Should I Invest My Bonus All At Once or Over Time? – Money Q&A

Transcript:

On this episode of the personal finance podcast, should I pay off debt or keep the money invested?

Whoa, what's up everybody. And welcome to the personal finance podcast. I'm your host, Andrew founder of master money. co. And today on the personal finance podcast, we're going to be talking through, should I pay off debt or. Keep the money invested. And we're going to be answering your questions on this money Q and a, if you guys have any questions, make sure you reach out to us on the master money newsletter by going to master money.

co slash newsletter. And don't forget to follow us on Spotify, Apple podcasts, or whatever podcast player you love listening to this podcast on and consider leaving a five star rating and review on Apple podcasts, Spotify, or podcast. Your favorite podcast player. If you are getting value out of the show, thank you guys enough for leaving those five star ratings and reviews.

And also check us out on YouTube at the androgen Cola YouTube channel. If you have not already, and you can watch these episodes as well. So today we're going to be diving into. Four of your questions. The first one is should I pay off debt or should I keep my money invested? And we'll talk through that specific scenario and what this person is specifically wanting to do.

Number two is how can I use the backdoor Roth IRA for my specific scenario? Number three is how should I strategize for. For early retirement. And number four is talking through some other tools in my financial protection plan. And what are some of those tools that I like to use? So this is an action packed episode, really excited to dive into these without further ado, let's get into it.

Question number one is I listen to your episodes regularly and was wondering if you could help me answer this question. I currently have 27, 000 in my Robinhood account and 10, 000 in my STRS from when I was a teacher. If you don't know what STRS is, that's just a retirement account for teachers, but I have student loans of around 30, 000 and about five to 6, 000 in credit card debt.

I am now only working two part time jobs, barely scraping by. Now I thought of selling off all my stocks to pay off the debt, but I really don't want to do that because it took me four years to get to 27 K. What should I do since I want to continue investing, but I don't want to get buried in this debt since I am paying the minimum amount.

So most of it just goes to interest. Thank you and appreciate the episode you put out. So first of all, thank you so much for sending in your question. I think this is something that a lot of people struggle with and you are trying to balance and juggle a bunch of different things at the same time. And I know how difficult this can be.

And this is one thing I want you to hear up front is you may be in this situation right now, but this is just the start. And I think there is a lot of things that you can do here to help yourself kind of progress moving forward. So as we start to talk through some of these things, I really appreciate you sitting in the question.

So let's assess your debt really quick. So you have 30, 000 in student loan debt. And you have five to 6, 000 in credit card debt. Now, the first thing that's coming to mind is I am redlining towards that credit card debt, that five to 6, 000 in credit card debt. Because all credit card debt, no matter what, unless you have a 0 percent interest balance transfer card, most credit card debt is going to be at like a 20 percent interest rate.

On average, it's above 20%. Some of them are like 17. Some of them are as high as 30%. And because of that, I will always, always, always want you to go laser focused on that credit card debt and get that paid off. The reason is your investments We'll not outperform that credit card debt. They will never outperform the credit card debt.

No matter what you try to do, even the best investors in the world are not going to consistently get above that 18, 19, 20 percent rate of return. And so, because of this, we want to make sure that we target that credit card debt first. So looking at the assets that you have. In your Robin Hood account, one thing I would do is if I was personally in your situation, what I would do is I would sell some stocks in order to pay off that credit card debt in full and then make sure I don't go back into credit card debt by slowly trying to figure out ways.

A do I need to make more money and or do I need to manage my money differently? So that's number one is looking at that. Number two is I would look at the student loans and say to myself, Oh, Hey, these student loans, I'm making these minimum payments, but what is the interest rate on these student loans?

If the interest rate is really high on these loans, I'm talking anything above a six and a half, 7 percent interest rate, then we need to reevaluate these loans as well. And we need to figure out what is going to be the best situation for me on these student loans. I don't want you to have to clear out your account to pay off these student loans.

You should clear out five to 6, 000 to pay up the credit cards. But when it comes to these student loans, can we refinance them if they are too high? And we don't have your interest rate here. If your interest rate is below 6%, you can continue just making those payments over time and then utilizing the rest of the money to continue investing if you want to, or build up your emergency fund by using the one three six method if you have not done that already.

