Simply Money

Episode Transcript

(00:07):
Tonight, this is a money show. We don't usually talk about baking,
but we're talking about how to bakeinflation into your financial plan and why spring
might actually be a good time topull the trigger on a car. You're
listening to Simply Money, presented byall Worth Financial. I Meani Wagner along
with Steve Ruby. The good olddays when a Federal Reserve meeting was just

(00:29):
like an afterthought mentioned below the foldof the newspaper. Nobody was really paying
attention because inflation was at a normalrate and it just didn't have the impact
that it does Now. Now you'vegot a Federal Reserve meeting and the results
of that ripple through the economy rightdown to everyone's four O one K,
So we're all paying attention. Andthen today, of course another Federal Reserve

(00:51):
meeting, so people are paying closeattention. Yeah, but this time it
was no surprise. I mean,we had Chief Investment Officer Andy Stout on
a Monday. Obviously, this issomething we've done talk about with him,
and we've been talking about with ourlisteners for quite some time. When I
say no surprise, it's because theFed today they didn't do anything. They
left interest rates alone, they currentlystand between five point two five and five

(01:11):
point five percent. You know,the economy continues to grow, but it's
a little bit more slow, sothe Fed is just pausing to kind of
wait and see. Well, notonly did the Fed not do anything,
but nobody expected that they would doanything. Right, It's like how Vegas
has odds on everything. Well,economists had odds on you know, the
Federal Reserve hiking or lowering interest ratestoday, and it was at zero.

(01:34):
Nobody was expecting anything to happen.So what the Fed did was kind of
in line with what we thought theywere going to do. They've been really
clear about kind of taking a waitand see approach, right, I mean,
and I think the market, though, there's kind of been this weird
disconnect. We talk about this manytimes. The market's saying like, okay,
let's stop start dropping these rates.You know, the market's like it's
time, it's time. The FederalReserve, though, has been crystal clear

(01:57):
when communicating that, hey, it'snot time yet, because we're still getting
all of this data in in someof the data as saying I don't know,
like interest rates are still being alittle bit stubborn getting to that two
percent goal. Rates may take longer, and they're also saying we're not taking
anything off the table. I don'tthink rate increases are necessarily on the table

(02:17):
now, but they don't want toerr on this side of cutting rates too
soon and then have inflation get outof control yet again. Yeah, that's
why they're waiting and see what happens. I mean, Obviously, companies that
make up the stock market, theythey want interest rates to go down sooner
rather than later because it makes thecost of doing business less, Borrowing becomes

(02:40):
cheaper, they're purchasing power. Obviouslyis going to affect their bottom line and
then turn the stock price. Butthat's why the FED has raised interest rates,
and that's why they're pausing it becausethey're purposely slowing down the economy to
slow inflation. So where does inflationstand currently? To CPI increased it.
It did go up a little bitpoint four percent February, so it lifted
the year of a year number fromthree point one to three point two core

(03:04):
inflation. Remember that excludes food andenergy prices because those are more volatile.
That also rose zero point four percent, but its twelve month change was a
little bit higher. At three pointeight compared to CPI at three point two.
Well, the FED do next wellremains to be seen, of course,
and I think there's more data comingin, so we'll be continuing to
kind of digest that they do meetagain at the end of next month in

(03:25):
April. All right, I gotto draw our attention now to Elon Musk.
This guy is an interesting dude.I don't even know any other way
to put it. So now he'sat the home of three different companies.
Of course, you've got Tesla,and you've got SpaceX, the space expiration
company, and then he took overX. So when it comes to Wall

(03:46):
Street, a lot is riding onhim. So then when you find out
that he has a prescription for catamine, you know, I don't know,
people could get a little nervous.Yeah, So Elon, he wants you
to know, He wants us allto know. He wants investors to know
that we don't need to worry abouthis drug use. That's what he came
out and said, you don't needto worry about my drug use. Now,

(04:11):
keep in mind that there are alsoallegations of illegal drug use, not
just a prescription for ketamine, whichI think is a horse tranquilizer. I
don't actually know much about this particulardrug, and I did see the interview
that he did about it, andhe said, you know, I can't
abuse it, and this is kindof how he explained it, because I
work sixteen hours a day, essentiallysix seven days a week, and if

