Speaker 1: Welcome to Head of Money. I'm Joel, I am Matt.
Speaker 1: Today we're talking about longer loans, pre paying principle, and
Speaker 1: higher heating bills. That's right, buddy. This is our Friday Flight,
Speaker 1: the weekly round up, our weekly roundup of the news
Speaker 1: and how it pertains to your personal finances, so that
Speaker 1: you don't have to spend all of your life combing
Speaker 1: through the headlines and the articles to find the ones
Speaker 1: that are going to impact your bank account.
Speaker 2: I pick the most important stuff, share it with you
Speaker 2: and stuff, and we offer our hot takes.
Speaker 1: It's kind of what we do. Honestly, you want to
Speaker 1: kick things off. Speaking of hot takes. With the Federal
Speaker 1: Trade Commission, we might disagree.
Speaker 2: On this because I know you know we're going to disagree.
Speaker 2: You disaground this, but I think this is potentially a
Speaker 2: really good thing. The FTC just announced this week that
Speaker 2: they're going to do a click to a click to
Speaker 2: cancel rule. And basically what the FDC wants is for
Speaker 2: companies to not be allowed to if they make it
Speaker 2: really easy to sign up on their website or via
Speaker 2: their app. Hey guess what they need to make it
Speaker 2: just as easy to cancel, and I think it was
Speaker 2: earlier this year met the cable companies testified in front
Speaker 2: of the FTC and they basically said, listen, if we
Speaker 2: make it easy to cancel, then people are actually going
Speaker 2: to cancel our service, and we don't want that. And
Speaker 2: the FTC was like, that's the point, so that people
Speaker 2: can cancel if they want to. And I think the
Speaker 2: cable companies actually retain a massive number of people who
Speaker 2: try to cancel because they call to cancel, they're forced
Speaker 2: to call, they can't they can't use, you know, go
Speaker 2: to the internet website of the provider and cancel, and
Speaker 2: because of that, they end up talking them in or
Speaker 2: they offer him a deal or something like that. It's
Speaker 2: just this rig and role that I think consumers are
Speaker 2: tired of in many ways. I just tried to cancel
Speaker 2: something the other day, a streaming service, and it was
Speaker 2: like hard to find the grade out cancel button at
Speaker 2: the bottom.
Speaker 1: And there's like six steps that you have to go through.
Speaker 1: When it's like the same color as the background, right,
Speaker 1: it's literally impossible unless I select all and then I
Speaker 1: see it highlight right.
Speaker 2: It's like trying to find the unsubscribed button on the
Speaker 2: bottom of an email sometimes it's like finding ale in
Speaker 2: a haysack. But so I kind of like this, it's
Speaker 2: not set in stone yet. There's like six months I
Speaker 2: think before this becomes official. You just had actually trouble
Speaker 2: canceling a gym membership, and.
Speaker 1: So we're not gonna talk about that though.
Speaker 2: But actually that's one of the things is gym's make
Speaker 2: it really hard to cancel. People end up sticking around
Speaker 2: pay an extra, whereas if they made it easier to cancel,
Speaker 2: I think people would be They wouldn't find themselves paying
Speaker 2: for stuff that they're not getting or that they don't want.
Speaker 1: Yeah, I am of two minds with it, because I
Speaker 1: certainly understand. I see the appeal right the ability to
Speaker 1: cancel the same way that you subscribed. It makes it's
Speaker 1: common sense. But at the same time, I just don't
Speaker 1: like how we've arrived at that point. Like I like
Speaker 1: the result and what the end result might be, but
Speaker 1: instead of the government getting involved, obviously, I would rather
Speaker 1: see the free and open market decide and the ability
Speaker 1: for us as consumers to vote with our dollars or
Speaker 1: leave a review, a negative review, cant or with our
Speaker 1: dollars because they're making it so hard for us to
Speaker 1: leave because your dollars are all tied up. Yeah, but
Speaker 1: just the ability to tell your friends about it, I
Speaker 1: think is it's just a simpler, more straightforward way of
Speaker 1: achieving the same ends as opposed to what I see
Speaker 1: being the more complex, expensive way to achieve this sense
Speaker 1: by having a government agency potentially enforce this, because what
Speaker 1: does that actually look like, the government to step in
Speaker 1: and say, hey, they'll do business like this, Like, that's
Speaker 1: the part of it that that turns me off, and
Speaker 1: I would rather see consumers be able to vote with
Speaker 1: your dollars. Yeah. But either way though, I mean, we'll see.
Speaker 1: And obviously if it goes through, and it's a part
Speaker 1: of how businesses are forced to implement some of these changes,
Speaker 1: I'm all for it because it's like, okay, well if
Speaker 1: that's if that's the rule, then we abide by the
Speaker 1: rule and we all get to benefit. In this case
Speaker 1: as a consumer, Yeah, I'll be thankful for it. And
Speaker 1: I think, yeah, if you want to cancel your service,
Speaker 1: it should be you shouldn't have to go to an
Speaker 1: AI bought and chat and and jump through a bunch
Speaker 1: of hoops. When it was they made it super simple
Speaker 1: to sign up. That to me feels kind of like
Speaker 1: a bait and switch, and I think it's a dirty practice. Yeah,
Speaker 1: I just think there are better ways for businesses to
Speaker 1: run their businesses. This makes me think of a kind
Speaker 1: of a random story that we came across this week,
Speaker 1: Home Depot. What they're doing now. They're having their corporate folks,
Speaker 1: their corporate employees, and the CEO is the one who
Speaker 1: implemented this. But they have to go to an actual
Speaker 1: home Depot store to work once a quarter. And the
Speaker 1: goal here is for the people who might be a
Speaker 1: bit more detached from the end product and for the
Speaker 1: services that they're providing to be more connected to you know,
Speaker 1: what the boots on the ground are actually encountering. And
Speaker 1: I think this can only be good for morale and
Speaker 1: for business. This is a smart business move, Yes, And
Speaker 1: this is like the perfect example I think of how
Speaker 1: instead of this being some like mandated from on high,
Speaker 1: from like a government agency, here is an individual company deciding,
Speaker 1: you know what we need to get. We need to
Speaker 1: be more in touch with how it is that our
Speaker 1: consumers are seeing the end product, and that is going
Speaker 1: to allow us to innovate. It's going to allow us
Speaker 1: to make changes. We're going to be able to see that, like, oh,
Speaker 1: we don't like it when we make whatever it is
Speaker 1: is at a home Depot story right, And like, well,
Speaker 1: I hate it that we make customers stand over here
Speaker 1: when they're making returns. Why can't we do this? And
Speaker 1: like there are these small little tweaks along the way
Speaker 1: that you can implement.
