April 6, 2025 • 32 mins
Buying refurb can make sense - if you do it right!
Ask HTM: Nate wants to make sure his parents are in a good financial position and specifically wants to know about long-term care.
Robinhood is about to start offering advice for a fee. But is it worth the cost? Also, BNPL transactions will start being factored into your credit score.
Ask HTM: Listener Matthew wants to know how to budget for hobbies.
Ask HTM: Nate wants to make sure his parents are in a good financial position and specifically wants to know about long-term care.
Robinhood is about to start offering advice for a fee. But is it worth the cost? Also, BNPL transactions will start being factored into your credit score.
Ask HTM: Listener Matthew wants to know how to budget for hobbies.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
I Am six forty. You're listening to how to Money
on demand on the 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 lars Guard and Matt Altmix.
Speaker 1 (00:34):
KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 3 (00:37):
This is how to Money. I'm your host, Joel Larsguard
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.
Speaker 1 (00:55):
Let's get to the ludacrous headline of the week though.
This comes from the Wall Street Journal and it read
it's feeling ripped off by thousand dollars phones. The second
hand market is taking off. And yes, yes, Matt, I
personally am offended and taken by how expensive these phones
have gotten. I'm on a new phone buyer strike. I'm
on a mission to make mine last as long as
(01:16):
humanly possible.
Speaker 3 (01:17):
You know what you can do that with an iPhone.
That's because the bill quality is so much better. You've
got to admit that at this point. You're right.
Speaker 1 (01:23):
And the other thing, and we've talked about this before
on the show, is that iPhone Apple supports their phones
longer than Android does then Google does. Right, So just
the fact that, like my daughter has an iPhone seven
that was gifted tour by her grandma that we keep
at home. She barely uses, but they just stop supporting
that at the end of the last year. Yeah, so
it's one of those things where they finally bricked it.
Speaker 3 (01:45):
That's a seven. Think about how long ago that was
that came out. I don't even know when nothing came out.
Probably eight or nine years ago, is my guest.
Speaker 1 (01:50):
That's amazing, right, So yeah, but I will say this,
I think a lot of people are going on new
phone buyer strikes. You can you can see that in
kind of the age of the average hand set.
Speaker 3 (02:00):
That the people have phones are the new car like,
like they're only getting older and older the ones that
are out there on the road. And in a similar way, yeah,
maybe we should be considering used phones just like we
consider used cars all the time.
Speaker 1 (02:13):
Maybe a secondhand phone, right, I love that because especially
it's like the flagship prices have gone up, the budget
devices have also gone up. We talked about that when
iPhone Apple announced excuse me, the sixteen E, right, and
it's like that was way more expensive than the Esse
that they had released as a budget phone.
Speaker 3 (02:29):
So quote unquote budget it's a six hundred dollars phone, right,
It's not a budget phone anymore.
Speaker 1 (02:34):
They used to be three fifty to four hundred bucks,
which is why I used to go with the pixel versions,
the dumbed down pixel versions, because they.
Speaker 3 (02:39):
Were really good and they were like three fifty.
Speaker 1 (02:42):
But that's not the case anymore. And so yeah, I
love to see that the people are holding onto their
phones alonger. Especially we talk about the lack of innovation,
although there's a counter argument of that coming in a second.
In the cell phone space. That's another reason just to
not upgrade, especially when I'm hearing all the bad reviews
about Apple's AI in their newest hands It's like, it's
not that great, it's it's over it's overblown, and so
(03:04):
you probably don't need that either. So paying instead of
paying I guess twelve hundred bucks for the newest iPhone,
you can get something of almost equal ability, like the
iPhone fourteen or something like that. Go back a couple
generations and you can get that for like five hundred
bucks instead. I was even I met, I was seeing
some refer models on Woot for roughly that price, and yeah,
(03:25):
less than half price.
Speaker 3 (03:26):
I'm that's what I want to sign up for. Well, yeah,
I mean that's big, specifically because offers a three hundred
and sixty five day repair or replace warranty on the
referred phones that they sell. I made the mistake of
purchasing a referb a refurbished I don't like seeing referb.
That's a weird word. Refurbished that sounds way better a
refurbished phone from eBay. And they did not it's not
(03:48):
I mean it was presented. It wasn't presented as a
refurbished phone. So that's the problem. And then they're making
repairs to it and they're not watertight as opposed to
buying a truly refurbished from let's say Apple, where it
still has a one year warranty and it's up to
factory standards and that's that's a good price.
Speaker 1 (04:07):
The battery too, They do additional things to their repurp phones.
But then again, the price you're gonna pay for a
reprop phone and Apple versus a place like.
Speaker 3 (04:14):
Woo, it is going to be a bit be expensive.
But I also like the idea of having a dummer
phone to just prevent me from becoming my own worst
enemy doom scrolling until I die. Basically, I wanted to
mention the light Phone. That's been a good option on
that front, and they just released this new model this
past week. It too is way overpriced at eight hundred dollars.
(04:35):
I think for a limited time they're offering it for
six for six hundred bucks. But on top of that,
the company's proprietary service, like the Plan, well, it costs
you thirty dollars a month, not surprising you only get
one gig of data because that's all it probably takes
to run a light phone. But even thirty dollars a month, man,
that's way more than what it is that you and
I are spending. Like, I am all for limiting tech
(04:57):
to live more irl life, but not at that price point.
If you're going to pay that, if you want a
dumb phone, just go back and get a basic flip
phone exactly. It feels like light phone is jumped the
shark with this pricing, and it just highlights how there
aren't new products that are needed to solve old problems, right,
It's just like, Oh, I got this problem whe I'm
on my phone. Oh instead, I need this new, shiny,
(05:18):
sexy product that's going to solve this old problem as
opposed to kind of going back to what it was
like before you had that problem, which is an older phone,
or even just limiting it. Honestly, it reminds me of
folks who are wanting to go for more the minimalist
lifestyle or clothing aesthetic, and they think, oh, I need
to buy I need to go with one of those
(05:38):
companies that sells all them kind of minimalist looking clothes,
you know, where everything's like solid colors and colors aren't
very vibrant, and some stripes the occasional stripe. But you
don't have to do that. All you need to do
is first toss out half the clothes in your actual closet,
find the items that you love the most that you
compare with lots of other clothes. Boom, you've got yourself
(05:59):
a capsule wardrobe. That's what that's called you no longer,
you don't have to go out and buy an entirely
new product. In a similar way, I think there's a
way that you can do that when it comes to
technology like your phone. I for lent, I gave up
social media, specifically Instagram, because I didn't like how much
time that that was draining out of my life. I
guess why. What I don't need to do is go
out and buy the phone app. Just delete the app,
(06:22):
And I think it's something I'm actually hopefully going to
be able to maintain even after the litten season. But yeah,
you don't need to spend money to solve your problems.
You make a great point.
Speaker 1 (06:32):
Well, let's talk about gorillas though, Matt, you you hinted
at this.
Speaker 3 (06:35):
Do you want to talk about it? I feel a
little bad about the gorilla. It was a gorilla glass.
Speaker 1 (06:39):
Yeah, okay, why don't you tell us about how apples
like all The one thing that Apple has done incredibly
well is work with Corning to innovate on glass, which
has been great for your iPhones. It means that you
know the iPhone you got when when was it starting
with the twelve or thirteen? That the more unbreakable glass
(06:59):
kind of came into being.
Speaker 3 (07:00):
Yeah, so the glass was always the gorilla glass, I'm
pretty sure from the beginning. But yeah, starting with the
twelve is when they did the ceramic shield, Like that
was like the next level of hard glass. So now
it's like harder, it's even harder exactly. So basically what
I'm saying here from a phone standpoint, personally, at least
I wouldn't go past anything older than a twelve, but hey,
if you do, I bet you would be able to
get a really sick deal. But when it comes to
(07:23):
home improvements, the hard glasst's out there is being translated
to new windows for your home, which could save Americans
billions of dollars annually on energy costs. These new windows,
they now have a better installation value than your walls,
which is crazy, Like typically windows are the it's like
(07:43):
the weakest link when it.
Speaker 1 (07:45):
Comes to energy los like at least twenty percent worse
than your walls. But the windows we've got here in
our little studio clubhouse thing, Matt, they're probably much worse
than that.