(04:33):
I take too much of this,then I'm not going to be able to
work and that has an impact.And I like the way that he twisted
it because he said, Hey,investors, rather than worrying about this,
you should be glad that I'm takingthis because it's what I've been doing,
and hey, look how successful I'vebeen to this point. So let's all
get on board with the fact thatthis is something that I'm doing. You

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know, I just think it's notnot a normal thing to hear about,
you know, this sort of druguse in with someone who has so much
power over our nation's economy. Yeah, I mean, I can't wait for
the drug infuse frenzy of bad decisions. I think that's the scary part here.
Sure what happens if you know itleads to some kind of chaos,

(05:19):
which we have seen with him justa tweet. He's chaotic, anyway,
Yeah, it has moved the markets. But keep in mind here the difference
here between kenamine, which he sayshe uses for a negative chemical state similar
to depression, isn't the same asas some of the information that came out
from the Wall Street Journal that showeddrug use including LSD, cocaine, ecstasy,

(05:42):
other psychedelics. So there's a differencebetween medication for depressed depression and I
guess blasting cocina yacht with a bunchof suburties well and cheap. In mind,
this dude has government contracts, right, He's contracting with NASA. This
is not just what we're going toget on law line and say on the
X platform at two o'clock in themorning, right, I mean, this

(06:03):
has real life life and death consequences. Right. So he claims that NASA
is now requiring him to do somedrug testing and that he is and that
he will comply with that and thedrug tests will show that there's nothing out
of line going on here. Ithink this is a to be continued kind

(06:25):
of a situation because if there's anythingwe know about Elon Musk at this point,
it is that whenever something bubbles upto the surface, there's usually more
to it, and I think willcontinue to digest that for some time to
come. You're listening to Simply Money, presented by all Worth Financial Imami Wagner
along with Steve Ruby, as wetalk about some of the major financial headlines

(06:46):
and what they might have to dowith you. I mean, you could
easily say Elon Musk, this guy'scrazy, but when you look at the
fact that he owns these three companies, your four to one k might have,
you know, some of these companystocks in them, and what we
saw even just you know, inrecent months when he started diverting so much
attention to the X platform and thenthere was concerns over can he really keep

(07:08):
Tesla up right? Tesla stock tooka nose dive during that time. So
you know, one person in thissituation can have a real impact on all
of our four oh one case.So this is definitely something worth following.
Yeah, I mean it's a tendantto diversification, putting all your eggs in
one basket. I mean, wehave Elon Musk at the helm of Twitter

(07:28):
and Tesla, and those are publiclytraded stocks, and here we are.
If something happens to one of them, or if something happens that moves the
needle because you know Tesla, orbecause Musk is you know, getting in
a drug frenzy of some kind,that that's a scary thought. Do not
put all of your eggs in ElonMusk's basket. I think that's just a
really safe financial advice. Speaking offinancial advice, you might know this dude

(07:53):
from Shark Tank Love the show,Kevin O'Leary making some headlines right now because
he says he for right, forbidsa strong word to bring their money together,
to merge their finances. Because hesays, everyone needs your own financial
identity, So keep your keep yourmoney, keep your finances separate, even

(08:13):
when you're married. Yeah, sofifty percent of marriages end in divorce in
this day and age. That thatthat is a fact, that's an unfortunate
reality. So his reasoning behind it, sure, I understand. But the
whole forbid your family, forbid yourchildren, forbid those around you from not
getting a prenup, that that's alittle strong in my opinion. I agree,

(08:37):
And I also understand what he's sayingfrom a very personal standpoint. I
would have never expected that my firstmarriage was going to end in divorce,
but it did. In One ofthe things I am incredibly grateful for is
that I have the financial background thatI do, and I know exactly what
to do. And I think manytimes in I'm speaking sometimes to women in

(09:01):
particular, here, it's really easyto say, Okay, all of our
money is together. He's making allthese financial decisions about our four to one
case, about our investments, abouthow we do things, and I'm really
not really not much of a partof that. And I say this after
you know, years of watching couplescome into meetings and it's just the guy
talking and she's just differring. AndI'm a huge proponent of empowering women in

(09:24):
particular right to have a voice andto educate themselves on these things. Nothing
bad happens when there's two brains comingtogether to make smart financial decisions. So
I'm a huge proponent of both peopleand the couple having a financial education and
a voice right in that decision makingprocess, whether you keep your finances separate

