Kersten Wealth Management Group - Money Sense 8-02-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to Money Central, listening to the advisors
of Kristen Wealth Manager Group, Kevin Kristen and Brad Kirsten.
Happy to be with you today. Brad, we've closed out
the month of July. It looks like overall, I didn't
even double check what it was the the for the
for the full month June thirtieth ended on a positive note.
We talked about in the previous show about how June

(00:22):
and July are typically tied at the hip, but it
does look like with one day to spare here because
we are taping the show earlier, that July is going
to turn out to be.

Speaker 2 (00:30):
A positive month.

Speaker 3 (00:31):
Yeah, we got the FED meeting later this afternoon, so
anything could happen. I think that you don't have you
don't have everybody hanging on the words of the FED anymore.
They're probably likely not gonna cut, but going to use
the press conference to kind of tee up the next meeting.

Speaker 2 (00:45):
Got a list here.

Speaker 3 (00:46):
The next meeting is actually not until September, So September seventeenth.
My guess is all the talk in the meeting then
will be that they're they're planning on cutting in September.
It's one of those whatever the first reaction is, the
talk will change it when we get to it. So
in all likelihood, if that's the conversation, we're gonna end

(01:07):
on another positive note for the next two days. But
we're at a point where you're kind of seasonally getting
into a week period of time. You know, I feel
bad for people who panicked and advisors who panicked in April,
because here we are now with the market up eight.
You know, we might finish the month up nine. On
the year, you could be a well diversified portfolio and

(01:32):
almost not have missed. Very few areas of the market,
really healthcare only that has disappointed, but international behaving finally
this year and helping performance. You're going to be somewhere
between seven and ten percent. If you just didn't panic,
if you added to risk in March or April, you're

(01:52):
a little bit better than that. So it is a
point where it's proven to be a little bit more
conservative with new dollars, Maybe tap the brakes and get
back to where you started the year on your allocations,
because when I say seasonal, you'll go back August and
September all the way back to nineteen ninety and they
have negative performance. August performance for all the way since

(02:14):
nineteen ninety is negative a half a percent. It's the
second worst. September is the worst at point eight percent
point eight four percent decline. So back to back months
here with negative performance, it's about a coin flip. Fifty
percent of the time they're negative, fifty percent of the
time they're positive. We didn't get it last year. Last
year you had this late July selloff and a little

(02:37):
bit into August and then August September kind of rip forward.
A lot of that had to do with I think
the positive momentum Trump had after the assassination attempt, where
the market kind of just chugged along until the election.
The only two positive sectors in this time of August
and September going back to nineteen ninety our technology at
a point two percent increase and utilities as a point

(03:00):
three percent increase. Incidentally, those are the two areas that
we've kept in the portfolio as a big overweight, and
utility is one that we continue to add to on
any kind of readjustment to the portfolios. And a lot
of that both of those have to do with all
of the AI data center build out and utilities and

(03:20):
technology are going to be the biggest beneficiaries. There wouldn't
surprise me at all if these next two months are volatile,
But those are our two leaders going forward. We'll look
ahead and talk about that when we get eight weeks
out if that actually came true. But if the market
keeps rallying, I think you really need to be tapping
the brakes on any rally so you have some dry powder,

(03:42):
because it would be unusual to have these two months
go by without even a five percent dip.

Speaker 2 (03:48):
Well, I agree, I agree with that, and.

Speaker 1 (03:52):
You haven't other than what happened in March and April,
which is really just kind of one big selloff. You
really haven't had any other selloff throughout the year of
any significant. But we do see good economic numbers.

Speaker 2 (04:03):
We've seen.

Speaker 1 (04:06):
Better than expected earnings numbers as well. By the way,
the S and P closed out June at sixty two
oh four, so it's at sixty three eighty six right now,
so comfortably positive for the for the month of July
as well. But I you know, I look at the numbers,
I see GDP coming in at three percent on the
first release. It's obviously going to get modified GDP's at

(04:27):
three percent. Yes, inflation is inflation is down from the peak.
But two things. Number one the cumulative effect of inflation,
which I agree with. I don't buy into the tariff
nonsense that somehow tariff tariffs are going to cause this
spike of inflation they have. The first six months is
below two However, if you look at the predictions for

(04:49):
the next few months and you look at trueflation, you're
you're creeping up on three percent again, not true inflation. Yeah,
you are creeping up on three percent in the coming months.
First NPI. Yeah, that's the expectations.

Speaker 3 (05:04):
Okay, and you're talking about the Fed's expectations for where
it's going.

Speaker 2 (05:08):
Here's my point.

Speaker 1 (05:10):
There is no reason to cut rates. And so you
know Trump can strong arm all he wants about housing.
This is the problem I think Trump's going to get
himself into, and you know he'll twist himself around, but
he's promising lower mortgage rates. If the FED cuts rates, yeah,
that's a problem. That's not going to happen.

Speaker 2 (05:29):
There's no reason to set that expectation.

Speaker 1 (05:31):
Mortgage rates are determined by the tenure Treasury, and if
the economy is good, the tenyure treasury will not fall.
Last fall when the FED cut rates, the tenure treasury
went up big.

Speaker 3 (05:42):
Spike before it with anticipation that we were in this
FED cutting cycle. And I think that would be the
only thing if the talk is that we're gonna cut
in September, and then they cut in September and after
that met and they say we are on a continued
cycle of declines. You're gonna get mortgage rates to fall.
But it's only because of the anticipation that that the
short end is going to get pushed down that far.

(06:03):
But it is. It is market driven, not Fed driven.
When you're looking at mortgage traits, looking at trueflation today,
kevin is two point oh four. Uh, yesterday was two
point oh one. A week ago it was two point
oh two.

Speaker 2 (06:16):
Is it?

Speaker 3 (06:16):
Is it above where we were in this one point
three to one point eight area.

Speaker 1 (06:20):
Yeah, but you're you're doing true flation Okay. When CPI
was reporting at two okay, yeah, a couple months back, Yeah,
trueflation was one three, was one three. So trueflation has
consistently run a half to three quarters below the CPI report.

