October 4, 2024 • 33 mins
Time for a Friday Flight- our little sampling of the week’s financial news and what it means for your personal finances. There are a lot of headlines out there, but we boil them down to specific takeaways that will allow you to kick off the weekend informed and help you to get ahead with your money. In this episode we explain some relevant and helpful stories like: Helene relief, mega backdoor Roth, dockworkers strike against automation, time to book holiday travel, Southwest switcheroo, online passport renewals, Robinhood hidden fees, Gen Z out-investing Boomers, student loan shifts, fintech faux pas, bustling brick and mortar branches, and political economic malpractice.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How to Money. I'm Joel, I am Matt.
Speaker 2 (00:03):
Today we're talking holiday travel, fintech, faux pause, and a
big student loan shift.
Speaker 1 (00:27):
That's right, Joel. This is our Friday Flight, which is
our weekly take on the different news stories out there
and specifically how they impact your money. But first, man,
we wanted to just share how heartbroken we are to
see some of the different communities that were impacted by
Hurricane Helene. Last week. Our family actually we had to
evacuate while so this was during fall break. Our family
(00:50):
was at Cape sam Blast and we had to actually
it was a mandatory evacuation. That being said, don't cry
for us, right, I mean, we completely missed us. But
then it went on to tear through George, Florida, Georgia,
but then specifically the Carolinas man, especially around Asheville. That
to see the kind of devastation that it's brought about there,
especially as we see not only just the destruction of
(01:11):
entire towns but also the lives lost as that sadly,
that death hole is just ticking up.
Speaker 2 (01:17):
It's looking like this is a hundreds of people missing you, right,
So which is man?
Speaker 1 (01:21):
That does not bode well this is going to be
like the worst storm since Katrina.
Speaker 2 (01:25):
I think it's one of those things where you just
kind of can't prepare. I think as a town like Asheville,
North Carolina, you're not expecting a hurricane and decimated at
all like that. That's something that Floridians are at least
somewhat prepared for.
Speaker 1 (01:38):
On your radar.
Speaker 2 (01:39):
Yeah, and just just the pictures, the videos, the small businesses,
the lives lost, the families impacted. It's going to take
so long to rebuild. It's truly devastating, especially when I
know Matt used to live there. Yeah, by like some
of the spots that were impacted, and.
Speaker 1 (01:55):
It's kind of crazy, but all the towns that I
am most familiar with got I mean got hammered. Like Yeah,
I don't want to go into all the details or whatever,
but we did want to make sure though that if
you were wanting to donate some money to help with
the relief efforts in Georgia, there is the Send Relief Organization.
North Carolina has a disaster relief fund. Florida they've got
(02:16):
a disaster fund as well. We'll make sure to link
to all of those. These are vetted organizations where they're
going to take the dollars donated and apply that directly
to where the need is most needed. And also if
you happen to be I guess closer to those areas,
FEMA has their VOAD, which is the volunteer organization active
in disaster groups if you're looking to physically get involved
(02:37):
to help provide some relief for those for those specific states.
But certainly you can look those up, but we'll make
sure a link to them in the show notes for
this episode as well. Yeah.
Speaker 2 (02:45):
One of the things that happens, Matt, that's really sad
after disasters like this, there are scammers.
Speaker 1 (02:52):
Yeah, the scam I got to watch out for that.
Speaker 2 (02:53):
So that's why we wanted to provide you with like
links to vetted organizations Exactly. There are going to be people.
They sound legit and they're not. And it's got a
good photo, it's convincing.
Speaker 1 (03:03):
That's right.
Speaker 2 (03:04):
It's easier to do these days too than ever before.
I Before we get to just all the stories that
we have to cover this week, there's a lot of them,
I wanted to issue just kind of a quick point
of clarification after Monday's listener question, episode listener Greg sent
in a question about over contributing to his four to
one K I think is how we put it, and
listener Rich, who is a financial advisor, sent us an
(03:26):
email and he was saying, hey, listen, you guys, you
might have maybe missed something. He's like, I listened to
it three times, and I think maybe there's something that
needs to be discussed here. And basically what the listener
Rich was getting at is that some foural one K
plans allow high earners to contribute more than the contribution limit.
So it's kind of this weird rule that some foral
(03:47):
one k plans do allow some participants to add more
into the four to one K. But on a post
tax basis, that could have been what listener Greg was
actually doing was contributing more because his plan allows them to,
but those other dollars are going to be taxed.
Speaker 1 (04:02):
Which again made sense given the fact that he's such
a baller like, he's a high earner and his plan
might allow for this opportunity to convert and roll some
of those funds over.
Speaker 2 (04:11):
And the typical advice if that's allowed in one of
your plans and you are one of those people who
wants to invest tons of money sock away big bucks
like like Greg was doing. You can do a megaback
to or wroth. You know that. Because that money is
post tax, the best thing to do with it typically
is to roll it into your your wroth for oh
one k via what's known as in plan conversions or
into your wroth IRA. It's one of those ways you
(04:33):
can get more money into a wrath. But if you
kind of leave it be and you don't put it
into a roth vehicle, typically it's better to not over
contribute and to invest that money elsewhere.
Speaker 1 (04:41):
That's right, man. So let's go ahead and keep moving
forward and get to our more typical Friday flight stories.
Let's get to the dock workers strike. This is obviously
a big story and the macro economic and labor news cycle,
but the long shortman strike it just started earlier this
week along the entire East co But those strikes could
have a significant cascading impact on the economy. The lack
(05:05):
of goods moving to and fro are going to cause
food to spoil. Bananas are actually already spoiling, so Joell
to make sure you stock up on those. I know
how you are with your bananas. In the tea banana
every day. Yeah, and I'm like, I'm gonna be upset. Actually,
I saw that coffee is something else that there might
be a shortage of as well, and I'm actually stocked
up on that because well it's a long story. We're
(05:27):
trying to sample a new go to coffee at that.
Speaker 2 (05:30):
You're hoarding, although we're seeing signs of people hoarding.
Speaker 1 (05:32):
Really yeah, geez.
Speaker 2 (05:33):
People are literally already going to the grocery sort of
like add to get extra paper towels or toilet paper,
which is interesting because those are mostly produced domestically, so
they're not going to be impacted by this strike.
Speaker 1 (05:43):
Like coffee and bananas. But what that's going to do, though,
is cause prices to rise because there's not enough supply
to cover demand. It could even prevent crucial pharmaceutical drugs
from being made, which is you know, obviously going to
cause even more widespread harm. And that's just the tip
of the iceberg. And so depending on the length of
the work stoppage, this could disrupt and damage millions of businesses,
(06:05):
resulting in even significant job losses as well, and just
potentially even trigger a recession. It's been a long time
since we've had a strike like this, it could even
cause inflation to ramp back up. It's that big of
a deal. It's been I think over forty years since
we've seen it. I think it hadn't been since seventy
seven since we've seen a dockworker strike like this. And
I'm not going to say this is causation, but back
(06:26):
in seventy seven so old inflation was like in the
was solidly in the six seven percent range, and the
subsequent years we saw it tick up into the double digits. Again,
I'm not going to say that that's what's going to
happen here, but it's not necessarily the kind of riding
you want to see on the wall.
Speaker 2 (06:39):
Yeah, I mean, I think the depth of the damage
is going to depend on the length of the strike,
and we just don't that's an unknown quantity, right, none
of us knows that. But the potential economic loss is
being estimated at five billion dollars per day. And I think, Matt,
you and I we get collective bargaining and some of
the demands of the union seem reasonable, but some also
seem tenable, like the pay raise. I get it, especially
(07:03):
with inflation and maybe salaries not keeping up with the
rate of inflation as much as these people would like.
And I think the dockworkers have also seen, Hey, their
jobs are crucially important to our ability to function as
a society, but some of the demands also are for
job security, and they in this deal, the dockworkers want
(07:24):
the essentially no more automation with how their job is done.
And I think that's one of those things where you
kind of can't slow down technology, and if you attempt
to do that, you attempt to kind of protect your
job insulate yourself from technological shifts.
Speaker 1 (07:38):
Well, at some point you can't anymore. So I don't know.
