595 | Value Matrix Case Study Series: Part 2 — Required Bloat

20:45And now, all right, Brad, can I just, can I gloss through that? And just as we go forward and just say 170 or do you think it's worth? All right, cool. So their current annual spend was about$170 ,000. And then now after going through this process, Brad, walk me through what sort of savings they were fine just by focusing essentially on this review category. Yeah.

21:03Jonathan Mendonsa:So like we talked about with a lot of those insurance savings and the phone savings, it looks like they saved about$800 a month. So that's about 10 grand per year annual savings. It's a little less than that,$9 ,700. That means when you multiply that amount by 25, they reduce their fine number by almost a quarter of a million dollars, which is really not nothing. Of course, that's a fantastic thing for just these few items that were in those review and probably at its essence six to eight phone calls and they saved quarter of a million dollars on their fine number. And Jonathan, that was just low hanging fruit.

21:42Jonathan Mendonsa:They still have all of those fixed expenses, which, as you know, are not quite so fixed. Yeah, exactly. So, you know, as this couple finishes this exercise and is excited by just the quick wins, but also they recognize that it wasn't discretionary. They might even end up spending more indiscretionary at some point in the near future. But the issue wasn't just what it is, is they have kind of locked themselves in, but locked themselves in isn't exactly the full picture. And this is why as we proceed through this, we're staying very focused on one aspect on a time, but we're building. And so what do I mean by that?

22:16Well, they have debt. Debt was a big part of the expenses that we cover. When we talk about required bloat, daycare has an end. Debt can have an end. And so this exercise, as you go through it, they are excited to get back and do this again next year and see what was fixed. Is it still fixed now? As we do this audit again, they're not just going to leave it forever. How do we like knowing that all of our economic output is just going to debt service payments? Do we want to stay in debt the rest of our lives? Or do we want to put that money back to work? So as we kind of build on this exercise and we now start talking about debt payoff strategies, Brad, As we go to a new tactic, we're going to start to have a timeline where you're going to see potentially a million dollars come off that expected fine number.

23:01Just as you start to have time bound expenses that are coming to an end and debt service payments that are also coming to an end. And now with this value matrix in mind, they finally get to put that money to work. Yeah.

23:14Jonathan Mendonsa:And that'll be really interesting for all of these case studies and all of us who are running through this expense audit and value matrix is to see, okay, what does my fine number look like now? But you can also project forward because very many of these expenses are just simply not going to be there. For this family, the$850 a month for car payments, like you were saying, that's the debt you were talking about, the$1 ,800 a month for the daycare, the$500 a month for college savings, right there, that's$3 ,150 per month, almost 38 grand times 25. That's basically a million dollars off their fine number just from those three things.

23:56Jonathan Mendonsa:So their fine number is cut by a quarter just from those three things. And then, I mean, frankly, Jonathan, you look at their housing expenses, what was it? 50 to$60 ,000 a year. That's not nothing, right? I mean, it's full of choices, man, but you do get one life. So the YOLO aspect is on the one end, but the other aspect is you're locking yourself into an outcome at the same time that the world has never been more untethered. You are no longer required to work right next to or live right next to wherever you work. If your value matrix is all aligned, but talk about, you know, yeah, you're not going to fix that tomorrow.

24:35You're not going to solve that tomorrow. But are you never going to inspect it again? I don't know. I think someone that's taking the time to do a value matrix might very likely keep looking at that in lieu of other options. And anytime someone says something is fixed, like, oh, there's nothing I can do about this. Isn't it cool that there's a community of people that have interacted with that same decision tree and found other options and can share them with you? So you have the benefit of knowing everything that you don't know that you don't know.

25:05Jonathan Mendonsa:Love it. I'm kind of excited, man. We're going to do another case today. We might even get through all three. We will. We will die on this hill. Okay. What happens when you've already cut and your required costs are reasonable? What if you're already doing it right? All right. That's case number three. So Brad, we're going to go ahead and take a look at this case and we're going to do a different breakdown. Why don't you go ahead and introduce the categories and the groups and the spendings for these individuals? Sure. This looks like a couple who's almost there. Their annual expenses in total are about$50 ,000.

