Should You Drain Your Emergency Fund? (And 4 Other Money Questions Keeping You Up) SB1750

You’ve got questions. We’ve got two CFPs and a former planner ready to hash it out.

Joe Saul-Sehy, OG, Doug, and CFP Anna Allem tackle the money decisions you’re actually losing sleep over—and here’s the thing: they don’t always agree on the answer. That’s the point.

Should you drain your emergency fund to pay off debt? Is whole life insurance for your kids a smart move or an expensive mistake? How much life insurance do you actually need (not what some calculator tells you)? And when life throws you a curveball—layoff, surprise expense, major purchase—what’s the move?

With Joe Saul-Sehy’s 16 years in financial planning, OG’s CFP perspective, and Anna’s insights, you’ll hear how experienced voices think through these decisions differently—and why your answer might be different than all of theirs. Because the real skill isn’t finding THE right answer; it’s learning how to make YOUR right call.

This episode is for anyone who’s ever stared at their bank account thinking, “I know I should do something… but what?”

Plus: Doug delivers trivia about the first auto insurance policy (because of course), the gang weighs in on athlete endorsements and reverse mortgages, and there’s a TikTok money tip that sparks some debate.

What You’ll Walk Away With:

• How experienced financial minds approach the emergency fund dilemma differently—and what that means for your situation

• The whole life insurance debate: when it makes sense for kids and when you’re better off elsewhere

• A framework for figuring out how much life insurance you actually need—and why the “rules of thumb” don’t always work

• What to do when your financial plan meets real life (layoffs, surprise bills, major purchases)

• The confidence to make a decision even when experts would handle it differently

Before You Hit Play, Ask Yourself:

What’s the one money question you keep Googling but still don’t feel confident about? If you’re second-guessing your emergency fund, your insurance, or a big financial move, this episode is your permission to stop spinning and start deciding.

Got a question we didn’t cover? Call in to the show! ⁠StackingBenjamins.com/Voicemail⁠

Deeper dives with curated links, topics, and discussions are in our newsletter, The 201, available at https://www.stackingbenjamins.com/201

Enjoy!

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Doug’s Trivia

• The very first automobile insurance coverage was sold on today’s date back in 1897. Gilbert L. Loomis of Dayton, Ohio, was the first purchaser, buying $1,000 of liability coverage for a whopping $7.50. He bought it from a company with a logo that’s simply a red open umbrella. What umbrella-wielding company did Gilbert purchase his policy from?

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Want more than just the show notes? How about our newsletter with STACKS of related, deeper links?

• Check out The 201, our email that comes with every Monday and Wednesday episode, PLUS a list of more than 19 of the top money lessons Joe’s learned over his own life about money. From credit to cash reserves, and insurance to investing, we’ll tackle all of these. Head to StackingBenjamins.com/the201 to sign up (it’s free and we will never give away your email to others).

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Join Us Wednesday

Tune in on Wednesday when we simplify saving, investing, and financial planning with a legend in the space. New York Times columnist and financial planner Carl Richards joins us for a wide-ranging discussion about how to manage your money, goals, and life in a simple and effective way.

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Written by: Kevin Bailey

Miss our last show? Listen here: What Lucky People Do Differently With Money (SB1749) » The Stacking Benjamins Show

Episode transcript

[00:00:00] Joe: It’s Monday. Doug’s up making coffee, but look, Anna’s back. Og. Anna’s back. Hey, she’s gonna save the show again. Thankfully, it’s about time 

[00:00:10] Anna: ready to go. 

[00:00:11] Joe: You’re here just in time for our salute to the troops. We gotta do this one without Doug, so he’ll be back in a moment. But raise your mugs everybody. On behalf of the men and women at Navy Federal Credit Union, serve our troops in the men and women making a podcast in mom’s basement.

[00:00:25] Joe: Here’s to the people that kept us safe all weekend long while we were messing around. Thank you for all you do. Let’s go stacks and Benjamins together. 

[00:00:33] bit: Good evening. I’m Ron Burgundy, and this is What’s Happening in your world Tonight.

[00:00:43] Doug: Live from Joe’s mom’s basement. It’s the Stacking Benjamin Show.

[00:00:57] Doug: I am Joe’s Mom’s Neighbor, Doug, and today we put you in the driver’s seat with answers to your burning questions, from emergency funds to layoffs, to whole life insurance to investing. We are covering what’s on your mind. Plus, I’ll also share a TikTok minute you won’t soon forget, and then we’ll have some eye popping trivia for you.

[00:01:18] Doug: And now. Three people who are here to help you make some eye popping moves with your money. It’s Joe OG and CFP Anna Allen.

[00:01:35] Joe: Hey there stackers. And happy Monday to you. I am Joe Saul-Sehy. Hi. Welcome back to the Stacky Benjamin Show. We’re super happy you’re here. Sit back and relax because we’re about to have sit back and 

[00:01:46] OG: relax. Okay. 

[00:01:49] Joe: Hour of answering your que and OGs done for the day. But let’s say hi to the one and only og.

[00:01:56] Joe: Good morning my friend. How are you? 

[00:01:58] OG: Good morning, Buenos Diaz. Had a great weekend. Thank you for asking. 

[00:02:02] Joe: Well, I didn’t ask, but I’m glad that you can edit. And we are joined by the woman who’s back to save the podcast. Anna Allen’s back. How are you? 

[00:02:12] Anna: I’m doing so good. How are you Joe? 

[00:02:15] Joe: I am great now that you’re here.

[00:02:18] Joe: It’s about time. We got some sanity back in the basement. As you know, mom’s always happy when, when you show up mm-hmm. For the show, she feels more at ease. So much more at ease. She knows the basement’s gonna be taken care of. Mm-hmm. That we’re not gonna mess around with the Nintendo. Mm-hmm. The things are gonna be great.

[00:02:34] Joe: But, uh, speaking of great, we got some great questions guys. We’re gonna get right to those. Before we do that though, we’ve got a couple sponsors who make sure that we can keep on keeping on and you don’t have to pay a dime for any of this goodness today. So we’re gonna hear from them and then Anna OG and I we’re tackling your questions.

[00:03:01] Joe: Let’s begin today’s Decker Adventure with Matt. Hey Matt, what’s on your mind? 

[00:03:08] caller: Hey, Joan, og question about purchasing a whole life policy for your baby, or really young children with an additional purchase benefit, uh, with the idea of creating insurability for them for life, regardless of future medical history.

[00:03:24] caller: Obviously, yeah, not interested in doing it for the whole life, um, insurance for someone of that age. But curious if you could talk about the pros and cons of that additional purchase benefit. And if you weren’t going to use this avenue to ensure insurability, like how would you think about working on this problem as far as saving in other ways or trying to better use the money that could be going into a policy of that kind.

[00:03:47] caller: Thanks for all the help. Always enjoy listening. 

[00:03:50] Joe: Matt, thanks a ton for the question. God, you know it’s funny guys. Oh 

[00:03:53] bit: God, no. God, please, no, no, no, no. 

[00:04:01] Anna: Too many buttons. Josh, 

[00:04:03] Joe: tell us how you really feel og. Tell us how you really feel about that. I 

[00:04:07] OG: can’t say it anymore succinctly than that. That is about succinctly as I could get.

[00:04:11] Joe: Well, let’s dive into this for a second because we wanna know why you think that way. I mean, here’s the thing to Matt’s point is that you have this child, the child might end up having one of a bajillion different issues along the way, won’t be able to get life insurance in the future. One thing that life insurance salespeople tell you when they’re selling children’s policies is, Hey, kid really doesn’t need insurance, but you can get them locked in now and they don’t have to worry about it later.

[00:04:37] Joe: And the cost of insurance on a child is next to nothing because once they get past SIDS age, sudden infant death syndrome age, the cost of the policy is almost nothing oog, 

[00:04:48] OG: right? But think about it from the perspective of what sort of, I guess maybe is the juice worth the squeeze here? You know, so you’re right, there could be some sort of circumstances where, from a insurability standpoint, either it’s not, you know, you can’t do it or it’s cost prohibitive or whatever.

[00:05:06] OG: But that’s true for many, many, many people, right? That’s not just your kid. That’s, lots of people have health issues in their forties and fifties and whatever, when, when you kind of need to have sizable amount of life insurance. But the reality is, is that even if you could do it, or you can, you’re not gonna be able to get enough insurance to make it actually worthwhile, because you still have to have an evidence of insurability for this, for this kid, unless your kid has some special talent, you know, and it’s like a child actor or something.

[00:05:36] OG: You have to have some reason to have a sizable amount of insurance. So if you, so 

[00:05:41] Joe: you’re talking about any number beyond like basic burial costs? 

[00:05:44] OG: Yeah. I mean, could you argue I need 50 grand? Sure. Could you argue a hundred? Uh, probably. Can you argue 7 million? No. If you think about how much insurance you have, or maybe how much you’re supposed to have.

