May 11, 2025 • 33 mins
New home and apartment sizes are shrinking in the US. Opting for a smaller abode could be a great move for your finances!
Ask HTM: Ben wants to know if you need a credit card to get through life.
Target date funds continue to gain steam. They can be a great option for many investors!
Ask HTM: David wants to know when to ditch full coverage on his automobiles.
Ask HTM: Ben wants to know if you need a credit card to get through life.
Target date funds continue to gain steam. They can be a great option for many investors!
Ask HTM: David wants to know when to ditch full coverage on his automobiles.
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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):
Do you want to live well without drowning in debt?
Joel and Matt have you covered? This is how to
Money with Joel lars Guard and Matt Ullmax.
Speaker 3 (01:19):
KF I am six forty live everywhere on the iHeartRadio app.
This is how to Money. I am Matt Altmics.
Speaker 1 (01:25):
And I'm Joel Larscard. 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 4 (01:32):
Joel, you got to note here about Walmart. What's what's
the latest with Walmart? I want to give you a
big fan. I want to give a quick I'm not
not a fan of Walmart.
Speaker 3 (01:41):
Walmart.
Speaker 4 (01:41):
Yeah, so we've been doing more shopping there lately. It's
just not our you know, there's only one place in
my heart, and it's shaped like aldi.
Speaker 1 (01:48):
You should actually get an Aldie tattoo over your heart.
I think that'd be great, maybe one of these days.
So okay, two different retailer policies that I wanted to
highlight here. One that's consumer friendly and one that's not
so Walmart. And I didn't realize this until I went
in the other day. I bought some shoes for my
little dude online and turns out they were too big,
(02:09):
so I had to go in the store.
Speaker 3 (02:10):
You're not gonna hang on to them wait for them
to grow into them.
Speaker 1 (02:13):
You're right, I probably could, but I had to go
in anyway, okay, right to buy the right size, and
they the when I got there, the price at the
store for those shoes was higher than it was online,
and they wouldn't let me do an exchange, and they
wouldn't so I could return and then I could buy
and then if but then I was going to be
spending more than what I would have paid online, So
(02:34):
they that I was just unfamiliar with the fact that
Walmart does not match online prices in stores, which to
me does not seem And I guess I would get
it too, because there's more third party sellers on Walmart. Now,
if it wasn't actually sold by Walmart, it's like, all right,
I get that, don't price match that. But if it
is sold in walt Item, Yeah, if it's solden ship
(02:55):
by Walmart, why wouldn't they match it?
Speaker 3 (02:57):
You know who would match that, who's that old?
Speaker 4 (03:02):
I don't know how many pairs of that you're buying
an Aldie, But you know, like Cay and I we
joke about this. Anytime there's something kind of random that
we need, we just look at each other and I'm like, oh,
we've just voiced it into existence, because then you walk
down that seasonal aisle or like I swear.
Speaker 3 (03:17):
It pops up, it's there.
Speaker 4 (03:18):
Like we were recently talking about getting a composter tapped
into your home. I think it just means that I'm
just way more typical average American consumer than maybe I
would like to admit.
Speaker 3 (03:30):
That could be. That's all I got.
Speaker 1 (03:31):
So I highlighted I highlighted a negative store policy. Let
me highlight a positive one from best Buy. So my
dad texted me and he's like, hey, I know you're
like where you live, they're better about picking up old
electronic items and stuff like that. Can can I drop
them off at your house? And can you ask your
trash provider to pick it up? And I was like, yeah,
but you know you could take this stuff to best
(03:51):
Buy instead. And when you go to best Buy, look
at their like electronics recycling page. They will take almost
anything for for free. So if you've got like my
dad had, like old modems and DVD players and stuff
lying around remotes, they'll take old TVs under a certain size.
So if you're like I've kind of accumulated a lot
of junk electronics that's past their prime and they're not
(04:13):
you can't sell them and you're gonna actually to actually
pay money to dispose of them.
Speaker 3 (04:17):
See take them to best Buy.
Speaker 4 (04:18):
I know you're supposed to recycle, but I think there's
a whole lot of folks, dude, who are out there
just tossing that stuff.
Speaker 3 (04:22):
You know, I think that's probably like do you ever
feel that way about recycling?
Speaker 1 (04:25):
Kind of can't with a fifty five inch TV, but
you probably can with that old murder.
Speaker 3 (04:28):
But could he not sell that fifty five inch even
for like.
Speaker 4 (04:32):
Well it was maybe I mean that's a good point too,
but like a no, no, he was a Flaskreen but.
Speaker 3 (04:36):
Like the screen just went out. You can't sell that.
Speaker 1 (04:40):
Yeah, I was gonna say, I mean, maybe there's some
tinkerer hobbyists who would be interested in that.
Speaker 3 (04:44):
You know.
Speaker 4 (04:44):
What I was gonna say was that sometimes I feel
like it is not a futile endeavor, but like it
like recycling, like I do regular recycling, Like this morning
even I was preparing some strawberries for my lunch, Like
what did I do with a plastic strawberry container sitting
in the recycling bin?
Speaker 3 (05:01):
Like we could?
Speaker 4 (05:02):
You know, we're even composting actually, like we are, like
we're cutting little tops off and suci a hippie. We
are reducing our waist and so we are doing our
small little part. But like sometimes when I think about it,
I feel like we are only moving the needle like
points zero zero zero zero, Like I don't know, you
can put tons of zeros one percent, like just even
in our country. Like and when I start thinking about
(05:23):
the world large, like at large, like you think about China,
and you think about countries that are burning massive amounts
of coal fossil fuels, and how does that they handle waste?
I'm just like, man, maybe like for our little neighborhood
over here, we're doing it a good thing. But I
don't know, sometimes I get discouraged when I think about
just the world at.
Speaker 3 (05:43):
Large, man, and all that's going on. Oh man, we
went broad.
Speaker 4 (05:47):
You should still do the right thing, Like I like
we are still recycling. But sometimes I have a hard time,
I guess, get getting super excited about that. But that
being said, I'm glad you brought that Possey up talk
about the deforestation of the Amazon rainforest. Now, man, it's
and it's certainly great that there are companies out there
who are processing these electronics, making sure that there's not
what is it, lad and mercury getting into the water
(06:07):
supply and different things like that. Are glad that they're
taking care of that because I don't want to be
living somewhere man where.
Speaker 3 (06:14):
Those forever chemicals and whatever. Is that what they're called.
Forever chemicals?
Speaker 4 (06:18):
Yeah, forever thinks forever plastics. Yeah, that's the new thing
now plastics, microplastics. We're all eating the microplastics inside of us,
It's true.
Speaker 1 (06:25):
So trying to highlight something good and bad, I feel
like we have down more of the bad path, not
bad maybe. Okay, let's highlight something else that's good though
here because we talked what last week about the slate
truck that's twenty grand, which is awesome.
Speaker 3 (06:40):
That's a good thing.
Speaker 1 (06:41):
Love that, that's good news. Well now not just our
cars shrinking and getting less expensive, but we're seeing signs
that new homes in the United States, they're continuing to
shrink in size. So I think part of that is
because of negative news, the higher cost of building, and
the fact that prices are remaining elevated. Builders are like, well,
I can produce the square footage of the house that
(07:03):
I'm building, and i could do just fine and make
a profit, and I'm going to appeld more buyers. So
and we are seeing some price cuts too in the
housing market. We're actually going to dedicate a whole Hot
of Money newsletter to housing soon, so please sign up
for that. But yeah, some of the new apartment sizes
are actually shrinking in size too. So when new apartments
(07:23):
are being built, especially gen zs, they're like, yeah, give
me all the amenities, but give me a tiny box
in which to stick my bed and I'll be fine.
So I think this is a good thing. I think
bigger isn't always better, And in fact, when you think
about it, bigger means more maintenance costs. It means higher
utility bills. The five thousand square foot house versus the
twenty five hundred square foot house, yeah, it's going to
(07:45):
cost you a lot more money to maintain we talked
about secondary costs last week, Well you got a factor
in the secondary cost of home ownership two and like,
I think just bigger is better that mentality. Maybe it's
falling by the wayside a little bit. Finally, I just
think being content to live in smaller quarters it means
less money going towards housing and more money that you
(08:06):
have to save and invest to grow your net worth,
to have more options when it comes to work and
free time. The more we tossed into our homes, the
less flexibility we have.
Speaker 3 (08:15):
Totally agree.
Speaker 2 (08:17):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (08:25):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 1 (08:29):
All right, let's give you a question now, Matt. This
one specifically is about credit cards, whether they're necessary.
