Simply Money

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Episode Transcript

(00:00):
Staples. You're small room. Thingsare happening all at once. Security of
our world, your world. Theworld is still moving these front end Center.
It keeps changing every day. Fiftyfive KRC the talk station to night.
We are going to point out fiveways that your brain could be costing

(00:24):
you money. You're listening to simplymoney because I'm by all Worth Financial Imani
Wagner along with Steve's Provac younency.I think when it comes to money and
accumulating money and making smart decisions andbuilding wealth, so many people think,
well, it's just a matter oflike money and math, money and math.
That's it, right. If Iget those two things right, it's
just all going to fall into place. Except for you. You're the problem.

(00:47):
And I'm not talking about Steve's Trovacis the problem. I'm talking about
each of us. And most peoplewould agree with you. Steve's Provac is
a problem. You're often the problem, but you're not this problem. This
problem is on each of us andhow we process things and how we let
our emotions take over. And there'sa whole side to building wealth. It

(01:07):
has to do with yourself. Andthat's what we're going to dig into tonight.
Yeah, And this might sound like, Okay, we're going to use
terms like behavioral finance, and youknow that's a snoozer, but no,
this is we're people, and peoplehave emotions, and believe it or not,
emotions can get in the way ofmaking proper decisions. And once amy,

(01:29):
once you realize that you are anemotional being, you can start kind
of stepping to the sideline and say, am I making that decision because of
the facts because of the numbers,or am I making that decision emotionally without
the facts supporting me. One wouldbe a good decision, the other most
likely is going to be a baddecision. So you know, when we

(01:53):
talk about behavioral finance, it's reallyabout letting your emotions get involved in the
thought problem. I'm a huge fanof self awareness as a whole, right,
like why do we do what wedo? But I think, especially
when it comes to money and understandingbehavioral finance, it can shed light into
maybe you feel like, why canI not do better about saving? Why

(02:15):
do I every time I put moneyinto my four oh one K I take
it out because I get scared?Right? Why am I making these decisions?
Understanding yourself can help you break somepatterns. You know Andy Stalder a
chief investment officer. He sends outan investment update every Monday morning, and
recently he got one from him andit said and there was just this and

(02:35):
it was such an universal truth thatI actually emailed him about it and he
said, he said, after all, people are not hardwired to be rational.
That's there's so much truth in that. And he's talking about how with
investments and when we get scared aboutwars, and we get scared about market

(02:57):
volatility, and we get scared aboutwho's the political office of take your choice
right, we make decisions. ButI thought, we're actually not even hardwired
to make rational decisions. Well,you know, there's the science behind this,
and I find it very interesting.And he's gonna hate me for saying
this, but he's kind of likemister Spock from Star Trek. You know,
I'm not going to say he hasno emotions whatsoever, but when he

(03:22):
analyzes what's going on in the market, I mean he's he's a quant I
mean he's looking at strictly numbers anddoes not let emotions get in the way.
That's what you want with someone who'smaking large financial decisions, and that
is so I think that is sokey for everybody. Maybe not as good
as a professional like Candy, butI find myself asking to myself, Okay,

(03:47):
am I making this decision as awell thought out decision or am I
being emotional about it? Give youa great example. I mean, in
the early stages of the pandemic,it was crazy. I mean people were
being sent home remote work. Wedon't know how bad this is going to
be. Maybe a lot of peopleare going to die, and markets are
in free fault. Okay, theeasiest thing in the world to do is

(04:10):
say, all right, get meout, you get me out. That's
an emotional decision, right there.Are you really thinking about price earnings multiples
and future growth and where that companyor where that index is going to be
six months down to wrote, No, you're emotional, you're talking about You're
thinking only about protection, protection,protection, And was that a good decision?
I know somebody who got out earlyon and got right back in by

(04:33):
October and locked in one monster lossthat he only recently is seeing black on
his Ledger statement he was in thered this whole time because he was out
for about two and a half months. That was because he made an emotional
decision, not a thought out decision. And you want to talk about specific

(04:53):
ways that you could be doing thiswithout even being aware of it, and
one of those is mental accounting.You might say a dollar is a dollar
is a dollar, but often whenyou go through life, you'll say You'll
look at someone else and you'll say, they just went to Europe. They
spent how much money on that vacation. That's insane. I would never spend
that much on that vacation. Meanwhile, if you looked at your credit card

(05:16):
statement, you would also realize thatyou had spent that much money on eating
out over the course of the lastyear. You're not upset about spending that
money on eating out, but youcan easily look at how someone else is
spending their money and say that doesn'tmake sense. It's mental accounting. It's
like these gymnastics that we play inour minds to make sense of the way
that we spend I recently had afriend make that say this to me,

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and I thought, hmm, thisis a perfect example of this. She
said, we went on this vacationand it was so amazing because we'd paid
for the flights before we had paidfor the resort where we were staying before,
and she said, so, thenwhen we got there, it was
like the vacation was free and wecould spend whatever we want because we had
prepaid for everything. Hmm okay,interesting way of taking a look at it.

