BiggerPockets Money Podcast - 494: How to Buy a House, Fund a Business, & Invest “Extra” Cash in 2024

Episode Date: January 19, 2024

Want to learn how to buy a house in 2024? Whether you have outstanding credit or your score could use a little work, there are different ways to buy. In this episode, we’ll lay out your best options and provide actionable steps you can take to boost your credit score in the meantime! Welcome back to the BiggerPockets Money podcast! Today, Mindy and Kyle are fielding some of your biggest money questions. Beyond buying a home, you’ll learn how to use your home equity to fund your new business idea. Have you run into some “extra” cash recently? We share investing strategies that will allow you to “hack” tax brackets and position yourself to retire early. This year, it’s crucial that you get on the same page with your partner, financially. Mindy and Kyle talk about the tough but essential “meetings” you should be having about your budget. Finally, is there ever a time when it makes sense to buy a depreciating asset like a brand-new car? Our hosts’ answer might surprise you! If you want Mindy and Kyle to answer a money question, you can submit a question here or post it in the Money Facebook Group! In This Episode We Cover How to buy a house in 2024 with less-than-perfect credit What you MUST know before entering a home equity agreement The BEST ways to fund your new business idea How to buy a brand-new car and stay on track for FIRE How to invest “extra” money and “hack” your tax bracket to owe less The finance “meetings” you NEED to have with your partner And So Much More! Links from the Show BiggerPockets Money Facebook Group Network with Other Investors on The Path to FIRE Through the BiggerPockets Forums Finance Review Guest Onboarding Join BiggerPockets for FREE Mindy on BiggerPockets Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Money Moment When to Buy New vs. Used and is That Car Repair Worth the Cash The Money Date: What You Should (And Definitely Should Not) Do to Align Your Finances as a Couple Playing with FIRE (Financial Independence, Retire Early) with Scott Rieckens Ramit Sethi’s Money Advice for Couples: Live a Rich Life, Together Grab Your Copy of “Playing with FIRE” Click here to check the full show notes: https://www.biggerpockets.com/blog/money-494   Interested in learning more about today's sponsors or becoming a BiggerPockets partner yourself? Email us: [e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, my dear listeners, and welcome to the Bigger Pockets Money podcast, where we answer listener questions today. We are going to be discussing home equity agreements, car purchases, solo 401ks, credit scores, and marriage troubles. Hello, hello, hello. My name is Mindy Jensen, and joining me today is my rock-solid co-host, Kyle Mast. Good to be here again, Mindy. Man, we've got a good show today. These are some tougher questions. It'll be fun to get into them a little bit. I am so excited about this show. These are the best Ask Mindy and Kyle questions I think I have ever seen and I am so pumped to answer them. But before we do, we have to say that Kyle and I are here to make financial independence less scary, less just for somebody else.

To introduce you to every money story because we truly believe that financial freedom is attainable for everyone, no matter when or where you're starting. So true, whether you want to retire early and. travel the world, go on to make big time investments in assets like real estate or start your own business. We'll help you reach your financial goals on this podcast and get money out of the way so you can launch yourself towards your dreams. Kyle, as you alluded to just a moment ago, we've got some pretty deep questions to chat about today. And I, like I said before, I am pumped. These are some great questions. Yeah, these are really cool. And we usually on these podcasts, we'll sometimes say something like, you know, I'm a CFP, I'm not your CFP. This is not

not advice. These are ideas. But we really want to step that up on this episode because these are some pretty deep questions and they really depend on someone's specific situation. People's situations can be so different. So we're going to try to throw out some ideas, probably some questions to think about in a situation. But if you're in a similar situation, don't assume that what we're saying fits you exactly and don't assume that, you know, your situation completely fits the question that's being asked. This is just something to really help us think through these things because these are a big deal a lot of these questions. So yeah, it'll be fun to get into it. Just want to throw that out there at the beginning because it's not a simple one size fits all

today. Yeah, the answer to any of these questions is not yes or no. It depends is the answer to every one of these questions. Right. And that's like everyone's worst favorite answer to a question. Yeah. Yep. If you have a question that you want to have answered on a future Ask Mindy and Kyle, go to biggerpockets.com slash money question or post in our Facebook group, which is found at Facebook.com slash groups slash BP money. All right. Let's jump into the first question. And we are not softballing it in here. This one comes from Angela on our Bigger Pockes Money Facebook group. What are the pros and cons of a home equity agreement? I don't qualify for a HELOC or a home equity line of credit.

