Hey Joe do you remember Barbara Barbara Walters barber Walters an anonymous caller you nicknamed her Barbara Walters she just did something that I love love love love and strongly encourage
bardustonuts oh well I do love that too but that's not what she's done yet oh she called with a follow up which is amazing because so many times show you and I answer calls and we have no idea how our responses affected the listener but we are about to hear from Barbara to find out exactly what impact our answer made on her life her money
and her choices fabulous this is the afford anything podcast the podcast that understands you can afford anything but not everything my name is Paula Pat I'm your host every other episode we answer questions that come from you the community and my buddy jos I'll see hi joins me for this Joe today let's begin with a quick refresher on barber's original question
my husband co-owns a business and we've been going back and forth on weather or how to include the possible lump sum payout from a sale in our financial planning we prefer to be conservative in our plans which is why we haven't included it in our numbers but we're also having a hard time enjoying the present since we know we have close to a decade to go if the sale doesn't go through what are your thoughts in our situation should we be less conservative today with the possibility of this sale in the horizon
should we stay at a course or maybe there's an alternative perspective you can offer
and we have now heard back from Barbara among other things she raises a topic that we don't discuss on this show enough scarcity mindset
hi Paula and Joe this is anonymous aka Barbara from a recent ask Paula episode my husband and I really appreciated your thoughtful responses and questions back to us
around including his potential business sale in our net worth it turns out that was a loaded question I laughed and even cried a little bit listening to that episode
in reflection I think we're suffering from a deep rooted scarcity mindset because of financial insecurity in our past and because of our families
and my husband is experiencing burnout from running a business that he came back away from
I promise we're not miserable we lead a wonderful love filled life surrounded by two sets of parents and an abundance of close friends
we even made the decision during covid to move closer to a place we love the beach
I like the work I do and I've already made the career change you referenced
I'm planning to solve for the two parts of my work that I don't like with a each of job change
we're trying to do everything in our power to not end up in the financial situations that both sets of parents are in which is why we prioritize saving and investing
we also want to be able to help our parents financially while not sacrificing our future
you asked what we're working for providing more financial support for our parents getting to the point where we can choose to work or work part-time
we're generally not feeling stressed about money our ultimate dream though is to buy a piece of land with a house to live in and a barn which we would convert into an event space
seriously that's what keeps us motivated we're on track to be coast by at the end of 2024 meaning we won't need to contribute anything additional to our retirement accounts
at that time we'll also have a brokerage account with roughly 400k in it
we're debt free and currently rent a charming and affordable cottage by the beach we have a meaty emergency fund and plenty of cash on hand for a reasonable down payment in our medium to high cost of living area
while we'd be most comfortable taking the conservative approach and waiting until the end of 2024 to increase our spending
I'm curious to hear your thoughts on that plan are we letting fear hold us back too much?
are we not prioritizing happiness enough? how can we build the financial and emotional confidence to take action now instead of waiting?
thanks as always for your guidance
Barbara thank you so much for updating us on your question and on the thoughts and emotions that you've had since then
I love these follow ups I love the opportunity to develop ongoing conversations and you said one thing that particularly stood out to me
and then you can tell it resonated because I said it even as I was queuing up your message
and it was when you talked about scarcity mindset it strikes me that you know what keeps you motivated it's that event space
the dream of that event space is the thing that gets you out of bed in the morning it's the thing that keeps you motivated
it's the thing that brings you happiness the idea of creating that of bringing it into the world
and so my response to you is very straightforward when it comes to spending money or loosening the reins
it sounds like it's not superfluous spending it's not a few extra sushi dinners a month that's gonna bring you happiness
it's building that dream so orient everything towards that that is your north star
I think that's the key in fact it's funny I was just speaking today with a guy who I gave advice to five years ago
Paula about his career and I thought that he should make the move and he was so afraid he thought that it was imposter syndrome
which sometimes or he had the severe posture syndrome which I think sometimes is related to a scarcity mindset right that I'm not enough
I don't have enough and I'm not enough and I feel like you just have to do it so I'm there with you you have to do the thing
because like I told him he was by the way writing me telling me what a great movie to have been and five years ago I had told him he should do this
and it was one of the best moves he'd ever made but then I wrote him back and said that was more advice for me than anything
there's never been a time when I delayed this thing that I really wanted to do where I looked back and went man I'm glad I didn't do that
I didn't do that thing I really wanted to do until five years later sometimes you just gotta go
that's incredibly insightful the link between imposter syndrome and scarcity mindset I have never I've thought separately about each of those topics but I have never synthesized the two
but aren't they so similar?
yeah one is the who and the other is the what?
