Another week in the rearview and we are rolling into the last month of Q3. Every quarter there is a handful of topics that would be a stretch to make their own post, but fit perfectly as smaller, condensed sections.

This quarter we are going to cover a useful tool for credit cards, a new ‘supplement craze’ to avoid, and two items showing 1st and 2nd order thinking when giving advice.

Also, there is a very nice promo going on that gives you $1,000 free money for opening an account. But it expires at the end of the month so it is time-sensitive.

I have been a bit less aggressive with account churning as the $100-250 ones don’t hit as strong at 40+ and well-off as in my 20s and 30s. But I jumped on this promo, and recommend you all consider doing it today. Took less than 5 minutes.

The theme of the week is to think a little deeper than first glance when it comes to finances and life.

Often the surface level story or what initially sounds good isn’t the best path.

We are blessed to live in a time that a little box in your pocket gives you access to all the information you could ever want. If you hear a claim, at least take a min and type into a browser “what is the negatives of [claim]” and see what pops up.

Yet, too many people passively accept information without a 2nd thought.

Lots to cover today and I kept the credit card site above the line since it is a cool looking tool.

Get Your Credit Card Benefits

Here is an interesting site I came across, although I haven’t signed up for it yet and may not get around to.

https://useyourcredits.com/

Around here, Credit Cards are great. If you are a responsible adult who pays the balance every month it is all upsides of points/cashback, no worries due to zero-fraud liability or losing a card, and no connection to your bank.

I know horror stories of someone losing a debit card or getting a debit card skimmed and money withdrawn from their account through fraud purchases and the hassle to get their money back from the bank (if ever).

Credit cards also lend themselves to churning for free money as well as the infinite interest free debt cheat code.

There are also a lot of ancillary benefits cards have that are typically never used. Free credits at restaurants, access to lounges and early access to events, free flight insurance when purchased with the card, free ride-share credits, etc etc.

Even someone who is pretty on top of their finances like myself doesn’t log-in monthly to my American Express account to select the bonus offers there. They almost always have a big (10%+) cash back offer at places we purchase regularly just for using the AmEx on the purchase, as long as you add the offer.

Well the linked site states it will notify you of all those perks so you don’t miss out on them.

Take the below $150 dining credit every 6 months:

That would be $300 on the year in free money that you might lose track of and miss.

It says you can sign-up without any bank information, just need to select the cards you own.

I may do this and will report back if I do, but if anyone does drop a note and let me know how it works.

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This week’s post is brought to you by one of the misguided budgetpoor accounts on twitter and a rehash (and probably scheduled to go off once every month) tweet:

There are just so many directions you can go on silliness like this:

1. If this was true Ferrari wouldn’t exist as a retail car company

   1. Bottom-tiered new Ferrari I could find with a quick search looked north of $200k. And yes, some people who have no business buying a $200k car will buy it, but if the only people who wanted Ferrari’s were broke they would go out of business. Top-tier looked to be over $2mm btw.

2. If you define ‘wealthy’ as no debt and $1mm invested…you have a very different and underwhelming definition of wealth.

   1. Hell, after 2 decades of working hard to help her out of debt and fixing her finances, Mama F’er would qualify as ‘wealthy’ under this definition and she can’t retire yet at mid-60s. Hardly what people picture for ‘wealth’.

3. Do some very wealthy people drive old, paid off cars? Yes. But the reasons have nothing to do with what is implied in the tweet (them being frugal and pinching pennies to invest more)

   1. One of the wealthier people I know drives some old beater of a truck. He in in RE development and it fits the image he is trying to have on the job sites. He doesn’t care for cars and ‘doesn’t like to carry keys in his pocket so can just leave the keys in the ignition because who cares if someone wants to steal it’. He also takes that truck to the pier/docks and spends his time on some ~80ft custom sail boat that ran him 8-figures. He loves sailing.

   2. Another drives a ‘gray man’ sedan so no one bothers him, but has 2 super cars at his weekend vacation home where he only sees other wealthy people who he won’t ‘come out to the store to someone sitting on his hood taking pictures’.

   3. Sure, there are some people who continue to make money and never ever spend it, penny-pinching their whole lives. But they have some mental unbalance.

