September 22, 2023 • 36 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: silly celly carrier promos, total cost of iPhone ownership, ACH autopay tradeoffs, super off peak EV incentives, the best month to buy a home, fund fee battles, the shockingly simple math of compounding returns, financially illiterate kids, rewards deficiency syndrome, & short lived highs from stuff vs enduring fulfillment from relationships.
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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 Matt, and
today we're talking ev incentives, fund fee battles, and reward
deficiency syndrome. Yeah, we're gonna get all medical and start
(00:30):
diagnosing people with that reward deficiency syndrome. No, we are
not going to do that, but we will get to
that story because we like to talk about money from
all the different angles. And that's a part of why
we love our Friday flights is we not only cover
all the different angles that you can talk about it,
we talk about some of the different stories that we've
come across. This past week, I watched a lot of
(00:51):
Doogie Houser back in my day. I feel like I
could do some medical analysis. You a doctor. I stayed
at a holiday and last night, okay, well hey real quick,
let's mention. Last Friday we had our first how the
Money listener hang in forever. I mean it's been a while,
a couple of years, I guess, since we had, like
you say, crawled out of our hermitshells. It was awesome.
(01:12):
It was so fun to meet so many different listeners
out at InterVoice, the Beer Pizza, local brewery. Such great beers,
such great pizza and even better, even better folks that
we got to meet. Man. Yeah, one listener Victoria, she
just paid off her student loans. It was teen k.
They were celebrating. The next day they're going to have
(01:33):
like a little party. Some friends are going to come
over and play games, which, by the way, is totally
my style of party. Yeah. No, so many great listeners.
Met listener Nick, who is just moved here to Atlanta.
Oh who, By the way, can I just say he
what a cool dude. He started listening since episode two
when he started school and he graduated and now the
guys just falling, so he had the best story. He's like, literally,
(01:54):
I was driving Tobama and pulled up episode two and
I've been listening to you guys, yeah since And he's
not only finish undergrad, he's got his NBA. Super cool.
And by the way, Nick was literally the first dude there,
and we forgot to grab our socks. So Nick, if
you're listening, yes, everybody else, not everybody else, but a
lot of other folks got socks, but you were literally
the first guy there. If you're listening to this, hit
(02:17):
us up. We want to send you a pair of socks. Well,
and just want to mention so it is really really,
really fun for us to get to enjoy We get
to enjoy meeting other listeners, but it's really fun to
watch the listeners interact and enjoy one another too. So
that was kind of cool. And I just want to
heads up to We're gonna hopefully do more of these
hangs in other cities in the future, And in fact,
we have one on the docket for the calendar baby
(02:37):
in New Orleans October nineteenth. Matt and I are going
to be down there, so we will post details shortly,
but New Orleans, October nineteenth at Courtyard Brewing, planning to
be there that evening. So if you live in or
around there anywhere in Louisiana, like just come state of Yeah,
come over to New Orleans, come hang with us. Yeah,
but we'll be there for fin Con, so there's a
(02:58):
chance we'll have some of our other personal finance buddies
there with us. Well, maybe some other folks that you
either read or keep up with, which just reminds me
how great it is and it's like, we need to
do more of this, so we're gonna man trying to
make it a priority. But yeah, it's a ton of fun.
We appreciate all the folks who came out last Friday,
but Jill, like I mentioned, this is the Friday flight.
And actually, speaking of last week, we actually we crapped
(03:20):
on all the new iPhones a little bit last week.
Twelve hundred dollars, right, that's the new Titanium model. It's
a lot of money. The other iterations were kind of minimal,
and so we think and an upgrade, it doesn't make
a whole lot of sense. Even if you do have
an older phone, consider getting an older one. Not the
brand news distincing brand new ones. But one thing that
(03:41):
we didn't really discuss was the different carrier promotions that
are happening right now where they're trying to entice you
with a free or at least massively disco discounted new iPhone.
But are you really getting something for nothing? No, not really.
The whole goal, obviously is to keep you locked into
a more expensive phone plan, to keep you tethered to
(04:01):
that company that you are currently with. And we have
seen the space the industry change over the years. The contracts,
they don't exist in the same way that they used to,
where you literally can't switch where you were locked in.
Those were the worst days of the cell phone industry
when it was like to your contracts, to the dark
ages of cell phones. And now like you still yeah,
like you said, you're kind of tethered, but not in
(04:22):
nearly the same way. Yeah, it's like basically, the way
that you're getting those discounts, the way that you're getting
that money off, is that you have to stick with
them because those those trade and deals, they're paid out
in monthly installments as opposed to kind of like an
upfront sort of lump sum. And so you're still again, yeah,
you're just you're it's like a loose tethering. It's like
you could leave, but oh, you're gonna You're gonna owe
(04:44):
us the difference. So and obviously these are folks that
probably aren't gonna be willing to do that, and so
instead you're stuck paying those higher monthly rates. And that's
not how we want you to approach your cell phone. Yeah,
they they don't want you, these big companies, they don't
want you looking in the direction of the discounters like Mint, Visible,
Google five, which are three of our favorites. Right, it's
like this Jedi mind trick and their marketing is all
about getting you to like, not see the discount cell
(05:07):
phone plans that exist out there in the ether, stay
focused on us, and so the big thing to look
at though, just like with the purchase of a car,
is the total cost of ownership. Right these big wireless companies,
they are not giving away free iPhones like candy out
of the goodness of their heart. And in fact, they're
not giving away free iPhones despite what their marketing looks like.
These are capitalist enterprises and their marketing is geared towards
(05:29):
folks who want the newest phone but can't fathom the
idea of coming up with twelve hundred bucks for it
in one fell swoop. And so if you're thinking about
the total out of pocket cost, you're gonna face something
like a fifteen dollars month cell phone plan and paying
full price for a new or preferably for an older model.
Like you said, Matt is going to be your best
money saving bet. And by the way, we'll link to
this in the show notes. But whilet hub just released
(05:50):
some really helpful stats and this calculator, so you can
kind of see, well, if I do want to get
the newest phone, where am I going to be able
to get that and service at the cheapest rate? I
don't think they included actually a couple of our favorite
cell phone providers in their calculations, but they did talk
about how a lot of the discount providers are going
to save you a lot more over, some of these
(06:11):
these major cell phone plans that do you know, all
the advertising on the NFL games and the Major League
Baseball games and stuff like that, you're going to be
inundated with them if you watch TV, if you watch sports.
But sure, I mean, and more than anything, what the
calculator does, it just helps you to see what the
actual costs are. And folks aren't taking the time even
like sit down at Google sheets or pull up a
spreadsheet and punch it like you can do it yourself
(06:31):
if you wanted to, Like you can just scribble it
out on a piece of paper and you can quickly
do the math. But we don't. A lot of folks
don't do that. They aren't going through the additional step
to say and to ask themselves how much is this
actually costing me? Additional in a lot of cases, especially
if you're looking at some of the pricier plans, versus
the most affordable plans, you are very likely going to
(06:55):
be saving hundreds and hundreds of dollars, if not thousands,
especially if a lot of those family plans. That's what
all at Heub found out was you might be saving
thousands over it to year period. It's insane. So on
that note, the big wireless companies that are also begging
you to pay with a debit card or via ach
instead of with a credit card, because we've talked about this,
but the duopoly of Visa MasterCard, they are continuing to
(07:19):
raise their transaction fees and so of course it's not
only impacting smaller businesses, which is oftentimes the context that
we will discuss on the show here, but it is
taking a pretty big bite out of their bottom lines
as well. We talked about how listener Tyler he's able
to get around this is sort of like a hack
that he's doing. So he's got t mobile, he schedules
his payment via debit card, right, so he's got his
(07:40):
information on there. But then he goes in manually he
pays with his credit card, and so that gives him
the best of both worlds. Right, He's got the extra
discount for having scheduled the payment in advanced, but then
he also has the protection and the rewards of using
a credit card. He's got that cell phone insurance, the
additional points and rewards. So I'm not sure if Verizon
in eighteen TI are doing the same thing. Not even
(08:00):
sure how much longer T Mobile is going to allow
this right to fly. But the worst way to pay
them is via an AH transfer. And that's because if
there is a problem with the amount that's taken out
of your account, well you've got to actually claw to
get your money back, because it's not the future promise
of money that you'll pay like with a credit card.
They've literally taken money out of your account. And yes,
(08:20):
there are protections and procedures, but it's just better to
not be out the money in the first place. So
it's going to come down to the individual to figure
out whether or it's it's going to be worth it
to get that extra monthly discount. We think it probably
is often, you know, because if you're saving five bucks,
and even if let's just say you have an expensive
cel phone plan at one hundred bucks, if you're paying
(08:41):
if you're saving five dollars, that's five percent that's pretty sweet.
But simultaneously, just know that you're not getting the same
protections and benefits that you would get with a credit card.
And that's that's just assuming just a basic cash back.
