June 13, 2025 • 40 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: matched 529 funds, luxury dumpster diving, the apps are spying on us, insurance dodging, wealthy home chefs, fresh Costco perks, God mode investing, leveraged fund retirement accounts, pudgy penguins, tighter used car market, Cybertruck losses, and Smartless cellular.
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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, and yes again,
Matt is not here, promised he'll be back soon. Today
we're talking about dumpster diving, insurance dodging, and pudgy penguins. Yeah,
(00:29):
that's right. Matt has spent multiple weeks behind bars and
I can't tell you the full story. And I'm just kidding.
He's Matt spends some time with his family. He'll be
back soon. This is kind of a summer summer thing
where I'm hosting this Friday flight by myself. But I
hope this is the last Friday flight I host solo
(00:49):
because it's not really as fun doing it boy myself,
even though I still love getting to talk about personal finances.
And I'm glad you're along for today's Friday flight. Before
I get to all the stories we've interesting, including pudgy penguins,
it's a really interesting one. NFTs are back with a vengeance.
I wanted to quickly highlight an email that listener Donnie sent.
(01:09):
He lives in Maryland, and there are all sorts of
things in the personal finance world that even as someone
who hosts a personal finance podcast, I'm unaware of, and
a lot of that is because there are state specific
programs or just small fin nuances that I have not
begun to appreciate or research in depth yet. And so
Donnie sent this email and at least for listeners in
(01:31):
Maryland and then maybe check and see if this is
something like this is available in your state as well.
There are cool perks for people who stick money aside
in five twenty nine plans for their kids. And so
Donnie basically wrote and told me and gave a lot
of detail on this. So look it up for yourself
on the Maryland five twenty nine dot com web page
(01:51):
for details. But if you meet certain income requirements basically
if you don't make a ton of money and actually
a ton of money, well that's in the eye of
the older. But you can get a state match to
your five to twenty nine plan for in order to
save for your kids college. So not only have five
twenty nine plans gotten more flexible lately, And I looked
(02:13):
up the Maryland five to twenty nine plan to see,
you know what the cost and expenses look like, and
on some of those investments they're quite low. So the
Maryland five to twenty nine plan is I would say
at least a really good solid one. Well, if you
meet certain income requirements and you're prone to interested in
saving for your kid's future, you might be able to
get matching funds from the state for making those contributions.
(02:36):
Interesting thing, you have to you can't claim a state
tax deduction and get this state contribution. So it's important,
Donnie said, to do the math to see which one
is going to work out better for you. But you
may might be able to get five hundred bucks and
maybe you would have only saved one hundred bucks in
taxes or something like that for making this contribution, and
in that case, you'd want to take the state five
hundred dollars contribution and you're getting out it's like a
(02:58):
net four hundred dollars win. So again, all of those
details are available on Maryland five twenty nine dot com.
But it just reminded me like, oh man, there's so
much to learn about personal finance. It never gets boring
to me. And there are so many ways that the
system is set up for people who are at least
curious and paying attention to benefit. And if you live
(03:20):
in Maryland, and again if someone else, by the way,
if you live in another state, and you're like, my
state does something similar. Shoot me an email, like, we
want to highlight these things on the show. We want
to make people aware of incredible benefits or free money. Right,
this is almost like four to one k match at
work on steroids. Though for your five twenty nine plans,
it's really cool. All right, congrats to all the graduates.
(03:40):
I'm seeing more and more pictures posted, and then there's
all these those yard signs, the signs in front of
neighborhoods at least where I live, saying congrats to these
grads and hate where are they going to college? Well,
and for college graduates in particular, you've been putting in
tons of work for a lot of years. It's paid
off with the degree. And we talked about the job
(04:02):
market last week and how it's not as good as
it has been for new college grads. But here's one
thing that I wasn't on my radar until I saw
an article in Indie Week, and it was that college
graduates tend to leave a lot of their possessions behind
when they fly the coop, When they leave the dorm
or whatever campus housing or off campus housing they live in,
(04:26):
they tend to leave a lot of their stuff they
just maybe it's they don't have a U haul or
a trailer to stick all their stuff in, and so
a lot of it ends up at the dumpster. Could
be some really nice stuff, right, It could be some
trash that nobody really wants, but it could be a
nice couch, or it could be In the case of
(04:47):
this article who wrote for Indie Week, she talked about
salvaging some really nice stuff that graduates were leaving behind
at the school closest to her. High end tables, luxury sneakers,
Lululemon workout stuff like shoved in a bag, fancy appliance
like nice toasters and microwaves and stuff like that. And
one person's trash is another person's treasure. And so the
(05:08):
author she basically highlighted how she was able to salvage
almost seven thousand dollars worth of stuff to prevent it
from being thrown in the trash and to put it
to use herself. And she created a spreadsheet and she said, hey,
this is something I'm going to keep, this is something
i'm going to sell, this is something I'm going to
give away. And I thought that was so cool. I mean,
(05:28):
it really is. The one person's trash is another person's treasure.
It's the most apt phrase here because as the college person,
you're saying, this is a burden to me. I don't
have anywhere to put it. Maybe I'm moving back home
with mom and dad for a few months. They don't
have room for this stuff. Or I don't know where
I'm going to end up. Maybe I'm sleeping on a
friend's couch for a couple weeks and then I'll figure
(05:49):
it out. And so in the interim, you just don't
have anywhere to put it, so it ends up on
the curb, or it ends up in the trash. Can
I think this happens. I've heard from people in New
York City right around the first of the month, because
there are fewer places to store stuff. You just find
stuff on the curb that you otherwise are like, why
are they getting rid of this? And it's because they
just can't take it with them, and it's more of
(06:10):
a pain, more of a hassle to take it. And
if you can deal with the hassle of moving it,
you just are the proud owner of something fairly nice
that someone else tossed out. And I think it also
says something about our culture that we live in an
era of disposable stuff, right, And it makes me think
that even if an item is initially more expensive, it
(06:31):
can cost you less over time to buy the nicer
thing upfront and to hold on to it. But then,
also because of extreme wealth in this country, when you
think about the fact that we have so on average
as a country, we're the wealthiest country in the history
of the world, there's room here for entrepreneurs to make
money based on the fact that based on some arbitrage, right,
(06:54):
the fact that somebody has said, oh I used this,
I no longer need it, I'm tossing it as and
you can step in and be the middleman or woman
to enjoy the profit of that. Basically, I have friends
who have done this before, whether it's with used clothing.
They've started businesses where they go to thrift stores and
(07:16):
buy stuff and list it on eBay. And I'm not
saying that it's not a job. It is. It takes time,
but if you have an eye for that stuff, you
can make a living literally just reselling things. Another friend
who said, who did that with mid century furniture and
he just knows where to go, what to look for
and once you get an eye for that, he's like,
you're able to find some things for one hundred bucks
(07:39):
that sell for thousands of dollars. And this reminded me
of that where people tossing stuff out you can benefit
from at least just the way people don't take care
of their stuff or get rid of it prematurely. At
the very least by the way, I wish folks would
donate that stuff so people can benefit instead of it
(08:00):
next to the dumpster, tossing it in the trash and
then you know, I don't know, maybe you don't have
time for a side house, so you're not interested. But
I think it's an underrated way to get cool stuff
or to make a buck, and you have to roll
up your sleeves and get a little bit dirty. I
think that's one of the things too, is this is
going to take maybe a little time, little effort, but
even I think that can be It's kind of like
(08:20):
my dishwasher story recently, buying extra dishwashers and flipping them,
and it's a way to turn something that would have
been a cost center into a profit center and still
get something new at the same time. I just love
that that's possible if you're paying attention. That makes you think.
One last story here on the dumpster diving front. I
had a buddy who there was back in the day
there was an airline called air Tran. Southwest bought air
(08:42):
Tran back in the day and that's how they actually
moved into flying out of Atlanta. But AirTran ran a
promotion on Wendy's Cups, and I think it was if you
collected like sixty four Wendy's cups, you were able to
take a free one way or around trip flight. And
I don't think there were any like limits to the
amount of cups you could collect in the number of
flights that you were able to rack up. And so
(09:05):
my buddy would literally jump into dumpsters to get these
Windy's cups because it meant free travel. And so, yeah,
these are the kind of things where if you see
something like that and you're like that. At one time
there was a lift promotion for new drivers and new
drivers all you had to do was jump through the
hoops to sign up for a lift, give one ride,
(09:26):
and you were able to get a thousand dollars bonus.
And I was like, that's worth my time. That's worth
my time. So these things don't come along frequently, I
wouldn't say, but they come along often enough that if
you're paying attention, you might be able to score something.
