November 22, 2024 • 34 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: car stereo hacks, auto IRAs, abysmal hedge fund returns, Travel Tuesday, unlimited vacation clubs, gave up the Spirit, skiplagging to save, sports betting problems, no thanks Tropicana, retail return hassle, deferred interest on store cards, and the rise of second hand gifting.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How the Money.
Speaker 2 (00:01):
I'm Joel, I'm Matt, and today we're talking about auto iras,
travel Tuesday and sloppy Seconds.
Speaker 1 (00:27):
Not auto iras as in car or truck iras, Automatic
iras right, automatic for the people, Joel, this is in
fact our Friday flight, and we're gonna hit all the
most important headlines that we think pertain to your personal finance.
Speaker 2 (00:40):
You're an RAM fan, right, that was a name one
of their albums, Automatic.
Speaker 1 (00:42):
For the People.
Speaker 2 (00:43):
Well, you know where that came from, from your college
town of Athens, Georgia.
Speaker 1 (00:46):
Yeah, we were D's the meeting three. I'm still around.
I actually I haven't been back to Athens in years,
and so I personally can't speak from experience as to
whether or not that's still there. But it was this
lod spot back in the day, especially for someone like me.
I was the I don't think I ever went there. Oh,
you would have loved it. You would have loved I
mean just like the combination of Southern food mixed with
(01:07):
music and culture and man, yeah, I'm sad that it
sounds like my it's not there. I'm sad that you
never that you've never made it. But if not if
it's still there, then we should totally hit it up.
I'll look it up. Uh, what you want to talk
about first, Joel?
Speaker 2 (01:19):
Okay, So we got an email from a listener this
week and we're I guess we were talking recently about
are the older cars that I my accurate in particularly
the two thousand and five. I can't really listen to
music in there. I like literally just play it for
my phone. Oh yeah, instead of like playing it through
my sound system because it's so antiquate.
Speaker 1 (01:38):
Well, you were literally using your your phone speakers, yes,
when you said okay, I'm like, I put it from
my car too.
Speaker 2 (01:43):
No, I'm literally playing it through the speaker on the phone.
And you may as well just like keep your earbuds in.
I know I probably should. Well sometimes I've done that
before too, but I don't know if that's that data. Yeah,
probably there. So listener Matt he emailed and he said, actually,
what you should do is just get basically a new
head unit for an older car. It's a couple hundred bucks,
especially stereo system. Yeah, especially this time of year, some
(02:05):
of those discounts from best Buy kicking in, and you
maybe get a free install or something like that, and yeah,
I don't know if I'm going to or not, but
I do think that's a good recommendation. And I think
for some people and set because that is one of
those things were like, ooh, that upgrade and make a
big difference in my life. And maybe you keep fixating
on that, and maybe maybe you.
Speaker 1 (02:21):
If it moves the needle for you, maybe that's enough
to keep you from getting a new vehicle exactly.
Speaker 2 (02:25):
And I think some people would say that's so important
to me. I think I'm going to kick this one
of the curve and get a new one. But there's
a whole lot more costs involved with upgrading your vehicle
than there is just putting in that new head unit,
So yeah, are you going to do it?
Speaker 1 (02:36):
Are you going to keep an eye out for some
deals over the next one?
Speaker 2 (02:39):
I might look around because honestly, being able to play
my favorite music through the car speakers would be a
big win. And I don't know how long I'm going
to have this car. That's like the thing, I'm not
trying to necessarily run it into the ground.
Speaker 1 (02:51):
Case. Do you get a Bluetooth speaker and just set
it up on your dash and just kind of blast
it through then I would look real ratchet. Then you
can plug it straight into the cigarette power unit as well,
so it'll never run out of power. Well, that's the
ultimate frugal hack. Instead of getting something a stereosystem it
looks a little ridiculous that you can only use while
you're in the car. Get you something that you can
(03:11):
take with you, all right, like like on a picnic.
I don't know.
Speaker 2 (03:14):
That doesn't interest me because I think it would look
a little ridiculous and it wouldn't provide quite as good
as sound either.
Speaker 1 (03:19):
You could you don't have to set it up on
the dash, you can set it down there, you know,
next to the shifter or whatever. I'll consider that the problem.
I totally hear what you're saying, though, you're talking about
not wanting to make that upgrade because of how much
value residual values left in the vehicle.
Speaker 2 (03:35):
If I'm just like, oh, I'm going to try to
own this car for the next five years, I'd be
willing to drop in the two hundred bucks, get three
hundred bucks even and say great, baby, yeah I would.
Speaker 1 (03:43):
Because you think you could get for it right now.
Speaker 2 (03:45):
The vehicle I'm gonna say thirty five hundred bucks.
Speaker 1 (03:47):
So you're talking like almost ten percent of the overall
cost of the vehicle in stereoss.
Speaker 2 (03:52):
But if I'm holding on to it for for five years.
Speaker 1 (03:54):
And you're going to hang on to it, I'm with
you one hundred percent. But that also means making all
the other repairs on it that you're probably neglecting, like
the windshield. You got some hate milk for that, talking
about how you need to get that windshield replaced because
it's got that big, old nasty crab, but it's not.
I don't know.
Speaker 2 (04:07):
Maybe I'll take a picture and post on Instagram or
something like that. But people were, like somebody in the
in the in the Facebook group said something like dude
with his net worth, like he should be doing that.
But the whole way you grow your net worth is
by not doing it stuff.
Speaker 1 (04:19):
But it just depends, Like I totally agree, because if
you are going to keep the thing around, if you
are going to drive it into the ground, if you
are in it for the long haul, you gotta you
gotta get the new tires. You may as well go
ahead and get the brakes turned or whatever. That way
you're not eating into the rotors, get the timing belt
was the last time the timing belt's been changed, because
if you don't do that, you'll literally total the vehicle
(04:40):
because of the cost to repair the engine sure if
it goes out, and that's not I mean, that's crazy expensive,
but worth it if you want to keep driving. I
say that because how much was it? It's like eleven
hundred bucks, I think, And that included an old change.
I did that last month. Not cheap, but now I
know that man are obviously it's going to be good
for another seventy five one hundred thousand miles.
Speaker 2 (04:59):
I just think I think more than anything, this is
not just a good recommendation for car owners, Like what's
the thing you can do to enjoy that car for longer?
So that keep prevents you from buying something newer? And
maybe like stops you from looking like browsing. But there's
got to be other things in life like that too,
Or is there something you can do.
Speaker 1 (05:19):
There's something that rises to the top that bothers you
game most?
Speaker 2 (05:22):
Yeah, what can you upgrade in your life at a
reasonable price that prevents you from making a more expensive upgrade?
So I like Matt's suggestion, and I think maybe we
can take that to another degree and say, what else
in your life can you upgrade in a small way
that prevents you from upgrading in a massive way.
Speaker 1 (05:36):
The problem is it's a bunch of little things typically,
because what would you say if you had to make
some upgrades to your van? What would it be? Because
we were recently talking about that grill piece on the
front of you, Evan the pop off, and you're like, oh,
give me because mine did as well, but the mechanic
glued it back on. But I was like, it's only
sixty bucks, and you're telling me to get one for
you as well, so you can slap it on there.
It's all the small things all added up together that
(05:59):
oftentimes think makes it difficult to pinpoint one single thing.
But I'm with you.
Speaker 2 (06:03):
If there is I find it a few small things
to my van and just literally put in a few
hundred bucks, I'd probably be like, you know what, you'd probably.
Speaker 1 (06:08):
Feel a lot. I feel at about it, yeah, but
it's just what is it about it?
Speaker 2 (06:11):
There's a scratch on the side that my dad put
on it, and I'm like, oh, if I repaired that
in the exterior, maybe yeah, something so I don't but
I think like maybe sometimes what those things are, you
might see that and you say, time to kick this
into the curving.
Speaker 1 (06:24):
That's what we don't want folks exactly. All right, Well,
we're talking about saving money by not spending it. One
of the other things you can do with your money, Joel,
invest your money. More states are now working to help
the residents save for retirement via something called auto iras.
There's a recent report from Pew that finds that tens
of millions of Americans who are employed in the private
(06:45):
sector that they don't have access to a retirement account.
And if you don't have access through work, you know,
you might go sign up for an IRA with one
of our low cost favorites out there, Vanguard Fidelity, even
Charles Schwab. But many folks don't do that.
Speaker 2 (07:00):
Is that takes some gumption, right to go out there
and make that happening on your.
Speaker 1 (07:03):
Own, kind of like making all these small little fixes
to your vehicle, Like I don't know, you got to
want it badly enough to make it happen. And so
some states are stepping in to bridge the gap. Some
of those employers who don't offer a four one K
plan are now required to offer this IRA that's run
by the state, and it includes automatic contributions of three
to five percent. That's typical. Ten states are now doing this,
(07:26):
seven more are going to follow suit soon, and dude,
it's working. There's an amazing amount of money in there,
something like one point seven billion dollars, which is really impressive.
And I think this is great because on average, when
you've got Americans who are struggling to save for retirement,
I think the easier that we can make it, especially
for folks who don't have access to an account at work,
(07:47):
a four to one k I think this is a
good thing. Yeah.
