Speaker 1: Welcome to How to Money. I'm Joel, I'm Matt, and
Speaker 1: today we're talking economic cheat codes for everyday life with
Speaker 1: Darryl Fairweather.
Speaker 2: Yeah, we are joined today by Darryl Fairweather, who is
Speaker 2: the chief economist over at Redfinn. Everybody knows about Redfinn.
Speaker 2: Before that, she was the senior economist at Amazon. And
Speaker 2: before that she was a researcher at the Federal Reserve
Speaker 2: Bank of Boston, and she worked with Freakonomics author Steven
Speaker 2: Levitt stepping back in time there. But now she has
Speaker 2: a new book that just came out, that actually came
Speaker 2: out last week, Hate the Game Economic Cheat Codes for Life,
Speaker 2: Love and Work, and Man. This book is all about
Speaker 2: helping folks to use game theory and behavioral science to
Speaker 2: lay out all the options as we approach these inevitable
Speaker 2: forks in the road in the road of life, like
Speaker 2: getting married and having kids or not doing those things,
Speaker 2: going for a promotion or looking for a new job,
Speaker 2: whether or not you should move. You know, these are
Speaker 2: like run of the mill, low stakes decisions we have
Speaker 2: to make a Lafe Joel. Basically, Daryl is wanting to
Speaker 2: help folks to win at whatever game in life. That
Speaker 2: they're playing, and we're excited to talk about all of
Speaker 2: that and more today. Darryl, thank you for joining How
Speaker 2: to Money.
Speaker 3: Thank you so much for having me.
Speaker 1: Oh we're stoked for this conversation, Darryl. First question, though,
Speaker 1: we ask everybody who comes on, what do you like
Speaker 1: to suplore John? For Matt and I, it's craft beer.
Speaker 1: I mean, we got a couple of other things in our
Speaker 1: arsenal that we like to spend money on too, but
Speaker 1: craft beer has been one of those mainstays. What is
Speaker 1: it that you spend money on? Maybe egregiously, but you're
Speaker 1: still hey, doing the smart thing, saving the investing for
Speaker 1: your future too.
Speaker 3: I definitely have a lot of subscriptions, Like streaming subscriptions
Speaker 3: is one of those where I'm like, do I really
Speaker 3: need to be subscribed to all these different services? And
Speaker 3: then I even have a Whoop subscription, which is like
Speaker 3: tracking my sleep and tracking my workout. And I'm a
Speaker 3: data junkie, so part of you know, spending money every
Speaker 3: month to collect data on myself is definitely feeding into that.
Speaker 3: But yeah, I question why I spend so much money.
Speaker 3: I could be doing it by hand. I could just
Speaker 3: be like paying attention more. I don't know if I
Speaker 3: need really the Whoop, but yeah, I keep it.
Speaker 2: I didn't know that you had to. Yeah, is that right?
Speaker 2: You have to set up for a year. I was
Speaker 2: talking to a buddy and he was just like, well,
Speaker 2: I did the Whoop thing, so I'm going to see
Speaker 2: it to the end of the to the subscription. What
Speaker 2: is like the timeframe there? Because Joel and I both
Speaker 2: have garments and it's totally free, but I'm guessing that
Speaker 2: there's additional data that you're getting with Whoop. Yeah.
Speaker 3: With Woop, I think it's like I think it's like
Speaker 3: thirty dollars a month, and then they give you a
Speaker 3: discount if you sign up for an entire year, and
Speaker 3: then I think they give you a discount when you're
Speaker 3: first signing up and buying the device. I had friends
Speaker 3: who had them, and I got in with like their
Speaker 3: little competitions, and yeah, I got roped in and now
Speaker 3: I'm locked in. I've had it for years now.
Speaker 1: It's amazing how there's like a social media aspect of
Speaker 1: fitness these days. Like I feel that with the garment,
Speaker 1: like my friends have garments were I'll see like the
Speaker 1: stuff that they're up to, and I just never thought,
Speaker 1: I don't know, I guess I didn't suspect those going
Speaker 1: to be the case. It is interesting, and then you're
Speaker 1: kind of tied into this network effect of the whoop now,
Speaker 1: which I don't know. Giving that up is feels like
Speaker 1: more than just get relieving yourself of a monthly payment.
Speaker 3: Yeah, it's really easy for me to justify it too,
Speaker 3: because it's for my health, Like I'm spending money on
Speaker 3: my health. That's a good thing. But yeah, I don't
Speaker 3: know when I think it's in terms of all the
Speaker 3: subscriptions I have, that's the one that costs more than
Speaker 3: the others and feels kind of the most frivolous.
Speaker 4: All right, I.
Speaker 2: Would have expected like the Netflix subscription or Apple Plus.
Speaker 2: Now that severance is, Yeah.
Speaker 3: I'm not cutting those those are mandatory.
Speaker 2: Yeah, i'volous. Must have something else. Actually, on a personal
Speaker 2: note that you're into, you're an avid board gamer. Yeah,
Speaker 2: like it comes up a few times in your book,
Speaker 2: So I guess another small thing here, do you have
Speaker 2: any favorite board games? And maybe make the link between
Speaker 2: the decision making process matrix, the gaming process and economics
Speaker 2: kind of bridge that for us.
Speaker 3: Yes, I got into board games back in college and
Speaker 3: graduate school, playing with a lot of economists all the time,
Speaker 3: and we're very competitive with our board games because I
Speaker 3: think that we think about the costs and benefits the
Speaker 3: same way we think about a lot of things in life.
Speaker 3: The games that I like the most, there's one called
Speaker 3: Castles of Burgundy. If there are any Euro game fans
Speaker 3: out there, you're kind of building your little, your little
Speaker 3: fiefdom with tiles and you're playing against another person. I
Speaker 3: like that game because I'm good at it. Any game
Speaker 3: that I'm good at.
Speaker 1: That's try to like any game I win frequently come
Speaker 1: in for that. I played Castles of Burgundy once, but
Speaker 1: it's been a minute, and I just don't play as
Speaker 1: many board games as I used to. But every year
Speaker 1: when we take our annual How the Money family vacation,
Speaker 1: we lond up a few board games we end. Lately,
Speaker 1: we've been playing a lot of Acchoir. Have you ever
Speaker 1: played that one?
Speaker 2: Yeah?
Speaker 3: I have that board game. It's actually in my stack
Speaker 3: right behind me.
Speaker 4: It's a really good one. Nice. I love that she's
Speaker 4: got a stack.
Speaker 2: Yeah, Like most economists have nerdy textbooks, and she's got
Speaker 2: those two. But yeah, the predominant feature in the bookshelf
Speaker 2: stack of games.
Speaker 4: It does.
Speaker 1: I like, I got to go to bed earlier than
Speaker 1: ever before, and so late night board game sessions it's
Speaker 1: very harder to come by, but I missed those days.
Speaker 4: They're so fun. Daryl.
Speaker 1: Let's talk about your book, and specifically a book that
Speaker 1: had an influence on you before you started writing this
Speaker 1: book was Freakonomics. It feels like, as someone who you
Speaker 1: kind of write about this. At the beginning of your book,
Speaker 1: you were an aspiring economist. Freakonomics pushed you further in
Speaker 1: that direction, and maybe your family wasn't so thrilled about
Speaker 1: that too.
Speaker 4: Is that right?
Speaker 3: Yes, Freakonomics came out twenty years ago, believe it or not,
Speaker 3: and that was the same time that I was getting
Speaker 3: ready to go to college. I had always been interested
Speaker 3: in math and science, and I thought that's what I
Speaker 3: was going to pursue. That's why I applied to MIT.
