Summer Financial Hangover

Our 2 Cents – Episode #262

Summer Financial Hangover

Gabriel’s voice is back, and so is Our 2 Cents! Today, Steve and Gabriel dive into the idea of a “summer financial hangover,” the importance of financial literacy, and some listener questions you won’t want to miss. Listen in now!

1. Summer Financial Hangover:
   • Learn what a financial hangover is, the warning signs to look out for, and how to get back on track.
2. Financial Illiteracy:
   • Why are so many Americans financially illiterate, and what can you do to become more confident and informed when it comes to managing your money?
3. Listener Comment and Questions:
   • “Dave (Ramsey) recommends investing in good growth stock mutual funds with long track records. Dave only recommends no more than 10% of your funds in individual stocks.” – Steven
   • “I just started a new job, and I’m told I can roll the 401(k) at my old company into the 401(k) at my new company. Should I do this so that I have everything in one place?” – Michelle
   • “Now that we’re empty nesters, we don’t need a five-bedroom house. But my wife wants to stay. Would it be financially irresponsible to stay in a house that’s so much bigger than what we need?” – Ed

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Podcast Transcript

Announcer: You’re listening to Our 2 Cents with a team from SGL Financial, Building Wealth for Life. Steve Lewit is the President of SGL Financial, and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news, trends, strategies, and more.

Gabriel Lewit: Well, hello everybody. Welcome back to Our 2 Cents, and it has been a little bit of time since we last spoke with you.

Steve Lewit: Listen to that clarity of your voice.

Gabriel Lewit: Well, if you had heard me last week, it would’ve sounded.

Steve Lewit: It sounded like that. Gurgling talk.

Gabriel Lewit: It was very froggy. I had lost my voice, which for whatever reason happens to me once or twice a year. I feel like if I just speak too much or get unlucky, I can no longer speak.

Steve Lewit: Yeah.

Gabriel Lewit: Very hard to give a podcast where you’re talking for 30 minutes when you can’t speak.

Steve Lewit: Yeah, it would be. Well, you could remain silent and I could just talk.

Gabriel Lewit: You could ask Steve if you wanted to do a solo show, and he said no. He said he did not want to do this on his own.

Steve Lewit: I need my second penny. Penny one. What do we got on the agenda today?

Gabriel Lewit: Well, of course, we hope you’re doing well. We missed talking with you the last week or so.

Steve Lewit: Yeah, I did.

Gabriel Lewit: We’ve got a great lineup of topics here for you today. We’re going to talk a little bit about the summer financial hangover and how you can recover from one if you had one.

Steve Lewit: Yeah.

Gabriel Lewit: And what exactly that even means. How do I get into that here?

Steve Lewit: And he did say financial hangovers.

Gabriel Lewit: Financial hangovers.

Steve Lewit: So, he ought to be clear.

Gabriel Lewit: You might have other hangovers as well, but we’re going to talk about the financial kind here today.

Steve Lewit: Exactly.

Gabriel Lewit: We’re also going to talk about an interesting article and study that was talking a bit about why the question, asking the question, why are Americans so financially illiterate?

Steve Lewit: Big question. Yep.

Gabriel Lewit: Okay. So there’s some interesting talking points, I think, in that discussion. If we have time, we’re going to talk about why people work in their retirement years even if they don’t have to.

Steve Lewit: And that’s the perosis of that. Yeah, it’s not as obvious as you might think.

Gabriel Lewit: And then we also have some listener questions that we’ll make sure we get a chance to talk about here today.

Steve Lewit: And comments.

Gabriel Lewit: And a couple comments as well. Yeah. So let’s go ahead and jump on in here. So financial hangover for the summer. Well, what exactly is that? Well, let’s start with a hangover that more people are typically familiar with.

Steve Lewit: Well, when you do something in excess like-

Gabriel Lewit: Well, like drinking.

Steve Lewit: Drinking or gambling or whatever you do.

Gabriel Lewit: Yeah. So if you do too much drinking on a Friday night or a Saturday night out with friends or at the local piano bar, wherever you might be, well, you might wake up the next day and feel not so hot because your head’s banging and your face is sweating or whatever happens to you when you get hangovers.

Steve Lewit: Is it not so good? It’s just a personal disruption, Gabriel.

Gabriel Lewit: I mean, gosh, we’ve all probably been there at one point or another.

Steve Lewit: Yeah.

