00:00
Peter Dunn
It.
00:03
Damian Dunn
Ladies and gentlemen, boys and girls, children.
00:06
Peter Dunn
Of all ages, get ready to be amazed. Put your hands together and make some noise. It's showtime. Hello, everybody. Welcome to the Pete the Planner show. Dame I did all of that because I just simply did not want to futz with the equipment this week.
00:30
Damian Dunn
Futs. Wow, that was really close.
00:34
Peter Dunn
I have not said the word futs before, but it felt good.
00:37
Damian Dunn
Wow, it sounded fantastic.
00:39
Peter Dunn
Dame welcome back. Week number two, Peter on the road. Yes. So we've got stories later to share with you about trials and tribulations of a business traveler.
00:52
Damian Dunn
I can't wait for that to cut into my NewsTime.
00:54
Peter Dunn
Oh, no, it's going to be a podcast only. It is not appropriate for broadcast air.
01:02
Damian Dunn
Even better.
01:04
Peter Dunn
So we got that. Dame, here's what's on the show this week. We're going to talk Parent Plus loans and why they are God's curse to the earth. We are going to have a listener email. It seems like this gentleman had received one and a half million dollars or something like that and wants to know what to do with it.
01:20
Damian Dunn
I can help.
01:21
Peter Dunn
Three. What is this one? Oh, I got a message from someone this week. I don't want to get too much into the specifics because we're not trying to out folks. Right. This person basically said, hey, I want to turn over a new leaf. Financially, where do you even begin? And part of that was to prove to someone else that they're turning over a new leaf, which I think is great. And so we'll talk about what do you do, of course, the biggest waste of money of the week. Dame this isn't travel stories, but my favorite story of the week, before we get the show started this week is our coworker Chad, who shared with us an amazing story. Chad, like every good Midwestern father, likes a nice lawn. He wants his yard to look nice. And so he made the financial decision to have a company come out and to aerate and reseed his yard.
02:13
Peter Dunn
And it wasn't just the poke holes with spikes. Dame this is the plugger. Right. They pulls out the plugs and it just looks like a whole, like, dog festival had been hanging out in your yard, if you know what I mean.
02:25
Damian Dunn
Absolutely.
02:26
Peter Dunn
So he hired him to come out. He even went to the length of calling the utility companies services that come out and mark where the utility lines are, because when you're plugging holes, you don't want to plug a gas pipe and then everything explodes. Right. That floats. So there's flags and spray paint all over his yard. The day comes in which the lawn servicer is to come and plug the yard and overseed. My colleague, at the conclusion of the company coming, looks outside and the company did his neighbor's lawn. So they came out, they did the neighbor's lawn, who had the best lawn in the neighborhood, mind you. But now it looks like there was a Chihuahua festival with all of these plugs all over the yard, which is decimated despite the fact that at the instruction of the lawn company, his lawn is marked and spray painted to suggest that he went through the pre process of having his lawn plugged.
03:25
Peter Dunn
And so then he had to call and tell the people, you did the wrong yard, and they came out today and fixed the yard. I think that's a hilarious story.
03:32
Damian Dunn
Yeah, his neighbor's yard is going to be fantastic after those plugs get cleared up.
03:37
Peter Dunn
You know what it makes me think, though? It's like, okay, so what's the true cost? The owner of that company gets that call, and he or she makes this judgment where they go, this just cost us. Now, it's interesting. It could have cost like $40. I mean, sure, there's labor costs and things like that. Who knows what they charge overall? Probably $300 or something like that. But anytime you make a mistake at a business and you're the business owner, you think about like someone sent out the wrong meal to the wrong table at a restaurant, what's the cost of that? Probably a few bucks. I always wonder even here, if we happen to make a mistake every once in a while, what's the true cost of that mistake? And I just think about that business owner going, oh, man, that stinks.
04:17
Damian Dunn
Yeah, I mean, if they handle it right, it's not going to be probably any cost at all. Honestly. They may end up getting a little bit of extra business from it if they handle it right. So, I don't know. I think that's a push on that one.
04:34
Peter Dunn
Danza Jameson. Hello, Jameson. I was in Texas last week. I hope you felt it. You felt the fury of the Peter in Texas. All right, Dame, start the show. We're talking Parent Plus loans based on this nerd wallet survey that came out this week that you and I have been talking about.
04:51
Damian Dunn
Yes.
04:52
Peter Dunn
So let's start the show in three, two, one. This week on the Pete the Planner show, we answer your money questions. Here's how the show works. You email us, askpete@petetheplanner.com that's askpete@petetplanner.com, and we occasionally will answer your email on the radio. Dame joining me this week, as always, is Damien Dunn, vice president of advice at your Moneyline and hey, Money. Hello, Dame.
05:19
Damian Dunn
Hello, Pete.
05:21
Peter Dunn
Back on the road, week two of travel season. We may have some travel tales to tell during the radio show this week, or I may just do it between segments. And you'd have to catch those travel tales on the podcast. If you want to hear the show within the show or the show outside the show, download the Pete the Planar podcast wherever you get podcast. Dame, this week we've got three things. We've got Parent Plus loans are the bane of existence. We've got how to turn over a new leaf financially. And we've got I just got one and a half million dollars. What do I do with it? Those are the segments this week. And of course, biggest waste of money of the week. And news Dame Nerd Wallet has a new survey for people who have Parent Plus loans. And I would say it's eye opening, but maybe it's only eye opening to people who had not had their eyes open to this previously.
06:12
Peter Dunn
But you and I have long felt that Parent Plus loans are just generally a bad idea for both parents and students. Thoughts?
06:20
Damian Dunn
There are typically some unintended consequences that come packaged in those nice Parent Plus loan deals, anywhere from scrambling retirement plans to maybe a little bit of disharmony between parents and children as the payments start to build up and the responsibilities continue well into what could be normally prime time for preparing for retirement. But there's any number of issues that could make Parent Plus loans distasteful.
