Afford Anything - Ask Paula: Help! My Bills Are Too High

Episode Date: July 6, 2022

#390: We start this episode with two anonymous callers who have opposite problems: one says her bills are too high, while the other is worried that she’s saving too much. Anonymous (“Izzy”) saves A LOT. She wants to relax about her spending more, and start including more joy into her life. How should she approach the next 10 or 20 years, so that she can enjoy her financial security? A different anonymous caller (“Starlight”) has the opposite problem: her expenses are mounting. Her bills make her uncomfortable. She wants to shake up her investments so that she can tap her assets in order to make her payments. Ideally, she’d also like to buy a house in Europe within the next 10 years. How should she do this? John liked the episode with Bill Bengen, where we discussed the 4% rule. However, he questions whether that rule should really be applied to the FIRE community. Steve is a landlord who needs his property to cash flow, but doesn’t like to raise rents. What should he do? Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode. Enjoy! For more information, visit the show notes at https://affordanything.com/episode390 Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a trade-off against something else, and that doesn't just apply to your money. That applies to your time, your focus, your energy, your attention. Any limited resource that you need to manage. Saying yes to something means turning away other opportunities, and that opens up two questions. First, what's your highest priority?

What matters most? And second, how do you make decisions accordingly? answering these two questions is a lifetime practice, and that's what this podcast is here to explore and facilitate. My name is Paula Pan. I'm the host of the Afford Anything podcast. Every other episode, we answer questions from you, the community. And my buddy, Joe Saul-Sehigh, former financial planner, joins me to help answer these questions. What's up, Joe? Paula, it's a doggie dog world, and I'm wearing milkbone underwear. That's a hell of a cold open.

That was a line that I just saw again from this old popular show, Cheers. Norm from Cheers. Did you ever watch Cheers? I'll give you one guess. No, never did. This guy, Norm was a regular at the bar. And he walks in one day and they said, Norm, how you doing, Norm? And he said exactly what I just said.

So there's good days and there's bad days. But it's about to get better, Paula, because we've got four financials. nominal questions here. I don't even know where to go with that. It's a doggy talk world. I'm going to try to erase from my memory that that intro just happened. And instead, we'll discuss the four questions that we're about to answer. Oh, good. We've got two anonymous callers, and they have the absolute opposite problem. The first anonymous caller saves a lot of money, has a 1.7 million net worth, saves $200,000 a year, arguably she may be saving too much. How can she plan for the coming decades in a way where she balances her natural inclination towards savings with the desire to

not overdo it, to enjoy the present moment? The other anonymous caller has the opposite problem. That caller has more living expenses than she's comfortable with. How can she optimize her investments in order to better manage her costs. And I think all we need to do, Paula, is hook the two of those two people up. That's all we need to do. Yeah, exactly. On average, on average, our anonymous callers are doing great. Anonymous one helps out anonymous caller too. Our job here's done. End of show. So those are two of the questions that we're going to answer. We're also going to answer a question from John, who wants to know if the 4% rule should be applied to the fired community, financial independence retire early community. And we're going to tackle a question from Steve,

a landlord who needs his property to cash flow but doesn't want to raise rents. So what should he do? We'll answer all of these right now, starting with one of our two anonymous callers. Joe, what nickname should we give this anonymous caller? Well, every time, every time for people that are new to afford anything, we'd like to talk about a show that I've recently watched. And I saw the new movie Lightyear, the latest Pixar movie, which, you know, it got a really bad IMDB rating. It's got like a 62 or 63. I thought it was wonderful. I thought it was really fun.

It was super fun. I love Toy Story. I thought Buzz Lightyear is a pretty cool character. But Buzz Lightyear ends up partnering with this young woman named Izzy in the movie. And Izzy is a badass. and has to continually tell Buzz what a badass she is. So I think our caller here is a badass. So let's call her Izzy.

All right. Then our first question comes from Izzy. Hi, Paula. Longtime listener, first time caller. Love your show and thank you for everything you do. I'm calling because I have a long-term, perhaps philosophical question and would love to hear your and Joel's perspective. A bit about me.

I'm in my mid-40s and have been a good-40s and have been extremely fortunate to have a well-paying career that I enjoy. I have about $1.7 million in savings, split evenly between tax-deferred and taxable brokerage accounts, all of it in low-cost mutual funds. Thanks to you, I'm aware of the benefits of real estate investing, but despite the lovely cash flow, it's not for me. I save about $200k a year, and my only debt is my 15-year mortgage, on which I owe $200k at a 3% interest and have 60% equity. I'm single, likely will not have any kids, and a third of my living expenses go to my mortgage. I'm naturally a saver, but in one of your shows, you talked about that some of us may be saving too much, which made me reconsider and readjust so I can enjoy more of the

things that bring me joy. Regarding my goals, number one is having financial freedom where money is not a limiting factor in the things I'd like to do. I'm not looking to retire early, but would like to have that option if I change my mind. Same with location. Happy where I live now, but would like to be able to move or retire elsewhere if I decide so, even if it's at a higher cost. I also want to be able to financially help my mom if she ever needs it. She is 70, retired, and healthy at the moment, but her nest egg is about 500K, and her pension covers only about half of her living expenses. and I'm concerned she may not have enough. On top of it, she's very risk-averse and it keeps it all in cash. I know, I know, it's killing me, but I'm not sure what to recommend to her that

matches her low-risk profile and time horizon. As you may have guessed already, I'm a long-term planner and would love to hear your thoughts on how to think about the next 10, 20, and beyond years given my goals. What should I consider? What should I prepare for? Up until now, I was so full on saving and investing to reach financial security, but I think I'm at a point where I should shift my perspective to think about the future in a different way. I know this is a big question, and I have no doubt that you and Joe will tackle it well. And if you can recommend any resources, I'm all years. Thank you again for everything you do for the community. I've learned so much from your show. Oh, and Joe, you better give me a cool name. I hope you've watched some good TV lately.

Izzy, I hope that was good enough. I'll tell you what, she's great. And if you see the movie Lightyear, you'll know what I'm talking about. But Paula, I think that this is a, obviously it's a wonderful problem to have that you might be saving too much money and also that you want to be able to help a family member. To be able to help your mom is just fantastic. And one frustration I had a lot, Paula, when I was a financial planner, was when people would say, no, I think I'm good.

You know, I got all my goals. I think I'm good. And I would always think, well, good for you. Good for you that you're good. But you've got this community around you that can always use some help. And I know just from the amount of joy I've seen people around me get from helping family community, from just making the world a better place, that there's so much more that you can do beyond just your own thing. Which leads my answer to Izzy's question, which is she says that she wants to do more. that she wants to be able to possibly move to a higher cost of living area. She may possibly want to, she says, I want to be able to do things. I would specify what that lifestyle looks like. Number one, I would target a city. Let's say that she's going from Atlanta to San Francisco as an example, right? Atlanta, not a low cost of living area, but a heck of a lot lower than San Francisco is. Yep.