yeah around the same pivotal question yeah exactly yeah I think that you know Barbara talked about her husband's burnout or being worried about burnout from running a business
since he can't get out of sometimes I feel like it's because you're working in a job and you know she talked about how much they love what they do and they're in a good place which is what we were questioning before
the fact that they are but I feel like sometimes Paula the burnout comes less from the job but from this dissatisfaction between doing a thing that is okay and good but not being the thing I'm really chasing
you know how many times you've been in a situation where you're like this is fine there's nothing wrong with it well then why do I feel affected by it why do I feel like I just don't want to get up for it the next day like everything's okay
but it just doesn't it's not the thing it doesn't let me on fire so you know in dating like have you ever been in a relationship that makes sense on paper?
yes yep it's it's that but for a job or for a business they actually had a callback recently on the hit show Ted Lasso to the owner of the team and a guy she had dated for a while that they talked about this very thing the guy was perfect on paper
everything he was great he was fantastic super great toward her they made a good looking couple and didn't do it yeah some jobs careers businesses some paths in life are like that there are many many paths in life that makes sense on paper
so I think Paula we go back to the beginning she knows what she wants I would just organize everything around how do I make that happen exactly yeah make that the north star and the beauty of having a north star having such clarity around it is it makes all subsequent decision making far easier because there's one singular guiding light around which
every question falls will this bring me closer to that dream which is the event space will this bring me closer to that or not and every decision falls in line from there
Joe I'm going to talk about all the off topic limits today right it just brought up dating now I'm going to switch to religion so I raised Hindu went to an all girls Catholic school
I'm fascinated by religion in fact I wrote my master's thesis on religion which is why this is top of mind for me right now I wrote it on the intersection between religion and immigration that's a different topic for a different day
one thing that I've learned from being around devout practitioners is their level of respect for a calling right if you have a calling then that's your calling and it doesn't matter what your parents want or society wants
or what you think you want right if you've got a calling you've got a calling and you have to answer it and I think that's a lesson that regardless of what your faith is or if you have any at all
I think that's a lesson that could benefit everyone Barbara I don't have anything else to tell you you have such a clear north star that I think that's your answer
thank you for calling in with that update my message to anyone who has previously had one of their questions aired on this show please call in send us an update that sense of continuity is everything so thank you Barbara and let us know when you open the event space
for anything meetup oh yeah oh I love it okay you heard it here first all right well thank you Barbara
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you've been thinking about buying a rental property but you're scared you don't know how to do it long distance you don't know if you can still get anything that's affordable you don't know how to estimate renovation costs or even really how to know if it's a good deal
you don't know if you're going to run out of cash after the purchase because of unanticipated repairs and vacancies you are scared you might spend too much money on a renovation you're scared that you might have no idea what you're getting into and things could go horribly wrong
you're scared you might be too late and maybe your property isn't going to cash flow maybe it's going to bleed maybe there'll be a housing market crash maybe you're worried that you yourself are too old or too young or that you're not rich enough or that you missed the boat these fears are common
if you want to learn about how the alumni from our course your first rental property faced these fears head on and became successful rental property investors go to affordanything.com slash fears that's affordanything.com slash fears
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the economic value or this is the value of an hour of my time the way to break out of that is by building investments one of those types of investments comes from rental properties rental properties are a great way to build a stream of residual income which you can use either to reach financial independence or to diversify your income streams to not panic if you have a job loss to have extra travel money or to retire early whichever your goal is I'm not going to tell you what your goals are
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Our next question comes from Samantha
Hey y'all I think we have a pretty unique situation we are in our 40s and we live sort of different lifestyle we have either lived out of our pickup truck or a van for the last 20 years we do work contracts across the US we're often in the middle of nowhere and so we'll sort of work for a few months and then that contract will end and we'll take off and go on national parks or travel internationally
I think financially we're actually in a pretty good place and we have no real debt which is pretty sweet and we love the freedom of being debt free it's awesome there is nothing like it
we have about 600 and retirement accounts we have three rental properties that we own free and clear and they're in great places that we love and we love our tenants and it's so easy to be landlords in those places and those profit about 40 to 60 thousand dollars a year
one of them is a short-term rental that's what the big discrepancy is the other two are long-term and we love them our income varies is anywhere from 80,000 to $4,000 a year not kidding and then we have working towards potentially saving for a house for ourselves
we have about $350,000 in savings including what I would call an untouchable $50,000 emergency fund we do not have a primary residence we still use our husbands' house for mail because they're asking for getting it to us and we're just on the road all the time
we found a place that we really love and that we would want to settle down in some day and we actually bought a piece of land there before the pandemic the problem is it's incredibly expensive it is $500 a square foot for even the most simple square foot
and that's just how it is we've called everyone we've been trying to work this out for years whether we do it for that price or not so that would be about $500,000 to build a thousand square foot place we would have to take out a mortgage or a HELOC for about $300,000 to finish that we think
we love it there it's awesome but now we're getting cold feed on building it at all there's nowhere else we want to settle down but what if we don't want to actually settle down yet?
