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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
I Am six forty. You're listening to How to Money
on demand on the iHeart Radio app.
Speaker 2 (00:10):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel lars Guard and Matt altmis.
Speaker 3 (00:29):
Kfi AM six forty live everywhere on the iHeartRadio app.
Speaker 4 (00:33):
This is how to Money. I am Matt Altmix.
Speaker 1 (00:35):
And I'm Joe Larsgard. If you're on Facebook, by the way,
you want to join a group of like minded folks
who have money questions, who have money insights, please go
join the how to Money Facebook group.
Speaker 3 (00:45):
Our ludicrous headline of the week comes from the New
York Times and the headline reads, they rush to buy
a home during the pandemic. Now some feel trapped and
I'm gonna save everyone the time and having to go
read this article bil can.
Speaker 1 (00:59):
I to say, it makes me think of the Dr
R Kelly song like trapped in a Closet? Isn't that
Remember that album came out? I more remember the disease
joke about R Kelly. But uh, basically, some folks who
you know who bought a home back during the pandemic
a few years ago, they found that the home it's
a little tight for them right now.
Speaker 3 (01:19):
It's it's it's not quite accommodating. They're growing family, it's
not quite to their liking as their circumstances have changed.
But of course they've got that sweet low rate and
they are loath to give it up. So with no
easy way to make a change, they are quote unquote
trapped and trapped. Yeah, just the closet. But it don't
you feel bad for him, Joel, It's I'll be honest,
(01:42):
it's hard to feel sad for folks who bought a home.
Speaker 4 (01:45):
They've got some equity, they've got a locked in low rate.
Like the folks. I feel bad for the folks out
there who actually.
Speaker 3 (01:51):
Want to buy a home but can't afford to because
they're their wages haven't kept up with the home price
increases and affordability is out of reach.
Speaker 1 (01:58):
I don't know if your mom member said this, you've
grown up, but my mom would be like, I've got
the world's tiniest violin here playing. I don't know where
that came from, but she would. She would say that
to me, your rubber fingers together. And that's how I
feel for these people. You're locked in your home that
you have backy, and like, I'm so still signing at
three percent rate. I'm so sorry for you. It just
felt like such a self indulgent article from The New
(02:21):
York Times. I don't even know why they felt like
they needed to print those stories of people who are like,
I've got two hundred thousand dollars in equity, but I'm
I'm stuck because you're not stuck.
Speaker 4 (02:30):
The truth is you're not stuck.
Speaker 1 (02:30):
If you're in that case, and you can totally make
it different, You've got options. This is also, by the way,
if you feel like you are stuck in a home
that you are, that you have bought, that you're paying
down that mortgage regularly, well you could have opted for
renting instead. And that's in particular a good idea if
you're planning to or you're not thinking you're in a
(02:53):
state in a home for at least five years better
off seven or more years. That's typically what makes buying
a home makes sense. And stats from just this week
Matt show that apartment rents are down and vacancies are up,
continuing to put more power back in the hands of
renters and just lower costs. I don't think you have
(03:13):
experienced this because you're a better landlord than I am.
But I've experienced like decreases and what I'm able to
get from my properties in the last year a year.
Speaker 3 (03:22):
Only because I have taken these opportunities to do some
slight upgrading in order to keep that rent line. So
you have to put more into it in order to
be able to keep that right or yes, I would
also be offering those places for less as well. Yeah,
so most likely that's where I'm at, which which is
you know, I'm not mad about it. I think this
is a great thing overall, because rents became excessively expensive.
(03:46):
It's it's good news after pandemic years of rapid price
increases the people experience, so let's say too, especially in
multi families, so like apartment complexes in particular have seen
the most because of the it's just a lot of
easier for developers to build those types of units as
opposed to single family rents.
Speaker 4 (04:05):
I think we actually talked about this a few weeks
ago as well.
Speaker 3 (04:07):
There isn't clear data on that, but yeah, it seems
that those are not dropping as much as kind of
holding steady at least nationwide. Yeah, obviously it depends on
your specific market.
Speaker 1 (04:18):
I think you and I would both agree that owning
a home, it can be a lovely endeavor, can be
a smart choice, and it can be a great long
term move for a whole lot of folks. It's just
not for everyone, and it's not always better from a
wealth building perspective. And I think that kind of cult
of home ownership mentality is something that has been developed
over many decades in this country, and it's led people
to believe that, like, the way to live the American
(04:40):
dream and to build some sort of financial future for
myself is to own a home. And that just doesn't
have to be the case.
Speaker 4 (04:47):
I used to be.
Speaker 3 (04:48):
But you don't have to follow that same playbook. And
I think there's the folks who are talking the loudest
about that are trying to encourage folks to follow the
same playbook that they have taken because they have, you know,
and I understand it, because they have seen how well
that's done for them, But that you don't have to
follow that playbook. There are plenty of other great ways
to invest. It's more accessible for folks to invest in
(05:09):
the market just while you're sitting on the couch. In
some ways that's not great. But I mean I want
to talk about even just the little lifestyle. Like you
were saying that home ownership is not for everyone, and
I think that's something that I need to get more
used to because I love home ownership and specifically I
even love spending money on my house and like the
(05:30):
expenses that go into like making little changes and making upgrades.
Speaker 4 (05:34):
Have we talked about my dishwasher? Oh? I think we did? Yeah?
Do we on the show? You have the fancy one? Yeah? Okay,
so yeah. But like, on one hand, I'm bummed because I'm.
Speaker 3 (05:42):
Like, ah, this is going to cost you know, it
was an unexpected costs that we didn't budget for because
the old one should have been good but it crapped out.
But of course I'm gonna end up getting a Bosh.
Well I shouldn't say of course. I wanted to prioritize
consumer reports. You're getting a bosch, you're getting a bush,
And so I got the more expensive bosh one that
pops open so that you know it's so great come
(06:03):
down in the morning. The plate Not only are the
plate strigile, the plastic stride does it read a story
to you and it plays it a little song.
Speaker 4 (06:11):
But I like, I enjoy doing that.
Speaker 3 (06:13):
But guess what those are additional expenses that you have
to be willing to pony up and to part with
your dollars in order to cover some of these expenses.
Speaker 4 (06:21):
When you are a renter, you ain't gotta worry.
Speaker 3 (06:24):
About that when something craps out, I mean unless you
actually had a runner who wanted to upgrade the dishwasher.
Speaker 4 (06:30):
But when something breaks, you call up your landlord. That's right.
Speaker 3 (06:33):
Speaking of another comic makes me like the mitch Heedburg joke.
It's like I went to home depot yesterday, which is
totally unnecessary. I need to go to an apartment depot.
Just a bunch of people standing around. We don't have
to fix jack.
Speaker 4 (06:46):
But like that, it's one of the biggest benefits. It's
one of the biggest benefits.
Speaker 3 (06:50):
And that's you just got to keep in mind that
that is what you're signing up for with home ownership.
But of course, the folks who they're not happy with
living in an apartment, the folks out there who to
purchase a home, those are the folks that we feel for,
and those are the folks who feel a bit locked
out of the market today, and the folks in this
article in particular. If you want to move, you can
(07:10):
still do that, like you just have to pay a
bit of a price for it. But and think about
people who bought at the peak of the market, where
home prices have re seend a little bit. Those people
are in a tougher spot because if your home is
now worth five percent less than what you paid for
it a year, eighteen months ago, something like that, and
you're like, I really feel like I need to do
something different. You got to bring potentially a load of
(07:31):
cash to the closing table in order to make a
different decision. But if you if you bought a home
three or four years ago and it's appreciated and you
don't want to sell it because you don't want to
give up the low mortgage interest rate, you still have
that opportunity. Though you still have that ability without losing
money in the process.
Speaker 4 (07:50):
Yeah, it just comes out of trade offs. What are
you willing to value?
Speaker 1 (07:54):
We got more money saving information to get to.
Speaker 3 (07:56):
KFI AM six forty. You're listening to how to Money
on demand on the iHeartRadio.
Speaker 1 (08:01):
App KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 4 (08:07):
This is out to Money. I'm Joel Larsgard and I
am Matt Altmix.
