Afford Anything - Ask Paula: Help! My Mom or Dad Took Out a Credit Card in My Name. Am I On the Hook?

Episode Date: December 6, 2019

#229: Normally, we’re a once-a-week podcast, with episodes airing every Monday. But on the first Friday of every month, we have a First Friday bonus episode! Helen discovered that her mother fraudulently opened credit card accounts in her name. Eek! How can she protect herself? What will happen to these accounts once her mother passes away? Amelia and her husband cannot fire their financial advisor. How can they minimize the damage and maximize the benefit they receive from him in the meantime? Anonymous asks if she should live off an inheritance and max out her 401k contributions during her first year of working full-time. She wants to reduce her taxable income. Is this a good idea? A different anonymous caller read a USA Today article claiming that “index funds are in a bubble.” How true is this? How can index funds be in a bubble? Shawn is self-employed. He invests in a Solo 401k that features both a Roth and Traditional component. How should he manage this account? Another anonymous listener is thinking about downshifting to part-time work. He holds around $278,000 in home equity. How can he capitalize on this? Former financial planner Joe Saul-Sehy and I answer these questions on today’s episode. Enjoy! For more information, visit the show notes at https://affordanything.com/episode229 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. It applies to anything in your life that's a scarce or limited resource. That leads to two questions. Number one, what matters most to you? And number two, how do you align your daily decisions in a way that reflects that? Answering these two questions is a lifetime practice, and that's what this podcast is here to explore.

My name is Paula Pant. I'm the host of the Afford Anything podcast. Normally we're a weekly show. We air every Monday morning. But once a month on the first Friday of the month, we air a first Friday bonus episode. So welcome to the December 2019 first Friday bonus episode. In today's episode, I'm going to be answering questions that come from you, the community. And here to help me with these questions is former financial planner Joe Sal Cahy. What's up, Joe? I have a little tear of joy that I get to be on the bonus. episode. Aw. And happy December. I know, right? If, yeah, if it weren't so cold. But you're, you're in Vegas, so you don't get the cold like we do. Exactly. Yeah, you're in Michigan. So you're experiencing true cold. I'm experiencing, I might have to put on a sweater maybe. I don't want to hear it. Now you're opening the wound and pouring salt in it. All right. Well, speaking of things that you do want to hear, our first question comes from Helen. Hi there, Paula. I just listened to your podcast about talking to your parents about retirement and beyond. Such a great podcast. I loved it. Thank you. I have a weird question. Sadly, my mother is not a great financial person at all. She is lied and staled in her life and has stolen from my family, my brother and I, and has opened credit cards or loan balances in our names.

since she does know our Social Security number and where we live and stuff. I have two questions today. How did my brother and I protect ourselves while she's still around to know that she's not opening more accounts in our name? I do have a credit watch on my credit score, so I get emails if anything happens, but I'm wondering, can I go any further with that? And then my second question is, when she passes away, how can you? My brother and I protect ourselves from being hit with balances that we never knew about for my mom.

If we are responsible for those or not, she definitely does never, never wants to talk about finances with us since it is a sore subject in our family. Thank you so much. I hope you have a great day. Keep on the podcast. It's amazing. Thank you. Helen, I'm so glad that you called in with this question because I want to be very clear about something. What your mom is doing is fraud. It is financial abuse. It is absolutely toxic behavior. And you need to deal with it in an incredibly serious manner because you and your brother are going to be in serious trouble or could be in serious trouble if your mom passes away or even if she doesn't and she just defaults on these debts.

Your mom, by virtue of opening these accounts in your name without your permission, is committing fraud. Plain, clear, simple, there's no two ways around that. That is straight up criminal fraud. What you and your brother need to do is sit down with your mom and say, listen, we need you

to transfer those balances, any remaining balances on any open accounts. We need you to transfer those balances to different accounts that are in your mom's name by X deadline. And if you don't get that done by X deadline, we are going to report this. You and your brother need to have that incredibly stern and firm conversation with your mom. And then if she does not transfer those

balances out of those accounts and into accounts in her own name, and if she does not close out those accounts by given deadline X, then I hate to say this, but you need to report it. Call the credit card companies. When you look at your own credit report, you'll be able to see exactly what accounts are open in your name, how long they've been open, what the balances on them are, what the payment history on those accounts are, you'll be able to see all of that information. And you'll also be able to see contact information for all of those creditors. You need to call those credit card companies or call those creditors and report it as fraud. Let them know that you did not authorize the opening of this account,

you did not make those purchases, that none of this is yours and that this was fraudulently opened. And their fraud department will open an investigation into it. Your mom could get in very, very serious trouble, as she should, as should happen, frankly, to anybody who commits that kind of an act. I mean, that is just straight up financial abuse. You know, as long as those accounts are open under your name, you're on the hook for it, plain and simple. And if your mom dies, you and your brother are going to be saddled.

with these bills unless you report it as fraud. So that's 100% what I would recommend you do. Two things that I will add to this once you have that done is it's becoming easier and easier to freeze your credit. So it's difficult for people besides you to get access to your credit. I would look up how to do that. It's going to be a little different with all three of the Bureau. Sometimes credit cards will allow you to turn them on or turn them off if they're open in your name. I also like the fact in this case that you're paying for credit monitoring. And even if you freeze your credit, because your mom has proven that she's very good at this horrible talent of hers, I'd actually leave that on, even though it might be a little redundant. I think in this case,

because you know that she's done this in the past, it's worth the insurance of having that protection. I totally agree. Helen should have both credit freezing and credit monitoring. The next piece is I would look through your credit report. Helen's probably already done this, but I would look to make sure that Helen knows about every single account, like check off every box of every piece of credit that's open using her name. If there are any joint accounts open, she can also call the credit card company and have those disconnected as well.

Lastly, with regard to her mom's estate, if her mom passes away, are they going to be on the hook for a bunch of of things i have a piece from the consumer financial protection bureau that generally says no as long as she's not listed on the account she's not responsible for her mom's debts because of her mom is doing this with her she might be doing it with other people so those debts would pass away with her mom now it does say if state law requires on some debts in community state properties, but those are all around surviving spouses, not around children. Still in this case, Paula, I think that when her mom passes away, if there is any dispute, that's a time when she might want to, well, not even might want to,

she should probably talk to an attorney who is in that area. Well, hold on, Joe, I want to clarify something. If her mom passes away, she's not going to be responsible for debts in her mom's name. her mom's name. But that, yeah, but that's not the issue here. The issue here is that her mom is opening accounts in her name. Yeah, I get that, but there's another problem, which is other debts that her mom may have. If her mom's doing this, her mom clearly, clearly doesn't care about the law. It might be doing it in other places.

