Latest / The Personal Finance Club Show / Billionaires Leaving Cali, Self-Employed Retirement, and The Permanent Life Insurance Scam | Ep 24

Transcript

Billionaires Leaving Cali, Self-Employed Retirement, and The Permanent Life Insurance Scam | Ep 24 · The Personal Finance Club Show

0:13
Welcome back to the Personal Finance Club show.
0:16
Hey, Jen. What's up, Jeremy?
0:19
So there's nothing more topical to talk about now than something
0:23
that happened 2 1/2 weeks ago, which was the Super Bowl and.
0:30
Something bad Bunny. Yeah, Bad Bunny was the
0:34
headliner, but someone even more famous potentially was singing
0:37
during the Super Bowl. And I just learned this like
0:40
yesterday. It blew my mind.
0:41
And so it was during a commercial.
0:44
I was watching the commercials, and this is literally the only
0:46
commercial that stood out to me during this whole show.
0:49
There's like a commercial, I think it was 60 seconds of a
0:53
Backstreet Boys karaoke song that was just like a blank
0:57
karaoke screen with Backstreet Boys for like a full minute,
0:59
like the last two seconds. It's like buy Coinbase.
1:03
I just remember like watching this, this commercials, like
1:06
what is this? What is this company?
1:08
And why are they burning money on this, you know, this ad or
1:11
whatever. And then but to their credit,
1:14
but even even though I was like, I was like, well, they got our
1:16
attention because it's like with people doing more and more and
1:18
more, they were just like had a very simple, just like karaoke
1:21
with like the song. And I have a question, Jen.
1:25
Yes, there was some singing in that song.
1:28
Do you know who sang? Who'd actually performed the
1:31
karaoke during the Super Bowl karaoke commercial?
1:35
Well, I do. It was me.
1:37
What? We have literally not talked
1:40
about this until this moment. You saying during the Super
1:44
Bowl? Yeah, it's not even my first
1:47
Super Bowl commercial. It's not your what.
1:50
What else have you done for this?
1:51
OK, first of all, OK, what else have you done for the Super
1:54
Bowl? And I'm going to come back to.
1:55
This. Well, the last one was a couple
1:56
years ago and I didn't post it because it was a Jesus
1:59
commercial and people get weird about Jesus.
2:01
Oh. There's a Jesus commercial.
2:04
The Super Bowl. Yeah, there's like a company
2:06
called He Gets Us that in theory just promotes the teachings of
2:10
Jesus. But they are like funded by
2:12
Hobby Lobby. So I just got nervous about
2:14
posting because people would be like, what are their
2:16
affiliations? But yeah.
2:18
Oh well, good thing that this isn't being recorded, right?
2:22
Enough time is best, right all? For all our best listeners.
2:26
Was that, was that a national spot?
2:27
Because this Coinbase thing was national.
2:30
I mean, it was on. Yeah, it was on.
2:32
Like anybody who's watching the Super Bowl saw it.
2:34
I think all the commercials are the same for the Super Bowl.
2:36
I don't think they like no. I do think there are some
2:39
regional spots because I, I, I know they might be, you know,
2:42
it's like San Diego news after the Super Bowl.
2:44
I think there's some like that. No, that one was everybody.
2:47
Oh my. Like all the people in different
2:49
states of my friend saw it. So that's yeah.
2:52
Wild. OK.
2:53
And so, like, how do you get a gig like this?
2:58
You know, I don't want to like, you know, belabor the point, but
3:02
like, singing for and a Super Bowl commercial is crazy.
3:06
It's like hot. Like, how'd you do that?
3:09
Well, short answer is I have been doing music for a very long
3:15
time like almost 20 years now and a lot of different ways.
3:19
So I've like sung in bands and you know, restaurant gigs and
3:23
done like I, I write music for film and TV kind of a lot,
3:26
honestly. And ads and and this this
3:31
company Walker. So like the through line is I
3:35
used to sing in a wedding band, the sax one player in that
3:38
wedding band. His wife works for this company
3:39
Walker so she knows my voice. So I've been doing stuff for
3:43
them for like 5 years where it's just like bank ads or something
3:46
like that. And a lot of times it'll just be
3:47
like a demo and it won't go through.
3:49
And then like I've done a couple that have gone through like.
3:51
A They're like an ad agency that gets hired by companies.
3:54
They're specifically like they're specifically sync like
3:57
so they sync to ads mostly, but like film and TV and yeah, they,
4:03
she called, she's called me like we did a Google spot a couple
4:05
years ago and like she called, she hasn't called me in like a
4:07
year. I was like, Dang, daddy forgot
4:09
about me. And then she was like, hey, this
4:12
is like 2 weeks before the Super Bowl, which is kind of odd
4:14
because I feel like a lot of them are probably more pre
4:16
planned. And she was like.
4:17
There was that recent two weeks before the Super Bowl, they
4:20
they're like putting this commercial together.
4:21
Yeah, it was like ASAP Backstreet Boys cover needed and
4:25
I was like, great, got you. Yeah, I just did it that night.
4:28
That's insane. OK.
4:30
And does this like make you the nation's premier karaoke?
4:34
Like if if like you're the one that gets chosen.
4:37
I know it's because you knew someone like a history of by the
4:39
way, people ask me the same thing.
4:40
It's like how you know, how are you so successful?
4:43
It's like, well, in high school, you know, I started, you know,
4:47
it's like for the task I got in a good college, I like met
4:49
people. I worked really hard for years
4:51
and years and years and then like, and you know, obviously
4:55
and then you get, and then you get lucky just like you did,
4:57
just like I do too. And so it's not like, oh, of
4:59
course I was, you know, and you know, you were just in the right
5:02
place at the right time. You could do it that night.
5:03
And and so there's like, there's both.
5:05
It's like hard work, persistence, and then you get
5:07
lucky. Yeah.
5:08
Also like context is that I have like I studied audio
5:11
engineering, so I have a home studio.
5:13
So I, I mean, I think at this point half of America has a home
5:16
studio. Like they can record themselves
5:17
but to be able to send in. Somebody like we're doing a
5:20
podcast right now for my studio. Exactly, like you could
5:23
literally record both. That's for the Super Bowl.
5:26
But being able to know how to like, actually send files in a
5:28
coherent way is is like something I pride myself on.
5:31
So that helps too for context. But yeah.
5:35
Yeah, amazing. OK.
5:36
And then I think it was a 62nd spot, at least the one I saw
5:41
online was. And from what I saw, Super Bowl
5:44
commercials were starting at 8 million for 30 seconds.
5:47
And they gave me the 16,000,000, yes.
5:50
And so that's my question is of the 16,000,000 that they spend
5:54
on this, there's much, you know, that's what they spent just air
5:56
it, but they must have spent something on top of that to
5:59
produce it, including your fees. How much did you get and if you
6:03
want to share it? Yeah, I'm not fine.
6:06
Yeah, I don't care. I got exactly $5350.
6:10
Really, that's a lot of money. I mean it's.
6:12
Not it's not. I'm sure there's people who get
6:14
like, SAG, like union rates, which would be crazy because
6:18
some of these Super Bowl commercials run like after the
6:20
Super Bowl. But this was a buyout, which
6:23
happens a lot lately. Yeah, yeah.
6:26
Wait, so if it's if it's union rate you get like you get
6:29
royalties every time it airs or? Something you get royalties
6:32
every time it airs and then there's just like a union rate
6:33
for like if it's like a four like this obviously wouldn't
6:36
have even gotten a lot in that way because it was very low
6:39
vocal. But like you get there's just
6:42
certain like in any union that you join.
6:44
There's rules and laws basically they're like if it plays on this
6:47
mainstage, like even the same way like when I've done on TV
6:50
appearances, it's like if you're a background vocalist, you get
6:53
one rate. If you're the lead singer, you
6:54
get another rate. If you're in a choir, you get an
6:56
even lower rate, like. Yeah, are you SAG then?