(09:45):
or merge them. I don't thinkthat that necessarily has this big of an
impact. Yes, I agree,I've seen it over the span of my
career, where one person is afinancial decision maker in the household and they
don't have the plan and together,and I encourage that. I say,
please bring your spouse in. Wewant them to know what's happening in the
financial plan. So this is different. This is communication, open lines of

(10:07):
communication, understanding what's going on betweena husband and a wife, whatever partnership
there is to make sure that yourplan works if something were to happen.
And that's what he's arguing. Nowkeep this in mind. By the way,
Kevin O'Leary, he actually owns aplatform, and I shouldn't say owns.
He invests in a platform that helpspeople draw up prenuptial agreements. So

(10:33):
there is a little bit of motivationhere as an angle here, Yeah,
behind why he would create such anoisy headline saying things like forbid, which
is very strong language. Yeah.I also, while we're talking about shar
Tank, I want to talk abouta local organization really quickly. Here I
have the privilege of working alongside.It's called Square one and it goes into

(10:54):
local high schools. Keith Schneider isthe man behind it, and he empowers
these high school students to say what'smissing as you look around in your world
and you're thinking about high school,whether it's sports or planning for college,
where do you see either a serviceor a product that's missing And then he
helps them kind of invent the ideabehind it and is there a market for

(11:18):
it, and what's the competitive analysisand how do we bring this product to
market? And how would we marketit in these products? And I just
got to MC their event last night. It's a shark tank like competition where
these kids have to present in frontof judges who are asking them questions.
It is the coolest thing and talkabout just real life experience. I have

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no doubt that the kids that participatein this, this will impact them for
years to come and the trajectory oftheir careers. So it's called Square Next.
If it's not in your kids oryour grandkids school, start asking questions
about it, and also go totheir website find out more support them if
this is something that you're interested in. But talk about just that entrepreneurial experience
and just such a cool thing.And I want to pivot quickly. Yeah,

(12:03):
yeah, I want to pivot quicklyto TikTok now because when we talk
about high school kids, many ofthem are getting their financial education, not
in a classroom, not from placeslike I'm talking about here, but from
TikTok and other you know, socialmedia platforms. Yeah, Congress is trying
to ban TikTok. It's or forcelet me let me rephrase that, either

(12:24):
trying to ban TikTok or force theChinese based parent company to sell it.
This is obviously going and to havesome unintended consequences if that were to happen.
But it is. You've talked aboutthis within your own household. You
have children that actually get financial advicefrom TikTok, and that's alarming to me.
Yeah. I mean my son cameto me a couple of years ago

(12:45):
and says, I think I wouldlike to invest in an S and P
five hundred index fund. I said, oh my gosh, buddy, that
is so smart. Were you listeningto my show? And he said,
no, I learned it on TikTok. That was solid. Financial advice is
easily though there's lots of information outthere that's not so great. Understand that
your children are learning a lot aboutmoney from these things. Make sure you're

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educating yourself and them on the truthabout that. Coming up next, how
to properly make inflation into your financialplan. You're listening to Simply Money presented
by all Worth Financial. Here infifty five krs the talk station. You're
listening to Simply Money presented by allWorth Financial. Immi Wagner along with Steve

(13:28):
Ruby straight Ahead six forty three,we're tackling roth Irase five twenty nine,
plans and much more, because yes, it is time to ask the advisor.
We're huge proponents of diversifying your portfolio, and we have just another example
of why that makes a lot ofsense today. This has to do once
again with the airline industry. Yeah, so if you have a lot of

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your stock wrapped up in certain kindsof company, that's something that you need
to be aware of, at minimummaybe make changes to max. Thinking about
Boeing, for example, this iswhere that one company has actually put the
whole airline industry in a bit ofa tough spot because the sky's for Boeing

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right now, shall we say gothere you go? So a panel blew
off of Boeing Jet midair just minutesafter an Alaska Airlines flight took off,
and it left a gaping hole,forcing pilots to make an emergency landing.
This was back in January, nowjust this past weekend, a post flight
inspection, so after the flight hadactually landed, there was yet another missing

(14:33):
panel and an older Boeing seven thirtyseven that had just arrived at its destination
was a flight from somewhere in Oregonto San Francisco or vice versa. You
know, I think that the onething that I like about the airline industry
is right all of the regulations aroundsafety and making sure that if something's wrong
with one particular plane, that we'relooking at every plane like that, every

(14:54):
possible issue that could come out ofit. Right, No one wants to
hear like, oh that happened,not a Boeing seven thirty seven. What
am I sitting on right now?A Boeing seven thirty seven? Like thanks,
but no thanks. So we haveto understand is the ripple effects of
just one of these panels coming off, and that means, you know,
entire fleets can be grounded as theytry to figure out what's the safest way.

