2/3/26 Buyer Beware: Insurance Sales, Credit Traps, and Paying Down Debt

The Moneywise Radio Show and Podcast Tuesday, February 3rd BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

• 0:00Speaker 00

  Live from the basement inside the historic Woolworths Building in downtown Bakersfield. Call or text in at 661-396-1000.

• 0:29Speaker 01

  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

• 0:37Speaker 00

  Now, let's start the Money Wise Show.

• 0:41Speaker 02

  And welcome to the Money Wise Show. We are live from the basement of the historic Woolworths Building in downtown Bakersfield. For the next hour, you are on KGO Money Talk, 1230 AM, 101.1 FM, and always streaming at MoneyWiseGuys.com. You could call or text into the show 24 hours a day at 661-396-1000. We are your hosts, I'm Sharad Waite and...

• 1:04Speaker 03

  Frank Lee.

• 1:05Speaker 02

  Hey Frank Lee.

• 1:06Speaker 03

  Hey.

• 1:06Speaker 02

  It's, uh, great seeing ya.

• 1:09Speaker 03

  It's a lovely Tuesday.

• 1:10Speaker 02

  Yeah, we actually had lunch together.

• 1:12Speaker 03

  We did, it's, it was great. It's always great having lunch with you guys.

• 1:16Speaker 02

  I know.

• 1:16Speaker 03

  Yeah, I need to do that more once, uh, you know, I make that senior level.

• 1:22Speaker 02

  No, I don't know, we do, I guess we do sometimes do lunches just us, but this was all the boys at lunch today at Locals, amazing, love being downtown. And, um, so it was always nice to hang out.

• 1:35Speaker 03

  Yeah, yeah, um, it was great, uh, the food there was great as well, and I think, I think that was my first time eating there.

• 1:42Speaker 02

  Oh yeah?

• 1:42Speaker 03

  Yeah, Locals.

• 1:43Speaker 02

  Congratulations.

• 1:44Speaker 03

  Yeah, so it was good.

• 1:44Speaker 02

  Farm to table.

• 1:45Speaker 03

  Farm to table.

• 1:46Speaker 02

  Uh, super good, it was, it was great. We got some, some great messages and I'd like to see if we can start out there. You got the first question?

• 1:56Speaker 03

  Yes, I do, let me pull that up, okay. First message is, I am 72 years old. Would getting a whole life policy now for the purpose of gifting my two grandchildren as beneficiaries for a tax-free gift a good idea? Their ages now are 10 and 7.

• 2:15Speaker 02

  Ooh, I love this question because it really made me think.

• 2:19Speaker 03

  Yeah, I've never heard someone getting a whole life policy to gift their grandchildren.

• 2:25Speaker 02

  Yeah.

• 2:26Speaker 03

  But I'd be interested on your take, but I know we've had multiple conversations on when it is appropriate to get whole life policies.

• 2:36Speaker 02

  Yeah.

• 2:36Speaker 03

  And usually in this case, it's very slim to none. Just because of the overall estate planning that takes place. And in order to, you know, go that route, you'd need a, you would have had to have a substantial amount of wealth.

• 2:52Speaker 02

  Yeah.

• 2:53Speaker 03

  That if you were to give anything further, you would be taxed heavily, substantially taxed.

• 2:59Speaker 02

  Or your beneficiaries would get a death tax or an estate tax.

• 3:03Speaker 03

  Yes.

• 3:03Speaker 02

  So many people I know are shocked. I am shocked too, when I, when I remind myself of what those limits are. A single person is about 15 million. If you're married or were married and you preserve that through your, you know, what you own in your trust, that's $30 million. So, I mean, you and I don't know too many people that are over that threshold.

• 3:25Speaker 03

  Definitely not me.

• 3:25Speaker 02

  We're not in that circle of people. I mean, they're out there for sure.

• 3:28Speaker 03

  Yeah.

• 3:29Speaker 02

  But it's very rare that the person has an estate tax issue. Most people listening to this show don't have that, that issue. That means, and let's be clear, because you, many people think that if you gift money to another person, somebody's going to have to pay taxes on that. You don't pay any taxes on money that you gift to anybody at any time, no matter what, until. In your lifetime, you've gifted over that 15 million if you're single, 30 million if you're married. Now, that's just what the limit is this year. That that limit can change and Congress plays with that number every few years. And that, you know, so, you know, it could go back down to what it was, say, you know, 15 years ago, which was was probably a few million.

• 4:14Speaker 02

  Yeah, might have been like half of that or whatever, but still 6 million.

• 4:17Speaker 03

  Yeah. And just to clarify, you're talking about the lifetime gift exemption.

• 4:23Speaker 02

  Yes.

• 4:23Speaker 03

  Which is different than the annual gift exclusion.

• 4:26Speaker 02

  Correct.

• 4:27Speaker 03

  Which can be confusing.

• 4:28Speaker 02

  Yes.

• 4:28Speaker 03

  But if played correctly, you can get away with, you know, having to dip into the lifetime gift exemption.

• 4:36Speaker 02

  But again, we're only talking about somebody who's anticipating gifting more than 30 million dollars.

• 4:41Speaker 03

  Exactly.

• 4:41Speaker 02

  That would then be going, okay, well, how much can I gift without it counting towards my lifetime allowance of 30 million? And that's that, is it 15 million this year? I mean, 15,000?

• 4:54Speaker 03

  Oh.

• 4:54Speaker 02

  Was it 19,000?

• 4:56Speaker 03

  19,800.

• 4:57Speaker 02

  Okay, okay.

• 4:58Speaker 03

  Per spouse.

• 5:00Speaker 02

  Per spouse.

• 5:00Speaker 03

  Per spouse, per beneficiary.

• 5:03Speaker 02

  Yes.

• 5:03Speaker 03

  So it's so in total, if in this example, if you and your spouse wanted to give both of your grandchildren, it'd be 38,000 each.

• 5:14Speaker 02

  Right, every year.

• 5:16Speaker 03

  Every year.

• 5:16Speaker 02

  And it wouldn't discount that 30 million that you can still gift without anybody paying any taxes.

• 5:23Speaker 03

  Exactly.

• 5:24Speaker 02

  So this is a, this is a, this is a tool that the, that wealth, that wealthy families use very frequently when they have large estates in order to minimize their estate without paying taxes. Then they are limited to that, that annual 19,800 dollars. Let's round it up to 20,000 dollars a year.

• 5:47Speaker 03

  Yep.

• 5:47Speaker 02

  Per spouse, per person. So both you and a spouse can give 40,000 dollars per person. Whoever you want, doesn't have to be family, it could be anybody. And you don't have to, you don't have to pay any taxes on that. You do need to file a, a. You do need with your tax return, file the fact that you gave, if you give money more than that $19,800, you still don't pay taxes then, but you do need to put it on your tax return. And that way, you are keeping a running tab of how much money was gifted to whom. So that the IRS knows that if you pass away, they go, okay, well, we see that you've gifted already a million dollars.