There are a lot of cards out there that have
really sweet welcome offers. Like on personal cards, you are
looking at at least getting five hundred bucks, But if
(09:01):
you happen to have a little side hustle and you're
able to get a business card, you're looking at one
thousand dollars of just straight cash back. That's not even
considering using those points towards something like travel, which acts
as a multiplier on top of that. So just something
to keep in mind. Yeah, how you pay matters, certain protections, rewards,
all that kind of stuff. We talk about it all
the time. But you also have to be disciplined if
(09:21):
you're using a credit card, that's for sure. And Matt,
everything in life revolves around incentives, right, we talk about
that all the time. There are no solutions, there are
only trade offers, no perfect solutions. There are subpar solutions. Well,
even when you pick this one thing that's like, okay,
that's my solution, but you trade off other things by
going in that direction, Right, that's just kind of the
reality of life, and it's definitely the reality of economics
(09:44):
and which way of paying is the most comedian, that
comes with the most protections and offers the best rewards.
Which makes me think of a white paper I just
saw about charging electric vehicles. Right, this doesn't come as
much of a surprise to me, but EV owners, it
turns out they end up responding to financial incentive to
charge their vehicle at different times of day. For instance,
if charging becomes free or the cost is significantly reduced
(10:06):
after a certain point in the evening, folks will wait
to charge. And if there aren't any incentives, if there
is no reduction in the rate, they'll charge whenever they
darm well feel like it. So it is interesting, like
some electric companies are basically telling customers, if you have
an EV and you charge at this time of day,
you'll pay a reduced rate. Others are saying that it's
even free. Listener Greg actually, who was at the hang
(10:28):
on Friday, he was telling me about he gets to
charge for free after nine pm his Tesla. So yeah, well,
like up to a certain amount. And it's funny because
I actually looked that up because I was curious because
I knew we're going to talk about electricity, and I couldn't.
I don't know what his specific plan is, but I
remember him saying, it's like one of those conversation, you know,
it's a crowded bar, like a lot of folks are talking.
I'm like, did I actually did I hear you? Right?
(10:49):
But what I did find so like Georgia Power were
here where we live. They got the nights and weekends rate,
where basically they're charging you more right to run the
AC at peak times are offering a much more attractive
rate at other times of the day. They've got like
off peak hours, but they also have the only thing
I could find was super off peak And guess what
they're charging per kilowat hour three cents one cent? Oh wow? Yes,
(11:10):
which is twenty or twenty four times more affordable than
just the standard rake. Like could you that's mind blowing?
So even if you don't have a free option or
something like that, could you imagine there are lines wrapped around,
like into the parking lot at Costco just because gas
is like ten cents twenty cents cheaper. Could you imagine
(11:30):
if it was twenty four times more affordable. It's just
mind blowing to think that if you do have an
EV the ability to slightly change your behavior, how it
could lead to incredible savings. This is just one of
those ways where it just massively pays to be a contrarian,
honestly right and great and not do what other folks
are doing. If you opt for a plan like that,
(11:50):
I think it could save you a ton of money.
But you have to not just change often when you
charge your electric vehicle. You have to change when you
do other things too, Change when you run the washer
and the dryer and allow the house to get a
whole lot hotter right during that peak period of day
so that you're not running their conditioner NonStop like other
people are. So you have to be willing to change
other things too. But it can be worth the savings
(12:11):
because the savings can be significant, Like you're talking about
if you like twenty x all literally is like one
point something since per kill it's crazy, which I'm like, uh,
it starts making me think twice about the one vehicle
that we have. But then again, then I've got to
purchase a pretty expensive EV or sort of hybrid plug
in hybrid whatever but definitely something I'm going to be
(12:34):
considering lolling forward. And this isn't just Georgia power. It's
there's oh yeah, yeah, this happens across the nation. So
I guess it's just a call to listeners to say, hey,
wait a second, can I shift my energy usage? And
can I save actually a lot on my electricity bill
by choosing one of these off peak sort of plans
and then changing my behavior conventionally you might see, yeah,
I don't know, you might be able to see your
power bill cut in half by doing something like this, which, yeah,
(12:55):
which is awesome. And you're also not paying for something
like filling up at the gas station, yes every week. Like,
I think the larger lesson here is just find like
consider doing things a little bit differently, consider times that
other people like. It makes me think about we talked
about dynamic pricing for beer last week, right like when
all the other folks aren't going to the pub or
going to the bar. So, speaking of timing, the best
(13:17):
time to buy a home is is almost here. Evidently,
according to realtor dot com, the first week in October
is the best time to be making some offers on
a house certainly still the fraught time out there due
to the limited inventory due to high prices incredibly high
interest rates that are tough to stomach as well. But
this time in the fall is when the least amount
(13:39):
of buyers are actively looking, and there are actually more
active listings than usual, So it makes it a great
time for you to pounce if you are financially ready.
And so we'll see what actually happens in the housing market,
because will home prices go down further if you if
you wait longer, that's a that's a tough question. It's
anybody's guess. But the supply and demand and imbalance, it's
(14:01):
likely not going anywhere. Our advice it stands, right, It
continues to center around personal factors. You got to consider
your timeline, You got to figure out determine how much
money you've got actually saved up. You need to actually
run the numbers and to determine whether or not this
is going to make sense for you. But then, like
that's maybe even more the mathematical analytical side of things,
there's also just personal considerations, as in how badly do
(14:24):
you want to live in your own home to be
able to create memories there or maybe to get your
kid into a certain school district because that's where this
great school is, and that would actually allow you to
save money on private school. I guess that kind of
swings back to the money. The money's ane of things.
But just consider some of these different different factors. So
of sometimes no more than a third of your take
(14:45):
on pay should be you should be spent on housing.
That's kind of a typical rule of thumb. But that
being said, there are other considerations as well. It makes
me think like it allows you to diet your car payment. Yes, yeah,
think through transportation. But let's say I was thinking about
like a friend of ours recently went to New York
and she never travels. I was shocked to learn that
she's like in her mid to late forties, she had
(15:06):
never been to New York City before. She hates to travel.
I was like, how have you never been to New
York City ever in your entire life before? It is like,
I don't like to travel. If that's you. If you're
listening and you're like, oh, that's me. I'm a home buddy.
I don't I don't like to go out to eat,
I don't like to travel. That's an instance where your
personal considerations, what it is that you prefer might slightly
sway what you would be willing to spend on a house.
(15:28):
And I think in her case it actually does too
because they live in a pretty nice place, they want
to spend a little more on that, which she exactly
every teacher don't go overboard. If you drive a clunker
and you don't travel and you don't go out to yep,
you can afford to spend a little bit more in
your house. Well, it makes me think too, Matt, like
when look at the facts on the ground, too, writ
how badly you mentioned, how badly do you want to
own that home? Well, yeah, if you're like, yeah, I
guess home ownership would be great. And oh, Matt just
(15:50):
said Matt and Joel just said October, the first week
in October is the time to buy. But you're saving
so much money because rent is so much cheaper, which
is the case across most of the country. The despair
between the cost of a mortgage now and the cost
of that same house, but renting it is so significant
that renting makes a whole lot more financial sense for
a whole lot of people. So unless you're like, I
(16:13):
really want to own a home, and I'm mountains in
order to make this happen. Yeah, I'm willing to sacrifice
and lots of other areas of my life in order
to make that it's staying put and saving that spread
and funneling it towards better things like paying off debt,
saving and investing. That is probably the best way to go,
at least for the time being, for a whole lot
of people. But Matt, we've got more to get to
(16:33):
on this episode, and specifically, I want to let's talk
about mental health and how that can impact how much
progress you're able to make on your personal finance journey.
We'll talk about that and more right after this. All right, man,
we are back from the break. We've got more money
(16:55):
stories to get to, and of course it's time now
to get to our ludicrous headline up the week. This
one is from the Journal. The headline read, you might
be paying too much for that index fund. That's right, folks,
Not all index funds are created equal. Yeah, sometimes we
just say index funds the way to go. But this
is a good reminder that the mount of ones. Yeah there. Yeah,
(17:17):
And so the war on expense ratios continues. State Street
they just announced that it's S and P five hundred
fund expense ratio is being cut to point zero two percent,
and so what's important to keep in mind, Vanguards is
point zero three percent. So they kind of cave in
and shots fired a little bit of a slap in
(17:38):
the face to the big, the big behemoth. But still, well,
I guess State Street they're they're pretty huge as well. Yeah,
but when we're talking about like that small of a difference,
there's no need to shake things up. If you're happy
with Vaneguard, don't see State Street and be like, oh
I gotta, I gotta get over there, got to move
all my accounts to right right. Yeah. But these these
falling fund fees, they have been a to win four
(18:00):
investors over the past couple of decades, right like, over
the course of years. Just as the weighted average fee
that investors pay based on where their assets are socked away,
it's actually down to point one point seven percent, which
is a far cry from where it used to be.
