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First Friday: The Retirement Rules That Changed While You Weren't Looking
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Crypto is down, job openings are down, tax refunds are up, Spending by the hyperscalers, Big tech is up, there's a new nominee for Fed chair, there is a Roth mandate for a certain segment of the population, prediction markets are opening grocery stores and A prominent member of the personal finance behavioral economic landscape is in the Epstein Files. We've got a lot to cover. Welcome to the first Friday episode of the Afford Anything podcast. This show covers five financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double I fire. I'm your host, Paula Pant. I hold a Master's in Economic Reporting from Columbia and typically we normally alternate between episodes in which we answer listener submitted questions and episodes in which we interview a guest. There's one exception, and that's the first Friday of every month when we pause to take a big macroeconomic look at what's been happening in the markets in the economy over the past month. So welcome to the February 2026 First Friday episode. A prominent name in the personal finance behavioral economics community, a name that many of you will recognize, was referenced in The Epstein files 636 times. Dr. Dan Ariely is a prominent professor of business at Duke University. He is the principal of the center for Advanced Hindsight, which is a Duke based lab dedicated to the study of behavioral finance. He is the author of three New York Times bestsellers including Predictably Irrational, which is a book that many of you I know have read and it was his biggest bestseller. He also wrote the Upside of Irrationality and the Honest Truth About Dishonesty. He wrote an advice column in the Wall Street Journal called Ask Ariely and he was a guest on this podcast twice in episode 257 which aired on May 18, 2020, and again in episode 273 which aired on August 31, 2020. Those of you who are frequent listeners know my buddy Joe Salsihai from Stacking Benjamins. He has also been on the Stacking Benjamins podcast twice and he is quoted extensively in Joe's book, Dr. Ariely. His subject matter is how we misthink money, our behavioral biases around the way in which we spend money. According to the Duke Chronicle, quote the released documents put Ariely's friendship with Epstein in a nine year window that between 2010 and 2019 when Epstein had a criminal record. Although the released files showed minimal correspondences after 2016, end quote. I've looked through the files. There are a series of emails between Ariely and Epstein, the bulk of which were between 2010 to 2016 that appears to be when they had the bulk of their communication. Based on the emails, it appears that they met up several times during that six year window. Most most notably, there was an exchange in 2012 in which Ariely asked Epstein for the name and email of a redhead that he met through Epstein. Ariely told Epstein that he would, quote, would love to be able to meet her again at some point, end quote. That was an email dated September 2012. The emails also reflect that their first meeting took place in 2010 over coffee between Ariely, Epstein and somebody referred to as Poppy. They met again at his house in 2012, and then they also met in both February and March of 2013 with the latter again taking place at his house. And then they met again in 2014 at Epstein's house and also in 2015 and then in 2016. An email from Ariely showed that he looked forward to meeting with Epstein, though we don't have confirmation if that took place or not. Dr. Ariely wrote a response that was published in the Duke Chronicle on February 2nd in which he said, Epstein told me about the accusations against him and said they were false. At the time, I believed him. As a researcher who studies human behavior, I was curious about him and a few years later I met him again in New York. These meetings were always in the presence of others and focused on topics related to decision making. Nothing in those interactions raised concerns for me or suggested that anything inappropriate was taking place, end quote. Later in that same piece, Dr. Ariely goes on to say, in general, the contact I had with Jeffrey Epstein was infrequent, largely logistical, often mediated by assistance. I had no connection with his criminal activity and was involved in no financial, professional or ongoing relationship, end quote. He also clarifies that he mentioned the redhead, quote, as a physical detail solely to help identify who I meant because I did not know her name. To the best of my memory, that introduction did not occur, nor did I ever meet her again, end quote. That is what we know. Those are the documented facts as reported initially in the Duke Chronicle. Moving to Economic News, the Bureau of Labor Statistics has rescheduled the release of the January employment report to February 11th. This data typically comes out on the first Friday of the month, but they have rescheduled it to the second Wednesday of the month as a result of the partial government shutdown. They have also delayed the release of the Consumer Price index to the second Friday of the month, February 13th. We do, however, have a