So if she looks at a specific area that would represent what she's talking about, and she gets a little granular, well, then we know what kind of a step up to her lifestyle that she has. Then we can use those numbers and ask, well, what's my trajectory now for financial independence using one of the many great calculators that are out there that will help her do that, apply a fairly normal inflation, not the inflation rate that we have now, but maybe like a 4% inflation rate and see, you know, what the age is that she can make it. So I would get specific. And the reason this is helpful is because it's not just informing her own goals and what she can do.

It also, I think, helps her get even more excited about what she wants to do in life because now she's getting a little bit more granular and a little bit more. And even if she decides not to do these things, it's okay. But now she's going to dream in actual video. Is visionable a word? Invisionable stuff versus just nebulous financial freedom. And I'll tell you why this is important. There have been studies done that show that psychologically, many of us, the reason we don't get excited about financial independence is because when I save for long-term

goals, it feels the same going into my account or going into a stranger's account. Like our brain doesn't even look at future me as me. It only does that when you start to get granular. about what that future looks like, then you get excited. I mean, how many times have we seen somebody, Paula, in the fire movement where they're like, yeah, I really didn't care about saving. And then all of a sudden I read the Mr. Money Mustache piece about the shockingly simple math. And I went, oh, my goodness.

And you know why? Because it went from this cloud of someday I'm going to retire to this concrete action that even I can do. And once it becomes concrete, then we get excited. This reminds me of advice that, Dr. Stephen Wendell, who is a behavioral economist and the head of behavioral science at Morningstar, there was a device that he shared on the Afford Anything podcast in episode 141. You can listen to it at affordanything.com slash episode 141.

He talks about exactly this. He talks about the importance of imagining incredibly vivid scenes because our minds are predisposed to prioritize the vivid over the subtle. And that's one of the reasons he says that we suffer. from what's known as present bias, which is the tendency to only think about the present, often at the expense of the future. Now, obviously, for Izzy here, our anonymous caller, Izzy does not have present bias, but to her question about how should I manage my money in order to accomplish this goal,

I agree with you, Joe, as soon as I heard her question, the first thing that came to my mind was she needs some numbers around that goal, because financial independence is far too ambiguous. And same thing, high cost of living area, far too ambiguous. There's a huge range of numbers that that could possibly represent. And so for her to be able to, number one, assess whether or not she's saving quote unquote too much. And number two, if so, how much she could comfortably start spending in the present, she needs to have some numbers around that financial independence school or that future high cost of living cost of living goal. The way that Stephen Wendell talks about it in the episode, the interview that he did with us,

he describes the exercise of really visualizing, all right, when you wake up in the morning, what's the first thing you do? Do you hit the snooze button? Do you pick up your phone and check Instagram? Do you play Wordle? How long do you do that? You do that for 10 minutes and then you get up, do you brush your teeth first or do you make a cup of coffee first? And when you're drinking that cup of coffee, where are you sitting?

Are you in your kitchen? Are you on your porch? If you're on your porch, is that year round or is that seasonal? He like describes the process and basically asks the questions that would prompt visualizing every minute detail of what a day is. in the life would look like, such that you can really dial in to how much you're going to be spending and what your lifestyle is going to look like. When I've given workshops on this topic in the past, the first thing that I would have people do

is I would put crayola crayons on the tables with just some regular printer paper, and everybody had to draw what they look like in financial independence. Like what was the scene around financial independence? And it's funny because most people, you know, my stick people don't look like stick people. It's so bad. I'm not an artist. But once you have to start to visualize, you trigger this whole different part of your brain. And some of the drawings that these non-artistic people would show me just blew me away.

Because once we have to begin using crayons and put ourselves back in, you know, kindergarten in first grade and do that type of activity, you start doing that thing, I think, the do. Dr. Wendell's talking about, like you get in that visionary space much, much, much easier than if you try to sound it out with words. Exactly. Exactly. And the other pieces, you know, and I thought about this when Izzy was talking about potentially wanting to move to a higher cost of living city, pay attention to the day-to-day life that you have in your current city, particularly on a day that you're not working, on a weekend

day. Or, Izzy, if you plan on staying in your job but working remotely from that new location, pay attention to any day that you might be out of the office working remotely in your current city. Pay attention to the most analogous days and observe what you do in your current city because it's probably going to be reasonably similar to what you do in your future city. It's just that in your future city, doing those same things might have an alternate cost. So, for example, when people think about the difference between living in a place like Cincinnati versus living in a place like New York City, it's easy to zero in on rent because rent is a big ticket item. It's the obvious increased cost. But there are other non-obvious cost changes that take place throughout your day that you wouldn't know.

necessarily be able to verbalize until you go through the exercise of paying attention to how you spend your days. So, for example, in your current city, do you belong to a gym? Do you go to a gym? Okay, what's the average gym membership in your current city versus the average gym membership in that higher cost city? When you go to the grocery store, what's the average grocery bill in your current city, Cincinnati versus what's the average grocery bill in a place like New York? And sometimes you'll find that costs are actually cheaper, right? In a place like Cincinnati, which is car dependent, you have to own and maintain a car and fuel it. Whereas in a place like New York, and that's the reason that I chose New York as an example, sometimes even in a higher cost

of living city, there are certain line items in which your costs will go down. Most people in New York don't own cars. So if you are primarily, walking, taking the subway, riding city bikes, your transportation costs are actually going to plummet. There's another interesting aspect of this, Paula, which on Stacky Benjamin's, we just spoke with a gentleman named Soon You, who talks about the nature of friction

and about actually applying some friction to our decision-making and looking at the way that our brain works, that we can get more utility, and more experience out of the same thing that happens to somebody else. We can respect the thing more. Let me tell you specifically what I'm talking about. Ideas like one-click ordering lower the dopamine hit that you get when you purchase an object. And studies have shown that when you use one-click ordering and it ends up, you know,

maybe hours later on your step, you don't really value that item that much. But if you do a full amount of research and it takes a time, let's say a week and then you have to physically they're getting a car drive down the street to look at that thing and then go evaluate it and decide whether you want it or not the dopamine hit is much much much bigger and studies show you end up valuing that object whatever it is that you bought in your life a lot more you have a buying decision that you like so transferring it to what we're talking about here with izzie if she goes through all of these differences in her lifestyle between the city she's in now and another city, you know, car dependent, maybe I can walk to the store,

maybe the price of XYZ, these things are higher or they're lower, whatever it is. As she does this homework, you're building up this dopamine slingshot, which also increases the likelihood that you're going to not only enjoy that financial independence experience more later on, but you're much more likely to want to save toward it and to stick with your plan because that dopamine hits so much bigger. I love the phrase dopamine slingshot. By the way. That is TM.