And so just we wanted to mention this because we
want you to be careful and pay attention to the
fees that you're paying. For sure, they definitely add up
(18:22):
just an increase from a point zero five percent to
point five to five percent doesn't seem that big, but
that could cost you almost a quarter of a million
dollars over the decades. That is quite a bit of money.
And so even though this particular fee, the change that
we're seeing is not that significant, it all comes down
to who you're with, to be honest, it does. Yeah, yeah, exactly.
(18:42):
Not all index funds are created equal. Depending on where
you go, it depends on the kind of fee that
you're going to pay. You don't have full control over this.
Inside of like let's say a workplace sponsored account, right,
your four oh one K or your four h three
B or something in particular, A lot of those four
or three b's you might be paying higher fees than
you'd like to, but that might be the price you
gotta pay to get that match, yes, to get a match.
(19:03):
But the inside of your own IRA or roth IRA, right,
you have the ability to choose the specific provider yourself,
and you can prioritize the one that comes with the
lowest possible fees. And so you know or at least
the average of the lowest possible fees. And that's why
we always Mention, Fidelity, Vanguard, Schwap, those are three of
the best. The truth is paying an extra point zero
(19:24):
one percent is not going to kill you, right. It's
kind of like, how, yeah, it's probably not worth changing
banks to go from four and a half to four
point seventy five on your highield savings account, but it
is worth ditching one of the big banks that pay
zero point one percent on savings in favor of any
highyield savings account that pays in the mid single digits.
And so I don't know, the folks that stay with
(19:45):
the high fee providers or with the big banks who
don't pay anything on savings, those are the ones who
end up missing out big lee. I'll say, it's like,
it doesn't matter if you go from Vanguard point oh
three to State Street point oh two, But it does
matter if you're with someone who's charging you half a
percent and you go to Vanguard and you're down to
point zero three. That's just makes me think of like
the mat there were AOL customers for years still paying
(20:08):
fees there were, and are they still paying is we
talked about it wasn't all that long ago. We talked
about the number of folks who are still paying for AOL,
which is just crazy. I mean, those are the people
who are just leaking money every month. And we don't
want you to be one of those people leaking money
every month because you're not making it that one big move. Yeah,
it's a pain in the butt, but it's worth it
if you're with one of the high few providers, that's right. Okay,
(20:29):
So since we're talking about investing, let's ask the question
when should you start saving for retirement? And the truth
is the earlier the better, And so this is rare
as all get out, but starting to save for retirement
in your team, we're speaking in the newborns here right
as you. Yeah, like literally, I mean seriously, the earlier
the better. But it would give you a massive leg up.
It would allow you to save a smaller percentage of
(20:51):
your income over the years because the dollars that you
saved early on they are working hard on your behalf.
If you don't start investing until you reach middle age,
like you've got your work cut out for you, you're
going to end up paying a significantly higher portion of
your investment dollars are going to be from you as
opposed to your money having multiplied and done. All that
work for you. If you want to retire on time,
(21:13):
you are just required to stock away so much higher
a percentage of your paycheck if you want to retire
with the same amount of money, whereas if you start earlier,
you can just sock away so much less. Really, that's right,
and the wroth part is key. Right. This is a
part of why we love roth irays because you're paying
tax on those earnings during years when you aren't making
(21:34):
much money at all. You are most likely going to
be in the absolute lowest tax bracket, and you're avoiding
taxation on the growth of that account forever. You never
have to worry about taxes ever again. And roth iray
funds they won't typically impact the kid's ability to score
financial aid for college either, so that's another big win.
But I'm going to give a little example here, and
(21:54):
I'm sure folks have heard something similar to this, but
just to put into perspective how big of an impact
this can make. Imagine you've got an entrepreneurial fourteen year old, right,
and let's say they start maxing out that roth ira Fully,
we're talking sixty five hundred bucks, Like that's a lot
of money. But let's imagine though, that they do that
for six solid years. They do that until they're twenty
(22:17):
years old, that amount will have grown with their contributions
and know, you get a little bit of growth to
fifty eight thousand dollars respectable. Right, Like, it's not a
life changing amount of money, but it is when you
consider the fact that we're that kid to leave that
money untouched from age twenty until sixty right until retirement
age literally not having contributed another single dollar. Right, maybe
(22:38):
they're like, Okay, I'm done with my money, nerdery, I've
got other things I'm interested in to go so my
while though it's yeah, so end everything I aron. So literally,
were they to not contribute a single dollar at the
age of sixty, they would have around one point two
million dollars, right, So that's that's case A case B.
Imagine a typical twenty five year old and they hear, oh,
(22:58):
you need to start investing, okay, And honestly, even twenty
five investing at the age of twenty five is still young.
It's still pretty early. But let's say they start maxing
out there roth Ira as well, sixty five hundred dollars
a year, and they're gonna continue to do that until
they hit retirement, until age sixty, they're gonna do that
for another thirty five years. They will still have never
caught up to the amount of money that that fourteen
(23:20):
year old has and their retirement. It's crazy and that insane.
There's just a golf, a massive chasm of difference between
the amount of money of their own money that that
fourteen year old put in versus the amount of money
that that later investor has put in like clockwork until
they decide to retire. It's even worse if you don't
start investing until you're forty forty five or fifty or
something like that, and the amount required, like I said,
(23:41):
to catch up and to feel like you're actually prepared
for retirement becomes just almost impossible to pull off for
most people. And not to mention just kind of the
habit that you developed starting early manutes, it's pretty rare
that you would actually invest sixty five hundred bucks a
year from fourteen to twenty and then never do it.
They just stop, Yeah, that's not likely going to have
and so just imagine the kind of well, and this
(24:02):
isn't to say that you got to forsake any other
interests that you might have. But just imagine the kind
of wealth that you're going to have. You're gonna be
able to retire quite comfortable. Yes, And so just incentivizing
just helping your teenager maybe think through that and get started,
even if it's not like maxing out roth every year,
but you're like, listen, even five hundred bucks into this
(24:22):
account is going to be life changing for you. And
in one great way to kind of help them do
this is the mom or dad match. It's to incentivize
good behavior while also summon think some really important money knowledge.
And there was a recent survey mat which found that
more than a third of parents they don't believe that
their child understands the value of a dollar. And this
is just such a great way of connecting the dots
because you know, one other concerning thing from that study
(24:45):
is that adults think that money habits really begin to
form at age fifteen, which is which is not true.
They formed start form so much earlier, right, Those beliefs
and habits begin really in early elementary school, if not
even a bit earlier than that. And so if we
wait to have money conversations with our kids until they're fifteen.
We've missed a lot of ripe opportunities for discussion. And
(25:06):
then you know, making money a relevant topic regularly in
the home, finding ways to help your kids just talk
about it. Earn, Yeah, you help them find ways to
earn more, to save, to spend wisely, even in those
elementary school years, even when they're first grade, second grade.
That's really important and that's going to help them then
as opposed to being like, hey, it's fifteen, it's time
to open your roth Ira and they're like, what are
you talking about? We haven't talked about money my whole life,
(25:28):
and now you want to Now you want to talk
and I think sixty five hundred dollars, what do you talk?
That's crazy talking, right, And I mean it is if
you've literally never talked about it before. And let's say
you literally have a fifteen year old and you've never
had that conversation. It's okay to start today, but it's
also better to start earlier. And then that makes that
roth Ira conversation in age fourteen, fifteen, sixteen a little
(25:48):
more palatable. Yeah, add that to you to do list.
Got the birds and the beast talk. But then you
got the money talks, that's right. But I think that's
also it doesn't need to be this big, giant sit
down sort of thing. Ye right, They need to be
the regular conversation, yeah, where we talk about money here
and there, all over the place, because it is something
that impacts your life, my life every single day and
(26:10):
everybody out there listening. And so just let your kids
in on some of those combos. Just don't make it
this like taboo topic that doesn't get brought up, or yeah,
talk about at the dinner table. Sometimes. Hey, our vacation
does not have to be a big deal. It could
be something that you lightly touch on here and there,
talk about the trade off while you're at the grocery
store perhaps, like this is why we get the this
is why we go to all d right the public,
(26:32):
this is why we don't get the name brand serial kids,
and we're getting bananas and peanut butter instead. Well, and
because of the nutrition you actually get out of bananas
and peanut butter, Yeah, empty, weedy whatever, filled sugar laden cereal.
By the way, while parents can help instill good money
knowledge and good habits at a young age, well, most
folks are left to fend for themselves, and it's important
(26:56):
to mention that sometimes your money issues run deeper than
allow lack of disciplines. Obviously there's sometimes a lack of
knowledge if it was never talked about, but for others,
there are other obstacles that are maybe a little more
difficult to overcome. The Times they had an interesting article
about women with ADHD and how that can actually impact
their ability to make financial progress. It's interesting actually how
(27:19):
they talked about. Oftentimes, boys they get diagnosed fairly early
on because of just the behavioral tendencies and the symptoms
that are shown. But girls oftentimes can fall through the cracks.
