May 17, 2024 • 32 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: public property foraging, FREE cell service, delinquent payments on the rise, more Gen Z credit card debt, phantom debt, chargeback safety net, political investing, Nancy Pelosi index, international exposure, and the Social Security time bomb.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How to Money. I'm Joel and I am Matt,
and today we're talking about free cell service for real,
free phantom debt, and politicized investing.
Speaker 2 (00:28):
Yeah, not just politicized investing, partisan investing, which is like
the worst kind of politics.
Speaker 1 (00:35):
But the Libertarians they're like two percent. They don't really
have any options. It's true.
Speaker 2 (00:39):
This is our Friday flight where we're going to cover
the best stories that we came across this week and
how they pertain to your personal finances. Okay, Joel, I've
got a question for you. I've got a frugal or
cheap So this time of year it's spring, obviously, and
around where we live, mulberry trees are. I was going
to say they're in full bloom. They're not in full boom.
The berries all are at like peak ripeness right now,
(01:02):
which means that a lot of sidewalks, a lot of paths,
or like the little road path thing that I take
to work, it's littered.
Speaker 1 (01:10):
With these berries. You're stepping all over them.
Speaker 2 (01:12):
It's kind of a mess. Honestly, I wear white tennis.
Speaker 1 (01:13):
Shoes these days.
Speaker 2 (01:15):
It gets on the shoe and messes it up. A
little purple But my question, my frugal or cheap for you,
is what are your thoughts of eating berries that don't
belong to you specifically, like this is public property, or
even if it's not public, I guess like it's it's
very clear that these are berries that aren't that aren't
being taken advantage of.
Speaker 1 (01:32):
Dude just coming into my backyard. I've got plenty.
Speaker 2 (01:34):
Yeah, you've got one over there too, back there with
the chickens.
Speaker 1 (01:36):
Right yeah, they're eating them where my kids are eating them.
Speaker 2 (01:39):
I got some healthy, antioxidant chickens right now. They're feeling
real good, exactly. I was feeling really good. So I
did this yesterday morning walking to work. It had just rained,
so there's like this nice natural bath, like the rain
water was kind of dripping off the berries a little bit,
and so I stopped actually rinsed. Yeah, I stopped, and
I started chowing down, and I figured this is totally fine.
But somebody drove past and honked at me, and I
(02:01):
thought it maybe it was a friend, but I didn't
recognize the car. So I'm like, no, it's surely somebody
didn't at me for gettinger for picking berries off the tree.
Like it's kind of weird to do that, I guess,
but I want to know your thoughts.
Speaker 1 (02:13):
Frugal or cheap. I think it's I think it's proble.
I think it's fine good. I mean, most of those
mulberries are going to waste. The birds are getting some,
but a lot of them. Like you said, you're all
over the sidewalks. The sidewalk, so eat some, maybe pick
a bunch and make a pie or something like that.
Speaker 2 (02:26):
Well, I guess theoretically the problem that poses is the
tragedy of the commons, right, Like, you've got this common
shared resource enough, more more people descend upon it than
it's capable of supporting. You got a problem on your hand.
Speaker 1 (02:38):
You're the only person I know but nobody does that.
We've been picking them in our backyard a little bit,
but we still have more than we need. So I
think if that becomes a problem, we can rethink it.
But I think for the time being, I'm glad you're
for it. Feel freey crambl what you need.
Speaker 2 (02:49):
There's a do you know outside of the library that
we go to as well. We're huge fans of the
local library. Ever had service berries? So you've got mulberries
in your backyard. You've got a big sweet tree serveerries.
It's kind of like a bush tree looking thing, and
they're these little round berries as well. They're also at
peak berry season. I don't know what you go it,
but if you go to the library, you look for
him on the side there, right near the entrance, and
(03:11):
you can like literally last we were there a few
days ago, and uh, I mean me and the kids.
We chow chowed down for like two or three minutes
just eating them, and.
Speaker 1 (03:19):
Only can you get free books.
Speaker 2 (03:20):
You a certain point, I said, let's let's move on.
Let's in case somebody else wants to stop and snack
on them as well. But I don't know, I'm off
for it.
Speaker 1 (03:27):
The one case in which it would be I think
cheap instead of rugal is if you don't know what
kind of berries are good and which ones aren't. Oh yeah,
you don't want to be like Peta in the Hunger
Games eating the night lock when you're not supposed to that.
Yeah yeah, you don't want to do bodily damage to
yourself by eating the wrong berries, the ones that you
know might upset your tongue.
Speaker 2 (03:43):
You're such a fan of Susanne Collins.
Speaker 1 (03:47):
Yes, you know, the movies were solid. I haven't seen
the new one though. I think was it a prequel?
Oh yeah, it was like the backstory. Yeah, I haven't
seen it. President Snow Yeah yeah, yeah, Well maybe somebody
else check that out.
Speaker 2 (03:59):
There's a bun, all right. Declared it frugal, not cheap.
Speaker 1 (04:03):
And whenever I say ghosts, Matt as everyone knows. All right.
Let's move on. Let's get to the stories we found
interesting this week. We call it the Friday Flight Matt.
Let's start off by talking about that free cell service story.
The cost on cell phone service has been dropping like
a rock over the years. If you look at a
one of those charts of inflation, it's like healthcare and
higher education costs skyrocketing.
Speaker 2 (04:24):
Yeah, we talked about that this past week, yep, with
Ryan Craig.
Speaker 1 (04:28):
That's right. But while those costs have gone up in
a big way, there are other costs that have gone down.
Talk about big screen TVs. I want to say those
have dropped like ninety seven percent in the price. Yeah,
it's ridiculous. But something else has gone down in price
has been cell phone service. Think about what you used
to pay ten twelve years ago. We've been highlighting this
movement regularly because the savings can be tremendous, right if
(04:48):
you opt for one of our low cost favorite providers.
I've actually got an article on the best m v
and o's mobile virtual network operators up on our site.
We'll post that in the show notes for this episode.
Speaker 2 (04:59):
But what if you're already low.
Speaker 1 (05:02):
Fifteen to twenty five dollars a month bill went away
completely went all the way to zero? Whoah, that'd be nice, right,
But is it possible or is that like pie in
the sky. Well, I'm not going to say that it's
a perfect solution, but really it might be possible if
you're willing to jump through a few hoops. Text Now
is a free, ad supported phone service that used to
only offer free text and call. So basically, sorry, no data,
(05:25):
but if all you care about is texting and calling,
you don't use data anyway. Hey, it was a good solution,
but now they've announced they're including a little bit of
data as well to run the most important apps like maps, email,
and ride share. Basically, you can only use apps that
use very little data, so they're not going to allow
you to watch YouTube on the go or stream your
favorite podcast.
Speaker 2 (05:45):
You can sit down with text now and play Fortnite
right likely none.
Speaker 1 (05:48):
Of that stuff like candy Grass. Sorry not till you
get home, but heck, I mean, you can download a
lot of things ahead of time right when you do
have that Wi Fi connection. Text Now runs on t
mobiles backbones, so it's not like it's on some you know,
janky Provider or anything like.
Speaker 2 (06:02):
That, same as Mint Mobile. That's right, I mean, and
it works great for us. So Joe, you could give
this a shot.
Speaker 1 (06:07):
I really might. The reviews are mixed on Reddit, so
I will say, like I want you to try it out.
You have to go through a specific text now app.
You can't use your traditional calling and texting apps most
of the time, so don't shoot the messenger if you
try it and you're like, this sucks you guys gave
a terrible recommendation. But I do think for some ultra
frugal folks, Matt, this might at least be worth a shot.
(06:27):
If you're like, no, I'm totally down to saving extra
two hundred bucks a year, I don't mind making my
life a little more difficult for that kind of savings.
Text now is totally worth looking.
Speaker 2 (06:36):
It makes sense that they have to do it within
the app right, like you need something to be able
to you need a medium to be able to deliver
the ads on per Right. Personally, though, I'm like I can't,
I can't get behind it. And you know, I spent
some time thinking about this and I was like, what
about that do I dislike? Because I'm not against advertising.
I literally was an advertising major. I thought I was
gonna be an ad man, like I worked for an advertising agency.
(06:57):
I worked as a designer.
Speaker 1 (06:58):
You're like, Don Draper fifth two years later.
Speaker 2 (07:00):
Well, it was funny is that that whole series came
out like after I quit advertising, and it kind of
made me want to like get back into it because
they certainly glamorized that that type of life and not
something not a path I wasna I was gonna go down.
