Speaker 1: Welcome to Had of Money. I'm Joel and I am Matt.
Speaker 1: Today we're talking about paltry predictions, working for wealth and
Speaker 1: Black Friday unfurled. That's right.
Speaker 2: This is our Friday flight where we're going to get
Speaker 2: to the most pressing stories that we've come across this
Speaker 2: week and how they pertain to your finances. And you're
Speaker 2: mentioning Black Friday Angel visions of like the nineties and
Speaker 2: the two thousands, whe folks whould line up at the
Speaker 2: store like you did back in the day to get
Speaker 2: the flat screen. People don't do that anymore.
Speaker 1: No, they don't.
Speaker 2: I don't do that, at least I'm glad they don't.
Speaker 2: Like I just don't go into stores hardly that often.
Speaker 2: But where I do go is Costco. Did you see
Speaker 2: that Costco's unveiling the little door scanner thing?
Speaker 1: Or actually I went last week and they had them
Speaker 1: set up. You have like scan your Costco ID on
Speaker 1: your way in.
Speaker 2: It's so dumb, because I'm sorry, I take it back Costco.
Speaker 2: The lady in front of me her car because they
Speaker 2: still have somebody there that's like attending to the machine
Speaker 2: or whatever. And the lady in front of me her card,
Speaker 2: it said that her membership was invalid or something like that,
Speaker 2: and the lady was like, no, it's not. And then
Speaker 2: the other lady was like, oh you can. You've been
Speaker 2: coming and you've paid and had no problem registering or
Speaker 2: uh checking out. She's like no, say okay, come on in.
Speaker 1: They're still figuring out the kings, right, I guess, so
Speaker 1: that should be generous there. So I think what Costco's
Speaker 1: trying to do here, tell me if you think I'm wrong.
Speaker 1: I think what they're trying to get that Netflix bump,
Speaker 1: the cracking down on passwords, and Costco's trying to crack
Speaker 1: down on membership sharing. And so they're thinking that they're
Speaker 1: going to see a meaningful bump in in people signing.
Speaker 2: Up for memberships here because just give somebody else your card.
Speaker 1: No, because now it shows up on the screen what
Speaker 1: your picture looks like when you That's the whole point.
Speaker 2: So they can say I didn't know why they were
Speaker 2: doing it.
Speaker 1: I'm sorry, sir, this doesn't like you. This is somebody
Speaker 1: else's membership. Well that's that's why your Costco card has
Speaker 1: your picture on it, right, because you're supposed to show
Speaker 1: him anyway. So it's just a bigger picture the door
Speaker 1: when you walk to They're not always checking that that closely,
Speaker 1: but they will be now with the scanner. So this
Speaker 1: is like their technological ability to now say, oh, Matt's
Speaker 1: coming in, that's actually Matt versus Matt's neighbor who he
Speaker 1: lent to his membership card. Two.
Speaker 2: Oh, I see, yeah, I'm curious to see if that works.
Speaker 2: I will say, based on our conversation with Chris Hutchins recently,
Speaker 2: can you hold up your your Apple pay your your
Speaker 2: phone to be let in as well? Because he was
Speaker 2: talking about how he puts his Costco card on his
Speaker 2: phone on his Apple Pay, which makes sense that you
Speaker 2: can do the Apple.
Speaker 1: Pay, right. I thought he put it on his the
Speaker 1: Costco app. There's a Costco app? Oh is that? What
Speaker 1: are you saying?
Speaker 2: Nothing, You're saying Apple pay.
Speaker 1: No, you can put your Costco credit card on Apple pay,
Speaker 1: but you can't put your membership on Apple pany. I
Speaker 1: don't think. Oh.
Speaker 2: I was thinking, okay, double click to pay slash double
Speaker 2: click to also get in the store.
Speaker 1: Yeah, that's what I want to be able to do.
Speaker 1: I mean, I don't have to open up a separate app. Well, sorry,
Speaker 1: Bud doesn't revolve around me, and my wish is no. Okay.
Speaker 1: Well but oh by the way, Calamen was yesterday and
Speaker 1: your your thing with your kiddo's is you pay them
Speaker 1: to not eat candy, right, uh huh okay.
Speaker 2: So that last year was the first year that we've
Speaker 2: ever implemented that and it was crazy successful.
Speaker 1: And who ends up eating this candy? Well? I do
Speaker 1: like over the we still had you know what I
Speaker 1: pay you to? You know what we did earlier this
Speaker 1: week we literally threw out all of our.
Speaker 2: Old candy because it's just I mean, it's stuff that's
Speaker 2: old and you know, like you've had a Snickers bar
Speaker 2: or something that's kind of been old and it sits there,
Speaker 2: it gets all mixed in with the fruit flavors and
Speaker 2: then it tastes all messed up.
Speaker 1: Man.
Speaker 2: I hate that. And so in some of that stuff,
Speaker 2: I don't know how old that is. And so the
Speaker 2: ability just to completely hit reset. Before the Halloween, the
Speaker 2: new Halloween stash came rolling in, but the kids have
Speaker 2: not yet fully sorted out all of the candy and
Speaker 2: and how much they want to cash in essentially, But.
Speaker 1: Yeah, no, I think it's a good plan and I
Speaker 1: think for everyone else, though, who's says, Oh man, my
Speaker 1: kids got so much candy. I wish they wouldn't need
Speaker 1: all of it. Well, maybe you can incentivize them with money.
Speaker 2: From a house standpoint part with someone. I don't want
Speaker 2: them eating all that.
Speaker 1: Oh yeah, no, it's it can be overload, man. I
Speaker 1: mean I remember the first couple of days after trigger
Speaker 1: treating when I was a kid, and it was just
Speaker 1: like gorge Fest.
Speaker 2: And I swear too, like in years past, this is
Speaker 2: always when the sickness gets kicked off. Oh yeah, it's
Speaker 2: right after Halloween, and it's it's it's not necessarily that
Speaker 2: sugar is so bad for you, it's the fact that
Speaker 2: that keeps you from the other healthier things that you
Speaker 2: need to be.
