January 10, 2025 • 35 mins
Time for a Friday Flight- our little sampling of the week’s financial news and what it means for your personal finances. There are a lot of headlines out there, but we boil them down to specific takeaways that will allow you to kick off the weekend informed and help you to get ahead with your money. In this episode we explain some relevant and helpful stories like: low cost insulation, best months to buy new and used cars, thousand dollar car payments, bougie extra bedrooms, what medical debt?, credit score supremacy, avoiding alts, risky business, points purgatory, credit card defaults, and gift card spillage.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Had of Money.
Speaker 2 (00:01):
I'm Joel, I'm Matt, and today we're talking about credit
score supremacy, avoiding alts and points in purgatory.
Speaker 1 (00:27):
Look at hu Jewel alliteration on point. Today with our
Friday Flight to the Max, our weekly roundup of the
news stories that we came across this week and specifically
the ones we think you should pay attention to and
how it's going to impact your wallet. We hope everyone
is staying warm out there. It's like nationwide sub zero
or sub freezing temperature.
Speaker 2 (00:45):
Most of the kid is in California, which geez hearts
go out to all our friends and one impacted out
there listeners out there.
Speaker 1 (00:51):
Yeah, well, I was going to say, so, we've we
talked recently about my sort of close phone versus open
cell spray poam, you know, with a with a house
and all that insulation. Yeah, yeah, all of that. I
don't want to talk about that. I've got another sort
of insulation breakthrough a lot of research trying to figure
this thing out, especially now when it's so cold in
the house and you can feel the cold through the floors. Man.
(01:14):
And so I've been considering getting our cross space in
the existing part of the home spray phoned because that's
something folks do they anyway.
Speaker 2 (01:22):
Especially just for comfort. Like I know it will reduce
your energy bills, but it will also just make your feet.
Speaker 1 (01:29):
Yeah, absolutely, it makes it. It just insulates that cross
space even more. But I got to thinking about it,
and I'm not going to do it. And here's why.
Because I came across honestly a bunch of different articles.
But cinderblock has a fairly high R value value or whatever, like,
it's fairly insulated. And on top of that, you consider
the fact that there's like a foam board on the
outside of that, then an air gap and then brick. Well,
(01:51):
all that equals to a fairly insulated cross space. You
don't need ad more. So you don't need to do
that leak. You could, but you don't. It's not necessary,
I guess, is what I'm saying. And that got me.
Might be overkill. It might be overkilled. But then I've
got to ask myself, well, why is the cross space
so cold? So here's my insulation breakthrough or my insulation realization, jol,
which is that the very cross space. Did you like
(02:12):
that the cross space door that I was going through
is not insulated, and so I looked it up. Guess
what the R value is of a half inch piece
of plywood of OSB gotta be minimal? It is less
is less than one? Okay, So basically I've got a
You know, most folks, if you've got a brick house,
(02:32):
like you have a fairly well insulated cross space that's
for all the cold air is coming in. But it's
like there's not even a door on there, like the
cold air is just pouring in. And it makes so
much sense because in the on our main level of
the house, like that is the coldest section and that's
one of the things where it's like, man, why is
it It's just so cold down here? It's not actually
that cold in other parts of the main floor, but
that portion of the house near the laundry room, oh,
(02:54):
which happens to be where the cross space access is.
My question for you, then, is I going to insulate
that door? Yeah? Better believe it.
Speaker 2 (03:01):
Is it similar though to when you have like attic
access and people will put those I've got one of
those zipper like et space hats.
Speaker 1 (03:10):
Yeah, basically is that what they put on the cross
space door. I've only minimally looked into it, but I
know that I am at least going to put some
foam back or board, which adds a little bit. But
I'm also considering They sell these different canister kits even
at home depot, where it's much more affordable and you
can it's a spray foam application, and I'm thinking about
buying one of those consumer grade spray foam application kits,
(03:33):
going in the cross space, putting a mask on, shutting
the door and spraying over it, springing the back of
the door, yeah, letting it cure, and then cutting my
way out essentially just with like a razor blade. So
it's still really half home improvement half escape room. Yeah,
it's really tight because you don't That's that's one of
the other issues with actual air leaks that can come sometimes.
(03:54):
It's not just insulation, is the fact that like, hey,
if you can see a gap, if you can see
sky out from your cross space, there's cold air obviously
getting in there. But anyway, all that to say, this
is a way to avoid spending thousands of dollars on
an encapsulation which you may not need. Instead, I'm going
to take this low cost budget approach to finding the
(04:15):
most low hanging fruit, and man, that cross based door
is one hundred percent the lowest hanging fruit when it
comes to keeping that space warm.
Speaker 2 (04:22):
Well, let us know how it goes and how it
changes kind of your environment near where that door is
in your main.
Speaker 1 (04:29):
To man, it has to yeah, but that Yeah, you're right.
I'm really hopeful a.
Speaker 2 (04:32):
Small amount of DIY I think could save you a
lot of money and get you where you want to
go without overdoing it.
Speaker 1 (04:37):
Yeah. And that's why I was thinking the phone backer
board because I was thinking, you know what, I could
even cut it to be slightly larger than the actual door. Yeah,
and that's that's really affordable, right, just a piece of whatever.
Maybe I'll even double it up, I don't know. Yeah,
but sticking that on, they're making it slightly larger that way,
when it closes, it's like it overlaps the crack in
the door. To sure, Oh you know what I'm saying.
Speaker 2 (04:57):
I think that because there's always a game plywood there.
It's not there's always a little gap there. It seems
like exactly, that's a good way to fix that.
Speaker 1 (05:02):
Anyway. I wanted to share that with all the folks
out there. Who might be thinking something similar where they're like, man,
my feet are so cold, how do we how do
we fix this? Yeah, this might be a solution. I
like it. I like it. And that's enough house talk. Yeah,
enough enough house which that truly is like our favorite channel. Now.
I have that set up a really on the same
because the same sung It's got all these free channels
included H and whatever you turn the TV on, it
(05:25):
always goes to some default channel, and so I always
have it set there because I love seeing all these
home improvement projects. It's like classic Americana. I love it.
I think most people here talk like this or they
think about having to do something like this themselves on
their own home, and they just get bummed out. I
get stoked. Yeah, you love home promos.
Speaker 2 (05:44):
I'm like most of the people listening who are like,
let's screw that. They're not terribly interested. But let's move
on with a Friday flight mass that to talk about
let's do them home. Let's talk about cars. Turns out
January is the best time to buy a used car.
This is according to our friends over at car Edge.
You know, we have had Ray and Zach on the
show last year and they provided a lot of great
(06:05):
advice when it comes to shopping for cars and getting
the best price. Well, the reasons that January is the
best time to buy a used car is because there
are more trade ins on the lot, because you know,
people upgrading their car, buying the new car, trading in
their old car in December, that's a popular time to do.
That makes sense for used cars now in abundance.
Speaker 1 (06:23):
That was one of the things they said was that
you get a good deal at the end of the month,
you get a better deal at the end of the quarter.
You get the best deals at the end of the year. Yeap.
Speaker 2 (06:30):
So if you want to buy a new car, e
might want to wait eleven and a half months. Within
Spring actually is typically when people start to look to
upgrade their used car ride too often because of a
tax refund cash infusion. So we're in this sweet spot
where there's an abundance of used cars and not all
that many people looking. Car prices Obviously they fluctuate according
(06:52):
to supply and demand, and so supplies high demand isn't
so basically for.
Speaker 1 (06:57):
Everyone out there.
Speaker 2 (06:58):
If you're like I'm looking for a used car, I
don't know when I'm going to start, well, now it
might be the best time actually, and it might even
be a good time to consider an electric vehicle, specifically
from rental car company Hurts. They bought Oh yeah, we've
talked about this before, Maat, but this continues to be
a problem for them. They bought a ton of Teslas,
they weren't able to rent them out in the numbers
that they hoped, and they're even I saw it. I
(07:19):
think it was in Jelopnik. They're even soliciting people who
just rent an EV. Now they're telling them at the
end of the rental period, hey, do you actually want
to buy this car. Here's what we'll sell it to
you for. You don't even need to take your things out,
just to just keep on driving. Really really incredible, Like
Hurts really wants to get rid of some of these
Teslas and other evs that they bought. Wow, their loss
could be your gain. It's at least worth taking a
(07:40):
look to see. But I mean some of those cars
are priced at sub twenty thousand dollars. That's not bad
for like an EV if it's in good condition.
Speaker 1 (07:47):
Absolutely, And it makes sense that they're wanting to unload
these because like if you think about it. If you
let's say you're a business traveler and you're just flying
into a city for the day, You're not thinking about like,
you don't want to have to learn how to drive
an EV you don't want to have to learn the
ins and outs of a tesla if that's not what
you typically drive. You want something that you're used to.
You're going to get to work or the office wherever
you're visiting. I don't know how this works, make your
(08:08):
sales calls or something like that. You don't don't have
to find a place to charge. No, Yeah, And when
it comes to if it is an overnight trip, where
are you typically staying. Most folks are staying at a hotel,
but how many of those give you the ability to charge?
