Speaker 1: Welcome to Out of Money. I'm Joel, and yes again,
Speaker 1: Matt is not here, promised he'll be back soon. Today
Speaker 1: we're talking about dumpster diving, insurance dodging, and pudgy penguins. Yeah,
Speaker 1: that's right. Matt has spent multiple weeks behind bars and
Speaker 1: I can't tell you the full story. And I'm just kidding.
Speaker 1: He's Matt spends some time with his family. He'll be
Speaker 1: back soon. This is kind of a summer summer thing
Speaker 1: where I'm hosting this Friday flight by myself. But I
Speaker 1: hope this is the last Friday flight I host solo
Speaker 1: because it's not really as fun doing it boy myself,
Speaker 1: even though I still love getting to talk about personal finances.
Speaker 1: And I'm glad you're along for today's Friday flight. Before
Speaker 1: I get to all the stories we've interesting, including pudgy penguins,
Speaker 1: it's a really interesting one. NFTs are back with a vengeance.
Speaker 1: I wanted to quickly highlight an email that listener Donnie sent.
Speaker 1: He lives in Maryland, and there are all sorts of
Speaker 1: things in the personal finance world that even as someone
Speaker 1: who hosts a personal finance podcast, I'm unaware of, and
Speaker 1: a lot of that is because there are state specific
Speaker 1: programs or just small fin nuances that I have not
Speaker 1: begun to appreciate or research in depth yet. And so
Speaker 1: Donnie sent this email and at least for listeners in
Speaker 1: Maryland and then maybe check and see if this is
Speaker 1: something like this is available in your state as well.
Speaker 1: There are cool perks for people who stick money aside
Speaker 1: in five twenty nine plans for their kids. And so
Speaker 1: Donnie basically wrote and told me and gave a lot
Speaker 1: of detail on this. So look it up for yourself
Speaker 1: on the Maryland five twenty nine dot com web page
Speaker 1: for details. But if you meet certain income requirements basically
Speaker 1: if you don't make a ton of money and actually
Speaker 1: a ton of money, well that's in the eye of
Speaker 1: the older. But you can get a state match to
Speaker 1: your five to twenty nine plan for in order to
Speaker 1: save for your kids college. So not only have five
Speaker 1: twenty nine plans gotten more flexible lately, And I looked
Speaker 1: up the Maryland five to twenty nine plan to see,
Speaker 1: you know what the cost and expenses look like, and
Speaker 1: on some of those investments they're quite low. So the
Speaker 1: Maryland five to twenty nine plan is I would say
Speaker 1: at least a really good solid one. Well, if you
Speaker 1: meet certain income requirements and you're prone to interested in
Speaker 1: saving for your kid's future, you might be able to
Speaker 1: get matching funds from the state for making those contributions.
Speaker 1: Interesting thing, you have to you can't claim a state
Speaker 1: tax deduction and get this state contribution. So it's important,
Speaker 1: Donnie said, to do the math to see which one
Speaker 1: is going to work out better for you. But you
Speaker 1: may might be able to get five hundred bucks and
Speaker 1: maybe you would have only saved one hundred bucks in
Speaker 1: taxes or something like that for making this contribution, and
Speaker 1: in that case, you'd want to take the state five
Speaker 1: hundred dollars contribution and you're getting out it's like a
Speaker 1: net four hundred dollars win. So again, all of those
Speaker 1: details are available on Maryland five twenty nine dot com.
Speaker 1: But it just reminded me like, oh man, there's so
Speaker 1: much to learn about personal finance. It never gets boring
Speaker 1: to me. And there are so many ways that the
Speaker 1: system is set up for people who are at least
Speaker 1: curious and paying attention to benefit. And if you live
Speaker 1: in Maryland, and again if someone else, by the way,
Speaker 1: if you live in another state, and you're like, my
Speaker 1: state does something similar. Shoot me an email, like, we
Speaker 1: want to highlight these things on the show. We want
Speaker 1: to make people aware of incredible benefits or free money. Right,
Speaker 1: this is almost like four to one k match at
Speaker 1: work on steroids. Though for your five twenty nine plans,
Speaker 1: it's really cool. All right, congrats to all the graduates.
Speaker 1: I'm seeing more and more pictures posted, and then there's
Speaker 1: all these those yard signs, the signs in front of
Speaker 1: neighborhoods at least where I live, saying congrats to these
Speaker 1: grads and hate where are they going to college? Well,
Speaker 1: and for college graduates in particular, you've been putting in
Speaker 1: tons of work for a lot of years. It's paid
Speaker 1: off with the degree. And we talked about the job
Speaker 1: market last week and how it's not as good as
Speaker 1: it has been for new college grads. But here's one
Speaker 1: thing that I wasn't on my radar until I saw
Speaker 1: an article in Indie Week, and it was that college
Speaker 1: graduates tend to leave a lot of their possessions behind
Speaker 1: when they fly the coop, When they leave the dorm
Speaker 1: or whatever campus housing or off campus housing they live in,
Speaker 1: they tend to leave a lot of their stuff they
Speaker 1: just maybe it's they don't have a U haul or
Speaker 1: a trailer to stick all their stuff in, and so
Speaker 1: a lot of it ends up at the dumpster. Could
Speaker 1: be some really nice stuff, right, It could be some
Speaker 1: trash that nobody really wants, but it could be a
Speaker 1: nice couch, or it could be In the case of
Speaker 1: this article who wrote for Indie Week, she talked about
Speaker 1: salvaging some really nice stuff that graduates were leaving behind
Speaker 1: at the school closest to her. High end tables, luxury sneakers,
Speaker 1: Lululemon workout stuff like shoved in a bag, fancy appliance
Speaker 1: like nice toasters and microwaves and stuff like that. And
Speaker 1: one person's trash is another person's treasure. And so the
Speaker 1: author she basically highlighted how she was able to salvage
Speaker 1: almost seven thousand dollars worth of stuff to prevent it
Speaker 1: from being thrown in the trash and to put it
Speaker 1: to use herself. And she created a spreadsheet and she said, hey,
Speaker 1: this is something I'm going to keep, this is something
Speaker 1: i'm going to sell, this is something I'm going to
Speaker 1: give away. And I thought that was so cool. I mean,
Speaker 1: it really is. The one person's trash is another person's treasure.
