What Would YOU Do With $50,000? (SB1716)

Summary

The Stacking Benjamins Show: What Would YOU Do With $50,000? (SB1716)
Release Date: August 1, 2025
Hosts: Joe Saul-Sehy and OG
Guests: Paula Pant (Afford Anything), Jesse Kramer

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Introduction to the Windfall Scenario

In this engaging episode of The Stacking Benjamins Show, hosts Joe Saul-Sehy and OG delve into a thought-provoking financial scenario: What would you do with $50,000? Joined by financial expert Paula Pant from the Afford Anything podcast and guest Jesse Kramer, the panel explores various strategies for handling a significant windfall. The discussion balances practical financial advice with entertaining banter, maintaining the show's signature light and friendly tone.

Understanding the Nature of the Windfall

Paula Pant begins by distinguishing between different sources of a windfall:

"I want to make a distinction here between $50,000 that came from an inheritance versus 50,000 that came as any other windfall."
(09:54)

She emphasizes that an inheritance often carries emotional significance and may come with specific wishes from the deceased, which should influence how the money is managed. This sets the stage for the panel to consider not just the financial implications but also the personal and emotional aspects of receiving such a sum.

Sharing the Windfall: Who Needs to Know?

The panel discusses whether individuals should disclose their newfound wealth:

Paula Pant suggests:

"If I had a spouse or partner, I'd tell that person. Otherwise, no. A financial advisor, but yeah, otherwise, no."
(12:01)

Doug concurs, adding that typically only close family members need to be informed unless a broader disclosure is necessary for financial planning purposes.

Order of Operations: Prioritizing Financial Moves

The core of the discussion revolves around the "Order of Operations"—a strategic approach to managing the $50,000. Each panelist presents their prioritized list:

1. Maximizing Retirement Contributions

   • Jesse Kramer advocates for maximizing 401(k) contributions to secure employer matches:

     "Max out your 401k to get the match."
     (14:05)

   • Doug expands on this by emphasizing the importance of capturing free money from employer matches:

     "This is probably going to be the exception more than the rule, but I'm sure there are some stackers right now who are like, yeah, guys, I would love to full match in my 401k..."
     (14:13)

2. Paying Off High-Interest Debt

   • Paula Pant prioritizes eliminating high-interest debt immediately after retirement contributions:

     "I would do that first. I mean if I had any high interest rate debt, that's the first thing I would tackle."
     (25:21)

   • OG adds a behavioral perspective, stressing that paying off consumer debt can prevent future financial pitfalls:

     "If your life is such that from a cash flow standpoint you have high interest consumer debt... you run the risk of having that backfire."
     (26:34)

3. Investing in Personal Business Ventures

   • Paula Pant, who owns a business, sees investing in her enterprise as a top priority, highlighting the higher risk but greater potential upside:

     "If there's a privately held business and you are the 100% sole owner... there's a much greater risk, but there's also a much greater upside potential."
     (15:30)

Behavioral Finance: Understanding Personal Spending Habits

A significant portion of the discussion focuses on the behavioral aspects of handling unexpected money. Paula Pant introduces the concept of the "Scuzz Factor", referring to the personal financial threshold that triggers discomfort:

"There's a certain financial threshold after which we become uncomfortable for some people... Maybe it makes sense to lock that money away."
(51:46)

This concept underscores the importance of self-awareness in financial planning, suggesting mechanisms like tax-advantaged accounts or down payments on homes to prevent overspending.

Tax Implications: Navigating the Complexities

Tax considerations are crucial when managing a windfall:

• Inheritance Tax: Doug clarifies that inheritance itself is typically not taxable to the recipient, though the estate may be subject to taxes:

  "If you get money through an estate, it's not going to be taxable to you."
  (54:34)

• Capital Gains on Appreciated Assets: When inheriting highly appreciated stocks, selling them could incur capital gains tax. Doug advises aligning such decisions with one's financial plan:

  "If you own investments that don't align with your greater financial plan... you should sell those and pay the tax... and redeploy those assets."
  (53:05)

Life Stage Considerations: Early Career vs. Retirement

The impact of a $50,000 windfall varies significantly depending on one's life stage:

• Early Career: Paula Pant highlights that younger individuals might use the money to fund education, make a down payment on a home, or invest in a reliable vehicle:

  "Early on, I think you would spend that money getting the education or training that you want... making a down payment on a home."
  (45:05)

• Retirement: For those nearing retirement, the focus shifts to securing funds for future living expenses:

  "If you're in your 60s, you're probably thinking about retirement and parking this money to fuel that retirement."
  (45:05)

Integrating Financial Goals and Policies

The panel stresses the importance of aligning the use of the windfall with one's overall financial goals and investment policy statement. Paula Pant suggests a balanced approach, combining retirement investments with business growth and paying off debts:

"The right answer is some combination of the two and it depends on the specific individual circumstances of that particular time."
(16:11)

Final Takeaways: Strategic Steps for Managing a $50,000 Windfall

As the episode concludes, the panel summarizes actionable steps for listeners:

1. Assess the Type of Windfall: Understand whether the money is an inheritance or another form of windfall, as this influences emotional and financial decisions.

2. Prioritize Financial Health:

   • Maximize retirement contributions to benefit from employer matches.
   • Eliminate high-interest debt to improve cash flow and prevent future financial strain.
   • Invest in personal or business ventures for long-term growth, if applicable.

3. Behavioral Safeguards:

   • Identify personal spending thresholds (Scuzz Factor) to avoid overspending.
   • Utilize commitment devices like locked-in investments or down payments to restrict access to funds.

4. Consider Tax Implications:

   • Navigate potential taxes on inherited assets or capital gains.
   • Consult a financial advisor to optimize tax strategies.

5. Align with Life Stage Goals:

   • Younger individuals may prioritize education and homeownership.
   • Those nearing retirement should focus on securing funds for future needs.

Notable Quotes

• Paula Pant:
  "If it's an inheritance, then it came from a loved one, and I would want to make a plan for that money that has some type of relationship, some sort of way to honor that particular loved one."
  (09:54)

• Doug:
  "I think it's important to draw a distinction there... if grandma says, hey, Sonny, we want you to use this money for something important, like it's worth taking that into account."
  (10:52)

• OG:
  "We should just do absolutely nothing for an extended period of time and just set your watch for remind me in 90 days type of thing."
  (18:42)

• Paula Pant:
  "There's an element of knowing yourself because if you know that your scuzz factor is calibrated towards having 10 grand in credit card debt, then you're gonna keep getting yourself back there."
  (51:46)

Conclusion

This episode of The Stacking Benjamins Show offers a comprehensive exploration of managing a $50,000 windfall, blending practical financial strategies with insights into personal behavior and life stages. By addressing the multifaceted nature of unexpected money, the panel equips listeners with the knowledge to make informed and thoughtful financial decisions.

For more detailed insights and personalized advice, listeners are encouraged to visit StackingBenjamins.com and explore additional resources and episodes.

Transcript

[Joe]

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[Doug]

Halfway home from the theme park before.

[Joe]

You'Re like, oh, where's Doug? Oh no, we have to go back.

[Doug]

My wallet's in his fanny pack, so.

[Joe]

Oh. Do not feel bad for Doug. He's terrible.

[Doug]

Every time he tells a story somewhere, a child loses a balloon.

[Jesse]

Live from the basement of the YouTube headquarters, it's the Stacking Benjamin Show. I'm Joe's mom's neighbor, Doug, and I love August. I begin planning those end of summer excursions. I take down the St. Patrick's Day party decorations and I think about what I'd do if I inherited $50,000. You know what I do? I'd put together a panel of experts and ask them. I haven't figured out who those experts might be yet, but I might as well ask the people we've got here today, huh? And don't worry because we'll also save time for our incredible year long trivia competition.

[Paula]

And.

[Jesse]

And now a guy who can't lift weights. But he sure knows how to flex a Roth. Ira, it's Joe. Oh, se.