Speaker 1: You're filling up all your calories on crap. Yeah exactly.
Speaker 2: Well, are y'all going to implement something similar.
Speaker 1: The reason for the holiday? I don't know. I like
Speaker 1: what you're doing, and I might. I think I'll at
Speaker 1: least give them the option because that they see your
Speaker 1: kids giving up a lot of their candy for money,
Speaker 1: and I think they're like, I don't know if I
Speaker 1: do the same thing, but I might give them a
Speaker 1: least the option.
Speaker 2: It's hard initially because their eyes are wide and it's
Speaker 2: you know, it's a ton of fun. But after a
Speaker 2: while they start realizing that, actually, maybe I will take.
Speaker 1: The buy out. Yeah, ten cents apiece.
Speaker 2: Ten cents apiece, and then for the for the bigger ones,
Speaker 2: a quarter. Okay, So I'm willing to pay out even
Speaker 2: more for the big ones here because some of the neighbors.
Speaker 2: You know, you always hear about the nigh Oh, you
Speaker 2: got to go to the neighborhood, because they hand out
Speaker 2: the king size. But anything that's like, you know, like
Speaker 2: the full size, anything bigger than the fun size, I'm
Speaker 2: willing to pay a quarter for.
Speaker 1: Makes sense? Yeah, all right it let's get to the
Speaker 1: Friday flight, Matt, all the stories we found interesting this week.
Speaker 1: Let's kick it off by talking about an investing prediction.
Speaker 1: They're the good folks over Colden Sacks. I don't really
Speaker 1: know anyone there, never talked to anyone at Golden Sex. Folks.
Speaker 1: I can't imagine all of them are good. Some of them.
Speaker 1: Maybe you're so generous, I know. Well, they just announced
Speaker 1: that future market returns are likely to be muted over
Speaker 1: the coming decade, basically saying Hey, we foresee the S
Speaker 1: and P five hundred returning like three percent annualized over
Speaker 1: the coming ten years, So every single year three percent returns.
Speaker 1: That's basically one percent after inflation, which is pretty crummy.
Speaker 1: So yeah, not if you hear that and you take
Speaker 1: it to heart, you're like, that's not good. I would
Speaker 1: hope my stock portfolio would do better than that. And
Speaker 1: it's worse than any other prediction that you or I
Speaker 1: have seen out there on the internets, which is interesting.
Speaker 1: We talked about kind of predictions regularly on the show
Speaker 1: because a lot of other market soothsayers or want to
Speaker 1: be sooth sayers, they've been editing their market predictions for
Speaker 1: this year upward, which is always amazing. It's like, well,
Speaker 1: I predicted something at the beginning of the year, but
Speaker 1: it's October and the market's been crushing. Can I revise
Speaker 1: that thing now? Right? Right?
Speaker 2: So isn't that called cheating? You're not allowed to do that, right.
Speaker 1: So, at the beginning of the year, the average market
Speaker 1: predictor was saying, I foresee a two percent return, something
Speaker 1: very tepid over the coming year, and it's been much
Speaker 1: much higher than that. So basically this prediction is saying
Speaker 1: to keep your expectations low for longer term market returns,
Speaker 1: And I guess it begs the question what should we
Speaker 1: do with these sorts of prognostications, And I think you
Speaker 1: and I we always come down on the side of
Speaker 1: not much. You know, we have seen actually abnormally great
Speaker 1: returns recently. This year has been amazing. Last year was
Speaker 1: great in the stock market. But we got to take
Speaker 1: the good years with the bad ones. It is. I
Speaker 1: think there is certainly a possibility that Golden Sacks could
Speaker 1: be spot on with this, where we could see a
Speaker 1: decade that returns weren't so great after a decade of
Speaker 1: fantastic returns. The truth is, we just don't know. And
Speaker 1: it's just also important to note that the stock market,
Speaker 1: it's not like it's completely detached from reality. I think
Speaker 1: valuations are high, but our economy is doing far better
Speaker 1: than other wealthy nations right now, so it's not like
Speaker 1: stock market. Why is it so high? Like we can
Speaker 1: there's at least a method to the madness. There's a
Speaker 1: reason for it happening totally.
Speaker 2: Yeah, And I will say, historically a return of three
Speaker 2: percent or less for the decade that happens less than
Speaker 2: ten percent of the time, so that's not very normal.
Speaker 2: Could it happen again, yes, But these predictions they should
Speaker 2: not influence the actions that you take today if you're
Speaker 2: in the wealth building phase of your life. Again, every
Speaker 2: single prediction about what the SMP would do this year
Speaker 2: was way off. Predictions were that we'd see something like
Speaker 2: a two percent increase in the SMP. But we're somewhere
Speaker 2: around twenty percent right now. If you zoom out just
Speaker 2: a little bit more and look at the past twelve months,
Speaker 2: we're at thirty seven percent. Wow, thirty seven Like that's insane.
Speaker 2: It's close to like four years worth of growth right there,
Speaker 2: which I think just in the past twelve months.
Speaker 1: He sat reversion of the mean With that Goldmen Sacks
Speaker 1: is counting on or at least betting on.
Speaker 2: I don't know though. I mean, like we are like
Speaker 2: you and I were not permables, right like, we don't
Speaker 2: think that we're are that we are on this endless
Speaker 2: upward rise.
Speaker 1: There are some.
Speaker 2: Signs that US stocks, in particular, that they might be overvalued.
Speaker 2: But trying to shift to savings because you think that
Speaker 2: you're going to make more over there over the next
Speaker 2: ten years. That sounds like a really bad choice. Yeah,
Speaker 2: if you ask me, especially if you have decades to invest,
Speaker 2: keep bellar cost averaging into the market. But I mean
Speaker 2: if I was saving for as short to medium term
Speaker 2: goal of let's say four to five years, guess what,
Speaker 2: I'm still going to stick that market, that money into
Speaker 2: the market if it was me personally, But especially if
Speaker 2: we're talking about retirement savings, You're gonna be just fine,
Speaker 2: stay diversified and continue to invest in the market.