Speaker 2: And I think in big companies it's really easy for
Speaker 2: the people at the top to get out of become
Speaker 2: out of touch with what's happening at maybe the individual
Speaker 2: retail locations. And like Sam Walton was famous for visiting
Speaker 2: like all the Walmarts and even visiting his competitors and
Speaker 2: stuff like that too, to get a sense for what's
Speaker 2: happening on the ground level. And I think many CEOs
Speaker 2: don't do that. So the fact that Home Depot is
Speaker 2: doing it feels like kind of like that the show
Speaker 2: Undercover Boss now, where the CEO would dress up and
Speaker 2: work like a day in the minds or something like
Speaker 2: that with the normies that worked for the company. And
Speaker 2: I think that's a good thing. All the pleabs, I
Speaker 2: think that's a great thing. Like Home Depot will probably
Speaker 2: benefit from this as a post.
Speaker 1: And so what we'll see is a business like home
Speaker 1: deepot continue to innovate and do well. Their stocks will
Speaker 1: continue to go up, customer service is going to remain high.
Speaker 1: And then if you see other companies that aren't innovating,
Speaker 1: like I think us all that Kmart is, they've got
Speaker 1: like one more store or something that's going to end
Speaker 1: up closing. Amazing. That's an example of a store that
Speaker 1: that didn't do that didn't keep up with the times exactly.
Speaker 1: And so it's up to the I think it can
Speaker 1: serve their customer well, were on a company company to
Speaker 1: company level as opposed to it being something that needs
Speaker 1: to be mandated from on high.
Speaker 2: Yeah, let's talk about something else, Matt. Let's talk about
Speaker 2: car Loans. We don't like them.
Speaker 1: I hate them.
Speaker 2: We've never liked them. We talked smack about them regularly
Speaker 2: on the show. And it's it's one of those things
Speaker 2: where it has been a problem in the past, and
Speaker 2: it's this problem is getting worse because as car prices
Speaker 2: have risen, interest rates have also gone up, and so
Speaker 2: car affordability has one of the been one of the
Speaker 2: biggest categories, the hardest hit categories by inflation. So yeah, eggs.
Speaker 2: It stinks that those costs more, but the car probably
Speaker 2: impacts your budget far more than just the eggs, and
Speaker 2: it's it's just not a fun situation right to be
Speaker 2: in if you're looking to upgrade your vehicle, because you're
Speaker 2: staring at the price tag the bottom line and you're
Speaker 2: freaking out. You're not used to paying this much for
Speaker 2: a car, especially if it's been five, six, seven years
Speaker 2: since you've had buy one.
Speaker 1: Hopefully even longer.
Speaker 2: Hopefully even longer. While you drive your car, you don't
Speaker 2: have to put up with this problem. But new numbers
Speaker 2: from Edmunds find that people aren't necessarily trading down to
Speaker 2: a cheaper automobile or saving up longer. What they're doing
Speaker 2: is they're increasing the payoff timeline so that they can
Speaker 2: snag the car they want. This is really bad.
Speaker 1: News in our estimation see here in this.
Speaker 2: Eighty four month car loans now account for almost one
Speaker 2: in five of the overall loans that were issued in
Speaker 2: just this past quarter. That has doubled in just the
Speaker 2: past few years, and then so the average car loan
Speaker 2: length is now sixty eight months Matt, so people are
Speaker 2: a lot more people opting for the eighty four, but
Speaker 2: the average is sixty eight. That's more than five and
Speaker 2: a half years to pay off the car that you're buying.
Speaker 2: Outrageously bad news, and it could come with serious financial
Speaker 2: consequences for people down the line. On top of that,
Speaker 2: nearly one in four consumers owe more on their car
Speaker 2: loan than the vehicle is worth, so they're upside down
Speaker 2: in their ride. Something like twenty twenty five, twenty six,
Speaker 2: twenty seven percent of people upside down on their vehicles.
Speaker 2: The national average for upside down balances is sixty four
Speaker 2: one hundred dollars. So talk about being in financial trouble
Speaker 2: when you own more than the car is worth. If
Speaker 2: you're in an act terrible or if you feel like you
Speaker 2: need to trade your car up, sorry, you still owe
Speaker 2: a bunch of money on it. That gets people into
Speaker 2: even worse car loans when they trade it in and
Speaker 2: they get another car on top of.
Speaker 1: That, then it perpetuates. It creates a six cycle, and
Speaker 1: we want people to avoid car loans all together. We
Speaker 1: want you to keep your current car on the road.
Speaker 1: Maintaining your vehicles highly underrated. Everybody wants to hit the
Speaker 1: easy button, and what easy means is expensive signing up
Speaker 1: for a new loan to where they don't have to
Speaker 1: like take the car into the shop. Like literally this morning,
Speaker 1: I spent like five ten minutes the car. The tire
Speaker 1: pressure gauge light came on on the dash and I
Speaker 1: ignored it for a couple of days, and Kate was like, hey,
Speaker 1: what's that all about. I'm like, okay, I finally get
Speaker 1: to it. But most people don't like even doing that.