25:36Jonathan Mendonsa:So this looks much more like the old school prototypical FI number. Their housing costs monthly are$1 ,600. So that looks like$1 ,200 a month in mortgage, some property tax, some home insurance, some maintenance from Paris that adds to$400 a month. Transportation of only$235 a month. So no car payments, just gas and car insurance and a little bit of maintenance. food and dining is remarkably locked in 600 bucks a month for two of them that's very much on the lower end jonathan of what we thought was that reasonable back of the envelope number so they're right in there utility is of 300 a month including their phones which are only 50 a month total so our normal go-to is not their insurance they've got it doesn't look like they have life insurance So that's an interesting point that we could talk about.

26:32Jonathan Mendonsa:When you're at FI, maybe life insurance isn't quite so necessary anymore because really at its essence, what term life insurance is, is someone who relies on your income in the untimely case of your death, then they would get this money to essentially make up for that. But yeah, if you're at FI, it doesn't look like these people need life insurance. So they have a small umbrella insurance policy, which makes sense for many FI people. Health insurance of about$400 a month looks like they contribute to either an HSA or an FSA. So that's 300 bucks a month. So very small prescriptions. Personal items are pretty locked in on 200 bucks a month.

27:13Jonathan Mendonsa:Same with entertainment. It looks like some streaming services, some audio books, some movies, you know, just a normal. normal life. Their travel and vacation is small. Also, we have to assume they are using travel rewards points, no debt, which is wonderful. It doesn't look like they have kids or pets, so$0 there. And then it looks like they donate about$2 ,400 approximately a year and give gifts. So about, yeah,$3 ,000 a year in donations and charity. Okay. So a total monthly expenses, about$4 ,200 a month, total annual spend of about $51 ,000 and then a two-person household. So a per person annual of about$25 ,500.

27:58We're going to take all of that and we're going to go ahead and go into the value matrix. All right, Brad. So I'm taking a look at what they did when they got to the interface in terms of making decisions around required expenses. As you would expect, insurance made it into the review category, mortgage and property tax were fixed, and then they had your variable stuff. but they made no changes here. They documented it. It's there, but once categorized as required and put in the right category, they moved directly into the value matrix. And at this point, we're taking a look at where they put things.

28:32And they put high joy, low cost, dining out, 120 bucks a month, coffee and snacks, 25 bucks a month, clothing, 40, haircuts, 25, hobbies, 80 a month, fitness and gym, 30 movies and concerts, 60 books and audio books,$20 a month. You went through all the prices, but flights, vacation, spending gifts, donations to charity, everything was in high joy, low cost. And by the way, again, high joy versus low cost and high joy versus high cost is again, a subjective decision about whether it's high or it's low to you. I mean, I look at it and, and, you know, we might have different numbers in mind, but they put everything in high joy, low cost.

29:08They put three items in low joy, low cost. And that was personal care, subscriptions and streaming services. And Brad, they chose to make just a couple very modest cuts.

29:19Jonathan Mendonsa:Yeah, but certainly not nothing, right? Personal care, it looks like they dropped it from$45 a month to$15 a month. So saving$360 a year subscriptions that probably looks like, and we mentioned this on the last episode, 592, about, hey, you don't have to have all of these streaming services or subscriptions all at the same time. In this day and age, you can just cancel some and binge or stream an entire series and then just pick up the next one. It looks like they did that with a bunch of subscriptions and streaming to the tune of, it looks like$60 a month they cut, leaves them with$30 a month in spending, and they cut 60.

29:59Jonathan Mendonsa:So these are, of course, not huge numbers. Jonathan, as we went through their budget and their value matrix and et cetera, there's not that much room. These people are pretty optimized. Right. And the key here, I think is, you know, they found a thousand dollars a year of savings, but I doubt they got here by accident. I doubt this was the first time that they've inspected what they're spending their money on. This is more of an upkeep type thing. And they just noticed, Hey, these expenses are hanging out, but I don't really, yeah, we should just cut that. Right. And they're doing this almost as a form of practice, so they're not finding much.

30:31But here's the big thing from three cases that we've done up to this point. Have you noticed that actually all we needed to interact with to be able to do this exercise was focus on just expenses? This gives us no insight into income or net worth whatsoever. But what we do know is that when your expenses are optimized, like they are in this scenario, then income earned and increases in income can go oh so much farther. So we've walked through three case studies and we're about to go into another one. What we know is this individual is very, this couple is very locked in on what it is they're choosing to spend money on, which means that their economic earnings can go towards the life they want to have.