yeah it's really hard to get inventory in that place there are only about five houses for sale and they're all above a million dollars
our life goals are to work less but eventually we want to be part of that community and we love it and we want to spend more time there
we hate debt because we love the freedom of our work ending and just we're going to sell these days out for a couple months but it also seems like our future selves would be pretty sick to have this house paid off in five or ten years
I don't know if that's a weird question could you help us figure out what we want?
thanks for all you guys do you really are the best
no you're the best that's my response to that Samantha you're the best yeah totally I Samantha I love your lifestyle that sounds like so much fun
my answer here is super simple from a financial perspective from a sheer money dollars perspective this is a slam dunk
do it now yeah absolutely I mean you know for sure if you were to settle down anywhere it would be there so there's no risk
no risk that you're not going to like it and then you're going to bear a bunch of transaction costs associated with getting out of the deal right so like the certainty and stability of if anywhere then here that is established
the fact that all the other properties in the area are selling for a million plus so you'd have the cheapest and newest property in the area maybe also the smallest but the cheapest in the newest
awesome awesome you want the cheapest house in your area that's exactly what you want the cheapest house on the block she also has experience renting it out if she decides she doesn't want to settle down right away
she's already an experienced landlord you know we tell sometimes some people we were you might love being landlord you might not and that's going to depend on who you are she already does it so until she's ready to settle down
she could rent it out she could bring in money and if it's desirable for her politics desirable for a reason a lot of people want to go there which means that is a should be also a slam dunk rental market I would think
maybe yeah maybe and Samantha you would know the answer to that much better than we would and then the other thing is Samantha your income fluctuates between 80,000 to 400,000 a year
this house is going to be $500,000 that's not that much more than your highest earning year so from every financial angle this is a total slam dunk
but as you said you don't know if you want to settle down and maybe you don't want to settle down enough to oversee the building of a place right because that's going to take a while the design the build the permits the blah blah blah blah blah
it's going to take some time it's going to anchor you to the space so maybe it's a yes but not now maybe it's a hey once we build this we don't want to rent it out like this is our dream home we kind of want to keep it just for us
you certainly have the budget for that that's not a problem but if those are reasons that building this now would make you feel tethered and there's a distinction between feeling tethered versus technically being tethered
because there are going to be a bunch of people who are like but technically you could do that sure yeah logistically you might not necessarily be tethered but if the emotional truth is that you feel tethered
then that is your experience right that's how it's going to feel for you that's what it will be and so if you don't want to feel tethered and if you think that there is a risk that building this is going to give you that feeling that claustrophobic
oh my goodness I'm chained to this project feeling if that's going to be the emotional truth of it that's a valid concern
I look at this a couple different ways Paula the first way I look at this is if they did decide to go ahead and build today what is the cost of being wrong right if they are wrong what's the cost going to be
versus what's the cost of them not making the move so let's go through those let's say that they miss out on this opportunity right now and the price continues to go up at the same rate of inflation is just going to be the same cost as it was today
and their money that they're piling though might be growing at a lower rate than inflation so it's actually going to cost them some dollars that way on the other side if this is a hot place and there's very few places for sale
they build it they turn around and they sell it well then they have the transaction cost so I don't think that the cost of this decision is big as she's building it up in her head
I feel like the downside either way is not as big as it is in her brain right exactly and certainly it's possible that labor materials associated with home construction might outpace inflation could share yeah you know yeah
but at the end of the day if she's emotionally psychologically mentally spiritually not ready to build because that is going to be a commitment she's not ready then she's not ready and so going back to dating you're using that as another analogy right
you know how sometimes it's like you're ready or you're not and if someone tries to force you when you're not ready it makes it worse it makes it so much worse but I just think Paula there's a way for to date this house I really do I think that she can look at this the same way she looks at her rental properties and she's just adding another rental property and this one they might want to live in the future that way they're dating right
she can date this property I think there's a valid opportunity there she can slow dance with it for a while yeah she can take it out for a nice Italian dinner
and if that's the case then Samantha when you are building when you're making all of those decisions make those decisions based on what you want not based on trying to force the property to make sense from a rental lens because as I teach my students in our rental property
investing course when you're buying a home purely purely for the purpose of that home being an investment then it's entirely a spreadsheet based decision and when you're buying or in your case building a personal residence
then it's in no way a spreadsheet based decision it's entirely something that you're doing for personal consumption and so where a lot of people get conflicted is when a property serves the function of a hybrid of the two whether that's because people plan on house hacking or they want a vacation home or they want something for their aging grandparents
anytime people try to make a property a hybrid of the two it often ends up doing neither well and so never try to hybridize a property that doesn't mean it can't be used for both functions
it means that when making decisions about the acquisition and the renovation of that property you make those decisions from a lens that is pure one or the other
so she would build that property for her yeah the way that she wants it and then rent it out exactly and don't give a rat's behind about its ROI what's the cap rate who cares right because that's not the point
you're just decreasing your holding cost yeah exactly until you make your ultimate decision are we going to get married to this property?
