May 4, 2025 • 33 mins
More Americans are using BNPL to pay for groceries. That's not good!
Ask HTM: Heather from OH has a question about her sister's student loan payments.
Tariffs are already having an impact. Amazon was planning on displaying the cost of tariffs for specific products on its site. But that's no longer happening. We like the idea of price transparency on tariffs!
Ask HTM: Matthew has a question about paying off medical bills with a credit card.
Ask HTM: Heather from OH has a question about her sister's student loan payments.
Tariffs are already having an impact. Amazon was planning on displaying the cost of tariffs for specific products on its site. But that's no longer happening. We like the idea of price transparency on tariffs!
Ask HTM: Matthew has a question about paying off medical bills with a credit card.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
K if I AM six forty. You're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
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 Lar's Guard and Matt Aultmix.
Speaker 1 (01:17):
KFI AM six point forty live everywhere on the iHeartRadio app.
Speaker 3 (01:21):
This is how to Money.
Speaker 4 (01:22):
I'm your host, Joel Larsgard and I am the other host,
Matt Altmix, And if you have a money question, we'll
send it our way. All you have to do is
record your question on the voice memo app there on
your phone and send it over via email. You can
find the simple instructions at howdomoney dot com. Forward slash
ask Matt. Now is time for the ludicrous headline of
the week. This one comes from CNBC and it reads
(01:45):
more Americans or financing groceries with buy now, pay later loans,
and more are paying those bills late, survey says oh Man.
I hate to talk about buy now, pay later again
because I think this is something that we like talks
back about pretty regularly. But there just aren't many headlines
that could break my heart more than this. The fact
(02:06):
that The survey found twenty five percent of buy Now,
Pay Later users are using installment loans to pay for
groceries these days, like in essential a need and more
than four and ten have paid late on one of
these loans in the past year. I feel like by
now Pay Later, it's it's like a virus that's spreading
and more and more people. It's like snuck into the
(02:29):
under the guys of Oh, this is going to make
life easier.
Speaker 1 (02:32):
That's right, that's right, yeah, which sounds nice, Like anytime
someone's like, I'm going to make your life easier, it's
like why not cool? That sounds great, But it's actually
what do they say, like when you do the easy thing, well,
you're going to pay You're gonna have to do the
hard thing later or versus like doing the hard thing
up front and then your life gets a little bit
easier down the road.
Speaker 4 (02:50):
And I think I think that should be like a
quick synopsis of what how to money is all about. Yeah,
over the hard thing first, that's like the philosophical approach
to how we do things here out how to money. Yeah,
And if you take the easy approach to paying for stuff,
which by now pay Later is the quintessential reality of that,
then you're going to have a hard time later, and
it's the youngest and most vulnerable among us who seem
(03:10):
to be taking the bait the method. Really, it seems
reasonable on the surface. Sure, I'll pay for this in
for installments and they're not going to be charged any interest.
But it's a slippery slope because a quarter of buy now,
Pay later buyers take on a bunch of these loans
at once. And the truth is, we buy more when
the friction is reduced, and now when you're unorganized as
to what you got going on out of your accounts
(03:32):
as well.
Speaker 3 (03:32):
I think that's a big part of it, that's right.
Speaker 1 (03:34):
And so it feels like you have to do this
in order to be able to afford the things that
you want, and you're buying more than you actually need
because of it, And then when it gets into groceries,
I feel like we've we've completely lost the plot.
Speaker 4 (03:44):
I find it interesting as well that more than sixty
percent of buy now, Pay later users think that on
time payments is that is going to help boost their
credit score, which might be true in the future, but
it isn't right now, at least for the majority of
the different buy now, pay later companies out there. It
is true with like a firm Apple pay Later, they
report as well, but.
Speaker 1 (04:04):
They haven't started putting it into the credit scoring model.
Speaker 4 (04:06):
And there are a whole lot of companies that aren't
reporting at all. And so it turns out most folks
don't understand how these payment plans work much less than
the behavioral impact that they have on their finances. In
our advice is to stay away and like, there's a
lot of new companies and anytime there's a new it's
like the wild wild West when it comes to payment options.
And it makes sense too that younger users are jumping
(04:28):
on this because they're more willing to experiment and try
new things.
Speaker 1 (04:31):
But new cool fintech, Yeah, I'll try.
Speaker 3 (04:33):
Why not?
Speaker 4 (04:33):
But as we have more and more options before us,
as our attention is more fragmented, that leads to confusion,
and it leads to a lot of folks feeling overwhelmed
and not feeling that they have their arms wrapped around,
in this case, their finances.
Speaker 3 (04:47):
Yeah.
Speaker 4 (04:47):
Another constant reason though for higher food costs, at least
on our sort of monthly budgets, is the never changing
reality of wasting food families Joel, they throw away a
third of what it is that they purchase, which is
slightly better than I thought it was a half.
Speaker 1 (05:03):
So like literally I thought it was like I think
it's somewhere it was close to a half of thirty
five ish to forty percent, So depending on who you ask,
I actually I almost saw.
Speaker 4 (05:11):
This as like an improvement based on maybe where things
were I don't know, at the height of individual spending
and the amount of cash that folks surplus, cash that
folks had in their household. I've never accounts.
Speaker 1 (05:22):
I've never known a human to love leftovers more than
you do, so I know that this disappoints you more
than anything else.
Speaker 4 (05:28):
Obviously, it's a great idea to eat out less. It's
a good idea to pivot to store brands, specifically to
shop at Aldi. But dude, if you're not cooking and
actually eating the food that you buy before it spoils
and goes bad, and not eating your leftovers, obviously you're
gonna pay far more for your food than you should.
So similar to talking about the different payment options, I
think a lot of it has to come A lot
(05:49):
of it comes down to the fact that we have
so many different food options available to us as well,
not just oh, which buy now, pay later? Which payment
terms am I going to opt for when it comes
to affording these grew but then when it comes to
the actual food that we are purchasing, like, it's so
silly to go to the more mainstream or higher end
grocery stores and you've got all the options before you
(06:09):
as opposed to going to all the and your options
are limited. And it makes it so that when you
come back and you put all the things in your fridge,
I think you are more likely to use some of
those ingredients as opposed to overbuying over purchasing because it's
so easy too, because of buy not pay later. And
then you take all these groceries, you shove them in
your fridge and you can't see half the stuff because
everything's stacked on top of everything. That's why, that's why
(06:32):
everyone's got the little tub of salad at the back
of the fridge that's turned to mush that you're like,
oh man, I'm gonna have to toss this, or you're like,
what's that smell? And then you realize, oh, it's that
there's a lemon down there at the bottom of the
produce bin that's turned blue.
Speaker 3 (06:46):
It's got the blue fuzz on it, and they turn blue. Yeah,
I guess, yeah.
Speaker 4 (06:50):
But what happens is you most people are just like, oh, gross,
and then they just grab the whole bag of lemons
or oranges and then they end up tossing it into
the trash.
Speaker 1 (06:57):
I think it's basically the wrong answer to the right question.
The right question is like, man, my food budget, it's
punching me in the face. How do I fix this?
And BNPL is positioning itself to be like, look at us,
we're over here, we'll help you out. And yet the
right answer involves going in the opposite direction, which is
to consider what you buy, what you bring in, how
(07:19):
much you're spending on groceries, and then using what you
have bought. Because that it feels so old school. It
feels so old school, But man, old school works so
much of the time. Still, you don't need the new
fangle BNPL with the flashy marketing and stuff like that,
and what seems like it's going to work out better,
Ultimately it's going to lead to not knowing where your
money is going and spending more money.
Speaker 4 (07:42):
Than you just going to lead to constrained budgets. Have
you heard of this thing called a food waste audit before?
Oh I think I heard of it, So okay, I've
never I've literally never heard of this and came across
this link to it in the show notes. But basically, man,
I love this so much. You take a sheet of paper,
you set it over near the trash can, and every
time so you just make like a normal week, every
time you take something out of the fridge or I
(08:03):
guess out of the pantry as well, and if it's
bad or stale and you toss it in the trash,
force yourself to write down the item and estimate the cost,
and then not the end of the week, you tally
up how much money you are waste.
Speaker 3 (08:15):
Multiply by four.
Speaker 4 (08:16):
Maybe you've got a monthly a monthly understanding of how
much you're wasting every single month. We'll check that, hey
rule of one seventy three. Take that monthly amount, multiply
abo one hundred seventy three. Now now we're really talking.