[Joe]

I think it's not weight, Doug, it's weight. I could lift weight. Like a single weight.

[Jesse]

Single weight.

[Joe]

But when you get to weights, it's way, way too far. Hey, everybody, Happy Friday. Welcome back to the Stacky Benjamin Show. We're super happy that you're here, Amanda. We have a topic for you today. If at some point in your life, maybe there's a windfall on the way, you're going to want to Know what to do. And we've got the perfect people to teach you what the things are to think about. What's the order of operations? What are some of the tangential things you might think differently about in your life? Let's meet our panel today, starting with the guy across the card table from me. Mr. OG is here. How are you, buddy?

[OG]

I'm having all sorts of troubles today, but I'm okay. Word to the wise, if you ever have a, you know, like a granola bar, sometimes they have like chocolate chips on them or something like that.

[Joe]

Yeah.

[OG]

And you decide to set a hot coffee mug on top of a old chocolate chip. It. It doesn't look like chocolate chip anymore when it's all over your fingers and all over your desk.

[Joe]

Is that your excuse for the chocolatey fingers? Is that what you're going with?

[OG]

Well, it still tastes like chocolate though, so that's good.

[Jesse]

That's a risky taste test.

[OG]

Shambled in one, fellas.

[Joe]

And ladies, just give it the taste test. The guy that hopefully hasn't done that with his daughter's diapers is Mr. Jesse Kramer.

[OG]

Not mustard here.

[Joe]

Yes.

[OG]

Mustard. Jesse.

[Doug]

We are off to a rip roaring start. What are we, like 45 seconds in? I'm about to bail out of this episode.

[Joe]

It's Friday.

[Doug]

000. I'll buy a new podcast partner.

[Joe]

You'll buy new friends.

[Doug]

Yeah. Get me out of here.

[Joe]

And we're done. Thanks for playing, everybody. We're out of here. But besides being here with us, you're having a.

[Doug]

Having a great day. It is a gorgeous day here in Rochester today. And I got out this morning with a friend and we whacked a ball around a golf course a little bit and, you know, no complaints. Now I'm in the office getting some things done and I'm here with you guys, melted chocolate and all. It's wonderful.

[Joe]

Fantastic. And speaking of whacked, Paula, Pay up from Afford Anything joins us.

[Paula]

I got to say. So as we've been talking for everyone who's joined us on YouTube or who's watching on YouTube, you'll have seen a color change, a background change, because when this started, the background was this golden yellow. And now, of course, we've changed to stacking Benjamin's green. The. The green of a Benjamin, which totally disrupts the joke that I was about to tell. Because, Jo, I was going to joke that the yellow that we have as our background, one could describe the color as maize.

[Joe]

Oh, God. No. No.

[Paula]

And I notice you're wearing these blue glasses.

[Joe]

No. And the show's over. Everybody say goodby, Paula Pant as she is gone from this podcast. Oh, that's horrible.

[Paula]

Hey, you're. You're the one who made a Wolverine colored show.

[Joe]

Oh, God.

[OG]

I knew I liked Paula.

[Joe]

What? What the heck's going on here? Well, on that note, quick change the topic. We're going to talk today about what? If you came across $50,000, you get a call from either your bank, an attorney, a loved one, and there's $50,000 in your bank account. That wasn't there yesterday.

[OG]

Bank's just gonna ran like. Has that ever happened? Have you ever had bank error in your favor?

[Doug]

I was gonna say it's monopoly money, right?

[OG]

I don't think so.

[Joe]

There it is right there. Jesse. It could happen. Who knows?

[Doug]

But for whatever reason, it usually happens to optimists. Oh, gee, so it would never happen to you, but other people it might happen to for sure?

[OG]

Maybe.

[Doug]

Sorry, sorry, sorry.

[Jesse]

Shots fired.

[Joe]

All right, we got. Jesse's clearly here. OG Is here. Paula is here. Well, for the time being, she's here. After that slight, I don't know if we want her to stick around or not. And Doug's here. We're going to talk about $50,000. What would you do? But first, we have some partners who make sure that we can keep on keeping on. And you pay nothing for this. Goodness. We're going to hear from them and then we're going to talk about how to invest a windfall. Do you remember the time before the Internet ruled our lives? Well, before that time, AOL brought America Online with email and Instant messenger. By 2000, AOL was so powerful it set his sights on media giant Time Warner. 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 in business and how they shape our world. Because when your flight perks disappear, your favorite restaurant chain goes bankrupt, or new tech 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 Wondery Plus. This episode is brought to you by Navy Federal Credit Union. Navy Federal can help you find and finance the right vehicle with ease. In this summer, you're in the driver's seat. With savings, you could get a 250 bonus when you buy your next car through Navy Federal's car buying Service powered by TrueCar and Finance with Navy Federal. With this tool you can find the vehicle that's right for you as you search through inventory and compare models. And you could get an amazing rate when you finance with Navy Federal. Navy Federal strives to support all active duty veterans and their families to achieve their personal and financial goals. And this partnership with TrueCar is one of the many tools Navy Federal uses to help its members make your plan with Navy Federal and TrueCar today Navy Federal Credit Union Our members are the mission to qualify for the $250 bonus, car purchase and financing must be completed by September 2, 2025. Terms and conditions apply and are available at Navy Federal.org TrueCar Credit & Collateral subject to approval. Navy Federal is insured by NCUA. Before we get into talking about how to invest a windfall, saying hello to our friends hanging out with us here. B is in the high desert. Does that mean B is high in the desert or is it. Is the desert high? Like which one? Paul is high?

[Paula]

Why does it have to be one or the other? Why can't it be both or the.

[Joe]

Or the low desert? I don't know. Our friend Jim Wang is here in Maryland. Hey, Jim. Carlos from North Carolina hanging out with us. Robin is okay saying hi from. Okay, not sure what that means.

[Paula]

Oklahoma.

[Joe]

Matthew. Matthew talking about the chocolate says better than the fuzzy hostess gamble that we talked about. Oh, gee. What was it you or Doug?

[OG]

Oh, no, that was me.

[Joe]

Yeah, that ate the fuzzy Twinkie.

[OG]

That was chocolate cupcake.

[Jesse]

Oh, that's the kind of hostess Matthew's talking about. I completely. Yeah, it took me a second. Okay, now I'm with you. I got it.

[Joe]

Art says they want their 20 minutes back. There you go. And Cat says hello there. Hello there, cat. All right, let's dive into this hall of pant. You just inherited $50,000. Let's start off with just your gut reaction. You now have $50,000 you didn't have before. What's your gut reaction?

[Paula]

Okay, so I want to make a distinction here between $50,000 that came from an inheritance versus 50,000 that came as any other windfall. Like let's say a commission, a bonus, heck, a lottery winning a scratch off ticket, whatever.

[Joe]

Why is that different?

[Paula]

If it's an inheritance, then it came from a loved one. And so if it came from a loved one, I would want to make a plan for that money that has some type of relationship, some sort of way to honor that Particular loved one.

[Joe]

Do you draw, Jesse, that. That differentiation as well?

[Doug]

I actually do. Or I think it is important, at least mentally. Like, we know so much of the stuff we talk about here has to do with behavior and psychology and all those things. And yeah, I think it's important to draw a distinction there. I will say, Paula, if I inherit money from my uncle, who's a degenerate gambler, that is the same as winning a lottery ticket in my mind. But no, I think Paul is right. Like, if my, especially with so many people these days might write a letter to their heirs or might have specific wishes in a will to their heirs. And I think it's important. Like, hey, if grandma says, hey, Sonny, we want you to use this money for something important, like it's worth taking that into account. I think it'll make you feel better.

[Joe]

Well, certainly, Ochi. I think, Paula, Jesse, have a point. If they have something in their will about how they want you to use that money. But it's funny. Money, money itself is an emotional. But we attach so much emotion to money. Do you. Do you see a difference, like they do between whether it's an inheritance or some other type of windfall?

