August 22, 2025 • 38 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: autopay fees, school supplies and sloppy joes, Aldi item of the week, a recipe for mediocrity, digital nomad fatigue, treat culture, crowdfunded real estate investing flop, adjustable rates mortgage applications on the rise, retired renters, and lease purchase agreement attraction.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Out of Money. I'm Joel, I'm Att.
Speaker 2 (00:02):
Today we're talking digital nomad, fatigue, treat culture, and retired renters.
Speaker 1 (00:26):
That's right, man.
Speaker 3 (00:27):
This is our Friday Flight, our weekly roundup of the
stories that made their way through different publications out there,
and we're going to tackle how they pertain to your
personal finances. Happy Friday, everyone, that's the best day of
the week. I like Fridays, that's the best. Yeah, what's
your second favorite day of the week.
Speaker 1 (00:44):
Yeah, favorites.
Speaker 3 (00:45):
You don't have them immediately ranked in Like Sundays, Sundays
or Mondays are great.
Speaker 2 (00:49):
They feel less chor oriented than Saturdays. You get the
Sunday scaries. No, yeah, like you worried about going back
to work next day. Yeah no, I get excited largely because.
Speaker 1 (00:58):
You love what you do.
Speaker 2 (01:00):
Have a fantastic time here. But we get a for
coffee immediately on Mondays. Mondays are our coffee day, and
so that do you.
Speaker 3 (01:06):
Think that that has a leave alleviated any of the
stress that you might normally feel on Sundays?
Speaker 1 (01:10):
You're like, well, at least I get to go get
a great coffee on that in the morning.
Speaker 2 (01:13):
I'm not usually stressed anyway, but it does add a
little excitement to my mind.
Speaker 3 (01:18):
We do you think we should have more stress in
our lives? I feel that there are there's just a
whole lot of anxiety and stress in the world, and
I don't know, I feel like we have been able
to take a proper view.
Speaker 1 (01:28):
Is it. I've just three kids, I've got my fair amount.
Speaker 3 (01:30):
It just seems like there's more and more existential threat
or stress that people are just.
Speaker 1 (01:35):
Soaking themselves with.
Speaker 3 (01:36):
I don't know, like we talk a good bit about
politics personally, but there's a difference between talking about it
and letting that fuel your deep seated fear and anxieties.
And we're just why we're talking about.
Speaker 2 (01:47):
Feel as political as a culture right now, and that's
why we try to stay away from it on the
ship man.
Speaker 1 (01:52):
That's right.
Speaker 2 (01:53):
Politics for zero, politics for our Friday flight. I mean
sometimes policy, but not politics. Okay, let's quickly though. I
wanted to mention a listener. Ricky emailed us this week
and he was really upset, Matt. He was really upset Ricky.
Speaker 1 (02:06):
James, not not at you.
Speaker 2 (02:08):
Wasn't mad at you.
Speaker 1 (02:08):
It wasn't mad at me either.
Speaker 2 (02:09):
Fortunately, Ricky mentioned he's with the USAA and he's got
an insurance policy through a USAA. When you actually look
at the consumer reports rankings, USA rates as one of
the top insurers year after year after year. So that
would seem to be a good thing.
Speaker 1 (02:24):
When it comes to customer satisfaction.
Speaker 2 (02:25):
Yeah, yep, but USA is really pissing Ricky off right now, Okay,
he is not happy.
Speaker 1 (02:32):
Harsh words.
Speaker 2 (02:32):
It was a very long email about a three dollars
fee that's charged to you if you don't sign up
for auto pay. So USAA, he said, is trying to
I think I wrote this ten he said. They're they're
charging me to give them money, And I get how
that's frustrating as a customer. And it's not even for
paying with a credit card, which would make sense, right,
there's a fee that they incur when if you pay
(02:54):
with a credit card, and so they passed out on
to you oftentimes. But no, no, no, it's it's not
because of that. It's just because usa A really, really
really wants Ricky and every single other person who works
there to sign up for auto pay, and if you
don't do it, they're going to charge you money. I
get why that's frustrating. What was your take?
Speaker 1 (03:12):
I don't have it toake because I didn't get that email.
Oh you didn't see it? Oh was it just to me?
Maybe it was just you okay, weird.
Speaker 3 (03:18):
Unless my email filter that one to span the perhaps
I would say no, I would be frustrated too.
Speaker 1 (03:24):
Yeah.
Speaker 3 (03:24):
I guess my question would be why does USAA want
folks on auto pay? Is it just for them to
be priced and sensitive?
Speaker 1 (03:30):
That's for you?
Speaker 2 (03:32):
Is that exactly what I'm thinking it must be. I mean,
obviously they're not going to come out and say it, Hey,
here's why we're doing this. But the reason I think
you're right that they're trying to get people away from
manual payments is because one they're shured of getting their
money on time, and then two they're saying, oh if
you yeah, then Ricky and everybody else is going to
be far less likely to shop around because it's just
(03:52):
going to get automatically taken out of that account.
Speaker 3 (03:55):
Well, I guess that's I mean, yes, so I agree.
I would be frustrated if that was me as well.
But that's a good argument for just tracking or spending.
Because even though I've got certain things on auto like
This makes me think of my we pay for your
long care yard service, the guys that come cut the yard,
and they started charging to use a credit card, which
I get because that is an expense that small businesses.
(04:16):
That's an expense that they are like, hey, if you
want to pay the credit card. Yeah, it's tough for
us as a small business to do that. But even still,
every time I see that charge, it makes me a
little upset, and I'm just I need. What I need
to do personally, though, is sit down and maybe look
at several different businesses that I've got set up on
autopay to see how much they're charging to use a
(04:38):
credit card and to weigh the pros and cons as
to whether or not it's worth it. Maybe I need
to set up an AH, which is most likely what
I need to do in this case. I doubt I'm
making enough on a recurring day and day out two
percent cash back, yeah, because it's typically a three percent charge,
so losing.
Speaker 2 (04:51):
A little bit on the spread. Yeah, Well, Ricky, we
feel for you, and USAA don't don't love that you
treated your customers this way when normal, I would say,
great organization. Consider getting your insurance there based on the
longevity of their positive reviews from a slew of people,
including organizations like Consumer Reports. But it's just a bummer
(05:12):
to hear that they're instituting totally an unnecessary fee. And
the cool thing is, or the interesting thing is that
Ricky found out is even with this autopay thing, he
can still go in there and manually pay if he
wants to not incur a charge like ahead of the
auto pay payment. Still, it's just a frustrating thing for
someone who's been a long time customer. All Right, we've
got a bunch to get to though. On the Friday flight,
(05:32):
let's talk about school being back, and is it back
for most people at this point? I think at this
point we're getting there. Maybe Northeast is after Labor Day.
Speaker 1 (05:42):
I think typically that crazy. It's crazy. It's like a month.
Speaker 3 (05:45):
Yeah, where we are, we start school very early, the
kids have been in school for like three weeks.
Speaker 1 (05:49):
Yeah, it's insane, just crazy. Yeah, it really is.
Speaker 2 (05:52):
Well, and anybody with kids knows that, Like summer super fun,
also crazy. Uh And and even though it's it's tough
to see summer go oh, the predictability of the school
year can be nice.
Speaker 1 (06:02):
Like I was.
Speaker 2 (06:03):
I was really looking forward to getting back into a rhythm.
It's nice to be back in that rhythm to it's
nice to break the rhythm, and then it's also nice
to get back to it. But school also means buying
school supplies, figuring out what to feature kids for lunch.
And on the first thing buying school supplies, I would say,
look at what you've already got on hand, Matt. We
were able to find a binder that was gently used
right from the previous year. We nice lunch lunch bags
(06:27):
that were and and bent go boxes or whatever to
pack their lunches in. Those are those are things that
we already had on hand. We don't have to buy
those things. We're not going.
Speaker 1 (06:35):
To re up.
Speaker 3 (06:36):
I will say, we had to ooh, maybe this is
here's a school supplies tip for for folks. We had
to purchase a new backpack with for one of our
kids because our backpack wasn't big enough to handle like
the big binders. Yeah, and so I'm of two minds
because that on one hand, our little dude just started
and we went ahead and bit the bullet and got
him the full sized backpack. But it's like as big
(06:57):
as he is, but I also know that that's gonna
last five six.
Speaker 1 (07:01):
Years most likely.
Speaker 3 (07:02):
But with our yeah, one of our daughters, we had
gotten her just one of the smaller ones, and it's
a perfectly fine backpack, not torn, still works. She couldn't
fit her three inch binders in there. That the school's
making her.
Speaker 2 (07:14):
It's amazing how much kids are supposed tone around at
schools these days.
Speaker 1 (07:18):
Just makes them stronger. Hope, so it's like rocking. But yeah, yeah,
exactly in between the water fountain and the home room.
Speaker 2 (07:24):
I'm curious to hear you take on this. CNN had
a story about pawn shops and how pawn shops are
a good place to get back to school supplies.
Speaker 3 (07:31):
I totally saw that, and I would have said, what
are you talking about? Musical instruments and not cross my
mind at all to look into a pawn shop for
a musical instrument.
Speaker 1 (07:41):
So super smart.
Speaker 2 (07:43):
So if you're her phone and your drum set there,
clarinet whatever else, oh my gosh, yeah, I think that's
a fantastic.
Speaker 1 (07:48):
Or even laptops, so there's a whole lot of.
Speaker 3 (07:50):
Electronics in there too. I know a lot of schools
provide oftentimes we'll provide because they had to spend all
that stemy money, all the school stemmy money on something
they can't spend it on south. So you spend it
on equipment, things that you don't have to main. You
got to maintain it, but it's not something you have
to pay out every single year.
Speaker 2 (08:06):
Yeah, supplies so through stores I think are another good
place to turn, especially for clothing for your kiddos. Heck, yeah,
and food. Let's talk about food prices. The cost of
a lunch has risen. That's just inflation, right, and inflation
at the grocery store. In particular, some school districts have
been raising the cost of their school lunches, although obviously,
like needy kids are are typically eligible for free or
(08:28):
greatly reduced lunch prices. But the school lunch is like
I think it's three dollars and twenty five cents where
we live nice, it's more than that.
