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- [00:01]
Fidelity Representative
Fidelity Trading Dashboard brings live data, news and charts into one screen so you can build and place trades. Better Start for free@fidelity.com TradingDashboard Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC Member NYSE SIPC.
- [00:15]
Leukemia and Lymphoma Society Representative
Do you know a high schooler who's a natural leader who wants to create change by bringing people together? They could be one of the next Student Visionaries of the Year Candidates across the country form powerful fundraising teams. You uniting with the Leukemia and Lymphoma Society to honor a local child with blood cancer. Through this seven week philanthropic leadership program, students build valuable skills like project management, entrepreneurship and financial literacy, something I wish I'd learned at that age. Plus, it helps them stand out on college applications. But most importantly, it's a chance for students to connect meaningfully with their communities and make a real impact on blood cancer patients and their families. Learn more about Student Visionaries of the year@lls.org that's LL S.org students.
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Jill Schlesinger
Welcome to the Jill on Money show. It's Friday, May 30th and hey gang, it really does feel like this is now officially we're getting into it like end of May, it's almost a half year behind us, five months behind us, seven months to go and time sort of marches on. But has your financial life paused to take a moment of reflection? Are you wondering what is the next best financial move for you? Are you trying to figure out how you are going to navigate the next seven months, the next seven years, 17 years, whatever it is, whatever your time horizon is. If you're listening to this program, you know that we talk about money, but we really are focused on you and your lives. And that is why we encourage you to get in touch with us. Because your money is not your life, I promise you. But what it does is it allows you to make different choices at different times in your life. And so we encourage you to get in touch with us by going to jillonmoney.com, click the contact Us button which is in the upper right hand corner. When you click on that, a formal pop up Write us a note. Now that's the email receive and we love to get your emails. It's fantastic. I think our inbox is like 400 million or something like that, very bulging. But we also like to talk to you because this allows us to ask a lot of nosy follow up questions and you know, listen, I'm a financial planner at heart. I'm a numbers person but I'm a voyeur. So I like to hear your stories. Same with Mark. We love to hear what is behind the question. Sometimes we can get to that more easily by talking to you through the computer. So get in touch with us, write us the note. And if you want to join us live, check the box. Mark will do everything else now. Very exciting. Next week is our second webinar of 2025. That webinar will be with Mike Quincy, the Consumer Reports auto expert. He will be joining us next Thursday, June 5th at 7 Eastern Time. You can only join if you are a subscriber to Jill on Money Live. Mark, I noticed that in the New York Times recently they're talking about like maybe EVs are kind of not going to actually be the thing anymore. I don't know, I kind of wanted it to be the thing. Maybe Mike will tell us and he'll help us understand what's going on in the car and truck market with all the tariffs. He'll help us understand what are the best cars to look at if you are thinking about getting something for your kid, your adult children. And he's just great and he's a lot of fun. And so I hope you join us Thursday, June 5th. But here's your asterisk. You've got to be a member of Jill on Money Live. That's our subscription service. And that will cost you 45 bucks for the next 12 months. Mike will be your first webinar. You'll have the back catalog of all of our previous webinars. You'll get three more after that. So we do them quarterly. It's so much fun. So check that out. There's also a bunch of bonus audio and video content that is behind the paywall. Jill on Money Live is the name of the service. Okay. So hey Mark, we got some emails here. So let's get started with Greg. He says this is a subject, you know, of course this sort of makes me want to smack him. But I'm going to be nice because it says 39 and want to quote, Retire 39. I never thought about retirement when I was 39, I'll tell you that much. But that's just me. All right. Greg says my wife and I are both turning 40 this summer. She's a full time teacher. She makes $90,000 and has incredibly cheap health benefits. She also has a 403 and a pension that starts at age 55. Oh my goodness. They've got two and a half million dollars in a brokerage account. They're only 40. Come on, 560,000 in Roths and $685,000 in traditional IRAs. More than three. Oh, my God, they've got three and a half million bucks in savings already. Is this. Come on, Mark, are you. This does not seem like a real question. I feel like this is a folk question. They have 13 rental properties and he's 40. Come on.
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Mark Tularisio
If he's got the time to come up with a faux question like this.
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Jill Schlesinger
And I don't know, this is ridiculous. I don't even want to answer. Okay, he's got 13 rental properties, 3.75 million. They owe two and a half million 6%. He wants to pay down a million or a million and a half on the credit line from the brokerage account and live on his wife's salary and the rental income so he can quit his stressful job that takes away from his precious years with his three and five year old boys, but he won't be able to save anymore. Can he stop contributing to retirement and coast? They want to live on 12 grand a month. Okay, Mark, 12 grand a month. Let's presume right now. They've got. They're going to take. Let's lop off. He's only going to pay down a millionaire. So he's going to take. Let's just say that of the two and a half million in brokerage, it'll leave him a million in the brokerage. So what? He's going to have a million in brokerage? 560 in Roths, 685 in traditional IRAs. So that's the basis of what they have. They'll have rental income. Her pension will be $3,500 a month. Boy, she's nice. Letting him coast, huh? Social Security. He gives us the thing. How do we plan for the 27 years? My wife is happy working as a teacher. I can reduce our rental home expenses if I have time to do things myself. So here's a question. Can we stop saving and basically let a little over $2 million in rental home values grow without contributing more? What do you think, Mark?
