How to Money Podcast Episode Summary

Title: Ask HTM - Unnecessary Credit Cards, Creatively Funding Grad School, & Dropping Car Insurance To Save #982
Host/Authors: Joel and Matt
Release Date: May 12, 2025

Introduction

In episode #982 of How to Money, co-hosts Joel and Matt tackle essential listener questions surrounding personal finance challenges. This episode delves into the necessity of credit cards, innovative strategies for funding graduate education, and the pros and cons of reducing car insurance coverage to bolster savings.

1. Do You Need a Credit Card?

Listener Question:
Ben, a 30-year-old listener with a decent credit score but no prior credit card experience, asks whether a credit card is necessary for everyday life and if it can aid in saving money.

Discussion Highlights:

• Necessity of Credit Cards: Joel and Matt agree that while credit cards aren’t essential, they can be beneficial when used responsibly. Matt emphasizes, “Only about half of the population actually uses credit cards,” highlighting that misuse can lead to financial harm (10:05).

• Benefits of Responsible Use: They outline several advantages of credit cards, such as fraud protection, purchase security, and rewards programs. Joel notes, “Cash and debit cards don't have nearly the same protections” (13:04).

• Risks of Mismanagement: The hosts caution against carrying balances and accruing high-interest debt, stating, “If you don't pay the bill on time and in full, you're going to be forking over 20% plus in interest” (15:00).

• Recommendations for Beginners: For Ben, they suggest starting with a no-annual-fee card, like the Citi Double Cash, and using it for a few recurring purchases to build credit without accumulating debt (16:02).

Notable Quote:
Matt advises, “Don’t buy stuff you can’t afford and don’t buy more than you otherwise would” (16:02).

2. Creatively Funding Graduate School

Listener Question:
Edward, a 40-year-old seeking to transition to a career as a registered dietitian, faces a $73,000 cost for grad school and wishes to avoid student loans.

Discussion Highlights:

• Employer Assistance: Joel and Matt recommend checking if Edward’s employer offers educational incentives or tuition reimbursement, noting, “Many employers do, and there are often no stipulations about what course of study you take” (29:06).

• Extended Timeline: They suggest spreading out coursework to manage expenses better, allowing Edward to maintain income while reducing annual educational costs (25:11).

• Exploring Scholarships and Grants: Matt mentions resources like Scolly by Sallie Mae and emphasizes completing the FAFSA to uncover available grants and aid (30:50).

• Flexible School Options: The hosts encourage considering alternative institutions that may offer similar degrees at lower costs or online programs, which can significantly reduce expenses (30:41).

Notable Quote:
Joel emphasizes, “Don’t marry a particular school just yet… there's a lot to be said for flexibility in your choices” (31:37).

3. Dropping Car Insurance to Save

Listener Question:
David, in his mid-30s, owns two older vehicles with full coverage insurance and contemplates dropping comprehensive and collision coverage to save approximately $78 per month.

Discussion Highlights:

• Risk Assessment: Joel and Matt discuss the balance between savings and potential financial risks. They agree that while saving on insurance can be beneficial, it’s crucial to consider the value of the vehicles and one’s ability to self-insure in case of an accident.

• Partial Reduction Strategy: Matt suggests maintaining full coverage on the more valuable vehicle (the Toyota) while potentially reducing coverage on the less valuable one (the Honda), thereby balancing savings with risk management (53:00).

• Emergency Fund Importance: They highlight the necessity of having a fully funded emergency fund before making significant cuts to insurance, ensuring that unexpected expenses can be covered without additional debt (52:13).

Notable Quote:
Joel cautions, “You could always get into a wreck next week… its a cheap move” (50:53).

4. Community Tips and Suggestions

Neighbor-Based Service Discounts:

• Katie, a listener, shared a creative approach to reducing costs for yard services by coordinating with neighbors to secure group discounts. Joel praises this idea, stating, “What if you could do six back to back and not have to travel” (03:38).

Credit Card Strategies:

• Joel mentions his own credit card strategy involving specific cards for different spending categories, while Matt considers simplifying his approach given his increasing responsibilities (17:56).

Teaching Kids About Money:

• An anonymous listener inquires about managing cash gifts for young children. Joel and Matt discuss the importance of making money tangible for kids, recommending high-yield savings accounts or credit union accounts tailored for youth, depending on the child’s age (53:49).

5. Additional Insights and Recommendations

Roth vs. Traditional 457 Deferred Compensation:

• Mike asks about the benefits of switching future contributions to a Roth 457 account versus maintaining a traditional 457 account, including the potential for Roth conversions.
• Joel and Matt delve into factors like current vs. future tax brackets, the impact of lifestyle on expenses, and the benefits of incremental Roth conversions during bear markets. They highly recommend consulting a financial advisor for personalized strategies (34:37).

Beer Reviews:

• Throughout the episode, Joel and Matt enjoy a review of a "guillotine of contemplation" beer by Barley Guillotine, discussing its unique flavors and complementing attributes. They highlight the balance of pineapple and hops, concluding it as an excellent hazy IPA (59:01).

Listener Engagement:

• The hosts encourage listeners to submit more questions via email and engage with the How to Money website for additional resources and tools, reinforcing their commitment to providing practical, jargon-free financial guidance.

Conclusion

In this episode, Joel and Matt provide practical advice on navigating credit card usage, funding higher education without incurring debt, and optimizing insurance coverage to enhance savings. Their balanced approach emphasizes informed decision-making, risk assessment, and leveraging available resources to achieve financial well-being. Additionally, the hosts foster community engagement by highlighting innovative listener solutions and encouraging proactive financial planning.

Notable Closing Quote:
Joel wraps up with encouragement, “Don't forget to send us your money questions… we want you wielding the sword well” (43:50).

Time Stamps for Notable Quotes

• [10:05] Matt on credit card usage statistics
• [13:04] Joel on credit card protections
• [16:02] Matt’s advice on responsible credit card use
• [29:06] Joel on employer education incentives
• [31:37] Joel on flexibility in school choices
• [50:53] Joel’s caution on dropping insurance
• [53:00] Matt’s partial reduction strategy
• [52:13] Importance of emergency funds before insurance cuts
• [53:49] Discussion on teaching kids about money
• [34:37] Insights on Roth vs. Traditional accounts
• [59:01] Beer review conclusion
• [43:50] Joel’s closing encouragement

For more detailed advice and resources, visit howtomoney.com.