June 1, 2025 • 33 mins
Credit card points are being devalued right and left. Matt and Joel tell you what you need to know to spend the points you've accumulated in an optimized way.
Ask HTM: Cade has a question about how to invest beyond his company match.
Renting is cheaper than buying basically everywhere right now. And the gap isn't small. Know this: You're not throwing away money when you opt to rent!
Ask HTM: Cassidy's insurance company is going to drop her if she doesn't address some issues around her home.
Ask HTM: Cade has a question about how to invest beyond his company match.
Renting is cheaper than buying basically everywhere right now. And the gap isn't small. Know this: You're not throwing away money when you opt to rent!
Ask HTM: Cassidy's insurance company is going to drop her if she doesn't address some issues around her home.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
K if I Am six forty. You're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel lars Guard and Matt Aultmix.
Speaker 1 (00:56):
Kf I Am six forty live everywhere on the iHeartRadio app.
Speaker 3 (01:00):
This is how to Money. I'm your host Jro 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 how tomoney dot com, forward slash ask Now. It
is time for the ludicrous headline of the week, and
(01:22):
this one is from the site Miles to Memories. The
headline reads, City thank You points will soon be worth
twenty five percent less, Joel. The credit card companies that
giveth and they taketh away City points are being devalued
by twenty five percent beginning in August, which will likely
come as a big shock to folks who have been
accruing points via their city credit cards. So first of all,
(01:43):
it's okay to be frustrated. This isn't something that I like,
I don't think like. For instance, like when you're at
the grocery store store and you experience some shrinkflation, it
feels less egregious because you have a choice to buy
something else, right, You've got options, But deflating the actual
value of your points that you've accrued by a meaningful
amount feels a bit more like robbery, right Like, It's
not like you have some other option of being like, okay,
(02:05):
well you stay with us, and maybe we'll only to
value it by fifteen percent or ten No, no, no.
Speaker 4 (02:09):
Just a twenty five percent cut across the board.
Speaker 3 (02:12):
But just know that you have a small window to
use those points at the current full value before that
value gets slashed. That's gonna be August twenty fourth, Yet
another date to put on the calendar. It reminds me
of a subscriptions right, like, put it on the calendar.
Know that this is something you need to because right
now you're listening. Maybe you're sitting on a stoplight, right,
Brittany Chris, I know you're listening, but you're not gonna
(02:33):
dive into figuring all of this out right there now,
you know, but add it to your calendar. Make sure
this is something that you pay attention to, because I
would hate for folks to miss out on some of
the value that they are entitled to overnight just because
they miss it by a couple of days.
Speaker 1 (02:44):
Yeah, and you might have been using that card in
hopes of booking travel in the future, and you're like
just stashing the points, stashing the points so you can
plan on an epic vacation, and then for City to
come out and pull the rug from under you and
be like, ah, I mean, you're gonna have to have
a lot more points now to get the vacation you'd
hope for. That's just a frustrating thing to experience. So
booking sooner than later is a good idea. And by
the way, City is not the only company doing this,
(03:06):
I mean Hyatt. Earlier this year they shifted hotel tiers
to make it more expensive to book with points at
some of their properties, and these point devaluations are becoming normalized.
The CFPB, the Consumer of Financial Production Bureau, I believe
they're on life support. They were poised to do something
about this at the end of twenty twenty four. They
were basically saying, hey, shot across the bow. Credit card companies,
(03:29):
you can't devalue points like this or we're going to
come after you. Well, that's unlikely to continue now because,
like I said, the CFPB, they are barely breathing, they're
barely holding on, so they're probably not going.
Speaker 4 (03:41):
To actually see that through.
Speaker 1 (03:44):
I think it's important for folks to not overestimate the
value of their points and to just get about using them.
The more you hoard them, the less valuable they become
over time. So yeah, plan your fun trip as app
Let this be an excuse to start u using the
points instead of just holding on to them. And I
think too, Matt, this is actually maybe another change that
(04:07):
people might want to consider making. Is if travel rewards
points are becoming less valuable, it makes straight up two
percent cash back cards more attractive. Yeah, because you don't
really have to think about it. And so yeah, if
you're like, oh, yeah, the travel points game playing that
has got me some sick deals, well the deal.
Speaker 4 (04:26):
If the deals are less.
Speaker 1 (04:26):
Sick, then cash back credit cards just seem to make
a little bit more sense these days.
Speaker 3 (04:31):
Yeah, I think folks might be less interested in jumping
through all the different hoops in order to like the
five percent rotating category spend is it discovered? But it
kind of comes down to, I guess what phase of
life you're in, Because if you're in the phase of
life where you're looking to simplify your finances in streamlines
and things like, I'm all about finding ways to optimize
(04:53):
and get the best bang for your buck. But beyond
a certain point, it just feels like too much. You know,
Like if you were the kind of person who wants
to squeeze every last bit of toothpaste out of the tube,
I'm gonna squeeze it a little bit, you know, but like,
you know what, I've never done. Have you ever cut
the end of it off and then like scraped out
the toothpaste? I have You've seen people do that hyperfergal friends. Yeah,
And I'm just like, Okay, maybe you can get like
(05:14):
what two more days of I don't know, I guess
depends on how often you toothpaste you use, I guess.
Speaker 4 (05:20):
But I'm like, I'm willing to give it a little bit.
Speaker 3 (05:22):
Of a squeeze, but I'm not willing to like go
through the steps of cutting it and that's what it
feels like, some of these different requirements and hoops that
we have to jump through in order to garner them
as benefit from these different banks that they're asking of us.
Speaking of actually Discover, I saw that they're now part
of Capital One. I didn't realize it, but someone in
the how to Money Facebook group mentioned that the only
(05:42):
credit card that they have are both Discovered and Capital
One cards.
Speaker 1 (05:46):
Which are now essentially going to become the same institution.
We don't know how it's exactly going to shake you.
Speaker 3 (05:51):
I think it's necessarily going to impact anyone's credit per se,
But I think more importantly it just raises the question
of just, oh, what kind of cards have you been using?
Have you been garnering the kind of benefit from those
cards as opposed to just not questioning it. I think
there are just some simple changes that you can make
that will allow you to get the most bang for
your bunch, right.
Speaker 1 (06:09):
I think one of those things is do I are
the only credit cards I have? Do they come from
one issuer? Because let's say you only use City cards, right, Well,
now you're like, well, man, City just did this thing
to my points, and they're worthless. Man, I should have
been banking points with somebody else too, And the same
thing is true. If you only have Discover and Capital
One cards, you might want to say, oh, maybe I
(06:29):
should get Namax card or a Chase card in addition,
so that I'm not wholly exposed to one.
Speaker 4 (06:35):
Credit card issue.
Speaker 1 (06:35):
I think that would be a wise move for the
person that had money Facebook group that had that issue,
and for anybody else out there listening who has a
similar issue.
Speaker 3 (06:43):
Yeah, but no, I don't want folks to hear me
say like throw some shade at Discover and say that
like we don't like Discover, like they're a great company,
and specifically both of those banks.
Speaker 1 (06:51):
So I'm curious to see what it looks like for
them to merge, because they don't even really fully know yet.
Speaker 3 (06:56):
But right right, my longest standing credit card that I've
ever had, I'm talking like twenty or twenty five years
is with Discover, and recently angel I was playing with
some tools with I don't know if it was with
one of the credit errors or with one of the
scores that are provided by one of the credit card companies,
but they've got like this estimator and it's just like, hey,
what happens if you were to get rid of this card,
or were you to pay off some reduced to the
(07:17):
amount of spending or add in. Of course they're wanting
you to add a card next. That way you can
increase your overall amount. But I was crazy shocked to
see and this was just a simulator, but I was
really surprised to see that my longest standing card where
I had to nix, that they were estimating that my
score was only going to drop by like two points.
Speaker 4 (07:33):
Oh wow, which I would have expected like at least
ten times that at least like twenty points or something. Yeah,
but yeah.
Speaker 1 (07:39):
It's probably because you have so many other credit cards
you've had for a long time too, Maybe.
Speaker 4 (07:42):
I guess so.
Speaker 3 (07:42):
But even still in my mind that one Discover card,
I'm like, oh, yeah, that's the one I've had since
Discover Capital one Discover since I've had that I've had
since I was a teenager. But evidently it wouldn't be
wouldn't be that big of a disruptor to the overall
credit score. Just take that with a grain of.
Speaker 4 (07:56):
Salt, though, very interesting.
Speaker 1 (07:58):
Yeah, all right, we've got more to get to on
today's show.
