How To Fix 8 of the Most Common 401k Mistakes (SB1720)

Summary

Podcast Summary: The Stacking Benjamins Show – Episode "How To Fix 8 of the Most Common 401k Mistakes (SB1720)"

Release Date: August 11, 2025

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Introduction

In this engaging episode of The Stacking Benjamins Show, hosts Joe Saul-Sehy and OG delve into the intricacies of 401k plans, highlighting eight common mistakes that individuals often make, which could significantly impact their retirement savings. The duo maintains their signature light-hearted tone, interspersed with expert advice and relatable anecdotes to make financial literacy both fun and accessible.

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1. Not Knowing the Difference Between 401k Plans

Discussion:
Joe and OG kick off by emphasizing the importance of understanding the nuances between different types of 401k plans, such as Traditional and Roth 401ks.

Notable Quote:
OG explains, “Everyone all the time will take a million in the Roth 401k. If the difference is a million or zero, I think everybody will take a million and have to pay the taxes” (12:05).

Insights:
They highlight that while Roth 401ks require paying taxes upfront, they offer tax-free growth and withdrawals, which can be more beneficial in the long run. Understanding these differences allows individuals to make informed decisions tailored to their financial goals.

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2. Not Adjusting Savings Rate After a Pay Raise or Job Change

Discussion:
The hosts discuss how failing to increase the 401k contribution rate after receiving a salary increase can lead to substantial losses over time.

Notable Quote:
Navy Federal Credit Union mentions, “A 2024 Vanguard study showed that 55% of job switchers reduced their 401k nest egg by $300,000 over their working lives by failing to adjust their savings rate to their new higher salary when they switch jobs” (13:39).

Insights:
Joe and OG stress the importance of maintaining or increasing the savings rate in line with income growth to maximize retirement savings and benefit from compounded growth.

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3. Forgetting Your 401k at Your Old Job

Discussion:
They shed light on the common oversight of leaving old 401k accounts with previous employers, which can lead to mismanagement and lost investment opportunities.

Notable Quote:
Doug shares a personal anecdote: “Sometimes just this money that should be out working for you” (16:50).

Insights:
The recommendation is to consolidate old 401k accounts into an IRA to maintain oversight, reduce fees, and ensure investments align with current financial goals.

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4. Not Understanding 401k Investments and Fees

Discussion:
The conversation turns to the importance of being aware of the investment options and associated fees within a 401k plan.

Notable Quote:
OG states, “...you can look at the fee structure however you want, like move that money to an IRA” (19:10).

Insights:
Evaluating the performance and fees of 401k investment options is crucial. High fees can erode returns over time, making it essential to choose low-cost, diversified investment options or consider rolling over to an IRA with better terms.

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5. Not Taking Advantage of the Employer Match

Discussion:
A significant portion of retirement savings is lost when employees do not fully capitalize on employer matching contributions.

Notable Quote:
OG passionately asserts, “even if the options suck, even if the fees are expensive... it's still free money” (20:22).

Insights:
Employer matches are essentially guaranteed returns on contributions and should be maximized. Even minimal matches can compound significantly over time, enhancing retirement funds.

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6. Understanding the Vesting Schedule

Discussion:
Joe and OG discuss the implications of vesting schedules on employer contributions and the potential loss of matched funds if one leaves a job prematurely.

Notable Quote:
OG advises, “You don't want to quit on June 30th if July 1st is your vesting” (24:51).

Insights:
Understanding vesting schedules ensures employees do not forfeit employer contributions. Planning career moves with vesting periods in mind can protect retirement savings.

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7. Taking Early Withdrawals

Discussion:
The hosts revisit a topic from a previous episode, emphasizing the pitfalls of withdrawing funds from a 401k before retirement age.

Notable Quote:
OG warns, “It's $45,000 problem if you're working with the idea of buckets... opportunity cost” (56:07).

Insights:
Early withdrawals often come with hefty penalties and taxes, diminishing the retirement nest egg. Alternatives like loans or other financing methods should be considered to avoid jeopardizing long-term financial stability.

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8. Not Rolling Over an Old 401k

Discussion:
They conclude with the importance of rolling over old 401k accounts to avoid forced distributions and unnecessary taxes.

Notable Quote:
OG explains, “If you're leaving your job, just know that you have to hit pause and ask for help” (32:35).

Insights:
Rolling over to an IRA provides greater control, better investment options, and avoids the complications of old employer plans. It simplifies financial management and ensures continuous growth of retirement funds.

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Transitioning from Saver to Spender Mindset

Caller Insight:
Joel from Cleveland raises a pertinent question about shifting from a saver mindset to a consumer mindset in retirement.

Discussion:
Joe and OG explore strategies to balance disciplined saving with enjoying the fruits of one’s labor in retirement. They use analogies like driving up a mountain road with guardrails to illustrate maintaining balance and flexibility.

Notable Quotes:

• OG compares retirement spending to staying within guardrails on a mountain road (42:11).
• Doug emphasizes trusting oneself to handle potential setbacks after transitioning (46:35).

Insights:
Developing a comprehensive financial plan that aligns spending with personal values and goals is essential. This approach ensures that retirees can enjoy their savings without compromising their financial security.

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Community Interaction and Takeaways

Listener Feedback:
David, a listener, provides feedback on the episode’s approach to 401k withdrawals, highlighting nuances in financial planning and tax implications.

Takeaways Shared by Doug:

1. Take the Employer Match: Never pass up the free money.
2. Align Spending with Values: Ensure that increased spending reflects personal values and goals.
3. Start Small: Gradually adjust spending habits to avoid financial missteps.

Final Advice:
The hosts reiterate the importance of personalized financial planning and consulting with financial advisors to navigate complex retirement decisions effectively.

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Conclusion

This episode of The Stacking Benjamins Show serves as a comprehensive guide to navigating common 401k mistakes. Joe and OG blend expert insights with relatable stories, emphasizing the importance of informed decision-making in securing a comfortable and fulfilling retirement. Whether you're adjusting your savings rate, understanding investment options, or transitioning your financial mindset, this episode provides valuable strategies to enhance your financial literacy and retirement planning.

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For more insights and detailed discussions, listeners are encouraged to visit StackingBenjamins.com and join their Facebook group.

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Timestamp Reference

• 12:05 – OG explains the preference for Roth 401ks over Traditional.
• 13:39 – Discussion on adjusting 401k contributions after job switches.
• 16:50 – Doug shares an anecdote about forgotten old 401k accounts.
• 19:10 – OG talks about evaluating 401k investment options and fees.
• 20:22 – OG emphasizes taking full advantage of employer matches.
• 24:51 – OG advises on understanding vesting schedules.
• 32:35 – OG discusses the importance of rolling over old 401ks.
• 42:11 – OG uses a mountain road analogy for retirement spending.
• 46:35 – Doug talks about trusting oneself in financial transitions.
• 56:07 – OG highlights the opportunity cost of early 401k withdrawals.

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Note: All timestamps correspond to the provided transcript and serve as reference points for specific discussions within the episode.

Transcript

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[Navy Federal Credit Union]

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[Joe's Mom's Neighbor Doug]

This is like a. I don't know, it's like a insulated yeti whatever. But there's stickers all over. I'm just drinking water this morning. Already gotten done with my coffee. But look at the sticker on it.

[Navy Federal Credit Union]

I hope your pain eases soon.

