Mark Kenney - retirement

We all have financial goals. However, even when we have a plan in place, it’s not always the right plan–and sometimes our plans can do more harm than good. How does this happen, why do we sometimes cling to bad decisions, and what can we do to stop making these mistakes?

To help answer these questions, we’re talking to Zeke Waisel. Zeke is a Behavioral Financial Advisor, as well as a CERTIFIED FINANCIAL PLANNER™. His unique training allows him to look past the numbers to understand why clients are (or aren’t) meeting their financial goals, make sense of behavioral biases, and create better plans.

In this episode, Zeke explains to us what exactly makes a BFA so unique, some of the biggest mistakes that people swear by when they make investments (both good and bad), and the unique challenges facing Millennial and Gen-X investors compared to their parents and grandparents.

In this podcast discussion, you’ll learn: 

  • Common situations in which behavioral bias trumps sound thinking.
  • Why younger investors are often more conservative with their money–and why Robinhood investors are often just gambling.
  • Zeke’s biggest pieces of advice for young people.
  • How to get a handle on your budget.

Inspiring Quote

  • “Not everything’s numbers. If you’re trying to invest and save for a goal, you may not be saving efficiently because you have a need behaviorally.” – Zeke Waisel


  • “[Robinhood] is part of a financial plan. Instead of going to a casino, you’re going to Robinhood.” – Zeke Waisel


Read the Transcript

Matthew Peck: Well, hello, everyone, thanks again for joining us on the SHP Retirement Road Map podcast. And this is going to be a special guest, or it’s going to be a step in the direction of really broadening out the people that we’re going to be inviting here on to provide good content for all of our listeners out there, but also to kind of give a good idea of the people that work at SHP. I say that because, very often, when we’re putting together financial plans for clients or we are reviewing different software and risk analysis and Morningstar and some of the other planning technology, some of that stuff isn’t proprietary. It’s not like, we’re the only company that uses Morningstar when it comes to doing a research on stocks, bonds, and mutual funds.


But what I hold in my heart and what I do believe is very special about SHP is the people that work here, the people that come in every single day, clock in, and make sure that the work that we do, whether it’s working with income planning or investment planning or tax planning, legacy, healthcare, management, financial, to show their dedication and to show where they’re trying to specialize in, to provide our clients an invaluable resource so that no matter what the question is, we can either handle it internally or steer them in the right direction with some of our partners and allies in this business.


So, with that in mind, I think our first or one of our first guests here is going to be Zeke Waisel, who has the renown of joining us about a couple of years ago. He worked for John Hancock in downtown Boston, but there he earned his CFP, so he’s a fellow CFP, for anyone that doesn’t know, that’s Certified Financial Planner, as well as a BFA. And then also, an MPAS, a Master Planner Advanced Studies. So, I’m also looking forward to kind of finding out what’s in this alphabet soup that we’re talking about right now. But a little bit more of his background, he’s graduated from the University of Maryland, originally from Sharon, but lives in Brighton right now as we speak.




Matthew Peck: But Zeke, thanks so much for joining the Retirement Road Map podcast.


Zeke Waisel: Thanks for having me, Matt.


Matthew Peck: Alright, so you have to tell us, as I said, I need to work my way through. I know what CFP stands for, but let’s go through BFA. What is it? What exactly does it mean? What type of specialty is there? And then, after that, let’s do the MPAS.


Zeke Waisel: Alright, sounds good. So, the BFA is Behavioral Financial Advisor. It basically was additional training that allowed me to learn that not everything’s numbers, it’s also how you feel. So, if you’re trying to invest and save for a goal, you may not actually be saving for the goal efficiently because you have that need behaviorally. You really want to save that money in a certain way that’s less risky or more risky even if the goal doesn’t ask for it. So, it really helps me understand you may have money set aside from an inheritance and you may be much less aggressive on that fund because it’s from an inheritance, you don’t want to lose it, even if that money is just part of your overall portfolio.