Speaker 3 (08:12):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and insight, please go ahead and join the how
to Money Facebook group Joel us hear from another listener.
This is a listener with a new baby in tow
and he wants to make sure he's taking the proper
financial steps to prepare for this baby's future.
Speaker 5 (08:31):
Hey guys, Casey from Utah here. My wife and I
recently had a son with Down syndrome, and she needed
to quit her job to help care for his needs.
It's likely that he will live with us for the
rest of our lives, and we want to ensure that
he is provided for and whoever cares for him after
we're gone has the resources they need. At the same time,
I would still like to retire someday. How can I
(08:53):
plan for retirement for three people instead of two, especially
with the reduced household income.
Speaker 4 (08:59):
Any thoughts be appreciated. Thanks man, Casey.
Speaker 1 (09:02):
First off, I just want to say it sounds like
you're being intentional to love your son.
Speaker 4 (09:06):
Well, yeah, and I love how he's approaching.
Speaker 1 (09:09):
Yes, this question is and it's gonna throw a wrench in
things financially like this is this changes your future, your
family's future, your financial future. Saving for retirement of course
is still necessary and important, but the family is the
top priority. And so this is going to make it harder.
Like you said, but I'm I think I just want
to say that I'm impressed by your dedication to make
(09:30):
sure that your son is well taken care of, even
if it means rearranging finances so your wife can stay
at home. Like those are the big kinds of decisions, Matt,
that people face that just don't get talked about all
that much. And so I'm glad Casey brought this up
so we can address it, address it on the show totally. Yeah,
And so I don't at all want to discount how
(09:50):
hard it might be for Casey. I grew up with
a special needs sister, so I certainly know. But at
the same time, and she needs care for the rest
of her days from your absolutely, and you have to
probably be a part of that at some point in
the future.
Speaker 4 (10:02):
Absolutely.
Speaker 3 (10:03):
That being said, it's almost like like the ability for
Casey to know that now and have years and like
decades ahead of him to prepare for that. I think
it's almost like, I think I would rather that happen
than let's say, if you had a kid then something
happened when they're like eighteen and then all of a sudden,
like I'm what I'm saying is that if you've got
twenty years ahead of you to prepare and you've got
(10:24):
time on your side and compounding, that is totally doable
as opposed to like, hey, we got to do this
thing that needs to be fixed by next year. There's
not a lot that you can do within such a
like just such a quick turnaround, but.
Speaker 1 (10:37):
The small rudder changes you can make now to the
course of your ship, like you're going to get there
over the course of twenty years, you have to make
a much harder turn right to get there in less.
Speaker 3 (10:45):
And like a year or two exactly. Yeah, So Casey
mentioned saving for his son. He wants to obviously make
sure that he's taken care of in the future. Casey,
I'm not sure if you've heard of an able account,
but you have certainly heard it now. That is going
to be the best way to stock money away for
his future. Anyone who has a disability that is diagnosed
(11:06):
before the age of twenty six qualifies for an able account.
It's basically akin to the five twenty nine accounts out there,
but was created specifically to help family save money for
disabled children without losing out on federal benefits like Social
Security income and Medicaid as well.
Speaker 4 (11:25):
But so Casey specifically.
Speaker 3 (11:27):
Lives in Utah, so you can head over to the
website able ut dot com and they've got pretty good
options over there. The expense ratios, the fees, they're fairly low,
and that is going to be the best account to
help your son to save up a nest egg for
his future. And we're specifically mentioning Utah's account because Casey,
(11:49):
you get a state deduction for dollars that you contribute
to that account. If you live in a state that
didn't have a deduction, that's when you would want to
start looking at other state plans, just like we do
with fights one nine accounts.
Speaker 4 (12:00):
Right.
Speaker 3 (12:00):
Yeah, and someone it comes to able accounts, I think
Ohio has a really good one. I think Florida has
a really good one as well. So for everyone else
out there who's interested, in an able account you don't
get the in state deduction, make sure to look to
some of those better options out there.
Speaker 4 (12:13):
But U tell us seems pretty solid.
Speaker 1 (12:15):
Yeah, and that's one piece of the puzzle, right, Matt
is saving for the third member of the family, for
their son. It's like a practical accounts Yeah, answered, that's
something that has to be mentioned, and it is one
of the places you want to start funneling some amount
of money to help him save for his own future.
Because yeah, it's different than like, we talk regularly about
(12:37):
whether or not we're going to invest for our children's future,
and we kind of waffle on that and we do
a little bit, but not a whole lot, and we
think our children should largely be responsible for funding their
own retirement. But it's different, like when you have a
special needs child who is going to need a lot
more care and won't be able to do some of
those things for himself. At the same time, Casey, you're
(12:57):
also worried about your own future. Understandably, you're going to
have higher expenses because your son is likely going to
live with you for a long long time. You've also
gone down to being a one income household, which makes
it harder to make ends meet and to deal with
those escalating costs that we're all experiencing, and at the
same time to save well for your own retirement. That
it feels like a mountain of necessities. And it's not
(13:22):
that it isn't possible, it's just that it will inevitably
take longer, which is why the time portion matters so
much that Matt talked about. So I think the first
piece of advice I would say is to maybe give
yourself some grace realizing that your circumstances are going to
delay your path to financial independence. And that's okay. I
think it could be demoralizing. Don't let it be demoralizing.
(13:44):
You just have new goals in your life that you
need to address.
Speaker 2 (13:47):
Yeah.
Speaker 3 (13:47):
No, I think thinking about it in that way is
really helpful because it just shows that there are all
different types of goals that we set for ourselves, and
so how do we sacrifice in the here and now
to make sure that we're able to achieve those goals? Right,
that's how we are able to realize the life we
envision for ourselves. And so practically speaking, I think what
that can look like is just I don't want to
(14:08):
This seems so like small and petty, but like budgeting
is what I'm thinking about, right, Like assessing your income,
assessing your expenses. You've certainly lost some income, and you
could stop prioritize retirement altogether in order to meet your
current needs. That would be an understandable reaction, but I
(14:28):
think it would be a bad one for your future,
for your desire to be financially independent and retire someday.
And instead I'd be asking, like, how can I reduce
my expenses so that I'm not going to negatively impact
my life in a significant way. Just start trimming wherever
you can, wherever possible to create more margin. And I
think this will be important. As you just build up
(14:50):
your savings, you are able to continue investing and also
start saving for your son's future as well. It may
not take, depending on how tight of a budget and
how tight of the ship that you're running. Even within
that you might find, holy cow, all of a sudden,
all of these dollars that were kind of just getting
spent willy nilly, we're able to funnel and harness in
(15:12):
a way that's going to lead to significant wealth down
the road. If you were already really on top of
your budget that I would say, maybe it would take
like maybe some bigger cuts, some more drastic changes in
your life as opposed to just trimming around the margins.
Speaker 1 (15:26):
Yeah, well, I think this is going to buy necessity,
involve some more communication between you and your wife, right,
And it's often an incumbent on the stay at home
spouse to create that more frugal environment. I think it's
going to take both of you really all hands on
deck sort of approach in order to feel comfortable to
still invest for yourself while taking care of your son
(15:47):
and you, like you mentioned, Matt, you'll probably have to
look beyond even low hanging fruit. I'm thinking about something like, Okay,
your wife is staying at home now, depending on your
work situation, Casey, can you all go down to being
a one car family? Like that's one of those things
that it's not just selling the car, it's the fact
that you're not paying insurance on that car anymore. Like
it's not a depreciating assets sitting in your driveway. So like,
(16:09):
what can you do that maybe might be a little
outside the box that you haven't you really haven't thought about.
Speaker 3 (16:15):
You have a lower cost of living area, you know.
I mean, maybe you're thinking before I it's not that
important that we're not close to family. Oh maybe all
of a sudden you're realizing that it's much more important
for us to be closer to family because of the
assistance that they're going to be able to provide for sure.
Speaker 1 (16:30):
All Right, we've got actually more to get to on
today's show. This is Joel Larsgard and Matt Altmis and
you're listening to KFI AM six forty how to Money
on demand on the iHeartRadio app KFI AM six forty
live everywhere on the iHeartRadio app.
