Holiday Ready? Essential Fire Safety to Save Lives and Cash! (SB1614)

It’s a Festivus for the rest of us! This week, we’re mixing holiday cheer with must-know insights to keep your season merry, bright, and worry-free. Steve Kerber joins us from the Fire Safety Research Institute, who shares life-saving fire safety tips just in time for all those twinkling lights and candles. Because the best insurance is prevention, right? This year we’re chatting about lithium-ion batteries and how explosive (literally) these can be for your holiday season if you aren’t careful. We’ll also chat about smoke alarms, closing your doors, and having an emergency exit plan in place!

But that’s not all—we’re also diving into why big Wall Street players are taking out loans they don’t need and how you can apply creative financing strategies to your own life. Plus, we answer a listener’s estate planning question that came up during their bedtime reading (we love multitasking). Sprinkle in some holiday trivia, debates over the best Christmas movies, and discussions on revocable trusts, and you’ve got a variety-packed episode that’s as fun as it is informative.

Episode Highlights:

Holiday fire safety tips from Steve Kerber, including new standards for smoke alarms and tips for handling lithium battery hazards.
Why having a solid fire escape plan is the ultimate prevention strategy.
How Wall Street’s creative financing trends can inspire you to rethink debt and financial flexibility.
Strategies for analyzing and managing debt like a CFO, just in time for the New Year.
Listener Q&A on estate planning, with practical advice on revocable trusts and holistic financial planning.
Holiday trivia, featuring quirky debates about the best Christmas movies—spoiler alert: “Die Hard” might come up.

Why You’ll Love This Episode:

It’s not every day you get a mix of life-saving fire tips, actionable financial strategies, and festive fun in one show. Whether you’re looking to keep your home safe, optimize your finances, or just get a good laugh, this episode has something for everyone.

Don’t Forget:

Tell us your favorite holiday movie! Share your pick in the Basement Facebook group or tag us on social media. Who knows—you might just settle the debate once and for all.

FULL SHOW NOTES: https://stackingbenjamins.com/fire-safety-tips-2024-steve-kerber-1614

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

Enjoy!

Wednesday Mentor: Steve Kerber

Even more on Fire Safety from our time with Steve:

Fire safety is not just about preventing accidents; it’s also about safeguarding your financial well-being. Just as you invest in an insurance policy to protect against unexpected events, proactively addressing fire safety can prevent financial devastation due to property loss, medical expenses, or even liability claims. During the holidays, the risk of home fires increases, making it essential to be especially vigilant.

**Fire Safety Tips with Financial Implications:**

1. **Install and Maintain Smoke Alarms**: Ensure that smoke alarms are installed on every level of your home and checked regularly. Newer models reduce nuisance alarms, which can lead to them being disabled. Keeping them functional is crucial as they can mean the difference between safely escaping from a fire and experiencing a total loss.

2. **Create a Fire Escape Plan**: This not only saves lives but also minimizes potential financial loss. A quick and safe evacuation protects your family and reduces the risk of personal injuries, which can lead to costly medical bills.

3. **Invest in Fire Extinguishers**: Having fire extinguishers readily available and knowing how to use them can prevent small fires from becoming major incidents. This reduces property damage and preserves your investments in your home and belongings.

4. **Be Wary of Electronic Devices and Lithium-ion Batteries**: The convenience of electronic gadgets comes with risks. Buying certified products and handling them correctly minimizes the chance of battery fires, which have been on the rise.

5. **Holiday Decorations**: Be cautious with lights and decorations as they can be fire hazards. Opt for LED lights, which are cooler and consume less electricity, reducing both fire risk and energy bills.

6. **Regular Maintenance of Heating Systems**: Ensure that chimneys, furnaces, and other heating appliances are serviced regularly. This prevents fires caused by equipment malfunctions and saves on costly emergency repairs.

7. **Renter’s and Homeowner’s Insurance**: Update your insurance policies to ensure they adequately cover potential fire-related losses. This financial safety net is critical in recovering from a fire’s devastating impact.

By integrating comprehensive fire safety measures into your financial planning, you not only protect your family’s physical well-being but also shield your long-term financial health. It’s about being proactive and prepared, ensuring that an unexpected fire won’t derail your financial goals.

Our Headline

Private-Equity Funds Are Taking Out Loans They Don’t Really Need (Wall Street Journal)

Doug’s Trivia

What’s the last name of the founder of the iconic car brand that includes such models as the
911, Panamera, Macan, and Cayenne?

Have a question for the show?

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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).

Other Mentions

Join Us Friday!

Tune in on Friday when we’re sharing the basics of holiday money tips according to one of the great minds in personal finance, Jonathan Clements.

Written by: Kevin Bailey

Miss our last show? Listen here: Do These 5 Financial Mistakes Sound Familiar? (SB1613)

Episode transcript

[00:00:00] bit: But out of that, a new holiday was born. A Festivus for the rest of us

[00:00:11] Doug: live from Joe’s mom’s basement. It’s the Stacking Benjamin Show.

[00:00:26] I am Joe’s moms neighbor, Doug, and if you’ve hung out with us for long, you may have heard us say that the best battle according to Sun Zu is the one never fought. That’s why today we welcome from the Fire Safety Research Institute, Steve Kerber plus Big Wall Street players are back in the news because they’re taking out loans they don’t need.

[00:00:47] Wait, haven’t we spent the last decade telling people to stop taking out loans they don’t need? We’ll detail why they’re doing it and. How you can think more creatively about your financing options. Plus we’ll answer a question from one stacker who was just laying in bed, having a little me time and thought, you know, I’d better call Saul.

[00:01:06] See hi in og. Really? That’s what he does before. But alright, you’ll find out why. And of course I’ll roll some of my best trivia out of the garage and share it with you. You’re welcome. And now two guys who look like they should have stayed in bed maybe a half hour longer. It’s Joe and O.

[00:01:36] Joe: Oh, that intro finally got OG going.

[00:01:38] OG: Geez, you don’t

[00:01:38] Joe: think

[00:01:38] OG: another half hour in bed is great. I mean, I go to bed at nine 30, get up at the crack at eight 15 every day. Oh

[00:01:45] Joe: God. It’s a solid 11 hours. Everybody. Welcome to know what the doctors tell you to do. Grandpa podcast. And Dougie talks about you and I being

[00:01:52] Doug: older, right?

[00:01:53] Well, here’s the thing, you better get into that pattern now because in a few years you’re gonna be waking up for no goddamn goddamn reason in a few years. You

[00:02:00] OG: wake up in every night. That’s what everybody says. Yeah. And you’ll

[00:02:03] Doug: be like, what the heck? I was sound asleep. What? Just woke. And then you’re up for three hours.

[00:02:06] OG: Just wasn’t tired. So get now. I still don’t have that problem. Get we’re tired, Doug.

[00:02:10] Joe: Hey everybody. Welcome to the old guys talking about Sleep podcast. We, we do have a great show today because this show is a variety show on purpose. If you’re new here stackers. If you’re a brand new stacker, and today we’ve got all the variety, this is gonna be so fun every year for Fire safety month, uh, Steve Kerber comes and people are wondering what’s fire safety gotta do with anything?

[00:02:30] You know what? You buy insurance. Our goal is to not use insurance. The best insurance is to have a plan. And Steve Kerber every year brings it. And we get so many people that write us afterwards going, that guy’s a lot of fun. I. And he knows how to explain fire safety. And if anybody remembers elementary school, uh, you just remember we would do the fire safety plan in elementary school.

[00:02:51] Why the hell don’t we have it around the house this year? It’s gonna be a little different because Steve wants to talk about some things around the holidays that are big, frequent problems that they see with fire safety. And so we’re gonna help you with your financial plan in that way. Let’s not burn the house down this year.

[00:03:09] OG

[00:03:09] Doug: again, in our school, they just had us get under our desks and cover our heads for fire safety. That’s, that’s what you did, right? I think that was nuclear safety,

[00:03:18] Joe: Mr. Because same, same, because that was gonna protect you from a nuclear bomb, everybody under your desk and, and make sure that when that mushroom cloud goes up.

[00:03:28] That, uh, when archeologists discover you, they think we we’re all under our desk for no reason.

[00:03:34] Doug: Desks are made outta steel I-beams.

[00:03:37] Joe: And then what’s the idea about Wall Street people taking out loans for no reason? We’ll get into that. Maybe that’d be our

[00:03:43] OG: reason. Who doesn’t like loans?

[00:03:45] Joe: And then Eric maybe has the best call ever to the show.

[00:03:49] So a lot to get into, but we have sponsors that make this show go so that uh, we can keep going and you don’t have to pay for it. So let’s hear from a couple of our wonderful companies that make this show. Rock and roll. And then we’re rock and rolling with Steve Kerber from the Fire Safety Research Institute.

[00:04:22] And you know what time of year it is when Steve Kerber is back And you know what? He’s bringing the best holiday gifts of all the gift of fire safety. How are you, Steve?

[00:04:30] Steve: Doing great, Joe.

