Latest / The Personal Finance Club Show / Contribution Limits, Draining Your 401k and a 50-year mortgage | Ep 11

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Contribution Limits, Draining Your 401k and a 50-year mortgage | Ep 11 · The Personal Finance Club Show

• 0:00
  Should you drain your 4O1K to pay off your credit card debt?
• 0:03
  How do contribution limits work? And should you get a 50 year
• 0:06
  mortgage? Let's find out right now.
• 0:13
  Welcome back to the Personal Finance Club show.
• 0:16
  Hey, Jen. What's up, Jeremy?
• 0:18
  So as you may know, Jen and I live on different portions of
• 0:22
  the Internet. Although we did discover
• 0:24
  recently we have one podcast in common, Wait Wait, Don't Tell
• 0:26
  Me. It's a podcast we both have
• 0:28
  listened to, but our Instagram feeds, our TikTok feeds tend to
• 0:34
  be very different. And so we played this game once
• 0:35
  before, which is name that celebrity where I showed Jen
• 0:39
  three people who were very prominent in my sphere of pop
• 0:43
  culture influence. And she throat showed me 3
• 0:47
  people. And we just tried to figure out,
• 0:48
  I think I was one for three and you were oh, for three.
• 0:52
  So we're collectively one for six.
• 0:55
  Dang, it's a cumulative can we start over?
• 0:58
  Well, no. Collectively as a team we're
• 1:00
  we're one for six last time. We're going to see if we're
• 1:02
  getting better than one. For six, so we're playing on the
• 1:04
  same team. Why?
• 1:05
  Just to see like how like how much our circles overlap.
• 1:08
  What I hate about this is like there's no way to study like the
• 1:11
  Internet and like the people are so vast.
• 1:13
  I just can't. I just have to hope that somehow
• 1:16
  I know someone. No, you have to like just go
• 1:19
  pretend to be me on TikTok for like an hour and be like search
• 1:23
  computer programming and like, you know, borderline autism and
• 1:29
  or whatever, you know, whatever, whatever best describes me and.
• 1:34
  Is that a hint? I don't know.
• 1:36
  I'm just what do you describe? How do you describe me?
• 1:38
  Tall, white, dumb looking guy? I don't know.
• 1:41
  OK, So am I going first or are you going first?
• 1:45
  I'll click your celebrity first, how about that?
• 1:47
  OK, so you're going to do my without context, right?
• 1:50
  So like should we explain we have one picture without
• 1:53
  context, one picture with context.
• 1:55
  So is it we're trying to get it without context and then if we
• 1:57
  can't we click on the next one? Yeah, we'll see when we can get
• 2:00
  it, because last time it wasn't really fair because Jen gave me
• 2:02
  more hints in hers than I gave her in mine.
• 2:04
  So now we're trying to make it more fair.
• 2:05
  So I'm going to look at this picture without context to like
• 2:07
  who they are or what they do. And here's the first picture.
• 2:10
  Yep, describe what you're seeing.
• 2:14
  This is a black man with a gold cross chain and a like a bandana
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  in a kind of a headband around his head.
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  He's wearing a big black color jacket.
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  I have no idea who this is. I don't think I've ever seen
• 2:27
  this person before. I mean, you know.
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  Do you want to look at the one with context and then take a
• 2:32
  guess? Yeah, for sure.
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  I want to look. I mean, right now I have no
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  guess. Like, you know, just knowing
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  you, I was like, maybe he's a musician, he's got a gold chain.
• 2:40
  Maybe he's a rapper. I don't know.
• 2:42
  Could be an athlete. I don't know.
• 2:44
  Could be a scientist. I don't know.
• 2:47
  All right. With context.
• 2:49
  OK. Oh, wait.
• 2:51
  I've I've blurred out something so that you wouldn't be able to
• 2:54
  see the name, but the context you want explain what you're
• 2:57
  seeing. So that this looks like the
• 2:58
  cover of ACD to me, like an album cover.
• 3:02
  And there's some words I think I can't really read them.
• 3:08
  This looks like do. Is this like the rapper who was
• 3:11
  shot in the 90s? Tupac.
• 3:13
  Is this Tupac? Oh.
• 3:15
  My God. Wait.
• 3:16
  I'm dying. I told my best friend.
• 3:18
  I said I'm gonna put this one up.
• 3:19
  I feel like Jeremy's gonna guess Tupac.
• 3:23
  It's not. Tupac.
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  It doesn't Well, 'cause the the he had like the band.
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  There's a picture of him with banana.
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  It doesn't look like his face. See.
• 3:29
  Where you got there? Like all these these pictures
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  are are older too, so like they definitely ran in the same
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  circles. But it is an album cover.
• 3:37
  Do you want me to tell you who it is?
• 3:39
  Yeah, tell me who it is. I.
• 3:40
  It's D'Angelo. Do you know who that is?
• 3:42
  No. Deangelo's a singer.
• 3:44
  He's an R&B singer. He actually just passed.
• 3:46
  He had pancreatic cancer. RIP King.
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  He's one of the greatest song artists of all time.
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  He worked a lot with Questlove, who you do know.
• 3:53
  Oh, yeah. From the Roots, who's who's on
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  Jimmy Fallon. Right.
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  So Questlove is the drummer on this album and pretty much all
• 4:00
  of Deangelo's albums. Yeah.
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  He's just like a prolific songer that worked with Erykah Badu,
• 4:05
  who you didn't get last time. He worked with a lot of amazing
• 4:08
  artists from Stevie Wonder. He's he's amazing and RIP King.
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  He's also really fine. I agree with that, but I'm sorry
• 4:19
  for his loss. But man, yeah.
• 4:22
  Do you know, maybe you know from OK, this is probably, I forget
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  what year this song came out. Sometime in the 2000s, he put
• 4:28
  out a song called How does it feel Untitled?
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  And it was a very controversial video because he was naked in
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  the video supposedly. But it did.
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  It only went down so far. And he was super over
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  sexualized. So he left the music industry
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  for like 15 years because he was like, everybody's just trying to
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  like hunt me down. All the women are all over me.
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  And so he just left for a while, came back, released one of the
• 4:49
  greatest albums of all time, Black Messiah.
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  And then and now he's gone. I don't know, don't know him.
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  I don't know music. If you show me musicians all
• 4:59
  day, I will not know any of them.
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  So my bad. OK, all right.
• 5:02
  So am I doing? I'm doing yours?
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  Yeah #1 without contact. I know 01.
• 5:10
  I thought you might know. I think this might be the
• 5:11
  easiest one for you. I don't know.
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  Who is it? What I love?
• 5:15
  OK, so watch me get it wrong. Is this Hank Green?
• 5:17
  It is. OK, I, I listened to a or I
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  watched a podcast the other day with Josh Johnson, who's one of
• 5:23
  the new anchors on The Daily Show, and Ashley Gavin.
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  They're two comedians and they had him on.
