"I Just Got a Raise. What's The Best Thing To Do With This New Money?"

Summary

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Podcast Episode Summary

Money Rehab with Nicole Lapin

Episode: "I Just Got a Raise. What's The Best Thing To Do With This New Money?"
Date: August 25, 2025
Host: Nicole Lapin
Guest: Molly

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Overview

In this episode, Nicole Lapin sits down with Molly, a listener who recently received a 40% raise, to answer the age-old question: What's the smartest way to allocate a significant income jump? Together, they unpack the windfall's impact, run through Molly's finances, and lay out a concrete, step-by-step plan to make this new income work harder, not just go towards lifestyle inflation. The episode is full of actionable advice on everything from high-yield savings to kids’ college funds and optimizing debt repayment.

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Key Discussion Points & Insights

1. Understanding the Situation: Molly’s Financial Windfall

• Molly's new role brings a 40% income increase (from $120k to $160k) ([04:50]).
• Additional savings because one child is starting primary school, saving approx. $1,500/month on daycare ([02:43]).
• Recent $60,000 separation payment from her previous company (after taxes and home repairs, $50k remains) ([05:19]).
• Ongoing vested stock in one of the “FANG” companies — value fluctuates between $150k–$200k ([05:50]).
• Joint household, both spouses have steady incomes and primary caregiving responsibilities are balanced due to remote/flexible work.

Quote:

“I feel like our lifestyle is really great the way it is. So I don't think it's necessary really to upgrade our lifestyle in any drastic ways ... really looking to see, you know, how I can make my money work for me and what I should be doing.”
— Molly, [01:43]

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2. Full Financial Picture: Assets, Liabilities, Savings

• Significant retirement savings: “a couple million” managed at Morgan Stanley, earmarked for retirement/children ([07:04]).
• Car loan: $15,000 left at a 6% interest rate ([07:59]).
• Total cash savings: $75,000 in various accounts (most in a regular low-yield account) ([09:09]).
• Kids' 529 college savings plans, mostly funded by family, but contributions from Molly and husband are inconsistent ([10:09], [19:24]).
• Home owned; mortgage rate extremely low at 0.6% ([24:15]).

Quote:

“We're pretending like [the retirement funds are] not there. We're pretending like it's for our children and for our retirement.”
— Molly, [07:47]

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3. Examining Goals & Short-Term Plans

• Avoiding "lifestyle creep": Molly wants to behave as if the raise never happened, using the extra income for meaningful savings/investment ([16:37]).
• Short-term goals include upgrading their house or potentially buying a new one, but only if it’s a significant improvement ([17:39]).
• Desire for clearer organization, possibly using sub-savings accounts for different goals like a “house fund,” “emergency fund,” etc. ([18:13]).

Quote:

“You said to our producer that you essentially want to live like you don't have this extra money, which I love Chef's Kiss so much. It's called lifestyle creep. Have you heard of lifestyle creep?”
— Nicole, [16:37]

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4. Diagnosing Financial Efficiency: Where Is the Money Sitting?

• Molly's primary savings sit in a basic account with an abysmally low APY: 0.02% ([20:06]).
• Nicole emphasizes the critical need to move savings into a high-yield savings account or other higher-interest vehicles ([20:54]).
• Discussion of short-term U.S. Treasuries and CDs for improved returns while retaining flexibility ([23:42]).

Quote:

“No, it's not great. We have to change this. This is our number one priority. You know, a high yield savings account will give you so much more love. It's the easiest thing you could possibly do to grow your money.”
— Nicole, [20:54]

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5. Debt Strategy: Paying Off the Car Loan

• With cash reserves so high and loan interest at 6%, Nicole recommends paying off the car if Molly isn't earning more than 6% elsewhere ([08:39], [22:59]).
• Molly agrees the math makes sense, especially since her current savings return less than 1%.