Speaker 5 (08:01):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (08:09):
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 (08:18):
Or Matt, let's get to another question. This one is
specifically about the order of operations for retirement accounts.
Speaker 6 (08:25):
Hey, Matt Angel, this is Caid from North Carolina. I
really appreciated your your thoughts on my wife's pension payout
plan that I asked a few months ago.
Speaker 4 (08:38):
I do have some.
Speaker 6 (08:39):
More questions now that I have received the job offer.
After I will graduate from my program, I will be
making one hundred and thirty thousand dollars a year in
California and wanted some thoughts on how to best prioritize
my retirement contributions. So when I put in five percent
(09:01):
to my company's four oh one K, they will put
in a ten percent match for a total of fifteen
percent of my gross income. But following that, if I've
access to both a health savings account as well as
a roth IRA, how would you prioritize contributions to one
over the other. I know that contributions to an HSA
(09:25):
in California are still subject to California state tax, so
that kind of hinders the overall tax tax savings that
are normally found within the HSA. We likely can't max
both mine and my wife's roth irays and my HSA
(09:45):
at least right away. So would you suggest only maxing
our wroth irays or maxing HSA and then doing contributions
to what we.
Speaker 4 (09:55):
Are comfortable with to our wraths.
Speaker 6 (09:58):
Thank you. I I really appreciate the show Best Friends
out well, Caid.
Speaker 3 (10:04):
First off, I'm gonna say congrats on that sweet new
gig you got. And you know what I'm going to
say is that I appreciate your transparency kind of sharing
with listeners out there.
Speaker 4 (10:13):
It helps them to be like, oh wait a minute, Okay.
Speaker 3 (10:16):
Maybe it makes them, you know, they got something to
shoot for, or it maybe it makes them.
Speaker 4 (10:20):
Think, Okay, if Caid's doing this, I can do this too.
I don't know. I appreciate that the transparency.
Speaker 1 (10:25):
That's a great salary man, even in California as well.
I mean, it should be noted in California, you should
give it. I always think about it's still solid athletes
who sign up to play for the California teams, and
there feels a lot less in actuality, is a lot
less like after taxation, because if you're in the highest
tax bracket in California, was it thirteen fourteen percent additional
(10:47):
being taken out? That's a lot sign up to playing
Florida instead.
Speaker 4 (10:50):
You get to keep all them.
Speaker 3 (10:51):
But on top of that, he's got that company match,
Like that whole structure is incredible. Right to be able
to get fifteen percent of your salary in your workplace
retirement account and you are only contributing five percent.
Speaker 4 (11:02):
Man, I love that. Like you're like, all right, I'll
show up with one third, you show up with the
other two thirds. We'll call it fifteen make it like
a bandit.
Speaker 3 (11:09):
I mean, that's actually not done, because I think you've
got the ability to go above and beyond cade. But
regardless the fact that your employer is so generously stepping
up to the plate like that, that's great.
Speaker 4 (11:19):
I think that's fantastic.
Speaker 1 (11:20):
Yeah, so you're already that fifteen percent savings rate that
we like to see, but we also love that you
want to go further and it's something that we would
encourage especially since the bulk of those contributions are coming
from your employer. We want you CAD to get used
to the physical reality of saving and investing fifteen percent
(11:41):
of your own money.
Speaker 4 (11:42):
You're in and year out, and.
Speaker 1 (11:44):
That's partly because any match is gravy on top. The
truth is that match can change at anytime. I've heard
from many listeners who have had their match pulled back
or eliminated, especially when economic times get a little trying.
That's one of the first things Matt that employers often
do is they say, you know that match.
Speaker 4 (12:03):
That we offered, Yeah, we're we're gonna have to posit
for now.
Speaker 1 (12:06):
And sometimes that pause turns into an elimination of the
match that they offer. That can be demoralizing for workers,
and it can also impact how quickly you're able to
grow your net worth as well. So I guess I
just don't want you to get so used to that
that you're like, I'm just and it sounds like you're not.
But I'm kicking in five percent, I'm overall saving fifteen
I can be happy with that. Well, if that pulls
(12:26):
back in any way, form or fashion, then you're gonna
feel the pain of having to increase. So I like
the idea of saving and investing a minimum of fifteen
percent aside from what your employer's doing totally. But K's question,
Wroth or the HSA. The answer is almost always gonna
be the HSA, of course, because of the triple tax
advantage nature of it.
Speaker 4 (12:46):
In fact, there's a quasi quadruple.
Speaker 3 (12:48):
Tax advantage because you're not paying payroll tax that faika
a tax that's on that and so investing inside of
an HSA, and this is of course available to you
because you.
Speaker 4 (12:57):
Are enrolled on a high deductible healthcare plan.
Speaker 3 (13:00):
But by investing those dollars that can help you to
grow wealth that will never be taxed in ways that
no other account offers. It's it's truly a unicorn. But
you got to use it properly. You got to invest
those dollars for decades to allow for those compounding returns.
And if you do that, according to the numbers, like
when you crunch the numbers, the HSA is the superior vehicle.
Even with the fact that, like you mentioned that California,
(13:23):
that they have some ridiculous HSA rules that effectively limit
the benefit, It's still good, right, This doesn't mean that
the HSA is a.
Speaker 4 (13:31):
No go, just not as good.
Speaker 3 (13:32):
It's yeah, exactly, it's not quite as advantageous as investing
within an.
Speaker 1 (13:36):
HSA and basically every other state. And you said basically
every other state. That's because there's literally one other state
that does what California does, and that's New Jersey.
Speaker 4 (13:44):
And so these two states, which is shaped like California,
but on the other side of the country.
Speaker 1 (13:49):
And they both of these states have compiled conspired against
their citizens. Shrink it down right, a much smaller version
and in a way to basically say, ah, yeah, the
federal government says that the these accounts are going to
be incredibly tax advantageous, and so do forty eight other states,
but we're going to be the two loan holdouts who
treat you like an idiot when you invest in an HSA.
(14:11):
So I do not love the fact that these states
do not offer the same tax benefit that almost everybody
else does. Not only do you have to pay income
tax on the money you contribute, you're also going to
owe state tax on the growth of the money you
experience in those accounts. But should that impact what you do?
Kad the answers maybe because the HSA, like Matt alluded to,
(14:34):
it's still better from an overall tax perspective, even with
those inferior tax rules in the state where you're living.
But those accounts are starting to look a bit more similar.
And the roth IRA, well, it has more flexibility, right,
It allows you to spend for other reasons beyond just
health expenses. The HSA, that's how you get the tax
(14:54):
treatment is because it's basically constrained for that kind of
spending in particular. Well, one thing that would factor into
my thinking here though, is are you planning to be
in California forever? Because if you're, you're likely going to
move to another state in the future. You're gonna be
able to avoid future state taxes on HSA withdrawals, making
it more compelling. So, yes, you're earning and investing in
(15:16):
an HSA while in California, but if you're taking the
money out in another state down the road, well, you're
not then going to be subject to the California tax
laws that are again antagonistic to HSA.
Speaker 3 (15:29):
So so it'll only be a thorn in your side
for that period of time while you're there.
Speaker 1 (15:33):
I want to say Kid said he was in North
North Carolina right now. So if he's like, Hey, all
my families in North Carolina, I'm in California. That's where
I'm gonna I'm gonna love this job. But like twenty years,
ten years down the line, we think we're going to
move back, well, then I would say that that that
puts another check mark in the HSA, because you're not
going to be subject to the worst parts.
Speaker 4 (15:51):
Of California's tax law.
Speaker 3 (15:53):
I missed wha, I miss the North Carolina party, that's
what you mentioned. What if he was moving from New
Jersey here in California and he's like, oh, I think
I'm going to move back home at some point.
Speaker 4 (16:05):
Again.
Speaker 3 (16:06):
And some of it like if you look at the numbers, yes,
like the most like financially optimized thing to do here
is to go with the HSA, But it also comes
down to what you like, if it's worth if the
hassle is worth it to you as an individual, for you,
if thinking through like this personal admin side of your life,
if that lights you up. If the job that you're
accepting in California is like, you know, a financial management
(16:28):
or something like that, then you're probably going to be
all over the numbers. And this is great because not
only do you have to track the expenses in order
to redeem that's not the proper term, but I don't know,
effectively to redeem your HSA dollars for retirement by keeping
up with your medical expenses, like everybody has to do that.
But in addition to that, you have to I mean,
so you mentioned that the income from those investments are
(16:50):
taxed on a state level.