So if her mom has other debts and those other people, I mean, I don't think you open debt in your child's name unless you have a bunch of other debt. And like Helen said in her call, she's been unable to. talk to her mom about money because her mom has so many money problems. Those money problems also, if I'm Helen, might weigh on me. And I think at the very least, I mean, this is not, quote, good news, but it's okay news when it comes to Helen being responsible later on as her air of paying off her mom's debt. Right. So if her mom has debts in mom's name, then mom's estate will be responsible for those debt, meaning that when the mom passes away, any debts that are in mom's name will be paid for from mom's estate or mom's assets prior to the rest of those assets getting portioned out

to the beneficiaries. Correct. But any debts that are in the name of Helen or Helen's brother are, it's not just that they'll be their responsibility after her mom passes away. It's that legally, those debts are their responsibility right now. From the moment that account got opened in somebody else's name, those debts immediately became the responsibility of Helen or the responsibility of Helen's brother. And that's what makes this fraud is that regardless of who's paying on the account, the fact that Helen and Helen's brother's name are on those debts means that they are legally responsible for them right at this moment and will continue to be legally responsible for them until they report them as fraud. Yeah.

So, Helen, you need to, basically, you need to report your mom. If she's not going to transfer those balances and close those accounts, then you need to take the action that you need to take in order to protect yourself. Best of luck. And I'm glad that you called in with this question because this is something that you need to take very seriously. So thank you, Helen, for asking that question. Our next question comes from Amelia. Hi, Paula, this is Amelia. I love your podcast and have found your advice so helpful, both on specific topics and just your general life and money philosophy. My question is how to maximize the benefit and minimize the damage when you absolutely must use a financial advisor to manage retirement accounts. I know that in general, you and most of the financial independence experts recommend self-investing in index funds, which outperform most financial advisors and don't subject your savings to high-fax. fees. I'm very comfortable with this approach and have my 401k invested in index funds.

However, my husband is using a financial advisor for his Roth IRA and SEP IRA. For many reasons, firing our financial advisor is not an option. He's one of my husband's best friends and our families are very close. Also, my husband is an attorney who specializes in estate planning and our financial advisor sends a lot of new clients and new business his way. In addition, we live in a small rural town and we like the idea of supporting another professional small business owner in our town. My husband refuses to stop using our financial advisor in order to go the index fund route, and I understand his reasons and have stopped pushing him, but it makes me very uncomfortable. About 50% of his portfolio is invested in a few large companies, and the rest is in various mutual funds, and the advisor

charges a 1% fee. Given that this is our situation, how can we make the best of it? Are there ways that a financial advisor can add value to our investing plan, such as by hedging against market fluctuations or by diversifying our investments outside of index funds. Here's a little more context on our financial situation and goals if it helps. We're 38 years old, we have a combined income of between 200 and 250,000. My husband is maxing out its 401k and backdoor Roth IRA, and I'm maxing out my 401k, and I have a Roth IRA with about $10,000. that's held with the same financial advisor, but I'm no longer contributing to it because of the aforementioned reasons. We currently live on between $60,000 and $70,000 a year, and we're using

the rest of our income to contribute to 529 plans for our three kids, aggressively pay down the $146,000 remaining on our mortgage, and save down payments for a few future rental properties. I would like to stop working in the next two to three years. My current salary is $100,000 a year and focus on buying our first rental properties. We have no debt besides our mortgage and a net worth of around 650,000. Thanks so much for any perspective you can provide. Amelia, thank you for asking that question. Because Joe is himself a former financial advisor, Joe, I'm going to let you kick this off. Thank you. It's funny, Paula, because there are so many assumptions just about financial advisors in Amelia's question that I just want to talk about financial advisors in general.

There are horrible plumbers and there are good plumbers. There are horrible people that work on your car and phenomenal people that work on your car. First of all, we don't go into a car lot and ask, what's the fee? The first thing that we look at is what's the person doing? So I want to, I want to back away and I want to start with some assumptions about the difference between a good advisor and a bad advisor. Good advisors don't have a cost-benefit analysis that doesn't make sense, meaning she talks about, hey, I think this advisor has high fees. He's charging 1% on top of whatever the funds are. It sounds like they must be actively managed mutual funds. Good financial advisors don't have a bad cost-benefit analysis. I don't know how well the portfolio is performing.

I don't have any idea about the funds that are inside of it. So I don't know what the cost-benefit analysis is. But that's number one. Number two is good financial advisors also don't compete against the index. People online, this has nothing to do with Amelia. But Paula, you and I see this all the time. We see an index versus some investment for someone toward their goal. Your goal has nothing to do with the S&P 500.

Your goal is your goal. So my question to my client always was, what's the amount of risk that we need to take to meet that goal? Maybe it's more than the S&P 500 if you're not saving much money. If you're saving a lot of money, why the hell would you take the risk of the stock market when it gyrates that much? Why wouldn't I lower that risk profile on my portfolio? A good advisor knows what we're aiming for and is not worried about the S&P 500. So I would even pose that your financial advisor's job has zero to do with an index. He might use an index fund to help you get there.

If he's good, he probably does. But your goal and the index are two totally different things. An advisor's job is to make sure that the whole thing dovetails together, that your whole portfolio dovetails together so that the tax ramifications work out. I was very frustrated when I heard Amelia say that she's not contributing to the Roth because she doesn't like the fee structure of that account. She should definitely be contributing to a Roth. There are people at companies where I used to go speak who would tell me, they would say,

well, you know what, our 401K has a high fee structure, so I don't put any money in the 401K. Are you kidding me? The amount of money that you save in taxes beats by a long shot. not usually, usually the amount of money that you're going to pay in additional friction from a poor set of funds. Not always, but most of the time. Don't stop contributing because you don't like the fee structure. Complain about the fee structure. Do something about the fee structure. Clearly, Amelia's doing that here, right? So I love the fact that she's thinking about this. But for people out there that are working at a company and not putting money in the 401K, you're not hurting the

company. You're hurting you. You're hurting yourself. The other thing is, with the advisor marrying everything together, it sounds like in this case the advisor is just an asset manager and only is looking at the portion of the portfolio that's, quote, with him, a good financial advisor looks at your entire picture. And whether money is in a 401k at work, managed in a collection of indexes or mutual funds, whatever it might be, real estate,

they're going to put all those things together and help you, avoid problems in your backyard. And let me, let me go one step further here and use a very specific example. Amelia is talking about something that I really like a lot, which is investing in real estate. A good financial advisor is going to tell Amelia and her husband that they need a really large cash reserve. And the reason is, what if she or her husband or both lose their job and they lose their renter at the same time. So anyone who knows, and Paula, you've talked about this, with your portfolio because you have rental properties. You talk about how you have a large cash reserve.

A good advisor is going to point that out. A good advisor also is going to help you make good decisions around your real estate so that when it comes time to look at your benchmarks, that you know what rate of return that real estate has returned to your portfolio and you know if it actually makes sense or not. It isn't about the house or real estate or stocks being better or worse. It's about your goal. And if an asset reaches the goal, it's great. If it doesn't reach the goal, then it stinks.

