November 9, 2025 • 33 mins
How To Money Hour 1 (11/09) - Cars aren't cheap anymore, far from it, but Americans are making them cost quite a bit more because of their idiotic financing moves. A HTM listener has a question about open enrollment and how to choose his healthcare plan wisely. Also, what's going on with the job market right now!? Is AI really crushing starter jobs? HTM listener Wayne wants to know if we would change our stance on BNPL if they offered discounts.
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Episode Transcript
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Speaker 1 (00:00):
You're listening to KFI AM six forty on demand. Do
you want to live well without drowning in debt? Joel
and Matt have you covered? This is How Do Money
with Joel Larsgard and Matt.
Speaker 2 (00:20):
Altmex KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 3 (00:33):
This is how to Money. I am Matt Altmes and
I'm Joelarsgard. Don't forget to sign up for the how
to Money newsletter. You can find that up at how
tomoney dot com slash newsletter. So, Joe, let's kick things off.
You want to talk about affordable vehicles.
Speaker 4 (00:45):
Those don't exist.
Speaker 3 (00:46):
Anymore, man, I think that's an oxymoron if you've ever
heard one. There are some out there. I get very few,
very few.
Speaker 4 (00:52):
Yeah.
Speaker 3 (00:53):
I actually was looking up at the value of our
minivan the other the other day and I was like, oh,
it's worth like less than six thousand dollars. Now it's affordable.
It's basically hit that fully depreciated mark. I don't know
that's going to go down to the value very much.
So there are some cheap cars you just can't buy mine. Sorry, yeah,
you need that thing, mane, What did you put for
the condition, because that's I know what I know.
Speaker 4 (01:13):
It's definitely not excellent. Okay, but did you do pretty
good or did you do four?
Speaker 5 (01:18):
Oh?
Speaker 3 (01:18):
No, probably whatever's in the middle, the middle, Yeah, that's
pretty easy. Yeah, it's got some things in this. At
this point, I want to I want to think that
mine's an excellent condition, but I know it's not. Like
in my heart it's an excellent condition. There are certain
things about it that I know are excellent. But then
I know from an outsider's perspective, they would see all
some of the busted up things, some of the spray
painted side view mirrors that creative Fathers three on there,
(01:41):
and in order for it to look slightly better, they
might notice that. Well, I think, my my, it makes
it sound so ratchet, which I think both of our
fans probably are.
Speaker 5 (01:49):
At this one.
Speaker 3 (01:50):
I would say my six four runner is in mint condition.
I'd put that in excellent, but that would be an
excellent So how long will.
Speaker 4 (01:57):
It say that way?
Speaker 3 (01:58):
We'll see do you feel like it's already gone downhill
since you've gotten it a little bit. I'm doing my best, though,
but they kept it in a garage. I don't have
space in a garage for two cars. So I have
a one car garage. People, what you can clear everything out,
squeeze put those suckers in there. I don't think it's possible, really, Yeah, okay,
we can try one day. Okay, So I'll help you
try it this weekend if you want. Let's talk about
expensive cars. Though we have cheap cars, but the average
(02:20):
American is opting for really really expensive ones. And I'm
over here reticent to spend, you know, five figures on
a car, but people are spending fifty k on average
on new cars. That's the We've crossed that threshold. Now,
it's insane. But because of high costs and high interest rates,
this means people are paying more for cars than ever before,
(02:40):
which means that the vast majority find themselves on like
a debt treadmill for a really long time. And we've
talked about this kind of ad nausea map, but there
was a new there was some new stats that came
out this week from Caribou who they they help people
refinance their loan and shop around and get a better deal,
and they said that the most popular choice these days
when people refinance a car loan is an eighty four
(03:02):
month long loan, which I didn't know. I knew you
could get that out on a new car. I didn't
realize you could refinance into an eighty four month long loan.
Speaker 4 (03:10):
It's crazy.
Speaker 3 (03:11):
So let's say you get a new car, you're in
it for a couple of years, and then you refinance
again into another seven year loan. Yeah, maybe you're able
to save some money every month, and maybe you lowered
your interest rate.
Speaker 4 (03:22):
You've probably done.
Speaker 3 (03:22):
Both of those things, but it means you're going to
be in the loan for even longer. Some of those
folks are going to be in that like a car loan,
because they take one out and refinance for something like
nine or ten years. It's crazy, hard, hard to really
fat them. Yeah, what's so the first thing I think
of when I hear eighty four months? It makes me
think of people who have like an eighteen month old.
It's like, no, no, no, you need to go ahead
(03:43):
and switch to my kids a year and a half.
Speaker 4 (03:45):
He's two years old.
Speaker 3 (03:46):
Like they're trying to obscure the fact of how long
of a period this is, I think by saying something
like eighty four months. But the journal actually had an
article about how repoemen are actually busier than ever. They're
basically working around the clock repossessing vehicles where folks aren't
making though payments.
Speaker 4 (04:03):
A dangerous shob.
Speaker 3 (04:04):
I had a friend who did that for I think
he still doesn't actually and I believe it. He says
the run ins man like people do not like their
car being taken another their driveway in the middle of
the night, But when the payments aren't being made, this
is are going to take.
Speaker 4 (04:16):
It is what happened. That's which you agree to.
Speaker 3 (04:18):
And delinquencies on car loans are up across all income levels.
But even with lower payments spread out over a longer
period of time, way too many people are out there
and they're unable to afford their ride. So just be
careful when you are buying a car. You do not
have to pay an arm and a leg in order
to get a good one. And in that article as well,
(04:39):
a fascinating stat was that home debt. So they had
like different types of debt, so like obviously auto loan debt,
but then they had home debt, right, so like your
mortgage or home equity loans, they're down significantly. They're down
something like fifty percent when looking at the same period
of time, which is is just fascinating that it seems
like something has changed in how it is that we
viewed vehicles, which I kind of think is a good thing.
(05:02):
I guess one way to interpret the data is that
more folks are seeing their vehicles more as a tool.
They're seeing it as a more expendable thing. And I
think some of them might have to do with the
rise of uber and left right, like it's just a
way to get from point A to point B, as
opposed to maybe having your identity so tightly tied to
a possession like that too to something like a vehicle,
(05:23):
which I'm just really fascinating. The fact that, yeah, mortgage delinquencies,
how equity loan delinquencies are down about this like fifty percent,
whereas auto loaned delinquencies are up fifty percent over the
past fifteen years. Yeah, crazy, Well, I mean I think, gosh,
you want to keep a roof over your head. Yeah, stability,
So it seems it's just interesting, Yeah, when you look
(05:45):
at the same period of time, though, I think some
of it also has to do with not to take
it back to the pandemic, but stimmy checks right, like
we found ourselves with.
Speaker 4 (05:52):
A lot more money in our banks.
Speaker 3 (05:55):
It wasn't so much money that you went and bought,
went on like a home shopping spree, but it was
more than just like going to your local RII and
getting a few new items. You're probably thinking, oh, I
can handle a bigger payment in my life. It seems
like taking on a not alone that you couldn't afford
may have been like the happy medium for a lot
of folks. Yeah, the activity du jure back in the day. Yeah, well,
(06:18):
I mean, I just yeah, I think when you're refinancing,
the goal is should be not to pay the lowest
amount in your monthly payment. It is to get rid
of that loan as quickly as possible, or it should
be so it's not like how little can I pay
every month to get rid of this car payment and
who cares how long? It's how much can I pay
in order to get rid of this car debt as
(06:39):
soon as possible? That really should be the thinking. We're
payment buyers in this country, that's right, and that's not
a good thing. All right, We've got actually more to
get to.
Speaker 1 (06:47):
On today's show, you're listening to KFI AM six forty
on demand.
Speaker 3 (06:54):
This is how to Money. I am one of your hosts,
Joe Larsgard, and I am that all mix. By the way,
you can always find more money saving information over at
howtomoney dot com. Well, let's get to a question now,
specifically about open enrollment.
Speaker 5 (07:09):
Hey, Matt and Joel, I've got a question about health insurance.
It's open enrollment season at my employer, and they're offering
us a couple different options for health insurance this year.
We're with a major provider right now, and it looks
like they're about twelve hundred dollars more expensive than one
of the other major providers that's being offered. I'm interested
in taking those savings, but I'm also weighing the cost
(07:33):
of confirming that all of our doctors accept the other ensure,
making sure that all of our prescriptions are covered for
my whole family of five. So any advice about how
to weigh the costs and benefits of switching from one
insurer to another.
