Money Monday with Brian James

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
I want to know what's happening.

Speaker 2 (00:01):
I know what's going on around town.

Speaker 1 (00:02):
Around the country.

Speaker 2 (00:03):
I don't even know. I need to know the weather
in traffic. Listen and you'll know. On fifty five KRZ
the talkstation Shabato sick here if if you have kr
CEED talk station, it's Monday. It's that time. All our financials.
Brian James giving us another edition of Money Monday, and
of course it's appointment listening for that secret group of

(00:26):
women out there that Brian and I learned about. You
tune in regularly just to cling to Brian James words
on investment strategies and today about Tariff's being up, the
interest on our national death Doge apparently didn't accomplish much,
Social Security and the topic we've been waiting for credit
unions versus banks. A lot to pile in for a
few segments. Brian James, Welcome back and Happy Monday in

(00:47):
spite of the Bengals loss.

Speaker 1 (00:48):
Happy Monday, and go Mariners, including all the former Reds
who are still playing. That's all we have to cling
to at this point. Hey, you got something there, Brian,
Go Luis Castillo and a Heniosuarez and handful of other ones, right,
it's something that's better than nothing. Will hang on to that.

Speaker 2 (01:05):
It is something and something that is tariffs I know
so far, you know, I mean draw your conclusions whether
we have been collectively scathed in our economy. But apparently
at some point they say they were going to catch
up to us, and it looks like they may be
catching up. And I know China has just put some huge,
huge prohibitions on the trading of the rare earth minerals

(01:26):
that we rely on them almost exclusively for. So what's
going on with the tariff ran.

Speaker 1 (01:31):
Well, the tariffs have had their impact, so interestingly, our
deficit is basically flat at one point eight trillion. Now
that would be a fantastic headline in any other environment. However,
what's happening is it's just the surge from the tariffs.
So the cash that's coming in from that that's keeping
the deficit from running up. So on one hand, anytime

(01:51):
the deficit doesn't increase, that would be I can't remember
the last time that was a headline. But all it
is is the cash that's coming from these tariffs, which
is probably somewhat temporary as the market continues to settle
itself out as countries decide whether they're willing to continue
or if they fight back, or if they find different
markets entirely to sell to. So customs duties had almost

(02:12):
two hundred billion dollars, that's more than double last year,
and it's still only three point seven percent of federal revenue.
So Trump had the President Trump had this big goal
of We're going to reduce income taxes, reliance on income taxes,
and increase reliance on external taxes, meaning these tariffs. That's
how we're going to run the country. So these tariffs,

(02:32):
even now at two hundred billion from these duties, is
still only three point seven percent of federal revenue. Individual
income taxes still make up fifty one percent of it.
So we got a long way to go. If these
tariffs are going to truly remove our income taxes, which
I have bad news. They are not.

Speaker 2 (02:48):
Fair enough on that. I guess tariffs, by all arguments,
can raise the price of goods here in the United States,
So one could argue if your income tax does stay down,
the money still has to be collected some way. This way,
at least, anybody who buys something is kind of sharing
in the responsibility. It's kind of like a increase in
sales tax that deal with fewer tax dollars coming in

(03:10):
by way of income tax.

Speaker 1 (03:11):
It's quite literally that. I mean, there's nothing that says
that any company or country that is selling into the
United States has to eat these tariffs. There are no
rules that say that they must keep their prices the
same and just eat the tariffs. There's really no way
to put that in place. They can simply decide to
walk away from the market, or they can raise their prices.
It's really no different than you know, if you're renting

(03:33):
an apartment and you feel like the landlord is going
to bear the brunt of the property tax increases, that
is not the case. They're simply going to raise the rent.
The renter is the one who ultimately pays everything. That's
why they call us consumers. We're at the bottom of
the at the bottom of the chain, and we are
the ones who consume all the goods and services that
are out there, and that means we have to eat

(03:54):
whatever price is. The only way you can avoid these
price increases is to truly change your lifestyle and not
need these things any and that's simply not an option
for most of the stuff we have to deal with now.