Speaker 3 (07:53):
It's amazing. This is the kind of progress that's going
to have major ramifications on new builds, window replacement jobs,
in the coming year, and it's just going to be
able to save individuals a lot of money due to
the fact that they're spending much less on heating and
cooling their homes.
Speaker 1 (08:06):
That sort of progress gets me really excited, especially when
we talk about the potential for energy shortages, which I
think have been overblown. But when we talk about just
making things far more efficient and retrofitting buildings to ensure
that they reduce energy loss, that is a huge bright
spot in the future. And seeing that like innovation in windows,
(08:27):
that's something like I wasn't really thinking much about, and
then you read about that and you're like, holy crap,
like that could have such a massive impact as people
do over time replace crummy old windows and they put
in not just slightly better, but significantly better windows that
could reduce your energy build by quite a bit.
Speaker 3 (08:43):
That's right, buddy.
Speaker 4 (08:45):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (08:52):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have money questions,
who have money insights, please go join the how to
Money Facebook group. Let's hear from a listener who is
looking ahead to the financial situation of his parents. He
wants to make sure they're a strong position there in
their later years.
Speaker 5 (09:11):
Hey, Joel and Matt, it's Nate from Oklahoma City. First off,
love you guys and listened to you guys for I
think five years. How you guys help me set on
the path to simplify my finance and thank you so
much for that.
Speaker 3 (09:25):
I had a question about long term care.
Speaker 6 (09:29):
I was curious my parents have to be this question
and I didn't know it for long term care when
someone's in a nursing home. We were wondering what assets
were protected from nursing homes to access, like retirement accounts
or homes or anything like that.
Speaker 3 (09:48):
That's just my question, Thanks Matt.
Speaker 1 (09:50):
I wish we had like a medal or something like
that that we could send to people who've been listening
as long as Nate has.
Speaker 3 (09:54):
They deserve it, like a challenge coin from the Stoics.
What's his name, Yeah, Ryan Holiday. Yeah, he's got like
all the coins and stuff on you. He drops them
and they hit the table and you can hear them,
like we've got beer caps. That's right, we can send
those out. Can you hear that?
Speaker 1 (10:08):
Well then naked keep it in his pocket. Every time
he touches his pocket. He'd be like, oh, yeah, I
love that show.
Speaker 3 (10:13):
Someday I'm gonna die, like the what's the Stoics momentum?
They're momentum. Sometime I'm going to die.
Speaker 1 (10:20):
But for now I'll listen to how to make things
that you should think about it. Glad the show's been helpful, Nate,
thank you for listening. Let's talk about long term care
insurance and just kind of thinking about planning for the
extreme future and for your parents. Less about extreme future,
more about near term stuff. These are questions Matt, I'm
sure you're having with your parents. I'm having with my
parents to a certain extent as well. A lot of
(10:42):
folks buy long term care insurance specifically because they're told to,
and in some cases it does make sense. But long
term care insurance can be so stinking expensive it's not
even funny. And it's a far cry from what it
was like fifteen years ago. Premiums have skyrocket. It's summer
up something like five hundred percent over the last ten
(11:03):
to fifteen years. So talk about inflation, Matt, long term
care insurance premium inflation has been worse than eggs, and so,
you know, while long term care insurance can provide an
incredible benefit for a really expensive need, and that's the thing.
It's like, you kind of want to ensure against something
like this because of how prohibitively expensive it can be.
Most Americans will need a few years of nursing home
(11:23):
care on average, right, and many who opt to take
out long term care insurance, well, they actually end up
dropping it before they're able to use the benefits because
of how expensive the premiums get. And yeah, just tends
to become more than they barkin for. So, you know,
while avoiding long long term care insurance, it sounds like
a risky move, like, hey, if I don't get that stuff,
even though it's like ridiculously expensive, it feels like highway robbery,
(11:46):
then like I'm not going to be taken care of. Well,
dropping it before you use it is like the worst
thing in the world. It's it's like going to college
for three years, racking up a ton of debt and
then dropping out before you get.
Speaker 3 (11:56):
The degree, which is maybe an okay situation to find
yourself in if you say, go to the local community college.
But we're talking about like Ivy League prices here when
it comes to what this long term care is going
to cost. And then with folks living longer, with the
supply and the demand and balance as well of the
providers who are offering this care to the elderly, I
think this issue it could actually get worse in the
(12:17):
coming years. So let's talk about funding long term care specifically.
If you don't have long term care insurance, well, you've
got to spend your own money, specifically until you reach
the point where Medicaid kicks in. But even then, Medicaid
coverage it's only gonna help in certain situations. It's not
going to help most middle class folks out there, and
oftentimes what that means is you're kind of out there
(12:38):
on your own. It's basically for people who are impoverished,
who are destitute medicaids. Yeah, exactly, if you built up
a you know, not a ridiculous elon musk networth, but
just like even just a nice little tidy sum, sorry,
Medicaid isn't going to kick in to help you with
long term care stuff.
Speaker 2 (12:54):
Yeah.
Speaker 3 (12:54):
And so for Nay, I would hopefully your parents they've
been diligent savers. It's just important to factor this in right, Like,
don't just project twenty five times your expenses and call
it a day, but also consider these future potential costs
and how you know they're going to add up over time.
This is one of those massive considerations that too many
folks aren't paying enough attention to. And you know, there
(13:16):
are other potential financial products and vehicles that can help
if you end up in a financial pinch. I'm specifically
thinking of a reverse mortgage. I think that's something that
folks are like, oh, yeah, we've always got that, We've
got the house, but that's not ideal either. They can
be really expensive, the fees that are associated with those
sky high, and they can also prevent you from leaving
your home to your heirs if you intend to. And
(13:38):
like the home specifically is just kind of like one
of those emotional things where I guess it depends on
where you live. You know, if you are living in
a city and it's much more trainsient and your family
isn't local, well maybe you don't care so much. But
if you are somewhere I don't know, he was he
in Oklahoma, but I don't know.
Speaker 1 (13:53):
I picture like out in a more rural setting, and
there's a family farm there spending a family for generation.
Speaker 3 (13:58):
More like a home that I don't know, a family
remember built and it's kind of been passed down through
the generations. That kind of thing. It's not the kind
of thing that you want to tap in order to
fund some of those later years, right, you know what
I'm saying.
Speaker 1 (14:07):
Okay, So Nate specifically asked about nursing homes draining assets,
like is that a possibility? Well, in some ways yes,
but in other ways no, I don't think not in
the way that Nate intended it. They can be really expensive.
Is with the way in which I'm saying they can
be asset drainers, because some predictions are saying that in
like twenty years, we'll be talking about on average spending
(14:27):
two hundred thousand dollars a year for the average nursing
home facility. So to stay in one for a year
with a private room two hundred grand.
Speaker 3 (14:35):
To include food is like an unlimited buffet or like
I think, well, yeah, of course incluse food, but like
I'm sure we're gonna have more like robots and stuff
imported from Japan because think about it, like they're kind
of going through that ahead of us, So hopefully we'll.
Speaker 1 (14:47):
Learn a lot from that's actually a thing is yeah,
oh yeah, that's crazy. Yeah, robots taking care of you.
I think we'll see more of that in the future too.
But the nursing home can't. And I think this is
what Nate was getting at. They can't drain your assets
without your permission, right. They can't like garnish your stock
portfolio or it starts selling stocks off, start selling positions
to pay for your care. But you know, if you've
(15:07):
been a good savor and investor, you're going to exceed,
kind of like you're talking about.
Speaker 3 (15:11):
Here, Matt.
Speaker 1 (15:11):
Eligibility requirements for Medicaid. Every state, though, has different requirements,
so familiarize yourself with them. But if you're looking to
if your parents are thinking, well, medic I've got Medicaid,
I don't need long term care insurance, or I don't
need to pay attention to not spending down my retirement
assets all the way because Medicaid is gonna kick in.
It's going to cover those costs. Well, it's just not
that simple or easy most way too many people, Matt.
(15:32):
I looked up the statistics, something like forty six percent
of people assume that Medicaid covers long term care for them,
and again for middle class folks, that's not the case.
You're gonna have to spend down your assets to make
that happen. You're gonna have to meet their resource limitation test.
