6/4/25 Building Wealth Young: Traditional vs. Roth IRAs, Choosing Banks Wisely & Mastering Your First Budget

The Moneywise Radio Show and Podcast Wednesday, June 4th 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_Manageme instagram: MoneywiseWealthManagement

• 0:00Speaker 00

  From the Garo Ellis padded radio room off Stockdale Highway, here is Money Wise. Call or text into the show 24/7 at 396-1000.

• 0:39Speaker 00

  Here is Money Wise.

• 0:40Speaker 01

  Money, money, money, money.

• 0:44Speaker 01

  Welcome to the Money Wise Show. We are live from the Garo 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. That was 396-1000 and 661 right before that. Today, we are your hosts. I'm Sammy Abiyawie.

• 1:11Speaker 02

  Latroy Dinkins.

• 1:12Speaker 01

  Latroy.

• 1:13Speaker 02

  What's going on, man?

• 1:14Speaker 01

  I'm excited for this show.

• 1:15Speaker 02

  Yes, sir.

• 1:15Speaker 01

  We've got a bunch of-

• 1:16Speaker 02

  I'm always excited when I'm on a show with you, man.

• 1:17Speaker 01

  Well, I appreciate that. We have a couple of listener questions. We've got some subjects we want to touch on.

• 1:23Speaker 02

  Yes, sir.

• 1:23Speaker 01

  And we have a budgeting thing we want to talk about, so I'm very, very excited. So before that, just a quick, we have a couple of questions.

• 1:31Speaker 02

  We've got a couple of messages. Here is one I want to hear. It says, "That's funny. You guys got into baggage fees on flights, and I always wondered if they were worth it. I've always tried to keep it to one, but I've had family say that prices are out of control. Do you guys know why flights out of Bakersfield are so expensive?" I want to know that, too. "Is it cheaper to fly to Denver from here or just make the trip to L.A.?"

• 1:54Speaker 01

  Very good question and typically what I do when I fly, I do take two luggages because I fly international and I need more clothes. But I have my little guy, he uses his foot to lift the luggage off the weighing thing.

• 2:09Speaker 02

  Little guy.

• 2:10Speaker 01

  My, my, my, uh, my son.

• 2:12Speaker 02

  Okay, he's not very little. He's not little.

• 2:15Speaker 01

  Yeah, he's not little, not anymore. So he pushes it so it does not weigh more than, than I end up paying. No, I'm just kidding. Um, you know, some, some flights allow you to, to get to, or some airlines allow you to take two luggages. I take advantage of that. And some don't. Now, talking back or talking about Bakersfield. Um, lived here now for 25 years. It's always, always intrigued me why it's so expensive to fly out. And I think it goes back to just lack of competition. We have two airlines flying out of Bakersfield. I think that's American and United. That's it. And it's been the case for, since I've moved here.

• 2:53Speaker 02

  Yeah.

• 2:53Speaker 01

  Uh, Stephen, you've lived here longer than I have.

• 2:57Speaker 02

  Never flew out of here.

• 2:59Speaker 01

  Never flew out of here.

• 3:00Speaker 02

  Never.

• 3:00Speaker 01

  And the other thing too is whenever you fly out of Bakersfield, there's always delays and problems and, and remember last year we were flying to Texas for that?

• 3:08Speaker 02

  Yeah, it was a big delay. Yeah.

• 3:10Speaker 01

  And, and, and, you know.

• 3:11Speaker 02

  And I was from here?

• 3:12Speaker 01

  Yeah, shared got stuck. Uh, and then I heard you getting stuck and I'm like, forget this, I'm canceling my ticket.

• 3:18Speaker 02

  We have to go early in the morning.

• 3:20Speaker 01

  I, I decided not to go at all.

• 3:21Speaker 02

  Yeah.

• 3:22Speaker 01

  So, lack of competition is one of the reasons in, in my opinion, I think there is low passenger volume because there's lack of competition and the pricing. So people avoid flying from here and they just.

• 3:32Speaker 02

  So they can artificially just raise the prices, sound like, because it's not, it's, it's that lack of supply, basically.

• 3:38Speaker 01

  Correct.

• 3:38Speaker 02

  Yeah.

• 3:39Speaker 01

  Correct. And people now, I mean, a lot of my relatives, whenever they fly to the Central Valley, they go to Fresno. It's cheaper to fly to Fresno or LAX. Fresno is actually a lot easier.

• 3:49Speaker 02

  To get to.

• 3:50Speaker 01

  To get to and from.

• 3:51Speaker 02

  Yeah.

• 3:51Speaker 01

  From, for, than, than LAX. And, and they have this new terminal that somehow some, they need to, to pay for. Uh, newer terminal, I should say.

• 4:01Speaker 02

  Yeah.

• 4:02Speaker 01

  So that's, I think, in my opinion, one of the reasons, just as a comparison, flying from Bakersfield to Denver typically costs you between a hundred ninety-nine and two thirty-eight dollars. If you're flying from LAX, it's one twelve, hundred twelve dollars.

• 4:17Speaker 02

  I think Burbank is probably Burbank is probably cheaper.

• 4:19Speaker 00

  And that's what I believe that's what Debbie was saying yesterday that she was flying out of Burbank and and it seemed cheaper. But yeah, it's it's a head scratcher because I wasn't sure. You know, I don't fly out much and if I do, it's usually on a long trip and I fly out of LA. But yeah, I've always kind of looked at at trips out of Bakersfield just to see maybe I'll go catch a a football game or a basketball game and you know, with places like Arizona or Colorado that I could just go in and out. But I mean, the ticket prices are cheap, but maybe that's why.

• 4:53Speaker 01

  Yeah, so my my my wife's best friend is here this week from the state of Washington. And she flew to Bakersfield. It was, I think, three hundred fifty dollars more to fly into Bakersfield than LAX.

• 5:07Speaker 02

  So even flying into Bakersfield, you're you're feeling that impact?

