Money Monday with Brian James

Episode Transcript

Speaker 1 (00:00):
If anything Trump does, I think he knows is doing
every day what we.

Speaker 2 (00:03):
Have to you know, fifty five KRC the Talk station.
He five the fifty five KRC the Talk Station.

Speaker 1 (00:15):
Are very happy.

Speaker 3 (00:16):
Monday's always made extra special happy. We get to hear
from Brian James Moor Financial on money matters. Brian James,
hope you had a wonderful week and welcome back to
the fifty five KRC Morning Show.

Speaker 1 (00:26):
Thank you and good morning to you as well.

Speaker 3 (00:28):
Not a lot of good news in the rundown of
topics here, so let's talk about consumer sentiment. I know
there's a couple of polls out Michigan University of Michigan
poll and a CNN poll people not feeling real good
about the economy at least in so far as concerns
about inflation are concerned. Are they are are the those
polled who are having these concerns and the sentiment dropping

(00:51):
off accurate?

Speaker 1 (00:55):
Well, but any poll is only as accurate as the
audience that they're talking to. Now, these do come from
the University of Michigan, which is that that's who we're
always talking about, right whenever you hear the words consumer sentiment. Yes,
there are plenty of organizations, but the University of Michigan
is the whopper that has been around for the longest time.
So if you're going to trust any poll, it's the
one with the largest reach in the most history. So

(01:16):
University of Michigan latest survey is showing a significant decline
in sentiment in February, dropping by about ten percent from January.
This is not shocking if you've paid any attention at
all to the headlines. I think there were plenty of
people out there who thought all we had to do
was was elect a really conservative administration and everything would
get fixed with the push of a button, because it's

(01:36):
just that simple. Well, we know that's not the case. Obviously.
Egg prices are the thing that everybody's sick of hearing about.
Tariffs are never ever ever going to be an immediate
good thing. They are shot across the bow to start
a little bit of a trade war and settle things
out at a different point. But in the very short run,
we're always going to have a negative downturn as business

(01:58):
sorts itself out and countries figure how they're going to
work together again with regard to these trade agreements. We've
seen it before, though, so nothing to panic about yet. However, yes,
obviously a lot of grumpy people out there at the moment.

Speaker 3 (02:09):
Well, and I found it a little ridiculous that Trump
actually set on the campaign trail. Here at trail he
promised to bring down prices starting day one. I think
I may even comment about that on the air. How
I mean this is inflation is very complicated and complex.
You talk about egg prices, well, there's something called the
bird flu out there. They're killing millions and millions and

(02:31):
millions of chicken, obviously reducing the availability of the price
of eggs. So there's one legitimate connection that has nothing
to do whatsoever with any administration's policies. So you can't
magically make bird flu go away or magically increase the
number of laying chickens in the world. So we're gonna
have to struggle with that problem for a while un
till it gets you worked out. However it gets worked out.

(02:51):
But insofar as tariffs are concerned, and you and I
kind of share the same point on that, if you
increase tariffs, the prices are going to necessarily increase by
some percentage, maybe not a full twenty five percent, but
that's going to get passed along to the consumer. Has
that happened yet, I mean, we're feeling yet the impact
of tariffs, because my understanding is it hasn't really settled

(03:13):
in yet.

Speaker 1 (03:14):
Yeah, we're starting to see increases on prices on things
laid on things that come out of China, for example, iPhones,
MacBooks are starting to increase prices a little bit, the
fast fashion types of things. These are names wh wouldn't
have heard of ten years ago, Shine and Timu, and
I think I'm pronouncing one of those incorrectly. But these
are places where where people have used a lot in

(03:36):
recent history to get really cheap clothing and things like that.
That's that's kind of ground zero for what we're really after.
There are rules not not only the tariffs, but there
are rules that were in place called the deminimous Exemptions
that that basically allowed China to create extremely cheap items
of apparel and things like that and ship them over here.