Speaker 1: It's the most apt phrase here because as the college person,
Speaker 1: you're saying, this is a burden to me. I don't
Speaker 1: have anywhere to put it. Maybe I'm moving back home
Speaker 1: with mom and dad for a few months. They don't
Speaker 1: have room for this stuff. Or I don't know where
Speaker 1: I'm going to end up. Maybe I'm sleeping on a
Speaker 1: friend's couch for a couple weeks and then I'll figure
Speaker 1: it out. And so in the interim, you just don't
Speaker 1: have anywhere to put it, so it ends up on
Speaker 1: the curb, or it ends up in the trash. Can
Speaker 1: I think this happens. I've heard from people in New
Speaker 1: York City right around the first of the month, because
Speaker 1: there are fewer places to store stuff. You just find
Speaker 1: stuff on the curb that you otherwise are like, why
Speaker 1: are they getting rid of this? And it's because they
Speaker 1: just can't take it with them, and it's more of
Speaker 1: a pain, more of a hassle to take it. And
Speaker 1: if you can deal with the hassle of moving it,
Speaker 1: you just are the proud owner of something fairly nice
Speaker 1: that someone else tossed out. And I think it also
Speaker 1: says something about our culture that we live in an
Speaker 1: era of disposable stuff, right, And it makes me think
Speaker 1: that even if an item is initially more expensive, it
Speaker 1: can cost you less over time to buy the nicer
Speaker 1: thing upfront and to hold on to it. But then,
Speaker 1: also because of extreme wealth in this country, when you
Speaker 1: think about the fact that we have so on average
Speaker 1: as a country, we're the wealthiest country in the history
Speaker 1: of the world, there's room here for entrepreneurs to make
Speaker 1: money based on the fact that based on some arbitrage, right,
Speaker 1: the fact that somebody has said, oh I used this,
Speaker 1: I no longer need it, I'm tossing it as and
Speaker 1: you can step in and be the middleman or woman
Speaker 1: to enjoy the profit of that. Basically, I have friends
Speaker 1: who have done this before, whether it's with used clothing.
Speaker 1: They've started businesses where they go to thrift stores and
Speaker 1: buy stuff and list it on eBay. And I'm not
Speaker 1: saying that it's not a job. It is. It takes time,
Speaker 1: but if you have an eye for that stuff, you
Speaker 1: can make a living literally just reselling things. Another friend
Speaker 1: who said, who did that with mid century furniture and
Speaker 1: he just knows where to go, what to look for
Speaker 1: and once you get an eye for that, he's like,
Speaker 1: you're able to find some things for one hundred bucks
Speaker 1: that sell for thousands of dollars. And this reminded me
Speaker 1: of that where people tossing stuff out you can benefit
Speaker 1: from at least just the way people don't take care
Speaker 1: of their stuff or get rid of it prematurely. At
Speaker 1: the very least by the way, I wish folks would
Speaker 1: donate that stuff so people can benefit instead of it
Speaker 1: next to the dumpster, tossing it in the trash and
Speaker 1: then you know, I don't know, maybe you don't have
Speaker 1: time for a side house, so you're not interested. But
Speaker 1: I think it's an underrated way to get cool stuff
Speaker 1: or to make a buck, and you have to roll
Speaker 1: up your sleeves and get a little bit dirty. I
Speaker 1: think that's one of the things too, is this is
Speaker 1: going to take maybe a little time, little effort, but
Speaker 1: even I think that can be It's kind of like
Speaker 1: my dishwasher story recently, buying extra dishwashers and flipping them,
Speaker 1: and it's a way to turn something that would have
Speaker 1: been a cost center into a profit center and still
Speaker 1: get something new at the same time. I just love
Speaker 1: that that's possible if you're paying attention. That makes you think.
Speaker 1: One last story here on the dumpster diving front. I
Speaker 1: had a buddy who there was back in the day
Speaker 1: there was an airline called air Tran. Southwest bought air
Speaker 1: Tran back in the day and that's how they actually
Speaker 1: moved into flying out of Atlanta. But AirTran ran a
Speaker 1: promotion on Wendy's Cups, and I think it was if you
Speaker 1: collected like sixty four Wendy's cups, you were able to
Speaker 1: take a free one way or around trip flight. And
Speaker 1: I don't think there were any like limits to the
Speaker 1: amount of cups you could collect in the number of
Speaker 1: flights that you were able to rack up. And so
Speaker 1: my buddy would literally jump into dumpsters to get these
Speaker 1: Windy's cups because it meant free travel. And so, yeah,
Speaker 1: these are the kind of things where if you see
Speaker 1: something like that and you're like that. At one time
Speaker 1: there was a lift promotion for new drivers and new
Speaker 1: drivers all you had to do was jump through the
Speaker 1: hoops to sign up for a lift, give one ride,
Speaker 1: and you were able to get a thousand dollars bonus.
Speaker 1: And I was like, that's worth my time. That's worth
Speaker 1: my time. So these things don't come along frequently, I
Speaker 1: wouldn't say, but they come along often enough that if
Speaker 1: you're paying attention, you might be able to score something.
