1 00:00:00,120 --> 00:00:02,559 Speaker 1: Welcome to How the Money. I'm Joel and I'm Matt, 2 00:00:02,560 --> 00:00:25,040 Speaker 1: and today we are responding to rate higist area. You know, 3 00:00:25,040 --> 00:00:28,840 Speaker 1: a man, we are talking about the dramatic increase in 4 00:00:28,840 --> 00:00:31,720 Speaker 1: interest rates that we've seen. This is a huge deal 5 00:00:31,800 --> 00:00:34,479 Speaker 1: because I mean, basically, we haven't seen an increase this 6 00:00:34,600 --> 00:00:37,440 Speaker 1: quickly since the eighties. It's been something like forty years, 7 00:00:38,040 --> 00:00:41,440 Speaker 1: which it's not a coincidence that there's another thing that 8 00:00:41,479 --> 00:00:44,080 Speaker 1: we haven't seen in forty years, inflation at the rate 9 00:00:44,120 --> 00:00:46,360 Speaker 1: that we've seen it, and so it makes total sense 10 00:00:46,400 --> 00:00:49,160 Speaker 1: that we are now seeing interest rates increase at this clip. 11 00:00:49,440 --> 00:00:51,280 Speaker 1: This is a big deal, and so we're excited to 12 00:00:51,400 --> 00:00:54,320 Speaker 1: dedicate an entire episode to interest rates today. Yeah. Well, 13 00:00:54,360 --> 00:00:56,640 Speaker 1: and there's a lot of confusion right about what it means, 14 00:00:56,680 --> 00:00:58,320 Speaker 1: but there's also a lot of confusion about what the 15 00:00:58,360 --> 00:01:00,640 Speaker 1: impact is, and not just on our our economy, but 16 00:01:00,680 --> 00:01:03,120 Speaker 1: there are a lot of like micro economic impacts, like 17 00:01:03,120 --> 00:01:04,880 Speaker 1: a lot of a lot of things that are going 18 00:01:04,920 --> 00:01:07,080 Speaker 1: to affect every single one of us in one way 19 00:01:07,160 --> 00:01:10,080 Speaker 1: or another. So we're gonna talk about like the myriad impacts, 20 00:01:10,080 --> 00:01:12,559 Speaker 1: like all of the different ways in which these fed 21 00:01:12,640 --> 00:01:15,240 Speaker 1: rate hikes are going to influence the way we live 22 00:01:15,280 --> 00:01:17,440 Speaker 1: our daily lives and the way we're gonna talk about 23 00:01:17,440 --> 00:01:20,520 Speaker 1: the way that they impact our personal finances on today's show. 24 00:01:20,520 --> 00:01:22,039 Speaker 1: But Matt, before we get to that, I wanted to 25 00:01:22,120 --> 00:01:25,679 Speaker 1: mention that I told you, obviously I held my head 26 00:01:25,720 --> 00:01:27,800 Speaker 1: in shame a little bit that I cracked the screen 27 00:01:28,080 --> 00:01:31,640 Speaker 1: my brand new phone within like a week or two 28 00:01:31,800 --> 00:01:34,160 Speaker 1: right after getting it, and you didn't tell me. I 29 00:01:34,200 --> 00:01:36,440 Speaker 1: caught you. I was trying to hide it from you. 30 00:01:36,480 --> 00:01:38,200 Speaker 1: I saw it. I was just like, what is that? 31 00:01:39,080 --> 00:01:40,959 Speaker 1: And I felt like an idiot because it had dropped 32 00:01:41,000 --> 00:01:43,399 Speaker 1: off my side table. But I'm looking at it now 33 00:01:43,640 --> 00:01:45,039 Speaker 1: and it looks like you've got a brand new screen 34 00:01:45,080 --> 00:01:47,360 Speaker 1: on there, and so it does fill me in. Okay, 35 00:01:47,400 --> 00:01:49,880 Speaker 1: so it's not a brand new screen, it's a brand 36 00:01:49,880 --> 00:01:54,080 Speaker 1: new phone. And because I told listeners, the whole part 37 00:01:54,080 --> 00:01:57,480 Speaker 1: of the whole reason I upgraded was because Google was 38 00:01:57,520 --> 00:02:00,080 Speaker 1: paying me three for a phone that I bought for 39 00:02:00,240 --> 00:02:03,400 Speaker 1: three or fifty two years ago, so basically almost full 40 00:02:03,400 --> 00:02:05,720 Speaker 1: price for a piece of crap phone that was messed up. 41 00:02:06,120 --> 00:02:08,080 Speaker 1: And so that's that was part of the reason I 42 00:02:08,080 --> 00:02:10,920 Speaker 1: was like cool, alright, timed up grade. And uh, then 43 00:02:10,919 --> 00:02:12,560 Speaker 1: after I cracked my screen. I was like, man, I'm 44 00:02:12,600 --> 00:02:14,960 Speaker 1: so bummed, but I'm I'm I'm not going to pay 45 00:02:15,480 --> 00:02:18,400 Speaker 1: a hundred dollars or whatever or to to fix my screen. 46 00:02:18,440 --> 00:02:21,240 Speaker 1: I'm just going to suck it up. And I deserve. 47 00:02:21,320 --> 00:02:22,760 Speaker 1: I deserve to live with the crack screen for being 48 00:02:22,760 --> 00:02:26,080 Speaker 1: an idiot. But I realized, wait a second, these Google 49 00:02:26,120 --> 00:02:29,240 Speaker 1: trade in deals are still happening, and so what I 50 00:02:29,280 --> 00:02:32,359 Speaker 1: did was I bought the same deal, did you I 51 00:02:32,480 --> 00:02:35,600 Speaker 1: used the same deal, yes, but with my parents Gmail address, 52 00:02:35,639 --> 00:02:38,920 Speaker 1: because only one trade in for Gmail address, and so 53 00:02:38,960 --> 00:02:40,960 Speaker 1: I had to go out there on Facebook market floor 54 00:02:40,960 --> 00:02:43,800 Speaker 1: achieved they weren't using it, they were fine with it, 55 00:02:44,280 --> 00:02:46,360 Speaker 1: and so they I had to go out there and 56 00:02:46,400 --> 00:02:49,800 Speaker 1: buy an iPhone eight for sixty bucks on Facebook Marketplace. 57 00:02:50,120 --> 00:02:52,160 Speaker 1: But the trade in value according to Google, because like 58 00:02:52,160 --> 00:02:54,760 Speaker 1: I said, they're doing these outside trading values, was three 59 00:02:54,840 --> 00:02:58,359 Speaker 1: hundred and eighty five dollars even more than holy crap, 60 00:02:58,480 --> 00:03:01,120 Speaker 1: I know for an iPhone eight iPhone eight Basic, and 61 00:03:01,160 --> 00:03:03,160 Speaker 1: even it had a willing to pay a premium to 62 00:03:03,160 --> 00:03:05,720 Speaker 1: the Apple users because they're like those suckers are used 63 00:03:05,720 --> 00:03:08,639 Speaker 1: to paying a ton of money exactly. So basically I've 64 00:03:08,680 --> 00:03:11,960 Speaker 1: paid uh, all in all the sixty bucks plus there 65 00:03:12,040 --> 00:03:15,080 Speaker 1: was like just just under a hundred dollar gap and 66 00:03:15,200 --> 00:03:17,160 Speaker 1: wanted to pay for this new home. So once I'm 67 00:03:17,240 --> 00:03:20,040 Speaker 1: my plan is to sell now my old pixel, the 68 00:03:20,600 --> 00:03:22,920 Speaker 1: brand new old pixel that has a crack in it, 69 00:03:23,080 --> 00:03:25,639 Speaker 1: for a hundred fifty bucks on Facebook Marketplace and I'll 70 00:03:26,520 --> 00:03:28,680 Speaker 1: I'll get out of this scott free. I'll even with 71 00:03:28,760 --> 00:03:32,680 Speaker 1: a new screen in hand. Nice. And obviously this is 72 00:03:32,720 --> 00:03:35,040 Speaker 1: this is just for the hardware, right, that's right. We 73 00:03:35,040 --> 00:03:36,760 Speaker 1: we love mitt Mobile and so you're not it's not 74 00:03:36,800 --> 00:03:39,560 Speaker 1: like you're doing this and locking into an additional two 75 00:03:39,640 --> 00:03:42,200 Speaker 1: years and another two years, and so you're not like 76 00:03:42,240 --> 00:03:45,440 Speaker 1: signed up with like Verizon for five years. This isn't 77 00:03:45,440 --> 00:03:47,760 Speaker 1: gonna deal with the devil like that. And typically where 78 00:03:47,760 --> 00:03:51,200 Speaker 1: you soldiers sold, typically when you see generous trade in 79 00:03:51,760 --> 00:03:54,520 Speaker 1: rebates like this, it is right, That's almost always how 80 00:03:54,560 --> 00:03:57,119 Speaker 1: it works is that it's with a particular cell phone 81 00:03:57,160 --> 00:03:59,560 Speaker 1: company and they're saying, great, we'll give you six h 82 00:04:00,120 --> 00:04:01,400 Speaker 1: for your piece of crap old phone if you get 83 00:04:01,400 --> 00:04:04,640 Speaker 1: this new phone, but you're you're indentured to us for 84 00:04:04,680 --> 00:04:07,520 Speaker 1: the next two years. But no, this was directly with Google, 85 00:04:07,600 --> 00:04:09,280 Speaker 1: just for the hardware. So I can still be a 86 00:04:09,320 --> 00:04:12,120 Speaker 1: free agent. I'm not locked in anywhere service wise. Nice 87 00:04:12,360 --> 00:04:14,560 Speaker 1: kind of makes me think of a discussion you and 88 00:04:14,600 --> 00:04:17,039 Speaker 1: I have had off the air. Is it propane Taxi 89 00:04:17,080 --> 00:04:20,080 Speaker 1: which is now Cinch but using a different credit card 90 00:04:20,160 --> 00:04:23,200 Speaker 1: in order to take advantage of the new customer offer. Yeah, 91 00:04:23,400 --> 00:04:25,080 Speaker 1: we're not going to get into that on this one, 92 00:04:25,120 --> 00:04:29,360 Speaker 1: but he said, we came down saying raises a similar question. 93 00:04:29,360 --> 00:04:31,839 Speaker 1: I feel like, you know, using my parents Gmail address 94 00:04:31,880 --> 00:04:33,520 Speaker 1: to do this. I asked them. I was like, you 95 00:04:33,560 --> 00:04:35,719 Speaker 1: guys play with us, and they're like, yeah, it works 96 00:04:35,760 --> 00:04:38,520 Speaker 1: for us. We're used to your odd money. You're the 97 00:04:38,520 --> 00:04:41,440 Speaker 1: same guy that is getting the free meals for the 98 00:04:41,520 --> 00:04:43,760 Speaker 1: home meal delivery kits and where he's getting the boxes 99 00:04:43,800 --> 00:04:47,039 Speaker 1: mail to somebody else comes remember that, listen, done that yet? 100 00:04:47,080 --> 00:04:52,320 Speaker 1: But I will say the propane delivery services, I swear 101 00:04:52,839 --> 00:04:55,560 Speaker 1: that they don't completely fill those jokers up. Whenever I 102 00:04:55,600 --> 00:04:57,760 Speaker 1: get a tank from one of those services, it doesn't 103 00:04:57,800 --> 00:04:59,520 Speaker 1: seem like it lasts nearly as long. And so I 104 00:04:59,560 --> 00:05:01,200 Speaker 1: don't know if that's a part of their model where 105 00:05:01,200 --> 00:05:03,680 Speaker 1: they're kind of like, you know, with corners of a tank. 106 00:05:03,760 --> 00:05:06,680 Speaker 1: It's pretty full. But I'm not gonna disparage them. I'm 107 00:05:06,680 --> 00:05:09,880 Speaker 1: gonna assume the best and maybe instead we had a 108 00:05:09,920 --> 00:05:12,840 Speaker 1: leak with our grill, with our flat top. But Joel, 109 00:05:12,880 --> 00:05:15,400 Speaker 1: let's quickly introduced our our beer for this episode. This 110 00:05:15,440 --> 00:05:19,200 Speaker 1: is called scotia By and we've been saying it wrong 111 00:05:19,240 --> 00:05:21,920 Speaker 1: evidently this whole time. It's not Boss Brewing and you 112 00:05:21,960 --> 00:05:24,280 Speaker 1: wrote you were done like boss k it's Boss QUI. 113 00:05:24,640 --> 00:05:27,560 Speaker 1: I've heard multiple people say Bosky, Okay, Bosky. I think 114 00:05:27,560 --> 00:05:30,280 Speaker 1: that's right, man, are are are well? Bob, who donated 115 00:05:30,279 --> 00:05:31,839 Speaker 1: these beers to the show, he emailed me. He's like, guys, 116 00:05:31,839 --> 00:05:35,320 Speaker 1: you're saying it wrong and stuff. I was like, okay, sorry, Bob, sorry, 117 00:05:35,320 --> 00:05:37,440 Speaker 1: we've already we've been saying it wrong for like four episodes, 118 00:05:37,480 --> 00:05:40,240 Speaker 1: two different pronunciations. Okay, but it's Bosky. I heard other 119 00:05:40,240 --> 00:05:42,840 Speaker 1: folks say Bosky okay. So I don't know you can 120 00:05:42,880 --> 00:05:45,240 Speaker 1: you can say it that way. But thanks for correcting us, Bob. 121 00:05:45,360 --> 00:05:47,960 Speaker 1: There our best pronunciations, not our strong suit. But Matt, 122 00:05:48,040 --> 00:05:50,159 Speaker 1: let's get onto the topic at hand. We're talking about 123 00:05:50,560 --> 00:05:55,000 Speaker 1: rate high hysteria and what our response should be as individuals, 124 00:05:55,360 --> 00:05:56,960 Speaker 1: and I don't I always like to start out with 125 00:05:57,000 --> 00:05:59,240 Speaker 1: a nerdy story or allegory and let's get let's get 126 00:05:59,279 --> 00:06:02,600 Speaker 1: real nerdy here. Because and I haven't actually watched any 127 00:06:02,600 --> 00:06:04,920 Speaker 1: of the new Lord of the Ring series on Amazon. 128 00:06:04,960 --> 00:06:06,559 Speaker 1: Have you seen any of you yet? I have? Okay, 129 00:06:06,920 --> 00:06:09,559 Speaker 1: can have watched four of them and have any ratings? 