Basically, if someone is truly wealthy (let’s say 8-figures in liquid assets), and you only see them as being frugal, it is because 1) they are are trying to create an image that helps them in their business, 2) they don’t trust you enough to show you where they splurge on their money, or 3) a few just unwell people who are trying to run up the numbers for the sole purpose of running up the numbers.

I get why tweets like this, or in real life people say things like the tweet.

If someone is a penny-pinching, froogal budgetpoor they have endured a lot of pain and often made it their personal identity. Years of curmudgeonly living and telling everyone how they were growing wealth has made it so they need it to be true. Admitting that the wealthy tend to be happier, nicer, more generous, and enjoy life and their money would shatter their worldview.

Or for the ones selling the $5k courses and $200 budget spreadsheets (10 mins of excel work), they fall into category #1 - they need to support the lie that wealthy also budget and drive old paid off cars as part of the image to help their business.

But this just leads to mass misinformation about the wealthy and wealth.

And so this week we are going to cover some of those myths, and in particular cover myths that stem from one of the best to ever do it.

It isn’t Jeff ‘drive a paid off 1999 Honda Accord’ Bezos…who has multiple supercars when not in an interview.

It isn’t Bill ‘wears a $10 casio watch’ Gates…who has a private jet and a 9-figure mansion.

It isn’t Mark ‘I shop at Costco and wear t-shirts’ Zuckerberg…who has a $270mm compound in Hawaii that he legally ‘stole’ from the ancestral people living there and built a big wall to keep them off his beach front.

(Honestly, I just got detoured typing 'rich person + frugal’ into Google and seeing dozens of puff pieces about each talking about how frugal they are and nearly every one mentions the ‘cheap’ car they drive day to day. Pretty entertaining.)

As impressive as the gaslighting is, we are going to one of the oldest and the GOATs of wealth myths.

Warren Buffet.

If you spend anytime around investing, you will inevitably run into numerous pieces of advice to invest like some wealthy person, typically its Warren Buffet.

And this post will address 2 of the big myths about building wealth and becoming wealthy that Warren Buffet espouses himself and is held up as a poster boy for.

• How to get wealthy

• How to grow wealth

• The role of being frugal/How frugal he is

And in the spirit of being fair and balanced, I do keep stumbling on paraphrased quotes that apparently Warren has spoken out against ‘extreme frugality’. He has said his wealth is what gives him the ability to be frugal, and over consumption is bad. But people on modest incomes have safety nets and being extremely frugal makes you miss out on the joys of life. He also recommends you spend on value not flash and on items that bring your real joy.

The preceding paragraph is actually pretty spot on with my own belief. And this substack has covered the topic ‘rich person being frugal = virtue signaling luxury ability” before from the angle of ‘why poor people have a lot of clutter’:

Another banger, so lets get into it.

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This week we are going to continue talking about how to use the concept of immunization to make your personal finances crush it.

Last week we introduced the concept of immunization in the typical corporate finance space. This is used extensively as a way to de-risk while also getting better earnings.

In fact, in many industries, the regulations that companies must follow basically punish any company that doesn’t do heavy matching of asset and liability timing and/or duration.

In the finance and particularly the insurance industry (where most of my career has been), companies need to hold money in reserve for potential negative future scenarios. One of the main areas of expertise for actuaries is understanding the reserve regulations and ensuring the insurance company holds adequate reserves to pay out all the future claims it will incur.

These regulations involve running many negative scenarios and making sure the company has enough reserves today to cover the losses in all those scenarios.

And the negative scenarios include many market shocks (different interest rate scenarios and spikes, equity scenarios, etc) in addition to the insurance specific shocks (mortality, longevity, policy lapses, etc).

If the insurance company doesn’t have adequate immunization between the assets it holds and the projected liability timing, those market shocks will cause massive shortfalls in the scenarios that require holding large reserves (negative to company profitability).

In short, you could say I spend a lot of my day thinking about immunization.

Now corporate immunization is going to be a lot more sophisticated than what you need in personal finance. But that doesn’t mean you can’t lean on the concept to make better decisioning.

