September 16, 2022 • 31 mins
Time for our Friday Flight! These episodes are a sampling of the week’s financial news and the impact on your personal finances. There are a lot of headlines out there, but we distill it 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 cover some relevant and helpful stories like: HTM sock giveaway, sticky inflation, stressful everyday money fights, college major regrets, taxing student loan forgiveness, IRS refunding an extra billion dollars to filers, WTD about market crash predictions, millennials selling out, 401k lifetime income illustrations, ESG funds looking worse than ever, & going into debt for an iPhone.
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- Maximize your rewards by getting the best credit card for how you spend.
- Massively reduce your cell phone bill each month by switching to a discount provider like Mint Mobile.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How the Money. I'm Joel and I am Matt,
and today we're discussing taxing, loan forgiveness, everyday, money fights,
and virtuous investing. Yeah, virtuous investing. We're gonna talk about
(00:30):
investing that gives you all the good feels. Uh later
on during this episode. But this is our Friday flight
where we're gonna talk about the most important stories that
we think you should be paying attention to this week.
But Joel, we should Uh. This isn't something we mentioned
on our last Friday flight last week because I don't know.
We knew that we were going, but we just didn't
talk about it. We were at Finncon as that episode
(00:52):
came out, and with finn Con, for folks, is a
financial conference, some would say the nerdiest place on Earth. Matt.
It is quiet, nerdy, but it's just a great time
for us to be able to just meet up with
other well finance creators. And these are a lot of
folks who were there who spoke actually have been on
our show, you know, like Patrice Washington was there, Anthony O'Neill, uh,
(01:15):
Erica Taylor. That's right. Eric Taylor had a great Taylor
made budgets, but the ability just to see a bunch
of Carl and Mindy Mindy Jensen UH and Carl R
like a personal finance personal finance power couple. There are
a lot of our friends who were there, and so
we didn't talk about ahead of time because it's it's
more of a nerdy thing. But it is a lot
of fun for us to be able to meet up
(01:35):
with some of these folks see the content that they're
creating and how they're going about it. It can be
really encouraging to us for and we also while are there,
we we took a bunch of our how many socks
the coolest socks personal personal finance, and nobody's got any
any on our thoughts. Those things are awesome. We stuck
(01:57):
those on a bunch of our friends those away and
speaking of our socks, were actually going to it's now
signed to give away five pairs of our how to
Money socks to UH and listen up. We're gonna narrow
the focus a little bit here as to who is
eligible for these socks, but we're gonna give five pairs
of socks away to five new subscribers to the How
(02:19):
To Money newsletter that's right, the finest socks in the
lands that represent one of your hopefully favorite podcasts. They're
super comfortable, super attractive. But yeah, if you go and
sign up for the How to Money newsletter before Wednesday
at midnight, you're gonna be automatically entered to win. Apparently
socks will ship amount to you and and yeah, we'll
announce the winners on our next Friday fight. And to
(02:41):
be honest, you're gonna get the added value. I'm not
just receiving the socks, but also receiving delightful, entertaining personal
finance content in your inbox. Personal financing a week, content
that's gonna feel you throughout the week. It's gonna revolution
on your life. Okay, maybe that's too maybe that's too
strong a claim, but it's it's fun. It's good. Specifically,
the way you sign for that newsletter head to how
the Money dot com forward slash newsletter and we'll link
(03:03):
to it in the show notes as well. We'll link
to it in the show notes and specifically too, for
all of you folks out there who are listening to
the show and you're not subscribed, this is an awesome
opportunity because you're not. You know, you're not competing with
like thousands of other folks. There might be I don't know,
maybe there's like even fifty or a hundred folks. You
are going to have better than ever. Yeah, you're the
odds are totally in your favorite So we want you
(03:25):
to do that. We take a Hunger Games line, send
us out to you soon. All right, well, let' let's
move on. Let's get to the Friday flight. It's a
quick sampling of stories we found interesting this week. It's
what we do every Friday. We kind of matt Now,
we passed through the headlines and we tell you what's
relevant to you in the world of personal finance. And
let's talk about inflation for a second. We got I
feel like we gotta lead off with that. I don't
know about you, kind of the story of the week.
(03:47):
It is, I personally have not heard the word transitory
in quite some time. Uh. It's one of those words
that for a minute a couple of years ago, it
was like the buzzwords could have been like the word
of the year for on Time magazine On to the
Chance Tour. Turns out that inflation is much stickier than
experts that hope they would be. And even as like
supply chains are functioning better and with a steep decline
(04:10):
in gas prices, we're still seeing the headline inflation number
barely budge. And that's because the cost of groceries is
continue to go up alongside a lot of other categories
that we've been talking about here on the show, in
particular housing, uh with you're buying or renting right, prices
there have skyrocketed, which is a huge part of what's
contributing to inflation that doesn't want to budge very much.
(04:31):
In particular, would be surprised if we see the rents
continue to climb. I think, you know, we've seen home
purchase prices cap out a little bit, but as far
as the rental prices that that folks are paying, I
think we're gonna unfortunately, I think we're gonna continue to
see those climb in the coming months. I think you
might be right. And while the cost of other goods
and services like traveling used cars have be kind of
to decline a little bit, a little bit at least,
(04:52):
it's just moving slow, and that means consumer costs are
not getting better. The CPI number hasn't changed very much
and so sad. The inflation continues to be just a
massive problem for anybody out there who spends money on anything. Yeah,
I think I saw that the same basket of goods
and services cost the average family four d sixty dollars
more per month now than it did a year ago. Uh.
(05:14):
And granted, you know a lot of folks have been
able to use the hot labor market to their advantage
in order to get paid more. But still this inflation,
it can it continues to remain a real problem. Uh.
And sticky inflation. It's the major reason why the number
of folks who are experiencing money stress has been on
the rise. The American Psychological Association, they just released a
(05:34):
study and it turns out that seventy two percent of
Americans say that they're stressed about their current financial situation.
And right on queue the journal, they documented the rise
and fights among couples over just simple expenses like grocery
store purchases. Like are they actually getting into fights in
the grocery store? Like put that kumquat banks too much?
I mean quite literally, Yeah, Like they're talking about the
(05:56):
different disagreements that couples are having, not only within grocery stores,
but just the price of gas and utilities are affecting
how people feel about their money. And younger folks are
actually the most stressed out, more than eight and ten
folks who are aged between basically millennials right eighteen to
forty three. So it's kind of like millenen Z, a
little bit of gen Z, a little bit of the
(06:18):
Zoomers as well. Mostly that's what our audience, that's all
they are. Basically everybody's listening, or not everybody, most of them,
the vast majority of folks eighteen forty three, but they
are the most stressed out about the personal finances. We
totally get it. These are conversations that Kate and I
have had recently. I mean, gone are the days where
we were paying a dollar per person per meal. That
has not been the case for a while. Like, I mean,
(06:41):
the cost of eggs more today than they were a
year ago. That is completely insane for us. It's causing
us to have maybe not heated discussions, but we're having to.
We're having more discussions about what we're starting to acts
from our yelling at cat over cumplots two. Aren't you
You're part of the problem. Maybe Seltzer's. Yeah what we
(07:02):
for a minute there we were Seltzer people, not me,
but my wife and kids. And I swear the most
annoying part, yes, forget that, dude. The most annoying part
was half drain kinds of Seltzer were being left around
the house. I'm like putting into it right now. You
can't leave the soldiers behind, Like, yeah, never number Seltzer.
My sacrifice has been ice cream. I love ice cream,
but you know what, I don't need that crap in
(07:23):
my life. And so that's something I'm like, all right,
let's just completely eliminate that. And I don't know. In
some ways, I feel that this is almost a good
exercise because it allows folks to sort of dig deep
and realize, Okay, what is it that I can live without?
