Afford Anything - Ask Paula: How Should You Invest a $1 Million Lump Sum?

Episode Date: December 4, 2020

#288: Karen and her wife are in their 50s, financially independent, and partially retired. They need $150,000 to buy a new home, and they aren’t sure which option is best. Should they take advantage of the CARES Act and pull money from their traditional IRAs? Raid their Roths? Or take out a mortgage? Ingrid’s mom is retiring this year. To fund her retirement, she’ll sell her property for $1 million. How should she invest this money so that she can live off of it in perpetuity? Elaine has saved $20,000 in a 529 plan for each of her two kids, but she realizes that they may not attend college. Should she keep the 529 plans, or save money elsewhere? Amanda is afraid to tap the equity in her home and use it to purchase a rental property. How should she think through whether this move is right for her? Lisa and her family plan to sell their home and move across the country. They might have the option to pay cash for a home, but they also want to buy an investment property. Should they get a mortgage on their new home or pay cash? My friend and former financial planner Joe Saul-Sehy joins me to answer your questions on this episode. Enjoy! For more information, visit the show notes at https://affordanything.com/episode288 Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a tradeoff against something else, and that doesn't just apply to your money. That applies to your time, your focus, your energy, your attention, anything in your life that is a scarce or limited resource. And that opens up two questions. First, what matters most to you? Second, how do you align your daily decisions to reflect that?

Answering these two questions is a lifetime practice. And that is what this podcast is here to explore. My name is Paula Pan. I am the host of the Afford Anything podcast. Normally we aspire to be a weekly episode. Typically our shows, when we're on time, our shows come out every Monday morning. But once a month, on the first Friday of the month, we release a first Friday bonus episode. So welcome to the December 2020 first Friday bonus episode.

Every other episode, ish, we answer questions that come from you, the community. And today, former financial planner Joe Saul See High is with me to answer these questions. What's up, Joe? I'm not Joe Salsi High-ish. Joe, yeah, you're Joe-ish. He's kind of. He's not the average Joe-ish. Yeah.

You know, I'm going to foreshadow today's show, Paula. I'm going to lay it on the line. Today's show is going to be the best questions ever. No offense to any of our other questioners. And to raise the bar, we're going to have the best answers ever. Ooh, no offense to any of our other answers. That's right. We've given fantastic.

I just want to, you know, they say that if you're, you're writing movies, you have to set high stakes. And I think that applies for a financial podcast, too. We should start every podcast episode with some fairly high stakes. And I think that that does it. Yeah. And it's also true that, you know, for anyone who creates content, if you don't look back at your old stuff and cringe, you're doing it wrong. Like, if you don't find the stuff that you created two years ago, cringe-worthy, then clearly you haven't improved. Yeah. Yeah. And we're hoping a year from now, we're doing the same. With that said, let's get to our first question. It comes from Ingrid. Hi, Paula, it's Ingrid. I'm really excited to have you answer another one of my questions.

I always appreciate your advice. This question is actually for my mother. She's in our late 60s. She will be retiring this year. All of her income or her retirement income is wrapped up, or I guess I should say assets are wrapped up in her property. So she's about to sell her property. She will net about a million dollars. Let's just say that for easy, numbers. So I'm just wondering what to tell her to do with this lump sum of money. I know she can't really stick it all in one go into an IRA. So does she use taxable brokerage account? You know, what would you do if this was your retirement? What would you do with that money? I just listened to your podcast with Mark Fowell talking about annuities. I'm just wondering what advice you have about that if she uses those.

Whatever advice you can give us, we kind of don't even know where to start. I know how to start planning in your 20s and 30s, but when you're already ready for retirement, you have a lump sum of money. That's kind of where we are at. Thank you so much for your advice. Ingrid, thank you for the question. To a lesser extent, I had this same question with my own parents. My parents are about to turn 80.

They are 79. about a year ago, at the age of 78, they got about around $200, $250,000 from the sale of something. And so they were faced with the question, what do they do with it? You know, what do you do with a large lump sum of money when you are already at traditional retirement age? So we spent quite a bit of time thinking about that. And the answer that we came up with is that it very much depends on the purpose, of that money, in your mom's case at the age of 60, how much of that $1 million does she plan on using for her own retirement versus how much of that? And the answer might be all of that is going

to be go towards her retirement portfolio. But it might be the case, and I don't know your mom's finances, it might be the case that she has a teacher's pension or a military pension or some other form of pension or relatively stable source of income that means that she doesn't need all of the $1 million as her retirement portfolio. And so maybe a portion of that million might have a goal of being money that she wants to give to charity or money that she wants to leave as a legacy. And so that $1 million may or may not be divided up into different slices based on the goal that it has. and then the investment that you put it in would be a reflection of the timeline of that goal. So if, for example, there's a portion of that million dollars that she wants to put into an endowment.

Let's say that she wants to create her own private 501C3 private non-operating foundation and create an endowment with $100,000, we'll say, or $200,000, and she wants to then use that endowment to generate a source of revenue that can be given to some charity every year. Well, the investment of that endowment, because it's supposed to live on in perpetuity, would be allocated differently than the other slice of that million that would be used for her own living expenses in retirement. So that's where I would start the conversation.

I'd start the conversation with what's the goal of that money? Are there multiple goals? And if so, how will that money be sliced up among those multiple goals? I love the fact, Paula, that we're starting with this one, because this is the most basic question. I see people get this wrong all the time, and it starts exactly with what you're talking about, and that is that investments have the same type of in the ground planting timeframes that corn has. I mean, I grew up in West Michigan, and it was all cornfield. So that might not work for you, but I'm going to run with it. But when you plant something, you don't plant corn in the fall because it dies in the winter, right?

You don't wait till three weeks later and you see it just start out and you yank it out. So knowing when that time frame is that your investment historically has been ripe is the perfect place to invest the money. And the bad news is because we don't know that, we don't know any of that. We can't give you an exact answer. but what we can do is this, and it's the way I think about investments, which, Paula, you nailed it. You draw out this timeline of big events she has coming up. Like she has this stream of money she may need every month or not, to your point, we don't know. And if she does, we're going to want to have some money in a short-term bucket for those things.

We want to leave that out of the market. So first thing is, how much money is she going to need for the next five years? I would leave that money completely out of the market. Then if she's got these big events coming up, timeline. how far away those are. And by the way, for some people, when we've done this before, your mom may have only her goals, but for other people listening,

if you're thinking about going back to school and you're also thinking about buying a rental property, you may not have ever thought that those two things might affect each other or might be on top of each other. So when you lay it out on a timeline and you see how your goals kind of not only contrast with each other, but how far away they are, you could number one set priorities, number two, figure out which investments historically have done the thing that you need, and then set up a much more coherent strategy about how you get about it.

