Check out Episode 84 of The Best Interest Podcast below.
Show Notes – Episode 84
Jesse begins today’s episode with two reflections. First, he talks about the rarity and preciousness of gathering all your loved ones in one place. While money is important, it is ultimately a means to gain the freedom to spend time with those you care about. In his second reflection, Jesse recounts the story of his parents’ neighbors’ house catching fire, highlighting the importance of risk management and preparedness, such as having smoke detectors and emergency plans. This underscores the idea of using money wisely to enhance life’s quality and maximize meaningful experiences with loved ones.
Today’s guest, Andy Hill, is the founder of Marriage Kids and Money, an award-winning YouTube channel, blog, and podcast that offers actionable advice for family financial independence. As Jesse and his wife raise their first infant child, Andy provides invaluable insights on the importance of emergency funds, baby items, healthcare, life insurance, and more. He delves into the essentials of family financial planning, enabling us to enjoy more time with the people we care about most.
If you’re thinking about what matters most in life and how smart financial planning can help you get there, then this is the episode for you.
Key Takeaways:
- Money matters because of the freedom it allows.
- How to prepare for crises.
- The cost of childbirth, diapers, and a whole lot of other things.
- How to deal with financial stress as a family.
- Preparing your family financially for the worst.
- Simple tips and tricks for new parents.
Key Timestamps:
(02:28) Jesse’s Monologue: The Value of Time with Loved Ones
(07:45) A Financial Cautionary Tale: House Fire
(19:45) Introducing Andy Hill: Family Finance Expert
(20:29) Preparing for the Costs of Childbirth
(24:42) Real Estate Considerations for Growing Families
(27:37) Emotional Impact of Financial Decisions
(29:45) Navigating Parenthood, Career Choices, and Savings
(38:59) Practical Tips for New Parents
(44:25) Life Insurance and Estate Planning for New Parents
(52:31) Conclusion and Resources
Key Topics Discussed:
The Best Interest, Jesse Cramer, Rochester New York financial planning, financial stress, emotional attention, family financial advisor, family finances, marriage kids and money, Andy Hill, estate planning, the finances of children
Mentions:
Website: https://marriagekidsandmoney.com/
LinkedIn: https://www.linkedin.com/in/andyhillmkm/
Mentions:
More of The Best Interest:
Check out the Best Interest Blog at bestinterest.blog
Contact me at [email protected]
The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.
Transcript – Episode 84
[00:00:00] Jesse: Welcome to the best interest podcast, where we believe Benjamin Franklin’s advice that an investment in knowledge pays the best interest, both in finances and in your life. Every episode teaches you personal finance and investing in simple terms. Now, let’s get started. Here’s your host, Jesse Cramer.
Hello and welcome to episode 84 of the Best Interest Podcast. My name is Jesse Cramer. Later in today’s episode, Andy Hill is going to be joining us again to dive deep into some of the financial topics surrounding being a new parent. I figured it’d be a fun time to have that conversation as my wife and I welcome our first child into our lives.
But first a couple messages, some housekeeping and a little bit of a monologue. I wanted to thank you guys for all of the terrific. AMA or Ask Me Anything questions that are coming in. If you haven’t listened to episode 81 yet, it’s our first Ask Me Anything episode. It’s already the fastest downloaded episode in the history of the Best Interest podcast.
It will soon probably be the most downloaded episode. And I think it’s very good. And listen, if you guys like it, keep on sending those questions in. Let me know that you like it. And I’m gonna keep on putting out episodes like that because I think it’s very useful to answer your direct questions. I’ve always talked about how I don’t want to fall victim to audience capture, right, where the wants and needs of an audience really pigeonholes me into some weird corner of content.
But these Ask Me Anything episodes I don’t think fall into that at all. In fact I think the broad and diverse nature of the questions that I’ve been receiving means that there’s a little bit of everything. There’s a lot of fun stuff. There’s enough interesting content in financial planning and investing and personal finance that we’re going to stay right on theme with these Ask Me Anything episodes.
So, again, episode 81 was the first Ask Me Anything episode we put out. There will be more in the future, especially with the rate of questions that are coming in and you can send those to Jesse at Best Interest. blog. And this episode’s review of the week comes from bh8489 and this is on Apple Podcasts where BH wrote in and said, relatable, interesting, and informative.
Jesse has a way with words. He brings complex ideas to life in an interesting way for someone like me who usually falls asleep at the first mention of finance. He balances beginner topics with more specific niche ones we should probably all be aware of. I’m a big fan. Well, BH, thank you very much for those kind words.
Feel free to drop me an email, Jesse at Best Interest. blog, and we’ll get you hooked up with a nice, super soft best interest t shirt. Now, when Andy Hill does join us in a few minutes on the podcast, you’ll hear that part of his thoughts, part of my thoughts on parenting have to do with this idea that, well, A, there are many things in life that matter much more than finances, including our lovely little children.
And B, there are many different seasons of life, not only in terms of just life as a whole, but also financially. And some seasons allow for more saving and more investing, while other seasons less so. So in that vein, I wanted to share some thoughts today from some of my previous blog posts to act as that reminder.
The reminder that there are many seasons of life. The reminder that there are many things that matter more than money. Now, this first article comes from about two years ago, exactly. June of 2022. I wrote this article right after my bachelor party weekend. I had high hopes going into my bachelor party.
They were easily exceeded. The best part by far was taking a step back and watching so many fun, important people in my life, most of whom came into the weekend as strangers to each other. So easily having a great time with one another. And for context, you know, this wasn’t a Las Vegas rager type of party or anything like that.
We rented a house on Seneca Lake, one of the Finger Lakes, you know, very much a lake house vibe with a big backyard, lots of room for yard games and barbecues and hanging out around the fire. It was that kind of vibe. So very, very fun. For me, that’s my kind of style. After the party was over, I drove back to Rochester, giving my friend Rosie a ride.
Cause Rosie flew in from Portland, Oregon for the party. Flew across the country, and other friends flew in from San Francisco, they drove from Cincinnati, New York City, Pittsburgh, all over the place. I was thanking Rosie for making that expensive and time consuming journey, and he responded, You just go.