precisely precisely and so Samantha if you use this as a rental property don't stress yourself out about feeling as though it needs to fit any parameters you have around what's the cap rate what's the internal rate of return what's the net present value of this property
don't make it fit any of those formulas which you would do and you should do on some duplex that you're buying in Indianapolis sure yeah because I'm never going to live there I'm not hardly ever going to even visit it
maybe once every three years for a weekend right just to make sure it's still standing you know when you're making those decisions yeah that's a formula based spreadsheet based math based decision don't try to make your dream home fit into that box
build it in the way that you want to build it and then offset some of those costs by letting someone live there if you decide to build now it's also perfectly valid you already own the land so it's also perfectly valid to just keep holding on to the land
keep stockpiling money and then when you're ready to build do it and yes the costs might go up at that time maybe only at the rate of inflation in which case it's a wash
maybe at greater than the rate of inflation in which case sure yeah you lost a little bit of money but you gained a little bit of life so that's a wash too
again I don't think the opportunity cost if we did some hard calculation is going to be as big as she thinks it's going to be I don't think it's going to be that huge
you know the other way I think about this and before I get to it I just love her aversion to debt it is so great especially with her lifestyle I mean wanting to continue that flexing
ability I think gives her a powerful place to work from that a lot of people don't have a lot of people have to go to work tomorrow because they've got these huge debts they have to pay these huge bills and the fact that she can go from place to place and do what she wants is a testament to that living
I think that if she does it now she could obviously make a plan to then very quickly pay off this debt so she gets back to that position and based on everything that she told us Paul I don't think it's going to take that long
it certainly doesn't seem to me that if she built today that it would take that long to get there but but the fact that she's so conflicted there's another strategy that I truly like when somebody's not sure which way to go
they don't know what to do take a coin out yeah and flip it and then before you look at it ask yourselves which one you were hoping it was when you were in the air
I do a slightly modified version of that it's I flip a coin and then I pay attention to how I feel about the result yeah when I was a financial planner I would flip the coin and I would ask them which one they were kind of hoping for and then I put the coin in my pocket
I'd like wait I want to see what it was I'm like it doesn't matter what it was right I tell myself like okay I have to do however the coin toss lands like I tell myself that I convinced myself of that like it lands on heads I gotta do X lands on tails gotta do Y cannot deviate must do what coin says
I tell myself that I flip the coin I get the result and immediately there will be a bodily feeling like either enthusiasm or relief or disappointment like there will be a visceral feeling and that's how I know well yeah we respond to deadlines
I asked Don Han who was the producer behind Beauty and the Beast and a lot of Disney movies I said you're working with these great artists he used to be an artist himself he was a Disney Imagineer now he's the guy holding on to the purse strings
I said does it feel weird being an artist and not being not being able to just give these artists everything they want you gotta tell them no and he said an artist without a deadline gets nothing done
I think you can take the word artist out of that I think deadlines are great for decision making and all that that trick is with the coin whether you do it the way you did it the way I do it is it just creates a deadline the deadline is now
and we're gonna we're gonna live with whatever the decision is and then you know what you want to do right so Samantha there's your answer flip the coin we could have just said that Paula in such a shorter episode flip a coin Samantha next caller
hahahaha that would be a great April Fool's Day episode we should can you imagine we'll just answer every call like that we'll air like 27 calls in the span of a single episode
alright well thank you Samantha and please call us back with an update and let us know what you decide
we'll return to the show in just a moment
imagine this you wake up to an alarm it's dark outside it's freezing cold all you want is to lay in bed for 30 more minutes but you can you have to get up you have to quickly shower scrape the ice off of your windshield
fight congestion and bumper to bumper traffic just so you can go to an office where you sit under a fluorescent light and drink mediocre instant coffee and they have that scratchy one ply toilet paper in the bathroom
and in your office they have that really low profile carpet you know what I'm talking about the corporate carpet the kind you only ever see in offices because no one in their right mind would ever install that in a house
and then meanwhile you're using the computer that the company gave you to use but it's a million years old and you're like why are you hounding me for more productivity when you're giving me this outdated equipment
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next question comes from an anonymous caller you Paula are getting close to the finish line for people that are new to afford anything you don't know that Paula and I would never get an anonymous caller we give them a name we assign them a name we don't like talking to anonymous people we want to know who we're talking to right like Barbara quote unquote Barbara is technically an anonymous caller but we we nicknamed her Barbara after Barbara Walters
and so this year with Paula's pursuit we are diving into the world of journalism and naming people after professional journalists so which journalist are we going to honor through this pick.