• 5:10Speaker 01

  Yes, she has a round, round, round trip ticket. So she's paying, I think she told me three hundred fifty or four hundred bucks more. Just so she can land in Bakersfield. Now, it's very convenient. Don't get me wrong. Right now, as a frequent flyer out of LAX, I mean, it's convenient. Otherwise, I have you have to rent the car, you have to drop off the car, you have to do all sort of stuff. Maybe it's worth the money for some.

• 5:32Speaker 02

  Yeah, I think for I think it's worth the money to fly out of Bakersfield.

• 5:35Speaker 01

  They used to have that bus, remember, Steve?

• 5:38Speaker 02

  Was it Greyhound?

• 5:40Speaker 01

  I don't know. Do they still have the the airport buck bus to LAX?

• 5:44Speaker 00

  I believe so.

• 5:45Speaker 01

  That's that's a that's a good deal, actually.

• 5:47Speaker 00

  That's usually busy because they're taking it to the casino. Because they do a lot of those casino trips.

• 5:52Speaker 01

  That's right. That's right. But I I've used that service before and it's actually a convenient service. They drop you right at where your airline is.

• 6:01Speaker 00

  So if we put the calculator down and just thought, okay, well, if if it's a hundred and fifty dollars more to fly out of here. I mean, how much are you really paying to LA? You know, to for the travel and if you have to leave your car there or if you have to rent a car. I mean, does it, does it even out or? I mean, I haven't really looked at travel in a couple of years. I'm, I'm planning on one for my son when he graduates in two years. I think we're going to take a family trip.

• 6:30Speaker 01

  Yeah.

• 6:30Speaker 00

  But, uh, that, that is a great question.

• 6:33Speaker 01

  No, it is.

• 6:33Speaker 00

  Whether it's baggage fees or, you know, they, they can just kind of upsell it either way.

• 6:38Speaker 01

  So flying out of here versus flying out of LAX, if it's $150 extra, I'll pay it. Why? Because the rental car is going to cost me that much, plus the headache of dropping it off, picking it up and what have you. Here, you drop it off here or somebody drops you off, you Uber from your house. To me, it's a lot more convenient if I'm flying within the US. Now, if I'm flying internationally, it makes more sense for me to just.

• 7:00Speaker 00

  Go to a bigger airport, of course.

• 7:02Speaker 01

  Yeah, yeah. Good question, though.

• 7:04Speaker 00

  Great question.

• 7:05Speaker 01

  We have a second question. Uh, if you had to pick just one, this is for you, Troy. Roth or traditional IRA for a 30-year-old making 75K, what would that be?

• 7:17Speaker 02

  Well, we, we need, I need, I need a little bit more detail because you could be 30 and you could be married. And if you're married, you're probably filing jointly. And so there's a lot of tax implication that goes into, uh, choosing one of those. So if you are single, if you're not making over 150,000, which you, it sounds like this person doesn't. Then you qualify to actually earn income into a Roth up to the maximum, I believe it's 75, 7500 max into a Roth. So to answer that question easily, 7500 into the Roth, you, you get to max out on that. That doesn't count as a tax deduction because it's a Roth. Now, the difference between a Roth and a traditional IRA, a traditional IRA is tax deferred.

• 8:02Speaker 02

  Meaning that you put money in there, you don't have to pay any capital gains, long-term capital gains, short-term capital gains. No, you're not, um, you don't have to pay taxes out of that. It's deferred, right? Well, the Roth has that same benefit, but the interest that grows on the investment within the Roth is tax-free whenever you withdraw. In a traditional IRA, if you withdraw, start withdrawing after the age of 59 and a half, then that money becomes taxable, all of it. Right? So those are the two differences. Now. If you were to say, "Hey, you know, I'm married," then the contribution limits for putting money into a Roth, if you're married, if you have, if you guys' income is, the modified adjusted gross income is more than $236,000,

• 8:46Speaker 02

  then you don't qualify to even put money into a Roth. But if it's less than that amount, then yes, you can as well put that into a Roth. And let me fix this error. It's $7,000, actually, that's the contribution limit for people that's under the age of 50. If you're above the age of 50, there's a catch-up contribution, that's $1,000, that you're able to put in there. So it would probably be in your best interest to utilize that Roth while you can, because you never know, there might be some elevation and growth in your career, you might not be able to, you know, put money into that Roth, right? So I would definitely choose the Roth path, but always, first and foremost, always exercise the pre-tax dollar benefits of an employer-sponsored plan, like a 401K.

• 9:31Speaker 02

  So if you have that option, that's pre-tax dollars, that goes into a 401K. Remember, if you're making contributions to a Roth, that's after-tax dollars. So I would say to you, you know, yeah, if you have extra money sitting on the table, put that money into the Roth because you qualify, but maximize the benefits of an employer-sponsored plan, like a 401K, 403B, whatever you have. Sometimes they offer matches, too. So you want to definitely utilize that, that's before-tax contributions. Those are, you know, they are tax-deductible. They are what's called above-the-line, anything like a 401K, traditional IRA, these are what you call above-the-line tax contributions, I mean, tax deductions. Above-the-line tax deductions.

• 10:17Speaker 02

  Whenever you get your gross income, you're able to subtract these above-the-line contributions, like a 401K or traditional IRA comes off. And then after that, you got what's called bottom-line deductions, which are, you know, if you are filing itemized or standard. Itemized deductions includes things like mortgage, insurance, you know, things of that nature. If it's more than the standard amount, then you go with itemized. So for instance, I think this year for like a married couple, I think the deduction is around $30,000. I'm not sure, but, but if your itemized deductions overlap that, then you want to file itemized. I know I'm getting a little bit deeper. I'm just trying to be very, very specific.

• 11:01Speaker 01

  I'm just listening and I'm learning. I think Stephen is the same. I was taking notes too. We're just looking at each other and we're both taking notes. So, thank you very much for the answer.

• 11:07Speaker 02

  But yeah, definitely do it in a Roth and that's after tax dollars. But if you have a employer sponsored plan, go ahead and utilize that first.

• 11:15Speaker 01

  Great, great answer and thank you Troy. Let's dive into just the market updates real quick. What, what happened in the market today?