• 6:27Speaker 02

  So now you only have $29 million left that you can gift with before we're going to charge a death tax or an estate tax. Right? Am I explaining that right? Does that make sense how I said it?

• 6:38Speaker 03

  Right, right.

• 6:38Speaker 02

  Yeah.

• 6:39Speaker 03

  Yeah, yeah, yeah. And I stand corrected, it's 19,000, not 19,000.

• 6:43Speaker 02

  Yeah, it's just straight 19,000.

• 6:44Speaker 03

  19,000, yes, yes.

• 6:46Speaker 02

  And I, yeah, that, that number can be confusing. For years, that was $10,000. And then it was $11,000 for a while. And, and I still talk to people this day that goes, well, I'm, I'm just going to gift the 10,000. I go, okay, why you, why at 10,000? And they say, well, because I don't want to have to pay taxes on that. And it's like, well, no, guess what? Your total estate is worth $500,000. So you're never going to pay a gift tax unless you inherit or win the lottery or something, you're never going to pay that. But let's take it back now to the question though, because let's assume that this individual who is wanting to gift to their, to their two grandchildren, doesn't have $30 million. And this is not to avoid an estate tax or a death tax.

• 7:28Speaker 02

  It's my suspicion is that this is just a question asking how, how can I use, or can I use life insurance as a way to maximize a gift that I want to give to my kids or my grandkids? And, and, and that is also a whole nother fascinating question because I think sometimes there's a misconception of what life insurance companies can do. Like, meaning that you can kind of game the system and say, well, I'm going to get a million dollar life insurance policy. And it's going to cost me whatever each month, but, but then if I die, my, my estate gets all of this money and boom, I've, I've won, I've, I've beat the system. Like the only-

• 8:13Speaker 02

  The only time that that might work is if you get the, you're healthy and you get the life insurance policy and then you get a terminal illness diagnosis and then you pass away.

• 8:24Speaker 03

  Oh, I see. I see what you mean.

• 8:25Speaker 02

  Right. Yeah. It's like, and if you know that that's going to happen, well, you have to disclose that to the insurance company. Like they're going to do a background, they're going to do a full medical background check. They're going to look at your medical records. And especially when you're older, they're going to look at it and they're going to look at your history. And so you're going to, they're going to either deny that life insurance for you, or they're going to charge you, and I looked it up. What would you guess on average in the country, a 72 year old male, healthy male, so non smoker, for a hundred thousand dollar like whole life policy? What do you think the average premium, monthly premium is?

• 9:05Speaker 03

  Yeah. So I'm trying to calculate back in my days at my old job.

• 9:10Speaker 02

  Yeah.

• 9:10Speaker 03

  Let's see, I, I, cause I took out a whole, a whole life policy for myself for 50,000. And I was paying roughly over 120. So little, little over 1,200 per year. So I can only imagine for a 72 year old that's still healthy. You're probably looking at close to 10,000.

• 9:34Speaker 02

  Yeah, you almost nailed it. It's, it's about a thousand dollars a month.

• 9:38Speaker 03

  Yeah.

• 9:39Speaker 02

  So about 12,000 dollars a year that you, that's healthy.

• 9:42Speaker 03

  Yeah.

• 9:42Speaker 02

  So now you ask the question, okay, if you've got a healthy 72 year old and they're wanting to gift the most amount of money to their grandkids. Is that really the way to do it? You're going to pay a thousand dollars a month?

• 9:54Speaker 03

  Right.

• 9:54Speaker 02

  For how long you think you're going to live? Now, maybe you've got something whispering in the back of your ear telling you, you're going to die in the two years. Okay. You know, and you don't have any evidence, but it's just like, I got a gut feeling. I'm not going to make it. Okay. You might, you might win that, but it's, these insurance companies are not dumb. They know exactly what they're doing. They, they, they know how to play the odds. And the odds are if you're a healthy 72 year old. You would be better off, likely you would be better off just gifting that money to your grandkids now. Or just stick it away in an account for them.

• 10:33Speaker 03

  Yep.

• 10:33Speaker 02

  And then let them, let them inherit that. Here's the other thing, life insurance policy won't pay out to a minor. So it's going to have to go to a trust or something. Also, whereas, you know, there's some other more flexible ways that if you're just going to gift money now, like you don't have to worry about a trust, you know, it's like here.

• 10:52Speaker 03

  Yeah, because the flip side of it is that, yes, you can pay the average, the average 1,000 or so. Cause some, some of these whole life carriers can be more expensive. So you can pay that much, or you can put it, like you said, in an account, a TOD account. Where on death transfers over and there's a step up basis.

• 11:11Speaker 02

  That's right.

• 11:11Speaker 03

  So even if they sell at the time of your death, it's essentially tax free.

• 11:16Speaker 02

  No taxes. Yeah, exactly.

• 11:19Speaker 03

  That's why, that's why I saw mind boggling when, you know, a lot of these people are pushing whole life. And arguing that there's tax benefits to it. It's like, well, no, not exactly. Like you can still do it on this way. Like you don't have to get a whole life.

• 11:32Speaker 02

  Right.

• 11:33Speaker 03

  So, and, and when you're investing it yourself, you can structure it however you want.

• 11:37Speaker 02

  Yep.

• 11:38Speaker 03

  Not on the whims of the insurance company.

• 11:40Speaker 02

  Right.

• 11:40Speaker 03

  Which is not that much better.

• 11:42Speaker 02

  Right. It's usually like cash. It's almost like money market. Even if they're going, oh no, we have a great return, you know, look at, look at this. Even if you have, so whole life policy, but you also have like a variable, universal life or variable whole life policy, which is the underlying investments that are still tied to the stock market in some ways. Like, so you can choose how that's invested. Okay, great. And, and you can, the taxes are deferred. Okay. That's, that's, that's great. But at the end of the day, most of it comes down to is this is the less than $30 million estate. Well then, why do you care about the estate tax? You know, there's, there's, there's just, it's, it's hard to figure out how it would make sense in my, in my world

• 12:27Speaker 02

  of how it would make sense to use a life insurance policy if your goal is to just try to send, pass on the most. Money as possible unless you win the insurance lottery.

• 12:37Speaker 03

  Yeah.

• 12:38Speaker 02

  Which can happen. That happens for sure.

• 12:40Speaker 03

  That recent one, the it was the second largest Powerball, like 1.8 billion.

• 12:45Speaker 02

  Yeah.

• 12:46Speaker 03

  If you're that person, then yes.

• 12:47Speaker 02

  Yeah.

• 12:47Speaker 03

  You do you sort of have to think, okay, what are some additional resources I can tap into and not have to pay the estate tax?