Speaker 1: Is your smartphone making your car insurance more expensive? The
Speaker 1: finance journal Kiplinger they dove into that topic the other
Speaker 1: day and they found that third party apps are feeding
Speaker 1: information to insurance company insurance companies that could be used
Speaker 1: against you in setting rates. So the I'm not talking
Speaker 1: about the apps from your insurance company, right, which we've
Speaker 1: talked about on the show before and I have used
Speaker 1: before in order to save money on my insurance. Basically,
Speaker 1: if you drive like a grainy for a month or
Speaker 1: three months, or what however long they tell you to
Speaker 1: you plug something into your car. They might say, hey,
Speaker 1: you're actually pretty safe driver. We're going to knock twenty
Speaker 1: eight percent off your insurance rate, which is pretty cool.
Speaker 1: I know some people are aware of those, but I
Speaker 1: think that, at least from what I've seen and experienced,
Speaker 1: they can be a good way to save money on insurance.
Speaker 1: But what I'm talking about is actually a bunch of
Speaker 1: different apps to collect other information on you. There was
Speaker 1: another article just this week about how the Chinese apps
Speaker 1: Timu and She and they might be spying on you
Speaker 1: when you do your shopping and selling that information well,
Speaker 1: could end up at insurance companies maybe maybe. And so
Speaker 1: apps you would not think of as spying on you
Speaker 1: or collecting information that could be used to create a
Speaker 1: dossier and sell that information are doing so. So it's
Speaker 1: weather apps, shopping apps, navigation apps are all those apps
Speaker 1: are all collecting some data if you allow them, and
Speaker 1: then they're selling that data to data brokers who sell
Speaker 1: it to insurance companies. And one of the main apps
Speaker 1: that was highlighted this and I swear we've talked about
Speaker 1: this on the show before, but I guess it just
Speaker 1: refreshed in my mind. It's called Life three sixty. And
Speaker 1: this seems this app seems like a benign app. It
Speaker 1: actually seems like it's an app that's poised to help
Speaker 1: families share location and keep track of each other and
Speaker 1: stay in touch with each other. Well, this app in
Speaker 1: particular seems to be collecting information that is being sold
Speaker 1: and it's leading to unexpected premium hikes for insurance Auto
Speaker 1: insurance in particular because of the data it's able at
Speaker 1: the robust data it's able to collect about where you
Speaker 1: are and what you're doing, and the insurance companies like, yeah,
Speaker 1: we'd like that because the more information we have, the
Speaker 1: more we can dial in rates for specific people if
Speaker 1: they're engaged in behaviors that we deem unsavory or unhealthy.
Speaker 1: And it is part of the brave new world that
Speaker 1: we live in. But it scares me and it makes
Speaker 1: me think that you should be really careful what apps
Speaker 1: you download, and also you should be careful what you
Speaker 1: let those apps share their permissions right that you give apps,
Speaker 1: And the tough thing about something like Life thirty sixty
Speaker 1: is the permissions that you need to grant it are
Speaker 1: pretty crucial to the functioning of the app. So that's
Speaker 1: one of those apps, Well, hey, you might want to
Speaker 1: find a different way to stay in touch with your family,
Speaker 1: because if they're collecting that data and using it in
Speaker 1: a way that's not just to allow you to use
Speaker 1: the app for pro family purposes, they're using it to
Speaker 1: actually spy on you and sell your data, then to
Speaker 1: meet that app would not be worth downloading. Opt out
Speaker 1: of sharing your data with apps whenever possible, And because
Speaker 1: of the quickly rising insurance rates we've seen around the
Speaker 1: nation the number of uninsured is rising, especially on the
Speaker 1: homeowners insurance front, and having insurance is crucial for most folks.
Speaker 1: And by the way, if more motorists are going around uninsured,
Speaker 1: it means you having insurance is even more necessary. Think
Speaker 1: about that uninsured motorists protection that protects you in case
Speaker 1: you get into an accident with somebody who doesn't have insurance.
Speaker 1: That could be you're saving grace in case of an accident,
Speaker 1: a car accident. But on the homeowners insurance front, statistics
Speaker 1: recently revealed that seven percent of all homeowners report not
Speaker 1: having any insurance coverage on their house. And this might
Speaker 1: not be horrific given that, and this is a surprising
Speaker 1: this statistic has always surprised me. Something like forty percent
Speaker 1: of all homeowners own their homes mortgage free. And it's
Speaker 1: funny because I know very few of those people. Actually,
Speaker 1: this local woman who babysits our kids, wonderful. She we
Speaker 1: were just talking this morning and she doesn't have a
Speaker 1: mortgage on her home. I was like, that's incredible. How
Speaker 1: incredible is that. I look forward to joining you in
Speaker 1: the ranks of that someday. But there are many people
Speaker 1: out there that I know of who own their home's
Speaker 1: mortgage free. But apparently the statistics show that four out
Speaker 1: of ten people do own their home and they don't
Speaker 1: have a mortgage attached to it. And in that case,
Speaker 1: you can opt to go without insurance. But do you
Speaker 1: want to, well, if you own your home outright, could
Speaker 1: you still afford to rebuild that home in the event
Speaker 1: of an emergency. That's a really important question. Those are
Speaker 1: the only folks who should be willing to take that gamble.
Speaker 1: And if you have a mortgage right, your mortgage holder
Speaker 1: will find out if you act your insurance. So you cannot,
Speaker 1: as someone with a mortgage on your home, say I'm
Speaker 1: gonna keep paying this mortgage, but I'm not gonna have insurance.
Speaker 1: I'm going to take that risk because that puts the
Speaker 1: risk also on the bank or the credit union where
Speaker 1: you got your loan, and they're going to make sure
Speaker 1: you have insurance. They're going to get it for you,
Speaker 1: but it's going to cost a heck of a lot
Speaker 1: more if they buy it. So you want to be
Speaker 1: the one shopping around for insurance in order to find
Speaker 1: the best value for yourself, because yeah, and if you're
Speaker 1: looking to save money. If you're looking to save money
Speaker 1: on insurance, raising your deductible, if you have the savings
Speaker 1: on hand, can be a way to kind of split
Speaker 1: that baby right where you're saying, the insurance is getting
Speaker 1: really expensive, and that is certainly true. We've documented the
Speaker 1: rise in homeowner's insurance costs over the past few years.