Speaker 5 (08:35):
Hi, Joel and Matt. My name is Ben. My question
for you is do you need a credit card to
get through life? And can they be used to help
you save money. I'm now thirty years old. I've never
had a credit card before, but I have a decent
credit score built up over the years. I haven't always
had a good relationship with money, but listening to your
(08:55):
podcast has definitely helped me to begin improving my financial
health and my relationship with money. For example, I've taken
on board your advice about building an emergency fund and
biking to work instead of driving. Interested to hear your
thoughts on whether a credit card is needed and whether
they can be used to help you save money.
Speaker 3 (09:17):
Thanks, Joel. Did you hear that how Bin's bike into work?
Speaker 2 (09:21):
Now?
Speaker 1 (09:21):
I can get behind that. I love it, man, Like
both of our bikes are in here today.
Speaker 3 (09:25):
We literally I walk.
Speaker 4 (09:28):
You often do bike into the to the office to
the clubhouse that often, But I ride my bike less,
although I take my son to school on the bike
every day.
Speaker 3 (09:37):
And I guess I just I prefer the slightly long.
Speaker 1 (09:39):
I mean, we have a mile long commute, so the
bike it takes me four minutes, and walking it takes
me fifteen. I just kind of like that fifteen minutes
worth of decompression.
Speaker 3 (09:47):
Oh I get that.
Speaker 4 (09:47):
Yeah, it depends on what you're trying to accomplish during
that period of time. But biking, what I love about
it is it's the perfect habit that then allows you
to do some of the things Ben that you're looking
to do, like build up an emergency fund, right like you. Okay,
it's been a minute since we've talked about bikes and
how how great biking is for you. It's like the
perfect atomic habit, which so that's the book I've been
(10:08):
I'm rereading that. It's been a minute a few years
since I've read that one. But you've got the short
term reward of being active and moving your body, and
you're feeling healthy and you're in a better mood. So
that's like the near term what you need to sustain you,
like in the day to day sort of thing. But
then you also have like the long term positive consequences
of biking into work. If that's something that you're able
(10:30):
to do, the financial health related and financially the financial savings,
like the benefits that you're gonna be able to accrue
not only save up an emergency fund, perhaps even downsize
your automobile fleet, maybe even completely cutting a car from
your life. Maybe you're paying off debt, maybe you are
investing more aggressively, all because.
Speaker 3 (10:49):
You have implemented a new habit in your life.
Speaker 1 (10:51):
If your biking habit gets that extreme where you can
knock a car out of your life. I mean, it's
amazing how much money you can save. Yeah, and Matt,
you're I realized that it takes a lot of intentionality
for people to do that.
Speaker 3 (11:02):
You've been doing.
Speaker 1 (11:02):
You've done that for I don't know, fifteen years, seventeen something.
It's crazy and most people say, well, it's basically impossible
in modern society.
Speaker 3 (11:11):
You got to be crazy to want to do this.
Speaker 1 (11:13):
Yeah, but then a lot of people end up having
like three or four cars in their house. Definitely overkill.
It's possible to get by on less. And when you
actually factor in, well, how much does this actually cost me,
especially with what's happened with insurance rates for car owners
these days, it could be a lot. So Ben, just yeah,
keep going, man, keep making it happen, because that is
not a small move that you're making.
Speaker 3 (11:35):
It really is big.
Speaker 1 (11:36):
Let's talk about credit cards, because I mean, if you
want us to give you the bare bones answer, it's
basically no, you don't need a credit card in your life,
not necessarily. Yeah, if you're saying do I have to
have it? No, of course not like there are a
lot Just like a car, you don't have to have it.
There are all sorts of things we could go without
in our lives, but we choose to include them because
(11:57):
they can be helpful. So we are fan of credit
cards when you use them wisely. But the truth is
only about half of the population actually uses credit cards. Well,
it's almost exactly fifty to fifty when you look at
the statistics, So many folks really shouldn't be using credit
cards at all. A massive percentage of Americans use credit
(12:20):
cards in ways that harm them financially, by not paying
their bills on time and.
Speaker 3 (12:24):
In full, and where they're carrying that balance. Yeah, and
then the.
Speaker 1 (12:26):
Other thing too, Matt part it is that, right, it's
the balance, and it's the interest rates. But then it's
also that they're spending more than they otherwise would. They're
they're treating it like it's fake money or something like that.
And Costco is the credit card equivalent. I go there
and I spend more just because it's available to me.
Speaker 4 (12:40):
That's probably true. Yeah, I'm sure some people do. Like you,
portions are the new credit cardinal. We go on to
eat and then we end up eating all those food
because the portions are so large. Yeah, I mean, I
think there's probably probably some truth to that. Possibly and
so when there are multiple ways to use a credit
card improper improperly, and then when you look at the
average revolving monthly balance, it's it's ballooned up to like
one thousand dollars now, and that is truly financially harmful
(13:03):
for anybody who uses credit cards in that way. I
think what we've come to notice in recent years, based
on feedback we've gotten from our younger listeners, and then
the more I've kind of seen this phenomena, I feel
the same way Matt. Younger people seem to be treating
cash the way older generations treated credit cards, where cash
feels like it's fake money. If I've got one hundred
bucks on hand, I'm going to blow it. Whereas the
(13:24):
credit card, I'm logging in and I'm seeing my statements,
and i realize I'm tying that spending on the credit
card to my monthly budget and to the money I
do or don't have in my bank account. It's where
it feels like that, like fake monopoly money, that kind
of thing. So it's interesting to see that shift.
Speaker 1 (13:37):
We used to say, oh, well, credit cards for most
people feel like fake money, but I think actually the
opposite is true even more even more so these days.
I guess what we would say when it comes down
to a bent is is we we use credit cards,
We recommend using them well, but they're obviously still not
a necessity to live like a fulfilling life or a
smart financially savvy life either.
Speaker 4 (13:57):
Yeah, and others in the personal finance space completely disagree
with us that credit cards can ever make sense. We
get where they're coming from, but we also think that
when you realize the potential pitfalls, if your eyes are
open to the ways that you can mismanagement, that you're
going to be far more likely to use them judiciously.
And the benefits, man, that's why they are legit. And
(14:18):
I'm not just talking about the rewards.
Speaker 3 (14:21):
So I looked it up. Man.
Speaker 4 (14:22):
Way back in episode one, we talked about the I
forget the name of it, but secondary tertiary credit card benefits.
We talked about fraud, liability, we talked about unauthorized charge protection,
things like that cash and debit cards don't have nearly
the same protections. But of course the cash rewards, man,
that's what kind of keeps me coming back. Month after
a month, you drop your cash, someone picks it up.
Speaker 1 (14:44):
Yes, you drop your credit cards, someone spends money on it,
you're not responsible for any of the charges that were
made using that credit card. That's the beautiful thing. A
lot of sweet benefits. And even with debit cards they
look the exact same, Matt. But in that episode we
talked about how there's not as much legal coverage that
you have using a debit card. Or if someone excuse me,
if someone uses that debit card as if they were
(15:05):
you and you don't find it out in quite enough time,
you can be on the hook for some of those charges.
Speaker 4 (15:09):
Yeah, debit cards are more like guilty until proven innocent,
whereas credit cards more like innocent until proven guilt.
Speaker 3 (15:14):
It's a great way to say it.
Speaker 1 (15:14):
Yeah, and the country is just that you have to
pay attention, right because using credit cards the way that
you would use cash. That's really the secret to using
credit cards in a way that's going to help you
and not hurt you. Basically, don't buy stuff you can't afford,
and don't buy more than you otherwise would always pay
the bill on time and in full. Otherwise, of course
(15:35):
you're going to be working over twenty percent plus in
interest to the credit card companies and that's a recipe
for disaster, and that there were recent stats that came
out about how people are going to pay more in
interest than what their balance is because of how little
they're paying towards their credit card bill every month. Like
you ain't gotta make much money doing that. In fact,
(15:56):
you're going the opposite direction. So credit cards they can
be this double edged short and then we want you
wielding the sword, well, we don't want you getting cut
to pieces by it. I think it's it's maybe we
should bring in just a couple other benefits too that
are worth mentioning. There are cash and travel awards that
you can earn. Everybody knows that. I don't know that
we need to say much about that, But having a
couple of credit cards in your arsenal two to three,
(16:18):
and then you know, the more you feel like you're
handling them well and you know what you're doing, you
can you can increase that. But having even just a
couple and using them judiciously can start you on that
cycle of some of those bonuses for opening an account
and then the perpetual awards that you get just from
using it responsibly. But then the secondary benefits are I
think those are what get mentioned a whole lot less.