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6. Family & Kids: Systematizing College Savings

• Automatic monthly 529 plan contributions suggested: $500 per child ($1,000 total) as auto-deposit ([19:47]).
• Regularity in contributing is encouraged over sporadic lump sums ([19:54]).

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7. Step-by-Step Recommended Plan (Nicole’s Recap)

([29:14]–[30:50])

1. Direct Deposit for College Funds:
   Auto-deposit $500/month into each 529 for the kids.
2. Open a High-Yield Savings Account:
   Move all low-interest savings into an account offering ~5% (Nicole recommends Public app).
3. Emergency Fund:
   Consider $20k for immediate emergencies—put in high-yield savings or short-term treasuries.
4. Pay Off Car Loan:
   Free up monthly cash flow (and mental bandwidth) by eliminating this 6% debt.
5. Home Fund:
   Separate sub-savings or short-term treasuries for a house upgrade, earning high interest until needed.
6. Consider Treasuries/CDs:
   Short-term U.S. Treasuries are currently yielding attractive rates (~5% half-year).
7. Treat Vested Stock Carefully:
   Use as last resort; can also borrow against it if needed (not just liquidating and incurring capital gains taxes).

Quote:

“Try to get the one with the highest interest rate that's giving right now. Scoot your money that's getting you 0% over to that. And then you could think of like your emergency fund as maybe you want to put that in Treasuries or something like that.”
— Nicole, [29:52]

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Notable Quotes & Memorable Moments

• On the importance of knowing where your money is:

  “I just kind of blew through it really quickly after college on dumb things ... I wish I could, like, go back and like, tell myself not to buy, like, bags that don't even hold any value.”
  — Molly, [15:30]

• On the principle of "lifestyle creep":

  “Lifestyle creep is basically like lifestyle inflation. People earn more, then they spend more and net net, they come out maybe the same or maybe even worse.”
  — Nicole, [17:00]

• On organizing for success:

  “You can create within your savings account sub-savings, and so those help sort of keep organized, like, what you're saving towards ... It doesn't feel like it's just going into like a bucket.”
  — Nicole, [18:13]

• On financial delegation:

  “When I met my husband, he already had a few accounts already. And so ... I had a lot of money sitting in savings, so rolled that in with him and then collected all my various ... I didn't even know I had all these 401ks.”
  — Molly, [13:10]

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Timestamps for Key Segments

• 01:43 – Molly introduces her financial windfall and her sensible approach
• 04:50 – Details about Molly's previous and current salary, windfalls, and vested stock
• 07:59 – Car loan details and Nicole’s first thoughts on debt strategy
• 10:09 – Discussion of emergency fund and college funding for kids
• 13:10 – Going over old retirement accounts and Molly's financial backstory
• 16:37 – Discussion about lifestyle inflation ("creep")
• 18:13 – Nicole recommends creating sub-savings for clear goal allocation
• 20:06 – Molly reveals her savings APY (0.02%)
• 20:54 – Nicole's high-yield savings account recommendation
• 23:42 – Explanation of short-term treasuries and CDs for extra cash
• 24:15 – Molly mentions ultra-low mortgage rate (0.6%)
• 26:07 – Nicole's rundown on treasuries, Public app, and how to buy government bonds
• 29:14–30:50 – Nicole's concise action plan for Molly's new extra income

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Actionable Takeaways

• Automate savings contributions (especially for kids’ college) for consistent compounding.
• Immediately move cash reserves into high-yield accounts to beat inflation and maximize returns.
• Pay off debts with higher interest rates than you can reliably earn elsewhere.
• Regularly review and clarify goals using sub-accounts or labeled funds for each savings purpose.
• Treat sudden windfalls with caution: pretend they don’t exist to avoid lifestyle inflation.
• Learn the basics of income-producing assets (Treasuries, CDs) for flexibility and security.