Speaker 4 (16:51):
That's something you have to keep up with yourself. It's taxes,
regular income. It's just another I don't know.
Speaker 3 (16:56):
It feels like a hassle for something that sure you
may not be taking full advantage of. And so if that,
if thinking through all of that kind of bums you out,
then you can't go wrong with a roth Ira. Keep
it simple. You've got all the flexibility in the world.
You'd never have to worry about keeping up with records
and medical expenses. It's just something to think about. Yeah,
that's one hundred percent spot on. All right, We've got
(17:17):
actually more to get to on today's show.
Speaker 5 (17:20):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (17:26):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 1 (17:31):
All right, let's talk housing, Matt. There's a recent Redfin
report and it highlighted just how much more expensive of
it it is to buy a home than it is
to rent these days. And this is something that we've
been documenting over the past few years, in particular as
housing prices have just gone through the roof. But it's fascinating.
I love seeing the data, like, Okay, how bad is
(17:54):
it actually? Well, buying a home now requires fifty thousand
dollars more in sala than renting, So essentially, you need
an annual income of around one hundred and sixteen thousand
dollars to afford a mid priced home. That's roughly eighty
two percent more than the sixty four thousand dollars you'd
need to be able to afford a mid price department.
(18:15):
Quite the disparity, dramatic difference, right, And a bank Rade
study also found that is cheaper to rent than buy
in all fifty of the largest metro areas, So there's
like not one metro area they found of the largest
ones where it would be cheaper for you to buy
than rent, And that was not the case ten years ago.
That was not the case ten years ago, which makes
(18:35):
renting look pretty good, makes it look a whole lot
better than it did a decade ago, and more folks
who would have bought a home in the past, they're
just kind of getting zen with renting. Rich households in particular,
they're choosing to rent more than ever. This was according
to to rent Cafe. You and I, we own our homes.
We're happy with our choice. We're also real estate investors.
(18:55):
But the case are renting, especially in today's economy, is
a strong one. And the old adage that you're just
throwing away money, it's just not true. That is like
one of those ingrained beliefs for a lot of people,
renting equals throwing away money. And if there's one thing
that we can say, like we're not telling any individual
renting is right for you or buying is right for you,
(19:15):
it can be very circumstantial. But I just want to
dispel the notion that people instinctively feel about renting being
a really dumb financial move. That's just not true, and
it's especially not true right now.
Speaker 4 (19:28):
Yeah, it's definitely not true.
Speaker 3 (19:29):
Like it's not true that you have to be oh,
if you are renting an apartment. You're broke because there's
actually been a rise in millionaire renters. And there's a
reason for that, right. Yeah, So this is another article
we came across this week. We're seeing more luxury rentals
that offer these fancy amenities drawing and folks who have
high net worths who are renting that. Coupled with the
flexibility and the convenience that renting offers, as well as
(19:51):
the fact that you don't have to save up a
massive down payment, dude, this means you can invest more
in the overall sock market instead of funneling it towards
higher housing costs as well as maintenance and repairs that
are oftentimes vastly underrated, underestimated, undersaved for. But a lot
of intentional renters and that's the key part, man, You
got to be intentional about this.
Speaker 4 (20:12):
You can achieve.
Speaker 3 (20:13):
Greater levels of financial success than your home owning peers
by pouring money into the market as opposed to pouring
money into your housing.
Speaker 4 (20:21):
Owning a home.
Speaker 3 (20:21):
It can certainly be a great goal, but it's just
not for everyone out there, and honestly, on the flip side,
it's not a guaranteed thing to continue we're actually seeing
signs of softening in the real estate market. The big
real estate sites they've been predicting a housing market swoon,
which actually seems to be materializing. So if you're a
hopeful buyer, this is actually good news out there. Small
little anecdote, Joel just received my property tax bill assessment
(20:47):
and I opened it expecting the worst, which I mean,
let's be honest, over the past few years, we've only
seen increased housing prices increase, which means paying more to
when it comes to property taxes. And I did a little.
Speaker 4 (20:57):
Whoo because I saw our whole value actually decreased.
Speaker 3 (21:01):
So nice, which I'm sure there's a lot of folks
might say the same who are listening, and they're just like, wait,
Matt's taking crazy pills.
Speaker 4 (21:07):
Like what is going on?
Speaker 3 (21:09):
But when you see an increase in the what the
city estimates your property to be, like, these are just
paper gains right like this that is not an increase
that you get to realize until it comes time for
you to sell your house or unless you're trying to
pull some equity out of your home. But guess what
you realize on a month by month basis the amount
going towards ESCO in order to save up for your
(21:29):
tax bill. So this is again, this is a silver
lining for this is a small silver lining, and this
is anecdotal, but we are seeing this in more metros
across the country.
Speaker 1 (21:38):
I was just talking to my sister who is moving
to another city, and she was looking. They're looking at
places to rent. They've been renters, they're happy being renters,
And there was a condo that they actually ended up
settling on, and the price they're paying for the condo
was like a lot less than what they would pay
to buy a similar size unit in that complex. So
(22:01):
it's just fascinating to see the person who's renting it
out they bought it not that long ago, and I'm like,
they're going to be losing money every single month by
renting this apartment to them. They must have no other choice.
It's just interesting that renters can make out like bandits here.
So I don't even know what the hoafee would be,
but like that's included in the rent that they pay.
So there's like substantial savings to be a renter, and
(22:22):
then they can do a lot with that excess cash, right,
do smart stuff with that money. Investing for their future
instead of putting more and more money because well, buying
is the only way you build, you know, you build
a high net worth. Well that's just not true, and
it's less true than it was ten years ago too.
Like buying a house can make sense based on your
specific circumstances, your specific goals, but you just have to
(22:45):
run the numbers and you have to know the trade
offs because for most people right now, continuing to rent
can make a lot of financial sense.
Speaker 3 (22:52):
Yeah, I do think though the trick is being intentional
about it, and folks who buy defaults have kept their
savings right pretty minimal, whether it's just you know, a
four at work or investing in addition to what it
is that their workplace is offering. Realizing that they don't
have a default amount going towards the building up of
home equity. Right, Like, there's almost there's like a mental
switch that maybe has been taking place right just with
the given the democratization of investing, the ability for folks
(23:14):
to do that more on their own, on their own terms,
where it feels a little more accessible as opposed to
it feeling like something that was kind of out of
their reach when it's like the things have switched essentially right,
Like like back in the day, it felt like home
ownership was a bit more attainable, and investing aggressively in
the market felt like something that that really only the
one percent did. But now it's almost like the opposite,
where where it's like, oh no, no, everybody can invest,
(23:36):
even just with like the spare change in your in
your pocket, but you bought.
Speaker 1 (23:40):
A home, like exactly, must be independently, We'll do that, yeah, exactly.
So I do think that those tides are going to turn.
This isn't this disparity will not last forever.
Speaker 4 (23:48):
I totally agree. Yeah, I don't think this is a
permanent change, Joe.
Speaker 3 (23:51):
While we're talking about housing, we are certainly fans of
using airbnb while while you're traveling, But there are other
ways to get a cool place when you are taking
a big trip, and that is by partaking in a
house swap all the holiday with Jack Black and.
Speaker 1 (24:06):
Oh yeah, this is for some reason making me think
of I think it was a Fox TV show wife
swap which one mom would go to another house and
vice versa, and then you would see how the family acted,
and uh huh, that's reality TV.
Speaker 4 (24:20):
At its finest. Sounds like it was one of your
favorites that you're t voing.
Speaker 1 (24:26):
I can't describe it accurately, but just go look up
King Curtis on YouTube. I think that it's one of
my favorite clips from television history.
Speaker 4 (24:32):
Is that an actual? The actual?
Speaker 1 (24:34):
I think it was from White Swap and this young
kid did not like the new mom was in the
South for that week, and the way you reacted was
television gold.
Speaker 4 (24:44):
I might have to look it up.
Speaker 3 (24:45):
But we're talking about house swapping, Yeah, not why swapping
about that? These platforms are growing as a way to
allow folks to travel for less. So obviously instead of
buying nights, you are essentially bartering your exchanging nights at
your own place. And the different sites out of course,
you got them kind of hip sounding ones like Kindred,
which sounds super bouge what I was reading about that one.
Speaker 4 (25:07):
But swap house is one home exchange. That's another one
these platforms.
Speaker 3 (25:11):
These sites, they allow you to offer your place up
when you are out of town to earn nights that
you can use on the platform in the future. On
one hand, I don't like it, Joel, because it is
an inefficient exchange of value right, like it's an inefficient market.