Speaker 1: Yeah, that's what we say here. Now, while we're talking
Speaker 1: about investing, there was some interesting data recently that came
Speaker 1: out about how different generations have different investing styles, and
Speaker 1: we talked about what with Gene Twangy about intergenerational differences
Speaker 1: in how we view money. That was kind of a
Speaker 1: fun conversation. But those differences have largely been defined by
Speaker 1: cultural markers and by macroeconomic events, specifically the most dramatic ones.
Speaker 1: Gen Z for instance, Right, they've seen incredible stock gains
Speaker 1: since they started investing, which means they're kind of keen
Speaker 1: on investing. Hey, this is a good game to play
Speaker 1: because it's helping me build my wealth. That's the good part.
Speaker 1: I don't know, maybe It makes me think about millennials too,
Speaker 1: in the Great Recession, graduating into a poor economic climate.
Speaker 1: Maybe they're a little more conservative, and so gen Z,
Speaker 1: as it turns out, is taking more of a gambling
Speaker 1: mentality into how they invest. Josh Brown actually recently said
Speaker 1: that very similar thing when he came on the show.
Speaker 1: And essentially they're the robin Hood generation, right, and they
Speaker 1: don't mind taking risky bets on s angle stocks and
Speaker 1: crypto coins, NFTs anywhere, remember those things. Nobody talks about
Speaker 1: NFTs anymore, Matt. I think they've largely gone by the wayside,
Speaker 1: and a lot of do people care good written crypto
Speaker 1: punk or whatever that all that stuff people.
Speaker 2: Board apes man like it wasn't that long ago, but
Speaker 2: it seems like forever.
Speaker 1: It feel like.
Speaker 2: On one hand, it's like, oh, we were talking about that,
Speaker 2: not all that long ago. I can I still remember
Speaker 2: the stories, Yeah, as we talked about it, But it
Speaker 2: also seems like a lifetime ago because of how much
Speaker 2: has changed when it comes to what folks are allocating
Speaker 2: their funds towards.
Speaker 1: Literally haven't heard those three letters put together in a
Speaker 1: long time. Nobody seems to care, and I'm sure that
Speaker 1: those things are worth a whole lot less, if not
Speaker 1: completely worthless. But all of us have a bias because
Speaker 1: of how we grew up, what we were taught about money,
Speaker 1: what we've experienced, and then kind of what we've experienced
Speaker 1: overall culturally and economically. But I think this is just
Speaker 1: for us. Matt reading this, it makes me think that
Speaker 1: people just need to look at a longer historical timeline
Speaker 1: to be your guide when it comes to how you
Speaker 1: invest one hundred percent, not just hey, what's happened over
Speaker 1: the past year, two years, five years. If you're one
Speaker 1: of those people who is risk averse, the truth is
Speaker 1: taking no risk comes with its own risks as well,
Speaker 1: namely inflation. Taking too much risk, on the other hand,
Speaker 1: comes with the potential for big losses. So I guess slow,
Speaker 1: steady risk appropriate. That would be our advice. That's psych
Speaker 1: typically our advice on the show. But I see these
Speaker 1: different generations kind of taking different tacks, and it's like,
Speaker 1: I don't know, maybe more balanced view, balanced response from millennials,
Speaker 1: agen Z and Uchen extras and boomers two is what's
Speaker 1: called for.
Speaker 2: Makes a ton of sense that we need to look
Speaker 2: outside of our own personal experiences, even let's go back
Speaker 2: even to another generation. Makes me think of the Silent
Speaker 2: generation or the Greatest Generation. I don't know which one,
Speaker 2: whatever it is that folks call it, but like the
Speaker 2: hesitancy to invest in the market because of the Great Depression,
Speaker 2: sticking money under your mattress as opposed to trusting in
Speaker 2: actual financial institutions. But while we're on this note of investing,
Speaker 2: morning Star they recently wrote a piece about trading platforms
Speaker 2: that are increasingly incentivizing risk. And we're talking about gamification
Speaker 2: here because these game like elements, they can be great
Speaker 2: for incentivizing saving, but I think they can lead to
Speaker 2: really poor behavior on the investing side, leading to more
Speaker 2: frequent trading, leading to speculative bets. And again, let's revisit
Speaker 2: a brokerage that's in the spotlight, Robin Hood. They're now
Speaker 2: allowing folks to bet on the election on their platform.
Speaker 1: I hate this.
Speaker 2: We did an episode many years ago at this point
Speaker 2: about how to level up your money game by using gamification,
Speaker 2: but I just hate that it's such a slippery slope.
Speaker 2: We're seeing more platforms, is it. Caulshy and Predicta is one,
Speaker 2: But there are these new gambling market platforms that are
Speaker 2: It's I don't like it for multiple reasons, obviously the
Speaker 2: fact that folks are losing money, but I think a
Speaker 2: lot of individuals see this as their sort of foray
Speaker 2: into in this case politics, Right, it's like, well, I
Speaker 2: don't know money where my mouth is. Well, yeah, But
Speaker 2: the thing is it's less of a focus on policy,
Speaker 2: and it's more of a focus on sort of the
Speaker 2: pop cultural elements of it by just like, oh, let
Speaker 2: me throw some money on that where the wind's blowing
Speaker 2: right now. Yeah, I guess that's the part of it
Speaker 2: that I hate. You're if you are sort of betting
Speaker 2: in this way. I think people have a belief that
Speaker 2: they are sort of being involved with politics, but in essence,
Speaker 2: it's they're not at all. You see what I'm saying.
Speaker 1: Yeah, our attention is being has been hacked by the
Speaker 1: social media apps, and now our investing habits have been
Speaker 1: hacked in some ways by at least certain companies trying
Speaker 1: to get us to participate more in risk of your behavior.