In part 1, we showed how you could set up a mix of assets to pay off some future known annual cost (in the example used, we showed how you can pay $100k to your kid’s college over 4 years guaranteed, but using only a portion of the money today.

Then we introduced how you could ‘pay off your mortgage’ for a 20%+ discount if you want to actually have more money vs brag on twitter about being mortgage-free.

But in introducing the concepts and frameworks, we started with a simplified solution. This week we will refine it to make it exact…and unlike most people who use a simple example that looks better than the more refined practical use case….our more detailed answer is actually BETTER.

Yes, today we are going to show how to actually do this in practice and the result is even better than the 20% discount we showed in the simple example.

Because when you use sound principles to make decisions you don’t need to cherry pick or exaggerate like people who just emotionally cling to a a hodge-podge of nice sounding one-liners like the standard budgetpooor gooroo.

We will finish up the post with some alternative approaches that use some of the other principles of immunization that give you flexibility in your approach based on your situation and wants.

Let’s get into the details.

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It is one of my favorite concepts and when done correctly, it is a huge win for your finances and mental health.

It is called ‘immunization’.

In the purest sense, it is something done by pretty much every large company that has some future money they need to pay out (liabilities), but it is very heavily used in the financial services world (banks, insurance companies, etc).

Consider a bank that knows it has a book of certificates of deposit (CDs) that mature at various points over the next 5 years. They need to invest assets to line up with those maturing CDs to make payments.

If there is $100 of CD maturing in a year, the bank can buy a 1-year UST that matures for $100. Same with the 2 year, 3 year,…etc etc. The end result is that the Bank has a maturing ‘risk-free’ asset that exactly matches up with its future liability (paying the customer the value of the maturing CD back).

Since every future cash outflow from the bank has a matching cash inflow the bank is cash flow matched. This makes for a fairly low-risk situation. There is very little or no risk at all from things like reinvestments, market value changes, credit (aka defaults) etc.

This is one of the simplest and most vanilla versions of immunization there is. But the concept is essentially the same across companies and industries.

And if you understand the value in an immunized position, you can use it in your personal finances as well, for some really big benefits.

So today, we will finally fully explain how to use immunization to dominate your finances.

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This is usually some clickbait. It is usually written by someone LARPing as being wealthy. Or even worse, a budgetpooor who thinks a million and no debt puts them on par with Billionaires.

There are levels to the wealth game. What works to get you to $100k net worth and what options you have at $100k net worth are very different than $100 million.

So when I read an email earlier today from a budgetpooor that started with “Wealthy people do not sell”, I was intrigued.

“You may have heard Elon never sells and that is how he got to be the richest man in the world. He borrows from his assets.”

So far so good. But the punchline of the email was:

• You have $1mm portfolio

• You borrow $500k to buy a house in cash (debt bad never forget)

• The market drops 40% and your portfolio is $600k

• You get margin called and your broker sells everything in your portfolio to pay back the loan

• Anyone saying to borrow against your assets is lying (buy my course to learn how to budget instead)

Comparing Carl with $1mm in stocks and no other liquidity to Elon (or even someone with 8-figures) is silly.

Taking a 50% loan on a portfolio 100% in stocks just to avoid taking a mortgage is silly.

Ignoring the widely used ‘Buy, borrow, die’ strategy because you are comparing someone who is over borrowing and needs to pay it back is silly.

There is a huge difference between taking a 5% loan on a portfolio or life insurance or other asset that over a long-term should grow more than the loaned amount making it so you never have to pay back the borrowed amount vs what the budget gooroo used as a strawman.

But it got me thinking about another topic that is often used as something ‘wealthy people do with their money’.

Family loans or Family Banking.

Looking at the internet you would think you need a PHD in finance and tax to lend to a family and need an offshore LLC where you have a Trust and all sorts of complexities.

Or, like the above margin loan example, some wild strawman horror story that doesn’t reflect reality.

Let’s take a non-clickbait-y look at Family Loans and how it may fit in your financial situation whether you are super rich or just normal ‘well enough off’.

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Just in case you didn’t get the email, you can get caught up with part 1 about Trump Account here for some background into what the account is:

Today is all about how and where the new account fits in the total financial portfolio of your Child.