Speaker 1: They've been significant, as costs of rerisen, the home prices
Speaker 1: of risen, insurance cost ofverism too, and so raising the
Speaker 1: deductible is a way to save on premiums and you
Speaker 1: have more skin in the game if you were to
Speaker 1: file a claim, but you got to have the cash
Speaker 1: on hand right in order to you got to have
Speaker 1: the money to back up that increased deductible that you're
Speaker 1: taking on. And it makes One of my neighbors has
Speaker 1: a second property and he did not have insurance on
Speaker 1: this property and a hurricane came through and wiped it out,
Speaker 1: and it was one of those things where obviously just
Speaker 1: super sad and definitely felt awful for him. He knew
Speaker 1: what he was getting into though, and he knew, Hey,
Speaker 1: insurance costs down here are so expensive, I just have
Speaker 1: to chance it. And the homeowners in certain parts of Florida,
Speaker 1: certain wildfire prone parts of California, who are who have
Speaker 1: enough money to back up the you know, to not
Speaker 1: go bust in case of their home burning down or
Speaker 1: you know, succumbing to a hurricane. They can, I think,
Speaker 1: go without insurance. But again, you have to do it
Speaker 1: in a really calculated way. And the vast majority of
Speaker 1: people could not stomach that loss. And so you have
Speaker 1: to stomach higher insurance costs to avoid the potential disastrous
Speaker 1: cost of full replacement of that home that most people
Speaker 1: cannot actually afford. R One tweet, one tweet can cause
Speaker 1: a firestorm, and it can drive a new cycle, right
Speaker 1: or one truth social post and I don't even know
Speaker 1: if they're called tweets anymore, and I don't know if
Speaker 1: truth social is actually social media network as much as
Speaker 1: the personal, you know, microphone of the president. But what
Speaker 1: in similar way, company can drive a narrative And we
Speaker 1: saw that this past week actually as Campbell's Soup announced
Speaker 1: that consumers are cooking at home again and in much
Speaker 1: higher numbers. Basically they're saying we're cooking at home, kind
Speaker 1: of like we were early in the pandemic days. Campbell's, yes,
Speaker 1: they sell soup. But they sell other items too, so
Speaker 1: they're not just saying, oh, we sold more Kansas soup.
Speaker 1: So this is how we know this. They sell stuff
Speaker 1: like pasta and crackers, and so they're saying, we sell
Speaker 1: enough stuff in the grocery store aisle, and we saw
Speaker 1: an uptick in sales. This makes us think that people
Speaker 1: are cooking at home more, and I think there's probably
Speaker 1: some truth to that, right, But I don't even know
Speaker 1: if we can call this a meaningful trend, but I
Speaker 1: will say this that it's a good reminder that cooking
Speaker 1: at home saves you a ton of money. And the
Speaker 1: Americans have historically spent more on food at home than
Speaker 1: eating out, but that has shifted dramatically over the past decade.
Speaker 1: We've all gotten so used to restaurant culture, to eating
Speaker 1: out culture, that we're spending less time around our kitchen
Speaker 1: and our stoves and around our tables at home, and
Speaker 1: we're spending a good bit more now of our money
Speaker 1: eating out than we are on groceries. And we've talked
Speaker 1: about grocery inflation, but guess what, grocery The increased prices
Speaker 1: of food has actually hit restaurants harder than it's hit
Speaker 1: grocery stores. So every time you eat out, you're shelling
Speaker 1: out a heck of a lot more money than you
Speaker 1: are when you're eating at home. And everyone kind of
Speaker 1: knows this, but when you put numbers to it, I
Speaker 1: think it helps. A meal at home costs the average,
Speaker 1: it's like four dollars a person on average, and a
Speaker 1: meal out at a restaurant is like seventeen dollars a
Speaker 1: person on average. Obviously, it varies wildly. You're going to
Speaker 1: McDonald's versus a Michelin star restaurant, that depends right, but
Speaker 1: somewhere in the middle, seventeen dollars on average per person.
Speaker 1: That's just simply that means that the more you eat
Speaker 1: at home, the more you're gonna save. And it makes
Speaker 1: me think that I think the biggest cause of eating
Speaker 1: out versus eating at home is that people haven't planned ahead.
Speaker 1: And if you were to plan ahead a little bit
Speaker 1: more like meal planning, batch cooking, thinking ahead on the weekends,
Speaker 1: what are we going to cook and having everything on hand,
Speaker 1: that can help you avoid those in a pinch a
Speaker 1: let's just go get a pizza, let's just go get
Speaker 1: fast food. And the other thing is is frozen foods.
Speaker 1: So I think for us, like Costco, frozen foods can
Speaker 1: be helpful in a pinch where we're like, what we
Speaker 1: would have done because we didn't plan very well was
Speaker 1: go out, But now we can throw in something that's frozen,
Speaker 1: whether it's even like salmon and rice, right that, We'll
Speaker 1: get the frozen salmon at Costco, and that's like a
Speaker 1: decently healthy meal that we didn't necessarily have to plan
Speaker 1: incredibly well for because life happens, right, So having those
Speaker 1: frozen foods on hand, it has at least been helpful
Speaker 1: to us. Trader Joe's is obviously another place where you
Speaker 1: can get great frozen meals, So think about think about that,
Speaker 1: because I love what Campbell's is saying, Hey, more people
Speaker 1: are starting to eat at home again, but the trend
Speaker 1: has gone so far in the other direction that even
Speaker 1: this small correction it's just not enough. And if you
Speaker 1: you know, with groceries being one of those top line
Speaker 1: items in our budget, you could easily save. I think
Speaker 1: something like if you were just to cut your eating
Speaker 1: out in half from what it is currently the average person,
Speaker 1: you would save something like seven thousand dollars a year,
Speaker 1: and that is not chump change. That is that is
Speaker 1: insane that you could save that much by that one
Speaker 1: simple thing. Say I'm still gonna eat out, I'm just
Speaker 1: gonna make it more rare. I'm just gonna do it
Speaker 1: half as much as I'm doing now, and then that
Speaker 1: would make that big of a dent. I just mentioned Costco.