Speaker 1: So you're right, I think gamification can work in a
Speaker 1: positive ways. There's some apps out there, thinking of like
Speaker 1: Cube Money, Matt, that's one of those kind of budgeting,
Speaker 1: banking apps that can help you use the envelope system
Speaker 1: in a digital way. That's a great way to gamify
Speaker 1: your finances. And then there are negative ways in which
Speaker 1: we're being preyed on in the gamification sphere, such as
Speaker 1: gambling on election or trading becoming a more frequent trader.
Speaker 1: That is what's scary. So use the good ways, avoid
Speaker 1: the bad ones to the best of your ability. Now,
Speaker 1: let's talk about work for a second. At the risk
Speaker 1: of sounding reductive, people make more money when they work
Speaker 1: longer hours. No way. Yeah, it doesn't sound like rocket science,
Speaker 1: does it. But Tyler Collen, who is like one of
Speaker 1: my favorite economists, his.
Speaker 2: Podcast is a very smart individual.
Speaker 1: Yeah, great podcast. He wrote about this in Marginal Revolution. Yes,
Speaker 1: his blog what's his name of his actual podcast Conversations
Speaker 1: with Tyler Oh, that's right. Yeah, so both are good.
Speaker 1: But he wrote about this in Bloomberg and it feels
Speaker 1: like one of those things like does this need to
Speaker 1: be said that if you work more you make more money? Well,
Speaker 1: I don't know. The way he explains that I think
Speaker 1: is helpful. He highlighted this recent study that economists did,
Speaker 1: and the study found that a twenty percent variance in
Speaker 1: lifetime earnings can be explained by a difference in the
Speaker 1: number of hours that you work. Essentially, if you work
Speaker 1: thirty five hours a week, your friend works forty five
Speaker 1: hours a week over time, on average, they are going
Speaker 1: to make more and compound their wealth more quickly than
Speaker 1: you will. And as Tyler wrote in the piece, matt
Speaker 1: He wrote, the decision to work harder operates on at
Speaker 1: least two levels. First, you put in more total time,
Speaker 1: which leads to higher lifetime earnings. Second, you invest more
Speaker 1: in your human capital, which makes you more productive. Again,
Speaker 1: this isn't something that's shocking, or wasn't I think understood
Speaker 1: by many kind of intuitively. But it's interesting to see
Speaker 1: some data attached to this common sense economic reality. And
Speaker 1: that doesn't mean that I think everyone should go out
Speaker 1: there and works seventy hours a week. Part of the
Speaker 1: reason investing makes so much sense is because it can
Speaker 1: allow you to work less. Right, so letting your money
Speaker 1: work harder for you than you're working for yourself.
Speaker 2: I feel like, so everyone's or not everyone, but a
Speaker 2: lot of folks have heard of like the horseshoe theory.
Speaker 2: I feel like this is a perfect illustration because there
Speaker 2: are a lot of folks that are like, yeah, no, duh.
Speaker 2: But then you get folks who are educated and they
Speaker 2: start doing research and they start picking it apart and
Speaker 2: they're like, well, actually, there's all these other factors that
Speaker 2: play into it. There's don't forget about policy, don't think
Speaker 2: about the systemic issues that we have when it comes
Speaker 2: to working and earning more. But yeah, in this case, Tyler,
Speaker 2: he's like digging into the data even more, and with
Speaker 2: his research and the numbers and the data is able
Speaker 2: to point out the fact that like, oh no, in
Speaker 2: this case, our intuition is actually is actually correct.
Speaker 1: Yeah, it makes me I think of Kobe Bryant back
Speaker 1: in the day. He would talk about how I think
Speaker 1: he used to work out three times a day, and
Speaker 1: he's essentially saying, I'm so far ahead of everybody else
Speaker 1: because of all the hard work I've put in there.
Speaker 1: There's some truth to that. Yeah, even if you start
Speaker 1: working out four times a day, you will never catch
Speaker 1: up to me, is what he was saying to like
Speaker 1: the younger basketball players. And yeah, hard work isn't everything,
Speaker 1: but it's amazing how how impactful can be on your
Speaker 1: wealth building journey.
Speaker 2: Yeah, to a certain extent, it's hard to be just
Speaker 2: putting the reps in, but there is a limit to
Speaker 2: trading your time for money, especially for lower income earners.
Speaker 2: And it's also important to note that hustle culture, like
Speaker 2: essentially that's what we're talking about here, it can just
Speaker 2: lead to burnout. It's going to be to live that
Speaker 2: that knows to the grindstone lifestyle for too long. And
Speaker 2: despite the fairly clear line that's that you can draw
Speaker 2: between the hours that you're going to work and the
Speaker 2: income that you're gonna earn, it's also important to work smart,
Speaker 2: not just hard, right, So it's not just about putting
Speaker 2: more hours in, but to actually think about like work
Speaker 2: on the job, like not working solely within the job,
Speaker 2: Like by working on the job, you're saying, how can
Speaker 2: I actually make this thing better? But then also to
Speaker 2: prioritize your life, not just your bank account, not just
Speaker 2: your net worth. Because I think there might be seasons
Speaker 2: where you do work more to earn more, but there
Speaker 2: are also going to be other seasons will work takes
Speaker 2: more of a back seat. But more than anything, I
Speaker 2: think the takeaway from me is just to think about
Speaker 2: this from a consistency standpoint, because I think about the
Speaker 2: kind of life that I want to lead, and I
Speaker 2: think about someone who might be going one hundred and
Speaker 2: ten percent right, and by going one hundred ten percent,
Speaker 2: you're earning like ten percent more and that's nice, but
Speaker 2: you also have like zero margin in your life. Other
Speaker 2: aspects of your life are falling apart, and maybe you
Speaker 2: end up I can work like twenty five years in
Speaker 2: thirty years in right, as opposed to imagine if around
Speaker 2: year twenty year, like I don't this is I've been
Speaker 2: going pretty hard. What if I dialed it back a
Speaker 2: little bit? This is such a great argument for coast
Speaker 2: fire right, So for all the financial independence folks out there,
Speaker 2: and to say instead of going like I was plugging
Speaker 2: away at one hundred percent, I'm going to step it
Speaker 2: back to ninety In a couple of years. Oh, I'm
Speaker 2: want to step it back to eighty percent. Imagine kind
Speaker 2: of like gradual stepping off the pedal. Yes, And imagine
Speaker 2: if like thirty thirty five years in you say, you
Speaker 2: know what I want to work like at fifty percent.