Speaker 2 (07:42):
Kyla sc Scalen actually wrote really nicely about this in
her most recent newsletter. She said that this might be
the biggest man made disaster ever, and I think she
might be right if this persists and so, but she
basically talked about how this represents more than just a
labor dispute. She said, it's a microcosm of the law
or societal challenges we face as we navigate the future
(08:03):
of work in an increasingly automated world. And there's this
growing tension, she said, between efficiency, job security, corporate interest
in workers' rights, and I think she's spot on. There's
all these things at play and there's no simple fix
where everyone wins here. And it's amazing too. As always,
stuff is happening in the economy that we can't control,
yet we're impacted by it. I think the key personal
(08:25):
finance takeaway here is to be financially prepared, to always
be ready for the unexpected. And it's often the unexpected
things that impact our economy more than the things that
we're seeing off down the road that are easy to predict,
easy to envision. Liquid savings are always crucial no matter what.
But I think the other thing we saw them at,
especially early in the pandemic, was people hoarding, and that
(08:47):
how that makes the problem worse.
Speaker 1 (08:48):
So I would just encourage people not to do that. Yeah,
going back to what you said about having cash in
the bank, like liquid cash saving. This is why we
don't want you investing every single dollar that you have
to have some of that margin, not only from like
let's say you're on the labor side and you're you're
one of the individuals who's not working right now, Well
you're gonna need some extra cash on hand. But then
on the other side of things. If you are someone
(09:09):
who's going to be more impacted by rising prices or
the inability to get certain goods, it's going to require
you to be a little more nimble with how it
is or maybe what it is that you're purchasing. But
I think another lesson too is just sort of like
what you're saying, which is that the forward march of
progress and technology is inevitable. And this totally makes me
think of the Luddites back in England in the eighteen
(09:31):
hundreds and how they started freaking out because of what, oh, automation,
Like they're freaked out by the machines essentially, and like
breaking the machines trying to keep them from doing the work,
which it seems so silly now, doesn't it, right, Like
as we look back, when you look back and say,
what passage of time are they thinking? But somehow today
in twenty twenty four, this feels different. But I think
(09:53):
it's the same lessons perpetual human instincts. Yeah, And so
I think one of the other lessons is that the
more nimble we can be as individuals, and the more
we invest in ourselves and the more we're able to
maybe pivot in our careers and be open to the
idea that that might happen. It's certainly going to put
us in a better financial position. And I understand that
like a lot of these folks are older, right like,
they probably don't envision another career on the horizon for them. Yes,
(10:15):
they're trying to get whatever it is that they can.
But for the rest of the folks out there listening
to this show, at the very least, that approaching your
career with that frame of mind, with that attitude, would
be incredibly beneficial.
Speaker 2 (10:26):
Yeah, and we're hoping for a quick resolution on this
front for all of us and for those bananas to
start flowing again. Math can't go too long without them.
Let's talk about travel for just a second. Let's talk
about win tu book holiday travel specifically. There was good
news when it came to falling gas prices, although war
in the Middle East is starting to send gas prices
(10:48):
northward again. But there's been also a lot of competition
in the airlines space. So we have seen lower fares
happening in the airline industry this year, which has been
great for anybody who enjoys traveling. Still, flying during the
holidays can cost you a lot more than if you're
just picking normal travel dates in the fall or something
like that. Right, So, being extra careful and planning when
(11:10):
you book your travel accordingly can help you save a
lot of money. And the booking site Hopper recommends booking
flights over the next couple of weeks in order to
get the best deal on that airfare. Specifically, they cited
October fourteenth as the date that you can expect prices
to start going up for Thanksgiving and Christmas travel. Google
had similar findings recently too, but they actually said that
(11:33):
the back half of October might be the best for
booking Christmas travel. I think it just makes sense to
start looking now and to start setting fair alerts for
travel dates that you're interested in flying and if you're
willing to annoy your family a little bit, the family
you're going to visit flying on Thanksgiving Day and Christmas
date itself and Christmas Eve too. Matt, I was looking,
(11:55):
Hey can you come.
Speaker 1 (11:55):
Pick me up twenty fifth? Well, yeah, yeah, that morning.
Speaker 2 (12:02):
Think anything else going on? Right, and you'll be so
thrilled to see me. It'll be worth driving to the airport.
But it's amazing how much money you'll be able to
save if you fly on those dates. Specifically, if you
fly on the dates near and surrounding Thanksgiving and Christmas,
you can expect to pay a whole lot more. And actually,
if you can maybe wait a few more days on
the back end, so instead of flying back from Thanksgiving
on that Sunday or Monday, let's say flying back on
(12:23):
that Tuesday instead, you might save a good bit more
as well. So, as always with travel, the more flexible
you can be, the more money you might say.
Speaker 1 (12:31):
That's right. Speaking of travel Southwest, they've announced some of
the specific seating changes that they're going to make. Basically,
the cattle call boarding arrangement that they have held until now,
it's going to be scuttled in favor of assigned seating
next year. Boo.
Speaker 2 (12:49):
It's always been weird. I've never quite understood it, but
I do it, and it's what the cattle call. Yeah,
like that's just how they do it.
Speaker 1 (12:56):
I know it is. It's kind of it's part of
it's weird, or it's more equitable for everybody to be
able to have a more affordable ticket. So it depends,
especially with those most early flights. Matter.
Speaker 2 (13:06):
If I don't wake up in time to book on
the app because you want to do it right at
twenty four hours in Advanda, part of the A group
and you end up out the B or C group
C twenty nine and you're obviously they're so they're doing
this in order to increase revenues. And what this means though,
is that Southwest is just going to end up looking
like every other airline out there. And I'm bummed and
(13:28):
I'm booing because it means that, in my mind, there's
there's less differentiation between Southwest now and some of the
other other airlines. Because yes, this does mean that some
Southwest flyers are going to be able to get a
better seat.
Speaker 1 (13:38):
But if you are more price sensitive, maybe one of
the reasons that you've gone with Southwest is because you
don't care about which seat it is that you're that
you're looking to book, and you do have the time
or the ability to get there sooner. You got time
on your side, and so it's a way that you can,
you know, get a pretty decent seat for the same
amount of money. But now chances are you're probably gonna
have a crumby seat because you didn't pay up for
(14:00):
that more expensive seat.
Speaker 2 (14:01):
Yeah, if you don't want to end up in the
very back of the plane, in the middle seat, you're
gonna have to like fork over more money to book
a fancier seat right next to the bathroom. I really, yeah, exactly.
I don't love necessarily the way that kind of modern
airlines have divided up the seating arrangements in order to
like get us to fork over more money. And you
know what, I'm I don't know. I get why they're
(14:22):
doing it, and it's gonna increase Southwest revenue. But one
good thing at least is that they're going to leave
the two.
Speaker 1 (14:28):
Free checked bag.
Speaker 2 (14:29):
At least that is a differentiator, and that's something it'll
save people money. I try not to check bags unless
I'm bringing beer home from a random destination, because that
is like the best way to get beer back from
wherever you're visiting is to check it. And I can
still do that at least for free on Southwest, So thank.
Speaker 1 (14:44):
You for that. The number one thing that all airlines
need to do is in order to speed things up,
why don't they board from the back to the front.
I don't know the fact that that is just the
most mind boggling thing that makes zero sense to me.
Speaker 2 (14:55):
It's literally even to people who are sitting in the
front of the plane board first, and then everybody has
to wait for them.
Speaker 1 (15:00):
To get the cycle passed through everybody, like, even if
that's putting a door like in the back of the
plane and just have the first class people walk all
the way through boom like. But it just drives me
crazy to think that all as far as I know,
all airlines do that. Man, you could be an airline executive,
you could see an airline consultant. That's right.
Speaker 2 (15:19):
You can fix our issues in the snap of a finger. Well,
and speaking of travel, timing is of the essence when
we're talking about booking travel. Well, there's other good news
on the travel front about online passport renewal. It's back, baby,
and it's back on a permanent basis.
Speaker 1 (15:35):
Matt.
Speaker 2 (15:35):
We talked about this when I tested it out, when
the State Department basically said, hey, listen, you can you
can try this online passport renewal. But it didn't it
didn't last long, it didn't live on the site for long.
I took advantage of it, and it was really nice,
Like it saved me time, annoyance and hassle, and so
if you have a passport and it's about to expire
or it has expired within the past five years, you
(15:56):
too can now renew online instead of going in person,
which is just an exercise. We're used to doing everything
online these days, but for some reason, this was something
that was still left in the stone age, speaking of ludites.
And this is going to save you time and annoyance
renewing your passport. It's still going to take roughly six
to eight weeks to get that passport back in your hands,
which actually isn't bad because for a while there was
(16:19):
taken a whole lot longer because the state Department had
a backlog. But yeah, it just feels like it's about time,
but still plan accordingly. And then there are some people
mat who still aren't going to be eligible to renew online.
