Popular Money Advice That Just Ain’t Right #593

Searing your steak as a way to ‘lock in the juices’ is something we’ve heard folks recommend for years! Get that grill hot as blazes, toss on your steak, and reap the juicy medium-rare rewards. But even though there might be a kernel of truth here, culinary scientists tell us that it’s not actually the best method. It turns out that the reverse sear is the better way to do it! Similarly, there are phrases and ideas in the personal finance space that get preached as though they’re the gospel truth. And there are a number of reasons why certain bits of advice stick with us- maybe it intuitively makes sense or perhaps it’s packaged well and is just flat-out catchy. We’re all looking for guidance and shortcuts but that doesn’t necessarily mean that these sayings are sage advice. So today we call out some of the biggest culprits on the show and share how you should be thinking about your money.

 

Want more How To Money in your life? Here are some additional ways to get ahead with your personal finances:

• Knowing your ‘money gear’ is a crucial part of your personal finance journey. Start here. 
• Sign up for the weekly HTM newsletter. It’s fun, free, & practical.
• Find a thriving community of fellow money nerds by joining the HTM Facebook group!
• 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.
• Don’t be cheap and forego getting a life insurance policy. Compare rates with Policygenius.

During this episode we enjoyed an Uplifted Scottish Ale by Talisman Brewing- thanks Andy for donating this one to the pod! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!

 

Best friends out!

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Welcome to How the Money. I'm Joel, I'm Matt, and
today we're discussing popular money advice that just ain't right, Joel.

(00:26):
Even the crappiest financial advice that's out there, it still
has a little negative truth, right, Like oftentimes, the reason
I think it resonates with folks is because they're like, oh,
no, no no, no, that's true. I've heard that before. I've
heard my parents talk about that, I've heard friends talk
about that. But that doesn't necessarily mean that it's like
this super bulletproof piece of financial advice that you should
be following to the letter with every dollar that you make. Yes,

(00:48):
some some of the pieces of advice we're going to
cover in this episode are things that you've heard people
say and they are smart people, and so you automatically
assume that based on their other advice or based on
the back that you've heard this from all sources of information,
that is good. And then it's probabble advice that your
grandparents gave you, and you're like, that would never steer
me wrong. It's like, well it's not quite right. Yeah,
we we want you to question everything that your grandparents

(01:10):
taught you. In this episode, now that's okay, that's too far.
Not not really. But but there are a lot of things, yeah,
that we're going to cover today, and and some of
it has, like you said, Matt, a ring of truth,
but we're gonna say, okay, here's here's the nugget that
is actually true, but here's where you should throw out
the rest of it. Uh. And so yeah, we've got
a lot to get to on this episode. But before
we get to that, Matt, I wanted to mention that
you and I we've talked about on the show, how

(01:32):
we have meta share covering our families when it comes
to our our health insurance actual insurance, not technically health insurance.
It's a health sharing plan exactly, but it is a
lot cheaper than than insurance. And How's even talking to
a neighbor the other day and he was saying what
he gets through his work, that his premiums every month

(01:52):
are really expensive, like even though his employer subsidizes a
decent chunk of those premiums, like it's there's still a
lot on the plate for him to have to pay
every single month. And so for us, it seems it's
the cheapest, most effective way for us to cover our
families and we we've got a review on it. If
you want to read it, will link to it in
the show notes that Matt wrote about how it's worked

(02:13):
for his family. But I found one of one of
my new favorite features of Menashare is that they have
partnered with basically this tele doot company called m d
Live and you can virtually visit a doctor on the
computer or via phone for free, which is just another
massive win for for us. Is included in the price.

(02:34):
There's no baseline fee, there's no copay that comes with that.
It is included, so like a week and a half,
which I've seen before, but like I've I've never never
taken advantage of. So we used it for the first
time a couple of weeks ago. Like all of our
kids were sick. I think everybody that we knew had
sick kids. Like it was going around. It's like flu,
it's COVID, it's colds, everything everything hating simultaneously. Everyone I

(02:58):
know who had a kid like had to pulled out
of school for a couple of days, and so we
were like, Okay, We're gonna try to go see the pediatrician.
They were full up. Man, think they didn't have room
to take us because everybody was sick, and so we're like, okay,
we're gonna give this tele doc MDIE Live. We're gonna
give it a shot. And it was great, Like it
was so simple. We waited forty five minutes and you
don't even like you're not like sitting in a waiting

(03:19):
room though, you're literally at home kicking it. And then
you get a text and it's like the doctor will
see you now, so you hop into the to the chat,
to the to the you click click the link. Waiting
forty five minutes at home while you're cooking dinner or
cleaning the dishes or something like that. It's much much
better than sitting in a waiting room full of other
sick kids sneezing on you and being all nasty. And

(03:39):
then there's no sick visit that we had to pay.
There's it's literally free to get the dice in. Yeah,
so I will say I'm super happy with it. Sunslineles
pretty bullish on teleduct teledoc stocks. I know, well, you know,
the Telenox stock in particular has not been doing well
as a plate, but um, yeah, it's it's just one
of those things that adds a lot of value to
our meta share membership. Nice looking for or to checking

(04:00):
that out. That's not something that we've taken advantage of yet,
but I could totally see where that would come in handy.
In particular, if you know that you just need we
probably need this prescript. You know this prescribed, We just
need some meds. My kids are particularly susceptible to SHREP
for some reason. It's a favorite. And so yeah, we
had to answer a couple questions of the dock and
and typically they like to do a swab. But he
even prescribed an antibiotic you know in that in that chat,

(04:22):
which is cool. Did did they make make your daughter
and make her open up her mouth? We took a picture?
Oh yeah, yeah, we took a picture. We sent it
in even before the appointment, because if you're on a
video call, he could just be all right, make sure
the video lights on and just just jam it in
there real close. You hear him talking. It's like echoing
in her mouth. Water. That's cool, that's cool that. I'm

(04:44):
glad you were able to take advantage of that. Um.
Hopefully we won't need to take advantage of that soon.
But I'm glad to know that it exists. Let's introduce
the beer. You and I. We are enjoying another Talisman beer. Uh,
and this one is called Uplifted. It is a Scottish
style ale Andy. Thank you so much for donating this.
This is our last of the Talisman beers. They're out
of Utah, but looking forward to enjoying this one, and

