Ask HTM - Spending Cash Windfalls, Retirement Investing vs College Savings, & So You Think You Can Landlord?! #1024

Summary

How to Money: Ask HTM – Spending Cash Windfalls, Retirement Investing vs College Savings, & So You Think You Can Landlord?! #1024

Podcast: How to Money
Hosts: Joel & Matt
Date: August 18, 2025

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Episode Overview

In this classic “Ask HTM” episode, best friends and co-hosts Joel and Matt tackle a series of listener questions ranging from handling a cash windfall, deciding between college savings and retirement investing, to the realities of becoming an accidental landlord. Along the way, they share personal anecdotes, practical financial insights, and a healthy amount of camaraderie and humor.

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Key Discussion Points and Insights

1. Should I Keep or Sell My Old House When Moving? (Jacob from Wisconsin)

• [12:14] Listener Jacob: Recently got a new job about an hour away, considering selling or renting current house; selling would net $50,000, while renting would earn $800–$900/month above mortgage.
• Matt and Joel’s Guidance:
  • Congrats on the new position! “Jacob, that means you're probably doing a great job at work. So congrats to you!” – Matt [13:31]
  • Evaluate your interest in landlording: If you're excited to manage a rental and put in effort, keeping the house can accelerate your path to financial independence. But being a landlord is a part-time job and requires attention, especially with a property an hour away.
  • The numbers matter: Budget for repairs and factor in real profit beyond just the rent-mortgage spread. The “1% rule” for rentals (rent equals or exceeds 1% of property price) is harder to achieve lately; don’t count on appreciation alone.
  • Loan terms caution: Be wary of offers with “no PMI” (private mortgage insurance). Sometimes “no PMI” loans come with higher interest. “Get multiple quotes, Jacob, to compare apples to apples…” – Joel [15:00]
  • Leverage lockboxes and good communication with contractors to save time on repairs from afar.
  • Tax consequences: Know the IRS “2 out of 5 years rule”—if you’ve lived in a home as your primary residence for 2 of past 5 years, you can avoid capital gains tax on sale. Plan your potential exit accordingly. [23:12]
  • Memorable Quote:
    “It just depends on what reasonable is, because… round trip, you’re looking at two hours. Not to mention the time you’re going to be there… there goes half your workday.” – Matt [18:12]
• Bottom Line: Weigh your willingness for the landlord role and ensure your numbers justify the hassle; don’t underestimate the time or deferred maintenance involved with rentals.

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2. Retirement Investing vs. College Savings (Scott)

• [28:51] Listener Scott: Late start saving for his kids’ (a junior and a freshman in high school) college via 529 plans—should he pause retirement investing to save more for their college, and is a 529 a smart vehicle this late in the game?
• Joel & Matt’s Guidance:
  • Don’t disrupt your own retirement: “Saving for your kids really should be a lower priority than your own personal retirement accounts… It’s not selfish to suggest that.” – Joel [33:00]
  • 529 plans now more flexible: Many now allow conversion to Roth IRA dollars if not used for education, and offer low-cost investments. However, if you’ll need the funds soon, aggressive investing in a 529 isn’t prudent for high school juniors.
    • “Investing that money would be too much of a gamble, especially for that junior.” – Joel [35:18]
  • Consider state tax deductions: Only worth prioritizing if your state provides meaningful tax advantages.
  • On making kids pay for college: “I just gotta say, no, I don’t think any parent owes their kids paying for their higher education… you’re doing them a better service by allowing them to pay for a lot of their own school or at least have to think through it.” – Joel [37:28]
  • Alternative approach: Help after graduation by paying off loans instead. If market conditions are poor when tuition bills are due, you can wait for a rebound to tap retirement accounts.
• Memorable Moment:
  “As long as you've talked about it well and they understand why it is that you're making that decision when it comes to your finances… you could land anywhere on that spectrum.” – Matt [40:48]
• Bottom Line: Prioritize your retirement; late-stage college savings are less impactful and shouldn’t derail your own financial security.

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3. What to Do With a Six-Figure Windfall? (Quay from China)

• [41:09] Listener Quay: Received $100,000 inheritance after mother’s passing. Already hitting Money Gear Five (solid financial shape); is it best to push towards six-figure investment accounts, save for a house down payment, or something else? Are there tax implications?
• Joel & Matt’s Guidance:
  • Honor emotions and legacy: Consider using a small portion of the money for something memorable tied to your mom (e.g., a trip, a keepsake).
    • “I had a friend… used her inheritance to buy himself a nice timepiece…every time, yeah, he looks at that, he just remembers the legacy…” – Matt [45:06]
  • Focus on maxing out Roth IRAs: The Roth’s flexibility (tax-free growth, potential for penalty-free withdrawals of contributions) makes it ideal, even if you later need funds for a home purchase.
  • Bridge to the six-figure mark: There’s special psychological and financial momentum at reaching $100k invested.
    • “Once you start getting up there close to…$100,000…it feels like the wind’s at your back a little bit… the more it builds beyond that, it’s even better.” – Matt [47:36]
  • House savings—depends on timeline: If buying a home is uncertain or 5+ years away, keep investing; if earlier, consider more conservative saving.
  • Tax implications: No Federal tax on inheritance at this level; some states have inheritance taxes (only 6 states in 2025), so double check your situation.
• Bottom Line: Use a modest portion to honor your mom, but prioritize Roth IRA maxing and investment growth unless home buying is imminent. No taxes due on the windfall in most cases.

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4. Rapid-Fire Listener Qs (Money for Kids Abroad, First Phones, and Spending Abroad)

a. Best Card for Teen’s European Trip (Jamie) [54:35]

• Best approach: Add your child as an authorized user to one of your credit cards with no foreign transaction fees—kids under 18 generally can’t hold their own credit card.
• Perks: Helps build their credit history early. Many cards allow adding users as young as 13; confirm with your provider.
• Additional tip: Send a debit card with no foreign transaction fees (e.g., Capital One, Discover) for ATM withdrawals.

b. First Phone for Kids Without Internet/Social Media (Patricia) [59:28]

• Key options: Gab wireless (watch or phone) is popular but may be pricey; using an old iPhone or similar device with parental controls and a limited plan (e.g., US Mobile or Tello Mobile) is flexible and cheap.
• Recommended plan: US Mobile plan at ~$8/month, Tello for even less if no data is needed.
• Bonus: Using a Wi-Fi-enabled device also works in many environments, with proper parental restrictions.

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Notable Quotes & Memorable Moments

• “You don’t Alphabet something. No, no, no. You Google it.” – Joel [04:23] (A playful riff on corporate branding.)
• “Sometimes they’re putting forward a problem that you didn’t notice in the first place.” – Matt on targeted YouTube ads [06:50]
• “Don’t go crazy, but a small splurge with a portion of this money could be smart…every time he rode that bike he thought about his mom.” – Joel [44:06]
• “Saving for your kids really should be a lower priority than your own personal retirement accounts…because there are so many other ways to pay for a higher education.” – Joel [33:00]
• “Put a lockbox there at the property because that can so easily save yourself at least two hours driving back and forth…” – Matt [21:58]

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Timestamps for Major Segments

• [12:14] Renting vs. selling your house – Jacob’s Question
• [28:51] Saving for college vs. retirement — Scott’s Dilemma
• [41:09] Handling a windfall – Quay from China
• [54:35] Sending a child abroad with a card – Jamie’s Question (Facebook)
• [59:28] Best phone options for kids — Patricia’s Facebook Question

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Episode Tone and Style

As always, the episode crackles with Joel and Matt’s easy rapport, dry wit, and strong commitment to practical, judgment-free financial guidance. There’s earnest encouragement for listeners to take charge of their finances, with plenty of side tangents (chocolate, nail clippers, robot vacuums) keeping the mood light and relatable.

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Conclusion

This “Ask HTM” episode delivers a rich mix of tactical advice and larger reflections on financial priorities, all while making personal finance accessible and even entertaining. Whether you’re dealing with a surprise inheritance, trying to make the right choices for your kids’ future, or just grappling with the possibilities (and pitfalls) of real estate, Joel and Matt help you weigh the options and point the way toward smarter, more values-aligned money decisions.