Speaker 1 (08:36):
For us.
Speaker 3 (08:37):
It's closer to five bucksky school lunch, which is one
of the reasons we ain't playing that game.
Speaker 2 (08:41):
Well, you typically pack your kids lunch. We do the
do the same, and I think that is a way
to save some like it's it's not like you're saving
a ton. But the big thing I think in packing
your kids lunch is you're able to give them something
that is much healthier typically than what you're going to
get at the school. And Len Penzo, who who is
a personal finance writer, he does this survey every year
(09:03):
of the cost of a school lunch, which I don't know,
I just think it's awesome. And he found that the
peanut butter and jelly sandwich is the cheapest sandwich roughly
forty four cents per sandwich.
Speaker 1 (09:13):
Created that's a deal. Yeah. I love PB and j's
me too.
Speaker 2 (09:17):
And then you know those denser foods, I think they
might not be the coolest foods, right, the carrots, the apples,
the almonds, and that sandwich. I think that's going to
help people reduce the cost of their kids lunch and
not their kids get full on real actual foods, you know.
Speaker 1 (09:31):
I mean, I think the.
Speaker 2 (09:32):
Absolutely it's all that stuff in the most of the
center aisles.
Speaker 3 (09:35):
Yeah yeah, yeah, absolutely true chips, individually packaged snacks.
Speaker 1 (09:39):
That is going to ramp up the cost of those meals.
Speaker 3 (09:42):
And here we go, Matt getting on a soapbox where
you shot matters as well. Aldy is a fantastic choice,
and I saw that more and more how to Money
listeners have access to an Aldi. They were set to
become the second largest grocery chain behind Walmarts over the next.
Speaker 1 (09:59):
Couple of years. We're just back your chair and all
then it makes me happy. Man.
Speaker 3 (10:03):
The Times they actually gave Aldi some love talking about
their rapid expansion across the US. And so if you
are listening and you're like, oh, yeah, school lunches, they've
hiked the prices there at school. I don't know if
I want to do I have what it takes to
be able to put together a school lunch. Is it
actually more affordable? Well, it will be if you start
shopping at Aldi. If that's not something that you do.
(10:24):
And here's some info that I not paid for my
Aldi not yeah.
Speaker 1 (10:27):
Yeah.
Speaker 3 (10:28):
So in the Times this they highlighted the fact that
one of the reasons Aldy is able to keep their
prices so low is because of the store brands Aldi
carries ninety percent. I was like, I didn't, I did.
It was a lot of I didn't know it was
that much, but like, the store brands are great, and
I'm gonna specifically call out here's my Aldi Cliancies. This
isn't going to be a recurring segment or anything, but
I'm gonna cut it. I'm gonna call it the all
(10:48):
the item of the week, which is it really should be.
And this is going to be so on brand, but
it's Warns Gruner. I tried to try to say it properly,
but that's the ald German pills. It is a good beer,
is it.
Speaker 1 (11:02):
That's right?
Speaker 3 (11:03):
You heard it from Joel Matt the craft beer guys.
We're not from you. I'm the one vouching for it,
but it's the solid German pills. If you're into that
stylid beer, I would recommend it super affordable.
Speaker 2 (11:13):
Makes sense that the grocery chain based out of Germany
has a good Germany and it's the only place you
can buy that beer in the US.
Speaker 1 (11:19):
Okay, like Aldi has a deal and so.
Speaker 3 (11:22):
I think they are literally the only importer and they're
the only retailer who is selling that beer state side
Man good so now, because that's an actual brewery over
in Germany.
Speaker 2 (11:30):
It's legit fascinating. Okay, speaking of your kids, right, whether
or not you say for their college, it really depends
on how much progress you've made with your own finances.
I was talking to a friend this week and he
was like, I'm not saying for my kids education, but
he had like a good reason for it. He's like,
I had to figure it out myself, and I think
that's a reasonable way to go. It wasn't because he couldn't.
(11:52):
It was because he didn't want to. And I think
that's totally fine. Like, more power to you to each there. Yeah,
but if you are doing a great job with your
own you know, saving and investing for your future, and
you're inclined to invest for you know, the future of
your offspring. You want them to go to school, and
you don't want them to pay well price. You want
to help them out with that. You want to grow
a nest egg. Well, knowing which five twenty nine plans
(12:14):
are the best can be helpful, because Matt, A lot
of people don't realize this, but you don't have to
use your state's plan. Some people think, well, I live
in Idaho, I guess I got to use Idaho's plan,
or I live in Wyoming, got to use Wyoming's plan.
And the truth is you don't have to. You can
go with any of the state plans that you want.
Speaker 1 (12:31):
So.
Speaker 2 (12:31):
Morning Star recently released its annual rating of all the
state plans. The top ones are Alaska, Illinois, Massachusetts, Pennsylvania,
and Utah. Utah has been like top notch for years.
They've been essentially at the forefront of low cost five
twenty nine plans, and a lot of people from other
states have opted to invest in the Utah Plan for
(12:52):
good reason, because it's such a good plan. I think
when you're trying to decide which five to twenty nine
plan to go with, though, if your state offers a
tax and sent and if you want to choose that one,
and if your state does not offer a state tax incentive,
like you're not getting a reduction in the income tax
that you have to pay, then op for one of
those superior plans, one of those top five plans that
(13:13):
morning Star recommends. I think those are they're all good.
The Utah Plan again, in particular, has been excellent for
a long time. So just know five twenty nine plans
continue to get better. Costs continue to go down in
many states, but there's still some that suck really bad.
Make sure you avoid those ones, all right.
Speaker 3 (13:29):
So the journal had a fairly provocative article about specifically
about work life balance, which certainly drew my attention, Joel,
but they this author. It was an opinion piece, of course,
but this author was saying that striving for that work
life balance is going to keep you mediocre. And of
course I think he was probably trying to be divisive,
(13:51):
throw a little opinion grenade out there into the world.
That being said, he made some solid points, all right.
The suggestion wasn't that balance is never a good thing,
but that, let's say, if you want to rock it
closer to financial independence by your early thirties, well, having
some balance is going to be hard to come by.
Like you truly do need to frontload the sacrifice. That's
something we've discussed here on the show. The more frugal
(14:14):
that you are early on, the more that you can't invest,
it's going to lead to more freedom. As of course,
compounding does its thing. That being said, far be it
from the two dudes who just took summer off to
rake anyone over the coals for not working hard enough.
Speaker 1 (14:30):
We have taken our fair share of breaks we summer now,
Matt do we.
Speaker 3 (14:36):
I might be able to get behind that, But the
writer of this article wants to be and he wants
to be a billionaire by age thirty. It's not a
goal that most people have. It's certainly not a goal
that I have. But I just want folks to know
that what you want and what you save and invest
it is going to give yourself options down the road.
But you also need to know that there are certain things.
(14:57):
And this is my biggest issue too, was like I
couldn't help to think of the sacrifices he made at
an early age to be able to He had like
multiple companies that he sold for millions of dollars. Incredibly
successful takes some dedication, but success comes at a high price.
And in his like think of the toll it took
on his body. I just cringed when he was talking
about on average he would get three and a half
hours of sleep at night. He gained eighty pounds in college.
(15:20):
You've heard of the freshman fifteen, which is a funny thing,
funny concept to explain to my kids recently. They're like, wait, what,
and they're like, well, a lot of schools of these
lunch or meal play series. Yeah, cafeteria, and they don't
make the best decisions when it comes to what it
is that they're eating. But I think for him it
probably came because of metabolic unhealth essentially, right, like when
(15:43):
you gained eighty pounds, He's living off of red bulls,
and that's just physical health. Think about the social sacrifices
that he made. There's things that I did in college
where it certainly serves me. I'm thinking about getting like
one of my earlier jobs. Like I spent a lot
of time working on a website, for instance, when I
was in college, and I'm I had friends that would
kind of make fun of me for it, and that
was It was only a short period of time though
(16:04):
that I really immersed myself in dream weaver and I'm
like get in there, like figuring it out and having
fun with it. Again, it led to me probably landing
a job that I otherwise may may not have gotten.
But I was given a hard time, and had I
taken that a little too far, what have I probably
maybe I wouldn't have met Kate.
Speaker 1 (16:19):
Yeah, my wife, who, by the way, we just celebrated
eighteen years. Yeah, cul that's man, thank you, Yeah, love you, babe.
Speaker 3 (16:25):
But there are other things that you are giving up
when you go that hard, right, Like there are people
I think, who are necessary to be the extremes, to
be the outliers. This dude's got like Elon Musk level
work ethic, and those folks I think are necessary to
change the world if that's your.
Speaker 1 (16:41):
Calling in life.
Speaker 3 (16:42):
But for other folks, I think it can be a
lesson of oh, something beyond quote unquote normal is possible.
But just where along that spectrum do do I want
to plant my flag and say that that's what I
want to strive after.
Speaker 2 (16:53):
And I recently heard the a similar fashion. The CEO
of Palenteer basically say if you want to be a
raging success, you're not gonna have any friends in your twenties.
That was essentially his message, And I'm like, how about
I not sign up for that plan then? And also
so much depends on what your definition of success is. Like,
we do think that having more financial margin, amassing some
(17:15):
peace out money, creating the habit of saving an investing
for your future so you don't spend every dollar that
comes in today. Yeah, that is part and parcel. That
is part of being successful, I think, because you're also
just delaying some of your gratification, which is a good
thing as a human. You're going to grow as an
individual if you do that. But the extreme ideas, which
(17:39):
it feels like that phases a little bit past. I'm
actually surprised to see that article in the Wall Street
Journal right now. That doesn't feel like it's part of
the ethos of our culture. But there are some people
still out there pushing like billion dollar business. If you
want to build that billion dollar business, that's ultimately what's
going to make you happy. And I think that article
and some of these other comments from quote unquote successful people,
they don't intrigue me.
Speaker 1 (18:00):
They actually make me want to run away.
Speaker 2 (18:02):
Because of all that it takes for them to achieve
that sort of status. It's it's completely totally not worth
it in my opinion.