And so I would definitely look at doing that based on the interest rate. So high interest debt is anything above a 6 percent interest rate, low interest debt. I'm fine with you continuing on investing or doing whatever portion of your plan that you were on. Thirdly, though, and this is probably something that you already know is the bigger part of the problem here is the income problem where you have.

Two part time jobs that you are barely scraping by. So what can we do to increase our income? And so we can handle these situations a little differently. I don't want you to have to continue to scrape by. Are there things that you can do a, to look for a job? And maybe you already are, you're maybe looking for a job.

Now I know how difficult that can be. And so can we start to look for another job? B. Can we build up some skills that possibly will allow us to earn more? Because really, making more money comes down to the value you provide. It does not come down to just getting lucky or whatever else. Making money is a value proposition.

Now, some people get lucky. That is absolutely part of the equation. Some people are privileged. That is absolutely part of the equation. But can you provide enough value in certain situations to Earn more. Now, most people are going to say to you, Hey, you just got to earn more money. It's so easy to do that.

It's not easy. I'll tell you that right now. It is not easy to earn more money up front until you start to build those skills. Now, let me tell you something. When you start to build skills, I'm talking sales, negotiation, really important skills that can really help your career, depending on whatever else you can do.

It becomes a little easier over time, but at the beginning, it is very, very difficult. And with your background, it looks like you were an educator. So you are willing to learn, you know how to learn because you would teach people. And so because of that, I think that there is a lot of things that you can do here to make a big, big difference.

And so if you can earn more, and you're probably in the process of trying to figure out ways to earn more. In addition, if you can get rid of that credit card debt, because it's only going to get worse over time. And if you can start to at least continue making those minimum payments, sell part of the portfolio, get rid of that credit card debt.

That's what I would do in this scenario. And then from there, then you can start to evaluate everything else. Now for your STRS account, I wouldn't touch that. I would just leave that there. Continue investing those dollars, make sure they're invested. And then going Robinhood accounts, you know, kind of prioritizing the debt repayment on everything else.

And then also you can look at some other things like we have a debt course. If you want to check that out, it's absolutely free. If you go to mastermind. co and you can go up to courses, there's a debt course that's completely free. That'll kind of give you a plan on how to do this and help you kind of step by step through that process.

But this is something that once you clear that credit card debt, then you can kind of make the next decision on what you should do with that student loan debt based on interest rate. Maybe you need to refinance it. it. Maybe you need to start trying to pay it down a little more aggressively. And the only way to pay that down aggressively, if you are just getting by is by earning more money.

And so this is kind of like a process of elimination that you have to go through before you make your final decision on that student loan. The credit card is clear as day. I want that gone as fast as you possibly can get it gone. But when it comes to the student loan debt, we need to know the interest rate.

And then we need to go through our decision tree and figure out where we need to land on that. So I hope that helps. Feel free to reach out to me with any other questions. I know what it feels like to be in this paycheck to paycheck situation. It is very, very difficult. Uh, and I want you to get out of that and I want you to start to build wealth.

And that is what I am here for is to help you guys as much as I possibly can. So please reach back out to me if you have an additional question. Question two is Hey, Andrew, love the podcast. Thanks for all you do to help everyday folks like myself do better with finances. Well, thank you so much for the kind words.

Can you please help me answer this retirement savings question? I'm a single woman in my early forties. Gross salary is 180, 000. Great job on your gross salary. By the way, I have three types of investment accounts, a Roth IRA. An IRA rollover and a non retirement brokerage account. I'm not eligible to participate in my workplace 401k because I'm a contractor.

With my salary increase, I'm also no longer eligible to make direct contributions into my Roth IRA, so I've been investing mostly in my brokerage account. However, I've heard about the backdoor Roth, but not 100 percent familiar with it. So here's my question. Can I make a direct after tax contribution into my rollover IRA, which essentially acts as a traditional IRA, then take that contribution, watch the cash shuttles, and immediately swing it into my Roth IRA?

Is that even allowed? Any insider direction you can provide is greatly appreciated. All right, so this is a great question and there's a couple of things that you can do here. Can you use your rollover IRA first of all to kind of roll it into the backdoor Roth IRA? You absolutely can. I'll talk more about the backdoor Roth IRA here in a second.