If you don’t make time for this stuff, it won’t happen. So when someone plans something, you just go. It’s how my family has stayed so close, even though we’re all over the country. You just go. You show up. Rosie’s comment made me think of a famous viral article from the website called Wait But Why. The article is called The Tail End, and we’ll include it in the show notes.
The gist of the article is that your remaining time with loved ones is deceptively limited. And I’ll use Rosie as an example. He and I, we met in college. We used to spend probably three hours a day together, between classes, studying, meals, all that stuff, for about 180 days a year, the college year. And we only knew each other for the, kind of the latter two and a half years of college.
Rough math, that’s 1, 350 hours. Now, he and I have seen each other about five times since college, usually for a nice long weekend, so maybe that’s a hundred more hours of actually hanging out together. And zooming out to the future between marriage, kids, careers, the fact that we live across the country from one another, That frequency is unlikely to increase.
He and I might have 10 or 20 more big hangouts ever. That weekend we spent together in the Finger Lakes at my bachelor party, it could easily represent 10 percent of my remaining FaceTime with Rosie ever. And the same goes for probably 80 percent of the guys at that particular party. My family, my childhood friends, my college friends.
We’re all in the last 10 percent or 20 percent of our time together, most likely. And now, as for that entire group ever getting together again, that’s a one and done situation. Those 20 friends of mine, they’ll never all be in that circumstance again. So, I stepped back a few times over that weekend to, to zoom out and to appreciate that.
Your life is no different, I would contend. You’re probably in the last 10 percent of time with your parents. Or with your siblings, or with your cousins, or your old friends, or your grown children. Your days, at least the ones you spend with your loved ones, are numbered. And what exactly does this have to do with money?
Well, money ultimately is a tool to buy freedom. But acquiring money requires us to sacrifice our freedom, at least in the short run. We sacrifice now, And we hope to reap the rewards later. Balancing that current sacrifice against the future reward, that is vital, right? That’s one of the entire things that we try to focus on here on the best interest, but also just in the whole personal finance, financial planning, investment management realm.
The whole idea is, why are we sacrificing money now? Why are we putting it to work for the long run? Why are we thinking about five years, 10 years, 20 years from now? Why are we even thinking about those topics in the first place? The reason why is because we want to balance the sacrifice now against the future reward later.
If you do it poorly, you won’t see enough of the people you love. It’s that simple, and it should be that sobering. You’ll sacrifice too much time now because you’ll take current abundant opportunities for granted. Or you won’t have the freedom to see those people later when your opportunities are waning.
One of the top regrets of the dying is, I wish I’d stayed in touch more. Nobody regrets not budgeting, nobody regrets a missed stock pick. They don’t measure regret in dollars, but they do regret not having the freedom to be with the people they love. They measure regret in time. Again. They don’t measure regret in dollars.
They measure regret in time. And time is ticking. Money isn’t the end, but it’s the means that can help you reclaim the clock. When you get the opportunity to see your best friends and family, you don’t want to miss it. You don’t want to miss them. You just go. So that’s the first mini lesson today about, about money not being the biggest of all things.
That other things obviously matter more to us. The second lesson comes from an article I wrote just a week or two after that first article. This one came from late June 2022. And the title of this article is a little bit self explanatory. It’s, My Parents Neighbor’s House Caught Fire, A Financial Cautionary Tale.
Yes, My Parents Neighbor’s House Caught Fire in the summer of 2022. My mom smelled smoke as she was working in the kitchen, and my dad looked out the window across the street and he saw flames coming out the window. Now that is not good, of course, for many reasons, but for one of the reasons is that by the time flames are pouring out of the window of a house, the fire’s been going for a little while.
Now those neighbors are older, they’re probably in their late 70s, they’re not in very good health, and, right, the fire had been clearly burning for a few minutes. So my dad ran across the street, my mom called 911, As my dad arrived, the older woman, the matriarch neighbor, she had gotten to the front door from the inside of the house, but she stopped there.
She couldn’t take the step down onto the porch without physical assistance due to health, physical health reasons. Her husband stood behind her inside the house and smoke was pouring out over their heads. Now, fearing flashover, my parents stood about 15 feet outside and beckoned her to take that step, take that step down onto the porch.
But she was gripped by fear and confusion. Now, if you don’t know what flashover is, really quick aside, we’ll maybe throw a link to a cool video in the show notes. Flashover happens in fires, especially fires that are contained within small spaces, like inside a room, inside a house, you know, a volume with walls and a ceiling and a floor around it.
Flashover happens when The room is filling up with very hot gas as a byproduct of the fire, but the flame seems relatively contained into maybe one corner. You don’t realize the fact that smoke and hot gases are filling up the room. And eventually there’s this very quick chemical reaction, for lack of a better term, where a lot of the hot gases ignite in a very short amount of time.
And you go from flames in a small corner of the room. to the entire room is on fire and everything inside it is burning in a very, very short amount of time, you know, mere seconds. So anyway, that’s what flashover is. It happens in a lot of fires, if you’re curious. Now, speaking of other strange definitions, we’re going to talk quickly about time dilation.
Time dilation is a well documented event that occurs during adrenaline rushes, right? In our human monkey brains, lizard brains, maybe you could say. My mom said it felt like forever. As they were standing outside the house, pleading with the two neighbors to leave the burning house, come down on the porch to take that step to escape.
And it just felt like forever. Well, finally, whether it was 3 seconds or 10 seconds or 30 seconds, nobody really knows. Enough adrenaline and enough heat, I suppose, pushed the neighbor to take that step down onto the porch, and then a few more steps towards the handicap ramp. From there, my parents darted up and grabbed her, helping her out onto the lawn.
The patriarch, he then stumbled out of the smoky doorway under his own power, and the neighbor suffered some pretty severe burns, but at least they were alive. Now, after a few more agonizing minutes, or maybe hours, who knows, with time dilation, The sirens came from the distance. Firefighters, police, ambulances all rolled in.
First aid was administered and the fire was quickly quenched. The first response time, if you’re curious, because this is something that they knew from the time of 9 1 1 being called to the time that the first ambulances and fire trucks arrived, it was eight minutes. Which, A, kind of shows the strangeness of time dilation, because I know my parents said it certainly didn’t feel like eight minutes.
