March 23, 2025 • 32 mins
Housing prices are still high. That's making adjustable rate mortgages more enticing. Plus, the government is talking about making federal land open to create more housing supply.
Ask HTM: Christa is investing like gangbuters. But her savings are paltry!
The stock market has experienced greater levels of volatility recently. That's causing folks to tinker with their portfolios more! Be careful, that can come back to bite you.
Ask HTM: Dejean wants to know why he was denied the ability to rent a property.
Ask HTM: Christa is investing like gangbuters. But her savings are paltry!
The stock market has experienced greater levels of volatility recently. That's causing folks to tinker with their portfolios more! Be careful, that can come back to bite you.
Ask HTM: Dejean wants to know why he was denied the ability to rent a property.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Kf I AM six forty. You're listening to how to
Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
Do you want to live well without drowning in debt?
Joel and Matt have you covered? This is how to
Money with Joel Larsgard and Matt Altmes KFI AM six
forty live everywhere on the iHeartRadio app.
Speaker 3 (00:24):
This is how to Money. I am Matt Altmes.
Speaker 1 (00:26):
And I'm Joel Larsgard. 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 (00:32):
Buying a house today is an expensive endeavor.
Speaker 4 (00:36):
I think that's the understatement of the century, not the century,
maybe understatement of the past decade. I'll say, as we've
seen house prices rise, they remain elevated, and interest rates
are still near seven percent on thirty year mortgages, and
one way to reduce your monthly obligation is to opt
for an ARM instead of a thirty year mortgage. There
(00:56):
is a recent Bloomberg article and they pointed out to
the tent rise of arms and how that could help
grease the wheels of the housing market a little bit.
Speaker 1 (01:05):
Yeah, you have more people opted for them that hey,
we might we might see more listings and exactly houses
going in a contract.
Speaker 3 (01:11):
Things might be flowing a little bit more and it's
going to.
Speaker 4 (01:13):
Get you a lower rate, but it won't be locked
in for forever or you know, for the life of
that loan. This means that you'd you know, you're living
yourself financially exposed at the end of that fixed term.
So oftentimes we're talking about like a five year term,
like a five to one ARM. But they can be
a reasonable choice for some folks out there, especially if
you're not planning on being in that home you know
(01:34):
too much past the initial fixed term, or if you
understand the trade offfs if you're willing to endure a
potentially higher interest rate down the line. But man, you
got to be careful. You got to weigh the trade offs.
You need to choose carefully. Where you planning to share
how how you opted to go with an ARM. I
did what I mean, it's I think it can be
a It used to not be a smart decision.
Speaker 3 (01:56):
Right like ten years ago, why would you opt for
an ARM?
Speaker 4 (01:58):
Interest rates were at like rock bottom lows and the
ability to opt for an eighth of a percent discount
over the thirty year fix. That was dumb, but now
it's like, Okay, there's a more of an ability to save,
and just given the fact that there's a higher likelihood
of rates going down in the future, it's not guaranteed.
Speaker 3 (02:16):
Yeah, but yeah, but it's interesting.
Speaker 1 (02:18):
Rates did continue to drop until just a few years ago,
and so some people who did, let's say, take out
an ARM ten years ago, and then five years in
they were like, my rates.
Speaker 3 (02:25):
Looking sweeter now.
Speaker 1 (02:26):
I'm kind of glad I went for the ARM, and
then they sell the like they were just paying a
lower interest rate the whole time, even though a thirty
year fix would have been better, I opted for a
ten to one arm, Matt, So I like that like
greater security, like a decade instead of just five years, but.
Speaker 3 (02:40):
Only because like the rider time period too.
Speaker 4 (02:42):
Yeah, because like like when you're closer to five it's like, well,
we don't want you buying and only staying there for
five years anyway, Like you need to get past that
five year I like that hit the ten and I
didn't know if.
Speaker 1 (02:51):
I was going to be in the house for ten
years or thirty. But I can cross that bridge when
I come to it, and I can paint out on the
mortgage more quickly if I want to, or I can
also refinance into another type of loan. I think I
used to be kind of like blinders on thirty year mortgage.
Thirty year fixes the only way to go, and I
think for most people that's probably still the smartest move.
(03:12):
But so much depends on the discrepancy in rates. And
if you can get a significantly lower rate by opting
for an ARM and let's say you're at least banking ahead,
you're planning ahead for potentially higher rates down the line
as that that mortgage rate adjusts. I think it's an
okay move. You just have to go into it with
eyes wide open. So that's what I did. It's worked
out well so far.
Speaker 3 (03:33):
We'll see.
Speaker 1 (03:34):
We'll see how it goes seven and a half years
from now. But let's talk about good political money news, Matt.
A recent move from the Trump administration could bring down
costs on housing using federal land, specifically to buildboard units,
almost a proposal that was made this week.
Speaker 3 (03:49):
I've always wanted to live in Yosemite.
Speaker 4 (03:50):
Valley, jol, wouldn't they be nice and be nice? Just
set of right their next to Curry Village. We'll see
if they make that land available. Unlikely, probably not, but
it does look like the Interior Department and HUD are
set to work together to and in terms of increase
housing supply by allowing building on federal land that's underutilized.
Speaker 1 (04:08):
Right, And the truth is, we need more supply. We've
talked about this for years. How are millions of homes
shy in this country? What we actually need? I was
just in Austin, matt and it was fascinating to hear
from folks how much cheaper it's become to live in
Austin over just a short period of time. Really, in
just the last like year, rents have declined by twenty
two percent I think something like that from peak Austin,
(04:30):
thanks to this boom and building. Like I was driving around,
I'm seeing unfinished apartment complexes everywhere. They are continuing to build,
and now the incentive is, I don't know, it's.
Speaker 3 (04:39):
Quite for the builders.
Speaker 1 (04:41):
Yeah, so you know, Austin renters now have more negotiation
power and you know a lot of apartment complexes are
offering months of free rent to entice people to come over.
It's interesting though, California is taking the opposite approach. Some
people are saying that in the aftermath of the wildfires,
it's a great time to prioritize building some density, like
adding more units. But the NIMBI movement, they're not in
(05:04):
my backyard movement is doing what they can to prevent that.
And so a lot of folks in California say, well,
we want more housing affordability, but we don't want to
do what it takes to get there. We don't want
more units because it might reduce the value of my house.
Speaker 4 (05:17):
You don't want to kill those expensive California vibes, right, Yeah.
Speaker 1 (05:20):
And they're not trust me, And so I don't know.
I was in Austin and I saw this poster, Matt
It said twenty five percent of housing costs are due
to government red tape. I think it was from like
realtor dot com or something like that, and I think
it's likely much more than that in California. I would
love love to see California take a page from Texas
on this. I think a lot of young folks in
particular benefit. Think about when you bring down the cost
(05:41):
of housing, you bring down that barrier to entry, and
you reduce that line item in people's budget, especially for
young folks. It's a massive win, totally.
Speaker 4 (05:50):
Yeah, And until then we will continue to most likely
we will continue to see population declines from California and
increases in states like Texas where there is where there
has been increased supply.
Speaker 1 (05:59):
It's so much of the is like government regulation, and
if you just dial back some of the building codes
and stuff like that and make it easier for builders
to create new supply, they'll do it.
Speaker 3 (06:09):
Yeah. Well, the lawsuit against the NAAR like.
Speaker 4 (06:12):
That looked like it might have had a meaningful implication
on closing costs and realtor commissions, specifically talking about grease
and the wheels of housing, but that hasn't pained out,
at least not yet. It's been about six months since
those rules have changed, and the average buyer commission has
gone from two point three to seven percent too, drum roll,
two point three six percent he has. It's barely budged,
(06:34):
so not dramatic, which is great news for worried realtors
out there, but bad news again for all the buyers
who are looking for ways to reduce some of these transaction.
Speaker 3 (06:42):
Costs associated with buying a house.
Speaker 4 (06:44):
But know that as an individual, you have the power
to push back, to discuss the commission structure with a
potential agent.
Speaker 3 (06:52):
You don't just have to fork.
Speaker 4 (06:53):
Over three percent of the purchase price by default just
because that's the way it's always been done.
Speaker 3 (06:57):
Yeah.
Speaker 4 (06:58):
And I think this is an area too where I
think just the technology that's associated with the transaction, the
transaction costs, and just the buying and selling of homes,
that's an area where I'm hopeful. And man, I just
think of it feels like such an antiquated old model,
the old way of doing things, And given the pressure,
given the fact that there is an entire generation wanting
(07:20):
to purchase a home where that they're finding that harder
and harder to.