Speaker 1: But spending some time, even if it's cold outside, to
Speaker 1: get out there and get the tire pressure backup means
Speaker 1: those tires are going to last longer. But we need
Speaker 1: to do that with all aspects of our car. But
Speaker 1: then if you eventually do want to get a new vehicle,
Speaker 1: just keep saving up. If you can be the opposite
Speaker 1: of the average American on this front, if you can
Speaker 1: stay disciplined to keep car debt out of your life,
Speaker 1: you're going to be shocked at how this single choice,
Speaker 1: just as one choice, can help you to make financial
Speaker 1: progress in leaps and bounds. Yea, as a friend of
Speaker 1: the show car dealership Guy, he said this in his
Speaker 1: new newsletter. I'll quote this. He wrote, Longer loan terms
Speaker 1: can make monthly payments easier to manage. Sure, that's why
Speaker 1: people do it. Yeah, but most Americans aren't looking to
Speaker 1: hold onto their cars for seven years. The real risk
Speaker 1: is that these extended loans increase the chance of carrying
Speaker 1: negative equity into their next purchase if they even keep
Speaker 1: up with their payments in the first place, which is
Speaker 1: one hundred percent true. So we don't want you to
Speaker 1: put yourself in this position. I think Joel would say, Hey,
Speaker 1: it's so, if you're going to get a loan, make
Speaker 1: sure to limit it to you know, forty eight months
Speaker 1: or maybe or less. Certainly that's much better than the
Speaker 1: seven year terms car even a smaller loan term. But man,
Speaker 1: you can get reliable vehicles by saving up cash. I
Speaker 1: think most Americans who are finding themselves in a position
Speaker 1: where they're looking at a new vehicle aren't in a
Speaker 1: highly urgent situation. Uh. And instead it's more of a
Speaker 1: lifestyle upgrade. And they're more Americans are financing these lifestyle upgrades.
Speaker 1: And that's what I hate seeing.
Speaker 2: And I think just because it's become normal, just because
Speaker 2: everybody's doing it. I mean, I don't know if your
Speaker 2: mom ever said this to you, map, but my mom
Speaker 2: but always yeah, just because everyone else is doing it.
Speaker 2: I mean, you're going to do it too. If Matt
Speaker 2: jumped off a bridge, Joel, would you do it too?
Speaker 2: And I'd be like, I don't know, maybe if there's
Speaker 2: water below and it looks kind of fun, it's only
Speaker 2: like thirty feet. Sure, I was actually really into that
Speaker 2: high school you were in a bridge jumping, so maybe
Speaker 2: I would mom. And maybe I'm actually undermining my own
Speaker 2: point here, but yeah, if everyone else is.
Speaker 1: Doing what I failed to Dijoel was oftentimes check the water,
Speaker 1: like for down trees, that's that's oh really, Oh yeah,
Speaker 1: you gotta you gotta do that. If you're gonna do
Speaker 1: some like cliff jumping, rock jumping at the lake, trestle
Speaker 1: train trestle jumping, you always need to check the water,
Speaker 1: makes sense, make sure it's clear of any debris.
Speaker 2: And r or else you can have a major accident,
Speaker 2: right exactly exactly, So I think I think you've gone
Speaker 2: as straight here from my point.
Speaker 1: Matt all sorts of it amount of money, how to
Speaker 1: save money by not going to the hospital, But I
Speaker 1: think it's just so normal.
Speaker 2: And when we talk about what the average person should
Speaker 2: spend on their car payment, or if you look at
Speaker 2: like rules of Thumb, typically it's ten percent of your
Speaker 2: overall income should or can go to car stuff. I
Speaker 2: would prefer to be for most folks for that to
Speaker 2: be far smaller, and that just gives you so much
Speaker 2: more flexibility in terms of vacation. You want to go
Speaker 2: on increasing your saving and investment investment rate. So just
Speaker 2: because everybody around you's doing it, doesn't mean that we
Speaker 2: should do it too. And I just see that like
Speaker 2: this current situation for a significant portion of American consumers,
Speaker 2: mat it's untenable and it's going to lead to some
Speaker 2: really horrendous side effects down the road. From a personal
Speaker 2: finance standpoint, So keeping your car expenses and your car
Speaker 2: note if you have to take one on to a minimum,
Speaker 2: and being really thoughtful about, Okay, how long is it
Speaker 2: going to take me to pay this off? And then
Speaker 2: how can I continue to bank that money so that
Speaker 2: I don't ever have to have a car loan in
Speaker 2: the future.
Speaker 1: That's the goal seven year car loans here that daysh
Speaker 1: Let's go ahead and talk about artificial intelligence, Joel, I
Speaker 1: personally don't exactly know. I guess what to think about AI,
Speaker 1: how it will impact our future. Are we all going
Speaker 1: to live in the Matrix someday? I actually don't think so,
Speaker 1: but some folks have if we lived in the Matrix
Speaker 1: and had to watch that movie on repeat. Interesting, I
Speaker 1: haven't thought about that. It's feeling a little too meta. Yeah,
Speaker 1: do our younger listeners even though what the matrix is.
Speaker 1: I'm sure they've heard of it. But if you haven't
Speaker 1: seen it, they have, Like the newer Matrix come out
Speaker 1: a few years ago, right, revolution, Yeah, revolutions, I think
Speaker 1: the only go to fifty year old people. The first
Speaker 1: one still holds up by the way. I think they're
Speaker 1: all decent. But at the time it was like mind
Speaker 1: bending in a way that our minds hadn't been. But
Speaker 1: I enjoyed reading an MIT professor who recently wrote that
Speaker 1: he believes that AI can only do basically five percent
Speaker 1: of all jobs right now. Basically, you're saying it could
Speaker 1: help some folks and replace others, but that is not
Speaker 1: going to like foment and economic revolution that's going to
Speaker 1: render all humans obsolete. And I'll say I'm actually I
Speaker 1: hope he's right, because there have been some recent stories
Speaker 1: about Google's new AI generated podcasts. Have you heard some
Speaker 1: of those, Joel, It's uncanny what they're able to do.
Speaker 1: I'm a little I was quaking in my Adidas when
Speaker 1: I read them. Matt look consered. Actually, are you actually
Speaker 1: worried about that?
Speaker 2: Is that I'm not because I just think I think
Speaker 2: the biggest thing that AI can't do is personality generated.