And there are all sorts of like different nuanced ways
to do. It's really complex tackle that. It's very complex, Yeah,
(15:54):
but there's it's not like a fun process, no.
Speaker 3 (15:57):
Yeah. And like you mentioned spending down assets like your
primate home, it doesn't count as an asset under Medicaid rules.
And so if you spent you know, two hundred thousand
dollars renovating that home in an attempt to spend that
money down, that's actually a strategy that some folks use.
And then like there's also these Medicaid complaint annuities that
all that being said, though, consider talking to an elder
(16:18):
law attorney in your state who specializes and medicates strategy.
This is like a specific niche. It's a specific sort
of branch of law that I wasn't aware of up
until recently.
Speaker 1 (16:29):
It's like my cousin's a hand surgeon. Like there's all
sorts of surgeons, but she specializes in hands, and this
is like the same thing for attorneys, Like it's like
no elder law but a medicaid specialist.
Speaker 3 (16:39):
Yeah, that's right.
Speaker 4 (16:41):
You're listening to how To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (16:48):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and insight, please go ahead and join the how
to Money Facebook group.
Speaker 1 (16:56):
All right, let's talk about your favorites investing firm, Matt Robinhood.
They they're kind of still trying to be big boy.
I think they've been.
Speaker 3 (17:05):
Totally big boy.
Speaker 1 (17:05):
They're a big boy, but like they started as mostly
a day trading app, and they have over time evolved
in their services offering retirement accounts, and now they just
announced this past week that they're going to offer retirement advice.
And so the fee similar to what other robo advisors
like Betterment charge are kind of getting into this robo
(17:26):
advisor space. They're charging a quarter of a percent, but
that fee then is capped at two hundred and fifty
bucks a year for robin Hood Gold numbers. Yeah, that's good,
which I think is cool. I kind of like the
idea of the fee cap, like, hey, yeah, it's it's
a quarter of a point, but after you have a
certain balance, we don't charge you anymore. A good explanation
of the methodology of the Robinhood portfolio management, like how
(17:48):
they're doing this, that was lacking. I just feel like
I didn't see enough information about how they're planning on
implementing this. Although they're saying that this is actively managed
and it can can include individual stocks, But what it
doesn't include, of course, at that cut rate price, is
personal advice. I think for now, I don't know about you.
I would say the jury is out, we need more
(18:09):
information about what this sort of robin Hood offering is
going to look like. It's like a flashy launch, but
there wasn't a whole lot of substance behind it. I
think the thing I am most nervous about, though, is
robin Hood's another announcement, an upcoming launch of AI based advice,
which is supposedly going to explain to people as you're
on the app, why the stock a specific stock is
going up or down, and that it's not always straightforward right, So, like,
(18:33):
is the AI going to be right on that? Is
it going to give me good advice or is it
going to be way off base?
Speaker 3 (18:37):
I don't know.
Speaker 1 (18:39):
So some of the ways robin Hood is changing are
positive for customers. Others like that, like the trading and
betting on future events that worries me. So there's yeah,
kind of the grown up robin Hood, and then there's
still the juvenile robin Hood I think, where I just
kind of don't know which one I'm getting. And if
you're going to go with robin Hood, you just got
to make sure you have the behavioral fortitude to let's
(18:59):
do the basic.
Speaker 3 (19:00):
I think that's always the case, and that's what I
was going to point to, right, like the fact that
they're offering this portfolio management and they've got these AI tools.
They're just trying to give people what it is that
folks seem to think that they want. Right, there are
some things that like their match. The fact that they
have a non employer retirement match is amazing. The first
of us kind freaking love that. But then also when
(19:21):
I log into the app, I also see little banner
that says, hey, are you interested in margin investing? I
hate that, but it's terrible, But it's at the same
time though, it's what it is that people are coming
to expect from their brokerages. But that doesn't mean that
you have to participate. It makes me, honestly think of
because like they've got so many different things, so many
different options, anything your heart might desire, Joel. It feels
(19:43):
like like Walt like Robin Hood is almost like Walmart
here where Yeah, they've got some amazing stuff. They've got
like some great affordable organic produce that feels like the
three percent match for Gold members when it comes to
their iras, right, You're like, yeah, that's the good stuff.
But guess what else Walmart cells like Dorito's and Coke. Yeah,
somebody that shelves and shelves of junk food. Yes, like
(20:04):
in the center of the aisle. Like that's the kind
of thing that feels more like margin investing or AI advice.
It's like could you do without? Well, absolutely, is it
something maybe occasionally you want to take a peek at. Sure,
you kind of take the good with the bad. But
in this way, ultimately, as personal finance enthusiasts, it does
come down to us as individuals and the decisions that
we make.
Speaker 1 (20:24):
And they continue, right, the one thing, the one great
thing about some of this robin Hood innovation is I
think they continue to push the envelope and they're causing
other broker's firms to have to react and step up, right,
and so we've seen innovation. We've seen other great brokers
terms you kind of follow robin Hood's lead on the
match right, Like Betterment implemented a match after robin Hood
did it, which is cool. So I like to see
(20:46):
that maybe they're innovative ways of thinking that could benefit
some of their customers. Well, it's it's also not limited
to Robinhood. Then other firms are getting in on the action.
Speaker 3 (20:56):
Yeah, okay, talk about buy now, pay later, because those
companies out there are going to start to report to
the credit bureaus. This is a sector of the market
that's grown to be a significant piece of the consumer
lending industry. So it makes a ton of sense that
those cleverly disguised loans would be factored into your credit score.
I honestly can't believe it's taken this long, especially given
(21:18):
the data that we have about how heavy by now
pay later users tend to be higher credit risks. So
Affirm they started furnishing data to experience last Tuesday TransUnion.
They say that they're already working with two Binyl payloader
companies as well. I'm sure more are going to follow soon.
The damn has broken. Credit scoring models are going to
(21:38):
have to be tweaked in order to include this BNPL
data in their models moving forward, where they're likely going
to be treated like other forms of debt, in particular
I mean credit cards, but also car loans because they
are more like installment loans. It's unlikely these changes are
going to cause big credit course wings, but maybe it
might because for for some I think it might because
(22:00):
it almost feels like this thing that has been ignored,
like where folks have like stuck their head in the sand,
and it's like when you if you know that you've
your shower's been leaking, leaking, and it's like, well, I no,
there's probably some rot under there. Maybe I don't know,
maybe the sub floor is kind of getting a little soft,
but you don't really fully know until someone gets in
there and kind of like peels it back and you're like,
oh wow, that's like all the way down to the floor. Joys, dude,
(22:22):
I didn't fall through. There's a lot of damage here,
and I don't like that the credit bureaus are kind
of the arbiters of your credit worthiness. But somebody's got
to do it, Like somebody has to be able to
wrap their head entirely around in individual's credit worthiness, how
much debt they have on hand, because there's a lot
of individuals who haven't you know, again, they haven't really
been paying attention. But for those who have been paying attention,
(22:44):
I think the big takeaway here is that if you
pay your buy now pay later payments on time, that's
gonna help your credit score. It's a good thing.
Speaker 1 (22:52):
And clearly these deserve to be factored into your credit score,
especially based on their popularity. I could see how five
years ago like they were just there were small potatoes,
and so there was more of a novel too. It
was no necessity. Yeah, and I think I mentioned this
on the show before. I've only used by Now Pay
Later once, and it was only because there was a
discount offered, like fifty bucks off if I use by
Now pay Later significant I paid it off instantly. So
(23:14):
buy Now Pay Later still remains one of those things
where I think people lose track of how much you're spending.
Speaker 3 (23:20):
You could grub up your burger on it now.
Speaker 1 (23:22):
Like we've talked about recently, it's just something we're staying
away from. Especially if you don't handle it well or
you have too many outstanding loans, Well, how's that going
to factor into your credit score? It could cause it
to drop at least by a little bit if you're
not handling those by now pay later payments well, or
if you're just overdoing it on buy now pay later
in general, just using it indiscriminately.
Speaker 3 (23:42):
Totally agree.
Speaker 4 (23:44):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (23:50):
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 3 (24:08):
And of course, now it is time for the Facebook
Question of the Week, which is from Matthew and he wrote,
do y'all keep your hobby fund money separate from emergency fund? Basically,
I buy and flip a ton of stuff to fund
my hobby. But it seems whenever I do this, an
unexpected bill comes up. I do have a nice emergency fund. Hm.