(05:06):
we will share our thoughts at the end of the episode,
no doubt, all right, but let's get onto it, Matt.
The subject at hand is do it popular money advice
that just ain't right, and uh, it made me think
of maybe some other pieces of advice that we just
assume are correct because you've heard it so much, so
many times. And I personally like to get out there
and grill on occasion. And you've you've heard everybody say

(05:28):
it that searing your meat. Is this the best way
to lock in the flavor? Right? You want to get
that grill, piping hot, lock in the moisture, slap that
steak down or whatever it is, and that is going
to yeah, lock in the moisture. It's something I've heard
folks say for years. You and then you get to
right right after they click their tongues and they're like,
all right, that's ready, that's right, And then it's like
you're gonna get to get to eat that juicy, medium

(05:50):
rare steak that you have always dreamed of, but you've
got to get the sear right. But as it turns out,
that's actually the farthest thing from the truth. Culinary scientists
tell us that although this sounds like good advice, it's
not actually the best method if you want to get
the proper outcome. And it's true that searing your steak
is going to brown it, which does increase some caramelization, flavor,

(06:11):
and texture here at some point. Yeah, it's good for
other reasons, but not necessarily what you're saying from a
moisture stand for, Yeah, like that's the my yard reaction whatever,
where basically you're reducing some of those sugars and that's
what creates that delicious smell. Like when you smell delicious food,
it's because of the browning. It's because of the searing
that often is taking place, But that doesn't necessarily have
anything to do with like you're saying, the moisture of

(06:33):
the meat that you're ceiling in like a I pictured
like a raincoat or you know, or like somebody who's
like trying to make weight for like wrestling or something
like that, and they're like wearing trash bags. They're just
like locking in all that mark, all that nasty moisture,
and they're just sweating like crazy. That s here does
not act like a rain jacket for your steak. No, no,
it doesn't. And the truth is starting to cook your
steak slower and then doing a reverse here to add

(06:56):
the flavor of the end is the best method getting
really fancy these days. So even let's say you you
put that steak in a suvie, you low cook it
until it reaches a certain temperature, and then you slap
it on the grill for like a minute a half
on each side or something like that. Typically a lot
of folks say that's the way you're gonna get the
best tasting steak in the end. But it's just not
what you normally hear as typical grilling advice from most folks.

(07:16):
And just like that BS grilling advice, right, that just
isn't right. We're gonna spend some time talking smack about
personal finance advice today on the show that we just
dislike or maybe that that has taken on this element
of gospel truth. But we would say, in reality, there's
a lot of mistruth in that statement, and so we're
going to kind of like break them down and talk
about them today show. Yeah, Like there's just a lot

(07:37):
of crappy things out there being said. Uh And oftentimes
I think the problem is that we like we hear
something and because it intuitively it makes you know, some
sort of sense, like we just stick with it, just
like you were talking about with the searing meat, or
maybe it's just packaged in such a way that it
makes it easy to remember, right, Because like we're all living,
busy live, So anytime we're able to hear something that
allows us to simplify and make life a little bit easier,

(08:00):
we're gonna cling to that basic rule of thumb. I
think it's one of the ways that we're that we're
able to be super productive, right, Like, most folks are
looking for shortcuts, but it doesn't always mean that those
shortcuts are accurate and that they that they're the best
method of of action for you and your money. And
the fact is there have always been uh folks out
there who are just spouting bad information, right, Like, I
think most folks are well intentioned, but you're likely going

(08:22):
to encounter some bad advice as you are working to
get your personal finances in order, as you're trying to
make that progress. And so we're gonna call out some
of the biggest culprits today on the show, and we're
gonna share how it is that you should be thinking
about your money. Yeah, and I like how you said
most people are well intentioned. I think there's there's a
couple of things that you're One, people are out there
are trying to simplify advice for the masses, trying to

(08:46):
give them good information in a bite sized way, but
oftentimes then you're missing a lot of kind of the
important truth that surrounds it. But also, there are a
lot of people who just don't know enough about personal finance.
And so they might be new nubie influencers on social media,
you hoping to talk about their experience and how they've
been able to change their lives, but oftentimes they're missing
some of the most important ingredients to be able to

(09:07):
help people do it in their own lives, right, Yeah, Yeah,
they might have a good story, just good heart yeah, exactly,
and kind of where they are personally. Maybe there's some
wisdom that you can clean from their experiences, but they
may not be fully informed and you may not be
able to directly apply it to your own situation because
their situation could be quite a bit different. And so, yeah,
we would say some of the basic advice still holds.

(09:29):
Like we're not trying to throw out the baby with
the bathwater in this episode. Some of the most basic
advice out there, for instance, like the number one rule
of personal finance, which is spending less than you make.
That holds water, right, that makes sense to us. But
even even in something like that, even in such a
basic piece of advice that's like the number one rule
of personal finance, that can even get warps into folks,

(09:51):
leading you to think that you shouldn't spend money, a
push towards maximum frugality, which we would say can become unhealthy.
Plus even that little basic piece advice, which is helpful,
it just doesn't tell you how much less you should
be spending, like how you should be changing your habits
and you know, should that be a constant amount over
the decades. Well, that pithy a little bit of advice

(10:12):
doesn't really tell you. So we would say even the
most basic advice that has truth to it needs some
context and needs some flushing out, in particular depending on
your personal situation. And naturally that context that flushing out
requires time and attention, which is unfortunately in short supply. Right, So,
most folks in our modern ages are content with these
five seconds sound bites and they're just not willing to

(10:34):
read pass the headlines. But that additional time is what
it often takes in order to understand the nuance of
any conversation or debate. And it's it's it's true everywhere,
but it's definitely true of these personal finance conversations as well.
All right, Yeah, so let's talk about some of the
some of the crappy advice in the realm of spending first,
and one of the popular lines of advice is skip