6:59
SAG was Screen Actors guilt for. You.
7:01
But even when I did TV appearances when I wasn't SAG,
7:04
they have to pay you sag rates because you're on TV.
7:07
OK, Yeah. Yeah.
7:10
So I got $350.00 for like a demo because they were just like, can
7:13
you do this? And they were like, they have to
7:14
pay you something to like try. And so they gave me like 100 and
7:18
they were like, we need more revisions.
7:19
And they gave me 150 and they were like, we'll give you 50
7:21
more if you do this. So I did like 3 or 4 rounds and
7:24
then they they were like here, it's a buy.
7:26
They told me from the beginning, it's going to be a buyout.
7:28
It was a vocal buyout, which I do all the time.
7:30
I do like I do that a lot where it's like they just pay me a
7:32
flat fee. Well, that was incredible.
7:36
You're so Hollywood. Just randomly singing for the
7:38
Super Bowl is amazing. I like saw.
7:40
That well, it was so quiet that I was like, am I posting this?
7:43
And I was like, I'll make it fun.
7:45
I mean, you know, like whatever quiet, you know, like it's you.
7:50
That's crazy. I mean, if it's you like on
7:53
screen, like singing really loudly.
7:55
I was like, who is she? Well.
7:57
It's funny because like when they sent me the thing because I
7:59
never record to picture, so when they sent me the thing, they
8:02
were like, hey, vocals are really intentionally very quiet.
8:05
And they sent me the video and I was like, Dang, like they can't
8:08
even show me what the commercial's going to be.
8:10
This is so stupid. And I'm like, oh, it's this is
8:12
the commercial. Like they sent me the karaoke.
8:15
I just had no idea. I just thought they were being
8:17
very secretive because Super Bowl commercials are so highly
8:19
revered. Right, right.
8:20
They're like, we're only going to give you this weird yellow
8:22
screen with words on it. Literally, I mean, honestly,
8:26
like I, I wasn't joking. Like I was like if you asked me
8:28
two days ago, before I knew it was you, can you remember 1
8:31
Super Bowl commercial? It would have been that one just
8:32
because they're so different, you know, I was just so blank.
8:37
I thought that I pissed a lot of people off because I had to say
8:39
am I so secure instead of am I sexual?
8:42
Yeah, exactly. People were like what the hell
8:43
is this Coinbase thing because. Apparently the.
8:47
Commercials were bad this year. So I don't know, I was with now
8:51
with kids and everything. I it's just craziness in my
8:53
house. I had trouble watching, but I'd
8:55
remember that one. OK, that's funny.
8:57
Anyway, amazing. Congrats.
8:59
That's really cool. Should we like actually talk
9:02
about this was about personal finance.
9:03
So we talked about money for like half this.
9:05
We talked about money this way to bleep it out.
9:08
Pointed questions about my finance.
9:10
You know what? You know that I have at least
9:11
$5000, right? At least I did.
9:12
Well, actually, they haven't paid me yet, so I don't have it
9:14
yet. I forgot Target cared.
9:19
Well, they sure want you to record that in a rush.
9:20
They can't pay you in a rush. Two, let's not get into how long
9:23
it takes to get paid from music gigs.
9:24
Oh my God, that's a. Whole progress.
9:26
Alright, let's get him 2 hot topics.
9:34
If that topic wasn't hot enough, we've got an even hotter one.
9:36
What's today's hot topic, Jen? OK so I have a New York Post
9:41
Instagram post which I'm sure is on their website as well, and it
9:44
says California loses mind boggling $1 trillion in wealth
9:50
and past month alone in past month alone over fears of
9:53
billionaire tax. Yeah, Dang, that's.
9:57
Me as an almost billionaire, what do you think?
10:00
It's an almost billionaire 6,000,000. 1 billion.
10:03
So much closer to 0 than I have to a billion.
10:05
A billion is 1000 million. I'm at six, so I'm 994 away.
10:10
I have 5000, you have 6,000,000. Potato, Potato.
10:13
Jen Jen's 5000 that she's owed. Is.
10:18
Is how close she's she knows someone who's supposed to pay
10:22
her 5350. OK, so you know this what what
10:29
this is talking about is this California billionaire's tax
10:34
that is going to charge billionaires 5% of how much
10:38
their net worth is and give it to the state of California.
10:41
And then there's headlines like this.
10:43
And when I see this sort of thing, I'm like, OK, New York
10:45
Post kind of like well known to be like pretty close in like the
10:49
tabloid. It's not like really refined
10:52
journalism. It's kind of like sensational
10:53
journalism and man, like when I Jen queues is up for me and then
10:58
I do the all the research to talk about it.
11:00
And this this kind of stuff is like kind of annoying because
11:04
fact checking stuff like this is kind of a game of whack A mole.
11:08
Because it's really easy to like say something crazy and then put
11:12
it out there and then to like unwind what they're talking
11:15
about and like give all the context.
11:16
And the truth behind the matter is very, very is difficult and
11:20
not very sexy. And by the time the truth
11:23
tellers are out there unwinding this, the sensationalist
11:26
tabloid, whether it's actual tabloids like New York Post or
11:29
whether it's just, you know, shit posters on TikTok, whatever
11:32
they've said 1650 or 56 other things.
11:36
And so that's just why this misinformation travels so much
11:38
faster than the information. So, so but let's go out on the
11:41
rabbit hole together. So I was like, OK, California
11:43
loses a trillion dollars in wealth and past month loan over
11:46
the billionaire tax. What does that mean?
11:48
I click on it. I go to the article on the New
11:51
York Times or sorry, the New York Post website.
11:54
If you actually read the first line of the article, it says
11:57
according to one of the state's wealthiest residents.
12:00
So this isn't like some deep research.
12:02
This is like according to some rich dude who lives in
12:04
California. I click on that, it goes to a
12:07
tweet that some dude made and it's by Chamath Polypatia.
12:13
I'm sorry if I said your name wrong, I don't.
12:16
Listen. Yeah, I know.
12:18
I'm sure he's really listening. But and you know, he's he's like
12:21
an actual legitimate like rich guy.
12:23
And he has a tweet that basically says $700 billion has
12:28
left California. OK.
12:29
So first of all, his tweet says 700 billion.
12:32
The headline says a trillion. So, you know, they're, of
12:36
course, already just. Yeah, as as what's $300 billion
12:40
between friends, Jen, Right. Imagine, imagine how many $5000
12:44
Backstreet Boys covers we could record for 300 billion.
12:47
You would be hoarse after that. You'd be hoarse.
12:52
You'd be. We should do the math on that.
12:54
Hold on, pause. I'll do the math on that really
12:55
quick. All right back, Just do the
12:58
math. So with the $300 billion the,
13:00
the New York Post is deleted, we could pay Jen $5000 a minute to
13:06
sing Backstreet Boys covers, no breaks, no sleeping, you know,
13:11
non-stop, $5000 a minute for 114 years, That's how much.
13:16
So 300 billion is a lot of money they just missed and then that
13:21
they just ignored, right? And then Chamath's tweet that
13:26
said 700 billion, that's actually referencing another
13:29
tweet from some other Twitter guy.
13:31
And that's referencing actually, you know, we could talk to the
13:34
bottom of the rabbit hole. It actually is referencing a New
13:36
York Times article, which is slightly, which is legitimate.
13:39
And it talks about Sergey Brin, who's moving LLCS out of
13:44
California, some of them. And it's one of those things
13:47
like, and, and it does to, to be fair, it does talk about this
13:51
wealth tax and it's saying maybe some people are moving out of
13:55
California, not sure yet. It's still up in the air.
