Friday Flight - Unemployment Uptick, Ridiculous Returns & The 4% Rule Debunked #993

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: Southwest sale extension, unemployment uptick, you too U3?, 401k contribution cutbacks, 4% rule debunked, avoiding the annuities, high priced mocktails, Gen Z forgoing the bar tab, Kirkland Sig old fashioned, dressed by the internet, golden age of secondhand shopping, and ridiculous returns.

 

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Episode Transcript

Speaker 1 (00:00):
Welcome to Out of Money. I'm Joel and Matt's not
here today, but I'm going to be talking about the
unemployment uptick, ridiculous returns, and the four percent rule debunked.

(00:30):
That's right, My good friend Michael Padre, my bestie. He
is not with me today, which is a little disappointing.
You might find at times during this episode that I
asked a question of Matt and then I just hear
crickets chirping, just crying into my microphone. No, but for
this Friday flight and next Friday flight, Matt will not

(00:50):
be with me, and I will be offering my take
on the headlines that I found interesting this week. Matt
didn't get to have any say, just me. Will the
power go to my head? That remains to be seen.
But first thing I wanted to talk about, actually real quick,
was just a heads up that today only it was
happening earlier this week. But today is the last day

(01:13):
Southwest extended their sale. We've kind of run Southwest through
the ringer recently, they haven't. I don't love the free
bags going away. I don't love some of the changes
happening at Southwest. I think they're going to lose loyalty.
They're definitely going to lose loyalty from me. But what
will gain loyalty back is low prices and so up

(01:34):
to fifty percent off on fares right now at Southwest
dot com. So if you're looking to travel and you're
flexible on where you go and when you go, and
you just want to get a cheap fair somewhere cool,
go check it out. I'm looking to go to New
York in the fall, potentially for a few days, and
I found some ridiculously cheap faares so this but again,

(01:57):
today's the last day for that. That is word to
the wise. Love a good deal, especially on airfare. Oh
and you can pay with points. I've got some Southwest
points loaded up that I plan to use for that trip.
So yeah, if you got some points lounging around, the
discount counts on airfare that you buy with points as well.

(02:19):
All right, I want to talk about specifically unemployment for
a little while, and we are not at great recession
levels of unemployment. We're far from it, in fact, I
mean you think about that. I remember I was graduating
college in the teeth of the Great Recession, and man,

(02:40):
I just remember havoc tumult all around. Shortly after graduation,
and especially for people graduating the year or two after me,
the job market just continued to get worse. But recent
college graduates, they're getting more nervous about entering the job
market right now. They're kind of assuming and feeling like

(03:00):
things aren't as good as they have been. And I
think it feels worse for recent college grads than it
has been, largely because the job market was so worker
friendly for the past few years. When you think about
just how good things have been that it makes sense
that they can't stay that good forever. And we've reached
more of an equilibrium now, right So it's kind of

(03:22):
like housing prices, they couldn't continue to go up into
the right at the insane rate that that they were
traveling upward for the coming years, like they had to
come back down to earth. Home prices couldn't outpace wage
growth for forever, and that's why I think we're starting
to see a softening in the housing market. But the
same thing is true of the job market. People jumping

(03:44):
ship and being able to get paid twenty thirty forty
thousand dollars more because there was such a shortage of workers,
and so yeah, we've reached this I think new place
of equilibrium, which does mean it's harder for new graduates
to find work, even as the unemployment rate remains low.
And so recent data found that the unemployment rates for

(04:07):
people in their young twenties is higher than average. It's
six percent compared to four percent, so still relatively historically low,
but not as good as the overall job market. So
if you're graduating and you're ready to put that degree
to use, you're like, oh, I don't know, maybe am
I actually going to get the job I want. Some

(04:29):
even suspect that companies are leaning more heavily on artificial intelligence.
That's part of the reason why I think there is
some anecdotal evidence to that and potentially some reality some
feat to the ground for that claim. But I also
think it might be overblown, Like the Shopify, No, you
can't hire anyone until you can prove that a I
can't do that job. That's few and far between, at