(03:56):
Shipping is the big part, but the policy that were
in place prior to this allowed them to do that
very easily and very cheaply. Those rules have changed too.
That's not a tar iff, that's simply the removal of
a discount effectively, So things like that are going to
get more expensive. We're also seeing produce fruits and vegetables
from Mexico, avocados, tomatoes, strawberries, bell pepper, stuff like that.

(04:18):
If you've been paying attention have seen noticeable price increases,
they're not yet. Remember these are things that per unit
don't cost that much to begin with. So unless you're
truly paying attention, and you're one of those people with
a spreadsheet and I've seen them in the grocery store
lately tracking prices over time, you may not notice this,
but you know something that costs fifty cents now that
now costs fifty five cents, that's a nickel, But if

(04:39):
you do the math, that's a ten percent increase. So
these things were just at the beginning of this. They're
going to sneak in. The price increases are going to
sneak in kind of without us noticing unless you're paying
close attention.

Speaker 3 (04:49):
Well, I know one of the things that was mentioned
in the article fed share at Jerome Pala said last
year to keynote address, you know, it was an inflation
brought about by a number of factors. Again, all these
different factors over which brand new administration can't really control
but pent up demand, stimulative policies, pandemic changes in work
and leisure policies, and the additional savings associated with constrained services.

(05:10):
In other words, people weren't out spending the money. Finally,
when the economy got opened back up again, it was
a spending free for all, which contributed to a historic
surgeon consumer spending on goods. If the demand goes down
because people are feeling the heat of you know, the
real estate tax is going up, or maybe some of
the increase in pricing. Obviously, grocery store prices continue to

(05:30):
go up. If demand goes down, then that might have
an impact on lowering prices because the supply will increase.

Speaker 1 (05:38):
Correct, that's all part of the correction. But demand going
down is usually going to result in some pain time,
I know, because if demand goes down for a product
that your company creates, guess who's in for a round
of belt tightening. So that's all part of the process
here of if we want to change the point at
which we meet in the market, meaning what do we
pay other countries for the goods and services that were

(06:00):
buying for them? What do they pay us for ours.
We want to change the point where we are on
the playing field for that, but that's not going to
happen without some pain and without some adjustment, and that
you're seeing an awful lot of that, you know, just
in the federal government with the cuts that like them
or not, the cuts that are coming from the Doge Office,
whether it's real or not, these things are actually happening,

(06:20):
and that is the same thing. We just want to
change how the money moves around. We want to change
how business is done, good, bad and different. There can
be good things that come out of that, there can
be bad things, but no matter what, there's going to
be disruption and it's going to be a bit of
a bumpy ride. And we're already seeing that these last
several weeks.

Speaker 3 (06:35):
Well, sort of a correlador to this discussion, I saw
this article headlines in the front page at the Wall
Street Journal, the US economy depends more than ever on
rich people. The highest earning ten percent of Americans account
for almost fifty percent of all consumer spending, and as
the article points out, the number of lower income earners
spending is dropping, but the rich people keep going out

(06:56):
and spending heaploads of cash and all kinds of things,
including travel and you know, stuff that's out of the
reach of a lot of Americans.

Speaker 1 (07:03):
Yeah, and that's what masks a lot of you know,
the real life situation here in the United States, because
those ten percent can really keep the economy cooking as
they have for the last several years. But you also
have a lot of people suffering out there, but that's
hidden by the fact that we have a strong economy,
economy keeps growing. The stock market the last couple of

(07:23):
years has been strong. We tend to forget about twenty
twenty two was a terrible year in the stock market,
but it doesn't come with a story attached, really, so
we don't really think about that. Nobody talks about it
like we do two thousand and eight. However, there's a
lot of people suffering out there, but that gets completely
hidden by all the economic activity that that largest or
richest ten percent is producing. And unfortunately, that's become the

(07:44):
American way over the last century or so. That's not
a new phenomenon. It's just getting the two groups are
just getting further and further apart.