13:58
And is that headline true? California loses a mind boggling
14:02
trillion dollars wealth. No, first of all, it's not all
14:04
true. That's $700.00 or 700 billion
14:06
that the tweet was about. Even that's making his vast
14:10
journalizing sweeping statements, which is Sergey Brin
14:13
moved some LLCS out of California, but he himself
14:16
didn't move. Therefore, every single ounce of
14:18
his net worth is moving out of California.
14:19
That's not true and it's probably not true for the rest
14:22
of it too. So it's like, you know, you pull
14:23
out his strings to get this headline.
14:25
It's not all true, but like with all scams and misinformation,
14:30
there's always like a nugget of truth.
14:31
And the nugget of truth is there is a ballot initiative for this
14:37
billionaire tax in California. Where are we at with it right
14:41
now? It's collecting signatures.
14:43
After it collects signatures, it needs to go to the ballot in
14:46
November and that needs to get voted on.
14:48
And then if that passes, then it becomes law.
14:51
And so this whole, you know, billionaire flight thing is like
14:55
very premature. It's not even happening.
14:57
Are billionaires thinking, OK, this might happen in the future,
15:00
so I should leave now maybe. But even that I see very little
15:03
evidence of, OK. But, you know, that's the whole
15:08
pull the strings on this misinformation stuff.
15:10
What's really going on here? I think it's worth talking about
15:12
this billionaire tax because it's a little bit interesting
15:15
and it is setting off some warning bells because unlike
15:18
most wealth taxes in the US, most taxes are taxing income.
15:25
So if I am a highly paid doctor and I make $500,000 a year based
15:32
on that income that it's paid from another entity, to me
15:36
that's when the tax happens. But a lot of wealthy people
15:40
don't even really have much income.
15:43
They just own stuff. So for example, we talked about
15:46
Elon Musk a few episodes ago. He owns a ton of Tesla stock,
15:50
among other stuff. His Tesla stock goes up and up
15:53
and up in value. So he is worth more and more and
15:55
more, but none of it's income because it's not, he's not
15:58
selling it, you know, usually and realizing income.
16:01
So just what something's worth. And basically what this tax is
16:06
proposing is saying, hey, instead of taxing income that's
16:09
actually changing hands, let's tax current value of net worth.
16:14
And that's freaking some people out because they're saying, hey,
16:18
if it's unrealized, if I haven't actually sold it yet, and if I
16:20
don't actually have the cash, I don't even have the cash to pay
16:23
the tax on it. I just have this thing that's
16:25
potentially worth some money. And there are some kind of very
16:29
outrageous examples being given saying, hey, what if grandma
16:33
lives in a house and, you know, she bought a little house in
16:36
this dusty little town California back in the 80s for
16:39
$75,000, and now it's worth $800,000.
16:43
And they're saying, hey, grandma, give me $200,000 and
16:46
she doesn't have 200,000. She just lives in the home that
16:48
she's lived in for 40 years. And in order to give a $200,000,
16:52
grandma would have to sell her home and move to, you know, move
16:56
downsize in order to pay that right.
16:58
And that's not fair because you're taxed, you're taxing this
17:00
unrealized game. That's, you know, kind of true
17:03
in that grandma is sitting in an unrealized game.
17:06
But of course, this ballot initiative is only asking the
17:09
tax on people with a net worth of over a billion dollars, not
17:13
grandma's home, of course. And it's giving this kind of
17:17
unrealistic example of saying, OK, all your wealth is type in
17:20
your home, not in much more liquid assets like stocks, which
17:24
can be sold to pay the tax. So to recap, it's a ballot
17:29
initiative. It's not true.
17:31
It's not happening. It would need to be approved by
17:34
the voters. It's based on the residents of
17:37
the person as of January 1st, 26th.
17:40
So it's actually, I think the reason that this is in headlines
17:43
right now is because at the very end of 2025, there was a little
17:46
bit of scrambling of these LLCS or whatever to maybe try and
17:49
move some wealth outside of the state.
17:51
I don't know. But it's based on the residents.
17:52
And I haven't seen anything about people physically moving
17:55
in the end of 2025 yet. So is this thing good?
18:01
Well, you know, there's really two sides to look, two ways to
18:04
look at it. If you're in favor of the wealth
18:08
tax, you would say things like, hey, billionaires aren't even
18:13
getting taxed at all, largely because they don't have income.
18:17
They just have these assets that that go up and up and up in
18:19
value. And then if they want to spend
18:20
the income, they could do this trick where they borrow money,
18:24
they go take a loan from the bank, which is untaxed because
18:26
loans are never taxed with their assets as backing spend that.
18:30
And then when they die, their heirs will appreciate a step up
18:33
in basis, basically never, ever paying tax.
18:35
They basically live on this like this bubble of assets forever,
18:39
never ever pay tax on it. And this is saying, hey, that's
18:44
not fair because all of us, all of us regular people who make
18:48
income, who go work for a living, said his own things for
18:51
a living. We're paying tax.
18:52
How come we're not paying tax? And there's lots of, you know,
18:56
largely regressive taxes in America.
18:59
For example, sales tax, if you're making $50,000 a year,
19:02
you spend almost all of your money, you have to to survive
19:05
where billionaires spend virtually none of their money.
19:08
And so, you know, poor people are getting taxed more as a
19:13
percent of their income because they have to pay sales tax.
19:16
And there's other taxes like that too.
19:17
Whereas this is a progressive tax where it's like, OK, only
19:22
people who have a net worth of over a billion dollars are
19:25
getting impacted by this. And we're trying to do something
19:27
to address the I'm never paying taxes and never gets treated as
19:31
an income situation. That's the pro argument.
19:33
The con argument is saying, hey, this is unrealized gains.
19:37
And if you tax unrealized gains, it's the slippery slope to
19:40
grandma's home that she's got to kick grandma out of her home.
19:43
I hate slippery slope arguments because you could say, hey, if 6
19:46
year olds get a driver's license, why not give babies a
19:48
driver's license? You know, we need to draw a line
19:51
somewhere. That's what laws do, right?
19:53
And you can also make the argument that says, hey, if
19:57
California introduces this, then it's going to disincentivize
20:01
billionaires from living here or moving here or staying here,
20:05
thus hurting other revenues. Because while billiards might
20:08
have this large unrealized gain, they also probably have lots of.
20:12
Taxable things like large expensive homes that pay
20:15
property tax on, and they probably have some income too.
20:17
And, you know, there's probably a lot of billionaires who are
20:19
paying taxes. And so if we push them out of
20:22
the state, that could hurt our tax revenue in an ongoing basis,
20:26
even if we get them for 5% of their net worth now.
20:28
So I'm not going to make an official recommendation on this
20:32
that's not even on the ballot yet.
20:34
I do think it's interesting and I do think that those problems
20:37
of unrealized gains and people, you know, billionaires getting
20:40
more and more and more and more wealthy without it ever being
20:43
taxed is probably imbalance and unfairness in our tax code.
20:47
Is this the perfect solution? I don't know.
20:49
But I do think that the the New York Post topic is a little
20:54
little hot, little bit of a hot topic.
20:56
I'd say all right, Also, I'll stay in California for now.
21:01
Jen, unless you sing what was it for 114 years, non-stop, no
21:05
breaks and get to your billionaire status, I think you
21:10
and I are probably fairly safe from this for now.
21:12
But you know, the slippery slope, people are out in full
21:14
force unless they say, hey, you know, billionaires are just
21:16
going to find offshore loopholes and then they're coming for you.
21:20
And, you know, the the other thing I'll mention about this is
21:23
I'm actually not really a big fan of ballot initiatives in
21:26
general because it just feels like a way for special interests
21:32
to push. You can go around our
21:35
legislative system. And, you know, we already have a
21:37
representative democracy in that we vote for people who we think
21:40
are going to vote in our interests.