So the idea that an advisor would have a in my backyard versus not in my backyard, that's a bad advisor, like a bad mechanic or a bad plumber. I think that whenever anybody says to me that they don't like having advisors, what you're saying is, I don't want smart people in my corner. And maybe, maybe as a group, we need to stop. talking about all the bad advisors and instead think more critically about our ability to interview people and find the good ones because there are good people out there, there are smart people out there and everyone should have smart people that think about problems differently than

they do in their corner. I have, I have a coach who helps me with, you know, there's the term life coach. I'm not in love with that term because it's kind of woo-woo and I'm not really a woo-woo guy. But I will tell you, I have a coach that helps me look at my entire life. I meet with her three times a month. Mary Lou is not someone that my spouse, Cheryl, likes. My spouse likes everybody. You know why she doesn't like Mary Lou? Because Mary Lou doesn't look at the world the same way that Cheryl and I do,

which, by the way, is exactly the reason I love Mary Lou. Mary Lou is a phenomenally brilliant person, looks at the world as if it's a glass half empty, tells me when I'm stepping in it. You want those people in your corner, intelligent people like that. that in your corner. The idea of not having advisors, not good. This might be a crappy advisor. This person you're working with might be rotten. But I wouldn't shy away from putting money in your Roth IRA. I would rethink what you want from your advisor. And then I would lay on the table with your advisor. Here's what I'm looking for. How can you help me put more money away? How can you help my

tax situation? How can you help me set milestones and keep them so that I know how much money to save and I know what I'm working toward. It doesn't matter to me what the asset is. It matters what the goal is. And then we pick the asset to fit the goal. Yeah. 100% I am with you, Joe. I'd only add a couple of things to that. Number one, the impression that I get from the way that she describes the situation is that this is an asset manager and not a true financial advisor. I'm not hearing in her question that he's is providing advice about her entire basket of goals. She talked about a 529 plan. She talked about paying off the mortgage on her primary residence. She talked about buying rental properties. She

talked about quitting her job, which pays her $100,000 a year. Those are significant events in your financial life. And an advisor is going to be advising you about all of those events. How do they all tie together? How does the desire to quit your job in the next two to three years tie together with the desire to pay off your primary residence and buy rental properties and max out 529 plans? How does the puzzle fit together? I'm not hearing that the advisor is providing any advice on any of this. It seems as though all he's doing is managing investments, managing assets, but nothing more. Joe, as you said, a good advisor looks at the whole picture. So I agree with you. I have no issue with advisors. I have

issues with people who simply want to manage your investments under the guise of full service financial advice. Yeah. And I think that if Amelia comes with what she wants out of the relationship, that might be a great middle ground, you know, to say, hey, I'm looking for an advisor. Here's what I want my advisor to do. Can you help me do these things? And the thing is, being an advisor is not the same thing as having good judgment. I don't know this person. I don't know what kind of advice they are giving. But the question that I would ask if I were in her shoes is when you walk away from a one-hour conversation with this person, do you walk away with fresh insight, fresh perspective? a new framework for looking at your situation? Do you walk away with the feeling that this person has given you genuinely good advice about how to rethink or remanage your situation? If so, then that's an advisor that's performing the job of an advisor.

That's an advisor who is executing sound judgment and sharing that wisdom with you. So that's really the operative question to ask. Are you walking away from these conversations feeling wiser or not? I get the fact, though, Paula, that they are in a position where they are stuck working with this gentleman. I get the relationship. I get the fact that he refers business to her husband and the value of that relationship is important, which is why I think making sure you go into your advisor with good questions that don't. define the framework of the discussion is going to be very important because she talked about

minimizing the damage. I'll tell you a story from my own practice back in the day. I had I had clients that were well on their way to financial independence. We spent the majority of our time talking about estate planning if they couldn't spend their money making sure that other people could. We also talked about withdrawing of money. We talked about stuff that I thought were big picture things. Here was the problem. About a year and a half into our relationship, I asked them how they liked what we were doing. And Gail surprisingly said, it's okay. It's all right. Like I get why this is important, but you're really not doing the stuff that I, that I want you to do. And I was shocked because I thought that every single thing that was important in the six areas of financial planning,

we were covering. And I leaned forward and said, please, I would love to serve you better. what can we do? She goes, well, we never, we never look at my budget. We never go through and see if I'm wasting money. Are there areas of my budget where I'm wasting money? Now, here I am. I'd already run the projections that they can waste a lot of money and it's going to be completely irrelevant, but it didn't solve the problem that she really wanted addressed. And because of that, I wasn't an advisor meeting her needs. I thought I was a good advisor from a third party perspective, but from what helped her sleep at night, I was not looking at the same problem that she was.

So from then on, once she made me aware of that, we always made sure to go through their budget and look at whether they were wasting money, if there were ways that they could do their grocery shopping better, and they could buy the next vehicle for a lower price. Things that, frankly, for me, when it came to big net worth decisions for these high net worth people, weren't moving the needle,

but definitely was, more around what she was looking for as an advisor. And what I think is so illustrative of that story is that, Joe, I would say, yes, what she was looking for in an advisor was important insofar as she wanted help with a specific question, which is how can we improve our budget? But I would also argue that you, by virtue of offering a different perspective, and making her aware of the unknown unknowns, hey, how's your estate planning going? hey, do you have a good withdrawal strategy for after you retire?

You know, what are the areas that could trip me up that I don't even know to worry about? By virtue of doing that, you were, I think, providing really good service in that you were illuminating those unknown unknowns. Well, I hope so. But I guess what I would do, if I were Amelia, I would do what Gail did with me. I would say what I'm really hoping for in this relationship are milestones dovetailing these things and see how the advisor responds. And maybe it'll also help her husband if he's in that meeting and sees the relationship back and forth because she talked about minimizing the damage.

You can't get the results you want unless you ask the question. So thank you, Amelia, for asking that question. And good luck with managing the relationship. with your advisor so that he has the opportunity to deliver the type of advice and the type of results that you're looking for. We'll come back to this episode after this word from our sponsors. Do you run a small business and do you have to deal with filing taxes, running payroll, possibly even offering benefits to your employees or to yourself because you're an employee of your own business? If so, you know that this stuff is complicated and it's time consuming and it's not the reason that you got into business. The more time that you spend dealing with HR, the less time that you spend actually running your business.

That's where Gusto comes in. Gusto makes payroll taxes and HR easy for small businesses. They offer fast, simple payroll processing benefits and HR support. They automatically pay and file your federal, state, and local taxes. You don't have to worry about it. They make it really easy to offer health benefits and 401Ks for your team. And they're built for small businesses. So if you run a business that's where maybe you're the only employee or you've got one other employee,

you know what, Gusto can help you with the HR end of that so that you can focus on actually making money and running your business. And this is the best time to get set up for the new year because as we go into 2020, you want to have everything set up in advance so that you go into the new year strong. You can try it for free when you run your first payroll by going to gusto.com slash you. Pala. So it's a special offer. Try it for free for three months. Gusto.com slash Pala, that's G-U-S-T-O.com slash Pala, to get three months free. If you wear contact lenses, you know how time-consuming it is to have to make an appointment, go to an office visit, and renew your prescription. Simple Contacts lets you renew your prescription and reorder your contacts from anywhere in minutes,

like from your couch. So here's how it works. The Simple Contacts Vision Test is self-guided and takes less than five minutes. You save a bunch of time as compared with making an appointment. So you'll take this vision test in five minutes. A doctor reviews your test. And if your vision hasn't changed, the doctor writes you a new prescription. And then a fresh supply of your favorite brand of contact lenses is on its way to your door.