Transcript

[Matt]

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[Joel]

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[Matt]

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[Joel]

Welcome to how to Money. I'm Joel.

[Matt]

I'm Matt.

[Joel]

Today we're answering your listener question.

[Matt]

Keeping the inflections elevated slightly for you.

[Joel]

Our listener put the emphasis on the different syllable map emphasis.

[Matt]

Listener questions. Who knows what we're gonna get to during today's episode?

[Joel]

Well, I know cause I picked these questions out ahead of time.

[Matt]

That's true. I was gonna say it's like a life. It's like a.

[Joel]

But the listeners don't know.

[Matt]

It's like a box of chocolates.

[Joel]

Yeah.

[Matt]

Except that's not even true because all boxes of chocolate have the little roadmap on the back of the lid.

[Joel]

That's true. Yeah.

[Matt]

So what was.

[Joel]

You know what you're getting?

[Matt]

What was old Mr. Gump saying?

[Joel]

Would you ever blindfold yourself though, and pick as. I don't know. I couldn't do that. There were a lot of like wild cards in there that I did not want to eat.

[Matt]

You don't like the ones loaded with cherry? Yeah, I can't handle any of that stuff.

[Joel]

I kind of like a chocolate purist. So I'm going to eat chocolate. I just want chocolate.

[Matt]

I do like a nice. The fancy bars, they even sell them at Aldi. Now the nicer bars of dark chocolate at like 85% cocoa. Those are some good ones.

[Joel]

If I'm going to eat chocolate, dark chocolate's where it's at. Maybe. Maybe a little sea salt tossed in there. Maybe some almonds if I'm feeling crazy.

[Matt]

Yeah. Some nuts. Some pistachios perhaps. Like the roadmap that you get on a box of chocolates. I'm going to give a little preview as to the questions we're going to get to today. Like, a listener is wondering what it is he should do with a recent windfall. He's got some cash on hand and he's trying to figure out what to do with that money. Another listener is thinking about putting his kids college savings on the back burner. Is that a smart move? Is that something he should be doing? Another listener is considering converting their primary residence to an investment property. Plus, we'll take a couple listener questions from comments there in the Facebook group, which maybe I should go ahead and plug. If you haven't checked out the how to Money Facebook group over on over in the Meta sites, be sure and search how to Money. Does anyone actually refer to Facebook as Meta other than investors?

[Joel]

No, I don't think so.

[Matt]

So let's call it Facebook I think.

[Joel]

It'S literally just investors.

[Matt]

It's like, you don't Alphabet something. No, no, no. You Google it.

[Joel]

Yeah, exactly.

[Matt]

There you go.

[Joel]

Okay. One quick thing I wanted to mention before we get to all the great listener questions we have on board today is, you know, I feel like, actually when you look at the most popular streaming services, YouTube has surpassed everybody. So even Netflix. Like, people spend more time watching YouTube than they spend watching Netflix, Amazon prime, any of the other streaming services.

[Matt]

Joel, we don't have attention spans anymore to be patient and to wait for things.

[Joel]

You're right.

[Matt]

I was really drawing that out to see if you would jump in because I didn't have the patience to wait.

[Joel]

You started to bore me.

[Matt]

But Joel is about to hit advance.

[Joel]

2X2X2X2X speed, man, which is probably what some people are listening to us on right now. But YouTube has, of course, if you are frugal or cheap, you probably don't pay for YouTube Premium, which allows you to skip the ads. Although I think Brian Feroldi, we had him on, and he mentioned he pays for it because he watches a lot of YouTube and he's like, it's so worth the 12 or 14 bucks a month. I remember him saying that to have.

[Matt]

No ads on YouTube, specifically with his kids. He's just like, we just don't want.

[Joel]

To sit there and wait anymore.

[Matt]

It's such a small amount for the. Which I get the amount of life that he's able to reclaim.

[Joel]

And part of it's the time, but the other part of it. And I do not pay for YouTube Premium, so I do watch the ads when I'm watching something on YouTube, but I don't think I watch as much YouTube as Brian for all these kids. So I don't feel the need to pay for it. But it's amazing the things that you get sold. And some of the ads are quite catchy and convincing. Like, I went down this rabbit hole for a few minutes of a nail clipper called Edgy. Have you seen this? Nope. So apparently it's, like, far superior to the nail clipper.

[Matt]

Fingernail clipper. Yeah, clippers.

[Joel]

Yeah. So it's. But it's my son. His fingernails grow ridiculously fast. I feel like I'm chopping his fingernails off every, like, third day. Yeah, that's an exaggeration. But it's close to that. And so I saw this ad for the Edgy, and I was like, whoa.

[Matt]

Okay.

[Joel]

This like. Like, stainless steel. And it's. It's like slicing instead of just Kind of bending and pulling your nail off.

[Matt]

Like it slices your nails instead of snip.

[Joel]

Yeah.

[Matt]

So, but maybe I should look this up and see if I in fact, need this because I don't like the way that slicing my fingernails sounds.

[Joel]

It doesn't sound good. But then, no, it's very convincing. In the ad, I did not end up buying one, but it's one of those. It just reminded me that sometimes, like, frugal or cheap. Are we paying for. To not watch the ads? Are we actually, like, paying, you know, not paying any money to not watch ads or watching the ads, then we get sucked into buying stuff. Again, I did not buy one, but I considered it. I was like, wait a second, have I been cutting my nails wrong all these years?

[Matt]

And sometimes they're like the wrong method my entire life.

[Joel]

It's like they're putting forward a problem that you didn't notice in the first place. I'm like, honestly, I've never had a problem cutting my nails with the 99 cent ones from the drugstore.

[Matt]

This is also the model that our media landscape, that our world operates on.

[Joel]

Right.

[Matt]

Like. Like YouTube ads aren't really all that different than what we used to see on TV as kids when we were growing up, except for the fact that they're more targeted.

[Joel]

Yeah.

[Matt]

So the question is, why so here. Yeah. Why were you dished up? How did they know that, those nail clippers specifically. Have you all been spending more on beauty supplies over in your household?

[Joel]

Not that I know of.

[Matt]

Yeah, maybe you are. Actually. We are. I was just telling you this morning how over the weekend I went shopping with my oldest daughter.

[Joel]

Yeah.

[Matt]

And we went to Sephora. I'm trying to be an engaged dad who understands what his preteen daughter is going through. And it was kind of like a little special outing between the two of us. And so speaking of ads, it's also kind of fascinating to think through the different images that certainly a young woman, you know, who's growing up that she is seeing there in the store and trying to like. And I'm personally trying to, like, interpret. Okay, what is she. What is she thinking when she sees that? Or, oh, there's this entire aisle dedicated to this one thing that she didn't know she should be paying attention to. And how is she responding to that? And what is super fascinating is hearing kind of like an ongoing commentary. Look like there's a section of like some body spray or something. She's like, oh, this is real popular. Like, well, how do you know about that?

[Joel]

Like, it's because, you know, like, girls in the class, right?

[Matt]

Yes, exactly. She's like, a lot of. A lot of the girls at school, I think they use this. And she tried some of them, like.

[Joel]

The body scrubs and stuff, because my daughter's getting those.

[Matt]

What is it? Bath and body works back in the day. Cucumber melon.

[Joel]

That was the. That was the hot sound.

[Matt]

That was a hot flavor. But it was interesting hearing her sort of work through it. And she's just really level headed. She's a lot like me. And so I was encouraged with her specifically to see how she responded to the different products and the different ads and the different imaging out there. I'm not too worried about her kind of going off the deep end, but all kids are different. And I'm pretty sure we're gonna have a kid who's gonna be like, I need it all. But it. I don't know. There's a part of not subscribing to the premium models of streaming where our kids are exposed to some of the different ads and products out there that. Where they're trying to convince them that. No, your old clippers, they were inferior, Joel, almost to, like, immunity and immunize. Yeah. Is that the word I'm trying to say? I misspelled there to thicken their skin a little bit when it comes to them, be able to kind of roll with the punches as they're. The onslaught of all the different advertisements that they're hit with. Yeah.

