Speaker 1: Welcome to How the Money. I'm Joel, I'm Matt.
Speaker 2: Today we're talking AI toys, homeowners held hostage, and impoverished Americans.
Speaker 1: That's right, buddy. This is our Friday Flight, the collection
Speaker 1: of stories of news articles that we came across and
Speaker 1: the ones that we think you need to pay attention
Speaker 1: to because they impact your finances the most.
Speaker 2: I think you need to pay attention so much, we're
Speaker 2: going to force you to listen to us for the
Speaker 2: next thirty something minutes.
Speaker 1: Yeah, speaking of folks held hostage, we'll get to that
Speaker 1: homeowner's held hostage story here in a second. But before
Speaker 1: we kick things off, let's give a massive, massive thanks
Speaker 1: to all of the How to Money listeners out there
Speaker 1: who participated in the Daffy Voices for Good challenge. We
Speaker 1: went up against like six, no, seven other podcasts, and
Speaker 1: the reason I know this specific number was because there
Speaker 1: was one podcast that beat us. But I was so happy.
Speaker 1: I want to it's all relative here, because what I
Speaker 1: calculated was the fact that something like pinching pennies, I
Speaker 1: forget what it's called.
Speaker 2: I don't know, I don't remember what they call their podcasts.
Speaker 1: So we came in second and we were only a
Speaker 1: few thousand dollars short of taking that first place spot.
Speaker 1: So I'm really proud of the generosity of our listeners percent.
Speaker 1: But I was also super stoked to see that the
Speaker 1: next six podcasts that competed in this challenge raised only
Speaker 1: half as much combined that we were able to raise
Speaker 1: with our listeners, which just demonstrates such an incredible generous
Speaker 1: spirit man, and.
Speaker 2: That not only are heart yeah, trying to build wealth,
Speaker 2: they want to do good things.
Speaker 1: With it and they're serious givers. Yeah, And honestly, I
Speaker 1: hope that a lot of folks are checking out donor
Speaker 1: advised funds, specifically with Daffy, because we, again, we have
Speaker 1: been such big of Daffy. What it does they do.
Speaker 1: We've been with them for a long time and they
Speaker 1: finally reached out and we're like, hey, maybe we'll start
Speaker 1: advertising with you. Guys Like great a little bit, which
Speaker 1: is something we started. Wait did we do that last
Speaker 1: did we start the end of last year? I think
Speaker 1: it was maybe? I think it was a beginning of
Speaker 1: last year. Maybe, Okay, And yeah, Daffy was a we
Speaker 1: like such a great part if it's a company we
Speaker 1: already use and love it's like the perfect slam Dune partnership.
Speaker 1: So yeah, and really fun to participate in this challenge.
Speaker 1: Next year, hopefully we do this again. Next year, we're
Speaker 1: gonna crush Pinching Pennies take the number one spot. Yeah,
Speaker 1: well we'll beat them because our listeners are awesome and
Speaker 1: maybe I don't know, maybe Matt, you'll we'll match even
Speaker 1: more next year.
Speaker 2: Yeah, I think let's do it. Let's go h okay. Oh,
Speaker 2: one last thing. I'm seeing all the Spotify raps coming
Speaker 2: out now. It's really fun to see. It's amazing how
Speaker 2: much some people listen to specific podcasts and just to
Speaker 2: see people like I listened to How the Money for
Speaker 2: fifteen thousand minutes last year and I'm like, oh my goodness,
Speaker 2: and so much time listening to our voices. I hope
Speaker 2: you haven't gone insane.
Speaker 1: But time for me to do my once a month's
Speaker 1: social media log in and I'll repost a bunch of
Speaker 1: those folks tag us over on Instagram. Specifically, you kind
Speaker 1: of run the Instagram. I kind of run the Facebook group.
Speaker 1: People have been posting in the Facebook group, so I'm
Speaker 1: sure you'll go to find some on Instagram for share.
Speaker 1: But Thank you for listening. Give us a follow if
Speaker 1: you don't at how the Money Pod.
Speaker 2: All right, let's get to the Friday flight sampling stories
Speaker 2: we found interesting this week. Let's talk about Black Friday
Speaker 2: Cyber Monday. Did you participate the shopping holiday?
Speaker 1: You snag yourself a deal? A little? Not much? Okay?
Speaker 2: The main thing I talked about buying tires. There's like
Speaker 2: an early Black Friday sale or whatever. Nice but running shoes.
Speaker 2: I stocked up on cheap but good running shoes, so solid,
Speaker 2: like the high end Adidas for all right, fifty bucks?
Speaker 2: All right, yeah, way to go do it's happy to
Speaker 2: get those?
Speaker 1: You are are you? Are you brand loyal? Now you
Speaker 1: have a lot? Only get the Adida shoes. Yeah, you
Speaker 1: have a lot of Adidas when you know, because they
Speaker 1: have the best sales to be you know, the sizing
Speaker 1: and like you kind of know what brand or not brand,
Speaker 1: what models they go for it as well. Well, you
Speaker 1: are like an ultra person. I have, like I know
Speaker 1: Ault people, and if Alter had shoes that were like
Speaker 1: in that price range, I would totally consider it, but
Speaker 1: they're a lot more expensive. Well, you're also cranking through
Speaker 1: the shoes, that's true.
Speaker 2: I do okay, So, but like a lot of people
Speaker 2: bought stuff on Black Friday and Cyber Monday, sales reup
Speaker 2: something like four percent year over year. Online sales in particular,
Speaker 2: we're up nine percent year over year. But because of
Speaker 2: inflation and tariffs and higher prices in general, those numbers
Speaker 2: could be slightly more inflated than they seem. So maybe
Speaker 2: actually people weren't buying a lot more. It's just that
Speaker 2: things cost more money. And by the way, Costco has
Speaker 2: even sued for a refund of the teriffs they've been
Speaker 2: forced to pay, which I kind of love to see that,
Speaker 2: like Costco's sticking up for themselves. We always stay with Costco.