I like this question, you think, Joe.
Speaker 1 (24:28):
I mean it sounds like Matthew is already doing the
emergency fund thing well, which is important, right. I like
the idea though, of kind of flipping stuff to fund
a hobby, a little side hustle.
Speaker 3 (24:37):
Actually it's kind of keeping it siloed. Yeah.
Speaker 1 (24:39):
Yeah, it's that mini side hustle to pay for things
that you might not otherwise have the funds for, right,
or you'd have to cut back on other financial goals.
So let's say you're like, oh no, I got to
hit that twenty percent savings rate, but I still want
to fund this hobby.
Speaker 3 (24:50):
I can't do both.
Speaker 1 (24:51):
Well, then you got to find a way to make
a little bit of extra money. Or let's say you're
prioritizing saving for a down payment or maxing out your
wroth IRA. You don't have to cut back on those
thing because you're finding another source to find the money
so that you can pay for that hobby. Whether it's
like skiing, I would say disc golf, but that's really
cheap ones so you don't really have to find much
money to do that one. But this is a great way,
I think to ensure that you're prioritizing something you care
(25:14):
about without sacrificing to wealth building necessities that we think
people need to be employing over the long haul.
Speaker 3 (25:20):
Totally. I think a question I've got for Dan is
like one of these what he calls unexpected bills that
keep popping up, Because if they're happening this frequently, like
every time he is looking to spend some money on
his hobby, is it possible to plan a little bit
better for them, or you know, like to put them
into your regular budget, because there are true emergencies that
(25:41):
come along, and that's of course what your emergency fund
is there for. But we also find that some folks
dip into the emergency fund a bit too regularly because
they haven't planned as well as they could have for
expenses that happen every year or at the same time
every month. Yeah, Christmas comes around the same time every year.
Speaker 1 (25:57):
It's like not a real emergency, but like they chalk
it up to an emergency because they didn't really have
much foresight so about things coming up.
Speaker 3 (26:04):
Yeah, it just it takes foresight. I like what you
said there, And so as you're looking at your budget
just or maybe maybe maybe that's the thing. Maybe it
doesn't have a budget. But even if you do have
a budget, and let's say these are expenses that haven't
been accounted for, revise the dang thing, because if some
of those unexpected bills could be planned for, then being
able to rearrange like that is the solution here. And
it's going to help you to touch your emergency fund
(26:26):
a whole lot less as well to really for it
to be there for the true emergencies in your life. Right, Yes,
and you just mentioned tires briefly there.
Speaker 1 (26:34):
That's that's like a great example of something that's coming
down the road.
Speaker 3 (26:38):
That's a good pun, right literally there goes.
Speaker 1 (26:41):
They are balding as we speak, right, and you need
to be saving up ahead for that expense, and hopefully
you can kind of figure out, well, what's a usable
life left, how much is it going to cost me
when I do replace those things? And how much do
I need to start saving now to be prepared or
the same thing that happens every year around Christmas time,
people are like, oh crap, I think I'm gonna spend
like nine hundred dollars this this December, and I didn't
(27:02):
plan for that. It's not an emergency, that's something that
needs to be thought of aut of time, and so.
Speaker 3 (27:07):
Should start that saving in January? Right exactly? So should
your hobby budget be a line item in your budget? Well,
it depends. I think the reason to keep it separate
would be to incentivize you to keep making extra money
to fund your hobby. Right.
Speaker 1 (27:19):
So, if you make less money in a given month,
you enjoy your hobby less. But if you make more,
you get to ramp it up and enjoy that hobby
even more, or at least bank more, so you can
keep it up longer.
Speaker 3 (27:29):
Right.
Speaker 1 (27:29):
So makes me think of a listener don't remember his
name off the top of my head.
Speaker 3 (27:32):
Matt was.
Speaker 1 (27:34):
I should know that, but I don't remember. But he
donates plasma to go on vacations. Ryan Kay, Ryan Kay, okay, Ryan,
You're the man. And he still does this. Seems he's
been doing this for many, many years, and I think
this is a great way. It's similar to the way
Matthew's thinking about it. It's like I'm gonna go on
a vacation up to the level at which I bank
money from donating that plasma, right, And so the reason
(27:57):
to include it in your budget is to know that
you'll get to enjoy it no matter what, that the
money's always going to be there because you've set it aside.
But the reason to not do that is because I
think it incentivideses you to push the envelope on that
side gig or on that plasma donation side, hustle so
that you so that you actually have your incentive is
to go make the money to pay for the thing
(28:18):
you want to do.
Speaker 3 (28:18):
Yeah, yeah, I want to. I'll say a quick note.
I know not everybody out there is like super organized
like some folks love it. I myself. I just just
yesterday I spent some time in Excel organizing some expenses,
checking in on the budget, seeing where things are landing
this month. I know for you that feels like one
of those nice heavy anxiety likes. I like ceping tabs
on it. Man, not everybody, it's not their cup of tea,
(28:40):
you know, and if and that's totally fine, but you
have to, I guess account for that. And so while
maybe for us, because we've got all the different savings
buckets set aside. We've got three to six months worth
of living expenses in our emergency fund. If you have
no buckets and it's just this, I'm gonna call it
the emergency slush fund. How about that it's like this
one big giant pile. All the money just gets piled
(29:02):
in there. I think that's totally fine, But you just
are gonna have to have a little bit more. You're
gonna have to have more margin on hand to be
able to account for some of these things that otherwise
you would have planned for, but instead you're kind of
drawing it from the emergency slush fund, which I kind
of like the more, I say, But let's get to
another quick one. This is an email from Dan and
he wrote, if these funds, if they're all tracking the
S and P of five hundred, which should be the same,
(29:24):
how come there's a wide difference between the performances. And
he specifically he highlighted the different returns between let's say,
vou vanguards SMP of five hundred fund fx AIX, which
is Fidelities Mutual fund, the actual SMP. There's a lot
of different funds out there, But what do you have
for Dan to chew on as he's considering these different options.
Speaker 1 (29:44):
So, yeah, I mean this is a good question, and
I think if you do look at the returns, you're
going to see little idiosyncrasies here. Say, this is not
the exact same thing. What's happening there? And yeah, these
funds are attempting to mimic a specific index, but there
are also just these little idiosyncrasies that lead to slightly
different results. The biggest one is how much they cost
to own, right, I'm talking about the expense ratios at
(30:06):
least in parts, but also potential fees that some old
school fund managers charge to own those funds. And so
while costs have overwhelmingly gone down for every day investor,
specifically on index funds, like Dan is highlighting, there are
still some sperms using the old playbook. They're feeding people
to death. It's amazing the price discrepancy between one S
(30:27):
and P five hundred fund, the cheapest ones, and then
another fund that mimics the S and P. But it's
within old school provider who just charges norm and a
leg still right, and those costs eat into returns. It
could make one ETF look better than the other. The
higher the fees the greater divergence from the index itself
and then from other low cost competitors. So that's that's
at least one reason that you might see more of
(30:49):
a divergence there.
Speaker 3 (30:50):
Yeah. Yeah, So for instance, let's take the case of
VTI versus f Z Rocks. So VTI is Vanguard's total
stock market ETF the other is offered by Fidelity. They're
both attempting to track the total stock market. VTI has
a minimal expense ratio minimal cost. Fc Rocks well, they
charged nothing but to pull that off. Fidelity they omitted
(31:12):
some microcap stocks from their fund in an effort to
minimize costs on their end. But still the performance of
both is quite similar. FC Rocks is up around ninety
two percent over the past five years, and VTI it's
right up there with it, but just a few percentage
points below eighty nine or ninety something like that.
Speaker 1 (31:30):
I mean, it's like, yes, the same ballpark is not
too far off. They're probably both in left field, close
to the fence, right.
Speaker 3 (31:35):
But yeah, And some of the reason too, why they
emit some of those different companies is just the way
that they're structured as well. Ets are they're just more
tax efficient. Specifically when you are owning. If you've got
let's say an ETF versus a mutual fund within a
brokerage account that's taxable, well, there are fewer taxable events
that take place with an ETF, But if we're talking
(31:56):
about in a retirement account, it's there's not much difference
there because you don't actually realize those taxable events with
it being tax deferred.
