2/10/25 Making Every Penny Count: From Pro Athletes to Smart Retirement Planning

The Moneywise Radio Show and Podcast Monday, February 10th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management instagram: MoneywiseWealthManagement

• 0:00Speaker 00

  From the padded radio room off Stockdale Highway, here is Money Wise. Call or text in at 661-396-1000.

• 0:09Speaker 01

  I need a dollar, dollar, dollar, that's what I need. Hey, hey. Well, I need a dollar, dollar, dollar, that's what I need. Hey, hey. Said I need a dollar, dollar, dollar, that's what I need. And if I share with you my story, would you share your dollar with me?

• 0:30Speaker 02

  Securities offered through S E F Securities, Inc., member FINRA, SIPC. Investment advisory services offered through S E F Investment Advisors, Inc., S E F Securities, Inc. and Money Wise Wealth Management are independently owned and operated.

• 0:40Speaker 00

  Now, let's start the Money Wise Show.

• 0:42Speaker 03

  Welcome, welcome to the Money Wise Show. We are live from the Gero Ellis padded radio room off Stockdale Highway on ESPN Bakersfield, 1230 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, we're your hosts, I'm Sharad Waite and?

• 1:06Speaker 04

  I'm Sammy Abiyawi.

• 1:07Speaker 03

  Sammy Abiyawi. Thanks so much for being here.

• 1:09Speaker 04

  Yeah, excited to be here today.

• 1:11Speaker 03

  Uh, we've got some great messages, want to get right to it and answer our listener questions.

• 1:18Speaker 04

  Yeah, we have a couple of them. I'll start with the first one. I've seen a lot of changes in government funding over the years, but what kind of economic and financial impact could these executive orders freezing or redirecting federal funds have on businesses, state budgets, and regular folks, just like me?

• 1:33Speaker 03

  Gosh, this is, this is a tough question because there's so much political noise going on right now. Uh, you know, this first few weeks of President Trump's presidency and all these executive orders, I think a lot of people's heads are spinning and we don't really know fully what the impacts are going to be yet. We take the tariffs are a perfect example. You threaten, threaten the tariffs and then pulled, pulled most of those back and just today, more tariffs being imposed on steel and aluminum that's being imported. It's really difficult to know what kind of impact. This is going to have, so we could sort of just speculate on what we do know.

• 2:15Speaker 03

  And that is the markets don't like uncertainty, stock market, bond market. Uncertainty is not its friend, and this does bring uncertainty. I can see there being an impact to some people who maybe doesn't, who don't have a longer term view on their investments of potentially having some losses. This is the, this is the challenge with short term investing is that you can get whipsawed unnecessarily and, and, and realize losses that aren't necessary. You don't need to do that. And so I, I think, you know, the impact on individuals, on the average person is just really difficult to know right now.

• 2:56Speaker 03

  Certainly, if you're in certain sectors and certain industries, then yeah, there's, there's, there's an impact.

• 3:02Speaker 04

  Yeah, a couple of things that comes, comes to my mind. First is the Small Business Administration. As a, as a former banker, if funds are halted or stopped for one reason or another. Small Business Administration is one catalyst for small businesses to access to sometimes cheap capital.

• 3:20Speaker 04

  But also long terms with some favorable terms that are not available in the commercial world of, of, of banking. So that's one thing that I can think of if this thing is halted for one reason or another. It might impact small businesses and their access to borrowings.

• 3:37Speaker 03

  Yeah.

• 3:39Speaker 04

  Just for me, infrastructure spending, if we're halting or slowing down our infrastructure, which is already crumbling, in my opinion, all throughout the United States, not just in the great state of California, could be impacted as well. So there, there is a risk, but also shared, I mean, the people in charge today or the current administration.

• 4:02Speaker 04

  You can't tell me they don't know these risks. So a lot of these decisions that are making, they're probably calculated and they might have some type of a plan for it.

• 4:11Speaker 03

  Yeah.

• 4:12Speaker 04

  Right?

• 4:12Speaker 03

  Yeah.

• 4:12Speaker 04

  Now, these are campaign promises that they are that are being fulfilled. But also, I mean, regardless of how you see Democrats versus Republicans, whatever, we're not going to sabotage our own country by not having a plan.

• 4:27Speaker 03

  Yeah.

• 4:27Speaker 04

  I I believe in that.

• 4:29Speaker 03

  Yeah, we also have to believe in the checks and balances of our government, the way it's set up. Right now, many of the orders coming from President Trump have been nullified by the courts. So that's why we have an executive branch and a judicial branch. Uh, that is the a way and and then the and then the executive branch. Did I ever say that?

• 4:55Speaker 04

  Yeah, you said executive, we said judicial.

• 4:58Speaker 03

  And the third is the Congress.

• 5:03Speaker 04

  Congress. I don't know how you you called that, but when I took my citizenship test, I remember that.

• 5:08Speaker 03

  You had to know that.

• 5:09Speaker 04

  I had to know that.

• 5:09Speaker 03

  When I took my citizenship merit badge, I had to know that. Now I can't remember what that third branch is. But basically you have Congress, you have the executive branch and you have the judicial branch. And legislative.

• 5:20Speaker 04

  Legislative.

• 5:21Speaker 03

  Legislative branch. So the reason we have these three branches of government is because you don't want anyone to have too much power.

• 5:27Speaker 04

  That's right.

• 5:28Speaker 03

  And so this is really testing the the limits of the executive branch power. Congress is the one that has really the the holds the purse strings. There Congress is the one that authorizes spending or spending cuts. And so it's just we're seeing the judicial branch taking being over overworked right now, I believe. And so again, it's just a lot of noise. There's so much noise happening. It's not just unique to President Trump either. Every president that comes in wants to make their mark. President Biden, when he came in, immediately did all kinds of different changes too. And and we saw the markets be a little, they were disrupted a little bit, mostly from uncertainty. At the end of the day, I'm I'm a firm believer in the free market and the power of a free market, a capitalistic market. I think that ultimately will win.