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Episode Tone & Style

Conversational, encouraging, and practical, with manageable chunks of guidance. Nicole’s hallmark is clarity and “no frills” advice, with focus on actionable steps anyone can implement. She meets Molly where she is—financially stable, seeking optimization, averse to unnecessary complication or risk.

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This episode is jam-packed with real-world, practical steps for making a salary raise work for—not against—your long-term prosperity, with expert advice that’s engaging for listeners at any stage of their financial journey.

Transcript

[A]

You guys, we got to talk about the Skims Fits Everybody bra and underwear line. And they do mean everybody. I have been wearing skims for over a year now. They came in so clutch when I was pregnant and all fabric felt so uncomfortable, honestly. Except for skims. The everybody line is buttery smooth. It's going to feel like you're wearing basically nothing. It's somehow stretchy and supportive at the same time. I don't know how they pulled it off, but they did. Skims Fits Everybody line comes in tons of shades and styles so you can find something that works for you without feeling like you're sacrificing comfort, coverage or cool factor. They are definitely very cool. I thought they were too cool for me. But no. Skims Fits Everybody is available [e-mail] believe me, your top drawer will thank you. Shop Skims Fits everybody [e-mail] and after you place your order, be sure to support the show and let them know we sent you. Select podcast in the survey and then select Money Rehab in the dropdown menu. I'm Nicole Lapin, the only financial expert. You don't need a dictionary to understand it's time for some Money Rehab. I know we have. If you get a raise or take a distribution on a huge stock or, I don't know, win the lottery, the first thing you do, celebrate, obviously. And the next thing you should do is ask yourself, now what? And not just that you want to ask yourself, now what do I do with this money to turn this money into more money? That's what today's Money Rehabber is asking herself and I help her answer that. Molly, welcome to Money Rehab.

[B]

Thank you. Thanks for having me. I'm a big fan.

[A]

Oh, I am. I'm a big fan of your question. Can you. Can you tell our listeners what it is?

[B]

Yeah. So I recently started a new job and I'll be making 40% more income. I also have some great life changes. One of my children is going to primary school, so I'm also losing a daycare check. And I feel like our lifestyle is really great the way it is. So I don't think it's necessary really to upgrade our lifestyle in any drastic ways other than, you know, the cost of groceries. So really looking to see, you know, how I can make my money work for me and what I should be doing. I want to view that money as sort of extra, not something that I'm going to have to depend on.

[A]

Ah, music to my ears. I love this. I love this problem, by the way. It's a great problem to have and it's really fun to talk about because you're doing so well. You're crushing it. You have these exciting life changes too. You mentioned that you have one kid. One kid is. You're now not going to pay a daycare check, so that's awesome. But you have how many all together?

[B]

I have two. So we still have one daycare check, but it's cut in half right now. So I'll take a savings of about 1500amonth.

[A]

Okay. And are you a single parent? You have a partner?

[B]

I have a partner. So two incomes.

[A]

Okay. And what is your guys's work life balance? How is that structured now?

[B]

So it's great because in addition to having a new job, it's 100% remote. It will include some travel for, you know, like QPRs and events. But for the most part, I should really only be traveling like one to two times per quarter. And my husband probably travels about the same. He manages a sales team here in Los Angeles, so he is pretty flexible with his time. He's usually out visiting accounts from about 11 to 6 daily. So I take on picking up the kids and getting dinner ready, and then we have dinner together as a family pretty much five days a week.

[A]

Okay. And before we get into the details of your finances, how do you generally feel about your financial picture?

[B]

Right now I feel pretty good about it. But then I also, like, every time I go to the grocery store, it's more and more. That's kind of a bummer. There's a lot of uncertainty there. And obviously I'm going to keep feeding my two children. That's probably the most, like, insecure thing about our finances. Our bills are pretty regular. In the last couple years, I would say all of our utility bills have increased, but I don't think we're living paycheck to paycheck. And I don't feel like we're struggling. We're still able to do date nights, pay for a sitter when we need to, and take our kids, you know, on vacations and. And fun little excursions. So I feel overall positive about it.

