← How to Money
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- [00:00]
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This is an iHeart podcast.
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Hey, it's Joel and Matt from how to Money. I was just in Seattle, Matt, and honestly, it's one of the greatest cities in the world, particularly in the summer. I went on this run by the water. We hopped a ferry across Puget Sound. Just an unforgettable trip.
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That's what struck me. What seems normal to a homeowner. It can be the thing that makes a guest trip really special.
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Which is why hosting your home on Airbnb makes sense, right? Travelers are looking for those authentic, memorable spaces. And if you don't have time to manage all that well, Airbnb Co Host feature makes it easy. A local co host can help with everything from creating the listing to keeping your place running smooth.
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Find a co host@airbnb.com host we care a lot about being intentional with our money. That is why we use Daffy, a giving app that makes it easy to organize donations like the ones I send.
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To my kids school or the recurring ones I have to give to my church and to a local mentoring organization called Blueprint 58. And because Daffy is also a donor advised fund, you can you can set aside cash, stock, ETFs or crypto. You can take the tax deduction right away and support charities anytime with every receipt already organized. So visit daffy.org howtomoney today and for a limited time get $25 to give to the charity of your choice. That's daffy.org howtomONEY I love entrepreneurship.
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I have been a small business owner for almost 20 years now, but it is tough to separate work from life. The business can be on your mind 24 7. So when you are hiring you need a partner that works just as hard as you do. And that hiring partner is LinkedIn Jobs. LinkedIn makes it easy to post your job for free, share it with your network and get qualified candidates that you can manage all in one place.
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Here's how it works. Post your job for free or you can pay to promote share with your network. You can let your network know that you're hiring. You can even add a hiring frame to your profile picture and get two times more qualified candidates. So post your job for free@LinkedIn.com howtomoney that's LinkedIn.com howtomoney to post your job for free. Terms and conditions apply. Welcome to How To Money. I'm Joel.
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I'm Matt.
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Today we're talking accidental landlords, debilitating debt and the work from home Prem.
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Happy Beautiful Friday everyone. It's beautiful at least where we are.
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B
Yeah, it is.
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A
You know what else is beautiful is the run that I got to go on. No, I'm sorry. The mustache.
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B
Oh, thank you. It's coming in nice.
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A
I don't know. The mustache is doing it for me. I take that back. I love your mustache. I think they're. How's the family taking to it?
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B
They like it. Yeah, yeah, yeah, yeah.
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A
Your family is so much more accepting of your mustache than my family was. Even your daughter of my mustache.
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B
The other day she hopped in the car and she said, I like your mustache, not my dad's. I was like, oh, okay.
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Yours is a bit thicker. It's a bit thicker and bushier than mine.
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Facial hair has always been my nemesis, so that's rare.
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No, it's. I think it's legit, man. You kind of got like the. What's the blonde?
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Burt Reynolds is what I'm calling for.
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A
The Wyatt Earp from. Is that tombstone. Oh, that. I'm thinking.
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B
Let's be honest. Now you're just buttering me up.
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A
No, it is good. No, I was going to say the beautiful morning that we both got to enjoy because we both, unplanned, went on a run this morning and literally you were running onto the street that I was on at the same time. And we just kind of like linked up. High fived. And immediately started talking about money on our end. No, you would have been sorely disappointed if that's what you were expecting.
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Just random catch up, friend stuff.
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We did hold hands for a second because we thought it was so funny.
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B
And that's what people expect from us at this point, right? Tied at the hip.
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A
Yeah, that's pretty funny. But no. This is our Friday flight. The most pertinent headlines, we think, to your personal finances. We want to talk about how changes out in the world are impacting your dollars. And first of all, man, let's touch on the government shutdown because the threats of federal layoffs have actually finally came to pass this week. And by the way, we're not here to assess the political fallout or anything. We're going to stick to the individual financial implications. That's what we say about personal finance here.
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B
I forget which department it was in, but I think there was an accidental firing of double the amount of intended people. Human services, I don't remember.
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A
Yeah, yeah. Roughly 4,000 folks across a few different agencies are no longer just furloughed, but they're actually out of a job. And threats of more firings are being made in an attempt to end the Shutdown. But it appears that we are still at an impasse. But beyond that, close to a million federal workers are still furloughed and haven't gotten paid. Although I think I saw the news yesterday was the fact that some of our military, some of our members of the military, they're getting their, their checks paid at least for this paycheck as they're moving. Yeah. Shuffling dollars, trying to make things happen. But the president has threatened that there will be additional folks who won't receive back pay that's legally due to them. I'm not sure how that would actually play out. I'm sure it would end up in courts. But I am almost certain that this is going to have broader economic implications. But I'm just going to tee it.
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B
Up for you, Joel.
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What's the responsibility that we can transfer to ourselves and how we could get by financial little storm like this?
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Let's be, let's be honest that just the feeling of not getting a paycheck when you're supposed to get one sucks. Totally. You know. Oh, yeah. And so.
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Come on, say it. I'm seeing. I'm teeing it up for you.
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B
There's a lot of personal responsibility at play in having your finances in order so that you're not terribly impacted by something like this.
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A
But three to six months.
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B
Yes, you're supposed to have three to six months.
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A
The emergency fund.
