Speaker 1: Welcome to How to Money. I'm Joel and I am Matt,
Speaker 1: and today we're talking about free cell service for real,
Speaker 1: free phantom debt, and politicized investing.
Speaker 2: Yeah, not just politicized investing, partisan investing, which is like
Speaker 2: the worst kind of politics.
Speaker 1: But the Libertarians they're like two percent. They don't really
Speaker 1: have any options. It's true.
Speaker 2: This is our Friday flight where we're going to cover
Speaker 2: the best stories that we came across this week and
Speaker 2: how they pertain to your personal finances. Okay, Joel, I've
Speaker 2: got a question for you. I've got a frugal or
Speaker 2: cheap So this time of year it's spring, obviously, and
Speaker 2: around where we live, mulberry trees are. I was going
Speaker 2: to say they're in full bloom. They're not in full boom.
Speaker 2: The berries all are at like peak ripeness right now,
Speaker 2: which means that a lot of sidewalks, a lot of paths,
Speaker 2: or like the little road path thing that I take
Speaker 2: to work, it's littered.
Speaker 1: With these berries. You're stepping all over them.
Speaker 2: It's kind of a mess. Honestly, I wear white tennis.
Speaker 1: Shoes these days.
Speaker 2: It gets on the shoe and messes it up. A
Speaker 2: little purple But my question, my frugal or cheap for you,
Speaker 2: is what are your thoughts of eating berries that don't
Speaker 2: belong to you specifically, like this is public property, or
Speaker 2: even if it's not public, I guess like it's it's
Speaker 2: very clear that these are berries that aren't that aren't
Speaker 2: being taken advantage of.
Speaker 1: Dude just coming into my backyard. I've got plenty.
Speaker 2: Yeah, you've got one over there too, back there with
Speaker 2: the chickens.
Speaker 1: Right yeah, they're eating them where my kids are eating them.
Speaker 2: I got some healthy, antioxidant chickens right now. They're feeling
Speaker 2: real good, exactly. I was feeling really good. So I
Speaker 2: did this yesterday morning walking to work. It had just rained,
Speaker 2: so there's like this nice natural bath, like the rain
Speaker 2: water was kind of dripping off the berries a little bit,
Speaker 2: and so I stopped actually rinsed. Yeah, I stopped, and
Speaker 2: I started chowing down, and I figured this is totally fine.
Speaker 2: But somebody drove past and honked at me, and I
Speaker 2: thought it maybe it was a friend, but I didn't
Speaker 2: recognize the car. So I'm like, no, it's surely somebody
Speaker 2: didn't at me for gettinger for picking berries off the tree.
Speaker 2: Like it's kind of weird to do that, I guess,
Speaker 2: but I want to know your thoughts.
Speaker 1: Frugal or cheap. I think it's I think it's proble.
Speaker 1: I think it's fine good. I mean, most of those
Speaker 1: mulberries are going to waste. The birds are getting some,
Speaker 1: but a lot of them. Like you said, you're all
Speaker 1: over the sidewalks. The sidewalk, so eat some, maybe pick
Speaker 1: a bunch and make a pie or something like that.
Speaker 2: Well, I guess theoretically the problem that poses is the
Speaker 2: tragedy of the commons, right, Like, you've got this common
Speaker 2: shared resource enough, more more people descend upon it than
Speaker 2: it's capable of supporting. You got a problem on your hand.
Speaker 1: You're the only person I know but nobody does that.
Speaker 1: We've been picking them in our backyard a little bit,
Speaker 1: but we still have more than we need. So I
Speaker 1: think if that becomes a problem, we can rethink it.
Speaker 1: But I think for the time being, I'm glad you're
Speaker 1: for it. Feel freey crambl what you need.
Speaker 2: There's a do you know outside of the library that
Speaker 2: we go to as well. We're huge fans of the
Speaker 2: local library. Ever had service berries? So you've got mulberries
Speaker 2: in your backyard. You've got a big sweet tree serveerries.
Speaker 2: It's kind of like a bush tree looking thing, and
Speaker 2: they're these little round berries as well. They're also at
Speaker 2: peak berry season. I don't know what you go it,
Speaker 2: but if you go to the library, you look for
Speaker 2: him on the side there, right near the entrance, and
Speaker 2: you can like literally last we were there a few
Speaker 2: days ago, and uh, I mean me and the kids.
Speaker 2: We chow chowed down for like two or three minutes
Speaker 2: just eating them, and.
Speaker 1: Only can you get free books.
Speaker 2: You a certain point, I said, let's let's move on.
Speaker 2: Let's in case somebody else wants to stop and snack
Speaker 2: on them as well. But I don't know, I'm off
Speaker 2: for it.
Speaker 1: The one case in which it would be I think
Speaker 1: cheap instead of rugal is if you don't know what
Speaker 1: kind of berries are good and which ones aren't. Oh yeah,
Speaker 1: you don't want to be like Peta in the Hunger
Speaker 1: Games eating the night lock when you're not supposed to that.
Speaker 1: Yeah yeah, you don't want to do bodily damage to
Speaker 1: yourself by eating the wrong berries, the ones that you
Speaker 1: know might upset your tongue.
Speaker 2: You're such a fan of Susanne Collins.
Speaker 1: Yes, you know, the movies were solid. I haven't seen
Speaker 1: the new one though. I think was it a prequel?
Speaker 1: Oh yeah, it was like the backstory. Yeah, I haven't
Speaker 1: seen it. President Snow Yeah yeah, yeah, Well maybe somebody
Speaker 1: else check that out.
Speaker 2: There's a bun, all right. Declared it frugal, not cheap.