I should say TM. Trade market right here. But you know what else this does, Paula? This does something else neat. Let's transition into helping her mother. Whenever I had a client and they would want to help somebody else, what we would do is look very carefully at what all their goals are. Because of course, if Izzy's conservative, they say on an airplane, and I've been on a hell of a lot of airplanes lately, put your own mask on before

helping somebody else with their mask if you get in trouble. So the best way to help somebody else with their financial independence is make yourself financially independent. Then you can help other people. Well, because we want to be conservative and we want to make sure that Izzy has enough money for herself before she sends money to mom and mom spends it and then Izzy may need it back. Let's make sure that she won't. So she jacks up that lifestyle. I think that's the, that's the technical term that all the academics use jack up the lifestyle. And then we apply a premium to that. Let's say, Paula, that things are 25% more expensive than that. Then we have something that we would in the business call, get another professional term, glad bag money,

meaning you take out this bag, you're stuffing it full of cash that you will never spend in your lifetime, and then you decide, what do I want to do with it? And once we applied these premiums, these ridiculous numbers that we know for sure that my client would never spend, we could then have some great discussions about legacy, about helping family, about the most appropriate way to do that so that family has money coming in. I mean, and one example is, if mom's risk tolerance is super low, Izzy could, instead of giving her mom money all at once, invest it knowing that her mom is going to spend that money later and dole it out to her mom rather than have her mom will watch the fluctuation. Mom may not need to watch all the fluctuation. Izzy can watch the

fluctuation, especially if she's comfortable with the regular risks of the stock market. So she can design then a plan of giving her mom money much better if she knows what the maximum amount of money is that she would probably use during her lifetime and then apply a premium to even that. So I think the theme that we keep coming back to is that Izzy needs numbers around her goals. Because to the root question, and she didn't really phrase a question this way, but I feel like the the spirit of her question is, am I saving too much? And if so, by how much am I saving too much? In other words, by how much can I move my spending from the future to the present? And the only way to answer those questions is by assigning numbers to her goals. Yeah, there's a little bit of math,

but it's so fun and it makes that dopamine slingshot bigger. Can we transition? Can we transition? into talking about her mom's risk aversion? Yes, absolutely. Because I think, Izzy, the way you help your mom here is you need to reframe risk. I think that mom's idea of risk is loss of principle because of market fluctuation. But for long-term goals, any season investor knows that market fluctuation is what it takes to beat inflation. And this is the perfect time, I think, to talk to a mom.

who might be price sensitive and understand what cost are at a grocery store and how much they've risen in the past six to 12 months. I think sharing with mom how much money mom has lost Paula in purchasing power by having it not in the market, I think is a fine way of reframing the issue in a kind way. saying, mom, the consumer price index or inflation is 8.6% right now. You're earning half a percent. You've lost 8% of your buying power. You've lost it.

It's gone. It's gone. You're buying 8% less stuff than you could buy before. Now, does that involve a little bit of fear? Sure, it does. But mom's already suffering from fear, but she's suffering from the wrong fear. it's like we have somebody behind us with a knife and we're so worried about this other thing that isn't as risky that we don't even see the person with the knife behind us.

The thing that is really hurting mom, the fear thing she should be afraid of, she's not even afraid of. And I know this from your favorite person where Paula gets all of her guru stuff from, Susie Ormond. Susie said something that was really, really smart, has said several things that are really smart. But Susie said, if you don't think you can save now and you're 40 years old, imagine that you're 65 and you still haven't saved. Just put yourself there. Visualize that for a second. And all of a sudden, I thought about that. And I get this huge about a fear, right?

I'm 65 years old. I haven't saved a dime. Oh, crap. Oh, my goodness. And does that involve some fear? Yes, it does. But it reframes the fear in a way that instead of being afraid that I don't have enough money today, I'm afraid I'm not sock. I'm not socked enough money away for tomorrow, which is what we really need to be afraid of at 40, right?

Right. Same thing, I think, for her mom. Right. If her mom then agrees to invest some of that money, where would you advise mom to put it? And I can tell you what comes to my mind right away, but I think you'll disagree. Well, I think the first thing we do before we, let's continue talking about the framing, Paula. Okay. The next frame we have to have is making sure.

mom knows that any money she needs this year, next year after that, the year after that, and the year after that, we're not going to move. Right. So make it very clear to mom that let's, and I would walk through that first before even talk about what you're doing with the rest of it. Okay, this money this year, 2020, 2024, 2025, 2026, 2027, that money stays in cash. Because immediately, mom's temperature comes down. Right.

And then we talk about the next five years. and we put that someplace very conservative just so that mom knows that there's a high likelihood that the money will get a better return than it's getting now without a lot of market risk. And then once we get to 10 years, then I think we start looking at a balanced portfolio of conservative, still fairly conservative stock options. And by options, I don't mean buy options. I mean different types of stock-based investments. We build a portfolio around stock-based investments, but still maybe with a lower allocation

to international and small-cap stocks, small company stocks than I would normally have, just once again, to keep the volatility low because mom's a brand new investor. And it doesn't matter what age you are. It matters what your background is and how much time you have until you need the money. And so I would just treat mom as if she's a brand new investor, needs to kind of see how it works a little bit. Experience a small downturn before she experiences a roller coaster. What I would tell her mom is it's very, it's in the spirit of that, but it's a slight variation. Absolutely 100% agree.

Anything that is meant to be spent in the next five years should be kept in cash. Definitely 100%. Five to 10 years, you could go Treasury inflation protected securities. You know, you could go into something fairly conservative for that. I would go right back to the asset class, Paula, that I've liked for a long time for conservative investors that rarely ever goes down. And the fact that it's down a lot right now makes me even more excited about putting money into it right now, which is that Ginny Mae train.

G-N-M-A. Mom in Ginny May, I think, is a marriage made in heaven. Okay, so that's for the five to ten-year bucket, money meant to be spent in the next five to ten years. And then for money that is meant to be spent in 10 plus years, I would direct that towards, and Joe, I think you're going to disagree with me here, a Vanguard Target Date Retirement 2020 or 2025 fund. And the reason for that is because I know, Joe, you and I generally both are not fans of Target date funds, but specifically the ones at Vanguard and Vanguard only. I do like. The benefit to a target date retirement fund at Vanguard is that for a new investor who might be overwhelmed by asset allocation or overwhelmed by like the unknown unknowns that are in the world of investing, I would want to reduce friction between that new investor and putting

that money into the market. Well, I love it when you and I disagree and I think it's really fun radio when we fight. But I don't think I can fight you on this one because the issue here is not what's most efficient in the market, which is what we're telling the average afford anything listener, right? What should you, what should you do? In this case, we have a brand new investor who's going to get freaked out by the fact that you probably need to have five different investments and immediately it's going to want them all to go up, which you and I know is suboptimal. But explaining that to somebody on a 101 level is very difficult. So, this is not perfect. I'm totally on board with we don't want perfect to be the enemy of getting it done.

Right. And I think it gets done much easier if mom just goes into a target date fund, even though part of me wants to throw up in my mouth a little bit when I say that. But I totally agree. Yeah. And in case people are wondering, the reason that I don't like target date funds anywhere other than Vanguard is because I don't even like them at Vanguard anymore, Paula. I don't like them at all. Joe has very strong feelings about target date funds. At most places, the target date funds have costs that are higher than what you would pay if you were to just buy every constituent element of what's inside of that fund. And so at most places, the target date funds are a rip-off because you're paying an additional

premium for the convenience of having them bundle all of these constituent funds together for you. Vanguard doesn't do that. So at Vanguard, you could, if you wanted to, look at what's inside of your target date fund and buy that same allocation and rebalance once a year. But why would you bother when there's no savings associated with that added workload? That's why I like Vanguard's target date funds. I tell you why you bother, Paula. Because he would pick different constituent elements. Well, yeah, because you know, you talk about being ripped off.