Matthew Peck: And so, yeah, to that point, I mean, is it something where– you even mentioned about that specifically with inheritance, I mean, are there other examples of where people’s behavior gets in their way or helps them? I mean, any other things that people can sort of wrap their mind around that they might be able to relate to?


Zeke Waisel: Yeah, I think inheritance is a great example. And then also education where they’re thinking about their kids, they really don’t want to be risky on those funds. But these kids are one, two years old, they really have a lot of time for that growth before they actually need the funds so they can take a little bit more risk, not at age 17, but ages 1 through 10 are a great time to take that risk and get some growth without having to worry about specific market fluctuations.


Matthew Peck: And are people able to overcome their behavioral finance? I mean, because I know some of my own sort of research and whatnot about things like overconfidence bias. And so, for all of our listeners, overconfidence bias is, let’s say you start to invest in the stock and immediately goes up. And so, suddenly you’re the smartest guy ever because you pick that one stock that happened to go up that particular day and you have to realize that, yeah, I mean, there was some research involved, but there was also some luck involved. Any other sort of behavioral biases that you can put your finger on?


Zeke Waisel: I think that really speaks towards the meme stock that’s happening right now. You bought AMC now, you can’t miss. You’re going to miss, and that’s okay. The idea is general growth over long term and really just making sure that your goals are aligned with your risk tolerance. If you’re trying to get a long-term goal, you can have more risk. If you want something soon, you shouldn’t have a lot of risk because you’re going to need those funds.


Matthew Peck: Well, because also, too, I mean, I know you work a lot with millennials and sort of the next gen, as we call them locally, but is it the same behaviors? Do you see behaviors regardless of age, where it’s like someone that’s 70 is going to have a similar behavioral finance issues as someone that’s 17?


Zeke Waisel: I find that depending on the age, younger actually tend to be a little bit more conservative these days because they’ve seen a lot of those fluctuations and they haven’t started investing yet. I think the biggest issue is just starting. Something that you’re able to watch and let it go for the long term, let it continue to grow, let it continue to do what it’s supposed to do for your goal and know that in the long term, it has historically done well. So, you should be able to let it do what it’s supposed to do.


Matthew Peck: Well, it’s interesting because from reading, I’m 42 years old, but with Robinhood and sort of the– it seems like people are more involved, are more investing. So, is that more of just sort of a louder minority of millennials, if you will, that are highly active, and then a majority still have that more conservative because maybe they have youthful memories of ‘08 and certainly March of 2020 will leave us all sort of shaken.


Zeke Waisel: Sure. I think that there’s definitely some people in Robinhood that are investing, but they may not be investing correctly or efficiently, right? So, they may be saving into Robinhood and buying the next big stock. And sometimes, they’re going to win. Sometimes, they’re going to lose, but they’re not saving enough in their 401(k), or they’re not saving in Roth IRA when they really should be. So, it’s all about making sure that those pieces are taken care of. And then if you want to play with some money, that’s okay, knowing that you might lose it, but you can afford to because you’re making other good financial decisions.


Matthew Peck: So, in other words, in your opinion, now, again, everything is our opinion, Robinhood is more of a distraction than a sort of true financial plan.


Zeke Waisel: I’d say it’s part of a financial plan. It’s a piece of, instead of going to a casino, you’re going to Robinhood sometimes, right? The key is you’re not buying full shares. Often, you can buy partial shares. So, if you want to buy part of a Tesla share and be involved in Tesla, excellent, make sure your Roth IRA is fully funded for that year, then buy the excess into Tesla.


Matthew Peck: So, okay, so now back to the whole idea of sort of being conservative or whether it’s sort of behavioral finances, if I haven’t mentioned it, let me say it again that Zeke helps out a lot of our– I mean, you do many things here. I can’t say that you’re only helping out with millennials, and so, the next generation of sort of accumulators and people that are just starting out, certainly help out the 401(k) end. You and I work together a lot on a number of different households. But since today, we really want to do focus on that one aspect of what you do, which is working with millennials, people that are just starting out in your 20s, in your 30s, talking about whether or not Robinhood is a distraction or not, and having a part of an overall plan. But what would be the first thing that you tell someone, like if they say, “Okay, I’m just starting out, where do I start?”