or a cash out refinance since I left my job and am currently bootstrapping a business. I need an influx of cash for the business and I own two duplexes. Do any of you have experience with home equity agreements? And can you tell me if this is a terrible idea? Kyle, you're up. Oh, boy. This one, there's so many moving parts here. So the first thing I want to say is, you know, I don't have the whole picture here.

If I was like doing a financial planning session with someone like this, I would ask a bunch more questions about, you know, what their short-term plans are, their long-term plans are, why they left their job, are they going to be hopping into a new job, or is it only the business? Like, there's some other pieces here that I'd want to know before kind of directing one way or the other. But as we jump into the home equity agreement piece, these are kind of a newer product that's gotten a little bit more popularity in the last like five to 10 years, where essentially you're giving over some ownership to your property rather than getting a he lock, which is a home equity line of credit, kind of like a credit card, but it's backed by your house,

or a home equity loan, which is a loan, kind of a second mortgage backed by your house, but you make fixed payments. Those are two different things, kind of have similar terminology, but the home equity agreement, you don't really make payments usually, and it's based on someone coming in, giving you cash to purchase a part of your home equity, it's a good way to think of it as kind of becoming a partnership on your home. And the reason that these, you really need to look at these is that they can be very different from company to company that offers them. There's a lot of different moving parts as far as like how you can cash out of it if you want to buy out of it early, what the terms are. Are there stipulations on unique?

to keep the property in a certain type of condition while this is in place, which kind of reflects some of the issues that you run into a reverse mortgage, some of these same things where you end up having this co-ownership sort of deal going on. So I essentially, if you can probably tell from what I'm stumbling through here, I'm a little uncomfortable with these in general because you are, you're giving up a lot of appreciation potential in the long run. There's a lot of unknowns with a product like this. If I was coaching someone in this situation, I would be asking a lot of other questions first to find other things before going this route. Mindy, jump in here. I think you've done some research on some of the specifics of how these can work. And you

might have even run into them before in talking with people. I actually haven't. And in preparing for this show, that's the first time I've ever heard of a home equity agreement, which to me, as a real estate agent for 10 years, as somebody who's been investing in real estate since 1996, to come across something that I've never heard of before when I like to think I know everything was kind of a surprise. And I started reading it and you said you're a little uncomfortable. Kyle's way more classy than I am. I am way uncomfortable with this situation because somebody else is coming in and partnering with me on my property. And I don't like that. I want to be in control and I want to be the boss of the situation. And I'm not when I am giving up some of my

equity in my house. And I started thinking about my actual house, the house that I'm sitting in right now. I bought this house for $365,000. So using super simple math, I'm not even talking about the fees involved in all of this. Which number in the thousands? If I bought, if I sold 10% when I bought this house, that's $36,000. I live in a cookie cutter neighborhood. So this house is all over the neighborhood. And a house just like this around the corner sold last year for $850,000. So that 10% that I sold for $36,000 is now worth $85,000. I'm essentially, it's getting a loan for $36,000 is going to cost me $49,000. And yes, past performance is not indicative of future gains and your mileage may vary and all sorts of other disclaimers. But that upside, the potential upside of the appreciation is not worth that small amount of $36,000 that I got in the beginning.

Combined with, Kyle, I don't know if you've been paying attention to the numbers that the Fed keeps throwing out, the inflation numbers. But those are starting to come in where the Fed wanted them to be. The Fed started raising rates because they wanted to rein in inflation. And inflation isn't perfect, but it's starting to come down and be more manageable. When that happens, the Fed may or may not, depending on which article you're reading today, will start lowering interest rates. And once interest rates start coming down, buyers who have been sitting on the sidelines are going to jump back in.