Speaker 2 (07:50):
Man, This is kind of like if you're a government
employee or you serve in the armed forces, you have
access to something called the TSP, right and there's been
talk over the years about hey, what if we made
just the TSP available to everybody in America? And this
is kind of the equivalent of that, because I think
a lot of people know that, hey, iras exist, I
could go out and do this, but if it's not
(08:11):
something that's offered through their workplace and isn't deducted from
their paycheck, they're less likely to go out there and
actually make it. Happen. So I like kind of making
it easy for people. The easier we can make it
for people, the more likely they are to do it right.
And since we started out of money, since we began
this podcast, we've always said that investing doesn't have to
be complicated. That the more we ratchet up the difficulty
(08:35):
level of what successful investing look like looks like, the
less likely people are to actually do the thing and
to start investing. And in fact, we've always said that
the more complicated it gets, typically the worse returns.
Speaker 1 (08:48):
Tend to get.
Speaker 2 (08:49):
And there was this recent article in Bloomberg and it
highlighted the difference between returns from hedge funds and overall
market returns this year. And although I will throw this caveat,
in hedge funds often they're not attempting to maximize returns.
They're using hedge tactics to reduce downside risk. But still,
on average, and this has been true for years and
(09:11):
years on end, they underperform what the total stock market produces.
Speaker 1 (09:15):
Yeah, I was gonna say you could. You could probably
substitute hedge funds for actively managed funds as well, and
you're gonna see smilar results.
Speaker 2 (09:21):
Exactly well, and that's before too accounting for the absurd
fees that they charge. And so here's a line from
the article that I've like kind of struck me. It said,
these higher fee strategies have proved too complex for their
own good, either by diversifying bets across the stock market
or shorting week looking companies.
Speaker 1 (09:41):
And so, as.
Speaker 2 (09:41):
Always, our advice is to buy the whole stock market
right at the whole basket of stocks, at the lowest
cost you possibly can. If you're in the wealth building
phase of your life, and if you're being told that
you need fancy and expensive funds or tactics, it's just
not true. And when you look at the people who
are engaging in that, these folks who probably dress in
fancy suits and work in the financial district of Manhattan, well,
(10:06):
they're not doing as well as a lot of everyday
normal investors just taking that basic approach of putting money
in continually, week after week, month after month, just funneling
do into the stock market.
Speaker 1 (10:16):
That's true. Yeah, don't you get the impression too, that
like the elite class of folks in the investing in
personal plan space, that they're over complicating things with like
they're justifying their own existence essentially through all of these products,
because like the message really isn't all that different, like
day after day, Like we try to cut through all
the all the junk, all the bs to point people
to like the healthy behaviors that they should be doing.
(10:38):
And I don't know, maybe it gets monotonous yea, and
folks out, maybe they tune out. But when it comes
to some of these investing products, like they have to
find new, creative, inventive ways to find diversification and try
to outperform the market in order to justify their fees.
Speaker 2 (10:52):
And I think it's always helpful to highlight these things
to say, oh, it seems really sexy, like, oh, I'm
a hedge fund manager, Like does it if you met
somebody who's a hedge fund manager?
Speaker 1 (11:00):
Sounds cool?
Speaker 2 (11:00):
You're talking to me slightly awestruck, and you'd be like, oh, yah,
tell me more about that. But the cooler thing is, Hey,
I addressed a lot of money in index funds, and
guess what, I'm building wealth and I'm getting rich.
Speaker 1 (11:10):
The cooler thing is to have the actual money.
Speaker 2 (11:11):
Yeah, And I'm sure some of those people have lots
of money, but they would have more. They just taken
the index mound approach.
Speaker 1 (11:18):
Joel. It's the time of year where retailers are discounting
in order to win your spending dollars. Is talk about
some of the deals that we're going to come across,
because it's not just TVs and toys. Travel is getting
on the price cut action as well, and in the
coming weeks you might find some sweet travel deals coming
your way. Specifically, if you are looking to book on
travel Tuesday, this is a way for travel companies to
(11:41):
boost their bookings at it's time that tends to be
a you know, there's like a lull in the market,
similar to a Black Friday. It's now more of an
extended event as opposed to just actually taking place on Tuesday.
But that being said, if traveling more is a part
of your twenty twenty five budget, and if it's something
that you want to do well, looking during the week
of in the week after Thanksgiving, it can help you
(12:03):
to snag a deal. And so the best deals, according
to a recent piece over on McKenzie's website, are of
course flights, but then cruises as well as package travel
deals too.
Speaker 2 (12:14):
Yeah, we're already seeing some of those travel bargains rolling
out even though travel Tuesday isn't actually doesn't come about
for a couple of weeks. And Matt, you mentioned package deals.
Some of those can be really good deals. But then
there are other things that kind of sound like they
might be a great package deal and they're actually exploitative,
and they could be like the worst deal you've ever encountered.
(12:35):
And I'm talking about something called vacation clubs, and they
are a twist on time shares, a kind of a
new twist on timeshares, because boy, if you call something
a timeshare now, people are kind of tipped off.
Speaker 1 (12:47):
Red flag.
Speaker 2 (12:47):
Wait a second, I've heard something bad about time shares
in the past, But if you call it a vacation
club and you rebrand it, people are saying, oh, vacation
clubs sound so much better. I haven't heard bad things
about this, but you're gonna hear something bad it now.
There was this New York Times report and it found
that people are paying tens of thousands of dollars to
join these vacation clubs based on a sexy pitch and
(13:10):
using name brand recognition from a company like Hyatt Ooh,
come get this Hyatt vacation club them. I've heard of Hyatt.
They wouldn't steer me wrong. They wouldn't completely steal my money,
would they. Well, these pitches are being made while they're
also applying the people who are receiving the pitch with
lots of alcohol, and we know that alcohol harm decision making.
I like drinks, yeah, but maybe not combined with like
(13:32):
tens you're saying all the things I like, Joel, maybe
not combined with a decision that could cost you tens
of thousands of dollars. Right, And then consumers they're finding
that the fine print after they've signed up for one
of these vacation clubs, it makes the investment that they've
made I use investment loosely, it's made it worthless. And
so the pristine promise that's been delivered in the pitch,
it doesn't live up to the reality that you encounter
(13:54):
on the back end. If you buy into a vacation club,
you don't actually really own it an you don't own
any real estate. You're buying discounts for future stays, but
blackout dates and other unfulfilled promises diminish the value to
being almost worthless. So timeshares are a problem because they're
(14:14):
really expensive, they're hard to unload, they're basically worth nothing
after you buy them. It'd be better you'd be better
off buying a used timeshare for very little, because people
will sell them for literally pennies. And you might hear
a pitch for a vacation club. It's eerily like a timeshare,
and it will similarly cost you big bucks.
Speaker 1 (14:31):
I think oftentimes what you're paying for is like the
access right, Like people are allured by the exclusivity of
some of these different clubs, and you kind of get
sucked in that way. It makes me think of there's
been a trend I've noticed recently two of smaller businesses
doing like these small business pop ups, and they charge
an upfront cost or upfront fee to even shop at
(14:52):
the pop up, and I feel like it's drawing on
the same sort of like limited time only the exclusive
nature of the ability to shop here and if you know,
like you may not even buy anything. But also it
includes a drink, and so it's a similar tactic. And
I don't like, I'm all for small businesses, but what's
great is that the market will decide whether or not
(15:12):
these things are going to be successful or not. But
I think it's just important to highlight some of the
marketing tactics that are going into whether you're talking about
a purchase with you know that's five digits versus one
that maybe is only two digits, right, Yeah, Well there's
this takes our pattern.
Speaker 2 (15:26):
Yeah, and some of the the maybe cute marketing is
one thing, but kind of predatory tactics that some of
these vacation clubs take is another. And you might be
We don't want you to be an unsuspecting victim.
Speaker 1 (15:37):
So while we're talking about traveled man, it's not been
a good week for Spirit Airlines. Huh, that's true. We
recently talked pretty glowingly about the Spirit effect and how
by it's just mere existence that they're able to help
lower fares for all of us. But the airline has
been struggling financially. They've entered bankruptcy. So what does that
mean for everyone out there who already has the trip
(16:00):
to Spirit. Well, if you are traveling in the near future,
like over Thanksgiving, it shouldn't change pretty much anything for you.
And you can even still book future flights with Spirit
if you're so inclined of maybe getting the absolute lowest price,
and you're not looking to take anything with you, just
your phone in your pocket. But if you have Spirit points, however,
you might want to consider using those sooner than later.
(16:21):
It's not completely known what the fate I guess, of
those points or the Spirit Airlines as a whole, will be,
but it does make it just given them more business
friendly administration coming to AUUS next year, it doesn't make
it more likely that they will exit bankruptcy via a
merger with one of the other airlines where those mergers
have gotten shut down.
Speaker 2 (16:39):
What they were trying to trying to merge with Jet
Blue or Jet Blue is trying to take Spirit over,
and that kind of got the.
Speaker 1 (16:46):
Frontier was trying to get in on the action to
at some point, and.
Speaker 2 (16:48):
I could just see that happening, because what's worse than
reduce competition via merger, Well, reduce competition probably.