21:41
And they go, they go and, you know, do the very complex job of
21:46
figuring out all the implications and, you know,
21:49
writing the laws and fixing them.
21:50
And of course, it's not perfect. We all know that like Congress
21:53
sucks and you know everything, but that's their job.
21:57
When you just go and do a ballot initiative, you're basically
22:00
routing around that and then putting the onus on the voter to
22:04
try to decipher these crazy things.
22:06
And a lot of times I see these ballot initiatives like, I'm
22:09
going to make one up that that's like, it's kind of true, but
22:13
from memory. But it's like, it's the like
22:15
anti human trafficking belt initiative saying, hey, we
22:19
should stop human sex trafficking in the abuse of
22:23
minors. And yeah, that sounds good.
22:25
Of course that sounds good. So voters all rushed to vote yes
22:28
for that. But then you think about it,
22:29
you're like, wait, isn't that already illegal?
22:32
Why aren't our legislators making abuse of minors illegal?
22:36
And the answer is it is illegal. And they're doing something else
22:39
with this because it's like some special interest that's trying
22:41
to like push. Like are these all these like
22:43
props and stuff? Yeah, it's all the props and and
22:45
you know, if you're not in California, you might not even
22:47
know we're talking about because in Michigan we don't have this.
22:50
But in California all the proposals, which is what this
22:52
is. It's you might see, you know,
22:54
in, in November, Jen, when we're voting, we might, we might see
22:58
California Prop 16 or whatever the number is going to be that's
23:01
going to say tax billionaires 5%.
23:03
And then we're going to vote yes or no on that.
23:05
But then the onus is on us to figure out all the nuance of it
23:09
in like the few minutes of our free time we have to dedicate to
23:11
each of these propositions and voting.
23:13
Whereas the people who we pay to go to Sacramento at the state
23:17
capitol and do this with their whole lives, like make them
23:21
decide, right? And so that's why I don't love
23:22
these propositions. So I have a friend who just says
23:25
I vote no on everything because I don't believe in the
23:28
proposition system at all. I think our legislators should
23:30
be doing that. And because it just does seem
23:33
like a way for special interests to go, you know, power through,
23:36
you know, they pay a bunch of people to send from the grocery
23:38
stores and collect signatures. Hey, do you want to reduce the
23:42
abuse of children? Sign our petition.
23:45
They do. It gets pushed through.
23:46
And then what really happens is some big company gets a tax
23:49
break or whatever it is. So I don't love the proposition
23:52
system in California, but and and and it then it what it comes
23:56
down to is propaganda like this post saying, you know, there's
23:59
this like wealth exodus and like, is that true?
24:02
I don't know, you know, but you know, I'd rather our legislators
24:06
do that work. All right, so you and I will
24:08
stick around for now. In the meantime, we will go on
24:12
to our next segment, Money, Money.
24:15
Can I ask a dumb one? The segment where we ask smart
24:18
questions to dumb people, that's a question today.
24:22
Our question is from Mike in Southern California.
24:24
I wonder where Mike kind of applied pressure because he said
24:28
this is somewhat time sensitive. I said, Mike, you know what, I
24:30
got you. Really He's like, I need some
24:33
financial advice. I was like, you know what?
24:36
Jen is doing emergency Super Bowl commercials.
24:39
I need I need an answer in podcast response form
24:43
immediately. Now my inbox is going to blow up
24:44
there, but what about my question?
24:46
No, we don't have that many. OK, so let me let me read Mike.
24:49
In Southern California's question, he said I always I've
24:51
always had a traditional job, so the usual advice of maxing out a
24:55
four O 1K has been appropriate for me.
24:57
However, I married someone who has been self-employed her whole
25:00
life and hasn't ever looked into what she could or should do
25:03
should be doing beyond just putting money in a savings
25:06
account. Should my wife be looking into a
25:08
solo 4 O 1K Sep IRA, Something else?
25:11
And can she contribute any of her savings from prior year's
25:14
income into these accounts? Or would she only be able to
25:17
start contributing income for the current year and future
25:20
years? Any other general advice for
25:22
self-employed people who don't have the one click option to
25:25
save for retirement through employer payroll?
25:28
OK, so Mike's basically asking, hey, for employed people, when
25:33
you get your job, you know, when Jen got her job at personal
25:36
Finance club, we presented them with their four O 1K.
25:39
It's basically like a click, click, click.
25:41
And then from payroll money goes into the four O 1K and it's
25:45
invested reasonably and it grows over time.
25:48
How great. But for self-employed people,
25:50
you don't have like an HR department that basically Tees
25:54
up for you. And So what do you do?
25:55
And in fact, self-employed people don't even have a four O
25:58
1K at all. And So what do you do?
26:00
And so first of all, I've basically been self-employed or
26:04
entrepreneur my entire life of my entire adult life, say for
26:07
two years where I had a regular W2 job.
26:11
And so I, I love the self-employed.
26:14
I feel like I'm Trump saying. Like wait, that got like weird a
26:17
little. I love, I love the the what does
26:21
he say? The uneducated.
26:22
Oh my God, that. What?
26:24
He says. I can't give up.
26:25
Yeah, there's, there's like a famous kind of saying I love the
26:28
uneducated or something like that.
26:30
Feel like that tracks. Yeah, yeah.
26:32
OK. So, so first of all, to break
26:37
down your question, what she's been doing is putting money into
26:39
a savings account. You know, there's kind of two
26:41
main issues here. The first big one is she's
26:44
saving the investing. Saving is just putting cash in a
26:48
pile, piling up cash, cash, cash, cash, cash.
26:50
That's a huge problem because that cash isn't growing relative
26:56
to the cost of inflation. It's actually losing value every
26:59
year. And so like we talked about all
27:00
the time, the big take away from this is that money should be
27:04
getting invested buying things, stocks and bonds, index funds
27:08
and stuff. We talked about all the time,
27:10
OK, if all she did was open up a regular old taxable brokerage
27:15
account, by the way, the savings account that she's in is a
27:17
taxable savings account. So don't get freaked out by the
27:21
word taxable because she's already paying tax on the growth
27:24
that's already happening. The problem is it's just not
27:26
growing very much. And so she just instead of had
27:29
it being a savings account, had it being an investment account,
27:31
There is unlimited, you know, in a regular old brokerage account,
27:34
there's unlimited contribution limits.
27:36
You can take it out whenever you want.
27:37
There's, you know, there's none of this year that's associated
27:40
with these fancy tax advantage accounts.
27:42
And so she could, and you know, and you even asks, can she be
27:45
doing prior years savings? She could, you know, I don't
27:48
know your numbers, but let's say she saved 100 grand over the
27:51
years. She could take 100 grand
27:52
tomorrow, put a new brokerage account, click buy and a index
27:55
fund and then it's all invested. Boom, problem solved.
27:59
That's the big issue here, saving versus investing, the
28:02
more nuanced issue. Jen, what do we need?
28:05
Oh. My God, I have no idea.
28:08
We need the nuance Canon. Oh God.
28:11
We need it's Jen's least favorite running joke on the
28:14
show. We need the nuance ticker tape
28:16
parade. We need the nuance.
28:18
Yeah, the nuance slide whistle. Oh, the Nuance marching band.
28:21
Oh, we have a whole Nuance marching band.
28:23
How great. We've expanded.
28:25
Yeah, this is this is a this is a Super Bowl airing karaoke
28:30
singer here just singing marching band live on our live
28:35
on the Pfc podcast. OK.
28:37
So the big issue is she's has been saving non investing that
28:40
should be addressed. The more nuanced issue is, OK,
28:41
now that you're investing, can you do better than a taxable
28:44
brokerage account? And the answer is, yeah, you
28:46
know, like it's more nuanced. It's like a nuanced marching
28:49
band because you could be saving some taxes, but that's not the
28:51
huge issue. So let's talk about first.