Speaker 1: And whenever I say ghosts, Matt as everyone knows. All right.
Speaker 1: Let's move on. Let's get to the stories we found
Speaker 1: interesting this week. We call it the Friday Flight Matt.
Speaker 1: Let's start off by talking about that free cell service story.
Speaker 1: The cost on cell phone service has been dropping like
Speaker 1: a rock over the years. If you look at a
Speaker 1: one of those charts of inflation, it's like healthcare and
Speaker 1: higher education costs skyrocketing.
Speaker 2: Yeah, we talked about that this past week, yep, with
Speaker 2: Ryan Craig.
Speaker 1: That's right. But while those costs have gone up in
Speaker 1: a big way, there are other costs that have gone down.
Speaker 1: Talk about big screen TVs. I want to say those
Speaker 1: have dropped like ninety seven percent in the price. Yeah,
Speaker 1: it's ridiculous. But something else has gone down in price
Speaker 1: has been cell phone service. Think about what you used
Speaker 1: to pay ten twelve years ago. We've been highlighting this
Speaker 1: movement regularly because the savings can be tremendous, right if
Speaker 1: you opt for one of our low cost favorite providers.
Speaker 1: I've actually got an article on the best m v
Speaker 1: and o's mobile virtual network operators up on our site.
Speaker 1: We'll post that in the show notes for this episode.
Speaker 2: But what if you're already low.
Speaker 1: Fifteen to twenty five dollars a month bill went away
Speaker 1: completely went all the way to zero? Whoah, that'd be nice, right,
Speaker 1: But is it possible or is that like pie in
Speaker 1: the sky. Well, I'm not going to say that it's
Speaker 1: a perfect solution, but really it might be possible if
Speaker 1: you're willing to jump through a few hoops. Text Now
Speaker 1: is a free, ad supported phone service that used to
Speaker 1: only offer free text and call. So basically, sorry, no data,
Speaker 1: but if all you care about is texting and calling,
Speaker 1: you don't use data anyway. Hey, it was a good solution,
Speaker 1: but now they've announced they're including a little bit of
Speaker 1: data as well to run the most important apps like maps, email,
Speaker 1: and ride share. Basically, you can only use apps that
Speaker 1: use very little data, so they're not going to allow
Speaker 1: you to watch YouTube on the go or stream your
Speaker 1: favorite podcast.
Speaker 2: You can sit down with text now and play Fortnite
Speaker 2: right likely none.
Speaker 1: Of that stuff like candy Grass. Sorry not till you
Speaker 1: get home, but heck, I mean, you can download a
Speaker 1: lot of things ahead of time right when you do
Speaker 1: have that Wi Fi connection. Text Now runs on t
Speaker 1: mobiles backbones, so it's not like it's on some you know,
Speaker 1: janky Provider or anything like.
Speaker 2: That, same as Mint Mobile. That's right, I mean, and
Speaker 2: it works great for us. So Joe, you could give
Speaker 2: this a shot.
Speaker 1: I really might. The reviews are mixed on Reddit, so
Speaker 1: I will say, like I want you to try it out.
Speaker 1: You have to go through a specific text now app.
Speaker 1: You can't use your traditional calling and texting apps most
Speaker 1: of the time, so don't shoot the messenger if you
Speaker 1: try it and you're like, this sucks you guys gave
Speaker 1: a terrible recommendation. But I do think for some ultra
Speaker 1: frugal folks, Matt, this might at least be worth a shot.
Speaker 1: If you're like, no, I'm totally down to saving extra
Speaker 1: two hundred bucks a year, I don't mind making my
Speaker 1: life a little more difficult for that kind of savings.
Speaker 1: Text now is totally worth looking.
Speaker 2: It makes sense that they have to do it within
Speaker 2: the app right, like you need something to be able
Speaker 2: to you need a medium to be able to deliver
Speaker 2: the ads on per Right. Personally, though, I'm like I can't,
Speaker 2: I can't get behind it. And you know, I spent
Speaker 2: some time thinking about this and I was like, what
Speaker 2: about that do I dislike? Because I'm not against advertising.
Speaker 2: I literally was an advertising major. I thought I was
Speaker 2: gonna be an ad man, like I worked for an advertising agency.
Speaker 2: I worked as a designer.
Speaker 1: You're like, Don Draper fifth two years later.
Speaker 2: Well, it was funny is that that whole series came
Speaker 2: out like after I quit advertising, and it kind of
Speaker 2: made me want to like get back into it because
Speaker 2: they certainly glamorized that that type of life and not
Speaker 2: something not a path I wasna I was gonna go down.
Speaker 2: But it got me thinking again about advertising. And what
Speaker 2: I realized was that something like cell phone service feels
Speaker 2: more like a utility to me, So it would be
Speaker 2: the equivalent in my mind almost of like your electricity
Speaker 2: company or your water company being like, oh yeah, you can,
Speaker 2: you can pay a reduced fee when it comes to
Speaker 2: how much you pay for your utility. But we're gonna
Speaker 2: spam you with that. I don't know how they would
Speaker 2: do that, like as they're delivering the electricity or the
Speaker 2: water or something like that. But you compare that to
Speaker 2: something that feels more consumption based, like a TV show
Speaker 2: or a magazine, right like the glass you know that
Speaker 2: all that, Like magazines are chock full of ads. Nobody
Speaker 2: bats and eyelash at that sports even like on the sidelines,
Speaker 2: or even like the naming rights to different stadiums. You
Speaker 2: are trading off the entertainment with the ability to all right,
Speaker 2: I'm consumer for free exactly as opposed to something like
Speaker 2: cell phone service, which to me and more and more,
Speaker 2: I think for a lot of folks it does feel
Speaker 2: a little bit more like utility. Like that's the part
Speaker 2: of it that I have a hard time getting behind.