Speaker 4 (16:46):
This is how to Money. I'm Joel Larsgard and I
and Matt Altmix.
Speaker 3 (16:50):
Don't forget to sign up for the how to Money
newsletter over at how toomoney dot com slash newsletter.
Speaker 1 (16:54):
All right, let's talk about a really interesting debate that
happened really over the past over the past week.
Speaker 3 (17:01):
This is like one of those one of those Internet
things when there's something that just blows up and everyone's
talking about it.
Speaker 4 (17:06):
I'm really low to even talk about it, but.
Speaker 1 (17:09):
There were responses everywhere, like the Washington Post and some
of our favorite artorders responded to everyone yeah, So it
was like everyone had to take it's it's in the water,
we should talk about it. So there was this firal
article in the Free Press last week attempting to make
the case that Americans are just so much poorer than
than we think. And the case was essentially that the
way that the US poverty line is calculated, well that
(17:32):
doesn't work anymore, not in today's economy. But it was wrong.
I think on a lot of levels.
Speaker 4 (17:38):
They made it.
Speaker 1 (17:39):
The author made it sound like a family of four
making one hundred and forty thousand dollars, they can barely
make it, They're barely scraping by. It's kind of like,
I don't know some of the social media people making
two hundred and fifty K and they're like, hey, but
I don't know how many money left over at the
end of the month. And you're like, how is that possible.
Let's look at your budget. Oh that's how well. Tyler Cowen,
who's like one of my favorite economists, he wrote a
(18:00):
response in the same publication, and it's well worth reading.
He highlighted some of the realities of modern prosperity, including
like tech advancements and bigger homes, like we've all got
more square footage per person, fewer kids living in the
same room. Food cost declines. You might have seen, you know,
food costs go up recently, but over the course of decades,
(18:20):
we've seen food costs go down. Him anyway, So we
spend much less of our disposable income feeding ourselves than
our grandparents did. And then so much of the rest
of the world healthcare improvements. He documented so many things.
The world is just not as bad as some folks
want you to believe. I think that's maybe the heart
of the response we want to get out.
Speaker 4 (18:39):
Yeah.
Speaker 3 (18:39):
No, well and specifically some of the standards. So the
original the original author Green dies Rision named Michael Green
and Michael Green. But uh, it's just ridiculous, like the
like these are luxuries that he's assuming that people not
only want but essentially are entitled to.
Speaker 4 (18:55):
And that's the part that rubs me the wrong way,
the fact that.
Speaker 3 (18:58):
Like, oh, yeah, like are there's a wide range of
vehicles that are going to get you to and from work,
like you don't have to go with like the average
or median price of a brand new vehicle today, and
those again.
Speaker 4 (19:10):
Those are the those are the sacrifices we make.
Speaker 3 (19:12):
Those are the the trade offs that we make, as
opposed to saying, oh, the new poverty line should be
four times higher than four or five five times higher
than what it currently is right now. It's like it
makes me think of like if you're playing a game
and you're just complaining, like we've got man, we did
we ever give a shout out to a listener who
sent us the upgraded version of a choir, We'll pull
(19:34):
into it. I'm not gonna take any of that right now,
but I'm thinking about the board game Acquire. You start
off with a certain amount of money, and it's sort
of like if I just out there the whole time
and complained that, dude, we should start out the game
playing like with five times as much money. It would
make it so much easier. But like, guess what that
would also do make the game. It would ruin the game,
like there would you there would be no incentive to
(19:57):
be strategic, and everyone would just round after round.
Speaker 4 (20:00):
You would just be buying things.
Speaker 3 (20:02):
Except that when it comes to real life, there is
a response, which is that supply and demand, well, okay,
those units of supply are going to go up in
value because there are more dollars chasing those limited goods.
It just I was not happy with the analysis of
the original authors. Yeah it was, it wasn't great. It
wasn't great, And there are other statistics I think that
(20:24):
could really combat his point of view too. Like we
highlighted recently in the how to Money newsletter that a
lot more families are making one hundred and fifty thousand
dollars now than we're fifty years ago. That's adjusted for inflation,
but it's a significant difference in the number of families
who have mid six figures are not mid six, not
five hundred k, but like one hundred and fifty thousand
(20:45):
dollars is really is quite a bit of money in
a lot of ways. And this is also not to
say that everything's great for everyone. We don't want to
sound completely dense and not understand and realize that there
are a lot of people living out there close to
the actual poverty line who are having a tough time
and who feel those grocery price rises more than your
(21:07):
middle class family, right, And it's it's true. Yeah, inflation
has attacked our wallets more in recent years, really, more
than any other time we've seen in our adult lives
and homes, healthcare have gotten more expensive. But I think
articles like this seem to want modern economic reality to
be more negative than it actually is. They're highlighting, sure,
(21:27):
just cherry picking statistics, and that's the negative, negative news
by you to reveal their worldview instead of kind of
coming at it honestly. Yeah, and I mean it honestly
reveals their, like you said, their worldview and what they
expect everyone should have. And then there's plenty of people
who aren't, you know, and gosh, I'm gonna sound like
such a media type person, but who are like the
(21:47):
coastal elites who are very happy not having all of
these amenities are Now, don't I feel like we're like
right in the middle.
Speaker 4 (21:55):
We're heartlanders.
Speaker 3 (21:56):
We live like near Ish, a major city, but we're
also approaching life with common sense and grit. Like anyway,
let's talk about building wealth, and potentially a way that
you can at least make your dollar go further is
moving overseas in order to stretch your dollar. So folks
(22:18):
who have kept up with like the Fire movement know
about this. It's called geographic arbitrage. But there are new
stats from the Defense Department, and they find that there's
a significant uptick in people who are taking the strategy.
And we're not talking about just like being nomadic, like,
we're talking about permanently moving to an international location that
(22:40):
has a much cheaper cost of living. And I think Portugal,
Thailand always comes to mind. Even Panama down in Central America.
Speaker 1 (22:47):
Had an old neighbor who moved down to Panamah, Yeah,
to retire, and like, I'm pretty sure she's living the
high life because it solder house and it's just your
dollar goes a lot further down.
Speaker 4 (22:56):
There, it does.
Speaker 3 (22:56):
Yeah, And in some thriving XPACT community, I think you
can you can find a solid community there along with
these lower costs in some you know, pretty decent healthcare
options too.
Speaker 4 (23:09):
This isn't for everyone.
Speaker 3 (23:09):
I actually talked about this with my father in law
recently because a buddy of his was seriously thinking about
moving down I think to Costa Rica.
Speaker 4 (23:15):
Are you trying to get him further away from you?
Speaker 3 (23:16):
No? Hey, if you if we moved down to Chile,
do not have that kind of relationship with the in laws,
the classic in the law relationship.
Speaker 4 (23:25):
Now I love them, they're great.
Speaker 3 (23:26):
This isn't for everyone, But I think it's worth considering,
it's worth putting out there because this route could completely
change your financial independence path and.
Speaker 4 (23:35):
What your life looks like.
Speaker 1 (23:36):
Yeah, I'm not like currently interested in moving abroad, but
I'm always like a little interested. Yeah, so maybe someday
I'm not going to say never. But Likes, there are
all these sort of things I've said that I would
never do that I ended up doing later later in
life and so but but it does seem like one
of those things where, especially if you are like I
(23:57):
haven't saved as much as I thought I would or
wanted to, How can I retire at the age I
want to? This is how this is a way to
do that, right, Because you're strutting your dollars so much
further you need less to be able to live that
retired lifestyle that you want. On the note of travel,
the real ID rollout Matt has been bonkers. So we've
covered this a little bit over the years. They keep
pushing back basically the implementation day. Basically every nine months
(24:20):
we provide an update for why it's not like it's
supposed to be. Yeah, and so, yeah, this switch is
just taking a really long time, and there are still
millions of Americans who don't have an updated real ID,
although the numbers have gotten a lot better, a lot
more people do have this in their wallet already. If
you haven't updated yours, well you're going to punch yourself,
I think if you go to the airport without one,
(24:42):
because it's about to get a lot more frustrating and
expensive starting February. First, you're gonna have to pay forty
five bucks and go through additional TSA vetting as you
go through security. If you have not upgraded to the
real ID, and if you're not sure whether your ID
is updated, look for a start in the upper right
hand corner of your driver's license. The start can look
(25:03):
different depending on the state. I think in California it's
like inside of a bear YEP, which makes sense. And
if yours isn't compliant, update your ID, especially especially before
you make your next trip to the airport, because uh yeah,
not just the additional money, but it's the additional hassle.