report for private sector employment from the Payroll processing company ADP which shows that private employers in the US added only 22,000 jobs in the month of January. That is significantly less than December's downwardly Revised number of 37,000 new jobs. Among these private sector jobs, jobs in the service industry were the bulk of it, 21,000 out of 22,000. While jobs prepared producing goods only saw an increase of 1,000 jobs. The bulk of the jobs were in the education and health services sector. Small businesses had absolutely flat hiring. Medium sized businesses added 41,000 and large businesses cut 18,000, which is how we get to our net number regionally. The bulk of the job growth took place in the Northeast and the Midwest, while the south and the west saw job losses. Overall, the ADP report shows a major slowdown in job creation and hiring that has been consistent over the past three years. And it reinforces the notion that we are in a low fire, low hire situation. The unemployment rate is still historically low. It has ticked up slightly, but it is still historically low. So not that many people are getting fired, but not that many people are getting hired. It's a very stagnant job market. The six month moving average of hiring is 48,000, which is substantially lower than it has been during big growth cycles in the past. Now again, this is all based on private sector data only. ADP is a private payroll processing company and they derive their data looking at the aggregate payroll data from their clients, which is quite a large sample size. Their client base covers roughly one fifth of private sector workers in the U.S. if you've heard Karsten Jeska, the economist, former Fed economist, He's been a frequent guest on this podcast. He once mentioned that he doesn't only look at jobs data, he also looks at unemployment claims. Because jobs data is a sample size based estimate, there can be measurement error. The numbers are frequently revised. But unemployment claims are claims. There's no methodology, there's no interpretation. A claim is a claim is a claim. What we have seen recently is a rise in unemployment claims. In the past week it moved up to 231,000 and that is an increase of 22,000 from the prior week. It's also significantly above the four week moving average of 212,000. So unemployment claims are up. Meanwhile, there's a different source of data. It's called the Job Openings and Labor Turnover Survey. Jolts data. It doesn't measure employment, it measures job openings. So it's related but different. And the jolts data shows that there are fewer open jobs. This is as of December. We don't have the January numbers yet, but as of December There are fewer open jobs than there were a year ago at the same time. So there were six and a half million open jobs in December, and that is down by nearly a million jobs as compared to the previous year. There's also yet another source of data, and it's released by a firm called Challenger Gray and Christmas. They released data related to layoffs, and the Challenger Gray report shows that 1.2 workers in the US were laid off in 2025, and that is the seventh worst year since 1989. According to Challenger Gray data, the layoffs in January last month were up 118% year over year as compared to the previous January. In fact, the numbers for January 2026 were so bad that this was the worst month since January 2009, when the great Recession was shaking up the market. Stocks are down as of the time of this recording, particularly for SaaS companies. However, major capital expenditure by the biggest tech companies, the hyperscalers, is already showing signs of growing faster than analysts predicted it would grow in 2026. So back in December of 2025, Goldman Sachs put out a report with a consensus estimate that AI hyperscalers might invest more than 500 billion in 2026. Now, with one month of data in, that number already appears to be too low. Amazon, Microsoft and Alphabet Combined, just those three companies alone are expected to spend 485 billion in capex in 2026. Meta is expected to spend between 115 to 135 billion, and Oracle another 50 billion. Many of these estimates are rooted in real numbers. For example, Microsoft's estimate of 100 billion in capex spending in 2026 is based on its annualized run rate of 35 billion in just Q1 alone. So the AI hyperscalers, they not only did spend a lot in 2025, it is expected to accelerate significantly in 2026. So to put this into perspective, Alphabet spending in this coming year is expected to be double what it spent last year. This will be very good for gdp, although of course what's good for GDP is not necessarily good for job growth. Wall street right now is picking some winners and losers. So there's some volatility in the market. And Wall street has decided that SAS companies are probably going to be the loser in this, because if AI allows companies, particularly major enterprise companies, to build their own custom solutions, then they don't need to be paying these big fees to SaaS companies. To make one more point on the notion that what's good for GDP is not necessarily good for job growth, because that's something new that we're seeing right now that we don't necessarily often see in the past. Historically, GDP growth and job growth have