Exactly. If it is the case, just hypothetically, that your mom plans to use this entire amount to fund her retirement. Let's just assume that for the sake of conversation. If that's the case, then you know that she'll be investing this money at, we'll say, the age of 60 and it needs to last for the next 40 years. And knowing that, then to what Joe said, the amount that she needs to access in the next five years gets left in cash, and the remainder of it gets invested in a way that is appropriate for that time horizon. Now, that might mean that that could be done in a few different ways. That could be done by keeping the money in a target date 2020 fund or a target date 2025 fund from Vanguard. You know, there are a lot of brokerages that have very expensive target date funds. Vanguard's is one of the few that is actually a good deal. So if you do go the target date route, do it at Vanguard.

But the simplest thing to do would be to go the target date route. That way you don't have to worry about asset allocation and rebalancing. If you wanted to layer in a little bit more complexity, you are certainly welcome to do so. You could design an asset allocation for the portion of money that she will be using between year five and year 15. And then a different asset allocation for anything that she'll be using year 15 on up. You know, that's another thing that you could do if you wanted to layer in more complexity and take more of a do-it-yourself approach. And the other thing that we're not discussing is rental properties.

And I, you know, I know when all you have is a hammer, everything looks like a nail. So I didn't want to jump to the RP word immediately. But certainly a source of income in retirement is to buy a rental property in cash. and live on the cash flow from that property. So would that be something that your mom is interested in doing? I don't know. Maybe, maybe not. So is that something that you would be able to help her out with?

I don't know where your other time commitments look like. So maybe, maybe not. But that's certainly another avenue that you could explore. But I also love that because you started with the time frame. And for some of this money, rental property could fit, right? Yeah, exactly. Because of the fact that it creates this throwoff of income that can be fairly reliable over the length of time, which is great.

Tax shelters. While you were talking, I was thinking about that because Ingrid kind of hinted at that. I think if she has a Roth IRA open already and she can then have that money in a spot where she can get it back out whenever she wants, if she has the ability to put money in and income still coming in, then using, yeah, I mean, use a tax shelter wherever you possibly can. Joe, you mentioned Roth IRA. I noticed you said specifically Roth and not traditional. Is there a reason you said that?

Well, because it's so flexible to get the money out right away. But assuming that we're going to start by sheltering the longest term money first, even at age 60, assuming she wants some money around for age 90, that's 30 years from now. Heck, if she's got the ability to shelter some of that long term money away, a Roth IRA is still an efficient way to do it if she's able to do that. She could also go with a traditional IRA. Now, the cool thing about the traditional is for a shorter time frame, she can still get a tax write-off today. And assuming if she's still working and in a few years she might not be working, she may be in a lower tax bracket fairly soon and be able to knock off some money at a higher tax bracket today, spend it later and give herself also a nice cushion for that money. So with shorter term money, I'd use the traditional IRA. But I really like thinking about that long-term money and how do I make sure that any dividends it throws off or any changes I?

I may make that would produce a capital gains tax that I can get rid of those by having it inside this tax shelter. All of that said, don't let the tax tail wag the investment dog. The first thing that you want to do is choose investments that are appropriate for the goals in the timeline. And once you choose those investments, then figure out how to tax optimize those. So investments first, tax second. So thank you, Ingrid, for asking that question.

Our next question comes from Karen. Hi, Paul. I love the podcast. and I learned something new every episode. I have a house buying dilemma. My wife and I are in our 50s. We are financially independent and mostly retired. We have just over a million dollars saved. We own our home and have no debt. We work enough to pay the bills and until now have avoided withdrawing substantial amounts from savings and none from our retirement savings. We enjoy our time, travel hack much of the year, in normal times. We don't want to work more or harder. Most of our savings is in traditional IRA accounts,

but we do have about $100,000 in Roth accounts, of which 30% was deposits. We plan to do conversions to the Roth when possible. At this time, a good part of our savings is in cash accounts. Here's the dilemma. We are moving to our higher cost of living area. I will need about $150,000 above the profit from our home sale to buy a new home. Where to get the $150,000 is the question. We're not open to buying a less expensive home, renting, not moving, or not selling our current home.

owning a home is part of our plan and we see it as an investment that covers the bulk of our housing costs ongoing. Here are the options as I see them. Option one, take advantage of the CARES Act and withdraw the money from our traditional IRAs. Despite the no early withdrawal penalty and the option to pay the taxes over three years, I estimate that we'd pay about 28% between income taxes and repaying the ACA subsidy, whether we claim the income all in one year or spread over three years. Either way, this is my top choice at the moment, because despite the high cost of it, it leaves us where we are now.

Debt-free and a home we love and able to live comfortably off of our part-time work. Option two is to get a mortgage for $150,000 plus enough to cover about five years of payments. We would hold back cash from the house sale to make the debt payments for about five years to take advantage of the tax-free home sale income and to not have to work more. After five years, it would be old enough to access retirement accounts to pay off the mortgage. but I expect we'd pay nearly the same amount of taxes when we're drawing from the traditional IRA, whether we do it now or later, because we'll always have income. Plus, even with the low mortgage rates, the mortgage would cost about 15% if we kept it for five years.

Option three is my least a favorite, but maybe the least expensive in the short run, which is use our Roth savings and pay the 10% penalty on the 70% of it that is earnings. I don't like the idea of paying the penalty on this tax-free money or wiping. it out. I realize a mortgage allows us to keep more money invested, and that could bring gains or earnings over the five years, but I'm not banking on that. As lifetime savers, we are just beginning to think about spending the money we've worked hard to save. It's a psychological and financial challenge. I appreciate keep it simple, especially at this point in life, and don't want to make a costly mistake. Help. Karen, first of all, congratulations on everything that you've built on being debt-free,

having a million dollars being retired. It sounds like you have spent a lifetime. You and your wife have spent a lifetime doing the right things, making very, very smart financial choices, and you are now seeing the benefit of that. So first and foremost, huge congratulations to you for everything that you've built. Joe, when we listen to this, your immediate response was, this is a fantastic question. Right. And why? Because it's kind of part of my rant about good financial advisors, is that a lot of people think that a good financial advisor or that a financial advisor in general is going to take away the decision or is somebody that's going to pick investments for you or whatever.

What a good financial advisor does is works with somebody who's really smart, who's already thought through this clearly and is wondering if they have an Achilles heel. You should never ever hire anybody to work in your corner who's going to take it away from you. you only have people in your corner that make you smarter, and you should think about it yourself. My least favorite clients when I was an advisor were people that would just take their stuff and go,

here, Joe, you deal with it. I don't want to know how any of this works. Well, if I get by a truck, you're in the same spot you were before. And no, I'm not your investment picking guy. I'm the guy that helps you make sure that everything dovetails together. So to do that, I think it's really important to think through all the options yourself. I think Karen's done just that. And I think asking us to people that specifically you, and I get to come along for the ride, but asking people that might have a different take on this is a great idea.