(06:03):
Mental accounting, A dollar is adollar, So you're going to spend
more money on his trip because youalready paid for the trip. That makes
zero sense. Yet we can oftentrick ourselves into thinking these things. You're
listening to simply money on fifty fiveKR. See, I'm Steve Sprovak along
with Amy Wagner, and we're talkingabout some of the emotional reasons we make

(06:25):
financial decisions and when it can getyou into real trouble. I think the
number one emotional issue that can getyou in real trouble, Amy is herd
behavior. Everybody's doing this. Iheard this again going back to the early
stages of the pandemic. But Ihad a very good, very intelligent friend
say, got to get out ofit. I mean, you'd be fool

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not to. So, I meanhe felt like he would be a fool
if he didn't follow the herd.And yet one of the best, if
not the best investor of all times, Warren Buffett. He's a contrarian.
He likes the herd, becase becausethe herd makes him money. He does
the opposite of what the herd does. If everybody's selling enough, you bet
if everybody's selling, and chances arehe's in there buying. If everybody's excited

(07:11):
and buying, he knows at somepoint that's probably close to if not at
the peak, he's in there selling. And you can use the herd to
your advantage. If you're one ofthe herd, just consider yourself a lemming,
you might be going over the cliff. Well, I love that you
brought up Lauren Buffet, as youknow, I'm a huge fan of his.
But it's not that he doesn't haveemotions. He's not a robot,
right, He has just learned tosuppress those emotions when it comes to making

(07:34):
terrible financial decisions that could and overthe course of time. Right when the
herd is going one way and he'sgoing the other direction, it no longer
scares him because he's seen time andtime again how he wins out. So
I think you can learn to changeyour behaviors over time by seeing, Okay,
not responding to them actually can bethe smartest thing for me. I'll

(07:58):
tell you, and I have personalexperience with this, and it's kind of
a sad story, but anchoring isthe fancy word for it. But Okay,
you paid more for the stock thanit's at and maybe you even say
yeah, But once it gets backup to where it was, I'll be
smart. I'll get rid of it. Then Wall Street doesn't care what you

(08:20):
paid for a stock. And theperson I'm thinking of had several thousand shares
of a stock in a local manufacturingcompany that was worth seventeen, had gone
up to thirty two and found itsway back to seventeen. And I told
him when it was at thirty two, they were going through layoffs and furloughs
and all that sort of thing.And I said, I told them,
companies don't do that because they're gettingmore and more healthy and profitable. You

(08:45):
might want to think about selling.He followed it all the way down to
seventeen. Finally said, you knowwhat, I think you're right. Once
it gets back up to thirty two, I'm going to sell. Well,
it got up, you know,to eighteen or nineteen and then eventually to
zero and went bankrupt. Wall Streetdoesn't care what you paid for a stock,
So don't fixate on what you paid. You've got to continually reassess does

(09:07):
that stock or does that index?Does it still have potential? Does it
still have reasons going for it?Yeah? That that were the reasons I
bought it in the first place,because things do change over time. Here's
another one that I see people fallingfor really often self attribution. You think
you're better at something than you reallyare. And I say this all the

(09:28):
time about this kind of realm offinancial me personally, I'm not looking I
am looking at you, but I'mnot looking at you. I actually know
a room. I actually know you'revery good at this whole financial thing.
But I also think you know,if you are not in this world that
Steve and I live in, you'rean expert at something else. You're an
expert at whatever you get paid todo every week. But I also know

(09:50):
that during times when the market's goingup, up up, at think one
of our founders has this great lineand he says, don't mistake a bull
market for brains. And it's likeyou realize, like every time you check
your floral. One case statement it'sup, it's up, it's up,
And all of a sudden you think, I have got this figured out.
I should be trading options, Ishould be leveraging, I should be doing