Speaker 2: I think it's going to make its treaty the prices.
Speaker 1: The price is already pretty low. So if we're talking
Speaker 1: about going from like eighty bucks a month to zero
Speaker 1: dollars a month, I might be willing to jump through
Speaker 1: the hoops because that's a that's a substantial savings. But
Speaker 1: when I'm talking about one hundred and fifty to one
Speaker 1: hundred and eighty bucks a year. I guess based on
Speaker 1: what I currently pay. Yeah, I'm probably not going to jump.
Speaker 2: Through those I'm not going to hate on somebody if
Speaker 2: they want to do that. If they're looking to like
Speaker 2: one hundred percent fully optimized from a financial standpoint, hey man,
Speaker 2: more power to you.
Speaker 1: I think one of the things that this might actually
Speaker 1: work for is for parents who have a kid, And
Speaker 1: part of the appeal isn't necessarily just it being free,
Speaker 1: but it's them not having access to data on the go.
Speaker 1: And so you might say, listen, I was hoping that
Speaker 1: my thirteen year old would would be able to get
Speaker 1: their first cell phone. Gosh, I don't necessarily want to
Speaker 1: pay two hundred bucks a year for them to have access,
Speaker 1: But I also don't want them to have unlimited access
Speaker 1: to data either, So maybe this is the perfect solution.
Speaker 1: They can text you, they can call you, and you're
Speaker 1: not going to pay a dollar for it either. Or
Speaker 1: I guess you pay one dollar for the SIM card.
Speaker 1: That's okay.
Speaker 2: So it's almost if you want to run a little
Speaker 2: test experiment on your kids, go for it.
Speaker 1: Turn your kids into guinea pigs. I'm in favor of it,
Speaker 1: all right, let's talk about debt for a second, Matt.
Speaker 1: You know, we're back to doing what we do best
Speaker 1: here as Americans spending money. We don't have that debt.
Speaker 1: And unfortunately, I know, debt and delinquencies are on the
Speaker 1: rise in the good old US of a. The overall
Speaker 1: debt load, it's not going up at like an incredibly
Speaker 1: rapid clip or anything like that, but new stats reveal
Speaker 1: that more folks are missing bill payments, with more than
Speaker 1: three percent of bills being overdue this past quarter. So
Speaker 1: people are behind on their payments Matt, that they would
Speaker 1: normally be making on time. And it's not some cause
Speaker 1: for macroeconomic alarm or anything like that. But credit card delinquencies,
Speaker 1: for instance, they haven't been this high since like twenty twelve,
Speaker 1: so it's been more than a decade since we've seen
Speaker 1: them rising at the pace they are and getting to
Speaker 1: the levels that they're currently at. It sure seems like
Speaker 1: we're having a tough time coming down from basically a
Speaker 1: post stimmy spendings pretty high, Like people got a lot
Speaker 1: of money thrust to their bankinghouse, they start spending, they
Speaker 1: spend that money down and they're like, I want to
Speaker 1: keep spending like that, and because of that, they're going
Speaker 1: into debt trying to keep that pace up. And student
Speaker 1: loan servicers, by the way, they're not even reporting late
Speaker 1: payments right now until the fall, so it's not even
Speaker 1: like that's factoring in. If people haven't been paying, they're
Speaker 1: not current on their student loans. Well, guess what, that's
Speaker 1: not impacting you in this way.
Speaker 2: Yeah, it seems like things are going to get.
Speaker 1: Worse later this year. It's a warning sign on the horizon,
Speaker 1: I think, showing that we are seeing increasing signs of
Speaker 1: financial distress and we just don't want our listeners to
Speaker 1: be a statistic in kind of that rising tide of
Speaker 1: people who find themselves behind on their payments. Totally.
Speaker 2: Yeah, and this is particularly a problem for gen Z.
Speaker 2: This is according to new data from trains Union. But
Speaker 2: not only are more young folks graduating with higher levels
Speaker 2: of student loan debt, they're also relying on credit card
Speaker 2: debt more as well. And even after adjusting for inflation,
Speaker 2: the average twenty two to twenty four year old today
Speaker 2: has six hundred dollars more in credit card debt than
Speaker 2: that same age group did a decade ago. And it's
Speaker 2: certainly true that rising costs for everything from groceries to
Speaker 2: rent to gas. They have had large impacts. Inflation is
Speaker 2: still well over three percent, but it's also true that
Speaker 2: it is easier to spend than ever before. And in
Speaker 2: this case, the problem isn't just inflation.
Speaker 1: It's us.
Speaker 2: It's the folks who are making the decision to purchase
Speaker 2: all the stuff, and those simultaneous trends are making it
Speaker 2: harder for gen Z specifically to get ahead financially.
Speaker 1: It's not like inflation's not still a headwind. It is,
Speaker 1: but it's also true that we are our own headwind, Like, yes, doubling.
Speaker 2: Our own worst enemy. Like both of these things are
Speaker 2: working against us, but only one of them do we
Speaker 2: personally have the ability to control.
Speaker 1: Yeah, only one of them is self imposed. Yeah, and
Speaker 1: so yeah, it's really important to pay attention to that.