130 00:06:09,680 --> 00:06:13,359 Speaker 1: Is good? It is? It's pretty good. Okay, it's a 131 00:06:13,360 --> 00:06:16,320 Speaker 1: little slow, I will say that, but we're in it. Okay. Now, 132 00:06:16,320 --> 00:06:18,680 Speaker 1: we don't watch TV often, like, there aren't many shows 133 00:06:18,680 --> 00:06:20,600 Speaker 1: that we that we both like, and so this is 134 00:06:20,680 --> 00:06:22,880 Speaker 1: one that we both can sit down once a week 135 00:06:23,200 --> 00:06:26,360 Speaker 1: watch a little bit of TV unwind. We have enjoyed them. Why. 136 00:06:26,440 --> 00:06:28,600 Speaker 1: I was thinking old school when I was thinking about 137 00:06:28,640 --> 00:06:31,280 Speaker 1: this episode, and I was thinking about the first Lord 138 00:06:31,320 --> 00:06:34,200 Speaker 1: of the Rings book, the original. Yeah, when Frodo he's 139 00:06:34,320 --> 00:06:37,320 Speaker 1: he's comfortably living in the Shire, but then Gandolf comes 140 00:06:37,320 --> 00:06:40,960 Speaker 1: along and he disrupts everything. He basically says like, you 141 00:06:41,000 --> 00:06:42,400 Speaker 1: need to leave it, go on this quest in order 142 00:06:42,440 --> 00:06:44,919 Speaker 1: to save the world and to save the Shire. And 143 00:06:45,080 --> 00:06:48,159 Speaker 1: if you opted to stay here instead, well the Shire 144 00:06:48,200 --> 00:06:51,040 Speaker 1: is doomed. It's gonna it's gonna get destroyed. So Frodo 145 00:06:51,120 --> 00:06:54,480 Speaker 1: is like, yes, I gotta go. He gets convinced. In fact, 146 00:06:54,520 --> 00:06:57,120 Speaker 1: he he wants to go because he understands the call. 147 00:06:57,320 --> 00:06:59,919 Speaker 1: You call that in order to not save the world 148 00:07:00,000 --> 00:07:02,560 Speaker 1: of the Middle Earth Jewel. That's right, Middle Earth, My bad. 149 00:07:02,680 --> 00:07:04,840 Speaker 1: I'm not as much of a ring head as you are. 150 00:07:04,839 --> 00:07:06,560 Speaker 1: I don't know what they call him, but yes, so 151 00:07:06,640 --> 00:07:09,120 Speaker 1: similar to Froto, maybe we might think that, like the 152 00:07:09,400 --> 00:07:13,840 Speaker 1: recent rate hikes from policymakers who have white hair and 153 00:07:14,160 --> 00:07:17,200 Speaker 1: pressing suits, are not going to impact us significantly in 154 00:07:17,240 --> 00:07:19,480 Speaker 1: our normal, everyday lives. I think Photo at the beginning 155 00:07:19,560 --> 00:07:23,160 Speaker 1: is like, cool, that's that's this battle taking place somewhere else, 156 00:07:23,360 --> 00:07:25,120 Speaker 1: and Gandolf has to convince him, well, no, it's it's 157 00:07:25,120 --> 00:07:29,000 Speaker 1: gonna come impact you. And the ramifications for these rate 158 00:07:29,040 --> 00:07:32,160 Speaker 1: hikes are actually many. For for us, they reverberate far 159 00:07:32,240 --> 00:07:34,280 Speaker 1: and wide. And so we're gonna talk today about how 160 00:07:34,280 --> 00:07:37,000 Speaker 1: they're impacting you and what your reaction should be. We're 161 00:07:37,000 --> 00:07:39,280 Speaker 1: going to dive into all that tonight, right. Yeah, I 162 00:07:39,280 --> 00:07:41,920 Speaker 1: think this this can be a really helpful illustration, but 163 00:07:42,080 --> 00:07:44,200 Speaker 1: I only think it goes It only goes so far 164 00:07:44,760 --> 00:07:48,440 Speaker 1: because while the one ring was just straight up evil, 165 00:07:48,720 --> 00:07:51,520 Speaker 1: higher interest rates aren't. Even though we do believe that 166 00:07:51,520 --> 00:07:54,400 Speaker 1: the impacts of higher interest rates are just as far 167 00:07:54,440 --> 00:07:57,440 Speaker 1: reaching as the reach of the one ring, the reach 168 00:07:57,520 --> 00:08:01,440 Speaker 1: of Sauron and I shared the all seeing Yeah. Um, 169 00:08:01,840 --> 00:08:04,400 Speaker 1: I mentioned this too because it seems like I swear 170 00:08:04,440 --> 00:08:05,840 Speaker 1: the FED. It feels like they've been getting a lot 171 00:08:05,840 --> 00:08:08,680 Speaker 1: of hate recently. Um. And I'm not a Fed apologist 172 00:08:08,680 --> 00:08:11,240 Speaker 1: by any means, but the raising of rates like this 173 00:08:11,360 --> 00:08:14,480 Speaker 1: is the natural outcome with the amount of inflation that 174 00:08:14,520 --> 00:08:16,960 Speaker 1: we have been experiencing. Um. I think everyone has just 175 00:08:16,960 --> 00:08:18,920 Speaker 1: gotten so used to the bull market over the past 176 00:08:18,960 --> 00:08:22,160 Speaker 1: thirteen years. But this has to happen, you know that, 177 00:08:22,320 --> 00:08:25,640 Speaker 1: like the FED getting involved here, Like it's a double 178 00:08:25,720 --> 00:08:27,520 Speaker 1: edged short And so if you are happy about the 179 00:08:27,520 --> 00:08:30,400 Speaker 1: FED lowering interest rates at times in order to give 180 00:08:30,440 --> 00:08:32,760 Speaker 1: the economy a little boost, you have to be willing 181 00:08:32,840 --> 00:08:35,400 Speaker 1: to see them kind of you know, put a wet 182 00:08:35,520 --> 00:08:37,720 Speaker 1: rag on things. You've got to take your medicine when 183 00:08:37,720 --> 00:08:41,360 Speaker 1: it's do exactly it's and it's at this point. Uh yeah, 184 00:08:41,440 --> 00:08:44,160 Speaker 1: So rate hikes they're not inherently evil. They're more of 185 00:08:44,200 --> 00:08:47,079 Speaker 1: a tool to help slow this economy that's out of control. 186 00:08:47,240 --> 00:08:50,520 Speaker 1: It's a way of slowing these rapidly increasing prices that 187 00:08:50,559 --> 00:08:52,640 Speaker 1: we've seen, and so our goal today is to help 188 00:08:52,640 --> 00:08:56,720 Speaker 1: you to decipher and to translate what this dramatic increase 189 00:08:56,760 --> 00:08:59,440 Speaker 1: in interest rates what that means for you and your money. 190 00:08:59,800 --> 00:09:02,160 Speaker 1: Because you you can't stay in your sunny and you're 191 00:09:02,240 --> 00:09:05,320 Speaker 1: you're safe shire. Eventually, these high interest rates, they are 192 00:09:05,360 --> 00:09:07,560 Speaker 1: going to find you. So you may as well ride 193 00:09:07,600 --> 00:09:09,719 Speaker 1: out into the sun and meet them head on. Right, 194 00:09:09,800 --> 00:09:12,319 Speaker 1: that's right. Well, let's let's take into some some history 195 00:09:12,360 --> 00:09:13,880 Speaker 1: here for a second, Matt, because I think that's going 196 00:09:13,960 --> 00:09:17,000 Speaker 1: to help us all understand a little bit more of 197 00:09:17,320 --> 00:09:19,480 Speaker 1: why rate hikes happened. Maybe some of the history of 198 00:09:19,559 --> 00:09:21,760 Speaker 1: rate high important to know what happened in the past, 199 00:09:22,000 --> 00:09:24,320 Speaker 1: just like within all the Lord of the Rings books 200 00:09:24,320 --> 00:09:27,079 Speaker 1: and the Rings of Power, you always dive into the 201 00:09:27,120 --> 00:09:29,480 Speaker 1: past like it's so important. That's right. You're seeing songs 202 00:09:29,520 --> 00:09:34,640 Speaker 1: about the past, read inscriptions on mountains that commemorate the past. 203 00:09:34,679 --> 00:09:36,719 Speaker 1: It's true. Yes, okay, all right, I like it. I 204 00:09:36,760 --> 00:09:38,360 Speaker 1: didn't realize we were going to go this far with 205 00:09:38,400 --> 00:09:41,400 Speaker 1: the analogy, but I'll stop. Okay, But yeah, let's take 206 00:09:41,400 --> 00:09:43,560 Speaker 1: into some history because I think that that helps us 207 00:09:43,679 --> 00:09:46,199 Speaker 1: understand why rate hikes happen. And the impact they've had 208 00:09:46,240 --> 00:09:48,959 Speaker 1: in the past. And so, uh, the name that it's 209 00:09:49,000 --> 00:09:51,120 Speaker 1: kind of going around right now that you might see 210 00:09:51,160 --> 00:09:53,679 Speaker 1: in headlines or news articles you're reading is the name 211 00:09:53,679 --> 00:09:56,200 Speaker 1: of Paul Volkler. A lot of folks are gonna recognize 212 00:09:56,240 --> 00:09:58,600 Speaker 1: his name now that maybe didn't realize who he was 213 00:09:58,640 --> 00:10:01,400 Speaker 1: two years ago. And it's been on the tip of 214 00:10:01,400 --> 00:10:03,480 Speaker 1: a lot of tongues because he was the chairman of 215 00:10:03,480 --> 00:10:06,000 Speaker 1: the FED the last time we had soaring inflation, like 216 00:10:06,040 --> 00:10:08,640 Speaker 1: we're saying now, right in the late seventies early eighties. 217 00:10:08,679 --> 00:10:11,600 Speaker 1: And uh, there's a name though that you're probably less 218 00:10:11,600 --> 00:10:14,040 Speaker 1: familiar with, and William Miller. He was the FED chair 219 00:10:14,120 --> 00:10:17,480 Speaker 1: right before Volker and his his lack of action actually 220 00:10:17,480 --> 00:10:20,160 Speaker 1: allowed the situation, allowed inflation to get out of hand. 221 00:10:20,400 --> 00:10:22,880 Speaker 1: And so by the time that Paul Volker took over 222 00:10:23,440 --> 00:10:27,199 Speaker 1: that job, America was experiencing double digit inflation in nine 223 00:10:27,760 --> 00:10:29,840 Speaker 1: which is just a little bit worse than what we're 224 00:10:29,840 --> 00:10:32,880 Speaker 1: actually experiencing now. And and there were worse actually in 225 00:10:32,880 --> 00:10:34,839 Speaker 1: a lot of ways, because mortgage rates were sky high, 226 00:10:35,200 --> 00:10:37,920 Speaker 1: gas prices were to the job market was also weak 227 00:10:38,200 --> 00:10:41,080 Speaker 1: on like what we're currently experiencing, and it took a 228 00:10:41,080 --> 00:10:42,839 Speaker 1: lot of a lot of huts, but to get to 229 00:10:42,880 --> 00:10:45,360 Speaker 1: go down the path that Volker took hiking rates quickly 230 00:10:45,360 --> 00:10:48,360 Speaker 1: in order to tamp down inflation. But he believed that 231 00:10:48,400 --> 00:10:50,199 Speaker 1: it turned out it looks like he was right that 232 00:10:50,240 --> 00:10:53,600 Speaker 1: it was this necessary route to prevent prices from spiraling 233 00:10:53,600 --> 00:10:57,360 Speaker 1: out of control. And Ben Bernanke, who was another head 234 00:10:57,480 --> 00:10:59,760 Speaker 1: of the Federal Reserve, I think he said it best 235 00:10:59,760 --> 00:11:03,120 Speaker 1: when he said the vulcar personified the idea of doing 236 00:11:03,160 --> 00:11:06,719 Speaker 1: something politically unpopular but economically necessary. That was kind of 237 00:11:07,080 --> 00:11:10,000 Speaker 1: Volker's role, and that's why we're kind of looking at 238 00:11:10,040 --> 00:11:12,400 Speaker 1: what he did in the past is informing kind of 239 00:11:12,440 --> 00:11:14,720 Speaker 1: the present and and the way the FED is currently 240 00:11:14,720 --> 00:11:17,240 Speaker 1: reacting to out of control inflation. Yep. Yeah, I think 241 00:11:17,240 --> 00:11:19,800 Speaker 1: we're seeing a repeat essentially of that, because I mean, 242 00:11:19,960 --> 00:11:22,240 Speaker 1: like in the early eighties inflation it was close to 243 00:11:22,360 --> 00:11:26,240 Speaker 1: fiftent and within within just a few years after raising 244 00:11:26,640 --> 00:11:28,959 Speaker 1: interest rates. Uh, just a few years later, we saw 245 00:11:29,000 --> 00:11:31,800 Speaker 1: inflation come down in the three percent range. Uh. And 246 00:11:31,840 --> 00:11:34,280 Speaker 1: hopefully we will see some you know, a dramatic shift 247 00:11:34,320 --> 00:11:37,240 Speaker 1: like that again with the increase in rates. But uh, 248 00:11:37,400 --> 00:11:40,439 Speaker 1: let's also give an opposite historical example to help put 249 00:11:40,440 --> 00:11:43,200 Speaker 1: things in perspective because as the housing market collapse, this 250 00:11:43,240 --> 00:11:45,280 Speaker 1: is back in two thousand eight, two thousand nine, the 251 00:11:45,400 --> 00:11:49,000 Speaker 1: economy was sent into a tailspin. You might remember that 252 00:11:49,040 --> 00:11:51,600 Speaker 1: folks were leaving, losing their homes, folks were getting fired, 253 00:11:52,120 --> 00:11:54,480 Speaker 1: and so the Fed they were looking to heat the 254 00:11:54,480 --> 00:11:57,800 Speaker 1: economy back up, and that meant the opposite of what 255 00:11:57,920 --> 00:12:01,400 Speaker 1: Volker did, lowering the interest rate. The Fed funds rate 256 00:12:01,559 --> 00:12:03,559 Speaker 1: was something like four and a half percent at the 257 00:12:03,640 --> 00:12:06,360 Speaker 1: end of two thousand and seven. By the fall of 258 00:12:06,400 --> 00:12:08,040 Speaker 1: the next year, in two thousand and eight, it was 259 00:12:08,040 --> 00:12:10,680 Speaker 1: down to two percent. But the Fed they kept going 260 00:12:10,920 --> 00:12:14,800 Speaker 1: as the economy continued it's malaise, lowering interest rates to 261 00:12:15,000 --> 00:12:18,640 Speaker 1: effectively zero. Uh. And so we we share this because 262 00:12:18,679 --> 00:12:22,400 Speaker 1: the Fed fund rate it's a tool that if used properly, 263 00:12:22,440 --> 00:12:25,000 Speaker 1: it can help boost the economy when things aren't going 264 00:12:25,040 --> 00:12:27,240 Speaker 1: so well. Uh. And it can also be used to 265 00:12:27,360 --> 00:12:31,600 Speaker 1: tamp down exuberance when things are going a little too hot, 266 00:12:31,640 --> 00:12:34,120 Speaker 1: like we've seen over the past year. That way things 267 00:12:34,240 --> 00:12:37,959 Speaker 1: don't continue to skyrocket and spiral out of control. Yeah, 268 00:12:38,000 --> 00:12:40,040 Speaker 1: it's kind of a rough tool, but it's a tool 269 00:12:40,440 --> 00:12:42,480 Speaker 1: that has a lot of power. It's a tool of 270 00:12:42,559 --> 00:12:45,640 Speaker 1: last resort which can be used in both ways, right exactly. Yeah, 