We are still in a low inventory situation. across most of America. So the law of supply and demand says that when you have low inventory and high demand, you are going to, or low supply and high demand, you are going to see prices rise. So I can see a very real situation where we have a lot of appreciation coming. So the little bit you're going to get now could very well fall into this $36,000 loan costing you $49,000. And that's on top of all the things. fees and, you know, appraisals and costs and yada, yada, yada. So the bottom line is,

I don't love this idea at all. Is there another way to fund your business? Could you get a job to generate income to fund the business? Could you get a job to qualify for a HELOC? So at least you own all of your home equity. And then you've got that funding available. Could you take a on a business partner who might know more about the business that you're starting in the first place. So you've got some money and some business expertise. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening.

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But we'll just go on to the next one here. I have an online business that did better than expected this year. So I have a lot more cash that's accumulated, probably around 30 to 40,000 that I can invest. I'm trying to decide what makes the most sense. I have already maxed out my Roth IRA, but I'm trying to decide if I should open a solo 401K starting from scratch. I'm assuming they have no retirement savings in a 401k or solo 401k or solo 401k. Or add it to my brokerage account, which has about $100,000 in it. I know logically that the solo 401k has tax advantages, but I also see the value of putting it where I already have money and letting the compounding effect do its job. What should I do? So that last sentence, putting it where I already have money. I'm assuming they mean either putting it with their brokerage account that has $100,000 in it or their Roth IRA, which they've already maxed out. Mindy, go for it. What do we do here with this extra influx? Well, I think there's a little bit of confusion here. I know logically the solo 401k has tax advantages, but I also see the value in

putting it where I already have money and let the compounding effect do its job. If you have $30,000 and you put it into a brand new account versus putting it on top of $100,000, that $30,000 is still going to grow however you are investing it. It's not only going to grow because there's already $100,000 in it. So I think there might be a little bit of miscommunication or confusion about compound effects right there. That said, I don't think you have to choose between one account or the other account. The solo 401k is going to reduce your taxable income if you go with the traditional route.

It's going to grow tax-free if you go with a Roth solo 401k option. And investing after-tax dollars allows you to make different choices and access those investment dollars down the road if you need to. I have both a solo 401k and a taxable account, and I would personally split them up. you can invest in the solo 401k in the same funds or stocks or bonds that you would do in the aftertax accounts, which will perform the same, whether it's in your 401k or your aftertax brokerage account. So that, again, I want to make sure we clarify that a bit of confusion. But the solo 401K has better contribution limits. And Kyle, actually correct me if I'm wrong.

Is there a difference in contribution limits between a solo 401k and a self-directed solo 401k? No, same thing, same tax code. Self-directed, you know, that might refer to being able to invest it in things other than the stock market. You know, like if you can put real estate in it. But no, solo 401k is the tax wrapper that has the same contribution limit to it. Perfect. So if you don't have any employees and because they're asking about the solo 401k, I'm assuming they don't, but I just want to say if you have no full-time employees, then a solo 401K is a great option.

So I think it comes down to what's most important, reducing your taxes or flexibility in your access to funds. But I don't think it has to be all in one or all in the other. Kyle, what would you say if you were advising this person? And keep in mind, Kyle is a CFP. He's not your CFP. First of all, I'd say congrats. You know, like, it's great. this is a great problem to have, and it sounds like you're trying to optimize what the best

use is of this extra amount of money that you have. The first thing I would do is I would ask you, well, I'd look at kind of where your tax situation is right now, because you can really hack between tax brackets with an amount like this. Like maybe you put $10,000 into a solo 401k that gets you below the next bump in that tax bracket. Are you married? Are you single? You know, what's your, where where's your taxable income landing for this year? And then kind of what are your, what's your income and goals? What are they looking like for the next two to five years? Probably from the tax standpoint.

Is your income going to go up significantly? Going to stay the same, going to go down significantly. Are you like leaving a job, selling a business? Some of these things will dictate where you, you know, how much you put into the solo 401k versus how much you put into the brokerage account. And I think I like what Mindy was talking about about splitting. things up and having it in different places, and you're already starting to do that here. And that just comes in super handy down the road when life changes or you, quote, retire.

