The Personal Finance Podcast - How Do I Reset My Money Mindset and Get Out of Debt? Pause Investing to Save for a House? How Does a Credit Score Actually Work? (Money Q&A)

Starting point is 00:00:00 On this episode of the Personal Finance Podcast, we answer your questions on this money Q&A. What's up, everybody, and welcome to the personal finance podcast. I'm your host, Andrew, founder of MasterMoney.com. And today on the Personal Finance Podcast, we're going to be answering your questions on this episode of Money Q&A. If you guys have any questions, make sure you join the Master Money Newsletter by going to Mastermoney. dot co slash newsletter and don't forget to follow us on apple podcast, Spotify, YouTube, or whatever your favorite podcast player is. And if you want to help out the show, consider leaving a five star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Cannot thank you

Starting point is 00:00:52 guys enough for leaving those five star ratings and reviews. Now today, we have an action-packed episode because I have about seven of your questions that we are going to go through today. So first, we're going to be talking to someone who is stuck into debt and talking through their situation on how they can pay off their debt faster. We're going to talk to someone who has a paid off house and has over a half a million dollars invested and trying to figure out if they should slow down their investing. We're going to talk to a self-employed freelancer on what their retirement options are. And a railroad worker with a child with special needs who is trying to figure out how to invest for their child. Plus, we're going to be talking about abundance mindset.

Starting point is 00:01:25 Should you keep investing aggressively or pull back and when those situations are going to arise and how a credit score actually works? Plus, we have the financial sales. We have the financial scam of this month and we're going to dive into some of the cool stuff I have been doing on the health front into Health Corner, which is at the end of this episode. Many of you have been a loving health corner. We're getting a lot of emails about that. So we will continue to do it at the end of this episode. So I am really, really excited. This is an action-packed episodes. Without further ado, let's get into it. All right. So the first question is from Jeremy. Jeremy says, I just found your podcast about a month ago. And so far I think it's great. Well, thank you so much, Jeremy. I truly

Starting point is 00:02:05 appreciate it. Right now I'm trying to get out of debt and I've been trying different systems but can't seem to keep with it. I'm really wanting to have a mindset with money and start making better decisions around money and helping with my future goals. Well, Jeremy, the first thing that I want to say up front is a, welcome to the podcast. So excited that you are here again. My goal with this show for everybody listening is to bring you as much value as we possibly can. And so that is my entire goal. And I think what you're doing right now, Jeremy, is you're recognizing, hey, I don't have the proper mindset thus far. And so there are some things that I can probably do in order to rewire the way that I am approaching this plan. Now, for anybody in debt who feels as though they can't

Starting point is 00:02:46 stick with their debt payoff plan, what I would recommend is looking into the debt snowball. So the debt snowball actually rewires your brain, where if you look at this mathematically, you can look at something like the debt avalanche, which is going to allow you to mathematically pay off your debt a little bit faster. If you kind of compare the two, it's not that much faster. But the debt snowball is going to actually be the psychological way to pay off your debt and allow you to stick with it. Now, how do these two things work? Well, the way that this works is the debt avalanche means that you are going to pay the debt off with the highest interest rate no matter what the balance is. So let's say, for example, that you have three different debts. Number one is you have

Starting point is 00:03:26 a car loan that has $10,000 left on it at a 6% interest rate. Then you have a credit card with $5,000 on it at an 18% interest rate, and you have a personal loan that's $1,000 at a 10% interest rate. Well, the debt avalanche would say, okay, we're going to pay off the credit card first because this has the highest interest rate. And in reality, that is mathematically the fastest way to pay this off. But let's say, for example, that you have some pretty big loans with higher interest rates. For example, if you had a helock or something like that, they had a really high interest rate and you have $100,000 that you need to be paying off, well, it feels like a grind. It feels like a slog when you are trying to pay that off.

Starting point is 00:04:06 Again, if you have the discipline, this is the way to go because it is faster to pay that off. But the debt snowball allows you to do the opposite. You pay off the smallest balance first, no matter what the interest rate is, and then you make minimum payments on everything else. Once you pay off that smallest balance, then those payments are directed to the next smallest balance. And so this is why it's called a snowball because it begins to grow when you take those extra payments and put them towards the next debt.

Starting point is 00:04:33 So in this example, you'd be paying off the $1,000 personal loan first because it has the smallest balance. Then once that personal loan is paid off, then you take all of those payments that you were directing towards the personal loan, and you put them towards the next smallest balance, which would be the credit card. The credit card gets paid off. Then you take all the money that you were thrown at the credit card, and you roll that into the next balance, which is your car loan. And then all of a sudden, you become debt free that way. It allows you to achieve things. It allows you to pay off debts.

Starting point is 00:05:01 But in addition, it allows you to redirect those payments and start to increase the rate that you were paying off some of these debts. And many people will run the numbers and they'll say, okay, I can pay it off a little bit faster if I do the debt avalanche. So I'm going to go that route. But they have a really hard time sticking with it. So instead, I want you to understand that the psychology matters more than the math in most of the time of these scenarios. In fact, if you run the numbers on the difference between the debt snowball and the dad avalanche, it really is not that big of a difference. And so in this scenario, Jeremy, what I would tell you to do is I would tell you first to look at your debts and list it from smallest to largest. What is the smallest balance and what is the largest balance? Make sure you have those interest rates involved as well. And then we need to start looking at these balances and seeing if we can pay these off as fast as we possibly can. Now, one of the areas that I would look at is when you look at that smallest balance, if you're having a hard time staying motivated, figure out, okay, how much extra payments can I make towards this? And if I'm struggling to stay motivated, how long will it be before I pay off the smallest balance first? That's goal number one. Once that smallest

Starting point is 00:06:03 balance is paid off, let's say it's going to be eight months before you pay off that smallest balance. Well, that gives you something to stay motivated towards. That gives you something to get after. And really, when it comes down to debt payoff, it comes down to tenacity. How willing are you to stick to this goal and actually get after this goal? And if you have tenacity, financial tenacity is one of the best things that you can have in place. And if you have this tenacity that you want to get rid of this for your future, for your family's future, for your children's children's future so you don't have this debt anymore? What a powerful feeling that can be. And when you stay motivated by thinking through how powerful this can be to get rid of this debt, it's going to absolutely change

Starting point is 00:06:42 your life. And so making sure that you have this in place is really, really important. The second thing I will say is to also make sure you have your starter emergency fund in place. Now working towards two goals is pretty difficult at times. But having that starter emergency fund, make sure that you do not get derailed when life throw things at you. So for me, a starter emergency fund is one month of bare bones expenses. So let's say, for example, you decide, okay, well, I'm going to make bare bones of expenses. I spend $5,000 to $6,000 per month, let's say you spend $5,000 per month on a decent month where you don't have to cut anything back. But then all of a sudden you realize, okay, I'm going to cut back to $3,000 per month if I had to cut out all the other excess and the extra

Starting point is 00:07:22 stuff that I buy all the time, from the eating out to the extra groceries that you really don't but they're just luxuries to have to the extra, you know, Uber Eats, whatever else you buy. Those things get cut out and then all of a sudden your bare bones is 3,000. That's what you need to have in place. Why? Because if life derails you, if it throws something at you like a monkey wrench, maybe something breaks down like your car, maybe you lose your job. And so at least you have something in place that's not going to derail your progress

Starting point is 00:07:47 and then you go deeper and deeper into debt. So that start our emergency fund is very important. And then start to automate your debt payments. We want to automatically send these payments over to this debt so that we do not let our willpower get in the O.A. And ruin this equation. Really important to do that because once you start to automate your money towards that debt, then all of a sudden you are literally building wealth on autopilot. So it's one of the best things that you can do.