[Joel]

There's like. I guess in some ways you want to protect yourself from too much advertising, because the truth is, we're all susceptible, at least to a certain point. Obviously, I went down the rabbit hole and I almost purchased because I was like. Changed my life. I think you're like 20 bucks. Like, it's an expensive nail clippers. Right.

[Matt]

But would you have those clippers for.

[Joel]

The rest of your life?

[Matt]

Probably, because you get the cheap ones on Amazon and they start rustin', you know, leave them sitting there on the sink, and so they sit in those.

[Joel]

Now you're telling me I really need to get some edgies.

[Matt]

I don't know.

[Joel]

Rhymes with wedgie, which makes it awesome.

[Matt]

The idea of slicing my fingernail still doesn't appeal to me.

[Joel]

All right, check it out. Let me know what you think. I'm curious. And if anybody out there listening has.

[Matt]

Experience with the edgy, has one of.

[Joel]

The fancier ones, tell me if I'm really missing out and if it's superior and if my nails are going to Be happier because of it.

[Matt]

So the real question is, do they still make the clip sound when you cut your fingernails? Because that's such a satisfying sound.

[Joel]

But I bet it's an even more satisfying sound. Or maybe it's like an assassin.

[Matt]

I don't know if they slice your nails. I feel like they. They probably don't make that sound.

[Joel]

Yeah, you're probably right.

[Matt]

It's sort of like a vacuum cleaner when you're vacuuming. How much? Well, I'm the one that does the vacuuming in my house. I don't know if you vacuum at your house. I love hearing.

[Joel]

I thought your robot vacuumed.

[Matt]

No, we got rid of Creature. Oh, the Roomba. He broke, so.

[Joel]

So no. And you're not replacing him.

[Matt]

I was looking ahead. I saw the writing on the walls. Just like, this isn't gonna work out long term. We could sort of do another round of replacement parts. Get him some more edge brushes. The edge brush broke and would wear down. And he was kind of going senile in his later years. And so I'm like, why are we spending so much money? And those things are kind of expensive.

[Joel]

Didn't realize robots got dementia like that.

[Matt]

That's what we're joking because we named him Creature after the. The house elf from Harry Potter. All the big old HP nerds out there are, like, fist pumping, but that's what the ongoing joke was like, oh, Creature. But I'm thinking, why am I not going to drop another several hundred dollars on a Roomba when I can just get the chairs off the ground and do a quick sweep of the main floor on the hardwoods, Boom. That's all we're doing for the most part anyway. Anyway, vacuuming up dirt. When you hit a good cluster of some dirt that got tracked in.

[Joel]

So satisfying sound of it sucking up.

[Matt]

In a similar way. I'm saying that cutting your fingernails can be a very satisfying sound, like asmr, if. If you're the one doing it. If you're the one snipping your own nails.

[Joel]

All right, let's get to listener questions, and we'll mention the beer. The beer we're having.

[Matt]

Joel's going to quietly just tap on his microphone.

[Joel]

It's called cordial for all the folks out there. It's a saison by the good people at Burial Brewing. We'll give our thoughts on this one later. But if you have a money question, we'd love to tackle it on the show. Go to howtomoney.com ask for the simple instructions. But, hey, if you got A money question. Whether it's more practical in nature, whether it's more philosophical in nature. We'd love to hear whatever money conundrum you've got coming up. Your fellow listeners would love to hear it too. So please do record your voice memo, send it our way. Hopefully we can take it next week on the pod. But, Matt, let's get to listener questions. Got some good ones on the show today. Start out with a question. This one comes from a listener who is trying to decide what to do with his old house as he's buying a new one.

[Jacob (Listener)]

Hey, Joel and Matt, this is Jacob from Wisconsin. Thank you for the podcast and all the help and advice you give individuals. My current question is whether my wife and I should rent our current house or sell it. I've recently got a new position and it's going to be about an hour away from where we currently are. So manageable driving distance. We could sell the house for about 50,000, which is what we originally were going to do, and put that towards the new house. We recently discovered that we can get a loan based on my credentials without PMI. Regardless of how much we finance. We have about 30,000 in our bank account without touching our emergency funds to kind of put down if we were not to sell our house, if we were to rent it. So what we're currently looking at is we could. We could rent it for anywhere from 1800 to 2000amonth. Our current mortgage is sitting on just over a thousand dollars. So the question is, should we sell it or would it be a good idea to sell it and get the 50,000, put it towards the house, not mess with our accounts or rent it and kind of go from there. Any thoughts on that would be greatly appreciated. Thank you, gentlemen. Cheers.

[Matt]

All right, well, first of all, I'll say congrats to Jacob. Joel. He didn't call it a promotion, but I did notice we were talking, we talk about inflection here on the podcast. When he said new position, I feel like he said it with a little bit of pep in his voice. Right? He was just like, I got a new position. I don't mean to brag. Got a new position. Maybe comes with a pay raise perhaps. But Jacob, that means you're probably doing a great job at work. So congrats to you. That's huge.

[Joel]

And it's amazing how much, like, my older sister just got a promotion at work and just like, I'm so pumped for her because, like, these, these money goals become so much easier to reach as your income grows. Like we talked with or I talked with Nick Maggi recently and he was talking about how especially at the front end of the wealth ladder, that those pay increases, they matter so much. Yeah. It's like, man, a $20,000 pay bump, which is a lot, can just allow you to do so much that you weren't able to do previously.

[Matt]

So it's like he's. Yeah, just hitting the easy button. It's like all of a sudden all these other goals are completely attainable is to keep yourself from moving the goalposts.

[Joel]

That's right.

[Matt]

That's when it remains just as difficult.

[Joel]

If you ramp your spending up commensurately, then it ain't going to help much. And in fact, it'll make things worse. But if you keep everything else the same. Let's talk about this housing question, Matt. I love that Jacob can avoid pmi, but I also wanted to know this, that, you know, some loans don't require 20% down and they might not charge PMI. Technically, there might be other inflated costs to consider. For instance, Jacob might be getting hit with a slightly higher interest. Like the lender might say, yeah, don't worry, Jacob, we don't charge pmi. But then the interest rate is worse than he'd be able to get elsewhere with a lender that does charge pmi. And that's private mortgage insurance for anybody who doesn't know who's listening. Which if you don't put down a sufficient down payment, this is a way the lender protects himself. And so it's important to get multiple quotes, Jacob, to compare apples to apples versus just kind of thanking your lucky stars that you can avoid pmi because PMI and a lower rate might be even better than what you're getting quoted right now. So just make sure you're considering multiple loan options. This is a place, Matt, that people cost themselves thousands, if not tens of thousands of dollars over the life of the loan by not shopping around on the front end. And the thing about why PMI might be preferable with a lower rate is because you can drop PMI by paying off more of the balance of your loan. But. But you can't really change the rate unless you refinance. And you might not be able to refinance at a lower rate so that higher rate sticks with you for the life of the loan.

[Matt]

That's right. Yeah. I think optional at 80%, mandatory, I believe at 78%. But do get quotes from multiple lenders out there. It sounds like Jacob's. He's up there in Wisconsin, check with a local credit union, maybe a local bank, ask around, see if somebody's got a mortgage broker that they would recommend. And if you can hold on to your current home as a rental and still get solid terms on that new house, I think that could be a great idea. But there are downsides to hanging onto that house. For instance, becoming a default landlord. I guess if you aren't interested in becoming a landlord, then it's default, otherwise you are proactively choosing it.

[Joel]

It sounds like he's at least a little interested because he's asking the question.

[Matt]

But I get he sounds neutral.

[Joel]

But some people are like, no, no, no, I'm, I'm gung ho for this, I'm ready, which is great to take on that part time job. And other people are like, well that's the thing, it worries me.