Speaker 1 (16:55):
Via bankruptcy of Spirit.
Speaker 2 (16:56):
So I think you're probably right, and I think we
could see Spirit brought into the loving arms of one
of these other low cost airlines. But yeah, Spirit not
being around anymore would be a loss for all of us.
Matt flying Spirit. It's not the only way to save
the times had an article this week about skip lagging,
which airlines continue to hate. Airlines really don't love it
(17:17):
when consumers try to save money on flights and out
of the box ways, and skip lagging is one of
those ways that people attempt to do that. And some
people might say, well, what is that, what does that
term mean? Well, it's when you hop off the plane
before you reach your end destination. And why would you
do that, Like, why would you book a flight somewhere
and get off early. Well, it's because it's actually cheaper
(17:39):
to book to a further off destination that connects in
the city you want to go to, instead of just
booking directly to the city you're trying to go to.
Your final destination exactly, is actually just the layover spot,
so you disembark early and you just paid a whole
lot less for your tickets. And there are even websites
out there, the main one being skip lagged dot com
(17:59):
to help you fight these hidden discounted fares, which is cool,
But this guy, Matt, the guy who started this website
years ago, has been being harassed and sued by the
airlines non stop because they freaking hate this.
Speaker 1 (18:13):
They do not they don't like it.
Speaker 2 (18:14):
They don't want anybody per taking these cheaper fares, They
don't want anyone highlighting that they exist. They would prefer
you to have a blindfold on and just pay them
more money. And I've actually never taken a flight that
used skip lagging, but I love that it exists, and
I think it's worth it for other travelers who want
to save money to at least look into skip blagging
(18:36):
and see if it could save them meaningful money. But
at the same time, you have to be a little
bit careful because the airlines hate this practice so much
they could penalize you if you get off the plane early.
For instance, some people have been sued. They've had their
frequent Flyer miles for folks, And often you're gonna have
the rest of your itinerary canceled. So you might find, oh,
(18:57):
I show back to I got off early, and then
you know what, I want to go back home now, Well,
the rest of your ticket is Nolan voids. You got
to be really careful in how you do the skip
blagging thing, but if you do it right, you might
be able to save money.
Speaker 1 (19:09):
Well, one way skip blagged that seems to make more
sense than the a round trip. The round trip ain't
going to happen. Yeah, But Joel, we've got more to
get to, including why previously loyal consumers are saying no
to the brands they used to love. We'll get to
that more right after this. We're back.
Speaker 2 (19:30):
The Friday flight continues, and it's time to get to
the ludicrous headline of the week, matth. This comes from Sherwood,
which is Robin Hood's journalistic brand thing they got going
on now, and they're doing a good job over there actually.
Speaker 1 (19:42):
Yeah, and we we'll continue to read stories by them
as long as their journalistic integrity is upheld. Yeah, it's
been solid so far. It's just a little suspicious because
you're kind of like, all right, what are they trying
to push? But when they've got good stories, I mean,
good stories are good stories, that's true.
Speaker 2 (19:56):
And so this one, the title was Today's sports betting
boom may be to Morrow's investment issue.
Speaker 1 (20:01):
Yeah, and so first off, doesn't sound like they're promoting
anything dodgy.
Speaker 2 (20:06):
No, like they're trying to make a supporting a real
problem exactly. And so first they mentioned that one hundred
and twenty billion dollars in sports bets were made last year,
which is crazy. I didn't realize just how much money
people are sinking into the sports gambling apps, but it's
a lot. There's no wonder we're seeing all the ads
for fan duel and DraftKings and all the like. I
(20:26):
don't really watch sports as much as I used to,
but I know, I know that they're advertising NonStop, especially
when you're watching your favorite teams play. And then a
group of academics on top of that just released a
new study which finds that sports gambling is causing people
who are partaking in it, it's causing them to invest less,
and so don't like that. That makes sense though it
(20:48):
makes sense, but it's also not a good thing. I mean,
one line that stuck out to me from this article
was this. It's said the increase embedding an associated consumption
leads to heightened financial instant ability, as households run up
credit card balances and more frequently overdraw their bank accounts.
So basically, sports gambling is ruining their lives and it's
(21:11):
causing people to invest a whole lot less. So if
you really, if you really want to gamble on sports,
you do you like, I'm not here to be the
moral police or to tell you that it's not okay
for you to spend your money in that way. But
I think it's also crucial to create a strict line
item in your budget and to pull those funds from
other areas, like your entertainment budget for instance. Right, Like
if you that's what it is. Yeah, if you go
(21:31):
to Vegas and you like for the weekend and you
gamble at the tables, like that should come out of
your entertainment budget. It shouldn't come from your investment account.
Do not, under any circumstances take money you would have
invested and shove it into your FanDuel account. Just make
sure it's not coming out of You're not taking it
from your eventual retirement future for having fun today.
Speaker 1 (21:53):
That's true. Yeah, it's less about the morality and more
of the fact that of what it's keeping people from doing,
you know, like it's the it's like junk food. Honestly,
it's like it's not that a Snickers bar. It's like poison.
And you're not to drop dead because of that. It's
that fact that that fills you up and that keeps
you from eating like healthy vegetables and meats and protein
like all the other things that we need in our diets.
And yes, over time that will cause you to drop dead. Yeah,
(22:17):
it's the substitute in nature that gambling poses. While we're
talking about food, another nefarious financial trend that continues is
shrink flation. And we've always said to make sure to
be alert to the different manufacturers out there that are
shrinking their sizes. Check the price per serving, know what
it is that you're getting. Smaller packages are just one
way that companies are able to avoid jacking up the price.
(22:39):
And some listeners they don't love our take on shrink inflation, Joel.
They think it should be illegal.
Speaker 2 (22:44):
Someone crapped on me when I said something recently about shrinkflation.
They reached out on Twitter and we're like, that's the
dumbest thing I've ever heard, Like why are you.
Speaker 1 (22:51):
Okay with this? And I'm like, well, what's the alternative?
Because it gives us options, that's why, you know. It
turns out consumers do notice when their favorite items shrink
in size. The free market in action and they changed
their buying habits accordingly. This actually happened with Tropicana recently.
They shrunk the container the jug down by six ounces
(23:11):
and instead of taking it lying down, folks opted to
buy another orange juice brand, a little bit of consumer
activism going on here. Tropicana sales went down by eight
percent in July, and then that trend continued. Sales were
down nineteen percent in October. I think that's awesome too.
I think it's good to see that folks are paying attention,
they're adjusting their their shopping habits, and I want to
(23:32):
highlight to the fact that I will say, we as
consumers are not perfectly rational and objective and logical when
it comes to what, you know, our grocery habits and
what it is that we're buying. I think a part
of it, too, came down to the fact that they
changed the actual packaging. And so you know what the
clear jug of tropicana looks like joal right, Like, how
would you describe that? Like A it's like bigger at
the bottom, and it's pear shaped, right, it's skinning around
(23:55):
the top, And so they changed it to where it's
more uniform, which makes sense. Like honestly, I kind of
as I'm thinking about it, I'm like, oh, I'd prefer
for that to be in my fridge. Then the wide
bottom thing because you get smaller footprint. But that has
an impact and people perceive it differently. They perceive it
differently and it looks more generic. And so while I
do think folks are looking at how much things cost
(24:17):
and are looking at the price perounce, even that one
little thing that snaps them out of the default purchase,
like the default reaching forward on the shelves, is enough
to help folks to reassess whether or not they're gaining
value from that company, which ultimately I also think is good.
Speaker 2 (24:31):
And I guess I just don't think shrink inflation is
going away. So we can beat our heads against the
wall and complain about the fact that package sizers are shrinking,
but the truth is we have to be aware of
it and react differently. And I think switching away from
name brands is one way to save a lot of money.
And if companies try to get too cute with their
shrinkflation efforts, it's going to backfire. People see that the
sizes are going down, they see that they're not getting
(24:52):
as much bang for their buck, and they're going to
make changes in how they shop. And that's just how
it should be. While we don't think shrinkflation should be
illegal or anything like that. It's totally okay for you
to not reward companies for doing it though, And Matt,
this is the time of year when people shop more
than ever. People are making more in store and online
transactions this time of year, and the truth is we
(25:13):
don't always hit the nail on the head with those
purchases the first time around, which means we're also making
more returns this time of year. And statistics show that
roughly fifteen percent of purchases overall end up being returned,
even higher in this winter shopping season. And so it's
a pain to make returns. I actually have a return
I gotta make right now. I just I hate actually
(25:34):
get there were some light bulbs that didn't work out. Dude,
don't don't maybe go off about light bulbs. They are
there are kind of ratchet lightbulbs that you no. It's
like this particular four pronged light bulb that goes into
a specialty light fixture. Light bulbs, light bulbs and batteries.
That's something I would love to see shrunk Like. We
don't need as many of any of those. Can we
(25:56):
just standardize those things a little bit more? But I
have to return those light bulbs because it didn't fit.
But more retailers are refunding your money and then also
on top of that, allowing you to keep the item
because the cost of taking it back receiving that that return, well,
they're just too high. And so there's there's this company
called return pro and they said that roughly sixty percent
(26:16):
of retailers now have an internal policy where they're allowing
you to keep the item that you're trying to return.