Starting point is 00:08:13 And then do a mindset shift, being I'm going to be tenacious with my money. I'm going to be tenacious to make sure that I get out of this debt. And nothing is going to stop me until I accomplish this goal. because once you're debt-free, all of the sudden you can do so many other cool things with your money. But the reality is if you feel as though you're in high interest debt and you need to get rid of this as fast as you possibly can, it comes down to becoming tenacious. It comes down to becoming someone who is disciplined with their mindset, which automation can remove your wheelpower so you stay disciplined. And then all you have to do is stick to the goal.

Starting point is 00:08:48 I know it's hard sometimes where Friday rolls around and you want to just spend some money on doing some fun things. but if you can stick to this, it'll change your financial future forever. So that's what I wanted to tell you as you go through this. Again, I appreciate you listening to the show. I'm so glad that you're here and keep me updated on your progress because this is really, really important and this is why we do some of this stuff. And for those of you out there, this is why we have Master Money Academy as well. We cheer each other on in Master Money Academy when we are working on some of these common goals.

Starting point is 00:09:14 So make sure you check it out in the show notes if you haven't already with a seven-day free trial. Let's jump in to the next question. If you've been listening to this show for a while, you know it's not just me anymore. It takes a great team behind the scenes to make everything happen. And if I had to hire someone tomorrow, I'd want someone who could jump right in and make an impact. That's why I'd use IndeedSponsor jobs. When workplace chaos hits, Indeed sponsor jobs helps you reach qualified candidates faster. Your job gets boosted in search results, so you're spending less time searching and more time interviewing the right people. Plus,

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Starting point is 00:11:45 All right, so we're going to jump into the next question. The next question is from Tim. He said, hey, Andrew, I've been listening to your podcast for over a year now, and I really appreciate all the content that you put out. Well, thank you so much, Tim. I truly appreciate you listening and I truly appreciate you being here. I have $39,000 left on a car loan at 7% paying $792 a month plus an extra $250 on top of that. I max my Roth. I contribute 12% to my 401k and invest $200 a month in Acorns and $10 a week into V-O-O. I am 49. My house is paid off and I have $525,000 in retirement accounts.

Starting point is 00:12:23 Should I back off investing to pay off the car loan faster so I can move to be debt-free or stay the course and wait the three-plus years? Tim, you are in a fantastic spot and I tell you what, you are doing an amazing job thus far. I mean, having $525,000 invested and really moving towards investing more money every single month, I think is really, really powerful. And the fact that you have a paid off house and you have this mindset that you want to become completely debt-free, I think it's.

Starting point is 00:12:49 absolutely fantastic. Now, your core loan is right on the line. In fact, we talk about high interest debt a lot on this show. And typically, my fine line is about 6% interest rate, and it has a little bit of flexibility based on situation. A lot of times, I will look at that situation and kind of see what's going on. Based on your scenario here, there's a number of different things that you can look at. Number one is looking at that 7% rate. I think that's an interesting rate, because when you look at this, right now the national average four car loans is right around 5.5%, at least in area. And so this is going to be something where I think you could probably refinance this loan and go to a local credit union or somewhere along those lines and get this refinance. And if they will

Starting point is 00:13:29 refinance it without any closing costs and some credit unions will run promos or things to do that, I think that is a great option to go look into first, is refinancing the car loan that allows you a one and a half percent differential there that's going to ensure that you can get this, you know, over the course of the next three years where you're AOK and you turn it in from high interest debt into low interest debt. But I know right now a lot of car loans have this slightly higher interest debt. But because the spot that you're in, in the way that the market has been moving as of late, I'd be more interested in investing more. I think this is going to be the area where I would continue my investing plan and continue your debt payoff plan. But I would

Starting point is 00:14:05 keep doing what you're doing. I wouldn't pause my investing just to pay this off faster just yet. I would first try to see if I can refinance. And so when you go to some of those places to look into refinancing, you can let them, you know, know what you're looking to do. But the second part of this equation is how much do you need in retirement? Since you're 49, you know, you may be retiring at 60. You may be retiring at 65. You may want to retire even earlier than that. But when do you want to retire? Because let's say, for example, you wanted to retire at age 65 and you have this $500,000 available to you right now. Well, what's your Coast FI number? What's the number where you can kind of pause investing and slow down if you actually wanted to? And so one of the things that you could do to look at this too is look at your

Starting point is 00:14:45 coast-fi number and so I put this into a simple coast-fi calculator. The one I used here is walletburst.com. There's a bunch of them out there that you can use. But at age 49, if you decided that you want to retire at age 65 and you wanted to spend $40,000 per year in retirement from this portfolio specifically, obviously you have other options like Social Security or whatever else you have available to you. And your current investable assets are at that $500,000. And you continue with your contributions, then you would currently be Coast-Fi right now, meaning if you wanted to spend that $40,000, per year. But if you wanted to spend more than that, then we need to continue the investing and continue to start to work towards building wealth out of this portfolio. And so that's where I wouldn't

Starting point is 00:15:25 pause it. So sometimes it just comes down to running the math on what this decision would be and how it would impact your retirement long term, especially as you approach 50. That's where I would really start to make sure I'm running these calculations before I make any financial decision because it's very, very helpful long term. So wallet burst has a great COS-Fi calculator that is basically a good starting point to kind of think through this. There's other great ones out there. I probably need to develop our own because there's some cool things that I would probably add to this, where you can really start to think through, okay, where do I need to be when I start to make decisions like this? And so many people think about just the debt decision. They want to get rid of that debt,

Starting point is 00:16:02 but we also have to just think about the big picture and how is this going to impact the big picture if we pause this long term. And so here's a couple of things that I would do again. One, I would look into refinancing and I would try to refinance that. five and a half percent interest rate if you can find that anywhere. If not, then I would just continue making the payments and looking at the impact of your investments because too, I would run this into a Coast Phi calculator and I would figure out, okay, where do I need to be when it comes to CoastFi? Now, for those of you out there listening who don't know what Coast Phi is, this is a point in time where you have been investing your money where you can actually pause investing and your investment

Starting point is 00:16:39 returns would take your portfolio to your retirement number. And so there is a point in time in every person's situation where if you figure out how much you want to spend every single year, you can figure out what your cost five number is based on your assumption of the rate of return of your portfolio. So a lot of times I like to be conservative with my portfolio and I will say, okay, at a 7% rate of return, if I stopped investing right now, what would this portfolio grow to by the time I turned age 60 or by the time I turned age 65? And it will show you exactly what would happen if you got those rates of returns all the way up to that number. an episode in the past and it's been years since we've done it on CoastFi. I'm going to do an