(16:40):
Like using that credit card overseas and not paying a
diamond foreign transaction fees. Well, that can just make travel
so much easier. There are extra insurance products you can
get using credit cards. Those can save you money, like
so the or cell phone protection right and other purchase protection.
Those secondary benefits of credit cards can really add up
(17:00):
to hundreds of dollars worth of value every year pretty easily.
I mean, think about even just some of the airport
lounges you can get into with some of the fancier
travel cards. I know, some of the how to Money audience,
they're obsessed with that. They love that, they love being
able to hit up the sweet lounges before their trip.
But of course I have to reiterate, no matter how
(17:21):
good the rewards are, they're just not worth it if
you carry a balance. And some people think, oh, the
rewards are great, and then they carry balance and it's like, no,
you just nullified all the rewards you got because of
the interest that you paid, And it just feels like
a duh thing to say. But I think there are
a lot of people out there who think using credit
cards in that way is still beneficial to them when
it's not. All right, Hey, we got more money saving
information to get to.
Speaker 2 (17:42):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (17:48):
Don't forget to sign up for the how to Money
newsletter over at how tomoney dot com slash newsletter.
Speaker 1 (17:52):
Or let's talk about target date funds, Matt. They just
crossed an important threshold. There are now more than four
trillion dollars in assets that are held inside, specifically of
target date funds, and morning Star wrote an article about
this and they basically detailed the rise of target date
funds in the last couple of decades. They're also holding
(18:13):
up better right now, right you have in the recent
market volatility. They're because of their more balanced approach, they're
not going to see as dramatic of a decline typically
as somebody who is invested more like you and I,
who's one hundred percent invested in stocks. On top of this,
though fees on these funds continued to decline. Morning Stars
said that in twenty fifteen they were zero point five
(18:35):
to five percent on average. Now they're point twenty nine
percent on average. So I like that target date funds
are experiencing the same decline in fees in expense ratios
that many other funds have seen as competition has increased,
and the big low cost investment houses like Vanguard, Fidelity,
and Schwab have really pushed the envelope on that. And
(18:56):
so Vanguard and Fidelity in particular have some of the
best low cost target date fund options. Their expense ratio
is a heck of a lot less than even the average.
We're talking about zero point eight percent, which is pretty
darn good. And so for investors who like simplicity, who
like low costs, I do think it is important for
us to consistently mention that target date funds can still
(19:17):
be a great option, particularly inside of your retirement accounts,
because if you invest in a target date fund, it's
going to automatically shift the allocation as you age. It's
easy psy it's a set it and forget it sort
of thing. And I think target date funds, while they're
not my one hundred percent favorite fully optimized way to
invest for really young people, I think they're still like,
(19:39):
don't let perfect.
Speaker 3 (19:40):
Be the enemy of good. They can still be a
good option.
Speaker 4 (19:42):
They're still solid. Yeah, let's talk about another investing trend.
Gold is the talk of the town these days, in
particularly because of the less predictable economic conditions that we've
been experiencing. Actually, gold, it has seen better returns than
the S and P five hundred over the past twenty
yearsocking to think about.
Speaker 3 (19:57):
And it is.
Speaker 4 (19:58):
Yeah, it's a bit more like cherry picking data, I think.
But still twenty here's a long time. Yeah, I mean,
but if you zoom out to thirty years, this SMP
blows it away. Yeah, you zoomed out to thirty forty fifty. Uh,
you zoom out one hundred years, dude, like that, it's
not even close. The last six months, last six months,
last twenty years, surprisingly it has done better. But the
(20:21):
question then comes up, should we all jump on this
gold investing bandwagon on this trend? Most experts out there
would tell you that gold isn't a necessary part of
your investment portfolio. But if you want to hold a
little bit of gold, I think that can makes a
whole lot of sense. We always talk about holding five
percent or less of your overall portfolio in different things
(20:44):
that we think are okay, Yeah, like precious metals. See
big points like you just gold could be one of
those you just love this one company and you're like,
you know what, I'm gonna go buy me some Warner
Brothers like I did after we talked about Harry Potter
being released. Yeah, I mean, just like one share part
of your like play portfolio.
Speaker 3 (21:04):
It's just for kicks, just to have time stamps. Oh
this is when that happened. And I don't know. It's
just a little something that's fun to do.
Speaker 4 (21:12):
Yeah, but uh, it's worth mentioning because you're going to
see more headlines about gold. You're going to see more
advertisements specifically from gold buying companies, especially with the runoff
and values that we've seen.
Speaker 3 (21:22):
They're loaded.
Speaker 4 (21:23):
Then they're gonna be like, y'all need to get in
on this, and they've got so much money come through
our proprietary system to buy gold because every investor needs
some gold in their lives, and they're going to do
the hard pitch. We would actually prefer if you want
to old some gold, we would prefer that you stick
with some low cost ETFs that invest in gold specifically
like g LDM.
Speaker 3 (21:42):
That is a great option with a very small fee
costco still selling the gold bars.
Speaker 4 (21:46):
Depends on the season. Okay, are they still selling giant
wheels of cheese of perm?
Speaker 5 (21:52):
Yeah?
Speaker 3 (21:52):
I guess Palmagano. Yeah, I don't know what the the gold.
Speaker 1 (21:55):
Buying season is, but yeah, I wonder. Typically when they
when they put them out there, they sell it quickly.
But even that's still selling two thousand dollars Yu steaks.
I mean probably, Sometimes they put these things out there
and I'm just like, who the heck somebody is is
buying this? Obviously somebody is, But I think that you're right, Like,
buying it inside of the low cost TTF makes more
sense even than buying like physical gold at a place
(22:17):
like Costco, which is going to give you a better
deal than you're going to get almost anywhere else for
buying gold. And some people like I don't want to
stick it under their mattress or something like that, that's
not a deal. Like, if you want some gold exposure,
low cost ETFs are typically the best way to go.
While we're talking about investing, Matt, let's talk about the
main headline this week, the one that hits us right
in the sweet spot in our hearts. Warren Buffett stepping
(22:38):
down as the CEO of Berkshire Hathaway, did you shed
a tear when you heard the news?
Speaker 3 (22:43):
I not really, I'm like, yeah, he's like so old.
Speaker 1 (22:47):
Good for him at the age of ninety four for
finally like saying all right, I'm gonna get it.
Speaker 4 (22:51):
It doesn't at the end of the year, seven months
or whatever. It maybe because I know you and I
we've had more conversations too. I mean, with Charlie Munger
having died, we talked about Warren Buffet earlier this year.
We actually had David clark On talking about the new
twel of Warren Buffett. Yeah, I don't know, it makes sense.
It totally makes sense. He's old, he's a sharp guy.
Speaker 1 (23:10):
I don't begrudge him this, and I actually encourage him
in this endeavor to like I bag work and live
out the rest of your years with I don't know,
hopefully a little lesson. But apparently he's going to remain
the chairman of Berkshire, so he's not likeas completely altogether,
but he really is the goat and been. So many
of the moves he's made over the decades that you
could highlight have been impressive, and Berkshire's returns you're talking
(23:34):
about the gold versus the SMP Will Berkshire his company,
those returns have far out paced the S and P
during his investing tenure, something like basically twenty percent returns
versus ten plus percent returns for the S and P
over those many decades. But I think it's important to
highlight the fact that he is an anomaly and most
of us shouldn't aspire to be like Warren Buffett. I mean,
(23:57):
in some ways we should, right, I appreciate his humility
and his intelligen but is frugal nature.
Speaker 3 (24:01):
Yeah, But in other.
Speaker 1 (24:02):
Ways it's like, don't try to do that. Because I
saw the stat Matt Jason's wagen the Wall Street Journal
estimates that Warren Buffett has read more than one hundred
thousand financial statements of companies, and he said that's actually
probably pretty conservative. I bet Warren thread quite a bit
more than that. And my question to how the money
listeners is are you willing to do that?
Speaker 3 (24:21):
Are you nope?
Speaker 1 (24:22):
Are you going to spend your days, your evenings instead
of hanging out with your partner or pursuing a hobby
reading financial statements of companies? Some people are gonna say, yeah,
I am, because that's really fun for me, then maybe
you are in the Warren Buffett ilk who can and
should invest in single stocks. But for most of us
(24:43):
normies who don't do that, then I think it's just
a good let Hey, index funds make the most sense,
and that's why we shall also do what Warren Buffett says,
not what he does. What he says to every day
investors is like, yeah, investing most of your assets into
the S and P five hundred is going to build
you wealth over time. You don't even need to do
it the way I did it. I love that he
did it the way he did it. I think he's
(25:04):
passed on a lot of great lessons to individual investors
over the years, patients long term thinking the beauty of simplicity.