(04:52):
least at this point. Where that goes in the future,
that's a good question. I'm not an expert on that,
but I think, yeah, it's true they graduate into a
tougher economic climate, it's emotionally difficult. It can have long
term personal finance consequences as well. So if you're graduating
into a down job market and you feel like you
have to take a job that you otherwise would not

(05:13):
have taken, or you might have, you're more highly qualified
than the job. Your first job suggests, it could have
lifetime career earnings impact. So I would do a couple
of things. I would suggest proactively reaching out to companies
you like and you want to work for. Don't just
lazily toss out resumes online. If you look at the
job boards of companies that you really dig, I think

(05:35):
that's a better way to go, and then just kind
of keep barking up that tree. Also, your network might
be small right now, but don't neglect it as your
job hunting. And also your school's alumni department they might
offer helpful resources. Hey, I just got a degree. Here,
I'm gonna hold your feet to the fire. You help
me find this job. What connections do you have for me?

(05:56):
I think that's always a good place to turn as well.
And this might counterintuitive, but if a graduate degree would
help your lifetime career earnings and you can mostly avoid debt.
You don't have to take on loads of debt to
get that an extra degree. And at the same time,
you feel like you're having trouble securing the kind of
job that you want, and you feel like you should
be capable of achieving in a better job climate, consider

(06:20):
getting more education. I think it's a way to wait
out a potential recession and to come out better on
the other side. Again, is a recession gonna happen, I
don't know, but if the job climate, if you feel
like you are having a harder time finding the job
that you deserve, or you think your education and experience
level qualifies you for this is a kind of a

(06:44):
normal approach for a lot of people over time has
been you know what, I'm gonna hunker down during the
tough economic climate, get that education. I'll come out on
the other side a little bit better, a little bit stronger,
ready to get that fancy your job. But also this
was making me think is unemployment worse than maybe the
headline number suggests. And there's this new study that found

(07:06):
that what they called functional employment in the US is
closer to twenty five percent, And I was like dumbfounded
when I read that statistic twenty five percent. No, I
have not seen any sign that we are experiencing unemployment
at those levels. And this study it made for shocking
and clickable headline, but I just don't I just don't

(07:27):
think it's accurate. I think the real truth, though, lies
maybe somewhere in the middle. We see the headline rate
four point two percent unemployment rate, and that headline rate
that gets the vast majority of the headlines right, but
maybe that's not quite as accurate as we would assume either.
And so maybe now is a good time for me
to quickly put on my pointy hat. Not really an economist,

(07:50):
but I'll play one for just a second and dive
into different stratifications of the unemployment rate in what they
might mean. So there's the headline rate, that four point
two percent that I just mentioned is known as U three,
But there's this other unemployment metric called U six, and
it might be a better indication of what's really going
on in the job market because U six includes another segment,

(08:13):
multiple other segments of folks that you three does not,
And so U six says, actually, we're gonna include just
beyond people who are just actively looking for work, who
don't have work. That's U three. We're going to actually
include people who have part time jobs who wish they
had a full time job. And if you look at
U six, then that unemployment rate is currently at seven

(08:35):
point three percent. So is unemployment four percent? Is unemployment
twenty five percent? Well, if you were to ask me,
I would point to U six and say, ah, it's
probably closer to the low sevens. That's likely a more
accurate state of what's happening in the labor market right now.
So U three that's what hits the papers. U six
is more reflective of real employment conditions. And actually U

(08:58):
six is still historically when we're talking about it. So
where does the job market stand? Certainly not as good
as it was a few years ago, but I think
there's still opportunity for people who are go getters. And yeah,
it's also helpful to realize that maybe the U three
if you are working hard to find a job and
you feel like it's harder to get don't be demoralized.