Starting point is 00:17:19 updated one because I think there's some really cool stuff that we could talk about in that episode and really, really excited about that. But the other thing about this, Tim, and part of this equation is what helps you sleep well at night? Because money is a tool that allows you to remove some of the stressors out of your life. And if this debt is stressing you out, if this is causing you sleepless nights or you're just thinking about it all the time, there's nothing wrong with paying that off whatsoever. For example, my wife and I, a couple of years ago and we had our third child. She's one and a half now. But we decided, okay, I'm going to take on a car loan for our vehicle that we are getting because we needed to get a bigger vehicle that fit all of us into

Starting point is 00:17:55 one car when we're driving around town with three kids. And so we ended up getting a vehicle that I took on a small car loan on. I took on a car loan because I was saying to myself, okay, well, I really would rather invest these dollars. I don't really want to have this car loan on hand. And then all of a sudden, after I took on that car loan, it would probably have been more optimal for me to invest every extra dollar. But instead I was looking at that carlo, and I said, this thing's bothered me. I really don't want to have this on hand anymore. And so I ended up just going and paying it off. Even though it was the least optimal thing for me to do in that situation, it was the best thing for me in terms of just me not having to think about it anymore, removing that

Starting point is 00:18:33 anxiety from the equation. It's not like a true anxiety, but it was just something I was always and constantly thinking about. And some of you listening right now may have felt this before, where you just have this lingering debt sitting there that it feels as though it doesn't go away. It's always in the back of your mind. You think about it on a daily basis. You know, you're just doing random things. All of a sudden, you're thinking about that debt. Like, man, I really just wish I could get rid of this debt.

Starting point is 00:18:56 It's just bothering me. That's normal. That's completely okay. If you want to get rid of it, it may not be the most optimal decision. And you got to know what the repercussions of those decisions are. Like, if you decide that I'm going to pause investing, I wouldn't pause it fully whatsoever. But what I would do is just look at, should I read it, reduce some of my investments to pay off this debt faster, that's one way to look at it as well.

Starting point is 00:19:16 But for me specifically, I always, always, always, especially in your situation, because you're in such a good situation, I would say continue on with your plan and then continue to invest your dollars over that time frame. I never really want to pause investing. I want to make sure I'm continuously dollar cost averaging into the market as much as I possibly can. Now, if this was credit card debt or if this was something else, I would tell you to pause investing and I would tell you to get after it. but because this is right on the fine line at 7%, I would be okay with you based on being debt free everywhere else, not even having a mortgage and having $500,000 in your investment accounts

Starting point is 00:19:51 to continue on with your plan so that you can reach a retirement age and be happy with your retirement. These are key years for you specifically as you begin to approach retirement age. And so I think that's one of the most important things, which is why personal finance is very personal for every single person. In this scenario, I think that unless the debt, really stresses you out, continue your investment plan, and then you can pay off the debt over the course of the next couple of years. Really great question. I truly appreciate it. And feel free to

Starting point is 00:20:20 ask me anything else beyond that. I would love to hear more about your situation. All right, the next question is from Kendall. Kendall says, hey, Andrew, I've been listening for some time and love your approach. The Q&As are so informative. I was pushed into independent consulting last year and no longer I have an employer 401k. I have $210,000 in a rollover IRA, $56,000 in a rollover Roth, awesome, and about $560,000 invested total at age 40. Kendall, that is absolutely amazing. I also use the foreign earned income exclusion, which reduces my taxable income significantly. How should I be contributing to tax advantage retirement accounts as a self-employed freelancer? Thanks for all you do. Well, Kendall, first of all, I just want to say that you have built this incredible base.

Starting point is 00:21:09 At age 40, having $560,000 invested is absolutely amazing. So first off, kudos to you. That is absolutely incredible. We need to celebrate you here because that is so, so cool. But there's one thing that I want you to look at, and I want you to make sure that you have this dialed in first. Because the foreign earned income exclusion can quietly wipe out your ability to contribute to retirement accounts. And so you want to make sure that you are looking at that before we pick an account and confirm you even have contribution room. So here's the trap that I think a lot of people fall into is to put money into an IRA or something like a solo 401k.

Starting point is 00:21:46 You need taxable earned income, what the IRS calls compensation. And the foreign earned income exclusion works by excluding your foreign earned income from your taxable income. And so if you exclude all of it, you have no taxable income or compensation left that you could put into some of these retirees. accounts. And so the way to look at this is that the exclusion only goes up to an annual cap of roughly $132,900 for 2026. And you can confirm the exact figure with your specific situation. But any income above the cap stays taxable in this scenario. And so one thing to look at is if the foreign earned income exclusion is zeroing out your earned income, you have something strategic that you could look deeper into or talk to your CPA about if this works even better for you,

Starting point is 00:22:31 that most freelancers don't know about. And it's called the foreign tax credit. So instead of excluding your income, the foreign tax credit keeps it taxable. So it counts as compensation, which is helpful for contributing to retirement accounts while offsetting your U.S. tax with the foreign tax you already paid.

Starting point is 00:22:49 And so because of this, if you're in a country with comparable or higher tax rates, it often leaves you owing the U.S. little or nothing while preserving your ability to fund some of these retirement accounts. So this is something they'll definitely look deeper into. If you have not done so already and talking to a CPA can really help you through your situation while you're thinking about this. But once you have confirmed that, once you have confirmed your taxable compensation, there is an account that I would definitely look into. And by far, my favorite accounts, especially if you're a freelancer and someone who is doing this solo, by far, one of the best wealth building accounts out there is the solo 401K.

Starting point is 00:23:26 The solo 401k is just an incredible way to build wealth, especially if you're, a high earner because you can put that $24,500 per year as the employee. Plus, you can put in 25% of net self-employment income as the employer. So you can put contributions in it as the employee and the employer for a whopping $72,000 combined in 2006. So you can literally, as long as you are profitable within your business, get up to $72,000 in the solo 401k. This is by far my favorite account and one of the best ones out there. Now, another account out there that you can look at is a SEP IRA and a SEP IRA works by putting 25% of compensation all the way up to that $72,000 again into this account. I find though that the SEP IRA feels a little too complicated

Starting point is 00:24:17 in some scenarios. So the Solo 401K, I typically at the end of the year, I have one. Typically at the end of the year will have my CPA run the numbers. They do the math and say, hey, here's how much you can put into this solo 401k. And usually they tried to tell me, okay, you can put all the way up to the cap, or if there are times where I couldn't, I remember back a couple of years ago, there were years where I couldn't. And so they just tell me, you know,

Starting point is 00:24:41 they come to me and tell me how much I can put in there. There's also the Roth Solo 401K, which is fantastic. And that is another great account. Like if you're looking at a Roth 401K, the Roth Solo 401K works exactly the same way. But you can't have employees outside of maybe, you can't have employees in your business. this outside of a spouse. So once you start to have employees, if you start to go and, you know,

Starting point is 00:25:01 build this business into maybe like a consultant or something like that, then it would change the way that you can do this. But if you wanted to get a really, really good amount in there, you can layer in the Roth IRA and you can layer in some other accounts that allow you to save for retirement. You also have the HSA available to you. So you can contribute to a solo 401k or SEP, whatever you're looking into. You can contribute to your Roth IRA and you have the HSA available to you as well. in addition to the traditional IRA if you wanted to go that route and you wanted to save on taxes in a specific given year. So I think the account is the easy decision. I think figuring out your tax situation is going to be the harder portion,

Starting point is 00:25:39 which is why I would look into the exclusion versus the foreign tax credit. I think those two things are going to help you really figure out where you need to land. It'll be the big difference in this equation. But solo 401K for sure, definitely look deeper into that. I think it is my favorite account overall and one of the best wealth building tools. Thank you so much for the question. And congrats on your progress. That's far.

