George Kamel - What To Do Once You’ve Max Out Your Investments

Episode Date: April 10, 2024

💵 Sign up for EveryDollar today. Create a free budget!  The last time I responded to your questions, I was a little concerned at how much you wanted to know about my hair routine. But this time, the quality of your questions was top-notch. In today’s video, we’ll cover everything from maxing out investments to waiting tables. Next Steps  📗 Order George Kamel’s new book, Breaking Free From Broke.  📺 Watch: 5 Worst Places to Keep Your Money Health Savings Accounts | The Savings Strategy Most Americans Are Missing Out On   How to Roll Over Your 401(k) to an IRA Offers From Today's Sponsors  This episode is sponsored by Tello, a mobile service plan designed to save you money. Go to tello.com/George for $5 off your first month of Tello’s unlimited data plan.   🙌    🎙️ The Ramsey Show    🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💼 The Ken Coleman Show  📈 The EntreLeadership Podcast     Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

What's up guys, George Camel here. And today I've got a list of questions straight from you guys that I'm going to tackle. And I'm not good at tackling much, so we'll see how this goes. Sports, where you just... And I've got to say, the quality of these questions is top-notch. I mean, the last time I told you guys to ask me anything, I was a little alarmed. You know, because of all the questions about the crawfish and my hair routine, it got personal real quick.

But what you guys have brought to the metaphorical table tells me that you're thinking intentionally about your money and that you genuinely want to make good decisions. which honestly makes me a pretty proud metaphorical dad. So let's get to your financial questions right after you walk your little fingeies over to that like and subscribe and give it a little clicky, a little tippity tap, if you will. And why you're at it, be the kind of friend you want to see in this world

and share this video with your loved ones, or your most hated ones. Don't know what it means. First question. I'm a self-employed new freelancer who's maxing out his Roth IRA and HSA. How else can I invest? First of all, I love that you're investing at all. Many freelancers and contractors out there just go, well, I don't work for a company, so I guess I can't invest.

The Roth IRA is a great investment option regardless of your employment. And the HSA, the health savings account, has a really cool investment option where you can help that money grow, tax-free, use it for qualified medical expenses, and it can turn into a 401k later in retirement. So if you've maxed both of those out and you're going, where else can I invest? One area you could look at is a SEP IRA for self-employed folks and a solo 401. if it's just you or you and a spouse. And outside of those, you still have the opportunity to invest with a brokerage account, which is not a retirement account. You're just investing and you can pull that money and pay the taxes on it.

But it's a great way to invest while you're still alive here and before you're retired. I'm not dead yet. Thanks. Next question. We have $10,000 in debt and a bill coming up in September for $6,000. Should we consolidate? How can I put this delicately? No.

When you consolidate your loan, you're just taking a bunch of debts and then putting them together. And there's no guarantee your interest rate will be lower. You could get stuck with a higher interest rate than you had before you consolidated. And those low interest rates, they don't always stay low. Sometimes they'll get you with some promotional offer, and there's a low interest rate at first, but it's only for a short period of time, and then it gets jacked up.

In almost every case of debt consolidation, lower payments just means the term of your loan gets dragged out longer than Gray's Anatomy. And Lord, that's a long time. How long can that show go for? Do they not figure it out his anatomy yet? No. So your goal shouldn't be to have a lower payment. Your goal should be to get out of debt ASAP, and that means more payments.

Put extra on the principle, use the debt snowball method, smallest to largest, regardless of the interest rate, and attack the little one with a vengeance. That's how it worked for me, and that's how it's worked for thousands and millions of people. Next question, here's a good one. We're going to pay cash for our first house. Is it okay to rent for three plus years in order to save up? Awesome goal to have. That's incredible that you guys are doing that in this housing market. So if it's going to take you two to three years, I'm okay with you renting and pausing and saving up. If it's going to take a whole lot longer, you may just want to go ahead and get a reasonable mortgage.