Speaker 3 (18:09):
Yeah, yeah, it makes me think of, honestly, the increase
that we've seen in folks who have been striving after
the digital nomad lifestyle, which we have seen increase dramatically
in particular over the past five years. Unfortunately, I feel
like a lot of folks like it seems like this mirage,
you know, like a lot of folks have essentially defined,
like you're kind of touching on, like what you define
(18:31):
as being successful.
Speaker 1 (18:32):
And I think a lot of folks.
Speaker 3 (18:34):
They saw a lot of influencers do it in the
late teens, being you know, out there traveling the world
while also operating a successful business, like.
Speaker 1 (18:43):
Oh, this is the new success, It's the new.
Speaker 3 (18:44):
Pinnacle of success, exactly as opposed to like what it
is that actually makes you happy. And there's a lot
of reasons that folks are kind of dropping off the
digital nomad train essentially, right, Like, you know, it's hard
to create community. You're constantly looking for Wi Fi if
you don't have some sort of internet service provider.
Speaker 2 (19:02):
But I think still saw be fun for a season,
and then it stops becoming fun because living out of
a suitcase gets boring after a while.
Speaker 3 (19:08):
Yeah, yeah, Oh, what I was going to say too
about early on or in response to the journal article,
you're talking about how it's surprised you that this was
something that was still being put out there. How doesn't
feel like it's part of the zeitgeist right now? It
honestly makes me worried for that guy that he has
sacrificed so much because he's still tied to these early
goals that he has set for himself. And that's what
(19:30):
that's In a similar way, That's how I feel about
the digital nomadism, right, Like you see it once and
you think, oh my gosh, this is everything, this is
what I'm going to go for, and you do it
for a little bit, but then you don't change your course.
Speaker 1 (19:41):
And we are.
Speaker 3 (19:42):
Constantly, ever evolving individuals, and I think what we need
to do is spend more time evaluating whether or not
the goals that we have set out for ourselves are
still the goals that we want to achieve, right, And
so in a similar way, that's why I think digital
nomadism has soured for a lot of folks because they
are continuing to pursue after this goal when they're realizing, well,
actually that means I don't get to spend any time
with my brother and he's got kids now, and oh
(20:05):
I want to spend more time with my folks. And
they're essentially married to this idea as opposed to reflecting
a little bit and saying, what do I define as
success in the stage of life.
Speaker 1 (20:16):
I think more folks need to be doing that.
Speaker 2 (20:17):
Yeah, agreed, And it's it's hard to It's an introspective
thing that people have to go there, and it's a
continual thing you have to revisit, and so being a
digital nomad for six months or for a year might
be awesome. But I've just seen a lot of stories
about a decline and interest and people like relationships being
blown up because they lived in a van together for
(20:38):
a year. And guess what that's You know, you don't
have all of those other outlets for relationship. You've got
that one person, and that can be a little stresful
of times, and even traveling after a while, traveling is awesome,
but it can get a little old, right if it's
like and it can feel if it's no longer special. Yeah,
and it can feel a little selfish two at times,
which can ruin the experience. Let's talk quickly, Matt. Articles
(21:00):
making gen Z. We talked about gen Z and credit
scores last week. Well, I just feel like articles making
gen Z seem like frivolous or out of touch are
kind of the norm right now. And The New York
Times was like, to hold my beer, let's I'll oblige
and make gen Z sound like idiots this week, and
so they wrote an article about how gen zs are
going over budget because they treat themselves too often and
(21:21):
so they're basically making the case that treat culture is
in full swing. It's something good happens at work, or
maybe even even something bad happens at work, and you
need some consolation prize the treat can be the way
to celebrate. And it seems like from what they're saying,
gen Zers are more likely to do this than others.
And I don't know if that's true. I don't know
that gen Z has particularly fallen prey to treat culture.
(21:43):
I do think though, that our society as a whole,
we see more emotional reactions in our spending, and it's
like it's kind of like a I deserve this sort
of mentality. But I think the thing that I didn't
love was in that article. It was like, they're willing
to blow their budget to get this treat, and you
and I were fans of spending intentionally on stuff that
(22:04):
you care about. Even now other people think it's ridiculous.
That's the craft beer equivalent, right, but put the blurge
in your budget, don't bust your budget for it. If
you want the expensive concert tickets because that's something you
really care about, or even just the fancy coffee, right,
then we think you should put that in your budget
and you should make it a priority. But it doesn't
hit the same way, right if you have to pay
(22:25):
interest on that purchase for months to come, if you
put it on the credit card and you can't pay
it off, or if you're buying out pay later because
you don't actually have the cash in the bank. And
so yeah, over spending to bring short term emotional pleasure,
that's not gonna be a winning combo in the end.
That's not a good approach to spending. I guess i'd
say something like financial security is the real treat man.
Speaker 3 (22:46):
Yeah, yeah, no, I think it speaks to well. First
of all, I am proud of you for not saying
the parks and rec quote. I feel like was just
like right there on the tip of your tongue, the
entire so close, and you didn't say it.
Speaker 1 (22:58):
I'm proud of you.
Speaker 3 (22:59):
But it remind again kind of going back to goals,
it's just an expense that you put on repeat without
thinking about it, right, and going back to getting people
on auto pay autopay. It's when you don't reevaluate the
purchases you're making or the goals that you're striving after,
or even investing I could I could even see ooh hot,
take from that here. Auto draft from investing standpoint is
typically a great thing, and it's going to lead to
(23:22):
outsized results, I think over decades. But at a certain
point it's worth reevaluating and saying, Okay, is this how
much I want to continue to go towards by four
one k? Or is it time to start spending some
money into here now. It's just that when you set
and forget everything in life, I think it could lead
you somewhere that you may just may not have intentionally
driven there on your own if you had actively taken it.
Speaker 2 (23:44):
And even revisiting your craft beer equivalent. You and I
have talked about how we're drinking less beer these days.
Speaker 1 (23:48):
Yea, so we still love a good craft beer.
Speaker 3 (23:49):
It's something we've intentionally done, but I need to think.
I think folks have picked up on that. They're like, oh, yeah,
it's not something that they do as often.
Speaker 2 (23:55):
Maybe it's still a part of the ethos, yeah, and
the fun of what we get to do, but it's just,
you know, we're not doing it like we're we're twenty
two anymore. And something else I would have considered ridiculous
years ago, which is like paying money to run, Like
that's insane.
Speaker 1 (24:08):
Who does that?
Speaker 2 (24:08):
And now I do that? So maybe that's my craft
be equivalent? Now, how much does this race cost? Five
hundred dollars? I'll do it. One of my friends wants
to do a seven marathons on seven continents in seven days. Right,
that sounds I have no interest. That seems a bit extreme.
Speaker 3 (24:24):
Yeah, all right, but we've got more to get to.
We're gonna talk about the demise of a fintech app
that was one that was promising outsized returns.
Speaker 1 (24:32):
We'll get to that. We'll talk about mortgages and more
right after the break.
Speaker 2 (24:43):
All right, Matt, we're back. Time to get to the
ludicrous headline of the week. This one comes from CNBC
when invest like the one percent fails, How Yield treats
real estate bets left customers with massive losses. I think, first,
I just want to say I really hate to see
individ investors lose money, And just I felt for the
people in the article who had invested with Yield Street
(25:08):
seeing the promised returns and they were like, yeah, this
seems like yeah, I'm trying to do the right thing
for my future. Maybe you even listen to a podcast
like how to Money, and I don't know, maybe you
only were listening with one ear because we would throw
shade at companies like this, but you're like, I'm investing
from the future. This is a great thing. We're not
talking these The people who invested in Yield treat that
this is not the upper crust who were giving money
(25:30):
to Bernie made Off or anything like that. It's normy
people and it just sucks to see them lose money.
So Yield Street, this company that invests in real estate,
crowdfunded real estate site, promised that real estate investing in
private credit would be democratized, and I'm so tired of
seeing that word in the money space. We're going to
democratize everything. Well, they certainly made losing money available to all.
(25:54):
Matt they said, we'll democratize you actually losing your life savings.
Speaker 1 (25:59):
How about that.
Speaker 2 (26:00):
Well, so they had thirty something opportunities available on their site,
investments that you could participate in. Four of those thirty
opportunities have been declared total losses, which means not just
that you didn't make money on your investment, but that
your capital is completely gone. So if you invested one
hundred k. Guess what, hunter k gone wiped out? Not
even the twenty percent returns weren't great. They were a
(26:21):
little overinflated. I got like ten percent returns. It's like
your money's gone.
Speaker 1 (26:25):
Yeah.
Speaker 2 (26:26):
Twenty three of those investments are on a watch list.
They potentially need to raise more money from investors to
keep those investments afloat, and for those investors it could
be throwing good money after bad. Those could also go
belly up too at some point. So we talked about
the availability the greater levels of availability of alternative assets
in retirement accounts last week. This is the perfect example
(26:50):
of why we prefer investing in publicly traded companies and
owning a slew of them in index funds. Ye, the
risks are just too great. Go with a tried and
true Yeah. So the Yields Street mission was to create
financial independence for millions, and.
Speaker 1 (27:02):
They did just the opposite.
Speaker 3 (27:04):
I'll note here though, that many private real estate funds
have had a tough time, especially for investments that were
made in the different boom towns like Austin is one
that comes to mind where prices have come down back
to earth, and the reason being many of these investment
firms had loans with short term interest rate fluctuations, making
it basically impossible for them to stay afloat as rates rose.
(27:25):
And then what do we see. We saw rents decline.
So these part of it because they got hit with
a double whammy. Essentially, their projections didn't involve much conservative conservatism.
They involved a lot of optimism. And so they're like, well,
if friends keep going up like this, yeah, and well
that's when mortgage rates state kind of where they are,
we're going to crush if everything is perfect. Yeah, then,
and that's what they were. That's what essentially what they
(27:46):
were auditioning out when it came to the different pitches
and the sales flyers and things like that. Yeah, that
rate of return, it sounded amazing. But our advice is this,
dear clear of sites that are promising that you can
invest like the one percent, and the easier availability of
these alternative investments in general is likely going to get
more investors in trouble in the coming years. It just
(28:07):
all comes down to how it is other spun the
different it's the new flavor of the day, basically, like
however they're going to choose to market it when instead,
we want you to stay with the tried and true
index funds.
