Welcome to Out of Money. I'm Joel, I'm Matt.

Welcome to Out of Money. I'm Joel, I'm Matt.

And today we're answering your listener questions.

And today we're answering your listener questions.

Joel, I feel so relaxed and so blessed out because I took a little sip of the beer that you and I are going to enjoy during this episode, right before you start talking about listener questions. Yeah, which is what we're getting to today.

Joel, I feel so relaxed and so blessed out because I took a little sip of the beer that you and I are going to enjoy during this episode, right before you start talking about listener questions. Yeah, which is what we're getting to today.

In fact, it's the toughest part of our job, Matt, the fact that we were forced by our bosses to drink beer while we talking about money.

In fact, it's the toughest part of our job, Matt, the fact that we were forced by our bosses to drink beer while we talking about money.

Hey, it's not lost on me how lucky we are. I was talking to a buddy not too long ago, and we were just talking about He was talking about something that he had going on with his work, and I was I was trying to relate, and I'm just like, man, I'm with you, bad boss, terrible coworkers.

Hey, it's not lost on me how lucky we are. I was talking to a buddy not too long ago, and we were just talking about He was talking about something that he had going on with his work, and I was I was trying to relate, and I'm just like, man, I'm with you, bad boss, terrible coworkers.

Yeah, man, I get it.

Yeah, man, I get it.

But then he kind of you like at me with incredulous size and was like, dude, don't you drink beer during the day on your podcast that you record?

But then he kind of you like at me with incredulous size and was like, dude, don't you drink beer during the day on your podcast that you record?

I was like, yeah, is it your coworker, your best friend.

I was like, yeah, is it your coworker, your best friend.

We've got perfect We've got a good I shall not complain. We are answering listener questions, though we've got a frugaler cheap actually that I'm excited to get to. This is a buying a used Mattress edition frugler cheap which I'm excited to get to. How used. As part of the question, that is true, another listeners asking me what to do with an inheritance. She's looking for the best options of what she should do without money. And we're going to talk about ROTH contributions in particular, a listener is no longer eligible to contribute to a ROTH, so what should he do. We'll get to that plus more during today's episode. Buddy, sounds good, you're looking forward to it very much, so I thought you might say that looking forward to him real quick. I wanted to do a quick little fitness update. Listener Brian reached out and was asking. He's like, man, I haven't heard you talk about CrossFit.

We've got perfect We've got a good I shall not complain. We are answering listener questions, though we've got a frugaler cheap actually that I'm excited to get to. This is a buying a used Mattress edition frugler cheap which I'm excited to get to. How used. As part of the question, that is true, another listeners asking me what to do with an inheritance. She's looking for the best options of what she should do without money. And we're going to talk about ROTH contributions in particular, a listener is no longer eligible to contribute to a ROTH, so what should he do. We'll get to that plus more during today's episode. Buddy, sounds good, you're looking forward to it very much, so I thought you might say that looking forward to him real quick. I wanted to do a quick little fitness update. Listener Brian reached out and was asking. He's like, man, I haven't heard you talk about CrossFit.

How whole are you Matt on.

How whole are you Matt on.

The podcast recently? And I'm still doing it, totally still doing it.

The podcast recently? And I'm still doing it, totally still doing it.

Where you're not doing CrossFit, you're doing home gym.

Where you're not doing CrossFit, you're doing home gym.

I'm doing the mat fit, I don't know, whatever you want to call it, my version of it in my garage and I realized I hadn't really sat down and done the math or anything. But I've been at it now for ten months at the home gym. Oh and get this, the local gym that I've been going to, they upped the monthly charge. It's up to two hundred bucks up the day. Yeah, okay, really expensive. So I'm not totally sure when that took place, but I'm going to assume ten months two hundred bucks two thousand dollars. I'm not totally sure if I ever admitted to how much I spent when I initially built out of the gym, but it is around four thousand dollars, okay, which is a lot of money. It's like a used car. But that being said, dude, I'm halfway. I'm halfway there to call on that money back. And that's just me. Kid's been out there working out as well. The kids are in there playing, trying to do pull ups because they know they'll they'll get I told them that if their first pull up that I witnessed without them jumping or anything, that they get paid five bykes, you know, trying to incentivize healthy living.

I'm doing the mat fit, I don't know, whatever you want to call it, my version of it in my garage and I realized I hadn't really sat down and done the math or anything. But I've been at it now for ten months at the home gym. Oh and get this, the local gym that I've been going to, they upped the monthly charge. It's up to two hundred bucks up the day. Yeah, okay, really expensive. So I'm not totally sure when that took place, but I'm going to assume ten months two hundred bucks two thousand dollars. I'm not totally sure if I ever admitted to how much I spent when I initially built out of the gym, but it is around four thousand dollars, okay, which is a lot of money. It's like a used car. But that being said, dude, I'm halfway. I'm halfway there to call on that money back. And that's just me. Kid's been out there working out as well. The kids are in there playing, trying to do pull ups because they know they'll they'll get I told them that if their first pull up that I witnessed without them jumping or anything, that they get paid five bykes, you know, trying to incentivize healthy living.

Man.

Man.

The other thing is you only equipment, and that equipment is valuable. So even though you've probably broken even at this point, because if you sold your stuff for half price, you could probably get rid of bit immediately think about so basically it's an asset right now. I'll say, right now you've broken even, so congratulates.

The other thing is you only equipment, and that equipment is valuable. So even though you've probably broken even at this point, because if you sold your stuff for half price, you could probably get rid of bit immediately think about so basically it's an asset right now. I'll say, right now you've broken even, so congratulates.

I appreciate that. Jill. How much have you spent on staying healthy?

I appreciate that. Jill. How much have you spent on staying healthy?

It's mostly just running shoes, which honestly, I haven't spent that much on. Like my running shoes are pretty cheap. People are actually amazed because I think the average runing shoes like one hundred fifty bucks now for a decent running shoes one thirty one fifty and I spend way less than that buying my Adidas when they're on sales. So I'm spending some more between like thirty and ninety dollars.

It's mostly just running shoes, which honestly, I haven't spent that much on. Like my running shoes are pretty cheap. People are actually amazed because I think the average runing shoes like one hundred fifty bucks now for a decent running shoes one thirty one fifty and I spend way less than that buying my Adidas when they're on sales. So I'm spending some more between like thirty and ninety dollars.

Prepare nice.

Prepare nice.

Here's the other thing I stock up when they're on sale too.

Here's the other thing I stock up when they're on sale too.

I think that getting what do they say, every three to four hundred miles.

I think that getting what do they say, every three to four hundred miles.

Something like that to replace the shoes is what.

Something like that to replace the shoes is what.

Some of the with the pros say. I think that's totally overblown. I think you can wear shoes well passed the quote unquote expiration date because it has so much to do with foot strike and how it is that you run right and so picture folks in the Nike ads. You know runners from the nineties full strike, gazelle stride, full stride and not perfect but just huge strides with their heel pointed out in what's going to happen is they're going to slam into the ground, sending those shock waves up the leg as opposed to running with a more of a midfoot strike. Yeah, anyway, if you run like that, yes, maybe you do need a little more cush But if you are running in such a way to where your foot falls lightly on the pavement, I think the cush you know, the maximum padded running shoes might be a little less necessary. For more reading on this, read Born to Run, a great book, which is the fantastic book. Got me excited about it. He talks a lot about it. Last question for you on this topic is all of our fitness talk out of the way.