Speaker 3: I was headed to MIT, but then on the way
Speaker 3: to MIT, my dad hands me the book of Freakonomics
Speaker 3: and just says, like, hey, this guy, you know, he
Speaker 3: went to MIT, maybe you'd be interested in this. So
Speaker 3: I read the book on the plane ride there and
Speaker 3: immediately I was like, this is what I wanted to do.
Speaker 3: I was, I felt like I was.
Speaker 2: I was always.
Speaker 3: Interested in the way that people behave, but it was
Speaker 3: just really hard for me to wrap my head around
Speaker 3: it without the math part, which is what I was
Speaker 3: also interested in. But Economics really brings it together. It
Speaker 3: applies this mathematical framework, this analytical framework, to the way
Speaker 3: that people interact with one another, and all those interactions
Speaker 3: make up the economy. And that book was just the
Speaker 3: one that kind of broke it opened for me and
Speaker 3: made me realize what economics is. It's not just about
Speaker 3: the stock market or GDP, It's really about human behavior.
Speaker 2: Yeah. I like how you mentioned how economists are essentially
Speaker 2: like profits and they explain human behavior and basically how
Speaker 2: the world works, which I've never really thought about it
Speaker 2: that way, where you're just kind of it almost allows
Speaker 2: you to like peer into the future and make pretty accurate,
Speaker 2: I guess predictions as to what might happen on that note. Well,
Speaker 2: I'm not going to ask you to make a prediction,
Speaker 2: I guess, but maybe just the current state of the
Speaker 2: housing market. You're the chief economists over there at redfin
Speaker 2: and this is a massive question. But what's going on
Speaker 2: when it comes to housing just the current state of
Speaker 2: things prices? Can you touch on that for a minute.
Speaker 3: The housing market has been distorted since at least the pandemic.
Speaker 3: I mean, you can argue it goes even farther back
Speaker 3: to the foreclosure crisis in the Great Recession, but I'll
Speaker 3: start with the pandemic. During the pandemic, interest rates fell
Speaker 3: to record lows, which made borrowing to buy a home
Speaker 3: historically cheap, and anybody who could buy a home was
Speaker 3: buying a home. People were buying multiple homes, people were
Speaker 3: buying vacation homes, people were moving because of remote work,
Speaker 3: and we had all us activity in the housing market.
Speaker 3: But then by twenty twenty three, inflation was the problem,
Speaker 3: not unemployment, and so the Federal Reserve had to raise
Speaker 3: interest rates that sent mortgage rates high. They increased by
Speaker 3: like the highest percentage historically, and home buying became unaffordable.
Speaker 3: Like it was a very sharp turn. And now homeowners
Speaker 3: don't want to sell because they were able to refinance
Speaker 3: into record loan mortgage rates during the pandemic, so their
Speaker 3: payments are still quite cheap, so they don't want to
Speaker 3: give that up because if they got gave it up
Speaker 3: and bought again, they would have to buy at these
Speaker 3: really high ends. So nobody wants to sell. People don't
Speaker 3: want to buy because interest rates are high, and it's
Speaker 3: just more affordable to rent right now in most metro areas.
Speaker 3: So we're just stuck in this place where there's very
Speaker 3: few transactions happening. Home values are remaining high, though, because
Speaker 3: it's both supply and demand that have pulled back. It's
Speaker 3: not like during the Great Recession, where there was no
Speaker 3: demand but there was still lots of supply and that
Speaker 3: caused values to fall. Values are still propped up by
Speaker 3: the fact that homeowners don't want to give up their homes.
Speaker 3: So we're just kind of stuck right now, and it's
Speaker 3: going to take interest rates falling or you know, new
Speaker 3: construction really taking off in order for this to break free.
Speaker 1: So you say that we're kind of stuck, and I
Speaker 1: think you're right. It does feel like just everything ground
Speaker 1: to a halt in the housing market. But when it
Speaker 1: comes to the and I think crisis is an overused term,
Speaker 1: but maybe the affordability crisis in housing, Are there any
Speaker 1: signs of relief? I'm going to look at a city
Speaker 1: like Austin and you see pretty significant declines at least
Speaker 1: in the amount of rent that can be asked year
Speaker 1: over year. But then there are and that's due to
Speaker 1: it seems like a cutting back of red tape. What
Speaker 1: do you see moving forward when it comes to rent
Speaker 1: and housing prices, and is that in a very city
Speaker 1: of the city.
Speaker 3: Austin is a great example of a place that where
Speaker 3: demand increase during the pandemic, and because building is allowed there,
Speaker 3: it's just easier to build there than is in other
Speaker 3: parts of the country. We saw an increase in new construction,
Speaker 3: and that increase in supply made it possible for rents
Speaker 3: to come back down after they had gone up in
Speaker 3: other parts of the country, like in California, when demand
Speaker 3: goes up, it just leads to higher prices because supply
Speaker 3: can't react, and that's largely due to regulations like single
Speaker 3: family zoning and the permitting processes that are there. So
Speaker 3: I think the lesson from that is that you have
Speaker 3: to make it easy to build because you know the
Speaker 3: next time there's going to be an increase in demand,
Speaker 3: either when rates fall or the economy is just doing
Speaker 3: really well, it will inevitably lead to higher prices unless
Speaker 3: we see an increase in supply reacting to it. So
Speaker 3: I think a lot of states of like made progress there,
Speaker 3: but there's still a lot of progress to be made.
Speaker 2: Yeah. Well, so, I mean, as you touched on supply,
Speaker 2: I think about the wildfires out in California and even
Speaker 2: Hurricane Helene damaged something like eighty I think around eighty
Speaker 2: thousand homes kind of along its path of destruction. How
Speaker 2: does something like that impact the supply of homes? Obviously
Speaker 2: you got homes that are completely destroyed and so they're
Speaker 2: not available, But even damaged homes, I feel like, at
Speaker 2: least temporarily, it kind of takes them off the market.
Speaker 2: Is that something that feels more localized or does that
Speaker 2: have larger impacts on the supply of housing across the
Speaker 2: country as well?
Speaker 3: It does have large impacts. We're already in a vulnerable
Speaker 3: position because of how unaffordable housing is. So climate change
Speaker 3: is inevitably going to make housing even less affordable because
Speaker 3: the cost of maintenance is going to increase with changing
Speaker 3: weather patterns. Like homes that were built for certain climates
Speaker 3: and then the climate changes, they need to be retrofitted
Speaker 3: and then it also makes insurance more expensive, and it
Speaker 3: literally like pulls homes out of the supply of housing
Speaker 3: if they're destroyed and then not be built. So all
Speaker 3: of that just makes housing more expensive, and we're seeing
Speaker 3: that in California how insurance premiums are going up. Insurance
Speaker 3: premiums are also going up in Florida and in Texas.
Speaker 3: But there are certain parts of the country where the
Speaker 3: climate could potentially become more appealing and values will go
Speaker 3: up as people decide to move to those places. So
Speaker 3: it really is going to have an effect on the
Speaker 3: entire country. There is no neighborhood that isn't going to
Speaker 3: be impacted one way or the other by climate change,
Speaker 3: and their housing markets are going to be impacted too.
Speaker 1: It's like if Minnesota becomes a little more balmby here,
Speaker 1: it starts to look a little more appealing. Oh, the
Speaker 1: Great Lakes. I've never been up there, but it seems
Speaker 1: quite nice now we're not frozen over half the year.
Speaker 4: It might be interested.
Speaker 1: I'm curious too, Darrell. Something else that was proposed recently,
Speaker 1: a Trump administration proposal was to use federal lands to
Speaker 1: build more housing supply, And is that going to make
Speaker 1: a dent in the housing issues that we have in
Speaker 1: this country because obviously applying demand like we just don't
Speaker 1: have enough supply. We're millions of units short, it seems.
Speaker 1: But on the other side, is the supply coming where
Speaker 1: it's most needed.