Speaker 2 (28:17):
And it can sounditicing, and some of the prospectus or
the prognostications can be Man, oh wow, I can't. I
don't know if I can beat that in this and
B five hundred fund that Matt and Joel talk about.
But you your due diligence is required at much greater
levels than it is investing in something like an index one. Now,
let's talk about another financial product. This one's making you comeback.
(28:38):
Adjustable rate mortgages applications have risen twenty five percent. They
make up something like one in ten mortgages that are
being taken out right now, and they're the highest they've
been since in the past few years. This is according
to the Mortgage Bankers Association. And you might, depending on
how old you are and your how much you remember
(28:58):
two thousand and eight, two thousand and nine, you might
see red blinking lights when you hear that you're worried
that adjustable rate mortgages are a bad product. Hey, weren't
they a big part of the reason that the Great
Recession even happened in the first place. Well, I would
say adjustable rate mortgages are not quite the same as
they were leading up to the mortgage meltdown in eight
They have fundamentally changed in a lot of ways, although
(29:19):
there's still a lot that you need to know before
you sign up for one. You know, most adjustable rate
mortgages come with longer inter rates these days, five seven
or ten years. You get a lower rate, and I
want to caveat that because you might not, but typically
you get a lower rate than you would on a
thirty year mortgage, which means you're going to pay down
principle faster. These mortgages, I think they have the potential
(29:39):
to be a decent choice, but the details are crucial.
And right now the interest rate disparity has actually shrunk,
which makes thirty loans more attractive. So it is kind
of surprising to me met that adjustable rate mortgages are
on the uptick when that kind of gap between interest
rates on arms and fixed rate mortgages is small.
Speaker 1 (30:00):
I think there's two reasons.
Speaker 3 (30:01):
I think folks are trying to get shave off whatever
they can off of the mortgage rate that they're getting.
But also I think some folks were thinking, well, there's
a chance that rates are going to come down, right,
like they're looking ahead to the potential rate cuts. I
think that might be leading to dwahy. It is, we're
seeing more applications four arms, but a lot of it
I think comes down to how long you're going to
be in the actual home that you're purchasing, but also
(30:22):
the mortgage that you're taking on as well, because the
average person stays in a home for twelve years. But
then on the mortgage side, the average person refinans is
every seven to ten years, and so a seven to
one or a ten to one ARM isn't actually as
risky a product as many have made it sound. Yes,
the interest rate can fluctuate after seven or ten years,
(30:43):
but are you going to be in the same home.
Are you going to have the same mortgage at that
point in time. So it's important to run the numbers,
see how much you stand to say, compare that to
a thirty thirty year fixed because if the ARM rate
isn't much better, then I would say just lock in
that thirty year and avoid the ARM all together.
Speaker 2 (31:00):
Yeah, and also just know how risky you're willing to get,
because the ARM does have a slightly greater risk factor.
The shorter the term is right, and typically after that
first correction can be up to two percentage points higher
if rates have gone that much higher. But do you
think that's gonna happen. I mean that there's a lot
of variables in whether or not you choose an ARM.
But my last mortgage, for the first time ever MAT
(31:22):
was an adjustable rate mortgage because I significant amount. And
when I do it again, yeah, if the savings were
significant enough. And I think another part of that is
that it might allow you to save up more money
or to pay down your mortgage faster, which are other
good things. But if you're just going to like consume
with the difference, might not be the best idea. All right,
But let's talk about renting for a second matt. Older Americans,
(31:44):
it seems, are actually more willing to rent these days.
You often think about older Americans as they've got houses
by now they own a house, and it's the younger
folks who are out there renting those apartments and two
bedroom homes. But Americans who are fifty five and older,
they're the fastest growing rent demographic in the country. Some
people in that demographic they've found that's selling their big
(32:07):
house only to buy a smaller one. When downsizing, it
doesn't really make much financial sense because of elevated interest rates,
So like, yeah, why do you trade in the sweet
mortgage rate when for a much larger one? Of selling
that home and then renting instead can be really enticing
given kind of where home values are, Like you mentioned, Matt,
also just I think the costs and the headaches of
(32:28):
maintaining a home can as you're entering your golden ears,
be kind of annoying or frustrating. And buying a home
it's not a slam dunk smart move for everyone at
all times, and neither is renting. There's just a lot
of factors to consider, including that bigger gap between the
average monthly mortgage payment and the rent that you would
pay for a similar home. And I do think, I
actually think this is a good thing. It's interesting to see.
(32:50):
I think it can free up Let's say you are
one of those older Americans who is who has a
paidoff home, or who has a home that's gone up
a lot in value and a lot of you have
a lot of equity in there. Well, maybe it does
make sense to sell and to rent, and you've got
more money to do other things that you that you're
interested in doing with your life, whether it's that's true
travel or I mean, yeah, I think home ownership is
(33:12):
thought to be the end all, be all, and I
just think this is is kind of an interesting shift
that I welcome.
Speaker 3 (33:17):
Yeah, I certainly get it though, right, because as you
are entering into those retired years, you are looking to
stabilize your expenses and you're you're looking for more knowns
as opposed to the unknowns, Like there's enough uncertainty in life, Rachel. True,
but that's one of my concerns though with renters or
with retirees being rent more likely to rent these days,
is that similar to the arm conversation, like you do
(33:38):
need to look off into the future a little bit
and to sort of weigh the pros and cons and
to think, Okay, what are rents likely going to do?
And it kind of depends on what you're willing to rent,
because I foresee, like we've seen softer rents, but when
it comes to single family homes that are in great
neighborhoods and desirable cities to live in that are very walkable,
like that supply isn't fluctuating, but you compare that to apartments,
(34:01):
and if you're willing to live in a condo or
an apartment unit or a multi family, the supply there
is much more elastic, and so you'll see more supply
come on like we have seen in some of these boomtowns.
So what does that do to rent well that it
dries it down. I think if you have that flexibility,
you're willing to pivot, you know, move over to a
new complex, a new unit, perhaps that's going to be
(34:21):
more affordable. Then I certainly think there's a financial advantage there.
But when it comes to yeah, I still see ownership
being great for some of those single family homes. If
you have a very particular spot in mind, like if
you pick picture of your retired years to be a
certain way for it to have a certain flavor, I
could see I can certainly see purchasing making the lessense.
(34:43):
And so much depends on the way you want to
live your retired years, right, And if you were like,
actually we want to downsize with a smaller home base
while renting, look at the disparity renting, there's a lot
more sense and we're going to be gone half the
time in if.
Speaker 1 (34:54):
That allows you to in fact do a whole lot
of traveling. Yeah.
Speaker 3 (34:57):
Yeah, a one hand, I pictured retired couple who's like
do and all the travel that they never did in
their earlier years, and they're just like doing years and
years of traveling. On the other hand, I see like
an older couple who's just like walking around the neighborhoods,
you know, like hanging out with like their younger neighbors,
being a part of a thriving community.
Speaker 1 (35:13):
And I think those are the kind of pros and
cons you got away.
Speaker 2 (35:16):
And it can be jarring angel to leave a home
that you've been in for years and decades.
Speaker 3 (35:20):
Sure, so I get how you got to factor that
into Hey, So, speaking of buying a home, lease purchase
agreements are actually on the rise. As well as mortgage rates,
home prices have stayed elevated. Borrowers are finding that they
might not qualify for a loan on the home or
their dreams, which is in turn leading to a higher
number of lease purchase agreements. This is according to Pew
(35:42):
Pew Research, and at least agreements they sound awesome, right, yeah,
rit the place you want to buy while you are
building up your nest egg, you'll have the option to
buy at a later date.
Speaker 2 (35:53):
But until then, it's like getting your foot in the door,
which sounds nice. Yeah, it's like, oh, I know, I've
got it's the inside track. The problem is the problem
on your foot. Here's the deal. Even while you are renting,
oftentimes you shoulder the responsibilities of a homeowner. You are
paying the property taxes, and if you don't pay your
rent on time, it can derail your chances at buying
(36:14):
the place. And on top of that, there is a
legal uncertainty too. Almost no states have laws for these
sorts of agreements. It's like a it's a legal gray zone.
It's like the legal framework isn't there. And so this
might sound like a good option if you are a
perpetual renter who really wants to own a home, But
in my opinion, it's not and I would stay. I
(36:35):
wouldn't do this. I think if you if as a
landlord it's mostly upside right, But as a tenant who
feels like.
Speaker 1 (36:42):
There's too many downsides, it feels like there's way.
Speaker 2 (36:44):
Too many potential gotchas. And if you have a nice
landlord who is interested in selling that you might be
able to find an amicable agreement.
Speaker 3 (36:51):
But there's I think that's a cleaner way of approaching
it too. Right, Like, if it's a home and you
have been renting there for a while and you're like, hey,
would you ever consider find out if they would be
open to possibly selling it, And then on top of that, hey,
maybe you can find a price that you agree to
off market. You're saving costs there, so they're getting a
little bit more, you're paying less, and then you just
find a closing attorney.
Speaker 2 (37:11):
You just have to be so careful about the terms.
And the truth is, some of those contracts I'm blown
up in people's face because they said, oh, if you
pay rent one day, even one day late, then the
whole lease purchis agreement is gone. And you've been paying
extra extra every single month as part of that down payment.
That the privilege, that's right, Yeah, And so then you're like, oh, man,
(37:31):
just like literally one tiny, tiny, tiny mistake and now
I don't get the home I was wanted.
Speaker 1 (37:36):
And that's a big problem.
Speaker 2 (37:37):
So when there's no legal recourse for you, that makes
these things incredibly risky. So yeah, yeah, you could talk
to your landlord about buying the place, that's one thing,
But entering into a least purchase agreements.
Speaker 3 (37:48):
All these purchase agreements Me No, like yeah, agreed. Well
that's gonna be it. Then, for this Friday flight, we
hope everyone has a fantastic weekend. We'll see you back
here on Monday with a fresh Ask how to Money episode.