Some of the with the pros say. I think that's totally overblown. I think you can wear shoes well passed the quote unquote expiration date because it has so much to do with foot strike and how it is that you run right and so picture folks in the Nike ads. You know runners from the nineties full strike, gazelle stride, full stride and not perfect but just huge strides with their heel pointed out in what's going to happen is they're going to slam into the ground, sending those shock waves up the leg as opposed to running with a more of a midfoot strike. Yeah, anyway, if you run like that, yes, maybe you do need a little more cush But if you are running in such a way to where your foot falls lightly on the pavement, I think the cush you know, the maximum padded running shoes might be a little less necessary. For more reading on this, read Born to Run, a great book, which is the fantastic book. Got me excited about it. He talks a lot about it. Last question for you on this topic is all of our fitness talk out of the way.

Well, how from a logistics standpoint, how nice is it to walk out your door and exercise?

Well, how from a logistics standpoint, how nice is it to walk out your door and exercise?

It's great?

It's great?

So, yeah, you're not paying two hundred bucks a month, you have of all your own gear, but also you wake up three minutes before you work out. That's pretty nice to and that's.

So, yeah, you're not paying two hundred bucks a month, you have of all your own gear, but also you wake up three minutes before you work out. That's pretty nice to and that's.

Literally exactly how I do it, just rolling out of the trying to maximize the amount of time I'm able to let my body recover. See, that's the other part of being healthy is getting enough sleep. It's stupid, but no, it is true, like the ability to roll out there. I will say we don't have a c in the garage though, so as it's been getting warmer, I'm certainly sweating a whole lot more. Yeah, I believe it because guess what the free gym, the locker room that's included with the gym membership, free showers, Yeah, that's not included. That's I got to pay for those myself.

Literally exactly how I do it, just rolling out of the trying to maximize the amount of time I'm able to let my body recover. See, that's the other part of being healthy is getting enough sleep. It's stupid, but no, it is true, like the ability to roll out there. I will say we don't have a c in the garage though, so as it's been getting warmer, I'm certainly sweating a whole lot more. Yeah, I believe it because guess what the free gym, the locker room that's included with the gym membership, free showers, Yeah, that's not included. That's I got to pay for those myself.

Well, I'm glad you're still doing it. Glad your money's worth.

Well, I'm glad you're still doing it. Glad your money's worth.

I'm glad you've been running it's as well. Dude, what's your next race that you're sending up.

I'm glad you've been running it's as well. Dude, what's your next race that you're sending up.

The peach Tree July fourth?

The peach Tree July fourth?

Hey, yeah, you and me. I don't think I have.

Hey, yeah, you and me. I don't think I have.

One before then, so and then half marathon after that full marathon on October that's the plan.

One before then, so and then half marathon after that full marathon on October that's the plan.

Which I don't Yeah, we'll say that one maybe for similar times. I don't know if we've talked about that.

Which I don't Yeah, we'll say that one maybe for similar times. I don't know if we've talked about that.

Yeah, all right, let's mention that be we're having on today's episode. This one's called anatomical transmutation. It is, of course a beer from an ipa from Burial Brewing Company in Ashville, North Carolina. We'll give our thoughts on this one at the end of the episode. And if you have a money question we'd love to hear from you, just go to how toomoney dot com slash ask, or instead of doing that, just record your question on the voice memo app of your phone, send it to us at how toomoneypod at gmail dot com. Hopefully we can take it next week on the show, Matt. This question comes from a listener who inherited some money. She's trying to figure out what's the best way to handle it.

Yeah, all right, let's mention that be we're having on today's episode. This one's called anatomical transmutation. It is, of course a beer from an ipa from Burial Brewing Company in Ashville, North Carolina. We'll give our thoughts on this one at the end of the episode. And if you have a money question we'd love to hear from you, just go to how toomoney dot com slash ask, or instead of doing that, just record your question on the voice memo app of your phone, send it to us at how toomoneypod at gmail dot com. Hopefully we can take it next week on the show, Matt. This question comes from a listener who inherited some money. She's trying to figure out what's the best way to handle it.

Hey, Matt and Joel, it's Cheryl from Nebraska. I am going to get about one hundred and fifty thousand dollars in inheritance. I owe about one hundred and ten on my house. I wondered if it would be smarter to pay off the house or just pay half on the principle, or I don't know what. Give me your thoughts. I listened to your show daily, love it.

Hey, Matt and Joel, it's Cheryl from Nebraska. I am going to get about one hundred and fifty thousand dollars in inheritance. I owe about one hundred and ten on my house. I wondered if it would be smarter to pay off the house or just pay half on the principle, or I don't know what. Give me your thoughts. I listened to your show daily, love it.

Thanks Joel, Cheryl is listening to us daily. I'm assuming she's catching up on the episodes. But what if we switched it up and started doing a daily podcast, daily financial news.

Thanks Joel, Cheryl is listening to us daily. I'm assuming she's catching up on the episodes. But what if we switched it up and started doing a daily podcast, daily financial news.

You wouldn't have to twist my arm. I don't think I like talking to you. I like talking about money, So doing that more, I wouldn't have to.

You wouldn't have to twist my arm. I don't think I like talking to you. I like talking about money, So doing that more, I wouldn't have to.

Cut it down to like a fifteen minute show.

Cut it down to like a fifteen minute show.

Perhaps, yes, okah, just because the one part of the thing that we can't control is how much listeners like or dislike us, and if we talk too much into their years, they might fall into the ladder camp.

Perhaps, yes, okah, just because the one part of the thing that we can't control is how much listeners like or dislike us, and if we talk too much into their years, they might fall into the ladder camp.

That is true, Cheryl. I want to kick things off and say that I'm sorry to hear that you've lost someone close to you, someone who's close enough that they would leave you in inheritance. So condolences first off. But what it is that you choose to do with this lump sum of money, Man, we are not going to be able to give a clearcad answer because it is so dependent on your personal money goals. It's so dependent on some of the specifics that we actually aren't privy to. So with that in mind, we'll try to a general framework, so hopefully you can make a smart decision with this cash and fusion, which I'm sure is what this feels like for sure.

That is true, Cheryl. I want to kick things off and say that I'm sorry to hear that you've lost someone close to you, someone who's close enough that they would leave you in inheritance. So condolences first off. But what it is that you choose to do with this lump sum of money, Man, we are not going to be able to give a clearcad answer because it is so dependent on your personal money goals. It's so dependent on some of the specifics that we actually aren't privy to. So with that in mind, we'll try to a general framework, so hopefully you can make a smart decision with this cash and fusion, which I'm sure is what this feels like for sure.

Most people like the biggest cash in fusion most people get, Matt is their their tax refund right that they got recently, and that feels like a big thing that they can do a lot with. But this is obviously much bigger. You can address bigger financial concerns that you have, and so let's address maybe the mortgage first. For Cheryl here, Cheryl, if you sup wish, he's got her eyes set on paying off that house. I get that. That's especially when you're talking about big some money. You're like, what do I owe the most on? And that is a mortgage typically for most people, and so it makes sense like, well, big lump sum, big mortgage. Let's try to eradicate as much of that as possible. And if you just bought the house recently, Cheryl, the answer might be yes. Right, if you've got like a seven percent mortgage or something like that, and you're a debt averse person, then paying off the mortgage it can be a fine way. I would say to use those inheritance dollars on top of paying it off, though you'd still have forty thousand dollars left to boost your savings and to invest, So it's not like that's the only thing you could accomplish either, which I think is great and lens maybe even more credence to the goal of paying off your mortgage with the majority of this money. But if you bought your house a whole bunch of years ago, and let's say you're in the last decade of paying it off, and you've got a really sweet locked in low interest rate, right, you're gonna get a whole lot less bank for your buck. So if you've got that three percent or so interestrate, you've already paid a lot of interest over the first decades of ownership, if you've had that mortgage for a long time. While paying it off in one fell swoop can feel good, there are meaningfully better ways I think to use out one hundred and fifty thousand dollars, because really that tail end of the mortgage matt when you don't know as much, you're just talking about paying very little in interest to the banks every single month because of the way a mortgage loan is amortized. So that's when people are most likely to start paying off their mortgage in droves to start throwing more money at it, but it's also the time where it matters to the least.