Speaker 2: Matt here on how to money gen Z shoppers appear
Speaker 2: to be feeling the biggest pinch, and they're dialing back
Speaker 2: spending accordingly. I want to say this, if you overdid it,
Speaker 2: that's okay on Black Friday and Cyber Monday, but it's
Speaker 2: crucial to note the return policy so you can get
Speaker 2: your money back before it's too late. If you're like,
Speaker 2: all these packages are starting to arrive, I forgot I
Speaker 2: even got that thing weight, I don't need that thing.
Speaker 2: Return it, you might maybe be able to mitigate some
Speaker 2: of the damage that you did if you ever spent
Speaker 2: The head of consumer insights over at Salesforce, that person
Speaker 2: credited their spending rise this year to artificial intelligence, and
Speaker 2: I think I think it was she She called it
Speaker 2: the ultimate purchase accelerator AI. We're not anti AI, but
Speaker 2: I just think caution is warranted for your budget when
Speaker 2: you're using AI. It worries me to think that people
Speaker 2: are like using that to facilitate even more buying habits,
Speaker 2: which I.
Speaker 1: Think is true. Yeah, yeah, so all the note of AI. Actually,
Speaker 1: we're going to see more AI toys on the market
Speaker 1: this year. The problem though, is that some are being
Speaker 1: marketed for kids as young as two years old, which
Speaker 1: then leads ovacy groups out there like fair Play to
Speaker 1: issue some stark warnings and rightly so. And it makes
Speaker 1: me think of some of the more educational devices, or
Speaker 1: at least that's maybe what we tell ourselves, because like
Speaker 1: I think a typical response might be, well, you know,
Speaker 1: these toys, they're educational, this is going to help them
Speaker 1: to learn, but man, it's so oh. It seems obvious
Speaker 1: to me though, that two year olds are pretty ill
Speaker 1: equipped to deal with AI and I don't know just
Speaker 1: the proper way to interact with it. I actually asked
Speaker 1: chat whether we should give our kids AI toys Joel,
Speaker 1: and guess what, give me a pretty stern warning against it.
Speaker 1: This is AI itself. You would think it would be
Speaker 1: a bit more self propagating, none them like pluribus. It's
Speaker 1: uh oh, I'll watch the biological mandate. I'm only a
Speaker 1: couple episodes in and the verdict is out. I'll keep
Speaker 1: you posting. But just even like myself as an adult,
Speaker 1: I'm still trying to figure out how much, into what
Speaker 1: capacity that AI should have in my life undred percent,
Speaker 1: And so with that in mind, I don't know. You
Speaker 1: don't have to take this advice, but I am all
Speaker 1: for keeping AI toys at a nice distance from our kids.
Speaker 1: Shoul get out there and touch some grass.
Speaker 2: Yeah, there's a lot of risk when you're putting those
Speaker 2: into your kids hands because of the nature of AI
Speaker 2: and like large language learning models, what are they going
Speaker 2: to encounter? Like, you don't know, And we've seen some
Speaker 2: really sad stories about teens, young people and what a
Speaker 2: relationship with AI has done to them. I think we're
Speaker 2: still tread lightly, especially in the early innings. And let's
Speaker 2: talk about returns for just another second, Matt. As shoppers
Speaker 2: make more returns and the cost of accepting those returns
Speaker 2: has risen, some retailers have quietly been shortening their return window.
Speaker 2: They're saying, hey, more people are making returns, and it
Speaker 2: just it really harms our bottom line. So we want
Speaker 2: to make it maybe a little more difficult to actually
Speaker 2: follow through. Sephora and Ulta those are those are makeup shops, Matt.
Speaker 2: I'm not sure if you've been in them.
Speaker 1: Oh, yeah, I've been to Sephora. Your daughter she's getting
Speaker 1: into the makeup right, like, uh, well, are a little bit,
Speaker 1: but yeah, I took her there too long ago, a
Speaker 1: little daddy daughter date. Well, they got to learn what's
Speaker 1: going on next time you go to there. Next time
Speaker 1: they get some makeup, if they want to return it,
Speaker 1: they only have thirty days. They don't sixty days anymore.
Speaker 1: So note that can you take can you take makeup
Speaker 1: back if it's been used, like if you try it out.
Speaker 1: I don't know, that's a good question. I don't know.
Speaker 1: I would I would think probably not. These are uncharted
Speaker 1: waters for me.
Speaker 2: We'll look that up. But we're also seeing retailers attempting
Speaker 2: to steer you towards their preferred method of making a
Speaker 2: return that costs them less money. Like Amazon, they want
Speaker 2: to get you to return stuff to Whole Foods because
Speaker 2: they own Whole Foods instead of a UPS location that's
Speaker 2: potentially much closer to you. And you're like, a Whole
Speaker 2: food is like twenty minutes out of the way. I
Speaker 2: don't really want to go there. It makes the return
Speaker 2: a much bigger pain. And not to tout Costco's greatness
Speaker 2: too much on this podcast already, but there's just a
Speaker 2: lot of peace of mind when you buy from a
Speaker 2: retailer who has a really great return policy, where you're
Speaker 2: just not quite as worried. It might even be I
Speaker 2: think sometimes at times worth paying a tiny bit extra
Speaker 2: knowing that you're buying from a place that has a
Speaker 2: good return policy. You can also, by the way, finagel
Speaker 2: extra return time at a place like Target by having
Speaker 2: their credit card. So just know what the return policy
Speaker 2: is before you buy, and be prepared to jump through
Speaker 2: the hoops and stay organized to make those returns in
Speaker 2: a timely manner, because returns are definitely a part of
Speaker 2: the holiday shopping reality.
Speaker 1: Yeah, most stuff. Yeah. My dad actually just purchased a
Speaker 1: Blackstone griddle and he was at Costco and it was
Speaker 1: on sale, and he's like, should I go for it?