[00:04:32] Joe: Well, and that is a gift, isn’t it? I mean, this time of year, I’m sure in your line of work you see people, you know, I, I even see ’em.

[00:04:38] Trees go up, houses go up, presents under the tree. I mean, it’s regardless of Christmas tree or not. This is a pretty dangerous time of year.

[00:04:46] Steve: Yeah. Every time winter season we see the statistics go up, we see more fires. Uh, you’ll start seeing more in the news. It’s just a sad, unfortunate component of, of the holiday season.

[00:04:57] A lot of, uh, heating systems, candles. And batteries just to add to the pile of what we see.

[00:05:06] Joe: Yeah, and I was surprised when you and I were writing about this ahead of time. Lithium batteries is really, and this is just a result of everybody’s got the latest high tech Toya, I guess Steve.

[00:05:16] Steve: Yeah. We want everything to be portable, so everything takes more energy now, and it just so happens that this new type of battery is very light.

[00:05:24] You can recharge it over and over and over again, but what comes with that is a lot of energy in a small space, it can lead to fires and we’re seeing an uptick in those types of fires.

[00:05:34] Joe: So how do we know then, Steve? I mean, if I’m, if I’m out holiday shopping, how do I know that this might be a fire hazard?

[00:05:41] Steve: Yeah, you’ll, you’ll see on it, it’ll talk about lithium ion batteries or ibs. It’s everything from like a single cell in a toothbrush up to like several cells in a laptop or a cell phone. To ride on toys and things like that, that would have a lot of sell. Scooters, uh, e-bikes are gonna be very popular this year as they have been since covid all the way up through electric vehicles.

[00:06:08] So we’re seeing this technology get used in all kinds of products.

[00:06:11] Joe: But you’re not saying don’t buy these products.

[00:06:14] Steve: Not at all. No, we’re absolutely, everybody has ’em, right? You can’t, you can’t get around them. I was like, don’t be the Grinch, Steve. Come on, man. Not at all. Not at all. I mean, I, I, I haven’t got my kid an e-bike yet, or a scooter, but I, I know it’s coming.

[00:06:26] It’s inevitable, I think. But yeah, no, we, I got a cell phone in my pocket. I got a laptop, I got the toothbrush, the razor. They’re all lithium I on batteries. The key really is to it through its entire lifecycle. So starting at the store, you wanna choose a certified product, okay? So you wanna buy a brand that, you know, a brand that you’ve heard of.

[00:06:46] Certainly if you’re doing brick and mortar and going to the store. I mean, you’re gonna find products there that are safety certified. So the, the UL and the Circle there are, are other organization UL Solutions tests things to these safety standards to make sure that they’re safe to purchase and have in your home.

[00:07:04] Joe: Was it you and I last year talking about, we were talking about these, um, uh, like hoverboard things kids have that were really light on fire all the time.

[00:07:11] Steve: Yeah. It, back in, I think it was like 2022, the hoverboards Yeah. Became really popular, especially around Christmas time. And what was happening was there, there was no safety standard for hoverboards yet.

[00:07:22] So stuff was being imported into the US with really poor quality batteries, bad battered, battery management systems. And we were seeing fires all over the place. It was somewhat easy to deal with after the fact. ’cause the consumer Product safety commission pretty much said like, Hey, this, this is a toy.

[00:07:40] It’s gotta be certified in order to be used. What we’ve seen since then and since Covid, is this gets a little more complex when you start talking about e-bikes and e scooters because people use them as their line of work. Mm-hmm. People use them to make a living. People use them to be able to commute to their job and stuff like that.

[00:08:00] So they weren’t as quick to say, Hey, get rid of those. Don’t, don’t use those, or they gotta be certified. So there’s been a delay in action being taken for these bigger devices. New York, for example, New York City passed their own regulation that said if you buy a battery in New York City, it’s gotta be certified.

[00:08:21] So we’re trying to get other cities to follow their lead, and we’re trying to get some national legislation to the same because we’re seeing deaths and injuries. New York City just happened to be the epicenter of it because of the amount of delivery people that work there to make that city run.

[00:08:35] Joe: But I love what we’re doing here today.

[00:08:37] Like don’t wait for your city to do it. Look for the certification yourself.

[00:08:41] Steve: Absolutely. Yeah. Look for it yourself. I mean, there’s absolutely no reason, uh, the products are available that are certified. That’s the start, right? So that’s at the store. There’s other things that you gotta pay attention to if you’ve got these things.

[00:08:54] So if, if you’re like me, I used to keep my tool batteries and stuff like that, like on the charger, sitting on the charger all the time. ’cause the older batteries, like the old batteries, they would have to trickle charge, otherwise they would lose their charge.

[00:09:08] Joe: Right. Yeah, I know exactly what you’re talking about.

[00:09:10] Steve: Yeah. It’s different with these lithium ion batteries, they hold their charge really well. So put those things on the charger, wait till the charger turns green says it’s done. Take it out of the charger, put it on your tool bench or wherever you keep your batteries. Little things like that could make a big difference because these things can be overcharged, they can be overheated.

[00:09:28] You don’t wanna keep ’em in the sunlight. Uh, so there’s a lot of things that could lead them to fail. Not to mention abuse, you drop it, uh, stuff like that. So there’s, there’s all kinds of tips and tricks with this new technology.

[00:09:41] Joe: Well, let’s go into some tips and tricks because this is the reason why our stackers love hearing you every year.

[00:09:47] I feel like it’s elementary school or middle school is the last time we do a fire safety drill. I. And yet every, it is so cool to hear the families that write me after you’ve been on every year going, you know what, we did a fire safety drill and it’s great. Like we should be doing this around the house.

[00:10:04] I would imagine with all the powered stuff that we have, the amount of time we have to get out of the house, it, it’s shrinking every year. I feel like the threat of a fire spreading is spreading faster every year. Steve,

[00:10:16] Steve: you’re spot on. Uh, we keep saying fire is getting faster and, and when you and I have talked about this over the years, we’re talking about plastics in your house.

[00:10:24] Yeah. We’re talking about polyurethane foam sofas and mattresses and, and all of that stuff. The sciences showed that it’s gone from, to have a room fully involved in fire 30 years ago, 40 years ago, it was 17 minutes and now it’s down to three. Holy cow. So we were like, oh man, this is crazy fast. We need to teach people about smoke alarms, escape plans, closing doors, all of that.

[00:10:47] And then the batteries came on the scene and that three minutes is down to a minute. That’s why we need to educate the public that it’s really important to be smart with these devices. ’cause you’re, you’re not gonna get rid of ’em. We just gotta be smart with them.

[00:11:00] Joe: Sure. Well, we covered batteries, so let’s talk smoke alarms because a couple years ago, man, you opened my eyes to the changing world of smoke alarms.

[00:11:08] Steve: Sure. And it’s finally coming to fruition. So over the last like 10, 15 years, we’ve been doing research because we commonly see that three out of every five fire deaths was someone without a working smoke alarm. So it was, alright, well what do we do? Well, why are people taking ’em down? Well, normally it’s nuisance cooking alarms.

[00:11:29] So you’re, you’re burning some toast or you’re broiled some burgers or the bacon went a little too long, you set that smoke alarm off. First thing you do, you rip it off the ceiling. You, you get the smoke out of the way and then it goes in the drawer and it never comes back out of the drawer. That’s what we need to avoid.

[00:11:46] So new. UL Certified smoke alarms to the latest standard from our colleagues at UL Standards and Engagement have made these alarms or set the standards so that all the manufacturers now need to reduce the nuisance alarms that they respond to. So essentially, these are smarter alarms. So I can burn my toast, you can burn your toast, and that smoke alarm knows the difference between burnt toast and a toaster fire.

[00:12:11] We’re using tech for good in some of our life safety devices. So if you go to the store and you’re buying new smoke alarms, you’re gonna see the new ones are gonna have a label on the package that says, uh uh, reduces nuisance cooking alarms. Awesome. We’re heading in the right direction. They’re also 10 year smoke alarms, so you don’t have to worry about that thing beeping in the middle of the night because you gotta replace your nine volt battery, which you don’t even have anymore because nothing else takes nine volt batteries.

[00:12:38] So we’re moving in the right direction. Spoken like a guy who’s gotten targeted. 2:00 AM Steve, been there, done that. Man, that’s, uh, and you gotta be careful you’re scrolling on any of these online retailers. I don’t want to name any, but you gotta be careful. You gotta make sure that you’re getting alarms that are meeting the new requirements, just like you would if you were to go to a big box retailer and what they’re gonna have on the shelves and, and smoke alarms expire after 10 years.

[00:13:05] Joe: By the way, you were the first person to tell me that. Yeah. I had no idea there was an expiration date on, on a smoke alarm.

[00:13:11] Steve: Well, that’s, uh, hopefully your mom’s basement got a new alarm put in it after that and you’re good for 10 years. I mean, that’s what we want people to do, realize that, uh, hey, these, these things do need to be kept up.

