June 23, 2024 • 33 mins
Gen Z investors are using astrology and tarot cards to guide their investments. And some 'economists' are predicting stock market DOOM. Don't listen to them! Listener question: How to handle gift cards in your budget? “Spaving” is the new money trend. But we don’t like it at all! Also, what do you need to be cautious of if you’re retiring early?
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(00:00):
KFI AM six forty. You're listeningto how to Money on demand on the
iHeartRadio app. All Joel and Mattwant 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 KFI AMsix forty live everywhere on the iHeartRadio app.
(00:28):
This is how to Money. I'myour host, Joe Larsgard, and
I am the other host, MattAltmix. 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 appthere on your phone and send it over
via email. You can find thesimple instructions at howdomoney dot com forward slash
ask. Let's go ahead and getto the ludicrous headline of the week,
(00:49):
and this one is from Business Insider. The headline reads, can the stars
predict the stock market? Gen Zthinks? So you like my voice there,
incredulous stupid headline voice because obviously,first of all, the entire population,
the entire gen Z generation, doesnot think that astrology is gonna aid
(01:11):
them in stock picking. I beta gen extra wrote that headline. That
does seem like a gen x kindof thing to do. I just like
stomp on the generation below me.So the headline itself is annoying, but
like it's also a true that somein the younger generation, maybe they are
looking for an investing edge and theyare looking to astrology. Maybe they're looking
to tarot cards to advise them.And one person who takes this tactic,
(01:36):
and this is in the story,they said, I tend to long the
full moon, in short, thenew moon. What do you do with
the harvest moon? Uh? Whatlike? What does this even mean?
It's it's just it's ridiculous. It'shard to tell how widespread this sort of
approaches and what it is that you'reletting influence how it is that you invest.
(01:57):
But if you're in astrology, Ithink that's fine. You're in AT's
go for it. You do you, But similar to your politics, don't
let that influence your investments. Don'tlet it influence how you invest when you
get in and get out of themarket, or even why like your long
term rationale and the reason behind whatlike what it is that you're investing for.
And let's be honest, if you'rea twenty five year old and you
think that you have special insight intothe stars and how that impacts the markets.
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Well, don't you think Neil degrasse Tyson would have figured this out
by now? Don't you think hewould be the billionaire? Like if there
was some sort of rhyme or reasonto the movement of the planets and the
sun and the stars. Pret surethat's the dude, Matt, who would
have capitalized on this. Not aperson fresh out of college. See,
but he understands the stars in adifferent way than folks were into astrology.
(02:43):
Dude, you know, like there'sa spirit there's like there are more advanced
astrologers who would have this out.I'm just saying. But what they're saying
is like, oh, I've I'mat the intersection of astrology and investing.
It's it's like the Memestock generation offolks who think that this is something that
they can perhaps look to. AndI get the desire to increase your performance
right there, Like it's an understandablehuman desire. We talked about this too,
(03:06):
Matt. American exceptionalism almost demands thatwe not be average, and so
inside of investing, the line thatwe toe is that averages the best thing
for you and I get why peoplewant to buck against that and they want
outsized returns, but it's hard tocome by and these some of these just
pie in the sky strategies aren't goingto help you get there, and in
fact, so much of the timeyou are going to lose money by trying
(03:29):
some novel theory of investing is speakingof investing. A new study from Northwestern
Mutual finds that younger folks are moreopen to AI money management tools than their
boomer counterparts, although for most financialplanning tasks, research also showed that most
people still prefer humans like fifty fourpercent to just AI alone fifteen percent.
(03:50):
And so obviously AI is not likeprimetime. It's primetime for some things,
maybe for helping you with your writingtasks or you know, search results,
something like that is likely going tobe more of a help than a hindrance
in the future, particularly when itcomes to some of these money tasks.
And we are seeing this transition inreal time with new fintech products. Taking
(04:10):
a Copilott, it's a cool budgetingtool, and they use artificial intelligence to
help you categorize transactions that are specificto your budget and your situation. It
gets smarter over time, right,makes that budgeting process easier and more specific
to you. Monarch Money is anotherone that we've talked about, a great
budgeting app. They use AI togive you more personalized advice on their site.
(04:33):
You can ask it questions. Itcan help you set goals or gain
insights to your money at a deeperlevel. But AI can also be like
a marketing buzzword, and so itmakes me think of another fintech product,
betterment. They don't use artificial intelligencebecause what they've said is that they found
that simpler approaches are more effective forthem. I don't know, to boil
it down, I guess I'm excitedabout the potential, but I'm also wary
(04:57):
of the need for AI in awhole lot of the finance realm two and
so much of it. I thinkit's just marketing. I mean, like,
are these companies actually using AI orare they just have they just updated
their algorithms, Like right, it'sall the same, Like we've been complaining
about algorithms and maybe that hasn't causeas much team because I don't know,
it's not like this a brain newsector, but like the whole just like
the ads that were fed via socialmedia. It's like, okay, that
(05:19):
sounds a lot like the AI thatMonarch or Copilot has implemented into their budgeting.
And so much of it I thinkis marketing and folks looking to cash
in and to show that they're forwardthinking. They're you know, they're utilizing
technology in order to benefit their customersand to better their products. Yeah,
but you're right, some of itis smoking mirrors. That's what it feels
like to me. And and specificallyI think because of chat GPT, because
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it has like the way it givesyou the information, it's like there's somebody,
you know, It's like there's somemind behind it. It's like typing
it out and you're seeing it,and it's like that's it's just like incomplete
Google results that are being sort offed to you in real time, you
know, and it's just formatted insuch a way that looks like there's somebody
on the other end. But somuch of it I think is perception.
In the new AI results with Google, when you see that at the very
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top, it's linking to multiple articlesunderneath war its referencing them from and it's
almost like the same old thing.It's like to pull out they had before,
which highlights takes information from one articledifferent format, though it's a different
format, and that matters. AndI guess how it is that folks interprets
and I get that it's a littledifferent of how they may pull it off
on the back end, But yeah, it is. I think it's I
think it's ever blown by the way. So we're talking about investing. Don't
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let the different talking heads on TVinfluence how you invest either. There was
a segment over on Fox Business wherethe economist Harry Dent, not to be
confused with Harvey Dent, but hepredicted a stock market crash worse than the
two thousand and eight crisis. Thebubbles of all bubbles is what he called
it. And he's predicting an eightysix percent drop in the SMP. That's
(06:48):
bad news, man, that'd behistoric. Which, of course, this
then reminds me of the phrase aboutecondomists predicting nine of the last three recessions.
So we think this is also overblown, because, yeah, the stock
market might experience a meaningful decline oftwenty percent even more, that certainly could
(07:09):
happen. Can we predict that whenit's going to happen. There's no way
or if it'll happen. I'm prettysure mister Dent that he's not going to
be able to predict it either.So we're pointing this out because we want
you to stay the course. Andit also makes me think about the reason
so many folks get airtime like thisis because when you're being cautious and you're
calling for a correction, it's like, hey, the good times they're not
(07:30):
gonna last. How is that personperceived? They're seen as wise, they're
seen as prudent, as opposed tolet's take out what history has actually shown
us over the past one hundred years, which is that the stock market goes
up three out of every four years. What do you do with that information?
Will you say, oh, okay, then I'm just going to continue
to invest no matter what. Well, what is the summary of if you
take that sort of mindset, Oh, you're seen as naive, you're pollyannish
(07:54):
at the very least being the mostgenerous. You're seen as just overly optimistic.
But that's the reality. But obviouslydoesn't get the headline, It doesn't
get the clicks, and I don'tthink it means that we're not seeing any
frothy behavior in the stock market,or that there isn't going to be some
reversion to the meme because I've seenoutsize gains over Talk to us a few
years, talk to me four years, yeah, you know, talk to
me after a decade. If you'regoing to ask either of us, will
(08:16):
the stock market be at higher levelsin four years than it is today?