• 11:22Speaker 02

  So, the markets right now, we are sitting pretty flat for all the NASDAQ and the SPY. But, you know, I have a lot of trader friends, Sammy. A lot of traders. Before I came to finance guy, I was, you know, just a trader, right? And so I have a lot of traders friends that are making a lot of money because of, of the market. Cause the beginning of the market, we went down, right? And everything was negative, but now we're starting to see that surge up.

• 11:50Speaker 02

  And so when we see that surge up, it's this thing that's called relative strength. And I don't want to go into too much detail. I don't want to talk over nobody's head. But what that relative strength does do to the market, whenever the general market goes up, some of these high-flying individual stocks, which I'm not making that recommendation. This is not investment advice. But some of those high-flying stocks, growth stocks, those tend to go up even further. And so a lot of my trader buddies are saying, hey, I'm making a lot of money, you know, and all this stuff. And then those that are actually in the driver's seat of retirement, they're contributing to their 401ks, 403Bs and things of that nature. You know, you got those 70, 30 split, 70% equity, 30% fixed income.

• 12:32Speaker 02

  You got, you got 60, 40s. They, if the market is doing well, nine times out of 10, those will be doing well too. So, there's a lot of those retirees and also people who are on their way to retirement, their portfolios, they should see like their portfolios being flat or even have some growth into those portfolios despite the market volatility. So, that's just my two cents. We're looking healthy despite everything that's going on with Elon Musk, with the Doge and, and Trump and tier of talk and, you know, things of that nature.

• 13:06Speaker 01

  Don't try to time the market.

• 13:08Speaker 02

  Don't try to time the market.

• 13:09Speaker 01

  It's time spent within the market.

• 13:10Speaker 02

  Time spent within the market.

• 13:11Speaker 01

  It's what you guys always say.

• 13:12Speaker 02

  Yeah.

• 13:13Speaker 01

  Great. If you would like to listen to this show or any of our past programs, subscribe to the Money Wise Podcast, commercial free on all podcast platforms like iTunes, Apple Podcasts, or Spotify. We'll take our first break. We'll be right back.

• 13:28Speaker 00

  Are you an employee with a company-sponsored retirement plan? Do you fully understand how you're invested and whether or not you are maximizing your retirement plan's options? For more information on a free assessment, contact Money Wise's 401(k) Specialist, Justin Leland, at 661-847-1000. That's 661-847-1000.

• 13:55Speaker 02

  I remember this song came out in 05.

• 13:59Speaker 01

  Welcome back, listeners. Welcome back. Money Wise Show. I'm Sammy Abiyaw here with Latroy. Latroy, I want to talk about something that happened in the month of June, and that's Wells Fargo Bank. If you remember, 2018 Wells Fargo-

• 14:13Speaker 02

  They used to be Washington Mutual?

• 14:15Speaker 01

  No.

• 14:16Speaker 02

  They was never Washington Mutual?

• 14:16Speaker 01

  No. They just had a big scandal in 2018, opening the fake accounts, and resulted in a regulatory moratorium putting a hold on their growth. So since 2018, Wells Fargo has been prohibited from growing their assets, meaning deposit loans and what have you.

• 14:34Speaker 02

  That sucks.

• 14:35Speaker 01

  Yes, it did. And it's big time.

• 14:38Speaker 02

  How do you grow as a business if you can't like, get any growth?

• 14:41Speaker 01

  Well, you can still, you can still maintain your profitability based on your existing clientele. However, you have to come up with a lot of efficiencies, right? The banks and bankers live with this thing called efficiency ratios. And Wells Fargo had to do a really, really, really good job in order for them to maintain a good efficiency ratio to survive. Now, the asset cap imposed was at 1.95 trillion. Now Wells Fargo is allowed to grow from that 1.95 trillion and go out and lend more money, you know, and get more clients, get more deposits, hire more people eventually. I think that's a good thing, personally. Why? Here in this

• 15:26Speaker 01

  market specifically- We need, we need bank competition, right? What do I mean by that? Having a national bank like Wells Fargo, which is fourth in the nation, coming back with a growth mindset, is just gonna help us collectively as a community in a sense where I think they're gonna invest more in talent acquisition, potentially in infrastructure, and which is gonna result eventually in growing and having more job openings.

• 15:58Speaker 02

  And they're fourth, and they have this cap on growth, and they're still number four.

• 16:01Speaker 01

  Yeah, so, so some other banks took advantage of that. Chase is one of them, Bank of America is another, Citi is another. But now Wells Fargo has been a behemoth since the sixties. They've done a very good job. Two hundred thousand plus employees, twenty-two nations. And imagine, you have this moratorium where you cannot do anything.

• 16:24Speaker 02

  Yeah.

• 16:25Speaker 01

  It's, it's, it's been a tough, tough road, but they've stuck it out. And they've, they've created a lot of efficiencies, like I stated, but now they're, they're back. So what does that mean to other commercial bankers and other bankers in general? Well, hey.

• 16:40Speaker 02

  More competition.

• 16:41Speaker 01

  That's more competition.

• 16:42Speaker 02

  Yeah.

• 16:43Speaker 01

  But it's good for us as consumers, you know, as retail consumers or even business clients. You have another option to go to.

• 16:51Speaker 02

  Yeah.

• 16:52Speaker 01

  Okay, which I really, really, really like.

• 16:55Speaker 02

  That's crazy, one point nine five trillion dollar cap. Uh, so, let's, let's elaborate on that. So, one point nine five trillion, that's how many, that's how much, up to how much loans they can hand out? Or is that just pure revenue?

• 17:10Speaker 01

  Total assets.

• 17:10Speaker 02

  Total assets?

• 17:11Speaker 01

  That's their total assets. So a bank assets is, is both, I know it's a little bit mind-boggling now. If you're a traditional accounting person, the balance sheet of a bank is reversed. Okay, so there, you're, you're typically your cash as a business is an asset, right?

• 17:28Speaker 02

  Yeah.

• 17:28Speaker 01

  And, and, and your loan is the liability. Flip those for a bank.

• 17:32Speaker 02

  Gotcha.

• 17:33Speaker 01

  The loan is an asset.

• 17:34Speaker 02

  Yeah.