That is first time applicants and children. So if you're
under the age of I forget sixteen, Like I think
my nephew when he was fifteen, they were going to
renew his passport and they're like, wait, let's wait, because
(16:40):
when you renew a child's passport, it only renews for
an extra five years, but once they become an adult,
and I think that's technically sixteen sports.
Speaker 1 (16:48):
I didn't know that. Then you can get the ten
year passport, which is smart. It's a better deal. It's
what you want to do, and it makes sense that
you have to if you're going to get a passport
for the first time. I get having to go in
person just to verify who exactly you are, but also
so don't wait until the last minute. I don't think
we've talked about this. I had a chance to go
out of a country with one of the kids. It
didn't end up working out, in part because of all
(17:08):
the hoops that we would have had to jump through
because we didn't have a passport yet for any of
the kids. And I was tempted to spend a large
amount of money to make that expedited, to make that
thing well not just expedited, but so there's expedited yet
standard expedited. And then you've got urgent, which is if
you're looking to travel in two weeks or less. And
ay not everybody has the ability to get to one
(17:29):
of the passport centers that handles these urgent requests. But
also it costs a ton of money and there are
a ridiculous number of hoops that you have to jump
through to make this happen, So you don't want to
find yourself in that situation.
Speaker 2 (17:39):
Well, the other thing people don't realize oftentimes Matt too,
is when they're traveling and their passport is going to
expire soon, but they still think they've got time. Well,
typically countries that their lines won't let you fly and
the countries won't let you in if you don't have
at least six months left on your passport from the
date of departure from leaving that country. So make sure
you've got that.
Speaker 1 (17:59):
The passport doesn't expire six months prior to you leaving
that comany.
Speaker 2 (18:03):
It's basically like a false expiration day, which is kind
of frustrating, but that's how it works. So all right,
we've got more to get to on this episode, of course,
including kind of some breaking news about student loan forgiveness.
We'll talk about that and more right after this.
Speaker 1 (18:23):
All right, let us continue with the Friday flight, and
of course, Joe, we've got our ludicrous headline of the week.
Let's get to a story from the Wall Street Journal,
and the headline reads, robinhood touts rock bottom fees for
options trading. Then come the hidden costs, and you might
be thinking to yourself, I thought trading on Robinhood was free.
I remember dabbling a little bit back, you know, back
(18:45):
in the day.
Speaker 2 (18:45):
Fourth day of the company that changed the ball game
the way things were done. They up in the entire industry.
Speaker 1 (18:50):
Well they did. They completely eliminated the fee per trade
that investors were used to paying. But they've got to
make money somehow, and so the way that robin Hood
makes money is they try a spread. It's the difference
between the buying price and the selling price, and that's
what they pocket. And specifically on options trading, which isn't
something that we are fans of nor that we would recommend.
(19:11):
But that being said, with options trading, it is far
more expensive than other brokerage firms. This is according to
new data from a handful of finance professors. They specifically
found that Robinhood takes nearly seven percent of the dollar
value of options transactions, which is far above the rest.
I think the Suddy found that Vanguarden Fidelity no surprise
(19:33):
there that they are much cheaper. But even still, I
even hesitate sharing that because I don't want people thinking, oh,
that's where I need to go for my options trading,
because the moral of the story is we don't want
you to trade options. We don't options trading focuses on
the price that you're paying. And this is like dare
I say, one instance, Joel, where we want folks to
be price insensitive, right like we want like our friend
(19:55):
of the show, Nick Midulie, he says, just keep buying
when it comes to investing for the long haul, when
it comes to investing for your retirement, we don't really
want you to pay attention to what the prices on
that index fund. Just keep buying. And in the case
of options trading, that's not something we want you to
do anyway, that's right.
Speaker 2 (20:11):
Yeah, so don't trade options. Definitely don't trade options on
Robinhood And yeah, but.
Speaker 1 (20:16):
You don't have to say that because we just said
don't trade options right now.
Speaker 2 (20:19):
And then it's amazing when you're talking about when something
seems free, it's wise for you to ask the question,
how is this company making money?
Speaker 1 (20:26):
Like Facebook? Okay, cool, it's free for me to use Facebook.
How are they making money? And that at least they're
doing it somehow, it's worth asking the question and trying
to figure that out. Because it might impact you negatively.
A quick bit of good news on the investing front, though,
map in front of the show. Josh Brown, who was
on recently, he highlighted this in his newsletter, and I
thought this was worth sharing. Gen Z is starting to
(20:47):
invest earlier than basically any other previous generation, which I
guess makes sense in a lot of ways with four
h one k's and automatic enrollment and the apps essentially
at our finger to There was this survey by Charles
Schwab and it found that that gen Zers are starting
to invest at age nineteen, whereas the average boomer didn't
(21:08):
begin investing until their mid thirties. So we're talking about
something close to two decades of a big, a little
difference more time that you have in the market. Covid
obviously had a massive impact on that. I think stemmy
money combined with staying at home, plus newfangled apps like Robinhood,
which we just talked about, it made investing more approachable,
It made it cheaper, and kind of made it more
(21:29):
fun in some ways, which we're not necessarily paper of
all of those things, but with the extra dollars floating
around and nowhere to spend them, a lot of gen
Zers were like, why don't I start getting on the
investing ball game, So there is a silver lining to that.
The coolest thing to me, though, is about this, you know,
age disparity of when when people are starting to invest
now is that there's just yet, like I said, so
(21:50):
much more time. There's like sixteen extra years for gen
zers to experience compounding than baby boomers had. And we
all know, we all know time in the market is
clutch in the wealth building process. Having that extra time.
Speaker 2 (22:03):
Because you're starting earlier is huge when it comes to
the final amount of money you have as you get
closer to those retirement years.
Speaker 1 (22:10):
That's right, man. Let's get to some student loan news.
There is a massive chunk of folks out there that
have student loans who haven't made a payment in years.
And if you're not current on your student loan payments
at this point, you need to make sure to change
that quickly. And that's because not paying on time can
now impact your credit score. We had a multi year
(22:30):
payment pause because of COVID, and even though payments were
set to begin again last fall, there were no consequences
for not paying on time. Like the payment pause was lifted,
but still we're not going to ing yet. Yeah, we're
not going to ing your credit score. Interest. It's still
been accruing for student loans over the prior year. But
as of the beginning of this week, student loan servicers
can now report your late payments to the bureaus, which
(22:53):
obviously you can have a meaningful impact on your credit score.
So just a heads up, log in, get current, make
sure you are not harming harming future you, especially if
you're someone who also happens to be house shopping.
Speaker 2 (23:04):
I mean, well, yeah, exactly. We talk about the impacts
of a ding credit score mat and just you know,
fifteen twenty points down on your credit score because you
a couple late payments because you didn't realize now that
the moratorium on reporting your late payments to the credit
bureaus was over, Well, that can impact a whole lot
of things. Could impact what you whether or not you
(23:24):
get the apartment you want to rent. It can impact
how much you're paying for car insurance in most states,
it's a big deal, so make sure you know that.
And obviously there was an ample reason for the initial
student loan payment pause, but making it an ongoing thing
I think alongside the promise of forgiveness that never materialized,
I think it set a lot of people up for failure.
Speaker 1 (23:43):
Matt.
Speaker 2 (23:43):
People are probably like, what student loans, I didn't realize
I had a payment even.
Speaker 1 (23:47):
Though I thought those were gonna get kicked to the curve.
Speaker 2 (23:49):
Yeah, like it was a long time ago since I
had to make actually make it a payment. And there's
this deprioritization of student loans that happening in a lot
of homes around the country, hoping that they would go
away completely, but they haven't. And so if you're one
of those people who had an out of sight, out
of mind approach to your student loans, it's time to
put that back on the front burner in your budget. Prioritize,
(24:11):
prioritize that fine room for it. And it's also important
to note you might have seen breaking news yesterday about
a judge saying that the Biden administration can now move
forward with student loan forgiveness.
Speaker 1 (24:22):
Matt.
Speaker 2 (24:22):
This is one of those things where I think people
are going to see that headline and they're going to say, oh,
student loan forgiveness is back on, and what's the ultimate
resolution going to be? Are people actually going to receive
forgiveness for their student loans. I don't know, you don't know.
This is still a political point, right, This is still
a political and legal football. So I would say, yeah,
take that headline with a grain of salt. Maybe at
(24:43):
some point some sort of student loan forgiveness will come
to pass. That's anybody's guess for the time being. Don't
neglect your student loans. All right, let's talk about where
it is.