It just gives you the opportunity to have tax-free funds to pull from up to a certain point, or excuse me, taxable funds to pull out of an account up to a certain point where you're basically paying no tax on it. And if you need more, then you can supplement it with some Roth IRA money or some brokerage money. And like Mindy said, being able to borrow against a brokerage account, for real estate purchase. Some of these things, the more diverse you are

from a tax standpoint with these accounts, the better flexibility you have down the road. As far as what you should do now, I would suggest opening a solo 401K just so you have it, even if you put a little bit in there just so it's ready to go next year. Say your next year is even bigger

and you're super busy and you're like December 25th and you're like, oh man, I forgot to open my solo 401K. It's already open. you write a check, you know, you get a deduction real quick. Like some of these things, if you can do it now, just to have the accounts ready, that's helpful too. So I would say you're doing great. I think it depends on what your goals are now, what your taxes are as far as

where you put it. And just to cap on what Mindy said about, it doesn't matter where the money goes from an investment vehicle standpoint. As far as like the funds that you're invested, if you're putting them in index funds, for example, they're going to perform the same, whether than a solo 4-1K or a brokerage account, it's the tax treatment of those funds that's going to be different. So it doesn't matter if you add the 30,000 onto the 100, like Mindy said, or if you leave it 100 and you put 30,000 in a different account. It should all invest and grow the same, just taxable difference. Oh, next question. I like this one. It's always been a dream of mind to own a car from day one and keep it for like 20 years, staying on top of maintenance and really

taking care of it. I'm looking at a new Toyota or Lexus in the 45 to 60,000 range, currently keeping my old car for 200,000 miles as long as I can. However, the thought of dropping so much on a car and financing scares me a bit. From your experience, has it ever been worth it to buy a brand new car? And is it worth it, especially with today's interest rates? Kyle, I am fascinated to hear your opinion on this. Oh boy, I might surprise you on this one. So this one, in the financial independence, retire early community, there is a very strong leaning towards used cars, run them into the ground as long as you can, pay to have them fixed because that, although it seems like a lot, it's a lot less than a $500 a month car payment

or $1,000 a month car payment. You know, car payments are getting super high these days just because of the price of vehicles. And there is a place for that. That is especially true if you are earlier on in your financial journey, depending on what your time is worth. Time is a big thing that you need to be more and more aware of as you start to become closer to financial independence. Your time is worth more, whether you own a business or you're employed.

You have a family. Some of these things start to factor in for me. So I'm going to answer from your experience, has it ever been worth it to buy a brand new car? So I want to answer that question. And if you would have asked me that like 10 years ago, I would have been like no way. Like there's no reason why should you ever buy a brand new car? Buy one four years old. It's 40% depreciated.

Now, you know, it's still, all the kinks are worked out. It's not a lemon. However, there are different stages of life for something like this. So I'll give you an example right now. We bought a brand new Chrysler Pacifica hybrid minivan. And the reason for that is that, like this question here, I want to own this car. I love this minivan, by the way. It goes like 30 miles on electric and then you can just take a road trip, fill it up with gas and keep going. Like,

I will preach this minivan to everyone all day long. I'm a minivan man. But in this case, I don't want to worry about it. So I did, I also did something else that a lot of people would recommend against doing and usually does not work out financially. I bought a warranty on this van, an extended warranty. Yes. A, a, man, Mindy is gasping. I'm getting the reaction I'm looking for here. So in the financial independence community, buying some sort of warranty is usually a bad decision. And it will probably work out bad because the only reason they sell them is because they come out ahead in the long run. However, for me and for my family, I'm in a place where right now I don't want to worry about

anything. I want this van to work. I want to drive it. I want my wife to be able to drive it. I want my family to be able to drive it. And if there's something wrong with it, I want to drop it off of the dealership, pick up a replacement, pick it up in a few days, and just keep going. I'm willing to pay the extra, I guess, to have that convenience for my time, for my family. However, if I was talking to someone where I was at maybe 10 years ago, it's a totally different story because you can, the time is the time value is different and the the accumulating of resources is different at that stage you need to really be building things and buying a depreciation depreciating asset like a minivan brand new and buying a warranty on it I just threw that in there as a even even worse