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That's why it's so important. The emergency fund is so important. But I guess I think it's important to speak to the fear and anxiety that people feel when they're like, how long is this going to go on? And how long is my paycheck going to get punted? Maybe I can miss one, but it's hard to miss two. The truth is, yes, you should have three to six months worth of savings on hand. But we know this, Matt, from all the studies we see that the vast majority of Americans do not have that. And so it puts them in a really tough place where how am I going to get money to cover expenses when a paycheck stops unexpectedly?
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A
What's really fascinating is the fact that I think a lot of folks who had government jobs probably thought that, oh, yeah, this is the type of work where I don't have to, you know what? Entrepreneurship. That's not for me. I just want the steady paycheck from the government. And then all of a sudden they find themselves in a situation like this, and they might even be sort of less prepared from a mental standpoint. Right. Because, like, if you are going to launch your own business. You kind of know that, man, it's gonna be feast or fallow, you know, like instead the ability to, you're ready.
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B
For the variability of income that entrepreneurship brings. Whereas you're right, if you, if you sign up for the steady paycheck life, it feels more like a gut punch.
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Yeah, I bet.
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So, yeah, I think too what this highlights, and this is something we talk about sometimes on the show is the need for a bbb, a bare bones budget.
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Oh yeah.
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And the BBB is ideally something that you would kind of figure out and, and suss out before you hit this point where you don't have money coming in. But also, hey, if you're already in hard times, sometimes you just got to go with what's going to work. And the bare bones budget is one of those things that is, it's underrated. And what you're doing is you're really separating your needs and your wants and you're saying, well, these are things I enjoy saving up for the vacation or saving up for that new car or streaming services, whatever it is. Buying stuff on Amazon, willy nilly, that's just kind of fun to have, like buying new clothing. Like those are all things that can really be kind of shoved aside until the bleeding is stopped, until the paychecks resume. So we have an article up on the site about creating a bare bones budget. The goal isn't to live like that forever, right? To not be able to enjoy the fruits of your labor and buy some of those things that you care about that, that you've put into the wants category. But the goal is to say for the time being, wants are off the table until that inflow of cash is restored.
- [08:21]
A
Feels like intermittent financial fasting, right? Like you're focusing on the things that are going to allow you to survive, but you're cutting out a whole lot of the other stuff. Joel, as you alluded to in the title of this episode, we are seeing a rise in accidental landlords. There are folks who want to sell their home, but they aren't very enthusiastic about the price that they're able to fetch on the market. And they're finding that renting their home out that it might be a better bet. There's this research group, Parcel Labs, and of course Parcel, they leave out the E. That's how you know it's a new think tank.
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B
Anything my son was asking the other day about a hat I was wearing and it's from a running company brand. It's called Runner.
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Runner.
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I guess that's what they're called, but it's like R, N, R. And he was like, what does that spell? And he's in kindergarten. So he does, he's like, where are the vowels, man? Like sorry.
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He's like, those aren't. That's a, that's not a real word.
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This is how all brand names are made now.
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A
Yeah, unfortunately. But they, this research group found that more homes are being taken off the MLS in order to be rented out rather than being sold for lesser amount. And this is another sign that the housing market is a little less friendly to sellers these days and that buyers are likely to see better prices in the coming months, I think. And the housing market, it's really complex, man. It's a little fickle. And what happens with rates are going to have a significant impact on the buyer demand. But just know that selling a home and renting it out are quite different decisions. You've got to be ready to take on the reality of landlording and it might make financial sense, but it might not. And so we would encourage folks to run the numbers. We want folks to consider the time that's going to be involved. It's more like a part time job as opposed to this passive stream of income where you're just kind of kicking back and just cruising down the stream of cash flow.
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B
I don't know.
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I will say though that term such a tough one, the passive income, just.
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Because I think people believe something that's not actually true.
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Absolutely.
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Most of the time.
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Absolutely. But I think what could be helpful too is the different folks have heard of the, the one way door in the two way door decision matrix in selling your home certainly falls into the category of more the one way door where you can't easily undo that, you can't get your house back, you can't hit command Z, you can't undo that transaction and say, you know what, actually I, I don't want to do that anymore. No, sorry, you don't have that three and a quarter percent mortgage anymore. You sold that.
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Yeah.
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You sold that house. As opposed to a two way door where you can, I think Jeff Bezos actually is the one who coined this or made it popular. But like a two way door allows you to experiment, try things out at a very low cost and because it's no big deal if it doesn't work out well, no harm, no foul.
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B
Oh, I hate landlording. Well, you can remedy that pretty quick.
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Exactly, exactly. And so I think that being said, if you know you are interested potentially in being a landlord and you have a house and you're not, it's sat there on the market. That's, it's definitely something to consider.
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B
Makes me think actually of a house right around the corner from us, Matt, that was listed for, I think, 900,000 and ended up selling for less than 600,000, right?
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A
Oh, yeah, yeah. Like I know which one you're talking about.
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Yeah. Because we looked up the records, we were curious to see what it sold for after it sold. And we're like, oh my gosh, I did not realize it sold for that much less than asking price. So sometimes that, that bitter reality hits you in the face when you were assuming, based on the listing prices of homes around, you were going to get a lot more. But the market isn't quite what it used to be and it might be a lot.
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And I will say this particular home, I think they were shooting for the moon. And then they probably realized, oh, lady, this house hasn't been touched in 40 years. There's a lot of, a lot of issues with it.
