Scott: [00:00:00] Dollars and Sense with HAPO Community Credit Union helps empower our listeners to achieve financial success while living for today and planning for tomorrow. This podcast focuses on financial education, community support, fraud prevention, real life stories of financial transformation, and much more.
HAPO Community Credit Union serves Washington and Oregon with over 18 locations. Bank on more when you bank with us. Hi, everybody, and welcome back to another episode of Dollars and Sense, HAPO Community Credit Union's financial literacy podcast. Today in the studio, we are joined by Nolan and Carter with HAPO's finance team, and we're going to be talking about an interesting topic, at least to me building a solid financial foundation, a conversation of what Pretty much anybody out there can use, but I think focusing initially on a younger group just getting out into the workforce, what they can do to set themselves up for success in the future.
Gentlemen, welcome.
Thanks for [00:01:00] having
us, Scott. Absolutely. When I first say a solid financial foundation what immediately comes to mind for each of you?
Security
Nolan: for the most part, not having to worry about. Every day or every week kind of making sure that you have a strong footing. You already know in the back of your mind that's something that you've set yourself up for and you don't have to really worry about too much.
Carter: Yeah. Yeah. I think, financially stable a good support. Yeah. And I think a future honestly too. Cause you're not just going to stay stagnant in one spot. You're going to look towards building.
Scott: Yeah, so get your, get yourself organized, have your bills covered, be financially independent and not just in say a survival mode.
I know coming out of school depending whether high school, trade school, college that first job, you might look at that, that income number and be like, Ooh, I am not making minimum wage. And then you look at rent and car insurance and gas and whatnot. And all of a sudden that, that number doesn't seem nearly big [00:02:00] enough.
Yeah. That's so true. A thousand
Nolan: percent. Yeah.
Scott: So when we start looking at those type of things, I know we've had some episodes on budgeting before, and that'll probably play a part in this, but what are we looking at as far as somebody coming out into the world and needing to make sure that they've got those things in place?
First off, what are the basics?
Nolan: First and foremost, and obviously this depends on your situation, maybe at home. There's obviously the group that coming right out of college or high school, they're getting a place on their own right away. There's also the group that might have, parents or relatives or someone that they can stay with.
So that obviously can change depending on your situation. But first and foremost, yeah, you gotta kinda make sure that you got rent covered, you got your utilities covered, and food. It's really a learning curve at first, for sure. Regardless of if you think you're ready or not, it's definitely something that kind of smacks you in the face right away.
And you got to start covering all of that on your own. Yeah. All the
Scott: things that maybe mom and dad covered or grandma and grandpa covered, or whoever you were with kept you [00:03:00] sheltered from those particular things like, Oh wait, utilities.
This is a new one.
Carter: Yeah, for sure. I think an important thing when you're starting out is especially in high school and even.
At this age, everybody has a phone at a young age. Getting an account at a young age so you can understand your inflows and outflows of cash early can help you immensely as you move down the road in high school and as, especially as you transition into college and trying to understand how you're going to either pay for school or get a job.
That kind of stuff happening.
Scott: Get into that point of also taking a look at needs versus wants. Yeah, I want an unlimited super fast data plan, one gig internet, but I can't afford that. And so I will suffer with slower internet download speeds and maybe only one streaming service or perhaps no streaming services and be able to eat this week, depending on, where you are on that financial scale.
Exactly. And you mentioned like that inflow and outflow those accounts like most people are going to [00:04:00] go out and open a savings account, youth account for their kids. So most people we would assume are coming out of school with probably a savings account, checking account, maybe a debit card, possibly a credit card.
But we would probably consider those to just be the basics, right? Yeah, absolutely.
Nolan: For sure. Yeah, those things are definitely important. And if you're. Toward the tail end of high school, and those aren't things that you have already, definitely something that it really gets you prepared if, if you're going to go into college or right out into the workforce, then that's something that you need to at least have keep in mind every, month or so you, it's just an important thing to keep track of because if you don't set up a good Kind of habit of keeping track of those things at a young age.
It gets a lot harder as you get older to keep that in the forefront of your mind.
Scott: Instead of just adding a new expense or a new income stream you're suddenly adding all 12 or 15 or 20 random things that you need to keep track of. Exactly. Suddenly it becomes a little bit of an [00:05:00] overload.
Nolan: Yeah.
Carter: Yeah, absolutely. And I think like you talked about having an account at a young age, you, when you, and and having an online banking that you can always look at and see where your money's at versus, just asking your parents for money and oh, it's just like an infinite cash machine.
But convenient. Yeah, it's, it is very convenient.