Speaker 1: And I said absolutely, because I've been preaching the gospel
Speaker 1: of the outdoor griddle for like seven years now. Like
Speaker 1: everybody I come in contact with, I tell them just
Speaker 1: how this has revolutionized how we cook our meals, specifically
Speaker 1: the proteins outside, but not even the rotin's like, dude,
Speaker 1: a big breakfas Saturday morning breakfast, like twenty four pancakes
Speaker 1: on the It's insane. Everybody who converts, they never want
Speaker 1: to go I know. And I told him, I was
Speaker 1: just like, you are going to love this, but if
Speaker 1: you don't Costco. So he rest assured that he would
Speaker 1: be able to take that back. Joe, I've got a
Speaker 1: stat here for you that I think you're going to
Speaker 1: be able to vamp on for minutes. The average American
Speaker 1: has almost two hundred and fifty dollars in unused gift cards.
Speaker 1: A third of those Americans have admitted to losing some
Speaker 1: of that money due to the fact that the cards
Speaker 1: either expire soon the retailer has closed, or they straight
Speaker 1: up lost the gift card and my inside's are turning
Speaker 1: right now, go for it. I wish you could see.
Speaker 1: I know this is like the hill I die OneD.
Speaker 1: I don't know. I know you don't like gift cards.
Speaker 1: I don't mind them, but I figured this would give
Speaker 1: you something to play with.
Speaker 2: Okay, I'm gonna go on the dietrive I go on
Speaker 2: every year, which is that you're turning cash, money that
Speaker 2: you can use at any location across the United States
Speaker 2: and you know, the parts of the world too, into
Speaker 2: something that is used usable at really only one retailer.
Speaker 2: And why would you do that to yourself? Why would
Speaker 2: you take money that you can use anywhere and like
Speaker 2: turn it into money you can only use in one place.
Speaker 1: I think most people are doing it for other people,
Speaker 1: not themselves.
Speaker 2: And they are, they are so much of the time.
Speaker 2: But that's why we have this problem where people leave
Speaker 2: their gift cards in their underweards or or forget that
Speaker 2: they have them, or that the retailer that they have
Speaker 2: a gift card too does go out of business and
Speaker 2: then they're kind of out of luck. So just be
Speaker 2: careful when buying gift cards this season. If you have
Speaker 2: gift cards, you haven't used, gather them up and start
Speaker 2: using them, consider giving them away if you don't care
Speaker 2: about that retailer, or you can sell them. You're not
Speaker 2: going to make as much money as the face value
Speaker 2: of the gift card, but you can sell them on
Speaker 2: a site like card cash dot com. There's also a
Speaker 2: cool site that will link to in the show notes
Speaker 2: where you can donate unused gift card dollars. So if
Speaker 2: you find yourself in that vein we're like, I got
Speaker 2: some random one slider, I don't know what to do
Speaker 2: with them, Well, you can donate them, which is cool.
Speaker 1: That's pretty cool.
Speaker 2: And there's actually the only time I'm down with gift
Speaker 2: cards where I think they actually make sense from a
Speaker 2: purchasing perspective is when you're getting a discount. So Costco
Speaker 2: has the discount of gift card section, like use seventy
Speaker 2: or eighty bucks for one hundred bucks worth of gift cards.
Speaker 2: If you're going to use them, why not get a
Speaker 2: discount and make some money on that target This Weekend
Speaker 2: is doing their ten percent off gift cards. They do
Speaker 2: it every single year. That's like one of those super
Speaker 2: popular retailers. So if you're like I want to get
Speaker 2: a gift card for somebody. I want them to have
Speaker 2: a wide range of options for what they can buy
Speaker 2: with them, and I also don't want to pay full price.
Speaker 2: That could be a good option. Do y'all shop at
Speaker 2: Target frequently? I would say frequently enough where the discounted
Speaker 2: gift cards would make sense for us.
Speaker 1: The last time I went in there, I don't know.
Speaker 1: Maybe it's just online shopping has just ruined it for me.
Speaker 1: But just walking through there and being inundated with the
Speaker 1: smells and the stuff. Just what is Target smell is
Speaker 1: drew like a combination of crappy coffee drinks and popcorn.
Speaker 1: Well they have the Starbucks they have? Yeah, that makes sense,
Speaker 1: Like that's the first thing. The door. What's worse walking
Speaker 1: into a into a Target and the smell there, or
Speaker 1: the smell at Sephora where there there's all these tweens
Speaker 1: who are spraying perfume everywhere. I think, I think the
Speaker 1: perfume smell. I can't handle that? What but we when
Speaker 1: I shop at Target usually it's usually it's online try
Speaker 1: to avoid I don't know, I'm just not much for
Speaker 1: going in store shoping. I get it. Hey, let's talk
Speaker 1: about some some policy implications some things that are happening
Speaker 1: at a very high level, and how that's impacting h
Speaker 1: impacting folks their ability to save specifically, because we're going
Speaker 1: to talk about the Trump accounts for baby.
Speaker 2: I'm so stoked that babies can now save money, invest
Speaker 2: and get rich.
Speaker 1: Yeah. The One Big Beautiful Bill Act, because it officially
Speaker 1: passed that made these Trump accounts a reality, but it
Speaker 1: has taken some time to get them off the ground
Speaker 1: as far as like what are the particulars, what are
Speaker 1: the details? It can be a bit confusing, but there
Speaker 1: is more coming to lights. These accounts are available to
Speaker 1: kids eighteen and under. But and this is the headline
Speaker 1: thing that I think drew a lot of the eyeballs
Speaker 1: in initially there is that they're dangling that carrot right
Speaker 1: of the free thousand dollars that, though is only available
Speaker 1: to children who are born between like January first, twenty
Speaker 1: twenty five or the very end of twenty twenty eight.
