Ask HTM - First-Time Landlording, New Car w/ Severance Pay, & Roth 401k for Early Retirees #907
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This is welcome. glad. Well, from revisions ous history. Picture this your halfway through A D I Y car fix tools scattered everywhere. And boom, you realized you missing a part. It's okay because, you know, whatever is it's on ebay, they've got everything breaks, headlights, cold air intake x whatever you need. And it's guarantee defeat, which means no more crossing your fingers and hoping you ordered the right thing, all the parts you need at Prices you will love guarantee to fit every time ebay things, people.

I would describe IT is very seamless club on on your air, and sometimes you can forget IT there. But I can bring my music with me, whatever I go, and just make life easier and seem less without interaction to be able to have the music without any interaction. Great check I am today. We're .

going .

to .

answer.

That's right. Just some of your little questions. I think you've .

got four to get two today, joe. He was like an A M A.

got one A A M A before. Then we literally named a next time we do one of those, let's one yeah or sooner, I don't know, maybe like later this year of I like am specifically I want to do an ama. So that means ask me anything for you.

None reddit folks, non money A M A. Like you've got ta ask us something that has nothing to do with because we talk about money all the time and I enjoy talking about personal finance. But to be able to deviate from the typical path a little bit.

what if the first one is? I'd be about that. But what you're so security number.

I would not answer that given years, but we are going to hear from a listener who as a first time landlord has a couple of questions for us. Another listener is wondering if he should not get a brain new car, but he's looking at a new ride specifically easing by using his severance money.

Another listeners asking about dipping into a four week early to fund some early retirement will get to those, plus another during today's episode, your body, but you know what to share a quick listener recommendation marcio, he actually reached out to us. So I guess I was a several weeks now that we talked about here and there. We talked about fitness on the show, our personal .

fitness try and .

keep to a minium.

bro. Anta huberman fell as I because .

there's other pod gas for that yeah specifically huberman. But mario, he heard us talking about that is like, hey, doos, you should check out f three, which is this free sort of communal fitness group. These groups we talked about .

IT like a year ago on on the point .

maybe a year ago, we'd only just heard about that. But since like i've talked to a body that a is involved with, one they are all over the country, they're free, they meet regularly. The way I see is a way for you to get into getting fit if it's not something that you've done .

before instead of weight, what you buy a block, right? Yes, so show up in your people.

Is that all the or is IT just the one here?

logally? I think that's kind of about other things. And and the cool thing is like zero dollars to show up and the whole goal is to do some physical fitness. And and you from what i've heard, you kind of develop bonds with some of the folks are working .

out with f three is like fitness. Faith is a family not told short maybe have you? So you've not been right.

I have not afford to go.

Would you consider going because IT for you, I bet for you the social aspect, I gotta think that that would be empowering for old.

Old was, no, that does not cool. The tough part is, I believe that starts like five. And you sleeping them.

that is the downside. They meet, really stand early, but I would say so the ability to work out at home, i've been know what to maintain that. okay. So a quickly little fitness update on me. We talked about building up my like I built up my garage, created my own little personal cross fit im.

And the big question was whether not I was going to be able to maintain IT without the accountability because for the most part, it's just me out there, obama alone some yeah get some podcast listening in. My buddy George hill come over sometimes, but sometimes he slacks. So George, if you're listening, public all even be showing up their body.

Five, forty five, that's what I do IT. We don't do five collectors. But I think for a lot of other folks, the ability to have some of that accountability like that part of IT is I think it's you.

Yes, no, I think you're right. I think really good. I think it's worth checking out for a lot of people.

They have like a main website and there's a bunch of local chapters. Find one near you and maybe show a couple of times, see if you like. IT not.

The best part is that is totally free. That's right. Yeah, you could probably find this like, you don't get home, people buy one. The one thing i'm kind of running up against right now that in my own filter, ity ran my first tap marathon.

But now i'm like, and you blew out your time, like, you totally thought you were going to. Like, every minutes faster, did you run IT? Well, I was hoping for sub two, and I bring in one three happy.

So, but seven minutes faster than you are expecting to. Like, great. That is amazing.

but here's the thing that i'm encountering. And these races can be expensive and the longer to raise, the more money costs. So running a half, i'm like, oh, so I try marathon at some point.

Let's like hundred fifty books to sign for these races sometimes and I don't know, maybe i'm being too cheap, but i'm like i'm to keep running, but I just don't know how many races i'm going to participate in, how right I to make IT I see? Or if I do, i'm to carbon out as a line out in the body. Is this the cause I regular cheap.

I would say IT would be cheap. Deed free to night, sign up for your next race. Because once you get that race on the calendar, you completely change how IT is.

It's just like with your money, once you ve identified a goal, something that you're working towards, whether it's like a disney cruise or whether it's a dumpling of for a house, like you are able to shift your behavior in such a way that you are going to achieve that goal. And there's all these good things that happen along the way. And that money I want you sign up for a race.

you're ably write that money too, I think actually kind of a skin in the game. So if I was ten to, you might be more blow IT off. But if you drop hundred and twenty box or whatever on the race we you like, I am going to be prepared for that race, committed to the time to show up and i'm going to be fit.