(09:20):
The unemployment rate not quite as rosy and glossy as
it seems in some of the headlines. Are worries about
the state of the economy are leading workers to reduce
four h one k contributions. Right now, there's this new
Morgan Stanley survey and it found that four in ten
employees are reducing what they're contributing to their workplace retirement
accounts because of the uncertainty that they're feeling. They're like,

(09:43):
things just don't feel good. It's a ViBe's based approach
to how much they're setting aside for their future. And
so the vast majority are still contributing something, right, They're
not dialing all the way back to zero, but they
are cutting back how much they invest. And the first
thing I thought of when I read this was that

(10:05):
actually might not be the worst news. If people are saying,
I'm gonna invest a little bit less, I'm gonna stick
some money into my savings account. I'm shoring up that
liquid savings because that's what I need to be worried
about if I really do have concerns about the economy
in the near term my own employment, Like, am I
going to have a job six months from now? I

(10:25):
don't know if you're worried about that. Having more cash
on hand makes sense. But sixty seven percent of folks
in this survey said they're not prioritizing savings either, So
they're not dialing back on retirement of contributions to sticking
in a high heel savings account, they're funneling it into
their monthly spending. You know, I don't want you investing

(10:45):
a big chunk of your paycheck if you haven't prioritized
liquid savings. Go look up the money gear's got to
how to money dot com. Click start here. You'll find
our money gears there. See where you're at and what
the next step is for you. But if your job
or industry right feels particularly vulnerable, airing on the side
of more savings could be wise. It's okay to dial

(11:06):
back in order to bulk up savings for a limited time.
But I also don't want you to cut back on
contributions because you're worried about the stock market, right. That
is the classic mistake that so many people make. I
was literally just reading about there's this old adage of
when it comes to investing in the stock market, and
we're in June now, but it's you go away in May, like,

(11:29):
don't don't invest in May because stock market doesn't usually
perform as well as it does in other months. And
actually when you look at the historical performance of the
stock market in May, it's pretty dark good. It's not
as good as the average stock market returns, but it's
still pretty good. And if you look at what happened
to the stock market in May twenty twenty five, it

(11:49):
was pretty awesome too. And so even with all of
these concerns, even with all the tariff concerns and the
steep stock market declines, we've seen a recovery and then some.
And so to change your investing goals, attitude and the
percentage because of headlines and vibes and uncertainty, well, if

(12:12):
you did that, if you follow that advice, it'd be
like shooting yourself in the foot from an investment perspective.
And instantly, there was this other study from Fidelity that
came out this week, and it found something really different
than what this Morgan Stanley survey found. It found that
people are saving a record amount in four to one case.

(12:33):
So where is there. It feels like there's this dissonance
to these two separate findings that came out in the
same week. Fidelity says people are saving almost fifteen percent
in four to one case, which is the minimum recommended
amount to invest for your future from most personal finance
nerds myself included, I want to see people hit that
as like a minimum threshold for what they're contributing to

(12:55):
their future. And I think these things are actually not
mutually exclusive, And let me explain why I think they
actually fit together in an interesting way. I think the
reason that both of these things are true is that
more folks are being auto opted into their workplace retirement
accounts in record numbers, and so like the bulk of

(13:18):
folks who were contributing nothing to their retirement accounts are
now contributing three percent or five percent whatever their employer
has said, Hey, this is like the minimum amount we're
going to auto opt you in at A lot of
the people who get auto opted in don't end up
changing that back to zero, which is something I love

(13:38):
to see because more people investing for their future is
a good thing, even if it's kind of against their will,
but they're too lazy to change it. I think that's awesome.
Then other people are taking their contribution amount down because
of economic race, and so you can have this effect
where yes, some people are dialing back retirement contributions and
other people are saving more than they and investing more

(13:59):
than the other. Why what have so both of those
things can be true at the same time. It's just
kind of fascinating to see both of those come out
simultaneously and be like, oh, yeah, okay, yeah. As I
noodled it out, I was like that there really can
be possible. I'd be curious to hear Maths take, but
he's not here, so yeah, I'll keep talking. Let's I
want to talk about four O one K withdraws for

(14:19):
a second. And I think lots of times we talk
about this in the context of retirement, but especially given
the younger audience of how to money, I think it's
actually means something for you today too, And I'll explain why.
The father of the four percent withdrawal rate, which essentially
says you can withdraw four percent of your portfolio every