[A]

And what was your salary before?

[B]

It was 120 cash. But I was part of an acquisition. And so I had a lot of stock that vested after two years. But I say that the company for five more years after I had already vested my. My stock and I had gotten some stock. But I feel like I left at a really good time where I wasn't leaving that much money on the table of Course, you're always leaving a little bit of money on the table.

[A]

So were you able to walk away with a lump sum?

[B]

Yes, I was. I didn't take, like, any vacation time, so I ended up at the end of everything with all the separation, making a big about, after taxes, 60,000.

[A]

Great. Okay, so. And we're not including the 60,000 in this raise. Right? So you got 60,000 as a. As a sweet windfall, and then on top of that, now your base is 160, it sounds like with a $40,000 raise.

[B]

Yes. And so I also still have this stock, so I haven't touched any of that, that is now valued at like 150. 200. It fluctuates. But the cash was more like separation payments. And so that I used about 10,000 for home repairs. And right now the rest is sitting in savings.

[A]

Okay, so we have 50k in savings.

[B]

And then more in savings. But that's, like, from that.

[A]

Okay, that makes sense. And then the 150. Is it a public company? You don't have to tell me which one.

[B]

It's one of the Fangs.

[A]

Oh, okay. Okay. So this is like. This is liquid dateable stock. This is liquid stock. You can go. You can sell it when you need to, but you're not going to.

[B]

Yeah, it fluctuates, but it's pretty consistent. And I don't see it going down to, like, no value.

[A]

Okay. And for anyone who doesn't know the Fangs, it's. They're now more like the Magnificent Seven. But the Fangs are like Facebook and Apple, Amazon, Netflix, Google. Like the tech companies.

[B]

Yeah. Cool.

[A]

Awesome. And then what else do you have in savings?

[B]

Um, I had 25,000 before, and then we have, oh, probably a couple million with our money manager. He's from. He's at Morgan Stanley. Financial planner. I'm not sure what to call him.

[A]

A couple million in retirement?

[B]

Yeah, in retirement. But not. Some of it is more accessible than others, but none of it would be accessible without any sort of taxation. So it's not as liquid, I guess. But if we needed access to that, then we could get access to that funds within, like, two days.

[A]

I see, I see. Okay, so you're kind of pretending like that's not there, but it is there, you know, to break in case of emergency.

[B]

We're pretending like it's not there. We're pretending like it's for our children and for our retirement.

[A]

This is a great way to look at it, but very cool that it's there as well. Do you have any Debt.

[B]

I have a car, so I owe probably like 15,000 on it. I had to purchase a new used car last year after my other car that I had for like 20 years died.

[A]

Oh, and so are you hoping to pay that off or what's the plan?

[B]

I think it makes the most sense to have some debt and to just keep doing the monthly payments. The monthly payments are about 8, 800. Would you agree with that?

[A]

I'm not sure. I'm not sure. You, you just had a great windfall. How much is your interest payment?

[B]

I got a 6% borrowing rate.

[A]

Okay. So typically, like, if you can make more than 6% with the cash that you have, then you can still pay the debt. So like if you're making 8% or 10%, then you would net out, you know, more than the 6%. But if you're saving in like a 1% account and you're spending 6% on interest, then you're losing like net 5%.

[B]

Yeah.

[A]

Okay, so it depends on where we're putting it first. So let's put a pin in the car for a second. Do you have an emergency fund?

[B]

I guess the savings I consider an emergency fund because it's money that's not with Morgan Stanley.

[A]

50 plus 25 from before?

[B]

Yeah, so around 75,000.

[A]

When you say savings account, you mean like a checking account or a regular savings account or a high yield savings account?