Speaker 1: You also have to be a US citizen with a
Speaker 1: Social Security number. And so if you are, you know,
Speaker 1: if you've already had a kid this year or congratulations
Speaker 1: if you have to get off congrats, yeah, oh man.
Speaker 1: Every time we have a listener question who mentioned if
Speaker 1: it's a like we should be talking about that. I
Speaker 1: you know, it hasn't even popped into my mind.
Speaker 2: Else we should do we have had the money socks
Speaker 2: for adults, we should get baby hod of money socks
Speaker 2: and then we should ship those how to money socks
Speaker 2: every time a listener has a baby.
Speaker 1: Instead of how the money baby socks about how to
Speaker 1: money onesies. Because of that that sounds even cutere.
Speaker 2: Because the baby soxs would be like kind of tiny,
Speaker 2: you wouldn't be able to see the.
Speaker 1: Yeah, good point, and uh but onesies, onesies are where
Speaker 1: it's at. You might have to actually look into that.
Speaker 1: Is there a sock fancy? But for onesies probably ones fancy?
Speaker 1: God exist. But we're mentioning this because if you if
Speaker 1: if that is you and you've got a kid or
Speaker 1: think you might certainly grab that free money for your
Speaker 1: child if you are eligible, there's a specific form you're
Speaker 1: gonna need to keep it out for IRS form forty
Speaker 1: five forty seven. That's what you're gonna want to fill
Speaker 1: out if you do have a child this year or no,
Speaker 1: what if you had a child this year?
Speaker 2: Is that reference to Trump being the forty fifth and
Speaker 2: forty seventh president.
Speaker 1: Oh my gosh, I didn't think about that until just now.
Speaker 1: Are you serious? That's crazy? This is so stupid. Gosh,
Speaker 1: it's like we're living living in a real life meme.
Speaker 1: But I think you're probably right. Probably is gosh. An
Speaker 1: online portal is going to open this coming summer to
Speaker 1: make it easier as well. The good news though, is
Speaker 1: that you can invest the dollars in low cost ETFs,
Speaker 1: which is certainly the way to go to help that
Speaker 1: nesse grow for your little one. I think it's a
Speaker 1: cool idea, although it does have a limited timeframe and
Speaker 1: it certainly has a limited ability as to what you
Speaker 1: can do with that account, right, Like the functionality is limited,
Speaker 1: which means that long term, I do think the actual
Speaker 1: impact of these accounts might be limited.
Speaker 2: It's a seed of a good idea, and it will
Speaker 2: help some kids and some families, and but is it
Speaker 2: going to have this wide ranging major impact on their
Speaker 2: future lives. I think it's overstand probably, And by the.
Speaker 1: Way, I'm willing to be open to it, right because
Speaker 1: I'm sure when they created like the four to one K,
Speaker 1: they're like, what's this dumb four to one you know,
Speaker 1: like or this thing that they named after the senator
Speaker 1: Senator Roth, but like, look at what those have turned into.
Speaker 1: And so I'm willing to be open minded, but I
Speaker 1: am a bit skeptical.
Speaker 2: Yeah, And I think it's really important to look at
Speaker 2: the details of this account because some people might be
Speaker 2: drawn to putting more money in these accounts beyond the
Speaker 2: free thousand dollars, and that might not be the smartest
Speaker 2: move because even though you can contribute even more to
Speaker 2: these accounts, it makes very little sense to utilize them
Speaker 2: past the free money, because the taxes can be complicated
Speaker 2: or excessive if the money isn't used for a home
Speaker 2: down payment or for education.
Speaker 1: So that is just how its tax is pretty complicated,
Speaker 1: is yeah, okay, a portion of it is taxed at
Speaker 1: this rate, it gets pretty funky.
Speaker 2: So the five P twenty nine account is probably a
Speaker 2: better way to save for your kids or even like
Speaker 2: the UTMA accounts like are likely better than these Trump
Speaker 2: accounts for are putting more money into take the free money,
Speaker 2: but after that, probably look elsewhere. And interestingly enough, Matt
Speaker 2: the Dell computers entrepreneur Michael Dell. He announced this week
Speaker 2: that he's offering an additional two hundred and fifty dollars
Speaker 2: for kids ten and younger who would have otherwise been
Speaker 2: left out of this Trump account goodness. And at first
Speaker 2: when I saw that, I was like, oh, man, the
Speaker 2: public private partnership. Sometimes it like makes me a little squeamy,
Speaker 2: But man, it seems like this is just like a
Speaker 2: philanthropic good deed that Michael Dell is doing and for
Speaker 2: the children. And even some of our kids are going
Speaker 2: to be eligible for this, So not only if you
Speaker 2: just had a newborn, but if you have a kid
Speaker 2: who's elementary school age, you might be your kids might qualify.
Speaker 2: He's donating I think we like six and a half
Speaker 2: billion dollars to make this.
Speaker 1: A realitmendous amount of money.
Speaker 2: Yeah, so it's a pert I didn't see coming. And
Speaker 2: I think maybe the best part of this, the silver lining,
Speaker 2: could be that more kids are going to be made
Speaker 2: aware of compounding returns and investing in how the market
Speaker 2: works from an earlier age because they're like, I got
Speaker 2: this account, Like you might start telling your kid about
Speaker 2: it at age six or seven. That's the upside, and
Speaker 2: then they kind of they get to learn exactly. So
Speaker 2: maybe that's like the most underrated part of these accounts.
Speaker 1: I wish instead I could just roll that Dell money
Speaker 1: just straight into their five twenty nine, you know, like
Speaker 1: I don't have to open up another account, but I'm
Speaker 1: probably going to because two hundred fifty bucks, I mean,
Speaker 1: I think I want to get my hands on that.
Speaker 1: Don't want to leave free money behind. Yeah, And it's
Speaker 1: I'm also like I kind of gave like the the
Speaker 1: I'm open minded, like this could lead somewhere kind of argument.