Starting point is 00:25:59 I think that's absolutely amazing. All right. The next question is from Nathan. Nathan says, I listen to a lot of great personal finance podcast, but yours is at the top. Well, thank you so much, Nathan. I truly appreciate you listening.

Starting point is 00:26:12 I am 51 with $750,000 in my Roth IRA, $575,000 in a traditional rollover, and $10,000 in a taxable account. Wow, that is absolutely incredible, Nathan. Congratulations. That is amazing. I work for the railroad and plan to retire at 59 to 60, which will give me about $95,000 to $100,000 per year and railroad retirement at 67 instead of Social Security. I have a special needs child and want to leave my Roth for my kids.

Starting point is 00:26:40 Should I contribute more to my Roth IRA or a taxable brokerage account? I may also receive $400 to $500,000 inheritance and would love a flat fee advisor recommendation. So Nathan, thank you so much for the kind words and you have done a phenomenal job, having one point. $1.3 million plus in your accounts with railroad retirement waiting for you is one of the strongest positions I have seen in a while. But a couple of things that I would tell you to do first is to look into this Roth versus taxable equation and there's something else I would do instead. But if you have a special needs child and they really need to have this money on hand in order to continue their everyday living, then I would consider this. Now, this is what I would do in your shoes.

Starting point is 00:27:21 Okay. So just to think about this and take this with a grain of salt. But I want you to kind of see if you can go talk to someone about this. I would not name them directly as a beneficiary in my Roth or any accounts because that can disqualify them from, you know, any means tested benefits like SSI or Medicaid or any of that other stuff or the other programs that they may depend on. Now, if they're depending on some of these programs, I would definitely look into those rules, but the money is meant to help them instead of kind of remove some of the other benefits they have in place. And so the fix for this is you can actually draft up a special needs trust. You can go to an attorney. They can help you through this process to figure out how to draft up a special needs trust. And you can pair this with

Starting point is 00:28:02 something like an ABLE account if it makes sense for your scenario where those two things can really help you as a companion for everyday expenses. So an Able account is great for those everyday expenses. The special needs trust is making sure that they get the money in the way that makes sense for them, while also ensuring that they get care and help from some of these government agencies that are there to help special needs folks. And so this does require some special planning from an attorney. And this is not a do it yourself thing. This is a more complicated thing. But I would definitely have a conversation at least with someone and talk through, okay, well, what does this stuff look like? And how can I set this up in a way that makes more sense? Now, let me get to what you're actually

Starting point is 00:28:41 asking. But that's the first thing I would do is I would just say, hey, let's get some protections in place. Let's get this legally protected so that we have that in place first. Now, this may cost you a few thousand dollars if it does that's just part of you know setting this up properly and that's a okay in my book like i would be okay paying that especially in your position where you are i'd be okay paying that knowing that my special needs child is getting the care that they need and it's all going to be structured illegally in the correct way so that's the first thing i would say but to get to what you actually ask your instinct to leave the roth to your kids is smart i think it is something that most people need to know the rules around the roth it is a great thing to hand

Starting point is 00:29:20 down to your kids. A Roth that is inherited passes down actually tax-free, and it keeps growing for your heirs tax-free, and non-spouse heirs must empty it within 10 years. So you have a 10-year window if you inherit a Roth IRA where you must empty that out, and no income tax will be owed along the way. Now, the taxable brokerage account gets what we call the step-up basis at death, meaning your heirs are going to inherit it as if they bought it at the date of death value, wiping out all the capital gains entirely, which is a very cool benefit of something like a taxable brokerage account. And this is where I think both of these are pretty air friendly. The step-up basis is a very, very powerful thing. Now let me explain the step-up basis really quick for those who

Starting point is 00:30:06 haven't heard of this before. Let's say, for example, you have a taxable brokerage account and you ended up putting $100,000 in that taxable brokerage account, and it grew over the years to $500,000. So the gain in that account is $400,000. Typically, when you pull money out of that taxable brokerage account, you're going to owe long-term capital gains tax on that money. And that's going to be 0%, 15% or 20%, depending on where your income is at that time. But when you pass away, something called a step-up basis happens,

Starting point is 00:30:34 where then all of the sudden, now that account moves all the way up where none of that tax is going to be owed on that money all the way up to the point of death. And so if you died and you had $500,000 in that account, and your kids inherit that money, all of a sudden the clock resets, and if they keep those dollars invested, then they would owe on the growth of that money after the date of death. This is a pretty cool benefit to a taxal brokerage account. And so that's the other thing to look at is both of those have the pros and cons of this, and it depends on your situation on which you want to look at.

Starting point is 00:31:05 But there's also one other thing to look into is if you plan on retiring at 59 to 60, your railroad benefits start at 67, what are we going to do in between there and how are we going to think about this? you may have to draw down on some of these accounts for that time being for the seven years that you have that differential there. And so that's another thing that we want to look into and think through how we want to structure this and make this work for your retirement as well. But one thing I would say is that you are in wonderful shape thus far. And this is all about optimization. It's all about thinking through the process and exactly how you want to do this. So here's the things that I would tell you to do. One is I would make sure I talk to that trust attorney and ensure that you at least have a

Starting point is 00:31:43 conversation, figure out what they could do for you, and then you can make the decision on if it is the best possible option for you. Then when you're looking at the Roth versus the taxable, you want to understand, okay, well, am I going to give this entire account to them? How do I want to think about this? Do I want them to be able to pull on this in the next couple of years? And so both of those have tremendous benefits overall when it comes to your kids inheriting that money. And they can continue to allow that money to grow in the Roth for up to 10 years after the day of death. Or you can give them the taxable and then you are going to have the step up base. And then you are going to have to step up basis in the taxable on the date of death. And so between those two things, both are great options.

Starting point is 00:32:18 It's just going to depend on what you really want to see them do with that money. Do you want them to keep it invested? Do you want them to draw on it? How do you want to think about that? And then from there, you can make that choice. But I would first start with those two things. And again, you're in a wonderful position. Congrats to you on all the hard work you have done thus far. I think that is warranted. And you're going to see these accounts compound pretty quickly over the course of the next seven to nine, 10 years because of the way that you have set this up. Once you hit your first million, you really start to see it accelerate as time goes on. So I congratulate you and truly, truly appreciate you sending in the question.