It's just a fantastic idea. So I love the question. Exactly. Exactly. Because to your point, Joe, there are certain things that you can outsource or delegate like scrubbing the toilet. And there are certain things that you should, you can never hand off to somebody else, such as making decisions. decisions. Decision making is the single most important executive function that you have as the CEO of your life. Says your brain. Yeah, exactly. Most important part of your body says your

brain. And so decision making, you know, you can outsource the execution, but you can never outsource the decision making. And I agree with you, Joe. What I love about Karen's question is that she has so thoroughly educated herself on all of it. of the different options available and has clearly spent a lot of time thinking through this. And now turning to us to get an outside set of eyes to make sure that she's not overlooking something, to make sure that there isn't some type of unknown unknown that might create a stumbling block and unforeseen stumbling block. When I talk to the smartest people that I know, and you and

I are very lucky. We get to do that more often now as podcasters, but even before that, my smartest clients not only wanted me in their corner. I mean, that's very smart, but they also, but Paula, they surrounded themselves with these super smart people. These are people that were, you know, I was in Detroit. And so these were top executives, some of the smartest engineers in the country. And you think about engineers and how analytical they are, they would get so far financially, and not just financially, but in their career, because they always want to be the dumbest person. They always wanted to surround themselves with people that were smarter than they were in certain areas, right? And so incredibly intelligent people. And I got to say half the time I would sit across from my client at first, you know, when I had imposter syndrome like everybody has at the beginning of their career.

And I thought, why the hell are you asking me? I mean, you're clearly smart enough to do this yourself. And then I had the big aha. Yes, they are smart enough. to do it themselves, but they want to know if there's something they missed. They want to be able to move quickly. And if I'm moving quickly, I want people in my corner helping me out who are great. Most of the smart people around me overpay for coaching. And by the way, when I define financial planner, I know I define it much more broadly than most people. I'm not even talking about hiring somebody. I'm talking about I get to have conversations with you, Paula. You know what I mean? I get to have our friend Len Penzo, who's an engineer who we were with on stacking Benjamin's every week.

That dude is hella smart. And that guy's forgotten so much stuff that I've never known. Just being able to ask these smart people questions, I think, is for me, that's what an advisor really is. It's not this formal, I sign on the dotted line and whatever. Because explicitly for you, I would think if I came to you with a question, you would be a fiduciary. Right. I mean, you're not going to mess with me. It's a legal term, so I legally cannot.

No, but I'm saying you would, you would, if we use it as a colloquial term, though, you would act in my best interest. You wouldn't say, you know what, Joe, here's what I think you'd do. I think you listen to 47 episodes of Afford Anything. And always click the link for our sponsors. Make sure you order some cookies from Mrs. Fields. Right. Right. You're not going to do that. Like, seriously. That's where the million should go from Ingrid's mom, all cookies. Yeah, and I don't want to get... All cookies. A million dollars,

Ingrid, worth of cookies. She'll thank you later. And by the way, you can get 15% off those cookies if you had to, right? Right. The old podcaster thing. If she needs a mattress. And not to get off on too big a rant here, but the, but, you know, Dr. Thomas Stanley wrote that book, The Millionaire Next Door. And what most people don't know is he wrote a couple of other books that are less well known. One is called Marketing to the Affluent and the other one is networking with the affluent. So like a smart man, he wrote the book for everybody. And then he said, hey, people that want to know these people, I will also tell you where they are and how to get them. Right.

And one of Dr. Stanley's cool things for people that want to market to affluent people is affluent people more than any other subset of people work off of referrals. Right. They surround themselves with smart, busy people who have done things already, and they go to that person and they go, Paula, how do I get this done? And even if that person doesn't know, guess what that person says? They go, hey, I have this woman I know. I'm going to introduce you to her and she's going to help you out.

Right, right. And that's what the richest people among us do. And I go online on Facebook and now I'm really on a rant and I've got a bunch of people going, hey, should I have smart people in my corner? No. You know why? Because you might have to pay them. And if you pay anybody anything, that is absolutely horrible. You should not do that. And by the way, don't ever think about giving them gifts or doing anything nice for them because they already got paid by you. How disgusting would it be to build a relationship with people who are smart and I'm sorry. I'm getting slightly sarcastic. Yeah, so what you're saying is that people, you see people all the time on Facebook, particularly people who come from the personal finance communities can often be cheap to the point where it's debilitating. Sabotaging their own success without really knowing it. I'm so tempted to put a plug for my course in right here, but I'm biting my tongue. I'm refraining from it because I hear that objection all the time. I hear people say like, oh, well, you can just like read blog posts or you can just like listen to podcast episodes.

We just did a story. Russell Wilson, who's the quarterback of the Seattle Seahawks, Paulus big fan. Karen, we will get to your question eventually, I promise. Yes. Russell Wilson recently was in a story, I believe, on Yahoo, talking about how he pays a million dollars a year for coaching. A million dollars a year. By the way, Russell Wilson's for football coaching. For coaching on health and wellness and eating correctly, anything that will help him extend his career.

His goal is to be in the NFL into his mid-40s. You take a look at the average NFL star. They don't last that long. Now, Russell Wilson's already made a ton of money. He's already, he's done a good job, I'm assuming, of saving a lot of money. He's probably going to be okay. It's not about financial independence. It's about how do I maximize the thing that I love doing.

Right. And I think it's powerful. He spends a million dollars. and I'm in a Facebook group a few weeks ago and somebody's talking about making their own effing Gatorade because Gatorade's too expensive. If you love making Gatorade, go make Gatorade and hire some cool people that know how to make Gatorade better to help you do it. But if you're doing it because Gatorade is $6.50. Anyway, Karen, let's talk about you. As you can see, Joe and I.

Joe and I both, we got on this tangent because, Karen, what we appreciate about your question is that you seem to know what's important. It's awesome. You know, you seem to know what matters. And that is such a relief and such a stark contrast from the people that we often encounter on a daily basis who are passing up dollars for the sake of pennies. Yeah, agreed. And again, I really want to plug my course right now because this episode is coming out during the week that we long. So you only got a few more days to sign up if you're listening to this on the day it comes out, which is Friday. I think you just did.

I think you just plugged it. I know. I think I did. So let me give Karen some Achilles-eels to think about. All right. Let's do it. And also to give her some things that she might not do Paula, but I think she should consider. So Karen comes across to me as somebody who, I mean, I love her keep a simple approach, right?

She doesn't want to remember what she did. She doesn't want to have to pull any lovers later. I love that. I also love the fact that she told us that that is her bent. I also like the fact that she signals, I also like the fact that she signaled us that she's very conservative, right? Doesn't want to do something that's going to be aggressive and time consuming. So I love all that.