• 6:14Speaker 03

  And so, you know, hang in there, hang in there, people, it's gonna be all right.

• 6:18Speaker 04

  We will be all right.

• 6:19Speaker 03

  Yeah.

• 6:19Speaker 04

  At the end of the day. I always say this, and this is not me blowing smoke, we live in the greatest country on earth.

• 6:26Speaker 03

  No doubt.

• 6:26Speaker 04

  Regardless of what you, you're a Republican, you're a Democrat, this is to me as an immigrant, this is the best country I would choose to live in.

• 6:34Speaker 03

  That's right, that's right, words and all. Got another message, you want to read that one, Sammy?

• 6:38Speaker 04

  Yes. Good afternoon. This may be a long question, but maybe you can answer it when you have the time. But how does a financial advisor get paid? The more money a client has? Also, how does one become a financial advisor? What schooling did you guys take to become one? Big fan of the show and grateful for the education you guys share. Thank you.

• 6:58Speaker 03

  Great question. Thank you, listener. I love this question. We've talked about it many times over the years about our industry and how we get paid. One of the most important things I think an investor can understand if you're hiring a financial advisor is how they get paid. You should never be afraid to ask that person that question. How, where do you get your money? It's a very legitimate question and, you know, it's no surprise that the answer to that question will tell you whether or not there may be some conflicts of interest. So we'll start with, you know, what the way that MoneyWise is structured, which we have a fee-based structure. That means we're paid a percentage of the assets that we're managing.

• 7:38Speaker 03

  That does mean, I guess, in some cases, the more money somebody has, the more we get paid. That kind of puts us on the same side of the desk, the same side of the table as our clients. We want to make them money and the more money they make, the more money we make.

• 7:54Speaker 04

  That's right.

• 7:54Speaker 03

  But it's not always the case. For example, at MoneyWise, we have a tiered fee schedule. And that, that fee schedule, the, the percentage that we charge our clients for our advice gets smaller the larger the household assets become. And that, that may sound a little counterintuitive, but, you know, at some point, you're doing the same work for somebody who has $10,000 as somebody who has $10 million in some cases. And so that's why, at least at here at MoneyWise, the, you know, once, once you start getting into the high High net worth into the millions of dollars, our fee goes down.

• 8:35Speaker 03

  And a lot of the work that we do as financial advisors is upfront. It's in those first few years of relationship where you're doing a lot of that groundwork, getting the investment strategy set up and going and getting their plan set up and start being able to track towards those goals is really upfront. That's why at MoneyWise, our most valuable clients are the clients that have been with us the longest because it costs us money to onboard a client. So that's the first thing to be aware of how a financial advisor is paid. They're generally either fee-based or they're commission-based. And the commission-based advisor generally are using products.

• 9:20Speaker 03

  They're in our world, they're usually selling insurance or annuities, maybe certain mutual funds, loaded mutual funds, different life insurance products. That is a commission-based structure. And there can be a more conflicts of interest when you're working with somebody who's going to get paid by a product rather than for their advice. The advantage of using a fee-based advisor is that the advisor has a fiduciary responsibility to make sure that your best interests are in play.

• 10:01Speaker 03

  And it has to be documented that shows that the financial advisor is putting their best interests, the client's best interests, ahead of their own. Not every financial advisor is held to that standard. There are other financial advisors that while they may be licensed, they only need to have, the recommendations need to be suitable. It doesn't need to be, have this fiduciary standard. And what do I mean by suitable? Well, it just means that the product itself is appropriate for that person. That's a very different standard than the fiduciary standard, which Is that it doesn't it doesn't it's not the product, it's what you're offering is the best.

• 10:47Speaker 04

  Solution.

• 10:48Speaker 03

  Best solution for that for that.

• 10:49Speaker 04

  That individual that that person.

• 10:51Speaker 03

  Yeah, so you know, those are the those are the two main. Models of how we get paid as financial advisors. There are some that are sort of hybrids that can be a mix of those two things. As well as their flat fee or hourly fee advisors, which we we have that here is at MoneyWise as well. So. Sometimes it just doesn't make sense, or there's not necessarily assets to manage. And so in that case, if some advisors can just charge a flat fee for a plan. And then there can be, you know, you just pay hourly rate, just like you would a CPA or an attorney. So, um, yeah.

• 11:27Speaker 04

  So the great answer and thank you. And so the listener also asks, how do you become one? What type of studies do you have to follow to get to become a financial advisor?

• 11:36Speaker 03

  You know, it may be surprising to some people that to be a financial advisor, you don't need a college degree. Now, that may not be, you know. I know some financial advisors that don't have a college degree and they're great financial advisors because they may have other things like experience. And years of experience and or or diverse experience working with people. I think can easily compensate for somebody who doesn't have a bachelor's degree. Now, it's most financial advisors do have a bachelor's degree.

• 12:07Speaker 04

  Sometimes masters degrees.

• 12:08Speaker 03

  Yeah, MBA, you have an MBA, Sammy. Uh, when you have a master's degree. Then you you generally can qualify for some further certifications or licensing that. Is very helpful in our industry. The the premier. License or certification in our industry is CFP, a Certified Financial Planner. This is one of the top credentials. It's because it requires an enormous amount of of coursework and exams and in many different areas.

• 12:40Speaker 04

  It's an in-depth uh, study. Like, I mean, we have two on staff today and with the third one going through the process. Which we're very proud of as a company, as a firm, we're very proud of having those two individuals and with the third on the way. Because it does give an edge to your advice.

• 12:58Speaker 03

  Yeah, it really does.

• 12:59Speaker 04

  Go into a little bit more uh, studying and and ability to give.

• 13:06Speaker 04

  Maybe a better advice, but also you finish your responsibility, having that title just goes a little bit more than a regular financial advisor. Would you agree?

