NerdWallet's Smart Money Podcast - Learn From The Nerds: Best Money Moves of 2023

Episode Date: December 21, 2023

In this episode of NerdWallet's Smart Money Podcast, hosts Sean Pyles and Sara Rathner share the best money moves of 2023 as submitted by their fellow colleagues. Some of the highlights include saving aggressively to prepare for future expenses, getting rid of private mortgage insurance, automating finances for budgeting and planning, setting up 529 college savings plans for children, shopping around for the best mortgage rates, and understanding the difference between an emergency fund and a rainy day fund.

If you're a loyal fan of the show, it's possible you stay until the very end of each episode. And if you do, you always hear us say, until next time, turn to the nerds. Well, today, dear listener, we are turning the show over to the nerds. We present the best money moves of 2023 by our fellow nerds. This year, I learned how to explain the effect of compounding using a lovely seasonal analogy, snow. You think of your money like snow. When you spend it, it melts and runs away. But when you save it, any new snowfall sticks to the snow that's already there. that. Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Sarah Raffner. This episode finishes off our nerdy deep dive into the end of 2023. This is it, Sarah, the finale of our last

series of the year. A piece de resistance. Yes, we sent a notice out calling all nerds asking for the best things our colleagues did with their money in 2023. And I mean all nerds, IT, HR, everybody, even the corner office. And today we're going to share their money wins. I love this. So before we start, like you and I are nerds too, right, Sean? Should we start with our money wins for 2023? I think we should. Sarah, give us yours. Yeah. You know, here's, this sounds like a weird money win, but I have said on the show before, one of the pieces of advice that I got when I was younger was to save as aggressively as you can for as long as you can, because your life will get more complicated as you get older. Well, I have reached the point where my life is complicated and

expensive. And I will say that because I had spent those years putting money away as best I could, I had money on hand to do the things that I needed to do this year. There were some unexpected repairs to our house that we had to do. We ended up replacing our car because we had a baby. And that was probably one of the most expensive things I did in 2023 was pay all those hospital bills. And now I'm paying daycare bills. So this kid will cost me money until he's like 35. And then maybe he'll be independent by then. Well, no.

They say you reap what you sow, you had been sowing savings for years and years. And now you are seeing the benefits of that, which is great. Yeah, you know what it has allowed us to do. And by us, I mean, I say my husband and I is say yes to the things we need. And know that we have the money on hand. And that's really nice when something in your house breaks, or there's that you want to do, like travel or night out with friends, it's going to cost a lot of money. We can say yes to the things that mean something to us because we spent so long just pocketing, putting money away, living as well below our means as we could. And now I think we're living at our means, which is kind of nice. Sean, what about you?

What is your money win for 2023? Well, it's a little nerdy and a little in the weeds, maybe. But I got rid of my private mortgage insurance on my house after going into war with the bank that owns my mortgage. It was not a fun process, but I came out the victor. And I'm so proud of myself for that, because the bank that owns my mortgage is not very nice. So that's my money win 2023. I was surprised you to go to war, isn't it just sort of like a once you hit 20% equity, like, do you have to refinance? Or how does that work? Oh, yes. They barraged me with a mountain of paperwork and time delays and

bureaucratic processes that I actually detailed in a Money Hot Takes episode of Smart Money. So I think that you were out of maternity leave, Sarah. Yeah, so I missed that story, but perhaps link to it in the show notes. So if people wanted to hear your saga, they can do that. Will do. Okay, great. Well, before we get into the nerd's best money moves of 2023, a reminder, dear listener, that we always love hearing from you. Leave us a voicemail or text the nerd hotline at 901-730-6373. That's 901-730-NERD or email a voice memo to podcast at nerdwallet.com. All right, Sarah, are you ready to hear from our nerdy colleagues about their best money moves of 2023. I am. Let's see what they all learned this year. And maybe we could take some of that advice and apply it to our own finances. Yeah, I mean, that's the idea. So let's start with the boss. Tim Chen is the founder and CEO of NerdWallet, and he did an energy efficient move this year. I switched from a Mercedes SUV

to a Toyota Sienna. I'm getting twice the gas mileage. I'm using the cheap gas and I'm paying about a tenth as much every time I service the car. Well, Sean, it is so true that you really save money on servicing when you don't have a luxury car. Just getting a new battery or oil filter can be less expensive. Oh, yeah. And twice the gas mileage. That is really impressive. And Sarah, I bet you can relate to getting a new vehicle this year to help your family get around a little bit easier.