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Mark Tularisio
Did he, did he say what the rental income is?
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Jill Schlesinger
Nope, he did not.
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Mark Tularisio
I mean, I'm gonna assume it's obviously enough, but if that's the case, then yeah, he could probably do it, but he didn't tell us that.
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Jill Schlesinger
Yeah, you left out one big piece, Greg. I feel like this is someone who's completely punking us. I really don't believe this is a real question.
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Mark Tularisio
Oh, I don't think so at all.
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Leukemia and Lymphoma Society Representative
You don't?
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Jill Schlesinger
No. How does a 40 year old have all this money?
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Mark Tularisio
I don't know. Maybe they inherited some of it. I don't know.
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Jill Schlesinger
It seems very strange. That's all I can say. Maybe he's like. Maybe someone died and left them rental properties. I don't know. But 13 rental homes and they're worth 3, 3.75 million total. What kind of rental homes are these? It's like not a lot, right? When you think about it. I don't know where he lives. Get back in touch with us, Greg. We'll get you on the air. We'll anonymize you. I don't believe you. But Mark does. I just kind of know why. Okay, Paul says I've listened to your show a few times. What do you mean a few times, Paul? Listen to it every time. I appreciate how clearly you explain things. Okay. I'm 59 and a half years old and I'm trying to rebuild after some major life changes. I had a long time career as a professional musician. But when the pandemic hit, everything changed. Remember, Mark? We did talk. We talked to a couple musicians during that time. Anyway, Paul went through a rough divorce and he started over. Starting from scratch, essentially. He says these days I work as a truck driver for a wine distributor in New Jersey. And I also play part time in a wedding band. Yearly income is about 70 to 85,000. Plus 10 or 15,000 from my music gigs. Right now I have $61,000 in an E Trade brokerage account, $5,500 in Fidelity, $20,000 in savings, a $25,000 balance on a home equity line of credit. Oh, my gosh, these line lines of credit have gotten so expensive. His is 8.75%. $7,500 on a 0% interest credit card from recent dental work. A roof that will likely need replacing soon, 10,000 to $20,000, a home that's fully paid off. Okay, I've heard a Roth could be a smart move at this stage, but I'm not sure how it works or whether I can convert my current E Trade or Fidelity brokerage accounts into Roth IRAs without selling everything first. Can you help me understand if that's possible and whether it makes sense for someone in my position? Thank you so much for your time and everything you share on the show. It's really helpful. Well, all right, Paul, I'm going to guess that the money that you have in the E Trade account and the Fidelity account, that those two accounts are not retirement accounts. Okay, so let's just say they're Straight up brokerage accounts, meaning they've already been taxed. So a couple of things. If you want to do something with the money in those accounts, you would have to sell and then take the money to do something else. Now might be a very good idea for you to sell because given your tax bracket, you know, you're probably not going to pay a lot in capital gains, you know, maybe 15%. But I would say that maybe what you should consider doing is taking some of the money in that E trade brokerage account. Maybe half of it, I would say. And I would first pay down the $25,000 balance on the home equity line of credit. Let's lock in an 8.75%, no risk return. That sounds like a good idea to me. So maybe you've got to sell half of the account. I'm a little bit worried about potentially doing much more than that at this point. Are you planning, are you able to make sure that this credit card of $7,500 will get paid off? Because if you're not sure that that's going to happen within a year and that the interest rate's going to go up, we may need to think about tackling that as well. The roof, you could pay that, you could like, you could basically blow out of the whole brokerage account, essentially pay the tax that's due, clean up your balance sheet, meaning pay off your home equity line of credit, pay off that interest from the credit card as soon as the zero percent is up, make sure that the roof is paid for without any additional debt, and then you can start a Roth ira, which is essentially taking an after tax dollar like you have in your brokerage account, putting it into an account and investing that for the future. Now you are 59 and a half already, so this is a very good way to start saving money. It grows, it grows, it grows, it grows. And then maybe later in life, maybe in 15 or 20 years, whenever you're done, when you take that money out of the Roth, there will be no tax due. So the difference between a Roth and a traditional is that with a Roth, you've already paid the tax that's due. You pay no tax on the way out. With a traditional, you don't pay the tax upfront. You wait until you take it out later in you, when you're withdrawing your money from your retirement account, that's when you pay the tax that's due. Michael writes, accidentally contributed to a Roth when I probably shouldn't have. I'm a co owner of a two person Member Manage llc. All of our compensation comes from distributions, and we have it as K1 income. I received my K1 very late this year, so I had to file an extension. I then contributed the max to this year's Roths, my wife's and mine. Without realizing, I made more than I thought last year. That put me over the Roth IRA limit. How screwed am I? You, Michael, are not the first person to have this problem. Don't worry. So you just have to recharacterize the money. You have to contact the place where you made the Roth contribution and say exactly what you just wrote to us. They'll take the money out. You have to submit a form to the IRS and tell them that you've done this. But don't worry, people. This happens all the time. This is also why we really encourage people not to make their contributions until they get their final tax documents. So, I mean, I guess it's a good problem. You made more than the limit, right? So, not bad. Okay. Tracy writes. Hello, Jill. I have four kids in their 20s. Two of them took my advice, and they actually took financial literacy classes in high school. And. And the other two have not. Guess what? Mom was right. Isn't she always right? And they now need more information about saving, mortgages, retirement. Can you recommend an online class or podcast for the just beginning young adults? Right now, neither of these two are making a lot, but they need to learn right now how to handle their money. Well, I am afraid they will take advice from TikTok. Many thanks, Tracy. What do you think about that, Mark? Who. Who's the getting to know you early stage podcast?