Gabriel Lewit: So, what exactly is a financial hangover? Well, it’s when you spend too much and then you’re feeling the ramifications of it afterwards, and that can manifest itself in a number of different ways. And there could be just generally speaking, financial hangovers. You bought a new car and then the next day you’re like, “Oh my gosh.”

Steve Lewit: Did I really? In other words, you had that much money.

Gabriel Lewit: What did I do? Or you go on a vacation. Well, in this case, we’re talking specifically about the summer financial hangover. Why? Because people some way or another typically find a way to spend more in the summer months than they do often during the rest of-

Steve Lewit: Well, everybody’s out. It’s a relaxed atmosphere. You’re in nice places and all of a sudden you all have that. We’ll go out for a better dinner or a more expensive dinner where we’ll buy, “Hey, let’s go on that little weekend that we hadn’t planned.” And all of that adds up and it adds up in little, little bits, so you don’t even see it. And all of a sudden you’re turning around. It’s like you get the credit card statement and then it’s the morning after.

Gabriel Lewit: Exactly. And so we’re going to start with some signs for you. If you’re listening here on this show today, you’re going to hear some signs. You might have yourself a good old classic summer financial hangover, and we’ll see how many of these you might resonate with here today.

Steve Lewit: Do we have a 10-step program to add onto this?

Gabriel Lewit: Well, this is not yet an addiction, hopefully.

Steve Lewit: Okay.

Gabriel Lewit: All right, but this is just – Hey,

Steve Lewit: David. It could be.

Gabriel Lewit: Yeah. So let’s go through the science here. Now, the first one is your credit card balance is higher than normal.

Steve Lewit: Yes. Now, folks, you can have a month where you have big expenses. That’s okay. But it’s a matter of looking at those expenses and say, where did they come from? Now, if you’re fixing your bathroom or upgrading your kitchen, you’re going to have a bigger credit card. That’s not necessarily a over… What shall I say this? Not necessarily something to have a hangover about.

Gabriel Lewit: Well, I would disagree, sir. Which is exactly the point, bro. You went ahead and you splurged this summer. You got your renovation done for that bath you’d been jonesing for, and now you’ve got high credit card debt. You’ve got a hangover. And you’re asking yourself, “What did I do? How do I pay for this?”

Steve Lewit: Yes. It’s strange because I just finished my kitchen and we went way over budget.

Gabriel Lewit: Listen, of course you did. Surprises me not at all.

Steve Lewit: And I do, because I look at the credit card debt and I say, “Oh my gosh, look at that.” And that’s a sign of a hangover. When you say to yourself, “Oh my God.”

Gabriel Lewit: Well, I’m sure you have a plan to pay that off this financial planner.

Steve Lewit: Absolutely. I would think so. It’s in the savings account.

Gabriel Lewit: There you go. So just did it for the points?

Steve Lewit: Yeah, I needed more air flights.

Gabriel Lewit: Well, okay. All right. Well, yeah, so one of those is you’ve got a higher balance than usual and might be starting to ask yourself questions like, how do I pay this off? That’s another sign. You’re starting to hear phrases go through your head that might inspire some uncertainty about your finances. That’s another sign. You maybe have a emergency fund and all of a sudden you’re looking at that balance and asking yourself the question-

Steve Lewit: “Where did it go?”

Gabriel Lewit: “Where did the money go? Where? Honey, I thought that used to be like $10,000 or 20, and now it says 3?” Yeah, where did that go? Disappeared. It does, and it did. Okay. You might feel anxious checking your bank accounts just in general. You just might have some what we call financial anxiety, which can sometimes be prevalent for everybody no matter what, but it could also just be specifically because you know you spent and you almost feel guilty about logging back in to check your balances because you know you perhaps spent more than you should. All right. And then probably the last core sign is a question just generally, where the heck did the money go? You just don’t even know. Just whatever you’re looking at, you’re like, “What causes? Why is my balance higher? Why is my savings lower? Why didn’t I save this month?” You just have no clue where the money went.

Steve Lewit: Yeah. No, that’s a condition, by the way, Gabriel, that could last all year round. First of all, I don’t know, maybe it was a few months ago you and I were having that conversation. It’s like, it doesn’t matter what you earn, but the money comes in and the money comes out and we don’t really know where it goes exactly. But during the summer, that happens more often.

