Roth IRA's Explained with Barbara Ginty

Published Apr 30, 2021, 7:00 AM

Understanding investing terms and options is not for the faint of heart, but we don't have to be experts in order to make wise, frugal financial decisions for our future. On this episode Barbara Ginty shares in some very understandable and approachable ways some of the basics of investing and how to take advantage of Roth IRA's.

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Episode one, Roth Iras explain. Welcome to the Frugal Friends podcast, where you'll learn to save money, embrace simplicity, and liver with your life. Here your host Jen and Jill m. Welcome to the Frugal Friends podcast. My name is Jen, my name is Jill, and today we are sharing with you are absolutely awesome interview with Barbara Guinty of Plan Financial The Future Rich Podcast. She is an amazing, amazing certified financial planner just like puts everything in really understandable terms and doesn't make you feel dumb for not knowing what you don't know. Yeah, it can be really hard, especially when you get it's hard to get really smart people on the podcast because they're so smart, it's hard for them to relate to everyone else who's like light years away. Yeah, they think the baseline is so far above the baseline actually is. Yeah, But I think Barbara does a really good job of like kind of explaining the basics but also elevating them. She definitely covered some things that I wouldn't like, wouldn't be a top of mind for me to talk about, and I talked about like raw eires every day, So I loved it. But first we have to thank our sponsors for this episode. Our first sponsor is your emergency fund. So whether it's five hundred a thousand or fifteen thousand, you need money set aside in case you're laid off or unable to work, or I mean for any other emergency expense, and keeping it in a high yield savings account separate from your regular checking and savings lessons the likelihood of you actually spending it, So any high yeld savings account without fees or minimum balance requirements will do. Currently, we like Access Bank for its lack of fees and impressive point six a p y and there are no hoops to jump through to get that uh and when you sign up for an account through Frugal Friends podcast dot com slash Access, you will support the show at no extra cost to you. So again, Frugal Friends Podcast dot com slash a x O s if you need a high yield savings account for any reason, that's the one we like right now and away for you to support the show. Also brought to you by the school bus. It was scary at first with all those competing questions, will the driver see me? How do they get the door to open? Will I trip up the stairs, where will I sit? And even though the worst case scenario to all of those questions does eventually happen, you know the driver doesn't see you. You do trip, there's nowhere to sit. We figure it out until finally we're enjoying jaw Breakers until our tongue blades, playing around to punch Buggy, and between trying to get truckers to honk at us from the back seat, you know where the cool kids sit the school bus. Much like financial planning for retirement. It's scary at first, but soon enough you know just where to sit and how long you can sleep in until you legit miss your ride the school bus? Anybody school bus? Yeah? Did you ride the school bus? I'm pelling I did. Yeah. Um, I never sat in the back. I was always a middle middle sit at least you figured out where. Much like my life now, I'm very much a middle sitter in anywhere I go. Like, I don't sit right in the front, I don't sit in the back. I'm very much a middle person. Did you eat jawbreakers on the bus? No? I didn't. Man, do you remember those things like the size of baseballs? And then you just keep licking I'm not into licking things. Well, like, that's probably good. Yeah, I prefer why you sat in the middle. Yeah, I also prefer very average candies to Anyways, enough about candy, let's talk about rath eyre As. If you are interested in more, a few episodes you should queue up to play after this. Our episode ninety four, that's our retirement one oh one episode we talked about kind of all of the tax advantage retirement accounts, and then we also have a recent episode, episode one understanding the stock Market with Bolaso Kunbi. That one was really great. We went through a lot of like terms and stock market basics and also touched on how they relate to the retirement accounts. And in this one, we're very much deep diving into the roth Ira. So get excited for Barbara and uh yeah, she's just she's an amazing podcast host, educator, certified financial planner, so smart, very excited to share this interview with you. Let's get into it. Bar Brett, thanks so much for coming onto the show. We are so happy to have you here. Thank you for having me. I'm excited to be here. This is a topic that we need to talk about for our listeners. Of course, because I'm selfless like that, but also for me, because I am selfish like that. I will be just honest from the jump that I am a frugal friend. I am not a retirement expert. So I will shamelessly be the representative for all of our listeners who hear these words and have big old question marks. We're just gonna We're just gonna get rid of the shame. Barbara, and I get good at that because I've heard some of your podcast and all of the people who are like I don't know, um, I don't know maybe, and you're so sweet, you're so kind, like, Okay, well, we'll figure that out together. I love it so much. That's what we're gonna do with everybody listening. Were you and Barbara and us, We're going to figure it out together. So let's there are no bad questions, oh kin, except there are. There are some really bad questions and things that we should know already, but you know what we don't, and and we better start learning now. I think the only I think the only bad questions would be like asking you about like your personal life, like intimate details of your personal life, Barbara, So um, don't do that when you go to a financial planner. But beyond that, no bad questions about retirement question. We've leveled the playing field. So that's where we're at. So Barbara, tell me some intimate details about your child, just kidding. What I really want you to do is tell us so, like define what is a rath ira, and like how does it work? Sure, so we'll start real basic. I will say that the rath ira, for people who listen to my podcast, I talked about it a lot, is one of my favorite vehicles, and it definitely is, and I have you know, but a lot of people don't know a lot about the rath and how it works. So the rath ira is So first we'll start with the word ira, which is an individual retirement account. And so there are two types of individual retirement accounts. One is the raw and the raw version of it means you're putting the money in after tax. You're not getting a tax break today. As long as you leave the money in the roth ira for five years um and you're older than fifty nine and a half, all