August 16, 2024 • 33 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: concert t-shirts, debt disasters, when you’re afraid to spend, expected student loan forgiveness, college degree decisions, affordable new houses, realtor commissions reduced, retirement raiding, financial fiduciary failures, Venmo vigilance, & green tax credit tips.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How to Money. I'm Joel and I am
and today we're talking debt disasters, retirement rating, and tax
credit tips. That's all right. This is our Friday flight
(00:29):
where we're going to talk.
Speaker 2 (00:30):
Through the most important headlines, the ones that we think pertain.
Speaker 1 (00:33):
To your personal finances the most.
Speaker 2 (00:35):
All the other stories, Joel, you can just forget about it.
Speaker 1 (00:37):
Yeah, they're not important. They're the twenty four to seven
news cycle. We don't cover that stuff. We cover the
money stuff, the really important stuff, because who cares about
a lot of other garbage. It's true.
Speaker 2 (00:46):
Yeah, got a you have a money saving tip first
or anything today?
Speaker 1 (00:49):
Joel? Okay, I do actually real quick before we get
to all the stories, Matt, I went to a concert.
We've talked about concert price inflation recently. Oh yeah, it's
expensive to go to a concert. These days? Are things
more expensive? Joel? Everything is more expensive? And so I
went to see my good buddy Zach Bryan. No, I
don't actually know him. I wish I did Yell boys. Yeah,
but he fantastic show. But what I realized Emily and
(01:11):
we were walking to our seats and we saw this
incredibly long line. It looked like it was for ice cream.
It looked like it was for ice cream to the bathroom,
and I was like, wow, why does everybody want ice cream?
Speaker 2 (01:21):
You mean free ice cream? Like, certainly, no, it was
paid ice cream.
Speaker 1 (01:25):
But and actually, interestingly enough, at Randomly the Mercedes Benz
where we are local soccer team plays where Zach Brian played,
their concessions are incredibly cheap. Unlike most of the rest
of the country, that random stadium keeps those prices low
for people, which is cool, thank you, Arthur Blank exactly.
But the one thing that was incredibly expensive and what
everyone was waiting in this long line for was for merch.
(01:48):
They wanted the merchant table baby, the T shirt. Guess
how much the T shirts were, Matt, I'm sure you
probably know.
Speaker 2 (01:53):
If I had a guess, okay, so pre panned T
shirt prices, I would have said, like forty fifty bucks.
I'm guess some postpan increase that by like what twenty five.
Speaker 1 (02:02):
Percent right now, and it's fifty bucks first ye yeah, okay,
we got to wait in that long line. You get
a T shirt for fifty bucks, or you get it
seems reasonable, there's a hoodie for like ninety Oh my gosh, okay,
maybe I'm an old man, that cantankerrous old man. Do
you know to Zach Brynd hoodie, it is no, I don't.
And plus I don't like wearing people's faces on my
body if it seems weird. But your wife's face, right, exactly,
if she got you a hoodie with her face on it,
(02:23):
you'd wear that. I would totally wear that. It would
probably cost a lot less too. Certainly, I just saw
so many people, Matt.
Speaker 2 (02:28):
But you can't blame it on inflation because well, hey,
maybe we can tie this into like a story, because
I'm sure a lot of folks saw that, hey, we've
conquered inflation getting closer to because I said, the Federal Reserve,
you've done it, because we're down it's that two point
nine percent point nine. Yeah, And I'm sure you saw
some of the headlines which were like, inflation has not
been this low in years. But just a reminder out
(02:48):
there for folks, this is true, inflation hasn't been this low.
But what it's not saying is that prices. It's not
saying that prices haven't been this low since preplane. What
they're saying is inflation, which means we're still losing money
at a ray higher than we would like to.
Speaker 1 (03:01):
It's just we're just not losing money as quickly as
we used to. That rate of increases slowing, for sure.
Speaker 2 (03:06):
It's sort of like getting beat. It's like, oh, we
got beat again, but well we didn't get beat as bad.
It's like you still got whipped three to one instead
of six to nothing. Yeah, no, for sure.
Speaker 1 (03:14):
And I guess really what that made me think too,
is I saw all these people wait in line to
buy these really expensive merchant I was like, that's how
much I paid for the ticket to get in? Really
it was like fifty bucks. And so to buy a
T shirt that costs fifty bucks, people are spending more
at the concert than they spent on the ticket itself.
And to me, it's all about the experience seeing the music,
and I don't I don't need something that I can
(03:34):
physically wear necessarily to remember that night.
Speaker 2 (03:38):
Maybe if it was a different artist, you would. If
you were a SWIFTYE and you're looking for the Eras
T shirt. Yeah, honestly, hey, let's let's pind some of
this on her, because I'm sure so much of this
it's like, well, we didn't make it to.
Speaker 1 (03:49):
The Aras tour.
Speaker 2 (03:50):
Yeah, we also like Zach Ryan, and so you're willing
to maybe fork out a little bit more because it's like, well,
we were thinking about spending thousands on that show and
we only have to spend like one hundred bucks and
we're little like kings and queens over here. Yeah, there's
so many outings in relative. It's like if you go
to the movies, like you can watch just the movie
and pay get out of there for paying like nine
bucks ten bucks each or whatever. If you go to
(04:10):
the mattin a show, but if you buy all the
accouterments to go with it, you're like at least doubling
the cost.
Speaker 1 (04:16):
Of your movie. And I don't want to sound like
apprude or something like that, but I was like, no way,
I'm standing in that line for a fifty dollars T shirt.
You got to pick your battles man. Yeah.
Speaker 2 (04:24):
In fact, as more folks are spending like crazy, credit
card debt problems are actually getting worse right now too.
A higher percentage of Americans nearly half, aren't able to
pay their bill on time and in full right now.
And so what that means is that we're seeing higher
balances overall, and more late payments as well, which of
course violates our golden rules of using plastic. That's not
how we do it around here.
Speaker 1 (04:43):
People buying too many of those expensive T shirts.
Speaker 2 (04:45):
Mat Yeah, interest rates on credit cards they're never great,
but they're obviously worse than they were a few years ago,
which only compounds this problem. Bank Rate reports that folks
are still splurging on things like travel and also entertainment,
but they don't kind of yeah, they don't have the
money in the bank. They don't have the cash in
order to back up that spending, which means you're paying
(05:05):
something like twenty two percent in interest for that discretionary spending.
And again, this is it's worth maybe bringing up the
inflation headlines that maybe a lot of folks saw, because
I think a lot of folks might give themselves permission
because they're like, hey, things are coming back down. No, no, no,
we're never We're not going to go back to where
prices were Prepan. And actually, if we are in Postpan,
if we did, that would be bad, it would be
a bad thing. We are still experiencing inflation, just not
(05:28):
quite at the clip that we were experiencing. Don't see
this as permission to go out there and spend willing
nelly on your credit card.
Speaker 1 (05:34):
Especially again. Yeah, I think the average balance MATT in
that report was like over six thousand dollars, and it's
increased by a few hundred bucks over the past couple
of years. And that's scary. That's just a lot of
money that's compounding in the wrong direction for you. So
pay attention to that credit card debt if you have some,
make a plan to get rid of it as quickly
as possible. Undebt dot it is a great website to
(05:55):
kind of help you come up with that plan, whether
you're going the debt snowball or the avalanche method. But
it might seem like a low enough number. Oh it's
not five figures, it's only four figures.
Speaker 2 (06:05):
No, no, no, no.
Speaker 1 (06:05):
You want to get rid of it and get rid
of it as quickly as possible. On the opposite side
of the spectrum, and I saw this article in The Atlantic.
It was about well to do folks who can't spend
money no matter how much they have, and a litany
of our favorite how to money guests are actually quoted
in this article. And I don't know, Matt, You and
we probably have more in common with the people they
highlighted in this piece, which documented people who have enough savings,
(06:29):
plenty in savings investments, they've got a good income, but
they still can't allow themselves to spend on things they
care about. So, for instance, they highlighted this person who'd
saved up enough money to buy a new car in cash.
They'd save like sixty grand, but they still opted to
buy a much cheaper car even though they had the
money and they had allocated it for that specific purpose
(06:49):
and decided to keep the rest in savings. And that's
obviously it's not the worst thing in the world, right.
Spending more than you bring in is much worse. You're
gonna find yourself in that credit card debt. But finding
healthy outlets for spending is also a good thing. And
these folks highlighted in this article and some of the
people we know in the personal finance space have a
hard time doing that. There's just a massive gap, a
(07:11):
healthy in between place between putting what you can't afford
on plastic and putting off buying what you can afford
out of an irrational fear. Sure, yeah, balance people, Yeah,
that's what we're looking for. Quick student loan update. Half
of student loan borrowers are expecting student loan forgiveness. This
is according to a new Sally May report. And I
want to highlight the language here.
Speaker 2 (07:32):
These folks are not just hoping, but expecting student loan forgiveness.
I honestly understand why because communication from the political classes
has been that this is something that will happen. We're
fighting to get this done for you. Yes, and the
messages you conveyed.