Starting point is 00:32:53 And let me know what you decide. I would love to hear more as you start to think about this. My relationship with money has changed a lot over the years. Early on, I thought building wealth was about making more money. Now, I know it's really about having clarity. When you know exactly where your money is going and whether you're on track, you make better decisions. That's one of the reasons I love Monarch. It's the personal finance app that tracks everything from your accounts and investments to your savings, goals, and spending so you can see your

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Starting point is 00:35:38 Awesome. The next question is from Lindsay. Lindsay says, good afternoon, Andrew. I've been listening to your podcast on and off since 2021 and 22. Your podcast helps give me momentum to keep good financial health and to go through the financial steps. My question is, how do you prioritize your value areas in life and tell yourself that you are okay financially?

Starting point is 00:35:58 My husband and I went through a season of lack the last few years, but we are now in a season of abundance and we have one times our income saved for retirement before our 30s, a six-month emergency fund and a sinking fund. but my mind still sees us struggling. How do you make that mental shift? Lindsay, I absolutely love this question, and I am so glad that you sent this in because I think so many people out there feel this.

Starting point is 00:36:23 You get to the point in time where, first of all, you guys are doing absolutely incredible. Having one times your income saved, having that emergency fund in place, having everything set up in a way that makes sense is absolutely incredible. And I think what you are doing here is, you know, you are on top of your game.

Starting point is 00:36:40 So I want you to know right now that if you're at a point in time where you feel as though you've got extra money on hand and you've got this cash on hand where you are in a position of strength, then let's start to work on our money mindset. And I would first tell you to look and acknowledge that you are probably having a scarcity mindset. So you want to figure out where that's coming from. And when it comes to a scarcity mindset, I had this for years and years and years. I struggled with this forever. I came from a middle class household.

Starting point is 00:37:10 And for me specifically, everything I did when I was growing up, I had to earn myself. Where even when I was going to high school, for example, I went to a private high school, everybody around me was kind of given things. They were given things in a way where I was kind of shocked at how much stuff they were given. And I was always the type of person that I had to go and earn it. I had to go out. And if I wanted to go buy something, I had to go earn money in order to go buy something. My parents didn't just hand me money.

Starting point is 00:37:36 my friends, we would go to the mall, for example, and I would watch their parents just hand them a bunch of $20 bills to go buy stuff at the mall. Me specifically, I had to bring my own money every single time. And so because of that, I had a similar mindset where I had to earn this. I had this scarcity mindset. And I didn't want to go back to that feeling where I always had to, you know, do certain things that created this environment in my brain of like, hey, I need to earn it every single time. And so sometimes it feels as though you still need to contain. to earn it, even though you've already got to the point in time where you can start to enjoy your money a little bit more. And so what happened here is then this caused me in my 20s to have this

Starting point is 00:38:16 really frugal mindset. And I've talked about this a number of times, but there was a point in time where I hit rock bottom. I was living paycheck to paycheck on my first job. I hit rock bottom. I didn't have enough money to fill up my gas tank. And at that point in time, I decided, okay, I'm going to turn this whole thing around. But that also doubled down on my scarcity mindset because I hit rock bottom and I figured out my finances and I figured out how to budget. I figured out how to start to build wealth. I figured out how to increase my income, but I still had the scarcity mindset that I didn't want to go backwards to where I was. And so, you know, my upbringing had a huge impact on me because there were times, you know, like we, you know, my parents are in a business

Starting point is 00:38:50 and when the business went under, we had to go live with my grandmother for a few months. There were times where like all these different things would happen to me. And I just had this scarcity mindset like, I don't ever want to feel that way. I don't ever want to do this. And so I would hoard money or I would put money aside and feel as though I just couldn't enjoy it. And it took me throughout my entire 20s to work on this. And what I realized was that spending is a skill. It's a skill that you can work on and there's a skill that you can earn. And when you start to think about spending as a skill, it's going to change the way you think about money. And this is going to be something where I want you to kind of create a list of things that you actually value. Now, your values and your

Starting point is 00:39:29 husband's values may be very different. Maybe you're looking at your values and you value, I don't know, fitness and you value traveling and you value doing other things and your husband values a very different set of things. But you can come together and work towards common goals that are going to help both of you achieve what you want in this life. Okay. And so you got to think through, okay, how much do I have left at the end of every single month? Well, if I'm hitting my retirement goals, if I'm hitting my investment goals, if I've got my six-month emergency fund, if I've got everything in place, guess what? You get to enjoy some of that money. You have earned the right to enjoy some of that money. And I want you to know that right now because this is one of those things that now, once you realize,

Starting point is 00:40:10 okay, I can enjoy some of this money, now we need to identify those values and we need to spend a little bit more on those values. So I want you to create what I've talked about in the past called a blow fund. A blow fund is something where you put a set of capital inside of a little thinking fund on the side that you can spend on things that you actually want to spend money on. So set aside maybe it's $100 to begin a month. Maybe it's $200, maybe it's $300, depending on how much you have left over and start to use that fund as a place where you and your husband can enjoy that money. And maybe you split it up. If you want to enjoy it on your own and you want to put it towards your own hobbies, do it this way. Split it up where each of you get half and you just start

Starting point is 00:40:51 to spend it on things that you actually enjoy. I want you to practice spending more. on things on purpose. Because in my 20s, I didn't practice this enough. And then I started to practice it a little bit more in my early 30s. And now I have it down pretty much to a science. Sometimes I actually spend overspin on my values. And so I have to reel it back at times to make sure that I am on track. And so in reality, this is going to be something that you'll never fully master. Nobody ever fully masters the game of money. But what you are going to be able to do is you're going to be able to spend more on your values and spend more on things that bring you joy. But it comes down to really talking about this and having a conversation about this and being

Starting point is 00:41:29 intentional about writing out those values. I love to do this where I will actually recalibrate every couple of months and say to myself, well, am I really going in the right direction and rowing in the right direction towards my values? I've seen this happen a few times where I've started to overspend just on random stupid stuff. For example, and then I'll go back and look at my values and I'll say, well, this isn't, this isn't supporting what I really want to do. This isn't pushing towards the goals that I actually have.

Starting point is 00:41:54 This isn't pursuing financial freedom that the freedom that I want for me and my family. This isn't pursuing that long lasting legacy building wealth that I really want. And so instead, I need to make sure that I recalibrate and I reprioritize. Let me give an example of this because I just started to do this recently. One of the things that I have said throughout my entire life is I think that a boat is a big all waste of money. I think a boat is one of those things that is an appreciating asset that goes down to zero at some point in time. But then I started to rent some boats with my kids.

Starting point is 00:42:26 And I saw the smiles on their faces. And my wife absolutely loves going out on the boat. And how much fun and how much happiness and joy it brought my family. Where I live in Florida, we have islands all over the place that you can boat to. You can hang out on the island all day and then shoot back. It's basically like having your own private beach for the most part. And so I realized pretty quickly, this is something that is so incredibly valuable. And we are creating these amazing memories.