Most people like the biggest cash in fusion most people get, Matt is their their tax refund right that they got recently, and that feels like a big thing that they can do a lot with. But this is obviously much bigger. You can address bigger financial concerns that you have, and so let's address maybe the mortgage first. For Cheryl here, Cheryl, if you sup wish, he's got her eyes set on paying off that house. I get that. That's especially when you're talking about big some money. You're like, what do I owe the most on? And that is a mortgage typically for most people, and so it makes sense like, well, big lump sum, big mortgage. Let's try to eradicate as much of that as possible. And if you just bought the house recently, Cheryl, the answer might be yes. Right, if you've got like a seven percent mortgage or something like that, and you're a debt averse person, then paying off the mortgage it can be a fine way. I would say to use those inheritance dollars on top of paying it off, though you'd still have forty thousand dollars left to boost your savings and to invest, So it's not like that's the only thing you could accomplish either, which I think is great and lens maybe even more credence to the goal of paying off your mortgage with the majority of this money. But if you bought your house a whole bunch of years ago, and let's say you're in the last decade of paying it off, and you've got a really sweet locked in low interest rate, right, you're gonna get a whole lot less bank for your buck. So if you've got that three percent or so interestrate, you've already paid a lot of interest over the first decades of ownership, if you've had that mortgage for a long time. While paying it off in one fell swoop can feel good, there are meaningfully better ways I think to use out one hundred and fifty thousand dollars, because really that tail end of the mortgage matt when you don't know as much, you're just talking about paying very little in interest to the banks every single month because of the way a mortgage loan is amortized. So that's when people are most likely to start paying off their mortgage in droves to start throwing more money at it, but it's also the time where it matters to the least.

That is true. One thing I want to mention too, like and you mentioned one hundred and fifty thousand dollars, So did Cheryl make sure Cheryl that you are accounting for taxes on this inheritance, because yes, there is no federal inheritance tax, but Cheryl lives in Nebraska, and Nebraska is one of the few states that does actually have an inheritance tax, and so we may not be talking about the full one fifty So I'm assuming, Cheryl, though, that you are keeping that in mind. But Joel, like, we're talking about the alternatives and what we can do with this money. We've mentioned this before, but when you can get that higher guaranteed return in a high yield savings account, why would you consider accelerating your debt payoff. It's hard to give up a guaranteed return on your investment by hanging onto a lower mortgage as opposed to paying it off early, because most of the time there's risk involved when you were trying to invest money versus paying off that debt, and you know you might want to invest some of those dollars too. But when there is that risk free route to earn more, it's really hard to turn down. And that's what a high heel savings account is for people with a mortgage in the low to mid threes, it's guaranteed plus. And this is another note. I think a lot of folks, maybe more recently folks have sort of felt the advantages of having more cash on hand. But generally speaking, liquidity is incredibly underrated in personal finance. Everyone's looking for different ways to optimize as opposed to finding ways to be able to weather the storm. And when there are fewer and fewer storms, maybe you start thinking, ah, maybe all the storms they don't exist anymore. It's like, no, you just wait, there'll be something that comes along.

That is true. One thing I want to mention too, like and you mentioned one hundred and fifty thousand dollars, So did Cheryl make sure Cheryl that you are accounting for taxes on this inheritance, because yes, there is no federal inheritance tax, but Cheryl lives in Nebraska, and Nebraska is one of the few states that does actually have an inheritance tax, and so we may not be talking about the full one fifty So I'm assuming, Cheryl, though, that you are keeping that in mind. But Joel, like, we're talking about the alternatives and what we can do with this money. We've mentioned this before, but when you can get that higher guaranteed return in a high yield savings account, why would you consider accelerating your debt payoff. It's hard to give up a guaranteed return on your investment by hanging onto a lower mortgage as opposed to paying it off early, because most of the time there's risk involved when you were trying to invest money versus paying off that debt, and you know you might want to invest some of those dollars too. But when there is that risk free route to earn more, it's really hard to turn down. And that's what a high heel savings account is for people with a mortgage in the low to mid threes, it's guaranteed plus. And this is another note. I think a lot of folks, maybe more recently folks have sort of felt the advantages of having more cash on hand. But generally speaking, liquidity is incredibly underrated in personal finance. Everyone's looking for different ways to optimize as opposed to finding ways to be able to weather the storm. And when there are fewer and fewer storms, maybe you start thinking, ah, maybe all the storms they don't exist anymore. It's like, no, you just wait, there'll be something that comes along.

And I think that the cash is trash mantra caught on for a whole bunch of years. Yeah, well I'm just gonna invest then and no matter what. And so, you know, paying off low interest that didn't make sense. Putting money in savings didn't make sense because hey, what's that cash really doing for me? Well, cash is finally doing something for you now, it's certainly not trash. And you're right, the liquidity piece, the liquidity that having cash on hand.

And I think that the cash is trash mantra caught on for a whole bunch of years. Yeah, well I'm just gonna invest then and no matter what. And so, you know, paying off low interest that didn't make sense. Putting money in savings didn't make sense because hey, what's that cash really doing for me? Well, cash is finally doing something for you now, it's certainly not trash. And you're right, the liquidity piece, the liquidity that having cash on hand.

Provides those options. Man, there's worth there. There's value as opposed to paying off the mortgage early. Like once you get rid of that mortgage, especially if it's a lower rate mortgage, there's no going back, possibly ever, but maybe potentially in your lifetime being able to secure a mortgage of that low Whereas if savings rates go down you can always sort of change your plan.

Provides those options. Man, there's worth there. There's value as opposed to paying off the mortgage early. Like once you get rid of that mortgage, especially if it's a lower rate mortgage, there's no going back, possibly ever, but maybe potentially in your lifetime being able to secure a mortgage of that low Whereas if savings rates go down you can always sort of change your plan.

Of attack at that point. Yes, yes, I think that's exactly right. Don't do something that you're going to regret. And I think maybe that's just another good point here too, Matt, that depending on where you're at grief wise, Cheryl, people tend to make a decision with inheritance dollars more quickly than they should. And give yourself a little bit of time, like a little breather, to figure out what is going to be the best thing for me. We just don't want you to make an emotionally charged decision here with reaction. I would be prone to do right if I'm grieving and also found a bunch of money that was coming my way, it would be tough for me to make the smartest decision. I think in the heat of the moment, So yeah, feel free to take some time and sit on it. And that's what a high savings account could do for you as well. There's even a potential, by the way, that you're getting an additional tax break for paying mortgage interest, although probably not if you take the standard deduction when you file taxes, So just keep that in mind. From the mortgage perspective, maybe it's helping you out in some ways tax wise, but we also want you to think big here. What else could you do?