There is certainly a lot of chatter online and in real life about these new acounts for kis and whether you should open one and how valuable they are or are not.

But nearly everyone seems to be missing some key facts about the account - and also missing some of the risk in the new account.

So let’s set the record straight about the role these accounts can play for your child.

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Finally we can get into the new Trump Account (aka 530A IRA as my sister’s husband’s very insufferable and self-aggrandizing mother kept ‘correcting’ everyone on).

Today’s post is going to be a general overview of the account and where it may fit into the broader planning and saving for your children. Also, there is a quick walk-through as this isn’t as simple as setting up some other accounts since it involves filling out an IRS form too.

But this is pretty exciting & interesting. It isn’t often that an entirely new account becomes available for use.

And a lot of the early takes I have seen are pretty…well…terrible.

As is often the case, the so called ‘personal finance gooroos’ are stuck only thinking in 1-dimension and throwing out some pretty short-sighted and potentially very incorrect advice on these new accounts.

So lets fix that.

Setting Up A Trump Account

If you decide to open a Trump account, it isn’t as simple as opening a new account on your brokerage platform.

You will need to go to the IRS site and fill out information on the electronic Form 4547 first. I wasn’t expecting some of those intermediary steps (as you will see it is a bit cumbersome), but overall it didn’t take much actual work.

I’ll quickly walk through the process I went through. Note, I avoid downloading phone apps like the plague, so I did all mine through the website. It may be different user experience with the app.

1) Go To the New Trump Account Website:

The Trump account website is here: https://trumpaccount.com/signup

You’ll need to go through the standard account set-up stuff like supplying an email, filling out your name and information, choosing a password, doing MFA for security, yadda yadda.

On one of the first screens where you put in your name is the above with a link to IRS Form 4547. I ignored it and went through all the other steps and when I got towards the end I got to this screen:

There is no avoiding it, you need to go to the IRS site and fill out Form 4547.

2) Go To IRS Site & Create an ID.me (if you don’t have one)

I didn’t have an ID.me and that added some friction to the process as I needed to create one before I could fill out Form 4547.

You can go to the IRS site here and click the Form 4547 link as well if you want to skip going through the Trump Account site: https://www.irs.gov/payments/online-account-for-individuals

The link for the ID.me page is hideous, but it looks like the below:

Now the ID.me process on a computer involves filling out your personal information and providing your phone number. The site texts you a link to click on your phone and you are directed to a site on your phone to do the next steps.

[Note - if you are doing all this through the app, you probably have a little more streamlined experience.]

You will need to take pictures of an ID, (I used drivers license but there were other approved options like passport, etc).

Then you need to give access to your camera for a facial scan and proof that you are really you through biometrics. This involves holding your face in the oval on your phone screen and the screen flashes a host of colors.

Annoyingly, my experience was that every area of my house was causing errors for being ‘too bright’, so it took about a dozen tries and going into a food pantry to finally get it to work.

The phone directs you back to your computer website and now you have an ID.me sign-me and can go fill out the IRS form.

3) Fill out Form 4547

The Form 4547 is pretty quick to fill out, you provide your information, your child’s, and submit it.

You’ll need name, SSN, relationship to you, birth date, and that’s about it. If your child was born in Jan 1, 2025 - Dec 31, 2028 time frame, you will be able to opt them into getting the $1,000 contribution to their account. If your child’s birthdate was not in that window the option automatically greys out.

So for your children eligible, make sure you are opting into the $1,000…unless you hate free money.

You can add up to 4 children per form on the IRS site. If you have more (I do), you’ll need to fill out another form for the other kids.

4) Wait…Then Go Back To Trump Account Site To Finish Set-up

I don’t know what the turn around time is on Form 4547 and being able to finish the set-up on the Trump site.

I did my first 4 kids and they showed up on the Trump Account site the next day for being eligible for an account.

When you go back to the Trump Account site, you will see a list of the kids from Form 4547 and their birthdates, as well as if they are eligible for the account and if they are eligible for the $1,000 contribution.

You choose the kids who you want to open the account for and are asked to confirm their SSN and birthdate.

Then you have to sign-off on disclaimers about the account. Then finally the accounts are created.