[00:13:23] Now that they’re sealed, you’re gonna pay much less attention to it. ’cause you’re not gonna be changing your clocks, changing your batteries anymore. It’s when, when do I hit 10 years

[00:13:31] Joe: and it’ll let us know then when it hits. 10 years. Right,

[00:13:34] Steve: exactly. So the, the new annoying chirp is going to happen at the 10 year mark.

[00:13:38] Essentially, it’s an end of life chirp, so it’ll let you know it’s, uh, time to get me, uh, replaced. Hopefully it’s not at two in the morning. It’s two in the afternoon. So you can do something about it. But we’re making progress in these areas.

[00:13:53] Joe: I love the set it and forget it. Let’s talk about doors because you guys have also shared over the years the importance of keeping the door closed and how much time that buys you.

[00:14:05] Can you walk into the idea of the importance of the door in fire safety?

[00:14:10] Steve: Absolutely. So as, as we put this all together, I mean, essentially what we’re saying is if you have a fire. You’ve got the least amount of time today to escape than you’ve ever had in history. So you gotta have those smoke alarms because it’s gotta let you know as quickly as possible that you’ve got an issue.

[00:14:28] Then you gotta have an escape plan because if you wake up in the middle of the night and you don’t know where you are and you’re hearing that alarm go off, chances are if you’re thinking about getting outta your house or your apartment or your building for the first time, you’re not gonna do it quickly.

[00:14:42] It’s gonna be awkward. It’s gonna be rough, it’s gonna take a while. If you got kids, you gotta go get the kids, the dog. It’s no one thinks about those things until it’s too late. Now we know fire’s fast. You need to buy yourself as much time as possible. So we call it kind of making yourself saveable. So I think everybody thinks like, well, if I have a fire, the fire department’s gonna come.

[00:15:02] They’re just gonna get me. Well, fire’s so fast today that you might not be saveable by the time the fire department gets there. We talked about three minutes. We talked about one minute.

[00:15:10] bit: One minute.

[00:15:11] Steve: Yeah. No fire department’s getting to you and saving you in three minutes, let alone one minute. So you’ve gotta buy yourself time.

[00:15:18] And the way you buy yourself time is if you, if you can’t get out, you need to have a closed door between you and where that fire is. That’s what’s gonna buy you the time for the fire department to come save you. So that barrier is gonna stop the smoke or slow the smoke from getting to you. It’s gonna slow the heat.

[00:15:35] A lot of our tests show you can have essentially a thousand degrees on one side of the door and less than a hundred degrees on the other side of the door. That gives you the time to get to the window, hang out at the window, make sure somebody called the fire department, be really specific on where you are, and they’re gonna come save you.

[00:15:53] Joe: Wow. And, and I love Plan A and plan B. I mean, I got that door, but I got the window as plan B.

[00:16:00] Steve: Yeah, I mean, essentially plan A is go out the closest exit outta your home. A lot of times, hopefully that’s okay that you get that early warning from the smoke alarm. You kinda get down low, you know where your exit is, you see your exit, and you get out your exit, you get to your meeting place and make sure your family’s all accounted for.

[00:16:18] Plan B is, okay, well that exit got blocked, so now I’ll go out this other exit, say it’s a window. And then plan C is I can’t get out. Let’s say I’m on the fifth floor of an apartment building and I’m not jumping out of that window, so I’m gonna get the closed door between me and the problem, and I’m gonna get to that window and I’m gonna wait for the fire department to come get me out.

[00:16:42] Joe: It’s funny, we all have homeowner’s insurance, we have renter’s insurance, and we pay a lot of money for that. And man, I think the best insurance is what you just talked about, so. I love this idea of planning ahead of time and from families that have done this guys, they’ve told me that actually these plans, Steve, are fun.

[00:16:58] It actually is fun walk. The kids love it, walking through the plan ahead of time, like in the family, all working together, like it’s this unifying, it’s so much more fun, obviously than the day of my co-host, og. He had his house go up when he was, uh, a kid and nothing fun about that.

[00:17:14] Steve: Yeah, absolutely. It’s life changing.

[00:17:16] I think everybody’s probably in the grand scheme of things, doesn’t think about home insurance. They don’t think about what could happen in a fire loss. They’re probably underinsured. There’s not a good appreciation for what the contents you have in your home is. I mean, insurance industry is getting much more sophisticated as well with tools that kind of, you’re this, this many years old, this is your household income.

[00:17:39] This is what you likely purchase and have in your home. You wanna make sure that those expectations line up because you don’t wanna be in a situation where you take your insurance for granted. You actually do have an incident where you need to use it, and that safety blanket’s not there. We just led an investigation of the Lahaina fire in Maui.

[00:17:59] Oh,

[00:18:00] Joe: oh yeah. Holy.

[00:18:01] Steve: Yeah. 2000 structures were destroyed. A hundred people lost their lives. And one of the things that you see quite a bit is there was a lot of multi-generational houses and stuff like that where people had their homes paid off, they lost sight of their insurance, weren’t paying attention to it, didn’t think a fire was gonna happen to them.

[00:18:20] And then it turns out that the cost to rebuild is significantly more than what you were insured for. And you’re stuck. So very can’t, can’t say that, uh, enough. I mean, I, I think it’s something we all take for granted, something that just kind of hangs out in the background. But when’s the last time you check to make sure that you’re insurance?

[00:18:39] Levels matched what you’re hoping gets replaced.

[00:18:44] Joe: Yeah, we, uh, try to preach that a couple times a year here for that very, very reason. But I love, I love the idea of even before we get to that, let’s just have a plan to get you out alive. Right? Sure. Let’s have a plan to get there. I think this every year when you hear Steve, if only there were a place that had maybe a website, maybe some tools, maybe some stuff where we could get more information and dive in deeper if only that place existed.

[00:19:07] Steve: Yeah, no, it’s there. It’s, it’s actually multiple places depending on what information you’re looking to get. I mean, if you go to fsri.org, you can learn about all the, the fire safety stuff that we’re doing. What I’d love people to go to this time of year and this year is battery fire safety.org. There’s so much nuance here.

[00:19:26] I mean, we talked about the importance of when you first purchase it. I mean, there’s how you handle it and how it goes through its life, the importance of having a matching charger. That goes with the product. I mean, it’s so easy to go online now and buy just what you think has the right plug on it.

[00:19:43] Joe: I’ve done that before myself.

[00:19:45] I’m like, man, I hope so.

[00:19:46] Steve: Yeah. So that’s the issue is the charger needs to talk to the battery and they need to speak the same language. And if you just go online and buy a charger, just ’cause it has the same plug doesn’t mean it’s gonna speak to that battery. So that’s where we start seeing overcharging, overheating, uh, things, put ’em on charge overnight, and then we see bad incidents.

[00:20:05] And then the other big thing is we, we don’t want people keeping scooters and e-bikes in their way out of their house or their apartment.

[00:20:13] bit: Hmm.

[00:20:14] Steve: That’s been the downfall in New York City where they’ll put their scooter by their apartment door. And they go to sleep and that thing fails in the middle of the night and they’ve got one way out, and it’s now compromised because of that scooter.

[00:20:27] So put it in another room, put it in a closet, put put it anywhere. That is, I mean, if you can’t charge it outside, which is ideal for those scooters or in your garage, you wanna make sure it’s absolutely not in your main path out of the structure. And then the other big thing is, uh, you can’t throw these things away.

[00:20:47] We’re seeing a lot of trash truck fires. We’re seeing a lot of landfill fires, a lot of recycling center fires because these things hold their energy so well. Oh, uh, you throw it away, the trash truck smushes it, it sets it into thermal runaway, and next thing you know, the whole garbage truck’s on fire. Oh.

[00:21:04] So you gotta recycle them at a recycling center, which I know is not convenient. Nobody wants to just take a single battery or a set of batteries to the recycling center, but you can’t throw it in the trash. That’s another thing that’s huge. I mean, there’s, there’s not a lot of warning signs, but if you see bulging batteries or you hear something hiss or a little bit of white smoke comes out of it, get that outta your house.

[00:21:28] It’s time to, uh, get that outside. ’cause it, it could create a terrible problem. So lots of nuance to this battery thing. It’s not a simple close before you do message or a have an escape plan. It’s uh, so we call it take charge of battery safety and charge is an acronym. So each letter of charge stands for all of the topics that we just talked about.

[00:21:52] Joe: Awesome. And that’s all gonna be a battery fire safety.org. You got it. Stackers will link to it on the show notes page at stack your Benjamins dot com, along with fsri.org as well, Steve. Uh, happy holidays my friend. Thanks for keeping our stackers safe again this year. And mom’s always happy you’re helping us Stay safe here in the basement too.

[00:22:11] Steve: Right on. Have a fire safe holiday season everybody.

[00:22:16] bit: This is Darryl from Pennsylvania. When I’m not busy arguing with a 4-year-old, I’m Stacking Benjamins. No daddy.