Speaker 3: Federal land tends to be in parts of the country
Speaker 3: that don't have access to amenities like city amenities. They
Speaker 3: might not even have access to roads to begin with.
Speaker 3: So I think developing, yeah, that kind of land, it's
Speaker 3: not the high value land. If it was high value,
Speaker 3: it wouldn't be federal land. It would have already there
Speaker 3: would have already been a push to develop it. So
Speaker 3: I think that it's not really solving the real problem,
Speaker 3: which is how expensive housing is. In the most productive
Speaker 3: cities in the United States, like New York, Los Angeles,
Speaker 3: San Francisco, there is some federal land in those areas.
Speaker 3: It's like post offices and federal buildings, and I think
Speaker 3: that the idea of densifying those types of buildings and
Speaker 3: allowing there to be mixed use housing, mixed use development
Speaker 3: with like a federal building and then housing on top
Speaker 3: of it, I think is a really interesting idea that
Speaker 3: we should just allow. I think the default should be
Speaker 3: that we allow housing on more lots of land, especially
Speaker 3: if it's near places that people want to live.
Speaker 2: Yeah, just by default say yes, and then if there's problems,
Speaker 2: we'll figure it out. That seems much more appealing to
Speaker 2: me than living in an Oppenheimer like desert town that
Speaker 2: gets erected in Utah or something.
Speaker 4: Like that in New Mexico.
Speaker 2: But right, yeah, which is what I pictured, beautiful hours
Speaker 2: in the middle of nowhere.
Speaker 1: But I like the idea of the post office being
Speaker 1: on the bottom floor of like a high rise. Like
Speaker 1: think about that. That sounds like maybe what you're suggesting, Darryl.
Speaker 2: Right, yes, yes, talk to us about the rule of
Speaker 2: thumb for a housing budget. You talk about this in
Speaker 2: chapter five of your new book. But has your advice
Speaker 2: on that changed as we have seen cost rise faster
Speaker 2: than we've seen wages go up.
Speaker 3: The rule of thumb is that you shouldn't spend more
Speaker 3: than thirty percent of your pre tax income on housing.
Speaker 3: But the reality is that the majority of renters are
Speaker 3: spending more of that on their rent. So I think
Speaker 3: that that was the rule of thumb, you know, fifteen
Speaker 3: twenty years ago, and people were able to meet that,
Speaker 3: but now a lot of people just it just feels
Speaker 3: like so out of reach for them. So what I
Speaker 3: advise people to do is to go through their spending
Speaker 3: habits on a monthly basis, like pull it up your
Speaker 3: credit card transactions or your bank statements, or use software
Speaker 3: that's out there, and just look at how much you're
Speaker 3: spending on each category. And then when you're thinking about
Speaker 3: moving somewhere new, think about how all those categories could change,
Speaker 3: because it's not just the housing payment. If you're moving
Speaker 3: somewhere with public transit, you might not be spending money
Speaker 3: on your car or on gas anymore. Or if you're
Speaker 3: moving somewhere that's smaller, then maybe your energy bill is
Speaker 3: not going to be as big compared to somewhere that's larger.
Speaker 3: So I think every category deserves evaluation and taken in
Speaker 3: and taken in because that thirty percent rule is really, just,
Speaker 3: like I think, more something that academics use to understand
Speaker 3: how many people are struggling. But at a personal level,
Speaker 3: you just have to make do with what options are
Speaker 3: available to you.
Speaker 1: Yeah, I realized I'm asking this question of someone who
Speaker 1: is an economist at a real estate website. But I
Speaker 1: think in this country, at least, home ownership like this
Speaker 1: ride of passage for a lot of people, and the
Speaker 1: majority of individual wealth is often tied to equity in
Speaker 1: a home, which we don't think is a good thing,
Speaker 1: but it's a reality. Have we just overly deified home
Speaker 1: ownership in the US. Is that part of the problem.
Speaker 1: We've made home ownership seem like it's a prerequisite to
Speaker 1: live the American dream?
Speaker 3: Yes, And I think it like goes back to the
Speaker 3: founding of our country how people with property were the
Speaker 3: ones who are allowed to vote initially. It's it's just
Speaker 3: seen as like a step into having wealth or being
Speaker 3: in the middle class when you own property, and the
Speaker 3: first piece of property that people own is typically their
Speaker 3: own home. So yeah, I think that there's really, from
Speaker 3: an economic standpoint, no reason to glorify housing. It's actually,
Speaker 3: you know, unadvisable to put all of your money into
Speaker 3: one undiversified asset. You can see that with climate risk.
Speaker 3: So if we reimagine like how we want people to
Speaker 3: build wealth and look at all the different ways to
Speaker 3: invest besides home ownership, I think we'd be a better
Speaker 3: position as an economy.
Speaker 4: Totally agree.
Speaker 2: When you buy a home, though, like you're oftentimes doing
Speaker 2: it for personal reasons, not necessarily from like a wealth
Speaker 2: building standpoint that although that is a positive proxy results. Yeah, yeah,
Speaker 2: but I guess when you are looking at it as
Speaker 2: a primary residence, Like one of the problems when it
Speaker 2: comes to especially like when you're bidding on a house
Speaker 2: is getting emotionally attached and you say to watch out
Speaker 2: for that, which is it's easier than done. But do
Speaker 2: you have any tips for avoiding like envisioning ourselves in
Speaker 2: a home as you're going out there as your house shopping,
Speaker 2: because that can lead to perhaps, yeah, maybe you overpaying
Speaker 2: for that house. Yes.
Speaker 3: My My first piece of advice is to do a
Speaker 3: lot of your thinking before you even start your home search,
Speaker 3: setting your budget, talking to a mortgage lender to understand,
Speaker 3: like if you what you qualify in terms of your loan,
Speaker 3: going through whatever your must haves versus your nice to havebs,
Speaker 3: looking at homes that are available for salor that recently sold,
Speaker 3: an understanding if your budget makes sense given what is
Speaker 3: that you want, and then start your home search with
Speaker 3: an idea in mind of like this is how much
Speaker 3: I'm going to pay and these are the home features
Speaker 3: that are most important to me. When you find the
Speaker 3: home that fits all that criteria and you're starting to
Speaker 3: fall in love, I would definitely advise you to slow down, Like,
Speaker 3: don't start imagining Thanksgiving dinners or happy family memories there
Speaker 3: because it's not your home yet, and there are going
Speaker 3: to be other people, yeah, making offers on this home,
Speaker 3: and you could get in a situation where you end
Speaker 3: up overbidding because you are already become attached to it.
Speaker 3: And there's a lot of behavioral economics research about how
Speaker 3: once you own something, you tend to overvalue it. So
Speaker 3: just kind of stay attached. Yeah, it's not yours yet,
Speaker 3: that's my biggest advice.
Speaker 2: Okay, yeah, I think so, like a true economist, remove
Speaker 2: the emotion, remove those feelings, right, look at the numbers.
Speaker 1: One of the things you just mentioned in there too
Speaker 1: was talking to a mortgage broker. And this is one
Speaker 1: of those things that I feel like it's so underplayed,
Speaker 1: is to talk to a few different lenders and get
Speaker 1: quotes because of how much it can save you. Like,
Speaker 1: the stakes are so high, so much higher than almost
Speaker 1: anything else we buy, than really anything else we buy.
Speaker 1: So let's say you go to a credit union to
Speaker 1: get a loan for a car instead of getting it
Speaker 1: at the dealership. Sure, save a couple percentage points on
Speaker 1: the APR right at the rate of the loan, But
Speaker 1: when it comes to your mortgage loan, just because of
Speaker 1: the balance, the amount of money you're borrowing, it can
Speaker 1: be significant. Is that something that people From everything I've read,
Speaker 1: it seems like people don't do that enough.