I mean for sure, yes,yes. Does that mean we won't experience
a lot of volatility in between inthe day time? We probably will,
but it doesn't matter because we're notinvesting for the short term. Yeah,
we're investing for the long term.That's right. We got more money saving
information to get to. You're listeningto How To Money with Joel Larsgard on
(08:37):
demand from KFI AM six forty andwe'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 wantto be able to use it responsibly.
But if you do that, ifyou pay your credit card on time and
in full every single month, wellcheck out our credit card tool. You
can find that up on the websiteat howtomoney dot com. Joe is here
(09:00):
from our next listener, she's gota question, specifically a nerdy budgeting question.
Let's hear it. Hey, MattJel, my name's Georgia. I'm
wondering how you all account for giftcards in your budget. Well, it's
awesome that gift cards can feel likebonus income. I don't love that the
redemption transactions are hidden from my budget. I think there's value in tracking expenses
(09:20):
for historical purposes, especially the onesthat I would have done anyways, but
just so happen to pay with thegift card. My budgeting system can't connect
to gift cards and read the transaction, so I have to manually track them
and categorize them appropriately and just kindof a pain. Should I just ditch
the tracking and leave them out ofmy budget altogether? Or is there a
(09:41):
better way to ensure that my expensesare accurate. I use my spending data
to estimate how much to budget annuallyor monthly, so ignoring expenses that were
paid with the gift cards skews myestimates. Thanks so much, love the
show. I love George's attention todetail here. Gift cards people usually receive
them, and of course from somebodyelse as a gift and then I think
(10:03):
most folks think of them as freemoney to be spent however, they like
without repercussions, which I think isa totally fine approach, Like, I'm
not no shame in that game.But of course you're going to gain more
ground by incorporating, you know,spending none of those gift cards into your
budget. Right, unless you're gettinglike gargantuan gift cards on the rig,
it's not going to make a massivedifference. But it's a cool conservative approach
(10:24):
that functions in essence like a forcedmethod of saving. So I kind of
like how she's paying attention to thatevery nook and cranny of her financial life.
I mean, got it all buttonedup. Yeah, But I'm not
sure if there are any budgeting appsthat allow you to account for gift cards.
I looked, I didn't. Idefinitely didn't see any, But I
think since it's kind of a oneand done thing, unlike a better credit
(10:46):
card, right, I think itkind of makes sense though that budget software
doesn't have anyway to get to thatdata unless you input it manually, which
of course is not seamless, butit is a way to keep track of
those dollars that you spend, andI think there is something about the manual
inputting of data that connects our brainto what it is that we're spending in
(11:07):
a more thorough way. I don'tknow, it's not that like you're rubbing
your face in the mess that youmade, but sometimes it depends on how
you spent that that month in aparticular category. And so I guess all
that to say, this could bea situation where it's a blessing in disguise
and Georgia. This is one ofthe reasons why I know there are lots
of different budgeting apps and software outthere that automates things, I still manually
(11:31):
input my expenses in order for meto be able to pay attention to what
it is that we're spending, inorder to catch any fluctuations in our behavior,
which over time, could you know, it compounds And so for me,
it's something that even though it froma does it make sense for me
to spend my time in this way, well not if I'm only looking at
like my hourly rate, but ithas more of an impact and I just
want to I really enjoy keeping tabson my spending in that way. I
(11:54):
like being able to keep up withit, and I like being to compare
previously, Like at the end ofthe year, MA had the ability to
look back on our expenses, comparethat to previous years of spending, and
to see where we are as afamily. I think that's really important and
it drives and it informs the decisionsthat we make in the coming year.
And it seems like that's a bigpart of why Georgia wants to keep up
with this. I'm curious how manygift cards she's getting and what she's getting
these gift cards for. If thisis like a minor thing and just kind
(12:16):
of like a type a perfectionism that'scoming through, or maybe I don't know,
maybe some employers will give you giftcards as like a bonus sometimes,
so maybe they are a significant partof kind of her quote unquote income essentially,
maybe, And so I get wantingto document that. I get.
The bad news is that there's notreally it's a manual thing. There's not
really any way to do this withany of the software that we like the
(12:37):
best when it comes to budgeting,which is like why NAB and Monarch Money,
those are two of the best outthere in the business right now,
especially now the Mints has gone away. So yeah, if you really really
want to keep track of this,you're gonna have to kind of implement a
Matt like system. There's not somethingsuper de breasy and Matt, we haven't
really posted your Excel budget spreadsheet recently. For all the nerds out there you're
(13:01):
interested, we should put that inthe show notes for this episode up on
how money dot com. Yeah,so the other option, So that's one
one option right to actually keep upwith it, But the other option is
just a ditch it. That's whatshe said, to ditch it completely,
and I might recommend doing taking thatapproach, treating those gift cards more like
a complete and total gift that justallows you to spend in a way that
(13:22):
you otherwise wouldn't and almost treat itmore like a bonus. And that's exactly
how I treat it. Basically.Anytime we have a gift card, like
even cash on hand as well,I treat like free money. It's just
it's just a little bit of extraspending money. And someone gives you a
bottle of bourbon. You don't stickthat into your booze budget like you know,
deduct accordingly, you just enjoy thebourbon. I guess you could,
but yeah, no, you justI just enjoy it. And most of
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that comes down to just not necessarilywanting to personally keep up with it.
Yeah, so that's yeah, Iassume that's what you'll do as well.
Yeah, on no perfect solution here, we you know, Yeah, similarly,
we'll just use the gift cards anoption. It's to a restaurant or
something like that from a relative,and we just enjoy it, and it
basically means we can eat out anothertime that we hadn't budgeted for. So
(14:05):
it feels like a sweet bonus andit feels like an extra perk that we
hadn't planned on, which I whichI love and I appreciate. It's free
money more than anything, I willsay. I think what's important to do
is just to make sure that youuse that gift card, because I don't
know where the stats are off thetop of my head, but the number
of gift cards that are languishing inGermany drawers, whether or not you're gifted
that gift card or whether it's youthat has that's gone out, because maybe
(14:28):
you're able to buy three hundred dollarsworth of dining credit for two hundred dollars,
Joel, that's something that you've doneat a favorite Mexican restaurant of ours
back in town. But if youdon't use that gift card, well obviously
that's a big no no. Yeah, no, you got to make sure
you use it, keep them ina place where you're going to take them
out with you all the time,yep, if mayke it prominent, yeah,
(14:48):
and no one to overlook it exactly. So that's the worst thing about
gift cards is people they go unusedand you forget about it is wasted money.
I think I heard something like Starbucksis like one of the biggest banks
album in the world just because ofhow much money is sitting in Starbucks gift
cards in people's accounts. It justdoesn't get used or or lingers for a
long time at least. Yeah.And I will say, you're more likely
(15:09):
not to use the card if itwas gifted to you, because it might
be a restaurant or a store someplacethat you don't often frequent. And if
that's the case, it's worth checkingout some different sites like card cash or
giftcash dot com, or you cango on there and then you put in
your gift card how much it is, and they'll give you a quote.
They'll tell you like basically, let'ssay you got a twenty five dollars gift
(15:30):
card. You can go to thesedifferent sites and they'll say, all right,
we'll give you twenty one bucks forthat. Yeah, and you might
be for like Amazon than you willfor like the Gap. Sure, and
you might be thinking, man,that's a pretty steep cut. But here's
the deal. What's better to havelike most of your money or none of
your money. Like let's say youlose that gift card, or let's say
you have a gift card that expires. Man, it is so much better
to go ahead and exchange that cardfor actual cash that you can then immediately
(15:52):
deposit in your account or go spendwherever it is that you want. And
so this is an instance where youmight be allowing perfect to be the enemy
of good. And if you havecards on hand that folks have given you
that you're not going to use,man, I would totally unload those that
again sites like card cash or giftcash doctor, or use them to buy
gifts for other people or I don'tknow, can you regift gift cards,
I think you can sure, I'mokay with that. If you're by the
(16:15):
way, this expires next week,well, typically, like I might want
to get on it. Most ofthose gift cards don't expire, right,
so, especially like the big majorbrands, less of times they're good in
perpetuity. So if you're like,I don't shop at Old maybe, but
my friend Sheila does or I don'tknow if she's your friends with other state
names like but just yeah, Montanaexactly, that'd be a good name,
(16:36):
all right, But I hope thathelps Georgia. Best of luck to you.