(15:16):
Is there a larger impact here?You know, Steve, you and
I were just stranded for over twentyfour hours in Dallas. A couple of
weeks ago trying to get home whenwe were coming from a from an all
Worth conference, you know, Andso there's there's We're heading into the busy
travel season spring break in summertime,and if there's a number of planes that
have been called into question their safety, you know, not only does that

(15:39):
affect just how easy it is fortravelers to get around, but it affects
the stock price not only on Boeing, but on the airlines that have Boeing
fleets in many other industries that arekind of adjacent to that. So if
you are all in on you know, travel in your stock portfolio, well,
this is just one thing that youhave no control over that could have

(16:02):
a huge impact. And keep inmind, with a lot of these flights
being grounded because of a fleet ofinspectors going through and looking at all these
planes making sure they're safe to fly, this could mean if you were flight
options, which translates to potential higherprices. But personally, I'll take higher
travel costs to I'm sure I don'tget sucked out a window miles above the
planet. I'm very much on thesame page as you on this one.

(16:23):
All right, inflation, we allknow it's still above that two percent target
that the FED has just been gunningfor and someone unsuccessfully to this point,
but we're getting closer and closer.We've all felt it, whether it's at
the grocery store, the pump,the bills that you're paying. Understand that
inflation can have a huge impact notonly now on what you're paying, but
when you think about the future andyou're planning for retirement. And we talk

(16:47):
all the time about one of thelargest things that you can deal with in
retirement is going broke safely, andthat is not planning for inflation when you
are planning for retirement. Yeah,that's a good point, because inflation is
a silent killer in retirement that manyinvestors don't take into consideration if they're planning

(17:07):
on their own. I've had peoplecome into my office that we've I've met
with for the first time and theyshow me the spreadsheet that they built that
they're all excited about, and it'svery intricate, and they have all their
investments mapped into it and returns,hypothetical returns, and sometimes even taxes.
Great because that's something that you getto pay in retirement to but they didn't
bake inflation into their software that theybuilt. And that's a scary thought because

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inflation, if it continues on average, then about every twenty one twenty two
years, the value of the dollargets chopped in half. So think about
that. If you have a milliondollars and you set it in cash,
that's where you're talking about safely losing, and it's just sitting there not investing,
then twenty years from now, alittle more than twenty years from now,
that would have half the purchasing powerthat it does today. I was

(17:49):
actually looking at a chart about thisrecently, going back to nineteen twenty eight.
The one dollar in nineteen twenty eightto buy the same thing that a
dollar, it would be seventeen dollarsnow, you know, and I think
there are a number of ways thatthis affects your financial plan. Well,
first of all, you need tobake inflation into it. But second of

(18:11):
all, how you invest also needsto take into account inflation. And what
I mean by that is during theyears when you're working in saving the money
that you're going to use in inflation, many of us top of mind is
grow grow that money, grow thatmoney, grow that money. But all
of a sudden when you get toretirement and you're no longer putting money and
you're taking it out, so manyof us want to curl up in the

(18:32):
fetal position around that lot of cashand just protect it. And the problem
with doing that is, okay,well, right now, Yeah, I
can put money into a money marketaccount or a CD and I could maybe
make five percent. Why wouldn't thatbe good enough? Okay, Well,
if you have to take that moneyout at some point or from certain accounts
and pay taxes on it, thenyou also then take inflation out of that,

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and it suddenly that five percent islooking a lot closer to one percent,
right if anything you know in ourfinancial plans at all worth right now,
when we talk about inflation and retirement, we're looking at north of two
point five percent is what we kindof bake into that. And that's for
normal expenses. That's for you know, what you'll have to pay for things.