Zeke Waisel: I think the biggest piece is budgeting at that point, figuring out how much you’re actually spending, where excess can be cut and knowing what your net cash flow is. So, we talk about this a lot with my clients. It’s what are you taking in after taxes, after deductions, after medical, and what are you actually spending out of that baseline? Student loans, credit cards, just normal savings. Then what do you have extra? Food, dining, and fun. What do you actually need to save for?  And how do you achieve those goals?


Matthew Peck: Okay, so then, are people able to? I mean, even though this is sort of part of media, if you will, I’m always trying to discern sort of, I wouldn’t say speculation per se or the headline with what’s actually happening on the streets, if you will. So, the headlines are, and from what I’ve heard, too, from people, I mean, extremely difficult to get into a new home with rising housing prices and certainly, for sure, in the Northeast, and I’m sure across the country, or increasing on rents, and the massive burden of student loans. So, if you don’t mind, like, in your own experience, of course, I mean, sort of unpack those. I mean, in your opinion, how bad is it, or is it, no, it’s a little bit overblown, and you can manage some of these big issues?


Zeke Waisel: I think it really depends on student loans, one of the major debt pieces, because there’s no asset attached, that it’s you, you are the asset that’s attached. If you’re not earning enough to pay the student loans, the student loans were a net negative to your financials. So, it’s all about keeping that net worth continuing to grow. Whether you start negative $150,000 or positive $150,000, my goal is to make sure you continue to make good decisions and be a little bit better each year. I mean, I’ve seen that definitely student loans can be a huge drag on a portfolio or on goals, definitely set some people behind. I see a lot of kids up until her late 20s, sometimes early 30s staying at home because they can’t afford rent and student loans, or it’s not a financially smart decision to do so.


Matthew Peck: Yeah. So, what might those doing loans do in general? It’s like, I know some people refinance, some people don’t refinance. I mean, I remember when I came out, this was a long, long time ago, but I had my little coupon book from Sallie Mae or whatever it was, way back when. And so, what type of refinancing options are available? I mean, I see commercials every once in a while, our local banks getting into refinances, or do you get to go to specific vendors? Or what options that the client or the people have when it comes to their student loans?


Zeke Waisel: Yeah, there are definitely refinance options. The downside is you’re taking them out of the public sector and putting them into private. So, if something happens where there’s a forgiveness for student loans, you’re now taking that off the table for yourself.


Matthew Peck: Oh, interesting.


Zeke Waisel: Because now a personal loan for student. You can get a little bit better rates than a true personal loan, but it’s still going to be usually higher rates than a mortgage or an auto loan, but sometimes lower than Sallie Mae is giving you. Those can be in a 6%, 7%. You might get a 4% or 5% range.


Matthew Peck: So, it’s really in that range, though. So, here we are, and sort of, end of year 2021, right? So, currently, what rates are people generally paying? What options do they have? Is it?


Zeke Waisel: It’s kind of all over the place. It depends on a couple of factors, one, which semester did you get that student loan?


Matthew Peck: What, really?


Zeke Waisel: But you can have eight different student loans over four years, one per semester.


Matthew Peck: Okay, alright. Yeah, okay.


Zeke Waisel: Maybe it’s $2,000 here, maybe it’s $5,000 there. It depends on the semester you needed money for.


Matthew Peck: And what the interest rates were at that time?


Zeke Waisel: Exactly. Just whatever they’re offering you at that time. So, what’s the average interest rate is the question, and then which ones do you want to refinance? Obviously, you always want to pay the highest one down first, if possible. So, let’s see what you can get on that one, and then what are the other pieces? Can they take the whole thing? Or can they only refinance two-thirds of your student loans and the rest a public? So, it’s all those different decisions to determine what makes the most financial sense.