Uh, you can do that, but I like to reduce the mess on this kind of stuff. And so what I would typically do is I would open like a traditional IRA and just have that as my rollover IRA, meaning that I put the money in there every single year and then, you know, wait a couple of days and then roll it into my Roth IRA.

And so here's traditionally how it would work if you want to understand the backdoor Roth IRA. And for anybody listening, the way the backdoor Roth IRA works, we have an entire episode on this. But if you make too much money to contribute to a Roth IRA, which a lot of folks listening to this podcast do make too much money to contribute to a Roth IRA, and there are income limits for the Roth IRA.

So if you make too much money, then you have to do what is called a backdoor Roth IRA. This is what I have to do at the beginning of every single year. You could do it, you know, throughout the entire year. Whenever you need to up till tax day of the next year, uh, you can do these backdoor Roth IRA. So what you do is you contribute money to a traditional IRA, which has no income limits and you make that non deductible after tax contribution to that traditional IRA.

And since you're ineligible to make a direct contribution to your Roth IRA due to your income, this is the first step. Okay. So it's going to go into the traditional IRA. Then you're gonna convert that to a Roth IRA. So once the contribution is made and the cash settles, you convert the amount that you put into your traditional IRA to your Roth IRA.

I like to do this all at once, and so typically I'll do it at the beginning of the year because it's just easier for me to do it all at once. And since the contribution was made with after tax dollars, the conversion is in a general sense tax free. As long as there are no earnings on the contribution before you do the conversion.

So I don't ever invest the money. Once it goes into the traditional IRA, it sits there in cash until the cash settles. Then I move it over to the Roth IRA. Now your rollover IRA. And if people don't know what a rollover IRA is, this is a, an account that basically like if you have a 401k at a previous employer, you can roll that into a rollover IRA and you can control the investments.

One of my favorite ways to handle an. old 401k is to put it into a rollover IRA, like a Vanguard or something like that. That is one of my favorite ways to do that, but you'll need to also be mindful of the pro rata rule, which means if you're going to use the rollover IRA. So this rule requires you to consider all of your traditional IRA balances, including your rollover IRA, when.

calculating the tax on a Roth conversion. And so the IRS looks at the total value of your traditional IRAs, including rollover IRAs, to determine how much of your conversion is taxable. So if your rollover IRA contains pre tax dollars, this conversion could be partially taxable, which complicates the backdoor Roth IRA strategy.

So to keep it cleaner, because this does complicate the entire situation, I like to just have a separate traditional IRA open, To just keep this process cleaner, especially if you want to do the backdoor Roth IRA. And most people should consider the backdoor Roth IRA if they make too much money. I would probably be less likely to use that rollover IRA, but you can, it just complicates your tax situation.

So if you want to use it, I would probably talk to a CPA to make sure, Hey, how does this actually impact me? When I start to do this rollover in my specific situation, how much am I gonna pay in taxes and or how is this gonna impact my tax scenario in this year? Because otherwise you could save money into a traditional IRA even throughout the year if you wanted to, and then roll it over into the Roth at the end of the year once you have all of it available, or roll it over whenever you want to.

Now, for anybody listening who wants to execute a backdoor Roth, IRA, the three steps are, again, you make that non-deductible contribution, you contribute up to the annual limit. To a traditional IRA at the time recording this in 000. Ensure this is a after tax contribution, then you can convert that to a Roth IRA.

So once the contribution settles, convert the full amount to your Roth IRA, and then you report the conversion. So on your tax return, form 8606 will report the non deductible contribution to the Roth conversion. So I have my CPA do this every year. And, uh, my CPA is very pro doing this. They want all their clients doing this if they make too much money.

And it just helps their tax situation a lot of different ways. And so they fill out that form for me every single year. If you don't have a CPA, though, you can also look at it and fill it out yourself. A lot of like the tax software. Now we'll ask that question. When you go through that process. So the backdoor Roth IRA, very powerful tool for high earners.

Definitely want to get more money into a Roth IRA, especially if you like that tax free growth, which I absolutely love inside the Roth IRA, then that will allow you to get that money in there, even if you make too much money. So really, really good question. If you have any other questions, just let me know.

