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Speaker 1: Joe Larsguard is heard every Sunday here on KFI from

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Speaker 1: twelve to two pm. He is the host of how

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Speaker 1: to Money, and we entitled the two segments he does

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Speaker 1: with us very cleverly, how to Money, Joel, Good Morning,

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Speaker 1: Morning Bill. All Right, a lot going on today. All right, layoffs,

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Speaker 1: potential layoffs. We know what's happening with the federal government

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Speaker 1: and the government workers. But considering what happened to Amazon

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Speaker 1: workers and ups just unloaded a bunch of them, and

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Speaker 1: Target is unloading.

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Speaker 2: What do people do?

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Speaker 1: Number One? Do you anticipate it? Sometimes you don't know.

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Speaker 1: And if you do think it's coming your way, what

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Speaker 1: happens and how do you handle it?

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Speaker 2: Yeah, that's a good question.

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Speaker 3: And I think the headlines are making people fearful, right

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Speaker 3: and understandably so, especially when you're seeing tens ten thousand people.

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Speaker 3: Let go to one employer tens of thousands and another

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Speaker 3: employer and you're like, oh my gosh, this is this

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Speaker 3: trend coming from me. And part of you know, what

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Speaker 3: people are feeling is the reality of AI taking out

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Speaker 3: some of those entry level positions. And I think in

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Speaker 3: particular young graduates, new graduates are feeling that specifically, what

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Speaker 3: do you do when it seems like there is downsizing

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Speaker 3: happening in the job market. I think the first instinct

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Speaker 3: I would have, and what I would encourage people to do,

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Speaker 3: is to look at their own personal finances because you

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Speaker 3: kind of whether it's an industry thing, whether it's a

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Speaker 3: greater economy as a whole thing, or whether it's even

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Speaker 3: your specific employer thing, you want to make sure that

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Speaker 3: your personal finances are buttoned up. And so you know,

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Speaker 3: we're talking about increasing that emergency fund, having more.

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Speaker 1: Liquid cash those let me throw something at you, because

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Speaker 1: we have heard the formula is you should have six

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Speaker 1: months of expenses put away in savings or minimum three.

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Speaker 1: But you're paying rent, you have, you're paying off the car,

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Speaker 1: you've got utilities, the kids. I six thousand dollars a

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Speaker 1: month is fairly I think that would not be a

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Speaker 1: figure that I'm overstating. Sure, well that's thirty thousand dollars

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Speaker 1: or thirty six thousand dollars. Who the hell says up

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Speaker 1: thirty six thousand dollars. When you have a family, especially

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Speaker 1: living in southern California, how do you plan ahead even

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Speaker 1: if you know that you should, How do they do that.

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Speaker 4: I guess you mean you move to Arkansas and you

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Speaker 4: eat squirrels.

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Speaker 2: Well I don't.

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Speaker 3: I mean I do think we are seeing people move

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Speaker 3: in order to save money. I just heard from a

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Speaker 3: listener recently who said I was living in an expensive

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Speaker 3: part of the country and I moved to a less

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Speaker 3: expensive part was able to pay cash for the house

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Speaker 3: in relatively short order because I was moving to someplace

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Speaker 3: that was that much cheaper. It's not for everybody, and

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Speaker 3: your job is often attached to where you live, and

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Speaker 3: so it's a ridiculous assertion for ninety plus percent of people.

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Speaker 3: But there is a segment of the population where I

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Speaker 3: think that can make sense. I think you highlighted six

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Speaker 3: months of emergency savings. I think really the place to

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Speaker 3: start is essentially roughly three grand. That is going to

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Speaker 3: get you through most pinches. It's probably not going to

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Speaker 3: get you all the way from a layoff till your

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Speaker 3: next job without having any financial turbulence, but it's going

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Speaker 3: to get you through most financial emergencies and then in

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Speaker 3: for three months right worth of savings. And it's going

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Speaker 3: to take a while. I think for most people to

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Speaker 3: get to three months worth of savings. This might be

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Speaker 3: like an eighteen month long endeavor. But it is worth

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Speaker 3: tightening the belt. It is worth paying down some of

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Speaker 3: those high interest debts that you create more room in

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Speaker 3: your life for savings. It's worth maybe even sticking to

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Speaker 3: what I call a bare bones budget for a hot minute,

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Speaker 3: just so that you can get to that three month

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Speaker 3: level of savings. That is for a lot of people

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Speaker 3: going to be the bridge from oh my gosh, what am.