[Matt]

That's the thing, the part time job part of it. Like there is a big difference between just pass in the market and owning and managing a rental property. Managing is key, I think for at least for the first few years in terms of profit and just learning the ropes. But if you get excited about the opportunity, if you are willing to put in the work, I think this rental property could help you to reach financial independence at a faster pace. And certainly that's because of the fact that you are leveraging this debt. It just requires more attention. And whether or not you've got this new job, whether or not you've got that time on your hand and on your hands to be able to pull that off, that kind of comes down to lifestyle. Whether or not that's something that you want to continue doing and maybe you do because you've got friends there still at the, you know, like in your old neighborhood. So you're like, well, I'm going to be going back anyway. In that case I could see that being maybe a little bit more of a no brainer.

[Joel]

I did think when Jacob said manageable driving distance, like he's willing to go back when it's necessary. And the truth is the better you get at managing a rental property and finding good tenants, the less you have to be there. It doesn't mean you never have to be there, but you might find that you only have to be there once a quarter or something like that. And if you're willing to commit to that and maybe a little more frequently in the first years, you're kind of getting established. But if it's a reasonable distance for you to drive, I think it puts a check mark in the corner of like yeah, keep it around.

[Matt]

It just depends on what reasonable is because he's. Didn't he say like about an hour? Yeah, it's like maybe an hour away.

[Joel]

For him that's reasonable.

[Matt]

Maybe for him that's reasonable. But like round trip, you're looking at two hours. Not to mention the time that you're going to be there. Let's say you're showing the property. Obviously that's a couple hours or so. Let's say you're just meeting a contractor there. I mean, you're looking at, gosh, you know, three, like they're, boom, there goes your at least like half your workday. If it's during the week, if it's on the weekend, like, there goes your Saturday morning.

[Joel]

Sure.

[Matt]

Right. And so even though it seems like it's not that far away, I guess account for the total amount of time that you might have to carve out in order to manage that yourself. But.

[Joel]

But that time you spend could, like you alluded to, Matt, pay off in additional returns over time, better returns than you might get in the market. It would be wise to see how good the numbers look for your current property as a rental. Jacob, you mentioned a little bit, but you've got to know how much wiggle room there is between your mortgage and the monthly rental amount. We have talked in the past, Matt, about the 1% rule, which is something that we used to strive for, which is essentially that the monthly rental amount equates to 1% of the overall purchase price. But that's hard to come by these days. It's still possible, I guess, in some parts of the country, but I would say especially in major cities, yeah, not going to happen in many parts of the country. A new landlord is likely going to lose money month after month and their only real goal of profit can be price appreciation. I don't think that's going to be the case in Wisconsin where Jacob is. If that is the case, though, it can work out, but it's riskier and it's not worth the hassle. I don't think for the most part of being a landlord. But Jacob's not going to be losing money. Sounds like he's going to be able to clear something like 800 plus dollars making money hand over fist a month for expenses. Yeah, just budget for repairs, Jacob. And you know better than anybody else what kind of condition the home is in. But you have to budget for that stuff because it doesn't mean like, hey, if I do this, 800 bucks a month in profit on a recurring Basis is mine. Your home is still actually going to, despite that profit margin, lose money in some years. Because I have properties that have maybe like probably, I would say a similar discrepancy between the mortgage amount and the rent. But when you have to replace a roof or an H vac system, water heater, new bathroom, new cabinets, new bathroom, all that kind of stuff, you have to factor that stuff in. It will eat into your profits. You're hoping over time still that it makes sense. But this is a long term investment. It's not your. It's not like you're trying to make a quick buck here. That is true.

[Matt]

But obviously he's just got the advantage too of being able to roll that primary into an investment.

[Joel]

Right.

[Matt]

Meaning that he's got better financing terms. Typically you're going to get a better mortgage when it's owner occupied. And so being able to hold on to first house, Joel, that's how you got into it. That's actually not how I purchased my first rental property because we were like, actually we like this house. We're not going to move. And so we ended up buying another place.

[Joel]

But then you did eventually turn that house also into a rental, which.

[Matt]

Yeah. Which I'm actually in the. So that was.

[Joel]

So you didn't do it the first time, but you did do it.

[Matt]

I did do it the second time. That is true. And man, I tell you what, it's been awesome to maintain that incredibly low mortgage rate.

[Joel]

And there's something cool about holding on to that house. If you love it. Yeah, like, I really like that.

[Matt]

Feels like you got history.

[Joel]

Yeah. I don't know, it's every time you step back in there, like shed a.

[Matt]

Little tear because there's something, something nice about it for sure. I was gonna. This is fresh on my mind though too because actually that this particular house that I'm thinking of, I've had a renter in there for eight years and she finally was like, I'm finally moving out. I thought she was gonna be a lifer, man. I was. I thought maybe she just didn't want to own her own place, but I think she was just working on her career. She, you know, it was. Ended up being a great, a great property for her. But what that means though is that there's some deferred maintenance that needs to take place. And so this sort of like you were saying, this is one of those years. I think I'm gonna end up, up spending a chunk of money there on that property. Not to mention we had a waterline main bus there earlier in the year. So I'm already sort of underwater a little bit with that one.

[Joel]

No pun intended.

[Matt]

Yeah, but what I was going to say. So kind of going back to the part time job aspect of this. Jacob, what's key? So this is a great, just general tactical tip. But make sure to put a lockbox there at the property because that can be something that you can so easily save yourself at least two hours driving back and forth because hey, if you need to get some work done, hey, in my case, I literally was texting this morning with a painter. I didn't need to meet him down there, just gave him the code to the lockbox. He looked through it. So prioritize contractors who are good at communicating, obviously contractors that you trust too when it comes to doing some of that work. Because that with this being an hour away, that can save you a ton of time and you can kind of have your cake of self managing and eat it too.

[Joel]

I still remember the first time I didn't move away. I was just out of town and something happened at one of my rental properties and that I normally would have because it was right around the corner, I normally would have just shown, just pop up, pop on over, meet the plumber, right like. But it was the first time I wasn't there and couldn't do it. And it opened my eyes to the fact that if I created the right systems, I wouldn't have to drive over there even though it was a mile away. And now you and I, we live a little bit further from our rental properties and we gotta, gotta be able to do that. You have to have those systems and so Jacob's gonna have to learn those from the get go. And having, you know, a lockbox that his trusted contractors can access will make a big deal. Yeah, I think that's a good tip, Matt. I also want to mention to Jacob as he's kind of trying to figure out what he wants to do here and I think he could go really either way. But don't forget about taxes because before you commit one way or the other, it's important to at least recognize and know what the 2 and 5 rule is. Which essentially means that if you've lived in your house as your primary residence for two of the past five years, you can avoid capital gains tax on the profit of that home when you sell. So let's say you try your hand at renting this place out. You're like, I'm going to give it a go, we'll list it, I'M going to manage it. You're a year in and you're like, I hate this. Like the tenants have been bothering me to no end. I've had more repairs through on the unit than I thought. I got to put this on the market and sell it. Well, the great thing is you can still avoid paying Uncle Sam 15% of the gain that your home has experienced since that initial purchase because you lived in it recently. But if you go beyond that market and let's say you've rented out for four years and then you sell the property, well, you're going to owe the capital gains tax on all the gains you've experienced since you bought it.

[Matt]

So that's basically like having your computer die one day out of warranty.

[Joel]

That's right. That's right.

[Matt]

No, I should have done it yesterday.

[Joel]

Yes, that's exactly right. Except for one you can control and the other you can't, I guess. Right? Yeah, that's true. So make sure you know that. But yeah, other than that, I think if you paid a reasonable amount for your home, you got a solid locked in interest rate, you're keen to become a landlord. Jacob I think there's a lot of plus signs, especially if you don't mind that. Drive once or twice a quarter to go back there and check on your baby, your investment. I think you might be happy being a landlord and you might see better financial returns from it too.

[Matt]

Joel, we've got more to get to. We're going to hear from a listener who is on the other side of the world. He has an investing question. We'll get to that and more right after this.