Speaker 3 (07:46):
All right, Joel, And that was Brian from Chicago. By
the way, here's some numbers. The average annual cost now
is twenty seven thousand dollars for the average family in
the US, and the average employee covers most of that
twenty thousand dollars, but that still leaves a ton of
money for you to cover as the employee, a little
(08:07):
over six thousand dollars. And that's just the premiums like that,
that doesn't include the other costs. And so even with
great workplace coverage here, we're talking that man like you
could easily spend over ten thousand, maybe closer to fifteen
on healthcare costs in a given year between just like
the premium ms and then just some of the other
costs that go into it. Paying those premiums gets you
(08:30):
the coverage right in case of catastrophic something catastrophic happens
to you, but it also gives you the ability to
pay less to go see the doctor when we're talking
about cope's and stuff like that. But just to think
that that's how much it requires just to have health
coverage in this country, even when your employer is putting
a substantial amount of the bill, it's it's harrowing. That's
(08:51):
kind of hard to fathom. And I know that there
are some employers who do even better on the healthcare
coverage front. They pay even more or all of your
premiums I think if you are an individual working for
one of those employers, just don't neglect to realize how
great of a benefit that is, because it really is substantial.
And you see, you might have friends working down the
street for another firm that's less generous and they are
(09:13):
paying a lot more of the They've got more skin
in the game essentially when it comes to premiums than
you do. So if you're in that case, be thankful,
i'd say, and Matt, I think when it comes to
this question, we want to compare the total annual cost.
Right It's hard to do because we're using predicted costs.
There's no way to one hundred percent predict exactly what
(09:33):
you're going to spend in healthcare in a given year.
So much of healthcare is like ow I broke my ankle,
I need to go see the doctor right now. You
don't usually know exactly what you're going to spend in
the coming year, understandably so, but you can come up
with a solid estimate, I think, based on what you
spent last year and whether or not there any procedures
you already have planned that are in the works. And
(09:55):
some folks they even batch bigger health needs into a
specific year while they're on let's say, a lower deductible plan,
and then they move to a higher deductible plan in
years where they're less likely to need care, which is
I think a solid planning option. If you're saying, listen,
I know I've got this major surgery, and my spouse
has this other thing going up, my kid needs to
get their tonsils removed. Let's go for the lower deductible
(10:16):
plan in twenty twenty six, and then twenty twenty seven,
hopefully most of our major surgeries are over with boom, Like,
we're going to go back to the high deductible plan,
try to save more money. But the total costs we're
talking about here is premiums, it's your potential deductible, it's copays,
and it's also really important to know what your out
of pocket max is as well. I think those are
really kind of the crucial moving parts. So we've got
a factor in, yeah, the overall costs, because if you
(10:37):
just go simply seeking lower premiums, well that's often going
to mean higher deductibles. So also take into account how
much cash, how much money you have in savings, whether
or not you can go with a plan like that,
if you have some more healthcare expenses next year, Joel,
you mentioned copay costs as well. Those really can't add up,
so make sure you are aware of that if you
do go and see the doctor regularly. And it's yeah,
(11:01):
And Brian he mentioned specifically looking into the doctors that
he has making sure that they accept the new health
insurance as well.
Speaker 4 (11:10):
It may not be worth it for you.
Speaker 3 (11:12):
So you get your family a five, right, If you
have to go and find a new pediatrician, if you
have to find a new doctor for you, if your
wife or your partner, if they need to go find
a new doctor as well, it might be a massive headache.
But that being said, I don't know. Maybe extreme time
situations call for extreme measures here and the ability to
save an extreme amount of money. Yeah, yeah, And so
(11:32):
I don't want the default to be like, well, yeah,
obviously make sure because that's just presupposing that he's not
going to make a big change like that. And I
actually want to introduce the idea that hey, maybe it's
worth doing something completely different in order to save some
money here. Yeah maybe, but you might with three kids,
you're attached to the physician. I mean, I remember Matt
when we moved the heart. One of the hardest parts
(11:53):
about leaving where we lived was how much we loved
the pediatrician where we were, and we just not to
throw shade, but we haven't found a great pediatrician where
we are now. It's just okay, yeah, and we miss
the old and we're like, we even think about do
we go back and just drive forty five minutes to
go see a pediatrician.
Speaker 4 (12:11):
Maybe you can.
Speaker 3 (12:12):
And so if you if you feel that attached and
you're like, huh, well my pediatrician who we love, you know,
doesn't take this new healthcare coverage, doesn't doesn't take this plan, well,
I get how that's going to help sway your decision.
And you might be like, not worth the savings if
we can't see that person again. And yeah, you got
a factor in prescriptions too, because if there are any
(12:32):
regular prescriptions that you'd want to you know, that you take,
you'd want to see how much those are going to
cost underneath this new plan as well. Although depending on
what you take, especially if it's an older generic, you
might actually save a lot of money by not going
through insurance and using a site that we've mentioned before
like hostplus drugs. Good Rx is another good place, so
don't necessarily think you have to go through insurance to
(12:54):
save money on prescriptions. You might save more not going
through insurance. We'd also love to see you on an
HSA eligible high deductible health care plan if it makes
sense for your overall health care costs. Don't let the
tail wag the dog here, but if a high deductible
health care plan is ideal from that total cost perspective
that we're discussing, it'll mean you can utilize an HSA two,
(13:17):
which can just be another way to save money on
healthcare because it reduces your taxes for the current year
and it allows you to grow those dollars for your
future too. Your employer they might be generous enough to
even offer an HSA match. We have heard from many
listeners who have that as a benefit where they work.
That sweetens the pot. We're seeing more of this and
(13:37):
we love it. But just take that into consideration as well,
because there are additional perks with the high deductible health
care plan. You save on premiums, you have access to
the HSA. Still, that doesn't mean it's always the best
choice for everyone. Yeah, Yeah, And Brian, he's talking about
saving twelve hundred bucks here, but kind of piggybacking off
of the taking more extreme measures. I've got to bring
(13:57):
up health sharing plans because you are interested in saving
what I would say is the most extreme.
Speaker 4 (14:04):
Amount of money, trol.
Speaker 3 (14:06):
So I logged into our state's healthcare exchange, so healthcare
dot gov or if you live in a state where
healthcare dot gov no longer works because the state exchange
just took over, check that out. But I logged in
there and guess what our family of six monthly cost.
Speaker 1 (14:21):
Was going to be.
Speaker 3 (14:21):
I'm going to guess for a bronze plan for the
cheapest Okay, I'm going to guess like twenty three.
Speaker 4 (14:27):
Thousand I'm sorry monthly. So I'm me a eight nineteen hundred,
twenty five hundred dollars wow a month?
Speaker 3 (14:33):
Okay a month versus three hundred and seventy four dollars
a month, which is what we're paying here. This is
the difference between oh, paying over thirty thousand dollars over
the course of a year and.
Speaker 4 (14:43):
Versus six and that's a dollar. You're not talking about
a gold plan, No, this was like prices.
Speaker 3 (14:48):
You might be able to get a plan starting at
and it said that I could not believe it. And
by the way, when I said six thousand dollars, that's
not only the quote unquote premium that I'm paying towards
the health sharing, but also that also includes our out
of pocket costs. So we spent a little over six
thousand dollars total last year.
Speaker 4 (15:06):
Yeah, and you're.
Speaker 3 (15:07):
Probably thinking, all, yeah, I know how you are, with
like not ever going to see the doctor last year
was actually we had several doctor's visits out of which
is yeah, you have to take that rationalok, tew times
kind of out of the ordinary for us. So I'm
just highlighting that if you are looking to save the
absolute most amount of money, you've got to look into
health sharing. And not all of them are are religious,
(15:29):
are faith based either SAIDERA, so you and I both
both of us families are with Meta Share, but Sidara
is a great option as well, where there's a whole
lot of folks who are served well via that organization.
The problem is, it's really hard when you're offered a
Cadillac health insurance plan through your work and the premiums
are highly subsidized, it's tough to think about saying none
of the above and going getting your.
Speaker 4 (15:50):
Own health sharing plan.
