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Chapter 1: What advice should I follow when paying off my mortgage?
You too. What's up?
I have a husband who's retiring within the next 12 months. and we'd like to finish paying off the mortgage on the house. Good. Yes, per your advice. And our financial advisor is advising us not to because the mortgage is at under 3%, and our investments are doing well above that. However, that doesn't matter to us. We want to plow ahead and get this done.
And our next question to him is, how can we best divest of our investments and pull the money out, make the cash available to do this? And his next tier of advice is to pull from our bonds that are earning at tax-free rates as opposed to pulling from our mutual funds that we'll have to pay capital gains taxes on. What do you suggest we do?
You probably got no gain on your bonds. Their probably value is down even though the coupon rate stayed the same. But as interest rates rise, bond values go down. And so my guess is that you bought them during a lower interest rate environment, so they're probably not even worth what you paid for them today. Is that right?
I'm not sure. That's a good question.
I don't think you're gonna have any gain to amount to anything. So I like his advice on that basis.
Okay.
And what is your total nest egg?
$4 million.
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Chapter 2: How should I prioritize my debts?
I love it.
But I mean, it's teaching for everybody out there.
It's good. It's good.
It's everybody out there. Thank you. So bonds, the thing you remember about bonds is there's a set interest rate on the bond. So when interest rates rise in order to achieve that same – a higher – let's say you've got a 4% rate and interest rates are 7%. And so people are expecting 7%, but your bond is only paying 4%. So the value of your bond goes down.
As interest rates rise, it goes up as interest rates fall. Bond prices are exactly inverse to the prevailing interest rate market. So in a record low in the last 100 years, we had an unprecedented 3% interest rate environment for bonds. A decade, right? And in the middle of the lowest interest rate environment in known history, this guy puts you in bonds.
And where is it going to go from the lowest in interest rate environment in history? Up! As interest rates go up, your bond values go down. And so I'm afraid you may have actually lost money on these bonds when you get into them. But I'm hoping you at least broke even. That's what I'm hoping. So interest rates, folks, bond prices, the value of a bond goes down.
As interest rates rise, so you never would buy bonds in a rising interest rate environment. You would buy them in a falling interest rate environment if you were going to buy bonds at all. And that's because of the yield on the bond has to approximate the prevailing rate. And yet the coupon rate is fixed.
Yeah. And I think one of the most important things we've learned with the financial advisor is exactly what you said at the top of this, is that here are my goals. And if they're not respecting or hearing that, they're going to do the inverse of that.
Where else have I got to figure out that you're giving me bad numbers?
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Chapter 3: Why do banks issue so many credit cards?
No, they'll give it to you. Whatever the payment is, they'll approve you for the loan way beyond.
18-year-old, $200,000 in loans for college. Sure, sure. Right? Yeah. They just hand it to you.
So, Corey, the most aggressively – here's an interesting fact. Let's just take it even a step back further. We now, at this moment in 2024, in America, the United States, live in the most marketed to, sold to culture in the history of the world. In the history of the human race. You will receive...
more marketing impressions on your ears and eyes and brain in this coming calendar year than any set of humans ever has in history. That's pretty interesting when you think about it. And when you are sold that much stuff, people buy that much stuff. And among the most marketed to group of people in the history of the human race
The most aggressively marketed product in the most aggressively marketed time in history is debt. Debt is a product. They sell it. They sell home equity loans. They sell student loans. They sell car loans. They sell private loans. They sell title loans. They sell Any kind of home loans, any kind of loan you can dream up. Put a word in front of the word loan and it happens. Dog loans, cat loans.
There are loans for everything. I was trying to buy a T-shirt, for God's sakes, and they offered me payments on it with Klorna the other day. I'm like, it's a T-shirt. Why would you? Three easy payments of $1.26. I mean, come on. You know, it's like, what?
On a $5 t-shirt.
I'm kidding. I don't remember that.
No, I know. That probably wasn't the number. 10 easy payments. It's at the end of every transaction. 20 easy payments of $1.26. No, I got you. Whatever it is.
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Chapter 4: How can I stay disciplined while getting out of debt?