28:54
You can always do a Roth IRA. Roth IRA you can contribute in
28:58
2026, you can contribute up to $7500.
29:02
But there are income limits. So you're married, you're
29:04
married. Your married income limit is I
29:06
think $242,000 or if you're single, it's 153,000.
29:10
So basically if you make more money than that, then you get
29:13
into this, OK, you're not not really allowed to contribute to
29:16
a Roth IRA. You can do a backdoor Roth IRA.
29:18
I'm not going to talk about that now because you know, we got in
29:21
this podcast at some. Point.
29:22
But we've done it before. We have talked about it.
29:23
Done it before, yeah. So there's option one Roth IRA
29:27
option #2 Sep IRA, that means self-employed pension.
29:30
I think that's what stands for With a Sep IRA, instead of
29:34
$7500, you can contribute, you can contribute up to 25% of your
29:39
net business income. That means basically 25% of your
29:42
profit. So for example, if your business
29:44
brings in 200,000 dollars, 25% of that is $50,000 and you could
29:51
contribute $50,000 to a Sep IRA. 50,000 for those keeping track
29:56
at home is way more than 7500. And the Sep has a limit of
30:01
$72,000. So if 25% of your business's
30:05
profit is more than 72,000, you're still capped.
30:08
But 72,000, again for those keeping track at home is way
30:12
more than 7500. So these self-employed business,
30:15
self-employed business retirement accounts actually
30:19
have really great contribution limits, but they do get sticky
30:24
if you have employees. So with the Sup IRA, if you're
30:26
doing it and then you also have employees, you have to open one
30:29
for them too and contribute the same percent of their income
30:33
into their Sup IRA. So they're.
30:36
Yeah, well, it doesn't stink for the employee, James.
30:38
OK, You have that protection too, because you got a four O 1K
30:41
just like I do. Yeah.
30:44
So. And I think what the IRS is
30:46
trying to do here is they don't want this to be a big loophole
30:49
for rich people to, you know, step on the throats of their
30:52
employees. They're saying, OK, hey, if
30:53
you're truly self-employed by yourself, go nuts.
30:56
If you have employees, you got to include them too, to help
30:58
them on this journey of investing.
31:01
There's also, like you mentioned, a solo 4 O 1K.
31:05
Solo 4 O 1K, you can also contribute up to 25% of your
31:09
profits, or you can contribute up to 23,500, which is the same
31:13
as the four O 1K limit. And so basically this is even
31:16
more flexible. For example, let's say you only
31:18
have $40,000 in profit with a set by Ray, you can owe you 25%
31:25
of that $10,000. With a solo 4 O 1K, you can do
31:29
23500. So you can actually do more than
31:32
that. And there's still a limit on
31:34
both of those things, which is however you're contributing, it
31:38
can't be more than $72,000 per year.
31:39
So it's the same limit as the set buy rate.
31:42
So basically the solar for 1K is even a little bit more flexible
31:46
because it allows you to make larger contributions on lower
31:48
income. For your situation, Mike and
31:51
Socal, our neighbor, he's probably within an hour of one
31:54
of us because I'm in San Diego and you're in a.
31:56
Light. Yeah, let's hang out.
31:58
Why don't you ask this question, person?
32:00
You got to just demand an instant podcast response.
32:05
But Mike and Socal, if your wife has a lot of cash sitting there,
32:11
what you might be able to do is say, hey, we're just going to
32:14
live off the cash for a while and then put almost all your
32:17
income as much as we can into these tax advantage accounts.
32:20
I do that a lot where, you know, I'm kind of doing it right now
32:22
where almost all of my Pfc income is going right into our
32:25
four O 1K and I'm living off of cash.
32:27
I'm living off of my investments from years prior.
32:31
And that's something that you might consider doing.
32:32
So again, big picture, go recognize and respect the
32:38
difference between saving and investing.
32:40
If all you ever did was instead of putting into a savings
32:43
account, you put into a investment account, bought a
32:46
three fund portfolio of AUS stock index fund, international
32:49
stock index fund, and bond index fund, you'd be doing great.
32:54
If you try to prioritize a tax advantage account like a solo 4
32:59
O 1K, that'd be even better because you'd save sum on taxes
33:03
and solo 4 O1 KS will let you do either a traditional
33:06
contribution or a Roth contribution.
33:08
And to open one of those, it's really easy.
33:09
You go to fidelityfidelity.com and click open on the four O 1
33:14
or the solo 4 O 1K option. It's kind of just an account
33:16
just like a Roth IRA is. And it's like scary for the
33:19
first like 20 minutes you're looking at it and then it
33:21
becomes easy after that. If you have employees, this gets
33:25
stickier for all these situations.
33:26
And so I basically say if you're a small business with like even
33:29
a few employees, then I would just say, hey, go do a regular
33:32
41K. That's what I do with Nectarine.
33:34
That's what we do here at Pfc. And my advice is to use a
33:39
company called Guideline, which is available at guideline.com.
33:42
And again, none of these are sponsored, sadly, sponsors,
33:45
Fidelity sponsors Guideline. Actually, I've never done a, a
33:49
investment sponsorship at all because I don't want my
33:51
investment. I don't want my advice to be
33:55
biased, but that's what we use at Nectarine because it works
33:59
really, really well. It's really, really easy.
34:00
And you know, in terms of all the logistical stuff small
34:04
businesses need to organize, it ends up being pretty easy to
34:07
run. Your four O 1 Ki wouldn't use
34:08
Vanguard, by the way. That's what we use.
34:10
I normally always recommend Vanguard, but for your own, for
34:13
your small business, 4 O 1K, it's a hairy mess.
34:16
Their interface is just awful. And Jen is looking a little bit
34:20
shell shocked and nodding because I get these cryptic
34:25
emails from Vanguard and I forward them to Jen.
34:26
I'm like, can you deal with this?
34:29
I don't want to deal with this. Then then Jen has to have it
34:32
ruin her life for a few hours instead of mine.
34:35
They know, too. They're so nice on the phone.
34:37
They're like, yeah, we got you. What do you need?
34:38
Like we know our interface is trash, yeah.
34:41
That's a good thing about Vanguard and Fidelis.
34:43
You can usually call them and talk to like a really reasonable
34:45
person. Great customer service.
34:47
I will give them that. OK, which is, you know, very,
34:50
very 1970s of them because, you know, I just call them, you
34:52
know, like just give us a call. No, the, the internet's been
34:55
invented in the last 50 years and like this stuff can be
34:58
automated. So we like we don't even have to
35:00
talk. But you know, that's not how
35:03
they do things. And, you know, Speaking of
35:05
Nectarine, you know, if this is you go grab an hour with a
35:08
nectarine advisor, you can filter by small business and,
35:10
and, and you're going to talk to an expert who actually, you
35:13
know, has deep knowledge about this stuff.
35:15
This part is sponsored by the way, because I'm a co-owner of
35:17
nectarine, as our disclaimer says at the end of every show.
35:21
So I obviously have an incentive there.
35:23
But fun fact, I've never made a penny from nectarine.
35:25
I haven't had a single dollar of income from it.
35:27
So it's am I, am I biased? I don't know.
35:31
I mean, obviously I'm an owner. So I, I hope and expect to have
35:35
value from it one day, hopefully, but you never know.
35:38
So yeah, there's your answer is make sure she's investing and
35:42
you know, don't tell your wife to do anything.
35:43
I would, I just, you know, like learn with her and talk about it
35:47
and, and come to an understanding because you kind
35:49
of don't want to make someone do something that they don't feel
35:51
comfortable doing or don't understand doing.
