The Sugar Daddy Podcast
Ready to normalize talking about money? Then welcome to The Sugar Daddy Podcast. Every episode will get you one step closer to your financial goals. Whether that is learning how to invest, budget, save, retire early or simply make better money choices, Jess & Brandon have got you covered in a way that's easy to understand, and easy to implement. Tune in as they demystify the realm of dollars, so it all makes cents, while giving you a glimpse into their relationship with money and each other.
Brandon is an award winning licensed financial planner, and owner of Oak City Financial, with over a decade of experience and millions of dollars managed for his clients all over the United States.
New episodes published the first three Wednesdays of every month.
The Sugar Daddy Podcast
101: Rip & Rant | The Truth About Taxes, Corporate Greed & Crypto in your 401(k)
In this episode, Jess and Brandon tackle the misconception of taxes, corporate greed and the new twist in retirement planning: cryptocurrency in your 401(k).
The path to financial security lies in addressing the real economic challenges: demanding fair compensation, understanding the true value of your work, and sticking with sound, proven financial principles.
If you want to stop falling behind and start building real financial security, this episode is your wake-up call.
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Yeah, and at the end of the day, it's not the taxes. Like I said, you go and look up the information. We are historically at an all-time low in the taxes, the various tax practices that we have currently Historical all-time low. However, incomes have not kept up with the increase of how much things cost. Nowadays. You have these companies that are laying off thousands of employees and then turning around and using that money to do stock buybacks. This is a corporate greed issue.
Speaker 2:Hey babe, what are we talking about today?
Speaker 1:Well, today we're going to do another little rip and rant. First, we're going to start out with everyone seems to be focused on taxes. Everyone's always about we're paying too much taxes, we're paying too high in taxes, but in all honesty, that's really not the issue. And we're going to go about Trump wanting to open up 401k plans to allow cryptocurrency and how. I strongly disagree with the premise behind doing that.
Speaker 2:All right. Well, every time I look at my paycheck, it feels like the taxes are the problem. So you tell me why they're not.
Speaker 1:Well, taxes aren't the issue. The reason being is, if you look historically over the past 100 years, that various tax rates. We are historically at an all-time low when it comes to taxes.
Speaker 2:So why does it feel like we're all broke?
Speaker 1:Because everything costs more and we're not getting paid more. So the taxes aren't the issue. The issue is the cost of inflation for everyday goods that we need. You know your groceries, whatever it may be on a daily basis that you're spending money on.
Speaker 2:That has increased dramatically and our incomes have not kept up with it.
Speaker 1:Yeah, I mean every time I go to the grocery store.
Speaker 2:I get angry because I walk out with like two bags and I'm like great, I have fruit and snacks for the kids for the next week. And why did it cost a hundred something dollars?
Speaker 1:so you think about it, man, like back in, like the 50s and 60s, you were able to raise a family of four on a single income with someone who has a high school, uh level of education and have a car, maybe two, and also be able to have enough money to eventually retire yeah, that's crazy so, and during that time period, income tax rates were significantly higher than they are now. That's true. Well, that's crazy. So, and during that time period, income tax rates were significantly higher than they are now.
Speaker 2:That's true, well, and that's also when people had, you know, mortgage rates that were 11, 12%. Yes, yeah.
Speaker 1:The problem that they want you to focus on. They want you to think it's the taxes. It is not taxes, it is income, it's salaries how much you are getting paid at work. Employers are not paying their employees what they should. They have these large corporations that should have been increasing incomes on a routine, on an annual basis, to keep up with the cost of goods, and they have not been doing that. Plain and simple corporations are becoming greedy and keeping more money and not paying employees what they should be paid. If we were to be paid what was on par in comparison to how much groceries, housing and everything like that has increased, we would be fine.
Speaker 2:Which is not an annual 2% or 3% cost of living increase, because the cost of living has increased more than 3% A cost of living increase.
Speaker 1:Because the cost of living has increased more than 3%.
Speaker 2:Think just purely off the past like four or five years.
Speaker 1:How much a house has increased, housing prices have increased and I should show you right there like your income hasn't gone up that much. All right, real quick. I want to speak to the person listening who feels like they can't work with a financial planner yet because they're carrying a lot of debt. First of all, I see you and I need you to know you're not broken, you're not behind. You're just in a tough season. I created something just for you because I've had people reach out who are serious about changing their money story.