271 00:12:45,679 --> 00:12:48,360 Speaker 1: it's a double edged sword, um, And I mean, you know, 272 00:12:48,360 --> 00:12:49,839 Speaker 1: not like we were talking about this recently, but I 273 00:12:49,840 --> 00:12:52,080 Speaker 1: think a lot of times folks complain about the FED 274 00:12:52,120 --> 00:12:53,680 Speaker 1: and the job that they have to do. It should 275 00:12:53,720 --> 00:12:55,600 Speaker 1: be a tool for the last resort. But honestly, there 276 00:12:55,640 --> 00:12:58,440 Speaker 1: should be a lot more legislation that happens prior to 277 00:12:58,559 --> 00:13:01,680 Speaker 1: this what almost feels like like the like the nuclear 278 00:13:01,720 --> 00:13:04,080 Speaker 1: option essentially, which is raising interest rates? Does anyone who's 279 00:13:04,080 --> 00:13:07,160 Speaker 1: followed Congress knows there's not much action going on in 280 00:13:07,200 --> 00:13:10,800 Speaker 1: that deliberative body or and even calling them a deliberative 281 00:13:10,840 --> 00:13:13,360 Speaker 1: body is probably too high price these days. But yeah, 282 00:13:13,360 --> 00:13:16,400 Speaker 1: you would expect more things to be happening there, and 283 00:13:16,440 --> 00:13:18,319 Speaker 1: since they're not, it feels like the Federals has to 284 00:13:18,360 --> 00:13:20,400 Speaker 1: kind of be the adult in the room. It's it's 285 00:13:20,400 --> 00:13:22,880 Speaker 1: which which can also be frustrating because it's like, this 286 00:13:22,920 --> 00:13:25,320 Speaker 1: is a guy that we didn't elect and so he's 287 00:13:25,360 --> 00:13:26,920 Speaker 1: the one calling the shots, and so I think there 288 00:13:26,960 --> 00:13:29,440 Speaker 1: can be a degree of frustration there. And so unfortunately 289 00:13:29,440 --> 00:13:31,240 Speaker 1: that's just where things are when nobody else is gonna 290 00:13:31,240 --> 00:13:33,560 Speaker 1: step up somebody's got to do it, and it takes 291 00:13:33,559 --> 00:13:35,600 Speaker 1: the right person to write, because like that's the difference 292 00:13:35,640 --> 00:13:39,400 Speaker 1: between William Miller and Vulcar is. Like Volker he had 293 00:13:39,600 --> 00:13:41,480 Speaker 1: the personality to be like, you know what, everyone's gonna 294 00:13:41,480 --> 00:13:43,280 Speaker 1: hate me, but I'm I've got to do this. It's 295 00:13:43,280 --> 00:13:47,280 Speaker 1: only gonna make me stronger. Well, it's also it's also 296 00:13:47,320 --> 00:13:51,920 Speaker 1: probably good to explain maybe exactly what the interest rate is, 297 00:13:51,960 --> 00:13:54,520 Speaker 1: the interest rate that we're talking about, because the Fed 298 00:13:54,640 --> 00:13:56,559 Speaker 1: we talked about interest rates all the time on the 299 00:13:56,559 --> 00:13:59,040 Speaker 1: show Man. We're talking about mortgage interest rates, credit card 300 00:13:59,040 --> 00:14:02,600 Speaker 1: interest rates, those are all different things. But the interest 301 00:14:02,679 --> 00:14:05,480 Speaker 1: rate that we're discussing here, is it like the ring 302 00:14:05,520 --> 00:14:07,480 Speaker 1: of power? Is it like the one ring to rule 303 00:14:07,520 --> 00:14:09,520 Speaker 1: them all? And kind of sort of kind of sort 304 00:14:09,520 --> 00:14:13,960 Speaker 1: of like that, But it's the FED isn't necessarily telling 305 00:14:14,440 --> 00:14:16,559 Speaker 1: banks like C I T or Marcus or ally or 306 00:14:16,600 --> 00:14:19,280 Speaker 1: whatever to increase what they're paying you in your high 307 00:14:19,320 --> 00:14:22,000 Speaker 1: yield save music account. But the FED is setting the 308 00:14:22,080 --> 00:14:24,800 Speaker 1: rate the banks change when they lend money to each other. 309 00:14:25,120 --> 00:14:27,760 Speaker 1: Essentially the cost of doing business, right, That's what this 310 00:14:27,800 --> 00:14:30,400 Speaker 1: FED rate is. So think of it as kind of 311 00:14:30,440 --> 00:14:32,840 Speaker 1: like a base interest rate. It's it's kind of like 312 00:14:32,840 --> 00:14:35,680 Speaker 1: they're setting a new floor right for what what borrowing 313 00:14:35,720 --> 00:14:38,760 Speaker 1: rates are going to be. But then of course that 314 00:14:38,760 --> 00:14:42,080 Speaker 1: that rate that they they set has downstream effects that 315 00:14:42,120 --> 00:14:45,160 Speaker 1: directly impact our money and today, you know, the truth 316 00:14:45,240 --> 00:14:47,440 Speaker 1: is that there there was a lot of money pumped 317 00:14:47,440 --> 00:14:50,960 Speaker 1: into the American economy because of COVID, because the health crisis. 318 00:14:51,360 --> 00:14:54,240 Speaker 1: Much of it was necessary, especially early in the in 319 00:14:54,240 --> 00:14:56,840 Speaker 1: the early days of the pandemic, but a broken supply 320 00:14:56,960 --> 00:15:00,240 Speaker 1: chain combined with too much stimulus money is a ajor 321 00:15:00,280 --> 00:15:02,600 Speaker 1: reason we're in the position that we're in. And like 322 00:15:02,640 --> 00:15:04,760 Speaker 1: we said, Matt, not enough adults in the room doing 323 00:15:04,800 --> 00:15:06,400 Speaker 1: what needs to be done, and so the FED has 324 00:15:06,440 --> 00:15:09,560 Speaker 1: to basically combat some of the financial overreachs that we 325 00:15:09,600 --> 00:15:12,360 Speaker 1: saw happened last year. That's right, exactly. Yeah, that is 326 00:15:12,400 --> 00:15:14,360 Speaker 1: how and why we are in the position that we 327 00:15:14,400 --> 00:15:16,920 Speaker 1: are currently um And so you know, we like we 328 00:15:16,920 --> 00:15:19,440 Speaker 1: don't typically dive into this much history on the show, 329 00:15:19,960 --> 00:15:22,280 Speaker 1: but we think it's helpful to see the way that 330 00:15:22,400 --> 00:15:24,520 Speaker 1: rate hikes have been used in the past and the 331 00:15:24,520 --> 00:15:27,440 Speaker 1: impact that those rate cuts and bombs that they have 332 00:15:27,680 --> 00:15:30,520 Speaker 1: on the economy as a whole. But what we really 333 00:15:30,520 --> 00:15:33,600 Speaker 1: want to cover on this episode is how living within 334 00:15:33,800 --> 00:15:36,960 Speaker 1: an environment of FED interest rate hikes, which are likely 335 00:15:37,000 --> 00:15:39,320 Speaker 1: to continue until inflation starts to chill out a little bit, 336 00:15:39,680 --> 00:15:42,080 Speaker 1: how that is going to impact your personal finances. And 337 00:15:42,120 --> 00:15:44,160 Speaker 1: so we'll we'll get to what higher rates mean to 338 00:15:44,280 --> 00:15:46,840 Speaker 1: you as someone who's who's earning and spending their money, 339 00:15:46,880 --> 00:15:50,080 Speaker 1: as someone who's saving and investing as well. Uh, in 340 00:15:50,120 --> 00:15:51,880 Speaker 1: the here and now, we'll get to all of that 341 00:15:52,120 --> 00:16:03,680 Speaker 1: right after this. All right, mat, let's keep going. We're 342 00:16:03,720 --> 00:16:05,800 Speaker 1: not normally history buffs. We're not trying to do the 343 00:16:05,840 --> 00:16:08,800 Speaker 1: Dan Carlin thing hardcore money history or anything like that, 344 00:16:09,120 --> 00:16:12,440 Speaker 1: but buckle up for four more hours of this. Would man, 345 00:16:13,160 --> 00:16:15,240 Speaker 1: would you listen to Dan Carlin on four hours of 346 00:16:15,240 --> 00:16:16,840 Speaker 1: the Fed? Like, would he ever even do that? I 347 00:16:16,880 --> 00:16:18,440 Speaker 1: don't know. I'd listen to that. I would listen. I 348 00:16:18,480 --> 00:16:21,400 Speaker 1: mean that's because that's just what we like to talk about. Also, 349 00:16:21,760 --> 00:16:23,640 Speaker 1: like hearing about dudes got an amazing voice and a 350 00:16:23,640 --> 00:16:25,160 Speaker 1: lot of passion for he does, and so I would 351 00:16:25,160 --> 00:16:28,200 Speaker 1: listen to Dan Carlin talk about almost anything. But yeah, 352 00:16:28,240 --> 00:16:31,440 Speaker 1: let's let's talk about the things that matter to individual 353 00:16:31,440 --> 00:16:33,960 Speaker 1: how to money listeners and all of the various ways 354 00:16:34,400 --> 00:16:38,360 Speaker 1: in which FED rate hikes and what looked like continued 355 00:16:38,440 --> 00:16:41,200 Speaker 1: FED rate hikes moving into the future. How those are 356 00:16:41,240 --> 00:16:44,040 Speaker 1: going to affect their money. Let's talk Let's first talk 357 00:16:44,080 --> 00:16:47,840 Speaker 1: about how it's gonna affect spending, and because yeah, when 358 00:16:47,880 --> 00:16:51,640 Speaker 1: borrowing gets more expensive, it's inevitably going to cause individuals 359 00:16:51,680 --> 00:16:55,320 Speaker 1: to consume less. It makes sense, right, because especially in 360 00:16:55,320 --> 00:16:58,400 Speaker 1: a society where we're used to making payments on everything, right, 361 00:16:58,400 --> 00:17:00,600 Speaker 1: I mean, we don't really like that that's case, but 362 00:17:00,760 --> 00:17:03,680 Speaker 1: it is the case. People borrow to buy things that 363 00:17:03,760 --> 00:17:07,240 Speaker 1: they want. Well, when the item you buy, when the 364 00:17:07,240 --> 00:17:09,399 Speaker 1: item that you're interested in now cost more because the 365 00:17:09,440 --> 00:17:12,879 Speaker 1: cost of financing have increased, you're gonna buy less stuff. 366 00:17:12,960 --> 00:17:16,120 Speaker 1: It's it's just kind of a human reaction because it's 367 00:17:16,119 --> 00:17:18,000 Speaker 1: not like your rate of pay is increasing at the 368 00:17:18,040 --> 00:17:21,240 Speaker 1: same rate that not necessarily borrowing costs are increasing. They're 369 00:17:21,320 --> 00:17:23,160 Speaker 1: they're not right now, and so it's not like you've 370 00:17:23,200 --> 00:17:25,800 Speaker 1: got an unlimited pool of money that you can continue 371 00:17:25,800 --> 00:17:28,120 Speaker 1: to pay Like, we want people to be price conscious. 372 00:17:28,119 --> 00:17:29,800 Speaker 1: So this is what this allows folks to do is 373 00:17:29,840 --> 00:17:31,600 Speaker 1: to realize, oh, wait a minute, this is costing me 374 00:17:31,640 --> 00:17:33,600 Speaker 1: more money. I need to make some changes in my life. 375 00:17:33,760 --> 00:17:34,919 Speaker 1: We need to be able to have a little bit 376 00:17:34,920 --> 00:17:37,120 Speaker 1: of flexibility when it comes to our spending in this way. 377 00:17:37,200 --> 00:17:39,240 Speaker 1: In some ways it kind of it stinks, right the 378 00:17:39,240 --> 00:17:41,360 Speaker 1: borrowing costs are going off, we'll talk about that here 379 00:17:41,359 --> 00:17:43,720 Speaker 1: as well. But in other ways, it's like, okay, cool, 380 00:17:43,720 --> 00:17:45,320 Speaker 1: maybe it's gonna help us pump the brakes on stuff 381 00:17:45,320 --> 00:17:46,960 Speaker 1: that we shouldn't have been buying anyway. Yeah, that's the 382 00:17:47,080 --> 00:17:48,720 Speaker 1: that's the kind of that's the silver lining of it. 383 00:17:49,440 --> 00:17:52,240 Speaker 1: But the reality is that the annual percentage rate the 384 00:17:52,240 --> 00:17:56,240 Speaker 1: APR on credit cards is going up basically in lockstep 385 00:17:56,359 --> 00:17:59,639 Speaker 1: with the federal rate hikes, and those increases have an 386 00:17:59,640 --> 00:18:03,760 Speaker 1: immediate impact on your monthly payment if you're carrying a balance. 387 00:18:04,119 --> 00:18:07,080 Speaker 1: So if you've got some lingering credit card debt hanging around, 388 00:18:07,119 --> 00:18:10,119 Speaker 1: that debt, it's gonna cost you more money, right, Like 389 00:18:10,200 --> 00:18:12,160 Speaker 1: it's it's kind of crazy to think about. But it's 390 00:18:12,200 --> 00:18:14,320 Speaker 1: not just these future purchases that are going to cost 391 00:18:14,320 --> 00:18:16,200 Speaker 1: you more. It's the stuff that you've already purchased this 392 00:18:16,720 --> 00:18:19,440 Speaker 1: costing you more as well. Uh, debt in this way, 393 00:18:19,480 --> 00:18:22,399 Speaker 1: it's got this creative way of reaching into your past 394 00:18:22,920 --> 00:18:26,080 Speaker 1: and making you feel even more regret for the poor 395 00:18:26,119 --> 00:18:29,439 Speaker 1: decisions that you made when you see interest rates and 396 00:18:29,480 --> 00:18:32,920 Speaker 1: aprs increased like they've like they've been because that we 397 00:18:32,960 --> 00:18:35,200 Speaker 1: always suggest getting rid of credit card debt no matter what. 398 00:18:35,560 --> 00:18:39,040 Speaker 1: But that debt is morphing into something even worse right now, 399 00:18:39,040 --> 00:18:40,679 Speaker 1: and so we want you out. In this case, our 400 00:18:40,680 --> 00:18:43,680 Speaker 1: message isn't changing at all, but the urgency is changing 401 00:18:43,760 --> 00:18:46,440 Speaker 1: just slightly. Yeah, something that was bad is getting worse, 402 00:18:46,520 --> 00:18:49,240 Speaker 1: and so it's even more incumbent upon you if you 403 00:18:49,280 --> 00:18:52,280 Speaker 1: are in credit card debt, to make a plan to 404 00:18:52,320 --> 00:18:55,399 Speaker 1: get out of it more quickly. And so yeah, we 405 00:18:55,640 --> 00:18:57,879 Speaker 1: on debt dot. It is a place that we always recommend. 