(10:11):
all of these things because I'm reallygood at this. Are you really good
at it? Or is the marketjust in a place where it's going to
be tough to screw this up?Right now? Right? And so self
attribution is a way where you actuallythink you're smarter at something or better at
something than you really are. Youmake one choice on an individual stock and
it goes well, And now allof a sudden you're telling all your buddies,

(10:33):
I'm going to pick the next bigone. I've got it all figured
out, I've got this formula.Right. Not necessarily, you just got
lucky. Maybe once everybody's a geniusand a rising market, isn't that true?
Now? And you can usually pickthese people out at a dinner party
because they're the loud ones telling youhow much they've made you know it?
No, it's humility is a reallygood emotion to have when you're an investor,

(10:58):
because you're not going to get themall right. Did you'd be on
an island somewhere you know, it'sokay to miss a few, It's okay
to say I don't know everything.It's okay to change your opinion because the
facts have changed. And just becauseyou had a pretty good run doesn't mean
it's always going to continue. Amatter of fact, the longer your run
is and this is true in anyyou know, in gambling and investing,

(11:20):
you stack up five or six winsin a row, you're due, You're
you're going to take a hit atsome point. Another one, right,
behavioral finance, as we look athow this is affecting you and your money,
and this is a huge one,an emotional gap. You have maybe
already put together a financial plan.You know what your goals are. You
might know when you want to retireand how much you want to help the
kids with college. You may haveall of those things laid out, and

(11:41):
you may have a great plan financiallyfor getting yourself there. Then something happens.
Usually it's fear, it's greed,anxiety, enthusiasm, you name the
emotion, but it comes in awave. It knocks you down and all
of a sudden you are switching coursefrom that plan because you just this emotion
is driving you in the other direction. Of course, we saw it so

(12:03):
much in twenty twenty, right Steve, when everyone was called, you know,
all the investors that we work witha pandemic and we're shutting down the
economy, and the President said this, and we need to get our money
out of the markets. We don'tknow what's going to happen. Right in,
those emotions overtook and we tried totalk, you know, common sense
to so many people, to alot of people at work, but to
those who didn't, fear drove themout of the market. The market rebounded

(12:26):
several weeks later to new highs,and they missed out on those new highs
because of those emotions. Fear andgreed are not only two of the strongest
emotions, but two of the biggestreasons for losses in the stock market.
Here's the all Worth advice. Listen, find yourself a good fiduciary financial advisor
who can keep you from straying fromthat retirement roadmap. Keep your emotions out

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of things. Coming up next someof the worst habits to carry with you
into retirement. You're listening to simplyMoney presented by all Worth Financial here in
fifty five krs. The talk station. I think financial advice. You should
consult your own financial advisor, taxconsultant, or a state planning attorney to
conduct your own due diligence kilting too. Simply Money presented by all Worth Financial.

(13:13):
I mean you Wagner along with SteveSprovak. If you can't catch our
show every single night, you don'thave to miss a thing. We've got
a daily podcast where you just searchSimply Money. It's right there on the
iHeart app or wherever you turn toto get your podcasts coming up. We're
testing your knowledge retirement fact or fiction, making sure you don't fall for the
miss when it comes to your retirement. Speaking of retirement, you know,

(13:35):
we've helped thousands of people through theyears kind of transition from the work life
into retired life. And there's justsome kind of greatest hits that we come
across of like bad things that peoplecan traps that people can fall into that
just kind of get them off offthe right path. And one of them,
I would say, is spoiling thekids. Yeah. I mean when

(13:58):
I first see people and know theyhave me do a financial plan for their
upcoming retirement, their biggest concern isI just don't want to run out of
money, and you know a decentplan, you're not going to run out
of money as long as you stickwith it. But these are five things
that will very likely help you runout of money despite having a good plan.

(14:18):
These are five things that if you'reretired, just acknowledge that this is
happening. And I can't let thisbankrupt me, because I once this money's
gone, it's gone. And unfortunately, I've seen you know, spoiling your
children. I'm not sure is agood phrase for it. I've seen bankrupting
mom and dad because adult children keepasking for money, okay, And I

(14:45):
remember one in particular instance. Itwas heard breaking to me an older woman
who's being bankrupted by her adult kids. Her son was always out of work,
and the daughter was divorced, hada young kid. You know,
every reason in the world to besad, and why she needed it's her
money. I don't care, youknow, she could do with whether whatever
she wants. But I saw heron the path to bankruptcy because the kids