So I gala thanksgiving. That's kind of a real race. Yeah yeah. Matters mentioned. The bear haven't on the episode this is called turbo dog it's by abet which is a bury out of lousianner great day of blues and will give our thoughts on this one at the end of the episode but let's take listen your questions and if you have uh, a money question we wants to hear from you um just record your question on the voice memo APP of your phone and send IT over our way to how do money part A G 点 com whatever your money questions there's no question to dumb， no question too fantastical for that matter. Take hopefully we will take you next week on the show and that less you to a question now about saving .

up for a newborn man. I'm hoping to find the best savings plan for my baby. I planned and starting a five twenty nine plan, but would also like something like a high yield saving account.

Essentially, I would like something my son can have access to at any given point. But what's the best option? What will give them the best return and what's an option for a baby?

Thanks for all of your help and knowledge rebeca from clive and ohio rebeca. Thank you so much for reaching out to how the money and I will be the first on the show to say congrats to you. Congrats on the the new addition to .

the family man follow we had how the money one sees we would totally send you. We we should make that a reality. Why not all .

we've got a socks is true. Yeah, I like the odd articles of clothing. That means not to, yeah, i'm actually onna look into that because I think that would be hilarious. And cause babies are the cutest what's cuter than a baby is a baby also wearing right a perfectly?

Anytime a listener has a baby, they can just reach at us. And yes, what problem it'll send you a day will let you know.

take that back. It's free. Literally anyone want to reaches .

out if they have a baby as a listener, if they can prove they like the show. Then I will ue to .

make other s to the post service because like you do, like you don't know you're opening the flood gates. Like there's to be some sort condition, don't you? You there's something about marketing here that's missed.

They also have to get a two of our faces on their left shoulder.

So maybe I want to be that extremely yeah, i'll see once we actually if and when we get the baby ones these but Rebecca, I know how keen new parents are to set their babies up for a future financial success by quick little to clam here, and i'm not going to launch to all the money here is necessarily, but make sure that you secure your own retirement before saving and before investing for future generations.

This is not selfish and actually is the opposite. You are ensuring that you're not going to be a financial burden to your child potentially in their financially vulnerable years once you they are kind of sandwich ed in the middle. And if you are already crushing your own money, goals being awesome, but if not, wanna make sure that you're doing that first?

Yeah matter. We've use this synnoeve before, but it's exactly like what they tell you on an airplane that nobody listens to. You get to your buzz in and so you're not paying attention because you have heard a million times, but they say to put your own oxyde mask on first before you put them on the minor child next to you and that makes sense, right? Because you put them on your k and the new black out, well, then you can help them in the event of emergency.

So that's that's exactly what you're doing here is you're ensuring that your own your own financial salvation y before you start thinking about your kid who has many, many, many years and their own effort that they can bring to the table in that endeavor. Two, my guess is that rebec is doing a good job on that front. And in part of why I say that is because she's trying to fund far off goals for her baby, and she's also at the same time, trying to fund more near term goals.

And she's taking the both the end approach and she's keen on the five twenty nine, which is great, SHE said. SHE lives in ohio, and ohio actually has one of the best planes in the nation. They offer vanguard funds, which if you listen to the show for any link of time, you know we like vanguard funds because vanguard has changed the game and incredible access to low cost index funds.

And then on top of that, she's going to get a state tax deduction for investing in a five twenty nine account. For those future education expenses, too, which is just another reason that people should consider five, four, nine accounts, especially now there more flexible. Specifically in ohio, you're going to get a tax deduction of up to four thousand dollars in contributions each, every year.

It's a win for baby. It's a win for you. As long as kind of matter like you were saying that you have to put the cart before the horse, you've been taken care of your own financial future as well.

exactly. Yeah, maybe we will linked to the money years in our showing tes for this episode, but that's why we develop those because essentially, like you're thinking about how you ride a bicycle when you're starting from a stain still, you don't start on the biggest, tallest, fastest gear you're on. The rainy gear is where you wanna where you want to start when you are getting that bike moving, and where you to start, you'd burn yourself out.

Basically, if you were to try to go from a stand, steps and coins might not be able to help you. Yeah, there's a Better way of doing that. There's a Better order of Operations, and that's what the money years are.

But joy mentioned the five nine dollars. One of other benefits there is that if they don't actually get used for education, they can become rough ira dollars for him. So the dollars are saving and socking away now could become the it's like the seed funding for his future retirement.

And I think the toughest question that you asked is about where to put liquid funds so that he has access along the way because then you also mentioned wanting to get a high return. So that's a difficult feet. There's a difficult problem, a discount .

not to crack. yeah. Liquidity in high returns typically are anathema from one another. And the reason that you up for liquidity is for certainty and not to in order to seek out the highest returns because the higher n are going to come with more volatility and less access. Yeah.

I mean, like honestly, it's it's kind of an odd thing. I would asked you the question, like why do you actually want him to have access? Like why would you want a little one to have access to funds like for them to be completely liquid when simply ally, that's as a parent, that's something that that you can take care of that is supposed to having sort of A A warchest this massive account.

Here's one thing that rebeca didn't now line. And like, at what point in time are you talking about your having access to these funds? Yeah what might he be spending that money on and win? And if for talking about him having access to um some of this money in take his elementary school years, we really are talking about just having money in savings or cds.