[B]

It's. I don't know what type of savings account. It's pretty basic level. And then I have a checking account, and then I have two checking accounts for my sons. And I just like anytime they get any money for their birthdays, I stick it in there. We also do college savings plan for both of them. My parents contribute 1200 on each of their birthdays every year and also for holiday. So they get about 2,400 each a year just from my parents for. Just for their 529. Is that 10? What's it called? Okay, 529. Yeah. So they, and then my husband contribute to that as well.

[A]

And do they have like a custodial Roth IRA or any other funds that you're contributing to?

[B]

No, they just have the checking accounts, which don't really have that much money in them, and then those 529 accounts.

[A]

Okay. And the savings account I'm assuming is like less than 1% APY.

[B]

Probably.

[A]

Okay, so. And so you, what would you say, like your three to six months of bare bone living expenses would be, you know, let's say you needed to just get by on the, the basic things you're, You're. It sounds like you own your home, so your mortgage, groceries, utilities, just to make ends meet.

[B]

Six to seven thousand a month. Okay, but that's on two incomes, so not just my income, because my income's the lower one.

[A]

Cool. So for your family. I guess so for both incomes. So six to seven for, you know, six months would be around, you know, 40k, right? Yeah, I would say like 40k might be the goal to have as just, you know, something that's accessible. And so when you think about having an emergency fund, where would that feel good to be for you?

[B]

I don't know what the emergency would be, so I guess.

[A]

So this is like, you know, not necessarily something that's just chilling in your checking account. It's something that you can easily liquidate if you do have an emergency. You know, emergencies, you know, and we, you know, God forbid none of these ever happen. But, you know, you or your husband get sick or, you know, unable to work for some reason or, you know, lose your job or any of that type of stuff. So you want to kind of like earmark that amount of. What could get you through this time without. Not without tapping into retirement. And it sounds like you have quite a bit in there which you could tap into if you really, really needed to, but you would want something a little bit more accessible.

[B]

Yeah. So are you saying I have too much in savings?

[A]

You. You might have. Well, let's see where they're all. It's all sitting in the same account right now. Sounds like you might want to. We might want to break it up.

[B]

Yeah, I'd love to know where to put it. Yeah.

[A]

Let's get organized. Let's create a system because the extra that you're having every month is amortized. 40k would be how much extra take.

[B]

Home for just my salary.

[A]

Well, you're the only one that got the raise, right?

[B]

Yeah. Yeah. Probably like around 2000. Yeah.

[A]

Okay. And you're 38, right. Well, you're crushing it. I mean, it sounds like. Do you know much about what's. What the strategy is for your retirement portfolio that you have?

[B]

Yeah, right now we're doing more aggressive on stocks, like I think an 80 20s split. But I think that's just on the money that I've given the financial planner. I don't think that's for our whole portfolio. There are a lot of different accounts within Morgan Stanley, and I should probably understand a little bit more what they all are. But when I met my husband, he already had A few accounts already. And so I just kind of. First, I had a lot of money sitting in savings, so rolled that in with him and then collected all my various. Like, I didn't even know I had all these 401ks at different companies. And I. Like, he helped me locate them, like, literally from my first job. And I was there for five and a half years, and I had no clue that I had set up a 401k and was putting 10% of my salary into it. Oh, that dang.

[A]

How much was that?

[B]

Forget. I think it was, like. I mean, it was my first job out of college, but I think it was, like, 25, $30,000.

[A]

That's awesome. Okay.

[B]

It was insane, but I just had no clue that I even had that money, so. And then, like, I had, like, little tech jobs here and there that were very minimal, like, 2000, $9000. But he helped me move those as well. And then I most recently moved my last. Oh, yeah, I also had a 401k at my fang job, and that one was, I want to say, 75. So I moved that to him as well.

[A]

Okay. And. Well, I mean, you're doing awesome. Just, like. Can we take a moment? A Molly appreciation moment? Hold onto your wallets. Money rehab will be right back. And now for some more money rehab. You're clearly being really thoughtful about your money. You're putting it to work. You're making smart money moves. Where does this come from? Like, growing up, did you learn how to manage your money from your parents? What was that experience? Like? Where were these money lessons from?