Speaker 1: And again, yeah, you can blame circumstances, and it's not
Speaker 1: that there isn't some truth to that, but we're also
Speaker 1: responsible for those actions of getting into debt at a
Speaker 1: higher rate, especially when we're talking about where interest rates
Speaker 1: stand right now, Matt, We're harming our own financial future
Speaker 1: and future US is going to have to pay down
Speaker 1: these debts and when we're talking about credit cards, we're
Speaker 1: talking about high interest rates too, and that's not even including,
Speaker 1: by the way, what's known as phantom debts from buy now,
Speaker 1: Pay Later companies, specifically that doesn't get reported to the
Speaker 1: credit bureaus and it's hard to account for. There were
Speaker 1: new statistics on that front this week too, and they
Speaker 1: found that twenty eight percent of folks find themselves delinquent
Speaker 1: on other debts because they overdid it on buy now,
Speaker 1: Pay Later purchases. So basically, they got a little trigger
Speaker 1: happy on the website, on their favorite retailer site, and
Speaker 1: they opted to buy stuff, buy more than they could
Speaker 1: actually afford, and so it's causing them to fall behind
Speaker 1: on other bills. And then forty three percent of folks
Speaker 1: who owe money to one of the buy now, Pay
Speaker 1: Later companies like a Firm or Klarna, they're behind on
Speaker 1: their payments to those companies too. Pulling from Harris also
Speaker 1: found that more than half of respondents who use by
Speaker 1: Now Pay Later said it allowed them to purchase more
Speaker 1: than they could afford. Well, nearly a quarter agreed with
Speaker 1: the statement that they're by Now Pay Later spending was
Speaker 1: out of control. So by Now pay later is something
Speaker 1: we have warned against because the behavioral impacts and the
Speaker 1: downstream money impacts that can have on your life. We
Speaker 1: just think that by now pay Later has so many
Speaker 1: serious downsides that it's not worth even considering. We think,
Speaker 1: though credit cards can be a tool, right, they can
Speaker 1: be useful, or they can bring misery, by now pay
Speaker 1: Later only seems to be causing folks to buy more
Speaker 1: than they otherwise would, and it leads to meaningful money problems,
Speaker 1: like they're starting to keep up.
Speaker 2: With Like that's the thing because with by now pay Later,
Speaker 2: it's like each transaction is in a sense, its own
Speaker 2: credit card, it's its own lane of credit, and you've
Speaker 2: got those payments and I feel like they can they
Speaker 2: don't compound, but they just they build up really quickly. Yeah,
Speaker 2: and it's just difficult to manage and to keep up
Speaker 2: with all of that.
Speaker 1: And you're like, when did I buy with that? And
Speaker 1: like how many okay, how many loans do I currently
Speaker 1: have exactly Karna, Yeah, and there's now a few of
Speaker 1: those services that are proliferated to and you're like, I
Speaker 1: think I've got some with a firm also, and it
Speaker 1: just it gets out of control. Real quick, really quickly.
Speaker 2: And you know you mentioned using credit cards like a tool.
Speaker 2: The FTC, the Federal Trade Commission, they're actually even telling
Speaker 2: us to pay with credit cards, and that's because of
Speaker 2: the protections that they offer. They put out a consumer
Speaker 2: alert earlier this week about fake ads on social media
Speaker 2: with what they called too good to be true pricing,
Speaker 2: and their investigation found that a lot of fake companies
Speaker 2: out there are posting pretty compelling ads. You know, you
Speaker 2: see that as a consumer, you click it to buy,
Speaker 2: and what happens is you either get nothing or you
Speaker 2: end up with a counterfeit item, and depending on how you.
Speaker 1: Paid, you might be out of luck.
Speaker 2: Jil, I feel like you might have been thinking this
Speaker 2: would happen when you went to like Ralph's Backpacks and
Speaker 2: where you bought that like a sketchy website.
Speaker 1: It was al sporting Goods.
Speaker 2: Okay, yeah, close enough, but you're like, I'm not sure
Speaker 2: if this backpack is going to show up. But hey,
Speaker 2: a couple of weeks later, the backpack showed up. You
Speaker 2: were good to go.
Speaker 1: Was it was almost a month later? Was it a month?
Speaker 1: It was so long? Oh my god, but it was.
Speaker 1: But it turned out it was a legit store, and
Speaker 1: I was like, you know what, I can least, hey,
Speaker 1: I can feel confident making the just because I'm making
Speaker 1: it with a credit card. With any other form of payment,
Speaker 1: I would not have felt okay, I would have gone else.
Speaker 2: I have the ability to dispute the charge when you
Speaker 2: are using a credit card like that, paying any other way, Yeah,
Speaker 2: it just leaves you incredibly vulnerable. And so because of that,
Speaker 2: we really like credit cards. We love the benefits they offer,
Speaker 2: the secondary benefits, we love the cash back and the points.
Speaker 2: Huge fans of that. We'll link to an article in
Speaker 2: the show notes that talk about how we like to
Speaker 2: use credit cards. But that being said, you didn't make
Speaker 2: sure that you are using them wisely.
Speaker 1: Yeah, and roughly half of people do. Something like fifty
Speaker 1: percent of people pay their balance on time and unfill
Speaker 1: every single month. Other fifty percent do not. And those
Speaker 1: are the people, Matt, who are subsidizing the rewards of
Speaker 1: people like you and me. And it's not because we're
Speaker 1: enamored with the system, but it's the system. That's that's
Speaker 1: how it works right now. And because that's how it works, like,
Speaker 1: play the game, but play it properly and don't let
Speaker 1: yourself get in over your heels with credit card debt, because, yeah,
Speaker 1: I'm amazed at the casual reference that people will throw
Speaker 1: around sometimes to having credit card debt. And I think
Speaker 1: of it as like a pants on fire situation, like
Speaker 1: I'm stop dropping and roll. Man, I'm getting rid of
Speaker 1: that thing right away. But some people feel they start
Speaker 1: to feel comfortable keeping that credit card dead around. That's
Speaker 1: a bad place to be, right, I do not want
Speaker 1: to carry that balance, Yeah, especially with two twenty four
Speaker 1: percent interest. That will mess you up. Let's also talk
Speaker 1: about caps on credit card late fees, right, they were
Speaker 1: supposed to go into effect earlier this week. We talked
Speaker 1: a bit about this not too long ago on the show,
Speaker 1: but not going to happen at least for the time being.