It often expresses itself differently it does in boys. We
think that our eight year old probably has ADHD, although
we haven't gotten an official diagnosis. But I'm like, man,
I can see I can see it, but it looks
(27:42):
it just exhibits itself so much more. Obviously in boys,
we're not doctors, we're not psychiatrists. But yet folks with ADHD,
neurodivergent folks, they can have a tougher time managing their money.
So apparently folks who have ADHD can feel something called
This is what we led with at the very top
of the episode reward deficiency syndrome, which basically means it
(28:04):
can lead to higher levels of spending in order to
get a dopamine release. Where it is that you get
that initial dopamine release to begin with, Like, that's another conversation,
I guess, but oftentimes we are turning to spending, and
if you kind of have this deficiency syndrome, you're basically
you're spending even more in order to get that hit.
(28:24):
Evidently you can have the opposite effect as well. Sometimes
it causes folks to become so anxious that they avoid
spending as much as possible from a financial standpoint. Maybe
you're not in as bad of a situation, but maybe
you are still dealing with a similar level of unhealth. Again,
we're not doctors, but that makes said like, if you
feel like this is you maybe consider going to see
(28:44):
an actual doctor. I think just even having a diagnosis
can help a whole lot. I think talking to like
a therapist, they could help you to just understand what
it is that's going on. It could help you to
not only identify, but then even come up with a
plan to help you to avoid some of the tendencies
that you have that you might be drawn towards that
could be leading to financial instability. Yeah, and I think
(29:06):
you're right, Like getting a diagnosis, if you think that
might be you can be helpful because it can at
least help you see where things are stemming from. Right.
I think medication can sometimes be helpful. Cognitive behavioral therapy
is something else that can kind of help your brain rewire,
teach it new ways of thinking about stuff CBT. Yeah, exactly,
So I mean again, trying to change the CBT brand,
(29:27):
you know, make it cool again, Yeah, trying to make
it sound yeah, sound browie. I appreciate that well. I
think it's just one of those things where it probably
doesn't get talked enough about in the personal finance space
and it feels like it's just math or behavioral change.
And behavioral change can be more difficult for some than
others based on what's going on inside the brains, and
so it's just important to mention that not doctors, but man,
(29:50):
it can help if you're struggling to unearth maybe some
of that kind of stuff and not just assume that
you're the kind of person who can't do it. You
might have more opticles in your but it doesn't mean
you can't overcome them with a little bit of help.
And Matt, this might sound weird, but I think I
think loneliness can cause us to do weird things with
our money too. There's been a lot written about kind
(30:11):
of the epidemic of loneliness that we're experiencing in America
these days. Irl, stuff like that are how to money
hang that's becoming more and more rare, sadly. And when
you can buy whatever you want and have it delivered
in minutes or hours, yes, it can become easier to
hunker down and spend like a maniac. And so yeah, yeah,
I mean that's I think that's a part of like
what I was kind of hinting at before, like where
(30:31):
it is that you are receiving those highs, those dopamine releases. Yeah,
when you don't have individuals in your life to shoot
straight with you, you don't have anyone saying that like
hey man, maybe you shouldn't be buying that, or like
why are you getting another one of those? It seems
like this endless cycle because when you are purchasing something,
it's such a short lived dopamine release. It's not a
(30:52):
robust high right, as opposed to something that you are
able to, that's able to power you. It's sort of
like our when we're able to hang out with a
bunch of listeners and carry that on into the weekend
and beyond. Or at least there was like just a
bit more of a shame factor because even if you
didn't have a friend with you, you had to go
to the mall and the person or something like that.
(31:13):
Like there was some sort of in person feeling that
you can drive based on your spending, but not so
much anymore. You can just like literally do it from
the privacy of your own home. And so this is
how the Amazon man has turned into a drug dealer.
It's like deliver me in my fix. Yeah, that's kind
of what we're talking about pretty much. And so, like
Insider had an article about how Friends and Seinfeld, both
(31:33):
those shows were onto something back in the day with
the coffee shop and the diner kind of being places
to congregate and how it provided a lot of social stimulation,
necessary social stimulation. And we agree, right, there's been a
whole lot talked about in the personal finance space about
how buying coffee is like the worst thing you can
do for your money. But the truth is those little splurges. Yeah,
(31:54):
and if you do it every day, you gotta get
rid of it. You can add up, that's for sure.
But meeting a friend for a latte it might actually
able to help you reduce or a beer or beer
or beer it could help you reduce spending in other areas. Right.
If it means that, if that meaningful social interaction gives
you kind of the outlet you need that helps prevent
some of those other unhealthy spending outlets, I think it
(32:15):
can be a good thing. It's ok, Matt and I
I think we would suggest finding an inexpensive third place
that you hit up regularly. Right, it can be it's
good for your ability to build community, and it can
be good for your finances too. And it doesn't have
to necessarily involve spending money. Your third place can be
your local hiking trail, right. I mean, I'm spending a
lot more time online lately, and I run into the
same people and it's kind of fun. So it doesn't
(32:36):
have to be even buying a coffee, which is a
pretty cheap way to get that outlet. It can be
other things too. Yeah, I mean, I think it just
It just takes being vulnerable. It takes you going on
on a limb, because like what we're talking about here
is community and creating a sense of community, and that's
something that we've you know, you and I have talked
about this with our wives altogether, just how it's definitely
you know, we moved our families a year ago from
someplace that we had lived for over a decade to
(32:59):
a complete the new part of town where we didn't
know anybody, starting from scratch. Yeah, and I think what
we're what I'm realizing more and more is that it
just takes vulnerability. It takes going out on a tiny
not a tiny limit. It takes taking a tiny like
little leap of faith, essentially saying hi to somebody, introducing yourself.
And it's uncomfortable doing that because you don't have control
(33:19):
over the situation, like, oh, what if they don't reciprocate,
what if they don't respond to me? Or what you
hug and random people, but if they don't want to
talk to me, well, that's just the cost of creating community,
of trying to foster community. But I think that's that's
it's just what it takes. And oftentimes we're just in
our own worlds. Dude, we were talking about We're talking
to a Chick Filay owner and they were saying that
(33:41):
ninety over ninety percent of their business takes place in
the dry through. Yes, and that's I feel like that's
another example of an instance where we are trying to
be in control. The only relationship is transactional. You're just
getting your food, you're giving, you're paying for it, and
you miss those in person brushing of the shoulders, meeting somebody,
or seeing somebody you hadn't seen before, meeting somebody, hearing
something new. The ability to not control your life perfectly,
(34:05):
I think is actually a great way to ultimately lead
to happiness. And it just Yeah, that's why we love biking,
right because it gets you out of your car where
you're not completely insulated from your surroundings. You have more
of a chance to to actually talk to talk to people. Literally.
Yesterday I was biking home from work and it was
I was coming up on the path. My neighbor was
there and I hadn't talked to him in a couple months,
(34:27):
and I had my earbuds in I was I was
listening to a podcast. I was like, let me just
turn turn it off, pull up next to him, see
if he's willing to chat a little bit, And we
ended up talking for over thirty minutes. We went all
the way back back to the neighborhood. And that was like,
so that's an instance of not even having to pay
any money, but just being because I'm like, what if
he was on a call, or what if he was
(34:47):
listening to an audiobook that he was really interested in
and kind of shut me down. Okay, Like that's just
I guess a risk that I think we should all
be willing to take if, in particular, you are looking
for more community, and I think we certainly need need
more of that based on the stats you're talking about me. Yeah,
I think that. I think pandemic of loneliness we're all
dealing with that. I think those relational outlets help relieve
(35:07):
some of our desire to spend money to fill that void, right, Yeah,
so yeah, we avoid the cheap that cheap hit of
like let's go ahead and have it delivered tomorrow. Yeah.
I had like the best conversation with this older gentleman
who's on the mountain all the time, like and I was,
I was on it. I hiked with him for a
little while, and it's just meeting new people here and
hearing about their lives, smoking the cool stuff. Dude, he's
(35:28):
there a lot more than he's in better shape. Yeah,
he's probably in his early sixties and he respect he
owned me, but it Yeah, but it's so fun and
so that's the kind of stuff just encourage you to do.
It's it's amazing how all these other aspects of our
lives impact how we think about how we handle our money.