Can you imagine, Matt Trying to the TSA line is
already the pain of my existence.
Speaker 4 (25:24):
When I go, do they just hit you up for
forty five bucks? Like right then and there? How does it?
How does it work? Yeah, they probably have one of
those like machines.
Speaker 3 (25:31):
Sure reader right there, they're just like tap here to pay,
and you're like, pay for what for non compliance?
Speaker 4 (25:37):
Sir?
Speaker 5 (25:38):
Right?
Speaker 4 (25:38):
That's what for?
Speaker 1 (25:39):
I mean, I have a feeling it's just going to
be a complete mess for people who aren't really compliance.
So make sure you get that done. Look out for
your loved ones to maybe help them make sure.
Speaker 5 (25:48):
They have right.
Speaker 4 (25:49):
I also doing it. That's right. You are listening to
How Some Money?
Speaker 3 (25:53):
This is Matt Altmix and Joelar's Guard, and you are
listening to kf I AM six forty How the Money
on demand on the iHeartRadio.
Speaker 1 (26:01):
KFI AM six point forty live everywhere on the iHeartRadio app.
Speaker 4 (26:06):
This is how to Money. I am one of your hosts,
Joel Larsgard, and I am that a mix.
Speaker 3 (26:11):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 1 (26:16):
Let's get to the Facebook question of the week. This
one comes from Connie. She's what do you think about annuities?
Two different banks have advised me to get these. I
understand they probably get a nice commission, but they've offered it.
It's a safe alternative investment. Matt, what's your take.
Speaker 4 (26:29):
I like that two different banks have recommended them.
Speaker 3 (26:32):
So she's been out there doing her shopping and she's like, well,
the first time I thought no, no, thank you. But
then when the second bank was just like, oh, yeah, yeah,
you need an annuity, just probably like everybody's saying, maybe
there's some truth here. No, Well, first off, I mean
I guess even the fact that she's going to a bank, right,
Like getting financial advice from a financial institution like a
(26:53):
bank is I mean, it's always a bad idea. Where
it is that you get your financial advice matters so much,
and the incentives often determine the kind of advice that
you're going to receive. So, as you mentioned, if the
commission is steep, there is a much higher chance that
they're going to recommend that product, whether or not it
is in your your best interest. And so the fees
(27:15):
that banks realize on annuities, like variable annuities, they can
be massive and I'm talking like in the two to
three percent range annually.
Speaker 4 (27:23):
And so I would say the.
Speaker 3 (27:25):
First mistake was even going to your local banker and saying, hey,
sell many a financial product. Yeah, that's something you want
to avoid generally speak a greed stay away from banks
for financial advice. Also an annuity, it's kind of an investment,
but it's also an insurance product. With many forms of annuities,
like in indexed annuity, your investment returns are capped and
(27:48):
so you know, think about the returns you would have
been losing out on in this fantastic market run if
you were to have opted for an annuity instead of
putting your dollars in an annuity, instead of investing them
in the mark it right, you would have gotten creamed.
From a returns perspective, you would have lost out on
so much upside aiming for security and not and trying
(28:10):
to avoid risk. And so if you're looking for an investment,
annuities are not the best place to look. If you're looking, though,
to create income based on the investment dollars you've been
able to grow as you get closer to retirement age,
that's when and I stress some some a few low
cost types of annuities might maybe a decent choice for
(28:32):
steady income, but annuities just are not a great choice
for most folks. And if you're looking for a smart
investing strategy, They're just not really a reasonable choice at all.
Speaker 4 (28:41):
So they are an inferior financial product.
Speaker 1 (28:43):
Who annuities And if you do step into that space
later in life seeking that sort of income like clockwork
every single month, just be really really careful and do
your due diligence and know that you need to opt
for a cost one and you're probably not going to
get that at your bank.
Speaker 3 (29:03):
That's right, Joel's take a question from an anonymous poster
in the Facebook group. Is anyone else finding it harder
to keep maxing out hsas and roths as the contribution
limits increase? I don't think we can comfortably do it
next year. Company raises have been non existent for two
years and costs for everything are up, including health insurance.
(29:24):
I'm glad we can still get some money in there,
and super grateful for the past years we could max
it out. Feeling a bit sad that we can't hit
the goal next year, though, Joe, what you think? Yeah,
I mean you're not alone, Anonymous. I think that's the
first thing I want to mention, especially you talk about
the rising cost of health insurance. Depending on where you work,
you might be seeing a double digit increase in what
(29:44):
you're expected to pay for health insurance and it makes
sense with that being such a large expense here, like
it's kind of come from somewhere, and I feel like
I have to dial it back on retirement account contributions.
Also want to say, I'm so glad that you want
to max out all those accounts that you've been able to, right,
even if you can't do it every single year, the
fact that that is your goal, that's what you're striving after,
(30:06):
it means a lot. Like it means that your heart's
in the right place, you're shoving your money in the
right place, and you're setting yourself up for an awesome future,
even if you can't do it to perfection.
Speaker 4 (30:14):
You know, yeah, you know what this makes me think of.
Speaker 3 (30:15):
This makes me think of James Clear Atomic habits, where
he talks about identity based habits, right, And so there
are times when we latch onto certain habits and things
that we're trying to implement because there's some sort of
external marker, right, And in this case, I think for
this anonymous poster, maybe the external marker is being able
to say that I maxed out the roth IRA or
(30:36):
I'm maxed out the HSA But what I think is
more important is the fact that this person sees themselves
as an investor, right, Like this is because something that
they do because I'm an investor, Like because I am
intelligent and I understand the power of compounding returns. I
understand how tax advantage accounts lead to more wealth for
(30:57):
me and my family down the road, I understand, and
delayed gratification like these are all the kind of tenants
that are at the core of means to be an investor,
the optionality I'm building for myself. Yes, every year that
I get at least close to maxing those counts, yeah,
And so I mean personally, I wouldn't beat myself up
if I wasn't able to hit the new max amounts,
especially if you're, you know, contributing the same amount that
(31:21):
you didn't let's say last year or the year before.
But the limits have just gone up and so you're
quote quote unquote not maxing it out anymore, but you're
you know, investing pretty dang close to what you're investing before. Well,
on doesn't matter, like you don't have the title anymore.
But I don't know, I'm not My wife doesn't given
me like a gold star for maxing out our retired accounts.
(31:43):
So I don't know, I don't hopefully that that is helpful, Like, yes,
please still do invest, but I personally I wouldn't beat
myself up over not being able to quote unquote max
those accounts.
Speaker 1 (31:53):
I think it's just also important to note that as
we make progress towards financial goals, it's not always up
into the right endeavor. That means, like, even as a
serious investors, your net worth is going to go down
year of a year, sometimes not through any fault of
your own, but just because hey, twenty twenty two is
a rough year in the markets, and guess what, even
though I contributed, I'm worth less today than I was
a year ago. And that's just like a frustrating thing
(32:15):
to encounter. Or like, yeah, i can't put as much
in as I did last year, but I'm still doing
my best.
Speaker 4 (32:21):
Like that's okay.
Speaker 1 (32:24):
And as long as like you're doing your best, you're
still prioritizing, contributing and setting money aside for your future,
then I think you are creating a bright financial future
for yourself and you are taking the right tactic.
Speaker 3 (32:36):
Totally agree, buddy, And that is going to do it
for today. Thank you for listening. We appreciate your time
and attention. We'll see you back here next week. And
you are listening to how to Money on KFI AM
six forty. You've been listening to how To Money with
Joel Larscard and Matt All Mix and you can always
hear us live on kf I AM six forty twelve
to two pm on Sunday and anytime on the iHeartRadio
(32:58):
app
I Am six forty. You're listening to How to Money
on demand on the iHeart Radio app.