Speaker 1 (07:48):
You can count on it.
Speaker 2 (07:49):
And because the hopes have been raised, but student loan
forgiveness has remained elusive because of the approach that is
what has been deemed illegal. Basically, Congress has to do something,
not just the executive branch. You can't just decree that
student loans are gonna get wipe clean.
Speaker 1 (08:05):
If you're expecting Congress to do something, don't hold your breath.
Exactly it will so.
Speaker 2 (08:09):
And most recently the Safe Plan, which makes the path
to loan forgiveness ten years as opposed to twenty, it
is also on hold right now because of the same
legal challenges. And so while forgiveness it's still a future
potential reality, the fact that forty eight percent of folks
are banking on It is scary, especially after all the
hurdles that forgiveness attempts have experienced so far. So keep
(08:32):
that in mind again, don't. It's sort of like the
whole thing with prices coming down. You're you're counting your
your chickens before they have.
Speaker 1 (08:37):
Yeah, which no one should ever do that man. And
then I love using farm terminology.
Speaker 2 (08:41):
Because everyone knows exactly what that means, because even if
they've ever been on a farm, we are so closely
identified with our we don't know where our food comes from.
Speaker 1 (08:48):
They're the agricultural roots. Although I know where my eggs
come from because we do have backyard chickens, that's right,
So I don't count the chickens.
Speaker 2 (08:53):
You say backyard chicken or backyard chickens.
Speaker 1 (08:55):
We have two. We've had some incidents along the way
that I don't really want to detail right now. It's sad,
but just.
Speaker 2 (09:03):
Is making sure that you are down to one because
it's like, no, I'm sorry, we started to hear Gosh,
wouldn't that be sad if you had one lunch checking
so lonely?
Speaker 1 (09:10):
It would be so? But I think you're right Matt. This,
the expectation is one thing that's not okay. I think
the hope is another thing. And so you might want
to direct your finances in such a way that you
are prepared to pay off those student loans wholly on yourself,
and while payments are paused, you are setting money aside
(09:31):
for that express purpose. But if you're expecting student loan forgiveness,
I think those people might be funneling their money in
other ways, spending more than they should, and there's a
good chance they're going to find themselves in a tough
financial situation once student loan payments resume and if some
of these forgiveness attempts fall flat again. And you know,
one way to get rid of loans, we would say,
is to not have them in the first place. And
(09:52):
the halo around getting a college degree seems to be
getting more and more damaged. There's another new poll which
finds it only thirty six percent of Americans think getting
a college degree is worth the time, money, and effort.
Basically a third of folks say yeah, college is worth it.
These days, that number is down more than twenty points
in less than a decade. The shine seems to be
(10:13):
off college at this point. I'm sure COVID had something
to do with that, but it's also the escalating prices, right, Matt,
you and I were both college grads. Were not anti
higher education by any search of the imagination. Some people
call you professor as you walk around town Professor, Matt.
I don't know why they do that. I don't know either.
But whether or not college is worth it, I think
it's a case by case decision. Right. It depends on
(10:35):
what you want to do with your life. You want
to be an engineer, college is probably a really good idea,
and it also depends on how much it costs. It's
it's true, of course that college graduates still earn on average,
a lot more than their high school only graduate peers.
Speaker 2 (10:49):
Yes, that data hasn't changed. Yeah, for a lot of folks,
it's still likely going to pay off in the long run.
Speaker 1 (10:54):
That's right. It's just yeah, it's lost some of its lesson.
But how much You know, what does that student loan
debt look like upon graduate situation, And if it exceeds
what you're likely to earn in that first year of work,
then you're taking on too much debt and you need
to reconsider you need to rethink the value proposition of college.
And it makes me think too about our recent conversation
Matt with Jocelyn Pearson about scholarships, and that is another
(11:15):
way to help tackle that, where yeah, going to college,
getting that degree can make a whole lot of sense,
but reducing the cost of it is crucial in order
for it to really pay off.
Speaker 2 (11:24):
That's rights talk about the difference between buying used versus
buying new, because we know that, let's say, buying a
new car that will almost always cost you more than
buying used, and.
Speaker 1 (11:34):
That buying new anything is going to cost you more, right.
Speaker 2 (11:36):
Typically, well, that's traditionally been the case for buying a
home as well, although new data out there is finding
the opposite is true. Right now, new houses cost at
least a tiny bit less per square foot than old houses.
Speaker 1 (11:48):
In summer of twenty twenty four.
Speaker 2 (11:49):
This is according to a new Zilla report, which is
really fascinating that you've got something that it's like normally
the yeah, the brand new thing is going to cost
you more of a premium. Like if you're sill peel
the plant stick off of it, you're paying a premium
for that.
Speaker 1 (12:01):
Yeah, if you're going on a Facebook marketplace to get the item,
as opposed to Amazon. Typically you're gonna say money because
guess what, someone preloved that item. That's a nice that's
a nice way to say you used it.
Speaker 2 (12:10):
Yeah, it's got a patina, it's been gently cared for.
But if you are in the market for a new
or used home, rates have been trending down, while price
cuts are rising in many cities, and so affordability. While
it hasn't been amazing it, it has at least cooled
a little bit in some meaningful ways that I think
a lot of first I'm home buyers in particular, are
looking forward.
Speaker 1 (12:30):
To Yeah, as the economy calms down, that's part of
what's bringing inflation down, Matt. But it's just really interesting
to see that new houses might be cheaper than old
I prefer older homes typically, but if it's going to
cost me more, I'm more than willing to consider a
new home and think about the fact that maintenance is
going to be a whole lot less in those first
few years typically of new home ownership than my old home.
Speaker 2 (12:50):
Right, Yeah, it's nice having all those new systems. Yeah,
although I feel like this is something we've talked about
all the show before. I think my theory for a
while why a lot of folks don't like new homes
has less to do with the home, has more to
do with landscaping, because typically when you've got a developer,
they clear cut everything and the landscape like that's the
last thing that takes place, right, is like planting trees
or bushes, and they're like, all right, we don't have
(13:10):
any money, let's just plant a couple holly trees, yeah,
and pine stroll over a bunch of grass seed lad
as opposed to old neighborhoods or houses that I mean
they've got, you know, you got one hundred these beautiful
oaks and beautiful trees that can sometimes crash through your house.
But that's something that we're attracted to, is like a
home that looks established and integrated into the landscape around that,
(13:32):
which is something that I think gets mixed when it
comes to these newer builds.
Speaker 1 (13:35):
Yeah, no, I agree. I think that's a big downer
when you're looking at those new neighborhood communities. And so
my parents had like this happy medium where they did clearcut,
but they left this big strip in the center that
felt like a natural park, and they kept, like the
exterior a lot of trees around too. Every lot was
like similarly clear cut, but at least there was some
nature of feeling being in nature. I think that while
(13:57):
they kind of did the clear cut route, something else
by the way that's been budging slowly but surely downward
is realtor commissions. And this is something that we've talked
about on the show that hey, we love realtors, but
commissions for realtors in the United States are higher than
basically any other civilized country in existence. The average buyer
commission has dropped from two point sixty two percent to
(14:20):
two point five to five percent, which is tiny, right,
so it's not a lot. This isn't like massive groundbreaking news.
But that's also before the recent commission settlement goes into
full effect match so we haven't seen I think that's
September when that goes into full effect. I'm not expecting
titanic shifts in the ways that realtors get paid. But
(14:40):
over time, the loosening of the National Association of Realtors
monopoly and their grip that they had is going to
allow technology and diverse business models to flourish. Saving consumers
money in the home buying and selling process. This is
good news. So this current small downward trend is worth
highlighting because of what it could indicate moving forward. And yeah,
(15:03):
we've always talked about the costs of buying and selling
a home can be incredibly expensive. Part of the reason
people should when they're looking to buy a home, plan
to stay there for a minimum of five years, probably
more like seven to ten because of the transaction costs.
But if the transaction costs end up going down, it's
going to save consumers money and it's going to create
more fluidity in the housing market too. So I think
(15:23):
this is maybe the canary in the coal mine, something
good to see, possibly showing a better future ahead.
Speaker 2 (15:29):
I'm really curious to see how this plays out because
I think there's also the chance though, that this all
like it all gets baked into the cake, right and
so I transaction costs are coming down and homeowners that
are currently have their homes on the market are thinking,
wait a minute, folks are going to be able to
save money on like basically it's going to drive the
price up essentially right like Maymi. Potentially, if you've got
buyers who are taking that into account.
Speaker 1 (15:50):
I think maybe in the short term that might be true,
but I think in the long term it's the competition.
Speaker 2 (15:54):
And the long run, competition always wins the ability for
folks to have other options. But really, I'm curious to
where things end up. But Joe, we've got more to
get to. We're gonna talk about the different payment apps
and some of the scams you need to be looking
out for, as well as lottery winner financial advice.