that would be a bad decision because that's going to put you against that's going to pitch you against having enough to make a monthly payment for an investment property or your own primary residence. Like those things need to come first, whatever you need to do to kind of get those things rolling ahead of time. But yet, let's go to Mindy and get some reaction here. Well, first of all, you're fired. I can't believe you would ever say that, Kyle. Oh, my goodness. No, but absolutely, you're in a different position than you were 10 years ago. It's not a question of should you or shouldn't you, it's, does it make your life better? And it clearly does. You didn't just get talked into it. You thought about it. You made a conscious decision to do it based

on many, many, many factors. So in that case, as much as it pains my fie heart to say this, Kyle, I approve of your brand new car purchase with an extended warranty. Thank goodness. I'm presuming that this car works, the existing car works. There's nothing to stop her from saving for the new car while she is continuing to drive the current car. And I think they should. But the beginning of your question says, it's always been a dream of mine. And I really want you to dive into this. Why has this always been a dream of yours? Have you just always driven really crappy cars and you want a nice one? You want one that's yours and like nobody else is messed up because, you know, you've all, when you buy a brand new car, you're like, oh, I remember how I got that dent. Like the back of my car has a big dent in it because my husband backed it into the shelf in the garage.

Like, but it's a crappy car now so I don't care. You know, another thing to think about is can you afford it? Your comment, the thought of dropping so much on a car scares me. Makes me wonder if you can just afford it and just really aren't that into cars, which is. is fine, but it sends me back to the point, why do you want this? So if it's something that you value and you can afford it, then I say, go for it. But if it's not something you really value, you don't really care all that much about cars, or you can't afford it or some combination of both, then I would say reevaluate why you are looking at making this purchase in the first place.

Yeah, this is super good. And just to touch on kind of the seasons of life thing, again, just to reinforce that, it really does depend on your financial situation, your life situation. There's nothing wrong. And it's awesome, like, earlier on in the journey, or even all the way through, if it's your jam, to just, like, love driving the beater and just, like, paying for the repairs every now and then. Like, I literally, my first car was a 1986 Honda Accord. And I had a bumper sticker that said, you must be pretty secure to be seen in this car

that my friend got for me. And it's just, you know, and I just enjoyed that. I mean, the fact that I could back it into a shopping cart and not care about it was great. I mean, that was just so, so nice. Now if someone like scrapes the side of the van, I'm not going to feel good at all about it. You know, just the stages of life really make a difference. So just kind of take that into account. Don't get ahead of yourself.

There is a time for it. But, you know, if you're not there yet, it can really hurt you financially. So just be careful on that front. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going and more importantly where your tax refund can make the biggest impact. Because the goal isn't just to look backward. It's to actually make progress. Simplify your finances with

Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in Edle.

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My credit score is horrible. 537 to be exact. My goal was to buy a house in June 2024. I have the down payment on a house and the price range I am looking for if I were to have to pay 20% down. But will anyone give me a loan with such a bad credit score? If I use the next six months to really work on fixing my credit,

will I be able to make much of a difference? Is that all achievable? And if so, what is your advice on how I should go about it? Or should I just move the goalpost? What do you think, Mindy? I want to know why that credit score is 537 because that's a, you have to try to get a 537. But let me answer the question first. You can qualify for an FHA loan with a credit score down to 500. If you have a 580 or above, you can get by with an FHA loan at 3.5% down. I mean, you have to qualify, but 3.5% down is the lowest. If you have lower than 580, you have to bring 10% down. So it sounds like he would be able to qualify for an FHA loan. But now, back to my first comment, why is your credit score so low?

35% of your entire credit score is based on your history of making payments on time. So with a credit score like this, I'm thinking he has either missed payments or made payments late. And banks don't like that. They want their money on time. And it's in this technological age, it's super easy to make payments on time. Another 30% is the amounts owed. So let's say you have a credit card with a $1,000 limit. The banks really, really like to see you using 30% of your credit limit or less. So a $1,000 limit, they want to see you using $300 or less. So if you've got a $900 balance, yeah, you're not over your budget or over your amount, but the banks look at that as, ooh, he's not good with his money. And I don't understand why they do that. If they give you a $1,000

credit limit, you should be able to use all $1,000 of it. So number one, start making your payments on time. And number two, start paying your stuff down or call them up and ask for an increase in your credit limit so that your usage percentage goes down. It's a game. Everybody plays weird games with their credit score. But the bottom line is, yes, you can qualify for a loan. You can probably only qualify for an FHA loan.