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Speaker 1: I going to do?

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Speaker 3: I just got laid off today too. I can rest

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Speaker 3: easy while I'm applying for new jobs, and while I'm

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Speaker 3: getting my LinkedIn updated, and while I'm tapping my network.

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Speaker 3: I've got a little bit of breathing room. And I

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Speaker 3: just want people to have some more of that breathing room,

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Speaker 3: especially when it feels like the job, the job situation

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Speaker 3: is not looking as rosy as it has.

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Speaker 4: Yeah, it has to be so depressing out there.

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Speaker 1: My daughter is going through it with her computer science skills,

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Speaker 1: and I mean it's just tough out there.

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Speaker 4: I mean, you and I are very lucky that you

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Speaker 4: know we do.

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Speaker 1: You have a contract by the way, No, oh, you

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Speaker 1: don't have a contract.

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Speaker 4: Wow, Okay, then you and I are that lucky.

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Speaker 2: Well, I am you know?

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Speaker 4: So what can I tell you? That's just me being

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Speaker 4: an ass.

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Speaker 2: You know. Now, I'm gonna work on that. Have you know?

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Speaker 2: Maybe you can? Maybe? No, No, let's let me tell

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Speaker 2: you something.

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Speaker 1: There are some downsides and having a contract and being

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Speaker 1: protected for a period of time. I just can't think

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Speaker 1: of any Okay, Joel. This story that I'm looking at,

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Speaker 1: or this headline I'm looking at, is people are buying

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Speaker 1: more expensive cars. I buy that because cars are more expensive,

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Speaker 1: you have no choice but refinancing and financing in eighty.

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Speaker 2: Four month loans.

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Speaker 1: Eighty four month loans, isn't that for like twelve years?

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Speaker 2: It's something close to that.

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Speaker 1: You have to we upside down from the minute you

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Speaker 1: buy the car until the moment it falls apart one

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Speaker 1: hundred percent.

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Speaker 3: You are upside down in the car for a really

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Speaker 3: long time, which presents other problems.

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Speaker 2: To add fuel to the fire, though, Bill.

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Speaker 3: It's not that people are just initially taking out a

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Speaker 3: really long loan in order to afford the higher car

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Speaker 3: and the higher interest rate. Then what people are doing

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Speaker 3: is a couple of years into the loan, they're refinancing,

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Speaker 3: and they're going back into another seven year loan into

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Speaker 3: another eighty four month term, and it's just it so

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Speaker 3: it means that people are not just choosing to be

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Speaker 3: in debt for that new car for seven years overall,

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Speaker 3: which is way, way, way, way too long in my opinion,

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Speaker 3: Like I would love to see people stick to a

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Speaker 3: three year loan, and if you can't, then you shouldn't be.

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Speaker 3: You need to change your aspirations on what car you're

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Speaker 3: willing to purchase, but to refinance again back into another

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Speaker 3: eighty four month loan. People are on average, This is

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Speaker 3: a report from refinance company Cariboo. They're refinancing forty thousand

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Speaker 3: dollars forty thousand dollars worth of car debt. Maybe yeah,

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Speaker 3: they're able to lower their interest rate from something like

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Speaker 3: ten and a half to seven and a half, and

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Speaker 3: they're able to lower their monthly payment of course, but

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Speaker 3: this is the way most Americans think. It's like that.

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Speaker 3: It's that payment by your mentality. Oh I can lower

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Speaker 3: my payments by one hundred and sixty bucks, let me

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Speaker 3: go with that option. But ultimately, what that does is

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Speaker 3: it keeps you in debt so much longer, and for

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Speaker 3: so many people it means they're trading in a car

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Speaker 3: they're upside down on at some point in the future

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Speaker 3: to buy another car, which just compounds the situation even

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Speaker 3: more so.

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Speaker 1: The point is when we talk about upside down is

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Speaker 1: that the value of the car will always be less

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Speaker 1: than the amount that you owe, So under any circumstances,

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Speaker 1: you're going to owe money at the end of all this.

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Speaker 1: And I mean, can you imagine at the end of

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Speaker 1: eighty four months, right you you've paid it off and

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Speaker 1: your car is worth twelve dollars, I mean it's uh,

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Speaker 1: and you've repaired it for a number of years, which

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Speaker 1: is insanely expensive. New loans, I can I can actually

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Speaker 1: remember this because I've always done three year loans and

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Speaker 1: it's whatever car I could afford.