It’s also not bad for rural America, because they are. Out in the countryside, shout out to volunteer firefighters, some of you listening might not know this, some of your local fire departments might be well funded with full time employees, full time firefighters. But many rural areas have volunteer only fire departments, where those volunteers, they carry radio scanners as they go about their normal daily lives, their normal nine to five jobs.
And when a call comes, they drop what they’re doing and they respond. About 30 different people responded to this particular fire, some coming from as far as 20 miles away. That is very nice dedication, so kudos to the volunteer firefighters. Now this is a true story about a real fire. But my financial mind couldn’t help but see some powerful money lessons.
The first money lesson is the money in the closet lesson. There’s a reason my dad got to the front door, despite not being inside the burning house and despite running 300 feet or 400 feet across the road. There’s a reason why he got to the front door before the neighbors got to their own front door.
They delayed leaving their house so they could go retrieve cash that was stored in the back of the house. Now, I’m not a fire safety expert, but according to the actual experts, one of the top four fire safety rules is, if a fire occurs in your home, get out, stay out, and call for help. Never go back inside for anything or anyone.
That’s the rule. An unburned person without money can recover. Right? I think we all agree on that. An unburned person, without money, can recover. But a lump of fleshy charcoal, with a thousand dollars, cannot recover. That’s the important lesson. But there’s more to this lesson. It’s like peeling back an onion.
Because some of you are thinking, well, I have a hundred thousand dollars in my 401k, and I’ve got ten thousand dollars in a bank. I don’t really care if 500 or 1, 000 burns up in a fire. Well, you are in a good spot. A lot of the listeners, a lot of the readers of The Best Interest are financially literate.
We’re in good spots. But I would bet that these particular neighbors, they don’t have a 401k. They don’t have a bank account. And only the 500 that they have, that’s probably the only cash they have to their name. They rely on a monthly social security check to pay the bills. And that’s about it. And they’re living at a pretty low level, potentially even in poverty.
You and I from our financial positions, we might not be able to comprehend their desire, their need to save that cash. When I originally shared the story, a reader wrote in and they kind of said like, What is going on here? Just get a fireproof safe. I get it. I have a fireproof safe, but a fireproof safe costs money.
These neighbors, they didn’t have any money. To make matters worse, I doubt they had homeowner’s insurance, which typically covers small cash losses for what it’s worth. They probably distrusted some institutions like banks, and that played an obvious role as well. Now, I don’t think those are separate issues, but interrelated ones.
I think that the positives in life, they create compound magic. So it’s good parents, a good childhood, good schools, good college, a good career, a good spouse, good friends. All those things, you mix them up in a pot, and you get some semblance of a good life. But I also think that the negatives in life create compound tragedy in many cases.
Ignorance, poverty, broken homes, those kind of issues, they’re interwoven, they’re deep seated. And how can they be fixed? I’m not really sure, but it’s a sad state of affairs and I think that had a role to play in this situation. Lesson number two, smoke detectors. Okay, smoke detectors are a life saving risk management tool.
Again, I’m not a fire expert, but the rest of the top four fire safety rules, I already read you the first one. The next three are Install smoke alarms on every level of your home, inside bedrooms, and outside sleeping areas. Test your smoke alarms every month. If they’re not working, change the batteries.
And lastly, talk with all family members about a fire escape plan and practice the plan twice a year. The essence of risk management, you guys, is that it almost always appears unnecessary. It’s a nuisance, right? Why should I own smoke detectors? They’re annoying as hell when I accidentally burn some toast.
They cost me five dollars a year in batteries and I’ve never had to use them. That’s the way a lot of people think about risk management, right? You never have to use it. It’s a waste of time. It’s an annoyance. Well, my parents neighbors did not have smoke detectors. If this fire had happened to start at night or in an unoccupied room, they’d probably be dead.
Risk and risk management are essential parts of investing and money management too. In fact, one of my weirdly favorite topics to write about is the topic of fire safety and its relationship to investing in money. I wrote an article once, we’ll throw it in the show notes, called Investing Fire Alarms. Or investing fire drills that we should run fire drills for ourself in our investing portfolio so that we practice what it’s like to be in a scary situation.
And we make sure that we don’t panic. Emergency funds, they’re risk management. An emergency fund feels wasteful, right? Our cash is just sitting there and it’s losing ground to inflation. That is wasteful. Until suddenly, you need it. And all of a sudden, it’s not wasteful. In that moment, the waste magically transforms into your most vital money.
Because it’s a liquid, on hand asset that you can spend to save your butt from something terrible. Diversification, that’s risk management too. It’s not fun necessarily to be diversified during a S& P 500 or NASDAQ bull market. Why am I worried about risk when every single stock seems to be going up? But the value of risk management comes into focus during bear markets, just like it did, say, in 2022.
Building risk management into your life will benefit you in the future, right? It’s too late to fix the past. You either had risk management that saved you in the past, or you didn’t. Risk management will benefit you in the future. That’s the important thing to remember, whether we’re talking about emergency funds, diversification, or fire alarms.
Going back to my imagery, I suppose, lumps of charcoal cannot buy smoke detectors. Plan for the downsides now, before it’s too late. The third money lesson is about health. Back in episode 79 of the Best Interest Podcast, Phil Perlman joined me. We talked about this idea that, yeah, sure, money and time are interchangeable.
That’s often talked about in the world of personal finance, that money and time have this relationship. But actually, if you focus on your health, you can buy yourself, or you can earn yourself, more healthy years of your life. You can earn more time through smart health choices. So in a way, health equals time.
But we also said that time equals money. So health and time and money, they’re all related. We talked about that on episode 79, and there was another amazing health lesson from this fire in my parents neighborhood. Yes, the best interest is about money. But the true end is to live a happy, healthy, fruitful life.
Money is just a tool that helps you along the way. And I found something sad and scary and cautionary about the neighbor’s inability to physically leave their own home. They physically take that step, because it was a big step and they didn’t have their wheelchair, they didn’t have their walker. Take that step from the burning house down outside onto the non burning porch.
Old age will come for us all and physical deterioration is unavoidable, it’s part of that. But I pray that my body will always permit me to escape a burning building. And I hope that the salads and the squash matches and the semi focus on health, again, I need to get better at it. I hope that it’ll work as intended in the long run.