Speaker 1: If it weren't enough of a reason to be a
Speaker 1: Costco member, there's so many reasons I not to. You know,
Speaker 1: Costco doesn't pay to advertise on this podcast, but I
Speaker 1: will advertise for them just because I think they're such
Speaker 1: a good company and they can save you so much money. Matt,
Speaker 1: he's a big Aldi fan, but he's not here to
Speaker 1: defend Aldie today, so I can just talk great about
Speaker 1: Costco right without hearing him chime in and be like, oh,
Speaker 1: he's voter. But the Costco actually just announced that they're
Speaker 1: going to be offering extra perks for executive members. And
Speaker 1: the executive membership is one hundred and thirty dollars, And
Speaker 1: some people say, well, that's why don't I just get
Speaker 1: the regular Cosco membership it's half the price. Well, if
Speaker 1: you're an executive member. Now there are additional reasons to
Speaker 1: consider it or to enjoy it, and then if you
Speaker 1: haven't become an executive member, there are additional reasons to
Speaker 1: consider it. They're going to open up the warehouse an
Speaker 1: hour early for executive members, starting at nine am, starting
Speaker 1: June thirtieth. They're also going to stay open an extra
Speaker 1: hour on Saturdays until seven pm, but only for executive members.
Speaker 1: So if you get the basic membership, sorry, you don't
Speaker 1: get in during those hours. I believe that's kind of
Speaker 1: a riff on Sam's Club. I believe they do something
Speaker 1: very similar. Another thing, if you like Costco Same Day,
Speaker 1: and I've talked about this, when you can get the
Speaker 1: discounted Instacart gift cards, which they're not selling at Costco
Speaker 1: anymore right now, sadly, but I found some on Amazon
Speaker 1: just just earlier this week, ten dollars off per one
Speaker 1: hundred dollars gift card, so I stocked up with as
Speaker 1: many as I could. But if you like Costco Same Day,
Speaker 1: which is fulfilled through Instacart, you'll get a monthly ten
Speaker 1: dollars for free on orders of one hundred and fifty
Speaker 1: dollars or more, which is just another perk when you
Speaker 1: think about that, that's one hundred and twenty dollars over
Speaker 1: the course of the year. And again if you have
Speaker 1: the discount gift cards, then it can make financial sense.
Speaker 1: But the executive membership is essentially paying for itself. And
Speaker 1: the other thing. The other thing about the executive membership,
Speaker 1: I tell people who always go with the executive membership
Speaker 1: and not with the basic because you can get a
Speaker 1: refund of the difference in price if you end up
Speaker 1: not getting enough benefit from that executive membership over the year.
Speaker 1: So if you're like, Okay, I'll try it, but I
Speaker 1: don't know if I spend enough money there, well you
Speaker 1: can go up to the front desk at Costco and say, hey,
Speaker 1: I got the executive membership. My savings were like twenty bucks.
Speaker 1: It wasn't good enough, and they'll say, oh cool, we'll
Speaker 1: just give you the difference, the forty five dollars difference
Speaker 1: or whatever it was between the basic membership and the
Speaker 1: executive membership. Here you go. And so that is the
Speaker 1: guarantee that Costco has, which just means like, especially now,
Speaker 1: everybody should be an executive member. All right, We've got
Speaker 1: more to get to on this episode, including what if
Speaker 1: was an investor, how would that work out. We'll talk
Speaker 1: about that, and I might throw some shade at the
Speaker 1: cyber truck for a second too. We'll get to all
Speaker 1: that and more. Right after this, I went back from
Speaker 1: the break of course, got to get to the ludicrous
Speaker 1: headline of the week. This one comes from a website
Speaker 1: called Alpha Architect, and the headline reads, even God would
Speaker 1: get fired as an active investor. And this is one
Speaker 1: of the best headlines I've seen in a while. And
Speaker 1: it's just kind of ludicrous to think that the creator
Speaker 1: of the universe would not be able to make it
Speaker 1: as an active investor. In this article did a really
Speaker 1: good job setting up why and then talking about just
Speaker 1: how even if you had perfect foreknowledge you as an investor,
Speaker 1: you wouldn't ultimately be able to make it. The people
Speaker 1: who you're investing on behalf of would be so mad
Speaker 1: at the drawdowns that they experienced during the multuous months
Speaker 1: that they would fire you. And so the gist was
Speaker 1: that even with like practic perfect foresight, that active investors
Speaker 1: are going to get fired before their strategy is allowed
Speaker 1: to play out. There saying no, no, no stick with me
Speaker 1: this company. It's I know that the draw down is
Speaker 1: significant right now, but if you just hang on for
Speaker 1: the ride, I promise like we're going to have a
Speaker 1: comeback and we're all going to make money. Well, the
Speaker 1: truth is, when you own the best performing stocks over time,
Speaker 1: still individual stocks, those draw downs can be so gut
Speaker 1: wrenching over months or even years that even if you
Speaker 1: had the conviction to stay the course, your clients as
Speaker 1: an investor would be like, sorry, dude, I'm not hanging
Speaker 1: with you. My portfolio is down to seventy five percent
Speaker 1: in the last twelve months and that so even if
Speaker 1: you knew ahead of time, you would have to be
Speaker 1: incredibly convincing to get people to stick with you during
Speaker 1: those times of greater volatile And I think as individuals, right,
Speaker 1: if we had perfect foresight, we would say, I'm okay
Speaker 1: with greater levels of volatility if I know that at
Speaker 1: some point it's going to pay off in the long run.