It kind of makes me think of gift cards, like
why would you do this intermediary sort of step. It
makes me think of timeshares almost right, like like you
(25:31):
are handcuffed to this thing. But I do think it
makes more sense in different markets who where they're starting
to crack down more on airbnbs, where they're imposing more
strict regulations, like up in New York City, Spain, even
as well them all together, didn't they I don't know
if they banned them all completely outright, but they are
really cracking down because they're winning because and I get it,
like these towns they're starting to lose the charm that
(25:53):
made them what they were when they're just inundated by tours.
And so from that standpoint, it makes sense as a
creative work around.
Speaker 4 (26:00):
But I don't know, man, the.
Speaker 3 (26:01):
Dollar cash, the universal exchange store of value, the ability
to use that, I'm still more of a fan of.
Speaker 4 (26:08):
I don't know. I still like barning renting.
Speaker 1 (26:10):
I like barnering, so I like the way these sites,
what these sites are trying to do. And one of
the other things that they note on there is that
they're not reducing housing supply in local places because you're
just swapping, right, and so there isn't like this unit
that's being taken offline to be fully dedicated to full
time short rental use, which which is interesting.
Speaker 4 (26:32):
Totally agree.
Speaker 5 (26:34):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (26:40):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter.
Speaker 3 (26:45):
It is now tigned for the Facebook Question of the Week,
which is from Catherine and she wrote, ugh, do you
like you like my?
Speaker 4 (26:52):
Uh?
Speaker 1 (26:53):
I love that she stuck that in there. Yeah, frustration
coming out.
Speaker 4 (26:56):
When you read that you do you see or do
you hear no?
Speaker 3 (27:00):
I definitely hear yeah, the former the actual it's it's
the frustration for sure coming out in type well in
particular with this one, she wrote, My insurance company is
gonna drop me unless I complete these things by June seventh.
Remove yard debris, cut back vegetation, paint the home all
when color, and cut the tree branches back from the
detached structures.
Speaker 4 (27:19):
That's all fair, but the.
Speaker 3 (27:21):
Paint, WTF do they care? That my house is all
when color? Is there any point in trying to fight it?
Speaker 4 (27:28):
Joel? What you think should she fight it?
Speaker 1 (27:31):
Do you do you try to fight the man matt
ever or yeah, I think sometimes you do. Sometimes you do.
I can be hard headed. You probably try to fight
the man against like veteran thinks ways to more craftly
deal with this, and it's maybe that's what I want
to suggest, maybe some maybe craftier ways to deal with
this instead of ease into it, Catherine, instead of letting
your frustration get the best of you and just being like,
(27:53):
screw you, why are you making me do this?
Speaker 3 (27:55):
Like?
Speaker 1 (27:55):
There are ways I think to get around this and
to stay insured without completely ruining your life. So the
truth is insurance companies are sending out more of these
notices these days. We talked about that actually with our
friend Lisa from Consumer Reports not too long Lisa gil yeah,
and she was talking about how her tiny home Y's right,
(28:16):
that's right when gravel, which the pea gravel.
Speaker 4 (28:19):
She was addicted to the pea gravel.
Speaker 1 (28:21):
Just the with insurance rates going up around the country
and insurers are being a little more cognizant about who
they're insuring and what the properties look like. And then
on top of that, technology is making easier for insurance
companies to.
Speaker 4 (28:34):
Kind of check in and see what's going on.
Speaker 1 (28:36):
Right, They're using drones, they're doing flyovers, they're taking images
in an attempt to make sure they're not taking on
undue risk. My neighbor Matt just told me the other day, Hey,
my roof is more than ten years old, and now
my insurance company is saying they don't want to insure
me anymore. This is becoming Actually, roofs should last for
twenty to thirty plus years, and the fact that insurance
(28:59):
companies are just getting a little more antsy and squirrely
about offering insurance when everything's not kind of perfect. So
that sucks for those of you out there listening. You
haven't received a letter, you might in the future. I
remember getting one like these two metworks like trim back
those branches. Hey, what I had this? Well, it's the
weirdest thing. It's hard to even describe. I had like
a driveway where there was like a drop off. Do
(29:19):
you remember that at at my first house.
Speaker 4 (29:21):
It was a hazard.
Speaker 1 (29:22):
Yeah, it was a hazard, and so I had to
put up like a cement block in there so that
the car couldn't go rolling off it.
Speaker 4 (29:29):
It sounds weird, and it.
Speaker 1 (29:30):
Was, but like, so I get why the insurance company's
basically saying, hey, someone could fly off this parking pad.
Speaker 4 (29:37):
I forgot about that and injure themselves. Oh you would
have like.
Speaker 3 (29:39):
Told your car if your car would have run into that. Yes,
so it's good for them to be a stop there.
Speaker 1 (29:44):
I know in many ways it does make sense to
insurance companies are saying, I don't know, you might need
to do something for you to still be insurable, but
I think it can be scary. It can feel like
you got to cancel your Saturday plan is to get
your house back in ship shape or something like that,
or be left without insurance, which comes with cascading constant Yeah,
one of which is force placed insurance. The lender says, oh,
you're not insured anymore, we'll find that insurance for you.
(30:06):
But then the insurance costs a heck of a lot
more than what you were paying, and so yeah, I
think I know Catherine's frustrated by this, but this should
move up her priority list. But also I also just
don't think it should freaker out.
Speaker 3 (30:18):
And I think This makes me think these are the
kind of times you want to have an actual agent,
like somebody you can call, someone you can reach out to,
because that would be incredibly helpful because then and I'm
assuming that there is a way for you to upload
pictures and whatnot, but just someone to talk to where
you can send them some updated pictures. Let's say when
you make those first repairs, right, like you've cut back
(30:38):
some of that vegetation, you trim some of this tree branches,
that might be enough to satisfy them, you know, like
you send those along.
Speaker 4 (30:45):
And you're like, hey, I'm getting quotes for the painting,
and then see what they say.
Speaker 3 (30:49):
You know, it's more kind of like a there's more
of a gray area as opposed to provide proof that
all of these points have been addressed.
Speaker 1 (30:55):
I think this is more of a negotiation, I think, yeah,
exactly than it is a hard time line like get
it done or you're out. Yeah, start those talks, getting
the started communicating directly. I think this is the right
way to handle this, and it could obviously, I mean,
I think it could buy you more time as well,
if costs to have some of these repairs made.
Speaker 4 (31:13):
If that's an issue.
Speaker 3 (31:14):
I think just starting the conversation while simultaneously financially preparing
for that, and maybe even yourself.
Speaker 4 (31:20):
Yeah, take a saturday, borrow some tools.
Speaker 3 (31:22):
From a neighbor, like work on getting things cleaned up,
because buy some beer for your friends, having all hands
on that party to get rid of some of the
excess vegetation. Because in the end, I do think that
this is something you're gonna have to address.
Speaker 1 (31:33):
Yeah, And I think Catherine might be thinking, oh, you
know what, maybe maybe this is the perfect time to
shop around for insurance. And the truth is, maybe almost
every year is the right time to shop for insurance,
Like you should probably be shopping regularly regardless.
Speaker 4 (31:47):
That's a good thing to do.
Speaker 1 (31:47):
Yes, get quotes elsewhere, sure, but going with another insurance
company likely isn't going to save you from this repairless
because they will probably do a drive by or a
drone buy of sorts too. They will require similar fixes
in all likelihood, so that might not save your bacon
on this one. And while we get the shock, right,
these things should really be taken care of proactively. And
(32:09):
I also get the frustration with the house color thing. Matt.
Speaker 3 (32:11):
She's like, well, I don't care dude, that's multiple tones.
I think this is insane. Like this, this is where
I would be pushing back. I would be asking some
serious questions. I have zero understanding how that the color
of your house is going to impact the liability that.
Speaker 4 (32:27):
I bet they have some data somewhere. I bet that's how.
Speaker 3 (32:30):
But like, how would the color of a house or
the fact that that it's painted two tone, It's like, okay,
it's dark green and light green. I don't know in HOA,
I understand in HOA saying oh, sorry, according to the
covenant that you signed, and to be a part of
this neighborhood or part of this community, it has to
be one.
Speaker 4 (32:43):
Of these five shades. I get that.
Speaker 3 (32:45):
I even understand speaking of different shades, Like if it's
in a historic district, if there's some board that's just like,
oh no, we've only we've identified the Sherwin Williams Historic
Registry colors or some you know, something like that. It
makes no sense in my mind why the color of
a house house increases or decreases the liability and the
potential for the insurance company to fork out repairs on
(33:06):
that house. Yeah, like that makes no sense to me.