Is your smartphone making your car insurance more expensive? The
finance journal Kiplinger they dove into that topic the other
(09:50):
day and they found that third party apps are feeding
information to insurance company insurance companies that could be used
against you in setting rates. So the I'm not talking
about the apps from your insurance company, right, which we've
talked about on the show before and I have used
before in order to save money on my insurance. Basically,
(10:11):
if you drive like a grainy for a month or
three months, or what however long they tell you to
you plug something into your car. They might say, hey,
you're actually pretty safe driver. We're going to knock twenty
eight percent off your insurance rate, which is pretty cool.
I know some people are aware of those, but I
think that, at least from what I've seen and experienced,
they can be a good way to save money on insurance.
(10:32):
But what I'm talking about is actually a bunch of
different apps to collect other information on you. There was
another article just this week about how the Chinese apps
Timu and She and they might be spying on you
when you do your shopping and selling that information well,
could end up at insurance companies maybe maybe. And so
(10:52):
apps you would not think of as spying on you
or collecting information that could be used to create a
dossier and sell that information are doing so. So it's
weather apps, shopping apps, navigation apps are all those apps
are all collecting some data if you allow them, and
then they're selling that data to data brokers who sell
(11:13):
it to insurance companies. And one of the main apps
that was highlighted this and I swear we've talked about
this on the show before, but I guess it just
refreshed in my mind. It's called Life three sixty. And
this seems this app seems like a benign app. It
actually seems like it's an app that's poised to help
families share location and keep track of each other and
(11:33):
stay in touch with each other. Well, this app in
particular seems to be collecting information that is being sold
and it's leading to unexpected premium hikes for insurance Auto
insurance in particular because of the data it's able at
the robust data it's able to collect about where you
are and what you're doing, and the insurance companies like, yeah,
(11:55):
we'd like that because the more information we have, the
more we can dial in rates for specific people if
they're engaged in behaviors that we deem unsavory or unhealthy.
And it is part of the brave new world that
we live in. But it scares me and it makes
me think that you should be really careful what apps
you download, and also you should be careful what you
let those apps share their permissions right that you give apps,
(12:18):
And the tough thing about something like Life thirty sixty
is the permissions that you need to grant it are
pretty crucial to the functioning of the app. So that's
one of those apps, Well, hey, you might want to
find a different way to stay in touch with your family,
because if they're collecting that data and using it in
a way that's not just to allow you to use
the app for pro family purposes, they're using it to
(12:39):
actually spy on you and sell your data, then to
meet that app would not be worth downloading. Opt out
of sharing your data with apps whenever possible, And because
of the quickly rising insurance rates we've seen around the
nation the number of uninsured is rising, especially on the
homeowners insurance front, and having insurance is crucial for most folks.
(13:02):
And by the way, if more motorists are going around uninsured,
it means you having insurance is even more necessary. Think
about that uninsured motorists protection that protects you in case
you get into an accident with somebody who doesn't have insurance.
That could be you're saving grace in case of an accident,
a car accident. But on the homeowners insurance front, statistics
(13:24):
recently revealed that seven percent of all homeowners report not
having any insurance coverage on their house. And this might
not be horrific given that, and this is a surprising
this statistic has always surprised me. Something like forty percent
of all homeowners own their homes mortgage free. And it's
funny because I know very few of those people. Actually,
(13:46):
this local woman who babysits our kids, wonderful. She we
were just talking this morning and she doesn't have a
mortgage on her home. I was like, that's incredible. How
incredible is that. I look forward to joining you in
the ranks of that someday. But there are many people
out there that I know of who own their home's
mortgage free. But apparently the statistics show that four out
of ten people do own their home and they don't
(14:06):
have a mortgage attached to it. And in that case,
you can opt to go without insurance. But do you
want to, well, if you own your home outright, could
you still afford to rebuild that home in the event
of an emergency. That's a really important question. Those are
the only folks who should be willing to take that gamble.
And if you have a mortgage right, your mortgage holder
(14:28):
will find out if you act your insurance. So you cannot,
as someone with a mortgage on your home, say I'm
gonna keep paying this mortgage, but I'm not gonna have insurance.
I'm going to take that risk because that puts the
risk also on the bank or the credit union where
you got your loan, and they're going to make sure
you have insurance. They're going to get it for you,
but it's going to cost a heck of a lot
more if they buy it. So you want to be
(14:48):
the one shopping around for insurance in order to find
the best value for yourself, because yeah, and if you're
looking to save money. If you're looking to save money
on insurance, raising your deductible, if you have the savings
on hand, can be a way to kind of split
that baby right where you're saying, the insurance is getting
really expensive, and that is certainly true. We've documented the
(15:11):
rise in homeowner's insurance costs over the past few years.
They've been significant, as costs of rerisen, the home prices
of risen, insurance cost ofverism too, and so raising the
deductible is a way to save on premiums and you
have more skin in the game if you were to
file a claim, but you got to have the cash
on hand right in order to you got to have
(15:33):
the money to back up that increased deductible that you're
taking on. And it makes One of my neighbors has
a second property and he did not have insurance on
this property and a hurricane came through and wiped it out,
and it was one of those things where obviously just
super sad and definitely felt awful for him. He knew
(15:56):
what he was getting into though, and he knew, Hey,
insurance costs down here are so expensive, I just have
to chance it. And the homeowners in certain parts of Florida,
certain wildfire prone parts of California, who are who have
enough money to back up the you know, to not
go bust in case of their home burning down or
(16:19):
you know, succumbing to a hurricane. They can, I think,
go without insurance. But again, you have to do it
in a really calculated way. And the vast majority of
people could not stomach that loss. And so you have
to stomach higher insurance costs to avoid the potential disastrous
cost of full replacement of that home that most people
(16:40):
cannot actually afford. R One tweet, one tweet can cause
a firestorm, and it can drive a new cycle, right
or one truth social post and I don't even know
if they're called tweets anymore, and I don't know if
truth social is actually social media network as much as
the personal, you know, microphone of the president. But what
in similar way, company can drive a narrative And we
(17:01):
saw that this past week actually as Campbell's Soup announced
that consumers are cooking at home again and in much
higher numbers. Basically they're saying we're cooking at home, kind
of like we were early in the pandemic days. Campbell's, yes,
they sell soup. But they sell other items too, so
they're not just saying, oh, we sold more Kansas soup.
So this is how we know this. They sell stuff
like pasta and crackers, and so they're saying, we sell
(17:23):
enough stuff in the grocery store aisle, and we saw
an uptick in sales. This makes us think that people
are cooking at home more, and I think there's probably
some truth to that, right, But I don't even know
if we can call this a meaningful trend, but I
will say this that it's a good reminder that cooking
at home saves you a ton of money. And the
Americans have historically spent more on food at home than
(17:47):
eating out, but that has shifted dramatically over the past decade.
We've all gotten so used to restaurant culture, to eating
out culture, that we're spending less time around our kitchen
and our stoves and around our tables at home, and
we're spending a good bit more now of our money
eating out than we are on groceries. And we've talked
(18:08):
about grocery inflation, but guess what, grocery The increased prices
of food has actually hit restaurants harder than it's hit
grocery stores. So every time you eat out, you're shelling
out a heck of a lot more money than you
are when you're eating at home. And everyone kind of
knows this, but when you put numbers to it, I
think it helps. A meal at home costs the average,
it's like four dollars a person on average, and a
(18:30):
meal out at a restaurant is like seventeen dollars a
person on average. Obviously, it varies wildly. You're going to
McDonald's versus a Michelin star restaurant, that depends right, but
somewhere in the middle, seventeen dollars on average per person.
That's just simply that means that the more you eat
at home, the more you're gonna save. And it makes
me think that I think the biggest cause of eating
(18:52):
out versus eating at home is that people haven't planned ahead.
And if you were to plan ahead a little bit
more like meal planning, batch cooking, thinking ahead on the weekends,
what are we going to cook and having everything on hand,
that can help you avoid those in a pinch a
let's just go get a pizza, let's just go get
fast food. And the other thing is is frozen foods.
(19:15):
So I think for us, like Costco, frozen foods can
be helpful in a pinch where we're like, what we
would have done because we didn't plan very well was
go out, But now we can throw in something that's frozen,
whether it's even like salmon and rice, right that, We'll
get the frozen salmon at Costco, and that's like a
decently healthy meal that we didn't necessarily have to plan
(19:37):
incredibly well for because life happens, right, So having those
frozen foods on hand, it has at least been helpful
to us. Trader Joe's is obviously another place where you
can get great frozen meals, So think about think about that,
because I love what Campbell's is saying, Hey, more people
are starting to eat at home again, but the trend
has gone so far in the other direction that even
(19:58):
this small correction it's just not enough. And if you
you know, with groceries being one of those top line
items in our budget, you could easily save. I think
something like if you were just to cut your eating
out in half from what it is currently the average person,
you would save something like seven thousand dollars a year,
and that is not chump change. That is that is
(20:19):
insane that you could save that much by that one
simple thing. Say I'm still gonna eat out, I'm just
gonna make it more rare. I'm just gonna do it
half as much as I'm doing now, and then that
would make that big of a dent. I just mentioned Costco.