[OG]

I mean, I would think grandma always wanted me to have a Ferrari, so. So here we go. No matter what she said, I've never inherited anything ever. So I don't know how I personally would feel about this, but I've seen it happen, and I feel like there's a little bit of extra pause maybe is the best word to think, you know, like between receiving it and doing something with it. So I guess most people have some sort of thought of, like, you know, this is a gift from somebody. Maybe they're alive, maybe they're not anymore. But I still have to have some honor in what I do next.

[Joe]

So next question. Paula Pant. Would you tell anybody you now have $50,000 you didn't have before? Does anybody need to know?

[Paula]

I mean, if I had a spouse or partner, I'd tell that person. Otherwise, no. A financial advisor, but yeah, otherwise, no.

[Joe]

Jesse, would you tell anybody about your info?

[Doug]

Spouse, definitely. But I think that's where it ends. I think my wife is the only person I tell.

[Joe]

Oh, gee.

[OG]

I think this goes back to where it's from. We had an example where we had a pretty good profit in a real estate sale. And I told. I mean, obviously my wife and I were partners on the deal, so we knew about that. But we talked to our kids about it, and they were a little bit younger, but we Kind of kept it more family. I don't know that I would rent a airplane banner and let the universe know, but I felt like in that situation, and it was maybe just a smidge more than 50k, I felt like in that circumstance, it was a good opportunity to use some real time on the job training, so to speak.

[Joe]

Right.

[OG]

Like, what do they call that? Just in time training.

[Joe]

Yeah, Right.

[OG]

It's like, boom, we got this check. Let's talk about it as a family. Here's what went into it. Here's. Yeah, it looks really great, but now we have to really adjust for the costs associated with it that we were out of pocket until we got that money. So it's not like all profit and just kind of teaching the kids about that a little bit.

[Joe]

Let's go through that. Let's do that. Just in time training with all of our stackers. Jesse, let's start with you. What's the first thing on your order of operations when you're thinking about best use of $50,000? You didn't know you were going to.

[Doug]

Have the first thing on my list. I suppose it's going to be thinking back to the order of operations if I'm in a situation where I can't currently capture my full 401k match, but now I have this extra $50,000 of liquidity, hopefully that buys me enough space in my personal finances to now start getting my full match. But then after that, I'm just thinking high interest debt. That's the first place my mind goes to. If I've got $15,000 in credit card debt debt, it's immediately going to disappear. And even in my personal circumstances, my mortgage interest is high enough that I don't really love it sitting there on my balance sheet. And even that's going to be one of the first things that I would personally tackle in my life.

[Joe]

That's interesting. So max out your 401k. Well, at least to the match.

[Doug]

Yeah.

[Joe]

You take the $50,000 and have it create more money. Really?

[Doug]

Oh, totally. Exactly. This is probably going to be the exception more than the rule, but I'm sure there are some stackers right now who are like, yeah, guys, I would love to full match in my 401k, but my budget is just stretched to the limit every single month and I can't do it. Well, hopefully now this $50,000 influx buys you enough space in your budget to start getting that full match.

[Joe]

Yeah. So now you're spending down from the 50,000 account while you're shoving more money into the 401k to get that. Correct.

[Doug]

Correct.

[Joe]

Over the short run. Gotcha. Paula, Jesse's got Max out 401 as the first thing on his order of operations list. Do you have anything above that?

[Paula]

Well, I, I would go, I mean it's maybe splitting hairs, but Roth IRA or backdoor Roth ira, it's the same idea. But actually I will go even one above that and that is for me personally because I own a business, I would invest the $50,000 into the business. Afford. In my case it's afford anything. But for the sake of anybody listening, if there's a privately held business and you are the 100% sole owner investing into that business, there's a much greater risk, but there's also a much greater upside potential when you're investing into a business that you yourself own, own and operate.

[Joe]

What I liked about maxing out the 401k that Jesse suggested was that he's using that to take advantage of even more free money. Why would the Roth IRA come before maxing out that 401 match?

[Paula]

Okay, so as a disclaimer, I'm thinking from the perspective of somebody who's self employed and therefore doesn't have a match.

[Joe]

Gotcha.

[Doug]

Fair.

[Joe]

Paul is thinking very, very close to the vest. Let's say you're pull a paint.

[Paula]

Yeah, well, let's just say you're self employed because my whole example, even in the example of investing into a business that you yourself own, that's essentially also an example of being self employed. So I suppose every answer that I'm giving right now really comes from the perspective of somebody who's self employed or who's an entrepreneur.

[Joe]

Let's then talk 401k because most of our stackers are not self employed. Jesse, going back to you max out the 401k to get the match, Paula went immediately toward Roth. Do you do Roth 401k with that money or pre tax 401k?

[Doug]

Ooh, great question. It's all going to come down to a function of tax rates. That's almost always how I think about these situations. And so if someone finds themselves, if they find themselves in their highest or higher earning years, maybe if someone's, maybe later in their career, they know this is about as much money as they're ever going to make. Hopefully they've done enough rudimentary financial planning to understand that maybe their early retirement years will be in a lower tax bracket. Well, if I'm paying more taxes now, if I'm in a higher tax bracket now and a lower tax bracket later. I would much rather go traditional. I'll defer my taxes when I'm in the highest rates to a later date. But if someone say earlier career or they just they aren't sure how their current versus future tax rates stack up, then I think Roth, there's a really good argument for Roth in that case.

[Joe]

Oh gee, let's see if we can get consensus on this. Somebody working a 9 to 5 and they haven't maxed out the 401k to get the match. Are you on board with Jesse's suggestion that that's the number one thing you think about?

[OG]

Actually, no, I would. And we've actually done this many times with people that have had stuff like this happen. I think the right thing to do is actually to do absolutely nothing for an extended period of time and just kind of set your watch for remind me in 90 days type of thing and just let life just kind of settle down. Generally speaking, whether, I mean this is a broad brushstroke, but if whatever happened to dump 50 grand in your pocket, if we're thinking about it from the perspective of it's unexpected, there might be a little baggage that goes with that. I don't mean baggage in a bad way, but I'm just saying there's other stuff going on in your life. If it's an inheritance, it's somebody maybe passed away. If it's, you know, scratch off lottery ticket, your adrenaline's at an all time high and like this is a really poor time to make money decisions. Heck, even if it's a year end bonus and you are expecting 20 and they bonus you 50, there's nothing wrong with taking six weeks or three months and just saying, I'm just going to park this in my savings account. I'm just going to, it's just going to earn me a little interest and just let life settle back down to normal before I start making big money decisions to the point of like, well, I could max out my 401 and do all that sort of stuff. You can do that anytime. If you can't do it this year, then you just do it in 2026 if you're able to do it. We had a client some time ago, had some money, but it was due to a really, really, really terrible situation. And the whole conversation was like, what do we got to do? We got to invest it. And I'm like, no, no, no, you put this money in a savings account, go live your life for six months if you still want to talk about this in six months. Call me in six months. Right? In the meantime, go make your 4% in your savings account and just deal with all of the other stuff that's coming with this. So I think hitting the pause button here is much more important, especially when it comes to, like, windfall type of. Type of cash, unexpected cash.

[Joe]

Jesse, the OG suggestion does not preclude yours. Right. And yours does not preclude his son. Would you do the same thing where you do the pause? Relax, you know, be comfortable with the fact that things have changed a little bit and then max out the 401k, or would you do it right away?