Speaker 1 (16:09):
We'll get to that more right after this. All right,
Friday flight continues. Got to get to our ludicrous headline
of the week. This one comes from USA today. Need
some quick cash. You're allowed to raise your four one k. That, Matt,
(16:30):
is what the headline read. I started pulling at my
hair when I read that, in crying a little bit
at the same time. Ruffled your feathers. I was in
a bad emotional state when I read that your chicken feathers.
That's right. This is a ludicrous headline, of course, not
because it's actually incorrect, but because it's technically true, at
least to a certain exemple. You can't really like raid
your four O one k that kind of I don't know,
(16:53):
kind of taste some sort of like Viking like conquering
or something of your four one k, like ripping it
all to shreds and taking all the money out of four.
Speaker 2 (16:59):
One k pillaging take place. I guess, hey, well, depends
on how much you have in there. I guess, I
guess you got You don't have that very much money
in there, then yeah, you actually could.
Speaker 1 (17:07):
If you got twelve hundred bucks, you can rate it.
But starting at the beginning of the year, thanks two
I guess or not, thanks to the Secure Act two
point zero, you can use your four to one K
as a glorified emergency fund, at least one thousand bucks
of it, no questions asked. You don't need to prove
any sort of emergency. It's all very loosey goosey. You
just grab the money out and you use it for
(17:28):
whatever you want to use it for, and so it's
not really a rating. And I don't really like this terminology, Matt,
because I think it makes people think that the money
in their four on k is accessible. I think even
reading articles like this, if you don't pay attention very closely,
you might end up taking more money out of your
four to one K than even just a thousand bucks.
Sure that is legally allowed, and find yourself in a
(17:48):
taxes and penalty situation, but it's still whether you're sticking
to the rules and only taking out a thousand bucks,
it's still typically a bad idea for almost anyone to
take money out of a retirement account on a whim.
I guess. Putting food on the table is one thing, right,
but for most people when they're taking money out of
a retirement account, when it's for a quote unquote emergency,
(18:09):
it's for things that wouldn't typic qualify as an emergency
in my opinion.
Speaker 2 (18:13):
Yeah, and it's not like you have to actually prove
that emergency status or anything like that. And the data
shows that when you make it harder to tap retirement accounts,
folks are going to be more likely to keep that
money locked up in that four win k or within
that IRA.
Speaker 1 (18:25):
They will plan accordingly, they will get creative, there are
other things that they can do. But the easier that
you make it, the more likely they are to access it,
where they're going to just harm their future financial selves. Joel.
Speaker 2 (18:35):
It makes me think of like when you go to
see a doctor, not a doctor, I guess, but any
time where you're like checking in and there's a receptionist
and they got like some candies there, what do you do?
Speaker 1 (18:43):
You grab the candy? Why because it's right?
Speaker 2 (18:45):
Or like if you at a restaurant when they got
the mints there afterwards, or you love taking the matches
no matter what, why you grab those matches as you
don't need matches? I don't know, they're free, they're right here.
It's same thing with me with like toothpicks. I don't
need a toothpick. Hey, you want a toothpick too? Why
am I taking a toothpick? I never used toothpicks. It's
because they're there right in front of me, and because
they're free, Yeah, as opposed to it being something that
(19:08):
you actually need. So I think folks need to keep
that in mind, Like it.
Speaker 1 (19:10):
Feels like it's just a mission slip.
Speaker 2 (19:12):
Yeah, just because it's there doesn't mean that that is
necessarily something that you should be doing.
Speaker 1 (19:15):
Like I wasn't planning on it, but I guess it's allowed,
So why not.
Speaker 2 (19:19):
Because it's been presented as an option and so yeah,
you can avoid at least the ten percent penalty taking
that money out of a four one k limiting it
to one thousand dollars, but you've still got to pay
income tax, so keep that in mind. The ultimate reality
is that you shouldn't invest money that you might need
in the short term, despite your ability to now legally
(19:40):
snag some of it. We want you to leave money
that you've invested that's meant for returnament to work. We
wanted to multiply for you again for future far off you.
Speaker 1 (19:47):
Yeah, that's right. It's amazing what that thousand dollars could
turn into decades from now. And so really, the only
person that you're hurting, even though it's you're allowed to
do this, but you're hurting yourself, and you're hurting future
you costing yourself thousands and thousands of more dollars down
the line. Retired you isn't isn't happy about this choice
you're making. So I don't know that that headline Matt
(20:09):
needs some addressing. I get why the USA Today headline
riders want to go in that direction, but it's a
little misleading. Hearing folks wrong. Yeah, and I think it's
bad advice to people. Need to know what's legally allowed
and legally available. That's true, But when you kind of
color it and paint it like that. It starts to
lead people down a potentially bad path. All right, let's
talk about financial advice, Matt. You and I we don't
(20:30):
really play the lottery. I guess you do every once
in a while when the jackpot gets really high. Mem
I'm an abstainer.
Speaker 2 (20:36):
George just likes to bet on dog racing, that's right. Yeah,
But well, like once I got a bachelor party. Yeah,
when the actual situation calls for it was really Yeah.
I feel like that's the kind of thing that you
would do that win in Rome, right, you had to
back then.
Speaker 1 (20:50):
But even if you were a win the lottery, Matt,
your life might not be loads better than it was
before thanks to something we talk about often called the
hedonic treadmill. And the truth is your life might actually
get worse altering your relationships. I remember, I think we
talked about this recently. Charles Barkley was saying, like, man,
once I started making money in the NBA, everybody came
out of the woodwork, friends and family. It just changed
(21:13):
his relationship to a lot of people, and there wasn't
much he could do about it.
Speaker 2 (21:17):
Right, People reships go sideways once there's a whole lot
of money online.
Speaker 1 (21:20):
His friends started to see him, or at least some
of them, as an ATM machine. Well financial writer at
the Wall Street Journal Jason's Wig. He recently documented a
couple who won the lottery and super cool folks. They
were opting to give most of the money away to charity.
They chose to enlist the help of a financial advisor
in this endeavor, and so the couple they set up
(21:42):
a research foundation. Basically, what they wanted to do was
find a cure for a disease that had taken their
daughter's life at the age of two. Again, incredible right
that they were compelled to use this newfound wealth in
that way. But then their advisor, Matt opted for variable
annuities for a large chunk of the money that they
(22:03):
had stuck into this foundation, netting him over a million
dollars in commissions. Yeah, pretty much instantly. So he got paid, yes,
and then he would sell those variable new annuities down
the road to purchase more variable annuities, garnering him more
money at the couple's expense. They got paid again. Yeah,
he's like double dipping. The best part is the commissions,
(22:24):
and so sadly the money dwindled. It was going down
in value as the market was soaring. So their money,
if it had just been invested in what we talk
about low cost index funds, it would have doubled in
value in this time period, but ultimately they had less
money than they started with. It's a cautionary tale, and
there are This is not to throw shade at all
financial advisors by any stretch of the imagination. There are
(22:45):
some great financial advisors out there, and hiring a fee
only fiduciary can be worthwhile for you in your money journey.
But hiring a pro also doesn't absolve you of the
ability to be informed yourself. So it's kind of a
buyer beware thing, right. Sure, just make sure you know
what you're getting into before you sign your name on
the dotted line.
Speaker 2 (23:04):
So, in similar news, a short seller was charged by
the SEC about lying about his public stock trading recommendations
that he was making and he was attempting to manipulate
the trading behavior of his followers, where he's basically being
dishonest about his own trades in an attempt to increase
his own upside. And so this is another instance where
somebody who's not doesn't have the best interest of those
(23:25):
who he is advising in mind, And so yeah, a
similar main takeaway be careful of who it is that
you're following, who it is that you're listening to when
it comes to investing advice, or even.
Speaker 1 (23:35):
Who you're just casually consuming their content and you're like, oh, well,
that's funny. They just said this stock is gonna make
up go throw a few dollars that way. Yeah. Do
they have a vested interest in seeing you go that route?
Speaker 2 (23:46):
Possibly? Yeah, And at the very least they could be
obscuring the truth. Maybe not like flat out lying, but
you know, sometimes fat sometimes it is. Sometimes it is,
but just not to mention. There's just a whole lot
of incompetence out there as well. So yeah, it all
comes down to the ability for us to vet who
it is that we're taking financial advice from.
Speaker 1 (24:04):
All Right, man, let's talk about payment apps for just
a second. They're ubiquitous. Everyone uses them, and it's actually
part of the reason that check usage has declined massively
in recent years. Like we talked about on the show
not too long ago, we're talking about Venmo, cash App
and Zel. Those are the big three, are there? Other
ones probably, Yeah, people use PayPal, I guess to send
(24:24):
money to and so yeah, those things just are incredibly convenient.
I'm glad they exist. But of course, with everything good,
there's something to watch out for, and there are potential
pitfalls with apps like Zel and zell is being looked
into by the Consumer Financial Protection Bureau for not protecting
(24:44):
its users in the way that it is supposed to be.