They have all of the brands and lenses that you're familiar with. The vision test is only 20 bucks. And the contact lens prices are unbeatable. We had a member of our team use them. And in her case, she had an unexpired prescription. and so she just uploaded her current prescription to Simple Contacts, and then they sent her a six-month supply of her favorite brand. So she saved a bunch of money and a couple of hours as compared with an office visit.

Now, this is not a replacement for your periodic full eye health exam. You still need those. But they test that your current prescription still helps you see 2020, and they renew that prescription. And they're also offering a promotion for our listeners. You can get $20 off of your contacts at Simplecontacts.com. slash Paula 20 or intercode Paula 20 at checkout. Again, get $20 off your contacts by going to simplecontacts.com slash paula 20 or intercode

Paula 20. That's P-A-U-L-A-20. Simplecontacts.com slash Paula 20. Our next question comes from Sean. Paula, Paula, Paula. I am self-employed and have a self-directed solo 401K with a rock. components and a traditional component to that self-directed account. And what I find very confusing is keeping track of my investments in which account they came from. And I've been told that you can

actually take money from both accounts and put them into the same investment as long as you're properly allocating the money back to each account from the investment. And my question is, how do I prove to the IRS if they were to come to me in 15 years and say prove to me that you have been properly managing your retirement accounts and equally divvying out the money that you invested from each of the traditional and the Roth accounts back to where they were supposed to go? I just don't understand. I mean, do they audit you? I mean, there's no bank that's over my self-directed accounts.

I mean, I have a bank that holds the money. But since I'm not just doing the standard retirement investment investment. investment thing where I have a 401k with my employer and just put money into stocks, I get somewhat overwhelmed and confused. And as a result, sometimes I'm even scared to mix my traditional and rough money into investments, even if I need that because I don't have enough money in one account. I'm scared to mix them because I'm just afraid I'm going to get it all confused. and the IRS at some point is going to want me to prove the money came from somewhere, and I'm not going to be able to do that.

So any advice you have, I greatly appreciate it. I'm your biggest fan out here in West Texas. Love you so much. Thanks for all the good work you do. Sean, thank you for that question. Now, before we get into the answer, the first thing that I want to clarify for the sake of everybody who's listening is that what Sean has just asked about is a self-directed IRA,

and that differs from a regular IRA. So for the sake of everyone who's listening, if you just heard that question and you're thinking, wait, I don't understand, if you buy an asset, that asset is held inside of your traditional IRA or your Roth IRA, that's absolutely correct. So for the average person who's listening, if you have a Vanguard account,

and that Vanguard account has both a traditional IRA and a Roth IRA, then inside each of those IRAs, you might buy the same underlying asset. You might buy the Vanguard Total Stock Market Index Fund, and you buy that index fund inside of each IRA. And so there's no question there about which account is holding the asset, even though you're holding the same investment in both accounts. It's very clean.

It's bucket one holds asset A, and bucket two also holds asset A. That's what happens in a regular IRA. But a self-directed IRA is different from a regular IRA because in a self-directed IRA, you can invest the money inside of a self-directed IRA in unusual assets, such as physical real estate, businesses, businesses, businesses, farms, you can use that money to invest in things that you wouldn't just buy on a stock market exchange. And in order to do that, you need a trustee or a custodian that specializes in these types of untypical or less typical investments. The advantage is to having a self-directed IRA is that you have that ability to diversify your

portfolio. The disadvantage, of course, is that it adds quite a bit of complexity to the management of it. Which is why, Paula, when people would come into my office, office back when I was an advisor excited that I could buy some of this physical stuff or non-traditional stuff inside an IRA. You know what my first answer usually was? What my default answer was? I'm guessing it would be don't overcomplicate your life. Yes, don't do it. Don't do it. These assets have difficult rules to follow sometime as illustrated by Sean's question, but even without Sean's question where he's trying to mix Roth and pre-tax money together, just as an example, if you purchase a physical house and put it inside of your IRA,

it's incredibly difficult to have a mortgage on that property because the money can't come from your hands. This is an asset that you're not allowed to touch, which also means I have had clients that wanted to do this and then said, hey, I'll buy it with my IRA and we'll go there every summer for our summer, summer vacation. You can't do that. This is a retirement asset that you can't touch until it's outside of that tech shelter. There are very specific rules around these assets. And often people don't realize all the rules and they inadvertently disqualify that entire property. Let's say you have a half a million dollar house that you want to buy with an IRA and you accidentally

disqualify that property like Sean's alluding to. Well, guess what happens then? Now you have half a million with a 10% penalty and tax due today on all of that money. It can be very ugly. So the rules are complex. The rules are difficult. Sean's question makes it even more difficult, which is, what if I have something that I want to buy and I want to commingle money from a Roth and money from a traditional IRA?

I go back to my default answer. Don't do it. Just absolutely don't do not do not do it. because when he asks the question, how can I prove to the IRS? He already knows the answer, Paula. It's going to be incredibly difficult to prove to the IRS how that works. I have never had a client who had an asset that performed so well that we had to have it outside of the regular places like Vanguard Fidelity T.Row Price.

Number one, and then number two, we had to have so much money in that asset that we, had to commingle pre-tax and Roth money together. So if it's a heck of an asset and he were to convince me that this was well worth it, I would then go to his custodian because if you have a self-directed IRA, you still have to have a custodian, somebody that you work with like Rocket Dollar or one of the other traditional companies that are out there, ask your custodian how to do it. If anybody knows how to solve that riddle, it's going to be the custodian because they work with a lot of people who deal with these non-conventional, non-conforming assets inside IRAs. Right. And so if he were to do it, I mean, the process would be that money from both his traditional account and his Roth account would both go into a self-directed IRA that is managed by a custodian or a trustee. They'd actually go into two separate IRAs, and then the two separate IRAs would be commingled to buy percentages of the assets.

So let's say, just because we were talking about houses earlier, it's a house. You buy 60% of the house with the regular IRA and 40% of the house with the Roth. Right, exactly, because those self-directed IRAs would then produce an IRA LLC that would then be used by that piece of real estate. Which is why I think to myself, before you even go, to that step, just think about three things. Don't do it. Then think don't do it. And then third thing, no, don't do it. Exactly. I mean, at the end of the day, the amount of time and effort that you are going to put into transferring that money into a self-directed IRA with a custodian that can then direct that money towards an IRA LLC that can then allow you to buy,

property or make some type of other investment and who can work with a CPA that knows exactly how to properly report all of this. I mean, we're talking about an incredibly administratively complex task that is just not worth your time unless you're managing an incredibly large sum of money. Yeah, we talked earlier about Amelia's advisor in the 1% fee. Yeah, yeah. This could very easily be much higher. Yeah, exactly. Think about all of the cost associated with having a CPA who gets it, having a bookkeeper who gets it.

I mean, don't add additional complexity to your life unless the reward is worth the complexity. And what I see far too many people do is, and Sean, I don't know the size of your accounts. I don't know what types of assets you hold. but broadly speaking, I see a lot of people who go on the internet and they find what seem to be creative hacks. Like there's this shiny object syndrome that's associated with not just self-directed IRAs, but also 1031 exchanges. And all these other things that kind of gives you this feeling that you're a little bit cooler than your friends because here you are executing on this thing that the average Johnny Q. Public has never even heard of. The problem is those types of opportunities also come with an enormous level of both restrictions and administrative complexity. That doesn't mean don't do it. That just means only do it if the reward justifies the complexity.