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  So I think that if I seen this even like 3 weeks ago, I
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  wouldn't have known. But now I know his face looks
• 5:33
  like like currently. That's funny.
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  Yeah, he's he's like a super huge like OG YouTube, super huge
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  on TikTok and honestly, like I didn't even really he's kind of
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  like a modern day Bill Nye the science guy.
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  And but also I feel like he's one of those people like to some
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  people he's like the biggest person in media and to some
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  people like just never even heard those words together.
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  So. He seems cool and he promoted
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  some, I should probably like know it, but some product where
• 5:58
  he like gives all the proceeds like it's like do.com or
• 6:02
  something like that and he's just like gives all of the money
• 6:04
  to charity he doesn't take. He seems like an extraordinarily
• 6:07
  good human and, you know, kind of angers me that, you know, why
• 6:13
  can't I be that good? Well, you'll get.
• 6:16
  There, but yeah or inspires me how we look at but yeah look at
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  the. One with context just OK, you
• 6:21
  got to sign up Don or going to be one.
• 6:23
  OK, so that was like the context that you gave me.
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  I don't know if it's. Much Well, it's like he's just a
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  he's just a YouTube who's like in his studio doing YouTube
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  stuff. So I couldn't really find how
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  how much better context you have.
• 6:33
  I don't know. All right, let's move on this.
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  Next one, I kind of feel bad because you're not going to get
• 6:37
  it. You made mine really hard last
• 6:40
  time, so I had to do one that was really hard.
• 6:42
  All right, here is a very fancy looking black woman with short
• 6:46
  hair and a crazy extravagant dressed dress that says bizarre
• 6:51
  on the top right, which is looks like some sort of fashion
• 6:53
  magazine. You are just picking things.
• 6:55
  I'm like never going to know. I don't.
• 6:56
  Even know what Harper's Bazaar is?
• 6:57
  That's great. Don't know what that is.
• 7:01
  Yeah, it's all red. I don't.
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  I don't. I don't think I know this
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  person. You want to.
• 7:06
  Go to Contacts. Yeah, I'm going to see if with
• 7:08
  contacts, if it helps. All right, now she's with some
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  white dude with curly brown hair and she's wearing a very sheer
• 7:18
  sexy outfit. Don't know who that dude is
• 7:20
  either. Looks like they're in a romantic
• 7:23
  relationship. This might be like one of those.
• 7:26
  Are they siblings? Are they dating?
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  Except I don't think they're siblings in this case.
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  Yeah. OK.
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  Any wild guesses of like what they might do or what she might
• 7:35
  do or be? They, I, I don't know, just, I
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  have to say they're musicians again, because I don't, don't
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  know them. I don't know what else, unless
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  they're in fashion or something. I don't know.
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  I don't know who's got to tell me.
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  I have no clue. OK, so this is Olandria Carthen.
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  She was the 3rd runner up on the season of Love Island.
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  But but OK, context is that she has blown up since leaving.
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  Like she didn't win, but her and Nick who coupled up during the
• 8:03
  season have blown up. She is like this is she was just
• 8:06
  on the cover of Vietnam Harper's Bazaar.
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  She's been an Ebony magazine. She's been like People's Choice
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  Awards winner like she has been blowing up ever since.
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  There's lots of controversy around her involvement, but she
• 8:19
  has been speaking out for like HBCU since she won and like, has
• 8:22
  all these partnerships and she's taking her brand instead of
• 8:24
  becoming like an influencer. She's totally blown up and I
• 8:28
  love her. I'm obsessed.
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  Good. For her, the guy never heard
• 8:31
  those names. The guy?
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  Never. Heard those fans.
• 8:33
  They're Nicolandrea. Collectively, that's their
• 8:35
  celebrity name. Nicolandrea Hive.
• 8:36
  Stand up. If any of my Love Island girlies
• 8:38
  are in the chat, shout out. I want to say that I watched
• 8:42
  this season because I did have a couple songs in this past
• 8:45
  season. However, I would have watched it
• 8:47
  anyway. I watched.
• 8:47
  Well, you had songs that you wrote on Love Island.
• 8:50
  Yeah. What?
• 8:52
  That's the headline here. That's amazing.
• 8:54
  This is what I'd do. Dang, Jen, you're like, you're a
• 8:58
  celebrity. We should.
• 8:59
  I should start shouting out like what?
• 9:01
  What songs my show? What shows my song.
• 9:03
  Then on November 20th, I'll be in Kardashians.
• 9:07
  What? Get those plugs in.
• 9:08
  That's an incredible way to go. But yeah, I want to blame it on
• 9:11
  that. But I really would have watched
• 9:12
  anyway. I watched last season.
• 9:13
  I didn't have any songs in that season, so it was such a good
• 9:16
  season, so. I've never seen episodes.
• 9:18
  Sorry, I mean, I had to give you a tough one.
• 9:20
  D'Angelo was in the news very so he died like a month ago, so I
• 9:23
  thought maybe you would have seen him.
• 9:26
  No, I mean, there's a, there's a chance, you know, I'm more
• 9:27
  likely just in the influencer world.
• 9:29
  But all right, let's move on. OK, we're moving on.
• 9:33
  Celebrity 2 without. Context out.
• 9:35
  Context. OK, I'll make sure I'll click on
• 9:37
  the right one this. One's a little hard because I
• 9:38
  don't think he even really looks like himself in this photo that
• 9:41
  much, but just he's so, he's so iconic.
• 9:45
  He's a black man with a nice watch and a nice suit.
• 9:49
  I want to say soccer player. Let me look at your face.
• 9:53
  Oh, You're nodding. OK.
• 9:55
  I don't know. From this picture.
• 9:56
  I don't know. So I have to go to context.
• 9:58
  Let me go. Oh, oh, he is a track star.
• 10:03
  It's not Usain Bolt, is it? It is.
• 10:06
  Oh, maybe. I was like, I was like athletics
• 10:12
  or something, like maybe we have an overlap.
• 10:14
  And then track, obviously that's my sport I ran in college.
• 10:16
  This is like the most prominent track and field athlete in
• 10:20
  history, I think, and maybe one of the most well known athletes
• 10:24
  on planet Earth. Nice.
• 10:26
  And yeah, he's very hard to recognize without context
• 10:28
  because he's just so iconic in his like, Jamaican jersey and
• 10:31
  everything. For sure.
• 10:32
  And I feel like I've only seen like, action shots of him.
• 10:36
  So yeah. Yeah, I know.
• 10:37
  I mean like, why would he be in a suit?
• 10:39
  Yeah, OK, sweet. So I think you're 2 for two and
• 10:43
  I'm O for two. So I've already lost this round.
• 10:45
  But but as a collective we're we've already improved on last.
• 10:48
  Time. I like the idea of us working
• 10:49
  together. OK, so you're going to go my
• 10:51
  you're on #3 for me. Yeah, I think.
• 10:53
  You'll get this one. I hope so.
• 10:56
  I. Think so I get.
• 10:57
  Try to make it a little bit easier.
• 10:58
  Let's see if you know. Oh, I know her.