(10:56):
the latte, skip the avocado toast. This is I mean, honestly,
it's barren on one of the pieces of advice I
hate the most. Uh. And it's not that spending too
much money at your local coffee shop like that, it's
not possible, it definitely is um And it's not that
the small expenses that you make that they don't add
up to a meaningful amount of money because they do,

(11:17):
and you know you might be wasting money without even
thinking enough about it. Now, this happens to a lot
of folks. It's just I don't understand why coffee shops
specifically bear the brunt of this. Right. Coffee shop honors
so many other places you could attack exactly some many
other places where where folks are we're wasting money, like
a ridiculous car payment for a fancy car that you
don't really need when you could have just paid cash

(11:37):
for something more affordable, or like having your meals delivered.
Or speaking of food, think about the countless containers of
leftovers that you've tossed or Joel the countless your favorite
thing to attack by the people they don't eat their leftovers?
What is wrong with you? You You don't like those people.
It's a terrible happen It's just an inefficient way of
going about making your meals at home. And yet we're

(11:58):
kind of digressing here. We're talking about the Latta factor.
But folks, and in particular media, I think it's just
picked one of the loveliest spots that's often the like
a cornerstone of community hangs. It just seems like the
coffee shop has it's kind of gotten a bad rap.
Maybe this is on on online joke because like this morning,
you and I we when got a coffee before our
our morning meeting, we had a new neighbor who was awesome,
We saw old neighbors who we love, and it's it's

(12:20):
something that I don't know, maybe we're buy us a
little bit because it's something that we are realizing. It's
it's important in our sort of It's not like something
we do every day, but when we do partake in
it typically, Yeah, it's it provides a lot of meeting
and value to us. Four dollar flat white provides a
lot more than just like a delicious cup of coffee exactly.
And that's, by the way, my beverage of choice typically

(12:40):
if I'm going out to a coffee shop, flat white
tortato all the way. Tortatoes are great too, slightly less milk.
Yeah that's true. Uh well so yeah, so we would
say that that is one of those things where that
is up to the individual. And I think you're right,
Math there are other places, in particular larger line items
in our budget that are much easier to cut back,
especially if the coffee shop is a place where you
do derive a lot of joy and community from, or

(13:02):
you enjoy even you know, when you're working from home
going to work there, and really when you think about it,
in the grand scheme of things, it's a minimal cost.
For some reason, we've singled out coffee shops. It's wrong,
it needs to stop. But speaking of those just eight right,
that's right, those bigger ticket items, though, you have bigger
fish to fry. So when you spend an inordinate amount
of your time thinking about these tiny little ways that

(13:23):
you could potentially eke out a few more bucks, I'm
not saying I don't think either of us would say
that that that's time poorly spent. But we would say
you might be hogging valuable mental bandwidth that could be
spent all on those bigger ticket items where you could
be getting a bigger r o I by looking elsewhere.
And so instead of constantly worrying about spending money on coffee,

(13:44):
get a more affordable car insurance provider boom that just
paid for your coffee for the entire year. I love
doing those bigger things, a one time task that allows
you then to use your money in a way that's
more effectively going to move the needle value wise in
your life. And this is of course a fine balance
to strike because you and I were all about frugal living, Like,
we don't want people necessarily going out there and get

(14:04):
that flat wine every day. That's not what we're that's
not what we're saying. But if you're counting pennies of
every single purchase, not only are you like sucking the
fund the joy out of some of those simple pleasures
of life, but it's it could also just be a
highly inefficient use of your time. You're you're majoring on
the miners, and we would say that there's a whole
lot more financial ground you can cover focusing more on

(14:24):
those big ticket items. That's right. I gotta keep you
in check in case I'll start hearing Joel's saying, all right,
kind of feels like a two flat white kind of day.
Oh man, I don't think I've ever done two coffees
in one day a week. Maybe we can justify that
on occasion. Um, all right, Well, not only should you
be thinking about like some of these big ways to
save money, but also the bigger ways that you can

(14:44):
make more money as well, right, because I think you
can easily adopt that same like Latte factor mindset and
then just apply it to how it is that you
make money. And so, like specifically, what I'm thinking of
here is, like, we see a lot of folks who
are spending a tremendous amount of time their side hustle use,
in particularly using different apps like swag Bucks, Uber, Instant

(15:05):
Card or a few that come to mind. And again
we're you know, we're all about folks using the spare
time that they've got to to get after whatever financial
goal that they've set for themselves. But this is an instance,
man like where it would be really helpful to pause
for a moment and imagine where this side hustle is
going to take you. But the allure to immediately make
some some instant cash is attractive, not to mention, you know,

(15:26):
like all the apps, they are designed to keep folks
coming back, to keep you coming back from more due
to how does that their design, how how they're they've
essentially gamified the tasks or the jobs that literally pop
up from within the app. They don't want you to
slow down and think about the big picture. They just
want you to keep working, so don't lose sight of
the force for the trees. Simultaneously, don't let the desire

(15:47):
to hustle and to make a small amount of money
today keep you from making a large amount of money tomorrow.
This is when, like I I even hate using this phrase,
but oftentimes folks who kind of fall into this pattern
fall into like the scarcity mindset. And I don't like
say that because it makes it seem like that you
can just manifest stuff and think it and bring it
into existence. That you can't just do that. It takes

(16:08):
a lot of hard work. But sometimes we do get
locked into that scarcity mindset as opposed to thinking about
like an abundance mindset. Right, Like if you are so focused,
in particular going back to the spending on just watching
every single little penny and instead what if you took
that same amount of energy and poured it into ways
that you can not only make money via some of
these different apps that feel immediate, but like, let's talk

(16:29):
about some of the bigger pictures, some of the larger,
big thinking kind of ways that will allow you to
advance your career and make some serious positive impacts on
your income Yeah. It almost makes me think of when
you go to a casino and how you have no
idea what time of day it is, and they're probably
in oxygen, and so you're blinders are on. You don't
know how long you've been there. You don't know how
much money you've lost, like because you're getting free drinks
and so it's but you've got a free buffet and