Speaker 4: Do you agree?
Speaker 3: I think that everybody should shop around. I think it's
Speaker 3: easier now than it used to be because there are
Speaker 3: so many websites and there's so much comparative shopping you
Speaker 3: can do online. But I do think that there are
Speaker 3: people who just go straight to whatever their bank is
Speaker 3: and ask them what they can borrow, and they think that,
Speaker 3: you know, this is my bank. They've been good to
Speaker 3: me before. Why wouldn't I not go to them for
Speaker 3: my home loan, not realizing that the bank is giving
Speaker 3: you a much higher rate than what maybe a different
Speaker 3: lender would give you. So I definitely advise people to
Speaker 3: shop around. It's easy to do online, get at least
Speaker 3: three different opinions, and then the other thing to consider,
Speaker 3: because there are some differences between lenders, is just how
Speaker 3: responsive they are. If you like the software in terms
Speaker 3: of uploading your documents, and you know they are. They
Speaker 3: doing a good job explaining it to you what you
Speaker 3: can afford. I think if they're hitting all those criteria,
Speaker 3: then the next thing is just to focus on the
Speaker 3: price that they're giving you guys.
Speaker 4: Yeah, the rate.
Speaker 2: You also write about being smart when you are selling
Speaker 2: at home, and you mentioned renovating, how do you think
Speaker 2: about the ROI and whether renovations that you're considering whether
Speaker 2: they're going to pay off when it comes to a
Speaker 2: higher sales price.
Speaker 3: Not all investments have an ROI, and I think it's
Speaker 3: kind of unfortunate, but the things that tend to have
Speaker 3: the ROI tend to be those really visual things where
Speaker 3: if somebody is looking at the listing online or they're
Speaker 3: walking through the home, that are just kind of a
Speaker 3: turn off, like old paint, for example. It's really easy
Speaker 3: to repaint your house, but can make it just look fresher, newer,
Speaker 3: and more appealing. Those hidden things like say redoing the
Speaker 3: electrical they're really costly and they might not pay off unfortunately.
Speaker 3: So I think just talking to your agent can help
Speaker 3: you evaluate what investments are going to be paid, are
Speaker 3: going to have a payoff. Also understanding the market and
Speaker 3: really competitive markets it you don't really need to do
Speaker 3: that much specialty your home to get it sold. In
Speaker 3: weaker markets, you do have to make sure that the
Speaker 3: home is moving ready if you want to attract a buyer.
Speaker 1: I'm thinking putting in on your listing. At the very top,
Speaker 1: we just put new insulation in. It's It's true that
Speaker 1: it'll be super sexy, yeah, next home, but they're trying
Speaker 1: to imagine themselves at the thanksgaming dinner table in that home,
Speaker 1: just like we don't want to imagine ourselves in that situation.
Speaker 1: You want as a guest, as a seller, other people
Speaker 1: thinking that about your house. And so it's when you
Speaker 1: look at kind of the annual studies that come out
Speaker 1: about what renovations make the most, offer the most bang
Speaker 1: for the buck. The thing and I've noticed in recent
Speaker 1: years is that it's garage doors that tend to be
Speaker 1: to offer the biggest bang, Like that people actually make
Speaker 1: more than what they spend on the garage door. Is
Speaker 1: that just because it's such a big piece of curb appeal.
Speaker 3: Yes, I think curb appeal matters a lot in real estate.
Speaker 3: And yeah, those newer garage doors they have, like the
Speaker 3: windows on them, they come in different colors. I think
Speaker 3: that they they do just make the overall home look newer,
Speaker 3: And I think new is what people tend to gravitate towards.
Speaker 2: Which is why Joel I just got done not too
Speaker 2: long ago, why I painted my garage door. Yeah, looks
Speaker 2: like a brand new, gradual, cheaper way to get the bang.
Speaker 4: Yeah.
Speaker 2: Although, oh yeah, we won't get into this there. But
Speaker 2: they also sell like these little window these magnet kits
Speaker 2: where it looks like there's windows in your garage, you
Speaker 2: like slap on it, like the fake carriage handles on there.
Speaker 2: I was just like, Babe, we're.
Speaker 4: Not going to do that.
Speaker 2: Come on, We're not here to create the false illusion.
Speaker 2: But Drek, we've got more to get to. We're gonna
Speaker 2: continue to discuss just the intersection of economics and everyday life.
Speaker 4: Will get to that more. Right after this, we're back
Speaker 4: from the break.
Speaker 1: We're still talking with Daryl Fairweather talking about we just
Speaker 1: got done talking about the housing market. There's so much
Speaker 1: more to discuss, though, so much more that Daryl covers
Speaker 1: in her new book that's really worth checking out. It's
Speaker 1: called Hate the Game. And Daryl in this book, you
Speaker 1: really you focus on the fact that that and you
Speaker 1: mentioned this kind of at the very beginning of our conversation.
Speaker 1: Do you feel like economics has something to say about
Speaker 1: like everything we do or and does it have predictive
Speaker 1: powers where if we were just a little more in
Speaker 1: tune with economic realities that we would stand to gain
Speaker 1: an edge.
Speaker 3: I think economics has a lot to do with anytime
Speaker 3: there's a limited resource and there are people who want it,
Speaker 3: that explains that economics can explain it. And you see
Speaker 3: that in so many different settings. You obviously see it
Speaker 3: and say investment, you see it in the labor market,
Speaker 3: but you also see it in romantic interactions too, that
Speaker 3: two people want something. Maybe it's different things and there's
Speaker 3: a conflict that happens. But I don't think it applies
Speaker 3: to like nearly everything. I do try to like stay
Speaker 3: in my lane somewhat and not pipe up on things
Speaker 3: I'm not an expert on. But economics it touches so
Speaker 3: many things. It gives me a lot to talk about.
Speaker 4: It's funny.
Speaker 1: I'm reading a book by Thomas soul right now, Applied Economics,
Speaker 1: and he talks about how economics applies to healthcare, but
Speaker 1: then also it's immigration, and he gives just like not
Speaker 1: only first order effects, but second and third order effects.
Speaker 1: How do you think about the role that I think
Speaker 1: sometimes people can think of an initial reality that might
Speaker 1: happen if we change this one thing. It's like, oh,
Speaker 1: it's going to do this and it's going to be
Speaker 1: so good. But then there are oftentimes secondary and third
Speaker 1: like just cascading reality of impacts of economic decisions. But
Speaker 1: I don't know, as humans, we tend to really only
Speaker 1: be able to visualize kind of the first set of
Speaker 1: things of consequences.
Speaker 3: Yes, this is the law of unintended consequences. When it
Speaker 3: comes to incentives and economics, you can bet that people
Speaker 3: are going to respond to incentives. So if you change
Speaker 3: the incentives, people's behaviors will change. If, for example, you
Speaker 3: make a product illegal, it's not just that people are
Speaker 3: no longer going to consume that product. You can expect
Speaker 3: some of the consumption to go underground. So I think
Speaker 3: just thinking through the way that people change their behavior
Speaker 3: when you change a law, or change a policy, or
Speaker 3: just change anything, can help you avoid that pitfall of
Speaker 3: not thinking through the unintended consequences.
Speaker 2: Yeah, I like this higher level of thinking. Like on
Speaker 2: that note one line that you write in your book,
Speaker 2: the decisions you make in one game often impact your
Speaker 2: ability to attain your objectives in other games. And that's
Speaker 2: when you were talking about finding balance in life. Can
Speaker 2: you talk about that, just like the trade offs of
Speaker 2: let's say, balancing career, success and family, and how that
Speaker 2: can have an impact on some of the other areas
Speaker 2: of life, sometimes without intending to.
Speaker 4: Of course, Yeah, there's this.