• 11:02
  I don't know if I'm gonna think of her name.
• 11:03
  So she's a theatre actress and singer in the in the show
• 11:09
  Wicked, and she plays. I've never seen Wicked and so.
• 11:14
  But yeah, she's definitely been all over everything.
• 11:19
  I thought that you might know like what she's from, but not
• 11:21
  necessarily know her name. Yeah, I would even know her
• 11:23
  name. If you gave me like 3 options,
• 11:25
  I'd be able to know it. I'm sure that context is very
• 11:29
  contextual. The green face kind of gave
• 11:33
  away. Although honestly, like I've
• 11:34
  since I haven't seen Wicked, actually I think I recognize
• 11:36
  that the first one more just because I've seen her she's.
• 11:39
  Really. So you don't know the
• 11:40
  character's name? Take a guess.
• 11:45
  Alphaba. Is it alphaba good?
• 11:47
  Job. Oh wow, so proudly I'll give you
• 11:50
  this one cuz you got alpha. Her name is Cynthia Revo.
• 11:53
  She's an amazing Broadway star of Color Purple fame, but
• 11:57
  obviously of recently wicked fame with Ariana Grande and that
• 12:01
  crazy press tour that they're on.
• 12:03
  And I'm obsessed with her. Obviously she's one of the best
• 12:05
  singers alive. OK awesome.
• 12:07
  Let me do your #3. This one, your first two are so
• 12:11
  hard. This one I feel less bad about
• 12:12
  cuz I don't think he didn't get her.
• 12:14
  She looks like OK, it's a a white woman with like strawberry
• 12:17
  blonde hair. She looks a little OK.
• 12:19
  She looks like she's giving like a Ted talk.
• 12:22
  She's a mic on. I don't know without the
• 12:25
  context. Let me go to with.
• 12:26
  Context. If you got from that, I'd be
• 12:27
  shocked. Oh, OK, She's a judge ATV judge,
• 12:32
  but not Judge Judy because Judge Judy's a lot older.
• 12:36
  I don't know. I don't know.
• 12:39
  I know like Judge Joe Brown and Judge Judy and that's pretty
• 12:42
  much it. That's fine because this this is
• 12:44
  I did 2 of my celebrity crushes last time, Alex Honnold and Ken
• 12:49
  Jennings from from Jeopardy. This is my third celebrity
• 12:53
  crush, third of three. So this is all of them.
• 12:55
  OK, she's how old is she? It's not, you know, look, it's
• 12:59
  not that old, right? 55 minimum.
• 13:02
  Yeah, here you go. OK.
• 13:03
  I guess you're old enough for that cougaring, yeah.
• 13:05
  I'm 45, sorry I can't do a 10 year age gap.
• 13:09
  What? I'm gonna tell Andrea, OK?
• 13:12
  So who is she being? Married is the bigger prom or
• 13:16
  not a prom. This is ATV Judge Marilyn
• 13:21
  Milian, who was famously the judge on the People's Court for
• 13:23
  like 20 years. Gun to my name would never know
• 13:26
  that name. Yeah.
• 13:28
  Yeah, do. If you if I said People's Court,
• 13:30
  who would you say I don't? Know oh.
• 13:32
  OK, most people say Judge Wapner, but like, he stopped
• 13:35
  doing the People's Court like literally 25 years ago or
• 13:38
  something. And she did it for 20 years up
• 13:40
  until a couple years ago when they, you know, finally ended
• 13:42
  the show. But she's just like, I don't
• 13:44
  know, one of these people where you just watch her and she's
• 13:46
  like, she's so smart. She's like so fast, She's tough,
• 13:51
  she's mean, she's funny, you know?
• 13:54
  I already forgot her name. Marilyn Milian, She's Latina.
• 13:58
  She speaks Spanish and gives these little phrases in Spanish.
• 14:00
  I like, used to just be, like, addicted to the People's Court.
• 14:02
  It's so silly. But yeah, definitely.
• 14:05
  Yeah. But she's not, like, in pop
• 14:08
  culture these days at all. So if you, like, weren't
• 14:10
  watching the People's Court 10 years ago.
• 14:12
  I was watching Oprah, I guess. All right, so I got 1.
• 14:16
  You got 2-3 out of 6. Not terrible.
• 14:20
  Yeah, very good. I'm proud of us.
• 14:22
  That was fun. Yeah.
• 14:24
  All right, let's get into the actual show, I guess.
• 14:26
  Yeah, let's do actual personal. Finance, OK, let's get into
• 14:33
  explain it like I'm five our our subject today.
• 14:39
  Contribution limits. I'm just going to leave it there
• 14:41
  because I feel like you have a lot to say.
• 14:42
  I'm going to let you dive in. I do.
• 14:46
  Contribution limits really often confuse people.
• 14:50
  And so I'm going to start just talking about bank accounts and
• 14:54
  then we're going to get to and explain like I'm 5 analogy.
• 14:58
  And I think maybe if we go in order, it'll be all become more
• 15:01
  clear. And so if you go open up a
• 15:03
  savings account or a checking account, most people understand
• 15:06
  this. Go to a bank, you open up
• 15:08
  account, you can put cash and you can put cash out.
• 15:11
  No one ever worries about contribution limits here.
• 15:14
  If I go put in $10.00 or $100 or $1000 or $1,000,000, that's no
• 15:19
  problem for your bank account. And actually, at one point, I
• 15:22
  did actually contribute, you know, $2,000,000 at once all to
• 15:25
  a bank account. I called the bank ahead of time
• 15:27
  and said, can you hold this much money?
• 15:30
  Is this going to become a problem?
• 15:31
  I don't know exactly. They said, yeah, no problem.
• 15:37
  And I didn't know that. You know, I assume if it was
• 15:39
  like a trillion dollars, that would probably set off some sort
• 15:41
  of alert and you get a phone call and be like, this is more
• 15:43
  money than exists right now. Where did you come up with this?
• 15:47
  But otherwise, there are no there's no limits to bank
• 15:50
  accounts. OK, so that's a bank account.
• 15:52
  But bank accounts only hold cash.
• 15:55
  If I go to my bank and try to deposit Apple stock, they're
• 15:59
  going to say you can't do that. That doesn't make any sense.
• 16:02
  Banks only hold cash. So enter a brokerage.
• 16:06
  A brokerage is like a bank. It's a big financial
• 16:09
  institution. But instead of just holding
• 16:11
  cash, they have different rules. And they can hold stocks and
• 16:15
  bonds and ETFs and mutual funds and investments, right?
• 16:19
  And so I can go to a brokerage account and deposit cash, or I
• 16:24
  can deposit, you know, stock or buy stock inside of my brokerage
• 16:28
  account. Brokerage accounts also don't
• 16:30
  have any sort of contribution limits.
• 16:33
  So I can, you know, go to my, I'm a very like hands on person.