Speaker 3 (06:37):
Yeah, but trueflation's first six months is the same as
CPI's first six months. CPI's first six months is one
point nine percent. That's you average out trueflation, that's where
it was. The last three months are are just above two,
and the first three months we're above. We're above it.
You can see the quarterly on the bottom of trueflation
and the bottom of CPI are lined up, and true
flation is three quarters of a percent than the CPI.

(07:01):
Now you could talk about how trueflation is the real inflation.
Nobody follows it. Nobody follows trueflation, right, Okay, so the
only thing does the Wall Street Journal do a headline
trueflation reaches one point two? No, they never do that.
They do CPI. The Fed does CPI. So trueflation might
be a forward looking indicator in terms of the direction.

(07:23):
But trueflation bottomed out in April, has gone consistently higher
since April, and so if you use the three quarters
of a percent metric, we're going to be in the
high twos by the end of the year, and the
Fed's looking for two. We're there for a while simply
because you had some really low ones coming off that
the CPI. The now cast for CPI for July, and

(07:46):
we're still a couple weeks away from that point one
six it's pretty much stayed there, is not moved. And
because a point three is or a point one is
rolling off, the prediction is then that the annual be
two point seven two. You're right high twos. But I
think that's the last of them, and I think it's
gonna trickle down where you're pulling off maybe a tenth

(08:07):
of all.

Speaker 2 (08:07):
I think.

Speaker 1 (08:08):
I think everyone gets addicted to narratives. Okay, we talked,
Actually we talked about this a year ago when football
season was in place. Everyone gets addicted to the narrative.
Defense wins championships, right, gotta have it.

Speaker 3 (08:23):
We're obsessed. Yeah, defense wins championship. When's the last time
that really happened? Ravens with with an okay, quarterback, that's it.

Speaker 1 (08:32):
We get obsessed with. Market can't go up unless the
FED cuts, Is it true?

Speaker 2 (08:37):
I don't know's we're more than that. We're up.

Speaker 3 (08:41):
If we doubled this year from here, we're already seven
months in, but you're you're coming up on double digits.

Speaker 2 (08:46):
That would be a good year. And we're seven months in.
We haven't had a.

Speaker 1 (08:50):
FED cut the FED raise rates. In the nineties, market
went up. The FED cut, the FED raise rates in
the early nineteen eighties, drammatically the market went up. There's
only one example where the FED cut and the market went.

Speaker 3 (09:06):
Up, and that's after eight COVID, and COVID was as
the breaks on that, but it was not just the cut.

Speaker 1 (09:13):
But that was also the stimulus from the government. So
to me, I think we're all sort of locked into
this narrative that we need it. Well two different narratives.
We have to have it or the market can't go up.
I don't necessarily know that that's true, and we have
to have it or mortgages can't the mortgages can't be refinanced,

(09:33):
And I don't know that on the mortgage side of things.
I think the market can still go higher over time.
Of course, over the over a three to five year
period it will, but when you look at the interest
rates side of it, I don't think knowing that there's
anything the FED can do to get these people that
they're three and a half percent mortgage that they want, no,

(09:54):
it's not going to happen. No, So if that's not
going to happen. If anything, especially if you want to
bring housing prices down, you're eventually going to give people
to throw in the towel on the three percent mortgage
and they're gonna.

Speaker 2 (10:07):
List their house.

Speaker 1 (10:08):
They say, well, I held on to the three percent
mortgage for as long as I could, and that's going
to increase supply, which is going to lower prices. And so,
you know, should the FED get to some level of
equilibrium and maybe cut a couple of times. Sure, probably
should cut a little tight. They're a little tight. They
should cut at least twice, But I'm not so sure.
That shouldn't be the end of it. And Trump is

(10:31):
insisting on it because he wants a certain outcome, and
that outcome probably not going to happen.

Speaker 3 (10:38):
He is a real estate guy and experience probably the
benefit of that over the last thirty years.

Speaker 1 (10:44):
Here's what it will help commercial because commercial isn't tied
to the ten year treasure because commercial does short term finance, right,
Anyone doing short term financing, which is more on the
business side of things, will be helped by lower rates.

Speaker 3 (10:57):
And if you're having to buy a house, maybe issues
to consider one threes and fives and know that you
want to take advantage of the chance to refinance later.
And if one threes and fives are in the high fours,
low fives and everything else is high fives. Six is
just go ahead and do it. It's no big deal. I mean,
we don't have to get locked into thirty is my

(11:17):
only option and uh and if they're admortized over thirty,
just just do it and play it by year. I
think we're on a trend of lower interest rates. They're
going to do some it'll move things a little. It's
not going back down to three. And like you've said,
you don't want a world where we're looking at three
percent mortgages again, because that'll mean that we had to

(11:40):
do stimulus again because of some event, and you don't
want that. So I think there's a couple other narratives
that have kind of come and went, and everyone is
kind of forgetting what everybody said. And a lot of
that revolves around all of this tough talk with tariffs
and tough talk with our trading partners. Everyone said, remember, oh,
you can't push our our friends in the EU around.

(12:03):
If you push them around, that they're they're not gonna
be our friends anymore. The EU has been for decades
the friend that comes to dinner and thinks you're gonna
pay for it, and all you're doing is saying we're
gonna split the check, and everyone else at the table says, no,
you have to keep buying his dinner or he won't
come out with us anymore. Well, Trump said, you're paying

(12:26):
for your own dinner. They they fought as hard as
they could, and here we have on Monday. Well, if
you if you print out the White House press release
for it, it's it's it says making global history. Yeah,
the biggest deal of all time, and but it is important.
And the reason that you know it's a good deal

(12:48):
is if you pull up any European UH press release,
they all say that they got the shaft. They all
hate the deal. They can't believe that we made the deal.
The US got the best end of the deal. But
if you read the liberal newspapers in the US, they
think that this is somehow a bad deal.

Speaker 2 (13:05):
Both sides can't have a bad deal.