Matthew Peck: But also, when it comes to a couple of questions, but is this the type of stuff? That’s why we do this stuff, people, but no, a couple of question, number one is the other refinancing options in the public sector, or no, like once you have what you have is what you get there in whole refinancing is shifting it from public to the private sector? And then sort of follow-up question, within the private sector, is it still considered a student loan? Or is it considered, I think, you still call it like a personal loan?


Zeke Waisel: Yeah. So, first question is, I haven’t seen any public sectors offering refinances. Honestly, why would they? They can get the rate that they already promised to you and they are going to get paid out if someone refinances it out, they just get paid off right away. And then the private ones sometimes are considered student loans through the private sector, and sometimes they’re considered true private loans, but they give you a better rate because of student debt, not credit card debt or any type of repair or anything like that.


Matthew Peck: Okay. And then any tax benefits to either one, public or private, because I remember, one of the bigger things was being able to write off the interest on it, and then, if memory serves, it was available at once, and now it’s no longer available, or maybe it’s an income limit thing, or what are they doing there?


Zeke Waisel: There’s definitely an income limit piece of that. One of the main factors is if you’re going for the public forgiveness, the public student loan forgiveness, it has to stay public. It can’t go private because then you don’t get that ability to write it off and take it out.


Matthew Peck: Yeah. I want to come back to the whole public forgiveness thing in a second. So, let’s just take for a second, private versus public loans, or either one of them the ability to write off interest, like you do, well, like you used to be able to do on your mortgages and any other type of tax incentives, one way or the other.


Zeke Waisel: There are some benefits for the public eye, and it depends on how the loan is coded on the private side if it’s refinanced. If it’s considered a student loan, there may be tax benefits. If it’s not, it’s just going to be a private personal loan, and there won’t be any tax benefit, just like a normal personal loan.


Matthew Peck: Yeah, almost like a car loan or whatever it may be.


Zeke Waisel: Yeah, exactly.


Matthew Peck: Okay, yes. So, now, let’s walk into the minefield. They know there’s a lot of trying to think of a right way of putting it, got to be diplomatic and political nowadays as we venture into the culture wars, and hopefully, we don’t get decimated here. So, the idea of public forgiveness, is that something that is being proposed right now? Is it sort of more of a fact locally and here in Massachusetts? What’s the current update?


Zeke Waisel: So, there is public forgiveness, which is still going through legislators figuring out if they’re going to do it, to what extent. I know they forgave some predatory loans that were from schools that may or may not have actually been grade schools.


Matthew Peck: Accredited, you mean.


Zeke Waisel: Yeah, or grade schools. And then there’s also the actual public servant forgiveness. When you’re working for 10 years, you can get the rest forgiven based on a certain rate, very beneficial, but you have to be there 10 years. Otherwise, you owe starting your nine and a half you leave that public sector, you don’t get those forgiveness dollars. It’s not pro-rated.


Matthew Peck: So, some of the public forgiveness programs besides the predatory aspects and some of those online universities, which is probably where they originated from, because I remember, a good friend of mine who is a nurse practitioner. She ended up practicing within the sort of an underserved community, and she was able to get all of her loans forgiven. So, what you’re saying is that anytime people might say like, oh, forgiveness of loans, forgiveness of loans, they’re reworking that program.


Zeke Waisel: If they’re two separate programs, there is. The loan forgiveness that they’re trying to rework, and then there’s the public servant forgiveness, which is in place and has been for multiple years. You have to work 10 years. And a low income is fine, or any type of servant for the public where you can actually get the remainder of your loans wiped out.


Matthew Peck: Okay. So, are they changing that 10-year, though? Are they trying to bring it down?


Zeke Waisel: Not that I’ve heard of, so far. Hopefully, not.


Matthew Peck: Yeah.


Zeke Waisel: I think that’s going to mess up a lot of people’s plans.


Matthew Peck: Right. Because you just said…


Zeke Waisel: Some were three, four, five years into that plan. There’s also income-based repayment, which has a similar connotation, but there are some taxability differences there. So, there’s a lot of different ways of doing it, but there are student loan experts that I recommend going to. I’m not one of them. I know enough to tell you when to go talk to a student loan expert.