Speaker 3 (15:51):
I think it may typically make the most sense for
self employed people, right who don't have access to any
sort of health coverage to work, or if you're if
maybe you're employed by an employer who says, yeah, we
don't you're kind of own, yeah, but like we don't
really subsize the premiums very much, and you're feeling more
of that healthcare dot Gov sort of slap in the
face where you're faced with paying the bulk of the
(16:12):
premiums yourself exactly. But even assuming the average American where
it's okay, say twenty seven thousand employers coming twenty you're
covering six. I paid six total last year, not just
in the cost of health care, but also in out
of pockets what I call in my excel sheet medical
out of pocket costs. Yeah, and so you're still looking
(16:32):
at saving a few thousand dollars right there, assuming uh,
you know, a healthier year.
Speaker 4 (16:37):
But that's something else you got to keep in mind.
Speaker 3 (16:38):
Too, because if you do use the doctor a whole lot,
if you've got a whole lot of procedures lined up,
if you've got different you know, regular visits that you
need to go in and get things checked in on.
That's probably not going to work out for you quite
as well. Yeah, you're spot on, my friend.
Speaker 1 (16:52):
You're listening to KFI AM six forty on demand.
Speaker 3 (16:56):
Your host tro Lars Guard and I am the other host, Matt,
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 how toomoney dot com forward slash ask.
I wonder if we are now at a tipping point
in the job market, because obviously there tipping point.
Speaker 4 (17:20):
It was a popular book.
Speaker 3 (17:21):
Man. I'm thinking about like the post pandemic times, right,
Like that was a killer period of time for workers.
Getting a new job was just leading to record pay
increases because the demand for employees it was incredibly steep.
The supply of folks for those jobs was limited. But
then we've seen that level out and unemployment numbers are
still actually good historically, but the job market it just
(17:43):
feels a little stagnant, and we've seen more recent reports
of just bigger name companies out there cutting head counts
by significantly, like tens of thousands of employees. I'm specifically
thinking of ups and Amazon who target maybe too. And
at the same time, worries about artificial intelligence, how that's
going to impact the job market, Those questions abound, and
(18:05):
we do see the signs that it is impacting young folks,
specifically at entry level jobs, and I think it's a
problem that could compound even more as those entry level jobs,
they are typically the gateway into more permanent, more higher
paying jobs.
Speaker 4 (18:19):
Right.
Speaker 3 (18:20):
You don't typically take some of those initial jobs because
you think it's just a fantastic job, but it's the
opportunity and it being more of a stepping stone, and
that's that feels like a problem that's just kind of
that we're speeding towards, still off pretty far off the distance,
but especially as some of these durngal workers are trying
to just get their foot in the door and to
get into, yeah, some of these companies that they want
(18:41):
to work for sure. Yeah, it's a little worrisome to
see college grads getting a degree and then coming out
in a time where it feels like some of those
starter jobs are harder to come by because you're right.
Those starter jobs lead to careers that eventually lead to
moving up and lead to earning more. And if you
can't get a starter job, it's hard to get on
that track. How to get out those lower percentile income brackets. Yeah, Still,
(19:05):
I don't think I would overreact to some of these headlines.
I think far fewer people think that AI is a
threat to their job then think it's going to impact
the job market in general. If you look at the statistics,
so kind of like so many other things in this life,
it's less personal pessimism like oh AI is going to
mess me over, and it's more of like a general wariness.
I'm not sure how AI is going to impact the
(19:27):
job the way jobs function in this country overall. And
i'd say the two of us met we're banking on
the fact that AI is going to make workers more productive,
kind of like the computers, kind of like Internet in
autimistic here. Yeah, and that it's not going to be
an existential threat to labor as a whole. But they're
going to be growing pains, and I think we're seeing
(19:48):
some of those showing pains. They are going to be
layoffs in some sectors, probably specifically in the tech sector,
but I'm pretty sure we're also see companies that let
too many workers go because of AI like rehiring in
the coming years. I think they're going to be like, oh, hey,
it's gonna change everything. Let's call the workforce, and then
they're going to realize, we hold too much. We need
some of those people back, and I think they're going
(20:09):
to regret some of the some of the layoffs that
they made. So it's a little consolation for current job
seekers serving a tough time. But I just told that
these frees are gonna last forever. Sure, or the folks
who are getting cut right, because it is it feels
like a tail of two job markets, right, because it
depends on it totally depends on the type of job
you have. If it if you are in a more administrative,
(20:29):
more data review, or a job that involves a lot
of digital monotony, not monotony, but like digital repetition, Like
these are one hundred percent the types of jobs that
are going to be replaced, and so if you are
in that kind of a field, you probably are thinking no, no, no.
Speaker 4 (20:46):
For me, this is totally personal.
Speaker 3 (20:48):
Yeah, as I play pairalegals, like that's a job that's
like up for extinction as opposed to the jobs that
are going to be more difficult to replace, like healthcare
or skilled skill trades or you know, teachers even right
like I could one percent see AI being more of
like the assistant in this in a similar way that
we can't envision our life now without the Internet, and
(21:10):
that's so much of it too, man, the fear of
the unknown as we look ahead, Like you mentioned that
the Internet being a good example, Well, that's easy now
as we look back and we are able to directly
see all the industries and jobs that have been created
because of the Internet. But we're at the very beginning
of this as we're projecting and looking forward, and it's
just for a lot of people it's scary because we
like the creativity and the clairvoyance to.
Speaker 4 (21:32):
Know what's actually going to happen.
Speaker 3 (21:33):
I don't know, but there will likely be some of
that creative destruction taking place and brand new sectors of
jobs that we're not even that aren't even on people's radars.
You think about the impact of the Internet, like you
think about the dot com bubble and all of the
companies that we're trying to do something novel because the
Internet now existed and so many of those companies no
(21:56):
longer exist like there is even in particular, as new
technologies are coming into into the mainstream, there there are
a lot of new startups like vying to be the
next successful company that are gonna that they're gonna they're
they're gonna change right how we all interact with AI.
Some of them are gonna be highly successful, and many
of them will fall by the wayside, and that is
(22:18):
kind of part of how the economic cycle of new
technology works, and they're winners and losers in it. But
that's like whole comfort for somebody in the job market
who feels like put out the pasture directly under threat. Yeah,
feel like they're getting the heisman when they're looking for jobs.
Because the market is tough and because there's a lot
of kind of AI turmoil happening, a lot of these
(22:39):
companies are looking to get leaner. You are listening to
how to Money.
Speaker 1 (22:44):
You're listening to KFI A M six forty on demand.
Speaker 4 (22:52):
This is how to Money. I am Matt Altmixed.
Speaker 3 (22:54):
And I'm Joel Larsgard. If you're on Facebook, by the way,
you want to join a group of like minded folks
who have money questions have money insights, please go join
the how to Money Facebook group. Let's now hear from
a listener who has a hypothetical discount question for us.
Speaker 6 (23:09):
It's Wayne again from Philadelphia calling in with yet another question.
This question pertains to buy now and pay later services. Now,
I would like to preface this with I have never
in my life used or even considered to use any
of these services. And I say that just to cover myself,
because I know your views of them are fairly negative.
(23:33):
And I understand that and mostly agree that. Said, I
had a thought experiment. I thought you might want to
indulge me in it. What if to attract more people
to use buy now at pay later services and to
get them used to using them in general, they started
offering large discounts on the items that you were purchasing.
(23:54):
Figure something along the lines of ten twenty thirty percent off.
With something like that, move the needle on how you
felt about buy now pay later services. If your answer
is no, I would be curious if there's anything these
buy now pay later services could do to interest you
in using them. For instance, even a larger discount, let's
(24:16):
say eighty percent off just to be ridiculous, or perhaps
some other kind of bonus that I can't think of.
Is there anything that would get you interested in doing this?
And I promise I don't work for these companies and
I'm trying to trick you into using the services and
or becoming an advertiser for them buy now, pay later services?
Can they be made into something that the how the
money guys would approve of? What do you say, man,
(24:38):
Jil can you fix it? As always? Best?
Speaker 4 (24:41):
Wayne out? Inside man for Klarna? Wayne?
Speaker 3 (24:45):
Not cool? Wayne, we know what you're doing now, Matt,
I could if there was a gun to your head,
would you use it buy now, pay later service? If
it was existential life or death? Yeah, okay, that's not
a wouldn't be the end of the world. Okay, Yeah,
I agree, I agree. So they're they're Wayne, that's the answer.
