March 16, 2025 • 33 mins
A new article touts 'investing' your emergency fund. But that's a terrible idea!
Ask HTM: Mary from MI wants to cultivate a secondary source of income.
A new list of top grocery stores was just released. Trader Joes took the top spot!
Ask HTM: Megan wants to know if the Costco credit card is worth getting.
Ask HTM: Mary from MI wants to cultivate a secondary source of income.
A new list of top grocery stores was just released. Trader Joes took the top spot!
Ask HTM: Megan wants to know if the Costco credit card is worth getting.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
I Am six forty. You're listening to how to Money
on demand on the iHeartRadio app.
Speaker 2 (00:07):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel lars Guard and Matt Altmix.
Speaker 1 (00:26):
KFI AM six forty live everywhere on the iHeartRadio app.
This is how to Money. I'm your host, Joe lars
Guard and I am the other host, Matt Altmix. And
if you have a money question, we'll send it our way.
All you have to do is record your question on
the voice memo app there on your phone and send
it over via email. You can find the simple instructions
at howdomoney dot com forward slash ask. All right, Matt,
(00:49):
now it's time for the ludicrous headline of the week.
This one comes from a website called The Morning Call,
and the headline reads how to set and Invest your
Mercy Fund. I prickled when I saw the headline. Row
you know how I feel about investing emergency funds. Those
two words should never go hand in hand. They shouldn't
be in the same headline. I clicked through so I
(01:11):
could hate whatever words were written inside of that and
then I was like, wait a second, the byeline is
by friend of the show, Christine Ben's over for Morning Star.
I was like, I know Christine is not advocating investing
your E fund, and she wasn't. Fortunately, she agrees that
emergency funds need to be liquid. But I was just like,
I know that the person who writes, they don't always
(01:33):
write the headline. It's the editor editor a terrible headline.
And because it's the ludicrous headline of the week email,
the content in side of the article was good. I
can still add this in and say I hate it,
it sucks. We'll give Christine, though, We'll give her a BUYE.
Can you imagine if your emergency fund was invested right now?
I do. That stock market's down ten percent, and you're like,
wait a second. I thought I had twenty grand on
(01:54):
hand for emergencies. Now got eighteen. Not so good. Actually,
one of the things, so if you actually dig into
the article, I will say one of the things she
missed was that you need to have your money in
the right receptacle, which I don't know if we've ever
used that specific term before, but I love that, and
I think I love it because I spent last week,
I used my time and built this storage bin rack
(02:14):
shelf system in one of our new closets. Okay, And
in order to house the you know, like the big
twenty seven gallon totes or bins that you can buy
from home depot. In order to house those, I can
put like four across five tall. You do the math.
That's twenty bins, Joel. But I've been thinking a lot
about bins and storage and different things like that, and
so maybe that's why that's that word stood out to
(02:35):
me because guess what I'm not going to put in
those storage bins. I'm not going to put underwear, Yeah,
my underwear or my socks because guess what broccoli? I
need that on a daily basis. I was thinking, Yeah,
I was thinking in the kitchen like I'm not gonna
put a lemon squeezer or a cocktail shaker or a
blender things like that in there. You know why, Well,
I guess I make cocktails more often. But when it
(02:57):
comes on like making smoothies, like don't we never We
rarely makes moothes maybe once every couple of months. We're
smoothie people, y'all, y'all do it a lot. But like
even still, I don't want it to be kind of
way off upstairs in a room, in a closet, in
a bin. It needs to be down there in the kitchen. Sure,
you kind of put it to the back of the cabinet,
perhaps in the lemon squeezer. I mean, we're using that
thing fairly often. So where do you keep that? Oh,
(03:18):
you keep it right at hand. In a similar way,
the act of investing your dollars means that that money
is tied up for a long, much longer period of time,
and that is not how you want to approach your
emergency fund specifically. Yeah, but Vanguard they actually highlighted how
four one K hardship withdrawals are becoming more common, to
our chagrin, it's getting easier to access four one K
dollars that are supposed to be locked up for a retirement.
(03:40):
For a while now, we've had the one thousand dollars
no questions asked rule thanks to the Secure Act two
point zero back in twenty twenty two, which means that
folks are turning their for cash in a pinch to
their four one ks. And it's still relatively rare that
folks are doing this. Almost five percent of folks with
a four to one K cap that last year. But
(04:01):
it is a record high, so like what I'm pointing
out has substantially increasing. Yes, the trend is not going
in a direction that I like. It's like, I see
five percent, I'm like, that's not a huge deal. But
I hate the fact that that is a new record
high because it has never been easier to grab that money.
And if you need cash, we're just here to let
you know that grabbing it from your retirement account is
a bad way to solve that problem. It's going to
(04:23):
create more problems, and it's going to lead to less
wealth down the road. You've unnecessarily interrupted that compounding growth.
Just because you can doesn't mean you should. And you're right, yeah,
we have a lot of negative consequences. Speaking of blenders
and smoothies makes me think about when I decided to
make a sandwich smoothie in college show just because I could. Yeah,
I quickly learned that did not mean I should. It
(04:45):
was terrible, man. I think we've talked about this before,
maybe not on the show, but when my little sister
had jaw surgery growing up and we had to blend
everything up for her for a few months. That's rough. Oh,
that's right. I just remember having to like walk out
of a kitchen. I'll say, I cannot even smell this
right now, all right, Matt. Later this month, Chase is
going to block Zell payments made on social media in
(05:05):
an attempt to reduce fraud. Half apparently of all Zel
scams originate on social media. I believe it. So, I
mean social media it's got yeah, it's right for that
kind of stuff, and Zell has come under fire for
not protecting users in any meaningful way. This might cause
I think some annoyance for some Zell users who buy
stuff via social media, but it's going to protect a
(05:26):
whole lot more.
Speaker 2 (05:28):
You know.
Speaker 1 (05:28):
This is I think a good reminder to be incredibly
careful using P two P apps like Zell, Venmo cash app,
because just more consumer protections are coming, but they're thin
and they're certainly not coming from the oversight of government agencies.
So use two factor authentication and only send money to
people you know or to verified folks. Matt. One of
the things this makes me think of might send that
(05:50):
test payment across That's right. My neighbor across the street
had random people showing up to his house this week
to pick up things that they said they bought on
Facebook marketplace no Way, And it turns out out someone
gave them a fake address to pick up the goods.
They had already paid the person for the goods they
were buying. Never pay somebody ahead of time until you're
(06:10):
actually in full possession of that item and go to
a well lit public place to pick up that item.
So they were showing up and they were mad at him,
and he's like, you were not talking to me, right, sorry, right, yes,
He's like, that's not me and yourself to blame. Police
had to show up. It was, it was a thing.
It was. It was a bummer and I hate that
that happened to those people. But just you cannot pay
(06:30):
for something side unseen. Yeah, that's true.
Speaker 3 (06:32):
Man. You're listening to How to Money with Joel Larsgard
on demand from KFI AM six forty.
Speaker 1 (06:40):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and insight, please go ahead and join the how
to Money Facebook group Joel. Let's hear from our next listener.
This is a listener who is looking to cultivate a
secondary source of income for herself.
Speaker 4 (06:58):
Hey, Matt and Joel. My name is Mary and I'm
from Southeast Michigan. I've been listening to your show for
years now and I've learned so so much from the
both of you and Joel. I used to listen to
The Clark Howard Show when you were on it as well,
and so I learned a ton from you back then too.
Thank you both and keep up the good work. My
question for you today is about cultivating a secondary or
(07:19):
supplemental income source. I have a W two job and
I would like to start up, essentially a side gig
that will supply me with a secondary source of income
in addition to that W two job. I would like
for that secondary income source to in ten years time,
provide me at least sixty thousand dollars a year. So
(07:40):
achieving that sixty thousand dollars a year in ten years
or so, I originally planned to use rental properties to
get there, but I'd also like to get your take
on other options. Would using REITs or dividend yielding ETFs
be comparable? And for your information for this question, I
plan to use a property management company when it comes
(08:01):
to the rental properties to deal with the typical day
to day activities.
Speaker 1 (08:05):
But I'd love to get.