But it's now time for me to say best friends out.
Speaker 1 (38:03):
I'll say it too, best friends Out.
Welcome to Out of Money. I'm Joel, I'm Att.
Speaker 2 (00:02):
Today we're talking digital nomad, fatigue, treat culture, and retired renters.
Speaker 1 (00:26):
That's right, man.
Speaker 3 (00:27):
This is our Friday Flight, our weekly roundup of the
stories that made their way through different publications out there,
and we're going to tackle how they pertain to your
personal finances. Happy Friday, everyone, that's the best day of
the week. I like Fridays, that's the best. Yeah, what's
your second favorite day of the week.
Speaker 1 (00:44):
Yeah, favorites.
Speaker 3 (00:45):
You don't have them immediately ranked in Like Sundays, Sundays
or Mondays are great.
Speaker 2 (00:49):
They feel less chor oriented than Saturdays. You get the
Sunday scaries. No, yeah, like you worried about going back
to work next day. Yeah no, I get excited largely because.
Speaker 1 (00:58):
You love what you do.
Speaker 2 (01:00):
Have a fantastic time here. But we get a for
coffee immediately on Mondays. Mondays are our coffee day, and
so that do you.
Speaker 3 (01:06):
Think that that has a leave alleviated any of the
stress that you might normally feel on Sundays?
Speaker 1 (01:10):
You're like, well, at least I get to go get
a great coffee on that in the morning.
Speaker 2 (01:13):
I'm not usually stressed anyway, but it does add a
little excitement to my mind.
Speaker 3 (01:18):
We do you think we should have more stress in
our lives? I feel that there are there's just a
whole lot of anxiety and stress in the world, and
I don't know, I feel like we have been able
to take a proper view.
Speaker 1 (01:28):
Is it. I've just three kids, I've got my fair amount.
Speaker 3 (01:30):
It just seems like there's more and more existential threat
or stress that people are just.
Speaker 1 (01:35):
Soaking themselves with.
Speaker 3 (01:36):
I don't know, like we talk a good bit about
politics personally, but there's a difference between talking about it
and letting that fuel your deep seated fear and anxieties.
And we're just why we're talking about.
Speaker 2 (01:47):
Feel as political as a culture right now, and that's
why we try to stay away from it on the
ship man.
Speaker 1 (01:52):
That's right.
Speaker 2 (01:53):
Politics for zero, politics for our Friday flight. I mean
sometimes policy, but not politics. Okay, let's quickly though. I
wanted to mention a listener. Ricky emailed us this week
and he was really upset, Matt. He was really upset Ricky.
Speaker 1 (02:06):
James, not not at you.
Speaker 2 (02:08):
Wasn't mad at you.
Speaker 1 (02:08):
It wasn't mad at me either.
Speaker 2 (02:09):
Fortunately, Ricky mentioned he's with the USAA and he's got
an insurance policy through a USAA. When you actually look
at the consumer reports rankings, USA rates as one of
the top insurers year after year after year. So that
would seem to be a good thing.
Speaker 1 (02:24):
When it comes to customer satisfaction.
Speaker 2 (02:25):
Yeah, yep, but USA is really pissing Ricky off right now, Okay,
he is not happy.
Speaker 1 (02:32):
Harsh words.
Speaker 2 (02:32):
It was a very long email about a three dollars
fee that's charged to you if you don't sign up
for auto pay. So USAA, he said, is trying to
I think I wrote this ten he said. They're they're
charging me to give them money, And I get how
that's frustrating as a customer. And it's not even for
paying with a credit card, which would make sense, right,
there's a fee that they incur when if you pay
(02:54):
with a credit card, and so they passed out on
to you oftentimes. But no, no, no, it's it's not
because of that. It's just because usa A really, really
really wants Ricky and every single other person who works
there to sign up for auto pay, and if you
don't do it, they're going to charge you money. I
get why that's frustrating. What was your take?
Speaker 1 (03:12):
I don't have it toake because I didn't get that email.
Oh you didn't see it? Oh was it just to me?
Maybe it was just you okay, weird.
Speaker 3 (03:18):
Unless my email filter that one to span the perhaps
I would say no, I would be frustrated too.
Speaker 1 (03:24):
Yeah.
Speaker 3 (03:24):
I guess my question would be why does USAA want
folks on auto pay? Is it just for them to
be priced and sensitive?
Speaker 1 (03:30):
That's for you?
Speaker 2 (03:32):
Is that exactly what I'm thinking it must be. I mean,
obviously they're not going to come out and say it, Hey,
here's why we're doing this. But the reason I think
you're right that they're trying to get people away from
manual payments is because one they're shured of getting their
money on time, and then two they're saying, oh if
you yeah, then Ricky and everybody else is going to
be far less likely to shop around because it's just
(03:52):
going to get automatically taken out of that account.
Speaker 3 (03:55):
Well, I guess that's I mean, yes, so I agree.
I would be frustrated if that was me as well.
But that's a good argument for just tracking or spending.
Because even though I've got certain things on auto like
This makes me think of my we pay for your
long care yard service, the guys that come cut the yard,
and they started charging to use a credit card, which
I get because that is an expense that small businesses.
(04:16):
That's an expense that they are like, hey, if you
want to pay the credit card. Yeah, it's tough for
us as a small business to do that. But even still,
every time I see that charge, it makes me a
little upset, and I'm just I need. What I need
to do personally, though, is sit down and maybe look
at several different businesses that I've got set up on
autopay to see how much they're charging to use a
(04:38):
credit card and to weigh the pros and cons as
to whether or not it's worth it. Maybe I need
to set up an AH, which is most likely what
I need to do in this case. I doubt I'm
making enough on a recurring day and day out two
percent cash back, yeah, because it's typically a three percent charge,
so losing.
Speaker 2 (04:51):
A little bit on the spread. Yeah, Well, Ricky, we
feel for you, and USAA don't don't love that you
treated your customers this way when normal, I would say,
great organization. Consider getting your insurance there based on the
longevity of their positive reviews from a slew of people,
including organizations like Consumer Reports. But it's just a bummer
(05:12):
to hear that they're instituting totally an unnecessary fee. And
the cool thing is, or the interesting thing is that
Ricky found out is even with this autopay thing, he
can still go in there and manually pay if he
wants to not incur a charge like ahead of the
auto pay payment. Still, it's just a frustrating thing for
someone who's been a long time customer. All Right, we've
got a bunch to get to though. On the Friday flight,
(05:32):
let's talk about school being back, and is it back
for most people at this point? I think at this
point we're getting there. Maybe Northeast is after Labor Day.
Speaker 1 (05:42):
I think typically that crazy. It's crazy. It's like a month.
Speaker 3 (05:45):
Yeah, where we are, we start school very early, the
kids have been in school for like three weeks.
Speaker 1 (05:49):
Yeah, it's insane, just crazy. Yeah, it really is.
Speaker 2 (05:52):
Well, and anybody with kids knows that, Like summer super fun,
also crazy. Uh And and even though it's it's tough
to see summer go oh, the predictability of the school
year can be nice.
Speaker 1 (06:02):
Like I was.
Speaker 2 (06:03):
I was really looking forward to getting back into a rhythm.
It's nice to be back in that rhythm to it's
nice to break the rhythm, and then it's also nice
to get back to it. But school also means buying
school supplies, figuring out what to feature kids for lunch.
And on the first thing buying school supplies, I would say,
look at what you've already got on hand, Matt. We
were able to find a binder that was gently used
right from the previous year. We nice lunch lunch bags
(06:27):
that were and and bent go boxes or whatever to
pack their lunches in. Those are those are things that
we already had on hand. We don't have to buy
those things. We're not going.
Speaker 1 (06:35):
To re up.
Speaker 3 (06:36):
I will say, we had to ooh, maybe this is
here's a school supplies tip for for folks. We had
to purchase a new backpack with for one of our
kids because our backpack wasn't big enough to handle like
the big binders. Yeah, and so I'm of two minds
because that on one hand, our little dude just started
and we went ahead and bit the bullet and got
him the full sized backpack. But it's like as big
(06:57):
as he is, but I also know that that's gonna
last five six.
Speaker 1 (07:01):
Years most likely.
Speaker 3 (07:02):
But with our yeah, one of our daughters, we had
gotten her just one of the smaller ones, and it's
a perfectly fine backpack, not torn, still works. She couldn't
fit her three inch binders in there. That the school's
making her.
Speaker 2 (07:14):
It's amazing how much kids are supposed tone around at
schools these days.
Speaker 1 (07:18):
Just makes them stronger. Hope, so it's like rocking. But yeah, yeah,
exactly in between the water fountain and the home room.
Speaker 2 (07:24):
I'm curious to hear you take on this. CNN had
a story about pawn shops and how pawn shops are
a good place to get back to school supplies.
Speaker 3 (07:31):
I totally saw that, and I would have said, what
are you talking about? Musical instruments and not cross my
mind at all to look into a pawn shop for
a musical instrument.
Speaker 1 (07:41):
So super smart.
Speaker 2 (07:43):
So if you're her phone and your drum set there,
clarinet whatever else, oh my gosh, yeah, I think that's
a fantastic.
Speaker 1 (07:48):
Or even laptops, so there's a whole lot of.
Speaker 3 (07:50):
Electronics in there too. I know a lot of schools
provide oftentimes we'll provide because they had to spend all
that stemy money, all the school stemmy money on something
they can't spend it on south. So you spend it
on equipment, things that you don't have to main. You
got to maintain it, but it's not something you have
to pay out every single year.
Speaker 2 (08:06):
Yeah, supplies so through stores I think are another good
place to turn, especially for clothing for your kiddos. Heck, yeah,
and food. Let's talk about food prices. The cost of
a lunch has risen. That's just inflation, right, and inflation
at the grocery store. In particular, some school districts have
been raising the cost of their school lunches, although obviously,
like needy kids are are typically eligible for free or
(08:28):
greatly reduced lunch prices. But the school lunch is like
I think it's three dollars and twenty five cents where
we live nice, it's more than that.
Speaker 1 (08:36):
For us.