But it got me thinking again about advertising. And what
I realized was that something like cell phone service feels
more like a utility to me, So it would be
(07:22):
the equivalent in my mind almost of like your electricity
company or your water company being like, oh yeah, you can,
you can pay a reduced fee when it comes to
how much you pay for your utility. But we're gonna
spam you with that. I don't know how they would
do that, like as they're delivering the electricity or the
water or something like that. But you compare that to
something that feels more consumption based, like a TV show
or a magazine, right like the glass you know that
(07:44):
all that, Like magazines are chock full of ads. Nobody
bats and eyelash at that sports even like on the sidelines,
or even like the naming rights to different stadiums. You
are trading off the entertainment with the ability to all right,
I'm consumer for free exactly as opposed to something like
cell phone service, which to me and more and more,
I think for a lot of folks it does feel
(08:05):
a little bit more like utility. Like that's the part
of it that I have a hard time getting behind.
I think it's going to make its treaty the prices.
Speaker 1 (08:12):
The price is already pretty low. So if we're talking
about going from like eighty bucks a month to zero
dollars a month, I might be willing to jump through
the hoops because that's a that's a substantial savings. But
when I'm talking about one hundred and fifty to one
hundred and eighty bucks a year. I guess based on
what I currently pay. Yeah, I'm probably not going to jump.
Speaker 2 (08:26):
Through those I'm not going to hate on somebody if
they want to do that. If they're looking to like
one hundred percent fully optimized from a financial standpoint, hey man,
more power to you.
Speaker 1 (08:33):
I think one of the things that this might actually
work for is for parents who have a kid, And
part of the appeal isn't necessarily just it being free,
but it's them not having access to data on the go.
And so you might say, listen, I was hoping that
my thirteen year old would would be able to get
their first cell phone. Gosh, I don't necessarily want to
pay two hundred bucks a year for them to have access,
(08:53):
But I also don't want them to have unlimited access
to data either, So maybe this is the perfect solution.
They can text you, they can call you, and you're
not going to pay a dollar for it either. Or
I guess you pay one dollar for the SIM card.
That's okay.
Speaker 2 (09:05):
So it's almost if you want to run a little
test experiment on your kids, go for it.
Speaker 1 (09:08):
Turn your kids into guinea pigs. I'm in favor of it,
all right, let's talk about debt for a second, Matt.
You know, we're back to doing what we do best
here as Americans spending money. We don't have that debt.
And unfortunately, I know, debt and delinquencies are on the
rise in the good old US of a. The overall
debt load, it's not going up at like an incredibly
(09:29):
rapid clip or anything like that, but new stats reveal
that more folks are missing bill payments, with more than
three percent of bills being overdue this past quarter. So
people are behind on their payments Matt, that they would
normally be making on time. And it's not some cause
for macroeconomic alarm or anything like that. But credit card delinquencies,
(09:50):
for instance, they haven't been this high since like twenty twelve,
so it's been more than a decade since we've seen
them rising at the pace they are and getting to
the levels that they're currently at. It sure seems like
we're having a tough time coming down from basically a
post stimmy spendings pretty high, Like people got a lot
of money thrust to their bankinghouse, they start spending, they
spend that money down and they're like, I want to
keep spending like that, and because of that, they're going
(10:12):
into debt trying to keep that pace up. And student
loan servicers, by the way, they're not even reporting late
payments right now until the fall, so it's not even
like that's factoring in. If people haven't been paying, they're
not current on their student loans. Well, guess what, that's
not impacting you in this way.
Speaker 2 (10:27):
Yeah, it seems like things are going to get.
Speaker 1 (10:29):
Worse later this year. It's a warning sign on the horizon,
I think, showing that we are seeing increasing signs of
financial distress and we just don't want our listeners to
be a statistic in kind of that rising tide of
people who find themselves behind on their payments. Totally.
Speaker 2 (10:46):
Yeah, and this is particularly a problem for gen Z.
This is according to new data from trains Union. But
not only are more young folks graduating with higher levels
of student loan debt, they're also relying on credit card
debt more as well. And even after adjusting for inflation,
the average twenty two to twenty four year old today
has six hundred dollars more in credit card debt than
(11:07):
that same age group did a decade ago. And it's
certainly true that rising costs for everything from groceries to
rent to gas. They have had large impacts. Inflation is
still well over three percent, but it's also true that
it is easier to spend than ever before. And in
this case, the problem isn't just inflation.
Speaker 1 (11:25):
It's us.
Speaker 2 (11:26):
It's the folks who are making the decision to purchase
all the stuff, and those simultaneous trends are making it
harder for gen Z specifically to get ahead financially.
Speaker 1 (11:33):
It's not like inflation's not still a headwind. It is,
but it's also true that we are our own headwind, Like, yes, doubling.
Speaker 2 (11:41):
Our own worst enemy. Like both of these things are
working against us, but only one of them do we
personally have the ability to control.
Speaker 1 (11:46):
Yeah, only one of them is self imposed. Yeah, and
so yeah, it's really important to pay attention to that.
And again, yeah, you can blame circumstances, and it's not
that there isn't some truth to that, but we're also
responsible for those actions of getting into debt at a
higher rate, especially when we're talking about where interest rates
stand right now, Matt, We're harming our own financial future
and future US is going to have to pay down
(12:07):
these debts and when we're talking about credit cards, we're
talking about high interest rates too, and that's not even including,
by the way, what's known as phantom debts from buy now,
Pay Later companies, specifically that doesn't get reported to the
credit bureaus and it's hard to account for. There were
new statistics on that front this week too, and they
found that twenty eight percent of folks find themselves delinquent
on other debts because they overdid it on buy now,
(12:30):
Pay Later purchases. So basically, they got a little trigger
happy on the website, on their favorite retailer site, and
they opted to buy stuff, buy more than they could
actually afford, and so it's causing them to fall behind
on other bills. And then forty three percent of folks
who owe money to one of the buy now, Pay
Later companies like a Firm or Klarna, they're behind on
their payments to those companies too. Pulling from Harris also
(12:54):
found that more than half of respondents who use by
Now Pay Later said it allowed them to purchase more
than they could afford. Well, nearly a quarter agreed with
the statement that they're by Now Pay Later spending was
out of control. So by Now pay later is something
we have warned against because the behavioral impacts and the
downstream money impacts that can have on your life. We
just think that by now pay Later has so many
(13:16):
serious downsides that it's not worth even considering. We think,
though credit cards can be a tool, right, they can
be useful, or they can bring misery, by now pay
Later only seems to be causing folks to buy more
than they otherwise would, and it leads to meaningful money problems,
like they're starting to keep up.
Speaker 2 (13:32):
With Like that's the thing because with by now pay Later,
it's like each transaction is in a sense, its own
credit card, it's its own lane of credit, and you've
got those payments and I feel like they can they
don't compound, but they just they build up really quickly. Yeah,
and it's just difficult to manage and to keep up
with all of that.
Speaker 1 (13:46):
And you're like, when did I buy with that? And
like how many okay, how many loans do I currently
have exactly Karna, Yeah, and there's now a few of
those services that are proliferated to and you're like, I
think I've got some with a firm also, and it
just it gets out of control. Real quick, really quickly.
Speaker 2 (13:59):
And you know you mentioned using credit cards like a tool.
The FTC, the Federal Trade Commission, they're actually even telling
us to pay with credit cards, and that's because of
the protections that they offer. They put out a consumer
alert earlier this week about fake ads on social media
with what they called too good to be true pricing,
and their investigation found that a lot of fake companies
(14:21):
out there are posting pretty compelling ads. You know, you
see that as a consumer, you click it to buy,
and what happens is you either get nothing or you
end up with a counterfeit item, and depending on how you.
Speaker 1 (14:32):
Paid, you might be out of luck.
Speaker 2 (14:33):
Jil, I feel like you might have been thinking this
would happen when you went to like Ralph's Backpacks and
where you bought that like a sketchy website.
Speaker 1 (14:40):
It was al sporting Goods.
Speaker 2 (14:42):
Okay, yeah, close enough, but you're like, I'm not sure
if this backpack is going to show up. But hey,
a couple of weeks later, the backpack showed up. You
were good to go.
Speaker 1 (14:50):
Was it was almost a month later? Was it a month?
It was so long? Oh my god, but it was.
But it turned out it was a legit store, and
I was like, you know what, I can least, hey,
I can feel confident making the just because I'm making
it with a credit card. With any other form of payment,
I would not have felt okay, I would have gone else.
Speaker 2 (15:05):
I have the ability to dispute the charge when you
are using a credit card like that, paying any other way, Yeah,
it just leaves you incredibly vulnerable. And so because of that,
we really like credit cards. We love the benefits they offer,
the secondary benefits, we love the cash back and the points.
Huge fans of that. We'll link to an article in
the show notes that talk about how we like to
use credit cards. But that being said, you didn't make
(15:26):
sure that you are using them wisely.