We're taking it to the next level, because that is
were you to not waste that money and instead invest
it in the market, that's how much you would have
on hand at the end of ten years.
Speaker 3 (08:36):
So you're throwing away real money, not just pennies.
Speaker 4 (08:39):
It's like literally taking almost literally I should say, taking
money and just putting it right in the trash.
Speaker 1 (08:44):
I mean, I hate that there's a step in between,
but that is what you're doing. All right, We've got
more to get to on today's show.
Speaker 2 (08:52):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (09:00):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet, well you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool.
You can find that up on the website at howtomoney
dot com.
Speaker 4 (09:17):
All right, let's hear from a listener who is calling
on behalf of not herself, but actually her sister.
Speaker 5 (09:24):
Hi, Joel Innatt, this is Heather from Ohio and I'm
a longtime listener and fan. My question is regarding my
sister and her student loan payments. She graduated from college
about ten years ago. She's been making the income driven repayments,
and her amount that she owes has actually tripled from
(09:44):
her original amount, even though she hasn't missed any payments.
She's been making them religiously. But I believe that after
twenty years her amount would be that she always would
be canceled. But I wasn't sure if that was true
or like, what can I guide her to because I
feel like it's not clear. Thanks so much for any.
Speaker 1 (10:05):
Help, well man, to see your balance triple, I gotta
imagine that sucks. That feels like a punch in the face.
Speaker 3 (10:13):
So I hate.
Speaker 1 (10:15):
Seeing people go through the immercial emotional turmoil of making
payments on time, of like doing the right thing that
they're supposed to do.
Speaker 5 (10:23):
Right.
Speaker 1 (10:23):
Hey, I was told that this is what my student
loan payment needs to be and doing the right thing
every single month like clockwork, and then hey, the balance
continues to increase. It's so unnerving, Like I can't imagine
going through that. It just doesn't feel right to make
no time payments seeing the balance increase. And then on
top of that, with the political football that student loans
(10:44):
have become, I think worries are mounting for student loan
borrowers of all stripes, especially ones who are like, well,
I know the Biden forgiveness thing, that's not going to happen.
But what about the forms of forgiveness that were essentially
promised for many many years before Joe Biden came in
office or is that going to stick around there? Yeah, well,
(11:04):
most most of that is going to stick around. The
Safe plan is sunk, but these other income based plans,
it just definitely seems like even if changes are made,
that all existing loans would still have access to current
payback plans. So for folks who are paying back their
loans on an income driven repayment plan, like your sister Heather,
I wouldn't be sitting on pins and needles. I would
keep paying as agreed, just under the assumption that the
(11:26):
federal government is going to hold up their end of
the bargain. But this is just a sad outcome of
the political environment that we are currently living in and
not I mean, I'm going to risk alienating listeners here,
but this is why, like truly our political system is broken,
because when you make a bunch of sweeping actions based
on executive or orders, which is what happened the last administration,
(11:46):
and then what happens when the other party inevitably comes
to power. Well, with the strike of a pen and
a phone, you know, and phone calls with this, with
a pen and with a cell phone, Joel, all of
that gets undone.
Speaker 3 (11:56):
Yeah, and who suffers. It's the American people.
Speaker 4 (11:59):
And so it's it's the part of our politics that
I hate the most, the fact that it seems like
it's they're more as entertainment as opposed to doing the
boring work of governing in the legislating, which is where
it actually does need to take place. Right if if
these were laws that were truly laws, as opposed to eos,
I think we would see the American public in particular
get jerked around a lot.
Speaker 1 (12:19):
Less much safe process matters. And it seems like Congress
has become like a commentating class. They like to go
on the nightly new shows and talk about the moves
back and forth instead of legislating.
Speaker 3 (12:30):
Yeah, if they would legislate.
Speaker 4 (12:31):
Less public service, less public servants, and more using the
platform for themselves as individuals as opposed to serving the country.
Speaker 1 (12:38):
Yeah, and would feel like you're getting less done, I
think as the president. But it's the right way to
go about things. And it's the way the founding Father's
set it up, so then we would have slower gradual
change to set up the whiplash we've all been enduring.
But Heather, your instinct, right is that this is clear
as mud is kind of true. The smartest way to proceed,
I think is as if the current arrangement stands and
(13:01):
will continue to stand. Kind of like Matt mentioned, and
you said that she graduated from college a decade ago,
I'm assuming this is undergrad Under current IDR rules, she
is eligible for forgiveness after twenty years of payment, So basically, hey,
she's halfway there. And I think that's another reason that
the ballooning balance, it's just not something to freak out about,
even if it's tough to watch, even if it's hard
(13:22):
to stomach. That advice doesn't apply to everyone. I think
some other people might be better off trying to pay their
loans in full, not waiting on forgiveness. It just might
not make the most math sense to hold on for
twenty years and opt for a smaller amount of forgiveness.
But especially for your sister, it sounds like clearly forgiveness
is going to be needs to be the aim is
(13:43):
going to be kind of her salvation to a certain extent. Especially,
think about what's going to happen over the next ten years.
Mathth the balance is already tripled, well, chances are it's
going to grow a heck of a lot more. Think
about ultimately what Heather's sister is going to be forgiven
the amount of student loan debt that will just be
wiped off the face of the earth for her in
one fell swoop, it's gonna be massive.
Speaker 4 (14:05):
Yeah, And there are even ways for your sister to
work to maximize her forgiveness. So let's talk about that
strategicy here for a second. And what I mean by
that is lowering her payment by reducing her income. So,
for instance, the more she in her job, is that
what we're saying, Yeah, they can't.
Speaker 3 (14:21):
Tax you if you don't have any income. The more she.
Speaker 4 (14:25):
Invests in traditional tax advantage accounts, and the more it's
going to reduce her adjusted gross income that would be
a traditional IRA or a traditional four to one K
or an HSA.
Speaker 3 (14:37):
The more that she can sock into those.
Speaker 4 (14:38):
Accounts, the less that she's going to owe the government
when it comes to the student loans.
Speaker 3 (14:41):
It's just the way it is. Obviously she does. You know,
she's got to.
Speaker 4 (14:44):
Have money to pay for a roof, overhead for her head,
to pay for food groceries. But making these additional contributions
can reduce her payment amount, which would increase her balance
even more over time, wait for it, but lead to
more overall forgiveness. At the end of this period of time,
it means less of her money actually going towards student
loan repayment.
Speaker 3 (15:04):
Yeah.
Speaker 4 (15:05):
So it's just it's tough to stomach, but it almost
seems like that this can just be a stage of
life where there's a whole lot of difference spending. She's
really focused on investing, because investing right now is a
double edged sword because it means more time that money
is going to have to compound over time, but it
also means the added benefit of paying less right now
towards her student loans.
Speaker 3 (15:24):
Yep, one hundred percent.
Speaker 1 (15:25):
So it feels like a gamble, but I think that's
the right approach, is to try and minimize the amount
of money going out in monthly form towards a student
loan payment. Yeah, which means the balance is going to grow,
but ultimately there's a big win at the end of
the day or at the end of the decade, of
the decade. Yeah, and last, but not least, I would
say it's a good idea for your sister to start
(15:46):
saving though, for a potential tax bill now. And that
is because the one caveat at the end of forgiveness
is that you're growing balance. Well, when that's forgiven, it
could end up generating tax consequences. And so I say
could because that is the biggest unknown. What is Congress
going to do about that. There's currently a law in
place that prevents individuals from incurring what's been called a
(16:08):
student loan forgiveness tax bomb, but that law is set
to expire at the end of this year. And so
anybody who has had their student loans forgiven in recent history,
they haven't had any sort of tax bill at the
end of the day. They haven't had to pay anything.
But let's just assume that there was like one hundred
and fifty thousand dollars in forgiveness mat of student loan
(16:29):
debt ten years from now, that the tax bill would
be not insignificant. And so Heather, for your sake and
for your sister's sake, I hope that gets extended. But
if not, just be prepared and be ready, be saving up.
Your sister should be saving up for a tax bill
that it might come to pass.
Speaker 4 (16:46):
Yeah, yeah, so you're addressing the tax implications. One other thought,
going back to her reducing her justic gross income, the
implications were she to get married. I didn't get the
depression that she's necessarily married right now. It sounds like
she might. Her sister might be flying solo at the moment.
But were she did to get married, this might be
an instance, and this is really hypothetical, I guess, but
if she combines her income with her partner, who might
(17:10):
make a ton of money, well, that would that was
gonna have a dramatic impact on the amount that gets forgiven.