406 00:18:57,880 --> 00:18:59,240 Speaker 1: Will link to it again in the show Nuts on 407 00:18:59,359 --> 00:19:02,320 Speaker 1: debt it, and it is a tool that is completely 408 00:19:02,359 --> 00:19:03,920 Speaker 1: free that will help you come up with a plan. 409 00:19:04,680 --> 00:19:06,800 Speaker 1: And there's different ways you're can attack that that debt, 410 00:19:06,920 --> 00:19:08,240 Speaker 1: but it's gonna help you come up with a plan. 411 00:19:08,320 --> 00:19:11,280 Speaker 1: And having that plan in writing is what's going to 412 00:19:11,320 --> 00:19:13,399 Speaker 1: help you actually get out of that debt. If you 413 00:19:13,440 --> 00:19:15,359 Speaker 1: don't have a plan, it's really hard, Like you're just 414 00:19:15,440 --> 00:19:17,120 Speaker 1: kind of like I think I'm gonna throw an extra 415 00:19:17,160 --> 00:19:19,679 Speaker 1: twenty bucks here or there towards my debt. Typically it's 416 00:19:19,680 --> 00:19:21,120 Speaker 1: gonna take you a whole lot longer if you don't 417 00:19:21,160 --> 00:19:24,800 Speaker 1: have an actual written plan, a strategy to get rid 418 00:19:24,800 --> 00:19:27,280 Speaker 1: of it quickly. And if you're currently paying twenty plus 419 00:19:27,320 --> 00:19:29,919 Speaker 1: percent on a credit card and you just can't stomach it, 420 00:19:30,280 --> 00:19:33,000 Speaker 1: I get it. We would say a balanced transfer card 421 00:19:33,240 --> 00:19:35,560 Speaker 1: might make a ton of sense for you to will 422 00:19:35,600 --> 00:19:37,960 Speaker 1: link to our favorite balance transfer cards in the show notes. 423 00:19:38,080 --> 00:19:40,840 Speaker 1: But if you ought for this strategy, it's crucial again 424 00:19:41,200 --> 00:19:43,000 Speaker 1: to have a plan so that you aren't just racking 425 00:19:43,040 --> 00:19:45,800 Speaker 1: up more debt. Some people will transfer a balance, then 426 00:19:45,800 --> 00:19:47,600 Speaker 1: they'll wrack up debt on the card that they transfer 427 00:19:47,640 --> 00:19:50,800 Speaker 1: the balance from, just increasing their overall debtload. That is 428 00:19:50,800 --> 00:19:52,840 Speaker 1: not a place you want to be. But yeah, paying 429 00:19:52,880 --> 00:19:55,080 Speaker 1: it off with a little bit of like an interest 430 00:19:55,119 --> 00:19:58,199 Speaker 1: holiday can be the perfect way to accelerate progress. Again, 431 00:19:58,320 --> 00:20:00,760 Speaker 1: if you have a plan, and as rates are just 432 00:20:00,760 --> 00:20:02,760 Speaker 1: going to continue to go up on those credit cards, 433 00:20:03,000 --> 00:20:05,960 Speaker 1: it's important to formula that plan now and then get 434 00:20:06,040 --> 00:20:07,919 Speaker 1: after it. Yeah, if you don't have a plan, it's 435 00:20:07,920 --> 00:20:10,280 Speaker 1: sort of like instead of like pulling weeds up by 436 00:20:10,280 --> 00:20:12,040 Speaker 1: the route, you're just kind of like snipping the little 437 00:20:12,040 --> 00:20:14,600 Speaker 1: branches off. Knowing that it's just going to sprout back 438 00:20:14,600 --> 00:20:17,879 Speaker 1: even stronger as the routes continue to borrow down. You 439 00:20:17,920 --> 00:20:20,560 Speaker 1: basically need to be willing to enact some spending reform 440 00:20:21,080 --> 00:20:23,919 Speaker 1: when when it comes to your credit cards, like a 441 00:20:23,920 --> 00:20:28,359 Speaker 1: parole board to sign off exactly you you've become a 442 00:20:28,400 --> 00:20:32,280 Speaker 1: model prisoner, a model like whether or not you deserve 443 00:20:32,359 --> 00:20:36,960 Speaker 1: to get well. Helocks they come actually with very much 444 00:20:37,040 --> 00:20:39,560 Speaker 1: the same issues as credit cards. Rates. They have been 445 00:20:39,760 --> 00:20:42,800 Speaker 1: ridiculously low for folks who have been borrowing on their 446 00:20:42,840 --> 00:20:45,240 Speaker 1: homes to do work to their house typically, which was 447 00:20:45,320 --> 00:20:48,439 Speaker 1: a lot of people during it was, but that's been 448 00:20:48,520 --> 00:20:50,840 Speaker 1: changing now as rates have been on the rise. Depending 449 00:20:50,880 --> 00:20:53,640 Speaker 1: on the terms of your helock your home equity line 450 00:20:53,640 --> 00:20:57,359 Speaker 1: of credit, your rate can likely increase every single month. 451 00:20:57,600 --> 00:20:59,359 Speaker 1: And so, similar to the credit card debt that we 452 00:20:59,440 --> 00:21:02,879 Speaker 1: just mentioned, you are already paying more in interest for 453 00:21:02,880 --> 00:21:04,800 Speaker 1: the money that you borrowed, and then that interest rate 454 00:21:04,880 --> 00:21:07,600 Speaker 1: is likely going to continue to climb. Your Your once 455 00:21:07,720 --> 00:21:10,919 Speaker 1: ultra low rate might be creeping up well past five percent. 456 00:21:11,000 --> 00:21:13,400 Speaker 1: Now new helocks are in the six to seven percent range. 457 00:21:13,760 --> 00:21:17,280 Speaker 1: That might not demand your immediate attention like a credit 458 00:21:17,320 --> 00:21:20,000 Speaker 1: card ratewood, but it is something to watch out for. 459 00:21:20,080 --> 00:21:22,040 Speaker 1: It's something to keep an eye on, and it's worth 460 00:21:22,160 --> 00:21:26,000 Speaker 1: preparing to accelerate paying off as these rates continue to 461 00:21:26,040 --> 00:21:28,320 Speaker 1: go up. Yeah, the credit card interest rates going up 462 00:21:28,400 --> 00:21:31,280 Speaker 1: is more like, oh man, there's a there's a fire 463 00:21:31,320 --> 00:21:32,840 Speaker 1: on my stove and I gotta put it out before 464 00:21:32,880 --> 00:21:35,320 Speaker 1: it like takes down the whole kitchen potentially the whole house, 465 00:21:35,560 --> 00:21:39,040 Speaker 1: the helock. Maybe not quite as dramatic of a debt 466 00:21:39,080 --> 00:21:42,080 Speaker 1: situation because we're still talking about interest rates that are 467 00:21:42,359 --> 00:21:45,080 Speaker 1: for a lot of people in that six percent range. 468 00:21:45,400 --> 00:21:48,320 Speaker 1: Not horrific, but not ideal, not fun. It's not a fire, 469 00:21:48,359 --> 00:21:50,600 Speaker 1: but they're the exposed wires up in the attic that 470 00:21:50,640 --> 00:21:52,920 Speaker 1: the world could of chew through. And you know it's 471 00:21:52,920 --> 00:21:56,040 Speaker 1: a hazard. You know that. Oh man, that insulation, it 472 00:21:56,080 --> 00:21:59,600 Speaker 1: could totally arc or something. I don't know, there could 473 00:21:59,600 --> 00:22:01,520 Speaker 1: be spark, nothing could catch on fire, and need to 474 00:22:01,520 --> 00:22:03,240 Speaker 1: take care of that. There's a there's a problem there 475 00:22:03,280 --> 00:22:05,159 Speaker 1: that needs to be looked at for sure. Well, and 476 00:22:05,240 --> 00:22:08,080 Speaker 1: let's talk about mortgage interest rate to Matt because if 477 00:22:08,119 --> 00:22:10,440 Speaker 1: you're already on a home, the reality is that the 478 00:22:10,560 --> 00:22:12,760 Speaker 1: rate on your current mortgage likely isn't gonna change at 479 00:22:12,760 --> 00:22:14,520 Speaker 1: all because of these rate hikes. So it's important to 480 00:22:14,560 --> 00:22:18,159 Speaker 1: mention that that's because most folks have wisely locked in 481 00:22:18,240 --> 00:22:20,679 Speaker 1: fixed rates while they were at historic clothes. I mean, man, 482 00:22:20,720 --> 00:22:22,720 Speaker 1: I feel like you and I were voices crying in 483 00:22:22,720 --> 00:22:25,720 Speaker 1: the wilderness telling people to refinance when rates were at 484 00:22:25,840 --> 00:22:28,880 Speaker 1: like that three percent mark. And they're not always gonna 485 00:22:28,880 --> 00:22:32,199 Speaker 1: be here, and they keep going down with the boys 486 00:22:32,200 --> 00:22:34,880 Speaker 1: who kept crying wolf. I'm gonna wait for that sure 487 00:22:34,960 --> 00:22:38,320 Speaker 1: enough half thirty year interest rate please. Yeah that that 488 00:22:38,359 --> 00:22:41,200 Speaker 1: never came to me. And so uh yeah, folks though 489 00:22:41,240 --> 00:22:43,400 Speaker 1: that did. And they've got a three percent rate, let's 490 00:22:43,400 --> 00:22:45,480 Speaker 1: say on a thirty year mortgage. Those folks are sitting 491 00:22:45,520 --> 00:22:49,200 Speaker 1: pretty and as inflation is making everything costs more money, 492 00:22:49,560 --> 00:22:51,919 Speaker 1: you're super cheap. Mortgage is kind of this safe haven 493 00:22:52,359 --> 00:22:54,920 Speaker 1: um at least, you know, as much as a massive 494 00:22:55,080 --> 00:22:58,000 Speaker 1: chunk of debt you can be considered a safe haven. 495 00:22:58,280 --> 00:23:00,440 Speaker 1: It is that. But if you're one of the rare 496 00:23:00,480 --> 00:23:03,480 Speaker 1: birds that took out like an adjustable rate mortgage, although 497 00:23:03,520 --> 00:23:05,680 Speaker 1: more people are doing that now, fewer people were doing 498 00:23:05,680 --> 00:23:07,520 Speaker 1: it years ago. So we would say take a look 499 00:23:07,520 --> 00:23:09,280 Speaker 1: at the fine print to see when and how much 500 00:23:09,280 --> 00:23:12,639 Speaker 1: you're interest rate can move up. Those factors, along with 501 00:23:12,680 --> 00:23:14,320 Speaker 1: how long you're planning to own your home, are going 502 00:23:14,320 --> 00:23:16,680 Speaker 1: to impact whether or not there's anything you should be 503 00:23:16,720 --> 00:23:19,800 Speaker 1: looking to do with that arm that you've got. But 504 00:23:19,840 --> 00:23:23,480 Speaker 1: the truth is, for current mortgage holders, these interest rate hikes, 505 00:23:23,880 --> 00:23:25,560 Speaker 1: unlike in other countries I think I was reading in 506 00:23:25,760 --> 00:23:29,200 Speaker 1: Great Britain, most people have adjustable rate mortgages and they 507 00:23:29,400 --> 00:23:32,440 Speaker 1: adjust anywhere after two to five years within getting that mortgage, 508 00:23:32,640 --> 00:23:34,880 Speaker 1: So a lot of a lot of people there are 509 00:23:35,160 --> 00:23:38,399 Speaker 1: more precarious financial position, whereas most folks in the States 510 00:23:38,680 --> 00:23:42,040 Speaker 1: have locked in fixed rate mortgages. They're they're less affected, 511 00:23:42,119 --> 00:23:44,679 Speaker 1: far less affected by these rate hikes than people across 512 00:23:44,680 --> 00:23:47,840 Speaker 1: the pond. They're dealing with the sterling arms on the rise, 513 00:23:48,560 --> 00:23:50,840 Speaker 1: not lack of natural gas with They've got a lot 514 00:23:50,880 --> 00:23:52,800 Speaker 1: going on over there in other country not not doing 515 00:23:52,800 --> 00:23:55,800 Speaker 1: so hot. Let's let's also discuss what's happening for folks 516 00:23:55,920 --> 00:23:58,760 Speaker 1: who are currently shopping for a home. We've talked extensively 517 00:23:58,760 --> 00:24:01,960 Speaker 1: about the housing market in Friday Flight episodes recently, so 518 00:24:02,000 --> 00:24:04,320 Speaker 1: we're not going to dive deep into housing costs, but 519 00:24:04,359 --> 00:24:07,560 Speaker 1: when it comes to mortgage interest rates, interestingly enough, they 520 00:24:07,840 --> 00:24:11,120 Speaker 1: don't move in lockstep with the Fed rate because there 521 00:24:11,160 --> 00:24:15,200 Speaker 1: are a number of different factors at play in this market. Um. 522 00:24:15,240 --> 00:24:17,760 Speaker 1: You know, that's different than credit cards and helocks, um. 523 00:24:17,920 --> 00:24:20,439 Speaker 1: Mortgage rates. They actually tend to go up as the 524 00:24:20,440 --> 00:24:22,520 Speaker 1: economy is doing well, and they tend to go down 525 00:24:22,560 --> 00:24:26,040 Speaker 1: as the economy slows. As we all know, mortgage rates 526 00:24:26,200 --> 00:24:29,040 Speaker 1: are up quite a bit over the past year. But 527 00:24:29,119 --> 00:24:32,679 Speaker 1: even as the Fed hikes rates again, you know, we 528 00:24:32,800 --> 00:24:35,960 Speaker 1: could be in store for mortgage rate declines, uh in 529 00:24:35,960 --> 00:24:38,320 Speaker 1: the not too distant future. That remains to be seen. 530 00:24:38,640 --> 00:24:41,840 Speaker 1: But considering that the Fed interest rate was at zero 531 00:24:41,920 --> 00:24:44,720 Speaker 1: percent earlier this year, we're now seeing it at three percent. 