What are the things that are important to my health?
What are the important groceries and foods that we need
to be eating. And I think there's a lot of
(07:44):
crap that we can cut from our diets. And the
more that we can handle our money better in other
areas of life too, the hopefully the less stressed out
will become around like that's that's like what we want
for our listeners manage for them to be empowered based
on their ability up their savings right, so they have
more margin, more breathing room, so that even as inflation
is a real thorn in their side, they're like, you
(08:05):
know what, I don't have to be stressed out about
this because I know where my money is going and
I'm handling it well. Uh, and it doesn't mean that
it's a good thing. It's still still painting the butt.
Welcome to the empowerment, so they are, we should have
a segment on Friday's right, Let's know, that's the whole show.
The whole show is all about empowerment and getting folks
to make smart moves with their money. So exactly, Well,
let's talk about college for a secondment, because we've actually
(08:25):
talked about how college degrees are not necessarily the best
use of your money. We talked about that recently, how
they're actually worth less than they used to be. That
was episode five. And the truth is, the reality is
we have the supply and demand problem that the market
has been flooded with college graduates over the last couple
of decades, and in a lot of fields there's just
a whole lot more supply of folks with a college
(08:47):
degree than there is demand for people with those degrees,
and that is in part why two and five graduates,
according to a recent survey, have expressed regret over their
chosen field of study. And on top of that, nearly
half of those who got a degree in humanities and
the arts said they'd wish I wish they've chosen to
pursue a different degree. And so, man, I know, we
got some pushback on that college episode. Some people were like,
(09:09):
why are you guys hayting. As always, we tried to
take the nuanced approach where for some folks, for a
lot of folks, a college degree can be meaningful, can
create additional lifetime earnings. So much of it depends on
your personality and your skill set. But I feel like
we're treating college degrees like there are a no dub
path to a middle class lifestyle, and that's less the
(09:31):
case than it has been, and the reality on the
ground is revealing. I would say that fewer folks are
having that experience right, especially as prices are rising exponentially.
The cost is a huge factor in whether or not
a college degree makes sense for people. And something else
that came out this week, nineteen of the top twenty
colleges in the U. S News and World Report rankings
(09:52):
cost more than fifty five dollars a year to attend,
not for the whole degree a year. So we're talking
about like a quarter million dollars of debt potentially if
there are no scholarships involved for your college degree. And
when we're talking about costs that are that extreme to
get a degree, we've got to think long and hard
about what the final outcome is going to be, the
(10:13):
value proposition, the trade off of time and money to
get that degree, what is it actually going to provide
in the end. And so it's interesting to see how
many people are expressing regret over the degree they've gotten.
I think so much of that comes down to how
much it costs to get it, absolutely, man. Yeah, and
and we're not haters, you know. Like we've said before,
like college it can be an awesome path for a
(10:33):
lot of folks because in large part they're able to
provide higher lifetime earnings and that it oftentimes provides more
job satisfaction. But the risk to reward ratio has just
changed when it comes to pursuing a higher education. And yeah,
as costs have risen exponentially in the value of many degrees,
we're seeing them decline and because of that, it's up
to individuals to be more careful on the front end
(10:55):
before they mindlessly choose a college or a course of study.
And so, whether we're talking about your kids, or your friends,
or like you, yourself, we want your eyes to be
wide open within this decision making process where you're able
to try to figure out what you think the likely
r o I of that degree is going to be.
You know, the reality is that like some degrees are
gonna just be worth more than others, and many of
(11:17):
those worthwhile degrees can actually be pursued for a lot
less money than you think. And you know, if you
want to study something that doesn't hold as much value
in the marketplace, it's even more important to keep costs
to a minimum. Yeah, if you really really want that
basket weaving degree, I think it's okay as long as
you count the cost and you have the cash to
pay for it. But if you're taking on student loan
debt tens of thousands of dollars of student loan debt
(11:39):
to get a degree that in all likelihood isn't going
to lead to a higher paying job. That's when you're
in big trouble, that's right, that's when you've got debt
and nothing really to show for it. Well, so speaking
of college Matt student loan forgiveness, let's talk about that
for a second. That continues to be a hot topic,
and there's more information coming out about it. We talked
about it recently in depth, and and we said that
student loan borrowers aren't going to be paying income tax
(12:02):
on the forgiveness amount. And that is true. The folks
aren't going to be paying federal income tax on the
amount that they're forgiven. But state taxes are another issue.
And so it's come out this week that a bunch
of states are in line to send a tax bill
to forgiveness recipients. And this this is subject to change.
State governments can make exceptions and can pass legislation to
(12:24):
prevent that from happening. But states like North Carolina, Indiana, Mississippi, Arkansas, Minnesota, Wisconsin,
even California are all at least for now, even California,
even California, and of course California, well no, I mean California.
I would think they would actually be on board with
defense on this, but I don't know. They love tax
their citizens. They do have what the highest individual income
(12:45):
tax rate in amltize taxes? Yeah, it's it's something like
exsive thirteen states in total who are considering taxing the
amount that was forgiven. Yeah, so this is subject to change,
but it's something to be aware of, and we'll we'll
link to that in the show notes an article about this.
But they've I'll send you a tax bill. And how
much are you going to owe? Is the next question.
It depends on how much forgiveness you received and the
(13:06):
state income tax thresholds where you live. Lots of folks
are likely gonna end up owing somewhere between five hundred
bucks and a thousand bucks in additional state income taxes
come April if if there's no pivot made and so, yeah,
just just a heads up to start mentally and financially
preparing for that. The forgiveness feels good, but he might
be taxed, at least at the state level on some
of that forgiveness. Yes, right, Yeah, so that's some bad
(13:27):
news when it comes to taxes. On a positive note,
the I R S is gonna be refunding over a
billion dollars to evidently any taxpayers who missed deadlines for
filing their twenty nineteen and the tax returns, and so
the way it works, you know, typically the I R
S they charge you a fee for filing late. But
because of the pandemic, the kind hearted suit wearing folks
(13:48):
over there at the Internal Revenue Service and they're going
to send that money back to you. Uh it's something
like I think like one point six million Americans are
going to be eligible for this refund. And the best
part is you don't have to do anything. It's going
to be automatic. That is, actually unless you haven't if
you still haven't filed your taxes for if you're that
late for those years, like literally the latest person out there. Yeah,
(14:08):
if that's the case, you need to get on it
because you have until September to finally get those returns in.
And also, you know, don't get used to this kind
of generosity from the I R S. I don't think
this is likely to be normal moving forward. I feel
like they're just throwing everybody one final pandemic bone and
uh so, yeah, I don't count on this in the future. Yeah, well,
(14:28):
thank you, sweetheart. I R s folks, for anybody who
was late that is going to that they could be
hundreds and hundreds of dollars in life fees that they
are able to avoid that are gonna get automatically refunded
to them, which which is nice. Absolutely. I think that
the average refund amount is going to be something like
seven and fifty bucks. So maybe you filed lates, you
already paid that fee. And also maybe your state that
(14:50):
you're living in is gonna charge you for the student
loans that were that we're forgiven. So hang onto that
come out in the wash exactly, but at least you're not,
at least it's not feeling like that you're paying and
more out of pocket. But we've got additional stories that
we're gonna get to this week, including that virtuous investing story.
We'll get to that plus others right after this. All Right,
(15:18):
the Friday flight continues, and Matt, we gotta get to
our ludicrous headline of the week. And typically we find
something from a newspaper, a television station somewhere around the
country that annoys us or irks us, or maybe it
just is worded poorly and makes us think something that
maybe they weren't trying to do just bad headlines are
(15:39):
all over the place, But this week's comes in the
form of a tweet. I think it's maybe our first
time to do this. Who's out there making predictions again?