What is the opportunity cost that you're paying in addition to the actual cost cost that comes from this added level of complexity? and is that worthwhile? Sometimes simplifying is better than optimizing. So thank you, Sean, for asking that question. Our next question comes from Anonymous. Hi, Paula. I am on the path to financial independence, and I have been for a few years now. And as most of us in the financial independence world, too, I hold most of my investments in index funds. Recently, I saw an article in USA Today, which admittedly is not the most reputable financial resource. I will admit that. That indicated that they thought index funds were in a bubble.

What do you think? And what does that even mean? I mean, I understand a bubble from a perspective of mortgages, for example, in the 2008 financial crisis. But how can an index fund be in a bubble? Do you have any insight on that? Are you nervous at all? Good news here. and that is that this piece isn't just from one publication in the USA Today.

Paula, this was all over the internet. This was a big thing, not because of a bubble, but exactly who said that there may be a bubble in our future. And that is Michael Burry, who was famously played by Christian Bale in the big time movie, The Big Short, just a few years ago. And of course, the Big Short was an adaptation of a book by the same name from Michael Lerner, Lewis. So Michael Burry is a hedge fund manager who called the last bubble. He called the subprime mortgage bubble. And so when he said that index funds are the next bubble, everybody sat up and took notice since he successfully called the last one. What was interesting about this quote was not just who said it, Michael Burry, but it was also this quote happened, I believe, before Jack Bogle passed away.

And he was asked about this quote. And Mr. Bogle even. said that yes, he is correct and there is the possibility that we could be in a bubble. And for those of you who have never heard the name Jack Bogle, he is the founder of Vanguard and the inventor of index funds. Right. So in a lot of circles, you would almost call him Paul a Mr. Passive. Right. Exactly. I mean, he is the person who created index funds. He came up with it. So if anyone's an expert on index funds, it's Jack Bogle. Yeah. So a my Michael Burry said it, I went, whatever, when Jack Bogle agreed, my ears perked up. Here is Dr. Burry's opinion.

He says that as more and more money goes into index funds, the mechanisms by which people price assets in a market begins to deteriorate, meaning if you're going to buy Apple stock, you're going to buy it because the price versus earnings makes sense. And the marketplace can sustain what that price is. So a bunch of people agree on a price in the market, and that's what a stock sells for. A lot of investors aren't looking at the underlying assets like Apple stock or Amazon or Microsoft or Netflix or whatever it might be. They're just automatically putting money into the fund. And as larger and larger percentages of people do that, it becomes more difficult for the market to really settle on what a real price is versus the fact that people are arbitrarily just buying, buying, buying, buying, buying,

And what happens when people buy, the price goes up. And in Dr. Burry's interpretation, the price goes up artificially. But the tracking mechanism gets very difficult is what he talks about. Meaning it's difficult to track the price to what the real price should be. So that's why he introduced the process of a bubble. I'll reiterate what Mr. Bogle said, which is that yes, absolutely. If everybody is a passive investor and every investor gets on the exchange trade fund indexing platform, we do lose that.

And he's absolutely correct. However, the next thing Mr. Bogle said was that we're a long way away from that. So with my money, I index invest for the most part. I think most people still should index invest. But this, Paula, I thought was a neat exercise, more because of the fact that as Dr. Burry discussed this, it gave people a little. education about how markets work. And I think that even if you index, knowing a little bit about how markets work, isn't just educational. It's also fun. Well, it seems to me that the underlying

question isn't so much about index funds per se, but about whether or not the market as a whole is overheated. Because if the market is overheated, then exposure to an overheated market where the price to earnings ratio is insane can signal a potential collapse. And we've seen that in the past, where when assets reach valuations that their earnings cannot support, well, eventually the House of Cards falls and we go into a cyclical recession and then we recover from said recession and then the cycle starts again. So it isn't the index funds. themselves are the bubble, index funds are a mechanism by which we make investments. But by virtue of the fact that index funds are so popular, more and more people are piling into the market at

higher and higher valuations, which could have the effect of driving the market up to unsustainable valuation levels. Well, and I think it's even deeper than that, though, Paula, I agree with everything you said, but it makes it more difficult for the people that are tracking prices to get a price that the underlying investment can actually sustain. It's not actually, whether it's higher or lower. You're right. If it's higher and overblown, then we go into a cyclical recession. But finding that real price, it becomes more difficult, which means increased volatility. But Jack Bogle has an answer for that. He definitely does. His thought process was that we are not near that point yet. yet. And even though that may happen in the future that we reach those levels that Dr.

Burry talks about, I think it's much more worthwhile to focus on things that we can control, number one, which is putting money into the market. And then number two, worry about our investments the way the market is now, which we are not close to a situation yet where there's so many passive investors that we have to worry yet about what Dr. Burry's discussing. When do we know that we will be in that situation? What are the indicators? I think the indicator for me is not one brilliant person talking about it, but a lot of brilliant people talking about it.

Because the discussion wasn't other people agreeing with him. The discussion was, is he correct? And what's the efficacy of reacting to his statement today? There weren't other people getting on board saying, you know what? We're there right now. In fact, Dr. Burie wasn't even saying we're there right now. he really warned that we're headed that way. We're on that course. But at the end of the day, this discussion is purely a hypothetical thought exercise.

We do not know what is in store in the year 2020, 2021, 2022. And particularly, you know, this episode is going to air in December of 2019. And every December, it becomes very fashionable for people to make predictions about what the next year, or in this case, the next decade might hold. But we don't know what the roaring 20s has in store for us. And any guess about what that may be is nothing more than a guess. And particularly in the financial markets, there's almost no risk to publicly announcing some type of a guess, right? If you have a platform and you make some projection about what you think will happen in the next year. If you get that wrong, people will have forgotten about it. You won't be held

accountable for getting it wrong. And if you get it right, then you can refer back to the fact that you called it and use that as bragging rights. So it's incredibly popular for people to make guesses about what might happen. And yes, there are indicators that we can watch, absolutely. But at the end of the day, all hypothetical discussions are purely that. They are hypothetical, theoretical conversations about what may or may not happen in the future. And all we can truly know is what the situation is today. And all we can act on is the information that's available today. So thank you, Anonymous, for asking that question. We'll come back to this episode in just a minute. But first, it's that time of year again, time to share smiles and good times with

friends and family, and of course to exchange gifts. So how about you give yourself a gift? The gift of self-confidence and how do you get it by having straighter brighter teeth with help from candid? Candid's aligners can help straighten your teeth faster and cheaper than traditional wire braces. The process looks like this. You send candid impressions of your teeth and an experienced orthodontist who's licensed in your state creates a custom treatment plan for you. You'll get a 3D preview of what your future teeth will look like. Treatment takes six months on average and cost 65% less than braces, and it ships directly to you so that you don't have to go into an office. Plus, during the holiday season, for every aliner that's purchased, Candid donates $25 to Smile Train,

a group that brings safe, 100% free cleft lip and palate treatment to children around the globe, so you'll also be supporting a good cause. Give yourself the gift of Candid. Go to candid.com slash Paula and use code Paula to get $75 off. That's CandidC.O.com slash Paula. code Paula for $75 off. CandidC-O.com slash Paula, code Paula. It's already December, and as much as we love the holiday season, this time of year can be a bit stressful because we've all got a long list of things to do.