If it weren't enough of a reason to be a
Costco member, there's so many reasons I not to. You know,
Costco doesn't pay to advertise on this podcast, but I
will advertise for them just because I think they're such
(20:40):
a good company and they can save you so much money. Matt,
he's a big Aldi fan, but he's not here to
defend Aldie today, so I can just talk great about
Costco right without hearing him chime in and be like, oh,
he's voter. But the Costco actually just announced that they're
going to be offering extra perks for executive members. And
the executive membership is one hundred and thirty dollars, And
some people say, well, that's why don't I just get
(21:01):
the regular Cosco membership it's half the price. Well, if
you're an executive member. Now there are additional reasons to
consider it or to enjoy it, and then if you
haven't become an executive member, there are additional reasons to
consider it. They're going to open up the warehouse an
hour early for executive members, starting at nine am, starting
June thirtieth. They're also going to stay open an extra
(21:22):
hour on Saturdays until seven pm, but only for executive members.
So if you get the basic membership, sorry, you don't
get in during those hours. I believe that's kind of
a riff on Sam's Club. I believe they do something
very similar. Another thing, if you like Costco Same Day,
and I've talked about this, when you can get the
discounted Instacart gift cards, which they're not selling at Costco
(21:42):
anymore right now, sadly, but I found some on Amazon
just just earlier this week, ten dollars off per one
hundred dollars gift card, so I stocked up with as
many as I could. But if you like Costco Same Day,
which is fulfilled through Instacart, you'll get a monthly ten
dollars for free on orders of one hundred and fifty
dollars or more, which is just another perk when you
think about that, that's one hundred and twenty dollars over
(22:03):
the course of the year. And again if you have
the discount gift cards, then it can make financial sense.
But the executive membership is essentially paying for itself. And
the other thing. The other thing about the executive membership,
I tell people who always go with the executive membership
and not with the basic because you can get a
refund of the difference in price if you end up
(22:24):
not getting enough benefit from that executive membership over the year.
So if you're like, Okay, I'll try it, but I
don't know if I spend enough money there, well you
can go up to the front desk at Costco and say, hey,
I got the executive membership. My savings were like twenty bucks.
It wasn't good enough, and they'll say, oh cool, we'll
just give you the difference, the forty five dollars difference
(22:44):
or whatever it was between the basic membership and the
executive membership. Here you go. And so that is the
guarantee that Costco has, which just means like, especially now,
everybody should be an executive member. All right, We've got
more to get to on this episode, including what if
was an investor, how would that work out. We'll talk
about that, and I might throw some shade at the
(23:05):
cyber truck for a second too. We'll get to all
that and more. Right after this, I went back from
the break of course, got to get to the ludicrous
headline of the week. This one comes from a website
called Alpha Architect, and the headline reads, even God would
(23:28):
get fired as an active investor. And this is one
of the best headlines I've seen in a while. And
it's just kind of ludicrous to think that the creator
of the universe would not be able to make it
as an active investor. In this article did a really
good job setting up why and then talking about just
how even if you had perfect foreknowledge you as an investor,
(23:50):
you wouldn't ultimately be able to make it. The people
who you're investing on behalf of would be so mad
at the drawdowns that they experienced during the multuous months
that they would fire you. And so the gist was
that even with like practic perfect foresight, that active investors
are going to get fired before their strategy is allowed
(24:11):
to play out. There saying no, no, no stick with me
this company. It's I know that the draw down is
significant right now, but if you just hang on for
the ride, I promise like we're going to have a
comeback and we're all going to make money. Well, the
truth is, when you own the best performing stocks over time,
still individual stocks, those draw downs can be so gut
(24:33):
wrenching over months or even years that even if you
had the conviction to stay the course, your clients as
an investor would be like, sorry, dude, I'm not hanging
with you. My portfolio is down to seventy five percent
in the last twelve months and that so even if
you knew ahead of time, you would have to be
(24:53):
incredibly convincing to get people to stick with you during
those times of greater volatile And I think as individuals, right,
if we had perfect foresight, we would say, I'm okay
with greater levels of volatility if I know that at
some point it's going to pay off in the long run.
But as people who are investing our money with somebody
(25:17):
who's making the calls on our behalf, we wouldn't be
right because we don't have that perfect foreknowledge. They're trying
to tell us that they do. And this is honestly
kind of how some parts of the investing world function
you're believing somebody else's conviction, but those people don't have
perfect foreknowledge, and which means that their outcomes are even worse.
(25:39):
But it was just fascinating to see that even if
you did, even if you knew which stocks were going
to be big, those drawdowns would be so significant that
people wouldn't be able to stomach them. And very few
people have the conviction to hold on during the toughest
of times. I think about just a stock recently where
there's this company called Carvana and they're trying to which
(26:00):
we've talked about on the show, for selling your car
to them or buying a used car, and their stock
price just got torched last year, and it looked like
Carvana might go away altogether. And even though they'd created
this inventive new business model, Carvana stock got obliterated so
hard and a lot of people thought it wasn't going
(26:21):
to be around, and if it hadn't stuck around, investors
would have been wiped out. And then you think about
what's actually happened with the turnaround of Carvana and their
stock price zooming. But did people have the conviction to
be able to hold on during those most tumultuous times.
Some investors did and they raped their rewards, but a
lot of other people got out because the drawdoun in
(26:45):
the stock price is really tough to stomach. And this
is just another pro I think in the index investing camp,
the drawdowns are less severe. And you might say, well,
I think I can pick the winners. But the truth
is one, can you? And then two? Even if you
pick a winner, can you stick with that winner even
when the going is tough? A La Carvana or a
(27:06):
Lah Think about Apple. There have been times where Apple
is a company was it looked like they were almost dead.
They recovered from the verge of bankruptcy back in those
early Steve Job day Steve Jobs days. And so are
you the kind of person that has the conviction that
that stock is worth holding on to for the long term.
(27:27):
I don't know about you, but I don't know that
I have the time the intelligence to study companies enough
to have that sort of conviction that I'm willing to
hold on through thick and thin in order to attempt
to experience those greater levels of returns. Fifty four percent
of stocks, by the way, never recover after experiencing a
(27:48):
ninety percent draw down. So and by the way, you
could get even more risky by investing in leveraged funds,
which are becoming more widely available inside of retirement accounts
or are set to become available inside of retirement accounts soon.
The thought I think behind these leveraged funds is that
you can Hey, you can finance a vehicle, you can
(28:08):
finance your education, you can find it's a home. Why
not use debt to increase what you're able to buy
investment wise too, And this has always been if you're
a real estate investor, if you've heard us talk about
real estate investing, it's always been a big part of
what makes real estate investing in particular attractive because if
it weren't for leverage, almost nobody would want to participate
(28:31):
in real estate investing. The returns just wouldn't be as robust.
There's something about putting ten percent down or twenty percent
down on a property and saying I don't have to
actually have the cash to buy the whole thing up front.
That juice is your returns, right, especially if you have
a locked in low interest rate, It can make the
(28:51):
investment look a whole lot more attractive, and the problem
here though, is greater potential reward equals greater risks. Leverage
is something that can either make you look smarter, it
can make you look really stupid. And if the market
goes through an extended tough time, investors who are putting
money into these leverage funds they could be wiped out.
(29:12):
I'm not against all forms of debt. We talk about
smart forms of debt on the show, that there are
some kinds of debt that, in proportion used wisely, in intelligence, intelligently,
and not overdone, can actually help your ultimate wealth building goals.
Smart use of leverage can benefit what I would call
(29:34):
shrewd investors, because we see what happened in two thousand
and eight, right, Unwise investors who took on too much debt,
who bit off more than they could chew, found themselves
between a rock and a hard place. But investing in
these sorts of leverage funds it's a little too risky
for my blood as well. I'd avoid them again, stick
to regular old index funds because the only certain thing
(29:55):
about these leveraged funds is the extra fees they assess
because of the ad complexity that they are putting into
your portfolio. So if you see these leverage funds, Yeah,
they're a way that you could potentially increase your earnings,
but you're taking on more risk and I just don't
think it makes sense. But even worse than leverage funds
would be investing in memes, and that is of course becoming.
(30:18):
It has became more common during the crypto heyday and
the n f T the NFT invasion that we experienced.