Speaker 1: So like I can't make it fun, right, I mean,
Speaker 1: they might think they can make it fun, but it's
Speaker 1: going to be this sort of sterile version of fun
Speaker 1: as opposed to like the real stuff that we're experiencing
Speaker 1: in our day to day lives. Think about this.
Speaker 2: Think about how cheap it's gotten to listen to the
Speaker 2: music you want to listen to, whatever album, whatever song,
Speaker 2: whatever artist you want to listen to, deep cuts, no matter.
Speaker 2: You can listen to it for for for your cheap.
Speaker 2: But think about how much money people pay to go
Speaker 2: see a concert in person. It's insane. The yeah, the
Speaker 2: price tag for concerts for big artists and stuff like
Speaker 2: that has gone through the roof. And I think people
Speaker 2: more than ever want authenticity. They want real life, they
Speaker 2: want real people, they want experiences, and I think I
Speaker 2: don't know, hopefully hopefully listening to Matt Joel is in
Speaker 2: experience of sorts that people will want to listen to
Speaker 2: even though they are going to be AI podcasts out there.
Speaker 1: They want a little rougher around the edges, and that's
Speaker 1: what we're able to provide. That's right.
Speaker 2: They want the stumbles, they want the bumbles, they want
Speaker 2: a few ums on occasion.
Speaker 1: I think, so whatever other idiocy we might come up
Speaker 1: with it.
Speaker 2: Yeah, but I think that's a really smart prediction. I
Speaker 2: think that's probably true, Matt. Five percent of jobs interrupted
Speaker 2: significantly by AI. That makes sense to me. I think
Speaker 2: some of the massive doomsayers on AI, I don't know.
Speaker 2: I just I don't see that future to take them seriously. Yeah,
Speaker 2: one industry we'd love to see disrupted by AI is
Speaker 2: real estate. And that's because real estate commissions make it
Speaker 2: so much more expensive. You're buying sell homes, Kirkma, the
Speaker 2: realtors with the pitchforks.
Speaker 1: Yeah, they're like, oh, you're justifying your profession, but you're
Speaker 1: coming after hours, sorry, guys, shirks.
Speaker 2: And that's not because we hate real estate agents and
Speaker 2: we think that and I don't think that that AI
Speaker 2: is going to reduce the need for good realtors, but
Speaker 2: I think it will maybe grease the kids and potentially
Speaker 2: bring commission back into a reasonable range total. And there's
Speaker 2: this new company that's basically trying to bring those costs down.
Speaker 2: It's billing itself as AI for home buying. It's called
Speaker 2: fly Homes. So I was reading an article about this,
Speaker 2: Matt and basically, this company believes that over time, AI
Speaker 2: is going to help answer most of the questions that
Speaker 2: you have about a home that you want to buy. So, hey,
Speaker 2: not only did you find it on Zilo, you got
Speaker 2: some basic information. Now you go to fly homes and
Speaker 2: you're like, hey, has this cross space ever been flooded?
Speaker 2: Or there's other questions you can ask. And this AI
Speaker 2: is going to learn about like apparently all the homes
Speaker 2: in the country, and it's going to be able to
Speaker 2: give you more informations and then I'll help you even
Speaker 2: write an offer. It might even help you negotiate. What
Speaker 2: happens if two ais are negotiating against each other, I
Speaker 2: have no idea. Both of those systems just completely break down,
Speaker 2: and it's like the seventies game or seventies movie wargames.
Speaker 2: You remember that, no, I.
Speaker 1: Don't involve the computer. Ok yeah, I'm playing against itself
Speaker 1: running different scenarios. Okay, yeah, I mean maybe it ends
Speaker 1: up being like that. I don't know if fly homes
Speaker 1: like how if this is ready for primetime, or if
Speaker 1: in a few years, as they continue to make progress,
Speaker 1: will this actually be able to help consumers. I don't
Speaker 1: see artificial intelligence replacing agents now, but I do see
Speaker 1: it becoming maybe an accessory and helping to bring down
Speaker 1: costs for consumers, just maybe a helpful tool for agents
Speaker 1: to maximize their time, a way to reduce the transaction costs,
Speaker 1: because yeah, they're prohibitive in so many ways, and I
Speaker 1: do think they prevent the housing market from being as
Speaker 1: fluid as it could be. The pricing model, like the
Speaker 1: way the pricing structure works or has worked in the
Speaker 1: past when it comes to realtors. That's I think that's
Speaker 1: the biggest thing that's going to get disrupted. And as
Speaker 1: I think about it, the biggest the best parallel that
Speaker 1: I can think of are financial advisors. And in the past,
Speaker 1: typically the structure for payment is assets under management, and
Speaker 1: so if you've got clients and they're worth tons of money, dude,
Speaker 1: you are rolling in it. Yeah, But now the way
Speaker 1: it works. Oftentimes it's a flat fee, so you get
Speaker 1: the services, and maybe it's not yeah, okay, maybe they're
Speaker 1: not taking you out to lunch, maybe you're not going
Speaker 1: golfing with them, and because you're a you're not a
Speaker 1: big high roller or anything like that. But you are being
Speaker 1: provided the services that they're able to provide all of
Speaker 1: their clients, regardless of how much money they make. And
Speaker 1: in a similar way, I think the same might be
Speaker 1: true when it comes to realtors, Like, why just because
Speaker 1: you are selling a house that's eight hundred thousand dollars
Speaker 1: as opposed to four hundred thousand dollars, does that mean
Speaker 1: you should be making twice as much when maybe you
Speaker 1: did it twice the work. I don't think so, and
Speaker 1: so in that way, and again and all the realtors
Speaker 1: are going to come after us.
Speaker 2: They they don't like the three percent rule being threatened
Speaker 2: because it and again, of.
Speaker 1: Course it hurts their bottom line.
Speaker 2: But when you look at the numbers, there's a ton
Speaker 2: of real estate agents who don't make much money, and
Speaker 2: that's because typically they're doing it super part time.
Speaker 1: O their license and they only help out their friends.
Speaker 2: Right, there's a lot of agents out there, though, the
Speaker 2: agents who make a lot of sales or help a
Speaker 2: lot of people through it the year, they do quite
Speaker 2: well for themselves, and I'm not worried about those people
Speaker 2: not being able to continue doing well for themselves.
