It’s been awhile since we’ve answered the mailbag, so we thought there’s no better day to tackle some questions! So, our long-time hosts, Farnoosh & OG are kicking off April by answering a TON of your questions! We received many questions about topics including: caring for your pets after your passing, investing while paying off debt, savings plans, picking an HSA, and more.

Plus, in our headlines segment, while everyone is panicking, we discuss why you should keep your cool and not change your plan. Plus, getting your taxes ready to file even though the filing date has been pushed back? If so, we’ll discuss some frequent (and ugly) mistakes people make. Of course we’ll also save time for Doug’s trivia. Just another 50-minute day in the office (AKA basement) for us!

Stay safe everyone! …and wash your hands!

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Show Notes:

<3:45> Headlines

• Haven assets losing their mojo in virus-stricken market (Reuters)
• 5 Common Tax Mistakes You Need to Avoid (Tuscon.com)

<18:50> Our amazing hosts answer your questions!

Tune in to today’s episode to get Farnoosh and OG’s takes on YOUR questions. Some topics we tackle are: caring for your pets after your passing, investing while paying off debt, savings plans.

To get more Farnoosh you can visit her website farnoosh.tv or listen to her hit podcast So Money.

<26:40> Doug’s Trivia

• What company represented by a fruit, started by two Steve’s, was founded on this day in history?

<32:05> Haven Life Line

• Robin writes in to ask whether or not the crew would consider a fitness-based bank account that rewards you with a higher interest rate if you hit a step-per-day threshold.

Want the guys to answer your question? You can call into the Haven Life Line and get your question answered on-air HERE.

Join us Friday!

When we’ll argue through the 20 signs that show you MIGHT be spending too much money at the supermarket!

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You can check out our full show rundown below:

Our April Fools Day got off to an exhilarating start with Farnoosh Torabi taking the helm with her overqualified sidekick, OG. Doug is oblivious to the fact that Joe is absent and proceeds through the intro per normal. Doug is hyped that today is “International tattoo day.”

Headlines:

•   Haven Assets Losing Their Mojo in Virus-Stricken Market. Due to the Coronavirus fear-induced panic, “safe haven assets” (gold, Treasury Bills) have reached overbought levels, leaving very little opportunity for future returns. OG feels that it’s a poorly advised     move to lock in guaranteed near-zero percent returns. He argues     that the average investor does not know a -20% return for stocks is     coming until it has already occurred. His advice is to not change your mind midstream. Stick to your plan.    
     
• 5 Common Tax Mistakes You Need to Avoid.    
     
  • Putting down the wrong Social Security number. Pay close attention to insure that you enter the correct SSNs – be extra vigilant with your children/dependents. OG points out that the IRS has been known to give out EINs to businesses or other entities that are the same sequence of numbers as peoples’ SSNs. If this is the case, you will receive a letter from the IRS. Don’t freak out, just write the IRS back.
           
  • People often choose the wrong tax filing status. Farnoosh shares a personal story of the first time she filed jointly. Make sure you double check the filing, even if you are using an accountant. Especially important in years that your status changes (marriage, divorce, death of spouse, etc.)
           
  • Writing off itemizing before running the numbers. Farnoosh (per the article): The standard deduction is much higher now than in years past, which means it will be advantageous for most tax filers, but it could pay to not assume. OG states that if you do a rough calculation for deductions (mortgage interest, charitable contributions, etc.), and it’s close to the standard deduction, then it may be worth it to crunch the numbers. But if your back of the napkin calculations are way below the standard deduction, then save yourself the time and use the standard deduction.        
           
  • Failing to report all of your income. Farnoosh shares her experience where the IRS claims that she did not report all of her income. Of course Farnoosh did, being the upstanding citizen that she is, but the onus was on her to prove that it was all there. The IRS is fallible, and it’s on the taxpayer to file correctly and keep the records. Especially crucial for freelancers and those with side gigs to go through the filing with a fine-toothed comb and maintain immaculate records.
           
  • Filing taxes on paper. Some people still do this in spite of a much higher error rate – 21%. More than 1 in 5 people who file on paper make a mistake vs. less than 1% for electronic filers. For those who either a. have an uncomplicated situation or b. do not have the financial wherewithal to use a CPA, there are numerous tax filing assistance opportunities available.        
       

Takeaways from the two headlines

1.  Try not to be so reactive to the markets. Let the markets ride its     course, have a long-term financial plan and be appropriately     diversified so you are not tempted to sell in the midst of a bear     market.
      
2. Dot the I’s and cross the T’s on your tax return, call in a professional if you need the assistance, and read the entire return yourself so you are certain that it is correct.
   

Questions from the mailbag

Jennifer asks if financial planner have ever experienced clients who want to plan to leave money after their death to take care of their pets, and, if so, what options are available for that goal. Jennifer has witnesses many animals being taken to animal shelters after their owners’ deaths due to lack of the family’s ability or interest to take care of the pet.