[Doug]

The hardest part about that question, Joe, and I was thinking this as OG was speaking, is, well, how long is the pause period supposed to be? How long does it need to be? Does it really vary on a case by case basis? I mean, if someone's coming to me and they're like, yep, grandma died. She's had dementia for 15 years. We're. We're. To be honest with you, we're almost happy that she's now in a better place. She's no longer suffering. We've known for years that this money would be coming to us. We've kind of had this noodling around in the back of our head that we might do X, Y and z with our $50,000. I mean, I hear that story that I just made up, but I hear that story and I say this. This person's ready to make a decision, as opposed to, my brother just got hit by a car a week ago, and it came out of nowhere, and we're all devastated. Oh, by the way, what do I do with this $50,000? Right? Those are night and day different. And so I.

[Joe]

Well, this is where maybe we get back to that first question. It really differs if it's an inheritance versus a bonus from work that you didn't expect.

[Doug]

I think so. Totally. Totally. Because we all know, I mean, right, we're all humans here, and we all know how much emotional baggage can be tied with some of these ways of coming into money. Whereas some of the other examples that we've talked about already on this episode, there's not that much emotion tied to it at all. And so, on the one hand, I totally agree with OG like, you never want to make these big decisions in a rush. You don't have to be in a huge rush. But the question does come back to, like, hey, is. Is two weeks enough time just to take a breather and then we sit down or does it really need to be like, hey, you, you probably have to deal with some grief here, so why don't we talk in a few months, if not longer? There's a gray area in there that I don't have a perfect answer to.

[Joe]

There really is. OG I think two questions there. Number one, do you put it on the calendar ahead of time as somebody's advisor? Have you gone, I'm going to give you two weeks. We'll get back together in two weeks or six months or three months or whatever it is. You agree on a time frame and it's on a calendar or is it truly call me when you're ready?

[OG]

No, we always do the follow up. So, yeah, I would pick a specific time. You know, I would say, all right, on February 1st. Let's talk about this again.

[Joe]

Well, and then my second question is if it's a bonus from work, isn't some of that pause time like, you know, if you, if you know it's coming for a month or two, I suppose you don't need that pause time because you can do some planning ahead of time and then deploy it immediately.

[OG]

Yeah. I mean, again, it just kind of depends on how that conversation goes. I think most companies announce, you know, year end stuff, whatever that looks like, and then sometime later is when you get it. It's never the, you know, surprise. We've told you 20 and you got 50. You know, that doesn't ever happen. And honestly, I think from a bonus at work standpoint, a lot of times some of that is already kind of factored into cash flow anyway. Unless it's like literally your first time ever getting a bonus. Because in real life, real people spend their bonuses, you know, as part of their overall cash flow. So if, if we've been doing some planning anyway, we're already, we've already said your salary is this your bonus expected is 50k. And this is what we, you know, that's already planned for. I'm looking at it from the perspective of like a purely surprise windfall that you had no idea was coming.

[Joe]

No clue. We have lots of people chiming in online with us. Jim says, I wouldn't tell anybody who didn't live inside my house. Lots of people saying that. Jennifer joining us from Maryland. Aaron says hi from Tinseltown, Green Bay, just to get under Joe skin. We're going to beat the lines this year.

[OG]

Title Town, that is.

[Joe]

He called it Tinseltown.

[OG]

Oh, no.

[Joe]

He called it Title Town. I called it Tinseltown. Well, we'll call it Tinseltown I don't want it to be Title Town.

[OG]

I like Tinseltown too.

[Joe]

I went Detroit, Michigan to be Title Town. Come on, let's go. Eric says he'd invested on the Powerball, but what I want to do is get I love how snarky some people are, but let's talk about what Listener Heavy talks about going back to the self employed part. Paula, he asked the question SEP IRA question mark. So if you're investing it in your business or putting it in a retirement plan as a self employed person, is the SEP IRA your go to?

[Paula]

No, it's not. I think the first decision that you would need to make is do you want to invest it directly into your business or do you want to put it into a retirement account? And that's a tricky question for any self employed person. Putting it into your retirement account is great for the long term, but there's a higher risk but potentially higher reward by directly investing it into your own business. The quote unquote right answer is some combination of the two and it depends on the factor, the specific individual circumstances of that particular time, yada yada yada. With that said, for the portion that you put into a retirement account, my significant preference is a Solo 401k rather than a SEP IRA for two reasons. Number one, you can create a Solo 401k that is a Roth 401k which then gives you the ability to make Roth contributions. In fact, with a Solo 401K, your employee side of contributions can be Roth and your employer side, because you are your own employer, can be traditional. So you can make both traditional and Roth contributions if you do the solo 401k route, whereas with a SEP IRA everything is going to be traditional. The second reason is because if you're doing a backdoor Roth ira, if you're making backdoor Roth IRA conversions, the amount that you can convert into a backdoor Roth is proportionate to the total amount of money that you have in all of your IRA assets. And so by virtue of keeping your IRA assets smaller, which you can do by keeping your 401k bigger, you can put more money into the backdoor Roth portion.

[Joe]

Let's talk a little bit about the high interest debt discussion that Jesse that you brought up about. Credit cards are next. Paula, let's stick with you. Beyond this money investing in your business or putting it toward the 401k, do you go next to high interest rate debt?

[Paula]

Oh, I would do that first. I mean if I had any high interest rate debt, that's the first thing I would tackle.

[Joe]

You do that before the free money if you're working for the man. Oh, quote unquote.

[Paula]

No, if I was working for the man, I would get the match first.

[Joe]

Yeah. And then what Jesse said.

[Paula]

Yeah, exactly. Get the match first, then pay off high interest debt and then if I were working for the man, then the investing in your own business option would not be on the table. So then it would be other retirement accounts.

[Joe]

Oh gee, how about you? High interest rate debt next on the list.

[OG]

I'm just going to keep on being contrarian here. I think. So after the time that we've established we're going to drag our feet a little bit. No, I think I would make a concerted effort at topping off a reasonable amount of emergency fund money. If you've got one month, okay, fine, maybe add one month to that. I don't know that you have to go 0 to 6 months all with the cash and then you don't do anything else basically. But I think you can make progress on that. And I wouldn't use the extra money to help with cash flow to max out 401 s or any of that stuff. I would put it all on high interest debt. The reason being primarily around behavior. If your life is such that from a cash flow standpoint you have high interest consumer debt and you're not saving a bunch of money in your retirement plan, which is why would you, if you have high interest consumer debt, then trying to trick yourself into going, well, I'm going to add this savings and I'm going to spend out of this cash and that sort of thing. I think you run the risk of having that backfire where you will spend more of that 50k than you're allotted to to help with cash flow and then you will end up right back where you started, just dragging out the inevitable. So you're going to get a really good ROI if you have consumer debt on paying off your credit cards. I mean it's geez. I mean, what are these, a 25, 30% nowadays? Right.

[Joe]

My question though, OG is, is the other side of this that I want to ask all of you, which is also behavior. How many times have you seen somebody pay off their high interest credit card debt? Oh, thank goodness that I finally got the money that I was able to pay this off. And then eight months later, because they haven't changed any of their budget or the way they think about money, they're back into the same debt they had before.

[OG]

Well, how would that change if instead of doing that for eight months you put money in a 401k and then ran out of cash. You still have consumer debt. And yeah, now you've got 8 months of 401k contributions. La Dee da. Like, the outcome is the same. If this is a root cause issue, none of this is going to fix that.

[Joe]

Well, but does this, though, Jesse, mean maybe if we, you know, and I love how we're kind of coming up with this by committee, but does this mean during that pause period, if there is a pause period, like, I'm like, okay, how am I going to deploy this money so I don't make the stupid fricking decisions I made before?

[Doug]

I think I've actually what you're talking about, Joe. I have changed my answer. And I think it's really important that listeners understand what I'm about to say. I think you take the first, call it two to $3,000 and get hypnosis to change your spending habits.