• 16:37
  So I can like log on to Bank of America and click transfer
• 16:40
  transfer from my checking account to my brokerage account
• 16:44
  with a brokerage. Like I have a really hard time
• 16:47
  saying that word. In elementary school, I had to
• 16:50
  go to speech therapy for my Rs, of which there is one in my
• 16:54
  first name. And so my name, my first name,
• 16:57
  Jeremy was like still very hard for me to say sometimes Jeremy.
• 17:01
  And like, you know, I'm pretty good at R at this point, but
• 17:04
  brokerage is a really I've never.
• 17:06
  Noticed. It I'm trying really hard.
• 17:08
  Every time I say brokerage I I like brace for impact brace.
• 17:11
  For impact. I.
• 17:13
  Don't know why brokerage because that like the BR and the then
• 17:16
  there's another R right behind it and Spanish R is no chance
• 17:19
  like you're. Fighting for your life.
• 17:21
  Yeah, exactly. So I can go transfer money from
• 17:25
  my checking account to my brokerage account, like with
• 17:27
  Fidelity or Vanguard or Schwab, and there's no problem.
• 17:31
  I can move $1,000,000 no problem.
• 17:32
  I can put any amount of money in my brokerage account.
• 17:34
  I can buy any amount of stock or mutual funds or ETFs, right.
• 17:37
  So there's no contribution limits.
• 17:39
  The problem with brokerage accounts, if there is one, is
• 17:42
  that you pay tax on the gains. And so the government looked at
• 17:46
  the behavior of Americans and said, hey, not enough people are
• 17:50
  investing money. We want them to invest money.
• 17:53
  It's good for the economy. It's good for themselves.
• 17:56
  You know, the more money you invest for yourself in your
• 17:58
  brokerage account, the less likely you, the less likely you
• 18:01
  are to be a homeless old person on the streets.
• 18:04
  So as a government, we want to encourage people to put more
• 18:07
  money into their brokerage account.
• 18:08
  So let's introduce a special type of brokerage account called
• 18:12
  a Roth IRA. An IRA stands for Individual
• 18:15
  Individual Retirement Account. Now every time I say R I'm like
• 18:19
  OK. Individual doesn't have any Rs
• 18:21
  and. You retirement does though,
• 18:23
  that's the R. You don't think I know what word
• 18:25
  has an R? All right, so a Roth IRA stands
• 18:29
  for an individual retirement account.
• 18:30
  And basically the rule is all the growth in a Roth IRA is
• 18:34
  never ever taxed again. Like a brokerage account in that
• 18:36
  you can buy stocks and bonds and invest and see growth, but
• 18:40
  inside of a Roth IRA, it's never ever taxed again.
• 18:43
  And the government said this is a really good deal because we're
• 18:46
  not going to tax you on all this amazing growth of your
• 18:48
  investments, but we don't want billionaires just putting all
• 18:53
  their money into a Roth IRA and never paying any tax again.
• 18:55
  And so we're going to kind of put a little speed limit sign on
• 18:58
  the front of this account that says, hey, you can't contribute
• 19:02
  money faster than for this year. It changes every year.
• 19:06
  But this year, 2025, seven, $1000 a year for an individual
• 19:10
  or if you're 50 years or older, it's $8000 a year.
• 19:13
  So basically that's the contribution limit on the
• 19:16
  special type of brokerage account called a Roth IRA.
• 19:19
  You can only put $7000 in per year.
• 19:22
  And sometimes this confuses people.
• 19:24
  One, it confuses people because they conflate this one
• 19:28
  contribution limit with like any amount of investing, right?
• 19:31
  So one common question I get is, hey, what if I have more than
• 19:36
  $7000? Can I invest 8000 or $9000?
• 19:39
  And the answer is, of course you can.
• 19:40
  You can put an unlimited amount of money into a regular
• 19:42
  brokerage account. That speed limit only applies to
• 19:46
  your Roth IRA. So you might have two accounts,
• 19:49
  a Roth IRA where you put $7000 per year in, and then your
• 19:52
  regular brokerage account where you put in infinite amount of
• 19:55
  money, right? And the other thing that
• 19:58
  confuses people is. How much money you can put in
• 20:01
  per year versus how much money is inside of it.
• 20:03
  So like let's say I put in $7000 last year and then let let's say
• 20:07
  I put in $7000 this year. And then that's that's $14,000
• 20:11
  total. And then it grows.
• 20:12
  Now I could have 15 or $16,000 in.
• 20:15
  And so let me give an analogy. Let's say you have a rabbit
• 20:18
  farm. This is the five year old
• 20:19
  analogy. This is the explain like I'm 5
• 20:21
  where maybe a 5 year old could have I see some rabbit farm,
• 20:24
  love it. And the government says we don't
• 20:28
  want there to be rabbits to grow too fast.
• 20:31
  They say, hey, you can add 7 rabbits per year to rabbit farm.
• 20:34
  So last year you put 7 rabbits in.
• 20:36
  This year you put 7 rabbits in. Once the rabbits are in the
• 20:39
  farm, they can do their they can do their little rabbit thing as
• 20:43
  much as they want. What kind of wait, wait, wait,
• 20:45
  wait, wait? That's not so 5 year old.
• 20:46
  What are the rabbits doing? That's true.
• 20:48
  Well, baby rabbits, Baby rabbits.
• 20:51
  The stork brings them. So yeah, I guess that isn't so
• 20:53
  5, but whatever. So once they're in the rabbit
• 20:56
  farm, those rabbits can multiply as much as they want.
• 20:58
  So like you could put 7 rabbits in last year or seven rabbits in
• 21:01
  this year and then maybe there's 500 rabbits in or 5000 or
• 21:04
  500,000. It doesn't matter.
• 21:05
  Once once they're in, that's fine.
• 21:08
  It only applies to the front door.
• 21:09
  How fast you can put new baby rabbits in, right?
• 21:12
  How fast you can like add rabbits to the not baby rabbits.
• 21:16
  So how fast you can add rabbits too.
• 21:17
  So in the in the real Roth IRA, like let's say I put 7000 in
• 21:21
  last year or 7000 in this year and let's say my investments had
• 21:24
  like the year of the life and went up to $1,000,000.
• 21:27
  That's fine. And then there's one other
• 21:30
  caveat here, which is in addition to contribution limits,
• 21:33
  there are also income limits. So the government said, hey, we
• 21:39
  don't want people, billionaires putting in too much money, like
• 21:42
  all billion dollars. And also, you know, while we're
• 21:44
  at it, we don't want people making $1,000,000 a year to have
• 21:47
  access at all because this isn't for them.
• 21:49
  It's for regular middle income people, not super $1,000,000
• 21:53
  earners. And so this year in 2025, if
• 21:57
  you're single, you have to make less than $150,000 in order to
• 22:01
  contribute at all or in order to contribute the full amount.
• 22:06
  And then if you are married, you have to make less than $236,000
• 22:10
  in order to contribute the full amount.