532 00:24:44,800 --> 00:24:48,480 Speaker 1: We've seen corresponding moves within mortgage rates within thirty year 533 00:24:48,520 --> 00:24:50,360 Speaker 1: fixed because again at the beginning of this this year, we're 534 00:24:50,359 --> 00:24:53,639 Speaker 1: looking at three percent mortgage rates. We're pushing seven percent 535 00:24:53,720 --> 00:24:57,119 Speaker 1: now on thirty year fixed, which is completely insane. And 536 00:24:57,160 --> 00:24:59,440 Speaker 1: so that movement that increased right there can I think 537 00:24:59,440 --> 00:25:02,720 Speaker 1: most definitely to be attributed to the higher federal interest 538 00:25:02,840 --> 00:25:05,600 Speaker 1: rates that are being hiked. Sure, and the question is 539 00:25:05,640 --> 00:25:08,239 Speaker 1: how how much longer and how much higher are our 540 00:25:08,320 --> 00:25:11,240 Speaker 1: mortgage interest rates going to go. That's a question that's 541 00:25:11,280 --> 00:25:14,280 Speaker 1: really difficult to answer, and we might see as if 542 00:25:14,320 --> 00:25:17,280 Speaker 1: we start to get see nastier economic data come through, 543 00:25:17,320 --> 00:25:21,600 Speaker 1: including more job losses, more higher unemployment, that could start 544 00:25:21,640 --> 00:25:24,760 Speaker 1: to push mortgage interest rates down a little bit. But like, man, 545 00:25:25,040 --> 00:25:26,320 Speaker 1: there's a lot of a lot of things that play 546 00:25:26,359 --> 00:25:27,840 Speaker 1: in that market. So it's it's hard to know and 547 00:25:27,840 --> 00:25:29,840 Speaker 1: hard to pring. It's tough to be exactly, it's tough 548 00:25:29,840 --> 00:25:32,320 Speaker 1: to pin into the wall. Yeah, but it's at least 549 00:25:32,440 --> 00:25:33,919 Speaker 1: I'm glad you covered that, man. And let's let's talk 550 00:25:33,920 --> 00:25:36,320 Speaker 1: about one more thing, which is car loans. I mean, 551 00:25:36,800 --> 00:25:39,000 Speaker 1: hopefully we've made it clear that anything and everything you 552 00:25:39,080 --> 00:25:41,159 Speaker 1: finance is going to cost you more. That's that's like, 553 00:25:41,560 --> 00:25:44,440 Speaker 1: that's one of the major impacts of FED rate hikes 554 00:25:44,520 --> 00:25:46,040 Speaker 1: is and that's what they're trying to do, is to 555 00:25:46,080 --> 00:25:48,600 Speaker 1: crush demand, at least to a certain extent by making 556 00:25:48,600 --> 00:25:50,760 Speaker 1: everything cost more. And the same is true when we're 557 00:25:50,760 --> 00:25:53,399 Speaker 1: talking about vehicles. Getting a loan for a car is 558 00:25:53,440 --> 00:25:56,560 Speaker 1: becoming a more expensive thing to The average interest rate 559 00:25:56,680 --> 00:25:59,600 Speaker 1: on a new car was three eight five percent at 560 00:25:59,600 --> 00:26:01,840 Speaker 1: the beginning the year. Now it's I think it's just 561 00:26:01,840 --> 00:26:04,040 Speaker 1: crusted five and a half percent, so almost two full 562 00:26:04,080 --> 00:26:08,000 Speaker 1: points higher, and we don't like the idea of taking 563 00:26:08,000 --> 00:26:09,840 Speaker 1: out a loan for your car in really any interest 564 00:26:09,920 --> 00:26:12,920 Speaker 1: rate in environment, but it's even more important to save 565 00:26:12,960 --> 00:26:15,680 Speaker 1: up cash to pay for your ride as borrowing costs rise, 566 00:26:15,720 --> 00:26:18,639 Speaker 1: and that means opting for a less expensive vehicle for 567 00:26:18,680 --> 00:26:22,080 Speaker 1: most folks. So yeah, ideally you'll be smart and chop around, 568 00:26:22,119 --> 00:26:24,360 Speaker 1: and if you do need to borrow money to buy 569 00:26:24,400 --> 00:26:26,000 Speaker 1: a car, you'll probably want to go to a credit 570 00:26:26,040 --> 00:26:28,320 Speaker 1: union to get the best rate. But the best of 571 00:26:28,359 --> 00:26:31,000 Speaker 1: all worlds is to pay cash for a car to 572 00:26:31,160 --> 00:26:33,800 Speaker 1: avoid the financing costs altogether and save up more money 573 00:26:33,840 --> 00:26:35,919 Speaker 1: if if you do end up needing to buy something 574 00:26:35,960 --> 00:26:38,000 Speaker 1: something different than what you got now, or maybe you 575 00:26:38,040 --> 00:26:40,480 Speaker 1: could even ride your bike to work. There's a lot 576 00:26:40,520 --> 00:26:42,800 Speaker 1: that you can get done on two wheels plus a 577 00:26:42,880 --> 00:26:46,280 Speaker 1: bicycle helmet. Uh. Let's talk about jobs you'll because we've 578 00:26:46,320 --> 00:26:48,640 Speaker 1: so so far we've talked about spending. Uh, but let's 579 00:26:48,640 --> 00:26:52,000 Speaker 1: talk about your ability to earn an income because higher 580 00:26:52,200 --> 00:26:55,399 Speaker 1: lending rates it also impacts our ability to have that 581 00:26:55,400 --> 00:26:58,000 Speaker 1: gainful employment. And so here's a quick example or a 582 00:26:58,040 --> 00:27:00,600 Speaker 1: scenario here to run through. As it becomes more expensive 583 00:27:00,600 --> 00:27:02,720 Speaker 1: for borrowers to finance something like a house like we 584 00:27:02,800 --> 00:27:05,760 Speaker 1: just mentioned. That's gonna mean fewer folks are out there 585 00:27:05,760 --> 00:27:09,600 Speaker 1: buying and even renovating their home, right, which means there 586 00:27:09,640 --> 00:27:12,520 Speaker 1: are then going to be fewer home builders hiring contractors, 587 00:27:12,560 --> 00:27:15,960 Speaker 1: which means there are fewer jobs available. And then on 588 00:27:16,040 --> 00:27:19,960 Speaker 1: top of that, those contractors, they're purchasing fewer materials as well, 589 00:27:20,000 --> 00:27:23,320 Speaker 1: like you home depot, and so that the company's for instance, 590 00:27:23,359 --> 00:27:26,560 Speaker 1: that's milling fewer trees for lumber, they're no longer hiring folks, 591 00:27:26,760 --> 00:27:29,160 Speaker 1: and actually maybe they even start laying some folks off. 592 00:27:29,520 --> 00:27:33,440 Speaker 1: So essentially there's this massive, you know again, downstream ripple 593 00:27:33,520 --> 00:27:35,840 Speaker 1: effect that will begin to see in the job market. 594 00:27:35,880 --> 00:27:39,040 Speaker 1: And the same reality applies to a whole bunch of industries. 595 00:27:39,240 --> 00:27:42,240 Speaker 1: Most businesses, they are reliant on debt and financing, and 596 00:27:42,280 --> 00:27:45,200 Speaker 1: so when the cost of that debt of that financing 597 00:27:45,280 --> 00:27:49,320 Speaker 1: goes up, it restricts what different not only industry industries, 598 00:27:49,359 --> 00:27:51,280 Speaker 1: but just specific business is what they're able to do. 599 00:27:51,800 --> 00:27:54,720 Speaker 1: There's a tightening of the belt that's happening as employers 600 00:27:54,720 --> 00:27:56,600 Speaker 1: are trying to find ways to cut their costs because 601 00:27:56,600 --> 00:28:00,560 Speaker 1: this increased costs of financing, that's an expense, right that 602 00:28:00,720 --> 00:28:03,800 Speaker 1: is a hard line item on their cash flow statements. 603 00:28:04,000 --> 00:28:06,400 Speaker 1: That has an impact on the folks that they are 604 00:28:06,440 --> 00:28:08,439 Speaker 1: then able to hire, which is going to have an 605 00:28:08,440 --> 00:28:10,720 Speaker 1: impact on you the jobs that are available to you 606 00:28:10,760 --> 00:28:13,760 Speaker 1: as an individual. Yeah, and those borrowing costs are impacting 607 00:28:13,800 --> 00:28:16,680 Speaker 1: their customers who maybe can't afford quite as much as 608 00:28:17,200 --> 00:28:20,000 Speaker 1: they previously could, right, because everything costs more than it 609 00:28:20,080 --> 00:28:23,280 Speaker 1: did just a minute ago because of higher interest rates. 610 00:28:23,520 --> 00:28:25,360 Speaker 1: And so you're right, I think, yeah, the job market 611 00:28:25,480 --> 00:28:28,159 Speaker 1: is going to change, is going to shift because of 612 00:28:28,600 --> 00:28:31,320 Speaker 1: rising FED interest rates, and and the FED has talked 613 00:28:31,320 --> 00:28:35,080 Speaker 1: about how they're trying to engineer a soft landing, and 614 00:28:35,160 --> 00:28:37,880 Speaker 1: what does that mean. I think that means basically, they're 615 00:28:37,880 --> 00:28:40,520 Speaker 1: trying to avoid a recession while kind of bringing inflation 616 00:28:40,560 --> 00:28:42,640 Speaker 1: down at the same time. So it makes me think 617 00:28:42,640 --> 00:28:47,040 Speaker 1: of the Sully Sullenberger plane landing on the Hudson, right, 618 00:28:47,040 --> 00:28:51,080 Speaker 1: How that was like this amazing kind of miracles, total miracles. Yeah, 619 00:28:51,120 --> 00:28:54,080 Speaker 1: Like sticking that landing was pretty dangn difficult. I can't 620 00:28:54,080 --> 00:28:55,720 Speaker 1: imagine doing that. That's what he wanted, That's what he 621 00:28:55,760 --> 00:28:58,400 Speaker 1: didn't want to do, is stick the way he doesn't wanna. 622 00:28:58,640 --> 00:29:01,880 Speaker 1: He just wants to glide across momoothly. Yeah. Yeah, well 623 00:29:01,880 --> 00:29:04,360 Speaker 1: that's what I call sticking. Yeah, so I think of 624 00:29:04,440 --> 00:29:06,840 Speaker 1: like a gym gymnast, like the sick the landing, the 625 00:29:06,800 --> 00:29:08,440 Speaker 1: just like plant their feet and they don't move at 626 00:29:08,440 --> 00:29:10,800 Speaker 1: all exactly. That's like what the FED is trying to do. 627 00:29:10,840 --> 00:29:13,000 Speaker 1: But when you think about your momentum going every which way, 628 00:29:13,160 --> 00:29:16,400 Speaker 1: it's really hard to do that flying over the pommel 629 00:29:16,480 --> 00:29:19,480 Speaker 1: horse or whatever it is, kulling and and actually planning 630 00:29:19,480 --> 00:29:21,720 Speaker 1: your feet at the same time without falling forward or 631 00:29:21,720 --> 00:29:24,120 Speaker 1: back or something like that. And the reality is it's 632 00:29:24,160 --> 00:29:26,920 Speaker 1: becoming more unlikely they're going to get this this perfectly 633 00:29:26,960 --> 00:29:30,160 Speaker 1: engineered soft landing. And the FED zone predictions Matt are 634 00:29:30,200 --> 00:29:32,920 Speaker 1: saying that unemployment is going to increase by at least 635 00:29:32,920 --> 00:29:36,080 Speaker 1: one percent around the country. And that's not dire because 636 00:29:36,120 --> 00:29:40,160 Speaker 1: we're at historically ultra low unemployment numbers, but that's still 637 00:29:40,160 --> 00:29:42,280 Speaker 1: equates to at least a million folks losing their jobs, 638 00:29:42,280 --> 00:29:45,840 Speaker 1: probably more. And so those are real families, real individuals 639 00:29:45,920 --> 00:29:49,520 Speaker 1: who are going to be impacted by FED policy, and 640 00:29:49,520 --> 00:29:51,400 Speaker 1: and that could those predictions could even be shy of 641 00:29:51,480 --> 00:29:54,200 Speaker 1: what happens. Right, So what it means is probably that 642 00:29:54,240 --> 00:29:56,320 Speaker 1: the abundance of jobs is going to be whittled down. 643 00:29:56,440 --> 00:29:58,240 Speaker 1: There's not going to be two jobs for every single 644 00:29:58,280 --> 00:30:00,480 Speaker 1: person out there looking for a job. We're gonna see 645 00:30:00,520 --> 00:30:04,160 Speaker 1: fewer stories of people making more for jumping ship and 646 00:30:04,160 --> 00:30:06,200 Speaker 1: going down the street to a different company. There's also 647 00:30:06,320 --> 00:30:09,400 Speaker 1: just gonna be less demand right for workers, and pay 648 00:30:09,480 --> 00:30:11,480 Speaker 1: rates aren't gonna rise as quickly across the board. Yeah, 649 00:30:11,480 --> 00:30:13,640 Speaker 1: I wouldn't be surprised if you see, uh, start seeing 650 00:30:13,680 --> 00:30:16,040 Speaker 1: headlines that say, oh, yeah, that's it's the end of 651 00:30:16,040 --> 00:30:18,760 Speaker 1: the great resignation, Like that feels like something that was 652 00:30:18,800 --> 00:30:23,280 Speaker 1: so yes in particular, if we start to see, you know, 653 00:30:23,360 --> 00:30:26,760 Speaker 1: like those initial jobless rates start to climb, if we 654 00:30:26,800 --> 00:30:28,880 Speaker 1: start seeing a shift in the labor market in that way, 655 00:30:28,960 --> 00:30:32,600 Speaker 1: I yeah, what great resignation, Jewel? I know, yeah, it 656 00:30:32,680 --> 00:30:34,640 Speaker 1: might it might be short lived ultimately when it comes 657 00:30:34,640 --> 00:30:36,240 Speaker 1: down to it. And so what we would say, what 658 00:30:36,280 --> 00:30:38,800 Speaker 1: we would recommend is that you hold onto your savings, 659 00:30:38,800 --> 00:30:41,640 Speaker 1: that you be wise with how you're approaching your career 660 00:30:41,720 --> 00:30:44,440 Speaker 1: and the job you currently have, because the kind of 661 00:30:44,440 --> 00:30:48,520 Speaker 1: current reality where workers are completely in control of their 662 00:30:48,520 --> 00:30:52,200 Speaker 1: own future is it seems like that's subtly shifting because 663 00:30:52,440 --> 00:30:55,640 Speaker 1: largely because of Fed FED policy, because of FED rate hikes. Yeah, 664 00:30:55,640 --> 00:30:58,040 Speaker 1: there's not easy money just slashing around the economy. Yeah, 665 00:30:58,120 --> 00:31:00,560 Speaker 1: so you need to be even more careful and even 666 00:31:00,560 --> 00:31:03,800 Speaker 1: more thoughtful about your own personal financial situation. And so yeah, 667 00:31:03,840 --> 00:31:06,640 Speaker 1: speaking of savings, we're gonna talk about the impact of 668 00:31:06,760 --> 00:31:10,240 Speaker 1: rate hikes on savings and investments that you're making. We're 669 00:31:10,240 --> 00:31:12,200 Speaker 1: gonna have a lot more positive things to say throughout 670 00:31:12,200 --> 00:31:14,000 Speaker 1: the rest of this episode, so so stay tuned that 671 00:31:14,000 --> 00:31:25,160 Speaker 1: we'll get there right after this break. All right, we 672 00:31:25,280 --> 00:31:27,680 Speaker 1: are back and we you know, we just spent some 673 00:31:27,720 --> 00:31:31,120 Speaker 1: time talking about how these higher interest rates, how they 674 00:31:31,160 --> 00:31:34,520 Speaker 1: are affecting our ability not only our own personal ability 675 00:31:34,560 --> 00:31:37,440 Speaker 1: to consume, but of other businesses and what that means 676 00:31:37,480 --> 00:31:39,920 Speaker 1: for the job market. But let's now talk about what 677 00:31:39,960 --> 00:31:41,880 Speaker 1: the what this means for us when it comes to 678 00:31:42,120 --> 00:31:44,880 Speaker 1: saving our money, because you know, like if you like 679 00:31:44,960 --> 00:31:46,840 Speaker 1: saving money, if you like putting money in your savings, 680 00:31:46,880 --> 00:31:49,680 Speaker 1: your checking account, you've probably felt like an idiot for 681 00:31:49,840 --> 00:31:51,960 Speaker 1: about the past fifteen years, Like it's not been a 682 00:31:51,960 --> 00:31:55,360 Speaker 1: good environment for folks holding onto their dough. But here's 683 00:31:55,640 --> 00:31:58,880 Speaker 1: a little silver lining. This is a positive side of 684 00:31:58,880 --> 00:32:02,080 Speaker 1: of rate hikes, which cruise particularly to the savers out there. 