Speaker 1 (15:28):
Yeah, and roughly half of people do. Something like fifty
percent of people pay their balance on time and unfill
every single month. Other fifty percent do not. And those
are the people, Matt, who are subsidizing the rewards of
people like you and me. And it's not because we're
enamored with the system, but it's the system. That's that's
how it works right now. And because that's how it works, like,
play the game, but play it properly and don't let
(15:48):
yourself get in over your heels with credit card debt, because, yeah,
I'm amazed at the casual reference that people will throw
around sometimes to having credit card debt. And I think
of it as like a pants on fire situation, like
I'm stop dropping and roll. Man, I'm getting rid of
that thing right away. But some people feel they start
to feel comfortable keeping that credit card dead around. That's
a bad place to be, right, I do not want
to carry that balance, Yeah, especially with two twenty four
(16:10):
percent interest. That will mess you up. Let's also talk
about caps on credit card late fees, right, they were
supposed to go into effect earlier this week. We talked
a bit about this not too long ago on the show,
but not going to happen at least for the time being.
A federal judge in Texas blocked this new CFPB rule
at least for the time being. Instead of reduced to
(16:31):
eight dollars late fees, I think it was supposed to
be implemented on Tuesday. Well, they can stay at roughly
four times that level for the time being. I think
the max late charge is forty one bucks. That means
that not paying your credit card bill on time, which
is a massive no. No, of course in our book,
is still going to cost you a lot more. But
whether the late bee is egregious or not, we never
(16:52):
want you to pay it. I don't care if it's
eight dollars or forty dollars. Don't pay a late fee, please.
Speaker 2 (16:57):
It almost doesn't matter if they charge like one thousand
dollars for the late fee is either way, we don't
want you paying it, right, Yeah, and they.
Speaker 1 (17:02):
Charge you one thousand bucks, like if you if you
mess that up, like obviously that's gonna be a massive hindrance,
but still hopefully that bigger stick would cause you to
do the proper thing for your finances. Right, And even
though your late fee might be smaller in the future,
you're still doing significant damage to your credit score by
paying late. So it's not just the fee, it's the
fact that you're hindering your credit score, which impacts so
(17:24):
many other areas of your personal finance, as we talk
about that all the time, and so automating your payment
so that it happens a date or two before the
due date is a good way to avoid those late
fees altogether. If you're paying I think I had one
late fee mat that I had to get refunded recently
because I switched bank accounts or something like that and
it didn't go through the first time, and I was like, ah, crap,
did you did the chat and ask them to waive it? Yes?
(17:45):
And they did. It's so crazy. Yes, it takes like
no time. And nine out of ten people remember that.
In nine out of ten people, I think something like that,
eight or nine out of ten people who ask for
a late fee to be waived get.
Speaker 2 (17:55):
That double, especially if that's not something that you typically
rack up because you do handle your credit card responsibly.
But yeah, I do the same thing. I always so, like,
technically speaking, as long as you schedule your payment on
or before the due date, you're totally fine. So like literally,
if it's due on the fifteenth, schedule for the fifteenth,
you're good to go. I'm superstitious, and so I'll always
like to be extra safe. And I don't know why,
(18:16):
but I never choose the actual due date. I always
choose a business day prior. So if it's doing Monday,
I'll choose the friday before, and obviously if it's doing Thursday,
I'll choose Wednesday.
Speaker 1 (18:26):
I don't like flirting with disaster.
Speaker 2 (18:28):
I just like to be free and clear of the
potential of getting burned by the credit card companies. I'm
with you, and plus I already used up my one free.
Please waive this charge card.
Speaker 1 (18:37):
That's like your monopoly get out of jail free exactly, Sorry,
you don't get another one.
Speaker 2 (18:40):
Man.
Speaker 1 (18:41):
We got more to get to on this episode, including
let's talk about international investing. There's some new stats on
that and it reveals something interesting about what your allocation
to international stocks should be. We'll get to that more
right after this we were back from the break.
Speaker 2 (19:04):
Yeah, you were talking about that international investing, thinking about
some international exposure. It sounds so sophisticated, doesn't it.
Speaker 1 (19:12):
You should be wearing a boat exactly.
Speaker 2 (19:14):
Smoking a pipe. But before we get to that, it
is now time for the ludicrous headline of the week,
and it's from The Economist this week, and the headline
reads how American politics has infected investing.
Speaker 1 (19:27):
H of course, you.
Speaker 2 (19:27):
Gotta love the country. You gotta love our heinous politics,
like we still have a like a how long do
we have before the elections? Like how many five weeks
of the year we're discussing it ad nauseum.
Speaker 1 (19:39):
There are a lot of folks out there, though. I
think they just announced the first debate too, which is yeah,
earlier this week. I'll be like a primetime fight.
Speaker 2 (19:45):
I was not expecting that, to be honest, I didn't
think there were going to be any any debates. But
so the reason we wanted to talk about this is
because there are a ton of folks out there and
they think that they should change their investments based on
their politics or based on who's in office right who's president,
And this article highlights a fund specifically that allows conservatives
(20:06):
to invest in companies that lean in their political direction. Basically,
even investment products are catering to people's political beliefs now,
and we feel that this sucks just as much as
like recent years, ESG investing has been huge environmental, social
and governance investing. It was yeah, pretty hot, but it
actually leaned in the other political direction. And so here's
(20:29):
a little PSA for folks. Feel free to follow your
favorite candidates, Feel free to express your political beliefs, although
less be honest, being less political will likely make all
of us a whole lot happier. But keep in mind,
no matter what, create a firewall between your political beliefs,
how it is that you vote, and how it is
that you invest. Because election results don't impact the market
(20:49):
either way, according to history, keep investing regularly and in
a diversified way. They're also pointing out to the fact too,
that folks are intentionally It's not just that like, well, they.
Speaker 1 (20:59):
Kind of lean this way politically.
Speaker 2 (21:00):
Folks are throwing money into funds or organizations that feel
like that they align more with.
Speaker 1 (21:06):
Their political beliefs.
Speaker 2 (21:07):
And you can do that. It's hey, it's your money, right,
like the free country. You can do that, but just
know that you're going to be paying a price for
it because it does not lead to outsized returns.
Speaker 1 (21:16):
Yeah. I think there's one thing to donate money to
your favorite candidate's campaign who you believe in kind of
what they believe in. You think that their approach to
solving some of the major problems we face as a
country is more right on, maybe than their opponent. But
it's another thing to say, I'm going to invest my
dollars according to my political ideology or you know what, Hey,
(21:36):
guess what if this other person gets elected, I'm actually
going to move some of my assets to cash or
something like that. Because I think the market is going
to fall apart with this person in charge. History just
shows that doesn't happen. That it doesn't happen.
Speaker 2 (21:46):
Nope.
Speaker 1 (21:47):
Yeah. And so if you were to make massive decisions
about how or when you invest money based on the
person who you think is going to get elected, you're
being shortsighted and in fact you're going to cost yourself
over the long run.
Speaker 2 (21:59):
Firewallet, keep it siloed.
Speaker 1 (22:00):
Yeah, stay true to the course. Makes me think, actually, Matt,
of a conversation I had earlier this week might actually
be a smart pivot on trading because of politics, and
the move here would be to do exactly what the
best traders in Congress are doing. Oh jeez, So I
have a friend who like it, kind of starting to
do this. Nancy Pelosi, by the way, is famous or infamous,
(22:22):
I guess, for her stock trading prowess, right. She she
makes far more in the market than she's made in
her day job. And she's not the only person. A
lot of people in Congress, that's true, I have done
just that. Like, this is also not a partisan thing.
Folks in Congress. They have to report trades that they
make within sixty days, and a lot of these folks
outperform the market. They do better than the folks who
run hedge funds statistically speaking, not because of their skill,
(22:45):
but because of the juicy information they have access to.
Speaker 2 (22:47):
Because of their their committee appointments.
Speaker 1 (22:49):
That's right. Yeah, and so they're hearing some Yeah, they're
hearing some of that info ahead of time. Like one
of my friends, he started following an Instagram account called
Politician Trade Tracker, and it's attempting. He's attempting to make
some of the trades that the politicians are making. They
get posted publicly, and I don't see myself going in
this direction, but I guess there's a chance that could
work out well for him. It's gonna better than maybe
the other sort of political investing strategy we talked about.
(23:11):
There's a one Congressman, Matt who was in some sort
of Boeing hearing and the day before the news became public,
he sold all of his Boeing stock got out of it.
It's just the right time, of course, it's so corrupt.
I don't want to answer questions about it.
Speaker 2 (23:24):
But here is why I don't think that that strategy
is gonna work, and that's because they like they can
wait sixty days yep before they have to disclose that.
Speaker 1 (23:32):
And so yeah, the Boeing knowing that Boeing thing sixty
days after the fact.
Speaker 2 (23:36):
Does or let too late exactly, and so like, I
know that what that typically means. Though yes, there is
likely some underlying information that means good or bad for
a specific company, but you gotta admit there are some
meme stock like elements to this. And just look to
even earlier this week, Game Stop was back, and guess what,
if you had purchased on Monday, you would have been
(23:57):
doing just fine.
Speaker 1 (23:58):
But if you purchased on Tuesday, well that's why.
Speaker 2 (24:00):
And everybody that purchaon on Monday was selling, Yeah, and
you'd be the sucker left holding the bag and so like.