• 22:11
  After the amount of money, it kind of like very quickly has
• 22:14
  this like phase out period and then you can't contribute at
• 22:16
  all. So basically if you're over
• 22:18
  those income amounts, like how much you make, that's your
• 22:21
  modified adjusted gross income. We're way beyond expand like A5
• 22:24
  at this point, but you can't contribute all.
• 22:26
  And so basically, there's this little speed limit sign that
• 22:28
  says, hey, you can only put in seven rabbits per year.
• 22:31
  Oh, and by the way, if you're making too many rabbits already
• 22:35
  outside of this rabbit farm, you can't put in any.
• 22:39
  And so that confuses people also because they say, hey, oh, hey,
• 22:42
  OK, I put in $7000 last year, but this year I'm not eligible
• 22:47
  because my income has gone too high.
• 22:49
  What happens to those rabbits inside of there?
• 22:51
  And the answer is they're fine. They can stay there forever.
• 22:54
  It these contribution and income limits only apply to the new
• 22:58
  contributions, how much you're adding every year.
• 22:59
  Once it's in there, it's safe. It's protected forever.
• 23:02
  And so to answer, yeah, those basic questions, can you put
• 23:06
  more than $7000? You can even invest more than
• 23:09
  $7000. Yes.
• 23:10
  Just not into your Roth IRA. And then what happens?
• 23:13
  What what if I am restricted basic income?
• 23:17
  You can't contribute more necessarily.
• 23:18
  Although there is this thing called the back door Roth IRA.
• 23:22
  Stay tuned for a future episode. But everything that's in there
• 23:28
  is already fine. So that's what it is.
• 23:30
  It's just a way to basically slow people down and squeezing
• 23:33
  too much of their money into this really cool tax break
• 23:37
  called a Roth IRA. OK.
• 23:40
  Yeah, we, you know, we do office hours here and there and
• 23:42
  sometimes we have people that ask questions like, you know,
• 23:44
  when you get to the end of the year, you do taxes, you don't
• 23:46
  necessarily even know how much you're a adjusted gross income
• 23:51
  will be. And you know, you, I I see you
• 23:53
  generally telling people if you're even close, don't even
• 23:56
  mess with it because it's just not worth it.
• 23:58
  So that's when you need to worry about it.
• 24:00
  But this is good. You we broke it down.
• 24:02
  I don't know about 5. I like the I like the rabbits.
• 24:05
  Yeah, rabbits farm. Seven rabbits per year, kids.
• 24:07
  Yeah, 7 rabbits. OK, fantastic.
• 24:11
  Let's get into our next segment because I'm excited money.
• 24:16
  Money can. I ask a dumb one.
• 24:18
  We have an audio message today, I think.
• 24:22
  Jeremy, you posted. Did you post something on your
• 24:24
  story to tell people to send in messages yet?
• 24:26
  Not yet, but. I will, and if you're listening
• 24:28
  you can DM me on Instagram or e-mail podcast at.
• 24:31
  Personalfinanceclub.com Wow put me on the spot.
• 24:34
  I am the lost forgets. It and send us a a selfie video
• 24:38
  of yourself 30 to 60 seconds long and we'll include your
• 24:41
  question on a future episode. We want to make this more audio
• 24:45
  and visual and this is our first one with an actual audio.
• 24:48
  So let's listen to what the question is.
• 24:52
  Hi, Jeremy. Hi Jen, I am from Orlando, FL
• 24:55
  I'm in my late 20s and I wanted to cash out my 401K so that I
• 25:01
  can pay a good chunk of my credit card debt.
• 25:04
  And so I have about $15,000 in credit card debt and I have
• 25:07
  about $22,000 in my 401K. Since I make about 50 KA year I
• 25:14
  contribute a good amount to my 401K.
• 25:17
  I'm still hopeful that even with all the tax and the penalties,
• 25:21
  that it'll still be a good chunk for me to either pay all of my
• 25:26
  debt or a good majority. Let me know.
• 25:28
  I'm excited to hear what you guys have to say and I love you
• 25:31
  guys's podcasts. That was a four.
• 25:33
  Minute question originally and that was the most, the version
• 25:36
  we just listened to is 42 seconds.
• 25:37
  So we got down significantly, but still made sense, right.
• 25:41
  Yes, OK, so that was anonymous. I'm going to call her Orlando
• 25:46
  because she's from Orlando and basic details she's got $15,000
• 25:51
  in credit card debt. She said it's been around for
• 25:53
  years and she's got 22,004 O 1K and she says hey can I just be
• 25:57
  done with this cash on my 4O1K, pay off the debt and then start
• 26:01
  contributing to my 4O1K. And here's my thoughts.
• 26:04
  One, you're putting a good amount on your 4O1K which is
• 26:07
  awesome. You're making 50 KA year which
• 26:09
  isn't a massive salary. It's like a good start.
• 26:12
  It's going to grow over the years.
• 26:13
  You're already contributing your 4O1K amazing.
• 26:15
  You want to get out of debt amazing 15K ton of money.
• 26:19
  But you know this isn't like a we don't want this to be a
• 26:22
  lifelong debt sentence for you. We want you to get out of debt
• 26:25
  quickly. That said, well, I don't want to
• 26:28
  have happen. I think the worst case scenario
• 26:29
  would be for you to cash all your 400K down to nothing or
• 26:32
  close to nothing, pay off your debt and then fall right back
• 26:36
  into the debt trap and rack up your debt again.
• 26:38
  And now you're back to having $15,000 in debt and now you have
• 26:41
  no 4O1K. And so I'm very hesitant to
• 26:44
  recommend people cashing out their four O 1K plus of course,
• 26:47
  as you mentioned, there is tax and penalties associated with
• 26:50
  that. And so you're going to pay
• 26:51
  income tax and all the money you take out plus a 10% penalty.
• 26:55
  And if you're contributing money to your 4O1K just to pull out
• 26:58
  and pay the penalty, there's like a shortcut to that, which
• 27:00
  is stop your contributions. And so you're you mentioned part
• 27:04
  of the audio that I cut that you have a a mash and you're doing
• 27:07
  that. But I might say temporarily, I
• 27:10
  might do these things. One, get that raise at work.
• 27:14
  It's time to like get get that raise, get get more income, get
• 27:19
  that side hustle going. Just like Jen, just sell some
• 27:23
  music to Hollywood, you know, easy brand name productions.
• 27:28
  Yep, as she'll attest, it's a very easy, quick cash.
• 27:32
  Yeah. Click, click, click.
• 27:34
  Yeah. Just spend 40 years in the music
• 27:36
  industry and make contacts and Yep, you too can make 500 bucks
• 27:40
  here and there. Hopefully you make more than I
• 27:43
  don't know. I hope so too.
• 27:45
  OK. All right, so yeah, get those
• 27:48
  work at this side and I might even say, hey, stop contributing
• 27:51
  temporarily to your 41K. So then you have what you were
• 27:54
  putting into your 41K plus your raise, plus your side hustle,
• 27:58
  plus the minimum payments you are already making to your debt
• 28:01
  and take all that money and you want to make big chunky just eye
• 28:06
  watering payments to your debt. And so leave your 41K to
• 28:09
  compound safely grow during this time.
