00:13
Peter Dunn
Good day. Good day. Good day, everyone. It's a special Thursday edition of the Pete the Planner show. Why, you ask? I have something better to do tomorrow at the normal time. Joining me, as always, I used to say as often, but I mean, it's sort of what you do now is Damian Dunn, everybody. Damian Dunn.
00:29
Damian Dunn
Is that two weeks in a row that you've hit the intro?
00:32
Peter Dunn
I believe it is. Last week, though, I was dancing visually on the screen because I forgot to put the graphics up. But you know what I was thinking about in the shower? I was thinking about you today when I was just really soaping myself up and I thought about this concept of the next words. Never mind. Never mind. I don't know if I can continue.
01:03
Damian Dunn
Okay, great. Way to open. We're one for two. We got the intro. Then our host broke up over a joke that nobody will ever hear.
01:14
Peter Dunn
I'm might get it out, so it wasn't even a joke, but it would have been quite unsavory. Let's go the reverse way around it here. Dame, how many hours of radio do you feel like you've done now in your life? You do this once a week for an hour. I mean, you've done some other stuff. What do you think?
01:34
Damian Dunn
Once a week for an hour? I've probably been doing this for two years, roughly. Now, consistently. Maybe it would be my guess, and maybe a couple of the other odds and ends. 120 ish okay.
01:50
Peter Dunn
Yeah. So I've been doing it for twelve years. Right. And at one point in time, the show was 2 hours long. What? Yeah. My guess is that I'm close to 1200 to 1500 hours. And the reason is because I started thinking of the concept of mastery of 10,000 hours is what is said to master something. And I was thinking about it because Dame is not going to have anywhere close to 10,000 hours. He's gotten pretty darn good at this. I'm nowhere near 10,000 hours and I need every bit of those 10,000 hours.
02:27
Damian Dunn
But if you look at all the other stuff that you do that kind of fits into this spot. Yeah. Other podcasts that you appear on and shows and newscasts and all that other stuff. I bet you're really close to 1300 hours.
02:45
Peter Dunn
I bet I'm close to 10,000 hours. Total of everything. Anyway, no one cares. I understand. I picked up on it and dismissed it. That was a quick response and helpful thank you. Actually, I just read feedback that came through for one of our financial concierge team members. They says quick response and helpful thank you. I just said that to you. Dame, here's what's on the show this week. We got three really good questions and we're on a deadline because it's a busy day. So, Dame, let's start the show. Let me put up a little banner here so people know I love the podcast. People love the visuals. Okay, there it is. All right, let me get ready here, everybody, because I know you care. Let's get the time set up.
03:31
Damian Dunn
Hold on, I got to get my clock here.
03:33
Peter Dunn
All right, the behind the scenes no one likes to know how the sausage is made.
03:38
Damian Dunn
Ready where you are.
03:39
Peter Dunn
All right, in three, two, one. This week on The Pete the Planner Show, we answer your money questions. Here's how the show works. You email us, askpete@petetheplanner.com that's, askpete@petetheplanner.com, and we'll answer your question sometimes. Joining me often. And now Damian Dunn. Hello, Dame. Hello.
04:01
Damian Dunn
Pete.
04:02
Peter Dunn
Vice president of advice at your Money line and Hey, Money. So, Dame, let's get right to it. We have three questions this week. I will let you choose which one we answer. In which segment. We've got a 529 question, we've got an income question, and we have got a non qualified investment account question. Which one do you want first?
04:23
Damian Dunn
Let's go with the 529, Pete.
04:25
Peter Dunn
Dear Pete, my wife and I have one child who is ten. Yo. We've used a 529 account to set money aside for her future college expense since shortly after she was born and with the help of the markets, as well as a generous gift from my wife's parents, have saved around $75,000. We'll continue to contribute $5,000 per year for the next eight years and anticipate having a nice sum of money when it's time to ship her off to school. In fact, I think it's possible that we save so much money that we have money left over in her account. If my daughter is awarded any scholarships, that will definitely be the case. My question is, does it make sense to save money for college in an account other than the 529 that is from Monica? Dame, let's get the dirties out of the way here real quick.
05:20
Peter Dunn
I'm a paid endorser for the Indiana College Choice 529 plan. So anything that I say right now is not because I'm a paid endorser, but it is important that you know I am a paid endorser. That being said yeah, Dame, there are circumstances in which you should stop using a 529 and use something else. How's that for a paid endorsement? I might lose my gig.
05:38
Damian Dunn
Yeah, I don't think you're in any real risk of that. We don't even know where Monica lives, for example, so it could be a different state altogether. But, yeah, you're exactly right. Monica brings up a really good question. It's one that most people probably don't think about because they're not going to be in a similar position. However, if you do find yourself in a similar situation, you might want to start thinking about putting money elsewhere for a couple of reasons. One, if money is left over in a 529, you've got a couple of options, and some of them are really good. You could potentially leave that money there and redesignate a beneficiary down the road to a grandchild or maybe even yourself. If you go back for schooling later on in life, that's a fine thing. You could also take the money out, and this is where it starts getting a little tricky because you'll have some taxes and a little bit of penalty on the growth of the contributions.