(15:07):
and maybe they thought mom just hada ton of money, which she didn't,
you know, but the kids keptasking and asking, and Mom just
kept giving and giving. And giving, and that's not healthy. That's one
of the biggest things about our jobis to say no, you can't do
that. But if you do,that is the consequence of that. Here's
what will happen. If you keepgiving that money to your children, you

(15:28):
will run out of money in Xnumber of years. And I mean,
here's the numbers of it. HalfAmerican parents are giving an average to fourteen
hundred dollars plus a month to theiradult kids. And we're talking groceries,
mortgages, you know, cell phones, insurance, all the thing blows me
away. I don't know. Iwas. I was absolutely stunned by that

(15:50):
number. That half of retirees givenaverage average a fourteen hundred bucks a month.
What's the average social Security check?I mean figure signing over. Yeah,
you're signing over your Social Security checkto your kids and burning through your
own investments. So that's that's dangerous. Well, and I think that's great
perspective there, Steve, because ifyou said to someone, would you just

(16:11):
sign over your Social Security check toyour kids, most of them will say
no, I need that money.That sounds that sounds insane, Yet in
one sense, that's what you're doing. And I think by looking at it
that way that there's fresh perspective onthat. You have to set boundaries.
You have to talk openly about financialexpectations and wean them off. I mean,
if this fourteen hundred dollars a monthis ringing true to you, you

(16:34):
know you've got to start setting somehealthy boundaries there. Here's something else that
has to do with money, butnot as directly, and this is skipping
your doctors. Yes, yeah,we're talking about this one. You know.
I'm like, he's I'm like,did you go to the doctored?
You know, your annual visy's likea few years ago. I'm like,
the older you get, the moreeasily that a doctor can find something that's

(16:56):
treatable at that point because you're thereevery year, versus something that can get
way out of control because you hadn'tbeen to the doctor. Yeah, and
guys, we're talking to you,we're talking to me because women are smarter
than us. And yeah, abouthalf half the men out there they put
off doctor visits. And once youturn sixty five, you can't start doing

(17:19):
that. I mean, the numbersare staggering. The average sixty five year
old male or female is going tospend about one hundred and fifty seven thousand
dollars in health expenses the remainder oftheir life, and they're, you know,
the last whatever number of years areremaining. If you don't stay on
top of stuff, it can getbad quickly. And I know everybody listening

(17:41):
knows somebody that I never went tothe doctor first time he goes, and
it's something serious. And I canname two people right off the top of
my head that in the past coupleof months I've seen that happen. Just
don't put off doctor visits because you'retrying to save a buck. Yeah,
So build in the habit when you'reyoung, regular checkups, regular treatments.

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It's kind of like your car.Right, routine car meetance. Make sure
that you are maintaining yourself and whenyou get to retirement, when you get
older, it's going to literally payoff when it comes to your finances because
you will be in much better shape. Here's another thing, worrying about your
investment portfolio. We've been talking aboutbehavioral finance, and this is when you

(18:22):
like your emotions are driving your terribledecisions and when you worry too much,
right, and you're maybe the personwho's checking the markets eight times a day,
and you can drive yourself crazy andthen you start to make knee jerk
decisions that affect your long term portfolio. I remember being in a meeting where
the husband said, yeah, Iknow you tell me not to pay attention

(18:45):
every day, but I do checkmy account every day, and the wife
right behind him is holding up fivefingers, in other words, five times
times of the day. Yeah,exactly. You know. You know when
the last time I check my accounts, and you know I'm coming close to
retirement. It's been probably two monthssince I checked my accounts, and yet
people call me and say, I'mguessing you check yours all the time.

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No, I don't want to.I don't need to. I know roughly
where the markets are, and Ialso hear from from investors, you know,
when things are going a little crazy. I know you're getting calls from
everybody right now, so I don'twant to take your time up. No
chances are you're the only person callingme. You know. It's the smart
people that are long term investors.They're they're not on top of this every

(19:29):
day because you don't need to beor want to be. Here's another thing,
that we see derailing retirement a lot. This is procrastination, and this
is with some really vital things.And I'm going to tell you right now,
I am one hundred percent guilty ofthis delaying major choices like drafting a
will. I'm not lying. Ihave a physical to do list in front
of my face every weeking hour.It's it's how I keep or I would

(19:52):
lose track of everything. And andwhen I at the end of every week,
I then, Okay, here's thethings that I didn't do. I'm
not I'm not joking when I say, Steve that for years I would write
estate planning and I would put iton the next week, and then I
would go through that week and nothing. And finally, is what if something
happens to me? Right? Thisis being selfish because I think it's a
very loving act to go ahead andset out your will and make sure that

(20:14):
everything's taken care of. I agreeone hundred percent get your will done in
powers of attorney if you have not. Here's the all Worth advice. Retirement
is the perfect time for a freshstart. That's why you want to leave
some of these bad financial habits behind. Coming up next to the pros and
cons of credit card rewards with ourcredit expert. You're listening to Simply Money,
presented by all Worth Financial here infifty five KRC, the talk station.

