Friday Flight - Brainless Borrowing, DOGE Dividends, & Abroad on a Budget #951

Summary

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

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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.

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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.”

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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.

Transcript

[Capital One Ad]

This podcast is sponsored by Capital One. In households. We subscribe to everything music, tv, even dog food. And it rocks until you have to manage it all, which is where Capital One comes in. Capital One credit card holders can easily track, block or cancel recurring charges right from the Capital One mobile app at no additional cost. With one sign in, you can manage all your subscriptions all in one place. Learn more at Capital1.comsubscriptions Terms and Conditions apply.

[Joel]

This episode is brought to you by Navy Federal Credit Union. At Navy Federal, it's been their mission to help members of the military, veterans and their families reach their financial goals. There are a lot of great flexible savings and investing options like certificates with sky high rates that allow you to add money anytime throughout your term.

[Matt]

Plus, Navy Federal gives you access to financial advisors and online tools to help you find the investing and savings plan that work for you. Sign up@navy federal.org Navy Federal Credit Union members are the mission. Savings products insured by NCUA Investment products are not insured, not obligations of Navy Federal and may lose value.

[Oracle Ad]

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[Joel]

Cloud bill in half if you move to OCI. Minimum financial commitment and other terms apply. Offer ends March 31st. See if your company qualifies for this special [e-mail] strategic. That's oracle.com strategic welcome to how to Money. I'm Joel.

[Matt]

I'm Matt.

[Joel]

Today we're talking about brainless borrowing, Doge dividends, and abroad on a Bud.

[Matt]

Doge dividends. Joel, that's a headline that's like specifically written for the Friday flight. Yes, because of the alliteration.

[Joel]

Of course.

[Matt]

Your favorite thing.

[Joel]

It's what I do best.

[Matt]

Matt, what's this thing about Nuuly so N U U L Y right?

[Joel]

So I thought this, and this is a particular website company, but there are other ones that do similar things, apparently, like rent the Runway or whatever. But you and I, a closed website. We haven't. Yeah, we haven't talked about this actually on the show, but we got nominated for an iHeart podcast award in the best business category, Best business and finance podcast. And we're probably going to lose. Like, let's be honest.

[Matt]

There's a chance we win.

[Joel]

I mean, well, we're at one out of five nominated, but there's, I think, a less than 20% chance that we win.

[Matt]

20% chance of us making it.

[Joel]

Joel. I don't know. Maybe we're probably not. But Emily, my wife, and I were like, let's go down for it. The awards are here in a little over a week. You sadly can't make it. So if we do win, I'll be hoisting the trophy alone, without you, which will be sad. But again, we're not winning. Okay, so Emily's like, I need a fancy dress for this occasion. We're going to, like, a podcast award show, right? Like, don't you walk down the red carpet and you wear something nice? What am I going to wear? And those kinds of dresses are, I guess, are typically pretty expensive. And she's like, why don't I just rent something? And so we've never tried one of these websites before. I don't know if guys do it or not. Like, I think my buddy Josh has done something called Stitch Fix before. So I think some guys do rent clothes.

[Matt]

Fix was like, they send you a box of clothes.

[Joel]

Maybe that's it. Maybe you keep it.

[Matt]

Stitch Fix.

[Joel]

I don't know. I don't know how that works. But we looked into. Into this, into Nuuly, and so she's going to get like, like a $600 dress for this occasion. You get like six pieces for like 100 bucks, and then you can cancel at any time. So it's one of those things where you're not obligated to rent clothes from them for six months or a year or anything like that. So especially for, like, a special occasion, if you don't want to go fork over big bucks for the nice dress for the. When you are, you know, how often are these events actually occur?

[Matt]

Right?

[Joel]

It's kind of true.

[Matt]

So, I mean, you said 100 bucks, and that still sounds pretty dang expensive. It's just like, is it worth it, though, to spend, you know, I guess, six times that in order to get the $600 dress? And I think it might. This is probably why it makes more sense for ladies than it does for men. Because with men's clothing and fashion, generally speaking, there's not a whole lot that changes. Right. Like, you get yourself a good fitting tux or suit, and you're going to wear that thing for like, 20 years where it's just. It is a little bit when it comes to the ladies.

[Joel]

Well, I think.

[Matt]

Is that a part of the pink tax that I think it is? I think there's just different standards as to what's expected of the ladies out.

[Joel]

There, which is a bummer. Like, you might love the dress and, hey, it's fun for this, but might not.

[Matt]

Do you want to wear it again?