Gabriel Lewit: I don’t know if you were speaking about you, but I know where my money goes, sir.

Steve Lewit: Well, I know where my money goes too, but somehow it goes much faster than I would like it to.

Gabriel Lewit: Well, that can happen, yes, very commonly here in the summer months. Well, as we’ve been talking about, where do those money and dollars typically go, especially in the summer? Vacations and travel is a very common one. You were talking about that earlier, taking that weekend trip or that week-long vacation.

And if you ever go on vacation, sometimes people do budget for those. That’s the best way to do it. You set aside exactly how much you’re going to spend on lodging, on travel, on cars, the whole nine yards, and then you actually stick to that budget. Then there’s the other kind of people that just book and spend, and then they come back later and they figure out how much should we spend? And then, whoops, it’s way more than we thought it was going to be.

Steve Lewit: Yeah. Yeah.

Gabriel Lewit: Okay. So there’s a couple different ways that you could potentially spend, but this is commonly going to be a problem for the latter there. Dining out, eating out with friends, entertainment and activities, whether it’s that Lollapalooza festival that-

Steve Lewit: Got to go.

Gabriel Lewit: Gosh, Producer Gabby here was jamming at, right?

Steve Lewit: Yep.

Gabriel Lewit: Did you ask again? I thought you might. I picture you going to Lollapalooza somewhere in my head.

Steve Lewit: Yes. I’m not surprised.

Gabriel Lewit: But in a good way, you’re like a music aficionado, right? And so yeah, you might’ve spent some money on Lollapalooza tickets, eating out, dining out, drinking, all that fun stuff. Kids’ activities, camps, summer camps aren’t cheap.

Steve Lewit: You should know that.

Gabriel Lewit: I do know that. I could tell you that one from experience. Shopping, home improvement, renovations, and then sometimes just the general household expenses might be higher. Your utility bills are oftentimes higher in the summer months because of AC and other stuff. Electricity costs are higher. So all these things can collect. And then the question is now, what do you do about it?

Steve Lewit: Yeah, that is the question. So you get up in the morning or Sunday afternoon and you’re doing your bills and you get that, “Oh my God,” feeling in yourself, what do I do now? So what do I do now, Gabriel?

Gabriel Lewit: Well, that’s a great question. What I wouldn’t do to start off with is you might’ve heard this for the regular hangovers, the drinking kind, something called hair of the dog that’s supposedly going to make you feel better. Have you heard of this? You’re looking at me blankly.

Steve Lewit: Hair. The hair of the dog. The hair, Jean?

Gabriel Lewit: Producer John, have you got all this?

Steve Lewit: Yes.

Gabriel Lewit: Are you sure I’m not crazy?

Steve Lewit: Producer Jon knows everything, by the way.

Gabriel Lewit: Yeah. If you have a drinking hangover, the hair of the dog says you wake up, you start drinking again.

Steve Lewit: Wait, what does that have to do with the hair of the dog.

Gabriel Lewit: I don’t know where the phrase came from. Okay, that’s not my fault.

Steve Lewit: Well, we put things out there, you don’t even know what they mean.

Gabriel Lewit: But people know, man, but people know what the hair of a dog is.

Steve Lewit: People, I don’t know. I’m just a normal person. And someone says the hair of the dog means I drink again. And it’s like, what are you talking about?

Gabriel Lewit: For the hair of the dog that bit you. It comes from an old mistaken medical belief that placing hair from a rabid dog into a bite wound could cure the bite.

Steve Lewit: You are leading this conversation. You can’t bring up stuff you don’t understand.

Gabriel Lewit: Well, I actually didn’t know that, so now I do know, which is interesting.

Steve Lewit: Or you put the hair, the rabid dog into your wound and it heals the wound?

Gabriel Lewit: Yeah. So the idea is if you drank a lot last night and you have a hangover, you just drink again in the morning and it goes away.

Steve Lewit: Did this come up during the era of witches and sorcerers or what is this?

Gabriel Lewit: This was probably free scientific medicine.

Steve Lewit: We’re supposed to be presenting ourselves as knowledgeable financial professionals.

Gabriel Lewit: Okay. So anyways, the point here is, yeah, what does that have to do with a financial hangover? Well, certainly if you go and spend more, that’s not going to solve your problem. So let’s talk about some-

Steve Lewit: But here’s the thing. Here’s the thing, Gabriel. People feel better when they spend.