Speaker 1 (33:08):
Okay, Thank you, as always for listening to the show.
We appreciate your time and attention. You can always find
more money saving information up on our website at howtomoney
dot com. We'll see you back here next week. You're
listening to how to Money. You've been listening to how
to Money with Joel Larsgard. You can always hear us
live on KFI AM six forty twelve pm to two
pm on Sunday, and anytime on demand on the iHeartRadio app.
K if I Am six forty. You're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel lars Guard and Matt Aultmix.
Speaker 1 (00:56):
Kf I Am six forty live everywhere on the iHeartRadio app.
Speaker 3 (01:00):
This is how to Money. I'm your host Jro 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 how tomoney dot com, forward slash ask Now. It
is time for the ludicrous headline of the week, and
(01:22):
this one is from the site Miles to Memories. The
headline reads, City thank You points will soon be worth
twenty five percent less, Joel. The credit card companies that
giveth and they taketh away City points are being devalued
by twenty five percent beginning in August, which will likely
come as a big shock to folks who have been
accruing points via their city credit cards. So first of all,
(01:43):
it's okay to be frustrated. This isn't something that I like,
I don't think like. For instance, like when you're at
the grocery store store and you experience some shrinkflation, it
feels less egregious because you have a choice to buy
something else, right, You've got options, But deflating the actual
value of your points that you've accrued by a meaningful
amount feels a bit more like robbery, right Like, It's
not like you have some other option of being like, okay,
(02:05):
well you stay with us, and maybe we'll only to
value it by fifteen percent or ten No, no, no.
Speaker 4 (02:09):
Just a twenty five percent cut across the board.
Speaker 3 (02:12):
But just know that you have a small window to
use those points at the current full value before that
value gets slashed. That's gonna be August twenty fourth, Yet
another date to put on the calendar. It reminds me
of a subscriptions right, like, put it on the calendar.
Know that this is something you need to because right
now you're listening. Maybe you're sitting on a stoplight, right,
Brittany Chris, I know you're listening, but you're not gonna
(02:33):
dive into figuring all of this out right there now,
you know, but add it to your calendar. Make sure
this is something that you pay attention to, because I
would hate for folks to miss out on some of
the value that they are entitled to overnight just because
they miss it by a couple of days.
Speaker 1 (02:44):
Yeah, and you might have been using that card in
hopes of booking travel in the future, and you're like
just stashing the points, stashing the points so you can
plan on an epic vacation, and then for City to
come out and pull the rug from under you and
be like, ah, I mean, you're gonna have to have
a lot more points now to get the vacation you'd
hope for. That's just a frustrating thing to experience. So
booking sooner than later is a good idea. And by
the way, City is not the only company doing this,
(03:06):
I mean Hyatt. Earlier this year they shifted hotel tiers
to make it more expensive to book with points at
some of their properties, and these point devaluations are becoming normalized.
The CFPB, the Consumer of Financial Production Bureau, I believe
they're on life support. They were poised to do something
about this at the end of twenty twenty four. They
were basically saying, hey, shot across the bow. Credit card companies,
(03:29):
you can't devalue points like this or we're going to
come after you. Well, that's unlikely to continue now because,
like I said, the CFPB, they are barely breathing, they're
barely holding on, so they're probably not going.
Speaker 4 (03:41):
To actually see that through.
Speaker 1 (03:44):
I think it's important for folks to not overestimate the
value of their points and to just get about using them.
The more you hoard them, the less valuable they become
over time. So yeah, plan your fun trip as app
Let this be an excuse to start u using the
points instead of just holding on to them. And I
think too, Matt, this is actually maybe another change that
(04:07):
people might want to consider making. Is if travel rewards
points are becoming less valuable, it makes straight up two
percent cash back cards more attractive. Yeah, because you don't
really have to think about it. And so yeah, if
you're like, oh, yeah, the travel points game playing that
has got me some sick deals, well the deal.
Speaker 4 (04:26):
If the deals are less.
Speaker 1 (04:26):
Sick, then cash back credit cards just seem to make
a little bit more sense these days.
Speaker 3 (04:31):
Yeah, I think folks might be less interested in jumping
through all the different hoops in order to like the
five percent rotating category spend is it discovered? But it
kind of comes down to, I guess what phase of
life you're in, Because if you're in the phase of
life where you're looking to simplify your finances in streamlines
and things like, I'm all about finding ways to optimize
(04:53):
and get the best bang for your buck. But beyond
a certain point, it just feels like too much. You know,
Like if you were the kind of person who wants
to squeeze every last bit of toothpaste out of the tube,
I'm gonna squeeze it a little bit, you know, but like,
you know what, I've never done. Have you ever cut
the end of it off and then like scraped out
the toothpaste? I have You've seen people do that hyperfergal friends. Yeah,
And I'm just like, Okay, maybe you can get like
(05:14):
what two more days of I don't know, I guess
depends on how often you toothpaste you use, I guess.
Speaker 4 (05:20):
But I'm like, I'm willing to give it a little bit.
Speaker 3 (05:22):
Of a squeeze, but I'm not willing to like go
through the steps of cutting it and that's what it
feels like, some of these different requirements and hoops that
we have to jump through in order to garner them
as benefit from these different banks that they're asking of us.
Speaking of actually Discover, I saw that they're now part
of Capital One. I didn't realize it, but someone in
the how to Money Facebook group mentioned that the only
(05:42):
credit card that they have are both Discovered and Capital
One cards.
Speaker 1 (05:46):
Which are now essentially going to become the same institution.
We don't know how it's exactly going to shake you.
Speaker 3 (05:51):
I think it's necessarily going to impact anyone's credit per se,
But I think more importantly it just raises the question
of just, oh, what kind of cards have you been using?
Have you been garnering the kind of benefit from those
cards as opposed to just not questioning it. I think
there are just some simple changes that you can make
that will allow you to get the most bang for
your bunch, right.
Speaker 1 (06:09):
I think one of those things is do I are
the only credit cards I have? Do they come from
one issuer? Because let's say you only use City cards, right, Well,
now you're like, well, man, City just did this thing
to my points, and they're worthless. Man, I should have
been banking points with somebody else too, And the same
thing is true. If you only have Discover and Capital
One cards, you might want to say, oh, maybe I
(06:29):
should get Namax card or a Chase card in addition,
so that I'm not wholly exposed to one.
Speaker 4 (06:35):
Credit card issue.
Speaker 1 (06:35):
I think that would be a wise move for the
person that had money Facebook group that had that issue,
and for anybody else out there listening who has a
similar issue.
Speaker 3 (06:43):
Yeah, but no, I don't want folks to hear me
say like throw some shade at Discover and say that
like we don't like Discover, like they're a great company,
and specifically both of those banks.
Speaker 1 (06:51):
So I'm curious to see what it looks like for
them to merge, because they don't even really fully know yet.
Speaker 3 (06:56):
But right right, my longest standing credit card that I've
ever had, I'm talking like twenty or twenty five years
is with Discover, and recently angel I was playing with
some tools with I don't know if it was with
one of the credit errors or with one of the
scores that are provided by one of the credit card companies,
but they've got like this estimator and it's just like, hey,
what happens if you were to get rid of this card,
or were you to pay off some reduced to the
(07:17):
amount of spending or add in. Of course they're wanting
you to add a card next. That way you can
increase your overall amount. But I was crazy shocked to
see and this was just a simulator, but I was
really surprised to see that my longest standing card where
I had to nix, that they were estimating that my
score was only going to drop by like two points.
Speaker 4 (07:33):
Oh wow, which I would have expected like at least
ten times that at least like twenty points or something. Yeah,
but yeah.
Speaker 1 (07:39):
It's probably because you have so many other credit cards
you've had for a long time too, Maybe.
Speaker 4 (07:42):
I guess so.
Speaker 3 (07:42):
But even still in my mind that one Discover card,
I'm like, oh, yeah, that's the one I've had since
Discover Capital one Discover since I've had that I've had
since I was a teenager. But evidently it wouldn't be
wouldn't be that big of a disruptor to the overall
credit score. Just take that with a grain of.
Speaker 4 (07:56):
Salt, though, very interesting.
Speaker 1 (07:58):
Yeah, all right, we've got more to get to on
today's show.
Speaker 5 (08:01):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (08:09):
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 (08:18):
Or Matt, let's get to another question. This one is
specifically about the order of operations for retirement accounts.
Speaker 6 (08:25):
Hey, Matt Angel, this is Caid from North Carolina. I
really appreciated your your thoughts on my wife's pension payout
plan that I asked a few months ago.