I say probably. I think that's definitely. I'm not a lender. You should talk to a lender. Talk to them about what they are seeing your credit score at. Just because you're seeing 537 doesn't mean that's what they're seeing. But talk to them, they can see your credit score, your credit history, your credit, all of that. They'll look at that and say, these are the things you need to do to fix this situation and then do those things and then start looking for a house. So no, I don't think you should move your goalpost. Kyle, how about you? Yeah, I mean, I had the first question that you had. You know, I'd want to know more about the situation. How did we get down to 537? And, you know, my guess is if someone's that low, you might not even have a credit card anymore. You know, like they might have all been closed or you might not have access. But like Mindy said, you can literally go online. If you have a credit card, a lot of times you can actually go online and just go through the settings and find request credit limit. And a lot of times they'll just bump it up for free. Like no credit check or anything. anything, you won't have to call. That'd be the first thing to check because then you're kind of improving that ratio. But, you know, part of the question was should you wait six months to see if you can improve your credit score? I would say, yeah. I mean, just without knowing the

situation fully, six months of you making on-time payments, I would go, right now, today, there's now a lot of ways to use other forms of payments to improve your credit score. You know, of course, student loans, mortgage payments, credit card payments. But now you can also a lot of rent platforms. So if you're renting, you can choose to have your rent payment history fed to the credit bureaus, basically, to help improve your credit score. So there's a lot of, and your cell phone payments, some of these things, you can start having them factor into your credit worthiness.

And I would do that right away, try to find out any way that you can to have on-time payments in many different areas of your life, be filtered towards your credit score to help push that up a little bit. Because I really do think it wouldn't, it wouldn't hurt six months of good on-time credit payments across the board is going to improve your score. It really is. I mean, there's no way it's not going to improve your score. The issue that with it being that low, and you have a 20% down payment here, so I'm kind of, I'm trying to wrestle with what's going on here because you've got some cash going on, but you've got a credit score that's really low. you know, like maybe there were some medical payments, you know, things that maybe were out of your hand.

But if you've got cash now, it means that somehow you're either, you either have good habits currently that you could maybe push forward six months to help push that score up. And that could significantly change the interest rate on the house that you get. If you can get it up, you know, Mindy would know this a little bit better in being an agent and closer to the lending world. But you start bumping up 50 points here and there. You get to some different tiers where you're going to save a quarter percent and half a percent in interest. And if you're buying a place that you want to be in for a while, that's going to make a big difference for your financial future. And it gives you some time to get your feet under you from whatever happened to cause this

537 score. All right. Our last question, I find this one to be quite fascinating. About a year ago, my husband and I took a realistic look at our finances for the first time and realized we are going to be in big trouble if we don't get our X together. We promise. We must we would start making changes, and I have kept my end of the bargain. I pack my lunch, have been walking to work, and never buy anything I don't need. He has had a harder time doing this. We never, ever used to fight before, and now since our financial troubles, we bicker all the time. What should I do?

My husband had a tough childhood around money, and he has expressed that making these changes is not easy for him as it puts him back in a dark place. I don't know how to speak to him about this, but I am fed up. Please note, we don't fight about anything else, and I do not want to end my marriage over this. So, Kyle, your thoughts? Oh, and how long have you been married, Kyle? I have been married. Ooh, you're quizzing me right on the bat.

12 years, 12 and a half years. Okay. Okay, yeah, took me a little bit. Had to do some math. I thank you for bringing this question in, whoever sent this in. I just, this is pretty vulnerable and this is, this affects so many people. And I would even say, you know, over the years, I'm a financial planner. I like love finances and it, that just, it's fun for me. And me and my wife have to consistently talk about money, change how we budget,

change how we work through things at different stages in life, at different times. You know, she was my venture capitalist essentially when I started my business. She was making money. I was making nothing. And so you just have to communicate constantly on these things. I really think, you know, and I'm not a marriage counselor by any means, but finances are, if you can communicate well on finances, it goes a long way in all the other areas of a marriage. It keeps things out in the open and it creates a good habit of keeping everything out in the open. I would, I would try to be gracious with your husband, with his background, and try to communicate with each other and try to figure out ways that can make it easier on him to hold up his end of the bargain.

