Krista (8:41)

Well, first you told, you said, you said, you bragged to them, I found free parking like a mile away.

Clark Howard (8:48)

It was not a mile.

Krista (8:50)

Felt like it.

Clark Howard (8:51)

Not a mile.

Krista (8:52)

And they said, our parking's free at.

Clark Howard (8:55)

The hotel right behind.

Krista (8:56)

Yeah, you didn't hurt me. You didn't harm me. You harmed my shoes.

Clark Howard (9:00)

Yeah, but that look you gave me, I can still See that look you gave me?

Krista (9:04)

I really like shoes. But I. You know, that was silly. I should have just said drop me off, Clark. I don't want to ruin my shoes. Right. Or I should have worn appropriate footwear.

Clark Howard (9:13)

If I were a decent human being, I would have dropped you off and gone and parked in the snowstorm.

Krista (9:20)

It's a funny story. And you've never harmed anyone by being too cheap. I guarantee you no one in your life would say that you're incredibly generous.

Clark Howard (9:28)

I don't know.

Krista (9:29)

You are. All right, well, you've harmed yourself though. Because I'll say one thing that's harmed you. Parking your cars in bad parking areas to get free parking. And you've had numerous broken into and had a windshield shattered.

Clark Howard (9:41)

I need two hands. Yeah, six times. Six times over the decades my car has been broken into because I was too cheap to pay for parking.

Krista (9:54)

All right.

Clark Howard (9:55)

It's true. Fact.

Krista (9:56)

Joseph in Colorado wrote into you and said I get that one should have at least two bank accounts regarding a separate checking account. And for debit or other sketchy financial transactions with. Wouldn't a checking and savings account at the same financial institution be low risk if you disabled overdraft protection on the checking account rather than have it at a separate bank? I have checking and savings at USAA with no overdraft protection and keep less than $100 in there. But quickly transfer more into the account when paying bills. I get that this checking account money can be wiped out by the fraudsters. Thank you, President Clark. Has a great ring to it.

Clark Howard (10:31)

President of what? Garden Club?

Krista (10:35)

No.

Clark Howard (10:36)

Okay. Yeah, you wouldn't. I mean, since I've had to ask.

Krista (10:40)

The last thing I would guess you'd be the president of.

Clark Howard (10:43)

Thank you for your faith and confidence in me, Joseph. And thank you if you're a USAA member for having served or obviously a relative has served our great nation in the US military. So I don't know the answer to USAA Federal Savings Bank. It's one of the largest banks in the country now and I don't know if they have in your service agreement with them. If they have a cross default clause which I've explained before, most financial institutions, if you have two accounts with them and one of them overdraws, let's say a criminal fraudulently gets into one of them and they're taking money, they automatically go to the other account and start seizing money. And so you can get wiped out even with two separate accounts. So you'd have to know if USAA does practice what's known as cross default.

Krista (11:41)

All right, Paul in Florida says I wanted to know if Clark knows about the new day pass feature in Sling tv.

Clark Howard (11:47)

I do.

Krista (11:47)

Now you can buy a one day pass, three day pass or seven day pass. I think it's a great feature and curious to see if their revenue goes up. For anybody wanting to have access to different channels, but mainly ESPN Sports Programmin, it's a great alternative to just pay $5 for a 24 hour pass to watch a game.

Clark Howard (12:03)

Yes, thank you for mentioning that. I have never mentioned the short term passes from slang. They do it to try to get people to subscribe to slang. It's like a sampler pack. Instead of having a free trial offer, you just buy it for a period of time. And people do it very heavily during college basketball season. There's a game they want to watch and they'll buy that one day pass or multi day pass for college basketball.

Krista (12:35)

Mike in California says what is your opinion on zero percent interest financing? My thinking is it's the same if not better than paying cash. Not having to outlay large amounts of money all at once and reduce what you've saved seems like a smart idea. For example, if a furniture store offered 0% financing for three years on a new $5,000 sofa and loveseat, is it a worse idea in your opinion to spread out the $5,000 over 36 monthly payments than it would be paying the full amount on the spot at the time of purchase? I'm only talking about 0% financing deals once an interest charge is introduced. I no longer like the idea. Okay, no plans.

Clark Howard (13:14)

Mike, Mike, you're killing me. You're killing me. Because it is the rarest of rare individuals that will take out what's known as a no no no plan in the trade that are all based on people not getting the final dollar of payment in before the payment. Zero percent payment holiday ends because almost 100% of these no no no plans do interest retroactive to day one, usually mid-30s percent. Like 35 36% on every last penny of it. Even if just $1 is left open when the payment holiday period ends. You would have to be the rarest of rare individuals that gets every payment done on a no no no plan before that period ends. Like you got to keep a really solid digital or paper calendar that you never mess up on it. If you are that individual, go for it. But it's. I don't know, it's maybe one in a thousand people.