[Joe's Mom's Neighbor Doug]

Yeah.

[Navy Federal Credit Union]

It'S about to, though. It's about to. We're about to give people an hour of financial goodness. Of course it's going to ease soon. And we're about to salute our troops on behalf of the men and women make a podcast in mom's basement. And the men and women who serve our troops and our veterans at Navy Federal Credit Union, here's a big salute to the people keeping us safe all weekend long while we played Cheers. Thank you so much. And let's go stack some Benjamins together now, shall we?

[Joe's Mom's Neighbor Doug]

Thanks, everybody.

[OG]

Okay, right here, it says right here in this.

[Joe's Mom's Neighbor Doug]

This account we have $401,000.

[OG]

Jackpot. Nope. That says you have a 401k account.

[Progressive Insurance]

If you liquidate that right now, you'll have, you know, maybe $5,000.

[OG]

So what happened to the other $396,000?

[Progressive Insurance]

What is wrong with the two of you?

[Joe's Mom's Neighbor Doug]

Live from Joe's mom's basement, it's the stacking. Benjam. I'm Joe's mom's neighbor Doug. And are you messing up your retirement funds at work? Today we'll dive into eight of the most common oopsies people make with their retirement money so you reach financial independence faster. But that's not all. We'll also help out stacker Joel from Cleveland. Cleveland rocks. Who wonders how to turn from a saver mindset to a spender mindset. We have thoughts. Specifically, OG has thoughts. Seriously, Joel, hand me the money. I can help you build that muscle in a hurry. And wait, is that panic? No need, because I'll still swoop in with a rich helping of my incredible trivia.

[Navy Federal Credit Union]

Yeah, that's better.

[Joe's Mom's Neighbor Doug]

And now two guys who cut their vacation short because apparently pool float financial planning didn't catch on. It's Joe and. Oh, jj. Jj.

[Navy Federal Credit Union]

Well, happy Monday there, stacker. Welcome back to the Stacking Benjamin show where we're going to help you build a bigger stack. And today we're going to correct those 401k mistakes and help you turn into a spender. And let's say hello to the spender right across the card table from me. Mr. OG is here.

[OG]

I. I'm an expert spender. I'm a great spender of other people's money.

[Navy Federal Credit Union]

Also, it is, it is super fun to help Joel spend his money. We are all about it today. Joel is another spender here in the basement. We, we can help you with that. But very seriously, OG people that spent their whole life saving and being intentional with money, you know how hard it is. I mean, turning you see this all the time across the table from you. While it's easy for you and me, it's very difficult for a lot of people to change that mentality.

[OG]

Well, it's the same difficulty that people have going from spending a whole bunch to trying to save a whole bunch versus saving a whole bunch. Trying to spend a whole bunch. It's just, it's a whole different mindset and it's very unnatural. If you're a spender your whole life and somebody shakes you at 50 and goes, dude, you gotta start saving money, you're like, oh, what?

[Navy Federal Credit Union]

Yeah.

[OG]

And if you're a saver your whole life and somebody at 60 goes, you got so much money, man, you should start spending it, you're like, eh, I'm uncomfortable with that.

[Navy Federal Credit Union]

But it's like going to the gym or beginning anything. Like just lace up the shoes and get there. Realize that you're not going to do everything perfectly right away. And we've got some tips to help you get on that road. But Doug, love the oopsies. It's like we're all financial 2 year olds.

[Joe's Mom's Neighbor Doug]

Oopsie oopsies. Sometimes we fall down, go boom with our 401k.

[Navy Federal Credit Union]

So we've got you covered today. We also have a couple sponsors to make sure we can keep on keeping on. You don't pay a dime for any of this goodness we're going to share. So sit back and relax and hear from our sponsors. And then og, Doug and I are going to get into it. Let's help you fix eight of the most common mistakes people make with their retirement plan through work. Remember the days of you've got mail? Well, maybe not. Maybe you're younger than that, but there used to be a day where you would turn on your computer, you go get a cup of coffee and then you'd hear all this scratching and screeching and then this voice would go, you've got mail. That was before the Internet ruled our lives. And during that time, AOL brought America Online with email and Instant messenger. By 2000, AOL was so powerful it set aside on media giant Time Warner. The deal was supposed to bring us into the future, but instead it became one of the messiest corporate disasters on record. But what went wrong? Was it culture clashes, the dot com crash, or something deeper? Business wars gives you a front row seat to the biggest moments of business and how they shape our world. Because when your flight perks disappear, your favorite restaurant chain goes bankrupt, or new design reshapes everything overnight, there's always a deeper story behind the headlines. Follow Business wars on the Wondery app or wherever you get your podcast. You can binge all episodes of Business wars, the AOL Time Warner Disaster early and ad free right now on Wonder plus Small business Owners State farms there with small business insurance to fit your specific needs. Whether you're starting a new venture or growing an existing one, State Farm helps you choose the right coverage to protect what matters most. Working with a local State Farm agent helps you understand your coverage options, offering local support to help you achieve your goals. Focus on turning your passion into a thriving business, knowing your insurance can change as your business grows. Stay Farm here to help you succeed with your business. Like a good neighbor, Stay Farm is there.

[OG]

Hello darlings. And now it's time for your favorite part of the show, our Stacking Benjamin's Headlines.

[Navy Federal Credit Union]

The inspiration for this comes to us from Kiplinger. It's a piece that we'll link to in our show notes eight 401k mistakes that could take your retirement. Of course, OG as you know, this also applies to solo 401ks, 403bs, 457s. Pick any letters, even. Heck, if you are in a retirement plan in Canada or Mexico or one of those amazing European countries, I'm sure people are effing this up all over the world these. These same mistakes. So let's dive into helping you correct mistakes because, oh, gee, you know, and just to kind of build the foundation here, I'm not really much of a golfer, as both of you know. I think you both golf with me before. I've proven time and time again not much of a golfer.

[Joe's Mom's Neighbor Doug]

Don't sell yourself short, judge. You're a tremendous slouch.

[Navy Federal Credit Union]

You're tremendously bad at golf. But I do know this. One thing I know from pro golfers and people that are great at golf is a lot of the key at being good at golf or many things is just not making unforced mistakes about not doing these kind of dumb little things. Like, it's not about OG being brilliant as much as it's about not getting yourself into trouble. Yeah.

[Joe's Mom's Neighbor Doug]

Not pulling out the nine iron when you thought it was a six iron.

[Navy Federal Credit Union]

You've done that before.

[Joe's Mom's Neighbor Doug]

Well, I mean, I never.

[OG]

Tiger woods did it in the video golf thing.

[Joe's Mom's Neighbor Doug]

Oh, that's right.

[OG]

He did indoor golf deal that he had the Tiger woods indoor league.

[Joe's Mom's Neighbor Doug]

Yeah.

[OG]

And somebody goes, that's 91. So he pulled out his 91 club and he hit it and they, they're all like looking at each other going, is he hitting a wedge? Like, what's going on? And he hits this perfect 91 yard shot and it comes up a hundred yards short and they go, it's one 91. He goes, you said 91. They're like, yeah, the one was assumed it was a par four. We hit driver. The next shot is a six iron or whatever, you know, and he's like, he hits this perfect 91 yard shot, exactly 91 yards and he was exactly a hundred yards.