06:54
Peter Dunn
We'll say, yeah, here's the thing about Parent Plus loans. They're generally a byproduct of one thing the student capping out the amount of student loans they can take out on their own behalf. And the parent going, okay, well, at this point you're halfway through college. If you leave, this is a giant problem. Let me solve it by putting my future income on the line. And so let's explore that. To begin. Here dame number one, it is a byproduct of not only that, but is a byproduct of school choice in the beginning, prior to a student capping out how much student loans they can take out, you should know that's going to happen when you choose a particular school. Yet parents often are just surprised that they keep getting these bills during the entire four years plus of a student's existence. So isn't it as simple to say you can prevent Parent Plus loans by ensuring you're not going to a school that maxes out your kids student loans?
07:57
Damian Dunn
Yeah, I'm not sure how parents are surprised at this. Maybe they think maybe this is a situation where we see young homeowners falling into the same trap. We anticipate there's going to be maybe a bonus or a raise or a change income, maybe a potential future scholarship that's going to bring the cost down of that education. And we think everything's going to be okay. We know it's going to be expensive, but there's going to be ways for us to mitigate that, and oftentimes there's not. And you're left with one solution borrow some cash.
08:35
Peter Dunn
Student loans for students. On the surface, make some sense, just very plain and simple. You get an education which you're able to leverage to then pay back the cost of borrowing for the education. Right? That just very simple. However, a loan that a parent takes on behalf of their student, it's someone else's education that the actual borrower can't leverage to repay the debt. And this is on top of the fact that, as we've talked about on this show in the past, I believe the toughest years of a person's financial life are 47 to 53. I believe that period of time for just about anyone, especially people who have children at traditional childbearing ages, 47 to 53 are a nightmare. You're closer to the end of your career than the beginning of your career. Your parents are aging both medically and financially. Your health is changing.
09:29
Peter Dunn
Your kids are going through college, which can put a lot of out of pocket expenses on you. You're having a midlife crisis from a psychological standpoint. But Dame, if you fill Parent Plus loans on top of that, it is truly the salting of the wounds, because it takes that period of time 47 to 53, and it extends it at least ten years into your early 60s, where you've got this house you can't live in. And we call that a parent plus loan.
09:57
Damian Dunn
Yeah, there are any number of reasons not to do this, but just the confluence of all the circumstances that you just outlined are reason enough not to do it. And if you haven't planned on your child's education, if you haven't done maybe as good a job as you wanted to, saving ahead of time, it makes that college choice decision even more crucial, not only to your child's financial future, but certainly yours. You've got to make sure that you're not going to cut yourself off at the knees as you're preparing to move into that next stage of life and all of the responsibilities that are going to come with it.
10:33
Peter Dunn
Yeah. It is worth noting here that Craig P. Anderson, student loan expert, I would say former student loan expert, but he's still a student loan expert and principal at Clearpath Coaching and Consulting. You can learn more@clearpathcoaches.com. He notes in our Facebook Live chat right now that originally Parent Plus loans were for middle class families. It was created program created in the it was supposed to help people who couldn't tap equity in their homes and things like that. However, what's happened in the last 20 years is that low income families have used these loans to fill the gaps from a funding perspective, which on the surface Dame, sounds beautiful. It sounds like upward mobility. However, what I just said is the people taking out the loans are low income families, which is to suggest that their struggle in their 50s are as bad as anybody. And so that makes that period of time again 47 to 53 years old.
11:36
Peter Dunn
It extends it to their early sixty s and makes retirement nearly impossible, if not impossible, for very well meaning loving parents.
11:47
Damian Dunn
Totally agree. It might have had the best of intentions when it was originally created. It is not being used, like so many things in life, as originally intended, and it's causing probably a larger burden for more families than it's helping.
12:02
Peter Dunn
Let's hit some of the takeaways from this Nerd wallet survey. 37% of parents said my child will be taking over the payments once the automatic COVID-19 forbearance program ends. Dame, this is where you began our segment with, will this create dysfunction in an intergenerational relationship when there's just 37% of parents believe their children will just take over their payments? I wonder what percentage of children also believe they are to take over their children or their parents payments.
12:40
Damian Dunn
That was my exact follow up question, was going to be how many of those kids are planning on it and how many of them know they're going to be doing that or be asked to do that?
12:48
Peter Dunn
At the moment, 34% of parents are not confident they'll be able to start payments back up when this forbearance program ends. The forbearance period ends here in the next couple of months.
13:01
Damian Dunn
I would like to note that there were some additional figures that came along in the surgery survey. I believe the percentage of parents who are unsure they'll be able to make the payments are higher than the students, the former students, who will be able to make the payments, which I think.
13:18
Peter Dunn
Illustrates the point because the parents have already have this entire life built on expenses. I thought this one is the most interesting and it is the most telling to me, but maybe it's just the most telling to my narrative. I just realized that's the second day in a row. I've used the word narrative in that regard, which I usually don't get into narratives anyway. If I could do it over again, 30% of parents said they would ask their child to rethink their education plan so they would not need to take out a Parent Plus loan. I don't want to say people are wrong or kick them when they're down, but with the last 20 seconds of this segment here on the radio, dame I just have to say that number should be close to 100%.
13:57
Damian Dunn
Yeah, I think that's way too low.
14:00
Peter Dunn
If you have to take on Parent Plus loans, you should know that before your kid enrolls in that school. And if it's going to be the case, choose a different school. It matters a lot. Coming up after the break dame how to turn over a new leaf financially. All that's on the Pete the Planner show. I'm Pete the planner. Actually, I didn't want to do that segment next, but I froze up. Boy giggly. Megly, I always like when Craig P. Anderson provides, like, real time insight during the show on a segment that he knows more about than we do.
14:35
Damian Dunn
It was like having somebody in your ear during a TV segment just saying, hey, here's what's going on.
14:39
Peter Dunn
Yeah, he's a producer. I'm going to endorse him on LinkedIn for producing my radio show. Clearpathcoaches.com. I get Craig's emails every Tuesday, and every time I feel like he has climbed inside of my brain and said, oh, this is what you're struggling with this week. Here's some very valuable insight on that.
15:02
Damian Dunn
Emails. I need to go sign up for the email.
