December 19, 2025 • 35 mins
Time for a Friday Flight- our little sampling of the week’s best 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:
- Deceptive dollar stores
- When it pays to go cheap
- Warrior dividends
- Less great target date funds
- Moderate millionaires
- The wealth effect
- Underperforming financial advisors
- Time to update those beneficiaries
- Wanna be real estate moguls
- Frustrated flippers
- Don’t gamble
- Robinhood pushing prop bets
- Betting your credit card balance
- Debit card cashback
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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 Matt.
Today we're talking about despicable dollar stores, frustrated flippers, and
betting your credit card balance. That's right, buddy.
Speaker 2 (00:29):
This is our Friday flight, our breakdown of the headlines
from the past week and how they specifically pertain to
your ability to earn more. This sounds like such a
I don't know, like a podcast pitch. We're gonna talk
about money today, folks do. That's what we do here.
Speaker 1 (00:44):
It's like pinking the brain trying to take over the world.
We are that with talking about money.
Speaker 3 (00:47):
Have you been watching more of that? Have I referenced
multiple cartoon?
Speaker 2 (00:50):
I think I want to say you can correct me,
but I'm gonna guess you've referenced it twice in the
past two months.
Speaker 1 (00:56):
Dang it.
Speaker 2 (00:56):
So you're on so now, I think three times on
a hiatus. I was telling me Abo, make all the
references you want. Okay, all right, I well, I don't
want to beat a dead mouse. But were they mice
or rats? They were mice?
Speaker 3 (01:10):
I don't know, Okay.
Speaker 2 (01:11):
I just remember one of them was huge when them
was tiny, that's right, yeah, and had the brain in
the glass jar in the glass fish bowl looking thing, right,
wasn't he the brain?
Speaker 1 (01:18):
I think that might have been teenage mutant ninja turtles.
Oh there's a brain in a jar in that one. Yeah.
Speaker 2 (01:24):
Wait, I think I am getting my nineties cartoons reference. Wait,
so was the pinky was the big one and the brain?
Brain was a smart, skinny guy, little little rat.
Speaker 1 (01:32):
I think the opposite was true. I think this one
was the idiot and brain was the was the big one.
Oh really, I'm pretty sure? Okay, yeah, okay, we digress.
What we're gonna talk about money today and not nineties trivia?
Uh and and we got a bunch of interesting stories
to get to. We're gona talk about Warrior dividends as
well Target Date Fund, some nefarious stuff going on there.
Matt I wanted to quickly start off and talking to
(01:53):
actually reference back to an episode earlier in the week.
We got an email from Catherine about listener Greg's question
about HSA's and which health care plan to choose, and
one of her questions was like, wait a second. Listener
Greg said that all of his plans were HSA eligible,
(02:14):
but how could that be? And that's true? That was
something I thought about but didn't say in the moment
because listener Greg told, hey, all these are HSA eligible,
even the lowest deductible plan that's being offered. And I
just we suggested the highest deductible plan to listener Greg
that likely qualifies is HSA qualified. But if he chose
one of those other plans and it wasn't HSA eligible,
then that would make those plans even more inferior.
Speaker 3 (02:35):
I'm just trusting him because he said that they were
HSA of eligible.
Speaker 2 (02:38):
Yea, so maybe we should Okay, I'm pretty sure that
the One Big Beautiful Bill Act like expanded the scope
of the type of high deductible health care plans that
are eligible for HSA. So I think this is a
part of the reason why not to get partisan, but
why the Republican Party has been pushing the HSAS is
because more plans are eligible for HSA.
Speaker 3 (02:58):
So I think I want.
Speaker 1 (02:59):
To millions and millions more people now are going to
be eligible. Yeah, and it's a lower threshold.
Speaker 2 (03:04):
So it used to be oh, you have to have
a high deductible health care plan, and it's like, oh,
you've got to have the catastrophic plan. But it's much
lower now. It's like in the thousand, Like I want
to say, it's a couple thousand dollars, maybe it's like
three or four for a family plan. But the ability
for individuals to use the HSA has been greatly expanded.
Speaker 1 (03:22):
And so I just looked up, Matt, the minimum deductible
for a Health Savings Account eligible health plan in twenty
twenty six is going to be seventeen hundred dollars the
go for self cover. So you're right, I mean it's
gone significantly lower for family coverage.
Speaker 2 (03:34):
Just thirty four hundred for a family, which is used
to be much higher. It used to be much much higher,
And so you were making it. Yeah, there you go.
It was a trade off. You could say, Okay, I
could participate in this HSA, but it means I need
to have more more cash on hand. So many more
folks are eligible for the HSA. And hey, thank you
was it Catherine for bringing this to our attention, because
(03:55):
we talk about how hsas are the ultimate retirement accounts.
More people have these available to them, and you don't
have to take the sacrifice of going with a higher
deductible plan. So I mean, gosh, thirty four hundred for
your Family. That's like, I don't know. In my book,
that's well within reason and that is a low deductible
plan in my opinion.
Speaker 1 (04:13):
If you're curious to learn more about HSAS, we've got
great content up on the site about it. We'll link
to those. An article about HSA's in the show notes,
and we should probably edit that article met to reflect
how it's time many more people have HSA accounts accessible
to them, which is a beautiful thing. All right, let's
talk about dollar stores. Math do it. The Guardian had
(04:34):
an article about overpriced dollar stores. They had a lot
of good information in this article. We talked last week
about Instacart's algorithmic pricing problem. Well, Family Dollar and Dollar
General have been failing price inspections around the country.
Speaker 2 (04:48):
Price inspection, Yeah, sounds like something that the city does.
They show up, they do an inspection, clear you for operation.
Speaker 1 (04:55):
Yeah. Does it look like that something like that right
where they're literally checking what price are do you have
on the shelf and what are things ringing up? And
if there's a big discrepancy, then they're saying, hey, you
owe is a fine. You have to pay us a
fine because it's a price check. False advertising basically right,
you're advertising one price and you're charging people another. So
as a consumer, you see a price on the shelf,
but then it rings up more expensive at the register,
(05:17):
and particularly with these dollar stores, it's not a fluke
that might happen to you every now and again, and
then you have to ask the person that the register,
wait a second, it was showing this on the shelf.
We've all had that happen before. But roughly a quarter
of items are more expensive and costs more than you
think in many of these dollar stores. I feels intentional.
Family Dollar in particular has failed twenty one hundred price
(05:37):
inspections in twenty states over just the past couple of years.
And part of what makes this nefarious is that as
prices rise, a lot more people are turning the dollar
stores thinking that it will save them money. We've talked
about this before, but sadly that's often not the case.
And while some individual items might appear to be cheaper one,
they might not be as cheap as it looks because
(05:59):
they're ring up higher, and then too, the unit price
is almost always higher than if you would go to
a traditional grocery store or if you were to buy
in bulk, let's say, at Costco, and so dollar stores
are occasionally a deal maybe, but rarely a deal. And
so that's especially true when the advertised price is not
what you end up paying. I think we have to
tell these dollar stores out there to do better because
(06:20):
they're not taking care of consumers very well.
Speaker 2 (06:22):
Yeah, and on top of that, we are all about
the buy once, cry once kind of movement, right where
if you have the cash on hand and instead you
are opting for quality so you don't have to revisit
that purchase. But at the same time, I understand a
desire for folks to get an item and you don't
need a ton of that item and you don't have
a ton of cash on hand to be able to
pay for that. I think that's oftentimes where some of
(06:42):
these some of these businesses land in the market that
they serve. But while we're talking about affordable stuff, Joel Wirecutter,
they had a list of when going cheap makes sense
And I love seeing this because this completely upholds a
long held belief that I personally have had, which is
vodka is not something you should be paying a premium
(07:03):
for it. It was first on the list and specifically
Kirkland Sig vodka was one of their recommendations. And word
on the street and it's been on the street for
a while, is that the Kirkland Stig vodka is goose
because they call it the French vodka. On top of that,
you're typically mixing that spirit with other flavors, so it
doesn't make sense to go ultra premium there where ITAs.
Speaker 1 (07:24):
Like, if you're drinking straight bourbon like, you might want
to go for the higher end stuff.
Speaker 3 (07:27):
Oh did I share my jalepeno infusion of recipe?
Speaker 1 (07:32):
I door, I think you have on the air.
Speaker 2 (07:34):
Okay, So what you do if you were in you
can literally toss out a cocail. All you gotta do
is take a halopeno, chop it up and uh put
it in a mason jar of vodka. Let it sit
twenty four hours. Boom, You've got some vodka with some heat.
The reason I bring it up is because we had
tacos last night and I made a margarita for Kate
and I. We split it, added a little bit of
(07:55):
that jalapenia infused vodka in there and it brought the
heat with a little bit of mess out.
Speaker 3 (07:59):
Dude.
Speaker 2 (07:59):
It was a very good marguerite. All right, I think
folks are missing out if you haven't if you haven't
done that. But we're talking about cheap products and where
it makes sense. Smart home gear came second, came in
second on the list, and the price discrepancy can incredibly large,
but the quality differences tend to be pretty minimal.
Speaker 1 (08:16):
Right.
Speaker 2 (08:16):
Folks are used to the name brands, but then because
of that, they're passing up some of these brands like Whys.