And it seems small or it seems like they are unrelated,
but but really everything's interconnected. So it's true. All right,
(35:50):
that's going to do it for this self help session
of out of money. Got to talking about not money
there second exactly. Yeah, we appreciate you listening, and we
hope you have a great weekend. And again, if you're
in New Orleans, don't forget to put October nineteenth on
your calendars. Right, We look forward to doing an in
person hang there at Courtyard Brewing. We hope to see
a bunch of you out there on October nineteenth. That's
(36:11):
a Thursday night, So matth that's going to do it
for this one. Until next time, Best friends, out, best
friends out,
Welcome to Out of Money. I'm Joel, I'm Matt, and
today we're talking ev incentives, fund fee battles, and reward
deficiency syndrome. Yeah, we're gonna get all medical and start
(00:30):
diagnosing people with that reward deficiency syndrome. No, we are
not going to do that, but we will get to
that story because we like to talk about money from
all the different angles. And that's a part of why
we love our Friday flights is we not only cover
all the different angles that you can talk about it,
we talk about some of the different stories that we've
come across. This past week, I watched a lot of
(00:51):
Doogie Houser back in my day. I feel like I
could do some medical analysis. You a doctor. I stayed
at a holiday and last night, okay, well hey real quick,
let's mention. Last Friday we had our first how the
Money listener hang in forever. I mean it's been a while,
a couple of years, I guess, since we had, like
you say, crawled out of our hermitshells. It was awesome.
(01:12):
It was so fun to meet so many different listeners
out at InterVoice, the Beer Pizza, local brewery. Such great beers,
such great pizza and even better, even better folks that
we got to meet. Man. Yeah, one listener Victoria, she
just paid off her student loans. It was teen k.
They were celebrating. The next day they're going to have
(01:33):
like a little party. Some friends are going to come
over and play games, which, by the way, is totally
my style of party. Yeah. No, so many great listeners.
Met listener Nick, who is just moved here to Atlanta.
Oh who, By the way, can I just say he
what a cool dude. He started listening since episode two
when he started school and he graduated and now the
guys just falling, so he had the best story. He's like, literally,
(01:54):
I was driving Tobama and pulled up episode two and
I've been listening to you guys, yeah since And he's
not only finish undergrad, he's got his NBA. Super cool.
And by the way, Nick was literally the first dude there,
and we forgot to grab our socks. So Nick, if
you're listening, yes, everybody else, not everybody else, but a
lot of other folks got socks, but you were literally
the first guy there. If you're listening to this, hit
(02:17):
us up. We want to send you a pair of socks. Well,
and just want to mention so it is really really,
really fun for us to get to enjoy We get
to enjoy meeting other listeners, but it's really fun to
watch the listeners interact and enjoy one another too. So
that was kind of cool. And I just want to
heads up to We're gonna hopefully do more of these
hangs in other cities in the future, And in fact,
we have one on the docket for the calendar baby
(02:37):
in New Orleans October nineteenth. Matt and I are going
to be down there, so we will post details shortly,
but New Orleans, October nineteenth at Courtyard Brewing, planning to
be there that evening. So if you live in or
around there anywhere in Louisiana, like just come state of Yeah,
come over to New Orleans, come hang with us. Yeah,
but we'll be there for fin Con, so there's a
(02:58):
chance we'll have some of our other personal finance buddies
there with us. Well, maybe some other folks that you
either read or keep up with, which just reminds me
how great it is and it's like, we need to
do more of this, so we're gonna man trying to
make it a priority. But yeah, it's a ton of fun.
We appreciate all the folks who came out last Friday,
but Jill, like I mentioned, this is the Friday flight.
And actually, speaking of last week, we actually we crapped
(03:20):
on all the new iPhones a little bit last week.
Twelve hundred dollars, right, that's the new Titanium model. It's
a lot of money. The other iterations were kind of minimal,
and so we think and an upgrade, it doesn't make
a whole lot of sense. Even if you do have
an older phone, consider getting an older one. Not the
brand news distincing brand new ones. But one thing that
(03:41):
we didn't really discuss was the different carrier promotions that
are happening right now where they're trying to entice you
with a free or at least massively disco discounted new iPhone.
But are you really getting something for nothing? No, not really.
The whole goal, obviously is to keep you locked into
a more expensive phone plan, to keep you tethered to
(04:01):
that company that you are currently with. And we have
seen the space the industry change over the years. The contracts,
they don't exist in the same way that they used to,
where you literally can't switch where you were locked in.
Those were the worst days of the cell phone industry
when it was like to your contracts, to the dark
ages of cell phones. And now like you still yeah,
like you said, you're kind of tethered, but not in
(04:22):
nearly the same way. Yeah, it's like basically, the way
that you're getting those discounts, the way that you're getting
that money off, is that you have to stick with
them because those those trade and deals, they're paid out
in monthly installments as opposed to kind of like an
upfront sort of lump sum. And so you're still again, yeah,
you're just you're it's like a loose tethering. It's like
you could leave, but oh, you're gonna You're gonna owe
(04:44):
us the difference. So and obviously these are folks that
probably aren't gonna be willing to do that, and so
instead you're stuck paying those higher monthly rates. And that's
not how we want you to approach your cell phone. Yeah,
they they don't want you, these big companies, they don't
want you looking in the direction of the discounters like Mint, Visible,
Google five, which are three of our favorites. Right, it's
like this Jedi mind trick and their marketing is all
about getting you to like, not see the discount cell
(05:07):
phone plans that exist out there in the ether, stay
focused on us, and so the big thing to look
at though, just like with the purchase of a car,
is the total cost of ownership. Right these big wireless companies,
they are not giving away free iPhones like candy out
of the goodness of their heart. And in fact, they're
not giving away free iPhones despite what their marketing looks like.
These are capitalist enterprises and their marketing is geared towards
(05:29):
folks who want the newest phone but can't fathom the
idea of coming up with twelve hundred bucks for it
in one fell swoop. And so if you're thinking about
the total out of pocket cost, you're gonna face something
like a fifteen dollars month cell phone plan and paying
full price for a new or preferably for an older model.
Like you said, Matt is going to be your best
money saving bet. And by the way, we'll link to
this in the show notes. But whilet hub just released
(05:50):
some really helpful stats and this calculator, so you can
kind of see, well, if I do want to get
the newest phone, where am I going to be able
to get that and service at the cheapest rate? I
don't think they included actually a couple of our favorite
cell phone providers in their calculations, but they did talk
about how a lot of the discount providers are going
to save you a lot more over, some of these
(06:11):
these major cell phone plans that do you know, all
the advertising on the NFL games and the Major League
Baseball games and stuff like that, you're going to be
inundated with them if you watch TV, if you watch sports.
But sure, I mean, and more than anything, what the
calculator does, it just helps you to see what the
actual costs are. And folks aren't taking the time even
like sit down at Google sheets or pull up a
spreadsheet and punch it like you can do it yourself
(06:31):
if you wanted to, Like you can just scribble it
out on a piece of paper and you can quickly
do the math. But we don't. A lot of folks
don't do that. They aren't going through the additional step
to say and to ask themselves how much is this
actually costing me? Additional in a lot of cases, especially
if you're looking at some of the pricier plans, versus
the most affordable plans, you are very likely going to
(06:55):
be saving hundreds and hundreds of dollars, if not thousands,
especially if a lot of those family plans. That's what
all at Heub found out was you might be saving
thousands over it to year period. It's insane. So on
that note, the big wireless companies that are also begging
you to pay with a debit card or via ach
instead of with a credit card, because we've talked about this,
but the duopoly of Visa MasterCard, they are continuing to
(07:19):
raise their transaction fees and so of course it's not
only impacting smaller businesses, which is oftentimes the context that
we will discuss on the show here, but it is
taking a pretty big bite out of their bottom lines
as well. We talked about how listener Tyler he's able
to get around this is sort of like a hack
that he's doing. So he's got t mobile, he schedules
his payment via debit card, right, so he's got his
(07:40):
information on there. But then he goes in manually he
pays with his credit card, and so that gives him
the best of both worlds. Right, He's got the extra
discount for having scheduled the payment in advanced, but then
he also has the protection and the rewards of using
a credit card. He's got that cell phone insurance, the
additional points and rewards. So I'm not sure if Verizon
in eighteen TI are doing the same thing. Not even
(08:00):
sure how much longer T Mobile is going to allow
this right to fly. But the worst way to pay
them is via an AH transfer. And that's because if
there is a problem with the amount that's taken out
of your account, well you've got to actually claw to
get your money back, because it's not the future promise
of money that you'll pay like with a credit card.
They've literally taken money out of your account. And yes,
(08:20):
there are protections and procedures, but it's just better to
not be out the money in the first place. So
it's going to come down to the individual to figure
out whether or it's it's going to be worth it
to get that extra monthly discount. We think it probably
is often, you know, because if you're saving five bucks,
and even if let's just say you have an expensive
cel phone plan at one hundred bucks, if you're paying
(08:41):
if you're saving five dollars, that's five percent that's pretty sweet.
But simultaneously, just know that you're not getting the same
protections and benefits that you would get with a credit card.
And that's that's just assuming just a basic cash back.