• 28:13
  And then if you can, if you can scrap together 500 bucks a month
• 28:16
  in 30 months, you'll basically, you know, be credit card debt
• 28:20
  free. And then if you can then turn
• 28:23
  those 41K contributions back on and then start investing that
• 28:27
  money, then your 41K, which is 22 K, hopefully it'll have grown
• 28:31
  over those thirty months. Well, then you can start really
• 28:34
  making that grow fast. And if you can do 1000 bucks a
• 28:39
  month, that 30 months goes to 15 months, right?
• 28:41
  And so the big problem here isn't, you know, you mentioned,
• 28:46
  OK, I can maybe get in like a low tax bracket if I like do it
• 28:51
  this year or I can maybe this might be a good time to do it or
• 28:54
  I might, you know, your problem isn't that you're trying to play
• 28:57
  this like a little tax game. Your problem is you got to pay
• 29:00
  down the principal. And if you're not doing that
• 29:03
  with your own income, with your own cash flow, I'm afraid you're
• 29:06
  going to get back into it. And so I would say, hey, have
• 29:08
  this be like, you know, if, if you have credit card debt you're
• 29:10
  not paying off in full, this is like, like priority numero Uno.
• 29:15
  That's my little judge Marilyn Milian smash.
• 29:18
  That means priority #1 and the only, the only thing you should
• 29:21
  be focusing on is going ham on that.
• 29:24
  Do you know what ham means, Jen? I know what.
• 29:27
  Going ham means go crazy, pay it off.
• 29:29
  Yeah, it means go ham. Means just go absolutely ham and
• 29:32
  you know, just, you know, sell some stuff, whatever it is.
• 29:35
  Script goes money because 15K it seems daunting, but if you like,
• 29:38
  if you can make $1000 payment against that, how's 14K?
• 29:41
  And that's a lot less and that's 13 K.
• 29:43
  Pretty soon it's going to be 4 figures and you're going to feel
• 29:45
  this accelerate. Then once you get that down to
• 29:47
  0, take all those debt payments, put them investing.
• 29:49
  That's what I do. Orlando.
• 29:52
  You're in really good shape. You're young, you're in your
• 29:53
  20s. You got a job.
• 29:56
  You want to get debt free. You're already doing your 41K.
• 29:59
  Get this. Kill this credit card debt the
• 30:01
  old fashioned way. Don't cash out your 41K.
• 30:04
  Crush it with your income, and you're going to be a millionaire
• 30:07
  over the course of your career. I promise you.
• 30:10
  Wow. OK.
• 30:11
  I love this. I love this question.
• 30:12
  I can't believe you got it down to 42 seconds.
• 30:13
  It was like over 3 minutes long and I I was curious what you
• 30:17
  were going to say because Orlando was making the math
• 30:19
  sound right. You know what I'm saying?
• 30:20
  Math parts. I was like maybe he'll say she
• 30:22
  should do this but totally like explanation so much of personal
• 30:25
  alliance. Isn't math, it's not like oh if
• 30:27
  I can get 1% here there on the Excel sheet, it's like, hey,
• 30:30
  there's a reason you have $15,000 in credit card debt and
• 30:32
  there's a reason your 41K is 22 K.
• 30:34
  Like let's focus on getting that debt down to 0, not just trying
• 30:39
  to take this like shortcut to see if we can like save 1% taxes
• 30:42
  or, you know, forward a penalty or whatever.
• 30:44
  That's not the problem. It's like the behavior we want
• 30:46
  to make sure is right before we can do a worse situation for
• 30:49
  sure. OK.
• 30:50
  Love it. That's why they pay you the big
• 30:51
  bucks. I make less than.
• 30:55
  Than Orlando does here OK, let's.
• 30:59
  Move on to our next segment. Scroll.
• 31:05
  Patrol and as you know, Jeremy's going to click on a link that he
• 31:10
  has not seen yet, a video that I've sourced from the Internet.
• 31:13
  He's going to react in real time and tell us what he thinks.
• 31:16
  So we're going to click on this together, all right, plus
• 31:18
  pressing. Play now more millionaires are
• 31:20
  made. During recessions than any other
• 31:22
  time. How do they do it?
• 31:23
  So that's the thing. You want to find the opportunity
• 31:25
  and and the way that you find the opportunity is first to
• 31:28
  understand how you get there because history doesn't repeat
• 31:32
  itself, but it does rhyme. And So what happens is people
• 31:35
  say, oh, this happened in 2020, so must happen again where this
• 31:38
  happened in 2008. So this is probably going to
• 31:40
  happen or this happened in 2001. That's not how it works.
• 31:44
  You have to understand what happened and how you're getting
• 31:47
  to where you are right now. That way you can look for the
• 31:49
  new opportunity because the opportunity is going to be
• 31:52
  similar but different, and you want to be ready when times are
• 31:55
  OK and good and prepared. That way when things go bad, you
• 31:59
  can come in and pounce on the opportunity and take advantage
• 32:02
  of it. OK.
• 32:04
  That's Jess Breit from minority Mindset.
• 32:07
  I know I don't know him personally, but I know of him.
• 32:09
  Maybe I met him once at a Fincon or something.
• 32:13
  I think I did. I'm pretty sure he went to
• 32:15
  Michigan where I went, so I already automatically like go
• 32:17
  blue. He gets exactly.
• 32:19
  Go blue, he automatically gets 100% pass A+.
• 32:22
  I'm just kidding. Yeah, I don't.
• 32:25
  Yeah, I like him. I don't really know what was
• 32:27
  being said there. That's why I.
• 32:29
  Got I was like, what is he saying like word salad, right
• 32:33
  Yeah, look for the. Opportunity it's it's same, same
• 32:36
  but different. Have you ever been to India?
• 32:38
  I, I haven't actually, but my brother said that went there and
• 32:41
  he's like, or I guess I've had some multiple, but he's he says
• 32:44
  they always say same, same but different.
• 32:46
  That's like kind of a saying there.
• 32:47
  It's like, oh, you want, you know, Samsung phone like here
• 32:51
  it's same, same but different. It's a, you know, Samsung phone
• 32:53
  or something. And yeah, I don't know what he's
• 32:58
  saying there. It just was like a minute and 20
• 33:00
  seconds of I was, I don't know yet.
• 33:04
  We were, I thought we're going to get to the point at some
• 33:06
  point and we didn't. That somehow has 3.1000 likes on
• 33:10
  YouTube Shorts and I don't know sometimes I missed like I
• 33:14
  laughed so hard when I saw. It I was like, what did he just
• 33:17
  say? And I watched a couple times.
• 33:18
  It feels like, yeah. And I, I like him and I assume
• 33:21
  like this was, you know, there's context to this that wasn't
• 33:24
  included here or who knows what. It looks, this looks like it's
• 33:27
  from his official channel. So it was like someone like,
• 33:29
  yeah, it was, it was a short. I will say I scrolled, you know,
• 33:31
  through the the next few shorts. I couldn't, you know, clip
• 33:33
  because they were too good. I was like, no, these are too
• 33:35
  good. I want to get something.