Speaker 1: But as people who are investing our money with somebody
Speaker 1: who's making the calls on our behalf, we wouldn't be
Speaker 1: right because we don't have that perfect foreknowledge. They're trying
Speaker 1: to tell us that they do. And this is honestly
Speaker 1: kind of how some parts of the investing world function
Speaker 1: you're believing somebody else's conviction, but those people don't have
Speaker 1: perfect foreknowledge, and which means that their outcomes are even worse.
Speaker 1: But it was just fascinating to see that even if
Speaker 1: you did, even if you knew which stocks were going
Speaker 1: to be big, those drawdowns would be so significant that
Speaker 1: people wouldn't be able to stomach them. And very few
Speaker 1: people have the conviction to hold on during the toughest
Speaker 1: of times. I think about just a stock recently where
Speaker 1: there's this company called Carvana and they're trying to which
Speaker 1: we've talked about on the show, for selling your car
Speaker 1: to them or buying a used car, and their stock
Speaker 1: price just got torched last year, and it looked like
Speaker 1: Carvana might go away altogether. And even though they'd created
Speaker 1: this inventive new business model, Carvana stock got obliterated so
Speaker 1: hard and a lot of people thought it wasn't going
Speaker 1: to be around, and if it hadn't stuck around, investors
Speaker 1: would have been wiped out. And then you think about
Speaker 1: what's actually happened with the turnaround of Carvana and their
Speaker 1: stock price zooming. But did people have the conviction to
Speaker 1: be able to hold on during those most tumultuous times.
Speaker 1: Some investors did and they raped their rewards, but a
Speaker 1: lot of other people got out because the drawdoun in
Speaker 1: the stock price is really tough to stomach. And this
Speaker 1: is just another pro I think in the index investing camp,
Speaker 1: the drawdowns are less severe. And you might say, well,
Speaker 1: I think I can pick the winners. But the truth
Speaker 1: is one, can you? And then two? Even if you
Speaker 1: pick a winner, can you stick with that winner even
Speaker 1: when the going is tough? A La Carvana or a
Speaker 1: Lah Think about Apple. There have been times where Apple
Speaker 1: is a company was it looked like they were almost dead.
Speaker 1: They recovered from the verge of bankruptcy back in those
Speaker 1: early Steve Job day Steve Jobs days. And so are
Speaker 1: you the kind of person that has the conviction that
Speaker 1: that stock is worth holding on to for the long term.
Speaker 1: I don't know about you, but I don't know that
Speaker 1: I have the time the intelligence to study companies enough
Speaker 1: to have that sort of conviction that I'm willing to
Speaker 1: hold on through thick and thin in order to attempt
Speaker 1: to experience those greater levels of returns. Fifty four percent
Speaker 1: of stocks, by the way, never recover after experiencing a
Speaker 1: ninety percent draw down. So and by the way, you
Speaker 1: could get even more risky by investing in leveraged funds,
Speaker 1: which are becoming more widely available inside of retirement accounts
Speaker 1: or are set to become available inside of retirement accounts soon.
Speaker 1: The thought I think behind these leveraged funds is that
Speaker 1: you can Hey, you can finance a vehicle, you can
Speaker 1: finance your education, you can find it's a home. Why
Speaker 1: not use debt to increase what you're able to buy
Speaker 1: investment wise too, And this has always been if you're
Speaker 1: a real estate investor, if you've heard us talk about
Speaker 1: real estate investing, it's always been a big part of
Speaker 1: what makes real estate investing in particular attractive because if
Speaker 1: it weren't for leverage, almost nobody would want to participate
Speaker 1: in real estate investing. The returns just wouldn't be as robust.
Speaker 1: There's something about putting ten percent down or twenty percent
Speaker 1: down on a property and saying I don't have to
Speaker 1: actually have the cash to buy the whole thing up front.
Speaker 1: That juice is your returns, right, especially if you have
Speaker 1: a locked in low interest rate, It can make the
Speaker 1: investment look a whole lot more attractive, and the problem
Speaker 1: here though, is greater potential reward equals greater risks. Leverage
Speaker 1: is something that can either make you look smarter, it
Speaker 1: can make you look really stupid. And if the market
Speaker 1: goes through an extended tough time, investors who are putting
Speaker 1: money into these leverage funds they could be wiped out.
Speaker 1: I'm not against all forms of debt. We talk about
Speaker 1: smart forms of debt on the show, that there are
Speaker 1: some kinds of debt that, in proportion used wisely, in intelligence, intelligently,
Speaker 1: and not overdone, can actually help your ultimate wealth building goals.
Speaker 1: Smart use of leverage can benefit what I would call
Speaker 1: shrewd investors, because we see what happened in two thousand
Speaker 1: and eight, right, Unwise investors who took on too much debt,
Speaker 1: who bit off more than they could chew, found themselves
Speaker 1: between a rock and a hard place. But investing in
Speaker 1: these sorts of leverage funds it's a little too risky
Speaker 1: for my blood as well. I'd avoid them again, stick
Speaker 1: to regular old index funds because the only certain thing
Speaker 1: about these leveraged funds is the extra fees they assess
Speaker 1: because of the ad complexity that they are putting into
Speaker 1: your portfolio. So if you see these leverage funds, Yeah,
Speaker 1: they're a way that you could potentially increase your earnings,
Speaker 1: but you're taking on more risk and I just don't
Speaker 1: think it makes sense. But even worse than leverage funds
Speaker 1: would be investing in memes, and that is of course becoming.
Speaker 1: It has became more common during the crypto heyday and
Speaker 1: the n f T the NFT invasion that we experienced.