The first thing I do before, I put down a bunch of money on this house, though. The second you put down money on that house and something goes bad where you need that money back, the only way to get it back is to take out another loan. So I don't like taking something that's liquid and turning it into an ill-liquid thing without first running some pretty actually basic numbers. And it actually goes back to what we talked with Ingrid about, which is timeline out how you would spend this money.

And are you going to be okay without that money? And if you are okay without that money and you can easily make your goals without that money, well, then do the thing that you want to do and sock the money toward the house, pay cash, you're done with it. But if something happens to you today, because the one thing that scared me, Karen, that you kept talking about was, hey, we're still working. We can keep it. What if something happens that you're not working?

And that's what I'd like Karen to timeline is if something bad happens and I need this money instead of my income stream that I'm relying on, can I still make it without it? Right. And I want to know that. Now, that brings up for me then a middle ground because I'm assuming, and once again, I haven't done the numbers, but we've done these numbers enough to know that I'm probably right. I think the answer is going to be, nope, she can't. She can't put down all this money on the house. She will have to then continue to work.

So for me, the conservative thing to do would be to take out that mortgage. But I would make one move, one time to avoid complexity. I would hook her funds up to that mortgage. And instead of draining all that money at once, drain the payment out every time there's a payment. She now doesn't have to make the payment. She can still pay it off the rest of it whenever the heck she wants because the money's sitting there.

She has segregated specifically for the house. But the cash is still sitting there if something bad happens. And then in her timeline, when she gets to the point that she knows she has enough money, and she doesn't have to do that anymore, then she has a choice. She can turn off that spigot, get rid of the mortgage, pay it off, and boom, now she has her cash. On the other side, I'll tell you what people usually do, Paula, because this is super easy. And interest rates are, Karen, because you said interest rates are super low, but she doesn't want to do it. Usually people get five years, six years, seven years into this, and it is so easy.

And they see that their money is continuing to accumulate in that account. They're like, why wouldn't I just keep doing this? why wouldn't I let that money continue to make more money over time while the mortgage payments being made for me? Right. But given that a portion of that money is being used to make the monthly payment, that portion needs to be kept in cash. That portion is not going to be kept in any type of appreciating or income producing assets such as equities. It does. Right. Absolutely. Which is why for this strategy, this is going to make Karen grown, and I get it, I would use the longest term mortgage possible. so that it bleeds as little of that cash as possible every month because the longer you give, so we talk about planning seasons.

If you give equities 15 years, I can say with a high degree of certainty, yeah, you're probably going to do pretty well. The problem is that first five years, we can't really have inequities. So we have to have five years sitting in a spot that's very conservative and then the rest, maybe inequities. But if you give me a 30 year mortgage, we can easily sit five years in cash. and I'll give you a big thumbs up that if our economy is going to continue, the stock market's reflection of the economy, you're going to do great.

In other words, Joe, just to recap what you've said, even if you don't plan on holding a mortgage for 30 years, even if you plan on only holding it for five and then at the five-year mark, you decide that you want to wave a magic wand and pay it off, you would still want to get that 30-year mortgage so that the monthly payment is smaller so that when you are saving up five years' worth of payments and keeping that in cash, that's a smaller amount of money, which means that then the remainder of the money can be invested in something that grows. Exactly. And I don't think Karen's going to do that based on... Yeah, I don't think she is either.

Based on her question. But I get worried about the opposite side. And I think Karen will hear this loud and clear. I do think she will because conservative people, when they worry about things, I think I just presented the thing of financial planner worries about because I worked with 200 people and where it might not have ever happened to you or somebody around you. When you work with a larger number of people, you see it happen much more often. And I see this income stream get derailed far more often than I would like. And the risk is bigger that that could happen than a lot of people think. So I would put that risk on the table.

What if you can't depend on that future stream of income? Right. It sounds to me, like from the way that Karen asked her question, she's a fan of not having debt. And it sounds to me as though, and Karen correct me if I'm wrong, that you really like the option in which you just do this whole thing in cash and you don't take out any loans. It's clean. It's simple. Sure, there are financial benefits that come from not paying the closing costs on a new mortgage, not paying the interest rate.

But even beyond that, it's also just the cleanest, simplest, most straightforward course of action. I love all that too, Paula. I just don't think she has enough money to do what she wants to do. Yeah. And she might. I could be very wrong. She could timeline it, but I would timeline those goals without future income before you make that assessment that she's going to be okay without that money.

The fact that they're a dual income couple, though, does that change things? Because if one person loses their job, the other person still has an income stream. Yeah, I mean, you can run it with both of losing their job because, well, here's the thing. If one person loses their job and you question why, it's probably a disability, right? And then you wonder if your spouse is going to be able to maintain their job as much, which I think is a fallacy in some planning. You see studies where the spouse loses their job because they have to go home at lunch all the time. The boss is wondering where the heck they are.

It depends on what the issue is. So, yeah, we could show 50% income or show it both ways. I mean, with software today, you can just put both income streams in, take one out and show it that way. Take the other one out, pop the other one back in, show it that way, and then show with both of them gone, and make a reasonable decision about what you would do based on those numbers. That's a good point. considered, at that age, disability is a common reason why many people lose their jobs. And if one spouse gets disabled, then that does affect the career and the ability to work of the other spouse.

And that's not the same for people who are listening to this who are in their 30s and doing planning. Certainly disability can happen at any age. But if you're a dual income couple in your 30s and there's a job loss, probabilistically it's more likely to occur because someone simply works for a company that goes out of business or is in an industry that gets harmed by a pandemic. But, you know, one person is in the live events industry and the other person is a software programmer. And so, you know, you've at least got one income. I wish I knew we were going to view this way because I would have had the statistic ready, but people can look this up. Talking about disability, you know, a disability that people have

laid in life where it's a long-term care issue, it's a catastrophic illness. Right. The number of times, because everybody wants to stay at home, nobody wants to go to a facility. I mean, some people might, but the vast majority of people I met with wanted to stay at home and a loved one takes care of them. But what's interesting is, and I don't have this number handy and I wish I did, the number of times the caregiver passes away before the patient in those situations is unbelievable. It just ages the hell out of the person who's taking care of the person. So this is not Karen. This is somebody who's, you know, much, much, much older. But yeah, it gets worse the older you get.

So we start off with a rant about financial planning and end with some doom and gloom. Karen's like, this is not at all the answer I was expecting. I just want to pay cash in my mortgage. Right. But I can imagine Karen listening to this right now and thinking, well, if that is the case, If the worst were to happen and one of us becomes ill or gets a disability and loses our job, at a psychological level, it seems as though that's time in which you would extra want to be debt-free. You would extra want the comfort of knowing that you don't have a mortgage, the psychological comfort.

I don't think that's psychological comfort at all. All my money, or I got a bunch of money that's wrapped up in this property that I now have available that I can pull from. And sure, I'm mortgaging my future, right, because it was set away initially to make that mortgage payment. But heck, I'll deal with 20 years down the road later. I've got this money a spot where I can get it. The only way to get that money later is to go take out a loan at that time. And I walk into my, and maybe not even walk in. I go to my bank.

