1
00:00:00,160 --> 00:00:02,560
Speaker 1: Let's say good morning now to the host of How

2
00:00:02,600 --> 00:00:06,400
Speaker 1: to Money on KFI. It's our very own Joel Larsguard. Hey, Joel,

3
00:00:06,440 --> 00:00:09,879
Speaker 1: really quick. Last week we were talking about emergency funds

4
00:00:09,920 --> 00:00:11,760
Speaker 1: and how important it is to set it up, and

5
00:00:11,840 --> 00:00:15,960
Speaker 1: I started thinking about it because if the shutdown, people

6
00:00:16,000 --> 00:00:19,440
Speaker 1: who work in the government, whether they're working or they're furloughed,

7
00:00:19,520 --> 00:00:21,720
Speaker 1: they're not getting their paychecks right now, which sort of

8
00:00:22,120 --> 00:00:25,480
Speaker 1: increases the importance of that emergency fund for something unexpected

9
00:00:25,520 --> 00:00:25,800
Speaker 1: like this.

10
00:00:26,360 --> 00:00:29,080
Speaker 2: Yeah, I mean, it certainly does, and it's just a

11
00:00:29,120 --> 00:00:32,600
Speaker 2: good it's a good reminder to all of us to

12
00:00:33,120 --> 00:00:35,640
Speaker 2: recheck our emergency funds because this sort of thing can

13
00:00:35,960 --> 00:00:38,400
Speaker 2: can happen. And this was being you know, telegraphed the

14
00:00:38,479 --> 00:00:42,120
Speaker 2: showdown between the Democrats and Republicans. How long is the

15
00:00:42,600 --> 00:00:45,240
Speaker 2: is the government going to remain shut down? How long

16
00:00:45,640 --> 00:00:49,320
Speaker 2: are people going to be furloughed not receiving paychecks? And

17
00:00:49,400 --> 00:00:52,320
Speaker 2: will some of those threats come to pass of not

18
00:00:52,479 --> 00:00:55,760
Speaker 2: receiving that back pay that's legally owed to the workers

19
00:00:55,760 --> 00:00:57,880
Speaker 2: who have been furloughed. And we're talking like, you know,

20
00:00:57,960 --> 00:01:00,120
Speaker 2: close to a million a million people not getting a

21
00:01:00,160 --> 00:01:03,160
Speaker 2: paycheck when they expected it. So yeah, this is the

22
00:01:03,320 --> 00:01:06,880
Speaker 2: exact reason that emergency funds exist. And you know I

23
00:01:06,880 --> 00:01:09,000
Speaker 2: talk about that basic key fund, well, I want people

24
00:01:09,000 --> 00:01:12,120
Speaker 2: to save beyond that too, typically having like three to

25
00:01:12,160 --> 00:01:15,480
Speaker 2: six months worth of expenses in a savings account and

26
00:01:15,680 --> 00:01:17,960
Speaker 2: a lot of people think, ah, that's that's silly. Who

27
00:01:18,000 --> 00:01:20,560
Speaker 2: needs that much cash on hand? Well, yeah, if you

28
00:01:20,720 --> 00:01:23,840
Speaker 2: lose your job like that is not just peace of mind,

29
00:01:23,840 --> 00:01:26,680
Speaker 2: but it's a financial backstop for you. So the yeah,

30
00:01:26,720 --> 00:01:29,840
Speaker 2: I think this is the perfect example of how important

31
00:01:30,319 --> 00:01:33,200
Speaker 2: an emergency fund is. And then also, I know we've

32
00:01:33,200 --> 00:01:35,560
Speaker 2: talked about this before, Amy, but a bare bones budget,

33
00:01:35,720 --> 00:01:39,040
Speaker 2: which is something I'm really fond of because I want

34
00:01:39,040 --> 00:01:41,480
Speaker 2: people to and I would ideally like people to do

35
00:01:41,520 --> 00:01:45,400
Speaker 2: this before, create a bear bones budget before stuff hits

36
00:01:45,440 --> 00:01:49,320
Speaker 2: the fan. But yeah, the bear bones budget is essentially saying, Hey,

37
00:01:49,320 --> 00:01:52,520
Speaker 2: what are my absolute essential needs and what are the

38
00:01:52,560 --> 00:01:55,160
Speaker 2: things that I'm spending on that I really enjoy but

39
00:01:55,240 --> 00:01:57,360
Speaker 2: I need to cut back on for the time being

40
00:01:57,440 --> 00:01:59,480
Speaker 2: because I've either lost a job, had some sort of