(16:50):
so maybe that makes up for all the time. And
that's how this tells me that I should not go
to Vegas because I hear that and I have fallen
into similar traps at other points in my life. Yes,
in particular, I'm thinking about playing video games in college
and I'm just like, wait, what day is it? Itst
like everything is conspiring against you to get you to
lose your money. And I think with some of these
side hustles, it's not that they can't be effective in

(17:13):
the short term, but we've talked about kind of the
nefarious elements that side hustles come with, and so people
have to be really careful before they dedicate too much
time to make money on the side. There are often
more effective ways to grow your to grow your income
over the long term that doesn't mean to you know,
the great thing about side houses is you can like
literally hit a button and start making money today. And
that's a great short term tactic, but it's not going

(17:34):
to be best when it comes to long term earnings,
which is which we how where we want your eyes
a little more focused on. That's Rachel. And we've got
several other pieces of popular financial advice that we're gonna
get to that's just not right, including we're gonna talk
a little bit more about earning money as well as
popular advice to avoid when it comes to how it
is that we save and invest our money. Will get

(17:55):
to all of that right after this, Matt. Let's keep going.
Let's talk about personal finance advice and you and I
we're just not fans of and these are kind of
things that people start to get accustomed to. I think
we've gotten a lot more accustomed to side hustles, like

(18:17):
we just talked about before the break in recent years,
and as in that being a way to maybe make
ends meet or to grow your income when there are
better ways over the long term to grow your income.
But there's the flip side of that coin, so let's
talk about that too. There's the there's the reality that
some people they have a relationship to their job where
it's more like golden handcuffs, And so that's something we

(18:38):
want people to change their thinking about as well, because
on the other end of the spectrum, right, there are
some people who have a great job that pays incredibly well,
and in fact, it might pay a little a little
too handsomely, and you feel stuck, right, even if you
don't really like your job, even if you actually kind
of hate it and you don't want to go to
work anymore, you don't like your coworkers, you don't like
what you're doing, you're working too much. We know folks

(18:59):
who have made these confessions to us, and they're like,
my job sucks, but I'm making so much money they
can bank. How can I leave? I can't. And so
it's this case of golden handcuffs, where the salary, the
benefits I've gotten so robust that you don't even let
yourself consider an alternative. And of course, Matt, neither you
or I when people are making this admission, have told us,
you know what, my life doesn't really matter. But kind

(19:20):
of in some ways, what they're saying, right, that's what
they're saying through their actions, not necessarily because it's something
that they've flat outstated that, like I no longer care
about how I spend my hours. Yes, but they are
in essence saying that they're saying, it's all about the
Benjamin's The dollars matter more than how my time has spent,
than me actually finding joy taking pride in what I
do every day. I'm just gonna grind it out another

(19:41):
five or ten years, Like that's the kind of the
mentality that a lot of people have to keep reaping
the rewards of this awesome paycheck. But this, of course,
it's it's terrible financial advice that ultimately its terrible life advice.
It you know, we don't know how long we are guaranteed.
And the every single year that you spend at a
job that you just can't stop like that you hate,
those are years you're not going to be able to

(20:02):
get back right. Yes, I mean so much of life
statisfaction specifically, it comes from the work you do and
the ability that you have to to help other people.
Victor Frankel, We've mentioned him plenty of times here on
the show. He's an Austrian psychiatrist. He wrote one of
the most profound books uh Man's Search for Meeting after
surviving the Holocaust. But he found that personal relationships, specifically,

(20:25):
they are the most important component of funding happiness. And
then right after that, it was engaging in productive work
that is the next thing that brings us meaning. So
you want to know what he doesn't discuss making a
ton of money. And so with that in mind, like,
what better way to spend half of our of our
waking hours than by engaging in rewarding and productive work
that connects us to our fellow man, to our fellow

(20:47):
human beings. And this is one of those bits of
advice that I say that I know right like, we
all have a head knowledge of it, but do we
grasp it as as heart knowledge? You know? This is
this is a good one to revisit because we're tempted to,
you know, simply understand this concept without actually living it out.
I think we're constantly tempted to live in a way

(21:07):
that is at odds with this, because that's what success
looks like, that's what the world tells us to do.
That's even you know, what our parents tell us to do.
They're like, oh, but that's gonna put you on this
trajectory by all sort of outward measures of success, you're
likely going to decide that what you should do is,
like you said, like continuing to grind it out and
not just for like ten years, but like twenty thirty years.
Sometimes doing work that you don't love as opposed to

(21:29):
thinking about how it is you're actually spending that time.
That's really important. Man. I feel like we are the
money show that is constantly telling people to think less
about money and not focus on the money. That's totally true,
and and so we try to cover the nuts and bolts,
and we want to help people get better with your money,
invest more wisely, and save a bigger chunk of what

(21:49):
they bring home. But we also want people to think
about money as a tool and to not think about
money as the ends. It is a means two better
ends for your life. It's the tool that we focus
on the most here on the show. But ultimately, like
what we're all about is just folks living a life
that they feel it leads to happiness essentially, just a
fulfilling life for sure. And the reality is if if
money is the end goal, you're going to miss out

(22:09):
on some of the things that matter the most, like
that is a byproduct of too much focus on money
is missing out on a lot of things that matter.
Let's talk about some more something else in the in
the vein of career and earnings oriented advice that people
here on the rag matt and that is just that
college is a no brainer, right and and so not
many of our listeners are college age, you know, a

(22:31):
small handful, but some of our listeners are getting to
the point where they've got kids who are considering going
to college. They've got those those teenagers now at home.
And so every time we talk about this, I feel
like we get unhappy listener emails because they say, listen,
why are you talking crap about college? Uh? And we
especially got him after episode five forty eight where we
kind of debunked the fact that college makes sense for

(22:53):
that was it's college for dummies. And we definitely, like,
not everyone is happy that we don't think that college
is a slambug decision, but we just we just don't
think that the vast majority of high school seniors should
be mortgaging their futures by taking on astronomical amounts of debt,
which which is in many cases leading to I don't

(23:13):
know the most expensive piece of wal art to ll ever,
hang right that college degree that goes behind their desk.
That do some couple, do you even know where your
college degree, like your actual diploma is. No, I would
like it. And I remember I would have had to
walk to get my diploma, but my mom was out
of town, so I didn't even have to walk. No,
I didn't even walk. I didn't do it. So I
just didn't. I didn't care, just showed up in a
tube a few weeks later. That's exactly right. Well, so

(23:36):
I guess you know. You can ask the question, just
college pay off for lots of folks still? And we
would say yes, of course, like it does for a
lot of people. And the more you can curb the
costs that you incur and the time it takes to
get that degree. What I mean is not taking six
or seven years to get it, plus making sure that
the one you get is more highly valued in the marketplace,
then the more likely it is to be a smart choice.