He's just been such a remarkable fixture in the investing
landscape for so long. But I think this is a
good reminder to learn from Warren Buffett and not necessarily
try to mimic him.
Speaker 4 (25:22):
Okay, So I don't know if this is uncouth to
bring this up, but maybe with Warren getting old, yeah,
ninety four years old, maybe this is a good reminder
to review your beneficiaries. If you haven't on your different accounts.
Speaker 3 (25:35):
I'm sure Warren has this so you know, buttoned up.
Speaker 4 (25:37):
Yeah, I'm sure he does. But I saw a recent
article talking about this. We haven't mentioned this on the
show in a while, but if there have been any
major life changes, make sure that you make those changes
within the back end of your retirement accounts. Contrary to
popular belief, your beneficiary it actually supersedes what is in
your will, so like, you don't want the money that
(25:58):
you've been working hard to grow to be left to.
Speaker 3 (26:01):
Someone that maybe you no longer intend for that money
to go to you.
Speaker 4 (26:04):
In that article they actually mentioned Heath Ledger and how
with his unexpected death, he hadn't named his daughter as
the beneficiary. Instead he had left all the money to
like his sisters and his parents. That's like a you know,
celebrity obviously, so it gets slightly more attention, But that's
just a great example. In the end, they gave her
all the money, so they took care of her. But yeah,
that's still the kind of situation that you ideally want
(26:27):
to completely avoid.
Speaker 3 (26:28):
And let's be.
Speaker 4 (26:28):
Honest, it'll take you all of forty five seconds to
log into the back end of your account and do
that and if you don't have the right beneficiary listed
and you were to pass away, like that's a man.
Speaker 3 (26:38):
Think about the.
Speaker 1 (26:39):
Problem that you're leaving your loved ones. Sure, random other
aside on investing, Matt real quick. I saw the stat
and it shocked me. You know, the trump coin that
got released, it was widely published, one or multiple I
feel like, oh, that's true.
Speaker 4 (26:56):
But I feel like there have been multiple stories about
grifting taking place from the in the White House.
Speaker 1 (27:00):
Well, this is something we've talked about on the show before.
Bitcoin and crypto are kind of completely different things in
a whole lot of ways, and there's a lot more
room to get swindled, I guess in the crypto space
in there is if you just invest some in bitcoin
with regularity. Turns out only fifty eight people have made
money owning trump coin. They've made almost a billion dollars
(27:22):
in total. And wow, over seven hundred and fifty thousand
people invested in trump coin and almost all those people
lost money. So fifty eight yeah, out of seven hundred
and fifty thousand people made money, the rest of them lost.
Speaker 3 (27:36):
It sounds like a scam, yep.
Speaker 4 (27:37):
A lot of pump and dump style happening in the
crypto space. Still beware, I stand behind my term or
my use of the word grift. Yeah, because like that
is what like talk about wealth treamsfer Man. This is
something that we hate seeing. This is regardless of whether
or not you support him, the different policies that he's
going for.
Speaker 3 (27:55):
I hate to see this.
Speaker 2 (27:56):
You're listening to How to Money with Joel Larsca on
demand from KFI AM six forty.
Speaker 1 (28:02):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have money questions,
who have money insights, please go join the how to
Money Facebook group.
Speaker 4 (28:11):
It is now time for the Facebook question of the week,
which is from David and he writes.
Speaker 3 (28:16):
Hey, y'all, we are in our mid thirties. You can
tell David's a Southerner.
Speaker 4 (28:20):
He says, y'all, we are in our mid thirties, about
three quarters of the way through money year four with.
Speaker 3 (28:25):
Some in gear five.
Speaker 4 (28:27):
We have two vehicles, a two thousand and eight Toyota
worth about twelve thousand dollars and a two thousand and
nine Honda worth about three thousand dollars. We've got full
coverage on them with higher liability limits.
Speaker 3 (28:37):
Than our state's minimum.
Speaker 4 (28:38):
As well as five hundred dollars deductibles and all of
the coverage items. I looked at how much we could
save if we ditched all coverage except the state minimum liability,
and it was only seventy eight dollars per month, roughly
fifty percent savings. If I multiply seventy eight dollars though
by one hundred and seventy three, we get thirteen thousand,
four hundred and ninety four dollars, which is what we
could roughly be worth invested.
Speaker 3 (29:00):
Into the S and P five hundred each month.
Speaker 4 (29:03):
We don't make a lot of money, so I'm looking
for ways to cut costs so we can increase our savings.
But I also don't love the idea of putting the
bill for a total vehicle. And I'll mention too, David,
he that's the rule of one to seventy three. It's
a monthly savings amount where you to invest that. It's
the compounding return were you to continue to then invest
(29:24):
that dollar amount every single month over the course of
a decade, over ten years exactly.
Speaker 3 (29:28):
And I'll say thirteen thousand dollars.
Speaker 4 (29:29):
It doesn't sound on that much, but that's just like
at the very beginning of the compounding, Like if you
do that for another decade and you're looking at a
figure like easily three times, that is what you would see.
Speaker 1 (29:40):
Yeah, which I think is worth pointing out. And you're
also talking about a fifty percent cut in what you're
putting towards insurance every single month. And this is just
one of my favorite topics to discuss, and I feel
like in the personal finance space it goes under discussed,
is how to save money on insurance, Like you don't
want to like cut your insurance to the bare bones, Like, hey,
I'm going to eliminate my health in searance because that's
(30:01):
going to save me, you know, seven hundred dollars in
premiums every single month. And then you fall out of
a tree and like break your femur or something like that,
and you've got to go to the emergency room. Think
about all those bills.
Speaker 4 (30:09):
Why you even in the tree, Joel, Yeah, I know exactly,
I was getting my cat or something like that. I
don't know, but that those are the kind of decisions
that are short sighted, and you know you're better off
to pay the health insurance premium because of what could happen,
And with car insurance, the stakes are a little bit lower,
but they're still really important that there is a lot
at stake. And I'm kind of biased, and I think
(30:32):
that folks with older vehicles that have appreciated substantially should
often get rid of full coverage. That is actually one
of the primary benefits of driving an older car, specifically
something that is almost twenty years old, like David's doing, right,
But that is only if you can easily afford to
self insurance to take on that additional risk. If your
savings are paltry, if they're minimal, you still need to
(30:54):
keep full coverage in my opinion, even if it's more costly,
which just I think incentivizes you to save more money
so that you can afford to ditch the full coverage.
And no one can guarantee that it's going to be
the best result.
Speaker 1 (31:07):
You could always get into a wreck next week the
week after you dropped the full coverage on your insurance policy,
which would be yes frustrating, and it is potentially part
of the deal. Like the odds though are in your
financial favor. Makes me think of Matt, the insurance policy
I have on my home, and I have a percentage
based insurance policy. And when the tree came crashing down
(31:28):
through our roof, I believe you asked me, are you
going to change that now? Because your deductible was so ridiculous?
And I said, I didn't ask you that other people,
other people. I know the answer Ananswest, No, I'm not
because just mathematically and when you think about it, yeah,
could a tree fall through my roof again this year?
Speaker 3 (31:45):
Next year? Sure? And would that harm me financially? Yes?
Speaker 1 (31:48):
Overall though, I'm looking at the numbers and I believe
I will come out ahead, although it didn't feel like
it when the event occurred.
Speaker 3 (31:55):
When you're forking out, yeah, five figures when it came
out to the deductible there.
Speaker 4 (32:00):
But David, he mentioned that he doesn't make a lot
of money, which makes it even harder to buy a
new car outright if he needed it post accident, and
he eliminated that coverage. So I'm not sure what, David,
what your savings looks like, which is the most relevant
factor here. But this is a case where his attemptional
to be frugal could end up being cheap, because if
he got an accident, you might have to take out
(32:21):
a loan to then buy let's say, you know, any
type of car, but let's say a newer car without
any sort of insurance payout. And if it happened before
he was able to bank the savings by reducing his premiums,
he could find himself in a real bind and it
would likely not be worth it for him. He mentioned too,
that he's three quarters of the way through money gear
number four and one of year number four.
Speaker 3 (32:44):
Maybe folks are out there asking which money gear is out.
Speaker 4 (32:46):
Again, that's a fully funny funded emergency fund, and if
it was me personally, I think I would be less
likely to cut some of these coverages until that thing
is like, yeah, fully beefed up and fully stopped.
Speaker 1 (32:58):
But maybe that's maybe that's a good answer. Is once
you get there, once you achieve the full emergency fund,
that's the perfect time.