[B]

When I graduated, I was given a Bank account with $50,000 in it, and I just kind of blew through it really quickly after college on dumb things that I wish I could, like, go back and, like, tell myself not to buy, like, bags that don't even hold any value and nobody even cares about anymore. And. But my parents are always really good with money. They never had any issues. So I think I just, like. I don't know. I listen to a lot of other podcasts, and I think I relate to this. Like, I just have an abundance mindset that I'll never have to worry and I'll always be there because. Because I work hard and I plan for the future. And I also married someone who feels the same way. He has amazing work ethic. He's been working since he was, like, 13. Was, like, a golf pro, and, you know, just has always been working and supporting himself. And I think, you know, we're both lucky we had our Education paid for, which is very rare. So we left school with no debt as well.

[A]

That's awesome. So back to your salary, your nice, juicy salary bump. Where are we going to put this? You said to our producer that you essentially want to live like you don't have this extra money, which I love Chef's Kiss so much. It's called lifestyle creep. Have you heard of lifestyle creepy?

[B]

Yeah, because I listen to your podcast.

[A]

Yay. I'm so glad. Yes. Lifestyle creep is basically like lifestyle inflation. People earn more than they spend more and net net, they come out maybe the same or maybe even worse, depending on how much their lifestyle creeps. So I'm so, so glad that you want to keep those financial goals and in mind, with no lifestyle creep, what is your short term goal? Do you have any savings goals that you have pre retirement? Like, do you want to get a new house? Do you want to go around the world? I don't know.

[B]

I think short term goals, we either want to do some upgrades to our current house or purchase new one. The rates are really high right now, so it feels like houses that are within our budget aren't that much more impressive than the house we have now. We'd have to go way outside of our budget to really feel like we're in an upgrade. And if we're not going to feel like we're in an upgrade, there's really no point in moving. We love our school district and our friends, so that's important.

[A]

So would you say that you still want to be saving toward that goal or do you, you know, have individual goals? I say I asked because, you know, you can create within your savings account sub savings, and so those help sort of keep organized, like, what you're saving towards. So you could have your emergency fund sub savings account within your portal. You could have like a new car fund. You could have something else. So I just, you know, as we're trying to figure this out together, visualize what we're saving for, tends to help people actually stick to it. So it doesn't feel like it's just going into like a bucket. Does that resonate with you at all?

[B]

Yeah, it does. I'd probably say we could stick to the house goal even though the market is gonna kind of determine, like, if we're ready to make that jump or not. But why not? Dream big. Maybe. Maybe we'll save so much so we'll just buy all cash next time.

[A]

Yeah, I love that. Okay, cool. So we have like a house house fund and an emergency fund.

[B]

Yeah, anything Else I would like there to put more in their 529. We're really inconsistent with it. We're just kind of like when we think about it, or when we just have money sitting there and we were just like, oh, we have like money sitting here. We can just throw it in their accounts, but maybe get on a consistent schedule with paying them monthly.

[A]

Okay, I love that. What would we want to set aside for the 529?

[B]

Maybe 500 each. So a thousand a month?

[A]

Yeah. That's so generous. Absolutely. Okay, great. Great goal. Okay, so. So it sounds like you don't have a high yield savings account. You're just stashing your cash in something that's giving you less than 1%.

[B]

Do you know offhand, um, that sounds right? I don't know. Can I look at it? Let's see what it says. Annual Percentage yield earned 0.02%.

[A]

Oof. Yikes. How does that make you feel?

[B]

Sad.

[A]

0.02% sad. That makes me feel bad for you. I don't love it. I mean, inflation typically grows at 3%, right? I mean, in the last few years it's been way more than that. You've seen it at the grocery store. So you want to earn at least 3% to just keep your money in line with inflation. Ideally you want to earn more than inflation, but now you're actually losing money by keeping all of your money in this account.