I mean, is not that easy. And this is something
Kate and I learned firsthand when we went out to Colorado.
I wanted to try out the tesla and I was like, man,
it's kind of a pain in the butt actually to
(08:29):
stay at a condo where I can't charge the thing.
And we were forced to find the superchargers, which was
fairly easy, but still budgeting the time to because you
still have to sit there while it's charging, even on
a supercharger, and the cost it was just as expensive
as gasoline. Yeah, and that's why it's better to own.
It makes a ton of rent. All the advantage is
being able to drive it home, pulled into your garage
(08:51):
and do that slow basic charge. That's where the real
savings come in. Absolutely, No, the real savings is buying
not a new car but a used car. Because the
average price of a new car these asual is it's
still close to fifty thousand dollars, which is it's difficult
for me to wrap my mind around.
Speaker 2 (09:07):
I want to say, if I'm recalling correctly, is like
and seventy three dollars average price for a new car
so expensive.
Speaker 1 (09:13):
Twenty percent of buyers now have a monthly payment of
one thousand dollars or more. And certainly some of this
we can blame on inflation, but that's only a part
of it. Felix Salmon over at Axios. He highlights that
our tastes they account for most of the price increased.
We like nice things or less content with compacts in
(09:34):
sedans than we used to be, and upgrading to the
suv or upgrading to that truck. It costs dramatically more.
And so when you're thinking about your next car, just
keep that in mind. For some folks, a three to
row shuv maybe it is necessary. But if not, man,
a smaller car is going to save you a lot
more money in almost every way as well.
Speaker 2 (09:53):
Yeah, I think that's really important to highlight, Matt. I
think a lot of it's like that Spider Man meme
where all the Spider Man are at each other. I
think it's really easy to point in inflation, but then
there's a finger pointing back at you, and it's like, well,
did you have to buy the biggest possible car on
the planet. And when you're talking about those big SUVs,
we're typically talking about seventy plus thousand dollars rides. And
(10:13):
so maybe you need it, maybe you don't, and if
you don't, you can save a lot of money. And
this coincides perfectly with something else I saw about the
amount of space that the average American has in their
home these days. The number of homes with extra bedrooms
just hitting all time high. So like we are gluttons
for space and we're expanding maybe even when we don't need.
Speaker 1 (10:34):
To, or just such a facy rich nation yea, our
tastes have exceeded our pocket book. That's true, that's right, Yeah,
and so yes, similar to buying the larger car, that
extra space is going to cost you big time. Zillow
estimates that the average three bedroom home costs three hundred
and thirty six thousand dollars, but the average four bedroom
home costs four hundred and ninety six thousand dollars. That's
(10:56):
a more than one hundred and fifty thousand dollars difference,
which is substantial. And there's nothing wrong with having a
home office or having a guest room, right, having maybe
a little bit more room than you need.
Speaker 2 (11:06):
But and especially you know post COVID more people working
from home, Like I get that you want a separate
space like that. But given that homes are one of
our most expensive purchases, it's important to go in eyes
wide open and know that buying a beastly home, one
that's maybe larger than you actually need, with space that
you're not going to put to use very well, it
comes with financial consequences. And Matt, I think sometimes people
(11:28):
think about, well, what about when the rare occurrences where
people are staying at your home yep, or maybe Hey,
the holidays just finished and you had someone staying at
your home for four or five days, and you're like, gosh,
don't want to live through those tight quarters again next
Christmas when it comes around, Well, maybe think about renting
that special person in your life, your parents or whoever
they might be, renting them something around the corner. And
(11:51):
that is way cheaper you pay for it yourself, even
how much cheaper is that than renovating, adding on or
buying a new, bigger house.
Speaker 1 (11:57):
Tens of thousands of dollars. And the same thing is
true when it comes to to vehicles. Like a common
thread between silk houses and autos is the fact that,
like we're planning for these edge case scenarios that rarely happen,
and we catastrophize what would happen if we were in need? Right,
and so like I'm thinking of like going back to
cars and trucks. Folks are like, well, I want to
have a truck because I want to be able to
(12:17):
pick up the new refrigerator because we're going to upgrade
our appliances or whatever. A couple of things here. First off,
Costco and Home Depot they all deliver. Yeah, so you
don't even need the truck. Secondly, if you actually do
need a pickup, well, for you could borrow it. But
let's say you don't have any friends with trucks. Okay,
you can still go to home depot and rent the
stupid truck for twenty bucks for a flatbed. And there's
(12:37):
a big difference between paying twenty twenty five bucks to
rent a pickup truck versus financing a seventy five thousand
dollars decked out whatever fancy pickup truck. That people are
spending so much money on this.
Speaker 2 (12:48):
And it's I think it's just so easy to feel that,
especially in the aftermath of a visit like that, and say,
we got to do something about this house.
Speaker 1 (12:55):
It's getting too tight. But is it really getting too tight?
Let's just sign up for some payments. Yeah.
Speaker 2 (12:59):
And it's just interesting to see that Americans have gotten
accustomed to having more space than they actually need. Part
of that is increasing home sizes, part of that is
declining family sizes. It's kind of both of those things
happening simultaneously. But we used to get by with a
heck of a lot less space in this country, and
to think, I don't know the twenty five hundred square
foot house is getting pretty tight from my family of
three like that. I think that's the phenomenon that you
(13:20):
and I would love to combat a little here.
Speaker 1 (13:22):
Absolutely, Joel's talk about debt, specifically medical debt, because it's
no longer going to show up on credit reports, or
actually will it, Joel, We will see. That's what That's
what all the headlines are saying. At least, it's another
political tug of war the outgoing Biden administration. They have
finalized a rule that is going to end the inclusion
(13:43):
of all medical debt on credit reports moving forward. We've
already seen the removal of sub five hundred dollars medical
bills from being reported to credit bureaus, which has helped
a lot of folks not have their scores crushed thanks
to just, you know, a minor bill that they couldn't
afford to pay, or even maybe that they forgot to pay.
But this much bigger rule change would mean that medical
(14:04):
debt of any size can no longer plague people on
the credit front, and it would impact close to fifteen
million people according to the CFPB. But I think it
is unlikely to stick because again of the way that
we arrived to this rule being implemented. It's not that
we don't feel for folks who have medical debt, certainly, but.
Speaker 2 (14:26):
And it's not that the system doesn't have meaningful problems
with sure how medical debt.
Speaker 1 (14:32):
Is, but the way you arrive at solving these problems
and matters a ton and to say, carte blanche, oh,
we're going to change the rules. We're going to change
the standards. As to the idea is that, well, everyone's
credit score is going to be boosted. But like, think
about the last time you had, like just think about
great inflation with teachers. What if a teacher says, hey,
I'm only going to give a's this semester, Well, guess
(14:52):
what that A no longer means anything because everybody got
an A. And so what do colleges then do. They're like, Okay, well,
we're actually looking for people that have high than A
four point zero. We're looking for the students out there,
they have the four point two to four point three
who are tacking on the ap classes. That's what I
see happening here is that there's not going to be
this sort of long term benefit to folks because lenders
(15:13):
are still going to cover their butts. They're still going
to find ways to filter through applicants that are out there,
and they want the best applicants who are looking to
take loans from banks and credit unilll.
Speaker 2 (15:22):
The other thing is that this might be this might
not live for very long because it.
Speaker 1 (15:26):
Is assuming the best that it is able to stick
around for.
Speaker 2 (15:28):
Literally, you know, weeks away from transition to the next presidency,
the next administration, and this could be overturned and with
stroke of a pen. So when we don't arrive at
legislation in the proper way, which is typically through congressional action,
which they have been loath to work, it seems the
sort of back and forth politics and legislation that we've seen,
(15:50):
specifically from executive branches and administrations going back and forth,
we see more of that, and that means that these
changes aren't necessarily standing the test of time to stay.
Speaker 1 (16:00):
Yeah.
Speaker 2 (16:00):
Oh, and by the way, we have an episode go
back and listen in to episode seven sixteen if you
want to know how to fight back against medical debt again. Oh,
the system sucks, doctor Virgie. Doctor Virgie, she was wonderful
and the system is again not consumer friendly. The healthcare
system the health insurance system and then the reporting of
health debt to your credit report. But if you want
(16:23):
to know how to battle that in your life, you
got to stick up for yourself. Episode seven to sixteen
is for you. Will link to that in the show
notes And Matt this brings up too, you're kind of
getting at maybe how credit scores are becoming less relevant
if we're not taking into account certain factors for credit reports.
And I guess the importance of credit scores has been
widely debated in the personal finance community. Some people think
(16:44):
that they matter, other people would say that they don't.
Dave Ramsey in particular, is one of those guys who
would say, oh, he loves.
Speaker 1 (16:49):
The I love debt score. That's what he calls it.
Speaker 2 (16:52):
Heytes that thing, right, And you and I have said, well, no,
it's it's not the best thing in the world, but
it's smart to jump through the hoops to make sure
that your credit score stays solid. And so this Yahoo
Finance article detailed why you shouldn't listen to Dave Ramsey's
advice on living without a credit score, and we wholeheartedly
agree with it. The credit scoring system is flawed. The
(17:12):
credit bureaus are error prone and not great at responding
to your concerns. There was actually another lawsuit just filed
against TransUnion this week because guess what, they don't deal
with consumer complaints well at all. And that's phrasing it nicely.