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B
But I feel like I'm seeing a lot more multi hundred thousand dollar price cuts on homes. Just people shooting for the moon and realizing the market ain't there. Another reason homeowners are staying put, I think too, which is making things difficult in the market mad, is because they're going to owe tax if they sell. Because if someone has owned a home for a long time and the value of their home has appreciated significantly, capital gains taxes are going to kick in if they were to sell, which offers another reason to stay put. It's not just, oh, I'm abandoning a 3% mortgage. It's gosh, my home is worth $800,000 more than it used to be and I don't want to pay $45,000 in tax because of it. This is particularly true for many older homeowners who live in expensive markets. But Business Insider had an interesting article about whether or not capital gains taxes on primary homes should just be eliminated altogether. And similar to a lot of legislation, this hasn't been updated since 1997. So if we were to index inflation for inflation caps on what you would pay from a tax perspective when you sold your home, they wouldn't be what they are right now, which is 250,000 for single individuals and $500,000 for people married filing jointly, they'd be something like double that. Maybe five hundred thousand and a million dollars would be the exclusion.
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Doesn't surprise me.
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Yeah, but this happened in 97 and so they would be even Higher, by the way, if they were indexed to home price growth. But this is something that we as individuals don't really have any control over. But it is interesting food for thought that that is just another lock in mechanism that is, I think, hampering home sales. If something were to be done from a legislation perspective, which again, I think there are a couple of different proposals, one to eliminate and one just to increase, that could actually move things forward.
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A
Yeah, those capital gains are just one of the many factors keeping houses from being on the market, being opened up for folks who really want to live there. Let's touch on the cost of utilities. Inflation has calmed down in many parts of the economy, but certainly not all parts. And we've recently discussed how how much more expensive health care is getting. But electricity prices are going up at a similar 10% clip year over year.
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Do you blame artificial intelligence and the power sucking dynamics?
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A
I do, actually. It has a lot to do with it.
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It's got to be part of it. I literally went to ChatGPT to ask it if it was the problem behind higher electricity prices. And it was like, hey, dude, listen, this is a multifaceted problem. Don't just blame me.
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A
But was it getting defensive?
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But yeah, it might be part of the problem.
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A
You're picking up on the tone.
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No, they weren't. It was pretty straightforward in its approach. But it was funny how it was like trying not to take all the blame.
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A
Well, what's so crazy is, I mean, I saw, I just saw a headline yesterday, I didn't read it, but talking about how the AI data centers, they're building their own power plants because of the amount of electricity that they are requiring. And you were recently in Memphis, which is where Elon Musk's newest, the Colossus. Did you swing by there?
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B
No, he didn't.
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Friend of the show.
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B
Yeah, yeah, our.
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The world's richest buddy. He didn't give you a tour?
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No, he didn't. Well, it wasn't Microsoft that bought a defunct nuclear power plant trying to bring it back online. So it's crazy.
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A
Yeah, but it also, it makes a ton of sense because it's. It almost seems like AI has become this public utility, but. Oh no, no, no, we, in that sense it is sort of like a public utility because we are all paying the price to a certain extent in higher electricity prices. But it makes sense though, that 78% of folks are saying that their energy bills just across the board are a source of stress. And so one tip, if you live in a state where you can shop with different natural gas marketers. Well, certainly do that. And there are all sorts of other ways to make your home more efficient and still get tax credits for doing.
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B
It through the end of the year, Right?
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A
Yeah. Well, and. Yeah. And depending on the state as well. Like, so, for instance, our local. We've a tax rebate for thermostats.
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B
Yeah.
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A
And guess what? I didn't replace all my thermostats this year.
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B
Just the ones you get for free or for cheap.
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A
Just the two, because I'm waiting till next year because those are still going to be there. But you can also make other changes to use less energy as well. I'm thinking of the ability to wear warmer clothes so you can lower the thermostat temperature.
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B
Thanks, Dad.
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A
I can't wait.
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B
Man, you sound just like my dad. But now I'm a dad and I say the same thing.
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A
I know. That's what's. It's crazy. I think about one of our daughters, and she loves. And I know you've got a daughter this way, too. What is up with these girls? They love, like, in the summer months, they're wearing these very warm robes.
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B
Yeah.
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A
And then they're wanting the air to be a little bit cooler. And I go in her room and the fan's on full blast. It's like a. Like a wind tunnel in there. So in typical dad fashion, I say, hey, sweetie, you know, if you took off your robe and only wore your jammies, you could lower the fan from high down to low. That way it wasn't, you know, your mouth wouldn't get so dried out and your eyes are so dry because the wind's blowing so hard.
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B
I don't quite understand.
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She just stares at me with, like, that blank preteen stare, like that. You don't understand anything.
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B
We're at the point now in their progress as adolescents where I think they really think we. They're getting to the point where they don't. They think they know more than us.
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A
Yeah.
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B
Yeah.
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A
They think we're idiots.
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I don't know how I feel about.
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A
This, but in some ways we are idiots.
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B
Yeah, that's true.
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A
In some ways, we are not.
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B
They're pointing out the truth in some ways. But, yeah, I think it's important to note that the tax credits for a lot of these home. These green improvements, they're all the federal tax credits. Yeah. Through the end of the year. And one of the things I think, Matt, people don't consider is insulation. And this is a DIY project. You can Do. I've done it in the past.
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A
I love insulation.
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B
You can like, rent that gear, buy the product and hurl it into your attic. And it's not that difficult. Me and a buddy did it in like hour and a half, like insulating the attic at one of my old houses. And so think about that and then just think about how much you can save. You can get it deeply discounted thanks to the federal government. And then at the same time, you're going to reduce those energy costs. So. And then there might be another way to save Matt a little outside the box way here. Space heaters could be a good way to save money this winter.