Speaker 2: But because of that, because of all that additional time,
Speaker 2: maybe you're able to work for another decade. Maybe you're
Speaker 2: able to work for another twenty years, and think about
Speaker 2: the added benefit not only to you, like cognitively from
Speaker 2: a community standpoint, but also from a financial standpoint, Like
Speaker 2: earning fifty percent for another twenty years put you much
Speaker 2: further ahead than working an extra ten percent beyond that
Speaker 2: one hundred percent for a shorter period of a.
Speaker 1: Lot of percentage just throw around. It's you never do.
Speaker 2: Math and percentages on a podcast, But I'm just saying
Speaker 2: that the ability to work for a longer period of
Speaker 2: time at a diminished intensity, I think it's going to
Speaker 2: lead to a much happier life for a lot of
Speaker 2: folks in a better financial position.
Speaker 1: Yeah. I think you're right as well. I think a
Speaker 1: lot of people might read that and then be like,
Speaker 1: oh cool, Tyler, so I should be working a lot more.
Speaker 1: And I don't think that's what he's getting at. I
Speaker 1: think he's just getting at an ultimate reality that work
Speaker 1: is typically tied to income.
Speaker 2: And I like the individual empowerment part of the message
Speaker 2: that he's relaying here.
Speaker 1: Yeah, and the truth is, if you want to earn more,
Speaker 1: oftentimes it will involve working more. But you and I
Speaker 1: were also in favor of balance, and so it's nice
Speaker 1: to know that, and it's nice to know that during
Speaker 1: certain segments of your life you might prioritize that and
Speaker 1: at other times you might back off of work a
Speaker 1: little bit because, guess what, you have been frugal, You've
Speaker 1: paid attention to your investing, to your finances, and you
Speaker 1: don't need to work as hard as everybody else around
Speaker 1: you is likely doing. But Matt, we're going to get
Speaker 1: to more on this episode, including what newlyweds want for
Speaker 1: as a wedding gift. It certainly seems like the concept
Speaker 1: of a wedding registry is dying. We'll talk about that
Speaker 1: more right after this.
Speaker 2: All right, Joe, we are back from the break. We've
Speaker 2: got more to get to. It is now time for
Speaker 2: the ludicrous headline.
Speaker 1: Of the week. My favorite time, Yeah, is it literally
Speaker 1: your favorite time? Like?
Speaker 2: Our pick this week is from the New York Times
Speaker 2: and the headline reads, homeowners tap into their rising home equity.
Speaker 2: This sounds familiar, anel. It sounds like this is a
Speaker 2: movie we've seen before and it doesn't end well.
Speaker 1: Yeah, it's like the Second Joker, I Guess It, which
Speaker 1: was apparently panned by all the by everyone, it was
Speaker 1: a muscle.
Speaker 2: Yeah, I didn't. I think I could have told you,
Speaker 2: Like even just like in the initial the first production
Speaker 2: meeting where they sat down and we're like, hey, this
Speaker 2: is what we're thinking, right, I feel like I could
Speaker 2: have saved them a whole lot of hearder.
Speaker 1: This headline is the equivalent of that.
Speaker 2: For everyone out there who owns a home, it's incredibly
Speaker 2: exciting to see the value skyrocket, which directly impacts your
Speaker 2: net worth. Maybe for you, it's like your favorite pastime
Speaker 2: is hopping over to Zillo and checking out your estimate.
Speaker 2: If you bought a home like four or five years
Speaker 2: ago or the decade even before that, you've done incredibly
Speaker 2: well for yourself. But what should you do with that
Speaker 2: mountain of increased equity? Well, that's another matter. Balances on
Speaker 2: helocks are rising quickly twenty percent over the past few years.
Speaker 2: Home equity loans that have fixed rates are becoming more
Speaker 2: popular this year as well. But once you take that
Speaker 2: equity out and you spend it, well, you've now got
Speaker 2: another recurring monthly bill in your life. It puts your
Speaker 2: financial security at risk. And it is not that considering
Speaker 2: a helock is never a good idea. It's just that
Speaker 2: it rarely is for most folks. For the kind of
Speaker 2: spending that most folks out there are being tempted into.
Speaker 1: And I'm getting literally like solicited to take out money
Speaker 1: from my banker credit union because they're saying, look at
Speaker 1: all this home you have that is put it to use?
Speaker 1: Is what they want.
Speaker 2: I think that's one hundred percent of the reason. The
Speaker 2: fact that there are so many mortgage servicers out there
Speaker 2: and they're texting us, they're sending us the email blasts saying, hey,
Speaker 2: it's so easy, right board they want the business, yes,
Speaker 2: because I mean that's the business that they're in, is
Speaker 2: to try to get more customers taking money out of
Speaker 2: their homes, out of this piggy bank. And it's the
Speaker 2: fact too that like nobody's b I shouldn't say nobody,
Speaker 2: but like if you have a retirement account, you probably
Speaker 2: feel worse for like tip making a four to win
Speaker 2: k loan or cashing out a retirement account. It feels
Speaker 2: like a more egregious move because it's literally labeled like
Speaker 2: this is your retirement account, but your house, Oh it's
Speaker 2: a it's a gray area. Who knows what you could
Speaker 2: use this for? All sorts of things. Yeah, I think
Speaker 2: I think you're right. And the thing is, we don't
Speaker 2: actually have stats. We don't really know why people are
Speaker 2: tapping into their home equity. I would be super curious
Speaker 2: to see some sort of study about the main reasons
Speaker 2: why people choose to take money out of their home.