So there are scams out there on Zel and on
these other payment apps too, but with Zel, they're linked
to the big banks, and the accusation is that the
big banks are being inattentive and they're customers are being
harmed in the process. And so basically, once you send
money to someone you shouldn't have, whether it's a scammer
(25:07):
or whether it's just a pure accident. With these apps,
typically you're out of luck and you bark up the
tree of the banks and you say, listen, I got
duped or I accidentally typed in the wrong phone, or
I fat finger syndrome, Matt, I've done that one digit
off right, And that person typically isn't going to send
the money back to you because they think you're scamming them,
which is understandable, and the big banks haven't held Zel
(25:29):
to account. They haven't ensured that Zell customers are able
to get their money back or have any sort of
real protection if they make a mistake. And the important
thing to notice is that you might be out of
luck if this happens to you. The banks are reluctant
to refund unauthorized transactions, which I get though, well, because
you say unauthorized, Oftentimes they are authorized transactions. It's just
(25:51):
that you have made those transactions mistakenly, but not always.
Sometimes let's say it's someone else who've got to hold
your phone, or your child who got to hold your phone.
There are stories about that too.
Speaker 2 (25:59):
Yeah. Yeah, if there's actual crime that has taken place,
right like a criminal a criminal app, I guess if
your kid does it well, like a lot of it
comes down to user error. It comes down to the
individual and us being vigilant and making sure that you
know that we're not mistakenly putting the wrong cash app
handle in there. Because I volunteered and said that, like,
oh yeah, I've been there, like I literally have done that.
This is back when we were in the throes of
(26:21):
having a new baby. I don't think Kate and I
were getting much sleep, and she had found something like
I used baby item, went and got it. I had
punched in the wrong name of it. I don't know
if she gave it to me incorrectly or I punched
it incorrectly, but I paid somebody else.
Speaker 1 (26:35):
Yeah, and she's like, oh, you didn't pay me. I'm like,
dang it.
Speaker 2 (26:38):
So I paid her correctly, you know, I had the
correct name in there. But then I spent like a
couple of weeks trying to get my money back from
the other person. And like you said, they thought that
they're getting skinned cause I'm like, hey, I accidentally sent
you some money of buying this baby.
Speaker 1 (26:51):
Which totally sounds like a skin I know.
Speaker 2 (26:52):
And so they were trying to protect themselves and be
super careful and so at the very least, a lot
of the apps have implemented like a punch in the
last four digits of the person's phone number, do that,
or like I pretty much always know whether it's zell
Venmo cash up, I always send over one dollar just
to make sure that they are receiving at that yeah,
just to confirm, and I once they say yes, I
(27:14):
will send over the rest of it, but just to
avoid the risk of feeling like my money is floating
out there somewhere in the ether. I hate that feeling,
so like, literally every single time, I always send a
dollar over just to ensure that, hey, is this channel open.
Are thing's gonna work here? Especially because I did it
recently with a contractor.
Speaker 1 (27:30):
I think it's a good suggestion, especially because big bucks
are at stake when we treat your money and the
protections are slimmed in, non existent. And this is just
I think, another check mark in favor of credit cards too.
We talk about credit cards regularly on the show. We think,
despite what we talked about at the very beginning of
the show, with half of Americans carrying credit card debt,
regularly handling credit cards responsibly because they have the most
(27:54):
protections of any payment method in existence. That's why we're
so keen on credit cards. Is you have the rewards nice,
The sign of bonuses are great. You can find some
great credit cards up on our site at how the
Money dot com. Look, you know, click credit cards in
the uppright hand corner. We've got a bunch of guys
to help you choose the best one for you. But
this reinforces Matt, why we're so keen on recommending credit cards. Yes,
(28:14):
we want people to avoid the debt and experience the
upsides of credit cards, but we also want you to
have those protections in place, which is what credit cards
are so good at. It's true.
Speaker 2 (28:22):
Okay, let's talk about home upgrades, specifically some green home upgrades.
Americans are updating their homes thanks to tax credits. We
have collectively claimed more than eight billion dollars in green
tax credits, specifically last year under the Inflation Reduction Act.
Can you say that in your best doctor evil voice?
Eight billion dollars good solid, So specifically solar panels, insallation.
(28:47):
They were the most popular projects, was it? I guess
two years ago I took advantage of a window tax credit,
got six hundred dollars off some windows. I did ac
and insulation myself. So I say, I'm one of the
Americans participating in this.
Speaker 1 (29:01):
Yeah, we're putting that out there.
Speaker 2 (29:02):
We don't want folks to sleep on this money, especially
if you're already planning to perform some of this work.
If you're already going to do these projects on your home,
you're just leaving money on the table. If you're not
taking advantage of the money that's being offered there, they
can dramatically reduce the overall cost as well as the
payoff timeline of that upgrade. And almost all of these
projects that offer the different tax credits, they come with
(29:22):
another benefit, which is the reduced energy consumption, which leads
to repeated savings month after month. Ye don't forget that.
What's the insulation that you put in your house?
Speaker 1 (29:32):
Well, so we had we were just like missing insulation
in a part, and I was like, oh, cool, Well,
if I'm getting a thirty percent cut in the time
to pull the trigger, it's going to save me on
my energy bills. Why not?
Speaker 2 (29:42):
So I think we might be in the market for that.
Maybe I'll sneak that in this year because.
Speaker 1 (29:46):
So for us, I thought about it last year. So
it's our floor.
Speaker 2 (29:51):
They went insulating the floor where the cross space is.
But I was seeing about it last year and I
didn't want to do it last year because I thought, well,
I don't want to do this if we're not gonna
necessarily stay in the home. That's it's like one of
the kind of upgrades you do if you're going to
live in the home. If you're going to be selling
the place nobody really cares about.
Speaker 1 (30:06):
Effect to that, I'll.
Speaker 2 (30:07):
Put a bunch of installation in the Floyd say all
right things.
Speaker 1 (30:09):
Buddy, Yeah, you're not getting a extra fifteen hundred bucks
for that thing exactly. But now that we're like, oh no,
I think we're going to be here in this home
for a while, I'm starting to think through some of
the different upgrades that would benefit me as a homeowner
when it comes to utility. Is yeah, just also how
my feet feel in the winter. Sure, well look to
your power company too. So in addition to this that
these tax credits, you might find that your your power
(30:30):
provider offers incentives to and a reduction on your bill
or a rebate or something like that. So maybe look
look into both because you might find that those two
things combined double hip. Almost a no brainer to do,
at least a couple of these things. I love it
if you've got the cash and the average tax savings
Matt for a solar install specifically, was one of the
more expensive things you can do under these tax credits.
(30:52):
The way they currently exist is five thousand bucks, which
is a big reduction right in the overall cost. Obviously,
the reason it's so big is because it's just such
an expensive outlay. But a new survey from Forbes found
that nine out of ten folks were really happy after
installing solar at their home. So when people do that,
I guess a lot of people waffle matt because it
(31:12):
is so expensive. Most of the people who end up
doing it say this was great for me. It's one
thing you might not want to do, though, if you're
considering a solar install is to take out a loan.
And that's not just because you always build eight, nine,
ten percent. It's because of a new CFPB warning they
just warned about grifters in the space who are attempting
to sell you on the merits of getting solar and
(31:36):
the money saving realities that you're going to enjoy, and
they're enriching themselves in the process. And so the interest
rate that they that they tell you about, well, it
looks reasonable for the solar install but hidden fees could
increase the price substantially. They're kind of keeping them back
from you and then you find out later on. So
similar to buying a car, you want the cash price
(31:56):
from any solar installer, and if you need to finance
the installation. It's better to go to your credit union
than to get a loan through the salesperson from the
solar company typically. So yeah, just know, hey, installing solar
panels is only beginning, is only going to become more
and more normalized. Prices have gone down on solar panels.
We've got these tax credits in addition. It can make
(32:16):
a lot of financial sense because, like you said, Matt,
you're going to be saving money each and every month.
Just watch out for the fine print and make sure
you're not taking out some sort of loan that's going
to come back to buy check.
Speaker 2 (32:26):
Yeah, and of course don't forget the installation, right, Like,
start with the basics before look into the fancy thing.
Speaker 1 (32:31):
Yeah.
Speaker 2 (32:32):
I think a lot of folks are kind of drawn
to the technology fancy part of it, and it's just
tough when the technology is consistently improving over the years.
Speaker 1 (32:39):
These tax credits are going to be around for many
years to come. So don't feel a rush like I
got to do a right rush, especially if it means
I got to take out a loan versus saving up
and I can pay cash next year for it. Just
wait a little bit and.
Speaker 2 (32:50):
Certainly get get a lot of quotes as well. Energy
Sage is a great resource where you can reach out
to multiple different installers and providers to ensure that you're
getting the best price the best panels.
Speaker 1 (33:01):
That way, you're able to save the most money.
Speaker 2 (33:02):
We'll link to that in our show notes up on
the website at hadamoney dot com, where you can find
all the different resources that we may have mentioned during
today's Friday flight. Oh and everybody wish Joel good luck
on his joels running a half marathon tomorrow.
Speaker 1 (33:17):
Your first one baby run, not walking. You've got this thing.