Speaker 1 (07:23):
Do, I feel like something's got to change. Yeah, all right,
We've got actually more to get to. On today's show.
Speaker 2 (07:29):
You're listening to how To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 4 (07:36):
By the way, you can always find more money saving
information over at howtomoney dot com. Let's get to a
question from a listener who's doing an awesome job investing
for her future, but the savings maybe not so great.
Speaker 5 (07:50):
Hi, guys, this is Christa from Centerville, Virginia. I'm fifty
one years old and married with two elementary age kids
at home, and my question is surrounding retirement and emergency
fund savings. So I currently max out my four oh
(08:11):
one K plan with my company, and I'm also participating
in the Ketchup contribution. I haven't started on the emergency
fund though, because I'm putting in about nineteen percent of
my income into retirement, there isn't really much left to then,
(08:31):
say for the emergency fund. So my question is is
it wise to pause retirement savings at my age in
favor of fully funding the emergency fund?
Speaker 3 (08:44):
Or can my.
Speaker 5 (08:45):
Existing helock act as the emergency fund if we ever
need to use it? Thanks so much?
Speaker 3 (08:53):
Is it wise?
Speaker 4 (08:54):
That's the heart of Christa's question here, Joel, But before
we answer it, I will say life, elementary age kids.
Speaker 3 (09:01):
Man, it's a.
Speaker 4 (09:02):
Total blast, but it can feel all encompassing, not just
physically and emotionally, but financially as well. So Christa, I
want to start off by congratulating you kudos on hitting
a nineteen percent savings rate, despite being a life stage
where that is not always easy. I think that's truly incredible.
Speaker 3 (09:19):
She said. She's also got catch.
Speaker 4 (09:21):
Up contributions as well, So we're talking thirty one thousand dollars.
Speaker 3 (09:24):
That's those Mustard contributions. Dude. Yeah, she's laid it on thick.
Speaker 1 (09:29):
Sorry, dad joke. I too have young kids, and my
kids know that I'm master. Yeah, run thick, but yeah, no,
you're right, Matt. That's incredible like to be to be
have a savings rate that's substantial, especially when you're kind
of the age Krista is. She's not too terribly far
off from where we are, and you are in that
kind of sandwich generation area where you might be supporting
(09:50):
or helping older parents, you've got young kids to take
care of. It can be tough to hit all those
financial goals that you have for yourself. But a savings rate,
i will say, is divided up into money you're funneling
into liquid savings, or debt you're paying off, and then
also on top of that, money that you're investing for
your future. So all three of those things could be
considered part of your savings right. The thing is, if
(10:10):
you skip the savings portion and you go straight to investing,
there are some real potential downsides. Matt, you shared this
story on the podcast before I made this mistake. Yeah,
you want to just briefly recount your your early Wrath
mess up.
Speaker 3 (10:24):
Yeah, I'm the bottom line.
Speaker 4 (10:25):
I didn't have money set aside in my savings account
because I heard about the beauty of compounding interest, and
so I'd socked that money away into a wroth account.
I saw that balanced decline because it happened to be
a down year, and boom, I had less money on
hand that I then needed for a move back to
the big city where I was offered a job.
Speaker 1 (10:42):
So, even though it sucked, investing is a great thing.
You just got too far in front of it, right,
And it makes you think about like all the federal
layoffs that have been happening recently, Right, you would be
in a tough position, right if you were to lose
your job for some reason. It's not that there aren't
other places to turn for money. In Christ's case, it's
just that be tapping a debt vehicle instead of liquid savings,
(11:03):
and because of her high savings rate, it's very much
possible for her to increase that liquid savings. And I
think from where I'm saving, I would prefer for her
to focus on that for right now.
Speaker 3 (11:13):
Totally.
Speaker 4 (11:14):
Yeah, she's just funding all the savings dollars in one
direction when you should be splitting them up. So we
would suggest that you dial back, in fact, reduce your
contributions to your four to one K all the way
back to just getting the full match. We at least
want you to do that, because you can't beat that
return on those dollars, But then put every other dollar
into your savings account until you achieve at least three
(11:34):
months worth of liquid expenses, and then after that then
you can ramp up your investing back to where it
currently is. Although if you are a bit more cautious
or maybe you feel the need to acquire a little
more savings and you can put you know, let's say,
sixteen to seventeen percent towards your investments towards your four
one K, and then the rest of it can slowly
(11:55):
grow your savings pile until maybe you have an additional
one to two months worth of expenses on hand. And
based on the fact that she currently has no emergency fund,
I think Christal is going to be very comfortable even
having like two to three months sure of savings and
so for and I think she'd do the trick, and
I think that's totally within the bounds of what's reasonable.
Speaker 1 (12:12):
But this brings up kind of a really important part
of Christ's question is, well, aren't there alternatives to cash
in savings? You guys are this kind of old school
Matt and Joel. You're telling me that I need money
inside of a high old savings account.
Speaker 4 (12:25):
But what about surely there's a more sophisticated option, Yeah,
product out there for me.
Speaker 1 (12:29):
Investment returns are going to outpace money that I have
in my savings account, So why don't I, in hopes
that I don't have to tap any sort of emergency fund,
just have the helock on the back burner in case
it's needed, like kind of one of those break glassing
case of emergency things. And so let's dive into that, Matt,
I mean we we do think. I think it is
true to a certain extent at least that it can
(12:49):
be a great potential backup efund. It's just far too risky, though,
to make it your primary one. So if you've got
let's say, four months worth of cash and you're out
of the job for six months, I think the helock
then can help bridge the gap. So it's nice to
have the helock as a backup to the backup, But
if you have no savings and you lose your job,
you'd have to tap the helock right away. It becomes
(13:12):
your first recourse, which I don't think is a good thing.
Think about how much debt you might accrue over the
course of three to six months. That probably, yeah, in
these days, at like a nine percent rate, it could
take you years to pay that off, which you put
you in a weaker overall financial position. I just don't
like the idea of the helock being the first line,
(13:33):
the first fail safe. I think liquid cache saving should
be the first thing, and then you know what, Hey,
if you have another resource that's potentially better than a
credit card for tapping some money. Yeah, maybe it's the
backup to the backup, but I just don't think you
want it being kind of that main thing and having
zero insulation between yourself and an emergency and having to
tap the helock for that emergency totally.
Speaker 4 (13:54):
In addition to that, your bank also has the ability
to reduce your line of credit in many cases, so
the access to your home equity it can actually dry
up before you need it the most, especially if there's
like a tightening in the economy. Max might say, well,
we're going to restrict our lending in.
Speaker 3 (14:09):
The helock front. We're looking to show up their books
as well.
Speaker 4 (14:10):
Yeah, so that's another con to making the heelock your main,
your primary emergency fund, which brings up even like ROTH contributions,
because sometimes we'll think about that as a backup emergency
fund as well.
Speaker 3 (14:21):
But we also want you to avoid typing.
Speaker 4 (14:23):
Those dollars if at all possible, having a big rostache.
It doesn't negate the need for having those liquid savings
on hand. And I think, Krista, what you're trying to
do here is a good thing you would much rather
invest than to save. And I think she's looking ahead
a little bit. She's looking at her age. She's thinking, Man,
every year that I am not maxing out my account,
(14:44):
that's a year lost, that's a year where I'm not
experiencing the magic of compound interest.
Speaker 3 (14:49):
And one other thing that I don't know.
Speaker 1 (14:51):
When she started either, So she's fifty one, but maybe
she's like, I just started at like forty six, and
I feel like I've got this.
Speaker 3 (14:56):
She might feel very I mean go hard in that
direction totally, and.
Speaker 4 (14:59):
For someone who's made the catch up contributions, I think
that's the headspace that you are in, which I totally understand.
But one thing that you mentioned but you didn't mention
was so you said that you are married, but you
didn't mention your partner's income, and it sounds like whoever
it is that you're working for, that you've got a
good thing going there. When it comes to investments, I
would say, is there a way for you to possibly
(15:20):
keep investing there with your folk? Obviously you're getting the
full match, but continue to invest those additional dollars so
that you can max that out while finding a way
to divert some of the funds, assuming I guess there's
an additional stream of income that your partner is earning.