[00:05:56] OG: The way that we think about it is assume that you get hit by a bus. You wanna pay off all your debts, you wanna send your kids to college, and you wanna maintain the same standard of living for your family for the rest of their life. That’s a big chunk of money. That might be $2 million or $3 million or $4 million for a policy, a term policy for somebody who’s, um, you know, making good money and has a family.

[00:06:17] OG: And so now add inflation to that for the next 40 years to make it a reasonable dollar amount, right? So let’s say that you say, well, I can get, you know, I am gonna have a hundred thousand dollars of insurability for my kid and that’s good. And you know, if my kid can’t get insurance, that’s fine. But a hundred thousand dollars doesn’t do anything.

[00:06:36] OG: In the grand scheme of things, in 45 years from now when your kid is a middle-aged adult with their own family, I think it’s a scare tactic used by the insurance agents to say, let’s drum up some business. And we’ve got this new parent here who. Is scared about everything. Understandably worried. Yeah.

[00:06:54] OG: Yeah. I mean we, we were all parents, young parents once and, and everything is new and scary and you know, you’re like, oh crap. Well, like what do I do? It’s completely unnecessary unless your kid does something, you know, like is an actress or an actor or something, you know, and is bringing in a bunch of money.

[00:07:12] OG: And even then, arguably it shouldn’t be your money anyway. That money should just be sitting in an account for your kid. Like if you’re living on your kid’s money, I think that’s kind of jacked up too. So anyway, 

[00:07:23] Joe: Cheryl, my spouse works in, uh, healthcare and specifically healthcare for children. She can always identify the first time parents because they are worried about every single thing.

[00:07:33] Joe: To your point, og. Yeah. And then she can also quickly identify where it’s like kid number five. ’cause a kid is running around the room tearing everything apart and is ready to stick their finger in the light socket. And Cheryl’s like, maybe they shouldn’t do that. And the mom looks at Cheryl like, oh, let him do it.

[00:07:50] Joe: They’ll that’ll alert them, they’ll figure it out. But baby number one touches the wall and they worry about the bruise. Yeah. You know, is this room baby proofed yet? 

[00:07:59] OG: I can’t. 

[00:07:59] Joe: Yeah. I take your baby in there. I don’t know. Anna, when you first heard Matt’s question, what was your first takeaway, your first thought?

[00:08:05] Anna: Well, I am in this situation right now because I was pregnant two years ago and I had the letters in the mail from Gerber and all the other places that offer you a whole life policy. And I was like, this is a bunch of hooey. There’s no way I’m gonna do this. I don’t need to get insurance on my baby. And insurability just felt like we’re taking insurance a little too far at that point.

[00:08:32] Anna: And then I had a kid, and she actually is uninsurable, she has a disease where when she grows up, she probably won’t be able to get private insurance for life insurance for disability. And I’ve thought about this, I was like, oh, should I have done that? And then I had the same thought as OG of like, okay, it’s really not that much money.

[00:08:52] Anna: Most of the time when they’re offering you something, it’s like 50,000. And then if you do the purchase benefits, I don’t know what those are, but it’s not a lot of money when it adds up. And I’ve thought about like, what does her future look like? And any kid who has an issue or a young adult who runs into an issue before they put life insurance in place, what does that look like for them?

[00:09:14] Anna: It’s just gonna be, uh, maybe she’s focusing a little bit more on employee benefits and that’s way more important to her and her spouse and trying to find that. Or maybe it’s having a bigger emergency fund. Maybe it is just having conversations about the reality of their situation. There’s a lot of people where they have to navigate life without life insurance and, and life insurance is really important, but if you can’t have it, it’s not the end of the world.

[00:09:41] Anna: Like there’s other avenues to figure this out. When you get to that point, like OG said, we have plenty of people who just can’t get insured. That’s what happens. And we just have to have real conversations about what life looks like without that person to support them. And so. That’s kind of what my thought was.

[00:09:59] Anna: Yeah. On that. 

[00:10:00] Joe: Insurance companies to both your points are really good at math. They’re super good at math, and they make sure that even if they pay out the death benefit, that generally they’re gonna come out ahead. And so I think our challenge is how do we make sure we’re good at math with our children?

[00:10:16] Joe: And if we do that, then instead of worrying about the life insurance piece, which I think a lot of families worry about, worry about helping them save early, worry about helping them get a good head start, worry about having enough money so that you’re financially independent and they will be financially independent and you don’t have to worry about the life insurance part.

[00:10:36] Joe: And I know that I can make it sound easy. It’s not easy. Yeah. 

[00:10:40] OG: Easier said than done. Yep. Right. 

[00:10:42] Joe: But I think that by focusing on that piece of the puzzle, which people don’t think enough about. How do I get more savings for my child versus the using that same amount of energy. And I think a lot of people think about it because of companies and like you said, Gerber and all these companies and the flood of stuff.

[00:11:00] Joe: You get all the fear tactics that you get around insurance. If we spent the same amount of energy that insurance companies help us have mindshare on, on the saving part, we’re gonna do, we’re gonna do a great job. But overall, og, you know, you said you’re not gonna have probably enough insurance for later on, which begs the question for the adults in the room.

[00:11:23] Joe: Let’s take the kid piece out of this. How do we figure out what the right amount of life insurance is for us? Not for the kid? 

[00:11:30] OG: Yeah. Ultimately it’s not that complicated to think through and you can just use experiences of other people and if you don’t have other people’s experiences, you can use. Our experiences to help think through this.

[00:11:44] OG: So the first thing that happens when anybody, any loved one dies, and I’m thinking about like spouse and you’ve got kids at home and that sort of thing. I’m not thinking about grandma and grandpa ‘

[00:11:53] shout out: cause 

[00:11:53] OG: that would be different, but I’m saying tragic, something crazy happens. Car accident, you know, whatever.

[00:12:00] OG: The first thing that people say is, I want all the debt gone. Right? I don’t care if it’s a mortgage, if it’s a student loan at great interest rate. I don’t care if my car’s at 0.9, I just wanna simplify everything. So I, I wanna write a check and make all the debt go away. And largely that’s a good idea. So the first thing that I would do is I would write up a list of who’s all the people I owe money to.

[00:12:23] OG: Those are the first checks you’re writing and I’m setting aside, obviously final expense checks of hospital or, you know, medical bills or funerals or whatever. When the dust settles, I probably shouldn’t say that, but when the dust settles, but I’m gonna say it anyway, literally, you’re gonna want to, uh, you know, write those checks.

[00:12:43] OG: The second thing that people say is, no matter where they are in their savings plan, they wanna make sure the kids are able to go to college. A lot of times people have different goals for, uh, college education. I wanna pay for all of it. I wanna pay for some of it, you know, I want junior to pay for some.

[00:12:57] OG: We’re gonna take student loans, we’re gonna get scholarships. Universally, in my experience, the surviving spouse says, let’s set aside enough money for the kids to go to college. I don’t care if that kid is a year old or 17 years old and we’ve saved a bunch of money or no money. What goes in the bucket right now to go college is paid for?

[00:13:14] OG: And, and sometimes even say like, what if they wanna go to grad school? Or like, I want my kids to be completely okay. You know, so roundup basically, whatever you think that number is. Roundup. So we got all the debt, then all the, all the college funding. Now, the rest of it then is how much money do I need to live on to maintain the same standard of living?

[00:13:32] OG: And I know sometimes people will get a little tongue in cheek on this and say, well, you know, if there’s one less person than the, then the bills go down or we don’t use as much water. Or, you know, it’s the same argument. People say, and we joke about this with long-term care insurance, like, oh, I’m not gonna need long-term care when I get dementia.

[00:13:48] OG: I’ll just say, mock kill me in the backyard. It’s like, okay, sure she will, right? You get been married for 75 years and she’s gonna get smack you on the head with a shovel and uh, now grandma’s going to jail for murder, you know, or whatever. So it’s, it’s just not realistic, you know, it’s what people say to me to not have to talk about the thing that matters.

[00:14:05] OG: But I would honestly look at your expenses. Now you don’t have the debt and maybe you don’t have the savings for the college fund, but I would say use that 4% rule, maybe conservatively if you’re younger, use the 3% rule and say, if I don’t ever work again, my spouse is gone, how much money do I need to have in my bank account every month to live the life that I’m living?

[00:14:25] OG: I understand your life is gonna change. You’re gonna do different things, or you’re gonna have different experiences. But the thing that you don’t wanna do is you don’t wanna have to, because of obligation, go to work on Monday. You know, and maybe you don’t want to go to work the next Monday. And I fully understand that some people do go back to work and they maybe go back to work sooner than other people.

[00:14:44] OG: And, but the reality is, is unless you’ve actually been through this rollercoaster, you don’t know how you’re gonna respond. 

[00:14:52] Joe: Well, that’s a problem that I had when I was a financial planner, was that, you know, the job of a financial planner is to create more predictable outcomes, right? To be able to help people build this runway and these milestones to get there.