So that might be an instance with where where she
would continue to file married but filing separately because she
would essentially want to isolate her own income to keep
that technically artificially low for their overall health.
Speaker 1 (17:28):
So if Heather Mary, if Heather's sister, Mary's rich, Mary's
prince charming, like Heather's been trying to convince her to
do exactly, that's when you got to really think about we're.
Speaker 3 (17:35):
Reading between the lines I know kind of conversations Heather and.
Speaker 1 (17:37):
Her sister have, right, I think it's I think it's
a good advice if that comes to past.
Speaker 3 (17:41):
That's a strategy I'd employed.
Speaker 1 (17:44):
We got more money saving information to get to.
Speaker 2 (17:47):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 4 (17:54):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and in site, please go ahead and join the
how to Money Facebook group.
Speaker 1 (18:03):
All right, man, let's talk tariffs for a second. And
you know, I know you and I we've we've talked
about it a lot, hoping not to have to talk
about it forever into the future. But Amazon announced earlier
this week that it's gonna it was going to display
the cost of tariffs next to certain goods for sale
on the site. I think it was going to be
kind of in their Amazon Hall section, which was there.
(18:23):
It's not kind of their competitor to Shean and Timu.
But then what they wanted to highlight was essentially the
trump impact of higher prices that these tariffs were going
to cause. And then Jeff Bezos took a call from
Donald Trump. It appears that's no longer happening. And they
were also like, actually, it was never happening, even though
there were reports that it was happening.
Speaker 3 (18:43):
It was in the works. Change we changed our mind, right,
And the Wall.
Speaker 1 (18:45):
Street Journal said, actually, the public, I'll quote here, the
public could have used Amazon's price transparency. Tariffs are taxes,
and tellful to know how policy choices affect final prices.
That's right, and I agree. I think that transparency from
Amazon would have been helpful, and I think it probably
would have helped to sour some consumers about tariffs because
(19:06):
they would have been like, wait a second, I heard
all this stuff talk about tariffs, but how much is
it actually costing me? And they'd find out with that
as broken out essentially in the pricing. We're gonna find
out even if it's not broken out though. But most companies,
they don't like tariffs and they want to show their customers,
at least some of them, the exact impact that they
have on the bottom line. I think we're going to
see more and more of that, and you can't blame them.
(19:27):
On top of this. Matt cheap Chinese goods. They're cheap
no longer those two companies I mentioned earlier Timushi, in
which again I've never purchased anything from either of those sites.
Apparently their prices are going up, doubling the costs of
many of the items they sell.
Speaker 4 (19:42):
One more thing on the tariff specifically, So that was
because of the Deminimus loophole, which literally expires today May second.
So it's not to say that Chinese goods. You can
still buy cheap Chinese stuff online, you just can't buy
it directly from China where they're shipping it straight from
the factories where they're avoiding all the the important duties
and whatever.
Speaker 1 (20:02):
It is, because the price has got to go up, right,
So on top of that, shipping volumes to US ports
are plumbing, and even with some of the larger tariff delays,
the reality of tariffs, it's it's really only we're only
at the very emphasy starting to begin to feel the impact.
So I do think we're going to see higher prices,
fewer options, if this the way tariffs are currently constructed
(20:24):
remain or or if potentially they get worse.
Speaker 4 (20:26):
Yeah, and don't forget about the secondary costs of everything
that we buy as well. That's something else that we
often failed to take into account.
Speaker 3 (20:33):
Right, So let's.
Speaker 4 (20:34):
Say you want to buy a TV obviously requires electricity,
and then so right there, you see the yellow sticker
on there when you buy it, predicting how much it's
going to cost you to watch your favorite shows every
single year. Well, there's a Wall Street Journal tech writer
who highlighted a trend that we've all been subject to
more recurring subscriptions. So instead of paying for that new
gadget straight up getting to use it as you please,
(20:56):
you might.
Speaker 3 (20:56):
Pay a reduced price.
Speaker 4 (20:58):
It's like a hidden price, right, or a false price,
maybe I should say, and then you pay an annual
fee to unlock his full potential. We talked about at
some point. I think it was last year that we
talked about the heated seats that aren't digitally unlocked unless
you pay the subscription.
Speaker 3 (21:13):
Yeah, or maybe it was a heated steering wheel as well.
Speaker 1 (21:15):
Super annoy BMW, Right, BMW What I said where Hey, yeah, no,
this comes with TVD seats, but you got to pay
to access them exactly.
Speaker 4 (21:23):
Luxury brands terrists though, could cause an influx of subscriptions
in order to keep the initial price low because folks
are used to paying a certain amount, it's going to
feel painful to pay more upfront. So essentially, how can
we sneak these higher costs in the back door?
Speaker 1 (21:37):
Could Apple find a way to make the price of
the iPhone.
Speaker 3 (21:40):
I guarantee you're thinking about it half as.
Speaker 1 (21:42):
Much or something in order to in order to reduce
what they pay in tariffs and create like a subscription
model where you pay them monthly instead.
Speaker 4 (21:51):
It's all about the subscription man. Yeah, yeah, yeah, because
you don't pay tariffs on subscriptions.
Speaker 3 (21:55):
Keep that in mind.
Speaker 4 (21:55):
Keep in mind the additional cost before you click something
to buy it, think about the secondary costs.
Speaker 1 (22:01):
Just one basic thing that like, some of my friends
have the Whoop fitness bands, right, you and I we've
got the garment watches. Yeah, And it wasn't just because
the initial cost was lower, although it was, but the
Whoop band comes with a monthly subscription fee to access
the data that you're racking it and a lot of
folks are paying for it.
Speaker 3 (22:19):
For a year and a vas in order to get
the best deal of right right, I don't even know how.
Speaker 1 (22:22):
Much it costs, but I don't know whether it's but
I know that I pay zero dollars tax us all
the data from the running that I'm doing, So yeah,
that factors in, right, hey, how much? What's not just
like what's the initial cost, what's the outlay right now?
But think about what are the costs down the road
that I'm going to occur by buying this thing? It
really matters, like and I think the more we can
think about the things we buy in that way, we're
(22:42):
probably it's going to at least like force our hand
to think about our purchases differently, and we might find
ourselves buying less or at least pivoting to buy other
items that are going to have lower secondary costs.
Speaker 3 (22:55):
That's true.
Speaker 4 (22:55):
Another way to help us decide what to buy what
not to buy in an era of rising prices is
to consider prices in terms of time. So basically CPI,
it's not a great metric because let's say we were
talking about TVs earlier. The TV you bought back in
the eighties, it does not compare to the one that
you can buy today. It's much better now and it
costs a whole lot less. And superabundance is about how
(23:18):
much richer we've become. Things to global competition for the
good book trade. Yeah, the reality that it just takes
us less time working in order to earn incomes to
pay for basics like food and energy, which is a
good thing. This is something that we love. It shows
that we can afford more of everything. Now, this is
like the heart of progress. But it makes me think
(23:39):
that we should all figure out our hourly rate.
Speaker 3 (23:41):
And this is.
Speaker 4 (23:41):
Another topic we discussed way back in the day is
episode ninety nine, and I think going through that exercise,
it can create this subtle mental shift because the next
time you're thinking about buying something, I think you might
be more keen to think about how long you would
have to work in order to afford that item, which
could be a better way of thinking about it. You know,
I think that one reframe could prevent some ill advised
(24:03):
purchases and just to cause you to say again, second guess,
reframe things put it in a different light to where
you're not just thinking about how it's going to make
you feel in the moment, but what you're thinking about
is what about future me or what are the alternatives?
Or how much is this actually gonna cost me a
little bit further down the road, Not just what I
have to pay upfront Right now.
Speaker 1 (24:23):
The one hundred and eighty bucks feels really different than
saying that's gonna take me six hours of work, and
especially if you don't like your job.
Speaker 3 (24:30):
Yeah, that will hopefully make you think twice.
Speaker 1 (24:33):
About whether or not you really want to buy the thing,
because if it means you gotta you gotta go, you know,
put in some additional hours in order to and you
don't always have to put in additional hours, but you're
reframing it in terms of thinking about how much of
my time is involved in getting this item, And I
just think that's a better way to think about it.
And that also is going to make you less likely
to buy things you don't need. All Right, We've got
(24:55):
more to get to on today's show.
Speaker 2 (24:57):
You're listening to how to Money if Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (25:03):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter.
Speaker 4 (25:09):
We now have the Facebook question of the Week, which
is from Matthew partial to that name.
Speaker 3 (25:14):
So I will probably have to pay off about three.