• 13:14Speaker 03

  I agree. With the CFP, you're required to have instructions and pass exams in areas such as tax planning, estate planning, insurance. These are, some of these topics can get very complicated. If you don't have any experience with it, then you need to have some educational background in these, in these fields. So, besides CFP, other really respectable certifications is Chartered Financial Analyst. Some people may have seen that, CFA. This is an advanced investment analyst certification. We see this a lot in the money management world, our CFAs,

• 13:58Speaker 03

  as well as Chartered Financial Consultants, or CHFCs. This is an alternative to a CFP, but it's more of a focus on financial planning. So, you know, again, working with an advisor experience is very valuable. The certifications are valuable. Now licensing is also important. In our world, FINRA, which is the financial regulatory agency that oversees our world, there are several different series licenses. And generally, you want an advisor that has at least a Series 66 or 65, which is the license that allows you to charge a fee to

• 14:39Speaker 03

  give advice. It's helpful if there's a Series 7, which is the securities license that allows you to work in stocks and bond, individual trades. And it's a very challenging certification or license. I've gone through the Series 7 many years ago, and it's very in-depth, and you get a really good exposure to the financial investment world. Many financial advisors also have their life and health insurance licenses, which is, again, helpful to have that background in insurance. So, you know, those are, those are the main points

• 15:23Speaker 03

  to be aware of. You know, for, for somebody to be a, a...

• 15:29Speaker 03

  Financial planner, it's becoming much more difficult as the years go on because you and we'd have a lack of financial advisors. You and I know this is we've here at Moneywise are always recruiting, basically. We're always looking for

• 15:45Speaker 04

  Individuals, good people, yes.

• 15:47Speaker 03

  Yeah, and we've, you know, we've, we've reached out to a lot of them in town and we'll continue to do that and

• 15:55Speaker 04

  In general, the finance industry has been a go-to after you graduate from college. You get a business degree, you get a finance degree and you go into banking, you go into this finance world. But last 10 years, 15 years, it's been a little bit tricky because a lot of the people don't think of the financial world as sexy anymore, especially younger, the younger population. However, if you, I mean, from my end, it's a very rewarding career because you get to be exposed to a lot of things and you learn a lot of things, in my opinion.

• 16:24Speaker 03

  Yeah, for sure. I've loved it. It's been a wonderful career for me and I think our advisors here at Moneywise really like what they do.

• 16:32Speaker 04

  That's true, yeah. Because at the end of the day, to me, it's rewarding because you get to help somebody, either in retirement or near in retirement, or just financial planning to get a budget together or whatever. To me, that's, that's, that's huge.

• 16:44Speaker 03

  Yeah, and you work with your, you should have a relationship with your financial advisor, which means you see them, you see them regularly and they become a very, a real valuable part of your, of your team, which also might include an attorney. Everybody needs to have at least one or two attorneys on your speed dial for, for life when life happens to you, as well as a banker is a very valuable resource for, especially if you're a business owner, is having a relationship with a banker and your CPA, your accountant, your tax professional. So those are, those are really the, the three or the four-legged stool for your, your financial

• 17:27Speaker 03

  household in order CPA, attorney, banker, financial advisor. You want to, you want to have just good people that you know you trust, you know how they're getting paid. And you know what value you're getting back from them. So those are, that's great, Sammy.

• 17:42Speaker 04

  Yeah, great question. Very good. Keep them coming.

• 17:44Speaker 03

  Yeah, keep them coming. Definitely send them our way. 661-396-1000 is the phone number. We got a lot more to cover. We're going to take our first break of the day and we'll be right back.

• 17:53Speaker 00

  If you're a business owner who provides a retirement plan for your employees, contact Money Wise Wealth Management to see if you're maximizing your options and minimizing your liabilities. Money Wise 401K plans are customized to you and your company's needs. 661-847-1000. That's 661-847-1000.

• 18:20Speaker 03

  Thanks for tuning in. We're Money Wise. I'm Sherrod Wade. I'm here with Sammy Abiawi. We're your hosts today.

• 18:26Speaker 04

  He did it.

• 18:27Speaker 03

  Yeah, he did. What'd you think?

• 18:30Speaker 04

  Frank, I've never listened to him.

• 18:32Speaker 03

  Oh, really?

• 18:32Speaker 04

  Seriously, until yesterday. And the thing I liked the most is him going after Drake, because I don't like Drake.

• 18:41Speaker 03

  He did. He definitely went after Drake.

• 18:42Speaker 04

  I do not like Drake. I don't like his music. I don't like who he is.

• 18:46Speaker 03

  Yeah.

• 18:47Speaker 04

  So him doing it, I loved it. And the fact that he has two of his exes, one of them was Crippin'.

• 18:54Speaker 03

  Oh, yeah.

• 18:54Speaker 04

  Serena Williams.

• 18:55Speaker 03

  Oh, yeah. Crip dancing. Yeah, I saw it. Yeah, I thought it was so good. I'm a huge fan of Kung Fu Kenny, Mr. Kendrick Lamar. His, he's the only artist, I, I, but generally listen to music on Spotify streaming, you know, on my phone. And it's the only artist that I got a notice from that said that I'm in the top 1% of listeners, at least his last album. His last, the two albums, Mr. Morale, the big, the, the big steppers, that, that album is just unbelievable.

• 19:24Speaker 04

  Have you been to one of his shows or concerts?

• 19:26Speaker 03

  No, but I would. I would die to go to one of his concerts.

• 19:28Speaker 04

  I'll go with you.

• 19:29Speaker 03

  Oh, let's do it. I, I've watched it on YouTube. I've watched a couple of his concerts on YouTube and he's, he is, it's just mind blowing how he can remember the lyrics and spit them out. You know, it's, it's like, I don't know how anybody can rap. It's.

• 19:44Speaker 04

  Gabe was, was following suit with him yesterday. He, he loves, he loves him.

• 19:48Speaker 00

  Ryan was the same way. He was pumped.

• 19:50Speaker 04

  Yeah, he was pumped and he was like all dancing in the living room. I told Mary Ann, we have our own show.