[Joe's Mom's Neighbor Doug]

That's an unforced error. Back to our point and Joe's point. It's an unforced error because it was a thinking error, not an execution error. Is that what you're sort of getting at, Joe?

[Navy Federal Credit Union]

Absolutely. Yeah. I remember because listening to a lot of talk radio, I remember speaking of advertisers, Golf Digest being an advertiser on these shows, and I remember this expert from Golf Digest saying, you know, they played this little clip and the guy's like, I've never seen a golf pro go, well, I'm just going to blow it through these trees when they get in trouble, right?

[Joe's Mom's Neighbor Doug]

Yeah. Whenever I'm there, if I golf with my brother and I'm there, my brother would say, dude, if you had the skills to get out of there, you wouldn't be in there in the first place.

[Navy Federal Credit Union]

That's exactly right.

[Joe's Mom's Neighbor Doug]

Just take your drive.

[OG]

I got this shot. That's my favorite line playing golf.

[Navy Federal Credit Union]

I got this shot, hold my beer.

[OG]

Downhill next to a tree that is redneck.

[Navy Federal Credit Union]

West Michigan, straight out of the Fairway screwed number one on their list of eight not knowing the difference between 401k plans. And I think this one is is subtle OG and by the way, it's also not life threatening if you don't know the difference between different types of retirement plans. There are traditional and Roth plans available in the United States and wherever you live, you may have different types of plans and gains you earn are going to grow in different ways. So can we talk about the difference between the subtle difference between contributing to one and contributing to the other?

[OG]

Well, Ed Slott would say that if you contribute to a traditional plan, whether it's a traditional IRA or traditional pre tax 401, you really only have 65% of your money because the other third is going to go to the, to the tax man at some point in time down the line. I'm with you. I think this is a pretty subtle issue because unlike earning money, you don't. When you earn and save money, you make money. You go pay some taxes and you spend some and then you save what's left. And when you retire, you spend money and you pay taxes on what you spent. So you have a little bit more control over where that tax bill is going to be coming from. So while it's not necessary, well, given the choice between a million dollars in a pre tax 401k and a million dollars in a Roth 401k, everyone all the time will take a million in the Roth 401k. If the difference is a million or zero, I think everybody will take a million and have to pay the taxes. So yeah, it's important to know the difference between pre tax and Roth. But the impact I think is going to be much more felt much more early. Golly, there's a lot of.

[Navy Federal Credit Union]

I think it's B felt much more.

[OG]

Early, more felt earlier than me. Good. I don't know. It's like you're going to experience the issues with the decision making sooner in your work life because it's going to affect your cash Flow. If you're maxing out the 401 pre tax and then you flip it to Roth, your tax bill will increase 5, 6, 7, $8,000 probably. And that's a material number.

[Navy Federal Credit Union]

I like the bent too. Talk me out of the Roth. You know, okay, let's try to do the Roth and talk me out of that decision versus starting with pre tax and talk me out of that decision. There are reasons why you wouldn't do the Roth, but generally for me, I'm going to bias toward the Roth and then go through all the reasons why, why you shouldn't do that. One, because to your point, if you.

[OG]

Have a 401k match, you're building two of the three sides of that tax control triangle, right?

[Navy Federal Credit Union]

Oh, good point. Because the employer is always going to put it in tax free or pre tax. I mean pre tax. Yeah, number two on their list. And I think much more important not adjusting your savings rate when you switch jobs. They're not talking about just switching companies OG they're talking about you get a pay raise and you don't bump up the amount that you're saving into your 401k. A 2024 Vanguard study showed that 55% of job switchers reduced their 401k nest egg by 300,000 over their working lives by failing to adjust their savings rate to their new higher salary when they switch jobs. That's a big sum of money.

[OG]

I mean, if you're doing percentages, right, your percentage is going to be the same. You know, if you're putting 10% in, I think the bigger risk is for the people that are over 250k of income gross and you're doing 10% and now you get a pay raise to 300,000, your 10% still is 23.5. And maybe that's what they're talking about. You need to account for that extra money that you should be saving elsewhere. I know they're just talking about retirement plans here, but I think it's perfectly fine to start your career at, hey, I put 5% in, I put 10% in and just let your income pull that number higher. If you can adjust that percentage higher and say, well, I was at 10, but now I can go to 11, I was 11, now I can go to 12, that's great too. But if you start your career at 22 years old and you're making, you know, $75,000 a year and you can do 10% and then 10 years from now you're making 150 grand you're still doing 10%. You're pulling that savings rate higher along the way. I think that's totally fine. I think as you get past the max, that's where I think that big lifestyle number increases. Because think about the physician, right, or the, you know, the high income person who's making 300, $400,000 a year. They're maxing out their 401k by September, by October or June or something. And then the whole rest of the year there's extra money. Oh, I got extra money in my paycheck. Or when you hit that FICA tax limit and you're like, oh, I got extra money in my paycheck in October, November and December, just in time for Christmas. It's like you lived without it for 10 months, man. Just save that 1500 bucks.

[Navy Federal Credit Union]

You know, Nick Magi, who's on the show, episode 1712, just a couple weeks ago, talked about how much easier it is to save when you just make more money. I think you make a great point when you say that.

[OG]

Just to my point.

[Navy Federal Credit Union]

That's right. Just, just allowing your raises to do the heavy lifting. You're going to be okay. But if you've never lived this new lifestyle before, raising it from 10% to 12% of your new.

[OG]

Yeah.

[Navy Federal Credit Union]

Amount of money that you're making is a, is also an easy thing to do.

[OG]

It's a great time to do it. Especially if it's like a large increase. You know, I get it. If you're making 80 grand and you go to 82,5. Okay, a lot of that is lifestyle and just inflation. But if you go from 82 to a new job in a new place and now you're making 135, like that's a good opportunity to say, all right, I'm going to have some fun. You know, I'm gonna increase my lifestyle quite a bit here. But I can also save 10,000 extra dollars and I didn't even know it existed.

[Navy Federal Credit Union]

Increase your lifestyle now and increase your lifestyle later.

[OG]

Yeah, exactly.

[Navy Federal Credit Union]

Not either or. It's both number three on the list. Forgetting your 401k at your old job. This is a doozy, OG. I mean, how many times have you met with somebody? I remember during my financial planning career, people like, oh, I realized I got this money sitting over at XYZ Company. It's not allocated correctly, not toward my goals, sitting in cash. Sometimes just this money that should be out working for you. It's so easy to Forget that old 401.

[OG]

This is a really big one. And people who are young think, I'll never forget about this, but I had this client years ago who retired, worked in the electrical distribution world and came in for a review meeting. He says, weird question. Do you know why we've got a check for $150 from Land O' Lakes Butter? And I said, I mean, could have been one of those lawsuit things. You eat lots of butter, it's very clearly a reimbursement of some kind.

[Joe's Mom's Neighbor Doug]

You're the lead person in a class action lawsuit.

[OG]

Yes, yes sir. You are the leader in the club, you won the contest. But anyways, I said, I don't know because you get those things, right? You get the. You whatever. And so six months later, he comes in for another review meeting. He says, you wouldn't believe it. Idiots at the butter company keep on sending me checks for 150 bucks. And I said, you ever work at Land O Lakes or anything? He goes, no. I said, what'd you do when you're in college? I thought you didn't you live in Wisconsin when you're in college? He goes, I worked on a dairy farm for a couple years. I said, huh, that's your pension from the dairy farm that was part of Land O Lakes that was acquired and da, da, da, da, that was your four years. That's your equivalent pension. He had completely forgotten that that existed because it was just such an insignificant thing when he was 22 years old. And now pensions, of course, aren't the same as they were before. But this happens with workplace plans too. It's like you work at a place for six months and then you get a better job and you go, ah, I'll deal with that later. And all those little teeny tiny bits add up.