But like the bottom line is I'd rather have a separate IRA just to make this clean and it's a clean situation where you, Hey, money goes in, boom. Money goes to the back door Roth IRA. Money goes in, you do the back door Roth IRA over and over again. So that's how I like to do it just to make it cleaner.

Even though an additional count is usually something I don't recommend in this scenario, it actually simplifies it. So I actually like having that additional account for that reason. All right, the next question is actually two parts, and I think these are both fantastic questions. So the first one is talking about tax advantage accounts, so I know you're a big fan of investing in tax advantage accounts such as the Roth IRA, HSA, etc.

I have a Roth 401k currently, and I am taking advantage of the 5 percent employer match, amazing employer match there. In the upcoming months, my plan is to start maxing my contributions in this account as my income increases. It is currently invested in an incredibly low S and P 500 index fund. My plan is to retire early.

And in order to do this, I would need money accessible and in an account that does not charge penalties for early withdrawal. With this in mind, I wanted to start contributing to a taxable account with any extra money at any time. After maxing my Roth 401k, rather than open a Roth IRA, as I don't want to be bound to having to wait until 59 and a half to use this money without penalties.

With my desire to have the possibility to retire early, well before 59 and a half, would you think it'd be wiser to invest extra cash into a taxable account as long as I'm maxing my retirement account at work, rather than investing extra into a Roth IRA in order to have access to the money sooner and without withdrawal penalties?

Wonderful question. So we have two episodes. I'm going to highlight at the top of this show that we did that will really help you in this situation. If you want to dive deeper than what I'm even going to dive into now. One is with Katie Gaddy and Katie Gaddy and I are talking through how can you access retirement accounts and specifically you can access some of them early.

But in addition, how can you do this and not pay any taxes? And so we go deep dive into that. The second one that was with Jeremy Schneider from Personal Finance Club. And we talked through six ways to access your retirement accounts early. And there are ways to access your retirement accounts early. I'm going to go through some of them here today.

We dive deeper in that episode with Jeremy too. And this will be something I think can be really helpful for a lot of people. So the first one is yes. So you have a taxable brokerage account. I love having a taxable brokerage account if you plan on it. Retiring early for a number of different reasons.

One, it will help you just have additional flexibility because what you're going to see here is I want you to have multiple different buckets of where you can pull money from, especially if you are a really high earner, you can take a lot of this additional income and put it in various buckets. And because you have these different buckets, it will allow you to have more flexibility in retirement.

So super important caveat there. Number one is to make sure you have those different buckets. And so having, you know, extra funds going into a taxable brokerage is great. But also having a Roth IRA, and I'll explain why here in a second, because a Roth IRA is going to be important to your strategy if you do a few different things.

So number one is you can do something called a Roth IRA conversion ladder. And so the Roth IRA is going to allow you to actually access this money early. And here's how it works. So a Roth conversion ladder allows you to actually convert a portion of your traditional IRA or 401k funds into a Roth IRA each year.

And then after the conversion, you'll need to wait five years before you can withdraw the converted funds penalty free. So the big thing with a Roth IRA is that, and Katie and I talked deep about this on how to access this. And not pay taxes and the money also. But when you convert money from a traditional IRA to a Roth IRA, you gotta remember the contributions in a Roth IRA can be accessed penalty free.

But when you do this conversion, you have to wait five years before you can access the money and not pay a penalty. And so because of this, what a lot of people like to do is they'll do the Roth conversion ladder and they will start it five years before retirement. And so you can start to do a Roth conversion ladder where you're converting money that you need every single year from the traditional IRA or your 401k into your Roth IRA.

So that way, when you retire five years later, you're able to access those funds penalty free. And now what Katie and I talk about in that episode two, though, is that you can do this based on the standard deduction and you can reduce your tax liability significantly. And so when you do this each year, you convert the amount from your traditional IRA to your Roth IRA, and then you only pay taxes on the converted amount at your current income tax rate when you do the conversion.

And so most of these, if you're making a ton of money towards the end, you may want to find different vehicles like your taxable brokerage account that you could pull money from for the first couple of years. Because if you can get to the point in time where you start to do these conversions at a time where you make low income, then your taxable liability comes even lower over that time frame.