Speaker 4 (33:04):
I would be more than willing to give myself commission
at that point. But until then, it does kind of
feel like, all right, well, I'm trying to be frugal here,
but yeah, it ends up being a cheap move.
Speaker 1 (33:14):
Yeah, that's exactly right. We've got a lot more to
get to on today's show. 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):
Do you want to live well without drowning in debt?
Joel and Matt have you covered? This is how to
Money with Joel lars Guard and Matt Ullmax.
Speaker 3 (01:19):
KF I am six forty live everywhere on the iHeartRadio app.
This is how to Money. I am Matt Altmics.
Speaker 1 (01:25):
And I'm Joel Larscard. 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 4 (01:32):
Joel, you got to note here about Walmart. What's what's
the latest with Walmart? I want to give you a
big fan. I want to give a quick I'm not
not a fan of Walmart.
Speaker 3 (01:41):
Walmart.
Speaker 4 (01:41):
Yeah, so we've been doing more shopping there lately. It's
just not our you know, there's only one place in
my heart, and it's shaped like aldi.
Speaker 1 (01:48):
You should actually get an Aldie tattoo over your heart.
I think that'd be great, maybe one of these days.
So okay, two different retailer policies that I wanted to
highlight here. One that's consumer friendly and one that's not
so Walmart. And I didn't realize this until I went
in the other day. I bought some shoes for my
little dude online and turns out they were too big,
(02:09):
so I had to go in the store.
Speaker 3 (02:10):
You're not gonna hang on to them wait for them
to grow into them.
Speaker 1 (02:13):
You're right, I probably could, but I had to go
in anyway, okay, right to buy the right size, and
they the when I got there, the price at the
store for those shoes was higher than it was online,
and they wouldn't let me do an exchange, and they
wouldn't so I could return and then I could buy
and then if but then I was going to be
spending more than what I would have paid online, So
(02:34):
they that I was just unfamiliar with the fact that
Walmart does not match online prices in stores, which to
me does not seem And I guess I would get
it too, because there's more third party sellers on Walmart. Now,
if it wasn't actually sold by Walmart, it's like, all right,
I get that, don't price match that. But if it
is sold in walt Item, Yeah, if it's solden ship
(02:55):
by Walmart, why wouldn't they match it?
Speaker 3 (02:57):
You know who would match that, who's that old?
Speaker 4 (03:02):
I don't know how many pairs of that you're buying
an Aldie, But you know, like Cay and I we
joke about this. Anytime there's something kind of random that
we need, we just look at each other and I'm like, oh,
we've just voiced it into existence, because then you walk
down that seasonal aisle or like I swear.
Speaker 3 (03:17):
It pops up, it's there.
Speaker 4 (03:18):
Like we were recently talking about getting a composter tapped
into your home. I think it just means that I'm
just way more typical average American consumer than maybe I
would like to admit.
Speaker 3 (03:30):
That could be. That's all I got.
Speaker 1 (03:31):
So I highlighted I highlighted a negative store policy. Let
me highlight a positive one from best Buy. So my
dad texted me and he's like, hey, I know you're
like where you live, they're better about picking up old
electronic items and stuff like that. Can can I drop
them off at your house? And can you ask your
trash provider to pick it up? And I was like, yeah,
but you know you could take this stuff to best
(03:51):
Buy instead. And when you go to best Buy, look
at their like electronics recycling page. They will take almost
anything for for free. So if you've got like my
dad had, like old modems and DVD players and stuff
lying around remotes, they'll take old TVs under a certain size.
So if you're like I've kind of accumulated a lot
of junk electronics that's past their prime and they're not
(04:13):
you can't sell them and you're gonna actually to actually
pay money to dispose of them.
Speaker 3 (04:17):
See take them to best Buy.
Speaker 4 (04:18):
I know you're supposed to recycle, but I think there's
a whole lot of folks, dude, who are out there
just tossing that stuff.
Speaker 3 (04:22):
You know, I think that's probably like do you ever
feel that way about recycling?
Speaker 1 (04:25):
Kind of can't with a fifty five inch TV, but
you probably can with that old murder.
Speaker 3 (04:28):
But could he not sell that fifty five inch even
for like.
Speaker 4 (04:32):
Well it was maybe I mean that's a good point too,
but like a no, no, he was a Flaskreen but.
Speaker 3 (04:36):
Like the screen just went out. You can't sell that.
Speaker 1 (04:40):
Yeah, I was gonna say, I mean, maybe there's some
tinkerer hobbyists who would be interested in that.
Speaker 3 (04:44):
You know.
Speaker 4 (04:44):
What I was gonna say was that sometimes I feel
like it is not a futile endeavor, but like it
like recycling, like I do regular recycling, Like this morning
even I was preparing some strawberries for my lunch, Like
what did I do with a plastic strawberry container sitting
in the recycling bin?
Speaker 3 (05:01):
Like we could?
Speaker 4 (05:02):
You know, we're even composting actually, like we are, like
we're cutting little tops off and suci a hippie. We
are reducing our waist and so we are doing our
small little part. But like sometimes when I think about it,
I feel like we are only moving the needle like
points zero zero zero zero, Like I don't know, you
can put tons of zeros one percent, like just even
in our country. Like and when I start thinking about
(05:23):
the world large, like at large, like you think about China,
and you think about countries that are burning massive amounts
of coal fossil fuels, and how does that they handle waste?
I'm just like, man, maybe like for our little neighborhood
over here, we're doing it a good thing. But I
don't know, sometimes I get discouraged when I think about
just the world at.
Speaker 3 (05:43):
Large, man, and all that's going on. Oh man, we
went broad.
Speaker 4 (05:47):
You should still do the right thing, Like I like
we are still recycling. But sometimes I have a hard time,
I guess, get getting super excited about that. But that
being said, I'm glad you brought that Possey up talk
about the deforestation of the Amazon rainforest. Now, man, it's
and it's certainly great that there are companies out there
who are processing these electronics, making sure that there's not
what is it, lad and mercury getting into the water
(06:07):
supply and different things like that. Are glad that they're
taking care of that because I don't want to be
living somewhere man where.
Speaker 3 (06:14):
Those forever chemicals and whatever. Is that what they're called.
Forever chemicals?
Speaker 4 (06:18):
Yeah, forever thinks forever plastics. Yeah, that's the new thing
now plastics, microplastics. We're all eating the microplastics inside of us,
It's true.
Speaker 1 (06:25):
So trying to highlight something good and bad, I feel
like we have down more of the bad path, not
bad maybe. Okay, let's highlight something else that's good though
here because we talked what last week about the slate
truck that's twenty grand, which is awesome.
Speaker 3 (06:40):
That's a good thing.
Speaker 1 (06:41):
Love that, that's good news. Well now not just our
cars shrinking and getting less expensive, but we're seeing signs
that new homes in the United States, they're continuing to
shrink in size. So I think part of that is
because of negative news, the higher cost of building, and
the fact that prices are remaining elevated. Builders are like, well,
I can produce the square footage of the house that
(07:03):
I'm building, and i could do just fine and make
a profit, and I'm going to appeld more buyers. So
and we are seeing some price cuts too in the
housing market. We're actually going to dedicate a whole Hot
of Money newsletter to housing soon, so please sign up
for that. But yeah, some of the new apartment sizes
are actually shrinking in size too. So when new apartments
(07:23):
are being built, especially gen zs, they're like, yeah, give
me all the amenities, but give me a tiny box
in which to stick my bed and I'll be fine.
So I think this is a good thing. I think
bigger isn't always better, And in fact, when you think
about it, bigger means more maintenance costs. It means higher
utility bills. The five thousand square foot house versus the
twenty five hundred square foot house, yeah, it's going to
(07:45):
cost you a lot more money to maintain we talked
about secondary costs last week, Well you got a factor
in the secondary cost of home ownership two and like,
I think just bigger is better that mentality. Maybe it's
falling by the wayside a little bit. Finally, I just
think being content to live in smaller quarters it means
less money going towards housing and more money that you
(08:06):
have to save and invest to grow your net worth,
to have more options when it comes to work and
free time. The more we tossed into our homes, the
less flexibility we have.
Speaker 3 (08:15):
Totally agree.
Speaker 2 (08:17):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (08:25):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 1 (08:29):
All right, let's give you a question now, Matt. This
one specifically is about credit cards, whether they're necessary.
Speaker 5 (08:35):
Hi, Joel and Matt. My name is Ben. My question
for you is do you need a credit card to
get through life? And can they be used to help
you save money. I'm now thirty years old. I've never
had a credit card before, but I have a decent
credit score built up over the years. I haven't always
had a good relationship with money, but listening to your
(08:55):
podcast has definitely helped me to begin improving my financial
health and my relationship with money. For example, I've taken
on board your advice about building an emergency fund and
biking to work instead of driving. Interested to hear your
thoughts on whether a credit card is needed and whether
they can be used to help you save money.