• 19:56Speaker 03

  Kendrick Lamar is super humble too.

• 19:58Speaker 04

  Yeah.

• 19:59Speaker 03

  Very humble. Yeah. Uh, he's just.

• 20:02Speaker 04

  Another great song.

• 20:03Speaker 03

  Yeah, for sure. Speaking of humble, we have news today. President Trump says that he is going to order the treasury to stop making and stop minting pennies and nickels.

• 20:17Speaker 04

  Hallelujah.

• 20:17Speaker 03

  Hallelujah. This has been, I can't tell you, I've been hearing this for so many years. It's very similar to getting rid of the daylight savings time.

• 20:25Speaker 04

  Yes.

• 20:25Speaker 03

  This has been going on.

• 20:26Speaker 04

  I think it's on his agenda too.

• 20:28Speaker 03

  Good. Make that happen. Cause it's been, it's been going on for years and years. It goes all the way back to late Senator John McCain in 2017. He co-sponsored.

• 20:39Speaker 04

  Yes, that's right.

• 20:40Speaker 03

  Currency optimization, innovation and national savings coins. And this was an act that he was pushing, uh, to try to get rid of the penny production. And, you know, they conducted a feasibility study. Before that, in 1990, there was a representative Jim Colby. He introduced the Price Rounding Act, which was, which was an act aiming to eliminate the penny and cash transaction, transactions by rounding prices to the nearest nickel. So all these efforts have just come and gone and with no luck.

• 21:16Speaker 04

  It's, it's, it's interesting to me. Now I'll, I'll talk from a banker standpoint.

• 21:20Speaker 03

  Yeah.

• 21:20Speaker 04

  Now, my nightmare when I was a banker is people coming in with bags and we have to, sometimes we don't count them. We just put them in the vault and then we send them over to the main vault and they, they, they have to weigh them instead of going through.

• 21:35Speaker 03

  Wow.

• 21:35Speaker 04

  Or you have to buy a coin, coin machine. But the, the thing is, is you have to order these things. So your convenience store clients that own convenience stores, they have to come and buy these from you. Then you have to carry them and break your back.

• 21:49Speaker 03

  Yeah.

• 21:50Speaker 04

  Right?

• 21:50Speaker 03

  Right.

• 21:51Speaker 04

  And, and then you go to the store and they give you two pennies. So just forget about it. Just put them in that little thing. I never want them. Right?

• 21:58Speaker 03

  Right.

• 21:58Speaker 04

  So from a banking standpoint, if they do this, it's huge. It's music to bankers' ears, man. Because you do not, they're gonna stop handling that.

• 22:07Speaker 03

  And how many times have you heard also, it'll come up on the news every, every once in a while, somebody loses a lawsuit and they pay it off in pennies?

• 22:13Speaker 04

  That's right.

• 22:15Speaker 03

  I mean, what a nightmare. Could you imagine somebody coming into the bank with a hundred thousand dollars worth of pennies?

• 22:21Speaker 04

  I mean, like, just, just bags and bags and bags of these things. Now, I'll remind us, I'll remind us though. Forcibly, we were forced into, eliminated the pennies and the nickels during COVID.

• 22:32Speaker 03

  Why is that?

• 22:33Speaker 04

  Because we-

• 22:34Speaker 03

  Oh, because nobody wanted to handle or-

• 22:36Speaker 04

  That's right.

• 22:36Speaker 03

  Yeah. It is filthy. It's so gross.

• 22:38Speaker 04

  We actually went away from that and, and for the longest time, we did not have them at the bank. So people will come in and say, we don't have them.

• 22:44Speaker 03

  Yeah.

• 22:45Speaker 04

  So just learn how to run a business without them.

• 22:47Speaker 03

  Without it.

• 22:48Speaker 04

  Convenience stores, small businesses, they learned how to run that. As clients, as consumers, we learned how to not have them anymore.

• 22:56Speaker 03

  Yeah.

• 22:56Speaker 04

  So during a year and a half, or two years of that craziness called COVID, we actually learned how to live without these things.

• 23:03Speaker 03

  Well, other countries have figured it out too. Canada in 2012 got rid of their pennies. And other countries have already done this, including Australia and New Zealand. Both removed their one and two cent coins from circulation in the 1990s. European nations like Netherlands, Finland and Ireland have all adopted policies to eliminate or get rid of their one or two cent euro coins.

• 23:29Speaker 04

  So, so I'll bet you a penny. Bet you a penny. Now that President Trump came up with the, the, the comments today, tomorrow or sometime this week, Doge will come out with the statistics of why we should be eliminating the pennies. Hundred eighty-five million dollars in 2023 to produce pennies. Hundred eighty-five million dollars for a face value of seventy-one million dollars.

• 23:51Speaker 03

  That's just the US?

• 23:53Speaker 04

  Just, yeah, here.

• 23:55Speaker 03

  Yeah, so I, looking at the cost of a penny, it's about 3.7 cents to produce one cent, a one cent penny.

• 24:03Speaker 04

  Yeah.

• 24:03Speaker 03

  That, this is, this has led to a loss of about 85 million dollars from minting nearly 3.2 billion pennies in a year. 3.2 billion pennies is how many they've minted. So they're losing 85 million a year to make the penny. The nickel, it's even worse.

• 24:22Speaker 04

  Yes.

• 24:22Speaker 03

  Production of a nickel costs nearly 14 cents, which is almost three times its face value. So you gotta get rid of the penny and the nickel. Now, the dime is still okay, in my, in my opinion. It costs about five cents to produce a dime. So that makes it a little bit more cost effective, but still, I guess that's still pretty expensive.

• 24:41Speaker 04

  So, yeah, definitely. And frankly, do you want to handle that? Handle this stuff going in your pocket and you're like, all day long, next to your keys, you know? A penny in 1900s, shared, had the same value as 30 cents today.

• 24:58Speaker 03

  Oh, really?

• 24:59Speaker 04

  A nickel in 1950 had the same value as 60 cents.