I've got lots of y z Wyze, We've got lots
of Wise Gear, cameras, exterior lights, things like that.
Speaker 1 (08:30):
I even tried their vacuum at one point and it
was no dice in. But it's pretty solid for a
quarter of the price, work work pretty well.
Speaker 2 (08:37):
They talk about how even fancy bikes don't make a
whole lot of sense because what you're doing is you're
you are prioritizing a light bike, right, So a lot
of times there's like carbon fiber frames, right, like super
lightweight kind of stuff, and those tend to break. And
for most people, what you're looking for is something that's
going to lash you a really long time.
Speaker 1 (08:52):
If you're for a triath premium, you probably really do
want the expensive light bike, but if you're just kind
of like getting around town, probably don't need it, and
it's probably more likely to damage it. Absolutely.
Speaker 2 (09:03):
And I was also happy to see that they featured
like seven different pictures like items that are like super ubiquitous.
You can get him anywhere. And I was proud to
see that we use an employee. Four out of the
seven of those items, nice house are you? Including the
super affordable lodge cast iron pan.
Speaker 1 (09:20):
There's a toaster. I was like, that's our toaster, that's.
Speaker 3 (09:22):
Our frying pan.
Speaker 2 (09:23):
What else wasn't There's two other things in there that
I was just like, we've got that too.
Speaker 1 (09:27):
Wire Hutter has influenced you, haven't they.
Speaker 3 (09:30):
I like to say, Joel, that we have influenced Wired.
Speaker 1 (09:32):
Okay, all right, speaking of good deals, I guess Matt,
I don't know that's a bad transition. Let's talk about
warrior dividends for just a second, because the President announced
to this in his speech this week that active duty
service members are going to be getting a check for
one seven and seventy six dollars seventy six that's date
rings a bell, quite patriotic. Yeah, it's an important one
(09:55):
in our country's history, and Merry Christmas to our active
duty service members. This is like obviously going to be
hugely beneficial. This money was it appears like taken from
a fund that was created in the One Big Beautiful
Bill to subsidize housing costs or military members. But I
guess it's just going out in a blanket check form
(10:16):
to all their active duty service members.
Speaker 3 (10:18):
So I'm for it.
Speaker 2 (10:19):
Yeah, And this I'm not poored across the board, right
because what is that going to lead to?
Speaker 3 (10:23):
Just inflation? But like, these are active duty.
Speaker 2 (10:25):
These are folks who are literally on call twenty four
to seven, folks who get deployed, who get moved overseas,
like every couple every you know, a few years, they're
moving into a new city. This is not a luxurious
sort of lifestyle. And so there's a certain sacrifice there
that I can get behind. As far as them getting
these checks, I agreeatically.
Speaker 1 (10:43):
I think like where it comes, like the rub for
some people is going to be like, well, the President
is saying he's using tariff money raised from tariffs to
fund some of these checks, and yet the tariffs are
still the constitutionality of those tariffs is still up for debate,
and we're not likely to get a ruling from Supreme
Court for a few more months, and so there's that problem.
(11:03):
But I don't think many of us are like mad
that money is going to active duty service members, that's
for sure.
Speaker 2 (11:08):
Sure, Yeah, the irony of the actual terrorists not being constitutional,
but the dollar amount being seventeen seventy six is now
lost on us. Joel, let's talk about investing target date
funds specifically, because if you choose one wisely, I think
it can be a solid choice for many folks out
there who are looking to not think very hard about
(11:32):
their retirement nest egg, right, like they just want to
set it and forget it. But we want folks to
be careful because there are a lot of really bad
target date funds out there as well. They're not all
created equal, and they're getting more complicated, and some are
are becoming markedly worse Jason's wig. He reported that private
investments are being brought into target date funds. Now they're
(11:53):
inside of four one k's as well, So not.
Speaker 1 (11:55):
Just inside of your four and K that you can choose,
but you get the target date fund that you think
is well balanced.
Speaker 2 (12:00):
A bit more generic it doesn't have the yeah, the
fancy stuff.
Speaker 1 (12:04):
And stuffing the private investments into even that.
Speaker 2 (12:07):
Yeah, And a lot of these target date funds are
they're increasing the number of underlying funds that they hold
as well, right, And so what's happening here is that
the targeting funds are marketed as this sort of simple product,
but they're getting more complex under the hood. Even man
the folks over at Vanguard, they've actually unveiled a new
target date fund that includes annuities as well, which isn't
(12:29):
it Not my favorite thing.
Speaker 1 (12:30):
Mine either, At least when I looked at the Vanguard
target date fund, they are keeping the costs relatively low
similar to their other target date funds. Still, it's not
what I would choose or what I would suggest people
partake in. And I guess it just it's sad to say,
I wish that target date funds didn't vary as much
in terms of what is under the hood and in
(12:51):
terms of cost, because then it would be easier to say, yeah,
target date funds are great, but it's in many cases
they're not. And so you have to be really discerning
when you decide which target date fund you're being offered,
and whether or not it makes sense for you, because
there are a whole lot of bad ones, and some
of the bad ones are getting worse. There are still
a couple of good ones out there, but it's still
(13:12):
the wild West, I guess in the target date fund space.
And the truth is, especially as target date funds get
more complicated, there are just better ways to achieve simplicity
and diversification when you're investing. By the way, the stock
market remains close to all time highs, which means a
lot more folks are finding themselves in the millionaire category.
I think the number of millionaires in this country matt
has quadrupled since twenty ten, which pretty cool to see
(13:36):
and really makes sense. I guess when you just look
at more people having stock market exposure and we're talking
about fifteen.
Speaker 2 (13:42):
Years and the way compounding works a lot of gains
and the way compounding works, right.
Speaker 1 (13:45):
So, but a lot of these folks see themselves as
moderate millionaires. There's an article in the Wall Street Journal
about that they're excited to have reached the point of
becoming a millionaire, but they still feel like they have
to save and spend wisely, Like, why am I not
living like a million and I guess I understand that reaction.
But as friend of the show Ben Carlson pointed out,
(14:06):
he said, you don't become a millionaire by spending money
like a millionaire. He basically said, wealth is a lack
of spending. And it's true, right, that's how you build
wealth is by saving and investing a decent chunk more
than you spend. And it's just also true that you
don't want to completely abandon the habits that got you
to that point, because that's how you like lose millionaire status.
(14:28):
I think reaching reaching that millionaire plateau is great, but
move the rudder slowly in the spending direction. You don't
want to be like, all right, I'm a millionaire, now
I can ball out. Yeah.
Speaker 2 (14:38):
So folks talk about how this is called the wealth effect, right,
this is so essentially you feel your net worth grow
and with that, you've got the desire to spend some
of that money, even if is locked away in a
retirement account, which that's not something we are fans of, right, Like,
these are dollars that are meant to be used down
the road, and so, man, we don't want to see
(14:58):
folks spending money that is specifically earmarked for something like that.
One of the examples they gave was like taking out
a helock to pay for your vacation because you just
know that the value of your house is doubled. Same
with taking money from your four one k right just
because it's worth way more, you feel richer. That does
not mean we want you to take a four to
one k loan or any money out your four one
(15:19):
k is specifically for retirement. On top of that, the
stock market, the housing market, it could experience a correction
which would then put you in a tougher spot. And
so if you've been crushing it, don't be afraid to
dial back your investing a bit as you are looking.
Speaker 1 (15:33):
For ways to directly pay for.
Speaker 2 (15:35):
Some of your expenses in the here now, but certainly
taking robbing Peter to pay Paul sort of approach where
you are on top of that, sometimes paying fees but
then interest payments on top of that is a surefire
way to lose more some of that hard one wealth.
Speaker 1 (15:51):
Yeah, I agree. I think if you're feeling that wealth effect,
like ah, man, this money's burning a hole in my pocket,
but it's in these inaccessible, inaccessible things, which is like, hey,
the value of your home or your fourrowing k. Just
dialing back some on your investment so you can enjoy
more of the here and now is a better recipe
than taking money out of those places, which has other
potential real downsides. And this might this might surprise you, Matt.
(16:12):
I don't know if you would have agreed to thought
this or not, but one in five households in the
United States actually has a million dollar net worth. So
it's that's a lot like numbers on the rise. Yeah,
that's impressed a lot of folks. Well, and many people
listening to this podcast fit into that category now, and
a lot of others are going to get there within
a reasonable time frame. And there was this other interesting
(16:33):
article I saw where millionaires tend to be satisfied with
a lot of the professionals they hire. They love their therapists,
their personal trainers, they love their housekeepers if they have one, right,
but they don't value their financial advisor in the same
way they value other professionals that they hire. And the
main reason it seems to be because of how much
their advisor costs in what they feel like they're getting
(16:54):
in return for the expense that they're dishing out so
they just they just don't think they're getting what they're
paying for, which, yeah, that makes sense. And so something
like twenty six percent are thinking of switching, eighteen percent
are say they're thinking of ditching their advisor all together
and just diying their investments.
Speaker 2 (17:11):
I think that makes total sense because I think folks
are realizing that financial advisors, like they used to be
seen more as like, oh, you will pick my socks
for me. But as more data comes out as to
the underperformance of those picks, folks, they are moving to
the target date fund or something simpler like we were
advocating for, like the widely differed index fund.