15:04
Peter Dunn
You know what? Maybe you should actually dame linked into our slack right now. Clearpathcoaches.com? Clearpathcoaches.com. In fact, what I'm going to do is I'm going to put it on the Facebook post right now as well. For everybody. I don't know, I've never done that before, but there it goes. Hit my man up. All right. Damien, you wouldn't travel story.
15:31
Damian Dunn
Yes.
15:33
Peter Dunn
The story I'm about to tell you seems as though it's from a sitcom. It seems as though it's from a stand up act. It seems as though it's not true. But the story I'm about to tell you is incredibly true and incredibly unfortunate and arguably funny. So, Dame, when you're flying on an airplane and the little televisions entertainment systems are nestled neatly in the headrest in front of you, and that is your intimate viewing experience, something happens if the pilot comes on and talks, or the flight attendant comes on and talks. The movie, the show you're watching, on demand programming simply pauses. It just pauses. That's what it does. I'm watching one of my favorite sitcoms ever, favorite comedies ever. It's a series called Party Down. It is the funniest show ever. Ever. Party down. It's about a group of caterers who are actors catering on the ride out in California and La.
16:44
Peter Dunn
It is unbelievably funny. Adam Scott, I believe, is his name. I think he ended up being on Parks and Rec is in it. Jane lynch is in it. It's just really funny. Anyway, I hadn't seen the show in like five years or so I'm watching an episode I'm familiar with. It's about this dating mixer for seniors, right? And so these people come together and it's like a speed dating thing for seniors. And there's like this expert on how to date when you're a senior, someone in your sixty s seventy s. Eighty s, whatever, and they're catering this event. So I'm watching it. It's great. It gets to the part that I had forgotten about in which the dating coach for seniors livens up the party by bringing in adult entertainers. So here's the thing. In this segment, I'm thinking, I'm on an airplane. I start to remember what's going to happen.
17:42
Peter Dunn
They're going to edit this part out, they're going to blur over a particular area, right? Something that doesn't necessarily bother you in the privacy of your own home when you're watching it with your significant other and your kids are asleep and maybe you've had a pour of bourbon or sick. But when the pilot comes on to tell you about inclement weather on the horizon, and the first shot is of an actress who has removed the top part of her clothing, and it is in full display of the entire plane because you're pretty far up, and it's there for 45 seconds and you're trying to cover it. But then as you're covering the screen, you're actually grabbing the woman where it is inappropriate. And then you catch out of the corner of your eye an elderly woman who's sitting next to you that is just staring at you with shame and disgust.
18:38
Peter Dunn
And previously in The Flight, I'd done something I never, ever do before.
18:45
Damian Dunn
Talk to her.
18:47
Peter Dunn
I talked to her. What do you do, sir? Well, I do a financial company. What's it called? It's called your moneyline. Oh, that's neat. Do you know anything else? Actually, I have a radio show, and I write a column for USA Today. Oh, what's it called? Pete, the planner. Pete, the planner. You know what? My grandson is interested in finance. I'm going to text him that right now. This is pre flight. She texts him, I'm sitting next to Pete the Planner. He says he has a website. She's texting your grandson. And I'm thinking, you know what? I never talk to people on flights, but I feel like I helped this woman grandson, needless to say. Dame an hour later, this woman's shaking her head in disgust and Pete the Planner watching nudie films on a flight. How about that?
19:37
Damian Dunn
I think from now on, anytime somebody asks you're, Bill Ramsay, Dave's brother, funny.
19:43
Peter Dunn
You bring that up. I have another travel story that I will share at the next break. Dame here we go. Back on the Pete the Planner show. Back on the Pizza Planner show. If you missed the last segment, that means you were late to the show. Two demerits all right. Dame I received an email, something like that, from a person who said, you know what? I've previously not been great with money, and I want to turn over a new leaf. I want to show my commitment to myself and to the people that are important to me that I want to better with money. How do you do that? How do you actually do that? And so, Dame, I find that it's not as simple as just telling someone to put together a budget, because I don't think it's really that. I think it's about beginning to reserve, save, break your dependency on your income by saving money on a regular basis.
20:44
Peter Dunn
And I think the easiest way for someone to do that is to save 10% of the money they bring in at any given time to a savings account to create that mechanism to exercise that muscle of saving. So for me, Dame, the absolute best place to start and we'll get to the other parts, but the best place to start is by saving 10% of your income. No excuses. And get used to just having 90% of otherwise what you would have had. Are you in agreement with this? Do you disagree? Do you see it differently?
21:17
Damian Dunn
I don't disagree with the action itself. I think there are many reasons why it's great. There's a tangible benefit, a tangible result when it's all said and done, that you've taken that approach and you're taking this to heart, really making that change. The 10% might feel like a lot of money up front to somebody who's had problems in the past, maybe an approach. And I can't think if there's an official name for the plan or the program, but where you do one dollars the first day and $2 the next day that we've advocated for, that might be a little easier for somebody to get started. Might also feel like it's a bit of a gamification to it to keep your interest as you're going, you know, what's coming tomorrow, and you're actively involved in it. It's not just a one time transfer, maybe from one account to the next.
22:06
Damian Dunn
And if you can show that consistency as well, I think it goes a long way to building some credence to what you're doing and being able to say, hey, look, I taken some real deep thought into this and taking myself a little bit more seriously, and things are going well so far.
22:27
Peter Dunn
I had a buddy I think I've told you this story a long time ago. I had a buddy from high school. We played basketball together. He ended up being a barber in central Indiana right out of school. I think he went to college. I don't remember that part. Anyway, he was cutting hair, and his dad told him to, every day set aside $10. Every day, $10 cash. He would just take it out of the till. And I don't know why I said till. Technically, I'm right there. I wanted to seem like Little House in the Prairie was around, and he set it aside, and I went and got a haircut from him probably ten years ago, back when I had hair. And so he'd been doing this for a very long time. I guess it would have been 15 years, at least he'd been doing this.