Speaker 2 (04:03):
For most of the stuff, there are a lot of
things on I think our collective budget margins that if
we really gave it long hard thought, we know we
could do without them. So that's up to an individual
families choices, and people are going to be forced to
make those kind of choices. Interest revealing that the interest
rate on our debt is now over one trillion dollars,
meaning that is I guess more than even defense spending

(04:24):
usually coming into like number one. But that's because we
have a spending problem in government. I know Donald Trump's
done some took some steps with the OMB on Friday
to start firing people. But when they fire people that
whether it impacts you and me in our day to
day lives, it's certainly not going to be a sizable
enough chunk of government cuts to actually accomplish something. So
let's talk about that. But also, we had huge hopes

(04:47):
for the Doge Department and that apparently has kind of
fizzled out. So where are we with this debt and
of course the DOGE cuts, So yeah, the.

Speaker 1 (04:56):
Big concern there with the size of debt, So debt
is it's just like anything else you have a mortgage
out there, you're a bunch of credit card debts, then
you are impacted directly by interest rates. And now that
we're literally writing checks for a trillion dollars as a country,
that's just for the interest. Remember some if we're writing
a check for a trillion dollars, somebody might go, oh, great,
we're paying down a principle. No we're not. We're simply

(05:18):
maintaining what we already have. We are treading water. So
that net interest of a trillion dollars is now bigger
than medicare or defense. Based on some calculations, roughly about
a dollar of every five dollars in revenue. And again
remember half of that comes from our own income taxes.
A dollar out of every five dollars goes to these
interest payments. This is coming from the higher rates and

(05:38):
the fact that we have just more debt than we've
ever had before. Of course, so the issue here, the
concern is that we were likely going to head into
a higher for longer type of a situation with regard
to interest rates staying where they are. Remember, we're not
always only talking about the Federal Reserve and what it
wants to do with interest rates. We're often talking about
what the market. The market has an impact on rates too.

(06:01):
Whatever it's sensitive to. Whatever the market thinks of the
credit quality of the United States, can it continue to
pay its debts and so forth, that will also have
an impact on interest rates. That means Washington is going
to be super sensitive to interest rate moves, even if
the Fed makes gradual cuts, Brian, the rolling over debt
that's still out there is going to keep these average

(06:21):
interest costs elevated. And that means we need to make
some cautious mortgage and refi assumptions, and we need to
be stress testing our budgets for these higher rates. For
those of you what that means out there, For those
of you perhaps on an adjustable rate mortgage, you need
to take a look at what that might be if
you did it five years ago at a really low rate. Well,
that's going to be sneaking up on you very soon.
You need to make sure you can handle whatever the

(06:43):
increased payment is going to be when that adjustable rate
mortgage adjusts.

Speaker 2 (06:46):
Well, doesn't the interest rate that repair, I mean, doesn't
the debt interest which we have to pay more than
a trillion year, and that keeps growing. Doesn't that necessarily
have a restrictive force on the growth of government. I mean,
if they're not bringing in any additional tax, you run
the risk of digging us further into a deficit hole
which increases that trillion dollars to something north of it.
Or you have to say, listen, we got all this

(07:08):
debt service we've got to pay. We no longer can
afford to fill in the blank. Maybe we need to
reduce the size of that department. Maybe we just say
no to something new by way of you know, oh,
I don't know, expanding health care for illegal immigrants or something.
But something's got to give.

Speaker 1 (07:21):
Brian, Yeah, that's that's true for any household as well
as it's true for the for our country as a whole.
And that's that's what DOGE was intended to do. Yeah,
that didn't really quite you know, the little segue into
that topic since you mentioned it. When DOZE was originally
set up, remember this is the Department of Governmental Efficiency
run by Elon Musk briefly that was going to come

(07:41):
in and just clean house and figure out exactly where
all the waste is and get rid of it all.
And they were going to achieve two trillion dollars in savings.
That was the brochure that we all read, but so
far that hasn't been the case. Not to mention, Elon
Musk stepped down a few months ago, and we really
haven't heard much ever since. So total spending excluding interests
rose about two hundred and twenty billion dollars, or four

(08:02):
percent for that entire year. That would have been bigger
except for in September twenty five when the Trump administration
put in a non cash spending reduction based on modifications
to student loans. That knocked it down a little bit.