Speaker 1: I'm just a full timers are going to be fine.
Speaker 2: I just think that there's probably a more fair way
Speaker 2: to compensate, and for some agents it might even end
Speaker 2: up meaning that they make more. Matt, We've got more
Speaker 2: to get to on this episode. We're actually going to
Speaker 2: talk about real estate prices going down in some parts
Speaker 2: of the country. We'll get to that and more right
Speaker 2: after this.
Speaker 1: All right, buddy, we are back from the break, and
Speaker 1: of course now we've got our ludicrous headline of the week,
Speaker 1: which this week is from Wired magazine. I used to
Speaker 1: actually be a subscriber to the physical Wired magazine back
Speaker 1: in the day. I was into the text.
Speaker 2: I saw that the Atlantic just increased the number of
Speaker 2: physical magazines are sending out to give a year from
Speaker 2: ten to twelve. I was like, our magazine's back.
Speaker 1: And I think this goes to like people want physical stuff.
Speaker 1: Yeah they are, they are, well the onion. I think
Speaker 1: it was like a decade ago stopped actually creating something
Speaker 1: that you could hold. Yeah, but then they I think
Speaker 1: they're realizing this is something similar. I'm all about it
Speaker 1: because I'm actually I like this trend.
Speaker 2: There are a couple of magazines like I don't think
Speaker 2: I subscribed to any magazines right now, physical magazines, and
Speaker 2: part of me wants to go subscribe to a couple
Speaker 2: just because there's something about getting into the mail holding
Speaker 2: in your hands.
Speaker 1: It's special and the design choices that go into like
Speaker 1: the just the paper weight, like all the old school
Speaker 1: journalism magazine folks are like, yeah, yeah, bring them back.
Speaker 1: But again, this headline is from Wired, and the headline reads,
Speaker 1: the more this releix costs, the more you want it.
Speaker 1: We're gonna knock on luxury a little bit. This is
Speaker 1: why we don't buy fancy stuff, Joel. I try not
Speaker 1: to care about luxury goods, and in part it's because
Speaker 1: the finest luxury good makers out there, they typically raise
Speaker 1: prices much faster than the rate of inflation. Yet it
Speaker 1: only makes their products. So for instance, Swiss watches fancy
Speaker 1: handmade bags, it makes them more desirable, which sounds.
Speaker 2: Like the opposite should be true, right If this is
Speaker 2: how luxury works, though, Josaster in the rate of inflation,
Speaker 2: then what like, why do I want it more?
Speaker 1: It's the forbidden fruit. That's why we buy these goods
Speaker 1: in a desire to signify social status. And we'll keep
Speaker 1: buying these goods that are widely considered exclusive because of
Speaker 1: what it reveals to the people around us, what it
Speaker 1: signals as so good. Old Teddy Roosevelt said, this comparison
Speaker 1: is the thief of joy. But Joel, it'll also rob
Speaker 1: you of your hard earned money. It robs you with
Speaker 1: the freedom that it could have bought you instead when
Speaker 1: we focus on buying not only stuff, but luxury goods
Speaker 1: that have very little intrinsic value.
Speaker 2: And I think for some people, Matt, it's okay to
Speaker 2: desire some things that are upper echelon or that are nicer.
Speaker 2: And if you have the money to spend on those things,
Speaker 2: and you've budgeted appropriately and you're doing all the other
Speaker 2: smart stuff with your money and Rolexes or your craft
Speaker 2: beer equivalent or something, that's fine, Like I've got no
Speaker 2: beef with you on that. But I think sometimes people
Speaker 2: buy the things they can't afford in an attempt to
Speaker 2: signal and they're not doing the other things, and they
Speaker 2: put themselves into financial buying because of it. So you
Speaker 2: got to watch out for that. And the other side
Speaker 2: of the coin to Matt is, I'm curious to hear
Speaker 2: your thoughts on this. I hear that like, Rolexes continue
Speaker 2: to go up in value, so it's an investment, Joel.
Speaker 2: I guess in some ways it could be right. So
Speaker 2: maybe you don't trick yourself into thinking of it that way.
Speaker 2: But when you see like some of those vintage Rolexes,
Speaker 2: or there's some kind to rolexes that continue to go
Speaker 2: up in value if you take care of it year
Speaker 2: after year, maybe that's one reason to at least not
Speaker 2: be as down on luxury goods as it might otherwise be.
Speaker 2: Sure doesn't mean I'm buying one.
Speaker 1: That's how you can justify it. No, I'm not interested personally.
Speaker 1: I am more of a speedmaster, an Omega speedmaster guy. Yeah,
Speaker 1: less of a Rolex fan. How much does this cost?
Speaker 1: Just as much? I think? Oh really? Oh yeah, especially one? No. No,
Speaker 1: I just have looked at him from afar and I
Speaker 1: don't think I will ever be able to allow myself
Speaker 1: to actually do it because of all the things I
Speaker 1: just said, like, I'm trying to try and buy you
Speaker 1: one for your birthday. Dude, if you did that, that
Speaker 1: would be stupid, But I would totally wear it, Like
Speaker 1: do I put it next to my garment watch or yeah,
Speaker 1: like what do I do at that point? One on
Speaker 1: each rest? No. I mean we've I think we shared
Speaker 1: the story about how Kate and I were on a
Speaker 1: date and there was a watch club meeting at one
Speaker 1: of our favorite local spots, and man, the ability to
Speaker 1: get my I was like, what are you guys doing?
Speaker 1: And I see all these watches and they're they're collectors. Yeah.
Speaker 1: It was also encouraging to hear that you can kind
Speaker 1: of get into it without dropping ridiculous amounts of money
Speaker 1: on some of the the you know, the Omegas or
Speaker 1: the Rolexes. There's a lot of other sort of like
Speaker 1: medium tier brands as well. If that's something that you're into,
Speaker 1: I feel like, I'm man, if you've got the money,
Speaker 1: if you are in if gosh that I can't believe.