685 00:32:02,480 --> 00:32:05,520 Speaker 1: As you've all noticed, rates on those high yield savings 686 00:32:05,560 --> 00:32:08,280 Speaker 1: accounts out there are going up. Or actually maybe you 687 00:32:08,280 --> 00:32:09,920 Speaker 1: you haven't noticed if you are with one of the 688 00:32:09,920 --> 00:32:12,480 Speaker 1: big banks, because that's not a game that they play. Now. 689 00:32:12,560 --> 00:32:15,960 Speaker 1: They haven't raised rates one iota. There's still not a 690 00:32:15,960 --> 00:32:18,880 Speaker 1: bit point zero two PI. Literally went today to Wells Fargos. 691 00:32:19,000 --> 00:32:21,040 Speaker 1: Did you just wanted to check and be like, all right, 692 00:32:21,120 --> 00:32:24,280 Speaker 1: have they budged? Guess what? Point zero one percent? Still? Oh, 693 00:32:24,520 --> 00:32:27,800 Speaker 1: haters authetic And so with that in mind, make sure 694 00:32:27,800 --> 00:32:29,600 Speaker 1: that you're doing business with a bank out there that 695 00:32:29,600 --> 00:32:32,560 Speaker 1: that pays the top tier rate. Now, we've got an 696 00:32:32,640 --> 00:32:34,360 Speaker 1: article up on the site at how the Money dot 697 00:32:34,400 --> 00:32:37,840 Speaker 1: com that lists out our favorite banks. All of them 698 00:32:38,040 --> 00:32:40,960 Speaker 1: are now paying more than two percent on your actual 699 00:32:40,960 --> 00:32:44,520 Speaker 1: savings account. I will admit that's not epic, but it 700 00:32:44,680 --> 00:32:48,440 Speaker 1: is far better than what savers have been accustomed to 701 00:32:48,600 --> 00:32:51,800 Speaker 1: in recent years. It is much more generous than the 702 00:32:52,520 --> 00:32:54,400 Speaker 1: maybe like point four is is what I think we 703 00:32:54,440 --> 00:32:56,000 Speaker 1: saw maybe a year ago, a couple of years ago. 704 00:32:56,040 --> 00:33:00,400 Speaker 1: It's like five times better than than what you were earning. Granted, 705 00:33:00,440 --> 00:33:03,000 Speaker 1: we always wanted to see people investing right and and 706 00:33:03,000 --> 00:33:05,600 Speaker 1: we people need savings too, though, And I hated seeing 707 00:33:05,640 --> 00:33:08,440 Speaker 1: savers getting just completely crushed by seeing rates on savings 708 00:33:08,480 --> 00:33:11,760 Speaker 1: accounts just plummet to next to nothing. And granted, the 709 00:33:11,760 --> 00:33:13,880 Speaker 1: big banks pay next to nothing all day, every day, 710 00:33:14,240 --> 00:33:15,680 Speaker 1: no matter what year it is, no matter what the 711 00:33:15,720 --> 00:33:18,000 Speaker 1: interest rate environment is, so where you bank matters, Matt, 712 00:33:18,000 --> 00:33:19,920 Speaker 1: I'm glad you said that. But it's nice to see 713 00:33:19,920 --> 00:33:23,760 Speaker 1: savers saving, which is a good financial habit to get 714 00:33:23,800 --> 00:33:26,840 Speaker 1: into accruing more savings over time. It's nice to see 715 00:33:26,840 --> 00:33:29,240 Speaker 1: them get rewarded, at least in some way form or fashion. Yeah, 716 00:33:29,240 --> 00:33:31,440 Speaker 1: it feels a little less crappy to stalk away six 717 00:33:31,480 --> 00:33:34,200 Speaker 1: months of living offences when at least it's earning two 718 00:33:34,240 --> 00:33:36,240 Speaker 1: and a half almost two and a half percent basics, 719 00:33:36,240 --> 00:33:38,400 Speaker 1: still less than the rate of inflation. But you're like, okay, 720 00:33:38,400 --> 00:33:42,760 Speaker 1: I'm not getting like Emotionally, it helps agree, and and 721 00:33:42,800 --> 00:33:44,680 Speaker 1: you know, I think we're gonna see those rates continue 722 00:33:44,720 --> 00:33:46,720 Speaker 1: to go up because the FED, like we said, the 723 00:33:46,720 --> 00:33:49,200 Speaker 1: FED has telegraphed that that they're going to continue to 724 00:33:49,280 --> 00:33:52,240 Speaker 1: raise rates. And so I feel like the online banks 725 00:33:52,360 --> 00:33:55,040 Speaker 1: who actually care about competing in the marketplace are going 726 00:33:55,080 --> 00:33:57,440 Speaker 1: to continue to raise their rates. I feel like Matt 727 00:33:57,480 --> 00:33:59,560 Speaker 1: with like a bank like c I T. We've been 728 00:33:59,600 --> 00:34:03,360 Speaker 1: seeing emails like twice a week or they're raising rates 729 00:34:03,640 --> 00:34:05,360 Speaker 1: and it's fun to kind of see them go up. 730 00:34:05,800 --> 00:34:08,919 Speaker 1: You're gonna be paying point four percent more, even though 731 00:34:09,000 --> 00:34:11,000 Speaker 1: the big banks don't feel compelled to compete, like the 732 00:34:11,040 --> 00:34:13,839 Speaker 1: online banks are competing leg compression, which is nice to see. 733 00:34:14,000 --> 00:34:16,360 Speaker 1: But let's talk about another savings vehicle to which is 734 00:34:16,360 --> 00:34:18,640 Speaker 1: I bonds. And we've we've told the how the Money 735 00:34:18,640 --> 00:34:21,480 Speaker 1: audience about those for quite a while now. They remain 736 00:34:21,520 --> 00:34:25,360 Speaker 1: attractive for medium term savings goals, although this might not 737 00:34:25,400 --> 00:34:28,160 Speaker 1: be the case forever. Remember, the Fed is trying to 738 00:34:28,200 --> 00:34:32,040 Speaker 1: make inflation chill out, and the rate on I bonds 739 00:34:32,120 --> 00:34:34,920 Speaker 1: is directly tied to what's happening with inflation. So I 740 00:34:34,960 --> 00:34:36,200 Speaker 1: don't know, if you listen to us at the end 741 00:34:36,239 --> 00:34:38,440 Speaker 1: of last year, you're still sitting pretty right. You're you're 742 00:34:38,440 --> 00:34:40,760 Speaker 1: getting paid quite a bit of money on those I bonds. 743 00:34:41,080 --> 00:34:43,040 Speaker 1: You should be glad you did it. It might even 744 00:34:43,040 --> 00:34:44,840 Speaker 1: make sense for folks who can to tack away a 745 00:34:44,840 --> 00:34:48,080 Speaker 1: bit more into I bonds right now. But what we're 746 00:34:48,080 --> 00:34:50,600 Speaker 1: saying about I bonds a year from now or two 747 00:34:50,680 --> 00:34:53,480 Speaker 1: years from now, hopefully we're seeing in a different story 748 00:34:53,480 --> 00:34:56,359 Speaker 1: and hopefully they're not quite as attractive, because that would 749 00:34:56,400 --> 00:34:59,160 Speaker 1: mean inflation isn't nearly as bad as it was exactly. 750 00:34:59,280 --> 00:35:02,920 Speaker 1: Hopefully we don't have the hots for ivans right now 751 00:35:02,960 --> 00:35:06,520 Speaker 1: we do hopefully ivans gits really ugly real quick. Alright, 752 00:35:06,560 --> 00:35:10,800 Speaker 1: so we've discussed savings. Now let's start dabbling into investing 753 00:35:11,000 --> 00:35:13,520 Speaker 1: a little bit because as money as it gets more expensive, 754 00:35:13,840 --> 00:35:16,719 Speaker 1: we are seeing the stock market go through some trying times. Man, 755 00:35:17,200 --> 00:35:20,040 Speaker 1: the market, it hasn't been great, uh this year so far. 756 00:35:20,080 --> 00:35:23,239 Speaker 1: If you haven't been paying attention, and honestly, seriously, like 757 00:35:23,280 --> 00:35:25,480 Speaker 1: we recommend that you don't pay attention so that you 758 00:35:25,560 --> 00:35:28,759 Speaker 1: might actually be kind of like blissfully unaware. Say you're 759 00:35:28,800 --> 00:35:32,279 Speaker 1: like truly is blissed. Sometimes you're back in your warm, 760 00:35:32,320 --> 00:35:34,320 Speaker 1: cozy bed back back of the shire and you're like, 761 00:35:34,360 --> 00:35:36,239 Speaker 1: what are you talking about? And yeah, you're you're you're 762 00:35:36,280 --> 00:35:39,759 Speaker 1: frodo who didn't You're like, oh, this is great. Maybe 763 00:35:39,760 --> 00:35:41,279 Speaker 1: somebody else will take care of the problem for us. 764 00:35:41,600 --> 00:35:43,279 Speaker 1: But I mean, honestly, it makes me think of the 765 00:35:43,280 --> 00:35:45,480 Speaker 1: past couple of years. It makes me think of spacks, 766 00:35:45,680 --> 00:35:49,640 Speaker 1: remember that they're not much of a thing anymore. They 767 00:35:49,719 --> 00:35:54,200 Speaker 1: were incredibly hot us we're like supposedly genius investors. They 768 00:35:54,200 --> 00:35:56,319 Speaker 1: were trying to get smaller companies to go public by 769 00:35:56,440 --> 00:36:01,400 Speaker 1: essentially like reverse merging into these special purpose acquisition companies. Uh, 770 00:36:01,560 --> 00:36:05,000 Speaker 1: what's back stands for. Similarly, when money was flowing in 771 00:36:05,000 --> 00:36:08,720 Speaker 1: the form of stimulus payments, that's when we saw cryptocurrencies 772 00:36:08,800 --> 00:36:11,520 Speaker 1: take off like a rocket. And of course it's not 773 00:36:11,560 --> 00:36:14,279 Speaker 1: doing so hot right now. Morgan Housell a friend of 774 00:36:14,320 --> 00:36:16,640 Speaker 1: the show. He actually said this perfectly the other day 775 00:36:16,640 --> 00:36:20,120 Speaker 1: on Twitter. He said that lots of pain as people 776 00:36:20,160 --> 00:36:22,960 Speaker 1: realize that what they thought was their own investment genius 777 00:36:23,280 --> 00:36:28,560 Speaker 1: was actually just lower interest rate. That's true. That again, 778 00:36:28,640 --> 00:36:32,840 Speaker 1: plus the massive amounts of additional money that we're flowing 779 00:36:32,840 --> 00:36:36,040 Speaker 1: into folks bank accounts as stimmy payments that they did 780 00:36:36,080 --> 00:36:38,400 Speaker 1: not have any way of paying because we were all 781 00:36:38,440 --> 00:36:41,400 Speaker 1: stuck at home, and made everyone feel like investing genius 782 00:36:41,440 --> 00:36:43,799 Speaker 1: as everyone was basically taking the money and just saying, Oh, 783 00:36:43,840 --> 00:36:45,400 Speaker 1: I think it's time to invest. It's time for me 784 00:36:45,440 --> 00:36:47,600 Speaker 1: to open a Robin Hood account. Yeah, everything was kind 785 00:36:47,600 --> 00:36:49,640 Speaker 1: of up into the right there for a couple of years. 786 00:36:49,960 --> 00:36:53,080 Speaker 1: Uh and but now we're seeing kind of the sugar 787 00:36:53,160 --> 00:36:56,040 Speaker 1: high where off as rates are kind of resetting back 788 00:36:56,040 --> 00:36:58,399 Speaker 1: to some are a little more normal, and they're also 789 00:36:58,440 --> 00:37:01,560 Speaker 1: resetting quickly, which is causing a more severe reaction. Dude, 790 00:37:01,719 --> 00:37:03,440 Speaker 1: I love that you said sugar high, because that's exactly 791 00:37:03,480 --> 00:37:06,279 Speaker 1: what it was. It was just this hot burning but 792 00:37:06,400 --> 00:37:09,359 Speaker 1: like you got a sugar high versus like eating real food, 793 00:37:09,680 --> 00:37:13,600 Speaker 1: like like some meat and some broccoli, Like the kind 794 00:37:13,680 --> 00:37:15,840 Speaker 1: of energy, the kind of calories that that's going to 795 00:37:15,960 --> 00:37:18,400 Speaker 1: fuel you into the future as opposed to just a 796 00:37:18,440 --> 00:37:20,560 Speaker 1: sugar rush or like it also makes me think of 797 00:37:20,600 --> 00:37:22,200 Speaker 1: what you the kind of wood that you put on 798 00:37:22,200 --> 00:37:24,120 Speaker 1: a fire. You can get that branch that fell in 799 00:37:24,120 --> 00:37:25,600 Speaker 1: your yard and it's got all the dead leaves on it, 800 00:37:25,680 --> 00:37:28,000 Speaker 1: and throwed on there. You know it's gonna happen. Oh 801 00:37:28,000 --> 00:37:30,279 Speaker 1: my god, it's gonna it's well, the branch that's been 802 00:37:30,320 --> 00:37:31,759 Speaker 1: laying there for a while, so it's completely dead, it's 803 00:37:31,760 --> 00:37:34,960 Speaker 1: super dry. That thing will light up so fast and 804 00:37:34,960 --> 00:37:37,680 Speaker 1: it's really impressive and the kids are like, whoa, but 805 00:37:37,719 --> 00:37:39,880 Speaker 1: you know what, that thing's gone in like thirty seconds 806 00:37:40,239 --> 00:37:43,480 Speaker 1: as opposed to the season firewood that you've had set aside, 807 00:37:43,480 --> 00:37:45,440 Speaker 1: and then you put that wood on there. That's the 808 00:37:45,520 --> 00:37:48,000 Speaker 1: kind of fuel that will continue to burn, and that's 809 00:37:48,000 --> 00:37:50,640 Speaker 1: what you need in order to have a healthy bonfire. 