[00:15:07] Joe: And so six months from now, we’re gonna be here a year from now. We need to be here and kind of to show the path that we’re, and we know the path is gonna change, but to light up the path, there’s always uncertainty. The time when people became most uncertain was when your spouse died. I had no idea what the hell you were gonna 

[00:15:24] OG: do.

[00:15:24] OG: And they think that they have the most certainty in that moment. Oh, I’ll go back to work right away. We don’t need that extra money. It’s like you will, your wife of 30 years just got hit by a bus and Monday morning like, Hey Bill, how’s the weekend? Oh, ma died. That sucks. Anyways, let’s make widgets. 

[00:15:38] Anna: Yeah.

[00:15:38] Anna: Let’s go back. And maybe even going back for longer too, maybe you weren’t saving as much now because you have additional expenses or, or you’re trying to make up for the lost income and now you’re working until you’re 70 instead of 60. Yeah. 

[00:15:52] OG: I’m just saying have the flexibility. Mm-hmm. Well, and I 

[00:15:54] Joe: have seen some people go back to work right away and bury themselves in it.

[00:15:57] Joe: Like they Absolutely. The work, the work is what, yeah. You 

[00:15:59] OG: don’t have any idea how you’re gonna respond until you have to respond. 

[00:16:02] Joe: I remember one client I had, it was two years. Mm-hmm. Two years to just begin uncovering the feelings and getting, but I’ll tell 

[00:16:10] OG: you the one thing that everybody says. So you kind of, you have the proverbial meeting of like, here’s the money and it’s not in person.

[00:16:18] OG: There’s not a big check. You know, it’s not like Ed McMahon with balloons at your door. Like, here’s your prize. Congratulations. Here’s your prize. Your spouse died. Congratulations. Dingdong the witch. Dead. Terrible witch, witch. Um, 

[00:16:34] Joe: it just, it just seems like the worst TikTok they have. People have different emotions, Anna.

[00:16:37] OG: Some people, you know, will experience it differently. But, um, anyways, the thing that people say is they look at it, whatever the number is, it’s a million bucks. 2 million bucks, 8 million bucks. And they go, is this all there is? Because there’s a finality to that. Like, here’s the lump sum that is equated to your loved ones.

[00:16:57] OG: Everything, right? Like, here it is, this is the number that you put on it. Now the mental math starts going like $5 million. Sounds like a lot of money. Unless you’ve got, until you’ve got a million dollar mortgage, a $200,000 line of credit. You got three kids you wanna send to college, which is another 600,000, and all of a sudden you got 3 million in your brokerage account.

[00:17:18] OG: You know, 5 million sounds really good. Until now it’s three. That’s $10,000 a month, but you were making $200,000 a year. 

[00:17:26] Joe: You are like, Ooh. So for the average person, what I’m hearing is, number one, you need to account for the budget deficit that happens. Number two is the percentage of the goals that were being funded by the other person, or in the case of maybe kids college, just take that off the table so that you don’t have to worry about it anymore.

[00:17:49] Joe: That analysis is what in the business they call a capital needs analysis. Mm-hmm. The issue I always had was that that number always blows in the wind because is, you described og, some people could be really conservative with those numbers. Some people are really aggressive and by aggressive they go, well, no, I’m going back to work on Monday.

[00:18:08] Joe: Well, sure you are. Yeah. Okay, so that number drives me crazy. On the other side, there’s another way people look at this, which is called human life value, which is Anna passes away, she has a long career ahead of her, and she was gonna make X amount of money. How much money would she have brought in? And can we present value that?

[00:18:27] Joe: That’s gonna give us a gigantic number. I don’t know what you guys do, but what I used to always focus on was just kind of a field goal. Here’s our two numbers, and then have a discussion about where do you wanna be between those. I don’t know. How do you work through that, Anna? 

[00:18:40] Anna: Yeah. We’re pretty much just looking at what OG was walking through, where we’re, we’re looking through 

[00:18:45] Joe: the capital needs, the needs, how, 

[00:18:46] Anna: yeah, the capital needs.

[00:18:47] Anna: There’s obviously different ways to look at it, and you can also just kind of like throw a dart and find a number. We don’t know exactly what you’re gonna need at the end of the day. You can use both, where you’re gonna come up with two different numbers. You’re just really trying to find something that’s gonna sustain your family so that you have whatever option you wanna go down if that time comes.

[00:19:09] Joe: I like all these ways that we’re talking about doing it much better than just the five x your salary or whatever. The ridiculous rule of thumb. I can’t stand the rule of thumb. I mean, it isn’t that hard to go through and come up with what your capital needs would be for you. Why the hell wouldn’t I take 20 minutes to do that versus just I’m gonna use 10 times, 10 times the date on the calendar, whatever the, I don’t know if the ridiculous rules that, I’m 

[00:19:36] Anna: sure there’s a calculator out there too, somewhere to help you with it and wouldn’t take very long.

[00:19:41] Joe: Yeah, they’re actually, uh, one, the life insurance industry has one that I like, which is, it’s uh, life happens.org, which has good calcula actually for both of those things, for capital needs and for that human life value calculation. You know, he mentioned whole life insurance thoughts, OG on, uh, permanent coverage in general.

[00:20:00] OG: Well, it’s not very high on my list. It’s an arrow in the quiver to use, but it’s not necessarily the go-to. There’s a time and a place for permanent coverage mostly, in my opinion, around estate planning. But for most people, because as their financial status continues to grow throughout their life, in theory, their need around covering other things will go down.

[00:20:27] OG: Right? You know, I’ve got a kid in college already, so I only have to fund two colleges. Well, I got a kid that’s a junior, so that one’s pretty well squared away too, versus 10 years ago and the boys were eight and six and Caroline was a newborn, or maybe she wasn’t even born at that time. But you get the idea.

[00:20:43] OG: It’s like as we’ve saved more money, we need less in the future. We’ve paid off more of our mortgage, we’ve, we’ve done that sort of stuff. So our insurance needs have changed to the better. Permanent insurance. Makes a lot of sense when you actually have a permanent need. And that revolves around something, something more like an estate planning need where, you know, your net worth is $30 million or $50 million and you’re looking at a $12 million tax bill.

[00:21:12] OG: It’s like, well, I can go get $12 million of life insurance for cheaper than $12 million to the IRS, and then when I die, I take the $12 million of money that I paid for. It costs me 3 million to pay for it, but I take that 12 million to pay the IRS off the, of the life insurance. So, um, that makes more sense for that, not a big fan.

[00:21:33] Joe: Yeah, but I mean, 99% of the times that I see permanent life insurance policies, I think they could be 

[00:21:41] OG: destroyed. And you’d be, you’d be just fine. Well, the biggest thing with permanent insurance is, is that it has to be used appropriately if you’re just barely making the minimum payments. You know it’s gonna blow up and it’s not gonna do what it needs to do.

[00:21:56] OG: The idea behind it is that you can put all sorts of money in this thing early because all insurance costs the same down the line. An 85-year-old having $5 million of life insurance costs the same, whether it’s whole life insurance or term. The idea of whole life is that from 40 to 80, you’ve put so much extra money in it that that money is paying its own premium so that your cashflow is lower.

[00:22:22] OG: But the actual cost of insurance for an 85-year-old for a million dollars of life insurance is the same no matter where you go. Roughly. To your point, insurance companies are pretty smart. They don’t want 85 year olds cost to insure. The way any permanent life works, whether it’s whole life or any other kind, is you put extra money in early such that the cash value grows to help offset the premiums that you have to pay in the future.

[00:22:46] OG: You’re just paying it 

[00:22:47] Joe: back with your own money basically. That’s why it’s so, having the permanent insurance discussion is always. Was always so fun. By fun, I mean the opposite of fun because I would have to convince my client who doesn’t know how it works, that stuffing this thing full of money, whoa, this insurance costs $500 a month or a thousand dollars a month.

[00:23:08] Joe: It doesn’t cost five, it doesn’t cost a thousand dollars a month. We’re shoving all that money in it so that it costs very, very little. That doesn’t make sense. 

[00:23:16] OG: Yeah, the cost. Why am I putting in if it doesn’t, you’re just saving money to offset the future cash flow 

[00:23:20] Joe: and someday stackers, we will go back and do another insurance 1 0 1.

[00:23:24] Joe: We’ll give you a bunch of resources in the 2 0 1 and the, uh, show notes because we’re not gonna dive into why that’s the case today. That’s a hour long discussion. But, um, but putting more money into the insurance policy is a hundred percent the only way to really make it work if you’re gonna go with permanent life insurance.

[00:23:44] Joe: Let’s take a letter. We just got a letter. We just got a letter. We just got a letter. Wonder who it’s from. Our letter today is from Joel. Joel writes, I have a hard time letting six months of cash sit on the sidelines. Is it terrible to hope for some better returns with say, invest half of my six months and then put the rest in safer?

[00:24:09] Joe: Things like CDs or a high yield savings account? I get the fact if the world is ending and I lose my job, the invested half could be down. But I know a guy who will let me live in his mom’s basement. If that happens. I have to run audio for a podcast if that happens, and nobody wants me to do that. Thanks a ton, Joel, for the note.