• 12:55Speaker 02

  The estate tax, because if they died, if they get that 1.88 billion and then they die, they die tomorrow, they're going to lose half of that.

• 13:03Speaker 03

  Right, right.

• 13:04Speaker 02

  To estate tax.

• 13:05Speaker 03

  Exactly. Well, even winning the 8.8, 1.8, they're already taxed with the lottery if they take the lump sum. And then your walk away, your take home is what, 6, 7, 800?

• 13:17Speaker 02

  Yeah, 800 million.

• 13:19Speaker 03

  Yeah.

• 13:19Speaker 02

  Yeah.

• 13:20Speaker 03

  That, yeah, that itself still is far.

• 13:25Speaker 02

  Over the limit.

• 13:26Speaker 03

  Yeah, exceeds the the estate's amount.

• 13:28Speaker 02

  It'd be $50 million that you would be, that you would owe estate tax on. And I can't remember the the rate, but it's high, like the estate tax is high.

• 13:38Speaker 03

  Yeah, more than 40%.

• 13:40Speaker 02

  Yeah, I think so. And, and, you know, California does not, though, have that, that death tax, which is nice. Go California. And we get crapped on a lot for having high taxes.

• 13:51Speaker 03

  Well, not that one.

• 13:52Speaker 02

  Not that one. California doesn't, doesn't have that estate tax or that death tax, but on the federal level.

• 13:58Speaker 03

  Yeah.

• 13:58Speaker 02

  You would be stuck with that.

• 14:00Speaker 03

  Yeah.

• 14:00Speaker 02

  I, I, you know, I'm sure there's something maybe that we're missing here on it, in terms of this question.

• 14:06Speaker 03

  So I mean, again, coming from where I came from back in the the insurance companies, I, we can dive into some of the more, you know, clever ways that a lot of these agents are sort of selling life insurance. But I don't know if I want to open up that Ken Warren's.

• 14:24Speaker 02

  Why?

• 14:25Speaker 03

  I don't know.

• 14:25Speaker 02

  Friends over there?

• 14:26Speaker 03

  Uh, no, not really. I mean, if we want to, we can, we can get into it.

• 14:31Speaker 02

  I, I want to hear it. I want to hear something here because it is, I have, I have a few pet peeves in our industry. One of them is the overselling of whole life and permanent. Life insurance.

• 14:44Speaker 03

  Oh, yes, 100%.

• 14:45Speaker 02

  It's just, it's just oversold and it's oversold to the people that can least afford it. Or at least, least need it. But it seems to me to be driven primarily off of the high commissions that are paid from it.

• 14:58Speaker 03

  Yes, yes.

• 14:59Speaker 02

  Like that, that's it.

• 15:00Speaker 03

  Yeah.

• 15:01Speaker 02

  And that is, seems not good for our industry.

• 15:06Speaker 03

  Yeah.

• 15:06Speaker 02

  Cause they're calling themselves financial advisors.

• 15:09Speaker 03

  Yeah.

• 15:09Speaker 02

  When really they're looking at a tool, one or two tools. And so they think that is the answer to everything.

• 15:17Speaker 03

  Yes.

• 15:17Speaker 02

  Like every problem, they say every problem is a nail when you only have a hammer.

• 15:21Speaker 03

  Yeah.

• 15:22Speaker 02

  To, to solve it, you know?

• 15:24Speaker 03

  Everyone's in it, yep.

• 15:25Speaker 02

  Yeah, it's like, oh, I got the fix for that. Turns out I got a hammer, a Swiss Army hammer that can solve that. It's called permanent life insurance. And it's like, oh, Jesus.

• 15:33Speaker 03

  And, and I think I brought this up in our teams meeting before, but there was a recent article from The Guardian about a specific company that, you know, people who go into this industry, it's a revolving door and it's, it's pretty bad on how they really set you up for kind of like failure, but they're, they're sort of clever about it because they perfected their way, their language on how it seems like, no, this is part of the, your road to success.

• 16:02Speaker 02

  To success. And then they can always point to a couple of people in the organization. Look at that person. Look at the.

• 16:07Speaker 03

  You just gotta do what they do.

• 16:09Speaker 02

  Right. That person over there, they made a fifth, they made 200 calls a day for the last 10 years. And look at that Cadillac they drive, you know? You see the same pitch in multi-level marketing.

• 16:23Speaker 03

  Yeah.

• 16:23Speaker 02

  Which is still a thing.

• 16:25Speaker 03

  Yes.

• 16:26Speaker 02

  You know, where it's, you know, they're really touting how you can have this, you know, independence, financial freedom by, you know, selling whatever it is, candles or, or, you know, health, health supplements.

• 16:40Speaker 03

  Yeah.

• 16:41Speaker 02

  And, and then when you look at how those schemes are set up, it's a very, very small percentage of people that actually go up to the very top. And it's, then it's the rest of the people down below that are supporting them.

• 16:55Speaker 03

  Yes. So, um, one of the main issues that I've had with a lot, with where I worked and, and most likely a lot of these other insurance companies that sell whole life is that they've really.

• 17:10Speaker 03

  Perfected their way and tailoring the conversation to where it fits a specific risk. So they use whole life policy as not just a product for providing that death benefit, but a way to take a line of credit. So you know how we were talking about S blocks?

• 17:34Speaker 02

  It's like banking on yourself concept.

• 17:35Speaker 03

  Exactly, exactly. Banking on yourself.

• 17:37Speaker 02

  Yeah, explain that.

• 17:38Speaker 03

  So before, before I get into that, there's something in the financial advising world that we sort of talk about. We've talked about in our team meetings regularly is the sequence of return risk.

• 17:51Speaker 02

  Yeah.

• 17:53Speaker 03

  So if anyone's familiar with that, that term, it's basically making sure that when you retire, obviously you don't have income coming in, so you have to rely on whatever retirement savings you have while it's still being invested. Well, as we all know, the market fluctuates. So if you're taking, if you're starting to take distributions from your, your 401k, your IRA, whatever account you have, you are potentially taking away some of the principal, especially on down markets. So if a market is down, you're taking more of it out.

• 18:29Speaker 02

  Right.

• 18:29Speaker 03

  Than you would if the market was either flat or up. So that is the sequence of return risk.

• 18:35Speaker 02

  Yeah.

• 18:36Speaker 03

  How they've structured it, and this is, this is brilliant, by the way, because it, it taps in again to their, the investors' emotions and fear. It's like, oh shoot, like I'm gonna run out of money if I just do, because the, the demonstrated or the portfolio that they've, gave an example is, is a 65 year old who, who retires at 65 has a million dollars in their IRA and they're drawing down 6% each year. So instead of the, the 4% rule, it's 6%. One illustration showed that by 20 years, and they, they used the example from 2008 to 2020.