And this again, this is days and days like in
game stots instance, It's not just days, but it's like
hours and minutes that matter. And so I got to
think that someone who's trying to track what it is
that you know, Pelosi is doing with when it comes
to her trades, man, it just doesn't seem all that
(24:20):
great to me.
Speaker 1 (24:21):
He might be a little too far behind the curve. Yes, yeah, exactly.
Speaker 2 (24:24):
Yeah, And they probably want that information to get out there,
because if they're buying a bunch of stuff up and
then it gets reported that, oh they must know something
that everyone piles on and they're like see yeah, And
this is just another reason, by the way, that that
our elected too pessimistic.
Speaker 1 (24:36):
I don't know, no, I don't think. I mean our
elected officials should not be able to trade individual stocks.
They should. If NX fonds are good enough for the
rest of us, they should be good enough for our
elected officials too. And that's because it's we talk about
inside your training, like when it happens, like the hammer
comes down, like on somebody who's been found guilty of that,
like look at Martha Stewart.
Speaker 2 (24:53):
But this this is like the exact same thing. It is,
like it's just the legal conflict of interest when it
comes to you presiding over a committee that has that
is privy to this information and now you get to
go out and make your own trade.
Speaker 1 (25:04):
I think it was actually one of our local senators
here in Georgia, I don't remember which one map, but
one of them introduced legislation to try and ban I
think it should totally be banned it. That'd be great Yeah,
it didn't make it an It didn't make any progress, of course,
but at least he stuck up for it.
Speaker 2 (25:17):
It's not that you can't invest, it's just that you
should be investing only in index funds as opposed to
individual companies. Hey, you want to benefit from the good
work that you're doing as a public official, as a
public servant. Okay, but let's make sure the entire economy
is doing good, not just like these companies that you've
cherry picked that you get to benefit from. And while
we're talking about investing, if you are in a target
date fund or if you're in an SMP fund SMP
(25:40):
five under fund, you've likely got enough international exposure even
though you don't own any foreign companies. That was always
what Vanguard founder Jack Bogel what he believed.
Speaker 1 (25:51):
I've always agreed, but.
Speaker 2 (25:52):
Some would call that home country bias, that if you
don't own emerging market ETFs or stocks, then you have
exposure to foreign companies, you aren't diversified enough. But the
argument for a US centric approach isn't because it's not
important to have exposure to foreign markets. It's that investing
in the largest US corporations gives you a fair bit
(26:14):
of that.
Speaker 1 (26:14):
It's already baked in. This is a mainstay of the
investment debates mat that happens is do you need international
exposure or not? But I tend agree with what you
just said. You know, only investing in US stocks doesn't
mean that you're not exposed to overseas economies. The US
stock market, of course, includes many multinational corporations, and a
(26:35):
lot of those corporations conduct a whole lot of business abroad.
Think about were recently in the Dominican Republic. How many
KFCs did you see? I saw a lot, Right, that's
a US based company.
Speaker 2 (26:45):
KFCs, as well as Nathan's Nathan.
Speaker 1 (26:48):
Exactly like you're used to seeing US companies and their
names and their brands, their locals plastered all over the
place when you travel to different parts of the world.
And according to recent findings from a company called fact Set,
forty one percent of revenue generated by S and P
five hundred companies comes from international markets. Right boom. This
I think means that by owning a simple S and
(27:10):
P five hundred index fund, you still have a significant
amount of international exposure in your life. Again, I think
good folks can come out on different sides of this debate,
but I also think that this is crucial information. It
can help people feel more comfortable socking their money into
a total stock market or S and P five hundred
index fund while avoiding some of the fancier and the
(27:31):
often more expensive international allocation possibilities. The biggest reason I
think for owning international stocks is potentially mean reversion right
in the fact that US stock evaluations are a little
bit frothy. But a lot of people would say, oh,
you don't have enough international exposure if you're investing only
in the US stock market. I think that argument probably
isn't a great one. Yep, there's no need to get fancy.
Speaker 2 (27:53):
Just stick with the Vanguard's boring old S ANDB five
hundred etf VY.
Speaker 1 (27:57):
That's my favorite. It's simpler. It is too Matt. I
feel like the easier it is for people to stay
the course and the more funds you feel like you
need to own, people start getting into the ten, twelve,
fifteen funds that they own, rebalancing all that stuff. It
then it overcomplicates things that people say buying and selling
at the wrong time. They throw in the towel. Maybe
are they they're less thoughtful about their investments. And I
do think that the simpler it is, the easier it
(28:19):
is to monitor, the easier it is to stay the course.
Speaker 2 (28:21):
But let's talk about whether or not social Security is
failing the writing. It's been on the wall that Social
Security is not doing so well. It's great that folks
are living longer, but the reality is that the system
is being used as like a multi decade retirement fund,
and negative demographic trends are creating a problem. Basically, like
imagine an upside down pyramid is a good way to
(28:43):
visualize less, fewer folks being able to support an aging population.
Speaker 1 (28:47):
Just be honest, it's not your fault. You had four kids,
I had three.
Speaker 2 (28:51):
It's those people who, hey, we're playing our part ye
to make things.
Speaker 1 (28:54):
We need more people to hit in that direction.
Speaker 2 (28:56):
Yeah. So the reason we bring this up is because
the government report was just released last week and it
predicts that the Social Security Trust Fund is going to
run out of money in twenty thirty three, and the
report states that at that point, benefits would automatically be
cut by twenty one percent unless elected officials do something
in the meantime that twenty thirty three day. It actually
(29:16):
hasn't changed since we discussed the future of social security
in depth back in episode four thirteen. That was a
few years ago, by the way, But it does drive
home to the point that the projections that you'll see
on the social Security dot Gov website that they might
be a bit rosier than your actual future retirement reality. Yeah.
Speaker 1 (29:35):
Man, I think people go to one of two extremes
when they're thinking about the reality of social security in
how it's going to impact their ability to retire. Some
people are they're so conservative they say, I'm not factoring
in any social security and plus I'm not sure it's
even going to be there for me. Well, in that episode,
you mentioned like we kind of debunked that we don't
think that there's any way, form or fashion that social
(29:56):
security just goes away. That's not political tenable, like that's
just not how it's going to play out. But you're
right that if our politicians don't get their act together
in the near future, and this was something that we
mentioned in that episode too, that a real possibility is
shaving those payouts that what you see, like you said,
when you log into social Security dot gov, you're like, oh,
(30:18):
thirty eight hundred bucks a month, that's gonna be awesome.
But then you knock that down by twenty percent, you're
talking about three grand a month. And so you don't
want to overplan and overestimate what you're gonna have in
social Security because then you might be undersaving for yourself,
right Yeah, yeah, for that reason.
Speaker 2 (30:33):
Personally, I mean, either taxes are going to go up
and or most likely the benefits are going to get reduced.
And for that reason, I think the best way to
think about it is to not see social Security as
a dependable source of income. Yeah, within retirement, Like I
like to think about it like an ice cream Sunday
factor in a smaller portion of a smaller portion. Yeah,
by social Security on that ice cream Sunday, it's just
the whip cream on top, right, Like it's nice that
(30:54):
it's there. I'll certainly take it, But over time it
kind of like starts to melt into nothing and it's
mostly air anyway, Like, it's not very substantive. You've got
to show up with your own ice cream if you're
going to be able to enjoy anything in your retirement.
Speaker 1 (31:07):
Yeah. I mean, again, I don't want to say like
abandoned hopes of receiving any social Security I think it
planning on receiving some makes a whole lot of sense. Yeah,
but I think you also don't want to be over
relying on it and overestimate what you're going to be
able to get.
Speaker 2 (31:21):
It's the toppings, it's the nuts, because whip cream does
seem a bit ephemeral, like it's like it's just gonna
get blown away in the way. No, there's some reality
to the fact that it's like the nuts and chocolate chips.
Speaker 1 (31:31):
How about that. So they're not going to pull the
rug out from under you. But you also want to
make sure that you're relying on yourself for the vast
majority of your retirement income. Right. So I think when
you look at this report, Matt, it's not glowing, but
it's also not damning. I think things really look similar
to what we have when we did a deep dive
a few years ago. Like, things still look the same.
(31:52):
But people are going to see a whole lot of
triggering headlines. I think about this report. Some people are
going to be like, oh, social Security is going away,
and some and and people are gonna freak out on
both sides of the spectrum. And the truth is that
reality lives somewhere in the middle as usual.
Speaker 2 (32:06):
That's right. I think that's gonna be it for our
Friday flight. Before we end it though, a quick thanks
to Pamela R. For referring to the how To Money
newsletter to some friends of hers. Pamela, we wouldn't be
able to do it without readers like you who are
not only reading the newsletter but sending it along to
friends who also need a good dose of personal finance
in their inbox every Tuesday morning, no.