Speaker 2 (08:14):
But other than.

Speaker 1 (08:15):
Student loans, the only the only major categories where the
Congressional Budget Office said spending actually declined was the FDIC, which,
if you think about this, all that means is we
didn't have scary headlines about banks failure, which is that's
a good thing. But we can't count it as a
victory small Business administration because we had a similar situation
where we didn't have to lay out the kind of
money that we normally do for disaster related loans that

(08:37):
do come out of the Small Business Administration. So so
far we can't really say that DOJ has had all
that much of an impact despite the blusters coming out
of that department.

Speaker 2 (08:46):
Yeah, I really had some hope for that department up right.

Speaker 1 (08:48):
It made sense, right, didn't it. It sounds like something
responsible countries do.

Speaker 2 (08:52):
It still does. I guess the question mark is why
isn't it accomplishing what we had expected? It just seems
so strange.

Speaker 1 (09:00):
But I'll give you my opinion, and I think my
opinion is because anything that's truly going to fix anything
involves necessarily someone telling us as a society that we
must sacrifice. I don't think that our current political leadership
believes that we have that in us, and I definitely
don't believe that anybody who is in that position to
make those types of changes thinks that they can win

(09:20):
a reelection the next time around.

Speaker 2 (09:22):
Social Security, Medicare, Medicaid, the third rails of politics will
continue with Brian James fro while Worth Financial. We'll talk
about an update on social is security, speaking of which
as well as credit unions versus bank topic by demand
more with Brian James. After I mentioned Cullen Electric family
in and operated Colin Electric Andrew Cullen is outstanding team
of electricians. They do great work for you. They have

(09:43):
for me over the years, many many, many projects, and
of course I got a tenure wiring warranty for what
they did for me, so will you. You'll find the
customer service to be superior and the price is always right.
So big projects, small projects, anything in between. If it
comes to residential electric projects, call Cullen to do that.
It's five one three two two seven four one one
two five one three two two seven four one one

(10:05):
two or online go to Cullen c U l E
and Cullenelectriccincinnati dot com. Fifty five krc it's aight eighteen
here fifty five KRCD talk station doing that money. Monday
Fame with all of financials Brian James, all Right, I
mentioned one of the third rails of politics, something that
could probably stand to use some reform in the name

(10:26):
of saving our financial future here in the United States
of America, the third rail social Security. And people always
argue I paid into it, I paid in when I'm entitled.
I'm entitled. But the structure of social Security doesn't really
work out in the taxpayer's favor because people now live
a hell a lot longer than they used to. You
retire at say sixty two or sixty five. You're around
until like eighty five. Now, when its Social Security started,

(10:49):
most people didn't live past like late sixties, so you
were only on it for a few years. They're also
fifteen I think workers to every one person receiving it.
That number has dropped precipitously, So the money that's going
into the program is a lot less than it used to.
It sounds like it needs some sort of reform. Brian James.
Where are we on social Security? So where we.

Speaker 1 (11:09):
Are on Social Security? There is a hole in the bucket.
Brian Thomas. The math doesn't quite math very well. And
this has everything to do with what you had mentioned.
Of course, with people living longer and so forth. It
used to be you'd live maybe three five years and
get Social Security payments. Now there's thirty years worth of that.
Along the way, we have added enhanced benefits for spouses,
which I don't think is a bad thing, because you

(11:31):
can't ice your spouse out or your ex spouse or whatever.
We have to have some kind of safety net for
those folks who maybe didn't have their own earnings record
because they were home raising kids and then a divorce happened,
all that kind of stuff, those kinds of things, as
well as the eight percent increase in delayed retirement credits,
which simply means if you don't file for it, you