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When you look at things like healthcare, we actually look at a completely
different number because we know that healthcare, you know, the cost that that
inflates far outpace is the normal costof inflation. It's over four percent.
College savings, if you're helping childrenor Grandchildren says six point three percent.
So the only way to combat inflationover the long term is to maintain some
kind of stock exposure. That's wherethe growth comes from and the ability to

(19:37):
keep up with inflation. Here's theall Worth advice. Not only need to
bake inflation into your financial plan,you also need to figure out how to
outperform it over time. You're listeningto Simply Money presented by all Worth Financial
here on fifty five KRC, thetalk station. You're listening to Simply Money
presented by all Worth Financial. IAGNAR along with Steve Ruby. You know,

(20:00):
we talk about money stats a loton the show and we try to
make sense of them. And I'mgoing to throw out a stat right now
that actually doesn't make any sense tome, and that is a two and
three Americans who have credit card debtare also at the same time chasing credit
card rewards. Joining us tonight tomake sense of this is our good friend

(20:21):
Brad Scares, who is our creditexpert here on this show. Some of
these stats you can make sense of. Some of them, Well, they
just don't make any sense. Yeah, Amy, they say the stat was
sixty seven percent. You know,try to maximize their credit card rewards.
Now, keep in mind, youknow, credit card debt right now is
kind of at an all time high, where at like one point, I

(20:42):
think the figure is like one pointone three trillion dollars in credit card debt.
And keep in mind, a lotof these interest rates are somewhere in
the in the vicinity of you know, fifteen to twenty three percent interest.
And you know, if you're chasinga few you know, dollars that you

(21:03):
get back from a credit card whileyou're paying you know, twenty some aid
percent interest on the credit card,you're not exactly you know, winning financially
here, I think I know theanswer to this question, but are there
any credit cards out there that offerenough of a reward to make that worth
it? Well, here's the thing, and you have to kind of go
through, you know, when youlook at some of the stats. You

(21:27):
know, the people that are perhapsmaking you know, one hundred thousand plus
a year, okay, those folksthat have the ability to pay off their
cards every single month, they're notcarrying a balance. You know, the
average credit card balance right now inthe US is a little over ten thousand
dollars, so, you know,ten thousand and eight forty eight to be

(21:48):
exact. So if you're someone who'srevolving credit card debt and you're doing it,
you know, and you're like,oh, I'm going to use these
particular cards, I don't know thatthat ever makes sense. Now, if
you're someone who has a high incomeand you're able to pay the cards off
every month, you never end uppaying any interest, and you can get
some you know, airline miles outof a credit card issuer, or you

(22:11):
can get some you know, cashback where they might you know, you're
using your card for everything, andyou get you know, two or three
hundred dollars back for doing that andyou pay no interest, Well then that
could make some sense for you.But I've never seen anyone who is winning
financially that was financially you know,successful, say hey, I owe all
of my financial success to my creditcard rewards points. I've never heard or

(22:36):
someone who says I have ten fivehundred dollars in debt, but I am
winning a life because I have twentythousand dollars worth of Delta sky miles or
Marriott Bondboy points or whatever it is. And I think, you know,
people talk about credit cards often throughthat lens of what points you get and
how to get the most out ofthem. In brit I think it's really

(23:00):
important to drive home. This onlymakes sense if you are paying that balance
off on time and in full everysingle month exactly. And what we tend
to find is, you know,you know, if someone is not able
to pay off the cards on amonthly basis, and if they're using it,
it's usually kind of a thing thatthey tell themselves to kind of justify

(23:22):
and rationalize, you know, thecredit card debt. But you know,
in general it's good to avoid creditcard debt. Having ten hundred dollars on
you know, eighteen percent, nineteenpercent, twenty three percent credit cards is
not a good idea. Even ifthey are throwing back, you know,
one hundred bucks a month to you, or if they're going to give you

(23:45):
a three hundred dollars airline ticket,you're going to pay a lot more than
that back over the next you know, if you're paying minimum payments, I
mean, it could take you overto thirty years to pay that credit card
back. It's kind of amazing tothink about that. The people that can
read these high credit card debts arethe ones that are actually essentially paying for

(24:06):
the benefits that those that pay theirsoff every month receive. Yeah, it's
a good point. You're exactly right. That's you know, the credit card
companies aren't throwing out these rewards,uh, you know, to entice the
people that are going to be ableto take truly take advantage of it and
not pay interest back. The majorityof this is for people who you know,

(24:30):
they entice them like, oh,we'll give you five hundred initial points
to you know, to charge youknow, five thousand dollars or three thousand
dollars or something like that. Andthe idea is, hey, if we
can get them to just get abalance and then you know, get them
to where they don't pay that offevery month. Well, now you've got
the credit card industry and now theyhave a revolver uh you know borrower here