But at the same time, you know, the game isn't
all that hard to play once you kind of dig
into the rules, and not playing the game of trying
(17:35):
to have a solid credit score makes your life harder.
You know, not tending to your credit score. It can
lead to higher mortgage rates, higher insurance costs in most
states around the country, to not getting a rental that
you're interested in getting if you know you are. Let's
say you're trying to go down the street and you say, oh, hey,
I want to apply to live at this property. Well,
the landlord might say, I don't know. Your credit score
(17:56):
is pretty rough. Sorry, you can't live here. So you're
only harming your self if you're not paying attention to
your credit score. And we've got resources on how to
money dot com about how to tend to your credit
But I think despite what Dave Ramsey says on this,
we advise caring about your credit score, even though he doesn't.
Speaker 1 (18:12):
Yeah, but it's also possible to pay too much attention
to your credit score. The Journal documented someone someone who
is attempting to attain a perfect credit score. He was
already at eight forty, but guess what, Joel wasn't good enough.
He wanted the coveted eight fifty, and he achieved it.
One of those type A folks. I guess, yeah, through
some trial and air. But dude, this what a hollow victory.
(18:35):
Talk about like majoring in the minors. Maybe at the
end of the soul section, I'll ask you what your
credit score is, but I don't. Honestly, I don't know
right now. I know you don't know because it doesn't Honestly,
it doesn't even matter. I was anytime we talk about
credit score, I know it's good enough, so I'm always curious.
I'm like, all right, well, actually, where am I sitting
right now? Probably like maybe I'm guessing I'm like seven eighty.
I bet you're higher than that. Actually, But there are
a certain segment of Americans out there who seem to
(18:57):
be obsessing over the credit score to an unhell healthy degree.
But the truth is, anything above a seven sixty is fantastic.
And that's going to get you qualified for the best
loan terms out there. And so what we would say
is to it's kind of fun, right if you're just
like like the way I'm talking about it, be like, oh,
you just kind of keep an eye on it, and
it's kind of fun to be like, oh, yeah, actually
I'm ten points higher than you. But also, don't make
(19:19):
this slight if that's what you want to compare your friendships,
like like just some healthy competition, right, Like it makes
me think of that one time when we're like, all right,
where do we think Netflix is going to be at
the end of the year. We never followed up on that. Actually, yeah,
you remember that. This is like years ago when Netflix
tanked or whatever, and you and I we had a
small friendly wager, yeah on Netflix the price of their stock.
But don't take it too seriously. Don't waste your time
(19:41):
and energy trying to push your score way up above
anything that is actually going to move the needle when
it comes to the kind of loan terms that you
might be able to qualify for. Yeah, in the case
of your credit score, good enough is great, agreed. And
I think if you are kind of wondering where your
credit score stands. It's a good idea to get the
picture that you can typically get that from a credit
(20:02):
card company that you do business with, or you can
check out credit karma dot com. That's a good place
to kind.
Speaker 2 (20:06):
Of not just get an idea of what your score is,
but then you can also they've got like the score
card that'll help you help highlight the places where you
can improve your credit. But again, if you're in that
seven to seventy plus range, don't sweat trying to raise
it significantly. And it was really interesting to see the
journey of this guy, Matt, trying to improve his score
to eight fifty and how much time and effort it took.
Speaker 1 (20:28):
I feel bad for the guy. Yeah, Like, honestly, guess what,
like as a waste of.
Speaker 2 (20:31):
Time, we only hear so many hours on this earth
does don't waste it thinking about a perfect credit score.
Speaker 1 (20:35):
As I'm reading through that profile, and just like, dude,
there's so many better things you could be doing with
your life, but instead this is the thing that you've
chosen to obsess over. Yeah, but Joe, we got more
to get to more Friday Fly, We're gonna get to
points Purgatory and more. Right after the break our Matt,
(20:57):
we're back. Now it's time for.
Speaker 2 (20:59):
The ludicrous headline of the week. This one comes from
the Wall Street Journal and the headline reads, You're invited
to Wall Street's private party. Say you're busy and more
and more is being written about alternative assets right now.
And Jason's Wyke, he's the investment columnist over there at
the Journal. He had a great piece on why we
(21:19):
should kind of give him the heisman, right, we don't
want alternative assets in our lives, in our portfolios, even
though financial advisors are pushing these alternative investments on us
as individual investors more than ever before. And there are
all sorts of ways now we've documented this on the
show in the past, for people, the average person to
(21:41):
invest that were essentially unavailable to previous generations.
Speaker 1 (21:44):
We talked about.
Speaker 2 (21:45):
And some of that's good, right, like the advent of
index funds in the seventies, Like that's a beautiful, wonderful
thing that makes it easier to invest. And then there
are other ways that you can easily invest, but in
products that might not makes sense for you, So wine, whiskey,
real estate. Those are some of the alternative assets that
(22:06):
people can now invest in. There's invest in farmland, farmland
anchor Trader Veno vest. I mean, there's all of these
websites out there that make it easy to invest in
all these different things.
Speaker 1 (22:15):
Hey, why don't you.
Speaker 2 (22:16):
Diversify your portfolio and invest in some farmland or some
art right stuff like that. And then it even got
pretty wild with NFTs and meme coins over the last
few years. And you can do this all like from
the comfort of your home and your PJS on a
slick looking website. So I think people are more tempted
or even just like some of the partial real estate
investing websites. Matt the crowdfunding real estate website. That's another
(22:38):
one that attracts people, and the accessibility I think makes
it seem normal or even good. But then these alternative
investment products come with often in small type, often in
places that are hard to find, significantly higher fees, yeah,
lots more risk, significantly less liquidity. And so I'm with
(22:59):
Jason's wig here. We don't believe that anybody out there
listening needs any alternative investments in their life in order
to be diversified, in order to build wealth wisely. In
In fact, I think a lot of people you're maybe
majoring on the miners, if you like, try to put
too much your focus in. They're kind of like trying
to get that perfect credit score. It's just not important.
Speaker 1 (23:17):
Agreed. One small caveat is real estate, because that is
something that you and I are invested in, but not
this sort of crowdfunded approach to investing in real estate
I do. I think it's not even something that we
talk about all that all that often these days, Like
when's the last time you bought a house, Joel, Yeah,
it's been a minute. Like I haven't purchased a home
in the twenty twenties because well, my personal home. But
(23:38):
when it comes to an investment in real estate, because
the deals were back in the teams harder to come
by now. And if you already have a property, that's fine,
it's sure hang onto it, especially if you've got that
low interest rate mortgage rate baked into it. But for
somebody who is interested in growing their wealth right now
and they're just getting started, and that is not an
area I would say that you should be focusing on
unless it's something that you're really really passionate about it.
Speaker 2 (24:00):
And I think there is a difference in my mind,
between owning long term real estate that you invest in
locally and you self manage or renting out a portion
of your house right short term rental style. There's a
big difference between that and between some of these alternative
investment styles, because there are advantages you can have as
a local real estate investor that you don't have when
(24:23):
you're investing via some of these other newfangled websites. And yeah,
there are higher fees in real estate, but there are
also advantages to real estate too that the index fund
investor just doesn't quite have. But yeah, I think that's
that's like the one exception I'll give to this. I
just don't I don't wrangle regular real estate investing, owning
other owning, owning more properties into the alternative investment sphere.
(24:46):
I think I'm talking about all these other things or
all these digital ways to invest that seem super sexy,
and they talk about and they tout magnified returns by
investing in art or watches or whatever, and hey, look
at what's happened with like watch valueations matt over the
past few years. Those have gone down. And it's been
said that, oh, Rolex watches, they only go up in value.
That's not so that's.
Speaker 1 (25:06):
Not the case necessarily, the case stock market's been going up,
the value of your Rolex watch has gone down. Yeah,
I will say, if investing more is one of your
big goals for twenty twenty five, be careful which brokerage
firm that you choose to go with, because more of
the different uh, you know, as we're talking about apps here,
there are a lot more investment apps that are more
like traditional investing apps, but they are incentivizing risk these
(25:27):
days more than some of the big ones that we
are actually fans of. So it started with robin Hood,
of course, but they've actually gotten better since their inception,
while other newer companies have leaned harder in the gamification direction,
and new research shows that it is particularly effective at
getting younger investors with less investing knowledge to trade more frequently,
(25:47):
which of course leads to worse results. There's a study
that showed that the best performing portfolios were the unfortunately,
were those of people who had died and they hadn't
been touched. Because you're not getting in there and you're
not messing, you're not buying and selling at inopportune times, I.
Speaker 2 (26:01):
Feel like you should reiterate that, because every time I
see that, it's it just it's kind of baffling. But
it makes a lot of sense, right that, like people
who aren't living can't tweak their portfolio so they do better.