Scott: I wish I still had one of
Carter: those.
Scott: I might be dating myself a little bit here. You mentioned online banking in high school. I actually went through and registered. on the register of my checkbook to reconcile and balance my checking account on there.
But basically the same thing. You're looking at your debits, your credits on your account. Take a look at that balance, how it's going to up, how it's going down, get an idea of the fact that, hey, guess what? If I am going out to lunch every day, that's going to cost me a heck of a lot more than if I just meal prep a pack of ramen for lunch every day.
And of course, then balancing what is surviving and what is living.
Nolan: Exactly. Yeah.
Scott: With taking a look at some of those account budgetary things, I know [00:06:00] we had a conversation about structuring accounts on a previous episode where we talked about having different sub savings or sub checking accounts or just multiple checking accounts where, as you're getting your paycheck direct deposited, you're pulling those monthly expenditures out as a budgetary tool, keeping them off in different accounts so that you could know that, hey, if I don't pull anything from this account, I've got my monthly expenses covered. Exactly. And then everything else going somewhere else, maybe your fun account, a friend of mine referred to his as his James Bond 007 account.
He could pull out that card for whatever he wanted. But then building those account structures to, to be able to have a good handle on your debts, your income.
Nolan: Yeah. I think that's really important as you start having to worry about those bills. I can speak personally, that's how I treat my expenses every month as well.
I'm married, so my wife and I, we collaborate on this [00:07:00] with our respective paychecks. But it is something that the second, the day we get paid, We take either, if you get paid twice a month or monthly or whatever it may be, you take that portion out of your paycheck right away. You do not even consider that as part of your your income that you could spend on other things.
And so that almost creates this habit where you know that my paycheck might be this. But really, it's just this because those are things I need to pay right away. You don't even consider that. So yeah.
Scott: And then at that point, you also don't have necessarily that same stress level having to see if you can cover those things,
Nolan: right?
Because yeah, the worst thing would be you don't do that. And then when the time comes, you have to pay the bill. You realize that you've already spent that money elsewhere. Because you weren't paying attention, which
Scott: everyone's prone to do had that happen with my wife and I in our account where we had money in there.
And I was like, I've moved this money over here to pay for this thing. And then that payment didn't come out for another week.
Yeah.
Scott: And so she looked at it later and was like, Oh, this is here. I will pay this other thing. And [00:08:00] I just had to transfer a bit of money to cover that. But it was one of those things like, Oh goodness, that accounts really dry at the moment.
Yeah, exactly. Yeah. And I think that kind of brings me to one of my next ideas here would be that emergency savings situation. We've talked about that being a very important step for most people have. three to six months worth of expenses saved up so that if something does happen and both of you are paying bills, that you've got a bit of a cushion there.
Or if something else say, losing a job or a source of income happens that you're still set for a while. I personally feel like that is a pretty good, foundational piece that everybody should probably be pushing for.
Carter: Yeah, absolutely. Almost
Scott: immediately.
Carter: Yeah, totally. I totally agree with that.
Everybody's safety net or savings account is going to look a little bit different and obviously you have to plan accordingly. Just to talk [00:09:00] back to our previous point about structuring your accounts. One of the, My wife doesn't want anything to do with the finances. She could care less how it looks, where it goes.
And so one of the ways that we mitigate that is we have a bill pay account, and then we have a Rachel account slash our account. And. The bill pay account, as soon as we get paid, money gets moved over there to pay those bills. She knows slash doesn't have access. She doesn't have a debit card. She still has access to it.
She's on the account, but she doesn't, she knows that's that account. The bills get paid out of that. I put money in savings or pay the visa or whatever loans we have. And then she has her account and she knows what she has for the month or the two weeks until, and she can spend that as needed. So it's a good, easy way to without having to go line by line and figure out she just has to look at the account and that's what I have left for the rest of the week, I need to spend it accordingly, and yeah, and then that way you're able to, like we talked [00:10:00] about, put money away for savings accounts and start building that and then once you have that, then you can have a little more fun and
Scott: Yeah, and I think that, that's a good point that you make is that she doesn't want to have that stress level of looking at and organizing that and obviously can trust you to accomplish those.
Yeah, absolutely. So with that structure in place, you like financially sound, structurally stable, being able to look at the one thing and not accidentally. Overdraft or run things like that. Yeah, absolutely. Yeah.
Nolan: Safety net savings definitely. And this is even coming from someone working in finance.
So I look at numbers all the time, but that's something that it's still hard, even, in this position to, obviously that's something that you need to do because in this day and age with how expensive things are getting, especially with your utilities with, if it's rent or your mortgage or whatever.