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A
We're like inside the box. Space heater box.
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B
Yeah, I guess they come in a box.
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A
I was just trying to lean into the whole dad thing.
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B
Dad jokes. Well, CNET ran the numbers, which I appreciated specifically about how much a space heater can save if you opt to use that. And they can basically save depending on how you're getting your energy where you live in the country, they can help you save hundreds of dollars a year if you use it. And this is really important to heat specific spaces over, keeping the heat on throughout your home. So this, I think especially, Matt, for people who work from home who maybe they're alone in the house and they don't need to heat the whole entire house, they can turn the temp way down this winter and they just have their space heater warming up their little space. You're heating Instead of heating 2,500 square feet, you're heating 300 square feet. Whatever it is, I think not heating the whole house, but just the space you're using is a smart way to go. And this is going to be actually even more impactful for people who live in the States where home heating oil is the main source of energy because it is a much more expensive form of energy. Yeah.
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A
Heating oil and propane.
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B
Yeah. Less. Less helpful if you use natural gas. But I think it's also even more helpful if you have a larger home because. Yeah, if you're turning on the heat to everywhere and the bigger your house is, the more you're spending to. To keep that house warm.
- [19:11]
A
Yeah, yeah. What I like what you said though, about insulation, though, is that that is a passive form of energy saving. Whereas the space heater, though, it's better than heating the whole house. It's still active, it still costs you money. And so, yes, heating, let's say one floor as opposed to the entire house is better than heating the whole house. And yes, heating one room is better than heating the entire floor. But you know what's better than heating an entire room? Just. Just heating yourself. And put that robe back on, sweetie, because it's winter.
- [19:38]
B
And you know what? You're probably number one tip to stay warm in the winter. What am I going to say?
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A
Oh man, I can't wait to start drinking hot water.
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B
Drinking hot water.
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A
We definitely aren't in that season yet.
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B
But occasionally, every once in a while it's too hot, you burn your tongue. And I look over there like I feel bad for you.
- [19:56]
A
I. Yeah, I have gotten better about always testing the water before chugging it, but okay. One other monthly cost that's been going down the price of cell service. And Mint Mobile is pushing to make the same true of home Internet. They've got a $30 a month for at home 5G Internet plan. This is if you already have Mint Mobile plan. But that's pretty great. This is another more competition ways to integrate lower prices or ways for us to be or to have available to us some of these different providers. I love that.
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B
Well, for the longest time it was cable company and phone company is where you get Internet from. And now that you can get them from, get, you know, Internet service 5G from a bunch of different players now, which we talked about not too long ago. But it's nice to see Mint Mobile entering the space as well.
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A
Love it, man.
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B
Thirty bucks a month. And I was looking at the speeds. If you look at they have like their little cards almost like nutrition fact labels telling you about how fast your download speeds are going to be. They're pretty fast. I mean they're not a terabyte, but they're like you don't need a terabyte. Somewhere between 130 and 400 megabytes, which is most.
- [21:01]
A
That's what most people need, right? Most people don't even need that much. Yeah, it's crazy.
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B
So if you're going to be a.
- [21:06]
A
Serious techie, if you're wanting over 500.
- [21:08]
B
I think saw a Facebook post in the how to Money Facebook group this week. Someone said, I spent 56 minutes on the phone to try to lower my Internet bill. But hey, I saved 60 bucks a month. That's a lot of money to save that much money. But this might be one of those ways where you don't actually have to get on the phone with anybody. You literally just go to Mint Mobile's website. You sign up for this thing. The equipment is free as well. There's no extra fees for that so 30 bucks a month will save a lot of people out there listening quite a bit of money and they'll still get pretty fast Internet.
- [21:36]
A
That's right. I would even say that that is a form of creative destruction, Joel, which is another story that we're going to get to. We'll touch on the perceived importance of college and more right after the break.
- [21:52]
B
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- [22:18]
A
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B
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- [23:35]
A
It makes me think. You mentioned kids, Joel. I might be done having kids at this point, but my friends, my neighbors, they aren't. I've got family members who have a a fresh baby at home as well. And it is such an amazing season of life. But those changes should also bring about a reassessment of whether or not you've got your estate planning ducks all in a row. Trust and will makes it simple and straightforward. Their easy to use website is simple to navigate and plus all your information, all your documents, they are securely stored with bank level encryption.
- [24:04]
B
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- [24:36]
A
Now let me tell you how it works. First, you post your job. LinkedIn's new feature can help you write job descriptions and then quickly get your job in front of the right people with deep candidate insights. You either post your job for free or you pay to promote, which by the way gets you three times more qualified applicants. And then just sit back and rest easy knowing that you are getting the highest quality candidates. Based on LinkedIn data, 72% of small business owners using LinkedIn said that LinkedIn helps them to find the best candidates. Find out why more than two and a half million small businesses use LinkedIn for hiring today. Find your next great hire on LinkedIn.
- [25:11]
B
Post your job for free at LinkedIn.com howtomoney that's LinkedIn.com howtomoney to post your job for free. Terms and conditions apply. All right, Matt, we're back. Let's get to the ludicrous headline of the week. Luda.
- [25:25]
A
Luda.
- [25:26]
B
This one comes. Does he appear like in the State Farm commercials when you do that?
- [25:30]
A
That's just our new little jingle. Lucas headline of the day.