Speaker 4 (08:06):
Your take on what I might need to consider if
the income that I'll get from dividends and ETFs will
be similar to that of a rental property. And for
your knowledge as well, for rental properties, I would be
looking at properties that provide a six to ten percent
cap rate. Love to get your thoughts. Thanks guys, Oh Matt.
(08:29):
Mary she mentioned my work with Clark back in the
day and worked with.
Speaker 1 (08:33):
Was that the clerk that you mentioned earlier too? And
it was as far as you'd like to extend his razors? Yep,
So I worked with Clark Howard for fourteen plus years.
It was glorious. Still stay in touch with those folks.
My little sister still works on the crew over there.
What a great formidable period of my life. And Mary,
I love this goal that you've got, by the way,
attempting to build up another source of income to replace
(08:54):
your W two income. It's brilliant, right. The emergency fund,
it's basically short term insurance to help you if you
were to lose your job. But you're thinking about cultivating
some long term insurance too. Which we think everyone should
be doing to one extent or another, and often, as
you alluded to, that takes a while to develop, right.
It doesn't happen overnight. Whether we're talking about doing it
(09:16):
through the stock market, or we're talking about building a
business on the side while you're working full time to
generate more revenue, or we're talking about owning rental properties.
It's going to take time to hit that critical mass
of sixty thousand dollars of income a year that you're
shooting for. But you're giving yourself I think a long
enough runtway here. We really think that you can meet
(09:36):
this goal in a decade. But Matt, some people want
to turn on that's spiking immediately. They're like, how can
I get this in a year? And it's like, well,
not going to happen, probably not, Yeah, but ten years
maybe that's long enough. Yeah, it depends on a few
things like this makes me think of We recently interviewed
Shun and she actually had a similar goal. We talked
to her last week. Even though she had a fancy job,
(09:56):
she had that fancy consultant gig, she still started a
side hustle as of pographer in order to bring in
extra money to accelerate that goal. And so the first
suggestion that we'd make is to at least consider starting
a side business as part of the answer here. Like,
you don't have to work over ninety hours a week
like Sean did, but building up a small stream of
side revenue is going to help you to get closer
to that income goal, and it can increase your ability
(10:19):
to invest at the same time because you're going to
have more dollars flowing in. So so much of this
comes down to how much personal time you're willing to
give it. Yeah, and that's my biggest concern is that
she named a lot of passive sort of avenues to
you know, have an additional stream of income, and like,
you can do that, but that's going to take an
incredibly ambitious amount of investing over the next ten years.
(10:42):
If you're looking to draw down sixty thousand dollars annually,
I'm assuming that she's expecting to continue that stream going
for the rest of her life basically, you know, So
I don't know, let's late, we don't need to dive
into the details yet, but bottom line, like that is
some seriously aggressive investing that she'd have to do in
order to pull something like that off. Agreed, So, yeah,
I think what you're hinting at here is Matt is
(11:02):
probably gonna take pulling a bunch of different level levers,
one of which will be reducing expenses and another which
could be increasing your income, and aside, hustle might be
a big part of that. Yeah, and well, the big
I think the biggest difference here is is like how
much sweat equity are you willing to put into it?
Because if you're thinking, like, well, no, I just want
this to be this automated thing, like you said, it
(11:22):
definitely can't be pulled off into one year, but even
ten years is a pretty tall ask. However, you can
change the equation, you can change the factors that go
into this cake that you're baking. If you're willing to
give it a little bit of sweat equity, like that
changes the game. And she specifically was asking about real estate.
I mean, I think that's one of the reasons that
makes that so attractive is that you're combining capital but
(11:44):
then also your ability to dive in there and like
mess with it. So that's exactly right. Yeah, I mean
I think I do lean towards real estate as the
answer for this. I think that that's for a couple
of different reasons. If you know, if done wisely with
the long term mindset, leverage could be your friend on
the real estate front. Right, you can buy property that
has positive cash flow with a twenty to twenty five
percent down payment, And on top of that, actually you
(12:05):
might be able to get incredibly creative by house hacking,
with a guide to that on our website. So if
you're looking and willing to think outside the box a
little bit, I think that can accelerate your returns and
accelerate your cash flow. And by being a more flexible
homeowner slash investor, you might be able to either decrease
your timeline or increase your cash flow goal too. It
(12:25):
just all depends on kind of what you're highlighting here,
aut how uncomfortable you're willing to get, how much elbow
grease you're willing to put in, how much of the
suck are you willing to embrace, right, and how much
dedication are you willing to put into kind of amassing
a small real estate portfolio. You know, local real estate
markets they're less efficient than the overall stock market, which
means smart investors can find deals that are harder to
(12:48):
find in let's say the publicly traded stock market space.
You mentioned, though using a property management company that would
make the numbers harder to pull off. We always suggest
for Newbee landlords to do self management for a couple
of years at least, to learn the ropes, to know
the questions to ask, and you get pretty familiar with
the whole process by doing that. So I don't know,
(13:09):
maybe that's another place where you could use some of
that elbow grease to manage the property yourself, make sure
those numbers are better, and then at some point down
the line you can offload that to a property manager. Totally. Yeah,
this is why I think this is sort of like
a secret early retirement question, because there's not a whole
lot of her saying that, like, I'm looking to start
a whole new side business, a whole new gig. And
(13:31):
that's when it gets challenging because she did mention investing
in dividend producing stocks, and I think this is at
the truly at the heart of her question. I don't
think that there is any particular magic in going that
direction right or opting for reads that are shedding dividends,
that kind of thing where you are earning money that way.
Instead of focusing on dividends, just focus on creating a
diverse portfolio of investments that's going to grow meaningfully over time.
(13:55):
When you look at the data stocks that pay higher dividends,
they actually underperform the S and P five hundred and
so maybe instead just invest in vu something as simple
as Vanguard's S and P five hundred ETF and abiding
by something like the four percent rule, you could tap
those funds down the road even if you aren't fully retired.
I think there's there's sort of like this mental hurdle,
(14:15):
like people don't want to sell their positions. They don't
want to sell their securities, but like that's what they're
there for. Yeah, folks, A lot there's like the oh,
how do I get income generating assets? That's what stocks are.
And so once you get past that mental hurdle of
knowing that, like, Okay, if I need those funds, I
then sell some shares. I'd rather grow that's your income.
I'd rather grow the pot bigger than have a smaller
(14:36):
pot that throws off dividends. Right, That's kind of what
you're getting at, and when you look at the numbers,
growing the bigger pot is typically done through investing directly
in something like an SMP or total stock market index fund.
It's better than prioritizing companies who pay higher dividends totally.
So again, kind of speaking to the early retirement part
of her question, I mean assuming like it sounds like
she's got some money, but let's just assume that she's
(14:58):
starting from zero. She's looking to be able to draw
down sixty thousand dollars a year ten years from now,
so a full decade from now. That means she needs
at least seven hundred and fifteen thousand dollars on hand.
And that's something with like a I think I put
in like a forty year runway before that turns into
a negative number, which means investing fifty thousand dollars a
(15:20):
year starting now. Again, assuming that she has zero dollars
set aside, let's just say that you woke up and
you're like, oh, this is a new goal of mine.
I've not prepared at all for this. This is what
it would take. Is something it's like setting aside like
a little over four thousand dollars every single month, which
is really that's really tough to take your throwing cold
water on this one. Now, I'm just saying, like I
(15:40):
want to be realistic, like you have, you're going to
need to have at least seven hundred and fifty thousand dollars,
if not more. On like that, I was gonna say,
that would be that assumes a perfect market. That assumes
a perfect eight percent. So I figured, you know, on average,
you're looking at ten percent eight percent with inflation, So
that assumes a perfect eight percent every single year of compounding.
And then that assume assumes inflation calms down a little bit. Exactly.
(16:02):
There's a lot of a lot of assumptions here. For
a lot of people would say you need to save
have invested at least a million, even more than that,
in order to be able to pull this at a minimum,
to be able to pull this off, you're still looking
at a pretty large sum of money, which is totally doable. Yeah,
but I'm just trying to be realistic here when you
actually crush the numbers to see what does it take
to be able to pull this thing off. Yeah, I
(16:22):
couldn't agree more. All Right, We've got more to get
to on today's show.