23:15
Peter Dunn
And he had literally saved $10 a day for 15 years, and he had it in cash. I'm doing the math right now, actually, because I remember at the time just being shocked. And he would also, by the way, on Fridays, he would set aside $30 to account for the weekends. So he literally, for 15 years, saved $10 a day. Yeah, he had, like, $55,000 in cash, which is remarkable. And it's just because you peel it off and you get used to it. Now, I think the other element for someone trying to turn over a new leaf is this what people struggle with as their life is going on is they struggle with recognizing their shifting of priorities. Do you remember when you and Mrs. Planner north had a actually, she wouldn't be my wife. She'd be Mrs. Dunn.
24:09
Damian Dunn
You'd have some explaining to do.
24:10
Peter Dunn
Sorry, cassie true. Mrs. Planner is like, take them. I don't care anyway. Do you remember when you all first had children and you're coming off some of your kidless life and then you've got the kids and your expenses start to shift and there's that period of let's just call it confusion, where you're just like, we actually don't spend money on these things anymore. We spend money on these things, but depending on what those old things are, those expenses can continue on. And then your cash flow is short because you haven't recognized that your priorities and your spending have shifted, yet you keep putting money in those areas. Does that resonate? Does that make sense?
24:49
Damian Dunn
Yeah, sure. I think most people go through that circumstance, and sometimes that even goes from being maybe a two income household down to a one income household as well. So there's all sorts of variables that could happen in that scenario.
25:02
Peter Dunn
Yeah, I think the more you spend, especially with kids, the more you spend on entertainment, the more discretionary spending you have pre kids, the harder it is to then shift your priorities to the expenses associated with the kids especially do they get into activities and things like that. And if you don't recognize that, then you're getting into this scenario in which you're consistently spending more than you make. And I think that people who struggle and who need to turn over a new leaf, they don't examine how their life and their habits have changed. And not in a negatively critical way, but in a way that is detailed enough to recognize that they care about different things than they used to, yet sometimes their money doesn't know it yet. And so I think that is step number two. Step number one is save 10% of whatever comes in and just put it into a savings account.
25:58
Peter Dunn
Step two is to critically look at your expenses and say, does this actually matter to me for what I care about today? Which then gets us to step number three. Dame which everyone thinks is step number one. That's where a budget actually comes in. You start to look and the best way to budget, in my opinion, and we're actually going to talk about this in detail next week on the show, talk about pre planning is to take a look at how you spend money regularly. Now it's sort of taking a look at your expenses. I like printing off a bank statement than using an Excel spreadsheet. Dame, do you have a method that you and your team prefer to lead people to?
26:36
Damian Dunn
We are method agnostic. We will let anybody try and figure out what method works best for them and encourage them and support them through that. But there's got to be a method.
26:47
Peter Dunn
There does have to be a method. That's the unique thing about budgeting and budgeting apps and budgeting processes is that just try something. I don't really care whether there's one called like lunch money or something like that. There's YNAB there's all these sorts of things. We don't particularly care. We just want the one that matches up with you. I like to think of it like fitness. Maybe you did P 90 X for a day, and you're like, this killed me, and I hate it, and I hate exercise, and I do not want your shake. Right? Try something else. You're going to find something like, do you end up loving Jazzer Size or Zumba? I don't know. Maybe you do. And if you do, that's great. But that's why these ideas that everyone has to do the same method is ridiculous. And that's the same for people who try to change up their diet.
27:36
Peter Dunn
It's the same concept. You have to find something that matches you. Dame the other unique property in all of this is, what are the chances I'll let you answer this what are the chances that you and your significant other benefit from the exact same type of budget?
27:51
Damian Dunn
Very small. Unless somebody is the ringleader on this on a monthly basis and you can communicate what's going on, then maybe that person just kind of gets to ride shotgun in that process. And that's okay as long as they're still actively involved in the meetings and all that good stuff. But what makes sense to me and how it's represented and how I can see it probably isn't going to make sense to the second person in the relationship. So there may be a little give and take on that side of the equation.
28:24
Peter Dunn
If you've ever sat down with your elementary school student and helped them with their math homework, then your significant other comes over and then does their attempt to help with the math homework. You see how different your brains were socialized to think about numbers? Sometimes Mrs. Planner will be helping Tito, and she'll help him get to his in one way. And then I'll come over and I'll do it a different way. And she's like, wow, why do you do it that way? And it's like, well, for me, it's blah, blah. She's like, oh, I never thought about that way, because I do it blah, blah, blah that manifests itself in how you deal with money every single day. Dave coming up after the break dame we have got an email from someone who's receiving $1.5 million after taxes. What should they do with it? I'll give you my email address next.
29:10
Peter Dunn
I'm Pete the planner.
29:14
Damian Dunn
Mrs. Advice and I are having this playing this scenario out with middle school math right now.
29:21
Peter Dunn
Yeah, I'm at this point with math that I don't know how I know the answer to certain things, but I do. And then so that's frustrating to everyone involved. I'll be like, Ollie, it's this. And she's like, Why is it this? I'm like, Because it is, dummy. Really good teacher.
29:40
Damian Dunn
Yeah, just write that on your paper, Ollie. Write the answer and. Say just because it is, dummy.
29:46
Peter Dunn
Dame, have you ever been a coach in a youth sporting event in which the other coach gets in trouble by the official, gets thrown out, gets a yellow card? Have you ever been in that scenario?
30:03
Damian Dunn
I've been an umpire and thrown a fan out.
30:06
Peter Dunn
Oh, yeah. Well, that I believe. Yeah, I was at a game. I'm an assistant coach of a twelve year old girl soccer team this week, and the coach on the other team got a yellow card, which is sort of unusual. It's not that big a deal, but it's sort of a big deal. It's like getting a technical foul in basketball, right? Gets a yellow card. And so my head coach and I are standing there and if we're being honest, he shouldn't have gotten one. And so it was like this awkward moment, but this really nice moment amongst coaches on the other side just been like, yeah, hey, man, that sucked. You definitely should not have gotten that. It was just really weird because you often think of it's your opponent and you want to benefit from things that go wrong in an appropriate way, but in that moment, it's like, that doesn't feel right.
30:54
Damian Dunn
Yeah, well, hopefully at the level that I'm assuming you're coaching, you don't want stuff like that to happen. You want everybody to come and learn and have a good time and get the experience of competing against each other and yes, even losing, get the experience of losing to round out that side of the child that's participating.