If getting life insurance is one of the things on your to-do list, PolicyGenius might be able to help you cross that off your list. PolicyGenius makes finding the right life insurance simple. You can compare quotes from top insurers to find your best price. and you can save $1,500 or more a year by using PolicyGenius to compare life insurance policies. Once you apply, their team will handle all the paperwork and the red tape. And they can also help you find home insurance, auto insurance, disability insurance. I use them to look for health insurance.

It's currently open enrollment. So I went to their website, looked at the policies that were available, and made some decisions about what I wanted to do for 2020. So if you need life insurance, but you aren't sure where to start, why not start at policygenus.com? It only takes a few minutes to find the right life insurance policy, apply, and cross another thing off your to do list. Policy genius, when it comes to life insurance, it's nice to get it right. Our next question also comes from anonymous, but a different anonymous. Hi, Paula. I love the podcast. Thank you for all that you do. My question is about capitalizing on home equity. A quick background.

My wife and I are a single-income household. They currently have thin monthly margins. We have no debt outside of our home, contribute roughly 70% of my pay and a 401k in Roth IRA, and have five months of living expenses in a money market account, earning 2.3% annually. We have one son and another baby due in October. We have been in our house for six years and currently owe $172,000 on our home and our one year into a 15-year note at 2.875%. Our home's value in the Denver area is $450,000. Our house payment for mortgage, insurance, and taxes is $1,893 per month, which is 45% of our take-home pay.

I have a desire to spend more time with my family and am considering relocating us and moving to part-time work for a couple of years. My question is, how would you advise us to capitalize on our significant home equity and grow those dollars long-term, whether we move or stay put? Thank you in advance for your advice. anonymous thank you for that question first of all it sounds as though you are in a great position you have no debt other than your mortgage you're saving 17% of your pay into a retirement account you have a five-month emergency fund you have an extremely low interest rate on your home you have significant home equity and your second child was just born this episode is going to air in December and you said that that baby is due in October. So by the time this episode airs, your second child is

one or two months old. So congratulations. And of course, you would like to spend more time with your family. And in order to do so, you'd like to potentially relocate to a lower cost of living area and move to part-time work for a few years. I think that's a great idea. And you have up to this point, put yourself in a strong financial position. But as you also said, you're a single income household within monthly margins, which means you don't have the space to take a lot of risks. And so to your question, which is how do you capitalize on your home equity, you don't. Because the only way that you could do that would be by upping your debt. And Upping your debt means exposing yourself to greater risk.

And if you are a single income household with thin monthly margins and that single income is about to turn into a part-time single income, that is the worst time to take on increased risk, increased debt, increased leverage. That's when you want to be moving towards safety rather than greater degrees of risk. Yeah, when I've seen people or interviewed people or was an advisor for people who are doing really well with their money, they all work toward paying off debt quickly. There are lots of professors out there, Paula, who know the math, who have nothing saved, who will tell you about ways that you can flex that house, that home equity that you have and make more money from that money. and I would be reticent to do that. I would try everything in my power to not do that.

In fact, if margins are small, you know what? I would look at first. There's a huge percentage. I don't remember the number offhand. Probably should have that number. There's a huge percentage of people who would be given a raise at work if they ask for one. I just read this just a couple months ago about the number of bosses who will give you a raise at work if you ask for one.

Maybe there are ways to increase your income to make margins higher or to, build a secondary income stream, something, but that working with that money inside your house is not something I would do. Now, when I was an advisor, if people were behind and needed to be much more aggressive, that's a whole different discussion. The problem then, though, is we run into a much more increased risk of failure, and we definitely don't want to do that. And I'm even, I'm even a little reticent to tell you how this works. But if you did decide that you wanted to take advantage of the money inside your house, refinancing that loan back out to a 30-year loan, this is a horrible idea,

is going to free up a bunch of cash flow, right? It will solve your problem with your margin. However, listen to what you just did. You're going to pay a lot more money, not just because of the fact that interest rates are probably higher now for you than they were when you first took out the loan because that interest rate you have is phenomenal. That's number one. But number two, you reset the clock on your amortization table. And if you followed amortization tables, you know the bank takes all their money up front. So you're going to restart that clock. And you're going to pay a lot more money

in interest than you would if you just finished out the loan that you had. However, not only could you do that, you could also then dip into the equity and invest that. Once again, talking about the professors in their math at a higher interest rate than what the interest rate on the loan would be. That's how you do it. I wouldn't do it in a million years. I wouldn't hear that. Pay your debt off and find other sources of income or other places to cut. Don't mess with the fact that you're doing so well on your house. Exactly. It's so tempting to say, hey, theoretically, I could borrow against the equity in my home, invest it in the stock market and do a lot better. Sure, theoretically on a long-term aggregate average, maybe.

Yes, yes, that's how the charts would play out. That doesn't mean it's a good idea, particularly with the specifics of your goals and your family situation, right? You want to support a family of four on part-time single income. That is not the time in which you take on more debt. Yeah, I really think even though the math works, you just look behaviorally. Yeah. Behaviorally, people who succeed pay down their debt. Yeah.

And more broadly speaking, the level of risk that you take on needs to be in line with your current life situation. And supporting a family of four on one person's part-time income is inherently risky. And so if you are going to increase risk in that capacity, by which I mean you're increasing income risk, right, because you're supporting this family of four on a single part-time income, if you're increasing risk in that dimension, then you want to decrease risk in other dimensions. And leverage is another dimension. It is one of many dimensions of risk. So thank you, Anonymous, for asking that question. Our next question, once again, comes from another different caller who is also anonymous.

Hi, Paula. I recently graduated college and am starting my first full-time job in September. I'm lucky enough not to have any debt and a decent amount of inheritance from my grandparents. My question is, should I max on my 401k this year and live off my inheritance investments? This would reduce my taxable income, but it would leave me less liquid. Do you see any other problems with this approach? In case you need more details, I'll be living and working in Seattle and making just over $100,000 a year. here. Thanks. Anonymous, thank you for that question.