that money comes out tax free. So that's really the high level explanation of it. We can make it more complicated from there. But let's start with the basics. So one reason somebody might do a roth IRA versus a traditional IRA, which is the other sibling in the IRA area, which is the pre tax when you're getting a tax break, is because you um are in the lower Usually it's ideal to do it when you're in a lower tax bracket, right because you're not getting a tax break today, you're anticipating getting your tax breaking in the future, ideally after fifty and a half, right when you're retired, and all that money grows tax defers, meaning you don't pay anything on it while it's growing, and then when you go to take it out when you're tired, it's totally tax for you, which is the biggest benefit of the raw THI array. Yeah, I think it's that tax, that tax, like pre tax, post tax, like those words that kind of like trip people up, but they're not like, it's not a complex like idea. It's just saying like, well, you're pre tax, you're contributing pre tax. That means like before income taxes are taking out. So the way to think about it is like the government is one your partner and everything right, the I R S is always your partner for the rest of your life. Right, we have a permanent partner here. They never go whether you want them or not, whether you want them or not, they're your partner and they're going to be with you through thin give it um. And so it's basically, when do you want to take that tax break. Do you want to get a tax break from your partner today or do you want to get a tax break from your partner in retirement? I want to It's either you're gonna have it now or you're gonna have it later. So it's the most simple way to think about it. Yeah, or And I think some people don't realize this, Like if you invest like outside of like your tax advantage retirement accounts, like just in a regular brokerage, then you are getting no tax break from your partner on either end, which isn't necessarily bad, but like why go there, Like why do robin hood before you can take advantage of your like tax friendly ones. Yes, because the thing is I R. S loves if you don't take advantage of the tax code. Right, So I like to explain the tax code, just like buying an aeroplane ticket. Right, So when you get on an airplane, which no one's done in a while. But when we get back on airplanes, there will be a person on that plane that paid zero for that ticket, right because they use miles and they were strategic, right, and they paid nothing to be there. And then they'll be the other person who bought that ticket that morning and paid top dollar. Right. That is exactly how our tax code works. It is up to you to learn it. It's an adversarial relationship that we have with the I R. S. It's up for you and it's your responsibility alone to learn how the tax system works and to understand it and to take advantage of it. Tax avoidance is perfectly legal and encouraged in our tax code. You just have to understand how our taxes work. Tax Evasion is what they get you where you go to jail. So we don't want to do that. But yeah, you don't want to do that. But tax avoidance, so deferring taxation, taking advantage of the tax deferred account, taking a tax break today versus in the future. Those are all encouraged in our tax code. And that's why I like to use the example of an airplane because everyone can relate to that. Usually with flying is somebody who's really strategic and got that ticket through zero dollars, and there's probably another person that's on that flight that paid five hundred. Right same way, with the taxes, people are able to reduce their tax bill and kind of by taking advantage of, like you just said, retirement plans and you know, not maybe doing a broker account, because they're taking advantage of pre tax and post tax for you know, with the ROTH and traditional or work plan in rather or whatever the combination is going to be. And so you're allowed to do that. That's called tax avoidance. It's perfectly legal, and I would say even encouraged with their tax code. Amazing, Barbara, I love how simplified that. I try to understand plane tickets. Yes, following, we're having a conversation about I RA S and I am following. Yes, And the person who got the ticket for free planned like way in advance to like earn those points and planned in advanced to buy that ticket. So that's literally the same thing too with the RATH I RA like, the earlier you start, the better chance you have aiding the most tax liability. Yeah, exactly. The person who bought the ticket that morning is going to pay the most, and they obviously planned the least. And I think it's not talked about enough, but I think one of the biggest advantages to being successful with your money is really time, which just means you're planning everything in advance. Yes, because time gets you so many advantages that you really can't You can't buy time, right, So if you or the person that got there in the morning to buy that plane ticket, well that's the price, right, if you want to seat, that's the price versus the person that was strategic about airline miles and credit card points and everything. Right, that time was invaluable. And it's the same thing with your retirement. The time is invaluable. Yes, And it's like when you have less money, you often have a little extra time, usually saying people with with no money have a lot of extra time. I get it, but you do have at least the time horizon on your side, even if you don't like have minutes in the day, but you do have that, like you know, twenty thirty years like of just money that can be sitting there. Yeah, and that's where the magic really starts to happen. Because I like to say so every ten years. Is can be really valuable with your retirement money because if your money is earning seven point two percent, it's doubling every ten years and the power of the double is incredible, right, because that's where you go from. We'll just use big numbers to get the point across, but that's where you go from four hundred thousand to eight hundred thousands, and that's just with time and having the money's invested. Yeah. Well it's a lot of money, a lot of stuff we can do with that amount of money, especially when you're frugal. Yeah. So for more definitions and explanations, Barbara, can you explain to us just the simple differences between a roth ira A and a four oh one K why someone might choose one over the other or both. So the big difference really is so the ira A, remember, is an individual retirement account. Anybody can do it. A four O one K is a work retirement plan, which a four oh one K. Whether you have a four O one K, you have four fifty seven, stop me if I get too many letters for seven or A four through B. They're all just the area you find the description essentially in the I R S. You know the I r C code, which is where they explain what they do. So a four O one case, usually with big public companies four O three B is going to be