So there's a strategy here on how to do this. Which is why I think your taxable brokerage account coming into play could be very, very helpful. And so this strategy is going to allow you to access your retirement funds before age 59 and a half without that 10 percent early withdrawal penalty. And you can also take advantage of the tax free growth in the Roth IRA over the course of that timeframe.

Now, number two is the backdoor Roth IRA conversion. We just talked about that on the last question here on how that actually works. But the backdoor Roth conversion will allow you to take advantage of tax free growth in a Roth IRA, even if your income is too high. So if your income is too high right now, do a backdoor Roth IRA.

If you want to open one up, if you have the additional income. And then third thing I want you to consider is a health savings account. So the cool thing about a health savings account is this will give you the triple tax benefits, meaning money will go in tax free. Your money will grow tax free and you can pull the money out tax free as long as you have a qualified medical expense.

And so over the course of your career, every time you go to the doctor, every time you get medicine, every time you go get a knee brace, for example, you can look for HSA eligible items and then you can take those receipts and reimburse yourself. And it doesn't matter when you bought those things or when you went to see the doctor or whenever else happened.

It does not matter when that happened. You can reimburse yourself 50 years later if you want to. There's no timeline on when you have to do this. And so the HSA is amazing because you can start to pull retirement dollars out as well by using that account. And if you don't use all the money later on down the line, it just turns into like a traditional IRA.

The rules are the same as a traditional IRA. And because healthcare costs are rising so fast, I think the HSA is a imperative account for most people to have when they are trying to retire early because a, it gives them additional flexibility. They could pull some additional cash when they need it out of it.

As long as they have a qualified medical expense without having to pay some of those additional fees. And so I think withdrawals for those qualified medical expenses are tax free. You can even go on Amazon now and Amazon has HSA eligible options. Items and you can kind of look through those items and see which of these are eligible and which ones are not.

And the IRS also has a laundry list of items on their website that shows which items are eligible and which are not. And you're going to be surprised at some of the things that are eligible. Things like contact solution, all kinds of different things that you might use every single day will be eligible as a qualified medical expense.

So a really great thing. Now we're going to do an ultimate HSA. Episode coming up again. Uh, we haven't done one in a long time and there's a lot more details that have been added as of late that I want to talk through. So if you are interested in that episode, make sure you're subscribed to the podcast or the show, and we'll be able to go through that with you.

There's also the option of SEP, so S E P P. And this is a method to withdraw funds from your retirement accounts before age 59 and a half without incurring that 10 percent penalty. You say you're going to retire much earlier. This requires you to be, you know, five years away from 59 and a half. So this may not actually qualify for you, but you can look into SEP as well and see if that might be something you can utilize.

But I like the taxable brokerage account. I don't think there's anything wrong with that taxable brokerage account. I think it offers flexibility and it gives you a bunch of options, especially if you're going to retire early and you have the long term capital gains tax. Now where you can get, you know, if laws change in the future right now, there's a lot of conversation about them taxing capital gains tax at really high rates for really wealthy people.

If that ever trickles down to Us regular folks that could become a bigger problem when it comes to the taxable brokerage account right now that's not an issue and we can only focus on the things that we can control so that none of those things are passed so we can just focus on this and what we can control but that's just one thing to keep in the back of your head is you may need to make some maneuvers or have a backup plan if that ever happened i'm not one to try to predict anything like that and so i think this is something where you can kind of make your own decision on that but when it comes to capital gains tax long term capital gains You know, you'll be paying anywhere from zero 15 to 20 percent depending on your income.

And so that is another thing to kind of look at. And that's on the gains, obviously not on your contributions. So the strategy here that I would have for you is I would give you a kind of an outline here is I would have multiple buckets. So I would use a combination of the taxable brokerage, Roth IRAs, HSAs, and your 401k and have all of these different buckets available so that you can add additional flexibility if you're going to retire early.

In addition, I would have that HSA for those medical expenses. Medical expenses are a really, really big thing. And more people need to be talking about them. Like I said, they inflate 7 percent per year is on average what the data is coming back at now. And so because of that, we need to leverage our HSA to cover medical costs tax free.

It's very important that we do that because we can preserve other assets for non medical expenses. And so because of this, we can use the HSA for medical expenses, but we can also also use it and reimburse ourselves later on for the medical expenses that you have during your career and working years.