[Joel]

Right. Yeah, I know there's, like, a different thing about wearing the same dress to fancy occasion. So if I was a stigma test.

[Matt]

If I was a lady, I would 100% get an awesome dress, and I would wear it to everything. Like, to all the fancy events. It's just like, well, there's Matt.

[Joel]

Well, well. Who literally wears the same shirt or the same outfit like, six or seven days in a row.

[Matt]

That's in the winter. I can. Because I'm like, you wear the undershirt and, like, I'm like, my outer button up shirt, it doesn't get dirty. And so I literally have the ability. I will literally wear a new fresh shirt on Sunday, wear it all throughout the week, and then by the time Friday rolls around and I'm like, all right, trust me. I've noticed it's starting to get a little bit stale. It doesn't get stinky because, again, the shirts that touch the skin, you got to. Those are going straight to the hamper after one use. Socks, underwear, T shirts. One use. This is what we're teaching our kids. But everything. I was like, pants. You know, pants, you can get several days out of. Shorts. I don't know, it depends on the shorts. But maybe you can get a couple.

[Joel]

Days out of that jacket in those shorts.

[Matt]

Jackets, jeans, like, these are things that you rarely need to wash, which is, of course, gonna lengthen the life of your clothing as well. But I think that's fun, though, that Emily is. She's getting all dolled up, getting dressed up, and I didn't think. I didn't realize it was gonna be like the Oscars, but I don't know. It is.

[Joel]

We'll see. I idea what to expect, but I.

[Matt]

Think, you know, y'all show up and everyone else is wearing, like, jeans and.

[Joel]

T shirts that might be the case.

[Matt]

Hey, no, y'all.

[Joel]

I'm okay being overdressed. You know, it's just like.

[Matt]

That's all right. We've got a gala to attend after this.

[Joel]

That's right, losers. We didn't dress up for this. We dressed up for the other thing. Okay. Yeah.

[Matt]

I love it.

[Joel]

I'll let you know if we. If we win.

[Matt]

But if we win, I'm holding my breath. You need to FaceTime me live. And I'll be like. Well, you know, like the little microphone. Yeah. All right, buddy. That'll be me.

[Joel]

Yeah.

[Matt]

Yelling through the phone.

[Joel]

I look forward to it. All right, let's move on. Matt, let's get to the Friday flight. A sampling of stories we found interesting this week. Let's kick it off. Let's talk about travel. If you want to fly for less money, it's not all about finding the right discount airline or snagging a sweet sale price. Like, wait, I think Southwest had a 30% off sale on certain flights this week.

[Matt]

I saw that.

[Joel]

Which is awesome.

[Matt]

Yeah.

[Joel]

You might be able to fly for less, Right. If you find one of those sales. But it would also be smart to fly or to attempt to fly from the airports that offer the least expensive fares most regularly. So to help us out here, the Bureau of Transportation Statistics, they listed the lowest cost airports to embark from. And, Matt, I think we should name them, right? Because if, you know, let's do it. The airports that traditionally offer the lowest prices, hey, you might want to, like, start looking to see whether you can find a flight from there as opposed to maybe the airport that's closest to your house. So Fort Laud, Lauderdale, Orlando. So we got two Florida airports first off, but then Vegas, Chicago, and LaGuardia. Those are going to nab you. The lowest domestic fares on average. Dulles in Washington, D.C. that's the most expensive airport to fly from. And the average price difference, Matt, between flights from Fort Lauderdale and from the Washington Dulles Airport, it's more than $200 a ticket.

[Matt]

That's pretty steep.

[Joel]

So if you live in Washington, D.C. it's not like you're driving down to Fort Lauderdale, right, to. To save money on your ticket. But I think this just goes to show that if. If you only shop at the airport that's nearest you, you might be leaving out other potential options to reduce the cost of your travel. So shop around, set fare alerts, but also look to cheaper airports that you might be able to reasonably fly from.

[Matt]

Yeah, I noticed you said laguardia. Does everyone say laguardia? Or laguardia.

[Joel]

Guardia.

[Matt]

Is it. Why is it Guardia? Because it's spelled Joseph.

[Joel]

What's his last name?

[Matt]

Oh, is that, I don't know who that is.

[Joel]

Based after a former New York City mayor.

[Matt]

Oh, yeah.

[Joel]

Charles LaGuardia.

[Matt]

Well, because like the, like the way you spell guard, like you don't pronounce it. Like guard the base, you say guard. Okay, small tangent over. So regarding the different, regarding the different airports, what's so fascinating too is the fact that one of the biggest differences or one of the biggest reasons for the price discrepancy is because of competition.