All right, We've got actually moreto get to on today's show.
You're listening to How To Money withJoel Larsgard on demand from KFI AM six
forty. If you're on Facebook,by the way, you want to join
a group of like minded folks whohave money questions, who have money insights,
please go join the how to MoneyFacebook group. Let's talk about spathing.
(17:00):
If you heard of this term before, I did not until this article.
Okay, So it's another dumb trendcalled spathing that the USA Today highlighted
this week. And I don't know, maybe this is just another term that
the young kids are using and youand I are too old to realize it.
Now we are over the hill.This play stupid terms. We'll get
us stay up to speed on hervocabulary, though, and so this is
a new term though for something it'sold for your Riz is off the chain
(17:23):
this morning. I don't think he'dsay off the chain anymore, rud Riz.
Yes, well I was combining thetwo. Okay, it's like the
old yes, all right, Iappreciate like it. Yeah, nicely done,
but okay. So spaving is anew term for the age old belief
that you can save more by spendingmore. Is letting the buy one,
get one fifty percent off deal triggeredit by two things when you only needed
(17:45):
one, because it feels like you'resaving more in the process. Or it's
spending more to hit a free shippingthreshold when you weren't planning on buying those
additional items in the first place.We've all been there, I too,
have had my mind hijacked in thatway, Matt. So I think the
this is a normal human condition.It's also, I would say, it's
like spending more to hit a creditcard welcome bonus. It's great that you
(18:07):
can earn the eighty five thousand Southwestmiles right now. Put a link to
that show notes if you want tothe details on how to get the Southwest
Companion pass easier than ever given howmany miles are throwing out there. I
just booked a Kate Is Colorado tripfor later this fall. I guess how
much it costs me buy that secondticket? Nothing? Nine dollars and thirty
cents for whatever the tax even yecharge exactly. So those Southwest points are
(18:29):
coming super handy. But it's onlyworth signing up for the credit card if
you're not having to manufacture spending togetherthere, which means having to spend more
than your normal budget allows for puttingyou into debt that you can't pay off.
Right and so, if you knowyou're going to use that item and
you have the funds, or ifyou're buying in bulk, you're stocking up
spending more now to prolong your nextpurchase, that's fine, but watch out
(18:51):
for the marketing attempts trying to makeit sound like buying more is going to
save you more. It's going toperk your frugal ears up, especially if
you somebody like me. But ultimatelyit's a letdown, and it means you've
spent more than you otherwise would have. And I feel like nothing gives us
in that zone mat as much asBlack Friday and all those deals like yeah,
oh, you're a dummy if youdon't spend money in this way because
(19:12):
it's saving you money, and it'slike, well, you actually need it,
not really, no. Yeah.It makes me think of a recent
article in the Atlantic about the freetrial trap, because, of course,
who doesn't want a free seven daytrial or even like a free month of
service. But that offer it doesn'texist out of the goodness of that company's
heart. It's a bait. It'sto get a hook in your mouth.
(19:33):
And there's actually good news all thestreaming front, because we're seeing cancelations tick
up to record numbers as the differentstreaming services out there. Proliferate folks are
realizing that is eating up more oftheir monthly budget and they're cracking down more
folks are canceling everything like us.They're opting to cancel a bit more indiscriminately
at least. But the free trialtrap, man, the thing is real
(19:56):
because forgetting to cancel is costing folksbig bucks in spiderweb man. It's like
it's like the fly. It's adeath by a thousand cuts because you don't
think it's that big of a deal, but all of those things added up
makes an impact the US. Theyeven suit Adobe this week. Did you
see that over they're making canceling toodifficult for their customers. But it's okay
(20:17):
to try things before you buy,but don't forget, like use a calendar
reminder to ensure that you don't forgetto cancel that like a couple of days
at least in advance, you know, because if you hit snows or maybe
if you click and drag it overto the next day because you're like,
I don't want to do it today, give yourself a little bit of margins.
There's a difference too, between again, between forgetting about it versus just
be becoming immune to those prices.And luckily, more and more for folks
(20:41):
are becoming less insulated from those chargesbecause there are so many of them,
right, Like that that's the thing. It's you know, you're talking about
part time jobs earlier, Like that'swhat it takes in order to manage all
of the different subscription services out there. There's a reason they give you free
access for a limited time because theyknow most people aren't going to cancel Matt.
They realize I think we gave thatstatistic not too long ago about people
(21:04):
who signed up for Peacock to watchthe Chiefs Dolphins game back in the fall,
and people are so excited about that, and they sign up for Peacock
and then they never cancel, andmaybe that's the only thing they've watched on
that service, but they're still payingfor it. The same thing with a
gym membership. Man any does anyindustry do it better than the gyms.
Let's talk about groceries for a second, and maybe whether or not you should
(21:26):
drive more in an attempt to savemore. There was an article in the
Wall Street Journal signing that more Americansare shopping around to save money. They're
hitting up various retailers in order tosnag the specials at each given store,
even driving the cheaper area codes toshop at less expensive stores. So maybe
think Matt like Publics is a grocerychain out of Florida that we have some
(21:48):
of them here in Georgia, actuallya lot of them, and they have
a slew of Bogo offers every weekby wing you one free deals. Those
items can be a really good priceif you're buying just those Bogo those Publics,
but the normal prices are higher thanbasically every other grocery chain out there.
Publics has nice stores, and theycharge more for almost every item on
their shelves than the discount chains youand I like to shop at. So
(22:11):
I don't know, maybe you wantto hit up Publics but just based on
the Bogo deals, and then yougo somewhere else to get more of your
other groceries. The best way toplan out your grocery purchases is to use
the website basically a digital tool likeflip dot com flipp dot com so you
can see all the sales flyers inone place. That'll help you create a
(22:32):
grocery saving strategy. If you're thekind of person who says, I'm willing
to not just go to a onestop shop or to drive further to get
to the discount place, maybe Iwant to hit up two or three spots.
Well that's I think that's the problem. That's my biggest issue that I
have with the journal with the headline, which is them saying that hey,
you can no longer do the onestop shop, but that's not true.
And people they have so fallen intolike they've fallen in love with certain brands
(22:55):
and they're like, oh, Igot to go to this store to get
this because they're the only place thatsells that. I want to push back
on that little bit, like youdon't necessarily need all the different options.
You can just go to Aldi andnot even look at the different deals at
the different grocery stores to save time, and you you're still going to save
a ton of money. And Iknow not everyone has an all d near
them, but they're dude. Ifeel like they're multiplalying like rabbits, Like
(23:15):
they're they're opening more and more ofthose stores are opening all over the place.
If you've never considered going to anAldi, you've got to check it
out. We're legal as well asa cousin to Aldi. That's where we
shot. We're it's slightly more complex, fancier cousin of Ald is how I
view letal. They're pretty similar legaland costco. That's they get the bulk
of our grocery dollars. But yeah, I think the time and energy it
(23:37):
takes and the additional planning it takesto shop in a bunch of different grocery
stores. You got to figure outhow much are you actually saving and whether
it's worth the hours you're putting into. So that's why going to a place
like all the or legal like tryingto really get the bulk of your stuff
at one store, but the cheapeststore is probably the best, best,
the way to do it. You'relistening to how To Money with Joel Larsgard
(24:00):
on demand from KFI AM six forty. Don't forget to sign up for the
how to Money newsletter. You canfind that up at how tomoney dot com
slash newsletter. It is now timefor the Facebook question of the Week.