If Matt were faced, well, it did a lot of
it does come down to the discount, So it comes
down to the particular So I mean, I'm glad that
(25:07):
Wayne's avoided them so far. But I think the short answer,
it truly is yes, like not even gone to my
head sort of situation. And I think what Wayne is
really putting his finger on the heart of why we're
not fans of buy Now Pay Later. If there were
discounts involved for using buy Now Pay Later, I'd be
more than happy to consider using them. I actually did,
and I think I talked about this on the show.
(25:28):
I used by Now Pay Later one time, and it
was because I got a meaningful discount on some running shoes.
I don't I don't remember if it was like, do
you buy anything.
Speaker 4 (25:36):
Or else other than running shoes? No, not really.
Speaker 3 (25:38):
I just ripped through it so fast, though, but it
was I was like, I'll just go buy these shoes
are a good price here, And then there was I
think it was like fifty bucks off one hundred and
fifty bucks for using Clara, and I was like, I'll
just get another pair of shoes. I stick them on
the top of my closet mat in a row, and
then I just like pulled down the next pair when
I need it. But yeah, I was like, well, if
they're going to offer me fifty bucks off, then I'm happy.
(26:00):
I'm happy to use by Now Pay Later. And then
I just didn't use it, like by Now Pay Later.
I immediately paid off the loan or whatever they call it,
in order to avoid the behavioral trap, because I just
don't want to be caught in that sort of like
I've got how many outstanding loans do I have? And
am I being tempted to buy things I wouldn't otherwise buy?
But yeah, if there was like a ten or twenty
percent off perk for using by now pay later, I'd
(26:20):
probably use it a lot more.
Speaker 4 (26:22):
Yeah, you know.
Speaker 3 (26:22):
Like so occasionally folks will reach out to us to
say that, well, credit cards, they're not much better than
buy not pay later, Like you are still using debt
to purchase something that you don't have the money for
at the time, And.
Speaker 4 (26:33):
That's that's kind of true.
Speaker 3 (26:34):
But I think I would say that if that is
how you are actually using your credit cards, and if
that is how you are using your buy now, pay later,
well then that's not something I'm happy with, right, that's
not happy with you, I'm not because if that if
you don't have the cash on like you need to
have the cash on hand if you are going to
use these methods of payment, it doesn't matter if it's
a credit card or if it's a buy now, pay later,
(26:54):
like that is the like you must have that ticket
in order to ride like that is like we're trying
to raise the standard here. We're trying to raise the bar.
Like the cash on hand, that is your license to
be able to play this game. Otherwise then it's too
slippery of a slope. Otherwise we don't want you messing
with it at all. And so if okay, then if
they are the same, You got the cash on hand,
(27:15):
why would you then go with a credit card over
the buy not Pay later?
Speaker 4 (27:19):
And it does come down to the perks.
Speaker 3 (27:21):
Going back to what you're saying as far as getting
the discount, you're saying, like maybe get like ten or
twenty percent off, like truly, if like I would do
it for like five percent off, yeah, because because that's
roughly what a credit card. Yeah, because I'm getting anywhere
between two percent and six percent off with my credit cards.
Speaker 4 (27:37):
If there is a buy not Pay later.
Speaker 3 (27:38):
And this is me maybe wishing this out into existence,
but if there is a buy not Pay Later that
was willing to offer five percent off just across the
board in order to use their products, guess what I
would do it. I would get in there, I'd figure
out how to incorporate that into my financial system into
my Excel spreadsheets to spread that out over the four months.
But I actual probably wouldn't do that. I'll probably, just
like I do with a credit card, would py it
(28:00):
off at the end of the month, snag the discount,
and I would probably stop using credit cards. Although that
being said, there are other perks as well that the
credit cards offered. Yeah, not just the discount, but I
think I would consider it, like the buyer protections and
how if someone steals your credit card. Wouldn't rent a card,
I'm sorry, I wouldn't rent a vehicle with buy not
pay later. Yeah, in some of these other flight and
(28:22):
some of these other perks that maybe we can touch on,
But as far as just general spending, I think I
do it even for five percent, not even you don't
even need attendem me with eighty percent, because you're so
What you're really getting at the heart at is that
credit cards offer meaningful protections and benefits when you use them.
The only thing that buy now, pay later offers. The
only perk you get is you get to pay that
(28:44):
item off over a longer period of time. And so
what that leads to for so many people, what that
has led to for so many is poor behavioral and
financial results, which have been well documented. People spend more
on average when they have the ability to use buy
not pay later, Klarna or after pay or whatever at checkout,
and it's just one of the reasons to be wary
when you see those statistics that that's why retailers want
(29:06):
to do business with buy now, pay later companies because
they know that when they make that available at checkout,
people will buy more stuff, they will add more things
to their card, it will juice their sales. And you
could argue that tapping your credit card to pay insulates
you from maybe some of the pain and friction of
buying too, and yes that I think that can be
(29:26):
true for lots of folks. But the goal of using
a credit card it's not just to mitigate the pain
of purchases. That's but that is the whole essential use
case and reason for existence to buy now, pay later
companies to mitigate friction. And you know, there are important
consumer protections alongside these rewards that I think and boosting
your credit score by now pay later doesn't do that.
(29:48):
Credit cards do help do that. I think there's so
many even though credit cards have their downsides, are so
many potential positives for using them if you use them effectively.
There just really aren't any for buy not pay layter.
Yeah about the friction lists, I'm assuming are there apps
on your phone or can you put Klarna or the
different by now pay later companies in your wallet?
Speaker 4 (30:09):
Right?
Speaker 3 (30:09):
Because I like, I've been thinking about it recently and
the fact that I can double click and pay and
then the little transaction device, the clover or the square
pay or whatever like when they has it, when it's
got the little when it's got the little ding like
a little chime. There's something about that that makes it
so satisfying. And I think I've mentioned this before, but
(30:30):
I've since that since I've mentioned it previously, I've been
thinking about that because it used to be what with
a chip You stick it in there and it would
make this terrible sound like that. Yeah, and it what
does that reinforce? It makes it seem like you did
something wrong, as opposed to they completely change the user
interface of it and now it's like this nice little
(30:50):
congratulations you have been approved. You did it.
Speaker 4 (30:53):
I think that was the reason they invented.
Speaker 3 (30:55):
It's nice technology. It's a nice pat on the back
and I think that's the friction, whereas, honestly, I think
credit cards feel a little more dangerous because of the
fact that we can use them in Apple Pay or
the Google Pay and the wallets as opposed to because
when you're sitting down at a computer clicking the four
easy installments, the four that doesn't seem any more difficult
(31:16):
to me than the fact that you've got a credit
card auto saved in there, right. But the in personness
of that sort of physical response that a device does
to you when you purchase something that to me almost
puts credit cards back on my radar. As far as
the payment method, that might be a bit more nefarious
right now. Yeah, yeah, Well we talked about this with
Jason Gorsky a while back, right when he professor who
(31:38):
writes about the power of cash, And I do think
they're again like kind of what you're getting at is
the insertion took a few seconds, was kind of annoying.
The tapping makes it then the awful buzz, Yeah, it
makes it super easy and you feel like you're breezing
through the line. And I think that is actually a downside.
Maybe really easy to use credit cards post a pull
(32:00):
out your wallet, physically parting with a cash that hand.
Speaker 4 (32:03):
That's right.
Speaker 3 (32:03):
So we have to be careful about how we're paying,
what we're getting used to, how we're reconciling our books
and looking at our spending at the end of the month.
And if by now pay later works for you, you're using
it in a really intentional manner and you're not overspending
using those services, then by all means like you do you.
But I just think the whole way they're designed is
essentially to get people to spend in ways the otherwise wouldn't,
(32:26):
to become even more of a consumer. And I think
those incentives have really gotten the best of a lot
of people. Speaking of paying with cash, did you notice
the old lady who was paying for her coffee with
cash this morning and she was a little confused about
the price, and he's like, oh, no, we actually round
down when you pay with cash, so he didn't say
(32:48):
the precise amount. But I was like, oh my gosh,
that's right. Yeah, because when you pay with card, they
charge you that service feed. That's true, yeah, but yeah,
fascinating how that has an impact on how it is
we consume though. Yeah, that's exactly right. We've got a
lot more to get to on today's show. You're listening
to How the Money on KFI A M six
Speaker 4 (33:05):
Forty, kf I AM six forty on demand
You're listening to KFI AM six forty on demand. Do
you want to live well without drowning in debt? Joel
and Matt have you covered? This is How Do Money
with Joel Larsgard and Matt.