But you can now or very soon buy n f
ts in e F T ETF format in an exchange
traded fund. So there was there is a new ETF
that is set to launch that you know, and it
(30:39):
is passing the regulatory hurdles as we speak. And you
might have thought NFTs were dead, that pictures of board
apes and stuff they were talking about them on all
the nighttime comedy shows, that those were gone for good,
but they're not. And now there is a something you
can invest in, the n f T s, the an
n f T ETF that that invests essentially in this
(31:01):
Pudgy Penguin project Pudgy Penguins, which sounds I don't know,
exciting and cutting edge, right, I'm kidding, I'm joking, of
course not it's it's I think, a great way to
lose your money quickly if you're if you're interested in that.
I went to the website because I was just so curious. Okay,
what is the Pudgy Penguins NFT project all about? And
(31:26):
they use some of the new techno jargon, of course.
On their website they say that they're here to well
and they also use some goofy language to proliferate the
penguin memetic culture not like like meme culture and good vibes.
And they're also fostering creativity, community and freedom. I don't
know how Pudgy Penguins is fostering community and freedom creativity.
(31:47):
Maybe it's the kind of cute penguins. But yeah. You
can also go to their website and you can buy
ridiculously expensive merch Maybe that's how they're hoping to make
money here. And maybe I'm not online enough, but this
this is just another investment I'm completely avoiding. I think
we did greatly disparaged NFTs back in the day, and
I still feel the exact same way. Let's learn from
(32:11):
the fact that bored apes are worth a fraction of
what they used to be, the fact that NFTs are
on the comeback, and potentially you can invest in them
in an even simpler form, publicly traded ETFs. I don't
think of that as a good thing, and yeah, I
would just do it at your own peril. NFTs still
make so little sense to me. I would rather own
(32:34):
real art that I can hang on my walls than
a jpeg that is mine but that can be copy
and pasted. It still just baffles me that this is
a segment of the market. But I think for most
people who enter into it, you're going to lose money,
and it's just the rare person who times it properly
who makes money. All right, Depreciating assets are once again
(32:54):
flipping the script. They're going up in value. Supply chain
issues during COVID led to a situation where people were
seeing their used car increase in value. It was a
rare phenomenon. It was interesting to document on the show
because it's something we don't see, Like we always talked
about cars as depreciating assets. Hey, that thing is going
to go down in value, And just for a hot
(33:15):
minute there it was like, wait a second, your used
car is actually it's worth more today than it was yesterday.
And an even more rare feet. There were people who
leased cars and then if they bought it out after
the lease was up, they were able to make money
too because there was a spread on what they had
to pay for And typically this is almost never the case,
(33:35):
right when those contracts are written that you can buy
the car and then it's actually worth more than what
you have to pay to the dealership to buy the
car then, and so people would instead of just turning
the car over, if they would say, wait a second,
I can pay fifteen thousand dollars for this car, but
it's actually worth nineteen or twenty thousand, So yeah, I'll
(33:58):
take it, even if I don't plan on keeping it.
I'll and I'll make the difference. So that was really interesting.
But we're seeing maybe signs that this is coming about again,
that the used car market it's getting tighter because of tariffs,
and demand for used cars seems to be going up,
Supply seems to be dwindling, and then prices seem to
(34:18):
be rising again. How long this is going to last
depends on a number of factors, including tariff policy, which
as we all know, has been very very whiplashy, very
back and forth. You know where tariffs land or if
they land is anybody's guess. And I don't even know
if the person in charge of tariff policy really knows
(34:38):
where things are going to land right now. And so
I think this is just another another reason to hold
onto your used car longer and to feel comfortable putting
money into it within reason. There're obviously like rules of
thumb of when hey, my car needs seven thousand dollars
worth of work and it's worth five thousand dollars. Yeah,
I'm not putting that money into it, but it makes
I've been thinking about my five VAC. It's summer right
(35:01):
now and the AC doesn't work, and I've just been
sweating it out like an idiot, and I've finally come
to the conclusion, you know what, this is a good car.
I'm gonna put some money into it. I've kind of
been holding out and not putting money into it in
hopes that I would at some point just ditch it.
And I'm like, you know what, Now I think I'm
going to hold onto this thing longer. I'm going to
put in the money that it needs to keep this
(35:21):
thing around. And I do think for you know, it's
a twenty year old car. I do think for a
lot of people that is a wise move. Part of
the reason I love used car so much and I
love holding onto car so long, is because it's such
a significant part of most people's budgets, and I love
making it a really insignificant part of my budget so
I can spend more on stuff I care about more.
And one of the other main reasons that I just
(35:44):
hate new cars it's really hard for me to stomach
buying a new car is because they tend to depreciate
in value, so dann quickly. And this is a great
time for me to talk trash about the cyber truck.
And not because I have a debta against Elon or
anything like that. It's not just a political thing. But
(36:05):
and obviously, you know, Elon has found himself in some
the political fray, largely of his own making. He seems
to have annoyed everyone from every side at this point.
But the value of the cyber truck has plummeted far
more than the average new car that gets sold. Apparently,
cyber truck prices are down something like forty percent just
a year after being in customer hands. And this was
(36:29):
this is like a far cry from even just the
normal depreciation that a new car typically experiences of twenty percent,
that's still a lot right to buy let's say a
fifty thousand dollars car and for it to be worth
forty thousand dollars a year later. That's a lot of
money to lose in just a short period of time.
But if you bought the one hundred thousand dollars cyber
truck and it's now worth sixty two thousand dollars just
(36:51):
a year later, you just burned a whole pile of cash.
And so that has been fascinating to watch. And I
think this is oh. I think it's particularly true of
the cyber truck, but I think it's also true of
brand new models that it's hard to know what the
customer demand is going to be and whether or not
they're going to retain their value. In the same way,
(37:13):
depreciation is something that we all face as car owners.
The car, at least in normal times, the car is
not going up in value, but the ownership timeline and
holding on to it longer it can help kind of
cover up for some of those depreciation flaws. And the
other thing that helps is to just buy older cars
that are in good condition and hold on to them longer,
(37:35):
because if you buy a car that's at least five
years old and you hold on to it for five
or ten years, the longer you hold onto that car,
you're paying. You're buying someone else's depreciating asset, and it's
going to appreciate a heck of a lot less during
the time that you own it. And the thing is,
if you're smart about getting your car checked out, and
you're smart about looking at places like Consumer Reports for
(37:56):
aliability ratings, you can hone in on cars that are
going to be more reliable over time, that are going
to be a better bet. Buying a five year old
car doesn't mean buying even a ten or fifteen year
old car doesn't mean you're doomed to be in the
repair shop all the time if you buy smartly, and
if you need one more reason not to buy a
(38:16):
new car, I was just talking to a friend the
other day. Financing terms are getting worse, and my friend
was saying he was being pushed into an eight year
car loan and he was like, but I wanted to
do a six year car loan. But if I do eight,
can I pay it off more? Quickly, and I was
telling him about my four year rule that you don't
ever want to finance a car more than four years.
I don't know if he listened or not. And that's
(38:36):
really up to you as an individual. But if you
want to, my advice is to not buy a car
that you can't afford to buy in cash, and if
you absolutely do have to finance it thirty six to
forty eight months at absolute most, and get that loan
from a credit union. And I know cars can be
like a status symbol in this country, but that's not
(38:57):
something I buy into and I think of it. It
does a point A to point B transportation, and if
you want to think of it as a status symbol,
that's fine, but only by it if you can actually
afford it, and if you have to finance it over
a long period of time, you can't afford it all right. Last,
but not least, the SmartLess Guys, the guys from the
SmartLess podcast, Jason Bateman, Will Arnett and Sean Hayes, they're
(39:18):
launching their own cell phone service. I haven't seen all
the details, but it's just funny because I think celebrities
the two things they love to launch now it seems
like our smartphone plans and tequila lines. But this is
a straight up Ryan Reynolds invitation. The dude who invested
massive amount in Mint Mobile and then finally sold Mint
Mobile to T Mobile after gaining a lot of subscribers
(39:41):
and increasing the value. This seems like it might be
another good option. I'm all for competition in this space,
but Mint and US Mobile are still two of my
absolute favorites. For saving money, you could save a ridiculous
amount of money by going with the MV and O
Carrios carriers mobile virtual network operators. And yeah, if you're
(40:01):
with one of the big companies, you're probably paying too much.
So just a reminder, and maybe the SmartLess plan is
going to be awesome and take the cake. I'll wait
till they have a website up and more details on
how much these plans cost. But always going to have
more competition in a space that's already seen prices drop dramatically.
All right, that's going to do it for this episode.