There are a lot of cards out there that have
really sweet welcome offers. Like on personal cards, you are
looking at at least getting five hundred bucks, But if
(09:01):
you happen to have a little side hustle and you're
able to get a business card, you're looking at one
thousand dollars of just straight cash back. That's not even
considering using those points towards something like travel, which acts
as a multiplier on top of that. So just something
to keep in mind. Yeah, how you pay matters, certain protections, rewards,
all that kind of stuff. We talk about it all
the time. But you also have to be disciplined if
(09:21):
you're using a credit card, that's for sure. And Matt,
everything in life revolves around incentives, right, we talk about
that all the time. There are no solutions, there are
only trade offers, no perfect solutions. There are subpar solutions. Well,
even when you pick this one thing that's like, okay,
that's my solution, but you trade off other things by
going in that direction, Right, that's just kind of the
reality of life, and it's definitely the reality of economics
(09:44):
and which way of paying is the most comedian, that
comes with the most protections and offers the best rewards.
Which makes me think of a white paper I just
saw about charging electric vehicles. Right, this doesn't come as
much of a surprise to me, but EV owners, it
turns out they end up responding to financial incentive to
charge their vehicle at different times of day. For instance,
if charging becomes free or the cost is significantly reduced
(10:06):
after a certain point in the evening, folks will wait
to charge. And if there aren't any incentives, if there
is no reduction in the rate, they'll charge whenever they
darm well feel like it. So it is interesting, like
some electric companies are basically telling customers, if you have
an EV and you charge at this time of day,
you'll pay a reduced rate. Others are saying that it's
even free. Listener Greg actually, who was at the hang
(10:28):
on Friday, he was telling me about he gets to
charge for free after nine pm his Tesla. So yeah, well,
like up to a certain amount. And it's funny because
I actually looked that up because I was curious because
I knew we're going to talk about electricity, and I couldn't.
I don't know what his specific plan is, but I
remember him saying, it's like one of those conversation, you know,
it's a crowded bar, like a lot of folks are talking.
I'm like, did I actually did I hear you? Right?
(10:49):
But what I did find so like Georgia Power were
here where we live. They got the nights and weekends rate,
where basically they're charging you more right to run the
AC at peak times are offering a much more attractive
rate at other times of the day. They've got like
off peak hours, but they also have the only thing
I could find was super off peak And guess what
they're charging per kilowat hour three cents one cent? Oh wow? Yes,
(11:10):
which is twenty or twenty four times more affordable than
just the standard rake. Like could you that's mind blowing?
So even if you don't have a free option or
something like that, could you imagine there are lines wrapped around,
like into the parking lot at Costco just because gas
is like ten cents twenty cents cheaper. Could you imagine
(11:30):
if it was twenty four times more affordable. It's just
mind blowing to think that if you do have an
EV the ability to slightly change your behavior, how it
could lead to incredible savings. This is just one of
those ways where it just massively pays to be a contrarian,
honestly right and great and not do what other folks
are doing. If you opt for a plan like that,
(11:50):
I think it could save you a ton of money.
But you have to not just change often when you
charge your electric vehicle. You have to change when you
do other things too, Change when you run the washer
and the dryer and allow the house to get a
whole lot hotter right during that peak period of day
so that you're not running their conditioner NonStop like other
people are. So you have to be willing to change
other things too. But it can be worth the savings
(12:11):
because the savings can be significant, Like you're talking about
if you like twenty x all literally is like one
point something since per kill it's crazy, which I'm like, uh,
it starts making me think twice about the one vehicle
that we have. But then again, then I've got to
purchase a pretty expensive EV or sort of hybrid plug
in hybrid whatever but definitely something I'm going to be
(12:34):
considering lolling forward. And this isn't just Georgia power. It's
there's oh yeah, yeah, this happens across the nation. So
I guess it's just a call to listeners to say, hey,
wait a second, can I shift my energy usage? And
can I save actually a lot on my electricity bill
by choosing one of these off peak sort of plans
and then changing my behavior conventionally you might see, yeah,
I don't know, you might be able to see your
power bill cut in half by doing something like this, which, yeah,
(12:55):
which is awesome. And you're also not paying for something
like filling up at the gas station, yes every week. Like,
I think the larger lesson here is just find like
consider doing things a little bit differently, consider times that
other people like. It makes me think about we talked
about dynamic pricing for beer last week, right like when
all the other folks aren't going to the pub or
going to the bar. So, speaking of timing, the best
(13:17):
time to buy a home is is almost here. Evidently,
according to realtor dot com, the first week in October
is the best time to be making some offers on
a house certainly still the fraught time out there due
to the limited inventory due to high prices incredibly high
interest rates that are tough to stomach as well. But
this time in the fall is when the least amount
(13:39):
of buyers are actively looking, and there are actually more
active listings than usual, So it makes it a great
time for you to pounce if you are financially ready.
And so we'll see what actually happens in the housing market,
because will home prices go down further if you if
you wait longer, that's a that's a tough question. It's
anybody's guess. But the supply and demand and imbalance, it's
(14:01):
likely not going anywhere. Our advice it stands, right, It
continues to center around personal factors. You got to consider
your timeline, You got to figure out determine how much
money you've got actually saved up. You need to actually
run the numbers and to determine whether or not this
is going to make sense for you. But then, like
that's maybe even more the mathematical analytical side of things,
there's also just personal considerations, as in how badly do
(14:24):
you want to live in your own home to be
able to create memories there or maybe to get your
kid into a certain school district because that's where this
great school is, and that would actually allow you to
save money on private school. I guess that kind of
swings back to the money. The money's ane of things.
But just consider some of these different different factors. So
of sometimes no more than a third of your take
(14:45):
on pay should be you should be spent on housing.
That's kind of a typical rule of thumb. But that
being said, there are other considerations as well. It makes
me think like it allows you to diet your car payment. Yes, yeah,
think through transportation. But let's say I was thinking about
like a friend of ours recently went to New York
and she never travels. I was shocked to learn that
she's like in her mid to late forties, she had
(15:06):
never been to New York City before. She hates to travel.
I was like, how have you never been to New
York City ever in your entire life before? It is like,
I don't like to travel. If that's you. If you're
listening and you're like, oh, that's me. I'm a home buddy.
I don't I don't like to go out to eat,
I don't like to travel. That's an instance where your
personal considerations, what it is that you prefer might slightly
sway what you would be willing to spend on a house.
(15:28):
And I think in her case it actually does too
because they live in a pretty nice place, they want
to spend a little more on that, which she exactly
every teacher don't go overboard. If you drive a clunker
and you don't travel and you don't go out to yep,
you can afford to spend a little bit more in
your house. Well, it makes me think too, Matt, like
when look at the facts on the ground, too, writ
how badly you mentioned, how badly do you want to
own that home? Well, yeah, if you're like, yeah, I
guess home ownership would be great. And oh, Matt just
(15:50):
said Matt and Joel just said October, the first week
in October is the time to buy. But you're saving
so much money because rent is so much cheaper, which
is the case across most of the country. The despair
between the cost of a mortgage now and the cost
of that same house, but renting it is so significant
that renting makes a whole lot more financial sense for
a whole lot of people. So unless you're like, I
(16:13):
really want to own a home, and I'm mountains in
order to make this happen. Yeah, I'm willing to sacrifice
and lots of other areas of my life in order
to make that it's staying put and saving that spread
and funneling it towards better things like paying off debt,
saving and investing. That is probably the best way to go,
at least for the time being, for a whole lot
of people. But Matt, we've got more to get to
(16:33):
on this episode, and specifically, I want to let's talk
about mental health and how that can impact how much
progress you're able to make on your personal finance journey.
We'll talk about that and more right after this. All right, man,
we are back from the break. We've got more money
(16:55):
stories to get to, and of course it's time now
to get to our ludicrous headline up the week. This
one is from the Journal. The headline read, you might
be paying too much for that index fund. That's right, folks,
Not all index funds are created equal. Yeah, sometimes we
just say index funds the way to go. But this
is a good reminder that the mount of ones. Yeah there. Yeah,
(17:17):
And so the war on expense ratios continues. State Street
they just announced that it's S and P five hundred
fund expense ratio is being cut to point zero two percent,
and so what's important to keep in mind, Vanguards is
point zero three percent. So they kind of cave in
and shots fired a little bit of a slap in
(17:38):
the face to the big, the big behemoth. But still, well,
I guess State Street they're they're pretty huge as well. Yeah,
but when we're talking about like that small of a difference,
there's no need to shake things up. If you're happy
with Vaneguard, don't see State Street and be like, oh
I gotta, I gotta get over there, got to move
all my accounts to right right. Yeah. But these these
falling fund fees, they have been a to win four
(18:00):
investors over the past couple of decades, right like, over
the course of years. Just as the weighted average fee
that investors pay based on where their assets are socked away,
it's actually down to point one point seven percent, which
is a far cry from where it used to be.