[Joel]

Yeah.

[Matt]

And so specifically Dulles, like, I was really fascinated. I'm like, why is it much more expensive? Is it because that's where all the politicians fly into and they are price insensitive? Perhaps. But it also has a lot to do with the different airlines that service that airport. And there's a lot of competition there. But specifically, United airlines has over 70% market share. They basically have a stranglehold, which means they can set the prices high and you don't have many other options to get around that as opposed to.

[Joel]

Why do you think Atlanta wasn't on that list?

[Matt]

Yeah, because we got tons of different options.

[Joel]

No, no, no. It wasn't on the list because Delta probably runs 60 plus percent of the flights out of our airport.

[Matt]

I thought you meant to the most expensive list. We do have a lot of options, but I was going to say guess the market share of United at Fort Lauderdale. So at Dulles, it's 70% at Fort Lauderdale. Any guesses?

[Joel]

I'm gonna guess 15. 8.

[Matt]

Okay, 8%. So. And that's much lower compared to the top three were Spirit, JetBlue and Southwest, which like the low cost, affordable airlines, provides that competition. And that's a huge driving factor behind why there's such a price discrepancy as well.

[Joel]

And so when there is a major airline based out of that city who runs, they kind of run the show, they're going to have a lot more pricing power and they can kind of keep some people out. I mean, Southwest came to Atlanta a few years back, but they're even talking about reducing flights. So I'm guessing the situation, the pricing situation in coming to and from the Atlanta airport is only going to get worse. Might get a little stiffer in the coming years. Okay, let's keep talking about travel, Matt. As more airline frequent flyer programs have put the emphasis on how much you spend versus how often you travel, it's all about, you know, spending more money on tickets instead of just flying regularly, folks are opting to play the field in attempts to save money. They're saying, eh, I don't think I'm going to book with the airline. Normally I go with a particular airline because I'm used to flying them. But people are saying I'm going to be a little less loyal moving forward. And we've always said that being loyal to one brand or one airline, it's a bad idea because it's going to cost you money. Right? But even for normal people who only travel a few times a year, some of those loyalty perks, like when combined with, let's say, a proprietary credit card, they could result in some pretty sweet benefits for travelers, potentially enough to justify a higher ticket price. But I think those days are coming to an end. And we are all for loyalty in some areas of life, right? Like friendship and love. Like Matt, you and I, we're loyal to each other. We're going to be best friends.

[Matt]

Yeah, boy.

[Joel]

Forever.

[Matt]

But move over to Zach Braff and Donald Faison.

[Joel]

We're better than that.

[Matt]

We're real friends. We're real, real friends.

[Joel]

They're real friends too, right?

[Matt]

Evidently.

[Joel]

Yeah. We haven't gotten that T mobile commercial yet though.

[Matt]

You know, Kate and I've debated watching Scrubs with the kids because it was one of our favorite shows back in college. And every time those T mobile commercials come on, they just totally crack up. They think that they are so funny and they are. And Kate and I looked at each other, we're just like, oh my gosh, they would so enjoys Scrubs. I'm not totally sure how appropriate that would be for a six year old, seven year old.

[Joel]

That's a good question. Okay, so loyalty, it's great in some areas, not great in others. Specifically when we're talking about airlines for most people. Right. So yeah, if you're in the position, if you find that your perks have diminished from the airline that you typically fly with, but the price of your ticket hasn't and airfares are going up, folks. Look elsewhere. Google Flights is like the proper place to start searching.

[Matt]

Oh yeah.

[Joel]

Be more interested in paying the least amount of money for the fare as opposed to going with the airline you're used to flying.

[Matt]

Yeah, shopping around is going to pay off, man. But on top of that, every trip is on sale because of the current strength of the dollar. Friend of the show, Elaine Glusack, she wrote about this over in the Times and she found that a hotel room in Europe that cost $224 last summer cost only $208 today. So it's not just that the dollar is more competitive against the euro, but the Japanese yen, the Canadian dollar, they have also become weaker compared to the US Dollar, basically because of favorable exchange rates. Your money goes further in many overseas countries and destinations right now. And so don't only think about the cost of the flight in and of itself. Granted, that is a huge part of the cost of a vacation. But also think about how much everything else is gonna cost during your stay as well. Gives you the chance to go abroad and maybe live a little bit beyond your. Not beyond your means, but maybe just slightly fancier trip than maybe what you're used to.