Hey, what's your income stream look like? Yeah, I don't have one. I think I'll loan you money at that time to get your own asset. Or you got to sell the house. Right. You know, so. Get the loan while you still qualify. Yeah.

It's ugly. And I get it. I would love to just say pay cash. I just run those numbers first. That's all I'd do. If I'm conservative, that gives me, that to me is the best piece of mind. I don't want to just put a bunch of money toward a house. She called for peace of mind.

Peace of mind for me is I ran the numbers. I know I'm going to be good. Then I put the money toward the house. And those are specifically the ones I'd run. Right. So in other words, comfort comes from holding cash. And sometimes in order to hold cash, you have to have a mortgage, at least for a little while. I actually think it's the more conservative thing.

Well, thank you. I feel like we're ending this on kind of a downer note. We love you, Karen. You may get disabled, so go into debt. That's our answer. That is not the takeaway. I just want to be clear. That is not the take.

Please. That's a one-star review. Oh, we're so going to get a one-star review from that. I recently had the opportunity to listen to Paula Pants Afford Anything show. She had this idiot Joe Solve. Salsa Head. He's going off about how everybody should use leverage and get out of debt instead of pay cash. Not at all.

So thank you. Karen, for asking that question. We'll come back to this episode after this word from our sponsors. 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.

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These prices won't go lower this year. So you're lying on the floor? save up the 50% November 13th to 20th. Conditions apply, details online. Our next question comes from Elaine. Hi, Paula. I have a question about 529 plans in this changing world. I have two sons who are 8 and 12 years old.

I started making monthly contributions to 529 plans for them a few years ago, and the balances are now around $20,000 each. As I watch my kids grow, I've started thinking that there's a chance they won't go to college. They do well in school and come from. a highly educated family, but they're both independent-minded and entrepreneurial by nature. With the increasing options for learning skills and starting businesses without a college degree, I can see them choosing a non-college path. I think the pandemic has only accelerated this optional

role of college. Regardless of whether they attend college, I want to save money for my kids to help them launch into adulthood, whether they use it for education or starting a business or buying a home. So my question is, if there's only a 50-50 chance my kids go to to college, is a 529 still a good place to be saving money for them? I live in North Carolina, where we don't get a state tax break on these contributions. So the value of the 529 is primarily the tax-free growth. If we end up withdrawing money from the 529s for something other than approved educational expenses for them, I know there's a penalty, but I'm not sure about the taxes. I've seen something suggesting that dumb properly the tax rate could be based on the child's tax

bracket rather than the parents. Even if this is the case, I'm not sure how to think about the benefit of staying in a 529 versus saving money somewhere else for my kids' future. I admit, I like the idea of staying in the 529 because it clearly designates this money as being for my kids, but I don't want to stick with it if it doesn't make financial sense. I'd really appreciate your thoughts on how best to say for this uncertain parenting future. Elaine, thank you for asking that question. Two things come to mind immediately. Number one, as you said, the tax benefit or financial benefit of keeping money in 529 plans is tax deferment on the growth inside of the account. So you don't get a tax deduction on the money that goes into the account. All you get is that the growth that's in there gets tax

deferred. But given the age of your children and given how close they are to going to college, you're probably not going to have that money in high growth assets. You're probably not going to have a big chunk of that money in equity index funds. That money is going to be invested more conservatively, and therefore it's going to grow significantly less because of the fact that the timeline to withdrawal, the timeline to use, is so near. Essentially, when we're talking about money for your children's college, given their age, we're talking about money that's in basically a short-term bucket. So I see limited to no value to you putting money into a 529 plan as a result of that.

Now, if your kids were two, my answer would be different. But at this age, it doesn't seem to be worth it. Even though with her thought process around why she wouldn't use it, I even question it too, actually. If she is a parent with a much wide angle lens on careers and on different ways to make money and that it's not always college for everybody, then putting money in a 529 plan at age two could be a huge mistake. There are ways to get around the penalties as an example. If child one doesn't go to college and child two does, you can transfer the money from one beneficiary to another. you can also, if neither one of them, go to school, she can transfer it to herself. And as long as it's accredited, the classes she's taking are accredited.

And there's a lot of classes online now, far more than there were a year ago. She can do that. So I used to have clients that would take flight school lessons. They wanted to fly. Golf, cooking. So there's all these things you can use that money for to avoid some of those penalties. Now, what are we trying to do? We're just trying to avoid, we're not really trying to take a cooking class.

We're trying to get away from a penalty. So I would still rethink that strategy. Can you just imagine the first day of cooking class? The teacher's like, what made you decide that you wanted to learn French cuisine? Well, it's a tax dodge. My kid decided against Harvard. Like, that's the most circuitous answer ever. So I'm with you.

Here's the problem. Another great place where people put these dollars is in a Roth IRA. I really like the Roth IRA for retirement. So going back to the same theme that I've had about timelining your goals, I would make sure that you have enough money in there for your own retirement before you take money out of it for a kid's education fund. But if you certainly, if you can have enough money in a Roth that is for your retirement and to handle college expenses, then by all means, that's a great place. I would segregate those two goals, too, Paula. I would have inside of your raw, I would have fund A is junior's college fund and fund B is my retirement money. Don't, don't let your meat and potatoes touch because often people go, well,

I'm just going to take a little bit from my retirement because I'm not retiring until later. And that's not a great idea. Right, right. And that goes back to the previous discussion about money gets invested based on goal and money gets separated into buckets based on goal. So even if it's not literally in a different account, you need to at least imagine it or framework it as different buckets. Agreed.

So, yeah, she's right. Don't use it. How about that? Yeah. Well, what a finance podcast. We tell Karen to go into debt. We tell Elaine to stop using a 529 plan. Avoid college plans.

Take that money, gurus. Wow, we are such bad influences. Take that. Next, we're going to tell you not to floss. Oh, that's a bridge too far. So thank you, Elaine, for asking that question. Our next question comes from Amanda. Hey, Paula, this is Amanda in Massachusetts.