06:30
Damian Dunn
The contributions will come out tax free, but the growth will have some penalties attached to it as well as taxes. So that might not be very tasteful, but you can still get your hands on the money if you absolutely need to. So you've got some choices there. The other thing that comes along with that, though, in certain states, if they give you a tax credit as well, they may claw back that tax credit if you take money out of a 529 account. So you might have some other settling up to do with the state that you live in. So if you find yourself in a position where you think you're going to have excess in a 529 account, if you're not comfortable leaving that money in there for other educational purposes, for the original beneficiary, you might want to start looking towards other accounts, whether that's a non qualified account.
07:21
Damian Dunn
Some people really like to use Roth accounts for this sort of thing as well, but you'll know what? Your taxation is going to be in those accounts as well going forward. So it's an individual consideration and decision, I think, Pete, but it is one to roll around in your head a little bit.
07:40
Peter Dunn
My theory is that if you have two children, then there's nothing wrong with overfunding the first one, because then you can always transfer the money to the second one and there's just no real financial ramifications, negative financial ramifications to that. But it sounds like just by the way, Monica wrote this email, that the fact that she called and said they had one child, that does change the complexity of it. It does force you to make some decisions. I don't know, man. I'd have to say, if they're eligible for Roth, given their income and whatever they got going on, then a Roth might be a good pivot at some point in time. But I don't know what that point in time is. I mean, $75,000 now, they're eight more years. Even if they don't contribute another dime, that could very easily be $150,000 if it were to double in the next eight years or so, roth might be appropriate now.
08:37
Damian Dunn
Sure, there are a few things that we really don't have any idea about here. We don't know about the income or the ability to cash flow, some potential expenses down the road. We don't even know what schooling options are going to be reasonably available to her. Maybe their daughter wants to go off to a very expensive private school. And 100 grand at that point, or 150 grand is going to cover maybe two years of the education. At that point, they're going to be scratching their heads trying to figure out where they're going to come up with the rest of the cash. So just because they've done a very nice job up to this point accumulating money for that particular expense, it doesn't mean everything's all clear if they maintain that $5,000 going forward. So I think that'll become a little bit clearer in the next few years as they determine what the future looks like for their daughter.
09:30
Damian Dunn
But at this point, I wouldn't concern yourself with trying to deviate from a 529 savings plan at this point.
09:37
Peter Dunn
I will say my daughter is twelve, and by ten we knew that she has interests, more expensive tastes in more expensive schools, whereas our son, who's three years younger, I assume he'll go to a less expensive place because he just simply doesn't care about those sorts of things. Well, we are saving more for my daughter because she is older. But I think that's the way it's actually going to sort out is that we're going to need as much money as possible saved for her because of where she's going, especially if she doesn't get merit based aid, whereas our son will just naturally be less expensive.
10:17
Damian Dunn
It's going to be a very individual and personalized decision for your kids as you go. And if you have the ability to cash flow college as the needs arise, that's fantastic. Obviously, if you can put some money away ahead of time and let the markets help you out with that fantastic as well. And the other thing that we've kind of glossed over here is that even though they've done a great job with the saving up to this point, we're not entirely sure how that money is invested. If it's an age based portfolio, those get very conservative very quickly. So even if the markets do well, the returns may be half or three quarters of what the market returns pretty reasonably, so it may not grow quite as fast as we initially anticipated.
11:06
Peter Dunn
I have to admit, when I learned something on this show, which is more often than I care to admit, I didn't realize that a tax credit gets clawed back if you use the money for non educational expenses. Which makes sense. I guess I'm going to have to study what those provisions are.
11:23
Damian Dunn
Not every state has that. Pretty confident that the great state of Indiana does, although I could be corrected at any moment. But I'm pretty sure Indiana does claw back the tax credit if money is used for a non qualified purpose.
11:38
Peter Dunn
What's interesting about that is let's say you've got 15 years of state tax credits. That's $15,000. I wonder if they FIFO or LIFO that thing back out. Your Mrs. Dunn would likely know that because she tends to know everything about everything in a good way, right?
11:56
Damian Dunn
Yes.
11:58
Peter Dunn
What are you going to disagree with that? So dame a great question, Monica. Thanks for asking. Dame says, continue the course on the 529 likely. I say maybe sprinkle in some Roth. It doesn't always have to be 100% of something and 0% of the other. You can get half the tax credit and put $2,500 a year if you happen to be in the state of Indiana. And then put the other 2500 in a Roth if you qualify, which just happens to be a more flexible vehicle. Anyway, the key for all of this is very simple. Not only do you want to try to avoid some semblance of student loans for your daughter, but more importantly, you must absolutely refuse to take on student loans yourself in the form of Parent Plus loans. To me, that is the essence of intelligent college planning in the 21st century, is avoiding Parent Plus loans.
12:50
Peter Dunn
And with that, Dame, we take a break. Coming up after the break oh, someone's got good problems. Big income bump. What do I do? Must be nice. I've never asked that question myself. That's all. Next on the Pete the Planner Show. I'm Pete the planner. Pretty good run.
13:07
Damian Dunn
Yeah.