Speaker 3 (07:51):
All right, and pivoting over to something connected in some
level market correction I keep hearing about we're going to
we'd for a market correction good way. In other words,
the market is overpriced and people are expecting it to
drop off and valuations of stocks to drop off. And
the question is, as some are have observed, are the
Doge cuts bad for the economy? And will it empower?

(08:13):
Will it cause perhaps a market correction?

Speaker 1 (08:16):
Good? Very well? So this This latest talking head is
Steve Cohen. He's the CEO Ofer point seventy two Asset Management,
and he says he is now bearished on the US
economy for the first time in a while. He manages
a hedge fund. He's a billionaire hedge fund type of
a guy, obviously a very smart person who have gotten
to this point. Certainly his opinion is worth something. But
at the same time, you can go back through time,

(08:39):
and I encourage people to do this when you start
to feel attracted to this one talking head on some
TV show says, here's what I think that is valuable. However,
go back in time and go see what people said
about early twenty two or early twenty three or twenty four.
There is always at least one talking head out there
who is not necessarily a stupid person. But there's always
one talking head out there that is predicting a huge pullback.

(09:03):
We never ever ever go back and see whether these
people will write or not. So maybe Brian Thomas, you
and I should mark our calendars or February whatever it is,
twenty fourth of twenty six and see if mister Cohen
was corrected.

Speaker 3 (09:15):
Yeah, let's hope he's not correct because a lot of
people have a lot of money in four oh and
ks and they're counting on that for the retirement. We
don't want to see the market go in the toilet again.
Does take a little bit while to get that money back,
although the market has rebounded enough that most people have
made up that money that we lost in twenty twenty two. Anyhow,
Brian James, all with financials pause. We'll find out about
home sales dropping in January and more Americans taking loans

(09:38):
to pay for emergencies, but at what costs. Cash poor
Americans are real problem eight fifteen fifty five kc DE
Talk station, Don't go away, be.

Speaker 1 (09:45):
Right back fifty five KRC. If you're a.

Speaker 3 (09:48):
Claarmont County VET and a very happy Monday to you,
try to find some happiness in these sad stories we're
talking about with money Mondays Brian James, and in real estate,
home sales have dropped January because prices are really high
and people's perception of the interest rates for mortgages really high,
in the combination of the two just really puts people
out of the out of the market. I saw the

(10:10):
medium price of a home in January three hundred and
ninety six thousand, nine hundred dollars. That's up four percent
or four point eight percent from the year before and
the highest price ever for the month of January. That's
a lot of money for medium price Brian James.

Speaker 1 (10:24):
That really is and then we may maybe maybe seeing
a peak in all this. So sales are previously owned
homes fell by almost five percent in January compared to December.
One point one eight million homes for sale at the
end of January. That was an increase of three and
a half percent and up seventeen percent from January twenty
four So interestingly, we are seeing more homes than the

(10:47):
number of homes hitting the sale block has increased percentage wise,
but the actual closed sales are starting to drop, So
that's a sign of a peak here. And as you
mentioned that the medium price of a home three hundred
ninety six thousand dollars. That's up five percent itself. That's
the highest we've ever had on that particular measure. In
Cincinnati is not exempted from this anymore like we used

(11:07):
to be. The secret is out that this is a
wonderful place to live, and at least up until now,
has been very reasonably priced with regard to real estate.
Still is, of course regarding the compared to the richest
places out there in New York City, San Francisco, and
so forth. But at the same time, we are not
the bargain that we used to be, so we're look,

(11:27):
this isn't too much of a surprise. The analyst. We're
expecting about a two point six percent decline in sales. However,
the actual decline was about five percent, So these you know,
we might be getting to that point where we're going
to start to see a correction, bit of correction on
the housing market.

Speaker 3 (11:42):
Well, I guess if you want to sell your home
and it sits out there for a long time and
people aren't coming to see it, maybe you've overpriced the
home and asking too much, which obviously, if you're going
to sell the house, you're going to have to lower
the price to a point where someone's going to even
show up to take a look at it, which apparently
they're not right now. Well, so yeah, there's a market
correction that might benefit everybody, just lower expectations on the

(12:05):
value of your home.