Speaker 2: If you're taking out like a small amount in order
Speaker 2: to perform a minor bathroom renovation or something like that,
Speaker 2: and then you've got this plan to pay it off
Speaker 2: in twelve months or less, then I think you and
Speaker 2: I could sign off on that, Matt. We might say
Speaker 2: more power to you. You're using the helock for what
Speaker 2: it was made for. And guess what, You've got a
Speaker 2: bunch of equity in your home. Cool, using a little
Speaker 2: bit of it to improve your home. It's not the
Speaker 2: worst thing in the world. But I think other folks
Speaker 2: are seeing dollar signs when they look at their house
Speaker 2: and they're taking money out because they can, and because
Speaker 2: someone told them they could. Mortgage rates, well, they're not
Speaker 2: following like a whole lot of people expected them to.
Speaker 2: And the rate on the helock it's not guaranteed to drop.
Speaker 2: I think a lot of people are saying, oh, cool,
Speaker 2: we're in this era now where interest rates are going
Speaker 2: to go down, But are they going to go down
Speaker 2: as much as a lot of people have predicted.
Speaker 1: Maybe, maybe not. And so we're still talking about paying
Speaker 1: like nine percent on money you borrow against your home.
Speaker 1: So in our estimation almost all the time, it's better
Speaker 1: to hold off and save up, save up the cash.
Speaker 2: Yeah, and you mentioned like doing a small bathroom renovation,
Speaker 2: and I think a lot of folks might be thinking, oh,
Speaker 2: but I can deduct the interest that I'm paying towards that.
Speaker 2: But was it the last week that the IRS they
Speaker 2: just released the new numbers for next year standard deduction's
Speaker 2: gone up. Yeah, thirty thousand for married couples, fifteen thousand
Speaker 2: for single filers.
Speaker 1: That's a really high bar.
Speaker 2: And so I think the fact that, like that's in
Speaker 2: the back of a lot of people minds. But the
Speaker 2: fact is, I think fewer and fewer folks are going
Speaker 2: to be itemizing their taxes, itemizing their deductions as opposed
Speaker 2: to taking the standard.
Speaker 1: But while I think a lot of people see that
Speaker 1: and they say, oh, that's one more reason to take
Speaker 1: money out of my home, and it's not because for
Speaker 1: most people they don't qualify for that interestroduction.
Speaker 2: It's a neot point. Well, while we're talking about houses,
Speaker 2: guess what more folks want these days when they get married.
Speaker 2: That's right, a house instead of a big wish list
Speaker 2: of items that might go in their home. They would
Speaker 2: rather have a down payment donation for the actual home
Speaker 2: instead than not. Everyone's heard of the marriage website Slash magazine.
Speaker 2: The Not found that the sheriff couples including a home
Speaker 2: fund on their registries has increased sixty two percent since
Speaker 2: twenty eighteen, which, personally, man, I think this is awesome
Speaker 2: because cash it's easier to give the recipient. They can
Speaker 2: do whatever they want with that money, whether it's to
Speaker 2: put towards a down payment for a home or to
Speaker 2: get something else.
Speaker 1: That the old school actually one way of doing things right.
Speaker 2: The Asian way as well, Like you got the red envelopes. Yeah,
Speaker 2: there's something about here. Why is it our culture that's
Speaker 2: so weird about that? Well, it's our culture. I don't know, man, Yeah,
Speaker 2: there's there's I'm all for it because it's incredibly practical.
Speaker 1: I love it.
Speaker 2: But I think there are still going to be a
Speaker 2: lot of other folks out there who are going to
Speaker 2: feel that it's slightly uncouth to ask for cash donations
Speaker 2: as or cash gifts versus an item something which is
Speaker 2: not like there's a whole lot of thought that went
Speaker 2: into it, right, Because if you make a registry, it's
Speaker 2: like you weren't being thoughtful. You just bought this thing
Speaker 2: for me instead. Is anhird roundabout thing that we do here.
Speaker 1: The only reason I'm buying something I know you want
Speaker 1: is because you told me you wanted it. So if
Speaker 1: you tell me that you want cash for the down
Speaker 1: payment for the house, cool, I mean, yeah, it saves
Speaker 1: me some time, some hassle, and it also allows me
Speaker 1: to give you the thing you actually really truly want.
Speaker 2: Did you normally get a whole lot of gifts when
Speaker 2: y'all got married?
Speaker 1: Oh? Yeah, because we did the old school way with the.
Speaker 2: Registry, remember spending all that time going back to bed
Speaker 2: bath and beyond making the returns and actually getting the things.
Speaker 1: That you needed or wanted, because we didn't want to
Speaker 1: be like ungrateful weirdos who asked their cash. And so
Speaker 1: I'm so glad that cultural element is changing because you
Speaker 1: should be able to ask her that, and I would
Speaker 1: like to give you that. Do you have any items
Speaker 1: from that you received as wedding gifts that you still
Speaker 1: use today or still have. Oh, for sure, like what
Speaker 1: like my I can't think of lake crusette pot. For sure,
Speaker 1: that's one of the best things. I'm sure there are
Speaker 1: other things. I'm sure we have other pots and pans
Speaker 1: and stuff like that, but maybe we have a cast
Speaker 1: these great steak knives that are like French steak knives
Speaker 1: that came from I want to say, Creighton Barrel and
Speaker 1: they're great, very cool.
Speaker 2: The one thing I can think of that we registered
Speaker 2: for it. I was like, I can't believe we're registering
Speaker 2: for like one hundred and fifty dollars trash can, but
Speaker 2: we did, and so one got.
Speaker 1: It for us.
Speaker 2: We literally use it every day. Nice simple human you know,
Speaker 2: like the stainless.
Speaker 1: Stale foot operated.
Speaker 2: I'm like, is this thing ever going to break? I
Speaker 2: love it, But I don't think there is many things.
Speaker 2: There are many things out there that they make us
Speaker 2: solidly as they made that trash can. I can't wait
Speaker 2: to have my kids come home, like whenever they're married
Speaker 2: or something. We can to be like, is this the
Speaker 2: same trash can when we were kids? Indeed children, it
Speaker 2: is I.
Speaker 1: Love that that remind you of your wedding day trash
Speaker 1: can in your kitchen.