This is from an anonymous poster andthey write for someone retiring significantly early,
think someone in their forties, Whatare some of the hidden costs or catches
that can be a surprise and theycan lead back to needing employment or significant
(24:25):
cuts to lifestyle. You want tomake sure they're planning ahead. What you
think, Joe, Well, thisgoes back to kind of what we were
saying with Justin, who's a littlebit younger, and so you want to
be thinking about these potential shifts,these potential life changes or the potential gotchas
of retiring early. And yeah,if you are in the lean fire camp
where you're saving barely enough to coveryour bills, you might find that a
(24:48):
bunch of different things could impact yourability to stay retired. So not that
you need the one more year syndromeis real too, But it's also crucial
to be thinking about patting and someof these other inevitable things that can catch
up to you. So let's covera few that could slap someone upside the
face, Matt, who is retiringin their forties. I think the first
(25:10):
one is lifestyle creep And actually thiswas something that a lot of fellow how
to Money Facebook members mentioned, whichis so true? Is it? Basically,
if all your friends are working,what are you going to do with
your time? You might have abunch of free or cheap hobbies, which
is great. You might be intodisc golf and running and biking, and
those are like fairly cheap things todo on the rag, But you also
(25:33):
might be tempted to increase your spendingtoo, and so realize that, hey,
with more free time can come morespending, it could come less spending
too, Matt. Maybe you're ableto ditch a car, you're not spending
as much time commuting to work.Something like that, Maybe you can actually
reduce some of your costs to spendall that money at Brooks Brothers on your
right your business attire, Yes,but what does that look like for you?
(25:55):
At least be willing to think about, how will I want to increase
my lifestyle If I'm working less,am I going to be traveling more?
Yeah? Credit card rewards points willtake you part of the way, but
they're not going to take you thewhole way, and so you're going to
need to budget accordingly for that.And I would just make sure cool your
budget now looks one way, it'sgoing to look different when you hit retirement
in your forties, So just makesure you're kind of at least thinking through
(26:17):
how it could be impacted. Yeah, vacation specifically, because when you're working
full time, taking an offer aweek or two, like once a year
like that seems like a normal amountof vacation. But when you're retired,
you're probably thinking, how come I'mnot always on vacation. That's certainly something
to work to think through. Buthealthcare, this was honestly the first thing
I thought of because other members inthe Facebook group they mentioned this as well.
(26:40):
But the cool thing for folks inthe fire crowd is that when you
retire early, even if you havemillions of dollars in investments, it's often
going to make it look like yourincome is minimal. And so the subsidies
that you qualify for and the ultimateprice that you're gonna end up paying for
health care, well, it revolvesaround your family size and your income,
not your net worth, which isa good sign. Right, So you're
(27:02):
basically good healthcare might not cost youas much as you think. Yeah,
but it depends too on how longthese massively generous subsidies are going to continue,
right, Like, how long they'reactually going to be around that's another
conversation. But just build in somesubstantial flexibility for your costs I think potentially
to rise dramatically. There's certain thingseven on the books now, Matt,
that are set to expire, includingsome of those generous subsidies for people making
(27:23):
under certain certain income thresholds. There'seven the tax cuts and job dec which
is set to expire. So theseare not even just like, oh,
will politicians do this or that,And granted they might do something that keeps
those things around, but they alsomight not. And so if you're planning
on your health care costs staying theexact same or going up at just the
(27:44):
general rate of inflation, you're beingmyopic. On the note of healthcare listener,
Hew, do you mentioned dental workthat's not covered by health insurance most
of the time, right, there'sa separate dental policy over related it is,
well, I think depends on howbout your teeth are, and you
can do like medical tourism, right, so to potentially down on some of
the costs vacation and get your teethfixed exactly exactly sitting pull side anyway,
(28:06):
sitting Pinicolada, you don't need tobe showing then you don't even need teeth,
yeah for that, But a lotof those costs are going to be
out of pocket. Who knows whatyour mouth situation is, like anonymous poster,
but I would at least think abouthaving money on hand for potential dental
care. And then Matt continuing on, I think something else inflation. Right,
Many retirement models factor in a twoor three percent rate of inflation,
(28:26):
but what if it's hire right?Can you imagine having been the person who
retired in late twenty nineteen. Rightrunning standard numbers, it seemed reasonable.
At the time, rates had beenrelatively steady, we hadn't seen out of
control inflation in decades. But alasinflation reared its ugly head in a massive
way. And so if you hadjust reduced your liquidity paying off your two
(28:48):
and a half percent mortgage and youmoved into more conservative investments, largely missing
out on the massive stock market runup that happened after that COVID dip,
you found yourself in a really toughspot financially speaking, and your playing just
didn't shake out the way that youhoped. And so inflation was not slowly,
but it was rapidly reducing your buyingpower. Inflation is back under control
to a certain extent, not backwhere the Feds want it, but man,
(29:11):
you've got a least factor in forsome of those outsized things that you
can't control. I think COVID,which has shown a dramatic spotlight on some
of the things that are out ofour control that can significantly impact our finances.
Yeah, and you kind of rolltwo things into one there, like
you're talking about inflation, but thenyou were kind of talking about the stock
market, and that's I think that'sanother risk because when you're drawing down on
your investments, you're typically moving yourassets into more conservative investments, which means,
(29:36):
yeah, one of the risks thatyou do run is missing out on
outsized returns there within the market.I'll point out though, that everything we've
talked about so far, so we'vetalked about like lifestyle, cree, healthcare,
taxes, these are all sort offinancial considerations. And I think one
other consideration is how it is notthat you're going to be spending your money,
but how you're going to be spendingyour time. Because as an individual
(29:59):
who's maybe been in a job oran industry for like twenty thirty years,
I think it can be difficult tobreak out of the mindset of where it
is that you find your identity becauselike the jobs that we have that like
that is most likely the biggest impactthat we have on society, Right,
Like, this is something you doat least eight hours a day typically,
and and you do such a goodjob at it that they pay you thousands
(30:21):
of dollars every month. Okay,Now imagine a world where you are completely
divorced from that situation. Like thatis what retirement is like in the jarring.
Yes exactly, and so for alot of folks, I think one
of the risks you run is notgoing back to work because you need the
money, but because you need thepurpose. And so I think it pays
to make sure that you've found purposeand how it is that you want to
(30:41):
spend your time outside of the wallsof your employees takes the thing. We
had a friend who she and herhusband early retired, and you know what
he was doing not too long afterhe quit his day job. He was
driving for uber yep. And itwasn't because they ran out of funds or
because the stock market took a stepback. It was because he didn't know
what to do with his time.Is looking to be an active member of
(31:02):
society and find a way to contribute. He was one of those talking to
buber drivers, Matt, because hewas missing the personal connection that you get
with people. And I'm sure everytime someone came in with earbuds in he
that would be you put a frownon it would be me exactly. That's
why I know I need this outletat least to some degree. But dialing
it back, maybe it was like, I need to be somewhere where I
can just talk and people lisn't dialingit back a little bit and maybe not
(31:22):
going a whole hog all or nothing. Maybe that's a better way to at
least like test the waters, orkind of like we talked about with Jillian
John's are doing a long a sabbatical, like taking two months off, taking
four months off, finding a wayto test the waters before you go all
in and say I'm just bagging workand I'm never going to work again.
I think I can be a healthierapproach. It can at least allow you
(31:45):
to know how you're going to respondto it in ways other than just the
financial ones. Totally, Absolutely,it's important to think through how you're going
to garner that life satisfaction and fulfillmentonce that's no longer something that you're doing
every single day and I or notdude who think that work is the only
thing they can give you that satisfaction. But it's recognizing the fact that it
does because truly, especially in America, sadly, for so many people it
(32:05):
is. It is probably like oneof those top three things, if not
the number one thing. Well,like I get it because it's what we
spend most of our time doing,like throughout the day, right, and
so on one hand, like there'sa healthy approach to it, but there's
got to be things outside of that. And I do think that over time
you can start shifting towards some ofthose things outside of work. Like early
it's sort of like investing, right, We're like, early on, you're
going after it really hard. Butover time you start to maybe I don't
(32:29):
know, maybe it's maturity, Maybeyou realize that there are things outside of
the walls of your employer, outsideof your business, that you want to
do. But I guess what I'mpointing out is the fact that not everyone
has given that thought that there issomething beyond that, and that's when it
starts to get dangerous, and that'swhen it's unhealthy. I think. Yeah,
thank you as always for listening tothe show. We appreciate your time
(32:49):
and attention. You can always findmore money saving information up on our website
at howtomoney dot com. We'll seeyou back here next week. You've been
listening to How To Money with JoelLarsgard. 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.