Of course it's the rich dad, poor dad guy, Robert Kyosaki,
and he tweeted last week it's this. It's his pastime.
He likes to tweet, and he likes to tweet making
those predictions dumb things. And he he likes to use
all caps in a lot of tweets too, which I
(16:00):
think is I don't know if that's just a generational
thing or it's kind of a classic boomer movie. Okay,
they hate on any of our boomer listeners out there,
but I mean, I don't know, how often do you
tweet in all caps? Um? How often do I tweet?
Is a better question, rarely, but in all caps never?
Probably never? Yeah, Well, he he tweeted the crash is here.
(16:20):
I'm trying to emphasises like he does. Is that how
that's how he wrote it? Yes? And then he said stocks, bonds,
mutual funds, et F in real estate crashing as predicted
middle class being wiped out. And then what did he
proceed to do. He proceeds to tell all of his
followers to buy Solver. Uh. This guy, Matt, he tends
to make a prediction every single year at a random time,
(16:42):
typically in the fall. I feel like, but his track
record just isn't great. He's he's wrong most of the time.
And there was another article this week analysts that Morgan
Stanley are predicting a major market downturn over the next
four months and all these things, like these predictions, what's
our response to them? Who cares? Because the reality is
like if anyone was paying attention this week, the market
(17:03):
was down almost four and a half percent in a day,
like the largest single day dropped since But to us,
that doesn't matter. That's short term stuff that we don't
care about. The same is true, right if we experience
more volatility and and downward movement in the coming months.
We're long term investors here at how the money, and
so we expect these short term blists. We choose not
to pay attention to them. And could these predictions come
(17:24):
to pass? Sure it might happen, but he Mr Kiyosaki
has also made a lot of predictions that have not
come to pass. And if you if you believe these predictions,
if you buy them, hook client and sinker, and you
make your investing decisions based on them, it's far more
likely that you're gonna lose money than make it. Yeah,
and again we bring this to your attention because it's
okay if you notice that folks are out there saying
these kinds of things, but we don't want you to
(17:45):
take action with your actual money. You could just unfollow
up to that. That is true for for the bad
advice and for all the kids tweets. Yeah. Well, and
speaking of taking the wrong actions, the wrong steps with
your money, friend of the show Lindsay Bell, she actually
tweeted out a shocking chart this week. It turns out
that millennials are selling stocks like it's their job. Data
from Ally shows that forty nine of millennials have sold
(18:07):
stocks over the past twelve months, whereas only seventeen percent
of zoomers did the same thing, and one of the
main reasons that they cited as a reason for selling
was volatility. Man, this, honestly, this kind of makes me
mad because this points to a lack of financial education
because volatility within the stock market is to be expected.
It's just an inevitable part of the wealth building process.
(18:30):
But when you sell, you're often locking in losses in
an attempt to time the market. None of us, obviously
are smart enough to do that successfully, though, and so
this is not something we would recommend. We would we
want you to just continue buying. You're going to see
the volatility. You might see the market crash, just like
Robert Kiyosaki mentioned, but that doesn't mean you have to
actually take action and do anything about it. Makes me
(18:51):
think of our interview with Nick mcjuli. His book was
called just keep buying, and I love I love that phrase.
That's how we should think about investing in the market.
Just keep buying through thick and through thin, back to invest,
and you'll be wealthy at some point. That's just the
that's just the way it goes. You don't really have
to pay attention to day to day movements or movements
year to year. Even alright, let's let's keep talking about investing, though,
(19:12):
because let's talk about four owne case in particular, because
folks who got their Q two four own case statement,
they might have noticed that it looked a little bit
different than it normally does. And that's because there's now
a requirement for four own K providers to attach what's
known as a lifetime income illustration. And by you, I
don't know. When I say illustration, might think like doodles
of Disney pictures or something like that. No, that's not
(19:34):
what we're talking about. Uh. This is basically an attempt
to give people a picture of how much monthly income
they can expect based on their total instag Yeah. Yeah,
and illustration and picture maybe inaccurate words as well, because
I don't even think it's a chart or anything like that.
It's just kind of like a table with some numbers
on this that kind of gives you a heads up,
uh huh. And so yeah, that this comes from the
Secure Act, which was passed in twenty nineteen, which now
(19:55):
made this a legal requirement. And it might be disconcerting
because let's say you've got a hundred and twenty thousand
bucks in your retirement account. Well, you'll realize, based on
this lifetime income illustration, that you should be able to
expect five hundred ish dollars a month in income when
you reach retirement age. But here's the thing. Uh, the
younger you are, the less this matters. Right, the goal
(20:17):
really should be to just increase your overall nest egg,
ramping up the amount you're able to contribute, while paying
very little attention to these details about how much you're
gonna be able to spend in retirement. And for folks
closer to retirement, I think this can be maybe a
helpful wake up call to start stalking away even more.
You might realize. Let's say you're you're in your fifties
and you're listening to H T M and you're like,
a man, I just got that my my lifetime income
(20:38):
illustration shows that, yeah, I'm only gonna be able to
expect seven or eight hundred dollars a month in income
from my retirement accounts. You might need to increase your
contribution level so you can catch up. But the reality
is you might also have a penchant from somewhere else,
and you've got to factor social Security into so there's
a lot to think about. I think this lifetime income
illustration can be helpful, but I think for some folks
(20:58):
that can also be shocked and they just like have
no no idea what to do with it. I mean,
I think that's the whole point, right is hopefully it
shocks you into doing something different with your money, because
in the end, hopefully you're able to see that, oh yeah,
six hundred bucks a month, that's not quite enough for
me to live on. Uh if I would to retire
right now, this is not feasible, and so sort of
like we were saying earlier, I feel like that it
can provide some empowerment to folks to realize there are things,
(21:21):
there are steps I can take right now to change
how much I've got within my four o one k.
I think one of the things bumping your four owne
K contributions up upper cent or two, like it's gonna
make a massive difference. And that's where maybe this illustration
could do better in the future is if they had
like some projections or something right, because I think the
criticism might be that it's just a snapshot of what
your nest egg is currently and what that would provide you,
(21:42):
but not based on your age or future exactly, or
or how long you're planning to work. Because if you
knew that, Okay, well it's only hundred twenty five thousand now,
but like I just started last year. I guess not
last year, but I guess like five ten years ago.
But if you know, you've got another twenty years worth
of your career here ahead of you, and you can
map that out, if you know, if they had like
(22:02):
a little dash line, uh, with an increased four oh
one K amount, and then what that would allow you
to withdraw every single month. I think that's the part
of it that can be encouraging to. Basically, this illustration
could use a lot of work better people. But I
do like the spirit behind it because it just allows folks.
It's a tool, right, and it allows folks to peer
into the future in the same way that we joke
(22:23):
and and literally have done this, but you know, using
the face app to see an older version of yourself.
I think, for in particular for younger investors, if they
can see, you know, six d bucks, Oh my gosh,
that's not a whole lot of money. I need to
start saving more now, uh. In that way, it does
allow us to look down the road a little bit
and too essentially forecast and realize, Okay, maybe I've been
(22:44):
embracing that yellow lifestyle a little too much. Maybe I
need to travel a little bit less and instead divert
some of those funds towards my retirement yea, yeah, stop
eating out so much. That's not that's nothing, it's expensive. Well,
one one thing we prefer you not to invest in
within your four one K is E s G funds,
and we we've talked about this a few times on
the show, and I think any how, the Money Listener
knows that they're not our favorite because the goal of
(23:06):
these funds really it's to allow folks to invest in
what we would call a virtuous way, in a socially
responsible way. But as you've heard of say, they often
don't do an awesome job at it. Friend of the
show and recent guest, Alison Schreeger, she just wrote a
great article for City Journal about how the E s
G bubble is starting to burst, and at the heart
of the problem that she expounded on was virtuous investing.