Speaker 1 (17:28):
I think this also goes to show that there is
a wide range, just like in so many parts of life. Right,
you can hire one contractor that you're eminently satisfied with
because you feel like, yeah, it was expensive, but I
got the value for it. They just were on time, professional,
they did great work, and we didn't go too much
over budget or overtime. And then there are other contractors
(17:48):
where you're like, this is the biggest nightmare I've ever experienced.
And the same can be true in the advisor space, right,
And you have to know that and so it's really
important to hire the right person. At howdomoney dot com,
slash advisor is the place we would suggest going to
find a top notch professional if you're so inclined, because
we've partnered with wealth Ramp and wealth Ramp has thoroughly
(18:10):
vetted the advisors that live on their site who are
able to do business with wealth Ramp. And yeah, the
different an A plus advisor and a C minus. The
cost doesn't vary very much and often actually the better
advisors will charge you less, but the return you get
on your money is it's evinitely more valuable.
Speaker 2 (18:28):
It's certainly good to practice not overgeneralizing certain populations.
Speaker 3 (18:33):
I will definitely agree with that.
Speaker 1 (18:34):
And one thing that any decent advisor would tell you
is to update your beneficiaries regularly. There was an article
about that this week that I saw, and it just
reflects actually a recent family experience of ours. So where
if you do not have the right beneficiary listed and
someone passes away, it creates a world of problems and
(18:54):
the person who you wanted to get the money or
who doesn't get it, whether that's insurance policy, whether that's
a retirement account. Man, let this be a reminder to
you to change your beneficiary if needed, because you just
want to make sure that that money goes to the
person you intended it to go to. You've been working
and saving all these years, and it's something more to
happen like you just don't want that money going elsewhere,
(19:17):
So check your listed beneficiaries, which typically trumps your will.
It'll take just a few minutes of your time and
it could save you and loved ones a lot of grief.
Speaker 2 (19:25):
That's right, buddy, And we've got more to get to here.
On our Friday flight, we're gonna talk about Robinhood, something
else they've been cooking up. We'll get to that and
more right after.
Speaker 1 (19:33):
This our wall back from the break man. Robinhood really
hasn't been cooking. I feel like they're launching stuff like
all the time. And yeah, we'll get to we'll get
through our thoughts on what they're doing. But first we
got to get to the ludicrous headline of the week.
This one comes from Business Insider and it reads the
(19:56):
wanna be real estate locals going bust and this story
it's home for a newish crop of real estate investors
who took risky bets, who made overly rosy projections and
who didn't keep enough cash on the sidelines, Matt. When
we talk about real estate investing, there's so much hype
out there, and there's so many people on the socials
(20:16):
trying to tell you how much money you're going to
make as a real estate investor, often hiding the reality
behind the scenes that it's a lot harder than you
might think, and there's a lot you have to be
prepared for if you enter into that space as an investor.
And so Business Insider had this article documenting how landlords
are using something known as DSCR loans to buy properties
(20:37):
that would cash flow without having to prove credit worthiness
and so basically they're getting loans based upon projections. Yeah,
I think that this single family home I'm buying is
going to get three thousand dollars a month in rent
and the mortgage is only twenty five hundred dollars, and
so other lenders like, great, let's go, and so people
are finding themselves between a rock in a hard place.
(20:58):
It makes me think of the great recept two met
that even these loans are available to people, that it's
a risky bet for a lender to make, and then
for people who want to be landlords. Just because you
are offered this loan doesn't mean you should take it.
Because for a lot of people, the pre purchased guestamates
have fallen short and the rental market has slowed down meaningfully,
which means an uptick in vacancy on expected repairs, or
(21:20):
some declining rents, or a mix of all three of
those things creates highly unstable footings. We're seeing just a
lot of landlords like, uh, yeah, I'm in this loan.
I'm losing money every month on this rental property that
I thought was going to be a financial win for me.
Speaker 3 (21:34):
Yeah, And we are all about eliminating the jargon.
Speaker 1 (21:37):
So DSCR, he said, that's what they are, right, The.
Speaker 2 (21:39):
DSCR loans stands for debt service coverage ratio loans, where
they are Yeah, they're basing the loans not on how
much money you have in the bank or how much
money you make and how much debt you're servicing, but
just on the simple projections. And I'll be honest, especially
for someone who's been self employed, man, getting any of
my properties, but certainly that very first.
Speaker 3 (21:59):
One was so freaking hard.
Speaker 1 (22:01):
You had to prove a lot.
Speaker 2 (22:02):
Oh my gosh, the amount of information that the bank
was reaching out to us about like it was incessant.
It was NonStop, like, Okay, prove your income, Okay, pro
Oh are you sure these are all the accounts you have?
Show us how much money you got in the bank,
Like I was halfway expecting like a full body cavity search.
Speaker 3 (22:21):
Like are there any debts in there? Like they were
wanting to know everything.
Speaker 1 (22:24):
You're also expecting a little rumples still skin like put
your first born.
Speaker 2 (22:27):
Yeah, And I was, And I get it though, because
they are trying to mitigate that risk, and so I like, honestly,
had I been aware of those back in the day,
like I may have been tempted a little bit to say,
you know what, let's just bypass all of that headache
and instead, let's let's get one of these DCR loans
to where we can.
Speaker 1 (22:43):
Avoid that altogether, which I agree it sounds nice in
principle as the investor, but especially if your productions are
too rosy like it's, it's much riskier for the banks
and for the person doing the borrowing. And so, as
somebody who wants to get into rental real estate, you
got to be really really care before jumping in on
one of these loans because it can come back to
bite you. It's just been really interesting, Like Warren Buffett
(23:05):
has that quote about when the tide goes out, we
see who's swimming naked. And that's really what's happening in
a lot of the real estate space right now, where
people who bought at the top of the market projecting
just continued year over year increases of the rents or
thinking that the market where they were buying was going
to just continue to be red hot. Well, a lot
(23:26):
of those projections have proved to be untrue, and so
they're finding themselves with their pants.
Speaker 2 (23:31):
Down, yeah, I think, or when you just swimming naked,
your pants aren't down, they're just missing.
Speaker 1 (23:35):
The just gone. Yeah.
Speaker 2 (23:38):
I think the biggest problem with real estate specifically is
when you have like a trifecta of bad things happen, right, Like,
if you have declining rents in a given area A,
then you have on top of that, maybe you've got
a big expense on your specific property that B. But
then let's say you've got some vacancy right like something
like that. When you have like a trifecta a multiplying effect.
That's when it really can come back to you, I think,
(24:00):
and because like you can take this like similar risks
with a stock market, right, Like you can have overly
rosy projections and you're like, all right, I'm going to
expect to earn ten percent in retirement.
Speaker 3 (24:10):
Maybe you're earlier and in.
Speaker 2 (24:11):
Five percent, But that's just a singular factor where you
can be Okay, we need change that, like moving forward,
we haven't been earning the rate that we are expecting.
And yeah, it just feels a bit more under within
your control because like a lot of times, like how
do you combat that when you are in retirement, it's
by modifying your spending as well as opposed to some
of these outside of your control things like what is
(24:33):
the market, the housing market overall doing. Oh I wasn't
expecting that perfectly healthy looking tree to get exploded and
go through my roof. Like there are some of these
out of your sphere of influence factors that when all
stacked up together, can Yeah, it can really mess you
up financially.
Speaker 1 (24:50):
That's why real estate investors need to have even more
savings on hand to weather tougher times. Yeah, and if
you don't like you're really putting yourself in a tough position.
There's an article too this week specifically about real estate
flippers and how they're having a tough time, which makes
sense because as home prices are moderating, homes are sitting longer,
the prices are going up of basically everything on the
(25:11):
renovation front. At flipping, which has always been a risky endeavor,
they're facing a really tough climate. So if your house
sits for let's say five months instead of one month, like,
that's a lot of extra money that you are just leaking.
It's leaking like a sieve. And so I think the
moral of the story here is that real estate investing
isn't for everyone, and this is a particularly tough climate
(25:35):
to get into real estate investing, whereas like ten twelve
years ago, it was just so much easier, Like the
deck wasn't stacked against you nearly the same way. Can
you still be a successful real estate investor in twenty
twenty five, twenty twenty six, Yes, but it's just going
to take a lot more due diligence and a lot
more preparation for potential risk.
Speaker 3 (25:55):
That's right, Joe.
Speaker 2 (25:56):
We haven't talked about gambling in a while, and unfortunately,
it seems like all signs are pointing to everything getting
worse on that front. Like I'm thinking about like the
the NBA arrests, which I don't think we've we talked
about on the show. Yeah, But in addition to that,
we've seen like the meteoric rise of just different prediction websites, which,
let's just be honest, are gambling by another name. But
(26:17):
there's been an influx of calls to the National Problem
Gambling Helpline, particularly in states where gambling has been legalized,
But there's also been a significant rise in bankruptcies in
debt collection efforts in those states as well. Are they
perfectly correlated, maybe not, But I do think it is
evidence of more more problematic behavior because it's just really
(26:40):
hard to watch a sporting event and not be swayed
by the tsunami of ads that you see to encourage
you to participate in all these different, different kind of bets.