Speaker 1 (24:53):
That you bank, Joel, not you specifically, but oh for
everyone out there. I was going to give the laundry
list of banks that I have a relationship with. Mat
you're a fan of Discover, That's that's where I send payroll.
Should I be sharing this? Are folks going to talk
my account number and rounting number? Yeah? No. Vox they
just published an article warning people about using different apps
out there like Venmo as they're checking account. A recent
(25:16):
study found that a third of gen Z and millennials
are using different fintech apps out there for their banking,
and depending on the app, depending on the software, because
you know different, some of these newer banks, they're not
the worst, it's not a terrible thing. But if you're
using cash app. If you're using Venmo as your primary
place for money storage, well that's not good. That's bad.
(25:38):
Venmo and cash app they aren't banks, and they're not
paying you anything on money that remains in their possession.
The more money you have sitting there, the more it's
missing out on better returns that you could be getting elsewhere. Certainly,
those platforms can be great for sending your friends some
money to cover an expense, maybe getting cash to pay
for a class teacher gift where everyone's piling their funds together, right,
and most great for that, but they're also more socattle
(26:00):
to scams. We bottom line, want you to use Venmo
apps like Venmo, cash App, even PayPal the way that
they were intended. And that's the thing we say intended,
because they want you to keep your money. I love
them because then you know, obviously they're able to earn interest,
and I want to keep my Venmo cast balance at
zero exactly. Yeah, they're able to pad their profits.
Speaker 2 (26:22):
But so I was because I can still make a
payment and it'll take it from my bank account, which
is awesome. And so when money comes into my Venmo account,
guess what I do. I immediately ship it off to my bank.
Speaker 1 (26:30):
You know what's funny is that even recently I was
making a payment or no, we have our business PayPal
account that we don't partially ever use, but occasionally certain
vendors will send us money that way, and I saw
some in there. It's just a couple hundred bucks, and
I was like, oh, we need to get this over
to our checking account. And they even prompted me and said, hey,
are you sure you want to move that money over
just in case there's a refund that you might have
(26:51):
to issue. So they're basically coming up for reasons for
them to hang on to your money. It's a little nefarious. Yeah,
I think this analogy might help and maybe think through
Like imagine you come home for the grocery store. You
dump all of your groceries on the counter. Your bananas, Yeah,
not your bananas, because they're floating off short of it
and instead of putting them away where where they belong. Instead,
you are living like a bachelor and you're leaving all
(27:12):
your food just sitting there. You're not organized. It's a
problem because the cold stuff isn't cold. It's not in
the fridge. Your ice cream is melting, it's not in
the freezer like it should be. The non perishables aren't
in the pantry, and let's say you want to make
a big meal, you've got no meson plas, like you
have no room on your counter to know what it
is that you should be doing with the different things
that you've purchased. Matt likes to use French, fancy French terms.
(27:33):
I don't want to said faux pas. So that's one problem.
But I think another problem with it as well is
the fact that imagine you're walking through your kitchen and
all that food's sitting there, what are you gonna do.
You're gonna think, oh, I might want to snack on
something right there, when otherwise you're not even hungry. But
the reason you're doing it is because it's there, it's accessible,
and that's I think some of the problems with keeping
(27:54):
money in these apps is it's too accessible, and especially
when we are sometimes getting different requests via people, we
think we know there's just too many opportunities for us
to be parted with our money, and so keeping a
minimum amount of money in some of those different apps
is what we would recommend.
Speaker 2 (28:09):
I agree, yeah, and you're not doing yourself in it.
You could still make payments with Venmo not having any
money in your Venmo accounts. That's the way it's set up.
So using Venmo as like your bank is a bad idea.
Speaker 1 (28:21):
Yeah. They make it so easy though, that's the thing.
And when you start getting sloppy with your finances, yeah,
I think you're going to be more prone to lose
your money. Yeah, well, okay.
Speaker 2 (28:28):
On the note of banks, Reuters reports the Bank of
America is going to open a bunch of new branches
one hundred and sixty five over the next couple of years,
and then they also mentioned that Chase is planning to
open five hundred new branches over the next three years.
So the giant banks in this country mat they're only
getting bigger. And I might, as a millennial, say, that's
(28:48):
a really dumb strategy. Do people really brick and mortar anymore? Well,
I think actually the strategy is working. So there's a
reason that these are the biggest banks in existence. And
then people continue to use them. And apparently eighty percent
of Bank of America checking accounts still get opened inside
of an actual branch location, not on the Bank of
America website. I would not have guessed that I would
(29:10):
have guessed it was like forty percent, but it's eighty percent.
But just because you see the branding of these banks
every time you're driving your car watching a sporting event,
because they advertise all over the place. They even advertised
the sporting arenas that are being played in, it doesn't
mean you do business with them. The billions of dollars
that these banks are spending on building out these brick
and mortar locations, they are creating some converts. But we
(29:32):
don't want you to be one of those converts. And
we're going to keep stressing this because we always do.
This is something we.
Speaker 1 (29:37):
Care a lot about.
Speaker 2 (29:38):
Online banks are the best of all worlds essentially, Matt.
You mentioned that I bank with discovered that's one of them.
Capital One has a great online banking account. Ally is
one that you've done business with for a long time.
Those are some of the bestli banks. Yeah, classic, that's right.
There's some great ones out there. Do business with those.
Don't do business with the giant banks, even though they
might have a commediate location.
Speaker 1 (29:59):
All right, Last, but not least, I'm not sure if
you notice, Joel, there was a vice presidential debate on Tuesday,
hard about that. It was.
Speaker 2 (30:07):
It was actually fairly civil. I watched a little bit.
I was shocked to see that. It's a breath of
fresh air. It was to see folks focusing on policy
versus like personal stuff. But what we wanted to mention
is that economists they basically hate all the presidential economic.
Speaker 1 (30:21):
Proposals pos on both your house. Yeah, yeah, a vast
majority of voters. Of course, they're going to love to
hear that tips they will be taxed, price gouging the
grocery store, that that's going to be held accountable, that
they're going to be stiffer tariffs, maybe even that credit
card interest rates that they're going to be capped at
ten percent.
Speaker 2 (30:38):
All those things. As an individual voter, you might say, no,
that sounds.
Speaker 1 (30:41):
Nice, But almost no economists agree that these policies are sound,
and most folks probably aren't listening to economists. But we're
gonna line up with them on this one. Let's be honest.
Speaker 2 (30:51):
I don't sometimes economists can sound boring, Matt, So maybe
maybe we need like some icy economists that are a
little more fun.
Speaker 1 (30:57):
Sounds like there's a need in the market applying demand.
That's an economist joke, Well, just a law of the land.
But we wanted to, I guess highlight this because the
different promises that get touted in a some speech, they
might sound nice, that many of them just they're just
not practical, they're not possible, or if they are possible,
they would just open up a massive can of worms.
(31:20):
And we're just living in this era of bipartisan tone
deafness when it comes to economics and what the different
kinds of spending that our nation is likely like striving
after it, Like on both sides of the aisle, there
seems to be an ignorance or a denial of reality
of what that's going to do to our country.
Speaker 2 (31:37):
Let's talk about the domino effects of a policy like this,
Like what would happen if we actually implemented some of
these policies that both candidates are proposing, and at least
on the money front, there'd be a lot of negative
consequences I think.
Speaker 1 (31:47):
Of at least some of these policies.
Speaker 2 (31:49):
And Yeah, when you see the disparity between what individual
voters think about those proposals and what economists think, it's
shocking because like seventy eight percent of voters might say, oh,
I think that policy sounds good, and like eight percent
of economists think it's a good idea, and so I
think it's not that economists run the world or should
run the world, and not that they are the smartest
people in the room necessarily, but a lot of what's
(32:11):
being proposed doesn't make much sense.
Speaker 1 (32:13):
Yeah, I think that's why you and I, if we
align with any party, it's the Libertarian Party, which unfortunately
doesn't seem to be getting anywhere, but because of the
fact that they're looking to have less government spending. Talk
about weirdos.
Speaker 2 (32:24):
Though there's a lot of weirdos in the Libertarian parties team,
there are which you fit right in.