[Navy Federal Credit Union]

A huge part of being good with money is just being able to see the whole dashboard, seeing everything in front of you. Very easily move that money, you can move it to the new 401k. Generally I don't like that because then you're going to move from that company or the company decides to go cheap with the options, which is going to be the next thing you're beholden to whatever the new company does. I truly like when you leave companies and the average person will work for four or five different companies over their career. Move that to an IRA that you have supreme flexibility. You know, you've got whatever options you need. What's cool is og, you don't need a lot of options, but you can do whatever the hell you want. And you can look at the fee structure however you want, like move that money to an ira. I think for me is the thing to do. And I think you agree.

[OG]

Oh yeah, 100%.

[Navy Federal Credit Union]

Next up is what I just mentioned. Not knowing your 401k investments and the fees attached. Here's what I like doing. I like if. If I do have that IRA or an old 401k and it had some investments that were great and some investments that were rotten, I like overemphasizing those investments so that I can under emphasize investment options that suck at my current employer. Like if I don't have a great international option at my employer, I work for a small company. The international option is expensive. It's not really competitive. Well, in my ira, I can put that money over there into a much better option. Maybe a nice index fund for international investing versus having to shove the wrong investment choice into something that's suboptimal. I really like just knowing what your 401k is good at and what it's not good at. When it comes to the investments that are out there, that's a pretty easy one. Number five, how about this one? Not taking advantage of the employer match. Oh boy. Oh gee, this is that you're in the weeds on the golf course. You don't have to be a hero. Just kid, just please go get the match.

[OG]

My favorite thing is when people say things like it's only a 3% match. It's like you're only getting 100% return only on 3% of your money. If there was an investment out there that guaranteed 100% return or a 50% return, you would put as much money as you were allowed to do. Like if there was a slot machine in Vegas, every time you put in a dollar, it kicked out $2. You would do it as fast as you could, you know, up to whatever limit it is. And it's the same thing. Even if the options suck, even if the fees are expensive, even if everything else is awful about it, even if you're going to quit your job in six months, like it's still free money. So take the free money and whatever you can do to at least do the employer match is really important. And employers get creative with this, right? They want you to have some skin in the game. So sometimes it's dollar for dollar on the first three, sometimes it's 50 cents on the dollar in the first six. You know, they want you to kind of participate as well. And maybe you can't do all that right away, but that needs to be a really, really, really Quick short term goal of if they're giving me 3% for every 6% I put in the 50% return immediately I got to get to 6.

[Navy Federal Credit Union]

I know I kind of hurried past number four not knowing the 401 investments and fees because I mentioned that it's fairly obvious. But a piece of that OG which you bring up here, that's not really obvious. Let's say that you find out your 401k, you work for a small company, they pass a lot of the fees on in a small company to the employee because the employer doesn't have the wherewithal to pay what generally can be big administration costs. Having a high fee 401 is far better than not having a 401k at all. I believe putting money into this fund that you know isn't the place you want to be forever is still far better than doing nothing. And what I generally saw was that people had a high fee 401k when they were smart enough to know they had a lot of fees they were paying. Like, oh, I'm not paying those guys, so I'm not doing that. Well, what are you doing instead? I'm just spending it.

[OG]

I'll show them.

[Navy Federal Credit Union]

Yeah, I'm showing the man by getting less retirement.

[Joe's Mom's Neighbor Doug]

Right? This topic and the previous thing that OG said reminded me of one of the sterner talking tos I got from my grandfather. I was probably 10. We were walking, I'll remember, we were walking from the car into a grocery store through a parking lot. It was raining. Not bad, but it had been raining. There was, I think it was a nickel in kind of a nasty puddle of water. There's like an oil slick sheen. We're in a parking lot, right? So it just was kind of gross. And we're walking past and I just said to my grandfather there casually, oh, there was a nickel in there. And he goes, you didn't pick it up? Said, oh, no, it's only a nickel and it's kind of gross. And oh my God, did I get talked to about how he said, basically said you will never be at a point in your life where you can just walk past free money is essentially what he's saying. So in my head, the analogy to what you just said, Joe, was, yeah, it's kind of dirty, it's kind of messy. It maybe it's high fees and. But take the free money of the employer match. You know what you said, OG and even if it's a little dirty, it's worth it.

[Navy Federal Credit Union]

Or even the free money of the Tech shelter, you know, beats what you're paying in fees. And there may be some ways OG to get that money out of there early. If your company offers something called an in service withdrawal, you might be able to move that money into your own ira. But do you see many companies that allow in service withdrawals anymore?

[OG]

Yeah, yeah. It's usually after 55 is pretty standard.

[Navy Federal Credit Union]

Okay.

[OG]

But not before 55. Yeah.

[Navy Federal Credit Union]

So you might be able to keep working, do whatever you're doing, and you can get it out of the high fee 401k and do even better. But man, don't walk past the what's. What's way more than nickels.

[Joe's Mom's Neighbor Doug]

Yeah. Thanks for bringing up some childhood ptsd. Appreciate you guys just dredging that up for me.

[Navy Federal Credit Union]

That is our goal today. Number six is understanding the vesting schedule on that match on your 401k.og they talk about sometimes people will be ready to move money out of the 401k or they leave their job before the vesting period ends. Listen, if a job is life sucking, I wouldn't let a vesting schedule get in your way. And I saw that far too much when, when I was a planner where people like, well, I'm gonna stay because it's great money. Yeah. But every time you come in here, you talk about how it's just this job's killing you. But I think OG you still want to know what the damage is going to be before you rip the money out.

[OG]

Well, just remember when you see that statement and it says you have $100,000, if there's some vesting in there, that's not all your money yet. And most of the time for employer matching, there's not going to be a vesting schedule. But sometimes for additional discretionary bonuses or profit sharing or something, there sometimes is. And so you don't want to. To your point, you don't want to quit on June 30th if July 1st is your vesting. You know what I mean? Because that stuff is there for a reason. Because they statistically know you might want to leave by June. If you leave on June, then we get to claw that money back. And to your point, use it for other contributions or fees or whatever the case may be down the line. So I don't think you raise any red flags by calling the administrator of the 401 and asking fidelity, hey, can you explain this vesting schedule to me? When does different tranches become available? We're very familiar with vesting schedules. With stock options, it's the same for your 401k sometimes, if it's there, just.

[Navy Federal Credit Union]

Know what that is. Number seven, we dove into last week taking early withdrawals. We did an entire headline episode on that. So please go back and listen to that episode last week. Great headline from the Wall street journal about early 401k withdrawals. Number eight. Number eight, not rolling over an old 401k is often the biggie. This is especially important if you leave a company over a short time. If your account has under $7,000 invested under previous employers plan, they may decide to distribute the account to you or roll it into an IRA under the forced plan distribution rule. Not only is that a bureaucratic headache, this piece says you'll also have to pay taxes on any distribution. This check OG is just, while it's not the end of the world, it's an administrative freaking nightmare when they just cash you out.