Speaker 1: But it's hard not to be cynical, especially when they're
Speaker 1: called Trump accounts, right, Like, because what do you think
Speaker 1: of when you hear Trump accounts. I think of like
Speaker 1: Trump hotels, or I think of like Trump stakes, Trump
Speaker 1: are Rex, like any It just seems like another opportunity
Speaker 1: for him to throw his name on something. And I'm
Speaker 1: not trying to be trump coin overly political here or anything,
Speaker 1: but like it feels like a band aid on something
Speaker 1: of like rising prices, and they're like, oh, let's throw
Speaker 1: the people a bone. Let's find a way to get
Speaker 1: money back into the back into the hands, and not
Speaker 1: addressing underlying issues, right, not addressing inflation initially started by
Speaker 1: the government injecting ridiculous amounts of money into our economy
Speaker 1: but then kept alive with tariffs. Yes, but then on
Speaker 1: top so it's it's both sides of the aisle who
Speaker 1: are at fault here. And and we talked about those
Speaker 1: you what a couple of weeks ago that he basically
Speaker 1: admitted that, yeah, terris do cause prices to rise because
Speaker 1: you know what, we're gonna get breakfasts to be more
Speaker 1: affordable for you again with your banana and your beef
Speaker 1: and what a coffee? And so it's so they know,
Speaker 1: the administration knows that this raises prices, which you know,
Speaker 1: then can there's an argument to be made that like, oh, okay,
Speaker 1: well it's just a negotiating tactic, right like that, just
Speaker 1: hang on and we're going to negotiate better trade deals
Speaker 1: and who knows man Again, it just feels like a
Speaker 1: giant meme sort of environment that that we're currently living in.
Speaker 2: We are living in interesting times. But just I think
Speaker 2: practical takeaway for everybody out there is at least take
Speaker 2: advantage of free money, yep, even though it means opening
Speaker 2: up a new account and having something else to track
Speaker 2: and take care of, even if it seems silly, go ahead,
Speaker 2: go for you mean, you don't have to agree with everything,
Speaker 2: but it's available there for you.
Speaker 1: Yeah, agreed.
Speaker 2: Or We've got more to get to, including people feeling
Speaker 2: like they're handcuffed to their home. We'll talk about that
Speaker 2: and then where what actually constitutes poverty in the United States.
Speaker 2: There's been a warring war of arguments in the past week.
Speaker 2: We'll talk about that and more right after this.
Speaker 1: All right, buddy, we are back from the break and
Speaker 1: it is now time.
Speaker 2: What are we during that break, Matt? The people want
Speaker 2: to know.
Speaker 1: I lean back and I stretch take a sip. Do
Speaker 1: you see me over here drinking my hot water? And
Speaker 1: at the very beginning I put it down without taking
Speaker 1: a sip because I was afraid it was gonna burn
Speaker 1: my mouth. I think I got out. Don't do it
Speaker 1: right before you have to speak? Got it a little
Speaker 1: too hots right before we sat down to record. But
Speaker 1: our ludicrous headline of the week comes from the New
Speaker 1: York Times, and the headline reads, they rush to buy
Speaker 1: a home during the pandemic. Now some feel trapped and
Speaker 1: I'm gonna save everyone the time and having to go
Speaker 1: read this article, Meil, Can I just say it makes
Speaker 1: me think of the d R. R. Kelly song like
Speaker 1: trapped in a closet? Isn't that Remember that album came out.
Speaker 1: I'm more remember the disease joke about R. Kelly. But uh, basically,
Speaker 1: some folks who you know, who bought a home back
Speaker 1: during the pandemic a few years ago, they found that
Speaker 1: the home it's a little tight for them right now.
Speaker 1: It's it's uh, it's not quite accommodating. They're growing family,
Speaker 1: it's not quite to their liking as their circumstances have changed.
Speaker 1: But of course they've got that sweet low rate and
Speaker 1: they are loath to give it up. So with no
Speaker 1: easy way to make a change, they are quote unquote
Speaker 1: trapped and trapped. Yeah, just the closet. But it don't
Speaker 1: you feel bad for him, Joel, It's I'll be honest,
Speaker 1: it's hard to feel sad for folks who bought a home.
Speaker 1: They've got some equity, they've got a locked in low rate.
Speaker 1: Like the folks. I feel bad for the folks out
Speaker 1: there who actually want to buy a home but can't
Speaker 1: afford you because they're their wages haven't kept up with
Speaker 1: home pricing increases, and affordability is out of reach.
Speaker 2: I don't know if your mom ever said this to
Speaker 2: you growing up, but my mom would be like, I've
Speaker 2: got the world's tiniest violin here playing. I don't know
Speaker 2: where that came from, but she would. She would say
Speaker 2: that to me rubber fingers together. And that's how I
Speaker 2: feel for these people. You're locked in your home, that
Speaker 2: you have equity, and like, I'm still saying at three
Speaker 2: percent rate, I'm so sorry for you. It just felt
Speaker 2: like such a self indulgent article from the New York Times.
Speaker 2: I don't even know why they felt like they needed
Speaker 2: to print those stories of people who are like, I've
Speaker 2: got two hundred thousand dollars in equity, but I'm stuck
Speaker 2: because you're not stuck. The truth is you're not stuck
Speaker 2: if you're in that case, and you can totally make
Speaker 2: it different. Option You've got options. This is also, by
Speaker 2: the way, if you feel like you are stuck in
Speaker 2: a home that you are, that you have bought, that
Speaker 2: you're paying down that mortgage regularly, well you could have
Speaker 2: opted for renting instead. And that's in particular a good idea.
Speaker 2: If you're planning to u or you're not, you're not
Speaker 2: thinking you're in a state in a home for at
Speaker 2: least five years better off seven or more years. That's
Speaker 2: typically what makes buying a home makes sense. In stats
Speaker 2: from just this week Matt show that apartment rents are
Speaker 2: down and vacancies are up, continuing to put more power
Speaker 2: back in the hands of renters and just lower costs.