Speaker 1 (32:02):
But when it comes to I guess specific index trackers
like an SMP or a total stock market that I
would worry a whole lot less about those micro differences
in outcomes.
Speaker 3 (32:11):
That's right, and that is going to do it for today.
Thank you for listening. We appreciate your time and attention.
We'll see you back here next week.
Speaker 1 (32:19):
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
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 lars Guard and Matt Altmix.
Speaker 1 (00:34):
KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 3 (00:37):
This is how to Money. I'm your host, Joel Larsguard
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.
Speaker 1 (00:55):
Let's get to the ludacrous headline of the week though.
This comes from the Wall Street Journal and it read
it's feeling ripped off by thousand dollars phones. The second
hand market is taking off. And yes, yes, Matt, I
personally am offended and taken by how expensive these phones
have gotten. I'm on a new phone buyer strike. I'm
on a mission to make mine last as long as
(01:16):
humanly possible.
Speaker 3 (01:17):
You know what you can do that with an iPhone.
That's because the bill quality is so much better. You've
got to admit that at this point. You're right.
Speaker 1 (01:23):
And the other thing, and we've talked about this before
on the show, is that iPhone Apple supports their phones
longer than Android does then Google does. Right, So just
the fact that, like my daughter has an iPhone seven
that was gifted tour by her grandma that we keep
at home. She barely uses, but they just stop supporting
that at the end of the last year. Yeah, so
it's one of those things where they finally bricked it.
Speaker 3 (01:45):
That's a seven. Think about how long ago that was
that came out. I don't even know when nothing came out.
Probably eight or nine years ago, is my guest.
Speaker 1 (01:50):
That's amazing, right, So yeah, but I will say this,
I think a lot of people are going on new
phone buyer strikes. You can you can see that in
kind of the age of the average hand set.
Speaker 3 (02:00):
That the people have phones are the new car like,
like they're only getting older and older the ones that
are out there on the road. And in a similar way, yeah,
maybe we should be considering used phones just like we
consider used cars all the time.
Speaker 1 (02:13):
Maybe a secondhand phone, right, I love that because especially
it's like the flagship prices have gone up, the budget
devices have also gone up. We talked about that when
iPhone Apple announced excuse me, the sixteen E, right, and
it's like that was way more expensive than the Esse
that they had released as a budget phone.
Speaker 3 (02:29):
So quote unquote budget it's a six hundred dollars phone, right,
It's not a budget phone anymore.
Speaker 1 (02:34):
They used to be three fifty to four hundred bucks,
which is why I used to go with the pixel versions,
the dumbed down pixel versions, because they.
Speaker 3 (02:39):
Were really good and they were like three fifty.
Speaker 1 (02:42):
But that's not the case anymore. And so yeah, I
love to see that the people are holding onto their
phones alonger. Especially we talk about the lack of innovation,
although there's a counter argument of that coming in a second.
In the cell phone space. That's another reason just to
not upgrade, especially when I'm hearing all the bad reviews
about Apple's AI in their newest hands It's like, it's
not that great, it's it's over it's overblown, and so
(03:04):
you probably don't need that either. So paying instead of
paying I guess twelve hundred bucks for the newest iPhone,
you can get something of almost equal ability, like the
iPhone fourteen or something like that. Go back a couple
generations and you can get that for like five hundred
bucks instead. I was even I met, I was seeing
some refer models on Woot for roughly that price, and yeah,
(03:25):
less than half price.
Speaker 3 (03:26):
I'm that's what I want to sign up for. Well, yeah,
I mean that's big, specifically because offers a three hundred
and sixty five day repair or replace warranty on the
referred phones that they sell. I made the mistake of
purchasing a referb a refurbished I don't like seeing referb.
That's a weird word. Refurbished that sounds way better a
refurbished phone from eBay. And they did not it's not
(03:48):
I mean it was presented. It wasn't presented as a
refurbished phone. So that's the problem. And then they're making
repairs to it and they're not watertight as opposed to
buying a truly refurbished from let's say Apple, where it
still has a one year warranty and it's up to
factory standards and that's that's a good price.
Speaker 1 (04:07):
The battery too, They do additional things to their repurp phones.
But then again, the price you're gonna pay for a
reprop phone and Apple versus a place like.
Speaker 3 (04:14):
Woo, it is going to be a bit be expensive.
But I also like the idea of having a dummer
phone to just prevent me from becoming my own worst
enemy doom scrolling until I die. Basically, I wanted to
mention the light Phone. That's been a good option on
that front, and they just released this new model this
past week. It too is way overpriced at eight hundred dollars.
(04:35):
I think for a limited time they're offering it for
six for six hundred bucks. But on top of that,
the company's proprietary service, like the Plan, well, it costs
you thirty dollars a month, not surprising you only get
one gig of data because that's all it probably takes
to run a light phone. But even thirty dollars a month, man,
that's way more than what it is that you and
I are spending. Like, I am all for limiting tech
(04:57):
to live more irl life, but not at that price point.
If you're going to pay that, if you want a
dumb phone, just go back and get a basic flip
phone exactly. It feels like light phone is jumped the
shark with this pricing, and it just highlights how there
aren't new products that are needed to solve old problems, right,
It's just like, Oh, I got this problem whe I'm
on my phone. Oh instead, I need this new, shiny,
(05:18):
sexy product that's going to solve this old problem as
opposed to kind of going back to what it was
like before you had that problem, which is an older phone,
or even just limiting it. Honestly, it reminds me of
folks who are wanting to go for more the minimalist
lifestyle or clothing aesthetic, and they think, oh, I need
to buy I need to go with one of those
(05:38):
companies that sells all them kind of minimalist looking clothes,
you know, where everything's like solid colors and colors aren't
very vibrant, and some stripes the occasional stripe. But you
don't have to do that. All you need to do
is first toss out half the clothes in your actual closet,
find the items that you love the most that you
compare with lots of other clothes. Boom, you've got yourself
(05:59):
a capsule wardrobe. That's what that's called you no longer,
you don't have to go out and buy an entirely
new product. In a similar way, I think there's a
way that you can do that when it comes to
technology like your phone. I for lent, I gave up
social media, specifically Instagram, because I didn't like how much
time that that was draining out of my life. I
guess why. What I don't need to do is go
out and buy the phone app. Just delete the app,
(06:22):
And I think it's something I'm actually hopefully going to
be able to maintain even after the litten season. But yeah,
you don't need to spend money to solve your problems.
You make a great point.
Speaker 1 (06:32):
Well, let's talk about gorillas though, Matt, you you hinted
at this.
Speaker 3 (06:35):
Do you want to talk about it? I feel a
little bad about the gorilla. It was a gorilla glass.
Speaker 1 (06:39):
Yeah, okay, why don't you tell us about how apples
like all The one thing that Apple has done incredibly
well is work with Corning to innovate on glass, which
has been great for your iPhones. It means that you
know the iPhone you got when when was it starting
with the twelve or thirteen? That the more unbreakable glass
(06:59):
kind of came into being.
Speaker 3 (07:00):
Yeah, so the glass was always the gorilla glass, I'm
pretty sure from the beginning. But yeah, starting with the
twelve is when they did the ceramic shield, Like that
was like the next level of hard glass. So now
it's like harder, it's even harder exactly. So basically what
I'm saying here from a phone standpoint, personally, at least
I wouldn't go past anything older than a twelve, but hey,
if you do, I bet you would be able to
get a really sick deal. But when it comes to
(07:23):
home improvements, the hard glasst's out there is being translated
to new windows for your home, which could save Americans
billions of dollars annually on energy costs. These new windows,
they now have a better installation value than your walls,
which is crazy, Like typically windows are the it's like
(07:43):
the weakest link when it.
Speaker 1 (07:45):
Comes to energy los like at least twenty percent worse
than your walls. But the windows we've got here in
our little studio clubhouse thing, Matt, they're probably much worse
than that.
Speaker 3 (07:53):
It's amazing. This is the kind of progress that's going
to have major ramifications on new builds, window replacement jobs,
in the coming year, and it's just going to be
able to save individuals a lot of money due to
the fact that they're spending much less on heating and
cooling their homes.