13:07
Peter Dunn
Gosh, it felt real. Maybe. I have mastered 10,000 hours right there. Chris asks, how did the bank appointment go last week with your daughter? Love that you had her do all the talking, Chris. Thanks for asking, Dame. I did not have a good banking week with my kids this past week. Although I will say my experience my daughter had was fine. It just didn't go the way we thought. She had to get an account because she's not 13, she's twelve, which means I basically have to cordon off a portion of my account and assign it to her. And if I want to deposit she wants to deposit money, she puts it in my account, then I put it in hers. And then I can control how she does things via an app, which is great and all, but I don't want to do that. I want her to have her own debit card and make her own deposits, but she can't do that until she's 13, so that's just me complaining.
14:01
Peter Dunn
But on the other hand, do you want old gripey mad guy?
14:05
Damian Dunn
Yeah.
14:06
Peter Dunn
I can't name brands because you know how my son has a bank account at a different bank and years ago we set up just a savings account for him. It might even be an Atma or something, I don't even remember. Right. Just a savings account for him. He was nothing years old. I think there were $600 in there. I never opened statements because why would I? It's just there. I don't care. I opened it this week. There's $250 in there. Do you want to guess why, Dame?
14:37
Damian Dunn
I'm going to guess. Inactivity fees.
14:39
Peter Dunn
They're charging my nine year old son $5 a month for inactivity fees. So this happened to my daughter at a different bank years ago and I went in I was like, what is going on? They're like, oh, sorry about that. That happens sometimes. And they credit all the money back. My gut tells me this other bank not going to do that and you're going to have one angry bald man.
15:00
Damian Dunn
Oh, man. Sorry, Ted.
15:06
Peter Dunn
I never use the bully pulpit. I'm not going to say the name of the bank and shame them for lots of reasons. There's no however to this. It's not like a however was coming, but I am very upset about it.
15:17
Damian Dunn
So I think the bigger question to be answered here is, are mom and dad going to step in and make them whole, or are you going to use this as a learning experience?
15:28
Peter Dunn
Next segment in three, two actually, you know what I'm going to do? I've not told Mrs Planner this, and she's not like she's watching, so she won't find out. I'm going to take him with me when I go in, and when the person explains it to me, he'll go, what? And I'll be like, Ted, the bank's taking your money because they wanted you to deposit money based on the job you have. And then just like, make well here. Can you explain it to them?
15:56
Damian Dunn
Exactly? It's what I would hope you would do.
15:59
Peter Dunn
Oh, passive aggressiveness. In three, two, one. Back on the Pizza Planner show, Dame, sometimes we get a question that to a lot of people, does not seem like a problem. And then they hear the question, they're like, do I care about this? Here's what I hope you understand is when someone is a better position than you financially, and you hear about them on our show, to get over the fact that they're in a better spot than you, get over the fact that is not your current problem, and try to learn from the underlying issue. And you would I don't know, Dame, you wouldn't be amazed, but most people would be amazed to know how many people shut off their ears instantly. You don't say their level of income or their level of savings, because then everything else, for some reason, doesn't make sense. And, Dame, even though there are absolutely no numbers and the question I'm about to read to you, the email that we received, people are going to feel that way.
16:56
Peter Dunn
Are you ready?
16:57
Damian Dunn
Yes.
16:57
Peter Dunn
Boy how about that for a run up? Dear Pete, my husband and I stand to make significantly more money in the near future as our incomes are both increasing. Click. We intend to keep an eye on our expenses and make sure we don't experience a drastic amount of lifestyle creep. But there are some things we've been working towards that we'd like to reward ourselves with. In the short term, they'd all be one time expenses versus recurring, and I'm not sure if that counts as lifestyle creep. Do we get your blessing to go ahead if you say no? Can we get a second opinion from Dame. Love the show. Audrey all right. So Dame, why don't you go first?
17:41
Damian Dunn
I think this is a really interesting concept because on the face of it, you think one time expense, it's really not going to show up month after month until it does, right? Because I think that the challenge here. And what I would be really concerned with is that you've been working towards a new car. You've been diligently saving for a new car, whether it's new or used, I don't care. A different car, I guess, is what we should say. And you decide, you know what, we're going to treat ourselves and we're going to spend instead of a Buick, we're going to get a Cadillac this time around. Well, does everybody get a Cadillac from here on out? Is this just a new standard, even though this was a one time purchase? Because I'm going to tell you, maybe your thing is a trip, and instead of going to Hilton Head, you go to Hawaii.
18:36
Damian Dunn
Well, do all the trips have to be Hawaii or the islands from now on, even though it was just a one time? Because I think this is the trap that people could really easily fall into. They see them as one time expenses, but if they're only one time expenses each and every year, you experience lifestyle creep in a whole different way. So do they count as lifestyle creep? Maybe not, but maybe so. Am I off base, or do you feel similar?
19:05
Peter Dunn
I 100% agree. I call this the wine problem. Like, once you actually have a good bottle of wine, it ruins what you were used to. Right. I remember specifically, this is a weird story. I was judging a young chef's contest at a culinary school several years ago, and I liked wine a lot. And it just so happens there was a ridiculous bottle of wine there that they were letting the judges have. And it was something that I never even aspired to drink. But I tried it, and man, did it ruin all wine for me thereafter in terms of expense. And I think you're right. If Hilton Head was once the thing and now Hilton Head is no longer, or even that, dame go to Hilton Head, but you stay in a much nicer place, and then you don't want to go back to the lesser place.
19:56
Peter Dunn
Right. Total big issue there, I think, too. If you're having that much of an income increase, isn't that the ultimate get out of jail free card? To fully examine all of your current financial shortcomings, serve those first, and then responsibly irresponsibly, blow the rest, because it doesn't matter because you've just healed all of your discretions.