• 25:03Speaker 03

  What?

• 25:04Speaker 04

  Today.

• 25:04Speaker 03

  Is it because of what they, it was made out of? It was actually made out of nickel?

• 25:07Speaker 04

  Also the inflation impact.

• 25:09Speaker 03

  Oh, yeah. Oh, right. Right.

• 25:12Speaker 04

  So, it, it just doesn't make sense for us to have these things anymore.

• 25:17Speaker 03

  You know how much it costs to make a $1 bill?

• 25:20Speaker 04

  I do not.

• 25:21Speaker 03

  3.2 cents. That's a, that's a deal. Those three cents to print. I guess maybe that still is gonna add up, right? To make $1, 3.2 cents. A $100 bill costs nine cents to make, to print. A $50 bill's five cents. So, yeah, let's, let's get rid of this. Now, something that's interesting is that there's some people that are complaining, saying that this could be inflationary. Because what happens if you get rid of pennies and nickels? You gotta round up or down. With it, you know, if it, instead of, instead of it being, you know, 50, 55 cents, it's gonna have to be 60 cents. Or it'd have to go down to 50 cents. But most companies are just going to round up.

• 26:03Speaker 04

  That's right.

• 26:04Speaker 03

  And so you could see, I guess, initial slight inflation from it. But in what I could read, what happened in Canada over 13 years ago, they didn't experience. It wasn't that big of a deal. It really didn't have an economic impact on the country.

• 26:21Speaker 04

  I, I, I wouldn't know, but I also, I would assume not personally. You know, I'm, I'm just thinking about myself and my expenditures. When I go to the store and it's $9.99, now I'm paying $10, I'm, I'm okay with that.

• 26:35Speaker 03

  I wonder how it will work when you have sales tax, which is some odd percentage. So if somebody's still paying in cash, you know, how are they going to give back change? They're going to have to just change all of the pricing so that they're taking into account the sales tax. So they will have even numbers.

• 26:52Speaker 04

  Yeah.

• 26:53Speaker 03

  Which I, that drives me crazy when you don't. I mean, it's just a trick that retailers use on people to, you know, the 9.99 trick to, to get people to buy something. Cause it's in your mind, you think it's way cheaper than it really is.

• 27:07Speaker 04

  Yeah.

• 27:07Speaker 03

  But oh, man, I, I hope this passes Sammy. I hope we can get rid of those filthy coins.

• 27:12Speaker 04

  Me too. Seriously. I, I personally don't use cash. I use my, my cards or, or my Apple Pay or Google Pay, whatever.

• 27:20Speaker 03

  Yeah.

• 27:21Speaker 04

  I don't use cash personally, but when I do, you know.

• 27:25Speaker 03

  What do you do with your coins? Do you have like a jar?

• 27:29Speaker 04

  Gabe takes them.

• 27:30Speaker 03

  Yeah.

• 27:30Speaker 04

  Yeah. He takes them and he just, just collects and.

• 27:32Speaker 03

  He's got a piggy bank somewhere.

• 27:33Speaker 04

  Mm hmm. And then he goes to the bank and just, just, you know, he got a hundred dollars sometimes. One time he got 500 bucks. He collected so much.

• 27:41Speaker 03

  Oh, nice. Take it to like a coin star?

• 27:43Speaker 04

  Yeah, I, I prefer not to. I have them roll them because it's a lot more.

• 27:48Speaker 03

  You put them to work.

• 27:49Speaker 04

  Oh yeah. Plus you get more, you know, they, they, they take what 10% maybe?

• 27:53Speaker 03

  Yeah. I'm not sure what the coin star charges.

• 27:55Speaker 04

  I think it's like five or 10%. There's a percentage.

• 27:58Speaker 03

  Yeah. Yeah.

• 27:59Speaker 04

  So he, he did it one time and then he saw how much he got and he was like, oh, I'm not doing this again.

• 28:06Speaker 03

  That's so much work. Well, that's great. I hope this happens. Get rid of those pennies and nickels. I'm going to take another break today. We're Money Wise. We'll be back in a few minutes.

• 28:14Speaker 00

  Have you been putting off your finances? Seize the day. Call the Money Wise office at 661-847-1000 or email [email protected] for more information.

• 28:33Speaker 03

  No more change. We're the Money Wise Show. Thanks for tuning in. I'm Sharad Waite here with Sammy Abiawi. We made it through the Super Bowl. Right around this-

• 28:43Speaker 04

  That was a beating, man.

• 28:44Speaker 03

  Yeah.

• 28:45Speaker 04

  That was a beating. I felt bad for Kansas.

• 28:47Speaker 03

  I felt bad. They looked so sad, too, like, towards the end.

• 28:50Speaker 04

  Yeah, I didn't even realize. I mean, it did not, it just didn't. They looked sad. They looked weird.

• 28:56Speaker 03

  Yeah.

• 28:57Speaker 04

  I don't know. I felt bad. Gabe was very happy.

• 29:00Speaker 03

  You know, right around this Super Bowl weekend, Antonio Brown came out in the news. You remember Antonio Brown, I'm sure?

• 29:09Speaker 04

  Yeah, he was a Steeler at one, a Steeler at one time.

• 29:12Speaker 03

  Yeah.

• 29:13Speaker 00

  Majority of the time.

• 29:14Speaker 04

  Until he lost it. He walked out of the field and I remember that vividly.

• 29:20Speaker 03

  Kind of a hothead, I guess.

• 29:21Speaker 00

  Oh, yeah.

• 29:22Speaker 04

  I think he's just crazy, in my opinion. I don't know. Maybe he's got some problems.

• 29:25Speaker 03

  I think he played 10, 10 or 11 years in the NFL.

• 29:29Speaker 00

  Oh, yeah.

• 29:30Speaker 04

  Talented, talented guy, too.