You're in this together, I know, like when I am
saving from my retirement, it's not just for me and
my wife is just like sorry, out of luck. Like
(15:41):
we're doing this together money, Like we're being.
Speaker 3 (15:44):
Eaten at the buffet and she's gonna beeting faster. We're
pulling our resources together. We are in it together.
Speaker 4 (15:48):
And research has shown that not only do is there
a better result from a numbers from a financial standpoint,
but that your quality of life and your levels of
happiness are going to be better too. So hopefully that
that's something else that you're considering as well, that you're
pooling your resources together, and that these are goals that
you're both working towards. Hopefully it's not something that you
feel that you have to shoulder completely on your own.
Speaker 3 (16:11):
Yeah.
Speaker 1 (16:11):
I couldn't agree more. All Right, we've got more to
get to on today's show.
Speaker 2 (16:16):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 4 (16:22):
Don't forget to sign up for the how to Money
newsletter over at how toomoney dot com slash newsletter.
Speaker 1 (16:27):
Matt, let's talk about investing investors. They're shaking things up
right now given the economic actions of the Trump administration
recent stock market volatility. The Wall Street Journal just profiled
some folks who are making meaningful changes to their investment
portfolio in light of recent volatility. They're saying, don't like that.
Speaker 3 (16:46):
Yeah, They're like, I'm not sure.
Speaker 1 (16:47):
This doesn't look so good. I might need to do
something different, and it doesn't seem like based on their investigation,
that this activity is widespread. I don't think people are
knee JERKX selling right and left, but that doesn't mean
it's no concerning gold and cash in particular have been
garnering more interest as stocks have kind of sort of
I'm not going to say free fall, but they've been
going down, right, stock price them going down or there
(17:09):
at least they've been more volatile.
Speaker 3 (17:11):
I guess we're back down.
Speaker 1 (17:12):
To essentially where we were at least in the S
and P five hundred about six months ago. International markets
those are also receiving more interest from people who are
more US centric focused in their investments too, And it
does seem like this, at least to some extent, does
fall along party lines. But I think no matter where
you land politically, the goal is it should be to
(17:35):
tune out the noise and to not make knee jerk changes.
I guess I'm just worried about people seeing something like
a ten percent drop, which feels existential, but especially for
so many How to Money listeners who are in the
wealth building phase of their life, they're early on like
it's a bad idea to make any changes right now.
Speaker 4 (17:50):
And I also hate too that that it does seem
to be falling along party lines, and this is where, unfortunately,
I think folks politics can get in the way of
their investing because it's like, on one hand, we'll say, oh, no,
the volatility, it's par for the course. But I understand
when there are when there's a subset of half the
population who looks at this and say, well, no, this
is this is volatility that is not necessary. It feels
(18:12):
like like an own goal, like within the current administration,
and if you are not optimistic about where things are going.
I totally understand a lot of folks hesitant behavior when
it comes to investing in the market, but I think
zooming out and gaining a better just a better perspective
is so important when it comes to times like these.
I think back to like, we might have a lot
(18:32):
of listeners and they weren't even alive during the dot
com bubble bust or whatever, but that was like the
end of the world, and then not too long after
two K was literally the end of the world.
Speaker 1 (18:41):
Yeah, there's a whole lot happening back, like satellites is
gonna be fallen out of the sky, crushing us SEP.
Speaker 4 (18:45):
And then the Great Recession like these were like literally
end of the world, the sky is falling type of scenarios.
But then what happened, things rebounded. The problem, though, is
that you can't look ahead to see what's You can't
see what's coming down the pike, right and so, But
like when we invest, we are inherently optimistic about what's
going to happen then and so now because of what
has happened over the past fifteen years, we gotta do
(19:07):
the market and where the economy has gone. Like you
look back to the Y two k, you look back
to the two thousands, dot Com bust, you look at
the Greater Session and they look like tiny little speed
bumps compared to where the market has gone since then.
And like even COVID like that was creating more uncertainty
than you know. The skettershot terrasts that we're currently currently
been threatened. At least the stock market was thinking much faster.
(19:29):
The future was highly uncertain, but folks who made reactionary
moves back then ended up being proved wrong fairly quickly.
So ultimately the key to a brighter financial future is
to invest more.
Speaker 3 (19:41):
And that's the thing. These days.
Speaker 4 (19:42):
Your dollar cost average purchase of an index fund is
better than it was a few weeks ago. You are
getting wealthier ultimately by staying the course, and.
Speaker 3 (19:53):
Just know that you're buying at a discount. Remember that.
Speaker 1 (19:55):
What it makes me think, Matt, is that we live
in such a society that we talk about politics a
lot more. Think even about late night comedians that used
to be the Yeah, they used to like tell jokes
about daily life, and they used to have on entertainers
and stuff like that, And now there's so much discussion
of politics in what feels like every realm of our
lives twenty.
Speaker 3 (20:16):
Four to seven news cycle.
Speaker 4 (20:18):
I think that has a lot to do with it
as well, the fact that folks are so glued to
the headlines and every and gosh, we talk about the
democratization of investing, and so the ability to just to
pull out you you whip out your phone and you
can make a trade or you know what I was
thinking about, mind, but now I'm not going to actually
I'm thinking about selling just that knee jerk response to
what happens to be tweeted.
Speaker 3 (20:38):
Or truth or just whatever. But like that day is
a terrible way to invest your money.
Speaker 1 (20:43):
And they can always feel like this guy is falling, Yeah,
if you're paying attention to the headlines on the rig
and we're here to say that it's not, and that yeah,
you want to have a plan for your money and
for your investments so that you're not making kind of
moves on the fly.
Speaker 3 (20:57):
You know where you're going and you know why you're
doing it. Matt.
Speaker 1 (21:00):
There was this old Fidelity study that you and I
have referenced over time as well on investing, and it
showed that seeing essentially like a digital rendering of what
you would look like in thirty to forty years, how
it could impact your willingness to invest. Now, I believe
you and I took a picture on that app and
uh we should like, yeah, repost that on Instagram.
Speaker 3 (21:20):
But we look good older, I think.
Speaker 2 (21:22):
Oh.
Speaker 3 (21:22):
I was happy with it. We're gonna be hot Grandpa's someday.
Speaker 1 (21:27):
But the reality was like seeing what old you was
going to look like, it was going to create more
empathy and it was going to cause a realization, right
that you're actually going to be old someday, because there's
something about being in your twenties and you're like, yeah,
I'm gonna live forever. Hey, Grandpa, get out of here,
it's like, I'm never going to be that, but you are, like,
that's just how the world works. And now there's new
(21:48):
data that essentially reinforces this fidelity survey from a long
time ago. There's a study from Sweden and it found
that people with low balanced save these accounts were fourteen
percent more likely to vest in a long term savings
product when they received a notification with a language prompting
them to think about the future first, just a notification
(22:09):
map like hey, just a prompt guess what little prompt
minor prompt. And I think it makes sense, right, like,
let's use this sort of information to our advantage, realizing
that we have a hard time thinking about the future
and empathizing with our future selves. I think it's important
for How to Money listeners to find a way to
keep their why behind investing top of mind. And I
(22:30):
think visuals can help. Whether that's literally doing the was
it the Oldifi app or whatever it was called and
taking a picture and making yourself look old and then posting.
Speaker 3 (22:40):
That somewhere in your room. I don't know what you
need to do.
Speaker 1 (22:43):
Make it the wallpaper on your phone, yeah, or like
setting a monthly alert, Hey, you're going to die someday right,
or or keeping some sort of like faux metal skull
on your dresser. I don't know what it is for
you that's going to help remind you that you are
going to get older over time, but I do think
that that sort of visualization and connection to that truth
(23:04):
can help you stay the course and potentially even bump
up your investing percentage.
Speaker 3 (23:08):
Totally man, And this makes me.
Speaker 4 (23:10):
This reminds me of something that I'm pretty sure mister
money Mustache wrote. It's a visual that has stuck with
me ever since, and it was something along the lines
of that if you spend money on just dumb stuff today,
how essentially what you're doing is you're taking a crap
sandwich and you're placing it on this conveyor belt, and
it's going to go off on his journey and then
at some point off in the future it comes back
to future you and this is something that you need it. Yeah, basically,
(23:32):
it's something that you have delivered to yourself as opposed
to its story investing your money and instead we like,
what that is is a delightful, thoughtful, generous gift to
your future self. It goes off on the conveyor belt
and then way off in the future. It's this nice present,
this nice gift that you get to receive.