Speaker 2: I don't think you have experienced this because you're a
Speaker 2: better landlord than I am. But I have experienced like
Speaker 2: decreases and what I'm able to get from my properties
Speaker 2: in the last year a.
Speaker 1: Year only because I have taken these opportunities to do
Speaker 1: some slight upgrading in order to keep that rent line.
Speaker 1: So you having to put more into it and be
Speaker 1: able to keep that right or yes, I would also
Speaker 1: be offering those places for less as well.
Speaker 2: Yeah, so most likely that's where I'm at, which which
Speaker 2: is you know, I'm not mad about it. I think
Speaker 2: this is a great thing overall, because rents became excessively expensive.
Speaker 2: It's it's good news after pandemic years of rapid price
Speaker 2: increases the people experience.
Speaker 1: So let's say too, especially in multi families. So like
Speaker 1: apartment complexes in particular have seen the most because of
Speaker 1: the it's just a lot easier for developers to build
Speaker 1: those types of units as opposed to single family rents.
Speaker 1: I think we actually talked about this a few weeks
Speaker 1: ago as well. There isn't clear data on that, but yeah,
Speaker 1: it seems that those are not dropping as much as
Speaker 1: kind of holding steady, at least nationwide. Yeah, obviously it
Speaker 1: depends on your specific market. I think you and I
Speaker 1: would both agree that owning a home, it can be
Speaker 1: a lovely endeavor, can be a smart choice, and it
Speaker 1: can be a great long term move for a whole
Speaker 1: lot of folks. It's just not for everyone, and it's
Speaker 1: not always better from a wealth building perspective. And I
Speaker 1: think that kind of cult of home ownership mentality is
Speaker 1: something that has been developed over many decades in this country,
Speaker 1: and it's led people to believe that like the way
Speaker 1: to live the American dream and to build some sort
Speaker 1: of financial future for myself just to own a home.
Speaker 1: And that just doesn't have to be the case I
Speaker 1: used to be. But you don't have to follow that
Speaker 1: same playbook. And I think there's the folks who are
Speaker 1: talking the loudest about that are trying to encourage folks
Speaker 1: to follow the same playbook that they have taken because
Speaker 1: they have, you know, and I understate it because they
Speaker 1: have seen how well it's done for them, But that
Speaker 1: you don't have to follow that playbook. There are plenty
Speaker 1: of other great ways to invest. It's more accessible to
Speaker 1: for folks to invest in the market just while you're
Speaker 1: sitting on the couch. In some ways, that's not great,
Speaker 1: But I mean, I want to talk about even just
Speaker 1: the lifestyle. Like you were saying that home ownership is
Speaker 1: not for everyone, and I think that's something that I
Speaker 1: need to get more used to because I love home
Speaker 1: ownership and specifically I even love spending money on my
Speaker 1: house and like the expenses that go into like making
Speaker 1: little changes and making upgrades. Have we talked about my dishwasher? Oh?
Speaker 1: I think we did? Yeah? Do we? On the show?
Speaker 1: You got the fancy one? Yeah? Okay, so yeah. But like,
Speaker 1: on one hand, I'm bummed because I'm like, this is
Speaker 1: going to cost you know, it was an unexpected costs
Speaker 1: that we didn't budget for because the old one should
Speaker 1: have been good but it crapped out. But of course
Speaker 1: I'm gonna end up getting a bosh. Uh. Well, I
Speaker 1: shouldn't say of course I wanted to prioritize consumer reports.
Speaker 1: You're getting a bus, you're getting ash and so got
Speaker 1: and I got the more expensive b wash, the one
Speaker 1: that pops open so that you know it's so great,
Speaker 1: come down in the morning. The plate not only are
Speaker 1: the plate.
Speaker 2: Strigil the plastic stride, does it read a story to you?
Speaker 1: And it plays a little song? But I like, I
Speaker 1: enjoy doing that. But guess what those are additional expenses
Speaker 1: that you have to be willing to pony up and
Speaker 1: to part with your dollars in order to cover some
Speaker 1: of these expenses. When you are a renter, you ain't
Speaker 1: gotta worry about that when something craps out. I mean,
Speaker 1: unless you actually had a runner who wanted to upgrade
Speaker 1: the dishwasher. But when something breaks, you call up your landlord.
Speaker 1: Just right. Speaking of another comic makes me like the
Speaker 1: mitch Heedburg joke. It's like I went to home depot yesterday,
Speaker 1: which is totally unnecessary. I need to go to an
Speaker 1: apartment depot. Just a bunch of people standing around. We
Speaker 1: don't have to fix jack. But like that, it's one
Speaker 1: of the biggest benefits. It's one of the biggest benefits,
Speaker 1: and that's you just got to keep in mind that
Speaker 1: that is what you're signing up for with home ownership.
Speaker 1: But of course, the folks who they're not happy with
Speaker 1: living in an apartment, the folks out there who want
Speaker 1: to purchase a home, those are the folks that we
Speaker 1: feel for. Those of the folks who feel a bit
Speaker 1: locked out of the market today, and the folks in
Speaker 1: this article in particular. If you want to move, you
Speaker 1: can still do that, like you just have to pay
Speaker 1: a bit of a price for it. But and think
Speaker 1: about people who bought at the peak of the market,
Speaker 1: where home prices have receeated a little bit. Those people
Speaker 1: are in a tougher spot because if your home is
Speaker 1: now worth five percent less than what you paid for
Speaker 1: it a year, eighteen months ago, something like that, and
Speaker 1: you're like, oh, I really feel like I need to
Speaker 1: do something different. You got to bring potentially a load
Speaker 1: of cash to the closing table in order to make
Speaker 1: a different decision. But if you if you bought a
Speaker 1: home three or four years ago and it's appreciated and
Speaker 1: you're you don't want to sell it because you don't
Speaker 1: want to give up the low mortgage interest rate, you
Speaker 1: still have that opportunity, though you still have that ability
Speaker 1: without losing money in the process. Yeah, it just comes
Speaker 1: out of trade offs. What are you willing to value?