41
00:01:59,480 --> 00:02:03,120
Speaker 2: significant and medical setback that costs me a lot of money,

42
00:02:03,160 --> 00:02:05,160
Speaker 2: and man, I've got to find a way to pay

43
00:02:05,160 --> 00:02:07,840
Speaker 2: for this in short order. The bear bones budget is

44
00:02:07,880 --> 00:02:09,680
Speaker 2: something you don't want to keep around long term, but

45
00:02:09,720 --> 00:02:12,639
Speaker 2: it is it is something that you can employ in

46
00:02:13,560 --> 00:02:16,040
Speaker 2: short term necessity status. We've got an article up on

47
00:02:16,080 --> 00:02:18,639
Speaker 2: howdomoney dot com about how to create a barbones budget.

48
00:02:18,639 --> 00:02:21,080
Speaker 2: But I think it's a great exercise for everyone to

49
00:02:21,080 --> 00:02:22,919
Speaker 2: partake in. So the emergency fund combined with the bare

50
00:02:22,960 --> 00:02:25,560
Speaker 2: bones budget can really help you out in the pinch.

51
00:02:25,960 --> 00:02:28,280
Speaker 1: I love that idea because I know that, like when

52
00:02:28,280 --> 00:02:30,960
Speaker 1: you lose a job unexpectedly, it's kind of a shock

53
00:02:31,040 --> 00:02:33,600
Speaker 1: to your system. And if you already have something, like

54
00:02:34,280 --> 00:02:36,280
Speaker 1: you have the plan in place and you're like, this

55
00:02:36,320 --> 00:02:39,000
Speaker 1: is for my rainy day, then when that rainy day comes,

56
00:02:39,000 --> 00:02:42,320
Speaker 1: you go, okay, okay, I'm gonna be okay, I can

57
00:02:42,360 --> 00:02:45,200
Speaker 1: cut this temporarily. I can cut this because you know

58
00:02:45,240 --> 00:02:46,400
Speaker 1: what you can and can't.

59
00:02:46,880 --> 00:02:51,359
Speaker 2: You're coming into it from a position of confidence and forethought, right,

60
00:02:51,400 --> 00:02:55,520
Speaker 2: and just that adds so much to your ability to

61
00:02:55,639 --> 00:02:59,679
Speaker 2: remain emotionally stable during a tumultuous time. And I've just

62
00:02:59,720 --> 00:03:01,519
Speaker 2: heard from so many Out of Money listeners over the

63
00:03:01,600 --> 00:03:04,000
Speaker 2: year who have emailed and they've said, hey, listen, like

64
00:03:04,040 --> 00:03:06,600
Speaker 2: this really rough thing happened to me. But I was prepared,

65
00:03:06,919 --> 00:03:09,880
Speaker 2: and I can't tell you how impactful that was for

66
00:03:10,000 --> 00:03:13,120
Speaker 2: my ability to get through the tough thing. And yeah,

67
00:03:13,120 --> 00:03:16,000
Speaker 2: there's something about preparing before. And it's like, I'm not

68
00:03:16,040 --> 00:03:19,080
Speaker 2: a doomsday prepper, but I think of those people who do.

69
00:03:20,040 --> 00:03:22,959
Speaker 2: Think they're really thoughtful about, well, what happens if the

70
00:03:23,040 --> 00:03:26,080
Speaker 2: zombie apocalypse comes and they've got like a root seller

71
00:03:26,120 --> 00:03:28,160
Speaker 2: in their backyard or whatever. And that's not my style,

72
00:03:28,200 --> 00:03:30,840
Speaker 2: but at least from a personal finance standpoint, you want

73
00:03:30,840 --> 00:03:32,760
Speaker 2: to have at least a little bit of inkling in

74
00:03:32,760 --> 00:03:33,240
Speaker 2: that direction.

75
00:03:33,520 --> 00:03:36,920
Speaker 1: Okay, And of course, look at us, we're already running

76
00:03:36,920 --> 00:03:38,560
Speaker 1: short on time and we haven't even talked about things

77
00:03:38,560 --> 00:03:41,080
Speaker 1: we want to talk about today. The homeowners are leading

78
00:03:41,080 --> 00:03:45,760
Speaker 1: in are lent leaning into refinancing, which it kind of

79
00:03:45,760 --> 00:03:48,120
Speaker 1: surprises me because interest rates are kind of still up there.