• 17:34Speaker 01

  Right, and the deposit is the liability.

• 17:36Speaker 02

  Yeah.

• 17:37Speaker 01

  Because you're my client and I'm holding your deposit so I can lend it.

• 17:40Speaker 02

  Yeah.

• 17:41Speaker 01

  Right? So, their asset at one point nine five trillion is both loans and deposits, the total of both of those. That's what they were capped at. But now, no more cap for Wells Fargo. Happy hunting Wells Fargo.

• 17:55Speaker 02

  So they must have had some sort of inefficiency though, because that was the the impetus for them to put that cap because you said it was due to some sort of.

• 18:03Speaker 01

  No, it's fraud. No, no, no, they got caught.

• 18:07Speaker 02

  They got caught with their pants down.

• 18:08Speaker 01

  They got caught, definitely. Yes, they got caught opening fake accounts for people.

• 18:14Speaker 02

  Wow.

• 18:15Speaker 01

  So they had a culture, a bank culture where sales, sales, sales, and they're driving, you know, the people in the branch levels to just, hey, if a customer walks in, I want you to up sell. Credit card, even if they don't need one. Open a savings account, even if they don't need one. Maybe they need a line of credit, even if they don't need one. A lot of the times, these people opened fake fake accounts, submitted them so they can get a bonus at the end of the quarter. And then, you know, the letters don't go into the client's house, it goes somewhere else.

• 18:45Speaker 02

  Wow.

• 18:45Speaker 01

  Oh, yeah, it was a big deal in 2018. Fair, very big deal.

• 18:49Speaker 02

  Did they get fined for that activity?

• 18:51Speaker 01

  Yes.

• 18:52Speaker 02

  I'm sure you probably don't know the number, but.

• 18:54Speaker 01

  But the biggest fine is to to put a hold on a bank like Wells Fargo, not to grow. That's the biggest fine you can have. So it took them seven years to get back. You know, and for the regulators to trust them, well, we see, we see, you know, enough progress that we're going to trust you again to give you the ability to grow. Which is, I I think, good for them. Good for them and the leadership of the CEO. Sharf, I think, is his his name, I think, joined the bank in 2019, and I think he did did a good job.

• 19:26Speaker 02

  New reputation now.

• 19:27Speaker 01

  Yes.

• 19:27Speaker 02

  So they've been under this for, what, you said 10 years?

• 19:30Speaker 01

  No, seven.

• 19:30Speaker 02

  Seven years.

• 19:31Speaker 01

  Seven years.

• 19:32Speaker 02

  Man, that's a prison sentence.

• 19:34Speaker 01

  Yeah, they're on probation now.

• 19:37Speaker 02

  Yeah, that's crazy, man.

• 19:39Speaker 01

  Ah, yeah, I just wanted to to to to bring that up. Another subject, it's interesting that I read about is the car sales. You know, car sales and and and car revenue sales have dipped in the month of May, following a big rush of people going in the month of April and just buying cars. And I remember, Stephen, we had Ali Douglas here from the manager at Lexus saying. Hey, if you really don't need that car, don't rush into buying that. I think that was a great advice. Cause a lot of people rushed into buying cars. Maybe they didn't even need them because tariffs are gonna go up and your car price is gonna go by thirty, forty percent. None of that is happening yet.

• 20:18Speaker 00

  And we're gonna have to have him back on because we've had some recent listeners calling and asking if they need to buy them now instead of waiting because they're scared that it's gonna be outrageous prices here in a couple of months.

• 20:31Speaker 01

  And we have that podcast podcast available, so I would encourage our listeners to go and listen to what Ali's advice was. And I believe the advice was if you really don't need the car and your car can sustain you for another ninety days, wait and see.

• 20:45Speaker 00

  It's kind of the same thing we've been saying for years about buying a home.

• 20:49Speaker 01

  Yes.

• 20:49Speaker 00

  When's the best time to buy a home?

• 20:51Speaker 01

  When you can afford it.

• 20:52Speaker 00

  Exactly.

• 20:53Speaker 01

  Yeah, which is a great point. I want, I wanna, I wanna talk about that. Can we talk or should we take a break?

• 20:59Speaker 00

  Oh, go ahead.

• 21:00Speaker 01

  Yeah, so the houses, housing, interesting, I, I, I read something today. The affordability of houses is just becoming a bigger and bigger problem in the States. But mainly to me, California, a couple of things. First, interest rates, right? The second major thing that a lot of people don't pay attention to is the insurance premium.

• 21:22Speaker 00

  It went up.

• 21:23Speaker 01

  It went up substantially since the fires for the last couple of years. And now the state is actually, the commissioner is allowing the insurance companies to raise the rates, which is, which make, it's, it's making it a little bit more.

• 21:36Speaker 00

  It's probably more than the taxes that you pay annually on a house.

• 21:40Speaker 01

  Um, our taxes here in Kern County, I believe is a one and a quarter of the assessed value of the property. But taxes, I mean, insurance going up by seventeen percent, up to twenty percent. And some of, sometimes it's just dropping you. You know, I have a couple of rentals and I got a letter in the mail. Hey, you need to go cut this tree. The tree is way far from the roof.

• 22:02Speaker 00

  Yeah.

• 22:02Speaker 01

  Why do I need to cut, cut the tree? My renter likes it. He uses it for shade and his car or whatever. No, you need to cut it or we're gonna drop you. And guess what? They dropped me.

• 22:13Speaker 00

  What?

• 22:14Speaker 01

  They, they did. My premium went up, I, I kid you not, went up from, I think I was paying nine hundred dollars or a thousand dollars a year to about twenty, two hundred bucks. Now I cannot go back to my rent. I was like, hey, you need to pay more. I just.

• 22:30Speaker 00

  You can't do that, yeah.

• 22:31Speaker 01

  No, I'm not that type of landlord, but.

• 22:33Speaker 00

  Yeah.

• 22:33Speaker 01

  It's just.

• 22:34Speaker 00

  But I know a few that are.

• 22:36Speaker 01

  Yeah.