Speaker 2 (00:20):
Altmex KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 3 (00:33):
This is how to Money. I am Matt Altmes and
I'm Joelarsgard. Don't forget to sign up for the how
to Money newsletter. You can find that up at how
tomoney dot com slash newsletter. So, Joe, let's kick things off.
You want to talk about affordable vehicles.
Speaker 4 (00:45):
Those don't exist.
Speaker 3 (00:46):
Anymore, man, I think that's an oxymoron if you've ever
heard one. There are some out there. I get very few,
very few.
Speaker 4 (00:52):
Yeah.
Speaker 3 (00:53):
I actually was looking up at the value of our
minivan the other the other day and I was like, oh,
it's worth like less than six thousand dollars. Now it's affordable.
It's basically hit that fully depreciated mark. I don't know
that's going to go down to the value very much.
So there are some cheap cars you just can't buy mine. Sorry, yeah,
you need that thing, mane, What did you put for
the condition, because that's I know what I know.
Speaker 4 (01:13):
It's definitely not excellent. Okay, but did you do pretty
good or did you do four?
Speaker 5 (01:18):
Oh?
Speaker 3 (01:18):
No, probably whatever's in the middle, the middle, Yeah, that's
pretty easy. Yeah, it's got some things in this. At
this point, I want to I want to think that
mine's an excellent condition, but I know it's not. Like
in my heart it's an excellent condition. There are certain
things about it that I know are excellent. But then
I know from an outsider's perspective, they would see all
some of the busted up things, some of the spray
painted side view mirrors that creative Fathers three on there,
(01:41):
and in order for it to look slightly better, they
might notice that. Well, I think, my my, it makes
it sound so ratchet, which I think both of our
fans probably are.
Speaker 5 (01:49):
At this one.
Speaker 3 (01:50):
I would say my six four runner is in mint condition.
I'd put that in excellent, but that would be an
excellent So how long will.
Speaker 4 (01:57):
It say that way?
Speaker 3 (01:58):
We'll see do you feel like it's already gone downhill
since you've gotten it a little bit. I'm doing my best, though,
but they kept it in a garage. I don't have
space in a garage for two cars. So I have
a one car garage. People, what you can clear everything out,
squeeze put those suckers in there. I don't think it's possible, really, Yeah, okay,
we can try one day. Okay, So I'll help you
try it this weekend if you want. Let's talk about
expensive cars. Though we have cheap cars, but the average
(02:20):
American is opting for really really expensive ones. And I'm
over here reticent to spend, you know, five figures on
a car, but people are spending fifty k on average
on new cars. That's the We've crossed that threshold. Now,
it's insane. But because of high costs and high interest rates,
this means people are paying more for cars than ever before,
(02:40):
which means that the vast majority find themselves on like
a debt treadmill for a really long time. And we've
talked about this kind of ad nausea map, but there
was a new there was some new stats that came
out this week from Caribou who they they help people
refinance their loan and shop around and get a better deal,
and they said that the most popular choice these days
when people refinance a car loan is an eighty four
(03:02):
month long loan, which I didn't know. I knew you
could get that out on a new car. I didn't
realize you could refinance into an eighty four month long loan.
Speaker 4 (03:10):
It's crazy.
Speaker 3 (03:11):
So let's say you get a new car, you're in
it for a couple of years, and then you refinance
again into another seven year loan. Yeah, maybe you're able
to save some money every month, and maybe you lowered
your interest rate.
Speaker 4 (03:22):
You've probably done.
Speaker 3 (03:22):
Both of those things, but it means you're going to
be in the loan for even longer. Some of those
folks are going to be in that like a car loan,
because they take one out and refinance for something like
nine or ten years. It's crazy, hard, hard to really
fat them. Yeah, what's so the first thing I think
of when I hear eighty four months? It makes me
think of people who have like an eighteen month old.
It's like, no, no, no, you need to go ahead
(03:43):
and switch to my kids a year and a half.
Speaker 4 (03:45):
He's two years old.
Speaker 3 (03:46):
Like they're trying to obscure the fact of how long
of a period this is, I think by saying something
like eighty four months. But the journal actually had an
article about how repoemen are actually busier than ever. They're
basically working around the clock repossessing vehicles where folks aren't
making though payments.
Speaker 4 (04:03):
A dangerous shob.
Speaker 3 (04:04):
I had a friend who did that for I think
he still doesn't actually and I believe it. He says
the run ins man like people do not like their
car being taken another their driveway in the middle of
the night, But when the payments aren't being made, this
is are going to take.
Speaker 4 (04:16):
It is what happened. That's which you agree to.
Speaker 3 (04:18):
And delinquencies on car loans are up across all income levels.
But even with lower payments spread out over a longer
period of time, way too many people are out there
and they're unable to afford their ride. So just be
careful when you are buying a car. You do not
have to pay an arm and a leg in order
to get a good one. And in that article as well,
(04:39):
a fascinating stat was that home debt. So they had
like different types of debt, so like obviously auto loan debt,
but then they had home debt, right, so like your
mortgage or home equity loans, they're down significantly. They're down
something like fifty percent when looking at the same period
of time, which is is just fascinating that it seems
like something has changed in how it is that we
viewed vehicles, which I kind of think is a good thing.
(05:02):
I guess one way to interpret the data is that
more folks are seeing their vehicles more as a tool.
They're seeing it as a more expendable thing. And I
think some of them might have to do with the
rise of uber and left right, like it's just a
way to get from point A to point B, as
opposed to maybe having your identity so tightly tied to
a possession like that too to something like a vehicle,
(05:23):
which I'm just really fascinating. The fact that, yeah, mortgage delinquencies,
how equity loan delinquencies are down about this like fifty percent,
whereas auto loaned delinquencies are up fifty percent over the
past fifteen years. Yeah, crazy, Well, I mean I think, gosh,
you want to keep a roof over your head. Yeah, stability,
So it seems it's just interesting, Yeah, when you look
(05:45):
at the same period of time, though, I think some
of it also has to do with not to take
it back to the pandemic, but stimmy checks right, like
we found ourselves with.
Speaker 4 (05:52):
A lot more money in our banks.
Speaker 3 (05:55):
It wasn't so much money that you went and bought,
went on like a home shopping spree, but it was
more than just like going to your local RII and
getting a few new items. You're probably thinking, oh, I
can handle a bigger payment in my life. It seems
like taking on a not alone that you couldn't afford
may have been like the happy medium for a lot
of folks. Yeah, the activity du jure back in the day. Yeah, well,
(06:18):
I mean, I just yeah, I think when you're refinancing,
the goal is should be not to pay the lowest
amount in your monthly payment. It is to get rid
of that loan as quickly as possible, or it should
be so it's not like how little can I pay
every month to get rid of this car payment and
who cares how long? It's how much can I pay
in order to get rid of this car debt as
(06:39):
soon as possible? That really should be the thinking. We're
payment buyers in this country, that's right, and that's not
a good thing. All right, We've got actually more to
get to.
Speaker 1 (06:47):
On today's show, you're listening to KFI AM six forty
on demand.
Speaker 3 (06:54):
This is how to Money. I am one of your hosts,
Joe Larsgard, and I am that all mix. By the way,
you can always find more money saving information over at
howtomoney dot com. Well, let's get to a question now,
specifically about open enrollment.
Speaker 5 (07:09):
Hey, Matt and Joel, I've got a question about health insurance.
It's open enrollment season at my employer, and they're offering
us a couple different options for health insurance this year.
We're with a major provider right now, and it looks
like they're about twelve hundred dollars more expensive than one
of the other major providers that's being offered. I'm interested
in taking those savings, but I'm also weighing the cost
(07:33):
of confirming that all of our doctors accept the other ensure,
making sure that all of our prescriptions are covered for
my whole family of five. So any advice about how
to weigh the costs and benefits of switching from one
insurer to another.