Here's what rips you off in a target date fund, even at Vanguard. the asset allocation rips you off because for most of us, because of their responsibility and their marketing need for you to not lose money, they get generally too conservative too quickly. And most people need that last double. They need if you use a rule of 72 and you look at how long it takes your money to double, a target date fund will rob you of the double you need more than any, which is the last one. And it is far more simple than people make it. Very smart, very smart people, Paula.

Very, very smart people will get analytical about every single little thing. And then they go, oh, no, I'll just put it in Target Day fund. Are you kidding me? This is going to take you 15 minutes more work, 15 minutes more work. And it's not difficult. Why are we like, no, Target Day funds are great if you're, no, no, come on. Because they're simple. They're simple.

And the workaround, if you're worried that it's going to be too conservative, is to go into a target date fund that is at a later date than what you're actually going to target. It still doesn't get more conservative on your timeline. Why wouldn't you spend the 15 minutes longer to make it more conservative when you needed to be more conservative? Like, it isn't hard. I feel like everybody thinks this is so hard. It is solving a problem that you people don't have. You don't have this problem.

And you think you do. And the asset management company, any asset management company, wants you to think that this is difficult. It's not as difficult as we make it. Screw the target date fund. Take the 15 minutes and do it yourself. It is not hard, except for Izzy's mom. It is not hard.

You should do this yourself. Well, for somebody like Izzy's mom or for somebody who is a new investor who is intimidated by the world of investing, that intimidation is a friction factor. And so behaviorally... It's a way smaller constituency. Paula, you and I know it, than the number of people using this crap. No, I agree if you're a finance nerd, target date funds are not for you. But if you want the simple path, I say go at the route that's going to reduce friction.

Just flush that last double down the toilet because you don't want to take the 15 minutes. You'd rather walk around the mall, which, by the way, also drives me crazy. I was just in Las Vegas. And I'm at the forum shops at Caesars Casino. and where the hell this is going. The number of people that are walking around at a place where you're just buying expensive stuff just always blows me away. Like how we just get so attracted to.

I want to walk around in a place where I can just go buy a bunch of crap that I may never use versus like you don't see that type of line outside of a vanguard headquarters. How great would it be? That's where Joe took all of his dates when he was single. Hey, I got a great idea. Let's go grab a, let's go make a coffee at home, not grab a Starbucks. Let's go make a coffee at home and walk around Vanguard headquarters. The way the people walk through shopping malls.

Like just the idea of walking through, like the longer you think about it, the more ridiculous it is that we will walk around a shopping mall for fun. Like I'm just daring myself to go buy stuff. It's an air-conditioned space you can get your steps in. In Vegas, maybe I agree with you. Okay. Yes. All right. I think we've answered Izzy's question, which is put numbers on your goals.

And once you've got some specific numbers associated with those future goals, you will be able to know whether or not you can dial back your savings and if so, by how much. And once you know that, then the surplus you can use to support your mom, who will be, hopefully, dividing her money into three buckets, zero to five years, five to ten years, and ten plus years. Thank you, Izzy, for asking you. that question. We're going to take a break to hear a word from our sponsors and when we come back,

we'll hear from the other anonymous caller, the one who has the opposite problem of Izzy. Stick around. Fifth Third Bank's commercial payments are fast and efficient, but they're not just fast and efficient. They're also powered by the latest in payments technology built to evolve with your business. Fifth Third Bank has the big bank muscle to handle payments for businesses of any size. But they also have the fintech hustle that got them named one of America's most innovative companies by Fortune magazine. That's what being a fifth-third better is all about. It's about not being just one thing, but many things for our customers. Big Bank Muscle, FinTech Hustle.

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Don't miss out on early Black Friday deals. Head to Wayfair.com now to shop Wayfair's Black Friday deals for up to 70% off. That's W-A-Y-F-F-A-R.com. Sale ends December 7th. And we're back. Our next question comes from an anonymous caller. Joe, you watching any other movies, TV shows? I mean, I would try to name an anonymous caller, but you know I don't watch any media. I really don't. You don't watch anything. No. A series that I'm just starting to get into

the new season on is this hilarious, violent and fairly obscene series that is kind of makes fun of the Marvel universe. by having these real-life superheroes that are owned by a corporation. And the superheroes aren't really worried about doing good as much as they're worried about when they do good, how much does their Instagram and fan base grow by? That's a hilarious concept. What type of ratings do they get? And how does it help the company make more money? And of course, this is called The Boys.

The Boys is the name of the show. And by the way, if you don't like blood, obscenity, and some of the grossest stuff you've ever seen, you do not want to watch the boys. However, there's a great character in the boys. She is the superhero starlight. And I like us thinking about herself as superheroes. As an example, Paula, the reason I think that we don't need target date funds. Oh, my gosh. It's because it's very easy to be a superhero when it comes to your acid.

I will always advocate for people being smart enough to do this. I will always. Anything that dumps it down, I won't. See how this became Ramp Part 2? Wow. This is it. We haven't even introduced the question from the anonymous caller and we are already going off topic.

This is, I should, I should bust out a stopwatch. I mean, this is a new record. You brought it up. She started it. But let's call her Starlight because she's a superhero. Excellent. Well, then our next question comes from Starlight. Hello, Paula and Joe.

I'm hoping you can help me. I am a 45-year-old and I recently separated from my live-in partner and it has left me with the full responsibility of my mortgage on my house, which is 100% in my name. I currently owe $290,000 on it at a 2.7,000. 5% fixed interest, and my home now looks to be worth about $550,000. I live in a high property tax state, so my mortgage with taxes and insurance is about $2,300 per month. I currently earn about $125,000 per year, contributing 16% of my salary to my pre-tax 401k, and I max out my Roth IRA every year.