KFI AM six forty. You're listeningto how to Money on demand on the
iHeartRadio app. All Joel and Mattwant 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 KFI AMsix forty live everywhere on the iHeartRadio app.
(00:28):
This is how to Money. I'myour host, Joe Larsgard, and
I am the other host, MattAltmix. 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 appthere on your phone and send it over
via email. You can find thesimple instructions at howdomoney dot com forward slash
ask. Let's go ahead and getto the ludicrous headline of the week,
(00:49):
and this one is from Business Insider. The headline reads, can the stars
predict the stock market? Gen Zthinks? So you like my voice there,
incredulous stupid headline voice because obviously,first of all, the entire population,
the entire gen Z generation, doesnot think that astrology is gonna aid
(01:11):
them in stock picking. I beta gen extra wrote that headline. That
does seem like a gen x kindof thing to do. I just like
stomp on the generation below me.So the headline itself is annoying, but
like it's also a true that somein the younger generation, maybe they are
looking for an investing edge and theyare looking to astrology. Maybe they're looking
to tarot cards to advise them.And one person who takes this tactic,
(01:36):
and this is in the story,they said, I tend to long the
full moon, in short, thenew moon. What do you do with
the harvest moon? Uh? Whatlike? What does this even mean?
It's it's just it's ridiculous. It'shard to tell how widespread this sort of
approaches and what it is that you'reletting influence how it is that you invest.
(01:57):
But if you're in astrology, Ithink that's fine. You're in AT's
go for it. You do you, But similar to your politics, don't
let that influence your investments. Don'tlet it influence how you invest when you
get in and get out of themarket, or even why like your long
term rationale and the reason behind whatlike what it is that you're investing for.
And let's be honest, if you'rea twenty five year old and you
think that you have special insight intothe stars and how that impacts the markets.
(02:22):
Well, don't you think Neil degrasse Tyson would have figured this out
by now? Don't you think hewould be the billionaire? Like if there
was some sort of rhyme or reasonto the movement of the planets and the
sun and the stars. Pret surethat's the dude, Matt, who would
have capitalized on this. Not aperson fresh out of college. See,
but he understands the stars in adifferent way than folks were into astrology.
(02:43):
Dude, you know, like there'sa spirit there's like there are more advanced
astrologers who would have this out.I'm just saying. But what they're saying
is like, oh, I've I'mat the intersection of astrology and investing.
It's it's like the Memestock generation offolks who think that this is something that
they can perhaps look to. AndI get the desire to increase your performance
right there, Like it's an understandablehuman desire. We talked about this too,
(03:06):
Matt. American exceptionalism almost demands thatwe not be average, and so
inside of investing, the line thatwe toe is that averages the best thing
for you and I get why peoplewant to buck against that and they want
outsized returns, but it's hard tocome by and these some of these just
pie in the sky strategies aren't goingto help you get there, and in
fact, so much of the timeyou are going to lose money by trying
(03:29):
some novel theory of investing is speakingof investing. A new study from Northwestern
Mutual finds that younger folks are moreopen to AI money management tools than their
boomer counterparts, although for most financialplanning tasks, research also showed that most
people still prefer humans like fifty fourpercent to just AI alone fifteen percent.
(03:50):
And so obviously AI is not likeprimetime. It's primetime for some things,
maybe for helping you with your writingtasks or you know, search results,
something like that is likely going tobe more of a help than a hindrance
in the future, particularly when itcomes to some of these money tasks.
And we are seeing this transition inreal time with new fintech products. Taking
(04:10):
a Copilott, it's a cool budgetingtool, and they use artificial intelligence to
help you categorize transactions that are specificto your budget and your situation. It
gets smarter over time, right,makes that budgeting process easier and more specific
to you. Monarch Money is anotherone that we've talked about, a great
budgeting app. They use AI togive you more personalized advice on their site.
(04:33):
You can ask it questions. Itcan help you set goals or gain
insights to your money at a deeperlevel. But AI can also be like
a marketing buzzword, and so itmakes me think of another fintech product,
betterment. They don't use artificial intelligencebecause what they've said is that they found
that simpler approaches are more effective forthem. I don't know, to boil
it down, I guess I'm excitedabout the potential, but I'm also wary
(04:57):
of the need for AI in awhole lot of the finance realm two and
so much of it. I thinkit's just marketing. I mean, like,
are these companies actually using AI orare they just have they just updated
their algorithms, Like right, it'sall the same, Like we've been complaining
about algorithms and maybe that hasn't causeas much team because I don't know,
it's not like this a brain newsector, but like the whole just like
the ads that were fed via socialmedia. It's like, okay, that
(05:19):
sounds a lot like the AI thatMonarch or Copilot has implemented into their budgeting.
And so much of it I thinkis marketing and folks looking to cash
in and to show that they're forwardthinking. They're you know, they're utilizing
technology in order to benefit their customersand to better their products. Yeah,
but you're right, some of itis smoking mirrors. That's what it feels
like to me. And and specificallyI think because of chat GPT, because
(05:42):
it has like the way it givesyou the information, it's like there's somebody,
you know, It's like there's somemind behind it. It's like typing
it out and you're seeing it,and it's like that's it's just like incomplete
Google results that are being sort offed to you in real time, you
know, and it's just formatted insuch a way that looks like there's somebody
on the other end. But somuch of it I think is perception.
In the new AI results with Google, when you see that at the very
(06:04):
top, it's linking to multiple articlesunderneath war its referencing them from and it's
almost like the same old thing.It's like to pull out they had before,
which highlights takes information from one articledifferent format, though it's a different
format, and that matters. AndI guess how it is that folks interprets
and I get that it's a littledifferent of how they may pull it off
on the back end, But yeah, it is. I think it's I
think it's ever blown by the way. So we're talking about investing. Don't
(06:26):
let the different talking heads on TVinfluence how you invest either. There was
a segment over on Fox Business wherethe economist Harry Dent, not to be
confused with Harvey Dent, but hepredicted a stock market crash worse than the
two thousand and eight crisis. Thebubbles of all bubbles is what he called
it. And he's predicting an eightysix percent drop in the SMP. That's
(06:48):
bad news, man, that'd behistoric. Which, of course, this
then reminds me of the phrase aboutecondomists predicting nine of the last three recessions.
So we think this is also overblown, because, yeah, the stock
market might experience a meaningful decline oftwenty percent even more, that certainly could
(07:09):
happen. Can we predict that whenit's going to happen. There's no way
or if it'll happen. I'm prettysure mister Dent that he's not going to
be able to predict it either.So we're pointing this out because we want
you to stay the course. Andit also makes me think about the reason
so many folks get airtime like thisis because when you're being cautious and you're
calling for a correction, it's like, hey, the good times they're not
(07:30):
gonna last. How is that personperceived? They're seen as wise, they're
seen as prudent, as opposed tolet's take out what history has actually shown
us over the past one hundred years, which is that the stock market goes
up three out of every four years. What do you do with that information?
Will you say, oh, okay, then I'm just going to continue
to invest no matter what. Well, what is the summary of if you
take that sort of mindset, Oh, you're seen as naive, you're pollyannish
(07:54):
at the very least being the mostgenerous. You're seen as just overly optimistic.
But that's the reality. But obviouslydoesn't get the headline, It doesn't
get the clicks, and I don'tthink it means that we're not seeing any
frothy behavior in the stock market,or that there isn't going to be some
reversion to the meme because I've seenoutsize gains over Talk to us a few
years, talk to me four years, yeah, you know, talk to
me after a decade. If you'regoing to ask either of us, will
(08:16):
the stock market be at higher levelsin four years than it is today?
I mean for sure, yes,yes. Does that mean we won't experience
a lot of volatility in between inthe day time? We probably will,
but it doesn't matter because we're notinvesting for the short term. Yeah,
we're investing for the long term.That's right. We got more money saving
information to get to. You're listeningto How To Money with Joel Larsgard on
(08:37):
demand from KFI AM six forty andwe'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 wantto be able to use it responsibly.