Speaker 1:But the full financial planning package just wasn't the right fit yet. So I built a new service through Oak City Financial that's focused completely on debt reduction. No fluff, no shame. You'll get a one-time planning session, a personalized payoff strategy, your own financial dashboard and monthly coaching. If you want extra support while you climb out, it's $300 to get started and $100 a month. If you want that ongoing guidance, that's it. This is about helping you get unst100 a month. If you want that ongoing guidance, that's it. This is about helping you get unstuck, not making you feel like you failed. If this sounds like what you've been needing, go ahead and schedule a call with me. The link is in the show notes. Let's take the first step together, and that's the problem. But it's easier for politicians to say it's a tax issue, because then they're doing the work of the corporations and not paying you more Everyone's all like. I barely hear anyone talk about they need to be paid more. I hear way more about taxes.
Speaker 1:Oh, I will always feel like I need to be paid more what I'm saying, like in the media and everything like that, everyone's talking about taxes and I mean obviously tariffs is an issue. But, like the. Also biggest issue is that corporations aren't paying what they should be paying employees.
Speaker 2:Well, I even remember when I was teaching in South Carolina. You know you would get your 3% cost of living increase, but then health insurance would go up six or 7%, so like you're still losing money in the end. So even though you're getting your increase and the district is doing the right thing, the other portions that are coming out of your paycheck are increasing double, if not more. So then that cost of living increase literally does nothing like it feels like it's completely insignificant.
Speaker 1:Also. The thing is, too, is that you used to have a lot of benefit of being a loyal employee and sticking with one employer for your entire career. That does not exist, I can tell you right now. It's actually the opposite.
Speaker 2:Right, you're losing money if you stay.
Speaker 1:I'm not saying that anyone should switch jobs just to switch jobs. That's not what I'm saying, because there's a lot of other factors that go into determining whether or not it makes sense to make a move. But I can tell you strictly, from a monetary standpoint if you are not switching jobs every few years, you are missing out on drastic increases in your income. And that's just not. It's not an opinion, that's what the numbers show.
Speaker 2:But that also goes back to, and poorly reflects on, corporations. So instead of paying their employees what they should, instead of having them leave and having high attrition and then posting that same position. I mean you can go down hundreds of Reddit threads where people are like, oh, I left my job, I was asking for a raise, I had stellar performance reviews, and when I finally left, now they're like, oh, can you stay, Can you stay? And it's too late. And then they post that job for $30,000, $40,000, $50,000 more than that person who left was making, and they probably would have stayed for $10,000 more or $20,000 more or something less. Not to mention all of the cost in hiring, recruiting, the loss of time for onboarding. I mean you are losing huge amounts of money by not actively working to retain your talented staff.
Speaker 1:And I mean we've had friends who've been employed at the same company for 10 or almost 15 years and then they bring somebody new in. That's not nearly experienced. And you're the person that's going to be training them, and then you find out that that person is making the same as you are.
Speaker 2:Which is insane. But also listen. Here are my contributions. Here's what I've done over time. Here's what the market indicates. I should be compensated. Can you come up to this level right? If not, I need to make a change. That kind of conversation should be had. And if they can't you know, meet you where you are or come up with some sort of way to compensate you further, then you should go and leave to get paid what you're worth. Yeah, so there is like a cost of staying also and a responsibility cost, I feel like.
Speaker 1:Yeah, and at the end of the day, it's not the taxes. Like I said, you go and look up the information. We are historically at an all-time low in the taxes, the various tax practices that we have currently Historical all-time low. However, incomes have not kept up with the increase of how much things cost. Nowadays. You have these companies that are laying off thousands of employees and then turning around and using that money to do stock buybacks. This is a corporate greed issue.
Speaker 2:And paying the C-suite millions of dollars in bonuses.
Speaker 1:It's not too much that's being taken out of your paycheck for taxes. Now we could have a conversation about like I don't like what my taxes are being used for. That's a completely different conversation. But the fact that people are upset about how much comes out, you're missing the mark.
Speaker 2:Well, yeah, and it makes sense, because if what was coming out was commensurate with what things cost and it wasn't so inflated, then it wouldn't feel as bad as it does. Like you said, I mean, even growing up, you know like my parents didn't earn a lot, but we had a house, we had two. Once I started driving three cars, we went on vacation Like there's no. I mean I don't understand how people who have, you know, a four-member household, like how are you surviving on anything less than $100,000 a year? And I mean and the majority of the United States is doing that, obviously but like how it's tough.
Speaker 2:I mean it really feels like a slap in the face. It's awful.
Speaker 1:Yeah, and it's just getting worse.
Speaker 2:It's just getting worse.
Speaker 1:Yeah.
Speaker 2:So anything else you?
Speaker 1:want to say about that. It's not the taxes, it's not All right, it's not all right. So on to the next one. They are proposing allowing cryptocurrencies to be a part of your 401k plan?
Speaker 2:did it already go through?
Speaker 1:um, honestly, I have to double check.