Speaker 3 (13:06):
And if the other side unanimously says the US got,
you know, took us to the cleaners, you have to
wake up and say, this probably is a pretty good
deal for the US. Before I talk about some of
the details, let's just summarize what the last year has been.
The EU was ten percent on pretty much everything, little
higher on some, little lower on some. Let's call the
EU's tariff on our goods going over there ten percent.

(13:29):
They also had all these restrictions for basically just not
allowing things in or making it difficult to have things
come in, so most small to mid sized companies didn't
bother exporting to the European Union. In April, we did
reciprocal tariffs and did ten percent. They were ten.

Speaker 2 (13:46):
We did ten.

Speaker 3 (13:47):
Okay, what were we the year before? And I think
for the most of the decade prior we were one
point two percent on average. Some things had zero, some
things had five. The average four all goods of EU
goods coming into the US was one point two percent
for twenty twenty four. So we went to ten because

(14:08):
they were ten. And where are we now? They are
now zero. We ship our goods in and they are zero.
We are fifteen percent. They ship our goods here and
we're fifteen percent. This is part of that fair and
reciprocal for the trade imbalance part of it, And this
is what they didn't think Trump would get done, to

(14:29):
have the balance be a little bit more. Because we
buy more from them, we're charging a little bit we're
charging the tariff and so they're zero war fifteen. How
is this not a good deal? It puts a level
playing field on US competitors to EU goods, so that
they're not just shipping cheap stuff. Here, we're on a
more level playing field. And then beyond that, it's their

(14:50):
agreement to start buying some of our stuff instead of
buying cheap goods from Asian countries or buying things like
oil and natural gas from Russia. Remember back in twenty eighteen,
Trump goes over there and says, why are you buying
Russian oil and natural gas? There's gonna come a day
where they're gonna either cut it off or they're gonna

(15:11):
hold your feet to the fire because you're relying on them.
You could buy it from us, and you're not. And
everyone at the table laughed. He's over there somewhere at
some EU meeting and everybody laughed, and ah, that's funny.

Speaker 2 (15:24):
Why would we do that?

Speaker 3 (15:25):
Well here they are now they're going to because they
had to experience this Russia Ukraine war and a little
bit more volatility in the oil price. And not to mention,
if we're supposed to be their friend, why wouldn't they
So the deal.

Speaker 1 (15:39):
Definitely think I mean for the energy standpoint, I don't
think that there's nearly as much pushback because they saw
what happened when they relied too heavily on Russia.

Speaker 3 (15:48):
Yeah so, but even our media laughing at Trump for
even saying it to them, And here we are now
they're finally doing it. The first commitment of seven or
fifty billion, I don't even know how many years that
is or what it means energy.

Speaker 2 (16:00):
Actually, that's the one part of it I think will happen.

Speaker 1 (16:02):
Some of these other things were Trump's saying that these
countries are going to invest billions and billions a out.

Speaker 2 (16:07):
I don't know if it's actually gonna.

Speaker 3 (16:09):
Yeah, there's some blanket statement about investment of six hundred
billion in the US. I think what they're talking about
is is incentivizing you to build a plant here so
that you don't have tariffs and and and so they
throw a number at it.

Speaker 2 (16:22):
Who knows, but it takes so long that it does.
But it will be out office.

Speaker 3 (16:25):
But it's part of the reason for the tariff is
you're not building anything here.

Speaker 2 (16:30):
You want to avoid the tariff.

Speaker 3 (16:31):
Do this. And there's some six hundred billion commitment, But
the sevener and fifty billion is happening, and it's and
it's for US energy and it benefits US energy companies.
There's there's a couple of carve outs for even higher
tariffs on things that the US is at a disadvantage
because they're shipping cheap goods here steal aluminum, copper, higher

(16:52):
tariff on those because we.

Speaker 2 (16:54):
Don't why do we want it in?

Speaker 3 (16:56):
Why wouldn't we want the US company making steal a
luminium and copper to benefit from it. So a fifty
percent tariff on those goods coming in, and then the commitment.
The other two commitments I think that are the most
important are all the non tariff barriers that the EU
puts on is going to be kind of an ongoing
commitment to remove those. And then the other is all

(17:17):
the deals that they're they kind have not inked yet
for the European Union to buy military equipment that we're
not buying for them anymore. They're going to buy their
own equipment from US. So it's EU spending their money
to buy our company's US military equipment. What was it
we were doing it and shipping it to them for

(17:39):
free that's over. So that's that's a big part of
this deal that nobody's really talking about. They were getting
a free lunch, and that's part of If you read
the foreign articles, they're like, why would they make this deal?
They were just sending us stuff and now we have
to pay for our own. This isn't good. Well, that
the free lunch is over, and that a lot of
this has to do with that. The headlines are this

(18:01):
zero percent for their stuff, fifteen percent or fifteen percent
for stuff coming into the US, zero for the stuff
going to the EU. But all these other things are important,
and that's why it did take some time to get
it done. It wasn't gonna happen overnight. It took a
few meetings. And the same thing with China. We're having
ongoing discussions with China. Things are moving forward, they're making

(18:21):
agreements on certain things, but they're not going to roll
out a deal with five of twenty things worked out.
They're going to have to keep having meetings, and that's
why it took so long. With the EU, and the
reason they're mad is all the things that were unfair
are gone and they're going to pay up a little
bit for a while to even up the trade deficit,
and none of the US media thought that he would

(18:44):
get it done. I think none of the European media
thought that they would cave, but they did, and so
it's all good for us.

Speaker 1 (18:51):
Well, and here's something that, in my opinion, is on
Trump's side for putting these tariffs in place and having
it last a long time. There's one thing that regardless
of who the politician is, there's one thing that every
politician is addicted to is money. Money coming into the government. Okay,
they want money coming into the government so they can

(19:12):
do more programs. And if they do more programs, they
can spend more money and buy more votes and do
all those things they want to do.

Speaker 3 (19:19):
Is is a Democrat really going to come in and
see three hundred billion or four hundred billions coming from tariffs? Yeah?

Speaker 2 (19:26):
Right, right, right? When's the last time I cut that off? Yeah?
When's the last time a Democrat.

Speaker 3 (19:32):
Turned off a faucet right right after money coming in
that they can spend.