Speaker 3 (16:27):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (16:34):
By the way, you can always find more money saving
information over at howtomoney dot com. Now, let's talk about
grocery stores. Kiplinger detailed the best and worst grocery store
chains in the country. What they did was they used
Google reviews from across the country to try and spot trends,
and so Trainer Joe's took the top spot in their analysis.
(16:54):
Costco and Wegmans took second and third. Legal Andaldi still
take a respectable eighth and nine, which just makes you
think that it's still first in my heart. Yeah, we
have so many grocery stores in this country, by the way,
and so let's talk about the worst ones. King Soopers,
save a lot, Kroger and Walmart those were the worst
for according to Kiplinger. And so you know, price obviously
(17:17):
isn't the only consideration, because Legal and Aldi would have
been like top three for sure if that were the case.
And we're just so fortunate to live in a country
where we have so much competition in the grocery store space.
I know we've experienced a lot of inflation in grocery
prices over the last few years, and nobody likes to
see that, but we all benefit from this increased competition,
and it's just important to note you're likely to have
(17:39):
a better experience at some of the top spots, some
of the places that are ranked more highly, and a
lot of those you're gonna pay less too.
Speaker 4 (17:45):
Matt.
Speaker 1 (17:45):
Yeah, I do hate the fact though, that it was
based on Google reviews, because you know that somebody was
in there, let's say at Aldi, and they had just
a sour interaction with an employee who was standing there
stocking the shelves, or maybe they're like, he's never had
a bad interaction with employee at Aldi.
Speaker 4 (18:00):
Man.
Speaker 1 (18:01):
Some people, it depends on your store, man. It depends
on the store, the manager, the folks that they've hired. Sometimes,
especially with Audie. I'm just coming to all these defense here.
If they've never stuck a quarter in a shopping cart before,
they're just kind of like, I couldn't get a cart,
they're locked up. How does that does that even work?
Because it's it feels weird, you got it takes them
getting used to it. Yeah, a little tip. You can
(18:21):
go to the cashier and ask them for a quarter,
and they're allowed to give out a certain number of
quarters per shift, so well, that's one way around that.
It also, specifically to me, it made intuitive sense to
see some of these stores at the top. And yeah,
I guess it specifically because of course they know how
to sing and entertain like BEng Bells. It's like a
party when you go into a Trader Joe's. Man, I'm like,
are y'all making like rum cocktails or something over here?
(18:42):
I feel like I want to be a part of
the island scene here. It's not like they're charging ridiculous
amounts more either, Like Trader Jones has pre solid costs
on a lot of what they offer, so vibe it
makes sense that they're the top spot. Let's talk about
senior citizen discounts, Matt, Like, when you go to the
grocery store, certain grocery stores incentive seniors to come on
certain days with a discount. So Public's is a grocery
(19:06):
store chain in the Southeast. They give folks who are
sixty and older five percent off every Wednesday. Fred Meyer
offers ten percent off on the first Tuesday of every month.
And that's not all. There are more discounts at other
grocery stores too. But the New York Times had an
interesting article about whether or not senior discounts should just
go away altogether. And the article was based on a
(19:27):
reader who is questioning the ethical nature of age based benefits.
But the author. I was glad the author kind of
defended our senior citizens here, Matt. They basically pointed out
that this not only helps seniors who might be financially vulnerable,
which is a lot of senior citizens, especially if you're
living on a fixed income. The grocery store, though, isn't
(19:48):
terribly crowded during those incentivized times. It's kind of like
incentivizing people to come to see a matine movie. Yeah,
there's it's like, hey, who's free at like one o'clock
on a Thursday. Not many people. We're still paying rent, right,
so if we get some butts in the sea, to me,
that's a form of dynamic pricing. And so exactly, seniors
and the rest of us, we should all be priced
sensitive and we should let those incentives sway us. If
(20:11):
I'm Matt, once i'm fully retired, if I want to
go do my grocery shopping on a Wednesday, morning to
get that extra five or ten percent off. I'm going
to do it. Yeah, Joe. The weather's been nice lately,
windows have been open. You. You love this time of year,
don't you. Man, you don't have to run your AC
or your heat. You're kind of like in this in
between sort of. It's like instead of it being like
a purgatory, as in like a bad thing, it's kind
(20:32):
of like a good thing. Yeah, oh it's the best.
I agree. I think it's It's one of my favorite
things to see how long I can go without running
either the heat or the AC at all, just like
get the fans cranking. Yeah, well we have to do man.
I realized last week that my sleep was suffering, and
I'm like, oh, it's because we still have like the
winter blanket on because we let the temperature drop so
(20:54):
much in the winter. But it means I'm like not
sleeping as well. So we had a like it's also
because you're not saunaing before bed like I am. My
sleep has improved, yet. Have you seen your sleep scores
sleepskips go up? Well, something that's going to help folks
to keep their utility bills low, to keep from having
a turn on their ac or their heat, next fall
or next winner is to make sure that you have
enough insulation. See that they had an article about getting
(21:16):
a free home energy audit, which it turns out a
lot of different electricity providers offer to their customers, and
the author he found that he had almost no insulation
in his walls, costing him massive amounts of money. And
they're often incentives for making energy upgrades as well. And
that's before you even like buy the electricity provider, and
that's before considering any of the different federal tax benefits
(21:40):
as well. Those two things combined can really bring down
the cost. Heck, yeah, he was specifically in Massachusetts and
it was going to be completely free for in his case,
the landlord to get insulation put in the walls, which
not only does it make it more comfortable from a
temperature standpoint, but acoustically is nicer as well, especially if
you've got roommates. You don't you know, you don't hear
your roommate in the room next door, like you know,
(22:01):
you want like a little bit more privacy, And all
of a sudden you're like, WHOA, I thought I needed
a bigger place. Turns out all we needed was to
not be able to hear each other all the time.
We made a similar move in our little clubhouse here
where we work and record the podcast. Our landlord, we
were like, hey, do you know about these discounts, because
it'd be awesome if you made some of these improvements
(22:22):
and we'll sign a lease, we'll stay longer. Yeah, And
it was a win win where so much more comfortable, Yeah,
so much more comfortab up here now. So he put
an installation in, did a couple other little things and
reaped some substant substantial tax savings and electricity bill savings
thirty percent off yeah, yeah, and those federal benefits. And
then then you might not have done it. I don't
think if we if we had not made this suggestion. Sure, yeah,
(22:42):
and the different utility providers they've got those rebates as well.
Georgia Power is offering it's like seventy five percent off
smart thermostats. And so we're gonna get a couple Google nests.
Normally these things are one hundred and thirty bucks. Man,
we're paying like thirty two dollars a pop. You're limited
to two. So we're gonna go ahead and replace one
of the other ones that isn't so smart? Yeah, and
they look good as well. And they're gonna help us
to save a ton of money, so it's a gonna win.
(23:04):
We got more money saving information to get to.
Speaker 3 (23:06):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (23:13):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet, well, you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool.
You can find that up on the website at howtomoney
dot com. Let's now take the Facebook question of the week,
which is from Megan. She asks, does anyone have the
(23:36):
Costco credit card? I'm a new Costco member. Welcome to
the fold, Meghan, and I would love to hear about
your experience with their credit card. Thank you, Joel. Do
you like the Costco credit card? Are you a fan? Yeah?
I am I. By the way, are you only a
fan of the big box retailer? I still itself. I
still remember the day I joined the club, and not
not really, but uh, you get your picture taken. A
(23:58):
lot of us really do remember it, because it's not
often that you stand there in front of the screen
and you know, they tell you to smile at the camera,
do whatever else say. It wasn't life changing in the
way I thought it would be, but I'm so glad
it did, because being a Costco member has given me
a lot of benefits. I actually do recall as well,
because it was only a couple of years ago or
two years ago. Gosh, let me hold on, let me
pull up, Mike. I was not even a Costco credit
(24:18):
card right here, busted out.
Speaker 5 (24:19):
Man.
Speaker 1 (24:19):
You look at it because it tells you how long
you've been a member since since February twenty fourteen. So
I've been a member nineteen. Let me take a yeah, okay.