• 19:19Speaker 03

  Or 2018, I think.

• 19:21Speaker 02

  Like, so that 10-year period, they, that's the example that they say if the markets were like this during that time and you were taking 6% off of a million dollars.

• 19:29Speaker 03

  I think it was, I think it was, I forget when, but it was, it was a 20-year period.

• 19:33Speaker 02

  Yeah.

• 19:34Speaker 03

  Within those 20 years, you're now 84, that next year, in order for you to take distributions out, you would have none.

• 19:41Speaker 02

  Right.

• 19:41Speaker 03

  In that 60-40 portfolio of a million dollars.

• 19:44Speaker 02

  Yeah.

• 19:44Speaker 03

  Uh, that is the sequence of return to risk.

• 19:48Speaker 02

  Yeah.

• 19:48Speaker 03

  Essentially, your money not lasting long enough.

• 19:50Speaker 02

  Right.

• 19:52Speaker 03

  Where they use the whole life policy is that they're, they're saying, well, if you were to take a line of credit out from the whole life policy and substitute it on those down market days, you would still end up having a million dollars when you're 84.

• 20:08Speaker 02

  But you'd have a loan.

• 20:10Speaker 03

  Exactly. You would still have a loan, but what they're saying is that, you know, you can pay off the interest with the, the, the IRA account that you have and then, you know, supplement it.

• 20:21Speaker 02

  Yeah, and they're saying this allows you to kind of stay in the markets and not have to pull it out in down markets, which really hurts you.

• 20:28Speaker 03

  Exactly.

• 20:29Speaker 02

  Which I wouldn't be surprised, I know you're not sure about the timeframe that they're illustrating, but it almost, it would make sense for those times to be an unusual period of market performance.

• 20:40Speaker 03

  Yes, so, and what really opened my eye was when I was here with MoneyWise and seeing that on average, if you're taking large distributions out during the middle of the year, that's the worst time to take money out. That is when you're going to feel the most, the most impact on those drawdowns. Versus if you wait towards the end of the year, then they're not as likely to affect you. They still will, but not as much if they're in the middle of the year.

• 21:05Speaker 02

  Yeah.

• 21:05Speaker 03

  So my thought was that, okay, what if they took that information and just made it worse and say, here, by, because of these drawdowns, you're going to run out of money in 20 years.

• 21:15Speaker 02

  Right.

• 21:16Speaker 03

  But they, they sort of nitpicked, okay, these were the worst times to take. Let's use that as an example.

• 21:21Speaker 02

  Yes.

• 21:21Speaker 03

  And the, the other side of it is that, okay, in that illustration that they used, if it was, Because it was a large sum of money that you have to pull out from your whole life policy.

• 21:33Speaker 02

  Right.

• 21:33Speaker 03

  Don't get me wrong, it's not cheap. So the other question I had for them was like, okay, well then, how much of a whole life policy do you have to get? In order to supplement that scenario, that one million dollar portfolio and you're taking the, because each year you're taking about sixty thousand. And over the course of twenty years with the COLA, the rate of inflation, that gets up to about eighty thousand, a little bit more towards the end of that twenty year.

• 21:57Speaker 02

  Yeah.

• 21:58Speaker 03

  So there were like at least eight down market years, maybe more. And all those times you're taking it out of the whole life policy. Well then, how much of a, how much in your whole life policy do you need in order to supplement that income?

• 22:14Speaker 02

  Yeah.

• 22:14Speaker 03

  And it's substantial.

• 22:15Speaker 02

  It's a big life insurance policy that you're also paying the premium on along the way, all these years.

• 22:20Speaker 03

  All the years, up until, some of them stop at, up until sixty five, but that's still, you know, begs the question, how much do I have to pay into the whole life policy versus if I were to just take that money, do the buy term, invest the difference, put it into a individual TOD or if you're able to into a Roth IRA, where again, tax benefits, you know? So it's like, I would have had more if I invested, even if I invested in a sixty forty through and through, I still would have more.

• 22:50Speaker 02

  Yeah.

• 22:51Speaker 03

  On my end by not buying the whole life policy.

• 22:54Speaker 02

  Yes, I have never seen where it works out for the person to go the whole life insurance policy route versus what you described, which is just invest it the best you can and the proper mix of low cost investments and putting and saving the money for the cost of the insurance and putting it towards that. It always, it always works out for them better in that second scenario.

• 23:22Speaker 03

  Yeah.

• 23:22Speaker 02

  But it doesn't work out for the person selling the life insurance.

• 23:25Speaker 03

  Right.

• 23:26Speaker 02

  And they get paid a lot on those whole life policies. And then the other sad thing is you get stuck with them. I've met with so many people over the years that I've had this whole life policy for thirty years. And now what do I do? And I just, you know, I have to tell them many times, it's time to just cut your losses.

• 23:45Speaker 03

  Yeah.

• 23:45Speaker 02

  You know, like, I don't know why you have this. You don't have a need for life insurance now. Like, why are you gonna keep paying this?

• 23:51Speaker 03

  Exactly. And, and for the most part, I want to say, if you've been in it long enough, you, you technically can. Cause you, at that point, you're past the surrender fee.

• 24:01Speaker 02

  Yeah.

• 24:01Speaker 03

  Surrender charge and you, you have enough cash value built up.

• 24:04Speaker 02

  Yeah, but you don't get those premiums back.

• 24:06Speaker 03

  Exactly. It's like, it's not, it's not a full amount until, cause when I was looking at it for my policy, my whole life policy, it wasn't until like 15 years, maybe, maybe a little bit more. But again, yes, it, it's, it's hard. And this actually brings up a good, uh, case study with, uh, a discovery I had with someone else. They had a, uh, a whole life policy with, uh, I'll say the name, Pac Life. Because Pac Life is making headwinds right now with that, um, uh, who's that NASCAR racer?

• 24:40Speaker 02

  Is this sponsoring? That's, that's one of the sponsors for, his Pac Life is one of his sponsors?

• 24:45Speaker 03

  Uh, Pac Life. So, uh, basically, uh, Kyle Busch. Kyle Busch. So NASCAR racer, he bought like eight million dollars of, uh, whole life insurance through Pac Life.

• 24:58Speaker 02

  Uh huh.

• 24:58Speaker 03

  Um, over the course of a few years, but has no cash value in his account. So he's suing Pac Life.

• 25:06Speaker 02

  Oh.

• 25:07Speaker 03

  For that, yeah.

• 25:07Speaker 02

  Oh, interesting.

• 25:09Speaker 03

  Yeah, yeah.

• 25:09Speaker 02

  He's like, where is this investment?