Speaker 2 (19:36):
That they can spend. That's never happened. And that's the
pushback with EU.

Speaker 3 (19:40):
Was not going to come to us and be like, guys,
I know a lot of this stuff got put in
place post World War II to build back up. Hey,
we've already built back up that this is unnecessary, Okay,
that is like that is like you you accidentally put
a tip on top of the gratuity that's already on there.
The waitress is not going to run out to your
the parking lot and be like, hey, you doubled up here,

(20:02):
so you want to accept it.

Speaker 1 (20:03):
The terriffs obviously are gonna happen regardless. The only thing
I'm skeptical of is the vague commitment to invest. I'm
very skeptical that that will ever. That will I mean,
what is it? But what's what's the penalty for not
doing that?

Speaker 2 (20:17):
Well? Nothing?

Speaker 3 (20:18):
Yeah, but if they're gonna have to spend more on
on their own NATO defense because we're just not doing it.
A commitment to buy from us, because we're not just
gonna ship it to you for free, it means they're
paying and we're not. That's good for us, good for
our government. That was balanced, Yeah, and some of that
is separate. But a lot of these trade deals include

(20:39):
this sort of vague commitment to invest.

Speaker 2 (20:41):
And that's fine.

Speaker 1 (20:42):
I mean, I'm not sure the market is pricing much
of that in anyway, let's take our first pause. You're
listening to Money Sense Kevin and Brad Kurstin will be
right back.

Speaker 2 (20:50):
Welcome back to the show.

Speaker 1 (20:51):
You're listening to the advisors of Kirsten Wealth Manageer Group,
Kevin Kirsten and Brad Kirsten happy to be with you today.
As a reminder, we are professional financial advisors and our
offices are in Perrysburg. Give us a call throughout the
week if you'd like to set up a consultation to
review your financial plan. Whether you're just getting started, well
on your way, or already in retirement, we'd be happy
to sit down with you and review four one nine

(21:12):
eight seven to two zero zero sixty seven, or check
us out online at Kirstenwealth dot com. Brad, We've talked
about a lot of different radio show and podcasters over
the years. Some things we agree with, some things we
disagree with, and one of the most famous ones is
Dave Ramsey, who's all over the radio.

Speaker 2 (21:32):
And there are a few good things, and I think.

Speaker 1 (21:34):
The general theme of the investing point being careful, being
careful with debt, which I think is his overall theme.
I think that general theme is pretty good. But we've
found over the years, whether it be some of his
investing advice where he talks about taking eight percent withdrawals
in retirement to be a little bit excessive, and also

(21:57):
some of the claims that he makes, and he's getting
to the point where nobody's fact checking him. If Dave
Ramsey said, it must be true.

Speaker 2 (22:04):
Yeah.

Speaker 3 (22:04):
And that's what I have a problem with. How you
can go on even famous podcast say things that are
obviously not true, and that podcaster does not just look
it up. Brogan does this all the time. Hey, that
doesn't seem quite right.

Speaker 2 (22:19):
Let's look it up.

Speaker 3 (22:20):
Oh no, you're you're misconstruing these facts. So this week
he's on with Tucker Carlson. Tucker Carlson's podcast and his
YouTube channel are very popular, so popular that two days
after I went to print out the comments for this
particular thing, and it was I had to.

Speaker 2 (22:38):
Cut it off.

Speaker 3 (22:39):
You see the stack I have This is about four
comments per page, and it's I've got it ended up
being like two hundred pages. Before I realized how many
we're gonna print out. I caught it two days after
every single comment except for one out of I would say,
thirty are the same.

Speaker 2 (22:55):
Man.

Speaker 3 (22:55):
I'll read some of them. But here's the here, here
was the thing that he said that I was just like, oh,
oh my god, how how can a real podcaster and
his staff not call him on his and so article
even that printed after praising Dave for this, and it
says Tuckle Carlson asks Dave Ramsey why credit cards are
a problem if you pay them off, and Dave said,

(23:15):
that's the great lie. Most people don't. So further on,
he says, most people don't. That's the great lie. Everybody
talks about this theoretical discipline that they that they just
freaking don't have. That's his quote, they don't they just
if we don't have, I mean. So, then he says

(23:38):
it wasn't just it's not just my hot take, it's
back by data. Seventy eight percent roll the balances over
month to month. That's what he said, seventy eight percent.
That's the data. Data is pretty easy to look up.
A lot of different sources have this data. But he
says the data backs him up at seventy eight percent.
And then he goes on to talk about how ninety

(23:59):
seven percent of people don't paid their thirty year mortgage
off in fifteen. Well, what a dumb set. What if
I wanted to pay it off in fifteen, why wouldn't
I get a fifteen the rate is lower. Well, we've
talked about on this show that it's still better to
do a thirty even if you want to pay it
off in fifteen. But for the lot of people, probably
don't do it. But it's it's not helping you that much.

Speaker 2 (24:18):
So let me go further. Here, go down.

Speaker 3 (24:21):
After he goes off on people using credit cards, he says,
not only do they not pay it off, the average
American this is his quote, the average American right now
has thirty seven thousand in credit card debt. The average
American not American household, he said. He said American, but
even household would not even be close. They get charged
eighteen to twenty eight percent. And that's how Good Old

(24:43):
Chase can make three hundred million on you. I mean,
he's just so negative on the whole system. Okay, And
he says using a credit card, people think they're gonna
get all these advantages.

Speaker 2 (24:53):
He is his quote, people with.

Speaker 3 (24:55):
A master's degree in finance. Maybe I got one percent
back on a Discover card So you're gonna run one
hundred grand through a Discover card and get a thousand
back on what planet does that build wealth?

Speaker 2 (25:06):
Okay?

Speaker 3 (25:07):
Why is Dave, who's worth five hundred million dollars making
fifty million a year, why does he have a Discover card?

Speaker 2 (25:15):
Okay, one percent.