(20:36):
I have KRC, an iHeartRadio station. You're listening to Simply Money and
presented by all Worth Financial. IMeany Wagner along with Steve Strovak. We
talk a lot about credit cards andsay they are a tool used well,
and they could be a great tool. But if you let them use you

(20:56):
well, you can get in allkinds of credit card and credit and that
kind of thing. Joining us tonight with his perspective on specifically these credit
card reward cards is Britt Scarce,our credit expert. Britt, you know
I've said this on the show severaltimes before, and this is not anything
that I've done. My dad,Gary Wagner when I went off to college,
and you will never ever not payoff your credit card bill every month.

(21:18):
So I've made all kinds of baddecisions in my lifetime, that's not
one of them. And so wedo use rewards perks. We use travel
perks a lot that come from ourcredit cards. But I want to get
your take on this. Absolutely,you end up really possibly getting a bunch
of great rewards when you utilize theseprograms, but you also you have to

(21:44):
really respect these things because it canbe a little bit like playing with sharks
and snakes. You know, theycan also be very dangerous, right,
And you know you have folks thatyou know, say, oh, well,
I always put everything on this particularcard because I get all of these
points, and I get all thesethis cash back and all this other stuff.
But what I find is that inmany cases, if you're not someone

(22:06):
who's disciplined like what you're saying Amy, where you're able to utilize that card
and pay it right off every month, it could encourage overspending, and people,
you know, they kind of rationalize, you know, spending money on
things that perhaps they don't necessarily needand perhaps racking up debt that they can't
pay off on a monthly basis,which could get them in a you know

(22:27):
a lot of financial trouble. Well, well, you certainly don't want to
pay ten dollars an interest to getten cents worth of flying points or whatever
the rewards happen to be. Butyou know, there is some value and
if you're going to be buying somethinganyway, why not throw it on a

(22:48):
rewards card and get some benefit outof it. I think the key is
tracking your spending on those credit cards. Won't that keep you out of trouble?
Absolutely, Steve. You have folksthat, you know, if you're
doing something anyway, Let's say youtravel for work and you fly all the
time, you know, and whynot take advantage of sky miles and things

(23:08):
like that that could perhaps you know, get you a free vacation, you
know, through the travel that youdo. Anyway, that makes a lot
of sense. But you just gotto make sure that you're not just spending
just to spend. And unfortunately,a lot of us will rationalize, well,
you know, I'm gonna I'm goingto buy this extra whatever, you

(23:29):
know, and yeah, it's threethousand dollars and it's you know, going
to take me, you know,ten years to pay it off, and
and you know, and rationalize,like you said, to get you know,
just a small reward. And that'sthe danger. And I think that's
also kind of the psychology that thecredit cards want to use because they know
that people in general, once theyrack up that debt, a lot of

(23:51):
them are going to revolve that debtand the credit card companies are going to
make over twenty percent interest on that, you'll send me something money present of
all with financial IEMI Wagner along withSteve's trovec As, we are joined by
our credit expert brit Scarce making senseof rewards credit cards right, the pros
and the cons you know, andI think some of the great travel cards
they'll also come with annual fees.And I don't think we can overlook the

(24:15):
fact that that has to be partof this conversation. You can list all
these great benefits that your card isgiving you, but if you're paying I
mean some of these are four hundreddollars four fifty something like that in annual
fees, is it really worth it. I have a friend of mine who
was telling me about all the greatperts about one of his credit cards when
it came to travel at the airportsand so forth, and it comes with

(24:37):
a seven hundred and fifty dollars annualfee. Wow. And you know,
but you know, you get tobe you get to be in a great
lounge, and you know any timeyou go to the airport, you know
you get free drinks. Right,So what are the other downsides? I
mean, yeah, rewards, theycan be great if you pay them off
every month. There I see nonegatives, But are there any other things