• 33:36
  I want to catch him. So yeah, actually I.
• 33:38
  Actually, like just read, I like is a kind.
• 33:40
  I think most of what he says is is great, but I just feel like
• 33:42
  that context of that was was totally missing and I don't know
• 33:46
  how to grade that. Like we didn't get to the point.
• 33:48
  Like you look for an opportunity, OK, like how what
• 33:51
  opportunity? What's different?
• 33:52
  What's the same? I don't know.
• 33:53
  And, you know, are more millionaires made in recessions
• 33:57
  than any other time? Like, I don't know that that's
• 34:00
  true. I think that, you know, I think
• 34:02
  when there is a recession or the market's down, it's a good time
• 34:05
  to, you know, keep doing what you're doing, you know, build
• 34:09
  the income, pay on your debt, buy more shares.
• 34:11
  I think a lot of people actually end up doing the opposite, which
• 34:13
  is, you know, I just, I just, I read a story about this actually
• 34:16
  on the Personal Finance Club Facebook page.
• 34:18
  It was I think like April of 2025, earlier this year, the
• 34:24
  market was down, you know, 20% because Trump tariffs.
• 34:27
  And some guy like pasted the e-mail that he sent to his
• 34:30
  financial advisor that essentially said, you know, the
• 34:34
  economy is trashed, the sky is falling.
• 34:38
  You know, I'm sick of this sell. It's, it's, it's, it's the
• 34:41
  e-mail that everyone sent to their financial advisor during
• 34:43
  every recession and during all of time.
• 34:45
  Sell everything. I want to go into cash.
• 34:47
  I want to go in bonds. And I'm like, dude, you know,
• 34:49
  the market already went down to 20%.
• 34:51
  Like you missed it. You know, like if you think it's
• 34:53
  going to go down 50, fine. But this isn't this isn't the
• 34:55
  time. The time was before.
• 34:57
  But really the time is just don't do that.
• 34:59
  Just keep investing. And so, you know, a good way to
• 35:01
  become a millionaire during a recession or during a down
• 35:04
  market is to buy more shares. When those shares go down 2030
• 35:07
  forty, 50%, like they probably will again in our lifetime.
• 35:10
  Don't get out of the market, get into the market, buy, you know,
• 35:13
  buy and sell. So yeah, I don't know.
• 35:16
  I don't know how to grade that because it didn't.
• 35:18
  It was just a minute and 20 seconds of it wasn't really a
• 35:21
  minute. And 20 seconds it feels shorter.
• 35:23
  Oh, I don't. Know to me it felt longer.
• 35:27
  I love that you somehow. Made sense out of word salad.
• 35:29
  I'll try and get a good Jess Breeze clip for another time,
• 35:32
  but all right, we don't have to grade that one.
• 35:34
  It gets an incomplete. I give it an N.
• 35:35
  Slash a an incomplete like C teacher.
• 35:39
  Yeah, because you didn't get to that point.
• 35:41
  I don't know what? Don't know what the point is.
• 35:44
  And it's like kind of a clever little sound bite.
• 35:46
  History doesn't repeat something at rhymes.
• 35:47
  And I'm like, OK. Like poetry, Jeremy.
• 35:51
  Yeah. It sounds like poetry.
• 35:52
  But I still don't know what that means.
• 35:53
  So OK, incomplete. All right, well.
• 35:55
  On that note, let's get into our last segment of the episode.
• 36:01
  Jeremy had. Time today, we're in the
• 36:04
  comments section. I pulled a post.
• 36:06
  You put up an Instagram post recently about Trump
• 36:08
  administration's teaser of a potential 50 year mortgage hot
• 36:12
  topic. So you can buy.
• 36:13
  You can buy one of the hottest Pfc topics, buy versus rent with
• 36:17
  politics. So it was a blaze and I pulled
• 36:19
  one of the comments and I hope that you would have time today.
• 36:22
  So I'm going to read this comment.
• 36:23
  This comment just says I get the concern.
• 36:25
  The interest over 50 years is a lot, but I think we're missing
• 36:28
  the bigger picture. For many buyers, it's not about
• 36:31
  the total interest. It's about qualifying and
• 36:33
  affording the monthly payment today.
• 36:36
  A50 year mortgage could open the door for people who otherwise
• 36:38
  can't buy right now. And let's be real, no one says
• 36:41
  you have to keep it for 50 years.
• 36:42
  With the right strategy and extra principal payments, it can
• 36:45
  be a flexible tool, not a trap. It's not perfect for everyone,
• 36:48
  but for some, it's a way in that's worth considering.
• 36:50
  And then they commented on their comment and said, I think the
• 36:53
  goal here is teaching financial literacy to people for them to
• 36:56
  make smart decisions. Jeremy, what are your thoughts
• 36:58
  on this commenter? So yeah.
• 37:01
  Just to kind of mention that point of the post, I said, hey,
• 37:05
  if you take out a $500,000 mortgage at 7%, which is about
• 37:10
  the current rates and paid off over 30 years, you pay about
• 37:14
  $700,000 in interest more than the even what you're borrowing,
• 37:19
  which is mind blowing, right? But if you extend that to 50
• 37:22
  years, instead of paying $700,000 in interest, you pay
• 37:25
  $1.3 million in interest. So you borrow 500,000 and you
• 37:30
  pay back $1.8 million. And this isn't like Monopoly
• 37:33
  mine. It's like actually like you're
• 37:36
  taking out of your paycheck every month.
• 37:37
  Give it to the bank one point $1,000,000 / 50 years, right?
• 37:40
  And, and you're, and in exchange for that, instead of paying
• 37:45
  $3300 a month, I'm rounding here, you pay $3000 a month.
• 37:50
  So your payment's about 300 bucks a month less, but you pay
• 37:54
  $1.3 million in interest. And the commenter is like, he's
• 37:58
  like, yeah, but that's not the point.
• 37:59
  You know, this isn't how people operate in the real world.
• 38:02
  They don't just sit there and pay a mortgage for 30 years or
• 38:04
  50 years. They just try to get into a home
• 38:07
  as a tool to get a lower payment and then something else happens
• 38:11
  like they refinance or they sell or whatever.
• 38:13
  And to that I actually say like, yeah, that's true.
• 38:16
  In fact, according to LendingTree, most 30 year
• 38:19
  mortgages only last between 7 and 10 years because that's kind
• 38:23
  of how long people staying at home or that's how long it lasts
• 38:25
  before they refi. And so you're not actually
• 38:29
  paying all that interest to that one lender over the 30 years
• 38:34
  you're getting out and then starting something else.
• 38:36
  But you're still paying the interest.