Speaker 1 (08:06):
That sort of progress gets me really excited, especially when
we talk about the potential for energy shortages, which I
think have been overblown. But when we talk about just
making things far more efficient and retrofitting buildings to ensure
that they reduce energy loss, that is a huge bright
spot in the future. And seeing that like innovation in windows,
(08:27):
that's something like I wasn't really thinking much about, and
then you read about that and you're like, holy crap,
like that could have such a massive impact as people
do over time replace crummy old windows and they put
in not just slightly better, but significantly better windows that
could reduce your energy build by quite a bit.
Speaker 3 (08:43):
That's right, buddy.
Speaker 4 (08:45):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (08:52):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have money questions,
who have money insights, please go join the how to
Money Facebook group. Let's hear from a listener who is
looking ahead to the financial situation of his parents. He
wants to make sure they're a strong position there in
their later years.
Speaker 5 (09:11):
Hey, Joel and Matt, it's Nate from Oklahoma City. First off,
love you guys and listened to you guys for I
think five years. How you guys help me set on
the path to simplify my finance and thank you so
much for that.
Speaker 3 (09:25):
I had a question about long term care.
Speaker 6 (09:29):
I was curious my parents have to be this question
and I didn't know it for long term care when
someone's in a nursing home. We were wondering what assets
were protected from nursing homes to access, like retirement accounts
or homes or anything like that.
Speaker 3 (09:48):
That's just my question, Thanks Matt.
Speaker 1 (09:50):
I wish we had like a medal or something like
that that we could send to people who've been listening
as long as Nate has.
Speaker 3 (09:54):
They deserve it, like a challenge coin from the Stoics.
What's his name, Yeah, Ryan Holiday. Yeah, he's got like
all the coins and stuff on you. He drops them
and they hit the table and you can hear them,
like we've got beer caps. That's right, we can send
those out. Can you hear that?
Speaker 1 (10:08):
Well then naked keep it in his pocket. Every time
he touches his pocket. He'd be like, oh, yeah, I
love that show.
Speaker 3 (10:13):
Someday I'm gonna die, like the what's the Stoics momentum?
They're momentum. Sometime I'm going to die.
Speaker 1 (10:20):
But for now I'll listen to how to make things
that you should think about it. Glad the show's been helpful, Nate,
thank you for listening. Let's talk about long term care
insurance and just kind of thinking about planning for the
extreme future and for your parents. Less about extreme future,
more about near term stuff. These are questions Matt, I'm
sure you're having with your parents. I'm having with my
parents to a certain extent as well. A lot of
(10:42):
folks buy long term care insurance specifically because they're told to,
and in some cases it does make sense. But long
term care insurance can be so stinking expensive it's not
even funny. And it's a far cry from what it
was like fifteen years ago. Premiums have skyrocket. It's summer
up something like five hundred percent over the last ten
(11:03):
to fifteen years. So talk about inflation, Matt, long term
care insurance premium inflation has been worse than eggs, and so,
you know, while long term care insurance can provide an
incredible benefit for a really expensive need, and that's the thing.
It's like, you kind of want to ensure against something
like this because of how prohibitively expensive it can be.
Most Americans will need a few years of nursing home
(11:23):
care on average, right, and many who opt to take
out long term care insurance, well, they actually end up
dropping it before they're able to use the benefits because
of how expensive the premiums get. And yeah, just tends
to become more than they barkin for. So, you know,
while avoiding long long term care insurance, it sounds like
a risky move, like, hey, if I don't get that stuff,
even though it's like ridiculously expensive, it feels like highway robbery,
(11:46):
then like I'm not going to be taken care of. Well,
dropping it before you use it is like the worst
thing in the world. It's it's like going to college
for three years, racking up a ton of debt and
then dropping out before you get.
Speaker 3 (11:56):
The degree, which is maybe an okay situation to find
yourself in if you say, go to the local community college.
But we're talking about like Ivy League prices here when
it comes to what this long term care is going
to cost. And then with folks living longer, with the
supply and the demand and balance as well of the
providers who are offering this care to the elderly, I
think this issue it could actually get worse in the
(12:17):
coming years. So let's talk about funding long term care specifically.
If you don't have long term care insurance, well, you've
got to spend your own money, specifically until you reach
the point where Medicaid kicks in. But even then, Medicaid
coverage it's only gonna help in certain situations. It's not
going to help most middle class folks out there, and
oftentimes what that means is you're kind of out there
(12:38):
on your own. It's basically for people who are impoverished,
who are destitute medicaids. Yeah, exactly, if you built up
a you know, not a ridiculous elon musk networth, but
just like even just a nice little tidy sum, sorry,
Medicaid isn't going to kick in to help you with
long term care stuff.
Speaker 2 (12:54):
Yeah.
Speaker 3 (12:54):
And so for Nay, I would hopefully your parents they've
been diligent savers. It's just important to factor this in right, Like,
don't just project twenty five times your expenses and call
it a day, but also consider these future potential costs
and how you know they're going to add up over time.
This is one of those massive considerations that too many
folks aren't paying enough attention to. And you know, there
(13:16):
are other potential financial products and vehicles that can help
if you end up in a financial pinch. I'm specifically
thinking of a reverse mortgage. I think that's something that
folks are like, oh, yeah, we've always got that, We've
got the house, but that's not ideal either. They can
be really expensive, the fees that are associated with those
sky high, and they can also prevent you from leaving
your home to your heirs if you intend to. And
(13:38):
like the home specifically is just kind of like one
of those emotional things where I guess it depends on
where you live. You know, if you are living in
a city and it's much more trainsient and your family
isn't local, well maybe you don't care so much. But
if you are somewhere I don't know, he was he
in Oklahoma, but I don't know.
Speaker 1 (13:53):
I picture like out in a more rural setting, and
there's a family farm there spending a family for generation.
Speaker 3 (13:58):
More like a home that I don't know, a family
remember built and it's kind of been passed down through
the generations. That kind of thing. It's not the kind
of thing that you want to tap in order to
fund some of those later years, right, you know what
I'm saying.
Speaker 1 (14:07):
Okay, So Nate specifically asked about nursing homes draining assets,
like is that a possibility? Well, in some ways yes,
but in other ways no, I don't think not in
the way that Nate intended it. They can be really expensive.
Is with the way in which I'm saying they can
be asset drainers, because some predictions are saying that in
like twenty years, we'll be talking about on average spending
(14:27):
two hundred thousand dollars a year for the average nursing
home facility. So to stay in one for a year
with a private room two hundred grand.
Speaker 3 (14:35):
To include food is like an unlimited buffet or like
I think, well, yeah, of course incluse food, but like
I'm sure we're gonna have more like robots and stuff
imported from Japan because think about it, like they're kind
of going through that ahead of us, So hopefully we'll.
Speaker 1 (14:47):
Learn a lot from that's actually a thing is yeah,
oh yeah, that's crazy. Yeah, robots taking care of you.
I think we'll see more of that in the future too.
But the nursing home can't. And I think this is
what Nate was getting at. They can't drain your assets
without your permission, right. They can't like garnish your stock
portfolio or it starts selling stocks off, start selling positions
to pay for your care. But you know, if you've
(15:07):
been a good savor and investor, you're going to exceed,
kind of like you're talking about.
Speaker 3 (15:11):
Here, Matt.
Speaker 1 (15:11):
Eligibility requirements for Medicaid. Every state, though, has different requirements,
so familiarize yourself with them. But if you're looking to
if your parents are thinking, well, medic I've got Medicaid,
I don't need long term care insurance, or I don't
need to pay attention to not spending down my retirement
assets all the way because Medicaid is gonna kick in.
It's going to cover those costs. Well, it's just not
that simple or easy most way too many people, Matt.
(15:32):
I looked up the statistics, something like forty six percent
of people assume that Medicaid covers long term care for them,
and again for middle class folks, that's not the case.
You're gonna have to spend down your assets to make
that happen. You're gonna have to meet their resource limitation test.
And there are all sorts of like different nuanced ways
to do. It's really complex tackle that. It's very complex, Yeah,
(15:54):
but there's it's not like a fun process, no.
Speaker 3 (15:57):
Yeah. And like you mentioned spending down assets like your
primate home, it doesn't count as an asset under Medicaid rules.
And so if you spent you know, two hundred thousand
dollars renovating that home in an attempt to spend that
money down, that's actually a strategy that some folks use.