But if you want him to be able to reach a higher potential return, that's onna mean take more risk and and the like I said you know more rist means a longer time line and so if you you know you're onna need access to this money until, let's say, his teenage years, I think you can feel much more comfortable investing that money in the market. Stock market volatility becomes far less of an issue when you're saving for a decade or so in the future. But yeah the win or even quidd we need is like at the heart of this question. And that's kind of tough to the cycle.

certainly. Yeah yeah, the win is the bigger part part. But like I mean, you're say a decade or more for I mean and IT kind depends on your appetite for risk as if IT was me personally, like i'm very comfortable certainly investing for a decade or more.

But lesson a decade, sure, five years, even. Like I would only if I was me personal. Rebecca, if this was money that you're planning to use in the next three to four years, okay, maybe at that point because you're looking at a seventy five percent chance of of getting a positive return if you're looking for years.

But even when you up to five years, it's something like an eighty eight chance of seeing positive returns on that money were IT to be invested in the market. And so if IT was me personally, i'm investing that money. If you are looking at five years or longer based on the historical data, based on the historical returns, exactly. And we're you to invest money in atma or an ugma. So a uniform transfer or uniform gift to minors most sounds .

like the bowl dog name .

for the georgia dog up. But these accounts might make sense if that is what you're going for, more flexible investment accounts that allow you to sock money into the market on your child's of the half and they don't have to be earmarked specifically for college. The potential problem with these types of accounts though, or that you lose full control of the funds.

So once they are earmarked for your son, like that money is going to be his once he turns eighteen or twenty one depends on the on the state but if he's not in a great place, for some reason IT doesn't really matter. IT doesn't matter what he's spending that money on. Its his there's nothing you can do about IT that is the really test control.

That's why we almost never talk about these accounts because, yes, they can be helpful if you're keen on helping your child invest in ensuring that they have like a robust start once they enter a kind of their early adult years. But there are some real cause of those accounts too.

And the your efforts might be missed that there might be Better ways to invest in account that you won't, right? And then give that money to them down the road instead of funding money into an account that's essentially a lockbox for them. And the truth, this is a parent, you don't know what your kid is going to be like when they turn eighteen and nineteen or twenty and maybe they make a lot of progress by time they turn twenty five and you feel more comfortable giving the .

money then but or even a portion of the money yeah, it's up to you to make the quality exactly.

If you stick IT in one of these up more accounts, you don't have nearly as much control. The control is essentially their hands once they reached that age of majority. These accounts or investments that you put in your son's name, IT, would also impact his ability to get financial date for college, right if he a masses a big song thanks to you and all your hard work here will um financial aid could window and and that could really think I mean, you could be talking about losing out on thousands of dollars, three dollars for college yeah because he has a prety sweat worth in comparison to his peers who are also applying for financial lag too. So make sure to keep that in mind. You don't not really want to am sharing your future efforts and abilities to get free money for your child in the college base, if that kind of in the plans for him as well.

Quick side note, if you totally game game the system, there's a loop where the money that goes within a grandparents five twenty nine account doesn't count towards your sons financial aid at all. So if you ve got your parents or your partners parents that are in the optimize and maximize the returns that you might be to see in a reward letter in the future, depending on the college, then that's A A sweet little I don't want to call IT a hack but it's a certainly a looper pretty .

well known to the grandparents looper um and so yeah that that's something else to consider having the grandparents opened up the five line on account instead of you doing yourself. And then I just want to go back with quick map to that idea of medium term money. I mean, I think sucking money into the five, twenty, nine, twenty and each year right up to that tax inductor amount makes a lot of sense.

And then sticking the excess money into a high old, says account that you plan to use for your son is that could provide mindblowing returns, right, especially as rather likely to continue going down on savings. But if you're with one of our favorite online banks, you're going to get a solid return. You're onna have access those funds whenever you want so much again comes down to your timely your goals in rebec. If you back out to us with more clearly about some of the the goals in the time frame, we would be happy to discuss that too. But that windy need the money.

What do you plan to use IT for? I just can imagine her like they're being a use for IT until he's like typically you would think of, okay, use maybe going to start a business. Okay, that's way off in the future.

Okay, maybe he's going to for him to buy his own car. Okay, sixty, like maybe even a travel like a gapper. Okay, eighteen, like all of these are so far.

often the future. No reason to put the money in his name. yeah.

yeah. And so for that reason, I can think of too many scenarios to where I would make sense to save as to invest those dollars unless you're literally looking at me spending in the next couple years. And so rebeca, again, congrats on the baby and good luck to you on saving up for his futures for me.

one rich kids someday. That's right.

So we ve got more to get to you. We're going to hear from listener who is looking to take on a house hack. Will gets a her question in more right after this.

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I M at this listening questions. Episode continues. Let's take a question about something.

We typically put the kybosh on tapping retirement accounts early. Hi, matt Angel. This is Derek from kansas city.

Just like you guys, I love bikes. disgusting. F good beer and personal finance. My question is about accessing retirement funds early to bridge the gap between early in age fifty nine and a half.

I know that .

rough I R A contributions can be withdrawn at any time, but is there way to access raw four one k contributions penalty free before fifteen, nine and a half? Thanks for answering my question and thanks for the show.

Deric IT sounds like we could be buddies because you said other things that I like to do my in my spirits that, well, you, unless of a discovered, to be honest, than you are gel, that these are more completely in line with all the things that you like to do. I do enjoy direct. I would buds you.

so would probably get along fine.