Speaker 1: A federal judge in Texas blocked this new CFPB rule
Speaker 1: at least for the time being. Instead of reduced to
Speaker 1: eight dollars late fees, I think it was supposed to
Speaker 1: be implemented on Tuesday. Well, they can stay at roughly
Speaker 1: four times that level for the time being. I think
Speaker 1: the max late charge is forty one bucks. That means
Speaker 1: that not paying your credit card bill on time, which
Speaker 1: is a massive no. No, of course in our book,
Speaker 1: is still going to cost you a lot more. But
Speaker 1: whether the late bee is egregious or not, we never
Speaker 1: want you to pay it. I don't care if it's
Speaker 1: eight dollars or forty dollars. Don't pay a late fee, please.
Speaker 2: It almost doesn't matter if they charge like one thousand
Speaker 2: dollars for the late fee is either way, we don't
Speaker 2: want you paying it, right, Yeah, and they.
Speaker 1: Charge you one thousand bucks, like if you if you
Speaker 1: mess that up, like obviously that's gonna be a massive hindrance,
Speaker 1: but still hopefully that bigger stick would cause you to
Speaker 1: do the proper thing for your finances. Right, And even
Speaker 1: though your late fee might be smaller in the future,
Speaker 1: you're still doing significant damage to your credit score by
Speaker 1: paying late. So it's not just the fee, it's the
Speaker 1: fact that you're hindering your credit score, which impacts so
Speaker 1: many other areas of your personal finance, as we talk
Speaker 1: about that all the time, and so automating your payment
Speaker 1: so that it happens a date or two before the
Speaker 1: due date is a good way to avoid those late
Speaker 1: fees altogether. If you're paying I think I had one
Speaker 1: late fee mat that I had to get refunded recently
Speaker 1: because I switched bank accounts or something like that and
Speaker 1: it didn't go through the first time, and I was like, ah, crap,
Speaker 1: did you did the chat and ask them to waive it? Yes?
Speaker 1: And they did. It's so crazy. Yes, it takes like
Speaker 1: no time. And nine out of ten people remember that.
Speaker 1: In nine out of ten people, I think something like that,
Speaker 1: eight or nine out of ten people who ask for
Speaker 1: a late fee to be waived get.
Speaker 2: That double, especially if that's not something that you typically
Speaker 2: rack up because you do handle your credit card responsibly.
Speaker 2: But yeah, I do the same thing. I always so, like,
Speaker 2: technically speaking, as long as you schedule your payment on
Speaker 2: or before the due date, you're totally fine. So like literally,
Speaker 2: if it's due on the fifteenth, schedule for the fifteenth,
Speaker 2: you're good to go. I'm superstitious, and so I'll always
Speaker 2: like to be extra safe. And I don't know why,
Speaker 2: but I never choose the actual due date. I always
Speaker 2: choose a business day prior. So if it's doing Monday,
Speaker 2: I'll choose the friday before, and obviously if it's doing Thursday,
Speaker 2: I'll choose Wednesday.
Speaker 1: I don't like flirting with disaster.
Speaker 2: I just like to be free and clear of the
Speaker 2: potential of getting burned by the credit card companies. I'm
Speaker 2: with you, and plus I already used up my one free.
Speaker 2: Please waive this charge card.
Speaker 1: That's like your monopoly get out of jail free exactly, Sorry,
Speaker 1: you don't get another one.
Speaker 2: Man.
Speaker 1: We got more to get to on this episode, including
Speaker 1: let's talk about international investing. There's some new stats on
Speaker 1: that and it reveals something interesting about what your allocation
Speaker 1: to international stocks should be. We'll get to that more
Speaker 1: right after this we were back from the break.
Speaker 2: Yeah, you were talking about that international investing, thinking about
Speaker 2: some international exposure. It sounds so sophisticated, doesn't it.
Speaker 1: You should be wearing a boat exactly.
Speaker 2: Smoking a pipe. But before we get to that, it
Speaker 2: is now time for the ludicrous headline of the week,
Speaker 2: and it's from The Economist this week, and the headline
Speaker 2: reads how American politics has infected investing.
Speaker 1: H of course, you.
Speaker 2: Gotta love the country. You gotta love our heinous politics,
Speaker 2: like we still have a like a how long do
Speaker 2: we have before the elections? Like how many five weeks
Speaker 2: of the year we're discussing it ad nauseum.
Speaker 1: There are a lot of folks out there, though. I
Speaker 1: think they just announced the first debate too, which is yeah,
Speaker 1: earlier this week. I'll be like a primetime fight.