You know, whether that means, you know, try not to shame him if he gets it wrong, but also being a lot of times, and this is a lot of budget gurus, a gurus, that's not the right word I'm looking for. People that are really have a lot of experience in this arena. I put like Dave Ramsey in this camp, David Bach, like some of these people that have been in the personal finance world for a long time, they talk about the agreement of a budget, you know, the agreeing on it together so that you can call each other out in a gracious way when someone veers outside of it and that there's permission to do that. So I would try to get there first with your husband, probably, so that you can talk about like, hey, it sounds like we're getting out of what we agreed upon

for the budget. Do we need to change something so that we don't go outside of what we agreed upon? Do we need to make this part of the budget bigger and this part of the budget smaller? And just continually go at that and try to do things that make it as easy as possible. And one of those, it may seem old school, but to go cash. You know, cash is just a really good way that hurts when you spend it. And it's a really good way to monitor what you're doing. And, you know, if you guys, I'm a big fan of joint checking accounts in marriages. Not everyone feels that way, but I see the benefit and I've seen the benefit of it with clients

as far as transparency goes. And, you know, if you have your joint checking account, you take out your cash for the budget for the month. And you guys have to meet regularly to have communication around what is being spent, what is not. And you have this cash that you divvy out. I'm like here's, here's your eating out on the way to work and back for a month. And I would say, for me and my wife, we don't do a month because a month is a long time and it's easy to spend it really fast earlier on. We do twice a month for a lot of our budgeting.

And that's a little bit more work. But if you're starting out in this cash realm, sometimes it's very helpful to do twice a month. Be like, here, we just got to make it two weeks. You know, this is the cash. And you get to like day 10 and you're pretty much out, you can get four more. days without, you know, it doesn't seem that big. If you get to day 16 and you've got a month to go, now you're just like, we're spiraling and we can't do this together. A lot of, maybe those are just some ideas. You know, this is a tough thing because it sounds like he has

some background here with money issues. I'm sensitive to that. At the same time, part of me is like we are all our own people and we all have our own responsibility and we all make our own choices. So there's a piece there too that if you guys are agreeing on something, you both need to hold the bargain and hold up the bargain that you've agreed to and move forward on it. Mindy, what are your thoughts? This is a tough one for me because everyone is so different in how they relate to money. It is a tough one. I completely agree with everything that you're saying because you are 100% correct. You said the C word, Kyle, communicate.

Quick, what am I thinking? You have no idea what I'm thinking. if I don't tell you. Just like, I have no idea what you're thinking if you don't tell me. And the same works in an actual marriage instead of just podcast host relationship. I talk to my husband all the time. I watched a lot of my friends. I was one of the last people in my friend group to get married. And I watched a lot of my friends get divorced. And I would look at their marriages. I'm like, well, of course you got divorced. All you did was fight all the time. You never talked to each other. And the worst time to talk is in the middle of a fight.

So on episode 157 of the Bigger Pockets Money podcast, Scott and I talked about how to have a money date with your spouse from the position of I'm the one who wants it. They're the one who doesn't. And one of the first tips was if you have kids, get a babysitter, make a nice dinner, have no other distractions, make a plan to sit down. everybody's calm, make an agenda, and have a conversation. We both agree that we need to change our money, but it seems kind of like that's where the agreement is ending right now. I'm also doing a little bit of reading between the lines. It sounds like they're trying to make a lot of changes all at once. And that's kind of setting yourself up for disaster. She is packing her lunch, walking to work, and never buying anything she doesn't need. Maybe we start with what, maybe we, they,

Maybe they start with one thing. She can pack her lunch. And since she's already making her lunch, she could make his lunch too. And this isn't a women belong in the kitchen kind of comment. This is a she's doing it already. And it's very important to her. And this is going to make it easier for him to make the change too. Or perhaps they do it together.