tended to, for the most part, run in lockstep. And what we're seeing in 2026 is the decoupling of those two things. I should say what we expect to see in 2026 is a continuation of a trend that we've already seen in 2025 and 2024, which is a decoupling of those two things, a decoupling of corporate growth from job growth. And if I may take a moment to editorialize, one thing that I've been thinking about a lot lately is, and this is something we've discussed on many First Friday episodes in the past, is this wide chasm between consumer confidence and economic performance. So the early 2026 Consumer Confidence Reports are out. The Conference Board released its consumer confidence index numbers for early 2026, and they found that consumer confidence has fallen to in January 2026, consumer confidence fell to its lowest level since 2014. Let me repeat that. Consumer confidence is at its lowest level in 12 years, according to data from the Conference Board, which is one of two major trackers of consumer confidence, the other one being the University of Michigan's Consumer Sentiment Index, which has often found similar They've both had similar findings. You know, in spite of some recent stock market volatility, we've got stocks, real estate values, gold, and as of last fall, even crypto at all time highs. Crypto obviously has tanked and home prices have softened slightly since 2022. But we have this situation where people who owned assets pre pandemic buy in. Holders who acquired assets pre pandemic have done very, very well. But people who own assets are only about 50% of the population. And the other half of the population that doesn't hold any assets is seeing job stagnation, rising prices and the cost of fundamental life, things like a home feeling increasingly out of reach. And so I think that the disconnect between consumer confidence and economic performance is largely a reflection of who owns assets versus who doesn't, and specifically who purchased assets pre pandemic. Stocks, real estate, even gold. Who purchased those assets pre pandemic versus who didn't. Owning assets is not just about, quote, unquote, being rich. It is to a certain extent about not being broke, not feeling as though prices are climbing and climbing and climbing and they're getting further away from you and your wages aren't keeping up and there aren't a whole lot of other jobs that you can move into. That is a very tough situation to be in. But if you have a 401k that's going gangbusters, or an IRA that's going gangbusters, or a handful of rental properties that have all grown in equity immensely, then you are likely to feel more confident about the future as compared to somebody who holds no assets. It just keeps coming back to the most important thing that you can do in order to not just build wealth, but in order to not be broke, is buy assets, buy stocks, buy real estate, buy bonds, buy treasuries, buy ETFs, buy index funds, maybe buy a tiny portion of commodities, but buy assets. That is the single most important thing that you can do to protect yourself in a rapidly changing and increasingly uncertain world. Okay, we're going to take a moment to hear from the sponsors who make this show possible. When we return, there's so much more that we still need to cover. We're going to talk about the nominee for the new Fed chair, Kevin Warsh. We'll discuss Davos. We'll talk about 530A accounts. We'll talk about the 401 withdrawal allowance for a house down payment, the credit card interest rate cap. We'll talk about home buying in 2025, which was at its lowest point in 30 years. We'll talk about a mandate to invest in Roth accounts. And we'll discuss tax refunds. We've got a lot. That's all ahead. It's time for the new year. It's time to refresh your home, refresh your living space. Get excited for the year ahead. Wayfair has everything you need to get back into an at home routine you love. They've got items for every room in the home. Bathroom, kitchen, bedrooms, outdoor space. I have a daybed from them, I have shelving from them. I have a weighted blanket from them. I got my parents a set of chairs for their eat in breakfast nook. Wayfair has items for every style, every budget, every room in your home. And if you want to do a refresh, I mean, spring is really right around the corner. It's not that far away. So if you want to do some spring cleaning, get some storage solutions, get some shelving, get some outdoor furniture, maybe get some kitchen essentials for easy weeknight dinners or desks or office chairs or bookcases for a better work from home or study setup. What I love about them is that their selection is so big that whatever style you're looking for, you'll find something there. That fits your home. So I wanted really space saving things because I live in a Manhattan apartment. Everything I got from Wayfair I optimized for efficiency. Get organized, refreshed and back on track this new year. For way less head to Wayfair.com right now to shop all things home. That's W A Y F A I R.com Wayfair Every style, every home Think about some of your financial goals and life goals for the upcoming year. Maybe you want to rent a better apartment or maybe you want to buy a car or a house. Doing those things means getting your credit in shape now and AVA can help with