20:23
Damian Dunn
If you didn't have financial goals before this, you darn well better have them now, because you will blow through that money faster than you can imagine. If you're not hitting these goals or striving to hit these goals as you go on a month to month basis. If you were saving a couple of $1,000 between 401 KS and dedicated savings to a general saving account and all that good stuff, and you get this income bump, okay, splurge on a couple of things, that's okay. But you've got to increase those goals as you go, because if you don't, it's inevitable you will start to spend more money. If you are anything like the average person, me included, money sitting in an account that doesn't have a job is money that's asking to be spent on something that's pointless is not going to get me towards my goals.
21:13
Peter Dunn
By the way, I said discretions. I mean indiscretions. But I would also like to note this isn't terribly different than when someone gets an inheritance or a big lump sum or a windfall where it's like, well, we did want that boat. Grandpa would want us to grandpa would want us to have this boat. No, Grandpa wants to be alive. So you don't justify the purchase that way. Dame it's interesting, right? Because it really is about that standard of living increasing unknowingly, because you just and this sounds gross, and no one ever some people actually put it in this term. We deserve it. Why wouldn't we? We have the money to do it, so we're going to do it. And I don't want to make anyone feel bad about that, but that's why I said this is the ultimate get out of jail free card. If you have two incomes increasing, go to your financial advisor and say, this is the lifestyle we want at retirement.
22:08
Peter Dunn
Tell me if we're on track. If we are not on track, let's get on track and then blow the rest to some degree. If I'm being 100% transparent with you and it's not that hard because I'm very fair skinned, I tend to fund all of my goals immediately, and then I will blow money on whatever I want, and I don't feel bad about it because we refuse to go into debt and we've already funded our goals. So what's it really matter? It's the lazy man's budget, and it's how I roll.
22:34
Damian Dunn
That's a really interesting point that you just made is that if your lifestyle increases, you start spending more money on a month to month basis. All of a sudden, your savings has to increase, too. That path that you may have been on to hit that retirement number perfectly for the goal that you had is no longer the number that you need to save now because you've just increased your lifestyle. So if you're going to make a permanent change to your lifestyle, you need to make a permanent change to your savings rate going forward as well. And if you need help figuring that out, by all means, talk to a financial advisor. Call hey money, whoever do some math. I'm sure there's a bajillion calculators on Google or Bing. Take your pick and you can figure this out, but there are consequences to somewhat, maybe seemingly insignificant decisions.
23:23
Peter Dunn
You know what one of my pet peeves are when it comes to this arena, and I'm about to alienate a tremendous number of listeners. A tremendous number of listeners is when something like this happens, or it doesn't happen, for that matter. And then there's a couple and they both get Fun money accounts. They both is like, well, it's my allowance. It's my fun money. We each have an allowance of fun money. You can discretion. You can do what you want with. I get 500, she gets 500, do whatever you want. And that seems really healthy and it seems really responsible. And by the way, arguably it is healthy and responsible, but it just annoys me, and I can't tell you why. I usually don't like to tell people things that annoy me with no reason why, but I just don't know why. It just drives me nuts.
24:09
Damian Dunn
It's really interesting because you've kind of just described exactly what you do, assuming those people hit all their goals ahead of time. Exactly what you're saying is you go and spend money, but what you left out was letting Mrs. Planner go and spend money. So I think maybe that's where the problem was.
24:28
Peter Dunn
Yeah, let me think about that. I think we both have the attitude, but I guess it's just we don't have a certain amount we set aside, and we also have separate accounts because we just split my income into two and we pay bills at a different one. She manages one of them, I manage another one. But both our money, I guess we do that.
24:48
Damian Dunn
But your income is pretty consistent from month to month, too. At least I'm assuming it's pretty consistent from month to month. And so you roughly know what you're going to have to work with because your expenses are going to be pretty consistent from month to month. So you just do this in a not quite so official way.
25:03
Peter Dunn
What if I were a blowhard? What if that was just really the reality of the situation?
25:08
Damian Dunn
Do we get better ratings?
25:10
Peter Dunn
We probably would. All right, Dan, let's do this. Let's take a break. Coming up after The Break, a great question about non qualified accounts. What are they? When are they appropriate? Should you have one? That's next on the Pizza Planner show. I'm Pete the planner. That little pause was for Time there.
25:27
Damian Dunn
Pro move.
25:29
Peter Dunn
I don't know what it is. Maybe it's just the term fun money that's annoying to me. It's fun money. Just like fun he's having to do what you want with. It's fun. Brian pinkens. Good day to you, sir. Rick said he had that same I think I already Put this up had the same issue when he ate Pineapple in Hawaii for the first time. It's so much better than you've had in the Continental US. That's also the truth. And Danza has a new hashtag for the show free Ted's Money. Why do I have so many banking issues with my kids?
25:55
Damian Dunn
I don't know. Don't they know who you are?
25:59
Peter Dunn
No. Actually, can I tell you a funny story?
26:05
Damian Dunn
Yeah.
26:06
Peter Dunn
So Ollie and I go into set up this account or whatever, and she does the talking, and the bank person knows me. I'm not in there a lot, but the bank person knows me. Right? One of those things, right?