- [25:33]
B
Okay, I like it. So this one comes from CNBC and it says attending a wedding can cost you as much as a typical month's rent. And this is not getting married. This is not throwing a wedding. This is going to a wedding. This is a study from Zillow which found that going to like being involved in the wedding party, essentially going to the bachelor bachelorette party plus travel that's going to cost the average attendee more than 2,000 bucks, which I think just slightly over the typical renter's monthly rent. And Matt, you and I, we're no longer in the friends getting married phase of our lives. We talked about that recently. We're no longer in the friends that are getting or having kids phase of our lives. Although I guess that still happens on occasion.
- [26:18]
A
Yeah. Hey, you speak for yourself. I hold babies occasionally. You hold babies, too?
- [26:22]
B
I hold babies.
- [26:23]
A
We got plenty of friends who are having babies.
- [26:24]
B
Okay.
- [26:24]
A
I'm just saying, like, personally, we are not.
- [26:27]
B
I'm just saying we're old. We don't.
- [26:29]
A
Fingers crossed.
- [26:29]
B
I go to weddings as much as.
- [26:30]
A
I used to know, and that's actually kind of sad. Weddings are a ton of fun.
- [26:33]
B
They are so fun. So much fun. Well, you definitely go to a lot less than used to photograph them.
- [26:38]
A
Used to be there all the time.
- [26:39]
B
Right. But I guess I just. I feel for young folks who are put in this position. I remember being in that position of someone saying, hey, be in my wedding. And I'm like, yeah, you're my friend. I would love to be in your wedding. And then you, like, they're like, oh, you got to buy this suit and you need to travel here and we're going to throw this party. And like, there were all these expenses that were expected from you as a participant in the wedding. And that can feel. Especially as someone who's trying to be frugal, trying to save money, trying to make progress. And typically when you're in that young phase of life, it's not like you got tons of money rolling in and you're like, oh, yeah, this is no big deal. Like, 2,000 bucks feels like a lot of money.
- [27:20]
A
A lot of money.
- [27:20]
B
Your mid-20s. Right.
- [27:22]
A
But it's a lot of money in your. Even if someone were to be in their mid-40s. I'm not my mid-40s.
- [27:27]
B
Even if you're getting closer.
- [27:29]
A
Early 40s, baby.
- [27:30]
B
Do you think there are still ways, though, for people to be able to tone down the cost of stuff like that? I mean, I think maybe.
- [27:35]
A
I think having conversations.
- [27:37]
B
Yeah.
- [27:37]
A
There's ways to even, I think, be involved in the planning a little bit. Like you were talking about Bachelor. Maybe not the actual wedding, but when it comes to the plans for a.
- [27:46]
B
Bachelor or a bachelorette party, it's like, hey, guys, maybe we don't order that bottle of Crystal hall because it's too. It's too expensive for my taste.
- [27:53]
A
Why it is that anyone, like, why it is that that is even a thing is, like, mind blowing. Like, just the whole club culture, like, ordering a bottle at a club, being there with a bunch of other people who are also doing the same thing. Like, why would you not do that in your own home? Or like a place that you would rent on Airbnb? It's such an old school way of doing things, but it still happens.
- [28:13]
B
Tell your friends, hey, kind of mind blowing. I'll buy the case of beer. Let's do board game night at my house. That's the bachelor party.
- [28:18]
A
Hey, yeah, man.
- [28:19]
B
Make the suggestion like that.
- [28:20]
A
Although I will say, I mean, we want folks to be there for their friends, but yes, if you have, especially if you have other financial goals, I think find a way to do it a little bit more on the frugal side. But prices or what it is that folks are spending on weddings have. It has gone down in the past 20 years pretty significantly.
- [28:38]
B
Really?
- [28:39]
A
Yeah.
- [28:39]
B
Okay.
- [28:39]
A
Well, I mean like not the actual prices. Like when you adjust for inflation, it peaked around 2007, the amount of money that folks were spending on. And so it's, it's. I think it's around like 25% less now than it was 20 years ago.
- [28:52]
B
Weddings just don't that crazy matter in the same way?
- [28:54]
A
Yeah, I think folks are just, they're just spending much less on getting married and all the events surrounding the wedding. I think, mean, folks obviously are still getting married, but they're just not throwing the massive traditional parties that one might assume needs to be thrown as opposed to more alternative ways to elope or to get married at the courthouse. And then, hey, we're renting out our favorite little restaurant here. Everyone's invited. That's basically the reception. Right? Like, think about how much more affordable that is. And throwing like a 150 person wedding. Yeah, that's gonna cost you $30,000.
- [29:25]
B
Well, I think, I think young people too, maybe what this speaks to as well is that they're, they're thinking about those bigger financial decisions that are coming up for them, including wanting to buy a house.
- [29:35]
A
Down payment, man.
- [29:36]
B
Yeah. And so they're saying, like, should we spend all this money on the a party a single day? And I think that, like, I love the party atmosphere. Like, I love that weddings are so much fun. I think back on mine with tons of fondness and I wouldn't want to do it any differently. We also didn't spend too much money on it. But yeah, like, I think if you're saying we're prioritizing this instead, we, we want the long term benefit of owning our own home. Makes sense that you might spend less on a wedding.