Speaker 2 (00:10):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel lars Guard and Matt altmis.
Speaker 3 (00:29):
Kfi AM six forty live everywhere on the iHeartRadio app.
Speaker 4 (00:33):
This is how to Money. I am Matt Altmix.
Speaker 1 (00:35):
And I'm Joe Larsgard. If you're on Facebook, by the way,
you want to join a group of like minded folks
who have money questions, who have money insights, please go
join the how to Money Facebook group.
Speaker 3 (00:45):
Our ludicrous headline of the week comes from the New
York Times and the headline reads, they rush to buy
a home during the pandemic. Now some feel trapped and
I'm gonna save everyone the time and having to go
read this article bil can.
Speaker 1 (00:59):
I to say, it makes me think of the Dr
R Kelly song like trapped in a Closet? Isn't that
Remember that album came out? I more remember the disease
joke about R Kelly. But uh, basically, some folks who
you know who bought a home back during the pandemic
a few years ago, they found that the home it's
a little tight for them right now.
Speaker 3 (01:19):
It's it's it's not quite accommodating. They're growing family, it's
not quite to their liking as their circumstances have changed.
But of course they've got that sweet low rate and
they are loath to give it up. So with no
easy way to make a change, they are quote unquote
trapped and trapped. Yeah, just the closet. But it don't
you feel bad for him, Joel, It's I'll be honest,
(01:42):
it's hard to feel sad for folks who bought a home.
Speaker 4 (01:45):
They've got some equity, they've got a locked in low rate.
Like the folks. I feel bad for the folks out
there who actually.
Speaker 3 (01:51):
Want to buy a home but can't afford to because
they're their wages haven't kept up with the home price
increases and affordability is out of reach.
Speaker 1 (01:58):
I don't know if your mom member said this, you've
grown up, but my mom would be like, I've got
the world's tiniest violin here playing. I don't know where
that came from, but she would. She would say that
to me, your rubber fingers together. And that's how I
feel for these people. You're locked in your home that
you have backy, and like, I'm so still signing at
three percent rate. I'm so sorry for you. It just
felt like such a self indulgent article from The New
(02:21):
York Times. I don't even know why they felt like
they needed to print those stories of people who are like,
I've got two hundred thousand dollars in equity, but I'm
I'm stuck because you're not stuck.
Speaker 4 (02:30):
The truth is you're not stuck.
Speaker 1 (02:30):
If you're in that case, and you can totally make
it different, You've got options. This is also, by the way,
if you feel like you are stuck in a home
that you are, that you have bought, that you're paying
down that mortgage regularly, well you could have opted for
renting instead. And that's in particular a good idea if
you're planning to or you're not thinking you're in a
(02:53):
state in a home for at least five years better
off seven or more years. That's typically what makes buying
a home makes sense. And stats from just this week
Matt show that apartment rents are down and vacancies are up,
continuing to put more power back in the hands of
renters and just lower costs. I don't think you have
(03:13):
experienced this because you're a better landlord than I am.
But I've experienced like decreases and what I'm able to
get from my properties in the last year a year.
Speaker 3 (03:22):
Only because I have taken these opportunities to do some
slight upgrading in order to keep that rent line. So
you have to put more into it in order to
be able to keep that right or yes, I would
also be offering those places for less as well. Yeah,
so most likely that's where I'm at, which which is
you know, I'm not mad about it. I think this
is a great thing overall, because rents became excessively expensive.
(03:46):
It's it's good news after pandemic years of rapid price
increases the people experience, so let's say too, especially in
multi families, so like apartment complexes in particular have seen
the most because of the it's just a lot of
easier for developers to build those types of units as
opposed to single family rents.
Speaker 4 (04:05):
I think we actually talked about this a few weeks
ago as well.
Speaker 3 (04:07):
There isn't clear data on that, but yeah, it seems
that those are not dropping as much as kind of
holding steady at least nationwide. Yeah, obviously it depends on
your specific market.
Speaker 1 (04:18):
I think you and I would both agree that owning
a home, it can be a lovely endeavor, can be
a smart choice, and it can be a great long
term move for a whole lot of folks. It's just
not for everyone, and it's not always better from a
wealth building perspective. And I think that kind of cult
of home ownership mentality is something that has been developed
over many decades in this country, and it's led people
to believe that, like, the way to live the American
(04:40):
dream and to build some sort of financial future for
myself is to own a home. And that just doesn't
have to be the case.
Speaker 4 (04:47):
I used to be.
Speaker 3 (04:48):
But you don't have to follow that same playbook. And
I think there's the folks who are talking the loudest
about that are trying to encourage folks to follow the
same playbook that they have taken because they have, you know,
and I understand it, because they have seen how well
that's done for them, But that you don't have to
follow that playbook. There are plenty of other great ways
to invest. It's more accessible for folks to invest in
(05:09):
the market just while you're sitting on the couch. In
some ways that's not great. But I mean I want
to talk about even just the little lifestyle. Like you
were saying that home ownership is not for everyone, and
I think that's something that I need to get more
used to because I love home ownership and specifically I
even love spending money on my house and like the
(05:30):
expenses that go into like making little changes and making upgrades.
Speaker 4 (05:34):
Have we talked about my dishwasher? Oh? I think we did? Yeah?
Do we on the show? You have the fancy one? Yeah? Okay,
so yeah. But like, on one hand, I'm bummed because I'm.
Speaker 3 (05:42):
Like, ah, this is going to cost you know, it
was an unexpected costs that we didn't budget for because
the old one should have been good but it crapped out.
But of course I'm gonna end up getting a Bosh.
Well I shouldn't say of course. I wanted to prioritize
consumer reports. You're getting a bosch, you're getting a bush,
And so I got the more expensive bosh one that
pops open so that you know it's so great come
(06:03):
down in the morning. The plate Not only are the
plate strigile, the plastic stride does it read a story
to you and it plays it a little song.
Speaker 4 (06:11):
But I like, I enjoy doing that.
Speaker 3 (06:13):
But guess what those are additional expenses that you have
to be willing to pony up and to part with
your dollars in order to cover some of these expenses.
Speaker 4 (06:21):
When you are a renter, you ain't gotta worry.
Speaker 3 (06:24):
About that when something craps out, I mean unless you
actually had a runner who wanted to upgrade the dishwasher.
Speaker 4 (06:30):
But when something breaks, you call up your landlord. That's right.
Speaker 3 (06:33):
Speaking of another comic makes me like the mitch Heedburg joke.
It's like I went to home depot yesterday, which is
totally unnecessary. I need to go to an apartment depot.
Just a bunch of people standing around. We don't have
to fix jack.
Speaker 4 (06:46):
But like that, it's one of the biggest benefits. It's
one of the biggest benefits.
Speaker 3 (06:50):
And that's you just got to keep in mind that
that is what you're signing up for with home ownership.
But of course, the folks who they're not happy with
living in an apartment, the folks out there who to
purchase a home, those are the folks that we feel for,
and those are the folks who feel a bit locked
out of the market today, and the folks in this
article in particular. If you want to move, you can
(07:10):
still do that, like you just have to pay a
bit of a price for it. But and think about
people who bought at the peak of the market, where
home prices have re seend a little bit. Those people
are in a tougher spot because if your home is
now worth five percent less than what you paid for
it a year, eighteen months ago, something like that, and
you're like, I really feel like I need to do
something different. You got to bring potentially a load of
(07:31):
cash to the closing table in order to make a
different decision. But if you if you bought a home
three or four years ago and it's appreciated and you
don't want to sell it because you don't want to
give up the low mortgage interest rate, you still have
that opportunity. Though you still have that ability without losing
money in the process.
Speaker 4 (07:50):
Yeah, it just comes out of trade offs. What are
you willing to value?
Speaker 1 (07:54):
We got more money saving information to get to.
Speaker 3 (07:56):
KFI AM six forty. You're listening to how to Money
on demand on the iHeartRadio.
Speaker 1 (08:01):
App KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 4 (08:07):
This is out to Money. I'm Joel Larsgard and I
am Matt Altmix.