Starting point is 00:42:49 And so I started a boat fund where I am going to, at some point in time over the course of the next five or six years, I'm going to buy one of the dumbest purchases that you can buy. I'm going to buy a boat, but I'm going to pay in cash, and I am going to make sure that I do not ever go into debt for something like that. But this is a scenario where I said to myself, what are my goals and what are my values? I want my family to enjoy these experiences together. And so that is why I went out and started this boat fund. And so over the course the next couple of years, I'll talk about this on the show,

Starting point is 00:43:19 but I am going to, you know, have these dollars set aside so that I can buy this boat. Now, I, if anybody wants to know the parameters around what I'm doing here, I'm actually investing the dollars because I don't care if the market pulls back when I'm ready to buy the boat. I'll just wait a year or two longer if that's the case. But for me, for most people specifically, if you're saving for something short term like this, I highly recommend you doing it in cash. I just know what the, what the rules of the game are here. And I'm pretty, pretty much ready to just allow that to grow a little bit more and take that risk. And then if it does pull back, I'm okay, not having the boat. I'll just continue to rent them.

Starting point is 00:43:52 But that's just going to be the way that I do it and the way that I structure it. And so I came to the conclusion that forever, I didn't want to do it because I know how much, you know, how big of a money paid a boat is. But instead I decided, you know what? I'm going to build a cash plan to go out and buy a boat. So I put a little bit of money every single month in that fund. Going to see what happens here. And I'm really, really excited for it. But that is me practicing spending on my values. That is me practicing exactly what I'm talking about here. I want you to start practicing it. Put it in this blow fund and start to see how you feel about this.

Starting point is 00:44:23 How do you feel about spending a little bit more on yourself? How do you feel about taking the extra classes or going out on that fishing charter or going out and doing an extra vacation or two a year or buying the extra stuff at the store? How do you feel about it? And then start to really just exercise that muscle. Now, you don't want to take it too far, but you want to exercise that muscle a little bit more frequently so that you can build the skill of spending. And I think that's going to be one of my favorite things that I love to unlock for people as building the skill of spending because money is there to enjoy.

Starting point is 00:44:53 It is there to bring you value. And that's what I want it to do for each and every single one of you. So that's the starting point is first, work on the psychology. But as you're working on the psychology, put it into practice because doing those two things together is going to allow change. And that's what we want when it comes to spending. All right. So now we're going to talk about the financial scam of the month. and I am going to be willing to guess

Starting point is 00:45:17 that many of you have had this happen to you over the course of the last couple of months or maybe over the course of the last couple of years. And if you have, I want you to comment down below on Spotify or Apple Podcasts or YouTube or wherever you're watching this podcast because I would love to hear from each and every single one of you. And the funny thing is,

Starting point is 00:45:33 is when I planned to do this episode and plan to talk about this specific financial scam, the same evening that I set up this episode, I got the literal text message that I'm about to talk about right now, this exact scam. It was hilarious and just one of those things that made me realize I'm probably supposed to talk about this in the podcast, so I'm excited for it.

Starting point is 00:45:52 So this is the USPS or the FedEx or the DHL or Amazon logistics. This is the scam where you're going to get a text message that you missed a package. Now, if you have seen this in the past before, many times, you'll get a text to your phone that says, hey, miss package, click the link so that you can recover your package. Well, most parts of this country right now, many people are expecting a package of some sort.

Starting point is 00:46:16 And if these scammers get people and they get a lot of people, which we're going to talk about a second, they can actually send out this text message and they are just playing a volume game, hoping that you're expecting a package and you're going to click the link. So here's the numbers behind this scam. People reported $470 million in losses

Starting point is 00:46:31 to text-based scams in 2024, which was just two years ago, and nearly 100 million more than the previous year with package delivery scams as the single most reported category. So the number one, category where people are getting hit with scams when it comes to text messages is package delivery scams. The FBI and the United States Postal Service issued joint warnings about a dramatic search

Starting point is 00:46:54 in these text-based fishing scams that are happening right now. And so here's how this works, because it is a very low pickup that you won't notice, but here's the big thing, okay? A text message arrives and it looks like it's from the United States Postal Service or FedEx or I get them from UPS all the time. It always says UPS, D.HL, or Amazon Logistics. And the message references a package that could not be delivered or a customs hold or an address confirmation needed or a small re-delivery fee. And it's usually like $1.99 or $2.99.

Starting point is 00:47:29 Now what the message does is it creates mild urgency. So the one that I got, for example, says, hey, you need to respond by tomorrow. We're going to send it back to the company where you ordered this package from. And so it makeshift say, okay, I'm going to try to. you know, get this information to them so that they can redeliver my package tomorrow or the next day. And it's going to say your package is easier to later. They're going to send it back. And then there's a link that almost looks legitimate. So a common pattern to look at this for would be like USPS delivery update.com or FedEx tracking alert.net or USPS redelivery.com. And sometimes they use

Starting point is 00:48:03 link shorteners to hide the destination entirely. But the link is going to lead to a fake website that mimics looking exactly like the carrier's branding. So if it's a USPS one, it'll look like their branding. If it's a FedEx brand, if it's a FedEx one, it'll have the purple and orange logo and it'll have, you know, it'll look exactly like the FedEx website. And it'll ask you to confirm your address and pay the small re-delivery fee. Now here's what happens, because this $2 charge is a smokescreen. All it's there to do is to get your credit card number when you put in that information or your phone number or your address. And it's going to start to take some of your information, and sometimes even your login credentials for the specific websites if you

Starting point is 00:48:46 have one. And the data gets sold, combined with other breach data, and used to open accounts in your name. And so if you ever get these text messages, what I would say is do not ever click the link and do not ever put your information in with that specific link. I got one recently, which is the funny thing, but I hadn't got one in the past before this, before I started to talk about this, but I had friends that I've talked to who get these all of the time. And I think it's really, really interesting how they do this because you are not even thinking about it. You're probably expecting a package.

Starting point is 00:49:17 And if they hit you at the right time, all of a sudden they perfectly are going to hit you where you're going to say, oh, shoot, I was expecting that package today, didn't get it. I better make sure that I put in this information. And so you may be asking yourself, well, how do they get this information and how do they find it? Well, the main way is from these data brokers that are out there.

Starting point is 00:49:34 There are data brokers that sell your information, and they take your information and they will sell your name or your phone number or your address, whatever information they have on you and they will sell it to these scammers left and right. They don't care whatsoever. They have your information. They just want to sell it to these scammers. And so what you want to do is get your information removed from these websites. And so the way to do that, the way that I do that is with a service called Delete Me. Delete Me will go to these data brokers and they will remove your information from these websites, which if you do not use a service like Delete Me will take you hours and hours and hours.

Starting point is 00:50:09 And so this is a big portion of my financial protection plan online. And every single person should have a financial protection plan online in 2026 because this is the time where scams are getting better and better and better. So use Delete Me to remove your personal information. And it is one of the best services out there because they also will continuously monitor these websites to make sure that your information is removed. So if you go to join deleteme.com slash pfp20, you can get 20% off delete me with that link. So I highly recommend that you do this because, again, this is something I have been doing for years.