- [30:00]
A
I get it. We've already touched on working from home, but the, the trend away from working from home is in full swing. So hybrid work, I think. I don't know. My impression is that it's still pretty normal, but some companies are playing hardball. Their employees aren't loving it. And, man, there are some folks who are just straight up opting to quit their job rather than going back to commuting, you know, driving into the office four or five days a week. And on top of that, many folks are willing to get paid less elsewhere in order to keep that work from home, perk that flexibility. There's a new study from Harvard that found that software engineers and data scientists with multiple job offers, they declined the higher paying ones that required in office attendance in order to keep that work from home flexibility to the tune of 25% less pay, which is significant, man. Like, I would have expected something like, oh, yeah, I'll take a 10% cut, but 25% is major. Yeah, it just shows how haircut. No, man, that's like.
- [30:57]
B
It's like taking it down to the scalp.
- [30:59]
A
Yeah, yeah. Straight edge, undercut, like to the. To the scalp. It just shows. Wait, is that what's called the undercut? Like when you.
- [31:07]
B
Yeah.
- [31:08]
A
On top.
- [31:08]
B
Yeah.
- [31:08]
A
I don't want. You think, like undercut. No, that's an uppercut. Like a punch. Punch to the gut. I didn't want you to think I was confusing, mixing. Mixing up my metaphors, but it shows you how much individuals these days are valuing that perk. And it also, it just makes sense to not just commuting to work. Like, if you think about the total amount of time that you're spending away from home, like we were just touching on people being in their homes. There's a lot of young professionals who have spent a lot of money on their home. Right. Like they spent money on that nice new wallpaper or the nice new piece of art that they've got up on the wall. And if you think about the amount of time you dedicate to getting ready for work, commuting to work, the time actually being at work, then coming back home, think about how little time you spend at home as opposed to some drab office part where if you want to go for a walk after work, you're walking in a parking deck or walking the stairwell as opposed to walking around in your, you know, your beautiful, sunny neighborhood.
- [32:00]
B
I think your tone on this is also revealing, maybe introverted way of existing in the world. I'm more of an extrovert, and so I don't think of going into the office in that same way.
- [32:11]
A
I'M showing my cards. Well, I do think fair enough.
- [32:14]
B
Everybody feels people feel differently about it. Right. And I think most people can admit that like, oh, if I'm stuck in like an hour plus long traffic slog to and from work, that that commute can really can be unsatisfying to say the least. But, but I do think for, especially for younger workers, this is something we've talked about, Matt, but I think it can bring increased connection, increased joy in your work and then specifically more ability to advance. But then it's also true that maybe you've been working in the same industry for 15 years or something like that. You have a lot of connections and you have other priorities and so working from home is something that you're more than willing to trade off less pay for. I do think this perk of work from home is not seen as a perk anymore. It's almost seen as for a lot of people like table stakes, for me to even consider you're working at your job in this place. And I think the companies who are saying, no, no, you're going to have to work in person, they're going to have to come up with a compelling reason why. And part of that is going to have to be increased pay, I think.
- [33:14]
A
Yeah, I agree. I do think it does feel more like a middle aged slash introvert benefit working from home.
- [33:20]
B
Yeah.
- [33:21]
A
As opposed to like that younger but also more extroverted approach.
- [33:24]
B
Well, it's also interesting, right, that this study was done of tech workers and it's easier to take a 25% pay cut when you're talking about a job that pays 200 grand and 150 grand. It's harder to, I think, take that 25% pay cut. If you're talking about a job that pays 100 grand and 75 grand, the stakes are different there too. So I don't know that everyone's willing to make that exact same trade off. Not everyone has the same ability to turn down a much bigger paycheck. And, and part of that is because of the propensity for Americans to be in debt. And there was a study, debt keeps 7 in 10 people from building wealth. This was according to a new survey from the national foundation for Credit Counseling. Not shocking at all really. That's why we're against most forms of debt because they keep you spinning your wheels, they keep you locked in place, they keep you unable to make decisions that are in your best future interest because you're paying for past mistakes. And for most folks too, it takes a while to dig that debt hole and quite a while to dig out of it. So if you find yourself in that scenario, you're one of those seven and 10 people. You're like, I hear Matt and Joel talking about building net worth. This is something that I would love to do, but my goodness, I feel like I just can't get out of this perpetual debt hangover that I'm living in. Facing the facts is crucial because there's no way to really start digging yourself out until you do look at head on and say, hey, list out all your debts, know what you actually owe and figure out what the monthly payments are. That's a really important part of it. Going back to the beginning too. Matt. I think that bare bones budget might be the right thing for some of these people who are saying I can't build wealth because I'm in lots of debt. Cutting back significantly for a time in order to make sure that you can pay off those debts in shorter order. With that kind of goal in mind, it makes it easier for a lot of people to actually make progress not just from a financial standpoint, but from that sort of myopic focus standpoint. And so I would love to see more people who find themselves in that position just kicking it up in top gear to be able to pay off that debt more quickly.
- [35:23]
A
Totally. And at the very least, I mean, I think another way to think about a bare bones budget too is sort of like a financial bug out bag, you know, for the like a bug out bag, like preppers, like folks are just like, oh, in case like you know, it hits the fan or there's a natural disaster, like a lot of times it'll include some non perishable meals, like a flashlight, I don't know, cash, things like that. But something that allows you to hit the road soon without having to sit there and figure it out. Right. And so that's why figuring out a bare bones budget ahead of time before some of the furlough pay takes place. But what you're talking about implementing it right now, not like off way off in the future, but putting it to use right now. But I don't know, I'm just helping folks to trying to help folks understand how to potentially use a bare bones budget. It's just a plan for where the worst financial outcomes were they to happen. It's like a fire drill, right? Like the reason you do a fire drill is like you hope you don't have to do that, but if it gets really bad, you know exactly what it is that you should be doing.