(14:42):
single year in retirement and not run out of money,
his name is Bill Bengen, and this has been a
his the way his methodology, and the way that he
rigorously defined and came to the four percent rule conclusion.
It's been a mainsay of personal finance for a long time,
and fascinating enough, it wasn't four percent originally it was

(15:05):
four point one five percent. He rerounded it down to
four percent because it just seemed more palatable and like
you would catch on, and yeah, it did catch on
like wildfire. But even mister Bengan, who came up with
that rule decades ago, has basically said, now, ah, it's
too conservative, and he says he's amended the rule to
be the four percent rule to the four point seven

(15:27):
percent rule, based on new calculations of stock market returns
over the past few decades, alongside better inflation data the
option to be able to invest in a greater diversity
of assets. So mister Bengan has said, hey, actually the
four percent rule is too conservative, and I think this
is really good news for a lot of reasons. One,

(15:47):
this is something that's gotten in the news more recently,
as Dave Ramsey was like, oh, you can have like
a seven or eight percent withdrawal rate and you won't
outlive your money, and that's not great advice. It can
hold up. Yes, it's certainly possible that that works out
for you, but there's just too high a percentage of
the time where if you're taking out seventy eight percent
of your money from your portfolio every year, over the

(16:08):
course of decades, you do run out of money and
then what do you do at that point? But this
allows a couple things. It allows you to take out
more of your assets every single year in retirement and
still stay solvent over the course of your retirement. Basically,
if historical trends continue. This is backward looking projecting into
the future. You can't know what the future will bring.

(16:30):
But the flip side is also that people can retire
with less money than they assumed. Right, if you need less,
you can amass less. And I think that hopefully should
ease the mind of some type a retirement savers who
are like, I need to have four million dollars in
my retirement account by the time I'm sixty five. Maybe
you don't, right, Maybe you can aim for a smaller number.

(16:52):
And obviously the four percent rule is contextualized for it's
a rule of thumb because so much depends on well,
do you have a mortgage still when you reach retirement age,
do you have other sources of income? Are you delaying
social Security and planning on taking that? Then there are
so many other factors that go into whether or not

(17:13):
you actually need four percent of your portfolio. For in
perpetuity right for decades on end, or you can actually
withdraw more one year less another year. But I think
just even knowing and seeing that the guy who created
the four percent rule, mister Bengen, that he's saying, actually,
you can withdraw a decently a bigger chunk of your

(17:35):
retirement savings every year, that should, I think, help us
all maybe feel take a deep breath and say, actually,
I probably don't need to be quite as intense as
I otherwise thought that thought I needed to be. And
maybe that can be a little breath of fresh air
as you're pursuing your retirement savings goals. And for folks

(17:56):
who want a guaranteed stream of income in retirement instead
of fretting over withdrawal rates and stock market moves, annuities
are becoming a more and more popular choice. Kiplinger wrote
about how buying an annuity inside of your four to
one k is. It's becoming an even more popular approach
these days. But I'm not a huge fan of this,
and there are also big potential downsides to the income

(18:17):
certainty that you'd achieve by having an annuity inside of
your retirement account. The main things are the fees and
the likelihood of lower returns. So is your peace of
mind for having the guaranteed stream of income really worth
those two fairly significant trade offs. I'd say probably not.
And if you're being sold or being told that you
need to get an annuity or should get an annuity,

(18:39):
you should dig into the details before you pounce and say, sure,
that sounds great, because what sounds good on the surface
when someone's selling it to you could mess you up.
And it means more certainty, yes, but it could also
mean and will likely mean fewer dollars to spend because
you're taking some of that risk off the table. And
don't forget functions like an annuity. So do you need

(19:02):
to also innuitize the money that you have invested and
saved up for many, many years and decades as well?
Probably not, like having the guaranteed annuity of Social Security
and then having an investment portfolio to tap from. I
love the idea of having both. Remember, your retirement can
last for many decades. You don't want to be overly conservative,

(19:24):
and sometimes if you lean too heavy in the hyper
expensive annuity direction, you are taking too conservative of an approach.
We got more to get to solo here on today's
Friday Flights, including you're going to talk about mocktails and
why gen Z treats a bar tab a lot differently
than previous generations, and why I actually think it's smart.