[Joel]

It feels like you're living above your means because when you go over there, you're like, wait a second, my money goes further. And so it feels like with every purchase you make or going out to eat or something like that, or the hotel that you're paying for, it should all cost a little bit less because the dollar's strong.

[Matt]

Yeah, it feels like this is everything. 10% off. That's what it's going to feel like.

[Joel]

Exactly, exactly. Which is pretty sweet feeling. Matt, let's talk about credit cards. I've seen that article discussed the secondary benefits of credit cards and that's something that we sing the praises of, that it's not just the 2% cash back or the travel rewards, although those are great. There are other benefits of credit cards as well, and some of them don't get touted all that much really, but they can be incredibly rewarding. And so this author at cnet, they got a new battery for their iPhone without having and paying for AppleCare. And that was thanks to the Chase Freedom Flex card, saved them 90 bucks because that's what it would have cost otherwise. I think this is. I just wanted to use this as a reminder to tell people not to sleep on the secondary benefits that credit cards have to offer. Like you can snag cell phone insurance or no foreign transaction fees or trip cancellation coverage or baggage delay insurance or purchase protection or a longer extended warranty. There are just so many things that are under the surface oftentimes that most people don't realize. They're like, oh, I get the 2% cash back or I'm getting the 5% back when I, when I pay for gas. And those things. That's awesome. Like, I'm all for those rewards. But then there are these other ones that most people, I think they just forget or they neglect to think about and they can be pretty rewarding too.

[Matt]

Don't forget about the cdw, man, the collision damage waiver. Get that primary benefit, that stuff when.

[Joel]

You travel and that's so expensive, that's a massive. If you travel to say at least a week, a year, you want that benefit that you would use regularly as.

[Matt]

Well as opposed to just when things go poorly. Yeah, yeah, but I guess if you get in a wreck, things have gone poorly, but it's, it's paying for the insurance to make sure that you are covered in case something like that were to happen. One of the other benefits too is that those credit card, credit card rewards, they don't get taxed, which of course we're thankful for. It's one of the only ways that we can avoid the tax, man, the Thrifty Traveler, they had an article about this particular subject and it's worth mentioning that some kinds of credit card rewards actually will result in taxation. You don't have to worry about your sign up bonus that doesn't get taxed. It's treated as a rebate essentially for your spending your 2% cash back. Your travel points, they're not going to get taxed either. But and this is news to me, man, referral bonuses, they do get taxed. I didn't know this. And so if you send your friend a link to sign up for one of your favorite cards, if you are one of those credit card optimizers out there and you're trying to get everyone on board, those credit card pushers, slash, you're also trying to like garner your own rewards. You're going to get a 1099 for the bonus that you receive if they sign up. And even if the bonus came in the form of miles, you are supposed to pay tax. So I'm not totally sure what the follow through rate is when it comes to some of the different banks, but don't be surprised if you receive a 1099 in the mail for that. Yeah, heads up.

[Joel]

All right, Matt, let's talk about getting paid from your employer and then getting paid. Yeah, sometimes pay comes in the form of non monetary compensation. We always talk about looking at your total compensation package when you're looking for a job or you're trying to assess the benefits of a job offer you have, or you're even just thinking how competitive is the pay that I'm earning currently where I'm at versus what maybe a friend or what other people in the industry are earning somewhere else, Somewhere down the street. The Wall Street Journal just wrote about why one perk that looks great. It really isn't. And that's unlimited vacation time. This is something like that. I feel like I've seen popping up more and more as companies offering, hey, no, no, no. It's not just two weeks of pto. You can take as much time off as you want. And that's kind of the pitch. That's the sell from the company that you can travel as frequently as you desire. But everyone I've talked to, I don't know about you, Matt, who has this benefit, they don't feel okay using it. So this sounds like a great perk, but in reality, maybe it doesn't play out so well. Kind of the unspoken rules dictate that you're not supposed to abuse your newfound freedom, like, the ability to travel as much as you want, which I think actually causes people, from what I can tell, to take even less time off than they're allowed. It's a sad reality, but I would say make sure to look this gift horse in the mouth and ask about how this benefit functions in reality. If you're applying for a job and the employer says, hey, this is one of the perks we offer, I would want to know more about how that actually works and whether people actually take a significant amount of time off. Because we're always talking 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. We should all be taking our vacation, man. Like, it's one of those perks that we've earned that we deserve. And all work and no play makes us pretty dull, too.