(25:02):
that I haven't seen that that cantrap you? Well, what you find
sometimes is that the redemption of someof those perks can be very complex.
You know, you can only redeemit on a Tuesday while you're you know,
wear a green suit or something.You know, I'm exaggerating a little
bit. You know, some ofthat can be a challenge. But the

(25:22):
other thing too is, you knowwe talk credit scores all the time,
right, Well, if you havefolks that are racking up balances on these
cards, if you're getting anywhere nearthe you know, credit limits on these
cards, you know, the theyou know, thirty percent of your FI
code credit scores based on credit utilizationon these individual cards. So if you're

(25:44):
using you know, over twenty tothirty percent of what is available on that
credit card, well, that's goingto start impacting your credit score as well.
I also want to bring up tothis point that I just I've kind
of really noticed this over the pastfew years. When you're just signing up
for one of these rewards cards.But a lot of times they'll say if
you spend five thousand dollars in thefirst two months, we will give you,

(26:07):
you know, twenty thousand extra milesor points or whatever it is,
you know. And it's like,oh, well, I wouldn't normally spend
that much in that amount of time, but maybe we should put everything on
this credit card and maybe spend alittle more in order to get those initial
points upfront. I feel like they'realmost incentivizing people kind of to develop bad
habits with these credit cards exactly,because if you put that kind of money

(26:32):
on there and let they're hoping thata certain percentage of consumers will start revolving
that balance, they won't pay thatin full the next month. So guess
what if that's a twenty two percentinterest rate card or twenty three percent,
Well they now have got themselves aguaranteed return as the credit card company,

(26:53):
you know, of twenty some oddpercent return. So you know, that's
that's the incentive, and it doesn'tcost so much at all to give you
those you know, those points becauseagain, those points, you know,
you have to have so many ofthem before they actually have to pay out
any kind of meaningful, you know, actual reward. So do you have
a favored or a couple of favoriterewards cards that are worthwhile, Steve,

(27:18):
I have to tell you, I'mnot a big fan of any of these
personally, so I would not bea good person to ask because I personally
don't utilize them, and I reallyprefer the method that your dad speaks of,
Amy, and I use credit cardsvery sparingly and pay them off every
month. And I think one ofthe things you have to keep in mind

(27:41):
with any of these rewards, whetherit's cash back, whether it's sky miles,
whether it's you know, points tostay at a hotel, these are
pennies on the dollar. And ifyou are not paying that credit card off
every month, there is absolutely zerovalue in any of these rewards. Ever,
because you are, you are payingso much more interest and you can
ever get from those rewards. Andit's almost a psychological way of understanding this,

(28:04):
But you have to look at itthat way. I agree completely.
Amy. Let's talk about interest rateson these too. I mean, as
far as you know, some ofthese reward cards and actually all credit cards
these days, you're you're looking attwenty plus percent that you're going to pay
just to maybe pay off something andyou're going to get you know, some
sky miles for it. I agree. And the what most of the people

(28:26):
that I see that play this game, I also noticed that they tend to
have very large amounts of revolving creditcard debt. And you know that financially
is just not wise. You're youknow, carrying large amounts of credit card
debt. And I know people youknow say that all debt is you know,
normal and usual, and you knowit's not a big deal, but

(28:48):
you know, it robs you ofthe ability to you know, to use
that money more wisely, like investing. Yeah, and you know, just
a monthly peace of mind of nothaving payments, monthly payments, you know,
rob us of our you know ofour future piece. Yeah, freedom
right, freedom to make the bestpossible financial decisions for you. Bird Scares,
our credit expert, Thank you asalways for your insights and the fact

(29:11):
of maybe you are thinking about openingup one of these rewards credit cards.
What you need to think about first. You're listening to Simply Money presented by
all Worth Financial here on fifty fiveKRC the talk station exactly from what's happening
here, let your voice be heard. It's inflation it's here. It's going
to keep in worse price oil andgas is what's controlling our economy. Your

(29:32):
voice on fifty five KRC. You'relistening too. Simply Money presented by all
Worth Financial. I mean you herealong with Steve Strovak. Do you have
a financial question? Maybe you andyour spouse just cannot agree on you're not
on the same page, or it'sjust keeping you up at night. There's
a red button you can click onwhile you're listening to the show. It's

(29:53):
right there on the iHeart app.Record your question. It's coming straight to
us. We'd love to help youfigure that out. And coming up,
We've got a tool that can helpyou keep your spending under control. We'll
tell you what that is. Here'sanother tool. There's so many myths out
there when it comes to making smartdecisions about your money and retiring well,
so this tool we like to callfactor fiction. It's a little game that