Speaker 4 (25:16):
Thousand dollars in medical bills coming up soon. Should I
just find a good rewards card.
Speaker 3 (25:21):
And do that. I don't have one at the moment.
Speaker 4 (25:25):
What do you think, Joel, Is it time to this
is where we separate ourselves from the Dave Ramsey's of
the world.
Speaker 1 (25:30):
Yeah, oh yeah, yeah's I would say, probably right, yeah,
that's but we need to then go into the specifics.
I think the main question for Matthew here is can
you pay off the balance on time and in full
when the bill comes to That's three thousand bucks, right,
So yeah, get the credit card if you have three
thousand plus dollars in savings and you're going to be
able to pay the bill. If not, though, no, because
(25:52):
the rewards just aren't worth it, even the more significant
rewards that you can get from an initial sign up bonus,
which is what makes having a significant bill that's like
a silver lining.
Speaker 3 (26:03):
I guess macau is.
Speaker 1 (26:04):
Nobody wants to pay like three thousand dollars and medical bills,
but if it means new credit card and sign up bonus,
that can make that can just reduce the pain a
little bit, depending on what pain is going on in
your body. I don't know that if it's actually medically
prescribed to do that, but it can reduce the financial pain.
And so I think if I had a three thousand
dollars medical bill, I would be looking to get a
new credit card, right, getting the brand new one, getting
(26:25):
the sweet sign up bonus for paying that one bill. Right,
even if medical bills aren't that fun to pay, I
think that makes sense, and it's nice to do it,
not over a slew of transactions trying to monitor your progress,
but being like boom met, the sign up bonus makes
it easy and with one swipe or one tap, that's
kind of awesome.
Speaker 4 (26:42):
Yeah, assuming though that you do have the cash on
hand and that you're not actually going to go into
credit card debt. But also don't forget that you might
have some recourse here to reduce the size of this
medical bill pretty meaningfully or maybe even have it completely eradicated,
depending on your income. And so look into the financial
aid possibilities that are offered there through that hospital or
(27:03):
through that medical provider. Maybe you'll actually owe a whole
lot less. That being said kind of sounds like maybe
he's done that because he said I'll probably have to
pay off about three thousand dollars. So it sounds like
it's something that it's a journey. He's been arched up
that tree.
Speaker 1 (27:18):
And maybe the bill was higher, and now it's been
reduced to three thousand, and he can't get it.
Speaker 4 (27:21):
And he's finally coming into terms that this is what
it is. But last, but not least, head over to
the how to Money credit card tool to see what
card might make the most sense for you. The top
rewards often come in the form of travel points, so
hopefully that's something you're open to. If that's the case,
the Capital One venture X is well worth considering right
now if that's not something that you're interested in. Interested
(27:43):
in even something like the Blue Cash Preferred Card, which
there's a similar theme that we've been discussing today, which
is like doing something that you're already planning to do.
The Blue Cash Preferred Card is a fantastic card because
it's not that hard to spend a ton of money
at the grocery store these days, and so depending on
how it is that you spend, that could be well
worth the money.
Speaker 1 (28:01):
Yeah, let's get to another question, Matt. This one comes
from Anonymous, which is a name I'm partial to, and
they say we all less than ten thousand dollars on
a house. We'll pay it off this year. Three vehicles
all paid off. Old truck isn't getting much use. We
use it occasionally, less than five thousand miles in a year.
The truck could fetch about five thousand bucks and that
(28:21):
money would pay off the house several months faster.
Speaker 3 (28:24):
Would you sell it? Well, I would say the value of.
Speaker 4 (28:28):
The truck, like how much they can get for, is
only a part of the answer to this question, because
I think the bigger question is the ongoing cost of
keeping the truck. So I'm talking about the cost of insurance,
which has skyrocketed in recent years, but also repairs and maintenance.
So even though this vehicle is close to full depreciation,
you're still losing money in other ways if you keep
(28:49):
it around. So holding on to it when you're using
it so little likely means that there isn't enough value,
and instead selling it is going to be smart for you,
so that you are prioritizing owning paid off vehicles, which
is a rare tack to take when it comes to
our transportation.
Speaker 3 (29:06):
Yeah, all three of them owned.
Speaker 4 (29:08):
Yeah, that's awesome, But we've almost never heard of someone
who's regretted reducing their car fleet just makes life a
lot simpler as well. Let's clutter, and when it's like
the largest item other than your actual house that you own,
I'm all four clear and that thing out.
Speaker 1 (29:21):
But I think you're totally right to point out not
what you could gain, but point out what you're actually
losing month after a month, basically in perpetuity by keeping
that around.
Speaker 4 (29:30):
Although I will say, okay, Devil's Advocate, I had a
friend who they ended up selling an old vehicle. Heads up,
get a quote from your insurance provider and see what
your premiums would go to, because if you have teen drivers,
in particular, because my buddy, his teenage driver, was on
the old was a full time driver, because they have
to put him down as a full time driver on
(29:51):
the oldest car, and by getting rid of that old car,
they were forced to put him on a newer car.
And so what they ended up doing was reducing the
total number of cars that they had covered by car
insurance by this provider.
Speaker 3 (30:02):
And what happened to the.
Speaker 4 (30:03):
Premium It didn't, in fact go down, It went up, okay,
And so he was pulling his hair out when he
discovered that because he thought there was no way that
that was likely at all a possibility. But that is something.
So that's the counter.
Speaker 3 (30:15):
It's a smart top, that's the counter to the cost
of insurance. Yeah, normally things like that.
Speaker 1 (30:20):
Normally you get rid of a car from your fleet,
your insurance cost is going to go down. But you know,
those rare occasions it might not. So I think it's
a good point tenage driver's man, hop on the phone
with your insurance company first and figure out what that
would look like. And maybe you might say, oh, well,
it's not going to send me anything on insurance, or
it's going to send me so little to make it negligible.
I'm going to keep this puppy around because hey, it's
it's not going to cost me really any more money intoppreciation,
(30:43):
which is the biggest nasty factor going against car owners.
And the plus side I guess of owning that car
or that truck for longer is that it's kind of convenient.
The value is not going to decline meaningfully. You got
to spare right when another car is in the shop
or something like that. But there are other solutions to
that problem, and I think that just require a little
more inconvenience, like renting a car, borrowing one from a
(31:04):
friend in a pinch, or uber like I think the
sharing economy, the reality of the sharing economy, it might
be the perfect solution, right to save this poster a
bit of money here. Plus, you don't have to worry
about fixing the old truck as more issues start to
pop up with it, as all of us know who
have driven older vehicles. Once you start getting to that point,
I'm not trying to We don't want people to get
(31:26):
rid of their old car trade up to a new
car because of potential fixes they'll have to make most
of the time. But the truth is, the older the ride,
the more repairs you're gonna have to make, and it
just becomes a more dicey, difficult decision when the repair
bills get expensive and the value of the vehicle goes down.
And so getting rid of it while it's still running,
(31:46):
well maybe avoids you from having to make.
Speaker 3 (31:49):
A decision like that.
Speaker 4 (31:50):
Yeah, unloading it essentially before it's a problem. I'll point
out two, getting five thousand dollars is cool. You know,
you get that money back in your hands. You're talking
about paying off the house early. I would be very
hesitant to do that considering where you are on the
amortization schedule of that house, the fact that you're basically
paying no money to the bank right now, regardless of
(32:11):
what your interest I mean, you're paying something, but like,
relatively speaking, you're paying almost nothing, And regardless of what
your actual stated interest rate is, you are paying much much,
much less than that right now because of where you
are on the schedule. Most of the money that's going
towards your payment is actual principle, that is paying down
the balance of that house.
Speaker 1 (32:30):
And so the complete opposite of those early months and
years of having the mortgage. I mean, you're literally in
like the last few months, so like I can, I've
never been to that stage of the payment cycle. So
maybe that does something to you psychologically, and maybe you
want to get rid of it sooner, But I at
least I get the impulse right now where I'm sitting,
I'm just like, uh, no way that it's basically your
(32:51):
own money, So why pay it off when you don't
need to, and when instead what you could do is
invest that money, Assuming that you are in a stage
of life where you are still growing your wealth, I
would one hundred percent be investing that money as opposed
to paying off that debt or even saving honestly, rather
than just paid off as agreed, just because, like you said,
what you're actually forking over an interest is infintesticly small
(33:14):
and so prioritizing mortgage payoff. Although I get the psychological
benefit when you pay it off as agreed, given kind
of the terms you likely have in place in that
mortgage and where you stand in it, it just makes
almost no financial sense at all. It's really only a
psychological win that you get this right, and.