[00:22:25] Joe: Big thanks to Steve Kerber. Oh gee, I know that you’ve been through a house fire before and, uh, never thought about lithium batteries. Lithium batteries.

[00:22:36] OG: You know, everybody gives it a lot of grief when you’re looking at the, you know, you’re getting on airplanes and they ask you those silly questions. Did you take the battery outta your, uh, away luggage? Did you, uh, there’s no e-cigarettes or any of that sort of stuff in your back. It’s ’cause, you know, if it catches on fire, you want to know about it, not have it be in the, in the baggage compartment below.

[00:22:57] So take that stuff seriously. It happens.

[00:22:59] Joe: The best plan is always to worry about what the experts worry about, right? If Steve Kerber is worried about lithium batteries, you should be worried about lithium batteries. Yeah. Yeah. What’s the one thing you see, you know, when you talk to people about. What if you got disabled when you’re talking to ’em about their financial planner, but it’s like, oh, that’s not gonna happen to me.

[00:23:14] Mm-hmm. Why do all the pros worry that it’s gonna happen to you? Because that’s the stuff that really disrupts your plan,

[00:23:20] Doug: Doug. Yeah. I just wonder on an airplane, what are they gonna do If my whole camera bag goes up in flames, you’re still 35,000 feet in the air with a. A fire, the, like, the temperature of the surface of the sun.

[00:23:35] What do they do? Do they have special containers they can put it in? Do you know? Og

[00:23:39] OG: Some of ’em do the fire retardant bags or whatever. That’s the only thing you can do. ’cause it burns, it burns out, right? There’s no, you can’t put water on it to make you go out the lithium battery. Right? Whatever. So gotta

[00:23:50] Doug: open that compartment up, grab my whole camera bag, which has like nine lithium batteries in it and somehow get it into that bag.

[00:23:57] I’m not doing that. Yeah, but

[00:23:58] OG: you’ll likely notice it before it’s like full blown fire, right? There’s smoke, there’s indications that something bad is happening, a smell or something like that. Whereas the argument being, yeah, it’s a, it’s a cluster f regardless. But do you want all that to happen below the floorboards where no one has access to it?

[00:24:16] It’s not pressurized and they can’t get to it?

[00:24:18] Joe: Agreed.

[00:24:19] OG: Well, it,

[00:24:19] Joe: well, and this is what happens. By the way, I was leaving, uh, cat Mandu last year.

[00:24:24] OG: Scoreboard as

[00:24:25] Joe: you do.

[00:24:26] OG: You

[00:24:26] Joe: know, as

[00:24:26] OG: one does,

[00:24:28] Joe: do I have any, sooner or later you gotta leave, you know, and you had your hoverboard, and they asked me if I have any batteries in my bag, not realizing that I had packed one of my, one of my batteries in the bag.

[00:24:40] I said, no, honestly, they came and got me. And they were either going to take it out and just take it away and then leave me a note saying that I wasn’t gonna have it, or I had to go all the way back through security and do it again. So even after they checked my bag, they came and filed me and made me recheck it.

[00:24:58] Doug: Like six people from the airline came pointing at you. Liar

[00:25:02] Joe: American. It’s him. It’s him. Get him. Get him. Get him. Swarm. We’ve him swarm. Swarm. Hey, time for as if that’s not awkward enough. Time for our TikTok minute where it always gets awkward. Always gets awkward. I think on the TikTok minute, this is where we shine the light on a TikTok creator today.

[00:25:18] It’s a YouTube short creator, by the way, who is either saying same thing, something brilliant or air quotes, brilliant, genius. And, uh, today, by the way, uh, this one was recommended by the gentleman who writes our 2 0 1 newsletter. Kevin, Kevin Bailey sent this to me and goes, Hey, you gotta play this for the TikTok minute.

[00:25:38] Doug: He is a super smart guy. So I’m gonna say, this is brilliant.

[00:25:42] Joe: Let’s see if this is brilliant. This is a, well, I. A lot of our ones that are brilliant, Doug, come from the mouths of comedians.

[00:25:53] bit: My wife did that ancestry.com. She discovered that one of her ancestors graduated in the first graduating class at Harvard in 1636 and get this two weeks ago.

[00:26:06] He finished paying off his student loan.

[00:26:13] Joe: It’s becoming a problem.

[00:26:15] Doug: Old student loan repayment thing, having student loans had their 15 minutes of fame. Can we move on to some other, some other problem. Rip on something else. Everybody’s bitching about how expensive houses are. Can can we just move on to that? Be a little more trendy? Yeah. That now

[00:26:28] Joe: that the student loan problem has been, uh, solved.

[00:26:30] bit: Yeah.

[00:26:31] Joe: That’s comedian and Kylie Bryan on stage talking student loans and Harvard history. Coming up next, we’re gonna talk about. Loans, why are people on Wall Street taking out loans? But before that, Doug, you’ve got maybe the best trivia of the holiday season today. Yeah, but before that, can we talk about your Charlie

[00:26:52] Doug: Brown scrawny tree behind you?

[00:26:54] OG: It is. I mean, the Charlie Brown tree, that thing needs a little tree skirt or something. Buddy, can you water us miss?

[00:27:00] Joe: You can see the roots are firmly planted in the carpet.

[00:27:04] Doug: The roots that look like metal, that’s like the Festivus pole. It’s pretty much That’s how tall and narrow

[00:27:12] Joe: that thing is. Just ’cause it’s a Festivus pole doesn’t mean you can dance on it.

[00:27:16] Doug

[00:27:18] OG: just needs a tree skirt. Clean that up a little bit. Maybe some fake presents under. All right. Get the holiday spirit. Dang it.

[00:27:24] Doug: Let’s do some trivia. Hey there, stackers. I’m Joe’s mom’s neighbor, Duggan. Today we celebrate the birth of a man named Ferdinand. Hey, that rhymes who made lots of Benjamin’s.

[00:27:35] Well, he would have if they’d had Benjamin’s as their currency in his European country. This guy was the creator of iconic brands like the 9 1 1, the Panama, the McCann, the Cayenne, the Tecan, anything that ends in an an. Here’s a question. The brand name of these cars is the same name shared by Ferdinand, whose birthday is today.

[00:27:58] What’s the name? I’ll be back with the name right after I figure out the name of the designer of the El Camino. Probably the same guy.

[00:28:19] Hey there, stackers. I’m your trivia engine Revver and guy who’s taken this podcast from zero to 60 and 51 minutes flat. Joe’s mom’s neighbor, Doug, if you are like me, stacker, which you would be, if you were maybe slightly better looking and did something with that thing hanging, you know, you’d be wondering, how do you actually pronounce Ferdinand’s last name?

[00:28:42] Well, no better way to do it than to defer to my favorite person to listen to as I fall asleep every night. Some random European

[00:28:51] bit: dude. We are looking at how to pronounce the name of arguably the most famous of all German sports car manufacturers founded in Stuttgart, Germany in 1931 and named after its founder make of such iconic model size, the nine 11 Carra gt, cayenne, or Panama.

[00:29:08] Just to name a few. We kind of all know in some fashion or another how to say the name of this automobile brand, right? But how is it said in German? Simply Porsche. Porsche. Porsche.

[00:29:23] Doug: Porsche. Dad. There you have it. It’s Porsche. Happy birthday, Ferdinand. Now let’s go race off with Joe and og, but hold on. Why are we trusting this guy as our pronunciation?

[00:29:37] When he can’t even say arguably

[00:29:43] Joe: Abi. Abi. I could listen to say Abi all day though, couldn’t you? Porsche. Porsche. Porsche. Porsche. And your point, how is he the expert? Just ’cause he’s some dude on YouTube. We don’t know. Do we really know? Hey, time for us to move into our headline.

[00:29:59] headlines: Hello Doling. And now it’s time for your favorite part of the show, our Stacking Benjamin’s headlines.

[00:30:06] Joe: Today’s headline comes to us from the Wall Street Journal. This is something OG that I’d like you to dive into for us, because initially, whenever you see Wall Street starting to do something, you go, well, what’s going on? This is by John sru. Private equity funds are taking out loans they don’t really need, what’s, what’s going on

[00:30:30] bit: here?

[00:30:31] Okay.

[00:30:32] Joe: Yeah. Uh, John Wrights, while sometimes useful financial innovation as a way of creating conflicts of interest, private markets are now a key testing ground for this. Wow. Did he just put Wall Street and conflict of interest together? It’s strange borrowing through what is known as quote, net asset value financing.

[00:30:52] Has become popular among private equity fund managers who have been going through a rough patch since Central Banks started pushing up interest rates at breakneck speed. It allows them to borrow money using their portfolios as collateral NAV loans, as they’re called. Experienced a 30% compound annual growth between 2019 and 2023.

[00:31:10] Hedge fund administrators, Sitco estimates benefiting specialist lenders such as Dawson Partners in 17 Capital, which is majority owned by Oaktree Capital Management. What the hell’s going on here? Og? Why are these companies taking out loans on their investments on the people that are investing with them?