Those bills don't stop coming if you lose your job. With it being [00:11:00] just as expensive as it's ever been to live these days, that is something that it might seem like I'll push this off until the next month because I want to spend this money on this month. That's always something that you do need to have saved up because, at the end of the day, It's something that it'll help you get out of that survival mode.
We were talking about earlier is because all of a sudden when that happens to, if you thought you're out of financial survival mode, you get thrown right back into it. And so it's really important to keep that saved up.
Scott: Yeah. There's nothing like a situations. A couple summers ago, we hit here in the tri cities, 118 degrees and I lost my entire air conditioning unit and 12, 000 later.
Yeah, exactly. That, that was a huge unexpected bill. And I was lucky to be able to finance that expenditure at 0 percent actually over the course of a year, but still that was we need to get this thing replaced because at 118 degrees outside you're not really concerned about bank [00:12:00] account so much as you are.
Less than 90 degrees inside the house. Yes.
Yes.
Scott: And so and that, that was one of those things came about and then you want the double whammy windstorm took the roof out needed to re and it was, again, we were in a good position with that because we had planned ahead and we had been able to create those foundations.
But it's very easy to see how. three months of saved up expenses goes away on an emergency like that. Exactly. Yeah. So and again, you also mentioned as things get more expensive, you may have had three months saved up or maybe six months saved up and now it's looking more like it's three months or
Nolan: two or one.
Exactly.
Scott: And I don't think we're necessarily promoting people ignoring life to make this thing happen because there's nothing like working just so that you can get by, you want to live life as well.
Yeah.
Scott: So whether it takes you six months or a year to build up that, as long as you're [00:13:00] working towards it, I think you're doing the right thing.
Nolan: And that, yeah, it's not something that you're going to have saved up immediately out of college or out of high school or trade school or whatever, because you only have a certain income. Per year and with all the things that we've already talked about this early on in the podcast that takes up a lot of your Monthly expenditures.
Yeah, that's obviously not something that you're gonna right away be able to do But you do need to somewhat be working toward. Yeah as at whatever pace you can comfortably while still not eating Yeah, or
Scott: unless you really love ramen
Nolan: and ramen. It's not. I like ramen. So not everyday ramen, but ramen.
Scott: Sorry. Yeah. One of the things that, that we I feel like mentioned a little bit was Having I think when we touched on having a phone as a kid, odds are coming out of high school, you aren't paying for your own phone. That's probably your parents. You're an extra line on their account. That might be one of those things working towards financial independence.
Getting [00:14:00] your foundation in place so that you're that you're not Pulling every expense onto yourself at that point. Maybe you're lucky and you've got that type of a scenario where your parents can help you out. I know my younger brother, I think actually is still on an account with my parents.
He is a very well off engineer. But I believe that he now actually covers the entire account. So I think he's, I think he flipped that one over and is now covering my mom's cell phone bill. What a
Carter: nice guy.
Scott: But I think he also kept the account that way because it was just easier than splitting out to having two separate accounts.
Nolan: Yeah. And that is something that as you do start to, realize how many bills go into, your monthly expenses out of school, you do if you have that relationship with your parents that is something that's nice to slowly roll out. Okay, now I'm going to start paying the phone bill, or now I'm going to start taking on car insurance, or whatever it may be, because those are things that, You almost feel like you're drowning if you take it all in at once.[00:15:00]
But unfortunately, there are some circumstances where people do. And so that's just another thing you got to be aware of as you're entering the workforce.
Carter: Yeah, for sure. Yeah, and I think you touched on a lot of good pieces. And I think that we forget to talk about, like, how we get to those spots.
And I think setting goals for each level of tiers that we talk about is super important. And You set a small goal, you hit your goal, you make a new goal and you continue to grow and build. And like we talked about, you don't just, you don't just all of a sudden have 15 grand saved up in a savings account, right?
That's slowly built up over time goals you've made, talking with your wife and having a, a reasonable conversation about. where we're spending money and how we're saving and, yeah.
Scott: Yeah, getting, and I think that goes again back to utilizing a budget as a tool to make sure that access to these things, we can build this, but we're also wanting to pay for this vacation, so we're going to put some money aside for [00:16:00] that.
So we've got, a reward at the end of that goal. Everybody loves a little reward at the end of everything. So something to look forward to while you're doing this, because while having say 15, 000 saved up as an emergency savings is cool. It's not exactly a reward at the end of it. You're not like, yay, I saved up 15, 000 now I can go buy a boat because then you're back to square zero at that point.