(23:29):
It's kind of hard to define our oil companies awful
or are they currently just the cheapest way to power
economic development, particularly in the developing world. Exactly do you
care more about the earth and uh utilizing fossil fuels less,
or do you care about maybe equity amongst all the
different nations, in particular in developing world. These are more
complex questions and sometimes we give them credit. Bactly, it's
not just like good versus evil. And I think a
(23:51):
lot of times that's how you know E s G
investing is that's what that's what they're setting out to do.
There's they're they're there to say, oh but this is good,
but okay, according to according to what parameters, according to
who's definitely and every E s G fund is created differently.
Some invest in test Lass, some don't. Some I'm invest
in oil, how many some don't. So I'm invest in Facebook,
who is potentially ruining our society. Others don't, right, I mean,
(24:11):
and that is a legitimate those are legitimate concerns and
and returns from these funds they're not matching up with
their index counterparts either. So spending your money, we would say,
in a way that aligns with your values, is something
worth doing, is something worth pursuing. But it's not as
easy to invest in a similar manner, and it's likely
to cost you more in fees in returns if you try, so,
(24:32):
you're gonna be less financially stable, You're you're not gonna
build wealth as quickly. They're just legitimate downsides to investing
uh in these E s G funds trying to invest
in a virtuous way. Yeah, I mean you can clearly,
I mean, it will cost you more if it says
the expense ratio is higher than the point zero three
percent that you should be paying, which they inevitably are,
or like even like I was looking at Vanguards, it's
(24:55):
e s G V they're only point zero six which
is I mean, as they go. Oh that's as I think,
almost as cheap as you can get. The industry average
is like point four percent, which is way higher than
what anybody should be paying out there for a widely
diversified index fund. But then, like you said, the performances
of these E s G funds has been like it
was actually looking slightly better than the stock market as
(25:18):
a whole, or there are many as we were in
a bowl market when everyone's feeling great about everything. But
then as soon as things have turned around a little
bit and we've entered into a bear market, these E
s G funds have not performed well. So yeah, like
you said, they cost more, they are not performing. Not
to mention, they aren't doing whatever it is that you
think they're doing. Like you might get the good feels
again from investing in something that feels more green, but
(25:42):
the reality is it may not even be doing that
all that. Well, yeah, I think we might get some pushback, Matt.
Some people might be like, why don't Matt and Joel
care about the earth or care about being virtuous citizens?
We would say, because Joel's too busy other coal rolling,
right exactly. Yeah, Well, there are so many little decisions
you can make that are good for the earth and
good for you a while, we just think E s
G funds are not necessarily one of them. All right,
(26:04):
but let's let's move on. Let's talk about new phones.
Because Apple had their infamous event last last week. They
used to be so much more popular. I remember, like
New York Times writers used to like live stream their
comments on what Apple was releasing. That doesn't seem to
be the case anymore. But Apple just released their their
newest version of the iPhone, iPhone fourteen, and I don't
really care about that. But a new survey found that
(26:27):
one in five folks are more than willing to go
into debt in order to buy the new iPhone. And
that that's according to wallet hub. When I saw that stat, Matt,
that's something I got in the email inbox. Uh. It
made my my usual optimistic self a little bit bumped. Uh.
It made me sad about the state of humanity because
the reality is that, as The Atlantic noted this week,
the iPhone it's just not cool anymore. So the changes, Well,
(26:51):
even if it was cool, it doesn't change our opinion. Yes,
even if it was still hip, which I don't think
it is. I think it's bad to go into debt
for it. Yeah, I mean, like we were just talking
about student before the break. I mean, you need to
be careful about the kind of debt that you take on. Obviously,
student learns has more promising potential. And we're talking about
consumption here, basically financing lifestyle, which is not something that
we can get behind at all. Yeah. And the reality
(27:12):
is that the iterations of smartphones are infintessively small these days.
The difference between an iPhone thirteen and an iPhone fourteen,
it's pretty minimal. Yeah, there's gonna be a whole lot
of people that decide to upgrade to an ever so
slightly better iPhone and put it on a credit card
that they can't pay off in order to get a
new phone. And so I don't know what we would say,
(27:33):
if you prefer to buy a way more expensive phone
that's barely improved, that's okay. Just don't go into debt
to buy one, and make sure that you're doing it intentionally.
Don't fall victim to the upgrade cycle and every time
something new comes out you're like, oh yeah, knee jerk reaction,
Pavlov's dog, I'm going to get that thing, even though
it's probably not going to make much of a difference
in your life. Why why are you such an iPhone
hater's not a pixel guy? Even though I and you're busted.
(27:56):
I'm looking at your crack Hey, it's a great phone,
your brand new crack phone. Right now about it? I'll say,
I'm a thirteen iPhone thirteen Pro owner. Forget the fourteen
like like you said, you like, there were very few
upgrades to that. Just get the thirteen Pro for much less.
And I'll advocate a little bit for Apple here. And
at least they did increase the price of their phones,
because that was one thing that everybody was thinking it
(28:16):
might go up a hundred bucks or so. And what
happening that they held the line. How many years did
you take between upgrades? Wasn't wasn't it close to five years?
Five years? I think that the average upgrade cycle is
a whole lot less than that. And the longer weeken
what we're trying to keep folks from just continuing to
go down that path, the longer we can make our
upgrade cycle if you normally do it on two year cycles,
(28:37):
trying to expand a three and if if we can,
you should be able to do that, because these phones
are getting better and better. Going back to the going
Green conversation to Matt, like less waste, less e waste exactly. Actually,
speaking of smartphones, the fair phone, they got some love
and the Times this week, um was it? Alex listener
Alex he told us about ye about these phones a
while back. Sadly they're only available in Europe. But the
(28:58):
cool thing about those phones is that they and last
you a really long time because as the batteries, as
your storage gets outdated or filled up, as camera technology improves,
you can upgrade all of these different elements on your
own fair phone pretty easily. Like they're they're literally built
for you to tinker with so that they don't ever
have to become obsolete. A fair phone is the type
(29:20):
of phone that tinker Bell would would totally. The reality though,
is that most phones they're not designed for longevity, and
so you know, were they to do that, that it
would undermine the company's bottom line, and so we would, personally,
we would love to see someone take the fair phone
business model launch it here in the United States. That
right there, that might be something that causes me to
jump off of the Apple iPhone ship if I can,
(29:43):
you know, mess around with my own phone, swap little
parts in and out like it's a Lego phone, but
that doesn't completely fall apart when you were to drop it.
I'm just picturing our kids are really getting into, you know,
tinkering with legos and tinker toys, that kind of stuff,
But every time another kiddo bumps into it, it it just
falls up heart. Hopefully that doesn't happen to their fair phone,
but you know, people people who have it say that
(30:04):
it's great, supposed to be fantastic, planned, oss, super reparable.
It's still a real problem in our economy and uh
and I will admit one of the worst things about
Google is they don't commit to as long of a
software upgrade cycle as Apple does to their phones. And
that's a real problem. So I'm gonna call out both companies,
and they really should both be doing a better job
at making sure their products can last longer for people,
(30:26):
including software upgrades and hardware that's more interchangeable. Right, there
is room for improvement on both fronts, but that's gonna
be it for our Friday flight. Don't forget how do
Many Socks? If you are not a subscriber to our newsletter,
head to how to Money dot com forward slash newsletter.