[Matt]

Yeah, I totally agree. It feels like one of those things where it's a benefit that, like, I don't even know if this exists, but, like, it makes me think if you go to, like, an arcade and it's just like, if you get this wristband, it's unlimited Coke refills. Or, like, if you buy the special cup at a gas station.

[Joel]

Yeah.

[Matt]

It's like anytime you come with. Come in with your cup, you just drink whatever you want. But the reality is, is how much are you actually. How much soda are you actually going to drink? And do you want to drink an unlimited amount of Coke like, every time you.

[Joel]

I'm gonna drink till kidney failure, baby.

[Matt]

It kind of feels like something where it's just, like, on paper, it seems appealing until you actually start thinking through it, and it's just like, well, what's the actual reality of me taking full advantage of this? And when it comes to time, off, it's like, okay, are we talking about how great it would be to take unlimited time off? Or maybe we just need to actually take the time off based on a normal amount of vacation days. And certainly it probably should be higher in the US because we're such a work performance productivity driven culture. But I think that's something else to keep in mind as well. Another typical perk that we. Not we, Joel. But that most folks often get from their employer, our employer is so stingy is health insurance. But as we're seeing a rise in small business formation, entrepreneurs, they gotta figure out how to get coverage without bankrupting themselves, which is like the whole point of starting a business is maybe for this to succeed. Vox they detailed the rise of health sharing companies, not health care companies, but they are growing quickly. These health sharing companies, almost 2 million Americans find themselves on one of these plans that look like health insurance, but they have meaningful differences. And it's basically the number of folks that are on these plans have doubled in the past several. In the past few years. So look into them because they like, there's significant savings to be had. But do be careful. Know the fine print, know the exclusions. Joel and I, we are both on MetaShare specifically. They've worked well for us, but we also haven't tested the limits. Although some friends of ours have, I think about some. Some good friends. And I think it was literally the year after they joined on, she ruptured or tore her Achilles. And they were also like, well, we were thinking about getting tonsils removed and adenoids as well from like one of their.

[Joel]

Whatever that is.

[Matt]

I don't know, I think it's in your mouth, somewhere in your throat. But they did all of that within a year because they were gonna. They knew that they're gonna hit their. What's called the annual household portion. And it worked incredibly well for them, which was really encouraging because I'm like, all right, I'm pretty sure this is gonna work out. And I think we'd even kind of steered them in like that direction because they were paying an inordinate amount. They're blame you. I know. I was a little nervous. I'm just like, oh, man, hope this works out. It worked out great for them. I love the fact that more people are getting on this. I was talking to a nurse friend a few days ago. So she's a nurse, she works within the healthcare industry. And I don't know how we got to talking about healthcare. And I kind of sheepishly was like, yeah, I don't know. I rarely go to the doctor and got to talking about health sharing and you would expect with her that she'd be on some sort of Cadillac Premium Primo Healthcare plus Healthcare prime health account.

[Joel]

Joel but all the healthcare you can eat.

[Matt]

She is on a health sharing plan because she's like, yeah, it's so stinking expensive. Like we don't even pay for the kind of coverage that we often take at the, at the hospital. Blew my mind. But it's just evidence of the fact that that's an area, an industry that needs a little bit of reform.

[Joel]

And I'm glad that there's competition and not everyone can choose to go this route. Right. We were like literally talking to a friend last night who has a young daughter who has had cancer for many, many years. They have a lot of appointments they have to go to. It gets really expensive. And so their employment decisions are largely based around healthcare, which makes total sense for them. But for other families, like we have been pretty fortunate on the healthcare front and so we're able to opt for something like this in order to reduce our out of pocket on a monthly basis. And fingers crossed that it saves us money over time because we're just not shelling out as much for healthcare overall. But again, this is a personal decision and more Americans are choosing some of these health sharing options because they are saving them money. But the trade offs are a crucial thing to take into account. Matt we've got more to get to on this episode, including we're going to talk about some of the worst places to borrow money. Borrowing money has gotten more expensive over the past couple of years. We'll talk about that and whether or not you're going to get a $5,000 check in the mail from the government right after this.

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[Matt]

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[Joel]

Goals.

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[Matt]

Sign up@navy federal.org Navy Federal Credit Union members are the mission savings products insured by ncua. Investment products are not insured, not obligations of Navy Federal and may lose value. Hi, this is Joel and Matt from the how to Money podcast.

[Joel]

Yeah, Matt, this month my kids, they've got a longer break from school coming up and I want to take them on a trip somewhere while they've got the time off. Do you have any recommendations?