Speaker 3: Trope with women, right having it all means having the family,
Speaker 3: having the career, and doing all the things at the
Speaker 3: same time. But the reality is that you have to
Speaker 3: make trade offs. And I think one of the most
Speaker 3: important things you can do in your life and career
Speaker 3: is figuring out what is that you value most and
Speaker 3: then being okay with making a trade off to get
Speaker 3: what you really want. And I think, I mean, at
Speaker 3: least in my life I have, I feel like struck
Speaker 3: that balance with family and career, but I have had
Speaker 3: to have strong boundaries in both because I'm not going
Speaker 3: to be able to like be everything to everyone all
Speaker 3: the time. But that's again it goes back to economics.
Speaker 3: There are constraints, there are trade offs that you have
Speaker 3: to make and you have to know what you value
Speaker 3: to really optimize.
Speaker 2: Small personal follow up there, So you say that you
Speaker 2: feel like that you've found that balance yourself, do you
Speaker 2: ever doubt that, Like, like, when you're it sounds like
Speaker 2: you know, you're incredibly successful. It sounds like you've got
Speaker 2: nice family life as well. Do you ever look at
Speaker 2: your life and you're like, wait a minute, it almost
Speaker 2: seems like things are going too well.
Speaker 4: I guess I'm just curious.
Speaker 2: They're just a little peak at your personal life and
Speaker 2: whether or not that's a doubt that maybe comes to mind.
Speaker 3: I think that I'm not immune to things that could
Speaker 3: happen in the economy or just like the randomness of life.
Speaker 3: So all those things are going well for me now,
Speaker 3: Like I could definitely get like, you know, knocked off
Speaker 3: my horse at any moment. I feel like that's kind
Speaker 3: of the anxiety of being in the economy that a
Speaker 3: lot of people go through, is like you never know
Speaker 3: if it's enough, because you could always imagine some scenario
Speaker 3: where it's not going to be enough. Here you wish
Speaker 3: you didn't spend that money on you know, something today
Speaker 3: because you wish you could have saved it for that
Speaker 3: bad scenario in the future. But you can't live your
Speaker 3: life just only planning for bad scenarios, because then you
Speaker 3: end up missing out on all the good, all the
Speaker 3: on all the luck and all the good things that
Speaker 3: could happen to you. So I think that's just another
Speaker 3: thing that requires balance and also being able to take
Speaker 3: an l when you lose, just realizing that, like, sometimes
Speaker 3: you're gonna lose, and as long as you're you know,
Speaker 3: keep making choices that align with your values. In the end,
Speaker 3: you'll get to the place that is optimal for you.
Speaker 1: Yeah, I think that's that's good advice. And also just
Speaker 1: kind of keep tuning in because your desires and your
Speaker 1: priorities shift and change too over time. Right, It's like
Speaker 1: once you have a two or three kids or something
Speaker 1: like that, like your family life becomes more important than
Speaker 1: when you were single, and you could dedicate more time
Speaker 1: to work. I'm curious on that topic. You characterize marriage
Speaker 1: in your book as a financial strategy, which I think
Speaker 1: is interesting. I don't I wonder how my wife would
Speaker 1: react to that. Quite I need asked when I get
Speaker 1: home it was a business decision, but you say that
Speaker 1: it can produce happiness and intimacy, So you put that
Speaker 1: part in there, but there's a trade off between those
Speaker 1: two objectives. So how do you think about the mix
Speaker 1: of love and the essential intertwined economic reality that tying
Speaker 1: yourself to another individual for the rest of your days?
Speaker 1: Like what that entails?
Speaker 3: Yeah, I mean, obviously marriage, there's a lot of purposes
Speaker 3: to marriage, but I think the financial aspect shouldn't be downplayed.
Speaker 3: I mean, you're teaming up with another person, combining your finances,
Speaker 3: and from that point on, whatever decision you make, it's
Speaker 3: going to impact the other person. So you have to
Speaker 3: talk about these financial decisions or else you know, you
Speaker 3: might end up like not not with the outcomes that
Speaker 3: you want. I'll just put it, I guess I'll put
Speaker 3: it that way. But one thing that's shown in economic
Speaker 3: research is that when two people have negatively correlated incomes,
Speaker 3: like say one person they both work in real estate,
Speaker 3: but one person focuses on luxury and one person focuses
Speaker 3: on foreclosures, there they have better economic stability and actually
Speaker 3: a lower chance of divorce because they don't have the
Speaker 3: same volatility and income that you know, two people who
Speaker 3: work on luxury real estate might feel because when housing
Speaker 3: markets doing well, the couple's fine. With the housing markets
Speaker 3: doing bad, the couple's fine. And it's just interesting to
Speaker 3: see that play out like across different different industries and
Speaker 3: different careers that couples might have. I think it's something
Speaker 3: to be aware of because you know, if you're signing
Speaker 3: up for more financial hardship because of the kind of
Speaker 3: careers that you and your partner chose, that is going
Speaker 3: to be a strain on the marriage and on your life.
Speaker 1: So for how of money listeners out there in the
Speaker 1: dating pool, what would you suggest to them? What sort
Speaker 1: of conversations should they be having when they're kind of
Speaker 1: getting to know somebody and they're saying, I don't know,
Speaker 1: I think I might want to sign on the marriage
Speaker 1: certificate with you and do life together. Are there certain
Speaker 1: kind of conversations around economics and personal finance they should
Speaker 1: be having ahead of time to make sure that's a
Speaker 1: wise decision.
Speaker 3: I think the most important thing to establish is whose
Speaker 3: career is prioritized when it's it's not necessarily that one
Speaker 3: person's career is prioritized over the other, but at different
Speaker 3: moments you're going to have to make decisions about you know,
Speaker 3: who picks up the kids after school, or who is
Speaker 3: going to go on a business trip versus who's going
Speaker 3: to stay home with the kids, And it might be
Speaker 3: like you trade off on a weekly basis, or you
Speaker 3: trade off on like on the amount of years where
Speaker 3: for a certain amount of time, one partner is dedicated
Speaker 3: to kids and the other partners doing the career, but
Speaker 3: then later it might switch. But I think just talking
Speaker 3: through that part of it is super important and can
Speaker 3: also help you plan for downturns in the economy, Like
Speaker 3: you're going to prioritize your career now, but if ever
Speaker 3: you lost your job, then that's when I would step
Speaker 3: up or something like that. So just understanding like who
Speaker 3: is the primary earner at any moment in time, or
Speaker 3: not primary earner but primary career person at any moment
Speaker 3: in time, I think can avoid a lot of hard
Speaker 3: fights later on.
Speaker 2: Yeah, yeah, I mean what I hear you speaking to
Speaker 2: and you write about this as well. It's just essentially
Speaker 2: aligning your goals. But there are ways, I guess of
Speaker 2: doing that as opposed to jumping straight to the negatively
Speaker 2: correlated careers and incomes.
Speaker 4: I guess. I mean that's a part of dating.
Speaker 2: Right, likely you just talk about what you're looking forward
Speaker 2: to in life, and then that's like a soft way
Speaker 2: of aligning those goals. And if you hear somebody say
Speaker 2: something that, oh wow, I've never thought about that and
Speaker 2: nor do I ever want that, it's.
Speaker 1: Like I'm looking forward to traveling every week for the
Speaker 1: rest of my life on and maybe for work trips.
Speaker 1: Oh yeah, And you're like, wait, no, that's not good.
Speaker 4: It's just funny.
Speaker 2: I guess hearing in economic terms as opposed to kind
Speaker 2: of how that plays out in real life. But Darryl
Speaker 2: talk about career implications, like how should economics impact our
Speaker 2: job and career decisions the work that we decide to do.