So not only they're giving you the money back, but
they're saying, just hold on to that dumb light.
Speaker 1 (26:25):
Bulb, you idiot. But they didn't say that to you.
They didn't say that, No, I got to actually go
in and give the light pull back. Was this an
online order or in person online? But of course then
you got to like go to see I guess that's
the problem because it's so small that they're like, oh, yeah,
you can get send the back. It's not going to
cost this tal only by the heavy stuff on language. Yeah.
Speaker 2 (26:42):
Well, and they don't make these policies public typically because
then I think people would gain the system, right, But
this is a good reminder to know.
Speaker 1 (26:50):
I think that.
Speaker 2 (26:51):
Maybe you might get to keep the item that you're
returning in get the refund, but also know the return
policy before you buy, especially this time of year, because
lots of retail are offering larger return windows, but there
might be some items that they won't take back and
they might have harsher return policies around electronics items. So
know what you're getting into and where you're buying from
(27:12):
and what the return policy actually is before you make
a purchase this time of year.
Speaker 1 (27:15):
It's true, yeah, especially with some of those clearance items
that you may not have the ability to return, and
when you buy, you might be tempted to get a
store card store credit card at checkout in order to
snag a thirty percent off discount something like that. We
would recommend for you to not do that. Store cards
they're not nearly as good as traditional normal credit cards.
(27:37):
They come with far higher interest rates attached to them.
They're at a record high of thirty three percent this year,
and so if you don't pay off that balance on
time and in full, it's worse than ever. So an
argument to this, though, might be some folks are thinking, well, hey,
this car's got a zero percent rate for a certain
amount of time.
Speaker 2 (27:55):
That sweet introductory fee plus I say, fifty bucks off
the total purchase. So you guys are this is a
good money.
Speaker 1 (28:01):
Move, and that's true, but you got to make sure
it just like honestly, it comes down to how you
handle it. If you can handle a credit card like
a pro, then sure, go for it. But often those
cards charged was called deferred interest, and so this means
that you will be retroactively charged interest for the entire
time span, going back to day one of that promotional period.
Speaker 2 (28:20):
It's like those furniture stores that would do like no payments,
no interest until twenty twenty nine, and then if you
missed one payment or you're a little bit laate or
something like, all that interest comite you exactly.
Speaker 1 (28:31):
And so in that case, that extra discount that you
got on the items you purchase, they won't make up
for it. It's a nefarious tactic. We want you to
avoid store cards. In particular. It's the transparency that bothers
me the most. And I wasn't surprised to see that
a certain retailer that sells electronics, Best Buy had the
worst transparency in the fact that this was not something
(28:51):
that they disclosed. I'm all for people making the decisions
in an informed way, right, Like you can make give
give people the information, but when you try to hide it,
and that deserves like a special call out. In my opinion,
I think.
Speaker 2 (29:02):
Two store cards that I am less opposed to than
most of the other store cards are Amazon and Target
because those offer a reasonable discount five percent on everything
you buy from those two stores. And Amazon's credit card
is offering a two hundred dollars sign up bonus right
now when you grab that card, So if you shop
at those two stores a significant amount, if those are
(29:24):
retailers that you're loyal to, I think having that credit
card is fine. And I've actually got the Amazon card
and I only use it when I'm shopping at Amazon.
Speaker 1 (29:31):
So yeah, same.
Speaker 2 (29:32):
But most of the store cards we are so much crappier.
Speaker 1 (29:35):
Yeah, well, and we handle them like a pro. And
it just depends on what you're doing, right, like if
you're going to go in and completely revamp your wardrobe
or something like that, like getting thirty percent off at
like Banana Republic or something like you can say of
a huge chunk of money. It's just when you don't
handle your cards properly. In fact, is buying brain new
(29:55):
clothes in the mall. That is not likely the most
affordable way to revamp your wardrobe. The best way is
to buy used. And it turns out to all that
more Americans are apparently getting more comfortable with the idea
of buying used gifts, wrapping them up, you know, making
them look all nice and pretty, sticking them under the tree.
Folks are trying to stretch their gift giving budget and
are turning to secondhand gifts to make this happen. And
(30:17):
this is apparently one of the things that divides along
generational lines. So here's just that seventy nine percent of
gen zers think that giving secondhand presence is great, but
only thirty two percent of boomers. I agree with that,
Okay Boomer. Yeah, although, like I said, make it look nice,
like it all comes down to, like the presentation.
Speaker 2 (30:36):
You can make sure it's still thoughtful too, right, Like
you can buy a used gift that's completely thoughtless, and
you can buy a used gift it could be even
be like something vintage, and it could be an incredibly
thoughtful gift, like I could buy you Matt, like a
use what a used record or something like that, like
you know, and you'd be like, oh, this early Arcade
Fire album, it's one of my favorites, and you'd spin
it on your happily on your vinyl player record place
(31:00):
if you had one. I'm just I'm just like pointing out,
just like a random thing. But there are ways to
do turntables, I think. So I never got a record player,
got one? You got into yeah, vinyl back. I probably
got like eight albums, eight records, but it's it's I
like the sound of it, even though I rarely play it.
But they think there are ways to do use gifts
or like you've been into giving me dumbbells recently for
(31:22):
Christmas the last couple of years.
Speaker 1 (31:23):
I could. One time I gave you, you know. Then last
year you gave me a rocking plate. Oh that's right.
Speaker 2 (31:27):
I wouldn't have cared if it was used or new. True,
as long as it works like it does it weigh
thirty heavy thing?
Speaker 1 (31:34):
Yes, does exactly.
Speaker 2 (31:35):
So if you had said, dude, I got this actually
for like ten bucks off Facebook marketplace, I would have
thought that was awesome.
Speaker 1 (31:40):
Well, the plan cheap. I had to get you that,
because you're putting multiple dumbells in your back, like as
you're getting into rocking. You're putting multiple dumbbells in your bag,
and it was like poking you in the back. And
this is going to lead to Jill having some issues.
It's like punching on his kidneys to get you that flat.
Do you rook to work today?
Speaker 2 (31:54):
Do you always keep it in your backpack as always?
But I try to nice. Yeah, I'm probably fifty percent
of the time on the day and when I'm bringing
do work in my backpack.
Speaker 1 (32:01):
But I think I won't get you wait for Christmas
this year. I about that.
Speaker 2 (32:05):
Okay, Well, I was thinking to another like another way
that used gifts actually make sense. Like I've thought about
kid getting my kids a Nintendo Switch. I don't know
if I'm going to or not, probably not, honestly, but
I've thought about it. Have we talked about this, No,
we haven't. Oh yeah, we're thinking about doing the same.
Are you okay for the new one?
Speaker 1 (32:23):
I know? Same? But then they so I'm just like,
but some of the deals are better this year on.
So I've thought about it.
Speaker 2 (32:27):
But I was think my nephew who's sixteen, he's probably
got some old games that he doesn't play anymore. He's
got a switch and guess what, they're perfectly fine games
and my kids wouldn't know the difference. And so why
go out and buy my kids a fifty dollars game
when he could just give them three the games he
doesn't play anymore that they would be interested in software?
Run wear Out does it right? So that's like, that's
where I think we used gifts. I'm okay with us
(32:49):
gifts as long as they're they're thoughtful, they might save
you some money and you're able to get the person
kind of what they want for the holidays instead of
feeling like you got to go out there and buy
something in like this new glossy packaging or something like that.
Speaker 1 (33:01):
One yeah, one man's trash is another man's treasure. What
do you think about white elephant gifts? How nice do
white elephant gifts? Do?
Speaker 2 (33:07):
This need to be see, this has to be clarified
for every white elephant gathering, because you.
Speaker 1 (33:10):
Gotta put the price, you gotta put the price range
on there.
Speaker 2 (33:13):
Some people are like, oh, yeah, the twenty five dollars
price range, But then they're getting like twenty five dollars
Starbucks gift cards or something like that, and I'm not with.
Speaker 1 (33:19):
That unless you left Starbucks. Well no, but I think white.
Speaker 2 (33:21):
Elephant gift should be a little offbeat, should be a
little goofy, right, isn't that the whole point of them?
Speaker 1 (33:25):
I guess?
Speaker 2 (33:25):
So I don't necessarily like you want it to be
something that somebody kind of wants, but it's also.
Speaker 1 (33:30):
A little weird. I like the fact that sometimes folks
will give you bust out the thirty dollars gift card
to the local coffee shop, but then someone else has
got something totally random, because you know, there's different strokes
for different folks in the same way that we're talking
about getting used gifts, Like everyone's looking for something different,
and maybe you're just not in the mood to go
home with something wacky, and you just want to load
the gift card into your app so that you don't
forget it, and boom, you got free coffee for the
(33:51):
next couple months. All right, that whole thing.
Speaker 2 (33:53):
Well, so he said her own on that one, I guess,
But maybe just at least consider giving a used gift
this year to someone who would enjoy it. But Matt,
that's going to do it. For this episode of How
to Money, we'll put links to some of the stories
we covered on today's podcast up in the show notes
on our website at howtomoney dot com.