usually hospitals or school teachers. For fifty seven is going to be government workers. So we just think about IRA. A is one section meaning you do it yourself righte the d I Y, and then the other section being what work is going to offer you. So usually with the work plan, especially with the four oh one case, you have a rath option and then you also have your traditional option. The traditional works very similar to traditional IRA, and that the traditional um. If you choose a traditional for oll o ka, it's going to go in pre tax. If you choose a raw for ow one k, it's going to go in post tax. So I would say the biggest difference between a raw for owen k and the roth ira is going to be when you're using the rath component in a work retirement plan. Work retirement plans have a much higher contribution level, so you can put if you're under fifty nine hundred to max out your four ow one k at work and do the RATH in that, where if you're doing a roth ira, the limit on that is going to be six thousand dollars if you're eligible. There's an eligibility requirement with the roth IRA. If you earned too much, you're not eligible to do it at all. So with the four own K at work, not only is there no incomplementation on it, there's also the availability to max it out at a much higher level. And then this is where we're gonna get a little farther into retirement. So just stop me. But with your four OWNK at work, when you do go to retire, we have this fun thing called R and D. Either of you heard of this okay which is your okay, which is your required minimum distribution. So basically, the government says you have been deferring taxation on this account since you opened it. So let's just say you listen to the podcasts and you know to open your fur own K at the right page of twenty five, and you've been deferring it this entire time. Right, there's been no tax while you're growing these investments. At seventy two, the government mint says to you, and they just rolled it back it used to be seventy and a half, or they rolled it back to seventy two. At seventy two. You have to take a minimum amount out of your four ow one k, and that is determined by the lifetime factor table that the I r S puts out. Because you know, why would we use a percentage That would be too straight part, so we use a factor table get online. Because everybody loves factors, right, we wouldn't want to use a factor table. Essentially, it works out to be like a little bit over a three, So that's a Besides the contribution level the income limits, the other big difference between a roth bar ow one k and a roth ira is the roth bur own k has rm D on it. The roth ira does not have rm D on it. So you could pass on a roth ira like to your children and grandchildren whatever. You don't have to use it. You don't have to use it, which does not apply to the beneficiary. The beneficiary has a mandatory distribution. You could roll your four owne k over into a roth ira. I haven't raw four own k is haven't been around long enough, so as of now, it seems like you can take a rath for owen k and roll it over into a roth Ira and avoid the R and D. But the government might catch on to that with like all good things. Yeah, with all the things. They usually like they want the R and D so they can change the rules. I didn't see anything. I haven't seen anyone do it now where they got stopped. But a raw four own case haven't been around that long, right. The baby boomers are the ones taking the maximum r ds currently, so the government's not missing out on money with the raw for o K at this point. So maybe that would change on the road. But I do think you can get away with that, but I would give the disclaimer you should check with your financial advisor or c P A good well, yes, I think One of the questions I get asked a lot is like, I have an old four ohwe K, Should I roll it into a roth ira? Because I hear so much about rath iras. But like, that's why it's good to know the difference, because it's not necessarily a good idea to roll a traditional four oh n K into a roth I r R Is that I mean in your professional opinion, Like, is there ever a reason you would do that? So raw conversions are their own animals. So if we were to take a piece of paper and draw two lines down and have three columns. I would say you have your IRA s on like a little left side, so traditional and raw. You have your work retirement plans right four okay for through, be raw for traditional, and then on the third side of separate side and I would draw like a big line of around it would be your roth conversions, which are totally different animal and have totally different rules. So the four O one case, it's a yearly contribution in your year in December thirty one, your rath iras. The contributions are about text filing deadline, right, so you can do you know, if you're listening to this now, you can still make your twenty row FI a contribution if you meet the eligibility for it. Um. Rath conversions are a totally different animal m hm. So I do like roth conversions. I like them a lot. And I also like backdoor roths, which is like another way to do it with your work plan, which we can get into. It's kind of a fun strategy. But sometimes it makes sense for people to take your four own K and roll it into a roth. Sometimes it doesn't make sense. So there's a lot of variables. Because there is this thing called the pro rata rule, which you don't want to fall into. A nice way to describe the pro rata rule is if you put milk and coffee and then you try and take the milk back out, it's not easy to do that. Yeah, so once you mix money, so it has to be a very straightforward process to do the Rath conversion. So I'll give you an example of when I did one with my sister and it worked out perfectly. She had one four own kay. It was the only investment she had. We put her in her well, we I put her in her four own kay. She was totally oblivious. My poor sister never even had a lot. It kind of like my relationship with gen does things with my money, and I'm like, I trust you implicitly. Yeah, she got together. My sister never had WiFi. They always stolen from like a coffee shop bear By. And the reason why was because I had her like putting money in her form o kay. She was totally unaware that she could have had more money in her paycheck. But anyway, she went along with it. And then um, when she quit her job, she decided she was going to go to law school. But obviously she didn't have that plan she first quit her job and moved home, and I made her work for me, because you can't just sit around and like do nothing while I'm running the family business. And then she decided she was definitely not gonna do that the rest of her life and went to law school. So in the form one case, she had sixty dollars when right before law school started, that's what she had accumulated in her four O one k. Only investment she had was just the four one K. Went to law school. Obviously in law school was doing that full time, had no income. Law schools three