[OG]

I know you're being funny with that, but that does spark a question which is, does it make sense to spend a few dollars to actually do some therapy on this? I mean, maybe it does if that's really the thing, right? Like, there's a difference between, like, inflation just kind of got into me and I'm, you know, I'm not fully employed the way I want to be and, you know, just kind of dripped away. And now I'm like, death by a thousand paper cuts. And if I can free up some cash flow by not having these, these payments, then I can get my lips above water again and life is good versus, you know, the person really has the problem of not being able to budget and, you know, that sort of thing. So, you know, you have to be honest with yourself around which one of those is the situation. But there is a pretty profound. You're talking about your mortgage, Jesse. And my challenge to everybody is, you know, when they say stuff like, oh, your mortgage is a really low interest rate, why would you want to pay it off? Well, because I don't want to owe anybody any money. That's why. And more importantly. Well, like what Paula says about being a business owner. To make a mortgage payment, I gotta make my mortgage payment, plus another 30% on top of that, plus however much it costs me to make the money, you know, because I got employees and payroll and costs to run the business and that sort of stuff just so that I get enough to pay my mortgage. Like, think about all the stress that, you know, you gotta make $100,000 to pay a $50,000 mortgage payment. That's why I wanna get rid of my mortgage payment. Just takes another 100 grand that I don't have to like worry about hustling for all the time. So I think the power of the cash flow and the impact of saying, well, if I don't have this thousand dollars a month, holy moly, that makes a big difference.

[Joe]

Yeah, I did get excited, Jesse, when you were, when you were like, you know, my mortgage, I'm thinking I might take a look at that.

[Doug]

Totally.

[Joe]

Yeah.

[Doug]

I'll share with listeners. You know, we bought our house and we're so glad we did, but we bought it August of 2023. This August will be two full years. Six and a half percent is our mortgage rate.

[OG]

So pretty normal mortgage rate then. Yeah, but it's historically normal.

[Doug]

Correct? Historically normal.

[OG]

You're basing your bias on a short term market fluctuation. Jesse, be careful.

[Doug]

It's the kind of thing where it's like, I think if you ask people who know what they're talking about, I think that six and a half percent rate probably falls in that gray area where if someone's like, well, yeah, maybe mathematically, if you really believe in long term investing, you could probably get better returns here by investing, I should say. But if you compare six and a half to prevailing rates right now in fixed income, which are like four, well then yeah, you're much better paying off the six and a half percent. So it comes down to what you prefer.

[OG]

And yeah, but it's tax deductible.

[Doug]

I know. Which you're right. But, but maybe there is.

[OG]

Maybe.

[Doug]

I mean, I've reached a point too whether it's just career wise, having a family for all these things. I think to myself, simplicity that. Exactly. And getting that debt off my back. There's a non monetary value to that.

[OG]

Absolutely.

[Doug]

That carries some weight here. So that's part of my thinking.

[Joe]

Well, and I go to back to happiness, which is the happiest retirees pay off their debt. They're not dumb, they know math and they still pay off their debt. Lots of points that our stackers hanging out with us on YouTube are bringing up that I want to bring up in the second half. How much of our rubric here has to do with the place that you're at in life? Are there any tax implications that we should think about? And your investment policy statement like where does that fit in? Where did the overall goals, where does that fit? And we're going to talk about all those things. But we pause halfway through our Friday show for this amazing year long trivia competition featuring these three fine people, Paula, Jesse and Og. And we have had some humdinger years, as mom says. Just some amazing, amazingly competitive year long competitions. And unfortunately so far this has not been one of those. Doug. But we're hoping. Joe, what is the score so far in this shindig?

[Jesse]

Well, we've still got Paula way off in the distance on the horizon. You can just make out Paula at five and a half points. She's waving, she's all excited, but she's not getting any closer. Jesse has made a bit of a surge recently. He's at 7 1/2 points trying to catch up with OG at 10 points.

[Joe]

Jesse gets a point today. That would go a long way. And Paula gets a point today. We can all just celebrate because Paula got a point. But we needed a question. It's August 1st, Doug. What does that mean about today's trivia?

[Jesse]

Well, hey there, stackers. I'm Joe's mom's neighbor, Doug. And oh boy, August 1st, it's so bittersweet, isn't it?

[Joe]

Sure.

[Jesse]

On one side I get the 105 degree temperatures that make me feel. Feel like I'm living in an easy Bake oven. But on the negative side, I guess I finally have to take down the decorations from my favorite holiday, St. Patrick's Day. I know some people love Christmas in July, but why spread that commercialism when you could have St. Patrick's in August? Imagine sweltering in the Texas heat while drinking a room temp Guinness and getting the meat sweats eating pounds upon pounds of delicious boiled corned beef. I know, right? Incredible. So to get this dream rolling, let's share some St. Patrick's Day trivia. The first thing you need for a holiday to become official is a parade. Duh.

[Joe]

Duh.

[Jesse]

Yeah. So what year, what year was the first St. Patrick's Day parade? I'll be back right after I go pour a little water into Joe's mom's Jameson bottle. Forgot I took a swig yesterday. And that lady, she measures every drop in those bottles.

[Joe]

Well, she does. Man, you better get up there, Doug, because you're in trouble. Otherwise. Well. Oh gee. St. Patrick's Day. Exactly what you think about on August 1st? I'm sure if you think like Doug, it's the first thing you think about. When was the first St. Patty's Day parade?

[OG]

Clarifying question. In America.

[Joe]

Ever.

[OG]

Ever.

[Joe]

On record. On record.

[OG]

Okay, so St. Patrick was. So he was alive. 1455 to 1507. Right about there and then was. What's it called when you become a saint? Like, canonized or something? Like in 16, the Pius voice. I'm going to say that the first St. Patrick's Day parade was in 1780.

[Joe]

1780 is OG like, 100 years after.

[OG]

He was knighted as a saint, whatever that's called.

[Joe]

All right, Jesse, 1780 is the first guess. What are you thinking?

[Doug]

I have no idea how much of what OG Just said is actually real. And if it is real, I think he's a freak for knowing that stuff. I'm just gonna lay out a number, and I'm not gonna give any other context to this number, and I'm just gonna see what the room. How the room feels about this number. I'm gonna say you said 1780.

[OG]

OG yeah, about 150 years after he was.

[Doug]

I'm gonna say 1779.

[OG]

17.

[Joe]

Oh, Paula, Paula, Paula, Paula.

[Paula]

All right, so we've got 1779. We've got 1780. So I think that the real St. Patrick lived in, like, the year 700. He picked four leaf. No, three leaf clovers. Yeah, he picked three leaf clovers and used it to describe the Holy Trinity, Father, Son, Holy Spirit, the three leaves of the three leaf clover. And that's all I know about him.

[OG]

Pick your dates around.

[Doug]

How do you guys know this stuff?

[Paula]

But in order to have a parade, so what is the difference between a parade versus a march? I would think with a parade once.

[Doug]

A month.

[Paula]

The month of St. Patrick's Day, actually. So to have a parade, wouldn't you need a parade float, which would require vehicles, and vehicles were built in the 1900s, which, on that line of logic, I would take the over, but I also would capture so much more time.

[Joe]

Can you say in that line of logic, I take the over again?

[Paula]

So. So to that line of logic, I would take the over, but then again, if I took the under, I would capture so much more time. So. Geez. All right, in honor of the Coalition to Defeat OG I can't take the under, because then that would cut off Jesse. So we've got to cut off OG So that means I've got to take the over. So I'm taking 1781.

[Joe]

That's how they do it, Doug. That's how they do it. 1781.

[Doug]

Sorry, listeners. Well, you know, we're not making it fun for you guys.

[Joe]

He just saw that happen. But OG in the past, OG has gotten it right. Exactly. Like, dead on right.

[Paula]

Last week. Last week.

[OG]

Last week's was easy.

[Paula]

Oh, man, very easy.

[OG]

This one.

[Joe]

No, man.

[OG]

Somewhat easy too. And I'm fairly close.

[Doug]

On that note, has any substitutes gotten points for me? Do you keep track of that? Doug? How many points of the 10? 7 and a half and 5 and a half are substitute points.