Matthew Peck: No, but I mean, I’m finding this helpful. Hopefully, we all know. Is that right? So, then what’s the other aspect, though? So, you mentioned, okay, so you have like the public sector, sort of 10-year program, and then they have like the true loan forgiveness.


Zeke Waisel: Which now, they’re trying to forgive any proportion of certain loans. There’s been a bunch of different bills set forth, but nothing’s come through completely, where maybe if you earn under a certain amount in a given year, you get 100%. Kind of like the stimulus checks where, depending on your income, depending on where you are, you may get some partial or none.


Matthew Peck: Okay, interesting. But as you mentioned in the beginning, circle back to that, you had better not have refinanced, per se, because you might not be able to take advantage of this program. And that’s all part of the human infrastructure bill, that is grinding its way.


Zeke Waisel: Yep, exactly. And so, that’s why a lot of my clients are saying, “You know what? I can afford to pay my minimum payments, but they’re deferred to 0% until the end of January. Let me wait and put them aside.” I say, “Fine, put them in a separate account. Leave those funds there. And then as soon as the interest kicks back on, start paying right into it, and pay it off as soon as possible.”


Matthew Peck: Right into that point. So, now, as I mentioned, I kind of went down the wormhole in the student loans. So, it’s like, okay, so here clients have or– I guess, I mean, I hate labeling people like, oh, you’re all millennials, but it’s like, pretty much what? 18 to 40 is kind of the official…


Zeke Waisel: Millennials, I think, are just in the 25-ish to 35-40 range.


Matthew Peck: Okay.


Zeke Waisel: But then Gen X, there’s still some have student loans or other accumulation issues. Just efficiency, you want to be as efficient as possible because the more efficient you are, the younger you are, the better it’s going to be for your future.


Matthew Peck: Well, that’s what they say. So, here you have people, they have the student loan issue like we’re just talking about. And should they then move out of their parent’s house and then start to pay a mortgage? Or is it, no, they really should say, “I wouldn’t even think about that until my student loans are paid off”? Do you see what I mean?


Zeke Waisel: It really depends on cash flow. If their student loans are $2,000 a month, minimum payments, you’re probably going to be looking at staying in your parents’ house because that’s a huge payment. If they’re a couple of hundred dollars a month, you may be able to afford that and rent, and depends on your income, depends on what other debt you have. Do you have a car loan or is it paid off? Do you have credit card debt that you’ve accrued or is that gone? You know, things like that, where, yes, it’ll put you behind for buying a home, but at the same time, you may not want to live at home when you’re 31 because you’re 31, you want to be out in the city or whatever it may be, even if it’s a financially better decision. And that’s where that BFA comes in, behavioral, and what are you actually going to do?


Matthew Peck: Right. And help people overcome what might be getting in their way, sort of mentally, if you will. Alright. And then, seemingly about cash flow, too. I mean, is it– because even I, like sometimes I’ll have sticker shock, right? I’ll be like, Oh, my goodness, no home is worth this much back in my day. I called Old Man Disease. And I’m slowly suffering from it. But is it something that’s just like, no, no, wages and what people are earning are able to afford this? So as much as it’s like, oh, my goodness, that’s outrageous, is it like, no, no, that’s just what the market bears, and people, their income or whatever, then their cash flow is meeting it, or no, no, this affordable housing is a serious issue, and it really is starting to lead to people either leaving the area or delaying moving out of their parent’s house, I mean, I guess in your experience, what have you seen?


Zeke Waisel: I mean, definitely, the Northeast, Boston-centric, New England, specifically, even New York, California, a lot of those places are very expensive. And while some wages are much higher, there are definitely some that haven’t moved much, depending on the group and the sector you’re actually working in. Yeah, so it really depends on the individual. I’ve seen people that are younger than me earning more than my parents ever made.


Matthew Peck: Well, yeah, yeah, yeah.