(40:22):
I can't wait to have my best friend back in
the near future. But I hope you have a great
weekend and I'll see you back here on Monday for
a brand new episode Audio's best friend out
Welcome to Out of Money. I'm Joel, and yes again,
Matt is not here, promised he'll be back soon. Today
we're talking about dumpster diving, insurance dodging, and pudgy penguins. Yeah,
(00:29):
that's right. Matt has spent multiple weeks behind bars and
I can't tell you the full story. And I'm just kidding.
He's Matt spends some time with his family. He'll be
back soon. This is kind of a summer summer thing
where I'm hosting this Friday flight by myself. But I
hope this is the last Friday flight I host solo
(00:49):
because it's not really as fun doing it boy myself,
even though I still love getting to talk about personal finances.
And I'm glad you're along for today's Friday flight. Before
I get to all the stories we've interesting, including pudgy penguins,
it's a really interesting one. NFTs are back with a vengeance.
I wanted to quickly highlight an email that listener Donnie sent.
(01:09):
He lives in Maryland, and there are all sorts of
things in the personal finance world that even as someone
who hosts a personal finance podcast, I'm unaware of, and
a lot of that is because there are state specific
programs or just small fin nuances that I have not
begun to appreciate or research in depth yet. And so
Donnie sent this email and at least for listeners in
(01:31):
Maryland and then maybe check and see if this is
something like this is available in your state as well.
There are cool perks for people who stick money aside
in five twenty nine plans for their kids. And so
Donnie basically wrote and told me and gave a lot
of detail on this. So look it up for yourself
on the Maryland five twenty nine dot com web page
(01:51):
for details. But if you meet certain income requirements basically
if you don't make a ton of money and actually
a ton of money, well that's in the eye of
the older. But you can get a state match to
your five to twenty nine plan for in order to
save for your kids college. So not only have five
twenty nine plans gotten more flexible lately, And I looked
(02:13):
up the Maryland five to twenty nine plan to see,
you know what the cost and expenses look like, and
on some of those investments they're quite low. So the
Maryland five to twenty nine plan is I would say
at least a really good solid one. Well, if you
meet certain income requirements and you're prone to interested in
saving for your kid's future, you might be able to
get matching funds from the state for making those contributions.
(02:36):
Interesting thing, you have to you can't claim a state
tax deduction and get this state contribution. So it's important,
Donnie said, to do the math to see which one
is going to work out better for you. But you
may might be able to get five hundred bucks and
maybe you would have only saved one hundred bucks in
taxes or something like that for making this contribution, and
in that case, you'd want to take the state five
hundred dollars contribution and you're getting out it's like a
(02:58):
net four hundred dollars win. So again, all of those
details are available on Maryland five twenty nine dot com.
But it just reminded me like, oh man, there's so
much to learn about personal finance. It never gets boring
to me. And there are so many ways that the
system is set up for people who are at least
curious and paying attention to benefit. And if you live
(03:20):
in Maryland, and again if someone else, by the way,
if you live in another state, and you're like, my
state does something similar. Shoot me an email, like, we
want to highlight these things on the show. We want
to make people aware of incredible benefits or free money. Right,
this is almost like four to one k match at
work on steroids. Though for your five twenty nine plans,
it's really cool. All right, congrats to all the graduates.
(03:40):
I'm seeing more and more pictures posted, and then there's
all these those yard signs, the signs in front of
neighborhoods at least where I live, saying congrats to these
grads and hate where are they going to college? Well,
and for college graduates in particular, you've been putting in
tons of work for a lot of years. It's paid
off with the degree. And we talked about the job
(04:02):
market last week and how it's not as good as
it has been for new college grads. But here's one
thing that I wasn't on my radar until I saw
an article in Indie Week, and it was that college
graduates tend to leave a lot of their possessions behind
when they fly the coop, When they leave the dorm
or whatever campus housing or off campus housing they live in,
(04:26):
they tend to leave a lot of their stuff they
just maybe it's they don't have a U haul or
a trailer to stick all their stuff in, and so
a lot of it ends up at the dumpster. Could
be some really nice stuff, right, It could be some
trash that nobody really wants, but it could be a
nice couch, or it could be In the case of
(04:47):
this article who wrote for Indie Week, she talked about
salvaging some really nice stuff that graduates were leaving behind
at the school closest to her. High end tables, luxury sneakers,
Lululemon workout stuff like shoved in a bag, fancy appliance
like nice toasters and microwaves and stuff like that. And
one person's trash is another person's treasure. And so the
(05:08):
author she basically highlighted how she was able to salvage
almost seven thousand dollars worth of stuff to prevent it
from being thrown in the trash and to put it
to use herself. And she created a spreadsheet and she said, hey,
this is something I'm going to keep, this is something
i'm going to sell, this is something I'm going to
give away. And I thought that was so cool. I mean,
(05:28):
it really is. The one person's trash is another person's treasure.
It's the most apt phrase here because as the college person,
you're saying, this is a burden to me. I don't
have anywhere to put it. Maybe I'm moving back home
with mom and dad for a few months. They don't
have room for this stuff. Or I don't know where
I'm going to end up. Maybe I'm sleeping on a
friend's couch for a couple weeks and then I'll figure
(05:49):
it out. And so in the interim, you just don't
have anywhere to put it, so it ends up on
the curb, or it ends up in the trash. Can
I think this happens. I've heard from people in New
York City right around the first of the month, because
there are fewer places to store stuff. You just find
stuff on the curb that you otherwise are like, why
are they getting rid of this? And it's because they
just can't take it with them, and it's more of
(06:10):
a pain, more of a hassle to take it. And
if you can deal with the hassle of moving it,
you just are the proud owner of something fairly nice
that someone else tossed out. And I think it also
says something about our culture that we live in an
era of disposable stuff, right, And it makes me think
that even if an item is initially more expensive, it
(06:31):
can cost you less over time to buy the nicer
thing upfront and to hold on to it. But then,
also because of extreme wealth in this country, when you
think about the fact that we have so on average
as a country, we're the wealthiest country in the history
of the world, there's room here for entrepreneurs to make
money based on the fact that based on some arbitrage, right,
(06:54):
the fact that somebody has said, oh I used this,
I no longer need it, I'm tossing it as and
you can step in and be the middleman or woman
to enjoy the profit of that. Basically, I have friends
who have done this before, whether it's with used clothing.
They've started businesses where they go to thrift stores and
(07:16):
buy stuff and list it on eBay. And I'm not
saying that it's not a job. It is. It takes time,
but if you have an eye for that stuff, you
can make a living literally just reselling things. Another friend
who said, who did that with mid century furniture and
he just knows where to go, what to look for
and once you get an eye for that, he's like,
you're able to find some things for one hundred bucks
(07:39):
that sell for thousands of dollars. And this reminded me
of that where people tossing stuff out you can benefit
from at least just the way people don't take care
of their stuff or get rid of it prematurely. At
the very least by the way, I wish folks would
donate that stuff so people can benefit instead of it
(08:00):
next to the dumpster, tossing it in the trash and
then you know, I don't know, maybe you don't have
time for a side house, so you're not interested. But
I think it's an underrated way to get cool stuff
or to make a buck, and you have to roll
up your sleeves and get a little bit dirty. I
think that's one of the things too, is this is
going to take maybe a little time, little effort, but
even I think that can be It's kind of like
(08:20):
my dishwasher story recently, buying extra dishwashers and flipping them,
and it's a way to turn something that would have
been a cost center into a profit center and still
get something new at the same time. I just love
that that's possible if you're paying attention. That makes you think.
One last story here on the dumpster diving front. I
had a buddy who there was back in the day
there was an airline called air Tran. Southwest bought air
(08:42):
Tran back in the day and that's how they actually
moved into flying out of Atlanta. But AirTran ran a
promotion on Wendy's Cups, and I think it was if you
collected like sixty four Wendy's cups, you were able to
take a free one way or around trip flight. And
I don't think there were any like limits to the
amount of cups you could collect in the number of
flights that you were able to rack up. And so
(09:05):
my buddy would literally jump into dumpsters to get these
Windy's cups because it meant free travel. And so, yeah,
these are the kind of things where if you see
something like that and you're like that. At one time
there was a lift promotion for new drivers and new
drivers all you had to do was jump through the
hoops to sign up for a lift, give one ride,
(09:26):
and you were able to get a thousand dollars bonus.
And I was like, that's worth my time. That's worth
my time. So these things don't come along frequently, I
wouldn't say, but they come along often enough that if
you're paying attention, you might be able to score something.