(19:46):
We'll get to that and more right after this. All right,
we're back, still talking Friday Flight and of course it's
for the ludicrous headline of the week. This one comes
from the Wall Street Journal and has said mocktails cost
fifteen bucks and nobody knows why. And I'm not a

(20:10):
mocktail guy, but I was like, mocktails for real cost
fifteen bucks. That's insane. So I read the article and
I there are obviously a couple different takeaways from this.
I think it's interesting that we as a society are
more aware of the effects of alcohol, and we're all
avoiding alcohol more and more. And this comes from the
guy who drinks beer on his podcast. But even I

(20:34):
am drinking less than I have in the past, and
on purpose to say I want to be healthier. I
want to enjoy a good drink on occasion, but I
also think that drinking a lot less frequently is better
for me. I feel better, So I get why people
are dropping alcohol. Some people dropping it all together. And

(20:54):
I wish Matt was here today to tell me what
Andrew Huberman would say, probably something like alcohol is poison.
Lift heavy stuff and then live forever. And there's a
point for that. Except for living forever. None of us
are going to do that. But I also, I think
I love that we're not teetotaling and dropping alcohol out
of this like legalistic moral duty, but it's more of
just an effort to treat our bodies well. Non Alcoholic

(21:16):
beer is gaining popularity in a big way too, and
even craft brewers are saying, oh, we have to have
non alcoholic beer to cater to that segment of the
population because they're growing. And I've had a couple solid ones.
I'm still a fan of real craft beer, but it's
nice to see the non alcoholic stuff getting better. But

(21:37):
mocktails they're hot too, And you would think that a
mocktail would save us money because the most expensive ingredient
is being left out of the equation, but they don't.
Bars used to charge less for non alcoholic drinks, like
a Shirley Temple or something like that, but bars have
caught on and many are charging cocktail equivalent prices because
they can, I guess, and also because us the more

(22:00):
you dig into it, like, you can make non alcoholic
spirits like gin and vodka and stuff like that, and
they're really hard to make and they're expensive to make,
and so if you want those put into your drink
to get more of the flavor profile you were hoping for,
it's going to be just as expensive as a drink,
or very close to as expensive as the alcoholic version

(22:20):
of that drink. So a lot of ebstainers are taking
the smart route of opting for tea or diet coke
or sparkling water or something like that instead when they're
out in the bar. So just know if you're cutting
out alcohol and part of your reasoning is not just
health but an effort to save money, well it might

(22:41):
not save you money. If you're buying the expensive mocktails,
the ones that are attempting to most closely mimic your
favorite cocktails. Be aware when you go out with your
friends you might be racking up just as high of
a bar tab and I douce I obviously drinking at
home or making your own cocktails or mocktails at home

(23:01):
will be will save you a lot of money as well.
And there's this other drinking trend that I thought was
worth covering. It's gen zers saying we're going to open
a bar tab, or we're not going to open a
bar tab. We're just going to pay for each drink individually.
So if you order three beers in a night, you
literally pay three times over the course of the evening

(23:21):
instead of opening a tab and paying for it all
at once at the end. And one of my friends
he texted me about this, and he's a millennial like me,
and he just couldn't understand the logic. He's like, what
is up with these young people, the gen zers, who
don't open up a bar tab and they pay for
every drink as they get it. He's like, this baffles me.
I don't understand, but I actually do, and I think

(23:45):
that this kind of makes some sense, and I think
it actually might be financially savvy. It might be smart
because when we talk, and when we've talked in the
past about the gamification of money, part of what helps
you spend less is increasing the pain of spending. In
a society of ever reducing amounts of friction for buying stuff,