•  Farnoosh: “I would imagine that you could write something in your will, leave a reserve for your pets – I mean, they’re dependents after all – and you want to make sure they’re taken care of. I’m sure life     insurance policies may or may not extend to pets, but that’s     something that you want to look for in your fine print; or if you’re     about to shop for life insurance, to ask about that to make sure     that they are taken care of…”
     
• OG: “I don’t think that you can call up MetLife and say, ‘hey I just want to change the beneficiary of my life insurance to Boxster…”.  OG argues that pets are not people (no SSN), and therefore life insurance is not the correct vehicle. Estate planning is an individual endeavor, which may include setting up trusts for kids/grandkids, making sure you aren’t paying estate taxes, or taking care of the “other part” of their family. Talk openly with a trusted person who cares about you and the animals and ask how to make it easy on him/her.
  

Shaka the sidehustler asks if she should stop contributing to her 401(k) (with a 4% match) to tackle $30,000 in student loan debt at 3%.

•  Farnoosh: No. Farnoosh believes that Shaka should continue contributing to the 401(k) at minimum up to the 4% match (8% total). The math states that the 3% debt is simply outweighed in the long-term by the potential growth and compounding that the 401(k) can achieve. Do the math to determine exactly how much you can save by paying  off the loan early, and contrast that with what you could achieve with the long-term market averages.
     
• OG:  Agrees 100% with Farnoosh. OG adds that the “4% match” is actually a 100% match on the 4% of her gross income that she contributes. That’s a guaranteed doubling of the money contributed. Terminology is crucial to allow our brains to understand.
  

Doug’s trivia:

• “A certain company named after a fruit was started on this date in     history by two guys named Steve. What is the name of that company?”

•  “Apple Computers, the first company to hit a trillion dollar     valuation, was founded on April first, 1976, by Steve Jobs and Steve     Wozniak, and now is the most valuable company in the world –     depending on the day.
  

Mailbag continued

Robin asks if they would recommend Fitness Bank, which is offering 2.2%, but in order to earn it, you must walk at least 12,500 steps per day?

•  Farnoosh: Farnoosh can see the merit in the “rewards systems” offered by  some personal finance apps/websites. Due to the quarantine, however, Farnoosh doubts her ability to walk the required steps to attain the 2.2% carrot. She likes the approach – “Health is wealth.”
     
• OG: John Hancock has an insurance policy that the policy holder can receive lower rates by practicing healthy habits. So a rewards system is an effective tool for businesses to offer clients an incentive in     exchange for a certain action. However, OG believes that for this     particular bank, we do not have enough information to make a     recommendation, but will get them on the FinTech Friday to find out    more. In general, however, when considering a high-than-average     yield savings account, make sure it’s insured by FDIC, is liquid and     easily transferrable, and is legitimate.
  

• Katherine and her husband both work and have access to decent options for health insurance. The family of four is on his healthcare plan. She has access to s high-deductible healthcare plan (HDHP). She asks if she can be on his plan and participate in the Health Savings Account (HSA) while simultaneously being on his plan, and, if so would that even be something she’d want to do?   
• Farnoosh:  Do the research to see if it makes sense. Go online and search for healthcare advocates who can help simplify the comparison without bias.    
• OG:     Probably     only makes sense if at least one person is retired – retiree     healthcare plan or Medicare can be a second payer. In Katherine’s     case, is it efficient? Is there a major gap in coverage need that     is not provided by the husband’s plan? OG has a hard time seeing a     scenario where the math makes sense. The price of insurance     premiums in the HDHP will likely negate any benefits received by     being able to contribute to the HSA (“Don’t pay $2,000 in     insurance premiums in order to save $7,000 in the HSA. Just save     $7,000 or $9,000 without the HSA”).    
  

• John wants to know how do they get the Stacking Benjamins tee shirt to be so soft?

• Farnoosh:  Revealing the secret is akin to revealing grandma’s secret recipe. It is proprietary information. Just know that it is a long,     elaborate process that includes months of massaging (trade secret     how it is actually done). Farnoosh goes on more than she should.
     
• OG:  Tee shirt purveyor, Brad, is a musician, who plays music to the animals; hence ridiculously soft sheep’s wool. Relaxing and soft music produces soft wool. Simple logic.
  

Doug’s recap and takeaways

•  When doing taxes, pay close attention to SSNs, filing status, and     whether or not it makes sense to take the standard deduction or     itemize.    
     
•  Always take advantage of a match as much as possible while tackling debt and saving simultaneously. While it may take longer to get rid of the debt, you’ll have a much larger asset pile when it is gone.
     
• APRIL FOOLS! Doug is in cahoots with Farnoosh to replace Joe in     today’s episode. Who knew?