Speaker 1 (34:10):
You know it. So, until next time, best friends out
and best friends Out
Welcome to How the Money.
Speaker 2 (00:01):
I'm Joel, I'm Matt, and today we're talking about auto iras,
travel Tuesday and sloppy Seconds.
Speaker 1 (00:27):
Not auto iras as in car or truck iras, Automatic
iras right, automatic for the people, Joel, this is in
fact our Friday flight, and we're gonna hit all the
most important headlines that we think pertain to your personal finance.
Speaker 2 (00:40):
You're an RAM fan, right, that was a name one
of their albums, Automatic.
Speaker 1 (00:42):
For the People.
Speaker 2 (00:43):
Well, you know where that came from, from your college
town of Athens, Georgia.
Speaker 1 (00:46):
Yeah, we were D's the meeting three. I'm still around.
I actually I haven't been back to Athens in years,
and so I personally can't speak from experience as to
whether or not that's still there. But it was this
lod spot back in the day, especially for someone like me.
I was the I don't think I ever went there. Oh,
you would have loved it. You would have loved I
mean just like the combination of Southern food mixed with
(01:07):
music and culture and man, yeah, I'm sad that it
sounds like my it's not there. I'm sad that you
never that you've never made it. But if not if
it's still there, then we should totally hit it up.
I'll look it up. Uh, what you want to talk
about first, Joel?
Speaker 2 (01:19):
Okay, So we got an email from a listener this
week and we're I guess we were talking recently about
are the older cars that I my accurate in particularly
the two thousand and five. I can't really listen to
music in there. I like literally just play it for
my phone. Oh yeah, instead of like playing it through
my sound system because it's so antiquate.
Speaker 1 (01:38):
Well, you were literally using your your phone speakers, yes,
when you said okay, I'm like, I put it from
my car too.
Speaker 2 (01:43):
No, I'm literally playing it through the speaker on the phone.
And you may as well just like keep your earbuds in.
I know I probably should. Well sometimes I've done that
before too, but I don't know if that's that data. Yeah,
probably there. So listener Matt he emailed and he said, actually,
what you should do is just get basically a new
head unit for an older car. It's a couple hundred bucks,
especially stereo system. Yeah, especially this time of year, some
(02:05):
of those discounts from best Buy kicking in, and you
maybe get a free install or something like that, and yeah,
I don't know if I'm going to or not, but
I do think that's a good recommendation. And I think
for some people and set because that is one of
those things were like, ooh, that upgrade and make a
big difference in my life. And maybe you keep fixating
on that, and maybe maybe you.
Speaker 1 (02:21):
If it moves the needle for you, maybe that's enough
to keep you from getting a new vehicle exactly.
Speaker 2 (02:25):
And I think some people would say that's so important
to me. I think I'm going to kick this one
of the curve and get a new one. But there's
a whole lot more costs involved with upgrading your vehicle
than there is just putting in that new head unit,
So yeah, are you going to do it?
Speaker 1 (02:36):
Are you going to keep an eye out for some
deals over the next one?
Speaker 2 (02:39):
I might look around because honestly, being able to play
my favorite music through the car speakers would be a
big win. And I don't know how long I'm going
to have this car. That's like the thing, I'm not
trying to necessarily run it into the ground.
Speaker 1 (02:51):
Case. Do you get a Bluetooth speaker and just set
it up on your dash and just kind of blast
it through then I would look real ratchet. Then you
can plug it straight into the cigarette power unit as well,
so it'll never run out of power. Well, that's the
ultimate frugal hack. Instead of getting something a stereosystem it
looks a little ridiculous that you can only use while
you're in the car. Get you something that you can
(03:11):
take with you, all right, like like on a picnic.
I don't know.
Speaker 2 (03:14):
That doesn't interest me because I think it would look
a little ridiculous and it wouldn't provide quite as good
as sound either.
Speaker 1 (03:19):
You could you don't have to set it up on
the dash, you can set it down there, you know,
next to the shifter or whatever. I'll consider that the problem.
I totally hear what you're saying, though, you're talking about
not wanting to make that upgrade because of how much
value residual values left in the vehicle.
Speaker 2 (03:35):
If I'm just like, oh, I'm going to try to
own this car for the next five years, I'd be
willing to drop in the two hundred bucks, get three
hundred bucks even and say great, baby, yeah I would.
Speaker 1 (03:43):
Because you think you could get for it right now.
Speaker 2 (03:45):
The vehicle I'm gonna say thirty five hundred bucks.
Speaker 1 (03:47):
So you're talking like almost ten percent of the overall
cost of the vehicle in stereoss.
Speaker 2 (03:52):
But if I'm holding on to it for for five years.
Speaker 1 (03:54):
And you're going to hang on to it, I'm with
you one hundred percent. But that also means making all
the other repairs on it that you're probably neglecting, like
the windshield. You got some hate milk for that, talking
about how you need to get that windshield replaced because
it's got that big, old nasty crab, but it's not.
I don't know.
Speaker 2 (04:07):
Maybe I'll take a picture and post on Instagram or
something like that. But people were, like somebody in the
in the in the Facebook group said something like dude
with his net worth, like he should be doing that.
But the whole way you grow your net worth is
by not doing it stuff.
Speaker 1 (04:19):
But it just depends, Like I totally agree, because if
you are going to keep the thing around, if you
are going to drive it into the ground, if you
are in it for the long haul, you gotta you
gotta get the new tires. You may as well go
ahead and get the brakes turned or whatever. That way
you're not eating into the rotors, get the timing belt
was the last time the timing belt's been changed, because
if you don't do that, you'll literally total the vehicle
(04:40):
because of the cost to repair the engine sure if
it goes out, and that's not I mean, that's crazy expensive,
but worth it if you want to keep driving. I
say that because how much was it? It's like eleven
hundred bucks, I think, And that included an old change.
I did that last month. Not cheap, but now I
know that man are obviously it's going to be good
for another seventy five one hundred thousand miles.
Speaker 2 (04:59):
I just think I think more than anything, this is
not just a good recommendation for car owners, Like what's
the thing you can do to enjoy that car for longer?
So that keep prevents you from buying something newer? And
maybe like stops you from looking like browsing. But there's
got to be other things in life like that too,
Or is there something you can do.
Speaker 1 (05:19):
There's something that rises to the top that bothers you
game most?
Speaker 2 (05:22):
Yeah, what can you upgrade in your life at a
reasonable price that prevents you from making a more expensive upgrade?
So I like Matt's suggestion, and I think maybe we
can take that to another degree and say, what else
in your life can you upgrade in a small way
that prevents you from upgrading in a massive way.
Speaker 1 (05:36):
The problem is it's a bunch of little things typically,
because what would you say if you had to make
some upgrades to your van? What would it be? Because
we were recently talking about that grill piece on the
front of you, Evan the pop off, and you're like, oh,
give me because mine did as well, but the mechanic
glued it back on. But I was like, it's only
sixty bucks, and you're telling me to get one for
you as well, so you can slap it on there.
It's all the small things all added up together that
(05:59):
oftentimes think makes it difficult to pinpoint one single thing.
But I'm with you.
Speaker 2 (06:03):
If there is I find it a few small things
to my van and just literally put in a few
hundred bucks, I'd probably be like, you know what, you'd probably.
Speaker 1 (06:08):
Feel a lot. I feel at about it, yeah, but
it's just what is it about it?
Speaker 2 (06:11):
There's a scratch on the side that my dad put
on it, and I'm like, oh, if I repaired that
in the exterior, maybe yeah, something so I don't but
I think like maybe sometimes what those things are, you
might see that and you say, time to kick this
into the curving.
Speaker 1 (06:24):
That's what we don't want folks exactly. All right, Well,
we're talking about saving money by not spending it. One
of the other things you can do with your money, Joel,
invest your money. More states are now working to help
the residents save for retirement via something called auto iras.
There's a recent report from Pew that finds that tens
of millions of Americans who are employed in the private
(06:45):
sector that they don't have access to a retirement account.
And if you don't have access through work, you know,
you might go sign up for an IRA with one
of our low cost favorites out there, Vanguard Fidelity, even
Charles Schwab. But many folks don't do that.
Speaker 2 (07:00):
Is that takes some gumption, right to go out there
and make that happening on your.
Speaker 1 (07:03):
Own, kind of like making all these small little fixes
to your vehicle, Like I don't know, you got to
want it badly enough to make it happen. And so
some states are stepping in to bridge the gap. Some
of those employers who don't offer a four one K
plan are now required to offer this IRA that's run
by the state, and it includes automatic contributions of three
to five percent. That's typical. Ten states are now doing this,
(07:26):
seven more are going to follow suit soon, and dude,
it's working. There's an amazing amount of money in there,
something like one point seven billion dollars, which is really impressive.
And I think this is great because on average, when
you've got Americans who are struggling to save for retirement,
I think the easier that we can make it, especially
for folks who don't have access to an account at work,
(07:47):
a four to one k I think this is a
good thing. Yeah.