(24:05):
it's much easier to get parted from your money and
not feel a thing until you realize, oh man, credit
card bill just came in and I owe more than
I thought I did, or your savings get depleted because
you just were more thoughtlessly spending. And it's of course
easier to do that now than it has ever been

(24:28):
in human history to spend money and not think about
it by now, pay later makes it easy. Credit cards
have made it easy. So, and even just retailers where
one day shipping, or hey, you know you can get
it the same day, get it later this afternoon, that
sort of frictionless response or grub hub whatever, everything it's
conspiring to get us to spend money thoughtlessly. And so

(24:50):
what gen zers are doing here, in my opinion, by
avoiding the bar tab is saying is every time I
get a beer or a drink or whatever it is,
or a mocktail, I'm going to pay for it, and
then I will feel the pain. And maybe don't mean
I drink less because I don't want to spend as
much as I realize I'm spending. So paying free drink individually,

(25:11):
maybe it slows you down, maybe drink less overall, It
might decrease what you ultimately spend when going out. I'm
gonna call this a win. I'm gonna say, gen z Ers,
you're being smart here. I like this. If it's a
frugal versus cheap, I'm gonna say it's frugal. And if
you would prefer to make cocktails at home, but you
want to make them the easy route. One of my

(25:31):
favorite substacks from a guy who is a raging cocktail enthusiast.
He tried Kirkland's Signature from Costco their New Old Fashion
in a bottle, so it's not just bourbon, and then
you mix the other ingredients like the bitters and the
sugar and stuff in yourself. You just get pre made
in a bottle and then you can add some lemon

(25:52):
dust on your own. I guess if you want. But
he said it's actually not too bad. So it wasn't
like this ringing endorsement, like it's incredible. But he said, yeah,
decently delicious for the price you pay, and the New
Old Fashion in a bottle Kirkland signature brand is less
than a dollar a serving, which ain't bad. So that's

(26:13):
one of my go to cocktails at home. I might
have to try this out at some point, but that's
another Hey, if you're looking to save money the pre
mixed Kirkland signature cocktail, drinking it at home might make sense.
Or another story I found interesting this week, one out
of eight new items of clothing is now purchased on Amazon.

(26:33):
Amazon feels like the sun that our universe revolves around now,
at least for some people. I was talking to somebody
this week and they said, my wife buys stuff on
Amazon like it's her job, and the returns you a woman.
We're going to talk about returns in just a second,
because she is just like clothing, whatever it is. Amazon

(26:54):
is the center of her retail universe. And I don't
think she's alone in that. And it is kind of
frightening to me because one out of eight items being
sold clothing items being sold on Amazon. Now, Amazon's not
even like was not originally a clothing retailer, And when
you think about that's not their bread and butter, but
it's becoming the bread and butter at least more than
I suspected. And that's double the amounts they're selling, double

(27:15):
the amount of clothing items of any other retailer Walmart included,
And think about Walmart they've got physical locations around the country.
Amazon doesn't like they're just online. And so I'm not
an Amazon hater, and I don't think everyone should just
boycott Amazon or anything like that, but it's Amazon has

(27:35):
been expanding their wardrobe selection, and when you're shopping for
other stuff now, they're going to make suggestions and say, hey,
had you thought about maybe adding a pair of socks
or a dress or this nice shirt. Did you realize
that we have these Amazon basic shorts that you would
look so good in. And so they're making suggestions, and
because this is the place where most people are shopping

(27:56):
on a regular basis, they're just more likely to buy
clothes there now. And it is adding up. So it
might not be because they have the most fashionable items
in existence, or because they even have the cheapest items,
but it's I think it's largely comes down to the
fact that it's convenient, and yet maybe some of the
stuff is a great value. I think I have like
a pair of Amazon shorts and they're good, like they're fine,

(28:19):
Like they're they're worth the money, I would say, and
they fit good, they're not like the highest quality. I've
got some nicer shorts fund of like more. But I
think the main reason people buy stuff on Amazon and
buy clothing on Amazon, it's because it's easy. I know
that's why my wife shops there. She buys stuff on Amazon,
and then she's like, yeah, that's fine, Yeah it works.