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[Scott (Listener)]

Hey guys, thanks for taking my call. So my situation is I've got a high school junior and a high school freshman. And of course, like many adults, parents, we didn't start saving as soon as we could in the 529, which I did start recently. But now because of my sense that the market is volatile, I'm not sure if that's the best option. So I want to get your thoughts on that. But more importantly, I guess what I'm willing to wondering is I'm going back and forth between the idea of whether or not to start saving as much as I can. In other words, stop maybe putting as much in my retirement account, which is pretty aggressive in that regard. So I think if I pulled back a little bit, it wouldn't be a traumatic thing. But thinking that maybe what I could do is basically just have her pay for it and use that extra money to continue to go aggressively in the market, thinking that, that it's better to take out a loan and probably pay it off at a lower interest rate than, you know, the money I could, extra money I could make in my retirement account and just start pulling that out. I'm 61, so it's not like I would suffer any penalties in a few years if I start pulling out other than just the regular taxes. So that's in a nutshell. Just kind of want to figure out what's my best option at this length. Late stage in the game. All right, thanks.

[Matt]

All right, Joel, let's get to Scott. And one of the things that he said, I think he said something like my sense is that the market is volatile right now and I think it is going to be okay for him to pull back on how much he's putting into the market. If he's been investing a pretty large percentage of his income for a long time, I just don't want to see him reducing his contributions just because he's worried about a pullback. Because he's reading the news, the headlines. He's thinking about, like, when you're younger and you're just building up that wealth, you probably aren't paying too much attention to what's going on. What's the news in markets? Right. Like, how are tariffs impacting the stock market? But as you get closer to needing that money, like he is, he said he's got a freshman as well as a junior. You start thinking about, oh, what does that mean for this? What does it mean for that? Well, I mentioned tariffs specifically. I'm thinking back to all the headline predictions about tariffs and the impact. Impact of those on the economy. And, you know, we're still not fans of tariffs in general. I do think they will certainly slow down growth. But the 20% pullback that we experienced back when, back Liberation Day. Joel, do you remember it? Seems like I do. Seems like it was so long ago.

[Joel]

I remember the fun signage that was held up by our president.

[Matt]

It was so based on trade deficits. But that pullback was. I don't know. I feel like it bounced back so quickly.

[Joel]

It did.

[Matt]

And we've recently reached record highs. This happens all the time. The volatility, Scott, that you're experiencing, that is just the price of admission. And the higher returns are just the reward that you get for dealing with these greater levels of risk. And so I'm just here to say I don't know if this time, like everyone always says, this time it's different. I don't. I'm proposing the idea that this time isn't really all that different from all the other previous times.

[Joel]

Yeah. And like, will the stock market bounce back in no time flat like it did with COVID and like it did with terror? No, maybe not. There will probably be downturns in the stock market and in the economy that last longer than what we've experienced recently. But still just pointing to being like, oh, it feels like the market's more volatile than normal. I don't think it is. I think maybe it's easy as an investor who's got your finger on the pulse to feel like that, but I don't necessarily think that makes it true.

[Matt]

I really do think it's the older you get too, the closer you start eyeing some of your retirement goals. Or in this case, goals for his kids. You start thinking about it a little more where you're just like, well, shoot, actually do I actually want to take all the risk that is available? All the risk that's on the table? I used to say yes, give me, give me, give me. But now he's just like, oh, maybe I'm going to say no to seconds this time. You kind of like slide back from.

[Joel]

The table a little bit at some point. That's a smart idea to de risk right as you're getting closer to needing that money. Which brings me to the question at hand about saving for your kids. I first just want to tell Scott not to beat himself up for not starting a 529 plan sooner. This might sound harsh to other listeners, but saving for your kids really should be a lower priority than your own personal retirement accounts. And no, it's not because you don't love your kids, but it's because there are so many other ways to pay for a higher education. You know, we talked with Jocelyn Pearson back in episode 860 about getting scholarships and that's only one episode. We've had multiple episodes, many episodes on paying for college. Ron Lieber from the New York Times on the show there are so many different ways to reduce the cost of college, to find other ways to pay for college that aren't just like personal investments in a 529 plan, but when it comes to your retirement, sorry, that stuff doesn't exist. And so that is the priority. And it's not selfish to suggest that. We just don't suggest making meaningful contributions to 529 accounts for your kids until you reach money gears number seven, which if you look at them on our website, that's the last money gear. So it's very far along in the order of operations. If you haven't done basically all the other priorities first, like you shouldn't be doing it. There's just too many other financial goals that take precedent.

[Matt]

Yeah, let's take a minute too to talk about 529 accounts and just how much better those plans have gotten. First of all, they have become more flexible. You can even in time turn some of the contributions into Roth IRA dollars for them if it's in fact not needed for their schooling. So because of that, we like 529s more than we used to and many of them come with just incredibly low cost investments. But not every parent cares about that. Not every parent wants to save for their kids retirement. And to be honest, in your case, Scott, you Don't want to invest the dollars that you are contributing anyway because of how quickly it is that you are most likely going to need these dollars for your kids higher education.

[Joel]

That's a good point. You're talking about, like, Scott getting closer to needing the money he's sticking in his retirement accounts. I mean, hopefully he's still got decades of retirement left, but for his kids, we're talking about spending that money actually in the fairly near future. You said your kids are in high school, right? Junior and freshman. Well, that means that investing that money would be too much of a gamble, especially for that junior if you're going to need that money in a couple of years or at least some of that money. Right?

[Matt]

Yeah. Freshman. Maybe you can take some more risks there, but yeah, definitely not the junior.

[Joel]

Right? Exactly. Yeah. I think with the freshman, you might be able to do a conservative mix of investments because you have more years that you can let those investments rise. But needing those funds in short order means investing doesn't make much sense. Which means the 529 account doesn't make as much sense right now. I think the only way I'd prioritize it is if you felt like you were really ahead of the game as far as your own personal and workplace retirement accounts. Like, hey, I've crushed it so well that even though my kids are this far along in high school, I guess I can take my foot off the pedal and toss some money in there. And the only other reason I would consider it is if your state offers a sweet tax deduction. Oh, yeah. Because if you live in a state without any tax income tax benefits, I just don't really see the point of putting money in a 529 account. But if you do, you can just like literally consider it as a tax evasion vehicle and tax evasion. Yeah.

[Matt]

I don't mean that this is how you launder money, Scott.

[Joel]

It's a very legal way. But like, we did that with some of Emily's grad school. We just like stuck it in and took it out pretty quickly.

[Matt]

It goes in here, it sits there for a day, and then it goes.

[Joel]

Out of there because we had to actually pay the school bill.

[Matt]

Okay, so two things that makes me think that, first of all, Scott didn't say his name at the beginning. So this listener question is being presented here by Scott. But secondly, we always try to get folks to say where they're from as well, because it helps to. It just adds a little bit of color right. To the question. And so normally we'd be able also information. Yeah, exactly. Because like let's say Scott lives in California or Tennessee. Well, yeah, he's not getting a state break. Right. But if he lives in Georgia or if he lives in New York, you are going to get a deduction on your state income tax there. And so that would have been something that would have been helpful. Helpful to know. But I like how we're talking about this as money laundering because there is a certain amount of that and it can be significant in a legal way, Matt, in a very legal way, but just depending on how much he's looking. He didn't say specific number, but I mean, we're talking about a large amount of money. Depending again, if he gets that state deduction, were he to, if he's looking at socking away some serious amounts of money, we could be talking thousands of dollars here.

[Joel]

But I agreed. And I also just think, don't feel compelled to do this. And I love what he said at the end that he was like, maybe my kids pay for their own college. And I think when we say, yeah, that's a great idea, some people might be like, why are you rooting against his kids to succeed? Why doesn't Scott owe his kids that? And I just gotta say, no, I don't think any parent owes their kids paying for their higher education. I just don't think that is something that comes with the territory of procreating. But I think in some ways actually you're doing them a better service by allowing them to pay for a lot of their own school or at least have to think through it. It forces them to think about applying for scholarship, to reconsider which school they choose to go to based on what sort of financial aid packages each school offers them. And just as opposed to like a.

[Matt]

Blank check sort of mentality of, right, well, if I got in, that means I'm going to go there. Right? I'm going to go to the best school I got into. Right, right.