But if you sign up for that newsletter by Wednesday
(30:47):
at midnight, you will be entered to win one of
five pairs of socks, and we will announce those winners
on our next Friday flight, no doubt. All Right, Matt,
that's gonna do it for this episode until next time.
Best Friends Out, Best Friends Out. M
Welcome to How the Money. I'm Joel and I am Matt,
and today we're discussing taxing, loan forgiveness, everyday, money fights,
and virtuous investing. Yeah, virtuous investing. We're gonna talk about
(00:30):
investing that gives you all the good feels. Uh later
on during this episode. But this is our Friday flight
where we're gonna talk about the most important stories that
we think you should be paying attention to this week.
But Joel, we should Uh. This isn't something we mentioned
on our last Friday flight last week because I don't know.
We knew that we were going, but we just didn't
talk about it. We were at Finncon as that episode
(00:52):
came out, and with finn Con, for folks, is a
financial conference, some would say the nerdiest place on Earth. Matt.
It is quiet, nerdy, but it's just a great time
for us to be able to just meet up with
other well finance creators. And these are a lot of
folks who were there who spoke actually have been on
our show, you know, like Patrice Washington was there, Anthony O'Neill, uh,
(01:15):
Erica Taylor. That's right. Eric Taylor had a great Taylor
made budgets, but the ability just to see a bunch
of Carl and Mindy Mindy Jensen UH and Carl R
like a personal finance personal finance power couple. There are
a lot of our friends who were there, and so
we didn't talk about ahead of time because it's it's
more of a nerdy thing. But it is a lot
of fun for us to be able to meet up
(01:35):
with some of these folks see the content that they're
creating and how they're going about it. It can be
really encouraging to us for and we also while are there,
we we took a bunch of our how many socks
the coolest socks personal personal finance, and nobody's got any
any on our thoughts. Those things are awesome. We stuck
(01:57):
those on a bunch of our friends those away and
speaking of our socks, were actually going to it's now
signed to give away five pairs of our how to
Money socks to UH and listen up. We're gonna narrow
the focus a little bit here as to who is
eligible for these socks, but we're gonna give five pairs
of socks away to five new subscribers to the How
(02:19):
To Money newsletter that's right, the finest socks in the
lands that represent one of your hopefully favorite podcasts. They're
super comfortable, super attractive. But yeah, if you go and
sign up for the How to Money newsletter before Wednesday
at midnight, you're gonna be automatically entered to win. Apparently
socks will ship amount to you and and yeah, we'll
announce the winners on our next Friday fight. And to
(02:41):
be honest, you're gonna get the added value. I'm not
just receiving the socks, but also receiving delightful, entertaining personal
finance content in your inbox. Personal financing a week, content
that's gonna feel you throughout the week. It's gonna revolution
on your life. Okay, maybe that's too maybe that's too
strong a claim, but it's it's fun. It's good. Specifically,
the way you sign for that newsletter head to how
the Money dot com forward slash newsletter and we'll link
(03:03):
to it in the show notes as well. We'll link
to it in the show notes and specifically too, for
all of you folks out there who are listening to
the show and you're not subscribed, this is an awesome
opportunity because you're not. You know, you're not competing with
like thousands of other folks. There might be I don't know,
maybe there's like even fifty or a hundred folks. You
are going to have better than ever. Yeah, you're the
odds are totally in your favorite So we want you
(03:25):
to do that. We take a Hunger Games line, send
us out to you soon. All right, well, let' let's
move on. Let's get to the Friday flight. It's a
quick sampling of stories we found interesting this week. It's
what we do every Friday. We kind of matt Now,
we passed through the headlines and we tell you what's
relevant to you in the world of personal finance. And
let's talk about inflation for a second. We got I
feel like we gotta lead off with that. I don't
know about you, kind of the story of the week.
(03:47):
It is, I personally have not heard the word transitory
in quite some time. Uh. It's one of those words
that for a minute a couple of years ago, it
was like the buzzwords could have been like the word
of the year for on Time magazine On to the
Chance Tour. Turns out that inflation is much stickier than
experts that hope they would be. And even as like
supply chains are functioning better and with a steep decline
(04:10):
in gas prices, we're still seeing the headline inflation number
barely budge. And that's because the cost of groceries is
continue to go up alongside a lot of other categories
that we've been talking about here on the show, in
particular housing, uh with you're buying or renting right, prices
there have skyrocketed, which is a huge part of what's
contributing to inflation that doesn't want to budge very much.
(04:31):
In particular, would be surprised if we see the rents
continue to climb. I think, you know, we've seen home
purchase prices cap out a little bit, but as far
as the rental prices that that folks are paying, I
think we're gonna unfortunately, I think we're gonna continue to
see those climb in the coming months. I think you
might be right. And while the cost of other goods
and services like traveling used cars have be kind of
to decline a little bit, a little bit at least,
(04:52):
it's just moving slow, and that means consumer costs are
not getting better. The CPI number hasn't changed very much
and so sad. The inflation continues to be just a
massive problem for anybody out there who spends money on anything. Yeah,
I think I saw that the same basket of goods
and services cost the average family four d sixty dollars
more per month now than it did a year ago. Uh.
(05:14):
And granted, you know a lot of folks have been
able to use the hot labor market to their advantage
in order to get paid more. But still this inflation,
it can it continues to remain a real problem. Uh.
And sticky inflation. It's the major reason why the number
of folks who are experiencing money stress has been on
the rise. The American Psychological Association, they just released a
(05:34):
study and it turns out that seventy two percent of
Americans say that they're stressed about their current financial situation.
And right on queue the journal, they documented the rise
and fights among couples over just simple expenses like grocery
store purchases. Like are they actually getting into fights in
the grocery store? Like put that kumquat banks too much?
I mean quite literally, Yeah, Like they're talking about the
(05:56):
different disagreements that couples are having, not only within grocery stores,
but just the price of gas and utilities are affecting
how people feel about their money. And younger folks are
actually the most stressed out, more than eight and ten
folks who are aged between basically millennials right eighteen to
forty three. So it's kind of like millenen Z, a
little bit of gen Z, a little bit of the
(06:18):
Zoomers as well. Mostly that's what our audience, that's all
they are. Basically everybody's listening, or not everybody, most of them,
the vast majority of folks eighteen forty three, but they
are the most stressed out about the personal finances. We
totally get it. These are conversations that Kate and I
have had recently. I mean, gone are the days where
we were paying a dollar per person per meal. That
has not been the case for a while. Like, I mean,
(06:41):
the cost of eggs more today than they were a
year ago. That is completely insane for us. It's causing
us to have maybe not heated discussions, but we're having to.
We're having more discussions about what we're starting to acts
from our yelling at cat over cumplots two. Aren't you
You're part of the problem. Maybe Seltzer's. Yeah what we
(07:02):
for a minute there we were Seltzer people, not me,
but my wife and kids. And I swear the most
annoying part, yes, forget that, dude. The most annoying part
was half drain kinds of Seltzer were being left around
the house. I'm like putting into it right now. You
can't leave the soldiers behind, Like, yeah, never number Seltzer.
My sacrifice has been ice cream. I love ice cream,
but you know what, I don't need that crap in
(07:23):
my life. And so that's something I'm like, all right,
let's just completely eliminate that. And I don't know. In
some ways, I feel that this is almost a good
exercise because it allows folks to sort of dig deep
and realize, Okay, what is it that I can live without?
What are the things that are important to my health?