31:17
Peter Dunn
At the risk of feeling like I'm making fun of someone, which I'm not the referee in question here. I'm stating facts. I'm stating facts. Arguably the oldest youth sports official I've ever seen. And that sounds rude. It sounds like I'm going somewhere at this, but I'm going to go early 80s.
31:40
Damian Dunn
That's impressive. On up and down a soccer field.
31:43
Peter Dunn
On an eleven b eleven soccer field. Now, if this person was in the early 80s, they have lived a hard life. I would argue that this person had a shorter fuse because back when he began refereeing, you just didn't say anything to officials. And he's also so elderly, it's possible he invented the game of soccer. All right, Dame, let's hit the next segment, and then after the next break, you get, I don't know, another travel story, which is sort of just short and funny, but I enjoy it. Coming up in three, two, one. Back on the Pete the Planner show. Dame, every once in a while we get an email and ask Pete at Pete Theplaner.com. And we got one this week. We're going to answer it now. Dear Pete, I will be receiving $1.5 million after taxes. This person denoted timeout. This person denoted dame, 1.5 million by writing dollar sign, one decimal five space, capital M.
32:43
Peter Dunn
Capital M, which is a proper way to do it. I also would note that in reading that first sentence, I could already tell you how old the person was.
32:55
Damian Dunn
Interesting.
32:56
Peter Dunn
It's like when people write the date, like military people write the date or people write the time. Like military people. You just sort of know. Did you read into it there?
33:07
Damian Dunn
The overall tone of the email made me think that they're not unfamiliar with large numbers.
33:13
Peter Dunn
Oh, well, let's see how that goes. I will be receiving 1.5 after tax in the near future, and I'm trying to decide whether I should add all of this to my investment portfolio. 90% stocks, 10% bonds. The alternative would be to invest about a third of it and pay off the mortgage of my primary residence. With the rest, I owe about $960,000 on my 30 year fixed at a rate of 3.75%. I'm in the highest tax bracket and do not have debt except my mortgage. My mortgage gives me about $32,000 per year in tax deduction. Most of the articles I've read recommend investing the full amount if one is in the situation. What do you think? All right. So do you feel like you have enough facts there?
34:04
Damian Dunn
I have facts to make. Snap judgment decisions. Of course. We've always got enough facts to do that.
34:10
Peter Dunn
Sure we are stock full of uninformed opinions, and they're usually from this desk. Your team usually knows what they're doing.
34:19
Damian Dunn
I've never been a fan of carrying a mortgage for a tax deduction. I don't know about you, Pete, but when somebody says you can't get rid of your mortgage because you got to keep that tax deduction, well, first of all, that's changed a lot for most people, not this individual, because they've got enough to enough in deductions to qualify to take itemized deductions. For most people, you're going to fall smack dab in the middle of standard deduction time period. So if you hear somebody say, don't get rid of your mortgage because you get that valuable tax deduction, probably not the case anymore, even for somebody who's a high net worth individual like this. I still struggle yes, there's a bigger benefit because they're in a different tax bracket, but I still struggle with the idea of keeping debt for a tax benefit when you could just pay the thing off, keep the cash, do whatever the heck you want with it, and pay a fraction of that cash back in taxes and whatever.
35:16
Peter Dunn
All right, so I maybe agree with you because I don't know what your ultimate piece of advice is here. However, here's where my I am 100% agree with the like, keep a debt for the tax deduction. I think that's ridiculous. Like, it's just like it's silly math. I think the bigger issue here for me is 3.75% mortgage is relatively inexpensive, not to the times, but to the long term average gain this person would get by investing the money. And if this person has such significant income, which they do, because they're in the highest tax bracket, then leverage that significant income to get a better rate of return than you'd have to pay on that mortgage, which is to say, leave the mortgage in place and let it ride.
36:07
Damian Dunn
Jimmy I think that's a 30 year or a 15 year mortgage.
36:11
Peter Dunn
He says it's a 30 year fixed mortgage.
36:13
Damian Dunn
Okay.
36:16
Peter Dunn
Obviously it's a jumbo, but he should be able to get that down. Shouldn't part of the recommendation be like, hey, consider refi in there? Gary I would.
36:28
Damian Dunn
If you're going to leave the debt in place, which is a very viable option at this point, might as well make it cheap, save yourself a little bit of cash on that other side. Unless you really want to maximize that deduction, I guess, but otherwise get it down, refinance that debt, invest the cash, let it ride.
36:53
Peter Dunn
All right, I'm looking right now, 30 year jumbo rate. Is this right, dude?
37:02
Damian Dunn
No, you're going to have to give us some details.
37:05
Peter Dunn
Pete oh, yeah. Two and a half percent.
37:11
Damian Dunn
Really?
37:13
Peter Dunn
Yeah, but I can't be right. I'm seeing some higher than that. But let's say it's 3% on that much 75 basis points. I don't know how deep he is due into his mortgage. I mean, if he's eleven years deep in his mortgage, like look at a 15 look at a 20 year mortgage. Isn't it funny when we get questions like this? Like the question is about do I invest or pay off my mortgage? But what you realize is there's another element at play here? I think the answer is to absolutely invest it and refinance your mortgage. It's a lot of money.
37:53
Damian Dunn
Yeah, it's not insignificant amount of money that we're talking about here. I don't know. Recently I've started scratching my head a little bit thinking, do we give different pieces of advice for different scenarios? Some people might that might see as similar on the outside, but based on some of the internal details, do we go a different direction? And what might that be confusing for some people? What do you think about that?
38:26
Peter Dunn
Yeah, that's the idea of expertise. That's the idea of nuance. I also would suggest that's why when I write in large publications or talk on large platforms, you always have to hedge when you give big, broad, sweeping pieces of advice, because there are little elements. Like this guy's got a 90 ten portfolio, 90% stocks, 10% bonds, which is to suggest he's likely a savvy investor because he says it that way. And he also writes 1.5 million as 1.5. This is the nuance that helps us answer the questions. Had this been transcribed and written a different way, some of the details left out, we would give a different piece of advice, no?