that. AVA is a credit building app that's designed to work fast and help your credit score where it really matters. So your credit score can start climbing, climbing with almost zero effort. You pay your monthly subscriptions as usual with the AVA credit builder card and AVA reports your on time payments to all major credit bureaus, which helps you build a solid credit history quickly. AVA members have improved their scores by an average of 30 points in 30 days. And Ava can now report your rent, utility and phone bills automatically, even up to 24 months of past payments so that your everyday payments can help build credit faster. And all of that's included in your AVA membership. And AVA members get access to all of ava's credit building tools so there are no hidden fees or sneaky membership tiers in order to unlock extra features. It's low stress, low cost and very transparent. And ava's the highest rated credit building app on trustpilot with the most most five star reviews. Take control of your credit today. Download the AVA app ava and when you join using my promo code Paula, you'll get 20% off your first year, monthly or annual. Your choice. Again, grab the AVA app and use my promo code Paula so they know you heard it from me and you'll get 20% off any plan for up to a year. That's promo code Paula. P A U L A thanks to ava. Now go get yourself good credit. We live in a time when there's an onslaught of messages, there's emails, there's text messages, there's DMs. Grammarly gives you one place to think, write and finish your work where you already write. And it's loaded with agents that help you sound natural and engaging. I get AI is everywhere, but a lot of the tools that are out there either flatten your voice or take over your voice or you know it sounds like AI. What I like about Grammarly is that it works for how you actually work. We know AI is here to stay, but knowing how to actually use it at work so that it augments you rather than flattens you. That's the art of it. I've used Grammarly to help me adjust tone, adjust wording. Basically I've used it as an editor. So it's not writing for me. I'm still doing the writing. It's just helping me in the way that an editor would helping me fine tune what I'm saying so that my message is natural, you know, not stiff, not AI written. And it works. It integrates with the apps that you use every day, it works seamlessly across more than 500,000 apps and websites, and it helps you adjust phrasing clarity and communicate more effectively in a world of generic AI don't sound like everyone else. With Grammarly, you never will. Download Grammarly for free@Grammarly.com that's Grammarly.com. Welcome back. There's a New Nominee for Fed Chair this choice took a lot of people by surprise. Kevin Warsh is the nominee. He has a reputation for being a hawk, meaning he is hyper vigilant about inflation. That makes him a choice that took many people by surprise, given that it is well known that the White House wants the Fed to lower the interest rate, which of course could have some inflationary risks. Given that the White House wants the interest rate to be lowered, why appoint somebody who has a reputation for being hyper vigilant about inflation. Why appoint that guy to be Fed Chair? Well, a couple of things to note about him. So Warsh is quite vocal about the size of the Fed's balance sheet. He thinks the Fed needs to clean up its balance sheet. He doesn't like the Fed's habit of buying bonds in the open market in order to lower interest rates. And so his nomination signals that perhaps an unstated or lesser known goal of the administration is to clean up the Fed's balance sheet. Now, there is a risk that by virtue of doing so, by virtue of selling those bonds, that could pressure rates to go higher. So that would be countermeasured through rate cuts. Warsh has advocated for rate cuts. He says that AI is deflationary. We actually dug into that. If you want a deep dive into how AI can be deflationary, listen to our podcast interview with Zach Kass, which just aired a couple of weeks ago in January. He talks about how AI can make the cost of living cheaper for many of us, most of us, because there are services that we formerly had to pay for that we no longer will need to pay for, or at least not as much, but because AI, according to war, because AI has a deflationary effect that in Warsh's view, gives us greater leeway to engage in rate cutting. And that very rate cutting can also give us license to shrink the size of the Fed's balance sheet by selling bonds back onto the market. Warsh is expected to become the fed chair on May 15, which is when the current fed chair, Jerome Powell's term ends. So Jerome Powell will remain a member of the Fed Board of Governors until his term. His term as a Board of Governors member ends on January 31, 2028, but his term as chair ends on May 15th of this year. Meanwhile, the current Wall street consensus is that analysts are generally expecting the fed to implement one or two more rate cuts this year, meaning another 25 to 50 basis points. That's a quarter point or half point over the span of the year. In related news, home buying in 2025 hit its lowest point in 30 years. The 2025 home sale numbers matched the 1995 home sale numbers. The national association of