• 29:31Speaker 03

  Oh, yeah. I mean, you have to be to, you know, just to be at that level for that many years. He was on a podcast over the weekend where he, where it came out that he has filed for Chapter 11 bankruptcy. He actually filed in May of 2024. And he said on the podcast that he had made over $100 million on and off the field and now is declaring bankruptcy. You know, he says he just blew all the money. He says he just blew everything. And it, you know, this happens very regularly, way more than, than people realize how professional athletes can go, can go through a lot of money really quickly. I mean, some of the, some of the biggest examples would be Mike Tyson,

• 30:16Speaker 03

  who was estimated worth $400 million at one point. He filed bankruptcy in 2003 citing he had debt problems. Evander Holyfield was worth approximately 250 million in his, at his peak. And again, he said because of his lavish spending and failed business ventures and child support obligations.

• 30:40Speaker 04

  11 kids.

• 30:41Speaker 03

  Is that how many?

• 30:42Speaker 04

  11 kids.

• 30:44Speaker 03

  Holy cow.

• 30:44Speaker 04

  Lot of baby mamas to feed.

• 30:45Speaker 03

  Man, Michael Vick, going back to the NFL quarterback. He earned an estimated 25 million a year at his peak. Filed for a Chapter 11 bankruptcy in 2008. He had debts of over 10 million, 10 to 50 million dollars.

• 31:01Speaker 04

  He came back, though. See, that guy came back out of jail, played at a high level and played for, did he play for Andy Reid again? At the Eagles?

• 31:12Speaker 00

  I think so, yeah.

• 31:13Speaker 04

  Yeah, yeah.

• 31:14Speaker 03

  You know, that is impressive.

• 31:16Speaker 04

  Yes.

• 31:16Speaker 03

  Yeah, you know, you have to kind of dig a little deeper to see some of these people who've filed bankruptcy and have come back. Nicolas Cage, who is a very well-known actor, faced foreclosure and significant debt in the late 2000s. He had earned over 150 million dollars. Again, he had unpaid taxes and extravagant purchases.

• 31:37Speaker 04

  Yeah, I mean, I listened to some of these. I read about some of these. Allen Iverson.

• 31:43Speaker 03

  Oh, yeah.

• 31:44Speaker 00

  I remember that one.

• 31:44Speaker 04

  Most, you know, athletic and just gifted athletes you can ever watch. 200 million dollars. Severe cash problems at one time. Lavish spending, going out and just buying things that you might not need. Spending $5,000 at TGI Fridays in the case of Vince Young, who earned 34 million dollars during his NFL career and just got some financial problems later on. It's Shaq, I don't know if you've ever listened to Shaq.

• 32:19Speaker 03

  Oh, yeah.

• 32:19Speaker 04

  So when Shaq became, you know, he got drafted, his dad sat him down and had a talk with him. And that changed for, changed his mind eventually because he was spending money on

• 32:33Speaker 03

  Yeah.

• 32:33Speaker 04

  on his high school buddies and other thing and crazy things.

• 32:37Speaker 03

  We've played, I think, a clip on this show where he said, "I learned a word. Once I started making all this money, I was getting paid, and then I learned a word that I'll never forget. Fika."

• 32:51Speaker 03

  Which is your payroll tax. He's like, you mean, I gotta pay payroll? I gotta pay taxes on this money? He's, I'll never forget, FICA. What is FICA?

• 32:59Speaker 04

  Seriously, but and he had that example in his life that that helped him. Some of these athletes don't, and some of these athletes, by the way, Sher, they get taken advantage of.

• 33:09Speaker 03

  Yeah.

• 33:09Speaker 04

  By some of the closest advisors they might have.

• 33:12Speaker 03

  Well, Otani, Shohei Otani had this happen to him, his own inner circle, his translator.

• 33:18Speaker 04

  Yeah, his translator was betting money, his money.

• 33:20Speaker 03

  His money?

• 33:21Speaker 04

  Yeah.

• 33:21Speaker 03

  Like, taking his, his money, millions of dollars. I think he's, I think he's in jail or serving some jail time.

• 33:26Speaker 04

  Sentenced to, to, to jail, yes.

• 33:28Speaker 03

  Like, you imagine somebody like that, this is, you know, the top baseball player in the world could have, can be taken advantage of financially. So it, yeah, it's, it's, it's very easy when you have just so much money coming in. They have these different business ventures and things.

• 33:45Speaker 04

  That's why I, I recommend for athletes that are going through college before they go get drafted, do whatever. Take some financial classes or some financial education to help yourself understand the ins and outs. Some of these people just made some bad investments.

• 34:02Speaker 03

  Yeah.

• 34:02Speaker 04

  You know, some people talk them into some great, great idea about a new investment or new products and they go, you know, and Joba Oil, I go back to that.

• 34:11Speaker 03

  Yeah, all right.

• 34:15Speaker 00

  I remember that with Antonio Brown, cause last, I think it was in 2023, he bought like half of a, an arena football team.

• 34:23Speaker 04

  Oh, yeah.

• 34:24Speaker 00

  And then didn't pay the coaches and ended up getting kicked out of that arena league. But that was a half a million dollars that he spent just for like 48% of the team. And a year and a half later, he's filing for bankruptcy.

• 34:39Speaker 04

  So Stephen, maybe you know this, I mean, you, you get drafted as a basketball player, as a football player. You're probably in your late teens, maybe early twenties, and then you, you.

• 34:52Speaker 04

  You get signed up and all of a sudden you're making millions. Sure, you've seen it in your world as a financial advisor if people win in the lottery.

• 34:59Speaker 03

  Yep. Yeah, or inheriting a bunch of money that I've definitely seen. There's, there's, we've talked about the sudden wealth syndrome.

• 35:05Speaker 04

  That's right.

• 35:06Speaker 03

  Which is, you know, what the mind trip that it is for somebody when they, when they happen upon a bunch of money, a bunch of zeros after they just don't know what to do. It's, you're in a vulnerable spot for a few years until you can sort of adjust.

• 35:21Speaker 04

  That's right.

• 35:22Speaker 03

  And you gotta be really careful.