But if you're doing both and you're setting something aside for your boat, Okay, now you're gonna get your goal. If you're not a vacation person, maybe you want toys. Yeah, exactly. Ev
Nolan: Everyone loves toys. , you're lying to yourself if you don't like toys. Exactly. And I, it is real that is always also a part of life.
As we were talking about earlier. You don't want to spend so much or concerted effort into paying all these bills and not also take a step back and enjoy things. And we also mentioned or talked about credit card earlier about something you might have coming out of school and that, as long as you are aware of your own [00:17:00] personal tendencies and whatnot, because credit cards can, if you're not smart with them, they can turn into a real hassle and a real problem, but there are a lot of really good benefits to credit cards with the credit building aspect, obviously, but there's also the component where those.
fun things you want to save up for, you can help save up for those things with your credit card. For instance I like playing guitar. And so I also like buying guitars for better or for worse, because they are not cheap. But the I will say by using my credit card properly, you always want to make sure you're aware of your credit statement and your checking account balance, your saving balance, so you can pay off these things.
But as you're using your credit card and using it properly. The cashback and the rewards and stuff like that, they come along with purchases. You're just, you're going to do anyways. You can do it with a debit card. You can do it with a credit card. If you use your credit card, use it all of a sudden you start to see these things build up.
Oh, I can afford, a night at a hotel or all of a sudden I have this money. I could spend on a guitar [00:18:00] feels like for free. Obviously you had to spend money to get there, but you wouldn't, if you were just using a debit card, for instance, you might not have had that just available. So it could help.
I don't say kill two birds with one stone, it'll point
Scott: it it's another tool. And I think it, it might be one of our roadmap tools on this, as far as you are building that foundation, you've got your savings and your account structured, you can handle your bills. You've got a budget in place where you're planning these things out.
You're saving up. You've got your security savings.
Nolan: Yep.
Scott: Like you got a pretty solid starting point there. So where do you go next? Because a solid starting point is great, but we call it a starting point because there's more that you can do. A hundred percent. A credit card I think is a pretty good one because that allows you to build your credit score.
Like you mentioned, and that is a very important thing when it comes to. going out and acquiring debt loans for things like say a house or a car. Absolutely. And having those things in [00:19:00] places with a good credit score is going to help you get a lower rate on all of those, which shockingly will save you money in the long run as that 1 percent off on your interest rate on a car loan is going to save you a decent chunk of change, this free money as it were in the long run of paying off that car.
Nolan: Yeah.
Scott: Also, I think we've got a couple of other types of accounts that we could look into now that we don't need. If we've got this good foundation, we've got things handled. We've got our emergency savings. We don't need the liquidity necessarily of having those pure cash accounts like a checking account or a savings account.
We can start looking at things like say money market accounts, which you don't have as much access to the money. But it generally has a better return rate on interest, correct? It does, yeah.
Carter: Yeah, and money markets are great. Saving, we all have savings account. The interest rates on those are pretty low, more or less money market starts to tear up.
But other [00:20:00] options like a certificate of deposit, you're going to get a little bit higher yield, but it is in fact locked up for a certain amount of time. So those are some potential options. Those are absolutely great options because if you have any kind of money, 5, 000 or more, you want to make that money work for you.
You don't just want it sitting on the sidelines doing nothing, right? Yeah.
Scott: In fact with the money market accounts, those are typically half dozen or so accesses to that account a year. I think it's a month, six transactions a month. Yeah. Okay. So you do have access to that money and it's going to do a little bit better for you than say a standard savings account.
So that actually might be a great place to put your emergency savings into an account like that. So now it's not just sitting there waiting on the sideline to come in as a relief pitcher for you, but it's actually doing some work at the same time.
Nolan: Earning some dividends, exactly.
Scott: And then if you have money that you don't need access to, that certificate deposit is going to get you an even better [00:21:00] return.
But you've got to look at it through the window and kind of wave at it and be like, I'll see you in 12 months. Yep. And all of your friends that you're bringing with you with this great interest that we're going to pick up on it.
Nolan: Yeah.
Scott: Oh, sorry.
Nolan: Oh, no, go ahead. I was saying, and the CDs are also a joy if you are a person who likes maybe you're a thrift store, a shopper and you like finding good deals or you like finding for a CDs incense, a good rate.
There's always different institutions that will offer these different specials and different rates and stuff. And that's always a fun thing. You can say I can get. X right here. But if I go across the street, I can get X right here. And so there's also this component that you feel this gratification that you're not only trying to put your money to work in a better way, but you're also researching and you're doing your part to get the most return you can.