Speaker 1 (26:12):
The less active of an investor you are, the better
your results are going to be. And so instead of
realizing your potential behavioral biases and you know, and helping out,
some of these newer apps out there and some of
these newer platforms are exploiting your behavioral issues, your biases
because it's better for their bottom line to get you
to trade more often. And this is why the more
(26:32):
boring companies that we have always recommended, like Vanguard and
Fidelity are still great. And it's almost like a ride
of passage for younger investors to get sort of distracted
by the shiny, the novel, the sexy, the new, which
I almost want to be okay with because when you're younger,
you've got less money at risk, like the stakes are lower,
And part of me says, well, better to learn these
(26:54):
lessons now while you're younger with fewer zeros than you
know twenty thirty years from now. But of course The
reason we have the show is for people to learn
from our mistakes, to learn from other people, Like why
make the same mistakes that your parents have made when
you can learn your lessons like in a secondhand way.
But I think there are still going to be some
folks out there who might have to experience it.
Speaker 2 (27:14):
Well, that's exactly what you marry. In our conversation with
Josh Brown, that's that was one of the things he
said was like, no, people should be like given the
chance to to screw up. And I think people should
certainly be given the chance to screw up, but I
wouldn't it be better to avoid it completely and to yeah,
learn from other people's beats, right, Yeah, So I agree,
that's why we have the show.
Speaker 1 (27:34):
I guess that's what we're trying to advocate for. People
are still gonna meme, bros. Are still gonna meme, you know,
Like folks are still going to go out there and
do the dumb things and.
Speaker 2 (27:42):
If they want to do And we talked about like
maybe sandboxing too some of your investing as well, Like
if you have this die hard desire to trade or
to speculate on individual.
Speaker 1 (27:52):
Stocks, do you want to have a little bit of fun.
Speaker 2 (27:53):
Yeah, that's okay, but just do it with a small
portion of your portfolio and make sure you can lose
sleep or you won't lose sleep at night if you
lose the money that you're training inside of that account.
But I would siphon that off and do it somewhere
else and do the boring thing with the vast majority
because it's the tried and true way to build wealth
and it's far less mentally taxing. So yeah, let's talk
(28:15):
about credit cards for a second. For the extreme credit
card nerds, getting the right reward credit card can be
massively beneficial. And Matt I think about hearing from listeners
the exotic trips that they've taken, the cool places they've gone,
and how much money they've saved because they've just played
the game. They know the system, and they've just changed
essentially the method of their payment and it's led to
(28:36):
some pretty cool perks. And we've talked about that on
the show a reasonable amount, most recently in episode eight
ninety nine with our friend Chris Hutchins from the podcast
All the Hacks. Well, there was this new survey from
bankrate and it made me think twice about rewards credit cards,
or at least want to add some nuance into the conversation.
What Bankrate found was that the average person, they're not
(28:56):
paying much attention to the credit cards they are using
and to the points that they're racking up. Almost a
quarter of folks ended up not redeeming any of their
rewards in the past year, so they hey, maybe they
accumulated their rewards, but they didn't spend any of them.
I forgot about them, Yeah, exactly. I think that's a
big part of it. It's almost like the gift card
that you were given a couple of years ago. It's
lost somewhere or it's been forgotten about, and I think
(29:19):
it could be fun to play the game. It can
be really cool to accrue those travel points, but the
truth is using them for the cost of the trip.
That's the real joy. I mean, if you miss out
on that connection, what are you actually doing. Plus the
longer those points linger, the less valuable they become. And
travel rewards, Man, they might sound great in theory, but
what do they look like in practice in your life.
(29:40):
I think it's a good question to ask, because it
turns out, based on this Bankrate survey, cash back cards
were the crowd favorites, and although yeah, they might not
provide the best theoretical return for your spending, they might
be the best real life choice for a lot of people.
Because the credit card rewards the best ones that you
can get are the ones that you're actually going to use.
Speaker 1 (30:00):
Absolutely, yeah, where are you going to actually follow through
and do the dang thing. But having said, be careful
how you're using your credit cards, especially if you are
a newer listener, or if you've had a history of
overspending or getting into consumer debt. But either way, check
out the Golden Rules of Plastic. This is an article
we've got up on the site. We don't want poor
(30:20):
usage of credit cards to increase your debt load or
to harm your credit score. We talked about earlier The
Financial Times they just published an article about how US
credit card defaults. They're actually at a fifteen year high,
which isn't great macro data or on an individual micro level. Basically,
the lender doesn't think that the debt will be repaid,
(30:41):
so they write it off. That is what it means
when credit card debt is in default. We've discussed how
paying off debt, how it's basically like this apex goal
for Americans and we love that, especially as interest rates
have climbed. But never having a balance, well, that is
crucial to smart credit card use to be able to
completely avoid it all together or to get out of
that debt. If you have acquired some we will link
(31:05):
to that Golden Rules of Plastic article in the show
notes as well. But if you need some additional help,
we would well, we would love to hear from you.
Send us a voice memo. We'd love to hear the
particulars of your personal situation. But if you are someone
who is like no, no, no, guys, I can't wait
for you to maybe get back to me on a
show off in the future. I need help now. If so,
we would recommend to reach out to an organization like
(31:26):
Money Management International that provides credit card debt counseling. We
want consumer debts to be something that is in the
rear view mirror for you.
Speaker 2 (31:36):
And I think I just saw this today this morning, Matt,
when I was looking at my email, and the number
is ticked up. The percentage of people who use credit
cards who don't pay them off on time infil every month,
that is just going up. That number, so I think
it's like forty eight percent of families now have some
sort of recurring credit card debt, and that with a
high interest rate attached. That is putting you behind in
(31:59):
your finances. It's like running on a treadmill, but like
have you seen the treadmills for the guy who runs
marathons in like two hours and they try to put
people on it like the.
Speaker 1 (32:08):
Size of a room, like a small regain, and it's like,
can you run out the pace? And you can't. I couldn't.
Speaker 2 (32:12):
I couldn't run it for eight seconds, I don't think,
and people just fall flat on their face because that's
how fast he runs. But he runs that fast for
twenty six miles. That's what like perpetual credit card debt
is doing to your finances.
Speaker 1 (32:22):
The algorithm knows you, Joel, Yes it does. Twenty twenty
twenty one, Joel would have been like, wait what I'm
being fed treadmill videos of I give had way too
much running the world record marathon runner. It's pretty ridiculous.
I love it.
Speaker 2 (32:35):
Well. We talked about the downsides of buying gift cards
ahead of Christmas, and I have more hesitation, I think
than you do. You you you're more leisse fair about
gift cards and I yeah, let people make their mistakes, right,
I won't be able to think twice. Although there were
some good discounts out there that made gift cards cheaper,
which we're down with. Let mean, I think about the
(32:55):
annual Target ten percent off gift cards sale. We didn't
talk about it on the show, but it's usually kind
of of after Black Friday before Christmas, and if you're
a big time Target chopper, hey go get that discount,
but just remember to not be a spillage statistic. And
spillage is when gift cards linger for months or for
years without being spent. And this is great for retailers
(33:18):
because they hey, get they got the money in their
pocket already, they sold the gift card, and then if
that gift card never gets presented, that's cashing their in
their pockets. But it's important for you to not be
that statistic and to spend the money because, as we've documented,
there's no guarantee that the store you have a gift
card for sticks around for forever.
Speaker 1 (33:36):
It's right if you're a TGI Fridays was a Fridays Yeah,
that was the last one.
Speaker 2 (33:40):
But this has happened at many different times, right where
a store is just going out of business and you're like,
wait a second, or my gift cards worthless and they
might be. So make a plan to spend your gift
cards quickly, like let's say in the first quarter of
twenty twenty five, or another option. If you have a
gift card and you're like, I'm never using that. I
don't really like this retailer. Why did ant Edna give
it to me? Use a site like card cash dot com.
(34:02):
You can sell a gift card online. You're gonna get
you know, depending on where it's two pennies on the
dollar or let's say sixty cents on the dollar or
something like that. But getting something is better than getting nothing.
Just I think the key here is to not let
your gift cards languish or get lost.
Speaker 1 (34:19):
That's right. Actually, have you continue to use the costco
instacrt gift card hacked? Uh?
Speaker 2 (34:25):
I will say they on the online purchases they limit
two Instacard gift card purchases per fourteen days.
Speaker 1 (34:32):
Oh really?
Speaker 2 (34:33):
Yeah, but then so I had to I ran back
into the store to get a couple more. But yeah,
it's working out well for me. So far, I'm still
as a hoop.
Speaker 1 (34:40):
That you're willing to jump through for sure, give that
sweet discount. Well that's a situation where it totally makes
sense to get the gift card. Dreda. I'm not anti
gift cards.
Speaker 2 (34:49):
I'm just anti gift cards going to waste, Yeah, going
to waste, or I prefer for you to get them
at a lower price.
Speaker 1 (34:54):
Well, that's gonna be it for this episode. We hope
everyone has a fantastic weekend that you stay warm out there.
We'll see back here on Monday with a fresh ask
how to Money episode. Head over to the website. Specifically,
check out our credit card tool if you are looking
for a credit card that aligns with how it is
that you spend your money, or specifically the kind of
rewards that you're looking to garner from your credit card.