well as listeners to afford anything no not only am I devoting this year to doing this deep dive in journalism but also I am Nepali I was born in Kathmandu Nepal and so I want to honor a Nepali journalist named Uma Singh who was murdered at the age of 27 by as many as 15 people who attacked her with knives she died of multiple people
stab wounds in Nepal and it is suspected that the work that she was doing as a reporter the light that she was shining on issues of importance motivated her killing so as a token of respect for her and for all the journalists who risk their lives particularly in countries that do not have strong rule of law
or that have high levels of corruption in honor of all of them this next caller will be named Uma
Hi Paula I'm calling in about a retirement question I'm a federal employee and my husband splits his work time between a part time federal government job and a part time job running his own LLC doing project management type work
my salary is $161,000 and my husband makes approximately $85,000 a year with the opportunity to increase if he takes on more clients for his LLC I am 33 and he's 39
we're both maxing out our TSP traditional retirement accounts as of this year which means we started putting in $22,500 per account for the year with a 5% match from the federal government
currently I have just over $100,000 saved up in my retirement account and he has about $70,000 we have two children both under 5 years old
because I have a decent amount of student loans and I'm eligible for the public service loan forgiveness program we file separately which makes it difficult for us to contribute to a Roth this should change in about two and a half years when hopefully my loans are forgiven
we do plan on contributing to a SIP IRA but it's unclear as of this year exactly how much we'll be contributing
I have two key questions first when considering our retirement goals how should we take into account our pensions are they reliable enough to count on as part of our overall plan for retirement?
Second, how do we figure out how much we need to save for retirement in order to maintain a lifestyle that allows us to travel frequently and live comfortably
think a light version of fat fire third, how do we determine if we are on track to save enough for retirement? Assuming a 7% rate of return no salary increases and a continued contribution of $22,500 per year for each of us
I should have $2.5 million by the time I turn 59, my husband should have about $1 million by the time he turns 59
I'm not sure yet if we will have a mortgage at that time, our current mortgage is about $2,500 a month and we may not be done with the 30-year term quite when we turn 59
We're trying to decide if we need to increase the number of years we work or if it would be feasible to retire slightly early for both of us if we save enough in a separate brokerage account
however, we're having difficulty figuring out how the pensions play into our considerations as well as how we need to save and exactly how much we need to save in order to be successful
Thank you
Uma, thank you for your question, a few things right off the bat, number one, I love that you are taking such great action towards retirement savings
and I wouldn't worry at all about the fact that you can't contribute to a Roth account right now
I know if you've listened to this show you know how much I love Roth accounts but the benefits that you're getting as a substitute are so much better
that having to wait for another two and a half years, three years before you can contribute to a Roth IRA is small details, it's a small price to pay
to your question, your second question of how much will you need?
You know, as you said, you're 33, your husband is 39
This is the inherent challenge of all retirement planning necessarily when you're trying to make predictions about what a given lifestyle will cost decades in the future
It's anybody's best guess, even Joe as your former financial planner as you can attest, even financial planners, even AI that does financial planning
like even our best humans and our best tech cannot predict how prices will rise for different commodities, for different services in different geographic regions
and cannot predict how markets will perform
and this is a time in particular of so much rapid change that imagining life 20 years from now is all but impossible
but what we can do is calculate for a range of options based on historic information
It's an imperfect science but it's the best we have
and so UMA, what I want you to do is test drive the type of lifestyle that you're talking about you described it as just a little less than fat fire
a moderate version of fat fire
Can you test drive that for a month or even for two weeks? Can you test drive that lifestyle as a vacation?
and get a sense of what your day to day is like, get a sense of what the spending is like
build a budget for what you think in today's dollars, what you think you would be spending if you were to live like that today
and once you know that, once you have your budget in today's dollars
then it's a simple math equation of assuming X% inflation, what is that going to be when I retire?
and assuming Y% market performance, how much will I need in order to build out a portfolio that is at a minimum 25X my annual spending for that time
I actually like the a lot of the retirement calculators that are out there for this poll up
especially because to UMA's point the pension is going to become more and more important
the longer that she and her husband work for the federal government
you do want to calculate the pension
you're going to have to calculate a number of years
and you can get some easy pension estimates from the government website
it's super easy to get when I was a planner we would get these all the time
what do we think that the pension is going to look like later on?