Speaker 2: I was not expecting that, to be honest, I didn't
Speaker 2: think there were going to be any any debates. But
Speaker 2: so the reason we wanted to talk about this is
Speaker 2: because there are a ton of folks out there and
Speaker 2: they think that they should change their investments based on
Speaker 2: their politics or based on who's in office right who's president,
Speaker 2: And this article highlights a fund specifically that allows conservatives
Speaker 2: to invest in companies that lean in their political direction. Basically,
Speaker 2: even investment products are catering to people's political beliefs now,
Speaker 2: and we feel that this sucks just as much as
Speaker 2: like recent years, ESG investing has been huge environmental, social
Speaker 2: and governance investing. It was yeah, pretty hot, but it
Speaker 2: actually leaned in the other political direction. And so here's
Speaker 2: a little PSA for folks. Feel free to follow your
Speaker 2: favorite candidates, Feel free to express your political beliefs, although
Speaker 2: less be honest, being less political will likely make all
Speaker 2: of us a whole lot happier. But keep in mind,
Speaker 2: no matter what, create a firewall between your political beliefs,
Speaker 2: how it is that you vote, and how it is
Speaker 2: that you invest. Because election results don't impact the market
Speaker 2: either way, according to history, keep investing regularly and in
Speaker 2: a diversified way. They're also pointing out to the fact too,
Speaker 2: that folks are intentionally It's not just that like, well, they.
Speaker 1: Kind of lean this way politically.
Speaker 2: Folks are throwing money into funds or organizations that feel
Speaker 2: like that they align more with.
Speaker 1: Their political beliefs.
Speaker 2: And you can do that. It's hey, it's your money, right,
Speaker 2: like the free country. You can do that, but just
Speaker 2: know that you're going to be paying a price for
Speaker 2: it because it does not lead to outsized returns.
Speaker 1: Yeah. I think there's one thing to donate money to
Speaker 1: your favorite candidate's campaign who you believe in kind of
Speaker 1: what they believe in. You think that their approach to
Speaker 1: solving some of the major problems we face as a
Speaker 1: country is more right on, maybe than their opponent. But
Speaker 1: it's another thing to say, I'm going to invest my
Speaker 1: dollars according to my political ideology or you know what, Hey,
Speaker 1: guess what if this other person gets elected, I'm actually
Speaker 1: going to move some of my assets to cash or
Speaker 1: something like that. Because I think the market is going
Speaker 1: to fall apart with this person in charge. History just
Speaker 1: shows that doesn't happen. That it doesn't happen.
Speaker 2: Nope.
Speaker 1: Yeah. And so if you were to make massive decisions
Speaker 1: about how or when you invest money based on the
Speaker 1: person who you think is going to get elected, you're
Speaker 1: being shortsighted and in fact you're going to cost yourself
Speaker 1: over the long run.
Speaker 2: Firewallet, keep it siloed.
Speaker 1: Yeah, stay true to the course. Makes me think, actually, Matt,
Speaker 1: of a conversation I had earlier this week might actually
Speaker 1: be a smart pivot on trading because of politics, and
Speaker 1: the move here would be to do exactly what the
Speaker 1: best traders in Congress are doing. Oh jeez, So I
Speaker 1: have a friend who like it, kind of starting to
Speaker 1: do this. Nancy Pelosi, by the way, is famous or infamous,
Speaker 1: I guess, for her stock trading prowess, right. She she
Speaker 1: makes far more in the market than she's made in
Speaker 1: her day job. And she's not the only person. A
Speaker 1: lot of people in Congress, that's true, I have done
Speaker 1: just that. Like, this is also not a partisan thing.
Speaker 1: Folks in Congress. They have to report trades that they
Speaker 1: make within sixty days, and a lot of these folks
Speaker 1: outperform the market. They do better than the folks who
Speaker 1: run hedge funds statistically speaking, not because of their skill,
Speaker 1: but because of the juicy information they have access to.
Speaker 2: Because of their their committee appointments.
Speaker 1: That's right. Yeah, and so they're hearing some Yeah, they're
Speaker 1: hearing some of that info ahead of time. Like one
Speaker 1: of my friends, he started following an Instagram account called
Speaker 1: Politician Trade Tracker, and it's attempting. He's attempting to make
Speaker 1: some of the trades that the politicians are making. They
Speaker 1: get posted publicly, and I don't see myself going in
Speaker 1: this direction, but I guess there's a chance that could
Speaker 1: work out well for him. It's gonna better than maybe
Speaker 1: the other sort of political investing strategy we talked about.
Speaker 1: There's a one Congressman, Matt who was in some sort
Speaker 1: of Boeing hearing and the day before the news became public,
Speaker 1: he sold all of his Boeing stock got out of it.
Speaker 1: It's just the right time, of course, it's so corrupt.
Speaker 1: I don't want to answer questions about it.
Speaker 2: But here is why I don't think that that strategy
Speaker 2: is gonna work, and that's because they like they can
Speaker 2: wait sixty days yep before they have to disclose that.
Speaker 1: And so yeah, the Boeing knowing that Boeing thing sixty
Speaker 1: days after the fact.
Speaker 2: Does or let too late exactly, and so like, I
Speaker 2: know that what that typically means. Though yes, there is
Speaker 2: likely some underlying information that means good or bad for
Speaker 2: a specific company, but you gotta admit there are some
Speaker 2: meme stock like elements to this. And just look to
Speaker 2: even earlier this week, Game Stop was back, and guess what,
Speaker 2: if you had purchased on Monday, you would have been
Speaker 2: doing just fine.
Speaker 1: But if you purchased on Tuesday, well that's why.
Speaker 2: And everybody that purchaon on Monday was selling, Yeah, and
Speaker 2: you'd be the sucker left holding the bag and so like.
Speaker 2: And this again, this is days and days like in
Speaker 2: game stots instance, It's not just days, but it's like
Speaker 2: hours and minutes that matter. And so I got to
Speaker 2: think that someone who's trying to track what it is
Speaker 2: that you know, Pelosi is doing with when it comes
Speaker 2: to her trades, man, it just doesn't seem all that
Speaker 2: great to me.