(35:15):
You can sort it buy airline, you can sort it
buy business cards, personal cards, cash back, and of course
you can find that at how to money dot com.
Forward slash credit card tool. Joel, it's gonna be it
for this one, buddy. Until next time, Best Friends Out,
Best Friends Out,
Welcome to Had of Money.
Speaker 2 (00:01):
I'm Joel, I'm Matt, and today we're talking about credit
score supremacy, avoiding alts and points in purgatory.
Speaker 1 (00:27):
Look at hu Jewel alliteration on point. Today with our
Friday Flight to the Max, our weekly roundup of the
news stories that we came across this week and specifically
the ones we think you should pay attention to and
how it's going to impact your wallet. We hope everyone
is staying warm out there. It's like nationwide sub zero
or sub freezing temperature.
Speaker 2 (00:45):
Most of the kid is in California, which geez hearts
go out to all our friends and one impacted out
there listeners out there.
Speaker 1 (00:51):
Yeah, well, I was going to say, so, we've we
talked recently about my sort of close phone versus open
cell spray poam, you know, with a with a house
and all that insulation. Yeah, yeah, all of that. I
don't want to talk about that. I've got another sort
of insulation breakthrough a lot of research trying to figure
this thing out, especially now when it's so cold in
the house and you can feel the cold through the floors. Man.
(01:14):
And so I've been considering getting our cross space in
the existing part of the home spray phoned because that's
something folks do they anyway.
Speaker 2 (01:22):
Especially just for comfort. Like I know it will reduce
your energy bills, but it will also just make your feet.
Speaker 1 (01:29):
Yeah, absolutely, it makes it. It just insulates that cross
space even more. But I got to thinking about it,
and I'm not going to do it. And here's why.
Because I came across honestly a bunch of different articles.
But cinderblock has a fairly high R value value or whatever, like,
it's fairly insulated. And on top of that, you consider
the fact that there's like a foam board on the
outside of that, then an air gap and then brick. Well,
(01:51):
all that equals to a fairly insulated cross space. You
don't need ad more. So you don't need to do
that leak. You could, but you don't. It's not necessary,
I guess, is what I'm saying. And that got me.
Might be overkill. It might be overkilled. But then I've
got to ask myself, well, why is the cross space
so cold? So here's my insulation breakthrough or my insulation realization, jol,
which is that the very cross space. Did you like
(02:12):
that the cross space door that I was going through
is not insulated, and so I looked it up. Guess
what the R value is of a half inch piece
of plywood of OSB gotta be minimal? It is less
is less than one? Okay, So basically I've got a
You know, most folks, if you've got a brick house,
(02:32):
like you have a fairly well insulated cross space that's
for all the cold air is coming in. But it's
like there's not even a door on there, like the
cold air is just pouring in. And it makes so
much sense because in the on our main level of
the house, like that is the coldest section and that's
one of the things where it's like, man, why is
it It's just so cold down here? It's not actually
that cold in other parts of the main floor, but
that portion of the house near the laundry room, oh,
(02:54):
which happens to be where the cross space access is.
My question for you, then, is I going to insulate
that door? Yeah? Better believe it.
Speaker 2 (03:01):
Is it similar though to when you have like attic
access and people will put those I've got one of
those zipper like et space hats.
Speaker 1 (03:10):
Yeah, basically is that what they put on the cross
space door. I've only minimally looked into it, but I
know that I am at least going to put some
foam back or board, which adds a little bit. But
I'm also considering They sell these different canister kits even
at home depot, where it's much more affordable and you
can it's a spray foam application, and I'm thinking about
buying one of those consumer grade spray foam application kits,
(03:33):
going in the cross space, putting a mask on, shutting
the door and spraying over it, springing the back of
the door, yeah, letting it cure, and then cutting my
way out essentially just with like a razor blade. So
it's still really half home improvement half escape room. Yeah,
it's really tight because you don't That's that's one of
the other issues with actual air leaks that can come sometimes.
(03:54):
It's not just insulation, is the fact that like, hey,
if you can see a gap, if you can see
sky out from your cross space, there's cold air obviously
getting in there. But anyway, all that to say, this
is a way to avoid spending thousands of dollars on
an encapsulation which you may not need. Instead, I'm going
to take this low cost budget approach to finding the
(04:15):
most low hanging fruit, and man, that cross based door
is one hundred percent the lowest hanging fruit when it
comes to keeping that space warm.
Speaker 2 (04:22):
Well, let us know how it goes and how it
changes kind of your environment near where that door is
in your main.
Speaker 1 (04:29):
To man, it has to yeah, but that Yeah, you're right.
I'm really hopeful a.
Speaker 2 (04:32):
Small amount of DIY I think could save you a
lot of money and get you where you want to
go without overdoing it.
Speaker 1 (04:37):
Yeah. And that's why I was thinking the phone backer
board because I was thinking, you know what, I could
even cut it to be slightly larger than the actual door. Yeah,
and that's that's really affordable, right, just a piece of whatever.
Maybe I'll even double it up, I don't know. Yeah,
but sticking that on, they're making it slightly larger that way,
when it closes, it's like it overlaps the crack in
the door. To sure, Oh you know what I'm saying.
Speaker 2 (04:57):
I think that because there's always a game plywood there.
It's not there's always a little gap there. It seems
like exactly, that's a good way to fix that.
Speaker 1 (05:02):
Anyway. I wanted to share that with all the folks
out there. Who might be thinking something similar where they're like, man,
my feet are so cold, how do we how do
we fix this? Yeah, this might be a solution. I
like it. I like it. And that's enough house talk. Yeah,
enough enough house which that truly is like our favorite channel. Now.
I have that set up a really on the same
because the same sung It's got all these free channels
included H and whatever you turn the TV on, it
(05:25):
always goes to some default channel, and so I always
have it set there because I love seeing all these
home improvement projects. It's like classic Americana. I love it.
I think most people here talk like this or they
think about having to do something like this themselves on
their own home, and they just get bummed out. I
get stoked. Yeah, you love home promos.
Speaker 2 (05:44):
I'm like most of the people listening who are like,
let's screw that. They're not terribly interested. But let's move
on with a Friday flight mass that to talk about
let's do them home. Let's talk about cars. Turns out
January is the best time to buy a used car.
This is according to our friends over at car Edge.
You know, we have had Ray and Zach on the
show last year and they provided a lot of great
(06:05):
advice when it comes to shopping for cars and getting
the best price. Well, the reasons that January is the
best time to buy a used car is because there
are more trade ins on the lot, because you know,
people upgrading their car, buying the new car, trading in
their old car in December, that's a popular time to do.
That makes sense for used cars now in abundance.
Speaker 1 (06:23):
That was one of the things they said was that
you get a good deal at the end of the month,
you get a better deal at the end of the quarter.
You get the best deals at the end of the year. Yeap.
Speaker 2 (06:30):
So if you want to buy a new car, e
might want to wait eleven and a half months. Within
Spring actually is typically when people start to look to
upgrade their used car ride too often because of a
tax refund cash infusion. So we're in this sweet spot
where there's an abundance of used cars and not all
that many people looking. Car prices Obviously they fluctuate according
(06:52):
to supply and demand, and so supplies high demand isn't
so basically for.
Speaker 1 (06:57):
Everyone out there.
Speaker 2 (06:58):
If you're like I'm looking for a used car, I
don't know when I'm going to start, well, now it
might be the best time actually, and it might even
be a good time to consider an electric vehicle, specifically
from rental car company Hurts. They bought Oh yeah, we've
talked about this before, Maat, but this continues to be
a problem for them. They bought a ton of Teslas,
they weren't able to rent them out in the numbers
that they hoped, and they're even I saw it. I
(07:19):
think it was in Jelopnik. They're even soliciting people who
just rent an EV. Now they're telling them at the
end of the rental period, hey, do you actually want
to buy this car. Here's what we'll sell it to
you for. You don't even need to take your things out,
just to just keep on driving. Really really incredible, Like
Hurts really wants to get rid of some of these
Teslas and other evs that they bought. Wow, their loss
could be your gain. It's at least worth taking a
(07:40):
look to see. But I mean some of those cars
are priced at sub twenty thousand dollars. That's not bad
for like an EV if it's in good condition.
Speaker 1 (07:47):
Absolutely, And it makes sense that they're wanting to unload
these because like if you think about it. If you
let's say you're a business traveler and you're just flying
into a city for the day, You're not thinking about like,
you don't want to have to learn how to drive
an EV you don't want to have to learn the
ins and outs of a tesla if that's not what
you typically drive. You want something that you're used to.
You're going to get to work or the office wherever
you're visiting. I don't know how this works, make your
(08:08):
sales calls or something like that. You don't don't have
to find a place to charge. No, Yeah, And when
it comes to if it is an overnight trip, where
are you typically staying. Most folks are staying at a hotel,
but how many of those give you the ability to charge?
I mean, is not that easy. And this is something
Kate and I learned firsthand when we went out to Colorado.
I wanted to try out the tesla and I was like, man,
it's kind of a pain in the butt actually to
(08:29):
stay at a condo where I can't charge the thing.