Speaker 3 (09:17):
Thanks, Joel. Did you hear that how Bin's bike into work?
Speaker 2 (09:21):
Now?
Speaker 1 (09:21):
I can get behind that. I love it, man, Like
both of our bikes are in here today.
Speaker 3 (09:25):
We literally I walk.
Speaker 4 (09:28):
You often do bike into the to the office to
the clubhouse that often, But I ride my bike less,
although I take my son to school on the bike
every day.
Speaker 3 (09:37):
And I guess I just I prefer the slightly long.
Speaker 1 (09:39):
I mean, we have a mile long commute, so the
bike it takes me four minutes, and walking it takes
me fifteen. I just kind of like that fifteen minutes
worth of decompression.
Speaker 3 (09:47):
Oh I get that.
Speaker 4 (09:47):
Yeah, it depends on what you're trying to accomplish during
that period of time. But biking, what I love about
it is it's the perfect habit that then allows you
to do some of the things Ben that you're looking
to do, like build up an emergency fund, right like you. Okay,
it's been a minute since we've talked about bikes and
how how great biking is for you. It's like the
perfect atomic habit, which so that's the book I've been
(10:08):
I'm rereading that. It's been a minute a few years
since I've read that one. But you've got the short
term reward of being active and moving your body, and
you're feeling healthy and you're in a better mood. So
that's like the near term what you need to sustain you,
like in the day to day sort of thing. But
then you also have like the long term positive consequences
of biking into work. If that's something that you're able
(10:30):
to do, the financial health related and financially the financial savings,
like the benefits that you're gonna be able to accrue
not only save up an emergency fund, perhaps even downsize
your automobile fleet, maybe even completely cutting a car from
your life. Maybe you're paying off debt, maybe you are
investing more aggressively, all because.
Speaker 3 (10:49):
You have implemented a new habit in your life.
Speaker 1 (10:51):
If your biking habit gets that extreme where you can
knock a car out of your life. I mean, it's
amazing how much money you can save. Yeah, and Matt,
you're I realized that it takes a lot of intentionality
for people to do that.
Speaker 3 (11:02):
You've been doing.
Speaker 1 (11:02):
You've done that for I don't know, fifteen years, seventeen something.
It's crazy and most people say, well, it's basically impossible
in modern society.
Speaker 3 (11:11):
You got to be crazy to want to do this.
Speaker 1 (11:13):
Yeah, but then a lot of people end up having
like three or four cars in their house. Definitely overkill.
It's possible to get by on less. And when you
actually factor in, well, how much does this actually cost me,
especially with what's happened with insurance rates for car owners
these days, it could be a lot. So Ben, just yeah,
keep going, man, keep making it happen, because that is
not a small move that you're making.
Speaker 3 (11:35):
It really is big.
Speaker 1 (11:36):
Let's talk about credit cards, because I mean, if you
want us to give you the bare bones answer, it's
basically no, you don't need a credit card in your life,
not necessarily. Yeah, if you're saying do I have to
have it? No, of course not like there are a
lot Just like a car, you don't have to have it.
There are all sorts of things we could go without
in our lives, but we choose to include them because
(11:57):
they can be helpful. So we are fan of credit
cards when you use them wisely. But the truth is
only about half of the population actually uses credit cards. Well,
it's almost exactly fifty to fifty when you look at
the statistics, So many folks really shouldn't be using credit
cards at all. A massive percentage of Americans use credit
(12:20):
cards in ways that harm them financially, by not paying
their bills on time and.
Speaker 3 (12:24):
In full, and where they're carrying that balance. Yeah, and
then the.
Speaker 1 (12:26):
Other thing too, Matt part it is that, right, it's
the balance, and it's the interest rates. But then it's
also that they're spending more than they otherwise would. They're
they're treating it like it's fake money or something like that.
And Costco is the credit card equivalent. I go there
and I spend more just because it's available to me.
Speaker 4 (12:40):
That's probably true. Yeah, I'm sure some people do. Like you,
portions are the new credit cardinal. We go on to
eat and then we end up eating all those food
because the portions are so large. Yeah, I mean, I
think there's probably probably some truth to that. Possibly and
so when there are multiple ways to use a credit
card improper improperly, and then when you look at the
average revolving monthly balance, it's it's ballooned up to like
one thousand dollars now, and that is truly financially harmful
(13:03):
for anybody who uses credit cards in that way. I
think what we've come to notice in recent years, based
on feedback we've gotten from our younger listeners, and then
the more I've kind of seen this phenomena, I feel
the same way Matt. Younger people seem to be treating
cash the way older generations treated credit cards, where cash
feels like it's fake money. If I've got one hundred
bucks on hand, I'm going to blow it. Whereas the
(13:24):
credit card, I'm logging in and I'm seeing my statements,
and i realize I'm tying that spending on the credit
card to my monthly budget and to the money I
do or don't have in my bank account. It's where
it feels like that, like fake monopoly money, that kind
of thing. So it's interesting to see that shift.
Speaker 1 (13:37):
We used to say, oh, well, credit cards for most
people feel like fake money, but I think actually the
opposite is true even more even more so these days.
I guess what we would say when it comes down
to a bent is is we we use credit cards,
We recommend using them well, but they're obviously still not
a necessity to live like a fulfilling life or a
smart financially savvy life either.
Speaker 4 (13:57):
Yeah, and others in the personal finance space completely disagree
with us that credit cards can ever make sense. We
get where they're coming from, but we also think that
when you realize the potential pitfalls, if your eyes are
open to the ways that you can mismanagement, that you're
going to be far more likely to use them judiciously.
And the benefits, man, that's why they are legit. And
(14:18):
I'm not just talking about the rewards.
Speaker 3 (14:21):
So I looked it up. Man.
Speaker 4 (14:22):
Way back in episode one, we talked about the I
forget the name of it, but secondary tertiary credit card benefits.
We talked about fraud, liability, we talked about unauthorized charge protection,
things like that cash and debit cards don't have nearly
the same protections. But of course the cash rewards, man,
that's what kind of keeps me coming back. Month after
a month, you drop your cash, someone picks it up.
Speaker 1 (14:44):
Yes, you drop your credit cards, someone spends money on it,
you're not responsible for any of the charges that were
made using that credit card. That's the beautiful thing. A
lot of sweet benefits. And even with debit cards they
look the exact same, Matt. But in that episode we
talked about how there's not as much legal coverage that
you have using a debit card. Or if someone excuse me,
if someone uses that debit card as if they were
(15:05):
you and you don't find it out in quite enough time,
you can be on the hook for some of those charges.
Speaker 4 (15:09):
Yeah, debit cards are more like guilty until proven innocent,
whereas credit cards more like innocent until proven guilt.
Speaker 3 (15:14):
It's a great way to say it.
Speaker 1 (15:14):
Yeah, and the country is just that you have to
pay attention, right because using credit cards the way that
you would use cash. That's really the secret to using
credit cards in a way that's going to help you
and not hurt you. Basically, don't buy stuff you can't afford,
and don't buy more than you otherwise would always pay
the bill on time and in full. Otherwise, of course
(15:35):
you're going to be working over twenty percent plus in
interest to the credit card companies and that's a recipe
for disaster, and that there were recent stats that came
out about how people are going to pay more in
interest than what their balance is because of how little
they're paying towards their credit card bill every month. Like
you ain't gotta make much money doing that. In fact,
(15:56):
you're going the opposite direction. So credit cards they can
be this double edged short and then we want you
wielding the sword, well, we don't want you getting cut
to pieces by it. I think it's it's maybe we
should bring in just a couple other benefits too that
are worth mentioning. There are cash and travel awards that
you can earn. Everybody knows that. I don't know that
we need to say much about that, But having a
couple of credit cards in your arsenal two to three,
(16:18):
and then you know, the more you feel like you're
handling them well and you know what you're doing, you
can you can increase that. But having even just a
couple and using them judiciously can start you on that
cycle of some of those bonuses for opening an account
and then the perpetual awards that you get just from
using it responsibly. But then the secondary benefits are I
think those are what get mentioned a whole lot less.
(16:40):
Like using that credit card overseas and not paying a
diamond foreign transaction fees. Well, that can just make travel
so much easier. There are extra insurance products you can
get using credit cards. Those can save you money, like
so the or cell phone protection right and other purchase protection.
Those secondary benefits of credit cards can really add up
(17:00):
to hundreds of dollars worth of value every year pretty easily.