Speaker 3 (25:16):
My kids who have no jobs could go get a
Discover card and get more than one percent, And he
says one percent. So those are the three claims that
I've just I gotta pick apart. So let's look at
the real stats. He says that seventy eight percent of
people roll their balances, only twelve percent pay them off. Okay,
In twenty twenty two, the number of people that not

(25:38):
only paid it off every month, but pretty close to
that have it as an auto pay to pay balance
forty two percent. Twenty three it was forty four percent,
last year was forty five percent. It's got up every year.
Right now, it's forty six percent for the current year
that are paying it off month to month and forty
six percent that have not paid any interest this year.

(25:59):
He says, it's back by data that seventy eight percent
roll of balance, or only twelve percent paid off. But
the real data is that forty six percent do. I
was actually surprised. I thought it would be even higher,
but almost fifty percent never pay any interest. And this
also if we go to the comments, it's just NonStop
people saying I haven't paid it in fifty years and
I get the advantages of it. Well.

Speaker 1 (26:20):
The other thing too, is by the way, on this
whole argument, and you might be in to get into
this as well. He says people who use credit cards
spend more money, which I find to be nonsense.

Speaker 2 (26:30):
That is part of his argument. That is part of it.

Speaker 1 (26:32):
But here's what I would also say. Visa charges on
average about two and a half percent for a transaction.

Speaker 2 (26:38):
So not to me so, but that's in the price
of the product you buy.

Speaker 3 (26:43):
So if you're not taking advantage of the credit card benefits, correct,
and you are paying cash that price you're paying for
the credit card.

Speaker 1 (26:51):
So so look at two people, they're going to buy
one hundred dollars product. Yeah, okay, that product would be
ninety seven dollars and fifty cents without Visa, Yes, okay,
both are gonna pay one hundred. One is gonna get
two percent. I don't know where at one percent cash
back you can get two percent cash back very easily, even.

Speaker 2 (27:08):
If you do no other benefits.

Speaker 1 (27:09):
One can get even if you do no other benefits,
you can get two percent cash back very easily. But
so the one person's gonna get two percent cash back
and the other person's gonna pay cash and pay the
extra two and a half percent. You think, oh, if
I use a visa, I pay two and a half percent. No,
the merchant pays the two and a half percent, which

(27:30):
means the people who pay cash are also paying the
extra cost.

Speaker 3 (27:35):
Now, occasionally you'll have something, you know, you try to
pay your daughter's college tuition on a credit card, They're
gonna make you pay an extra fee.

Speaker 2 (27:43):
Okay, yeah they would. Yeah.

Speaker 3 (27:44):
Uh, you have somebody that we'll get your house, maybe
maybe your lawn guy. He might charge you an extra
two fine. But ninety nine point nine five percent of
the things that you purchase do not have a search
charge to you. They have a search arge to everyone
and you don't even see it. So you're right, the
cash person is not getting the benefits that if you

(28:04):
go somewhere and they offer a three percent cash discount,
you might.

Speaker 2 (28:08):
Want to take advantage of that. Sometimes you see that
on gas even you might want to take advantage of that.

Speaker 3 (28:11):
Let's go a couple other things here, and then we'll
talk about the things that aren't Even in the article,
thirty seven thousand is what the average credit card balance
rolling balances? He says, no, not back eye data, And
even in the comments, people are like, that seems a
bit high.

Speaker 2 (28:27):
Pretty easy to look up.

Speaker 3 (28:28):
So the real data is it was last year it
was six one and ninety four, and this year it
has gone up, but so have people's incomes, by the way,
and net worth this year it is six four hundred
and thirty four, So just a little different than thirty
seven thousand, and Tucker could call him on this. It's
pretty easy to look up with acor has a staff
with AI. It will take you ten seconds to realize

(28:50):
thirty seven thousand is just like six times too high.
Four hundred and thirty four is this year whole household
eight nine hundred and forty. Because that's my thoughts. Oh,
maybe he's doing a whole household. Whole household is eighty
nine hundred and forty is the average if it's a
husband and wife. How about maybe it's an aged thing.

(29:10):
I look this up. Maybe he's talking about certain ages
versus others. Gen X, which are in their peak earning
years right now, are the highest at nine five hundred
and fifty seven whole household. The lowest is gen Z
three four hundred and fifty. Are you talking about current balances?
That's current balance, but that's current rolling balance. If you
paid it off, your balance is zero.

Speaker 1 (29:30):
I was gonna say, because current balances, even people who
pay it off every month, if they're doing the data
based on current balance, all of those people would be increased.

Speaker 3 (29:38):
I thought about that. I couldn't even find that. So
there's no way, Dave Diddy. I could not find it
because you don't have a balance. If you pay off
your balance, your rolling balance is zero every month. So
it has to be the rolling balanced people. And the
average is six four hundred and thirty four, not thirty
seven thousand. Now, let's poke some holes in this stupid
one percent thing that he says. Pretty easy to look up.

(30:01):
Any credit card is going to give.

Speaker 2 (30:02):
You more than that.

Speaker 3 (30:03):
Even if you're doing miles or hotel points, you're getting
more than that. And if you're good at it, you
can get upwards of three maybe a little bit more
if you're if you're really good at it and only
using it for things like hotels that give you four
stay the fifth free or waiting for sales for your
your mileage flights, you probably can get somewhere four or
five on what you're gonna get. But even if you

(30:24):
just want it to be cash back. Right now, I'm
looking at one that says six percent cash back on
certain categories, two percent cash back on most other categories,
and one percent cash back on all else. The six
percent is just for a year, but it's on about
twenty different categories. This is the best one. Look at
it up on Points Guy. He ranks this is the best.

(30:45):
One says that in your first year you're gonna average
three and a half, and after the bonus falls off,
it goes down to three percent on all others, and
you'd be in that two and a half to two
point seven five range. That's what I would find. If
you know what you're doing and you want cash back,
over two should be the goal and two minimum would
be if you, just for the convenience of him, want
to keep the same card. A far cry from the

(31:08):
one that he says he's just skewing everything to go
with his narrative, and I just think it's so disingenuous,
and a lot of the comments say the same thing.
I'm telling you, ninety nine percent of these comments are
not pro Dave. They are the opposite first one I
pulled out. I mean again, I have two hundred pages.