Speaker 1 (26:52):
Plus they're going to give you free money to get started, right,
So it's like, here's a free hundred dollars to place
your first.
Speaker 2 (26:56):
Bet, and it feels like you'd be a total dummy
to not take them. Up on that offer and then
they've of course got their hooks in you. But in
an economy that feels a little bit less robust, I
think we're just seeing more people out there just partake
in betting in the hopes of like, oh.
Speaker 3 (27:13):
Maybe I can actually use my knowledge of the game,
Like I actually watch a lot of basketball, you know,
I watched a good amount of football. Maybe I can.
Speaker 2 (27:20):
I can make a buck while I'm also entertaining myself.
And it's not panning out for a lot of folks.
Speaker 1 (27:26):
No, it's not. Yeah, And so I think it's especially
nefarious when it's in your pocket twenty four to seven
you can access at any time. And then on top
of that, there are parlay and prop bets that are
because it's less just like which team is going to
win today? I think the Bills are going to win.
And now it's getting like, well, is what about a
misfree throw or a quarterback in completion? You can bet
(27:47):
on stuff as minuscule in a game and the potential
outcome as a drop ball, Yeah, which is insane to
think about.
Speaker 2 (27:54):
Yeah, which is where this is where the Robin Hood
story comes in, because they are enabling this kind of
behavior they are.
Speaker 3 (28:01):
Unfortunately.
Speaker 1 (28:01):
Yeah, they've they've launched NFL parlay and prop bets on
their prediction market platform, and those I think are a
big part of the problem. And so it's just it's
kind of like fantasy football. It's like it did make
the game more interesting to watch, I think for a
lot of people. But this is a way that gets
you more heavily involved in the outcome of the game,
(28:21):
but and in every little thing that's happening along the way.
But the downside of you losing is that you're losing money,
not that you're losing pride amongst your fantasy community. Right,
so the stakes are a lot different.
Speaker 2 (28:33):
Or your inability to be forced to wear a dress
like while holding a sign saying that you lost the.
Speaker 3 (28:39):
What is it like that, Yeah, fantasy pool, that's right,
that's right.
Speaker 1 (28:42):
Or having to wear the jersey of the team that
you hate, or.
Speaker 2 (28:44):
Something which seems much more wholesome, Oh my gosh, compared
to just folks who are ruining their financial lives.
Speaker 1 (28:49):
It does, and it feels like we're entering this like
gamblification of society. And what makes me say that is
not just the things we've talked about, but There was
another an app or a website that we found out
about this week called Covered, and this website bills their
service as paying bills made fun. Matt, when's the last
time bill paying was a joy for you?
Speaker 2 (29:09):
Yes?
Speaker 3 (29:09):
I don't know.
Speaker 2 (29:10):
I like to cross it off my list. Yeah, but
not in the way that they're advertising.
Speaker 1 (29:14):
Right, Yes, yeah, My red flags are already up when
I read that this Covered is being sold as a
credit card with gaming features embedded, where you can win
back your purchases. You can get, as they say, up
to one hundred percent cash back. Oh, Matt, make sure
three percent, robbin. The card looks super lame. If you
get one hundred percent cash back, you say, gosh back, Yeah,
sign me up. I'd be a nudi not to right.
(29:35):
So you used a Covered card to buy stuff, and
then you hope right that you can game, which is
gamble for the chance to win back the money you spent,
while likely going deeper into debt in the process. We
thought buy now, Pay Later was bad, Well, this app
it's invested in by a prominent venture capital company. It's
just a more wretched sign of the time. Ye.
Speaker 2 (29:57):
Well, in addition to that, so you move down pretty
quickly to covered. But Robinhood is actually even doing and
we haven't talked about this on the show, and no
journalist has written about it yet, So I'm just gonna
have to dig and share from my own experience. But
they are so, yes, the three percent is real and
I'm using that card pretty much NonStop. But they are
(30:17):
encouraging you to parlay the points that you are earning
into the points that you can then essentially roll a
dice and win bigger stuff. So there is a gamification
element to the robin Hood card too, because it's got
the separate app. It's not the Robinhood training app. It's
a separate Robinhood credit card app. And within that it's like, oh,
you could you have the chance of winning more cash
(30:38):
back or oh you have a chance of winning a
literal bar of gold, right, And so your eyes get
wide and you think, oh my gosh, and some of
it it's not even a chance to win it, it's
just oh, you will earn this once you accrue so
many points. And so, if I'll be honest, I was like, oh,
an ounce of gold or whatever it was, and so
I just ran the price on it, like you're way
over paying based on what those points are worth. And
(31:00):
so if you haven't done the math, then they're not
counting on folks to be smart and logical about this.
Uh yeah, you're completely losing out. And though you were
attracted by the three percent cash back, and you know
that your eyes were filled with the three percent dollars,
you know the three percent sign instead, in fact, what
is actually happening is your behavior is getting forwarded by
the gamification of it.
Speaker 1 (31:20):
You're not actually getting the three percent because you're using
your You're falling prey to Robin Hood's traps on the.
Speaker 3 (31:25):
Back, you're risking it.
Speaker 1 (31:26):
Yeahrkes me think of a do you remember the penny
bid websites where you would buy like a bunch of
tokens essentially, and you would make place bids on a
bunch of items. Then if someone else placed a bid, well,
then the clock restarted. And so it was just this
way where yeah, maybe somebody won the PlayStation for twenty
two dollars, but it wasn't gonna be you. You were
just gonna waste a lot of money bidding on these
(31:47):
products in the process. And so yeah, these what Robin
Hood's doing, we think stinks. What covered is is worse
than stinks. That's like all they are.
Speaker 2 (31:56):
Yeah, like they are, yeah, And I don't want to
like judge, but I'll So I was clicking around the
covered website and it looked over to the.
Speaker 1 (32:02):
Under Machine Man.
Speaker 2 (32:03):
Yeah, like the whole website is set up that way,
and you see the guys that started this thing, and
they don't look like they're happy about what they're doing.
Like there's no argument to be made right about what
it is that you're providing, right, Like with rot Robinhood
you can be like, no, we're we're trying to democratize investing.
Oh this is They do have some good products for sure. Yeah,
oh this is the three percent card. And like a
lot of tools that exist in the gray financial space,
(32:27):
you have to make sure that you're using them correctly.
Speaker 1 (32:29):
And there's just a lot more opportunity to be taking
advantage of or to be your own worst enemy. There's
a lot of these new tools, and so you just, yeah,
you have to be incredibly careful. And some of them
are just like bad all the way down, and some
of them have a mix of both, and you just
have to be discerning to use those tools well or
just avoid them all together, and I think sportscambling is
one of those things that hopefully most how the money
(32:51):
listeners are avoiding all together because there's not much good
coming out of it for a lot of people. Or
while we're talking about purchasing tools and credit cards, Matt,
let's talk about debit cards for just a second. They're
we're seeing kind of an uptick in debit cards that
have rewards attached to them. Oh, it's not just credit
cards anymore, right, For the longest time, debit cards were
just a means of purchasing, but like, you typically didn't
(33:13):
get rewarded for making those purchases. Target has a credit
card and debit card. Both have a five percent cash
back option, which is kind of cool, so if you're
a regular Target shopper, that is that's been around for
a long time, but still like that's an example of
a debit card that has rewards attached to it. Discover
talked about this before. They have a one percent cash
back for using their debit card. But we're seeing more
(33:35):
like airlines and hotels and even venmo is getting into
the space as well where you can get rewarded for
using your debit card. I think We're just going to
see more and more of this in twenty twenty six.
But the problem codes.
Speaker 2 (33:48):
Yeah, these co branded credit cards specific to a specific
to many specifics that pertain to an individual brand.
Speaker 1 (33:56):
Not just credit cards. Debit cards too, right, So the
boats are yeah, I say debit cards. But here's the thing.
You have to sign up for an individual checking account
for each one of these debit cards. You have to
keep a certain amount in there to avoid fees like
the hoops you have to jump through to get too
many hoops Yep, too many hoops, although.
Speaker 2 (34:11):
Not with the not with the target debit card, Like
that's a debit card that ties directly to your checking account,
that's true. So that's one where. Yeah, we've got mixed
feelings about target. I don't want uh lump targeting with
the rest of these new co branded debit cards, agreed.
Speaker 1 (34:25):
Yeah, and some of these you have to be You
decide for yourself whether or not it makes sense. But
the credit cards are typically going to be more rewarding
and not gonna have the same hoops to jump through.
But yeah, that does that make sense for you? Well,
only if you follow the gold rules of plastic, Like
we talk about here on the show.
Speaker 3 (34:41):
That's right, and that's gonna be it for this Friday flight.
We hope you enjoyed the show. Did you enjoy it, Joel?
Speaker 1 (34:47):
I had a great time.
Speaker 2 (34:48):
I had a fantastic time as well. That's gonna be
it for the so fun listeners. Can find OO show
notes up on the website at howto money dot com.
Don't forget the how to money dot com word slash
advisor if you're looking for some of.
Speaker 3 (35:03):
Those highly vetted advisors.