years, I rolled her four own k every tax here twenty from the four owne K over into a roth ira. It ended up, I think over the three years costing around like seven dollars. My dad paid the tax bill for because she had no money, I wasn't going to pay it, so I dedicated, um, you've done. I set her up with it. So the key there was that she had no other accounts right, so there was no it was just the rolling K to the ross was very clean transaction, so we were not running into the brow rattle rule, which is where you can get messy. The other key was that we didn't withhold anything for taxes. A very common question when you're making that transaction is would you like to with both for tax It seems like a very prudent answer to say, yes, we'll hold something for taxes. I'm gonna frowe it. But under being under fifteen and a half, she would have fallen into the early distribution right taxes and penalties. So you don't want to take anything out because you're too young. So we rolled the whole thing over sixty over the course of three years fully into a roth now you know, post law school and with her age, what it will be worth in her retirement if it earns the seven point two percent compounding interest, she'd be worth about nine hundred thousand, which will now be totally tax free versus a taxable had she which she would have because she didn't know about it, just sat on it through law school and just left it in the forum. Kaye. So it's a very powerful tool. It just has to be done in the right scenario so it doesn't cause a problem. Yeah, and that made sense of her because her income was like for those literally years, yeah literally zero okay, sweet, So if your income zero and for some reason consult a financial planner about is that the backdoor roth is that what they call no that is a row conversion, Roth conversion, Okay, roth conversion, which I always like to say, like with the government, had to be careful about the wording. So the word is conversion versus contribution. Different rules for converging versus contribution. But and so very often scenarios where that would apply to people would be going back to law school, going back to graduate school, taking time off to have a child or take care of a parent. Some people just take a year off of work, right they're just burnt out and they're going to take a year off, that would be it. Or if you're starting a business and you're gonna be in a low income year, you could plan for it right like when I started, when I bought my business, which I thought meant I was going to have money initially. Wrong. Uh, that's a good time to do it too, where you're not making very much money. So there's a lot of opportunities throughout your life as long. So the way I like to think about it, it's like get out of free jail card if you're playing, you know, a game, So just keep that in your back pocket. If you know about about it, you can play that card anytime down the road, as long as you have the right situation and you can plan for those situations. That's how you get the free plane ticket. Yeah, planning. I love taking those plane rights on points al right. So what are some of the downsides of a rath. I r a because we love them, but that doesn't mean they are right for everyone. So I would say a downside for a raw would be the fact that you're not getting the tax break today, and some people need the tax break today. I currently don't live in New York City anymore, but I did, And so when you're living, for instance, in New York City, you're paying New York State, you're paying New York City, and then you're paying the fetes, so you're paying three taxes. So and I didn't live like I'm not in New York City anymore. I'm in a lower tax bracket from that situation, So a raw Winton made sense for me. They're right, I'm paying three taxes. I don't pay those three anymore. So it doesn't always make sense from a tax standpoint. You have to see where you're at tax wise. Also, one of the downsides with a rath Ira not talking about the forum on k here is there are those income limitations, so not everyone qualifies for them. So it just depends on your tax situation to see what is going to be in your best option. And the other thing to remember is it doesn't have to be one or the other. It's not black and white. So I like to try for most people, I think trying to take advantage and have a little bit in each of the different buckets is ideal because it gives you more optionality. And I really like optionality because you don't know everyone to oh, well, if you know where you're going to be in the future. I mean I don't know where I'm going to be in thirty years. Most people don't. And we don't know where the taxes are going to be in thirty years. Probably probably higher, but it would be great to think maybe they'll be lower. So there's so many variables we don't know. So I really like the idea of giving yourself options and just trying to take advantage of all the different aspects of retirement planning, and then that way you've a little bit of everything um and then you can just do more in one or the other, just depending on what your tax situation is. Nice. Yeah, I think well said, and I know you've mentioned Gen two in the past. I'm sure Barbara you would echo the same that it's a low annual limit, like six thousand dollars if even if you are eligible to contribute per year. Although I just learned to show you. Literally, I'm throwing myself under the bus here. I didn't realize that both my husband and I could open our own raw iras separately, right, I know, I know, I'm I'm putting myself out there because I am fully imagining. I'm not the only one like you take small steps and it's like, okay, I'm doing this thing. I'm doing good. Look at me. I'm a millennial like thinking, like forward thinking, and not not knowing everything about it yet. So I'm just sure that I never made that known to you. I think you did. You didn't tell me, but it wasn't. It was like a couple of months ago, and that was the first I was like, oh, this world is open to me. So, yeah, six thousand dollars per person, but if you're married, you know, then you're talking twelve thousand a year, and depending on what you make every year. That's you know, a significant chunk of money. And the thing to remember if you're married and maybe you're a stay at home parent, is you could do what's called the spousal row, meaning you don't have to because you have to have earned income to do it. But if you're married and one spouse isn't working the other you can qualify for the earn income by being married, so meaning one spouse can be staying at home and have no w two earnings and you can both contribute and separate accounts. That's the other thing. Sometimes people think they will give you, Like the most misconceptions I see with roth, people will think it's six thousand for both, so you can do twelve thousand, you can do six and an I R A and six or row like, no, it's six thousand, whatever combination you want to do. And then the other misconception I get