I’m reminded of the Warren Buffett quote, You only get one mind and one body, and it’s got to last a lifetime. But if you don’t take care of that mind and that body, there’ll be a wreck 40 years later. So, the lesson, the money lesson, even though it’s a health lesson, is to take care of your body and your mind.
So, big shout out to my parents for helping save two people’s lives, shout out to the firefighters, the emergency responders. Don’t forget those four rules of fire safety, everyone. Here’s a quick ad and then we’ll get back to the show. Serious question. Why do podcasters constantly ask for ratings and reviews?
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On Apple podcasts or Spotify. Thank you. And now we’re going to welcome Andy Hill onto the podcast. Andy first joined us on episode 66, a terrific episode about marriage, kids, and money. Andy is the award winning family finance coach behind marriage, kids, and money. That’s Andy’s platform, which is dedicated to helping young families build wealth and happiness.
Andy’s advice and personal finance experience have been featured in major media outlets like CNBC, Forbes, Market Watch, NBC News. He’s had millions of podcast downloads and video views. And Andy’s message of family financial empowerment has resonated with listeners, readers, and viewers all across the world.
And I thought Andy would be the perfect person to ask some questions about the financial implications of being a new parent.
Andy, thanks for joining us. And I think of you, you are an absolute expert on family finances. You have a wonderful young family of your own. And here I am, you know, when this episode comes out, there’s a chance that baby Cramer might be here. I’ve certainly been thinking about the finances before this recording and now more than ever, you know, what lies before me.
So I’m hoping today we could share some great information, we’ll pull on your expertise for someone who is either maybe contemplating having children, or pregnant with their first child, or maybe even in those early years of raising their kids. What do you think about that?
[00:21:02] Andy: I love that. I mean, talk about the ultimate preparation.
I applaud you for that, Jesse. It’s a smart way to be.
[00:21:07] Jesse: Well, thank you much. We’ll see how it works in, uh, we’ll see how it all plays out in reality. I love it. But, just thinking of the timeline of having kids. I would wager that, I suppose if we really wanted to get into details, we could even go into like IDF type, you know, hey, we can’t have kids conversations, but I don’t, and that affects some people, but maybe the place that everybody gets affected by that we can start is You’re planning for the birth itself, and birth can be pretty expensive medical expense, maybe insurance is involved, or maybe not.
But what’s your understanding of kind of birthing costs? What kind of questions should a pregnant person or a pregnant couple ask when it comes to preparing for the costs of birth itself?
[00:21:48] Andy: I think it’s a fantastic way to prepare, and obviously it can be a big cost, especially if there’s unexpected things that happen during the pregnancy.
So Like a lot of things in personal finance, it’s always great to be prepared with the right insurance and a cash cushion as well. So if for some reason you had like a higher deductible plan, it’s good to make sure that you can cover that deductible for anything that might go on during this time period.
Now, That being said, if you are planning to have kids, this would be one of those moments in time where you’re going to probably incur a lot of costs, so if you’re looking and deciding between those two insurance plans, maybe a lower deductible plan might make sense, knowing that what you’ve got coming up, going on in the future, but having cash set aside can help mitigate a lot of these things, so I know you talk about it a lot, whether that is a three month emergency fund or a six month emergency fund, Cash can help with a lot of these conversations.
And the great thing about having cash nowadays is the interest rates are fantastic on these high yield savings accounts. So it’s not really like you’re letting your money sit there, do nothing. So you could feel good about preparing for what’s to come with your family, as well as, you know, you’re making whatever 4%, 5 percent on your money right now.
So everybody’s winning, I guess is what I’m saying, Jesse.
[00:23:00] Jesse: The emergency fund is huge. And I was thinking as you, you, you made me think during your answer, Andy, open enrollment for healthcare. I want to say that’s universal, and it’s usually, you know, end of October, early November, I think, for everybody. And I can tell you for sure, it’s something that my wife and I did this past early November, is, at that point, we did happen to know already that she was pregnant, which is nice.
But even if not, even if we were thinking, okay, 2024 is the year, we’re going to start trying. I sat down and did a relatively in depth analysis of here’s the bronze, here’s the silver, here’s the gold, here’s the platinum plan, here’s what the premium of the plan is, here’s the, you know, here’s the deductible, here are the benefits.
And I would encourage anyone out there to do that, especially if you know this really expensive birth and pregnancy is coming up or might come up next year. I think it’s worth taking the time to do that. Did you do anything like that when you
[00:23:51] Andy: guys were pregnant, Andy? You know, when we were around that time, yeah, we did take a look at those things and lucky enough, if you have these things happening in your life and you have a healthy life, you know, a high deductible plan could be great because you don’t need a lot of those expenses.
But this is one of those moments where. You know, you’re going to be relying on the hospital quite a bit and the costs as they do continue to rise in those areas. So it’s a smart way to go. It’s something to investigate and a good way to learn about more of what the details are with your health plan anyway, especially as you’re deciding where to go, what caretakers you’re working with and making sure your preferred OB GYN is covered under the plan and things like that, because those are very, very important things.
I know that was extremely important for my wife and I, especially after we had number one and then number two, we’re like, okay, we loved going there. We love meeting with those docs. We want to make sure as we’re switching plans that we still have those folks covered.
[00:24:41] Jesse: Awesome. And now, okay, let’s say someone, they’ve got a family, maybe a growing family, and with a growing family comes growing need for space.
So I figure some new parents, and again, we were here about a year ago, where we thought to ourselves, if we’re going to start a family, we’re probably going to need a bigger home than we have right now. So it’s not even a birth thing. It’s a real estate thing. But still, what are some of the conversations that you’ve been involved in, either with listeners of Marriage, Kids and Money or in your own family?
And what are some of the problems or solutions when it comes to we got to have that conversation? Are we in the right space for our growing family?
[00:25:15] Andy: Oh, man, this is both an emotional decision as well as a, I don’t know, an important financial one as well. I think that Right off the bat, I think the quick assumption for a lot of people is more space, you know, whether that’s a house or a car, before the child even comes into the conversation, or before you’re even pregnant, and I think that’s Depending on your situation, if you’ve got the funds to do it and you can financially do that, good on you.