• 35:23Speaker 04

  So these young people sometimes don't have the best advice. They don't have the best, the best circle around them and they get taken advantage of. Or sometimes they just have excessive spending.

• 35:32Speaker 00

  Well, that's what, like you were saying with Shaq, I remember when he was a rookie, he had said that the, he spent like a million dollars in one day.

• 35:39Speaker 04

  Yes.

• 35:40Speaker 00

  Bought three, you know, sweet cars and something for his mom, a house. And he was like, wait, where did all this money go?

• 35:48Speaker 03

  Yeah.

• 35:49Speaker 00

  And he said, that's when we, we used to play that FICA play.

• 35:52Speaker 03

  Yeah.

• 35:53Speaker 00

  Quote, cause he said that, I'm glad it happened when I was a rookie because he went on to play another 15 years.

• 36:00Speaker 04

  That's right.

• 36:00Speaker 00

  And had to learn the, the hard way, but luckily his parents taught him, sat, sat him down, said, hey, hey, hey. You know?

• 36:07Speaker 03

  There's a few of those athletes, maybe you can remind me, Stephen, who, who essentially live off of their.

• 36:13Speaker 04

  Sponsorships.

• 36:14Speaker 03

  Yeah, but they, and then they, or they, or they live off of just their salaries, but they save all their sponsorship money.

• 36:20Speaker 04

  So yes, I know Stephen Gronkowski is one of them. Saved a hundred percent of his 70 million dollar career earnings.

• 36:27Speaker 03

  I mean, come on.

• 36:28Speaker 04

  Kawhi Leonard still drives 1997 Chevy Tahoe.

• 36:32Speaker 03

  That's what I'm talking about.

• 36:34Speaker 04

  Marshawn Lynch got, lived off Skittle, Skittle's endorsements.

• 36:39Speaker 00

  There was a couple of players that would still stay in their parents' house.

• 36:43Speaker 03

  Yeah.

• 36:43Speaker 00

  Because they were traveling so much that they didn't want to buy the homes. They waited until they retired and said, well, why am I going to spend, you know, 200 grand, 500 grand on a house when, you know, I'm not even going to be there.

• 36:56Speaker 03

  Right.

• 36:56Speaker 04

  Yeah.

• 36:57Speaker 03

  There was a, there was a, a HBO, um, what's the HBO NFL show? Hard knocks, remember the Hard Knocks a couple of years ago and one of the players, they highlighted how he was just going around giving financial advice to all the players. That's actually really good financial advice and telling them, telling all these players how they need to manage their money and not spend and you know, budget and that kind of thing is, it was brilliant. It was really, really good.

• 37:20Speaker 04

  The most recent one is Saquon Barkley.

• 37:22Speaker 03

  Oh, oh, yeah.

• 37:23Speaker 04

  Yeah, he just played and he won Super Bowl last night.

• 37:26Speaker 03

  Yeah.

• 37:27Speaker 04

  Never spent his NFL salary, lives off sponsorships and things like Nike and.

• 37:33Speaker 03

  Yeah. And then a lot of them go into business, you know, they start all these other businesses because they've got all this cash and they do really well, like far better in the business world than they do in their professional athlete career.

• 37:48Speaker 04

  Magic Johnson.

• 37:48Speaker 03

  Yeah. Magic Johnson's just amazing what he's done.

• 37:52Speaker 04

  Yeah.

• 37:52Speaker 03

  We got a couple of really good messages. I want to do this, Sammy, maybe take a break. We'll come right back. We're going to address these, these, these few messages that we've just gotten in from listeners. So if you're out there listening, stick around. We're going to answer these questions. We'll be right back.

• 38:04Speaker 00

  Money Wise Wealth Management is the only locally owned, independent firm that uses a comprehensive wealth, tax and estate approach, working closely with a highly trusted CPA and attorney. For information on how Money Wise can help you invest and plan for your future, call 661-847-1000. That's 661-847-1000.

• 38:33Speaker 03

  Welcome back. We're Money Wise. Got some great listener questions here. Appreciate anybody who's listening and keep them coming our way. 661-396-1000.

• 38:43Speaker 04

  I'll go for the first one, Sherrod. Hi, Money Wise. Five years ago, I did a back, backdoor Roth conversion, $200,000. I paid taxes with some extra money I had in my savings account. I'm 64 and I would like to start converting $50,000 a year for the next five years into the Roth account. But I want to have them tax the 50,000 before I converted. What's your thought? And if I live to see 75, that's probably when I start using that money. I still have my 401k, 1.5 million. I don't plan on moving my 401k even when I retire until I pass away. I'll let my family deal with that. Working with Fidelity, great show as always.

• 39:22Speaker 03

  Ah, this is great. Great listener question. So Roth conversions can get very tricky. And we always recommend that if you're considering a Roth conversion, get some advice because there are some really good calculators that we use here at Money Wise, other financial advisors, some of them have access to these calculators. But with the right information, you can know exactly when and how it would make sense for you to go a Roth versus a traditional IRA. So for our listeners, just real quickly, a Roth IRA is different than a traditional in that a Roth, you've already paid the taxes on the money that's gone into it, but you get to withdraw it tax-free. Whereas a traditional IRA, you don't pay the taxes on the money that goes in it.

• 40:07Speaker 03

  So you get that tax break upfront, but then when you do pull the money out, you're taxed at it as at ordinary income rates. So congratulations, this listener went a step further and did a backdoor Roth, which is you have to have under a certain amount of income to be able to qualify to contribute to a Roth. There are some backdoor ways into it by, for example, contributing to a non-deductible traditional IRA and then converting that into a Roth. So really, a lot of the hard work has already been done here. But the question is now, if you want to continue to do a Roth conversion or if you want to contribute to the Roth, you're going to have to pay taxes on that money that goes into it.

• 40:52Speaker 03

  And you're weighing the benefit of the, or the benefit of...