We will get along seventy five percent of the time in time. I go play this golf. I might stay home. Yeah.

you don't loit as much study.

I enjoy IT. And I feel like last when I played, I think you that what do you think about have you checked out the new there's a new disk.

of course, here locally I heard about. But yes.

I will be going to like the perfect time of year and nice where, Derek, let's talk about early retirement. I think the tough is being here to the plan for is often being able to tap her term accounts early, but without overdoing IT, without basically running out of funds, right?

Because if you retire, let's say, fifty, for instance, well, you need to be able to grab some of those assets before, obviously fifteen thousand and half, which should be tRicky, but you've also gotto leave enough in there for those traditional retirement years as well. It's a it's just a tolerate order. It's a bigger hurdle to get over and it's certainly not impossible to pull off. But IT just takes a little bit for thought. IT takes some planning and it's I mean, just just going take A A larger nest gug as well as you're going to be drawing down on those assets on the security and more .

years to find you got fewer years to actually save up for that goal. So IT just means you have to have a higher savings, right, and be more intentional, got to get get after IT, that's right. But then you also have to figure out the um I don't want use the term loophole because these are just the way these funds these accounts or structure. It's a hack.

These are two words that we can use for the rest of the epo.

We've too many times. So but these accounts are literally have different rules in their different irs regulations about how you can tap certain accounts early. And so we'll do our best to kind of walk through some of those things like ROI contributions, for instance, those can be access early.

So let's say you maxed out your roth ira for fifteen years, something like that. And let's for arguments sake, say that that was a total of one hundred thousand dollars in contribution. Very nice.

Be great, right? The account then might be worth two hundred thousand dollars because of the earnings in addition to the contributions might be worth even substantially more than napoli. Just say that for example, you can still only take the hundred thousand dollars out penalty free before the age of fifty thousand and a half right? The the contributions, right the earnings sadly are still uh not and play you can't tap those and actually maybe not sadness because you still need those funds like you said that for those future decades too. But that makes the roth ira, we would say, a great dull purpose investing vehicle for people who want to .

retire early may not need to tap those earnings until the fact basically until he 6。 So IT, actually it's a it's almost like a nine issue. If you're got enough set aside there in the and .

there will be the goal. Is that like hey, no, you you don't want to tap or touch those earnings anyway because you need those to keep compounding for you for years and decades into the future because you ve got a really long retirement time horizon. Sadly though, you're rough four and k IT doesn't have the same level of flexibility when IT comes to early with rawls.

Like if you take money out early, you have to pay tax on what's not as the non contribution amount and at ten percent penalty two. So the rough four in kay, although they are they both have aaf in the name. They both have kind of like different rules essentially for how you tap that money early.

They are not created equal. It's it's a weird four million. So let's go with the, would you say like a hundred thousand dollar contribution with like a twenty thousand overall value? Let's use use that example. Uh and so let's you opted to take twenty thousand out of your rough for one k well, half would be considered contributions and the other half would be considered growth. And so this means that you pay tax and penalty on half of that on ten thousand dollars of that thousand dollars like you're taking out, which is not ideal.

And so with like with an a rough I ray, the first dollars to come out where you to tap that early are the contributions where as with a rough for win k, it's representative of the overall makeup of the of that funds essentially count. They can be tax fifty, fifty. You could, however, roll that rough for and k into your rough ira and then you're going to have greater levels of tax free access.

The key here though, is that your rough ra needs to have been open for at least five years so either you hadn't open one up, roll IT over and don't touch IT for five years or just take IT into that routh um that you might have already had opened. Maybe it's a rough ara that opened when you're a teenager, maybe at a life guarding gig and you're like, hey, i've heard about this rah I everything because i'm in the personal finance yeah what i'm not thrown on the desk out on the discovery course. If that's the case.

then you can go and do that immediately yeah IT can be a little in that because we're talking about two different accounts with the name rather than IT. Two different kind of like rules surrounding how you tapper with those funds, especially if you're doing IT early. And we're also talking about timelines, right? And timelines apply like how long the routh this is.

Open is essentially the quint essential time and that you need to know. And like you said, if you've had the rather open for quite a bit of time and you roll money into IT, then that money is essentially available instantly. But if truth is, is newer or fresher brain new the money he had to sit there for five years before you touch IT.

And even still, like when you perform that roll over, you're limited on your ability to make non qualified or early with draws to just one hundred thousand dollars of contributions, right? You still can't touch the other half the earnings in the example that we're giving the one hundred thousand dollars of earnings without paying tax and penalty on that amount. But there are other reasons.

I I would say you want to migrate money potentially for me rather for all one key over to a roth ira. So essentially sucking money away into a rough for N K is a great thing for so many how to money listeners. But getting that into a rough I over time can make a lot of sense.

tube. And one of the main reasons for that is the eventual reality of R M S mat required minimum distributions. And this is something that most of our listeners ers, let's say, there, in their late twenty years, early mid thirties, they are like, far, far away from .

this reality.

Is that all about .

for old to worry but IT will come .

down the pickets some point. Um and so R N these are required on raw for in case at least the way the tax are currently stands, but they're not required on roth iras. And since it's this incredibly simple conversion process, we think IT makes a lot of sense to turn rough for all in k money into rough array money at some point along the line.