I was not willing to join because it was so
far from where we used to live. We used to
live in town and maybe you had to drive out
to the burbs. And I realized, at least for us
at that point in time, it was not going to
be worth it. Spoken like a true pleab, but now
(24:40):
I don't even know what that means. I hear the
kids say, no, I love it. Yeah, okay, let's talk
about specifically the Costco credit card. It is great, like
Costco membership is fantastic, but so is the Costco credit card.
I think if you're a Costco member, it's a no brainer. Like,
I don't know why you would be a Costco member
and not have the Costco credit card. Sometimes Madam at
the gas station filling up, obviously using my Costco credit card,
(25:02):
and I see people using a different credit card and
I'm like, huh, I like scratch my head. I don't
understand it. What kind of spine you do it on
other people? Look at that? What? Yeah, I don't look
at anybody. I like, I'm like, head down. Oh, it's
not head down, It's just I have like I want
to spend as little time in the gas line as possible.
I'm quick and while it's pumping, What else are you doing?
I'm people watching? Oh are you Yeah, I'm cleaning out
(25:23):
the car. Oh there's a there's free trash can right
there that I don't have to like empty the bag
every single time. You don't clean out the car while
you just stand there and stare at people. Usually my
kids are like running around in there, and I'm you know,
I'm like just standing there for I like, do a
little bit stretching maybe, and then I'm like, what credit
card do they use?
Speaker 3 (25:41):
No?
Speaker 1 (25:41):
Man, I go I open the door, pull all the
trash out of the side compart, you know, like you've
got all the different pockets and there's all these gum
wrappers and oh sure like coffee cup whatever, just all
sorts of trash. That is the at least for us,
the clean out the van. Let's get this thing. Look
at half decent time. Okay, yeah, smart, No look at
other people's credit card. But I love that you do.
Speaker 4 (25:59):
Yeah.
Speaker 1 (25:59):
Well, I mean when I look and I see people
using something else, it makes no sense to me. You
go there and try to explain to them that, hey,
what why are you doing this? You should get this
card because of the specifically partly because the gas cash back. Right, So,
so it's four percent at gas stations. It's five percent
now only recently when you're buying gas at Costco. So
you get five percent cash back on Costco gas, which
(26:21):
is also the most affordable, highest quality of gass like
you can purchase. So it's a no brainer. Oh yes,
if it's nearby and in your in your schedule, so
and you have to pay with the visa. By the way,
at Costco used to be an AMEX. I just don't
think there's any reason to use a different visa card
when you're checking out, like get the Costco card, especially
because there's no annual fee attached, totally.
Speaker 5 (26:41):
Yeah, And on top of that, you get three percent
cash back on travel, including if you purchase like one
of those Costco travel bundles, which I personally have never done,
but one of these days I'm going to get around
to doing it, Joel.
Speaker 1 (26:52):
But you can't use one of the cards where you're
earning five percent, like the Custom Cash card is what
I'm specifically thinking of. You have to use a visa card.
The warehouse clubs also don't qualify as a grocery store,
so you can It's not like you can get a
Blue Cash preferred six percent back because it's not a
grocery store. On top of that, you can't use the
Amax and so like, And you can't use the City
Double Cash either, like you got to get the Costco card,
(27:14):
like on two cash back on all Costco purchases with
the Costco credit card. So again, why would you use
anything else I could see if there was an annual
fe attached, like you might have to run the numbers,
do some math. But there's no harm, no foul on
having an additional credit card. Even if let's say you
only use this credit card for costco purchases and for gas,
(27:35):
then I would say this card, having this card in
your arsenal makes sense. It makes sense, all right. Another
quick question from this is actually a different Megan on
the Facebook group, but she wrote, anyone know of a
spreadsheet that analyzes a home purchase from an investment perspective?
We know that we're only going to be there for
five years, so we want to be more strategic about
what we buy. Joel, what you think I'm gonna say,
(27:56):
don't buy the home? Probably that's a TLDR. That's a
quick answer. But you know, Matt, you and I we
always talk about the importance of timeline when it comes
to home ownership, yep. And whether or not it makes sense,
or it's going to pay off, or it's going to
be a better financial move for you. The expense of
buying and selling can be significant, So there are significant
costs associated with both of those endeavors. And so if
(28:18):
you're bumping them close together within a five year timeframe,
the cost could be prohibitive. Right, So if you own home,
let's say for a couple of years, even if you
see some equity growth, this seller in this case often
has to come to the closing table with cash to
cover closing fees and agent's costs and stuff like that.
I think big ups, by the way to Megan for
asking this question before she buys the house. I've heard
(28:40):
way too many folks, Matt who buy the house. They've
heard home ownership is smart, they haven't thought through the details,
and it ends up costing them because let's say they
live in the home for three years or something like that. Well,
their own home ownership timeline wasn't long enough and they
ended up losing in the process. They would have been
better off renting totally. Yeah, And Megan also said she's
looking at this from an invest perspective, but I don't
(29:01):
think that she wants to own this as a rental property.
I think what she's asking about is whether the financial
benefit will be superior when you are considering owning a
home versus renting a home, given those transaction costs that
you just mentioned. Their job and when you look at
what home prices have done over the past fifteen years
or so, that you know, the typical reaction for most folks,
(29:22):
especially realtors, folks in the real estate space, they're going
to tell you to buy every single time instead of rent.
They would say that you'd be you'd be an idiot
to not purchase a home. You're going to come out ahead.
And in one sense they have interest in telling you that. Matt,
of course you've got that. But like like, yeah, like
if you look at history, yeah, you're homeowners. They have
made out like bandits in recent years. But she also
(29:44):
can't count on these recent trends continuing far off into
the future, or even for the next five years specifically, right.
I mean, the truth is it's highly unlikely that the
housing market is going to experience similar, ongoing significant price
increases over the coming fifteen years. I would be shocked
if the coming fifteen years looked a lot like the
last fifteen years in terms of home price acceleration. That's
(30:07):
because price increases can't out pace inflation, they can't outpace
wages forever. We're already seeing prices stalling and predictions of
price declines in the near term from some outlets. The
truth is, if you look back, you bought in twenty thirteen,
you sold in twenty eighteen, or if you'd bought in
twenty eighteen and sold in twenty twenty three, those are
both five year timelines, you would have done quite well
(30:27):
for yourself. But those might be the exception, not the rule.
And so if you look just a recent history instead
of a longer stretch of history, you might be doing
yourself a disservice. Assuming that something's going to be true
that likely isn't going to be when you zoom out
the five year ownership timeline, it's really the minimum to
avoid potentially losing real money in that transaction, at least
when we're talking about a longer perspective. And I'm just
(30:50):
I'm worried, Matt, about someone sticking to a five year
ownership time What we always say five to seven and
typically we prefer seven. Five years just might not be
long enough. Yeah, Well, especially given the massive disparity between
rent prices right now and then the typical mortgage payment
these days in most cities, and specifically because she said
that she knows she's only going to be there for
five years, like maybe they're moving to a college town
(31:12):
and they're there for like a graduate degree or something.
I don't know, especially given that I would suggest renting.
It's what I would do if I were in your
shoes given a similar timeline. And we don't have a
so because of that, we don't have a spreadsheet recommendation
when it comes to something like this. But do check
out the New York Times rent versus by calculator, which
is totally great. And the only other way that this
(31:34):
that I would change my mind were I in your situation,
is if the what it is that the NRA is like,
if the industry gets a massive shake up, basically when
it comes to commissions fees paid towards realtors, because we
haven't seen that. But we haven't seen that, like there's
been talking about NAR not the NRA. I always say
that very different organization, National Association of Realtors. They've had
(31:54):
a stranglehold where you're paying six percent and if that
completely gets up ended, well, my answer is also going
to change because all of a sudden, the vast majority
of the transaction costs gets eliminated. Yeah, housing prices for
the most part are fairly stable over time, we see
them typically go up into the right cross your fingers.
We don't see another massive decline like we saw in
(32:17):
seven eight with a great recession, but that's like a
once in a lifetime thing. In my opinion. You eliminate
these massive transaction costs. I think we do see people
purchasing at homes living there for two or three years.
Maybe they see a little bit appreciation, maybe they don't,
but it's not even that big of a deal because
the transaction costs, the known expense that comes with selling
at home is no longer there. Yeah, totally, okay. Thank
(32:38):
you as always for listening to the show. We appreciate
your time and attention. You can always find more money
saving information up on our website at howtomoney dot com.