(30:15):
we like to throw out there,have a little fun with it, but
essentially we hope you learn something.I think maybe we're just looking at the
wrong way before. So here's thefirst one. Steve, I'll just throw
it to you. Fact or fiction. We've got bear markets that last longer
than bull markets fiction. I amso glad this question came up. And
you know, it seems when themarket's down, it seems like it lasts

(30:38):
forever because you always remember, yeah, you always remember that the bad times
more than you remember the good times. But I'll give you a great example.
Remember how bad eight and oh ninewas. I mean, it was
every single day just getting pummeled thatthat bear market, that drop in the
stock market lasted a year and ahalf. Okay, that's thanks, But

(30:59):
then we saw a year recovery.You know. That's why. The longer
the news is banned and the longerwe're in a bear market, the longer
prices are down, the more excitedI get, because I know that means
we're gonna have some really, reallyreally good times. And the fun part
is, okay, when can Ishift more in the stocks? Is the
time yet? Is the time yet? Are things really bad? Because prices

(31:22):
are cheap when the news is theworst? I mean, just think about
that. It's never the news isnever great and that and everybody's saying at
the same time, Okay, thatmust be the bottom. It's going to
be good from here on in nowbull markets always last longer than bear markets.
Let's go to the next one.Fact or fiction is kind of along
the same lines. A recession iscoming. Yeah, that's a fact.

(31:45):
It's always flack. Yeah, justlike if your clock is broken, sooner
or later it's going to be right, you know. I mean there's always
a recession. The question is isit tomorrow or is it ten years from
now? You know, that's aneasy one. You have to understand that
it's a cycle. There's a businesscycle to it, right, there's always
a recession coming. And see tothe point you made earlier, there's opportunities

(32:07):
that come from the fact that themarkets are down. So rather than being
scared and running through the hills likeyour hair is on fire, understanding those
are opportunities there that you can takeadvantage of can make a big difference.
All Right, I've got one foryou. I know you don't like debt
factor fiction is mortgage an example ofgood debt? Okay, So this is
a a kind of a kind ofit. And let me explain this to

(32:30):
you. I like a mortgage betterthan revolving credit card debt, right,
I mean, you have a home, it's an investments you can live in
it. You know, it's notnecessarily a bad debt. Most of us
have mortgage debt in our lives.But what I would say is if you
can prioritize paying off that mortgage bythe time you retire. When you think

(32:51):
about how much money you have goingout every month, most of that the
line's share of it. The biggestbill for most of us is our mortgage.
You take that off the table,and all of a sudden, you
free up peace of mind and alot of money going into retirement when you
no longer have that paycheck coming in. So, while I don't think a
mortgage is bad debt, I stillthink it's the kind of debt that you

(33:12):
want paid off before you retire.Yeah, it's the last in line to
get paid off for most people,and you know, the interest rates lower
than your car loan, probably certainlythan credit card debt. I think that
is so such a great point youmade, though of having it paid off,
figure out a way to pay offthat mortgage by the day you retire.
Amy, I've seen both instances.I've seen huge mortgages in retirement.

(33:35):
Maybe the people wanted to downsize andthey just decided. Now we still like
this house, we're going to keepit. There's nothing good that comes out
of taking money out of your investmentsto make mortgage payments, especially when the
market is down. Okay, factorfiction, You need at least a million
dollars to achieve financial independence. Ithink there's a lot of people out there
that would love this being a factbecause it's just a number and they just

(33:59):
give me the number and I willwork toward it. And I would say
this is fiction because some people aregonna need way more than a million dollars
and some people are fine with lessthan a million dollars. What you need
to figure out in order to figureout your specific number is your lifestyle,
what is your spending like? AndI would say that for most of you,
you might want to fudge the numbersa little bit, like, well,

(34:20):
this is how much we spend onthis now, but when we retire,
we're going to have more time tocook at home, so we're not
gonna eat out as much. Well, but are you going to want to
cook it home? Right? Exactly? I think you're going to look at
your lifestyle now figure out how muchthat costs you on an annual basis,
And those are the numbers that youstart looking at when you figure out what
your retirement number is. But it'svery personal. Okay, let's say a

(34:42):
million dollars is a number that you'retrying to achieve. I think a lot
of people get hung up on allright, that would be nice, but
I can't reach there. Well,you know what, at least take it
one step further. How much doyou have? Now, what's it going
to take to get to a milliondollars by your desired retirement age and figure
out a rate of return to plugin and plug it into a business calculator.