[Matt]

Ooh. Well, I love checking out national parks personally. And Joel, I know that you and the family love hiking together, spending some quality time outdoors as well. You could always check out Yosemite. That's like one of my absolute favorite places on earth. Starting down there in Curry Village, hiking up out of the Valley, can't beat it.

[Joel]

Sounds pretty lovely. That's a good idea. And I'm going to suggest this to my family. I'll let you know what they say.

[Matt]

All right.

[Joel]

We may not know where we're going yet, but I do know one thing. We'll definitely be checking out the local Airbnbs wherever we end up. It gives us flexibility and incredible options for a place to stay while we're away from home.

[Matt]

Plus, while you're away, you can host guests in your home on Airbnb. It's easy and a great way to earn additional income.

[Joel]

And now hosting is easier than ever with Airbnb's co host feature. Airbnb gives you access to a network of high quality local co hosts who can help take care of your home and your guests when you're not there. Find a co [e-mail] host.

[Matt]

All right, Joel, we are back from the break and of course it is now time for the ludicrous headline of the week. It's from cnet. The headline reads, is a tax prep service promising you a huge tax refund? It could be a scam, Joel. We're sharing this one because we want folks to know that if you have a burning desire to get a massive, huge tax refund, well, it can interfere with your decision making skills. It can cause you to fall prey to what's being called a ghost tax preparer.

[Joel]

Sounds spooky.

[Matt]

Yeah.

[Joel]

Is it a friendly ghost like Casper or friendly.

[Matt]

So essentially, if a so called tax preparer is highlighting how big of a refund they can help you to get, before knowing your specifics, the alarm bells should be going off because the way it works is that individual is going to then file your return with fake deductions with credits that you don't actually qualify for. And of course they're gonna then charge you based on a percentage of your overall tax refund. So they are incentivized to get as many deductions in there as possible. It raises how much you are gonna then pay them. But then your preparer disappears. You're left cleaning up the mess. This is not the kind of situation you wanna find yourself in. And so if you want tax help, we would recommend for you to ask around to friends, ask for recommendations. Don't go rogue on such an important h as you're doing your own homework. Make sure that the tax preparer has a preparer tax identification number. If they're trying to file your taxes, prepare your taxes without having that they're breaking the law. That's, that's also another red flag. Make sure that they've got a physical address as opposed to just this. Oh, they've got a website. They seem totally legit, but it's pretty easy to up and vanish in the middle of the night with a website versus having a physical office, a physical location.

[Joel]

And this is so nefarious, Matt, because so many people, they bank on that massive refund every year. And if someone's kind of selling them a bill of goods, like, hey, we'll get you the bigger refund, like, we have special tactics to score you more money back from the federal government.

[Matt]

You don't want to leave money on the table.

[Joel]

No. And that. So it sounds so promising. And you're like, well, normally I get like 2 grand, but this guy's saying I'm getting like 5 or 6. That is, you typically want to walk down that road. Except for in this case, it's totally false. You're going to be in hot water with the irs. Which brings up the perpetual point of contention come tax season. Should you go tax software or should you hire a tax pro? And Kiplinger, they did a great job covering this. They basically suggested that software is great for folks who take the standard deduction, who only earn income as a W2 employee, and who only invest in traditional assets. Like stocks, and also for folks who have lived in one state for the entire year. So if you move, you might want to hire somebody. So if that's you, though, and you fall into all those categories, use software like go with the free or cheap options. Cash app in particular is still our favorite because they're 100% free for federal and for state filing.

[Matt]

What it used to be called, before.

[Joel]

Cash App bought it, it was Credit Karma Tax.

[Matt]

Was it Credit Karma Tax?

[Joel]

Yeah. And then Cash App bought it from them.

[Matt]

It continued to do an excellent job.

[Joel]

Excellent job. And it's more robust than a lot of the other free services, even the IRS direct file service. But let's say you don't meet all those requirements or you've got income from another source or you itemize your deductions. If you have more complexity, it's often worth the cost to hire a pro. As long as they're not one of those ghost preparers that we just talked about, make sure they're a legit tax preparer. They know what they're doing.

[Matt]

It's hard for me to hear you say ghost prepare and not think of ghost peppers. Remember back when ghost peppers were all the rage?

[Joel]

No, when were they all the rage?

[Matt]

Like, 15 years ago. Something like that. That's like when all these, like, super hot peppers started, I hear Ghost Prepare, I think Ghost Pepper. That's when. That's the first time I ever heard of, like, the Scoville Heat.