First of all, I just want to thank you for everything that you do. You've been my favorite resource in the FI community for the last couple of years ever since. I was introduced to your podcast. So just really grateful for everything that I've learned from you. Thanks in advance for any help with my question. I'm really calling because I'm hoping that you can help me think through my fear that I have around tapping into my equity in my personal home to invest in our first rental property. Essentially, you know, I've had a few close people in my life sort of say, oh, I would never risk my personal home for any kind of investment and you're better off just waiting and saving up the cash. And I'm wondering, you know, whether that's really

true and how to sort of maybe what kind of framework to think through and how to look at our own personal financial situation to determine whether we really are good candidates to go ahead and tap into our own equity. We did do a recent refi of our personal property. And so we can't do a cash out refi unless we, you know, wait a year or so and refi again. And a Heelock is something that we have talked about that that might be on the table. We do need to learn a little bit more. So very curious to hear what your advice would be, just to give you a little bit of background. I am 39. My husband is 51. We are hoping to retire at sort of normal age for him. So, you know, 14, 15 years from now, possibly earlier, if we can make it work. And also hoping that we're close enough to kind of a

half-fi or a coast-fi that we could start to take our foot off the gas in a few years here. and maybe both work part-time or one of us work full-time and the other one, you know, not stop working to be home with our daughter, you know, we're just considering some different options. So we do think that rental property investing is a great choice for us because of the bias towards cash flow and also because it's something that we both have a lot of interest in. And, you know, we love real estate. It's something that we've sort of been curious about from the sidelines for many years now. So thinking it might be time to just jump in from a sort of general high view of our

financial situation, we have a net worth of about 625,000. About 400,000 of that is sort of available for retirement, about 23,000 in cash, 110,000 in taxable brokerage, around 260 in our retirement accounts. And then we have about 225 in home equity in our personal home. So we'd just love to hear how you would approach thinking about a down payment for a rental property and whether you think it would be wise for us to tap into our home equity and, you know, what are some of the risks we want to consider? Thanks so much, Paula. Amanda, that's a fantastic question. And I can tell you my answer immediately. The delineating factor or the distinguishing factor is not whether or not it's your personal residence. The factor to consider is how emotionally attached are you to that particular

property. Never risk something that you're not willing to lose. If it is the case that this property has been in your family for generations and it was your grandma's house and you would be heartbroken if you lost it because it is not like a $10 bill that can be exchanged for any other $10 bill, it is a piece of real estate and therefore unique and has sentimental value, if that's the case, never mortgage something that holds so much sentimental value that losing it would be a tragedy in your life. But if it doesn't have that level of sentimental value, if it's just a place where you're living, and if things were to go bad, you could make alternative arrangements, you could downsize into a cheaper property, you're flexible and you could do something else. If you don't have

that kind of sentimental attachment to your home, then I think it's perfectly fine to risk it. In fact, I think that's a fantastic option because cash out refying a primary residence is one of the best deals that you can get in terms of qualifications, in terms of interest rate, in terms of accessing the money that you need for your first rental property, a refi on the equity in your primary residence is one of the most accessible and cheapest ways to get that money. And so I'll give you an example. My primary residence is a condo in Las Vegas, and if I lost it, I wouldn't really care. I mean, it's a nice condo. You know, I'd be like a little sad to, you know, but at the end of the day, it's just a condo that I bought five years ago. There's no sentimental value there.

So I'm perfectly fine risking it because I'm perfectly fine with the possibility of losing it. Now, by contrast, my triplex in Atlanta, I have. overwhelming emotional attachment to that property. And I have it paid off free and clear, and I will never borrow against it. And in my class, I've had office hours with students where they're like, you have all of this money just sitting there, this equity that's tied up in this property. Why are you not borrowing against it? And it's because I'm not willing to lose that property. Even though it's not my primary residence, even though I haven't lived there in over five years, I'm still attached to it. I want my kids to have it. I want my grandkids to have it.

I do, I will not lose it. And therefore, I will not borrow against it. Which was going to also be my point, which I wanted to be clear about before everybody thought that I was Joe leverage after answering Karen's question, which is just remember that when you don't make a mortgage payment, And let's say that it is the very last mortgage payment, Paula. And let's say you took out that 30-year loan like we were, you know, talking to Karen about thinking about, right? Not doing, but run the numbers and maybe look at that. If you make 29 years and 11 months worth of payments and you miss just the last payment, how much of the house does the bank take? All of it.

And you own 99.9% of that property at that point. You own almost all of it, and yet they still get the entire house. And that is why Karen is questioning having debt. That's why anybody should question using leverage at any time. And so it does. It comes back to what's the downside. And like we said with Karen, what's the downside of putting all that money away? Well, the downside is she might need it later.

The downside of taking out that debt for Amanda is actually the opposite. Yeah, exactly. The upside to borrowing against your personal residence is that for a lot of people, that's the initial fuel that builds momentum on your financial life. There are many people, and I'm not just talking about real estate, there are many people who start businesses by taking out a loan against the equity that they have in their home and using that money to seed a business that they start. And we can talk, it's a separate discussion as to whether or not that's a sound idea. And a lot of that's going to depend on the specifics of the business. But that is how a lot of people transition from working a W-2 job to being a business owner. Particularly in immigrant communities, at least I'll speak for the Nepalese community.

That's the one that I know the most. If you want to buy a convenience store or you want to open a small restaurant, if you want to start that little business that the whole family can work in, you need some initial seed funding for that. And you're new to America. you don't have other family here. You don't have Uncle Bob that you can ask for a loan because Uncle Bob still lives in Nepal and earns money in rupees. So what do you do? You work for a while. You build some home equity. You borrow against it. And then you open up your small little store. And that's how a lot of people get their start. So I'm a big supporter of taking out a loan against your primary residence because if not for that, so many people would be stuck. And it also, for both Amanda and for Karen, Paula, what strikes me is that on Amanda's end, it's a question about why shouldn't I use leverage? On Karen's, it was a question about why should I use leverage.

And we also want to remember, and we didn't even cover this with Karen, there's a middle ground, right? Let's say that Karen or Amanda, on Amanda's end, she saves up part of it so that she takes less risk by having a smaller mortgage. Karen maybe can't afford to put as much money down to avoid a mortgage completely, but she can certainly have a much smaller one so that there's less risk there. Once again, not that excited about Karen because she said she likes it very clean and simple, so it really is kind of one of the other. But there still is a middle ground here where we do a little bit of both. So what would you suggest for Amanda then?

What would be the middle ground for Amanda? You know, I kind of like the idea of saving toward it, partly because I don't know, it was more a vibe I got during her question than anything she actually said. But I think that the saving toward it gives you a little more time to plan as well. Do you mean saving towards the rental property for the next year while she's waiting to qualify to do a cash out? And then reassessing one year from now when she qualifies for the cash out? Yes. Yes. And I don't have enough information to really state that that's the way that I go. but that is definitely was my gut instinct.