26:17
Damian Dunn
You're in there once a month at least.
26:20
Peter Dunn
Bank. I have several banks in a very inefficient way with no logic to any of it, but that's a different episode. So anyway, this woman knows me. She's like, Pete. Oh, hello. And it's like, okay. And she's talking to Ollie. She's like, Your dad used to bring us cookies all the time, like, fresh baked that he'd made. And that's how I remember him. And I'm like, I'm part of this conversation, and I'm just like, that definitely didn't happen. I'm a reasonably nice person, but I'm not tagged baked goods to my bank. Nice.
27:02
Damian Dunn
Yeah, I can totally believe that now. Did Ollie believe it?
27:07
Peter Dunn
Well, she was like, whatever. And then the car, she asked me about it, and it's like, here's the thing. Sometimes people conflate memories with other things, but it just becomes their truth. And she's like, well, why did you tell them that wasn't you? And I'm like, well, that's being an adult, right? It's being in a mature person. It's like, well, who cares? I'm just telling the radio audience now, but who cares? It doesn't matter. Didn't happen.
27:31
Damian Dunn
What if there's another Pete that goes to that bank and did bring cookies, but now she thinks that person is Pete the Planner, and she's just flipped them?
27:43
Peter Dunn
That's possible. I'm hoping when I go to the other bank with Ted that the bank manager is there, does know, sort of the Pete the Planner thing. I know she does. And if she's there, I don't like to ask for special favors. I really don't. I have to admit that. But it wouldn't frustrate me if that manager was there and then she reversed all the fees that Ted's paid over the last several years. Do you view that as my fault, or do you find it bad that upma accounts I think it is an upma. I don't remember would have fees for kids. That doesn't make sense to me.
28:15
Damian Dunn
That seems incredibly dumb that any kids account would have fees attached to it.
28:20
Peter Dunn
It's my fault. I just want everyone to know.
28:23
Damian Dunn
I mean, technically, if it's an upma account, you are the custodian. So it is your fault.
28:28
Peter Dunn
Everything's my fault. All right, next one here. I love this question a lot because I get it a lot, and I've asked myself this years ago. So let's do it in three, two, one. Back on the Pete the Planner show. You know, you can email us, ask. Pete@petetheplanner.com that's askpete@petetheplanner.com dame. This one says subject line non qualified account as a question mark. My financial advisor is encouraging me to start a non qualified account in addition to my Roth IRA and the 403 B I have at work. Why wouldn't I just keep saving into my retirement account instead? Thanks, Zachary. I believe it's pronounced Saturi.
29:20
Damian Dunn
Interesting.
29:21
Peter Dunn
Well, I mean, is this I mean, is this as simple as the three bucket approach to saving could potentially I.
29:28
Damian Dunn
Mean, you said you get this question all the time. I'm curious as to how you answer it.
29:34
Peter Dunn
Okay, so there are three buckets of money that people should regularly put money into. Right. The most important bucket, oddly enough, in my opinion, is the by the way, I read a piece this week, this criticism of how people talk and act that says when talking, you should never say, in my opinion, really, that it's redundant because the fact that you're stating it makes it your opinion. I'm like, well, no, because I speak on factual things of which I'm an expert, which I'm providing fact to people. And so therefore, I delineate when I'm offering my opinion because I think that's only fair.
30:07
Damian Dunn
Yeah.
30:10
Peter Dunn
Anyway, in my opinion, saving for retirement is the most important thing because it's the hardest thing you're going to do. So that's the first bucket that gets money in the form of your retirement plan at work. So you put money in that bucket every pay period. The second bucket that you put money into is actually the very first bucket, which is your short term savings. You put money into that until you have an emergency fund built up. And once you have three months expenses built up, then in my opinion, you don't put any more money in that bucket. Which then brings us to the middle bucket. It ain't for retirement, it ain't for the short term. It is a middle bucket and it is called non qualified money. And Dame, as you know, when we talk about non qualified, it means non retirement, non tax qualified.
30:55
Peter Dunn
So, yes, jatchery, if you are putting the right money away for retirement, the right amount, and you have a full emergency fund, middle bucket up, my man, because to me, that is wealth. Wealth is the middle bucket. That's how you know you are ballin, as the kids say.
31:15
Damian Dunn
The middle bucket will give. Zachary, I believe he said, was it the gentleman's name? Zachary? Tons of flexibility going forward if things go well and investments in the retirement account are bountiful and that account grows and grows to the point where Zachary could potentially retire early. Well, maybe not, because he may end up having to take some penalties on top of the taxes that might come out of those accounts. How would you bridge that? Well, maybe you could use some non qualified money to get there. Other things that pop up throughout your life. Maybe you need to fund a wedding for a child, potentially pull from the non qualified account, down payment for a new car, all sorts of things. A non qualified account provides flexibility for you to take advantage of opportunities in your life that you may not have otherwise been able to, but also maybe save your high knee in events that you didn't foresee coming, that maybe fall outside of the bounds of an emergency fund.
32:23
Peter Dunn
At what point is it appropriate to save for a kid's wedding? Like what's the age that you're like, yeah, they're going to hitch up with somebody and I need to be able to pay for it because I'm a very traditional person. But common sort of sensibility says that's a little bit weird to say I've got a twelve year old, I want to start saving for a wedding. That's a little bit weird.