(31:28):
I'm not going through all of them. I feel sorry
for Dave to live in a world where people where
I think everyone can't handle having a credit card. I've
set up reoccurring payments and I don't know anyone that
doesn't have reoccurring payments to pay off the balance in full.
Next person says, I have a credit card. I've had
a credit card for sixty years, and I have never

(31:49):
carried a balance month to month in my entire life.
That's pretty much the theme of everyone here. We two
use credit cards for ninety nine percent of our stuff
to get miles. They add up, I have never paid
for a flight. Usually we take one or two a year,
and we always use it for miles. And that's the thing.
He says, it's not worth it. Here's the problem with
him saying it's not worth it. He makes fifty million

(32:10):
dollars a year. Is it worth it to him to
get one or two thousand dollars a year bonus back. No,
what if you make fifty What if you make seventy
five and you're getting two to five thousand a year,
you're talking about ten percent more of your income just
to play this little game. And oh, by the way,
to have the benefit that no one is going to

(32:31):
get into your bank account because you're using a debit
card to have the benefit that you that in fifteen minutes,
if you have a fraudulent charge, it's gone to have
the benefit that nobody will hack into your bank account,
take all your money and it might never come back,
or if it does, it'll take you years to get
it back, and all the while you don't have your
money back. And so a lot of people talk about

(32:52):
that in these comments about how they will never use
a debit card again because their account got hacked. They
either didn't get their money back or they didn't get
it back for years and it was a big pain.
So read a few more comments. I disagree that debit
cards is basically what I was talking about, have the
same risk as credit cards.

Speaker 2 (33:08):
They do not.

Speaker 3 (33:09):
If someone siphons your bank account, there's a lot of
hoops to go through to restore it. And that is true.
And the next person here on the right below it
two years to deal with a cleanup in tall order.
I've had two issues in thirty five years. One was
with a credit card company, and in fifteen minutes I
had all my money back. Here's another one. Cash does
not Oh, I forgot about this part of what he said.

(33:32):
I didn't even highlight this in the articles. He said
that his wife carries cash around to spend cash for everything.
I bet, I bet she's thrilled that he's saying she's
got a purse full of cash. He says, cash for groceries,
cash for everything. She only carries cash. They're worth They're
worth five hundred million dollars. She's not carrying a little
bit of cash around. He basically just advertised that if

(33:53):
you see my wife out, he's putting her in danger. Yeah,
you don't hear a lot of people unless you're on vacation.
That's what the pickpockets are out right. Most people don't
carry any cash around. You're gonna rob me. I just
take my credit card. Great, I'll call and cancel it.
Good luck. And that's what this person says is is
Cash is the dumbest thing that you can use. It

(34:14):
doesn't improve your credit. You need to refinance your house,
you need to even buy a car. You have no
credit if all you use was cash. And so something
else to think about is building credit? Just a continue
ones where people are like I must be the only
one with discipline. I'm one of the twelve percent, and
so are all my friends, right right, it's like everyone

(34:35):
I must know only the only people I know are discipline.
Credit card uses, because I only know credit card users.
Debit cards are not smart. You're putting all your money
at risk. Why wouldn't you put the bank's money at risk?
If you hate banks so much?

Speaker 2 (34:50):
It's a good point. He hates banks. Why don't we
put their money at risk instead of mine? Why don't
we put chases money at risk instead of mine? If
it's gonna get it's gonna.

Speaker 1 (34:57):
Be fraudulent, the fraud per detection observation. You just made
my regardless of the money and the points. And that's
all kind of it's it's kind of a pain. It's difficult.
But in this if you did nothing else, honestly, if
you did nothing else, then I was going to tell somebody,
because sometimes to try to maximize all these points and stuff,

(35:18):
it does get exhausting. I just saw an ad. I
think there's two different ones out there. I think Capital one,
which is a visa, and I'm pretty sure Chase has
one two where it's just no fee, two percent cash back.
Like even if you said I don't want to play
the game because.

Speaker 3 (35:36):
It's too much homework that I don't want to bounce around,
there's no bonuses here. This is just the standard deal.
I agree. If somebody is not going to bounce around
for credit card, credit card, do that, do it where
it has the best non bonus deal, right, and then
just call it a day. But then you're protected. And
Dave Ramsey hates banks. Why wouldn't he say, Hey, if

(35:56):
there's a fraudulent charge, the bank has to pay for it.
If you do your debit card, or you get robbed
because you're carrying around a purse full of cash, it's
you that has to pay for it. We hate banks,
let's have them have the risk. But no, he doesn't
say that. I'll end it with this. I've gone through
a lot, this person says. The thirty seven thousand average
balance figures seemed way too high. I checked and in

(36:19):
fifteen seconds, several sources said it was six. So it's
just what is Tucker doing? And if you watch it,
he's like, really, literally this phray, this tone really only
twelve percent? Really thirty seven thousand? No, not really, it's
all made up.

Speaker 1 (36:39):
I mean it's it's just to sum this up, it's
very simple. Use credit cards, never carry a balance, pay
them off every month, and if you want to keep
it simple, do the no annual fee free cash back cards.

Speaker 2 (36:54):
You'll get all the fraud protection. Do not use your
debit card.

Speaker 1 (36:57):
I would go that far. I would say you can
take money out of your ATM. Other than that, do
not use your debit card for any swipe transaction at all.
I don't think anyone should do it.

Speaker 2 (37:07):
Never.

Speaker 3 (37:07):
If you have your credit your debit card hacked, it
will take you months to get your money back, if
at all.

Speaker 2 (37:14):
If it's your fault, the bank is not giving you
your money back, it.

Speaker 1 (37:17):
Will take you months to get your money back from
the bank if you get it at all, and the
credit card will give it back right away.

Speaker 2 (37:22):
Let's take our next pause.

Speaker 1 (37:23):
You're listening to money since Kevin and Brad Kurston will
be right back.

Speaker 2 (37:27):
Welcome back to the show.

Speaker 1 (37:27):
You're listening to the advisors of Kirsten Wealth Manager Group,
Kevin Kirsten and Brad Kirstin.