Speaker 3 (23:51):
Think about it that way.
Speaker 4 (23:52):
Just whatever it is, like you said, that allows you
to connect with your future self. Those are the strategies
to implement. Okay, brief story.
Speaker 1 (23:59):
My dad one time, I guess you can instead of
going instead of going to get a colonoscopy.
Speaker 3 (24:04):
You could you could do what you needed to do at.
Speaker 1 (24:08):
Home and then mail it in. Oh way, he accidentally
mailed it to his to himself. So so when he
opened up that box at home, are you kidding? And
I came back like two days later and he's like, wait, oh,
what's this for me? And then he opened it, he's like,
oh gosh, I do so speaking of crap sandwiches, that's.
Speaker 3 (24:29):
What you want to avoid. That's what you want to
write there. Yeah, all right, nice visual for everyone.
Speaker 1 (24:33):
Then all right, hey, we got more money saving information
to get to.
Speaker 2 (24:37):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (24:43):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet, well, you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool.
You can find that up on the website at how
to money dot com.
Speaker 4 (25:01):
Let's not hear from a listener who is having a
tough time landing the home or the apartment that he
applied for.
Speaker 6 (25:08):
Hey, how to money listeners, my name is Dejan and
I come from Georgia. I have a question. So I've
been applying for homes to rent and I received a
denial and what they stated was very weird. I've never
had this before, but it stated that I was denied
due to lack of real estate secured loan information and
(25:32):
I would love to know what that is. If you
guys can help me figure out what that is and
what I need to do to be able to rent,
that would be great. Thank you.
Speaker 1 (25:41):
Ba Wait, Matt, I'm not gonna lie. It feels like
a weird denial letter to get I totally agree. I
interpret that to mean that since you don't have a mortgage,
you can't rent the house, which feels like a weird
thing to tell somebody who's trying to rent your place,
Like you don't have a home loan, so you can't
rent this, yeah, apartment at home. I just don't understand
(26:03):
why any landlord would would make that the reason for
not getting the apartment that you applied for. So the
fact that you've been turned down at least for this
reason is confusing. I would start asking questions. I would
start pushing back in a way because I would want
to know, Like, I can't tell you exactly why they
would turn you down for that reason. It doesn't make
any sense to me, But I would be asking the question.
Speaker 4 (26:24):
It would make sense if he was applaning for a loan, right,
Like if he was a plan for a helock, for instance,
It's like, Okay, what's the property that we're gonna take,
Like what's the collateral? Like what are you putting on
the line in case you don't pay? Because that's what
they're looking for, right, because then if you don't pay, boom,
they have.
Speaker 3 (26:40):
Access to your house. That's not the case.
Speaker 4 (26:42):
So, Dejohn, did you accidentally apply for a helo or
I doubt that that's the case though that's not like
something you would accidentally do. Whoops, Instead of filling out
the application for that sweet apartment or that that nice.
Speaker 1 (26:53):
House, and this could be like a glitch in the matrix.
I instead sign up for a helock. Yeah, where did
I go wrong?
Speaker 3 (26:58):
No? I don't. I think that's not the case.
Speaker 1 (27:00):
That's why you need to push back and ask questions,
because this doesn't sound like a legitimate reason to be
turned around. This could be a simple mistake, but you're
just not going to know if you don't ask, and
it could mean I think what they could be saying, potentially, Matt,
is that you don't have an installment loan of any
kind on your credit report. And the truth is you
and I have said this before on the show, having
multiple types of credit available to you can positively impact
(27:23):
your score and it makes you look like a more
well rounded borrower as long as you're making those payments
consistently on time. And so maybe if the installment loan
thing and the lack of an installment loan is what
they're pointing to, if that's the reason you were denied,
go get yourself an installment loan to help your chances.
And wish you had some advice for you on that front.
Speaker 3 (27:40):
Two, which might sound weird to say, Hey, go out
and get this loan in order to booce your credit
score so that you can get the sweet spot.
Speaker 4 (27:46):
But it could increase your odds of getting accepted for
the rental property you want. And that's because a poor
credit score is often one of the top reasons for
a denial. So looking to increase that by handling your
credit well and by increasing your credit diversity is pretty crucial.
Speaker 3 (28:03):
And one of the easiest ways to go about doing
that is through a.
Speaker 4 (28:05):
Company called self And it will cost you a little
bit of money, but they've developed this product, this great
method for helping folks to increase their score pretty significantly
by helping individuals to make loans to themselves, and then
by paying those loans loans regularly and on time, it
gets reported to the credit bureaus on your behalf, which
(28:25):
sounds totally shady and it is kind of gaming the system,
but is totally legit and.
Speaker 3 (28:30):
It is a reasonable, a reasonable route to take.
Speaker 4 (28:33):
I will say, though, if you already have an installment loan,
you know there's a chance maybe you have a student
loan and guess what that counts as an installment loan
as well. And so if you're like no, guys, I
already have student loans and I pay those off. I
pay on those every single month. Well, then this isn't
something I would recommend. It's even more baffling. It's clearly
a mistake. I think we're that to be the case.
But this is for everyone else out there who doesn't
(28:54):
have an install installment loan. This is something seriously to consider.
Speaker 3 (28:58):
Yeah. Yeah, I mean depends on what your credit score is.
Speaker 1 (28:59):
If you're like, my credit score is already north the
seven forty, I wouldn't jump through these shops to try
to just get installment loan on your credit report.
Speaker 3 (29:06):
But if you have, if your.
Speaker 1 (29:07):
Credit you're fairly new to the building credit game, and
you're like, I've got a credit card that's a revolving
line of credit and that's all you've got kind of
being reported to the bureaus.
Speaker 4 (29:17):
But I've heard that cash is king, so I've always
done that. I thought credit cards are bad. If that's
the case, then you might have a pretty low credit score.
Speaker 1 (29:24):
Taking on more lines of credit and a diversity of
types of credit can really, over time be a boost
to your credit score. And you know that company that
you just mentioned, Matt self, they they're making the installment
loan thing easy for people. It's like one of those
it's one of those early fintech companies that actually has
done a pretty good job by people help them improve
their credit. And the truth is to the credit scoring
(29:45):
system is badly flawed.
Speaker 2 (29:47):
You know.
Speaker 1 (29:48):
There are other types of reasons for denial too, that
are typically like insufficient income or bad references from friends
or previous landlords. Credit, I think is probably one of
the main reasons. But make sure you're buttoned up on
all of those fronts. It's a good idea to find
other ways to stand out as a potential tenant to Matt.
You and I know this as landlords. There are some
tenants that just really stand out. It's typically the ones
who show up on time when we've talked about meeting,
(30:10):
you're ten minutes late, then it just it doesn't bode
well from the get.
Speaker 4 (30:15):
Go, or if they're like a no show and then
they took like later that night were like hey tomorrow,
I'm just like I mean maybe.
Speaker 1 (30:22):
Yeah, but probably not, and like be respectful. Right, That's
just something else that's that's important. Fill out the application
and then follow up. It's kind of like searching for
a job, Matt, where people just submit the resume and
then they forget they ever submitted. And and the fact
that like people who follow up with an employer after
the fact in not just like hey, what's the deal,
(30:43):
but proactively in a kind way like reach back out
and say, hey, I'm really interested in this job, what's
the status? That to me shows that you're taking initiative
and you can do the same thing as a potential tenant.
On top of that, it's a renter's market in much
of the country right now, as rents have softened and
landlords are facing more potential bake sees. Typically in many markets, Matt,
when a landlord lists their property for rent, they're getting
(31:05):
far fewer applications from from potential tenants. And so I
think tenants just doing that little bit of extra work
it can make you stand out in a much thinner
field already.
Speaker 3 (31:17):
So that's what I would recommend. I think would go
a long ways.
Speaker 4 (31:19):
And essentially what you're saying is to present yourself as
an attractive potential tenant to the landlord and being responsive. Man,
I think that goes a long ways because it tells
me as a landlord that Hey, like this person is
someone who's great at communicating. It tells me that there's
a chance that they're going to be better about paying
on time. It tells me that if there's something wrong
at the house, that they're going to let me know
(31:40):
pretty quickly, like, hey, the heat's out, Okay, great, We're
going to fix that asap because obviously for you, you
are very cold if it's the middle of the winter
like I experienced not too long ago. But also for
the sake of the house, I'm like, I don't want
the pipes freezing and for it to cause additional problems.