Realtors reported that existing home sales remain stalled at around 4 million. Currently, as of today, Friday, February 6, the current average 30 year fixed rate mortgage is at 6.26%, according to Bankrate. Now what would happen if that prevailing mortgage rate dropped by just a quarter point from 6.26% down to 6%? Well, according to the national association of Homebuilders, that would bring 1.1 million more households onto the market, which would spur some home sales. Now I should note that the Fed does not set mortgage interest rates. The Fed only sets the federal funds rate, which is the rate at which banks borrow money from one another bank to bank overnight. So it's the overnight lending rate for bank to bank lending. The reason that we often talk about the Fed's interest rate policy is because it's a proxy for the 10 year treasury yield. But it is the 10 year treasury yield and not the Fed's interest rates that determine 30 year fixed mortgage rates. Which means that sometimes, even if the Fed drops rates, if the 10 year treasury yield for unrelated events moves in a way that surprises the market, the 30 year mortgage rate will follow. In any event, the national association of Home Builders released a report indicating that they expect the 30 year mortgage rate to reach 6% by next year 2027. I should also add, if you are looking to buy a home either for yourself or as a rental property, a new report has listed the most affordable states and they are West Virginia, Mississippi, Louisiana, Kentucky and Arkansas. Those five states have the lowest median home prices with many single family homes staying under 212,000. A new house bill has been introduced that would allow people to make withdrawals from their 401k without penalties for the purposes of making a down payment or covering closing costs on a primary residence. Under this proposal, which was introduced on January 23, individuals could withdraw funds from their 401s for up to five years without penalty and could make a penalty free 401k withdrawal for the purposes of gifting that money to a relative as long as the relative uses the money for a down payment or closing costs. The name of the bill is the Home Savings act and it was introduced by representative John McGuire of Virginia. However, it has no co sponsors and does not have a companion Senate bill so its likelihood of getting passed is uncertain. The White House is calling for a one year cap on credit card interest rates. Under this proposal, credit card interest rates would be maxed out at a maximum of 10% for one year. In order for this to pass, it would require widespread congressional support. The heads of major banks and credit card issuers are of course against this, with JPMorgan Chase CEO Jamie Dimon stating that if this were to pass, many lenders would pull credit lines from consumers. It would likely, according to Brian Kelly, the points Guy who is a former guest on the show, it would likely also have major ramifications for cash back points miles Other Credit Card rewards According to experian, as of June 2025, the typical American had $6,735 in credit card debt. According to the Federal Reserve, the average interest rate on credit card debt is around 21%. This means that paying off $10,000 in debt over the span of three years would require paying more than $3,500 in interest. According to an analysis by Vanderbilt University, capping credit card interest rates to 10% would reduce consumer interest payments by more than 100 billion. An analysis by Vanderbilt University found that a 10% cap would likely result in reduced lending to customers who have FICO scores below 600, who may then turn towards pawn shops or payday loans. However, it could increase the popularity of Buy Now Pay later services such as Klarna, which are already used by more than 90 million Americans. And buy Now Pay later services often split purchases into four payments and those payments are interest free. These services primarily make their money from merchant fees, so they charge the retailers between 2% to 8% of the transaction cost. They do also generate revenue from customer fees, primarily fees for missed payments, you can contribute more to your 401 and IRA this year. We should have covered this in January, but we didn't, so get to it in the February episode. The 401k employee contribution limit has increased to 24,500 this year. And if you are 50 or older, you can contribute an extra $8,000 as a catch up contribution. So if you're 50 or older by December 31st, whatever your age is on December 31st is considered your age for the entire year for the purposes of catch up contributions. If you're 50 or older, you can contribute a total of $32,500 to your 401k as an employee contribution. And then your employer can also put in a bunch of money. So the total contribution limit, including the employer side, is $72,000. There's also something that some plans allow that are called super catch ups and those are for people between the ages of 60 to 63. If your plan allows for a super catch up, that's an additional $11,250. The IRA contribution limits are up as well. So in 2026 you can put $7,500. That is an increase over the $7,000 limit which we had in 2025. If you are age 50 and over by the end of the year, you can also contribute an additional $1,100 as a catch up contribution. That's a 10% increase over 2025's catch up limit, which was $1,000. The HSA contribution limits only ticked up slightly. Self only coverage for 2026 is up $100 extra as compared to last year. So this year it's $4,400. Last year it was $4,300. If you have a family HSA, the contribution limit this year is up $200 as compared to last year. So this year it's $87.50. Last year it was $85.50. The catch up, which for an HSA is people 55 and older, remains the same at an extra thousand dollars. But there is a Roth mandate. That's right, a mandate for one of these accounts, but it only applies to one of these and to certain people. Who does it apply to and when? We're going to find out right after this forward from our sponsors. I want to give applause to all of the entrepreneurs out there starting something new. It isn't just hard. I mean, it is hard. It's a lot of work. But beyond that, emotionally it's. It's terrifying. Because you've got all of these doubts. You don't know if it's going to work out. You're putting a ton of time and effort and energy and making a lot of sacrifices and you don't know if there's going to be any payoff. It's a big leap of faith. When I started my business, I wasn't sure of what I was doing and had tons of doubts. And now with the benefit of hindsight, I'm glad I did it in spite of those hesitations. And I also know it's really helpful to have a great team and great tools to assist a partner like Shopify can really help. Shopify is your commerce expert with world class expertise in everything from managing inventory to international shipping to processing returns. They can help you find customers with easy to run email and social media campaigns and they've got award winning 24. 7 customer support. You can tackle important tasks in one place, from inventory to payments to analytics and more. It's time to turn those what ifs into with Shopify today. Sign up for your $1 per month trial today at shopify.com Paula go to shopify.com Paula that's shopify.com Paula I've been hosting this podcast for 10 years now. We started in January 2016 and what I've consistently seen year after year over the past decade is that it's always at the beginning of the year that people tend to set big financial goals for the year ahead. And that makes sense. The beginning of the year is a natural time to set goals for how you want the year ahead to look like. Is this the year that you want to pay off debt? Is this the year that you want to hit certain savings targets within your 529 plan, or your retirement accounts or your emergency fund? Set yourself up for financial success this year. Monarch is the all in one personal finance tool designed to make your life easier. It brings your entire financial life, budgeting, accounts and investments, net worth and future planning together in one dashboard on your phone or laptop. Feel aware and in control of your finances this year and get 50% off your monarch subscription with code Afford. The thing is, there are some people who just focus on tracking. There are some people, all they do is they track their expenses and that can lead to feeling bad or feeling guilty about your spending. And it's always backwards looking. It's when you're looking back at your previous month's spending that's a lagging look at what you've done in the past. Monarch keeps you focused on the future, on planning ahead, and hitting real financial milestones. It's got a great dashboard where you can see everything. Your debt payoff timeline, your savings goals, your net worth. You can really see that progress. According to a 2025 survey, Monarch users reported saving over $200 per month on average after joining. Set yourself up for financial success in 2026 with Monarch, the all in one tool that makes proactive money management simple all year long. Use code afford@monarch.com for half off your first year. That's 50% off your first year@monarch.com with code afford a F F O R.
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Welcome back. If you made more than $150,000 last year and if you're making catch up contributions into your 401k this year, you are required required to make those as Roth contributions. This is totally new. There has never been a Roth mandate before. It used to be optional, but starting January 1st of this year if you're 50 and older, it's totally up to you whether you want to make pre tax contributions or Roth contributions or a combination of the two to your retirement account up to the $24,500 limit. But any catch up contributions that you make must be made to a Roth account. Now this is for employer sponsored retirement plans like this is for your 401. It is not for your personal IRA. So this does not apply to non employer sponsored accounts. Now originally this rule was supposed to go into effect back in 2024, but at the time a lot of workers didn't have access to a Roth 401K. So the IRS actually granted a two year transition period which gave many employers time to prepare for the Roth catch up contribution rule to go into effect. And so over the span of the last two years, many employees suddenly got access to a Roth 401K for the first time. So check with your employer because even if three, four, five years ago you didn't have access to a Roth 401K