39:13
Damian Dunn
Yeah, I think so. And I realize that might ruffle some feathers of listeners, but really, when you get down to it, there are different guidelines for different situations, even though they may seem the same on the face of it. So I guess that goes back to making sure you're working with somebody you trust as well, knowing that while you may see something in black and white, they're seeing all the shades as well, and they can give you the experience advice to make sure that you're doing what's best for you. Even though it may not seem that way on the face of it. So didn't see this segment going that way, but make sure you're working with somebody that you trust and respect and has the experience needed to help you in your specific situation.
40:00
Peter Dunn
I'm going to change some just secondary details of this email, and we'll see how this goes. All right. Dear Pete, I'm getting an inheritance of over $1 million sometime soon. I have an investment portfolio, but I'm not exactly sure what the mix is. Should I pay off my mortgage, my 30 year mortgage that's got kind of a high rate, or do I invest the money from a tax standpoint? I do like tax breaks. Everything I've just said is exactly the same as the pertinent details of that email, but it's the nuance that change that reflects how we answer it. And to your point, brilliant point.
40:46
Damian Dunn
Yeah. Just hearing it worded differently does make you take a different approach to it. If you've been in financial services for any length of time, you can get a really good feel for the acumen and the experience of somebody typically pretty quickly. That doesn't always mean it's the right one, but sometimes you can make these judgments and really start to go in the right direction.
41:14
Peter Dunn
You know where this gets a little stickier. As we enter the break here in just a moment, imagine this person's significant other sending us the same email, because it's this person's acumen, as you say, that colors the words they use. If someone slightly removed, potentially with less financial aptitude, it's completely different email.
41:40
Damian Dunn
Yeah, you're right.
41:41
Peter Dunn
All right, let's do this. Let's take a break. If you're listening on the podcast, you're going to get a travel story if you don't listen to the podcast, go to the Pete the Planner podcast and listen to it. You get to hear what happens between the show, between segments. Then we'll come back to biggest waste of money of the week and the news right here on the Pete the Planner radio network on Pete the Planner. Got a new radio network to hear about that.
42:02
Damian Dunn
I did. I think I've heard something about that affiliate.
42:05
Peter Dunn
Oh, we're all not on the radio, so we'll do that when we come back.
42:08
Damian Dunn
Yeah. Be nice if we probably give him a shout out again this week.
42:12
Peter Dunn
All right. So dame on the way to California. My first flight was to Minneapolis on Sunday morning. Took a flight to Minneapolis and then on the way to John Wayne Santa Ana Airport. After that, I'm boarding the flight to Minneapolis and I'm going to be sitting in comfort plus, which I guess you would call second class. I don't know. I'm sitting in, like, the second section a little bit more legroom. And the lady scans me in, and she said, hey, hang out here for a second. Someone didn't show up. You can actually sit in first class. I was like, okay, now you're talking, Betty. Her name was Sally. Get on the plane. I've flown first class before in similar situations. Whatever. It doesn't matter. I'm sitting there. It's nice. The flight attendant comes over and says, welcome, Mr. Schwartz. Can I take your jacket and hang it up for you?
43:18
Peter Dunn
I was like, okay, sure. She did that, and then she came over right after that. She hung up my jacket. She said, Mr. Schwartz, can I get you a cocktail? Can I get you something to drink before the flight takes off? I was like, wow, no, thank you. Thank you very much. Into the flight, 20 minutes. She comes over and she goes, mr. Schwartz, can I get you a snack? I was like, no, I'm good. Right before the flight land, she comes over. She goes, mr. Schwartz, do you know where your next flight takes off? What gate? I was like, yeah, I'm good. Thank you very much. So Damien occurred to me at this point in time, once someone calls you Mr. Schwartz, that's not something you want to correct. In my mind, I've been and still am Mr. Schwartz right now. Does it fit Peter Schwartz?
44:10
Damian Dunn
Yeah. Yes, it does. I'm looking forward to seeing you change your Twitter handle very soon.
44:16
Peter Dunn
Peterswartz.com and I will also note it's a guy like Peter Schwartz who will have a topless image freeze on their plain screen for an uncomfortable amount of time and then have to explain it to the elderly woman next door who was married to the soccer ref.
44:36
Damian Dunn
What a small world.
44:39
Peter Dunn
I'm not making fun of the soccer ref. The soccer ref's black shorts were do you remember? Okay, let me think about this. Late 90s, early 2000. There was, like the athletic material for high school sports jerseys that actually had, like a satin a sateen sheen to them. Do you remember this period of time? I do now. Things are more flat again, but there was a time when it would just it literally sparkled. This ref had on a pair of black shorts that were made of that sateen material that were this sounds like I'm making fun of him. I'm just trying to illustrate what was going on that had seen better days and probably were purchased that period of time, not making fun of him. So they had browned. They were literally like brown, like a lovely chocolatey brown. Like, if you had a dessert in front of you of that color, you will partake.
45:34
Peter Dunn
And so it really added to the vibe of giving someone a yellow card. It was amazing.
45:38
Damian Dunn
Lots of hours in the sun to make go from and washes to go from black to brown.
45:44
Peter Dunn
And I also have to make another note about the ref. When he came over to me because I was setting up the field, I'm assistant to the coach. He came over, he's walking at me. I'm looking at the sun over his head and just blinding. Blinding clearly enough to brown his shorts, so to speak. He comes up and he's like, did you line the field like that? Did you line the field? Because I was the one lining the field. And he began to complain about how it was done poorly, which it was because it was my first time. And he said, did you line the field? And he's still probably 15 yards away from me, but he's backlit with the sun. And I'm looking down, I see a ref coming. I hear the voice, I see the short haircut, and I go, yes, ma'am. And here's the dumb thing about being a relatively polite Midwesterner.
46:38
Peter Dunn
I unnecessarily insulted this person just by doing what my father told me to do, which is to respect people and say, sir urmam. And then I did something dumb because of the sun blinding me. You know what I mean?
46:56
Damian Dunn
Can we start a collection to support you getting kicked out of a game this year?