[00:24:31] Joe: Mom’s always happy with you coming over, but spending the night, uh, and spending several nights because you don’t have any money, I’m not, not sure about that. Anna, the idea of investing half of your emergency fund, what would you say to Joel? 

[00:24:43] Anna: I think if you’re investing half of your emergency fund, then you’re just cutting your emergency fund down by half.

[00:24:49] Anna: Let’s be honest, you’re, you’re taking maybe six months and you’re making it three months or four months or something around there, which the six month goal is not a one size fits all situation. Yes, it’s probably the most ideal for most people, but if you feel comfortable at three months, four months, and you can sleep okay at night, and maybe your situation is a little bit different, you have an in-law suite, a basement to sleep in somewhere.

[00:25:21] Anna: If something happens to you, you feel like you are wireless from your job, you rent an apartment instead of owning something. Yeah, maybe three to four months makes sense to you and that’s fine, but I wouldn’t consider what you have in your brokerage account as emergency fund purposes. I would leave that out there and just acknowledge the fact that you wanna reduce your emergency fund.

[00:25:42] Anna: A little bit. 

[00:25:44] Joe: What we don’t wanna have happen, Joel, is you get to the point where you need that money and you go, oh, I should have thought of X earlier. And I don’t know, oh gee, let’s walk through. What are some of those x’s you’ve seen where people needed that emergency fund and they hadn’t thought enough about it?

[00:26:00] OG: Oh, if your spouse dies, that would be one. 

[00:26:02] Joe: There’s, there’s one call back to four minutes ago. 

[00:26:06] OG: Yeah. Uh, there’s all sorts of reasons to need cash. I think the, the biggest way to think about this is if you’ve ever done any training for running or any cardio activity of any kind, and Joe, you know this, I’m out.

[00:26:22] OG: Oh no, you do. I do. And I know, you know this analogy I do. In order to finish the race, you have to go slow in your training. You have to go slow to go fast, right. It’s all about, it’s all about the base building. If you look at a training protocol for how to run a marathon. It’s not, go run as fast as you can for 26 miles.

[00:26:43] OG: That’s not the training protocol for the year leading up to it or the six months. It’s build the base, go do a 5K and not as fast as you can. A slow measured pace. You’re trying to build the base so that you can train your body to use the right energy sources. And the same thing is true with your money.

[00:27:01] OG: If you don’t have the right base, that doesn’t mean your pyramid’s gonna tip over immediately, but it just limits your choices in the future. I don’t have a dog in the hunt three months, six months, 12 months, 18 months. There’s, like Anna said, there’s a bunch of circumstances there. If you work in a job where it’s a, you know, oh, a virtually guaranteed career and there’s no chance of being fired and you make a bunch of money and you don’t spend a lot, then you probably don’t need a lot of of emergency fund.

[00:27:30] OG: We’ve had clients that have paid off their house, which is the major expense. Their, you know, the, the number one expense of their, of their month. They go, oh, my house payment’s paid off. I don’t need to have six months of mortgage payments anymore. I own the house. You know? Yeah. So you can reduce that. All that factors into the decision.

[00:27:49] OG: But the purpose of your emergency fund yes. Is for emergencies, but it’s also so that the rest of your money can be invested aggressively. And really that’s the biggest, that’s the, that’s the benefit of having cash on hand is so that you don’t have to say, well, can I get a little bit more, can I take, you know, let’s say that your cash reserve is 5,000 a month, that’s your spending and you’ve got six months worth of that.

[00:28:15] OG: So you’ve got $30,000 and you’re going, man, 30,000 sitting in my checking account sucks. Maybe I’m gonna put that in high yield account and I’m gonna get 4% a year. All right. It’s a hundred dollars a month of interest. Okay. Better than a sharp stick in the eye. We’ll take it. Right. It’s a good high yield interest rate right now.

[00:28:30] OG: You say, well, but half of that money I want to get 5% on, I really wanna, yeah. You know, I’m gonna stick it to the man and get five. It’s like, okay, what, what, what did we do here? We added complexity. You added another account, you put it in a different place that’s not easily transferable or accessible, or you gotta have a different screen for whatever the case may be.

[00:28:51] OG: All to get an extra $150 a year of interest, like 10 bucks. Is it worth it? Right. Versus, versus the volatility that you just introduced. Or you say, well that 15 grand, I wanna invest it. Like Anna said, now that $15,000 allows me that cash reserve. That’s nice and safe and secure allows me to be fully invested with the 18 thou or the other 15,000.

[00:29:18] OG: And that’s really the big difference. The emergency fund allows you to be fully invested with the rest of your money and not take half measures. Whatever your number is, draw a line in the sand. Be okay with whatever that number is, but be realistic with it and call it, call it how it is. You know, you’re not investing half of your cash reserve, you’re just lowering half your cash.

[00:29:37] OG: You’re just going from six to three, 

[00:29:39] Joe: which is fine. It’s okay. I like the analogy around running. My general philosophy around getting ready for anything is when I go out and train. To your point, I start off slow, og, and then I ease up from there as we go. You start off 

[00:29:54] OG: slow and go slower. 

[00:29:55] Joe: Yes, AB a hundred percent.

[00:29:56] OG: Yeah. But that’s true. I, I mean, I say that, you know, kind of being funny, but that’s the way to run, isn’t it? Start out slow and go slower. It’s, I’m, I mean everybody who trains knows this, 

[00:30:07] Joe: but you said run slow to go fast. And I get the analogy, but for me it’s run slow to go even slower. I used to run slow to go fast, but no longer, and it strikes me, I don’t know, I think the number one thing people don’t think about is the risk of disability.

[00:30:20] Joe: Like that’s the one that’s persistent throughout your career. I think. 

[00:30:23] Anna: With a disability, there is obviously going back to the insurance conversation, you can have a long-term disability policy in place. Typically, there’s a waiting period until that starts to pay out, so you need cash to, even if you have that insurance policy in place, you need cash to get you through that 180 days to get you that point.

[00:30:45] Anna: And then on top of that, you’re not getting your full salary in a disability payout. Sometimes, even if it’s not set up correctly, it’s taxed on top of having only a percentage of of your previous salary. So you definitely need a nice chunky emergency fund for that time period of, of potentially happening.

[00:31:05] Anna: That can definitely come into play with some sort of disability, whether it’s just a short term, you don’t even get the policy paid out, or if you don’t have a policy in place, it’s even more important to have something there to support you. 

[00:31:17] Joe: It even strikes me as you’re talking, this is the thing, it’s not that you know, oh gee, you’re talking about four and I’m going to eke out five.

[00:31:24] Joe: It isn’t the crappy interest rate that we’re after with our emergency fund. I think one of the true rates return to me, and you mentioned one of them, is I can be more aggressive with the rest of my money. ’cause what’s the thing you hear from people all the time? What if I need it? I can’t be aggressive ’cause what if I need it?

[00:31:39] Joe: No, you’re not gonna need it. We put six months over there or three months or whatever the number is. But the second thing is. I also then don’t need, Anna, to your point, I don’t need the short-term disability policy ’cause I just self-insured through my emergency fund. So there’s some money that I’m not spending.

[00:31:53] Joe: I can raise the deductibles on my homeowners and my car insurance. There’s money. I’m not giving two insurance companies anymore because I have that money sitting in the emergency fund. I think the ROI is not what I’m getting through the credit union of the bank. The ROI is all the money I’m not spending because of the fact that I have this money sitting there.

[00:32:12] Anna: Yeah. I think 

[00:32:13] Joe: that’s a much, much bigger thing. Yeah, 

[00:32:14] Anna: it’s, it’s almost like, I know we’re really harping on insurance here, but if you look at your emergency fund as if it is insurance, you self-insuring yourself and the premium that you’re paying on that is the growth that you’re missing out on with not investing it.

[00:32:28] Anna: And that 4% or whatever it is that you’re missing out on is basically just what you’re paying in order to be able to be more aggressive or in order to raise your deductibles or just have more peace of mind. 

[00:32:40] Joe: Coming up in the second half of today’s discussion, we’re gonna have our TikTok minute. I know OG can’t wait for the TikTok minute.

[00:32:45] Joe: He’s a big fan of TikTok and I dunno if you know that. And then, uh, we’re going to ask again about another question on emergency funds and a question about buying a house, all that. But Doug, where the hell have you been? It’s about time, man. Get down to the microphone and let’s get some trivion. What do we got today?

[00:33:09] Doug: Hey there, stackers. I’m Joe’s mom’s neighbor, Doug. And speaking of insurance, the very first automobile insurance coverage was sold on today’s date back in 1897, Gilbert l Loomis of Dayton, Ohio was the first purchaser buying $1,000 of liability coverage for a whopping $7 and 50 cents. He bought it from a company with a logo that’s simply a red open umbrella.

[00:33:33] Doug: What umbrella wielding company to Gilbert purchase his policy from?