Yeah, new to me. And it's a hybrid. So the mileage is pretty sweet. Nice. All right. Well, let's hear from another nerd. Skylar Damiano is an IT administrator here at NerdWallet. The money lessons I've learned in 2023 that I'm taking with me into 2024 are

importance of marriage is related to finances, and that you'll never stop learning about how to manage your money. My partner and I are accelerating our marriage to the end of this year because it will save us a ton of money in the long run via tax benefits. These are things that we just never thought about when we were single, or even in our case as queer people who never really thought about marriage beyond our domestic partnership. But I've also learned that I will never stop learning about the financial world around me. I can't possibly know everything related to financial well-being, but the more I

research and the more I practice good habits, the more likely I am to carry those good habits into the future. One that stuck with me from last year is not spending beyond my means. I now wait until I have funds available before I make a purchase like a new smartphone or, you know, a new toy or hobby that I want to get into. In this case, I want to become a DJ in the next year. I'm not spending any money on that equipment though until I for sure have enough to save on it. Because if I have the option to not rely on credit, but instead use my credit card to my advantage via cashback, it's far more rewarding for me down the line. Sarah, waiting until you have enough money to actually purchase something you want is a

timeless piece of financial advice, one of the most basic and most important. Also, Skylar, I would love to hear a DJ set when you are up and running with your equipment. And this is near and dear to my heart, but utilizing a credit card for points or cashback instead of carrying a balance, that is chef's kiss. And Skylar wasn't the only nerd highlighting this idea.

Here's Tom Lehman, an account executive for NerdWallet. So the best piece of financial advice I would have to say is live well below your means. So what a lot of people do is over the course of their career, they tend to make more money. And when that happens, they tend to buy more stuff. They buy a cooler car, bigger house, you know, more clothes, everything, right? I call that the lifestyle tax. So if you really want to take control of your finances, what you have to do is you have to increase the gap between how much you make and what your expenses are. So I think making more money will naturally happen to a lot of people as they progress in

their career. So I think the real key is figuring out where you could cut costs and be minimalistic about everything in your life. Just getting rid of stuff and getting out of the habit of buying stupid stuff. Every time you buy one thing, you got to get rid of two in your house. That's a great way to start. Sean, I think a lot of us often take the opportunity at the end of the year or the start of a new one to get rid of stupid stuff. The harder part is Tom's advice to get out of the habit of buying stupid stuff in the first place. Yeah, preaching to the choir, Sarah, because I'm sure that I have some stupid stuff on the way to my front door as we speak. All right, well, let's hear now from Sally French. She's a travel

writer here and she's been on the show before. Here is her takeaway from 2023. My biggest money lesson is to always ask if your travels go wrong. I was caught up in the United meltdown as well as I had a canceled Southwest flight. And even though I was able to get another flight, I was still delayed while I wasn't entitled to any compensation officially. I still asked airline customer service and I asked nicely. And in both instances, I got either a flight credit or miles from the airline. Even if your travels are disrupted, even if you're not entitled to compensation, it doesn't hurt to ask because like I did, I was able to get some money back. Love it. Always ask. What do you have to lose? All they can say is no and you're on your

way or not. You're stuck at the airport indefinitely, but you can still ask. Yeah. You're hopefully on your way unless your flight is canceled twice. But yes, always worth asking. Next up, we have Kevin Barry. He leads multimedia content here at NerdWallet and happens to be my direct boss. You've heard his name in the credits of this show as a fact checker and editor. looking at everything and the money coming into my checking account. And I had set up all these automated, like send this money here, send this money to an investment account, send this money to a savings account and kind of just set it and forgot about it and let it do its thing this year. And then, you know, like that has really come back to help me. For example, the property tax bill showed up and I was like, whoa, it's, you know, it went up, it's 1000s and 1000s of dollars. But then I went to my account that I'd set up for automated savings for property taxes, because I knew this bill was coming, right? Like Kevin in January knew, Kevin in November had to