Speaker 1 (32:28):
Yeah, I would. We've got a quick newsletter referral shout
out to Megan C. Megan, thank you so much for
referring the newsletter to friends or family, those who you
care about. And if you have no idea what we're
even talking about here, head to how Tomoney dot com
forward slash newsletter, where every Tuesday morning you can get
an email in your inbox with helpful money earning, saving
(32:50):
and investing advice and Joel guarantees that you'll be glad
you did all right, So that's gonna be it for
this episode, Joe, until next time. Best Friends Out, Best
Friends Out, BEFO
Welcome to How to Money. I'm Joel, I am Matt.
Speaker 2 (00:03):
Today we're talking holiday travel, fintech, faux pause, and a
big student loan shift.
Speaker 1 (00:27):
That's right, Joel. This is our Friday Flight, which is
our weekly take on the different news stories out there
and specifically how they impact your money. But first, man,
we wanted to just share how heartbroken we are to
see some of the different communities that were impacted by
Hurricane Helene. Last week. Our family actually we had to
evacuate while so this was during fall break. Our family
(00:50):
was at Cape sam Blast and we had to actually
it was a mandatory evacuation. That being said, don't cry
for us, right, I mean, we completely missed us. But
then it went on to tear through George, Florida, Georgia,
but then specifically the Carolinas man, especially around Asheville. That
to see the kind of devastation that it's brought about there,
especially as we see not only just the destruction of
(01:11):
entire towns but also the lives lost as that sadly,
that death hole is just ticking up.
Speaker 2 (01:17):
It's looking like this is a hundreds of people missing you, right,
So which is man?
Speaker 1 (01:21):
That does not bode well this is going to be
like the worst storm since Katrina.
Speaker 2 (01:25):
I think it's one of those things where you just
kind of can't prepare. I think as a town like Asheville,
North Carolina, you're not expecting a hurricane and decimated at
all like that. That's something that Floridians are at least
somewhat prepared for.
Speaker 1 (01:38):
On your radar.
Speaker 2 (01:39):
Yeah, and just just the pictures, the videos, the small businesses,
the lives lost, the families impacted. It's going to take
so long to rebuild. It's truly devastating, especially when I
know Matt used to live there. Yeah, by like some
of the spots that were impacted, and.
Speaker 1 (01:55):
It's kind of crazy, but all the towns that I
am most familiar with got I mean got hammered. Like Yeah,
I don't want to go into all the details or whatever,
but we did want to make sure though that if
you were wanting to donate some money to help with
the relief efforts in Georgia, there is the Send Relief Organization.
North Carolina has a disaster relief fund. Florida they've got
(02:16):
a disaster fund as well. We'll make sure to link
to all of those. These are vetted organizations where they're
going to take the dollars donated and apply that directly
to where the need is most needed. And also if
you happen to be I guess closer to those areas,
FEMA has their VOAD, which is the volunteer organization active
in disaster groups if you're looking to physically get involved
(02:37):
to help provide some relief for those for those specific states.
But certainly you can look those up, but we'll make
sure a link to them in the show notes for
this episode as well. Yeah.
Speaker 2 (02:45):
One of the things that happens, Matt, that's really sad
after disasters like this, there are scammers.
Speaker 1 (02:52):
Yeah, the scam I got to watch out for that.
Speaker 2 (02:53):
So that's why we wanted to provide you with like
links to vetted organizations Exactly. There are going to be people.
They sound legit and they're not. And it's got a
good photo, it's convincing.
Speaker 1 (03:03):
That's right.
Speaker 2 (03:04):
It's easier to do these days too than ever before.
I Before we get to just all the stories that
we have to cover this week, there's a lot of them,
I wanted to issue just kind of a quick point
of clarification after Monday's listener question, episode listener Greg sent
in a question about over contributing to his four to
one K I think is how we put it, and
listener Rich, who is a financial advisor, sent us an
(03:26):
email and he was saying, hey, listen, you guys, you
might have maybe missed something. He's like, I listened to
it three times, and I think maybe there's something that
needs to be discussed here. And basically what the listener
Rich was getting at is that some foural one K
plans allow high earners to contribute more than the contribution limit.
So it's kind of this weird rule that some foral
(03:47):
one k plans do allow some participants to add more
into the four to one K. But on a post
tax basis, that could have been what listener Greg was
actually doing was contributing more because his plan allows them to,
but those other dollars are going to be taxed.
Speaker 1 (04:02):
Which again made sense given the fact that he's such
a baller like, he's a high earner and his plan
might allow for this opportunity to convert and roll some
of those funds over.
Speaker 2 (04:11):
And the typical advice if that's allowed in one of
your plans and you are one of those people who
wants to invest tons of money sock away big bucks
like like Greg was doing. You can do a megaback
to or wroth. You know that. Because that money is
post tax, the best thing to do with it typically
is to roll it into your your wroth for oh
one k via what's known as in plan conversions or
into your wroth IRA. It's one of those ways you
(04:33):
can get more money into a wrath. But if you
kind of leave it be and you don't put it
into a roth vehicle, typically it's better to not over
contribute and to invest that money elsewhere.
Speaker 1 (04:41):
That's right, man. So let's go ahead and keep moving
forward and get to our more typical Friday flight stories.
Let's get to the dock workers strike. This is obviously
a big story and the macro economic and labor news cycle,
but the long shortman strike it just started earlier this
week along the entire East co But those strikes could
have a significant cascading impact on the economy. The lack
(05:05):
of goods moving to and fro are going to cause
food to spoil. Bananas are actually already spoiling, so Joell
to make sure you stock up on those. I know
how you are with your bananas. In the tea banana
every day. Yeah, and I'm like, I'm gonna be upset. Actually,
I saw that coffee is something else that there might
be a shortage of as well, and I'm actually stocked
up on that because well it's a long story. We're
(05:27):
trying to sample a new go to coffee at that.
Speaker 2 (05:30):
You're hoarding, although we're seeing signs of people hoarding.
Speaker 1 (05:32):
Really yeah, geez.
Speaker 2 (05:33):
People are literally already going to the grocery sort of
like add to get extra paper towels or toilet paper,
which is interesting because those are mostly produced domestically, so
they're not going to be impacted by this strike.
Speaker 1 (05:43):
Like coffee and bananas. But what that's going to do, though,
is cause prices to rise because there's not enough supply
to cover demand. It could even prevent crucial pharmaceutical drugs
from being made, which is you know, obviously going to
cause even more widespread harm. And that's just the tip
of the iceberg. And so depending on the length of
the work stoppage, this could disrupt and damage millions of businesses,
(06:05):
resulting in even significant job losses as well, and just
potentially even trigger a recession. It's been a long time
since we've had a strike like this, it could even
cause inflation to ramp back up. It's that big of
a deal. It's been I think over forty years since
we've seen it. I think it hadn't been since seventy
seven since we've seen a dockworker strike like this. And
I'm not going to say this is causation, but back
(06:26):
in seventy seven so old inflation was like in the
was solidly in the six seven percent range, and the
subsequent years we saw it tick up into the double digits. Again,
I'm not going to say that that's what's going to
happen here, but it's not necessarily the kind of riding
you want to see on the wall.
Speaker 2 (06:39):
Yeah, I mean, I think the depth of the damage
is going to depend on the length of the strike,
and we just don't that's an unknown quantity, right, none
of us knows that. But the potential economic loss is
being estimated at five billion dollars per day. And I think, Matt,
you and I we get collective bargaining and some of
the demands of the union seem reasonable, but some also
seem tenable, like the pay raise. I get it, especially
(07:03):
with inflation and maybe salaries not keeping up with the
rate of inflation as much as these people would like.
And I think the dockworkers have also seen, Hey, their
jobs are crucially important to our ability to function as
a society, but some of the demands also are for
job security, and they in this deal, the dockworkers want
(07:24):
the essentially no more automation with how their job is done.
And I think that's one of those things where you
kind of can't slow down technology, and if you attempt
to do that, you attempt to kind of protect your
job insulate yourself from technological shifts.
Speaker 1 (07:38):
Well, at some point you can't anymore. So I don't know.
Speaker 2 (07:42):
Kyla sc Scalen actually wrote really nicely about this in
her most recent newsletter. She said that this might be
the biggest man made disaster ever, and I think she
might be right if this persists and so, but she
basically talked about how this represents more than just a
labor dispute. She said, it's a microcosm of the law
or societal challenges we face as we navigate the future
(08:03):
of work in an increasingly automated world. And there's this
growing tension, she said, between efficiency, job security, corporate interest
in workers' rights, and I think she's spot on. There's
all these things at play and there's no simple fix
where everyone wins here. And it's amazing too. As always,
stuff is happening in the economy that we can't control,
yet we're impacted by it. I think the key personal
(08:25):
finance takeaway here is to be financially prepared, to always
be ready for the unexpected. And it's often the unexpected
things that impact our economy more than the things that
we're seeing off down the road that are easy to predict,
easy to envision. Liquid savings are always crucial no matter what.