Speaker 2: All right, let's talk about a really interesting debate that
Speaker 2: happened really over the past over the past week.
Speaker 1: This is like one of those one of those Internet
Speaker 1: things when there's something that just blows up and everyone's
Speaker 1: talking about it. I'm really low to even talk about it.
Speaker 2: But there were responses everywhere, like the Washington Post and
Speaker 2: some of our favorite everywords responded to everyone.
Speaker 1: Yeah, So it was like everyone had to take it's
Speaker 1: it's in the water. We should we should talk about it.
Speaker 1: So there was this firal article in the Free Press
Speaker 1: last week attempting to make the case that Americans are
Speaker 1: just so much poorer than we than we think. And
Speaker 1: the case was essentially that the way that the US
Speaker 1: poverty line is calculated, well that doesn't work anymore, not
Speaker 1: in today's economy. But but it was wrong. I think
Speaker 1: on a lot of levels. They made it.
Speaker 2: The author made it sound like a family of four
Speaker 2: making one hundred and forty thousand dollars, they can barely
Speaker 2: make it, They're barely scraping by. It's kind of like
Speaker 2: I don't know some of the social media people making
Speaker 2: two hundred and fifty k, and they're like, hey, but
Speaker 2: I don't I don't know how many money left over
Speaker 2: at the end of the month. And you're like, how
Speaker 2: is that possible. Let's look at your budget.
Speaker 1: Oh, that's how Well.
Speaker 2: Tyler Cowen, who's like one of my favorite economists, he
Speaker 2: wrote a response in the same publication, and it's well
Speaker 2: where reading. He highlighted some of the realities of modern prosperity,
Speaker 2: including like tech advancements and bigger homes, like we've all
Speaker 2: got more square footage per person, fewer kids living in
Speaker 2: the same room, food cost declines. You might have seen,
Speaker 2: you know, food costs go up recently, but over the
Speaker 2: course of decades, we've seen food costs go down.
Speaker 1: Him anyway, so we spend much less of our disposable
Speaker 1: income feeding ourselves than our grandparents.
Speaker 2: Did, and then so much of the rest of the
Speaker 2: world healthcare improvements. He documented so many things. The world
Speaker 2: is just not as bad as some folks want you
Speaker 2: to believe. I think that's maybe the heart of the response.
Speaker 2: We want to get out.
Speaker 1: Yeah, no, well, and specifically some of the standards. So
Speaker 1: the original the original author Green discorsion name Michael Green
Speaker 1: and Michael Green. But uh, it's just ridiculous, like the
Speaker 1: like these are luxuries that he's assuming that people not
Speaker 1: only want but essentially are entitled to. And that's the
Speaker 1: part that rubs me the wrong way, the fact that like,
Speaker 1: oh yeah, like there are there's a wide range of
Speaker 1: vehicles that are going to get you to and from work,
Speaker 1: like you don't have to go with like the average
Speaker 1: or median price of a brain new vehicle today. And
Speaker 1: those again, those are the those are the sacrifices we make.
Speaker 1: Those are the the trade offs that we make, as
Speaker 1: opposed to saying, oh, the new poverty line should be
Speaker 1: four times higher than four or five five times higher
Speaker 1: than what it currently is right now. It's like it
Speaker 1: makes me think of like if you're playing a game
Speaker 1: and you're just complaining, like we've got man, we did
Speaker 1: we ever give a shout out to a listener who
Speaker 1: sent us the upgraded version of a choir? Well, we'll
Speaker 1: pull into it. I'm not going to take a into
Speaker 1: that right now, but I'm thinking about the board game Acquire.
Speaker 1: You start off with a certain amount of money, uh,
Speaker 1: and it's sort of like if I just out there
Speaker 1: the whole time and complained that dude, we should start
Speaker 1: out the game playing like with five times as much money.
Speaker 1: It would make it so much easier. But like, guess
Speaker 1: what that would also do make the game. It would
Speaker 1: ruin the game, like there would you There would be
Speaker 1: no incentive to be strategic, and everyone would just round
Speaker 1: after round. You would just be buying things, except that
Speaker 1: when it comes to real life there is a response,
Speaker 1: which is that supply and demand. Well, okay, those units
Speaker 1: of supply are going to go up in value because
Speaker 1: there are more dollars chasing those limited goods. It just
Speaker 1: I was not happy with the analysis of the original author.
Speaker 1: Yeah it was. It wasn't great.
Speaker 2: It wasn't great, And there are other statistics I think
Speaker 2: that could really combat his point of view too. Like
Speaker 2: we highlighted recently in the how to Money newsletter that
Speaker 2: a lot more families are making one hundred and fifty
Speaker 2: thousand dollars now than we're fifty years ago. That's adjusted
Speaker 2: for inflation, but it's a significant difference in the number
Speaker 2: of families who have mid six figures are not mid six,
Speaker 2: not five hundred k, but like one hundred and fifty
Speaker 2: thousand dollars is really is quite a bit of money
Speaker 2: in a lot of ways. And this is also not
Speaker 2: to say that everything's great for everyone. We don't want
Speaker 2: to sound completely dense and not understand and realize that
Speaker 2: there are a lot of people living out there close
Speaker 2: to the actual poverty line who are having a tough
Speaker 2: time and who feel those grocery price rises more than
Speaker 2: your middle class family, right, And it's it's true. Yeah,
Speaker 2: inflation has attacked our wallets more in recent years, really
Speaker 2: more than any other time we've seen in our adult lives,
Speaker 2: and homes healthcare have gotten more expensive. But I think
Speaker 2: articles like this seem to want modern economic reality to
Speaker 2: be more negative than it actually is. They're highlighting, sure,
Speaker 2: just cherry picking statistics.