• 25:11Speaker 03

  Where, where's my money, kind of thing. And so that's, there, there's a whole, whole scandal about that with Pac Life. But this, uh, investor coming in, they also had Pac Life insurance. Uh, but as I was going through the statement, I was like, I'm sorry, like, how long have you guys had this policy for? And why is, why is there no cash value? And I was like, this doesn't make sense. Like, if you had it for this long, you would have had at least some cash value in the account, but there was none. And so this is the part where another, um, uh,

• 25:46Speaker 03

  Issue I have with these whole life policies is that if the agent doesn't have your best interests in mind, in a sense, they could just tack on a lot of the riders.

• 25:59Speaker 02

  Riders.

• 26:00Speaker 03

  Yes, and that's what it is.

• 26:01Speaker 02

  It's getting eaten up by some other guarantee.

• 26:03Speaker 03

  All the fees that are eating away, mortality, the long-term care rider, the retirement rider, all these different riders that they tack on to the policy is going to slowly eat away at your cash value.

• 26:18Speaker 02

  I had no idea about this Kyle Busch issue. I was just, I just looked, Googled it right now. It was an indexed universal life policy.

• 26:28Speaker 03

  Oh, okay.

• 26:28Speaker 02

  Which is, adds another layer, you know, for our listeners, you have whole life insurance, which generally the insurance company is just giving you, usually it's kind of a fixed rate, or, or, you know, an internal guaranteed rate that you get, or a fluctuating rate within a certain range on the whole life policy for the cash that you have sitting in that account. But then you've got other types of life insurance policies that are, the investment is linked, either it's variable, which means it can be linked to a sub-account that's, that's invested, almost like a mutual fund, that, you know, follows an index for the stock market or whatever. But then you've got this other layer that's, that's below that, that's an indexed universal life. So you're using like an indexed, you know, familiar with indexed annuities?

• 27:13Speaker 02

  They're essentially fixed annuities. They are a fixed annuity that is just crediting your interest without loss. So you don't have market loss, so they can give you, they give you that. But what they take in return is, they cap how much you could get on your return, or they take a, they participate in some of those gains, so they, they take some of the gains when there are gains in those years. And so it's a very inefficient way to invest. It's super inefficient.

• 27:40Speaker 03

  Yeah, that's something I still need to brush up on and sort of dive into. But yes, from my understanding with a lot of the conversations that we have, there's a cap that they put you at for participating in, and that's what you get. But yes, you, you don't participate in the. Ups and downs like you would in a variable annuity.

• 27:57Speaker 02

  Correct.

• 27:58Speaker 03

  Yes.

• 27:58Speaker 02

  Yeah, where in the variable annuity or variable universal life insurance policy. It varies and go up and down and then when and when you're participating in the market and you're accepting some of that risk, you should get more return. And generally you do get more return, but you're still not getting the type of return than if you were just direct indexing, or if you were just directly invested in the market and didn't have the insurance company in the mid in the middle of it. So this is a great discussion, Frank. And we can, we can, we can sort of crap on whole life insurance for the whole rest of the hour. But we have several more questions. So we're going to take a break and then keep the questions coming our way. 661-396-1000. That's the number you can text or call. We'd be happy to help you. We're Money Wise. We'll be right back.

• 28:42Speaker 00

  Need to get your financial fix on the go? If so, subscribe to the Money Wise Podcast and catch up on all past shows whenever.

• 28:56Speaker 02

  We're Money Wise. Thanks for tuning in. I'm Sharad here with Frank today. It's so nice to hear the buffer music. Last few months you couldn't.

• 29:04Speaker 03

  On the Zoom.

• 29:05Speaker 02

  On the Zoom, we couldn't.

• 29:06Speaker 03

  It was, it was awkward. Yeah.

• 29:07Speaker 02

  A little awkward.

• 29:08Speaker 03

  Yeah.

• 29:08Speaker 02

  And we did it. We pulled it off. But welcome, welcome to the Money Wise Show, the basement at the Woolworths Building. Frank, we got another question here.

• 29:16Speaker 03

  Let's do it. Okay. Second question was, following up from my message, message yesterday. So my credit cards are around 20% and around 1,200 each. I never miss a payment and always sprinkle a little more than the minimum, but, but say I pay off the credit cards one and two, will my credit score go up drastically?

• 29:37Speaker 02

  Good, good question. Good. And thanks for following up. Regular listener. Love it. So yesterday, Frank, Sammy and I were on the show. We were talking about the ways to, the best ways to pay off multiple credit cards. There's two schools of thought here. There is the debt snowball. And then there is the debt avalanche. So think of a snowball. If you, if you, you're at the top of the hill and you got a little ball and you roll it down the hill. It starts out small and then it starts to pick up speed and it gets bigger and bigger. And, and that, that debt snowball concept idea is go tackle the smallest credit card debt that you owe.

• 30:20Speaker 02

  So the one with the smallest balance owed on it and pay that off first. And then the idea is it will then allow you to go on to the next card. So then you go to the next card that has the second lowest amount. So it, it, there is a, a big benefit into people seeing progress being made towards their, towards their, their credit score and, and getting rid of some of that bad debt. And credit card is bad debt. You should not be carrying a balance on a credit card. The only time that should happen is if there's an emergency. There's no, there's very few other options.

• 31:02Speaker 02

  But credit card debt is terrible. As our listener is saying, 20%, that's, that's about average. That's like an average cost, which means if you make that minimum payment on that credit card, it almost never gets paid off. I mean, it's, it's decades before it would get paid off.

• 31:15Speaker 03

  I was gonna say 20% seems low. Usually mine are like 25, 30, yeah.

• 31:20Speaker 02

  I'm guessing their credit score is good.

• 31:22Speaker 03

  Yeah.

• 31:23Speaker 02

  And it probably is because they're, they're this much aware of like, how can I really maximize my ability to improve my credit score?

• 31:30Speaker 03

  Yeah.

• 31:30Speaker 02

  The second most important aspect of any credit score is your credit utilization. The first big, most important, which I think is 35% of the credit score makes up whether you're paying on time. But then the next category, which makes up 30% of the score, is how much of your credit are you using that's available to you? So if you have four credit cards and you're only using one credit card, between the four credit cards, you have a hundred thousand dollars of credit available to you. And you're, and, and you're not using any of it, you, You're getting the most out of that score. You're maximizing your ability to improve that part of your score. It doesn't really matter, though, which card you're paying off in terms of credit utilization.

• 32:16Speaker 02

  It matters how much you're paying off from all of the debt that you have. Because you're trying to bring down that percentage of utilization as low as possible. So in this case, it wouldn't matter which card you're paying off. What matters is how much of the balance are you paying off?

• 32:33Speaker 03

  Right.