So there's also that component to it too, that makes you. A
Scott: little bit of almost retail therapy, if you will. Exactly, yeah.
Carter: Oh gosh, that's too funny. Yeah, I guess just like anything, if you're shopping for rates on your auto loans or your mortgage, [00:22:00] you're gonna shop for rates on your savings accounts and CDs, you want to get the best bang for your buck, for sure. Yeah,
Scott: and diversifying across multiple of these things, not a bad idea. Yeah, absolutely. Yeah, with with all the other aspects that are out there, if you don't need access to that, make your money work for you. For sure. The credit card aspect, building up your credit score.
Mine you like cash back, I'm assuming, for your guitars. I'm travel rewards. I get Airline miles. Yeah. Actually Marriott vacation points. Okay. I haven't paid for a hotel in quite a while. Thanks to what I built up with those. But again you're not wrong. It's you use those to pay a bill that you know, you're going to be able to pay off.
and you reap the benefits of utilizing their service.
And
Scott: could be a slippery slope if you don't make that payment on time, that some of those interest rates can be a little eye opening and shocking. But having that availability definitely doesn't hurt either. We had a conversation with some of our consumer lending about some of those, how you, how your [00:23:00] credit score is built, your credit mix,
and
Scott: how much you should be utilizing And the concept that if you've got a credit card and you're trying to build your credit, it doesn't matter if you bought a pack of gum this month and paid it off, or if you bought a 500, something nice guitar for yourself and paid it off.
It all counts as I paid this month.
Nolan: Exactly. And
Scott: so utilizing those smartly gets you that boost in your credit score, which is definitely going to help you out down the
Carter: road. Shout out to Levi and Todd, cause that is one of the most misunderstood concepts. Ever in anyone you come in, they're like, Oh, I should just use it all the time, right?
It's no, it should carry a balance. I should carry a balance. I should max it out. And so I, they know that I use it and I pay it. I'm like, absolutely not. Don't do that, please. Yeah. You just need to use it once, pay it off and you're good to go. And you're going to build history and.
Scott: Yeah. And all of that is going to go back into that credit score and help boost you up so that you can then afford these extra things.
So if we've got a [00:24:00] good financial foundation at this point, we're doing a bit more to start building some wealth, however long this has taken us to get to, because this isn't a race it's definitely about building at the pace that you're capable of keeping your your security as well as then being able to make strides.
And hopefully as we go through this, we make bigger and bigger strides. Thanks. With those more things like CDs where we're earning more and getting things to work for us. Yeah, exactly. Where else can we go beyond that?
Nolan: There's also the component of, and this isn't necessarily something that again, you'll be able to do right away.
But as time goes on, there's the There's always in retirement accounts that you can ensure that part of your paycheck's going toward. You can do an IRA, personal contributions on your own time, or you can 401k through your employer. And that's something that I think also when you start working, it's almost like you want that money, however much your employer might, match you at, if that's [00:25:00] something they offer, you're going to want to do that.
You want to hit that percentage that they'll match you back at, because if you get used to living on this income and all of a sudden you think you're ready to maybe up it because you're not at that match point yet. And all of a sudden, Oh, my paycheck is a lot smaller now because I wasn't just doing that from the start.
I got used to living with more of my paycheck being just a liquid cash that I could spend. And so that's something that for sure you can go ahead and, Work that in to when you go to retirement or when you get to retirement age, you have thanked yourself back in the day for doing that early on.
Scott: And if your employer is doing any level of 401k matching and you're not taking advantage of it, you're actually getting paid less.
Yeah, absolutely. While your paycheck might be slightly larger because you didn't take 6 percent and they're matching a half to everyone's, you're leaving 3%. Exactly. In your employer's pocket as opposed to [00:26:00] bringing it over to yours, which will eventually be hopefully way more than 3 percent of that particular check each time.
Carter: Yeah, that's a no brainer. Anytime your employer offers match, you match the mat. Unless you're in a slippery situation, whatever they're matching that they will match against yours, you contribute that at least if not more
Yeah,
Scott: absolutely. And we talked about some of those things. On our total compensation package episode, we talked about employer paid benefits versus employee paid benefits as well as things like that.
pension plans and 401k. And in this particular case, that match is something that if you're not taking advantage of it wow. Go correct that as soon as you can immediately go talk to HR.
Nolan: Exactly.
Scott: Investment accounts you were mentioning if you like to live a little bit more dangerously.
Stock market isn't necessarily the most dangerous, but it's also not the safest. It can be dangerous. It [00:27:00] comes with its own risk.