We'll see you back here next week. You've been listening
to How to Money with Joel Larsgard. You can always
hear us live on KFI AM six forty twelve pm
to two pm on Sunday, and anytime on demand on
the iHeartRadio app.
I Am six forty. You're listening to how to Money
on demand on the iHeartRadio app.
Speaker 2 (00:07):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel lars Guard and Matt Altmix.
Speaker 1 (00:26):
KFI AM six forty live everywhere on the iHeartRadio app.
This is how to Money. I'm your host, Joe lars
Guard and I am the other host, Matt Altmix. And
if you have a money question, we'll send it our way.
All you have to do is record your question on
the voice memo app there on your phone and send
it over via email. You can find the simple instructions
at howdomoney dot com forward slash ask. All right, Matt,
(00:49):
now it's time for the ludicrous headline of the week.
This one comes from a website called The Morning Call,
and the headline reads how to set and Invest your
Mercy Fund. I prickled when I saw the headline. Row
you know how I feel about investing emergency funds. Those
two words should never go hand in hand. They shouldn't
be in the same headline. I clicked through so I
(01:11):
could hate whatever words were written inside of that and
then I was like, wait a second, the byeline is
by friend of the show, Christine Ben's over for Morning Star.
I was like, I know Christine is not advocating investing
your E fund, and she wasn't. Fortunately, she agrees that
emergency funds need to be liquid. But I was just like,
I know that the person who writes, they don't always
(01:33):
write the headline. It's the editor editor a terrible headline.
And because it's the ludicrous headline of the week email,
the content in side of the article was good. I
can still add this in and say I hate it,
it sucks. We'll give Christine, though, We'll give her a BUYE.
Can you imagine if your emergency fund was invested right now?
I do. That stock market's down ten percent, and you're like,
wait a second. I thought I had twenty grand on
(01:54):
hand for emergencies. Now got eighteen. Not so good. Actually,
one of the things, so if you actually dig into
the article, I will say one of the things she
missed was that you need to have your money in
the right receptacle, which I don't know if we've ever
used that specific term before, but I love that, and
I think I love it because I spent last week,
I used my time and built this storage bin rack
(02:14):
shelf system in one of our new closets. Okay, And
in order to house the you know, like the big
twenty seven gallon totes or bins that you can buy
from home depot. In order to house those, I can
put like four across five tall. You do the math.
That's twenty bins, Joel. But I've been thinking a lot
about bins and storage and different things like that, and
so maybe that's why that's that word stood out to
(02:35):
me because guess what I'm not going to put in
those storage bins. I'm not going to put underwear, Yeah,
my underwear or my socks because guess what broccoli? I
need that on a daily basis. I was thinking, Yeah,
I was thinking in the kitchen like I'm not gonna
put a lemon squeezer or a cocktail shaker or a
blender things like that in there. You know why, Well,
I guess I make cocktails more often. But when it
(02:57):
comes on like making smoothies, like don't we never We
rarely makes moothes maybe once every couple of months. We're
smoothie people, y'all, y'all do it a lot. But like
even still, I don't want it to be kind of
way off upstairs in a room, in a closet, in
a bin. It needs to be down there in the kitchen. Sure,
you kind of put it to the back of the cabinet,
perhaps in the lemon squeezer. I mean, we're using that
thing fairly often. So where do you keep that? Oh,
(03:18):
you keep it right at hand. In a similar way,
the act of investing your dollars means that that money
is tied up for a long, much longer period of time,
and that is not how you want to approach your
emergency fund specifically. Yeah, but Vanguard they actually highlighted how
four one K hardship withdrawals are becoming more common, to
our chagrin, it's getting easier to access four one K
dollars that are supposed to be locked up for a retirement.
(03:40):
For a while now, we've had the one thousand dollars
no questions asked rule thanks to the Secure Act two
point zero back in twenty twenty two, which means that
folks are turning their for cash in a pinch to
their four one ks. And it's still relatively rare that
folks are doing this. Almost five percent of folks with
a four to one K cap that last year. But
(04:01):
it is a record high, so like what I'm pointing
out has substantially increasing. Yes, the trend is not going
in a direction that I like. It's like, I see
five percent, I'm like, that's not a huge deal. But
I hate the fact that that is a new record
high because it has never been easier to grab that money.
And if you need cash, we're just here to let
you know that grabbing it from your retirement account is
a bad way to solve that problem. It's going to
(04:23):
create more problems, and it's going to lead to less
wealth down the road. You've unnecessarily interrupted that compounding growth.
Just because you can doesn't mean you should. And you're right, yeah,
we have a lot of negative consequences. Speaking of blenders
and smoothies makes me think about when I decided to
make a sandwich smoothie in college show just because I could. Yeah,
I quickly learned that did not mean I should. It
(04:45):
was terrible, man. I think we've talked about this before,
maybe not on the show, but when my little sister
had jaw surgery growing up and we had to blend
everything up for her for a few months. That's rough. Oh,
that's right. I just remember having to like walk out
of a kitchen. I'll say, I cannot even smell this
right now, all right, Matt. Later this month, Chase is
going to block Zell payments made on social media in
(05:05):
an attempt to reduce fraud. Half apparently of all Zel
scams originate on social media. I believe it. So, I
mean social media it's got yeah, it's right for that
kind of stuff, and Zell has come under fire for
not protecting users in any meaningful way. This might cause
I think some annoyance for some Zell users who buy
stuff via social media, but it's going to protect a
(05:26):
whole lot more.
Speaker 2 (05:28):
You know.
Speaker 1 (05:28):
This is I think a good reminder to be incredibly
careful using P two P apps like Zell, Venmo cash app,
because just more consumer protections are coming, but they're thin
and they're certainly not coming from the oversight of government agencies.
So use two factor authentication and only send money to
people you know or to verified folks. Matt. One of
the things this makes me think of might send that
(05:50):
test payment across That's right. My neighbor across the street
had random people showing up to his house this week
to pick up things that they said they bought on
Facebook marketplace no Way, And it turns out out someone
gave them a fake address to pick up the goods.
They had already paid the person for the goods they
were buying. Never pay somebody ahead of time until you're
(06:10):
actually in full possession of that item and go to
a well lit public place to pick up that item.
So they were showing up and they were mad at him,
and he's like, you were not talking to me, right, sorry, right, yes,
He's like, that's not me and yourself to blame. Police
had to show up. It was, it was a thing.
It was. It was a bummer and I hate that
that happened to those people. But just you cannot pay
(06:30):
for something side unseen. Yeah, that's true.
Speaker 3 (06:32):
Man. You're listening to How to Money with Joel Larsgard
on demand from KFI AM six forty.
Speaker 1 (06:40):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and insight, please go ahead and join the how
to Money Facebook group Joel. Let's hear from our next listener.
This is a listener who is looking to cultivate a
secondary source of income for herself.
Speaker 4 (06:58):
Hey, Matt and Joel. My name is Mary and I'm
from Southeast Michigan. I've been listening to your show for
years now and I've learned so so much from the
both of you and Joel. I used to listen to
The Clark Howard Show when you were on it as well,
and so I learned a ton from you back then too.
Thank you both and keep up the good work. My
question for you today is about cultivating a secondary or
(07:19):
supplemental income source. I have a W two job and
I would like to start up, essentially a side gig
that will supply me with a secondary source of income
in addition to that W two job. I would like
for that secondary income source to in ten years time,
provide me at least sixty thousand dollars a year. So
(07:40):
achieving that sixty thousand dollars a year in ten years
or so, I originally planned to use rental properties to
get there, but I'd also like to get your take
on other options. Would using REITs or dividend yielding ETFs
be comparable? And for your information for this question, I
plan to use a property management company when it comes
(08:01):
to the rental properties to deal with the typical day
to day activities.
Speaker 1 (08:05):
But I'd love to get.
Speaker 4 (08:06):
Your take on what I might need to consider if
the income that I'll get from dividends and ETFs will
be similar to that of a rental property. And for
your knowledge as well, for rental properties, I would be
looking at properties that provide a six to ten percent
cap rate. Love to get your thoughts. Thanks guys, Oh Matt.