Of attack at that point. Yes, yes, I think that's exactly right. Don't do something that you're going to regret. And I think maybe that's just another good point here too, Matt, that depending on where you're at grief wise, Cheryl, people tend to make a decision with inheritance dollars more quickly than they should. And give yourself a little bit of time, like a little breather, to figure out what is going to be the best thing for me. We just don't want you to make an emotionally charged decision here with reaction. I would be prone to do right if I'm grieving and also found a bunch of money that was coming my way, it would be tough for me to make the smartest decision. I think in the heat of the moment, So yeah, feel free to take some time and sit on it. And that's what a high savings account could do for you as well. There's even a potential, by the way, that you're getting an additional tax break for paying mortgage interest, although probably not if you take the standard deduction when you file taxes, So just keep that in mind. From the mortgage perspective, maybe it's helping you out in some ways tax wise, but we also want you to think big here. What else could you do?

Well?

Well?

You know, yeah, mortgage payoff, that's you know, not the only consideration. You could get rid of other debts if you have any, and you probably should because no other debt you have in your life is going to be as as low or advantageous as your mortgage debt. But if you have like a credit card debt or a car loan, there's just there's no way that saving that money instead of paying those off makes any sense. So pay those jokers off and have no debt besides the mortgage. That's an ideal place to be. You could even use this money that I want to even think bigger than that. You could use it to start a business. You've always wanted to get.

You know, yeah, mortgage payoff, that's you know, not the only consideration. You could get rid of other debts if you have any, and you probably should because no other debt you have in your life is going to be as as low or advantageous as your mortgage debt. But if you have like a credit card debt or a car loan, there's just there's no way that saving that money instead of paying those off makes any sense. So pay those jokers off and have no debt besides the mortgage. That's an ideal place to be. You could even use this money that I want to even think bigger than that. You could use it to start a business. You've always wanted to get.

Yeah, yeah, those are the big dreams that I was thinking about it.

Yeah, yeah, those are the big dreams that I was thinking about it.

Yeah yeah, like that paying off that that's still kind of basic personal finance stuff. But what else could you do, like brainstorm how this money could change your life for the for the in the years moving forward. What about going back to school to get a degree and paying paying for it in cash, especially if that could lead to increased earnings for you if that's something you're interested in. Those are both two things that this money could do, and they would probably honor the person who gave it to you right where you're like, listen, I'm using this as a catalyst to completely not just change my financial situation, but change my life in a really cool way moving forward. So I would consider that. And then another maybe basic personal finance thing that's still big, is like, hey, how can I max out investment accounts for years to come with this money. That's another really cool thing you could do with it. But I just I guess I want to emphasize that the sky could be the limit here, because we're talking about a pretty big sum of money. It could be life changing, and you could do something kind of just like ho hum and boring or you could opt to do something that was just a potential catalyzer for your career, your life and future income too.

Yeah yeah, like that paying off that that's still kind of basic personal finance stuff. But what else could you do, like brainstorm how this money could change your life for the for the in the years moving forward. What about going back to school to get a degree and paying paying for it in cash, especially if that could lead to increased earnings for you if that's something you're interested in. Those are both two things that this money could do, and they would probably honor the person who gave it to you right where you're like, listen, I'm using this as a catalyst to completely not just change my financial situation, but change my life in a really cool way moving forward. So I would consider that. And then another maybe basic personal finance thing that's still big, is like, hey, how can I max out investment accounts for years to come with this money. That's another really cool thing you could do with it. But I just I guess I want to emphasize that the sky could be the limit here, because we're talking about a pretty big sum of money. It could be life changing, and you could do something kind of just like ho hum and boring or you could opt to do something that was just a potential catalyzer for your career, your life and future income too.

Oh, I never heard the term catalyzer before. Makes me think a fertilizer. Can you use it that way? Like catalysts? Just saying I like catalyzer though even better. But Cheryl, let's address like the behavioral consumer science, psychology sort of side of things. Will this money that you now have burn a hole in your pocket if you leave it there in your savings account as you are trying to find some different, big, awesome ways to spend it or invest it. Because if you've got a niche trigger finger and you're finding yourself wanting to spend, well, in that case, paying off the debt, even mortgage debt, I think that that would be a superior choice. What are the alternatives? And if the alternatives are going to be to totally blow that money, we don't want to see you doing that, so at least think through the behavioral side of this decision. Because many folks who suddenly inherited money weren't well prepared, you know, and that money was frittered away and few short years that's the kind of situation we don't want to see you emulate all of that.

Oh, I never heard the term catalyzer before. Makes me think a fertilizer. Can you use it that way? Like catalysts? Just saying I like catalyzer though even better. But Cheryl, let's address like the behavioral consumer science, psychology sort of side of things. Will this money that you now have burn a hole in your pocket if you leave it there in your savings account as you are trying to find some different, big, awesome ways to spend it or invest it. Because if you've got a niche trigger finger and you're finding yourself wanting to spend, well, in that case, paying off the debt, even mortgage debt, I think that that would be a superior choice. What are the alternatives? And if the alternatives are going to be to totally blow that money, we don't want to see you doing that, so at least think through the behavioral side of this decision. Because many folks who suddenly inherited money weren't well prepared, you know, and that money was frittered away and few short years that's the kind of situation we don't want to see you emulate all of that.

It's almost like lottery winners, where I think when it's unexpected, it feels like something that you can more easily just kind of.

It's almost like lottery winners, where I think when it's unexpected, it feels like something that you can more easily just kind of.

Blow sure, because easy kind of easy goes exactly.

Blow sure, because easy kind of easy goes exactly.

Exactly, And we don't want you to find yourself in that sort of behavioral position where you're like, well, I didn't have to work my butt off to earn this money, so let me use it. I can use it in kind of a more happy, go lucky sort of way, and know this money could really could really change your life.

Exactly, And we don't want you to find yourself in that sort of behavioral position where you're like, well, I didn't have to work my butt off to earn this money, so let me use it. I can use it in kind of a more happy, go lucky sort of way, and know this money could really could really change your life.

Yeah, I was gonna say, on the note of spending it, I think it could. It could, and maybe even should be worth considering spending a portion of this money on yourself in a way that feels a bit wasteful, that maybe feels like the craft beer equivalent in your life, the thing that you splurge on that you know isn't great from a long term perspective. But if it can act as like a pressure relief valve in a way, and if that allows you to stay on the straight and arrow with the remaining dollars that you have, I think that could be a good thing. Some funks will say, hey, spend five ten percent. But because this is such a large amount of money, like that makes me a little bit nervous, right Like, if we're talking about let's say this is one hundred and fifty after taxes there for Nebraska. Truly, that's what she's looking to have on hand, to be able to do with fifteen thousand dollars. That is a lot of money as opposed to I mean, I don't know. I feel like I could see myself being a little bit uncomfortable with that sudden sort of timer ticking in the back of my head, thinking, well, I'm supposed to spend a certain amount of it. I think there are ways maybe where you can be just very intentional with some of your spending dollars, whether that's spending it on other people or just marking a special occasion, just some way to, like, I don't know, memorialize even the person who you receive this money from. I think could be a great way to honor this inheritance that you have as well. But I don't know. It just depends on who you are, because if you're behind the ball when it comes to some of your other savings goals, and if you have the desire to do all the smart things with this money, by all means, go for it. But if you are fully funded from a retirement standpoint, you have zero credit card debt, cars are paid off, if you have full coverage on your insurance, you have life, if you have if you've done all the things, then you might be the kind of person that we need to encourage to spend the money.