Speaker 1 (12:07):
Yeah, and that's where it starts. I mean that there
are house is always worth something. Houses are never absolutely
completely worthless and let it unless it's you know, completely
run down and about to fall apart. It's always the
price that's the issue. So if the if the buying
market has shied away from the neighborhood you happen to
be in, well you can correct that by lowering the price.
It's not wonderful, but it doesn't mean you cannot sell
your house at the same time. So there's also an

(12:30):
issue right now with there there are arguably fewer buyers
out there than there would be in a normal market,
because there are people out there who want to change
their neighborhood or downsize, or they want to sell their
home for some reason, but they're currently sitting on a
mortgage it's less than four percent. Well, those folks are
going to say, you know what, we're not really in
a hurry that the problems we've identified here are not immediate.

(12:52):
Let's wait until it's better and enjoy our four percent
mortgage a little more. So That means sellers are really
only dealing with people who are forced to move because
of a or maybe they have to have a bigger
house or something like that. That just means there are
fewer buyers out there now because the ones who have
flexibility are exercising that flexibility and going to hold off
a little bit.

Speaker 3 (13:10):
And we've had conversations before about you know, paying off
your home and actually owning it. And I know that's
not always within the reach of a lot of people,
but my wife and I you know, did a little
belt tightening over the years when we had that lower,
just just slightly under three percent mortgage because we refinanced
to a much lower level. That's the right thing to do,
but we use the extra money to make extra payments

(13:32):
every month and ended up being able to buy the
home a lot earlier. Now, is that, from a financial
planning standpoint, a good thing to do when it is
that low or where we have been better served had
we taken that extra revenue and maybe put it into
the market or something.

Speaker 1 (13:48):
Great. Question comes up all the time here at this table,
and I'm sure it's a quiz it important question. So yeah,
I can show I can show you in a spreadsheet, Brian,
that the best thing we should all do is borrow
money against everything and always invested, and by the time
we're one hundred years old, we have a gigantic pile
of money. That's the mathematical answer, but it's obviously not
the human answer. So when you have this situation, yeah,

(14:12):
it always makes sense to invest as much as you can.
What I would encourage people to do is truly learn
how an amortized mortgage works. And that simply means go
look at understand the relationship between your payment and the
interest rate and how much goes to principle early in
the mortgage versus how much goes late. If you're ten
years into a fifteen year mortgage, you are paying very

(14:34):
very very very very little no matter what the interest
rate is. You are paying very little interest because you're
mostly paying principle, because you pay the interest and amortization exactly. Yes,
you paid it up front. Your first payment was ninety
nine percent interest. Your last payment is going to be
ninety nine percent principle. Everything else is somewhere in between.
So I am a big believer, and of course come

(14:54):
up with a financial plan, and first of all, see
what you need to do, and then once you've got
the basics covered, make these decisions based off of what
will make you feel most confident. If you feel like
my nest egg is a little low, I need more money,
that's fine, and your interest, your mortgage rate is reasonable,
then focus on the four one k. Put those extra
dollars a four one k and grown. Or if you

(15:14):
feel the opposite, you know what, I think, We're okay,
we got a good pile of money. I really want
to get this mortgage monkey off my back. That's fine,
pay it down more quickly. That's an emotional decision, not
so much a mathematical one, right.

Speaker 3 (15:24):
And you know, I really really understood that when we
did it. But we were able to do the extra
payments because we were in a comfortable position. And I
got to think about being in debt, Brian, I really do.

Speaker 1 (15:35):
I hate it.

Speaker 3 (15:36):
I don't know if it's because of my Westside genetics,
but if I owe a human being a dollar, I
want to discharge that asap and that and just you know,
the idea of owning something outright just makes me feel
very comfortable, you know what I mean. It's a psychological thing.