(28:40):
But I think if I've been trying lately to help
her shop for nicer, even more expensive items that I
think are going to last longer for her, she just
doesn't love to shop online. And so the more I
can kind of pitch in and say, oh, look at
this stuff I found for you, it takes some weight
off her plate and she actually she actually likes me

(29:02):
being her kind of secret shopper of sorts. But I
think taking Amazon, the Amazon app off your phone is
a good way to maybe stop some of that mindless shopping.
If you feel like you've gotten into a rut, so
consider reconsider how much clothing you're buying on Amazon, whether
you need it, and whether or not you're actually wearing
the stuff that you buy, and just don't buy it

(29:25):
because it's easy, and consider buying stuff more stuff secondhand.
We talked about how tariffs are making secondhand goods more enticing.
There's no arbitrary additional cost added on when you buy
stuff used, whether it's a garage, shale of goodwill anything
like that. Right, but everyone is getting in on this action.
My wife was just talking about her clothing habits. Well,
she's a big fan of Anthropology clothing, but it's incredibly

(29:48):
expensive and so actually buying stuff there she just never
does it because it's so one dress is like two
hundred and fifty bucks or something like that. She's like,
I'm not doing that, which I'm thankful for. But she
actually I talked about this recently. She rented some stuff
from Newly, where you spend one hundred hundred and twenty
five bucks and you get like six different pieces for

(30:08):
the month, and she needed a fancy dress and she's like, great,
this is a perfect chance to try this, and it
was awesome. And what I've just came around to realizing
is that Newly has to at some point sell the
stuff they've been renting, and they sell it at a
massive discount. So some of the dresses that you can get,
or a lot of more than just dresses, items of
clothing that you can get that were rented by people

(30:30):
on Newly are now being sold on Anthropologies site. That
they're like cleaned up and then shipped out to you,
and it's amazing. You can get like two hundred dollar
dresses for like thirty bucks. And so that's kind of
where we've been sourcing her wardrobe lately. We've gotten some
really cool stuff there that hasn't cost much money, but
it's high quality. I think other places to prioritize buying

(30:50):
US goods. If you haven't heard of Buffalo Exchange, that's
like a growing chain that's being added to more and
more cities. Plato's Closet that's another one, and that's too
where you can make money selling your old stuff at
both of those stores, and then they'll turn around and
sell your stuff for more. They're kind of the middleman
of sorts goodwill obviously, even on sporting goods, I was thinking,
Play It Again Sports is a great place to go

(31:12):
because buying used it saves you know, it's good for
the planet, it's green, but also saves you money. And
so I'm looking for a used stationary bike for my
wife right now, and I'm like, yeah, I probably need
to head over to Play It Again Sports if I
don't find what I need on Facebook Marketplace. But yeah,
I think it's also important to mention that some of
these retailer websites they're getting into the secondhand goods game,

(31:34):
like Levi's has done this well. Peloton just launched a
secondhand Peloton store online this week. And the what I found, because,
like I said, I'm looking for a stationary bike. I
went onto Peloton site and we're talking about starting prices
at like nine hundred bucks. But if you look on
Facebook Marketplace and you buy from someone in your area,

(31:54):
you're talking about being able to get one for close
to half that price. So just make sure that you
don't knee jerk go to the brand's website and not
look to your peers in your community, because you might
find that they're cutting out the middleman is going to
save you the most money. And this is a way

(32:16):
I think to follow Ashley Piper's advice from the Wednesday
episode no new things, adding no new things to your life.
It's not easy, but it's also it is a beautiful
way to live. So trying to deprioritize new buys and
prioritize secondhand goods is it. Yeah, it's good for the
world and it's good for our wallets. The how to

(32:37):
Money Facebook group recently had a post that scratch made
me scratch my head and then a lot of people
chipped in in the how to Money community community and
they didn't they didn't love the post, but it was
essentially about returning something after using it, and The New
York Post had an article that had some overlap with
that post. In the how to Money Facebook group this week,