And it's going to be massive helpful to early retirees to who just want more flexibility over win and how they grab those funds as well. Just it's a similar vehicle. The raw array and the rough allows you at least h the raw four O K allows you to stash more money into those retirement accounts, which is awesome because you can put twenty three thousand dollars this year, twenty three thousand five hundred next year into a rough for OK, which means you can be banking bookies of dollar in a rough vehicle for your future. But at some point you want to change IT into rough eight dollars because then .

it's more accessible, more flexible. Yes, so that's how to money. So let's quickly maybe touch on the way to money.

And Derek, I think, is worth of spending some time and asking yourself the question, why do I want to retire early? Because I will say when I first personally first discovered fire, early retirement. Oh, I can completely like bag work altogether. Well, something I totally want to do. But man, what I have found is that over the years, and honestly, i'll say, even like over the decades now, I have realized that I still want to do something.

And so I think is worth asking yourself, like, what do I want to do when I grow up? I'm serious like, like, what if you could have any job in the world if money didn't matter? What would you like to spend your time doing? Like maybe like a career pivot is in store for you.

And you talked about you love biking. Maybe that's like getting involved with like a biking nonprofit or something in your city that's advocating for bike lanes and getting bikes to underserved communities, that kind of thing? Or do you like beer? Maybe it's like finding your favorite. There's some good berries in kinds of the city is that we're board.

I forget anyway, i'm sure this rebels there in number, but how could you be to learn how to blue beer? And so when you don't have to sock away away tons of money towards retirement like the world, you're oyster and IT is worth thinking, okay, how can I contribute to society? What is something that is going to light me up that i'm going to be excited to do? Because, guess what, i'm coasts fire now.

I don't have to worry about the money so much. And I think that might be an awesome way for you to consider shifting things and shaking things up a little bit. Were you to find a job that still paying the ills where you're not back and work together or cool, you don't have to tap these funds anymore, which renders.

That we said earlier about making this conversion obsolete so yet you can still do those things. But there's a bigger question here that's worth asking. Yes, the why behind your money .

but also makes me think back to a conversation the u and I had with our friend jillian on the show, and he talks about taking sabbat ticals and the importance of taking sabbaticals. And I do you think that there's more americans are experiencing more burnout in kind of our hyper obsess work culture? So where we're fans of work, but we're not fans of the hyper obsess or culture. And so maybe taking three to six months off, maybe that is actually the perfect way to dip your telling and say, does early retirement make sense for me? And maybe IT puts you on like kind of your allowing to match a career pivot path and maybe that is more sustainable and maybe incentivises you to want to continue working even if it's in something that pays a little bit less, keeps the dollar .

bills coming in or even a lot depending of wide path. Got light up before.

let's get to another question at this comes from a lister who's about to become a landlord.

He wants to make sure she's doing IT the right. Hi matt. Just this is a out of not I am looking to move and plan to rent the home that I currently live in. I was wondering if you guys had any suggestions on where I could find a good rental agreement. And also, if you recommend I shaken any kind of special insurance or anything like that, any see you have would be greatly appreciated.

Matt, I love this question, and this is something that we have talked about regularly. We don't talk about. We don't talk about really investing as much as we used to. But for people aren't interested and want to get into IT, this is one of the best ways to get jump started is to rent out the home you're currently living, living in, saving up the downpayment to buy the next home jumping ship, renting out the one you are living in, you keep the financing terms you hold on to hopefully properly understand really well, that sounds like that's what a man is doing. That was my first step, my first foreign real state.

No, you've done that. I did something very similar.

Yeah and that that can be um a replicable path uh to success for people who want to you know they move into a house at slightly larger or something like that. The growing their family, they also want to start investing in real estate. I'm not going to say it's easy because you're going to save up the next downpayment, right? You're not getting the cash from the home that your selling. But if you can be disciplined, you can jump start that real state investing ability um by holding on to that house .

yeah hey on to that great low mortgage that you've got locked in. Honestly, I see a lot of people getting in the real state this way as housing affordability has gone up. And so they're staying in their home for a little bit longer. So they got more money, I don't know, maybe more time to find that next property. And they're like how i'm not going to get rid of this current house that, that we're in because the .

you might realized there more is like a thousand box of a month and they can run if like one thousand hundred a month, they are like way to second. Why am I not doing that?

Sounds like a great article actually we something like that up on the website. But A I am glad to hear that you're not trying to DIY this lease. Certainly, you could draft something up in email on your phone while you're waiting on a stop light in that technically can be legally binding if the person signs .

that you could didn't get your ID draw and cranes on and eight and half by elemental and both you in the tenant sign, and yes, is legally binding, but IT might provide.

does IT have all the things included that you need to have addressed a rental contract? At least like IT is an important legal document. You don't want to cheap out on this. That would certainly be an example of being cheap, not frugal. You want to make sure that you're dressing all the aspects of perspective lander life and what the renter might be asking here in this document.

There's all these causes met when I read through the the least that that I originally bought, and i've used the same one over and over and over like IT has. There are so many little causes in there that you won't even thought to put in there about how much time the tenants allowed to spend away from the property, right, without notifying you or you know what happens if they choose not sign another least but stay months to months. What are the terms going to be then you don't have those ah there's all those things are baked into the least. And if you don't buy a least that has all those elements thought through, you might be signing at least that doesn't protect you or your tenant in the way that.

that needs to. That's true. And maybe those are things and aspects of renting that you learn along .

the way to learn lessons the hard way. One more where, like i'm sure you, he says the same thing, but IT requires your tenant to have runner insurance renders insurances is incredibly cheap. But when they sign on the dot line, they are essentially saying, hey, my stuff is covered because i've gotten my own renders insurance claim or something to happen.