Speaker 2: I just remember registering for it and being like, I
Speaker 2: can't believe, like because you can buy yourself practical Matt,
Speaker 2: a ten dollars rubber made trash can. But we're like,
Speaker 2: you know what, I don't want to see that garbage anymore.
Speaker 2: I'm a I'm about to be a married man. I'm
Speaker 2: not living that bachelor.
Speaker 1: Your own adult. Don't make me look at the trash.
Speaker 1: I get what I want. Yeah, exactly, all right, let's
Speaker 1: keep talking about real estate. Real estate data firm core
Speaker 1: Logic says that most homeowners don't have enough homeowners insurance,
Speaker 1: and if there's anything we've learned Matt from the devastating
Speaker 1: storms in the Southeast recently in some of our favorite
Speaker 1: towns close by, is to check your insurance policy to
Speaker 1: make sure you have enough coverage, and to make sure
Speaker 1: that you have the right kind of coverage too. The
Speaker 1: cost of building materials and labor have risen significantly, which
Speaker 1: means now is a great time to double check your coverage.
Speaker 1: Make sure you have what's known as replacement cost coverage,
Speaker 1: which could be actually more than the actual value of
Speaker 1: your home, because the cost to rebuild your home could
Speaker 1: be more than what Zillo you mentioned. This es meam,
Speaker 1: that could be more than what the z estimate is right.
Speaker 1: Increasing your coverage could raise your premiums. Yes, it could
Speaker 1: cost more to have that insurance now, but it's crucial
Speaker 1: to budget for that because the whole point of insurance
Speaker 1: is to be covered in case something catastrophic happens, and
Speaker 1: so you want to make sure you actually have enough coverage.
Speaker 1: Trying to get the absolute lowest price could be cheap,
Speaker 1: not frugal, that's right.
Speaker 2: So on the flip side of the insurance discussion, Joe,
Speaker 2: let's talk about car insurance teens. They are more reticent
Speaker 2: to get their driver's license these days than in decades past. Personally,
Speaker 2: that kind of bums me out that you know, less
Speaker 2: risk taking that whole thing. But it actually might be
Speaker 2: a good thing for the parents, at least from a
Speaker 2: financial perspective. Friend of the show, Ron Lieber, he's been
Speaker 2: writing in the Times regularly about how much it's costing
Speaker 2: families to ensure their fleet of vehicles. Which there's your
Speaker 2: first problem, right, if you have more more more vehicles
Speaker 2: cost vehicles. Yeah, he taught with some families that have
Speaker 2: like three or four kids who are paying twenty thousand
Speaker 2: dollars a year for car insurance a loan.
Speaker 1: Make any sense to me?
Speaker 2: Which is mine? Does that happen my buddy when he's
Speaker 2: playing twelve thousand a year? And I thought that that
Speaker 2: was nuts?
Speaker 1: That is nuts.
Speaker 2: And they are in a similar situation where they've got
Speaker 2: a bunch of vehicles and a bunch of drivers. Ron himself,
Speaker 2: he's been trying to shop his plan to save money,
Speaker 2: but even still to no avail. But so what is
Speaker 2: it that you can do out there? Well, ask about
Speaker 2: good grade discounts.
Speaker 1: Your child is a good student, uh huh.
Speaker 2: And so specifically these are some pointers you have kids,
Speaker 2: but any other discounts that might be available, We want
Speaker 2: you to leave no stone unturned, but then have your
Speaker 2: kid participate in the.
Speaker 1: Costs, especially if they get a ticket.
Speaker 2: Point out the like, these are things that they don't
Speaker 2: necessarily know, and they're just, you know, they're just kind
Speaker 2: of thinking about the things that matter to them that.
Speaker 1: Might they take it for granted that they yeah, exactly
Speaker 1: that they care about.
Speaker 2: But if you're like, hey, by the way, if you
Speaker 2: ever get a ticket that's coming out of your bank account.
Speaker 2: I think that right there, like that alone can help
Speaker 2: them to drive a little bit more cautiously. I've even
Speaker 2: noticed even like when I'm driving, like when I'm taking
Speaker 2: the kids to school, they'll look up ahead and see
Speaker 2: like the light they know it's getting ready to turn yellow,
Speaker 2: and so those say like, go go, go go, because
Speaker 2: they like get into school early to see their friends
Speaker 2: and whatnot. And I'm like, no, I'm realizing, like we
Speaker 2: have to start setting a better example, or I do
Speaker 2: at least like now. And to mention that decay, She's like, actually,
Speaker 2: it's good for them to see us like not constantly
Speaker 2: toe of the line. But it's a reminder that they
Speaker 2: learn from seeing how we drive as well. But again
Speaker 2: for it to also be a topic of conversation as well,
Speaker 2: and for if you've got teenage drivers, for them to
Speaker 2: know that, like, hey, you're gonna be on the hook
Speaker 2: if if you get a speeding ticket, yeah, my moving violation.
Speaker 1: Sure. My nephew just turned sixteen and he is in
Speaker 1: that crowd who's less interested in driving, so he's been
Speaker 1: holding off. And I know my sister and brother in
Speaker 1: law have Actually I think that they'd be fine with
Speaker 1: him going ahead and getting the license and moving on
Speaker 1: with driving and taking himself places. But at the same time,
Speaker 1: the cost is real and significant, and so they have
Speaker 1: I think got in the quote. They kind of know
Speaker 1: how much more it's gonna cost, and they're.
Speaker 2: Racing themselves a little bit.
Speaker 1: They're like, take your time, sweetie. However, you don't have
Speaker 1: to get your license anytime soon because it is so
Speaker 1: much more expensive data team to your policy. So this
Speaker 1: is brand new territory for us. But pretty much like
Speaker 1: once you have a licensed teenager, you have to add
Speaker 1: them to the plan, I'm pretty sure in most states,
Speaker 1: which means by default, like you are automatically going to
Speaker 1: see your premium skyrocket. I think I'm gonna certainly encourage
Speaker 1: them to get their permit, but maybe we don't ever
Speaker 1: get their light, not ever, and I'm gonna make them
Speaker 1: drive all the time when we're going. Is this frugal
Speaker 1: or cheap? It depends on how much it's gonna cost,
Speaker 1: and if they want to partake in the cost, and.