Speaker 1: But you can now or very soon buy n f
Speaker 1: ts in e F T ETF format in an exchange
Speaker 1: traded fund. So there was there is a new ETF
Speaker 1: that is set to launch that you know, and it
Speaker 1: is passing the regulatory hurdles as we speak. And you
Speaker 1: might have thought NFTs were dead, that pictures of board
Speaker 1: apes and stuff they were talking about them on all
Speaker 1: the nighttime comedy shows, that those were gone for good,
Speaker 1: but they're not. And now there is a something you
Speaker 1: can invest in, the n f T s, the an
Speaker 1: n f T ETF that that invests essentially in this
Speaker 1: Pudgy Penguin project Pudgy Penguins, which sounds I don't know,
Speaker 1: exciting and cutting edge, right, I'm kidding, I'm joking, of
Speaker 1: course not it's it's I think, a great way to
Speaker 1: lose your money quickly if you're if you're interested in that.
Speaker 1: I went to the website because I was just so curious. Okay,
Speaker 1: what is the Pudgy Penguins NFT project all about? And
Speaker 1: they use some of the new techno jargon, of course.
Speaker 1: On their website they say that they're here to well
Speaker 1: and they also use some goofy language to proliferate the
Speaker 1: penguin memetic culture not like like meme culture and good vibes.
Speaker 1: And they're also fostering creativity, community and freedom. I don't
Speaker 1: know how Pudgy Penguins is fostering community and freedom creativity.
Speaker 1: Maybe it's the kind of cute penguins. But yeah. You
Speaker 1: can also go to their website and you can buy
Speaker 1: ridiculously expensive merch Maybe that's how they're hoping to make
Speaker 1: money here. And maybe I'm not online enough, but this
Speaker 1: this is just another investment I'm completely avoiding. I think
Speaker 1: we did greatly disparaged NFTs back in the day, and
Speaker 1: I still feel the exact same way. Let's learn from
Speaker 1: the fact that bored apes are worth a fraction of
Speaker 1: what they used to be, the fact that NFTs are
Speaker 1: on the comeback, and potentially you can invest in them
Speaker 1: in an even simpler form, publicly traded ETFs. I don't
Speaker 1: think of that as a good thing, and yeah, I
Speaker 1: would just do it at your own peril. NFTs still
Speaker 1: make so little sense to me. I would rather own
Speaker 1: real art that I can hang on my walls than
Speaker 1: a jpeg that is mine but that can be copy
Speaker 1: and pasted. It still just baffles me that this is
Speaker 1: a segment of the market. But I think for most
Speaker 1: people who enter into it, you're going to lose money,
Speaker 1: and it's just the rare person who times it properly
Speaker 1: who makes money. All right, Depreciating assets are once again
Speaker 1: flipping the script. They're going up in value. Supply chain
Speaker 1: issues during COVID led to a situation where people were
Speaker 1: seeing their used car increase in value. It was a
Speaker 1: rare phenomenon. It was interesting to document on the show
Speaker 1: because it's something we don't see, Like we always talked
Speaker 1: about cars as depreciating assets. Hey, that thing is going
Speaker 1: to go down in value, And just for a hot
Speaker 1: minute there it was like, wait a second, your used
Speaker 1: car is actually it's worth more today than it was yesterday.
Speaker 1: And an even more rare feet. There were people who
Speaker 1: leased cars and then if they bought it out after
Speaker 1: the lease was up, they were able to make money
Speaker 1: too because there was a spread on what they had
Speaker 1: to pay for And typically this is almost never the case,
Speaker 1: right when those contracts are written that you can buy
Speaker 1: the car and then it's actually worth more than what
Speaker 1: you have to pay to the dealership to buy the
Speaker 1: car then, and so people would instead of just turning
Speaker 1: the car over, if they would say, wait a second,
Speaker 1: I can pay fifteen thousand dollars for this car, but
Speaker 1: it's actually worth nineteen or twenty thousand, So yeah, I'll
Speaker 1: take it, even if I don't plan on keeping it.
Speaker 1: I'll and I'll make the difference. So that was really interesting.
Speaker 1: But we're seeing maybe signs that this is coming about again,
Speaker 1: that the used car market it's getting tighter because of tariffs,
Speaker 1: and demand for used cars seems to be going up,
Speaker 1: Supply seems to be dwindling, and then prices seem to
Speaker 1: be rising again. How long this is going to last
Speaker 1: depends on a number of factors, including tariff policy, which
Speaker 1: as we all know, has been very very whiplashy, very
Speaker 1: back and forth. You know where tariffs land or if
Speaker 1: they land is anybody's guess. And I don't even know
Speaker 1: if the person in charge of tariff policy really knows
Speaker 1: where things are going to land right now. And so
Speaker 1: I think this is just another another reason to hold
Speaker 1: onto your used car longer and to feel comfortable putting
Speaker 1: money into it within reason. There're obviously like rules of
Speaker 1: thumb of when hey, my car needs seven thousand dollars
Speaker 1: worth of work and it's worth five thousand dollars. Yeah,
Speaker 1: I'm not putting that money into it, but it makes
Speaker 1: I've been thinking about my five VAC. It's summer right
Speaker 1: now and the AC doesn't work, and I've just been
Speaker 1: sweating it out like an idiot, and I've finally come
Speaker 1: to the conclusion, you know what, this is a good car.
Speaker 1: I'm gonna put some money into it. I've kind of
Speaker 1: been holding out and not putting money into it in
Speaker 1: hopes that I would at some point just ditch it.
Speaker 1: And I'm like, you know what, Now I think I'm
Speaker 1: going to hold onto this thing longer. I'm going to
Speaker 1: put in the money that it needs to keep this
Speaker 1: thing around. And I do think for you know, it's
Speaker 1: a twenty year old car. I do think for a
Speaker 1: lot of people that is a wise move. Part of
Speaker 1: the reason I love used car so much and I
Speaker 1: love holding onto car so long, is because it's such
Speaker 1: a significant part of most people's budgets, and I love
Speaker 1: making it a really insignificant part of my budget so
Speaker 1: I can spend more on stuff I care about more.