Speaker 2 (35:05):
Financial advisors that are that are gonna do you good,
not the ones that are gonna overcharge and over promise
as well as to what it is that they're going
to provide. But uh, yep, howd too money dot com
forward slash advisor. That's gonna be it until next time.
Best friends out, Best Friends Out,
Welcome to How to Money. I'm Joel and I am Matt.
Today we're talking about despicable dollar stores, frustrated flippers, and
betting your credit card balance. That's right, buddy.
Speaker 2 (00:29):
This is our Friday flight, our breakdown of the headlines
from the past week and how they specifically pertain to
your ability to earn more. This sounds like such a
I don't know, like a podcast pitch. We're gonna talk
about money today, folks do. That's what we do here.
Speaker 1 (00:44):
It's like pinking the brain trying to take over the world.
We are that with talking about money.
Speaker 3 (00:47):
Have you been watching more of that? Have I referenced
multiple cartoon?
Speaker 2 (00:50):
I think I want to say you can correct me,
but I'm gonna guess you've referenced it twice in the
past two months.
Speaker 1 (00:56):
Dang it.
Speaker 2 (00:56):
So you're on so now, I think three times on
a hiatus. I was telling me Abo, make all the
references you want. Okay, all right, I well, I don't
want to beat a dead mouse. But were they mice
or rats? They were mice?
Speaker 3 (01:10):
I don't know, Okay.
Speaker 2 (01:11):
I just remember one of them was huge when them
was tiny, that's right, yeah, and had the brain in
the glass jar in the glass fish bowl looking thing, right,
wasn't he the brain?
Speaker 1 (01:18):
I think that might have been teenage mutant ninja turtles.
Oh there's a brain in a jar in that one. Yeah.
Speaker 2 (01:24):
Wait, I think I am getting my nineties cartoons reference. Wait,
so was the pinky was the big one and the brain?
Brain was a smart, skinny guy, little little rat.
Speaker 1 (01:32):
I think the opposite was true. I think this one
was the idiot and brain was the was the big one.
Oh really, I'm pretty sure? Okay, yeah, okay, we digress.
What we're gonna talk about money today and not nineties trivia?
Uh and and we got a bunch of interesting stories
to get to. We're gona talk about Warrior dividends as
well Target Date Fund, some nefarious stuff going on there.
Matt I wanted to quickly start off and talking to
(01:53):
actually reference back to an episode earlier in the week.
We got an email from Catherine about listener Greg's question
about HSA's and which health care plan to choose, and
one of her questions was like, wait a second. Listener
Greg said that all of his plans were HSA eligible,
(02:14):
but how could that be? And that's true? That was
something I thought about but didn't say in the moment
because listener Greg told, hey, all these are HSA eligible,
even the lowest deductible plan that's being offered. And I
just we suggested the highest deductible plan to listener Greg
that likely qualifies is HSA qualified. But if he chose
one of those other plans and it wasn't HSA eligible,
then that would make those plans even more inferior.
Speaker 3 (02:35):
I'm just trusting him because he said that they were
HSA of eligible.
Speaker 2 (02:38):
Yea, so maybe we should Okay, I'm pretty sure that
the One Big Beautiful Bill Act like expanded the scope
of the type of high deductible health care plans that
are eligible for HSA. So I think this is a
part of the reason why not to get partisan, but
why the Republican Party has been pushing the HSAS is
because more plans are eligible for HSA.
Speaker 3 (02:58):
So I think I want.
Speaker 1 (02:59):
To millions and millions more people now are going to
be eligible. Yeah, and it's a lower threshold.
Speaker 2 (03:04):
So it used to be oh, you have to have
a high deductible health care plan, and it's like, oh,
you've got to have the catastrophic plan. But it's much
lower now. It's like in the thousand, Like I want
to say, it's a couple thousand dollars, maybe it's like
three or four for a family plan. But the ability
for individuals to use the HSA has been greatly expanded.
Speaker 1 (03:22):
And so I just looked up, Matt, the minimum deductible
for a Health Savings Account eligible health plan in twenty
twenty six is going to be seventeen hundred dollars the
go for self cover. So you're right, I mean it's
gone significantly lower for family coverage.
Speaker 2 (03:34):
Just thirty four hundred for a family, which is used
to be much higher. It used to be much much higher,
And so you were making it. Yeah, there you go.
It was a trade off. You could say, Okay, I
could participate in this HSA, but it means I need
to have more more cash on hand. So many more
folks are eligible for the HSA. And hey, thank you
was it Catherine for bringing this to our attention, because
(03:55):
we talk about how hsas are the ultimate retirement accounts.
More people have these available to them, and you don't
have to take the sacrifice of going with a higher
deductible plan. So I mean, gosh, thirty four hundred for
your Family. That's like, I don't know. In my book,
that's well within reason and that is a low deductible
plan in my opinion.
Speaker 1 (04:13):
If you're curious to learn more about HSAS, we've got
great content up on the site about it. We'll link
to those. An article about HSA's in the show notes,
and we should probably edit that article met to reflect
how it's time many more people have HSA accounts accessible
to them, which is a beautiful thing. All right, let's
talk about dollar stores. Math do it. The Guardian had
(04:34):
an article about overpriced dollar stores. They had a lot
of good information in this article. We talked last week
about Instacart's algorithmic pricing problem. Well, Family Dollar and Dollar
General have been failing price inspections around the country.
Speaker 2 (04:48):
Price inspection, Yeah, sounds like something that the city does.
They show up, they do an inspection, clear you for operation.
Speaker 1 (04:55):
Yeah. Does it look like that something like that right
where they're literally checking what price are do you have
on the shelf and what are things ringing up? And
if there's a big discrepancy, then they're saying, hey, you
owe is a fine. You have to pay us a
fine because it's a price check. False advertising basically right,
you're advertising one price and you're charging people another. So
as a consumer, you see a price on the shelf,
but then it rings up more expensive at the register,
(05:17):
and particularly with these dollar stores, it's not a fluke
that might happen to you every now and again, and
then you have to ask the person that the register,
wait a second, it was showing this on the shelf.
We've all had that happen before. But roughly a quarter
of items are more expensive and costs more than you
think in many of these dollar stores. I feels intentional.
Family Dollar in particular has failed twenty one hundred price
(05:37):
inspections in twenty states over just the past couple of years.
And part of what makes this nefarious is that as
prices rise, a lot more people are turning the dollar
stores thinking that it will save them money. We've talked
about this before, but sadly that's often not the case.
And while some individual items might appear to be cheaper one,
they might not be as cheap as it looks because
(05:59):
they're ring up higher, and then too, the unit price
is almost always higher than if you would go to
a traditional grocery store or if you were to buy
in bulk, let's say, at Costco, and so dollar stores
are occasionally a deal maybe, but rarely a deal. And
so that's especially true when the advertised price is not
what you end up paying. I think we have to
tell these dollar stores out there to do better because
(06:20):
they're not taking care of consumers very well.
Speaker 2 (06:22):
Yeah, and on top of that, we are all about
the buy once, cry once kind of movement, right where
if you have the cash on hand and instead you
are opting for quality so you don't have to revisit
that purchase. But at the same time, I understand a
desire for folks to get an item and you don't
need a ton of that item and you don't have
a ton of cash on hand to be able to
pay for that. I think that's oftentimes where some of
(06:42):
these some of these businesses land in the market that
they serve. But while we're talking about affordable stuff, Joel Wirecutter,
they had a list of when going cheap makes sense
And I love seeing this because this completely upholds a
long held belief that I personally have had, which is
vodka is not something you should be paying a premium
(07:03):
for it. It was first on the list and specifically
Kirkland Sig vodka was one of their recommendations. And word
on the street and it's been on the street for
a while, is that the Kirkland Stig vodka is goose
because they call it the French vodka. On top of that,
you're typically mixing that spirit with other flavors, so it
doesn't make sense to go ultra premium there where ITAs.
Speaker 1 (07:24):
Like, if you're drinking straight bourbon like, you might want
to go for the higher end stuff.
Speaker 3 (07:27):
Oh did I share my jalepeno infusion of recipe?
Speaker 1 (07:32):
I door, I think you have on the air.
Speaker 2 (07:34):
Okay, So what you do if you were in you
can literally toss out a cocail. All you gotta do
is take a halopeno, chop it up and uh put
it in a mason jar of vodka. Let it sit
twenty four hours. Boom, You've got some vodka with some heat.
The reason I bring it up is because we had
tacos last night and I made a margarita for Kate
and I. We split it, added a little bit of
(07:55):
that jalapenia infused vodka in there and it brought the
heat with a little bit of mess out.
Speaker 3 (07:59):
Dude.
Speaker 2 (07:59):
It was a very good marguerite. All right, I think
folks are missing out if you haven't if you haven't
done that. But we're talking about cheap products and where
it makes sense. Smart home gear came second, came in
second on the list, and the price discrepancy can incredibly large,
but the quality differences tend to be pretty minimal.
Speaker 1 (08:16):
Right.
Speaker 2 (08:16):
Folks are used to the name brands, but then because
of that, they're passing up some of these brands like Whys.
I've got lots of y z Wyze, We've got lots
of Wise Gear, cameras, exterior lights, things like that.