• 22:36Speaker 00

  I rented one of my first apartments, but no, I just bought my house probably eight or nine years ago and, you know, I ripped out all the garden and put in some new stuff because it was just, uh, it needed a lot of water. So I was going more with, um.

• 22:53Speaker 01

  The desert, desert field?

• 22:55Speaker 00

  More of the cactus and type stuff, but, uh, P G D came out and they needed to, uh, to check everything out and I had to remove two plants and now it's got a big hole right there. So I'm like, I had no idea that they would ever have to come out and check, but I got three or four letters and tell me, you know, that they were going to put, you know, subcharges into my bill and all this extra stuff. But man, I, I, uh, I, my first home was a, a kind of a house like that where I was renting. And there was big, big trees and stuff kept landing in the neighbor's yard and she kept complaining to the landlord. And they took it out of my rent that we had to pay for it. So.

• 23:40Speaker 01

  So he came and cut, cut the, cut the trees?

• 23:42Speaker 00

  We had to.

• 23:43Speaker 01

  And, and, oh, so you had to as the, as the, as the renter?

• 23:47Speaker 00

  Yep.

• 23:48Speaker 01

  Yeah. No, I'm not going to do that to my, no.

• 23:51Speaker 00

  It could be worse.

• 23:52Speaker 01

  Yeah, yeah. Well, we'll take another break. When we get back, we have a very, very good subject, Latrona, to talk about, and that's household budgeting.

• 24:01Speaker 00

  Are you nearing retirement and currently working with a financial advisor? Are you not sure if you're invested appropriately? Call our offices at six, six, one, eight, four, seven, one thousand to sit down with a money wise financial advisor for a no obligation assessment.

• 24:21Speaker 01

  We're back. Yes, sir. Back. Sammy Abiyawi with Troy. We have a listener comment. "I just want to share some support for your show. I love the genuine and local feel accompanied by solid financial advice. Really do appreciate it. There is no other local show like yours. Be money wise." Man, that's a...

• 24:40Speaker 00

  Thank you.

• 24:41Speaker 01

  Man, Stephen, I want a pay raise, man.

• 24:45Speaker 00

  Let me, uh, let me talk to my boss.

• 24:47Speaker 02

  We also got a message here. It says, "Hey, guys. Great to hear Ali's name. What a great dude. But my question, how do you recommend people shop for banks? What should they prioritize?"

• 24:58Speaker 01

  Well, very good question. Now, this, it's my, my field. I spent 25 years of, of, of this. I'll tell you, there's a couple of things to look for. If you're a consumer or a business, to me, it's how accessible is your banker is priority number one. Okay, I don't want to be dealing with an 800 number. I don't want to be dealing with somebody in Midwest. I want to be dealing with somebody local. So if you have access to your banker, cherish that. Because that person is out there to help you.

• 25:28Speaker 02

  Is that one person, three people, the whole?

• 25:31Speaker 01

  It really depends on the business model that the bank has. So I worked for a bank where we surrounded people with a team of bankers, right? And, and, and we were strictly business bank when I worked for them. We did nothing else but business, you know, we, the in and out model, we called it. And we surrounded the people with, you know, three, four different people, depending on the complexity of that relationship. And so the, you're on vacation, you're sick, that client always has somebody to talk to.

• 26:01Speaker 02

  Gotcha.

• 26:01Speaker 01

  Okay. And then we trained our people that whenever people walk in, you can answer questions. You're the universal banker. We're going to train you to have every aspect of the bank nailed. So banker, I mean, you can answer any questions that might come up. Okay? That, that's the success of the bank I, I, I used to work for. That's what, what we did. And we were very successful with that approach. Now, on a retail standpoint, it really depends on, besides access to your banker, what do you want out of the bank? Are you just a depositor? Are you using your debit card, credit card? Are you going to, you're looking for a mortgage? So as you're... Maybe grow in your relationship with the bank. You want to take advantages of all the services they offer.

• 26:45Speaker 01

  That's going to help you also potentially with reducing your fees. We talked about this a couple of days ago, we shared on the show. Look for a bank where you can bundle a lot of things, but then it's going to benefit you as the client or as the customer to reduce your fees. Maybe have some benefits like overdraft with no extra fees. There's a bunch of things you can, you can do and you can negotiate. So don't be afraid of asking questions and negotiate.

• 27:13Speaker 02

  Negotiate what?

• 27:15Speaker 01

  Anything, fees for instance. Right, if somebody or interest rates, if you're going to deposit, right? Let's say for you Troy. Moneywise gives you a paycheck, that paycheck goes directly into your checking account. That should preclude you from paying a checking account fee. Cause the money is coming directly into your account. Right? And then other things that you can think of, hey, I want a credit card. Because my, my money comes here directly, I'm, you're my number one bank. Can you give me a?

• 27:46Speaker 02

  Huge credit line or something.

• 27:47Speaker 01

  Or something that you could use for, I don't know, pay bills, get points and things like that.

• 27:52Speaker 02

  Which is a perfect segue to what we're.

• 27:55Speaker 01

  Yes.

• 27:55Speaker 02

  Going to discuss.

• 27:56Speaker 01

  So lead us, lead us to that.

• 27:58Speaker 02

  So you know, oftentimes folks, you know, we, it's inevitable, we, we gotta pay bills, right? Some, some of us aren't, we don't understand that, you know, there's some bills that can come out automatically. Sometimes we just pay these bills, we individually, which makes, you know, getting paid like a, like a chore. You know, when you get paid money, it's a chore because you gotta pay bills and things of that nature. It's hard to budget because you got this coming out, this coming out. Some people, you know, have a lot of income and they got a huge overhead. So, you know, there are some budgeting techniques to talk about, discuss.

• 28:34Speaker 01

  You know, I nerd on this stuff.

• 28:35Speaker 02

  Yeah.

• 28:36Speaker 01

  I get very nerdy on budgeting, numbers and things like that. So yes, I agree with you. Every household, in fact, every person that has an income coming in and expenses going out should have a budget.

• 28:47Speaker 02

  Yeah.

• 28:48Speaker 01

  Why? Cause things creep up on you. Right, so a budget keeps you accountable towards yourself. How do you budget? First, understand what your income level is and then write down all your expenses. Just, just brain dump into a piece of paper, all the expenses.