Speaker 4 (08:38):
I do have some.
Speaker 6 (08:39):
More questions now that I have received the job offer.
After I will graduate from my program, I will be
making one hundred and thirty thousand dollars a year in
California and wanted some thoughts on how to best prioritize
my retirement contributions. So when I put in five percent
(09:01):
to my company's four oh one K, they will put
in a ten percent match for a total of fifteen
percent of my gross income. But following that, if I've
access to both a health savings account as well as
a roth IRA, how would you prioritize contributions to one
over the other. I know that contributions to an HSA
(09:25):
in California are still subject to California state tax, so
that kind of hinders the overall tax tax savings that
are normally found within the HSA. We likely can't max
both mine and my wife's roth irays and my HSA
(09:45):
at least right away. So would you suggest only maxing
our wroth irays or maxing HSA and then doing contributions
to what we.
Speaker 4 (09:55):
Are comfortable with to our wraths.
Speaker 6 (09:58):
Thank you. I I really appreciate the show Best Friends
out well, Caid.
Speaker 3 (10:04):
First off, I'm gonna say congrats on that sweet new
gig you got. And you know what I'm going to
say is that I appreciate your transparency kind of sharing
with listeners out there.
Speaker 4 (10:13):
It helps them to be like, oh wait a minute, Okay.
Speaker 3 (10:16):
Maybe it makes them, you know, they got something to
shoot for, or it maybe it makes them.
Speaker 4 (10:20):
Think, Okay, if Caid's doing this, I can do this too.
I don't know. I appreciate that the transparency.
Speaker 1 (10:25):
That's a great salary man, even in California as well.
I mean, it should be noted in California, you should
give it. I always think about it's still solid athletes
who sign up to play for the California teams, and
there feels a lot less in actuality, is a lot
less like after taxation, because if you're in the highest
tax bracket in California, was it thirteen fourteen percent additional
(10:47):
being taken out? That's a lot sign up to playing
Florida instead.
Speaker 4 (10:50):
You get to keep all them.
Speaker 3 (10:51):
But on top of that, he's got that company match,
Like that whole structure is incredible. Right to be able
to get fifteen percent of your salary in your workplace
retirement account and you are only contributing five percent.
Speaker 4 (11:02):
Man, I love that. Like you're like, all right, I'll
show up with one third, you show up with the
other two thirds. We'll call it fifteen make it like
a bandit.
Speaker 3 (11:09):
I mean, that's actually not done, because I think you've
got the ability to go above and beyond cade. But
regardless the fact that your employer is so generously stepping
up to the plate like that, that's great.
Speaker 4 (11:19):
I think that's fantastic.
Speaker 1 (11:20):
Yeah, so you're already that fifteen percent savings rate that
we like to see, but we also love that you
want to go further and it's something that we would
encourage especially since the bulk of those contributions are coming
from your employer. We want you CAD to get used
to the physical reality of saving and investing fifteen percent
(11:41):
of your own money.
Speaker 4 (11:42):
You're in and year out, and.
Speaker 1 (11:44):
That's partly because any match is gravy on top. The
truth is that match can change at anytime. I've heard
from many listeners who have had their match pulled back
or eliminated, especially when economic times get a little trying.
That's one of the first things Matt that employers often
do is they say, you know that match.
Speaker 4 (12:03):
That we offered, Yeah, we're we're gonna have to posit
for now.
Speaker 1 (12:06):
And sometimes that pause turns into an elimination of the
match that they offer. That can be demoralizing for workers,
and it can also impact how quickly you're able to
grow your net worth as well. So I guess I
just don't want you to get so used to that
that you're like, I'm just and it sounds like you're not.
But I'm kicking in five percent, I'm overall saving fifteen
I can be happy with that. Well, if that pulls
(12:26):
back in any way, form or fashion, then you're gonna
feel the pain of having to increase. So I like
the idea of saving and investing a minimum of fifteen
percent aside from what your employer's doing totally. But K's question,
Wroth or the HSA. The answer is almost always gonna
be the HSA, of course, because of the triple tax
advantage nature of it.
Speaker 4 (12:46):
In fact, there's a quasi quadruple.
Speaker 3 (12:48):
Tax advantage because you're not paying payroll tax that faika
a tax that's on that and so investing inside of
an HSA, and this is of course available to you
because you.
Speaker 4 (12:57):
Are enrolled on a high deductible healthcare plan.
Speaker 3 (13:00):
But by investing those dollars that can help you to
grow wealth that will never be taxed in ways that
no other account offers. It's it's truly a unicorn. But
you got to use it properly. You got to invest
those dollars for decades to allow for those compounding returns.
And if you do that, according to the numbers, like
when you crunch the numbers, the HSA is the superior vehicle.
Even with the fact that, like you mentioned that California,
(13:23):
that they have some ridiculous HSA rules that effectively limit
the benefit, It's still good, right, This doesn't mean that
the HSA is a.
Speaker 4 (13:31):
No go, just not as good.
Speaker 3 (13:32):
It's yeah, exactly, it's not quite as advantageous as investing
within an.
Speaker 1 (13:36):
HSA and basically every other state. And you said basically
every other state. That's because there's literally one other state
that does what California does, and that's New Jersey.
Speaker 4 (13:44):
And so these two states, which is shaped like California,
but on the other side of the country.
Speaker 1 (13:49):
And they both of these states have compiled conspired against
their citizens. Shrink it down right, a much smaller version
and in a way to basically say, ah, yeah, the
federal government says that the these accounts are going to
be incredibly tax advantageous, and so do forty eight other states,
but we're going to be the two loan holdouts who
treat you like an idiot when you invest in an HSA.
(14:11):
So I do not love the fact that these states
do not offer the same tax benefit that almost everybody
else does. Not only do you have to pay income
tax on the money you contribute, you're also going to
owe state tax on the growth of the money you
experience in those accounts. But should that impact what you do?
Kad the answers maybe because the HSA, like Matt alluded to,
(14:34):
it's still better from an overall tax perspective, even with
those inferior tax rules in the state where you're living.
But those accounts are starting to look a bit more similar.
And the roth IRA, well, it has more flexibility, right,
It allows you to spend for other reasons beyond just
health expenses. The HSA, that's how you get the tax
(14:54):
treatment is because it's basically constrained for that kind of
spending in particular. Well, one thing that would factor into
my thinking here though, is are you planning to be
in California forever? Because if you're, you're likely going to
move to another state in the future. You're gonna be
able to avoid future state taxes on HSA withdrawals, making
it more compelling. So, yes, you're earning and investing in
(15:16):
an HSA while in California, but if you're taking the
money out in another state down the road, well, you're
not then going to be subject to the California tax
laws that are again antagonistic to HSA.
Speaker 3 (15:29):
So so it'll only be a thorn in your side
for that period of time while you're there.
Speaker 1 (15:33):
I want to say Kid said he was in North
North Carolina right now. So if he's like, Hey, all
my families in North Carolina, I'm in California. That's where
I'm gonna I'm gonna love this job. But like twenty years,
ten years down the line, we think we're going to
move back, well, then I would say that that that
puts another check mark in the HSA, because you're not
going to be subject to the worst parts.
Speaker 4 (15:51):
Of California's tax law.
Speaker 3 (15:53):
I missed wha, I miss the North Carolina party, that's
what you mentioned. What if he was moving from New
Jersey here in California and he's like, oh, I think
I'm going to move back home at some point.
Speaker 4 (16:05):
Again.
Speaker 3 (16:06):
And some of it like if you look at the numbers, yes,
like the most like financially optimized thing to do here
is to go with the HSA, But it also comes
down to what you like, if it's worth if the
hassle is worth it to you as an individual, for you,
if thinking through like this personal admin side of your life,
if that lights you up. If the job that you're
accepting in California is like, you know, a financial management
(16:28):
or something like that, then you're probably going to be
all over the numbers. And this is great because not
only do you have to track the expenses in order
to redeem that's not the proper term, but I don't know,
effectively to redeem your HSA dollars for retirement by keeping
up with your medical expenses, like everybody has to do that.
But in addition to that, you have to I mean,
so you mentioned that the income from those investments are
(16:50):
taxed on a state level.
Speaker 4 (16:51):
That's something you have to keep up with yourself. It's taxes,
regular income. It's just another I don't know.
Speaker 3 (16:56):
It feels like a hassle for something that sure you
may not be taking full advantage of. And so if that,
if thinking through all of that kind of bums you out,
then you can't go wrong with a roth Ira. Keep
it simple. You've got all the flexibility in the world.