Like, that’s great, but if you if this is gonna be a stretch for you financially to upgrade that house, maybe to get that 6 or 7 or 8 percent mortgage on the next place so that you’re preparing to You know, have the perfect home. Know that you being a more financially comfortable parent is probably more optimal than that second or third extra room that you might fill in the future as your family grows.
So, there’s nothing wrong with expanding and growing and biggering as we, as our family’s bigger, but make sure we can afford it because, again, that stress, that’s something your kids will feel. When you’re, oh my God, I got to have this job. I was so stressful. I got to pay for this mortgage. It’s just killing me.
Like, then the kids might feel bad because of the situation you’re in. It’s, it’s a big psychology thing there at that point. So make sure that you can afford it. And if you can’t afford it, it’s okay. There’s no childhood trauma. If you’re staying in a home that fits a baby size person for so long, I, my, my wife and I started off in an 1, 100 square foot bungalow.
It was totally fine for our situation. Yes, we had our daughter there and she was alive over the next couple of years. She lived in this tiny bungalow with us and she was fine because she was a baby in a crib. And then eventually, yes, she started to run around a little bit more. We found out we were pregnant with our, our second child.
And then the conversations happened like, all right, man, you’re 1, 100 square foot bungalow bachelor pad was fine to begin with. Now let’s look for the better school district, the slightly bigger home. And you know, much to my chagrin, I agreed. And we moved forward from there, but I guess what I would say, just, I wouldn’t rush into it just because you’re looking at Instagram or seeing what other people are doing.
And saying, okay, this is a family home. There’s no definition of a family home. There’s no strict definition. Make sure it fits for your budget. Make sure it fits for your family. And it doesn’t overburden your life so you’re stuck with something that impacts
[00:27:35] Jesse: your, your well being. It’s so funny that you mentioned that, that side effect that maybe some people overlook, that your children do benefit from having parents who are not financially burdened, who are not bringing that financial stress into the household.
It’s so funny that you mentioned that, that side It’s not necessarily what I was even thinking about talking about today, but it’s totally, it’s got to be something you talk about a lot on Marriage, Kids and Money. And I just had a conversation maybe 45 minutes before this recording, Andy, with A friend of mine, late 30s, and a lot of the discussion was around their emotional baggage, maybe is the right term, or what they’re trying to work through emotionally in their late 30s, based on the household situation during their childhood, where their father came right out and said, you know, their father was a very 20, Uh, very, very strict frugalite about, you know, the example that was used was when the strawberries went bad in the fridge, that was a, and that, that deserved maybe not punishment, but there was a reprimand.
How could you let the strawberries go bad in the fridge? And part of the function of that was maybe a little bit of overstretching financially and then a lost job and then some challenges at home and it all, it mixes in a pot and can lead to here we are 30 years later and it’s still on this person’s mind.
[00:28:48] Andy: Oh no, I mean, I’ve heard that too from coaching clients or friends where what happens with you as a parent financially Your kids are watching. You are their heroes, or you’re, you’re, you’re their only source of information. Yes, eventually they’ll get on social media and get the teenage friends that’ll tell them what’s going on.
But, in the beginning, their ideas of what money means, it’s formulated. We’ve seen studies of this by age seven. It’s crazy. So those things, those memories, that’s a core memory of your friend right there, that they’re always going to remember that. And depending on how they reacted to that, they either adopted dad’s lifestyle and just said, this is the way, or they went completely the opposite and said, Hey, life is for living, man.
I am not talking about brown bananas or moldy strawberries. Like this is, I am, I’m just going to YOLO and spend it all. Hopefully they found a happy medium, you know, with the partner, but yeah, those things can really affect us.
[00:29:43] Jesse: Absolutely. Let’s switch gears. Let’s talk about the two headed monster, as I think of it, Childcare costs and or lost income because I feel like they’re connected at the hip depending on how a parent or parents decide to Stay at home, use child care, go back to work.
It’s a deep topic, but what kind of advice can you offer anyone who’s trying to find that right balance, Andy?
[00:30:08] Andy: Again, another emotionally charged, as well as financially charged, topic for my wife and I. This was one of those situations where, when we got together, she was excited about moving away from a career that she really didn’t like.
So, the topic of Eventually doing the stay at home mom thing was something that she brought up that she was very excited about that she wanted to move forward with. So for us, this was, hey, we’re a double income household right now, what can we do to get used to living on 1. 5 incomes? So that would move for her to part time.
And then eventually just one single income. So that was a combination of us reducing our debt. So we had no debt that allowed us to go to that part time income for her. And then from there, eventually, what can we do to invest so much that we hit coast fire and eventually pay off our mortgage? Okay.
That’s the second lever now that she can go full time stay at home mom. And she loved that. That was great. That was great for our kids. That was great for her. I also worked with a woman at the same time who said, I can’t imagine doing what your wife is doing. I’m with my kids for a certain amount of time and it drives me bonkers.
I love my job. I love having autonomy at the office. I love going in and, you know, working and doing my craft. Those are both great solutions. And she sought out childcare to support her during her career growth. So those are two, I guess, opposites of the spectrum right there. And there’s no right answer about what you’re supposed to do, really.
There’s no Calling that says you need to be this type of person, you can’t be a career woman, you only need to be a mother at home, or you should only be a career woman, you know, there’s no right answer. So you have to decide between you and your partner what the right thing is for you. I love finding some middle ground between these situations.
Part time work can be a fantastic solution for both mothers and fathers if you can financially afford it for a period of time. And with that affording, might be a little scale back on lifestyle in order to do that. If becoming a parent is so important to you, and you want to spend some more time with your kids, but still keep a little career, you’re going to have to sacrifice somewhere, and some of that might be with Entertainment, vacations, you know, all those extra things that we like to do when we’re in our 20s and we have no kids and we’re dinks and things like that, which is, it’s great, do it, you know, do it while you can, do it while you can, because you’re going to get tied up pretty soon with those kids and all that’s required with them, so I think finding your own version of the right thing and then ignoring anything you see online that tells you this is prescribed what you’re supposed to do as a father or a mother, It’s a really smart idea, but have those conversations with your partner, decide what the right thing is.