Nolan: Yeah. And that's something that as you go through the process of, I want to explore the stock market, whatever. There's a lot of different options out there. No pun intended.
I was just going to say something. To to invest your money in. And obviously if it's something that might On the page or, in on paper seem they could have a lot of benefit and upside, but There's obviously the risk of the stock market, too, that if you're not too comfortable with that, there's never any harm in not maybe exploring those naked calls, naked puts or whatever it might be, these things that could have a lot of upside, but also a lot of downside.
So there's lots of different ways that you can get involved in the stock market.
Scott: Yeah, and talking with a financial advisor, investment services, professional usually one of the first things they ask you is what level of risk are you comfortable with? Exactly. Because everything that they're going to do for you is some level of risk.
Nothing is guaranteed. Exactly. But at the same time, a 6 percent [00:28:00] return doesn't look like a bad thing if everything is going well. Exactly. And generally speaking, a lot of those are long game type of investments as far as finances is concerned. As far as our foundations at that point, we're starting to build towards retirement.
Carter: Yeah, absolutely. And there's a lot of investing apps out there. There's a lot of resources out there that are super accessible. A lot of those financial advisors will talk to you almost for free. I'm sure you can call them and ask, but most of the time they make their money off of when you start investing.
And so they'll give you a good base of. How risky you want to be, what, what your demographic is and what your risk portfolio should look like. But there's a lot of stuff. If you're too nervous to go talk to somebody, there's plenty of apps out there that are super helpful.
Like Acorns Robin hood, all these like direct to consumer apps are just like incredibly knowledgeable. There's a lot of [00:29:00] information out there. And it's super accessible for everyone.
Scott: And again, it's a more risky move to try and grow with those, but that's the question at the beginning.
How much are you comfortable with? And it's another way of getting potential growth.
Nolan: Exactly. And it, when you start investing money as a young person, your retirement age is likely going to be decades down the line. And if you look at the stock market's return over its inception, it's always.
It's still going up. Historically speaking,
Carter: the trend is going up. There's recessions.
Nolan: There's the unfortunate part that maybe you're trying to retire at a time when there's a recession or whatever, but if you're young, there might be a couple more recessions before you retire. But at the end of the day, the return.
Will be up you will more than likely be making a lot more than what you put
Carter: in at least 6 percent and often times Significantly more so if
Nolan: there's ever time to feel a little risky with your investments It's definitely as you're getting into the workforce
Scott: Yeah, and then maybe get a [00:30:00] little bit more conservative over time and you're like I've got a really nice chunk of money out here that I'm looking at using, planning my retirement around it when I decide I don't feel like coming into the office anymore.
I want to get myself an RV and travel the land, but I want to be able to afford one. So start to mitigate some of that risk. We did mention earlier real estate and mostly mortgage as far as a thing that would probably come on board. I don't necessarily believe that a mortgage is part of a good financial foundation as far as we talk about security.
But I think that as, since we've been talking about being a little bit more adventurous as you've gotten that foundation in place I know a number of people who have gone into real estate investment getting a house, using it as a rental or something along those lines as a secondary or even a tertiary, source of income on those things.
Again, if you've got people that can rent a property and you can cover the cost of [00:31:00] those things, utilizing a debt, in this case, a mortgage to create income.
Nolan: Yeah, that's something that I feel like is more and more becoming prevalent as a means of additional income. I can speak from experience, like when I moved out after I graduated college, my wife and I, and actually, at the time, she was my fiance, and My friend, we all rented a house because we had all just gotten out of college and it's definitely something that can provide good income if you're the one that is leasing the home, but it's also a good good example of how out of college you might, or high school, you might not be ready, obviously, to afford a home because it's a big investment.
Oh, yeah. That's something that. But whether if you're an individual or if you have friends you want to live together with or a significant other, that's a good way to start because not only is living with somebody else can be fun, but also it helps reduce your [00:32:00] initial bills with your month to month living.
And then they can help you build up quicker to that point where you can start to afford a home for yourself and then maybe down the line and investment
Scott: property. Yeah, I know as a college student, I split an apartment with three other guys. So we were paying 25 percent of that a month over the course of that.
It makes it a lot easier to afford something like that when you've got a couple of people that you can live with. I also saw a number of people who had roommates that didn't work out very well because personalities clash, but obviously this is a financial decision and, You need to approach it with a bit of that in mind as well.