[OG]

Well, again, this goes back to paying attention to where your money is and knowing you have some options if you leave your job. They're not going to do this in the first day and a half. This is a 90 day, 120 day, 180 day type process because it's going to take a while for all the systems and payroll and whatever to kind of coagulate and go like, okay, Joe's gone from his job. So you have plenty of time to deal with this and to call up the new plan or to call up Fidelity or Schwab or whatever and roll your money over. And. And honestly, if it's a small balance, this is a good thing that they are forcing your hand in some respect because I think it draws attention to the fact that, hey, you've got something here you got to do.

[Navy Federal Credit Union]

You don't want this little thing hanging out there.

[OG]

Yeah, I mean, again, back to my point, you will forget about it. It seems like you never will, but you will. It's not great that they send you a check for $5,000 because then they're going to withhold 20% for taxes and you'll get a 10% penalty. I think we talked about this a couple weeks ago. The amount of money that you lose, you know, or that people lose on average by cashing those things out, like, oh, it's just, it's just 10 grand. It's just 20 grand. I'll cash that out. Like I could use this for a car. I think was your story example that you used. Or maybe this is in the article. But yeah, I think if you get that notice, if you get the thing that says, hey, if you don't do anything in 30 days, we're going to force liquidate you. That is your wake up call that, hey, there's something I need to be doing here. Don't martyr yourself to the IRS just to not have to make a phone call. Like that's silly, that's $1,000 phone call. It's like, I'll make the phone call, we'll split the cash before we.

[Navy Federal Credit Union]

That's a good deal. Before we leave this topic, I mentioned earlier that my bias is, is to go Roth versus traditional and talk me out of that, right? I go in thinking I'm going to do the Roth and then I'm going to have the worst cash flow situation today but the most flexible outcome later on. I'm also going to get some pre tax money if I get the match. So that's going to be my bias. There is another bias I mentioned earlier which is rolling the money to an IRA when you leave a job. There is a situation, oh gee, we should raise awareness of here, which is if you want that early retirement age 55 or later, it might make sense to leave the money in the old 401k because 401ks have this rule and maybe you can dive into this for a second OG where you can take the money out after age 55 if you've retired.

[OG]

I mean it's just that simple. It's. Everybody knows the or should know the 59 and a half component of retirement planning, which is your qualified money becomes available to you without penalty at 59 and a half if you retire and you're separated from service. So you have to be retired after the age of 55. Then you also are eligible to take money from your 401k only, not IRAs without penalty. But the reality is is that you can take money anyways. At 35, if you retire from your retirement account, you just have to do it the right way. And there's a little bit more paperwork and some rules you have to follow so it's not impossible if you're financially independent. You're 37 and you've got 6 million bucks and you're like, hey, some of that's in my 401. I'm going to have to need some of that to live. You can use it without penalty. You have to think of it this way. The IRS set these rules in place to prevent people from spending their retirement money on stupid crap before retirement. If you're retired, the IRS is okay with it like, oh, you're 41 and retired. Good Job, no penalty for you. We just have to prove to us that you're not spending it on a Ferrari by doing these other rules. So there's ways around it. But if you're looking at early retirement, early being between 55 and 60, it can make sense to leave some, maybe not all, but you can leave some of your Money in your 401 and use that for cash flow if really all you have is qualified money.

[Navy Federal Credit Union]

I had one more note of something that didn't appear. This is a one for all of our uber nerds in the stacking Benjamin's family and that is this. Also OG if you have a big concentration of individual stock, maybe company stock that's inside your 401k, you also may not want to roll that to an IRA when you change jobs.

[OG]

Yeah, I mean I don't think that we want to get into this because it's so nuanced and very technical. But, but suffice it to say, if you have company Stock in your 401k, get help and you're leaving your job, you need to hit pause on what you're doing because you have a one shot to have a different tax status on that company stock versus it being ordinary income, turning it to long term capital gain. There's pros and cons to it. There's a lot of rules to be done to make sure that you do it correctly. Doing it correctly can save you bunches of money. Doing it incorrectly can cost you bunches of money. And there's timelines, there's deadlines, there's a lot of hoops to jump through. But I think the message for company stock is if you have your and this is your own company stock. This isn't like I work at Apple, but I have Nvidia in my brokerage account in my 401k. Now this is Apple within Apple or Nvidia within Nvidia. If you've got your own company Stock in your 401 plan, then you have to hit pause. This is much less common since Enron, honestly. Although it still happens because they give you a lot of opportunity to diversify.

[Navy Federal Credit Union]

Whereas before.

[OG]

They didn't have to give you the opportunity to diversify it. They could just pay you your company match in company stock and then make you keep it. Which yeah, sounds great if you're working at Nvidia, but not great.

[Navy Federal Credit Union]

Which was great for the CFO when they're doing the company buyback.

[OG]

Great if you're, yeah, need the float of company stuff. You need constant purchases of Company stock to keep the charade going. They stop that now. So it happens a lot less, but we see it maybe once a year. And yeah, so if you've got company stocking your 401k and you're like, I'm leaving my job, just know that you have to hit pause and ask for help or I wouldn't necessarily chat GPT this, but that might be a start to at least know what you're talking about.

[Navy Federal Credit Union]

Well, and I'll lead people down that path. Road is the strategy is called net unrealized appreciation. If you just look up NUA rules, you will immediately go, I want to go find a pro to. To help me get this right.

[Joe's Mom's Neighbor Doug]

Oh my God, what have I done?

[Navy Federal Credit Union]

Yes. Even if you think you understand it, I would still have a pro check your work because, oh, gee, 100%.

[OG]

Right?

[Navy Federal Credit Union]

The devastation that you will create for yourself if you do this wrong is pretty bad. Love this piece from Kiplinger. We'll link to it in our show notes stackybenjamins.com and we have a newsletter called the 201 where Kevin Bailey goes into topics like this and pieces like this that we've curated on the Internet. Kind of the best of the Internet that we found that week. Stacky benjamins.com 201 Also, when we go on the road, and I'm about to announce that I'll be headed to Portland. Portland, Oregon. We're coming to see you in September. I'll have details on that next week. But if you subscribe to the 201, we can send you an email with all of the details, even if you miss that particular show where we mention it. All right, that's going to do it for our headline today. Doug, we're on to the trivia segment. What's brewing today, my friend?

[Joe's Mom's Neighbor Doug]

Hey there, Stackers. I'm Joe's mom's neighbor, Doug. And today's is the anniversary of the day steel magnate Andrew Carnegie died. Hold on, is it Carnegie? Carnegie?

[Navy Federal Credit Union]

Isn't that weird? It's like there's Carnegie Hall.

[Joe's Mom's Neighbor Doug]

Yeah.

[Navy Federal Credit Union]

When I hear his last name, they say Carnegie.

[Joe's Mom's Neighbor Doug]

And now, now my brain's just circling the drain because now I'm like, is it magnet or magnate? This is what I think we need to spend time on.

[Navy Federal Credit Union]

Can just we.

[Joe's Mom's Neighbor Doug]

We just put the trivia aside and.

[Navy Federal Credit Union]

No.