(11:52):
get an eight percent increase. Before nineteen seventy seven, that
was one percent per year, and then in nineteen seventy
seven through nineteen three they basically locked in an eight
percent increase for anyone who was born in nineteen forty
three or later, which is essentially everybody who's thinking about
this right now. So basically, by two thousand and eight,
everybody reaching seventy aged seventy had access to that full

(12:13):
eight percent annual delayed retirement increase. Remember this is if
I'm sixty two and I choose not to file for it,
my payment's going to go up by a full eight percent.
That has nothing to do with inflation, nothing to do
with interest rates. It's just a codified, concrete, eight percent
mathematical increase. So those are the reasons that the math
don't math. But let's talk about where we are right now.
So we've had a we get every so often we

(12:35):
get a new trustees report, and earlier this year of
the twenty twenty five report showed that the full benefits
are projected to be payable only for about nine more
years without adjustments, trust funds expected to be depleted by
twenty thirty four. Now I want to unpack that because
somebody just heard me say that Social Security is going
away in twenty thirty four. It is not.

Speaker 2 (12:55):
No, they didn't hear that. They weren't listening to the
words you use, Brian James. Exactly.

Speaker 1 (12:59):
Words are important, aren't they, Brian Thomas. So what this means, though,
is the trust fund reserves. What that means is that
we're simply bringing in more than more than we're paying
out currently, and that situation is going to last for
nine more years. I will be sitting in this chair
in twenty thirty four, and my paycheck at that time
will have a FIKA entry on it, which is how
taxes are extracted from my paycheck and sent directly to beneficiaries.

(13:22):
The point of all that is that fight A taxes
right now are more than what is actually being paid
out to beneficiaries. But that amount that surplus goes down
every year. It's got nine years left, so is it
going to zero? No? But if they change nothing, then
the current estimate is that Social Security is incoming revenue
from those fight A taxes otherwise known as payroll taxes.
That's going to cover only about eighty one percent of

(13:43):
scheduled benefits. Meaning if you go to SSA dot gov
and set up your my Social Security profile, then you
should knock off, say twenty percent of whatever that report
tells you, if you want to adjust your plan.

Speaker 2 (13:56):
I would do it both ways.

Speaker 1 (13:57):
Run your plan with the original numbers and then run
it again with a twenty percent reduction in your Social
Security just so you can see what the impact might be.

Speaker 2 (14:04):
Well, and a financial planner will do those number crunches
for you, right, I mean you can put any scenario
into your like thousand point you know what the future
might look like program? Correct?

Speaker 1 (14:13):
Oh absolutely, this is just one topic. You know. We
might even rephrase this and just say, hey, look look
what if you spend twenty percent more than you think
you're spending. This is just the math part, the things
that the little stories and anecdotes that trigger the math
is what gets our attention. But the math is still
just math.

Speaker 2 (14:28):
Well, and we've all been warned about this, that that
sheet you get annually from Social Security telling you what
your expected payment will be given when you retire, whether
it's sixty two, sixty five, or you hold off till later.
It always it says right there on the front. This
is not a guarantee you're going to get the money.
I mean, you know, hey, here's a flag. You might

(14:48):
not want to count on this because our elected officials
don't do anything to try to salvage the program.

Speaker 1 (14:52):
That's right, So let's let's talk about that a little bit.
So it's it's not that we don't try to fix it.
It's that it's that we've just are not in a
political mood and I don't see it coming anytime soon
where we are willing to make the sacrifices that are necessary.
So we did this a study of just a few
weeks ago, and there have been one hundred and forty
three different attempts that have hit the floor of Congress

(15:15):
to hopefully fix this problem. But every last one of
them is some flavor of either reducing benefits on current
retirees or increasing taxes on workers. There's a million ways
you can do that, but that's all we're all we're
doing here. You have to trust adjust the inflows or
the outflows period, end of story. We are not at
a place where we're willing to allow either side to win.
It's very easy to shoot this stuff out of the sky.