I don't have any other debt, but I am adjusting to, and I'm also a little worried about the full responsibility for home maintenance and this mortgage payment, which takes up more of my monthly cash flow than I'm comfortable with. I currently have approximately $400,000 in my 401k, $200,000 in my Roth IRA, $30,000 in after-tax brokerage, and $150,000 in my emergency. fund in a high-yield savings account. I know this is a lot, but it gives me comfort to have a solid emergency fund. I own a four-bedroom rental property in another state that I have rented below market. I intend to raise the rent this summer, but it will still be rented below market at $1,150 a month. I have a fantastic tenant who has rented this property for 19 years with no issues. I've only raised

the rent twice, the last time being last year. This house is currently worth approximately $300,000, with $69,000 owed on it at a 3.75 interest rate. Current monthly mortgage is $630. I manage this property myself. So here's my question. In order to improve my cash flow and make the most financially optimal choice. Should I, one, take advantage of the seller's market and sell my rental property and apply the proceeds less costs and capital gains to my current mortgage and then recast my loan? Or should I take $69,000 from my emergency fund, continue renting this property, and pay it off, and then apply the monthly rental proceeds, the additional monthly rental proceeds to my monthly cash flow. What are your thoughts on my financial situation? I don't want to make a short-term decision

that will end up costing me more in the long run. My goal is to stop working by around age 60 and perhaps buy a house in Europe in my 50s. Thanks. Starlight, thank you so much for that question. First of all, I know the shock of bearing the entire mortgage payment when you're not used to that can feel jarring, but from all the numbers you've shared, it sounds as though you are in overall a very good place. You have a huge amount of equity in both your primary residence and in your rental property. You have an incredibly low fixed interest rate on both of your properties. You have no other debt. You have a massive emergency fund. You've got great savings in both your 401k and your Roth IRA. So your numbers seem absolutely solid. And definitely the budgetary shock

of adjusting from paying a portion of your mortgage to paying the entirety of your mortgage, that's definitely a splash of cold water. But overall, you're doing very, very well. To your question about how to improve your cash flow, here's what I would not do. I would not sell your rental property for a number of reasons. Number one, the number sounds great. You have a reliable tenant who's been there for 19 years. That is every landlord's dream to have a wonderful tenant who pays rent on time, who takes good care of the place, and who's been there for 19 years. Wow. Wow. That is the last thing that I would ever give up. Yeah, I couldn't imagine. When she said sell the Rendell, I'm like, are you kidding me?

Yeah. My first thought, I was like, if she wants to sell that rental, I am buying it. Seriously. Buy it today. Yeah. All right, so that one's off the table. Yeah, that is so off the table. I do like the other option of taking $69,000 from the emergency fund and paying off

that rental property. The interest rate on that rental property is so low that from an interest rate perspective, there's no reason to pay it off. but from a cash flow perspective, paying off that rental property would increase, probably fairly dramatically increase the amount of cash that goes into your bank account every single month. So it would achieve the goal of very rapidly increasing cash flow. That said, she also talked about how she doesn't want to make a short-term decision that

will end up costing her more in the long run. Trying to squeeze more cash flow out of her rental property when she doesn't really, quote unquote, need it is a little bit of that short-term decision. Because at a 3.75% interest rate on an investment property, Starlight, the longer you can hang on to that, the better. That's why I'm not in love with that option either. I mean, don't get me wrong while I think having a solid. emergency fund is important. I think $130,000 emergency fund is too much. It's $150,000. It's

$150,000. I wrote down a number too small. That's, yeah, because, I mean, think about Paula, you know, I was speaking with a money manager last week and he was saying, if you want to look at what inflation really is, like the consumer price index, a lot of people know the longer you dig into it, the more that number is very suspect, right? He said if you look at imports and exports and the difference in price is you evaluate those, you get a much clear number. He said, when you look at import, export numbers, that number is closer to 12 to 15%, which feels much more like the grocery store that I visit, right? It's not an 8% up grocery store. It's about a 14, 15% grocery store.

And by the way, Joe, just a quick interjection. She mentioned that she might want to buy a house in Europe in her 50s, and she's 45, so her 50s is right around the corner. Inflation in Europe is, in many parts of Europe, is even higher than it is in the United States. Take a look at Estonia right now. Estonia has the highest inflation in all of Europe. And a lot of other countries, Germany, massive inflation there.

Yeah, this is a worldwide problem. Yeah. I think because of those things, I look at just the purchasing power. Same thing we said about Izzy's mom earlier. The purchasing power she's lost on that money is something I'm very fearful of. Right. Exactly. I think there, though, is the third option, Paula, that where you haven't even evaluated,

which I wouldn't have even known anything about had I not been doing this book tour. And this nonprofit million stories has had me on our Instagram feed, talked to a different person in every city. And these have been great interviews. And I met this wonderful woman named Maria who had just been through a divorce and had a similar question, which was, how do I afford this mortgage on this house that now is only in my name? And so she has decreased cash flow and the same mortgage she used to have.

and I love how creative Maria was, Paula, about how she handled this. She actually remodeled her garage, turned her garage into a separate suite, and had a renter who covers her entire mortgage. Now, I'm not, I'm not suggesting that Starlight redo her garage. I'm thinking there's some creative, more income ways to solve this problem, too. We always look at the expense side of the equation. I feel like we don't often enough look at the income side. of the equation. Right. And, you know, the other thing, I know, of course, on this podcast,

we talk so much about real estate and buy extension Airbnb or VRBO, short-term rentals, things like that. But property is not the only type of physical asset that can be monetized. Right now, rental cars are incredibly expensive. And as a result, people who own cars, who use a service like Turo. Turo, if you haven't heard of it, Turo is basically the Airbnb of car rentals. It's a place where any Joe or Paula can list their car for rent. So if you own a car and you're not using it or you only use it a few days a week, you can rent it out whenever you don't need it.

That's another option that right now is paying incredible money because of the fact that car rentals everywhere, there's just the cost of renting a car, is significantly higher than it used to be due to upstream supply chain shortages that are impacting the car rental industry. It just feels like it flows through everything that we buy. Yeah, exactly, exactly. And in addition to renting out a portion of your home or renting out your car, I mean, there are all kinds of other physical assets.

your lawnmower, your tools, there are apps and websites out there that enable you to rent out a massive variety of things that you own, rent out your basement for storage, rent out your weed whacker. I mean, there are some ways that you can monetize your physical possessions. And the reason that I'm specifically bringing up monetizing your possession, and the reason that I'm specifically bringing up monetizing your possessions is because that is distinct from monetizing your time. Often the objection that we hear when we talk about side hustles is, I don't have adequate time. But at the end of the day, there are essentially three things that you can sell. You can sell

your time. You can sell your skills, which is basically just a high rent version of selling your time. Or you can sell, i.e. rent out your belongings. I think this is so exciting that there's a whole side of the equation that, and by the way, it's not just starlight. So many of us think about one side of the equation and not this other whole side or earn more money. And I'm not saying that earn more is always the best way to handle issues. I think there's a lot of times that we need to downsize and it would give us more sanity to downsize. But in this case, I think the fact that she's very comfortable already, Paula, without a property manager on her home, shows that she's not averse to some of the DIY things that people do. I get excited about her beginning to dream

about what can I do to keep things the way they are. I like the interest rate on both of these mortgages. And I'm thinking that if she recast the mortgage, that's a huge mistake on the primary property and selling the rental property is a mistake. So you're right. If she's going to do anything on the lower debt side of the equation, it's paying off the rental. But I think if she could find a way to find that money elsewhere on the income side, she doesn't have to mess with things that don't appear to be broken. Right. Exactly. And that's a good way of saying it. The interest rates on both of her properties are so good. I don't see any compelling reason to pay it off. Now, if she had called, and I'll give the disclaimer, I paid off on my rental