You will have one log-in under you and on the top is a drop down to choose the different kids. I assume one money is in you will see some account information on this screen, but as of now it is just asking for the first contribution.

SPYM is State Streets Passive SP500 ETF. It shows a 0.02% expense ratio online, so you are getting money in a low-cost, passive, broad ETF when you contribute.

5) Contribute

I haven’t contributed yet, but clicking on the contribute option you need to link an external account to send funds from.

Anyone can contribute to the child’s account and the account can receive up to $5k per year in total from all contributors.

The last thing to note, is that the account is using Robinhood as the platform for the Trump accounts. Some people have strong opinions on Robinhood, so worth noting.

Allright, so that is how the account gets set-up, provided to everyone above the paywall, but the bigger question to answer is, ‘should you set-up a Trump account and if so, how should it fit in your child’s financial portfolio with the other account options?’

Let’s clear up some misconceptions and get some answers.

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There is a much anticipated post on Trump accounts in the works. With the newest lil F’er coming into the world over the 4th of July weekend, setting up a Trump account to get the free money is officially on the to-do list. And I will chronicle the process of setting up the account for you along with the info about the pros & cons on the new account.

This week I stumbled across a post that, on the surface, sounds really solid.

The author clearly has a good grasp on some basic financial stuff and nothing that he wrote is demonstrably incorrect as far as the numbers go.

But, like many of the FIRE folk, it takes all of life and turns it into a myopic, singular-focused measure…being able to retire a little earlier.

For some people, this may work. Take DINKs (Dual Income, No Kids…the aptly cringey-est acronym for the type who loves to brag about how no kids lets them drink white claws at 11 AM on a Tuesday), who base their entire existence on short-term self pleasure.

But for the vast majority of people, this kind of math is a fool’s errand when you consider what the opportunity cost of it is.

If you search ‘FIRE’ in the search, you will see a lot of posts mentioning the whole froogal movement and the issues with their obsession on spreadsheet math and reaching some arbitrary bare minimum financial target to retire and continue a froogal existence.

And the general theme and issue I have with FIRE is the huge blindspot for real life coming in and laying waste to plans that work in excel.

Or, as a great philosophizer once posited - “Everyone has a plan till [Life] punches them in the mouth”

I think these posts are important because I will often talk to people who build some retirement ‘strategy’ but it is so far removed from their lived reality that it leads them to making many misguided decisions.

Having a strategy and plan is great.

It is important.

And sticking to a strategy and plan is also great.

It is also very important.

But no one wants to spend a lifetime taking actions to get to their end goal, only to find out it was completely wrong in the end. It is arguably the worst outcome. All that time spent only to be in retirement and eating cat food because your plan to ‘spend $420.69 per week exactly with 9% returns means you never run out of money through age 100’ only to find that all your assumptions were wrong…and after a lifetime of scrimping, you actually want to enjoy the occasional nicety now at 70 that you didn’t put into your plan.

Specific to the post we are going to breakdown today, it is all about minimizing your retirement spend through location selection.

Read this because life is silently standing there during the stare down getting ready to have your plans quickly meet the punch of reality.

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Long listicles tend to suck.

Seriously, you get like 1 or few good items and a lot of fluff like “just the process”, “Enjoy the ride” and other things that are just touchey-feely.

The first item tends to be a great piece of advice but when you get to #10 or #12 or God-forbid those awful mega lists of #101, the last 69% of numbered items are just Trash Bandicoot quality.

Luckily, my disgust about useless list items means I want every single item I put to be something useful and actionable.

Last week we went over some simple steps for a successful retirement.

And this week we are going to go over more steps - but fluff-free steps. I actually originally had a lot more to include in the first article, but ran out of space.

Here are some more quality, actionable items to help you build your wealth and be in primo shape for retirement.

(If you didn’t read last week, go check it out above)

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Stopping work. Having infinite free time to do what you want.

That is the goal of the majority of people, to one day be able to retire. Some people want to retire early. Some people want to retire at their standard retirement age of 65. And others just want to work till they die.

But retirement is not something that just miraculously happens. You need to plan, prepare, and work to be able to retire.

At its most basic, you just need to save enough to cover your expenses when you stop working. But to get there, you need to do the prep work.