Speaker 3 (08:37):
It's closer to five bucksky school lunch, which is one
of the reasons we ain't playing that game.
Speaker 2 (08:41):
Well, you typically pack your kids lunch. We do the
do the same, and I think that is a way
to save some like it's it's not like you're saving
a ton. But the big thing I think in packing
your kids lunch is you're able to give them something
that is much healthier typically than what you're going to
get at the school. And Len Penzo, who who is
a personal finance writer, he does this survey every year
(09:03):
of the cost of a school lunch, which I don't know,
I just think it's awesome. And he found that the
peanut butter and jelly sandwich is the cheapest sandwich roughly
forty four cents per sandwich.
Speaker 1 (09:13):
Created that's a deal. Yeah. I love PB and j's
me too.
Speaker 2 (09:17):
And then you know those denser foods, I think they
might not be the coolest foods, right, the carrots, the apples,
the almonds, and that sandwich. I think that's going to
help people reduce the cost of their kids lunch and
not their kids get full on real actual foods, you know.
Speaker 1 (09:31):
I mean, I think the.
Speaker 2 (09:32):
Absolutely it's all that stuff in the most of the
center aisles.
Speaker 3 (09:35):
Yeah yeah, yeah, absolutely true chips, individually packaged snacks.
Speaker 1 (09:39):
That is going to ramp up the cost of those meals.
Speaker 3 (09:42):
And here we go, Matt getting on a soapbox where
you shot matters as well. Aldy is a fantastic choice,
and I saw that more and more how to Money
listeners have access to an Aldi. They were set to
become the second largest grocery chain behind Walmarts over the next.
Speaker 1 (09:59):
Couple of years. We're just back your chair and all
then it makes me happy. Man.
Speaker 3 (10:03):
The Times they actually gave Aldi some love talking about
their rapid expansion across the US. And so if you
are listening and you're like, oh, yeah, school lunches, they've
hiked the prices there at school. I don't know if
I want to do I have what it takes to
be able to put together a school lunch. Is it
actually more affordable? Well, it will be if you start
shopping at Aldi. If that's not something that you do.
(10:24):
And here's some info that I not paid for my
Aldi not yeah.
Speaker 1 (10:27):
Yeah.
Speaker 3 (10:28):
So in the Times this they highlighted the fact that
one of the reasons Aldy is able to keep their
prices so low is because of the store brands Aldi
carries ninety percent. I was like, I didn't, I did.
It was a lot of I didn't know it was
that much, but like, the store brands are great, and
I'm gonna specifically call out here's my Aldi Cliancies. This
isn't going to be a recurring segment or anything, but
I'm gonna cut it. I'm gonna call it the all
(10:48):
the item of the week, which is it really should be.
And this is going to be so on brand, but
it's Warns Gruner. I tried to try to say it properly,
but that's the ald German pills. It is a good beer,
is it.
Speaker 1 (11:02):
That's right?
Speaker 3 (11:03):
You heard it from Joel Matt the craft beer guys.
We're not from you. I'm the one vouching for it,
but it's the solid German pills. If you're into that
stylid beer, I would recommend it super affordable.
Speaker 2 (11:13):
Makes sense that the grocery chain based out of Germany
has a good Germany and it's the only place you
can buy that beer in the US.
Speaker 1 (11:19):
Okay, like Aldi has a deal and so.
Speaker 3 (11:22):
I think they are literally the only importer and they're
the only retailer who is selling that beer state side
Man good so now, because that's an actual brewery over
in Germany.
Speaker 2 (11:30):
It's legit fascinating. Okay, speaking of your kids, right, whether
or not you say for their college, it really depends
on how much progress you've made with your own finances.
I was talking to a friend this week and he
was like, I'm not saying for my kids education, but
he had like a good reason for it. He's like,
I had to figure it out myself, and I think
that's a reasonable way to go. It wasn't because he couldn't.
(11:52):
It was because he didn't want to. And I think
that's totally fine. Like, more power to you to each there. Yeah,
but if you are doing a great job with your
own you know, saving and investing for your future, and
you're inclined to invest for you know, the future of
your offspring. You want them to go to school, and
you don't want them to pay well price. You want
to help them out with that. You want to grow
a nest egg. Well, knowing which five twenty nine plans
(12:14):
are the best can be helpful, because Matt, A lot
of people don't realize this, but you don't have to
use your state's plan. Some people think, well, I live
in Idaho, I guess I got to use Idaho's plan,
or I live in Wyoming, got to use Wyoming's plan.
And the truth is you don't have to. You can
go with any of the state plans that you want.
Speaker 1 (12:31):
So.
Speaker 2 (12:31):
Morning Star recently released its annual rating of all the
state plans. The top ones are Alaska, Illinois, Massachusetts, Pennsylvania,
and Utah. Utah has been like top notch for years.
They've been essentially at the forefront of low cost five
twenty nine plans, and a lot of people from other
states have opted to invest in the Utah Plan for
(12:52):
good reason, because it's such a good plan. I think
when you're trying to decide which five to twenty nine
plan to go with, though, if your state offers a
tax and sent and if you want to choose that one,
and if your state does not offer a state tax incentive,
like you're not getting a reduction in the income tax
that you have to pay, then op for one of
those superior plans, one of those top five plans that
(13:13):
morning Star recommends. I think those are they're all good.
The Utah Plan again, in particular, has been excellent for
a long time. So just know five twenty nine plans
continue to get better. Costs continue to go down in
many states, but there's still some that suck really bad.
Make sure you avoid those ones, all right.
Speaker 3 (13:29):
So the journal had a fairly provocative article about specifically
about work life balance, which certainly drew my attention, Joel,
but they this author. It was an opinion piece, of course,
but this author was saying that striving for that work
life balance is going to keep you mediocre. And of
course I think he was probably trying to be divisive,
(13:51):
throw a little opinion grenade out there into the world.
That being said, he made some solid points, all right.
The suggestion wasn't that balance is never a good thing,
but that, let's say, if you want to rock it
closer to financial independence by your early thirties, well, having
some balance is going to be hard to come by.
Like you truly do need to frontload the sacrifice. That's
something we've discussed here on the show. The more frugal
(14:14):
that you are early on, the more that you can't invest,
it's going to lead to more freedom. As of course,
compounding does its thing. That being said, far be it
from the two dudes who just took summer off to
rake anyone over the coals for not working hard enough.
Speaker 1 (14:30):
We have taken our fair share of breaks we summer now,
Matt do we.
Speaker 3 (14:36):
I might be able to get behind that, But the
writer of this article wants to be and he wants
to be a billionaire by age thirty. It's not a
goal that most people have. It's certainly not a goal
that I have. But I just want folks to know
that what you want and what you save and invest
it is going to give yourself options down the road.
But you also need to know that there are certain things.
(14:57):
And this is my biggest issue too, was like I
couldn't help to think of the sacrifices he made at
an early age to be able to He had like
multiple companies that he sold for millions of dollars. Incredibly
successful takes some dedication, but success comes at a high price.
And in his like think of the toll it took
on his body. I just cringed when he was talking
about on average he would get three and a half
hours of sleep at night. He gained eighty pounds in college.
(15:20):
You've heard of the freshman fifteen, which is a funny thing,
funny concept to explain to my kids recently. They're like, wait, what,
and they're like, well, a lot of schools of these
lunch or meal play series. Yeah, cafeteria, and they don't
make the best decisions when it comes to what it
is that they're eating. But I think for him it
probably came because of metabolic unhealth essentially, right, like when
(15:43):
you gained eighty pounds, He's living off of red bulls,
and that's just physical health. Think about the social sacrifices
that he made. There's things that I did in college
where it certainly serves me. I'm thinking about getting like
one of my earlier jobs. Like I spent a lot
of time working on a website, for instance, when I
was in college, and I'm I had friends that would
kind of make fun of me for it, and that
was It was only a short period of time though
(16:04):
that I really immersed myself in dream weaver and I'm
like get in there, like figuring it out and having
fun with it. Again, it led to me probably landing
a job that I otherwise may may not have gotten.
But I was given a hard time, and had I
taken that a little too far, what have I probably
maybe I wouldn't have met Kate.
Speaker 1 (16:19):
Yeah, my wife, who, by the way, we just celebrated
eighteen years. Yeah, cul that's man, thank you, Yeah, love you, babe.
Speaker 3 (16:25):
But there are other things that you are giving up
when you go that hard, right, Like there are people
I think, who are necessary to be the extremes, to
be the outliers. This dude's got like Elon Musk level
work ethic, and those folks I think are necessary to
change the world if that's your.
Speaker 1 (16:41):
Calling in life.
Speaker 3 (16:42):
But for other folks, I think it can be a
lesson of oh, something beyond quote unquote normal is possible.
But just where along that spectrum do do I want
to plant my flag and say that that's what I
want to strive after.
Speaker 2 (16:53):
And I recently heard the a similar fashion. The CEO
of Palenteer basically say if you want to be a
raging success, you're not gonna have any friends in your twenties.
That was essentially his message, And I'm like, how about
I not sign up for that plan then? And also
so much depends on what your definition of success is. Like,
we do think that having more financial margin, amassing some
(17:15):
peace out money, creating the habit of saving an investing
for your future so you don't spend every dollar that
comes in today. Yeah, that is part and parcel. That
is part of being successful, I think, because you're also
just delaying some of your gratification, which is a good
thing as a human. You're going to grow as an
individual if you do that. But the extreme ideas, which
(17:39):
it feels like that phases a little bit past. I'm
actually surprised to see that article in the Wall Street
Journal right now. That doesn't feel like it's part of
the ethos of our culture. But there are some people
still out there pushing like billion dollar business. If you
want to build that billion dollar business, that's ultimately what's
going to make you happy. And I think that article
and some of these other comments from quote unquote successful people,
they don't intrigue me.
Speaker 1 (18:00):
They actually make me want to run away.
Speaker 2 (18:02):
Because of all that it takes for them to achieve
that sort of status. It's it's completely totally not worth
it in my opinion.