Speaker 3 (07:46):
All right, Joel, And that was Brian from Chicago. By
the way, here's some numbers. The average annual cost now
is twenty seven thousand dollars for the average family in
the US, and the average employee covers most of that
twenty thousand dollars, but that still leaves a ton of
money for you to cover as the employee, a little
(08:07):
over six thousand dollars. And that's just the premiums like that,
that doesn't include the other costs. And so even with
great workplace coverage here, we're talking that man like you
could easily spend over ten thousand, maybe closer to fifteen
on healthcare costs in a given year between just like
the premium ms and then just some of the other
costs that go into it. Paying those premiums gets you
(08:30):
the coverage right in case of catastrophic something catastrophic happens
to you, but it also gives you the ability to
pay less to go see the doctor when we're talking
about cope's and stuff like that. But just to think
that that's how much it requires just to have health
coverage in this country, even when your employer is putting
a substantial amount of the bill, it's it's harrowing. That's
(08:51):
kind of hard to fathom. And I know that there
are some employers who do even better on the healthcare
coverage front. They pay even more or all of your
premiums I think if you are an individual working for
one of those employers, just don't neglect to realize how
great of a benefit that is, because it really is substantial.
And you see, you might have friends working down the
street for another firm that's less generous and they are
(09:13):
paying a lot more of the They've got more skin
in the game essentially when it comes to premiums than
you do. So if you're in that case, be thankful,
i'd say, and Matt, I think when it comes to
this question, we want to compare the total annual cost.
Right It's hard to do because we're using predicted costs.
There's no way to one hundred percent predict exactly what
(09:33):
you're going to spend in healthcare in a given year.
So much of healthcare is like ow I broke my ankle,
I need to go see the doctor right now. You
don't usually know exactly what you're going to spend in
the coming year, understandably so, but you can come up
with a solid estimate, I think, based on what you
spent last year and whether or not there any procedures
you already have planned that are in the works. And
(09:55):
some folks they even batch bigger health needs into a
specific year while they're on let's say, a lower deductible plan,
and then they move to a higher deductible plan in
years where they're less likely to need care, which is
I think a solid planning option. If you're saying, listen,
I know I've got this major surgery, and my spouse
has this other thing going up, my kid needs to
get their tonsils removed. Let's go for the lower deductible
(10:16):
plan in twenty twenty six, and then twenty twenty seven,
hopefully most of our major surgeries are over with boom, Like,
we're going to go back to the high deductible plan,
try to save more money. But the total costs we're
talking about here is premiums, it's your potential deductible, it's copays,
and it's also really important to know what your out
of pocket max is as well. I think those are
really kind of the crucial moving parts. So we've got
a factor in, yeah, the overall costs, because if you
(10:37):
just go simply seeking lower premiums, well that's often going
to mean higher deductibles. So also take into account how
much cash, how much money you have in savings, whether
or not you can go with a plan like that,
if you have some more healthcare expenses next year, Joel,
you mentioned copay costs as well. Those really can't add up,
so make sure you are aware of that if you
do go and see the doctor regularly. And it's yeah,
(11:01):
And Brian he mentioned specifically looking into the doctors that
he has making sure that they accept the new health
insurance as well.
Speaker 4 (11:10):
It may not be worth it for you.
Speaker 3 (11:12):
So you get your family a five, right, If you
have to go and find a new pediatrician, if you
have to find a new doctor for you, if your
wife or your partner, if they need to go find
a new doctor as well, it might be a massive headache.
But that being said, I don't know. Maybe extreme time
situations call for extreme measures here and the ability to
save an extreme amount of money. Yeah, yeah, And so
(11:32):
I don't want the default to be like, well, yeah,
obviously make sure because that's just presupposing that he's not
going to make a big change like that. And I
actually want to introduce the idea that hey, maybe it's
worth doing something completely different in order to save some
money here. Yeah maybe, but you might with three kids,
you're attached to the physician. I mean, I remember Matt
when we moved the heart. One of the hardest parts
(11:53):
about leaving where we lived was how much we loved
the pediatrician where we were, and we just not to
throw shade, but we haven't found a great pediatrician where
we are now. It's just okay, yeah, and we miss
the old and we're like, we even think about do
we go back and just drive forty five minutes to
go see a pediatrician.
Speaker 4 (12:11):
Maybe you can.
Speaker 3 (12:12):
And so if you if you feel that attached and
you're like, huh, well my pediatrician who we love, you know,
doesn't take this new healthcare coverage, doesn't doesn't take this plan, well,
I get how that's going to help sway your decision.
And you might be like, not worth the savings if
we can't see that person again. And yeah, you got
a factor in prescriptions too, because if there are any
(12:32):
regular prescriptions that you'd want to you know, that you take,
you'd want to see how much those are going to
cost underneath this new plan as well. Although depending on
what you take, especially if it's an older generic, you
might actually save a lot of money by not going
through insurance and using a site that we've mentioned before
like hostplus drugs. Good Rx is another good place, so
don't necessarily think you have to go through insurance to
(12:54):
save money on prescriptions. You might save more not going
through insurance. We'd also love to see you on an
HSA eligible high deductible health care plan if it makes
sense for your overall health care costs. Don't let the
tail wag the dog here, but if a high deductible
health care plan is ideal from that total cost perspective
that we're discussing, it'll mean you can utilize an HSA two,
(13:17):
which can just be another way to save money on
healthcare because it reduces your taxes for the current year
and it allows you to grow those dollars for your
future too. Your employer they might be generous enough to
even offer an HSA match. We have heard from many
listeners who have that as a benefit where they work.
That sweetens the pot. We're seeing more of this and
(13:37):
we love it. But just take that into consideration as well,
because there are additional perks with the high deductible health
care plan. You save on premiums, you have access to
the HSA. Still, that doesn't mean it's always the best
choice for everyone. Yeah, Yeah, And Brian, he's talking about
saving twelve hundred bucks here, but kind of piggybacking off
of the taking more extreme measures. I've got to bring
(13:57):
up health sharing plans because you are interested in saving
what I would say is the most extreme.
Speaker 4 (14:04):
Amount of money, trol.
Speaker 3 (14:06):
So I logged into our state's healthcare exchange, so healthcare
dot gov or if you live in a state where
healthcare dot gov no longer works because the state exchange
just took over, check that out. But I logged in
there and guess what our family of six monthly cost.
Speaker 1 (14:21):
Was going to be.
Speaker 3 (14:21):
I'm going to guess for a bronze plan for the
cheapest Okay, I'm going to guess like twenty three.
Speaker 4 (14:27):
Thousand I'm sorry monthly. So I'm me a eight nineteen hundred,
twenty five hundred dollars wow a month?
Speaker 3 (14:33):
Okay a month versus three hundred and seventy four dollars
a month, which is what we're paying here. This is
the difference between oh, paying over thirty thousand dollars over
the course of a year and.
Speaker 4 (14:43):
Versus six and that's a dollar. You're not talking about
a gold plan, No, this was like prices.
Speaker 3 (14:48):
You might be able to get a plan starting at
and it said that I could not believe it. And
by the way, when I said six thousand dollars, that's
not only the quote unquote premium that I'm paying towards
the health sharing, but also that also includes our out
of pocket costs. So we spent a little over six
thousand dollars total last year.
Speaker 4 (15:06):
Yeah, and you're.
Speaker 3 (15:07):
Probably thinking, all, yeah, I know how you are, with
like not ever going to see the doctor last year
was actually we had several doctor's visits out of which
is yeah, you have to take that rationalok, tew times
kind of out of the ordinary for us. So I'm
just highlighting that if you are looking to save the
absolute most amount of money, you've got to look into
health sharing. And not all of them are are religious,
(15:29):
are faith based either SAIDERA, so you and I both
both of us families are with Meta Share, but Sidara
is a great option as well, where there's a whole
lot of folks who are served well via that organization.
The problem is, it's really hard when you're offered a
Cadillac health insurance plan through your work and the premiums
are highly subsidized, it's tough to think about saying none
of the above and going getting your.
Speaker 4 (15:50):
Own health sharing plan.