But I think the other thing we saw them at,
especially early in the pandemic, was people hoarding, and that
(08:47):
how that makes the problem worse.
Speaker 1 (08:48):
So I would just encourage people not to do that. Yeah,
going back to what you said about having cash in
the bank, like liquid cash saving. This is why we
don't want you investing every single dollar that you have
to have some of that margin, not only from like
let's say you're on the labor side and you're you're
one of the individuals who's not working right now, Well
you're gonna need some extra cash on hand. But then
on the other side of things. If you are someone
(09:09):
who's going to be more impacted by rising prices or
the inability to get certain goods, it's going to require
you to be a little more nimble with how it
is or maybe what it is that you're purchasing. But
I think another lesson too is just sort of like
what you're saying, which is that the forward march of
progress and technology is inevitable. And this totally makes me
think of the Luddites back in England in the eighteen
(09:31):
hundreds and how they started freaking out because of what, oh, automation,
Like they're freaked out by the machines essentially, and like
breaking the machines trying to keep them from doing the work,
which it seems so silly now, doesn't it, right, Like
as we look back, when you look back and say,
what passage of time are they thinking? But somehow today
in twenty twenty four, this feels different. But I think
(09:53):
it's the same lessons perpetual human instincts. Yeah, And so
I think one of the other lessons is that the
more nimble we can be as individuals, and the more
we invest in ourselves and the more we're able to
maybe pivot in our careers and be open to the
idea that that might happen. It's certainly going to put
us in a better financial position. And I understand that
like a lot of these folks are older, right like,
they probably don't envision another career on the horizon for them. Yes,
(10:15):
they're trying to get whatever it is that they can.
But for the rest of the folks out there listening
to this show, at the very least, that approaching your
career with that frame of mind, with that attitude, would
be incredibly beneficial.
Speaker 2 (10:26):
Yeah, and we're hoping for a quick resolution on this
front for all of us and for those bananas to
start flowing again. Math can't go too long without them.
Let's talk about travel for just a second. Let's talk
about win tu book holiday travel specifically. There was good
news when it came to falling gas prices, although war
in the Middle East is starting to send gas prices
(10:48):
northward again. But there's been also a lot of competition
in the airlines space. So we have seen lower fares
happening in the airline industry this year, which has been
great for anybody who enjoys traveling. Still, flying during the
holidays can cost you a lot more than if you're
just picking normal travel dates in the fall or something
like that. Right, So, being extra careful and planning when
(11:10):
you book your travel accordingly can help you save a
lot of money. And the booking site Hopper recommends booking
flights over the next couple of weeks in order to
get the best deal on that airfare. Specifically, they cited
October fourteenth as the date that you can expect prices
to start going up for Thanksgiving and Christmas travel. Google
had similar findings recently too, but they actually said that
(11:33):
the back half of October might be the best for
booking Christmas travel. I think it just makes sense to
start looking now and to start setting fair alerts for
travel dates that you're interested in flying and if you're
willing to annoy your family a little bit, the family
you're going to visit flying on Thanksgiving Day and Christmas
date itself and Christmas Eve too. Matt, I was looking,
(11:55):
Hey can you come.
Speaker 1 (11:55):
Pick me up twenty fifth? Well, yeah, yeah, that morning.
Speaker 2 (12:02):
Think anything else going on? Right, and you'll be so
thrilled to see me. It'll be worth driving to the airport.
But it's amazing how much money you'll be able to
save if you fly on those dates. Specifically, if you
fly on the dates near and surrounding Thanksgiving and Christmas,
you can expect to pay a whole lot more. And actually,
if you can maybe wait a few more days on
the back end, so instead of flying back from Thanksgiving
on that Sunday or Monday, let's say flying back on
(12:23):
that Tuesday instead, you might save a good bit more
as well. So, as always with travel, the more flexible
you can be, the more money you might say.
Speaker 1 (12:31):
That's right. Speaking of travel Southwest, they've announced some of
the specific seating changes that they're going to make. Basically,
the cattle call boarding arrangement that they have held until now,
it's going to be scuttled in favor of assigned seating
next year. Boo.
Speaker 2 (12:49):
It's always been weird. I've never quite understood it, but
I do it, and it's what the cattle call. Yeah,
like that's just how they do it.
Speaker 1 (12:56):
I know it is. It's kind of it's part of
it's weird, or it's more equitable for everybody to be
able to have a more affordable ticket. So it depends,
especially with those most early flights. Matter.
Speaker 2 (13:06):
If I don't wake up in time to book on
the app because you want to do it right at
twenty four hours in Advanda, part of the A group
and you end up out the B or C group
C twenty nine and you're obviously they're so they're doing
this in order to increase revenues. And what this means though,
is that Southwest is just going to end up looking
like every other airline out there. And I'm bummed and
(13:28):
I'm booing because it means that, in my mind, there's
there's less differentiation between Southwest now and some of the
other other airlines. Because yes, this does mean that some
Southwest flyers are going to be able to get a
better seat.
Speaker 1 (13:38):
But if you are more price sensitive, maybe one of
the reasons that you've gone with Southwest is because you
don't care about which seat it is that you're that
you're looking to book, and you do have the time
or the ability to get there sooner. You got time
on your side, and so it's a way that you can,
you know, get a pretty decent seat for the same
amount of money. But now chances are you're probably gonna
have a crumby seat because you didn't pay up for
(14:00):
that more expensive seat.
Speaker 2 (14:01):
Yeah, if you don't want to end up in the
very back of the plane, in the middle seat, you're
gonna have to like fork over more money to book
a fancier seat right next to the bathroom. I really, yeah, exactly.
I don't love necessarily the way that kind of modern
airlines have divided up the seating arrangements in order to
like get us to fork over more money. And you
know what, I'm I don't know. I get why they're
(14:22):
doing it, and it's gonna increase Southwest revenue. But one
good thing at least is that they're going to leave
the two.
Speaker 1 (14:28):
Free checked bag.
Speaker 2 (14:29):
At least that is a differentiator, and that's something it'll
save people money. I try not to check bags unless
I'm bringing beer home from a random destination, because that
is like the best way to get beer back from
wherever you're visiting is to check it. And I can
still do that at least for free on Southwest, So thank.
Speaker 1 (14:44):
You for that. The number one thing that all airlines
need to do is in order to speed things up,
why don't they board from the back to the front.
I don't know the fact that that is just the
most mind boggling thing that makes zero sense to me.
Speaker 2 (14:55):
It's literally even to people who are sitting in the
front of the plane board first, and then everybody has
to wait for them.
Speaker 1 (15:00):
To get the cycle passed through everybody, like, even if
that's putting a door like in the back of the
plane and just have the first class people walk all
the way through boom like. But it just drives me
crazy to think that all as far as I know,
all airlines do that. Man, you could be an airline executive,
you could see an airline consultant. That's right.
Speaker 2 (15:19):
You can fix our issues in the snap of a finger. Well,
and speaking of travel, timing is of the essence when
we're talking about booking travel. Well, there's other good news
on the travel front about online passport renewal. It's back, baby,
and it's back on a permanent basis.
Speaker 1 (15:35):
Matt.
Speaker 2 (15:35):
We talked about this when I tested it out, when
the State Department basically said, hey, listen, you can you
can try this online passport renewal. But it didn't it
didn't last long, it didn't live on the site for long.
I took advantage of it, and it was really nice,
Like it saved me time, annoyance and hassle, and so
if you have a passport and it's about to expire
or it has expired within the past five years, you
(15:56):
too can now renew online instead of going in person,
which is just an exercise. We're used to doing everything
online these days, but for some reason, this was something
that was still left in the stone age, speaking of ludites.
And this is going to save you time and annoyance
renewing your passport. It's still going to take roughly six
to eight weeks to get that passport back in your hands,
which actually isn't bad because for a while there was
(16:19):
taken a whole lot longer because the state Department had
a backlog. But yeah, it just feels like it's about time,
but still plan accordingly. And then there are some people
mat who still aren't going to be eligible to renew online.
That is first time applicants and children. So if you're
under the age of I forget sixteen, Like I think
my nephew when he was fifteen, they were going to
renew his passport and they're like, wait, let's wait, because
(16:40):
when you renew a child's passport, it only renews for
an extra five years, but once they become an adult,
and I think that's technically sixteen sports.