(15:37):
Democrats come with, let's raise taxes on workers. Republicans say
you can't do that. These people work too hard. Republicans
come with, let's lower the benefits. And Democrats say, you
can't do that. These people work for these dollars. And
it gets shot down instantaneously. That's the cycle that we're in,
and I'm going to predict we're going to be in
it for most of the next decade, until our backs
are against the wall, Bryan, and we have no choice
except to elect somebody who will actually speak to us

(15:59):
like adult. We're not ready to do that.

Speaker 2 (16:01):
We're not ready to do that. Eight twenty four. Right now,
take a minute, early break, because we're going to get
two credit unions versus bank by request. Topic will continue
with Brian James after these brief words. Fifty five krc
the simply.

Speaker 1 (16:13):
Five KRCD talk station.

Speaker 2 (16:18):
Eight twenty eight to fifty five KRCD talk station buy
request topics. You can do those and a lot of
folks wanted to know what the difference is between a
credit union and a bank, and Brian James from all
Worth Financial is going to dive on into the details
on that. I've always enjoyed banking with Emery now share
facts over the years, Brian, most notably the wonderful experience
of being able to refinance my house by just signing

(16:40):
a single sheet of paper, not going through the whole
process of refinancing, not having to pay a dime. The
rates dropped. They had a paper that said, okay, you
went from what four down to three? My signature, boom,
my rate was down to three. They keep the paper
in house at least at Emory and share Fax and
I like that. That's one thing that I know from
personal experience.

Speaker 1 (16:59):
Yeah, simplify processes, those kinds of things. There's pros and
cons to each one of them, of course, But I
do want to shout out a quick thanks to our
our mysterious listener group of females who are interested in
financial topics and apparently have been listening to us for
a long time. And Lady Pacific question, thank you again
for listening and let's dive into this. So, okay, banks

(17:20):
versus credit unions At the end of the day, if
you need loans, checking accounts, savings depository, you're not going
to notice much difference. Functionally, they are pretty much the same.
So the differences between them. So, a bank is a
for profit entity. They're owned by the shareholders and the goal,
like any other business, as a generator return for those owners.
Having spent two fifteen years in the banking industry, I

(17:40):
can assure you that the customers come third, shareholders first,
regulator second, and then we'll get around to worrying for
the customers. This isn't I'm not painting the banks and
a bad bad light. It's just reality. If you've got
shareholders out there, they come first because we are the
United States of profit profit margin. Credit unions, on the
other hand, are nonprofit financial co operatives. They are owned

(18:01):
by their members. The members do want their profits, but
they come in the form of the dividends. That's why
if you if for those of you who have a
credit union account and a bank account, the way that
they label those interest payments is a little bit different. Yeah,
the banks will call it a you know, an interest payment.
Credit unions will call it like a share or something
like that because they are the owner of it. As
an account holder. So that's why the difference. Now, if

(18:23):
any one of them was mathematically, you know, identifiably calculably
more beneficial than the other in terms of really low
interest rates and really high depository rates, then the other
would not exist. It doesn't work that way, So don't
look for massive opportunities one direction or the other. So,
but let's talk about what is the difference here. So
first and foremost, safety first, If you've got a pile

(18:44):
of money somewhere, you want to know it's going to
be there. If you're holding money in a bank, that's
of course ensured by the FDIC. But at a credit
union there is a similar organization that most people aren't
familiar with. It's called the NCUA, the National Credit Union Association,
and it pretty much serves the same per is the FDI. See,
even those coverage limits are pretty much the same. It's
two hundred and fifty thousand dollars per institution, per account category. Right,

(19:08):
there's lots of games you can play with that on
both sides. You can have an individual account, you can
have a joint account with your spouse. You can have
accounts that are have your kids listened as beneficiaries. Each
of those has its own two hundred and fifty thousand
dollars coverage. But the point is your money is largely
no more safe in one versus the other. It's just
different organizations that are backing that up well.