Speaker 4 (33:28):
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.
Speaker 1 (33:34):
You've been listening to How to Money with Joel Larsgard.
You can always hear us live on KFI AM six
forty twelve pm to two pm on Sunday and anytime
on demand on the iHeartRadio app
K if I AM six forty. You're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
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 Lar's Guard and Matt Aultmix.
Speaker 1 (01:17):
KFI AM six point forty live everywhere on the iHeartRadio app.
Speaker 3 (01:21):
This is how to Money.
Speaker 4 (01:22):
I'm your host, Joel Larsgard and I am the other host,
Matt Altmix, And if you have a money question, we'll
send it our way. All you have to do is
record your question on the voice memo app there on
your phone and send it over via email. You can
find the simple instructions at howdomoney dot com. Forward slash
ask Matt. Now is time for the ludicrous headline of
the week. This one comes from CNBC and it reads
(01:45):
more Americans or financing groceries with buy now, pay later loans,
and more are paying those bills late, survey says oh Man.
I hate to talk about buy now, pay later again
because I think this is something that we like talks
back about pretty regularly. But there just aren't many headlines
that could break my heart more than this. The fact
(02:06):
that The survey found twenty five percent of buy Now,
Pay Later users are using installment loans to pay for
groceries these days, like in essential a need and more
than four and ten have paid late on one of
these loans in the past year. I feel like by
now Pay Later, it's it's like a virus that's spreading
and more and more people. It's like snuck into the
(02:29):
under the guys of Oh, this is going to make
life easier.
Speaker 1 (02:32):
That's right, that's right, yeah, which sounds nice, Like anytime
someone's like, I'm going to make your life easier, it's
like why not cool? That sounds great, But it's actually
what do they say, like when you do the easy thing, well,
you're going to pay You're gonna have to do the
hard thing later or versus like doing the hard thing
up front and then your life gets a little bit
easier down the road.
Speaker 4 (02:50):
And I think I think that should be like a
quick synopsis of what how to money is all about. Yeah,
over the hard thing first, that's like the philosophical approach
to how we do things here out how to money. Yeah,
And if you take the easy approach to paying for stuff,
which by now pay Later is the quintessential reality of that,
then you're going to have a hard time later, and
it's the youngest and most vulnerable among us who seem
(03:10):
to be taking the bait the method. Really, it seems
reasonable on the surface. Sure, I'll pay for this in
for installments and they're not going to be charged any interest.
But it's a slippery slope because a quarter of buy now,
Pay later buyers take on a bunch of these loans
at once. And the truth is, we buy more when
the friction is reduced, and now when you're unorganized as
to what you got going on out of your accounts
(03:32):
as well.
Speaker 3 (03:32):
I think that's a big part of it, that's right.
Speaker 1 (03:34):
And so it feels like you have to do this
in order to be able to afford the things that
you want, and you're buying more than you actually need
because of it, And then when it gets into groceries,
I feel like we've we've completely lost the plot.
Speaker 4 (03:44):
I find it interesting as well that more than sixty
percent of buy now, Pay later users think that on
time payments is that is going to help boost their
credit score, which might be true in the future, but
it isn't right now, at least for the majority of
the different buy now, pay later companies out there. It
is true with like a firm Apple pay Later, they
report as well, but.
Speaker 1 (04:04):
They haven't started putting it into the credit scoring model.
Speaker 4 (04:06):
And there are a whole lot of companies that aren't
reporting at all. And so it turns out most folks
don't understand how these payment plans work much less than
the behavioral impact that they have on their finances. In
our advice is to stay away and like, there's a
lot of new companies and anytime there's a new it's
like the wild wild West when it comes to payment options.
And it makes sense too that younger users are jumping
(04:28):
on this because they're more willing to experiment and try
new things.
Speaker 1 (04:31):
But new cool fintech, Yeah, I'll try.
Speaker 3 (04:33):
Why not?
Speaker 4 (04:33):
But as we have more and more options before us,
as our attention is more fragmented, that leads to confusion,
and it leads to a lot of folks feeling overwhelmed
and not feeling that they have their arms wrapped around,
in this case, their finances.
Speaker 3 (04:47):
Yeah.
Speaker 4 (04:47):
Another constant reason though for higher food costs, at least
on our sort of monthly budgets, is the never changing
reality of wasting food families Joel, they throw away a
third of what it is that they purchase, which is
slightly better than I thought it was a half.
Speaker 1 (05:03):
So like literally I thought it was like I think
it's somewhere it was close to a half of thirty
five ish to forty percent, So depending on who you ask,
I actually I almost saw.
Speaker 4 (05:11):
This as like an improvement based on maybe where things
were I don't know, at the height of individual spending
and the amount of cash that folks surplus, cash that
folks had in their household. I've never accounts.
Speaker 1 (05:22):
I've never known a human to love leftovers more than
you do, so I know that this disappoints you more
than anything else.
Speaker 4 (05:28):
Obviously, it's a great idea to eat out less. It's
a good idea to pivot to store brands, specifically to
shop at Aldi. But dude, if you're not cooking and
actually eating the food that you buy before it spoils
and goes bad, and not eating your leftovers, obviously you're
gonna pay far more for your food than you should.
So similar to talking about the different payment options, I
think a lot of it has to come A lot
(05:49):
of it comes down to the fact that we have
so many different food options available to us as well,
not just oh, which buy now, pay later? Which payment
terms am I going to opt for when it comes
to affording these grew but then when it comes to
the actual food that we are purchasing, like, it's so
silly to go to the more mainstream or higher end
grocery stores and you've got all the options before you
(06:09):
as opposed to going to all the and your options
are limited. And it makes it so that when you
come back and you put all the things in your fridge,
I think you are more likely to use some of
those ingredients as opposed to overbuying over purchasing because it's
so easy too, because of buy not pay later. And
then you take all these groceries, you shove them in
your fridge and you can't see half the stuff because
everything's stacked on top of everything. That's why, that's why
(06:32):
everyone's got the little tub of salad at the back
of the fridge that's turned to mush that you're like,
oh man, I'm gonna have to toss this, or you're like,
what's that smell? And then you realize, oh, it's that
there's a lemon down there at the bottom of the
produce bin that's turned blue.
Speaker 3 (06:46):
It's got the blue fuzz on it, and they turn blue. Yeah,
I guess, yeah.
Speaker 4 (06:50):
But what happens is you most people are just like, oh, gross,
and then they just grab the whole bag of lemons
or oranges and then they end up tossing it into
the trash.
Speaker 1 (06:57):
I think it's basically the wrong answer to the right question.
The right question is like, man, my food budget, it's
punching me in the face. How do I fix this?
And BNPL is positioning itself to be like, look at us,
we're over here, we'll help you out. And yet the
right answer involves going in the opposite direction, which is
to consider what you buy, what you bring in, how
(07:19):
much you're spending on groceries, and then using what you
have bought. Because that it feels so old school. It
feels so old school, But man, old school works so
much of the time. Still, you don't need the new
fangle BNPL with the flashy marketing and stuff like that,
and what seems like it's going to work out better,
Ultimately it's going to lead to not knowing where your
money is going and spending more money.
Speaker 4 (07:42):
Than you just going to lead to constrained budgets. Have
you heard of this thing called a food waste audit before?
Oh I think I heard of it, So okay, I've
never I've literally never heard of this and came across
this link to it in the show notes. But basically, man,
I love this so much. You take a sheet of paper,
you set it over near the trash can, and every
time so you just make like a normal week, every
time you take something out of the fridge or I
(08:03):
guess out of the pantry as well, and if it's
bad or stale and you toss it in the trash,
force yourself to write down the item and estimate the cost,
and then not the end of the week, you tally
up how much money you are waste.
Speaker 3 (08:15):
Multiply by four.
Speaker 4 (08:16):
Maybe you've got a monthly a monthly understanding of how
much you're wasting every single month. We'll check that, hey
rule of one seventy three. Take that monthly amount, multiply
abo one hundred seventy three. Now now we're really talking.
We're taking it to the next level, because that is
were you to not waste that money and instead invest
it in the market, that's how much you would have
on hand at the end of ten years.
Speaker 3 (08:36):
So you're throwing away real money, not just pennies.
Speaker 4 (08:39):
It's like literally taking almost literally I should say, taking
money and just putting it right in the trash.
Speaker 1 (08:44):
I mean, I hate that there's a step in between,
but that is what you're doing. All right, We've got
more to get to on today's show.