Is your smartphone making your car insurance more expensive? The
finance journal Kiplinger they dove into that topic the other
(09:50):
day and they found that third party apps are feeding
information to insurance company insurance companies that could be used
against you in setting rates. So the I'm not talking
about the apps from your insurance company, right, which we've
talked about on the show before and I have used
before in order to save money on my insurance. Basically,
(10:11):
if you drive like a grainy for a month or
three months, or what however long they tell you to
you plug something into your car. They might say, hey,
you're actually pretty safe driver. We're going to knock twenty
eight percent off your insurance rate, which is pretty cool.
I know some people are aware of those, but I
think that, at least from what I've seen and experienced,
they can be a good way to save money on insurance.
(10:32):
But what I'm talking about is actually a bunch of
different apps to collect other information on you. There was
another article just this week about how the Chinese apps
Timu and She and they might be spying on you
when you do your shopping and selling that information well,
could end up at insurance companies maybe maybe. And so
(10:52):
apps you would not think of as spying on you
or collecting information that could be used to create a
dossier and sell that information are doing so. So it's
weather apps, shopping apps, navigation apps are all those apps
are all collecting some data if you allow them, and
then they're selling that data to data brokers who sell
(11:13):
it to insurance companies. And one of the main apps
that was highlighted this and I swear we've talked about
this on the show before, but I guess it just
refreshed in my mind. It's called Life three sixty. And
this seems this app seems like a benign app. It
actually seems like it's an app that's poised to help
families share location and keep track of each other and
(11:33):
stay in touch with each other. Well, this app in
particular seems to be collecting information that is being sold
and it's leading to unexpected premium hikes for insurance Auto
insurance in particular because of the data it's able at
the robust data it's able to collect about where you
are and what you're doing, and the insurance companies like, yeah,
(11:55):
we'd like that because the more information we have, the
more we can dial in rates for specific people if
they're engaged in behaviors that we deem unsavory or unhealthy.
And it is part of the brave new world that
we live in. But it scares me and it makes
me think that you should be really careful what apps
you download, and also you should be careful what you
let those apps share their permissions right that you give apps,
(12:18):
And the tough thing about something like Life thirty sixty
is the permissions that you need to grant it are
pretty crucial to the functioning of the app. So that's
one of those apps, Well, hey, you might want to
find a different way to stay in touch with your family,
because if they're collecting that data and using it in
a way that's not just to allow you to use
the app for pro family purposes, they're using it to
(12:39):
actually spy on you and sell your data, then to
meet that app would not be worth downloading. Opt out
of sharing your data with apps whenever possible, And because
of the quickly rising insurance rates we've seen around the
nation the number of uninsured is rising, especially on the
homeowners insurance front, and having insurance is crucial for most folks.
(13:02):
And by the way, if more motorists are going around uninsured,
it means you having insurance is even more necessary. Think
about that uninsured motorists protection that protects you in case
you get into an accident with somebody who doesn't have insurance.
That could be you're saving grace in case of an accident,
a car accident. But on the homeowners insurance front, statistics
(13:24):
recently revealed that seven percent of all homeowners report not
having any insurance coverage on their house. And this might
not be horrific given that, and this is a surprising
this statistic has always surprised me. Something like forty percent
of all homeowners own their homes mortgage free. And it's
funny because I know very few of those people. Actually,
(13:46):
this local woman who babysits our kids, wonderful. She we
were just talking this morning and she doesn't have a
mortgage on her home. I was like, that's incredible. How
incredible is that. I look forward to joining you in
the ranks of that someday. But there are many people
out there that I know of who own their home's
mortgage free. But apparently the statistics show that four out
of ten people do own their home and they don't
(14:06):
have a mortgage attached to it. And in that case,
you can opt to go without insurance. But do you
want to, well, if you own your home outright, could
you still afford to rebuild that home in the event
of an emergency. That's a really important question. Those are
the only folks who should be willing to take that gamble.
And if you have a mortgage right, your mortgage holder
(14:28):
will find out if you act your insurance. So you cannot,
as someone with a mortgage on your home, say I'm
gonna keep paying this mortgage, but I'm not gonna have insurance.
I'm going to take that risk because that puts the
risk also on the bank or the credit union where
you got your loan, and they're going to make sure
you have insurance. They're going to get it for you,
but it's going to cost a heck of a lot
more if they buy it. So you want to be
(14:48):
the one shopping around for insurance in order to find
the best value for yourself, because yeah, and if you're
looking to save money. If you're looking to save money
on insurance, raising your deductible, if you have the savings
on hand, can be a way to kind of split
that baby right where you're saying, the insurance is getting
really expensive, and that is certainly true. We've documented the
(15:11):
rise in homeowner's insurance costs over the past few years.
They've been significant, as costs of rerisen, the home prices
of risen, insurance cost ofverism too, and so raising the
deductible is a way to save on premiums and you
have more skin in the game if you were to
file a claim, but you got to have the cash
on hand right in order to you got to have
(15:33):
the money to back up that increased deductible that you're
taking on. And it makes One of my neighbors has
a second property and he did not have insurance on
this property and a hurricane came through and wiped it out,
and it was one of those things where obviously just
super sad and definitely felt awful for him. He knew
(15:56):
what he was getting into though, and he knew, Hey,
insurance costs down here are so expensive, I just have
to chance it. And the homeowners in certain parts of Florida,
certain wildfire prone parts of California, who are who have
enough money to back up the you know, to not
go bust in case of their home burning down or
(16:19):
you know, succumbing to a hurricane. They can, I think,
go without insurance. But again, you have to do it
in a really calculated way. And the vast majority of
people could not stomach that loss. And so you have
to stomach higher insurance costs to avoid the potential disastrous
cost of full replacement of that home that most people
(16:40):
cannot actually afford. R One tweet, one tweet can cause
a firestorm, and it can drive a new cycle, right
or one truth social post and I don't even know
if they're called tweets anymore, and I don't know if
truth social is actually social media network as much as
the personal, you know, microphone of the president. But what
in similar way, company can drive a narrative And we
(17:01):
saw that this past week actually as Campbell's Soup announced
that consumers are cooking at home again and in much
higher numbers. Basically they're saying we're cooking at home, kind
of like we were early in the pandemic days. Campbell's, yes,
they sell soup. But they sell other items too, so
they're not just saying, oh, we sold more Kansas soup.
So this is how we know this. They sell stuff
like pasta and crackers, and so they're saying, we sell
(17:23):
enough stuff in the grocery store aisle, and we saw
an uptick in sales. This makes us think that people
are cooking at home more, and I think there's probably
some truth to that, right, But I don't even know
if we can call this a meaningful trend, but I
will say this that it's a good reminder that cooking
at home saves you a ton of money. And the
Americans have historically spent more on food at home than
(17:47):
eating out, but that has shifted dramatically over the past decade.
We've all gotten so used to restaurant culture, to eating
out culture, that we're spending less time around our kitchen
and our stoves and around our tables at home, and
we're spending a good bit more now of our money
eating out than we are on groceries. And we've talked
(18:08):
about grocery inflation, but guess what, grocery The increased prices
of food has actually hit restaurants harder than it's hit
grocery stores. So every time you eat out, you're shelling
out a heck of a lot more money than you
are when you're eating at home. And everyone kind of
knows this, but when you put numbers to it, I
think it helps. A meal at home costs the average,
it's like four dollars a person on average, and a
(18:30):
meal out at a restaurant is like seventeen dollars a
person on average. Obviously, it varies wildly. You're going to
McDonald's versus a Michelin star restaurant, that depends right, but
somewhere in the middle, seventeen dollars on average per person.
That's just simply that means that the more you eat
at home, the more you're gonna save. And it makes
me think that I think the biggest cause of eating
(18:52):
out versus eating at home is that people haven't planned ahead.
And if you were to plan ahead a little bit
more like meal planning, batch cooking, thinking ahead on the weekends,
what are we going to cook and having everything on hand,
that can help you avoid those in a pinch a
let's just go get a pizza, let's just go get
fast food. And the other thing is is frozen foods.
(19:15):
So I think for us, like Costco, frozen foods can
be helpful in a pinch where we're like, what we
would have done because we didn't plan very well was
go out, But now we can throw in something that's frozen,
whether it's even like salmon and rice, right that, We'll
get the frozen salmon at Costco, and that's like a
decently healthy meal that we didn't necessarily have to plan
(19:37):
incredibly well for because life happens, right, So having those
frozen foods on hand, it has at least been helpful
to us. Trader Joe's is obviously another place where you
can get great frozen meals, So think about think about that,
because I love what Campbell's is saying, Hey, more people
are starting to eat at home again, but the trend
has gone so far in the other direction that even
(19:58):
this small correction it's just not enough. And if you
you know, with groceries being one of those top line
items in our budget, you could easily save. I think
something like if you were just to cut your eating
out in half from what it is currently the average person,
you would save something like seven thousand dollars a year,
and that is not chump change. That is that is
(20:19):
insane that you could save that much by that one
simple thing. Say I'm still gonna eat out, I'm just
gonna make it more rare. I'm just gonna do it
half as much as I'm doing now, and then that
would make that big of a dent. I just mentioned Costco.