See you've been running a ton You're gonna crush all right, Well,
thank you, uh and we will see you back here
on Monday for a listener questions episode. But until next time,
best friends, our best friends out
Welcome to How to Money. I'm Joel and I am
and today we're talking debt disasters, retirement rating, and tax
credit tips. That's all right. This is our Friday flight
(00:29):
where we're going to talk.
Speaker 2 (00:30):
Through the most important headlines, the ones that we think pertain.
Speaker 1 (00:33):
To your personal finances the most.
Speaker 2 (00:35):
All the other stories, Joel, you can just forget about it.
Speaker 1 (00:37):
Yeah, they're not important. They're the twenty four to seven
news cycle. We don't cover that stuff. We cover the
money stuff, the really important stuff, because who cares about
a lot of other garbage. It's true.
Speaker 2 (00:46):
Yeah, got a you have a money saving tip first
or anything today?
Speaker 1 (00:49):
Joel? Okay, I do actually real quick before we get
to all the stories, Matt, I went to a concert.
We've talked about concert price inflation recently. Oh yeah, it's
expensive to go to a concert. These days? Are things
more expensive? Joel? Everything is more expensive? And so I
went to see my good buddy Zach Bryan. No, I
don't actually know him. I wish I did Yell boys. Yeah,
but he fantastic show. But what I realized Emily and
(01:11):
we were walking to our seats and we saw this
incredibly long line. It looked like it was for ice cream.
It looked like it was for ice cream to the bathroom,
and I was like, wow, why does everybody want ice cream?
Speaker 2 (01:21):
You mean free ice cream? Like, certainly, no, it was
paid ice cream.
Speaker 1 (01:25):
But and actually, interestingly enough, at Randomly the Mercedes Benz
where we are local soccer team plays where Zach Brian played,
their concessions are incredibly cheap. Unlike most of the rest
of the country, that random stadium keeps those prices low
for people, which is cool, thank you, Arthur Blank exactly.
But the one thing that was incredibly expensive and what
everyone was waiting in this long line for was for merch.
(01:48):
They wanted the merchant table baby, the T shirt. Guess
how much the T shirts were, Matt, I'm sure you
probably know.
Speaker 2 (01:53):
If I had a guess, okay, so pre panned T
shirt prices, I would have said, like forty fifty bucks.
I'm guess some postpan increase that by like what twenty five.
Speaker 1 (02:02):
Percent right now, and it's fifty bucks first ye yeah, okay,
we got to wait in that long line. You get
a T shirt for fifty bucks, or you get it
seems reasonable, there's a hoodie for like ninety Oh my gosh, okay,
maybe I'm an old man, that cantankerrous old man. Do
you know to Zach Brynd hoodie, it is no, I don't.
And plus I don't like wearing people's faces on my
body if it seems weird. But your wife's face, right, exactly,
if she got you a hoodie with her face on it,
(02:23):
you'd wear that. I would totally wear that. It would
probably cost a lot less too. Certainly, I just saw
so many people, Matt.
Speaker 2 (02:28):
But you can't blame it on inflation because well, hey,
maybe we can tie this into like a story, because
I'm sure a lot of folks saw that, hey, we've
conquered inflation getting closer to because I said, the Federal Reserve,
you've done it, because we're down it's that two point
nine percent point nine. Yeah, And I'm sure you saw
some of the headlines which were like, inflation has not
been this low in years. But just a reminder out
(02:48):
there for folks, this is true, inflation hasn't been this low.
But what it's not saying is that prices. It's not
saying that prices haven't been this low since preplane. What
they're saying is inflation, which means we're still losing money
at a ray higher than we would like to.
Speaker 1 (03:01):
It's just we're just not losing money as quickly as
we used to. That rate of increases slowing, for sure.
Speaker 2 (03:06):
It's sort of like getting beat. It's like, oh, we
got beat again, but well we didn't get beat as bad.
It's like you still got whipped three to one instead
of six to nothing. Yeah, no, for sure.
Speaker 1 (03:14):
And I guess really what that made me think too,
is I saw all these people wait in line to
buy these really expensive merchant I was like, that's how
much I paid for the ticket to get in? Really
it was like fifty bucks. And so to buy a
T shirt that costs fifty bucks, people are spending more
at the concert than they spent on the ticket itself.
And to me, it's all about the experience seeing the music,
and I don't I don't need something that I can
(03:34):
physically wear necessarily to remember that night.
Speaker 2 (03:38):
Maybe if it was a different artist, you would. If
you were a SWIFTYE and you're looking for the Eras
T shirt. Yeah, honestly, hey, let's let's pind some of
this on her, because I'm sure so much of this
it's like, well, we didn't make it to.
Speaker 1 (03:49):
The Aras tour.
Speaker 2 (03:50):
Yeah, we also like Zach Ryan, and so you're willing
to maybe fork out a little bit more because it's like, well,
we were thinking about spending thousands on that show and
we only have to spend like one hundred bucks and
we're little like kings and queens over here. Yeah, there's
so many outings in relative. It's like if you go
to the movies, like you can watch just the movie
and pay get out of there for paying like nine
bucks ten bucks each or whatever. If you go to
(04:10):
the mattin a show, but if you buy all the
accouterments to go with it, you're like at least doubling
the cost.
Speaker 1 (04:16):
Of your movie. And I don't want to sound like
apprude or something like that, but I was like, no way,
I'm standing in that line for a fifty dollars T shirt.
You got to pick your battles man. Yeah.
Speaker 2 (04:24):
In fact, as more folks are spending like crazy, credit
card debt problems are actually getting worse right now too.
A higher percentage of Americans nearly half, aren't able to
pay their bill on time and in full right now.
And so what that means is that we're seeing higher
balances overall, and more late payments as well, which of
course violates our golden rules of using plastic. That's not
how we do it around here.
Speaker 1 (04:43):
People buying too many of those expensive T shirts.
Speaker 2 (04:45):
Mat Yeah, interest rates on credit cards they're never great,
but they're obviously worse than they were a few years ago,
which only compounds this problem. Bank Rate reports that folks
are still splurging on things like travel and also entertainment,
but they don't kind of yeah, they don't have the
money in the bank. They don't have the cash in
order to back up that spending, which means you're paying
(05:05):
something like twenty two percent in interest for that discretionary spending.
And again, this is it's worth maybe bringing up the
inflation headlines that maybe a lot of folks saw, because
I think a lot of folks might give themselves permission
because they're like, hey, things are coming back down. No, no, no,
we're never We're not going to go back to where
prices were Prepan. And actually, if we are in Postpan,
if we did, that would be bad, it would be
a bad thing. We are still experiencing inflation, just not
(05:28):
quite at the clip that we were experiencing. Don't see
this as permission to go out there and spend willing
nelly on your credit card.
Speaker 1 (05:34):
Especially again. Yeah, I think the average balance MATT in
that report was like over six thousand dollars, and it's
increased by a few hundred bucks over the past couple
of years. And that's scary. That's just a lot of
money that's compounding in the wrong direction for you. So
pay attention to that credit card debt if you have some,
make a plan to get rid of it as quickly
as possible. Undebt dot it is a great website to
(05:55):
kind of help you come up with that plan, whether
you're going the debt snowball or the avalanche method. But
it might seem like a low enough number. Oh it's
not five figures, it's only four figures.
Speaker 2 (06:05):
No, no, no, no.
Speaker 1 (06:05):
You want to get rid of it and get rid
of it as quickly as possible. On the opposite side
of the spectrum, and I saw this article in The Atlantic.
It was about well to do folks who can't spend
money no matter how much they have, and a litany
of our favorite how to money guests are actually quoted
in this article. And I don't know, Matt, You and
we probably have more in common with the people they
highlighted in this piece, which documented people who have enough savings,
(06:29):
plenty in savings investments, they've got a good income, but
they still can't allow themselves to spend on things they
care about. So, for instance, they highlighted this person who'd
saved up enough money to buy a new car in cash.
They'd save like sixty grand, but they still opted to
buy a much cheaper car even though they had the
money and they had allocated it for that specific purpose
(06:49):
and decided to keep the rest in savings. And that's
obviously it's not the worst thing in the world, right.
Spending more than you bring in is much worse. You're
gonna find yourself in that credit card debt. But finding
healthy outlets for spending is also a good thing. And
these folks highlighted in this article and some of the
people we know in the personal finance space have a
hard time doing that. There's just a massive gap, a
(07:11):
healthy in between place between putting what you can't afford
on plastic and putting off buying what you can afford
out of an irrational fear. Sure, yeah, balance people, Yeah,
that's what we're looking for. Quick student loan update. Half
of student loan borrowers are expecting student loan forgiveness. This
is according to a new Sally May report. And I
want to highlight the language here.
Speaker 2 (07:32):
These folks are not just hoping, but expecting student loan forgiveness.
I honestly understand why because communication from the political classes
has been that this is something that will happen. We're
fighting to get this done for you. Yes, and the
messages you conveyed.
Speaker 1 (07:48):
You can count on it.