And I'll tell you what I also like. When it comes to the cash out, I would pretend initially like I struggled to get a renter in there. And I was going to have to cover that mortgage without having somebody in there. And so during that time, so I would simulate the fact that I had this property and I'd done the cash out, but I haven't yet. And now I have this extra payment. And every month I have the payment, I would see if I had this. I can support that payment. And the cool thing is if I can't, no harm, no foul. I just shut off that extra savings, right? Have that go into my down payment fund for this house or whatever fund I wanted

to go into. And I can playtest it before I actually take out the debt. What I teach my students to do is to maintain cash reserves prior to buying any rental property such that those cash reserves can cover upfront vacancy and also upfront repairs because it's almost always the case that the moment you close on a property, some unexpected repair pops up. So plan for that to happen. If it doesn't happen, consider that. Consider the absence of that happening, a bonus rather than the presence of that happening a surprise. Yeah, I love that. And being able to play test ahead of time, being able to simulate the fact that I'm out this cash flow ahead of time, knowing that this money that would normally be going to a bank is just going to build that fund. Right.

is a cool thing to do. Right, right. So what she could do is for the, while she's waiting to qualify for this cash out refi, the money that she's saving could be money for cash reserves. Because anytime you buy a rental property, you want to make sure that you have very, very strong cash reserves for that property prior to when you close. So absolutely, she could save cash that gets earmarked as cash reserves.

And then when she qualifies to do this cash out refi, if she can do the cash out refi and then use that money, to make the actual purchase. It's a nice muscle to flex to get used to building. Yeah. But Amanda, to your question, you know, the people who are expressing, oh, I would never risk my primary residence, I'm guessing, I don't know them, but I'm guessing that they are probably people who have a lot of sentimental attachment to their primary residence.

And so the idea of having to be flexible, the idea that if the worst were to happen, they might have to sell their home and downsize, that to them would be one of the great tragedies of their life. And if that's the case, then of course don't do it. But fundamentally, from a money perspective, there is no difference between money that's tied up in your personal residence versus money that's tied up in any one of your rental properties. Let's assume you have a portfolio of 10 rental properties. Equity is equity is equity no matter which house it's being held in. And so if the worst were to come to pass and you were to lose, let's say, $100,000 worth of equity, on your balance sheet and on your net worth statement, you've lost that same $100,000,

regardless of whether it's expressed in the form of House number one, house number two, house number three, house number four. It's the same $100,000 either way. The difference, though, between cash and real estate is, as I said in the beginning of this answer, any $10 bill can be exchanged for any other $10 bill, cash is interchangeable. Properties are not due to their unique characteristics. And so that is the X to solve for. So thank you, Amanda, for asking that question. We'll return to the show in just a moment.

Our final question today comes from Lisa. Hi, Paula, this is Lisa calling. I'm calling with a question related to selling my personal residence. A little bit about myself. I'm 40 years old and I'm married and I have a young, young child. I have a long-term goal to retire early and a short-term goal to take a mini-retirement in around three years. My family is considering a cross-country move. We're considering two different areas. One area has a lower cost of living than where we currently live, and the other

area has a similar cost of living. So if we sold our current home and moved to the similar cost of living place, we probably would buy a home that costs about the same. Whereas if we move to the lower cost of living area, we probably could afford to actually pay cash for our new home because we currently owe about $170,000 on a home that's valued at around $570,000. So on the one hand, it would be really great to have a home with no mortgage. We would feel so free if we did that. But on the other hand, because my understanding is we would not get taxed on the capital gains from our home, that seems like a really good deal to take.

We also have thought about buying an investment property, and so I also wonder if regardless of whether we move to the cheaper area or the more expensive area, that maybe we should take out a mortgage even if we don't necessarily need to, since it's going to be easier to get a better rate on our personal residence versus an investment property. I'm not sure how much this factors in, but I also want to mention that we do already have $45,000 that we have saved, with the explicit purpose of using it to buy an investment property. In addition to that, we do have three to six months saved for other emergencies that could come our way.

So with all of these things in mind, what advice would you give me? How should I make this decision of what to do when buying a new home? How do I decide how much to put down and how much to take out in a mortgage? I look forward to hearing from you. Thank you so much. Lisa, that's a great question. hear two questions inside of what you asked. I hear the question of which location should I move to, the higher cost property or the lower cost property. And then I also hear the question of,

regardless of where I move, what strategy should I employ around mortgages that factors into account not only our primary residence, but also future rental properties that we want to purchase. So let's take both of those in succession, going with that first question of what location do I move to, my recommendation would be, do not make that choice based on financial considerations, make that choice based on where you want to live. It is easy, and I say this because I have done this many times, it's easy to try to talk myself into something that I don't actually want because it's the cheaper option. When that happens, I tell myself a story that I'm saving money and that I'm being financially responsible.

But the truth is I'm actually shortchanging myself, my life, my experiences, for the sake of saving what ultimately, I won't say it's nothing, but it is a marginal cost that if added onto the plate, would have drastically improved or changed, altered the situation. I would have traveled to a different country than the one that I travel. in. I would have lived in a different place than the place I lived. And those have downstream effects, butterfly effects that impact the rest of your life in ways that are unpredictable. Sometimes for the better and sometimes for the worse, as is the nature of unpredictable. But all of that is to say,

let the heart lead and the mind execute. Do not use finances to justify a choice that you don't actually want because ultimately, if you do that, you will one day wake up and realize that you didn't want this choice and you want to get out of it and you want to make a change. And the cost of switching, the cost of making that change will be greater than any savings that you may have amassed in the meantime. Yeah, I'm glad you brought that up because I did not want to go to you to that question, which one should I move to? Because it really is, start off with what you want to do and see if you can afford it. That's, I think, the correct way to look at this.

And if you can't afford it, then the question isn't to do, to go to the other option, the question is, are there some factors that I'm overlooking, right? Yeah, then it's how can I afford it? Yes. So that's a big question. And by the way, there's this cool hack. I don't know that I love the term hack, but there's this cool hack that I've used before myself for goals.

and used it with clients. And when friends ask me questions and they can't come up with the answer about which one they rather do, you know what we do, Paula? What's that? Oh, you flip a coin. We flip a coin. Oh, yes, I do that too. But then I, as their advisor, their friend, their confidant, whatever, I say, okay, heads

are doing this, tails are doing that. And I flip it and I put it on my arm and I don't show them and I say, okay, which one do you hope it is? is. And I'd say almost 100% of the time they have an opinion. You know, yeah, when that coin's in the air, I'm like, man, I hope it's tails. I so hope it's tails. And it's funny because you know what? I'd never show them what the coin says. Because the coin doesn't matter. It's just to figure out what you really hope for, flip a coin. You know, I do a modified version of that where I flip a coin, see how it lands, and then I notice whether or not I feel disappointed in the answer. Same thing. Yeah. Good stuff. My contribution to this is going to be very shocking for people that have heard my answers to any other questions, which is that Lisa, what I would do in terms of affordability to wherever you move is to work backward. And how much should you put down, which was a question, like how should you structure your investments wherever you move and work backward? And by the way, it's not to buy less house or put less money down toward the house or to live a lower lifestyle. It's to do a achieve this balance that most people are looking for because the average person, Paul, as you know, discounts their long-term goals. They're like, you know what, retirement I can save for that later. Security, I can do that later. Most of us look at the next goal at eye level and go, well, I've got this thing coming up next year. As soon as that's done, I'll start

saving for that long-term goal. But we also know inherently when we look at life that compounding interest is our best friend. If we really want to do this the correct way, we want to do that. So I would run out that timeline and I'd look at what do my long-term goals cost, then what can I do today that doesn't sabotage those long-term goals? And obviously, if the long-term goal is not that big a deal, let's say you show yourself retiring at age 60 and you can't get the house that you want retiring at 60, ask yourself, would I be okay pushing that back five years? Or am I okay with a smaller house or a different house. And then those two goals, then you start working on priorities between them. And I like doing that because most of these people, what Lisa is asking us is

choice A or choice B, low cost of living versus high cost of living. I would suggest what you're saying, do that based on which one you want to do and then go A or B. But A or B is this size house today against my long-term goal of whatever it might be. Retirement, you know, she said that she has young children. You know, we had a question earlier about college. Let's say it's retirement, college, and the size house I want. I would timeline all those, see what all those goals cost, and then decide which one I'm most comfortable with compromising on if I can't do them all.