Gabriel Lewit: Yes, but let’s talk about some solutions here. So what you could do is start to, if you feel like you overdid it, start to give yourself. First of all, don’t beat yourself up. It happens to everybody. You are one of many, many millions of people that can sometimes overspend. Just go back. I’d like to call this a reset button where you just imagine yourself, you’ve got a big old button right in front of you that you can press that says reset. You could even buy these, I think on Amazon very cheaply, a big reset button. You can just push it and you start over. You start back at best practices like saving up money every month for your emergency fund. You start a snowball method or an avalanche method, start to pay down your credit card debt. You start to pay a little bit more attention to your budget and staying on budget as opposed to some freewheeling natures that might’ve gotten you into this in the first place.

But that’s okay. Just like if you drank too much at the bar and then the next night you drank too much, you might go a couple of weeks or two or months where you settle down, you don’t want to do all the drinking too often until you get yourself back into balance.

Steve Lewit: Yeah, it’s kind of like going off your diet. Okay, I had a bad week, but you can reset that diet and make up your mind and set an intention to get back on it.

Gabriel Lewit: Absolutely. So that’s the idea, folks. Summer hangover. Did you get one? Do you have one? Did you feel like you spent too much? If so, don’t despair. There’s lots that you can do here to get yourself back on track. What I think is that sounds like you had yourself a lot of fun.

Steve Lewit: Yeah, I hope you did.

Gabriel Lewit: Yeah, you hopefully, because look guys, you got to have some fun, guys and gals, along the way. You can’t just save, save, save forever and never enjoy yourself. So whatever you did, we are hoping you had a magically wonderful summer with family and friends and that-

Steve Lewit: Be aware of your budget.

Gabriel Lewit: Yeah, and let’s get you back on track. Now, if we can help you in any way, shape or form there, if you have questions for us, you can give us a call, 847-499-3330. Or if you’d like to set up a time to talk through planning, budgeting, investment management, any of the things that can be helpful for your finances, we’re here for you. You can email us info as well at info@sglfinancial.com as well.

Steve Lewit: See what happens when you don’t have a voice for two weeks?

Gabriel Lewit: You lose your skills.

Steve Lewit: Yeah, look at that.

Gabriel Lewit: You can also go to shieldfinancial.com and click contact us. Of course, we’re here for you anytime. And there’s no cost for that. All right, so let’s go ahead here and talk a little bit about our main topic here for today, which is why are Americans so financially illiterate?

Steve Lewit: Amazing.

Gabriel Lewit: Which the first question you might be wondering is, are they? And well, if you didn’t know there was a study done on this, because there’s study’s pretty much done on everything. And what the study basically resulted in is yes, most Americans are financially illiterate.

Steve Lewit: Well, Gabriel, you and I deal with a lot of young people coming out of college, they’re kids of our clients, and they come into us and I’m so happy they even come into us and say, “Hey, what should I do?” We start talking to them about credit cards, a bank accounts. What’s a stock? How does it work? And they have no idea. It’s never brought up in high school or college, or if it is brought up, it’s brought up on such a low level that it doesn’t carry and has no meaning when they graduate and get into the real world.

Gabriel Lewit: Well, absolutely. And financial literacy can happen at all stages and ages. It could be when you’re right out of college. It could be when you’re in your 20s or 30s, 40s, 50s, 60s. It could even be in your 70s and 80s if you just never knew how to spend or invest and you’re just doing things willy-nilly, that can carry itself all the way through your lifetime. And so the first thing here is this study, just to talk about it here, was done by the TIAA Institute. It does an annual survey about financial literacy, and over the last 10 years has observed a decline in the ability to answer basic questions about investing, retirement planning, risk-taking, budgeting, and financial something that was cut off on my sheet. So I can’t get through that last one.

Steve Lewit: Financial anything.

Gabriel Lewit: And in that full Gen Z scored the lowest, almost half could only answer two or fewer questions.

Steve Lewit: It is worth considering if you are illiterate. Illiterate is such a downgrading word. I would say if you’re not aware. Illiterate sounds so harsh, like something wrong for you. But a lot of people are not interested. We have many spouses, male or female, that are just not interested in money, and they let the other spouse do the job for them.