Speaker 2 (37:32):
Happy to be with you today.

Speaker 1 (37:33):
Switching gears a little bit, a little bit of a
planning topic, a little bit of a just an overall
life topic as well. I saw it in the Wall
Street Journal, Brad ways to prepare when your adult children
need financial help. It does come up. It does come up.
It could be a twenty two year old, could be
a forty two year old. It does come up quite
often in our business, and there's just things to look

(37:56):
out for. And even if you have some people have
a plan, they say they almost want to build it
into their financial plan. When my kids get to this age,
I want to help them out when they get their
first job. Maybe you want to help them out with
their first car so that they can not be saddled
with big payments. You want to help them out with
their down payment on their house. You want to just

(38:18):
give them a chunk of money when they graduate or
get married or whatever it might be. The problem I
find is, let's say someone's fifty years old and they
have a twenty two year old, or they're fifty five
years old, they have a twenty two year old and
they want to help that child out, and they have
all their money in their four o one K. Let's

(38:38):
start with that. When you have all your money in
your four to one K, you don't have any other
liquid savings. But you had this intent and you didn't
plan for it, Well, you're gonna be stuck paying penalties
and taxes. Even if you have an IRA, penalties and taxes.
Even if you have a roth IRA at least you
avoid some taxes, but you're paying penalties. So no, no,
I'm sorry. You're gonna be paid the taxes too if

(39:00):
you're under the age of fifty nine and a half.
So there's a lot to be careful of. And it's okay,
you can build it into your plan. But the first
piece of advice here looking at it is build up
liquid savings. We're talking about a non retirement savings, whether
it just be money in the bank or in a
non retirement account.

Speaker 2 (39:20):
We've talked a lot about that on this show.

Speaker 3 (39:22):
Yeah, and you can, even if you know you're going
to be given to him anyway, you can do a
joint account with them and have their name be the
Social Security numbers on it. That way, they're paying the tax,
not you likely in a lower bracket. That's one thing
to think about. The other is, even if you have
two or three years, especially if it's something larger like

(39:43):
a help with a down payment on a house and
the only thing you have is an IRA, we can
at least spread the taxes out a little bit over
a three year period. And it doesn't even have to
be a three year period. I'd somebody that wanted to
just split it up into two years, and we were
doing it in December, so it was a two month
period that we were litting it up. Now we're letting
it grow in the in the child's name. When they
need it later this year or early next year, there's

(40:06):
gains on the account. It'll be her paying the tax,
not someone who's in a higher bracket. So just a
little bit, even if it's a couple of years where
the extra planning can really save on taxes, that's right,
And so.

Speaker 1 (40:20):
I think it's a good idea regardless even if you
aren't planning on helping out a child, to have a
non retirement account for flexibility in retirement. What if you
want to buy a house. What if you want to
buy a house and your only source is your IRA
for that down payment. I'm gonna go backwards a little
bit here. The estimate is right around fifty percent of
parents say they are helping with adult children in the

(40:41):
United States. That's actually a three year high. The average
is approximately if someone is helping adult children, the average
is almost eighteen thousand dollars.

Speaker 2 (40:51):
Per year per year.

Speaker 3 (40:53):
Oh okay, I would say in my experience it is.
And there's probably some of that we don't know they're
averaging out, there's some bigger ones. Yeah.

Speaker 2 (41:00):
Yeah.

Speaker 3 (41:00):
My experience is probably a third are helping with one
larger purchase, you know, post post marriage, and that's it.
And uh yeah, so it's uh and that's typically going
to be somebody a little bit younger, fifty five to
sixty who's doing it. But again, it only becomes a
problem when we don't have non retirement sources or a
rowth IRA, because then we really have to examine the

(41:22):
tax brackets we're in. And if somebody's still working, we're
talking about peak earning, heres, peak peak tax, highest tax
and uh so, yeah, that's that if you can plan
ahead and get the non retirem account build up. That's
really what it's there for those larger one times.

Speaker 1 (41:39):
Here's something that we don't recommend, but people end up
with these, and that is a universal life insurance policy. Okay,
it's something that we steer people away from. But if
you want to help an adult child and you're in
your fifties and most of your money's tied up, if
you have a life insurance policy with cash value, talk
about how that can be a source that that you

(42:00):
could pull from that you can help. Yeah, so you
might not even need this in insurance policy anymore, or
it may be overfunded.

Speaker 3 (42:06):
Yeah, So a couple things to talk about with the
taxes on that type of policy. You got a cash
value built up. Your cost basis in that policy is
the premiums you paid. So maybe you put thirty in
and it's worth thirty seven, so it would have some tax,
but not fully tax like your IRA Air.

Speaker 2 (42:21):
Four to one K distributions.

Speaker 3 (42:23):
And so if you liquidated the whole thing, you'd have
a little bit of gain in that case, and most
of them do, even if it's just fixed interest that
they're paying. But really what the insurance salesman's going to
tell you is.

Speaker 2 (42:36):
Do a loan.

Speaker 3 (42:38):
You don't have to pay tax. Well, you don't have
to pay tax on that loan until you surrender the policy.
And the problem is a lot of these are at
a point where you don't have to pay anything and
you can keep the life insurance going until you do
the loan, and then the loan is a desk spiral
to have the the rest of the cash value go away.
I think a better option is you had the life
insurance for income replacement while you needed income replacement. Now

(43:03):
hopefully you're at a point where you have double, triple,
quadruple the assets and you don't need the income replacement
policy anymore. Maybe you're retiring. Why are you retiring? Because
you have enough money to live on That means your
wife does too, and therefore, why do we need the
insurance policy and all this cash value that eventually is
going to go to zero, and if you're in good health,

(43:25):
one option would be just to surrender it. Pay a
little bit of tax, but not a lot of tax
for this one time expense that you have.

Speaker 1 (43:33):
The third idea here in the journal, I think this
is not a bad idea, and I've heard of people
doing this, and it's something that you might want to
think about, and that is, buy some real estate when
your children are young, buy some real estate, buy a house,
rent it out. Then two different things. Number one, once

(43:54):
they get to the point where they've graduated high school
or graduated college, whatever, and they're going to go off
on their own, you have a place that they could
live in and you could give them a discounted rent
or something like that, or you could even there's ways
to even give that home to them, or if they
move away, you now have a separate source of equity

(44:14):
that you've build up.