Speaker 3 (08:12):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and insight, please go ahead and join the how
to Money Facebook group Joel us hear from another listener.
This is a listener with a new baby in tow
and he wants to make sure he's taking the proper
financial steps to prepare for this baby's future.
Speaker 5 (08:31):
Hey guys, Casey from Utah here. My wife and I
recently had a son with Down syndrome, and she needed
to quit her job to help care for his needs.
It's likely that he will live with us for the
rest of our lives, and we want to ensure that
he is provided for and whoever cares for him after
we're gone has the resources they need. At the same time,
I would still like to retire someday. How can I
(08:53):
plan for retirement for three people instead of two, especially
with the reduced household income.
Speaker 4 (08:59):
Any thoughts be appreciated. Thanks man, Casey.
Speaker 1 (09:02):
First off, I just want to say it sounds like
you're being intentional to love your son.
Speaker 4 (09:06):
Well, yeah, and I love how he's approaching.
Speaker 1 (09:09):
Yes, this question is and it's gonna throw a wrench in
things financially like this is this changes your future, your
family's future, your financial future. Saving for retirement of course
is still necessary and important, but the family is the
top priority. And so this is going to make it harder.
Like you said, but I'm I think I just want
to say that I'm impressed by your dedication to make
(09:30):
sure that your son is well taken care of, even
if it means rearranging finances so your wife can stay
at home. Like those are the big kinds of decisions, Matt,
that people face that just don't get talked about all
that much. And so I'm glad Casey brought this up
so we can address it, address it on the show totally. Yeah,
And so I don't at all want to discount how
(09:50):
hard it might be for Casey. I grew up with
a special needs sister, so I certainly know. But at
the same time, and she needs care for the rest
of her days from your absolutely, and you have to
probably be a part of that at some point in
the future.
Speaker 4 (10:02):
Absolutely.
Speaker 3 (10:03):
That being said, it's almost like like the ability for
Casey to know that now and have years and like
decades ahead of him to prepare for that. I think
it's almost like, I think I would rather that happen
than let's say, if you had a kid then something
happened when they're like eighteen and then all of a sudden,
like I'm what I'm saying is that if you've got
twenty years ahead of you to prepare and you've got
(10:24):
time on your side and compounding, that is totally doable
as opposed to like, hey, we got to do this
thing that needs to be fixed by next year. There's
not a lot that you can do within such a
like just such a quick turnaround, but.
Speaker 1 (10:37):
The small rudder changes you can make now to the
course of your ship, like you're going to get there
over the course of twenty years, you have to make
a much harder turn right to get there in less.
Speaker 3 (10:45):
And like a year or two exactly. Yeah, So Casey
mentioned saving for his son. He wants to obviously make
sure that he's taken care of in the future. Casey,
I'm not sure if you've heard of an able account,
but you have certainly heard it now. That is going
to be the best way to stock money away for
his future. Anyone who has a disability that is diagnosed
(11:06):
before the age of twenty six qualifies for an able account.
It's basically akin to the five twenty nine accounts out there,
but was created specifically to help family save money for
disabled children without losing out on federal benefits like Social
Security income and Medicaid as well.
Speaker 4 (11:25):
But so Casey specifically.
Speaker 3 (11:27):
Lives in Utah, so you can head over to the
website able ut dot com and they've got pretty good
options over there. The expense ratios, the fees, they're fairly low,
and that is going to be the best account to
help your son to save up a nest egg for
his future. And we're specifically mentioning Utah's account because Casey,
(11:49):
you get a state deduction for dollars that you contribute
to that account. If you live in a state that
didn't have a deduction, that's when you would want to
start looking at other state plans, just like we do
with fights one nine accounts.
Speaker 4 (12:00):
Right.
Speaker 3 (12:00):
Yeah, and someone it comes to able accounts, I think
Ohio has a really good one. I think Florida has
a really good one as well. So for everyone else
out there who's interested, in an able account you don't
get the in state deduction, make sure to look to
some of those better options out there.
Speaker 4 (12:13):
But U tell us seems pretty solid.
Speaker 1 (12:15):
Yeah, and that's one piece of the puzzle, right, Matt
is saving for the third member of the family, for
their son. It's like a practical accounts Yeah, answered, that's
something that has to be mentioned, and it is one
of the places you want to start funneling some amount
of money to help him save for his own future.
Because yeah, it's different than like, we talk regularly about
(12:37):
whether or not we're going to invest for our children's future,
and we kind of waffle on that and we do
a little bit, but not a whole lot, and we
think our children should largely be responsible for funding their
own retirement. But it's different, like when you have a
special needs child who is going to need a lot
more care and won't be able to do some of
those things for himself. At the same time, Casey, you're
(12:57):
also worried about your own future. Understandably, you're going to
have higher expenses because your son is likely going to
live with you for a long long time. You've also
gone down to being a one income household, which makes
it harder to make ends meet and to deal with
those escalating costs that we're all experiencing, and at the
same time to save well for your own retirement. That
it feels like a mountain of necessities. And it's not
(13:22):
that it isn't possible, it's just that it will inevitably
take longer, which is why the time portion matters so
much that Matt talked about. So I think the first
piece of advice I would say is to maybe give
yourself some grace realizing that your circumstances are going to
delay your path to financial independence. And that's okay. I
think it could be demoralizing. Don't let it be demoralizing.
(13:44):
You just have new goals in your life that you
need to address.
Speaker 2 (13:47):
Yeah.
Speaker 3 (13:47):
No, I think thinking about it in that way is
really helpful because it just shows that there are all
different types of goals that we set for ourselves, and
so how do we sacrifice in the here and now
to make sure that we're able to achieve those goals? Right,
that's how we are able to realize the life we
envision for ourselves. And so practically speaking, I think what
that can look like is just I don't want to
(14:08):
This seems so like small and petty, but like budgeting
is what I'm thinking about, right, Like assessing your income,
assessing your expenses. You've certainly lost some income, and you
could stop prioritize retirement altogether in order to meet your
current needs. That would be an understandable reaction, but I
(14:28):
think it would be a bad one for your future,
for your desire to be financially independent and retire someday.
And instead I'd be asking, like, how can I reduce
my expenses so that I'm not going to negatively impact
my life in a significant way. Just start trimming wherever
you can, wherever possible to create more margin. And I
think this will be important. As you just build up
(14:50):
your savings, you are able to continue investing and also
start saving for your son's future as well. It may
not take, depending on how tight of a budget and
how tight of the ship that you're running. Even within
that you might find, holy cow, all of a sudden,
all of these dollars that were kind of just getting
spent willy nilly, we're able to funnel and harness in
(15:12):
a way that's going to lead to significant wealth down
the road. If you were already really on top of
your budget that I would say, maybe it would take
like maybe some bigger cuts, some more drastic changes in
your life as opposed to just trimming around the margins.
Speaker 1 (15:26):
Yeah, well, I think this is going to buy necessity,
involve some more communication between you and your wife, right,
And it's often an incumbent on the stay at home
spouse to create that more frugal environment. I think it's
going to take both of you really all hands on
deck sort of approach in order to feel comfortable to
still invest for yourself while taking care of your son
(15:47):
and you, like you mentioned, Matt, you'll probably have to
look beyond even low hanging fruit. I'm thinking about something like, Okay,
your wife is staying at home now, depending on your
work situation, Casey, can you all go down to being
a one car family? Like that's one of those things
that it's not just selling the car, it's the fact
that you're not paying insurance on that car anymore. Like
it's not a depreciating assets sitting in your driveway. So like,
(16:09):
what can you do that maybe might be a little
outside the box that you haven't you really haven't thought about.
Speaker 3 (16:15):
You have a lower cost of living area, you know.
I mean, maybe you're thinking before I it's not that
important that we're not close to family. Oh maybe all
of a sudden you're realizing that it's much more important
for us to be closer to family because of the
assistance that they're going to be able to provide for sure.
Speaker 1 (16:30):
All Right, we've got actually more to get to on
today's show. This is Joel Larsgard and Matt Altmis and
you're listening to KFI AM six forty how to Money
on demand on the iHeartRadio app KFI AM six forty
live everywhere on the iHeartRadio app.