Be like, Hey, I need. This financial assistance and therefore I might be able to put up with the fact that they put dirty dishes stacked up in the sink
Nolan: Exactly, and it's not even something you can bank on forever Especially if it's just a couple friends because they might have different life plans So you don't always want to just bank on that being your reality for forever That's something that might be a little more year to year or however long the term is on your lease But that is something that can help [00:33:00] boost your savings in the meantime as you're saving up for those things Yeah
Carter: that I mean you talked about like potentially You Renting out a more like a home that you own or whatnot, but that passive income becomes an incredible tool That you can leverage in a bunch of different ways once you do have it though It's it can open up a realm of possibilities for you
Scott: So did we miss anything between those stages?
You just got out, you've got your account structured, working on your budget. You start to expand a little bit now that you've got your emergency savings in place, looking at some tools that maybe aren't as easily accessible, but give you a greater return, building credit, utilizing credit carefully and correctly.
And then. Expanding beyond that as a bit of a road map. I feel I know that those top end Expansion ideas are big in general And [00:34:00] might be quite a ways out for a lot of people But it could easily be a thing that you can look at and utilize Was there anything in the middle range there that we skipped over the top of that you guys can think of?
Nolan: Life events that could throw a whole wrench into what you had planned out at first. For one reason or another, maybe it's a family event, a medical event or something, but you can never expect it. But there is always a possibility that one of those things might come about and throw everything out the window from what you thought it was going to be.
And so I don't want a doomsday planned for that to happen. That's something to always just keep in mind. And if that does happen to you, just know that it's never too late to start. Maybe not from the beginning again, or maybe from the beginning again. But that's something that, it's unfortunate, but. to not let it discourage you because so hopefully have a long life to live.
Yeah.
Scott: And the goal of this of course, is you've got that foundation. You've, you hopefully, even after some [00:35:00] major event like that, have some place that you can go and start from. You've built good habits. You know how to build from basically ground zero back up to where you were and while it might not be something that we discussed previously, I think some of those you could be looking into things like life insurance investments long term care investments whether those are something that you want to, I know we, you can get certain items like that through your employers or other, like investment professionals that can help mitigate some of that if those type of situations come about.
Yeah.
Carter: Yeah, absolutely. Yeah. And I liked that. What Nolan was saying about like life happens, like you'll have kids, you're going to go through different phases of life. It's okay to take, change your perspective of where you think, thought you were going to be in five years and where you are in five years, it, everything's changing.
Your journey is going to be different for every single one of you. It's [00:36:00] important to understand that and still make goals and strive to meet them But under understand those goals are probably going to change over time and that's okay
Scott: Yeah, just like budgets change, as a promotion arrays a change in employment happen Right as a new streaming service comes online and you need to add a 17th one to the roster of things Because everybody knows that whatever plus is coming out soon And it's going to have that one show that you need to see.
You're not wrong. But yeah, being able to reevaluate those things as changes in the road come along. Kids, college I, my oldest brother his oldest daughter is on her way. I believe she literally just started college. And the expenditure from what I recall it being, again, aging myself here a little bit versus what she's got to deal with as a financial thing.
That. That is a a bit of a thing in and of itself. Yeah. Planning for that again, which may 100 percent be one of those financial foundation changes that you see is, Oh, I need to start a [00:37:00] new savings account or an investment account to start planning for that. Now that the kids, crawling we need to start thinking about when they leave the house and whether they're going to go off to college, whether they're going to go.
Vocational school, something along those lines. And that again, yeah, that'll change your trajectory a little bit. And
Nolan: that's like I can relate to your credit card bill if you're not paying attention. If that's something that for your children, you do want to provide for them. And obviously everyone's different.
Their children might not want to go to college or it's not something you can maybe do at the time, but. If that is your plan, that's a good thing to keep track of and be on top of because if you start at a certain point, you work that into your budget, then it's almost second nature as the years go on.
Whereas if you want to provide that for them, and all of a sudden they're 17 and you're like, Oh, that creep up on you real quick. And so that, that's just definitely something that Again, depends on the family if that's something they want to provide, but it's good thing to [00:38:00] keep in mind as you start having kids.
Yeah.
Carter: Yeah, absolutely. I think that's, I think just like education is almost like an investment in itself. It's you really need to understand the, what you're getting out of it because we did, you did touch on the fact that it is so expensive these days. And what does that cost really look like versus what am I getting out of it?
And is it. Does it make sense to spend 120, 000 on a four year degree or even plus a lot of times it's more than that.
Scott: And beyond that we actually were lucky enough to have Washington State University, Tri Cities financial aid group come in and chat with us. What is available out there as an assistance program, because that is a huge number.