Speaker 1 (16:48):
I didn't know that. Then you can get the ten
year passport, which is smart. It's a better deal. It's
what you want to do, and it makes sense that
you have to if you're going to get a passport
for the first time. I get having to go in
person just to verify who exactly you are, but also
so don't wait until the last minute. I don't think
we've talked about this. I had a chance to go
out of a country with one of the kids. It
didn't end up working out, in part because of all
(17:08):
the hoops that we would have had to jump through
because we didn't have a passport yet for any of
the kids. And I was tempted to spend a large
amount of money to make that expedited, to make that
thing well not just expedited, but so there's expedited yet
standard expedited. And then you've got urgent, which is if
you're looking to travel in two weeks or less. And
ay not everybody has the ability to get to one
(17:29):
of the passport centers that handles these urgent requests. But
also it costs a ton of money and there are
a ridiculous number of hoops that you have to jump
through to make this happen, So you don't want to
find yourself in that situation.
Speaker 2 (17:39):
Well, the other thing people don't realize oftentimes Matt too,
is when they're traveling and their passport is going to
expire soon, but they still think they've got time. Well,
typically countries that their lines won't let you fly and
the countries won't let you in if you don't have
at least six months left on your passport from the
date of departure from leaving that country. So make sure
you've got that.
Speaker 1 (17:59):
The passport doesn't expire six months prior to you leaving
that comany.
Speaker 2 (18:03):
It's basically like a false expiration day, which is kind
of frustrating, but that's how it works. So all right,
we've got more to get to on this episode, of course,
including kind of some breaking news about student loan forgiveness.
We'll talk about that and more right after this.
Speaker 1 (18:23):
All right, let us continue with the Friday flight, and
of course, Joe, we've got our ludicrous headline of the week.
Let's get to a story from the Wall Street Journal,
and the headline reads, robinhood touts rock bottom fees for
options trading. Then come the hidden costs, and you might
be thinking to yourself, I thought trading on Robinhood was free.
I remember dabbling a little bit back, you know, back
(18:45):
in the day.
Speaker 2 (18:45):
Fourth day of the company that changed the ball game
the way things were done. They up in the entire industry.
Speaker 1 (18:50):
Well they did. They completely eliminated the fee per trade
that investors were used to paying. But they've got to
make money somehow, and so the way that robin Hood
makes money is they try a spread. It's the difference
between the buying price and the selling price, and that's
what they pocket. And specifically on options trading, which isn't
something that we are fans of nor that we would recommend.
(19:11):
But that being said, with options trading, it is far
more expensive than other brokerage firms. This is according to
new data from a handful of finance professors. They specifically
found that Robinhood takes nearly seven percent of the dollar
value of options transactions, which is far above the rest.
I think the Suddy found that Vanguarden Fidelity no surprise
(19:33):
there that they are much cheaper. But even still, I
even hesitate sharing that because I don't want people thinking, oh,
that's where I need to go for my options trading,
because the moral of the story is we don't want
you to trade options. We don't options trading focuses on
the price that you're paying. And this is like dare
I say, one instance, Joel, where we want folks to
be price insensitive, right like we want like our friend
(19:55):
of the show, Nick Midulie, he says, just keep buying
when it comes to investing for the long haul, when
it comes to investing for your retirement, we don't really
want you to pay attention to what the prices on
that index fund. Just keep buying. And in the case
of options trading, that's not something we want you to
do anyway, that's right.
Speaker 2 (20:11):
Yeah, so don't trade options. Definitely don't trade options on
Robinhood And yeah, but.
Speaker 1 (20:16):
You don't have to say that because we just said
don't trade options right now.
Speaker 2 (20:19):
And then it's amazing when you're talking about when something
seems free, it's wise for you to ask the question,
how is this company making money?
Speaker 1 (20:26):
Like Facebook? Okay, cool, it's free for me to use Facebook.
How are they making money? And that at least they're
doing it somehow, it's worth asking the question and trying
to figure that out. Because it might impact you negatively.
A quick bit of good news on the investing front, though,
map in front of the show. Josh Brown, who was
on recently, he highlighted this in his newsletter, and I
thought this was worth sharing. Gen Z is starting to
(20:47):
invest earlier than basically any other previous generation, which I
guess makes sense in a lot of ways with four
h one k's and automatic enrollment and the apps essentially
at our finger to There was this survey by Charles
Schwab and it found that that gen Zers are starting
to invest at age nineteen, whereas the average boomer didn't
(21:08):
begin investing until their mid thirties. So we're talking about
something close to two decades of a big, a little
difference more time that you have in the market. Covid
obviously had a massive impact on that. I think stemmy
money combined with staying at home, plus newfangled apps like Robinhood,
which we just talked about, it made investing more approachable,
It made it cheaper, and kind of made it more
(21:29):
fun in some ways, which we're not necessarily paper of
all of those things, but with the extra dollars floating
around and nowhere to spend them, a lot of gen
Zers were like, why don't I start getting on the
investing ball game, So there is a silver lining to that.
The coolest thing to me, though, is about this, you know,
age disparity of when when people are starting to invest
now is that there's just yet, like I said, so
(21:50):
much more time. There's like sixteen extra years for gen
zers to experience compounding than baby boomers had. And we
all know, we all know time in the market is
clutch in the wealth building process. Having that extra time.
Speaker 2 (22:03):
Because you're starting earlier is huge when it comes to
the final amount of money you have as you get
closer to those retirement years.
Speaker 1 (22:10):
That's right, man. Let's get to some student loan news.
There is a massive chunk of folks out there that
have student loans who haven't made a payment in years.
And if you're not current on your student loan payments
at this point, you need to make sure to change
that quickly. And that's because not paying on time can
now impact your credit score. We had a multi year
(22:30):
payment pause because of COVID, and even though payments were
set to begin again last fall, there were no consequences
for not paying on time. Like the payment pause was lifted,
but still we're not going to ing yet. Yeah, we're
not going to ing your credit score. Interest. It's still
been accruing for student loans over the prior year. But
as of the beginning of this week, student loan servicers
can now report your late payments to the bureaus, which
(22:53):
obviously you can have a meaningful impact on your credit score.
So just a heads up, log in, get current, make
sure you are not harming harming future you, especially if
you're someone who also happens to be house shopping.
Speaker 2 (23:04):
I mean, well, yeah, exactly. We talk about the impacts
of a ding credit score mat and just you know,
fifteen twenty points down on your credit score because you
a couple late payments because you didn't realize now that
the moratorium on reporting your late payments to the credit
bureaus was over, Well, that can impact a whole lot
of things. Could impact what you whether or not you
(23:24):
get the apartment you want to rent. It can impact
how much you're paying for car insurance in most states,
it's a big deal, so make sure you know that.
And obviously there was an ample reason for the initial
student loan payment pause, but making it an ongoing thing
I think alongside the promise of forgiveness that never materialized,
I think it set a lot of people up for failure.
Speaker 1 (23:43):
Matt.
Speaker 2 (23:43):
People are probably like, what student loans, I didn't realize
I had a payment even.
Speaker 1 (23:47):
Though I thought those were gonna get kicked to the curve.
Speaker 2 (23:49):
Yeah, like it was a long time ago since I
had to make actually make it a payment. And there's
this deprioritization of student loans that happening in a lot
of homes around the country, hoping that they would go
away completely, but they haven't. And so if you're one
of those people who had an out of sight, out
of mind approach to your student loans, it's time to
put that back on the front burner in your budget. Prioritize,
(24:11):
prioritize that fine room for it. And it's also important
to note you might have seen breaking news yesterday about
a judge saying that the Biden administration can now move
forward with student loan forgiveness.
Speaker 1 (24:22):
Matt.
Speaker 2 (24:22):
This is one of those things where I think people
are going to see that headline and they're going to say, oh,
student loan forgiveness is back on, and what's the ultimate
resolution going to be? Are people actually going to receive
forgiveness for their student loans. I don't know, you don't know.
This is still a political point, right, This is still
a political and legal football. So I would say, yeah,
take that headline with a grain of salt. Maybe at
(24:43):
some point some sort of student loan forgiveness will come
to pass. That's anybody's guess for the time being. Don't
neglect your student loans. All right, let's talk about where
it is.
Speaker 1 (24:53):
That you bank, Joel, not you specifically, but oh for
everyone out there. I was going to give the laundry
list of banks that I have a relationship with. Mat
you're a fan of Discover, That's that's where I send payroll.