What are the important groceries and foods that we need
to be eating. And I think there's a lot of
(07:44):
crap that we can cut from our diets. And the
more that we can handle our money better in other
areas of life too, the hopefully the less stressed out
will become around like that's that's like what we want
for our listeners manage for them to be empowered based
on their ability up their savings right, so they have
more margin, more breathing room, so that even as inflation
is a real thorn in their side, they're like, you
(08:05):
know what, I don't have to be stressed out about
this because I know where my money is going and
I'm handling it well. Uh, and it doesn't mean that
it's a good thing. It's still still painting the butt.
Welcome to the empowerment, so they are, we should have
a segment on Friday's right, Let's know, that's the whole show.
The whole show is all about empowerment and getting folks
to make smart moves with their money. So exactly, Well,
let's talk about college for a secondment, because we've actually
(08:25):
talked about how college degrees are not necessarily the best
use of your money. We talked about that recently, how
they're actually worth less than they used to be. That
was episode five. And the truth is, the reality is
we have the supply and demand problem that the market
has been flooded with college graduates over the last couple
of decades, and in a lot of fields there's just
a whole lot more supply of folks with a college
(08:47):
degree than there is demand for people with those degrees,
and that is in part why two and five graduates,
according to a recent survey, have expressed regret over their
chosen field of study. And on top of that, nearly
half of those who got a degree in humanities and
the arts said they'd wish I wish they've chosen to
pursue a different degree. And so, man, I know, we
got some pushback on that college episode. Some people were like,
(09:09):
why are you guys hayting. As always, we tried to
take the nuanced approach where for some folks, for a
lot of folks, a college degree can be meaningful, can
create additional lifetime earnings. So much of it depends on
your personality and your skill set. But I feel like
we're treating college degrees like there are a no dub
path to a middle class lifestyle, and that's less the
(09:31):
case than it has been, and the reality on the
ground is revealing. I would say that fewer folks are
having that experience right, especially as prices are rising exponentially.
The cost is a huge factor in whether or not
a college degree makes sense for people. And something else
that came out this week, nineteen of the top twenty
colleges in the U. S News and World Report rankings
(09:52):
cost more than fifty five dollars a year to attend,
not for the whole degree a year. So we're talking
about like a quarter million dollars of debt potentially if
there are no scholarships involved for your college degree. And
when we're talking about costs that are that extreme to
get a degree, we've got to think long and hard
about what the final outcome is going to be, the
(10:13):
value proposition, the trade off of time and money to
get that degree, what is it actually going to provide
in the end. And so it's interesting to see how
many people are expressing regret over the degree they've gotten.
I think so much of that comes down to how
much it costs to get it, absolutely, man. Yeah, and
and we're not haters, you know. Like we've said before,
like college it can be an awesome path for a
(10:33):
lot of folks because in large part they're able to
provide higher lifetime earnings and that it oftentimes provides more
job satisfaction. But the risk to reward ratio has just
changed when it comes to pursuing a higher education. And yeah,
as costs have risen exponentially in the value of many degrees,
we're seeing them decline and because of that, it's up
to individuals to be more careful on the front end
(10:55):
before they mindlessly choose a college or a course of study.
And so, whether we're talking about your kids, or your friends,
or like you, yourself, we want your eyes to be
wide open within this decision making process where you're able
to try to figure out what you think the likely
r o I of that degree is going to be.
You know, the reality is that like some degrees are
gonna just be worth more than others, and many of
(11:17):
those worthwhile degrees can actually be pursued for a lot
less money than you think. And you know, if you
want to study something that doesn't hold as much value
in the marketplace, it's even more important to keep costs
to a minimum. Yeah, if you really really want that
basket weaving degree, I think it's okay as long as
you count the cost and you have the cash to
pay for it. But if you're taking on student loan
debt tens of thousands of dollars of student loan debt
(11:39):
to get a degree that in all likelihood isn't going
to lead to a higher paying job. That's when you're
in big trouble, that's right, that's when you've got debt
and nothing really to show for it. Well, so speaking
of college Matt student loan forgiveness, let's talk about that
for a second. That continues to be a hot topic,
and there's more information coming out about it. We talked
about it recently in depth, and and we said that
student loan borrowers aren't going to be paying income tax
(12:02):
on the forgiveness amount. And that is true. The folks
aren't going to be paying federal income tax on the
amount that they're forgiven. But state taxes are another issue.
And so it's come out this week that a bunch
of states are in line to send a tax bill
to forgiveness recipients. And this this is subject to change.
State governments can make exceptions and can pass legislation to
(12:24):
prevent that from happening. But states like North Carolina, Indiana, Mississippi, Arkansas, Minnesota, Wisconsin,
even California are all at least for now, even California,
even California, and of course California, well no, I mean California.
I would think they would actually be on board with
defense on this, but I don't know. They love tax
their citizens. They do have what the highest individual income
(12:45):
tax rate in amltize taxes? Yeah, it's it's something like
exsive thirteen states in total who are considering taxing the
amount that was forgiven. Yeah, so this is subject to change,
but it's something to be aware of, and we'll we'll
link to that in the show notes an article about this.
But they've I'll send you a tax bill. And how
much are you going to owe? Is the next question.
It depends on how much forgiveness you received and the
(13:06):
state income tax thresholds where you live. Lots of folks
are likely gonna end up owing somewhere between five hundred
bucks and a thousand bucks in additional state income taxes
come April if if there's no pivot made and so, yeah,
just just a heads up to start mentally and financially
preparing for that. The forgiveness feels good, but he might
be taxed, at least at the state level on some
of that forgiveness. Yes, right, Yeah, so that's some bad
(13:27):
news when it comes to taxes. On a positive note,
the I R S is gonna be refunding over a
billion dollars to evidently any taxpayers who missed deadlines for
filing their twenty nineteen and the tax returns, and so
the way it works, you know, typically the I R
S they charge you a fee for filing late. But
because of the pandemic, the kind hearted suit wearing folks
(13:48):
over there at the Internal Revenue Service and they're going
to send that money back to you. Uh it's something
like I think like one point six million Americans are
going to be eligible for this refund. And the best
part is you don't have to do anything. It's going
to be automatic. That is, actually unless you haven't if
you still haven't filed your taxes for if you're that
late for those years, like literally the latest person out there. Yeah,
(14:08):
if that's the case, you need to get on it
because you have until September to finally get those returns in.
And also, you know, don't get used to this kind
of generosity from the I R S. I don't think
this is likely to be normal moving forward. I feel
like they're just throwing everybody one final pandemic bone and
uh so, yeah, I don't count on this in the future. Yeah, well,
(14:28):
thank you, sweetheart. I R s folks, for anybody who
was late that is going to that they could be
hundreds and hundreds of dollars in life fees that they
are able to avoid that are gonna get automatically refunded
to them, which which is nice. Absolutely. I think that
the average refund amount is going to be something like
seven and fifty bucks. So maybe you filed lates, you
already paid that fee. And also maybe your state that
(14:50):
you're living in is gonna charge you for the student
loans that were that we're forgiven. So hang onto that
come out in the wash exactly, but at least you're not,
at least it's not feeling like that you're paying and
more out of pocket. But we've got additional stories that
we're gonna get to this week, including that virtuous investing story.
We'll get to that plus others right after this. All Right,
(15:18):
the Friday flight continues, and Matt, we gotta get to
our ludicrous headline of the week. And typically we find
something from a newspaper, a television station somewhere around the
country that annoys us or irks us, or maybe it
just is worded poorly and makes us think something that
maybe they weren't trying to do just bad headlines are
(15:39):
all over the place, But this week's comes in the
form of a tweet. I think it's maybe our first
time to do this. Who's out there making predictions again?
Of course it's the rich dad, poor dad guy, Robert Kyosaki,
and he tweeted last week it's this. It's his pastime.