Gabriel Lewit: Well, what’s I think interesting about this, and this is one of the points in the article here, it says this is despite the push in recent years to bring financial literacy classes to more high schools and the move in many states to make financial literacy education mandatory. Now, also, we’re going to see some interesting things in the near future as younger generations are more likely to seek advice from AI or influencers on TikTok or Instagram or otherwise, as opposed to doing the old tried and true research or taking courses and classes. And the challenge there is that AI, while getting better and better is a good start, but also can prevent someone from really understanding something. You just get quick surface level answers and you don’t really think too much about them. It doesn’t really create true literacy adoption for people just using on a very surface level basis.

It can also be wrong sometimes. And last but not least, sitting down and taking a real course or really learning about something creates a true, I think, appreciation for your knowledge and your development that you’re going to build from that.

Steve Lewit: Look, it could be like AI writing your term paper. You might learn a few things on the surface, but you really don’t understand it.

Gabriel Lewit: If I can give you kudos, I would say that’s a perfect analogy. If you just let AI spit out your term paper, if you just let AI spit out an email for you and you just glance at it, you really didn’t learn it. You didn’t sit down and read. When I did term papers back in college, I read dozens of books and did dozens of hours of research online collecting sources and footnotes, and then you actually had to write the thing. Remember that? Remember those days, right? You’ve physically by that act of doing it are learning it. And there’s a lot of studies now about AI, about the shortcuts it’s enabling people to take is resulting in people not learning things as in greater death as they would had in the past. So yeah, just something to be aware of. Now, the other challenge here is that there is more risk at play with how easy technology is making it for people to be able to do risky financial things like that on anything in the world through polymarket.

Steve Lewit: Yes. Yes.

Gabriel Lewit: Sure. I’ll just open an app and bet that it’s going to be greater than 73 degrees today in California.

Steve Lewit: Yeah.

Gabriel Lewit: Whoops, it is not. I just lost some money.

Steve Lewit: There’s a big political fight here in Illinois in Chicago about video gambling. I won’t get into why it’s a big fight, but gambling is right at your fingertips and that could cause another hangover for you real quick.

Gabriel Lewit: Yeah, you can do day trading, obviously, on your phone at any point in time if you were so inclined. You can bet options on margin really easily in apps like Robinhood and others. Robinhood had to stop this a long time ago. We probably talked about it on the show. They used to when someone made a trade, they had fireworks going out and they tried to gamify trading to get people hooked on actually placing trades.

Steve Lewit: I remember that.

Gabriel Lewit: Now they just say success, your trades has been placed. But it’s interesting. And so financial literacy is important. Household debt unsurprisingly is at some of the highest levels it’s been historically. Naturally, things are getting more expensive. But we’re also in an environment where people don’t want to have delayed gratification, which is part of financial literacy. And I remember when I was six or seven, my mom took me to the bank to open my first bank account at the bank right next door to my school. And I got a little checkbook and learned how to balance it and credit cards from a young age. When I was in college taking finance classes, I did some tutoring on it. When I was in my younger 20s, I did some junior achievement where I would go into local middle schools and teach them finance classes.

So I’m a big advocate of financial literacy, and it’s interesting to see how it’s starting to slide. And the question is what can we do about it? Well, doing this show honestly for me is one of the things I feel like I can do to try to bring some education and awareness and knowledge out there to the world. Although we don’t have millions of listeners, we do have thousands, which is pretty cool.

Steve Lewit: Yeah, it is cool.

Gabriel Lewit: And hopefully one by one, tip by tip, trick, trick by trick, strategy by strategy, we’re helping you feel more competent and aware in your finances so you can make better decisions.

Steve Lewit: And it is kind of a one at a time thing. Look, we’re doing the same with our clients because our clients, many of them are very bright and very financially literate, but they do not know the whole field of finance like we would, for example, because this is our business. So it is a matter of education. But at the very fundamental level of understanding, like you said, writing a check, what is inflation? What does it mean? What is the S&P 500s? There is just a simple lack of understanding and knowledge. What is money? How does it work? Is gold really important? These are the questions that I hear from young people and they have no. Should I buy gold? Should I buy Bitcoin? And they have no idea how it works or what it is. Or it’s just like you said, you get your information on TikTok and it’s a 30-second sprint and that’s it.

Gabriel Lewit: Well, yeah, TikTok is, don’t get me started there. I think we talk about it. Realize TikTok is filled with misadvice or short overly generalistic, simplistic things that can be misleading. Also, people that aren’t qualified that just have… They know how to get the headlines and the clicks, but they don’t necessarily have the credentials to back it up, but people don’t know the difference because they assume if someone’s got five million followers or 10 million video views, whatever, that it’s quality advice.