is that um if as a married couple, the twelve the six between each can go into one of the accounts, so it could be just in your husband's name or just in your name. It has to be retirement accounts. It's tied to your soul security. They always have to be separate because I've had and people ask that. They're like, well, I just want it, it's I want it all in mind, and I'm like, no, it doesn't work that way. We have to separate the myself too. We're married, we love each other. Let's just stir it all together. Yes, I take care of it all. It's all gonna be in my dad. I'm like, no, we can't do it though. Way nice Try Susan. Yeah, I mean you would, you would want I can see how you want it to be in one account because then compound interests can like maybe like work for you faster more than if you have like a little bit spread into like a bunch of different accounts. But yeah, it's definitely good for individuals to have their own investments. That's a good thing. The reason why with retirement accounts is it's all tied to your social because it ties back to the requirementum distribution. Right, So that's how they're tracking it, right. They want to track that you're taking out even though the raw doesn't fall under it, they still it's still gets open and structured just like a retirement account. Mm hmm. Barbara, you are a financial goddess and you have so much knowledge. Honest to goodness, if I were to think, like, who do I admire, it is like c p a s and accountants, These detail oriented people who study vary in my estimation, boring things for the betterment of those around them. Like your level of detailed knowledge is amazing to me. I'm just gonna be honest. I probably will never get there. I will never be at your level, but that's okay. It's okay to have unattainable goddess sattus for those of us like myself. So I need to say that you you don't have to know. I have to know like all the infuers, like all the little bits and pieces, right because I just depends what I'm talking to what's going to fit for them. So I have to like know all of it to see how it works. As long as you understand like the basic concepts, that's perfect. Like that's what people just need to know, basic concepts just so they can know. Okay. I feel like this might be an opportunity where I can take advantage of me and then you just contact like your accountant or a CFP and then they can guide you through the rest of it. It just so that you can kind of be on the team and just be aware of like, okay, I had I'm switching jobs and taking a year up. This is an opportunity for me to take be proactive and take advantage of my finances. So as long as you just have those like instincts to say, okay, this is an opportunity for me. You don't have to know all the details because you know the other parts that's crazy about this is the details and the laws around it change, I would say almost usually, So even if you've learned it this year doesn't mean it's going to work. Next does mean next year. What a powerful concept where you're just like you just have to know like the basics and kind of like, no, you don't know what you don't know, so like kind of just knowing what you don't know, and like knowing, okay, I might have a chance to do this, then you know when to seek out somebody who does know. Like you don't have to be responsible for the knowledge of everything. You just have to know who to go to and when to go to them, and knowing when is it's so powerful because you save so much money versus like, oh, I just don't want to take the time to learn anything, So I'm gonna pay for somebody to do it the whole time. You know, you can take a little time to learn the basics and then like hand it over for the more complex things. Yeah, you just want to be an active participant. You don't have to be the one like driving the bus. You just want to be on the bus and be aware that you're taking a trip. But you don't have to be like doing directions or anything else. You just want to be on the trip, is the way I would describe it. And and so then the thing to know is any time there's usually a life change happening. Whatever the life changes, buying how is getting a new apartment, getting a new job, those are usually windows of opportunity in your personal finance life. So that's just always be aware whenever there's a change positive or negative. Losing your job feels negative, it could be really positive for your personal finances. So anytime there's one of those life changes, that's what I would say would be a good time to reevaluate your personal finances and then absolutely just talk to an expert so they can guide you through whatever the rules are at that time. Barbara, you had me at basic you always have children, you have me at basing. Take it back to the basics. Yeah, I can do that. I can unders stand that I won't be an expert on all the details, and especially not if it's going to change on me every year. But I think that that is part of the frugality piece of this. How do we plan for retirement? How do we be mindful and good stewards? And yeah, tell our money where to go in the right ways and not overpay, but also recognize where our own limitations are that we can do some upfront work and then, like you said, Jen and you Barbara, recognize when to bring somebody else in to kind of help make some of these decisions in the best way possible. Speaking of basics, where would you recommend, Barbara, someone to go to open up a roth ira? If they're like, all right, let's take one step at a time, this is the first step. What should they do? Well, I'm fully licensed, so I can't recommend a specific location. But um, because we have a lot of rules if you have a CFP or your license, which I'm both, we can't give a lot of information, which is probably why when people see us on podcast or show is very vague, and it's not because I want to be vague, but for all the compance that because not a lot of people know that. And it's so sad, like you know the most, you know so much. Yeah, you're so regulated and what you can say, um, and I think that's sad, but I'm super super people have no idea how regulate it. Like I'm not allowed of text message. My home address is like public information because apparently that's good for the public, not good for me. Yeah, there's like so many like font sized rules. There are so many rules. It is like the compliance manual is like like it's on page four section and I'm like, what you mean. When I'm in Utah, I can just like show up at your house and I know, I try and get this specific information because you know she's going there flats and mine as well. Just look up Barbara. While I'm there, maybe do some charcouterie and get the deeds on where to open my rock so you could open them at any financial institution. I will say that you would want to check with the financial institution where you would be happy with the investments, because remember the raw is just the vehicle. It's not the investment. So I would look if you're interested in doing a ROW, I would