[00:33:46] Doug: Hey there, stackers. I’m umbrella lover and guy who blames it on the rain. Joe’s mom’s neighbor, Doug Gilbert, l Loomis from Dayton, Ohio purchased the first ever auto insurance policy, but because it was so uncommon, the policy had to be written up as a horse and carriage policy. He bought the policy for $1,000 of liability coverage costing $7 and 50 cents annually from what umbrella logoed company that would be Travelers Insurance, and now three people traveling back downstairs to the mics to help more stackers in need.

[00:34:20] Doug: Here’s Joe OG and Anna Alum.

[00:34:28] shout out: Hi, I am David Hirsh and when I’m not hosting the Dad to Dad podcast for the Special Fathers Network, which is a dad to dad mentoring program for fathers raising kids with special needs, I’m Stacking Benjamins 

[00:34:39] Joe: travelers, og. Nailed it. We were sitting back down nice work. By the way, one thing we were joking about upstairs was, oh gee, you thought, because you’re so used to the Friday trivia, the year we were gonna ask the year.

[00:34:52] Joe: Yeah. Which we never do on Monday, Wednesday we try to make it 

[00:34:54] OG: 1687. That’s my guess. 

[00:34:57] Joe: And then I thought, what if it was like the year 800 and some insurance agent was, was just making a big commission. It’s 

[00:35:05] OG: like a little lizard. And he’s like, now listen, if you’re wagon and horses. Get into a collision with another wagon and horses, we’ve gotta assign liability here.

[00:35:15] OG: It happens to the best of us. What’s your liability coverage? 

[00:35:18] Joe: Well, what if it was automobile insurance specifically? Like the client’s going, what the heck’s an automobile? Oh, it’s, it’s coming. Trust me. You need this. You are gonna want this. It’s a faster buggy. Talk about insuring early. It’s a prove insurance.

[00:35:30] Joe: Later, when you get your automobile, you’re gonna be so happy that you already had this. 

[00:35:35] OG: It wouldn’t surprise me if that went on the way insurance companies work. 

[00:35:38] Joe: Something else that won’t surprise you. Og. It’s time for our TikTok minute. This is part of the show. Oh, is it another 

[00:35:43] OG: one where I’m quite viral talking about something cool.

[00:35:45] Anna: Yeah, it’s just OG own viral TikTok moment. 

[00:35:49] Joe: It, it is so funny. I had to point out to him how many people there were and then ever since then he can’t quit bringing it up. All of a sudden. Tiktoks his favorite thing. 

[00:35:58] OG: It’s amazing. It’s great. 

[00:35:59] Joe: How many people watch me? 188,000? Whew. 188,000 people watching Chills down 

[00:36:03] OG: my spine.

[00:36:03] OG: Yeah. 

[00:36:04] Joe: On our TikTok minute, we either share a TikTok that is helpful or air quotes helpful that some creator spent some time on. Anna, do you think we’re gonna see something today that is helpful or air quotes helpful? 

[00:36:17] Anna: Well, last time I got this question wrong and I feel like I was tricked a little bit ’cause typically TikTok is not gonna have a lot of of good stuff, but last time there was a little nugget of positivity, so I don’t know, maybe we’ll see something good.

[00:36:32] Joe: This one is a piece from your favorite athlete who’s doing a financial product commercial. Let’s listen into this, this athlete. 

[00:36:44] bit: I’m Jim Kale, hall of fame athlete here with a special offer just for you. You know me, I made that big play in that game that makes you feel nostalgic for your youth, and now you’ll listen to anything that I tell you.

[00:36:56] bit: Whether it’s crypto, life insurance, or gold. I can get you to buy anything because for some reason you trust me. Being in the Hall of Fame from my chosen sport has convinced you that I know something about economics or science or that I can even read, which is totally illogical because I’ve been a pampered athlete since I was identified as genetically superior to you at the age of nine.

[00:37:19] bit: I’ve never read a book and that’s hard to do. I was given passing grades in high school because I dragged a team of losers to the state championship, and even in college, I never saw the inside of a classroom because I was too busy spending the suitcase of cash I was given just for being there. And yet now I tell you that a reverse mortgage might be right for you and you think, yeah, maybe Jim knows what he’s talking about.

[00:37:41] bit: Truth is, I don’t even know how reverse mortgage works. I’ve declared bankruptcy three times because I invested in my cousin’s idea for edible shoes. I have an earpiece in, and I’m literally repeating every word someone says to me. You could have hired a financial advisor who would look at your monetary assets and give you a plan designed specifically for you, but that’s what rich people do for you.

[00:38:01] bit: It’s me having a heart to heart during a commercial break of whatever real life murder show you’re watching at two o’clock in the morning. So whether it’s a weight loss product, the latest version of Candy Crush, or a way to keep your tally whacker hard. Listen to me, Jim Kale. 

[00:38:19] Anna: I’m so confused as to what he’s selling.

[00:38:23] OG: That’s the point, I think. 

[00:38:25] Anna: Okay. 

[00:38:26] OG: I think he might have nailed it. I was thinking about who’s the guy that’s, um, I wanna say it’s Tom Selleck, but I don’t think that’s true. Who’s the matriarch in the cop show? That’s on Sunday nights or whatever. He’s got the big bushy beard. That was Tom Selleck mustache. Is it Tom Selleck?

[00:38:44] OG: Yes. He’s like the police commissioner or something like that? I believe so, yes. Okay. I’m not 

[00:38:48] Joe: sure exactly what you’re talking about, but there is a show like that. 

[00:38:51] OG: I was thinking about that the other day because he, he was doing the, uh, the reverse mortgage show and it like commercial, and it was like, Hey, everybody, you know me, I’m your favorite actor.

[00:39:00] OG: It was like, just like that script. And he’s like, I’ve been on many shows that you’ve been watching since you were a young child. Now, I think you’ll listen to me for this. You should do a reverse mortgage with, you know, such and such. It’s like, and I could see all the old people going, eh, you know, he’s not wrong.

[00:39:15] OG: He, he was Magnum pi, whatever he was, you know, he did solve a lot of crimes in that TV program. 

[00:39:23] Joe: I immediately thought Tom Selleck, Henry Winkler. Yep. Fran Harington. Mm-hmm. Remember Fran Tarkenton did a bunch of those. The old, yeah. No, that’s before my time Pings Quarterback. I’ll 

[00:39:33] OG: do William Devein with gold.

[00:39:35] Joe: William Deva. 

[00:39:36] OG: Yeah. Yeah. Joe Namath. His latest one was, uh, hearing aids. I saw that one yesterday. 

[00:39:43] Joe: Huh? What 

[00:39:44] OG: exactly? 

[00:39:45] Joe: And then, and then our favorite, only because of how he pronounces it. Wolf Brimley. Oh, diabetes. Diabetes. The guy that created the word diabetes, he’s long dead. Right. If only there were a way for, there’s only a, 

[00:40:02] OG: there’s 

[00:40:03] Joe: only a 

[00:40:03] OG: device that would tell us everything instantaneously.

[00:40:06] Joe: When did Wilford Brimley pass away in 20, 25 years ago? 

[00:40:11] Anna: Mm-hmm. Rip. 

[00:40:13] Joe: No more oatmeal for him. Some stackers have no idea who the hell he is. Anna’s looking at us like, I have no idea who this guy is. You’d 

[00:40:18] OG: recognize 

[00:40:18] Joe: him. 

[00:40:18] Anna: I’m kind of out on this conversation. I am like just a little bit younger. I also don’t really watch cable.

[00:40:25] Anna: I’m not on TikTok. You watch cable. 

[00:40:27] Joe: Wow. It is specifically why you’re here, Anna is to keep us outta conversations about Wolffer. Brimley. 

[00:40:34] OG: Yeah. That guy. Oh no. That’s 

[00:40:36] Anna: rough 

[00:40:38] OG: still. How about that? Still not. Is that better? He’s still not, still 

[00:40:42] Joe: not ringing 

[00:40:42] Anna: a bell. 

[00:40:43] Joe: No. He sold oatmeal. He, he was also like always the evil sheriff in every show.

[00:40:49] Joe: That’s funny. The guy that kinda ran the town. Our next question comes to us from an anonymous stacker. You know what, Paula, over on her show, afford anything, always assigns a name, and it’s generally some celebrity, but we, I didn’t think we should do that. I think because this is the show that’s about being more like Benjamin Franklin, we should start doing the same.

[00:41:09] Joe: But let’s do the Stacky Benjamin’s take, which is, it should be a revolutionary figure. So this man is gonna ask us about money issues. Who’s a good revolutionary figure, OG that, uh, we should call this person. 

[00:41:23] OG: Uh, let’s go with, uh, an easy one. Alexander Hamilton obviously gotta 

[00:41:27] Joe: be, today’s question comes to us from Alexander.