Speaker 1: I so easily, like jiu jitsued myself into like trying
Speaker 1: to say that this is okay to get I was
Speaker 1: gonna add this. You just we talked about physical magazines
Speaker 1: for just a second. I think physical like analog goods. Also,
Speaker 1: because we live in such a digital world, something like
Speaker 1: a handmade watch, analog watch. There's something cool about that
Speaker 1: in an age where everything's on a screen, way cooler
Speaker 1: than like an Apple watch. So maybe buy a really
Speaker 1: expensive rolex everyone, Oh my god, it's just kidding. Yeah.
Speaker 2: Uh, something else that's skyrocketing and price a lottery tickets.
Speaker 2: Those are going to cost more starting in April. So
Speaker 2: instead of two bucks for your mega million's ticket, it's
Speaker 2: not gonna cost five dollars five spot.
Speaker 1: I feel steep feels a lot, yeah, a lot more
Speaker 1: expensive two dollars. It's just like, oh, you got a
Speaker 1: couple ones laying around, Well, I was gonna end up
Speaker 1: losing those anyway, right, right, But now you're.
Speaker 2: Like, you'll lose file five dollars five And of course
Speaker 2: there's gonna be more winners, there's gonna be bigger prizes. Still,
Speaker 2: your odds of winning are truly going to be abysmal.
Speaker 2: And your once a week habit, which is akin to
Speaker 2: tossing money in the garbage, which might have been cute
Speaker 2: at two dollars, now at five bucks. I think it
Speaker 2: deserves more serious line of questioning. Twenty bucks a month
Speaker 2: matt for the average person, I get, I think, and
Speaker 2: I think the average lottery player spends a whole lot
Speaker 2: more than that already, and if the price goes up,
Speaker 2: you know they might be dropping like one hundred dollars
Speaker 2: or more a month. That can especially when you think
Speaker 2: about the compounding realities of that money going to work
Speaker 2: for you in retirement accounts. That money could do a
Speaker 2: whole lot on your behalf. And I don't know, maybe
Speaker 2: all of us in the how of money community, maybe
Speaker 2: we can simultaneously commit to avoiding lottery tickets and luxury
Speaker 2: goods at the same time.
Speaker 1: What if, yeah, what if lottery tickets are somebody's craft
Speaker 1: beer equivalent. Oh, I don't know. I don't know if
Speaker 1: you can justify that as I think you can anything,
Speaker 1: right Like, That's why it's so hard for us to
Speaker 1: knock on stuff, which is part of it.
Speaker 2: Why but most people do it out of habit, or
Speaker 2: they do it out of hope, and they're doing it
Speaker 2: because they're I don't know, they think that, yeah, they
Speaker 2: need the big time payout. They can't they can't be
Speaker 2: patient and wait for thirty or forty years to build
Speaker 2: that wealth. But that's really the tried and true way
Speaker 2: to do it.
Speaker 1: And that's a muscle worth developing. Yeah, I hate that.
Speaker 1: It's more of a reflexive action for a lot of folks,
Speaker 1: and that's when folks are mindlessly sort of losing their money.
Speaker 1: There's a big difference between that and like, I don't know,
Speaker 1: twice a year being like, hey, every year I take
Speaker 1: my tax return and I use two dollars of that
Speaker 1: to buy a lot of ticket. Like I don't know
Speaker 1: if it's like a tradition or or maybe like well
Speaker 1: we always stick one lottery ticket in Christmas stocking or
Speaker 1: something like that. There's a big difference between that and
Speaker 1: like reflexively going every week on you know, Friday afternoon
Speaker 1: exactly that kind of thing. So, speaking of prices, Joel,
Speaker 1: so was it last week we talked about tattoos how
Speaker 1: much they cost? Like I joked about getting an experience
Speaker 1: tattoo on that experience New York Times. I think they
Speaker 1: heard us talking about that. They just had an article
Speaker 1: about how expensive tattoos have gotten. The global tattoo market
Speaker 1: is two point two billion dollars. I had no idea
Speaker 1: that it was that big of an industry and more
Speaker 1: America are paying big money to make their body a
Speaker 1: living work of art, and I can appreciate that. I
Speaker 1: can I understand folks who are into that. My wife
Speaker 1: wants to get attended. Does she really does what she
Speaker 1: want to get? Does she know like a wave somewhere? Yeah? Oh?
Speaker 1: Be the way? Is there like a counseling thing? A
Speaker 1: question I need? I need to take it a little bit.
Speaker 1: Didn't ask her why she thought it looked cool. I
Speaker 1: thought she's like the beach. Yeah, but she's not like
Speaker 1: obsessed with the beach. If you're obsessed with the beach,
Speaker 1: that's when you get like, yeah, I don't Yeah, maybe
Speaker 1: it's like a go with the flow. Oh okay, yeah.
Speaker 1: I can't believe you haven't asked her why she was away.
Speaker 1: I didn't ask her. Now now I feel dumb. What
Speaker 1: if you're like, I want to get a tattoo and
Speaker 1: you're like, I want to get a sunflower on my
Speaker 1: forearm when you let her to ask you? Why? Be
Speaker 1: Based on that Postmalon song, Yeah, it's a good song.
Speaker 1: I think it's just worth putting this out there because
Speaker 1: that you know, We've all seen friends get tattoos that
Speaker 1: to them represented something meaningful at that point in time,
Speaker 1: but then they end up loathing the ink that you
Speaker 1: know they adored just a few years earlier. Big money
Speaker 1: on the because then you've got, you know, not just
Speaker 1: the cost involved with getting a tattoo, that's one thing,
Speaker 1: a couple hundred per hour, but then the time the
Speaker 1: cost to remove the tattoo that is also worth considering
Speaker 1: as well. You got to think about if you don't
Speaker 1: end up loving that tattoo and the tattoo removal part
Speaker 1: of the industry that's actually one third of the tattoo
Speaker 1: market these days. I have a buddy who's so fascinated,
Speaker 1: who is obsessed with Lord of the Rings, and he's
Speaker 1: covering up some of his old tattoos because he, I
Speaker 1: guess doesn't like them or doesn't feel like they represent
Speaker 1: him in the same way anymore. So he's getting these
Speaker 1: massive Thord of the Rings scenes over the top of
Speaker 1: those old tattoos. And I think that's something else people do.