Speaker 3: Well understanding your strategy for earning more money within your career,
Speaker 3: I think it's just important to like to go to
Speaker 3: think about how you're going to advance your earnings. You
Speaker 3: can advance your earnings by gaining skills. You could advance
Speaker 3: your earnings by getting promotions or changing jobs. But I
Speaker 3: think for people just starting out their career, their biggest
Speaker 3: anxiety is just like I'm in a job. Like the
Speaker 3: entry level jobs aren't create jobs, they're not as enjoyable
Speaker 3: as those higher level jobs. Of figuring out how you're
Speaker 3: going to get there is really important, and there's so
Speaker 3: many there's so many different ways that economics can impact that.
Speaker 3: I talk in the book about understanding the principal agent
Speaker 3: model in terms of understanding what your boss might want
Speaker 3: out of you as an employee. I talk about backwards
Speaker 3: induction to understand how to get promoted, like understanding who
Speaker 3: is in control of promotion processes. But also there's like
Speaker 3: more macro stuff, like understanding how the unemployment rate in
Speaker 3: different industries is going to impact your own likelihood of
Speaker 3: going through about of unemployment, Like it's both the micro
Speaker 3: level but also this macro level is in the backdrop
Speaker 3: at all times.
Speaker 1: Yeah, I'm curious. Can you talk about that just a
Speaker 1: little more? And what should we as individuals be paying
Speaker 1: attention to so that we can realize what we can
Speaker 1: push for and what's not possible. I guess in a
Speaker 1: current economic climate, when you think, is it just like
Speaker 1: the headline unemployment rate, is it we even look you
Speaker 1: look back to COVID and the there was just some
Speaker 1: employers were willing to offer so much money for job switchers.
Speaker 1: That has declined significantly. What should we be paying at
Speaker 1: attention to from a macroeconomic perspective to kind of know
Speaker 1: are what our value might be worth in the market
Speaker 1: we're currently in as an employee.
Speaker 3: Yeah, the kind of metrics I would pay attention to,
Speaker 3: or how many job openings are in your career sector,
Speaker 3: how many peopleeople are unemployed looking for work in that
Speaker 3: career sector, because that can kind of tell you how
Speaker 3: how much competition there is, how how many people are
Speaker 3: going to be willing to take a lower income to
Speaker 3: get the same job that you want. You generally want
Speaker 3: to gravitate towards those jobs where there are lots of
Speaker 3: openings and not that many people who have the skills
Speaker 3: in them yet. Then you can be one of those
Speaker 3: early people when it's still rare for you to have
Speaker 3: those skills, and that's often when you can get the
Speaker 3: most raises and get them like the best career trajectory.
Speaker 3: You know everybody is going to be trying to do that,
Speaker 3: figure out what the next big thing is, But oftentimes
Speaker 3: you can kind of look at the data to give
Speaker 3: you a hint. Healthcare is one where like it's good,
Speaker 3: they're going to need to be more healthcare workers. Like
Speaker 3: if I was advising somebody who didn't who who only
Speaker 3: wanted job security and they were entering into college, I
Speaker 3: would say, pick something in healthcare because you're definitely going
Speaker 3: to be employed in the coming decades in.
Speaker 4: That aging population. That kind of thing.
Speaker 3: Yeah, aging population. The spending just keeps going up on it.
Speaker 3: So yeah, and then it's a kind of job but
Speaker 3: can't be replaced by robots at least not across the board,
Speaker 3: because it's manual, it requires a human touch. There's bedside care.
Speaker 3: I think that there will continue to be plenty of
Speaker 3: healthcare jobs.
Speaker 2: And then for folks who are so let's say they
Speaker 2: already have a career and you mentioned this, right, just
Speaker 2: the ability to increase your earnings either by like let's say,
Speaker 2: upping your skills, maybe opting for a new job, or
Speaker 2: kind of angling for that promotion. How would you recommend
Speaker 2: for someone to maybe decide between those two or even
Speaker 2: all three of those? Right, But I guess I specifically
Speaker 2: want to drill down on, like, Okay, I'm looking to
Speaker 2: either get promoted internally here or when should someone know
Speaker 2: that they should be looking just to a different company
Speaker 2: outside of who they're currently with.
Speaker 3: The First thing to assess is how likely are you
Speaker 3: to get promoted? Like are you already do you already
Speaker 3: have everything you need to get promoted, and it's a
Speaker 3: matter of pushing your promotion documents through and getting them approved,
Speaker 3: or are there more skills that you need and more
Speaker 3: evidence that you need to provide in order to get promoted.
Speaker 3: If it's in the latter category, there's more that you
Speaker 3: need to do. I think looking around at your peers
Speaker 3: and looking at how they have gotten promoted. And then
Speaker 3: if you're already at that stage where you have all
Speaker 3: the skills, I think the stage to go to is
Speaker 3: who is actually in charge of the promotion decision. Your
Speaker 3: manager probably has some control of it, but your manager's
Speaker 3: manager probably has to say and maybe even the executives
Speaker 3: have a say.
Speaker 1: So.
Speaker 3: Making sure that people who are making these decisions know
Speaker 3: who you are and know the value you bring is
Speaker 3: going to be really important to getting a promotion approved.
Speaker 1: Do you feel like people like great jobs have become
Speaker 1: more widely geographically available given work from home. It seems
Speaker 1: like some of the some employers are calling back work
Speaker 1: from home a little bit, and other employers are saying,
Speaker 1: oh cool, well you lived in Silicon valley and you
Speaker 1: made a ridiculously high salary, But if you're going to
Speaker 1: move to the middle part of the country, we're going
Speaker 1: to pay you less. Is there still an opportunity for
Speaker 1: people to live in a lower cost area of living
Speaker 1: and benefit from a higher paying job that might be
Speaker 1: headquartered in a more expensive place to live.
Speaker 3: I think that's definitely a lot easier to find those
Speaker 3: remote opportunities now than it was before the pandemic. But
Speaker 3: there is starting to be a bit of a reversal
Speaker 3: on the trend where more corporations are wanting their employees
Speaker 3: in office. We've seen that at Amazon. I think Apple
Speaker 3: and Facebook have also done this, and the federal government
Speaker 3: has called people back into work too. So I think
Speaker 3: that if you are trying to cast that y net,
Speaker 3: I wouldn't rule out in office for you, because that
Speaker 3: if you're still in that early part of your career,
Speaker 3: it could be detrimental to completely rule out in office work.
Speaker 3: But I think it is something that is worth aspiring
Speaker 3: to if that's how you feel most comfortable working, it's
Speaker 3: something that you value. I've set up a situation where
Speaker 3: I can work remotely, but you know, earlier in my
Speaker 3: career I didn't have the ability to do that. I'm
Speaker 3: lucky that I have it now. But I think it
Speaker 3: is something similar to your salary or similar to your
Speaker 3: vacation time or your healthcare. It's one of these features
Speaker 3: of your job that is going to impact your well being.
Speaker 4: Yeah, for sure.
Speaker 1: Or we've got more to get to, just a few
Speaker 1: more questions. Is with Darryl Fairwell. Featherwa with Darryl Fairweather
Speaker 1: about how economics impacts every area of our lives. We'll
Speaker 1: get to that right after this.
Speaker 2: All right, we are back from the break with Darryl Fairweather,
Speaker 2: her book Hate the Game Economic cheat Codes for Life,
Speaker 2: Love and Work. And I will say they're not necessarily
Speaker 2: cheat codes. Like what you're doing in the book is
Speaker 2: you're essentially you're like laying out the rules of these
Speaker 2: different games so that we can quite clearly identify how
Speaker 2: to actually win in these games. So it's not like
Speaker 2: I don't know, sometimes folks here cheat code no game Genie, Yeah, yeah,
Speaker 2: game Genie is like totally cheating, like you're not playing
Speaker 2: the game at all. You've like short not shortcut, like yeah,
Speaker 2: like hot wired the game, as opposed to clearly focusing
Speaker 2: on the pieces of data that are going to move
Speaker 2: the needle of the most Daryl. But in the book
Speaker 2: you discuss obviously these different major life changes like moving
Speaker 2: to a new city, and and essentially it seems like
Speaker 2: you're saying that folks on the fence are typically better
Speaker 2: off getting off the fence making the change. Can you
Speaker 2: explain why that is.