And here's what reasonable means, 15-year fixed rate where the payment is no more than a quarter of your take-home pay. Then just pay off the mortgage aggressively. Here's why. Housing is a moving goalpost. And so my worry for you is you wait three years and all of a sudden that house, is now 20% more, 30% more, and it keeps moving and you keep having to save up more and more to afford it. And for that reason, if it's going to take much longer than three years, go ahead and just get the mortgage when you can afford that house with those parameters I gave you. It's that Nunu asked, I'm a resident physician and make 46,000 post-tax in a high cost of living city.

Is it weird for me to waitress to make extra money? First of all, Nunu, I love the name. I don't know if you're a grandma or if you're 20, but I think Nunu is a very fun nickname, or give a name if that's what your parents so chose. You're making 46K resident physician. You're going to be making some great money soon, but right now it sounds like you need the cash. So no, it's not weird to waitress.

No side job is weird. There's dignity and pride to be had in all kinds of work. And so I would say go work those side hustles until you have the margin, you have no debt. And I'm just going to go out on a limb here and assume that you have massive debt from medical school. And so I would work that side hustle, until you're out of debt, until you have more margin,

until you have a wonderful, massive income, and then you can drop the side hustle. I want to tell you about TELO, a mobile service designed to save you money and a sponsor for today's episode. TELO is redefining the industry with affordable phone plans that get you the same reliable coverage and features as the big guys.

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And here's the best part when it comes to your wallet. Telo pricing starts as low as $5 and goes up to $25 a month for the unlimited everything plan, which includes 35 gigs of 4G LTE, 5G high speed data on T-Mobile's towers. If you know, you know. And here's another cool part. You get to be in control of your phone plan. There's no contract, no fine print, no blood oath, nothing. You're free to upgrade or downgrade whenever you put.

please. So go to tello.com slash george or click the link in the description to get $5 off their unlimited data plan for your first month of service. That's tello.com slash george. What made you want to share your financial experiences with others? I was the average George and so I grew up with immigrant parents. I didn't come from money. I fell for a lot of the traps that I talk about on this channel and what happened was I graduated with $36,000 in student loan debt, $4,000 in credit card debt and I was anxious, frustrated, cynical toward adulthood, feeling like I could never get ahead with money. I just thought you were either born into wealth or you never have it. What changed was I followed these Ramsey baby steps that I talk about on this channel and I was able to go from

broke to millionaire in a decade. And so I want to shout from the rooftops that if it's possible for me, it's possible for you. Next question, pay down mortgage, even if planning to move in a few years? Are you moving from a cave, Mr. Caveman? Or Mrs. Caveman? say lot word when few word do trick. But it's a good question. Should I pay down the mortgage even if I'm planning to move in a few years? We get this question on the Ramsey show that I co-host a lot. And here's the thinking.

Why would I pay down the mortgage if we're going to move and I need that money freed up to put towards the house? Well, here's what happens. When you move, you're going to sell that house. And so the equity is going to go with you. And you can use that equity and roll it over into the new house. So absolutely, I would still pay down the mortgage, even if you're planning to move in a few years.

it's a great forced savings plan and the equity is not lost. And that's exactly what I did and it's a great way to build wealth and a great way to avoid using that money for something else. That's maybe a little more exciting. Next up, switching jobs. Best place to transfer existing 401K? That's a fun one. So what I did and what I recommend everyone to do

is to not leave that 401K sitting out there. What you want to do is roll it over, a direct rollover. It's what it's called to an IRA, an individual retirement arrangement that is outside of, your employer. What that does is the company now doesn't own your retirement account. You have full control of it. And you're going to have way more investing options. And so if it's a traditional 401k, do a direct roll over to a traditional IRA. And what happens when you do that is you can

avoid paying taxes and penalties because you don't want to withdraw that money. You want to roll it over. And if it's a Roth 401k, you can roll that portion over to a Roth IRA. I'll drop a link below if you want more info on that because this is an important topic. And I know a lot of you are in the situation. Moving on. How has budgeting pivoted since you and your wife became parents? What a lovely question. Thank you for asking. Mia is doing great. She's adorable as ever. Whitney is the best mom of all time and we're having a blast with it, even financially. And so here's what it looks like in our budget. Number one, your health insurance is going to go up. On top of that, diapers and wipes have been the biggest expense so far.