Yeah, I was gonna say, on the note of spending it, I think it could. It could, and maybe even should be worth considering spending a portion of this money on yourself in a way that feels a bit wasteful, that maybe feels like the craft beer equivalent in your life, the thing that you splurge on that you know isn't great from a long term perspective. But if it can act as like a pressure relief valve in a way, and if that allows you to stay on the straight and arrow with the remaining dollars that you have, I think that could be a good thing. Some funks will say, hey, spend five ten percent. But because this is such a large amount of money, like that makes me a little bit nervous, right Like, if we're talking about let's say this is one hundred and fifty after taxes there for Nebraska. Truly, that's what she's looking to have on hand, to be able to do with fifteen thousand dollars. That is a lot of money as opposed to I mean, I don't know. I feel like I could see myself being a little bit uncomfortable with that sudden sort of timer ticking in the back of my head, thinking, well, I'm supposed to spend a certain amount of it. I think there are ways maybe where you can be just very intentional with some of your spending dollars, whether that's spending it on other people or just marking a special occasion, just some way to, like, I don't know, memorialize even the person who you receive this money from. I think could be a great way to honor this inheritance that you have as well. But I don't know. It just depends on who you are, because if you're behind the ball when it comes to some of your other savings goals, and if you have the desire to do all the smart things with this money, by all means, go for it. But if you are fully funded from a retirement standpoint, you have zero credit card debt, cars are paid off, if you have full coverage on your insurance, you have life, if you have if you've done all the things, then you might be the kind of person that we need to encourage to spend the money.

Yes, allow yourself that freedom, if you're in that kind of place.

Yes, allow yourself that freedom, if you're in that kind of place.

Depends on the situation and who you are.

Depends on the situation and who you are.

I'm guessing Nebraska winners aren't warm, Matt, and so maybe, like, hey, start planning a January trip to Hawaii if that's like, if that's in your if you're interested in that sort of thing, I.

I'm guessing Nebraska winners aren't warm, Matt, and so maybe, like, hey, start planning a January trip to Hawaii if that's like, if that's in your if you're interested in that sort of thing, I.

Thought you were gonna say, get you a nice, warm job that you.

Thought you were gonna say, get you a nice, warm job that you.

Can probably afford.

Can probably afford.

Both.

Both.

All right, We've got more to get to on this episode, including hey, should I switch from one low cost brokerage to another? And what if I lose roth Ira eligibility. We'll get to questions on both of those right after this we are back from the break.

All right, We've got more to get to on this episode, including hey, should I switch from one low cost brokerage to another? And what if I lose roth Ira eligibility. We'll get to questions on both of those right after this we are back from the break.

Joel, We've got more listener questions to get to now. Well, here from a listener and he has a particularly fun frugal or cheap for us.

Joel, We've got more listener questions to get to now. Well, here from a listener and he has a particularly fun frugal or cheap for us.

I'm Matt and Joel. This is Buddy from Downers Grove. I have a frugal or cheap question for you. So you walk into a mattress store. You're looking for a new mattress. You've been there before, you know the sales rep that's work with you, and you go on. You say, hey, I want the same bed that I bought two years ago because I need to swap one bet out at my house. And they say, hey, listen, we got one end back. It's going to have this fifty percent off and you could add on an extended warranty at a pre low rate. Is that frugal or cheap to be buying a used mattress that was on the show floor of a mattress store.

I'm Matt and Joel. This is Buddy from Downers Grove. I have a frugal or cheap question for you. So you walk into a mattress store. You're looking for a new mattress. You've been there before, you know the sales rep that's work with you, and you go on. You say, hey, I want the same bed that I bought two years ago because I need to swap one bet out at my house. And they say, hey, listen, we got one end back. It's going to have this fifty percent off and you could add on an extended warranty at a pre low rate. Is that frugal or cheap to be buying a used mattress that was on the show floor of a mattress store.

Thank you so much for the show. We'll be of a great day, all right, Matt.

Thank you so much for the show. We'll be of a great day, all right, Matt.

Normally, when I hear the words used and mattress in the same sentence, my earperks up, and I'm like, tell me more, cuz.

Normally, when I hear the words used and mattress in the same sentence, my earperks up, and I'm like, tell me more, cuz.

I get excited in a good way.

I get excited in a good way.

Well sometimes like is there a horror story coming here? Or like because I don't know, I get when I was much much younger, I was more inclined to do whatever it would take to save a buck. And I'm still thinking myself as a pretty frugal dude. But use mattresses. I have outgrown that used mattress regrets regrets. You well, we I know, I think you guys something similar and inherited mattress.

Well sometimes like is there a horror story coming here? Or like because I don't know, I get when I was much much younger, I was more inclined to do whatever it would take to save a buck. And I'm still thinking myself as a pretty frugal dude. But use mattresses. I have outgrown that used mattress regrets regrets. You well, we I know, I think you guys something similar and inherited mattress.

Yeah, well sort of. Okay, So the problem with Buddy's question here is that he's asking a guy who slept on a used mattress for over a decade.

Yeah, well sort of. Okay, So the problem with Buddy's question here is that he's asking a guy who slept on a used mattress for over a decade.

Ye.

Ye.

So, and this is a I used mattress, not by somebody. It wasn't inherited, it was not from somebody. We knew. It was listed on Facebook, and it just so happened that it was next door to some folks that we know, some friends of ours, and so I was able to kind of quasi have them vouch for their neighbors as these.

So, and this is a I used mattress, not by somebody. It wasn't inherited, it was not from somebody. We knew. It was listed on Facebook, and it just so happened that it was next door to some folks that we know, some friends of ours, and so I was able to kind of quasi have them vouch for their neighbors as these.

Weird, messy, nasty people.

Weird, messy, nasty people.

But I mean they did have cats, and there are you know, some cat here that I drove extra fast on the way home because the mattress was strapped at the top of the car. I'm like, okay, maybe that'll get all the oh the cat hair off. Okay, So here's the thing. We Like I said, we slept on that thing for over a decade, super comfortable mattress. And now so we upgraded to a king a couple of years ago. And guess who sleeps on that on that mattress now one of our kids. So we still have that mattress. And everybody in our household knows that that is the most comfortable mattress that's in the entire house bar nun Like, no questions ask everyone knows it. It's it was a smart move for us.

But I mean they did have cats, and there are you know, some cat here that I drove extra fast on the way home because the mattress was strapped at the top of the car. I'm like, okay, maybe that'll get all the oh the cat hair off. Okay, So here's the thing. We Like I said, we slept on that thing for over a decade, super comfortable mattress. And now so we upgraded to a king a couple of years ago. And guess who sleeps on that on that mattress now one of our kids. So we still have that mattress. And everybody in our household knows that that is the most comfortable mattress that's in the entire house bar nun Like, no questions ask everyone knows it. It's it was a smart move for us.

I think that's a clutch part of the answer here is it comfortable? Like yeah, because if you're saying, hey, listen, I'm thinking about trying to save money on this thing, and you know, the mattresses I at best, but actually it's not giving me the best night's sleep, Like there is something in sleep supportant man, This is also probably middle aged me coming out, but like my sleep matter is more than I did.

I think that's a clutch part of the answer here is it comfortable? Like yeah, because if you're saying, hey, listen, I'm thinking about trying to save money on this thing, and you know, the mattresses I at best, but actually it's not giving me the best night's sleep, Like there is something in sleep supportant man, This is also probably middle aged me coming out, but like my sleep matter is more than I did.

Yeah.

Yeah.

Often you pay attention to your sleep score on your watch every day. I look at it and and I always let that inform how I slept. I'm like, how did I sleep? I don't know, let me check my watch. I try to actually like think about how I feel a first and see if it matches up with a number, because it doesn't always just.