• 29:08Speaker 02

  Yes, grooming included because grooming is something that she do, gas, everything.

• 29:13Speaker 01

  If you shine your shoe, put it in there. I'm telling you, like this stuff is important. And I, and I'll talk about this later, but I think we do a very poor job teaching kids how to budget.

• 29:25Speaker 02

  Yeah.

• 29:25Speaker 01

  You know, when they graduate high school, some people are in college and they don't know how to budget. And I think Stephen and Seth talked to new graduates from Carl State a month ago or so about this and the importance of this. So, write down your expenses, then guess what? If you have access to Google, if you have access to Excel, they have templates.

• 29:46Speaker 02

  Yeah, they got templates.

• 29:48Speaker 01

  Go there and pull a template and just start, right, they already have all these expenses, make it yours. It's already color coded, it's pretty cool to look at and just maintain the budget. Write all your expenses down, your income and make sure, make sure there's some things there to be saved.

• 30:08Speaker 02

  Yeah.

• 30:08Speaker 01

  At least twenty percent of your income, if you're able, there's some people are not going to be able to do that, right? But save some money.

• 30:16Speaker 02

  Yeah, fifty percent of your money is the fifty, thirty, twenty rule.

• 30:19Speaker 01

  Yes, let's talk about that, walk us through that.

• 30:21Speaker 02

  Fifty percent should go towards, you know, your living expenses.

• 30:26Speaker 01

  Yes, housing, food, insurance.

• 30:28Speaker 02

  Food and insurance and all that stuff, you know, that's, you know, a lot of times people are scared to put variable items on their budget like, you know, gas. The gas that they utilize, they get lazy and say, oh, you know what, my gas is variable. I don't only drive from, you know, here, from A to B, I don't really go too far, you know? And they scared to put that gas budget into the, to the budget, you know?

• 30:49Speaker 01

  Put the gas budget in.

• 30:51Speaker 02

  Definitely, people only leave like room for, you know, rent, mortgage, utilities, phone bills, you know, some of the chunky, chunkier items. But they, they don't really budget like groceries and stuff, groceries, they just, you know, people fall into this frenzy of like buying fast food, eating out. That's what really erodes a person's budget.

• 31:12Speaker 02

  Not monetizing, not being able to itemize that, you know?

• 31:15Speaker 01

  I agree with you. I think the first step is to be honest with yourself when writing down the expenses. Because if you're telling yourself, hey, I don't eat out. Uh, well, let's take a look at the last three months of your statement. You know?

• 31:30Speaker 02

  Yeah.

• 31:30Speaker 01

  There's a couple hundred bucks going to Jack in the Box. No, you do eat out.

• 31:34Speaker 02

  Yeah.

• 31:35Speaker 00

  So that was just that one night.

• 31:37Speaker 02

  Yep.

• 31:37Speaker 00

  That stuff adds up.

• 31:39Speaker 02

  Don't have kids. Do not have kids, because you know, you're going, fast food is going to be a part of your budget. And I, do you think it's a bad thing to have a fast food budget if, if that's something that you?

• 31:49Speaker 01

  No.

• 31:50Speaker 02

  You know?

• 31:50Speaker 00

  It's in the budget.

• 31:51Speaker 02

  If it's in the budget, you need to have a fast food budget.

• 31:53Speaker 01

  Now, here's the thing. Here's the thing. Look, as parents, and I think as new parents, sometimes our kids ask for some things and things that we did not have, we want to give it to them. That, that, that's just a bad example in my opinion. If I'm not able to afford a sandwich today, I'm going to tell my kid, hey, you know what? We're going to eat pasta at home.

• 32:11Speaker 02

  Yeah.

• 32:12Speaker 01

  We're going to eat some tuna sandwich today or something. I want to be honest with my kid because I do not want to lie to him. I want to teach him good habits when it comes to budgeting from the get-go. And I don't want to be that, they can call me whatever. I don't care.

• 32:26Speaker 02

  Yeah.

• 32:26Speaker 01

  Like if they say, well, he, this guy's, no, he budgets for everything. That's fine by me, man.

• 32:30Speaker 02

  Yeah.

• 32:31Speaker 01

  Yeah. Because at the end of the day, you know, I, I get to the point where you're debt-free. You're a lot more flexible with your finances. You take advantage of some traveling and things like that. So honesty with yourself when, when putting the expenses down is very, very important.

• 32:49Speaker 02

  Yeah. And like I was saying, I forgot to mention the other two, the fifty, thirty, twenty rule. I like to do fifty, twenty, thirty, because it's in order of importance, right? Your, your, your needs is your essential expenses like housing costs. And then the twenty percent is savings and debt. That's more, that's the second thing in line. That's very important.

• 33:07Speaker 01

  Yes.

• 33:07Speaker 02

  You know, for instance, people come in all the time and say, oh, should I invest this money? This is their first time getting like twenty or thirty thousand dollars. And they're like, oh, I should invest all this money. I always look at the order of importance. I always recommend that, hey, do you have a savings, are you living on your own, first of all? You're your own person, right? Okay, do you have emergency savings? If you don't have emergency savings, okay, do you have credit card? Do you have credit card debt? If you have credit card debt, guess what? Take care of that first. Number two would be, uh, the, um, emergency savings. Number three would be investments.

• 33:36Speaker 01

  Yep.

• 33:36Speaker 02

  In that order. That falls under the category of savings and debt. But then after that, you have thirty percent that's like your wants and that's basically like the what I call discretionary income that you that you have after, you know, furnishing both your needs and your savings. But you still, even with that thirty percent, you want to be very methodical. You know, you want to be very strategic with how you spend that.

• 34:00Speaker 01

  Yeah, so so to me, what's what's important is if you do stick to a budget and if you do stick to a plan, you might not get the wants.

• 34:11Speaker 02

  Yeah.

• 34:12Speaker 01

  Year one, but I can assure you, you will get to the point where you will be able to afford them if you stick to the plan.

• 34:18Speaker 02

  Yeah.