[00:41:32] caller2: Hey, Joan Oji, I have a question about emergency funds. 2025 has been a y year for us financially. My wife was self-employed and at the beginning of the year, she had drastically reduced the number of clients she was serving. For reasons I can’t get into, this lowered our monthly income and we had to dip into our emergency fund to cover expenses.

[00:41:46] caller2: By the time our business was back up and running in June, our six month emergency fund was reduced to about 25% of what it should be. We started replenishing the fund but have had to replace our HVAC when our EC debt in the middle of the heat this summer, this will cost us around $70,000, which we were financing, but we also had two to $3,000 in car repairs that we had to cover as well.

[00:42:05] caller2: Our fund is about 25% of what it should be still, but I should be able to fill it up when I receive my end year bonus. So my question is concerning the intent behind emergency fund. I know in the past you guys have talked about how you use an emergency fund to cover expenses, which creates the ability to invest on a regular basis.

[00:42:20] caller2: I always thought an emergency fund was something you didn’t touch unless there was a true emergency. But I’ve realized that’s actually how we’re using ours for the past several years. I’m fine with this approach, but how should I prepare for those true emergencies that can really damage our finances?

[00:42:32] caller2: I’m talking unexpected medical home fires. Home repairs, natural disasters, those kind of things. Would it make sense that for separate super duper emergency fund that we never touch unless disaster strikes, or should we just have a policy that says we use our fund to cover monthly overages in our budget and then pump the brakes when we have reached a certain dollar amount or loss of money in the fund?

[00:42:52] caller2: I know this all comes down to personal preference and there’s no answer, but thought this was an example of why having emergency fund is important. Thanks for your thought, 

[00:42:59] Joe: Alexander. Thanks so much for the question. We talked about emergency funds before Doug’s trivia question. I mean, this is exactly what happened.

[00:43:07] Joe: This is the reason, 

[00:43:08] OG: like this should have been the first question to answer this. Should we should have just played this for the question before. Yeah. Hey 

[00:43:14] Joe: Joel, listen to Alexander. This is what could happen. Life has a way of the second you deplete the emergency fund of other things coming up. And if you don’t have one, then you have this one setback.

[00:43:26] Joe: You’re in the middle of solving that setback when the next setback happens. And I don’t know over my career when I’ve seen people start spinning outta control, it’s this little vortex of bad things that happen. So I love this question for that reason, Alexander, because, um, and thanks for sharing all of that.

[00:43:43] Joe: It sounds like quite, quite a struggle, but usage of the emergency fund guys. Anna, what do you think when you heard this question? 

[00:43:51] Anna: I think that the emergency fund isn’t just used for when the house burns down or you both lose your job and like real, real, real emergencies. This is. Used when there is a big car repair and there is the HVAC system goes down, and all these other things that come up that are deemed qualified for using the emergency fund.

[00:44:14] Anna: You don’t have enough cash to cover it and maybe you can’t get a loan for it or whatever it is. That’s really what it’s used for, but I think if cashflow is a little bit tight. One saw, which we have a couple people who do this, is creating like another mini emergency fund for, we know car repairs are gonna happen every single year.

[00:44:37] Anna: It’s what happens unless you have brand new cars, you’re probably gonna have a big bill one or two times a year where you have to fix your car. 

[00:44:45] Joe: Almost like the envelope system. So I have an envelope just for car repairs. 

[00:44:48] Anna: Yeah. Or your insurance premiums pop up. Like we know they’re gonna happen. But it all, at least for us, it hits in December.

[00:44:55] Anna: That’s also when we’re paying for Christmas. It’s a really big month. Do I wanna dip into my emergency fund? No. I know it’s gonna happen, but it’s not happening on a monthly basis. So it’s nice to, maybe, I don’t wanna complicate things for you, but if cashflow is tight, it might be good to have another little chunk of money set aside that you dip into first.

[00:45:16] Anna: And that is four things that you know are gonna happen throughout the year. Maybe it’s not for the HVAC system, maybe it’s not for the job loss. Maybe those things are, are under the, the real emergency fund umbrella, but you have this other bucket that’s not just a checking account, but it is used for those bigger expenses that come out throughout the year.

[00:45:34] Anna: So you’re not dipping into the emergency fund and it’s not fluctuating as much. 

[00:45:38] Joe: The first thing that strikes me though, guys, is that I would love to have a bucket of money for everything. I mean, mm-hmm. That ultimately that would be great. But let’s say that you do the financial plan. I’m behind on my financial independence goal and I’ve gotta fund this emergency fund.

[00:45:54] Joe: I would love to have the other bucket of money. What’s my order of operations? Do I fund the financial independence goal first and slow play this additional fund? Like how do I put the, these things together? So the dovetail, 

[00:46:06] Anna: I think if you’re pretty far behind on your emergency fund, that’s the focus. You pause the financial independence, you pause the 401k, maybe you bring it down to your, your match, and you really focus in on emergency fund.

[00:46:17] Anna: That’s, that’s really is if you understand the process of, and the steps of, of going through the financial planning process. Emergency fund is always, always number one. 

[00:46:28] Joe: Okay? So number one is make sure I’ve got the emergency fund in place because that will smooth out the ride, right? Mm-hmm. I don’t let these speed bumps get in my way, so I got that taken care of.

[00:46:37] Joe: Now we have this extra fund that you’re talking about versus. I’m behind for financial independence. What’s step two of my order of operations? 

[00:46:46] Anna: Well, I think that the little fund that I’m talking about is really supposed to be baked into your budget, like your annual budget. It’s baked into that number.

[00:46:57] Anna: So you should be, you know, looking at that as, you know, this is what our, our yearly expenses are. I know it within our budget, like we have car repairs. I don’t know how much they’re gonna be, but we have that number set aside that we know is probably gonna happen throughout the year. And if it doesn’t, then that’s really awesome.

[00:47:15] Anna: But I have it baked in there. You have to pay for your expenses, and if you can’t, and if that is getting in the way of achieving your financial independence age, then maybe the expenses are the issue. And maybe it’s, we need to look at this again and figure out, okay, what’s going on here? We can’t, we’re not able to save into our 4 0 1 Ks or into our four, three Bs, whatever it is.

[00:47:38] Anna: We’re not able to do that over the long term, like year after year. We’re struggling with this then maybe that is an expense issue. But it sounds like for Alexander it’s more of just like. This is a one-time situation and they’re just kind of getting thrown at everything. Yeah, and it’s just focus on, you know, getting everything sorted out in terms of cash and then you’ll get back into it and don’t, don’t lose your motivation and don’t lose steam as to being able to get back into that, because this might just be a blip in in time.

[00:48:09] Joe: I think a lot of people don’t think of this as a budget item. I like that clarification that, you know what? I’m gonna spend this money by the end of the year. It just, this envelope might fill up a little bit, but hey, then the money’s there when I need it. It should be a part of your budget. 

[00:48:22] OG: That I think, is the biggest distinction here is.

[00:48:25] OG: Talking about emergency funds for quite literally the emergencies. And I get, I think ultimately you could even say, isn’t there technically, uh, an amount that I should put away for HVAC repairs? Like, I gotta assume that once every 15 years I’m gonna have a $17,000 expense. Like, okay, technically you’re right, but you could string this out forever.

[00:48:45] OG: Yeah. I mean, at some point I’m 

[00:48:46] Joe: gonna wanna retire, so shouldn’t I have a monthly, 

[00:48:49] OG: someday in the future I’m gonna have to have groceries shipped to me. So I think those things are true emergencies, but the reality is, is that a lot of times people don’t account for the annual expenses or semi-annual expenses in their normal budgeting.

[00:49:04] OG: If I ask either of you guys how much your spending is, your go-to answer is probably what your charge card bill is, right? Like you’ve got an idea of how much the MX is or how much the visa bill is, and you say, oh, uh, we spend like 5,000 a month. Great. But. You also have property taxes and they’re due in December and you have car insurance and that’s due in May, and you go on vacation twice a year.

[00:49:27] OG: And those are big lump sums. That’s part of your spending also. And so you have to be very realistic with yourself when you’re building this out and say, yeah, I can make a little note card of all my monthly expenses, that’s totally great, but then be sure to include those annual expenses. And if you don’t have a way to account for those in your monthly cash flow, or you say, oh, I don’t pay my property taxes until I get my bonus at the end of November, and that’s how I pay my property taxes.

[00:49:53] OG: I mean, that’s a little slippery slope anyways, but you need to put that as part of your cash flow. And if you need to set that money aside so that it’s literally there for that normal cash flow expense, okay, fine, you can, that’s kind of like the envelope strategy or YA or every dollar has a purpose every single month, but I wouldn’t have extra cash reserve for the sake of extra cash reserve.

[00:50:17] OG: That’s just opportunity. Cost loss. 

[00:50:19] Joe: Yeah. There can be such a thing as too much here. ’cause you’re gonna need, yeah, you could 

[00:50:24] OG: say, and and, and I know that you have this too, on occasion you’ll have the client conversation and they’ll say, yeah, but we’re thinking about doing the Alaskan cruise in 2028, so we should set that aside.