Often you pay attention to your sleep score on your watch every day. I look at it and and I always let that inform how I slept. I'm like, how did I sleep? I don't know, let me check my watch. I try to actually like think about how I feel a first and see if it matches up with a number, because it doesn't always just.

To not like brainwash yourself by whatever the score happens to say yeah on the garment. Yeah, but I get it.

To not like brainwash yourself by whatever the score happens to say yeah on the garment. Yeah, but I get it.

I guess I just don't want Buddy to make a decision here solely for money, because yeah, yeah, you're sleep matters. It's going to influence a lot of things, including potentially how much money you make, like if you're like showing a groggy eye to your job and stuff like that, Like it matters.

I guess I just don't want Buddy to make a decision here solely for money, because yeah, yeah, you're sleep matters. It's going to influence a lot of things, including potentially how much money you make, like if you're like showing a groggy eye to your job and stuff like that, Like it matters.

Old Buddy got the cheap mattress but not making nearly as much a work anymore.

Old Buddy got the cheap mattress but not making nearly as much a work anymore.

Yeah, but I think it's like where Buddy's coming from, and the way he phrased this question makes me think that it is frugal and not cheap because a couple of things. It sounds like he's purchased this model before he's had good results, so he knows that this particular brand of mattress is a good one at least for you know, the way he's used it in the past. That bodes well. I, too, similar to Buddy, would be willing to buy a floor model in order to score fifty percent off if I was a fan and I needed another mattress. I'd rather buy a nice floor model mattress in order to score a higher end bed that I otherwise wouldn't be willing to purchase or able to afford, than to buy a brand new, much cheaper model. I just think that the construction could be much worse on the on some of those fly by night you know, mattress in a box sort of things. Although some of the mattress in the boxes are pretty good, and it just depends on I sleep on one now, but I think that, you know, the comfort level could be inferior on a lower end mattress. And so if you're like, hey, I know this, it's nicely, it's it's well made, I'm getting a great deal. I know, I like this thing. Save the money.

Yeah, but I think it's like where Buddy's coming from, and the way he phrased this question makes me think that it is frugal and not cheap because a couple of things. It sounds like he's purchased this model before he's had good results, so he knows that this particular brand of mattress is a good one at least for you know, the way he's used it in the past. That bodes well. I, too, similar to Buddy, would be willing to buy a floor model in order to score fifty percent off if I was a fan and I needed another mattress. I'd rather buy a nice floor model mattress in order to score a higher end bed that I otherwise wouldn't be willing to purchase or able to afford, than to buy a brand new, much cheaper model. I just think that the construction could be much worse on the on some of those fly by night you know, mattress in a box sort of things. Although some of the mattress in the boxes are pretty good, and it just depends on I sleep on one now, but I think that, you know, the comfort level could be inferior on a lower end mattress. And so if you're like, hey, I know this, it's nicely, it's it's well made, I'm getting a great deal. I know, I like this thing. Save the money.

Sure, I always see the floor model as like a benefit because of the fact that it's had some some folks kind of you know, bouncing on a little bit, kind of like walking around on their knees. So I will say that when we purchased our new mattress, I was like, man, this thing's kind of stiff, but like it takes a minute to actually break in, and anytime I've talked to folks who know a thing or two about mattresses. They literally will on their knees, like walk around on the mattress to kind of like break it in. Yeah, essentially. But also I think what Buddy said was that the sales rep or the salesperson whoever, they started at fifty percent, And so I almost see this as an opportunity, Like he came to him already with fifty percent in mind, and I think that there is a chance that he would even be able to go down a touch more sure perhaps, So yeah, why not negotiate. I want to see Buddy have a conversation. Hey, this is somebody he knows, someone he's familiar with. I think there's an ability for them to get rid of a model maybe that nobody else wants that's been in the back of the store for a minute. While also Buddy give getting an even better deal than he thought possible.

Sure, I always see the floor model as like a benefit because of the fact that it's had some some folks kind of you know, bouncing on a little bit, kind of like walking around on their knees. So I will say that when we purchased our new mattress, I was like, man, this thing's kind of stiff, but like it takes a minute to actually break in, and anytime I've talked to folks who know a thing or two about mattresses. They literally will on their knees, like walk around on the mattress to kind of like break it in. Yeah, essentially. But also I think what Buddy said was that the sales rep or the salesperson whoever, they started at fifty percent, And so I almost see this as an opportunity, Like he came to him already with fifty percent in mind, and I think that there is a chance that he would even be able to go down a touch more sure perhaps, So yeah, why not negotiate. I want to see Buddy have a conversation. Hey, this is somebody he knows, someone he's familiar with. I think there's an ability for them to get rid of a model maybe that nobody else wants that's been in the back of the store for a minute. While also Buddy give getting an even better deal than he thought possible.

I'd also probably want to know the return policy, Like is that is true. Hey, granted, this is a store model and I'm getting a sick discount, But if I take it home and I realize that it is bent out of shape or something like that, and the right side of the mattresses is worn in a little more than that, I thought that can I bring it back within thirty days? And so yeah, I think the return policy matters here, and you really only be able to figure out what kind of condition it's in after sleeping on it for a few nights. So that's that's at least one one question I would have. And then you know, the one one thing in your question that might be a bad idea would be to get an extended warranty though, because the risk of a mattress having significant issues is pretty low. And it's not that extended warranties can never be a smart move, it's just that they rarely are. Self insuring is almost always the best bet. It's almost always what you're going to hear from us as an answer. So if you're getting this barget basement price, what you're going to pay for the extended warranty would probably be a decent portion of the overall cost that I wouldn't want to work over.

I'd also probably want to know the return policy, Like is that is true. Hey, granted, this is a store model and I'm getting a sick discount, But if I take it home and I realize that it is bent out of shape or something like that, and the right side of the mattresses is worn in a little more than that, I thought that can I bring it back within thirty days? And so yeah, I think the return policy matters here, and you really only be able to figure out what kind of condition it's in after sleeping on it for a few nights. So that's that's at least one one question I would have. And then you know, the one one thing in your question that might be a bad idea would be to get an extended warranty though, because the risk of a mattress having significant issues is pretty low. And it's not that extended warranties can never be a smart move, it's just that they rarely are. Self insuring is almost always the best bet. It's almost always what you're going to hear from us as an answer. So if you're getting this barget basement price, what you're going to pay for the extended warranty would probably be a decent portion of the overall cost that I wouldn't want to work over.

Yeah, that's true. And I like the fact though that he is familiar with his particular brand and you already you already touched on that too, And I'm actually I'm curious because you mentioned that y'all have a more foam memory fione based mattress. Personally, I'm not a fan. I'm not a fan of those, and I'm I'm actually a little curious too if they I mean, I guess those companies have been around for a minute. But like, one of the things that you see with foam mattresses is that over time they collapse, in particular on the edges, and so folks will say that, like, oh, it feels like I'm going to roll off the edge of my bed because of the fact that it doesn't have that inherent structure. I don't know, I think I'm a bit suspicious, a touch skeptical of like the newer mattresses that have some of that poonam built into it as opposed to the traditional padded tufted spring mattress.