31:17They're reclaiming their most precious non-renewable resource, their time. What you spend, Brad, to give this back to you, what you spend does not reflect your net worth for the vast majority of individuals out there.

31:28Jonathan Mendonsa:Yeah, certainly here in the FI community, they are absolutely locked in. You talk about you can live a really optimized, wonderful life. In this case, they're spending about, after they made these small cuts,$50 ,000 a year. That means their FI number is a little more than$1.25 million. dollars. That is a really attainable number for a lot of people who have been following the path to five for 10 to 20 years. Of course, depending on your savings rate, et cetera, et cetera. But for living a five life, that's pretty accessible, Jonathan. That's what's cool. And like you said, if they are still in their working years, these people are almost there.

32:08Jonathan Mendonsa:So we have to assume based on what they've told us that they haven't pulled the trigger yet. any raise just gets dumped into savings and investments and it just, it keeps on rocking and rolling and compounding. I mean, we've seen incredible growth in the market over the last number of years. It wouldn't shock me if these people look at this value matrix and say, oh wow, it's so nice to see this on paper, on the screen. And just maybe we're already there. That wouldn't surprise me at all if we get the FI scream after this. Yeah. And it's kind of like, okay, you've spent enough time here. You can move on, right?

32:43Check the locks and go, we'll do the audit every year or so. And just we'll make sure we're following our values on this stuff. Good job. You're done. You don't need to overthink it. That's incredible. And it's not to say that anybody else needs to strive to hit this number. But what I can tell you as I look at it, you know, myself and as we kind of look at it as, wow, that's dialed in. They don't need help from a group to figure out how to optimize their expenses. they are dialed in.

33:10Jonathan Mendonsa:Yeah. I just wanted to take a quick aside since we mentioned umbrella insurance a couple of times. I just Googled this just to get the exact quote from Geico, let's say, of what personal umbrella insurance policy is a type of liability insurance that provides additional coverage beyond the limits of homeowners, auto, or other personal insurance policies. It helps, this is the critical part, it helps protect a policy holder's assets and future earnings from major claims or lawsuits. That's why that type of policy is especially applicable for people in the FI community who have significant assets.

33:43Jonathan Mendonsa:I know in years past, of course, I mentioned at the outset that my umbrella policy just went up significantly. But for many years, and I suspect for many people, an umbrella policy costs a couple hundred dollars a year for$1 million of coverage or$2 million of coverage. That's probably worth you calling up your insurance company and just getting a quote on because that's a really nice peace of mind thing, especially for us in the FI community who have built assets. Again, if you could sleep well at night for 10 bucks a month or 20 bucks a month, that seems like probably something you want to look into.

34:18Oh man, I have trouble getting up in the morning. All right. But here's the thought that I had. Actually, you know, we're talking about insurance, insurance products, but you kind of mentioned this in passing, this idea of actually being self-insured. I'm talking about life insurance, not with the umbrella insurance, but here's a pretty cool potential milestone or checkpoint the individuals hit. It's this idea, right? You don't necessarily need insurance for your whole life. So you know how we used to talk about various checkpoints that people could hit and how to let us know when they hit them.

34:47This could be a fun one. Hey, I realized that I am self-insured and I made the decision to drop my term life insurance policy. That would be a pretty cool milestone for individuals that actually recognize that. And if we saw that as a pattern.

35:04Jonathan Mendonsa:I like that. I like that a lot. Right. That is a milestone, certainly on the path to five when you realize, hey, look, this served me. And that doesn't mean it was wasted. All those premiums you paid. It's a bet. You want to lose, right? That is a bet you very much. Yes. You're only winning it from the grave. Let's hope that doesn't come to pass. That is definitely a bet. And that wasn't wasted. Those premiums were not wasted at all. You were locking into a contract that would have paid this death benefit. And yeah, this is great. Not only did I not die, which is, of course, the biggest part. but I'm at the point where nobody relies on my income anymore because I have enough assets to cover.