Speaker 3 (15:51):
I think it may typically make the most sense for
self employed people, right who don't have access to any
sort of health coverage to work, or if you're if
maybe you're employed by an employer who says, yeah, we
don't you're kind of own, yeah, but like we don't
really subsize the premiums very much, and you're feeling more
of that healthcare dot Gov sort of slap in the
face where you're faced with paying the bulk of the
(16:12):
premiums yourself exactly. But even assuming the average American where
it's okay, say twenty seven thousand employers coming twenty you're
covering six. I paid six total last year, not just
in the cost of health care, but also in out
of pockets what I call in my excel sheet medical
out of pocket costs. Yeah, and so you're still looking
(16:32):
at saving a few thousand dollars right there, assuming uh,
you know, a healthier year.
Speaker 4 (16:37):
But that's something else you got to keep in mind.
Speaker 3 (16:38):
Too, because if you do use the doctor a whole lot,
if you've got a whole lot of procedures lined up,
if you've got different you know, regular visits that you
need to go in and get things checked in on.
That's probably not going to work out for you quite
as well. Yeah, you're spot on, my friend.
Speaker 1 (16:52):
You're listening to KFI AM six forty on demand.
Speaker 3 (16:56):
Your host tro Lars Guard and I am the other host, Matt,
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 how toomoney dot com forward slash ask.
I wonder if we are now at a tipping point
in the job market, because obviously there tipping point.
Speaker 4 (17:20):
It was a popular book.
Speaker 3 (17:21):
Man. I'm thinking about like the post pandemic times, right,
Like that was a killer period of time for workers.
Getting a new job was just leading to record pay
increases because the demand for employees it was incredibly steep.
The supply of folks for those jobs was limited. But
then we've seen that level out and unemployment numbers are
still actually good historically, but the job market it just
(17:43):
feels a little stagnant, and we've seen more recent reports
of just bigger name companies out there cutting head counts
by significantly, like tens of thousands of employees. I'm specifically
thinking of ups and Amazon who target maybe too. And
at the same time, worries about artificial intelligence, how that's
going to impact the job market, Those questions abound, and
(18:05):
we do see the signs that it is impacting young folks,
specifically at entry level jobs, and I think it's a
problem that could compound even more as those entry level jobs,
they are typically the gateway into more permanent, more higher
paying jobs.
Speaker 4 (18:19):
Right.
Speaker 3 (18:20):
You don't typically take some of those initial jobs because
you think it's just a fantastic job, but it's the
opportunity and it being more of a stepping stone, and
that's that feels like a problem that's just kind of
that we're speeding towards, still off pretty far off the distance,
but especially as some of these durngal workers are trying
to just get their foot in the door and to
get into, yeah, some of these companies that they want
(18:41):
to work for sure. Yeah, it's a little worrisome to
see college grads getting a degree and then coming out
in a time where it feels like some of those
starter jobs are harder to come by because you're right.
Those starter jobs lead to careers that eventually lead to
moving up and lead to earning more. And if you
can't get a starter job, it's hard to get on
that track. How to get out those lower percentile income brackets. Yeah, Still,
(19:05):
I don't think I would overreact to some of these headlines.
I think far fewer people think that AI is a
threat to their job then think it's going to impact
the job market in general. If you look at the statistics,
so kind of like so many other things in this life,
it's less personal pessimism like oh AI is going to
mess me over, and it's more of like a general wariness.
I'm not sure how AI is going to impact the
(19:27):
job the way jobs function in this country overall. And
i'd say the two of us met we're banking on
the fact that AI is going to make workers more productive,
kind of like the computers, kind of like Internet in
autimistic here. Yeah, and that it's not going to be
an existential threat to labor as a whole. But they're
going to be growing pains, and I think we're seeing
(19:48):
some of those showing pains. They are going to be
layoffs in some sectors, probably specifically in the tech sector,
but I'm pretty sure we're also see companies that let
too many workers go because of AI like rehiring in
the coming years. I think they're going to be like, oh, hey,
it's gonna change everything. Let's call the workforce, and then
they're going to realize, we hold too much. We need
some of those people back, and I think they're going
(20:09):
to regret some of the some of the layoffs that
they made. So it's a little consolation for current job
seekers serving a tough time. But I just told that
these frees are gonna last forever. Sure, or the folks
who are getting cut right, because it is it feels
like a tail of two job markets, right, because it
depends on it totally depends on the type of job
you have. If it if you are in a more administrative,
(20:29):
more data review, or a job that involves a lot
of digital monotony, not monotony, but like digital repetition, Like
these are one hundred percent the types of jobs that
are going to be replaced, and so if you are
in that kind of a field, you probably are thinking no, no, no.
Speaker 4 (20:46):
For me, this is totally personal.
Speaker 3 (20:48):
Yeah, as I play pairalegals, like that's a job that's
like up for extinction as opposed to the jobs that
are going to be more difficult to replace, like healthcare
or skilled skill trades or you know, teachers even right
like I could one percent see AI being more of
like the assistant in this in a similar way that
we can't envision our life now without the Internet, and
(21:10):
that's so much of it too, man, the fear of
the unknown as we look ahead, Like you mentioned that
the Internet being a good example, Well, that's easy now
as we look back and we are able to directly
see all the industries and jobs that have been created
because of the Internet. But we're at the very beginning
of this as we're projecting and looking forward, and it's
just for a lot of people it's scary because we
like the creativity and the clairvoyance to.
Speaker 4 (21:32):
Know what's actually going to happen.
Speaker 3 (21:33):
I don't know, but there will likely be some of
that creative destruction taking place and brand new sectors of
jobs that we're not even that aren't even on people's radars.
You think about the impact of the Internet, like you
think about the dot com bubble and all of the
companies that we're trying to do something novel because the
Internet now existed and so many of those companies no
(21:56):
longer exist like there is even in particular, as new
technologies are coming into into the mainstream, there there are
a lot of new startups like vying to be the
next successful company that are gonna that they're gonna they're
they're gonna change right how we all interact with AI.
Some of them are gonna be highly successful, and many
of them will fall by the wayside, and that is
(22:18):
kind of part of how the economic cycle of new
technology works, and they're winners and losers in it. But
that's like whole comfort for somebody in the job market
who feels like put out the pasture directly under threat. Yeah,
feel like they're getting the heisman when they're looking for jobs.
Because the market is tough and because there's a lot
of kind of AI turmoil happening, a lot of these
(22:39):
companies are looking to get leaner. You are listening to
how to Money.
Speaker 1 (22:44):
You're listening to KFI A M six forty on demand.
Speaker 4 (22:52):
This is how to Money. I am Matt Altmixed.
Speaker 3 (22:54):
And I'm Joel Larsgard. If you're on Facebook, by the way,
you want to join a group of like minded folks
who have money questions have money insights, please go join
the how to Money Facebook group. Let's now hear from
a listener who has a hypothetical discount question for us.
Speaker 6 (23:09):
It's Wayne again from Philadelphia calling in with yet another question.
This question pertains to buy now and pay later services. Now,
I would like to preface this with I have never
in my life used or even considered to use any
of these services. And I say that just to cover myself,
because I know your views of them are fairly negative.
(23:33):
And I understand that and mostly agree that. Said, I
had a thought experiment. I thought you might want to
indulge me in it. What if to attract more people
to use buy now at pay later services and to
get them used to using them in general, they started
offering large discounts on the items that you were purchasing.
(23:54):
Figure something along the lines of ten twenty thirty percent off.
With something like that, move the needle on how you
felt about buy now pay later services. If your answer
is no, I would be curious if there's anything these
buy now pay later services could do to interest you
in using them. For instance, even a larger discount, let's
(24:16):
say eighty percent off just to be ridiculous, or perhaps
some other kind of bonus that I can't think of.
Is there anything that would get you interested in doing this?
And I promise I don't work for these companies and
I'm trying to trick you into using the services and
or becoming an advertiser for them buy now, pay later services?
Can they be made into something that the how the
money guys would approve of? What do you say, man,
(24:38):
Jil can you fix it? As always? Best?
Speaker 4 (24:41):
Wayne out? Inside man for Klarna? Wayne?
Speaker 3 (24:45):
Not cool? Wayne, we know what you're doing now, Matt,
I could if there was a gun to your head,
would you use it buy now, pay later service? If
it was existential life or death? Yeah, okay, that's not
a wouldn't be the end of the world. Okay, Yeah,
I agree, I agree. So they're they're Wayne, that's the answer.