[Joel]

Which also makes me think that they're going to take more control over their education and have more appreciation for it. My guess is, my guess, and this is just a stab in the dark mat the kids who have to think more about and pay for more of their own education graduate in less time, maybe aren't taking the five or six year plan. I think just more skin in the game is a good thing. So you can always on the back end, help your kids pay off some of that student loan debt with some of the money you've invested and saved up.

[Matt]

And I think that's kind of what he's getting at. It was a little unclear at the end what he was specifically asking, but if that's the case, then I think I'm all for that. I think what he would need to make sure that he avoids is getting bumped up into a higher tax bracket. Right. Let's say he's still working. It sounds like he's like, oh, I'm still earning money, I'm still contributing to my retirement accounts if he's got that income coming in. But then on top of that he's taking money from retirement because again with him being in those quote unquote retirement years, he's an older earner and father. I guess you don't often consider the fact that you are over 61 or 62 in his case while you have kids in college. But that would be the problem or that would be the only potential problem that I could think of is the fact that that might bump him up, it's going to increase his income for those years. But I really do love the flexibility that that gives them down the road to say, hmm, you've got these loans now as opposed to having sort of front loaded or like pre funded college education. It's a way to do it on the back end. And the flexibility of like waiting for the market to correct. Let's say that, oh man, he's entering into a period where the market's not doing so well. So maybe, you know, how about you just keep making payments on the student loans for a couple years and let's see if the market rebounds and you know, I'll help you out.

[Joel]

At that point it's like, oh, hey, I got a $10,000 lump sum, I'm willing to contribute towards paying down the student loans.

[Matt]

So in a really depends on how good the market does, sweetie.

[Joel]

Yeah, well, I think so much comes down to the way you talk about this with your kids.

[Matt]

Yeah, communication.

[Joel]

And it's not like this, hey, guess what? I want you to fend for yourself. Like, I don't even think you want to have the conversation like that, but it is something along the lines of like, hey, I'm prioritizing this, maybe I'll be able to help out in the future. I can't right now, but let's have some thoughtful discussions about what it looks like to find a great school for you that doesn't cost an arm and a leg. And I do think again, yeah, there will be a greater level of appreciation for that education if they have more Skin in the game from the get go.

[Matt]

Totally agree. I think you could land anywhere on that spectrum of how much you end up paying for your kids college as long as you've talked about it well and they understand why it is that you're making that decision when it comes to your finances. But Joe, let's keep moving. Let's hear from a listener now who has recently found himself with some additional cash on hand. What should he do with those dollars?

[Quay (Listener)]

Hey Joel and Matt, it's Quay again, still all the way from Shenzhen, China. While we were working on things with immigration for my wife, we were hit with a devastating surprise. My mom passed away this past October. Grief aside, my stepfather just paid me my mom's minority share of the ex equity from their retirement property they moved into less than a year ago. That equity amounts to just north of a hundred thousand dollars. This brings up two questions for my wife and me. The first is how to approach this influx of money with the money we pushed ourselves into Money year five. We have no debts besides my student loans that are still in the borrower defense program and a mortgage that has been turned into a somewhat profitable investment property. We have a long term goal of four to seven years from now we'll want to get a house and plant roots in America, but we could make that push to get our IRA and brokerage accounts to $100,000 or more. We know that getting around that area tilts the compounding heavily in our favor. So what should we do with the extra money and where I should should we put it last? Quick question is a lot shorter. What are the tax implications for 2025 after receiving this money? Are there any thanks y' all for any thoughts and suggestions during these ups and downs over the last couple years.

[Joel]

Man, Quay's been listening for a long time and pretty sure Quay is a.

[Matt]

Holder of how to money socks. By holder I mean wearer.

[Joel]

I hope he wears hope he sticks him on his feet because if you just like hold him up it doesn't really do much. But Koi, thanks for thanks for listening for so long. So sorry to hear about your mom's passing. And as anybody knows, everybody knows who's lost somebody. Like money doesn't make up for it. But it is also true that a six figure lump sum, it can make a big difference in your ability to hit your financial goals. So I think you can even think about how you use this money as a way to honor your mom's legacy.

[Matt]

I like that.

[Joel]

So yeah, we'll offer a few ways to potentially use that inheritance wisely to grow your wealth. And I don't know, Matt, but before we talk about investing it, maybe you have like, you don't want to be prudent with like every dollar that you get from an inheritance. What do you think?

[Matt]

Yes, he should.

[Joel]

You think so?

[Matt]

Yeah, yeah. Quay, he's been doing the right thing for a long time and he's just going to continue to do the right thing.

[Joel]

Yeah.

[Matt]

No, I do think, like, truly, because of the fact that we kind of know Kwei and he's been making smart moves with his money, it's okay to occasionally like just let off the gas a little bit.

[Joel]

Right.

[Matt]

And so to take a little bit of that money and just spend a little bit, a bit more frivolously maybe on something that you otherwise wouldn't spend money on.

[Joel]

Quay, it's kind of like all work and no play makes Jack a dull boy, I think, especially when it's a sum of money that you weren't expecting and all you do is bear down and do the quote unquote right thing with it. I think it can take some luster out of it.

[Matt]

It just depends on the person though. Like, there's a lot of folks who are just like, nope, that money is just like all the rest of my money. And it's going to enter into the machine and the machine is going. I mean, that's more of my approach.

[Joel]

Yeah.

[Matt]

Where like, I'm not going to necessarily change my life, but I do understand how for some folks especially, I don't know, something that's tied more to an individual like that, that that could be a way for them to set apart some funds. A way for them to remember that, you know, that individual, that loved one in a way that brings back good memories.

[Joel]

Sure.

[Matt]

I had a friend.

[Joel]

If it's a trip or even an Aiden, I was just thinking like, what if Kwei bought an E bike and every time he rode that bike he thought about his mom. It's kinda like when I go on vacation and I get an article of clothing, whether it's like a hat or a shirt, I love that. Versus something that is an inanimate object in my house. Cause every time I put it on, that smile comes my face. Cause I think about that trip and maybe it's the same thing.

[Matt]

What happens when the shirt wears out though, and you throw it away?

[Joel]

Do you forget about this question? I probably forget about the trip.

[Matt]

Then you're like, what? Vacation?

[Joel]

Yeah. Yeah.

[Matt]

Well, I guess in a similar way, I was gonna Mention a friend of mine, when his grandma died, he used some, he was like really into watches or I think he was maybe wanting to get into watches. And so he used some of that money to buy himself a nice timepiece that he wears to this day. And every time, yeah, he looks at that, he just remembers the legacy that she was able to set up. And in their case, it was, it had a lot to do with real estate as well. So I don't know, I felt like that was the first time I had heard one of my peers doing something similar to that as well. But I think that's worth considering, especially given that Kwei has been making a lot of the right money moves over a pretty long period of time.

[Joel]

Yeah, don't go crazy, but a small splurge with a portion of this money could be smart. Kwei, it sounds like your home purchase is far enough away that other priorities make more sense than to be funneling money into a savings account for a down payment. And I like the goal of getting your tax advantaged accounts. Roth ira. Hopefully you said ira. I'm not sure if it's a Roth and your taxable brokerage account into six figures. I'm just reminded, I think maybe I mentioned this quote recently, but Charlie Munger talks about you should do everything humanly possible to get to that first 100k, whether it's like walking and using coupons, it doesn't matter. Do whatever it takes to get there because it is an important, important threshold to cross. So that then, yes, your money starts. It just, it just feels like your money is working for you in a more significant way once you get to that level of wealth. And the Roth I think in particular is a killer account because if your personal finance situation continues to make progress, you might never need to tap it in order to buy that house. Five plus years from now you might be like, oh yeah, we were maxing out the Roth, but we also were saving on the side. And so we did both things at once. But you're also going to have, have the ability to use some of those Roth contribution dollars to help fund a payment, a down payment if you have to. And so the flexibility of the Roth is one of the key attributes that make it excellent. So our goal would be to max that out, I think, before contributing really anything to your taxable brokerage account and then putting that in second place. So I would just kind of make a plan to max it out each and every year, hold on to enough cash to fully fund it and you know, 20, 26 and then 20, 27 as well. Just so that you're not missing out on any dollar that you can stick into your Roth.