which was common, many employers did not formerly offer Roth 401. Your retirement plan might now include that because of the Roth catch up requirement, by the way, for anybody who's new to the show and is wondering what we're talking about very quickly. Roth contributions are after tax contributions, meaning you pay taxes on the money in the year in which you earn it, but then all of the growth, the dividends, the income, the capital gains, all of that grows tax exempt. By contrast, traditional contributions are tax deferred on the income in the year that you make it, but then you pay taxes at the end when you withdraw that money. So when we say that catch up contributions for people who made over 150,000 are now in your 401k mandated to be Roth, what we're saying is that you are required to pay taxes on that income this year, but that money can then grow tax exempt forever or for as long as you're alive. And then it gets complicated after that when we talk about inheritance. But that's a different topic for a different day. In any event, if you make a high income and you're over 50, it looks like you will be building out a stronger piece of the, you know, we talk about the, the tax triangle where you want a combination of tax deferred, tax exempt and taxable assets in your portfolio. So if you make a high income and you're over 50, you're going to be building out more of that tax exempt angle of the triangle. The majority of people are going to be getting a bigger tax refund. This year the OBBBA reduced individual taxes by an aggregate $129 billion. When that happened, tax withholdings didn't change. So most of that money has been withheld from paychecks. Which means of the 129 billion in tax reductions, about 100 billion of that. So the vast majority is turning into refunds. The Tax foundation estimates that refunds for a typical filer could be between 300 to $1,000 higher this year than it is in a typical year. Now. This is because of seven major tax cuts and those include the child tax credit, the standard deduction, the state and local tax deduction, the an extra $6,000 deduction for seniors, higher deductions on auto loan interest and higher deductions on taxes for tips and on overtime work. There are new accounts, tax advantaged accounts for every American child born between January 1st of 2025, last year and December 31st of 2028. These tax advantaged accounts are seeded with an initial $1,000. The account is fully in the child's name and the parent or legal guardian is the sole custodian until they turn 18. Parents and guardians or other family members also have the option to deposit up to $5,000 per year into these tax advantaged accounts. Now, depending on your political persuasion, there are three different names that people frequently use when they refer to these accounts. On one side of the political aisle, these are referred to as Trump accounts. On the other side of the political aisle, they are referred to as Invest America accounts. And among financial nerds, these accounts are referenced by the IRS code, which is 530A. So you know you've heard of the 529 plan or the 403B. So this is the 530A. So here's how it works. When you file your taxes, you make an election which enrolls your child. At that point, a financial institution will receive your funds and they will activate your account and it will be initially ceded with $1,000 from the US Treasury. And there are a number of private donors who have also offered additional seed funds for certain accounts, depending on zip code. Largely, the money in this account is required to be invested in broad market index funds. You cannot use this money to buy individual stocks or take a flyer on Bitcoin or anything like that. This thousand dollars from the US treasury is mandated to be invested in low fee broad market index funds. Now you don't have to contribute anymore. You can just leave the initial thousand dollar seed there and that could be the end of it. Or if you want to, you can contribute up to $5,000 per year. All of the money grows, tax deferred, similar to a traditional IRA. And when the child turns 18, the account is theirs. So they have the option to either continue letting it grow or the option to withdraw the funds at the age of 18 to use for paying for college, paying for trade school, buying a home, starting a business. There are no use restrictions, so they can use that money on whatever they want. Now as I mentioned, a number of companies and philanthropists have also offered additional funds to seed certain accounts. So Michael and Susan Dell, Ray and Barbara Dalio, as well as Uber, Visa, BlackRock, Dell, MasterCard, Charles Schwab, SoFi, just to name a few. That's not a comprehensive list. Those are all people in companies that have offered additional funds. All children in the US born between 2025-2028 who have a valid Social Security number are eligible to participate. To illustrate the payoff, let's just run through some hypothetical numbers. That initial $1,000 seed contribution invested in a diversified portfolio of low cost index funds in a tax deferred account. Assuming that the market performs at historical S&P 500 averages, this means the initial $1,000 seed contribution will grow to $6,000 by the time the child turns 18 if parents, guardians, other