pay this bill. And lo and behold, the math held up, and there was the right amount of money there. And that just took a lot of stress out of it. So yeah, I think my money lesson is, is like invest in automation for things that you know you're going to need to pay for or want to pay for even like a vacation. That's just been a real sort of stress reliever and time saver on my end of 2023. Oh, man, Sean automation can absolutely save your sanity. I have quite a few automated contributions in my own finances. A big one, two big ones is I automate contributions for my largest expenses, which are my mortgage and daycare. And that comes out of my checking account into a joint savings account. My husband also contributes. And then the money is whisked away by automatic clearinghouse once a month or once every other week,

depending on the bill. Lovely. You just need to make sure that the money is actually automatically going into that checking account so it can then be paid elsewhere. And then there's automation, obviously, into my retirement account, my 401k that I set up at work. So if you work for a place where you have to opt into the 401k when you first start your job, do it. Because the longer you wait to get that started, the less money you're able to save up and you might even be missing out on employer match. So if you're starting a new job or if you have been in your job for a while, but you just haven't bothered to set up your retirement accounts yet through

your employer, maybe make this the year you do that. Absolutely. Well, I think I'm going to take a page out of Kevin's book and set up automated deposits into an account for my car's annual registration because every year, June, Sean curses every other month of the year, Sean. We're not saving up for that in advance. Okay. Our next piece of advice is from Hannah Cho. She's our nerdy vice president of content. This year, I'm really proud

of finally setting up 529 college saving plans for my two kids. I have three kids and I have one set up for my oldest. And I finally got around to setting up two for my youngest, really trying to lean into taking advantage of time. They're still very young, where I still have probably 10 to 12 years before they head off to college. Yes, all of those years of investing and compounding will work wonders. Sarah, I know you just had your baby like five minutes ago, but have you set up a 529? I have. So by the time my kid is 18, he'll either be well on his way to college or he'll be fighting in the climate war of 2041. That's grim, but probably not inaccurate.

It's grim, but I want to set him up for a realistic life. Right. He'll be able to buy plenty of munitions on the battlefield. Oh, gosh. Well, Sarah, you weren't the only nerd to procreate this year. Adam Smith did as well, and he's all over the 529 planning. In 2023, my wife and I actually had twin boys. And the first thing that came up once I heard that was knowing that I've got to pay for potentially two college educations at the same time. So another thing that crossed my mind was, what if one of them goes to college and the other one doesn't?

Or what if neither of them go to college? What's the best way to approach this? So we actually found that there's a change to the 529 plan, which is how a lot of people save for their child's college education. And so should your child or if one of our twins or both of them decide not to go to college in the future, you can actually roll the 529 plan into a Roth IRA. And the beneficiary of the 529 plan now becomes the owner of that Roth IRA. And so traditional Roth IRA rules apply when transferring ownership. But that being said, it's a great savings vehicle for college planning or setting up a nice little nest egg for my twins in the future. And you know what, Sarah?

I love that Adam knows that there are options for his kids, college or no college. Yes, and this is a huge way to get your kids started on their financial lives, regardless of what they do after high school. All right, up next is Allison McCoy, VP of Brand Marketing at NerdWallet. My husband and I, we have officially begun our home buying process.

And one of the best things we did this year was shop around for the best mortgage. I was pretty surprised at the options out there, even in this high interest rate environment, and feel really confident that we found the right option for us that makes sure we're not leaving any money on the table. Yes, always shop around for just about anything, but especially mortgage rates, especially now. And as Allison knows, we have a lot of mortgage and home buying information all over Nerd Wallet. We have a whole team devoted to that subject matter.