look for financial institution that you are happy with their investment selections, so when you open it, then you have the investments you want to put in it there. Yeah, that's super important because you will find like brokers and I think this is pretty common in like four one case and four fifty sevens and stuff like that, where there's maybe like three or four options that's all you get, and then you look at other places and there's like four hundred. So that makes a huge difference. Yes, And the reason for that is because with your work retirement plan, and the company chooses who's going to be their administrator, who's going to run that plan, and they choose I like to call the menu, right, those are your investment options, what the choices are. They choose those for you. They have that responsibility to put that together. When you're doing an individual into an I RAN and retirement account, you can choose wherever you want to open that whatever institution. So I always say I would just align it with what the investment choices, because you don't want to open one, let's say at investment company ABC, and then you don't like investment company ABC's investment options, right, so you should have opened it with investment company you know, d F and then you like those options better, so you want to investigate what the investment options are. But yeah, within an individual retirement account, it's your choice wherever you want to open it. I love that because then you can really control, like, like, you know, do I like this one with the lower fees or this one with the even lower fees, or do I like the robo advisor that like does it all for me? Or do I want to like create my own portfolio. I love the roth ira A for that that it gives you total control, and it can seem intimidating because you have so much control. But like Barbara said before, like you know the basics and then if it gets too complex, then you can seek somebody out with like more knowledge. Yeah, absolutely absolutely, speaking of total control and your choice. And the best time of the week, it's the of the week, that's right, It's time for the best minute of your entire week. Maybe a baby was born and his name is William. Maybe you've paid off your mortgage. Maybe your car died and you're happy to not have to pay that bill anymore, Duck bills, Buffalo bills, Bill Clinton. This is the bill of the week, Barbara. Every week we invite our listeners or in this case, our guests, to share with us their favorite film for this week, and I know you have one for us, and we are excited to hear it. I'm excited too, because you know, UM, a lot of times I focused so much on other people's finances, I forget to like look at my as closely. So I was doing a podcast. We're talking about refinancing, and I got off the podcast and I was like, I should refinance, and so I just refinance. And my first mortgage came in is on Friday, and I refinance to a much lower rate. And then also because the difference wasn't dramatic, it's I think it ended up being a hundred dollars more a month and I was paying, I cut ten years off the mortgage, so I'm saving over the course of the mortgage. I'm gonna stay like a hundred and eighty thousand by refinancing and lowering the number of years. So I was like pretty stoked. I never what I do. Here's your opportunity. We refinanced this uh in, and it felt so good seeing that six figure number. It's like, this is how much you're going to save on the cost of this house. Yes, it's so amazing, well done, Barbara, we just bought them home. Were a few years out from the refinancing process, but I am celebrating with you. Howing. It's it's so interesting how even increasing a bill can be exciting for what the long term benefit is. Yeah, that future thinking, I know, because it was a short so to Basically, I'm giving up a hundred bucks a month to save a hundred and eighty thousand, which is crazy. I'll take that all night. Well, if any of you all out there is listening and you want to submit your bill, whether it's about refinancing or something completely different, just your friend named Bill, visit for real Friends pod cast dot com, slash bill. Leave us your bill excited to hear it. Today's bill is brought to you by another podcast. If you like podcasts, you'll definitely want to subscribe to Frugal Living. It's sponsored by brad Steels, one of the longest running deal sites on the Internet, and it's chock full of savings hacks, financial tips and stories on how to live better for less. They just started their second season and they're covering a variety of topics you can easily apply to your own lifestyle, like the best times to buy TVs or flowers, love flowers, and how to safely shop online to avoid scams because scams still happen. You'll even meet a food waste warrior who talks about dumpster diving. Travis would like that, yes, And you'll hear from consumers just like you, as well as industry experts breaking down unique in different ways to shop smarter, which you know we absolutely love. Frugal Living is hosted by Jim Marcus, an editor of Brad's Deals, and is available anywhere you listen to podcasts, So subscribe to join the conversation and learn something new about frugal living. And now it's time for the lightning round. Boo boo. Okay, So for today's lightning round, we always get a little bit vulnerable, and Jill hates it because I'm a counselor as my day job, so UH love vulnerability, just not my own. But she's so good at it and that's why I try and get her to do it. So today we're talking about our rath i a opening stories and BROBERA. I know I didn't ask you specifically if you had a funny or interesting one, but like Jill and I have interesting stories around opening our Rathirias. But really, any funny or interesting um retirement account story that you have you can share with us here. So I learned about combating interests at sixteen. It was on The Today Show and I was like, this is amazing. I used to watch his day show when I got ready to show baby Today Show, and so they did it and it was like, if you're sixteen and you put away this amount of money, you'll have be a millionaire. And I was like, oh, that sounds great. So my day was my financial advisor obviously, and so I gave him the money and I found out when I went to go for college that he never put it in a raw. He put it in a five twenty nine to help favor my college. I was like, helping fund of my college, which is not what I was planning on. So I had to open another one, which is fine, but I was just like, Dad, that's not what I asked for. He was not like being a fiduciary. In that moment, we need to. We need to pay for college before you say for regirement. But it's fine. So now I have a round. I opened my own role. But yes, oh my gosh, that's good. Shout out to parents, all right, So mine would be when we So we paid off all of our debt, we paid off all of our student loans and everything, and we put our head in the sand for two years to get this done. And then when we came out, we were