Yeah, that's true. And I like the fact though that he is familiar with his particular brand and you already you already touched on that too, And I'm actually I'm curious because you mentioned that y'all have a more foam memory fione based mattress. Personally, I'm not a fan. I'm not a fan of those, and I'm I'm actually a little curious too if they I mean, I guess those companies have been around for a minute. But like, one of the things that you see with foam mattresses is that over time they collapse, in particular on the edges, and so folks will say that, like, oh, it feels like I'm going to roll off the edge of my bed because of the fact that it doesn't have that inherent structure. I don't know, I think I'm a bit suspicious, a touch skeptical of like the newer mattresses that have some of that poonam built into it as opposed to the traditional padded tufted spring mattress.

Yeah, so, of course, matt The place I got my mattress from when I did upgrade was Costco, and I wanted to find the best value mattress one that.

Yeah, so, of course, matt The place I got my mattress from when I did upgrade was Costco, and I wanted to find the best value mattress one that.

Did you pick it up in the store. Picked it up in the store, Okay, so you're able to test it out. Though I forget exactly what I paid. I want to say it was five or maybe a little bit below five hundred bucks for a king size, and it's the costco. I just pulled it up here, the Nova Form fourteen inch comfort Grand memory film mattress, all right, and it gets pretty good reviews and it actually does well on a handsome looking mattress.

Did you pick it up in the store. Picked it up in the store, Okay, so you're able to test it out. Though I forget exactly what I paid. I want to say it was five or maybe a little bit below five hundred bucks for a king size, and it's the costco. I just pulled it up here, the Nova Form fourteen inch comfort Grand memory film mattress, all right, and it gets pretty good reviews and it actually does well on a handsome looking mattress.

Yeah, it does well on Consumer Reports and Wirecutter as well. And it's actually thicker than a lot of mattresses too. It's like fourteen inches thick, which is pretty darn thick. So pay attention to that because some of them are like eight inches thick, like they're just to me, that's not enough patting.

Yeah, it does well on Consumer Reports and Wirecutter as well. And it's actually thicker than a lot of mattresses too. It's like fourteen inches thick, which is pretty darn thick. So pay attention to that because some of them are like eight inches thick, like they're just to me, that's not enough patting.

But yeah, I like it.

But yeah, I like it.

Emily and I both like that mattress, and so that's just like one last thing is look at consumer Reports, look at Wirecutter when you're shopping around at mattresses. They have good recommendations, and it is interesting. It seems like one of those things where the price the sky can be the limit on price you can. You can drop five grand pretty easy on a mattress if you want to, but a lot of the top picks are are low four figures, like a thousand bucks or less for a really good one. So just don't feel like I'm not going if I don't spend a lot of money, I'm not going to get something that's great because you really can.

Emily and I both like that mattress, and so that's just like one last thing is look at consumer Reports, look at Wirecutter when you're shopping around at mattresses. They have good recommendations, and it is interesting. It seems like one of those things where the price the sky can be the limit on price you can. You can drop five grand pretty easy on a mattress if you want to, but a lot of the top picks are are low four figures, like a thousand bucks or less for a really good one. So just don't feel like I'm not going if I don't spend a lot of money, I'm not going to get something that's great because you really can.

That's true.

That's true.

Man.

Man.

All right, let's hear from another listener. This is someone who has a question about one of our absolute favorite retirement accounts.

All right, let's hear from another listener. This is someone who has a question about one of our absolute favorite retirement accounts.

Hey, Matt and Joel Fellow Marietta in here. At the beginning of the year, both my wife and I have fully funded a roth IRA. However, over the course of the year, we've had significant capital gains from our investments. I'm pretty sure this has pushed us out of the limit to be able to contribute to the wroth IRA, assuming we're no longer eligible. How do you all recommend we proceed prior to the end of the year. Thanks guys, best friends out.

Hey, Matt and Joel Fellow Marietta in here. At the beginning of the year, both my wife and I have fully funded a roth IRA. However, over the course of the year, we've had significant capital gains from our investments. I'm pretty sure this has pushed us out of the limit to be able to contribute to the wroth IRA, assuming we're no longer eligible. How do you all recommend we proceed prior to the end of the year. Thanks guys, best friends out.

Well, Matt Thomas listen our neck of the Woods. He's also an honorary bestie, he said. Best friends out.

Well, Matt Thomas listen our neck of the Woods. He's also an honorary bestie, he said. Best friends out.

Yeah, so you count, you count, We include you, We include you. Thank you. And by the way, Matt, we think it's typically a smart move to fully fund your roth IRA at the beginning of the year. This is something you have emphasized a lot because we talk about the big fan. We talked about dollar costs, averaging regularly on the show, which is essentially putting money in every time you get paid, so you get paid every two weeks, you're sticking money into that four one K if you've got that through your employer. And if you have a roth IRA, like you're just letting it auto draft out of your account every single month or every couple of weeks so you fully fund it by the end of the year. But if you have the money to fully fund the roth IRA at the beginning of the year, which we know not everybody does, but if you do, stick it in because one, it just kind of gets it out of the way, like you've done the thing well, and then you're actually going to be better off the majority of the time too as an investor, because that's what the data shows, right, what three out of four years the market goes up something like that exactly, So you're more likely to have a larger sum, larger balance at the end of an investing lifetime, or you to have invested at the beginning of every single year as opposed to the end of very I know most folks off for dollar cost averaging because they just don't have seven thousand dollars in January first to toss it in.

Yeah, so you count, you count, We include you, We include you. Thank you. And by the way, Matt, we think it's typically a smart move to fully fund your roth IRA at the beginning of the year. This is something you have emphasized a lot because we talk about the big fan. We talked about dollar costs, averaging regularly on the show, which is essentially putting money in every time you get paid, so you get paid every two weeks, you're sticking money into that four one K if you've got that through your employer. And if you have a roth IRA, like you're just letting it auto draft out of your account every single month or every couple of weeks so you fully fund it by the end of the year. But if you have the money to fully fund the roth IRA at the beginning of the year, which we know not everybody does, but if you do, stick it in because one, it just kind of gets it out of the way, like you've done the thing well, and then you're actually going to be better off the majority of the time too as an investor, because that's what the data shows, right, what three out of four years the market goes up something like that exactly, So you're more likely to have a larger sum, larger balance at the end of an investing lifetime, or you to have invested at the beginning of every single year as opposed to the end of very I know most folks off for dollar cost averaging because they just don't have seven thousand dollars in January first to toss it in.

But it's a good goal to work towards, though. I think that if that's something that over the course of a few years, if that's something that you can work towards, where you've got enough set aside that you can every year, maybe you dump a little bit more at the very beginning of the year. And in a similar way, I think it does a similar behavioral trick where I think what's great about dollar cost averaging is that it just takes the guesswork out of when it is that you want to buy into the market. You're essentially doing the same thing though when you do the a lumpsum investment at the beginning of every single year, you're just like, well, that's just what I do come January first, every single year. It's not something where we're having a conversation about a baby like this is just we are investors, this is what we do. We're gonna be better for it.

But it's a good goal to work towards, though. I think that if that's something that over the course of a few years, if that's something that you can work towards, where you've got enough set aside that you can every year, maybe you dump a little bit more at the very beginning of the year. And in a similar way, I think it does a similar behavioral trick where I think what's great about dollar cost averaging is that it just takes the guesswork out of when it is that you want to buy into the market. You're essentially doing the same thing though when you do the a lumpsum investment at the beginning of every single year, you're just like, well, that's just what I do come January first, every single year. It's not something where we're having a conversation about a baby like this is just we are investors, this is what we do. We're gonna be better for it.

And it's basically dollar cost averaging on just a far less frequent timeline. Because you're like, you're still doing the same thing, Like you're not like, well, maybe I'll wait till like July and see if the market's up then or something like that. You're still doing it like clockwork on the same you know, the same season, same date, hopefully every year.