Speaker 1 (32:26):
Doubt, and you can sign up for the HOA Money
Newsletter up on our website at hotamoney dot com slash
newsletter maw. That's gonna do it for this one. Until
next time, Best Friends Out, Best Friends Out.
Welcome to How to Money. I'm Joel and I am Matt,
and today we're talking about free cell service for real,
free phantom debt, and politicized investing.
Speaker 2 (00:28):
Yeah, not just politicized investing, partisan investing, which is like
the worst kind of politics.
Speaker 1 (00:35):
But the Libertarians they're like two percent. They don't really
have any options. It's true.
Speaker 2 (00:39):
This is our Friday flight where we're going to cover
the best stories that we came across this week and
how they pertain to your personal finances. Okay, Joel, I've
got a question for you. I've got a frugal or
cheap So this time of year it's spring, obviously, and
around where we live, mulberry trees are. I was going
to say they're in full bloom. They're not in full boom.
The berries all are at like peak ripeness right now,
(01:02):
which means that a lot of sidewalks, a lot of paths,
or like the little road path thing that I take
to work, it's littered.
Speaker 1 (01:10):
With these berries. You're stepping all over them.
Speaker 2 (01:12):
It's kind of a mess. Honestly, I wear white tennis.
Speaker 1 (01:13):
Shoes these days.
Speaker 2 (01:15):
It gets on the shoe and messes it up. A
little purple But my question, my frugal or cheap for you,
is what are your thoughts of eating berries that don't
belong to you specifically, like this is public property, or
even if it's not public, I guess like it's it's
very clear that these are berries that aren't that aren't
being taken advantage of.
Speaker 1 (01:32):
Dude just coming into my backyard. I've got plenty.
Speaker 2 (01:34):
Yeah, you've got one over there too, back there with
the chickens.
Speaker 1 (01:36):
Right yeah, they're eating them where my kids are eating them.
Speaker 2 (01:39):
I got some healthy, antioxidant chickens right now. They're feeling
real good, exactly. I was feeling really good. So I
did this yesterday morning walking to work. It had just rained,
so there's like this nice natural bath, like the rain
water was kind of dripping off the berries a little bit,
and so I stopped actually rinsed. Yeah, I stopped, and
I started chowing down, and I figured this is totally fine.
But somebody drove past and honked at me, and I
(02:01):
thought it maybe it was a friend, but I didn't
recognize the car. So I'm like, no, it's surely somebody
didn't at me for gettinger for picking berries off the tree.
Like it's kind of weird to do that, I guess,
but I want to know your thoughts.
Speaker 1 (02:13):
Frugal or cheap. I think it's I think it's proble.
I think it's fine good. I mean, most of those
mulberries are going to waste. The birds are getting some,
but a lot of them. Like you said, you're all
over the sidewalks. The sidewalk, so eat some, maybe pick
a bunch and make a pie or something like that.
Speaker 2 (02:26):
Well, I guess theoretically the problem that poses is the
tragedy of the commons, right, Like, you've got this common
shared resource enough, more more people descend upon it than
it's capable of supporting. You got a problem on your hand.
Speaker 1 (02:38):
You're the only person I know but nobody does that.
We've been picking them in our backyard a little bit,
but we still have more than we need. So I
think if that becomes a problem, we can rethink it.
But I think for the time being, I'm glad you're
for it. Feel freey crambl what you need.
Speaker 2 (02:49):
There's a do you know outside of the library that
we go to as well. We're huge fans of the
local library. Ever had service berries? So you've got mulberries
in your backyard. You've got a big sweet tree serveerries.
It's kind of like a bush tree looking thing, and
they're these little round berries as well. They're also at
peak berry season. I don't know what you go it,
but if you go to the library, you look for
him on the side there, right near the entrance, and
(03:11):
you can like literally last we were there a few
days ago, and uh, I mean me and the kids.
We chow chowed down for like two or three minutes
just eating them, and.
Speaker 1 (03:19):
Only can you get free books.
Speaker 2 (03:20):
You a certain point, I said, let's let's move on.
Let's in case somebody else wants to stop and snack
on them as well. But I don't know, I'm off
for it.
Speaker 1 (03:27):
The one case in which it would be I think
cheap instead of rugal is if you don't know what
kind of berries are good and which ones aren't. Oh yeah,
you don't want to be like Peta in the Hunger
Games eating the night lock when you're not supposed to that.
Yeah yeah, you don't want to do bodily damage to
yourself by eating the wrong berries, the ones that you
know might upset your tongue.
Speaker 2 (03:43):
You're such a fan of Susanne Collins.
Speaker 1 (03:47):
Yes, you know, the movies were solid. I haven't seen
the new one though. I think was it a prequel?
Oh yeah, it was like the backstory. Yeah, I haven't
seen it. President Snow Yeah yeah, yeah, Well maybe somebody
else check that out.
Speaker 2 (03:59):
There's a bun, all right. Declared it frugal, not cheap.
Speaker 1 (04:03):
And whenever I say ghosts, Matt as everyone knows. All right.
Let's move on. Let's get to the stories we found
interesting this week. We call it the Friday Flight Matt.
Let's start off by talking about that free cell service story.
The cost on cell phone service has been dropping like
a rock over the years. If you look at a
one of those charts of inflation, it's like healthcare and
higher education costs skyrocketing.
Speaker 2 (04:24):
Yeah, we talked about that this past week, yep, with
Ryan Craig.
Speaker 1 (04:28):
That's right. But while those costs have gone up in
a big way, there are other costs that have gone down.
Talk about big screen TVs. I want to say those
have dropped like ninety seven percent in the price. Yeah,
it's ridiculous. But something else has gone down in price
has been cell phone service. Think about what you used
to pay ten twelve years ago. We've been highlighting this
movement regularly because the savings can be tremendous, right if
(04:48):
you opt for one of our low cost favorite providers.
I've actually got an article on the best m v
and o's mobile virtual network operators up on our site.
We'll post that in the show notes for this episode.
Speaker 2 (04:59):
But what if you're already low.
Speaker 1 (05:02):
Fifteen to twenty five dollars a month bill went away
completely went all the way to zero? Whoah, that'd be nice, right,
But is it possible or is that like pie in
the sky. Well, I'm not going to say that it's
a perfect solution, but really it might be possible if
you're willing to jump through a few hoops. Text Now
is a free, ad supported phone service that used to
only offer free text and call. So basically, sorry, no data,
(05:25):
but if all you care about is texting and calling,
you don't use data anyway. Hey, it was a good solution,
but now they've announced they're including a little bit of
data as well to run the most important apps like maps, email,
and ride share. Basically, you can only use apps that
use very little data, so they're not going to allow
you to watch YouTube on the go or stream your
favorite podcast.
Speaker 2 (05:45):
You can sit down with text now and play Fortnite
right likely none.
Speaker 1 (05:48):
Of that stuff like candy Grass. Sorry not till you
get home, but heck, I mean, you can download a
lot of things ahead of time right when you do
have that Wi Fi connection. Text Now runs on t
mobiles backbones, so it's not like it's on some you know,
janky Provider or anything like.
Speaker 2 (06:02):
That, same as Mint Mobile. That's right, I mean, and
it works great for us. So Joe, you could give
this a shot.
Speaker 1 (06:07):
I really might. The reviews are mixed on Reddit, so
I will say, like I want you to try it out.
You have to go through a specific text now app.
You can't use your traditional calling and texting apps most
of the time, so don't shoot the messenger if you
try it and you're like, this sucks you guys gave
a terrible recommendation. But I do think for some ultra
frugal folks, Matt, this might at least be worth a shot.
(06:27):
If you're like, no, I'm totally down to saving extra
two hundred bucks a year, I don't mind making my
life a little more difficult for that kind of savings.
Text now is totally worth looking.
Speaker 2 (06:36):
It makes sense that they have to do it within
the app right, like you need something to be able
to you need a medium to be able to deliver
the ads on per Right. Personally, though, I'm like I can't,
I can't get behind it. And you know, I spent
some time thinking about this and I was like, what
about that do I dislike? Because I'm not against advertising.
I literally was an advertising major. I thought I was
gonna be an ad man, like I worked for an advertising agency.
(06:57):
I worked as a designer.
Speaker 1 (06:58):
You're like, Don Draper fifth two years later.
Speaker 2 (07:00):
Well, it was funny is that that whole series came
out like after I quit advertising, and it kind of
made me want to like get back into it because
they certainly glamorized that that type of life and not
something not a path I wasna I was gonna go down.
But it got me thinking again about advertising. And what
I realized was that something like cell phone service feels
more like a utility to me, So it would be
(07:22):
the equivalent in my mind almost of like your electricity
company or your water company being like, oh yeah, you can,
you can pay a reduced fee when it comes to
how much you pay for your utility. But we're gonna
spam you with that. I don't know how they would
do that, like as they're delivering the electricity or the
water or something like that. But you compare that to
something that feels more consumption based, like a TV show
or a magazine, right like the glass you know that
(07:44):
all that, Like magazines are chock full of ads. Nobody
bats and eyelash at that sports even like on the sidelines,
or even like the naming rights to different stadiums. You
are trading off the entertainment with the ability to all right,
I'm consumer for free exactly as opposed to something like
cell phone service, which to me and more and more,
I think for a lot of folks it does feel
(08:05):
a little bit more like utility. Like that's the part
of it that I have a hard time getting behind.