Zeke Waisel: But then, I also see people that were earning the same amount my parents were when they started, but not adjusted for inflation. So, there’s a huge difference there. And as home costs continue to grow, if those incomes don’t tick back up, then there will be a lot more people who can’t afford to buy now or possibly ever, which is a bigger issue at hand, for sure.


Matthew Peck: Well, yeah, to that point too, and another thought, I hope they don’t forget it. But that point too, I mean, is there a certain point where you just say, okay, goodness, you’re 35, don’t even bother? Or is it, do you see what I mean? Does that moment ever really happen where you should still just base it on cash flow and do all that stuff? Or is it okay, if you can save rather than putting money into the equity in the home, put money into an after-tax, brokerage account, and so, you’re sort of doing the same thing or whatever the difference is between rent and what your mortgage would be if you put in that difference into a brokerage account, is it kind of equivalent from rather than equity in the home, you have equity in stocks and bonds, mutual funds?


Zeke Waisel: Yeah, I think if you’re not able to afford the home you want or find them, I mean, they’re being snatched up like in a couple of days from going on the market. So, if you can’t find one, saving into something is great, but also you don’t want to be too aggressive in that short term. So, if you’re planning to buy a place in 6 to 12 months, you may not want to invest it at all. You may want to just keep it in cash.


Matthew Peck: Right.


Zeke Waisel: And then anything excess, that’s what you can invest because that’s longer term versus putting extra cash flow into a mortgage when you already have one. It really depends on the interest rate. If the interest rate is under 4%, you probably want to invest it because that’s a better return than a 4% or less mortgage interest rate. If it’s over that, that may be a good place to put some money into and get that mortgage paid down quicker.


Matthew Peck: Yeah. Well, because the other part too, I was thinking, maybe it’s back to the behavior aspect because I heard something because I think, this is more of a general sort of “broad-brush thing” that people do to millennials, which is like, oh, they lack patience and they’re entitled in all of this stuff, which is sort of like a standard criticism. But what was interesting when I was just reading this article the other day was that it was more kind of putting into context that, imagine you are 25, 30 years old, talking about how, a certain one of your buddies and friends are earning more than in their mid-20s. I mean, I guess to a certain extent you can’t get blamed because let’s say you’re looking at Mark Zuckerberg or any of these guys, you’re like, whoa, whoa, I have this tech titan who’s about my age, and he’s got $15 billion or whatever it is. I mean, how could you not feel a little like, maybe not entitled but feel a little kind of impatient to say, where’s mine if I’m looking at some of these tech tycoons that have done so well before they turned 30?


Zeke Waisel: Yep. And I definitely think it’s kind of a societal issue, where you have a lot of different jobs that need a bachelor’s degree, need one just to get in the door. And that’s good. But a bachelor’s degree costs anywhere from $40,000 to $200,000-plus. And if the parents can’t afford to pay for the kids, the kids then have to take out loans because that’s just the way of life. And now, you’re starting out a net negative, which is not what the generation older than me had to do. My parents didn’t start with student loans.


Matthew Peck: I had about $15,000. So, for people in their 40s, I can’t speak for Derek and Keith, I had about, yeah, less than $20,000 for sure is how much I exited college with.


Zeke Waisel: And it’s because student college debt has just grown much faster than inflation, much faster than savings ability. I mean, even if colleges started at 5% growth for inflation, but your parents were growing 5% every year, that’s still less because of taxes, right? You’re still paying taxes on that. It’s after-tax dollars. And if you can’t start saving now because you don’t have the extra cash flow, that makes it harder.


Matthew Peck: Yeah. Okay, so we kind of get a little bit couple of minutes, but it’s like– so you mentioned about budgeting and whatnot and everything else being equal. So, really, that’s where people should start, people should start looking at their budget. Is there a nice little tip as to– is it looking at their credit card statements, or what’s the best way for someone to get a handle on what their budget is?