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Speaker 4: I once did a three year loan on a.

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Speaker 1: New uh actually I think I say three year loan

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Speaker 1: on used VW, but it went to four years, and

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Speaker 1: I go, my god, why why would anybody you know

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Speaker 1: get a four year car loan as you pointed out,

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Speaker 1: and then five and then six and now seven years.

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Speaker 2: I mean, is is there a limit to this? Does

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Speaker 2: it stop? Well? I mean, I guess we'll find out.

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Speaker 3: It's crazy enough to think that on a brand new

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Speaker 3: car you can get a seven year loan, and then

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Speaker 3: it's even crazier to think that you can refinance after

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Speaker 3: having paid for a while, into another seven year loan.

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Speaker 3: And I do think, you know, car refinancing is something

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Speaker 3: more people should consider, especially if you do have a

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Speaker 3: high interest rate.

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Speaker 2: You could probably go to the local credit.

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Speaker 3: Union or go with one of those online shopping sites

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Speaker 3: that will help you find a better rate, but just

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Speaker 3: be super careful to not only fixate on your ability

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Speaker 3: to pay less in from month to month. I would

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Speaker 3: rather see you say, Okay, how much more can I

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Speaker 3: put towards this payment? Maybe I can even shorten the

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Speaker 3: length of the loan going to I've got five years left.

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Speaker 3: Maybe I go down to four lower, and maybe my

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Speaker 3: payment goes up a little bit, but my interest rate

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Speaker 3: goes down and so I'm able to pay off that

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Speaker 3: car more quickly. That's the way I'd rather see people think,

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Speaker 3: and then start saving up once that car is paid off,

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Speaker 3: so you can pay cash for the next car, or

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Speaker 3: at least have more to put down now.

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Speaker 1: The other side of the coin of what we're talking

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Speaker 1: about is the fact that cars last much longer today

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Speaker 1: they are well, they're actually better built even though a

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Speaker 1: lot of them are plastic and they go one hundred

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Speaker 1: and twenty one hundred and fifty thousand miles without even blinking.

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Speaker 1: And so that helps and give me the analogy. This morning,

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Speaker 1: I was tying my shoelaces on my sneakers, and so

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Speaker 1: there I am, and I was thinking, when was the

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Speaker 1: last time my shoelace. Shoelaces broke? When I was a kid,

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Speaker 1: they would break every two weeks. You have to buy

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Speaker 1: new ones today. When was the last time you shoelace broke?

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Speaker 2: Are you really talking about that? I am no, the analogy.

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Speaker 2: The analogy works.

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Speaker 1: I'm telling you the analogy works.

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Speaker 2: Well what you're driving at.

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Speaker 3: I think you're right that overall, from a car perspective,

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Speaker 3: there's been more competition in the space. We've seen people

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Speaker 3: like to think that there's plant obs lescence in the

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Speaker 3: car space. I just don't think that's true. I think

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Speaker 3: we have seen greater reliability. And when you look at

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Speaker 3: specifically at a site like Consumer Reports, you can dig

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Speaker 3: down into makes and models and years and you can

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Speaker 3: find which which cars are.

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Speaker 2: Going to last the longest.

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Speaker 3: They do such a good job with reliability ratings, and

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Speaker 3: so I think that's a really important thing to consider

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Speaker 3: when you're buying a car. Is not just like, hey,

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Speaker 3: that one looks cool, or yeah, that one does fit

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Speaker 3: my price point, but it's like, which one is going

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Speaker 3: to last you longer so that you can, yeah, be

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Speaker 3: driving that car for many more years.

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Speaker 2: Yeah.

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Speaker 1: Today, a car with sixty eighty thousand miles on it

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Speaker 1: is not an old, falling apart car the way they

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Speaker 1: used to be. By the way, in terms of shoelaces,

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Speaker 1: you know those little plastic ends of shoe laces.

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Speaker 2: Yeah, you know what they call those? Nope, well there

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Speaker 2: we are.

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Speaker 4: I think our anklets is what they're called.

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Speaker 2: Really, Yeah, you look betterup? Yeah, learn something new every

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Speaker 2: day every day.

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Speaker 4: We'll talk again next week, Joel.

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Speaker 2: Sunday, twelve to two pm.

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Speaker 1: His address is how to Money Joel, and the website

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Speaker 1: is Howtomoney dot com.

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Speaker 2: Joel. You have a good one, Thank you too. Thanks Bill,