Speaker 1 (08:30):
I even tried their vacuum at one point and it
was no dice in. But it's pretty solid for a
quarter of the price, work work pretty well.
Speaker 2 (08:37):
They talk about how even fancy bikes don't make a
whole lot of sense because what you're doing is you're
you are prioritizing a light bike, right, So a lot
of times there's like carbon fiber frames, right, like super
lightweight kind of stuff, and those tend to break. And
for most people, what you're looking for is something that's
going to lash you a really long time.
Speaker 1 (08:52):
If you're for a triath premium, you probably really do
want the expensive light bike, but if you're just kind
of like getting around town, probably don't need it, and
it's probably more likely to damage it. Absolutely.
Speaker 2 (09:03):
And I was also happy to see that they featured
like seven different pictures like items that are like super ubiquitous.
You can get him anywhere. And I was proud to
see that we use an employee. Four out of the
seven of those items, nice house are you? Including the
super affordable lodge cast iron pan.
Speaker 1 (09:20):
There's a toaster. I was like, that's our toaster, that's.
Speaker 3 (09:22):
Our frying pan.
Speaker 2 (09:23):
What else wasn't There's two other things in there that
I was just like, we've got that too.
Speaker 1 (09:27):
Wire Hutter has influenced you, haven't they.
Speaker 3 (09:30):
I like to say, Joel, that we have influenced Wired.
Speaker 1 (09:32):
Okay, all right, speaking of good deals, I guess Matt,
I don't know that's a bad transition. Let's talk about
warrior dividends for just a second, because the President announced
to this in his speech this week that active duty
service members are going to be getting a check for
one seven and seventy six dollars seventy six that's date
rings a bell, quite patriotic. Yeah, it's an important one
(09:55):
in our country's history, and Merry Christmas to our active
duty service members. This is like obviously going to be
hugely beneficial. This money was it appears like taken from
a fund that was created in the One Big Beautiful
Bill to subsidize housing costs or military members. But I
guess it's just going out in a blanket check form
(10:16):
to all their active duty service members.
Speaker 3 (10:18):
So I'm for it.
Speaker 2 (10:19):
Yeah, And this I'm not poored across the board, right
because what is that going to lead to?
Speaker 3 (10:23):
Just inflation? But like, these are active duty.
Speaker 2 (10:25):
These are folks who are literally on call twenty four
to seven, folks who get deployed, who get moved overseas,
like every couple every you know, a few years, they're
moving into a new city. This is not a luxurious
sort of lifestyle. And so there's a certain sacrifice there
that I can get behind. As far as them getting
these checks, I agreeatically.
Speaker 1 (10:43):
I think like where it comes, like the rub for
some people is going to be like, well, the President
is saying he's using tariff money raised from tariffs to
fund some of these checks, and yet the tariffs are
still the constitutionality of those tariffs is still up for debate,
and we're not likely to get a ruling from Supreme
Court for a few more months, and so there's that problem.
(11:03):
But I don't think many of us are like mad
that money is going to active duty service members, that's
for sure.
Speaker 2 (11:08):
Sure, Yeah, the irony of the actual terrorists not being constitutional,
but the dollar amount being seventeen seventy six is now
lost on us. Joel, let's talk about investing target date
funds specifically, because if you choose one wisely, I think
it can be a solid choice for many folks out
there who are looking to not think very hard about
(11:32):
their retirement nest egg, right, like they just want to
set it and forget it. But we want folks to
be careful because there are a lot of really bad
target date funds out there as well. They're not all
created equal, and they're getting more complicated, and some are
are becoming markedly worse Jason's wig. He reported that private
investments are being brought into target date funds. Now they're
(11:53):
inside of four one k's as well, So not.
Speaker 1 (11:55):
Just inside of your four and K that you can choose,
but you get the target date fund that you think
is well balanced.
Speaker 2 (12:00):
A bit more generic it doesn't have the yeah, the
fancy stuff.
Speaker 1 (12:04):
And stuffing the private investments into even that.
Speaker 2 (12:07):
Yeah, And a lot of these target date funds are
they're increasing the number of underlying funds that they hold
as well, right, And so what's happening here is that
the targeting funds are marketed as this sort of simple product,
but they're getting more complex under the hood. Even man
the folks over at Vanguard, they've actually unveiled a new
target date fund that includes annuities as well, which isn't
(12:29):
it Not my favorite thing.
Speaker 1 (12:30):
Mine either, At least when I looked at the Vanguard
target date fund, they are keeping the costs relatively low
similar to their other target date funds. Still, it's not
what I would choose or what I would suggest people
partake in. And I guess it just it's sad to say,
I wish that target date funds didn't vary as much
in terms of what is under the hood and in
(12:51):
terms of cost, because then it would be easier to say, yeah,
target date funds are great, but it's in many cases
they're not. And so you have to be really discerning
when you decide which target date fund you're being offered,
and whether or not it makes sense for you, because
there are a whole lot of bad ones, and some
of the bad ones are getting worse. There are still
a couple of good ones out there, but it's still
(13:12):
the wild West, I guess in the target date fund space.
And the truth is, especially as target date funds get
more complicated, there are just better ways to achieve simplicity
and diversification when you're investing. By the way, the stock
market remains close to all time highs, which means a
lot more folks are finding themselves in the millionaire category.
I think the number of millionaires in this country matt
has quadrupled since twenty ten, which pretty cool to see
(13:36):
and really makes sense. I guess when you just look
at more people having stock market exposure and we're talking
about fifteen.
Speaker 2 (13:42):
Years and the way compounding works a lot of gains
and the way compounding works, right.
Speaker 1 (13:45):
So, but a lot of these folks see themselves as
moderate millionaires. There's an article in the Wall Street Journal
about that they're excited to have reached the point of
becoming a millionaire, but they still feel like they have
to save and spend wisely, Like, why am I not
living like a million and I guess I understand that reaction.
But as friend of the show Ben Carlson pointed out,
(14:06):
he said, you don't become a millionaire by spending money
like a millionaire. He basically said, wealth is a lack
of spending. And it's true, right, that's how you build
wealth is by saving and investing a decent chunk more
than you spend. And it's just also true that you
don't want to completely abandon the habits that got you
to that point, because that's how you like lose millionaire status.
(14:28):
I think reaching reaching that millionaire plateau is great, but
move the rudder slowly in the spending direction. You don't
want to be like, all right, I'm a millionaire, now
I can ball out. Yeah.
Speaker 2 (14:38):
So folks talk about how this is called the wealth effect, right,
this is so essentially you feel your net worth grow
and with that, you've got the desire to spend some
of that money, even if is locked away in a
retirement account, which that's not something we are fans of, right, Like,
these are dollars that are meant to be used down
the road, and so, man, we don't want to see
(14:58):
folks spending money that is specifically earmarked for something like that.
One of the examples they gave was like taking out
a helock to pay for your vacation because you just
know that the value of your house is doubled. Same
with taking money from your four one k right just
because it's worth way more, you feel richer. That does
not mean we want you to take a four to
one k loan or any money out your four one
(15:19):
k is specifically for retirement. On top of that, the
stock market, the housing market, it could experience a correction
which would then put you in a tougher spot. And
so if you've been crushing it, don't be afraid to
dial back your investing a bit as you are looking.
Speaker 1 (15:33):
For ways to directly pay for.
Speaker 2 (15:35):
Some of your expenses in the here now, but certainly
taking robbing Peter to pay Paul sort of approach where
you are on top of that, sometimes paying fees but
then interest payments on top of that is a surefire
way to lose more some of that hard one wealth.
Speaker 1 (15:51):
Yeah, I agree. I think if you're feeling that wealth effect,
like ah, man, this money's burning a hole in my pocket,
but it's in these inaccessible, inaccessible things, which is like, hey,
the value of your home or your fourrowing k. Just
dialing back some on your investment so you can enjoy
more of the here and now is a better recipe
than taking money out of those places, which has other
potential real downsides. And this might this might surprise you, Matt.
(16:12):
I don't know if you would have agreed to thought
this or not, but one in five households in the
United States actually has a million dollar net worth. So
it's that's a lot like numbers on the rise. Yeah,
that's impressed a lot of folks. Well, and many people
listening to this podcast fit into that category now, and
a lot of others are going to get there within
a reasonable time frame. And there was this other interesting
(16:33):
article I saw where millionaires tend to be satisfied with
a lot of the professionals they hire. They love their therapists,
their personal trainers, they love their housekeepers if they have one, right,
but they don't value their financial advisor in the same
way they value other professionals that they hire. And the
main reason it seems to be because of how much
their advisor costs in what they feel like they're getting
(16:54):
in return for the expense that they're dishing out so
they just they just don't think they're getting what they're
paying for, which, yeah, that makes sense. And so something
like twenty six percent are thinking of switching, eighteen percent
are say they're thinking of ditching their advisor all together
and just diying their investments.
Speaker 2 (17:11):
I think that makes total sense because I think folks
are realizing that financial advisors, like they used to be
seen more as like, oh, you will pick my socks
for me. But as more data comes out as to
the underperformance of those picks, folks, they are moving to
the target date fund or something simpler like we were
advocating for, like the widely differed index fund.