Speaker 4 (16:46):
This is how to Money. I'm Joel Larsgard and I
and Matt Altmix.
Speaker 3 (16:50):
Don't forget to sign up for the how to Money
newsletter over at how toomoney dot com slash newsletter.
Speaker 1 (16:54):
All right, let's talk about a really interesting debate that
happened really over the past over the past week.
Speaker 3 (17:01):
This is like one of those one of those Internet
things when there's something that just blows up and everyone's
talking about it.
Speaker 4 (17:06):
I'm really low to even talk about it, but.
Speaker 1 (17:09):
There were responses everywhere, like the Washington Post and some
of our favorite artorders responded to everyone yeah, So it
was like everyone had to take it's it's in the water,
we should talk about it. So there was this firal
article in the Free Press last week attempting to make
the case that Americans are just so much poorer than
than we think. And the case was essentially that the
way that the US poverty line is calculated, well that
(17:32):
doesn't work anymore, not in today's economy. But it was wrong.
I think on a lot of levels.
Speaker 4 (17:38):
They made it.
Speaker 1 (17:39):
The author made it sound like a family of four
making one hundred and forty thousand dollars, they can barely
make it, They're barely scraping by. It's kind of like,
I don't know some of the social media people making
two hundred and fifty K and they're like, hey, but
I don't know how many money left over at the
end of the month. And you're like, how is that possible.
Let's look at your budget. Oh that's how well. Tyler Cowen,
who's like one of my favorite economists, he wrote a
(18:00):
response in the same publication, and it's well worth reading.
He highlighted some of the realities of modern prosperity, including
like tech advancements and bigger homes, like we've all got
more square footage per person, fewer kids living in the
same room. Food cost declines. You might have seen, you know,
food costs go up recently, but over the course of decades,
(18:20):
we've seen food costs go down. Him anyway, So we
spend much less of our disposable income feeding ourselves than
our grandparents did. And then so much of the rest
of the world healthcare improvements. He documented so many things.
The world is just not as bad as some folks
want you to believe. I think that's maybe the heart
of the response we want to get out.
Speaker 4 (18:39):
Yeah.
Speaker 3 (18:39):
No, well and specifically some of the standards. So the
original the original author Green dies Rision named Michael Green
and Michael Green. But uh, it's just ridiculous, like the
like these are luxuries that he's assuming that people not
only want but essentially are entitled to.
Speaker 4 (18:55):
And that's the part that rubs me the wrong way,
the fact that.
Speaker 3 (18:58):
Like, oh, yeah, like are there's a wide range of
vehicles that are going to get you to and from work,
like you don't have to go with like the average
or median price of a brand new vehicle today, and
those again.
Speaker 4 (19:10):
Those are the those are the sacrifices we make.
Speaker 3 (19:12):
Those are the the trade offs that we make, as
opposed to saying, oh, the new poverty line should be
four times higher than four or five five times higher
than what it currently is right now. It's like it
makes me think of like if you're playing a game
and you're just complaining, like we've got man, we did
we ever give a shout out to a listener who
sent us the upgraded version of a choir, We'll pull
(19:34):
into it. I'm not gonna take any of that right now,
but I'm thinking about the board game Acquire. You start
off with a certain amount of money, and it's sort
of like if I just out there the whole time
and complained that, dude, we should start out the game
playing like with five times as much money. It would
make it so much easier. But like, guess what that
would also do make the game. It would ruin the game,
like there would you there would be no incentive to
(19:57):
be strategic, and everyone would just round after round.
Speaker 4 (20:00):
You would just be buying things.
Speaker 3 (20:02):
Except that when it comes to real life, there is
a response, which is that supply and demand, well, okay,
those units of supply are going to go up in
value because there are more dollars chasing those limited goods.
It just I was not happy with the analysis of
the original authors. Yeah it was, it wasn't great. It
wasn't great, And there are other statistics I think that
(20:24):
could really combat his point of view too. Like we
highlighted recently in the how to Money newsletter that a
lot more families are making one hundred and fifty thousand
dollars now than we're fifty years ago. That's adjusted for inflation,
but it's a significant difference in the number of families
who have mid six figures are not mid six, not
five hundred k, but like one hundred and fifty thousand
(20:45):
dollars is really is quite a bit of money in
a lot of ways. And this is also not to
say that everything's great for everyone. We don't want to
sound completely dense and not understand and realize that there
are a lot of people living out there close to
the actual poverty line who are having a tough time
and who feel those grocery price rises more than your
(21:07):
middle class family, right, And it's it's true. Yeah, inflation
has attacked our wallets more in recent years, really, more
than any other time we've seen in our adult lives
and homes, healthcare have gotten more expensive. But I think
articles like this seem to want modern economic reality to
be more negative than it actually is. They're highlighting, sure,
(21:27):
just cherry picking statistics, and that's the negative, negative news
by you to reveal their worldview instead of kind of
coming at it honestly. Yeah, and I mean it honestly
reveals their, like you said, their worldview and what they
expect everyone should have. And then there's plenty of people
who aren't, you know, and gosh, I'm gonna sound like
such a media type person, but who are like the
(21:47):
coastal elites who are very happy not having all of
these amenities are Now, don't I feel like we're like
right in the middle.
Speaker 4 (21:55):
We're heartlanders.
Speaker 3 (21:56):
We live like near Ish, a major city, but we're
also approaching life with common sense and grit. Like anyway,
let's talk about building wealth, and potentially a way that
you can at least make your dollar go further is
moving overseas in order to stretch your dollar. So folks
(22:18):
who have kept up with like the Fire movement know
about this. It's called geographic arbitrage. But there are new
stats from the Defense Department, and they find that there's
a significant uptick in people who are taking the strategy.
And we're not talking about just like being nomadic, like,
we're talking about permanently moving to an international location that
(22:40):
has a much cheaper cost of living. And I think Portugal,
Thailand always comes to mind. Even Panama down in Central America.
Speaker 1 (22:47):
Had an old neighbor who moved down to Panamah, Yeah,
to retire, and like, I'm pretty sure she's living the
high life because it solder house and it's just your
dollar goes a lot further down.
Speaker 4 (22:56):
There, it does.
Speaker 3 (22:56):
Yeah, And in some thriving XPACT community, I think you
can you can find a solid community there along with
these lower costs in some you know, pretty decent healthcare
options too.
Speaker 4 (23:09):
This isn't for everyone.
Speaker 3 (23:09):
I actually talked about this with my father in law
recently because a buddy of his was seriously thinking about
moving down I think to Costa Rica.
Speaker 4 (23:15):
Are you trying to get him further away from you?
Speaker 3 (23:16):
No? Hey, if you if we moved down to Chile,
do not have that kind of relationship with the in laws,
the classic in the law relationship.
Speaker 4 (23:25):
Now I love them, they're great.
Speaker 3 (23:26):
This isn't for everyone, But I think it's worth considering,
it's worth putting out there because this route could completely
change your financial independence path and.
Speaker 4 (23:35):
What your life looks like.
Speaker 1 (23:36):
Yeah, I'm not like currently interested in moving abroad, but
I'm always like a little interested. Yeah, so maybe someday
I'm not going to say never. But Likes, there are
all these sort of things I've said that I would
never do that I ended up doing later later in
life and so but but it does seem like one
of those things where, especially if you are like I
(23:57):
haven't saved as much as I thought I would or
wanted to, How can I retire at the age I
want to? This is how this is a way to
do that, right, Because you're strutting your dollars so much
further you need less to be able to live that
retired lifestyle that you want. On the note of travel,
the real ID rollout Matt has been bonkers. So we've
covered this a little bit over the years. They keep
pushing back basically the implementation day. Basically every nine months
(24:20):
we provide an update for why it's not like it's
supposed to be. Yeah, and so, yeah, this switch is
just taking a really long time, and there are still
millions of Americans who don't have an updated real ID,
although the numbers have gotten a lot better, a lot
more people do have this in their wallet already. If
you haven't updated yours, well you're going to punch yourself,
I think if you go to the airport without one,
(24:42):
because it's about to get a lot more frustrating and
expensive starting February. First, you're gonna have to pay forty
five bucks and go through additional TSA vetting as you
go through security. If you have not upgraded to the
real ID, and if you're not sure whether your ID
is updated, look for a start in the upper right
hand corner of your driver's license. The start can look
(25:03):
different depending on the state. I think in California it's
like inside of a bear YEP, which makes sense. And
if yours isn't compliant, update your ID, especially especially before
you make your next trip to the airport, because uh yeah,
not just the additional money, but it's the additional hassle.