32:43
Damian Dunn
I think we had a question similar to this a while back and I wish I remember how we answered it, but maybe you approach it similar to how you set a goal for college education. You're going to pay X amount of dollars for this blessed event and you know roughly how long it's going to take you to save that money and anything above that is going to come out of the newlyweds pockets when you start that. I don't even like thinking about that day, let alone thinking about saving for it. So I'm probably not going to give a good answer on that.
33:21
Peter Dunn
Even though college savings are, I guess technically tax qualified accounts because they are not non qualified, because you do get some tax advantage in them, I still view college funds as a middle bucket expense for our household and so we have a full emergency fund. Obviously we max out our retirement plans that we can. So all the money that flows in a discretionary basis goes into that middle bucket, which includes college, which includes non qualified investment accounts. So often people don't understand when you hear the term brokerage account or I've got a stock trading account or this or that, if it's not specifically retirement account which you get specific tax advantage, it is in fact a non qualified account. If you just go to Betterment.com or ETrade or wherever, I don't really care, even Robin Hood, I mean it is probably a non qualified account, which just means you don't get tax advantage and there's a lot less restriction as to what you can use it for.
34:24
Peter Dunn
But Dame, it's also important for people to know because they're so used to retirement plan investing, you can have some rather significant tax consequences and non qualified account based on your trading habits. If you're not used to it, sure.
34:36
Damian Dunn
You make a really good buy and then sell it down the road for a nice little profit. You're going to get taxed on that profit. Not like your four hundred and one K at work or your Roth IRA where you can buy and sell without consequence or at least immediate consequence of taxation. So interest that gets credited to your account, dividends that get credited to your account, profits that you take from good investments, even losses, have an impact on your taxation as well. So you have to be very careful when you are investing with a non qualified account, which, as I would guess, a whole bunch of people found out last year after they didn't have anything better to do than day trade while they were sitting at home in their pajamas.
35:22
Peter Dunn
I can't imagine the number of people that got nasty tax bills last year. I mean, just an inordinate amount of people got a nasty tax bill.
35:33
Damian Dunn
What's a 1099? Why am I getting this in the mail?
35:36
Peter Dunn
It's crazy. Dame not to distract us from a really good segment, but I'm going to remember that email question that you thought was a scam and I thought was not a scam. I just got a reply for it, buddy. It took a real weird turn. Like an incredibly weird turn.
35:58
Damian Dunn
I cannot wait for the post show meeting.
36:01
Peter Dunn
I love when I talk in obscurity or whatever on the show. Dame all right, so you are a proponent of non qualified accounts? No one's going to not be a proponent of a non qualified account, but I would say I don't think they make a tremendous a lot of sense unless you have a full emergency fund. I think that would be my one big qualifier. Feel free to disagree with that. Can you think of a reason why a person would invest specifically of risk being an element into a non qualified account without a full emergency fund?
36:36
Damian Dunn
No. In fact, I would actually differ with your order of buckets and how they get filled as well. You said the retirement bucket should be the first one. I disagree somewhat on that and think that the small bucket, the emergency fund or the short term bucket should be the first one. And once you've got a comfortable amount, there not necessarily three months, but at least a buffer between you and reality, then you start contributing to that retirement account. But to go to past go and not do the short term bucket or the long term bucket and go right for that midterm bucket, maybe there's some I don't know. It'd be a really unique situation to try and figure out who that would fit for, but I can't think of any. Off the top of my head, the.
37:25
Peter Dunn
People want to know. We got a minute left in this segment. How's your bitcoin holding up in your Robin Hood account, which you bought because you thought was a really good idea right before Bitcoin fell?
37:37
Damian Dunn
Yeah, well, at one point last week I believe it was last week, I was actually up, but I am back down. So I am taking the beating for everyone out there who's wanted to do it. Let me be the lesson.
37:54
Peter Dunn
Don't do it. Do you tell us the amount I feel like you said was $90. Is that the amount you put in or was it not that amount?
38:02
Damian Dunn
Well, yeah, I started at $90, and then when everything dropped, I averaged in a little bit, and so that's what's helping me out. If it was just the original $90, I'd be way underwater.
38:14
Peter Dunn
My man. All right. Coming up after the break, biggest waste of money of the week. We may have just heard about it and the news. I'm Pete the planner. This is the show. My outros are hot fire today. I mean, they're just good.
38:27
Damian Dunn
I think I set you up for that one.
38:30
Peter Dunn
You really did. Our coworkers here at HQ get really annoyed when I start a sentence when I'm talking to them with on my run this morning, and then I'll talk about what I was thinking about or whatever. And so this morning, I was talking to Chad Force and Eric are out there. They were asking, I said, well, look, I was on my 20 miles bike ride this morning, so I switched it up. I just talked about riding a bike instead of running this morning.
38:57
Damian Dunn
As long as I'm just going to send them both a message and say, next time you say something about a bike, ask how the Lycra is fitting these days.
39:04
Peter Dunn
Oh, I was telling them all about the Lycra, the picture. You want to see me and Lycra here?
39:08
Damian Dunn
Rather not.
39:09
Peter Dunn
I took a Lycra selfie this morning, and the reason was because I was going to send it to you, but not because I was making fun of your Camo shirt yesterday. Yeah, I have a Camo cycling kit, which I'm going to show you.