He likes to tweet, and he likes to tweet making
those predictions dumb things. And he he likes to use
all caps in a lot of tweets too, which I
(16:00):
think is I don't know if that's just a generational
thing or it's kind of a classic boomer movie. Okay,
they hate on any of our boomer listeners out there,
but I mean, I don't know, how often do you
tweet in all caps? Um? How often do I tweet?
Is a better question, rarely, but in all caps never?
Probably never? Yeah, Well, he he tweeted the crash is here.
(16:20):
I'm trying to emphasises like he does. Is that how
that's how he wrote it? Yes? And then he said stocks, bonds,
mutual funds, et F in real estate crashing as predicted
middle class being wiped out. And then what did he
proceed to do. He proceeds to tell all of his
followers to buy Solver. Uh. This guy, Matt, he tends
to make a prediction every single year at a random time,
(16:42):
typically in the fall. I feel like, but his track
record just isn't great. He's he's wrong most of the time.
And there was another article this week analysts that Morgan
Stanley are predicting a major market downturn over the next
four months and all these things, like these predictions, what's
our response to them? Who cares? Because the reality is
like if anyone was paying attention this week, the market
(17:03):
was down almost four and a half percent in a day,
like the largest single day dropped since But to us,
that doesn't matter. That's short term stuff that we don't
care about. The same is true, right if we experience
more volatility and and downward movement in the coming months.
We're long term investors here at how the money, and
so we expect these short term blists. We choose not
to pay attention to them. And could these predictions come
(17:24):
to pass? Sure it might happen, but he Mr Kiyosaki
has also made a lot of predictions that have not
come to pass. And if you if you believe these predictions,
if you buy them, hook client and sinker, and you
make your investing decisions based on them, it's far more
likely that you're gonna lose money than make it. Yeah,
and again we bring this to your attention because it's
okay if you notice that folks are out there saying
these kinds of things, but we don't want you to
(17:45):
take action with your actual money. You could just unfollow
up to that. That is true for for the bad
advice and for all the kids tweets. Yeah. Well, and
speaking of taking the wrong actions, the wrong steps with
your money, friend of the show Lindsay Bell, she actually
tweeted out a shocking chart this week. It turns out
that millennials are selling stocks like it's their job. Data
from Ally shows that forty nine of millennials have sold
(18:07):
stocks over the past twelve months, whereas only seventeen percent
of zoomers did the same thing, and one of the
main reasons that they cited as a reason for selling
was volatility. Man, this, honestly, this kind of makes me
mad because this points to a lack of financial education
because volatility within the stock market is to be expected.
It's just an inevitable part of the wealth building process.
(18:30):
But when you sell, you're often locking in losses in
an attempt to time the market. None of us, obviously
are smart enough to do that successfully, though, and so
this is not something we would recommend. We would we
want you to just continue buying. You're going to see
the volatility. You might see the market crash, just like
Robert Kiyosaki mentioned, but that doesn't mean you have to
actually take action and do anything about it. Makes me
(18:51):
think of our interview with Nick mcjuli. His book was
called just keep buying, and I love I love that phrase.
That's how we should think about investing in the market.
Just keep buying through thick and through thin, back to invest,
and you'll be wealthy at some point. That's just the
that's just the way it goes. You don't really have
to pay attention to day to day movements or movements
year to year. Even alright, let's let's keep talking about investing, though,
(19:12):
because let's talk about four owne case in particular, because
folks who got their Q two four own case statement,
they might have noticed that it looked a little bit
different than it normally does. And that's because there's now
a requirement for four own K providers to attach what's
known as a lifetime income illustration. And by you, I
don't know. When I say illustration, might think like doodles
of Disney pictures or something like that. No, that's not
(19:34):
what we're talking about. Uh. This is basically an attempt
to give people a picture of how much monthly income
they can expect based on their total instag Yeah. Yeah,
and illustration and picture maybe inaccurate words as well, because
I don't even think it's a chart or anything like that.
It's just kind of like a table with some numbers
on this that kind of gives you a heads up,
uh huh. And so yeah, that this comes from the
Secure Act, which was passed in twenty nineteen, which now
(19:55):
made this a legal requirement. And it might be disconcerting
because let's say you've got a hundred and twenty thousand
bucks in your retirement account. Well, you'll realize, based on
this lifetime income illustration, that you should be able to
expect five hundred ish dollars a month in income when
you reach retirement age. But here's the thing. Uh, the
younger you are, the less this matters. Right, the goal
(20:17):
really should be to just increase your overall nest egg,
ramping up the amount you're able to contribute, while paying
very little attention to these details about how much you're
gonna be able to spend in retirement. And for folks
closer to retirement, I think this can be maybe a
helpful wake up call to start stalking away even more.
You might realize. Let's say you're you're in your fifties
and you're listening to H T M and you're like,
a man, I just got that my my lifetime income
(20:38):
illustration shows that, yeah, I'm only gonna be able to
expect seven or eight hundred dollars a month in income
from my retirement accounts. You might need to increase your
contribution level so you can catch up. But the reality
is you might also have a penchant from somewhere else,
and you've got to factor social Security into so there's
a lot to think about. I think this lifetime income
illustration can be helpful, but I think for some folks
(20:58):
that can also be shocked and they just like have
no no idea what to do with it. I mean,
I think that's the whole point, right is hopefully it
shocks you into doing something different with your money, because
in the end, hopefully you're able to see that, oh yeah,
six hundred bucks a month, that's not quite enough for
me to live on. Uh if I would to retire
right now, this is not feasible, and so sort of
like we were saying earlier, I feel like that it
can provide some empowerment to folks to realize there are things,
(21:21):
there are steps I can take right now to change
how much I've got within my four o one k.
I think one of the things bumping your four owne
K contributions up upper cent or two, like it's gonna
make a massive difference. And that's where maybe this illustration
could do better in the future is if they had
like some projections or something right, because I think the
criticism might be that it's just a snapshot of what
your nest egg is currently and what that would provide you,
(21:42):
but not based on your age or future exactly, or
or how long you're planning to work. Because if you
knew that, Okay, well it's only hundred twenty five thousand now,
but like I just started last year. I guess not
last year, but I guess like five ten years ago.
But if you know, you've got another twenty years worth
of your career here ahead of you, and you can
map that out, if you know, if they had like
(22:02):
a little dash line, uh, with an increased four oh
one K amount, and then what that would allow you
to withdraw every single month. I think that's the part
of it that can be encouraging to. Basically, this illustration
could use a lot of work better people. But I
do like the spirit behind it because it just allows folks.
It's a tool, right, and it allows folks to peer
into the future in the same way that we joke
(22:23):
and and literally have done this, but you know, using
the face app to see an older version of yourself.
I think, for in particular for younger investors, if they
can see, you know, six d bucks, Oh my gosh,
that's not a whole lot of money. I need to
start saving more now, uh. In that way, it does
allow us to look down the road a little bit
and too essentially forecast and realize, Okay, maybe I've been
(22:44):
embracing that yellow lifestyle a little too much. Maybe I
need to travel a little bit less and instead divert
some of those funds towards my retirement yea, yeah, stop
eating out so much. That's not that's nothing, it's expensive. Well,
one one thing we prefer you not to invest in
within your four one K is E s G funds,
and we we've talked about this a few times on
the show, and I think any how, the Money Listener
knows that they're not our favorite because the goal of
(23:06):
these funds really it's to allow folks to invest in
what we would call a virtuous way, in a socially
responsible way. But as you've heard of say, they often
don't do an awesome job at it. Friend of the
show and recent guest, Alison Schreeger, she just wrote a
great article for City Journal about how the E s
G bubble is starting to burst, and at the heart
of the problem that she expounded on was virtuous investing.