They're both in the kitchen. They're spending time together. They're having conversations. And they're making lunches for the lunches for the change. week or whatever. Maybe she can walk to work and he can't. Great. Then maybe he could drop her off on the way to work or, you know, maybe she never buys anything that she doesn't need and he feels so deprived from his childhood where he had a tough childhood around money and has expressed that making these changes is not easy for him and it puts him back in a dark place. Perhaps you change your

timeline to fix your finances and you each get a small amount of fun money where, you know, it's $20 or $50 or whatever, where this is a no questions ask. This is your money to do with as you please, but you need to operate within that small budget. You want to go out for a drink with your buddies after work this week. That comes out of your fun money. You want to buy a new t-shirt that comes out of your fun money. Oh, you don't have any more fun money? Well, then you're going to need to save that for next week.

if you want to do something that costs more. You know, things like that. But I think trying to jump in and fix everything all at once is not the right choice. So listen to the Money Date episode. Listen to it together. Talk about what kinds of changes you can make, what kinds of small changes you can make, and then build on those once you are no longer going out to lunch every single day, but instead taking lunch every single day, then you can work on.

on another change that you're going to make. But it's a lot of communication. It's a lot of forgiveness because he's coming from it at a different place. And also, I would consider therapy because these are deep-seated from childhood issues that he has clearly not gotten over. And look and see if your health insurance covers therapy because a couple of therapy appointments could be a really great help. That's so good.

I think one thing, as Mindy was talking to, I thought of, Ramit Sadie, he often hammers on this. And I think it's a really good thing, especially when there's some money baggage. You know, if you can identify what your husband's pain point is and I'll provide for that. You know, like, Remit talks a lot about by spending on the things that you love and then cutting everywhere else, you know, like cut the other junk out. And this is what Mindy was talking about with these lists that are made. You list your top things.

Don't do things that aren't on those lists. But it sounds like some of this past baggage. Like I don't know if it's because, you know, if the baggage is he grew up with very little money, like extreme poverty of some sort, or he saw maybe his parents fighting over money all the time. This can be all kinds of things when it comes to money. But maybe figure out what that is. And then intentionally choose to spend money to help. alleviate that in a healthy way, maybe provide something that shows that he's not in the same

place he was when he was a kid. This is different. And then cut in other places. Just a thought there because sometimes we think about it got to cut everywhere. We got to get our finances just crazy lean and just buckle down. And I think that can be the case, but you can always intentionally invest, whether it's time, money, resources, in something specific that will help your well-being. And it sounds like maybe that's maybe needed here also. But great question, though. This is, this is every, so many people deal with this. This is just a good question. That's a great point, Kyle. This is not remotely just limited to your husband. And this is, this is far more prevalent than you think. So I think therapy would be a very important.

really great place to start with this. And communication. Just let your husband know that you support him. You love him. You don't want to fight about this. And you want to get through it. And, you know, ask him a lot of open-ended questions too. How can we make this better? How can I make this easier on you? What can I do to support you? But letting him know that you love him and support him is going to be the best answer for this. All right. This was a super fun episode. Like I said, these are some of the best ask Kyle and Mindy questions that I think we have ever had, Kyle. This was a lot, a lot of fun. For our listeners, if you have a question you'd like to ask us, please go to biggerpockets.com slash money questions or post in our Facebook group at Facebook.com slash groups slash BP money.

All right, Kyle, should we get out of here? Let's get out of here. This was a lot of fun. That wraps up this episode of the Bigger Pockets Money podcast. He is the Kyle Mast. You can find him at Kylemas.com. And I am Mindy Jensen. You can find me all over BiggerPockets.com saying goodbye, dragonfly. If you enjoyed today's episode, please give us a five-star review on Spotify or Apple. And if you're looking for even more money content, feel free to visit our YouTube channel at YouTube.com slash Bigger Pockets Money. Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Kaelin Bennett, editing by Exodus Media, copywriting by Nate Weinstein.

Trob. Lastly, a big thank you to the bigger pockets team for making this show possible.