[Matt]

Yeah. Were unfortunate circumstances to arise, you can still max out that account. I wanted to speak. You mentioned kind of the Charlie Munger quote and the six figure retirement portfolio amount. I don't think there's any magic to hitting 100k.

[Joel]

I do think it's more mental magic.

[Matt]

I think it is. Yeah. I think, I do think there's some numbers behind it as well. Right. But just the fact that you get to six figures, so that's just a lot of fun going from five figures that you've been at for quite a while to six figures. It just psychologically it feels like a money win. But I think one of the things that happens once you get around and again it's not hitting that six figure mark, but once you start getting a portfolio that's around $100,000 is that the returns on your investment start to equal roughly about what it is that you contribute yourself. Right. And so it's sort of like this, this point and it's again, it's not like a hard line that you're crossing. But you know, once you start getting up there close to 70, 80, 90,000, it feels like somebody else is contributing to your retirement account in addition to you. Where it feels like the wind's at your back a little bit. And obviously the more it builds beyond that, it's even better.

[Joel]

Those like sub 30 or $40,000 accounts, you still feel like you're doing all the heavy lifting, but you're right.

[Matt]

Feels like you're spitting into the wind.

[Joel]

Yeah. And then once you get towards like the seven figure mark, that's where, where it starts to feel like the portfolio is doing more work than you are in your day job.

[Matt]

Yeah. Not just when it comes to your contributions, but how much you could potentially even earn at your full time job. But you mentioned maybe sticking the additional funds into that brokerage. I like what you said about just sort of earmarking that cash and just kind of having it on hand. Because I will say Quay mentioned that in something like four to seven years they want to buy that house. And, and if you wanted to take a more conservative approach to ensuring that you had enough money on hand to purchase that home. I think if it was me, it would depend on how married to that idea I was. And I don't know your situation. Kwei. And if you think there's a chance that you're going to be, I mean he's living over in China. How permanent is your stay over? Like, could it be that in, like, oh, hey, you got to be out of this country in three months sort of thing? If that were to be the case, I think I would start looking to some of the cities or towns that he knows he might want to live, get a feel for some of the, just what home prices are. And I would, personally, I think I would sleep better at night knowing that I've got a down payment in, like, basically on hand, ready to deploy. Were we to have to move back home earlier than expected. There's, I don't know. There's just some peace of mind.

[Joel]

How firm is that timeline that he has?

[Matt]

Exactly right.

[Joel]

So if the timeline is like, yeah, it's probably five to eight years, but I don't know, it could be too. Well, then that does. Or even things.

[Matt]

Or even less.

[Joel]

Yeah. But also, how married is he to the idea of buying a house? That's another important question because it's like, I don't know if, if the, if the money made sense, we'd buy, but if it didn't and we could find a good spot, we rent. So if that's the case, then the down payment savings really doesn't make as much sense. Yeah, so much.

[Matt]

There's a few other factors to keep in mind.

[Joel]

Let's tackle the last thing Kwei asked about on the tax front.

[Matt]

Taxes, tax consequences.

[Joel]

There should not be any tax consequences, and that's because the federal estate tax tax, it's highly unlikely to be an issue given the amount we're talking about. I believe the threshold typically for estate tax is like inheritance of like 14 million. I'm not sure where you file your taxes, Kwei, but a few states do have their own inheritance tax. So I think it's six states. So just be aware of that. But it's unlikely, right? So probably no tax consequences. Best of luck, though, as you proceed, and we hope you're able to achieve those goals that you've set out for yourself. All right, Matt, we got a couple more questions to get to. Specifically, actually, two different questions about money for kids in interesting scenarios. We'll get to those right after this.

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[Matt]

Right, buddy, we are back from the break and now we're going to get to the Facebook question of the week. This one is from Jamie and she wrote, I have a 16 year old daughter that is traveling to Europe with her orchestra group in March. I was thinking it would be easier to send her with a credit card to avoid her having to have cash on hand. I'm looking for a free credit card with no foreign transaction fees. Or is it better to just add her as a user to our current credit card? What you think, Joel?

[Joel]

First things first.

[Matt]

New card.

[Joel]

High school trips have gotten way better since when I was in high school.

[Matt]

I didn't take any high school trips.

[Joel]

When I was in high school, I went to New York City with the marching band. Really? Yeah.

[Matt]

Did y' all play in the Macy's Dave Parade thing?

[Joel]

I'm trying to remember where we played.

[Matt]

Wait, you wouldn't have remembered if you played in the.

[Joel]

No, I didn't play Thanksgiving. It wasn't that great, buddy. Where we played though. Why were we there? I don't even remember. It's so long ago. My memory's terrible. My nephew just went to Japan and Korea for like a week and a half with his school. Oh my gosh.

[Matt]

I was like, how much that cost? I bet it was.

[Joel]

But very cool that school trips have gotten this good.

[Matt]

Is this the nephew whose mom just got erased?

[Joel]

She's like, phew, I know.

[Matt]

Goodness, I got a massive fat bonus.

[Joel]

To pay for that. Exactly right.

[Matt]

For that trip.

[Joel]

So specifically though, on Jamie's question though, authorized user status on one of your cards. That should just be the way to go here because she'd need to be 18 to apply for her own credit card.

[Matt]

Yeah, it's not like it used to be. Where I'm pretty sure I got my.

[Joel]

First credit card when I was like.

[Matt]

13 or 14 years old. I'm serious.

[Joel]

I remember getting one in the Lied on the application. That's probably.

[Matt]

I don't even think I did. I think the credit card company was just like, yeah, whatever. I'm. I am.

[Joel]

They used to give them out like candy.

[Matt]

I am not even kidding. I was definitely still in the house. Definitely not in college.

[Joel]

That was before the card act passed. So there a little more flexibility there. But, you know, by having authorized user status on your card, you're going to be helping her actually to build a good credit standing early, which is clutch. Yep. And that's assuming you handle your credit card well and you've got a good credit score. But if so, she'll start to look like a good borrower by proxy, thanks to you. And it's just this wonderful thing to be able to do for your kid. It takes very little effort for some parents, by the way, for everyone else out there listening. Some cards don't let you do it until your kids turn 13. Others will allow it for basically kids of any age, even your newborns.

[Matt]

So just all my kids are authorized users on one. I can't remember which card it was, but they're all authorized. You know what's funny is one of our cards recently expired. And evidently I had one of our kids on there as an authorized user. And Kate was like, wait, how come I'm not on this? Like, she doesn't have that card, but one of the kids does. She was just annoyed. She's like, where's my card? But I think this is also a great time for your daughter Jamie to just practice and to test and see what it's like for her to have a credit card. Because obviously it's gonna be attached to your account so you can see how she's using it. And then any mistakes that she makes, well, she's under your roof. That is going to be easier to remedy and to teach her about it than were they, you know, were she to get her first card while she's away at college. It's sort of like having bumpers on at the bowling alley. Like, you are participating, you're throwing the ball.

[Joel]

I always score higher that way.

[Matt]

Do you? Yeah, I haven't bowled in forever.

[Joel]

It's been a long time.

[Matt]

Man, bowling is such an underrated. I want to take the family bowling at some point.

[Joel]

It is fun, but it always feels.

[Matt]

Like a nice winter sort of activity. Like, I don't want to go bowling when it's beautiful outside.

[Joel]

January, perfect bowling month.

[Matt]

January, February, perhaps. But I think that could be a great way for her just to test the waters a little bit and kind of get used to what it's like to make mistakes or maybe overspend in, in a way while your eyes are on this is on this card as opposed to when it's completely in her name and you don't have any visibility into that basically.