But if you do that, ifyou pay your credit card on time and
in full every single month, wellcheck out our credit card tool. You
can find that up on the websiteat howtomoney dot com. Joe is here
(09:00):
from our next listener, she's gota question, specifically a nerdy budgeting question.
Let's hear it. Hey, MattJel, my name's Georgia. I'm
wondering how you all account for giftcards in your budget. Well, it's
awesome that gift cards can feel likebonus income. I don't love that the
redemption transactions are hidden from my budget. I think there's value in tracking expenses
(09:20):
for historical purposes, especially the onesthat I would have done anyways, but
just so happen to pay with thegift card. My budgeting system can't connect
to gift cards and read the transaction, so I have to manually track them
and categorize them appropriately and just kindof a pain. Should I just ditch
the tracking and leave them out ofmy budget altogether? Or is there a
(09:41):
better way to ensure that my expensesare accurate. I use my spending data
to estimate how much to budget annuallyor monthly, so ignoring expenses that were
paid with the gift cards skews myestimates. Thanks so much, love the
show. I love George's attention todetail here. Gift cards people usually receive
them, and of course from somebodyelse as a gift and then I think
(10:03):
most folks think of them as freemoney to be spent however, they like
without repercussions, which I think isa totally fine approach, Like, I'm
not no shame in that game.But of course you're going to gain more
ground by incorporating, you know,spending none of those gift cards into your
budget. Right, unless you're gettinglike gargantuan gift cards on the rig,
it's not going to make a massivedifference. But it's a cool conservative approach
(10:24):
that functions in essence like a forcedmethod of saving. So I kind of
like how she's paying attention to thatevery nook and cranny of her financial life.
I mean, got it all buttonedup. Yeah, But I'm not
sure if there are any budgeting appsthat allow you to account for gift cards.
I looked, I didn't. Idefinitely didn't see any, But I
think since it's kind of a oneand done thing, unlike a better credit
(10:46):
card, right, I think itkind of makes sense though that budget software
doesn't have anyway to get to thatdata unless you input it manually, which
of course is not seamless, butit is a way to keep track of
those dollars that you spend, andI think there is something about the manual
inputting of data that connects our brainto what it is that we're spending in
(11:07):
a more thorough way. I don'tknow, it's not that like you're rubbing
your face in the mess that youmade, but sometimes it depends on how
you spent that that month in aparticular category. And so I guess all
that to say, this could bea situation where it's a blessing in disguise
and Georgia. This is one ofthe reasons why I know there are lots
of different budgeting apps and software outthere that automates things, I still manually
(11:31):
input my expenses in order for meto be able to pay attention to what
it is that we're spending, inorder to catch any fluctuations in our behavior,
which over time, could you know, it compounds And so for me,
it's something that even though it froma does it make sense for me
to spend my time in this way, well not if I'm only looking at
like my hourly rate, but ithas more of an impact and I just
want to I really enjoy keeping tabson my spending in that way. I
(11:54):
like being able to keep up withit, and I like being to compare
previously, Like at the end ofthe year, MA had the ability to
look back on our expenses, comparethat to previous years of spending, and
to see where we are as afamily. I think that's really important and
it drives and it informs the decisionsthat we make in the coming year.
And it seems like that's a bigpart of why Georgia wants to keep up
with this. I'm curious how manygift cards she's getting and what she's getting
these gift cards for. If thisis like a minor thing and just kind
(12:16):
of like a type a perfectionism that'scoming through, or maybe I don't know,
maybe some employers will give you giftcards as like a bonus sometimes,
so maybe they are a significant partof kind of her quote unquote income essentially,
maybe, And so I get wantingto document that. I get.
The bad news is that there's notreally it's a manual thing. There's not
really any way to do this withany of the software that we like the
(12:37):
best when it comes to budgeting,which is like why NAB and Monarch Money,
those are two of the best outthere in the business right now,
especially now the Mints has gone away. So yeah, if you really really
want to keep track of this,you're gonna have to kind of implement a
Matt like system. There's not somethingsuper de breasy and Matt, we haven't
really posted your Excel budget spreadsheet recently. For all the nerds out there you're
(13:01):
interested, we should put that inthe show notes for this episode up on
how money dot com. Yeah,so the other option, So that's one
one option right to actually keep upwith it, But the other option is
just a ditch it. That's whatshe said, to ditch it completely,
and I might recommend doing taking thatapproach, treating those gift cards more like
a complete and total gift that justallows you to spend in a way that
(13:22):
you otherwise wouldn't and almost treat itmore like a bonus. And that's exactly
how I treat it. Basically.Anytime we have a gift card, like
even cash on hand as well,I treat like free money. It's just
it's just a little bit of extraspending money. And someone gives you a
bottle of bourbon. You don't stickthat into your booze budget like you know,
deduct accordingly, you just enjoy thebourbon. I guess you could,
but yeah, no, you justI just enjoy it. And most of
(13:43):
that comes down to just not necessarilywanting to personally keep up with it.
Yeah, so that's yeah, Iassume that's what you'll do as well.
Yeah, on no perfect solution here, we you know, Yeah, similarly,
we'll just use the gift cards anoption. It's to a restaurant or
something like that from a relative,and we just enjoy it, and it
basically means we can eat out anothertime that we hadn't budgeted for. So
(14:05):
it feels like a sweet bonus andit feels like an extra perk that we
hadn't planned on, which I whichI love and I appreciate. It's free
money more than anything, I willsay. I think what's important to do
is just to make sure that youuse that gift card, because I don't
know where the stats are off thetop of my head, but the number
of gift cards that are languishing inGermany drawers, whether or not you're gifted
that gift card or whether it's youthat has that's gone out, because maybe
(14:28):
you're able to buy three hundred dollarsworth of dining credit for two hundred dollars,
Joel, that's something that you've doneat a favorite Mexican restaurant of ours
back in town. But if youdon't use that gift card, well obviously
that's a big no no. Yeah, no, you got to make sure
you use it, keep them ina place where you're going to take them
out with you all the time,yep, if mayke it prominent, yeah,
(14:48):
and no one to overlook it exactly. So that's the worst thing about
gift cards is people they go unusedand you forget about it is wasted money.
I think I heard something like Starbucksis like one of the biggest banks
album in the world just because ofhow much money is sitting in Starbucks gift
cards in people's accounts. It justdoesn't get used or or lingers for a
long time at least. Yeah.And I will say, you're more likely
(15:09):
not to use the card if itwas gifted to you, because it might
be a restaurant or a store someplacethat you don't often frequent. And if
that's the case, it's worth checkingout some different sites like card cash or
giftcash dot com, or you cango on there and then you put in
your gift card how much it is, and they'll give you a quote.
They'll tell you like basically, let'ssay you got a twenty five dollars gift
(15:30):
card. You can go to thesedifferent sites and they'll say, all right,
we'll give you twenty one bucks forthat. Yeah, and you might
be for like Amazon than you willfor like the Gap. Sure, and
you might be thinking, man,that's a pretty steep cut. But here's
the deal. What's better to havelike most of your money or none of
your money. Like let's say youlose that gift card, or let's say
you have a gift card that expires. Man, it is so much better
to go ahead and exchange that cardfor actual cash that you can then immediately
(15:52):
deposit in your account or go spendwherever it is that you want. And
so this is an instance where youmight be allowing perfect to be the enemy
of good. And if you havecards on hand that folks have given you
that you're not going to use,man, I would totally unload those that
again sites like card cash or giftcash doctor, or use them to buy
gifts for other people or I don'tknow, can you regift gift cards,
I think you can sure, I'mokay with that. If you're by the
(16:15):
way, this expires next week,well, typically, like I might want
to get on it. Most ofthose gift cards don't expire, right,
so, especially like the big majorbrands, less of times they're good in
perpetuity. So if you're like,I don't shop at Old maybe, but
my friend Sheila does or I don'tknow if she's your friends with other state
names like but just yeah, Montanaexactly, that'd be a good name,
(16:36):
all right, But I hope thathelps Georgia. Best of luck to you.