[00:50:33] OG: Right. It’s like, are you going to Alaska in 2028 or are you not? Well I dunno, we’re thinking about it. It’s like then no, like this is, if you start going, well maybe in 2030 I might do this and maybe I should probably have a little bit of extra set aside. You start building out these cash buckets and you end up with all your money sitting in cash because you go, well, every single month I spend $10,000 a month.

[00:50:53] OG: Shouldn’t I have 2030 sevens, $10,000? Setting aside, you know, ’cause I might need it. I mean, technically it’s out there, but that’s long-term money at this point. So think about your expenses in the future. Even if they’re one-off expenses as where do they fall? Are they zero to three years, three to 10 years, or 10 years plus away?

[00:51:14] OG: And if it’s 10 years plus away, that stuff is long-term money. Just like make it be long term if it’s in the next three years. You know, the alternative thing that happens too is people say, Hey, I wanna buy a house. I’m gonna keep my money invested. And it’s like, whoa, whoa, whoa. Yeah, no, don’t do that either, because how committed are you to buying this house in 24 months?

[00:51:33] OG: Oh, absolutely. We’re a hundred percent gonna do it. It’s like, well what happens if you get there and you have 20% less down payment than you thought? ’cause that could happen. So if you’ve got that a hundred k, that’s gonna be your house down payment in two years, that money needs to be in cash. 

[00:51:47] Joe: Yeah. And answering that question, how you answer that question is the key.

[00:51:50] Joe: If it’s down and I’m okay with that, I’ll just wait longer. Yes. Just like I’m cool. Fantastic. Three, 

[00:51:55] OG: five years. Okay, then you’re great. Yolo. Have it. College expenses, right. We advocate strongly to have, when you’re a freshman in high school, you have freshmen in college money sitting in cash, whatever you’re, you know, if you’re setting aside 5 29 money and you say, well, aren’t I giving up three years of market growth?

[00:52:11] OG: Yeah, probably. Unless those three years are 2007, eight, and nine. In which case you’re like, thank God I had that money in cash. ’cause otherwise I’d have half the money for my kids’ college when I got there. It’s the trade. The trade is, I’m taking some risk off the table for a guarantee. And that’s the capital markets at work.

[00:52:29] OG: You know, I can, I can see, 

[00:52:32] Joe: I can see who OG is. Dad, just, just if you’d done that, I got good news and bad news son. Remember that whole a and m thing. You get to wear this sweatshirt. I, I got you an a and m sweatshirt. Uh, because the bad news is dad went long on some options that didn’t, uh, 

[00:52:51] OG: didn’t quite play out the way that we thought.

[00:52:53] OG: My bad, that’s on me. Coach 

[00:52:56] Joe: turned out the parlay in that second race. 

[00:53:00] OG: The third, third horse in the second race didn’t post the way that I thought it would. 

[00:53:04] Joe: If that stupid thing had done what we needed to do, your college dreams would’ve been better funded. Last question of the day is from a woman who also wanted be anonymous.

[00:53:15] Joe: We need a woman who’s in a revolutionary figure. Anna 

[00:53:21] Anna: would, Betsy Ross, 

[00:53:22] Joe: Betsy Little’s enough. Yeah. I’m sure this question came from Betsy. 

[00:53:26] Anna: Not really. Yeah, 

[00:53:27] Joe: there it is. She was a revolutionary figure. A hundred percent. She was, 

[00:53:29] Anna: she may have been a little earlier, but, 

[00:53:30] Joe: well, that was revolutionary time period.

[00:53:32] Joe: I mean, 

[00:53:33] Anna: and I just feel like that makes sense since. We’re, you know, I’m outside Philadelphia. 

[00:53:38] Joe: Well, perfectly, she sewed 

[00:53:39] Anna: that flag here. She has ALS here. This, this is 

[00:53:42] Joe: from your neighbor, Betsy, then. Mm-hmm. Anna, Betsy says, thank you so much for your hard work and for being awesome. I can’t think of any insults like most people do.

[00:53:52] Joe: ’cause y’all are great. It’s very nice. I love how she qualifies. I know I’m supposed to insult you here, og. It’s okay, but I can’t think of one. I heart each of you equally, especially you, Doug. I’m so glad Doug’s not down here to hear that I’m considering buying a new home. Our realtor suggested not using a mortgage this time around because our current house is paid off and we’re financially independent.

[00:54:13] Joe: I didn’t know this was a thing I that 

[00:54:17] OG: I could wait. I can just write a check for houses. Wait, wait. 

[00:54:20] Joe: What? That is incredible. Isn’t that cool though that you’re so used to the fact that I have to have debt for this purchase going, wow. 

[00:54:28] OG: Wait, wait. I can just, you like you guys will just take a barrel full of cash.

[00:54:34] Joe: I’ve been maximizing retirement contributions and socking savings, a new brokerage account for the past decade. This will be my first time taking any funds out. Selling our current home covers half of the new house budget. I have the other half of the new house budget available in a money market. We would like to buy the new house move and then sell our current home, so I need to bridge that other half.

[00:54:57] Joe: During the time I ran the math on liquidating the needed funds from the Fidelity Total Stock market index, my brokerage account, selecting those parts that have the highest basis that have I’ve helped for longer than 12 months. We’ll get into stackers why that’s a thing and why Betsy’s talking about this and paying long-term capital gains tax on the gains.

[00:55:17] Joe: I compared this. To an adjustable rate securities back line of credit, which Fidelity offers presently at 7% with no origination fee as I’d repay the line of credit with the proceeds from the sale of the current house. The plan would be to have this paid off ASAP within six to 12 months. The math appears to be in favor of utilizing the line of credit instead of selling my stuff.

[00:55:41] Joe: However, I’ve heard people make comments about locking in gains and the stock market, as you guys know, this total stock market fund up 16% over the past year. Would it make sense to take some capital gains despite the tax it while the market’s up, or is that trying to tie the market? And I should use simple arithmetic to make this decision.

[00:56:01] Joe: Betsy, thank you so much. People hear all the time about maybe dispersing the capital gains. Take a little bit of it at a time that market’s up. I gotta bird in the hand. Og. Do I use the line of credit or do I sell some of my stuff? 

[00:56:16] OG: Just to make sure that I’ve got all the facts correct, so we have a new house purchase.

[00:56:20] OG: I’m just gonna make the numbers up just so that I’ve can Sure. To illustrate ’em. New house purchase is a million. I’ve got my current house, I’m gonna sell for 500 K and I’ve got 500 K in a money market fund. And then I also have other money in a brokerage account that I could sell to. Yeah. Maybe like another 500 K, maybe.

[00:56:36] Joe: Yeah. The money in the brokerage to make up the other 500 k. Sell that while I’m waiting for the house proceeds. 

[00:56:41] OG: Yeah. 

[00:56:42] Joe: Because I don’t want to sell my house until I move into the new one. 

[00:56:44] OG: Yeah. Yeah. So if you think about this from a timing standpoint and kind of what would happen if you don’t do the line of credit and you don’t want to get a mortgage, right?

[00:56:53] OG: If you just sell something, all you’re doing is you’re gonna sell something from, uh, you know, your total market fund and then, uh, pay some taxes and then turn around and buy the fund again. That’s the plan. The risk, of course, is that you say something silly like the market’s at an all time high. Maybe I should wait for the market to come down before I get back in.

[00:57:13] OG: And then, you know, now you have all this money sitting in cash and the market continues to go higher from here and you miss out on future gains for whatever reason. Even when people, and we run into this and a lot like, let’s say that you’re retired from your job and you’re, you know, you go from your 401k to your IRA, they go, well, should we invest that all today?

[00:57:31] OG: Like it was invested yesterday, of course we should invest it all today. Like, I’m scared that it’s out for one day. Like today might be the day it goes up 2% we like in the transfer that sucks. Like, yes, get it all in, shouldn’t we dollar cost average it in? No, it wasn’t dollar cost average before it was there.

[00:57:48] OG: Just put it back, you know, so there’s a big risk that that happens. Purely from a math standpoint, what she’s talking about here is Fidelity and other brokerage companies. Schwab will say, Hey, you’ve got a million bucks. We will give you $700,000 of cash, roughly 70 ish percent. We’ll give you 700 grand of cash, line of credit at reasonable market rates, uh, for you to use whatever you want.

[00:58:12] OG: Just like that. You fill out a little application. We run a little bit of a credit report, but mostly it’s based on how much money you have and we’ll just give you this line of credit. It’s just based on the, uh, the value of your brokerage account. You can’t do it on values of IRAs or Ross. This is just purely brokerage money, and you can use that money for anything you want.

[00:58:27] OG: It’s different than a margin loan in that you can’t use this money to buy additional securities with it, and the interest rates markedly less generally than a margin loan would be, but for the purposes that she’s talking about, this is a great idea. This is the usefulness of it so you can be a cash buyer for the new home.