properties. I hold them all free and clear. But the reason that I did that was specifically because I am a small business owner. And so I have massive risk and volatility in my career, in the work that I do. And so I wanted to de-risk everything else so that I could concentrate all of my risk on afford anything, right? On hiring a team and paying salaries and health benefits, right? There's enormous risk that comes from that. And so in order to more comfortably do that, for me, that meant de-risking all of the other elements of my life. I share that example to illustrate that interest rates alone are not the sole criteria when determining whether or not to hold on to a mortgage. But Joe, you and I keep bringing that topic up in the context of Starlight's specific

question because of the other details that Starlight has shared with us, there doesn't seem to be any compelling reason in her life that we are aware of why she would need to pay off these properties or want to pay off these properties other than the fact that she wants some additional cash flow each month. And cash flow is great, but I'm not. sure that either selling her rental, which is performing so well and which has a great tenant, or paying off her rental, I'm not sure that the rental is really the thing to tap in the quest for additional cash flow. I mean, it's worth asking the question, is there other low-hanging fruit in her life, you know, for the expense cutting side? But I'm kind of assuming that

there is not. Yeah. Because I think that if there was, she probably would, probably would have cut it by now. Well, she said there's no other debt. So if we look at the three biggest expenses, most people have housing, we just covered housing. Second is your transportation expect. Maybe, you know, she has two vehicles, maybe go to one, you know, that can, that can cut. I mean, transportation is just generally high right now with high gas prices, and that's, that's just a fact of life. Yeah. I mean, well, I mean, other commuting costs, but is changing your commute going to save her the type of cash flow she's looking for? No.

I don't think so, which brings us down to number three, and now we go down to food cost. And then I haven't seen, you know, I just think back to my financial planning days. And even then, just the small amount of money relatively to what she's talking about trying to save what that will do to her budget. So to your point, maybe a little bit on the transportation side, a little bit on the food, might, might do it. but I'm with you, I think there's many more interesting, creative, fun things she might be able to do on that income side. Right. Exactly.

And she's, I mean, it could be very straightforward, Paula. The very straightforward question I would ask is that assuming now that she has room in her house, would she be comfortable finding a way to have somebody rent from the place that she lives now? Right. either a roommate or an Airbnb situation, something like that. And I'm very comfortable with a no there. By the way, I mean, that does not have, there's no pressure to have to say yes. But if the answer is yes, like it was for the woman in Fort Lauderdale, I spoke with Maria. It's like, oh, yeah, I just changed my garage. And now I have a renter that pays my entire mortgage.

Right. Solved everything. Well, and it goes back to what I said earlier. There are fundamentally three things that you can monetize. You can monetize your time by trading your hours for dollars. You can monetize your skills in which you're still trading your hours for dollars, but you're charging for your expertise rather than for your time, which means that you're trading hours for dollars,

but you're doing so at a significantly higher amount. Or you can monetize your stuff. Or you can do a combination of all of the above. So that's the framework that Starlight I would encourage you to think about. as you think through ways that you can make extra money. Do you want to monetize time, skills, or stuff? So thank you, Starlight, for asking that question. We're going to take one final break to hear a word from our sponsors.

When we come back, we're going to answer two questions, one from John, who's wondering if the 4% rule should really be applied to the fire community, and the other from Steve, a landlord who does not want to raise the rent. on his tenants. We'll hear from both of them next. Our next question comes from John. Hi, Paula and Joe. This is John calling from Madison, Wisconsin.

Thanks for all that you both do for the Afford Anything community. Your Ask Paula episodes are fantastic, and I listen to them every time I have the opportunity to do so. And plug for Joe, maybe we can start calling these episodes. Ask Paula and Joe. There you go, Joe. Hopefully that will happen for you. Nonetheless, my question is about the 4% rule that was recently an afford anything episode

that interviewed Bill Bingon about the 4% rule, which was a great episode. My question is about how that applies to folks in the fire community and how that might differ for those who are actually in retirement at the traditional age. So one of the things that I think many of us forget about when we're thinking about retirement is the emotional component of it and seeing fluctuations in the market and your money going up and down. I think in retirement, traditional age, folks can lean on social security and they have access to Medicare and things like that that provides them maybe more support, not just financially, but also emotionally and behaviorally. as Joe would say. But if you're in the fire community, you don't have those same safety nets. So I'm curious about you all's thoughts on if 4% is appropriate for those in the fire community, not just from a mathematical perspective, but from an emotional perspective or a behavioral perspective

as you see your account go up and down, knowing that you might need that for 50 or 60 years, which is different than if you need it for 20 or 30. at least mentally, I think. So that's my question. Thanks for all you do. John, thank you so much for that question. And to your props to Joe, internally, we actually, the team at Afford Anything actually refers to these episodes as Ask Paula and Joe episodes. That's our internal naming for it.

We just haven't actually made that public. And John, I was in the middle of negotiating a 30% raise. And I don't want Paula to meet me halfway. on changing the episode name. So your timing couldn't be worse, my friend. Jill, what's 30% of zero? Oh, crap. You're right, John.

But hey, speaking of percentages, oh, how's that for a segue? Oh, hey. Let's talk about 4% to the root question. Is 4% appropriate for folks in the fire community? There are, as you described in your question, John, there are two ways to answer that question, one is mathematical and the other is emotional or behavioral. The mathematical answer to that question is, according to Bill Bengin, yes, it is mathematically appropriate because, per his research, as retirement approaches infinity, the safe withdrawal rate asymptotically approaches 4.2%.

And for people who are listening, who want to hear that full interview, and his description of the modeling and the research that he did to arrive at that conclusion. You can hear that on episode 377. That's afford anything.com slash episode 377. I am not a mathematician. I am not an MIT graduate and former rocket scientist, nor am I the person who built the mathematical model around retirement planning that was published by the Journal of Financial Planning,

a peer-reviewed journal that caused a massive stir in the financial planning community. Like, I am not Bill Bengen, so I defer to his mathematical modeling to arrive at the mathematical answer to that question. And according to Bill Bengen, he says that that mathematical answer is, yes, 4% is appropriate. But, John, to your question, humans are not robots and we do not operate our finances with spock-like reasoning. And so the behavioral component of money management and financial planning is arguably more important than the mathematical component. So from a behavioral lens is 4% appropriate. That, I believe, is going to be specific to each individual. Yeah, I just generally, you know, I hear the 4% rule, Paul.

And you know how I feel from the very beginning. I don't like applying any of these rules to my own financial planning. I think that it's taking out the calculator and diving in for what we need ourselves and getting a little bit more granular. We talked about this earlier, creates this friction. So the dopamine slingshot is bigger. And I don't think that our goal isn't more dopamine. Our goal is to have- Your goal isn't more dopamine.