Speaker 2: How long can you hang on to just the driver's
Speaker 2: permit where they're just learning how to drive, as opposed
Speaker 2: to them being a fully fledged independent driver where we
Speaker 2: have to add them onto the on the plan. Right,
Speaker 2: it's just crazy.
Speaker 1: Looking ahead when you look at kind of what's happened
Speaker 1: with inflation over the past few years. Car insurance is
Speaker 1: one of the scariest parts of what's happened on that front.
Speaker 1: I know it's freaking out a lot of people and
Speaker 1: it's testing a lot of budget. Let's talk about Black Friday, Matt.
Speaker 1: Black Friday continues to evolve. It's no longer a day.
Speaker 1: It's no longer the day after Thanksgiving. Now it's this season.
Speaker 1: It's an extended period of time where different retailers are
Speaker 1: offering sales and discounts. So, yeah, you don't have to
Speaker 1: wake up at five am any longer to get the
Speaker 1: terrific deal on a flat screen TV or a computer
Speaker 1: or something like that, which I think is good in
Speaker 1: some ways, in bad and others. Walmart just announced that
Speaker 1: it's going to have three distinct phases of Black Friday.
Speaker 1: We won't go over the specifics because it varies depending
Speaker 1: on whether or not you're shopping online or in store,
Speaker 1: whether or not you're all Walmart Plus member, they will
Speaker 1: have access to extra deals that others will not. The
Speaker 1: best deals are going to start though around November eleventh,
Speaker 1: so multiple weeks in front of Thanksgiving. We're talking about
Speaker 1: a few weeks in front of Thanksgiving. This is I
Speaker 1: think a call to pay attention to sales, to keep
Speaker 1: an eye on prices so that you're not overspending. You
Speaker 1: might find that you can get a refund if the
Speaker 1: price goes down after the by the way, if you're
Speaker 1: still paying attention to prices and what's happening with them,
Speaker 1: but also be careful because you can easily overspend.
Speaker 2: Yeah, it kind of feels like a slippery slope because
Speaker 2: once you start looking at the deals, you start thinking,
Speaker 2: well I need that, yeah, you know, and more than
Speaker 2: anything else, I think what we would encourage folks is
Speaker 2: that try to consume less, challenge yourself to find other
Speaker 2: ways of spending your money.
Speaker 1: And if there's a couple things you actually want, Matt,
Speaker 1: you can do like a deal alert in a website
Speaker 1: like slick Deals, so if you know the exact item,
Speaker 1: put it in there and then they'll notify you when
Speaker 1: of the price drops, so you're not like constantly looking
Speaker 1: and prousing attempted.
Speaker 2: To buy Stuff've never set up these parameters these filters
Speaker 2: before and slick deals that might have to get that
Speaker 2: a shot. So if you are going to get out
Speaker 2: there and you know you're looking for something specific, let's
Speaker 2: talk about comparing the best prices between different retailers. One
Speaker 2: of Walmart's biggest competitors is Amazon and Kiplinger. They just
Speaker 2: wrote an article about which of the two, which of
Speaker 2: the mammoth retailers is more affordable, and it turns out
Speaker 2: that Amazon they win most of the time, although so
Speaker 2: so keep that in mind. Ams on the wind most
Speaker 2: of the time. But prices are the exact same the
Speaker 2: vast majority of time. Seventy percent of the time the
Speaker 2: prices are basically the same. But this is just another
Speaker 2: reminder to price check if you if you do know
Speaker 2: that you're gonna buy something at the very least, check
Speaker 2: with one of the other major retailers, and.
Speaker 1: They're often like price matching each other. So it's like
Speaker 1: killer sale over here. Well, all these other stores are
Speaker 1: going to jump in and try to offer the same price.
Speaker 2: Yeah, and you mentioned slick deals. Don't forget using different
Speaker 2: extensions and sites like honey or Camel Camel Camel if
Speaker 2: as other ways to put some of those price alerts
Speaker 2: or just to look back at the price history of
Speaker 2: certain items, the ability to look at not just the MSRP,
Speaker 2: but what the actual price of that item was, because yeah,
Speaker 2: maybe it's a deal now, but actually last week it
Speaker 2: was an even better deal and you just missed out.
Speaker 2: You just need to wait a few more weeks for
Speaker 2: it to drop back down.
Speaker 1: A lot of marketing, a lot of cloudiness, and the
Speaker 1: prices these days, especially online, So that'll help kind of
Speaker 1: cut through the bs I guess, so that you can
Speaker 1: actually know, well, is this a deal or is it not?
Speaker 1: Checking the previous price history helps.
Speaker 2: A lot, but chances are you probably need less stuff
Speaker 2: just overall, don't we all?
Speaker 1: We do?
Speaker 2: I do, I'm trying to. I mean, we are trying
Speaker 2: to spend so much more, not trying to spend more
Speaker 2: when we are looking to spend, like as we're looking
Speaker 2: ahead to the holidays, like we are, we've already purchased
Speaker 2: tickets because we're gonna focus on trying to do more
Speaker 2: experiences with the kids as opposed to just filling the
Speaker 2: house with stuff that we're just like, oh.
Speaker 1: Why did we why did we sign ourselves up for this?
Speaker 1: And then the rooms are an awful mess. And yeah,
Speaker 1: and kids are like where's my stuff failure as well,
Speaker 1: because they're just like oh, because.
Speaker 2: Then they can't keep up with stuff and can't clean
Speaker 2: their rooms.
Speaker 1: All right, that's gonna do it for this one, Matt. Yeah,
Speaker 1: we'll put links to some of the stuff we mentioned
Speaker 1: up in the show notes on our website at howtomoney
Speaker 1: dot com. But until next time, best friends Out, Best
Speaker 1: Friends Out,