Speaker 2 (19:29):
And I know the credit union you're considered an owner
a shareholder. Going back to your point about shares, that
that's your slice of the part. That's how like for example,
in my refinancing situation, yes, the credit union collective is
making less money and interest payment on the loan, but
everybody benefits from the lower interest rate, which is why

(19:51):
you're making less of a profit. So you're getting three
percent when you used to get four or five. The
mortgage would have required you to continue to pay that
higher interest rate, which of course in youwers ti the
bank's benefit, which is why I guess they charge you
to go through the refinancing process. But it's just a
nice little perk being a quote unquote shareholder or owner. Yeah.

Speaker 1 (20:09):
Absolutely, And if if you're truly about the if you
want to know where the money is flowing, you got me,
Mike died there.

Speaker 2 (20:17):
Yes, you said flowing. I got all that. Where the
money is flowing?

Speaker 1 (20:20):
Go ahead, where the money's going, and you can literally
participate if you if you want, you can run to
be a trustee of the of the credit union and
you could really get into the into the dirt of
how this stuff works. You can't really do that with
with your big publicly traded banks.

Speaker 2 (20:32):
Unless you buy shares.

Speaker 1 (20:34):
Yes, but you've got to buy an awful lot of
shares you're going to get invited to that table.

Speaker 2 (20:39):
So so and this isn't.

Speaker 1 (20:40):
You know, I feel like we're leaning toward the credit
union side pretty strongly there and that those are the
good reasons. A little more transparency and you can be
you can be a little lot more comfortable that the
decisions that are being made are really for your benefit
because they're being made by other members just like you,
versus a board of directors who is really only focused
on the on the shareholders. Now, so what's the downs
side of a credit Ye, Well, in a lot of cases,

(21:02):
you're going to be giving up some on say technology.
They're not going to have the flashiest internet interfaces and
mobile apps out there, and that's I do enjoy that
I use. I use my mobile banking apps all the
time because I don't want to see the inside of
a bank branch. Ever, again, bigger banks, of course will
have wider branch and ATM networks where credit unions often
will will participate in some kind of shared arrangement with

(21:24):
some other network that you might not be familiar with.
Don't let that rule it out. Do the research if
you if it's a little tiny credit union that you're
not all that familiar with, understand what that ATM network
looks like, and you can figure out. You know, a
lot of them will have places in random store chains
like UDF or.

Speaker 2 (21:41):
Or that's P and C.

Speaker 1 (21:42):
But but some of the gas station chains will have
some financial organization you've never heard of, and your local, tiny,
little credit union may be a member of that. So
you don't necessarily have to rely on all they've only
got three branches, so therefore I only have free ATMs.
That's not how that works. But on the other hand,
you're not gonna have as much flexibility on promotional bonuses,

(22:03):
right because banks are publicly traded entities. They want to
be able to show they're bringing on new customers all
the time. You'll get better bonuses for opening new accounts.
We talked about the more sophisticated online stuff you're never
going to see, for example, a fantastic credit card reward
program coming out of a credit union. You won't get
that that's going to come out of your publicly traded
banks who have a lot more resources to do things

(22:24):
like that to drive business, and they have different incentives
to go drive new business and bring in new customers
than a credit union does. So the different things that
there are differences in the things that they will do
to attract you in the first place.

Speaker 2 (22:35):
Great, So you've given out a list of items, do
your work, do your homework, do the math, and figure
out what is in your best interest because it could
be a big bank, but it also could be a
federal credit union depending upon you know where your desires
lie and you know the interest rates that you're paying
in that kind of thing. Appreciate the breakdown Brian James
is very helpful exercise, and of course I appreciate the
conversation we have every week, and salute to the ladies

(22:57):
group that listens every Monday and Monday. Intent lead to
Brian James. You do great work. Brian will have you
on next Monday. Have a great week, my friend.

Speaker 1 (23:04):
I appreciate it. Thanks for the time, and thank you ladies.

Speaker 2 (23:06):
Don't go away, Eric Trump of the book Under Siege,
you'll be on next.

Speaker 1 (23:11):
This is fifty five KRC and iHeartRadio.