(23:58):
Like for instance, that advanced history degree. It's gonna pay
off for a much smaller section of people, and a
lot of folks who get that degree are going to
find that the money was poorly spent, even if it
was edifying. But the thing is, college truly was a
no brainer thirty four years ago, but it's it's much
more of a specific value proposition that young adults have
to consider beforehand these days, before they start applying to schools,

(24:22):
the reality of debt that can linger for for decades,
especially if that degree isn't landing you the lucrative career
that you hoped. It's just too much of a downside
to give some sort of blanket advice that college makes
sense for most people. Yeah, and on a related note
to just how you pay for that college makes me
think of accounts, and oftentimes that's also accepted as kind

(24:43):
of like a slam dunk, you know, no brainer sort
of decision. It's like, well, if you care about your kids,
of course you're gonna save and invest money within the
five account. But so much of it depends on your
personal situation. Because yes, that can be a great tool
to allow you to save if your kids college, but
if you're doing it to the detriment of your ability
to say, for retirement, well then we would say that

(25:04):
your priorities are a little out of whack. If you're
not in money gear six or seven, like plans probably
shouldn't be on your radar exactly. That's what we say,
Like you need to have your finances button up, your
personal finances buttoned up, You need to be saving for
retirement in a big, a major way before you start
investing for your kids us. And again it comes down
to your personal situation, like maybe you're not quite there,
but this is of vital importance to you, and you've

(25:25):
got all the reasons why then, you know what, Like
there are pieces of device and things that we're gonna
say here in the show that may not apply to
the folks out there, but this is something that we
think folks need to be thinking about more often than not.
And similarly, let let's talk about debt, Joel, because oftentimes
folks will hear that they should be living life debt free.

(25:46):
And again, this is one of those uber simple pieces
of advice that sounds good on its face, but if
you take this dogmatic pronouncement to its logical conclusion, you're
going to have a much harder time reaching your educational
and your financial goals. And we know that it's hard
to convey a reasonable debt philosophy just in a two

(26:06):
to five seconds sound bite here, which is why we
don't try to write like we create entire episodes on
important topics like debt accumulation and and debt payoff to
try and convey just a nuanced approach towards debt that
we think is healthy in our modern society. Um, you know,
the truth is, is actually possible to use debt in
a strategic way to catapult your finances for that's a

(26:28):
recent episode that will link to in our show notes.
But not all forms of debt were created to screw
you over, and it's important to keep that in mind.
But on the other hand, it's also possible to rely
on debt too much, right, particularly consumer debt, in order
to fund a lifestyle that you can actually afford buying
the things that you don't need and which should be
completely avoided. Yeah, there's a massive difference between a paiday

(26:51):
loan and a fifteen year mortgage, right, I mean, and
I think that's where the live life debt free sort
of philosophy, the mantra gets lost, and so people automatically
assume that every single potential form of debt is now
just something that they shouldn't even considered, they shouldn't bring
into their lives when the truth is, what we're revolting
here against your matt is a lack of nuance, right

(27:11):
It's it's that it's that pithy phrase that starts to
lead people down the road of thinking that's only one
way of handling debt makes sense, and that is to
never ever use it. And it's a convenient way to
convey a message, but it's not always the most helpful
to folks who are trying to make progress with their
personal finances. For instance, like let's say you do have
that fifteen your mortgage at two and a half percent.

(27:32):
At a two and a half percent rate, well, it
almost feels like a safe haven right now. They were
experiencing a period of intense inflation. Let's say you used
all your savings to pay off that mortgage, which in
and of itself would be like, I mean, you probably
had a lot, a lot of too much money in savings. Well,
you might find yourself in an uncomfortable position if let's
say you lost your job next week. Yeah, sure you
don't have the mortgage payment, but you also don't have

(27:53):
many cash in the bank to back you up to
allow you to afford your other monthly bills if the
worst case scenario happened. So, how dumb is that to
an appercent mortgage? Right, debt in actuality, we would say
it's not, it's not very dumb. It's it's really not
that bad, and and you probably shouldn't pay it off,
even at the expense of prioritizing something like tax advantage
retirement savings. So while the answer it's not always easy,

(28:16):
it often requires context. The question is always an important
one to ask. And then so much of the answer
comes down to the terms of that debt and what
you plan to do with the money you borrow, if
you're if you're sinking that money that you're borrowing into
speculative assets. Let's say cryptocurrency are all sorts of new
fangled digital coins that you could particularly lose it all

(28:36):
overnight still owing debt on top of it. That's really risky.
That's a terrible way to use debt. But we would
say there are smart ways to use debt to be
able to actually accelerate your progress. Just like you said, Matt,
and I think thinking that avoiding debt completely for the
rest of your life is the best way forward. Not
thinking about the ways that you can use it intelligently
as like a stepping stone to kind of continue down

(28:57):
the path is shortsighted and is in all like you
gonna mean you're making less progress potentially in your career
or in your personal finances and your wealth building journey
then you'd otherwise like to see totally don't use credit cards, Joel.
That's another piece of advice that you'll often hear. I
think the same guy who likes to say that dead
is dumb and to live that debt free lifestyle also

(29:18):
likes to talk smack about the credit cards. But the
truth is, when used effectively, we love credit cards. When
you use them effectively, you know they're they're not just
all right, they're the best form of payment where they
offer you greater consumer protections, plus superior rewards and benefits
and other meaningful perks. And it's worth pointing out here
debit cards and credit cards they definitely look the same,