Speaker 1 (15:51):
It absolutely is. And here's a common situation that drives
us question. So when people are in their late fifties,
early maybe mid sixties and they still have a mortgage,
that's you usually about the age that if there's an
inheritance coming, then that's about when it's going to happen.
So oftentimes people will have a wind fall. Now I've
now got one hundred grand available that I don't have
it doesn't have a job. Should I invest it? Should
I pay off the mortgage or whatever? So, yes, those

(16:13):
wind falls tend to drive that decision. And again there's
a mathematical component to it. And I always let's start
with the math. Here's the impact of investing it versus
here's the impact of paying off all of your debt,
And then we can start to see here's the mathematical
impact that is known, it's black and white, it's in stone.
Let's talk about how you will feel emotionally and psychologically
doing one versus the other. That is usually the answer.

(16:36):
As long as those basics are covered right.

Speaker 3 (16:38):
And another a shout out for financial planners who are
working for you and have a fiduciary obligation. They will
break this down for you. You don't have to do it yourself.
And I think it's a critical thing for your future
to have a financial planner so you can have these
conversations and make informed decisions to maximize your investment opportunities.
Brian James pause from them, and we're going to find

(16:58):
out with a problem we're facing here in America.

Speaker 1 (17:01):
People are apparently pretty cash poor.

Speaker 3 (17:04):
Maybe some financial planning advice additional coming up next eight
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Speaker 3 (18:14):
A twenty nine if fifty gout KRCD talk station doing
that money Monday thing with all the financials, Brian James.
He is a financial planner, and maybe he can help
out some of the folks who are dealing with these struggles.
And it's kind of heartbreaking, Brian, when you read how
many folks do not have money to cover, you know,
an expense that might pop up. A lot of people
live in paycheck to paycheck and even as the article

(18:36):
points out folks making six figures. I mean that sounds
to me like they maybe need to speak with someone
like you in financial planning. I don't know. I'm not
living in these circumstances. But when you see it broken down,
you know somebody has a car repair, or medical bills
or a big one surprise expenses, which happened to literally
every human being. They're put in a bad place, and

(18:58):
quite often that's going to end up on a high
interest credit card.

Speaker 1 (19:02):
Exactly. This is a real life example of fins to
the left. Fins to the right were surrounded by sharks.
And as you pointed out, it affects not only people
who just don't have a lot to put together, it
affects people who weren't paying attention. So here's two quick
examples that a client does. It's probably twenty five years ago. Well,
when I was young and just getting started, client would
would pull out money from their IRA to pay there

(19:24):
I forget with cash to go or whatever. Well, their
payday lender, they just treated their monthly payday lender like
a credit card. Every month they would go get money
out and pay a ridiculous interest rate, and then they
would have to take money out of the IRA to
pay it off. So it took months to get them
to catch up and stop that process. Now, shortly after that,
I had a client that came to me from the

(19:44):
private client group of a bank I was working for,
and he was a doctor with an enormous amount millions
of dollars worth of cash flow, and he was paying
thirty some thousand dollars in overdraft fees just because he
never sat down to catch up on his own cash flow.
And when the rules changed the CFPB. That's a whole
other topic, but the CFPB came in and said the

(20:06):
banks can't do this anymore. The bank that I was
employed by was concerned about the revenue we were going
to lose because we couldn't do that to him anymore.
Fins to the left, fins to the right. If there's
a need out there, there will be somebody out there
to fill it. But yes, you're right, this concern among
a lot of people is resulting in these these payday
lenders and these subprime credit cards where fees are sometimes

(20:26):
go up to ninety percent of the principle payday loans
average cost of about thirty five percent. Yeah, there's abuse
out there, but people are still falling for it.

Speaker 3 (20:35):
So in terms of a payday loan, they're gonna if
you know, you borrow us one thousand dollars, the payday
lender is going to get thirty five percent of that.