And so just we wanted to mention this because we
want you to be careful and pay attention to the
fees that you're paying. For sure, they definitely add up
(18:22):
just an increase from a point zero five percent to
point five to five percent doesn't seem that big, but
that could cost you almost a quarter of a million
dollars over the decades. That is quite a bit of money.
And so even though this particular fee, the change that
we're seeing is not that significant, it all comes down
to who you're with, to be honest, it does. Yeah, yeah, exactly.
(18:42):
Not all index funds are created equal. Depending on where
you go, it depends on the kind of fee that
you're going to pay. You don't have full control over this.
Inside of like let's say a workplace sponsored account, right,
your four oh one K or your four h three
B or something in particular, A lot of those four
or three b's you might be paying higher fees than
you'd like to, but that might be the price you
gotta pay to get that match, yes, to get a match.
(19:03):
But the inside of your own IRA or roth IRA, right,
you have the ability to choose the specific provider yourself,
and you can prioritize the one that comes with the
lowest possible fees. And so you know or at least
the average of the lowest possible fees. And that's why
we always Mention, Fidelity, Vanguard, Schwap, those are three of
the best. The truth is paying an extra point zero
(19:24):
one percent is not going to kill you, right. It's
kind of like, how, yeah, it's probably not worth changing
banks to go from four and a half to four
point seventy five on your highield savings account, but it
is worth ditching one of the big banks that pay
zero point one percent on savings in favor of any
highyield savings account that pays in the mid single digits.
And so I don't know, the folks that stay with
(19:45):
the high fee providers or with the big banks who
don't pay anything on savings, those are the ones who
end up missing out big lee. I'll say, it's like,
it doesn't matter if you go from Vanguard point oh
three to State Street point oh two, But it does
matter if you're with someone who's charging you half a
percent and you go to Vanguard and you're down to
point zero three. That's just makes me think of like
the mat there were AOL customers for years still paying
(20:08):
fees there were, and are they still paying is we
talked about it wasn't all that long ago. We talked
about the number of folks who are still paying for AOL,
which is just crazy. I mean, those are the people
who are just leaking money every month. And we don't
want you to be one of those people leaking money
every month because you're not making it that one big move. Yeah,
it's a pain in the butt, but it's worth it
if you're with one of the high few providers, that's right. Okay,
(20:29):
So since we're talking about investing, let's ask the question
when should you start saving for retirement? And the truth
is the earlier the better, And so this is rare
as all get out, but starting to save for retirement
in your team, we're speaking in the newborns here right
as you. Yeah, like literally, I mean seriously, the earlier
the better. But it would give you a massive leg up.
It would allow you to save a smaller percentage of
(20:51):
your income over the years because the dollars that you
saved early on they are working hard on your behalf.
If you don't start investing until you reach middle age,
like you've got your work cut out for you, you're
going to end up paying a significantly higher portion of
your investment dollars are going to be from you as
opposed to your money having multiplied and done. All that
work for you. If you want to retire on time,
(21:13):
you are just required to stock away so much higher
a percentage of your paycheck if you want to retire
with the same amount of money, whereas if you start earlier,
you can just sock away so much less. Really, that's right,
and the wroth part is key. Right. This is a
part of why we love roth irays because you're paying
tax on those earnings during years when you aren't making
(21:34):
much money at all. You are most likely going to
be in the absolute lowest tax bracket, and you're avoiding
taxation on the growth of that account forever. You never
have to worry about taxes ever again. And roth iray
funds they won't typically impact the kid's ability to score
financial aid for college either, so that's another big win.
But I'm going to give a little example here, and
(21:54):
I'm sure folks have heard something similar to this, but
just to put into perspective how big of an impact
this can make. Imagine you've got an entrepreneurial fourteen year old, right,
and let's say they start maxing out that roth ira Fully,
we're talking sixty five hundred bucks, Like that's a lot
of money. But let's imagine though, that they do that
for six solid years. They do that until they're twenty
(22:17):
years old, that amount will have grown with their contributions
and know, you get a little bit of growth to
fifty eight thousand dollars respectable. Right, Like, it's not a
life changing amount of money, but it is when you
consider the fact that we're that kid to leave that
money untouched from age twenty until sixty right until retirement
age literally not having contributed another single dollar. Right, maybe
(22:38):
they're like, Okay, I'm done with my money, nerdery, I've
got other things I'm interested in to go so my
while though it's yeah, so end everything I aron. So literally,
were they to not contribute a single dollar at the
age of sixty, they would have around one point two
million dollars, right, So that's that's case A case B.
Imagine a typical twenty five year old and they hear, oh,
(22:58):
you need to start investing, okay, And honestly, even twenty
five investing at the age of twenty five is still young.
It's still pretty early. But let's say they start maxing
out there roth Ira as well, sixty five hundred dollars
a year, and they're gonna continue to do that until
they hit retirement, until age sixty, they're gonna do that
for another thirty five years. They will still have never
caught up to the amount of money that that fourteen
(23:20):
year old has and their retirement. It's crazy and that insane.
There's just a golf, a massive chasm of difference between
the amount of money of their own money that that
fourteen year old put in versus the amount of money
that that later investor has put in like clockwork until
they decide to retire. It's even worse if you don't
start investing until you're forty forty five or fifty or
something like that, and the amount required, like I said,
(23:41):
to catch up and to feel like you're actually prepared
for retirement becomes just almost impossible to pull off for
most people. And not to mention just kind of the
habit that you developed starting early manutes, it's pretty rare
that you would actually invest sixty five hundred bucks a
year from fourteen to twenty and then never do it.
They just stop, Yeah, that's not likely going to have
and so just imagine the kind of well, and this
(24:02):
isn't to say that you got to forsake any other
interests that you might have. But just imagine the kind
of wealth that you're going to have. You're gonna be
able to retire quite comfortable. Yes, And so just incentivizing
just helping your teenager maybe think through that and get started,
even if it's not like maxing out roth every year,
but you're like, listen, even five hundred bucks into this
(24:22):
account is going to be life changing for you. And
in one great way to kind of help them do
this is the mom or dad match. It's to incentivize
good behavior while also summon think some really important money knowledge.
And there was a recent survey mat which found that
more than a third of parents they don't believe that
their child understands the value of a dollar. And this
is just such a great way of connecting the dots
because you know, one other concerning thing from that study
(24:45):
is that adults think that money habits really begin to
form at age fifteen, which is which is not true.
They formed start form so much earlier, right, Those beliefs
and habits begin really in early elementary school, if not
even a bit earlier than that. And so if we
wait to have money conversations with our kids until they're fifteen.
We've missed a lot of ripe opportunities for discussion. And
(25:06):
then you know, making money a relevant topic regularly in
the home, finding ways to help your kids just talk
about it. Earn, Yeah, you help them find ways to
earn more, to save, to spend wisely, even in those
elementary school years, even when they're first grade, second grade.
That's really important and that's going to help them then
as opposed to being like, hey, it's fifteen, it's time
to open your roth Ira and they're like, what are
you talking about? We haven't talked about money my whole life,
(25:28):
and now you want to Now you want to talk
and I think sixty five hundred dollars, what do you talk?
That's crazy talking, right, And I mean it is if
you've literally never talked about it before. And let's say
you literally have a fifteen year old and you've never
had that conversation. It's okay to start today, but it's
also better to start earlier. And then that makes that
roth Ira conversation in age fourteen, fifteen, sixteen a little
(25:48):
more palatable. Yeah, add that to you to do list.
Got the birds and the beast talk. But then you
got the money talks, that's right. But I think that's
also it doesn't need to be this big, giant sit
down sort of thing. Ye right, They need to be
the regular conversation, yeah, where we talk about money here
and there, all over the place, because it is something
that impacts your life, my life every single day and
(26:10):
everybody out there listening. And so just let your kids
in on some of those combos. Just don't make it
this like taboo topic that doesn't get brought up, or yeah,
talk about at the dinner table. Sometimes. Hey, our vacation
does not have to be a big deal. It could
be something that you lightly touch on here and there,
talk about the trade off while you're at the grocery
store perhaps, like this is why we get the this
is why we go to all d right the public,
(26:32):
this is why we don't get the name brand serial kids,
and we're getting bananas and peanut butter instead. Well, and
because of the nutrition you actually get out of bananas
and peanut butter, Yeah, empty, weedy whatever, filled sugar laden cereal.
By the way, while parents can help instill good money
knowledge and good habits at a young age, well, most
folks are left to fend for themselves, and it's important
(26:56):
to mention that sometimes your money issues run deeper than
allow lack of disciplines. Obviously there's sometimes a lack of
knowledge if it was never talked about, but for others,
there are other obstacles that are maybe a little more
difficult to overcome. The Times they had an interesting article
about women with ADHD and how that can actually impact
their ability to make financial progress. It's interesting actually how
(27:19):
they talked about. Oftentimes, boys they get diagnosed fairly early
on because of just the behavioral tendencies and the symptoms
that are shown. But girls oftentimes can fall through the cracks.