Speaker 2 (08:52):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (09:00):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet, well you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool.
You can find that up on the website at howtomoney
dot com.
Speaker 4 (09:17):
All right, let's hear from a listener who is calling
on behalf of not herself, but actually her sister.
Speaker 5 (09:24):
Hi, Joel Innatt, this is Heather from Ohio and I'm
a longtime listener and fan. My question is regarding my
sister and her student loan payments. She graduated from college
about ten years ago. She's been making the income driven repayments,
and her amount that she owes has actually tripled from
(09:44):
her original amount, even though she hasn't missed any payments.
She's been making them religiously. But I believe that after
twenty years her amount would be that she always would
be canceled. But I wasn't sure if that was true
or like, what can I guide her to because I
feel like it's not clear. Thanks so much for any.
Speaker 1 (10:05):
Help, well man, to see your balance triple, I gotta
imagine that sucks. That feels like a punch in the face.
Speaker 3 (10:13):
So I hate.
Speaker 1 (10:15):
Seeing people go through the immercial emotional turmoil of making
payments on time, of like doing the right thing that
they're supposed to do.
Speaker 5 (10:23):
Right.
Speaker 1 (10:23):
Hey, I was told that this is what my student
loan payment needs to be and doing the right thing
every single month like clockwork, and then hey, the balance
continues to increase. It's so unnerving, Like I can't imagine
going through that. It just doesn't feel right to make
no time payments seeing the balance increase. And then on
top of that, with the political football that student loans
(10:44):
have become, I think worries are mounting for student loan
borrowers of all stripes, especially ones who are like, well,
I know the Biden forgiveness thing, that's not going to happen.
But what about the forms of forgiveness that were essentially
promised for many many years before Joe Biden came in
office or is that going to stick around there? Yeah, well,
(11:04):
most most of that is going to stick around. The
Safe plan is sunk, but these other income based plans,
it just definitely seems like even if changes are made,
that all existing loans would still have access to current
payback plans. So for folks who are paying back their
loans on an income driven repayment plan, like your sister Heather,
I wouldn't be sitting on pins and needles. I would
keep paying as agreed, just under the assumption that the
(11:26):
federal government is going to hold up their end of
the bargain. But this is just a sad outcome of
the political environment that we are currently living in and
not I mean, I'm going to risk alienating listeners here,
but this is why, like truly our political system is broken,
because when you make a bunch of sweeping actions based
on executive or orders, which is what happened the last administration,
(11:46):
and then what happens when the other party inevitably comes
to power. Well, with the strike of a pen and
a phone, you know, and phone calls with this, with
a pen and with a cell phone, Joel, all of
that gets undone.
Speaker 3 (11:56):
Yeah, and who suffers. It's the American people.
Speaker 4 (11:59):
And so it's it's the part of our politics that
I hate the most, the fact that it seems like
it's they're more as entertainment as opposed to doing the
boring work of governing in the legislating, which is where
it actually does need to take place. Right if if
these were laws that were truly laws, as opposed to eos,
I think we would see the American public in particular
get jerked around a lot.
Speaker 1 (12:19):
Less much safe process matters. And it seems like Congress
has become like a commentating class. They like to go
on the nightly new shows and talk about the moves
back and forth instead of legislating.
Speaker 3 (12:30):
Yeah, if they would legislate.
Speaker 4 (12:31):
Less public service, less public servants, and more using the
platform for themselves as individuals as opposed to serving the country.
Speaker 1 (12:38):
Yeah, and would feel like you're getting less done, I
think as the president. But it's the right way to
go about things. And it's the way the founding Father's
set it up, so then we would have slower gradual
change to set up the whiplash we've all been enduring.
But Heather, your instinct, right is that this is clear
as mud is kind of true. The smartest way to proceed,
I think is as if the current arrangement stands and
(13:01):
will continue to stand. Kind of like Matt mentioned, and
you said that she graduated from college a decade ago,
I'm assuming this is undergrad Under current IDR rules, she
is eligible for forgiveness after twenty years of payment, So basically, hey,
she's halfway there. And I think that's another reason that
the ballooning balance, it's just not something to freak out about,
even if it's tough to watch, even if it's hard
(13:22):
to stomach. That advice doesn't apply to everyone. I think
some other people might be better off trying to pay their
loans in full, not waiting on forgiveness. It just might
not make the most math sense to hold on for
twenty years and opt for a smaller amount of forgiveness.
But especially for your sister, it sounds like clearly forgiveness
is going to be needs to be the aim is
(13:43):
going to be kind of her salvation to a certain extent. Especially,
think about what's going to happen over the next ten years.
Mathth the balance is already tripled, well, chances are it's
going to grow a heck of a lot more. Think
about ultimately what Heather's sister is going to be forgiven
the amount of student loan debt that will just be
wiped off the face of the earth for her in
one fell swoop, it's gonna be massive.
Speaker 4 (14:05):
Yeah, And there are even ways for your sister to
work to maximize her forgiveness. So let's talk about that
strategicy here for a second. And what I mean by
that is lowering her payment by reducing her income. So,
for instance, the more she in her job, is that
what we're saying, Yeah, they can't.
Speaker 3 (14:21):
Tax you if you don't have any income. The more she.
Speaker 4 (14:25):
Invests in traditional tax advantage accounts, and the more it's
going to reduce her adjusted gross income that would be
a traditional IRA or a traditional four to one K
or an HSA.
Speaker 3 (14:37):
The more that she can sock into those.
Speaker 4 (14:38):
Accounts, the less that she's going to owe the government
when it comes to the student loans.
Speaker 3 (14:41):
It's just the way it is. Obviously she does. You know,
she's got to.
Speaker 4 (14:44):
Have money to pay for a roof, overhead for her head,
to pay for food groceries. But making these additional contributions
can reduce her payment amount, which would increase her balance
even more over time, wait for it, but lead to
more overall forgiveness. At the end of this period of time,
it means less of her money actually going towards student
loan repayment.
Speaker 3 (15:04):
Yeah.
Speaker 4 (15:05):
So it's just it's tough to stomach, but it almost
seems like that this can just be a stage of
life where there's a whole lot of difference spending. She's
really focused on investing, because investing right now is a
double edged sword because it means more time that money
is going to have to compound over time, but it
also means the added benefit of paying less right now
towards her student loans.
Speaker 3 (15:24):
Yep, one hundred percent.
Speaker 1 (15:25):
So it feels like a gamble, but I think that's
the right approach, is to try and minimize the amount
of money going out in monthly form towards a student
loan payment. Yeah, which means the balance is going to grow,
but ultimately there's a big win at the end of
the day or at the end of the decade, of
the decade. Yeah, and last, but not least, I would
say it's a good idea for your sister to start
(15:46):
saving though, for a potential tax bill now. And that
is because the one caveat at the end of forgiveness
is that you're growing balance. Well, when that's forgiven, it
could end up generating tax consequences. And so I say
could because that is the biggest unknown. What is Congress
going to do about that. There's currently a law in
place that prevents individuals from incurring what's been called a
(16:08):
student loan forgiveness tax bomb, but that law is set
to expire at the end of this year. And so
anybody who has had their student loans forgiven in recent history,
they haven't had any sort of tax bill at the
end of the day. They haven't had to pay anything.
But let's just assume that there was like one hundred
and fifty thousand dollars in forgiveness mat of student loan
(16:29):
debt ten years from now, that the tax bill would
be not insignificant. And so Heather, for your sake and
for your sister's sake, I hope that gets extended. But
if not, just be prepared and be ready, be saving up.
Your sister should be saving up for a tax bill
that it might come to pass.
Speaker 4 (16:46):
Yeah, yeah, so you're addressing the tax implications. One other thought,
going back to her reducing her justic gross income, the
implications were she to get married. I didn't get the
depression that she's necessarily married right now. It sounds like
she might. Her sister might be flying solo at the moment.
But were she did to get married, this might be
an instance, and this is really hypothetical, I guess, but
if she combines her income with her partner, who might
(17:10):
make a ton of money, well, that would that was
gonna have a dramatic impact on the amount that gets forgiven.
So that might be an instance with where where she
would continue to file married but filing separately because she
would essentially want to isolate her own income to keep
that technically artificially low for their overall health.
Speaker 1 (17:28):
So if Heather Mary, if Heather's sister, Mary's rich, Mary's
prince charming, like Heather's been trying to convince her to
do exactly, that's when you got to really think about we're.
Speaker 3 (17:35):
Reading between the lines I know kind of conversations Heather and.