Speaker 1: They either got him removed giant Gollum on those ye
Speaker 1: is it? Is it?
Speaker 2: Pete Davidson from Saturday Night Live that like has gotten
Speaker 2: has spent a ton of money getting tattoos removed they
Speaker 2: got earlier on in life. So this is one of
Speaker 2: the things with me. We're like, think long and hard.
Speaker 2: I guess before you get the body art. Tattoos can
Speaker 2: be super cool and I just have never.
Speaker 1: Had tattoos more expensive than you think.
Speaker 2: Well, I just think, I like, I've never been able
Speaker 2: to find something that I'm like, I'm almost positive I'm
Speaker 2: gonna love that for the rest of my life. Can't
Speaker 2: wait when I'm eighty two to look down at that thing. Yeah,
Speaker 2: that wrinkled tattoo, that's that's at enjoy it.
Speaker 1: Like. There are very few things in my life where
Speaker 1: that I feel that resolute and where I trust myself
Speaker 1: to be that steadfast like years and years. Like family
Speaker 1: is one, and so you know, I could see myself.
Speaker 2: That was the one thing I thought about getting really
Speaker 2: some sort of like Shuonish version of my family, like
Speaker 2: tattooed on caricature of your whole fa one of my
Speaker 2: favorite artists representation of my family. But I just haven't.
Speaker 2: I just haven't been able to make that plunge get
Speaker 2: you a black cat tips, That's what I was taking.
Speaker 2: Version of everyone yes, exactly.
Speaker 1: That could be cool.
Speaker 2: It could be, but I still probably won't do it.
Speaker 2: So yeah, get body art if you're into it, but
Speaker 2: just make sure you actually are sure you want it,
Speaker 2: because it can be expensive to put on and to
Speaker 2: take off. Now, let's talk about real estate for a second.
Speaker 2: As prices go up, at some point, consumer stop buying, right,
Speaker 2: I think, go on buyer strike. They say it's it's
Speaker 2: too much. I'm backing out of the market. And we
Speaker 2: know this too. What goes up at an unsustainable pace
Speaker 2: must eventually chill out and come back down to earth,
Speaker 2: and that is what's happening in certain parts of the
Speaker 2: real estate market. Florida, for instance, was red hot for
Speaker 2: years more than the rest of the country, but the
Speaker 2: Florida market seems to be calming down quite a bit.
Speaker 2: I think this is partly thanks to recent violent storms,
Speaker 2: rising home insurance costs, and price fatigue, but I think
Speaker 2: price fatigue started before some of this other stuff too.
Speaker 2: Those factors have all combined to just reduced interest in
Speaker 2: Florida real estate in general. And so this is bad news,
Speaker 2: I guess if you own a home in Florida. But
Speaker 2: it's good news for want to be home buyers. And
Speaker 2: I think this is extending past just Florida specifically too.
Speaker 2: I mean, we went through a stretch of rapidly increasing prices,
Speaker 2: multiple offers on every home home sales going for one
Speaker 2: hundred thousand dollars more than what the asking price was,
Speaker 2: and then asking prices jumping conventionally too. But just like
Speaker 2: prices in many other parts of the economy, the housing
Speaker 2: market is more normalizing. So it just feels like we're
Speaker 2: living in a more normal American economy right now than
Speaker 2: we were a couple of years ago.
Speaker 1: And that's just a nice change, that's true. Yeah, so
Speaker 1: if you already own a home and recently purchased it,
Speaker 1: you might love the home, but not the rate. That
Speaker 1: was actually a term that was gaining popularity. Was it
Speaker 1: last year a couple of years ago. Marry the home,
Speaker 1: date the rate. Yeah, we crapped on that a lot.
Speaker 2: Yeah, we hate on realtors a lot, don't we, Joel, Well, no, no,
Speaker 2: we talked. That was about that was about refinancing, and
Speaker 2: they were saying, oh, listen, buy the home and guess
Speaker 2: what you don't like the rate, you can refinance like
Speaker 2: six months down the road.
Speaker 1: That was like, yeah, and look where ray. Traditionally that
Speaker 1: was a realtor rallying cry to be like, no, you
Speaker 1: can still buy the home, like this is only temporary. Yeah,
Speaker 1: but and look at rates. Yeah, they're still not doing great.
Speaker 1: They did. Friend of the Show, Michelle Singletary. She wrote
Speaker 1: in an article in The Washington Post about how you
Speaker 1: actually don't have to refinance to reduce what you pay
Speaker 1: an interest. She didn't suggest refinancing, because again, rates haven't
Speaker 1: dropped enough to make that a smart idea for almost anyone. Instead,
Speaker 1: she was pointed to paying extra towards your principal balance.
Speaker 1: So this is a classic suggestion, And yes, it it's
Speaker 1: going to reduce the overall amount of interest that you're
Speaker 1: going to pay over the life of the loan because
Speaker 1: specifically of the fact that you're going to reduce your
Speaker 1: payoff timeline. But that doesn't mean that you should start
Speaker 1: funneling more money towards your mortgage. If let's say you
Speaker 1: are investing, let's say you're saving like a baller, Yeah,
Speaker 1: maybe that's something you can consider, But we don't think
Speaker 1: that you should prioritize a mortgage payoff if it means
Speaker 1: not achieving the other goals. In your life and the
Speaker 1: biggest So again, by paying towards your principal balance, yes,
Speaker 1: you are going to eliminate that mortgage like seven years sooner. Right,
Speaker 1: This is the two Like, what is that if you
Speaker 1: pay twice two extra payments every single year. I think
Speaker 1: it's something like you're taking it from a thirty year
Speaker 1: mortgage down to a twenty three your mortgage bi weekly,
Speaker 1: that's what you're doing. Yeah, extra payment a year exactly,
Speaker 1: that's right. But guess what, you're not realizing that benefit
Speaker 1: until the twenty years down the line. And so if
Speaker 1: you're thinking that this is some way that you're going
Speaker 1: to be able to reduce what it is that you're
Speaker 1: paying every single month towards your mortgage, No, you're not
Speaker 1: reducing your monthly cash flow that's going that's leaving your
Speaker 1: bank account. This is this is a forced method of savings.