35:53
But I think it's worth sitting down and if, especially if she's
35:56
curious and and figuring out the difference between saving and
35:59
investing. And then yeah, go open up a solo
36:02
for 1K with Fidelity and throw some money in there and live off
36:04
the savings if it if there's plenty of it.
36:07
All right, So Cal, Mike and wife and Co, I hope that helps and I
36:13
hope it was in time. I mean, I guess you could do
36:15
this, all of this at any time. I think maybe he was talking
36:17
about like there's a tax deadline and for Roth Iras, you
36:22
can contribute to the 2025 IRA before the tax deadline.
36:27
We're almost certain that isn't true for any sort of four O 1K
36:29
solo or otherwise. And so, you know, Mike, there's
36:32
no rush. You know, you can definitely
36:34
start contributing for 2026, but I think the 2025 solo 4 O 1K has
36:39
the ship has sailed for that contribution limit.
36:41
But like I said, it's up to $72,000, which is a lot of
36:45
money. And of course you sell the
36:46
brokerage account option, which is unlimited.
36:48
So there's no, there's no panic to do anything quickly.
36:52
I would just make sure you and your wife are like comfortable
36:56
and informed about what you're doing and make a plan moving
36:59
forward. Period.
37:00
All right, let's go on to our next segment, Scroll Patrol.
37:10
Scroll Patrol. Or I have a video that Jeremy
37:12
hasn't seen. He's going to watch it in real
37:15
time and review it. This is a short 1 and I do have
37:19
a caption from Twitter in case we need context, so hopefully
37:23
this makes sense to you, but go ahead and click on that video,
37:26
Jeremy. All right, I'm already looking
37:28
at the screenshot. It says, or the first image, it
37:33
says this is what a salary of $1 million looks like after taxes
37:38
in California. Gross income $1 million Federal
37:44
tax 321 K State tax 103 K Social Security 10K Medicare 21,700
37:52
State disability 12,000 Total tax 468 that didn't come
37:56
$531,000 Tax rate 46.9% That was like a lot of background noise.
38:02
It was a lot of noise. This guy, I'm like, where are
38:05
you driving, girl? Is she actually like, what is
38:08
all that noise? We got to turn the volume of
38:10
that clip down so. Volume.
38:12
For that one you could just play.
38:14
It this did not need to be a video.
38:17
So this is just a video of a woman sitting in a car wearing
38:23
sunglasses. She does not appear to be
38:24
driving. I don't see a background moving
38:26
or anything. And then it just has this
38:29
overlay of your income is 1,000,000 bucks.
38:31
It goes through all these taxes and then your, your net income
38:34
is, is, you know, a little over half of that.
38:37
You know, she's looking very kind of angry.
38:40
How would you describe her appearance?
38:42
And she doesn't look. She's happy that she lost half
38:44
of her million, if that's even her story.
38:48
Is this her own? I want to see some receipts if
38:50
this is her income, but I recognize that seat belt.
38:52
That's a that's a Toyota Corolla seat belt I.
38:55
Can't. You could be a millionaire with
38:57
a Toyota Corolla. Jerry no, most are.
38:59
Most are you was Warren Buffett. Drive.
39:03
I assume people drive him. I don't know, but he's not a
39:07
millionaire, he's a billionaire. But a billionaire, so yeah.
39:10
All right, so, you know, I don't know.
39:13
She looks very upset. So I think the implication is
39:14
like how sad. But you know, you still have
39:20
$531,000 post tax to spend, which is about what 40,000
39:26
something a month that you can spend.
39:29
That's a lot of money. You have $40,000 a month to
39:33
spend more than 45,000. Whatever it works out to is a
39:36
lot of money to spend. And, and like I said, there are
39:40
lots of regressive taxes in the US and she actually highlights 1
39:47
by the way, these numbers all look correct to me.
39:49
Like this does not suit to be Yeah, this is not, you know, in
39:53
fact, you know, I think you actually can get to a point
39:56
where I think she might have left one out.
39:58
Actually really I think there's like another 2.9% tax on on high
40:04
income. So I think, I think you actually
40:06
can get to a point where you're over 50% total.
40:09
So the millionaires are being robbed.
40:11
You guys are right. But you know, of note, you know,
40:16
of your $1,000,000, only $10,000 goes into Social Security and
40:20
that's like that she puts around there.
40:22
And so that's about 1% of the tax rate.
40:24
Where as if you're a self-employed person like Mike's
40:27
Socal wife, who is let's say making $100,000, instead of
40:34
putting 1% of your tax into Social Security and you're
40:37
self-employed, you're putting about I think it's like 14%
40:41
between Social Security and Medicare.
40:43
So of you know of Mike's wife's 100,000 of income, I don't know
40:49
what Mike's wife makes, but I'm just using that as an example.
40:52
She could actually be paying the same as someone who's making
40:54
$1,000,000 because Social Security and Medicare or Social
40:56
Security stops after I think like 100 and something $1000 of
41:01
income and then there's 0% tax rate above that.
41:03
So it's hugely regressive. And that blows my mind because
41:07
Social Security is like the number one biggest expense of
41:11
the federal government. You know, paying for old people,
41:13
paying all the old people out is our biggest expense.
41:16
And that expense is entirely burdened on the middle class.
41:21
You know, if you make a billion dollars, you still pay the same
41:23
$10,000 in Social Security as that you do if you make
41:26
$100,000. And so it's hugely regressive.
41:29
And, you know, you might be thinking, well, the billionaire
41:32
doesn't need, you know, the billionaire is just one person
41:34
who gets their Social Security back, just like the $100,000
41:36
person is. That's true.
41:38
But are we, like, is the federal government spending a la carte
41:42
now? Are we going to pick and choose
41:43
what we spend money on? Like, you know, I don't feel
41:45
like I'm benefiting from many federal government programs.
41:49
Why am I paying into them? You know, and maybe I'm
41:52
benefiting disproportionately from others.
41:54
Why are other people's paying those right?
41:55
And so I don't get why the biggest expense is crazy,
41:58
literally is crazy. But it just, you know, the
42:00
reason this is getting very political, but the reason this
42:04
is still this way is because billionaires don't want this to
42:07
change. You know, like, you know,
42:08
people, billionaires really love regressive taxes because they
42:11
get a 0% tax rate on anything over $100,000.
42:14
And so, you know, to, you know, respond to this person and also
42:20
this implication is the $1,000,000 is all income.
42:23
It turns out wealthy people generally start to own lots of
42:27
assets. So for example, my income these
42:31
days is really low, like under $100,000 of W2 income.
42:35
Like it's like $66,000 of W2 income is what I like make in a
42:39
year. But I have capital gains because
42:43
I have $6 million of investments.
42:45
And if those go up by 10%, that's $600,000 that I'm
42:49
getting. That's not income.
42:50
It's just wealth growing. And if it's unrealized, I just
42:53
get to become wealthier and wealthier and wealthier without
42:56
paying any tax. And if I sell my assets, then I
43:00
have to pay capital gains tax, which is lower, much lower.
43:02
It's only 15%. And so I feel like this is
43:06
supposed to be some dramatic. Look how look how hard rich
43:11
people have it type video. And my answer is like, first of
43:14
all, $531,000 is like $45,000 a month of income that you can
43:19
spend, which is pretty darn good.
43:21
I would much rather be in that situation than in like the $3000
43:25
a month income, you know, making less than 10% of that like the,
43:28
you know, the median household. So you're still doing pretty
43:30
darn good. And this is kind of like a
43:33
little bit of a exaggerated example where 100% of your
43:36
income is like earned W2 income, not assets creating wealth like
43:42
most millionaires are. And so, you know, strangely,
43:46
it's a perfectly accurate video. I, I, I don't, you know, I don't
43:49
even need to look it up. I think all the numbers look
43:51
exactly right from what I'm seeing.