Speaker 1 (17:37):
Her sister have, right, I think it's I think it's
a good advice if that comes to past.
Speaker 3 (17:41):
That's a strategy I'd employed.
Speaker 1 (17:44):
We got more money saving information to get to.
Speaker 2 (17:47):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 4 (17:54):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and in site, please go ahead and join the
how to Money Facebook group.
Speaker 1 (18:03):
All right, man, let's talk tariffs for a second. And
you know, I know you and I we've we've talked
about it a lot, hoping not to have to talk
about it forever into the future. But Amazon announced earlier
this week that it's gonna it was going to display
the cost of tariffs next to certain goods for sale
on the site. I think it was going to be
kind of in their Amazon Hall section, which was there.
(18:23):
It's not kind of their competitor to Shean and Timu.
But then what they wanted to highlight was essentially the
trump impact of higher prices that these tariffs were going
to cause. And then Jeff Bezos took a call from
Donald Trump. It appears that's no longer happening. And they
were also like, actually, it was never happening, even though
there were reports that it was happening.
Speaker 3 (18:43):
It was in the works. Change we changed our mind, right,
And the Wall.
Speaker 1 (18:45):
Street Journal said, actually, the public, I'll quote here, the
public could have used Amazon's price transparency. Tariffs are taxes,
and tellful to know how policy choices affect final prices.
That's right, and I agree. I think that transparency from
Amazon would have been helpful, and I think it probably
would have helped to sour some consumers about tariffs because
(19:06):
they would have been like, wait a second, I heard
all this stuff talk about tariffs, but how much is
it actually costing me? And they'd find out with that
as broken out essentially in the pricing. We're gonna find
out even if it's not broken out though. But most companies,
they don't like tariffs and they want to show their customers,
at least some of them, the exact impact that they
have on the bottom line. I think we're going to
see more and more of that, and you can't blame them.
(19:27):
On top of this. Matt cheap Chinese goods. They're cheap
no longer those two companies I mentioned earlier Timushi, in
which again I've never purchased anything from either of those sites.
Apparently their prices are going up, doubling the costs of
many of the items they sell.
Speaker 4 (19:42):
One more thing on the tariff specifically, So that was
because of the Deminimus loophole, which literally expires today May second.
So it's not to say that Chinese goods. You can
still buy cheap Chinese stuff online, you just can't buy
it directly from China where they're shipping it straight from
the factories where they're avoiding all the the important duties
and whatever.
Speaker 1 (20:02):
It is, because the price has got to go up, right,
So on top of that, shipping volumes to US ports
are plumbing, and even with some of the larger tariff delays,
the reality of tariffs, it's it's really only we're only
at the very emphasy starting to begin to feel the impact.
So I do think we're going to see higher prices,
fewer options, if this the way tariffs are currently constructed
(20:24):
remain or or if potentially they get worse.
Speaker 4 (20:26):
Yeah, and don't forget about the secondary costs of everything
that we buy as well. That's something else that we
often failed to take into account.
Speaker 3 (20:33):
Right, So let's.
Speaker 4 (20:34):
Say you want to buy a TV obviously requires electricity,
and then so right there, you see the yellow sticker
on there when you buy it, predicting how much it's
going to cost you to watch your favorite shows every
single year. Well, there's a Wall Street Journal tech writer
who highlighted a trend that we've all been subject to
more recurring subscriptions. So instead of paying for that new
gadget straight up getting to use it as you please,
(20:56):
you might.
Speaker 3 (20:56):
Pay a reduced price.
Speaker 4 (20:58):
It's like a hidden price, right, or a false price,
maybe I should say, and then you pay an annual
fee to unlock his full potential. We talked about at
some point. I think it was last year that we
talked about the heated seats that aren't digitally unlocked unless
you pay the subscription.
Speaker 3 (21:13):
Yeah, or maybe it was a heated steering wheel as well.
Speaker 1 (21:15):
Super annoy BMW, Right, BMW What I said where Hey, yeah, no,
this comes with TVD seats, but you got to pay
to access them exactly.
Speaker 4 (21:23):
Luxury brands terrists though, could cause an influx of subscriptions
in order to keep the initial price low because folks
are used to paying a certain amount, it's going to
feel painful to pay more upfront. So essentially, how can
we sneak these higher costs in the back door?
Speaker 1 (21:37):
Could Apple find a way to make the price of
the iPhone.
Speaker 3 (21:40):
I guarantee you're thinking about it half as.
Speaker 1 (21:42):
Much or something in order to in order to reduce
what they pay in tariffs and create like a subscription
model where you pay them monthly instead.
Speaker 4 (21:51):
It's all about the subscription man. Yeah, yeah, yeah, because
you don't pay tariffs on subscriptions.
Speaker 3 (21:55):
Keep that in mind.
Speaker 4 (21:55):
Keep in mind the additional cost before you click something
to buy it, think about the secondary costs.
Speaker 1 (22:01):
Just one basic thing that like, some of my friends
have the Whoop fitness bands, right, you and I we've
got the garment watches. Yeah, And it wasn't just because
the initial cost was lower, although it was, but the
Whoop band comes with a monthly subscription fee to access
the data that you're racking it and a lot of
folks are paying for it.
Speaker 3 (22:19):
For a year and a vas in order to get
the best deal of right right, I don't even know how.
Speaker 1 (22:22):
Much it costs, but I don't know whether it's but
I know that I pay zero dollars tax us all
the data from the running that I'm doing, So yeah,
that factors in, right, hey, how much? What's not just
like what's the initial cost, what's the outlay right now?
But think about what are the costs down the road
that I'm going to occur by buying this thing? It
really matters, like and I think the more we can
think about the things we buy in that way, we're
(22:42):
probably it's going to at least like force our hand
to think about our purchases differently, and we might find
ourselves buying less or at least pivoting to buy other
items that are going to have lower secondary costs.
Speaker 3 (22:55):
That's true.
Speaker 4 (22:55):
Another way to help us decide what to buy what
not to buy in an era of rising prices is
to consider prices in terms of time. So basically CPI,
it's not a great metric because let's say we were
talking about TVs earlier. The TV you bought back in
the eighties, it does not compare to the one that
you can buy today. It's much better now and it
costs a whole lot less. And superabundance is about how
(23:18):
much richer we've become. Things to global competition for the
good book trade. Yeah, the reality that it just takes
us less time working in order to earn incomes to
pay for basics like food and energy, which is a
good thing. This is something that we love. It shows
that we can afford more of everything. Now, this is
like the heart of progress. But it makes me think
(23:39):
that we should all figure out our hourly rate.
Speaker 3 (23:41):
And this is.
Speaker 4 (23:41):
Another topic we discussed way back in the day is
episode ninety nine, and I think going through that exercise,
it can create this subtle mental shift because the next
time you're thinking about buying something, I think you might
be more keen to think about how long you would
have to work in order to afford that item, which
could be a better way of thinking about it. You know,
I think that one reframe could prevent some ill advised
(24:03):
purchases and just to cause you to say again, second guess,
reframe things put it in a different light to where
you're not just thinking about how it's going to make
you feel in the moment, but what you're thinking about
is what about future me or what are the alternatives?
Or how much is this actually gonna cost me a
little bit further down the road, Not just what I
have to pay upfront Right now.
Speaker 1 (24:23):
The one hundred and eighty bucks feels really different than
saying that's gonna take me six hours of work, and
especially if you don't like your job.
Speaker 3 (24:30):
Yeah, that will hopefully make you think twice.
Speaker 1 (24:33):
About whether or not you really want to buy the thing,
because if it means you gotta you gotta go, you know,
put in some additional hours in order to and you
don't always have to put in additional hours, but you're
reframing it in terms of thinking about how much of
my time is involved in getting this item, And I
just think that's a better way to think about it.
And that also is going to make you less likely
to buy things you don't need. All Right, We've got
(24:55):
more to get to on today's show.
Speaker 2 (24:57):
You're listening to how to Money if Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (25:03):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter.
Speaker 4 (25:09):
We now have the Facebook question of the Week, which
is from Matthew partial to that name.
Speaker 3 (25:14):
So I will probably have to pay off about three.
Speaker 4 (25:16):
Thousand dollars in medical bills coming up soon. Should I
just find a good rewards card.
Speaker 3 (25:21):
And do that. I don't have one at the moment.
Speaker 4 (25:25):
What do you think, Joel, Is it time to this
is where we separate ourselves from the Dave Ramsey's of
the world.