[Joe's Mom's Neighbor Doug]

Okay, fine. During Carnegie, I just decided it's Carnegie. During Carnegie's lifetime. While he definitely wasn't a saint, this guy was not a saint. Carnegie did his share of good giving away over 90% of his fortune to create public works. Here's one what's a place Carnegie created that you'll find in nearly every town across America? One where you can learn more about everything. Everything from avocado farming to zombie defense strategies. A place he created over 2500 of across the world. I'll be back right after I go read about Carnegie erecting these places. I mean, nothing beats a good erection story, am I right?

[Navy Federal Credit Union]

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[E]

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[Navy Federal Credit Union]

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[Joe's Mom's Neighbor Doug]

Hey there, stackers. I'm a rector, set lover and double entendre. Master Joe's mom's neighbor, Doug. Ah, Andrew Carnegie. He once said, the man who dies rich dies disgraced. Lucky for me, I'm living modest and dying broke. Sounds like I'll be in the express lane at the pearly gates, huh? During his lifetime, Carnegie built over 2,500 buildings in towns across the world, nearly 1700 of which were in America. They were places people could go and gain knowledge around nearly any topic, including financial literacy. What were these places? Well, Carnegie created a ton of what are now called Carnegie libraries, giving away over $56 million through his own philanthropy. And later through his foundation, he planted seeds to help people learn more across across the world. Now I see the resemblance. Andrew Carnegie built libraries so people could educate themselves out of poverty. I. I built a podcast studio from scratch with my bare hands so I could avoid doing real work. All right, maybe it wasn't from scratch and maybe wasn't from my bare hands. Okay, fine. It was already here and I showed up, but with a big, giant bag of charisma, right? I mean, it's pretty much the same thing. No need to split hairs here and now. Here come two guys who claim to be ready for Q4, but couldn't even handle my beach playlist.

[Navy Federal Credit Union]

Joe and OG that beach playlist had a Bunch of sad music on it. Duck.

[Joe's Mom's Neighbor Doug]

Oh, by myself. Don't wanna be.

[Navy Federal Credit Union]

Well, if you keep wearing the thong, you'll always be by yourself on the beach. Just, just saying. Hey, time for our calling segment that we call Better Call Saul. See? Hi and OG this is where we shine on stacker with an issue that they just need some help from. From my adorable co host, Mr. OG Adorbs.

[Joe's Mom's Neighbor Doug]

There's a sentence that's never been said before.

[Navy Federal Credit Union]

Well, oh gee. We had got this question from Joel from Cleveland.

[OG]

Hey guys, Joel from Cleveland here just finished the episode where Doug refers to the potpourri holder as the candy jar. That explains a lot. Thanks for clearing that up for us. My question for you guys is how do people transition from a saver mindset to a consumer mindset? Going from building your retirement portfolio to living off of it and consuming it. Any advice or pitfalls to avoid? Thanks for all you do, Joel.

[Navy Federal Credit Union]

Man, thank you for that call and great question. I know a lot of stackers when I go to camp Fies, you know, and you're talking to people face to face or I'm at meetups and we get into some discussions. This is OG a big topic for people that generally have been attracted the idea of saving and squirreling money away and saving for a rainy day. And man, if I, if I make a move right now, what if the rainy day happens right after I go buy the travel trailer or after I decide to go on the big expensive trip to Europe? Do you hear about the guilt people feel when they begin trying to switch into spending mode?

[OG]

I think the easiest way to think about this is if you've ever driven up a mountain road before. We were in Utah a couple of weeks ago and we got to do this ATV tour and it wasn't an atv, it was a four seater thing. But anyways, we're kind of going up these switchbacks on this mountain dirt road with rocks everywhere, with the abyss on one side and the cliff on the other. On a normal mountain road, God willing, they have a guardrail there, right? And if you're like how I drive up a mountain road, unless I'm driving up it with the mountain on my right, I'm going to shade a little bit to the middle, give myself a little wiggle room, right? You know, like you don't know if there's a rock coming down or if there's another truck on the, you know, switchback or whatever, right? So you kind of go in the middle and if all of a sudden you get distracted and you hit the mountain, you got a little guardrail, you're like, oh, can't do that. Okay, I'm a little too close. If you go the other way before you fall off the abyss into your death, you grind against the guardrail for a while. Can't do that. Go back to the middle and the same thing is true. I think when you think about your retirement income, we sit down, we figure out all these calculations and we say, okay, I can use a 4% rule, or maybe it's 4.5 now or 5.1 or whatever that guy on the Internet said that one time. And the reality is that it's never going to be exactly right. Because some year you go, I had this major car expense or I had this house insurance deductible that I had to pay or I decided to take this trip or I had this unexpected medical expense or whatever, and it's always going to be kind of plus or minus whatever your number is. And I think as long as you're within those guardrails and you can set those up for yourself, everything's acceptable. And if you get to one edge, you go, okay, I got to pull it back. We've talked about this a bunch of times, but I think it's really a really great example. Both Paul Merriman. Warren Buffett had this great way of thinking about it, too. Hey, if the market's up, I get to have a cherry Coke and an egg McMuffin and a hash brown for breakfast because my wife left me the money in the car. If the market was down yesterday, all I get is the egg McMuffin. Paul Merriman.

[Navy Federal Credit Union]

Well, to finish your Paul Merriman story, that's Buffett. The Merriman story is Merriman goes around the Pacific Northwest where he lives in down years and explores those areas. And then he goes around the world during the up years.

[OG]

Yeah, yeah. So it's just kind of a variable thing. You're not going to especially early retirees who are very analytical. And this is what this question really is around is I'm a super analytic fire achiever, like, how do I transition? Well, first of all, you're not going to do it unless you're confident that you're going to be successful. Right. So you're going to run the thousand Monte Carlo scenarios. You're going to what if it to death. You're going to find out what those upper and lower limits are and that sort of thing. I think a very real way to think about this is if you are foregoing things because you're worried about the cost, then I think you need to have some concern around, you know, my spending appropriately. If you're doing all the stuff that you want to do and you're not missing out on anything that you want to do, then there's no obligation to spend money. You know what I mean? I think for some reason people think you have to go spend money you don't have to. But if you're not doing stuff because you're afraid, maybe that's good or maybe it's bad. I think that's where the investigation has to happen.

[Navy Federal Credit Union]

Well, and this is where the financial plan, I think, solves a lot of problems. OG because when you do the financial plan, you're beginning with that end of mind, what do I want to do? And then you're talking about values. It isn't about spending more money. Which is why I don't love the 4% rule or the 5% rule or whatever the hell it is. Because now I'm just mindingly spending what I can, which is ridiculous. If 5% doesn't make me happy and 3% would, why the f am I going to spend more money? That's where a lot of the guilt comes from. But if I'm starting with I really, really want this and I can't afford it, now the savings plan gets more real. Now the spending plan gets more real. I think this is where the financial plan sol lot of problems.

[Joe's Mom's Neighbor Doug]

You know, I, I interpreted this question and I've heard this question other times and I usually interpret as more of a how do I shift my mindset? Because I've been so cautious for so long and now maybe I'm ready. Like maybe I have the things I need. I've got my bases covered. I feel like my long term plan, I'm on the right path, but I just can't get comfortable. It's an emotional thing.

[OG]

Right.