[Joel]

Like, that whole thing, which I know about from Hot Ones, right?

[Matt]

Which I've never watched. Actually.

[Joel]

Never seen an episode of Hot Ones?

[Matt]

No, I mean, okay, you gotta watch.

[Joel]

The Conan O'Brien episode. It's insane.

[Matt]

Is it funny?

[Joel]

It's so funny.

[Matt]

I guess. Okay, it sounds entertaining, I guess. I just think of folks who are, like, going after the hottest pepper and it's like, oh, this one. Because the ghost pepper used to be the hottest, and now there's other hybrids that they've come out with, and it's like, well, this one's got 2 million Scoville units or whatever. It's just not something I'm interested in at some point.

[Joel]

Humans.

[Matt]

Why would you want to do that to yourself? Don't do it, don't do it. And plus, like, it makes me think.

[Joel]

About, I don't even want to eat, like, a mildly hot pepper.

[Matt]

Well, Joe, let's talk about debt, because we are not debt enthusiasts, but we're also not debt haters to the core. Some types of debt, when used wisely in moderation, we think can help you to accelerate your different financial goals. We're talking about things like a mortgage, maybe a small amount of student loans to help you to get a degree, but specifically what you are borrowing for and the interest rate attached to that loan are going to be crucial factors when you're trying to decide whether that debt product is bad, whether it's neutral, or whether it's a potentially decent investment. A new report from Solo. It's like a community finance platform, first name Han. But they highlighted some of the worst places to borrow and they were highlighting the negative impact of short term loans that come with incredibly high fees, with high interest rates, subprime credit cards, payday loans, and earned wage access. That's like the different platforms and apps that allow you to get paid early. They were some of the worst culprits out there and we totally 100% agree those are crappy products that should be avoided at all costs.

[Joel]

Man, we've talked smack about every single one of those at some point. We hate them in the past. And, and yeah, I think that Earned Wage Access 1 mat is particularly nefarious because it looks so benevolent and those apps are so good at marketing, they're so slick and they make people think it looks like it's free. All I got to do is leave a little tip for the app creators. When you factor in how bad, how rotten that tip is from an interest rate standpoint, it's awful. And it's obliterating a reasonable chunk of your pay that you shouldn't be forking over to somebody. You don't want to access your paycheck early because it's going to cost you too much.

[Matt]

It feels like a wolf Payday Loan 2.0 in cheap clothing.

[Joel]

Essentially just a modern, slicker version of it that looks less nefarious, but underneath the surface, it's rotten to the core. They also mentioned in that report peer to peer lending and Buy Now Pay later as some of the places people turn when they're in a financial pinch. Right? And those forms of debt can charge you sky high interest if you don't make your payments on time. So for Buy Now Pay later, for instance, you might find that the interest and fees are equivalent to a 45% combined rate. According to Solow, if you're not making your payments on time, the macroeconomic reality is that borrowing costs are up on every debt vehicle these days, making every single form of debt more precarious. And the worst kinds of debt have become even more and even worse right over the past couple of Years. A whole lot of Americans are attracted to these forms of debt because they have no savings to pay for an emergency. Matt. I think that's why people fall for these traps. They feel like they have no other recourse. That's why we talk about the emergency fund. $2,467, the bare minimum. You got to hit that amount. That's crucial to help you avoid needing to turn to one of these really crummy debt vehicles that could essentially bend you over a barrel for months or years to come.

[Matt]

Yeah, okay. So, you know, I love numbers, Joel. I love crunching the numbers. And we've been saying the $2,467amount for a while.

[Joel]

Are you updating it for inflation?

[Matt]

We have to agree on this together.

[Joel]

But do we need a drum roll and a big reveal?

[Matt]

Let me just talk through the numbers, because the number numbers are fun. Raise your hand if you love math, everybody.

[Joel]

Numbers like Shakira's hips don't lie. So that report was Shakira, right?

[Matt]

I don't know. I think so. But that was based on research based back in 2019.

[Joel]

Okay.

[Matt]

2019 is when we identified. Oh, we need to start recommending to everyone to have $2,467 set aside. Guess what? The total inflation has, what it's been since 2019. It's a total of. Any guesses?

[Joel]

I'm gonna go 32%.

[Matt]

Not quite that high, 23.45%. So if you were to adjust $2,467, if you were to update that to take into account inflation since 2019, that means today, the new money gear number one initial emergency fund should be $3,045. Okay, 3,045.

[Joel]

That's good to know.