Should I be sharing this? Are folks going to talk
my account number and rounting number? Yeah? No. Vox they
just published an article warning people about using different apps
out there like Venmo as they're checking account. A recent
(25:16):
study found that a third of gen Z and millennials
are using different fintech apps out there for their banking,
and depending on the app, depending on the software, because
you know different, some of these newer banks, they're not
the worst, it's not a terrible thing. But if you're
using cash app. If you're using Venmo as your primary
place for money storage, well that's not good. That's bad.
(25:38):
Venmo and cash app they aren't banks, and they're not
paying you anything on money that remains in their possession.
The more money you have sitting there, the more it's
missing out on better returns that you could be getting elsewhere. Certainly,
those platforms can be great for sending your friends some
money to cover an expense, maybe getting cash to pay
for a class teacher gift where everyone's piling their funds together, right,
and most great for that, but they're also more socattle
(26:00):
to scams. We bottom line, want you to use Venmo
apps like Venmo, cash App, even PayPal the way that
they were intended. And that's the thing we say intended,
because they want you to keep your money. I love
them because then you know, obviously they're able to earn interest,
and I want to keep my Venmo cast balance at
zero exactly. Yeah, they're able to pad their profits.
Speaker 2 (26:22):
But so I was because I can still make a
payment and it'll take it from my bank account, which
is awesome. And so when money comes into my Venmo account,
guess what I do. I immediately ship it off to my bank.
Speaker 1 (26:30):
You know what's funny is that even recently I was
making a payment or no, we have our business PayPal
account that we don't partially ever use, but occasionally certain
vendors will send us money that way, and I saw
some in there. It's just a couple hundred bucks, and
I was like, oh, we need to get this over
to our checking account. And they even prompted me and said, hey,
are you sure you want to move that money over
just in case there's a refund that you might have
(26:51):
to issue. So they're basically coming up for reasons for
them to hang on to your money. It's a little nefarious. Yeah,
I think this analogy might help and maybe think through
Like imagine you come home for the grocery store. You
dump all of your groceries on the counter. Your bananas, Yeah,
not your bananas, because they're floating off short of it
and instead of putting them away where where they belong. Instead,
you are living like a bachelor and you're leaving all
(27:12):
your food just sitting there. You're not organized. It's a
problem because the cold stuff isn't cold. It's not in
the fridge. Your ice cream is melting, it's not in
the freezer like it should be. The non perishables aren't
in the pantry, and let's say you want to make
a big meal, you've got no meson plas, like you
have no room on your counter to know what it
is that you should be doing with the different things
that you've purchased. Matt likes to use French, fancy French terms.
(27:33):
I don't want to said faux pas. So that's one problem.
But I think another problem with it as well is
the fact that imagine you're walking through your kitchen and
all that food's sitting there, what are you gonna do.
You're gonna think, oh, I might want to snack on
something right there, when otherwise you're not even hungry. But
the reason you're doing it is because it's there, it's accessible,
and that's I think some of the problems with keeping
(27:54):
money in these apps is it's too accessible, and especially
when we are sometimes getting different requests via people, we
think we know there's just too many opportunities for us
to be parted with our money, and so keeping a
minimum amount of money in some of those different apps
is what we would recommend.
Speaker 2 (28:09):
I agree, yeah, and you're not doing yourself in it.
You could still make payments with Venmo not having any
money in your Venmo accounts. That's the way it's set up.
So using Venmo as like your bank is a bad idea.
Speaker 1 (28:21):
Yeah. They make it so easy though, that's the thing.
And when you start getting sloppy with your finances, yeah,
I think you're going to be more prone to lose
your money. Yeah, well, okay.
Speaker 2 (28:28):
On the note of banks, Reuters reports the Bank of
America is going to open a bunch of new branches
one hundred and sixty five over the next couple of years,
and then they also mentioned that Chase is planning to
open five hundred new branches over the next three years.
So the giant banks in this country mat they're only
getting bigger. And I might, as a millennial, say, that's
(28:48):
a really dumb strategy. Do people really brick and mortar anymore? Well,
I think actually the strategy is working. So there's a
reason that these are the biggest banks in existence. And
then people continue to use them. And apparently eighty percent
of Bank of America checking accounts still get opened inside
of an actual branch location, not on the Bank of
America website. I would not have guessed that I would
(29:10):
have guessed it was like forty percent, but it's eighty percent.
But just because you see the branding of these banks
every time you're driving your car watching a sporting event,
because they advertise all over the place. They even advertised
the sporting arenas that are being played in, it doesn't
mean you do business with them. The billions of dollars
that these banks are spending on building out these brick
and mortar locations, they are creating some converts. But we
(29:32):
don't want you to be one of those converts. And
we're going to keep stressing this because we always do.
This is something we.
Speaker 1 (29:37):
Care a lot about.
Speaker 2 (29:38):
Online banks are the best of all worlds essentially, Matt.
You mentioned that I bank with discovered that's one of them.
Capital One has a great online banking account. Ally is
one that you've done business with for a long time.
Those are some of the bestli banks. Yeah, classic, that's right.
There's some great ones out there. Do business with those.
Don't do business with the giant banks, even though they
might have a commediate location.
Speaker 1 (29:59):
All right, Last, but not least, I'm not sure if
you notice, Joel, there was a vice presidential debate on Tuesday,
hard about that. It was.
Speaker 2 (30:07):
It was actually fairly civil. I watched a little bit.
I was shocked to see that. It's a breath of
fresh air. It was to see folks focusing on policy
versus like personal stuff. But what we wanted to mention
is that economists they basically hate all the presidential economic.
Speaker 1 (30:21):
Proposals pos on both your house. Yeah, yeah, a vast
majority of voters. Of course, they're going to love to
hear that tips they will be taxed, price gouging the
grocery store, that that's going to be held accountable, that
they're going to be stiffer tariffs, maybe even that credit
card interest rates that they're going to be capped at
ten percent.
Speaker 2 (30:38):
All those things. As an individual voter, you might say, no,
that sounds.
Speaker 1 (30:41):
Nice, But almost no economists agree that these policies are sound,
and most folks probably aren't listening to economists. But we're
gonna line up with them on this one. Let's be honest.
Speaker 2 (30:51):
I don't sometimes economists can sound boring, Matt, So maybe
maybe we need like some icy economists that are a
little more fun.
Speaker 1 (30:57):
Sounds like there's a need in the market applying demand.
That's an economist joke, Well, just a law of the land.
But we wanted to, I guess highlight this because the
different promises that get touted in a some speech, they
might sound nice, that many of them just they're just
not practical, they're not possible, or if they are possible,
they would just open up a massive can of worms.
(31:20):
And we're just living in this era of bipartisan tone
deafness when it comes to economics and what the different
kinds of spending that our nation is likely like striving
after it, Like on both sides of the aisle, there
seems to be an ignorance or a denial of reality
of what that's going to do to our country.
Speaker 2 (31:37):
Let's talk about the domino effects of a policy like this,
Like what would happen if we actually implemented some of
these policies that both candidates are proposing, and at least
on the money front, there'd be a lot of negative
consequences I think.
Speaker 1 (31:47):
Of at least some of these policies.
Speaker 2 (31:49):
And Yeah, when you see the disparity between what individual
voters think about those proposals and what economists think, it's
shocking because like seventy eight percent of voters might say, oh,
I think that policy sounds good, and like eight percent
of economists think it's a good idea, and so I
think it's not that economists run the world or should
run the world, and not that they are the smartest
people in the room necessarily, but a lot of what's
(32:11):
being proposed doesn't make much sense.
Speaker 1 (32:13):
Yeah, I think that's why you and I, if we
align with any party, it's the Libertarian Party, which unfortunately
doesn't seem to be getting anywhere, but because of the
fact that they're looking to have less government spending. Talk
about weirdos.
Speaker 2 (32:24):
Though there's a lot of weirdos in the Libertarian parties team,
there are which you fit right in.
Speaker 1 (32:28):
Yeah, I would. We've got a quick newsletter referral shout
out to Megan C. Megan, thank you so much for
referring the newsletter to friends or family, those who you
care about. And if you have no idea what we're
even talking about here, head to how Tomoney dot com
forward slash newsletter, where every Tuesday morning you can get
an email in your inbox with helpful money earning, saving
(32:50):
and investing advice and Joel guarantees that you'll be glad
you did all right, So that's gonna be it for
this episode, Joe, until next time. Best Friends Out, Best
Friends Out, BEFO
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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