[Jesse]

But I will say you haven't missed enough. Jesse I don't think any.

[Joe]

I don't remember any.

[Doug]

I don't ever remember coming back from an off week and being like, oh, I got another point.

[Jesse]

No, I don't. I don't think you ever have. I think it's mostly Paul and and.

[OG]

This is a backhanded little slap by Jesse.

[Doug]

Well, you know, you're here a third of the time, OG and you have 10 points.

[OG]

The good news is I get paid the same though, so.

[Joe]

I miss. So our guess is OG started with 1780. Jesse said 1779. Paula 1781. Who's right? We'll find out in a minute. 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. Focused 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.

[Paula]

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[Joe]

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[OG]

On your next campaign.

[Joe]

Get started at LinkedIn.com results terms and conditions apply. Oh, gee. You began this parade of guesses with 1780. You feeling like you nailed it?

[OG]

I mean, I better. I honestly didn't think that those two would do that, but I can understand why they would.

[Joe]

Jesse, you feeling good with 1779?

[Doug]

I'm giving myself, like, a coin flip minus a one in a thousand chance, so I feel better than I did going in.

[Joe]

Paula, you said 1781. Where do you think this parade would have happened?

[Paula]

Well, so again, what's the distinction between a parade or a march or a stampede? Or a stampede?

[Joe]

Really fast parade.

[OG]

It's intent.

[Doug]

Remember when Mufasa died? Yeah, remember when Mufasa died? That was just a really fast parade.

[Joe]

That's all it was. You could tell Jesse has young kids at home. All right, OG, 1780. Jesse, everything below that, Paula, Everything above. Doug, you've got the answer, man. Who's taking home the win?

[Jesse]

Well, hey there, Stackers. I'm Jameson lover and guy who thinks kissing the Blarney Stone is kind of gross. Joe's mom's neighbor, Doug. We're celebrating St. Patrick's Day in August here in mom's basement. Well, one of us is, anyways. The one who isn't a stick in the mud and knows a true holiday tradition. One tradition that every great holiday has is a parade. So what year featured the first St. Patrick's Day parade on record? Well, the parade took place in what is now Florida. And I'm sure afterward they all went to nearby Daytona and watched a NASCAR race back in. Not gonna tell you the year this is. I just. I can't even hold my excitement right now, Joe, because, A, I get to piss off OG right now by going through this whole math thing. B, oh, I just. I'm just gonna. I'm gonna let it unfold because this is just so satisfying. Well, first of all, I'll say that it was 180 years before Paul is getting guess. 179 years before OG's guest. And just 178 years before Jesse's guest because the correct answer is 1601, making Jesse our winner. But wait, there is more to this glorious day. Because even though OG talked completely out of his butt about all those years and all of those things, he was so wrong. And that just makes me so happy because he sounded so confident about when all of this happened. Oh, gee, you need to go back to catechism because Patrick began his mission in Ireland in the year 432. You were a thousand freaking years off.

[OG]

I know.

[Paula]

Wow. I was only like 300 years off.

[Jesse]

Paula was closer and by. But this is the thing. This dude, if only he had been a salesman in the 20th century, he could have sold like so much vinyl siding or used cars. Because between 432 and his death in 461, he turned the island of Ireland from almost zero Christianity to almost 100% Christianity in 29 years. The whole damn island. It was incredible. But. But more importantly, it's incredible how wrong OG Was on every front. It's just a great day in the basement.

[Joe]

I don't know. I just know it took the whole coalition to get that done.

[Paula]

Coalition victory.

[OG]

Hardly call that a coalition. That's. That's just. This is how we're gonna do it for the next couple of weeks. This is kind of stupid.

[Doug]

That's fair. That's totally fair. If there are future questions that I have any slight clue, I'm more than happy to guess not in a coalition manner.

[Joe]

And.

[Doug]

Or if Joe just threatens to, like, kick me off the show for doing that. I won't do that. I won't do that.

[Jesse]

That's all it's gonna take, Joe.

[Joe]

Heck no. Because I'm enjoying the coalition catch up strategy right now. Okay, good times. Let's dive into the second half. Speaking of good times of this episode, somebody online with us on YouTube said, so how did you come up with 50,000 bucks? You know, the reason I came up with $50,000 is because $50,000, Paula, to some people is a life changing amount of money. And for other people it is certainly not a drop in the bucket. And it might change things, it might move the needle, but it's not life changing. And So I thought 50,000 is a nice number to talk about because Kat with us mentioned that maybe, maybe what you do with 50,000 has to do with what part of life you're in. What's some differences in how you'd use $50,000 early in life versus somebody maybe in retirement or closer to retirement, how they might use it?

[Paula]

Sure. So if you're early in life, I mean, I know a lot of people who made the decision about whether or not they wanted to go to grad school or to a vocational training program based on how much they could pay for and how much debt they wanted to take on. And so there are people who in their 20s make career decisions based on, hey, I don't have the money to go to this program or that program. So early on, I think you would spend that money getting the education or training that you want. Perhaps Making a down payment on a home, perhaps buying a vehicle. You know, oftentimes you're driving like, you know, a $2,000 beater car. And so if you can get into something a little bit safer, more reliable. Yeah, yeah, exactly. Those are some of the choices that you would make earlier in life. Whereas for most people, if you're, let's say, in your 60s, you're probably thinking about retirement and you're probably wanting to park this money in a manner where it can help fuel that retirement so that it will still be benefiting you into your 70s and 80s.

[Joe]

Oh, gee, I'm also thinking about outside benefits here. Does a $50,000 change, does that make you think differently about things outside that 50,000? Like as an example, we talk about somebody early in their life, they might think a little differently about their insurances. If they have $50,000 they didn't have before, they might raise some deductibles, they might, some of the short term disability, they might, if they put it in the emergency fund like you suggested, they might forego that. Are there some things, other things that you might think differently about that only tangentially have to do with this 50,000 bucks?

[OG]

Well, I think a lot of it is going to be determined by what your debt doing with it. I mean, if you're dumping it in your retirement plan because everything else is hunky dory, then it's just going to be commingled with the rest of your stuff. If you are topping off your emergency fund or you're using it to fund that last year of college tuition for your kid that you were like going, how the heck am I going to pay for this? Got one year to go and I don't know what to do. It's just too contemporaneous to broad brushstroke and say that there would be some sort of material changes. I honestly don't think that $50,000 is that much of a life change in terms of the upfront amount. Where 50k matters is, if you've had the opportunity to let it compound for a really long time. It's all those studies about starting saving early. And you know, if you max out your Roth for the first five years of work and you know, you've put in $30,000 or $35,000 and how much money that turns into over, over your lifetime. I'll tell you an example. I had a client who inherited a bunch of money from an uncle as we were going through kind of settling the estate. It was one of those really Chaotic estates where it was like, what do we do with this? And it was like thousand shares of Apple. It was just weird stuff that they found as they were cleaning up everything. After we got everything done, I said the famous line, I don't know if it's trademarked or not, but I will give credit to Paula because I said it before I knew you was, you can do anything you want. You can't do everything right.

[Joe]

At least you didn't say it on the Today show and say it was yours.

[OG]

Oh, that sounds like something somebody said.

[Joe]

Long story.

[OG]

We were talking about planning and what this money could be used for. She said, what would it take to take this money so that it still existed for my kids when I died? Like I have. She inherited $2 million, a lot of money. And she said, I want to leave 2 million, a million to each of my kids. I want to spend like crazy. But what do I have to do today to set aside enough money so that if I'm dead when I'm 90, my kids get, you know. And so we were able to carve out a chunk of money and go, okay, this is off limits. This is what's going to provide that $2 million inheritance, you know, and so if you start thinking, and I think this is the power of the 50k or 100k or whatever number it is, it's not in what it does for you right now. Although if you have consumer debt or something, it'll be magical. But if you're just like, I'm going to dump it in my account. Where it becomes meaningful is if you start thinking about how this affects, you know, your kids or grandkids generation. If you don't need the money for you, what can you do to be a good steward of this for the next hundred years? And now you start thinking about like, okay, now we're talking about tens of millions of dollars. And that's where I think, from a thinking standpoint, this is where this becomes powerful because your choices around what would you do if you had $10 million is a hell of a lot different than what you would do with 50,000.