[00:31:26] OG: I mean, it has to be a, A portfolio loan, right? Like a margin loan. Yeah. That’s what it, that’s basically what they’re, that’s what it sounds like, what they’re talking about here. When the average investor. Let’s say that you have a hundred thousand dollars in a brokerage account, and you might get a solicitation from the broker brokerage company that you do business with.

[00:31:43] You might see, hear about margin loans. Basically, what that allows you to do is you could buy more stock based on the value of the stock that you have. And a very common way to think about this, or easy way to think about it, I should say, is it’s about two to one. You know, there’s some rules around different stocks that make it less or more than that, but generally speaking, two to one.

[00:32:02] So if you have a hundred thousand dollars in a brokerage account and it’s invested in the SPY, or it’s invested in Apple shares or whatever, right? Or combination of stuff, you can go to your brokerage company and say, I’d like to buy more stock based on the value that I have stock. And they’ll say, all right, sure, I’ve at it.

[00:32:17] Here’s another a hundred thousand. So you can have a hundred thousand in your brokerage account and buy 200,000 worth of stock, and that sounds like a really great deal until you recognize what the interest rate is. For a long time, obviously, when interest rates were very low. Margin rates were low single digits, and I’m talking 1.5.

[00:32:36] Wow. 1.9% at some times. And there were some places, even advertising, I remember this advertising because I thought I was just ingenious. It was like, if you invest a million dollars with us, we will let you margin another million at 1.5%. What? And the dividend payout of the s and p was 2.1. So like just buy an s and p fund.

[00:32:59] Your dividends from your s and p fund will pay the interest on your million dollar loan. And then you get all the upside, sounds like a heck of a bargain if the market goes up. If the market goes down with margin loans, that gets ugly in a hurry. So notwithstanding the interest rate, if all of a sudden your stock portfolio goes down by 20, 30, 40%, which happens on occasion, you have $200,000 in your brokerage account.

[00:33:27] Now your portfolio has gone down 30%. So now you have called 140,000 in your brokerage account. Well, hold on a second. You don’t really have 140 in your brokerage account. You still owe Schwab a hundred. You have 40 in your brokerage account. So you take all the loss on your side of the equation, so to speak.

[00:33:46] There are some rules and regulations around margin loans that are implemented at the federal level that get passed down to brokerage companies. So if it gets too close to being insolvent, they sell you out. So they go, yeah, we don’t care what the market’s gonna recover tomorrow. We’re not. We’re not, we’re not betting on the fact that OGs gonna pay us back the a hundred thousand he borrowed.

[00:34:04] So we sell you out. We stay whole as the brokerage company, and you take the loss ultimately, again, very complicated and can sometimes make a bunch of sense if the interest rate is really low, like 2%, 3%, 4%. ’cause you go, well, I’m borrowing money at four, invest it at 8, 10, 11. That sounds fantastic. The problem nowadays of course, is that interest rates are much higher, and for the average investor, a margin loan might be 11%.

[00:34:31] So not much better than taking money outta your credit card, honestly. But if you’re a big investor, if you’re a hedge fund and you have billions of dollars under management, you can get some pretty attractive rates if you want. And there are some benefits to this. Honestly, I find it funny when people poo poo margin loans so much.

[00:34:49] Oh, how could you, how could you, that’s so risky. I go, well, hold on a second. Isn’t your whole life as a real estate investor, a pretty big margin loan? Didn’t you just go to the bank and say, I’ll give you $200,000. You go give me, let me buy that house for a million and you know, and then I’ll Airbnb it and I’ll make some cash.

[00:35:08] Like how is that any different than putting $200,000 in your brokerage account and going to borrow a million dollars on stock? Well, the difference is, is that your stock portfolio is valued day to day, right minute by minute, second by second. And so you see those real time adjustments. You’re, you have a high.

[00:35:23] Chance of making, you know, decisions. You don’t see the price fluctuation of your, of your house can’t touch it, you know, second to second. And obviously housing prices aren’t nearly as volatile as individual stock prices or the overall stock market. So it’s unlikely to see, you know, a 40% decline in your house price in a calendar year, whereas in the stock market that happens twice in a 20 year period Could

[00:35:48] Joe: happen.

[00:35:49] Yeah. But it still, to your point, is a loan, it’s, it’s an asset backed loan that, yeah. The other

[00:35:57] OG: major difference between mortgages and, and a portfolio loan of course, is that the bank can’t call your mortgage. That was the major change from the depression, which some people think was a major component of the depression was banks were like, well, we’ll just call these loans because we need the cash because of the run on the banks.

[00:36:14] And then of course, people didn’t have the loans, so the banks were repossessing houses. So the, the feds changed that and now make mortgages non cullable. So even if your house does go from a million dollars and now it’s worth 600,000, the bank can’t say, oh crap, can’t take away your house. We need you to pay this loan faster.

[00:36:29] Whereas in your stock portfolio that happens, just let’s just close you out. You go, sorry, your money’s gone. Best wishes, hugs and kisses. Chuck,

[00:36:37] Joe: what strikes me about this on the other side of this argument, og, the thing we can learn for private equity is they’re looking at debt in a very detailed, very structured way, and I think especially in a month where, you know, what are we gonna be talking about all January, how to get outta debt?

[00:36:52] We’re gonna be telling people, you know, why we’re gonna be telling people that, because in December, right now, they’re getting into debt

[00:36:57] OG: because it’s America.

[00:36:58] Joe: Because that’s, ’cause that’s what, that’s the American way. We, we, we get into debt November and December and then in January we’re like, oops, my bad.

[00:37:05] Every single year, January

[00:37:07] OG: through October, we work really hard to pay it off.

[00:37:09] Joe: I touched that stove again. So I love the fact that we’re being proactive about that this year. What strikes me though is that these companies are looking at debt like a chief financial officer would, where they go, how do I structure this to make it best for my life versus the average?

[00:37:27] Person out there just goes, oh, I can put this on Klarna. Like, heck yeah, I’m just, I can do three payments at 0% interest. As long as nothing ever goes wrong in my life, I have zero. Mm-hmm. That’s fantastic. Like there’s no, yeah, there’s no real structure. Like I think if we looked at our debt and thought about it just a little bit more analytically, we could do much better on how we structure our debt to really match our lifestyle.

[00:37:53] OG: Well, I mean, ultimately you don’t want any consumer debt. You can argue whether or not mortgage debt’s good or student debt is good. Consumer debt, I think universally is recognized as pretty crappy, but life is the way life is. I think it’s really interesting. You listen to some finance people on, on the radio in particular, maybe out of Nashville or someplace like that, and they’re like, oh, you’re stupid.

[00:38:15] It’s like, no, I don’t think that people wake up in the morning and go. What can I do to screw up my financial life today? Let’s see here. Oh, I know. I got a great one. I go buy food, buy a plane, and I’m gonna like charge it because, you know, I get like, life is the way, life is. You know, some people go to college and just simply don’t have the cash to pay for college, and does that mean that that person shouldn’t go to college?

[00:38:38] I, that’s debatable. I think maybe you have to pick a good major and, you know, be smart about it. Like you’re talking about, like, be smart with your debt choices, but that doesn’t also mean that you shouldn’t be aggressive in trying to conquer it the other side. And so when you look at fixing whatever is broken, whether it’s like, Hey, I got a little overextended in the holiday season.

[00:38:57] I don’t know why you wouldn’t figure out, like look at it very analytically and go, I, I, I, I got a thing right here. As a matter of fact, in the mail from Bank of America, my, you’re my favorite bank before they cancel this again. Um, that is a 0% credit card offer. And I said it there because I, I’m thinking, you know.

[00:39:17] Maybe that’ll be useful. I don’t know. I don’t know if it will be or it won’t be, but I mean, it’s reality. I have large tuition payments for my kids. I have, you know, how these things coming up in my life. Maybe it would be helpful. I’m just gonna have that safety Val. I don’t wanna say safety Val, that’s the wrong way to say it, but you know what I mean.

[00:39:34] I want that option. I don’t know that I’ll use it. I don’t know that I should. Probably not. But hey, 0%, 0%. If you have credit card debt, why wouldn’t you move it to 0% for a little while?

[00:39:43] Joe: Well, I was thinking about this the other day. If I look at that 0% offer just by itself, old Joe would’ve went, oh my God, 0%.

[00:39:52] And I would’ve had no plan and I would’ve seriously taken that card and used it to quote, do more today without thinking long term holistic Joe, which I learned that I had to be later on, right? And I had to dig myself outta that hole. When I look at my debt holistically, I. I kind of think the dude in Nashville is wrong because if I’m in a bunch of debt and I start thinking about how to structure this more logically to get outta debt, to get away from debt, so I don’t have debt, the dude in Nashville says, don’t restructure the debt because you’re not gonna take it as seriously if those payments are stolen or not gonna take it as seriously.