like, Okay, well now it's time to start investing. And we knew nothing about investing, like our parents didn't. Well, my parents didn't do it. Neither our parents talked about it to me or my husband. So like we just went with this dude that led a financial peace university class because we're like, oh, that's this seems appropriate, and he sells investments. And so we sat down and we had a meeting, and the whole meeting, I'm like, this feels weird, Like this field there's only four options like so, and it just like some of these fees feel weird. And I had no reason to think that, like nowhere in my like I had never heard of an index fund. I'd never heard of anything. But then so like where do you go when you feel weird and you want to learn stuff, you go to YouTube when you feel weird to learn stuff. You want to exercise, just go to YouTube. You go to YouTube. Um, and that's where I went, and I don't it's so bizarre. I don't know why. Like I wouldn't go to YouTube now to learn about investing unless it was like four X and options and stuff. But I did go there, and um, I ended up hearing this is way before I ever started a podcast. But I heard a video from Joe Saul sea Hi of stacking Benjamin's and Paula pant before anything, and they were talking about index funds and that one YouTube video. It wasn't even like a video of them, it was just a clip of a single podcast. I don't even know which podcast it was hers or his, I don't know. And uh, that led me to say, like, Okay, I'm gonna do it myself. I can do it myself. I'm going to do it myself. So I called me and I was like, hey, you can take care of my husband's investments, but like, I'm going to do it myself. And he's like, well, we can't really do that. And I was like, Okay, then I'm doing it all. And that was my last conversation with that man. Hey, I think it's so good that you went with your gut because if you are meeting with somebody and you don't have a good feeling, you should one percent leave. And then I feel like if they're ever pressure selling you on something like you need to do it today or you need to rush it also never a good sign. There is no rush with this stuff. Yeah, good tips. Yeah, that is a great tip. And I don't even know if they were pressuring me. I just got like a weird feeling. So and I wasn't even I knew nothing about retirement. So thank you to Joe. So I'll see hi. And Paula Pant I know you you're not listening, but thank you. I don't know, maybe maybe this will get back to them. I'm seeing a theme run through this, and it's making me realize the influence that we have as people in this space. For you, Barbara, the Today Show turned you onto investing Jen, it was you two videos. For me, it was a podcast. This podcast. Oh, we just get more and more progressive with it. But I opened to roth Ira A because Jen was like hey, we have this affiliate link through personal Capital, and if you open a roth ira a like with some company. I mean I used van Guard at the time, and you put a thousand dollars and more into it, then we can get this referral link and then we can post it to our audience and YadA YadA. So that was why I did it, to be able to get the twenty Amazon gift cards that came through the referral link. Oh the referral link didn't even end up working, and I was like, oh, well, what they wouldn't give you? I was like, you you don't know me. I've got a podcast and we have this many downloads, and they were still just like whatever, but they did give you the Amazon gift car. Eventually we at least one Amazon gift card anyhow, Uh that was why. And then I was like, okay, well, I guess I have this rath ir right now. But that was it. I opened it, I put a thousand dollars in. Okay, you go. You all know where this is going, those of you who who know anything about this stuff. That's all I did. I opened up a Vanguard account, put a thousand dollars in it, and left it, And then I start hearing Jen talk about, oh man, the number one mistake of people make is just opening one up and not choosing where to invest. And I'm like, I don't know, did I do that? Probably if if there's a number one mistake, I probably made it. But then I was I was too nervous to ask anybody, so I start youtubing that's where you go, right, like Jen said, that's where you go, And You're like nervous and something doesn't feel right, but no one wants No one was answering that question, like once it's in there, what do I do with it? Everyone wants to talk about, like here's how you go to van guard and set up an accoun I'm like, I'm not that much of a dummy, Like I know how to do that. Now I want to figure out how to invest it. Where do I go? And then Jen, I remember you saying that you did a video on it, so that I was searching your channel looking for your video. I couldn't find it. That's a sidebar, you might want to make it more obvious. Anyhow, Then one night I was hanging out at Jen's house and I finally worked up the courage to say so, I don't think mine's actually invested. And she was like, all right, let's check it out, and she like logs on. She's like, sure enough, Nope, it's been sitting in here for a whole year not doing anything. And it was more complicated than I thought. She's like typing in all these numbers and letters capitalized, and I'm like, how as a normal person would I have ever been able to do this. I'm I'm not a dummy, but that was complicated. It felt complicated to me anyway. Taking the investments, I feel like, is more intimidating than it needs to be. I can't have any help on that, unfortunately, just because of we're being licensed. But there is an easy way to have, like a formula to there's like some easier ways to do it, and there's some like auto plans that kind of take care of it for you. But yeah, that I would say, that's one of the big mistakes. And then the other one I would say, it's not putting a beneficiary on it. I did do that, yes, okayd have a beneficiary checked that? Yeah. No, it is definitely especially with like the discount online brokers that you know, that most people go with the Van Garden Fidelity. It's there's probably I mean, I think there's a reason why they're low cost is because they don't have a super like tech friendly intuitive um and I think they have like interface eight thousand options or something like when you go to search, there's like so many investment options. Yes, so yeah, I mean it's it is complicated, but there are definitely ways to simple ways to to do that for yourself if that's what you want to do. Otherwise you can go through a Boa advisor and they will do it for you. So yeah, man, thank you Barbara so much for sharing all of your wisdom. Seriously, you were so and we didn't even like touch the surface of like everything you know, So, like, where can people get more from you? Sure? So you can follow us on Instagram. Is probably the best Future rich podcast on Instagram. And then we also have a website Future rich podcast dot com. We created a roth Ira rath actually we call it all about roles because it's not just about the roth