• 34:18Speaker 01

  You're gonna have to give certain things up. You have to make some some sacrifices and eventually, I kid you not, it is gonna it is gonna happen. I've seen it multiple times with with business owners. Business owners are a prime example. They give up so much to own that business and they take the risks and all that. But they give up so much in order for them to get to the level where, oh, now I'm gonna I can afford this or I can afford that.

• 34:41Speaker 02

  And it's scary, the biggest scare is that people who are like growing in their careers and they go from making eighty thousand dollars to, let's say, you get a big promotion, it's a hundred thousand dollars, then the next year is a hundred fifty thousand dollars. And then what what happens is is called the lifestyle creep. People just start saying, oh, because I have this money, guess what, I could.

• 35:01Speaker 01

  Yes.

• 35:01Speaker 02

  Spend it. I could spend it, right?

• 35:03Speaker 01

  Yeah, so here here's this statistic that's very, very important for us to remember. Thirty seven percent of Americans say they could not afford an emergency expense over four hundred dollars. Four thirty seven thirty seven percent. They cannot afford to pay for a four hundred dollar emergency.

• 35:20Speaker 02

  So basically a tire.

• 35:21Speaker 01

  Yes.

• 35:22Speaker 02

  Like two tires.

• 35:23Speaker 01

  A great example.

• 35:24Speaker 02

  Yeah.

• 35:25Speaker 01

  A tire.

• 35:25Speaker 02

  Yeah.

• 35:26Speaker 01

  I mean, going back to your point, savings as part of the budget is very, very important. You gotta have at least three months of operating.

• 35:35Speaker 02

  Expenses.

• 35:36Speaker 01

  Expenses.

• 35:37Speaker 02

  Yeah.

• 35:37Speaker 01

  You know, that's that's just base basic stuff. But we got so used to swipe, swipe, swipe, swipe.

• 35:44Speaker 02

  Yeah.

• 35:45Speaker 01

  You know, it's it's it's it's an epidemic.

• 35:48Speaker 02

  This is basically, you gotta you gotta manage, is is basically kind of like what we do here. It's all about managing risk, right? Like your savings and and and debt, those are the biggest risk because if something happens, you you you can't take care of that. Then, you know, then you gotta borrow and then you become in a perpetual cycle of borrowing.

• 36:07Speaker 01

  That's it. You get into that circle of doom.

• 36:10Speaker 02

  Circle of doom.

• 36:11Speaker 01

  And, and you don't wanna be there.

• 36:13Speaker 02

  Yeah.

• 36:13Speaker 01

  That's what I'm telling you. You gotta be honest with yourself when you write your expenses down in the process of budgeting because a lot of people are not honest with that, with themselves.

• 36:21Speaker 02

  Yeah.

• 36:21Speaker 01

  They avoid putting, oh, I'm gonna eat out. Or, no, I don't eat fast food. Or, I don't dine out. Oh, no, you do.

• 36:28Speaker 02

  Yes, you do.

• 36:29Speaker 01

  Yes, you do. And avoid, this is the biggest, the biggest thing is, as your income go, goes up, the sacrifice is for you to maintain the same lifestyle.

• 36:39Speaker 02

  That's it.

• 36:40Speaker 01

  For a period of time.

• 36:41Speaker 02

  That, that's the secret sauce.

• 36:42Speaker 01

  While you're saving this extra money, then, once you save the money, then the world opens up to you.

• 36:48Speaker 02

  Dude, do you know how much money that you could put away before taxes, like, you know, twenty-two thousand five hundred if you're under the age of fifty?

• 36:57Speaker 01

  Yeah.

• 36:57Speaker 02

  Twenty-two thousand five hundred money, uh, five hundred dollars you could put away in your 401K or employer-sponsored plan 403B, whatever.

• 37:03Speaker 01

  That's pre-tax, correct?

• 37:04Speaker 02

  Pre-tax, yes. That's a lot of money to put away.

• 37:07Speaker 01

  Yes.

• 37:07Speaker 02

  I told my wife, I said, hey, well, let me not talk about me personally.

• 37:13Speaker 00

  That's probably smart.

• 37:14Speaker 02

  Yeah, but, but, um, just, you know, if you get to a certain level, just get the mindset of saying, you know what? I don't wanna fall into this lifestyle creep, so I'm just gonna put this money away and save it.

• 37:26Speaker 01

  That's right.

• 37:26Speaker 02

  There's so many vehicles out there that you can utilize, right?

• 37:29Speaker 01

  Yes. That's a very sound advice, actually. I, I really, I really.

• 37:33Speaker 02

  Be happy.

• 37:34Speaker 01

  That's it.

• 37:34Speaker 02

  Yeah.

• 37:35Speaker 01

  That's it. Budgeting, you know, budgeting one-on-one, be honest with yourself, write your expenses down, use Excel or Google Sheets for templates, and just get it done. Get it done.

• 37:46Speaker 02

  Yeah.

• 37:46Speaker 01

  We'll be right back, Stephen.

• 37:47Speaker 00

  Don't forget, Money Wise is more than a radio show. We're an independently owned, local wealth management firm with sixty-plus years of collective experience. Our financial advisors are here to help you, Kern County. Together, let's be smart, be safe, be money wise.

• 38:05Speaker 01

  Summer of 1994. This song reminds me of that summer, not that it came out in that year. Really good memories, really good memories. Seventh or eighth grade, I think I was, chasing my first girlfriend.

• 38:26Speaker 02

  Yeah, it sound like I need me a stogie and a shot of Kenny.

• 38:30Speaker 01

  We're your hosts at Money Wise, Samia Bia, we're here with Troy. We have a comment and a question, I think we need to continue on our subject from earlier. What was the first two, I only caught the wants in the rules. I have three kids that are grown, grown out, and man, I have so much extra money now that I am not paying for three children at McDonald's anymore.

• 38:50Speaker 02

  Oh, fast food, man, you gotta put that in the budget.

• 38:55Speaker 01

  Especially their boys, man.

• 38:56Speaker 02

  Oh, yeah, the boys.

• 38:57Speaker 01

  We have three boys, man, right?