• 38:38
  And if you just, you know, keep refining or keep moving and keep
• 38:41
  restarting the clock, you still are paying all that interest and
• 38:44
  then more probably. And so I actually have a little
• 38:47
  did you you may have seen this in the notes.
• 38:49
  I don't know, but I'm going to ask you a little guessing game
• 38:51
  and I already deleted it, so you can't see it now.
• 38:53
  But my question is, if you have a 50 year mortgage and you're
• 38:59
  making that $3000 a month payment and so you're paying
• 39:03
  $3000 a month times 12 months times 7 years, like what
• 39:07
  LendingTree said, how long it lasts?
• 39:08
  So you pay $250,000 to your mortgage, so $500,000 mortgage.
• 39:16
  You pay $250,000 towards that mortgage.
• 39:19
  Seven years later, what is the remaining balance on that
• 39:23
  mortgage? How much do you think you still
• 39:25
  owe? Because not all $250,000 goes
• 39:27
  towards principal. You're paying interest along the
• 39:29
  way. So what's your guess?
• 39:31
  And this is the 50 year mortgage scenario.
• 39:32
  This is like the new proposed 50 year crazy long mortgage.
• 39:36
  What would your after seven years?
• 39:38
  How much principal would you pay off or what would you be your
• 39:40
  remaining balance? You're 7.
• 39:42
  Years and you paid 250 on a $500,000 mortgage and you you
• 39:45
  but you've had to pay interest on that.
• 39:46
  So I'm going to say 300,000 300. Oh sweet summer, Jen.
• 39:55
  What a my sweet summer child. So you pay, you pay a quarter
• 40:00
  million towards this half million mortgage.
• 40:02
  After seven years, your remaining balance on that
• 40:05
  mortgage is $490,000. Oh my.
• 40:09
  God, you've made. Virtually no progress.
• 40:14
  And so this 50 year mortgage, what it essentially amounts to
• 40:18
  is an interest only mortgage. You know, since these mortgage,
• 40:21
  these these loans last on average 7 to 10 years that all
• 40:24
  that $250,000, two $140,000 went to interest.
• 40:29
  That's crazy $10,000 a little thing like less than a less than
• 40:34
  Orlando has a credit card. It's a total joke.
• 40:36
  And so and you know, and I think these like finance Bros, I don't
• 40:39
  know if this commenter is a finance bro.
• 40:41
  He's like, he's like, yeah, but you got, you got the leverage
• 40:42
  and you're going to sell it and you're going to make financial
• 40:44
  news. OK all.
• 40:47
  Right, finance chick that up. I don't know if the I don't know
• 40:51
  if the alternative is your finance bro, but I don't I don't
• 40:54
  actually remember the the gender of this person.
• 40:56
  But you know, I, I agree with the commenter that they're right
• 41:00
  that, you know, a lot of times you're just looking at the
• 41:03
  monthly payment. But I'd say getting into
• 41:06
  interest only loans isn't good personal finance behavior
• 41:09
  because you're basically then betting the entire farm on the
• 41:15
  value of your home going up. Because like, let's say you
• 41:19
  know, you're essentially becoming a like a lifelong
• 41:21
  renter to the government paying property tax, to your lender
• 41:26
  paying mortgage interest and to your insurance kind of paying
• 41:30
  insurance. So you're making these huge
• 41:31
  payments. And then if the home, the value
• 41:34
  of your home doesn't go up or goes down, all is lost, right?
• 41:38
  And do primary homes tend to go up and value?
• 41:42
  Yeah, usually, but not always. Like my brother had to sell at
• 41:45
  home at a loss during the, you know, financial crisis back in O
• 41:49
  seven O 8 time frame. And also 50 year mortgage will
• 41:53
  probably have higher interest rates.
• 41:57
  So if you look at a 30 year and a 15 year today, the 30 year has
• 42:01
  a higher rate by like half a percent or a percent more than
• 42:03
  the 15 year, as will the 50 year probably.
• 42:06
  And so to to suggest to someone they should pay more interest to
• 42:11
  not pay down the principal at all and basically get into this
• 42:14
  like very risky interest only situation where they're hoping
• 42:17
  that home goals have been valued is like not good personal
• 42:20
  finance behavior. And so no, I wouldn't recommend
• 42:22
  this. You know, that said, someone
• 42:23
  could say, well, yeah, just do the 50 year and then just paid
• 42:26
  off like a 30 year paid off like a 15.
• 42:28
  I'm like, yeah, but you know, at some point you're just, you
• 42:31
  know, giving yourself enough rope to hang yourself with.
• 42:33
  And so I'm not a huge fan. Yeah.
• 42:36
  OK, that's a saying so much. I'm ready for it.
• 42:39
  It's got a. Little dark, yeah.
• 42:42
  And that's not, didn't mean to be that context, but yeah, so,
• 42:46
  yeah, you know, that's, I kind of agree with this person that
• 42:49
  like, you know, the idea isn't you sit there and pay the same
• 42:51
  thing for 50 years because that's not how people behave.
• 42:53
  But still I don't like it as a tool to like, you know, get into
• 42:56
  a bigger home because you're just basically it's a tool to
• 42:58
  become more house poor. I'd rather like when someone has
• 43:01
  a 15 year loan, like, yeah, like go for it, get that 15 year
• 43:04
  loan, hold your feet to the fire, get out of debt soon own
• 43:08
  the home in cash, you know, put more of your money towards
• 43:11
  investing after that. That's how you actually build.
• 43:12
  Well, not by getting into interest only situations where
• 43:16
  you're bought too much house and you're just between property
• 43:19
  insurance, mortgage interest and property tax.
• 43:24
  You're just basically trying to water your whole life.
• 43:26
  That's not that's not the idea. Well.
• 43:29
  Can't argue with that. You did in fact have time today
• 43:33
  and we appreciate it. On that note, that's all.
• 43:36
  We have time for you to take on the Personal Finance Club show.
• 43:38
  We'll see you next week, and don't forget.
• 43:41
  To live by the 2 rules of personal finance club rule #1
• 43:44
  live below your means. Don't get the 50 year mortgages
• 43:47
  and rule #2 invest early and often.
• 43:50
  Peace, the personal finance. Club Show is produced by Jeremy
• 43:53
  Schneider and Jen Mundia, music by Essa Balu and Homie.
• 43:57
  Send your questions to podcast@personalfinanceclub.com.
• 44:01
  The Personal Finance Club show is Co hosted by Jeremy Schneider
• 44:03
  who is a co-owner of Nectarine and SEC Registered Investment
• 44:07
  Advisor. The views expressed on this show
• 44:09
  are those of the hosts and guests and do not necessarily
• 44:12
  reflect the views of Nectarine. Please refer to
• 44:15
  hellonectarine.com for all relevant disclosures.
• 44:18
  This podcast is for informational and educational
• 44:20
  purposes only and should not be construed as personalized
• 44:23
  investment advice or a solicitation to buy or sell any
• 44:26
  security. Listeners should consult their
• 44:29
  own financial, legal or tax professionals for advice
• 44:31
  specific to their situation.