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- [00:00]
A
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- [04:15]
B
Hey, so far so good. Thanks, Jill. Go Birds.
- [04:18]
A
Excellent. What can we do for you? Go Birds. Nicely done.
- [04:21]
C
What about the Six? The Sixers are playing the Knicks, Justin.
- [04:23]
A
Yeah, exactly.
- [04:24]
B
I know. And. And the Flyers are playing too.
- [04:25]
A
I mean, it's amazing. So the Flyers beat the Penguins. That must have been like a big cross state R, no, Absolutely.
- [04:31]
B
Yeah.
- [04:32]
A
But you're mostly an Eagles fan.
- [04:33]
B
All three for sure.
- [04:35]
A
Okay, Justin, what is going on? How can we help you?
- [04:38]
B
So recently purchased a house in August at a 30 year fixed mortgage at 6.99% new and okay, looking at a refi down to 5.99% and jumping to a 20 year and the result would only have my. My mortgage payment go up $200 a month.
- [04:57]
A
Wait, wait, wait, wait. Hold on. You got a fixed 30 year right now or is it a variable in any way? Fixed? It's a fixed 30 year refi. You've been quoted 5.99 a 20 year. And the payment is sort of similar, right?
- [05:11]
B
Exactly.
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A
Okay. How old are you, Justin?
- [05:14]
B
I'm 42.
- [05:15]
A
Are you married? Single, partnered. What's going on?
- [05:18]
B
Married with two kids.
- [05:20]
A
Okay, how old is the spouse?
- [05:22]
B
She is 43.
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A
Are you both working full time?
- [05:26]
B
Yes.
- [05:27]
A
How much do you guys earn?
- [05:29]
B
I pull in about 220 base and a variable bonus that's right around 100.
- [05:36]
A
Oh, sweet. Okay.
- [05:39]
B
She is a teacher pulling in about 66k right now.
- [05:43]
A
Is she a teacher who's like, well into a system where she would be able to receive a benefit, like a pension benefit rather than.
- [05:51]
B
No, she actually just started teaching. This is her second year as a full time, so she's. Yeah. So she's not going to get all those sweet teacher benefits for quite some time.
- [05:59]
A
But your cash flow must be pretty good. Yes.
- [06:03]
B
Yeah. And we live, you know, below our means for sure, so definitely big savers.
- [06:08]
A
How old are the kids?
- [06:11]
B
12 and 9.
- [06:12]
A
You had to think about that, didn't you? Are they in public or private school?
- [06:17]
B
Public.
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A
Okay. And have you guys started education funds for them or not?
- [06:23]
B
We both decided that we're not really going to shoot for paying full tuition at this point, so we have 529s for them, and we're just putting about 100 bucks a month in there for, you know, whatever expenses might be once they're old enough.
- [06:33]
A
Okay, how much is in the 529 plans combined?
- [06:38]
B
About 12k. So about 6,6000 for each of them.
- [06:40]
A
Okay. All right, perfect. Okay. But you love to save for retirement, don't you, Justin? So tell us about what you guys have socked away in retirement. So.
- [06:50]
B
So currently maxing out my 401k, that's only been the last two years I've been able to do that. So I have an old 401k sitting at 265 and.
- [07:00]
A
Wait, quick. I'm sorry. Sorry to interrupt. Is it a traditional or a Roth? The old one.
- [07:05]
B
Traditional.
- [07:06]
A
Okay, so $265,000 in the old 401 and the current $148,000. Also a traditional.
- [07:13]
B
Also traditional.
- [07:14]
A
Okay, gotcha. And what about your wife? What's she up to in terms of her retirement savings?
- [07:20]
B
She's really just getting started. I was kind of treating mine as, you know, for both of us. I do. I did start a Roth IRA for her. There's 10k in there. But then we quickly, you know, outgrew the limit. The limit.
- [07:32]
A
Yep, Yep.
- [07:33]
B
And I also have an, I also have a Roth IRA in my name as well. And there's, there's 62 in there.
- [07:37]
A
And what about your like cash savings or brokerage accounts, something that's already been taxed? What do you have floating around?
- [07:46]
B
So I've got a brokerage account with about 30k in it right now.
- [07:49]
A
Okay, great.
- [07:50]
B
And I told you I was, we were savers. I've got a high yield savings account with about 300,000 in it.
- [07:56]
A
Are you expecting Armageddon? What's happening? What, what exactly is on the horizon? I mean, can't you be happy enough with you have two teams in the playoffs? What, what bad can happen to you?
- [08:08]
B
Sir, that was saving up many, many years for the down payment on the house we bought. And it just, I, I like seeing it there, but I know it's, it's.
- [08:18]
C
I was wondering where all the money is.