Speaker 1 (25:30):
Yeah, oh yeah, yeah's I would say, probably right, yeah,
that's but we need to then go into the specifics.
I think the main question for Matthew here is can
you pay off the balance on time and in full
when the bill comes to That's three thousand bucks, right,
So yeah, get the credit card if you have three
thousand plus dollars in savings and you're going to be
able to pay the bill. If not, though, no, because
(25:52):
the rewards just aren't worth it, even the more significant
rewards that you can get from an initial sign up bonus,
which is what makes having a significant bill that's like
a silver lining.
Speaker 3 (26:03):
I guess macau is.
Speaker 1 (26:04):
Nobody wants to pay like three thousand dollars and medical bills,
but if it means new credit card and sign up bonus,
that can make that can just reduce the pain a
little bit, depending on what pain is going on in
your body. I don't know that if it's actually medically
prescribed to do that, but it can reduce the financial pain.
And so I think if I had a three thousand
dollars medical bill, I would be looking to get a
new credit card, right, getting the brand new one, getting
(26:25):
the sweet sign up bonus for paying that one bill. Right,
even if medical bills aren't that fun to pay, I
think that makes sense, and it's nice to do it,
not over a slew of transactions trying to monitor your progress,
but being like boom met, the sign up bonus makes
it easy and with one swipe or one tap, that's
kind of awesome.
Speaker 4 (26:42):
Yeah, assuming though that you do have the cash on
hand and that you're not actually going to go into
credit card debt. But also don't forget that you might
have some recourse here to reduce the size of this
medical bill pretty meaningfully or maybe even have it completely eradicated,
depending on your income. And so look into the financial
aid possibilities that are offered there through that hospital or
(27:03):
through that medical provider. Maybe you'll actually owe a whole
lot less. That being said kind of sounds like maybe
he's done that because he said I'll probably have to
pay off about three thousand dollars. So it sounds like
it's something that it's a journey. He's been arched up
that tree.
Speaker 1 (27:18):
And maybe the bill was higher, and now it's been
reduced to three thousand, and he can't get it.
Speaker 4 (27:21):
And he's finally coming into terms that this is what
it is. But last, but not least, head over to
the how to Money credit card tool to see what
card might make the most sense for you. The top
rewards often come in the form of travel points, so
hopefully that's something you're open to. If that's the case,
the Capital One venture X is well worth considering right
now if that's not something that you're interested in. Interested
(27:43):
in even something like the Blue Cash Preferred Card, which
there's a similar theme that we've been discussing today, which
is like doing something that you're already planning to do.
The Blue Cash Preferred Card is a fantastic card because
it's not that hard to spend a ton of money
at the grocery store these days, and so depending on
how it is that you spend, that could be well
worth the money.
Speaker 1 (28:01):
Yeah, let's get to another question, Matt. This one comes
from Anonymous, which is a name I'm partial to, and
they say we all less than ten thousand dollars on
a house. We'll pay it off this year. Three vehicles
all paid off. Old truck isn't getting much use. We
use it occasionally, less than five thousand miles in a year.
The truck could fetch about five thousand bucks and that
(28:21):
money would pay off the house several months faster.
Speaker 3 (28:24):
Would you sell it? Well, I would say the value of.
Speaker 4 (28:28):
The truck, like how much they can get for, is
only a part of the answer to this question, because
I think the bigger question is the ongoing cost of
keeping the truck. So I'm talking about the cost of insurance,
which has skyrocketed in recent years, but also repairs and maintenance.
So even though this vehicle is close to full depreciation,
you're still losing money in other ways if you keep
(28:49):
it around. So holding on to it when you're using
it so little likely means that there isn't enough value,
and instead selling it is going to be smart for you,
so that you are prioritizing owning paid off vehicles, which
is a rare tack to take when it comes to
our transportation.
Speaker 3 (29:06):
Yeah, all three of them owned.
Speaker 4 (29:08):
Yeah, that's awesome, But we've almost never heard of someone
who's regretted reducing their car fleet just makes life a
lot simpler as well. Let's clutter, and when it's like
the largest item other than your actual house that you own,
I'm all four clear and that thing out.
Speaker 1 (29:21):
But I think you're totally right to point out not
what you could gain, but point out what you're actually
losing month after a month, basically in perpetuity by keeping
that around.
Speaker 4 (29:30):
Although I will say, okay, Devil's Advocate, I had a
friend who they ended up selling an old vehicle. Heads up,
get a quote from your insurance provider and see what
your premiums would go to, because if you have teen drivers,
in particular, because my buddy, his teenage driver, was on
the old was a full time driver, because they have
to put him down as a full time driver on
(29:51):
the oldest car, and by getting rid of that old car,
they were forced to put him on a newer car.
And so what they ended up doing was reducing the
total number of cars that they had covered by car
insurance by this provider.
Speaker 3 (30:02):
And what happened to the.
Speaker 4 (30:03):
Premium It didn't, in fact go down, It went up, okay,
And so he was pulling his hair out when he
discovered that because he thought there was no way that
that was likely at all a possibility. But that is something.
So that's the counter.
Speaker 3 (30:15):
It's a smart top, that's the counter to the cost
of insurance. Yeah, normally things like that.
Speaker 1 (30:20):
Normally you get rid of a car from your fleet,
your insurance cost is going to go down. But you know,
those rare occasions it might not. So I think it's
a good point tenage driver's man, hop on the phone
with your insurance company first and figure out what that
would look like. And maybe you might say, oh, well,
it's not going to send me anything on insurance, or
it's going to send me so little to make it negligible.
I'm going to keep this puppy around because hey, it's
it's not going to cost me really any more money intoppreciation,
(30:43):
which is the biggest nasty factor going against car owners.
And the plus side I guess of owning that car
or that truck for longer is that it's kind of convenient.
The value is not going to decline meaningfully. You got
to spare right when another car is in the shop
or something like that. But there are other solutions to
that problem, and I think that just require a little
more inconvenience, like renting a car, borrowing one from a
(31:04):
friend in a pinch, or uber like I think the
sharing economy, the reality of the sharing economy, it might
be the perfect solution, right to save this poster a
bit of money here. Plus, you don't have to worry
about fixing the old truck as more issues start to
pop up with it, as all of us know who
have driven older vehicles. Once you start getting to that point,
I'm not trying to We don't want people to get
(31:26):
rid of their old car trade up to a new
car because of potential fixes they'll have to make most
of the time. But the truth is, the older the ride,
the more repairs you're gonna have to make, and it
just becomes a more dicey, difficult decision when the repair
bills get expensive and the value of the vehicle goes down.
And so getting rid of it while it's still running,
(31:46):
well maybe avoids you from having to make.
Speaker 3 (31:49):
A decision like that.
Speaker 4 (31:50):
Yeah, unloading it essentially before it's a problem. I'll point
out two, getting five thousand dollars is cool. You know,
you get that money back in your hands. You're talking
about paying off the house early. I would be very
hesitant to do that considering where you are on the
amortization schedule of that house, the fact that you're basically
paying no money to the bank right now, regardless of
(32:11):
what your interest I mean, you're paying something, but like,
relatively speaking, you're paying almost nothing, And regardless of what
your actual stated interest rate is, you are paying much much,
much less than that right now because of where you
are on the schedule. Most of the money that's going
towards your payment is actual principle, that is paying down
the balance of that house.
Speaker 1 (32:30):
And so the complete opposite of those early months and
years of having the mortgage. I mean, you're literally in
like the last few months, so like I can, I've
never been to that stage of the payment cycle. So
maybe that does something to you psychologically, and maybe you
want to get rid of it sooner, But I at
least I get the impulse right now where I'm sitting,
I'm just like, uh, no way that it's basically your
(32:51):
own money, So why pay it off when you don't
need to, and when instead what you could do is
invest that money, Assuming that you are in a stage
of life where you are still growing your wealth, I
would one hundred percent be investing that money as opposed
to paying off that debt or even saving honestly, rather
than just paid off as agreed, just because, like you said,
what you're actually forking over an interest is infintesticly small
(33:14):
and so prioritizing mortgage payoff. Although I get the psychological
benefit when you pay it off as agreed, given kind
of the terms you likely have in place in that
mortgage and where you stand in it, it just makes
almost no financial sense at all. It's really only a
psychological win that you get this right, and.
Speaker 4 (33:28):
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.
Speaker 1 (33:34):
You've been listening to How to Money with Joel Larsgard.
You can always hear us live on KFI AM six
forty twelve pm to two pm on Sunday and anytime
on demand on the iHeartRadio app
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