It often expresses itself differently it does in boys. We
think that our eight year old probably has ADHD, although
we haven't gotten an official diagnosis. But I'm like, man,
I can see I can see it, but it looks
(27:42):
it just exhibits itself so much more. Obviously in boys,
we're not doctors, we're not psychiatrists. But yet folks with ADHD,
neurodivergent folks, they can have a tougher time managing their money.
So apparently folks who have ADHD can feel something called
This is what we led with at the very top
of the episode reward deficiency syndrome, which basically means it
(28:04):
can lead to higher levels of spending in order to
get a dopamine release. Where it is that you get
that initial dopamine release to begin with, Like, that's another conversation,
I guess, but oftentimes we are turning to spending, and
if you kind of have this deficiency syndrome, you're basically
you're spending even more in order to get that hit.
(28:24):
Evidently you can have the opposite effect as well. Sometimes
it causes folks to become so anxious that they avoid
spending as much as possible from a financial standpoint. Maybe
you're not in as bad of a situation, but maybe
you are still dealing with a similar level of unhealth. Again,
we're not doctors, but that makes said like, if you
feel like this is you maybe consider going to see
(28:44):
an actual doctor. I think just even having a diagnosis
can help a whole lot. I think talking to like
a therapist, they could help you to just understand what
it is that's going on. It could help you to
not only identify, but then even come up with a
plan to help you to avoid some of the tendencies
that you have that you might be drawn towards that
could be leading to financial instability. Yeah, and I think
(29:06):
you're right, Like getting a diagnosis, if you think that
might be you can be helpful because it can at
least help you see where things are stemming from. Right.
I think medication can sometimes be helpful. Cognitive behavioral therapy
is something else that can kind of help your brain rewire,
teach it new ways of thinking about stuff CBT. Yeah, exactly,
So I mean again, trying to change the CBT brand,
(29:27):
you know, make it cool again, Yeah, trying to make
it sound yeah, sound browie. I appreciate that well. I
think it's just one of those things where it probably
doesn't get talked enough about in the personal finance space
and it feels like it's just math or behavioral change.
And behavioral change can be more difficult for some than
others based on what's going on inside the brains, and
so it's just important to mention that not doctors, but man,
(29:50):
it can help if you're struggling to unearth maybe some
of that kind of stuff and not just assume that
you're the kind of person who can't do it. You
might have more opticles in your but it doesn't mean
you can't overcome them with a little bit of help.
And Matt, this might sound weird, but I think I
think loneliness can cause us to do weird things with
our money too. There's been a lot written about kind
(30:11):
of the epidemic of loneliness that we're experiencing in America
these days. Irl, stuff like that are how to money
hang that's becoming more and more rare, sadly. And when
you can buy whatever you want and have it delivered
in minutes or hours, yes, it can become easier to
hunker down and spend like a maniac. And so yeah, yeah,
I mean that's I think that's a part of like
what I was kind of hinting at before, like where
(30:31):
it is that you are receiving those highs, those dopamine releases. Yeah,
when you don't have individuals in your life to shoot
straight with you, you don't have anyone saying that like
hey man, maybe you shouldn't be buying that, or like
why are you getting another one of those? It seems
like this endless cycle because when you are purchasing something,
it's such a short lived dopamine release. It's not a
(30:52):
robust high right, as opposed to something that you are
able to, that's able to power you. It's sort of
like our when we're able to hang out with a
bunch of listeners and carry that on into the weekend
and beyond. Or at least there was like just a
bit more of a shame factor because even if you
didn't have a friend with you, you had to go
to the mall and the person or something like that.
(31:13):
Like there was some sort of in person feeling that
you can drive based on your spending, but not so
much anymore. You can just like literally do it from
the privacy of your own home. And so this is
how the Amazon man has turned into a drug dealer.
It's like deliver me in my fix. Yeah, that's kind
of what we're talking about pretty much. And so, like
Insider had an article about how Friends and Seinfeld, both
(31:33):
those shows were onto something back in the day with
the coffee shop and the diner kind of being places
to congregate and how it provided a lot of social stimulation,
necessary social stimulation. And we agree, right, there's been a
whole lot talked about in the personal finance space about
how buying coffee is like the worst thing you can
do for your money. But the truth is those little splurges. Yeah,
(31:54):
and if you do it every day, you gotta get
rid of it. You can add up, that's for sure.
But meeting a friend for a latte it might actually
able to help you reduce or a beer or beer
or beer it could help you reduce spending in other areas. Right.
If it means that, if that meaningful social interaction gives
you kind of the outlet you need that helps prevent
some of those other unhealthy spending outlets, I think it
(32:15):
can be a good thing. It's ok, Matt and I
I think we would suggest finding an inexpensive third place
that you hit up regularly. Right, it can be it's
good for your ability to build community, and it can
be good for your finances too. And it doesn't have
to necessarily involve spending money. Your third place can be
your local hiking trail, right. I mean, I'm spending a
lot more time online lately, and I run into the
same people and it's kind of fun. So it doesn't
(32:36):
have to be even buying a coffee, which is a
pretty cheap way to get that outlet. It can be
other things too. Yeah, I mean, I think it just
It just takes being vulnerable. It takes you going on
on a limb, because like what we're talking about here
is community and creating a sense of community, and that's
something that we've you know, you and I have talked
about this with our wives altogether, just how it's definitely
you know, we moved our families a year ago from
someplace that we had lived for over a decade to
(32:59):
a complete the new part of town where we didn't
know anybody, starting from scratch. Yeah, and I think what
we're what I'm realizing more and more is that it
just takes vulnerability. It takes going out on a tiny
not a tiny limit. It takes taking a tiny like
little leap of faith, essentially saying hi to somebody, introducing yourself.
And it's uncomfortable doing that because you don't have control
(33:19):
over the situation, like, oh, what if they don't reciprocate,
what if they don't respond to me? Or what you
hug and random people, but if they don't want to
talk to me, well, that's just the cost of creating community,
of trying to foster community. But I think that's that's
it's just what it takes. And oftentimes we're just in
our own worlds. Dude, we were talking about We're talking
to a Chick Filay owner and they were saying that
(33:41):
ninety over ninety percent of their business takes place in
the dry through. Yes, and that's I feel like that's
another example of an instance where we are trying to
be in control. The only relationship is transactional. You're just
getting your food, you're giving, you're paying for it, and
you miss those in person brushing of the shoulders, meeting somebody,
or seeing somebody you hadn't seen before, meeting somebody, hearing
something new. The ability to not control your life perfectly,
(34:05):
I think is actually a great way to ultimately lead
to happiness. And it just Yeah, that's why we love biking,
right because it gets you out of your car where
you're not completely insulated from your surroundings. You have more
of a chance to to actually talk to talk to people. Literally.
Yesterday I was biking home from work and it was
I was coming up on the path. My neighbor was
there and I hadn't talked to him in a couple months,
(34:27):
and I had my earbuds in I was I was
listening to a podcast. I was like, let me just
turn turn it off, pull up next to him, see
if he's willing to chat a little bit, And we
ended up talking for over thirty minutes. We went all
the way back back to the neighborhood. And that was like,
so that's an instance of not even having to pay
any money, but just being because I'm like, what if
he was on a call, or what if he was
(34:47):
listening to an audiobook that he was really interested in
and kind of shut me down. Okay, Like that's just
I guess a risk that I think we should all
be willing to take if, in particular, you are looking
for more community, and I think we certainly need need
more of that based on the stats you're talking about me. Yeah,
I think that. I think pandemic of loneliness we're all
dealing with that. I think those relational outlets help relieve
(35:07):
some of our desire to spend money to fill that void, right, Yeah,
so yeah, we avoid the cheap that cheap hit of
like let's go ahead and have it delivered tomorrow. Yeah.
I had like the best conversation with this older gentleman
who's on the mountain all the time, like and I was,
I was on it. I hiked with him for a
little while, and it's just meeting new people here and
hearing about their lives, smoking the cool stuff. Dude, he's
(35:28):
there a lot more than he's in better shape. Yeah,
he's probably in his early sixties and he respect he
owned me, but it Yeah, but it's so fun and
so that's the kind of stuff just encourage you to do.
It's it's amazing how all these other aspects of our
lives impact how we think about how we handle our money.
And it seems small or it seems like they are unrelated,
but but really everything's interconnected. So it's true. All right,
(35:50):
that's going to do it for this self help session
of out of money. Got to talking about not money
there second exactly. Yeah, we appreciate you listening, and we
hope you have a great weekend. And again, if you're
in New Orleans, don't forget to put October nineteenth on
your calendars. Right, We look forward to doing an in
person hang there at Courtyard Brewing. We hope to see
a bunch of you out there on October nineteenth. That's
(36:11):
a Thursday night, So matth that's going to do it
for this one. Until next time, Best friends, out, best
friends out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!