• 40:58Speaker 03

  Getting that tax deduction now versus getting it later. You're really, you're going to want to have to run the calculation on that. One thing that I could tell you though, is that if you have a 401k, it sounds like you're still working and you're contributing to 401k. Most 401ks offer a Roth option. So, consider putting some of your 401k, if you still believe that it's to your advantage to contribute to a Roth, then consider a 401k Roth. You can start making contributions into your Roth portion of your 401k. This is great. I think the listener's really smart because they're saying, this is going to be my kids or my grandkids worries my 401k that hasn't been taxed. I'll let them worry about it at that time. And that's where some people definitely would want to consider having money,

• 41:43Speaker 03

  some of your retirement money that's already been taxed, like a Roth. Because then it gives you that flexibility to be able to pull money out without being taxed on it. Think, you know, down the road in your retirement, maybe you want to buy a car or you want to make a large purchase. If you're taking it from a Roth, you don't have to worry about the taxes on that. Of course, your beneficiaries will thank you if you have your money in a Roth because they can inherit that and they don't have to pay any taxes on it. Whereas if they inherit the traditional 401k or traditional IRA, your beneficiaries are going to have to deal with, your spouse will have to deal with the taxes, but even more so, your kids will have to deal with it, especially with the recent law changes with, in terms of inheriting IRAs,

• 42:25Speaker 03

  which require your kids to pull it all out within 10 years. Which is, you know, that can be incredibly tax-heavy for beneficiaries. So, great question. Great question. Got another one here, right Sammy?

• 42:38Speaker 04

  Yeah. Will the tariffs on steel and aluminum affect the cost here in California for business owners? I'm a new fan of Kendrick. I haven't liked a lot of new rappers over the last six or seven years, but started downloading his music during the second half of that boring day.

• 42:55Speaker 03

  That's great.

• 42:56Speaker 04

  Oh, wow.

• 42:56Speaker 03

  Welcome to the Kendrick Lamar Club. Let's talk about tariffs. We mentioned this a little bit in the beginning of the show. I just did some, some real quick research in terms of what we import in the country for steel and aluminum. I was very surprised to learn that we import nearly half of the alum, half of the aluminum that we use, that we consume in the United States, about half of it is imported.

• 43:21Speaker 04

  Where from do you especially, or is it just all over?

• 43:24Speaker 03

  I'm not sure where, that's a good question.

• 43:25Speaker 04

  Yeah.

• 43:26Speaker 03

  I don't have specific numbers on California, but you have to, you have to believe that California, being the largest economic state here in the country, that that's going to have an enormous impact on Californians. Because, you know, whatever that percentage is, United States, for example, in 2023, consumed about 93 million tons of steel, that which accounted for 13% of its demand. So that means we import about 13% of steel and about 50% of aluminum. And so, you know, that's going to be quite a bit that's going to impact California.

• 44:07Speaker 03

  So this is a, this is a tricky one, because we, again, we don't know what, we don't know how long this will last. President Trump has shown that he can pull these.

• 44:19Speaker 04

  Especially with these tariffs, yeah. I mean, I did a quick thing here. Our largest supplier for aluminum is Canada. 50% of the US imports.

• 44:26Speaker 03

  Oh, there you go.

• 44:27Speaker 04

  For aluminum, we're coming from, from Canada.

• 44:29Speaker 03

  From Canada.

• 44:29Speaker 04

  Then, then China and Mexico, that's 7 to 10%. Russia, not, none recently because of all the sanctions and the war in Ukraine. United Arab Emirates with some, a small percentage of 5 to 7%. So truly, Canada and China are in the lead with Canada being at 50%.

• 44:51Speaker 03

  Steel and aluminum is in everything. I mean, think of all construction and all that stuff.

• 44:56Speaker 04

  Yeah.

• 44:57Speaker 03

  Good questions. Before we go, Sammy, I don't know if you read over the news, the local news reported on Saturday, there was a Honda Civic caught going 125 miles an hour on the West Side Parkway. Got pulled over, got cited for reckless driving and the car was towed.

• 45:17Speaker 03

  My first thought was, how can a Honda Civic go 125 miles an hour? Did you know that those little cars can go that fast?

• 45:26Speaker 04

  I mean, 125 on the

• 45:28Speaker 03

  West Side Parkway.

• 45:29Speaker 04

  That's, that's, that's very reckless.

• 45:31Speaker 03

  Very reckless, but also go Honda Civic? Like, how is that?

• 45:36Speaker 04

  Yeah.

• 45:38Speaker 03

  That seems, I didn't know they had it in them.

• 45:42Speaker 04

  They do.

• 45:43Speaker 03

  Apparently.

• 45:43Speaker 04

  Apparently they do.

• 45:44Speaker 00

  You ever watch Fast and Furious?

• 45:45Speaker 03

  Oh, what do they, they trick them out?

• 45:48Speaker 04

  They trick them out.

• 45:49Speaker 03

  That reminds me of the, when Priuses first came out, their same thing happened. There was somebody, who was Wozniak? I think it was Steve Wozniak, one of the co-founders of Apple. He was caught going over 100 miles an hour in a Prius. And he said, because he wanted to let everybody know how fast they were. He was trying to promote them like hybrids. Look how fast a hybrid can go, can go over 100 miles an hour. Man.

• 46:10Speaker 04

  Oh.

• 46:11Speaker 03

  Well, good job, Baker for the Police Department, getting that reckless driver.

• 46:16Speaker 04

  I thought you were going to talk about the high-speed chase in front of our office last week.

• 46:20Speaker 03

  Oh, my goodness. Oh, so much to cover here. We barely scratched the surface. If you want to tune in tomorrow, Andre Gonzalez, Baker for the City Councilman will be on our show. We're going to talk about what's going on economically in the city. As we leave, remember these three things: be smart, be safe, and always be money wise.

• 46:38Speaker 02

  Securities offered through SCF Securities, Inc., member FINRA/SIPC. Investment advisory services offered through SCF Investment Advisors, Inc. SCF Securities, Inc. and Money Wise Wealth Management are independently owned and operated.