How to Money Podcast Summary: Friday Flight - Appealing ARMs, Iterating Investments, & College Cost Cuts #960

Release Date: March 21, 2025

In episode #960 of How to Money, hosts Joel and Matt delve into a variety of pressing financial topics, including the nuances of adjustable rate mortgages (ARMs), strategic investment adjustments amidst market volatility, and innovative approaches to reducing college costs. This comprehensive discussion provides listeners with actionable insights and expert advice to navigate their financial journeys effectively.

1. Navigating Consumer Tactics Amid Tariffs

The episode kicks off with a conversation about how companies may leverage potential tariffs to accelerate sales. Joel shares a personal anecdote:

Joel [03:29]: "So, but hey, we're going to honor that price for now. You just got to let us know asap."

This tactic prompts consumers to make quicker purchasing decisions to avoid anticipated price hikes. The hosts caution listeners to evaluate the necessity of their purchases critically and resist high-pressure sales tactics that may not reflect actual cost increases.

2. The Housing Market: Adjustable Rate Mortgages (ARMs) Explored

Joel and Matt shift focus to the housing market, discussing the rising costs of homeownership and the role of ARMs in alleviating monthly financial burdens.

Matt [04:32]: "Buying a house today is an expensive endeavor. I think that's the understatement of the century."

Key Points:

• ARMs vs. 30-Year Fixed Mortgages: ARMs offer lower initial interest rates compared to fixed mortgages, potentially increasing housing market liquidity.

  Matt [05:01]: "Contract, things might be flowing a little bit more and it's going to get you a lower rate, but it won't be locked in for forever."

• Pros and Cons of ARMs: Suitable for buyers planning short-term homeownership or those prepared for potential rate adjustments in the future.

  Joel [06:06]: "If you can get a significantly lower rate by opting for an ARM and let's say you're at least banking ahead, you're planning ahead for potentially higher rates down the line, it's an okay move."

• Political Influence on Housing Supply: The Trump administration's proposal to utilize federal land for housing aims to increase supply and reduce costs.

  Joel [07:39]: "The Interior Department and HUD are set to work together in an attempt to increase housing supply by allowing building on federal land that's underutilized."

• Regional Housing Trends: Contrasting Austin's declining rents due to a construction boom with California's stagnant housing affordability hindered by the NIMBY (Not In My Backyard) movement.

  Matt [09:07]: "We will continue to see population declines from California and increases in states like Texas where there has been increased supply."

3. Strategic Investing Amid Market Volatility

Addressing recent stock market fluctuations, Joel and Matt emphasize the importance of maintaining a long-term investment perspective and avoiding reactionary decisions.

Joel [13:13]: "It's a bad idea to make any changes right now."

Key Insights:

• Behavioral Finance: Investors often react emotionally to market downturns, leading to poor investment choices. The hosts urge listeners to stay calm and adhere to their investment strategies.

  Matt [13:37]: "Folks politics can get in the way of their investing... That's like on one hand we'll say oh no, no, the volatility is par for the course."

• Dollar Cost Averaging: Consistently investing a fixed amount irrespective of market conditions can mitigate risks and capitalize on lower stock prices.

• Visualization Techniques: Connecting with one's future self can reinforce investment discipline. Joel mentions a Fidelity study where visual prompts increased long-term investment behavior.

  Joel [17:33]: "People with low balance savings accounts were 14% more likely to invest in a long-term savings product when they received a notification with language prompting them to think about the future first."

• Avoiding Knee-Jerk Reactions: Historical market resilience, from the dot-com bubble to the Great Recession, highlights the benefits of staying the course.

  Matt [16:07]: "It was like within the current administration... something's got to change."

4. Redefining Travel and Hospitality Finances

Joel shares personal plans for a summer road trip with his family, highlighting cost-effective travel strategies like using Airbnb.

Joel [21:28]: "Head towards Seattle for my cousin's wedding by car. I'm already plotting all the different Airbnbs we can stay at along the way."

Discussion Points:

• Airbnb Hosting: Matt discusses the benefits of hosting on Airbnb to earn extra income while traveling.

  Matt [22:10]: "There's nothing like a cross country road trip during the summer months. And staying at Airbnbs is a great way to experience all the different towns and cities on the road."