Speaker 3 (18:09):
Yeah, yeah, it makes me think of, honestly, the increase
that we've seen in folks who have been striving after
the digital nomad lifestyle, which we have seen increase dramatically
in particular over the past five years. Unfortunately, I feel
like a lot of folks like it seems like this mirage,
you know, like a lot of folks have essentially defined,
like you're kind of touching on, like what you define
(18:31):
as being successful.
Speaker 1 (18:32):
And I think a lot of folks.
Speaker 3 (18:34):
They saw a lot of influencers do it in the
late teens, being you know, out there traveling the world
while also operating a successful business, like.
Speaker 1 (18:43):
Oh, this is the new success, It's the new.
Speaker 3 (18:44):
Pinnacle of success, exactly as opposed to like what it
is that actually makes you happy. And there's a lot
of reasons that folks are kind of dropping off the
digital nomad train essentially, right, Like, you know, it's hard
to create community. You're constantly looking for Wi Fi if
you don't have some sort of internet service provider.
Speaker 2 (19:02):
But I think still saw be fun for a season,
and then it stops becoming fun because living out of
a suitcase gets boring after a while.
Speaker 3 (19:08):
Yeah, yeah, Oh, what I was going to say too
about early on or in response to the journal article,
you're talking about how it's surprised you that this was
something that was still being put out there. How doesn't
feel like it's part of the zeitgeist right now? It
honestly makes me worried for that guy that he has
sacrificed so much because he's still tied to these early
goals that he has set for himself. And that's what
(19:30):
that's In a similar way, That's how I feel about
the digital nomadism, right, Like you see it once and
you think, oh my gosh, this is everything, this is
what I'm going to go for, and you do it
for a little bit, but then you don't change your course.
Speaker 1 (19:41):
And we are.
Speaker 3 (19:42):
Constantly, ever evolving individuals, and I think what we need
to do is spend more time evaluating whether or not
the goals that we have set out for ourselves are
still the goals that we want to achieve, right, And
so in a similar way, that's why I think digital
nomadism has soured for a lot of folks because they
are continuing to pursue after this goal when they're realizing, well,
actually that means I don't get to spend any time
with my brother and he's got kids now, and oh
(20:05):
I want to spend more time with my folks. And
they're essentially married to this idea as opposed to reflecting
a little bit and saying, what do I define as
success in the stage of life.
Speaker 1 (20:16):
I think more folks need to be doing that.
Speaker 2 (20:17):
Yeah, agreed, And it's it's hard to It's an introspective
thing that people have to go there, and it's a
continual thing you have to revisit, and so being a
digital nomad for six months or for a year might
be awesome. But I've just seen a lot of stories
about a decline and interest and people like relationships being
blown up because they lived in a van together for
(20:38):
a year. And guess what that's You know, you don't
have all of those other outlets for relationship. You've got
that one person, and that can be a little stresful
of times, and even traveling after a while, traveling is awesome,
but it can get a little old, right if it's
like and it can feel if it's no longer special. Yeah,
and it can feel a little selfish two at times,
which can ruin the experience. Let's talk quickly, Matt. Articles
(21:00):
making gen Z. We talked about gen Z and credit
scores last week. Well, I just feel like articles making
gen Z seem like frivolous or out of touch are
kind of the norm right now. And The New York
Times was like, to hold my beer, let's I'll oblige
and make gen Z sound like idiots this week, and
so they wrote an article about how gen zs are
going over budget because they treat themselves too often and
(21:21):
so they're basically making the case that treat culture is
in full swing. It's something good happens at work, or
maybe even even something bad happens at work, and you
need some consolation prize the treat can be the way
to celebrate. And it seems like from what they're saying,
gen Zers are more likely to do this than others.
And I don't know if that's true. I don't know
that gen Z has particularly fallen prey to treat culture.
(21:43):
I do think though, that our society as a whole,
we see more emotional reactions in our spending, and it's
like it's kind of like a I deserve this sort
of mentality. But I think the thing that I didn't
love was in that article. It was like, they're willing
to blow their budget to get this treat, and you
and I were fans of spending intentionally on stuff that
(22:04):
you care about. Even now other people think it's ridiculous.
That's the craft beer equivalent, right, but put the blurge
in your budget, don't bust your budget for it. If
you want the expensive concert tickets because that's something you
really care about, or even just the fancy coffee, right,
then we think you should put that in your budget
and you should make it a priority. But it doesn't
hit the same way, right if you have to pay
(22:25):
interest on that purchase for months to come, if you
put it on the credit card and you can't pay
it off, or if you're buying out pay later because
you don't actually have the cash in the bank. And
so yeah, over spending to bring short term emotional pleasure,
that's not gonna be a winning combo in the end.
That's not a good approach to spending. I guess i'd
say something like financial security is the real treat man.
Speaker 3 (22:46):
Yeah, yeah, no, I think it speaks to well. First
of all, I am proud of you for not saying
the parks and rec quote. I feel like was just
like right there on the tip of your tongue, the
entire so close, and you didn't say it.
Speaker 1 (22:58):
I'm proud of you.
Speaker 3 (22:59):
But it remind again kind of going back to goals,
it's just an expense that you put on repeat without
thinking about it, right, and going back to getting people
on auto pay autopay. It's when you don't reevaluate the
purchases you're making or the goals that you're striving after,
or even investing I could I could even see ooh hot,
take from that here. Auto draft from investing standpoint is
typically a great thing, and it's going to lead to
(23:22):
outsized results, I think over decades. But at a certain
point it's worth reevaluating and saying, Okay, is this how
much I want to continue to go towards by four
one k? Or is it time to start spending some
money into here now. It's just that when you set
and forget everything in life, I think it could lead
you somewhere that you may just may not have intentionally
driven there on your own if you had actively taken it.
Speaker 2 (23:44):
And even revisiting your craft beer equivalent. You and I
have talked about how we're drinking less beer these days.
Speaker 1 (23:48):
Yea, so we still love a good craft beer.
Speaker 3 (23:49):
It's something we've intentionally done, but I need to think.
I think folks have picked up on that. They're like, oh, yeah,
it's not something that they do as often.
Speaker 2 (23:55):
Maybe it's still a part of the ethos, yeah, and
the fun of what we get to do, but it's just,
you know, we're not doing it like we're we're twenty
two anymore. And something else I would have considered ridiculous
years ago, which is like paying money to run, Like
that's insane.
Speaker 1 (24:08):
Who does that?
Speaker 2 (24:08):
And now I do that? So maybe that's my craft
be equivalent? Now, how much does this race cost? Five
hundred dollars? I'll do it. One of my friends wants
to do a seven marathons on seven continents in seven days. Right,
that sounds I have no interest. That seems a bit extreme.
Speaker 3 (24:24):
Yeah, all right, but we've got more to get to.
We're gonna talk about the demise of a fintech app
that was one that was promising outsized returns.
Speaker 1 (24:32):
We'll get to that. We'll talk about mortgages and more
right after the break.
Speaker 2 (24:43):
All right, Matt, we're back. Time to get to the
ludicrous headline of the week. This one comes from CNBC
when invest like the one percent fails, How Yield treats
real estate bets left customers with massive losses. I think, first,
I just want to say I really hate to see
individ investors lose money, And just I felt for the
people in the article who had invested with Yield Street
(25:08):
seeing the promised returns and they were like, yeah, this
seems like yeah, I'm trying to do the right thing
for my future. Maybe you even listen to a podcast
like how to Money, and I don't know, maybe you
only were listening with one ear because we would throw
shade at companies like this, but you're like, I'm investing
from the future. This is a great thing. We're not
talking these The people who invested in Yield treat that
this is not the upper crust who were giving money
(25:30):
to Bernie made Off or anything like that. It's normy
people and it just sucks to see them lose money.
So Yield Street, this company that invests in real estate,
crowdfunded real estate site, promised that real estate investing in
private credit would be democratized, and I'm so tired of
seeing that word in the money space. We're going to
democratize everything. Well, they certainly made losing money available to all.
(25:54):
Matt they said, we'll democratize you actually losing your life savings.
Speaker 1 (25:59):
How about that.
Speaker 2 (26:00):
Well, so they had thirty something opportunities available on their site,
investments that you could participate in. Four of those thirty
opportunities have been declared total losses, which means not just
that you didn't make money on your investment, but that
your capital is completely gone. So if you invested one
hundred k. Guess what, hunter k gone wiped out? Not
even the twenty percent returns weren't great. They were a
(26:21):
little overinflated. I got like ten percent returns. It's like
your money's gone.
Speaker 1 (26:25):
Yeah.
Speaker 2 (26:26):
Twenty three of those investments are on a watch list.
They potentially need to raise more money from investors to
keep those investments afloat, and for those investors it could
be throwing good money after bad. Those could also go
belly up too at some point. So we talked about
the availability the greater levels of availability of alternative assets
in retirement accounts last week. This is the perfect example
(26:50):
of why we prefer investing in publicly traded companies and
owning a slew of them in index funds. Ye, the
risks are just too great. Go with a tried and
true Yeah. So the Yields Street mission was to create
financial independence for millions, and.
Speaker 1 (27:02):
They did just the opposite.
Speaker 3 (27:04):
I'll note here though, that many private real estate funds
have had a tough time, especially for investments that were
made in the different boom towns like Austin is one
that comes to mind where prices have come down back
to earth, and the reason being many of these investment
firms had loans with short term interest rate fluctuations, making
it basically impossible for them to stay afloat as rates rose.
(27:25):
And then what do we see. We saw rents decline.
So these part of it because they got hit with
a double whammy. Essentially, their projections didn't involve much conservative conservatism.
They involved a lot of optimism. And so they're like, well,
if friends keep going up like this, yeah, and well
that's when mortgage rates state kind of where they are,
we're going to crush if everything is perfect. Yeah, then,
and that's what they were. That's what essentially what they
(27:46):
were auditioning out when it came to the different pitches
and the sales flyers and things like that. Yeah, that
rate of return, it sounded amazing. But our advice is this,
dear clear of sites that are promising that you can
invest like the one percent, and the easier availability of
these alternative investments in general is likely going to get
more investors in trouble in the coming years. It just
(28:07):
all comes down to how it is other spun the
different it's the new flavor of the day, basically, like
however they're going to choose to market it when instead,
we want you to stay with the tried and true
index funds.