Speaker 2 (07:50):
Man, This is kind of like if you're a government
employee or you serve in the armed forces, you have
access to something called the TSP, right and there's been
talk over the years about hey, what if we made
just the TSP available to everybody in America? And this
is kind of the equivalent of that, because I think
a lot of people know that, hey, iras exist, I
could go out and do this, but if it's not
(08:11):
something that's offered through their workplace and isn't deducted from
their paycheck, they're less likely to go out there and
actually make it. Happen. So I like kind of making
it easy for people. The easier we can make it
for people, the more likely they are to do it right.
And since we started out of money, since we began
this podcast, we've always said that investing doesn't have to
be complicated. That the more we ratchet up the difficulty
(08:35):
level of what successful investing look like looks like, the
less likely people are to actually do the thing and
to start investing. And in fact, we've always said that
the more complicated it gets, typically the worse returns.
Speaker 1 (08:48):
Tend to get.
Speaker 2 (08:49):
And there was this recent article in Bloomberg and it
highlighted the difference between returns from hedge funds and overall
market returns this year. And although I will throw this caveat,
in hedge funds often they're not attempting to maximize returns.
They're using hedge tactics to reduce downside risk. But still,
on average, and this has been true for years and
(09:11):
years on end, they underperform what the total stock market produces.
Speaker 1 (09:15):
Yeah, I was gonna say you could. You could probably
substitute hedge funds for actively managed funds as well, and
you're gonna see smilar results.
Speaker 2 (09:21):
Exactly well, and that's before too accounting for the absurd
fees that they charge. And so here's a line from
the article that I've like kind of struck me. It said,
these higher fee strategies have proved too complex for their
own good, either by diversifying bets across the stock market
or shorting week looking companies.
Speaker 1 (09:41):
And so, as.
Speaker 2 (09:41):
Always, our advice is to buy the whole stock market
right at the whole basket of stocks, at the lowest
cost you possibly can. If you're in the wealth building
phase of your life, and if you're being told that
you need fancy and expensive funds or tactics, it's just
not true. And when you look at the people who
are engaging in that, these folks who probably dress in
fancy suits and work in the financial district of Manhattan, well,
(10:06):
they're not doing as well as a lot of everyday
normal investors just taking that basic approach of putting money
in continually, week after week, month after month, just funneling
do into the stock market.
Speaker 1 (10:16):
That's true. Yeah, don't you get the impression too, that
like the elite class of folks in the investing in
personal plan space, that they're over complicating things with like
they're justifying their own existence essentially through all of these products,
because like the message really isn't all that different, like
day after day, Like we try to cut through all
the all the junk, all the bs to point people
to like the healthy behaviors that they should be doing.
(10:38):
And I don't know, maybe it gets monotonous yea, and
folks out, maybe they tune out. But when it comes
to some of these investing products, like they have to
find new, creative, inventive ways to find diversification and try
to outperform the market in order to justify their fees.
Speaker 2 (10:52):
And I think it's always helpful to highlight these things
to say, oh, it seems really sexy, like, oh, I'm
a hedge fund manager, Like does it if you met
somebody who's a hedge fund manager?
Speaker 1 (11:00):
Sounds cool?
Speaker 2 (11:00):
You're talking to me slightly awestruck, and you'd be like, oh, yah,
tell me more about that. But the cooler thing is, Hey,
I addressed a lot of money in index funds, and
guess what, I'm building wealth and I'm getting rich.
Speaker 1 (11:10):
The cooler thing is to have the actual money.
Speaker 2 (11:11):
Yeah, And I'm sure some of those people have lots
of money, but they would have more. They just taken
the index mound approach.
Speaker 1 (11:18):
Joel. It's the time of year where retailers are discounting
in order to win your spending dollars. Is talk about
some of the deals that we're going to come across,
because it's not just TVs and toys. Travel is getting
on the price cut action as well, and in the
coming weeks you might find some sweet travel deals coming
your way. Specifically, if you are looking to book on
travel Tuesday, this is a way for travel companies to
(11:41):
boost their bookings at it's time that tends to be
a you know, there's like a lull in the market,
similar to a Black Friday. It's now more of an
extended event as opposed to just actually taking place on Tuesday.
But that being said, if traveling more is a part
of your twenty twenty five budget, and if it's something
that you want to do well, looking during the week
of in the week after Thanksgiving, it can help you
(12:03):
to snag a deal. And so the best deals, according
to a recent piece over on McKenzie's website, are of
course flights, but then cruises as well as package travel
deals too.
Speaker 2 (12:14):
Yeah, we're already seeing some of those travel bargains rolling
out even though travel Tuesday isn't actually doesn't come about
for a couple of weeks. And Matt, you mentioned package deals.
Some of those can be really good deals. But then
there are other things that kind of sound like they
might be a great package deal and they're actually exploitative,
and they could be like the worst deal you've ever encountered.
(12:35):
And I'm talking about something called vacation clubs, and they
are a twist on time shares, a kind of a
new twist on timeshares, because boy, if you call something
a timeshare now, people are kind of tipped off.
Speaker 1 (12:47):
Red flag.
Speaker 2 (12:47):
Wait a second, I've heard something bad about time shares
in the past, But if you call it a vacation
club and you rebrand it, people are saying, oh, vacation
clubs sound so much better. I haven't heard bad things
about this, but you're gonna hear something bad it now.
There was this New York Times report and it found
that people are paying tens of thousands of dollars to
join these vacation clubs based on a sexy pitch and
(13:10):
using name brand recognition from a company like Hyatt Ooh,
come get this Hyatt vacation club them. I've heard of Hyatt.
They wouldn't steer me wrong. They wouldn't completely steal my money,
would they. Well, these pitches are being made while they're
also applying the people who are receiving the pitch with
lots of alcohol, and we know that alcohol harm decision making.
I like drinks, yeah, but maybe not combined with like
(13:32):
tens you're saying all the things I like, Joel, maybe
not combined with a decision that could cost you tens
of thousands of dollars. Right, And then consumers they're finding
that the fine print after they've signed up for one
of these vacation clubs, it makes the investment that they've
made I use investment loosely, it's made it worthless. And
so the pristine promise that's been delivered in the pitch,
it doesn't live up to the reality that you encounter
(13:54):
on the back end. If you buy into a vacation club,
you don't actually really own it an you don't own
any real estate. You're buying discounts for future stays, but
blackout dates and other unfulfilled promises diminish the value to
being almost worthless. So timeshares are a problem because they're
(14:14):
really expensive, they're hard to unload, they're basically worth nothing
after you buy them. It'd be better you'd be better
off buying a used timeshare for very little, because people
will sell them for literally pennies. And you might hear
a pitch for a vacation club. It's eerily like a timeshare,
and it will similarly cost you big bucks.
Speaker 1 (14:31):
I think oftentimes what you're paying for is like the
access right, Like people are allured by the exclusivity of
some of these different clubs, and you kind of get
sucked in that way. It makes me think of there's
been a trend I've noticed recently two of smaller businesses
doing like these small business pop ups, and they charge
an upfront cost or upfront fee to even shop at
(14:52):
the pop up, and I feel like it's drawing on
the same sort of like limited time only the exclusive
nature of the ability to shop here and if you know,
like you may not even buy anything. But also it
includes a drink, and so it's a similar tactic. And
I don't like, I'm all for small businesses, but what's
great is that the market will decide whether or not
(15:12):
these things are going to be successful or not. But
I think it's just important to highlight some of the
marketing tactics that are going into whether you're talking about
a purchase with you know that's five digits versus one
that maybe is only two digits, right, Yeah, Well there's
this takes our pattern.
Speaker 2 (15:26):
Yeah, and some of the the maybe cute marketing is
one thing, but kind of predatory tactics that some of
these vacation clubs take is another. And you might be
We don't want you to be an unsuspecting victim.
Speaker 1 (15:37):
So while we're talking about traveled man, it's not been
a good week for Spirit Airlines. Huh, that's true. We
recently talked pretty glowingly about the Spirit effect and how
by it's just mere existence that they're able to help
lower fares for all of us. But the airline has
been struggling financially. They've entered bankruptcy. So what does that
mean for everyone out there who already has the trip
(16:00):
to Spirit. Well, if you are traveling in the near future,
like over Thanksgiving, it shouldn't change pretty much anything for you.
And you can even still book future flights with Spirit
if you're so inclined of maybe getting the absolute lowest price,
and you're not looking to take anything with you, just
your phone in your pocket. But if you have Spirit points, however,
you might want to consider using those sooner than later.
(16:21):
It's not completely known what the fate I guess, of
those points or the Spirit Airlines as a whole, will be,
but it does make it just given them more business
friendly administration coming to AUUS next year, it doesn't make
it more likely that they will exit bankruptcy via a
merger with one of the other airlines where those mergers
have gotten shut down.
Speaker 2 (16:39):
What they were trying to trying to merge with Jet
Blue or Jet Blue is trying to take Spirit over,
and that kind of got the.
Speaker 1 (16:46):
Frontier was trying to get in on the action to
at some point, and.
Speaker 2 (16:48):
I could just see that happening, because what's worse than
reduce competition via merger, Well, reduce competition probably.
Speaker 1 (16:55):
Via bankruptcy of Spirit.