Zeke Waisel: Yep, I mean, there’s definitely a bunch of different apps out there. Our financial portal allows for us to budget. The clients actually look through their budget categorized into each spending category. I’m spending this much on groceries, this much going out, maybe I need to cut that back. Maybe I don’t want to cut that back.


Matthew Peck: Do you ever do like percentages, where it’s like– so, someone comes to you with their budget, and you look at, he’s like, oh my goodness, you’re spending 20% for food, that’s outrageous. You should only spend 10% for food. And do you ever get into that type of granular level? Or is it more of, no, no, what’s your net?


Zeke Waisel: Yeah, I think it’s more about net because if someone’s a big foodie but then doesn’t have a car, doesn’t have any student loans, and doesn’t go clothing shopping at all, then that’s what they spend their money on. If someone really likes to travel, and they like to spend a couple of thousand dollars a year on travel but cooks every meal and spends under $200…


Matthew Peck: Yeah, brown bag, anything to…


Zeke Waisel: Right. Like that may be just, it’s what’s important to you. Let’s just make sure it’s not everything’s important to you because then you can’t achieve any goals.


Matthew Peck: Yeah. And then along those same lines, what is sort of like the first, second, third, if you will? So, in other words, okay, now, we have a net cash flow of 500 bucks or a thousand bucks or whatever it is. Is it 401(k) and get your match? Or is it Roth IRA first? Or is it debt? I mean, I’m not sure, it’s called a silver bullet, but do you have a pretty established, like 123 there? Or is it still just depends on a person’s situation?


Zeke Waisel: Yeah, I definitely would say the first piece at the same time is get that match from your 401(k), 403(b), whatever it may be, and pay down your credit cards. Credit cards are one of the worst types of debt you can have because it’s just such high-interest rates. Then, after that, with excess cash flow, now you talking about Roth IRA as you talk about maybe paying down some student debt, especially if it’s higher interest rates, even talk about, okay, now we can save towards a different goal. It just really depends on what your goals are before I actually tell you, okay, it’s a Roth, for sure, or it’s student debt, for sure.


Matthew Peck: It is something to where it’s like you’re passing on a deck of cards, redo the match, and then a little bit goes to the credit cards and a little bit elsewhere. Is it, no, no, no, get the match, then do everything into the credit card until the credit card is gone, and then start to move down the line from there?


Zeke Waisel: Yeah, I’d say it’s match minimum on everything, and then the highest interest rate from there on out. Usually, you get about 6% price at student loan, but then once you get under 4% debts, now we talk about, okay, maybe we actually invest that instead.


Matthew Peck: Okay, so it’s almost another version of the 4% rule if you will.


Zeke Waisel: A different 4%, yeah, you’re right. Between 4% and 5% debt, you can choose if you want to spend that, but anything under 4%, you’re pretty much going to get in the market in the long term.


Matthew Peck: Excellent. I kind of like that bookend. So, the 4% rule for all of our listeners, just so you know, and you’re probably aware of it, but there was no rule or sort of rule of thumb that they put around in the mid-90s that says, okay, as long as you’re withdrawing less than 4% of your portfolio in retirement, you should be okay, you should not run the risk of outliving your assets. But so, now, we have a new 4% rule, it’s the Zeke Waisel 4% rule, in the sense of okay, if your loans are over and above that, anything that’s over and above the 4%, knock that off first. And then once you get to the sub-fours on any of your outstanding loan…


Zeke Waisel: Mortgage, auto loan, usually, those two main ones.


Matthew Peck: Yeah.


Zeke Waisel: Mortgage and auto loans tend to be the ones under 4%. And those are good debt.


Matthew Peck: Good debt, yeah. And then at that point, you can start to put it away somewhere else. Or maybe now you’re putting more into your 401(k).


Zeke Waisel: 401(k) and Roth IRA, HSA, whatever makes the most tax efficient sense.