I think it's going to make its treaty the prices.
Speaker 1 (08:12):
The price is already pretty low. So if we're talking
about going from like eighty bucks a month to zero
dollars a month, I might be willing to jump through
the hoops because that's a that's a substantial savings. But
when I'm talking about one hundred and fifty to one
hundred and eighty bucks a year. I guess based on
what I currently pay. Yeah, I'm probably not going to jump.
Speaker 2 (08:26):
Through those I'm not going to hate on somebody if
they want to do that. If they're looking to like
one hundred percent fully optimized from a financial standpoint, hey man,
more power to you.
Speaker 1 (08:33):
I think one of the things that this might actually
work for is for parents who have a kid, And
part of the appeal isn't necessarily just it being free,
but it's them not having access to data on the go.
And so you might say, listen, I was hoping that
my thirteen year old would would be able to get
their first cell phone. Gosh, I don't necessarily want to
pay two hundred bucks a year for them to have access,
(08:53):
But I also don't want them to have unlimited access
to data either, So maybe this is the perfect solution.
They can text you, they can call you, and you're
not going to pay a dollar for it either. Or
I guess you pay one dollar for the SIM card.
That's okay.
Speaker 2 (09:05):
So it's almost if you want to run a little
test experiment on your kids, go for it.
Speaker 1 (09:08):
Turn your kids into guinea pigs. I'm in favor of it,
all right, let's talk about debt for a second, Matt.
You know, we're back to doing what we do best
here as Americans spending money. We don't have that debt.
And unfortunately, I know, debt and delinquencies are on the
rise in the good old US of a. The overall
debt load, it's not going up at like an incredibly
(09:29):
rapid clip or anything like that, but new stats reveal
that more folks are missing bill payments, with more than
three percent of bills being overdue this past quarter. So
people are behind on their payments Matt, that they would
normally be making on time. And it's not some cause
for macroeconomic alarm or anything like that. But credit card delinquencies,
(09:50):
for instance, they haven't been this high since like twenty twelve,
so it's been more than a decade since we've seen
them rising at the pace they are and getting to
the levels that they're currently at. It sure seems like
we're having a tough time coming down from basically a
post stimmy spendings pretty high, Like people got a lot
of money thrust to their bankinghouse, they start spending, they
spend that money down and they're like, I want to
keep spending like that, and because of that, they're going
(10:12):
into debt trying to keep that pace up. And student
loan servicers, by the way, they're not even reporting late
payments right now until the fall, so it's not even
like that's factoring in. If people haven't been paying, they're
not current on their student loans. Well, guess what, that's
not impacting you in this way.
Speaker 2 (10:27):
Yeah, it seems like things are going to get.
Speaker 1 (10:29):
Worse later this year. It's a warning sign on the horizon,
I think, showing that we are seeing increasing signs of
financial distress and we just don't want our listeners to
be a statistic in kind of that rising tide of
people who find themselves behind on their payments. Totally.
Speaker 2 (10:46):
Yeah, and this is particularly a problem for gen Z.
This is according to new data from trains Union. But
not only are more young folks graduating with higher levels
of student loan debt, they're also relying on credit card
debt more as well. And even after adjusting for inflation,
the average twenty two to twenty four year old today
has six hundred dollars more in credit card debt than
(11:07):
that same age group did a decade ago. And it's
certainly true that rising costs for everything from groceries to
rent to gas. They have had large impacts. Inflation is
still well over three percent, but it's also true that
it is easier to spend than ever before. And in
this case, the problem isn't just inflation.
Speaker 1 (11:25):
It's us.
Speaker 2 (11:26):
It's the folks who are making the decision to purchase
all the stuff, and those simultaneous trends are making it
harder for gen Z specifically to get ahead financially.
Speaker 1 (11:33):
It's not like inflation's not still a headwind. It is,
but it's also true that we are our own headwind, Like, yes, doubling.
Speaker 2 (11:41):
Our own worst enemy. Like both of these things are
working against us, but only one of them do we
personally have the ability to control.
Speaker 1 (11:46):
Yeah, only one of them is self imposed. Yeah, and
so yeah, it's really important to pay attention to that.
And again, yeah, you can blame circumstances, and it's not
that there isn't some truth to that, but we're also
responsible for those actions of getting into debt at a
higher rate, especially when we're talking about where interest rates
stand right now, Matt, We're harming our own financial future
and future US is going to have to pay down
(12:07):
these debts and when we're talking about credit cards, we're
talking about high interest rates too, and that's not even including,
by the way, what's known as phantom debts from buy now,
Pay Later companies, specifically that doesn't get reported to the
credit bureaus and it's hard to account for. There were
new statistics on that front this week too, and they
found that twenty eight percent of folks find themselves delinquent
on other debts because they overdid it on buy now,
(12:30):
Pay Later purchases. So basically, they got a little trigger
happy on the website, on their favorite retailer site, and
they opted to buy stuff, buy more than they could
actually afford, and so it's causing them to fall behind
on other bills. And then forty three percent of folks
who owe money to one of the buy now, Pay
Later companies like a Firm or Klarna, they're behind on
their payments to those companies too. Pulling from Harris also
(12:54):
found that more than half of respondents who use by
Now Pay Later said it allowed them to purchase more
than they could afford. Well, nearly a quarter agreed with
the statement that they're by Now Pay Later spending was
out of control. So by Now pay later is something
we have warned against because the behavioral impacts and the
downstream money impacts that can have on your life. We
just think that by now pay Later has so many
(13:16):
serious downsides that it's not worth even considering. We think,
though credit cards can be a tool, right, they can
be useful, or they can bring misery, by now pay
Later only seems to be causing folks to buy more
than they otherwise would, and it leads to meaningful money problems,
like they're starting to keep up.
Speaker 2 (13:32):
With Like that's the thing because with by now pay Later,
it's like each transaction is in a sense, its own
credit card, it's its own lane of credit, and you've
got those payments and I feel like they can they
don't compound, but they just they build up really quickly. Yeah,
and it's just difficult to manage and to keep up
with all of that.
Speaker 1 (13:46):
And you're like, when did I buy with that? And
like how many okay, how many loans do I currently
have exactly Karna, Yeah, and there's now a few of
those services that are proliferated to and you're like, I
think I've got some with a firm also, and it
just it gets out of control. Real quick, really quickly.
Speaker 2 (13:59):
And you know you mentioned using credit cards like a tool.
The FTC, the Federal Trade Commission, they're actually even telling
us to pay with credit cards, and that's because of
the protections that they offer. They put out a consumer
alert earlier this week about fake ads on social media
with what they called too good to be true pricing,
and their investigation found that a lot of fake companies
(14:21):
out there are posting pretty compelling ads. You know, you
see that as a consumer, you click it to buy,
and what happens is you either get nothing or you
end up with a counterfeit item, and depending on how you.
Speaker 1 (14:32):
Paid, you might be out of luck.
Speaker 2 (14:33):
Jil, I feel like you might have been thinking this
would happen when you went to like Ralph's Backpacks and
where you bought that like a sketchy website.
Speaker 1 (14:40):
It was al sporting Goods.
Speaker 2 (14:42):
Okay, yeah, close enough, but you're like, I'm not sure
if this backpack is going to show up. But hey,
a couple of weeks later, the backpack showed up. You
were good to go.
Speaker 1 (14:50):
Was it was almost a month later? Was it a month?
It was so long? Oh my god, but it was.
But it turned out it was a legit store, and
I was like, you know what, I can least, hey,
I can feel confident making the just because I'm making
it with a credit card. With any other form of payment,
I would not have felt okay, I would have gone else.
Speaker 2 (15:05):
I have the ability to dispute the charge when you
are using a credit card like that, paying any other way, Yeah,
it just leaves you incredibly vulnerable. And so because of that,
we really like credit cards. We love the benefits they offer,
the secondary benefits, we love the cash back and the points.
Huge fans of that. We'll link to an article in
the show notes that talk about how we like to
use credit cards. But that being said, you didn't make
(15:26):
sure that you are using them wisely.
Speaker 1 (15:28):
Yeah, and roughly half of people do. Something like fifty
percent of people pay their balance on time and unfill
every single month. Other fifty percent do not. And those
are the people, Matt, who are subsidizing the rewards of
people like you and me. And it's not because we're
enamored with the system, but it's the system. That's that's
how it works right now. And because that's how it works, like,
play the game, but play it properly and don't let
(15:48):
yourself get in over your heels with credit card debt, because, yeah,
I'm amazed at the casual reference that people will throw
around sometimes to having credit card debt. And I think
of it as like a pants on fire situation, like
I'm stop dropping and roll. Man, I'm getting rid of
that thing right away. But some people feel they start
to feel comfortable keeping that credit card dead around. That's
a bad place to be, right, I do not want
to carry that balance, Yeah, especially with two twenty four
(16:10):
percent interest. That will mess you up. Let's also talk
about caps on credit card late fees, right, they were
supposed to go into effect earlier this week. We talked
a bit about this not too long ago on the show,
but not going to happen at least for the time being.