(24:51):
that's going to continue to pay theinterest and everything. And you're exactly right.
I mean getting the people to paytwenty three percent that certainly pays for
the handful of very small percentage offolks that you know, we'll pay it
off every month and take advantage ofit, so they'll lose on those very
small percentages, but they'll make it. You know, they'll make that up
with you know, the ninety fiveplus that will you know, pay the

(25:12):
interest every month and revolve and youknow it's debt is kind of like you
know, it sneaks up on youslowly. You know, I've told the
story about you know how they cookfrogs, right, you know, you
know you put a frog in ain a boiling pot of water, it
jumps out immediately, But if youput it in cold water and slowly turn
the heat up, it'll swim aroundin there, and you know before it
knows that it's cooked. And that'sexactly how it is with us with debt.

(25:33):
The easy monthly payments are easy untilyou have so many of them that
you know you're cooked. Exactly alittle bit of a gross example, but
you know it's one of the bestones I've ever heard. It's eye opening,
It makes perfect sense. You're listeningto simply Money Present of all worth
Financial. We are joined tonight byBird Scares, our credit expert with some
perspective on the stat which we finda little bit alarming. Two and through

(25:56):
your Americans who have credit card debtare mistakenly chasing credit card rewards. It
just doesn't make sense. And butI want to get some practical advice out
there for anyone who does have creditcard debt. And I know you've helped
many many people kind of on thispath before. We would say, take
the rewards off the table, andthen what are your next steps? How

(26:17):
do you climb out of that debt? Exactly? You you don't need to
be if you have a lot ofcredit card debt. I mean, you're
in trouble financially, and if you'rerevolving that you know month, and if
you have ten, twelve, twenty, you know, thirty thousand, then
credit card debt, that that's that'sa that's a that's a debt crisis for
you. So number one, youknow, don't let's not even even think

(26:37):
about you know, rewards points.That's just you need to get out of
that debt. So, you know, one, there's a couple of different
strategies you can do. I mean, the one strategy is, you know,
if you have a I'm going tokind of promote credit unions here for
a moment. Does a lot ofcredit unions have very low interest rate credit
cards and a lot of them havezero cost balance transfer, so you could

(27:00):
possibly transfer some of that debt toa lower cost card with a credit union
that doesn't have ALLUS transfer fees tobe able to manage that debt a little
bit better. That's one way.Another the best way is to, you
know, stop adding new debt,build yourself an emergency fund so that you
don't utilize credit cards anymore when youhave an emergency, because that's usually what

(27:21):
kind of starts the credit card debtfor people. They have an emergency they
can't pay for, so therefore theyput it on a credit card and then
it just starts adding up and gettingmore and more. So get an emergency
fund in place so that you don'thave to add debt if something happens,
and then start the you know,the the debt snowball, you know,
where you find a little extra moneyin your budget, and you list all

(27:42):
of your debts from the smallest ofthe largest, and you pay minimum payments
on everything except for the smallest debtand add a little extra to that,
and you know, pay off thesmallest debt first and then take that minimum
payment add it to the next,and so on and so forth, just
like a snowball rolling down the Hilladding you know, more more snow and
getting bigger and bigger. Your monthlypayments get bigger and bigger, and you

(28:03):
can eventually get out of the creditcard debt. And you know there are
other ways like deck consolidation and thatsort of thing as well. But the
fear I have with a lot ofpeople with debt consolidation loans is they pay
off all the credit card debt withthe debt consolidation loan and they might even
save themselves, you know, hundredsof dollars a month by doing that.

(28:26):
But the problem is is a lotof them go and run the credit cards
back up, and now they havethe big debt consolidation loan and the new
credit card debt. So yes,So rather chasing words, you've got to
get out of the debt and staythat way. It has to be a
complete shift in how your financial houseis run. Great advice is always from
brid scares are credit Expert. You'relistening to Simply Money presented by all Worth

(28:48):
Financial here in fifty five kre seethe talk station. You're listening to Simply
Money and presented by all Worth Financial. I mean you Wagner along with Steve
Ruby, straight ahead why might nowmight finally be the time that it makes
sense to pull the trigger on buyingthat car? And do you have a
financial question you want for us toanswer. There's a red button you can