Speaker 1: And one of the other main reasons that I just
Speaker 1: hate new cars it's really hard for me to stomach
Speaker 1: buying a new car is because they tend to depreciate
Speaker 1: in value, so dann quickly. And this is a great
Speaker 1: time for me to talk trash about the cyber truck.
Speaker 1: And not because I have a debta against Elon or
Speaker 1: anything like that. It's not just a political thing. But
Speaker 1: and obviously, you know, Elon has found himself in some
Speaker 1: the political fray, largely of his own making. He seems
Speaker 1: to have annoyed everyone from every side at this point.
Speaker 1: But the value of the cyber truck has plummeted far
Speaker 1: more than the average new car that gets sold. Apparently,
Speaker 1: cyber truck prices are down something like forty percent just
Speaker 1: a year after being in customer hands. And this was
Speaker 1: this is like a far cry from even just the
Speaker 1: normal depreciation that a new car typically experiences of twenty percent,
Speaker 1: that's still a lot right to buy let's say a
Speaker 1: fifty thousand dollars car and for it to be worth
Speaker 1: forty thousand dollars a year later. That's a lot of
Speaker 1: money to lose in just a short period of time.
Speaker 1: But if you bought the one hundred thousand dollars cyber
Speaker 1: truck and it's now worth sixty two thousand dollars just
Speaker 1: a year later, you just burned a whole pile of cash.
Speaker 1: And so that has been fascinating to watch. And I
Speaker 1: think this is oh. I think it's particularly true of
Speaker 1: the cyber truck, but I think it's also true of
Speaker 1: brand new models that it's hard to know what the
Speaker 1: customer demand is going to be and whether or not
Speaker 1: they're going to retain their value. In the same way,
Speaker 1: depreciation is something that we all face as car owners.
Speaker 1: The car, at least in normal times, the car is
Speaker 1: not going up in value, but the ownership timeline and
Speaker 1: holding on to it longer it can help kind of
Speaker 1: cover up for some of those depreciation flaws. And the
Speaker 1: other thing that helps is to just buy older cars
Speaker 1: that are in good condition and hold on to them longer,
Speaker 1: because if you buy a car that's at least five
Speaker 1: years old and you hold on to it for five
Speaker 1: or ten years, the longer you hold onto that car,
Speaker 1: you're paying. You're buying someone else's depreciating asset, and it's
Speaker 1: going to appreciate a heck of a lot less during
Speaker 1: the time that you own it. And the thing is,
Speaker 1: if you're smart about getting your car checked out, and
Speaker 1: you're smart about looking at places like Consumer Reports for
Speaker 1: aliability ratings, you can hone in on cars that are
Speaker 1: going to be more reliable over time, that are going
Speaker 1: to be a better bet. Buying a five year old
Speaker 1: car doesn't mean buying even a ten or fifteen year
Speaker 1: old car doesn't mean you're doomed to be in the
Speaker 1: repair shop all the time if you buy smartly, and
Speaker 1: if you need one more reason not to buy a
Speaker 1: new car, I was just talking to a friend the
Speaker 1: other day. Financing terms are getting worse, and my friend
Speaker 1: was saying he was being pushed into an eight year
Speaker 1: car loan and he was like, but I wanted to
Speaker 1: do a six year car loan. But if I do eight,
Speaker 1: can I pay it off more? Quickly, and I was
Speaker 1: telling him about my four year rule that you don't
Speaker 1: ever want to finance a car more than four years.
Speaker 1: I don't know if he listened or not. And that's
Speaker 1: really up to you as an individual. But if you
Speaker 1: want to, my advice is to not buy a car
Speaker 1: that you can't afford to buy in cash, and if
Speaker 1: you absolutely do have to finance it thirty six to
Speaker 1: forty eight months at absolute most, and get that loan
Speaker 1: from a credit union. And I know cars can be
Speaker 1: like a status symbol in this country, but that's not
Speaker 1: something I buy into and I think of it. It
Speaker 1: does a point A to point B transportation, and if
Speaker 1: you want to think of it as a status symbol,
Speaker 1: that's fine, but only by it if you can actually
Speaker 1: afford it, and if you have to finance it over
Speaker 1: a long period of time, you can't afford it all right. Last,
Speaker 1: but not least, the SmartLess Guys, the guys from the
Speaker 1: SmartLess podcast, Jason Bateman, Will Arnett and Sean Hayes, they're
Speaker 1: launching their own cell phone service. I haven't seen all
Speaker 1: the details, but it's just funny because I think celebrities
Speaker 1: the two things they love to launch now it seems
Speaker 1: like our smartphone plans and tequila lines. But this is
Speaker 1: a straight up Ryan Reynolds invitation. The dude who invested
Speaker 1: massive amount in Mint Mobile and then finally sold Mint
Speaker 1: Mobile to T Mobile after gaining a lot of subscribers
Speaker 1: and increasing the value. This seems like it might be
Speaker 1: another good option. I'm all for competition in this space,
Speaker 1: but Mint and US Mobile are still two of my
Speaker 1: absolute favorites. For saving money, you could save a ridiculous
Speaker 1: amount of money by going with the MV and O
Speaker 1: Carrios carriers mobile virtual network operators. And yeah, if you're
Speaker 1: with one of the big companies, you're probably paying too much.
Speaker 1: So just a reminder, and maybe the SmartLess plan is
Speaker 1: going to be awesome and take the cake. I'll wait
Speaker 1: till they have a website up and more details on
Speaker 1: how much these plans cost. But always going to have
Speaker 1: more competition in a space that's already seen prices drop dramatically.
Speaker 1: All right, that's going to do it for this episode.
Speaker 1: I can't wait to have my best friend back in
Speaker 1: the near future. But I hope you have a great
Speaker 1: weekend and I'll see you back here on Monday for
Speaker 1: a brand new episode Audio's best friend out