(08:29):
Mary she mentioned my work with Clark back in the
day and worked with.
Speaker 1 (08:33):
Was that the clerk that you mentioned earlier too? And
it was as far as you'd like to extend his razors? Yep,
So I worked with Clark Howard for fourteen plus years.
It was glorious. Still stay in touch with those folks.
My little sister still works on the crew over there.
What a great formidable period of my life. And Mary,
I love this goal that you've got, by the way,
attempting to build up another source of income to replace
(08:54):
your W two income. It's brilliant, right. The emergency fund,
it's basically short term insurance to help you if you
were to lose your job. But you're thinking about cultivating
some long term insurance too. Which we think everyone should
be doing to one extent or another, and often, as
you alluded to, that takes a while to develop, right.
It doesn't happen overnight. Whether we're talking about doing it
(09:16):
through the stock market, or we're talking about building a
business on the side while you're working full time to
generate more revenue, or we're talking about owning rental properties.
It's going to take time to hit that critical mass
of sixty thousand dollars of income a year that you're
shooting for. But you're giving yourself I think a long
enough runtway here. We really think that you can meet
(09:36):
this goal in a decade. But Matt, some people want
to turn on that's spiking immediately. They're like, how can
I get this in a year? And it's like, well,
not going to happen, probably not, Yeah, but ten years
maybe that's long enough. Yeah, it depends on a few
things like this makes me think of We recently interviewed
Shun and she actually had a similar goal. We talked
to her last week. Even though she had a fancy job,
(09:56):
she had that fancy consultant gig, she still started a
side hustle as of pographer in order to bring in
extra money to accelerate that goal. And so the first
suggestion that we'd make is to at least consider starting
a side business as part of the answer here. Like,
you don't have to work over ninety hours a week
like Sean did, but building up a small stream of
side revenue is going to help you to get closer
to that income goal, and it can increase your ability
(10:19):
to invest at the same time because you're going to
have more dollars flowing in. So so much of this
comes down to how much personal time you're willing to
give it. Yeah, and that's my biggest concern is that
she named a lot of passive sort of avenues to
you know, have an additional stream of income, and like,
you can do that, but that's going to take an
incredibly ambitious amount of investing over the next ten years.
(10:42):
If you're looking to draw down sixty thousand dollars annually,
I'm assuming that she's expecting to continue that stream going
for the rest of her life basically, you know, So
I don't know, let's late, we don't need to dive
into the details yet, but bottom line, like that is
some seriously aggressive investing that she'd have to do in
order to pull something like that off. Agreed, So, yeah,
I think what you're hinting at here is Matt is
(11:02):
probably gonna take pulling a bunch of different level levers,
one of which will be reducing expenses and another which
could be increasing your income, and aside, hustle might be
a big part of that. Yeah, and well, the big
I think the biggest difference here is is like how
much sweat equity are you willing to put into it?
Because if you're thinking, like, well, no, I just want
this to be this automated thing, like you said, it
(11:22):
definitely can't be pulled off into one year, but even
ten years is a pretty tall ask. However, you can
change the equation, you can change the factors that go
into this cake that you're baking. If you're willing to
give it a little bit of sweat equity, like that
changes the game. And she specifically was asking about real estate.
I mean, I think that's one of the reasons that
makes that so attractive is that you're combining capital but
(11:44):
then also your ability to dive in there and like
mess with it. So that's exactly right. Yeah, I mean
I think I do lean towards real estate as the
answer for this. I think that that's for a couple
of different reasons. If you know, if done wisely with
the long term mindset, leverage could be your friend on
the real estate front. Right, you can buy property that
has positive cash flow with a twenty to twenty five
percent down payment, And on top of that, actually you
(12:05):
might be able to get incredibly creative by house hacking,
with a guide to that on our website. So if
you're looking and willing to think outside the box a
little bit, I think that can accelerate your returns and
accelerate your cash flow. And by being a more flexible
homeowner slash investor, you might be able to either decrease
your timeline or increase your cash flow goal too. It
(12:25):
just all depends on kind of what you're highlighting here,
aut how uncomfortable you're willing to get, how much elbow
grease you're willing to put in, how much of the
suck are you willing to embrace, right, and how much
dedication are you willing to put into kind of amassing
a small real estate portfolio. You know, local real estate
markets they're less efficient than the overall stock market, which
means smart investors can find deals that are harder to
(12:48):
find in let's say the publicly traded stock market space.
You mentioned, though using a property management company that would
make the numbers harder to pull off. We always suggest
for Newbee landlords to do self management for a couple
of years at least, to learn the ropes, to know
the questions to ask, and you get pretty familiar with
the whole process by doing that. So I don't know,
(13:09):
maybe that's another place where you could use some of
that elbow grease to manage the property yourself, make sure
those numbers are better, and then at some point down
the line you can offload that to a property manager. Totally. Yeah,
this is why I think this is sort of like
a secret early retirement question, because there's not a whole
lot of her saying that, like, I'm looking to start
a whole new side business, a whole new gig. And
(13:31):
that's when it gets challenging because she did mention investing
in dividend producing stocks, and I think this is at
the truly at the heart of her question. I don't
think that there is any particular magic in going that
direction right or opting for reads that are shedding dividends,
that kind of thing where you are earning money that way.
Instead of focusing on dividends, just focus on creating a
diverse portfolio of investments that's going to grow meaningfully over time.
(13:55):
When you look at the data stocks that pay higher dividends,
they actually underperform the S and P five hundred and
so maybe instead just invest in vu something as simple
as Vanguard's S and P five hundred ETF and abiding
by something like the four percent rule, you could tap
those funds down the road even if you aren't fully retired.
I think there's there's sort of like this mental hurdle,
(14:15):
like people don't want to sell their positions. They don't
want to sell their securities, but like that's what they're
there for. Yeah, folks, A lot there's like the oh,
how do I get income generating assets? That's what stocks are.
And so once you get past that mental hurdle of
knowing that, like, Okay, if I need those funds, I
then sell some shares. I'd rather grow that's your income.
I'd rather grow the pot bigger than have a smaller
(14:36):
pot that throws off dividends. Right, That's kind of what
you're getting at, and when you look at the numbers,
growing the bigger pot is typically done through investing directly
in something like an SMP or total stock market index fund.
It's better than prioritizing companies who pay higher dividends totally.
So again, kind of speaking to the early retirement part
of her question, I mean assuming like it sounds like
she's got some money, but let's just assume that she's
(14:58):
starting from zero. She's looking to be able to draw
down sixty thousand dollars a year ten years from now,
so a full decade from now. That means she needs
at least seven hundred and fifteen thousand dollars on hand.
And that's something with like a I think I put
in like a forty year runway before that turns into
a negative number, which means investing fifty thousand dollars a
(15:20):
year starting now. Again, assuming that she has zero dollars
set aside, let's just say that you woke up and
you're like, oh, this is a new goal of mine.
I've not prepared at all for this. This is what
it would take. Is something it's like setting aside like
a little over four thousand dollars every single month, which
is really that's really tough to take your throwing cold
water on this one. Now, I'm just saying, like I
(15:40):
want to be realistic, like you have, you're going to
need to have at least seven hundred and fifty thousand dollars,
if not more. On like that, I was gonna say,
that would be that assumes a perfect market. That assumes
a perfect eight percent. So I figured, you know, on average,
you're looking at ten percent eight percent with inflation, So
that assumes a perfect eight percent every single year of compounding.
And then that assume assumes inflation calms down a little bit. Exactly.
(16:02):
There's a lot of a lot of assumptions here. For
a lot of people would say you need to save
have invested at least a million, even more than that,
in order to be able to pull this at a minimum,
to be able to pull this off, you're still looking
at a pretty large sum of money, which is totally doable. Yeah,
but I'm just trying to be realistic here when you
actually crush the numbers to see what does it take
to be able to pull this thing off. Yeah, I
(16:22):
couldn't agree more. All Right, We've got more to get
to on today's show.
Speaker 3 (16:27):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (16:34):
By the way, you can always find more money saving
information over at howtomoney dot com. Now, let's talk about
grocery stores. Kiplinger detailed the best and worst grocery store
chains in the country. What they did was they used
Google reviews from across the country to try and spot trends,
and so Trainer Joe's took the top spot in their analysis.