(23:29):
It's kind of hard to define our oil companies awful
or are they currently just the cheapest way to power
economic development, particularly in the developing world. Exactly do you
care more about the earth and uh utilizing fossil fuels less,
or do you care about maybe equity amongst all the
different nations, in particular in developing world. These are more
complex questions and sometimes we give them credit. Bactly, it's
not just like good versus evil. And I think a
(23:51):
lot of times that's how you know E s G
investing is that's what that's what they're setting out to do.
There's they're they're there to say, oh but this is good,
but okay, according to according to what parameters, according to
who's definitely and every E s G fund is created differently.
Some invest in test Lass, some don't. Some I'm invest
in oil, how many some don't. So I'm invest in Facebook,
who is potentially ruining our society. Others don't, right, I mean,
(24:11):
and that is a legitimate those are legitimate concerns and
and returns from these funds they're not matching up with
their index counterparts either. So spending your money, we would say,
in a way that aligns with your values, is something
worth doing, is something worth pursuing. But it's not as
easy to invest in a similar manner, and it's likely
to cost you more in fees in returns if you try, so,
(24:32):
you're gonna be less financially stable, You're you're not gonna
build wealth as quickly. They're just legitimate downsides to investing
uh in these E s G funds trying to invest
in a virtuous way. Yeah, I mean you can clearly,
I mean, it will cost you more if it says
the expense ratio is higher than the point zero three
percent that you should be paying, which they inevitably are,
or like even like I was looking at Vanguards, it's
(24:55):
e s G V they're only point zero six which
is I mean, as they go. Oh that's as I think,
almost as cheap as you can get. The industry average
is like point four percent, which is way higher than
what anybody should be paying out there for a widely
diversified index fund. But then, like you said, the performances
of these E s G funds has been like it
was actually looking slightly better than the stock market as
(25:18):
a whole, or there are many as we were in
a bowl market when everyone's feeling great about everything. But
then as soon as things have turned around a little
bit and we've entered into a bear market, these E
s G funds have not performed well. So yeah, like
you said, they cost more, they are not performing. Not
to mention, they aren't doing whatever it is that you
think they're doing. Like you might get the good feels
again from investing in something that feels more green, but
(25:42):
the reality is it may not even be doing that
all that. Well, yeah, I think we might get some pushback, Matt.
Some people might be like, why don't Matt and Joel
care about the earth or care about being virtuous citizens?
We would say, because Joel's too busy other coal rolling,
right exactly. Yeah, Well, there are so many little decisions
you can make that are good for the earth and
good for you a while, we just think E s
G funds are not necessarily one of them. All right,
(26:04):
but let's let's move on. Let's talk about new phones.
Because Apple had their infamous event last last week. They
used to be so much more popular. I remember, like
New York Times writers used to like live stream their
comments on what Apple was releasing. That doesn't seem to
be the case anymore. But Apple just released their their
newest version of the iPhone, iPhone fourteen, and I don't
really care about that. But a new survey found that
(26:27):
one in five folks are more than willing to go
into debt in order to buy the new iPhone. And
that that's according to wallet hub. When I saw that stat, Matt,
that's something I got in the email inbox. Uh. It
made my my usual optimistic self a little bit bumped. Uh.
It made me sad about the state of humanity because
the reality is that, as The Atlantic noted this week,
the iPhone it's just not cool anymore. So the changes, Well,
(26:51):
even if it was cool, it doesn't change our opinion. Yes,
even if it was still hip, which I don't think
it is. I think it's bad to go into debt
for it. Yeah, I mean, like we were just talking
about student before the break. I mean, you need to
be careful about the kind of debt that you take on. Obviously,
student learns has more promising potential. And we're talking about
consumption here, basically financing lifestyle, which is not something that
we can get behind at all. Yeah. And the reality
(27:12):
is that the iterations of smartphones are infintessively small these days.
The difference between an iPhone thirteen and an iPhone fourteen,
it's pretty minimal. Yeah, there's gonna be a whole lot
of people that decide to upgrade to an ever so
slightly better iPhone and put it on a credit card
that they can't pay off in order to get a
new phone. And so I don't know what we would say,
(27:33):
if you prefer to buy a way more expensive phone
that's barely improved, that's okay. Just don't go into debt
to buy one, and make sure that you're doing it intentionally.
Don't fall victim to the upgrade cycle and every time
something new comes out you're like, oh yeah, knee jerk reaction,
Pavlov's dog, I'm going to get that thing, even though
it's probably not going to make much of a difference
in your life. Why why are you such an iPhone
hater's not a pixel guy? Even though I and you're busted.
(27:56):
I'm looking at your crack Hey, it's a great phone,
your brand new crack phone. Right now about it? I'll say,
I'm a thirteen iPhone thirteen Pro owner. Forget the fourteen
like like you said, you like, there were very few
upgrades to that. Just get the thirteen Pro for much less.
And I'll advocate a little bit for Apple here. And
at least they did increase the price of their phones,
because that was one thing that everybody was thinking it
(28:16):
might go up a hundred bucks or so. And what
happening that they held the line. How many years did
you take between upgrades? Wasn't wasn't it close to five years?
Five years? I think that the average upgrade cycle is
a whole lot less than that. And the longer weeken
what we're trying to keep folks from just continuing to
go down that path, the longer we can make our
upgrade cycle if you normally do it on two year cycles,
(28:37):
trying to expand a three and if if we can,
you should be able to do that, because these phones
are getting better and better. Going back to the going
Green conversation to Matt, like less waste, less e waste exactly. Actually,
speaking of smartphones, the fair phone, they got some love
and the Times this week, um was it? Alex listener
Alex he told us about ye about these phones a
while back. Sadly they're only available in Europe. But the
(28:58):
cool thing about those phones is that they and last
you a really long time because as the batteries, as
your storage gets outdated or filled up, as camera technology improves,
you can upgrade all of these different elements on your
own fair phone pretty easily. Like they're they're literally built
for you to tinker with so that they don't ever
have to become obsolete. A fair phone is the type
(29:20):
of phone that tinker Bell would would totally. The reality though,
is that most phones they're not designed for longevity, and
so you know, were they to do that, that it
would undermine the company's bottom line, and so we would, personally,
we would love to see someone take the fair phone
business model launch it here in the United States. That
right there, that might be something that causes me to
jump off of the Apple iPhone ship if I can,
(29:43):
you know, mess around with my own phone, swap little
parts in and out like it's a Lego phone, but
that doesn't completely fall apart when you were to drop it.
I'm just picturing our kids are really getting into, you know,
tinkering with legos and tinker toys, that kind of stuff,
But every time another kiddo bumps into it, it it just
falls up heart. Hopefully that doesn't happen to their fair phone,
but you know, people people who have it say that
(30:04):
it's great, supposed to be fantastic, planned, oss, super reparable.
It's still a real problem in our economy and uh
and I will admit one of the worst things about
Google is they don't commit to as long of a
software upgrade cycle as Apple does to their phones. And
that's a real problem. So I'm gonna call out both companies,
and they really should both be doing a better job
at making sure their products can last longer for people,
(30:26):
including software upgrades and hardware that's more interchangeable. Right, there
is room for improvement on both fronts, but that's gonna
be it for our Friday flight. Don't forget how do
Many Socks? If you are not a subscriber to our newsletter,
head to how to Money dot com forward slash newsletter.
But if you sign up for that newsletter by Wednesday
(30:47):
at midnight, you will be entered to win one of
five pairs of socks, and we will announce those winners
on our next Friday flight, no doubt. All Right, Matt,
that's gonna do it for this episode until next time.
Best Friends Out, Best Friends Out. M
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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