How to Money Podcast Summary: Episode: Friday Flight - Brainless Borrowing, DOGE Dividends, & Abroad on a Budget #951
Release Date: February 28, 2025
Host: Joel and Matt
Sponsored by: Navy Federal Credit Union, Capital One, Oracle

Introduction

In Episode #951 of How to Money, co-hosts Joel and Matt delve into three primary financial topics: the pitfalls of irresponsible borrowing, the speculative promise of DOGE dividends, and savvy strategies for traveling abroad on a budget. The episode is packed with actionable insights, expert advice, and candid discussions aimed at empowering listeners to make informed financial decisions.

Brainless Borrowing: Avoiding Costly Debt

Joel and Matt kick off the episode by addressing the dangers of high-interest and short-term borrowing options that can trap individuals in a cycle of debt. They highlight various predatory financial products, emphasizing the importance of building an emergency fund to avoid reliance on these costly options.

Key Points:

• High-Risk Debt Products: The hosts identify subprime credit cards, payday loans, peer-to-peer lending, and Buy Now Pay Later (BNPL) services as some of the worst places to borrow money. These options often come with exorbitant fees and interest rates that can quickly escalate debts.

• Earned Wage Access (EWA): Joel describes EWA as "a modern, slicker version of payday loans" that appear benevolent but can be financially detrimental due to hidden costs and fees.

• Importance of Emergency Funds: Emphasizing financial preparedness, Matt reiterates the necessity of an emergency fund, updating the recommended amount to account for inflation. They conclude that a minimum emergency fund should now be $3,045, up from the previously suggested $2,467.

Notable Quotes:

• Joel (33:32): “We always talk about how Americans don't take enough of their vacation time. If they have, like, a specific amount allotted, they never take the full amount.”
• Matt (31:27): “Borrowing costs are up on every debt vehicle these days, making every single form of debt more precarious.”

DOGE Dividends: Separating Fact from Fiction

The conversation shifts to the controversial topic of DOGE dividends, a proposed initiative by the federal government to provide direct payments to citizens by leveraging savings from cutting federal spending. Joel and Matt scrutinize the feasibility and likelihood of such a program.

Key Points:

• Proposed Dividends: President Trump floated the idea of using savings from DOGE (assumed to be a government initiative) to issue dividends, potentially up to $5,000 per household.

• Skepticism on Implementation: Both hosts express doubt about the practicality of disbursing such large sums, citing the massive scale of federal budget cuts required, especially in entitlement programs which make up two-thirds of the $7 trillion budget.

• Comparison to Past Promises: Joel compares the DOGE dividend proposal to the student loan forgiveness promises, suggesting that like previous initiatives, it may fall short of expectations due to political and economic constraints.

Notable Quotes:

• Joel (35:29): “It feels like another pipe dream. It’s just something where it sounds so promising, and you’re left disappointed.”
• Matt (36:33): “There's zero sign that Doge is going to find a way to slash government spending anywhere near that level.”

Abroad on a Budget: Maximizing Travel Savings

Joel and Matt provide practical advice for listeners looking to travel internationally without breaking the bank. They discuss strategies to minimize travel and accommodation costs, ensuring a fulfilling experience without excessive spending.

Key Points:

• Choosing the Right Airports: The hosts recommend flying from airports that historically offer lower fares. They list Fort Lauderdale, Orlando, Las Vegas, Chicago, and LaGuardia as some of the most cost-effective domestic departure points, contrasting them with more expensive options like Washington Dulles.

• Currency Exchange Benefits: Matt highlights the advantage of a strong US dollar against currencies like the euro and Japanese yen, which makes expenses abroad more affordable. This favorable exchange rate allows travelers to enjoy a more extravagant experience without exceeding their budget.

• Accommodation Tips: Joel suggests leveraging platforms like Airbnb for flexible and cost-effective lodging options. They also mention Airbnb’s co-host feature, which can help manage and potentially monetize one's home while traveling.

Notable Quotes:

• Joel (08:24): “If you live in Washington, D.C., it's not like you're driving down to Fort Lauderdale to save money on your ticket.”
• Matt (13:52): “Your money goes further in many overseas countries and destinations right now. It feels like you're living above your means because the dollar's strong.”

Credit Cards and Hidden Benefits

The discussion transitions to the often-overlooked secondary benefits of credit cards beyond standard cash back and travel rewards. Joel and Matt emphasize the importance of leveraging these features to maximize financial benefits.

Key Points:

• Secondary Benefits: Benefits such as cell phone insurance, no foreign transaction fees, trip cancellation coverage, baggage delay insurance, purchase protection, and extended warranties provide additional value to cardholders.

• Tax Implications: They caution that while most credit card rewards aren't taxed, referral bonuses may be. This is an essential consideration for those actively promoting credit products.

Notable Quotes:

• Joel (15:26): “You can snag cell phone insurance or no foreign transaction fees or trip cancellation coverage...”
• Matt (16:58): “Don't be surprised if you receive a 1099 in the mail for that. Yeah, heads up.”

Tax Preparation Tips: Avoiding Scams

Joel and Matt advise listeners on how to navigate tax season safely, emphasizing the importance of choosing reputable tax preparers to avoid fraudulent schemes promising unrealistic refunds.

Key Points:

• Ghost Tax Preparers: They warn against preparers who promise unusually large refunds without knowing the taxpayer’s specifics, as these individuals may file fraudulent returns and disappear after receiving a percentage of the inflated refund.

• Choosing Reliable Services: For straightforward tax situations, using reputable tax software like Cash App's service (formerly Credit Karma Tax) is recommended. For more complex financial situations, hiring a legitimate tax professional is advised, ensuring the preparer has a valid Preparer Tax Identification Number (PTIN) and a physical office location.

Notable Quotes:

• Joel (27:45): “Don’t go rogue on such an important task as you’re doing your own homework.”
• Matt (28:00): “It's hard for me to hear you say ghost preparer and not think of ghost peppers.”

Final Thoughts: Building Financial Resilience

In wrapping up, Joel and Matt reiterate the importance of financial preparedness, whether it's avoiding bad debt, scrutinizing government financial promises, or making the most of travel and credit card benefits. They urge listeners to stay informed and proactive in managing their finances to lead a prosperous and secure life.

Notable Quotes:

• Joel (34:33): “We need to be accurate with our recommendations.”
• Matt (33:38): “Maybe we will update the site and start recommending for folks $3,045 because that’s a significantly larger amount.”

Conclusion

Episode #951 of How to Money offers a comprehensive exploration of critical financial topics, blending practical advice with insightful analysis. Joel and Matt provide listeners with the knowledge and tools necessary to navigate the complexities of personal finance, from avoiding detrimental debt to making informed travel choices and maximizing credit card benefits. Their candid and engaging discussion ensures that both novice and seasoned individuals can glean valuable strategies to enhance their financial well-being.

For more detailed discussions and additional resources mentioned in this episode, visit howtomoney.com.