You've got to think about your ductable on your health insurance for the baby and all the visits you're going to have there. And if you have co-pays with your health insurance, outside of that, you know, you got all the clothes and the onesies and the passies and the bottles and the bottle warmer and the formula maker and all of that stuff. And you can go absolutely crazy with that stuff. Or you can really scale it down and you don't have to spend a ton of money. So the baby has not added a significant cost to our life. There's a huge initial upfront piece, but truthfully, baby showers and couple showers, all that stuff has been a really fun way where people have generously gifted us a lot of stuff, hand me down clothing.

There's a lot of ways you can shrink down the expenses of a baby. But it's been a blessing overall, and I would highly recommend it. Next question. How do I know if we're saving enough monthly for retirement and kids college? This is a big conundrum for a lot of people, and there truthfully is no one angle for it. There's so many factors here. So the easiest way to think about it, when it comes to college, how much money you have is the kind of college you're going to be able to afford. And that also means your kid's going to be looking for scholarships and grants like a part-time job.

They're going to be working part-time. Maybe they live at home and commute to a local community college or in-state school. And so there's no one number. But this is an ongoing conversation you need to have with your kids and talk about, hey, here's the kind of college you can go to. Here's what we can afford. Here's the skin in the game that I need you to have. we're going to make a plan for you to go debt-free. But in general, the earlier you can start investing the better in a 529 plan or an ESA,

that's going to allow that money to grow for you with compound interest and allow your kid to go to college debt-free. With retirement, it looks different for everyone. But the idea is if your assets are making more money than you do because the investment account is creating compound growth, that's a good time to go. I think we can retire now. And so take a look at your expenses,

where you're planning to do in a retirement, and see what your assets are doing to know if you're going to be able to quit working. Brock Dowdell. Here's one from Brock Dowdell. Opinion on high-yield savings and CDs. Ooh, okay, well, I'm a big fan of high-yield savings. In fact, it's where I keep my emergency fund. It's where I keep savings goals because right now, at the time of this recording,

my savings account is making 5.4%, which is an awesome rate. And it's liquid. It's easy to access. And I can move it to my checking account at any time with no penalty. there's no minimum balances, all that good stuff. Not a fan of CDs. Those are certificates of deposit, and there's a few reasons,

but the main one is you're locking up your money. And so if you're going to need that money, which most people might, we don't know what life's going to throw at us. We don't want that money locked up with penalties if we take it out early. For those reasons, stick to high-yield savings. You'll get a great rate,

and we did a whole video on savings accounts that I can drop in the description below if you want to learn more. Well, that's it for today, and I've got to tell you all those questions. They really filled my cup. Talking money, answering your financial questions. It's the highlight of my day.

And I know not everyone would enjoy that, but hey, different strokes for different folks. I mean, some people enjoy athletic activity, and I don't personally. Are you working out? So something for everyone here. That's why I have a personal finance YouTube channel and not a sports channel. Where we do sports, that'd be cool. Cool, cool, cool. So if you have a question we didn't get to, please leave it in the comments

and let us know what else you want to get answers to, because we will be doing more of these. as long as you guys will watch. As always, make sure to share this with the new news in your life or the other grandmas that have chosen non-traditional grandma names to help themselves feel younger. I'm talking about the Mimi's, the Gigi's, the cupcakes, the honeies. They need to ingest some content outside of Facebook. It's for their own personal health. All right, that's it. Thanks for watching. We'll see you next time.