We’re moving into a whole new universe of fatherhood as well, which I love. That’s talking about how fathers can evolve from just this breadwinner status. To, hey, I have a big role as a dad, too, in raising my child and coaching my, coaching up my child, being there for them, showing what, showing them what it means to be a great dad.
I’m excited about what’s going on lately with fatherhood, and so I love seeing some sort of hybrid in this situation that my wife and I are in right now. We like both versions of working and parenting, so we both, through some financial things we’ve been able to do, Both work part time and then we are parents to our kids.
So we’re able to pick them up, take them to school, take them to their soccer games. I’m a volunteer, a soccer coach for my son. So we’re trying to ride that line of both and we really like it. So eventually if you could afford to do that, it’s not a bad way to go.
[00:33:34] Jesse: Andy, through either your coaching, any of the coaching you do, coaching programs or the education that you provide, or through the podcast and just in thinking of like a podcast guest, have you ever worked someone through Kind of the exercise of what we just talked about, which is a little bit of, hey, you, mom and dad, or dad and dad, mom and mom, whatever, you have to decide for yourselves what you think about this, like what you want to do.
But then B, there is a brass tax financial part of it, which is, well, if mom’s salary goes down to half percent and 20%, And then child care cost, which is huge, but also pretty variable depending on where you are geographically. I mean, what are some of the questions and answers that parents can be thinking along these lines?
[00:34:18] Andy: Yeah, I would say a yes to all those things. Those are the majority of the conversations. Because I think a lot of people want to have that freedom and autonomy to Spend more time taking care of their helves and be a great parent and grow a career that they’re passionate about. It’s like, you know, it’s the Instagram dream, right?
But you gotta be able to afford it, right? So I’ve found that if we’re able to do some of these really smart things with our money. In our twenties and early thirties or whatever, before the time that we become parents, we can check a lot of those important boxes and make this process a lot easier.
Eliminating high interest debt from your lives, racking up that amount of money for an emergency fund to take care of situations that need to happen beforehand. Investing early and often if you get to a point where you’ve done so much investing, you can, you know, hit this status called coast fire, you know, and then help you kind of realize, Oh, I can pair things back a little bit with regard to my investments so that I don’t have to work as much.
And if you’re able to reduce your expenses and things like that, The idea of going down to part time work can be a lot easier. Now, with regard to childcare and the cost associated with that, I know you and I have recently seen some news that is a, it’s a staggering stat for a lot of parents out there and can be just one of those things where you just want to throw your hands up in there and you’re like, what can I do?
We’re both working full time and childcare is through the roof. I do not understand how parents do this. And. Unfortunately, there’s no easy way to slice that. It’s, these are real costs and the real amount of inflation that’s going up and up and up every year. These are individuals that work in these organizations and they need to be paid a fair wage in order to do it.
And we’re taking advantage of it as parents. We had portions of childcare, even though my wife stay at home, we did a, we did preschool, there was cost to that. And I remember as soon as both of my kids went to elementary school, it was like winning the lottery. I’m like, Oh man, we have so much more money back in our lives.
So I guess it’s a combination of just remembering that this is a season in your life if you decide to do the double income and then childcare thing, and it’s not gonna last forever. It’ll be tight, and it’ll require a lot of hard work if you guys both want to go down that track, but realize it’s not forever, and then when you do hit that point where they’re both in, uh, you know, public school, if that’s what you guys decide to do, It can be a nice win.
Maybe take that money and say, okay, instead of inflating our lifestyle, we can inflate your lifestyle a little bit. But what can we do to continue to build wealth, create more time freedom for us so we don’t get into this situation again, where we’re both having to work super hard and feeling a little bit tighter.
So I guess it’s, it’s a realization that this is a period of time.
[00:36:57] Jesse: The season of life analogy is perfect. It’s something I’ve thought about. It’s something my wife and I, Kelly, and I have spoken about. Because we’ve been relatively frugal, we’ve been diligent savers up until now, and we understand that life is changing.
In the short run, maybe we won’t be able to save as much, we won’t be able to invest as much. In the long run though, whether it’s some of those costs fade away over time, whether it’s our careers continue to go while certain costs remain fixed, we still think we’re at a very good spot. But part of the reason why we feel secure in saying that is because is because of the 10 years behind us have kind of paved the way to this point where we can Coast fire is such a good term I brought it up in a recent episode because literally you are taking your foot off the gas a little bit and choosing to coast And we are at a point right now where, well, it’s not necessarily the, the option of taking the foot off the gas.
There’s a specific reason why we are. It’s because the money’s going somewhere else. But when it comes to that, really, that, that hard driving savings attitude, well, we are taking the foot off the gas there, but we think we’re gonna be okay.
[00:38:01] Andy: If you could look at your numbers in that fashion and say, well, in order to afford more childcare, I know I’m supposed to be maxing out my 401k, I’m supposed to be maxing out my ro whatever.
It’s like, well, for a period of time, You’re going to need some of that money to take care of you today and your family today. So if you can bring that down a little bit and then maybe kick back up the savings rate again once you’re in full time school, that’s okay. There’s no right or wrong answer here.
Just adjust accordingly in order to make life more livable.
[00:38:30] Jesse: Here’s a quick ad and then we’ll get back to the show. One of the more common questions I hear is, Jesse, what do you like and use? Books, blogs, podcasts, even banks and brokerage firms. What are your recommendations? So, to answer that question, I put together a webpage.
You can check it out at Best Interest. blog slash recommendations. Again, that’s Best Interest. blog slash recommendations to check out how I’m improving my financial life. So now, Andy, the baby is here. The baby is here. Maybe we’re doing child care. Maybe we are not. Maybe we’re just going down the The baby is not
[00:39:08] Andy: here?
Okay, good. The baby is not here. Just checking. The baby is not here. Because I know you’re
[00:39:11] Jesse: close. In this conversation, the baby is not here. Right, but in
[00:39:14] Andy: the future, they might be, right.
[00:39:15] Jesse: Okay. And we need to We need, well maybe, hopefully by now we, hopefully by now we’ve at least thought about building that crib, or building that dresser, or putting the nursery together.
