In today’s episode, you’ll hear from just your Hosts! That’s right no guests to save the day.
As a reminder, Justin chronicles his life at Saving-Sherpa.com and Cody writes at FlytoFI.com
In today’s episode, the guys tackle 10 financial tips they always hear and give their take on what’s true.
Hopefully, you enjoy this special episode!
Listen, learn, and let us know what you think.
Episode Summary
Credit Card Balances
We discuss why you should ALWAYS be using a credit cardThe need for setting up autopay to pay off the full balanceNeither of us recommends carrying any balanceSome think it helps build their creditIn reality, you’re just setting yourself up to pay a ton of feesThe actual factor that relates to this is credit history which doesn’t require a balanceRent vs Buy
Justin calls out the importance of keeping in mind closing costs, HOAs, insurance, etcIt’s much more complicated than comparing a mortgage to just your rentThese things are especially true if you’re moving every two or three yearsIf you can go beyond and do things like house hacking, then buying is certainly a great optionAlso, keep in mind the non-money part of the decisionOwning a house can be stressful and add in more variables to your lifeNew vs Used
Justin recommends buying a car that’s 5 years old on a dealThen keep that car for two to three years and try to sell before you hit 100kJustin prefers these cars to be under $10k Cody discusses depreciation and interest ratesJustin then compares buying a car and keeping it for 20 years vs rebuying periodicallyGood vs Bad Debt
Obviously there is some debt that’s terrible such as credit cards with 15% interestThen there is a middle ground where it’s debt that doesn’t earn revenue but allows you to invest moreBoth felt like anything that 4-5% range in interest should just be paid off as quickly as possibleGoing to College
Going to a community college first isn’t a no-brainerMany scholarships that universities offer are only given to incoming freshmanJustin would have missed out on 10s of thousands if he went to community collegeCody calls out how important it is to just be intentionalHe also calls out the cool trades and technical skills that don’t require a college degreeFilling Up Savings Accounts
Justin highlights how destructive inflation can beIt’s also scary to see how many people have avoided investing during the last five yearsThese people are often terrified that we’ve hit the topBoth guys highly recommend buy and hold as well as getting into the market right awayFinancial Advisors
Justin does see value for some to have a tax specialist but doesn’t see the need for a financial advisorIt may be a good idea to pay a one time fee for an advisor to help set up a plan you’re comfortable withThat could help you get off the sidelines without being tied down to fees long termThese advisors often charge at least 1% which can really add upYou can see how much these fees are costing you by using Personal Capital’s Fee Analyzer tool.If the only reason you’re using an advisor is to give you a scapegoat when things go bad, rethink thatTo round it out, Justin cautions employees from having too much of their portfolio in their employers stockWhole Life Insurance
Justin highlights that no reputable financial independence writer has recommended Whole Life insurancePeople want to sell you these because the salesman gets a royalty for lifeWhole Life mixes insurance and investing which means neither is as efficient as it could beThis doesn’t mean you should necessarily cancel your plan if you’re already deep into itIf you’re really interested in this topic, we covered it previously in-depthYou can find that episode with Sa El hereAlso, don’t forget to check out our sponsor Bestow for great insurance quotesFinancial Infographics and Rules of Thumb
Justin really hates these generic infographics“How much you should spend on housing”, “What you’re 401k balance should be by age”These articles can both enable you and handcuff youIt enables you to do some minimum threshold but handcuffs you to not go beyondIf you read that saving 15% is your goal, you may be less likely to shoot for 25% or 50%These infographics can also turn people off from chasing goals at allIncrease Pay and Decrease Spending as Much as Possible
The guys discuss how dangerous it can be to fixate on both of theseObsessing can take you too far and lead to burning outIn reality, just by chasing financial independence you’re already ahead of 95%Finding a balance is so importantThere’s also an ROI for both of these thingsYou can do a ton of work to increase your savings rate just 1-5% but may barely change your retirement dateAs always it’s important to enjoy your journey to financial independenceKey Takeaways
It Depends: So many people try to push rules of thumb on each other but it’s important to tailor things to your lifeDon’t limit yourself: The internet is full of answers, but it may give you some that are well beyond what you’re capable ofEnjoy the journey: We can always make a little more or spend a little less, but always consider what the real cost of those decisions areCall to Action
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