Lisa, to the second half of your question, which was around the structure of the mortgage that you took. take out, I heard some hesitation in your voice around whether or not you want to buy a rental property. Now, I know that that's not something that everyone can have a firm answer on, on schedule, but if it is at all possible for you to first decide whether or not you want one so that it isn't we might want to buy a rental, it's we do or do not want to buy a rental, that will be very informative. If you sit down and put some serious, thought into it and decide either do or do not, you will then have a much more firm idea of

how to structure that mortgage. Because if you decide that you definitely do want to buy rental property, then absolutely it makes sense to take out a primary residence mortgage since you are likely to get the lowest interest rate and the most favorable terms on a primary residence mortgage. So if you are going to hold two properties, it absolutely makes sense to to bias the mortgage towards your primary residence so that that investment property is the one that you can hold in cash due to the structure of primary residence mortgages versus investor loans. That said, if you're not going to buy a rental property, then this is a moot point. So the first thing that I want you to think about is whether or not you want one.

So thank you, Lisa, for asking that question. Joe, I think we did it. You're kidding already? We're done. And the wild thing is we only had, what, two rants today. So that's pretty good. Well, one that was, poor Karen, probably thought we were never going to get to her question. She's like, wow.

Sorry. She's like, you guys, I'm still here. Standing over here. You know I can hear you. Joe, where can people find you if they want to hear more of your wacky antics? Oh, I've got some big news, Paula, which is that for our money with friendship, which you have been a collaborator with us on in the past. We not only are having a great season,

but we've really focused on our YouTube channel. So if you are into YouTube, money with friends, go to YouTube, put in money with friends, you'll find our channel. And if you subscribe there, not only can you watch, and Paula remembers this,

it's really fun making the shows live and people chat with us while we're making the shows, and that's always a good time. But now we're taking those videos, and after we do the live show, So if you just want to watch the finished product, you don't want to watch how it's made. Within the first couple days now, we have a new video editor, and we're making it much more

professional, and you can see just the finished copy. So on the Money with Friends channel, if you see just like Paula and I and no graphics, you're going to watch us raw make a couple episodes. Or if you see a graphic on the front and the back and you just got 20 minutes and you want to hear about a financial headline, click on that and you'll get both. So big changes at money with friends. Oh, excellent. And so YouTube, just go to YouTube and search for money with friends.

YouTube. Yep. Join us. We have a lot of fun. That is our show for today. Thank you so much for joining us. If you are interested in learning how to become a rental property investor, you have three days to enroll in our course.

We have an incredibly comprehensive course. And here's the thing. A lot of people use the word course as a euphemism for they recorded a video series. It's very unimpressive. You know, a lot of people record some videos, throw them up on utami or teachable, and call it a course. We go way beyond that. Part of the challenge in communicating the value of this course has been that the word course has such a broad application.

And our students and alumni in our course consistently say, oh, I've taken other online courses and this blows it out of the water. We've heard that time and time and time again from students. Even after student, wow, I've taken other online courses before and this is way beyond anything I was expecting. And we love getting that feedback because we designed this to be the signature, comprehensive A through Z, everything that you need to transform from a complete beginner to somebody who is a confident rental property investor.

So we teach you how to analyze properties, how to search for properties, regardless of whether you're searching locally or out of state, how to finance those properties, how to decide what level of renovation they need, how to estimate what those renovation costs are going to be, and decide what kind of offer you're going to submit, how to negotiate for that property, how to actually go through the purchasing process, and then how to manage a team of contractors from afar. You know, what if you're 2,000 miles away? How do you build a team in a different state? How do you manage a renovation in a different state? And once that's done, how do you get your tenants in there? How do you screen and manage tenants? We cover all of that in this course,

and it's very interactive. There's worksheets and spreadsheets and checklists and quizzes. We have a lot of community support. There's forums. There's happy hours. There are strategic mastermind groups. There are office hours with me twice a week, every Tuesday and Thursday, with time zones that are optimized for both East Coast and West Coast. And then, because we heard, we got feedback from our students, some of our students said, hey, I'm an introvert. And asking a question on a Zoom call in front of a bunch of classmates is kind of my worst nightmare. So starting this semester, we're rolling out introvert hours, which are a weekly window

every Wednesday in which introverts can discreetly and privately submit their questions in writing. So we have a lot of support for our students. It's highly interactive. It's designed to not only give you the knowledge and confidence that you need, but also to give you the support that is required to translate idea into action. So if you want to be part of what I believe is the most amazing rental property course out there, your window of opportunity is now through Monday, December 7. We're closing our doors for enrollment on Monday night at 11.59 p.m. After that, those doors are going to be shut for months. So if you want information about the course, if you want to learn more, if you want to see, take a sneak peek at some of the videos inside, head to Afford Anything.com slash enroll.

That's afford anything.com slash enroll. Thank you so much for tuning in. My name is Paula Pan. This is the Afford Anything podcast, and I will catch you in the next episode. So my lawyer says I'm supposed to give you a disclaimer. So here we go. This is for entertainment purposes only. this is not intended to be advice, and please do not consider me to be an expert or a grown-up,

or in any way worthy of even really being considered an adult. I'm just some random person who has access to the internet. So anything I say is purely for the sake of entertainment, you can just think of this as the least funny comedy show that you've ever heard. This is the Afford Anything Unfunny Comedy Hour. Before you make any financial moves, please check with a real grown-up and a real expert. That means check with a financial planner, check with a tax advisor, check with an attorney, check with somebody who actually has credentials and who knows what they're talking about,

because that's not me. So please, give me the same level of respect that you would give, maybe a house cat? And please regard this entire show as nothing more than your source of entertainment. All right, you've been warned. Thank you so much for that question. Ow! My cat. Oh, holy shit.

Just bit my leg. Wow, that's an answer, Ingrid. I bet you didn't expect that, Ingrid.