[Joe]

Well, and that's something that's interesting to me about the way we started this. And we were like, okay, I pay off high interest debt. I might work toward paying off my mortgage. But Paul, as somebody who's 25, 50,000, compounding many, many, many times between now and let's say, 60, if you invested it for long term, like at 25, do you use $50,000 to get rid of Past mistakes or fill in past mistakes you made and kind of start over? Or do you say, I'm going to solve those with other money and I'm going to use this 50,000 to do it? OG Seb maybe make it a meaningful long term. Kapow.

[Paula]

I think there's a behavioral component as well. And so to the point that you made earlier, Joe, you asked this question, you asked about how sometimes people will pay off their credit card only to get back into that same amount of credit card debt later. What that ties to is what I refer to as the scuzz factor. There's a certain financial threshold after which we become uncomfortable for some people. Like I had a friend, my friend Evelyn, she talked about this publicly, openly on my show many, many years ago. She said that she always felt like as long as the balance on her credit cards was $10,000 or less, she was fine. As soon as it hit 10,000, alarms started flashing. She had a big, big scuzz factor right at the $10,000 number. But as, as long as the balance was 10,000 or less, she was totally chill. There's an element of knowing yourself because if you know that your scuzz factor is calibrated towards having 10 grand in credit card debt, then you're gonna keep getting yourself back there. And if you know that about yourself, then maybe it makes sense to lock that money away. Put it into a tax advantaged retirement account where you can't tap it without penalty, or make a down payment on a home so that you just can't touch it. It's locked away as a down payment. You've lost that liquidity. If you know that about yourself, you can keep it from yourself in those ways.

[Joe]

That's funny. There's, I mean, there's just so much to unpack in what, what she said.

[Paula]

Yeah.

[Joe]

Around normalization of debt. Like, you know what I mean, there's, there's so many. That's a whole different podcast, what she said.

[Paula]

Yeah, exactly. So, yeah, I think there's very much a know yourself element to it. Paying tuition, actually, it's another way to, to lock it away from yourself. Basically, there are all of these options that might be mathematically less optimal, but if you know that the best thing you can do is to limit your own ability to screw up your own plan by virtue of locking the money away from yourself, sometimes that marginally less optimal path is the better choice.

[Joe]

Think about that knowledge that you gain at an early age, compounded across your life in better decision makings. I mean, assuming you used it right? We have to assume that you used what you learned. But it could be huge returns on that. Well, and for some jobs, even just the piece of paper opens up doors that you might not have opened before. Jesse, I want to talk a little bit here about tax implications. Let's say that for some reason you have highly appreciated stock versus just cash and the highly appreciated stock isn't invested according to your investment philosophy. But the things are performing pretty well. Do you sell those positions and pay the tax or do you keep what's been working working?

[Doug]

You're saying if you inherit, you inherit highly appreciated stock, that's the $50,000 that you inherit.

[Joe]

Ye, but in this case, and I know everybody's going to scream at me, well in this case Joe, there'd be a stuff up in basis, let's say that doesn't exist.

[Doug]

Or I will say I think it's six states actually do have an inheritance tax. So again, not an estate tax, that's different estate tax that the person who dies, this is you inheriting money. I think it's five or six states. But let's say this Joe, and maybe I can expand on your example. Let's say you followed OG's advice. You waited a year before doing anything and over the course of that year the stocks have appreciated more from the stepped up basis. Now you truly do have a capital gains liability. In that case, I still think again, maybe there's some quarter cases that I won't get into or that I'm not thinking of but for probably like 90% plus of people out there. If you own investments that don't align with your greater financial plan or that don't align with your investor policy statement that you can't wrap your head around that you're uncomfortable holding 90 plus percent of the time, you should sell those and use pay the tax that you have to pay, maybe do it smartly, maybe it's over a couple years, but either way you're paying the tax they have to pay and then redeploying those assets in a quote unquote better way according to your financial plan or your investor policy statement. That's my two cents.

[Joe]

Let's talk taxes for just a second. OG. $50,000, many different ways to get it. Are there different tax implications that we need to think about besides maybe an inheritance tax in those few states that Jesse's talking about?

[OG]

Well, no. If you get money through an estate, it's not going to be taxable to you. It could be taxable to the estate if now the limit is, you know, whatever, 30 million. But by the time you got it, it would have already, you know, the estate would have settled all that out. And like you said, if you get it as stock, even if it's highly appreciated stock or bitcoin, you know, you're going to inherit that new basis as of the date of death. So there could be some gains that happened between the time that grandma died and by the time you got the money, because, you know, it just takes a while for all that to settle out. But it wouldn't be as extreme. If you want it in a scratch off, well, that's a different thing. That's income tax. Now you earned money. You have to claim that on your taxes, you know, or the Powerball or something like that. You know, the one armed bandit pulling at the slot machine in Vegas. I would take some more immediate action if I inherited something that was worth money but was illiquid and cost me money to keep up with.

[Joe]

Example, like a property.

[OG]

Yeah. Like, I got the farm. It's like, okay, great.

[Joe]

Are you saying if you bought the farm.

[OG]

I'm sorry, if I bought the farm, then everybody else is like Scrooge mcducking it for a while. Or the apartment building. Right. Or your co owners with your five other siblings in the apartment building. God help us. You know, I would be much more interested in, like, exfilling from that as quickly as possible because a, I don't want to be forced into business partnerships with other people that I don't necessarily want to be in business partnerships with. And anything that's going to cost me money to maintain, I want to take a really keen look at before, you know, deciding that I'm going to keep it for a really long time. So, you know, just because it was great for Grandma and Grandpa doesn't mean it's necessarily gonna be great for you. So an exception to my, like, hit pause for a while rule would be, here's the farm. Oh, by the way, the cows are due to auction. And you know, a little bit. Oh, Lord, it would be. Have to speed it up a little bit.

[Joe]

It's funny, Jesse, when you got up, people just hanging out with us on the podcast don't know that Jesse got up. Eric said, Jesse went to spend the 50,000.

[OG]

I saw that.

[Doug]

I saw that.

[OG]

I would say that honestly, if you did get a surprise amount of money regardless of any of these things. Right. I want to save money. I want to put some money away. I got to pay down some debt. I do think you have to do something fun for yourself. Well, it doesn't have to be a boatload of cash.

[Joe]

This is actually. Hold on. Oh, gee, can I just take it from there? Because that's my last question. We're in the no judgment zone now. We're all in different spots. You got $50,000 right now. What would you do with it?

[OG]

Like, personally, really do with it?

[Joe]

Yes. $50,000. What would you do yourself right now? No judgment zone.

[Jesse]

Steady, Steady boy.

[OG]

The PG Show. PG filters scene from Office Space comes.

[Joe]

Do you need a second? I can go to somebody else first.

[OG]

No, I mean, here's what I would do. I would say, because I'm about to write a check for college tuition, I would say, oh, I don't have to take the money out of the 529 right now. I'm going to keep that in, pay the college tuition. And then I would probably use the rest of the money to buy William a car. So I'd probably pay for tuition and buy a car. These are two cash flow things that I'm going to take money out of my investment account to have to write checks for in the next six weeks. So I would probably just say, oh, I can just let that ride for another year. Sweet.

[Joe]

Excellent. Paula, what would you do?

[Paula]

Okay, If I had three different buckets of $50,000 each?

[Joe]

No, just $50,000. But I love how you turn it into 150,000 Saturday night.

[OG]

Right. Like, if I just had one wish, it would be for all mankind to hold hands.