A federal judge in Texas blocked this new CFPB rule
at least for the time being. Instead of reduced to
(16:31):
eight dollars late fees, I think it was supposed to
be implemented on Tuesday. Well, they can stay at roughly
four times that level for the time being. I think
the max late charge is forty one bucks. That means
that not paying your credit card bill on time, which
is a massive no. No, of course in our book,
is still going to cost you a lot more. But
whether the late bee is egregious or not, we never
(16:52):
want you to pay it. I don't care if it's
eight dollars or forty dollars. Don't pay a late fee, please.
Speaker 2 (16:57):
It almost doesn't matter if they charge like one thousand
dollars for the late fee is either way, we don't
want you paying it, right, Yeah, and they.
Speaker 1 (17:02):
Charge you one thousand bucks, like if you if you
mess that up, like obviously that's gonna be a massive hindrance,
but still hopefully that bigger stick would cause you to
do the proper thing for your finances. Right, And even
though your late fee might be smaller in the future,
you're still doing significant damage to your credit score by
paying late. So it's not just the fee, it's the
fact that you're hindering your credit score, which impacts so
(17:24):
many other areas of your personal finance, as we talk
about that all the time, and so automating your payment
so that it happens a date or two before the
due date is a good way to avoid those late
fees altogether. If you're paying I think I had one
late fee mat that I had to get refunded recently
because I switched bank accounts or something like that and
it didn't go through the first time, and I was like, ah, crap,
did you did the chat and ask them to waive it? Yes?
(17:45):
And they did. It's so crazy. Yes, it takes like
no time. And nine out of ten people remember that.
In nine out of ten people, I think something like that,
eight or nine out of ten people who ask for
a late fee to be waived get.
Speaker 2 (17:55):
That double, especially if that's not something that you typically
rack up because you do handle your credit card responsibly.
But yeah, I do the same thing. I always so, like,
technically speaking, as long as you schedule your payment on
or before the due date, you're totally fine. So like literally,
if it's due on the fifteenth, schedule for the fifteenth,
you're good to go. I'm superstitious, and so I'll always
like to be extra safe. And I don't know why,
(18:16):
but I never choose the actual due date. I always
choose a business day prior. So if it's doing Monday,
I'll choose the friday before, and obviously if it's doing Thursday,
I'll choose Wednesday.
Speaker 1 (18:26):
I don't like flirting with disaster.
Speaker 2 (18:28):
I just like to be free and clear of the
potential of getting burned by the credit card companies. I'm
with you, and plus I already used up my one free.
Please waive this charge card.
Speaker 1 (18:37):
That's like your monopoly get out of jail free exactly, Sorry,
you don't get another one.
Speaker 2 (18:40):
Man.
Speaker 1 (18:41):
We got more to get to on this episode, including
let's talk about international investing. There's some new stats on
that and it reveals something interesting about what your allocation
to international stocks should be. We'll get to that more
right after this we were back from the break.
Speaker 2 (19:04):
Yeah, you were talking about that international investing, thinking about
some international exposure. It sounds so sophisticated, doesn't it.
Speaker 1 (19:12):
You should be wearing a boat exactly.
Speaker 2 (19:14):
Smoking a pipe. But before we get to that, it
is now time for the ludicrous headline of the week,
and it's from The Economist this week, and the headline
reads how American politics has infected investing.
Speaker 1 (19:27):
H of course, you.
Speaker 2 (19:27):
Gotta love the country. You gotta love our heinous politics,
like we still have a like a how long do
we have before the elections? Like how many five weeks
of the year we're discussing it ad nauseum.
Speaker 1 (19:39):
There are a lot of folks out there, though. I
think they just announced the first debate too, which is yeah,
earlier this week. I'll be like a primetime fight.
Speaker 2 (19:45):
I was not expecting that, to be honest, I didn't
think there were going to be any any debates. But
so the reason we wanted to talk about this is
because there are a ton of folks out there and
they think that they should change their investments based on
their politics or based on who's in office right who's president,
And this article highlights a fund specifically that allows conservatives
(20:06):
to invest in companies that lean in their political direction. Basically,
even investment products are catering to people's political beliefs now,
and we feel that this sucks just as much as
like recent years, ESG investing has been huge environmental, social
and governance investing. It was yeah, pretty hot, but it
actually leaned in the other political direction. And so here's
(20:29):
a little PSA for folks. Feel free to follow your
favorite candidates, Feel free to express your political beliefs, although
less be honest, being less political will likely make all
of us a whole lot happier. But keep in mind,
no matter what, create a firewall between your political beliefs,
how it is that you vote, and how it is
that you invest. Because election results don't impact the market
(20:49):
either way, according to history, keep investing regularly and in
a diversified way. They're also pointing out to the fact too,
that folks are intentionally It's not just that like, well, they.
Speaker 1 (20:59):
Kind of lean this way politically.
Speaker 2 (21:00):
Folks are throwing money into funds or organizations that feel
like that they align more with.
Speaker 1 (21:06):
Their political beliefs.
Speaker 2 (21:07):
And you can do that. It's hey, it's your money, right,
like the free country. You can do that, but just
know that you're going to be paying a price for
it because it does not lead to outsized returns.
Speaker 1 (21:16):
Yeah. I think there's one thing to donate money to
your favorite candidate's campaign who you believe in kind of
what they believe in. You think that their approach to
solving some of the major problems we face as a
country is more right on, maybe than their opponent. But
it's another thing to say, I'm going to invest my
dollars according to my political ideology or you know what, Hey,
(21:36):
guess what if this other person gets elected, I'm actually
going to move some of my assets to cash or
something like that. Because I think the market is going
to fall apart with this person in charge. History just
shows that doesn't happen. That it doesn't happen.
Speaker 2 (21:46):
Nope.
Speaker 1 (21:47):
Yeah. And so if you were to make massive decisions
about how or when you invest money based on the
person who you think is going to get elected, you're
being shortsighted and in fact you're going to cost yourself
over the long run.
Speaker 2 (21:59):
Firewallet, keep it siloed.
Speaker 1 (22:00):
Yeah, stay true to the course. Makes me think, actually, Matt,
of a conversation I had earlier this week might actually
be a smart pivot on trading because of politics, and
the move here would be to do exactly what the
best traders in Congress are doing. Oh jeez, So I
have a friend who like it, kind of starting to
do this. Nancy Pelosi, by the way, is famous or infamous,
(22:22):
I guess, for her stock trading prowess, right. She she
makes far more in the market than she's made in
her day job. And she's not the only person. A
lot of people in Congress, that's true, I have done
just that. Like, this is also not a partisan thing.
Folks in Congress. They have to report trades that they
make within sixty days, and a lot of these folks
outperform the market. They do better than the folks who
run hedge funds statistically speaking, not because of their skill,
(22:45):
but because of the juicy information they have access to.
Speaker 2 (22:47):
Because of their their committee appointments.
Speaker 1 (22:49):
That's right. Yeah, and so they're hearing some Yeah, they're
hearing some of that info ahead of time. Like one
of my friends, he started following an Instagram account called
Politician Trade Tracker, and it's attempting. He's attempting to make
some of the trades that the politicians are making. They
get posted publicly, and I don't see myself going in
this direction, but I guess there's a chance that could
work out well for him. It's gonna better than maybe
the other sort of political investing strategy we talked about.
(23:11):
There's a one Congressman, Matt who was in some sort
of Boeing hearing and the day before the news became public,
he sold all of his Boeing stock got out of it.
It's just the right time, of course, it's so corrupt.
I don't want to answer questions about it.
Speaker 2 (23:24):
But here is why I don't think that that strategy
is gonna work, and that's because they like they can
wait sixty days yep before they have to disclose that.
Speaker 1 (23:32):
And so yeah, the Boeing knowing that Boeing thing sixty
days after the fact.
Speaker 2 (23:36):
Does or let too late exactly, and so like, I
know that what that typically means. Though yes, there is
likely some underlying information that means good or bad for
a specific company, but you gotta admit there are some
meme stock like elements to this. And just look to
even earlier this week, Game Stop was back, and guess what,
if you had purchased on Monday, you would have been
(23:57):
doing just fine.
Speaker 1 (23:58):
But if you purchased on Tuesday, well that's why.
Speaker 2 (24:00):
And everybody that purchaon on Monday was selling, Yeah, and
you'd be the sucker left holding the bag and so like.