And so knowing that someone's going to communicate, well, that's
just it's kind of like icing or maybe more more
(32:00):
like the cherry on top. When it comes to some
of the different pool of applicants that you're sorting through.
Our last piece of advice that would be to stick
up for yourself. I would ask why you weren't extended
a lease offered, because if you know what the pain
points are, I think these are things that you can
directly address.
Speaker 1 (32:16):
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.
Kf I AM six forty. You're listening to how to
Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
Do you want to live well without drowning in debt?
Joel and Matt have you covered? This is how to
Money with Joel Larsgard and Matt Altmes KFI AM six
forty live everywhere on the iHeartRadio app.
Speaker 3 (00:24):
This is how to Money. I am Matt Altmes.
Speaker 1 (00:26):
And I'm Joel Larsgard. 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 (00:32):
Buying a house today is an expensive endeavor.
Speaker 4 (00:36):
I think that's the understatement of the century, not the century,
maybe understatement of the past decade. I'll say, as we've
seen house prices rise, they remain elevated, and interest rates
are still near seven percent on thirty year mortgages, and
one way to reduce your monthly obligation is to opt
for an ARM instead of a thirty year mortgage. There
(00:56):
is a recent Bloomberg article and they pointed out to
the tent rise of arms and how that could help
grease the wheels of the housing market a little bit.
Speaker 1 (01:05):
Yeah, you have more people opted for them that hey,
we might we might see more listings and exactly houses
going in a contract.
Speaker 3 (01:11):
Things might be flowing a little bit more and it's
going to.
Speaker 4 (01:13):
Get you a lower rate, but it won't be locked
in for forever or you know, for the life of
that loan. This means that you'd you know, you're living
yourself financially exposed at the end of that fixed term.
So oftentimes we're talking about like a five year term,
like a five to one ARM. But they can be
a reasonable choice for some folks out there, especially if
you're not planning on being in that home you know
(01:34):
too much past the initial fixed term, or if you
understand the trade offfs if you're willing to endure a
potentially higher interest rate down the line. But man, you
got to be careful. You got to weigh the trade offs.
You need to choose carefully. Where you planning to share
how how you opted to go with an ARM. I
did what I mean, it's I think it can be
a It used to not be a smart decision.
Speaker 3 (01:56):
Right like ten years ago, why would you opt for
an ARM?
Speaker 4 (01:58):
Interest rates were at like rock bottom lows and the
ability to opt for an eighth of a percent discount
over the thirty year fix. That was dumb, but now
it's like, Okay, there's a more of an ability to save,
and just given the fact that there's a higher likelihood
of rates going down in the future, it's not guaranteed.
Speaker 3 (02:16):
Yeah, but yeah, but it's interesting.
Speaker 1 (02:18):
Rates did continue to drop until just a few years ago,
and so some people who did, let's say, take out
an ARM ten years ago, and then five years in
they were like, my rates.
Speaker 3 (02:25):
Looking sweeter now.
Speaker 1 (02:26):
I'm kind of glad I went for the ARM, and
then they sell the like they were just paying a
lower interest rate the whole time, even though a thirty
year fix would have been better, I opted for a
ten to one arm, Matt, So I like that like
greater security, like a decade instead of just five years, but.
Speaker 3 (02:40):
Only because like the rider time period too.
Speaker 4 (02:42):
Yeah, because like like when you're closer to five it's like, well,
we don't want you buying and only staying there for
five years anyway, Like you need to get past that
five year I like that hit the ten and I
didn't know if.
Speaker 1 (02:51):
I was going to be in the house for ten
years or thirty. But I can cross that bridge when
I come to it, and I can paint out on the
mortgage more quickly if I want to, or I can
also refinance into another type of loan. I think I
used to be kind of like blinders on thirty year mortgage.
Thirty year fixes the only way to go, and I
think for most people that's probably still the smartest move.
(03:12):
But so much depends on the discrepancy in rates. And
if you can get a significantly lower rate by opting
for an ARM and let's say you're at least banking ahead,
you're planning ahead for potentially higher rates down the line
as that that mortgage rate adjusts. I think it's an
okay move. You just have to go into it with
eyes wide open. So that's what I did. It's worked
out well so far.
Speaker 3 (03:33):
We'll see.
Speaker 1 (03:34):
We'll see how it goes seven and a half years
from now. But let's talk about good political money news, Matt.
A recent move from the Trump administration could bring down
costs on housing using federal land, specifically to buildboard units,
almost a proposal that was made this week.
Speaker 3 (03:49):
I've always wanted to live in Yosemite.
Speaker 4 (03:50):
Valley, jol, wouldn't they be nice and be nice? Just
set of right their next to Curry Village. We'll see
if they make that land available. Unlikely, probably not, but
it does look like the Interior Department and HUD are
set to work together to and in terms of increase
housing supply by allowing building on federal land that's underutilized.
Speaker 1 (04:08):
Right, And the truth is, we need more supply. We've
talked about this for years. How are millions of homes
shy in this country? What we actually need? I was
just in Austin, matt and it was fascinating to hear
from folks how much cheaper it's become to live in
Austin over just a short period of time. Really, in
just the last like year, rents have declined by twenty
two percent I think something like that from peak Austin,
(04:30):
thanks to this boom and building. Like I was driving around,
I'm seeing unfinished apartment complexes everywhere. They are continuing to build,
and now the incentive is, I don't know, it's.
Speaker 3 (04:39):
Quite for the builders.
Speaker 1 (04:41):
Yeah, so you know, Austin renters now have more negotiation
power and you know a lot of apartment complexes are
offering months of free rent to entice people to come over.
It's interesting though, California is taking the opposite approach. Some
people are saying that in the aftermath of the wildfires,
it's a great time to prioritize building some density, like
adding more units. But the NIMBI movement, they're not in
(05:04):
my backyard movement is doing what they can to prevent that.
And so a lot of folks in California say, well,
we want more housing affordability, but we don't want to
do what it takes to get there. We don't want
more units because it might reduce the value of my house.
Speaker 4 (05:17):
You don't want to kill those expensive California vibes, right, Yeah.
Speaker 1 (05:20):
And they're not trust me, And so I don't know.
I was in Austin and I saw this poster, Matt
It said twenty five percent of housing costs are due
to government red tape. I think it was from like
realtor dot com or something like that, and I think
it's likely much more than that in California. I would
love love to see California take a page from Texas
on this. I think a lot of young folks in
particular benefit. Think about when you bring down the cost
(05:41):
of housing, you bring down that barrier to entry, and
you reduce that line item in people's budget, especially for
young folks. It's a massive win, totally.
Speaker 4 (05:50):
Yeah, And until then we will continue to most likely
we will continue to see population declines from California and
increases in states like Texas where there is where there
has been increased supply.
Speaker 1 (05:59):
It's so much of the is like government regulation, and
if you just dial back some of the building codes
and stuff like that and make it easier for builders
to create new supply, they'll do it.
Speaker 3 (06:09):
Yeah. Well, the lawsuit against the NAAR like.
Speaker 4 (06:12):
That looked like it might have had a meaningful implication
on closing costs and realtor commissions, specifically talking about grease
and the wheels of housing, but that hasn't pained out,
at least not yet. It's been about six months since
those rules have changed, and the average buyer commission has
gone from two point three to seven percent too, drum roll,
two point three six percent he has. It's barely budged,
(06:34):
so not dramatic, which is great news for worried realtors
out there, but bad news again for all the buyers
who are looking for ways to reduce some of these transaction.
Speaker 3 (06:42):
Costs associated with buying a house.
Speaker 4 (06:44):
But know that as an individual, you have the power
to push back, to discuss the commission structure with a
potential agent.
Speaker 3 (06:52):
You don't just have to fork.
Speaker 4 (06:53):
Over three percent of the purchase price by default just
because that's the way it's always been done.
Speaker 3 (06:57):
Yeah.
Speaker 4 (06:58):
And I think this is an area too where I
think just the technology that's associated with the transaction, the
transaction costs, and just the buying and selling of homes,
that's an area where I'm hopeful. And man, I just
think of it feels like such an antiquated old model,
the old way of doing things, And given the pressure,
given the fact that there is an entire generation wanting
(07:20):
to purchase a home where that they're finding that harder
and harder to.
Speaker 1 (07:23):
Do, I feel like something's got to change. Yeah, all right,
We've got actually more to get to. On today's show.