And then after that, we can utilize something like a Roth conversion ladder. So as we start to approach retirement, we have our Roth IRA open. While we're working, we do a backdoor Roth IRA. When we get to the point where we are getting closer to retirement age, as long as our income is Make sense. We can start to do a Roth conversion ladder.

If you make too much money and you don't want to pay that much in taxes, you can start the Roth conversion ladder when you make less money in retirement. And that'll be kind of your two options and two avenues that you can take. But we want to have that thought process available to us and a great article.

If you want to learn more also about the Roth conversion ladder, we have episodes on it. Two episodes plus the episode with Katie. Uh, but if you want to learn more and just read a really great article as well, the mad scientist, instead of scientists and F scientist, uh, he has a really good article on the Roth conversion ladder and talking through that he retired early in his early thirties.

And that's a great article to look at too. And then the backdoor Roth for tax free growth. That's something you definitely want to do. And then having a taxable account for additional flexibility. So hammering at that taxable account. If you have a lot of additional funds. Nothing wrong with that at all.

I have no issues there and I think it's a good idea. And so because of that, relying on that taxable account for that flexibility will allow you to have just multiple buckets that you can pull from in early retirement and have that availability. Now, I know for most people, income is limited and you can't just spread it out on all these different accounts.

You're trying to build up some of these accounts and work through some of this. And so if you're in a situation where you're seeing Have a really high savings rate, and I'm talking tens of thousands of dollars per year. You can spread it out across some of these buckets. But if you're trying to max out specific accounts, if you're trying to go 401k, Roth, HSA, all that different stuff, you know, you can be really starting to hammer in a way at some cash here.

So just thinking through this strategy is really important. I like having these multiple buckets, though, especially with these four different scenarios. It'll give you more flexibility and less worry. Now, if you want to have a zero worry whatsoever Any of these constraints around you and you're willing to pay that 15 percent penalty, or if you make a ton of money, that 20 percent penalty on the capital gains, and you think that's worth it for, so you don't have to have the headache, then it's more power to you.

I would probably go with the multiple bucket strategy. Uh, so you don't have to worry as much. Now let's get to the second part of your question. And so part two of your question is, aside from delete me for identity protection, do you use any other identity protection services such as aura, life lock, et cetera?

Or your general identity that protection plan is to use is delete me, freeze your credit and use multi factor authentication. Okay, wonderful question. And this is something I think we'll be able to dive in really quick here. So at the top of the show, for those of you who don't know, We talk about financial protection a lot on this podcast.

And the reason for that is it's, there's a lot more going on in the world today than there used to be. And you really have to have a financial protection plan in place. And so because of this, uh, we talk about services like delete me. And if you don't know what delete me is, delete me as a service that isn't basically automated.

So this is a kind of a way to automate your financial protection plan is they go to different data brokers and they will say. Hey, you have this person's data. We want you to remove this information from the Internet. And the reason why they do this and the reason why you want to do this is because if somebody gets a piece of your information and they Google your name or they Google your address in quotations, they can find countless websites with the rest of your information on there.

And so delete me removes that information so that somebody is less likely to be able to scam you successfully online. And so you're protecting your finances so you don't have student loans or credit cards or something else opened in your name. And so delete me helps remove that information. And it is a.

Frontline defense on if somebody gets a part of your personal information, like we just had the huge social security fraud issue. If somebody gets your social security number, they can't find the rest of your information to try to fill out credit reports or things like that. And so delete me, we'll remove that information there.

If you want 20 percent off, delete me. You can go to join, delete me. com slash PFP 20 and you can get 20 percent off. Delete me there. It is a. Fantastic service is one of the first things I did, uh, with my financial protection plan. Secondly is the credit freeze. And so the credit freeze is something I think a lot of people need to be doing constantly.

Now the credit freeze, honestly, it's a little bit of a pain in the butt. You have to go and call the three credit bureaus and have them freeze your credit. And when they do that, then somebody can't open a student loan in your name or a credit card in your name. If they get a piece of your information or your social security number, the only person who can freeze and unfreeze that credit is you by calling those credit bureaus.

And so it takes like five, seven minutes per credit bureau, sometimes 10, depending on who you're talking to. And then two factor authentication. Most of you know what that is. It's just gives, you know, different ways when you're booking. Put in your password, you know, get two factor authentication so that you have, you know, you get a text message or something like that, or you use an app to unlock each time you use your password on something.