[00:58:47] OG: And fund it in two weeks and, and be done and then you can do the move and, and repay the loan. People are concerned about the loan, but frankly, it’s a heck of a lot easier and it doesn’t cost anything relative to getting a mortgage ’cause that’s the alternative, right? The alternative is to go get a mortgage for 500 k and then pay the mortgage off with the house proceeds to fund this.

[00:59:08] OG: But you’re gonna pay a bunch of costs and fees and it’s gonna take six weeks to get a mortgage. Four weeks if you’re lucky, and you have to come up with a bunch of documentation and tax returns and pay stubs and bank statements and it’s just a giant mess. Or you just click a few buttons on your Fidelity app and boom, they give you all this money accessible.

[00:59:26] OG: I would 100% of the time, take the securities loan to be a cash buyer, knowing that I’m gonna pay it off as soon as I sell the house. 

[00:59:34] Joe: The reason that 12 months was important when Betsy wrote this out is because you pay a lower capital gains tax if it’s 12 months. That’s the difference between short term and long term.

[00:59:46] Joe: The government tries to reward people for being investors not to be traders, and so the carrot there that people invest in companies instead of trading companies is we’ll give you a lower capital gains tax if you hold on to money for more than 12 months. So that’s why she’s like, listen, this money sat here longer than 12 months, but my first feeling wasn’t about this tax.

[01:00:09] Joe: Bird in the hand that Betsy’s thinking about it was exactly, oh gee, what you said, which is, what the hell are you gonna do when you sell the house proceeds? And, and Betsy, I don’t know you, but the average person I worked with often did something dumb with just, just ended up doing not great stuff with that.

[01:00:28] Joe: Because you end up then with a bunch of cash sitting around. 

[01:00:31] OG: Yeah. And what do 

[01:00:31] Joe: I do with the cash? 

[01:00:32] OG: And it’s a different thing than, you know, take away the value of the house or the money market fund. So let’s say that she’s trying to buy this million dollar house. She’s got 500 K house and a million dollars in brokerage money.

[01:00:47] OG: No money market, just all investments. If that’s the question, Hey, I don’t have any liquidity. I’ve just got investment money. Should I sell the investments to buy the house and pay taxes and, you know, I got half of it and, and should I sell the other half? That’s gonna come down to personal opinion about debt.

[01:01:05] OG: And it sounds like she likes the fact that the house is paid off. Yeah. There’s gonna be a little bit of a tax bill on the money that you sell and there’s no money going back. You know what I mean? Like this is selling it or not selling it. Yeah. And so then the question is, is do I wanna be debt free or do I want to have a loan payment associated with this house?

[01:01:22] OG: ’cause my net worth number’s the same, right. It doesn’t change my net worth. I’m just moving money around on the monopoly board. And she’s 

[01:01:29] Joe: still financially 

[01:01:30] OG: independent after this move. 

[01:01:32] Joe: Yeah, 

[01:01:32] OG: yeah. Assuming re that’s all the case, right? Yeah. So, uh, that’s a whole different, 

[01:01:35] Joe: a whole different, whole different 

[01:01:37] OG: thing.

[01:01:37] OG: In which case then yeah, I would sell it. And I wouldn’t look at it from the perspective of like the market’s at all time. Hi, should I do this? It’s like, well the money is there, this is what it’s for, it’s for me to use and. Move about as I please. And again, you’re not doing anything with your net worth by not having a $500,000 loan.

[01:01:57] OG: Instead of having 500,000 invested in 500 companies, you have 500,000 invested in one single family house. Okay? Not how I would do it, but that works from a net worth standpoint. But she’s talking about should I sell this to turn around and rebuy it again? ’cause she has the liquidity to pay all of it off in cash.

[01:02:16] OG: Take the loan, like do the securities loan and be a cash buyer. Sell the house as quickly as you can and uh, pay it off. Anna, you’re nodding as well. 

[01:02:25] Anna: Yeah, I agree. Simplicity wise, this makes the most sense. I don’t even think it comes down to the math. Like she mentions the math a couple times in her question and it’s.

[01:02:35] Anna: Really about this, although not intentionally trying to market time. It is market timing. I don’t think it’s the best move. ’cause you’re gonna have a lot of anxiety around it too. Once you get to the point where you solve off your house, you’re like trying to make a decision around what to do with the money.

[01:02:50] Anna: Put it back in. Like OG was saying, I think simplicity wise, open up the security back line of credit and move from there. 

[01:03:01] Joe: Thanks a ton for the question, Betsy. Thanks to everybody for the questions today. Such great questions from our stacker community. If you’ve got questions, head to stacky Benjamins dot com slash voicemail that gets you on the show.

[01:03:13] Joe: And, uh, if you want to write them, you can write me Joe at stacky Benjamins dot com. But we definitely prefer that you call in and because of that, you know what, it’s T-shirts. If you’re brave enough, swag, brave enough to call in. We give you some swag. Swag, give you some swag. So two people going home with swag today and two are not.

[01:03:29] Joe: But thank you to all of you for, uh, for contributing to make this a great show. Anna, people wanna know more about you, more about your practice. Where do they find you? 

[01:03:38] Anna: You can find me at the same place that you find OG in the past, Stacking Benjamins dot com slash og. 

[01:03:46] Joe: I feel bad for you having to share a link with ot.

[01:03:48] Joe: I 

[01:03:48] Anna: know, I know. 

[01:03:50] Joe: It’s way better than you think. 

[01:03:52] Anna: Well, he’s gotta sort through all of the fan mail for me, so that’s, that’s the only thing. 

[01:03:57] OG: It’s like, I, I thumbed through all the stuff to try to find the stuff that’s for me, and I have to forward all the rest of, its Anna for me, seven for Anna, 

[01:04:03] Joe: one for me, seven for Anna.

[01:04:04] Joe: One for 

[01:04:05] OG: me exactly How. Yeah. As it should be. 

[01:04:07] Joe: Mm-hmm. Let’s mosey out on the back porch and talk about community for a second. Guys, we just, I wanna say a big congratulations, Cole and Chris, the creators of our Seattle Benjamins after Dark Meetup group. Oh, boy. They, they, they had their first meeting last week.

[01:04:25] Joe: I saw the photos. It was a huge success. And so congratulations to those two guys. I know they worked really hard and congratulations to all our stackers in the Seattle area getting together. Uh, super fun. And if you wanna be a part of that, if you’re in the Tacoma, Seattle Greater Area, if you go into Facebook and put in Stacking Benjamin in Seattle, you’ll come up with the link for the Seattle Meetup group.

[01:04:48] Joe: So, uh, go join the group online. There’s a ton of perks, not the least of which is you could hang out with Chris and Cole. Who are two really cool stackers putting this together and stacker Rebecca, whose idea it was to have a meetup group in the first place. So congrats to them. We also have a meetup group in the Twin Cities.

[01:05:03] Joe: Same thing. Just put in, stack your Benjamin’s twin cities, and you’ll find that meetup group and, uh, several more guys getting ready to come online. Stackers after dark, Benjamin’s after dark rather. 

[01:05:16] OG: I don’t think that means what you think it means. 

[01:05:19] Joe: It just means Stacky Benjamin’s people meeting after dark.

[01:05:23] Joe: Of course. What, what else did you think it meant? Anna, thanks so much for hanging out with us today. It was so fun. Such a blast. Great, great time. Thanks for helping all of our stackers. And Doug, oh my God, Luca’s, coming back down the stairs. Where have you been? What the heck have you been doing time, Doug, for you to take it from here?

[01:05:39] Joe: What are the three things that should be on our to-do list today? 

[01:05:42] Doug: So what should we have learned today? First, take some advice from the team. Permanent life insurance, it can work, but most of the time sticking with term insurance is your best answer. The bigger win, getting the insurance you know you need.

[01:05:56] Doug: Get that done stacker. Second, emergency funds can also be just cash reserves, which makes no sense until the markets are down and you need money. Then if you don’t have a fund, you’ll wish you did. But the big lesson. Car insurance for the old El Camino. I not only bought full auto coverage, I also bought hurricane insurance, flood coverage, and disaster insurance.

[01:06:21] Doug: The auto agent said this thing drives like a hurricane. Totally true. Floods, great vibes. Wherever I drive it. A hundred percent true and disaster insurance because as the agent said, it’d be a disaster if I didn’t buy it. A thousand percent true man. Do I have a great agent? Maybe a little weird that he calls himself a free agent and doesn’t wanna be tied down to those companies you see commercials for.

[01:06:46] Doug: I just meet him at a gas station and pay him cash. Which is kind of a pain, but worth it for his expertise. This show is the Property of SP podcast LLC, copyright 2025, and is created by Joe Saul-Sehy. Joe gets some help from a few of our neighborhood friends. You’ll find out about our awesome team at Stacking Benjamins dot com, along with the show notes and how you can find us on YouTube and all the usual social media spots.

[01:07:15] Doug: Come say hello. Oh yeah, and before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s Mom’s neighbor, Duggan. We’ll see you next time back here at the Stacking Benjamin Show.