Starting point is 00:50:44 It is one of the best services that I use. They get rid of that personal information. It would take you hours and hours to do this on your own, but delete me does it for you. And so I highly recommend that you look deeper into that. This is one of the most important things that you can do. So you are not subject to a lot of these different scams that are happening. and if they get a piece of your information, all they have to do is go to the data brokers

Starting point is 00:51:04 and get the rest of it and they can open accounts in your names, loans in your names, all sorts of different things. I am so strict on this stuff because I had my identity stolen. I know what it feels like. I know what a pain it is. And so this is why it is so important to me to spread this message of all these different scamps so that it doesn't happen to you.

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Starting point is 00:52:36 different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some of America's top insurers side by side for free. And their licensed team helps you compare coverage, prices, and terms, answers your questions, and even handles the paperwork so you can get the right policy without the hassle. For me, having life insurance isn't about expecting something to happen. It's about knowing my family is protected so I can actually enjoy these moments together instead of worrying about what comes next. And with PolicyGenius, you can find

Starting point is 00:53:19 20-year life insurance policies starting at just $276 a year for $1 million of coverage. Head to PolicyGenius.com to compare life insurance quotes from top companies and see how much you can save. That's policy genius.com. All right. So the next question we have is from Cassandra. Cassandra sent in and said, should we keep investing aggressively or pull back in order to save more for a down payment on our first house? So Cassandra, this is a great question. I think a lot of people struggle through this question. And it's a big, big thing that a lot of people have to think through. Because right now in today's day and age, unfortunately, the housing prices have risen over time.

Starting point is 00:53:58 And so sometimes you have to think through, okay, well, if I'm going to make any meaningful progress towards this down payment, I may have to either reduce my investing or make a shift in my entire budget. But here's a couple of things that I would think about first. Is number one, is I would look at your area and think through total cost of ownership because it may make more sense right now to rent than it does to buy. And so what I would do is we have a total cost of ownership calculator that you can download for free if you go to mastermoney.com slash resources. and you want to look at the difference between buying a house versus renting a house in your area. Because if you're saving for a down payment, not realizing that you may be spending way more on buying a house than you would just renting and investing the difference.

Starting point is 00:54:39 That's the first thing I would look into. And we have tons of episodes diving deep into that if you want to look through that. But if you're thinking through, okay, well, I am going to be buying a house over the course of the next couple of years. And I don't really have a firm timeline yet. Then here's how I would think about this. Once you run those numbers, then it's time to come down to, okay, well, am I hitting my retirement goals? If you're hitting your retirement goals with your investing, that's the bare minimum that you need to invest, is figure out, okay, how much do I need to retire with?

Starting point is 00:55:06 And I want to hit those retirement goals first, okay? Once you have that in place, then you can start to save for a down payment on a house, because the last thing you want to do is allow a house to derail your progress towards retirement. If you stopped or slowed down investing and all of a sudden started to save for three to five years into retirement, you are losing out on not just those investment dollars, but also the opportunity cost that those investment dollars would have grown to if you would have kept them invested. Whereas if you moved the money over to your down payment, it's likely going to be sitting in cash because if you are saving for a down payment, typically we want that in a high yield savings account

Starting point is 00:55:44 sitting in cash so that you have it available when it comes time to be able to buy the home. And so this is one of those scenarios that I think if you are looking at a five-year or less time horizon, it is a big difference in what you're doing there. So some non-negotiables are things like your 401K match, making sure you're investing enough for retirement, making sure you have your emergency fund in place first, then you can go and start to save up for that home. But I wouldn't really slow down investing unless you are just above and beyond where your retirement numbers are. Outside of that, I would continue with the plan of investing and then try to increase your income to save more for those retirement goals or save more for the house goals if you can.

Starting point is 00:56:25 Otherwise, there's nothing wrong with renting. And I want everybody to remember this. There's nothing wrong with renting at all. Now, I want everybody listening obviously to own a home. I think it's great to own a home, but it's not a financial decision. It's a lifestyle decision. And when we think about this as a lifestyle decision, it's going to change the way we actually think about money long term. The Schiller Index, go look up the Schiller Index for home prices over the course of the last few decades. And you will see homes have appreciated after inflation and everything else, right around 2 to 3% every single year. And because of that, investing those dollars into the market can be a big, big difference for a lot of folks.

Starting point is 00:56:57 Now, sure, if you're not investing and you are deciding to build up your wealth in your home, the big thing about the home to remember is that you can't pull money out of your home in retirement. This isn't something that you can utilize in retirement. So if you want financial freedom, if that's your number one goal, prioritizing investing first and then everything beyond your retirement number, then you can put towards some of these other goals like buying a home. So I think that is the way to kind of think about this. You want to make sure you run total costs of ownership, understanding the entire total cost of ownership of buying a house

Starting point is 00:57:26 because there's a lot of additional costs that most people don't factor in. And then from there, you can really make a sound and solid financial decision. So thank you so much for the question. Really great question. I truly, truly appreciate it. All right. So the next one is from Unique. So Unique says, how does a credit score actually work?

Starting point is 00:57:45 So this is a great question, Unique. And this is something where I'm going to go through, the different areas of your credit score. And then I'm going to show you how to 80, 20 year credit score, the areas that you should be focusing on and the areas that you really don't have to focus on as much as some of these other areas. So here's actually what goes into your credit score

Starting point is 00:58:02 and I want you to understand each of these. So number one is payment history. So payment history is 35% of your credit score. So this is whether or not historically you have paid your bills on time and it is the single biggest factor by far, meaning if you make sure that you are paying your bills on time and you have a length of credit history that makes sense, this is going to be 35% of your credit score. So the way to make sure that

Starting point is 00:58:28 you're making those payments on time is to ensure that you are automatically paid. You're setting up auto pay on all of your different bills. That's the first thing that you need to be doing so that you can automatically make these payments. And if you're worried about, okay, well, I don't know if I'm going to have money in that account, you can actually move the date of a lot of your bills to a couple of days after whenever you get paid. So if you get paid twice a month, you can move the date of those bills, let's say, to the 15th, for example, so you know when those bills are hitting. And so it makes it a lot easier. But I highly recommend that you automate your money when you're looking at payment history. Number two is your credit utilization or the amount owed. And so this is how much

Starting point is 00:59:05 of your available credit you're using. So let's say, for example, that you have a $10,000 limit on a credit card and you use $1,000 per month on that $10,000 limit on a credit card, that means you are utilizing 10%. Okay. If you spent $5,000 in that card, you're utilizing 50%. And so this is spread across all of the different credit that you have available to you. So if you have 10 credit cards with $10,000 available and you spend $10,000 across all those credit cards per month, then you're using 10%. So this is one of the most important factors. This is actually 30% of your credit score. and this is going to be a big, big deal. So you want to make sure that you're leaving your credit utilization below 20%,

Starting point is 00:59:48 is like the max that I would do. But if you can even do it even lower than that, if you can make it to something like below 10%, that is what people with really high credit scores do, is a study was done that looked at people with 850 credit scores and most of them kept their utilization below 7%. So I want you to notice two things. Payment history and the amount owed or your credit utilization,

Starting point is 01:00:09 those two alone are 65% of your credit score, meaning that that is a huge, huge portion of what's going on. But the third one is the length of credit history. So this is going to be 15% of your credit score. So these three areas right here are the 80% I'm talking about. The 80% of your credit score that you really need to worry about is a length of credit history. How long have you had credit?