Ira download for the listeners. So yeah, so, and where can people get that? I didn't it's not in color, it's in it's a color PDF. So um on our website. You can get it so at Future Ridge podcast dot com and it's you put in your email address and then you'll get the download on all Things Roth. I love it. Thank you so much. Thank you Barbara for sharing all this, for holding our vulnerabilities and being kind with us. It's good to have a friend in this space. And thanks for sharing all of your knowledge while some of your knowledge. Thanks for being here. Thank you for having me. That was fun. I didn't think that I would say that after a talk about retirement accounts, but you know, I had fun. Yeah. No, Barbara just put a lot of insight out on the table. And I hope that even if you did kind of know what a rathira was or you'd heard of one, I hope that after this episode, like you feel confident about it and you have that baseline education because there are so many things that you can do on your own. You don't have to know everything about in investing to start investing. Yeah, and if you're like Barbara Jen or myself and hearing this causes a spark in you to go open and invest into a retirement account, please let us know. We're always hanging out in the Frugal Friends community group on Facebook, and we love to hear these updates and what the podcast has inspired you to do, or just the smart financial things that you're doing on your own, how you're being frugal, all these things. Absolutely, and thank you so much for listening. So we want to thank you for downloading the episode, subscribing, and leaving your kind reviews. It is the best way you can support the show without spending a penny, because it lets people know that we're a legit show. And for every one star review that complains about our voice and our laugh, we have a bunch of you giving us five star reviews about how cool the content is. So kind of like this one from am Wheel and it just happens to be five star ours and they say, do Jen and Jill have a secret? I love this one is get ready for this Jill. I listened to this podcast with my boyfriend. He said it sounded like to June Diane Raphael's talking about money, and he understood why I like it. June has historically been my doppelganger, so I'm feeling a little threatened. But whether it's Jen and Jill or simply to June's this is the best and most binge able personal finance podcast. Do I Wish I was June number three? On the cast obviously has a global pandemic normalized pretending I am June number three because we're all hard pressed for socialization right now, or June and June that friendly and warm in their convos that everyone pretends to do this and we do it anyway, even if there wasn't a pandemic. I guess you'll just need to listen to find out if you start lolling or making comments out loud. Welcome June number four, a first star Hall of Fame one a gas. I think that's the best word. Jaw dropped, probably because all of them job draw breakers on the bus, but also so excited. I think I even have tinges of goose bumps with how amazingly written, how connected, how thoughtful and funny and witty and adorable? Who knew? I got a review? Good hold and contain so much? Yeah? I so, I actually had to google June Diane Raphael and uh, she's an actress who has started on comedy programs such as Burning Love Something on Adult Swim and Grace and Frankie So and yeah, and she's beautiful, so like to have her as a doppelganger is a blessing. Well done. I am Wheel, am Wheel. Whoever you are good, You are a third. Good for you. Yeah, you are third and welcome to any. June number four welcome, you are safe, here to all you. June number four is we want to thank you our friends who share these episodes on social media. So when you share the latest episode and tag us on Facebook or Instagram, we're adding you to the monthly drawing. For every five tags and reviews we get each month, we're giving away a copy of the Frugal Friends workbook. It's just where you can get more from us, more content, more of our ideas, some of the visuals, the thoughts, it's questions. It's good do it with a friend, So keep leaving us reviews on iTunes or Stitcher, whether they are groundbreaking or very simple, we will take either. Send us a screenshot to Frugal Friends podcast at gmail dot com, and don't forget to tag us on social We see it. Bye. Frugal Friends is produced by Eric Sirian Jen. I feel like there's so many things that we could follow up on right now. YouTube. You being my own personal retirement financial planning expert. Italian food that you got for free for Kai last night. I don't know. I mean you want to say, I will say, okay. So on the Italian food, we went in there, we had going to pick food. Yeah, so sorry support this. We went in there and we had to buy one get one free promo and we went in there on kids Eat Free Day and we're like feeling good about ourselves, and then at the end of the dinner, the waiters like, I'm sorry, you can only use one of these promos at a time, and we're like, we would not have fed our child if we'd known that, and that's totally what did you choose? Well, we choose to buy away one free because ours were more expensive, but like we definitely could have fed him from our plates. Yes, you know that's what you normally do. Yes, And so it was a sad time, um, because we thought we were doing so well and then everything came crashing down in an instant. Did you at least have leftovers? Yes, which I ate for lunch today. And I also got a glass of wine Happy our promo, So it was actually I didn't realize it was happy our promo. So I got for half off, and so there was a wind there. So there were so many there were so many winds, but like they were just eclipsed by the major loss. The takeaway here is ask about all your coupes from the beginning. Yes, I mean it's a rookie mistake, but it really is. You should ask how many promos can I stack in this one meal. It can be embarrassing at first, but you keep living that frugal lifestyle and eventually it tears down all your pride and ego and you're just ready to put the coops on the table. Ask about their deals, Ask about how much things are when there's no prices listed next to it. That is a big pet peeve of mine. How are you going to list all this stuff on your menu and not put a price next to it? I just won't go to that restaurant if I see. If I look at a menu and there's no prices next to I leave. Or why ask I don't have any pride? How much is this? How much? How much? Because I know, I just know that it's high. If it's not gonna if you ain't gonna write it down, there's probably high. Yeah, I don't want to be here for that, and it's usually at these middle of the road restaurants too, or it's not like you're attracting the super wealthy, Like why why keep it a secret? Talking about secrets, those are the secrets that annoy me. The pricing, for sure, Just be transparent so I can know that I'm not going to order it.

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