(29:40):
but they are not created equal. Maybe we should do
entire an entire episode talking about the differences between debit
and credit cards. Um, But we are fans of using
them responsibly and if you have a reasonable level of discipline,
then you're gonna be able to use your cards effectively
and they're gonna be a great tool for you. That's
why we're much fans of using them. But again, we

(30:01):
just have to make sure that we couch it within
the proper language. We don't want anybody and everybody out
there to go looking for the best cash back sign
up bonuses that you can find. But if that is you,
if if you are in a healthy position, if you
do have that reasonable amount of discipline, then head over
to our site, go to how do money dot com
Forward slash credit cards because that tool will help you

(30:22):
to find the best credit card for you and based
on the different benefits and the perks that you are
looking for. And it doesn't get talked about much. Most
people don't know that there are different consumer protections when
you use a credit card at purchase then when you
use a debit card. So it's not just the two
percent cash back or the m X Blue cash Preferred
six percent back at the grocery store, like those are

(30:42):
awesome perks, but we're also talking about just more robust
fraud protection when you're using a credit card. We're talking
about sometimes an extended warranty that a credit card offers.
In addition, that means you don't have to buy the
crappy extended warranty that the electronics company or the big
box warehouse is trying to get you to buy. The
credit card offers that for you. Yeah, the ability to
drop the CDW, the collision damage waiver when you're renting

(31:04):
a car because you've got a car that offers primary
car insurance by declining that CDDNU or as we talked
about in a recent ascount of money up, so many
different benefits. Yeah, The the ability to not have to
carry a bunch of cash on your person when you're
traveling overseas and to get the best exchange rate and
to not pay a fee to do it because you
get that zero cent transaction fee. Yeah, so really foreign
transaction fee. When you dig dig into the details, I

(31:25):
mean credit cards a lot. There are people out there
who think that they can't be used effectively. Those people
would be wrong. It is possible to use a credit
card effectively. And that's not just about two percent cash
back right to slightly juice your returns. There's a lot
more to it than that. But we've got Matt some
more pieces of financial advice that we think are pretty crummy.
They just ain't right. We'll get to those, including some

(31:45):
about investing. I think that are really important, especially right
now with what's happening in the market. How they're there's
more bad investing advice going around now than even there
typically is. So we'll get to that and more right
after this. All right, so we just spent some time

(32:08):
talking about spending money. Now let's get serious and let's
discuss saving and investing your money. Uh. And a piece
of advice that you often hear Joel is save ten
percent of your income. This is advice I even heard
as a as a little wee one growing up. Um,
and you might be asking, like, why is this crappy
advice that sounds smart? And it kind of is. It's Uh,

(32:29):
it's certainly better than what the average American is saving,
which is it's somewhere in the three percent range. And
so if you're in that position, if you aren't currently
even saving a tenth of your income, then yes, this
is a good goal to strive for. But we don't
want how the money listeners out there to be the
average American. We don't want you to to stay there.
We don't want that ten percent basically to be a

(32:49):
ceiling for you, because sometimes mainstream financial advice that actually
I think they set the bar too low. And if
you stick with this incredibly basic framework of saving, even
as your your income increases over the years, you're gonna
find it hard to make progress towards those bigger financial goals.
If you get complacent just you know, saving ten percent
of your income, it's gonna be tough to save up

(33:10):
to pay cash for a car or amassing a big
old down payment for a home purchase while simultaneously socking
away enough for retirement. And not only is it about
the ability to achieve some of these financial goals that
you've identified today, but we're also talking about being able
to achieve financial goals tomorrow, right, Like, these are all
things that today that today Matt wants to do, but

(33:32):
what about tomorrow, Matt. I don't know what tomorrow Matt.
Once And so the ability to save a little bit
more than that standard ten percent gives me that additional flexibility,
gives me options to pursue some of those goals in
a way that feels like I'm making progress as opposed
to just completely resetting the clock. I'm pretty sure tomorrow
Matt is gonna want a quartado with a local coffee shop,
but he's gonna have to wait till next week. Okay,
next week, Matt is gonna get that. Just one a week,

(33:54):
all right, And yeah, I think that. I think you're right, man.
I think that is kind of this basic tenant of
personal finance advice. And many people drive for and then
you get to ten percent and you rest on your laurels.
And because of that, it takes a really long time
to make meaningful progress. And we think people should be
uh seeking to save a lot more of their money,
and other cultures do this, well, what is it In Japan?
The average person says something something like in the thirty

(34:15):
percent range of their salary. I think it's so much higher.
We are abysmal at saving and how the money listeners
can do better than that. We know that well, and
we're too soft. That's right. We're trying to harden you up.
And let's talk about some some crappy investing advice for
a second, because really we could do a whole episode
about crappy investing advice. There's a lot of that out there.

(34:36):
But one of them we would say is buy low
and sell high. And I feel like you hear in
a down market, you hear more people talking about that,
buying the dip, that kind of stuff. And again, Matt,
kind of like what you said with the ten percent thing,
It's like, this is kind of sort of good advice,
like there's there's a nugget of wisdom here, but there's
also the fact that this piece of advice could completely

(34:57):
mess you up. And it's just not possible really to
buy low and sell high, is what we would say.
UH stats show year after year that even professional fund
managers consistently underperform the simple strategy of buying straight up
index funds. And these are people that are highly compensated,
right that this is their job to attempt to outperform
the market, to to get outside returns. But the reality

(35:20):
is that trying to buy the dip means you're waiting
on stock prices to go down, and the truth is
stocks are mostly on and up into the right trajectory, right,
that is the overwhelming direction that they're heading. And that
means if you're holding onto money that you want to
invest in hopes of a market downturn, to score a
better deal. You're you're more likely to miss out on

(35:42):
gains than you are to get that deal that you're
hoping for, and so that's why we prefer we advocate
the dollar cost averaging approach, mostly ignoring current market conditions,
because your cash sitting on the sidelines while you're trying
to buy the dip is experiencing opportunity costs and it's
just being smacked around by inflation and cular today. So
we would say just keep buying, don't worry about timing