I mean, think about even just some of the airport
lounges you can get into with some of the fancier
travel cards. I know, some of the how to Money audience,
they're obsessed with that. They love that, they love being
able to hit up the sweet lounges before their trip.
But of course I have to reiterate, no matter how
(17:21):
good the rewards are, they're just not worth it if
you carry a balance. And some people think, oh, the
rewards are great, and then they carry balance and it's like, no,
you just nullified all the rewards you got because of
the interest that you paid, And it just feels like
a duh thing to say. But I think there are
a lot of people out there who think using credit
cards in that way is still beneficial to them when
it's not. All right, Hey, we got more money saving
information to get to.
Speaker 2 (17:42):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (17:48):
Don't forget to sign up for the how to Money
newsletter over at how tomoney dot com slash newsletter.
Speaker 1 (17:52):
Or let's talk about target date funds, Matt. They just
crossed an important threshold. There are now more than four
trillion dollars in assets that are held inside, specifically of
target date funds, and morning Star wrote an article about
this and they basically detailed the rise of target date
funds in the last couple of decades. They're also holding
(18:13):
up better right now, right you have in the recent
market volatility. They're because of their more balanced approach, they're
not going to see as dramatic of a decline typically
as somebody who is invested more like you and I,
who's one hundred percent invested in stocks. On top of this,
though fees on these funds continued to decline. Morning Stars
said that in twenty fifteen they were zero point five
(18:35):
to five percent on average. Now they're point twenty nine
percent on average. So I like that target date funds
are experiencing the same decline in fees in expense ratios
that many other funds have seen as competition has increased,
and the big low cost investment houses like Vanguard, Fidelity,
and Schwab have really pushed the envelope on that. And
(18:56):
so Vanguard and Fidelity in particular have some of the
best low cost target date fund options. Their expense ratio
is a heck of a lot less than even the average.
We're talking about zero point eight percent, which is pretty
darn good. And so for investors who like simplicity, who
like low costs, I do think it is important for
us to consistently mention that target date funds can still
(19:17):
be a great option, particularly inside of your retirement accounts,
because if you invest in a target date fund, it's
going to automatically shift the allocation as you age. It's
easy psy it's a set it and forget it sort
of thing. And I think target date funds, while they're
not my one hundred percent favorite fully optimized way to
invest for really young people, I think they're still like,
(19:39):
don't let perfect.
Speaker 3 (19:40):
Be the enemy of good. They can still be a
good option.
Speaker 4 (19:42):
They're still solid. Yeah, let's talk about another investing trend.
Gold is the talk of the town these days, in
particularly because of the less predictable economic conditions that we've
been experiencing. Actually, gold, it has seen better returns than
the S and P five hundred over the past twenty
yearsocking to think about.
Speaker 3 (19:57):
And it is.
Speaker 4 (19:58):
Yeah, it's a bit more like cherry picking data, I think.
But still twenty here's a long time. Yeah, I mean,
but if you zoom out to thirty years, this SMP
blows it away. Yeah, you zoomed out to thirty forty fifty. Uh,
you zoom out one hundred years, dude, like that, it's
not even close. The last six months, last six months,
last twenty years, surprisingly it has done better. But the
(20:21):
question then comes up, should we all jump on this
gold investing bandwagon on this trend? Most experts out there
would tell you that gold isn't a necessary part of
your investment portfolio. But if you want to hold a
little bit of gold, I think that can makes a
whole lot of sense. We always talk about holding five
percent or less of your overall portfolio in different things
(20:44):
that we think are okay, Yeah, like precious metals. See
big points like you just gold could be one of
those you just love this one company and you're like,
you know what, I'm gonna go buy me some Warner
Brothers like I did after we talked about Harry Potter
being released. Yeah, I mean, just like one share part
of your like play portfolio.
Speaker 3 (21:04):
It's just for kicks, just to have time stamps. Oh
this is when that happened. And I don't know. It's
just a little something that's fun to do.
Speaker 4 (21:12):
Yeah, but uh, it's worth mentioning because you're going to
see more headlines about gold. You're going to see more
advertisements specifically from gold buying companies, especially with the runoff
and values that we've seen.
Speaker 3 (21:22):
They're loaded.
Speaker 4 (21:23):
Then they're gonna be like, y'all need to get in
on this, and they've got so much money come through
our proprietary system to buy gold because every investor needs
some gold in their lives, and they're going to do
the hard pitch. We would actually prefer if you want
to old some gold, we would prefer that you stick
with some low cost ETFs that invest in gold specifically
like g LDM.
Speaker 3 (21:42):
That is a great option with a very small fee
costco still selling the gold bars.
Speaker 4 (21:46):
Depends on the season. Okay, are they still selling giant
wheels of cheese of perm?
Speaker 5 (21:52):
Yeah?
Speaker 3 (21:52):
I guess Palmagano. Yeah, I don't know what the the gold.
Speaker 1 (21:55):
Buying season is, but yeah, I wonder. Typically when they
when they put them out there, they sell it quickly.
But even that's still selling two thousand dollars Yu steaks.
I mean probably, Sometimes they put these things out there
and I'm just like, who the heck somebody is is
buying this? Obviously somebody is, But I think that you're right, Like,
buying it inside of the low cost TTF makes more
sense even than buying like physical gold at a place
(22:17):
like Costco, which is going to give you a better
deal than you're going to get almost anywhere else for
buying gold. And some people like I don't want to
stick it under their mattress or something like that, that's
not a deal. Like, if you want some gold exposure,
low cost ETFs are typically the best way to go.
While we're talking about investing, Matt, let's talk about the
main headline this week, the one that hits us right
in the sweet spot in our hearts. Warren Buffett stepping
(22:38):
down as the CEO of Berkshire Hathaway, did you shed
a tear when you heard the news?
Speaker 3 (22:43):
I not really, I'm like, yeah, he's like so old.
Speaker 1 (22:47):
Good for him at the age of ninety four for
finally like saying all right, I'm gonna get it.
Speaker 4 (22:51):
It doesn't at the end of the year, seven months
or whatever. It maybe because I know you and I
we've had more conversations too. I mean, with Charlie Munger
having died, we talked about Warren Buffet earlier this year.
We actually had David clark On talking about the new
twel of Warren Buffett. Yeah, I don't know, it makes sense.
It totally makes sense. He's old, he's a sharp guy.
Speaker 1 (23:10):
I don't begrudge him this, and I actually encourage him
in this endeavor to like I bag work and live
out the rest of your years with I don't know,
hopefully a little lesson. But apparently he's going to remain
the chairman of Berkshire, so he's not likeas completely altogether,
but he really is the goat and been. So many
of the moves he's made over the decades that you
could highlight have been impressive, and Berkshire's returns you're talking
(23:34):
about the gold versus the SMP Will Berkshire his company,
those returns have far out paced the S and P
during his investing tenure, something like basically twenty percent returns
versus ten plus percent returns for the S and P
over those many decades. But I think it's important to
highlight the fact that he is an anomaly and most
of us shouldn't aspire to be like Warren Buffett. I mean,
(23:57):
in some ways we should, right, I appreciate his humility
and his intelligen but is frugal nature.
Speaker 3 (24:01):
Yeah, But in other.
Speaker 1 (24:02):
Ways it's like, don't try to do that. Because I
saw the stat Matt Jason's wagen the Wall Street Journal
estimates that Warren Buffett has read more than one hundred
thousand financial statements of companies, and he said that's actually
probably pretty conservative. I bet Warren thread quite a bit
more than that. And my question to how the money
listeners is are you willing to do that?
Speaker 3 (24:21):
Are you nope?
Speaker 1 (24:22):
Are you going to spend your days, your evenings instead
of hanging out with your partner or pursuing a hobby
reading financial statements of companies? Some people are gonna say, yeah,
I am, because that's really fun for me, then maybe
you are in the Warren Buffett ilk who can and
should invest in single stocks. But for most of us
(24:43):
normies who don't do that, then I think it's just
a good let Hey, index funds make the most sense,
and that's why we shall also do what Warren Buffett says,
not what he does. What he says to every day
investors is like, yeah, investing most of your assets into
the S and P five hundred is going to build
you wealth over time. You don't even need to do
it the way I did it. I love that he
did it the way he did it. I think he's
(25:04):
passed on a lot of great lessons to individual investors
over the years, patients long term thinking the beauty of simplicity.
He's just been such a remarkable fixture in the investing
landscape for so long. But I think this is a
good reminder to learn from Warren Buffett and not necessarily
try to mimic him.