And this again, this is days and days like in
game stots instance, It's not just days, but it's like
hours and minutes that matter. And so I got to
think that someone who's trying to track what it is
that you know, Pelosi is doing with when it comes
to her trades, man, it just doesn't seem all that
(24:20):
great to me.
Speaker 1 (24:21):
He might be a little too far behind the curve. Yes, yeah, exactly.
Speaker 2 (24:24):
Yeah, And they probably want that information to get out there,
because if they're buying a bunch of stuff up and
then it gets reported that, oh they must know something
that everyone piles on and they're like see yeah, And
this is just another reason, by the way, that that
our elected too pessimistic.
Speaker 1 (24:36):
I don't know, no, I don't think. I mean our
elected officials should not be able to trade individual stocks.
They should. If NX fonds are good enough for the
rest of us, they should be good enough for our
elected officials too. And that's because it's we talk about
inside your training, like when it happens, like the hammer
comes down, like on somebody who's been found guilty of that,
like look at Martha Stewart.
Speaker 2 (24:53):
But this this is like the exact same thing. It is,
like it's just the legal conflict of interest when it
comes to you presiding over a committee that has that
is privy to this information and now you get to
go out and make your own trade.
Speaker 1 (25:04):
I think it was actually one of our local senators
here in Georgia, I don't remember which one map, but
one of them introduced legislation to try and ban I
think it should totally be banned it. That'd be great Yeah,
it didn't make it an It didn't make any progress, of course,
but at least he stuck up for it.
Speaker 2 (25:17):
It's not that you can't invest, it's just that you
should be investing only in index funds as opposed to
individual companies. Hey, you want to benefit from the good
work that you're doing as a public official, as a
public servant. Okay, but let's make sure the entire economy
is doing good, not just like these companies that you've
cherry picked that you get to benefit from. And while
we're talking about investing, if you are in a target
date fund or if you're in an SMP fund SMP
(25:40):
five under fund, you've likely got enough international exposure even
though you don't own any foreign companies. That was always
what Vanguard founder Jack Bogel what he believed.
Speaker 1 (25:51):
I've always agreed, but.
Speaker 2 (25:52):
Some would call that home country bias, that if you
don't own emerging market ETFs or stocks, then you have
exposure to foreign companies, you aren't diversified enough. But the
argument for a US centric approach isn't because it's not
important to have exposure to foreign markets. It's that investing
in the largest US corporations gives you a fair bit
(26:14):
of that.
Speaker 1 (26:14):
It's already baked in. This is a mainstay of the
investment debates mat that happens is do you need international
exposure or not? But I tend agree with what you
just said. You know, only investing in US stocks doesn't
mean that you're not exposed to overseas economies. The US
stock market, of course, includes many multinational corporations, and a
(26:35):
lot of those corporations conduct a whole lot of business abroad.
Think about were recently in the Dominican Republic. How many
KFCs did you see? I saw a lot, Right, that's
a US based company.
Speaker 2 (26:45):
KFCs, as well as Nathan's Nathan.
Speaker 1 (26:48):
Exactly like you're used to seeing US companies and their
names and their brands, their locals plastered all over the
place when you travel to different parts of the world.
And according to recent findings from a company called fact Set,
forty one percent of revenue generated by S and P
five hundred companies comes from international markets. Right boom. This
I think means that by owning a simple S and
(27:10):
P five hundred index fund, you still have a significant
amount of international exposure in your life. Again, I think
good folks can come out on different sides of this debate,
but I also think that this is crucial information. It
can help people feel more comfortable socking their money into
a total stock market or S and P five hundred
index fund while avoiding some of the fancier and the
(27:31):
often more expensive international allocation possibilities. The biggest reason I
think for owning international stocks is potentially mean reversion right
in the fact that US stock evaluations are a little
bit frothy. But a lot of people would say, oh,
you don't have enough international exposure if you're investing only
in the US stock market. I think that argument probably
isn't a great one. Yep, there's no need to get fancy.
Speaker 2 (27:53):
Just stick with the Vanguard's boring old S ANDB five
hundred etf VY.
Speaker 1 (27:57):
That's my favorite. It's simpler. It is too Matt. I
feel like the easier it is for people to stay
the course and the more funds you feel like you
need to own, people start getting into the ten, twelve,
fifteen funds that they own, rebalancing all that stuff. It
then it overcomplicates things that people say buying and selling
at the wrong time. They throw in the towel. Maybe
are they they're less thoughtful about their investments. And I
do think that the simpler it is, the easier it
(28:19):
is to monitor, the easier it is to stay the course.
Speaker 2 (28:21):
But let's talk about whether or not social Security is
failing the writing. It's been on the wall that Social
Security is not doing so well. It's great that folks
are living longer, but the reality is that the system
is being used as like a multi decade retirement fund,
and negative demographic trends are creating a problem. Basically, like
imagine an upside down pyramid is a good way to
(28:43):
visualize less, fewer folks being able to support an aging population.
Speaker 1 (28:47):
Just be honest, it's not your fault. You had four kids,
I had three.
Speaker 2 (28:51):
It's those people who, hey, we're playing our part ye
to make things.
Speaker 1 (28:54):
We need more people to hit in that direction.
Speaker 2 (28:56):
Yeah. So the reason we bring this up is because
the government report was just released last week and it
predicts that the Social Security Trust Fund is going to
run out of money in twenty thirty three, and the
report states that at that point, benefits would automatically be
cut by twenty one percent unless elected officials do something
in the meantime that twenty thirty three day. It actually
(29:16):
hasn't changed since we discussed the future of social security
in depth back in episode four thirteen. That was a
few years ago, by the way, But it does drive
home to the point that the projections that you'll see
on the social Security dot Gov website that they might
be a bit rosier than your actual future retirement reality. Yeah.
Speaker 1 (29:35):
Man, I think people go to one of two extremes
when they're thinking about the reality of social security in
how it's going to impact their ability to retire. Some
people are they're so conservative they say, I'm not factoring
in any social security and plus I'm not sure it's
even going to be there for me. Well, in that episode,
you mentioned like we kind of debunked that we don't
think that there's any way, form or fashion that social
(29:56):
security just goes away. That's not political tenable, like that's
just not how it's going to play out. But you're
right that if our politicians don't get their act together
in the near future, and this was something that we
mentioned in that episode too, that a real possibility is
shaving those payouts that what you see, like you said,
when you log into social Security dot gov, you're like, oh,
(30:18):
thirty eight hundred bucks a month, that's gonna be awesome.
But then you knock that down by twenty percent, you're
talking about three grand a month. And so you don't
want to overplan and overestimate what you're gonna have in
social Security because then you might be undersaving for yourself,
right Yeah, yeah, for that reason.
Speaker 2 (30:33):
Personally, I mean, either taxes are going to go up
and or most likely the benefits are going to get reduced.
And for that reason, I think the best way to
think about it is to not see social Security as
a dependable source of income. Yeah, within retirement, Like I
like to think about it like an ice cream Sunday
factor in a smaller portion of a smaller portion. Yeah,
by social Security on that ice cream Sunday, it's just
the whip cream on top, right, Like it's nice that
(30:54):
it's there. I'll certainly take it, But over time it
kind of like starts to melt into nothing and it's
mostly air anyway, Like, it's not very substantive. You've got
to show up with your own ice cream if you're
going to be able to enjoy anything in your retirement.
Speaker 1 (31:07):
Yeah. I mean, again, I don't want to say like
abandoned hopes of receiving any social Security I think it
planning on receiving some makes a whole lot of sense. Yeah,
but I think you also don't want to be over
relying on it and overestimate what you're going to be
able to get.
Speaker 2 (31:21):
It's the toppings, it's the nuts, because whip cream does
seem a bit ephemeral, like it's like it's just gonna
get blown away in the way. No, there's some reality
to the fact that it's like the nuts and chocolate chips.
Speaker 1 (31:31):
How about that. So they're not going to pull the
rug out from under you. But you also want to
make sure that you're relying on yourself for the vast
majority of your retirement income. Right. So I think when
you look at this report, Matt, it's not glowing, but
it's also not damning. I think things really look similar
to what we have when we did a deep dive
a few years ago. Like, things still look the same.
(31:52):
But people are going to see a whole lot of
triggering headlines. I think about this report. Some people are
going to be like, oh, social Security is going away,
and some and and people are gonna freak out on
both sides of the spectrum. And the truth is that
reality lives somewhere in the middle as usual.
Speaker 2 (32:06):
That's right. I think that's gonna be it for our
Friday flight. Before we end it though, a quick thanks
to Pamela R. For referring to the how To Money
newsletter to some friends of hers. Pamela, we wouldn't be
able to do it without readers like you who are
not only reading the newsletter but sending it along to
friends who also need a good dose of personal finance
in their inbox every Tuesday morning, no.
Speaker 1 (32:26):
Doubt, and you can sign up for the HOA Money
Newsletter up on our website at hotamoney dot com slash
newsletter maw. That's gonna 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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