- [08:20]
A
I mean, I was, I was totally. When you were like, we're really good savers, I was like, I don't mean these good, but I mean not great. Okay. All right, wait a second. How much is the house worth, Justin?
- [08:29]
B
Let's say 565.
- [08:31]
A
And the outstanding mortgage, that's at 6.99%. How, what is the outstanding balance?
- [08:39]
B
374.
- [08:41]
A
Okay. There's no other, there's no other debt. There's no old school loans floating around, right?
- [08:47]
B
Nope, nothing.
- [08:48]
A
Okay. And is there anything that you would need to tap the high yield savings account for? Are you saying like, oh, you know what? I really want to put in a second, a third, a fourth bathroom bedroom. Anything in the house that you would need to use that 300 grand for.
- [09:04]
B
Nothing major. And any kind of major renovation would probably be in the, you know, 30 to 40k range, we think.
- [09:10]
A
Okay, so 30 to. So we need to keep 30 to 40k. And how much do you guess that you spend in the current environment with your 6.99% mortgage and everything else and saving for retirement? What do you figure you spend on a monthly basis?
- [09:28]
B
So total out, including all of my savings and everything on a, on a net basis is about 13,000.
- [09:34]
A
All right, forgetting about the saving part, what do you think that the actual spending is? 10.
- [09:39]
B
Yeah.
- [09:39]
A
8. 10. Okay, so 10 grand. Okay, good. And the bonus that you have that extra hundred, Right. Is that consistent? Should we really look at your lives more as, hey, we make about 300 together, not 400, or is that bonus something you depend on?
- [09:58]
B
We certainly don't depend on it from a. From a take home standpoint, from a. From a budgeting standpoint, but should be pretty consistent, barring any, okay, you know, crazy craziness with the. With the job.
- [10:10]
A
Okay, sounds good. And do you feel secure in your job?
- [10:13]
B
Yes.
- [10:14]
A
Okay, so the idea here is you're a young guy, you hate debt. I'm just hearing it like you hate it. Right. And you like to save your good savers for sure. So.
- [10:26]
B
Yeah. So to give you the background, we spent our mid to late 20s and most of our early 30s really scraping by, kind of paycheck to paycheck. So we've got that trauma lingering in the back.
- [10:38]
A
And how did you make it? What happened?
- [10:41]
B
Just putting in the hard work and finally got the big bump at the job. And.
- [10:45]
A
Yeah, you know, it's.
- [10:46]
B
I'm in a, you know, in a field where the kind of. The more experience you get, the more desirable you are. And I switched companies and. And that was a big bump, and then it's been just an upward trajectory since.
- [10:57]
A
That's awesome. So, first of all, congratulations. That's amazing. It really is that trauma. I'm glad that you said that word because so often when we're talking to people, it is so emotional. Let's be honest, gang, we are human beings. We have emotions. And so I want to try to pull back from the emotional aspect of this and try to give you the contours of what I think is important here. So let's first start with the high yield savings account. Let's presume that of that 300, you really have about 150,000 to invest. Because all I want to do is, again, the trauma notwithstanding, you could have essentially $120,000. That's one year of your expenses, plus 30 grand for the renovation, and then you're fine. You got, you know, for any future renovation. So potentially, I'm not saying you should do this immediately. You have $150,000 of surplus savings that you could allocate somewhere. Do you agree with that, Justin?
- [12:03]
B
Yes, absolutely.
- [12:04]
A
Okay, good. Mark, are you on board with that?
- [12:06]
C
Also straight into the brokerage.
- [12:09]
A
Okay, hold on a second now. Let's talk about this refi. I am not convinced. Going to a 20 year makes sense, and here's why. First of all, you know, of course there's a cost involved with a refi. I know that rates are up a little. You know, like, you had these moments where it's like rates went down, they went up, but they're, you know, whatever I guess that mortgage rates are what right now, Mark? 30 year fixed? 636 and a half. Ish. Okay, so it wouldn't be like you would want to necessarily refi into another 30 year fix at these levels. Right. The question about a 20 year is about what is the best use of your money. Right. So, Mark, I want you to talk a little bit to Justin about the ability to save more money and how that might be more beneficial than having a shorter time horizon on the mortgage. So give the 20 versus the 30 and give the upside and the downside.
- [13:08]
C
I don't know. I'm kind of. If you're telling me, Justin, that it's only $200 a month, I mean, how is your cash flow now? Like, do you feel like you can absorb that no problem?
- [13:17]
B
Oh yeah, absolutely. And I'm more focused on the. I think it ended up being about 240,000 in interest savings over the life of the loan.
- [13:24]
A
Yeah, I mean, so let me just, let me. Mark is now going to hedge this because I totally thought you were going to say don't refi. So I'm going to give you the don't refi rationale versus the refi rationale. The don't refi is there's costs involved in this and you're going to stay in this house. Right. I'm just presuming we're not talking about refi if you're going to move in anytime soon, is that right?