[B]

Well, that's not great. I don't like to hear that. Okay.

[A]

No, it's not great. We have to change this. This is our number one priority. You know, a high yield savings account will give you so much more love. It's the easiest thing you could possibly do to grow your money. It's just going from like less than 1%, or in this case like way less than 1%, basically zero to, you know, I like public's high Yield savings account, for example. It's 5.1% APY right now. I mean, it's a no brainer. It's like, what would you rather get less than a percent or, or 5% on the money that you just got and the money that you're going to be bringing in? Yeah, it's, it's the same thing. You just get more interest.

[B]

How do I start one or move my money?

[A]

So we would just open a high yield savings account. The one I like is with public. I personally just use them because it's, it's easy to buy Treasuries, for instance, and maybe some of this money can go into Short term Treasuries. Short term US Treasuries are, are bonds issued by the government and they're giving a lot of interest right now. They're having a moment. It's really easy to buy bonds that way because I don't think you need all this money just sitting in a high yield savings account. Well, I don't. I lost the tally. So we have 75k from the separation and before and now we have about 2k more a month and we have 20k ish that we want for an emergency fund. So 20k I would put in a high yield savings account, open a brand new one. Consider that your emergency fund like your liquid emergency fund, even though you have other options. So I don't even know if you need that much more or even that much in a emergency fund because you have 150,000 in stock that's easily liquidatable. You have a huge retirement account. I would probably consider paying off your car. You're paying 6% in interest when you're making 0% right now. So I would just pay that off if you like the car or we can talk about changing your car potentially, but it's not doing you any favors and you have the money. And then I would think about what that. So the $500 that you want to put aside for the 529, you could probably do that as an auto deposit from your new paycheck. And then the rest I would just, I would have growing for you. So it could either go to your home fund, but it could be living in either a high yield savings account or in short term Treasuries. So short term Treasuries you could get, I don't know what is a 26 week treasury is around 5% right now and that's a half a year. So you, you keep your money tied up. It's kind of like do you know what a CD is?

[B]

Sort of, but not really.

[A]

So a CD is also giving a lot. It depends on your bank. But you don't need to have a CD at the same bank that you normally have your checking account. Some of the CDs right now are also giving about 5%. So because interest rates are so high, like you mentioned when we were talking about looking at houses. Right. Interest rates are high, you said. And like it's not worth necessarily getting a different house because it feels meh compared to what we have. And the interest rates are high and it sounds like you might have locked in a lower interest rate.

[B]

My interest rate's like 0.6.

[A]

I love that for you.

[B]

So I'm never moving. The thing with the stock is like, it's really like high taxes to cash out stock.

[A]

Totally. You can also always borrow against your stock, which is what all the billionaires do. So you take out a loan against it, the loan is less. You never have a taxable moment there. So there are ways to tap into that stock without. You're so right to note that there it sounds like there would be long term capital gains taxes because you've held onto it for a while, which would be at your ordinary. Which would be at a tax advantage rate compared to ordinary income. So it would, it would be less than you're normally paying on taxes for your salary, but still totally get it. So there are ways to tap into it for sure.

[B]

If you need it.

[A]

There are like securities loans that you can take against it. This is what, you know, Bill Gates does or Jeff Bezos. Right. They're never seeing, they're never paying tax. Like they have their stock increase in increase and they borrow against the proceeds of the stock in a loan. And loans are never taxed. And so then they take.

[B]

And then they.

[A]

How do they pay the interest of that loan? They pay, they take out another loan. They do this until they die. I'm not suggesting this is a great strategy for you necessarily, but there are ways to tap into it without seeing a taxable event. And also when you need the money, like I wouldn't worry about, you know, long term capital gains taxes if you need it.

[B]

Yeah. In terms of the high yield savings account, I don't see which bank you're talking about because it's not showing up. So I'd love to get that one and then I'd love to understand more about what short term Treasuries are. Cause I know you've talked a lot about I bonds which I've never pulled the trigger on. But what are. Can you like help me understand short term Treasuries?