And we were forced to find the superchargers, which was
fairly easy, but still budgeting the time to because you
still have to sit there while it's charging, even on
a supercharger, and the cost it was just as expensive
as gasoline. Yeah, and that's why it's better to own.
It makes a ton of rent. All the advantage is
being able to drive it home, pulled into your garage
(08:51):
and do that slow basic charge. That's where the real
savings come in. Absolutely, No, the real savings is buying
not a new car but a used car. Because the
average price of a new car these asual is it's
still close to fifty thousand dollars, which is it's difficult
for me to wrap my mind around.
Speaker 2 (09:07):
I want to say, if I'm recalling correctly, is like
and seventy three dollars average price for a new car
so expensive.
Speaker 1 (09:13):
Twenty percent of buyers now have a monthly payment of
one thousand dollars or more. And certainly some of this
we can blame on inflation, but that's only a part
of it. Felix Salmon over at Axios. He highlights that
our tastes they account for most of the price increased.
We like nice things or less content with compacts in
(09:34):
sedans than we used to be, and upgrading to the
suv or upgrading to that truck. It costs dramatically more.
And so when you're thinking about your next car, just
keep that in mind. For some folks, a three to
row shuv maybe it is necessary. But if not, man,
a smaller car is going to save you a lot
more money in almost every way as well.
Speaker 2 (09:53):
Yeah, I think that's really important to highlight, Matt. I
think a lot of it's like that Spider Man meme
where all the Spider Man are at each other. I
think it's really easy to point in inflation, but then
there's a finger pointing back at you, and it's like, well,
did you have to buy the biggest possible car on
the planet. And when you're talking about those big SUVs,
we're typically talking about seventy plus thousand dollars rides. And
(10:13):
so maybe you need it, maybe you don't, and if
you don't, you can save a lot of money. And
this coincides perfectly with something else I saw about the
amount of space that the average American has in their
home these days. The number of homes with extra bedrooms
just hitting all time high. So like we are gluttons
for space and we're expanding maybe even when we don't need.
Speaker 1 (10:34):
To, or just such a facy rich nation yea, our
tastes have exceeded our pocket book. That's true, that's right, Yeah,
and so yes, similar to buying the larger car, that
extra space is going to cost you big time. Zillow
estimates that the average three bedroom home costs three hundred
and thirty six thousand dollars, but the average four bedroom
home costs four hundred and ninety six thousand dollars. That's
(10:56):
a more than one hundred and fifty thousand dollars difference,
which is substantial. And there's nothing wrong with having a
home office or having a guest room, right, having maybe
a little bit more room than you need.
Speaker 2 (11:06):
But and especially you know post COVID more people working
from home, Like I get that you want a separate
space like that. But given that homes are one of
our most expensive purchases, it's important to go in eyes
wide open and know that buying a beastly home, one
that's maybe larger than you actually need, with space that
you're not going to put to use very well, it
comes with financial consequences. And Matt, I think sometimes people
(11:28):
think about, well, what about when the rare occurrences where
people are staying at your home yep, or maybe Hey,
the holidays just finished and you had someone staying at
your home for four or five days, and you're like, gosh,
don't want to live through those tight quarters again next
Christmas when it comes around, Well, maybe think about renting
that special person in your life, your parents or whoever
they might be, renting them something around the corner. And
(11:51):
that is way cheaper you pay for it yourself, even
how much cheaper is that than renovating, adding on or
buying a new, bigger house.
Speaker 1 (11:57):
Tens of thousands of dollars. And the same thing is
true when it comes to to vehicles. Like a common
thread between silk houses and autos is the fact that,
like we're planning for these edge case scenarios that rarely happen,
and we catastrophize what would happen if we were in need? Right,
and so like I'm thinking of like going back to
cars and trucks. Folks are like, well, I want to
have a truck because I want to be able to
(12:17):
pick up the new refrigerator because we're going to upgrade
our appliances or whatever. A couple of things here. First off,
Costco and Home Depot they all deliver. Yeah, so you
don't even need the truck. Secondly, if you actually do
need a pickup, well, for you could borrow it. But
let's say you don't have any friends with trucks. Okay,
you can still go to home depot and rent the
stupid truck for twenty bucks for a flatbed. And there's
(12:37):
a big difference between paying twenty twenty five bucks to
rent a pickup truck versus financing a seventy five thousand
dollars decked out whatever fancy pickup truck. That people are
spending so much money on this.
Speaker 2 (12:48):
And it's I think it's just so easy to feel that,
especially in the aftermath of a visit like that, and say,
we got to do something about this house.
Speaker 1 (12:55):
It's getting too tight. But is it really getting too tight?
Let's just sign up for some payments. Yeah.
Speaker 2 (12:59):
And it's just interesting to see that Americans have gotten
accustomed to having more space than they actually need. Part
of that is increasing home sizes, part of that is
declining family sizes. It's kind of both of those things
happening simultaneously. But we used to get by with a
heck of a lot less space in this country, and
to think, I don't know the twenty five hundred square
foot house is getting pretty tight from my family of
three like that. I think that's the phenomenon that you
(13:20):
and I would love to combat a little here.
Speaker 1 (13:22):
Absolutely, Joel's talk about debt, specifically medical debt, because it's
no longer going to show up on credit reports, or
actually will it, Joel, We will see. That's what That's
what all the headlines are saying. At least, it's another
political tug of war the outgoing Biden administration. They have
finalized a rule that is going to end the inclusion
(13:43):
of all medical debt on credit reports moving forward. We've
already seen the removal of sub five hundred dollars medical
bills from being reported to credit bureaus, which has helped
a lot of folks not have their scores crushed thanks
to just, you know, a minor bill that they couldn't
afford to pay, or even maybe that they forgot to pay.
But this much bigger rule change would mean that medical
(14:04):
debt of any size can no longer plague people on
the credit front, and it would impact close to fifteen
million people according to the CFPB. But I think it
is unlikely to stick because again of the way that
we arrived to this rule being implemented. It's not that
we don't feel for folks who have medical debt, certainly, but.
Speaker 2 (14:26):
And it's not that the system doesn't have meaningful problems
with sure how medical debt.
Speaker 1 (14:32):
Is, but the way you arrive at solving these problems
and matters a ton and to say, carte blanche, oh,
we're going to change the rules. We're going to change
the standards. As to the idea is that, well, everyone's
credit score is going to be boosted. But like, think
about the last time you had, like just think about
great inflation with teachers. What if a teacher says, hey,
I'm only going to give a's this semester, Well, guess
(14:52):
what that A no longer means anything because everybody got
an A. And so what do colleges then do. They're like, Okay, well,
we're actually looking for people that have high than A
four point zero. We're looking for the students out there,
they have the four point two to four point three
who are tacking on the ap classes. That's what I
see happening here is that there's not going to be
this sort of long term benefit to folks because lenders
(15:13):
are still going to cover their butts. They're still going
to find ways to filter through applicants that are out there,
and they want the best applicants who are looking to
take loans from banks and credit unilll.
Speaker 2 (15:22):
The other thing is that this might be this might
not live for very long because it.
Speaker 1 (15:26):
Is assuming the best that it is able to stick
around for.
Speaker 2 (15:28):
Literally, you know, weeks away from transition to the next presidency,
the next administration, and this could be overturned and with
stroke of a pen. So when we don't arrive at
legislation in the proper way, which is typically through congressional action,
which they have been loath to work, it seems the
sort of back and forth politics and legislation that we've seen,
(15:50):
specifically from executive branches and administrations going back and forth,
we see more of that, and that means that these
changes aren't necessarily standing the test of time to stay.
Speaker 1 (16:00):
Yeah.
Speaker 2 (16:00):
Oh, and by the way, we have an episode go
back and listen in to episode seven sixteen if you
want to know how to fight back against medical debt again. Oh,
the system sucks, doctor Virgie. Doctor Virgie, she was wonderful
and the system is again not consumer friendly. The healthcare
system the health insurance system and then the reporting of
health debt to your credit report. But if you want
(16:23):
to know how to battle that in your life, you
got to stick up for yourself. Episode seven to sixteen
is for you. Will link to that in the show
notes And Matt this brings up too, you're kind of
getting at maybe how credit scores are becoming less relevant
if we're not taking into account certain factors for credit reports.
And I guess the importance of credit scores has been
widely debated in the personal finance community. Some people think
(16:44):
that they matter, other people would say that they don't.
Dave Ramsey in particular, is one of those guys who
would say, oh, he loves.
Speaker 1 (16:49):
The I love debt score. That's what he calls it.
Speaker 2 (16:52):
Heytes that thing, right, And you and I have said, well, no,
it's it's not the best thing in the world, but
it's smart to jump through the hoops to make sure
that your credit score stays solid. And so this Yahoo
Finance article detailed why you shouldn't listen to Dave Ramsey's
advice on living without a credit score, and we wholeheartedly
agree with it. The credit scoring system is flawed. The
(17:12):
credit bureaus are error prone and not great at responding
to your concerns. There was actually another lawsuit just filed
against TransUnion this week because guess what, they don't deal
with consumer complaints well at all. And that's phrasing it nicely.