(32:58):
there was a listener specifically saying like, well, well, yeah,
what if I know that I need this item for
just one use and then I return it after the fact, Like,
is that frugal or cheap? And people are like that,
that's cheap man, that's super messed up to return something
that you use for like borrow it instead, but don't

(33:19):
cheat the retailer, which I think I think the hout
to Money community was right on this one. Well, this
tactic Apparently, tactics like this are becoming increasingly common and
more than one hundred billion dollars of returns that are
being made are fraudulent. Some people are making returns they're
just shipping back an empty box. Others are returning like

(33:42):
bricked electronic goods, like they take the insides of the
electronics out the parts that make the thing work properly,
and they take the goods, they use that for their
own purposes, and then they send back the hollow electronics
item to the retailer that the retailer doesn't notice, at
least before they get their refund. That is dirty. It's

(34:06):
not okay. It's unethical. So if you're like, I don't know,
I mean these big retailers, these corporations, these greedy corporations
making money at our expense, that's not how it works.
And if you are abusing return policies for your own
financial benefit, I think that is it's wrong on multiple levels.

(34:30):
And so this is what's going to happen. It's already
leading to more draconian return policies for all of us.
We talk about LLBean kind of changing their return policy.
Costco had to do this with electronics. They still have
one of the most generous return policies in the history
of return policies. But with the electronics man, people were
abusing the crap out of it, and especially in the

(34:53):
electronics department where prices go down over time, it was
costing Costco a significant amount of money. It's okay to
return stuff that wasn't up to stuff, buying clothes, wearing them,
then returning them. Though I think that's wrong to say
I'm going to use it one time and then return it.
That's not okay. Borrow from a friend instead, or try
one of those online rental sites. And I think this

(35:16):
is something else is going to come of this. With
the data that companies are generating on each individual customer,
they're likely to change return policies for individual customers in
the future. I think we're bound to get more personalized
return policies in the future where they say, oh, hey, Matt,
we noticed you've been returning stuff at twice the rate

(35:37):
of the normal customer, and I'm throwing them out under
the bus because he's not here today. You're cut off
from making returns in the near future, or we are
going to have a higher threshold for your ability to
make returns. I think they're going to punish habitual abusers
of return policy on the individual level instead of just
saying this is our corporate return policy. I think they're

(36:00):
gonna cut people off and say, oh, you're an Amazon
Prime customer. You've been here with us a long time,
but your return rate is significantly higher than average we're
going to have to curb this for you or Costco
at some point. Don't you think Costco is going to say, Hey,
you spend less than the average person and you return
three times as much. No Costco membership for you. Kind

(36:22):
of like no suit for you from Seinfeld. I could
see that being the case. You almost like dynamic pricing
for airlines and other companies out there saying hey, actually,
if you buy it this time, we're going to give
you a better deal. I think they're going to say
it's like dynamic return policies for individuals, and I don't
think they're wrong, because when you look at the way

(36:45):
individuals are, not everyone, obviously, but a small few could
ruin generous re term policies for the rest of us.
And I just hope that this doesn't get to the
point where we all get punished because of the awful
actions from a small minority of people that just return

(37:08):
a bunch of stuff thoughtlessly and uncaringly, almost attempting to
on purpose punish that retailer. So not cool, And I
hope that the how to money community realizes that these
kinds of tactics really cost all of us more money.
The loss and shrinkage that retailer's experience. It gets passed

(37:29):
on to us in the form of higher prices. It's
not like there's no harm caused when we abuse these systems.
All right, thank you as always for joining joining me
today on the show. It was weird to do this
one solo. I missed my buddy. We'll be back though
very shortly together. And if you've got money questions, well,
we've got a lot of money content up on our

(37:49):
website at howtomoney dot com. Go check that out. If
you've got a money question, we've probably answered it in
written form somewhere on the how to Money website, so
please do go check that out and sign up of
the how to Money newsletter dot com at how to
money dot com slash newsletter. All Right, until next time,
best friend, Oubt