And then like there's also these Medicaid complaint annuities that
all that being said, though, consider talking to an elder
(16:18):
law attorney in your state who specializes and medicates strategy.
This is like a specific niche. It's a specific sort
of branch of law that I wasn't aware of up
until recently.
Speaker 1 (16:29):
It's like my cousin's a hand surgeon. Like there's all
sorts of surgeons, but she specializes in hands, and this
is like the same thing for attorneys, Like it's like
no elder law but a medicaid specialist.
Speaker 3 (16:39):
Yeah, that's right.
Speaker 4 (16:41):
You're listening to how To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (16:48):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and insight, please go ahead and join the how
to Money Facebook group.
Speaker 1 (16:56):
All right, let's talk about your favorites investing firm, Matt Robinhood.
They they're kind of still trying to be big boy.
I think they've been.
Speaker 3 (17:05):
Totally big boy.
Speaker 1 (17:05):
They're a big boy, but like they started as mostly
a day trading app, and they have over time evolved
in their services offering retirement accounts, and now they just
announced this past week that they're going to offer retirement advice.
And so the fee similar to what other robo advisors
like Betterment charge are kind of getting into this robo
(17:26):
advisor space. They're charging a quarter of a percent, but
that fee then is capped at two hundred and fifty
bucks a year for robin Hood Gold numbers. Yeah, that's good,
which I think is cool. I kind of like the
idea of the fee cap, like, hey, yeah, it's it's
a quarter of a point, but after you have a
certain balance, we don't charge you anymore. A good explanation
of the methodology of the Robinhood portfolio management, like how
(17:48):
they're doing this, that was lacking. I just feel like
I didn't see enough information about how they're planning on
implementing this. Although they're saying that this is actively managed
and it can can include individual stocks, But what it
doesn't include, of course, at that cut rate price, is
personal advice. I think for now, I don't know about you.
I would say the jury is out, we need more
(18:09):
information about what this sort of robin Hood offering is
going to look like. It's like a flashy launch, but
there wasn't a whole lot of substance behind it. I
think the thing I am most nervous about, though, is
robin Hood's another announcement, an upcoming launch of AI based advice,
which is supposedly going to explain to people as you're
on the app, why the stock a specific stock is
going up or down, and that it's not always straightforward right, So, like,
(18:33):
is the AI going to be right on that? Is
it going to give me good advice or is it
going to be way off base?
Speaker 3 (18:37):
I don't know.
Speaker 1 (18:39):
So some of the ways robin Hood is changing are
positive for customers. Others like that, like the trading and
betting on future events that worries me. So there's yeah,
kind of the grown up robin Hood, and then there's
still the juvenile robin Hood I think, where I just
kind of don't know which one I'm getting. And if
you're going to go with robin Hood, you just got
to make sure you have the behavioral fortitude to let's
(18:59):
do the basic.
Speaker 3 (19:00):
I think that's always the case, and that's what I
was going to point to, right, like the fact that
they're offering this portfolio management and they've got these AI tools.
They're just trying to give people what it is that
folks seem to think that they want. Right, there are
some things that like their match. The fact that they
have a non employer retirement match is amazing. The first
of us kind freaking love that. But then also when
(19:21):
I log into the app, I also see little banner
that says, hey, are you interested in margin investing? I
hate that, but it's terrible, But it's at the same
time though, it's what it is that people are coming
to expect from their brokerages. But that doesn't mean that
you have to participate. It makes me, honestly think of
because like they've got so many different things, so many
different options, anything your heart might desire, Joel. It feels
(19:43):
like like Walt like Robin Hood is almost like Walmart
here where Yeah, they've got some amazing stuff. They've got
like some great affordable organic produce that feels like the
three percent match for Gold members when it comes to
their iras, right, You're like, yeah, that's the good stuff.
But guess what else Walmart cells like Dorito's and Coke. Yeah,
somebody that shelves and shelves of junk food. Yes, like
(20:04):
in the center of the aisle. Like that's the kind
of thing that feels more like margin investing or AI advice.
It's like could you do without? Well, absolutely, is it
something maybe occasionally you want to take a peek at. Sure,
you kind of take the good with the bad. But
in this way, ultimately, as personal finance enthusiasts, it does
come down to us as individuals and the decisions that
we make.
Speaker 1 (20:24):
And they continue, right, the one thing, the one great
thing about some of this robin Hood innovation is I
think they continue to push the envelope and they're causing
other broker's firms to have to react and step up, right,
and so we've seen innovation. We've seen other great brokers
terms you kind of follow robin Hood's lead on the
match right, Like Betterment implemented a match after robin Hood
did it, which is cool. So I like to see
(20:46):
that maybe they're innovative ways of thinking that could benefit
some of their customers. Well, it's it's also not limited
to Robinhood. Then other firms are getting in on the action.
Speaker 3 (20:56):
Yeah, okay, talk about buy now, pay later, because those
companies out there are going to start to report to
the credit bureaus. This is a sector of the market
that's grown to be a significant piece of the consumer
lending industry. So it makes a ton of sense that
those cleverly disguised loans would be factored into your credit score.
I honestly can't believe it's taken this long, especially given
(21:18):
the data that we have about how heavy by now
pay later users tend to be higher credit risks. So
Affirm they started furnishing data to experience last Tuesday TransUnion.
They say that they're already working with two Binyl payloader
companies as well. I'm sure more are going to follow soon.
The damn has broken. Credit scoring models are going to
(21:38):
have to be tweaked in order to include this BNPL
data in their models moving forward, where they're likely going
to be treated like other forms of debt, in particular
I mean credit cards, but also car loans because they
are more like installment loans. It's unlikely these changes are
going to cause big credit course wings, but maybe it
might because for for some I think it might because
(22:00):
it almost feels like this thing that has been ignored,
like where folks have like stuck their head in the sand,
and it's like when you if you know that you've
your shower's been leaking, leaking, and it's like, well, I no,
there's probably some rot under there. Maybe I don't know,
maybe the sub floor is kind of getting a little soft,
but you don't really fully know until someone gets in
there and kind of like peels it back and you're like,
oh wow, that's like all the way down to the floor. Joys, dude,
(22:22):
I didn't fall through. There's a lot of damage here,
and I don't like that the credit bureaus are kind
of the arbiters of your credit worthiness. But somebody's got
to do it, Like somebody has to be able to
wrap their head entirely around in individual's credit worthiness, how
much debt they have on hand, because there's a lot
of individuals who haven't you know, again, they haven't really
been paying attention. But for those who have been paying attention,
(22:44):
I think the big takeaway here is that if you
pay your buy now pay later payments on time, that's
gonna help your credit score. It's a good thing.
Speaker 1 (22:52):
And clearly these deserve to be factored into your credit score,
especially based on their popularity. I could see how five
years ago like they were just there were small potatoes,
and so there was more of a novel too. It
was no necessity. Yeah, and I think I mentioned this
on the show before. I've only used by Now Pay
Later once, and it was only because there was a
discount offered, like fifty bucks off if I use by
Now pay Later significant I paid it off instantly. So
(23:14):
buy Now Pay Later still remains one of those things
where I think people lose track of how much you're spending.
Speaker 3 (23:20):
You could grub up your burger on it now.
Speaker 1 (23:22):
Like we've talked about recently, it's just something we're staying
away from. Especially if you don't handle it well or
you have too many outstanding loans, Well, how's that going
to factor into your credit score? It could cause it
to drop at least by a little bit if you're
not handling those by now pay later payments well, or
if you're just overdoing it on buy now pay later
in general, just using it indiscriminately.
Speaker 3 (23:42):
Totally agree.
Speaker 4 (23:44):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (23:50):
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 3 (24:08):
And of course, now it is time for the Facebook
Question of the Week, which is from Matthew and he wrote,
do y'all keep your hobby fund money separate from emergency fund? Basically,
I buy and flip a ton of stuff to fund
my hobby. But it seems whenever I do this, an
unexpected bill comes up. I do have a nice emergency fund. Hm.
I like this question, you think, Joe.
Speaker 1 (24:28):
I mean it sounds like Matthew is already doing the
emergency fund thing well, which is important, right. I like
the idea though, of kind of flipping stuff to fund
a hobby, a little side hustle.
Speaker 3 (24:37):
Actually it's kind of keeping it siloed. Yeah.