• 32:33Speaker 02

  From all the cards or from combined what you owe. So it, again, it comes down, well, the way we answered it yesterday is the other alternative besides the debt snowball is the debt avalanche. This is the, this is the method I would, I prefer because to me, it's, it's, it's looking at the math. And mathematically, what makes sense is to tackle the debt that is costing you the most. Get rid of that first because that's the worst. The worst kind of debt would be the card that is costing you the most. Now, that may be because it has the highest balance. Or it may be because it has the highest interest rate that it's charging or a combination of the two. And so that is the, that's the card that I would say, get rid of that first. Because you're paying that company the most amount of money.

• 33:18Speaker 02

  It's costing you the most out of your pocket for that.

• 33:20Speaker 03

  Yeah.

• 33:21Speaker 02

  I know it might take you 10 years to do it, but that's, that's fine. Just get, go for that.

• 33:25Speaker 03

  Yeah.

• 33:25Speaker 02

  And then worry about those other little cards later. But that's just, that's a smaller interest rate or it's not costing you as much. So worry about those later. I know it might be 10 years down the road.

• 33:35Speaker 03

  Right.

• 33:35Speaker 02

  But just worry about it later.

• 33:37Speaker 03

  Right.

• 33:37Speaker 02

  Mathematically speaking, if you did that, at the end of the day, you would have saved more money. But for some people, it would have prevented them from feeling like they were making any progress at all. And so they would have been better off going the snowball route. Pay off those little cards.

• 33:52Speaker 03

  Yeah.

• 33:52Speaker 02

  Even though it's like not really costing you that much. There is a mental benefit to going, okay, I'm so glad I got rid of that JCPenney card. Or, you know, Home Depot card or whatever. Usually it's those types of things. That's what I've seen where people are getting, getting sold a credit card at the cash register to get that discount. And then they just let it sit there and they never pay it off. And then it just grows and. And so, you know, hopefully that answers the question, you know, about which card to pay. You know, in your case, you know, choose what you want, an avalanche or a snowball. It's not going to hurt you either way.

• 34:27Speaker 03

  Right. And as far as the credit score, I mean, it's not going to drastically affect it in any sense.

• 34:34Speaker 02

  No, because it's the amount of money that you're paying towards all of the credit that's available to you. So it wouldn't matter like which one, I don't think, unless I'm missing something. I don't know how it could, why it would matter. Now, here's the other thing is this has come up in previous, I don't know if it's this listener or other listeners, but they say, as soon as I pay off that card, I'm going to cancel it.

• 34:54Speaker 03

  Oh, right.

• 34:55Speaker 02

  Okay, so now you're creating another problem.

• 34:58Speaker 03

  Right.

• 34:58Speaker 02

  Because now you've gotten the great history of paying off that card, but it's that credit is no longer available to you. So it's going to lower your, it's going to lower your utilization rate.

• 35:08Speaker 03

  Yes.

• 35:09Speaker 02

  It's going to make lenders see, oh, boy, you don't have that much money available to you now by other people. Like, why am I going to loan you money? Which is why my recommendation is don't cancel the card, just throw it away. Cut it up, get rid of it. As long as there's not like an annual fee.

• 35:26Speaker 03

  Right, right.

• 35:27Speaker 02

  Put it on auto pay and then cut it up and get rid of it.

• 35:30Speaker 03

  Yeah.

• 35:30Speaker 02

  And never use it.

• 35:31Speaker 03

  I really need to, I think I mentioned to you once about my friend that has, is a credit card enthusiast, I want to say.

• 35:40Speaker 02

  Yes, yeah, I've heard about this.

• 35:42Speaker 03

  He has a binder of different credit cards.

• 35:45Speaker 02

  With all their perks, he's going for perks.

• 35:47Speaker 03

  Actually, I'm meeting up with him for lunch tomorrow. I'm going to ask him this.

• 35:49Speaker 02

  Ask him about it.

• 35:50Speaker 03

  Ask him, yeah, yeah.

• 35:51Speaker 02

  And get his permission if we can talk about it on the show.

• 35:54Speaker 03

  Exactly, yeah. I might as well just bring him onto the air.

• 35:57Speaker 02

  Yeah, you should, because that would be like the, that would be like a credit ninja. Where like you're, you're taking full advantage. I'm all for taking advantage of credit card companies. I do. I have no shame about saying I haven't paid a credit card company a dime of my money, and I have a lot of points.

• 36:13Speaker 03

  Yeah.

• 36:13Speaker 02

  I've accumulated a ton of perks and a ton of points, and I have no problem spending those points.

• 36:18Speaker 00

  Yeah, send him my way, because we would love to have him on the show.

• 36:21Speaker 03

  Okay, I'll tell him that, yeah.

• 36:22Speaker 02

  Yeah, well, find this story out first. Make sure this is legit.

• 36:25Speaker 03

  Right, right.

• 36:25Speaker 02

  He's really like managing this.

• 36:27Speaker 00

  If not, I'll book him with Sammy.

• 36:28Speaker 03

  Yeah, no, because, yeah, I always go to him and he's always like asking about, oh, have you looked into this credit card? It's like, no, man, like I have other things I need to do.

• 36:36Speaker 02

  You know how much junk mail I'm going to get?

• 36:38Speaker 03

  Yeah, yeah, thanks a lot, man. But it's like he, he, he's, he is a avid, he's an enthusiast when it comes to these credit cards. Cause yeah, he wants to take advantage of the, the bonuses and all that.

• 36:51Speaker 02

  Yeah.

• 36:51Speaker 03

  So he, like, everyone has their binder full of Pokemon cards and whatever, collection cards nowadays. But he has a binder of credit cards that he's just like, look at this.

• 37:03Speaker 02

  How many cards do I have?

• 37:06Speaker 03

  How, how are you? And he has his own Excel sheet that he tracks with as, as far as using them. But I do want to ask like what he does with the old ones. Cause yes, credit history does matter.

• 37:16Speaker 02

  Yeah.

• 37:17Speaker 03

  And by cancelling a credit card that you've been using for a long period of time, that shortens your credit history.

• 37:22Speaker 02

  Yeah.

• 37:23Speaker 03

  Which.

• 37:23Speaker 02

  The history isn't a big deal because your history is, is what it is, whether you have that card or not. Like, you know, like your credit score, your, your credit history is going to be there even if you've canceled that card. The history matters in terms of if you're paying on time. If you've got a history of, of a late or, or a, a collection on a debt, that's where it's a problem. It's only a problem with your history, usually for young people who have no history at all. Right? So they're, they're just going and they're just trying to get a credit card and they've never borrowed ever before. There's an issue initially for a very short period of time, but anybody can go get like a secured credit card.

• 38:04Speaker 02

  You know, that's where you deposit your money and then they just lend it back to you so that you can start building up your credit score. But you know about the hack, there's a great, one of my favorite money wise hacks.

• 38:16Speaker 03

  No, what is it?

• 38:17Speaker 02

  You add, as a parent, you can add, or anybody, you can add them as an authorized user. You don't have to give them the card, your card, you know, to your account, but you add them as the authorized user and they immediately adopt your history.