There are both pros and cons to the approach that you've suggested. If you live on your inheritance and max out your 401k, then effectively what you're doing is using a portion of that inheritance, using up to a maximum of $19,000, which is the 401K contribution limit, you'll be using that money as a proxy or as a supplement. for that $19,000 worth of income. Whatever your cost of living is, let's just say for the sake of example, you know, you mentioned that your income is going to be $100,000 a year. I don't know what your cost of living is. Let's just say for the sake of example, that your cost of living is $50,000 a year. Essentially what you're suggesting is of the $50,000 that I need to spend on my own cost of

living, should $31,000 of that come from my paycheck and the other $19,000 of that? come from my inheritance so that I can then use that money to max out my 401k. That's effectively what you're suggesting. If you execute it in exactly that way, in the way that I've just outlined, then sure, I think that's a perfectly fine idea. But here's the thing. I don't know how big of an inheritance you have, and I don't know what your cost of living is. And if you look at the entire bucket of this inheritance as money that you can live on

and spend, then there's a risk that what you end up spending out of that inheritance bucket grows to more than $19,000. And if that's the case, then you are now no longer using the money from that inheritance in order to help you max out your 401k. You are instead just spending down the inheritance. Essentially what I'm saying is whatever money you contribute towards your 401K should be exactly the portion of the inheritance that you trade off, because if the tradeoff exceeds the contribution, then you're just dipping into those funds for no reason. And you could otherwise

spend those funds in some other way or towards some other goal. Maybe you want to save for the down payment on a home. Maybe you want to have enough money that you could purchase a vehicle in cash rather than taking out a car loan. You know, there are many alternate uses of that money, and so I don't want to see you spend it down rather than earmark each dollar for a very specific purpose. I love the analogy that some financial personalities use when they talk about people and they talk about our lizard brain versus our thoughtful brain, right? Our lizard brain wants to eat now, is worried about eating now.

It's about having the things that we need now. It has no real concept of. the very, very long-term future. Yet the mathematician in us, the philosopher in us, the person who thinks objectively has all that. And for many of us, our goal is to control our lizard brain, which is exactly Paula, why I think she shouldn't do it. So while I like the idea of putting money into your 401k at an increased rate,

I think if you start looking at that money in the inheritance as a place that I can touch, our lizard brain comes up with many, many, many excuses about what I really need today to touch that. And I don't want to teach that piece of me that wants to go in and just touch it again. You know, I just, it's just going to be one time, Paula. I'm only going to do it this one. Oh, I had this problem. I have this tire. And I have to go and take money out of that account because, oh, I have another problem.

And this is probably, I know this is the last one until there's the next one. Right. I would not teach my lizard brain that touching this money is okay. What's cool is, and you and I've talked about this, in fact, before, if you cut yourself off from that money, your brain is amazing. Your brain comes up with 50 other ways that you can still max out that 401k without touching this money. It might be making more income. It might be cutting another area in your life. There are a lot of other ways.

but until you make this money inaccessible and I'm not going to touch it, your brain's not going to come up with those awesome other ideas and other ways that you could max out your 401K. Yeah, I think those are very, very valid points. And I agree. Every dollar needs a job. So, yeah, the only circumstance in which I would advocate doing this is if she takes – and again, I don't know the size of this inheritance, but if she takes only $19,000. precisely, and that's the exact amount of money that she puts into the 401K. Because in that case, there's a straight dollar for dollar trade, but the minute that it turns to $19,001, because, oh, I just need a little bit extra, that's where everything falls apart. This is a little bit of know yourself and the fact that I worked with a lot of people, so I know a lot of selves.

For most people, it's a horrible idea because the second you touch it, there's going to be. be another reason that comes along. Right. It very quickly can turn into 19,001. Absolutely. Thank you, Anonymous, for asking that question. We also have a comment to share, and this comment comes from Kyle. Hey, Paula. I just had a comment. I just got done listening to episode 221. Another great episode. Thank you.

I love that you guys addressed an employee stock purchase plan. I think very few podcasts like yours, fire or otherwise do that. So really appreciate that. I think it's such an underutilized benefit at people at public companies. I myself am similar to the gentleman who called in. I work in tech and also have an ESP. The one thing I would love to add that I think other people would benefit from knowing is that not only is an employee stock purchase plan a discount, often 10% on the stock,

that discount is pegged to a stock price that is set for, in my case, two years. I'm also at a Fortune 500 tech. So that two years may vary by company, but it is generally a peg to a certain amount that resets only so often. So this gentleman and myself and others may find that your 10% is actually a deeper discount because it's applied to your company's stock price from a year or even two years ago. And even if it's only grown at market rates, that discount becomes far, far greater. So I think that's a huge benefit. And that realizes immediately. So if you sell at the time that

it vests, your capital gains will basically be zero because you're selling just at the same buying price, essentially. But you get these much greater discounts than 10%. So it's quite amazing. I thoroughly encourage anyone who can contribute to an ESPP to do so for those reasons. Love everything you said about the conveyor belt. And thank you again for all of your wisdom. Take care. Oh, thanks for that comment. The conveyor belt analogy has always been one of my favorites because when somebody explained it to me that way, I got it. I put money into the ESPP on one end. I take it out on the other. I always have only a certain amount of my net worth on that conveyor belt. I want to focus in on employee stock purchase plans in the way that Kyle talked about, this idea of a reset, because he talked about the fact that his employee stock purchase plan, the purchase price resets every two years. I will tell you, Paula, in my experience, when I was an advisor, that's extraordinary. That's not the way it usually works. But knowing, knowing when that price resets and how the price reset button,

works in your company is really an important part of knowing how to use the employee stock purchase plan. I'll tell you the way I saw it work much more often. The company has a six month period, a buying period, and they take the price at the beginning of that period and the price at the end of that period, and you get to buy at the lower of one of those two dates. It doesn't matter what happened in the middle. It's just one of those two dates that the price is pegged to. So, So as you can imagine, not as great that way. Still very good. I think Kyle nailed it.

Still a fantastic opportunity, especially when the market's going up. And even when the market's going down, you're going to lose less money because you get the lower of those two numbers that the market drops. So the risk is less. The opportunity is more than the 10 or 15 percent, whatever the percentage the company gives you on top of that. But knowing what dates that stock price is going to be based on when they actually make purchase, I think everyone should know, and you can get that from your human resource department.

Cool. Thank you, Joe. And that brings us to the end of the episode. Joe, where can people find you if they would like to know more about you? I operate this crazy show that's a little like the tonight show of personal finance. Paula, where you go into depth a lot on your show. We have a very light discussion about finance. And I think, I think the variety show analogy, the tonight's show analogy would be apt. We have a lot of fun. And it's at the Stacking Benjamin show, which is every Monday, Wednesday, and Friday. Yeah, your show, Stacking Benjamins is like a lighthearted, funny slapstick look at money. Yeah, I think if you're looking for deep discussions, you're probably headed the wrong way. Yeah, exactly. Exactly. Yours is the car talk of personal finance. That was our goal when we

started it actually. That was our inspiration. I love car talk for people that don't know car talk. It's an NPR show, one of the two brothers. They called themselves click and clack. One passed away a couple years ago, but they still play the episodes, Paula, because they were so fun. And I was listening to Car Talk maybe nine years ago now. And I thought to myself, you know, I don't learn a thing about a car listening to this, but I'm having a great time. And I'm enveloped in car culture. So much lighter, much more. based on just getting people interested and involved. And then they graduate to afford anything after that.