That's available out there to students and whatnot, as long, along with other savings plans and whatnot. If you do have kids that are looking into that, 100 percent look into those programs. It's a wide array of programs that are available out there.
Carter: Yeah. Yeah. [00:39:00] That's, it's crazy though.
The education costs
Scott: can
Carter: just be
Scott: wild.
Carter: Yeah.
Scott: It, and it is a big expense, but it is, again, What can you get out of that? Is it gonna get you into a career that's going to let you start out at, say, 80, 000 instead of 40, 000? Yeah. With that, and of course by the time somebody listens to this episode, those numbers should have probably moved up to another 10, 000.
It definitely accelerated.
Carter: What's inflation?
Nolan: Yeah, no, that's super interesting. But yeah, and then even if it isn't an immediate payoff right out of school, that is something that, obviously it does down the line, that does look more impressive on your resume. If you do have it, again, not the end of the world.
If you don't, there's always different routes you can go. But I think on that same token, another thing to, to, is in this day and age with social media and having lots of peers that, as you're graduating, going through all this, there's a lot of other people going through the same time.
Sometimes you'll see things that online that make you think. I'm way behind this person. They're posting this, they [00:40:00] have this item. They're going here on vacation and you almost, that's not always something that tells the whole picture. So while you're going on this journey, people will, these things will come up and be like, Oh, this person's doing this.
But at the same time, it doesn't paint the whole picture. So you go at your own pace and you don't ever want to let that feel like you're behind for any reason.
Scott: It's not a race. You don't know if that person got, really lucky with a fantastic career and has some great investments and whatnot, or if they have a hundred thousand dollars of credit card debt.
Because that's what they use to pay for that entire vacation. You can't see that. So yeah run your own race. Keep your own pace and reevaluate things as they go. Yep. You mentioned kids all of a sudden they're 17 and whatnot. I've been seeing a number of posts from parents as kids are heading back to school.
with the, Oh, this was them in preschool. This is them as a senior in high school. Where did the time go? And that is, yeah, literally that moment. How many times did you take? And this is [00:41:00] definitely not what people are going to be thinking. How many times during those years did I check in on my budget for for prepping for them to go to college?
If I, if that's on my financial roadmap to help them out with that, exactly. So hopefully we've got those things baked into our budgets and we're evaluating them and not focused on them because we should be looking at, kids going to high school and look at all the great times that they had going through school and as a family and maybe on that trip up to the lake and hanging out and not Oh yeah, did I remember to check my budget for this thing?
That should be in the back of your head, not in the forefront of your memories.
Nolan: Exactly.
Scott: As we wrap this up, was there any final thoughts that you guys had that you want to leave the listeners with as far as prepping for building their own good foundation?
Carter: Yeah. The main thing is like you said, just in your last words, build a good foundation.
And that starts [00:42:00] with your finances and probably starts with your education or a job. But if you have a good foundation, you can build a lot on that and you can grow and flourish, but you have to have a strong foundation for that to be a foundation. For that to work, essentially.
Nolan: Yeah, and I mentioned this earlier but just know who you are as a person because at the end of the day, you're the one swiping your card and doing all these things that you'll mess up at some point, but you want to understand why you messed up and if you can correct it or not.
And if there's things you can change to maybe set yourself straighter on this path that you want to be down because. A lot of people like to just spend money, on new, like to buy the new shoes, the new new jacket, new whatever. But the at the end of the day, as long as you're doing that in a smart and calculated manner to the best of your ability and not.
Just spending willy nilly. That's a big part. I feel like at least at the [00:43:00] initial getting started up, cause eventually, in 20 years you can go out and buy, the brand new pair of Jordans for 500 on stock X. And you're like, all right, yeah, that's fine. I'd. I have enough money.
I've set myself up for this. I can do this on a whim, but
Scott: yeah I've put in, I put in the work all those years before I managed to set this aside. I've got my super secret savings account over here that I can pull out my fancy debit card and swipe and buy whatever I want. Because I know that's set aside purely for stupid or fun purchases on a whim or cashback
Carter: card.
Scott: Yeah. Could not recommend the cashback card anymore. Just dropping products over here. All right, gentlemen. Thank you very much. I think the concept that we've got here is pretty solid and should be able to be applied to pretty much anybody out there. Make make the strides that you can make at the pace that you can make them.
with a good goal in mind, reevaluate those as necessary, hit your goals and and build from there. [00:44:00] Thank you guys for sitting in with us for this one. It's been a great episode and for everybody else out there until next time, this has been Dollars and Sense, HAPO Community Credit Union's financial literacy podcast.