Speaker 2 (07:49):
And because the hopes have been raised, but student loan
forgiveness has remained elusive because of the approach that is
what has been deemed illegal. Basically, Congress has to do something,
not just the executive branch. You can't just decree that
student loans are gonna get wipe clean.
Speaker 1 (08:05):
If you're expecting Congress to do something, don't hold your breath.
Exactly it will so.
Speaker 2 (08:09):
And most recently the Safe Plan, which makes the path
to loan forgiveness ten years as opposed to twenty, it
is also on hold right now because of the same
legal challenges. And so while forgiveness it's still a future
potential reality, the fact that forty eight percent of folks
are banking on It is scary, especially after all the
hurdles that forgiveness attempts have experienced so far. So keep
(08:32):
that in mind again, don't. It's sort of like the
whole thing with prices coming down. You're you're counting your
your chickens before they have.
Speaker 1 (08:37):
Yeah, which no one should ever do that man. And
then I love using farm terminology.
Speaker 2 (08:41):
Because everyone knows exactly what that means, because even if
they've ever been on a farm, we are so closely
identified with our we don't know where our food comes from.
Speaker 1 (08:48):
They're the agricultural roots. Although I know where my eggs
come from because we do have backyard chickens, that's right,
So I don't count the chickens.
Speaker 2 (08:53):
You say backyard chicken or backyard chickens.
Speaker 1 (08:55):
We have two. We've had some incidents along the way
that I don't really want to detail right now. It's sad,
but just.
Speaker 2 (09:03):
Is making sure that you are down to one because
it's like, no, I'm sorry, we started to hear Gosh,
wouldn't that be sad if you had one lunch checking
so lonely?
Speaker 1 (09:10):
It would be so? But I think you're right Matt. This,
the expectation is one thing that's not okay. I think
the hope is another thing. And so you might want
to direct your finances in such a way that you
are prepared to pay off those student loans wholly on yourself,
and while payments are paused, you are setting money aside
(09:31):
for that express purpose. But if you're expecting student loan forgiveness,
I think those people might be funneling their money in
other ways, spending more than they should, and there's a
good chance they're going to find themselves in a tough
financial situation once student loan payments resume and if some
of these forgiveness attempts fall flat again. And you know,
one way to get rid of loans, we would say,
is to not have them in the first place. And
(09:52):
the halo around getting a college degree seems to be
getting more and more damaged. There's another new poll which
finds it only thirty six percent of Americans think getting
a college degree is worth the time, money, and effort.
Basically a third of folks say yeah, college is worth it.
These days, that number is down more than twenty points
in less than a decade. The shine seems to be
(10:13):
off college at this point. I'm sure COVID had something
to do with that, but it's also the escalating prices, right, Matt,
you and I were both college grads. Were not anti
higher education by any search of the imagination. Some people
call you professor as you walk around town Professor, Matt.
I don't know why they do that. I don't know either.
But whether or not college is worth it, I think
it's a case by case decision. Right. It depends on
(10:35):
what you want to do with your life. You want
to be an engineer, college is probably a really good idea,
and it also depends on how much it costs. It's
it's true, of course that college graduates still earn on average,
a lot more than their high school only graduate peers.
Speaker 2 (10:49):
Yes, that data hasn't changed. Yeah, for a lot of folks,
it's still likely going to pay off in the long run.
Speaker 1 (10:54):
That's right. It's just yeah, it's lost some of its lesson.
But how much You know, what does that student loan
debt look like upon graduate situation, And if it exceeds
what you're likely to earn in that first year of work,
then you're taking on too much debt and you need
to reconsider you need to rethink the value proposition of college.
And it makes me think too about our recent conversation
Matt with Jocelyn Pearson about scholarships, and that is another
(11:15):
way to help tackle that, where yeah, going to college,
getting that degree can make a whole lot of sense,
but reducing the cost of it is crucial in order
for it to really pay off.
Speaker 2 (11:24):
That's rights talk about the difference between buying used versus
buying new, because we know that, let's say, buying a
new car that will almost always cost you more than
buying used, and.
Speaker 1 (11:34):
That buying new anything is going to cost you more, right.
Speaker 2 (11:36):
Typically, well, that's traditionally been the case for buying a
home as well, although new data out there is finding
the opposite is true. Right now, new houses cost at
least a tiny bit less per square foot than old houses.
Speaker 1 (11:48):
In summer of twenty twenty four.
Speaker 2 (11:49):
This is according to a new Zilla report, which is
really fascinating that you've got something that it's like normally
the yeah, the brand new thing is going to cost
you more of a premium. Like if you're sill peel
the plant stick off of it, you're paying a premium
for that.
Speaker 1 (12:01):
Yeah, if you're going on a Facebook marketplace to get the item,
as opposed to Amazon. Typically you're gonna say money because
guess what, someone preloved that item. That's a nice that's
a nice way to say you used it.
Speaker 2 (12:10):
Yeah, it's got a patina, it's been gently cared for.
But if you are in the market for a new
or used home, rates have been trending down, while price
cuts are rising in many cities, and so affordability. While
it hasn't been amazing it, it has at least cooled
a little bit in some meaningful ways that I think
a lot of first I'm home buyers in particular, are
looking forward.
Speaker 1 (12:30):
To Yeah, as the economy calms down, that's part of
what's bringing inflation down, Matt. But it's just really interesting
to see that new houses might be cheaper than old
I prefer older homes typically, but if it's going to
cost me more, I'm more than willing to consider a
new home and think about the fact that maintenance is
going to be a whole lot less in those first
few years typically of new home ownership than my old home.
Speaker 2 (12:50):
Right, Yeah, it's nice having all those new systems. Yeah,
although I feel like this is something we've talked about
all the show before. I think my theory for a
while why a lot of folks don't like new homes
has less to do with the home, has more to
do with landscaping, because typically when you've got a developer,
they clear cut everything and the landscape like that's the
last thing that takes place, right, is like planting trees
or bushes, and they're like, all right, we don't have
(13:10):
any money, let's just plant a couple holly trees, yeah,
and pine stroll over a bunch of grass seed lad
as opposed to old neighborhoods or houses that I mean
they've got, you know, you got one hundred these beautiful
oaks and beautiful trees that can sometimes crash through your house.
But that's something that we're attracted to, is like a
home that looks established and integrated into the landscape around that,
(13:32):
which is something that I think gets mixed when it
comes to these newer builds.
Speaker 1 (13:35):
Yeah, no, I agree. I think that's a big downer
when you're looking at those new neighborhood communities. And so
my parents had like this happy medium where they did clearcut,
but they left this big strip in the center that
felt like a natural park, and they kept, like the
exterior a lot of trees around too. Every lot was
like similarly clear cut, but at least there was some
nature of feeling being in nature. I think that while
(13:57):
they kind of did the clear cut route, something else
by the way that's been budging slowly but surely downward
is realtor commissions. And this is something that we've talked
about on the show that hey, we love realtors, but
commissions for realtors in the United States are higher than
basically any other civilized country in existence. The average buyer
commission has dropped from two point sixty two percent to
(14:20):
two point five to five percent, which is tiny, right,
so it's not a lot. This isn't like massive groundbreaking news.
But that's also before the recent commission settlement goes into
full effect match so we haven't seen I think that's
September when that goes into full effect. I'm not expecting
titanic shifts in the ways that realtors get paid. But
(14:40):
over time, the loosening of the National Association of Realtors
monopoly and their grip that they had is going to
allow technology and diverse business models to flourish. Saving consumers
money in the home buying and selling process. This is
good news. So this current small downward trend is worth
highlighting because of what it could indicate moving forward. And yeah,
(15:03):
we've always talked about the costs of buying and selling
a home can be incredibly expensive. Part of the reason
people should when they're looking to buy a home, plan
to stay there for a minimum of five years, probably
more like seven to ten because of the transaction costs.
But if the transaction costs end up going down, it's
going to save consumers money and it's going to create
more fluidity in the housing market too. So I think
(15:23):
this is maybe the canary in the coal mine, something
good to see, possibly showing a better future ahead.
Speaker 2 (15:29):
I'm really curious to see how this plays out because
I think there's also the chance though, that this all
like it all gets baked into the cake, right and
so I transaction costs are coming down and homeowners that
are currently have their homes on the market are thinking,
wait a minute, folks are going to be able to
save money on like basically it's going to drive the
price up essentially right like Maymi. Potentially, if you've got
buyers who are taking that into account.
Speaker 1 (15:50):
I think maybe in the short term that might be true,
but I think in the long term it's the competition.
Speaker 2 (15:54):
And the long run, competition always wins the ability for
folks to have other options. But really, I'm curious to
where things end up. But Joe, we've got more to
get to. We're gonna talk about the different payment apps
and some of the scams you need to be looking
out for, as well as lottery winner financial advice.
Speaker 1 (16:09):
We'll get to that more right after this. All right,
Friday flight continues. Got to get to our ludicrous headline
of the week. This one comes from USA today. Need
some quick cash. You're allowed to raise your four one k. That, Matt,
(16:30):
is what the headline read. I started pulling at my
hair when I read that, in crying a little bit
at the same time. Ruffled your feathers. I was in
a bad emotional state when I read that your chicken feathers.