[Joe's Mom's Neighbor Doug]

I just can't get comfortable with finally loosening up and not blowing my plan, but with some of the extra I have to spending it. And I think it just comes from or the ability to make that switch is you have to trust yourself that the person who was good enough to put themselves on a disciplined plan to save the money and stick to the end goal that they had is going to be able to recover if something goes sideways. You're smart enough, you've already dealt with those situations over the last, whatever, five, 10, 15 years that you've been on your financial journey. You got it, man. Like you, you have the skills to be able to recover. So let's say you do go out and buy that car that you've really. You've. You've throttled yourself back. See how I got the. The analogy there? The throttle in the car, huh? Yeah, you. You throttled yourself back for years. You drove the old car, but you're like, I'm on good shape. I'm on good ground here. Maybe it's time for me to get the new car, do it. And if something goes sideways, you're gonna be okay because you had the skills to get yourself here in the first place. And maybe a THC gummy can't hurt either to just chill out a little bit.

[Navy Federal Credit Union]

And now that advice is from Doug.

[OG]

New sponsor to the Stacking Benjamin Show. It's a perfect place to put that.

[Navy Federal Credit Union]

Having trouble relaxing with your money? We have a way to relax. Oh, gee. I think there's a good point buried in what Doug said, too, about this idea that initially it will be uncomfortable. Like, being comfortable being a little uncomfortable, and knowing that's coming is an important part of this.

[OG]

Ultimately, I think you just have to fast forward down the line a little ways and say, what makes me feel more accomplished in my life plan? You know, if you're 60 years old today and you're like, hey, I think I'm, you know, I'm good. I got cash. I can, you know, I feel confident where I am. What makes you feel like you've lived your life when you're 80 and you go, oh, look at all this money. I get to swim in, like, Scrooge McDuck because I was such a miser for the last 20 years, and I never did anything. Or are you happy having experiences or whatever that means to you? Donating money or being like, you know, Carnegie magnate, you know, and seeing a library built or helping a community thing that's important to you or whatever, but you don't have the money anymore. You know, like, what's a better outcome for you 20 years down the line? And whichever one is most important to you is the thing that you're going to gravitate toward. I've always said a little tongue in cheek. Like, what's the point of having 10 million bucks in the bank and never taking your kids or grandkids to Disney? Everyone knows Disney is the absolute worst waste of money in history of mankind. It's so expensive. Every single thing is designed to literally flip you upside down and shake all of the change out of your pocket. However, every single time we go, and I know Joe Every time you go. And I've never talked to you about going to Disney, Doug, but I'm telling you, it'd be amazing if you did. It is so awesome. You never leave and go, I wish I wouldn't have done that. You're like, I should come back. I wish I could live here. Like, that's. You always come back thinking, this was the greatest. My last time at Disney with my kids, I was sick for a week on the couch. I went one day to the parks. The other five days, I was on the couch in the apartment sick with the flu and Covid and miserable. And I went, yeah, the kids had a great time. It was really kind, you know, I.

[Joe's Mom's Neighbor Doug]

Was a little sick.

[Navy Federal Credit Union]

It was still worth it.

[OG]

I was a little ill. It kind of sucked. But everyone else had such a great time. I could see the pool from my window. They look like they were having a blast. I want to go back. You know what I mean?

[Navy Federal Credit Union]

I did great. Four days without the kids. It was great.

[OG]

And they didn't. They didn't discount it. They weren't like, hey, sorry, you didn't use your park passes that you bought that expired. You know what? Here's a gift certificate. No, they're like, yeah, sucks, bro. Yeah, bruh. Sorry, bro. My point is, there's experiences. There's things that are important to you. And I bet that if you kind of get down inside, it's not. The most important thing to me is not vault full of gold coins to swim around in, like, duck. It's. I think this experience is. It's something. It's a donation. It's whatever. Like, is more important. So do the thing that's more important. And to Doug's point, you're smart enough to figure this out. You know, you're not going to let the plane go all the way to the ground before you start doing something.

[Navy Federal Credit Union]

This idea that money is a tool and not the goal, I think it's a huge thing that's difficult.

[OG]

This is why it's so funny to me when we talk to people about investment performance. Investment performance is an important piece of your overall plan. You can't negate that or just kind of poo poo that, because you gotta be in the ballpark of what your plan requires. But the ultimate goal. I've never met anybody at 70 years old that goes, thank God I averaged 9.02%. Oh, I'm so much better than my friends. You know, like, people go, I'm so glad I was able to take the cruise. I was so glad I was able to help my church. I was so glad I was able to go to Disney. Nobody ever says, like, I'm so glad that my Nvidia stock popped. You know what I mean? It's never about the performance. It's never about the actual dollar amount. So glad I crossed this threshold that I imagined in my brain was some arbitrary success factor. It's all about the thing that it provides, which is freedom or whatever that goal is for you.

[Navy Federal Credit Union]

We spoke with Bill Perkins back on our July 27, 2020 episode, and that episode still resonates OG because I think the big points that Bill brought to the table are very similar to the points that you're making now, which is experiences are more valuable than just possessions and that time matters. And. And I think when we look at regret, I think we have to turn that regret around and instead say, I get to the end of my life, and what would I regret not spending money on? What experiences do. I wish I would have prioritized that if I don't do this, I'm gonna feel regret turning that regret emotion. It's the same regret that Susie Orman talked about when she was on the show, saying, you know, you feel like you can't save any money in your 401k when you're 30. Now imagine you're 60 and you didn't save any money. All of a sudden the regret goes the opposite way. You're like, oh man, I should have done that. I think you need to just put yourself in future you mode and think backwards about this issue. Great topic, Joel. Thanks for bringing that up. And you know what, thanks for calling in and also reminding Joel that the potpourri is not the snack bar.

[Joe's Mom's Neighbor Doug]

I need to keep learning that lesson over and over and over again. It just looks so delicious.

[OG]

So delicious though, doesn't it?

[Navy Federal Credit Union]

Stack benjamin.com voicemail gets you to the place where you can call in and ask us a question as well. All right, let's mosey out on the back porch. Doug, what's happening in our Stacking Benjamins community?

[Joe's Mom's Neighbor Doug]

Yeah, Joe, you know, we had a great comment from a stacker in our basement group, stacker named David, who said love. The most recent episode certainly covered a lot of topics. Always love the Len Penzo sandwich survey. But I did want to comment on the math you did at the end where you discussed the guy pulling 14k out of his 401k to buy a new car. While I would never advise anybody to pull money out of their 401k, especially to buy a car. I'm not sure you were comparing apples to apples. This conflicts with your messages on previous episodes about money being fungible. If he is paying 9k for a car, let's say, does it really matter what account it comes from? Sure, the 10% penalty would compound and that is the biggest difference. But he will have to pay taxes on that money eventually. And you have even said the math doesn't care whether you pay taxes on it first or after growth. Again, I would never advise anybody to pull money out of their 401k, but if money is truly fungible, it's really just the 10% penalty equating to 45,000 versus the 450,000 per your math. Love the episode, but had to comment on the fact that his decision wasn't a half million dollar decision, only 50,000. That said, buy a used clunker that will get you from point A to point B reliably and you'll be much better off. All that from David. Thanks, Decker. David.