(35:04):
Maybe it's only an extra fifty bucksa pay paycheck, seventy five bucks
a paycheck? Can you do that? Because that might make a meaningful difference
in the way you live in retirement. All Right, I got to ask
you this one factor fiction. Youcan use an HSSA. This is your
wheelhouse. You can use an HSAfor any kind of purchase once you turn
sixty five, not just for medicalexpenses. This is actually fact. But

(35:29):
there's a caveat to this because theHSA money is actually earmarked for medical expenses.
Yeah, you never pay taxes onthat money. It's a gift from
the government. It doesn't exist anywhereelse. You can take that money out
for something else you will have topay taxes on. It becomes like a
de facto four one k. Atthat point, that's not a bad deal.
In yeah, I mean there's lotsof flexibilion. I think that's the

(35:51):
key to keep in mind here.But by having a health savings account,
you give yourself options later on comingup next, want a tip to keep
from buying something impulsively? We're goingto tell you about the ten ten ten
rule, what it is and howit works. Next, you're listening to
Simply Money, presented by all WorthFinancial here on fifty five KRC, the
talk station the worlds are on fire. Voice be heard. This is the
best show, the best radio personalityin the whole business. Your voice on

(36:16):
fifty five KARC. It is meanstoo. Simply Money presented by all Worth
Financial. I mean you Wagner alongwith ste Sproback. If you are someone
who tends to spend a bit impulsively, maybe your spouse is the impulse of
the spender, it can really bereally easy to say just don't do that,

(36:37):
or I'm going to quit doing that. But tonight we have a tool
that we're going to introduce to youthat might help you spend less impulsively.
You know this is something that hitshome with me because you put me in
front of a website with all kindsof different cars. I'm going to spend
hours on it, and I'm ibe a very I can be a very,

(37:00):
very impulsive person when it comes toanything that goes room. Okay,
but let's talk about the ten ten, ten roll. This will keep you
out of trouble more often than not. Ten minutes, ten months, ten
years. Okay, think about whatyou're considering buying and how you're going to
feel about that purchase. Ten minutesfrom now, ten months from now,

(37:21):
ten years from now. Where acar? The first ten are easy for
me. Ten minutes, Yeah,love it, ten months off, Still
love it? Ten years? Howmuch is it going to be worth?
Am I going to be tired ofit? Yeah? That's the one that
stops me from just impulsively buying outthe next pretty car. For a lot
of people, I think impulse spendingis like an emotion that you feel right

(37:42):
now. I just bought that thing. I'm excited that it's coming in the
mail, or I'm excited to driveit home or whatever, and you're just
thinking about the emotions in the moment. But by looking at this out ten
months and ten years, it forcesyou into having a long term perspective.
I try to do this with mykids when they were little, when they
would get money, you know,for birthdays or Christmas or whatever, I
would always say because they would havesomething immediately that they would want, and

(38:06):
I would say, Okay, youcan buy this thing now that costs ten
dollars or twenty dollars, or youcan save it up for Legos or that
American girl something bigger, something that, And it's just kind of forcing that
long term perspective of am I evengoing to care about this thing ten years
from now? I'm going to sayeighty to ninety percent of the time the

(38:27):
answer is no. And that makesit a lot easier to walk away from
that thing. Yeah, but youstarted the lesson by talking to them about
it. And that just reminded meof my older son when he was like
seven eight years old. Yeah,he want to say for something later,
younger son when he was like fouror five years old, No, I
want to go to Johnny's Toys rightnow? You knows that gratification, but

(38:47):
you know what, you started thatthought process with them, It'll stick with
them the rest of their lives.It just shifts the mind thinking from that
instant gratification to long term. Andlisten, we're not saying, OK,
if you're not still going to havethat thing ten you need closed, right,
There's certain things that you need thatyou may not have even if you
purchase them now ten years from now. But are you going to look back

(39:08):
ten years from now and say Iregret that, right, I should have
never that was a big poll purchaseand I could have done XYZ with that
money instead, ten ten, ten, Well, I care in ten minutes,
ten months, and ten years.If the answer to that is still
yes, I don't know, goahead and spend that money. Thanks for
listening tonight. You've been listening toSimply Money, present of my all Worth

(39:28):
Financial here on fifty five KRC,the talk station