Speak for yourself. That is goal number. what's your goal for financial dependence more dopamine but i think that if we want to if we want to have a rich life and reach financial independence regardless of age it is easier to do if you spend just a little more time figuring out what these numbers all mean to you so even even from the beginning of the four percent rule i've objected to it and i know that people say hey it's a nice shorthand to have. Okay, maybe. But we're smart enough, Paula. You can do this. You can do it. I want to talk a bit more about the behavioral side of things. In John's question, he talks about the fact that

traditional retirees have access to social security, Medicare, all of these things that provide ancillary sources of support. And that creates not just financial support, but also emotional support. There's that psychological relief that comes from knowing that social security is going to be there or that your health care costs are going to be buffeted by Medicare. That is true, but that will have a different emotional impact or internal or psychological impact on each individual. There is this grouping of personality characteristics. The acronym is Ocean. and that stands for openness to new experiences, conscientiousness, extroversion, agreeableness, and neuroticism. These personality characteristics, these big five personality characteristics, differ from person to person.

Someone, person A, might be high in neuroticism. Person B might be low in it. person C might be high in openness to new experiences. And as we all know, flexibility is a key piece of financial security. Flexibility is another way of talking about openness to experience, right? Person C might be high in openness to new experience, but person D might be low in it. So each person's personality differs. And as an extension, the anxiety that they feel around money-related issues and their willingness and desire to adapt to changing circumstances is going to also differ.

And so I don't think that we can filter people based on age buckets and state that once you reach a certain age, because you have access to particular resources like Social Security or Medicare, you should feel more okay. the reality is people will reach a certain age and will have access to those resources that become available to people of that age, Social Security and Medicare. But that doesn't mean that all people who then obtain access to those resources will have the same emotional response to their access to those resources. Because each person's level of neuroticism is going to differ. Each person's level of anxiety is going to differ. Each person's flexibility is going to differ.

Well, I think, Paula, that's why this individual approach, individual person by person approach, versus applying a broader, a broader... Bucketing? Yeah, is just an important next step. And frankly, it doesn't take that long and is so much more fulfilling. I guess, Joe, this also kind of relates to why you hate Target Date Fund so much, because by definition, target date funds take all people of a similar age bracket and group them into a fund that shares the same risk characteristics. I feel like my thought process is very consistent.

I think you're smart enough. I think you are different enough than other people. And I feel like this is important enough that you can spend the time to get it right. Joe scores high on conscientiousness and low on agreeableness. I'm only disagreeable when we try to dumb it down. Stop, don't dumb it down, people. Let's make it smarter. So, John, in response to your question, 4%. According to Bill Bengin is mathematically appropriate,

behaviorally, it will differ based on the personality characteristics of the individual. There we go. Thank you for asking that question. Our final question today comes from Steve. Hi, Paula. This is Steve from West Boylston, Massachusetts. I have been invested in real estate for about 20 years. I have five multifamily properties.

I'm looking to purchase my sixth. And I come across a problem regularly. As you know, the market has appreciated the value of the houses and also the rents have gone up. And some of these multi-properties, do cash flow at these new market rents. The problem is the tenants that live there are paying sometimes substantially below market rent. And now you run into a problem of if you're going to purchase the property and need to have market rents to have a cash flow, you would need to really disrupt the tenant's lives, sometimes raising a rent from 600 to 1,200. And that's difficult.

You know, I have a heart and care about people and would like to avoid situations like that. And then also, if you had to do it, it would be difficult with evictions, possibly, and so on. So I just wanted to know what your advice was or what your feelings are because I believe that this happens a lot. Anyways, I really do appreciate your show, learned a lot, and looking forward to hearing your answer. Believe it or not, we may have somebody that knows real estate here. And for the purpose of time, Paula, we will have that person answer this question and the other person will stay back in the green room. Wow, Joe, you're benching yourself? For this one, absolutely.

Wow. Tap out like it's the W.E. There it is. I suppose people do that in that. I don't watch things, Joe. You make all these pop culture references and you. When they're done, when they're just like, yeah, nope. That's what they do.

They tap. They tap their hand before the person they're fighting against breaks their arm. Not that you're going to break my arm. Steve's not going to break my arm. But when they tap, it's like, I'm done. And when it comes to Steve question, I think we don't need my input. I think we're good. Joe is mad that I called him a low unagreableness.

Look at this. I'm going to be very agreeable, though. Aw. All right. Well, Steve, I've got some thoughts on your question. First of all, congratulations on having five multifamily properties and also on the fact that you've been in real estate for 20 years. Real estate is the long game. And as you know, better than almost anyone, when you're in it for 20 years, when you play the long game and you're in it for decades, there is so much compounding wealth through.

equity growth that comes from principal payoff, through the equity growth that comes from market appreciation, even if that's just an inflationary increase, through the residual cash flow, through the tax treatment of real estate, there are so many ways that it can diversify and enhance your portfolio. So huge congratulations to you for staying in the long game, for being in this world for 20 years and for having five multifamilies. Now, let's talk about your question. The approach that I often take is that once a tenant is in place and living somewhere, I don't like increasing their rent other than by an inflationary increase.

So 3%, 5%, right now we're living in a period of 8% inflation. that type of annual inflationary adjustment is fine. I believe it's warranted in order to keep up with rising costs. But I don't like doubling the rent. And so the way that I run the numbers is by looking holistically at every line item on the spreadsheet that's going to play a role in the total cap rate on that property. As I'm sure you know, turnover and vacancy are two of the most expensive things that any landlord can deal with. And so the benefit of having a long-term

tenant who's fixed in place is that you don't have vacancy costs, you don't have turnover costs, and when you factor for that, often that tenant can continue to rent at below market rates, if that tenant is grandfathered in to a below market rate, assuming that that tenant maintains longevity, assuming 10 years without a turnover or without any vacancy, the fact that that tenant is in there for so long, that makes up for the rent differential. Now, of course, you need to actually run this through a spreadsheet in order to see if A equals B, right?

If the delta between fair market rent and what the tenant is paying is approximately equal to the costs of turnover and vacancy that you would bear in an alternate scenario in which you had tenants who were paying fair market rent, but you were having more frequent turnover. What I would do is run a spreadsheet to compare both of those scenarios, and the specific estimates as to your vacancy rate will differ depending on the neighborhood that you're investing in. When you do your due diligence on that neighborhood, when you look at the other properties,

and see comparable vacancy rates on comparable properties, you should hopefully be able to arrive at some type of an approximate idea. And talk to property managers who specialize in that particular neighborhood, ask them what kind of vacancy rates they have, what kind of occupancy rates they have, ask them how often they do turnovers. Good property managers will be tracking that data. And once you have the data around turnover and vacancy, you can then compare the numbers and see if your total net,

operating income, your total cap rate actually ends up being comparable. Because if it does, then you have found a scenario that is the best of both worlds, a scenario in which you don't need to disrupt the tenant's lives. You don't need to raise their rent. You can do what every landlord wants to do, which is keep a good long-term tenant. Good long-term tenants who stay for five years, 10 years, 15 years, those tenants are worth their weight in gold for the fact that they spare you from the costs of turnover. And remember as you're doing that calculation, if you have property managers who are handling this, remember that every time you do a turnover, you bear the cost not just of the vacancy, and the move-out costs, the cleaning costs, the inevitable repairs that happen at every turnover,