And so that's against you. That's important part of legally your own backside. But I think it's also an important heads up to your tenant to let them know what's expected and what they need to cover themselves exact.

So where do you go, AManda? Well, bigger pockets they've got state specific is that they sell for I think it's just one hundred bucks. We talked with dave mayer last week.

He's over their bigger pockets. We like them. Certainly worth considering. But you also probably don't have to spend one hundred dollars.

I would check out a veil A V, A, I L, avail that com. They offer free state specific leases as a lost leader, hoping that you're going to sign up for the premium service. So there's a way that you can hide your cake and eat too, like you could potentially get the free lease. And then just I know actually don't need these premium features, but that's actually something .

worth considering as well. Hope for sure. Yeah, if you are are looking to kind of up your landlord game and it's might think of it's similar to paying for budgeting ing software.

Does everybody need IT? no. Do you have budgeting software? no. You don't use IT like you use an excess bird sheet and that you've become accustom to for a decade and a half.

But a lot of people benefit massively from monarch money or wine now or something like that, and rightly so, like it's worth the money that you spend on IT. And I think the same thing can be true for consolidating your landlord responsibility. ie.

S right is at least is the best one that I know if i'd be Carried to hear from other landor's out there. If they're using something, it's Better or less expensive, but it's nice time. Healthful tools like that's one of the great things about modern technology. IT can make some of .

those more difficult task whole lot easier. tally. And if you were tempted to go maybe more of a DIY approach, this is like a half way. Maybe I, but I would say hit up some local real state investing groups because there are going to be a lot of folks there. You've got a lot of knowledge, a lot of experience in just straight ask on me like, hey, i'm actually I think i've going to be a landlord here soon. You have something I could to base my least and this isn't just you looking for free help or like a free lease because guess what, there are also not just investors there, but often times folks who manage properties.

And you know, if I was a property manager manager, I would be thinking, huh I can help this person along knowing that maybe you're not up to the chAllenge and of, well, that's just yet another property I can I give us me i'm looking to experience, you know the number of properties i'm looking to manage. And so or maybe you're like, you know, thank you so much and you've just made a great contact, just somebody who has potentially I mean, years and even decades of experience in the ability to kind of get some tips, some pointless from them to be able to share contractors right? Like, oh, hey, you have a roof and guy, we've never actually replaced the roof on our house and we're about to start reading IT out. But not sure if this is something need to do now or later that somebody .

that you can tap and force fellow landlord contacts are invaluable. Because you're right now, you and I text each other about this all the time. Yeah, have .

found a new lumber. good. actually.

Ve got a few other people in my role, bex, who also managed properties in the area and i'm always like aren't asking them to because I don't trust you actually ever mad. I'm getting usually have good but maybe you don't have a great plumber. You're like guy ghost me and so I reach out to somebody else and it's just nice to have put those people into my rollbacks.

Normally you say that .

too expensive or are you wanted that was like to you your recommended, but then somebody else to get a couple people to ire the jobs so I can know what i'm moving at, right? So it's always helpful to have those contacts and kind of be building out your network of people who are into real state in the vicinity. You're investing in two, AManda, and would have come to the least I would recommend.

Look at zillow rocket lawyer as well. Those are other potential good places to find. Free least templates that you can use might well compare them against each other. And it's just it's going to be an education for you reading through those lessons saying what's in here, which one seems like its the best and I would take a look at a couple and then pick the one that makes the most sense for you.

But I think you can get one that does the job and covers you nicely that is that doesn't cause you had done um and then a man ter also asked about special insurance. I think I tell you paced IT. The key here is to make sure you're not skimping on coverage, AManda.

Like that's a people people I think for a lot of people and especially now with how much insurance costs, it's really expensive. And I think people are saying, oh, can I downgrade that coverage just because I don't want to pay the higher premium and I get the impulse there? But typically, your leaving yourself exposed if you do .

that and I will say to make sure you and that you're transitioning your coverage from homeowners. To a renters or not a renters policy, but dwelling fire policy because that's gonna a heck of a lot more affordable. yes.

And given that this was the primary residence of years, like you're used to paying higher premiums. And so you could easily just be like, oh, yes, I want to keep those premiums and keep that coverage. No, no, no. This is a completely different kind of policy. And I don't think your insurance company would let you make that mistake because i'm assuming you probably ask them for a policy on the new property on the new hey, that you're moving into, but maybe not maybe it's with a different ensure and then your new house project is ensure by somebody else. Maybe there is a chance that you are paying homeowner policies on multiple properties, but you don't want that you anna dwelling fire policy.

And I think one more worth mentioning here, mat ferman a is is the suggestion of at least giving a umbrella policy because especially if you don't have an l sea on your property, which we don't think is necessary, what you're going to want is an umbrella policy, in all likelihood, to protect yourself. And that I think even more important matter when people have a few properties, right, that they're managing, that they own.