You'd never have to worry about keeping up with records
and medical expenses. It's just something to think about. Yeah,
that's one hundred percent spot on. All right, We've got
(17:17):
actually more to get to on today's show.
Speaker 5 (17:20):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (17:26):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 1 (17:31):
All right, let's talk housing, Matt. There's a recent Redfin
report and it highlighted just how much more expensive of
it it is to buy a home than it is
to rent these days. And this is something that we've
been documenting over the past few years, in particular as
housing prices have just gone through the roof. But it's fascinating.
I love seeing the data, like, Okay, how bad is
(17:54):
it actually? Well, buying a home now requires fifty thousand
dollars more in sala than renting, So essentially, you need
an annual income of around one hundred and sixteen thousand
dollars to afford a mid priced home. That's roughly eighty
two percent more than the sixty four thousand dollars you'd
need to be able to afford a mid price department.
(18:15):
Quite the disparity, dramatic difference, right, And a bank Rade
study also found that is cheaper to rent than buy
in all fifty of the largest metro areas, So there's
like not one metro area they found of the largest
ones where it would be cheaper for you to buy
than rent, And that was not the case ten years ago.
That was not the case ten years ago, which makes
(18:35):
renting look pretty good, makes it look a whole lot
better than it did a decade ago, and more folks
who would have bought a home in the past, they're
just kind of getting zen with renting. Rich households in particular,
they're choosing to rent more than ever. This was according
to to rent Cafe. You and I, we own our homes.
We're happy with our choice. We're also real estate investors.
(18:55):
But the case are renting, especially in today's economy, is
a strong one. And the old adage that you're just
throwing away money, it's just not true. That is like
one of those ingrained beliefs for a lot of people,
renting equals throwing away money. And if there's one thing
that we can say, like we're not telling any individual
renting is right for you or buying is right for you,
(19:15):
it can be very circumstantial. But I just want to
dispel the notion that people instinctively feel about renting being
a really dumb financial move. That's just not true, and
it's especially not true right now.
Speaker 4 (19:28):
Yeah, it's definitely not true.
Speaker 3 (19:29):
Like it's not true that you have to be oh,
if you are renting an apartment. You're broke because there's
actually been a rise in millionaire renters. And there's a
reason for that, right. Yeah, So this is another article
we came across this week. We're seeing more luxury rentals
that offer these fancy amenities drawing and folks who have
high net worths who are renting that. Coupled with the
flexibility and the convenience that renting offers, as well as
(19:51):
the fact that you don't have to save up a
massive down payment, dude, this means you can invest more
in the overall sock market instead of funneling it towards
higher housing costs as well as maintenance and repairs that
are oftentimes vastly underrated, underestimated, undersaved for. But a lot
of intentional renters and that's the key part, man, You
got to be intentional about this.
Speaker 4 (20:12):
You can achieve.
Speaker 3 (20:13):
Greater levels of financial success than your home owning peers
by pouring money into the market as opposed to pouring
money into your housing.
Speaker 4 (20:21):
Owning a home.
Speaker 3 (20:21):
It can certainly be a great goal, but it's just
not for everyone out there, and honestly, on the flip side,
it's not a guaranteed thing to continue we're actually seeing
signs of softening in the real estate market. The big
real estate sites they've been predicting a housing market swoon,
which actually seems to be materializing. So if you're a
hopeful buyer, this is actually good news out there. Small
little anecdote, Joel just received my property tax bill assessment
(20:47):
and I opened it expecting the worst, which I mean,
let's be honest, over the past few years, we've only
seen increased housing prices increase, which means paying more to
when it comes to property taxes. And I did a little.
Speaker 4 (20:57):
Whoo because I saw our whole value actually decreased.
Speaker 3 (21:01):
So nice, which I'm sure there's a lot of folks
might say the same who are listening, and they're just like, wait,
Matt's taking crazy pills.
Speaker 4 (21:07):
Like what is going on?
Speaker 3 (21:09):
But when you see an increase in the what the
city estimates your property to be, like, these are just
paper gains right like this that is not an increase
that you get to realize until it comes time for
you to sell your house or unless you're trying to
pull some equity out of your home. But guess what
you realize on a month by month basis the amount
going towards ESCO in order to save up for your
(21:29):
tax bill. So this is again, this is a silver
lining for this is a small silver lining, and this
is anecdotal, but we are seeing this in more metros
across the country.
Speaker 1 (21:38):
I was just talking to my sister who is moving
to another city, and she was looking. They're looking at
places to rent. They've been renters, they're happy being renters,
And there was a condo that they actually ended up
settling on, and the price they're paying for the condo
was like a lot less than what they would pay
to buy a similar size unit in that complex. So
(22:01):
it's just fascinating to see the person who's renting it
out they bought it not that long ago, and I'm like,
they're going to be losing money every single month by
renting this apartment to them. They must have no other choice.
It's just interesting that renters can make out like bandits here.
So I don't even know what the hoafee would be,
but like that's included in the rent that they pay.
So there's like substantial savings to be a renter, and
(22:22):
then they can do a lot with that excess cash, right,
do smart stuff with that money. Investing for their future
instead of putting more and more money because well, buying
is the only way you build, you know, you build
a high net worth. Well that's just not true, and
it's less true than it was ten years ago too.
Like buying a house can make sense based on your
specific circumstances, your specific goals, but you just have to
(22:45):
run the numbers and you have to know the trade
offs because for most people right now, continuing to rent
can make a lot of financial sense.
Speaker 3 (22:52):
Yeah, I do think though the trick is being intentional
about it, and folks who buy defaults have kept their
savings right pretty minimal, whether it's just you know, a
four at work or investing in addition to what it
is that their workplace is offering. Realizing that they don't
have a default amount going towards the building up of
home equity. Right, Like, there's almost there's like a mental
switch that maybe has been taking place right just with
the given the democratization of investing, the ability for folks
(23:14):
to do that more on their own, on their own terms,
where it feels a little more accessible as opposed to
it feeling like something that was kind of out of
their reach when it's like the things have switched essentially right,
Like like back in the day, it felt like home
ownership was a bit more attainable, and investing aggressively in
the market felt like something that that really only the
one percent did. But now it's almost like the opposite,
where where it's like, oh no, no, everybody can invest,
(23:36):
even just with like the spare change in your in
your pocket, but you bought.
Speaker 1 (23:40):
A home, like exactly, must be independently, We'll do that, yeah, exactly.
So I do think that those tides are going to turn.
This isn't this disparity will not last forever.
Speaker 4 (23:48):
I totally agree. Yeah, I don't think this is a
permanent change, Joe.
Speaker 3 (23:51):
While we're talking about housing, we are certainly fans of
using airbnb while while you're traveling, But there are other
ways to get a cool place when you are taking
a big trip, and that is by partaking in a
house swap all the holiday with Jack Black and.
Speaker 1 (24:06):
Oh yeah, this is for some reason making me think
of I think it was a Fox TV show wife
swap which one mom would go to another house and
vice versa, and then you would see how the family acted,
and uh huh, that's reality TV.
Speaker 4 (24:20):
At its finest. Sounds like it was one of your
favorites that you're t voing.
Speaker 1 (24:26):
I can't describe it accurately, but just go look up
King Curtis on YouTube. I think that it's one of
my favorite clips from television history.
Speaker 4 (24:32):
Is that an actual? The actual?
Speaker 1 (24:34):
I think it was from White Swap and this young
kid did not like the new mom was in the
South for that week, and the way you reacted was
television gold.
Speaker 4 (24:44):
I might have to look it up.
Speaker 3 (24:45):
But we're talking about house swapping, Yeah, not why swapping
about that? These platforms are growing as a way to
allow folks to travel for less. So obviously instead of
buying nights, you are essentially bartering your exchanging nights at
your own place. And the different sites out of course,
you got them kind of hip sounding ones like Kindred,
which sounds super bouge what I was reading about that one.
Speaker 4 (25:07):
But swap house is one home exchange. That's another one
these platforms.
Speaker 3 (25:11):
These sites, they allow you to offer your place up
when you are out of town to earn nights that
you can use on the platform in the future. On
one hand, I don't like it, Joel, because it is
an inefficient exchange of value right, like it's an inefficient market.
It kind of makes me think of gift cards, like
why would you do this intermediary sort of step. It
makes me think of timeshares almost right, like like you
(25:31):
are handcuffed to this thing. But I do think it
makes more sense in different markets who where they're starting
to crack down more on airbnbs, where they're imposing more
strict regulations, like up in New York City, Spain, even
as well them all together, didn't they I don't know
if they banned them all completely outright, but they are
really cracking down because they're winning because and I get it,
like these towns they're starting to lose the charm that
(25:53):
made them what they were when they're just inundated by tours.