47:03
Peter Dunn
I can't believe I didn't get the yellow card. I will never get kicked out of a game. I don't yell like that.
47:08
Damian Dunn
You could just make quiet backhanded remarks like ma'am to people.
47:14
Peter Dunn
I like to imagine that ref is sitting around his family room, listen to his large radio, listen to the stories and maybe heard that the story right now.
47:21
Damian Dunn
Giant console radios where you have to slide the tap open.
47:25
Peter Dunn
Next up is little orphan Annie.
47:30
Damian Dunn
They got the call sign for the new affiliate in the last segment, I.
47:34
Peter Dunn
Will note that when he went to the sideline at halftime to have a drink, he drank oval team.
47:39
Damian Dunn
No, he didn't. No, he didn't. I thought you were going to go with Metamusal or something like that.
47:47
Peter Dunn
I've got things to do. Oh, I've got that thing 11th. Okay, we got to go. We got to go now. I cannot joke anymore. Oh, I need a biggest waste of money of the week. Oh, this is going off the rails. What's going to happen next? Radio.
48:02
Damian Dunn
He's a TV.
48:03
Peter Dunn
Oh, I got it. This week's biggest waste of money of the week right here on the Pete the Planner show is Dame. If my daughter listens okay, in three, two, one. This week's biggest waste of money of the week right here on the Pizza Planner show is Dame. I don't know if your daughter's at the age yet where she comes to you with deals. She comes to you like, hey, I got an idea. Let me present a deal to you. Does that happen yet?
48:26
Damian Dunn
No, that has not.
48:28
Peter Dunn
I could see Thomas doing that. LJ I'm not sure.
48:31
Damian Dunn
Yeah.
48:31
Peter Dunn
Okay. So my daughter comes to me when I got home the other night, and she said, dad, before you say no and I'm like, okay, first of all, I am going to say no to whatever you say, but I want to listen and see where this goes because she's in this deal making thing right now. She goes, the new iPhone 13 came out, and I think I should trade in my phone and then trade it for the iPhone 13 because the iPhone 13 is new and it's lower price than what my phone was. I was like, okay, I'm listening, but of course I know how this all works. But I'm like okay, here's what I'd like you to do, Ollie. Do some research around it. Bring me the economics of it, and we'll go from there. She said okay. She goes, So that's not a no?
49:22
Peter Dunn
I said, It can't be a no until I have the economics. She's like, okay, last night for soccer practice, comes up to me and says, dad, here's the deal. Her phone, which is I don't know what it is. No one knows. She goes, the retail price and you're going to work with me here $1,000. And everyone's like, you bought your daughter $1,000 phone? It's like, well, you know how it works. Not exactly. And she was like, okay, my phone was $1,000, and if I trade it in, they'll give me $200 on trade in. And the new phone is $700. So it would only cost you $500 to do this. And she goes, Think about that. She's like, getting into like, think about that. It's $1,000 phone, and this one's cheaper because it's only $500. I said, Ollie, thank you for doing that research. Let's talk through some things here.
50:19
Peter Dunn
You had two ways to come at me here to discuss this. Number one, you could go with the features of the phone are so amazing that they provide value to us. The second thing you could do is bring a really good economic argument to the table that make it a good decision. I said, Honey, unfortunately, what you did is brought bad economics to the story with no value because we will end up with one phone and have outlaid $1,500 in the process. She's like, So that's a no? I was like, It is a no. And she said, I thought you weren't going to say no. So, dame that is the biggest waste of money of the week is upgrading your $1,000 phone for a $700 phone and ending up with one phone and paying $1,500.
51:09
Damian Dunn
Sure. Tim Apple is thrilled with this segment.
51:13
Peter Dunn
What's in the news this week, Tim?
51:16
Damian Dunn
Taco Bell is testing a tasty monthly subscription service in about 20 participating restaurants across Tucson, Arizona. Customers can pay between five to $10 a month for taco Lovers Passes. Each gives subscribers one taco a day for 30 days. The app based program is currently active until November 24. I'm sure you're asking what tacos are involved, I can tell you that. Soft tacos, spicy potato, soft taco, crunchy tacos, doritos tacos, some of the famous ones. Taco Bell likely hopes trial turns casual customers into regular customers and increase enrollment in its year old loyalty program. Yum brands, which owns the taco chain, said its recent earnings call that it's aiming to grow its digital sales this year with more exclusives such as this one. This is the key Pete app users enrolled in its loyalty program spend 35% more compared to prior to joining. Yeah.
52:17
Peter Dunn
Dean, what was your college Taco Bell order?
52:24
Damian Dunn
Probably three soft taco supreme. Probably. It was pretty plain, Jane.
52:33
Peter Dunn
It was a mexi melt mexican pizza, and then I would always get the cinnamon twists, the cinnamon crisps or whatever they're called. Here's the thing with those. You convinced yourself that it was a dessert and you were like, oh, this is amazing. It's basically like a sweet, but you never really liked them as much as you thought you'd like those little desserts.
52:59
Damian Dunn
Yeah, I totally agree.
53:01
Peter Dunn
What else is in the news this.
53:04
Damian Dunn
Week in predatory marketing? Robin Hood, the go to trading.
53:09
Peter Dunn
I've never heard of it.
53:10
Damian Dunn
Young investors wants to get its base even younger. The digital brokerage is kicking off a nationwide marketing campaign wednesday, this past Wednesday, that is. It's designed to turn more college students into Robin Hood customers. I know it seems almost impossible. Robin Hood will give students who sign up for brokerage accounts using their school email address $15 to trade and enter them into a $20,000 giveaway. Robin Hood executives will tour campuses of community colleges and historically black colleges and universities this fall.
53:46
Peter Dunn
Yeah, I was talking to Oz here at our office this week, talking about bitcoin, 20 year olds getting in, cryptocurrency and stuff, and she said, well, you used to day trade in college, because she knows this. We've had this conversation and for the first time ever, something occurred to me. Dame. I am hyper critical of people who invest in bitcoin, not just bitcoin, but cryptocurrencies, because I feel like they don't understand the risks. Do you think I really understood the risks of day trading in college? No. So all that's changed is my risk tolerance, my understanding of risk and wisdom. So I'm going to quit blasting people in their 20s who invest in cryptocurrency because I essentially did the equivalent of it at the time.