[Matt]

What do you think? Does it have a good ring to it?

[Joel]

It just doesn't come out.

[Matt]

Is it as good as 2,467?

[Joel]

It doesn't roll off the tongue as much, but we want to be accurate.

[Matt]

3045.

[Joel]

Yeah. Oh, okay. All right.

[Matt]

That sounds better. Yeah, I like that.

[Joel]

Okay.

[Matt]

All right. So maybe we will update the site and start recommending for folks 30 45, because that's a significantly larger amount of money than. I mean, that's a solid 500, you know, more than 500 bucks. So just something to keep in mind. Okay. We mentioned Doge last week and the implications of Doge on the federal workforce. President Trump, he has floated the idea of sending a portion of the savings that Doge claws back to Americans in the form of a direct payment. And if you've read any articles on this, if you seen this talked about, you've seen like a $5,000 number pretty early on. It kind of reminds me of the early days of the Stimmy dollars, you know?

[Joel]

Yeah.

[Matt]

Eyes get bigger, mouth starts watering a little bit. You start thinking you're going to see a direct deposit in your account.

[Joel]

Wait a second, how much am I getting? And you kind of start pre spending.

[Matt]

It before it even drops, unfortunately, because the precedent has been set. But the way it works is some of the savings from Doge would help to pay down the federal debt, while 20% could evidently flow to individuals. Sounds nice, but we don't want folks to hold their breath. I think we are unlikely to get a check for $5,000 in the mailbox anytime soon. Can't imagine what that would do to inflation. And it just does not seem very likely personally.

[Joel]

Right. No, it's one of those things where people are going to see headlines. They're going to be like, cool, where's my Doge dividend? Where's the check? When's it coming? And it's not. It's not coming. Like, it's highly unlikely.

[Matt]

I just don't be the bearer of bad news.

[Joel]

Right.

[Matt]

I just can't believe that they floated this idea that they stuck it out there without. I mean, it's just how the current administration works. They're just constantly throwing ideas out there.

[Joel]

But when you no substance to back it up.

[Matt]

When you put something out there like this that folks are like, that's something that they can wrap their heads around, that's incredibly tangible. They've seen what that felt like in the past. And if you don't deliver on that, folks are gonna be pissed.

[Joel]

Honestly, it's kind of like the student loan forgiveness thing. But I think this is actually being a little bit worse because the student loan forgiveness thing was they were attempting to do this, and there might be a legal way to pull this off, but ultimately there were a lot of disappointed student loan borrowers at the end of the day because that promise didn't come to fulfillment. This is another one of those things where it's a promise that's not going to happen. That's because $5,000 per household. Well, that's the estimate based on Doge cutting $2 trillion in federal spending. There's zero sign that Doge is going to find a way to slash government spending anywhere near that level. Not that there won't be some spending cuts around the margins that could shrink the size of government a bit. But as we said last week, entitlement programs would have to be significantly altered in order to realize savings of that magnitude. Those make up two thirds of the roughly $7 trillion budget and there's just no political will to touch those programs in the slightest. Like the President has basically said, we aren't going to cut back in any way, form or fashion on those entitlement programs.

[Matt]

They campaign on that.

[Joel]

So I think a $500 check, much less a $5,000 check, is a pipe dream. Just don't read that headline and assume that government money is heading your way soon.

[Matt]

Yeah, totally agree. Kind of reminds me of like so they also mentioned possibly floating the idea of a gold card for folks who want to rich people from overseas be US Citizens, which sounds ridiculous. Like that's how this, the Doge dividend sound. It just kind of sounds ridiculous. Catches all the headlines, the gold cards. It sounds like it's totally something Trump would do because it's gold, you know. But I will say once you start realizing that other countries have incentives like this, it seems less ridiculous. Like it just seems like some sort of pipe dream. Like, oh, let's throw this at the wall and see what sticks. You just assume that everything that the current administration is doing is like completely ridiculous until you start seeing that, oh, other countries also incentivize investments and high net worth individuals to move to their country for the good of the overall.

[Joel]

The gold card thing seems less ridiculous. Less ridiculous. Yeah, totally. And it's you're incentivizing people to come to your country who are hopefully going to be productive citizens, invest in the economy.

[Matt]

But we'll see if it pans out too.

[Joel]

All right, that's going to do it. For this episode, we will post links to some of the stories that we mentioned in today's Friday flight up on our [e-mail] Matt is going to do it for this one. Until next time, Best friends out.

[Matt]

Best friends out.

[Joel]

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