Today’s post is going to cover some of the simple steps needed to achieve your retirement dream.

In 5 simple steps laid out today, we will cover the what those steps are so you can lock-in on achieving your retirement goals, whatever they may be.

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Haven’t had any rocking good free money deals in a while. But today there is a yyyuge promo going on that can get you racking up some big $$s with 2 mins of clicking.

I just did it for myself and wife. If you have a player2 you can turn $1,025 into $2,050.

It took me under 10 minutes to do for both us.

This is one you don’t want to miss.

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No I am not a coffee snob.

And not a new drink by Hailey Bieber at Erewhon.

This was just my regular Starbucks Trenta Frappuccino.

So how did I end up paying $320?

…

…

No, this first person account is not my own, but a recent email I received from one of the many gooroos out there (I subscribe to see what the topics that are trending from the other guys and the “advice” they offer).

If you are like me, you read this and had a lot of initial thoughts.

First, when did Justin transition?

Second, you had to look up the reference to the new Erewhon drink:

Third, what grown man is going to starbucks to order some concoction called a ‘Trenta Frappucchino’ regularly as ‘coffee’

Fourth, what is a Trenta Frappuchinno? (Hint…it literally isn’t coffee)

And then finally after all those questions, you thought, “how did this guy spend $320 on a milk and syrup and ice?”

Well, welcome to the world of make-believe.

I’ll save you the rest of the email and get to the punchline. The $7 drink could potentially grow to $320 if you invested those $7 today for 40 years at 10% assumed rate of return.

Wow…this whole interaction just had me shaking my head.

But, the email served its purpose as it inspired this week’s post.

No, we won’t be going down the “Belieber” rabbit hole or talking about sugar drinks masquerading as healthy (though you really shouldn’t be drinking sugar calories after about the age of never).

We are going to talk about the type of exaggerated thinking that leads to honestly claiming your $7 coffee really costs $320, why that claim is especially silly now, and leave you with some practical advice based on what I started doing in my own accounts recently.

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We had an action packed week this week in the financial world.

First we got higher than expected inflation numbers. Followed by the big IPO of SpaceX.

There is a lot to say on both topics, so no big intros this week, just getting right to the meat & potatoes of the post…

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Arguably, it is hard to lose when in the bull. Even suboptimal decisions tend to work out when the rising tide is rising ships.

However, nearly all the hard lessons are learned during bear markets. That is when people get exposed, strategies fail, and bad habits that you could ignore in the bull start to really hurt.

Today’s post is going to address some of those bad habits and thought patterns that you can develop in the bull market.

It is better to identify these now and stop doing them now, than to wait till it is too late.

We are talking things like…

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Right?

Only rich people have estates?

Besides, you don’t really own anything rare or valuable…and your kids all get a long great anyway. There is no reason you need to go through and set up all that estate planning stuff?

Heck, you don’t even have rare Dakimakuras, you just have the regular cheap ones.

But there is a lot more to an estate plan than just splitting up your belongs.

And if you ever had the unfortunate circumstance of a sudden death in the family, you quickly see how much the lack of a detailed plan just makes for massive pain. I have first-hand experienced

• Inability and confusion over who could make health care decisions

• Slowing up the release of important medical data

• Assets going to probate

• Family fighting

• Estranged family coming in from left field

• Family stealing property and even in one case replacing a real diamond ring with a very poorly done ‘replica’ (in terms of it kind of looked the same)

At a minimum, realize that everyone actually does have an estate plan. It is either the one that you set up yourself that aligns with your values and desires, or it is the one that your home state has that is aligned with its (lack of) values.

Similarly, everyone also has an estate, regardless of wealth.

Don’t trust your state government’s estate plan. A little time today can help prevent a lot of pain later down the road.

Today’s post is going to go over all the various pieces in a good estate plan. This goes beyond just a basic will and into all the other legal documents you need, including some that are for your health care if you wind up incapacitated.

Even if you don’t have kids yet or don’t plan to have any money when you die or think you are young and invincible, estate planning is crucial.