those are going to be forward estimates and if you leave before the number of years your pension will be different
so it may actually make sense to work with a calculator
base it on your leaving soon, the amount that the pension factors in
if you left today, how much would that give you and your husband every month
and then a few years from now do it again and that'll be a much bigger number
or if you're really sure you're going to be there for the full duration
well then you can use a much much bigger number for that pension calculation
I like what Paula you're saying about starting off with the lifestyle
see how much then the pension will cover of that pension and social security
and then when you are through there's probably going to be in some years a deficit
where your portfolio is going to have to make up
and that will tell you how much money you need to have in those accounts
so you start with the end product this is the lifestyle that I want
this is what the pension is going to cover
here's the amount the pension won't cover
what's the net present value of that number
so I take that number and I run it back to today
that gives you the amount of money you need to save
and Joe that also answers the first element of her question
which is absolutely count the pension
yeah if it were a pension through a bank right now
oh oh
what to do
I'm telling daddy diamond on you
is it too soon
oh
to see to be busted on banks
if it were if it were for a shaky industry
you know like banking
it's not a cornerstone of our
oh
oh
I was going to say twist the knife
but then I just remembered we've named her Uma so I can't say that
oh
well that might be
if I make it even worse
okay
or too soon now I'm many fronts
however we've gone off the rails but the big point there Paula is
because it's the federal government pension
absolutely you count it
hundred percent because
the only way in which
you wouldn't receive that money is if the government goes bankrupt
and defaults on its pensions
and if the federal government goes bankrupt
we all have
way bigger problems
yeah
agreed yeah
that is the collapse of society as we know it
there's a website I'm pointing people to here several times
it's our friend Chris Mamula his website
can I retire yet has a wonderful
page full of calculators
some that you pay for some that you don't
a calculator that I really like
and that we recommend on the stacking bedroom show is the new retirement calculator
that one's going to be a little more expensive
and of course Paula if she wants to make sure those numbers are right
this might be worth hiring a financial planner for a couple hours
you know find a fee based hourly financial planner
do this work for her with her whatever it might be
and maybe look at the big picture that way
hundred percent Joe
and UMA your in terms of retirement planning
you're in a stronger spot than most because
have you heard of the concept of a three-legged stool
so the three-legged stores social security pension
and then private savings such as your investments
oftentimes people don't have pensions
the fact that you and your husband have access to a pension
and the fact that it comes from
the most stable possible entity
and that's what Joe's driving at earlier
it's not a pension that comes from
blockbuster video or bed bath and beyond
something that conceivably could collapse
but not a bank
ouch
Joe did you hear the first 18 minutes of my most recent episode?
No
no seriously go listen to the first 18 minutes
of the episode the aired right before this one
you'll see why I'm wincing
that goes for all y'all go listen to that intro
it's the intro to the encore episode with the Michael Kitzes
just listen to the first 18 minutes
the first republic bank story is one that I
have been tracking very closely
and the turmoil in the banking sector
man all I can say is that
lack of public confidence becomes a self-fulfilling prophecy
especially in banking
yeah especially
anyway listen to the first 18 minutes of the
episode the aired right before this
you'll get it
so UMA I hope that helped
to summarize include the pension
and run a handful of scenarios
with different assumptions about
return and about lifestyle expenses
but I think for you the first thing that I want you to do
the biggest thing to figure out
is to try to hone in
on the cost of that lifestyle
in today's dollars
try to hone that in
to the most clear extent possible
because once you can
tighten the range of what that is
in today's dollars
then that'll make every calculation
substantially more clear
so thank you UMA for asking that question
our final question today
comes from Trace
Hi there, my name is Trace
I am 27 and I live in California
I am looking for advice on where to store
some funds for my mini retirement
I'm planning to take a mini retirement
on the next one to two years
most likely starting in February of 2024
and I have saved
$8,000 of the $25,000 that I plan to save for that
this is going to be outside of my emergency fund
and my regular investments
borrowing K all that separate fund
I currently have those assets in
Ally High Yield Savings Account
but knowing that I'm going to start drawing
from it at the earliest summer of 2024
where do you recommend storing these funds
for a short period of time
totaling $25K
and still allowing them to work their hardest
I look forward to your response
thank you so much
Trace, thank you so much for your question
Given that you need to tap this money
in 2024
you're going to want to keep it in cash
where you've got it now
Ally Bank is
as of the time that we're recording this
paying around 4% for a money market account
3.75% APY on an online savings account
that's a fantastic rate
I'd leave it there
for the sake of other people who are listening
Apple just opened a savings account
with Goldman Sachs
they're paying 4.15% APY on savings
as of the time that we're recording this
which is Friday May 5th, 2023
Knowing that she doesn't need this for one year
if she's able to find a one year CD
that pays higher
I don't know Paula maybe she does that
but I'm with you
I think this is the best place to have it
because if she ends up needing it later
then she puts in a CD
I'm looking at
depositaccounts.com right now
5.1.9% APY
it says is top 1% of CDs
one year CDs by the way
currently national average on CDs
as of today 3.17%
so not a lot to see here
right
savings accounts top 1%
4.18%
national average by the way
0.38 so she already has it
Ally if she makes sure that
she has it in their money market account
I think she's going to be great
and the cool thing about
Ally is
since Ally has been around
I was going to say since the time I've had a podcast ball up
but seriously since the time
Ally is based in Detroit
I'm from Detroit
I've followed Ally for a long time
since they've been around
Ally tries to make sure
that their interest rate
is among the leaders all the time
they won't always be the top
but as the top ones move
they will move with it
they'll move up they'll move down with it and I've heard people complain about Ally Bank when
I was about 50 years ago
everybody else's interest rates were going
it wasn't Ally's problem
it was the whole industry
was paying less
so I like finding a bank like this
and this is not an ally commercial
but I like finding a bank that
has a reputation for
just keeping up with it
so it's one last thing I have to worry about
I don't want to worry about 50 different things
and whether I'm in a money market
that's paying today versus
because for someone who seems
so eager to rag on regional banks
and now I'm like
Mr. Ally boy
hey, hey, oh, yeah
a bank that has like no brick and mortar branches
a regional bank based in Utah
so, yeah, ally bank
do it
stay there, you're good
do nothing
do absolutely nothing
do nothing, yeah, trace your job right now
is to do nothing
I'm exhausted by giving this advice
well, Joe
I will let you rest from your exhaustion
because trace was the last question of today
oh, already
where can people find you if they are hungry for more?