- [13:44]
B
That's correct.
- [13:45]
A
Okay, so you're going to stay in this house. So the, the, the argument is don't refi. Now this is not even that much of a savings. Yes, you can shave time off, but like you're going to have more time ahead of you where you could get a better refi and the use of your money to propel your savings right now is more beneficial. That's the, that's the case for hanging with what you have refi when you get a better deal. Now, Mark, give the refi. Give the upside for refi.
- [14:14]
C
Yeah, I'm going refi. What's the 20 year rate?
- [14:17]
B
599.
- [14:18]
A
So it's 5 from 7 to 6, right? 7 to 6.
- [14:22]
C
A full percentage point.
- [14:23]
A
A full percentage point. But you're going to a shorter note. So it's not just a full percentage point, it's this. It's the full percentage point. But in Justin's defense, it is 10 years fewer payments, right?
- [14:33]
C
Yeah. I'm doing it for $200 a month that he could easily absorb. I'm doing it.
- [14:38]
A
Okay. So by the way, I was just trying to set Mark up to say I was doing it also, but unfortunately he came to the same conclusion. Sadly, we both come to the same conclusion. It is rare when I tell people to do this, but in this case, just because you're super duper savers, I do think it makes sense. And you know, you're already saving whatever it is, three grand a month probably between the two of you and where you are. And you know, it's really a bonus if your wife does continue to work in the school system and retirement looks good. I'm not even considering her to be pension rich down the line. She may or she may not because what if she decides she hates teaching? I think that the, that this does make sense. Do you need to throw any cash at this deal in order to make it work? Should we of the high yield savings account? Might you need some of the money?
- [15:27]
B
No, no, I can, I can float that extra 200 and everything on, on the take home.
- [15:32]
C
And by the way, you'll probably have another refi down the road at some point.
- [15:35]
A
I was just going to say there is a possibility down the line you could do this and we'll see where you are. But rates are, you know, these are real numbers. So when you have a full percentage point in time and all that, it does make sense. I think then we have to. Okay, so we're all on board. Yes. We're going to refi 20 years. One full percentage point. You suck. You suck it up around the 200 bucks a month extra. Fine. Now let's talk about this high yield savings account. Do you have the ability in your, like, your psyche to be able to take some portion of that surplus savings, that 150 grand and commit to putting it to work over the next period of months? Do you feel committed to that?
- [16:17]
B
Yes. I know it has to happen.
- [16:19]
A
Okay, so what is your comfort level around getting the money to work? Like could we put 15 grand a month to work? Could we do 30? Like, what is it? Like, how quickly do you want to move? Because you know what the, the upside is? Look, if you put it all to work right now and then the market collapsed, you'd feel terrible. So we're talking about dollar cost averaging. We're talking about putting some amount of money to work inside that brokerage account and get it, get it in there, get it invested and really be committed to sticking with your game plan. So what's the level that you and your wife would feel comfortable doing? Do you think On a monthly basis,
- [16:58]
B
I think conservatively, we could do it over a year, get it down to 1:50. I think if we get aggressive, we could do it in six months.
- [17:05]
A
Okay. It's really your comfort level. Whatever you decide, stick to it. What's invested inside of that brokerage account right now? What are the investments?
- [17:14]
B
Just your real simple three portfolio approach or three stocks. Yep. Yeah. So it's a. It's a index fund.
- [17:22]
A
Yes.
- [17:23]
B
A international fund and some bonds.
- [17:26]
A
Great. Perfect. Stick with it. Perfect. If you want to do 30 grand a month for the. I just like the symmetry of it all. So if you could do 30 grand a month and then you can, you know, allocate it among your three funds, however, you would do it. Great. If that feels like too much again, talk to your wife, see how you feel. It's like a lot of this is feel. Because you are not hyper focused on education right now. This makes it a lot easier. We know where the money's going. It's going to go in the brokerage account. It's going to get invested in a very consistent way. You're not going to mess with it. You don't need the money. It's all good. I have one other question. You have these kids. You have your estate documents and your life insurance taken care of?
- [18:07]
B
Life insurance? No. Estate planning is on the to do list.
- [18:10]
A
Oh, come on, man. You're like, you're so good. You couldn't let me just give you the go out on a high. So do you have life insurance through work?
- [18:20]
B
I do.
- [18:21]
A
How much is that? Is that like 1 times, 2 times, 3 times your salary?
- [18:25]
B
I believe it's 2.5.
- [18:27]
A
Okay. Can you buy more?
- [18:30]
B
I can't, so. Well, I guess I can, but I am actually. I have some medical issues, which makes the underwriting part difficult.