39:22
Damian Dunn
That seems dangerous.
39:24
Peter Dunn
That's just the camo. It's just real tight on the light, like, right there. That's a thigh.
39:30
Damian Dunn
Okay, riding a Camo seems dangerous.
39:34
Peter Dunn
Well, I mean, I don't know. I have a blinking red light I put on the back of my kid.
39:40
Damian Dunn
Can't hit what they don't see.
39:42
Peter Dunn
Exactly.
39:43
Damian Dunn
Okay.
39:44
Peter Dunn
Am I even there?
39:45
Damian Dunn
Exactly.
39:46
Peter Dunn
Have you not watched fantasy films? I mean, not those sorts of fantasy. Dame, let's do biggest Waste of money of the week and the news. Okay, in three, two, one. This week's biggest waste of money of the week right here on the Pete the Planner show. Ill. The Louis Vuitton times. NBA mini basketball hoop. Before I read this. Dame when there's a brand crossover thing, it's like this and this. They put x. Do I say meets? Do I say X? Do I say times? How do I express that?
40:26
Damian Dunn
Just Louis Vuitton and whatever the other one was.
40:29
Peter Dunn
Yeah. The Louis Vuitton and NBA mini basketball hoop. With the NFB NBA finals in full swing, louis Vuitton and NBA have released a complete capsule collection. The collaboration includes an assortment of basketball inspired clothing and accessories, but the standout team or pardon me. The standout item is this mini basketball hoop designed by artistic director Virgil Ablo. The piece borrows from the brand's iconic trunks with gold metal corners on the transparent backboard. A frosted LV is at the center of the square, while Co branding logos trim the perimeter. It comes with a miniature basketball made with brown leather and black trim. The set will be available at select Louis Vuitton locations later this month. Dame, you see it there on the screen. The radio listeners, of course, do not, because that's not how radio works. I'll tell you, it looks like the exact goal that is in my son's room without the Louis Vuitton junk on it.
41:30
Peter Dunn
The basketball goal, which is a nice one, in my son's room, I believe, was either 1999 or 29 99. But it has an acrylic backboard and a breakaway rim so he can dunk. This, my friend, is not 29 99. How much do you think the Louis Vuitton and NBA mini basketball hoop is? Oh, and listener of the year Danza also missed it. She went a little high. She said $18,000. Does this qualify as one of those items that if you own it's okay to just think the person is a moron for owning it?
42:11
Damian Dunn
Yeah, I don't see how there's any justification for this.
42:18
Peter Dunn
I'm trying to think if I should express my Louis Vuitton thoughts on the error of whether this should just be you and I someday. Do you have a feeling one way or the other?
42:27
Damian Dunn
Let's go.
42:28
Peter Dunn
Just you and I already expressed my fun. Money hot take. Dame, what's in the news?
42:35
Damian Dunn
This. Pete, we're going to go a little different direction this week. We're going to do some third quarter predictions this week. That's third quarter predictions. I'm going to ask you some questions. You're going to give me some answers.
42:47
Peter Dunn
All right, I'm ready.
42:48
Damian Dunn
Question one is a follow up and a little addition from a question that I asked you last week. Will Jeff Bezos and Sir Richard Branson both return from space safely?
43:01
Peter Dunn
I have to say yes, because I don't want to bet on someone's demise in space. Do you remember when I think it was Red Bull had a guy skydive from space?
43:14
Damian Dunn
Yeah.
43:15
Peter Dunn
And we could watch it live.
43:16
Damian Dunn
Yeah.
43:17
Peter Dunn
I don't like to throw Mrs. Planner under the bus in public settings. However, I'm about to. I watched it, and she was just furious that I was watching it under the idea that I'm potentially contributing to this man's death. Right. And so while I disagreed with her there, I refuse to guess whether or not Richard Branson and Jeff Bezos die in space. But what's the follow up question? Dame?
43:48
Damian Dunn
It's weird is this is becoming like a race in between the two. Branson upped his flight to go before him. Is that something you really want to speed up to make happen? I don't know. I'm more nervous for him than I am bezos.
44:05
Peter Dunn
Now, I know a lot of people love to hate billionaires. I just am not one of those people that are like, oh, billionaire, it's still a person. I also just don't care. Right. But that's not to say, oh, I hold them in high regard. No, if a person flies to San Diego or Jupiter, I don't care. And so, yeah, that's just not on my radar. But they'll both live.
44:27
Damian Dunn
All right, question number two.
44:29
Peter Dunn
Question number two.
44:30
Damian Dunn
If Robin Hood IPOs this year, which it seems like they will the price close higher or lower than its open price on the first day?
44:40
Peter Dunn
Oh, this just almost seems unfair. It's going to have to open higher because people are going to dutch tulip it up. I did love the article this week that suggested that if the SEC follows through on a required change to how they do business, that they lose more or less all of their profitability, which I think is a lot of people work there. So I'm not going to wish it ill, but it's interesting.
45:11
Damian Dunn
It's very interesting.
45:12
Peter Dunn
Yes.
45:14
Damian Dunn
Will another US company join Microsoft and Apple in the $2 trillion club this year? The closest right now are Amazon, roughly one and three quarters, and Alphabet, just a little bit further behind that. Will they crack the $2 trillion market cap?