Speaker 1: He might be a little too far behind the curve. Yes, yeah, exactly.
Speaker 2: Yeah, And they probably want that information to get out there,
Speaker 2: because if they're buying a bunch of stuff up and
Speaker 2: then it gets reported that, oh they must know something
Speaker 2: that everyone piles on and they're like see yeah, And
Speaker 2: this is just another reason, by the way, that that
Speaker 2: our elected too pessimistic.
Speaker 1: I don't know, no, I don't think. I mean our
Speaker 1: elected officials should not be able to trade individual stocks.
Speaker 1: They should. If NX fonds are good enough for the
Speaker 1: rest of us, they should be good enough for our
Speaker 1: elected officials too. And that's because it's we talk about
Speaker 1: inside your training, like when it happens, like the hammer
Speaker 1: comes down, like on somebody who's been found guilty of that,
Speaker 1: like look at Martha Stewart.
Speaker 2: But this this is like the exact same thing. It is,
Speaker 2: like it's just the legal conflict of interest when it
Speaker 2: comes to you presiding over a committee that has that
Speaker 2: is privy to this information and now you get to
Speaker 2: go out and make your own trade.
Speaker 1: I think it was actually one of our local senators
Speaker 1: here in Georgia, I don't remember which one map, but
Speaker 1: one of them introduced legislation to try and ban I
Speaker 1: think it should totally be banned it. That'd be great Yeah,
Speaker 1: it didn't make it an It didn't make any progress, of course,
Speaker 1: but at least he stuck up for it.
Speaker 2: It's not that you can't invest, it's just that you
Speaker 2: should be investing only in index funds as opposed to
Speaker 2: individual companies. Hey, you want to benefit from the good
Speaker 2: work that you're doing as a public official, as a
Speaker 2: public servant. Okay, but let's make sure the entire economy
Speaker 2: is doing good, not just like these companies that you've
Speaker 2: cherry picked that you get to benefit from. And while
Speaker 2: we're talking about investing, if you are in a target
Speaker 2: date fund or if you're in an SMP fund SMP
Speaker 2: five under fund, you've likely got enough international exposure even
Speaker 2: though you don't own any foreign companies. That was always
Speaker 2: what Vanguard founder Jack Bogel what he believed.
Speaker 1: I've always agreed, but.
Speaker 2: Some would call that home country bias, that if you
Speaker 2: don't own emerging market ETFs or stocks, then you have
Speaker 2: exposure to foreign companies, you aren't diversified enough. But the
Speaker 2: argument for a US centric approach isn't because it's not
Speaker 2: important to have exposure to foreign markets. It's that investing
Speaker 2: in the largest US corporations gives you a fair bit
Speaker 2: of that.
Speaker 1: It's already baked in. This is a mainstay of the
Speaker 1: investment debates mat that happens is do you need international
Speaker 1: exposure or not? But I tend agree with what you
Speaker 1: just said. You know, only investing in US stocks doesn't
Speaker 1: mean that you're not exposed to overseas economies. The US
Speaker 1: stock market, of course, includes many multinational corporations, and a
Speaker 1: lot of those corporations conduct a whole lot of business abroad.
Speaker 1: Think about were recently in the Dominican Republic. How many
Speaker 1: KFCs did you see? I saw a lot, Right, that's
Speaker 1: a US based company.
Speaker 2: KFCs, as well as Nathan's Nathan.
Speaker 1: Exactly like you're used to seeing US companies and their
Speaker 1: names and their brands, their locals plastered all over the
Speaker 1: place when you travel to different parts of the world.
Speaker 1: And according to recent findings from a company called fact Set,
Speaker 1: forty one percent of revenue generated by S and P
Speaker 1: five hundred companies comes from international markets. Right boom. This
Speaker 1: I think means that by owning a simple S and
Speaker 1: P five hundred index fund, you still have a significant
Speaker 1: amount of international exposure in your life. Again, I think
Speaker 1: good folks can come out on different sides of this debate,
Speaker 1: but I also think that this is crucial information. It
Speaker 1: can help people feel more comfortable socking their money into
Speaker 1: a total stock market or S and P five hundred
Speaker 1: index fund while avoiding some of the fancier and the
Speaker 1: often more expensive international allocation possibilities. The biggest reason I
Speaker 1: think for owning international stocks is potentially mean reversion right
Speaker 1: in the fact that US stock evaluations are a little
Speaker 1: bit frothy. But a lot of people would say, oh,
Speaker 1: you don't have enough international exposure if you're investing only
Speaker 1: in the US stock market. I think that argument probably
Speaker 1: isn't a great one. Yep, there's no need to get fancy.
Speaker 2: Just stick with the Vanguard's boring old S ANDB five
Speaker 2: hundred etf VY.
Speaker 1: That's my favorite. It's simpler. It is too Matt. I
Speaker 1: feel like the easier it is for people to stay
Speaker 1: the course and the more funds you feel like you
Speaker 1: need to own, people start getting into the ten, twelve,
Speaker 1: fifteen funds that they own, rebalancing all that stuff. It
Speaker 1: then it overcomplicates things that people say buying and selling
Speaker 1: at the wrong time. They throw in the towel. Maybe
Speaker 1: are they they're less thoughtful about their investments. And I
Speaker 1: do think that the simpler it is, the easier it
Speaker 1: is to monitor, the easier it is to stay the course.