Speaker 1 (17:28):
I think this also goes to show that there is
a wide range, just like in so many parts of life. Right,
you can hire one contractor that you're eminently satisfied with
because you feel like, yeah, it was expensive, but I
got the value for it. They just were on time, professional,
they did great work, and we didn't go too much
over budget or overtime. And then there are other contractors
(17:48):
where you're like, this is the biggest nightmare I've ever experienced.
And the same can be true in the advisor space, right,
And you have to know that and so it's really
important to hire the right person. At howdomoney dot com,
slash advisor is the place we would suggest going to
find a top notch professional if you're so inclined, because
we've partnered with wealth Ramp and wealth Ramp has thoroughly
(18:10):
vetted the advisors that live on their site who are
able to do business with wealth Ramp. And yeah, the
different an A plus advisor and a C minus. The
cost doesn't vary very much and often actually the better
advisors will charge you less, but the return you get
on your money is it's evinitely more valuable.
Speaker 2 (18:28):
It's certainly good to practice not overgeneralizing certain populations.
Speaker 3 (18:33):
I will definitely agree with that.
Speaker 1 (18:34):
And one thing that any decent advisor would tell you
is to update your beneficiaries regularly. There was an article
about that this week that I saw, and it just
reflects actually a recent family experience of ours. So where
if you do not have the right beneficiary listed and
someone passes away, it creates a world of problems and
(18:54):
the person who you wanted to get the money or
who doesn't get it, whether that's insurance policy, whether that's
a retirement account. Man, let this be a reminder to
you to change your beneficiary if needed, because you just
want to make sure that that money goes to the
person you intended it to go to. You've been working
and saving all these years, and it's something more to
happen like you just don't want that money going elsewhere,
(19:17):
So check your listed beneficiaries, which typically trumps your will.
It'll take just a few minutes of your time and
it could save you and loved ones a lot of grief.
Speaker 2 (19:25):
That's right, buddy, And we've got more to get to here.
On our Friday flight, we're gonna talk about Robinhood, something
else they've been cooking up. We'll get to that and
more right after.
Speaker 1 (19:33):
This our wall back from the break man. Robinhood really
hasn't been cooking. I feel like they're launching stuff like
all the time. And yeah, we'll get to we'll get
through our thoughts on what they're doing. But first we
got to get to the ludicrous headline of the week.
This one comes from Business Insider and it reads the
(19:56):
wanna be real estate locals going bust and this story
it's home for a newish crop of real estate investors
who took risky bets, who made overly rosy projections and
who didn't keep enough cash on the sidelines, Matt. When
we talk about real estate investing, there's so much hype
out there, and there's so many people on the socials
(20:16):
trying to tell you how much money you're going to
make as a real estate investor, often hiding the reality
behind the scenes that it's a lot harder than you
might think, and there's a lot you have to be
prepared for if you enter into that space as an investor.
And so Business Insider had this article documenting how landlords
are using something known as DSCR loans to buy properties
(20:37):
that would cash flow without having to prove credit worthiness
and so basically they're getting loans based upon projections. Yeah,
I think that this single family home I'm buying is
going to get three thousand dollars a month in rent
and the mortgage is only twenty five hundred dollars, and
so other lenders like, great, let's go, and so people
are finding themselves between a rock in a hard place.
(20:58):
It makes me think of the great recept two met
that even these loans are available to people, that it's
a risky bet for a lender to make, and then
for people who want to be landlords. Just because you
are offered this loan doesn't mean you should take it.
Because for a lot of people, the pre purchased guestamates
have fallen short and the rental market has slowed down meaningfully,
which means an uptick in vacancy on expected repairs, or
(21:20):
some declining rents, or a mix of all three of
those things creates highly unstable footings. We're seeing just a
lot of landlords like, uh, yeah, I'm in this loan.
I'm losing money every month on this rental property that
I thought was going to be a financial win for me.
Speaker 3 (21:34):
Yeah, And we are all about eliminating the jargon.
Speaker 1 (21:37):
So DSCR, he said, that's what they are, right, The.
Speaker 2 (21:39):
DSCR loans stands for debt service coverage ratio loans, where
they are Yeah, they're basing the loans not on how
much money you have in the bank or how much
money you make and how much debt you're servicing, but
just on the simple projections. And I'll be honest, especially
for someone who's been self employed, man, getting any of
my properties, but certainly that very first.
Speaker 3 (21:59):
One was so freaking hard.
Speaker 1 (22:01):
You had to prove a lot.
Speaker 2 (22:02):
Oh my gosh, the amount of information that the bank
was reaching out to us about like it was incessant.
It was NonStop, like, Okay, prove your income, Okay, pro
Oh are you sure these are all the accounts you have?
Show us how much money you got in the bank,
Like I was halfway expecting like a full body cavity search.
Speaker 3 (22:21):
Like are there any debts in there? Like they were
wanting to know everything.
Speaker 1 (22:24):
You're also expecting a little rumples still skin like put
your first born.
Speaker 2 (22:27):
Yeah, And I was, And I get it though, because
they are trying to mitigate that risk, and so I like, honestly,
had I been aware of those back in the day,
like I may have been tempted a little bit to say,
you know what, let's just bypass all of that headache
and instead, let's let's get one of these DCR loans
to where we can.
Speaker 1 (22:43):
Avoid that altogether, which I agree it sounds nice in
principle as the investor, but especially if your productions are
too rosy like it's, it's much riskier for the banks
and for the person doing the borrowing. And so, as
somebody who wants to get into rental real estate, you
got to be really really care before jumping in on
one of these loans because it can come back to
bite you. It's just been really interesting, Like Warren Buffett
(23:05):
has that quote about when the tide goes out, we
see who's swimming naked. And that's really what's happening in
a lot of the real estate space right now, where
people who bought at the top of the market projecting
just continued year over year increases of the rents or
thinking that the market where they were buying was going
to just continue to be red hot. Well, a lot
(23:26):
of those projections have proved to be untrue, and so
they're finding themselves with their pants.
Speaker 2 (23:31):
Down, yeah, I think, or when you just swimming naked,
your pants aren't down, they're just missing.
Speaker 1 (23:35):
The just gone. Yeah.
Speaker 2 (23:38):
I think the biggest problem with real estate specifically is
when you have like a trifecta of bad things happen, right, Like,
if you have declining rents in a given area A,
then you have on top of that, maybe you've got
a big expense on your specific property that B. But
then let's say you've got some vacancy right like something
like that. When you have like a trifecta a multiplying effect.
That's when it really can come back to you, I think,
(24:00):
and because like you can take this like similar risks
with a stock market, right, Like you can have overly
rosy projections and you're like, all right, I'm going to
expect to earn ten percent in retirement.
Speaker 3 (24:10):
Maybe you're earlier and in.
Speaker 2 (24:11):
Five percent, But that's just a singular factor where you
can be Okay, we need change that, like moving forward,
we haven't been earning the rate that we are expecting.
And yeah, it just feels a bit more under within
your control because like a lot of times, like how
do you combat that when you are in retirement, it's
by modifying your spending as well as opposed to some
of these outside of your control things like what is
(24:33):
the market, the housing market overall doing. Oh I wasn't
expecting that perfectly healthy looking tree to get exploded and
go through my roof. Like there are some of these
out of your sphere of influence factors that when all
stacked up together, can Yeah, it can really mess you
up financially.
Speaker 1 (24:50):
That's why real estate investors need to have even more
savings on hand to weather tougher times. Yeah, and if
you don't like you're really putting yourself in a tough position.
There's an article too this week specifically about real estate
flippers and how they're having a tough time, which makes
sense because as home prices are moderating, homes are sitting longer,
the prices are going up of basically everything on the
(25:11):
renovation front. At flipping, which has always been a risky endeavor,
they're facing a really tough climate. So if your house
sits for let's say five months instead of one month, like,
that's a lot of extra money that you are just leaking.
It's leaking like a sieve. And so I think the
moral of the story here is that real estate investing
isn't for everyone, and this is a particularly tough climate
(25:35):
to get into real estate investing, whereas like ten twelve
years ago, it was just so much easier, Like the
deck wasn't stacked against you nearly the same way. Can
you still be a successful real estate investor in twenty
twenty five, twenty twenty six, Yes, but it's just going
to take a lot more due diligence and a lot
more preparation for potential risk.
Speaker 3 (25:55):
That's right, Joe.
Speaker 2 (25:56):
We haven't talked about gambling in a while, and unfortunately,
it seems like all signs are pointing to everything getting
worse on that front. Like I'm thinking about like the
the NBA arrests, which I don't think we've we talked
about on the show. Yeah, But in addition to that,
we've seen like the meteoric rise of just different prediction websites, which,
let's just be honest, are gambling by another name. But
(26:17):
there's been an influx of calls to the National Problem
Gambling Helpline, particularly in states where gambling has been legalized,
But there's also been a significant rise in bankruptcies in
debt collection efforts in those states as well. Are they
perfectly correlated, maybe not, But I do think it is
evidence of more more problematic behavior because it's just really
(26:40):
hard to watch a sporting event and not be swayed
by the tsunami of ads that you see to encourage
you to participate in all these different, different kind of bets.
Speaker 1 (26:52):
Plus they're going to give you free money to get started, right,
So it's like, here's a free hundred dollars to place
your first.