43:53
You know, Social Security is about 10%.
43:55
Medicare is about 2.1% disability like all this is
44:01
right. So they're effective tax rates
44:02
46.9%, which sounds like a big number and it is.
44:05
But you're making $1,000,000. You know, I'd much, I'd much
44:08
rather have 40% of 1,000,000 than, you know, 100% of 50,000,
44:13
right? So I actually the, the
44:15
progressive nature of our tax system, I think is the right way
44:19
to go in my opinion. So in terms of accuracy, what do
44:23
I what do I give this? I'd say it's accurate, which is
44:26
fine, but I feel like it's like implying something bite based on
44:29
the skull on her face. So I don't know.
44:31
I give it like AB because I don't like, you know, I don't
44:35
really know what the point is other than someone scaling their
44:37
car and posting like this example.
44:39
Did this get a lot of likes, Jen, something this low effort
44:42
and. Stupid.
44:42
Let's see, Let's see what we're working with here.
44:45
She got 3000 comments on Twitter, 2000 reposts and 15,000
44:51
likes. Comments don't really mean
44:55
anything on Twitter nowadays though because people are like
44:58
spamming. But the first one has a cuss
44:59
word in it so I'll bleep. You're right, it's bleeping nuts
45:02
that you pay that little to Social Security.
45:04
So that was like, poor baby. Oh, OK, so they're saying what
45:08
I'm saying, which is, you know, they're kind of you make
45:10
$1,000,000 poor. Baby only $500,000 a year.
45:12
How will she survive? Is she crying about half of
45:15
having half a million after paying her fair share?
45:17
So they're kind of on your team. Yeah, that's usually how Twitter
45:20
goes, though it's. Like then we have this one guy
45:23
literally doing anything in America, the government.
45:27
So we do have some people who are like on her side, who are
45:30
like they're taking. Too much.
45:31
I can't even see that. Your internet's too bad.
45:34
Just grab the picture to our car listeners.
45:36
Oh car listeners, it's a man in an old timey photo when he has
45:39
his hand out and they're he is like, Gimme basically.
45:42
Oh, OK. Yeah, yeah.
45:43
Sorry, I forgot my Internet, my video.
45:45
What are you looking at? Pixels All the time we talk.
45:48
Wow. So sad you can't even see my
45:50
beauty. Yeah, OK, cool.
45:53
Impression of Jen. We did meet in person, so you
45:57
know what I look like. So there's proof of life for
45:59
what? It's worth, you know, I do think
46:01
California has high taxes and when we even when we're talking
46:03
about this billionaire tax, you know, I think it's definitely
46:06
worth being reflective as citizens saying, hey, is taxing
46:10
more and more and more and more the answer.
46:12
And, you know, it's a little bit of a slippery slope thing to say
46:15
because if you go back in like the 50s at the top, marginal tax
46:18
rate wasn't like 3039% like in this day.
46:21
It was like over 90%. So if you were making, you know,
46:24
$10 million, you'd be giving $9,000,000 to the federal
46:27
government, you know? What?
46:29
More something like that. I know pretty crazy, right?
46:31
And back then the thought was you still have $1,000,000, you
46:33
know, other than the people who this was like back in the 50s.
46:37
I know it's, it's crazy to think that that was, you know, this
46:42
kind of like, I think conservative folk can look back
46:46
in our, you know, maybe less woke time and say was, weren't
46:53
things great back then. But like, dude, we had a 90%
46:57
marginal tax rate back then. I think it was like 93% or
46:59
something. All right, pause.
47:01
I'm gonna Fact Check myself. OK, I fact checked myself.
47:03
I was wrong. It wasn't 90%.
47:05
It was 94% and it was, it was in the 50s.
47:09
It was it was in the is in the mid 40s and it was in response
47:13
to World War 2 and so and, and and rates remained above 90%
47:19
until 1963. OK, wait, I retract that.
47:22
I was wrong. I was right.
47:23
It was mostly in the 50s, but it was from the 40s to the 60s.
47:27
Marginal top marginal tax rate was over 90%, Jen.
47:31
And so and and you know, wealth inequality was less back then
47:35
And you know, I think the a conservative folk would say how
47:38
wasn't, wasn't the country great back then, you know?
47:41
Let's make America great again. I know makes.
47:44
Oh, that's a catchy headline. That's a catchy little phrase.
47:47
Is is anyone using that this office Dome?
47:50
Yeah. Should we maybe have that be our
47:52
new tagline for? Personal Remember the three
47:54
rules? Yeah, that's really an option.
47:56
Live below your means and make America great again.
47:58
OK, before let's just let's just look into the make sure that's
48:01
not like infringing on any trademarks.
48:04
Yeah, let's check the trademarks.
48:05
Yeah. But anyway, I give it a because
48:09
I do think that is actually very correct, accurate numbers.
48:12
But you know, in terms of who else are we going to tax, I
48:15
think taxing people making $1,000,000 a year is probably a
48:19
decent place to start. I think there's lots of
48:20
inequalities in our tax code like unrealized gains and and
48:25
capital gains are taxed not at all or much, much lower.
48:29
But I still think we should hold our legislators feet to the fire
48:33
in terms of being judicious with our money.
48:37
And, you know, spending more and more and more obviously isn't
48:40
good either. And so look at, OK, why we
48:43
already have high taxes relative to other states.
48:45
What's the difference? What can we do about it?
48:47
And I don't know, Jen, right to senators.
48:49
I can't solve all our problems in one podcast episode.
48:51
This is already a long one. You're doing great.
48:54
OK, let's let's get into our last segment.
48:58
Jeremy had time today. I had time today.
49:02
You guys yell me in the comments and I yell back through the
49:04
podcast where you can't defend yourself, which is just how I
49:06
like it. Yelling Okay, so in this video
49:11
you recently discovered a content creator named Jonathan.
49:14
He helps people get their money back from life insurance scam.
49:16
So in this video, you're talking about one of your favorite
49:19
topics, permanent life insurance.
49:20
I know you love it, and you play a clip from one of Jonathan's
49:23
call to show how wild some of these policies can be.
49:26
So is there anything you want to add before we see what the
49:29
comments section has to say? Well, yeah, let's, let's let's
49:32
actually play a quick clip of his videos because.
49:35
And just to set the stage, he literally does a three-way call
49:38
with a consumer, a person, a regular old person, like a
49:42
teacher or something who bought a permanent life insurance
49:45
policy. And he calls their life
49:47
insurance company. And he asked them questions like
49:50
how much of this person paying, what's their cash value?
49:54
How much can they can they take a loan out against it?
49:56
And how much can they get out of it right now?
49:58
And then then goes back to the consumer and said, did you know
50:02
that? And it basically because there's
50:05
this. So let's let's play that clip
50:07
now and then we're going to talk about the comment and talk about
50:10
the video. What kind of life insurance
50:12
policy does Brianna have? This is an index universal life
50:15
insurance policy. What's her monthly payment and
50:18
how much total has she put into the policy so far?
50:20
The monthly premium on this policy is $821.55 a month.
50:25
The total amount she's put into this policy is $49,293.
50:30
If she had an emergency today, how much is available for loan
50:35
8? 1000, $274.42.
50:38
OK, So let me get this straight. She's had this policy for five
50:42
years, has put over $49,000 into this policy and if she had an
50:46
emergency today, she only has a little over $8000.
50:49
Is that what I'm hearing? That is great.
50:51
Brianna. Were you aware of that?
50:52
Hold on, let me get this straight.
50:53
I'm like shaky right now. So you're telling me that out of
50:57
the 49 thousand that I've put in, only 8 is available?
51:02
Yes, ma'am. Like am I hearing something
51:04
wrong or is that what you're telling me?
51:05
No, that is correct. So there's that.
51:07
Was Jonathan calling the insurance companies?