45:29
Peter Dunn
I say yes. In fact, we are recording the show on July 8, which is a Thursday. On Tuesday and Wednesday of this week, the 6th and 7th, Amazon went through the roof. I don't know when you pulled this story, but it could be at the $2 trillion market cap right now. In fact, I'm going to look probably pulled back a little bit, but I'm going to go Amazon instead of Alphabet. What is your take? What do you think?
45:55
Damian Dunn
I think it's very possible that they both make it, pending some cases that are kind of floating through the government.
46:02
Peter Dunn
Regarding Alphabet right now, 1.843, it changed, as I was saying, that it was 1.844 and literally, as the first words came out of my mouth, it went down to a three. Amazon did. So it is very close to the.
46:16
Damian Dunn
$2 trillion mark, maybe before the end of the third quarter.
46:20
Peter Dunn
And then I would be right.
46:23
Damian Dunn
Two more questions. Will the Olympics happen without any serious COVID-19 disruptions? It seems like they might. I'll answer this one for you since they banned spectators from all events this year.
46:35
Peter Dunn
I think what we've learned about COVID is that there is a difference between a disruption that is immediately deadly and directly impactful and a disruption that is built on positive tests. So I'm going to answer this and say there will be a major disruption built on positive tests, which then could theoretically, indirectly lead to death and carnage. But much in the way that the Copa Soccer Tournament in Brazil right now, it was impacted with major COVID outbreaks amongst the players and training staff. And so then people couldn't play, and then it affected who could perform. I think that's what's going to happen at the Olympics, that you're going to have people show up and not be able to compete because they're on Quarantine. So that is my answer. There.
47:25
Damian Dunn
Finally a pure sports ball question. Will Aaron Rogers be a Green Bay packer at the start of the season?
47:32
Peter Dunn
Man I actually thought about this just the other day. No one cares about my takes on pro football. But I will say this, I thought he had a ton of leverage early in this whole thing, and for some reason, I feel like his leverage is gone. I feel like they're just like, yeah, we don't need all this, bro. So. No, I don't think he's a Green Bay packer. I think he retires and pulls one of those. I'm going to retire and then come out of retirement next year. That's my gut. What do you think about that?
48:01
Damian Dunn
I don't watch American football, so I have no idea who this gentleman is.
48:05
Peter Dunn
Stop it.
48:07
Damian Dunn
Time for a story.
48:09
Peter Dunn
We have a minute and 40 seconds. Time for a story.
48:11
Damian Dunn
This one will warm your heart. Pete americans are borrowing again, in some cases at levels not seen in more than a decade. Consumer demand for auto loans and leases, general purpose credit cards and personal loans was up 39% in April compared to the same period last year. I know what you're thinking. Last year? I mean, what was going on last year? Well, according to Equifax, it was also up 11% compared with 2019.
48:39
Peter Dunn
I really don't like to say I told you so. It's just not my vibe. It's not how I roll. I told you so. By the way, Amazon is now up to 1.848. It's gone up, what, $4 billion in the last 45 seconds.
48:56
Damian Dunn
I cannot wait for 1.849.
49:01
Peter Dunn
Do you want to just sit here? All until it happens, we're going to.
49:04
Damian Dunn
Have Amazon watch on every show from here on out.
49:07
Peter Dunn
Down 1.848. There's CNBC in the lobby of our office building here. It's always just on the TV there. And Chad and I were talking today, I think they have it on. So people think this is an important office building. This is stuff people got to know because no one should reasonably care about what is on there.
49:28
Damian Dunn
No.
49:29
Peter Dunn
Dame that's all we have time for this week. 1.84 seven right now. Sending you good vibes, because good vibes are all that's in the budget. I hope you all well. And if not, well, I'll see you next week. I'm Pete the Planner, and this is the show. Not the strongest clothes. I tried to get too cute. It happens. Dame, I'm going to go eat my lunch. I got Joella's hot chicken today. Oh love Joella's Hot chicken.
49:57
Damian Dunn
Think I'm going to go for a run so I can think while I'm on my run.
50:02
Peter Dunn
If we do happen to talk later, can you bring up the fact that you ran?
50:06
Damian Dunn
Sure.
50:08
Peter Dunn
What's more obnoxious? Telling someone all the time in the course of daily conversation that you work it out or posting about your workout online?
50:21
Damian Dunn
I think telling somebody face to face, because there's no escape from that. I can mute you or block you on social media. So it's the personal interaction that really drives the dagger home.
50:32
Peter Dunn
What is more obnoxious? Telling someone that you worked out face to face or telling someone face to face that you're just not on social media anymore?
50:41
Damian Dunn
That's a good one, because I do.
50:43
Peter Dunn
Both on a daily basis.
50:46
Damian Dunn
I don't know. It probably depends on what that person feels like they're struggling with at the point in time. If they know they should be working out and they're not. Probably the person that says they're always working out.
50:56
Peter Dunn
It's real judgmental if you tell people that you're off social media and how much you love it because it makes someone go internal immediately. By the way, d***, I'm ending the show. Go to your email inbox and read the response from the guy on the thing that we can't talk about. He gets sad super quick. Like like, in fact, I just stopped reading it and I might read it over hot chicken because I'll already be crying dame. That's all we have time for this week. Wishing everyone the best. And remember, stay getting money.