5. The Allure and Pitfalls of Exclusive Private Clubs

Exploring the surge in high-cost private clubs, particularly in Miami, Joel and Matt critique the trend of exclusivity tied to hefty membership fees.

Matt [23:28]: "Man, I thought folks who I knew that were joining golf clubs this time of year."

Key Observations:

• Cost vs. Value: High membership fees often don’t correlate with proportional benefits, leading to questionable financial decisions.

  Matt [24:08]: "You want to join the elite, you got to fork over a $9,000 joining fee and then of course, many thousands in fees every single year as well."

• Conspicuous Consumption: The hosts advise seeking meaningful connections through affordable means rather than expensive club memberships.

  Joel [27:33]: "Instead of just drinking the fancy wines."

6. Optimizing Daily Expenses: Services vs. DIY

The conversation turns to the growing trend of outsourcing mundane tasks, such as hiring someone to wait in line, and its implications on personal finances.

Joel [28:50]: "You can use sites like TaskRabbit or skip the line. I'm curious from your point of view, man, would you pay for that? I guess no, you wouldn't."

Insights:

• Value of Time vs. Money: While outsourcing can save time, it often leads to unnecessary expenditures that don’t offer significant value.

  Joel [29:24]: "Which means if I want to keep doing that, it just means my grocery bill is going to inflate."

7. Tackling Higher Education Costs

Joel and Matt address the escalating costs of college education and present strategies to minimize financial burdens.

Matt [32:08]: "The decision to get a college degree is less clear cut than it used to be."

Strategies Discussed:

• Negotiating Financial Aid: Highlighting success stories like Sierra Billy, who secured free education through relentless negotiation.

  Joel [34:22]: "She locked horns with the financial aid department. She started negotiating with them, pushing back on what they were offering her."

• Free Education Programs: Harvard’s expansion of free tuition for families earning under $200,000 signifies a positive trend towards affordability.

  Matt [32:28]: "They're just waiting to get a solid arsenal of reviews before they, like, double the price."

• Resource Utilization: Encouraging the use of tools and websites that list colleges offering free degrees to help prospective students make informed decisions.

8. Smart Choices in Cell Phone Services

The hosts examine T Mobile's planned price hikes and explore more affordable alternatives without compromising service quality.

Joel [36:18]: "But when the big cell phone providers say, hey, prices are going up, it's so easy to say, not for me they're not."

Recommendations:

• Switching Providers: Emphasizing the potential savings by moving to smaller carriers like Mint Mobile, Boost Mobile, or US Mobile.

  Matt [37:50]: "The great thing about switching cell phone providers too is that you save a ton of Money, but you're not downgrading in a serious way."

• Assessing Trade-Offs: Balancing cost savings with service quality to ensure essential needs are met without overspending.

  Joel [39:10]: "Your shoes at Walmart or pay less versus one of the name brands, it's not the same."

Conclusion

In this episode of How to Money, Joel and Matt provide listeners with a wealth of knowledge spanning housing, investing, education, and everyday expenses. By dissecting complex financial topics and offering pragmatic advice, they empower individuals to make informed decisions that align with their long-term financial well-being.

Listeners are encouraged to stay informed, question high-pressure sales tactics, opt for strategic financial products like ARMs when appropriate, maintain a long-term investment perspective, and seek out affordable alternatives in various aspects of life. These strategies collectively contribute to building a resilient and prosperous financial future.

Notable Quotes:

• Matt [04:32]: "Buying a house today is an expensive endeavor. I think that's the understatement of the century."
• Joel [06:06]: "If you can get a significantly lower rate by opting for an ARM and let's say you're at least banking ahead, you're planning ahead for potentially higher rates down the line, it's an okay move."
• Joel [17:33]: "People with low balance savings accounts were 14% more likely to invest in a long-term savings product when they received a notification with language prompting them to think about the future first."
• Matt [32:08]: "The decision to get a college degree is less clear cut than it used to be."
• Matt [37:50]: "The great thing about switching cell phone providers too is that you save a ton of Money, but you're not downgrading in a serious way."

For more insights and personalized financial strategies, tune into future episodes of How to Money and visit howtomoney.com.