- [36:21]
B
And I do think for some of these people who are saying, I can't build wealth because I'm in debt, like, that might be really bad. Right.
- [36:26]
A
Or they might just be like, finally fed up and tired of the situation that they find themselves in.
- [36:30]
B
And maybe, maybe you implement halfway measures. But I don't know. I think sometimes for a lot of people, like halfway measures can be, you want to make more progress on your goal quickly, and it just depends on where your mindset's at and how fed up you are with the debt that you've got on hand. But if that were me, because I know what's possible, I'm like, I don't want to live in this for longer than I have to. And then once you reach a certain point of stability where you're starting to make. Where you've gotten rid of a lot of that debt, you're starting to make progress on your net worth. That's when you can kick that bare bones budget to the curb and start living a life that's more measured in how you spend so that you're not going back to that place, but you can also enjoy more of that stuff that you care about.
- [37:10]
A
Totally. What are you thinking about college these days, Joel?
- [37:14]
B
I'm not going back.
- [37:15]
A
Have I talked to you about the preparation? Have we talked about that? This guy that's coming up with this, like, alternative plan for his. For his son, I think he's like. I think he wrote a book or something about it, but it's like all these different paths that you can explore, and they each have like, kind of a cutesy name, but allows you to explore, like an entirely different industry, different activities to do. I don't know. It was really fascinating.
- [37:37]
B
But that's cool. So his high school kids, he's like.
- [37:40]
A
He'S got a teenager that. Yeah. That I think he's putting through that. But it did really well. I don't know, just the way him and somebody else got together and created a book on that. Because there are more folks who are just not sure if the high costs of college are going to be worth it for them.
- [37:56]
B
Yeah, no, that's cool. I've noticed. Heard about that often.
- [37:59]
A
Like, one is like the medic. And it's basically like, I wish I knew it better. But for instance, you go to an emt, like, training course, you do this, you work in a volunteer in hospital. It's just all these different sort of avenues of what it looks like to be in healthcare to a certain extent, but like at the end of the day, after you do like the little course, like in that sector, you actually have marketable skills. You have not talents, but abilities, skills that you've learned.
- [38:24]
B
Maybe a certificate of some.
- [38:26]
A
Yeah, exactly. Like one of them. Like, okay, so maybe one was like home building. And I think this certificate costs a lot, like a larger amount of money. Like the outlay is a little bit more, but you learn how to operate bulldozers and stuff like that, which evidently that costs a lot of money. But it kind of makes sense given the destruction that you could wreck on a site. But like, that's something that even if you choose not to be a quote unquote home builder and you're not totally sure what you want to do with your life, at the end of the course, you've got this certificate that then allows you. Well, instead of driving for Uber, which is of course the lowest hanging fruit for a lot of folks because they can just download it onto their smartphone, you can go and work for a company, earn way more per hour in the meantime.
- [39:07]
B
Well, in the very least, you, if you become a homeowner at some point, you have the ability to fix your own home, probably in ways that you wouldn't have before. And you're just getting exposure. I like that because you're getting exposure to. Instead of just saying, hey, you're 18. What is the thing you want to do for the rest of your life? Pick that thing. Right now you're getting exposure to a bunch of different things before you get.
- [39:24]
A
To that point along the way.
- [39:26]
B
Yeah, yeah.
- [39:26]
A
It's fascinating.
- [39:28]
B
Why you're bringing this up is because there was this like Gallup poll, and basically Gallup found that the importance of college is being questioned now more than ever before. Only 35% of Americans think that college is very important. That's compared to 75% in 2010. It's interesting to see that the decline across every subgroup of American life, that nobody really thinks college is as important as it used to be. But that's not surprising to me. Right? And this is why people are coming up with alternative routes to teach their kids or to help their kids figure out what they want to pursue in the future before they just go off, send them to an expensive four year school. I think it's escalating costs, mounting student loan debt. Those are big parts of the reason. And we're just seeing a higher percentage of college graduates not putting their degree to good use, feeling like they could have gone without and then they wouldn't have been saddled with that debt, I just, I don't know that a college degree is the same crucial stepping stone to living a middle class lifestyle as it once was. I mean, to be fair, the other side of the equation, the average college graduate still makes a lot more over their lifetime than someone with just a high school diploma. But the value proposition isn't what it used to be. And I just don't know if that reality is going to hold over the next 30 years in the way that it has over the past 30.
- [40:46]
A
Exactly. Yeah. We should mention one silver lining. Yes, overall college costs are going up, but so are the discounts that colleges are offering. And we got to mention friend of the show Ron Lieber, because he reports that the average discounts for full time students at private colleges is 56%, which is. That's a big discount, man.
- [41:06]
B
Yeah, so basically they say it's going to cost 40 grand and then it costs nowhere near that ultimately because of.
- [41:11]
A
Less than half of that aid that's offered. Yeah, yeah, you're paying nowhere near that. The shockingly high list price, it is not the real price. This is the good news, but only for the folks out there who know this and who are acting accordingly, who are pushing for financial aid, who are pushing for just different merit aid that might be available to them, and who are searching for schools that offer more of both of this aid. But still, the lack of transparency about what discounts are offered and to whom it is being offered to is. It's a frustrating part of the process. But certainly know that the list price is not the actual cost of attending that school. Yeah.