If it weren't enough of a reason to be a
Costco member, there's so many reasons I not to. You know,
Costco doesn't pay to advertise on this podcast, but I
will advertise for them just because I think they're such
(20:40):
a good company and they can save you so much money. Matt,
he's a big Aldi fan, but he's not here to
defend Aldie today, so I can just talk great about
Costco right without hearing him chime in and be like, oh,
he's voter. But the Costco actually just announced that they're
going to be offering extra perks for executive members. And
the executive membership is one hundred and thirty dollars, And
some people say, well, that's why don't I just get
(21:01):
the regular Cosco membership it's half the price. Well, if
you're an executive member. Now there are additional reasons to
consider it or to enjoy it, and then if you
haven't become an executive member, there are additional reasons to
consider it. They're going to open up the warehouse an
hour early for executive members, starting at nine am, starting
June thirtieth. They're also going to stay open an extra
(21:22):
hour on Saturdays until seven pm, but only for executive members.
So if you get the basic membership, sorry, you don't
get in during those hours. I believe that's kind of
a riff on Sam's Club. I believe they do something
very similar. Another thing, if you like Costco Same Day,
and I've talked about this, when you can get the
discounted Instacart gift cards, which they're not selling at Costco
(21:42):
anymore right now, sadly, but I found some on Amazon
just just earlier this week, ten dollars off per one
hundred dollars gift card, so I stocked up with as
many as I could. But if you like Costco Same Day,
which is fulfilled through Instacart, you'll get a monthly ten
dollars for free on orders of one hundred and fifty
dollars or more, which is just another perk when you
think about that, that's one hundred and twenty dollars over
(22:03):
the course of the year. And again if you have
the discount gift cards, then it can make financial sense.
But the executive membership is essentially paying for itself. And
the other thing. The other thing about the executive membership,
I tell people who always go with the executive membership
and not with the basic because you can get a
refund of the difference in price if you end up
(22:24):
not getting enough benefit from that executive membership over the year.
So if you're like, Okay, I'll try it, but I
don't know if I spend enough money there, well you
can go up to the front desk at Costco and say, hey,
I got the executive membership. My savings were like twenty bucks.
It wasn't good enough, and they'll say, oh cool, we'll
just give you the difference, the forty five dollars difference
(22:44):
or whatever it was between the basic membership and the
executive membership. Here you go. And so that is the
guarantee that Costco has, which just means like, especially now,
everybody should be an executive member. All right, We've got
more to get to on this episode, including what if
was an investor, how would that work out. We'll talk
about that, and I might throw some shade at the
(23:05):
cyber truck for a second too. We'll get to all
that and more. Right after this, I went back from
the break of course, got to get to the ludicrous
headline of the week. This one comes from a website
called Alpha Architect, and the headline reads, even God would
(23:28):
get fired as an active investor. And this is one
of the best headlines I've seen in a while. And
it's just kind of ludicrous to think that the creator
of the universe would not be able to make it
as an active investor. In this article did a really
good job setting up why and then talking about just
how even if you had perfect foreknowledge you as an investor,
(23:50):
you wouldn't ultimately be able to make it. The people
who you're investing on behalf of would be so mad
at the drawdowns that they experienced during the multuous months
that they would fire you. And so the gist was
that even with like practic perfect foresight, that active investors
are going to get fired before their strategy is allowed
(24:11):
to play out. There saying no, no, no stick with me
this company. It's I know that the draw down is
significant right now, but if you just hang on for
the ride, I promise like we're going to have a
comeback and we're all going to make money. Well, the
truth is, when you own the best performing stocks over time,
still individual stocks, those draw downs can be so gut
(24:33):
wrenching over months or even years that even if you
had the conviction to stay the course, your clients as
an investor would be like, sorry, dude, I'm not hanging
with you. My portfolio is down to seventy five percent
in the last twelve months and that so even if
you knew ahead of time, you would have to be
(24:53):
incredibly convincing to get people to stick with you during
those times of greater volatile And I think as individuals, right,
if we had perfect foresight, we would say, I'm okay
with greater levels of volatility if I know that at
some point it's going to pay off in the long run.
But as people who are investing our money with somebody
(25:17):
who's making the calls on our behalf, we wouldn't be
right because we don't have that perfect foreknowledge. They're trying
to tell us that they do. And this is honestly
kind of how some parts of the investing world function
you're believing somebody else's conviction, but those people don't have
perfect foreknowledge, and which means that their outcomes are even worse.
(25:39):
But it was just fascinating to see that even if
you did, even if you knew which stocks were going
to be big, those drawdowns would be so significant that
people wouldn't be able to stomach them. And very few
people have the conviction to hold on during the toughest
of times. I think about just a stock recently where
there's this company called Carvana and they're trying to which
(26:00):
we've talked about on the show, for selling your car
to them or buying a used car, and their stock
price just got torched last year, and it looked like
Carvana might go away altogether. And even though they'd created
this inventive new business model, Carvana stock got obliterated so
hard and a lot of people thought it wasn't going
(26:21):
to be around, and if it hadn't stuck around, investors
would have been wiped out. And then you think about
what's actually happened with the turnaround of Carvana and their
stock price zooming. But did people have the conviction to
be able to hold on during those most tumultuous times.
Some investors did and they raped their rewards, but a
lot of other people got out because the drawdoun in
(26:45):
the stock price is really tough to stomach. And this
is just another pro I think in the index investing camp,
the drawdowns are less severe. And you might say, well,
I think I can pick the winners. But the truth
is one, can you? And then two? Even if you
pick a winner, can you stick with that winner even
when the going is tough? A La Carvana or a
(27:06):
Lah Think about Apple. There have been times where Apple
is a company was it looked like they were almost dead.
They recovered from the verge of bankruptcy back in those
early Steve Job day Steve Jobs days. And so are
you the kind of person that has the conviction that
that stock is worth holding on to for the long term.
(27:27):
I don't know about you, but I don't know that
I have the time the intelligence to study companies enough
to have that sort of conviction that I'm willing to
hold on through thick and thin in order to attempt
to experience those greater levels of returns. Fifty four percent
of stocks, by the way, never recover after experiencing a
(27:48):
ninety percent draw down. So and by the way, you
could get even more risky by investing in leveraged funds,
which are becoming more widely available inside of retirement accounts
or are set to become available inside of retirement accounts soon.
The thought I think behind these leveraged funds is that
you can Hey, you can finance a vehicle, you can
(28:08):
finance your education, you can find it's a home. Why
not use debt to increase what you're able to buy
investment wise too, And this has always been if you're
a real estate investor, if you've heard us talk about
real estate investing, it's always been a big part of
what makes real estate investing in particular attractive because if
it weren't for leverage, almost nobody would want to participate
(28:31):
in real estate investing. The returns just wouldn't be as robust.
There's something about putting ten percent down or twenty percent
down on a property and saying I don't have to
actually have the cash to buy the whole thing up front.
That juice is your returns, right, especially if you have
a locked in low interest rate, It can make the
(28:51):
investment look a whole lot more attractive, and the problem
here though, is greater potential reward equals greater risks. Leverage
is something that can either make you look smarter, it
can make you look really stupid. And if the market
goes through an extended tough time, investors who are putting
money into these leverage funds they could be wiped out.
(29:12):
I'm not against all forms of debt. We talk about
smart forms of debt on the show, that there are
some kinds of debt that, in proportion used wisely, in intelligence, intelligently,
and not overdone, can actually help your ultimate wealth building goals.
Smart use of leverage can benefit what I would call
(29:34):
shrewd investors, because we see what happened in two thousand
and eight, right, Unwise investors who took on too much debt,
who bit off more than they could chew, found themselves
between a rock and a hard place. But investing in
these sorts of leverage funds it's a little too risky
for my blood as well. I'd avoid them again, stick
to regular old index funds because the only certain thing
(29:55):
about these leveraged funds is the extra fees they assess
because of the ad complexity that they are putting into
your portfolio. So if you see these leverage funds, Yeah,
they're a way that you could potentially increase your earnings,
but you're taking on more risk and I just don't
think it makes sense. But even worse than leverage funds
would be investing in memes, and that is of course becoming.
(30:18):
It has became more common during the crypto heyday and
the n f T the NFT invasion that we experienced.