Steve Lewit: Well, they are what they are called. They’re influencers. They’re not experts.

Gabriel Lewit: Yes. And they may or may not be influencing you to the right decision. Exactly right. Now, other things is the investment environment has gotten more complex. There are things, as you mentioned, like cryptocurrencies that are new and unknown. There’s more types of index funds and ETFs and options and private equity. There’s all discussions about having these in retirement accounts. There’s more to be aware of now and know about than there was in the past. I think plenty of years ago, people were still thinking about stocks and bonds. People that are retirement age saying things like the market’s been up 14% a year for the last 15 years. Why can’t I take out 10% a year from my portfolios? And it’s been so long since we’ve had sustained down years that people have forgotten. You and I call this short-term memory syndrome for markets and investing, but people have forgotten. And yes, younger people have just purely never experienced it.

Steve Lewit: That’s right.

Gabriel Lewit: 2008 is just such a long way away in the rearview mirror that it’s so distant that people don’t even feel like it’s real anymore.

Steve Lewit: Imagine you graduated college in 2008, you get your first job, you put money in the stock market, and man, it just keeps going all best. You can’t go wrong. “Hey, I’m a genius. It’s fantastic.” And it has been fantastic. That’s the best part of it. But as we all know, the plane eventually has to land.

Gabriel Lewit: Exactly. Okay. Well, what can you do about this? You can do things like you’re doing, listen to this show. If you are feeling very financially literate, which I hope is the case, and if you’re listening to the show, chances are you’re far, far ahead of people that maybe don’t listen to our show. But if you feel like you’ve got kids or family members or people that are struggling in this area, try to help them out a little bit. Pass the word along. Have them maybe listen to our show, watch some webinars, read some books, maybe not look up everything on AI. But you actually can become an expert using AI if you use it truly as a research tool to not just copy and paste something from for quick, short answers. You can really use it to dive into strategies. And just keep in mind it’s not always correct. So you have to be careful.

Steve Lewit: Yeah, but it can be a great tool. For example, I read this long article about cryptocurrencies and it was so convoluted and so dense. I stuck it in Chat and I said, “Can you summarize this for me?” And I got this easy to read summary that I double check. I spot check the data, but that’s where it’s very, very helpful.

Gabriel Lewit: Absolutely. Absolutely. All right. Well, if there’s questions there, give us a call, of course. If we can help you with anything on the financial world that you don’t feel knowledgeable about, that’s what we’re here for, literally.

Steve Lewit: Are you going to give it the phone number?

Gabriel Lewit: Yeah. We’re close to the end of our show here in a couple minutes, but I want to talk about a couple listener questions.

Steve Lewit: Okay.

Gabriel Lewit: All right. And we’ve got one or comments here. One question first came from Steve. Steve asked, or I actually didn’t ask, but we had talked a couple of weeks ago, I think, about Dave Ramsey and an investment withdrawal rate recommendation that he had made that was higher than usual. Ramsey was saying on some of his articles and advice that a 8 or 10% withdrawal rate, you get different things when you research this, is okay for some people.

Steve Lewit: It was very high.

Gabriel Lewit: But it was very high when the traditional guidance is 4% or less, which has now risen maybe a 4.5%, depending on what you read and believe.

Steve Lewit: It’s certainly not eight or 10.

Gabriel Lewit: But most prevailing research out there says eight or 10% withdrawal rate is too high. Now I think, Steve, your question or comment here was that Dave recommends no more than 10% of your funds in individual stocks. I think are correct there. We’re talking about different things here because you could have all of your funds in a stock fund, ETF or mutual fund, not individual stocks, and still be taking out of that 8 to 10%, which is what Dave is talking about. That’s different than saying you should have no more than 10% of your funds in individual stocks, which I actually agree with that. You don’t want to have too much of your money concentrated in individual stocks. That is in fact a very risky thing as well.

And I also wanted to say we have a lot of appreciation for as many of the things Dave said. We even said that on the show, this was not a knock on Dave. It was just a way to help ensure that people understand that sometimes advice can be on the surface a little bit misleading. It’s like the tip of an iceberg. We want to look underneath that and really understand everything. An eight to 10% withdrawal rate, depending on how your portfolio set up is potentially very risky and you want to be very cautious with that.