Speaker 1: And to actually realize a reduced payment at some point,
Speaker 1: what you would have to do is, yes, either refinance,
Speaker 1: hoping that rates are going to come down. But the
Speaker 1: problem here though, refinancing is pretty expensive, and so the
Speaker 1: other alternative is to see if you can get your
Speaker 1: mortgage recast, which is where the lender reamateurizes your payment
Speaker 1: schedule based on the principal balance that is remaining. But
Speaker 1: that guess what, that also costs money too, so that
Speaker 1: there's no like sort of cost less than refining. It
Speaker 1: costs less, but there's no free lunch here, And so instead,
Speaker 1: we would much rather see folks avoid adopting the mindset
Speaker 1: of oh, I hate debt, and instead, if hey, if
Speaker 1: you want to save a bunch, sock that money into
Speaker 1: your savings account, find different ways of investing that money.
Speaker 1: But paying your mortgage early is typically not something that
Speaker 1: we can that we like to get behind.
Speaker 2: You should hate most debt, but mortgage debt is the
Speaker 2: exception to the rule. I think that like most debt
Speaker 2: that people call in and ask us about matt, we're like,
Speaker 2: get rid of it as soon as possible. Mortgage debt, though,
Speaker 2: is one of those that we say, oh, actually, there's
Speaker 2: a bunch of other things you could do with this,
Speaker 2: And in fact, there's certain benefits to having extra liquid
Speaker 2: cash on hand right That gives you a lot more freedom,
Speaker 2: more flexibility, and so we'd likely rather see you invest
Speaker 2: those dollars, especially if you're earlier on your financial journey,
Speaker 2: do that instead of prioritizing that mortgage payoff. So we
Speaker 2: love Michelle Singletary, just don't. And for some people this
Speaker 2: might be the best move, but it's certainly not for everybody.
Speaker 2: So I think if we're blanket telling everyone get rid
Speaker 2: of your house debt as quickly as possible, you might
Speaker 2: be missing out on other ways to grow your net
Speaker 2: worth instead of just trying to pay down a debt
Speaker 2: that's not actually one of the worst debts you have.
Speaker 2: All right, should you increase your utility budget in preparation
Speaker 2: for higher winter heating prices. It's starting to get cold, Matt.
Speaker 2: We've turned on the heat for the first time recently.
Speaker 1: I love it. Yeah, I love turn on the heat
Speaker 1: drives out there. Well, actually it's not the heat that
Speaker 1: dries out there. It's just lower temperatures carry less humidity.
Speaker 1: And if I talked too much about humidity in the
Speaker 1: air recently, maybe this you could have been a weather
Speaker 1: man and in another life. I find it fascinating.
Speaker 2: Yeah, that's all, and so much of like whether or
Speaker 2: not you're going to encounter higher heating prices this winter,
Speaker 2: it depends on where you live, and it depends on
Speaker 2: where you're getting your information. So CNN basically said, had
Speaker 2: an article saying higher electricity bills are coming this winter,
Speaker 2: and it sounded really scary, But then you read the
Speaker 2: fine print and you're like, it seems like they're not
Speaker 2: going up. They're going up at a slower rate than
Speaker 2: the rate of inflation, for sure. And then the Wall
Speaker 2: Street Journal had an article detailing the abundance of natural gas,
Speaker 2: which is going to lead to lower utility costs for
Speaker 2: a big chunk of folks in the states that use
Speaker 2: natural gas for heating MAP. I don't know about you,
Speaker 2: but my price per therm plummeted when I recently shopped around.
Speaker 2: And so you live, if you live in a state
Speaker 2: with deregulated natural gas, I forget how many there are,
Speaker 2: but shopping around could save you a bundle if you
Speaker 2: just keep paying what you're paying, if you're on the
Speaker 2: if you're not in some sort of locked in rate, Yeah,
Speaker 2: did you get to pay more? Did you get to
Speaker 2: the end of your two year lock basically yeah?
Speaker 1: And so then I love locking in another another chunk
Speaker 1: of time at an even lower rates.
Speaker 2: So much cheaper, so much cheaper this time around. So
Speaker 2: if use heating oil, it's gonna cost you a bit
Speaker 2: more this winter, but still not a whole lot more
Speaker 2: than last year according to the estimates that we've seen.
Speaker 2: But ultimately how much you spend depends less on rising
Speaker 2: prices at least in this current environment, and more on
Speaker 2: a combination of the weather. Because if it's super duper
Speaker 2: cold where you live, like you're gonna need to use
Speaker 2: more energy to heat your home. And then where you
Speaker 2: set thermostat, Matt, I think something people don't think about
Speaker 2: a whole lot and might sound cheap to some folks,
Speaker 2: sounds cheap to my kids, I think lots of times.
Speaker 2: But the lower you set that thermostat, hopefully without you know,
Speaker 2: make your fingers and your extremities go numb. But that's
Speaker 2: gonna that's gonna help you save a bundle on heating too.
Speaker 1: Just put some clothes on and we practice turn it
Speaker 1: down a few degrees when you leave the house to
Speaker 1: go to work too. We practice what we preach. We're
Speaker 1: sitting here, you are wearing a cozy hoodie. I am
Speaker 1: wearing a little Patagoia puff puffer jacket, and that's what's
Speaker 1: keeping our heat pump from having to blast, which costs
Speaker 1: us money. Right, But that's gonna be it for the
Speaker 1: US Friday flight. We hope everyone has a fantastic weekend.
Speaker 1: We will link to the different stories that we mentioned
Speaker 1: during this episode up in our show notes at howdomoney
Speaker 1: dot com. So buddy, hope you have a good one.
Speaker 1: Until next time, best Friends Out, Best Friends Out,