(36:03):
the market. The key is to get your money in
the market with regularity. So if you hear buy low
and sell high, it's advice. It sounds good, but pulling
it off, it's like, hey, yeah, I just go out
there and hit four home runs in a game and
it'll be I'll be all good. I've never tried to
hit a home run map, but I know it's really
difficult and that even the best guys like hit you
know sixty a year, right, like, and that's really hard
to come by. So hitting four home runs in a game,

(36:25):
that's it's great advice. If you can actually do it
sounds impossible, Yes, technically that is correct. You do that
and you'll be the m v P. You're gonna make
millions or billions. The same thing with buy low, sell
high in theory. On paper, it's great advice, but actually
executing it virtually impossible. Joel something else, like, I feel
like this isn't necessarily like advice that you hear, but
just kind of maybe more sentiment when it comes to investors,

(36:48):
which is the fact that they're afraid that the market
is going to collapse. There's a number of fairly bright
individuals out there who continue to predict that the stock
market like that is just this house of cards and
that we're all bound to get wiped out in this historic,
you know, catastrophe. Like it kind of makes me think
of like the fundamental Christians who predicted the end of

(37:09):
the world, like back in the eighties Kyle Lindsay and
he wrote like three books about it, and he was
just wrong every time he predicted that. And when their
conviction ends up being dead wrong, like they instead they
often just double down. Wait, I was just wrong on
that date, and how I've gotten push that out seven
new insights? Uh, And so they predict an even more
catastrophic event on the horizon and so when it comes
to the different financial advice out there, like best selling

(37:31):
author of Rich Dad, Poor Dad, Robert Kiwasaki, he's one
of those folks, but there are definitely others as well.
But the truth is the market it's got its ups
and downs as we've experienced this year, but there's still
no easier way to build wealth despite the significant amounts
of volatility. Uh Van regularly investing in the American economy. Humans,

(37:53):
we are incredibly creative, We're adaptable creatures. It's best to
just ignore these predictions of of doom and gloom. There
is enough other normal, sad normal stuff out there for
us to worry about. And by the way, I was
talking about the volatility, like that bumpy ride that you
experienced in the market, that is a feature, not a bug.
That is what allows us to be able to see
growth over the long haul. And again, if there is

(38:16):
some sort of catastrophe, something like like a nuclear attack
or something like that, I think we've got bigger problems.
And it doesn't matter if you're invested in whatever alternative investment.
It's also not going to save you. If we're you know,
approaching the end of the world and a lot of
the folks that are the loudest voices, Matt saying that
the stock market is the house of cards, or that
we're going to see massive declines this year or depression three,

(38:39):
it's inevitable. Those people often have a financial incentive to
scare people in order to buy what they're selling. By
the way, have you checked out this company and they
happen to sell goal? That's right, And here's how you
save yourself from this, from from being impacted to the
extent that other people are impacted when everything goes to
hell and another Matt. Another investing thing that you probably

(39:01):
hear that people here investing advice is to invest in
what you know. You might hear folks say that it
makes sense to invest in companies that you use regularly.
So like, if you absolutely love Netflix, if you're a
fan of the content they create, you should invested in
the stock. And if you can't wait till like spend
time in the metaverse, let's say, which I've not heard
anyone say that before that Netflix tone nicely done, And yeah,

(39:24):
I mean, like, have you heard anyone say they want
to spend time in the metaverse? I feel like they
know I definitely the Zuck. He's getting criticism for that
these days because he's sticking a lot of Facebooks dollars
or Metas dollars towards this future potential universe. But yeah,
if you if you are excited about that, if you're
one of the rare people like toss some of your
retirement dollars in a company that you think has some
insight into what we're gonna all gonna be doing in

(39:45):
the future. Or let's say you are a big fan
of the Yeasy Shoes, which probably nobody is anymore, kind
of got canceled, but after you went on as incredible
anti Semitic tirades, and so we we saw what happened
with the DITA stock. Like you never know, even just
like the crazy bumblings of a celebrity can lead to
a precipitous fallout in a company's stock. So I get

(40:07):
kind of why this advice gets gets spread. But hopefully
with each one of these examples you can see how
it might play play out. Like, first, we're not fans
of investing in single stocks. The two of us, we
talk about money and investing all the time and we
don't do it. But the reality is you just never
know what competition or other headwinds might be coming for
that company you love. For when it comes to Netflix,

(40:30):
there's more streaming competition out there than ever before. And
it's not to say that Netflix won't ultimately succeed, but
for a while they had it easier. They didn't have
much competition, and they had the edge. And it's not
to say that people won't want to spend time in
the metaverse. If Zuckerberg can make it something fascinating, if
he can make it like Ready Player one style, maybe
we'll all be in there like doing cool stuff. Or

(40:51):
we won't because people because we just don't know the future.
But like, that's what's the that's the predicament here is
that we have no clue. And when you're putting all
of your eggs in literally one basket with in stock,
like this is difficult to know because yeah, metaverse folks
might realize that, you know what those in real life relationships,
going back to Victor Frankel. Frankel, those are the relationships
that matter, not any not this imitation stuff. Basically that

(41:13):
that we're finding on the metaverse. Just because you like
company's shoes doesn't mean that they've partnered with the right
people to help, you know, improve that business and to
uh reach more customers. Over the long haul, those relationships
can sour costing companies hundreds of millions of dollars. Yeah,
and we're like you said, like we're talking about individual stocks,
but night, but even beyond that, I think the same
lessons can be applied to entire sectors. Right because during

(41:35):
the pandemic, what what did we see in the tech sector.
We saw tech stocks taking off, they crushed, uh. And
now what we've seen so far this year is them
man blood bath with all the big, big tech names.
And instead of what we've seen is energy stocks. The
energy entire energy sector is like at all time highs.
And so now you might be saying, oh, now the
time to invest in x ON, but you don't know.
You don't know, So instead invest in widely diversified index

(41:58):
funds like VOO or vt sacks, both of vanguards either
total stock or smp F I f under index funds.
And so don't invest in what you know, because that
essentially it's a shallow understanding. It's a shallow measure of
what you think might be successful in the future, but
is a far cry from an actual analysis, let alone
a prediction of what actually might happen in the future.