- [41:47]
B
All right, Matt, let's quickly touch on. The Nobel Prize in Economics was awarded to three different economists, econ, earlier this week. I'm not going to lie and say that, oh, I followed their work closely or anything like that, because that's not true. I did not. But in reading about kind of why these guys won the Nobel Prize, that I thought was at least worth mentioning because their work centered around explaining and quantifying the reality of creative destruction, which is an important concept in economics. And I don't know that you and I have touched on it a lot because we mostly talk personal finance, microeconomics. But this is truly one of the most important features of our economic system. And it ensures that the top dogs aren't going to be there forever. It realizes that innovation drives competition and increases standard of living for all of us. And then it drives down prices as a whole over time. And while it can suck, I guess, to be in the Industry that's on the fritz, that's kind of in decline. Like being in typewriters. Right. When computers are coming around, word processors. Yeah. You're like, no, but ultimately it's better for humanity as a whole. And so we shouldn't want the typewriter industry to stick around. Makes you think of this happens all the time. All the time. And we just assume that the top dogs are going to be there forever. So like Kodak, they found out about digital technology in photography before anybody else and they kind of sat on it and then they were usurped by a bunch of other players in the photography industry. Same thing even with Google and AI right now. I think Google wrote this incredible. They had a lot of in house work on that. They wrote a white paper on it in 2017. And other people have surpassed them quickly because Google didn't want to cannibalize the money maker, which was paid search ads.
- [43:32]
A
Google adsense.
- [43:33]
B
Yeah. So it's just fascinating to see that the companies you think right now are unstoppable. They probably won't be forever. And if history has anything to say about it, creative destruction means that, yeah, some companies are gonna lose, but that we're all gonna benefit from that losing.
- [43:50]
A
Yeah. And to allow for that creative destruction is so important. And this is not to go take a political turn or anything, but this is like my beef with the government shutdown. Cause what's at the center of the government shutdown, it's the healthcare subsidies. Right. And so which is the government reducing the price of a system that is not working very well. And so the fact that the government is subsidizing the cost of healthcare, it only like, do the insurers have any. And the healthcare providers, do they have any incentive to reduce the prices or to get creative or for there to be more competition?
- [44:21]
B
No.
- [44:21]
A
And so, but there's already very little.
- [44:23]
B
Incentive based on the way that the structure is set up. And yeah, so actually, but there, yeah.
- [44:28]
A
I want to see more creative disruption, specifically in healthcare because that's something that a lot of folks are talking about these days. There need to be more competitors, there need to be more alternatives. And maybe this is on my mind. We never listened to the radio, but we were in. Well, we were in a loaner vehicle yesterday and the radio was on and there was an ad for a health sharing company that I never heard of. And my daughter was like, well, what's that? And I got to explain to her what that is. And that's how. That's actually something that we are on. This is not that particular one, but just explaining basic, essentially creative distraction and how like this is coming up because there is a desire for there to be alternatives.
- [45:04]
B
So favorite podcast episode I've listened to recently was specifically on the healthcare topic and it was actually an episode from like 10 years ago from this podcast called Econ Talk. Oh yeah. And man, which is just one of the greatest if you care about economics at all. And Russ Roberts is such a great host. Been doing it for a long time.
- [45:22]
A
But he's a very smart individual.
- [45:25]
B
Yeah, he spoke with a guy who started the Surgery center of Oklahoma and they don't take insurance. And he talked about the way they've created an actual free market health system inside of their location and this has spread to many other parts of the country. But like that's just not how it works for the most part in health care. It is such an opaque, non market based system. And, and so I love seeing stuff like that pop up. And actually people with insurance go to the Surgery center of Oklahoma or other similar places because it's actually cheaper to pay the cash rate at a place like that than it is to pay the insurance adjusted rate in going to your local hospital. So.
- [46:06]
A
And guess what? They're probably getting better service, better providers, better surgeons because of the fact that they don't have to deal with all the red tape, they don't have to deal with insurance and they're attracting the talent. They're offering a superior product essentially. And then patients are going there because they want that superior service, superior product. Okay, was that we dabble too much in politics. Saved it for the end there. How about that?
- [46:29]
B
I think we're good. But if you have anger emails, send them directly to Matt.
- [46:32]
A
Send them to Joel.
- [46:33]
B
How domoneypodmail.com we read them all. We do, we do. Please reach out, holler at us. We love to hear from you and we hope you have a great weekend. But until next time, Matt, Best friends out.
- [46:41]
A
Best music.
- [46:57]
B
If you've been listening to the show for a while, you know we care a lot about being intentional with our money and that includes how we give it away.
- [47:04]
A
That is why we are big fans of Daffy, which is a modern donation platform and app for charitable giving that is also a donor advised fund, which means you can contribute cash, stock, ETFs or even crypto. You take the tax deduction right away and then send the money to over one and a half million charities, schools and other faith based organizations whenever you want with the funds that you've already set aside.
- [47:28]
B
I've personally been using it to send recurring donations for causes I really care about, like my church and a local nonprofit called Blueprint 58.
- [47:36]
A
Same here. Yeah, I've got recurring donations going to my kids school. DAFI also keeps your receipts organized for tax season. But the best part is DAFI itself is a nonprofit with a mission to help people to be more generous more often. So if you want a better system for your giving, head to Daffy.org howtomoney and for a limited time you'll even get $25 to give to the charity of your choice. Visit Daffy.org howtomONEY today Got a rental.
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