Um, and so generally those are some great places to start and really important places to start for a lot of people, but there are some additional things that you can do. And the question basically is asking, you know, is there any other identity theft protection that you get? I use a platform that I do not particularly like and the reason why I use it right now and I'm probably going to change it even though it's completely free is because my identity was stolen because when I worked in corporate world, an employer actually gave away a bunch of social security numbers.

And when they did that, uh, accidentally, so they had a phishing scam where somebody was acting like the CEO and asking for a bunch of information on a bunch of employees and they gave away like thousands of employees, social security numbers. And so because of that, they gave us identity theft protection with a company that we could trust.

For free. And so I've been using that for a long time. So I do have identity theft protection. And if I didn't have it, I would buy it. Um, and so that's something that I do have available. I do not recommend this service. And so aura like for the examples that you gave life lock and aura. Those are two great services that you can look at.

And aura does a lot of other things too. So if you don't know what they do and aura does a few other things as well, but you can have that identity theft protection. I think it's important to look into that. And this is just going to give you an extra layer of protection. Now, are they perfect? I don't think all of them are.

And so there's some things that you just have to kind of look through. Uh, some of these companies will also give you additional protection. Like if you have kids or something like that, they will make sure they monitor what they're browsing on the internet and some of the things that they are looking at.

So they have some additional. Things that might help you in terms of like financial fraud protection. I think that's important. Um, some of them offer that, and then they also have identity theft insurance. And so identity theft insurance, if it fits into your budget and you can afford it, and you are someone who can afford it, that might be something you want to consider as well, because identity theft insurance is something.

Um, that can protect you in a lot of scenarios. If you have a business, that's also a big one to have based on a business who takes in, you know, people's personal information. You definitely want to look into that as well. And usually they're pretty cheap. They're not that expensive to have that identity theft insurance.

If you want it for the whole family, you can have for the whole family to, uh, And so it's definitely something I think people need to consider more and more as time goes on here, because they can help you with a lot of different things. So look into the prices of some of those and see if it's worth it to you.

There's a lot of features for a lot of them, but yes, I do have one. It has less features than some of the other ones out there. And so that's why I am considering, even though I already have one paying for an additional one, just because. They're cheap enough to where it's not a huge, huge deal. Like I think, you know, if you're one adult, for example, if you're trying to do one just for yourself, it's like 12 bucks a month for a lot of these services.

So not a huge, huge deal for a couple it's 15 bucks a month. So it's, it's not a huge deal at all. And that will kind of give you some peace of mind, especially if you're worrying about some of that stuff. Another thing they also do is they give you financial transaction alerts if you want to set that up.

Uh, so I like that part of it. They also give you like home and auto title monitoring. They do the three credit bureau monitoring. So if somebody signs up for something in your name, it'll alert you pretty quickly. But the credit bureaus also can do that for free. So you can sign up to have them alert you for free.

And then some of them will cover 2 million worth of identity theft insurance, you know, so that just gives you that additional insurance. So it's pretty inexpensive for what they can do. Uh, And it just gives you that extra layer of protection. Uh, just know that you're gonna have to be paying that, you know.

If you decide to go that route, you're paying it your whole life. So you just gotta think through that. But I think it is going to be something that is happening more and more. And so, as many layers of protection as you can get, I think it's really important. So it starts with something like Delete. me. I would definitely utilize Delete.

me. If you go to, again, joindelete. me. com slash pfp20 is 20 percent off. Uh, and I think that can be your first line of defense in addition to freezing your credit. But if you wanna spend a little extra, you can use one of these other services too. On top of delete me to be able to do some of this stuff and help monitor, uh, some of your protection when it comes to your accounts and things like that.

And having that, and the bigger part is, you know, having that identity theft insurance is another big piece to that. So listen, thank you guys so much for listening to this episode. I cannot thank you guys enough for investing in yourself today, because that's exactly what you are doing when you listen to this podcast.

If you guys have any questions, again, join the master money newsletter by going to master money. co slash newsletter, and you can respond to any of those issues that come out. Every single week. Again, thank you so much for listening. I hope you have a great rest of your week and we will see you on the next episode.