35:41Jonathan Mendonsa:We're, we're at five. That sounds pretty good to me. All right. Well, if anybody has that one and wants to share it as a win, we could feature that voicemail on an episode in the future. I think it's pretty cool. So if you agree, let us know. We'll cover that win for you. You can now leave comments on these episodes. Choose about a com slash five nine five. That'll take you to the page where you can leave comments. You can comment on these scenarios and these particular people, any other things that we missed, that wouldn't be a bad place to talk about canceling your term life insurance, I think.

36:09Yeah, very cool. All right. Hey, I know you didn't think I was going to get to the third case, did you? You were ready, but here I am and we've got time. So let me set up. This was the hook that I had at the very beginning. Does anybody get that term? It's all right. This is this little pivot on the idea that's so interesting that you're going to want to stick around for it. Brad, for this third case, let's go ahead and go through the category groupings, I'll just quickly mention the highlight reel and then have you pop in with some insights. So for housing,$2 ,100 a month. For transportation,$690 a month.

36:42Food and dining, $770 a month. Utilities,$448. Insurance,$620. Healthcare,$360. Personal spending,$95 a month. Entertainment,$130 a month. Travel,$150 a month. No debt. Children,$980 a month. Pets,$85 a month. And then miscellaneous,$1 ,400 a month. And then for this couple, it's 2.5 effective people in the home. So there's probably a child involved.

37:16Jonathan Mendonsa:okay when you add that down that's about ninety four thousand dollars a year in spend it's interesting when i'm going through this i'm looking at these categories and thinking they're much more like the prior example with the case of almost there because a lot of this stuff looks pretty locked in i mean twenty one hundred dollars a month is not unreasonable for housing at all transportation it looks like they do have one car payment at three hundred and fifty dollars a month which, you know, of course is not ideal, but that's a necessary thing for some people. And I suspect that's something that could easily pay off.

37:51Jonathan Mendonsa:Their food is locked in. They're under$800 a month for either two or three people. Utilities of 400 and change a month. I mean, nothing looks terribly out of the ordinary here. Health insurance, you know, that again, for a lot of us, $550 a month for two or three, not unreasonable in the United States. Yeah. I mean, we're going down this. They don't have, they don't have a ton here. You get down to, to really two categories, children. We've got$900 a month in childcare or daycare. So that's yeah, almost$11 ,000 a year, which is not insignificant. But as we said, that is a season. Most families who have childcare daycare, that's going to be a five-year at most type expense because once the child goes to kindergarten, that should be reduced significantly.

38:42Jonathan Mendonsa:And then, yeah, really the big thing is, interestingly, donations or charity of$15 ,000 a year. So, I mean, that's almost, not quite, but that's probably what, 17 % or thereabouts, I'm doing the math in my head, 17 % of their annual budget comes from donations and charity and gifts. Those two categories alone, that's what, $28 ,000 and change on a$94 ,000 annual expense. That's 30 % right there. I'm really excited about this case study. I think that giving is something that happens a lot in the financial independence community, and there's a lot of ways of talking around it and about it. And I think this is going to be a wonderful case study for us just to explore it a little bit, because there is some nuance and some complexity and there are some various approaches to it.

39:31There is not necessarily a right way, but I do think there is a lot of power in being intentional about it and thinking about it through the lens of discretionary spending, but the value matrix, the value matrix. The one other thing I wanted to point out is when we're talking about car payments, I know it's easy to kind of feel like maybe that there's a judgment attached to you if you had to do a car payment or not. But I also know that a lot of us probably like at various times maybe have had the money to buy a car and made the choice to finance a car. And I think the interplay of the intersection is not, you know, maybe you went to CarMax to get the car and you realize that actually for you to bring the cash there, to do the cash there or to write a check or whatever, you didn't have it all strategically set up.

40:16But you realize you could finance it that day. And now it's been a couple of months later and you're like, well, let's just go and pay it off. I think the main point here is in the United States, we're so good at marketing that a lot of people end up in cars where they can only afford the payment. They can't afford the car itself. That's the fundamental trap that you want to get out of. If you've made a decision, you could have gotten the price on the car, but you made the choice to lock in the 1 % interest rate for four years at X, Y, Z, and maybe you're going to pay the car off at some point in the near future.

40:47And you have the means to do that. That's kind of a, that's just a personal decision, That's a choice on your part. And you might have made a smart, quote unquote, economic choice. You're not failing at five because you have a payment. But in general, as a pattern or a practice, if you have a lot of line items that represent consumer debt and you don't have a short term strategy to get that cleaned up, well, that's going to take more of your energy, your economic energy, than mapping out your path to financial events. because we have to solve that first one way or another before we can start getting the flywheel working for us.