[Paula]

And if I had two wishes, the.

[OG]

First would be for all the children. Of course.

[Paula]

In all seriousness, the 50,000 I would put into afford anything. The next 50,000, I would put into some improvements on my properties. But then the next 50,000, if I were to actually, like, spend it on myself and treat myself in some manner, I would buy a car.

[Joe]

You would actually have a car. Manhattan then.

[Paula]

Yeah, Well, I would buy a car. I would leave it in Atlanta. I would leave it in Georgia. Whenever I go back there, which I'm planning on starting to go there more frequently, I would have a car there.

[Joe]

Gotcha. Jesse, how about you?

[Doug]

If we had to treat ourselves, I think home renovation projects would probably be up there right now. We're finishing half our basement. So it would probably be about a $50,000 bill to finish the other half.

[OG]

Of the basement simulator on the other side.

[Doug]

Exactly. We have to raise the first floor of the house in order to fit the golf simulator in there. And then we have to separate out the. Where the hot tub. In the basement goes from the golf simulator without ruining the new bar in the basement. I'm kidding. I'm kidding. But yeah, home improvement, that'd be where it would go.

[Joe]

But I wasn't talking about treating yourself. I'm talking about like, on your order of operations, what would you say?

[Doug]

Serious answer. Then I'm sorry, is just the mortgage.

[Joe]

Yeah.

[Doug]

If you cut me a $50,000, you know, I tell my wife, going back to that part, who would you tell? I tell my wife, I'm sure we could allocate some of the $50,000 for something fun, something nice. We're in a position where we don't. We don't need to urgently pay down the mortgage, but the responsible thing to do with most of that money would be to pay down the mortgage. That's what we do.

[Joe]

On my end, we had a separate bucket for this addition that we're adding, but I haven't done. I didn't realize the extent that they were going to wreck my lawn by putting this in. And we've got this lawn project. Not going to be 50,000 bucks. But I would start with the lawn project, and then the rest of it, I would invest in better trips. We try to take a trip now once a year to spend with our kids. We call it like our family retreat. And I'd invested in a family retreat to spend more time with my children.

[OG]

Is anybody else getting the feeling like this is about the time where Joe goes and this is the reason I brought this all up for you guys. We've had a great quarter in stacking Benjamin and is this where this is headed, everybody? Is it? Anybody else think of the same thing?

[Joe]

Guess where it's headed. Doug, take it from here, man. Get us the hell out of here. What should we have learned? No. Before we do that, let's find out what's going on. Where you guys. Where you guys live. I was.

[OG]

Oddly enough, Joe does have a great new backyard, so maybe it's just been just great for his side of somebody.

[Joe]

You should see my backyard. That's why I would use it on my backyard. Oh, gee. What are you doing this weekend? First weekend in August.

[OG]

First weekend of August. This is the end. We are done with summer. Monday is back to football camp for William. So we are 10 days away from school, starting and off we go. Summer's over. Fun time over. Back to work.

[Joe]

And when does your oldest leave?

[OG]

Alex moves in. It's like maybe August 20th or something somewhere in there.

[Joe]

So tough day for us. It's a fun day when that stuff. I know when that started happening.

[OG]

I hope. Are you kidding me? I'm like, hi ho, hi ho, it's off to school you go, no, you're not.

[Joe]

You say that now.

[OG]

You don't think so?

[Joe]

Wait till you get to this point. Oh, I've been there. Just wait. Paula, what's going on at the Afford Anything show?

[Paula]

Today is the first Friday of the month and on the first Friday of every month we break our normal format and do a monthly economic update. What happened in the economy in the month of July? We cover all of that in today's first Friday economic update episode on the Afford Anything podcast.

[Joe]

Awesome. A look at the month behind and thinking about what's to come. Jesse, what's to come on the long term invest personal finance for long term investors.

[Doug]

We can start calling it pfly. That's okay. Last week we had an episode come out with Peter Lazaroff. And then next week we're having our 8th or 9th ask me anything episode come out. And real quick, I just realized today's August 1st, not today, but when we're listening to this. So listeners, I'm going to be up in the Adirondack High Peaks doing a really big hike today and then tomorrow grabbing some beers in the village of Lake Placid. So if there are any stackers up in the High Peaks or in Lake Placid, give me a shout.

[Joe]

Sweet stackers. Just reach out to Jesse, I'm assuming on social media, and, and go hiking with Jesse. All right, that's going to do it everybody. Thank you so much for hanging out with us everybody on YouTube. We had such a fun chat. Glad that you guys were able to help us with the show. Matthew says from OG we should just take the 50,000 and participate in consumerism. That's joke.

[OG]

I mean I have to get my kid a car and I'm paying college tuition.

[Joe]

Yes, just a joke from a different day. Paul saying gig em send that $50,000. Sending that $50,000 to College Station, says Paul. And we've got some other great things. Matthew asked, how many benchmade knives could you get? Doug? Three. All right, that's gonna do it for today. Big thanks to everybody hanging out. We're now moving this show to Monday. So if you want to hang out with us, it's at 3:30ish between 3:30 and 3:45 Eastern Time. Do the math on whatever portion of the country you're in. Come hang out with us and watch us make the show. But the highlight of the show is When Doug summarizes it all by giving us our top three things we should think about and put on our to do list as we head out of this week.

[Jesse]

Well, Joe, first, take some advice from Paula about finding your own Scuzz line. Maybe use any found money to keep yourself below the scuzz. Second, learn from OG when he said $50,000 may not be a life changing amount of money now, but let that bag of cash compound for a couple decades and you you'll be able to buy a Birkin bag for each of your grandkids. But the big lesson. Hey, asking for a friend who just pulled a Guinness from last year's celebration out of the fridge. Is Guinness a naturally green beer to celebrate St. Patrick's Day, or is this bottle just that old? Thanks to the Jesse Kramer for joining us today. Dig into the Pfly podcast. That's the personal finance for long term investors podcast. If you're not one of the cool kids wherever you're listening to us right now, we'll also include links in our show [e-mail] thanks to the scuzzy Paula Pant for hanging out with us today. You'll find her fabulous podcast Afford Anything wherever you listen to finer podcasts. And thanks also to OG for joining us. Looking for good financial financial planning help? Head to the stackingbenjamins.com OG for his calendar. This show is the property of SB Podcasts LLC, Copyright 2025 and is created by Josal Sehive. 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.

[Joe]

Oh yeah.

[Jesse]

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]

SA.

[Joe]

All right, we did it everybody. Thanks so much for hanging out everyone. By the way, I don't know what, I don't know if it attached any meaning, like I don't know the origins of this word, but I was going to bring up Scuzz. I. I have no idea. We call people Doug a scuzz when I was in junior high and if that has any, if that has any connotation that I don't know of or some weirdness that I don't know of, I apologize. But I just know that when I was in seventh grade, if somebody was.

[Jesse]

A scuzz, I just think of, like, that line in your toilet bowl that you can't, no matter how hard you scrub it, or just like.

[Joe]

Is that what it is?

[Jesse]

Grimy, nastiness.

[Joe]

What does scuzz even mean? I didn't bring it up because I didn't know what was attached to it.

[Paula]

It's like the film on your teeth when you don't brush your teeth.

[Joe]

Just gotta go.

[Doug]

No, I just. Chatgpt. What's the etymology of the word scuzz? Okay, American slang from the 1960s. The origins a little murky, Some theories It could be scum plus fuzz creating a blended word. And by the 1970s, scuzz and scuzzy were well established in countercultural slang, often used to describe unsavory people or gross environments.

[Jesse]

Perfect.

[Joe]

Yeah, there it is. Well, that's why we call people a scuzz, then.

[Jesse]

Okay, we're only offending the scuzzy.

[Joe]

Jason asks if it's like a scsi drive.

[Jesse]

Scsi drive? Jason, none of the other people on this podcast know what a scuzzy drive is, but I got your joke. Thank you.