Speaker 2 (16:56):
So I think you're probably right, and I think we
could see Spirit brought into the loving arms of one
of these other low cost airlines. But yeah, Spirit not
being around anymore would be a loss for all of us.
Matt flying Spirit. It's not the only way to save
the times had an article this week about skip lagging,
which airlines continue to hate. Airlines really don't love it
(17:17):
when consumers try to save money on flights and out
of the box ways, and skip lagging is one of
those ways that people attempt to do that. And some
people might say, well, what is that, what does that
term mean? Well, it's when you hop off the plane
before you reach your end destination. And why would you
do that, Like, why would you book a flight somewhere
and get off early. Well, it's because it's actually cheaper
(17:39):
to book to a further off destination that connects in
the city you want to go to, instead of just
booking directly to the city you're trying to go to.
Your final destination exactly, is actually just the layover spot,
so you disembark early and you just paid a whole
lot less for your tickets. And there are even websites
out there, the main one being skip lagged dot com
(17:59):
to help you fight these hidden discounted fares, which is cool,
But this guy, Matt, the guy who started this website
years ago, has been being harassed and sued by the
airlines non stop because they freaking hate this.
Speaker 1 (18:13):
They do not they don't like it.
Speaker 2 (18:14):
They don't want anybody per taking these cheaper fares, They
don't want anyone highlighting that they exist. They would prefer
you to have a blindfold on and just pay them
more money. And I've actually never taken a flight that
used skip lagging, but I love that it exists, and
I think it's worth it for other travelers who want
to save money to at least look into skip blagging
(18:36):
and see if it could save them meaningful money. But
at the same time, you have to be a little
bit careful because the airlines hate this practice so much
they could penalize you if you get off the plane early.
For instance, some people have been sued. They've had their
frequent Flyer miles for folks, And often you're gonna have
the rest of your itinerary canceled. So you might find, oh,
(18:57):
I show back to I got off early, and then
you know what, I want to go back home now, Well,
the rest of your ticket is Nolan voids. You got
to be really careful in how you do the skip
blagging thing, but if you do it right, you might
be able to save money.
Speaker 1 (19:09):
Well, one way skip blagged that seems to make more
sense than the a round trip. The round trip ain't
going to happen. Yeah, But Joel, we've got more to
get to, including why previously loyal consumers are saying no
to the brands they used to love. We'll get to
that more right after this. We're back.
Speaker 2 (19:30):
The Friday flight continues, and it's time to get to
the ludicrous headline of the week, matth. This comes from Sherwood,
which is Robin Hood's journalistic brand thing they got going
on now, and they're doing a good job over there actually.
Speaker 1 (19:42):
Yeah, and we we'll continue to read stories by them
as long as their journalistic integrity is upheld. Yeah, it's
been solid so far. It's just a little suspicious because
you're kind of like, all right, what are they trying
to push? But when they've got good stories, I mean,
good stories are good stories, that's true.
Speaker 2 (19:56):
And so this one, the title was Today's sports betting
boom may be to Morrow's investment issue.
Speaker 1 (20:01):
Yeah, and so first off, doesn't sound like they're promoting
anything dodgy.
Speaker 2 (20:06):
No, like they're trying to make a supporting a real
problem exactly. And so first they mentioned that one hundred
and twenty billion dollars in sports bets were made last year,
which is crazy. I didn't realize just how much money
people are sinking into the sports gambling apps, but it's
a lot. There's no wonder we're seeing all the ads
for fan duel and DraftKings and all the like. I
(20:26):
don't really watch sports as much as I used to,
but I know, I know that they're advertising NonStop, especially
when you're watching your favorite teams play. And then a
group of academics on top of that just released a
new study which finds that sports gambling is causing people
who are partaking in it, it's causing them to invest less,
and so don't like that. That makes sense though it
(20:48):
makes sense, but it's also not a good thing. I mean,
one line that stuck out to me from this article
was this. It's said the increase embedding an associated consumption
leads to heightened financial instant ability, as households run up
credit card balances and more frequently overdraw their bank accounts.
So basically, sports gambling is ruining their lives and it's
(21:11):
causing people to invest a whole lot less. So if
you really, if you really want to gamble on sports,
you do you like, I'm not here to be the
moral police or to tell you that it's not okay
for you to spend your money in that way. But
I think it's also crucial to create a strict line
item in your budget and to pull those funds from
other areas, like your entertainment budget for instance. Right, Like
if you that's what it is. Yeah, if you go
(21:31):
to Vegas and you like for the weekend and you
gamble at the tables, like that should come out of
your entertainment budget. It shouldn't come from your investment account.
Do not, under any circumstances take money you would have
invested and shove it into your FanDuel account. Just make
sure it's not coming out of You're not taking it
from your eventual retirement future for having fun today.
Speaker 1 (21:53):
That's true. Yeah, it's less about the morality and more
of the fact that of what it's keeping people from doing,
you know, like it's the it's like junk food. Honestly,
it's like it's not that a Snickers bar. It's like poison.
And you're not to drop dead because of that. It's
that fact that that fills you up and that keeps
you from eating like healthy vegetables and meats and protein
like all the other things that we need in our diets.
And yes, over time that will cause you to drop dead. Yeah,
(22:17):
it's the substitute in nature that gambling poses. While we're
talking about food, another nefarious financial trend that continues is
shrink flation. And we've always said to make sure to
be alert to the different manufacturers out there that are
shrinking their sizes. Check the price per serving, know what
it is that you're getting. Smaller packages are just one
way that companies are able to avoid jacking up the price.
(22:39):
And some listeners they don't love our take on shrink inflation, Joel.
They think it should be illegal.
Speaker 2 (22:44):
Someone crapped on me when I said something recently about shrinkflation.
They reached out on Twitter and we're like, that's the
dumbest thing I've ever heard, Like why are you.
Speaker 1 (22:51):
Okay with this? And I'm like, well, what's the alternative?
Because it gives us options, that's why, you know. It
turns out consumers do notice when their favorite items shrink
in size. The free market in action and they changed
their buying habits accordingly. This actually happened with Tropicana recently.
They shrunk the container the jug down by six ounces
(23:11):
and instead of taking it lying down, folks opted to
buy another orange juice brand, a little bit of consumer
activism going on here. Tropicana sales went down by eight
percent in July, and then that trend continued. Sales were
down nineteen percent in October. I think that's awesome too.
I think it's good to see that folks are paying attention,
they're adjusting their their shopping habits, and I want to
(23:32):
highlight to the fact that I will say, we as
consumers are not perfectly rational and objective and logical when
it comes to what, you know, our grocery habits and
what it is that we're buying. I think a part
of it, too, came down to the fact that they
changed the actual packaging. And so you know what the
clear jug of tropicana looks like joal right, Like, how
would you describe that? Like A it's like bigger at
the bottom, and it's pear shaped, right, it's skinning around
(23:55):
the top, And so they changed it to where it's
more uniform, which makes sense. Like honestly, I kind of
as I'm thinking about it, I'm like, oh, I'd prefer
for that to be in my fridge. Then the wide
bottom thing because you get smaller footprint. But that has
an impact and people perceive it differently. They perceive it
differently and it looks more generic. And so while I
do think folks are looking at how much things cost
(24:17):
and are looking at the price perounce, even that one
little thing that snaps them out of the default purchase,
like the default reaching forward on the shelves, is enough
to help folks to reassess whether or not they're gaining
value from that company, which ultimately I also think is good.
Speaker 2 (24:31):
And I guess I just don't think shrink inflation is
going away. So we can beat our heads against the
wall and complain about the fact that package sizers are shrinking,
but the truth is we have to be aware of
it and react differently. And I think switching away from
name brands is one way to save a lot of money.
And if companies try to get too cute with their
shrinkflation efforts, it's going to backfire. People see that the
sizes are going down, they see that they're not getting
(24:52):
as much bang for their buck, and they're going to
make changes in how they shop. And that's just how
it should be. While we don't think shrinkflation should be
illegal or anything like that. It's totally okay for you
to not reward companies for doing it though, And Matt,
this is the time of year when people shop more
than ever. People are making more in store and online
transactions this time of year, and the truth is we
(25:13):
don't always hit the nail on the head with those
purchases the first time around, which means we're also making
more returns this time of year. And statistics show that
roughly fifteen percent of purchases overall end up being returned,
even higher in this winter shopping season. And so it's
a pain to make returns. I actually have a return
I gotta make right now. I just I hate actually
(25:34):
get there were some light bulbs that didn't work out. Dude,
don't don't maybe go off about light bulbs. They are
there are kind of ratchet lightbulbs that you no. It's
like this particular four pronged light bulb that goes into
a specialty light fixture. Light bulbs, light bulbs and batteries.
That's something I would love to see shrunk Like. We
don't need as many of any of those. Can we
(25:56):
just standardize those things a little bit more? But I
have to return those light bulbs because it didn't fit.
But more retailers are refunding your money and then also
on top of that, allowing you to keep the item
because the cost of taking it back receiving that that return, well,
they're just too high. And so there's there's this company
called return pro and they said that roughly sixty percent
(26:16):
of retailers now have an internal policy where they're allowing
you to keep the item that you're trying to return.