And Abby Badek-Doyle is a member of that team. Here's her best money move of 2023. This year, I learned the difference between an emergency fund and a rainy day fund. People use those terms interchangeably. I know I sure did. So I never really thought about it, but they're actually two pretty different things. So an emergency fund is for big, major surprise expenses like major unexpected car repairs, new carburetor. And a rainy day fund is to help you pay for those

things that aren't necessarily emergencies, but are still outside of the scope of your typical monthly budget. Like, wow, the car is dirty after this camping trip. Can we please pay someone to do a deep clean and a full detail? Anyway, in our savings account, we've always used named sub accounts for goals like holiday shopping and travel. But then we had this amorphous blob of money that I always felt so weird and guilty tapping into. Like, even though we're disciplined savers and there was always enough there, it always just felt weird. So this year, I split the blob into separate rainy day and emergency fund accounts, and that took away all of the

stress and weirdness. Like, mentally, it was so helpful to not feel bad about spending money that I knew that we needed to spend on stuff that we knew was coming, and to know that we're still on track with our emergency savings for the bigger, unexpected stuff. So if you haven't tried naming sub accounts yet, I highly recommend it and review the names often to make sure that they're still working for you. So if you need to set a savings goal for your emergency fund, try using an online calculator. NerdWallet, of course, has a great one. And then name that and separate it from your rainy day fund and from the rest of your other savings goals. And that might be a small thing, but it was super helpful to me this year.

And I hope that it helps you, too. Yes. Yes. Yes. Yes. I feel like we should do a chest bump or a high five after that. Anyway, Sarah, do you have an amorphous blob of money that you feel weird and guilty tapping into? Always with the guilt, but the blob of money is divided into

several smaller sub blobs in the form of a few accounts with different purposes. And that helps me stay organized when it comes to deciding which accounts to use when I need to fund something. Love it. I mean, it's no secret to devoted Smart Money listeners that I have many sub blob accounts that I use on a daily basis. Also, nice call out to our NerdWallet calculators. Okay, onto our final nerdy piece of advice. Already?

That was fast. I know. Well, the good news is, Sarah, that we're always here, all of us, all of us nerds, and we are here for you and our listeners. So our final guest is Amy Knight. She is a spokesperson for NerdWallet UK, and she has a money lesson to share about compound interest and the beauty of snowfall. I have a money lesson to share about compound interest. This year I learned how to explain the effect of compounding using a lovely seasonal analogy, snow. I think this is a great way to

think about saving and it can be helpful when you're trying to start taking a longer term view of your finances. So the lesson is this, you think of your money like snow. When you spend it, it melts and runs away. But when you save it, any new snowfall sticks to the snow that's already there. New snowfall is your wages, maybe a bonus or holiday gift, an inheritance, maybe you sold an asset, and importantly, snow falls as interest. If you're not actively saving, new snowfall is not going to stick. It's going to melt and run straight out of your account. We see in real life that fresh snow sticks a lot more when there's already snow on the ground. I'm going to give a shout out here to my friend Kim in Wisconsin who will soon be shoveling her driveway every day. You start with a thin layer and as more

snow falls it builds up and this is very like compounding. Gradually your snow pile of savings compounds and the bigger it gets the more interest sticks to your money. As you watch it grow, you may be less tempted to melt the whole lot on an impulse purchase. I'd love to know what you think of this analogy, Sean. This winter, if you are able to leave just a little savings in your account after the holidays, think of it like leaving a thin layer of snow on the ground ready for 2024's snowfall to stick to. Don't forget the nerds can help you understand more about saving and investing. To discover how different financial products could work for you, just head to the personal finance section on nerdwallet.com. Well, that was lovely and spoken like a true spokesperson.

Gotta love the plug. She does that for a living. I also really like this idea of snow as a metaphor for saving and compounding. Not only is it accurate, it's also very soothing. Well, I'm closing my eyes here in Virginia, waiting for maybe a snowfall this year that within minutes will turn all black and sooty if we even get snow at all. Because last year we didn't.

I'm hoping we get at least a little bit here in the Pacific Northwest. And also, shout out to Kim in Wisconsin. All right, and that's a wrap on our year-end special series for 2023. But never fear, we'll be back next year. And in the meantime, if you have a money question of your own, turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com.

Visit nerdwallet.com slash podcast for more info on this episode. And remember to follow, rate, and review us wherever you're getting this podcast. This episode was produced by Tess Vigeland. Sean helped with editing. Kaylee Monahan mixed our audio. And a big thank you to NerdWallet editors for all of their help. And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds and happy new year.

Yay!