Speaker 3: Yeah, there's a bias in behavioral economics called the status
Speaker 3: quo bias, which is that it's been well documented that
Speaker 3: people tend to stick with whatever situation they're in. I
Speaker 3: talked about this a little bit before. How when you
Speaker 3: feel like you own something, you value it more. Well,
Speaker 3: the same is kind of true for the neighborhood that
Speaker 3: you live in. If you grew up in a certain neighborhood,
Speaker 3: you live in a certain neighborhood, you might think it's
Speaker 3: better than other neighborhoods out there, but you wouldn't really
Speaker 3: know unless you make the leap of faith and make
Speaker 3: a change. So I think if you're even if you're
Speaker 3: even contemplating moving cities, it's definitely worth exploring. And if
Speaker 3: you're on the fence, just go for it, because for
Speaker 3: most people, they are subconsciously holding themselves back from better
Speaker 3: opportunities because of that fear of the unknown and the
Speaker 3: status quo bias.
Speaker 2: So not just moving, but would you say that applies
Speaker 2: to I guess a lot of the diferent decisions in
Speaker 2: our life, the fact that status quo or the endowment
Speaker 2: effect that that is maybe weighing heavier on people's decision
Speaker 2: making processes than to even realize.
Speaker 3: I think for the average person, yes, you know, I
Speaker 3: know that there are people out there who maybe struggle
Speaker 3: with impulsivity and they feel like this is the exact opposite.
Speaker 3: They need to stop making so many changes. But I
Speaker 3: think the average person is resistant to change and it's
Speaker 3: holding them back from better opportunities.
Speaker 1: You also highlight in the book the concept of permanent income,
Speaker 1: which is the assumption of future earnings, and you say
Speaker 1: that that also impacts our money decisions how so well.
Speaker 3: The permanent income hypothesis is this idea that if you
Speaker 3: knew how much income you're going to live over your life,
Speaker 3: then you would be able to borrow against your future
Speaker 3: income and smooth out your consumption. So instead of eating
Speaker 3: ramen noodles as a poor college student, you would recognize
Speaker 3: that in the future you're going to be making more money,
Speaker 3: so why not you know, spend money on an actual
Speaker 3: meal instead of like making things harder for yourself. The
Speaker 3: part about the permanent income hypothesis is that I think
Speaker 3: people are afraid of that worst case scenario where they
Speaker 3: didn't end up, you know, getting the job after college
Speaker 3: that led to higher earnings, and they wish they really
Speaker 3: didn't spend or go into debt earlier on. But the
Speaker 3: idea is that you know, on average, people do earn
Speaker 3: more money over their lifetimes, and they should spend more
Speaker 3: when they're young, they should save when they're older, and
Speaker 3: then they have to spend down that retirement savings when
Speaker 3: they're in their later years.
Speaker 1: You just don't know, though. It was only we knew
Speaker 1: knew the future? Was it the white paper from Yale?
Speaker 1: Was it James Troy? Maybe they wrote that about kind
Speaker 1: of how how he was advocating for people to spend
Speaker 1: more early on and be willing to take on more
Speaker 1: debt because of this kind of permanent income hypothesis, saying
Speaker 1: that like hey, no, no, no, you just smooth out the
Speaker 1: ride a little bit in your living standard and it's
Speaker 1: it's all going to be okay. But yeah, when you
Speaker 1: factor in the realities of life that layoffs happen, or
Speaker 1: you know, even something like a hike in interest rates happen,
Speaker 1: and your credit card debt now is worse than it was,
Speaker 1: or your home equity line of credit payment has gone up.
Speaker 1: Like those are the kind of things that are harder
Speaker 1: to predict. So there, I think there are second order
Speaker 1: consequences to just assuming future income too, or assuming future races, right.
Speaker 3: Yeah, I think that the downsides can be quite severe,
Speaker 3: especially for people who don't have good safety nets. If
Speaker 3: you know, losing income would mean that you're out, you
Speaker 3: can't pay your rent, and you have nowhere to go,
Speaker 3: then like you have a different risk tolerance and somebody
Speaker 3: who can rely on their parents or can move back home.
Speaker 3: So I think for people who are worried about spending
Speaker 3: a lot when they're young, those those fears can be founded.
Speaker 3: And if it's having the psychological toll on you not
Speaker 3: having enough in savings, then I think that in and
Speaker 3: of itself is justified. Like if if you just feel
Speaker 3: better having money in your savings account, then like, go
Speaker 3: for it. You don't know, nobody should be telling you
Speaker 3: to spend more.
Speaker 2: Well, that feeling in your gut like that in and
Speaker 2: of itself should be a data point that you pay
Speaker 2: attention to. It's not just about like these external factors.
Speaker 2: It's just also and it's hard to quantify. But how
Speaker 2: how do you feel about this asision?
Speaker 4: Yeah?
Speaker 2: Because if you constantly are at feel like you're at
Speaker 2: odds with what your gut's telling you, then I don't
Speaker 2: think that's necessarily any way to live either, Darrel. You
Speaker 2: also admit, like you're talking about spending or saving up
Speaker 2: for retirement, you talk about stock picking, and you basically
Speaker 2: compare it to like a beauty like a beauty contest game.
Speaker 2: Can you share the correlation here between the two.
Speaker 3: Yeah. So there was this old game that used to
Speaker 3: appear in newspapers like kind of like just a fun thing,
Speaker 3: like a lottery kind of game, where you'd write in
Speaker 3: your answer and maybe win a prize. And the idea
Speaker 3: was to pick the picture of the woman that everybody
Speaker 3: else was going to select as the most beautiful. So
Speaker 3: instead of picking the picture that you personally thought was
Speaker 3: the most beautiful, you're trying to pick the one that
Speaker 3: everybody else is going to pick. But everybody else is
Speaker 3: also going through that same exercise of what else is
Speaker 3: everybody going to pick? I want to align on that.
Speaker 3: And it's very similar to the stock market because you're
Speaker 3: not necessarily picking the stock that you like the best.
Speaker 3: You're picking in the stock that you think everybody else
Speaker 3: is going to like in the future, and it's going
Speaker 3: to go up in value. What happens in the actual
Speaker 3: beauty contest game is that you know people the best
Speaker 3: answer is not like the one that kind of goes
Speaker 3: through too many lines of logic. If you reduce the
Speaker 3: there's a way to reduce the problem to like something
Speaker 3: mathematical and basically economists have shown that ideally, you just
Speaker 3: want to think about like two degrees of separation, like
Speaker 3: what does my opponent think about me, and then just
Speaker 3: end it there. You don't want to keep going on
Speaker 3: and on forever, like well, if this happens, or if
Speaker 3: that happens, or what are they think exactly? Sometimes overthinking
Speaker 3: can be too much, and I think that's also just
Speaker 3: a great reason to maybe not play the stock market
Speaker 3: because it's just requires too much thinking and just kind
Speaker 3: of play the averages and pick an index fund instead.
Speaker 1: With you on that, Darryl on that Wise notes, we'll
Speaker 1: lend this conversation. Thank you so much for taking the
Speaker 1: time to join us work in how to money listeners
Speaker 1: find out more about you and find out more about
Speaker 1: your new book.
Speaker 3: Well, you can buy my book in any bookstore or
Speaker 3: on any of the online platforms, and you can find
Speaker 3: me on all the social media. I'm at Fairweather PhD
Speaker 3: on Instagram and that's my handle pretty much everywhere.