Krista (14:24)

I don't know. I bet on this podcast There, there are a lot more people that would handle it. Right. I have done this before. I don't do it now just because I don't want to deal with it. But I did it when I bought my peloton bike, I remember, and I was just like, why wouldn't I keep the money in a savings account, earn the interest there? And what I did was I just calculated how much it was to pay it off in less. I think it was a two year thing. So I made sure I paid it off in like a year and a month or something like that. So there was no question. So I just made the monthly payments that way and I liked it. But it is, you have to, you know, but I didn't have to keep like a record. I just divided it out and made sure it was paid off, you know.

Clark Howard (14:56)

How often do you ride a peloton now?

Krista (14:58)

All the time. I love my. I love the peloton bike. Even though I belong to a gym that has classes. I don't like the cycle classes. I love. Peloton has a lot of features that others don't. And so I love that thing because.

Clark Howard (15:12)

You know, pelotons went from being like a Covid puppy in 20 and 21 and they were very hard to get. And then a lot of people who got them during that cycle, cycle that was such a bad. During that time then dumped them. And so used pelotons have been a real deal.

Krista (15:32)

I'm in like peloton groups on Facebook. Yeah, you can buy used peloton bikes really inexpensively on Facebook Marketplace if you think you'll use it. And then I have a card that does give me credit card gives me $10 back a month on the membership. So if you got. If you're a peloton user out there, we can follow each other. My username is. It's Christa I T S C H R I S T A Great.

Clark Howard (15:54)

Should we be on a peloton right now while we're talking? Anyway, coming up ahead, I want to talk about something. If you've got a side gig or you've got. There are millions and millions of people who have a one person entity. They do. There's a way for you to save money tax free and save up to big amounts of money every year. I want you to know about that I've talked about for years now. Widely available.

Krista (16:23)

We all have moments when we could have done better. Like cutting your own hair. Yikes. Or forgetting sunscreen. So now you look like a tomato.

Clark Howard (16:32)

Ouch.

Krista (16:32)

Coulda done better. Same goes for where you invest. Level up and invest smarter with Schwab. Get market insights, education and human help.

Clark Howard (16:41)

When you need it.

Krista (16:42)

Learn more@schwab.com.

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Don McDonald (17:16)

You know what's funny about free financial advice? It's usually the most expensive kind. I'm Don McDonald from the Talking Real Money podcast. For over three decades, my co host Tom and I have been the antidote to the financial nonsense that fills the airwaves. We don't sell products, we don't have sponsors paying us to recommend their funds. We just tell you what has actually worked. Backed by decades of academic research, not some guru's gut feeling. Our listeners tell us we're like car Talk for your money. Minus the car problems with maybe even more bad jokes. You're already listening to a podcast right now, so finding us couldn't be easier. Just search for Talking Real Money or visit talkingrealmoney.com give us a few minutes. The worst that happens, you're mildly entertained. The best? You stop making your broker richer and start building actual wealth.

Clark Howard (18:07)

Just search for Talking Real Money.

Don McDonald (18:10)

Talking Real Money is an educational podcast. Hosts are affiliated with a registered investment advisor. For disclosures, visit talking realmoney.com all right.

Clark Howard (18:18)

We'Ve had something that's been available officially but not practically and wide availability for so many years I can't remember. Called a self employed or solo 401k. It's referred to both ways and it's a tool that's available for you if you've got something you do. Maybe you used to work for a company, you retired and now you're a one person consulting firm. It's all key to be one one person. You're doing some side business, just you. Whatever it is, when it's just you. And I saw an estimate of how many people out there and it's forgot how many millions it is. It's a lot of people who do something either on the side is a self employed individual, just you, no employees. You can have ICs, you can have independent contractors doing stuff for you, but you've got to be the only employee to take advantage of a solo or self employed 401k. Which with the Roth version of it, you're able to shove massive amounts of money aside. Depending on how profitable what you do is, up to over $70,000 a year can be stashed, grow tax free and then spent tax free once you're eligible retirement age. It's phenomenal. If you are somebody who makes a huge amount of money from what you do and you're in a mega tax bracket, you can do a solo 401k. That's the traditional that reduces the amount of your income subject to tax in that year, grows tax free and then you pay tax on everything in it when you spend it. Here's the big change now. Like my three favorite children, Schwab, Vanguard and Fidelity, they all offer these. It's pretty much widespread everywhere in the investing world. If you just contact one of these firms, people who you reach on the customer no service line may not even be aware this exists. So it might require a little digging on a website of one of whatever investment house you use. But this is a great money saving benefit you get when you're working for yourself. A lot of things about working for yourself are great, some things not so great, you take vacation, you're not getting paid right. But the solo or self employed 401k is the most unknown underutilized tool out there for tax benefit for you when you run your own place and it's just you. So remember that if you're trying to build financial security long term and it's just you solo 401k, self employed 401k. Some firms call it one, some firms call it the other. It's the same thing. Go with a low cost firm, do not go with any bank based brokerage operation. They will rip you off with fees to the end of the earth. These accounts are so simple you can set them up with one of the discounters and your money's working for you, not for some high commission outfit. Krista.