yes, you can find me
and very soon again
Paula Pant will be back on the stacking Benjamin show
we call it the greatest money show on earth
because it's a circus on purpose
that it's all about
helping you prove to yourself
that you can do this
that it can be fun, it can be easier than you think
and so we just started a brand
new eight weeks Paula
listen to some of the themes we've coming up
we're going to talk about leadership with Oscar Munoz
who is the first Hispanic born individual
to lead a major airline
but he also led the turnaround of United Airlines
and his discussion about listening
it was so powerful
and about taking care of yourself first
he had a major health issue
while he was CEO of United
so that's a big one
a gentleman on Memorial Day
weighs over 300 pounds
it was told by a lot of people
some very bad things about him
deciding to go running
like people laughing at him
and he's a marathoner now
and he's got a huge Instagram community
about you can do this
and I say about finance all the time
also last I'll mention one more
Minyam Francois
had $5 to her name
her neighbor came over
and said why are you in the dark
and she didn't want to tell her neighbor
that she had no electricity
she took that $5 and her neighbor
by the way came over
because she had a huge cupcake order
and she wanted Minyam
who made great cupcakes to fill it
and she helped Minyam do that
and she was $60 into $60
then the $60 into $600
now she has this cupcake empire
that's worth well over $6 million
it's a great story about going from
having nothing
to making it happen
so those are a few of the inspiring stories coming up
that's amazing
and all of that is at the Stacking Benjamin's Podcast
which I will be rejoining very soon
when my fellowship at Columbia
we can hear the Calvary coming
right exactly
and the Calvary is on the way back
how am I doing on that trivia contest by the way
you're actually winning
which by the way is
from the poet per hatch who writes for
major publications and for
The New York Times a lot as an example
Paulette has taken
Paula who is
I don't even describe
you as
one of the smartest people I know
my wife says
you are way smarter than me
we work together is beyond her
but Paula also has a reputation
everybody for being crappy
at our trivia and constantly
being in last place
at our trivia contest
perpetual last place for years and years and years
always last place
it's always OG and Len Penzo fighting over first
but you're in first place right?
Paulette
all you have to do is let someone fill in for me
and suddenly
Paulette has you in first place
when you return so it's yours to ruin now.
It's yours to ruin.
Perfect.
Perfect.
Well thank you for tuning in.
This is the
Afford Anything podcast.
My name is Paula Pant.
If you enjoyed this episode please
subscribe to the show notes
Affordanything.com slash show notes
and if you haven't heard it yet
listen to the beginning of last week's episode
to understand
why I'm cringing so much at this
bank conversation
Thank you again for being part of this community
my name is Paula Pant.
I'm Joe Salci.
Hi.
And we will catch you in the next episode.
Here is an important disclaimer
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alright there's your disclaimer
have a great day
so Joe I just
started a Twitter war
oh no
oh yes
and I am
all in for it
and this is
the benefit of not needing a job
this is the benefit of work being optional
so here's what happened
some dude some editor
some fancy fancy publication
comes to Colombia today
to do a lunchtime talk
to teach my graduating class
whom I love
and who I'm very protective about
you know he comes to talk to my graduating class
about how they can pitch freelance articles
he tweets
this long thread
that just goes on and on
about how everyone there
is dressed in athleisure
and they look
quote
schlubby
and that the school has really gone downhill
these are graduate students
why are they dressing so schlubby
I mean it's just
wow
I was so rude
and it just so happens
that this morning I decided to put on
a really nice dress
like I got dressed up
to go to school
so I'm in a nice dress
professional dress with a collar
with heels
not for any reason
I just I don't know
total coincidence
I just woke up this morning
and was like
I feel like dressing up today
let's go
right
so
I had a friend take a picture of myself
with him
in the background on stage
giving the talk
and I posted
true class and style
comes not from how you dress
but from your character
schlubby
so boom
best dressed person there
defending
all my fellow grad students
who he's trashing
I understand what that would have to do
with this sort of job interview
or if this were some of that
where I was meeting employers
but if it's my
if it's my day to day
I'm with the same group of people
doing the same stuff
why
why is
why is
I don't understand
but I'm wrong
I'm a guy that thinks
that you should dress
and I do
if I'm meeting with you
for the first time
and we're in a professional setting
where it's like a networking meeting
if you dress up a little bit
for that meeting
I think that you have some respect
for me
right
so I do appreciate that
but in a classroom
right exactly
exactly
on a college campus
in the middle of finals week
really?