That's right. This is a ludicrous headline, of course, not
because it's actually incorrect, but because it's technically true, at
least to a certain exemple. You can't really like raid
your four O one k that kind of I don't know,
(16:53):
kind of taste some sort of like Viking like conquering
or something of your four one k, like ripping it
all to shreds and taking all the money out of four.
Speaker 2 (16:59):
One k pillaging take place. I guess, hey, well, depends
on how much you have in there. I guess, I
guess you got You don't have that very much money
in there, then yeah, you actually could.
Speaker 1 (17:07):
If you got twelve hundred bucks, you can rate it.
But starting at the beginning of the year, thanks two
I guess or not, thanks to the Secure Act two
point zero, you can use your four to one K
as a glorified emergency fund, at least one thousand bucks
of it, no questions asked. You don't need to prove
any sort of emergency. It's all very loosey goosey. You
just grab the money out and you use it for
(17:28):
whatever you want to use it for, and so it's
not really a rating. And I don't really like this terminology, Matt,
because I think it makes people think that the money
in their four on k is accessible. I think even
reading articles like this, if you don't pay attention very closely,
you might end up taking more money out of your
four to one K than even just a thousand bucks.
Sure that is legally allowed, and find yourself in a
(17:48):
taxes and penalty situation, but it's still whether you're sticking
to the rules and only taking out a thousand bucks,
it's still typically a bad idea for almost anyone to
take money out of a retirement account on a whim.
I guess. Putting food on the table is one thing, right,
but for most people when they're taking money out of
a retirement account, when it's for a quote unquote emergency,
(18:09):
it's for things that wouldn't typic qualify as an emergency
in my opinion.
Speaker 2 (18:13):
Yeah, and it's not like you have to actually prove
that emergency status or anything like that. And the data
shows that when you make it harder to tap retirement accounts,
folks are going to be more likely to keep that
money locked up in that four win k or within
that IRA.
Speaker 1 (18:25):
They will plan accordingly, they will get creative, there are
other things that they can do. But the easier that
you make it, the more likely they are to access it,
where they're going to just harm their future financial selves. Joel.
Speaker 2 (18:35):
It makes me think of like when you go to
see a doctor, not a doctor, I guess, but any
time where you're like checking in and there's a receptionist
and they got like some candies there, what do you do?
Speaker 1 (18:43):
You grab the candy? Why because it's right?
Speaker 2 (18:45):
Or like if you at a restaurant when they got
the mints there afterwards, or you love taking the matches
no matter what, why you grab those matches as you
don't need matches? I don't know, they're free, they're right here.
It's same thing with me with like toothpicks. I don't
need a toothpick. Hey, you want a toothpick too? Why
am I taking a toothpick? I never used toothpicks. It's
because they're there right in front of me, and because
they're free, Yeah, as opposed to it being something that
(19:08):
you actually need. So I think folks need to keep
that in mind, Like it.
Speaker 1 (19:10):
Feels like it's just a mission slip.
Speaker 2 (19:12):
Yeah, just because it's there doesn't mean that that is
necessarily something that you should be doing.
Speaker 1 (19:15):
Like I wasn't planning on it, but I guess it's allowed,
So why not.
Speaker 2 (19:19):
Because it's been presented as an option and so yeah,
you can avoid at least the ten percent penalty taking
that money out of a four one k limiting it
to one thousand dollars, but you've still got to pay
income tax, so keep that in mind. The ultimate reality
is that you shouldn't invest money that you might need
in the short term, despite your ability to now legally
(19:40):
snag some of it. We want you to leave money
that you've invested that's meant for returnament to work. We
wanted to multiply for you again for future far off you.
Speaker 1 (19:47):
Yeah, that's right. It's amazing what that thousand dollars could
turn into decades from now. And so really, the only
person that you're hurting, even though it's you're allowed to
do this, but you're hurting yourself, and you're hurting future
you costing yourself thousands and thousands of more dollars down
the line. Retired you isn't isn't happy about this choice
you're making. So I don't know that that headline Matt
(20:09):
needs some addressing. I get why the USA Today headline
riders want to go in that direction, but it's a
little misleading. Hearing folks wrong. Yeah, and I think it's
bad advice to people. Need to know what's legally allowed
and legally available. That's true, But when you kind of
color it and paint it like that. It starts to
lead people down a potentially bad path. All right, let's
talk about financial advice, Matt. You and I we don't
(20:30):
really play the lottery. I guess you do every once
in a while when the jackpot gets really high. Mem
I'm an abstainer.
Speaker 2 (20:36):
George just likes to bet on dog racing, that's right. Yeah,
But well, like once I got a bachelor party. Yeah,
when the actual situation calls for it was really Yeah.
I feel like that's the kind of thing that you
would do that win in Rome, right, you had to
back then.
Speaker 1 (20:50):
But even if you were a win the lottery, Matt,
your life might not be loads better than it was
before thanks to something we talk about often called the
hedonic treadmill. And the truth is your life might actually
get worse altering your relationships. I remember, I think we
talked about this recently. Charles Barkley was saying, like, man,
once I started making money in the NBA, everybody came
out of the woodwork, friends and family. It just changed
(21:13):
his relationship to a lot of people, and there wasn't
much he could do about it.
Speaker 2 (21:17):
Right, People reships go sideways once there's a whole lot
of money online.
Speaker 1 (21:20):
His friends started to see him, or at least some
of them, as an ATM machine. Well financial writer at
the Wall Street Journal Jason's Wig. He recently documented a
couple who won the lottery and super cool folks. They
were opting to give most of the money away to charity.
They chose to enlist the help of a financial advisor
in this endeavor, and so the couple they set up
(21:42):
a research foundation. Basically, what they wanted to do was
find a cure for a disease that had taken their
daughter's life at the age of two. Again, incredible right
that they were compelled to use this newfound wealth in
that way. But then their advisor, Matt opted for variable
annuities for a large chunk of the money that they
(22:03):
had stuck into this foundation, netting him over a million
dollars in commissions. Yeah, pretty much instantly. So he got paid, yes,
and then he would sell those variable new annuities down
the road to purchase more variable annuities, garnering him more
money at the couple's expense. They got paid again. Yeah,
he's like double dipping. The best part is the commissions,
(22:24):
and so sadly the money dwindled. It was going down
in value as the market was soaring. So their money,
if it had just been invested in what we talk
about low cost index funds, it would have doubled in
value in this time period, but ultimately they had less
money than they started with. It's a cautionary tale, and
there are This is not to throw shade at all
financial advisors by any stretch of the imagination. There are
(22:45):
some great financial advisors out there, and hiring a fee
only fiduciary can be worthwhile for you in your money journey.
But hiring a pro also doesn't absolve you of the
ability to be informed yourself. So it's kind of a
buyer beware thing, right. Sure, just make sure you know
what you're getting into before you sign your name on
the dotted line.
Speaker 2 (23:04):
So, in similar news, a short seller was charged by
the SEC about lying about his public stock trading recommendations
that he was making and he was attempting to manipulate
the trading behavior of his followers, where he's basically being
dishonest about his own trades in an attempt to increase
his own upside. And so this is another instance where
somebody who's not doesn't have the best interest of those
(23:25):
who he is advising in mind, And so yeah, a
similar main takeaway be careful of who it is that
you're following, who it is that you're listening to when
it comes to investing advice, or even.
Speaker 1 (23:35):
Who you're just casually consuming their content and you're like, oh, well,
that's funny. They just said this stock is gonna make
up go throw a few dollars that way. Yeah. Do
they have a vested interest in seeing you go that route?
Speaker 2 (23:46):
Possibly? Yeah, And at the very least they could be
obscuring the truth. Maybe not like flat out lying, but
you know, sometimes fat sometimes it is. Sometimes it is,
but just not to mention. There's just a whole lot
of incompetence out there as well. So yeah, it all
comes down to the ability for us to vet who
it is that we're taking financial advice from.
Speaker 1 (24:04):
All Right, man, let's talk about payment apps for just
a second. They're ubiquitous. Everyone uses them, and it's actually
part of the reason that check usage has declined massively
in recent years. Like we talked about on the show
not too long ago, we're talking about Venmo, cash App
and Zel. Those are the big three, are there? Other
ones probably, Yeah, people use PayPal, I guess to send
(24:24):
money to and so yeah, those things just are incredibly convenient.
I'm glad they exist. But of course, with everything good,
there's something to watch out for, and there are potential
pitfalls with apps like Zel and zell is being looked
into by the Consumer Financial Protection Bureau for not protecting
(24:44):
its users in the way that it is supposed to be.