• 38:30Speaker 03

  Yep, build up.

• 38:31Speaker 02

  Yeah. And it builds up instantly. So it's like.

• 38:33Speaker 03

  I wish my parents.

• 38:34Speaker 02

  I know.

• 38:35Speaker 03

  I, so when, when I applied for my first credit card, I, I think I was 24, 25. I, I, I applied for a credit card late. So obviously I didn't have that history and nor did any. Any credit provider want to, you know, issue me a card? Cause they're like, uh, no, we're not gonna, we're not gonna give you a card. So I had to like, I had to go to Wells Fargo and get like a college.

• 39:02Speaker 03

  I think it was still a credit card, but my limit was like 500.

• 39:06Speaker 02

  Yeah. And you may have had to have a, like a checking account or a savings account or something there too.

• 39:12Speaker 03

  But it's like, that was the only way. Uh, but it was hard. Yeah. It's like, I kinda wish I had it where, you know, they had me as an authorized user and just build me up. And now there's this history of, oh yeah, here's a credit card.

• 39:24Speaker 02

  Yeah.

• 39:25Speaker 03

  I don't know, Capital, Capital One or something. Yeah.

• 39:28Speaker 02

  Or whatever it is. Or, or even like what I did for my kids is I, I just, I didn't give them the card. I just added them as an authorized user.

• 39:35Speaker 03

  Yeah.

• 39:36Speaker 02

  And, and told them, by the way, you guys are gonna, you guys are gonna see a big bump in your credit score here real soon.

• 39:41Speaker 03

  Hi dad.

• 39:42Speaker 02

  Well, just, you know, you're, you've, you've been authorized to use my card. I'm not giving it to you.

• 39:47Speaker 03

  Yeah, yeah, yeah.

• 39:48Speaker 02

  Yeah. Uh, let's move on to the next question.

• 39:51Speaker 03

  All right.

• 39:54Speaker 03

  Oh, okay. Here we go. So third question we got, uh, can you guys explain the process of hiring the new Fed chair? Ooh.

• 40:01Speaker 02

  Love it. Love it. I, I have to always go back and refresh my memory back from my economics courses from college 25 years ago.

• 40:11Speaker 03

  Yeah, I'm not familiar with this whole process either, but I'm, I'm assuming that it's a, um, it's a tedious process.

• 40:22Speaker 03

  You can't just nominate and appoint someone right off the bat. It goes through the Senate, correct?

• 40:28Speaker 02

  That's right. Yeah. There's a whole process. It's the, the, the president is appointed. The president of the Fed, of the Board of Governors of the, of the Federal Reserve is appointed, nominated by the President of the United States and confirmed by the, the Senate. The Senate has to approve it by a majority vote. And then they, then they're approved and they can be a, they can be a chair of the Federal Reserve. The Governor, Board of Governors. Now, the, there have been times where the, the President of the United States has appointed somebody who was not on the, on, not part of the Board of Governors.

• 41:11Speaker 03

  Yeah.

• 41:12Speaker 02

  So they weren't part of the board. They're supposed to be a part of the board before they can be nominated as a, as a chair. But there's a workaround by. By the president nominating somebody to be on the board of governors. And then there's another nomination that happens immediately to make them the chair. And it's actually pretty common. It happened just recently with a few of our most recent Fed presidents, including, I just had the list here, but Janet Yellen was one of those.

• 41:48Speaker 02

  And the, dang it, I lost my list. But Janet Yellen, well, actually, no, I take that Janet Yellen was already a governor, and so was Jerome Powell, and so was Ben Bernanke. They were already on it. But here it is, Paul Volcker. Paul Volcker was not a governor before he was appointed. I mean, he was appointed as a governor and then immediately appointed as the chair, chairman of the board. Same thing with Alan Greenspan, which is insane to very well-known and well-respected Fed presidents.

• 42:33Speaker 02

  But, so it can be an outsider. It can be somebody who has never had any experience on the board of governors or on the board at all. And so I think that's something to note. The other thing is the president, the Fed chair is the president of the board of governors, which the board of governors, there's seven of them that are all appointed by the President of the United States. And they all stagger 14-year terms. So there, every few years, there's a new one that rolls off and a new president comes on,

• 43:17Speaker 02

  not president, but a new governor of the board comes on. So you have those seven that are rotated through, which is genius because they're long enough terms that The president can't fire them or get rid of them. The only time they can get rid of is if there is like something blatantly illegal that they're doing, like something malicious that they is proven that they've done. They can't be fired because the president doesn't like their policy, even though presidents in the past have tried to do that. So that gives us some stability on the board because these are the people. There's 12 members of this board that essentially are making the decision and voting towards where interest rates go. The cost of money across the globe.

• 44:02Speaker 02

  Very, very powerful position. The other five members of the board rotate from the regional Fed Bank presidents. So you have, you have 12 different regions across the country and each region has their own Federal Reserve District essentially and their own bank. And so New York, for example, there's one in New York, there's one in Dallas, San Francisco. And they, they manage and, and collect the regional information, but they also rotate in their seat on the Board of Governors. So there's five of those regional presidents that rotate in different terms

• 44:45Speaker 02

  and spend time working at, on the Board of Governors. So it's really, a really fascinating process.

• 44:52Speaker 03

  It seems like there's a lot of, there's a lot of information there to sort of dissect. And but it's, it's complicated in nature because, you know, there, the, from my understanding, the Federal Reserve is an independent entity away from the judicial legislative for very specific reasons.

• 45:14Speaker 02

  Yes.

• 45:15Speaker 03

  Because if we have one, one party controlling the, the monetary policies, then it can cause issues.

• 45:26Speaker 02

  Short sighted, short sightedness because presidents run on four-year terms. I, I get each president wanting to make the most out of what they're doing, but we don't want something that just to be good for four years. We're looking long-term. You know, as well as anybody, that economic cycles can be very long. And we don't want to just making, you know, trying to get short term gains by manipulating the interest rates doesn't serve anybody well. Then now you become a banana republic, or you become another underdeveloped country that has runaway inflation, or, you know, there's all kinds of problems. There's a reason why the United States has the world's currency.

• 46:07Speaker 02

  It's because whether you know it or not, we still are the most stable economy and still the most stable currency in the world. And, and, and that needs to be protected. I cringe at the idea of our politicians getting involved in, in economics. That, that needs to stay with the economists. And it's not an easy thing for these, for, for these, for the Fed Chair and, and the Board of Governors to make these decisions, but they are doing it with the least emotion possible. They're trying to do it with the most amount of data, like a data-driven decision and not based off of who may or may not win an election that's coming up.

• 46:48Speaker 03

  Right, right. Um, yes, because they're, they're serving a longer term for a, a greater purpose because they want to achieve those long-term goals.