(42:19):
And and so often times when we do this, Matt too,
we just get the timing wrong. So you might kind
of be right, and maybe the metaverse will exactly. Going
back to timing of the market, yes, sure by low
so high, But how the heck do you figure that out?
It might be fifteen years from now in retrospect hindsight,
it always looks so easy because you're framing the past
by what you are experiencing today. And so yeah, looking
back to the pandemic you're thinking, of course, tell you know,

(42:41):
we're talking about tele doc earlier. Of course they were
going to crush everybody's gonna be at home, everyone's gonna
be prize these technology companies. But at the time we
didn't know that. Uh, And so the same thing, you
know applies to the present. Moving forward, we have no
clue what the future is gonna hold. Are you're gonna
have this ramin introspect, you might be able to figure
it out. Afforded to to hold on to those to

(43:01):
those stocks when they're plumbering, when they're not doing well,
just because you have that ultimate faith and belief probably not.
Like most people at some point they cry uncle, they sell,
and so like, right now you doubt yourself. Yeah, it's
telling at the wrong time. I think there's just a
lot to be said for not not taking that approach,
even though there's a lot of people that are going
to say that that's what you should do and that
that that's how stock market investing makes sense to the

(43:24):
average average individual. But I don't think that's the case.
And I think investing in the market as a whole
is something that's easy for the average American to understand.
You don't have to start packing individual stocks of companies
that you already kind of kind of like in order
to be a good investor, and in fact, it's probably
gonna take you down the wrong path, that's right. Yeah, Again,
we could do an entire episode on the crappy investing

(43:44):
advice that we often hear, but I mean, as we
kind of round this episode out, bottom line, we just
want you to be careful who it is that you
listen to. There's probably a lot more crappy personal finance
advice out there than you think, and we can't tackle
all of the poor advice that you might come across
just in one episode. So bottom line, we want you
to be careful who it is that you're listening to.
We think that there's probably a lot more crappy personal

(44:07):
finance advice out there than you think, and you know,
we can't tackle it all just in one episode. Oftentimes
it's the folks who are screaming the loudest. It's the
folks who who have the most rigid rules out there.
They can be the easiest to understand, for sure, but
it doesn't mean that their advice is going to be
best for you. You know that's gonna be best for
you to listen to them, or that it will actually

(44:27):
be the most helpful for you in the long run.
At least personal finance advice it can and should be nuanced.
It takes time, like we talked about earlier too, uh
and and not all advices created equal. And some of
the different blanket rules of thumb that you come across
for everyone, no matter what they're their individual financial situation,
looks like that is not a great tactic. Where it

(44:47):
is that you are in your financial journey, It's crucial
to the advice that you should be heating and with that,
make sure that you spend enough time thinking about this.
I think oftentimes folks they go with the slogan advice,
the thing that's easy, need to repeat, the go with
the headlines, and instead we want you to to think
about it. We don't want you to spend too much time,
but spend enough time that you are informed and that

(45:08):
you're able to make the best decisions for yourself. Yeah,
And it just makes me think math that. Like you
mentioned Victor Frankel's book, and I think it's a great one,
and it's actually it's pretty skinny. It's it's not really
that hard for for most folks to read. But if
I hand it to my seven year old who's in
the second grade, when she's reading Pete the Cat kind
of books, right, Like, that's kind of the vein she's in.
She might be able to understand a good chunk of

(45:28):
the words. She's not gonna understand what she's reading though,
And so yeah, that when you do blanket advice or
you say this is the best thing for everyone, oftentimes
we're missing the reality that people are at different points
in their financial journey, and so we try to bring
that nuance to the forefront so that people can see
like how we're coming to our conclusions so they can
come to their own, not just tossing a phrase out
there and hoping that everyone adapts accordingly. Like, that's that's

(45:50):
not our a plan, that's not our path, that's not
how we roll. All right, man? Is that it for
this episode. Let's get to the beer this episode, you
and I enjoy it Uplifted, which is a Scottish style
ale from Talisman Brewing Company. Thank you Andy for donating
this one to the show. What were your thoughts, buddy,
So I've never had this was like a light version
of a Scott Shaniel. Yeah, so I was reading on
the side it said it's a it's like a session

(46:11):
sessionable scott to shale, So so it was. I would
say it was kind of like a light brown nail
in a lot of ways, and I like a good
Scotch shail. We actually got to have a good one
on the show not too long ago, and that was
fun because scott jails are actually kind of hard to
come by, not many people make them. But this one
left a little more to be desired than that one.
It was just it was kind of lacking in some
of the flavor profile and some of the punch I

(46:31):
typically like to get. It wasn't quite as toast. I
mean a lot of times it's characterized by like a toastiness.
Um that like some bigger, darker flavor caramel vibes. This
one was was like almost a little bit tart um.
So maybe that that lightness and body went itself. So
maybe it's just a yeah, like a slight tartness. But
as always, I would rather be drinking a craft beer
with you while we record an episode the Knots, So

(46:53):
I'm glad that you and I were able to enjoy
one of these today, buddy. And by the way, I
mean we talked about smart rules for spending earlier, just
for a second, as we were talking about the latte factor,
and that you and I kind of go what we
do flies directly in the face of that we drink
a craft beer, often an expensive craft beer every episode. Um.
This one unfortunately was free, thanks Andy. But but we

(47:13):
are spending our own money for these beers because and
and and not just because we love beer, that's a
big part of it, but because there's another lesson to
be had in there, that's spending money on the things
that you love. In the here and now while you're
getting good with your money is an important part of
the equation, and going too hard, becoming hyper frugal over
the top, is a recipe for disaster in the long run.
All frugal and no splurge mix Juel and I doll boys.

(47:36):
That's right. We don't want to be that, So all right, Matt,
that's gonna do it for for this episode. If you
have another piece of financial advice that really sucks, that's
really great to you, that you find around the interwebs
at some point, send it our way. We love to
hear from you. Reach out to us. You can email
us at how the Money Pod at gmail dot com.
That's right, buddy. So that's gonna be it for this episode.
Until next time, Best Friends Out, Best Friends Out. M