Yet, it is often overlooked when people think of personal finance, so lets fix that today…

Also note, nobody likes thinking about their mortality which is a big driver for why a lot of people put off a proper estate plan. But we all are going to die one day, even the guy on twitter who is vampirically injecting his sons blood into himself, no matter how much oral he gives to a 1% microbiome cooter.

A proper estate plan makes all the decisions ahead of time to help ease the burden on everyone. So even if you are uncomfortable thinking about your own death, you need to do it.

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There are a litany of reasons for this very common advice - avoid PMI, get some equity in, lower your mortgage and monthly payments a bit, etc etc.

It is advice that worked.

Heck, 20% down used to be required either explicitly way back in the day or implicitly in the less way back in the day.

There are a lot of good reasons you can put into a spreadsheet or a tweet for why 20% down payments are still the minimum before buying a house.

Ideally, you have even more than 20% down (ala the 30/30/3 home buying rule) since there are a lot of additional costs that come with buying a home (closing, moving, furnishing, renovating, etc etc).

But idealism and spreadsheets and tweets are not real life.

Real life is messier.

Real life has average home prices that look like this:

Putting 20% down on a $80k home in 1980 was $16k vs ~$20k median income. Your 20% down payment was less than your annual income.

Putting 20% down on a $200k home back in the early 2000s was $40k vs ~$40k median income. A little worse than the 1980s, but a 20% down payment was still around an annual income.

Putting 20% down in the 2020s on a $400k home is $80k vs ~$65k median income.

You can quibble on the numbers. You can quibble on starter home vs average home vs location specific prices. But the trend is clear, getting a 20% down payment has gotten harder for the average person.

The common response to this is to just delay getting a home a little longer. Save a little harder. Rent a place till later in life.

Yet, sometimes it makes sense to buy a house because life is at that point. Family, kids, putting roots down in a community, there are lots of reasons you may be at the point where buying a house makes sense.

Last week we covered all the steps you should do to prepare to buy your first home - from credit scores to budgets to loan types and plans.

And like most weeks, there was so much info to pack in, the post ran up to the word limit before all the thoughts were put to paper.

And so this week we are back to the home buying topic. Particularly, how to buy a home with less than 20% down and the things to consider when doing so.

It will be another packed article of knowledge, tips, and tricks, so lets dive right in.

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The National home price index is up ~33% from 2020 to 2023:

However, if you want to own a home and have been waiting, the time to jump in may be here soon (or even now depending on where you live since the housing market is very much location specific).

We have a few years of flat-ish home price growth on the national index. Chance are the 07-08 GFC price decreases were a one time event and in the future you won’t see a decline like that.

It may finally be a savvy move to get your first (or next) home.

But a house is likely one of the largest financial purchase you make in your lifetime. That means it is important to do it right.

This involves some planning, a little research, and not letting your emotions get the best of you (oh, the number of times I have seen someone excitedly overbid to get their dream home to have it turn into a financial nightmare after the excitement wanes post-closing.)

Today’s post is going to cover some of the steps you should take and some of the important things to know as you are preparing to purchase your home.

Even if you don’t plan to buy a home imminently, there are things you can start doing now to put yourself in a better spot when it is time to make the jump to being a home owner.

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F’er has a lot of kids. Much more than the standard American family.

If you are blessed with kids now or in the future, you will see all of them go through the ‘well ackshually’ phase of development. I’m no child psychologist, but it seems to be when they are starting to get to the pre-teen 8-12 year old range and starting to test their knowledge in the world.

It is peak Dunning-Kruger Effect.

You will say something and then one of your kids will ‘well ackshually’ you with some exception that proves the rule.

F’er to youngest kid, “Yes, Dogs have 4 legs”

Oldest Little F’er, “Well ackshually your dog growing up lost a leg so dogs can have less than 4 legs”

As a parent you will try to guide them between knowing when to correct misinformation and when they are just being a midwit and proving the point.

Today, we are going to do a little neck-bearding ourselves.

401ks have a lot of positives. But they are illiquid. The money goes in for retirement and accessing it before retirement incurs penalties and immediate taxes.

This is factual.

Butttttt….well there are more than a handful of ways that you can actually get to your money, penalty free, way before age 65.

This doesn’t mean 401ks are liquid. It doesn’t mean they are like a savings account you put money in and take it out.