But now we’ve got diapers, the baby’s growing, we have clothes, there are, there’s food, there’s supplies, there’s so many little baby trinkets out there, and all this stuff adds up. Now, A, I’m just wondering if from your experience, from your family, from the work you do, if you have any thoughts or tips or tricks, but B, especially now with Facebook marketplace and similar things like that, do you have any of the frugal tips or any ways where, where in your personal opinion, because I want this to be a personal question, where you guys decided, okay, for this kind of item, we’re going to buy it new.
But for that kind of item, yeah, we don’t mind buying used.
[00:39:59] Andy: I think that’s a great question. Yes, we definitely took advantage of Craigslist as well as Facebook marketplace around this timeframe, because some of the super expensive baby gear. It’s super expensive. So, you could find people that have gently used it or had it for a period of time, and sometimes these things are only relevant for a child’s life for like a year, you know?
Like, so, it didn’t even get used that much. Now, that being said, safety reasons, buying used car seats and things like that is usually not, uh, advisable, just based on if it could have been in a crash and things like that. So, you want to make sure that you’re buying used things that are safe and correct and things like that.
But As far as the new stuff that we went with, technology is fantastic as things go on. There are more and more gadgets to monitor your baby’s everything. So, if you were to buy something that’s 10 years old tech versus today tech, I mean, I can’t imagine the 2024 baby gear that’s out there right now. So, I mean, you can have a little bit of fun with that.
Don’t go too wild. Obviously, we can get a little nervous about every breath and movement that our child makes and monitoring every instant of it. Just know that this whole, like, raising humans thing has been on for a long time. Before the AI and tech that you might be buying with this gadget. So, don’t kill yourself with spending overboard in order for your child’s safety.
Cause I’m, I’m guaranteeing, I’m seeing the commercials and the marketing right now. You wanna protect your baby, right? You want them to have the best life ever. Buy my 500 gadget, right? So it’s like, just know that you’re gonna be okay if you don’t have to buy the 500 thing. But Yeah, if there are some things you guys want to put on a baby registry or, you know, ways to, you know, to have a little bit of fun with it, you know, I’m thinking of some of the things that, that we bought, we ended up buying a really nice stroller that we ended up using throughout our baby’s life all the way until they were probably, you know, six or seven.
Like, it was one of those things that it transferred from being a baby stroller also to a walker, to one of those things that’s like, If you could have one of these things for a long time, kind of like a, you know, a car, like, hey, if you’re gonna get some mileage out of this thing, that’s okay to buy the one that you really like, that you have the money for, but again, make sure you have actual money to buy it, instead of going into credit card debt to make sure your child has the best life, or your child is the safest, or whatever.
You need to have real money to do that, because again, you don’t want to get to a point where you’re totally stressed out just trying to raise the child, because Again, marketing and advertising have done a very good job in order to make you feel like if I buy all these things, I’m going to be a better parent.
Again, you can do this for a very inexpensive amount with used stuff, with hand me down things from your family locally. I can’t tell you how many great clothes that we got from family that lives around your cousins and aunts and uncles that were just handed down. You reach out to your network and yes, used is okay and it’s not a bad word.
I just
[00:42:55] Jesse: think Andy of the number of kids in the neighborhood let’s say or just draw a 10 mile radius around where you are and there are so many kids who are 3 or 6 or 12 or 24 months ahead of where your kid is. Yes. And you can attest to this Andy because I’m not there yet but most young parents who I know.
They look around their house and they’re like, all this stuff, we just, if someone would just come pick it up and help us get rid of it, I mean, we’d let them have it. Absolutely. Absolutely. So there are other parents near you, who are just ahead of you, who are probably willing to part with most of their stuff for free or pretty low cost, and that can help you out.
[00:43:31] Andy: Yes, and two points on that. Before the child comes, I would highly recommend going through your house. And getting rid of anything that you don’t use anymore, because space is going to be required. So if you can sell things on, again, Facebook marketplace, make 500, 1, 000 of just stuff that you have in your house that you don’t use anymore, that has value, that’s great.
And then also look into buy nothing groups as well. When you have a child or when you are wanting to be in a new community, this is a great way to give back and say, Hey, I’ve got everything. Ten onesies here and they’re all and we’re done we’re done with onesie time like who wants them and then you will find somebody in Your community that really could use that for no money Which is great and then do the same thing for other things that you might want as a parent those groups are invaluable It helps decrease consumerism.
It helps decrease waste of things that we don’t need. So those are great options as well.
[00:44:25] Jesse: I want to turn to a more serious topic, I think. At the very least, it’s a serious topic because it does deal with an unfortunate question, which is, what if something happens to one of the parents? And that brings us to kind of a twofold question, or at least the way I think of it is a twofold question.
And the first part is how should new parents think about life insurance in their life? And the second part is should they do anything on the estate planning front now that they have children, now that they have these ones, these little ones who they, they want to care for many, many decades ahead. And if something were to happen today, it could put the family in a tough financial situation.
[00:45:00] Andy: Absolutely. Yeah, I think it makes sense for a lot of individuals to have a will. And especially as life changes start to happen in your life, this is a great time to update said will. So if you have a new individual that needs to be added to that will, and also within a will you can direct who and how your child will be taken care of afterward, how those things are taken care of.
It’s so important to do, so I highly suggest doing a will, depending on your financial situation, a trust could maybe even be called to order as well. And regarding life insurance, yeah, I mean, it’s a sad subject. Nobody wants to think about dying, nobody wants to think about that, so it never becomes a popular topic, but it’s so important.
So yes, term life insurance is a great way to go, great way to start to go, that way you can keep the costs very low, but get a great benefit for it if you were to pass away. And this is even something that I don’t think a lot of stay at home parents take advantage of, but it’s also very important for the stay at home parent to have term life insurance as well.
If your stay at home parent who serves an important role with raising the child, especially as they get older, too, taking them to and from things, feeding them food, being there, you know, being there for everything that they need. If you were to lose that person, you’d be in a very difficult situation. So, although there isn’t a salary coming in for that individual, even though it has been estimated that stay at home moms, stay at home parents, should be paid around 180, 000 per year.
I think by last estimates, based on all the odds and ends jobs that they do, you should have term life insurance for that individual as well, because yes, that would be such a difficult situation if you were to lose your parents. So again, term life insurance can be very inexpensive, can help you in a situation where the unexpected happens.