Speaker 2 (28:17):
And it can sounditicing, and some of the prospectus or
the prognostications can be Man, oh wow, I can't. I
don't know if I can beat that in this and
B five hundred fund that Matt and Joel talk about.
But you your due diligence is required at much greater
levels than it is investing in something like an index one. Now,
let's talk about another financial product. This one's making you comeback.
(28:38):
Adjustable rate mortgages applications have risen twenty five percent. They
make up something like one in ten mortgages that are
being taken out right now, and they're the highest they've
been since in the past few years. This is according
to the Mortgage Bankers Association. And you might, depending on
how old you are and your how much you remember
(28:58):
two thousand and eight, two thousand and nine, you might
see red blinking lights when you hear that you're worried
that adjustable rate mortgages are a bad product. Hey, weren't
they a big part of the reason that the Great
Recession even happened in the first place. Well, I would
say adjustable rate mortgages are not quite the same as
they were leading up to the mortgage meltdown in eight
They have fundamentally changed in a lot of ways, although
(29:19):
there's still a lot that you need to know before
you sign up for one. You know, most adjustable rate
mortgages come with longer inter rates these days, five seven
or ten years. You get a lower rate, and I
want to caveat that because you might not, but typically
you get a lower rate than you would on a
thirty year mortgage, which means you're going to pay down
principle faster. These mortgages, I think they have the potential
(29:39):
to be a decent choice, but the details are crucial.
And right now the interest rate disparity has actually shrunk,
which makes thirty loans more attractive. So it is kind
of surprising to me met that adjustable rate mortgages are
on the uptick when that kind of gap between interest
rates on arms and fixed rate mortgages is small.
Speaker 1 (30:00):
I think there's two reasons.
Speaker 3 (30:01):
I think folks are trying to get shave off whatever
they can off of the mortgage rate that they're getting.
But also I think some folks were thinking, well, there's
a chance that rates are going to come down, right,
like they're looking ahead to the potential rate cuts. I
think that might be leading to dwahy. It is, we're
seeing more applications four arms, but a lot of it
I think comes down to how long you're going to
be in the actual home that you're purchasing, but also
(30:22):
the mortgage that you're taking on as well, because the
average person stays in a home for twelve years. But
then on the mortgage side, the average person refinans is
every seven to ten years, and so a seven to
one or a ten to one ARM isn't actually as
risky a product as many have made it sound. Yes,
the interest rate can fluctuate after seven or ten years,
(30:43):
but are you going to be in the same home.
Are you going to have the same mortgage at that
point in time. So it's important to run the numbers,
see how much you stand to say, compare that to
a thirty thirty year fixed because if the ARM rate
isn't much better, then I would say just lock in
that thirty year and avoid the ARM all together.
Speaker 2 (31:00):
Yeah, and also just know how risky you're willing to get,
because the ARM does have a slightly greater risk factor.
The shorter the term is right, and typically after that
first correction can be up to two percentage points higher
if rates have gone that much higher. But do you
think that's gonna happen. I mean that there's a lot
of variables in whether or not you choose an ARM.
But my last mortgage, for the first time ever MAT
(31:22):
was an adjustable rate mortgage because I significant amount. And
when I do it again, yeah, if the savings were
significant enough. And I think another part of that is
that it might allow you to save up more money
or to pay down your mortgage faster, which are other
good things. But if you're just going to like consume
with the difference, might not be the best idea. All right,
But let's talk about renting for a second matt. Older Americans,
(31:44):
it seems, are actually more willing to rent these days.
You often think about older Americans as they've got houses
by now they own a house, and it's the younger
folks who are out there renting those apartments and two
bedroom homes. But Americans who are fifty five and older,
they're the fastest growing rent demographic in the country. Some
people in that demographic they've found that's selling their big
(32:07):
house only to buy a smaller one. When downsizing, it
doesn't really make much financial sense because of elevated interest rates,
So like, yeah, why do you trade in the sweet
mortgage rate when for a much larger one? Of selling
that home and then renting instead can be really enticing
given kind of where home values are, Like you mentioned, Matt,
also just I think the costs and the headaches of
(32:28):
maintaining a home can as you're entering your golden ears,
be kind of annoying or frustrating. And buying a home
it's not a slam dunk smart move for everyone at
all times, and neither is renting. There's just a lot
of factors to consider, including that bigger gap between the
average monthly mortgage payment and the rent that you would
pay for a similar home. And I do think, I
actually think this is a good thing. It's interesting to see.
(32:50):
I think it can free up Let's say you are
one of those older Americans who is who has a
paidoff home, or who has a home that's gone up
a lot in value and a lot of you have
a lot of equity in there. Well, maybe it does
make sense to sell and to rent, and you've got
more money to do other things that you that you're
interested in doing with your life, whether it's that's true
travel or I mean, yeah, I think home ownership is
(33:12):
thought to be the end all, be all, and I
just think this is is kind of an interesting shift
that I welcome.
Speaker 3 (33:17):
Yeah, I certainly get it though, right, because as you
are entering into those retired years, you are looking to
stabilize your expenses and you're you're looking for more knowns
as opposed to the unknowns, Like there's enough uncertainty in life, Rachel. True,
but that's one of my concerns though with renters or
with retirees being rent more likely to rent these days,
is that similar to the arm conversation, like you do
(33:38):
need to look off into the future a little bit
and to sort of weigh the pros and cons and
to think, Okay, what are rents likely going to do?
And it kind of depends on what you're willing to rent,
because I foresee, like we've seen softer rents, but when
it comes to single family homes that are in great
neighborhoods and desirable cities to live in that are very walkable,
like that supply isn't fluctuating, but you compare that to apartments,
(34:01):
and if you're willing to live in a condo or
an apartment unit or a multi family, the supply there
is much more elastic, and so you'll see more supply
come on like we have seen in some of these boomtowns.
So what does that do to rent well that it
dries it down. I think if you have that flexibility,
you're willing to pivot, you know, move over to a
new complex, a new unit, perhaps that's going to be
(34:21):
more affordable. Then I certainly think there's a financial advantage there.
But when it comes to yeah, I still see ownership
being great for some of those single family homes. If
you have a very particular spot in mind, like if
you pick picture of your retired years to be a
certain way for it to have a certain flavor, I
could see I can certainly see purchasing making the lessense.
(34:43):
And so much depends on the way you want to
live your retired years, right, And if you were like,
actually we want to downsize with a smaller home base
while renting, look at the disparity renting, there's a lot
more sense and we're going to be gone half the
time in if.
Speaker 1 (34:54):
That allows you to in fact do a whole lot
of traveling. Yeah.
Speaker 3 (34:57):
Yeah, a one hand, I pictured retired couple who's like
do and all the travel that they never did in
their earlier years, and they're just like doing years and
years of traveling. On the other hand, I see like
an older couple who's just like walking around the neighborhoods,
you know, like hanging out with like their younger neighbors,
being a part of a thriving community.
Speaker 1 (35:13):
And I think those are the kind of pros and
cons you got away.
Speaker 2 (35:16):
And it can be jarring angel to leave a home
that you've been in for years and decades.
Speaker 3 (35:20):
Sure, so I get how you got to factor that
into Hey, So, speaking of buying a home, lease purchase
agreements are actually on the rise. As well as mortgage rates,
home prices have stayed elevated. Borrowers are finding that they
might not qualify for a loan on the home or
their dreams, which is in turn leading to a higher
number of lease purchase agreements. This is according to Pew
(35:42):
Pew Research, and at least agreements they sound awesome, right, yeah,
rit the place you want to buy while you are
building up your nest egg, you'll have the option to
buy at a later date.
Speaker 2 (35:53):
But until then, it's like getting your foot in the door,
which sounds nice. Yeah, it's like, oh, I know, I've
got it's the inside track. The problem is the problem
on your foot. Here's the deal. Even while you are renting,
oftentimes you shoulder the responsibilities of a homeowner. You are
paying the property taxes, and if you don't pay your
rent on time, it can derail your chances at buying
(36:14):
the place. And on top of that, there is a
legal uncertainty too. Almost no states have laws for these
sorts of agreements. It's like a it's a legal gray zone.
It's like the legal framework isn't there. And so this
might sound like a good option if you are a
perpetual renter who really wants to own a home, But
in my opinion, it's not and I would stay. I
(36:35):
wouldn't do this. I think if you if as a
landlord it's mostly upside right, But as a tenant who
feels like.
Speaker 1 (36:42):
There's too many downsides, it feels like there's way.
Speaker 2 (36:44):
Too many potential gotchas. And if you have a nice
landlord who is interested in selling that you might be
able to find an amicable agreement.
Speaker 3 (36:51):
But there's I think that's a cleaner way of approaching
it too. Right, Like, if it's a home and you
have been renting there for a while and you're like, hey,
would you ever consider find out if they would be
open to possibly selling it, And then on top of that, hey,
maybe you can find a price that you agree to
off market. You're saving costs there, so they're getting a
little bit more, you're paying less, and then you just
find a closing attorney.
Speaker 2 (37:11):
You just have to be so careful about the terms.
And the truth is, some of those contracts I'm blown
up in people's face because they said, oh, if you
pay rent one day, even one day late, then the
whole lease purchis agreement is gone. And you've been paying
extra extra every single month as part of that down payment.
That the privilege, that's right, Yeah, And so then you're like, oh, man,
(37:31):
just like literally one tiny, tiny, tiny mistake and now
I don't get the home I was wanted.
Speaker 1 (37:36):
And that's a big problem.
Speaker 2 (37:37):
So when there's no legal recourse for you, that makes
these things incredibly risky. So yeah, yeah, you could talk
to your landlord about buying the place, that's one thing,
But entering into a least purchase agreements.
Speaker 3 (37:48):
All these purchase agreements Me No, like yeah, agreed. Well
that's gonna be it. Then, for this Friday flight, we
hope everyone has a fantastic weekend. We'll see you back
here on Monday with a fresh Ask how to Money episode.
But it's now time for me to say best friends out.
Speaker 1 (38:03):
I'll say it too, best friends Out.
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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