• 38:59Speaker 02

  They tanks, horses, man. I said, babe, we gonna buy some hay, they gonna eat hay, eating us out of a home right now. But anyways, sorry for my mumbling, I probably mumbled, okay? Excuse that. But anyways, the 50, 30, 20. 50% represents the needs, that's the essential expenses like housing, rent, mortgage, utilities, groceries, transportation, etc. And you got the 30% that's allocated towards wants, and what are these? These are non-essential expenses like dining out, entertainment, hobbies, subscriptions, and travel. And then the other 20% is savings and debt, right? Savings, emergency fund, retirement accounts like Roths, traditional IRS 401Ks, investments,

• 39:43Speaker 02

  extra payments towards, you know, any sort of debt, high interest bearing debt, or any debt. So that's what that breaks down to be. But like I said, most importantly is, you know, the 50, 20, those two, everything is important, but like, the order of priority, your needs and the savings, really.

• 40:01Speaker 01

  So let me talk a little bit about savings and debt. So savings is very important. I really, really encourage people to have maybe multiple savings accounts. I have multiple savings accounts, one for travel, for instance. Every paycheck that comes in, a hundred dollars, a hundred fifty dollars, depending on the month, goes directly to travel, once goes to, I like having nice clothes.

• 40:20Speaker 02

  Yeah, you do.

• 40:21Speaker 01

  And I do not want to go and just.

• 40:23Speaker 02

  How much does your shirt cost?

• 40:25Speaker 01

  I buy stuff, I'm frugal, man.

• 40:29Speaker 01

  But you know, have, if you have these things, just, just have savings accounts so you can just budget for that.

• 40:36Speaker 02

  Yeah.

• 40:36Speaker 01

  More importantly is the debt.

• 40:38Speaker 02

  Yeah.

• 40:38Speaker 01

  You know, we have, we, here in this country, we are in the habit of just swipe your card and pay later. No.

• 40:44Speaker 02

  No.

• 40:44Speaker 01

  No.

• 40:45Speaker 02

  It's not what you do.

• 40:46Speaker 01

  No, no, no, no, no. If you're listening to us here at Money Wise.

• 40:48Speaker 02

  Don't carry a balance over.

• 40:49Speaker 01

  That's one thing you wanna avoid as much as possible. Do not fund your lifestyle through debt.

• 40:54Speaker 02

  Yeah.

• 40:54Speaker 01

  That's the kiss of death. And coming from a banker, and I've seen it. I've seen it where a lot of people, a lot of divorces happen because of this. Homes broken because of this. Debt.

• 41:07Speaker 01

  Avoid it as much as possible.

• 41:09Speaker 02

  Absolutely.

• 41:10Speaker 01

  How? Budget for it.

• 41:12Speaker 02

  Yep.

• 41:12Speaker 01

  So let's say you got into some credit card debt, and you have three, four, five different credit cards. Each one of them with a certain balance, right?

• 41:20Speaker 02

  Mm-hmm.

• 41:20Speaker 01

  So what you can do is start paying the smallest balance first. So just get it out of the way. What it does for you psychologically is just it.

• 41:28Speaker 02

  Eliminate one.

• 41:29Speaker 01

  That's right. I got one in. I'm gonna go for the second, and I'm gonna go for the third. Then what, without even thinking about it, you're creating a routine for yourself.

• 41:39Speaker 02

  Yeah.

• 41:40Speaker 01

  And you're becoming disciplined.

• 41:42Speaker 02

  Yes.

• 41:42Speaker 01

  With your debt management.

• 41:43Speaker 02

  Yeah.

• 41:44Speaker 01

  That's what that, starting with your lowest, you know, balance credit card does to your brain.

• 41:51Speaker 02

  Yeah.

• 41:51Speaker 01

  And eventually, once you pay off those credit cards, I can assure you, nine times out of ten, what I've seen is people do not wanna borrow again.

• 41:59Speaker 02

  Yeah.

• 41:59Speaker 01

  Especially on credit cards.

• 42:01Speaker 02

  Yeah. You, I mean, some people that are uneducated is a lot of, like, you know, especially from where I'm from, man, it's, it's a lot of folks that are like uneducated financially.

• 42:10Speaker 01

  Yes.

• 42:11Speaker 02

  Right? And they, you know, uh, they think that credit is just an extra, you know, you know, something that they can spend, just go spend and not utilize for something important like bills.

• 42:23Speaker 01

  Yes.

• 42:23Speaker 02

  Have automatic payments come out of your credit cards, and because you know you're gonna have the money to pay that back, pay it back, right?

• 42:29Speaker 01

  That's right.

• 42:29Speaker 02

  That'd be a great way of.

• 42:30Speaker 01

  Yeah, you take advantage of some points, you, you, you build your credit, all, all, all of that. It's just funding your lifestyle. Going out and buying a purse for three thousand dollars or an iPhone for fifteen hundred bucks using your credit card is just not savvy.

• 42:44Speaker 02

  Yeah, it's not savvy at all.

• 42:45Speaker 01

  It is not savvy. You wanna do something different.

• 42:47Speaker 02

  Just imagine paying your bills, just having to pay just one entity and that's the credit card.

• 42:52Speaker 01

  Yep.

• 42:52Speaker 02

  Everything coming out, you don't have to get paid and it becomes a chore and you've got to pay every single bill. Like that's, people do that.

• 42:59Speaker 01

  Yep.

• 42:59Speaker 02

  People still do that.

• 43:00Speaker 01

  Well, hey Troy, I've enjoyed the show with you today, man, like always.

• 43:04Speaker 02

  Yeah.

• 43:04Speaker 01

  Always. And we, we, we're looking for the next show. Uh, Steven?

• 43:09Speaker 00

  Yeah, tomorrow we will have Chris and Seth. You never know what you're going to get with those two. And we'll have Chad Hathaway joining us tomorrow. If you didn't catch the whole show or want to listen to a past show, just remember you can look up the Money Wise Podcast on all podcast platforms, Spotify, Google Play, iTunes, wherever you find your podcasts. But until then, be smart, be safe, be money wise.

• 43:45Speaker 03

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