Speaker 2 (44:15):
Non ira, non ira. You build up the equity.

Speaker 3 (44:18):
You could even take out a home equity loan and
help them with another home somewhere.

Speaker 2 (44:21):
If you weren't selling to them by the other if
you weren't. Yeah, so.

Speaker 1 (44:26):
Obviously it might be too late at a certain point,
when they get to a certain age, you don't have
enough time to build up that kind of equity. But
it could be a possibility, and all the while you
might make a little investment income along the way. Now
that's there's no free lunch there. That's going to be work.
It's worked to own a rental property. I think maybe
that's the biggest misconception. You either hire it done and

(44:47):
then that dips into your profits, and you hire a
management company to do it and that dips into the
profits that you make, or you're doing a lot yourself.
I have a few friends, one that I can think
of that has a rental property. Every couple of months,
there's always something.

Speaker 3 (45:02):
And he's handy, yeah, and yet he still thinks it's
a little bit more than he thought.

Speaker 2 (45:06):
The washer broke, the dryer broke, whatever it might be.
So it's one or the other.

Speaker 1 (45:10):
You're gonna either pay someone to do it and that
dips into your profits, but it is, it is gonna
be work. But that's another non retirement source of money
that you could tap into for gifting or to help
a child.

Speaker 2 (45:21):
Out there know what's coming now they live.

Speaker 3 (45:23):
If you know it's coming up, it's a perfect topic
to talk to your financial advisor about so that we
can make talk about the options and make a plan
for this one time expense.

Speaker 2 (45:30):
You know it's coming yep.

Speaker 1 (45:32):
And I think it's for us when we're talking to people,
it's not about oh, don't do it. I mean, obviously,
if it's going to mean that the person can't retire
or has to work ten more years.

Speaker 3 (45:42):
Maybe you do have to have that conversation, but build
it into your plan. Let's do it the best way.

Speaker 1 (45:48):
Yeah, right when your kids are born, build it into
your plan so that you're prepared for that when they're eighteen,
twenty twenty two years old. Let's take our last pause.
You're listening to Money Cents Kevin and Brad Kurston. We'll
be right back and welcome back.

Speaker 3 (45:59):
You listen to the advisors Kirsten Wealth Manager Group. Brad
and Kevin here with you. If you're out of town
or listening on iHeart and didn't hear any of our eyes.
Our offices in Perrysburg, Ohio, and yeah, we're professional financial advisors.
Call us anytime if you have any questions about your
own situation. And for those that listen on the radio,
if you are ever out of town. Easy way for

(46:19):
you to pick up the podcast is just to google
Kirsten Wealth on iTunes on the Apple podcast app, or
to go to our website and now there's links there
you can just click right on it. Kevin, the big
beautiful Bill will be talking about it, probably for the
next six months. But a lot of things that are
new that we're hearing about, and one of them is
not new, but we're just kind of kind of doing

(46:42):
the math on it, realized how good it is, and
it's the standard deduction for is it a three or
four year period for over the age of sixty five,
you get the higher standard deduction already thirty three to five,
I think is what it was, and maybe it's even
grossing up higher for next year. And then you get
this six thousand per person you'd finally enjoy.

Speaker 2 (47:00):
It would be forty six.

Speaker 3 (47:01):
Thousand, seven hundred as a standard deduction count starting next
year have to.

Speaker 2 (47:05):
Be under one hundred and fifty thousand of joint income.

Speaker 3 (47:07):
But somebody who was in that level, your first forty
six seven is not taxed. Then we've got whatever that
first bracket is probably Mary finally joint, it's probably thirty
thousand is ten percent. You're talking about an overall bracket.
If you made seventy to eighty thousand, your overall bracket's
going to be somewhere around three to four.

Speaker 1 (47:30):
You're still in the twelve per at that point, you're
still in the twelve percent bracket. Forty six seven. I
think the twelve percent brackets ninety plus thousand, so you're
at like one hundred and thirty seven thousand of income
and paying twelve percent. Just to reiterate, we've only got
a couple seconds left in the show. If you're doing
roth conversions or you were ever thinking about it, I

(47:50):
still believe and I know we've kind of had this
debate on this show whether tax rates are going up
over time or not.

Speaker 2 (47:55):
Well, they didn't. And remember everybody wants you to do
it all last year.

Speaker 3 (47:57):
But if you got the twelve percent bracket and you
have room in there, convert to a wroth. That's fine,
But don't take yourself over that one fifty because of
this standard deduction. That's a key thing that most people
are I think are gonna miss.

Speaker 2 (48:09):
Yeah, don't don't go.

Speaker 1 (48:10):
Don't lose that extra standard deduction, but take advantage of
that twelve percent bracket. And if you're already living on
your IRA and you're still not up to the max
on that twelve percent bracket, take out what you need
to live and then take the rest and convert to
a wroth. Because some of these tax breaks are going
are are definitely expiring, so but we're gonna keep diving

(48:31):
through the big beautiful bill because we're seeing other things
pop up because it was such a large bill that
we're going to continue to talk about on this show.
Thanks for listening, everyone, we'll talk to you next week.

Speaker 2 (48:44):
You've been listening to Money since brought to you each
week by Kirsten Wealth Management Group. To contact Dennis Spread
or Kevin professionally called four one nine eight seven to
two zero zero six seven or eight hundred eight seven
five seventeen eighty six.

Speaker 3 (48:58):
Their email address is Kirsten Wealth at LPL dot com
and their website is Kirstenwealth dot com.

Speaker 2 (49:05):
Opinions voiced in this show are for general information only
and are not intended to provide specific advice or recommendations
for any individual.

Speaker 3 (49:12):
To determine which investments may be appropriate for you, consult
with your financial advisor prior to investing.

Speaker 2 (49:18):
Securities are offered through LPL Financial member FINRA SIPC