But you can now or very soon buy n f
ts in e F T ETF format in an exchange
traded fund. So there was there is a new ETF
that is set to launch that you know, and it
(30:39):
is passing the regulatory hurdles as we speak. And you
might have thought NFTs were dead, that pictures of board
apes and stuff they were talking about them on all
the nighttime comedy shows, that those were gone for good,
but they're not. And now there is a something you
can invest in, the n f T s, the an
n f T ETF that that invests essentially in this
(31:01):
Pudgy Penguin project Pudgy Penguins, which sounds I don't know,
exciting and cutting edge, right, I'm kidding, I'm joking, of
course not it's it's I think, a great way to
lose your money quickly if you're if you're interested in that.
I went to the website because I was just so curious. Okay,
what is the Pudgy Penguins NFT project all about? And
(31:26):
they use some of the new techno jargon, of course.
On their website they say that they're here to well
and they also use some goofy language to proliferate the
penguin memetic culture not like like meme culture and good vibes.
And they're also fostering creativity, community and freedom. I don't
know how Pudgy Penguins is fostering community and freedom creativity.
(31:47):
Maybe it's the kind of cute penguins. But yeah. You
can also go to their website and you can buy
ridiculously expensive merch Maybe that's how they're hoping to make
money here. And maybe I'm not online enough, but this
this is just another investment I'm completely avoiding. I think
we did greatly disparaged NFTs back in the day, and
I still feel the exact same way. Let's learn from
(32:11):
the fact that bored apes are worth a fraction of
what they used to be, the fact that NFTs are
on the comeback, and potentially you can invest in them
in an even simpler form, publicly traded ETFs. I don't
think of that as a good thing, and yeah, I
would just do it at your own peril. NFTs still
make so little sense to me. I would rather own
(32:34):
real art that I can hang on my walls than
a jpeg that is mine but that can be copy
and pasted. It still just baffles me that this is
a segment of the market. But I think for most
people who enter into it, you're going to lose money,
and it's just the rare person who times it properly
who makes money. All right, Depreciating assets are once again
(32:54):
flipping the script. They're going up in value. Supply chain
issues during COVID led to a situation where people were
seeing their used car increase in value. It was a
rare phenomenon. It was interesting to document on the show
because it's something we don't see, Like we always talked
about cars as depreciating assets. Hey, that thing is going
to go down in value, And just for a hot
(33:15):
minute there it was like, wait a second, your used
car is actually it's worth more today than it was yesterday.
And an even more rare feet. There were people who
leased cars and then if they bought it out after
the lease was up, they were able to make money
too because there was a spread on what they had
to pay for And typically this is almost never the case,
(33:35):
right when those contracts are written that you can buy
the car and then it's actually worth more than what
you have to pay to the dealership to buy the
car then, and so people would instead of just turning
the car over, if they would say, wait a second,
I can pay fifteen thousand dollars for this car, but
it's actually worth nineteen or twenty thousand, So yeah, I'll
(33:58):
take it, even if I don't plan on keeping it.
I'll and I'll make the difference. So that was really interesting.
But we're seeing maybe signs that this is coming about again,
that the used car market it's getting tighter because of tariffs,
and demand for used cars seems to be going up,
Supply seems to be dwindling, and then prices seem to
(34:18):
be rising again. How long this is going to last
depends on a number of factors, including tariff policy, which
as we all know, has been very very whiplashy, very
back and forth. You know where tariffs land or if
they land is anybody's guess. And I don't even know
if the person in charge of tariff policy really knows
(34:38):
where things are going to land right now. And so
I think this is just another another reason to hold
onto your used car longer and to feel comfortable putting
money into it within reason. There're obviously like rules of
thumb of when hey, my car needs seven thousand dollars
worth of work and it's worth five thousand dollars. Yeah,
I'm not putting that money into it, but it makes
I've been thinking about my five VAC. It's summer right
(35:01):
now and the AC doesn't work, and I've just been
sweating it out like an idiot, and I've finally come
to the conclusion, you know what, this is a good car.
I'm gonna put some money into it. I've kind of
been holding out and not putting money into it in
hopes that I would at some point just ditch it.
And I'm like, you know what, Now I think I'm
going to hold onto this thing longer. I'm going to
put in the money that it needs to keep this
(35:21):
thing around. And I do think for you know, it's
a twenty year old car. I do think for a
lot of people that is a wise move. Part of
the reason I love used car so much and I
love holding onto car so long, is because it's such
a significant part of most people's budgets, and I love
making it a really insignificant part of my budget so
I can spend more on stuff I care about more.
And one of the other main reasons that I just
(35:44):
hate new cars it's really hard for me to stomach
buying a new car is because they tend to depreciate
in value, so dann quickly. And this is a great
time for me to talk trash about the cyber truck.
And not because I have a debta against Elon or
anything like that. It's not just a political thing. But
(36:05):
and obviously, you know, Elon has found himself in some
the political fray, largely of his own making. He seems
to have annoyed everyone from every side at this point.
But the value of the cyber truck has plummeted far
more than the average new car that gets sold. Apparently,
cyber truck prices are down something like forty percent just
a year after being in customer hands. And this was
(36:29):
this is like a far cry from even just the
normal depreciation that a new car typically experiences of twenty percent,
that's still a lot right to buy let's say a
fifty thousand dollars car and for it to be worth
forty thousand dollars a year later. That's a lot of
money to lose in just a short period of time.
But if you bought the one hundred thousand dollars cyber
truck and it's now worth sixty two thousand dollars just
(36:51):
a year later, you just burned a whole pile of cash.
And so that has been fascinating to watch. And I
think this is oh. I think it's particularly true of
the cyber truck, but I think it's also true of
brand new models that it's hard to know what the
customer demand is going to be and whether or not
they're going to retain their value. In the same way,
(37:13):
depreciation is something that we all face as car owners.
The car, at least in normal times, the car is
not going up in value, but the ownership timeline and
holding on to it longer it can help kind of
cover up for some of those depreciation flaws. And the
other thing that helps is to just buy older cars
that are in good condition and hold on to them longer,
(37:35):
because if you buy a car that's at least five
years old and you hold on to it for five
or ten years, the longer you hold onto that car,
you're paying. You're buying someone else's depreciating asset, and it's
going to appreciate a heck of a lot less during
the time that you own it. And the thing is,
if you're smart about getting your car checked out, and
you're smart about looking at places like Consumer Reports for
(37:56):
aliability ratings, you can hone in on cars that are
going to be more reliable over time, that are going
to be a better bet. Buying a five year old
car doesn't mean buying even a ten or fifteen year
old car doesn't mean you're doomed to be in the
repair shop all the time if you buy smartly, and
if you need one more reason not to buy a
(38:16):
new car, I was just talking to a friend the
other day. Financing terms are getting worse, and my friend
was saying he was being pushed into an eight year
car loan and he was like, but I wanted to
do a six year car loan. But if I do eight,
can I pay it off more? Quickly, and I was
telling him about my four year rule that you don't
ever want to finance a car more than four years.
I don't know if he listened or not. And that's
(38:36):
really up to you as an individual. But if you
want to, my advice is to not buy a car
that you can't afford to buy in cash, and if
you absolutely do have to finance it thirty six to
forty eight months at absolute most, and get that loan
from a credit union. And I know cars can be
like a status symbol in this country, but that's not
(38:57):
something I buy into and I think of it. It
does a point A to point B transportation, and if
you want to think of it as a status symbol,
that's fine, but only by it if you can actually
afford it, and if you have to finance it over
a long period of time, you can't afford it all right. Last,
but not least, the SmartLess Guys, the guys from the
SmartLess podcast, Jason Bateman, Will Arnett and Sean Hayes, they're
(39:18):
launching their own cell phone service. I haven't seen all
the details, but it's just funny because I think celebrities
the two things they love to launch now it seems
like our smartphone plans and tequila lines. But this is
a straight up Ryan Reynolds invitation. The dude who invested
massive amount in Mint Mobile and then finally sold Mint
Mobile to T Mobile after gaining a lot of subscribers
(39:41):
and increasing the value. This seems like it might be
another good option. I'm all for competition in this space,
but Mint and US Mobile are still two of my
absolute favorites. For saving money, you could save a ridiculous
amount of money by going with the MV and O
Carrios carriers mobile virtual network operators. And yeah, if you're
(40:01):
with one of the big companies, you're probably paying too much.
So just a reminder, and maybe the SmartLess plan is
going to be awesome and take the cake. I'll wait
till they have a website up and more details on
how much these plans cost. But always going to have
more competition in a space that's already seen prices drop dramatically.
All right, that's going to do it for this episode.
(40:22):
I can't wait to have my best friend back in
the near future. But I hope you have a great
weekend and I'll see you back here on Monday for
a brand new episode Audio's best friend out
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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