All right, We've got actually moreto get to on today's show.
You're listening to How To Money withJoel Larsgard on demand from KFI AM six
forty. If you're on Facebook,by the way, you want to join
a group of like minded folks whohave money questions, who have money insights,
please go join the how to MoneyFacebook group. Let's talk about spathing.
(17:00):
If you heard of this term before, I did not until this article.
Okay, So it's another dumb trendcalled spathing that the USA Today highlighted
this week. And I don't know, maybe this is just another term that
the young kids are using and youand I are too old to realize it.
Now we are over the hill.This play stupid terms. We'll get
us stay up to speed on hervocabulary, though, and so this is
a new term though for something it'sold for your Riz is off the chain
(17:23):
this morning. I don't think he'dsay off the chain anymore, rud Riz.
Yes, well I was combining thetwo. Okay, it's like the
old yes, all right, Iappreciate like it. Yeah, nicely done,
but okay. So spaving is anew term for the age old belief
that you can save more by spendingmore. Is letting the buy one,
get one fifty percent off deal triggeredit by two things when you only needed
(17:45):
one, because it feels like you'resaving more in the process. Or it's
spending more to hit a free shippingthreshold when you weren't planning on buying those
additional items in the first place.We've all been there, I too,
have had my mind hijacked in thatway, Matt. So I think the
this is a normal human condition.It's also, I would say, it's
like spending more to hit a creditcard welcome bonus. It's great that you
(18:07):
can earn the eighty five thousand Southwestmiles right now. Put a link to
that show notes if you want tothe details on how to get the Southwest
Companion pass easier than ever given howmany miles are throwing out there. I
just booked a Kate Is Colorado tripfor later this fall. I guess how
much it costs me buy that secondticket? Nothing? Nine dollars and thirty
cents for whatever the tax even yecharge exactly. So those Southwest points are
(18:29):
coming super handy. But it's onlyworth signing up for the credit card if
you're not having to manufacture spending togetherthere, which means having to spend more
than your normal budget allows for puttingyou into debt that you can't pay off.
Right and so, if you knowyou're going to use that item and
you have the funds, or ifyou're buying in bulk, you're stocking up
spending more now to prolong your nextpurchase, that's fine, but watch out
(18:51):
for the marketing attempts trying to makeit sound like buying more is going to
save you more. It's going toperk your frugal ears up, especially if
you somebody like me. But ultimatelyit's a letdown, and it means you've
spent more than you otherwise would have. And I feel like nothing gives us
in that zone mat as much asBlack Friday and all those deals like yeah,
oh, you're a dummy if youdon't spend money in this way because
(19:12):
it's saving you money, and it'slike, well, you actually need it,
not really, no. Yeah.It makes me think of a recent
article in the Atlantic about the freetrial trap, because, of course,
who doesn't want a free seven daytrial or even like a free month of
service. But that offer it doesn'texist out of the goodness of that company's
heart. It's a bait. It'sto get a hook in your mouth.
(19:33):
And there's actually good news all thestreaming front, because we're seeing cancelations tick
up to record numbers as the differentstreaming services out there. Proliferate folks are
realizing that is eating up more oftheir monthly budget and they're cracking down more
folks are canceling everything like us.They're opting to cancel a bit more indiscriminately
at least. But the free trialtrap, man, the thing is real
(19:56):
because forgetting to cancel is costing folksbig bucks in spiderweb man. It's like
it's like the fly. It's adeath by a thousand cuts because you don't
think it's that big of a deal, but all of those things added up
makes an impact the US. Theyeven suit Adobe this week. Did you
see that over they're making canceling toodifficult for their customers. But it's okay
(20:17):
to try things before you buy,but don't forget, like use a calendar
reminder to ensure that you don't forgetto cancel that like a couple of days
at least in advance, you know, because if you hit snows or maybe
if you click and drag it overto the next day because you're like,
I don't want to do it today, give yourself a little bit of margins.
There's a difference too, between again, between forgetting about it versus just
be becoming immune to those prices.And luckily, more and more for folks
(20:41):
are becoming less insulated from those chargesbecause there are so many of them,
right, Like that that's the thing. It's you know, you're talking about
part time jobs earlier, Like that'swhat it takes in order to manage all
of the different subscription services out there. There's a reason they give you free
access for a limited time because theyknow most people aren't going to cancel Matt.
They realize I think we gave thatstatistic not too long ago about people
(21:04):
who signed up for Peacock to watchthe Chiefs Dolphins game back in the fall,
and people are so excited about that, and they sign up for Peacock
and then they never cancel, andmaybe that's the only thing they've watched on
that service, but they're still payingfor it. The same thing with a
gym membership. Man any does anyindustry do it better than the gyms.
Let's talk about groceries for a second, and maybe whether or not you should
(21:26):
drive more in an attempt to savemore. There was an article in the
Wall Street Journal signing that more Americansare shopping around to save money. They're
hitting up various retailers in order tosnag the specials at each given store,
even driving the cheaper area codes toshop at less expensive stores. So maybe
think Matt like Publics is a grocerychain out of Florida that we have some
(21:48):
of them here in Georgia, actuallya lot of them, and they have
a slew of Bogo offers every weekby wing you one free deals. Those
items can be a really good priceif you're buying just those Bogo those Publics,
but the normal prices are higher thanbasically every other grocery chain out there.
Publics has nice stores, and theycharge more for almost every item on
their shelves than the discount chains youand I like to shop at. So
(22:11):
I don't know, maybe you wantto hit up Publics but just based on
the Bogo deals, and then yougo somewhere else to get more of your
other groceries. The best way toplan out your grocery purchases is to use
the website basically a digital tool likeflip dot com flipp dot com so you
can see all the sales flyers inone place. That'll help you create a
(22:32):
grocery saving strategy. If you're thekind of person who says, I'm willing
to not just go to a onestop shop or to drive further to get
to the discount place, maybe Iwant to hit up two or three spots.
Well that's I think that's the problem. That's my biggest issue that I
have with the journal with the headline, which is them saying that hey,
you can no longer do the onestop shop, but that's not true.
And people they have so fallen intolike they've fallen in love with certain brands
(22:55):
and they're like, oh, Igot to go to this store to get
this because they're the only place thatsells that. I want to push back
on that little bit, like youdon't necessarily need all the different options.
You can just go to Aldi andnot even look at the different deals at
the different grocery stores to save time, and you you're still going to save
a ton of money. And Iknow not everyone has an all d near
them, but they're dude. Ifeel like they're multiplalying like rabbits, Like
(23:15):
they're they're opening more and more ofthose stores are opening all over the place.
If you've never considered going to anAldi, you've got to check it
out. We're legal as well asa cousin to Aldi. That's where we
shot. We're it's slightly more complex, fancier cousin of Ald is how I
view letal. They're pretty similar legaland costco. That's they get the bulk
of our grocery dollars. But yeah, I think the time and energy it
(23:37):
takes and the additional planning it takesto shop in a bunch of different grocery
stores. You got to figure outhow much are you actually saving and whether
it's worth the hours you're putting into. So that's why going to a place
like all the or legal like tryingto really get the bulk of your stuff
at one store, but the cheapeststore is probably the best, best,
the way to do it. You'relistening to how To Money with Joel Larsgard
(24:00):
on demand from KFI AM six forty. Don't forget to sign up for the
how to Money newsletter. You canfind that up at how tomoney dot com
slash newsletter. It is now timefor the Facebook question of the Week.