wow
buddy
he was kind of a
naysayers
yeah what do you think
his that mole was?
you know I think he's just kind of a
negative person in general
because in the remarks that he made
he also said
hey if you're looking to make a lot of money
you're in the wrong business
hahaha
and I just kept thinking
buddy that's a reflection of you
not of your industry
because there are
a lot of journalists out there
who have figured out
how to make this
hyper profitable
I mean what do you think
being a media entrepreneur is?
we live in a time where
anyone can become their own
media mogul
of their own mini empire
their own niche empire
so this guy is talking to
students who are a week
from graduation
during finals week
and he's telling them
oh if you want to make a lot of money
you're in the wrong and it really
buddy
and then he's ragging on them for
showing up in Lulu Lemon
come on
I just had a great discussion with
my allow
who's the new pushkin show
other people's pockets
where she pretty much Paula
asks people how much money they make
and she's been a long time
investigative journalist
she was with
the Los Angeles Times
she said that that was
a problem for
her was that she had this feeling
in her head that because she was a
journalist she wasn't supposed to make
much money like that's the game and she
said when she asked people like Adam
Davidson the co-creator of
Planet Money
about how much money he was making
and he's like yeah I had a down year
I made less than $400,000
and this is a guy who's doing
journalistic work
and he doesn't have that paradigm and
she's like this is what I needed to
hear that I can do the job I love
and I can make good money as well
I don't need to hear somebody telling
me no you're not gonna make much money
yeah and you know what that speaks to
that speaks to the idea of
reframing from I can't do it
to how can I do it
yeah and when you reframe
if you say I can't
I am a journalist therefore I can't
make any money and this goes not
just this goes for plenty of
professions I'm an artist I'm an
I'm a costume designer
if you have decided
straight out of the gate that you're
gonna be poor guess what's gonna
happen yeah you'll be right
but if instead you reframe
and you ask the question
how how can I make a lot of money
doing this how can I make this
profitable then you
figure it the F out
and I know that sounds rainbows and
unicorns and blah blah theoretical but
we have case study after case study
after case study of people who
have done precisely that
look at the highest paid
and not just the highest paid like
Hollywood celebrities like forget about
those look at the tier of people who
make between 200,000 to 500,000
per year right I think
by any definition even if you live
in New York or San Francisco even if you
have six kids I think pretty much
everybody would agree that an
income of between 200,000 to 500,000
per year is considered solid
right you can live well on that you
can support your family on that even in
a high cost center or even with a
large family and that is within the
realm of any occupation and anyone who
tells you otherwise is effectively
communicating that they gave up
they gave up they lost the game and now
they want to inflict their limited
thinking on you
that sounds like the mo right there
and then by the way because I'm not
making a lot of money maybe then that's
a good reason to
to bash Columbia you know
yeah exactly just to
bring people down to my level
yeah I'm not making any money so
the whole industry is going bad and here's
the reason why because these people don't
dress in three-piece suits to go to class
that's why right yeah
what a jerkwad so anyway so I so I posted
that photo and that you know the true
class and style comes not from how you
dress but from your character
and I was thinking about it the reason
that I felt the freedom to post that
is because in part because of the
fact that I became a media entrepreneur
before going to school which means
I don't have to pitch this guy I'm not looking for a job
so I'm not afraid of speaking up
and defending and protecting
my friends whom he is insulting
who may need a job right yeah
and who are super stressed right now I know
how many of my friends are stressed right now
and so that is
we go back to you know why does financial
independence matter or why does
entrepreneurship matter or why
is it important to have multiple
streams of income or to have rental properties
that provide you with a base
or a stock portfolio that provides you with a
dividend base right when you go back to
why to all the people who are like why are you so focused
on money it's because you can do stuff like this
you know what I didn't burn the bridge
he burned the bridge when he decided to
to rag on the very students that he's coming to
purportedly help he burned that bridge
I'm simply the one who stood up when he said it
rather than coward down
and that's not to rag on anybody else
I understand if I were hoping to
pitch him if I were if I were thinking that maybe I need him
to pay me a trickle of 300 bucks an article
then yeah I might not as a 23 year old
or as a 24 year old I might just not
and say yes sir understood sir I'll dress better next time sir
but you know what I'm not 23 anymore
I'm in my late 30s and I've done well
and I'm going to use that to defend the 23 year olds
who are not yet in a place where they can speak up for themselves
even then I think for those people to go to the program directors
and say hey just some feedback about this person
could be helpful could you you want that person back?
yeah yeah I guess yeah that's the official way to do it
you could do it that way or you could just tweet
that's a good idea Joe I forgot about that route
I guess you could do that too
I thought about the fact that I might just give some feedback to the people that brought him in
that's a good idea look at it look collaborative problem solving
Paul might do that too now
tattle tale
tail.