Speaker 1 (24:39):
Yeah, it's that mini side hustle to pay for things
that you might not otherwise have the funds for, right,
or you'd have to cut back on other financial goals.
So let's say you're like, oh no, I got to
hit that twenty percent savings rate, but I still want
to fund this hobby.
Speaker 3 (24:50):
I can't do both.
Speaker 1 (24:51):
Well, then you got to find a way to make
a little bit of extra money. Or let's say you're
prioritizing saving for a down payment or maxing out your
wroth IRA. You don't have to cut back on those
thing because you're finding another source to find the money
so that you can pay for that hobby. Whether it's
like skiing, I would say disc golf, but that's really
cheap ones so you don't really have to find much
money to do that one. But this is a great way,
I think to ensure that you're prioritizing something you care
(25:14):
about without sacrificing to wealth building necessities that we think
people need to be employing over the long haul.
Speaker 3 (25:20):
Totally. I think a question I've got for Dan is
like one of these what he calls unexpected bills that
keep popping up, Because if they're happening this frequently, like
every time he is looking to spend some money on
his hobby, is it possible to plan a little bit
better for them, or you know, like to put them
into your regular budget, because there are true emergencies that
(25:41):
come along, and that's of course what your emergency fund
is there for. But we also find that some folks
dip into the emergency fund a bit too regularly because
they haven't planned as well as they could have for
expenses that happen every year or at the same time
every month. Yeah, Christmas comes around the same time every year.
Speaker 1 (25:57):
It's like not a real emergency, but like they chalk
it up to an emergency because they didn't really have
much foresight so about things coming up.
Speaker 3 (26:04):
Yeah, it just it takes foresight. I like what you
said there, And so as you're looking at your budget
just or maybe maybe maybe that's the thing. Maybe it
doesn't have a budget. But even if you do have
a budget, and let's say these are expenses that haven't
been accounted for, revise the dang thing, because if some
of those unexpected bills could be planned for, then being
able to rearrange like that is the solution here. And
it's going to help you to touch your emergency fund
(26:26):
a whole lot less as well to really for it
to be there for the true emergencies in your life. Right, Yes,
and you just mentioned tires briefly there.
Speaker 1 (26:34):
That's that's like a great example of something that's coming
down the road.
Speaker 3 (26:38):
That's a good pun, right literally there goes.
Speaker 1 (26:41):
They are balding as we speak, right, and you need
to be saving up ahead for that expense, and hopefully
you can kind of figure out, well, what's a usable
life left, how much is it going to cost me
when I do replace those things? And how much do
I need to start saving now to be prepared or
the same thing that happens every year around Christmas time,
people are like, oh crap, I think I'm gonna spend
like nine hundred dollars this this December, and I didn't
(27:02):
plan for that. It's not an emergency, that's something that
needs to be thought of aut of time, and so.
Speaker 3 (27:07):
Should start that saving in January? Right exactly? So should
your hobby budget be a line item in your budget? Well,
it depends. I think the reason to keep it separate
would be to incentivize you to keep making extra money
to fund your hobby. Right.
Speaker 1 (27:19):
So, if you make less money in a given month,
you enjoy your hobby less. But if you make more,
you get to ramp it up and enjoy that hobby
even more, or at least bank more, so you can
keep it up longer.
Speaker 3 (27:29):
Right.
Speaker 1 (27:29):
So makes me think of a listener don't remember his
name off the top of my head.
Speaker 3 (27:32):
Matt was.
Speaker 1 (27:34):
I should know that, but I don't remember. But he
donates plasma to go on vacations. Ryan Kay, Ryan Kay, okay, Ryan,
You're the man. And he still does this. Seems he's
been doing this for many, many years, and I think
this is a great way. It's similar to the way
Matthew's thinking about it. It's like I'm gonna go on
a vacation up to the level at which I bank
money from donating that plasma, right, And so the reason
(27:57):
to include it in your budget is to know that
you'll get to enjoy it no matter what, that the
money's always going to be there because you've set it aside.
But the reason to not do that is because I
think it incentivideses you to push the envelope on that
side gig or on that plasma donation side, hustle so
that you so that you actually have your incentive is
to go make the money to pay for the thing
(28:18):
you want to do.
Speaker 3 (28:18):
Yeah, yeah, I want to. I'll say a quick note.
I know not everybody out there is like super organized
like some folks love it. I myself. I just just
yesterday I spent some time in Excel organizing some expenses,
checking in on the budget, seeing where things are landing
this month. I know for you that feels like one
of those nice heavy anxiety likes. I like ceping tabs
on it. Man, not everybody, it's not their cup of tea,
(28:40):
you know, and if and that's totally fine, but you
have to, I guess account for that. And so while
maybe for us, because we've got all the different savings
buckets set aside. We've got three to six months worth
of living expenses in our emergency fund. If you have
no buckets and it's just this, I'm gonna call it
the emergency slush fund. How about that it's like this
one big giant pile. All the money just gets piled
(29:02):
in there. I think that's totally fine, But you just
are gonna have to have a little bit more. You're
gonna have to have more margin on hand to be
able to account for some of these things that otherwise
you would have planned for, but instead you're kind of
drawing it from the emergency slush fund, which I kind
of like the more, I say, But let's get to
another quick one. This is an email from Dan and
he wrote, if these funds, if they're all tracking the
S and P of five hundred, which should be the same,
(29:24):
how come there's a wide difference between the performances. And
he specifically he highlighted the different returns between let's say,
vou vanguards SMP of five hundred fund fx AIX, which
is Fidelities Mutual fund, the actual SMP. There's a lot
of different funds out there, But what do you have
for Dan to chew on as he's considering these different options.
Speaker 1 (29:44):
So, yeah, I mean this is a good question, and
I think if you do look at the returns, you're
going to see little idiosyncrasies here. Say, this is not
the exact same thing. What's happening there? And yeah, these
funds are attempting to mimic a specific index, but there
are also just these little idiosyncrasies that lead to slightly
different results. The biggest one is how much they cost
to own, right, I'm talking about the expense ratios at
(30:06):
least in parts, but also potential fees that some old
school fund managers charge to own those funds. And so
while costs have overwhelmingly gone down for every day investor,
specifically on index funds, like Dan is highlighting, there are
still some sperms using the old playbook. They're feeding people
to death. It's amazing the price discrepancy between one S
(30:27):
and P five hundred fund, the cheapest ones, and then
another fund that mimics the S and P. But it's
within old school provider who just charges norm and a
leg still right, and those costs eat into returns. It
could make one ETF look better than the other. The
higher the fees the greater divergence from the index itself
and then from other low cost competitors. So that's that's
at least one reason that you might see more of
(30:49):
a divergence there.
Speaker 3 (30:50):
Yeah. Yeah, So for instance, let's take the case of
VTI versus f Z Rocks. So VTI is Vanguard's total
stock market ETF the other is offered by Fidelity. They're
both attempting to track the total stock market. VTI has
a minimal expense ratio minimal cost. Fc Rocks well, they
charged nothing but to pull that off. Fidelity they omitted
(31:12):
some microcap stocks from their fund in an effort to
minimize costs on their end. But still the performance of
both is quite similar. FC Rocks is up around ninety
two percent over the past five years, and VTI it's
right up there with it, but just a few percentage
points below eighty nine or ninety something like that.
Speaker 1 (31:30):
I mean, it's like, yes, the same ballpark is not
too far off. They're probably both in left field, close
to the fence, right.
Speaker 3 (31:35):
But yeah, And some of the reason too, why they
emit some of those different companies is just the way
that they're structured as well. Ets are they're just more
tax efficient. Specifically when you are owning. If you've got
let's say an ETF versus a mutual fund within a
brokerage account that's taxable, well, there are fewer taxable events
that take place with an ETF, But if we're talking
(31:56):
about in a retirement account, it's there's not much difference
there because you don't actually realize those taxable events with
it being tax deferred.
Speaker 1 (32:02):
But when it comes to I guess specific index trackers
like an SMP or a total stock market that I
would worry a whole lot less about those micro differences
in outcomes.
Speaker 3 (32:11):
That's right, and that is going to do it for today.
Thank you for listening. We appreciate your time and attention.
We'll see you back here next week.
Speaker 1 (32:19):
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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