Steve Lewit: Well, I think we were more critical than that. At least I was. So we’re talking about two different things. One is growing your money, and the other was creating income out of your money. And there are very, very two different things. Dave has a very sound philosophy on growing money. So we weren’t talking about his investment philosophy. We were talking about his income-producing philosophy, which is subject to question, although I would say it more strongly than that, but I’m not going to say it again.

Gabriel Lewit: Yeah. So in any case, we appreciate the comment, and hopefully that helped to clarify a couple things there on that point. And of course, if you had questions or want to talk through that for you, give us a call for a one-on-one consultation at no cost for it. We’d love to chat with you about your financial goals and if we can assist you in any way, that’s exactly what we’re here for. All right, let’s see. We had one other question here or maybe another if we have time from Michelle. This is a simple one, Michelle, but I think it’s a great question. I just started a new job and I’m told I can roll the 401(k) at my old company into the 401(k) at my new company. Should I do that to have everything in one place?

Steve Lewit: Well, if convenience is the primary concern, then yes. If growing your money in a more efficient or better way, then the answer is maybe. Usually you have more options outside of your 401(k) to invest money than you had inside the 401(k). So typically, I’m not making advice for you, but typically we would say don’t put your money back in the 401(k). Let’s keep it out of the 401(k) in an IRA, and then we can invest that with many more options than the 401(k) has for you and do a better job.

Gabriel Lewit: Yeah, it’s called the rollover IRA, Michelle, and you could move your money there or you could move it into the new 401(k). But as Steve mentioned, generally you’ll have better flexibility and more options outside of the 401(k). If you move it into your current 401(k), you will have everything consolidated, but you’ll still be limited to just the handful of funds available at your new company, which may or may not be the top options out there. Usually they’re not. Okay, so hopefully that was helpful. If you had any follow-ups to that, Michelle, you can let us know.

And then Ed has another question here that I liked, “My wife and I are empty nesters. We don’t need a five-bedroom house, but my wife would prefer to stay in our five-bedroom house. Is that financially irresponsible to stay in a bigger house than we need?”

Steve Lewit: No, I’m going to just say flat out, Ed, no. Financial responsibility and happiness are two different things. So if your wife wants to stay in the house and you can afford it, guess what you should do?

Gabriel Lewit: As you just said, Steve, if you can afford it and you like living there and it gives you memories and appreciation for your past and a place for your kids to come home to potentially for holidays, why not?

Steve Lewit: Yeah. So look, every financial decision, Gabriel, has two components to it. One is a statistical component that says, no, keeping the house is a bad financial idea. It’s inefficient, it’s extra expenses, we don’t need it. We can take that money and save and grow it, spend it, give it to the kids. But that’s just data. And some people are very data-oriented and other people are like, “Hey, wait a minute, I love this house.” I just had a client, same thing. They have this big house and she loves this house. She wants to spend the rest of her life in the house. Is it a good business decision? No, it’s not a great business decision, but so what?”

Gabriel Lewit: Well, again, yeah, downsizing and freeing up equity might give you a little less on your budget month to month, might give you a little bit more money you could invest and earn a better rate of return than real estate might appreciate. But real estate’s still an investment. Your house is still going to grow. If you enjoy it, it provides appreciation. Well, what’s the point of money? The point of money is to use it to, I think, create a life that you like and enjoy. And if part of that is a slightly higher utility bill and property taxes because you like your bigger house and you can afford it, do what makes you happy. Yeah.

Steve Lewit: Agreed.

Gabriel Lewit: So Ed, if you have follow-ups on that, give us a call. And if anybody here has questions that we can support you with your finances on anything we talked about on today’s show or otherwise with retirement, investment management, tax strategies, you name it, that’s what we’re here for. You can call us anytime at 847-499-3330 or go to sglfinancial.com. Click contact us or you can email us anytime. Email at info@sglfinancial.com. See you on the next show. Have a wonderful rest of your week.

Steve Lewit: Stay well everyone. Bye-bye. See you soon.

Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at 847-499-3330 or visit us on the web at sglfinancial.com and be sure to subscribe to join us on next week’s episode.

Disclosure: Investment Advisory Services are offered through SGL Financial, LLC, an SEC Registered Investment Advisor. Insurance and other financial products are offered separately through individually licensed and appointed agents.