These are exceptions that prove the rule. A handful of IRS rules and 401k design features that let you get your money if you need it.

The goal isn’t to convince you that 401ks are liquid.

But to let you know they may not be as illiquid as people generalize. Hopefully enough so that you may consider putting more into your 401k as they are a great little tax-advantaged account for easy systematic contributions to investments.

So push up those glasses, stroke the little hairs on your chin, and get ready for 7+ ways you can actually access your 401k before retirement, penalty free.

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In short, if you wanted to find information, you had to rely on hearsay from friends…mostly those with older siblings.

This lead to many crazy stories and theories that were spread verbally across the country. And even if they were disproven by practice over and over, they wouldn’t die because there was no source of truth.

Hilariously, the most incorrect ones were about drugs or sex…if anyone ever tried smoking banana skin shavings, then you know.

“You can’t get pregnant in a hot tub”

“Mountain due makes sperm immobile”

“Wearing extra condoms adds more protection”

Nowadays, you can just easily check out some sources:

But back in the day ‘double-wrapping for double protection’ was common advice being thrown around. It was gospel. People swore up and down it was the only way.

So you can imagine the surprise to many people when they had 2 rubbers break or both fall off. (But as we see far too often, you can’t prove a negative, aka “well good thing I had 2 because it would have been even worse if I was only wearing 1”.)

Now you may be thinking…what in the hell does this have to do with Financial advice?!?!?

Far too often in finance, people will have multiple layers of ‘protection’ thinking they are being extra safe, not realizing that they are actually making themselves less protected than if they only had a single form and used it correctly.

This post is brought to you by a recent litigation at work that F’er got dragged into and had to explain to a court of lawyers, judges, and common folk how doubling and tripling up protection was actually having a negative impact to the customer…and sadly no, I didn’t use the double-wrapped condom analogy. Our legal area strongly discouraged their expert witness from doing that as it would be deemed unprofessional.

But it got me thinking about all the areas where people end up taking on massive risk due to their efforts to be de-risk being done in a myopic way.

We will go through a bunch of these examples and why the extra ‘protection’ is adding more risk, starting with a generalized example of the court case.

You may find a few areas where you are botching up your risk-management…or some parallels to things you are doing that could be improved.

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Another week in the books.

For whatever reason my internet this week had a lot of talks about kids, costs, and the soon to be released “Trump Account” for kids (They go live July 4th so expect a future post on that topic as we get closer and all the details drop.)

I have discussed a bit about various accounts for kids…

But one of the most commonly recommended and discussed plan is the 529 Plan.

For a host of reasons, people are very focused on ‘saving for their children’s college’. In fact, if you talk to a financial advisor or go to one of those “Financial Wellness” seminars at your job, it is like one of the top 3 questions/topics of discussion.

This kind of makes sense.

College is a huge cost, and a growing one at that - well outpacing inflation and up 4x on an inflation adjusted basis since the 1960s.

And that is just average tuition (granted, the public schools are certainly on average cheaper than private). If you add in your room and board, you are looking at an average annual all-in cost for a private school of $50k a year:

And you should absolutely want your kid to go to the finest, most expensive and prestigious school there is - it doesn’t matter what major they choose or what careers pay well - just definitely do it and figure it out later, right….???

…or atleast that is what the College Industrial Complex has been convincing everyone for decades. One of the OG posts on this substack explained all the moving parts in the “CIC” and how they just perpetuate the whole industry.

With all the above, it is no wonder why parents are very focused on ‘saving for their child’s future college expenses’.

It may be that the parent took out $250k of student loans themselves and knows the struggle of paying it off while trying to start your adult life. Or maybe they saw it with friends. Or maybe they didn’t go to college/dropped out and are convinced if only they graduated they would be making big money.

Whatever the reasons, a lot of parents want to save for their kid’s college. And the go-to advice from advisors and internet is “529 Plans”.

So today’s post will be dedicated to the 529 plans. What are they? How do they work? What are the pros & cons? And, probably most importantly, should you set one up for your kid/future kid?

There is a lot of advice out there, but a lot of it is only telling part of the story or is flat-out wrong.

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