[00:40:29] Right. Don’t, don’t save any money any place else until you get outta debt. Except your emergency fund. Yeah. You know, go ahead and give up the match at work. I think that’s wrong. Go ahead and give up any investments. I think that’s also wrong because I think that if you look at this holistically and you’re like, how do I reconfigure this debt and I think about it more every week, you know what happened when I started thinking about my money more og, my money problems started to go away because of the fact that every single week I was thinking about my big time holistic plan, I wasn’t thinking about how do I buy more crap?

[00:41:00] I started thinking about how does my plan work? I think we actually do think about is a consolidation loan, right? Is a, uh, 0% card, right? And then how do I get rid of that 0% card before that blows up in my face? And I’m always thinking about the downsides of the debt. Well, I think I could seriously clean up my debt a health lot faster.

[00:41:21] OG: Well, a lot of people have made a lot of money in absolutes. And I think when it comes to the financial planning world around any product or tool, I think every single product or tool has a use. I will 100% tell you that I can, I can make cases for why permanent life insurance makes sense where annuities make sense where, okay, I was gonna say high cost products, that’s not true.

[00:41:48] Um, 15.25% guarantees make sense. Kidding, kidding. Don’t at me, bro. But it’s not the tool, it’s the application of the tool. And I get for the vast majority of people. Yeah, the broad brush stroke of don’t recharacterize your debt because you’re not gonna take it as seriously. Like, that can be the case. But if you’re looking at it from a purely dollars and cents standpoint, it’s like, why would I pay interest to martyr myself?

[00:42:13] Like, like I’ll show them, I’ll be more committed by paying higher interest. Like, huh? What? Wait, you sure? I’ll, I’ll show that gym, bro. I’ll just get fat on the couch. Then I’ll lose more weight because I’ll be fatter and then when I lose more weight, I’ll be better because I was fatter to start with.

[00:42:35] Doug: What, it’s better for your social media though,

[00:42:38] OG: to, to be fatter first.

[00:42:39] Doug: Yeah. It makes for a much better real

[00:42:41] OG: And then go through the cut phase. Yeah. Anyways. I, I don’t know. It seems, I think everything has a purpose in the money world. It’s just, uh, are, you know, are you using the purpose and a good use for you personally? I don’t know that the right answer is like, take all your credit card debt, put it on 0%, forget about it.

[00:42:57] ’cause like you said, Joe, it’s horrible. That just horrible idea that’ll blow up too. Like that turns into a cluster F too. Because it’s not just that, it’s just some behavior. It can’t be

[00:43:04] Joe: about the product. It’s gotta be about, yeah, what’s my strategy? And then I take all the products that are available and go, Ooh, I’m gonna do that one.

[00:43:10] I’m gonna do that one, I’m gonna do that one. This is how I’m gonna get rid of that. Move on to the next thing. Yeah. I think if you start with a product, Ooh, Klarna, I can put this on three payments. No, no, no, no, no. Horrible strategy. We’ll link to this piece if you wanna dive in more. Very interesting to just look into what the pros are doing and go, what can I learn from that?

[00:43:29] Why are these guys taking out loans they, they don’t need, they’re just restructuring their debt to make the most of it. They’re flexing their ability. And I think we can all do that no matter. No matter where we’re at. It goes back to the Napoleon Hill book, think and Grow Rich. Right? It is what you think about.

[00:43:43] Mm-hmm. Time for our last segment of the day and maybe my favorite segment. We’ve had a lot of great segments today on this circus of an episode. But man, this one I’ve been waiting for since the very beginning. It’s time when one stacker said Better. Call Saul. See. Hi and og where we take a call from you and answer your question.

[00:44:04] By the way, if you would like us to answer your question on a Wednesday episode, stack Benjamins dot com slash voicemail, and today we answer maybe the call to end all calls from stacker. Eric,

[00:44:18] caller: Hey Joe and OG Eric from Maryland here. I was in bed last night doing a little pleasure reading, if you know what I mean, and had two questions regarding estate planning.

[00:44:29] One was about revocable living trust and whether or not I need to file a tax return on behalf of the trust, and if so, what rate would that be taxed at? Second question is regards to a third party special needs trust. Right now we have one for our son. It’s not funded, but I read somewhere that one day when it is funded that the trust would need to file a tax return.

[00:44:48] If that’s the case, do we know what rate that would be at? Thanks. Appreciate you guys later.

[00:44:53] Joe: Oh my God, Eric, I appreciate you. I love how Eric’s able to set up the most nerdy question of all time, the stacker question to end all stacker questions with the best opening, pleasure reading about estate planning and trust work.

[00:45:07] Doug: I never thought of that as a search term on my favorite nighttime website, but gonna now,

[00:45:14] Joe: Ooh, estate planning. Mm, pleasure reading.

[00:45:18] OG: You guys are weird.

[00:45:18] Joe: Oh gee. How does he solve these questions?

[00:45:21] OG: I mean, is it too silly to say, what does your CPA say about all these questions? That’s kinda, no, but it Jack yes, answer.

[00:45:27] Joe: Well, kind of if you present it that way, but let’s put some velvet on that hammer. ’cause this is, oh,

[00:45:31] OG: okay. I don’t know. I don’t know. Dude, what does your CPA a say, bro? I think he thinks you

[00:45:35] Doug: are his CPA. That,

[00:45:37] OG: that, that was as velvety as I can make that. No. Okay. So trust. If the person who established the trust and who’s the beneficiary of the trust.

[00:45:46] So like if you have the Joe saw sea high revocable trust, right? Joe, you’ve done some estate planning, you have the Joe revocable trust, your wife has her trust, you guys are both still alive. You may have your assets in that trust. That is just a pass through entity at this point. Meaning I. You’re the owner, you’re the grantor, you’re the present trustee.

[00:46:05] All of that stuff is still under your social. Your trust doesn’t have a separate EI number. It just shows up on your normal tax return. There’s no filing to do. There’s no just ’cause it’s, you know, in the trust your brokerage account is owned by the Joe Salt Sea High Revocable trust. There’s no extra hoops to jump through when you pass away.

[00:46:24] What happens is that trust has to go get a EI number. It can’t use your social anymore because at that moment it becomes an irrevocable trust. Can we talk,

[00:46:33] Joe: let me give people an analogy. Oh gee, of what you’re talking about. Just because for my brain, this really helped. Yeah, setting up a trust is like setting up a company and the company is a hundred percent mine.

[00:46:45] In your analogy, it shares my ID number, but when I die, my company does not die. But now that I die, my tax ID dies with me. So at this point, now the company has to go get a new ID because I have left instructions for this company that once I die as CEO and sole, you know, a hundred percent owner of this company, now I’ve got all these instructions for what happens with the company after I die.

[00:47:12] I think for me, somehow, OG that works.

[00:47:15] OG: Yeah. And so you’ve gotta get a new EI number, a new tax ID number, however you wanna call it. Now that is an irrevocable trust, so that company can’t be changed. To use your analogy, you can’t put stuff in, you can’t take stuff out anymore. The owner and CEO of that company is kick the bucket.

[00:47:31] So it’s now just whatever, whatever the instructions say. Now the trust has to file tax returns and it’s a separate tax form. 10 41 instead of a 10 40. And trusts have their own tax rates, and there’s a trust tax rate table that you can look up. The important thing to know with trust tax rates is that the top tax rate for an individual or for married filing joint or whatever is whatever the number is, 600 and some odd thousand dollars or 700,000.

[00:47:56] Like all of those tax rates are compressed in trust to such that the top tax rate for a trust is around 11,000. So you get to that top tax rate. If you have a brokerage account that has a million dollars in it and you earn $20,000 of dividends, you’re in the top tax rate. So usually in your trust and through your estate planning, the trust will stipulate that those pieces of income are to be distributed to the trust beneficiaries throughout the year, thus making the trust income taxed at.

[00:48:28] Ordinary person rates, not trust tax rates. So this is definitely something that you wanna have a CPA tax attorney, estate planning attorney work on. If you’re, you know, if you’re dealing with a trust of somebody who has passed away, it, it becomes a little bit of a, of a what to do toward the end of the year as you’re trying to make sure all that income is distributed.

[00:48:49] ’cause if you leave income in the trust, then it’s gonna be taxed at a, at a profoundly higher rate than it would be individually. So you wanna have a professional with that. And same thing with your special needs trust. Same deal you put money in and then once you’ve passed away and the stipulations of the trust start to kick in, now that’s gonna have some protections around it to help with the tax rates.

[00:49:09] You know, it’s gonna say, well we gotta distribute the income to the beneficiaries and so on and so forth. Probably, but not anything that you want to DIY at that point. Yeah, while you’re living. You have your estate plan done. Your beneficiaries are your trust, your, maybe your brokerage account is owned by your trust to keep it easy.

[00:49:26] You know, all that sort of stuff. That’s all well and good. No extra hoops to jump through once you’ve passed away. Once that trust becomes irrevocable, now you need to get some other people involved, at least initially, to kind of figure out what the process looks like for first couple years.