Speaker 2: Nice, we'll link to all of that, Darryl, Thanks so
Speaker 2: much for making the time for us today. Thank you
Speaker 2: all right, man, that was a good combo with old
Speaker 2: Darryl Fairweather. Yeah, it was. And she's not old. She's
Speaker 2: younger than us.
Speaker 1: Man, She's young, she's smarter, and I thought I thought
Speaker 1: her book was really insightful.
Speaker 4: What was your big takeaway from this conversation.
Speaker 2: It said, the whole first segment or first section, we
Speaker 2: talked about housing and when it comes to first time
Speaker 2: home buyers and how it is that they should be
Speaker 2: thinking about buying a home. She put the two parts
Speaker 2: of home buying in the right order, which is that
Speaker 2: what needs to happen first is you need to be
Speaker 2: thinking about it a whole lot before you get out there,
Speaker 2: before you go shopping. Then you can start looking. But
Speaker 2: the problem is most people start because of the ease
Speaker 2: that the apps make it. Unfortunately, and just like the
Speaker 2: wander lust that takes place with just oh, let's go
Speaker 2: let's see what houses are for sales browse first. Yeah,
Speaker 2: and I think there is a lot less of that
Speaker 2: going on than obviously there was over the past four
Speaker 2: years during the pandemic, but there does seem to be
Speaker 2: this sort of holdover, this kind of carryover effect of
Speaker 2: that where folks are looking, they're falling in love with
Speaker 2: a property with a house before they even know what
Speaker 2: it is that they can afford. They haven't looked at rates,
Speaker 2: they haven't decided how long that they're going to actually
Speaker 2: stay in that house.
Speaker 4: I don't know what the average price per square foot
Speaker 4: is for a house in an oh No.
Speaker 2: And so she is trying to deemotionalize the conversation from
Speaker 2: square one. Let's get analytical about it and then let's
Speaker 2: get out there and start looking. And I think that
Speaker 2: that can be just a helpful matrix and decision making
Speaker 2: process when it comes to especially for some home buyers
Speaker 2: who are getting out there for the first time looking
Speaker 2: at housing.
Speaker 4: Yeah. Yeah, that was my big takeaway how about you.
Speaker 1: Okay, so that was potentially gonna be mine, so oh sorry,
Speaker 1: ill here. And I like when she was talking about
Speaker 1: marriage and kind of the the economic reality of marriage
Speaker 1: and how you have to kind of talk about the
Speaker 1: things planned for those things ahead of time, and that
Speaker 1: is something as someone who's very interested in personal finance
Speaker 1: and saw personal finance as an issue in my parents' marriage,
Speaker 1: that was something I was a little more proactive about,
Speaker 1: largely just because I'd seen the way I can bite
Speaker 1: you in the butt if you're not. And also, let's
Speaker 1: be honest, even if your plans, you can't always. Sometimes
Speaker 1: things that are worse than your plans come to pass
Speaker 1: and you can't necessarily prevent that. But I was just
Speaker 1: thinking too about the prioritization of careers. I think that's
Speaker 1: a really especially in today's environment, a lot of two
Speaker 1: income households. You have to talk about that with your partner. Hey,
Speaker 1: for right now, like my job's on the front burner,
Speaker 1: yours is on the back. You're dealing with more house duties.
Speaker 1: And right now Emily and I are in this position
Speaker 1: of flip flopping where her career is kind of taking
Speaker 1: front and center role in our family. And that's a
Speaker 1: good thing. And I'm glad we've been able to have
Speaker 1: this conversation. And it's not that I'm bowing out of
Speaker 1: how to money or I'm completely uninterested in doing this
Speaker 1: podcast anymore, but it's just I love that I get
Speaker 1: to be in a little bit more of a hands
Speaker 1: on supportive role at the house too, and so that
Speaker 1: that will be something that I think ebbs and flows
Speaker 1: for a lot of couples over their career lifetime, in
Speaker 1: their marriage lifetime. Yeah, but it's something that having I
Speaker 1: think those conversations proactively and saying, hey, what whose era
Speaker 1: is this right now? And then when does my era
Speaker 1: kick in? Where I get to kind of put the
Speaker 1: pedal to the metal. I think I can prevent a
Speaker 1: lot of arguments or hard feelings.
Speaker 2: I love it, dude. Yeah, I feel like y'all have
Speaker 2: demonstrated that well. The beer that you and I enjoyed
Speaker 2: during this episode was an argyle. This is the Raspberry
Speaker 2: Key Lime Sour by Contrast Artists and Ales. What your thoughts, buddy,
Speaker 2: So still get a little more in here on a port.
Speaker 1: I think this is my favorite beer I've had from
Speaker 1: Contrast to this point. Oh yeah, I really like this one.
Speaker 1: It's because it's raspberry.
Speaker 2: It's because it's raspberry. So I pick this one's up specifically.
Speaker 2: And I saw that I had raspberry, I was just like,
Speaker 2: there's no way that Joel's not gonna enjoy it.
Speaker 1: I mean, I love love raspberry beers and raspberry key lime.
Speaker 1: I gotta say it's my jam, Like I dig this
Speaker 1: so I like the combo of flavors in this one,
Speaker 1: and it's it's pretty tart, not overly tart, but very
Speaker 1: very fruity.
Speaker 4: I dug it.
Speaker 2: It's got the I think more beers need to have
Speaker 2: lime in them. Lime, I think is a highly underrated citrus. Lately,
Speaker 2: I've been putting more lime in my cocktails. You know.
Speaker 4: The that beach Fire cocktail that.
Speaker 2: I created started out as made his own cocktail people.
Speaker 2: Started out as a whiskey sour, but which is typically
Speaker 2: you make that with a lemon, and I'm like, I
Speaker 2: don't like the lemon sour though, and that you start tweaking,
Speaker 2: and I'm like, oh, wait a minute, what if I
Speaker 2: switch it to lime? All of a sudden, I love
Speaker 2: it so much more. Make some other changes, as some
Speaker 2: smoky scotch and boom. You know, you get yourself a
Speaker 2: own signature cocktail. Yeah, but no that the raspberry in
Speaker 2: this actually kind of remind me of Cantitione. And I
Speaker 2: know that you're gonna cry. Here's the that this is
Speaker 2: not something that should ever be said. But something about
Speaker 2: that funky raspberry, man, it makes me think of those
Speaker 2: some of the greatest beers in the world. I'm not
Speaker 2: going to say it's I'm not your friend anymore. You
Speaker 2: can't compare any beer to Canti because it's its own.
Speaker 2: I guess I think of that anytime I have a
Speaker 2: raspberry sour because of the fact that so many of
Speaker 2: the beers that you've shared with me that were either
Speaker 2: Trefontaine or Katie Yone, they were raspberry.
Speaker 4: That was the fruit, raspberry, cherry.
Speaker 1: Gosh, any fruited sours that those guys make, they're literally
Speaker 1: the best beers in the world.
Speaker 4: Yeah, I mean quite literally.
Speaker 1: I throw down the collin to the American Brewery to
Speaker 1: do better than those guys do.
Speaker 2: But this is great, a total summertime sour kind of
Speaker 2: style beer that's super easy to drink.
Speaker 4: Most stuff really delicious. Right.
Speaker 1: We'll put links to Daryl's book and a few of
Speaker 1: the other resources we mentioned in this conversation up on
Speaker 1: our website at how tomoney dot com. You can find
Speaker 1: them in the show notes there, along with some other
Speaker 1: helpful resources to give you advice and encouragement in your
Speaker 1: money journey. They all live there all the time on our.
Speaker 2: Website, you know what. So until next time, buddy, best
Speaker 2: friends out, Best Friends Out.