But at the same time, you know, the game isn't
all that hard to play once you kind of dig
into the rules, and not playing the game of trying
(17:35):
to have a solid credit score makes your life harder.
You know, not tending to your credit score. It can
lead to higher mortgage rates, higher insurance costs in most
states around the country, to not getting a rental that
you're interested in getting if you know you are. Let's
say you're trying to go down the street and you say, oh, hey,
I want to apply to live at this property. Well,
the landlord might say, I don't know. Your credit score
(17:56):
is pretty rough. Sorry, you can't live here. So you're
only harming your self if you're not paying attention to
your credit score. And we've got resources on how to
money dot com about how to tend to your credit
But I think despite what Dave Ramsey says on this,
we advise caring about your credit score, even though he doesn't.
Speaker 1 (18:12):
Yeah, but it's also possible to pay too much attention
to your credit score. The Journal documented someone someone who
is attempting to attain a perfect credit score. He was
already at eight forty, but guess what, Joel wasn't good enough.
He wanted the coveted eight fifty, and he achieved it.
One of those type A folks. I guess, yeah, through
some trial and air. But dude, this what a hollow victory.
(18:35):
Talk about like majoring in the minors. Maybe at the
end of the soul section, I'll ask you what your
credit score is, but I don't. Honestly, I don't know
right now. I know you don't know because it doesn't Honestly,
it doesn't even matter. I was anytime we talk about
credit score, I know it's good enough, so I'm always curious.
I'm like, all right, well, actually, where am I sitting
right now? Probably like maybe I'm guessing I'm like seven eighty.
I bet you're higher than that. Actually, But there are
a certain segment of Americans out there who seem to
(18:57):
be obsessing over the credit score to an unhell healthy degree.
But the truth is, anything above a seven sixty is fantastic.
And that's going to get you qualified for the best
loan terms out there. And so what we would say
is to it's kind of fun, right if you're just
like like the way I'm talking about it, be like, oh,
you just kind of keep an eye on it, and
it's kind of fun to be like, oh, yeah, actually
I'm ten points higher than you. But also, don't make
(19:19):
this slight if that's what you want to compare your friendships,
like like just some healthy competition, right, Like it makes
me think of that one time when we're like, all right,
where do we think Netflix is going to be at
the end of the year. We never followed up on that. Actually, yeah,
you remember that. This is like years ago when Netflix
tanked or whatever, and you and I we had a
small friendly wager, yeah on Netflix the price of their stock.
But don't take it too seriously. Don't waste your time
(19:41):
and energy trying to push your score way up above
anything that is actually going to move the needle when
it comes to the kind of loan terms that you
might be able to qualify for. Yeah, in the case
of your credit score, good enough is great, agreed. And
I think if you are kind of wondering where your
credit score stands. It's a good idea to get the
picture that you can typically get that from a credit
(20:02):
card company that you do business with, or you can
check out credit karma dot com. That's a good place
to kind.
Speaker 2 (20:06):
Of not just get an idea of what your score is,
but then you can also they've got like the score
card that'll help you help highlight the places where you
can improve your credit. But again, if you're in that
seven to seventy plus range, don't sweat trying to raise
it significantly. And it was really interesting to see the
journey of this guy, Matt, trying to improve his score
to eight fifty and how much time and effort it took.
Speaker 1 (20:28):
I feel bad for the guy. Yeah, Like, honestly, guess what,
like as a waste of.
Speaker 2 (20:31):
Time, we only hear so many hours on this earth
does don't waste it thinking about a perfect credit score.
Speaker 1 (20:35):
As I'm reading through that profile, and just like, dude,
there's so many better things you could be doing with
your life, but instead this is the thing that you've
chosen to obsess over. Yeah, but Joe, we got more
to get to more Friday Fly, We're gonna get to
points Purgatory and more. Right after the break our Matt,
(20:57):
we're back. Now it's time for.
Speaker 2 (20:59):
The ludicrous headline of the week. This one comes from
the Wall Street Journal and the headline reads, You're invited
to Wall Street's private party. Say you're busy and more
and more is being written about alternative assets right now.
And Jason's Wyke, he's the investment columnist over there at
the Journal. He had a great piece on why we
(21:19):
should kind of give him the heisman, right, we don't
want alternative assets in our lives, in our portfolios, even
though financial advisors are pushing these alternative investments on us
as individual investors more than ever before. And there are
all sorts of ways now we've documented this on the
show in the past, for people, the average person to
(21:41):
invest that were essentially unavailable to previous generations.
Speaker 1 (21:44):
We talked about.
Speaker 2 (21:45):
And some of that's good, right, like the advent of
index funds in the seventies, Like that's a beautiful, wonderful
thing that makes it easier to invest. And then there
are other ways that you can easily invest, but in
products that might not makes sense for you, So wine, whiskey,
real estate. Those are some of the alternative assets that
(22:06):
people can now invest in. There's invest in farmland, farmland
anchor Trader Veno vest. I mean, there's all of these
websites out there that make it easy to invest in
all these different things.
Speaker 1 (22:15):
Hey, why don't you.
Speaker 2 (22:16):
Diversify your portfolio and invest in some farmland or some
art right stuff like that. And then it even got
pretty wild with NFTs and meme coins over the last
few years. And you can do this all like from
the comfort of your home and your PJS on a
slick looking website. So I think people are more tempted
or even just like some of the partial real estate
investing websites. Matt the crowdfunding real estate website. That's another
(22:38):
one that attracts people, and the accessibility I think makes
it seem normal or even good. But then these alternative
investment products come with often in small type, often in
places that are hard to find, significantly higher fees, yeah,
lots more risk, significantly less liquidity. And so I'm with
(22:59):
Jason's wig here. We don't believe that anybody out there
listening needs any alternative investments in their life in order
to be diversified, in order to build wealth wisely. In
In fact, I think a lot of people you're maybe
majoring on the miners, if you like, try to put
too much your focus in. They're kind of like trying
to get that perfect credit score. It's just not important.
Speaker 1 (23:17):
Agreed. One small caveat is real estate, because that is
something that you and I are invested in, but not
this sort of crowdfunded approach to investing in real estate
I do. I think it's not even something that we
talk about all that all that often these days, Like
when's the last time you bought a house, Joel, Yeah,
it's been a minute. Like I haven't purchased a home
in the twenty twenties because well, my personal home. But
(23:38):
when it comes to an investment in real estate, because
the deals were back in the teams harder to come
by now. And if you already have a property, that's fine,
it's sure hang onto it, especially if you've got that
low interest rate mortgage rate baked into it. But for
somebody who is interested in growing their wealth right now
and they're just getting started, and that is not an
area I would say that you should be focusing on
unless it's something that you're really really passionate about it.
Speaker 2 (24:00):
And I think there is a difference in my mind,
between owning long term real estate that you invest in
locally and you self manage or renting out a portion
of your house right short term rental style. There's a
big difference between that and between some of these alternative
investment styles, because there are advantages you can have as
a local real estate investor that you don't have when
(24:23):
you're investing via some of these other newfangled websites. And yeah,
there are higher fees in real estate, but there are
also advantages to real estate too that the index fund
investor just doesn't quite have. But yeah, I think that's
that's like the one exception I'll give to this. I
just don't I don't wrangle regular real estate investing, owning
other owning, owning more properties into the alternative investment sphere.
(24:46):
I think I'm talking about all these other things or
all these digital ways to invest that seem super sexy,
and they talk about and they tout magnified returns by
investing in art or watches or whatever, and hey, look
at what's happened with like watch valueations matt over the
past few years. Those have gone down. And it's been
said that, oh, Rolex watches, they only go up in value.
That's not so that's.
Speaker 1 (25:06):
Not the case necessarily, the case stock market's been going up,
the value of your Rolex watch has gone down. Yeah,
I will say, if investing more is one of your
big goals for twenty twenty five, be careful which brokerage
firm that you choose to go with, because more of
the different uh, you know, as we're talking about apps here,
there are a lot more investment apps that are more
like traditional investing apps, but they are incentivizing risk these
(25:27):
days more than some of the big ones that we
are actually fans of. So it started with robin Hood,
of course, but they've actually gotten better since their inception,
while other newer companies have leaned harder in the gamification direction,
and new research shows that it is particularly effective at
getting younger investors with less investing knowledge to trade more frequently,
(25:47):
which of course leads to worse results. There's a study
that showed that the best performing portfolios were the unfortunately,
were those of people who had died and they hadn't
been touched. Because you're not getting in there and you're
not messing, you're not buying and selling at inopportune times, I.
Speaker 2 (26:01):
Feel like you should reiterate that, because every time I
see that, it's it just it's kind of baffling. But
it makes a lot of sense, right that, like people
who aren't living can't tweak their portfolio so they do better.
