Are Your Good Money Habits Holding You Back? (Part 2)

We're back to wrap up our conversation which might be a bit counterintuitive. We’re going to question the real impact of common financial habits. Are the strategies you consider beneficial actually working in your favor? We explore the pros and cons of practices like paying off debt early and keeping up with financial news. Join us for a practical discussion, as we uncover the unexpected effects of everyday money decisions. Are your good money habits holding you back?

 

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Transcript: 

Marc Killian  00:00

Part Two of our prior conversation on our good money habits holding you back, we're going to continue to have the conversation about the real impact of common financial habits. And are those strategies that you consider beneficial actually working in your favor? So join us here on playing with the tax man with Tony Morrow.

 

Announcer 2  00:17

Look up in the sky. It's a bird. It's a plane. No, it's the tax man. He may not be a superhero. But Tony Morrow has saved many retirement plans with his extreme knowledge of tax planning strategies. It's time for a plan with the tax man.

 

Marc Killian  00:35

Welcome back into part two of our conversation on those good money habits. are they holding you back? Tony and I back again to talk investing finance and retirement of course, Tony is the CPA CFP a and in the big kahuna over there at tax Doctor Inc. And if you guys have questions, need some help get onto the calendar and have a conversation with him at your planning. proz.com He and his team are here to help you get to and through retirement at your planning proz.com What's going on my friend? How are you?

 

Tony Mauro  01:03

I am good in tax season is upon us now. So it's gonna be a little busier.

 

Marc Killian  01:08

I was gonna say I feel like I feel like that's gonna be the theme. I hear from you for the next couple of weeks. When we talk as tax season. It's tax season. Oh, yeah, it's tax season.

 

Tony Mauro  01:18

Now, it's, you know, the IRS, right, it has kind of delayed the start of the tax season, they always do this. And they kind of cram it into, sometimes less and less time. So it's always that that crunch, you know, and we don't well, we don't work ourselves to death, like we used to. And you know, so we have some cut offs there. And so it's not as bad, you know, as long and stuff as it used to be. But nevertheless, it's busy.

 

Marc Killian  01:43

Exactly, exactly. Well, I won't keep you long we'll finish our conversation. That way you can get back in and work on these things we got to do. But we started off with our first five right on some good money habits, are they holding us back. So we're gonna continue and of course, you don't have to listen to the prior podcast folks to check this one out, or enjoy or pick up some nuggets of information from this one. But it certainly isn't a bad idea. So make sure you go by and check that out. You can find it at your planning proz.com or subscribe to us on Apple, Google, Apple, YouTube or Spotify. Just type in playing with the tax man in the search box. Alright, so let's go to number six here have our total 10. Tony paying off debt early. Hey, you know, good habit, right? Reduces long term interest payments can provide a nice mental boost, especially when you pay something off, you're like, oh, yeah, you feel really good about that. But Why might it be bad to pay off debt early? This can be interesting.

 

Tony Mauro  02:33

I think, you know, I definitely advocate paying off high interest debt, of course, and get rid of all of that. But sometimes, especially in the mortgage area, you know, some of us that have had a mortgage over the last, what, 710 years where you've got low interest rates, if you pay it off early, you know, you could be, you know, basically using that money. In other words, you you take cash flow out of your out of your monthly budget to pay that off. And you could be using that to get higher returns elsewhere. And still, the net is quite a bit of a plus for you. So if you've got a low interest loan, you got to take a look at it work with your advisor to see if this is the best thing for you. I do advocate staying out of debt and being out of debt. But every once in a while, it's not that bad of a deal, especially on like, say on home mortgages.

 

Marc Killian  03:22

Right? Yeah, you know, so you got to kind of take a look at how you're dealing it and really kind of the debt thing will kind of play into that lazy money conversation, maybe right, some of that extra money sitting in savings right now or something like that. Right? So because, you know, if you're, you're thinking, Okay, I'm getting, you know, I can get 4% on the CD, because the numbers have been better, because we talked a little bit about the fact that the feds are probably going to cut rates this year in 2024. But you know, you're paying off your house more, if you're lucky enough to have like a 3% mortgage, right? Well, yeah, you're making 1%. But could that be better use someplace else? Right? So let's, let's say you're gonna drop 50 grand on your mortgage, and you know, and you still weren't paying it off, you were just gonna get it knocked down a good chunk or something like that. Could that 50 grand be making you more money someplace else? safely, of course, I get that we want to, you know, find a vehicle that, you know, kind of works well for our risk tolerance. But again, that's why maybe paying off too much debt early. Bad debt, probably certainly a good idea to get rid of quickly, right? Yeah. Does that make sense? Yeah. Okay, cool. Make sure I wanted to make sure I was following you there. Number seven, staying informed by watching and reading financial news or listening to podcasts. Right. So another way to do it. Good side, right. Financial education is important. Not a bad idea to be up on various different things. That's why we try to that's why I always say, you know,