And it's basically dollar cost averaging on just a far less frequent timeline. Because you're like, you're still doing the same thing, Like you're not like, well, maybe I'll wait till like July and see if the market's up then or something like that. You're still doing it like clockwork on the same you know, the same season, same date, hopefully every year.

Yeah, and you're also not saying like, Okay, I'm only gonna invest in even years or something, or you know, I'm just gonna wait and slom forty and I think it's gonna be better then, Like you're not timing the market at all in that way, of course, But there is that occasional situation that Thomas has found himself in where you end up regretting it, and not because the market goes down, but because you find yourself ineligible to contribute to that wrath. It's a good thing on one hand, right because it means that you've made too much money, and that is worth celebrating. In Thomas's case, it's great to have maybe capital gains that he was not expecting.

Yeah, and you're also not saying like, Okay, I'm only gonna invest in even years or something, or you know, I'm just gonna wait and slom forty and I think it's gonna be better then, Like you're not timing the market at all in that way, of course, But there is that occasional situation that Thomas has found himself in where you end up regretting it, and not because the market goes down, but because you find yourself ineligible to contribute to that wrath. It's a good thing on one hand, right because it means that you've made too much money, and that is worth celebrating. In Thomas's case, it's great to have maybe capital gains that he was not expecting.

Some people like when they talk about capital gains, they make it sound like it's like the worst thing ever, Like, dude, I got these seconds.

Some people like when they talk about capital gains, they make it sound like it's like the worst thing ever, Like, dude, I got these seconds.

And I get it emotionally.

And I get it emotionally.

My tax bill the big picture, well, that means you made money.

My tax bill the big picture, well, that means you made money.

Let's zoom out a little bit. You're doing well. We are happy for you. But the current income limits are one hundred and fifty thousand dollars for single folks to be able to contribute to a roth, and it is two hundred and thirty six thousand dollars if you are married filing jointly, say Thomas or and others out there. If you're going to be close to that line, it might be worth prioritizing some other tax advantage moves, like contributing more to a traditional four to one K or maybe even batching your giving so that you still meet the adjusted gross income requirements. Maybe typically you take the standard deduction, but you're like, you know what, let's hold off on giving. We'll give all of our money at the beginning of next year, and then it's actually pre fund your giving at the end of that next year for the following year. That way, you're getting credit for all of that charitable giving on one year. It allows you to itemize and take more of a deduction.

Let's zoom out a little bit. You're doing well. We are happy for you. But the current income limits are one hundred and fifty thousand dollars for single folks to be able to contribute to a roth, and it is two hundred and thirty six thousand dollars if you are married filing jointly, say Thomas or and others out there. If you're going to be close to that line, it might be worth prioritizing some other tax advantage moves, like contributing more to a traditional four to one K or maybe even batching your giving so that you still meet the adjusted gross income requirements. Maybe typically you take the standard deduction, but you're like, you know what, let's hold off on giving. We'll give all of our money at the beginning of next year, and then it's actually pre fund your giving at the end of that next year for the following year. That way, you're getting credit for all of that charitable giving on one year. It allows you to itemize and take more of a deduction.

Makes sense for a lot of people where it's like standard deduction one year, don't take the standard the next because you've just batched some of those like tax oriented tax saving choices into one given year and then you back off the next year. And that can make you know, a small dent in your ability to save on taxes, but also in your ability to then contribute to a roth.

Makes sense for a lot of people where it's like standard deduction one year, don't take the standard the next because you've just batched some of those like tax oriented tax saving choices into one given year and then you back off the next year. And that can make you know, a small dent in your ability to save on taxes, but also in your ability to then contribute to a roth.

Yeah, exactly, and ross truly are one of our favorite accounts, in large part because of the flexibility and the options that the GIF folks. That being said, man the ability to contribute a little more to a traditional four one K for instance, even if there isn't a match. Well, okay, you are still investing, but then you are also bringing down your adjusted gross income, which then in fact allows you to be able to sock maybe fewer dollars towards your WROTH, but at least you're eligible. Yes, right out of the gate as well, agreed. So so okay, what do you do though?

Yeah, exactly, and ross truly are one of our favorite accounts, in large part because of the flexibility and the options that the GIF folks. That being said, man the ability to contribute a little more to a traditional four one K for instance, even if there isn't a match. Well, okay, you are still investing, but then you are also bringing down your adjusted gross income, which then in fact allows you to be able to sock maybe fewer dollars towards your WROTH, but at least you're eligible. Yes, right out of the gate as well, agreed. So so okay, what do you do though?

If you've contributed to a wroth and you find out that you're income was over and above the limit for twenty twenty five, Well, there are a few moves you can make. You're not going to face any penalties if you actually just choose to withdraw your excess contribution plus any income that it's earned by the due date for your tax return. So you will have to include the taxable earnings portion in your taxable income. So, like, let's say the money you stuck into the ROTH. Well, it made money because it was invested in the market. Well that you will have to include in sort of your figure out what the IRS form number is, Matt, But there's a form you have to fill out to report that on your taxes. But because of the way roth irays are taxed, you can take your contribution out at any time, Like you don't need to wait until you're fifty nine and a half because you're paying the tax up front. So because of that, you can just literally plow back that contribution, no harm, no foul. Another option is to recharacterize that contribution and move it into a traditional IRA. And I do believe this is something that you've done, right, I have, But that's.

If you've contributed to a wroth and you find out that you're income was over and above the limit for twenty twenty five, Well, there are a few moves you can make. You're not going to face any penalties if you actually just choose to withdraw your excess contribution plus any income that it's earned by the due date for your tax return. So you will have to include the taxable earnings portion in your taxable income. So, like, let's say the money you stuck into the ROTH. Well, it made money because it was invested in the market. Well that you will have to include in sort of your figure out what the IRS form number is, Matt, But there's a form you have to fill out to report that on your taxes. But because of the way roth irays are taxed, you can take your contribution out at any time, Like you don't need to wait until you're fifty nine and a half because you're paying the tax up front. So because of that, you can just literally plow back that contribution, no harm, no foul. Another option is to recharacterize that contribution and move it into a traditional IRA. And I do believe this is something that you've done, right, I have, But that's.

Also before the larger brokerages out there, so like Fidelity and Vanguard, before they were offering this like a withdrawal of excess contributions. That's what they're calling it now. And so the recharacterization, I mean even just the term right, it sounds like it was something that was invented by a bunch of accountants or the IRS, where it's like, oh, you need to recharacterize your contributions for sure. And there are times when you're gonna want to do that. But I truly think that this is a new thing, because this was not available when I did this a number of years ago when we had to recharacterize contributions. But truly, the ability to go on to a brokerage like Fidelity or Vanguard and initiate and excess contributions withdrawal, like I love it. It makes so much sense, and it's oriented towards everyday retail investors as opposed to feeling like you have to hire an accountant to make sure that you're handling this thing correctly. And so I know that there are certain situations where someone is going to want to recharacterize. It's pretty easy. Well, there are forms. When I initiated that for us with Vanguard, it was just an online form that you filled out. In particular, is easy because I was recharacterizing those contributions, those dollars from a roth IRA's that was held there at Vanguard to a traditional ira that was also held there at Vanguard. It's a little more complicated if you are sending that to a different brokerage. There's a little more handholding that needs to take place. But especially if you're doing an in house recharacterization like that, it's pretty simple. But again, this withdrawal of excess contributions option makes this even easier.