But the thing is they're not terribly expensive. So get that go for me insurance company as well. You might be talking about two to three hundred dollars a year for like a million dollars worth of coverage, an umbrella policy. And that will protect you, especially if you've grown your network reasonably well and you have a couple of rental properties, this could protect you from like massive downside scenarios of some sort of big lawsuit or something that you didn't verse from attention based on something that was out of your control even.

That's right, man. We've moto get to we're going to hear from a listener who's considering getting a very unique vehicle, who gets to that right after this.

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Every family has a holiday tradition, if not a bunch of them. My favorite one that our family does was instituted by my dad a bunch of years ago. He called to himself the bad elf and he gives everyone a hilarious and unnecessary gift that we didn't ask for is basically our Christmas highlight now.

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Yeah, IT felt so good to have that taken care of once kitchi had a first kiddo to get life insurance in place role to know that the bulk of their expenses would be covered if something were to happen to me. And for us, IT was the conversation where kate realized that she'd want to be able to stay in the house that we had recently purchased. Do not have to worry about mortgage payments. That is what tip the scales for us. And if you already have life insurance through work IT and may not protect all of your family's needs or follow you if you leave that job, so consider your own term .

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But let's keep going. We get more listened questions to to keep roll. And you get me email from listener Jessie. He says, I ve had a company car for the last twenty years.

I've taken the that's a life actor. Ite, there's a long time, yeah, I said at trying to cut back on my hacks.

We ve been easy to too many times this subsides, he says. I've taking the seventh package and will likely get another job in the near future. There will also give me a company car or a car allowance.

Good for you, Jesse. And and in the meantime, he says, i'm going to get a vehicle that will serve a utility arian purpose. I was looking at the import mini japanese trucks as they run forever.

And I enjoy driving, enjoy driving when when I lived in japan, they are six thousand to fifteen thousand dollars, and because of their age, they don't qualify for a carbon. So I would have to take out a personal loan at a nine eight percent rate. So my Better off buying IT out, right, or leaving my money in the market and financing IT.

Second, the Price of a new S, U, V and a good used SUV are ginning to be about the same Price. Is IT Better to buy new because of the warranty? I don't care about cars at all.

I don't see them as an investment there, simply a commodity to be used. And I do not tie my ego to a particular kind of car. Can I just like you, a little plows for that, like Jesse, spot on to yet. Do not tie your ego or yourself worth to the Carry drive.

although he does say that he enjoys that other special car. But luckily it's it's unaffordable.

You're also pretty red one guy in our neigh's od who drives those old jeff y trucks and they're piece .

I think you about IT with his business and .

kind of like a tongue truck um but for an adult and they're pretty right.

I think they called key trucks like this K E I. So there either key trucks or sometimes they called k truck or k cars.

But cake ups like you, I will say.

men is always hard to lose a job, but in this case, I am man, i'm glad to hear that you got a solid servant package because if like honestly, if you planned out your personal finances is well like that can give you many months, if not many years of breathing room. We have some friends ah that went through this process during the pandemic as certain companies were play and folks off and then they actually ended up hiring her back and said that he could also continue receiving seven amazing SHE resumed job oh my god, it's a make believe how and .

we talk about this, I think with the financial sammer I sam dog in at one point on the show, but kind of manufacturing a layoff. Ff, if you're in good financial health, can be that severance package. Connect us like this, this fuel, this rocket fuel, paying your money, helping you live the life you want, all are not working exactly .

so that he said, this seems like you you're set up to be in a pretty solid situation. You're expecting to get a job soon, but you may not necessarily get that new jobs soon. You know, hopefully this job will come with the car allowance. sure. But if we were us, I mean, especially since there isn't currently a paycheck coming in, like I would be opting for something very inexpensive if you can get when that's closer to this six thousand, like that was a pretty wide range actually like six thousand, nothing he said to fifteen thousand, that's a wide range. And if you could snag one for like closer than six thousand dollar range.

maybe six, seven, eight year.

maybe use that additional time you have on hand to work on IT. Hey, there's a way to force some value into that vehicle. I am all for that IT just concerns me that you're taking on this additional responsibility, additional financial burden without having a job lined up already. You especially .

don't want to take out a high rate persons alone in order to buy like a nicer car that you are don't necessarily me right now. And so yeah, we would suggest to pay cash if you can, especially when we're talking about in nine or ten percent rate on that loan gross. Yeah terrible.

Makes one a bar like IT, right? And we also know we want you to avoid expensive vehicles for the time being. So those cheaper japanese trucks, the key trucks, as you call them, and I think there are a great choice.

Um we want people to keep their car costs under control in Normal circumstances. But especially given the current state of things for you, it's all the more important. And then once you land that new job, hey, you might able to keep the many truck around and pocket the car allowance for a little bit.

Or your employer, I don't know that. I know some employers say we require you to drive something that's like five years old or newer, in which case then you can go back to the drawing board. You could start scalery for reasonably Price user cars that fit the bill.

But I would anerly you just don't want to buy the nicer car in anticipation of the new job. The new job doesn't materialized. You're stuck with a car payment for something that you don't actually need. That's like far nice and there's really no reason tone the super next thing sure yeah.

And definitely don't buy a new vehicle. And so you talk about comparing new verses used, interestingly enough, stats uh, that we found actually show the opposite the the gap between new and used vehicle Prices. It's the widest it's ever been.

This is according to admins, the gap between the average Price of a new car and a use car. And this is the same make the same model is now more than twenty thousand dollars. So the average used car Prices twenty seven thousand dollars and the average new car Prices forty seven thousand dollars.