41:23And so there's a nuance there and we're going to be doing a full on debt episode, but I just wanted to add that additional context for individuals as well, Brad.

41:32Jonathan Mendonsa:Yeah, I'd like that. And I think it's also important that when we look at a point in time, we look at our annual expenses and we multiply by 25 and we come up with our fine number. It can misrepresent in some small ways. Like this is a perfect example. They have a$350 per month car payment. So you multiply that by 12 and then you multiply that by 25. That looks like their fine number needs to be increased by$105 ,000. But realistically, if this is a five-year loan, a$350 a month car payment is probably 20 to$23 ,000 on the actual loan. I got episodes planned for this. I'm doing it off the top of my head, man.

42:15Jonathan Mendonsa:Come on, Give me a break. All right. We'll do that in the future. But nevertheless, I mean, it's a really interesting thing. There are seasons. And I think that's what we've talked about in this episode. So yeah, to be continued. So Jonathan's giving me the evil eye here. You're talking about effective need and time bound expenses. Like, yes, yes, absolutely. We will get there. And that's why you're staying tuned for the ultimate crowdsource personal finance show, because we will. But in today's episode, we're staying focused on this last case. And if you're going to delay your financial independence number for any reason.

42:46How cool is it when it's giving?

42:48Jonathan Mendonsa:That's a pretty good reason, especially if the giving also, you can say truthfully, it brings you joy. So that's what we're going to do. We're going to go into the value matrix first. We're going to take a look at how this mapped out for them. So we took the expense audit and we went ahead and applied it to the required interface. And we're not going to spend much time here, but basically all the stuff that you can imagine, insurance all went into the review category. They didn't make any choices about that. Maintenance and groceries and all that type of stuff all made it into variable. The only things they identified as fixed, to your point, was the time-bound car payment, which is fixed right now, but not forever, the property tax and the mortgage.

43:29Nothing's going to happen with that. And in their case, probably next year, nothing's going to happen either unless they don't need to optimize it. And the car payment is its own conversation. So really in the absence of everything that they categorized as required, we're going to go ahead and see what made it into the discretionary value matrix. And Brad, again, it's pretty cool when everything that they're spending money on is showing up as high joy.

43:57Jonathan Mendonsa:Yeah, this is pretty fascinating. There are 12 of these items and when they categorize them, they put all 12 of them in high joy. That's really an astonishing thing. And when you go through an exercise like this, you never know, frankly, like that when you sit down either by yourself or as a couple and you go through this, wouldn't it be cool if every single item showed up as high joy? I mean, wouldn't that just really show that you're living in a line life? Regardless of cost, right? Just think about that in terms of, I wasn't even, I hadn't even mentally gotten there. If you remember two episodes back before we had the benefit of looking at this through practical case studies, we were talking about, okay, well, yeah, it's pretty cool when it's high joy or a low cost.

44:40And it's also pretty cool when it's, it's pretty obvious when it's low joy, high cost, but now the ones in the middle are the high joy, high cost and the low joy, low, because we were basically talking about how you have to make decisions because yeah, it's high joy, but it's also high cost. But I think to your point, you're highlighting right now, how amazing is it when there's nothing in the bottom quadrants?

45:00Jonathan Mendonsa:It's great. And I think we're all just trying to live better lives here on the path to fi. If you're locked in, that doesn't mean of course fudge this and just dump everything in high joy. We're not saying that at all. It's just, Hey, you look at this and you can honestly say everything fits in high joy. That's pretty good. So yeah, nine of their 12, they put in the high joy, low cost, and it doesn't look like they're decreasing any of these amounts. So dining out coffee, snacks, clothing, haircuts, grooming, streaming, hobbies, et cetera, fitness books and activities. They're pretty content with that.

45:32Jonathan Mendonsa:And then, yeah, you get to this other one, which is high joy, high cost. And they've got vacation spending, which they have$150 a month. So$1 ,800 a year. That doesn't sound like too high cost to me personally. I probably would have, if it was me, I probably would have put that in high joy, low cost. And then, yeah, it really does come back to these items that we were saying, which is gifts and donations and charity. And that adds up to $1 ,400 a month or about$17 ,000 a year. They have that in high joy, which is really nice. This is one of these really, really interesting opportunities. They were saying our life, we're focusing on high joy items and we've made very intentional choices.