[00:49:39] Joe: I love having Steve Kerber here today because he’s our insurance policy, so that we don’t have to use our homeowner’s insurance.

[00:49:45] Hopefully on a lithium battery incident or, or some. Every year he gives us this, these great plans for fire safety. I think in this case, especially when you’re dealing with the special needs stuff. This is where having the estate attorney, can you find a YouTube video that’ll go, no, dude, you can do this on your own.

[00:50:04] Yes, you will. You will see these all over the place.

[00:50:07] bit: Yeah. Yeah.

[00:50:07] Joe: I would have the insurance policy, I would have the Steve Kerber on this whole thing where I, I’m just paying my insurance. My insurance proceed is that estate attorney, and that’s the way I think about this. I know it’s done. I know it’s done right.

[00:50:22] Not by some bro, YouTube dude who’s, uh, well, I mean,

[00:50:25] OG: think of it this way. If you have $20,000 of income in your brokerage account as an individual, you’re a normal 15% tax bracket type of guy or gal. You get $20,000 of dividends. Your tax bill is how much? $3,000.

[00:50:41] Steve: Yeah.

[00:50:42] OG: Give or take. Right? If you have that same $20,000 in a trust, your tax rate could be 40%, $8,000.

[00:50:53] Isn’t it worth potentially a few hundred bucks or a thousand bucks or 2000 bucks to an attorney or CPA to go, how do I make this so that the government doesn’t get all eight grand of this and that you and I split this? You know, it’s like, even, even if it’s the same number, I would rather go to a business owner in my community than than freaking IRS am.

[00:51:11] I can avoid it. Right. You know, I’m simplifying it a little bit, but at the end of the day, you’re right, it’s at least initially you wanna have some third party here to, to kind of guide you through the process.

[00:51:22] Joe: Did you see the story a couple weeks ago about the, uh, mysterious $7 billion estate tax payment somebody made?

[00:51:28] OG: Uh, you guys

[00:51:29] Joe: didn’t see that?

[00:51:30] OG: No. I don’t remember getting any of that. So it didn’t really

[00:51:35] Joe: just, there was this, uh, little line item about money coming into the treasury that was a $7 billion payment on estate taxes that somebody made. Which they said before that I think the biggest one had been a billion.

[00:51:50] And then I remember the person that wrote this story goes, but somebody paid a billion dollars in estate taxes. How much money do you have to have to file a to have a $7 billion estate tax? Just incredible. Well,

[00:52:01] OG: it depends on your estate planning, right? I mean, the tax rates are 50% and gets to 50% pretty quickly.

[00:52:08] Right? So if you have no estate planning, it could be as little as having a $14 billion estate as little as and you owe half of it to the G.

[00:52:15] Joe: Yeah, they, they estimate in a few places that I read that this person’s estate was probably somewhere 21, 20 $2 billion. So it

[00:52:22] Doug: kind of narrows it down as to who that could be.

[00:52:24] Joe: It, it kind, it kind of does. They actually have dug some suspects. It could be

[00:52:29] OG: gift tax that have to be on the same line. You know, if somebody gave a bunch of money away and they just paid the taxes in advance, basically that could be that. Um,

[00:52:36] Joe: that’s actually the theory here is that the person is still alive.

[00:52:40] OG: I, I prefer the phrase death tax. Estate tax just sounds like, uh, well, gees, uh, we must pay our estate tax. Uh, thus we must, you know, it just sounds like it’s for rich people, but if you say death tax, everybody’s like, whoa. It affects everybody. Taxes when I’m dead.

[00:52:55] Joe: Get your plan together. Thanks again, Eric, for, uh, detailing for us what, uh, your, your late night pleasure reading involves bedtime

[00:53:03] OG: reading.

[00:53:05] Joe: That’s, uh, that’s what stackers do. We read finance books and estate planning books for fun. Everybody’s like, oh, what are you reading? Oh, I’m reading a romance novel. Well, what are you reading? Oh, I’m reading, uh, Vicki Robin. I need cooler friends. That’s, you mean more money nerds? Yeah. You need to be more people like Eric.

[00:53:22] Yeah. You’re not worthy. Doug Stacking Benjamins dot com slash voicemail. If you’d like to tell your story, ask your question to og I. Hey, uh, here at the end of the show, just a couple things. I announced on Monday that we have opened up the book club for enrollment. This is gonna start at the end of January.

[00:53:40] A very small group of people. This is not for everybody, but if you want to walk through in 10 sessions with me, all the lessons of Stacked, which are a complete financial plan, I’m doing that beginning at the end of January. Spaces are gonna fill up quickly, stacky Benjamins dot com slash bookclub for more on that.

[00:53:57] Also, I will be at Retire Meet in early February. So I know, uh, from Tom and Don over at tucking Real Money who put on this wonderful conference. Our friend Paul Merriman will be there, man. I look at the list also. Uh, the closing keynote speaker is Apollo Lipsky from Dimensional Funds, who’s been on this show.

[00:54:15] And it’s just an amazing resource. Apollo will be there. We’ve got a great lineup. I’ll be talking about what the happiest retirees know about statistics around being happy in your retirement and what to do to get there. So, uh, it’ll be retire meet.com. And then Tom mentioned to me that if you put the word Stacking in the promo box, you’ll get a substantial discount on tickets to retirement.

[00:54:38] So first weekend in February. If you’re in Seattle, come on out if you’re not here to hang out with me in Seattle. But you really need a more comprehensive financial plan. And like we told Eric, getting the right pros in your corner and making sure your plan dovetails, OG and his team are taking clients in 2025.

[00:54:55] So to get on his calendar so that, uh, you can start off 2025 with that meeting, Stacking Benjamins dot com slash OG is the way to get there. That, by the way, wraps up what’s going on here. Uh, lots of stuff in the basement right now to close out the year. We got an exciting last week of the year coming up, og.

[00:55:16] We decided they’re gonna be our favorite episodes from even numbered years during the holiday week between, uh, Christmas and New Year. So, okay. Five episodes the last week doing 2024. 2022. 2020. Oddly specific. It’s gonna be fun. We, you know, the year before we went with our favorite ones from that year, the year before, were from.

[00:55:39] Like funny, quirky episodes. We try to do a different theme every year. This year it’s even numbered, which sets up maybe next year. Best of Doug. Best of Doug, duh. Speaking of best of Doug, Doug, what are the best three things Doug’s got from this episode? I.

[00:55:54] Doug: That was pretty smooth actually. I’m kind of impressed with that one.

[00:55:57] That was good. Here’s what we should have learned today, Joe. First, take some advice from our headline. Worried About Your Debt. Try this. Imagine there’s a box. No, not one of those 32 Amazon boxes, the little cheap cardboard ones you got in your basement. No, like the big wooden crate like at the end of Indiana Jones.

[00:56:16] The arc of the covenant, like the big sturdy box. Now think outside of it out, outside of did it work? If not, then just get more flexible with your financial picture. Solutions often appear when you explore outside the box. Second estate planning and sexy time. You are talking my language, Eric, but the big lesson.

[00:56:46] Don’t tell Joe’s mom, it’s Ferdinand Porsha’s birthday. She’ll go on and on and on about how he wasn’t nearly as good looking as his profile picture was on Tinder. Wait, ma, I think you might be getting catfished.

[00:57:04] This show is the property of SB podcasts LLC, copyright 2024, and is created by Joe Saul Cihi. Joe gets 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.

[00:57:25] 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.

[00:58:41] bit: Okay,

[00:58:42] Joe: dude, on Monday you were telling us that you, uh, might have all the wine in the world, like you might have just. A bunch of wine, which by the way, I have one wine subscription that I do and I’ve thought about canceling it, but I don’t, I don’t drink white wine that much. And in Woodinville, speaking of Seattle, there’s a great, Woodinville is this town, by the way, where when you go to Seattle, if you like wine, all of the Washington wineries are in the east part of the state, way out in the middle of nowhere.

[00:59:15] And so they, Woodinville is like 42 tasting rooms for all the different wineries and it just is super fun. So there’s a little winery there called Gorman, which makes a great chardonnay and about 12 bottles of Chardonnay a year to take to parties or whatever. Mm-hmm. Is about it. For us, the bad news is living in Texas, they don’t send my summer shipment.

[00:59:36] In the summer. They send my winter shipment. Maybe the first week of November. And then they send my summer shipment late, like the first week of November. And then they send my winter shipment the first week of December. So right now I’ve got, you’re loaded up. I’ve got still like 10 of the 12, uh, left. But you know what, last year I go through those ’cause we just take ’em to parties and it, it’s a great white wine, uh, Gorman, wineries wines, but, oh gee, you, you can beat that.

[01:00:06] OG: Well, I don’t know that it’s a competition, but, um, we have purchased the same pinot every year from the same winery for many years. Oregon, and as you, what’s that?

[01:00:17] Joe: Oregon, is it in Oregon? Pinot?

[01:00:19] OG: No, it’s called sea smoke and it’s in, um, it’s in California. So as you purchase more, they give you an allotment for more.