And unfortunately, I’ve come across individuals young like us, man, that have been in this situation. A gentleman that I spoke to, uh, lost his wife in her thirties, and he was, you know, a hardworking guy. He was out there all day long doing all of his work, and then he lost his wife, who was at home taking, taking care of their children and helping to raise them.
Luckily enough, he got term life insurance, and it was a situation where he was able to use some of the money to invest and pay off his mortgage, and then he could go down to working part time and then be there for his 12 year old daughter. in this extremely difficult situation that they were in. So preparation is so key when it comes to this subject.
[00:47:23] Jesse: It’s already hard enough that the family is having to deal with the emotional recovery of losing someone they love so, so dearly. It becomes even harder if you have to layer on top of that, the fact that now there’s this huge financial problem that the family is having to dig out from. So try as you might.
And it’s always one of the hard things I find when talking about insurance, It almost is like there’s a built in scare tactic and it kind of sucks. But ultimately, the advice of term life insurance, which I heard you say, Andy, is almost always the right answer, if not always the right answer. I suppose there are probably some corner cases where maybe someone can make an argument otherwise.
I know here kind of the fiduciary advice is By term and invest the difference rather than ever trying to pursue one of the other plans available. But I do have two, what I think maybe are like practical questions for you, either through your personal experience or just through what you know when it comes to term.
And then also when it comes back to the will. So the first practical question, and maybe I’m committing, I think, what is a podcast faux pas, which is asking two questions at once, but I’ll remember what they are if we forget it. So the first one is simply, how does someone go about determining. the actual length of their term policy in turn, you know, should it be 10 years?
Should it be 30 years? But then the second question is any tips or tricks that you’ve learned over your time when it comes to naming those guardians in a will about how to approach the people who you’ve named as guardians because ostensibly you should let them know that they’re guardians in your will.
And it’s just any tactics about how to go about having that conversation.
[00:48:53] Andy: Sure. Yeah. I guess depending on when you get term life insurance. Just think about what a 10 year, 20 year, 30 year term might mean in the future. So the goal, at least as, as I see it for term life insurance is to help to cover your income during a loss, especially if somebody relies on your income.
So if you are married. And your spouse relies on your income, having term life insurance essentially replicates you for a period of time until that transition period happens. So, does that need to be permanent? Does it need to be your whole life? Not really. It shouldn’t need to. If you’re married and you have kids, that adds another layer onto it too.
Okay, not only do I need to help out with my salary, but we have children that we’re raising for a certain period of time. How long do I need to make sure that I’ve gotten? Skin in the game as a, as an income provider, even though I’m, even though I might’ve passed away for a period of time. So for us, we got ours right when we got married and originally a 20 year term seemed like a right amount to us at that point.
The reason being is we’re going to be raising kids for the next 20 years. And by that point, they should be well and good and gone. And hopefully by that point, we’re going to be so financially set that even if I were to pass away. My wife would be able to move on without me. We moved to a 30 year because the price difference wasn’t that different.
And my wife kind of liked it, you know, and that, that led us to our right, right to retirement age, essentially where we would have so much money to be able to live on at that point. So I don’t think it’s a right or wrong answer, but if you’re raising children or you’re thinking that’s, Hey, this is going to be a 20 year adventure.
I think 20 years is probably a good place to start. And then just look at the costs associated with that. And then as to your, your second question with regard to having conversations to who will help take care of the children and the events of your tragedy would be. Honestly, just doing, making sure you actually talk to them.
I think that’s really the tip. Yes. It’s important to lay that out. And it’s also important to have a frank conversation with your spouse and your partner about it. Although it might be morbid, it can be fun. You can have conversations and sit down and say, who’s real, who would really, really want to leave the kids with?
And you know, what would you want to do in your situation where you pass away? How do you want your body to be taken care of? What should we do with the kids? How should we leave them the money? These are actually important conversations to have, especially if you’re young in your marriage and you haven’t really had some of these very serious conversations, they could be eyeopening.
You know, I learned a lot about my wife’s final wishes during that conversation. I’m like, Oh, this says a lot about who she is as an individual. This says, I mean, it was like one of those moments where I just, like, respected her even more. It was, it’s, it can be a deep, fun conversation to have with your partner to learn more about them.
I guess fun is probably the wrong word, but interesting. That’s a better word.
[00:51:52] Jesse: I like that tip. I, again, speaking for myself, or speaking selfishly, if you will, but We’ve started that conversation, and thought about people in our life, and why or why not, and we tried to make it fun, we tried to make it light, because it is, no one wants to think about that topic, but, again, you just don’t want to end up in the situation where, what if you never brought up that topic, and something does happen?
What if you never bought that life insurance, and something does happen? It is better to rip the band aid off. It is worse to sweep this stuff under the carpet, right? We, we need to, what is it? Daylight is the best disinfectant, right? Disinfect it.
[00:52:26] Andy: There we go.
[00:52:26] Jesse: We’ll, we’ll, we’ll keep that flub in there. The listeners can laugh at that one.
Sunlight is not an infectant. Well, Andy, thank you so much for sharing, again, sharing all your wisdom with us. If folks hadn’t listened to you before on episode 66 of the best interest podcast, they can check you out there, but mainly they can go check you out at marriage, kids, and money. Terrific podcast.
Where can they find that podcast, Andy? Where can they connect with you? How can they reach out?
[00:52:50] Andy: If they’re listening to this fine podcast, you can just type in Marriage Kids and Money wherever you’re listening to your favorite podcast and you can check out everything that we do at Marriage Kids and Money.
com
[00:52:58] Jesse: Fantastic. Andy Hill of Marriage Kids and Money. Thanks for stopping by the Best Interest Podcast. Thank you, Jesse. Thanks for tuning in to this episode of the Best Interest Podcast. If you have a question for Jesse to answer on a future episode, send him an email at Jesse at Best Interest. blog. Again, that’s Jesse at Best Interest.
blog. Did you enjoy the show? Subscribe. Write and review the podcast wherever you listen. This helps others find the show and invest in knowledge themselves, and we really appreciate it. We’ll catch you on the next episode of the Best Interest Podcast.
The Best Interest Podcast is a personal podcast meant for education and entertainment. It should not be taken as financial advice and is not prescriptive of your financial situation.