• 46:57Speaker 02

  Yeah. Which is the Fed's mandate has two ma- major mandates. Keep inflation in check. The goal is to keep it at 2%. As close to 2% as possible. And then they want full employment. Maximize employment. And that is to keep the unemployment rate low, not, we don't want the unemployment rate to be too low, because that also creates some problems, but full employment, that, which is somewhere between 3 and 4%. That, that means pretty much anybody who wants a job or needs a job can get it at that rate. And that's what the Fed is trying to do. That's what they're, that's, that's their, that's all they, that's all they're trying to do. Not trying to win, not trying to win any political races.

• 47:39Speaker 03

  Right.

• 47:40Speaker 02

  But doing that. And that's a slow process. Methodical process. All right. Anything else? There are messages?

• 47:47Speaker 03

  We got a couple of messages. Uh, oh, I think you'll like this one. Uh, still think there's a market for you guys to release a book. Easy Steps to Be Money Wise, or How We All Can Be Money Wise. Love the show.

• 48:00Speaker 02

  There you go. Go write a book, Frank.

• 48:04Speaker 03

  Yeah, right? Yeah, you want to co-author?

• 48:08Speaker 02

  I love the idea. I love the idea. I mean, we try, we're trying to do it with through this show is just, you know, give good financial advice. That's the hope.

• 48:18Speaker 03

  Yeah, and I think we're doing that, you know, I don't, I didn't really see the impacts until, you know, working, working here and the MoneyWise and being part of the show. It's like getting all these questions, getting all these listeners. So, I mean, we're, we're definitely making an impact.

• 48:35Speaker 02

  Yeah.

• 48:36Speaker 03

  I do have, there is one more message.

• 48:39Speaker 02

  Yeah, go for it.

• 48:40Speaker 03

  I think it's a question. Okay. Have you ever heard of TaxDome? If so, do you know if it integrates directly to QuickBooks?

• 48:51Speaker 02

  I was not familiar with TaxDome, but I did look it up. And yes, TaxDome does integrate with QuickBooks online. It doesn't integrate with the QuickBooks desktop version. It's, what it does is essentially syncs your billing data between the two. So important. I mean, whether it's TaxDome or any other accounting or bookkeeping software that you're using, if it doesn't integrate with your, your bank and your, you know, where you're, where you're doing your, your transactions, then you're going to have a mess on your hand. It's just, you know, now you're talking about manually inputting stuff. And technology has really evolved so much to make it so much easier for all of us to be able to track our expenses.

• 49:34Speaker 02

  And that is done generally through recognizing our charges that come up on the bank, you know, whether it's using your debit or your credit card. And so, and so, yeah, you know, I'm not, I'm not, again, I'm not familiar with TaxDome, but it appears that it's essentially a, a cloud-based practice management platform that is specifically designed for tax and accounting and bookkeeping firms.

• 49:57Speaker 03

  Yeah, I'm not familiar with it too. It sounds like they're asking, because it seems like they're using TaxDome and QuickBooks. So there, are they using TaxDome for QuickBooks?

• 50:07Speaker 02

  Well, no, it's kind of, it's more than just a bookkeeping software. It's also a CRM, you know, client relationship management. And it's a secure document exchange and storage. You can do e-signatures and billing and workflow automation. So it's like, it's like a CRM that also has the capability of doing some of the bookkeeping and, and, and tasks that are needed by bookkeepers and accountants.

• 50:33Speaker 02

  I love that this fintech world continues to evolve. You know, pretty soon, like we were talking at lunch, that the robots are going to be doing everything for us. The software programs are very quickly taking over.

• 50:45Speaker 03

  Yeah, yeah. We've talked about that one company, was it Hero? Oh, my gosh, I'm forgetting the name of it, but.

• 50:55Speaker 02

  Is it a robot company?

• 50:56Speaker 03

  It's a robot.

• 50:57Speaker 02

  Neo?

• 50:57Speaker 03

  Neo, yes.

• 50:58Speaker 02

  Oh, yeah.

• 50:59Speaker 03

  And then that's the name of the humanoid robot. The company is OneX, I think.

• 51:06Speaker 02

  Oh, is it?

• 51:07Speaker 03

  I think Neo.

• 51:08Speaker 02

  But I know what robot you're talking about. It's the one that has like a fabric-covered

• 51:11Speaker 03

  Yes.

• 51:12Speaker 02

  skin, so it's used, it's supposed to be for home use.

• 51:14Speaker 03

  Yes.

• 51:16Speaker 02

  Where, you know, it's not going to like crush your dog if it falls over.

• 51:19Speaker 03

  Right. The mechanics, and I have to revisit what, how they built this humanoid, but it's, it mimics very similarly to that of a, oh, human.

• 51:30Speaker 02

  Human, yeah.

• 51:31Speaker 03

  But the joints and all that that they've built in made it so that, you know, the grasp, the weights overall and how much they can grasp is, is very limited, like maybe 20 pounds.

• 51:44Speaker 02

  Yeah.

• 51:45Speaker 03

  But they can't, they can't like crush your hand.

• 51:47Speaker 02

  Right.

• 51:48Speaker 03

  That's what I'm saying.

• 51:48Speaker 02

  Yeah, it's not going to go rogue on you and kill you.

• 51:51Speaker 03

  Yeah.

• 51:51Speaker 02

  It's a very fascinating business model because I don't know if you've heard what the catch is, and they're supposed to launch either later this year or beginning of next year.

• 51:58Speaker 03

  I think they're, yeah, I don't know, but.

• 52:00Speaker 02

  Did you hear what the big catch is, though?

• 52:02Speaker 03

  I think there's someone behind the robot.

• 52:04Speaker 02

  Yes.

• 52:04Speaker 03

  Yes, yeah.

• 52:05Speaker 02

  There's a human behind it in your house, walking through your house in a robot form.

• 52:09Speaker 03

  Yes.

• 52:10Speaker 02

  That's creepy.

• 52:10Speaker 03

  Because they're trying to collect data

• 52:12Speaker 02

  Yeah.

• 52:13Speaker 03

  on how the robot needs to function, because if you let the robot go, it doesn't really know how to pick up a table or how to pick up a tablecloth

• 52:21Speaker 02

  Yeah.

• 52:21Speaker 03

  very well. So they need someone behind the robot to do that for them, and it captures that data.

• 52:27Speaker 02

  And then it teaches it how to do it. But it's like, go teach your robot first before you let it in my house where it can like walk around. It's so creepy.

• 52:34Speaker 03

  It is.

• 52:35Speaker 02

  Like, I want a robot in my house like yesterday, but I don't need it that fast. You've got like, you know, some stoner on the end of that, those goggles, VR goggles, manipulating the robot in your house. All right, we're going to take off. Remember these three things: be smart, be safe, and always be money wise.