but in addition to that, you also pay a property manager's finder's fee at every turnover. So once you bake that into the spreadsheet, you might arrive at a scenario in which allowing the tenants to continue to pay the same rent that they're currently paying plus an inflationary increase is not only the most compassionate option, it also simultaneously makes equal or greater business sense. That's what I would be looking for as I look for the next multifamily. The other thing that I would do is see if your tenants are willing to. to sign a two-year lease, a three-year lease, heck, a four-year lease. See if you can align your interests. You want a tenant to stay long-term so that you don't have to deal with turnover and vacancy, and they want to know that their rent is locked in. So if you can incentivize tenant longevity by virtue of having them sign a longer lease, then you've got a best-case

scenario for everyone, the tenants are happy because they have locked in their rent for the next two years, three years, four years, so they don't have to worry about a significant rent increase for the duration of that long lease. And meanwhile, you're happy because now, when you're projecting the cap rate on this property for the next five years, you can pretty confidently project low or no turnovers, low or no vacancy. And by the way, if you do a multi-year lease signing, you can still build an inflationary escalation into that multi-year lease signing. The lease can always state that the rent is going to be X during the first 12 months, and then at the 12-month mark, the rent will adjust by 3%, or by 5%, or by some specific

number that all parties can plan for. So it might be that the rent is $700,000,000. per month for the first year, and then it's $735 per month for the second year. So, thank you for your question. I love the spirit of your question. And congratulations on the portfolio that you've built, and best of luck, on the search for the sixth multifamily. Joe, we did it. I can't believe we made it.

Another exciting episode of the Afford Anything podcast. Joe, where can people find you? since you are one half of one half of the episodes of afford anything, as a quarter of this show, Joe. Where can people- It's a 25% raise then. Oh, you know what? That makes sense. That makes sense.

Let's see. Okay, so 25 times zero, the five times zero. I'm doing this math wrong every time. What am I thinking? No, you can find me not on the road anymore. But thank you to everybody, by the way, who came out and hung out with, me in different cities across the country. Paula, a lot of your fans around the country say hello. And it was so nice. It's just so nice to meet people that you'd hang out with in real life.

You know, it's funny. A mentor mindset a long time ago that you attract people who are like you over your career and you repel people who aren't. And in every city, I felt like I was surrounded by people I would hang out with in real life. So thank you to everybody who did. And for those of you that didn't, you can hang out more with me on Monday, Wednesdays, and Fridays at the Stacking Benjamin Show, the greatest money show on earth. And what's funny, Paula, as an aside, there was a wonderful listener of both of our podcasts who said that it took her about a year and a half to begin listening to Stacking Benjamin's because she heard how academic we get on afford anything and knew that I'm a former financial planner. And she's like, so I thought it was going to be more, it was going to be more advanced. The Stacky Benjamin's show exists to bring people to the financial community. And I would say if you're expecting it to be a more nuanced and more financially granular show,

you're going the wrong way. Right. Stacking Benjamins is the car talk of personal finance. That is our goal is to make it fun and interesting for people. that normally wouldn't enjoy these topics. So if we can get more people involved in the personal finance world, we'll all be better off. If more people discover the Afford Anything show, which is why Paula's on stacking Benjambuds every Friday mixing it up with us. If we can do that, then I've done my job. So Monday, Wednesday, Friday, the greatest money show on Earth, because it's a circus,

stacking measurements. Oh, well, thank you so much, Joe. That's our show for today. Thank you so much for tuning in. If you enjoyed this episode, please do three things. Number one, most importantly, share it with a friend or a family member. That's the single most important thing that you can do to spread the message of financial independence, financial literacy, good financial health. Number two, subscribe to our show notes. Yeah, I haven't said that in a while. You can go to afford anything.com slash show notes, sign up to get a synopsis of every episode delivered directly to your inbox. And that makes it an easy way to share this podcast with friends, family, neighbors.

So again, afford anything.com slash show notes to get a summary of each episode sent directly to you. So that's the number two thing. And then number three, open up whatever app you are using to listen to this show and make sure that you hit the follow button so that you don't miss any of our amazing upcoming episodes. And if I can slide in a fourth while you're there, also please leave us a review. If you want to chat about today's episode with members of this community, head to Afford Anything.com slash community. And don't forget, we also have a book club. The Afford Anything Book Club, just finished reading The Psychology of Money by Morgan Housel,

who's a former guest on this show. And up next, we are reading Atomic Habits by James Clear, also a former guest on this podcast, and one of the brightest thinkers and writers of his generation on the topic of habit formation. How do you create healthy habits and break unhealthy habits? that is the central topic that James Clear immerses himself in, and his book, Atomic Habits, is the synthesis of years that he has spent reading, writing, and researching this subject.

It's a fantastic book, and we're discussing it in the Afford Anything Book Club. I'm right there with you in the book club, leaving my feedback on different chapters and different sections about the book. So you can discuss the book with me and with other members of the Afford Anything Book. community. To join the book club, go to fable.c.O. slash afford anything. That's fable, fable, fable, F-A-B-L-E, dot C-O-O-S-A-F-E-O-A-Ford- Anything. And by the way, all of the books that we read inside of the Afford- Anything Book Club are books authored by former guests on this podcast. So I mentioned Morgan Howsell, whose book, The Psychology of Money we've just finished reading. We're now reading James Clear, Atomic Habits. Coming up later, we'll be reading Happy Money by Ken Honda. And

emotional agility by Dr. Susan David, as well as many, many more. But every book that we read will have been written by an Afford Anything podcast guest. So if you've enjoyed some of the interviews that we've done and you want to go deeper into their material, the book club is a great way to do that and to do it with the community. So again, fable.c-o, f-b-l-e-l-c-o slash afford-anything. Thanks so much for tuning in. I hope you've enjoyed today's episode. My name is Paula Pan. This is the Afford Anything podcast, and I will catch you in the next episode. Here is an important disclaimer. There's a distinction between financial media and financial advice.

Financial media includes everything that you read on the internet, hear on a podcast, see on social media that relates to finance. All of this is financial media. That includes the Afford Anything podcast, this podcast, as well as everything Afford Anything produces. And financial media is not a regulated industry. There are no licensure requirements. There are no mandatory credentials. There's no oversight board or review board. The financial media, including this show, is fundamentally part of the media.

And the media is never a substitute for professional advice. That means any time you make a financial decision or a tax decision or a business decision, anytime you make any type of decision, you should be consulting with licensed credential experts. including but not limited to attorneys, tax professionals, certified financial planners, or certified financial advisors, always, always, always consult with them before you make any decision. Never use anything in the financial media, and that includes this show, and that includes everything that I say and do, never use the financial media as a substitute for actual professional

advice. All right, there's your disclaimer. Have a great day. Do you want to start? Should I start? What do you reckon? Where do you reckon? Where do you reckon? What are you from? What do you reckon? I don't know. Just because I live in Texas doesn't mean you got to talk my language. I reckon you stop saying fucking reckon. That's what I reckon. I'll go. All right. Cool. Three to one.