And so from that standpoint, it makes sense as a
creative work around.
Speaker 4 (26:00):
But I don't know, man, the.
Speaker 3 (26:01):
Dollar cash, the universal exchange store of value, the ability
to use that, I'm still more of a fan of.
Speaker 4 (26:08):
I don't know. I still like barning renting.
Speaker 1 (26:10):
I like barnering, so I like the way these sites,
what these sites are trying to do. And one of
the other things that they note on there is that
they're not reducing housing supply in local places because you're
just swapping, right, and so there isn't like this unit
that's being taken offline to be fully dedicated to full
time short rental use, which which is interesting.
Speaker 4 (26:32):
Totally agree.
Speaker 5 (26:34):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (26:40):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter.
Speaker 3 (26:45):
It is now tigned for the Facebook Question of the Week,
which is from Catherine and she wrote, ugh, do you
like you like my?
Speaker 4 (26:52):
Uh?
Speaker 1 (26:53):
I love that she stuck that in there. Yeah, frustration
coming out.
Speaker 4 (26:56):
When you read that you do you see or do
you hear no?
Speaker 3 (27:00):
I definitely hear yeah, the former the actual it's it's
the frustration for sure coming out in type well in
particular with this one, she wrote, My insurance company is
gonna drop me unless I complete these things by June seventh.
Remove yard debris, cut back vegetation, paint the home all
when color, and cut the tree branches back from the
detached structures.
Speaker 4 (27:19):
That's all fair, but the.
Speaker 3 (27:21):
Paint, WTF do they care? That my house is all
when color? Is there any point in trying to fight it?
Speaker 4 (27:28):
Joel? What you think should she fight it?
Speaker 1 (27:31):
Do you do you try to fight the man matt
ever or yeah, I think sometimes you do. Sometimes you do.
I can be hard headed. You probably try to fight
the man against like veteran thinks ways to more craftly
deal with this, and it's maybe that's what I want
to suggest, maybe some maybe craftier ways to deal with
this instead of ease into it, Catherine, instead of letting
your frustration get the best of you and just being like,
(27:53):
screw you, why are you making me do this?
Speaker 3 (27:55):
Like?
Speaker 1 (27:55):
There are ways I think to get around this and
to stay insured without completely ruining your life. So the
truth is insurance companies are sending out more of these
notices these days. We talked about that actually with our
friend Lisa from Consumer Reports not too long Lisa gil yeah,
and she was talking about how her tiny home Y's right,
(28:16):
that's right when gravel, which the pea gravel.
Speaker 4 (28:19):
She was addicted to the pea gravel.
Speaker 1 (28:21):
Just the with insurance rates going up around the country
and insurers are being a little more cognizant about who
they're insuring and what the properties look like. And then
on top of that, technology is making easier for insurance
companies to.
Speaker 4 (28:34):
Kind of check in and see what's going on.
Speaker 1 (28:36):
Right, They're using drones, they're doing flyovers, they're taking images
in an attempt to make sure they're not taking on
undue risk. My neighbor Matt just told me the other day, Hey,
my roof is more than ten years old, and now
my insurance company is saying they don't want to insure
me anymore. This is becoming Actually, roofs should last for
twenty to thirty plus years, and the fact that insurance
(28:59):
companies are just getting a little more antsy and squirrely
about offering insurance when everything's not kind of perfect. So
that sucks for those of you out there listening. You
haven't received a letter, you might in the future. I
remember getting one like these two metworks like trim back
those branches. Hey, what I had this? Well, it's the
weirdest thing. It's hard to even describe. I had like
a driveway where there was like a drop off. Do
(29:19):
you remember that at at my first house.
Speaker 4 (29:21):
It was a hazard.
Speaker 1 (29:22):
Yeah, it was a hazard, and so I had to
put up like a cement block in there so that
the car couldn't go rolling off it.
Speaker 4 (29:29):
It sounds weird, and it.
Speaker 1 (29:30):
Was, but like, so I get why the insurance company's
basically saying, hey, someone could fly off this parking pad.
Speaker 4 (29:37):
I forgot about that and injure themselves. Oh you would
have like.
Speaker 3 (29:39):
Told your car if your car would have run into that. Yes,
so it's good for them to be a stop there.
Speaker 1 (29:44):
I know in many ways it does make sense to
insurance companies are saying, I don't know, you might need
to do something for you to still be insurable, but
I think it can be scary. It can feel like
you got to cancel your Saturday plan is to get
your house back in ship shape or something like that,
or be left without insurance, which comes with cascading constant Yeah,
one of which is force placed insurance. The lender says, oh,
you're not insured anymore, we'll find that insurance for you.
(30:06):
But then the insurance costs a heck of a lot
more than what you were paying, and so yeah, I
think I know Catherine's frustrated by this, but this should
move up her priority list. But also I also just
don't think it should freaker out.
Speaker 3 (30:18):
And I think This makes me think these are the
kind of times you want to have an actual agent,
like somebody you can call, someone you can reach out to,
because that would be incredibly helpful because then and I'm
assuming that there is a way for you to upload
pictures and whatnot, but just someone to talk to where
you can send them some updated pictures. Let's say when
you make those first repairs, right, like you've cut back
(30:38):
some of that vegetation, you trim some of this tree branches,
that might be enough to satisfy them, you know, like
you send those along.
Speaker 4 (30:45):
And you're like, hey, I'm getting quotes for the painting,
and then see what they say.
Speaker 3 (30:49):
You know, it's more kind of like a there's more
of a gray area as opposed to provide proof that
all of these points have been addressed.
Speaker 1 (30:55):
I think this is more of a negotiation, I think, yeah,
exactly than it is a hard time line like get
it done or you're out. Yeah, start those talks, getting
the started communicating directly. I think this is the right
way to handle this, and it could obviously, I mean,
I think it could buy you more time as well,
if costs to have some of these repairs made.
Speaker 4 (31:13):
If that's an issue.
Speaker 3 (31:14):
I think just starting the conversation while simultaneously financially preparing
for that, and maybe even yourself.
Speaker 4 (31:20):
Yeah, take a saturday, borrow some tools.
Speaker 3 (31:22):
From a neighbor, like work on getting things cleaned up,
because buy some beer for your friends, having all hands
on that party to get rid of some of the
excess vegetation. Because in the end, I do think that
this is something you're gonna have to address.
Speaker 1 (31:33):
Yeah, And I think Catherine might be thinking, oh, you
know what, maybe maybe this is the perfect time to
shop around for insurance. And the truth is, maybe almost
every year is the right time to shop for insurance,
Like you should probably be shopping regularly regardless.
Speaker 4 (31:47):
That's a good thing to do.
Speaker 1 (31:47):
Yes, get quotes elsewhere, sure, but going with another insurance
company likely isn't going to save you from this repairless
because they will probably do a drive by or a
drone buy of sorts too. They will require similar fixes
in all likelihood, so that might not save your bacon
on this one. And while we get the shock, right,
these things should really be taken care of proactively. And
(32:09):
I also get the frustration with the house color thing. Matt.
Speaker 3 (32:11):
She's like, well, I don't care dude, that's multiple tones.
I think this is insane. Like this, this is where
I would be pushing back. I would be asking some
serious questions. I have zero understanding how that the color
of your house is going to impact the liability that.
Speaker 4 (32:27):
I bet they have some data somewhere. I bet that's how.
Speaker 3 (32:30):
But like, how would the color of a house or
the fact that that it's painted two tone, It's like, okay,
it's dark green and light green. I don't know in HOA,
I understand in HOA saying oh, sorry, according to the
covenant that you signed, and to be a part of
this neighborhood or part of this community, it has to
be one.
Speaker 4 (32:43):
Of these five shades. I get that.
Speaker 3 (32:45):
I even understand speaking of different shades, Like if it's
in a historic district, if there's some board that's just like,
oh no, we've only we've identified the Sherwin Williams Historic
Registry colors or some you know, something like that. It
makes no sense in my mind why the color of
a house house increases or decreases the liability and the
potential for the insurance company to fork out repairs on
(33:06):
that house. Yeah, like that makes no sense to me.
Speaker 1 (33:08):
Okay, Thank you, as always for listening to the show.
We appreciate your time and attention. You can always find
more money saving information up on our website at howtomoney
dot com. We'll see you back here next week. You're
listening to how to Money. 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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