Speaker 2 (07:29):
You're listening to how To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 4 (07:36):
By the way, you can always find more money saving
information over at howtomoney dot com. Let's get to a
question from a listener who's doing an awesome job investing
for her future, but the savings maybe not so great.
Speaker 5 (07:50):
Hi, guys, this is Christa from Centerville, Virginia. I'm fifty
one years old and married with two elementary age kids
at home, and my question is surrounding retirement and emergency
fund savings. So I currently max out my four oh
(08:11):
one K plan with my company, and I'm also participating
in the Ketchup contribution. I haven't started on the emergency
fund though, because I'm putting in about nineteen percent of
my income into retirement, there isn't really much left to then,
(08:31):
say for the emergency fund. So my question is is
it wise to pause retirement savings at my age in
favor of fully funding the emergency fund?
Speaker 3 (08:44):
Or can my.
Speaker 5 (08:45):
Existing helock act as the emergency fund if we ever
need to use it? Thanks so much?
Speaker 3 (08:53):
Is it wise?
Speaker 4 (08:54):
That's the heart of Christa's question here, Joel, But before
we answer it, I will say life, elementary age kids.
Speaker 3 (09:01):
Man, it's a.
Speaker 4 (09:02):
Total blast, but it can feel all encompassing, not just
physically and emotionally, but financially as well. So Christa, I
want to start off by congratulating you kudos on hitting
a nineteen percent savings rate, despite being a life stage
where that is not always easy. I think that's truly incredible.
Speaker 3 (09:19):
She said. She's also got catch.
Speaker 4 (09:21):
Up contributions as well, So we're talking thirty one thousand dollars.
Speaker 3 (09:24):
That's those Mustard contributions. Dude. Yeah, she's laid it on thick.
Speaker 1 (09:29):
Sorry, dad joke. I too have young kids, and my
kids know that I'm master. Yeah, run thick, but yeah, no,
you're right, Matt. That's incredible like to be to be
have a savings rate that's substantial, especially when you're kind
of the age Krista is. She's not too terribly far
off from where we are, and you are in that
kind of sandwich generation area where you might be supporting
(09:50):
or helping older parents, you've got young kids to take
care of. It can be tough to hit all those
financial goals that you have for yourself. But a savings rate,
i will say, is divided up into money you're funneling
into liquid savings, or debt you're paying off, and then
also on top of that, money that you're investing for
your future. So all three of those things could be
considered part of your savings right. The thing is, if
(10:10):
you skip the savings portion and you go straight to investing,
there are some real potential downsides. Matt, you shared this
story on the podcast before I made this mistake. Yeah,
you want to just briefly recount your your early Wrath
mess up.
Speaker 3 (10:24):
Yeah, I'm the bottom line.
Speaker 4 (10:25):
I didn't have money set aside in my savings account
because I heard about the beauty of compounding interest, and
so I'd socked that money away into a wroth account.
I saw that balanced decline because it happened to be
a down year, and boom, I had less money on
hand that I then needed for a move back to
the big city where I was offered a job.
Speaker 1 (10:42):
So, even though it sucked, investing is a great thing.
You just got too far in front of it, right,
And it makes you think about like all the federal
layoffs that have been happening recently, Right, you would be
in a tough position, right if you were to lose
your job for some reason. It's not that there aren't
other places to turn for money. In Christ's case, it's
just that be tapping a debt vehicle instead of liquid savings,
(11:03):
and because of her high savings rate, it's very much
possible for her to increase that liquid savings. And I
think from where I'm saving, I would prefer for her
to focus on that for right now.
Speaker 3 (11:13):
Totally.
Speaker 4 (11:14):
Yeah, she's just funding all the savings dollars in one
direction when you should be splitting them up. So we
would suggest that you dial back, in fact, reduce your
contributions to your four to one K all the way
back to just getting the full match. We at least
want you to do that, because you can't beat that
return on those dollars, But then put every other dollar
into your savings account until you achieve at least three
(11:34):
months worth of liquid expenses, and then after that then
you can ramp up your investing back to where it
currently is. Although if you are a bit more cautious
or maybe you feel the need to acquire a little
more savings and you can put you know, let's say,
sixteen to seventeen percent towards your investments towards your four
one K, and then the rest of it can slowly
(11:55):
grow your savings pile until maybe you have an additional
one to two months worth of expenses on hand. And
based on the fact that she currently has no emergency fund,
I think Christal is going to be very comfortable even
having like two to three months sure of savings and
so for and I think she'd do the trick, and
I think that's totally within the bounds of what's reasonable.
Speaker 1 (12:12):
But this brings up kind of a really important part
of Christ's question is, well, aren't there alternatives to cash
in savings? You guys are this kind of old school
Matt and Joel. You're telling me that I need money
inside of a high old savings account.
Speaker 4 (12:25):
But what about surely there's a more sophisticated option, Yeah,
product out there for me.
Speaker 1 (12:29):
Investment returns are going to outpace money that I have
in my savings account, So why don't I, in hopes
that I don't have to tap any sort of emergency fund,
just have the helock on the back burner in case
it's needed, like kind of one of those break glassing
case of emergency things. And so let's dive into that, Matt,
I mean we we do think. I think it is
true to a certain extent at least that it can
(12:49):
be a great potential backup efund. It's just far too risky, though,
to make it your primary one. So if you've got
let's say, four months worth of cash and you're out
of the job for six months, I think the helock
then can help bridge the gap. So it's nice to
have the helock as a backup to the backup, But
if you have no savings and you lose your job,
you'd have to tap the helock right away. It becomes
(13:12):
your first recourse, which I don't think is a good thing.
Think about how much debt you might accrue over the
course of three to six months. That probably, yeah, in
these days, at like a nine percent rate, it could
take you years to pay that off, which you put
you in a weaker overall financial position. I just don't
like the idea of the helock being the first line,
(13:33):
the first fail safe. I think liquid cache saving should
be the first thing, and then you know what, Hey,
if you have another resource that's potentially better than a
credit card for tapping some money. Yeah, maybe it's the
backup to the backup, but I just don't think you
want it being kind of that main thing and having
zero insulation between yourself and an emergency and having to
tap the helock for that emergency totally.
Speaker 4 (13:54):
In addition to that, your bank also has the ability
to reduce your line of credit in many cases, so
the access to your home equity it can actually dry
up before you need it the most, especially if there's
like a tightening in the economy. Max might say, well,
we're going to restrict our lending in.
Speaker 3 (14:09):
The helock front. We're looking to show up their books
as well.
Speaker 4 (14:10):
Yeah, so that's another con to making the heelock your main,
your primary emergency fund, which brings up even like ROTH contributions,
because sometimes we'll think about that as a backup emergency
fund as well.
Speaker 3 (14:21):
But we also want you to avoid typing.
Speaker 4 (14:23):
Those dollars if at all possible, having a big rostache.
It doesn't negate the need for having those liquid savings
on hand. And I think, Krista, what you're trying to
do here is a good thing you would much rather
invest than to save. And I think she's looking ahead
a little bit. She's looking at her age. She's thinking, Man,
every year that I am not maxing out my account,
(14:44):
that's a year lost, that's a year where I'm not
experiencing the magic of compound interest.
Speaker 3 (14:49):
And one other thing that I don't know.
Speaker 1 (14:51):
When she started either, So she's fifty one, but maybe
she's like, I just started at like forty six, and
I feel like I've got this.
Speaker 3 (14:56):
She might feel very I mean go hard in that
direction totally, and.
Speaker 4 (14:59):
For someone who's made the catch up contributions, I think
that's the headspace that you are in, which I totally understand.
But one thing that you mentioned but you didn't mention
was so you said that you are married, but you
didn't mention your partner's income, and it sounds like whoever
it is that you're working for, that you've got a
good thing going there. When it comes to investments, I
would say, is there a way for you to possibly
(15:20):
keep investing there with your folk? Obviously you're getting the
full match, but continue to invest those additional dollars so
that you can max that out while finding a way
to divert some of the funds, assuming I guess there's
an additional stream of income that your partner is earning.
You're in this together, I know, like when I am
saving from my retirement, it's not just for me and
my wife is just like sorry, out of luck. Like
(15:41):
we're doing this together money, Like we're being.
Speaker 3 (15:44):
Eaten at the buffet and she's gonna beeting faster. We're
pulling our resources together. We are in it together.