So keep that in mind as well. I don't know what specific vehicle you're looking at. You know every making model is different. So certainly comparison shop. And I think I wonder if that has a lot to do with IT because if you've got at your eyes, your hearts set on a specific vehicle makes me think about long time listeners of the show, not even not that long time listeners of the show will know that earlier this year I was really pine in for for whatever reason. I don't know why.

But to tell you the not just the intuitive of forgie, but not just a hybrid, but the plugged in hybrid, i'm talking the toyota for prime baby. I wanted to have all the options laid up before me to be able to power this vehicle. So you start looking around and is okay.

I definitely want to get a later model because I want to get IT after the redesign OK. So looking at like a no, no twenty, twenty two and maybe new year, I don't know. And then you start looking at some of the trim options and you think, okay, why I definitely want leather.

And before you know if you've kind you keep upgrading the vehicle and you're looking at, oh my gosh, this is going to cost me like thirty seven thousand dollars you have is like the slippery slope of consumerism, right? Take your boxing yourself in yeah and then before you know and like you're at a Price point that you would never have considered before and you look at the Price of new and you're like one a minute, it's only five, four thousand dollars. And so then you've talked yourself in to a questing about forty thousand dollar market before you know you're going on brain new vehicle.

It's onna appreciate like crazy I feel you highlighted exactly how IT works. I say that because that's what me I went into a thinking yeah I guess that might be time for to get a second vehicle and before you know i'm looking at brain new to together out for is thinking that, oh, maybe that makes sense because i'm onna, hang onto this thing forever. You start talking yourself into this.

And there I would say that I purely view vehicles as transportation, but there's something about a new vehicle, what you start looking IT. So Loring. And I don't want you to make about financial decision .

here just for me, man. IT would be nice to not have to play my music through one of those cash type inserts like like apple car play like that. I'm so nice apple car play is. So i'm sure the last car we and I chose to think I have experienced IT in like a rental car and I know that's going to mean nice like him, like five years when I do eventually have great my car. But for the time being, i'm just as then with not having IT and you just got a kind of maybe stop expLoring and stop perusing those fancy cars. I guess the one case in which a new car versus a use car might make sense is, is like some of the the more reasonably Priced electric vehicles because the real essentially enhanced tax credit that you're going to get with those um there is don't forget don't sleep on the the U D V tax credit. But the truth is I think for a lot of people buying that E V new, especially with the tax credit in with the idea of driving IT for eight to ten years, I think I can make financial sense for people opting for one of the a model three or a heavy boat uv that can be a physically responsible choice to that.

So you really know your egos is not tied up in your vehicle. If if you get a heavy boat eug.

they're not the sexiest gel is good .

back to the beer that uni enjoyed during the episode, which was a Brown ale, specifically turbot. G by a beat. Have you had A A and a beat beer on the show before we .

had purple house? Something have, because belongs anding craft this point.

Yeah, i've been around for a minute, but what do you think of this dark Brown .

ale is definitely like my dad, really like I feel like that some he provides like some of that coffee .

action top caramel note.

Yeah, yeah, sure. Some of that maybe a hint of chocolate.

You know, I pick this up. Why do you? why? So this was like the first craft t craft. I don't know. Can you tell us the craft beer? This is the first craft beer that I felt in life with.

you can call a craft beer is just like your, it's a fifteen year vintage of craft. Lot's changed since right after college.

and i've live in north CarOlina, a i've discovered this beer. And this was like my go to. And specifically, I i've got such fund memories of the house that I was reaching at the time had a window h in the shower.

And this is up in the mountains of north elinor. And especially when a cooler, I would open that window and let the cool air component. Well, I was taking a hot shower.

This is like after work, you know, or after a chop in some wood, which, yep, that's what I do IT. I would like wearing class. I did not have a beard, though.

I had a beard, not a beard, but I would have a bottle of turbotax, sit there on the window, sell you, getting shielded by the coller e common. I was the beer of choice at that point for you taking the hatch shower. This was my first introduction to shower beers.

So how does that hold .

up for you them it's actually yeah, it's just fine.

I think I say IT brings that good memory.

IT brings that good memories and I think it's Better because of that. But i'm actually not too bad. I can see why is not like top in anybody's list of their absolute favorite craft brood.

But if you like Brown nails, spear, it's a solid one. I like Brown ils, that was like my initial gateway into crap piers, who was was Brown nails. And very easy to drink if if I still like a good problem. But I I like more like an Brown like something one custom cake.

maybe scam burbling belle agent notes to IT. Yeah, there's not a whole lot of complexity when IT comes to turbot. G nice.

I'm glad I ve got to delt back into your early adult hood, craft your drinking days. Yeah.

I feel like, have we have been friends back then? You've been been doit and I would have been like, dude, have you tried shower beers? You like, no, what's a shower beer? It's a beer you enjoy after work.

You've influence me in some various ways. That would shower one of least that's going to do IT though, for this epsom. If you have listed questions, by the way, we love to hear from you, please do record your questions.

Send them over to us hopefuls. We can take you next week on the show. The weird are the Better. We love weird money questions. So yes, to make IT happen and that we will link to some stuff we mentioned up on the website in the shoots at how to money 点 com。 But that can do for this one until next time.

Best friends out. Best friends out.

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