Matthew Peck: Cool. And then, yeah, just last question because I know, I was going to say about sort of like the headlines versus what’s actually happening in your experience, do people, a lot of your buddies and just acquaintances, have a lot of credit card debt? So, imagine student loans, yes, but credit cards, maybe not so much. Or are we still seeing some of the predatory action because it started in trouble if you think for a second, but I vividly remember when I went to college, and that was just like mid to late 90s and whatever, walk down as a freshman to the student union? And there were all these booths everywhere and all these like t-shirts. And it was just like, okay, all I got to do is sign this for a credit card to get a free T-shirt. And it was like, I love free T-shirts.


So, I think I ended up with like 16 credit cards or whatever it was then. I was sort of smart enough or raised well enough to be like, okay, I’m cutting this thing up, I’ll take my free t-shirt. But did you see people come out of college with a lot of debt, or not a student loan debt but credit card debt specifically, do you still see that being a big issue because you’re speaking for all millennials right now?


Zeke Waisel: Okay, no pressure, right? I think there are definitely people who still have that debt. I think what I see is a little bit lower levels but not really understanding what they’re doing by not paying it off in full. It’s really, I think of, an aspect from the credit card companies. They show you that minimum payment, and then they show you a statement balance, and then they show you an account balance. And there are three different numbers there and you’re like, what does all this mean? Minimum payment is what they’re going to make you pay before you get a thing on your credit, that’s it. You’re still paying interest if you pay the minimum.


Statement balance is the amount you owe to them at the end of that statement, the entirety of it. If you don’t pay that entirety off, you will pay interest anywhere from 15% to 25% plus annualized and compounded daily. So, you really want to pay that off every month. Use it like a debit card, take the rewards if you need to pay it off most times a month, so you know exactly what’s in your checking account, but you do not want to carry debt over, it’s very inefficient.


Matthew Peck: Okay. Now, it’s interesting. And then the last thing I was going to say, because trying to understand those statements is absolutely something else with all the different numbers that thrown at you at that point. And as I mentioned, I mean, the interest rates on those guys are just absurd. I mean, we’re still talking double digits, 18%, 20%. And then one thing I’ll leave you with, too, is, or ask you, is there a way of showing somebody to say, okay, hey, if you just pay the minimum, is there like a quick calculation where you can just say, alright, I have $5,000 in debt and my minimum is $50. And so, oh, by the way, if I just pay the minimum, it’s going to take me 31 years. Rather than $5,000, I paid $100,000. Is there any quick little calculation that people can do to kind of get an idea of how big the problem is?


Zeke Waisel: Yeah, you can actually look at the statement. They’re mandated to have to show that what happens if you pay it off in a certain amount of time, how much in interest will you be paying? That was a relatively new regulation that was required by credit card companies. The problem is statements are electronic. You don’t really see them anymore.


Matthew Peck: Right.


Zeke Waisel: You have to actively go into your bank account into your credit card company, download the statement, and then you see it on page 3 or something like that. So, you can see it, it’ll show you exactly how much you’re going to pay in interest, but it’s buried a little bit because they want you to pay that interest.


Matthew Peck: Right, yeah. That’s how they offset people that don’t pay back and everything else, while they’re able to give away all these…


Zeke Waisel: These rewards and all that stuff.


Matthew Peck: Yeah. And as I said to young Matt Peck, as he’s working his way through UConn like hey, son, we’ll give you anything you want. He has a credit line for 15 grand. And all we did was check my pulse at that point. But obviously, Zeke, thank you so much for joining. It was very informative. Obviously, I hope our listeners did, too. And folks, don’t be surprised if Zeke’s back, we’re going to try to make this as interactive as possible. So, certainly, if you have any questions for us or anything along those lines, you can reach out to Zeke or myself or anyone here at SHP Financial, as we’ve mentioned, just trying to be an invaluable resource for you, whether it’s retirement planning or beyond because income tax, healthcare, legacy, and investment planning, they know no bounds. You see what I mean? It’s not something that, okay, this only applies if you’re 60 years old. This applies clearly if you’re 20 years old, and some of these fundamental things to build, a solid foundation for your entire life should be sort of started as soon as you can. So, thanks for listening, and join us next week.


Zeke Waisel: Okay, cool.


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