family members or friends choose to make additional contributions. If you make the maximum contribution of $5,000 per year, then the child will have $271,000 by the time they turn 18. On January 20, the White House issued an executive order banning large institutional investors from buying single family homes. The order states that within 30 days the Treasury Secretary shall define, quote, large institutional investor and quote single family home for the purposes of implementation and within 60 days a variety of federal services, including HUD, Veterans affairs and the FHFA. The Federal Housing Finance Agency shall issue guidance to prevent large institutional investors from acquiring single family homes that could otherwise be purchased by owner occupants. The order also requires property managers, quote, managing agents of single family home rentals participating in Federal Housing assistance programs, end quote, to disclose to HUD if there are any changes in ownership or control so that large institutional investors can't loophole their way into it. Now, technically, the order does not directly ban institutional investors from buying the homes, but it limits conventional mortgage guarantees for those types of transactions. In 2022, large investors defined as companies that own 50 or more properties, large investors in 2022 peaked at 3.5% of the single family home market. Currently, they now account for about 2% of single family home purchases in the past year. In 2025, however, there is geographic concentration around that activity, largely in the Sun Belt metros, the major metropolitan areas in the Sunbelt region. So While activity is 2% nationwide, it is disproportionately concentrated in certain locations. Crypto has tanked. Bitcoin as of a couple days ago actually dropped below $61,000. That's more than a 50% decline from its all time high at 126,000, which was on October 6, 2025. To phrase that another way, in the last four months the value of Bitcoin has dropped by more than half. It is now as of the time of this recording up just over 71,000. This type of volatility is quite normal for Bitcoin. In fact, this is Bitcoin's ninth decline of over 50% since 2010. According to Blockchain News, SpaceX has merged with Xai. Xai is a smaller AI company that is primarily known for the Grok AI chatbot. This mega merger values the companies at 1.25 trillion and has led to A bunch of memes around, people joking about the fact that the social media platform X is now a spaceship company. And in another funny twist, the prediction markets now have grocery stores. Kalshi and Polymarket, which are two of the big prediction betting markets where you can bet on everything from the super bowl to how many inches of snow are going to fall. Kalshee and Polymarket are both opening temporary grocery stores in New York City. Kalshi showed up first. They set up shop in the East Village in Manhattan at a place called Westside Market, and they offered shoppers $50 worth of free groceries. Polymarket saw that and said, hold my beer, we're going to go even bigger. So they decided to open up their own free grocery store, a pop up store. It'll be open for five days. From Thursday, February 12th at noon until Sunday, February 15th, they'll be giving away free groceries. In addition to that, they also donated $1 million to the Food bank for New York City. Speaking of Polymarket, one of the most interesting bets that took place in the last year was a bet on the question, quote, will Jesus Christ return in 2025? You could wager yes or no on Polymarket. Most of the money came in on no. And that was, as we all know now, that was the winning bet. And if you timed that bet just right, meaning if you placed a no bet in the month of April of last year, you would have received an annualized profit of 5.5%, meaning betting against the second coming of Christ in 2025, that bet would have outperformed Treasuries. But don't worry if you missed 2025, you can still, and I am not endorsing this, I'm not suggesting it, but you can still make that bet in 2026. Currently, betters on Polymarket are giving the return of Jesus in 2026 a 2% probability. Again, please do not use betting markets. I do not endorse gambling, but I thought that would be a fun story to end today's episode. Thank you so much for being part of the Afford Anything community. I hope you learned something. I hope this has given you food for thought. If you enjoyed today's episode, please share it with friends, family, neighbors, colleagues, your loved ones, your liked ones, your tolerated ones. Share this with the people in your life because that is how you spread financial information. My goal is to present finance and economics to you in a manner that is as factual, as unbiased, as neutral as possible. Although if I do have a bias, I am super pro index funds. I will make no secret of that very, very pro low cost index funds, pro buy and hold and pro ownership of assets. So I hope that this episode has inspired you to own assets and to discard your liabilities. Thank you again for being part of the Afford Anything community. You can subscribe to our newsletter. It's completely free. Affordanything.com Newsletter My name is Paula Pant. This is the Afford Anything podcast and I'll meet you in the next episode.