That brings us to the end of our show, but don't go anywhere because I want to take this moment to recap some exciting announcements about our philanthropic efforts. And what better time to do this to make this announcement than on the same week as Giving Tuesday. Now, for those of you who aren't familiar with Giving Tuesday, as we all know, it's currently the holiday season. Last week was Thanksgiving after that was Black Friday, Cyber Monday. And so because there's so much shopping and commercialism and consumerism happening right now, this concept called Giving Tuesday also became popularized because in the middle of holiday shopping season, this seems like an appropriate time to also start thinking about what charities do you want to support,

what nonprofits do you want to support, what do you want your end of year or holiday season giving to look like? And so it's with that in mind, with this episode airing in the same week as Giving, as Giving Tuesday that I want to talk about two major efforts that we, the Afford Anything community, have created together. One of them is our support of charity water. We raised more than $20,000 for charity water, which is a nonprofit that builds clean drinking water projects around the world. And in a second here, I'm about to give you an update on what's happening with that. And the other is the kickoff of the ChooseFI International Foundation. Back in September in Washington, D.C., Afford Anything and Choose FI co-hosted a party

that was the kickoff party for the launch of the foundation. And so in a second here, I'm also going to give you an update about how much money we raised through that. So let's talk about them both, starting with Charity Water. First of all, we, the Afford Anything community, like many of you who are listening to this right now, were part of the effort that we put together to raise more than $20,000 for charity water. And we did this so that as afford anything, we could sponsor a clean drinking water project. With that money has been sent to the nation of Sierra Leone. And specifically, it's been sent to the Kenema District of Sierra Leone,

where it is being used to build two new wells with hand pumps and, to rehabilitate 35 wells with hand pumps. Essentially what that means is we've built two wells with hand pumps, and then of these 35 wells that already exist, we've been able to renovate those so that they have improved hand pumps. The reason that that matters is because a lot of people in this area in Sierra Leone die due to diseases that are spread by dirty drinking water. But now that we have these new wells that are pumping clean water out of,

the ground, as well as improvements to the wells that are already existing. Thanks to that, there are approximately 682 people in Sierra Leone who will now be able to drink safe, clean drinking water. And that's all because of you. So I want to say a big thank you to every single person in this community who donated money to the campaign, every single person who bought a shirt at afford anything.com slash shirts. 100% of the proceeds from the sale of those shirts go to our charity water efforts. Big thanks to all of you who spread the word about the campaign. So huge thanks to everybody in this community for coming together and raising this $20,000

that is now hard at work in Sierra Leone. So that's the first update. The second update is about the Chusify International Foundation. Now, this is a nonprofit that brings financial literacy and financial education. to underserved communities. As I mentioned, Afford Anything and ChooseFI co-hosted a kickoff party that took place in Washington, D.C., back in September. At the time that we did that, we sold a certain limited batch of tickets that were VIP tickets for $200, and I offered to match the funds raised through those VIP tickets. And initially, when I put that offer out, I said I would match

it up to the first 10 tickets that were sold. So basically, what I'd planned, was that for every $200 tickets that sold, I will also donate another $200 up to $10, so I'd budgeted $2,000 for it. And in my head, I was thinking, that would be great if we can sell 10 of these $200 tickets. That means $2,000 will come from you, the community, and another $2,000 will come from me, and then together we will collectively raise $4,000. After I announced that on this podcast, you all blew me out of the water. The response to that offer was way bigger than I anticipated, and we ended up selling

18 of those $200 VIP tickets. So you, the community, raised $3,600. And when I saw that, I was like, well, clearly, I got to match that. I mean, if you all stepped up to the plate and exceeded expectations, then I'm going to do the same. And so I matched it with 30,000. $4,600 of my own money, and so we, the community, collectively raised $7,200 through the sale and the match of those VIP tickets. That all goes to benefit the Choose FI International Foundation, which is an amazing foundation that spreads financial literacy to the people who need it. You can find out more about them at choosefififoundation.org. So that is some insight into the impact that we as a community have

had together. And I hope that by sharing that, it inspires you to think about what you want to do in December 2019, what impact you want to make in terms of your holiday giving for any cause that calls to you, whether it's animal shelters or wildlife preservation or Alzheimer's research or helping domestic violence victims, whatever it is that is important to you. Think about the impact that you want to make. Think about how you want to put your money behind your values. And then go close out this decade on a generous note. That's my little message for the end of the episode. If you want to connect with more people in this community,

maybe have some community conversations about end-of-year giving or end-of-year tax planning, head to afford-anything.com slash community. We have a very quickly growing tribe there where people ask questions, exchange ideas, offer encouragement. There's a discussion going on in there right now about the idea of enough money, how much is enough? There's another discussion going on in there right now about what are some quick and easy tips for saving money for people for whom saving money does not come naturally. So if you're a natural spender, what are some quick and easy tips that can

help you start saving? That's another thriving discussion that's going on in there right now. We have almost 300 comments on a thread about what do you believe is the best thing that money can by. Great conversations happening in there, and you can also easily connect with other people who have your same profession, who are in your location. So you can make connections with others based on shared interests in particular topics like side hustles or real estate or location or profession or any other commonality that you want to connect on. That's all available for free at affordanything.com slash community, where you can hang out with other people within this community and cheer each other on as you form accountability groups and head into 2020 on a strong

note. Thank you to everybody who has left us a rating or a review. As of the time of this recording, we have 1,951 ratings on iTunes, which is now called Apple Podcasts. My goal is to get to 2000 by the end of the year. So we are so close. We are 49 away from getting to 2.000. So if you have not left us a rating or a review yet, please head to Affordanything.com slash iTunes. That's Affordanything.com slash iTunes. Leave us a rating. Leave us a review. We only need 49 more before we can close out this year with 2000. And I want to give a shout out to this one particular reviewer by the username of A-H-D-N-V-J-E. I have no idea how you'd even begin to pronounce that.

But that's how the username is spelled, and they say, quote, I love listening to Paula. She's so down to earth and she makes the material easy to understand. I started off with looking up Dave Ramsey's baby steps, but Paula has inspired me to want more. And for once, I want to own a house. I never thought I'd be able to. That's awesome.

I'm really happy for you that you're thinking bigger, you're dreaming bigger, you're aspiring to more. So, I mean, congratulations to you for escalated. and leveling up. And thank you so much for taking the time to leave that awesome review. So again, if you haven't done so yet,

please leave us a review in whatever app you're using to listen to podcasts, or you can head to Afford Anything.com slash iTunes to leave a review there. Big thanks to the sponsors for this episode, Gusto, Simple Contacts, Candid, and Policy Genius. For a complete list of all of our sponsors,

including all of the discounts and the deals, the special deals that they offer, you can find all of that at Affordanthing.com slash sponsors. where all of our coupon codes are. Thanks again for tuning in. My name is Paula Pant. This is the Afford Anything podcast.

I'll catch you next week. By the way, my lawyer says that I need a disclaimer, so here we go. This is purely for entertainment purposes. Basically, imagine that this is the least funny comedy show that you've ever listened to. We are not professionals. We barely can brush our teeth in the morning. And so we don't hold ourselves out to be experts, or really for that matter, even. adults. Give us the same amount of respect that you would give, say, a goldfish. And always,

always consult with a real grown-up before you make any decisions. That means consult with a tax advisor, consult with a lawyer, consult with a financial planner, consult with people who actually have credentials and who know what they're talking about, because that is definitely not us. All right, you've been warned.