(16:54):
Costco and Wegmans took second and third. Legal Andaldi still
take a respectable eighth and nine, which just makes you
think that it's still first in my heart. Yeah, we
have so many grocery stores in this country, by the way,
and so let's talk about the worst ones. King Soopers,
save a lot, Kroger and Walmart those were the worst
for according to Kiplinger. And so you know, price obviously
(17:17):
isn't the only consideration, because Legal and Aldi would have
been like top three for sure if that were the case.
And we're just so fortunate to live in a country
where we have so much competition in the grocery store space.
I know we've experienced a lot of inflation in grocery
prices over the last few years, and nobody likes to
see that, but we all benefit from this increased competition,
and it's just important to note you're likely to have
(17:39):
a better experience at some of the top spots, some
of the places that are ranked more highly, and a
lot of those you're gonna pay less too.
Speaker 4 (17:45):
Matt.
Speaker 1 (17:45):
Yeah, I do hate the fact though, that it was
based on Google reviews, because you know that somebody was
in there, let's say at Aldi, and they had just
a sour interaction with an employee who was standing there
stocking the shelves, or maybe they're like, he's never had
a bad interaction with employee at Aldi.
Speaker 4 (18:00):
Man.
Speaker 1 (18:01):
Some people, it depends on your store, man. It depends
on the store, the manager, the folks that they've hired. Sometimes,
especially with Audie. I'm just coming to all these defense here.
If they've never stuck a quarter in a shopping cart before,
they're just kind of like, I couldn't get a cart,
they're locked up. How does that does that even work?
Because it's it feels weird, you got it takes them
getting used to it. Yeah, a little tip. You can
(18:21):
go to the cashier and ask them for a quarter,
and they're allowed to give out a certain number of
quarters per shift, so well, that's one way around that.
It also, specifically to me, it made intuitive sense to
see some of these stores at the top. And yeah,
I guess it specifically because of course they know how
to sing and entertain like BEng Bells. It's like a
party when you go into a Trader Joe's. Man, I'm like,
are y'all making like rum cocktails or something over here?
(18:42):
I feel like I want to be a part of
the island scene here. It's not like they're charging ridiculous
amounts more either, Like Trader Jones has pre solid costs
on a lot of what they offer, so vibe it
makes sense that they're the top spot. Let's talk about
senior citizen discounts, Matt, Like, when you go to the
grocery store, certain grocery stores incentive seniors to come on
certain days with a discount. So Public's is a grocery
(19:06):
store chain in the Southeast. They give folks who are
sixty and older five percent off every Wednesday. Fred Meyer
offers ten percent off on the first Tuesday of every month.
And that's not all. There are more discounts at other
grocery stores too. But the New York Times had an
interesting article about whether or not senior discounts should just
go away altogether. And the article was based on a
(19:27):
reader who is questioning the ethical nature of age based benefits.
But the author. I was glad the author kind of
defended our senior citizens here, Matt. They basically pointed out
that this not only helps seniors who might be financially vulnerable,
which is a lot of senior citizens, especially if you're
living on a fixed income. The grocery store, though, isn't
(19:48):
terribly crowded during those incentivized times. It's kind of like
incentivizing people to come to see a matine movie. Yeah,
there's it's like, hey, who's free at like one o'clock
on a Thursday. Not many people. We're still paying rent, right,
so if we get some butts in the sea, to me,
that's a form of dynamic pricing. And so exactly, seniors
and the rest of us, we should all be priced
sensitive and we should let those incentives sway us. If
(20:11):
I'm Matt, once i'm fully retired, if I want to
go do my grocery shopping on a Wednesday, morning to
get that extra five or ten percent off. I'm going
to do it. Yeah, Joe. The weather's been nice lately,
windows have been open. You. You love this time of year,
don't you. Man, you don't have to run your AC
or your heat. You're kind of like in this in
between sort of. It's like instead of it being like
a purgatory, as in like a bad thing, it's kind
(20:32):
of like a good thing. Yeah, oh it's the best.
I agree. I think it's It's one of my favorite
things to see how long I can go without running
either the heat or the AC at all, just like
get the fans cranking. Yeah, well we have to do man.
I realized last week that my sleep was suffering, and
I'm like, oh, it's because we still have like the
winter blanket on because we let the temperature drop so
(20:54):
much in the winter. But it means I'm like not
sleeping as well. So we had a like it's also
because you're not saunaing before bed like I am. My
sleep has improved, yet. Have you seen your sleep scores
sleepskips go up? Well, something that's going to help folks
to keep their utility bills low, to keep from having
a turn on their ac or their heat, next fall
or next winner is to make sure that you have
enough insulation. See that they had an article about getting
(21:16):
a free home energy audit, which it turns out a
lot of different electricity providers offer to their customers, and
the author he found that he had almost no insulation
in his walls, costing him massive amounts of money. And
they're often incentives for making energy upgrades as well. And
that's before you even like buy the electricity provider, and
that's before considering any of the different federal tax benefits
(21:40):
as well. Those two things combined can really bring down
the cost. Heck, yeah, he was specifically in Massachusetts and
it was going to be completely free for in his case,
the landlord to get insulation put in the walls, which
not only does it make it more comfortable from a
temperature standpoint, but acoustically is nicer as well, especially if
you've got roommates. You don't you know, you don't hear
your roommate in the room next door, like you know,
(22:01):
you want like a little bit more privacy, And all
of a sudden you're like, WHOA, I thought I needed
a bigger place. Turns out all we needed was to
not be able to hear each other all the time.
We made a similar move in our little clubhouse here
where we work and record the podcast. Our landlord, we
were like, hey, do you know about these discounts, because
it'd be awesome if you made some of these improvements
(22:22):
and we'll sign a lease, we'll stay longer. Yeah, And
it was a win win where so much more comfortable, Yeah,
so much more comfortab up here now. So he put
an installation in, did a couple other little things and
reaped some substant substantial tax savings and electricity bill savings
thirty percent off yeah, yeah, and those federal benefits. And
then then you might not have done it. I don't
think if we if we had not made this suggestion. Sure, yeah,
(22:42):
and the different utility providers they've got those rebates as well.
Georgia Power is offering it's like seventy five percent off
smart thermostats. And so we're gonna get a couple Google nests.
Normally these things are one hundred and thirty bucks. Man,
we're paying like thirty two dollars a pop. You're limited
to two. So we're gonna go ahead and replace one
of the other ones that isn't so smart? Yeah, and
they look good as well. And they're gonna help us
to save a ton of money, so it's a gonna win.
(23:04):
We got more money saving information to get to.
Speaker 3 (23:06):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (23:13):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet, well, you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool.
You can find that up on the website at howtomoney
dot com. Let's now take the Facebook question of the week,
which is from Megan. She asks, does anyone have the
(23:36):
Costco credit card? I'm a new Costco member. Welcome to
the fold, Meghan, and I would love to hear about
your experience with their credit card. Thank you, Joel. Do
you like the Costco credit card? Are you a fan? Yeah?
I am I. By the way, are you only a
fan of the big box retailer? I still itself. I
still remember the day I joined the club, and not
not really, but uh, you get your picture taken. A
(23:58):
lot of us really do remember it, because it's not
often that you stand there in front of the screen
and you know, they tell you to smile at the camera,
do whatever else say. It wasn't life changing in the
way I thought it would be, but I'm so glad
it did, because being a Costco member has given me
a lot of benefits. I actually do recall as well,
because it was only a couple of years ago or
two years ago. Gosh, let me hold on, let me
pull up, Mike. I was not even a Costco credit
(24:18):
card right here, busted out.
Speaker 5 (24:19):
Man.
Speaker 1 (24:19):
You look at it because it tells you how long
you've been a member since since February twenty fourteen. So
I've been a member nineteen. Let me take a yeah, okay.
I was not willing to join because it was so
far from where we used to live. We used to
live in town and maybe you had to drive out
to the burbs. And I realized, at least for us
at that point in time, it was not going to
be worth it. Spoken like a true pleab, but now
(24:40):
I don't even know what that means. I hear the
kids say, no, I love it. Yeah, okay, let's talk
about specifically the Costco credit card. It is great, like
Costco membership is fantastic, but so is the Costco credit card.