Speaker 1 (26:12):
The less active of an investor you are, the better
your results are going to be. And so instead of
realizing your potential behavioral biases and you know, and helping out,
some of these newer apps out there and some of
these newer platforms are exploiting your behavioral issues, your biases
because it's better for their bottom line to get you
to trade more often. And this is why the more
(26:32):
boring companies that we have always recommended, like Vanguard and
Fidelity are still great. And it's almost like a ride
of passage for younger investors to get sort of distracted
by the shiny, the novel, the sexy, the new, which
I almost want to be okay with because when you're younger,
you've got less money at risk, like the stakes are lower,
And part of me says, well, better to learn these
(26:54):
lessons now while you're younger with fewer zeros than you
know twenty thirty years from now. But of course The
reason we have the show is for people to learn
from our mistakes, to learn from other people, Like why
make the same mistakes that your parents have made when
you can learn your lessons like in a secondhand way.
But I think there are still going to be some
folks out there who might have to experience it.
Speaker 2 (27:14):
Well, that's exactly what you marry. In our conversation with
Josh Brown, that's that was one of the things he
said was like, no, people should be like given the
chance to to screw up. And I think people should
certainly be given the chance to screw up, but I
wouldn't it be better to avoid it completely and to yeah,
learn from other people's beats, right, Yeah, So I agree,
that's why we have the show.
Speaker 1 (27:34):
I guess that's what we're trying to advocate for. People
are still gonna meme, bros. Are still gonna meme, you know,
Like folks are still going to go out there and
do the dumb things and.
Speaker 2 (27:42):
If they want to do And we talked about like
maybe sandboxing too some of your investing as well, Like
if you have this die hard desire to trade or
to speculate on individual.
Speaker 1 (27:52):
Stocks, do you want to have a little bit of fun.
Speaker 2 (27:53):
Yeah, that's okay, but just do it with a small
portion of your portfolio and make sure you can lose
sleep or you won't lose sleep at night if you
lose the money that you're training inside of that account.
But I would siphon that off and do it somewhere
else and do the boring thing with the vast majority
because it's the tried and true way to build wealth
and it's far less mentally taxing. So yeah, let's talk
(28:15):
about credit cards for a second. For the extreme credit
card nerds, getting the right reward credit card can be
massively beneficial. And Matt I think about hearing from listeners
the exotic trips that they've taken, the cool places they've gone,
and how much money they've saved because they've just played
the game. They know the system, and they've just changed
essentially the method of their payment and it's led to
(28:36):
some pretty cool perks. And we've talked about that on
the show a reasonable amount, most recently in episode eight
ninety nine with our friend Chris Hutchins from the podcast
All the Hacks. Well, there was this new survey from
bankrate and it made me think twice about rewards credit cards,
or at least want to add some nuance into the conversation.
What Bankrate found was that the average person, they're not
(28:56):
paying much attention to the credit cards they are using
and to the points that they're racking up. Almost a
quarter of folks ended up not redeeming any of their
rewards in the past year, so they hey, maybe they
accumulated their rewards, but they didn't spend any of them.
I forgot about them, Yeah, exactly. I think that's a
big part of it. It's almost like the gift card
that you were given a couple of years ago. It's
lost somewhere or it's been forgotten about, and I think
(29:19):
it could be fun to play the game. It can
be really cool to accrue those travel points, but the
truth is using them for the cost of the trip.
That's the real joy. I mean, if you miss out
on that connection, what are you actually doing. Plus the
longer those points linger, the less valuable they become. And
travel rewards, Man, they might sound great in theory, but
what do they look like in practice in your life.
(29:40):
I think it's a good question to ask, because it
turns out, based on this Bankrate survey, cash back cards
were the crowd favorites, and although yeah, they might not
provide the best theoretical return for your spending, they might
be the best real life choice for a lot of people.
Because the credit card rewards the best ones that you
can get are the ones that you're actually going to use.
Speaker 1 (30:00):
Absolutely, yeah, where are you going to actually follow through
and do the dang thing. But having said, be careful
how you're using your credit cards, especially if you are
a newer listener, or if you've had a history of
overspending or getting into consumer debt. But either way, check
out the Golden Rules of Plastic. This is an article
we've got up on the site. We don't want poor
(30:20):
usage of credit cards to increase your debt load or
to harm your credit score. We talked about earlier The
Financial Times they just published an article about how US
credit card defaults. They're actually at a fifteen year high,
which isn't great macro data or on an individual micro level. Basically,
the lender doesn't think that the debt will be repaid,
(30:41):
so they write it off. That is what it means
when credit card debt is in default. We've discussed how
paying off debt, how it's basically like this apex goal
for Americans and we love that, especially as interest rates
have climbed. But never having a balance, well, that is
crucial to smart credit card use to be able to
completely avoid it all together or to get out of
that debt. If you have acquired some we will link
(31:05):
to that Golden Rules of Plastic article in the show
notes as well. But if you need some additional help,
we would well, we would love to hear from you.
Send us a voice memo. We'd love to hear the
particulars of your personal situation. But if you are someone
who is like no, no, no, guys, I can't wait
for you to maybe get back to me on a
show off in the future. I need help now. If so,
we would recommend to reach out to an organization like
(31:26):
Money Management International that provides credit card debt counseling. We
want consumer debts to be something that is in the
rear view mirror for you.
Speaker 2 (31:36):
And I think I just saw this today this morning, Matt,
when I was looking at my email, and the number
is ticked up. The percentage of people who use credit
cards who don't pay them off on time infil every month,
that is just going up. That number, so I think
it's like forty eight percent of families now have some
sort of recurring credit card debt, and that with a
high interest rate attached. That is putting you behind in
(31:59):
your finances. It's like running on a treadmill, but like
have you seen the treadmills for the guy who runs
marathons in like two hours and they try to put
people on it like the.
Speaker 1 (32:08):
Size of a room, like a small regain, and it's like,
can you run out the pace? And you can't. I couldn't.
Speaker 2 (32:12):
I couldn't run it for eight seconds, I don't think,
and people just fall flat on their face because that's
how fast he runs. But he runs that fast for
twenty six miles. That's what like perpetual credit card debt
is doing to your finances.
Speaker 1 (32:22):
The algorithm knows you, Joel, Yes it does. Twenty twenty
twenty one, Joel would have been like, wait what I'm
being fed treadmill videos of I give had way too
much running the world record marathon runner. It's pretty ridiculous.
I love it.
Speaker 2 (32:35):
Well. We talked about the downsides of buying gift cards
ahead of Christmas, and I have more hesitation, I think
than you do. You you you're more leisse fair about
gift cards and I yeah, let people make their mistakes, right,
I won't be able to think twice. Although there were
some good discounts out there that made gift cards cheaper,
which we're down with. Let mean, I think about the
(32:55):
annual Target ten percent off gift cards sale. We didn't
talk about it on the show, but it's usually kind
of of after Black Friday before Christmas, and if you're
a big time Target chopper, hey go get that discount,
but just remember to not be a spillage statistic. And
spillage is when gift cards linger for months or for
years without being spent. And this is great for retailers
(33:18):
because they hey, get they got the money in their
pocket already, they sold the gift card, and then if
that gift card never gets presented, that's cashing their in
their pockets. But it's important for you to not be
that statistic and to spend the money because, as we've documented,
there's no guarantee that the store you have a gift
card for sticks around for forever.
Speaker 1 (33:36):
It's right if you're a TGI Fridays was a Fridays Yeah,
that was the last one.
Speaker 2 (33:40):
But this has happened at many different times, right where
a store is just going out of business and you're like,
wait a second, or my gift cards worthless and they
might be. So make a plan to spend your gift
cards quickly, like let's say in the first quarter of
twenty twenty five, or another option. If you have a
gift card and you're like, I'm never using that. I
don't really like this retailer. Why did ant Edna give
it to me? Use a site like card cash dot com.
(34:02):
You can sell a gift card online. You're gonna get
you know, depending on where it's two pennies on the
dollar or let's say sixty cents on the dollar or
something like that. But getting something is better than getting nothing.
Just I think the key here is to not let
your gift cards languish or get lost.
Speaker 1 (34:19):
That's right. Actually, have you continue to use the costco
instacrt gift card hacked? Uh?
Speaker 2 (34:25):
I will say they on the online purchases they limit
two Instacard gift card purchases per fourteen days.
Speaker 1 (34:32):
Oh really?
Speaker 2 (34:33):
Yeah, but then so I had to I ran back
into the store to get a couple more. But yeah,
it's working out well for me. So far, I'm still
as a hoop.
Speaker 1 (34:40):
That you're willing to jump through for sure, give that
sweet discount. Well that's a situation where it totally makes
sense to get the gift card. Dreda. I'm not anti
gift cards.
Speaker 2 (34:49):
I'm just anti gift cards going to waste, Yeah, going
to waste, or I prefer for you to get them
at a lower price.
Speaker 1 (34:54):
Well, that's gonna be it for this episode. We hope
everyone has a fantastic weekend that you stay warm out there.
We'll see back here on Monday with a fresh ask
how to Money episode. Head over to the website. Specifically,
check out our credit card tool if you are looking
for a credit card that aligns with how it is
that you spend your money, or specifically the kind of
rewards that you're looking to garner from your credit card.
(35:15):
You can sort it buy airline, you can sort it
buy business cards, personal cards, cash back, and of course
you can find that at how to money dot com.
Forward slash credit card tool. Joel, it's gonna be it
for this one, buddy. Until next time, Best Friends Out,
Best Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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