Speaker 2 (26:56):
Bet, and it feels like you'd be a total dummy
to not take them. Up on that offer and then
they've of course got their hooks in you. But in
an economy that feels a little bit less robust, I
think we're just seeing more people out there just partake
in betting in the hopes of like, oh.
Speaker 3 (27:13):
Maybe I can actually use my knowledge of the game,
Like I actually watch a lot of basketball, you know,
I watched a good amount of football. Maybe I can.
Speaker 2 (27:20):
I can make a buck while I'm also entertaining myself.
And it's not panning out for a lot of folks.
Speaker 1 (27:26):
No, it's not. Yeah, And so I think it's especially
nefarious when it's in your pocket twenty four to seven
you can access at any time. And then on top
of that, there are parlay and prop bets that are
because it's less just like which team is going to
win today? I think the Bills are going to win.
And now it's getting like, well, is what about a
misfree throw or a quarterback in completion? You can bet
(27:47):
on stuff as minuscule in a game and the potential
outcome as a drop ball, Yeah, which is insane to
think about.
Speaker 2 (27:54):
Yeah, which is where this is where the Robin Hood
story comes in, because they are enabling this kind of
behavior they are.
Speaker 3 (28:01):
Unfortunately.
Speaker 1 (28:01):
Yeah, they've they've launched NFL parlay and prop bets on
their prediction market platform, and those I think are a
big part of the problem. And so it's just it's
kind of like fantasy football. It's like it did make
the game more interesting to watch, I think for a
lot of people. But this is a way that gets
you more heavily involved in the outcome of the game,
(28:21):
but and in every little thing that's happening along the way.
But the downside of you losing is that you're losing money,
not that you're losing pride amongst your fantasy community. Right,
so the stakes are a lot different.
Speaker 2 (28:33):
Or your inability to be forced to wear a dress
like while holding a sign saying that you lost the.
Speaker 3 (28:39):
What is it like that, Yeah, fantasy pool, that's right,
that's right.
Speaker 1 (28:42):
Or having to wear the jersey of the team that
you hate, or.
Speaker 2 (28:44):
Something which seems much more wholesome, Oh my gosh, compared
to just folks who are ruining their financial lives.
Speaker 1 (28:49):
It does, and it feels like we're entering this like
gamblification of society. And what makes me say that is
not just the things we've talked about, but There was
another an app or a website that we found out
about this week called Covered, and this website bills their
service as paying bills made fun. Matt, when's the last
time bill paying was a joy for you?
Speaker 2 (29:09):
Yes?
Speaker 3 (29:09):
I don't know.
Speaker 2 (29:10):
I like to cross it off my list. Yeah, but
not in the way that they're advertising.
Speaker 1 (29:14):
Right, Yes, yeah, My red flags are already up when
I read that this Covered is being sold as a
credit card with gaming features embedded, where you can win
back your purchases. You can get, as they say, up
to one hundred percent cash back. Oh, Matt, make sure
three percent, robbin. The card looks super lame. If you
get one hundred percent cash back, you say, gosh back, Yeah,
sign me up. I'd be a nudi not to right.
(29:35):
So you used a Covered card to buy stuff, and
then you hope right that you can game, which is
gamble for the chance to win back the money you spent,
while likely going deeper into debt in the process. We
thought buy now, Pay Later was bad, Well, this app
it's invested in by a prominent venture capital company. It's
just a more wretched sign of the time. Ye.
Speaker 2 (29:57):
Well, in addition to that, so you move down pretty
quickly to covered. But Robinhood is actually even doing and
we haven't talked about this on the show, and no
journalist has written about it yet, So I'm just gonna
have to dig and share from my own experience. But
they are so, yes, the three percent is real and
I'm using that card pretty much NonStop. But they are
(30:17):
encouraging you to parlay the points that you are earning
into the points that you can then essentially roll a
dice and win bigger stuff. So there is a gamification
element to the robin Hood card too, because it's got
the separate app. It's not the Robinhood training app. It's
a separate Robinhood credit card app. And within that it's like, oh,
you could you have the chance of winning more cash
(30:38):
back or oh you have a chance of winning a
literal bar of gold, right, And so your eyes get
wide and you think, oh my gosh, and some of
it it's not even a chance to win it, it's
just oh, you will earn this once you accrue so
many points. And so, if I'll be honest, I was like, oh,
an ounce of gold or whatever it was, and so
I just ran the price on it, like you're way
over paying based on what those points are worth. And
(31:00):
so if you haven't done the math, then they're not
counting on folks to be smart and logical about this.
Uh yeah, you're completely losing out. And though you were
attracted by the three percent cash back, and you know
that your eyes were filled with the three percent dollars,
you know the three percent sign instead, in fact, what
is actually happening is your behavior is getting forwarded by
the gamification of it.
Speaker 1 (31:20):
You're not actually getting the three percent because you're using
your You're falling prey to Robin Hood's traps on the.
Speaker 3 (31:25):
Back, you're risking it.
Speaker 1 (31:26):
Yeahrkes me think of a do you remember the penny
bid websites where you would buy like a bunch of
tokens essentially, and you would make place bids on a
bunch of items. Then if someone else placed a bid, well,
then the clock restarted. And so it was just this
way where yeah, maybe somebody won the PlayStation for twenty
two dollars, but it wasn't gonna be you. You were
just gonna waste a lot of money bidding on these
(31:47):
products in the process. And so yeah, these what Robin
Hood's doing, we think stinks. What covered is is worse
than stinks. That's like all they are.
Speaker 2 (31:56):
Yeah, like they are, yeah, And I don't want to
like judge, but I'll So I was clicking around the
covered website and it looked over to the.
Speaker 1 (32:02):
Under Machine Man.
Speaker 2 (32:03):
Yeah, like the whole website is set up that way,
and you see the guys that started this thing, and
they don't look like they're happy about what they're doing.
Like there's no argument to be made right about what
it is that you're providing, right, Like with rot Robinhood
you can be like, no, we're we're trying to democratize investing.
Oh this is They do have some good products for sure. Yeah,
oh this is the three percent card. And like a
lot of tools that exist in the gray financial space,
(32:27):
you have to make sure that you're using them correctly.
Speaker 1 (32:29):
And there's just a lot more opportunity to be taking
advantage of or to be your own worst enemy. There's
a lot of these new tools, and so you just, yeah,
you have to be incredibly careful. And some of them
are just like bad all the way down, and some
of them have a mix of both, and you just
have to be discerning to use those tools well or
just avoid them all together, and I think sportscambling is
one of those things that hopefully most how the money
(32:51):
listeners are avoiding all together because there's not much good
coming out of it for a lot of people. Or
while we're talking about purchasing tools and credit cards, Matt,
let's talk about debit cards for just a second. They're
we're seeing kind of an uptick in debit cards that
have rewards attached to them. Oh, it's not just credit
cards anymore, right, For the longest time, debit cards were
just a means of purchasing, but like, you typically didn't
(33:13):
get rewarded for making those purchases. Target has a credit
card and debit card. Both have a five percent cash
back option, which is kind of cool, so if you're
a regular Target shopper, that is that's been around for
a long time, but still like that's an example of
a debit card that has rewards attached to it. Discover
talked about this before. They have a one percent cash
back for using their debit card. But we're seeing more
(33:35):
like airlines and hotels and even venmo is getting into
the space as well where you can get rewarded for
using your debit card. I think We're just going to
see more and more of this in twenty twenty six.
But the problem codes.
Speaker 2 (33:48):
Yeah, these co branded credit cards specific to a specific
to many specifics that pertain to an individual brand.
Speaker 1 (33:56):
Not just credit cards. Debit cards too, right, So the
boats are yeah, I say debit cards. But here's the thing.
You have to sign up for an individual checking account
for each one of these debit cards. You have to
keep a certain amount in there to avoid fees like
the hoops you have to jump through to get too
many hoops Yep, too many hoops, although.
Speaker 2 (34:11):
Not with the not with the target debit card, Like
that's a debit card that ties directly to your checking account,
that's true. So that's one where. Yeah, we've got mixed
feelings about target. I don't want uh lump targeting with
the rest of these new co branded debit cards, agreed.
Speaker 1 (34:25):
Yeah, and some of these you have to be You
decide for yourself whether or not it makes sense. But
the credit cards are typically going to be more rewarding
and not gonna have the same hoops to jump through.
But yeah, that does that make sense for you? Well,
only if you follow the gold rules of plastic, Like
we talk about here on the show.
Speaker 3 (34:41):
That's right, and that's gonna be it for this Friday flight.
We hope you enjoyed the show. Did you enjoy it, Joel?
Speaker 1 (34:47):
I had a great time.
Speaker 2 (34:48):
I had a fantastic time as well. That's gonna be
it for the so fun listeners. Can find OO show
notes up on the website at howto money dot com.
Don't forget the how to money dot com word slash
advisor if you're looking for some of.
Speaker 3 (35:03):
Those highly vetted advisors.
Speaker 2 (35:05):
Financial advisors that are that are gonna do you good,
not the ones that are gonna overcharge and over promise
as well as to what it is that they're going
to provide. But uh, yep, howd too money dot com
forward slash advisor. That's gonna be it until next time.
Best friends out, Best Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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