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Mark Tularisio
Well, isn't that Money Watch?
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Jill Schlesinger
That is a very good idea. So, okay, first of all, we have a second podcast. It's called Money Watch. We release it on Saturdays and Sundays, and that is what we're trying to do. We try to go back to basics a bit. And that would be a great idea to start. What about my friend Jack Otter's book? I wonder if it's still in print. Hmm. Who is that nice woman who did the book for newbies?
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Mark Tularisio
Erin Lowry.
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Jill Schlesinger
Yes. Aaron Lowry wrote a book called Broke Millennial, so that's pretty good. What about Jack Otter's book? Worth it? Not worth it. That's the name of it.
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Mark Tularisio
Aaron Lowry has a whole series built around that. Broke Millennials. Not just one book anymore. It was like three or four. All right, you know, it's a good.
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Jill Schlesinger
Check it out. She's a good writer also, and I like her. So try that out. Let us know how it works. Okay, this email is from Anonymous and he needs help settling a debate. And so he says. I am a pilot and I work for a large private aviation company. A group of about 50 of us started this company at the same time. We've got a large group text with lots of opinions. The way our 401k is structured is we get a 66% match. Holy moly. On the total contribution up to the maximum. However, for cash flow reasons, during the year, they only match 66% on the first 20% withholding. Then they do a catch up contribution in the following year. February. Okay, my coworker made the point we should not quote, front load our contributions in any given year, I. E. Max out contributions as early as possible because we're leaving money on the table until that catch up and it spreads the risk out in a bad year. My counter is it's not so simple. The best time invest is yesterday and the second best time is today. Without having done the math, my primary point being it's better to get as much money in the market as early as possible. And I don't care if it's a down year because I'm investing on a 20 to 30 year timescale and he's 38 years old. What do you think, Mark? Assuming returns that are whatever they are historically better all at once, do the wait. I tend to think just get the money invested and stop overthinking it.
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Mark Tularisio
Oh yeah, there's been plenty of proof out there. I remember doing this when I was going through the CFP coursework. But yeah, the math will prove to you that it's better to get the money in, you know, say January 1st versus September 15th.
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Jill Schlesinger
Even if it's a bad year, by the way, because then there's years where there are bad years. So just get the money to work and stop overthinking it. What do you guys fly your plane? Stop worrying about when to put your 401k to work.
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Mark Tularisio
I hope, I hope to not text them while they're flying.
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Jill Schlesinger
No texting while flying. Come on. Oh my God. What goes on in those cockpits? We don't even know. Pay attention, all you guys. All right, thank you so much, gang, for listening. That is our Friday episode. And on Fridays, you know, we like to thank everybody who makes it all possible, which is number one, you guys make this show possible. Thank you so much. You can subscribe subscribe to us on the Odyssey app or wherever you find your favorite podcasts. You can also subscribe to Money Watch on the Odyssey app, or wherever you find your favorite podcasts. Our music is composed by Joel Goodman. Mark Tularisio is our executive producer and king of all things Web. We are distributed by Odyssey. Try to lift someone up. Someone would need a little boost from you today. Change your work, Change your wealth, change your life. Thank you for listening. We'll talk to you on Monday. Buying a home in California can certainly feel intimidating.
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Leukemia and Lymphoma Society Representative
We hear from listeners all the time throughout the state, and they want to know, where can they even start? Many of them find that turning to.
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Jill Schlesinger
A Realtor changed everything.
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Leukemia and Lymphoma Society Representative
Realtors can help buyers understand what they can afford. They can explain all of the steps that are involved in purchasing a home, and they can walk you through every detail, from making an offer to closing the deal. Working with a Realtor can help you feel less alone or unsure about the process and that peace of mind that is the power of having a Realtor by your side. Whether you're ready to move or just starting to dream, don't go it alone. Don't let what you don't know stop you from starting your next chapter. Find your realtor@championsofhome.com that's championsofhome.com when you're.
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Fidelity Representative
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Jill Schlesinger
Can I get you a refill?
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Fidelity Representative
You can stay fresh wherever your business travel takes you. That's the powerful backing of American Express. Terms apply. Learn more@americanexpress.com AmEx Business.