810 00:37:50,680 --> 00:37:53,000 Speaker 1: In the same way we are seeing a correction, we're 811 00:37:53,040 --> 00:37:56,640 Speaker 1: seeing the markets return to some sort of some sense 812 00:37:56,680 --> 00:37:59,160 Speaker 1: of normalcy when it comes to the types of investments 813 00:37:59,160 --> 00:38:02,000 Speaker 1: that folks are willing to invest in, and historic valuations, 814 00:38:02,040 --> 00:38:04,960 Speaker 1: ways of thinking about the value of companies instead of 815 00:38:05,000 --> 00:38:08,160 Speaker 1: just speculative sort of tossing money at things. People are 816 00:38:08,160 --> 00:38:10,040 Speaker 1: starting to look at the fundamentals again, which I think 817 00:38:10,120 --> 00:38:11,799 Speaker 1: is good. And so I don't know. I guess it 818 00:38:11,800 --> 00:38:13,399 Speaker 1: makes me think, well, how how should how the money 819 00:38:13,400 --> 00:38:17,040 Speaker 1: listeners react given kind of what's happening inside of the markets, 820 00:38:17,080 --> 00:38:19,759 Speaker 1: inside of the investing space. We would say, one, it's 821 00:38:19,760 --> 00:38:22,319 Speaker 1: helpful to know how the sausage is made, like why 822 00:38:22,440 --> 00:38:24,080 Speaker 1: the stock market isn't doing so hot, And I think 823 00:38:24,080 --> 00:38:25,960 Speaker 1: Matt just touched on that for a second, which is helpful, 824 00:38:26,239 --> 00:38:29,400 Speaker 1: but that doesn't necessarily mean you should do anything different. 825 00:38:30,120 --> 00:38:32,160 Speaker 1: And I think sometimes it's easy to think, well, this 826 00:38:32,200 --> 00:38:34,520 Speaker 1: is unprecedented, or or man, look what's happening in the 827 00:38:34,520 --> 00:38:38,440 Speaker 1: market right now, I should change everything is unprecedented. It 828 00:38:38,440 --> 00:38:39,880 Speaker 1: doesn't feel like that in a lot of ways. But 829 00:38:39,920 --> 00:38:42,359 Speaker 1: it has been it's been forty years since we've seen this. Yes, 830 00:38:42,400 --> 00:38:44,840 Speaker 1: it's always been since nineteen eight, right, Yes, that's true. 831 00:38:45,160 --> 00:38:48,400 Speaker 1: But I think for for long term investors, these aberrations 832 00:38:48,400 --> 00:38:51,520 Speaker 1: don't mean that they should change anything necessarily, and and 833 00:38:51,600 --> 00:38:53,400 Speaker 1: in all likelihood, for a lot of people, it just 834 00:38:53,440 --> 00:38:56,640 Speaker 1: means that the stock market is getting cheaper. It's it's 835 00:38:56,960 --> 00:39:00,160 Speaker 1: getting more into that on sale territory, and it i'd 836 00:39:00,200 --> 00:39:03,640 Speaker 1: experience decently prolonged sale. But who knows. We don't know, Like, 837 00:39:03,680 --> 00:39:05,640 Speaker 1: we don't know how long the stock market is going 838 00:39:05,680 --> 00:39:07,239 Speaker 1: to kind of stay in a roll or be in 839 00:39:07,239 --> 00:39:09,400 Speaker 1: a bear market, and it could sink even further. But 840 00:39:09,440 --> 00:39:12,880 Speaker 1: what we suggest is what we've always suggested, which is 841 00:39:13,040 --> 00:39:16,160 Speaker 1: continuing to invest with every paycheck or every two weeks, 842 00:39:16,200 --> 00:39:19,120 Speaker 1: however you do it. That's what we continue to recommend, 843 00:39:19,440 --> 00:39:22,560 Speaker 1: and it's probably what we'll always recommend and until our 844 00:39:22,640 --> 00:39:25,080 Speaker 1: dying breaths. Like, just continue to stock money away in 845 00:39:25,080 --> 00:39:27,600 Speaker 1: the market, stick with your plan, and pay less attention. 846 00:39:27,880 --> 00:39:30,560 Speaker 1: Like Matt said to like be blissfully unaware of kind 847 00:39:30,560 --> 00:39:33,280 Speaker 1: of what's happening and just continue to do what you're doing, 848 00:39:33,400 --> 00:39:35,440 Speaker 1: no matter what the environment is, no matter what's happening 849 00:39:35,440 --> 00:39:38,880 Speaker 1: around you, and that the paradox of investing is at 850 00:39:38,920 --> 00:39:41,160 Speaker 1: the best time to invest is when the market is 851 00:39:41,200 --> 00:39:43,719 Speaker 1: having its roughest time. It's right now. It's which is 852 00:39:43,840 --> 00:39:47,280 Speaker 1: right now. It's counterintuitive, and lots of folks get scared 853 00:39:47,280 --> 00:39:49,719 Speaker 1: in times like this. It might be tempting to make 854 00:39:49,800 --> 00:39:51,600 Speaker 1: changes right now in the middle of kind of these 855 00:39:51,840 --> 00:39:54,879 Speaker 1: funky conditions that we're experiencing, and we would say that's 856 00:39:54,880 --> 00:39:56,920 Speaker 1: we're having a written investment plan and can help you 857 00:39:56,960 --> 00:39:59,279 Speaker 1: stay the course. It can help you continue what you're doing, 858 00:39:59,560 --> 00:40:02,080 Speaker 1: writing down so that you don't make a knee jerk 859 00:40:02,120 --> 00:40:04,239 Speaker 1: reaction to that. You know, wait, these are the long 860 00:40:04,360 --> 00:40:07,960 Speaker 1: term reasons and methods, but I'm using as an investor 861 00:40:08,360 --> 00:40:10,600 Speaker 1: that can prevent you from being like, this time it's 862 00:40:10,600 --> 00:40:13,920 Speaker 1: different and doing something doing something crazy that it doesn't 863 00:40:13,960 --> 00:40:17,040 Speaker 1: align with your goals and your values. That's right, man, 864 00:40:17,080 --> 00:40:19,640 Speaker 1: and you alluded to how we can talk ourselves into 865 00:40:20,040 --> 00:40:22,400 Speaker 1: into doing something different because we think, oh, it's different 866 00:40:22,400 --> 00:40:25,960 Speaker 1: this time, but the underlying fundamentals don't change. There is 867 00:40:26,000 --> 00:40:30,200 Speaker 1: still underlying truth of of what we've learned from history. 868 00:40:30,200 --> 00:40:31,799 Speaker 1: It's it's sort of why we look back to history 869 00:40:31,800 --> 00:40:33,719 Speaker 1: towards the beginning of the episode and what the FED 870 00:40:33,840 --> 00:40:36,000 Speaker 1: is done. But over the long haul, the stock market 871 00:40:36,239 --> 00:40:38,919 Speaker 1: does go up into the right and so even though, 872 00:40:38,960 --> 00:40:41,239 Speaker 1: like you said, who knows, we we might continue to 873 00:40:41,239 --> 00:40:43,839 Speaker 1: see the stock market decline, but what we do know 874 00:40:44,239 --> 00:40:46,800 Speaker 1: is that we that that the market is on sale, 875 00:40:46,840 --> 00:40:48,719 Speaker 1: and so does it make sense to buy things on 876 00:40:48,719 --> 00:40:52,760 Speaker 1: sale if that's a part of your investing plan, absolutely 877 00:40:52,800 --> 00:40:55,520 Speaker 1: you should see this as when that you're back helping 878 00:40:55,719 --> 00:40:58,440 Speaker 1: to propel you towards uh, you know, some degree of 879 00:40:58,440 --> 00:41:01,399 Speaker 1: financial freedom financial intos in the future. But if you're 880 00:41:01,440 --> 00:41:03,760 Speaker 1: closer to retirement, let's say, for all the older listeners 881 00:41:03,800 --> 00:41:07,240 Speaker 1: out there, these rate hikes and the stock market volatility 882 00:41:07,239 --> 00:41:09,239 Speaker 1: that we're experiencing are going to feel quite a bit 883 00:41:09,239 --> 00:41:11,960 Speaker 1: more daunting, which I totally get. And on top of that, 884 00:41:11,960 --> 00:41:14,120 Speaker 1: there might even be more pain in store for the market, 885 00:41:14,120 --> 00:41:16,799 Speaker 1: because again we don't know what the future holds. But 886 00:41:16,840 --> 00:41:19,040 Speaker 1: if you're hoping to tap those funds to pay for 887 00:41:19,120 --> 00:41:22,799 Speaker 1: retirement expenses, pretty soon you might be selling while the 888 00:41:22,840 --> 00:41:25,400 Speaker 1: market is down, which again I under I get that, 889 00:41:25,520 --> 00:41:27,520 Speaker 1: I know that that doesn't feel great. But luckily there 890 00:41:27,520 --> 00:41:29,560 Speaker 1: are a few things that can be done. First of all, 891 00:41:29,560 --> 00:41:32,040 Speaker 1: we'd recommend that you save up some more cash before 892 00:41:32,040 --> 00:41:34,120 Speaker 1: you quit. That's one thing you can do, just you know, 893 00:41:34,160 --> 00:41:37,080 Speaker 1: reducing your your spending to to draw down less. That 894 00:41:37,120 --> 00:41:39,760 Speaker 1: would be wise and your you might hate this advice, 895 00:41:39,800 --> 00:41:43,279 Speaker 1: but working longer is also an option. We often talk 896 00:41:43,320 --> 00:41:45,959 Speaker 1: about core pursuits here on the show. UM and again, 897 00:41:46,000 --> 00:41:48,200 Speaker 1: if you're an older listener and this is not something 898 00:41:48,280 --> 00:41:50,560 Speaker 1: you've heard us talk about, you might be thinking, well, 899 00:41:50,560 --> 00:41:53,000 Speaker 1: what's the core pursuit? Well, research shows that the happiest 900 00:41:53,000 --> 00:41:56,120 Speaker 1: retirees are are folks who have identified these different hobbies 901 00:41:56,120 --> 00:41:58,360 Speaker 1: on steroids, but the different aspects of our lives that 902 00:41:58,400 --> 00:42:01,600 Speaker 1: bring fulfillments, that bring meaning to our lives. And if 903 00:42:01,600 --> 00:42:03,440 Speaker 1: you happen to be somebody who has not done that 904 00:42:03,520 --> 00:42:06,399 Speaker 1: kind of work, you might find yourself in retirement, uh, 905 00:42:06,440 --> 00:42:09,640 Speaker 1: not only drawing down on a portfolio that's really taken 906 00:42:09,640 --> 00:42:11,719 Speaker 1: a beating over the past year, but to fund a 907 00:42:11,760 --> 00:42:15,279 Speaker 1: lifestyle that you're not necessarily happy with. Uh. And so 908 00:42:15,400 --> 00:42:17,319 Speaker 1: there's sort of a double win here. If you are 909 00:42:17,360 --> 00:42:19,520 Speaker 1: able to leave your money in the market as it 910 00:42:19,560 --> 00:42:22,600 Speaker 1: continues to hopefully fingers crossed rebound. Maybe over the next 911 00:42:22,680 --> 00:42:25,000 Speaker 1: year or two, you can still work, but maybe you're 912 00:42:25,040 --> 00:42:27,719 Speaker 1: working a little bit less. You are able to cover 913 00:42:27,840 --> 00:42:30,640 Speaker 1: some of your expenses without having to draw down your portfolio. 914 00:42:30,960 --> 00:42:32,600 Speaker 1: And guess what you're spending the rest of your time 915 00:42:32,640 --> 00:42:35,319 Speaker 1: doing With those additional hours, You're thinking about what you 916 00:42:35,320 --> 00:42:37,120 Speaker 1: want your life to look like. You're thinking about those 917 00:42:37,160 --> 00:42:40,120 Speaker 1: corporate suits, the things that you want to pursue, And 918 00:42:40,120 --> 00:42:42,600 Speaker 1: so I think that's something worth keeping in mind as well, 919 00:42:42,680 --> 00:42:44,560 Speaker 1: because we want folks, if they are at the point 920 00:42:44,600 --> 00:42:46,759 Speaker 1: to where they're going to retire, that they're able to 921 00:42:46,800 --> 00:42:50,080 Speaker 1: do that successfully, and that means doing it without feeling 922 00:42:50,080 --> 00:42:53,759 Speaker 1: any sort of weird feelings of regret about retiring, about 923 00:42:53,800 --> 00:42:56,600 Speaker 1: leaving work. Well, Matt, I've even known friends who have 924 00:42:56,680 --> 00:42:59,640 Speaker 1: retired and even though they had more than enough money, 925 00:42:59,680 --> 00:43:01,600 Speaker 1: they were still kind of obsessed with the day to 926 00:43:01,680 --> 00:43:04,440 Speaker 1: day market gyrations. And so I think the reality is 927 00:43:04,480 --> 00:43:07,440 Speaker 1: too that some people might they might think that they 928 00:43:07,440 --> 00:43:10,600 Speaker 1: can't retire, They might emotionally feel like they can't quit 929 00:43:10,600 --> 00:43:12,600 Speaker 1: work even though they have plenty of money, even when 930 00:43:12,640 --> 00:43:14,560 Speaker 1: even though the market has taken a dip. They might 931 00:43:14,560 --> 00:43:17,400 Speaker 1: just be reacting based on feelings and not on facts, 932 00:43:17,400 --> 00:43:19,759 Speaker 1: and so it's important to run the numbers two and see, like, Okay, cool, 933 00:43:19,800 --> 00:43:22,000 Speaker 1: can I live on you know, three or three and 934 00:43:22,040 --> 00:43:26,080 Speaker 1: a half four percent of my portfolio, even my portfolio 935 00:43:26,120 --> 00:43:28,279 Speaker 1: that's taken a hit. That's an important question to ask 936 00:43:28,320 --> 00:43:30,359 Speaker 1: because I think there are a lot of a lot 937 00:43:30,440 --> 00:43:33,520 Speaker 1: of folks who maybe react a little too vociferously to 938 00:43:33,760 --> 00:43:36,280 Speaker 1: kind of these market gyrations, even people who are nearing retirement. 