I said that when you American distress, they together, they will spend a billion dollars on marketing. It's more than beer. It's more than Chevy pickup trucks going through mud puddles, more than all your car advertising put together more than any other category of advertising. What's in your wallet says the failed actor.
mm-hmm the actor who can't get a part now what's in your wallet or the great actress because they're paying billions or millions of dollars to her too so yeah because they have it gotta admit I'm a Jennifer fan there was a um that's what I was thinking of Jennifer Garner yeah she's actually great but Maverick her dad would not be proud I know and I'm trying to look up because it was sent to me by multiple people now I can't find it
So anyway, the credit card is the most aggressively marketed product out there. And so in the midst of that, they are issuing credit cards en masse to people who can't pay them, don't need them, including dead people.
dogs we used to collect bizarre credit card stories and i had a guy send me one from virginia he as a joke which was fraudulent and he shouldn't have done this but as a joke he applied for a credit card in the name of buck naked okay they issued the card to buck buck got him a card Another guy sent me from New Orleans a credit card, an actual card. He sent me the card and a letter.
It was issued to Fru Fru, who was his poodle who had died. And that was unsolicited. They picked it up off the AKC registration and meant to send it to the owner of the dog, instead issued the card en masse to the dogs. Literally, it's gone to the dogs. And so, I mean, this is the credit card world. So please, God, don't think you're special if somebody gave you a credit card.
I mean, when I was in college, I thought, well, if they can get an American Express, then by God, I'm successful. And if I get a gold piece of plastic versus a silver piece of plastic, then I'm really someone.
Because of the color of my plastic. And you get to pay more fees to get those cards, too.
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Chapter 5: What should I do about my medical bills?
The color of my plastic dictates the quality of my personal identity. Yep. So, Corey, that's what you're dealing with, yeah. Yeah, we've had people with 200 credit cards. There are people that believe that credit cards are excellent and they have their own YouTube channel and all this stuff on how you can live off of the points.
And how you can be the card man or whatever and all this stuff, right? Yeah. So it's a thing because it's so prevalent that any moron can get more credit cards than they can pay. So that's that's how, Corey, because, you know, you're making the sweet and naive assumption that the bank actually cares about you and would look at you and say, you can't afford this.
So we're not going to do harm to you. No, they don't. None of that is true. They will do harm to you in a heartbeat if they get the opportunity.
And just to remember that they're they're here to make money.
money off of you and they know how to do it like that's their job that's their job and there was a recent clip it went crazy but the one you're just trying to find yes and i found it the president of or whoever it was of mastercard and visa it was the two they have 80 of the market share and they're in front of congress because because of antitrust Yeah.
Well, and they can't they won't lower fees for small businesses like they give deals to big corporations like Walmart. And and they have to verbalize and say what they're making their profit margin. It makes you sick. It makes you realize literally off the backs of Americans. This is what they're making. Like it is they make.
And we know we I know we know that they make billions and billions and billions. But as you sit there and watch these two people, you're like, oh, my God. And they're not even. you know, from any level of integrity, trying to help small businesses, even though we're against credit cards, but like even that, right? I mean, everything is about making money. It's all they're in it for.
And so they know how to do it really well. And they market it to you and bring you into this cycle and this mindset of it. That is very, it's crazy.
So just remember, if you're issued a new credit card, you're no better than frou-frou or a buck.
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Chapter 6: How can financial advice differ from personal goals?
Chapter 7: What are the dangers of credit card debt?
Good to talk with you. How can we help?
Yeah, my dream is to achieve financial freedom and continue to build wealth, but I feel like my spending habits are getting in the way of that. a little bit of background. I'm 25. I'm making over $150,000 a year. Wow, good for you. Yeah, I have no debt.
I'm putting myself through school, but I find myself spending unnecessarily on things I don't need, and I'm just wondering if I can get some advice on how to rein in my spending and start building wealth and achieve my financial freedom goal that I'm shooting for.
What do you do, and what are you studying?
I am studying engineering, and I am in pretty much an entry-level engineering position. And I love what I do. I'm able to work from home, and I have a lot of great benefits, but I feel like there's more that can be done.
So what are you wanting? Yeah, when you say there's more, because I mean, you're putting yourself through school debt-free, correct? You have no other debt. So is it investing you're looking at? Is it just your spending habits that you feel like you're making a lot, but there's not a lot to show at the end of the month? What's your biggest pain point?
Yeah, I feel like I have... I don't have boundaries when it comes to spending. I feel like I could be using my money for better things like investing for the long term. But I find myself spending a lot of time online shopping or going out. And I don't have a lot at the end of each month to put in my investment accounts like I'd like to.
Okay. Are you on a specific budget, like a pretty detailed budget?
Um, not really. I just kind of spend as you want. Yeah.
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