Speaker 4 (15:48):
And research has shown that not only do is there
a better result from a numbers from a financial standpoint,
but that your quality of life and your levels of
happiness are going to be better too. So hopefully that
that's something else that you're considering as well, that you're
pooling your resources together, and that these are goals that
you're both working towards. Hopefully it's not something that you
feel that you have to shoulder completely on your own.
Speaker 3 (16:11):
Yeah.
Speaker 1 (16:11):
I couldn't agree more. All Right, we've got more to
get to on today's show.
Speaker 2 (16:16):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 4 (16:22):
Don't forget to sign up for the how to Money
newsletter over at how toomoney dot com slash newsletter.
Speaker 1 (16:27):
Matt, let's talk about investing investors. They're shaking things up
right now given the economic actions of the Trump administration
recent stock market volatility. The Wall Street Journal just profiled
some folks who are making meaningful changes to their investment
portfolio in light of recent volatility. They're saying, don't like that.
Speaker 3 (16:46):
Yeah, They're like, I'm not sure.
Speaker 1 (16:47):
This doesn't look so good. I might need to do
something different, and it doesn't seem like based on their investigation,
that this activity is widespread. I don't think people are
knee JERKX selling right and left, but that doesn't mean
it's no concerning gold and cash in particular have been
garnering more interest as stocks have kind of sort of
I'm not going to say free fall, but they've been
going down, right, stock price them going down or there
(17:09):
at least they've been more volatile.
Speaker 3 (17:11):
I guess we're back down.
Speaker 1 (17:12):
To essentially where we were at least in the S
and P five hundred about six months ago. International markets
those are also receiving more interest from people who are
more US centric focused in their investments too, And it
does seem like this, at least to some extent, does
fall along party lines. But I think no matter where
you land politically, the goal is it should be to
(17:35):
tune out the noise and to not make knee jerk changes.
I guess I'm just worried about people seeing something like
a ten percent drop, which feels existential, but especially for
so many How to Money listeners who are in the
wealth building phase of their life, they're early on like
it's a bad idea to make any changes right now.
Speaker 4 (17:50):
And I also hate too that that it does seem
to be falling along party lines, and this is where, unfortunately,
I think folks politics can get in the way of
their investing because it's like, on one hand, we'll say, oh, no,
the volatility, it's par for the course. But I understand
when there are when there's a subset of half the
population who looks at this and say, well, no, this
is this is volatility that is not necessary. It feels
(18:12):
like like an own goal, like within the current administration,
and if you are not optimistic about where things are going.
I totally understand a lot of folks hesitant behavior when
it comes to investing in the market, but I think
zooming out and gaining a better just a better perspective
is so important when it comes to times like these.
I think back to like, we might have a lot
(18:32):
of listeners and they weren't even alive during the dot
com bubble bust or whatever, but that was like the
end of the world, and then not too long after
two K was literally the end of the world.
Speaker 1 (18:41):
Yeah, there's a whole lot happening back, like satellites is
gonna be fallen out of the sky, crushing us SEP.
Speaker 4 (18:45):
And then the Great Recession like these were like literally
end of the world, the sky is falling type of scenarios.
But then what happened, things rebounded. The problem, though, is
that you can't look ahead to see what's You can't
see what's coming down the pike, right and so, But
like when we invest, we are inherently optimistic about what's
going to happen then and so now because of what
has happened over the past fifteen years, we gotta do
(19:07):
the market and where the economy has gone. Like you
look back to the Y two k, you look back
to the two thousands, dot Com bust, you look at
the Greater Session and they look like tiny little speed
bumps compared to where the market has gone since then.
And like even COVID like that was creating more uncertainty
than you know. The skettershot terrasts that we're currently currently
been threatened. At least the stock market was thinking much faster.
(19:29):
The future was highly uncertain, but folks who made reactionary
moves back then ended up being proved wrong fairly quickly.
So ultimately the key to a brighter financial future is
to invest more.
Speaker 3 (19:41):
And that's the thing. These days.
Speaker 4 (19:42):
Your dollar cost average purchase of an index fund is
better than it was a few weeks ago. You are
getting wealthier ultimately by staying the course, and.
Speaker 3 (19:53):
Just know that you're buying at a discount. Remember that.
Speaker 1 (19:55):
What it makes me think, Matt, is that we live
in such a society that we talk about politics a
lot more. Think even about late night comedians that used
to be the Yeah, they used to like tell jokes
about daily life, and they used to have on entertainers
and stuff like that, And now there's so much discussion
of politics in what feels like every realm of our
lives twenty.
Speaker 3 (20:16):
Four to seven news cycle.
Speaker 4 (20:18):
I think that has a lot to do with it
as well, the fact that folks are so glued to
the headlines and every and gosh, we talk about the
democratization of investing, and so the ability to just to
pull out you you whip out your phone and you
can make a trade or you know what I was
thinking about, mind, but now I'm not going to actually
I'm thinking about selling just that knee jerk response to
what happens to be tweeted.
Speaker 3 (20:38):
Or truth or just whatever. But like that day is
a terrible way to invest your money.
Speaker 1 (20:43):
And they can always feel like this guy is falling, Yeah,
if you're paying attention to the headlines on the rig
and we're here to say that it's not, and that yeah,
you want to have a plan for your money and
for your investments so that you're not making kind of
moves on the fly.
Speaker 3 (20:57):
You know where you're going and you know why you're
doing it. Matt.
Speaker 1 (21:00):
There was this old Fidelity study that you and I
have referenced over time as well on investing, and it
showed that seeing essentially like a digital rendering of what
you would look like in thirty to forty years, how
it could impact your willingness to invest. Now, I believe
you and I took a picture on that app and
uh we should like, yeah, repost that on Instagram.
Speaker 3 (21:20):
But we look good older, I think.
Speaker 2 (21:22):
Oh.
Speaker 3 (21:22):
I was happy with it. We're gonna be hot Grandpa's someday.
Speaker 1 (21:27):
But the reality was like seeing what old you was
going to look like, it was going to create more
empathy and it was going to cause a realization, right
that you're actually going to be old someday, because there's
something about being in your twenties and you're like, yeah,
I'm gonna live forever. Hey, Grandpa, get out of here,
it's like, I'm never going to be that, but you are, like,
that's just how the world works. And now there's new
(21:48):
data that essentially reinforces this fidelity survey from a long
time ago. There's a study from Sweden and it found
that people with low balanced save these accounts were fourteen
percent more likely to vest in a long term savings
product when they received a notification with a language prompting
them to think about the future first, just a notification
(22:09):
map like hey, just a prompt guess what little prompt
minor prompt. And I think it makes sense, right, like,
let's use this sort of information to our advantage, realizing
that we have a hard time thinking about the future
and empathizing with our future selves. I think it's important
for How to Money listeners to find a way to
keep their why behind investing top of mind. And I
(22:30):
think visuals can help. Whether that's literally doing the was
it the Oldifi app or whatever it was called and
taking a picture and making yourself look old and then posting.
Speaker 3 (22:40):
That somewhere in your room. I don't know what you
need to do.
Speaker 1 (22:43):
Make it the wallpaper on your phone, yeah, or like
setting a monthly alert, Hey, you're going to die someday right,
or or keeping some sort of like faux metal skull
on your dresser. I don't know what it is for
you that's going to help remind you that you are
going to get older over time, but I do think
that that sort of visualization and connection to that truth
(23:04):
can help you stay the course and potentially even bump
up your investing percentage.
Speaker 3 (23:08):
Totally man, And this makes me.
Speaker 4 (23:10):
This reminds me of something that I'm pretty sure mister
money Mustache wrote. It's a visual that has stuck with
me ever since, and it was something along the lines
of that if you spend money on just dumb stuff today,
how essentially what you're doing is you're taking a crap
sandwich and you're placing it on this conveyor belt, and
it's going to go off on his journey and then
at some point off in the future it comes back
to future you and this is something that you need it. Yeah, basically,
(23:32):
it's something that you have delivered to yourself as opposed
to its story investing your money and instead we like,
what that is is a delightful, thoughtful, generous gift to
your future self. It goes off on the conveyor belt
and then way off in the future. It's this nice present,
this nice gift that you get to receive.
Speaker 3 (23:51):
Think about it that way.
Speaker 4 (23:52):
Just whatever it is, like you said, that allows you
to connect with your future self. Those are the strategies
to implement. Okay, brief story.
Speaker 1 (23:59):
My dad one time, I guess you can instead of
going instead of going to get a colonoscopy.
Speaker 3 (24:04):
You could you could do what you needed to do at.