[Joel]

And yes, for no foreign transaction fee cards are going to. That's what you're going to want. You probably already have one or two. Jamie, I would look because I feel like the majority of cards now have zero foreign transaction fee fees, but not all of them. So definitely prioritize adding her as an authorized user to one of the cards that doesn't charge for spending when she's abroad. You might also want to send her with a debit card that also comes with no foreign transaction fees so she can get some cash out because our, our society is pretty plastic centric. I actually Matt gave my daughter some cash yesterday to get a popsicle at a neighborhood event and they came back and they were like they don't take cash. And that is like I know that is a common occurrence here in our country, but it's less common I think in other parts of the world. You don't want her carrying too much because of potential theft. So make sure you talk about security and keeping that money close. But the best way to get cash is at an ATM once she lands. So if you have a debit card, typically the ones Capital One, we've talked about that bank, Discover, those are 0% foreign transaction fee debit cards. If you have a bank account there, send her with that debit card and have her pull out, I don't know, 150, 200 bucks maybe. So that she does have some spending cash, but she has the credit card too if she needs.

[Matt]

Real quick, let's take this one from Patricia. She wrote I want a phone for my 11 year old that will allow her to call or text me as well as her friends, but that doesn't have Internet access and won't let her get on social media. Kudos to you Patricia for that. I see a lot of flip phones available but I'm not sure which ones are good. What kind of plan to get which services to use. My husband and I are on Visible, which I like that man. Visible. That's one of those MVNOs for sure. Visible rocks and via no by the way, mobile virtual network operator.

[Joel]

And let's not rot our kids brains out with social media trying to avoid that for my kids. I don't know when we're gonna jump on the Bandwagon. And I don't know how long you can hold off on that.

[Matt]

16.

[Joel]

16, I think is you got.

[Matt]

Wait till eight. That's the cell phone. So wait till eighth grade and then that's the Jonathan Haidt recommendation.

[Joel]

16 for social media. That makes sense.

[Matt]

Or wait even longer.

[Joel]

Yeah, well, let's. There's. There's some good suggestions. In the Facebook group on this. We actually had one of the suggestions that a lot of people offered was Gab G A B B, which was. We used a gab watch for our middle child. It has limited capability, but it made it easy for her to call and text from that watch. They have smartphones too, and that was what we wanted. But here was the part that rubbed me the wrong way, Matt. It was expensive. The watch was free. It was kind of this freemium sort of model. But then the service ended up being more than I wanted to Pay. It was $17 a month, maybe almost 19 after taxes. Yeah, I didn't like that because given how much she used it, I mean, it felt overly priced. And we actually just got an Apple watch for my oldest daughter. We put her on a US mobile plan for $6.50 a month. That to me was a good happy medium. Yes, the watch has more capability, but that's where I think parental guidance and controls come in.

[Matt]

Well, I think that's the best option, I think for a lot of folks. They've already got an old iPhone laying around the house and so I would recommend that Patricia just go straight with the old iPhone and reset it to be a kid's phone. And you've got much more ability to block any website. Like literally. We've done this on one of the family devices that we allow our kids to use, use under our roof, but then they don't have the ability to download any apps either. And so that. I don't know. I think that one of the benefits here too is that if you're looking at getting one of these dumb, you know, like the dumbed down phones and I don't really care what the other kids think. But that being said, if you've got like a fake, I don't know what the kids call it, but like a fake device that's like, I think even just having the screen, like a color screen, it looks like, I don't know.

[Joel]

You'Re not even getting made in front of.

[Matt]

You're not standing out like a sore thumb.

[Joel]

Yeah.

[Matt]

As opposed to being like on your old school looking LCD flip phone, which if that's what you want to do. I am all for that.

[Joel]

And it's not like it costs that much more at this point in time. Like a lot of those, whether it's an old iPhone or whether it's some sort of Android, a lot of those.

[Matt]

You'Ve already taken the hit from a depreciation standpoint on the actual device. And then the service you can get for crazy cheap with one of the.

[Joel]

Low cost providers, like the Apple Watch we bought for my daughter because it was many, many generations old, it was pretty inexpensive.

[Matt]

There you go. And then on top of that, you also have the ability to try out. Well, maybe we don't even need to buy service because I know for us we're thinking about letting our oldest. It's at school to get picked up. Because back in the day when I needed to get picked up from school, what did I use? The payphone.

[Joel]

Oh, I thought you were gonna say pager.

[Matt]

No, schools don't have payphones anymore. I'm a little bit older than you, my friend.

[Joel]

Do you have a pager?

[Matt]

For a while I never had a pager.

[Joel]

Okay.

[Matt]

I skipped the pager, went straight to the cell phone when I went off to college. But there's no payphones anywhere, so you can't plunk the quarter in there. You can't even do one 800 collect, which is what I also used to do. My parents knew that were they to receive a 1-800-Collect request, that it was just time to go get Matt.

[Joel]

Yeah, yeah, yeah.

[Matt]

Even if they did not, even if they just hung up, I don't know, is that ethically sort of a great. But what I was going to say though is that with an old iPhone, you can still use it on WI fi. And in school, schools have WI fi. Our local downtown little square, Joel, has public WI fi. A lot of the local businesses have WI fi. So the ability for them to do a lot of what they need to do in order to text, in order to FaceTime, you can do that without hardly even getting service. Especially if they're in sort of a confined, like just an area where you know that they're going to be. But then even, even beyond that, the. The newer phones have GPS built into the actual device to where you don't need to be on WI fi or cellular data like your phone. You got the 14, right? Yeah, I think it was starting with the 14. The GPS is built into the actual device. You have to set it up ahead of time. But that's pretty stinking cool. And it almost renders service that you need to pay on a monthly basis. Obsolete.

[Joel]

But if you want real service and you want your child to be able to call or text from anywhere, I would say US mobile has essentially something that equates to $8 a month prepaid if you pay for an entire year. And if you want something even cheaper than that and you want zero data, like you don't even want any data to come with the plan because you think that'll be a temptation, then Tello Mobile has a good option. 100 minutes talk and unlimited text for 5 bucks a month. So those are two really good options.

[Matt]

It's affordable.

[Joel]

Yeah. I like it. If you do go with the flip phone because that you're really your anti screen screen and which I totally get. I'm not mad about that. But you want the cheapest possible service. I think Tello might qualify for kind of the absolute bare minimum.

[Matt]

Just don't overpay for one of those light phones, you know those super sweet looking minimalist and it's just like the.

[Joel]

E Ink and they cost just as much as like a nice new phone.

[Matt]

They cost like as much as iPhones, dude. Yeah, like the old, the old model, I looked it up. 300 bucks for the old model. The new one that they just released, which I think they're Pre order now, 700.

[Joel]

I know you and I talked about this a few months ago because I remember seeing that and I was like, I can't. No way.

[Matt]

I still saw it. I saw it again. I was just dumbfounded. I was shocked. But I think for especially some adults who have the money and they're just like, no, no, no. I need to be able to. I need a hard barrier between all the other things that are out there. Kind of the sirens, call of the world and notifications and all that. There's. That's a certainly a clear way to step away from that.

[Joel]

Sounds like in a lot of ways that's what Patricia is trying to prevent for her child. Let's just do it affordably. Yeah. I just appreciate that level of thoughtfulness because I want to have the same with my kids because I see it in the adults around me, just in the ability to put their phone down.

[Matt]

Absolutely. All right, let's get to the beer. You and I, we enjoyed a cordial which is a saison, a beer here by Barrial. I have never had a saison by burial before.

[Joel]

It's almost always brutally beautiful IPAs or insane stouts.

[Matt]

Yeah, most of the time. But yeah, I definitely enjoyed this.

[Joel]

Would you? You think? Yeah, I wrote down three adjectives. Gentle, floral and biscuity.

[Matt]

Biscuity. It was very golden. Yeah, it kind of almost drank like a golden ale. That's what, that's what kept coming to my mind with a tiniest bit of funk there as I was. I was tasting it, but really good, really delicious.

[Joel]

I do prefer the funkier saisons like it as you put a lot of funk in it and I'm gonna be more interested. But I still enjoyed this as just kind of a nice laid back beer.

[Matt]

Golden and clear. Super delicious. Glad you and I got to enjoy it today. But that's going to be it for this episode. You can find our show notes up on the [e-mail] that's going to be it. So until next time.

[Joel]

Best friends out.

[Matt]

Best friends Out.

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