So not only they're giving you the money back, but
they're saying, just hold on to that dumb light.
Speaker 1 (26:25):
Bulb, you idiot. But they didn't say that to you.
They didn't say that, No, I got to actually go
in and give the light pull back. Was this an
online order or in person online? But of course then
you got to like go to see I guess that's
the problem because it's so small that they're like, oh, yeah,
you can get send the back. It's not going to
cost this tal only by the heavy stuff on language. Yeah.
Speaker 2 (26:42):
Well, and they don't make these policies public typically because
then I think people would gain the system, right, But
this is a good reminder to know.
Speaker 1 (26:50):
I think that.
Speaker 2 (26:51):
Maybe you might get to keep the item that you're
returning in get the refund, but also know the return
policy before you buy, especially this time of year, because
lots of retail are offering larger return windows, but there
might be some items that they won't take back and
they might have harsher return policies around electronics items. So
know what you're getting into and where you're buying from
(27:12):
and what the return policy actually is before you make
a purchase this time of year.
Speaker 1 (27:15):
It's true, yeah, especially with some of those clearance items
that you may not have the ability to return, and
when you buy, you might be tempted to get a
store card store credit card at checkout in order to
snag a thirty percent off discount something like that. We
would recommend for you to not do that. Store cards
they're not nearly as good as traditional normal credit cards.
(27:37):
They come with far higher interest rates attached to them.
They're at a record high of thirty three percent this year,
and so if you don't pay off that balance on
time and in full, it's worse than ever. So an
argument to this, though, might be some folks are thinking, well, hey,
this car's got a zero percent rate for a certain
amount of time.
Speaker 2 (27:55):
That sweet introductory fee plus I say, fifty bucks off
the total purchase. So you guys are this is a
good money.
Speaker 1 (28:01):
Move, and that's true, but you got to make sure
it just like honestly, it comes down to how you
handle it. If you can handle a credit card like
a pro, then sure, go for it. But often those
cards charged was called deferred interest, and so this means
that you will be retroactively charged interest for the entire
time span, going back to day one of that promotional period.
Speaker 2 (28:20):
It's like those furniture stores that would do like no payments,
no interest until twenty twenty nine, and then if you
missed one payment or you're a little bit laate or
something like, all that interest comite you exactly.
Speaker 1 (28:31):
And so in that case, that extra discount that you
got on the items you purchase, they won't make up
for it. It's a nefarious tactic. We want you to
avoid store cards. In particular. It's the transparency that bothers
me the most. And I wasn't surprised to see that
a certain retailer that sells electronics, Best Buy had the
worst transparency in the fact that this was not something
(28:51):
that they disclosed. I'm all for people making the decisions
in an informed way, right, Like you can make give
give people the information, but when you try to hide it,
and that deserves like a special call out. In my opinion,
I think.
Speaker 2 (29:02):
Two store cards that I am less opposed to than
most of the other store cards are Amazon and Target
because those offer a reasonable discount five percent on everything
you buy from those two stores. And Amazon's credit card
is offering a two hundred dollars sign up bonus right
now when you grab that card, So if you shop
at those two stores a significant amount, if those are
(29:24):
retailers that you're loyal to, I think having that credit
card is fine. And I've actually got the Amazon card
and I only use it when I'm shopping at Amazon.
Speaker 1 (29:31):
So yeah, same.
Speaker 2 (29:32):
But most of the store cards we are so much crappier.
Speaker 1 (29:35):
Yeah, well, and we handle them like a pro. And
it just depends on what you're doing, right, like if
you're going to go in and completely revamp your wardrobe
or something like that, like getting thirty percent off at
like Banana Republic or something like you can say of
a huge chunk of money. It's just when you don't
handle your cards properly. In fact, is buying brain new
(29:55):
clothes in the mall. That is not likely the most
affordable way to revamp your wardrobe. The best way is
to buy used. And it turns out to all that
more Americans are apparently getting more comfortable with the idea
of buying used gifts, wrapping them up, you know, making
them look all nice and pretty, sticking them under the tree.
Folks are trying to stretch their gift giving budget and
are turning to secondhand gifts to make this happen. And
(30:17):
this is apparently one of the things that divides along
generational lines. So here's just that seventy nine percent of
gen zers think that giving secondhand presence is great, but
only thirty two percent of boomers. I agree with that,
Okay Boomer. Yeah, although, like I said, make it look nice,
like it all comes down to, like the presentation.
Speaker 2 (30:36):
You can make sure it's still thoughtful too, right, Like
you can buy a used gift that's completely thoughtless, and
you can buy a used gift it could be even
be like something vintage, and it could be an incredibly
thoughtful gift, like I could buy you Matt, like a
use what a used record or something like that, like
you know, and you'd be like, oh, this early Arcade
Fire album, it's one of my favorites, and you'd spin
it on your happily on your vinyl player record place
(31:00):
if you had one. I'm just I'm just like pointing out,
just like a random thing. But there are ways to
do turntables, I think. So I never got a record player,
got one? You got into yeah, vinyl back. I probably
got like eight albums, eight records, but it's it's I
like the sound of it, even though I rarely play it.
But they think there are ways to do use gifts
or like you've been into giving me dumbbells recently for
(31:22):
Christmas the last couple of years.
Speaker 1 (31:23):
I could. One time I gave you, you know. Then last
year you gave me a rocking plate. Oh that's right.
Speaker 2 (31:27):
I wouldn't have cared if it was used or new. True,
as long as it works like it does it weigh
thirty heavy thing?
Speaker 1 (31:34):
Yes, does exactly.
Speaker 2 (31:35):
So if you had said, dude, I got this actually
for like ten bucks off Facebook marketplace, I would have
thought that was awesome.
Speaker 1 (31:40):
Well, the plan cheap. I had to get you that,
because you're putting multiple dumbells in your back, like as
you're getting into rocking. You're putting multiple dumbbells in your bag,
and it was like poking you in the back. And
this is going to lead to Jill having some issues.
It's like punching on his kidneys to get you that flat.
Do you rook to work today?
Speaker 2 (31:54):
Do you always keep it in your backpack as always?
But I try to nice. Yeah, I'm probably fifty percent
of the time on the day and when I'm bringing
do work in my backpack.
Speaker 1 (32:01):
But I think I won't get you wait for Christmas
this year. I about that.
Speaker 2 (32:05):
Okay, Well, I was thinking to another like another way
that used gifts actually make sense. Like I've thought about
kid getting my kids a Nintendo Switch. I don't know
if I'm going to or not, probably not, honestly, but
I've thought about it. Have we talked about this, No,
we haven't. Oh yeah, we're thinking about doing the same.
Are you okay for the new one?
Speaker 1 (32:23):
I know? Same? But then they so I'm just like,
but some of the deals are better this year on.
So I've thought about it.
Speaker 2 (32:27):
But I was think my nephew who's sixteen, he's probably
got some old games that he doesn't play anymore. He's
got a switch and guess what, they're perfectly fine games
and my kids wouldn't know the difference. And so why
go out and buy my kids a fifty dollars game
when he could just give them three the games he
doesn't play anymore that they would be interested in software?
Run wear Out does it right? So that's like, that's
where I think we used gifts. I'm okay with us
(32:49):
gifts as long as they're they're thoughtful, they might save
you some money and you're able to get the person
kind of what they want for the holidays instead of
feeling like you got to go out there and buy
something in like this new glossy packaging or something like that.
Speaker 1 (33:01):
One yeah, one man's trash is another man's treasure. What
do you think about white elephant gifts? How nice do
white elephant gifts? Do?
Speaker 2 (33:07):
This need to be see, this has to be clarified
for every white elephant gathering, because you.
Speaker 1 (33:10):
Gotta put the price, you gotta put the price range
on there.
Speaker 2 (33:13):
Some people are like, oh, yeah, the twenty five dollars
price range, But then they're getting like twenty five dollars
Starbucks gift cards or something like that, and I'm not with.
Speaker 1 (33:19):
That unless you left Starbucks. Well no, but I think white.
Speaker 2 (33:21):
Elephant gift should be a little offbeat, should be a
little goofy, right, isn't that the whole point of them?
Speaker 1 (33:25):
I guess?
Speaker 2 (33:25):
So I don't necessarily like you want it to be
something that somebody kind of wants, but it's also.
Speaker 1 (33:30):
A little weird. I like the fact that sometimes folks
will give you bust out the thirty dollars gift card
to the local coffee shop, but then someone else has
got something totally random, because you know, there's different strokes
for different folks in the same way that we're talking
about getting used gifts, Like everyone's looking for something different,
and maybe you're just not in the mood to go
home with something wacky, and you just want to load
the gift card into your app so that you don't
forget it, and boom, you got free coffee for the
(33:51):
next couple months. All right, that whole thing.
Speaker 2 (33:53):
Well, so he said her own on that one, I guess,
But maybe just at least consider giving a used gift
this year to someone who would enjoy it. But Matt,
that's going to do it. For this episode of How
to Money, we'll put links to some of the stories
we covered on today's podcast up in the show notes
on our website at howtomoney dot com.
Speaker 1 (34:10):
You know it. So, until next time, best friends out
and best friends Out
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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