939 00:43:36,280 --> 00:43:38,319 Speaker 1: And I'm not saying that I don't get that it 940 00:43:38,480 --> 00:43:40,400 Speaker 1: is a more emotional reaction, like you've got a bigger 941 00:43:40,400 --> 00:43:42,640 Speaker 1: nest egg that now, like the the in the actual 942 00:43:42,680 --> 00:43:44,600 Speaker 1: dollar amounts, you've taken a bigger hit than people in 943 00:43:44,640 --> 00:43:47,520 Speaker 1: their twenties and thirties typically. But it doesn't mean that 944 00:43:47,600 --> 00:43:51,080 Speaker 1: you can't still retire in at the time that you 945 00:43:51,080 --> 00:43:53,600 Speaker 1: hoped you would, especially after before this what was the 946 00:43:53,680 --> 00:43:57,040 Speaker 1: thirteen year bull run, Like you probably weren't expecting that either. 947 00:43:57,080 --> 00:43:59,160 Speaker 1: You weren't expecting those returns. So just it's it's good 948 00:43:59,200 --> 00:44:01,800 Speaker 1: to keep it all in perspect different exactly. Yeah, less feelings, 949 00:44:02,040 --> 00:44:06,040 Speaker 1: more data also stand by that as well, So I 950 00:44:06,080 --> 00:44:07,880 Speaker 1: mean as we've gone through this episode. We want you 951 00:44:07,920 --> 00:44:09,480 Speaker 1: to know that higher interest rates are going to mean 952 00:44:09,560 --> 00:44:12,840 Speaker 1: slower growth typically moving forward, and that's going to impact 953 00:44:12,880 --> 00:44:15,759 Speaker 1: the whole slew of different personal finance elements. None of 954 00:44:15,840 --> 00:44:17,360 Speaker 1: us know what all Jerome pal is going to do 955 00:44:17,440 --> 00:44:20,520 Speaker 1: next month, Although do you want to make any predictions now, 956 00:44:20,560 --> 00:44:24,960 Speaker 1: I'm good you're not willing to put a little money 957 00:44:25,000 --> 00:44:26,640 Speaker 1: on the line. I'm not. I'm not gonna. I'm not 958 00:44:26,680 --> 00:44:29,319 Speaker 1: willing to bet. But I don't e want to say 959 00:44:29,360 --> 00:44:30,880 Speaker 1: this because I feel like I don't want people to 960 00:44:30,920 --> 00:44:33,640 Speaker 1: hear this and think that we're recommending that you do 961 00:44:33,760 --> 00:44:36,719 Speaker 1: something differently based on this. But if we see in 962 00:44:36,840 --> 00:44:40,160 Speaker 1: the inflation numbers ticked down some uh, and the next week, 963 00:44:40,239 --> 00:44:41,920 Speaker 1: if Jerome's all right, we're gonna make the announcement, I 964 00:44:41,920 --> 00:44:44,440 Speaker 1: wouldn't be surprised if it drops down to fifty basis 965 00:44:44,440 --> 00:44:47,919 Speaker 1: points rather than kind of like the slow roll back 966 00:44:48,280 --> 00:44:50,120 Speaker 1: as opposed to going cold Turkey or something like that. 967 00:44:50,160 --> 00:44:51,640 Speaker 1: I don't know. I'm not gonna. I'm not gonna make 968 00:44:51,640 --> 00:44:54,719 Speaker 1: you know. I don't see. Jill's not gonna dabble at all. 969 00:44:54,840 --> 00:44:58,239 Speaker 1: That's like one man's brain that I can't I've got 970 00:44:58,280 --> 00:45:00,960 Speaker 1: no No, I'm just trying to, like, I realize there's 971 00:45:00,960 --> 00:45:03,480 Speaker 1: like other people helping in this decision making process. There's 972 00:45:03,520 --> 00:45:05,719 Speaker 1: so many people but involved, and it's hard to know 973 00:45:05,760 --> 00:45:08,759 Speaker 1: what's what's. Inflation has been stickier than most of us 974 00:45:08,800 --> 00:45:11,280 Speaker 1: would have imagined, although hopefully we're seeing signs of abating. 975 00:45:11,680 --> 00:45:15,400 Speaker 1: But yeah, it's making predictions is a fool's errand I'm 976 00:45:15,440 --> 00:45:17,239 Speaker 1: not going to go there, but you go ahead and 977 00:45:17,280 --> 00:45:21,120 Speaker 1: feel free to be a fool. Maybe yeah, we would 978 00:45:21,120 --> 00:45:23,880 Speaker 1: say it's it's it's not smart to make investing decisions 979 00:45:23,880 --> 00:45:27,120 Speaker 1: based on predictions a future exactly exactly. That's that. Then 980 00:45:27,160 --> 00:45:28,320 Speaker 1: that's the whole thing. I didn't want to say it 981 00:45:28,320 --> 00:45:30,200 Speaker 1: because I don't want folks to change their behavior, but 982 00:45:30,239 --> 00:45:32,040 Speaker 1: it's fun to kind of speculate and be like, I 983 00:45:32,040 --> 00:45:34,000 Speaker 1: bet I could see this happening. Yeah, but this I 984 00:45:34,040 --> 00:45:36,560 Speaker 1: think this episode was less about making predictions and it's 985 00:45:36,560 --> 00:45:39,719 Speaker 1: more about reading the tea leaves of what is actually happening. Right, 986 00:45:40,040 --> 00:45:42,680 Speaker 1: It's more about reading the writing that's already on the wall. 987 00:45:43,320 --> 00:45:46,640 Speaker 1: As interest rates have risen and are going to continue 988 00:45:46,640 --> 00:45:49,120 Speaker 1: to rise based on everything that the FED is communicated, 989 00:45:49,400 --> 00:45:51,600 Speaker 1: and so it's it's more important than ever to be 990 00:45:51,640 --> 00:45:55,160 Speaker 1: prepared for slightly gloomier economic times. We want people to 991 00:45:55,239 --> 00:45:58,040 Speaker 1: keep investing, though, because money that you invest while the 992 00:45:58,080 --> 00:45:59,799 Speaker 1: market swoons is going to have even more of an 993 00:46:00,040 --> 00:46:02,960 Speaker 1: hacked on your ability to build wealth. It's buying at 994 00:46:03,000 --> 00:46:05,080 Speaker 1: that discount right, like we talked about. But we also 995 00:46:05,120 --> 00:46:07,680 Speaker 1: don't want you to forsake savings, and fortunately savings rates 996 00:46:07,719 --> 00:46:09,799 Speaker 1: are going up. The more money you put in the 997 00:46:09,840 --> 00:46:12,320 Speaker 1: bank put you in a stronger position right now. Unfortunately 998 00:46:12,360 --> 00:46:14,799 Speaker 1: you're not getting paid zero percent on it anymore. And 999 00:46:14,800 --> 00:46:17,040 Speaker 1: then we want you to pay even closer attention to 1000 00:46:17,080 --> 00:46:19,320 Speaker 1: your job situation, and that means you should probably be 1001 00:46:19,400 --> 00:46:21,160 Speaker 1: networking a little bit, a little bit more right now, 1002 00:46:21,360 --> 00:46:23,880 Speaker 1: just in case, right, dig the well before you're thirsty. 1003 00:46:23,920 --> 00:46:26,719 Speaker 1: As our friend Jordan Harbinger says, like paying attention to 1004 00:46:26,760 --> 00:46:30,360 Speaker 1: all of these personal finance categories that are directly impacted 1005 00:46:30,560 --> 00:46:32,880 Speaker 1: or at least indirectly impacted by these FED rate hikes. 1006 00:46:32,920 --> 00:46:36,080 Speaker 1: It's really it's really important. So, yeah, the FED rate hikes. 1007 00:46:36,360 --> 00:46:38,399 Speaker 1: While it might seem like it's just a few point 1008 00:46:38,400 --> 00:46:42,680 Speaker 1: ahead to people in suits in Washington making decisions, yes, 1009 00:46:43,000 --> 00:46:45,040 Speaker 1: kind of behind the curtain wizard of Austyle curtain. It 1010 00:46:45,120 --> 00:46:47,600 Speaker 1: might feel like that the realities that has far reaching 1011 00:46:47,640 --> 00:46:49,839 Speaker 1: impacts into all of our lives, uh, in a whole 1012 00:46:49,920 --> 00:46:52,160 Speaker 1: lot of in a whole bunch of aspects of personal finance. 1013 00:46:52,440 --> 00:46:54,440 Speaker 1: And so we hope that you are well prepared to 1014 00:46:54,480 --> 00:46:57,960 Speaker 1: whether kind of the potentially rocky shores of what happens 1015 00:46:57,960 --> 00:47:02,480 Speaker 1: with interest rates and unpredictability thereof. That's right, All right, 1016 00:47:02,560 --> 00:47:04,120 Speaker 1: let's get back to our beer. This is a beer 1017 00:47:04,160 --> 00:47:08,880 Speaker 1: by Boskie Brewing Company. Uh. This beer is Scotia, which 1018 00:47:08,920 --> 00:47:12,439 Speaker 1: it turns out, not surprisingly to be a Scotch ale. 1019 00:47:12,800 --> 00:47:14,400 Speaker 1: What were your thoughts on this one, buddy? Yeah, man, 1020 00:47:14,480 --> 00:47:18,960 Speaker 1: this was really good, multi caramel vibes in a big way. 1021 00:47:19,040 --> 00:47:22,120 Speaker 1: And I am partial to Scotch ails, and sails are underrated. 1022 00:47:22,320 --> 00:47:25,279 Speaker 1: More brewers should have a solid Scotch hail, but I 1023 00:47:25,719 --> 00:47:28,480 Speaker 1: feel like almost nobody does. So it's so rare. They're 1024 00:47:28,480 --> 00:47:30,520 Speaker 1: they're kind of in the brown ail category, but better, 1025 00:47:30,560 --> 00:47:33,000 Speaker 1: i'd say, And so, yeah, I don't know. I like 1026 00:47:33,080 --> 00:47:35,000 Speaker 1: a brown ail with a little bit more body in 1027 00:47:35,040 --> 00:47:37,680 Speaker 1: my opinion, but but without the big roasty notes that 1028 00:47:37,719 --> 00:47:39,720 Speaker 1: you typically get with a stout or with a porter 1029 00:47:40,040 --> 00:47:42,080 Speaker 1: and so in my mind he goes like brown ale, 1030 00:47:42,160 --> 00:47:47,040 Speaker 1: Scotch ale porter uh and then a stout and so this, Yeah, 1031 00:47:47,080 --> 00:47:50,880 Speaker 1: this is a classic. It's like a mixture of molasses. 1032 00:47:51,480 --> 00:47:54,359 Speaker 1: Brown bread makes me think of fall pastries, a little 1033 00:47:54,360 --> 00:47:56,440 Speaker 1: bit makes me think of like maybe some pecan pas 1034 00:47:56,520 --> 00:47:59,320 Speaker 1: and pumping by I'm already starting to think towards Thanksgiving 1035 00:47:59,360 --> 00:48:01,919 Speaker 1: a little bit, so little bit sweet and not too sweet. Yeah, 1036 00:48:01,960 --> 00:48:04,439 Speaker 1: it's like totally gets me in the balance for this 1037 00:48:04,480 --> 00:48:08,080 Speaker 1: is like the is this the equivalent to PSL for 1038 00:48:08,080 --> 00:48:11,239 Speaker 1: for craft beer drinkers? That's pumpkin spice latte for all 1039 00:48:11,280 --> 00:48:14,839 Speaker 1: the uninitiated folks. Yeah, I don't know the pup, nor 1040 00:48:14,880 --> 00:48:18,160 Speaker 1: do I do the abbreviation S. Yeah, it's like it's 1041 00:48:18,160 --> 00:48:20,919 Speaker 1: that's part of the vernaculus at this point, I'm too 1042 00:48:20,920 --> 00:48:23,080 Speaker 1: old to know that. But yeah, no, I thought this 1043 00:48:23,160 --> 00:48:25,719 Speaker 1: was great and fantastic. I love me a good Scotch jail, 1044 00:48:25,800 --> 00:48:28,399 Speaker 1: although it's rare that I find one. So big thanks 1045 00:48:28,440 --> 00:48:31,719 Speaker 1: to Bob for donating to us. Thank you Bob down 1046 00:48:31,760 --> 00:48:34,920 Speaker 1: there in Albuquerque, New Mexico. And Joel, that's gonna be 1047 00:48:35,040 --> 00:48:37,520 Speaker 1: buddy for this episode. Listeners can find our show notes 1048 00:48:37,600 --> 00:48:39,200 Speaker 1: up on the site at how to money dot com, 1049 00:48:39,239 --> 00:48:41,160 Speaker 1: we'll link to any of the things that we may 1050 00:48:41,160 --> 00:48:43,920 Speaker 1: have referenced during this episode. We'll have those listed out 1051 00:48:43,960 --> 00:48:46,400 Speaker 1: there for you. While you're there, you'll have the opportunity 1052 00:48:46,440 --> 00:48:49,440 Speaker 1: to sign up for our weekly newsletter if that is 1053 00:48:49,520 --> 00:48:54,080 Speaker 1: something that somehow you have not done yet. Every Tuesday morning, 1054 00:48:54,120 --> 00:48:56,560 Speaker 1: this newsletter is going out and it includes what we 1055 00:48:56,600 --> 00:48:59,520 Speaker 1: think is the most important personal finance information for you 1056 00:48:59,560 --> 00:49:01,920 Speaker 1: to know about, plus some encouragement to help you right 1057 00:49:02,520 --> 00:49:04,279 Speaker 1: stay on the right course, or get going on the 1058 00:49:04,360 --> 00:49:06,080 Speaker 1: right course. If you're not there yet exactly, you can 1059 00:49:06,080 --> 00:49:07,520 Speaker 1: sign up for that at how to money dot com 1060 00:49:07,560 --> 00:49:10,319 Speaker 1: Forward Slash Newsletter. But buddy, that's gonna be it, dude. 1061 00:49:10,400 --> 00:49:13,400 Speaker 1: Until next time. Best Friends Out, Best Friends Out.