(29:11):
click on while you're listening to theshow. It's right there on the iHeart
app. Record your question and it'scoming straight to us. And we start
tonight with a question from Anna,who's from Liberty Township. Hey, Amy
and Steve, our kids are fourand six, and we're trying to save
for their college expenses. Should weuse a five to two nine plan or
a roth ira So I'll take thatone. I mean, in this day

(29:33):
and age, the five twenty nineis a clear leader if it's saving for
college. Living in Liberty Township meansyou're in Ohio, so you can deduct
up to four thousand dollars of stateincome taxes per year. Secure AC two
point zero also open the door upfor some really interesting transitions later on,
meaning if these accounts have been openedfor at least fifteen years, and the

(29:57):
children at that time who are nowgoing to be adults, if they have
earned income, then you can actuallytransition up the thirty five thousand dollars of
unused five twenty nine money two Rothiras on behalf of the beneficiary in that
account, which would be your fourand six year olds today, but in
the future. Historically it was movingthe beneficiary from one to another, which

(30:18):
was great. You know, therewas portability because the problem here is if
you don't use it for college,it's tax and penalized. So in this
situation, we've now opened the doorup to being able to transition five twenty
nine money to roth dollars. Hugefan of five twenty nine's right, And
I think the more time that goeson, the more flexibility the government gives
us on these which is a raresituation where the government is making decisions.

(30:41):
It makes more sense. You mentioned, of course the tax implications of it,
right, that makes a lot ofsense. But I think we're just
getting more and more flexibility on howwe use these accounts. I mean,
it used to be that the majorconcern about a five twenty nine is,
Okay, I set up you know, my five twenty nine for my son
John John, and then you knowhe's two now, but I can already

(31:02):
tell he's really, really smart.He's probably going to get a full ride
to college, right, and soyou know what if he does and I've
got all this money set aside forhim and he never uses it. Well
to your point, now, withSecure Act two point zero, at some
point in his life, he canuse that for retirement. Or there's also
flexibility of saying, what if yourother kids, right John, John's little
sister at some point, maybe isn'tso smart that money can be transferred to

(31:26):
her. You could use it atsome point for some kind of you know,
educational purposes. So just lots offlexibility with these. And even when
they get to college, even ifthey get a scholarship, room and board,
technology like laptops and things like that, all of that this five twenty
nine money can be used for.So just lots of flexibility with these.
I'm a huge fan. All right, let's move next to Nancy from Highland

(31:48):
Heights. Here's my question. I'mfifty nine and single. Is there anything
specific or special I should be doingto plan for retirement since I'm not married?
Appreciate your thoughts. Thanks for thequestion, Answy. I mean,
at the end of the day,it's building a financial plan, making sure
you have your finger on the pulseof what your expenses are going to be

(32:08):
in retirement, how much you're bringingin in retirement, whether that's Social Security,
pension, annuity, income, parttime work, and then checking to
see how you're invested to ensure thatyour money lasts longer than you do.
Now. Separate from that, Iwould say a state planning is an important
factor because you're asking about retirement here, but we focus on financial planning as

(32:30):
many fiduciary financial advisors do. Sowhen it comes to your state plan,
making sure that you have the appropriatebeneficiaries, making sure that you have estate
planning documents for financial medical power,attorney, those types of things. Who's
going to step up to the plateand take care of your finances if you're
still around but can't make those decisions. You know. A couple of other
just practical things that I think aboutin this situation is we're huge proponents of

(32:53):
having that emergency fund, maybe becauseit's just you. You have more money
in that fund just for a littlemore flexibility and retirement. And then I
also think about long term care planning. You know, for many people,
with one person gets sick, youhave someone else there that can at least
maybe help take care of them ona day to day basis, unless you
know they really need some sort ofyou know, intense medical help or whatever.