I think if you're a Costco member, it's a no brainer. Like,
I don't know why you would be a Costco member
and not have the Costco credit card. Sometimes Madam at
the gas station filling up, obviously using my Costco credit card,
(25:02):
and I see people using a different credit card and
I'm like, huh, I like scratch my head. I don't
understand it. What kind of spine you do it on
other people? Look at that? What? Yeah, I don't look
at anybody. I like, I'm like, head down. Oh, it's
not head down, It's just I have like I want
to spend as little time in the gas line as possible.
I'm quick and while it's pumping, What else are you doing?
I'm people watching? Oh are you Yeah, I'm cleaning out
(25:23):
the car. Oh there's a there's free trash can right
there that I don't have to like empty the bag
every single time. You don't clean out the car while
you just stand there and stare at people. Usually my
kids are like running around in there, and I'm you know,
I'm like just standing there for I like, do a
little bit stretching maybe, and then I'm like, what credit
card do they use?
Speaker 3 (25:41):
No?
Speaker 1 (25:41):
Man, I go I open the door, pull all the
trash out of the side compart, you know, like you've
got all the different pockets and there's all these gum
wrappers and oh sure like coffee cup whatever, just all
sorts of trash. That is the at least for us,
the clean out the van. Let's get this thing. Look
at half decent time. Okay, yeah, smart, No look at
other people's credit card. But I love that you do.
Speaker 4 (25:59):
Yeah.
Speaker 1 (25:59):
Well, I mean when I look and I see people
using something else, it makes no sense to me. You
go there and try to explain to them that, hey,
what why are you doing this? You should get this
card because of the specifically partly because the gas cash back. Right, So,
so it's four percent at gas stations. It's five percent
now only recently when you're buying gas at Costco. So
you get five percent cash back on Costco gas, which
(26:21):
is also the most affordable, highest quality of gass like
you can purchase. So it's a no brainer. Oh yes,
if it's nearby and in your in your schedule, so
and you have to pay with the visa. By the way,
at Costco used to be an AMEX. I just don't
think there's any reason to use a different visa card
when you're checking out, like get the Costco card, especially
because there's no annual fee attached, totally.
Speaker 5 (26:41):
Yeah, And on top of that, you get three percent
cash back on travel, including if you purchase like one
of those Costco travel bundles, which I personally have never done,
but one of these days I'm going to get around
to doing it, Joel.
Speaker 1 (26:52):
But you can't use one of the cards where you're
earning five percent, like the Custom Cash card is what
I'm specifically thinking of. You have to use a visa card.
The warehouse clubs also don't qualify as a grocery store,
so you can It's not like you can get a
Blue Cash preferred six percent back because it's not a
grocery store. On top of that, you can't use the
Amax and so like, And you can't use the City
Double Cash either, like you got to get the Costco card,
(27:14):
like on two cash back on all Costco purchases with
the Costco credit card. So again, why would you use
anything else I could see if there was an annual
fe attached, like you might have to run the numbers,
do some math. But there's no harm, no foul on
having an additional credit card. Even if let's say you
only use this credit card for costco purchases and for gas,
(27:35):
then I would say this card, having this card in
your arsenal makes sense. It makes sense, all right. Another
quick question from this is actually a different Megan on
the Facebook group, but she wrote, anyone know of a
spreadsheet that analyzes a home purchase from an investment perspective?
We know that we're only going to be there for
five years, so we want to be more strategic about
what we buy. Joel, what you think I'm gonna say,
(27:56):
don't buy the home? Probably that's a TLDR. That's a
quick answer. But you know, Matt, you and I we
always talk about the importance of timeline when it comes
to home ownership, yep. And whether or not it makes sense,
or it's going to pay off, or it's going to
be a better financial move for you. The expense of
buying and selling can be significant, So there are significant
costs associated with both of those endeavors. And so if
(28:18):
you're bumping them close together within a five year timeframe,
the cost could be prohibitive. Right, So if you own home,
let's say for a couple of years, even if you
see some equity growth, this seller in this case often
has to come to the closing table with cash to
cover closing fees and agent's costs and stuff like that.
I think big ups, by the way to Megan for
asking this question before she buys the house. I've heard
(28:40):
way too many folks, Matt who buy the house. They've
heard home ownership is smart, they haven't thought through the details,
and it ends up costing them because let's say they
live in the home for three years or something like that. Well,
their own home ownership timeline wasn't long enough and they
ended up losing in the process. They would have been
better off renting totally. Yeah, And Megan also said she's
looking at this from an invest perspective, but I don't
(29:01):
think that she wants to own this as a rental property.
I think what she's asking about is whether the financial
benefit will be superior when you are considering owning a
home versus renting a home, given those transaction costs that
you just mentioned. Their job and when you look at
what home prices have done over the past fifteen years
or so, that you know, the typical reaction for most folks,
(29:22):
especially realtors, folks in the real estate space, they're going
to tell you to buy every single time instead of rent.
They would say that you'd be you'd be an idiot
to not purchase a home. You're going to come out ahead.
And in one sense they have interest in telling you that. Matt,
of course you've got that. But like like, yeah, like
if you look at history, yeah, you're homeowners. They have
made out like bandits in recent years. But she also
(29:44):
can't count on these recent trends continuing far off into
the future, or even for the next five years specifically, right.
I mean, the truth is it's highly unlikely that the
housing market is going to experience similar, ongoing significant price
increases over the coming fifteen years. I would be shocked
if the coming fifteen years looked a lot like the
last fifteen years in terms of home price acceleration. That's
(30:07):
because price increases can't out pace inflation, they can't outpace
wages forever. We're already seeing prices stalling and predictions of
price declines in the near term from some outlets. The
truth is, if you look back, you bought in twenty thirteen,
you sold in twenty eighteen, or if you'd bought in
twenty eighteen and sold in twenty twenty three, those are
both five year timelines, you would have done quite well
(30:27):
for yourself. But those might be the exception, not the rule.
And so if you look just a recent history instead
of a longer stretch of history, you might be doing
yourself a disservice. Assuming that something's going to be true
that likely isn't going to be when you zoom out
the five year ownership timeline, it's really the minimum to
avoid potentially losing real money in that transaction, at least
when we're talking about a longer perspective. And I'm just
(30:50):
I'm worried, Matt, about someone sticking to a five year
ownership time What we always say five to seven and
typically we prefer seven. Five years just might not be
long enough. Yeah, Well, especially given the massive disparity between
rent prices right now and then the typical mortgage payment
these days in most cities, and specifically because she said
that she knows she's only going to be there for
five years, like maybe they're moving to a college town
(31:12):
and they're there for like a graduate degree or something.
I don't know, especially given that I would suggest renting.
It's what I would do if I were in your
shoes given a similar timeline. And we don't have a
so because of that, we don't have a spreadsheet recommendation
when it comes to something like this. But do check
out the New York Times rent versus by calculator, which
is totally great. And the only other way that this
(31:34):
that I would change my mind were I in your situation,
is if the what it is that the NRA is like,
if the industry gets a massive shake up, basically when
it comes to commissions fees paid towards realtors, because we
haven't seen that. But we haven't seen that, like there's
been talking about NAR not the NRA. I always say
that very different organization, National Association of Realtors. They've had
(31:54):
a stranglehold where you're paying six percent and if that
completely gets up ended, well, my answer is also going
to change because all of a sudden, the vast majority
of the transaction costs gets eliminated. Yeah, housing prices for
the most part are fairly stable over time, we see
them typically go up into the right cross your fingers.
We don't see another massive decline like we saw in
(32:17):
seven eight with a great recession, but that's like a
once in a lifetime thing. In my opinion. You eliminate
these massive transaction costs. I think we do see people
purchasing at homes living there for two or three years.
Maybe they see a little bit appreciation, maybe they don't,
but it's not even that big of a deal because
the transaction costs, the known expense that comes with selling
at home is no longer there. Yeah, totally, okay. Thank
(32:38):
you as always for listening to the show. We appreciate
your time and attention. You can always find more money
saving information up on our website at howtomoney dot com.
We'll see you back here next week. You'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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