Speaker 2: But let's talk about whether or not social Security is
Speaker 2: failing the writing. It's been on the wall that Social
Speaker 2: Security is not doing so well. It's great that folks
Speaker 2: are living longer, but the reality is that the system
Speaker 2: is being used as like a multi decade retirement fund,
Speaker 2: and negative demographic trends are creating a problem. Basically, like
Speaker 2: imagine an upside down pyramid is a good way to
Speaker 2: visualize less, fewer folks being able to support an aging population.
Speaker 1: Just be honest, it's not your fault. You had four kids,
Speaker 1: I had three.
Speaker 2: It's those people who, hey, we're playing our part ye
Speaker 2: to make things.
Speaker 1: We need more people to hit in that direction.
Speaker 2: Yeah. So the reason we bring this up is because
Speaker 2: the government report was just released last week and it
Speaker 2: predicts that the Social Security Trust Fund is going to
Speaker 2: run out of money in twenty thirty three, and the
Speaker 2: report states that at that point, benefits would automatically be
Speaker 2: cut by twenty one percent unless elected officials do something
Speaker 2: in the meantime that twenty thirty three day. It actually
Speaker 2: hasn't changed since we discussed the future of social security
Speaker 2: in depth back in episode four thirteen. That was a
Speaker 2: few years ago, by the way, But it does drive
Speaker 2: home to the point that the projections that you'll see
Speaker 2: on the social Security dot Gov website that they might
Speaker 2: be a bit rosier than your actual future retirement reality. Yeah.
Speaker 1: Man, I think people go to one of two extremes
Speaker 1: when they're thinking about the reality of social security in
Speaker 1: how it's going to impact their ability to retire. Some
Speaker 1: people are they're so conservative they say, I'm not factoring
Speaker 1: in any social security and plus I'm not sure it's
Speaker 1: even going to be there for me. Well, in that episode,
Speaker 1: you mentioned like we kind of debunked that we don't
Speaker 1: think that there's any way, form or fashion that social
Speaker 1: security just goes away. That's not political tenable, like that's
Speaker 1: just not how it's going to play out. But you're
Speaker 1: right that if our politicians don't get their act together
Speaker 1: in the near future, and this was something that we
Speaker 1: mentioned in that episode too, that a real possibility is
Speaker 1: shaving those payouts that what you see, like you said,
Speaker 1: when you log into social Security dot gov, you're like, oh,
Speaker 1: thirty eight hundred bucks a month, that's gonna be awesome.
Speaker 1: But then you knock that down by twenty percent, you're
Speaker 1: talking about three grand a month. And so you don't
Speaker 1: want to overplan and overestimate what you're gonna have in
Speaker 1: social Security because then you might be undersaving for yourself,
Speaker 1: right Yeah, yeah, for that reason.
Speaker 2: Personally, I mean, either taxes are going to go up
Speaker 2: and or most likely the benefits are going to get reduced.
Speaker 2: And for that reason, I think the best way to
Speaker 2: think about it is to not see social Security as
Speaker 2: a dependable source of income. Yeah, within retirement, Like I
Speaker 2: like to think about it like an ice cream Sunday
Speaker 2: factor in a smaller portion of a smaller portion. Yeah,
Speaker 2: by social Security on that ice cream Sunday, it's just
Speaker 2: the whip cream on top, right, Like it's nice that
Speaker 2: it's there. I'll certainly take it, But over time it
Speaker 2: kind of like starts to melt into nothing and it's
Speaker 2: mostly air anyway, Like, it's not very substantive. You've got
Speaker 2: to show up with your own ice cream if you're
Speaker 2: going to be able to enjoy anything in your retirement.
Speaker 1: Yeah. I mean, again, I don't want to say like
Speaker 1: abandoned hopes of receiving any social Security I think it
Speaker 1: planning on receiving some makes a whole lot of sense. Yeah,
Speaker 1: but I think you also don't want to be over
Speaker 1: relying on it and overestimate what you're going to be
Speaker 1: able to get.
Speaker 2: It's the toppings, it's the nuts, because whip cream does
Speaker 2: seem a bit ephemeral, like it's like it's just gonna
Speaker 2: get blown away in the way. No, there's some reality
Speaker 2: to the fact that it's like the nuts and chocolate chips.
Speaker 1: How about that. So they're not going to pull the
Speaker 1: rug out from under you. But you also want to
Speaker 1: make sure that you're relying on yourself for the vast
Speaker 1: majority of your retirement income. Right. So I think when
Speaker 1: you look at this report, Matt, it's not glowing, but
Speaker 1: it's also not damning. I think things really look similar
Speaker 1: to what we have when we did a deep dive
Speaker 1: a few years ago. Like, things still look the same.
Speaker 1: But people are going to see a whole lot of
Speaker 1: triggering headlines. I think about this report. Some people are
Speaker 1: going to be like, oh, social Security is going away,
Speaker 1: and some and and people are gonna freak out on
Speaker 1: both sides of the spectrum. And the truth is that
Speaker 1: reality lives somewhere in the middle as usual.
Speaker 2: That's right. I think that's gonna be it for our
Speaker 2: Friday flight. Before we end it though, a quick thanks
Speaker 2: to Pamela R. For referring to the how To Money
Speaker 2: newsletter to some friends of hers. Pamela, we wouldn't be
Speaker 2: able to do it without readers like you who are
Speaker 2: not only reading the newsletter but sending it along to
Speaker 2: friends who also need a good dose of personal finance
Speaker 2: in their inbox every Tuesday morning, no.
Speaker 1: Doubt, and you can sign up for the HOA Money
Speaker 1: Newsletter up on our website at hotamoney dot com slash
Speaker 1: newsletter maw. That's gonna do it for this one. Until
Speaker 1: next time, Best Friends Out, Best Friends Out.