[01:00:29] Right? So like if you, the first time that you subscribe, they say, well, you can get, I. Three bottles and you’re like, oh, awesome, I’ll take three. And they’re like, now you can have five. And you’re like, I’ll take five. And so we’re at the point now where I think we’ve maxed it out. I don’t know the number, but 11.

[01:00:44] It’s like, would you like magnums? Would you like, like what? Here’s all these specialty boxes that come, but the, and you know this, and people who, who order wine now, it’s like, you, it’s a great business. They freaking charge you in March, you know? And they go, yeah, it’ll come sometime in November. Yeah.

[01:01:04] You’re, you’re like, so I pay in November? They’re like, no, no, no, no, no. You pay today and then we will ship it to you when we feel like it. Sometime later, perhaps if you’re lucky. So over Thanksgiving we drank a bottle of wine that we had a nice cab and, and I was thinking to myself, I was like, golly, the wine fridge is pretty.

[01:01:23] Pretty low. ’cause that’s where we keep our pinots. And, and I was like, it’s kind of, it’s kind of, there must be some boxes in the closet. So I go in the closet and there’s a bunch of Chardonnay, which we don’t drink a lot of white wine like you. And, and so I’m like, where the heck is all this? You know, did we really burn through 40 bottles of Pinot this year?

[01:01:41] It’s a pretty good clip. And then I thought to myself, wait a second, there might be a program for that. Don’t we usually get wine at this time of year? Like, where’s my shipment of new stuff? It’s always here in November. And so I start digging and I’m like, well, maybe this year. ’cause at the beginning of the year last, uh, in, in 24, I was like, you know, what’d be more intentional about spending?

[01:02:01] We have enough wine. We don’t need to, like, every time they send you shake, you don’t need to. Like, yeah. And so I was like, I probably just didn’t order anything this year. And I look at my, no, I did certain, most certainly did, according to American Express, and I’ve got the confirmations. They never shipped it.

[01:02:16] So I call the shipping company ’cause it’s, you know, delivers via vine vault and I call the shipping company. I’m like, what’s going on? They’re like, yeah, we don’t have a, we’re done for this season, man. We’re, we’re good. We, we, we do all our stuff in October, November, it’s December. And I’m like, yeah, I know.

[01:02:32] Where’s my stuff? So I call the winery and they’re like, uh, yeah, we shipped it to them. Like, what, what’d they say? And I’m like, yeah, we’re not playing this game. Y’all figure it out. Anyways, just the other day I got a, a nice little mea culpa from Vine Vault that said, uh, how’s, uh, how’s Thursday for your delivery?

[01:02:51] We have it as a matter of fact. Uh, we would like to deliver it on Thursday. It just came in, uh, surprising and, uh, yeah, right. Um, right after you could play, just arrived. It’s been here not the whole time. And uh, what do you think about Thursday? So we have I think 39 bottles of show how many what. I think it’s 39.

[01:03:12] Doug: Oh, geez. Oh, party at OGs house. You’re that company’s sole benefactor now.

[01:03:17] OG: It feels like it sometimes, but you know, and Joe, you know this, it’s actually a discount. I can’t even say with a straight face, it’s, it’s better to buy direct. Right? It’s if you buy

[01:03:28] Joe: 39. If you buy 36, you get the last three free.

[01:03:31] OG: Yeah, the three, the last three are included.

[01:03:34] But if you, yeah. Have you been to a restaurant where you’ve like seen the wine prices of wine that you own at your house? Yes.

[01:03:40] Joe: And you’re like, give me a break. You’re like.

[01:03:43] OG: I can get that at Costco for $12. Yeah. And it’s 65, or I get this bottle of wine for 50 bucks in my delivery and they’re selling it for one 90 or something.

[01:03:53] Wow. It’s like, it’s a way better deal to buy it, you know? And even retail, you know, you’re saving 20% on retail. So I, I think we’re actually saving money, so I’ll die on that hill. I, I think they call that boy math or something. I’m not sure. Drunk math.

[01:04:09] Joe: That might be. Well I got another way to celebrate the holidays, which I want to get to before we get too much further.

[01:04:15] ’cause I know, like me, a lot of people like watching holiday themed movies. You guys like holiday theme movies like Christmas Story or Holiday Inn or White Christmas Elf. I feel like I watch White Christmas every year. Mm.

[01:04:27] OG: I haven’t seen any of those movies in the last 25 years. Oh,

[01:04:30] Joe: so fun Or

[01:04:31] Doug: Elf unlike those.

[01:04:33] OG: Okay. Elf, I’ll take and National Lampoons. Christmas. Christmas Vacation, vacation.

[01:04:37] Joe: You don’t like Hallmark movies, Doug? No, it’s all the same movie. Oh. But I love it. I could watch that movie over and over and over.

[01:04:43] OG: You do. Wouldn’t you watch the Hallmark Channel? Yeah. It’s like literally the same movie you totally do.

[01:04:47] Doug: Sometimes it’s in Scotland, sometimes it’s in Georgia. Otherwise it’s the same movie.

[01:04:51] Joe: Maybe I’m channeling, you know, my dad, the last several years that’s, he got into it and maybe this year I’m just celebrating that ’cause I’m all about it this year. But, uh, so there’s a little bit of nostalgia there. But we did see a couple movies in the theater that were vastly different from each other.

[01:05:06] The first one we saw, oh gee, this movie, you’re gonna freaking love Doug. I think you’ll love it too. But this is specifically, I’m always looking for the movie that. OG will actually go see Red one. This movie OG Will like his red one. Red one is the most amazing Christmas movie. It is. It got bad reviews, didn’t it?

[01:05:26] Well, hold on. It is. It’s Dwayne Johnson and Chris Evans. Mm-hmm. And they have to save Christmas because Santa’s been abducted and now they gotta go get ’em back. I will give you all the information you need to know about this movie. And by the way, Santa Claus paid by JK Simmons, just incredible. And there’s a few other actors that you’ve seen before in this movie, but just to keep it brief, when you look at the audience score and you look at the critic score, this’ll tell you everything you need to know.

[01:05:55] The last time I looked, critics gave this movie like a 36%. To your point, Doug Audiences give it a 98. That’s all you need to know. Yeah, this was the most stupid movie. It was wonderful. It was everything about, of course, it’s St. Santa Claus being abducted. Critics. What do you want? Like, this is dumb. It was so, so, so fun.

[01:06:18] I absolutely love red wine. Yeah, we’ll put it on the list. Stuff blows up. It’s Christmas action movie. Fantastic. And then the other movie, vastly different called, uh, the Best Christmas Pageant Ever. I saw this movie yesterday. This movie has the feeling of the Christmas story, and it actually is about the Christmas story.

[01:06:38] It is about this town that does a Christmas pageant every single year at their church. And it’s always the same boring Christmas pageant. And there’s this family in town that is a bunch of, uh, bullies and all the kids. They scare the heck out of all the kids and for various reasons, they become the main actors in the Christmas pageant.

[01:06:59] It’s called the Best Christmas Pageant ever. And it’s such a heartwarming movie. I love both of these movies, but they’re vastly, vastly different movies, I’d say of the two. If you’re gonna go see one, the best Christmas pageant ever, if you’re into those type of movies, the better movie.

[01:07:14] OG: Did you ever see Fat Man with Mel Gibson as Santa Claus from a couple years ago?

[01:07:19] It was pretty direct to. Probably not even Netflix. I remember that you saw this

[01:07:24] Joe: movie and, and said you really liked it. Tuby,

[01:07:28] OG: it was like it was direct to whatever channels on 1065, free, whatever. You know that, that’s another one of those like rifts on Santa Claus. But you know, it’s Mel Gibson and he has like machine guns and it’s pretty funny.

[01:07:43] Oh, that’s great. It’s one of the, it’s one of the, uh, probably not as, uh, uh, family friendly as red. One appears to be, uh, red one seems to be a pg, PG 13 red one. Fat Man is red. R

[01:07:55] Joe: they say twice during the movie. No, but here’s the thing,

[01:08:00] OG: Irma, gerd,

[01:08:01] Joe: here’s the thing, og it is such a family friendly movie. I’m, don’t, don’t get me wrong, there’s a bunch of violence, right.

[01:08:06] But yeah, but it is so, it’s so. I was actually, that word doesn’t bother me, but it still, I was like, why’d they put that in the script? They didn’t need that word in the script, like right there. If they would’ve taken that out, I would’ve liked it even more. Like a lot of the times, you know, put it where it belongs and the word is fine, whatever the word is, it fits.

[01:08:26] In this case, there were two instances where they said it and I went, why’d they say that? That was stupid. They didn’t need that in there.

[01:08:31] OG: It’s like they’re trying to get the PG 13 rating.

[01:08:33] Joe: Yeah. Something. I don’t know what happened there. Yeah. But yeah. Red one. Best Christmas pageant ever. Big thumbs up.

[01:08:39] Okay,

[01:08:40] OG: check ’em

[01:08:41] Joe: out.

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