46:11And as we look at it, there's nothing that we need to make a decision on at this point to change.

46:17Jonathan Mendonsa:We don't feel compelled that we need to find any additional savings. There is definitely things that they could, but they would then be going into things that they have said after inspecting them are bringing us a lot of joy. Now, this is the really interesting thing. Let's just say, for instance, that they just chose to cut their giving. Forget the birthday gifts. We're just talking about their giving. We're going to cut it. And we could save$15 ,000 a year. Well, that means just that one choice that's going to take their current fine number from 2.35 million down to$1 ,979 ,400. That's$375 ,000 less that you need to save.

46:58Do you know what? They value this. This is an important part of their life. And they are excited about the idea of delaying financial independence, reading some number to not only, think about this, think about this, to not only be able to continue giving now, But when they reach financial independence, to be able to continue to give on the other side at the same level as they are today. This is what makes it so interesting for the financial independence community. When we're thinking about how to give, there are so many wonderful frameworks that are out there. There are individuals that want to leave something, you know, after they're done using it to something of their choice.

47:39There are individuals that have various tactics on when to give it and when to help children and different causes and charities and different activities that they want to invest it into. And these are personal decisions. But I will tell you that if giving is not at all part of your framework, you're going to run into another problem, which is hoarding. And you should see Uncle Frank from Risk Parity Radio talk about hoarding. He tends to use all caps. And this is the problem when you're so good at being frugal and so good at being optimized and your hands get gnarled into knots at your ability to keep every penny locked in your hands, you can never let it go.

48:20You can never walk away from your job because you can never see a number go down because that's a negative KPI number, right? When you have opened up your hands earlier to share in any way that you choose to do it, you are going to deftly avoid this feeling of hoarding as it comes to the point in time where you're going to go from accumulation to drawdown. You are going to bridge the gap and you're going to feel a lot better about your choices all along the way. I have a lot of, some of these, not the right word, but I can commiserate or I can appreciate the choice that this individual did, even recognizing, yeah, they could reach financial independence faster.

49:04Sure. And they could have a better looking savings rate number, but you know what? They have built in flexibility right now, built in flexibility in their financial independence number to the degree that they value this and are able to do it. They want to prioritize it now and in the life they want to build for the future. Yeah.

49:24Jonathan Mendonsa:And of course, you're not going to say this about yourself because it sounds like it's posting, but I know giving to charity and giving to your church is a significant part of your financial life. This is something that's very personal for you. I think this is a significant aspect of a lot of people's path to find. I know we had an amazing episode a couple years back, episode 483, and it was called effective giving for the five community with Rebecca and Jack. Jonathan, that was one of our most well-received episodes. I got countless emails over the years. I mean, literally years about that episode.

49:56Jonathan Mendonsa:Actually, Rebecca has a wonderful site called yieldandspread.org. She has something she just came out with called the Philanthropy Pledge. So this is to be continued, but you can certainly check it out. We'll put a link in the show notes. And like we've talked about over the years, there are always ways to optimize things. That's the nice part is clearly giving to charity is very important for many people in the FI community. And we're not going to spend a ton of time talking about these strategies necessarily, but donor advised funds are an interesting way, especially if you want to, again, you are someone who is on the path to FI, you have significant assets, you can optimize a little bit.

50:35Jonathan Mendonsa:So it might look like giving two years of your charitable giving in one calendar year to maybe get over the standard deduction for your tax return and actually get some tax benefit from giving. Now, of course, you're not giving to get a tax benefit. That would be preposterous. But if you are giving, why not get a tax benefit? Because frankly, the beautiful part about our tax system now is our standard deduction is so significant that over 90 % of tax filers don't get itemized deductions. We just use the standard. But what if it looked like, Jonathan, for you, What if it looked like you giving to your church for both 2026 and 2027 in December of 2026?