So there are scams out there on Zel and on
these other payment apps too, but with Zel, they're linked
to the big banks, and the accusation is that the
big banks are being inattentive and they're customers are being
harmed in the process. And so basically, once you send
money to someone you shouldn't have, whether it's a scammer
(25:07):
or whether it's just a pure accident. With these apps,
typically you're out of luck and you bark up the
tree of the banks and you say, listen, I got
duped or I accidentally typed in the wrong phone, or
I fat finger syndrome, Matt, I've done that one digit
off right, And that person typically isn't going to send
the money back to you because they think you're scamming them,
which is understandable, and the big banks haven't held Zel
(25:29):
to account. They haven't ensured that Zell customers are able
to get their money back or have any sort of
real protection if they make a mistake. And the important
thing to notice is that you might be out of
luck if this happens to you. The banks are reluctant
to refund unauthorized transactions, which I get though, well, because
you say unauthorized, Oftentimes they are authorized transactions. It's just
(25:51):
that you have made those transactions mistakenly, but not always.
Sometimes let's say it's someone else who've got to hold
your phone, or your child who got to hold your phone.
There are stories about that too.
Speaker 2 (25:59):
Yeah. Yeah, if there's actual crime that has taken place,
right like a criminal a criminal app, I guess if
your kid does it well, like a lot of it
comes down to user error. It comes down to the
individual and us being vigilant and making sure that you
know that we're not mistakenly putting the wrong cash app
handle in there. Because I volunteered and said that, like,
oh yeah, I've been there, like I literally have done that.
This is back when we were in the throes of
(26:21):
having a new baby. I don't think Kate and I
were getting much sleep, and she had found something like
I used baby item, went and got it. I had
punched in the wrong name of it. I don't know
if she gave it to me incorrectly or I punched
it incorrectly, but I paid somebody else.
Speaker 1 (26:35):
Yeah, and she's like, oh, you didn't pay me. I'm like,
dang it.
Speaker 2 (26:38):
So I paid her correctly, you know, I had the
correct name in there. But then I spent like a
couple of weeks trying to get my money back from
the other person. And like you said, they thought that
they're getting skinned cause I'm like, hey, I accidentally sent
you some money of buying this baby.
Speaker 1 (26:51):
Which totally sounds like a skin I know.
Speaker 2 (26:52):
And so they were trying to protect themselves and be
super careful and so at the very least, a lot
of the apps have implemented like a punch in the
last four digits of the person's phone number, do that,
or like I pretty much always know whether it's zell
Venmo cash up, I always send over one dollar just
to make sure that they are receiving at that yeah,
just to confirm, and I once they say yes, I
(27:14):
will send over the rest of it, but just to
avoid the risk of feeling like my money is floating
out there somewhere in the ether. I hate that feeling,
so like, literally every single time, I always send a
dollar over just to ensure that, hey, is this channel open.
Are thing's gonna work here? Especially because I did it
recently with a contractor.
Speaker 1 (27:30):
I think it's a good suggestion, especially because big bucks
are at stake when we treat your money and the
protections are slimmed in, non existent. And this is just
I think, another check mark in favor of credit cards too.
We talk about credit cards regularly on the show. We think,
despite what we talked about at the very beginning of
the show, with half of Americans carrying credit card debt,
regularly handling credit cards responsibly because they have the most
(27:54):
protections of any payment method in existence. That's why we're
so keen on credit cards. Is you have the rewards nice,
The sign of bonuses are great. You can find some
great credit cards up on our site at how the
Money dot com. Look, you know, click credit cards in
the uppright hand corner. We've got a bunch of guys
to help you choose the best one for you. But
this reinforces Matt, why we're so keen on recommending credit cards. Yes,
(28:14):
we want people to avoid the debt and experience the
upsides of credit cards, but we also want you to
have those protections in place, which is what credit cards
are so good at. It's true.
Speaker 2 (28:22):
Okay, let's talk about home upgrades, specifically some green home upgrades.
Americans are updating their homes thanks to tax credits. We
have collectively claimed more than eight billion dollars in green
tax credits, specifically last year under the Inflation Reduction Act.
Can you say that in your best doctor evil voice?
Eight billion dollars good solid, So specifically solar panels, insallation.
(28:47):
They were the most popular projects, was it? I guess
two years ago I took advantage of a window tax credit,
got six hundred dollars off some windows. I did ac
and insulation myself. So I say, I'm one of the
Americans participating in this.
Speaker 1 (29:01):
Yeah, we're putting that out there.
Speaker 2 (29:02):
We don't want folks to sleep on this money, especially
if you're already planning to perform some of this work.
If you're already going to do these projects on your home,
you're just leaving money on the table. If you're not
taking advantage of the money that's being offered there, they
can dramatically reduce the overall cost as well as the
payoff timeline of that upgrade. And almost all of these
projects that offer the different tax credits, they come with
(29:22):
another benefit, which is the reduced energy consumption, which leads
to repeated savings month after month. Ye don't forget that.
What's the insulation that you put in your house?
Speaker 1 (29:32):
Well, so we had we were just like missing insulation
in a part, and I was like, oh, cool, Well,
if I'm getting a thirty percent cut in the time
to pull the trigger, it's going to save me on
my energy bills. Why not?
Speaker 2 (29:42):
So I think we might be in the market for that.
Maybe I'll sneak that in this year because.
Speaker 1 (29:46):
So for us, I thought about it last year. So
it's our floor.
Speaker 2 (29:51):
They went insulating the floor where the cross space is.
But I was seeing about it last year and I
didn't want to do it last year because I thought, well,
I don't want to do this if we're not gonna
necessarily stay in the home. That's it's like one of
the kind of upgrades you do if you're going to
live in the home. If you're going to be selling
the place nobody really cares about.
Speaker 1 (30:06):
Effect to that, I'll.
Speaker 2 (30:07):
Put a bunch of installation in the Floyd say all
right things.
Speaker 1 (30:09):
Buddy, Yeah, you're not getting a extra fifteen hundred bucks
for that thing exactly. But now that we're like, oh no,
I think we're going to be here in this home
for a while, I'm starting to think through some of
the different upgrades that would benefit me as a homeowner
when it comes to utility. Is yeah, just also how
my feet feel in the winter. Sure, well look to
your power company too. So in addition to this that
these tax credits, you might find that your your power
(30:30):
provider offers incentives to and a reduction on your bill
or a rebate or something like that. So maybe look
look into both because you might find that those two
things combined double hip. Almost a no brainer to do,
at least a couple of these things. I love it
if you've got the cash and the average tax savings
Matt for a solar install specifically, was one of the
more expensive things you can do under these tax credits.
(30:52):
The way they currently exist is five thousand bucks, which
is a big reduction right in the overall cost. Obviously,
the reason it's so big is because it's just such
an expensive outlay. But a new survey from Forbes found
that nine out of ten folks were really happy after
installing solar at their home. So when people do that,
I guess a lot of people waffle matt because it
(31:12):
is so expensive. Most of the people who end up
doing it say this was great for me. It's one
thing you might not want to do, though, if you're
considering a solar install is to take out a loan.
And that's not just because you always build eight, nine,
ten percent. It's because of a new CFPB warning they
just warned about grifters in the space who are attempting
to sell you on the merits of getting solar and
(31:36):
the money saving realities that you're going to enjoy, and
they're enriching themselves in the process. And so the interest
rate that they that they tell you about, well, it
looks reasonable for the solar install but hidden fees could
increase the price substantially. They're kind of keeping them back
from you and then you find out later on. So
similar to buying a car, you want the cash price
(31:56):
from any solar installer, and if you need to finance
the installation. It's better to go to your credit union
than to get a loan through the salesperson from the
solar company typically. So yeah, just know, hey, installing solar
panels is only beginning, is only going to become more
and more normalized. Prices have gone down on solar panels.
We've got these tax credits in addition. It can make
(32:16):
a lot of financial sense because, like you said, Matt,
you're going to be saving money each and every month.
Just watch out for the fine print and make sure
you're not taking out some sort of loan that's going
to come back to buy check.
Speaker 2 (32:26):
Yeah, and of course don't forget the installation, right, Like,
start with the basics before look into the fancy thing.
Speaker 1 (32:31):
Yeah.
Speaker 2 (32:32):
I think a lot of folks are kind of drawn
to the technology fancy part of it, and it's just
tough when the technology is consistently improving over the years.
Speaker 1 (32:39):
These tax credits are going to be around for many
years to come. So don't feel a rush like I
got to do a right rush, especially if it means
I got to take out a loan versus saving up
and I can pay cash next year for it. Just
wait a little bit and.
Speaker 2 (32:50):
Certainly get get a lot of quotes as well. Energy
Sage is a great resource where you can reach out
to multiple different installers and providers to ensure that you're
getting the best price the best panels.
Speaker 1 (33:01):
That way, you're able to save the most money.
Speaker 2 (33:02):
We'll link to that in our show notes up on
the website at hadamoney dot com, where you can find
all the different resources that we may have mentioned during
today's Friday flight. Oh and everybody wish Joel good luck
on his joels running a half marathon tomorrow.
Speaker 1 (33:17):
Your first one baby run, not walking. You've got this thing.
See you've been running a ton You're gonna crush all right, Well,
thank you, uh and we will see you back here
on Monday for a listener questions episode. But until next time,
best friends, our best friends out
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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