80
00:03:48,960 --> 00:03:52,119
Speaker 2: They are they are compared to where they were four

81
00:03:52,200 --> 00:03:56,040
Speaker 2: years ago, right, but they're down from where they were

82
00:03:56,320 --> 00:04:00,920
Speaker 2: just about a year ago, and not insignificantly. We're talking about,

83
00:04:01,520 --> 00:04:03,920
Speaker 2: you know, rates, we're peaking above seven percent now, rates

84
00:04:03,920 --> 00:04:06,120
Speaker 2: are closer to the low sixes. And so we are

85
00:04:06,160 --> 00:04:10,000
Speaker 2: seeing more people interested in refinancing right now, and more

86
00:04:10,000 --> 00:04:14,880
Speaker 2: people submitting applications and yeah, does this make sense? Well, yeah,

87
00:04:14,880 --> 00:04:16,880
Speaker 2: it depends what your rate is, and it depends how

88
00:04:16,880 --> 00:04:18,560
Speaker 2: long you're planning on staying in the home. There's a

89
00:04:18,560 --> 00:04:21,920
Speaker 2: lot that you want to kind of decipher and think

90
00:04:21,960 --> 00:04:24,120
Speaker 2: through before you say, oh, yeah, rates are down, I

91
00:04:24,160 --> 00:04:28,080
Speaker 2: should refinance because refinancing is expensive and if it weren't.

92
00:04:28,080 --> 00:04:30,520
Speaker 2: If if refinances were free, I'd be like jump on it,

93
00:04:30,520 --> 00:04:32,240
Speaker 2: even if you could save a quarter point, but like

94
00:04:32,360 --> 00:04:35,680
Speaker 2: they're not. They typically cost thousands of dollars in closing costs.

95
00:04:35,720 --> 00:04:37,840
Speaker 2: So you want to figure out what your break even

96
00:04:37,839 --> 00:04:39,560
Speaker 2: point is. How long is it going to take me

97
00:04:39,600 --> 00:04:41,440
Speaker 2: to save money? And also you have to kind of

98
00:04:41,480 --> 00:04:45,320
Speaker 2: think about where rates are likely headed, and if you,

99
00:04:46,600 --> 00:04:49,520
Speaker 2: I think over time rates will continue to go down

100
00:04:49,600 --> 00:04:52,719
Speaker 2: a little bit. But like it's really hard to read

101
00:04:52,720 --> 00:04:55,359
Speaker 2: those tea leaves, and so whether or not you refinance

102
00:04:55,440 --> 00:04:58,839
Speaker 2: depends on a slew of things. And also adjustable rate mortgages.

103
00:04:58,839 --> 00:05:02,080
Speaker 2: We've talked about this. They're becoming more popular, and understandably

104
00:05:02,080 --> 00:05:04,120
Speaker 2: so because the rates are a lot lower. Like I

105
00:05:04,160 --> 00:05:06,960
Speaker 2: found a local credit union that has something that's called

106
00:05:07,000 --> 00:05:09,880
Speaker 2: a fifteen to fifteen arm and you get the lower

107
00:05:09,960 --> 00:05:12,200
Speaker 2: rate for the first fifteen years, and when the average

108
00:05:12,200 --> 00:05:14,280
Speaker 2: American stays in their house for less time than that,

109
00:05:14,760 --> 00:05:17,160
Speaker 2: maybe you'll never even see a rate reset and you'll

110
00:05:17,240 --> 00:05:19,800
Speaker 2: just pay the lower rate for that whole entire duration.

111
00:05:20,279 --> 00:05:23,120
Speaker 2: So arms are worth looking at, but again it's something

112
00:05:23,160 --> 00:05:25,640
Speaker 2: that you need to take in to context of your

113
00:05:25,680 --> 00:05:29,479
Speaker 2: own risk profile and your own long term plans.

114
00:05:29,760 --> 00:05:33,760
Speaker 1: Okay, great advice as always from Joel Larsgard, who's the

115
00:05:33,760 --> 00:05:36,560
Speaker 1: host of how to Money Sundays right here on KFI

116
00:05:36,680 --> 00:05:39,960
Speaker 1: from noon to two. You can also follow Joel at

117
00:05:40,000 --> 00:05:41,920
Speaker 1: how to Money Joel And then hopefully we can put

118
00:05:41,960 --> 00:05:44,760
Speaker 1: in our back pocket for next week some talk about

119
00:05:44,800 --> 00:05:48,120
Speaker 1: what people are doing instead of selling their homes.

120
00:05:48,400 --> 00:05:49,200
Speaker 2: Yeah, let's do it.

121
00:05:49,279 --> 00:05:51,040
Speaker 1: Okay, thank you, Joel, appreciate it.

122
00:05:51,279 --> 00:05:51,839
Speaker 2: Thanks Amy,