If Matt were faced, well, it did a lot of
it does come down to the discount, So it comes
down to the particular So I mean, I'm glad that
(25:07):
Wayne's avoided them so far. But I think the short answer,
it truly is yes, like not even gone to my
head sort of situation. And I think what Wayne is
really putting his finger on the heart of why we're
not fans of buy Now Pay Later. If there were
discounts involved for using buy Now Pay Later, I'd be
more than happy to consider using them. I actually did,
and I think I talked about this on the show.
(25:28):
I used by Now Pay Later one time, and it
was because I got a meaningful discount on some running shoes.
I don't I don't remember if it was like, do
you buy anything.
Speaker 4 (25:36):
Or else other than running shoes? No, not really.
Speaker 3 (25:38):
I just ripped through it so fast, though, but it
was I was like, I'll just go buy these shoes
are a good price here, And then there was I
think it was like fifty bucks off one hundred and
fifty bucks for using Clara, and I was like, I'll
just get another pair of shoes. I stick them on
the top of my closet mat in a row, and
then I just like pulled down the next pair when
I need it. But yeah, I was like, well, if
they're going to offer me fifty bucks off, then I'm happy.
(26:00):
I'm happy to use by Now Pay Later. And then
I just didn't use it, like by Now Pay Later.
I immediately paid off the loan or whatever they call it,
in order to avoid the behavioral trap, because I just
don't want to be caught in that sort of like
I've got how many outstanding loans do I have? And
am I being tempted to buy things I wouldn't otherwise buy?
But yeah, if there was like a ten or twenty
percent off perk for using by now pay later, I'd
(26:20):
probably use it a lot more.
Speaker 4 (26:22):
Yeah, you know.
Speaker 3 (26:22):
Like so occasionally folks will reach out to us to
say that, well, credit cards, they're not much better than
buy not pay later, Like you are still using debt
to purchase something that you don't have the money for
at the time, And.
Speaker 4 (26:33):
That's that's kind of true.
Speaker 3 (26:34):
But I think I would say that if that is
how you are actually using your credit cards, and if
that is how you are using your buy now, pay later,
well then that's not something I'm happy with, right, that's
not happy with you, I'm not because if that if
you don't have the cash on like you need to
have the cash on hand if you are going to
use these methods of payment, it doesn't matter if it's
a credit card or if it's a buy now, pay later,
(26:54):
like that is the like you must have that ticket
in order to ride like that is like we're trying
to raise the standard here. We're trying to raise the bar.
Like the cash on hand, that is your license to
be able to play this game. Otherwise then it's too
slippery of a slope. Otherwise we don't want you messing
with it at all. And so if okay, then if
they are the same, You got the cash on hand,
(27:15):
why would you then go with a credit card over
the buy not Pay later?
Speaker 4 (27:19):
And it does come down to the perks.
Speaker 3 (27:21):
Going back to what you're saying as far as getting
the discount, you're saying, like maybe get like ten or
twenty percent off, like truly, if like I would do
it for like five percent off, yeah, because because that's
roughly what a credit card. Yeah, because I'm getting anywhere
between two percent and six percent off with my credit cards.
Speaker 4 (27:37):
If there is a buy not Pay later.
Speaker 3 (27:38):
And this is me maybe wishing this out into existence,
but if there is a buy not Pay Later that
was willing to offer five percent off just across the
board in order to use their products, guess what I
would do it. I would get in there, I'd figure
out how to incorporate that into my financial system into
my Excel spreadsheets to spread that out over the four months.
But I actual probably wouldn't do that. I'll probably, just
like I do with a credit card, would py it
(28:00):
off at the end of the month, snag the discount,
and I would probably stop using credit cards. Although that
being said, there are other perks as well that the
credit cards offered. Yeah, not just the discount, but I
think I would consider it, like the buyer protections and
how if someone steals your credit card. Wouldn't rent a card,
I'm sorry, I wouldn't rent a vehicle with buy not
pay later. Yeah, in some of these other flight and
(28:22):
some of these other perks that maybe we can touch on,
But as far as just general spending, I think I
do it even for five percent, not even you don't
even need attendem me with eighty percent, because you're so
What you're really getting at the heart at is that
credit cards offer meaningful protections and benefits when you use them.
The only thing that buy now, pay later offers. The
only perk you get is you get to pay that
(28:44):
item off over a longer period of time. And so
what that leads to for so many people, what that
has led to for so many is poor behavioral and
financial results, which have been well documented. People spend more
on average when they have the ability to use buy
not pay later, Klarna or after pay or whatever at checkout,
and it's just one of the reasons to be wary
when you see those statistics that that's why retailers want
(29:06):
to do business with buy now, pay later companies because
they know that when they make that available at checkout,
people will buy more stuff, they will add more things
to their card, it will juice their sales. And you
could argue that tapping your credit card to pay insulates
you from maybe some of the pain and friction of
buying too, and yes that I think that can be
(29:26):
true for lots of folks. But the goal of using
a credit card it's not just to mitigate the pain
of purchases. That's but that is the whole essential use
case and reason for existence to buy now, pay later
companies to mitigate friction. And you know, there are important
consumer protections alongside these rewards that I think and boosting
your credit score by now pay later doesn't do that.
(29:48):
Credit cards do help do that. I think there's so
many even though credit cards have their downsides, are so
many potential positives for using them if you use them effectively.
There just really aren't any for buy not pay layter.
Yeah about the friction lists, I'm assuming are there apps
on your phone or can you put Klarna or the
different by now pay later companies in your wallet?
Speaker 4 (30:09):
Right?
Speaker 3 (30:09):
Because I like, I've been thinking about it recently and
the fact that I can double click and pay and
then the little transaction device, the clover or the square
pay or whatever like when they has it, when it's
got the little when it's got the little ding like
a little chime. There's something about that that makes it
so satisfying. And I think I've mentioned this before, but
(30:30):
I've since that since I've mentioned it previously, I've been
thinking about that because it used to be what with
a chip You stick it in there and it would
make this terrible sound like that. Yeah, and it what
does that reinforce? It makes it seem like you did
something wrong, as opposed to they completely change the user
interface of it and now it's like this nice little
(30:50):
congratulations you have been approved. You did it.
Speaker 4 (30:53):
I think that was the reason they invented.
Speaker 3 (30:55):
It's nice technology. It's a nice pat on the back
and I think that's the friction, whereas, honestly, I think
credit cards feel a little more dangerous because of the
fact that we can use them in Apple Pay or
the Google Pay and the wallets as opposed to because
when you're sitting down at a computer clicking the four
easy installments, the four that doesn't seem any more difficult
(31:16):
to me than the fact that you've got a credit
card auto saved in there, right. But the in personness
of that sort of physical response that a device does
to you when you purchase something that to me almost
puts credit cards back on my radar. As far as
the payment method, that might be a bit more nefarious
right now. Yeah, yeah, Well we talked about this with
Jason Gorsky a while back, right when he professor who
(31:38):
writes about the power of cash, And I do think
they're again like kind of what you're getting at is
the insertion took a few seconds, was kind of annoying.
The tapping makes it then the awful buzz, Yeah, it
makes it super easy and you feel like you're breezing
through the line. And I think that is actually a downside.
Maybe really easy to use credit cards post a pull
(32:00):
out your wallet, physically parting with a cash that hand.
Speaker 4 (32:03):
That's right.
Speaker 3 (32:03):
So we have to be careful about how we're paying,
what we're getting used to, how we're reconciling our books
and looking at our spending at the end of the month.
And if by now pay later works for you, you're using
it in a really intentional manner and you're not overspending
using those services, then by all means like you do you.
But I just think the whole way they're designed is
essentially to get people to spend in ways the otherwise wouldn't,
(32:26):
to become even more of a consumer. And I think
those incentives have really gotten the best of a lot
of people. Speaking of paying with cash, did you notice
the old lady who was paying for her coffee with
cash this morning and she was a little confused about
the price, and he's like, oh, no, we actually round
down when you pay with cash, so he didn't say
(32:48):
the precise amount. But I was like, oh my gosh,
that's right. Yeah, because when you pay with card, they
charge you that service feed. That's true, yeah, but yeah,
fascinating how that has an impact on how it is
we consume though. Yeah, that's exactly right. We've got a
lot more to get to on today's show. You're listening
to How the Money on KFI A M six
Speaker 4 (33:05):
Forty, kf I AM six forty on demand
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