 

Tony Mauro  04:43

hopefully you picked up a useful nugget or two of information from our show. But be careful, right, because there's an awful lot of talking heads ton of it, especially I mean, you got podcasts like we're doing of course, stuff you view the internet everything everybody's got an opinion right in it. It tends to be if you tend to get too far into it, maybe information overload, I think could be bad, I think you could end up making some rash decisions, I would say, if there's nothing wrong with listening and gathering as much info as you can, I would definitely say, to, you know, run it by your advisor, you know, because they are going to be the ones that can, you know, lend some credibility to some of that stuff you hear, and whether it fits into you know, what you're trying to do. So just be careful. And the other thing is, unless you really enjoy getting information overload, eminent just just for your own time sake, you know, go do something else. It's fun, unless, again, unless you really enjoy it, it's yeah, it's

 

Marc Killian  05:41

so funny how our society is so geared that we have all this tech, we have so many things that, you know, making our life, you know, supposedly easier, but they're really time socks. And the next thing, you know, you go, why the hell the day go, you know, right. And it's just, it's amazing. Like, again, the wife and I were on this diet, you know, it's still January, and we're still hanging in there. And, and it's cooking healthy takes so much time, you know, yes. And so it's no wonder that our society is a little heavier, because it's easy to run to Taco Bell, and so on and so forth. Right. And I think the same thing financially, sometimes, sometimes it's easy to think, Okay, well, I'll just, you know, I'll just Google something real quick. And then I'll just, you know,

 

06:25

the first two or three things is the what, probably what I'll go with, but it might not be the right thing for you, right? Just kind of like that taco. It tastes good, but it might not be the right thing. That's right. You know, speaking of that healthy eating not only takes a long time, it's generally more expensive. Oh, Wally, way more expensive, way more expensive. Yeah. And I'm actually tonight, I'm in charge of going home, and I gotta go get the ingredients. So you

 

Marc Killian  06:50

got to go out and get the ingredients. Hmm. I

 

Tony Mauro  06:53

1. And but it is, it is painful, you know, to go out and do that. And you. You cook it in now? Yeah, it's gone in about 1520 minutes. Yeah. Well,

 

Marc Killian  07:03

I don't want to go down that avenue, because that's what the wife's complain about Thanksgiving. I'm like, Yeah, but it's so good. She's like, I spent all day on this. And I was like, yeah, man, it's good. I tell you what, the healthy thing right, I know, we're off on a tangent. But that's the point of the podcast is just talking about life in general as well. And how it relates to finance but thinking about like even just wastefulness. So help this healthy eating out to your point, it's expensive. And so the other day, she bought one of these vegetable things, as already, it's all kind of pre cut stuff already. It's already kind of sealed up in the plastic and blah, blah, blah, right? It's about you know, a smorgasbord of vegetables already kind of pre done for you to make your was a call that meat crop or whatever the whenever you're making your stuff for food. And as soon as she opened it, she pulled the lid off of it. And the smell hit us like a ton of bricks. This was brand new, and the vegetables were were bad. They didn't look bad, but it wreaked. Right. And so it was like, well, that's total money gone down, right down the drain, you know, and so and so I was joking with the wife has said, you know, what, never, you know, gets mushy and smells really terrible and goes bad like that. And she's like, What, like doughnuts.