[A]

Yeah, for sure. So Public is. Is the app that I was talking about. It's the one that.

[B]

Oh, it's an app, okay.

[A]

Yeah, it's the one that I personally used. It. It has a lot of different functionalities. You can buy Treasuries so the, the treasury bills. So the short term Treasuries are Treasury bills and their notes and then they're bonds and that just refers to the duration. So you can buy, you know, 10 year treasury bonds, 30 year treasury bonds, but you can also buy the short term ones and the short term ones. Are are giving great interest right now. And so you would just download the app and if you wanted to take advantage of their high yield savings account, you would use it just like you are your bank of America account, your regular checking or savings account. You would open that up, you would transfer the money into that account. You could also then from the same app go to the treasury section. So like I'm in mine right now and I have like money in stocks, I have money in bonds, I have money in Treasuries and so I'm just opening up my treasury allocation and it's super easy to do this the other way that historically you could have bought treasury bonds would be through Treasurydirect.gov, which is just a really wonky, annoying site to deal with. It's super bad. I mean to a tech person, I would love to get your assessment of the UX UI of that site, but it's like out of the 80s and so this is an easy way to do it right now. Yeah, short term Treasuries are giving about 5% so you would just go and you would buy them in any increments you want. It could come from the, the checking account that you already have. So you could set it up to have it transfer straight from the account that the money is currently in to go to Treasuries and then depending on the duration they will expire and then you can either just keep rolling them over if you don't need the money and then CDs work in a, in a similar way, CDs are through the bank and Treasuries are through the government. So the bank is basically what, what's cool about debt is that when you are holding the debt, if you, you're basically the bank. So when you get a Treasury, you're loaning the bank money and for the privilege of using that money they're giving you interest. And this is the same situation with the government. So for the privilege of you loaning the government money, essentially they're giving you back this 5% interest. So they're going to build roads and bridges and you know, do whatever and then you get this money as, as an exchange and it sounds like you don't really need the money asap. So it's even better to try to get a higher interest rate if you could take advantage of bonds or even CDs.

[B]

Okay, I will look into this. Thank you. Cool.

[A]

Just. So does, how does that sound? It sounds like we have like a little asset allocation for the extra money that you have coming in. How does that feel?

[B]

It feels really good to have like a clear plan. So thank you so much for that.

[A]

Of course. So it's. So to recap, it sounds like of the extra money that you have coming in from the new job, 500amonth, we're going to do automatic deposit into your kids. 529. That's just something that you set up once. Like set it and forget it. And what's great about, like coming up with this plan is it sounds like you're, you know, goal oriented, dare I say a little type A, like you want to get shit done. And so you probably just need to spend a couple hours setting up this plan and then you're good. You haven't started the job yet, right?

[B]

No, I have.

[A]

Oh, you have. Okay. Okay. So that would just be, you know, a direct deposit that you could set up today. Then you would open up a high yield savings account. Try to get the one with the highest interest rate that's giving right now. Scoot your money that's getting you 0% over to that. And then you could think of like your emergency fund as maybe you want to put that in Treasuries or something like that. And then you can go ahead and buy, let's say, $20,000. You can talk to your husband about it. You can marinate on it. Just giving that number for, you know, for sake of ease. Buy 20 grand in treasuries, have that earning more money for you and tap into it if and when you need it. God forbid something happens. Hopefully you'll never have to touch it. And then because you won't touch it, it will just be earning more interest.

[B]

Great, thank you. Appreciate it. Yeah, yeah, sounds like really good plan. Thank you so much for the help and all the resources. I really appreciate it.

[A]

Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan Lavoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions moneyrehaboneynewsnetwork.com to potentially have your questions answered on the top show or even have a one on one intervention with me. And follow us on Instagramoneynews and TikTokoneyNewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make. Sa.