- [18:39]
A
You know what's weird? You should check this out. Through work, if you have some underlying health issues, sometimes it is easier to get insurance in a group policy like the one you have. So I would try to bump that up as much as I could.
- [18:52]
B
I can. Yeah, I believe, I believe I can get another 100k with. Without going through the medical underwriting.
- [18:57]
A
All right, well, let's do that. Let's definitely. So. So let's definitely do that. And what about for your wife? Does she have coverage?
- [19:04]
B
She does through work as well.
- [19:05]
A
Okay. Is it possible, like if something God forbid happened to you, she would inherit all this money, she'd get your insurance, which looks like five or six hundred grand, but if something happened to her I'm trying to think, would you need. I mean, your kids are school age. You might need some care. You're probably okay if she bumps up like, I don't know what she has through work, but if gets like a half a million dollars in coverage, that would be great just for the next 10, 15 years, just in case something bad were to happen and then you have a little basis. It wouldn't be very expensive for her, I imagine. So I would check that out in terms of estate planning, my man. Come on. If you're like a. If you're scraping by and you've gone through that experience and now you're like on the other side of it and you are living so well and life is good, that is such an important piece of what should happen next. And you've got kids, you know, you got to think about guardianship. Do you have a. A benefit through work? That's estate planning. Sometimes they have that as a benefit. A corporate.
- [20:10]
B
I do. I. We have. We have legal, you know, legal counsel. So it's, it's. It's just on the, it's. It's on the very large to do list. But I know it's been. It needs to go.
- [20:17]
A
Mark, when should we give Justin until to at least make the appointment? What should he say?
- [20:24]
C
I mean, if he's going to make the appointment, if he's going to use the workplace benefit, he might to wait until the fall for open enrollment, right? If he doesn't already have access to it.
- [20:32]
B
I already subscribe it only 6 months.
- [20:36]
A
So let's say by the end of the Knicks Sixers series, you'll make an appointment that'll give you a good week. You can't do that. You're not willing to do that, are you, Justin?
- [20:48]
B
I can make the appointment.
- [20:49]
A
All right, make the appointment. Let's. That's the beginning. So that's it. Make the appointment by the end of the series, when I hope Knicks kick the butts of the Sixers. Okay, last question. Is Philly Cheesesteak? Give us your number one.
- [21:05]
B
It's a tough question. I'm not, I'm not. I'm not going to give you an answer. I'm not going to. No freebies.
- [21:11]
A
No freebies. We have a friend at work who is from the Philadelphia area and he goes, stop talking about cheesesteaks. It's Danik's. The Nick's is where it's all at, which is some other kind of shaved beef or something that's a roast pork.
- [21:24]
B
And they are. Your friend is Correct. That is. That is the superior sandwich in my book as well.
- [21:28]
A
All right, the Knicks it is. Justin, Good luck. Go refi and get that money to work. Get that dollar cost averaging plan in place and of course make your appointment. Hey gang, if you are thinking about a refi, are you trying to shave time off? Are you trying to get the rate down? Do you need a lower payment? Is this worth it for you? Are there other issues in your life that need need some viewing? Some second or third opinions? Eyes Ears? Mark and I are both certified financial planners. We love talking to you. Get in touch with us. Go to jillonmoney.com Click the contact Us button, write us a note and if you want to come on the air, check the box. Mark will do everything else. Don't forget you can subscribe to us on the Odyssey app or wherever you find your favorite podcasts. Try to lift someone up. Change your work, Change your wealth, change your life. Thanks for listening. We'll talk to you tomorrow. Ever feel like you need one app for sales, another for inventory, another for accounting? And the list never ends. Managing a business shouldn't feel like a full time job just to keep your software in check. That's why Odoo exists. Odoo is the only business software you'll ever need. It's an all in one, fully integrated platform that handles everything CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more juggling logins. Everything works together seamlessly so your team can focus on what really matters, growing your business and serving your customers. Beyond simplifying your workflow, Odoo also saves you money. Instead of paying for multiple expensive platforms, you get one system for a free fraction of the cost. And whether you're just starting out or managing a large company, Odoo scales with you. It's easy to use and fully customizable. It streamlines every process, giving you more time and freedom to focus on the parts of your business that matter most. Thousands of businesses have already made the switch. Why not you try Odoo for free at odoo.com that's O-O-O.com Understanding power requires
- [23:36]
D
more than headlines I'm Peter Hamby, host of the Powers that Begin, a podcast from Puck examining politics, economics and media. To provide context, analysis and clarity without sensationalism, we ask how power operates, who benefits, and what's at stake. If you want to move beyond breaking news to deeper understanding, join us on the Powers that Be. New episodes every weekday. Follow the Powers that Be wherever you get your podcasts.