54:35
Damian Dunn
That's fair.
54:37
Peter Dunn
It's still really stupid. What else is in the nest?
54:39
Damian Dunn
Let's close the circle. Since we talked about Robin Hood, let's go to mass mutual. Remember that roaring kitty guy?
54:48
Peter Dunn
Oh, thunder. What was his name? Thunder?
54:50
Damian Dunn
No, roaring kitty. I just said it.
54:52
Peter Dunn
Roaring kitty. Roaring kitty.
54:53
Damian Dunn
Yeah. Mass mutual. They had to pay almost $5 million to resolve allegations by a Massachusetts security regulator, including that it failed to supervise its agents. Among the social media persona roaring kitty. During the GameStop frenzy, it ended up costing mass mutual $5 million.
55:14
Peter Dunn
Dame. We did a segment called Win, Lose or Jail.
55:18
Damian Dunn
Yes, we did.
55:20
Peter Dunn
Look, if I were a better, I don't know, entity within this program, I would track it down. And you will hear on that you and I both said one of the big losers in all of that Thunder Nuts thing was Mass Mutual. And it stinks because they did nothing wrong. They had a person who didn't disclose.
55:45
Damian Dunn
Right.
55:46
Peter Dunn
And yet they lost. I knew it.
55:48
Damian Dunn
Yeah. Apparently, they are going to now monitor the social media accounts of their employees.
55:54
Peter Dunn
Because of this, I used to write the social media copy for a large financial company that their financial advisors were allowed to use. And they could only tweet or post on LinkedIn what I wrote. And they would always be really vanilla dumb things because that's all you could get through their particular regulators. And now Mass Mutual or companies like them are going to have to continue to post dumb things that I write.
56:26
Damian Dunn
I'm sorry for everybody in that scenario.
56:29
Peter Dunn
When you're a young financial advisor and you hear the rules and compliance tells you this or that, having been there, it all seems dumb. It's like when your parents tell you something when you're a kid, you're like, Whatever. But now, again, as bald men, I get it. Have we all not been on some side of a well intentioned, terrible mistake that you make when you're unwise? Of course we have $5 million, because Kitten, Fire, whatever his name is going off the deep end.
57:06
Damian Dunn
Yeah, that's him. It's a preemptive hand slap. And then they just make sure they keep slapping your hand every time you try and do something.
57:13
Peter Dunn
Dame, there's a rumor that Lisa from your team will be joining us on the radio next week.
57:18
Damian Dunn
I've heard the same thing. I will keep my fingers crossed that actually comes to fruition.
57:23
Peter Dunn
All right, dame. Well, that's all we have time for this week. Just a couple of months left in the year. And by couple of months, I mean more than three.
57:32
Damian Dunn
That's some good counting, Pete.
57:34
Peter Dunn
That's what we do here. All right, Dame, I hope you have a good week. I hope everyone has a good weekend. Thank you for all our radio affiliates. New affiliate there in Anderson, Indiana. Wolf Boom Radio. Send you good vibes? Because good vibes are all that's in the budget. I'm Pete the planner. This is the Pete the Planner show. Oh, my gosh. You just got outed in the comments here.
57:55
Damian Dunn
Mrs. Advice outed me.
57:57
Peter Dunn
So Danza, Listener of the Year last year, asks, how's Dame's Bitcoin doing that he bought on Robin Hood.
58:05
Damian Dunn
I did.
58:06
Peter Dunn
And then Mrs. Dunn, mrs. Vice President of Advice, says dame's bitcoin is now AirPods. Which you're not wearing.
58:21
Damian Dunn
No, they're inside.
58:22
Peter Dunn
Why are they inside?
58:23
Damian Dunn
They're for special occasions. No, my Bitcoin did well, and so I decided I was going to take my profits and run.
58:38
Peter Dunn
You did. Well.
58:42
Damian Dunn
I don't need to share numbers.
58:45
Peter Dunn
Dame, I bought noise canceling headphones a long time ago when I used to travel, when I didn't wear glasses and didn't have to wear a mask. Now, when you've got an elderly, fat head like I have, you have glasses and you have a mask, the cup that goes over your ears just drives all of that into the side of your head and makes for a very uncomfortable experience.
59:06
Damian Dunn
Did you know that the AirPod pros are noise canceling as well?
59:10
Peter Dunn
I do, but you can't plug them into the movies that you watch in the back of airplane seats.
59:14
Damian Dunn
Yeah, sound is important for the kind of movies that you watch.
59:18
Peter Dunn
That's a good point. Dame, I got to go. Okay. I feel like there was something else I wanted to tell people this week. Can you remember what it is?
59:28
Damian Dunn
Thank you. Thank you for bearing.
59:30
Peter Dunn
No, it's a story, but I don't remember what it was. No, I will say this conference I was at in California this week, it was a very nice resort, and it always cracks me up. The nicer the resort, the more difficult it is to get water out of the faucet of the public restrooms at that resort because it's got one of the automated sensors where you have to put your hands under. And so you're literally like, well, someone will hand you a towel at any other place in this resort. They will brush things off your face. It is truly incredibly hospitable. Except if you go to the public bathroom and you just try to get a little bit of water in your hands to wash them, and then it's just like, no. So then you go to the next sink because you're trying to activate it, and it's like, no.
01:00:17
Peter Dunn
And then you get a little bit of soap on, and then it goes, and it splits, and you can't get it to go again. It's like, how is that possible that the nicest resort possibly in the United States won't give you water to wash the soap off your hands?
01:00:31
Damian Dunn
I don't know. I just got a message. I'm sorry. Lisa says she has a call booked at 10:00 a.m.. Next week. At this point, we can't send the show. I know.
01:00:41
Peter Dunn
All right, that's all I have, everybody. I got to work. Dame, good day to you.
01:00:45
Damian Dunn
Good day to everyone.
01:00:46
Peter Dunn
Stay getting money.