Speaker 1 (20:46):
Yeah, because if you are somebody who is forced into
the situation of going to a payday lender, then that
means you don't have anything else. You don't have anything
else you could use as collateral other than your next payday,
your next paycheck. So you walk into one of these
places and they have bulletproof glass for a reason, and
you want to and you basically provide proof of employment
with your past pay stubs, and you just basically tell

(21:09):
them you're gonna get my next paycheck it's gonna come
on this day. And they say, cool, here's a thousand bucks.
By the way, it's going to be thirteen fifty to
pay us back because that's the average cost of the
payday loan. But again, remember these are people who don't
have any other choice and feel forced into these situations.
There's always going to be somebody willing to bankroll that.
But it's not much different than paying the mafia protection money. Wow.

Speaker 3 (21:31):
Now is there a best case option for folks who
find themselves in this position like, oh my god, you
know I got this three thousand dollars bill that I
had to pay was a medical expense or they needed
their roof repaired or car repaired? Is there an option
that it represents the best option for folks rather than
obviously something like a payday loan.

Speaker 1 (21:52):
Sure, So what I what I look at in situations
like this is you know what else could we borrow
it against? Is there? First off, maybe there's a credit
card out there that you've got in your arsenal that
doesn't have a ridiculous interest rate. Maybe you have something
that's on a on one of those bonus upfront offering rates,
or maybe you're getting those envelopes in your mailbox. Nobody

(22:15):
wants to have more credit cards than we have to.
But if somebody is offering you zero percent for six
months or twelve months or whatever it is, then that
can be an opportunity to deal with this kind of thing.
If that's not a choice, then maybe a home equity line.

Speaker 3 (22:28):
I just wrote that down home equity can be yeah,
because it's a great way. Interest rates are currently running
seven percent or whatever, so you figure home equity loans
probably going to fall into that lower single digit category.
If you've got equity in your home and you can
get your bank to could give you a home equity loan,
at least you're not paying thirty percent interest.

Speaker 1 (22:48):
Correct Now, debt is debt. We don't want it. But
remember this shouldn't be a permanent situation anyway. If you
find yourself in this permanent situation of just always being behind,
then it's time for a ground to ceiling Florida ceiling
redo of all your finances. This is more like the
engine fell out at the bottom of the car and
I can't afford to buy a new one. I'm just
going to have to pay the five grand or whatever

(23:09):
it is to put an engine back in the car.
That's something that makes perfect sense for a home equity
line of credit. And because yes, you should be able
to keep that interest rate within the single digit the
single digit range, which is helpful. But the other thing
I'd throw out is if you have one out there
and I've had this conversation recently with clients and you
want to pay it off, do so. Don't necessarily close

(23:30):
it because you never know how you're going to need
a pile of cash in the short run, and if
you are about to retire, keep that line open even
if it's paid off. It can be at zero even
just pay an annual fee or something, because it will
be harder to get one after you no longer have
w two income.

Speaker 3 (23:47):
Yeah, you get basically like a checkbook that draws against
your home equity.

Speaker 1 (23:51):
Line of credit so correct or even a debit card
as well. It's very easy to use once you've got
it set up and then making the payments back. It
works like a credit card, look and feel like our
credit card. It's just you're borrowing against your house. If
you're gonna borrow five thousand bucks against two hundred thousand
dollars house, you're okay. If you're gonna borrow one hundred
grand against your two hundred thousand dollars house, maybe we
need to sit down and talk about what the real

(24:12):
problem is.

Speaker 3 (24:13):
Yeah, you might want to hold off on that new
edition remodeling project at that particular time. Brian James appreciate
your sound financial advice and the suggestions you offer folks,
and for coming on the program every morning to talk
about every Monday to talk about it and I'll look
forward to next Money, another edition of Money Monday. And thanks,
as always to all with Financial for loading you out.
I appreciate the opportunity. We'll talk to you in a week.

(24:34):
Take care of Brian. It's a thirty five right now,
fifty five Krcity Talk station. Joking the opening up the
phone lines of the something specific you want to talk about.
Happy to do that, but anyway, don't go well, I'll
be right back.

Speaker 1 (24:44):
This is fifty five karc an iHeartRadio station. Man, this
is Jeff