Speaker 1 (24:08):
Home and then mail it in. Oh way, he accidentally
mailed it to his to himself. So so when he
opened up that box at home, are you kidding? And
I came back like two days later and he's like, wait, oh,
what's this for me? And then he opened it, he's like,
oh gosh, I do so speaking of crap sandwiches, that's.
Speaker 3 (24:29):
What you want to avoid. That's what you want to
write there. Yeah, all right, nice visual for everyone.
Speaker 1 (24:33):
Then all right, hey, we got more money saving information
to get to.
Speaker 2 (24:37):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (24:43):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet, well, you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool.
You can find that up on the website at how
to money dot com.
Speaker 4 (25:01):
Let's not hear from a listener who is having a
tough time landing the home or the apartment that he
applied for.
Speaker 6 (25:08):
Hey, how to money listeners, my name is Dejan and
I come from Georgia. I have a question. So I've
been applying for homes to rent and I received a
denial and what they stated was very weird. I've never
had this before, but it stated that I was denied
due to lack of real estate secured loan information and
(25:32):
I would love to know what that is. If you
guys can help me figure out what that is and
what I need to do to be able to rent,
that would be great. Thank you.
Speaker 1 (25:41):
Ba Wait, Matt, I'm not gonna lie. It feels like
a weird denial letter to get I totally agree. I
interpret that to mean that since you don't have a mortgage,
you can't rent the house, which feels like a weird
thing to tell somebody who's trying to rent your place,
Like you don't have a home loan, so you can't
rent this, yeah, apartment at home. I just don't understand
(26:03):
why any landlord would would make that the reason for
not getting the apartment that you applied for. So the
fact that you've been turned down at least for this
reason is confusing. I would start asking questions. I would
start pushing back in a way because I would want
to know, Like, I can't tell you exactly why they
would turn you down for that reason. It doesn't make
any sense to me, But I would be asking the question.
Speaker 4 (26:24):
It would make sense if he was applaning for a loan, right,
Like if he was a plan for a helock, for instance,
It's like, Okay, what's the property that we're gonna take,
Like what's the collateral? Like what are you putting on
the line in case you don't pay? Because that's what
they're looking for, right, because then if you don't pay, boom,
they have.
Speaker 3 (26:40):
Access to your house. That's not the case.
Speaker 4 (26:42):
So, Dejohn, did you accidentally apply for a helo or
I doubt that that's the case though that's not like
something you would accidentally do. Whoops, Instead of filling out
the application for that sweet apartment or that that nice.
Speaker 1 (26:53):
House, and this could be like a glitch in the matrix.
I instead sign up for a helock. Yeah, where did
I go wrong?
Speaker 3 (26:58):
No? I don't. I think that's not the case.
Speaker 1 (27:00):
That's why you need to push back and ask questions,
because this doesn't sound like a legitimate reason to be
turned around. This could be a simple mistake, but you're
just not going to know if you don't ask, and
it could mean I think what they could be saying, potentially, Matt,
is that you don't have an installment loan of any
kind on your credit report. And the truth is you
and I have said this before on the show, having
multiple types of credit available to you can positively impact
(27:23):
your score and it makes you look like a more
well rounded borrower as long as you're making those payments
consistently on time. And so maybe if the installment loan
thing and the lack of an installment loan is what
they're pointing to, if that's the reason you were denied,
go get yourself an installment loan to help your chances.
And wish you had some advice for you on that front.
Speaker 3 (27:40):
Two, which might sound weird to say, Hey, go out
and get this loan in order to booce your credit
score so that you can get the sweet spot.
Speaker 4 (27:46):
But it could increase your odds of getting accepted for
the rental property you want. And that's because a poor
credit score is often one of the top reasons for
a denial. So looking to increase that by handling your
credit well and by increasing your credit diversity is pretty crucial.
Speaker 3 (28:03):
And one of the easiest ways to go about doing
that is through a.
Speaker 4 (28:05):
Company called self And it will cost you a little
bit of money, but they've developed this product, this great
method for helping folks to increase their score pretty significantly
by helping individuals to make loans to themselves, and then
by paying those loans loans regularly and on time, it
gets reported to the credit bureaus on your behalf, which
(28:25):
sounds totally shady and it is kind of gaming the system,
but is totally legit and.
Speaker 3 (28:30):
It is a reasonable, a reasonable route to take.
Speaker 4 (28:33):
I will say, though, if you already have an installment loan,
you know there's a chance maybe you have a student
loan and guess what that counts as an installment loan
as well. And so if you're like no, guys, I
already have student loans and I pay those off. I
pay on those every single month. Well, then this isn't
something I would recommend. It's even more baffling. It's clearly
a mistake. I think we're that to be the case.
But this is for everyone else out there who doesn't
(28:54):
have an install installment loan. This is something seriously to consider.
Speaker 3 (28:58):
Yeah. Yeah, I mean depends on what your credit score is.
Speaker 1 (28:59):
If you're like, my credit score is already north the
seven forty, I wouldn't jump through these shops to try
to just get installment loan on your credit report.
Speaker 3 (29:06):
But if you have, if your.
Speaker 1 (29:07):
Credit you're fairly new to the building credit game, and
you're like, I've got a credit card that's a revolving
line of credit and that's all you've got kind of
being reported to the bureaus.
Speaker 4 (29:17):
But I've heard that cash is king, so I've always
done that. I thought credit cards are bad. If that's
the case, then you might have a pretty low credit score.
Speaker 1 (29:24):
Taking on more lines of credit and a diversity of
types of credit can really, over time be a boost
to your credit score. And you know that company that
you just mentioned, Matt self, they they're making the installment
loan thing easy for people. It's like one of those
it's one of those early fintech companies that actually has
done a pretty good job by people help them improve
their credit. And the truth is to the credit scoring
(29:45):
system is badly flawed.
Speaker 2 (29:47):
You know.
Speaker 1 (29:48):
There are other types of reasons for denial too, that
are typically like insufficient income or bad references from friends
or previous landlords. Credit, I think is probably one of
the main reasons. But make sure you're buttoned up on
all of those fronts. It's a good idea to find
other ways to stand out as a potential tenant to Matt.
You and I know this as landlords. There are some
tenants that just really stand out. It's typically the ones
who show up on time when we've talked about meeting,
(30:10):
you're ten minutes late, then it just it doesn't bode
well from the get.
Speaker 4 (30:15):
Go, or if they're like a no show and then
they took like later that night were like hey tomorrow,
I'm just like I mean maybe.
Speaker 1 (30:22):
Yeah, but probably not, and like be respectful. Right, That's
just something else that's that's important. Fill out the application
and then follow up. It's kind of like searching for
a job, Matt, where people just submit the resume and
then they forget they ever submitted. And and the fact
that like people who follow up with an employer after
the fact in not just like hey, what's the deal,
(30:43):
but proactively in a kind way like reach back out
and say, hey, I'm really interested in this job, what's
the status? That to me shows that you're taking initiative
and you can do the same thing as a potential tenant.
On top of that, it's a renter's market in much
of the country right now, as rents have softened and
landlords are facing more potential bake sees. Typically in many markets, Matt,
when a landlord lists their property for rent, they're getting
(31:05):
far fewer applications from from potential tenants. And so I
think tenants just doing that little bit of extra work
it can make you stand out in a much thinner
field already.
Speaker 3 (31:17):
So that's what I would recommend. I think would go
a long ways.
Speaker 4 (31:19):
And essentially what you're saying is to present yourself as
an attractive potential tenant to the landlord and being responsive. Man,
I think that goes a long ways because it tells
me as a landlord that Hey, like this person is
someone who's great at communicating. It tells me that there's
a chance that they're going to be better about paying
on time. It tells me that if there's something wrong
at the house, that they're going to let me know
(31:40):
pretty quickly, like, hey, the heat's out, Okay, great, We're
going to fix that asap because obviously for you, you
are very cold if it's the middle of the winter
like I experienced not too long ago. But also for
the sake of the house, I'm like, I don't want
the pipes freezing and for it to cause additional problems.
And so knowing that someone's going to communicate, well, that's
just it's kind of like icing or maybe more more
(32:00):
like the cherry on top. When it comes to some
of the different pool of applicants that you're sorting through.
Our last piece of advice that would be to stick
up for yourself. I would ask why you weren't extended
a lease offered, because if you know what the pain
points are, I think these are things that you can
directly address.
Speaker 1 (32:16):
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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