Can you imagine, Matt Trying to the TSA line is
already the pain of my existence.
Speaker 4 (25:24):
When I go, do they just hit you up for
forty five bucks? Like right then and there? How does it?
How does it work? Yeah, they probably have one of
those like machines.
Speaker 3 (25:31):
Sure reader right there, they're just like tap here to pay,
and you're like, pay for what for non compliance?
Speaker 4 (25:37):
Sir?
Speaker 5 (25:38):
Right?
Speaker 4 (25:38):
That's what for?
Speaker 1 (25:39):
I mean, I have a feeling it's just going to
be a complete mess for people who aren't really compliance.
So make sure you get that done. Look out for
your loved ones to maybe help them make sure.
Speaker 5 (25:48):
They have right.
Speaker 4 (25:49):
I also doing it. That's right. You are listening to
How Some Money?
Speaker 3 (25:53):
This is Matt Altmix and Joelar's Guard, and you are
listening to kf I AM six forty How the Money
on demand on the iHeartRadio.
Speaker 1 (26:01):
KFI AM six point forty live everywhere on the iHeartRadio app.
Speaker 4 (26:06):
This is how to Money. I am one of your hosts,
Joel Larsgard, and I am that a mix.
Speaker 3 (26:11):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 1 (26:16):
Let's get to the Facebook question of the week. This
one comes from Connie. She's what do you think about annuities?
Two different banks have advised me to get these. I
understand they probably get a nice commission, but they've offered it.
It's a safe alternative investment. Matt, what's your take.
Speaker 4 (26:29):
I like that two different banks have recommended them.
Speaker 3 (26:32):
So she's been out there doing her shopping and she's like, well,
the first time I thought no, no, thank you. But
then when the second bank was just like, oh, yeah, yeah,
you need an annuity, just probably like everybody's saying, maybe
there's some truth here. No, Well, first off, I mean
I guess even the fact that she's going to a bank, right,
Like getting financial advice from a financial institution like a
(26:53):
bank is I mean, it's always a bad idea. Where
it is that you get your financial advice matters so much,
and the incentives often determine the kind of advice that
you're going to receive. So, as you mentioned, if the
commission is steep, there is a much higher chance that
they're going to recommend that product, whether or not it
is in your your best interest. And so the fees
(27:15):
that banks realize on annuities, like variable annuities, they can
be massive and I'm talking like in the two to
three percent range annually.
Speaker 4 (27:23):
And so I would say the.
Speaker 3 (27:25):
First mistake was even going to your local banker and saying, hey,
sell many a financial product. Yeah, that's something you want
to avoid generally speak a greed stay away from banks
for financial advice. Also an annuity, it's kind of an investment,
but it's also an insurance product. With many forms of annuities,
like in indexed annuity, your investment returns are capped and
(27:48):
so you know, think about the returns you would have
been losing out on in this fantastic market run if
you were to have opted for an annuity instead of
putting your dollars in an annuity, instead of investing them
in the mark it right, you would have gotten creamed.
From a returns perspective, you would have lost out on
so much upside aiming for security and not and trying
(28:10):
to avoid risk. And so if you're looking for an investment,
annuities are not the best place to look. If you're looking, though,
to create income based on the investment dollars you've been
able to grow as you get closer to retirement age,
that's when and I stress some some a few low
cost types of annuities might maybe a decent choice for
(28:32):
steady income, but annuities just are not a great choice
for most folks. And if you're looking for a smart
investing strategy, They're just not really a reasonable choice at all.
Speaker 4 (28:41):
So they are an inferior financial product.
Speaker 1 (28:43):
Who annuities And if you do step into that space
later in life seeking that sort of income like clockwork
every single month, just be really really careful and do
your due diligence and know that you need to opt
for a cost one and you're probably not going to
get that at your bank.
Speaker 3 (29:03):
That's right, Joel's take a question from an anonymous poster
in the Facebook group. Is anyone else finding it harder
to keep maxing out hsas and roths as the contribution
limits increase? I don't think we can comfortably do it
next year. Company raises have been non existent for two
years and costs for everything are up, including health insurance.
(29:24):
I'm glad we can still get some money in there,
and super grateful for the past years we could max
it out. Feeling a bit sad that we can't hit
the goal next year, though, Joe, what you think? Yeah,
I mean you're not alone, Anonymous. I think that's the
first thing I want to mention, especially you talk about
the rising cost of health insurance. Depending on where you work,
you might be seeing a double digit increase in what
(29:44):
you're expected to pay for health insurance and it makes
sense with that being such a large expense here, like
it's kind of come from somewhere, and I feel like
I have to dial it back on retirement account contributions.
Also want to say, I'm so glad that you want
to max out all those accounts that you've been able to, right,
even if you can't do it every single year, the
fact that that is your goal, that's what you're striving after,
(30:06):
it means a lot. Like it means that your heart's
in the right place, you're shoving your money in the
right place, and you're setting yourself up for an awesome future,
even if you can't do it to perfection.
Speaker 4 (30:14):
You know, yeah, you know what this makes me think of.
Speaker 3 (30:15):
This makes me think of James Clear Atomic habits, where
he talks about identity based habits, right, And so there
are times when we latch onto certain habits and things
that we're trying to implement because there's some sort of
external marker, right, And in this case, I think for
this anonymous poster, maybe the external marker is being able
to say that I maxed out the roth IRA or
(30:36):
I'm maxed out the HSA But what I think is
more important is the fact that this person sees themselves
as an investor, right, Like this is because something that
they do because I'm an investor, Like because I am
intelligent and I understand the power of compounding returns. I
understand how tax advantage accounts lead to more wealth for
(30:57):
me and my family down the road, I understand, and
delayed gratification like these are all the kind of tenants
that are at the core of means to be an investor,
the optionality I'm building for myself. Yes, every year that
I get at least close to maxing those counts, yeah,
And so I mean personally, I wouldn't beat myself up
if I wasn't able to hit the new max amounts,
especially if you're, you know, contributing the same amount that
(31:21):
you didn't let's say last year or the year before.
But the limits have just gone up and so you're
quote quote unquote not maxing it out anymore, but you're
you know, investing pretty dang close to what you're investing before. Well,
on doesn't matter, like you don't have the title anymore.
But I don't know, I'm not My wife doesn't given
me like a gold star for maxing out our retired accounts.
(31:43):
So I don't know, I don't hopefully that that is helpful, Like, yes,
please still do invest, but I personally I wouldn't beat
myself up over not being able to quote unquote max
those accounts.
Speaker 1 (31:53):
I think it's just also important to note that as
we make progress towards financial goals, it's not always up
into the right endeavor. That means, like, even as a
serious investors, your net worth is going to go down
year of a year, sometimes not through any fault of
your own, but just because hey, twenty twenty two is
a rough year in the markets, and guess what, even
though I contributed, I'm worth less today than I was
a year ago. And that's just like a frustrating thing
(32:15):
to encounter. Or like, yeah, i can't put as much
in as I did last year, but I'm still doing
my best.
Speaker 4 (32:21):
Like that's okay.
Speaker 1 (32:24):
And as long as like you're doing your best, you're
still prioritizing, contributing and setting money aside for your future,
then I think you are creating a bright financial future
for yourself and you are taking the right tactic.
Speaker 3 (32:36):
Totally agree, buddy, And that is going to do it
for today. Thank you for listening. We appreciate your time
and attention. We'll see you back here next week. And
you are listening to how to Money on KFI AM
six forty. You've been listening to how To Money with
Joel Larscard and Matt All Mix and you can always
hear us live on kf I AM six forty twelve
to two pm on Sunday and anytime on the iHeartRadio
(32:58):
app
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