Speaker 1: And that's the negative, negative news by.
Speaker 2: Yet to reveal their worldview instead of kind of coming
Speaker 2: at it honestly.
Speaker 1: Yeah, and I mean it honestly reveals their like you said,
Speaker 1: their worldview and what they expect everyone should have. Then
Speaker 1: there's plenty of people who aren't, you know, and gosh,
Speaker 1: I'm gonna sound like such a media type person, but
Speaker 1: who are like the coastal elites who are very happy,
Speaker 1: not having all of these amenities are West elites. No,
Speaker 1: I don't. I feel like we're like right in the middle.
Speaker 1: We're heartlanders. We live like near ish a major city,
Speaker 1: but we're also approaching life with in sense in grit.
Speaker 1: Like anyway, let's talk about building wealth, and potentially a
Speaker 1: way that you can at least make your dollar go
Speaker 1: further is moving overseas in order to stretch your dollar.
Speaker 1: So folks who have kept up with like the Fire
Speaker 1: movement know about this. It's called geographic arbitrage. But there
Speaker 1: are new stats from the Defense Department, and they find
Speaker 1: that there's a significant uptick in people who are taking
Speaker 1: the strategy. And we're not talking about just like being nomadic, like,
Speaker 1: we're talking about permanently moving to an international location that
Speaker 1: has a much cheaper cost of living. And I think Portugal,
Speaker 1: Thailand always comes to mind. Even Panama down in Central
Speaker 1: America had an old neighbor who moved down to Panama,
Speaker 1: Oh yeah, to retire, and like, I'm pretty sure she's
Speaker 1: living the high life because it soldar house and it's
Speaker 1: just your dollar goes a lot further down there, it does. Yeah,
Speaker 1: And in some thriving xpac communities, I think you can.
Speaker 1: Often you can find a solid community there along with
Speaker 1: these lower costs in some you know, pretty decent healthcare
Speaker 1: options too. This isn't for everyone. I actually talked about
Speaker 1: this with my father in law recently because a buddy
Speaker 1: of his was seriously thinking about moving down. I think
Speaker 1: to Costa Rica, are you trying to get him further
Speaker 1: away from you? No? You, if you move down to Chile,
Speaker 1: do not have that kind of relationship with the in laws,
Speaker 1: the classic in law relationship. Now I love them, They're great.
Speaker 1: This isn't for everyone, but I think it's worth considering.
Speaker 1: It's worth putting out there because this route could completely
Speaker 1: change your financial independence path and what your life looks like.
Speaker 2: Yeah, I'm not like currently interested in moving abroad, but
Speaker 2: I'm always like a little interested. Yeah, so maybe someday
Speaker 2: I'm not going to say never. But it's like it's
Speaker 2: like there are all these sort of things I've said
Speaker 2: that I would never do that I ended up doing
Speaker 2: later in life, and so, but but it does seem
Speaker 2: like one of those things where, especially if you are
Speaker 2: like I haven't saved as much as I thought I
Speaker 2: would or wanted to, How can I retire at the
Speaker 2: age I want to This is how this is a
Speaker 2: way to do that right, Because you're stretching your dollars
Speaker 2: so much further you need less to be able to
Speaker 2: live that retired lifestyle that you want. On the note
Speaker 2: of travel, the real ID rollout Matt has been bonkers.
Speaker 2: So we've covered this a little bit over the years.
Speaker 2: They keep pushing back the implementation day.
Speaker 1: Basically every nine months we provide an update for why
Speaker 1: it's not like it's supposed to be.
Speaker 2: Yeah, and so yeah, this switch has just taking a
Speaker 2: really long time, and there are still millions of Americans
Speaker 2: who don't have an updated real ID, although the numbers
Speaker 2: have gotten a lot better, a lot more people do
Speaker 2: have this in their wallet already. If you haven't updated yours,
Speaker 2: well you're going to punch yourself, I think if you
Speaker 2: go to the airport without one, because it's about to
Speaker 2: get a lot more frustrating and expensive starting February first,
Speaker 2: you're gonna have to pay forty five bucks and go
Speaker 2: through additional TSA vetting as you go through security. If
Speaker 2: you have not upgraded to the real ID, and if
Speaker 2: you're not sure whether your ID is updated, look for
Speaker 2: a start in the upper right hand corner of your
Speaker 2: driver's license. The start can look different depending on the state.
Speaker 2: I think in California it's like inside of a bear YEP,
Speaker 2: which makes sense. And if yours isn't compliant, update your ID,
Speaker 2: especially especially before you make your next trip to the airport,
Speaker 2: because uh yeah, not just the additional money, but it's
Speaker 2: the additional hassle. Can you imagine, Matt trying to the
Speaker 2: TSA line is already the pain of my existence when
Speaker 2: I go, do they just hit you.
Speaker 1: Up for forty five bucks? Like right then and there?
Speaker 1: How does it? How does it work? Yeah? They probably
Speaker 1: have one of those like machines. They get a square
Speaker 1: reader right there. They're just like tap here to pay,
Speaker 1: and you're like, pay for what? For? Non compliance? Sir? Right?
Speaker 1: That's what for? I mean, I have a feeling it's
Speaker 1: just going to be a complete mess for people who
Speaker 1: aren't really compliance. So make sure you get that done.
Speaker 1: Look out for your loved ones to maybe help them
Speaker 1: make sure they also doing it. That's right, before we go,
Speaker 1: let's do a quick newsletter referral shout out to Lewis
Speaker 1: L and Kathleen B. Thank you for not only reading
Speaker 1: the how to Money the newsletter, but sharing it with friends.
Speaker 1: And if you're listening and you've never even heard of
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Speaker 2: Now packed with all the vitamins and minerals you need
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Speaker 1: This was everybody, but that's gonna be it soone. Until
Speaker 1: next time, Best friends out, Best friends Out.