Starting point is 01:00:37 If you are just graduating from college and you have not had credit for very long, then all of a sudden you're going to realize, okay, well, I don't have a length of credit history that's really, really impactful. And so older accounts can help you with this. And this is why I always want you to keep some of your oldest credit cards open, if you can, some of your oldest pieces of credit history. But this is only 15% of your score. So the first two are the two that you need to focus on dramatically. And then the next three are less. But the length of credit history is 15% of your score. So between your payment your credit utilization or amounts owed and the length of credit history that is 80% of your credit

Starting point is 01:01:12 score right there those three things and really two of them are 65 and those are the two you really need to focus on the fourth thing is credit mix so the mix of different types of credit. Do you have a credit card? Do you have a mortgage? Do you have a car loan? Do you have that that that that that that that that that all of these different pieces are going to be about 10% of your score. I would not worry about this like if you're saying to yourself well I've only ever had a credit card maybe I should open up some other loans. No don't do that. just instead, continue on the path that you need to continue on for your own personal situation, but don't open up a bunch of different loans just so you have more credit mix. It's only 10% of your

Starting point is 01:01:46 score. And then the last thing is new credit. So how often are you applying for new accounts? This is also 10% of your score. Every application can trigger a hard inquiry, which can drop your score. So if you've ever opened a credit card or you've ever gotten a mortgage, you can see, okay, my credit score, boom, it dropped 5% or it dropped 7%. That's why. It's because new credit inquiries are going to drop your score temporarily and then it bounces back. So these are just the different things that are going to impact your credit score long term. And these are the things that are going to make the biggest impact. If I was anybody out there who was thinking about, okay, how do I fix this?

Starting point is 01:02:22 Payment history, making sure you are always, always, always, always, always paying on time. It's the number one factor in your credit score and your credit utilization. Those two things are going to be the two biggest things that you need to focus on. And the third thing, if you wanted to add in, the third thing is the length of credit. history, but if you are newer to this, just focus on the first two and not the third one. You don't have to worry as much about the third one. That's how you increase your credit score over time, and it takes a little bit of time. But once you get it there, you are really cranking this out and doing some great stuff. It's a six-figure decision to make sure that your credit

Starting point is 01:02:53 score is on top of its game. So really, really good stuff there as we start to think through this. Now, we're going to jump into a quick health corner. All right, so welcome to another health corner. Really, really excited for this. And there has been some things that I have been doing as of late that I wanted to talk to you guys about. So I've talked about my sleep issues over the course of the last couple of years, and I have done a bunch of different things that have helped me with those sleep issues, and this is one of them. So recently, and this is not sponsored whatsoever, I'm just kind of talking about the, I'll talk about the pros and cons of this, but recently I realize that I am really hot when I sleep.

Starting point is 01:03:27 I run hot and everything that I do, I just radiate heat off my body all of the time. I work out a lot, and so my body temperature is pretty high. And so because of this, when I sleep, I am waking up a lot. And I think part of the reason was because I was hot. So I invested, I bought it with my own money. This is not something that is sponsored. I invested in what is called a chili pad. Now, a chili pad is basically a mattress topper that you put underneath your sheets

Starting point is 01:03:52 that cools down your bed to a specific temperature. So I actually run mine about 55 degrees on my chili pad. And that cools my entire body down while I'm laying down on my sheets. and it has helped me tremendously with my sleep. In fact, I'm seeing deeper sleep, and I'm seeing just a big difference in it overall in my HRV and in my sleep scores. So I have been getting sleep scores in the 90s

Starting point is 01:04:18 on my Garmin four runner 970 ever since I got the chili pad. So this has been a huge portion of what has helped improve my sleep over that time frame is making sure you cool down your body. Now, I got the chili pad cube, which is the cheaper version. It's about a $500 mattress topper.

Starting point is 01:04:35 It runs cool water through these coils that are on that mattress topper. Now, here's the problem with it. This is the thing I don't like about it, is the coils. The coils press up against your back and it feels a little bit uncomfortable for me. But I'm willing to make that trade off

Starting point is 01:04:50 so that I can have deeper and better sleep. So right now I'm not really that comfortable in my bed because of those coils, but you get used to it over time and many people have reported they got used to it as well. And so I have noticed after using it for about 30 days now. I don't notice it as much anymore. It used to, like at first, the first couple of nights, I felt like I was sleeping on a bed of, you know, extension cords,

Starting point is 01:05:11 but now it feels a little bit better. And it's not as thick as an extension cord at all. Don't think that. It's a very small little coil that runs water through it. So you can kind of feel the water running through your back. And then you get used to it. It's not a big deal at all. Some people put some mattress toppers on there, but it can impact how cold it gets. But it gets very cold. I mean, it's, it actually makes a huge impact. It takes water. You run the water through the system, the system then goes and chills that water and then runs it through your mattress pad. So it's a pretty cool system the way that it works. And they have other competitors out there. There's chili pad. There's eight sleep. I think there's some other ones out there.

Starting point is 01:05:44 And I was debating on either going with a chili pad or a bed jet. The way that bed jet works, if you don't want those coils, is it's a fan that you put under your comforter and it shoots air into the bed basically. And you can make it cold air or warm air or whatever else. So if you think you would like that more. That's another thing to look into as a bed jet. It's about the same price as the chili pad cube. So that's definitely something you can also look into. So again, this is my health corner for this week. It has been very helpful for me to have that chili pad in place. And again, I've been sleeping, you know, seven and a half to eight and a half hours on that chili pad and really not having much wake up at all. Actually, a couple of times I've woken up because I've been too

Starting point is 01:06:23 cold. So that's been an interesting dynamic and a big shift for me as well. So again, thank you guys so much for listening to this episode of the personal finance podcast. I truly appreciate each and every single one of you. And if you want to dive deeper more and you want to be able to ask me these questions live on calls, consider joining Master Money Academy. Master Money Academy is where I do these live coaching calls on a weekly basis and we have all of our courses in there and everything else. And we have a seven day free trial down below if you want to check it out. But it is our community, our personal finance community where people are working on common goals in order to be able to build wealth. You can bounce ideas off each other in there. And there's so many.

Starting point is 01:06:59 other cool things that we have available. So nothing to lose. If you want to check it out, join for seven days. Link is down below in the show notes. Other than that, I truly appreciate each and every single one of you being here, and we will see you on the next episode. Recently, our company's softball team lost the big game by one run. Then Dale tried to console us with the quote, winning isn't everything. Well, Dale and I are very different. I get early payout from bed 365. If my team goes up big, I get paid out instantly, even if they blow the lead Sound familiar, Dale? Thanks, Beth 365.

Starting point is 01:07:33 Must be 19 or older Ontario only. Please play responsibly. If you have questions or concerns about your gambling or the gambling of someone close to you, please go to connectsuntario.cate and C-Supply.

The Personal Finance Podcast - How Do I Reset My Money Mindset and Get Out of Debt? Pause Investing to Save for a House? How Does a Credit Score Actually Work? (Money Q&A)

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