This is from an anonymous poster andthey write for someone retiring significantly early,
think someone in their forties, Whatare some of the hidden costs or catches
that can be a surprise and theycan lead back to needing employment or significant
(24:25):
cuts to lifestyle. You want tomake sure they're planning ahead. What you
think, Joe, Well, thisgoes back to kind of what we were
saying with Justin, who's a littlebit younger, and so you want to
be thinking about these potential shifts,these potential life changes or the potential gotchas
of retiring early. And yeah,if you are in the lean fire camp
where you're saving barely enough to coveryour bills, you might find that a
(24:48):
bunch of different things could impact yourability to stay retired. So not that
you need the one more year syndromeis real too, But it's also crucial
to be thinking about patting and someof these other inevitable things that can catch
up to you. So let's covera few that could slap someone upside the
face, Matt, who is retiringin their forties. I think the first
(25:10):
one is lifestyle creep And actually thiswas something that a lot of fellow how
to Money Facebook members mentioned, whichis so true? Is it? Basically,
if all your friends are working,what are you going to do with
your time? You might have abunch of free or cheap hobbies, which
is great. You might be intodisc golf and running and biking, and
those are like fairly cheap things todo on the rag, But you also
(25:33):
might be tempted to increase your spendingtoo, and so realize that, hey,
with more free time can come morespending, it could come less spending
too, Matt. Maybe you're ableto ditch a car, you're not spending
as much time commuting to work.Something like that, Maybe you can actually
reduce some of your costs to spendall that money at Brooks Brothers on your
right your business attire, Yes,but what does that look like for you?
(25:55):
At least be willing to think about, how will I want to increase
my lifestyle If I'm working less,am I going to be traveling more?
Yeah? Credit card rewards points willtake you part of the way, but
they're not going to take you thewhole way, and so you're going to
need to budget accordingly for that.And I would just make sure cool your
budget now looks one way, it'sgoing to look different when you hit retirement
in your forties, So just makesure you're kind of at least thinking through
(26:17):
how it could be impacted. Yeah, vacation specifically, because when you're working
full time, taking an offer aweek or two, like once a year
like that seems like a normal amountof vacation. But when you're retired,
you're probably thinking, how come I'mnot always on vacation. That's certainly something
to work to think through. Buthealthcare, this was honestly the first thing
I thought of because other members inthe Facebook group they mentioned this as well.
(26:40):
But the cool thing for folks inthe fire crowd is that when you
retire early, even if you havemillions of dollars in investments, it's often
going to make it look like yourincome is minimal. And so the subsidies
that you qualify for and the ultimateprice that you're gonna end up paying for
health care, well, it revolvesaround your family size and your income,
not your net worth, which isa good sign. Right, So you're
(27:02):
basically good healthcare might not cost youas much as you think. Yeah,
but it depends too on how longthese massively generous subsidies are going to continue,
right, Like, how long they'reactually going to be around that's another
conversation. But just build in somesubstantial flexibility for your costs I think potentially
to rise dramatically. There's certain thingseven on the books now, Matt,
that are set to expire, includingsome of those generous subsidies for people making
(27:23):
under certain certain income thresholds. There'seven the tax cuts and job dec which
is set to expire. So theseare not even just like, oh,
will politicians do this or that,And granted they might do something that keeps
those things around, but they alsomight not. And so if you're planning
on your health care costs staying theexact same or going up at just the
(27:44):
general rate of inflation, you're beingmyopic. On the note of healthcare listener,
Hew, do you mentioned dental workthat's not covered by health insurance most
of the time, right, there'sa separate dental policy over related it is,
well, I think depends on howbout your teeth are, and you
can do like medical tourism, right, so to potentially down on some of
the costs vacation and get your teethfixed exactly exactly sitting pull side anyway,
(28:06):
sitting Pinicolada, you don't need tobe showing then you don't even need teeth,
yeah for that, But a lotof those costs are going to be
out of pocket. Who knows whatyour mouth situation is, like anonymous poster,
but I would at least think abouthaving money on hand for potential dental
care. And then Matt continuing on, I think something else inflation. Right,
Many retirement models factor in a twoor three percent rate of inflation,
(28:26):
but what if it's hire right?Can you imagine having been the person who
retired in late twenty nineteen. Rightrunning standard numbers, it seemed reasonable.
At the time, rates had beenrelatively steady, we hadn't seen out of
control inflation in decades. But alasinflation reared its ugly head in a massive
way. And so if you hadjust reduced your liquidity paying off your two
(28:48):
and a half percent mortgage and youmoved into more conservative investments, largely missing
out on the massive stock market runup that happened after that COVID dip,
you found yourself in a really toughspot financially speaking, and your playing just
didn't shake out the way that youhoped. And so inflation was not slowly,
but it was rapidly reducing your buyingpower. Inflation is back under control
to a certain extent, not backwhere the Feds want it, but man,
(29:11):
you've got a least factor in forsome of those outsized things that you
can't control. I think COVID,which has shown a dramatic spotlight on some
of the things that are out ofour control that can significantly impact our finances.
Yeah, and you kind of rolltwo things into one there, like
you're talking about inflation, but thenyou were kind of talking about the stock
market, and that's I think that'sanother risk because when you're drawing down on
your investments, you're typically moving yourassets into more conservative investments, which means,
(29:36):
yeah, one of the risks thatyou do run is missing out on
outsized returns there within the market.I'll point out though, that everything we've
talked about so far, so we'vetalked about like lifestyle, cree, healthcare,
taxes, these are all sort offinancial considerations. And I think one
other consideration is how it is notthat you're going to be spending your money,
but how you're going to be spendingyour time. Because as an individual
(29:59):
who's maybe been in a job oran industry for like twenty thirty years,
I think it can be difficult tobreak out of the mindset of where it
is that you find your identity becauselike the jobs that we have that like
that is most likely the biggest impactthat we have on society, Right,
Like, this is something you doat least eight hours a day typically,
and and you do such a goodjob at it that they pay you thousands
(30:21):
of dollars every month. Okay,Now imagine a world where you are completely
divorced from that situation. Like thatis what retirement is like in the jarring.
Yes exactly, and so for alot of folks, I think one
of the risks you run is notgoing back to work because you need the
money, but because you need thepurpose. And so I think it pays
to make sure that you've found purposeand how it is that you want to
(30:41):
spend your time outside of the wallsof your employees takes the thing. We
had a friend who she and herhusband early retired, and you know what
he was doing not too long afterhe quit his day job. He was
driving for uber yep. And itwasn't because they ran out of funds or
because the stock market took a stepback. It was because he didn't know
what to do with his time.Is looking to be an active member of
(31:02):
society and find a way to contribute. He was one of those talking to
buber drivers, Matt, because hewas missing the personal connection that you get
with people. And I'm sure everytime someone came in with earbuds in he
that would be you put a frownon it would be me exactly. That's
why I know I need this outletat least to some degree. But dialing
it back, maybe it was like, I need to be somewhere where I
can just talk and people lisn't dialingit back a little bit and maybe not
(31:22):
going a whole hog all or nothing. Maybe that's a better way to at
least like test the waters, orkind of like we talked about with Jillian
John's are doing a long a sabbatical, like taking two months off, taking
four months off, finding a wayto test the waters before you go all
in and say I'm just bagging workand I'm never going to work again.
I think I can be a healthierapproach. It can at least allow you
(31:45):
to know how you're going to respondto it in ways other than just the
financial ones. Totally, Absolutely,it's important to think through how you're going
to garner that life satisfaction and fulfillmentonce that's no longer something that you're doing
every single day and I or notdude who think that work is the only
thing they can give you that satisfaction. But it's recognizing the fact that it
does because truly, especially in America, sadly, for so many people it
(32:05):
is. It is probably like oneof those top three things, if not
the number one thing. Well,like I get it because it's what we
spend most of our time doing,like throughout the day, right, and
so on one hand, like there'sa healthy approach to it, but there's
got to be things outside of that. And I do think that over time
you can start shifting towards some ofthose things outside of work. Like early
it's sort of like investing, right, We're like, early on, you're
going after it really hard. Butover time you start to maybe I don't
(32:29):
know, maybe it's maturity, Maybeyou realize that there are things outside of
the walls of your employer, outsideof your business, that you want to
do. But I guess what I'mpointing out is the fact that not everyone
has given that thought that there issomething beyond that, and that's when it
starts to get dangerous, and that'swhen it's unhealthy. I think. Yeah,
thank you as always for listening tothe show. We appreciate your time
(32:49):
and attention. You can always findmore money saving information up on our website
at howtomoney dot com. We'll seeyou back here next week. You've been
listening to How To Money with JoelLarsgard. 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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