(33:17):
But if it's just you. Ialso think long term care insurance or
a plan for that is also probablyreally important. Next, we've got Clyde
from Warren County. My wife andI are both sixty three and are going
to retire in fourteen months. Ourbiggest worry is healthcare. I used to
think that Medicare paid everything. Canyou please give us some suggestions for cutting

(33:38):
cost. I'm glad that you usedto think that, and you know that
that's entire no better now. Yeah, because Medicare does not pay for everything.
Is this is why we need toplan accordingly, save ahead, use
hsa as while we have time tosave, and make sure we have different
planning goals set aside for taking careof future medical expenses. And while we

(34:02):
transition into switching to Medicare from maybeyour employer sponsored healthcare, we do need
to sit down and look at eitheryour part ce Medicare advantage plans or a
metagap private insurance to make your insurancea little bit more like what you've grown
used to receiving it through your employer. Yeah, client, I'm glad that

(34:25):
you've realized that it's not all goingto be taken care of for you,
because that's a tough pill to swallowwhen you get to retirement. If you're
just learning it, then you knowfor others out there, client says he's
sixty three, who are younger,plan for this. I cannot stress that
enough. Plan for these healthcare expensesin retirement incredibly important. The latest numbers
out from Fidelity or three hundred andfifty three hundred and sixty thousand dollars the

(34:51):
cost of healthcare for a married coupleover the course of retirement. I'm a
huge proponent of health savings. Theaccount of that high deductible health care plan
makes sense for you, triple taxadvantage. I just think there's nothing like
them. So you do have options. But the key here is, of
course, to plan for this.Coming up next, we've got good news
and some bad news for those lookingto buy a car. The good news,

(35:14):
well, now might be the righttime. The bad news we'll get
to that next. You're listening toSimply Money, present of my all Worth
Financial here on fifty five KRC,the talk station. You're listening to Simply
Money presented by all Worth Financial ImamiWagner along with Steve Ruby. I kind
of feel bad. I feel likewe've been a bit of a broken record

(35:36):
on the show over the last fewyears because post pandemic, and we've talked
about buying a new car, buyinga used car. We've said, hey,
if you can put it off,it's probably best to put it off
because prices are just through the roofand we're finally maybe starting to see a
little light at the tunnel here.Yeah, I mean at this point,
experts believe that prices on new carsare expected to drop at this point because

(36:00):
the industry is moving beyond supply chainissues that were caused during the pandemic.
Well, and I think one ofthe other things that they're sort of realizing
now is that interest rates are higher. So for anyone who's buying a new
car or or used car, infinancing that car, it's going to be
more expensive and at that point something'sgot to give. Well, now that
supply chain issues have mostly been resolved, I think what's the giving is that

(36:23):
you're seeing car dealers have to geta little more creative and offering different discounts
to you in order to get youon the lot. I mean, it
was not that long ago that youwould drive onto a car lot and there'd
be like four cars for sale andthere'd be nothing there look around or drive
onto one. Now and it's kindof a very different story. Yeah,
but the prices are still pretty highright now. Average costs for a new

(36:45):
car is almost fifty thousand dollars thismonth, thirty one to five for a
used car. That's up twenty ninepercent thirty four percent respectively between now in
March of twenty twenty. So prettyamazing how high the cost star right now.
But again, the writing is onthe wall here with supply chain issues

(37:06):
resolving, prices are going to comedown first for your new cars. Second,
it is going to take a littlebit longer for the used vehicle prices
to drop afterwards. And also somemore bad news here, if you're looking
to trade in your car, youmay not be getting as much for that
used car. We were in thisweird place during the pandemic where used car

(37:27):
prices spiked. It used to beyou lost value as you drove that brand
new car off the lot. Forthe very first time, we were in
this place where you could have boughta car driven it for a year or
two, traded it back in,and they were going to pay you more
than you pay to buy that carin the first place. We're no longer
there. Yeah, did you sellany cars during the pandemic? I was
not lucky enough to sell cars onthe bottom. I bought them for two

(37:50):
teenagers that turned sixteen during that time, and we were just shell shocked by
the price of them. Yeah.I sold one, a twenty fifteen super
Room Pressa that I bought new intwenty fifteen, and I sold it during
the pandemic for about two thousand dollarsless than I paid. Wow. Absolutely
amazing how that worked because the supplychains were so disrupted. Now, remember,

(38:12):
if you are in the market buycar, used the twenty ten four
rule. This is where you're puttingtwenty percent down in the car. Make
sure your payments, which that needsto include gas and maintenance, don't make
more than ten percent your income.And remember, don't take out a loan
that's more than four years, becausethey will put six years, They will
put seven years in front of youwhen you're talking about buying that car to
make that monthly payment more palatable.Don't go for it. Thanks for listening.

(38:37):
We hope you're going to tune intomorrow. We're talking about the worst
reason to collect Social Security early.You've been listening to Simply Money, presented
by all Worth Financial here in fiftyfive KRC, the talk station