[Navy Federal Credit Union]

David, this was great. And there were a lot, there was a lot of great discussion on this in the basement. So love David's contributions to our community whenever he. He writes. And you know, the reason I brought that up, OG had less to do with the compounding interest that we did in terms of a math equation. And David, you're 100% right. It's a $45,000 problem, not a $450,000 problem. However, it still is a $45,000 problem if you're working with the idea of buckets. The idea of this was money for retirement and now you've reallocated it. I think OG it's the opportunity cost, which is the important thing here. The fact that Tom didn't weigh at all the opportunity cost. He just knew I had this money sitting here and I needed the new car. So if I need the new car, why wouldn't I just take it out of my 401k? Never once thinking that that was half a million dollars toward his retirement, that now he's going to have to go back and resave.

[OG]

Yeah, I mean, I see what, what Dave's saying here about money is money. It just doesn't. Whether it's in a savings account, brokerage account, equity of your house, it's still on your balance sheet, basically. So I kind of understand that. Although I would say that your tax deferred growth might also add a little bit to that 45 because you're not paying tax on overtime. But I see we've got to Kind of make an example here, I think, of the decision tree that's happening, right? I mean, to maybe his point, money's money, and it doesn't matter where it comes from. It still cost him $9,000. Could he have gotten a loan was his ad. You know, there's.

[Navy Federal Credit Union]

Well, I think that's the real comparison we didn't talk about, David, was, do I take the loan versus taking it for my 401k?

[OG]

What I always tell people is there's no right or wrong answers to any of this stuff. You know, it's really so personal and. And that drives the nerd community crazy because it's like, no, no, no, no, no. The correct answer is this. And it's like, no, it's not. What's right for you is different than for me. And it's about our personal. Our life. You know, our life is different than everybody else's, and your life is different than everybody else's. You know, a very easy example of this is there's plenty of ways to make money and be successful. If you invest in stocks, right? You just invest in ETFs and mutual funds and whatever. Just do your thing. There's also plenty of people who have been on the show and who are influencers and whatever, who are wildly successful, who don't have a dollar in stocks, who only have money in real estate. Does that make their way right and our way wrong or my way wrong and their way? No, it doesn't. It just means that we're different people and there's a thousand ways to be successful. You taking money out of your 401k to buy a car seems stupid to one person, seems reasonable to another. And this is where planning, I think, is the most important piece. Because the idea of planning is to look down the road that you're on and see what the outcome looks like. And if you're good with that outcome, then stay on that path. The benefit of having a guide with you is somebody who's been up and down this path a bunch of times. A bunch of different paths on the path that you're on, different routes is you can say, well, I was thinking about doing this. And your guide hopefully goes, yeah, we've been down that path before. It's pretty steep, it's full of bears, and I mean, you can get there. It's not fun, it's doable. Or there's this nice, casual path down the bubbling creek. We're out, that we're on. We could stay on that one. And I think that's ultimately the point here with this 401k money. Yeah, dude. You can get there doing it this way, you can get there doing it that way. Not trying to tell you which way is right. Maybe the guy's got. I mean, there's cultures that don't believe in borrowing money. Right. And paying interest. In that person's mind, the greater crime, you know, is to pay interest. That doesn't make that way of thinking right or wrong. It's a better thing to say, no, I pay cash and today my cash is in this location. So I think it's about recognizing all of the downstream effects and then making an educated decision for you and your family based on what you see the future looking like. Sorry, I'm going to stop talking.

[Joe's Mom's Neighbor Doug]

Joe, do you get the impression that OG's vacation to Utah was somehow terrifying and life threatening? Because all of his analogies lately are about these horrible wilderness situations. Mountain roads and steep paths and down rapid streams.

[Navy Federal Credit Union]

It gets you a good look into the psyche.

[OG]

It was interesting to find out on our tour in the mountains that apparently the mountain lion population is so bad in Utah that it is full open season on mountain lions all the time.

[Joe's Mom's Neighbor Doug]

No kidding.

[OG]

Yeah. Set out one of my kids tied to a tree and I was like, here, kitty, kitty, kitty, kitty, kitty.

[Joe's Mom's Neighbor Doug]

Those are. They're killing machines. Yeah. I have a great mountain lion story for part of the show that we don't talk about.

[Navy Federal Credit Union]

Yeah, maybe might have one before we leave this topic. I did have one piece of the story that I didn't tell that much last week, David, that I think your comment also bears out, which was Thomas was also in my office. I mentioned his dad had sent him over and he was in his off in my office because he wanted to take it back because of the fact that he didn't recognize the fact that there would be the 10% penalty. He didn't understand what the rules are. That to me was the important part. I think the compounding is a nice wow for people and that's a reason I like going through the compounding part of the story. But the fact that we look at this stuff ahead of time, almost like we began today's 401k discussion with looking at the different types that are available before you choose. Not going to be the end of the world either way, but knowing and willfully going into one versus the other can make your planning easier. Easier in the future. Fantastic discussion, David. Glad you brought it up. And if you by the way, you're not in our basement Facebook group it's stacking. Benjamin.com basement will be the quick and easy link to get you to our Facebook group. All right, I think that does it for today. At the end of every episode, we. For some damn reason, ask Doug.

[Joe's Mom's Neighbor Doug]

You trust me, Doug? That's your first mistake.

[Navy Federal Credit Union]

Doug, you take snacks out of the potpourri jar. But what were your three takeaways today that we should be working on?

[Joe's Mom's Neighbor Doug]

Well, between hallucinations, Joe, this is what I heard. First, take some advice from our headline. Decided not to take the match with that retirement plan. Come on, go for it. You can change it back later if you aren't able to save that much. But you'll never know if you don't take action. Second, how do you become a spender? Make sure the spending equals your values and start small. If you feel regret, go back back and retool to see what was bothering you and why. Becoming a spender doesn't happen overnight. You gotta work at it. Seriously. Ask OG he's been working at it forever. But the big lesson. You want to get a podcast session started quickly in Texarkana? Just ask. Hey, who wants to help me clean the grill? Believe it or not, these procrastinators suddenly become focused. See how focused they were today? Okay, guys, we finished. Now let's go clean the grill. Where did they go? This show is the property of SB Podcasts, LLC, Copyright 2025, and is created by Joe Saul Sehi. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome [e-mail] along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. Oh, yeah. And before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug, and we'll see you next time. Back here at the Stacking Benjamin show.

[OG]

Doug was talking about the pronunciation of Carnegie. Carnegie. Carnegie Mellon. Carnegie Melon.

[Joe's Mom's Neighbor Doug]

It doesn't sound right, does it?

[Navy Federal Credit Union]

It's definitely Carnegie Mellon.

[OG]

It reminded me of this bit from Sam Gallagher. You guys might have seen this many moons ago.

[F]

Sam Gallagher, get down. Check it out. B O M B Bomb. T o M B. Tom. No, Tomb. If T O M B is tomb, that's boom. The bomb's over. But no, that's bomb. That's tomb. Get ready. Is this Calm or coom. No, that's comb. And that's why spelling bees are only won by introverted little ugly girls. Because they're the only ones that got enough time to memorize this c o m be comb. P o m be poem. No, poem is p o with a e. With a m. Now, p o e m poem. H o e m home. No, home is h o. With a m. With a e. H o m e home. S o m e som. No, that's some s o m e. Some n o m e nom. No, that's n u m v. The whole doggone thing is dumb.

[OG]

He's flipping over. He's holding a thing and he's flipping the letters.

[Joe's Mom's Neighbor Doug]

It's a great bet.

[OG]

He's making this bit and he goes, the whole thing is d u m b dumb.