Speaker 4 (25:22):
Okay, So I don't know if this is uncouth to
bring this up, but maybe with Warren getting old, yeah,
ninety four years old, maybe this is a good reminder
to review your beneficiaries. If you haven't on your different accounts.
Speaker 3 (25:35):
I'm sure Warren has this so you know, buttoned up.
Speaker 4 (25:37):
Yeah, I'm sure he does. But I saw a recent
article talking about this. We haven't mentioned this on the
show in a while, but if there have been any
major life changes, make sure that you make those changes
within the back end of your retirement accounts. Contrary to
popular belief, your beneficiary it actually supersedes what is in
your will, so like, you don't want the money that
(25:58):
you've been working hard to grow to be left to.
Speaker 3 (26:01):
Someone that maybe you no longer intend for that money
to go to you.
Speaker 4 (26:04):
In that article they actually mentioned Heath Ledger and how
with his unexpected death, he hadn't named his daughter as
the beneficiary. Instead he had left all the money to
like his sisters and his parents. That's like a you know,
celebrity obviously, so it gets slightly more attention, But that's
just a great example. In the end, they gave her
all the money, so they took care of her. But yeah,
that's still the kind of situation that you ideally want
(26:27):
to completely avoid.
Speaker 3 (26:28):
And let's be.
Speaker 4 (26:28):
Honest, it'll take you all of forty five seconds to
log into the back end of your account and do
that and if you don't have the right beneficiary listed
and you were to pass away, like that's a man.
Speaker 3 (26:38):
Think about the.
Speaker 1 (26:39):
Problem that you're leaving your loved ones. Sure, random other
aside on investing, Matt real quick. I saw the stat
and it shocked me. You know, the trump coin that
got released, it was widely published, one or multiple I
feel like, oh, that's true.
Speaker 4 (26:56):
But I feel like there have been multiple stories about
grifting taking place from the in the White House.
Speaker 1 (27:00):
Well, this is something we've talked about on the show before.
Bitcoin and crypto are kind of completely different things in
a whole lot of ways, and there's a lot more
room to get swindled, I guess in the crypto space
in there is if you just invest some in bitcoin
with regularity. Turns out only fifty eight people have made
money owning trump coin. They've made almost a billion dollars
(27:22):
in total. And wow, over seven hundred and fifty thousand
people invested in trump coin and almost all those people
lost money. So fifty eight yeah, out of seven hundred
and fifty thousand people made money, the rest of them lost.
Speaker 3 (27:36):
It sounds like a scam, yep.
Speaker 4 (27:37):
A lot of pump and dump style happening in the
crypto space. Still beware, I stand behind my term or
my use of the word grift. Yeah, because like that
is what like talk about wealth treamsfer Man. This is
something that we hate seeing. This is regardless of whether
or not you support him, the different policies that he's
going for.
Speaker 3 (27:55):
I hate to see this.
Speaker 2 (27:56):
You're listening to How to Money with Joel Larsca on
demand from KFI AM six forty.
Speaker 1 (28:02):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have money questions,
who have money insights, please go join the how to
Money Facebook group.
Speaker 4 (28:11):
It is now time for the Facebook question of the week,
which is from David and he writes.
Speaker 3 (28:16):
Hey, y'all, we are in our mid thirties. You can
tell David's a Southerner.
Speaker 4 (28:20):
He says, y'all, we are in our mid thirties, about
three quarters of the way through money year four with.
Speaker 3 (28:25):
Some in gear five.
Speaker 4 (28:27):
We have two vehicles, a two thousand and eight Toyota
worth about twelve thousand dollars and a two thousand and
nine Honda worth about three thousand dollars. We've got full
coverage on them with higher liability limits.
Speaker 3 (28:37):
Than our state's minimum.
Speaker 4 (28:38):
As well as five hundred dollars deductibles and all of
the coverage items. I looked at how much we could
save if we ditched all coverage except the state minimum liability,
and it was only seventy eight dollars per month, roughly
fifty percent savings. If I multiply seventy eight dollars though
by one hundred and seventy three, we get thirteen thousand,
four hundred and ninety four dollars, which is what we
could roughly be worth invested.
Speaker 3 (29:00):
Into the S and P five hundred each month.
Speaker 4 (29:03):
We don't make a lot of money, so I'm looking
for ways to cut costs so we can increase our savings.
But I also don't love the idea of putting the
bill for a total vehicle. And I'll mention too, David,
he that's the rule of one to seventy three. It's
a monthly savings amount where you to invest that. It's
the compounding return were you to continue to then invest
(29:24):
that dollar amount every single month over the course of
a decade, over ten years exactly.
Speaker 3 (29:28):
And I'll say thirteen thousand dollars.
Speaker 4 (29:29):
It doesn't sound on that much, but that's just like
at the very beginning of the compounding, Like if you
do that for another decade and you're looking at a
figure like easily three times, that is what you would see.
Speaker 1 (29:40):
Yeah, which I think is worth pointing out. And you're
also talking about a fifty percent cut in what you're
putting towards insurance every single month. And this is just
one of my favorite topics to discuss, and I feel
like in the personal finance space it goes under discussed,
is how to save money on insurance, Like you don't
want to like cut your insurance to the bare bones, Like, hey,
I'm going to eliminate my health in searance because that's
(30:01):
going to save me, you know, seven hundred dollars in
premiums every single month. And then you fall out of
a tree and like break your femur or something like that,
and you've got to go to the emergency room. Think
about all those bills.
Speaker 4 (30:09):
Why you even in the tree, Joel, Yeah, I know exactly,
I was getting my cat or something like that. I
don't know, but that those are the kind of decisions
that are short sighted, and you know you're better off
to pay the health insurance premium because of what could happen,
And with car insurance, the stakes are a little bit lower,
but they're still really important that there is a lot
at stake. And I'm kind of biased, and I think
(30:32):
that folks with older vehicles that have appreciated substantially should
often get rid of full coverage. That is actually one
of the primary benefits of driving an older car, specifically
something that is almost twenty years old, like David's doing, right,
But that is only if you can easily afford to
self insurance to take on that additional risk. If your
savings are paltry, if they're minimal, you still need to
(30:54):
keep full coverage in my opinion, even if it's more costly,
which just I think incentivizes you to save more money
so that you can afford to ditch the full coverage.
And no one can guarantee that it's going to be
the best result.
Speaker 1 (31:07):
You could always get into a wreck next week the
week after you dropped the full coverage on your insurance policy,
which would be yes frustrating, and it is potentially part
of the deal. Like the odds though are in your
financial favor. Makes me think of Matt, the insurance policy
I have on my home, and I have a percentage
based insurance policy. And when the tree came crashing down
(31:28):
through our roof, I believe you asked me, are you
going to change that now? Because your deductible was so ridiculous?
And I said, I didn't ask you that other people,
other people. I know the answer Ananswest, No, I'm not
because just mathematically and when you think about it, yeah,
could a tree fall through my roof again this year?
Speaker 3 (31:45):
Next year? Sure? And would that harm me financially? Yes?
Speaker 1 (31:48):
Overall though, I'm looking at the numbers and I believe
I will come out ahead, although it didn't feel like
it when the event occurred.
Speaker 3 (31:55):
When you're forking out, yeah, five figures when it came
out to the deductible there.
Speaker 4 (32:00):
But David, he mentioned that he doesn't make a lot
of money, which makes it even harder to buy a
new car outright if he needed it post accident, and
he eliminated that coverage. So I'm not sure what, David,
what your savings looks like, which is the most relevant
factor here. But this is a case where his attemptional
to be frugal could end up being cheap, because if
he got an accident, you might have to take out
(32:21):
a loan to then buy let's say, you know, any
type of car, but let's say a newer car without
any sort of insurance payout. And if it happened before
he was able to bank the savings by reducing his premiums,
he could find himself in a real bind and it
would likely not be worth it for him. He mentioned too,
that he's three quarters of the way through money gear
number four and one of year number four.
Speaker 3 (32:44):
Maybe folks are out there asking which money gear is out.
Speaker 4 (32:46):
Again, that's a fully funny funded emergency fund, and if
it was me personally, I think I would be less
likely to cut some of these coverages until that thing
is like, yeah, fully beefed up and fully stopped.
Speaker 1 (32:58):
But maybe that's maybe that's a good answer. Is once
you get there, once you achieve the full emergency fund,
that's the perfect time.
Speaker 4 (33:04):
I would be more than willing to give myself commission
at that point. But until then, it does kind of
feel like, all right, well, I'm trying to be frugal here,
but yeah, it ends up being a cheap move.
Speaker 1 (33:14):
Yeah, that's exactly right. We've got a lot more to
get to on today's show. 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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