Krista (21:52)

All right, here are some questions for you. Bo and Rhode island wrote in with this one. Thank you so much for helping strangers. Roth investments are often described as tax free on withdrawal. Is this a simplified explanation of Roth assets or would I literally owe $0 in federal and state income taxes as I withdraw them?

Clark Howard (22:10)

Yeah, I don't know of any state anywhere in these 50 that taxes Roth IRA withdrawals just as they're federally tax free, they are state Tax free, as long as you wait till your age eligible on that Roth ira.

Krista (22:29)

Logan in California says after five years I fully funded my six month emergency fund.

Clark Howard (22:34)

Fantastic.

Krista (22:35)

However, now I'm wondering if my six month fully funded emergency fund should also include the potential cost of COBRA coverage in the event I lose my job, which would be about another $1,000 a month for me.

Clark Howard (22:48)

Yuck.

Krista (22:48)

And I know those with families would pay way more should the cost of COBRA be included in your fund calculation.

Clark Howard (22:55)

Okay, so Logan, you want to prepare for every possible eventuality. And you've saved what six months of living expenses are for you if you want to get as close to perfection as possible. Yeah, you could add an additional six grand into yours to cover potential COBRA costs that you would face. But here's my thing. On emergency funds, it's hard for me. You know, there's those studies that come out every year that say how few Americans could even handle emergency expense of $400. That's the number most often used. Probably needs to be inflation adjusted to 500. So what you've done is extraordinary and rare to have a emergency fund equal to six months of living expenses so you could keep looking for things. Well, I should save for that. I should. What if this happened? What if that happened? You're good. You save six months living expenses. You should be proud, relax and be happy. If it make you happier to put another 6k in it, go for it. But I wouldn't say of financial goals in your life. It's a high priority.

Krista (24:12)

Okay, Sven in Pennsylvania wrote in with this. For the third time in as many months, I paid for a restaurant tab with cash due to the 3% upcharge for using a credit card. And every time the restaurant rounded up the bill to the nearest dollar and only furnished change on the rounded up amount. It's not about the 42 cents extra.

Clark Howard (24:31)

Wait, wait, wait. Let me get this right. So if you're saving the 3% and the bill is 850, they're only giving you from a 10. They're only giving you back a buck, not a buck fifty.

Krista (24:47)

I'm guessing they don't keep any coins.

Clark Howard (24:49)

Oh wow. I've not heard that before either.

Krista (24:53)

They only furnish change on the rounded up amount. It's not about the 42 cents extra I paid. It's the principle that restaurants are rounding without advising patrons beforehand. They notify patrons on the bill that there is an additional fee for using credit cards. Should they not be required to notify on bills about the rounding up when Paying cash. When I inquired about this to the server after being shortchanged after my last meal, she shrugged her shoulders and said, we don't give coins and change. What are your thoughts?

Clark Howard (25:20)

Okay, so that's so weird, to be precise. And say you pay with a credit card, we're going to charge you 3% extra. But if you pay with cash, we're going to charge you extra for whatever the amount would be beyond just a solid dollar. Oh, my goodness. That is not a way. If people are cheap enough, because very, you know, restaurants know very few people are going to pull out cash. And if you're thrifty enough, I said cheap, but this is really thrifty that you're wanting to save that 3%, then they turn around and they don't really honor you saving 3%. That's uncool.

Krista (26:02)

Maybe if they rounded down.

Clark Howard (26:04)

Yeah, if it was up to 49 cents, they round down and then above that, they round up, then everybody would be square. Everybody would be fine. But it doesn't sound like from your post that that's the way it plays.

Krista (26:17)

So and so many places. I just went to a restaurant the other night, that big sign on the door, we no longer accept cash.

Clark Howard (26:24)

Well, I mean, that's happened in a lot of places because of crime. They don't want to be tempting for an armed robber. And, you know, I. I don't know if you remember I talked about how armed robberies are down so much because so few people have cash anymore. So 3%, though, seems to be becoming so common for so many different businesses now. And it's really the fault of the Congress that they allowed the dirty money from the banks to allow the establishment of this Visa MasterCard Cartel. We have where we have the highest merchant processing fees in the world. It's just not fair to businesses. So if I want to use a reward card and they tell me I'm going to have to pay 2% extra, 3% or whatever, I then have to make that decision and I'd have to start carrying cash again. Do you carry cash at all anymore?

Krista (27:26)

I always have some.

Clark Howard (27:28)

I only have money for tips for people in hotels or shuttle drivers or something like that. That's the only cash I. I always.

Krista (27:37)

Like having a couple of twenties on me just in case something happens.

Clark Howard (27:41)

Really?

Krista (27:41)

I don't know. Yeah.

Clark Howard (27:42)

Oh, can I borrow 20?

Krista (27:43)

Of course you can, Clark.

Clark Howard (27:47)

Oh, we're done for today. Aren't you glad? So have a wonderful rest of your day. Know what we're about. This is all about you. It's all about your wallet and giving you knowledge in a life where so much feels like we're not in control of. I want you to have the knowledge that gives you power for more control and that you can use that so you can save more and spend less. And never, never, not ever let somebody rip you off. And we'll see you on.