51:19Jonathan Mendonsa:Okay. That, that might not be so bad, right? And you, you would get over that standard deduction. Another interesting thing is you can donate appreciated stock to charity. This is a really nice one. So let's say you have$10 ,000 worth of stock that you bought for a thousand dollars. Okay. You have a$9 ,000 unrealized long-term capital gain in there. You can actually, for most significant nationwide and worldwide charities, you can donate appreciated stock very, very easily. What that looks like for you is since the stock is worth$10 ,000 today, you donate the stock and you make a$10 ,000 donation.

52:01Jonathan Mendonsa:Okay. That charity is receiving that$10 ,000. Now you had a$9 ,000 unrealized long-term capital gain in there and you never pay tax on that. That unrealized long-term cap gain is gone. It's wiped out. And now, of course, we're not doing this to stick the charity with the tax. That's the beautiful part is that is gone forever. They get the$10 ,000 stock. The way that I believe this works is they would just then sell that immediately and they have no tax implication for that. So they sell it for the fair market value. And that's what that charity receives. So everybody wins there. There are always ways at the margins, Jonathan.

52:38Jonathan Mendonsa:That's what's so cool about what we're doing here and what we in the FI community do. But at its essence, you are making charitable donations and giving for the right reasons. But that doesn't mean you want to be stupid at the margins when you can optimize. Absolutely. Yeah. And I am looking at exactly the stuff that you have described in terms of lumping together. And I will say that United States has made it a little trickier to nab the benefit on that, at least through front loading and combining multiple years in that way with the crazy standard deduction that is available now, which is great.

53:09Jonathan Mendonsa:Of course, it's amazing. It's amazing. I know. I know. Anyways, you know, other note about Rebecca, she asked me probably about a month ago now to create a forum inside the choose if I community app to talk specifically about giving. I have put it on my feature request to do this thing, and I've gotten busy the last couple of weeks, but remembering this conversation right now, I'm going to make sure that it is live by the time that this episode goes there. So for individuals that want to have a place to talk about effective giving and effective giving strategies and just the practice in general, what it looks like for your life, then we're going to have that forum set up to go along with this particular episode.

53:47But I think the big thing I want to just kind of end here with is just a couple of pieces of feedback from individuals that went through the exercise that had feedback for us along the way. This first piece was for Santa Lan and Santa Lan says, already fine, but spending has slowly crept up. I want to see what spending materially improves my life and what spending is not value added. So he's talking about the value matrix, right? And so this is a visualization. And I think the goal, one of the goals should be not just, you know, what gets cut versus not, but how much of your spending is showing up in a category that you define as low joy, regardless of the cost.

54:23And then from there, if you take a look at what made it in low joy and you realize, well, I'm really just ambivalent about it. It's just not going anywhere. It has to be. Well, then that's not a value matrix decision. That's a required expense and you should put it back over there. But for the things that are discretionary, it's pretty cool when everything is above the line. And then from there, you can make decisions around what you want to optimize or not. And then the other thing, and this is from Jagnow, and Jagnow says, I have the data, right? So YNAB, expenses, spreadsheets. But I want to use the data to change behavior.

54:56That's the value matrix. We need to add a subjective layer of visualization to which expenses are sucking up our cash flow. This will allow you to do that. You need to translate this from an idea, a good thought into actual action. And Brad, I know it's what you advocate for in every single episode.

55:14Jonathan Mendonsa:Yeah, I certainly try. And I just want to thank you again for taking action and creating this for all of us. That's what's so beautiful about it. This lives on the Chooseify website. Jonathan, why don't you tell people how they can access it? Definitely just go to chooseify.com slash local. And when you get there, you know, the site's an in-progress thing, and it's always kind of evolving and changing, but we're trying to make it really, really easy to get you onboarded. And as you get there, you can go to tools and resources, and you're going to have the ability to start an expense audit. That's not like optional.

55:44You're not going to get any value out of a value matrix. Sorry for the redundancy, but you're not going to get any value out of a value matrix without first going through an exercise of putting your expenses together. But once you have that, whether you did it separately or whether or not you did it from the scratch inside this tool, you're gonna bring those in and now you're gonna have the opportunity to interact with it. I think based on the feedback that I've already seen from Kaylin and she got to it before I even announced it, full credit to you, it's gonna bring you a lot of joy. Just going through the exercise and how often can individuals say that when looking at a Google spreadsheet?

56:16I know there's a few of you, but then there's the rest of us. All right, my friends, the fire is spreading. We'll see you next time as we continue to go down the road less traveled.