51:09
What? What did this commenter say
51:11
about that? OK this commenter says wait so
51:13
there's no benefit to the value of dying and your family being
51:16
paid out, plus the added value of being able to have cash value
51:20
in certain cases? It's not a scam, just not being
51:23
explained very well neither by you.
51:25
Because there are no benefits to life insurance.
51:27
The grammar was a little wild, but.
51:29
Yeah, that last sentence, I don't I feel.
51:31
Like and like. Was there supposed to be more?
51:34
I think they an entire word right there.
51:36
Yeah. OK, so this person saying hey
51:41
that's not fair. You know, even though we're
51:44
literally listening on this phone call of this consumer
51:47
being like, I didn't understand what I bought because it was mis
51:51
sold to me. This guy's saying, wait, so
51:54
there's no benefit to the value of dying and your family being
51:57
paid out plus the added value of cash benefit.
51:59
And so first of all, every time I see a comment like this, I
52:02
click through to their profile and like 9 times out of 10, it's
52:05
an insurance salesman that clearly out like clearly selling
52:08
insurance from their social media account.
52:10
And the other, the other one time I think it's like an
52:12
undercover insurance salesman or someone who does it as a side
52:14
hustle or that's their other account.
52:16
Or maybe it's someone who like misunderstands this stuff.
52:18
But you know, I literally live in these two worlds, one world
52:23
where the insurance companies are saying, Hey, look over here,
52:27
your family gets this death benefit.
52:28
You get cash value, you get all this money.
52:30
And then I try to like turn my head over to the left where all
52:33
the all their customers are sitting.
52:34
And then they push my chin like, no, no, no, don't look over
52:36
there. Look over here.
52:37
What we're what we're pointing is look how beautiful it is.
52:40
Look how beautiful it is. I'm like, no, look how those
52:42
people actually bought it. What do they?
52:44
No, don't look at them. And so Jonathan is like, I love
52:46
what he does because he like gets on the phone and he like he
52:49
has his world collide. He's like, hey, how much money
52:53
did you pay in $40,000? What's it worth today, $10,000?
52:57
Did you know that? No.
52:59
How is this possible thing that can't lose money lost 75% of its
53:03
value so far, You know, And so this commenter, I always say
53:08
there's always a hint of truth to all good scams.
53:11
And this commenter has a hint of truth.
53:13
Isn't there a benefit to your family being paid when you die?
53:16
Yeah, of course there is. Isn't it nice to have cash at
53:18
value? Of course.
53:20
But he literally says, wait, so there's no benefit to the value
53:24
of dying. And So what he's doing is this
53:26
false equivalency. He's saying, hey, you can have
53:30
cash value life insurance or you can have nothing.
53:34
Isn't cash value life insurance better than nothing?
53:38
And that's like saying, you know, hey, my 4 year old has
53:42
eaten nothing but Twinkies for the last week.
53:47
That's not very healthy. And my 4 year old saying, would
53:50
you rather I starve to death and eat nothing?
53:53
Isn't a Twinkie better than nothing?
53:55
And I'm like, well, you know, that's not what I'm proposing
53:58
here. I'm not proposing you eat
53:59
nothing. I'm proposing you eat something
54:01
healthier. And so this person's trying to
54:04
shove Twinkies down my throat. I'm saying, hey, I'm not saying
54:07
Twinkies have no nutritional value.
54:09
I'm saying that's not a healthy thing to eat.
54:12
We should eat something else. And in this case, you know,
54:15
basically what they're saying is once you once you want your
54:18
family to be paid out, sure, if they need to be.
54:21
I don't, you know, the purpose of me dying isn't to have a
54:23
windfall. For example, if I die today and
54:25
my family has to like get by with $6 million, they'll be
54:28
fine. Turns out actually do have life
54:30
insurance, but I've term life insurance, which means while my
54:32
kids are young and my, you know, wife will have an undue
54:36
financial burden while the kids are young, there's another
54:40
$1,000,000. So I literally have a
54:41
spreadsheet that says this is what Jeremy's worth alive 6.
54:44
This is what Jeremy's worth dead 7.
54:46
And so there's like another 1,000,000 bucks, but it's really
54:48
cheap. It's like 50 bucks a month and
54:50
then it expires and when it expires and I get nothing out of
54:53
it, hopefully because I'm still alive, great because then my
54:55
investments won't grow now they'll be worth 10 million or
54:58
15,000,000 or whatever it is, right?
55:00
And so the the hint of truth is like, sure, cash values better
55:05
nothing, sure a death penalty other than nothing.
55:09
But the big lie is you're not looking at the alternative.
55:12
And every time I do the math, like in Jonathan's videos, if
55:16
you were investing that money, you'd be dramatically far ahead.
55:20
And so the basic, you know, try and true advice is by the term
55:24
life insurance. You need invest the difference
55:27
and the insurance salesman will make the comparison to not
55:31
investing. They they say by term.
55:33
They say, oh you want to buy term insurance and flush the
55:35
hundreds of dollars down the toilet every month and I'm
55:37
saying no, I want to use that money instead of giving it to
55:40
you to invest. That way I'll strictly be better
55:43
off no matter when I die. If I die now, I get the term
55:47
life insurance plus all my investments.
55:49
If I die later in the term insurance has expired.
55:51
My investments have grown so much faster than what's inside
55:55
of the life insurance policy. I'm so far ahead that even with
55:57
no death benefit, I'll be better off.
55:59
My, your family will be better off.
56:01
And, and the numbers are dramatic.
56:02
You know, I'm talking like you'll have 80% less money by
56:06
doing this through an insurance. And it, it's impossible to give
56:08
the exact number because every single insurance policy is
56:10
different. But the insurance policies I
56:12
look at like the ones that you hear on Jonathan's call, you
56:16
know, over time you have 80% less money by investing through
56:20
an insurance company rather than investing on your own in
56:22
something like an index fund. And so you know, I give this
56:25
comment for an FI, Don't know how.
56:27
You're trading in the comments. I know I don't always, but
56:30
sometimes I do. I just think it's it's this this
56:33
scam misinformation lie being pushed by insurance salesman
56:36
trying to scare you into buying insurance when that's not what
56:40
most people, almost everybody should be doing.
56:42
So bad job insurance salesman. Sorry.
56:46
Bad job. OK, look at us, maybe to the end
56:50
of another episode. And we another hour, another
56:53
hour longish episode. That's a long one.
56:55
I blame Mike. You're welcome, you long
56:58
commuters. OK, give us the rules.
57:03
That's right, because you don't want to go broke, you want to be
57:06
rich. And how do you do that?
57:07
By following the 2 rules and the two rules are what counts, you
57:10
don't need to worry about the nuanced sticker tape parade or
57:12
the nuanced slide whistle there. You go.
57:16
This like this mic picks up whistling.
57:19
But yeah, follow 2 rules rule #1 live below your means rule #2
57:23
invest early and often. That's how you get rich.
57:25
That's how you do it. See you next week.
57:26
The Personal finance Club show is produced by Jeremy Schneider
57:29
and Jen Wendia, music by Esabalu and Homie.
57:32
Send your questions to podcast at personalfinanceclub.com.
57:36
The Personal Finance Club show is Co hosted by Jeremy Schneider
57:39
who is a co-owner of Nectarine and SEC Registered Investment
57:43
Advisor. The views expressed on this show
57:45
are those of the hosts and guests and do not necessarily
57:47
reflect the views of Nectarine. Please refer to
57:50
hellonectarine.com for all relevant disclosures.
57:54
This podcast is for informational and educational
57:56
purposes only and should not be construed as personalized
57:59
investment advice or a solicitation to buy or sell any
58:02
security. The listeners should consult
58:04
their own financial, legal or tax professionals for advice
58:07
specific