Speaker 2:I was under the impression that I thought it, I thought it passed, but well, either way, terrible idea terrible idea and the thing is, I'm not someone who's against cryptocurrency.
Speaker 1:We have cryptocurrency, but within your 401k plan, I think it proposes a lot of issues that could arise. Number one issue is that I've always said this, you always said this, we've had conversations and we sit on this podcast millions of times Sound financial planning and investing 99% of it is boring.
Speaker 2:And slow.
Speaker 1:Slow, and boring. It's not sexy.
Speaker 2:It's not sexy at all. You don't talk about it at the dinner table Like, ooh, what's my ETF doing? What's your index fund doing Like no, nobody's saying that.
Speaker 1:And that's how you're honestly, that's how a majority of your investing should be and that's especially how the investing should be done within your 401k plan. The problem I see happening is that cryptocurrencies is sexy. It's fun to talk about. So what I see happening is that it makes people feel important. Do you have crypto? Are you?
Speaker 2:doing anything in crypto.
Speaker 1:But it leads me down the path that I think, unfortunately, people are going to put way too much money into cryptocurrency rather than the standard investing that is safer and more time proven. So you're going to end up having these people that are putting all this money in cryptocurrency. You're going to have all these large fluctuations. You're not going to have the proper building of your investment over time to get to a point where you do become work optional.
Speaker 2:Well, so we're not going to be auto-enrolled in this. We're still going to have to go in and choose.
Speaker 1:No, that'd be even crazier.
Speaker 2:Well, would you put it past anybody in this?
Speaker 1:Normally the auto-enrollment. The only thing that you're normally auto-enrolled in when you have your 401k plan is a targeted fund. Okay, and a targeted fund is simply a fund that holds various investments and it's based upon your approximate year that you would retire.
Speaker 2:And it usually what puts in like 65?.
Speaker 1:What do you mean? It puts in 65?.
Speaker 2:Like as the target date. I mean, I know you can adjust it, it, but I feel like it auto, sorry.
Speaker 1:The age, yes, the age the age as far as would you retire? Yes, and what it is is that it starts out more aggressive when you're further away from that target date of retiring and as you get closer and closer to retirement, it gradually automatically changes over time from being more aggressive to being more conservative because you're getting closer to the time period when you would actually be using the money. That's what they normally would auto enroll you in. So hopefully it wouldn't be cryptocurrency, but like it's just.
Speaker 1:I always say there's an order of operations, like I'm not against cryptocurrency, I said before but you need to have a lot of other things in place, I think, prior to taking a dive into cryptocurrency, you do need to be doing the vanilla, plain old, boring investing within your 401k plan. You do need to make sure you have your emergency fund. You need to make sure that you're not you know you don't have credit card debt and stuff of that nature. So you do need to address these other things and I think cryptocurrency putting cryptocurrency in your 401k plan is bypassing all those other sound steps that you need to take prior to it.
Speaker 2:Okay, what would you say to the people who are like, nah, I want the cryptocurrency. I would say, I would say do what you want to do, but then don't.
Speaker 1:Don't cry and whine when it doesn't work out. Okay, what?
Speaker 2:about like do you think that we'll be able to do like a percentage like oh, 5% of my contribution goes to a crypto bucket?
Speaker 1:Yeah, I think you would. Yes, you would definitely be able to break it down like that more than likely.
Speaker 2:So maybe doing something like that is reasonable. What would you say?
Speaker 1:What I'm saying is that I'm talking about the potential hazards that are being opened up that could be avoided Because, like you should be, invest the way that a 401k plan works. Now you should be investing in the more traditional ways of investing within your 401k plan. Now, if you want to do the alternative investments or the more speculative investments, take the time to understand them and open up an account somewhere else to do those.
Speaker 2:Okay.
Speaker 1:Because, like you're not, it's not as if, like if we don't have access to cryptocurrency in your 401k plan, it's not like you don't have access to cryptocurrency right, right, there's a million other ways to do it. I just don't think it needs to be there. Okay, because the purpose of that granted, we can have another conversation where 401k plans was the way of getting rid of pensions and making individuals responsible for their own retirement planning. That's an easy outlet for people to F it up.
Speaker 2:Yeah.
Speaker 1:Because people already mess up enough stuff on their own, and now you're just making it easier for them to mess up more stuff. Now, granted, I also think that obviously he's doing this because Trump has his own investments in cryptocurrency companies, so I don't think it's. Oh, I want to help people grow their money through cryptocurrency. No, I want the stock value of my investments in crypto companies to shoot up. You really have to think about, hey, what is the purpose behind this? It's not to help you.
Speaker 1:Because you already have access to cryptocurrency everywhere else Right. This is for his friends that have those companies to help increase their stock value, pure and simple.
Speaker 2:That's it okay. So you're saying zero out of five stars, do not recommend no don't go down that rabbit hole not in your 401k plan. No, okay, okay. I mean I'm sure people saw that announcement and were just like salivating at the mouth.
Speaker 1:I have have no doubts because most people majority of people aren't sound financially. They also don't have like they also don't have the certain level of financial literacy. That's just the reality. It's not me trying to come down on people.
Speaker 2:Yeah.
Speaker 1:But that's why.
Speaker 2:I'm personally always super happy when I log into my Fidelity account and I look at my 401k and I'm like, okay, I'm glad I have that, because I don't think about it often. It's very boring, I know we, you know, we set up my new one to make sure that it's optimized. We did not do the target date fund because it wasn't aggressive enough right for where we want to be, and so, yeah, I mean, why take the uncertainty out when we have time? Proven, nice, boring ETF index fund investing Also think about this.
Speaker 2:I would say a majority of people don't understand their 401k plan as it is currently structured.
Speaker 1:Well, we have a whole episode about the 401k specifically, but majority of people don't understand their entire 401k plan, all the different options and the features of their 401k plan. They don't understand it as it is now Right. So now adding a speculative investment to the lineup, it's just going to add to the level of complexity that people don't understand, like even a majority, unfortunately, a majority of people that are invested in cryptocurrency don't understand it.
Speaker 2:Right.
Speaker 1:Like currently. So now you're just going to add to that and that's going to put more stress. And think about it. Now, like currently with social security, the issues there, that is it going to be around when we need it, who knows? So now you need to actually take even more onus to make sure that you are doing what you need to do in order to become work optional and retire one day, and this is not going to help that.
Speaker 2:Right, yeah, I mean, like you said, it's risky right? So whenever you're investing in something that is risky, has not stood the test of time, you shouldn't be putting your eggs in that basket, because you could be losing those eggs.
Speaker 1:And, like I said, I am not against cryptocurrency. For anyone out there that's listening to this and think, oh, he's just a hater on crypto, no, I've been in it for years. I also did a lot of research and understand it.
Speaker 2:Well, but it's also I mean, think about you know, being an angel investor right. Or like investing in startups. I mean you, it's great, and like being an angel investor is amazing if you can do that. But like it comes with a risk, it could pop off and you could be like, yes, this was amazing. Or it could be like, oh, I lost my money, and I mean we've recorded episodes about that Like, if you are going to miss that money, probability of you losing all your money you need to be investing money that you're not going to miss Right.
Speaker 2:I personally would miss all of my money.
Speaker 1:So, for example, if you've done everything else, if you have everything else in order, 5% or less going into speculative investments like cryptocurrency is fine Because, mathematically, if it went to zero, as long as you have have 95 of your other portfolio where it should be, you'll be fine. But you could that that five percent could, you know, exponentially make a big difference and having a lot more growth. But at the end of the day, if you lost it, you're still fine, whereas I think most people, honestly, are currently investing money that they that they would not be happy if they lost. They would miss it and they would probably alter how they're able to live their day-to-day life. And then now just add to that when you're talking about a 401k plan where you are just now possibly losing money that it's going to completely alter when and if you can retire.
Speaker 1:Correct.
Speaker 2:Oof. Yeah, I'm not playing around with my retirement because I want to retire as soon as possible. It doesn't need to be done there. That's my point.
Speaker 1:It doesn't need to be done there. Order of operations. Stop Like. Sometimes you've got to put up guardrails to help people to lead them down the right path, and this is taking down those guardrails. Yeah, but I think For the sake of Trump, putting money in his pocket. I was going to say but think about where the source is. So, yeah, yeah, any other rip and rant today, hun.
Speaker 2:No, that was that's. I think that's enough. That's enough for today, okay, all right. Well, you heard it here first. Taxes are not the problem, and maybe don't go down the crypto 401k rabbit hole and just stick with the plain, boring, time-tested investment, especially when it comes to your 401k and your future retirement, because your future self will likely thank you. We'll talk to you soon, don't forget. Benjamin Franklin said an investment in knowledge pays the best interest. You just got paid Until next time. Podcasts yo Learn how to make them pockets grow.
Speaker 1:Financial freedom's where we go.
Speaker 2:Smart investments, money flow. Thanks for listening to today's episode. We are so glad to have you as part of our Sugar Daddy community. If you learned something today, please remember to subscribe, rate, review and share this episode with your friends, family and extended network. Don't forget to connect with us on social media at the sugar daddy podcast. You can also email us your questions you want us to answer for our past. The sugar segments at the sugar daddy podcast at gmailcom or leave us a voicemail through our Instagram.
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