 

Tony Mauro  08:10

That's like so much preservatives. And

 

Marc Killian  08:13

she's like, You suck. And I said, I know. I know. But you know, it is it's expensive. So you definitely you got to be on your toes when you're trying to do you know, financial stuff, and healthy eating right? Learn a lot of stuff out there. Alright, so that was informative news. Let's go to number eight. global diversification. That sounds good. Tony spreads out the risk, right? You can capture growth and different economies. Give me some negatives to think about here? Well,

 

Tony Mauro  08:37

I think the one thing with the negatives is while it you know, depending on what you're doing, and which countries you're investing in, it definitely could add to the complexity, because a lot of these different countries have different laws, different regulations for their securities and whatnot. And the other thing is, is it does increase your risk, because obviously, there's a lot of volatility, generally, when, when a certain country is doing well, other countries are not, and vice versa. And it would behoove you definitely to get with your advisor, maybe even choose a fund versus individual securities, if you're going, you know, globally, because it's impossible for us sitting here, wherever we are, to get any type of what I would call, you know, in depth research and even if you have it, are you gonna be able to understand it, it's different accounting rules, different laws, everything else. So be very, very careful there and make sure that you get the diversification you need. I'm not opposed to global diversification. I think it needs to be done wisely. Okay. All right.

 

Marc Killian  09:37

Yeah. So cuz you're definitely exposed to more volatility. So Right. So if you're not comfortable with volatility, got to take that into consideration. All right. Number nine, that emergency fund constantly building it? So you know, we've talked about this before, but like you got 100 grand sitting in the savings account? What kind of emergency Do you have, that's going to cost $100,000? You know, did you get your you know, did you get your dog kidnapped, gotta pay Have 100 grand to get it back, right? So it's a great safety net to have. But just be careful, right? Because obviously, the downside of this is that your your basically, your savings account, even with the higher interest rates, were in telling your savings accounts not paying you four or 5%. So you're losing money safely.

 

Tony Mauro  10:15

You're losing money safely. And you certainly can continue the good habit, but maybe just reroute that money to something that could earn you a little bit more put it to work for you. Right. Yeah, be a put it to work better for you. You know, it's great to build up a really good emergency fund. But after that's done, like you say, there's no sense of just keep putting money into that you got to you got to keep it working better for you.

 

Marc Killian  10:37

Yeah. And, and if you're a retired person, obviously, the emergency fund conversation is completely different than if you're still working, right? Yes, yeah. And it's also that comfort, that comfort Tommy level of like, what's the amount in the savings account, a savings account that makes you both feel good to sleep at night, find that number kind of something fair for eat for both of you. Because it can be one something where one party in the marriage wants, you know, a big number and the other party is fine with less? And you know, so you want both to be comfortable, but you got to again, not have it, you know, being ineffective, too. Right? Okay. All right. Number 10 final one here, patients making financial decisions and building a plan. Now, again, this is kind of like our fifth one on the prior segment. In some cases, delaying your decisions, to get more information or to you know, check things out, can lead to better outcomes, right, it could lead to making impulsive decisions, I bought something over the holiday Christmas break, I shouldn't have. Right, and get some more information. But when, when that patients turns to do nothingness, which humans are really, really good at procrastination,

 

Tony Mauro  11:41

it can certainly harm you, it can harm you, because you can't get off the sidelines. And sometimes you tend to overthink slash over analyze, like say there's nothing wrong, being patient, getting all the facts, working with your advisor. But at some point, you're going to, you know, make your goals, you're going to have to make some decisions, and you're going so, and hopefully the advisors, you know, and that's what part of what you're paying them for is you know, to keep you on track. Get you going keep you going. Yeah, because we are as humans tend to not want to change.

 

Marc Killian  12:10

We're really, really good at procrastination, aren't we? Yeah. You know, and not like, I know that some people are really, you know, the opposite. That's great. But I think a good portion of us are pretty darn good at procrastination, and it may be in different arenas, right? Some people are really on the ball about this, but procrastinate the heck out of that right, you know, so on and so forth. So it's a treat, we all kind of carry around so just be careful. So that's our podcasts were good habits can sometimes maybe hold us back. Hopefully you found that informative. And of course, as always, if you got questions need help. Before you take any action, always check with a qualified professional like Tony as I mentioned earlier, he's a CPA, a CFP and an EA He's got the whole alphabet soup, right there on his business cards. If you need some help, reach out to him at your planning proz.com That is your planning proz.com And subscribe to play with the tax ban on Apple, Spotify and YouTube. Tony, my friend. Thanks for hanging out and good luck with dinner tonight. All right, thank

 

Tony Mauro  13:07

you. We'll see you next time. Yeah, we'll

 

Marc Killian  13:08

catch you next time. It'll be into February here on plan with the tax man with Tony Morris.

 

Walter Storholt  13:18

Securities offered through a van tax investment services SM Member FINRA SIPC, investment advisory services offered through a van tax advisory services insurance services offered through an event tax affiliated Insurance Agency investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional