← How to Money
Loading summary
Transcript149 lines
- [00:00]
Joel
Almost all of us have got old stuff that we should be tossing out. But in old 401k, make sure it keeps working for you. A Fidelity Rollover IRA has no account fees or minimums to open. An easy to follow rollover process makes it simple to get started in under 15 minutes. Plus, you'll have access to a rollover specialist.
- [00:19]
Matt
That's right, whether you've switched jobs or are just organizing your finances. Learn more@fidelity.com rollover consider all your options and the applicable fees and features of each before moving your retirement assets. Fidelity Brokerage Services, LLC Member NYSE SIPC.
- [00:36]
Joel
Breaking News T Mobile Network outperforms expectations in all sectors because T Mobile helps keep you connected from the heart of Portland to right where you are on America's largest 5G network. Switch now. Keep your phone and T Mobile will pay it off up to $800 per line via prepaid cart. Visit your local T Mobile location or or learn more@t mobile.com KeepAndSwitch up to four lines via virtual prepaid card allowed 15 days qualifying unlocked device credit service report in 90 plus days device and eligible carrier and timely redemption Required card has no cash access and expires in six months.
- [01:07]
Jack
In a world of economic uncertainty and workplace transformation, learn to lead by example. From visionary C Suite executives like Shannon Schuyler of PwC and Will Pearson of iHeartMedia, the Good Teacher explains the great teacher inspires. Don't always leave your team to do the work that's been the most important part of how to lead by example. Listen to leading by executives making an impact on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
- [01:40]
Joel
Welcome to how to Money. I'm Joel.
- [01:43]
Matt
I'm Matt.
- [01:43]
Joel
Today we're talking debt defaults, VIP investments, and regretful retirees. That's right, buddy.
- [02:09]
Matt
This is our Friday flight where we're going to cover the most pertinent headlines, the personal finance stories that you need to pay attention to, and how it's going to impact your money. That's what we're doing today, but before.
- [02:20]
Joel
We do it every Friday.
- [02:21]
Matt
That's true. Before we get to that, though, I think you had a word to say specifically about China. You're all about the the Chinese terrorists, right?
- [02:28]
Joel
I've been to China.
- [02:29]
Matt
We've covered that.
- [02:30]
Joel
We covered that on Monday. Right?
- [02:32]
Matt
Enough. Enough of the terrorists. Yeah, we're actually taking a nice tariff.
- [02:36]
Joel
Break today, which feels refreshing. It does feel good. But after that episode aired on Monday, we had multiple listeners email in about it. But Listener Ed, in particular, I just appreciated his email because he spent a good bit of time in some of these factory towns in China. He was essentially saying, hey, one of the reasons we can't compete with the price of Chinese goods. It's something that you and I touched on, and this is why he wrote that email. The BYD factory and the dormitories, essentially on the premise of that electric carmaker in China. And they've. And they've made a lot more progress on their vehicles because of the fact that they don't have as much and I don't know if I can say the respect for human life. That's kind of what Ed was getting at, was the way they treat workers in China is far inferior to the protections that we have for workers here in the United States.
- [03:30]
Matt
The US Isn't. We're not perfect, right? Like, that's the thing. Like, we've got our own skeletons in our closet. Like, in fact, we fought a civil war because of the truly crimes against humanity that we've. That we partook in ourselves. But there's a big difference too, I guess, between that, like, I don't know, 150, 200 years ago or so, versus, I guess, it being something that is going on now. And it's tough, though, because, like, what do you. It's tough to untangle our own spending from Chinese goods. Like, that's what it feels just like such a knot that is going to be so difficult to untie.
- [04:07]
Joel
Accordion knot.
- [04:08]
Matt
Yeah, yeah, yeah, yeah.
- [04:09]
Joel
Yes. I just appreciate Ed's email, and I think it does shine a light on just the vast differences that we have as countries and how we think about the people who man the factories, people who produce the goods, and the freedom that we allow people in the United States, which produces some of the best results for a lot of companies. But it also means that we can't compete, I guess, especially on the lower end of the manufacturing spectrum, at least.
- [04:33]
Matt
Not until we get our robotics in place. But then who's making the robotics? Joel, I know you need robots to make the robots first, so we got to get that initial round of, like, you know what, we're going to do this for America. We got to build a factory that's going to make all the robots, that's going to then make everything else.
- [04:49]
Joel
Definitely companies working on that. I know Elon's working on it. There are other. Other companies, like, working to make robots that do all sorts of things, which is cool. Can we make and create factories that compete with the factories in China? That mass produce goods. I mean, and just the size and scope of some of those factories and the level of technology that implemented, I don't know, like, we'll see. That remains to be seen.
- [05:11]
Matt
That's true.
- [05:12]
Joel
All right, let's, let's talk about some really important news happening right now, Matt. Let's talk about student loan debt collection, which it was announced this week essentially that, hey, the federal government, the Department of Education, is going to start collecting on student loans that aren't being paid on. And Linda McMahon, the Secretary of Education, she wrote an op ed this week in the Wall Street Journal. She basically explained the need to collect on loans if payments aren't being made. And this is, I would say, a dramatic turn from how the last administration handled student loans.
- [05:45]
Matt
Sure. The attempts or they weren't handling it.
- [05:47]
Joel
Yeah.
- [05:48]
Matt
Punching it down the road, we're going to ignore that these exist for everybody.
- [05:51]
Joel
Then the attempts at forgiveness, that didn't come to pass. And the Secretary of Education basically said the drop dead date to start making payments is May.
- [06:00]
Matt
That's right.
- [06:01]
Joel
So that's just around the corner. And so if you don't, if you're not able to make those payments, you're going to see a meaningful drop in your credit score. A lot of folks already have. And then in the most extreme cases, she highlighted that some people could have their wages garnished and they could even have starting next year, in all likelihood their tax refunds taken back if they haven't been paying on their student loans. So I think this is a call to not put your head in the sand. If you have student loans and you're like, what do I owe? Am I current? Am I paying right now? Log into your account, check out the loan simulator on the Education Department's website. And then I think something like 40% of borrowers are current on payments right now, Matt. So there's just a lot of people, probably a lot of people listening to this podcast right now that, that haven't been paying partly also because they're not sure if they're supposed to. So this could turn into, into a messy situation for millions and millions of folks. It could have wider impacts on the economy too. So, yeah, yeah, this I would say.
- [06:57]
Matt
To how to Money listeners, It's more like 80% of them are probably current. Like we hold a higher standard here at how to Money, don't we, Joel? And we're actually going to have a student loan expert on the show next week, so stay tuned for that. But while we're talking about debt dude, it is not just student loans. WalletHub, they reported that credit card debt is up as well, and so are delinquencies. Defaults were up 34% year over year from 2023 to 2024. And inflation and rising interest rates have been a double whammy, causing more folks to rely on their credit cards in order to get by. And then, of course, what happens? They find themselves with a balance that is growing. They have a payment that's too much to handle. And this isn't just younger folks as well, over half of folks who are aged 50 to 64. So that subset, they have a recurring credit card balance as well.
- [07:47]
Joel
It seems like this always seems like something that. Oh, it's a young people's thing. You don't have enough.
- [07:51]
Matt
And they haven't learned how to handle. Exactly. Yeah, their cards.
- [07:54]
Joel
That was shocking to me.
- [07:55]
Matt
It's no longer the case.
- [07:56]
Joel
The people in their 50s and early 60s still have this problem with credit cards.
- [07:59]
Matt
Yeah, they've got these recurring balances and many are going to end up paying more in interest than their overall actual balance and the overall actual charges that they put on that card. It's a compounding. You're doubling down on these poor decisions, essentially. It makes me think back to an early episode, like way back in the day that we did. I'm assuming we did it on debt, but we're talking about interest rates and how I pictured an escalator. And it's just like, okay, you can ride these interest rates up by receiving interest payments by having your money at a high yield savings account, for instance. And so those interest rates, you can just stand there on that stepman, and it'll take you up to that next level or if. If you can supercharge it by you putting forth a little bit of effort as well. So that's the guy that's walking up the escalator. And you know what? They're going to get there real quick. But if you're trying to get to that next level and the escalator is coming down, well, you take that first step, what happens? Boom. Right. You're right back down to ground level. So you have to work so much harder to escape, in this case, that credit card balance. So just, yeah, just keep that in mind.
- [08:56]
Joel
It is nefarious. And I think a lot of people assume a little bit's not that bad. But truly, even just, you know, a few thousand dollars in credit card debt and paying the minimum, like what that does to your finances every month, it's a Big deal. And so I think it's crucial to come up with a plan. If you're one of these folks who does have credit card debt you're hanging on to, we have resources on howtomoney.com to help. And if you or someone you know is like overwhelmed by credit card debt, there are organizations, nonprofit organizations that can help you out. Money Management International and the national foundation for Credit Counseling are two places you should at least consider going to. Low cost or free help. And the places that you hear advertise the for profit places. Be careful before you reach out to those folks. They will often take a lump sum of money and they might or might not be able to help you out. Oftentimes not. Let's add just a little bit more bad debt news here real quick, Matt. One in five car buyers are now opting, as it turns out, for 84 month loans when they buy a new car.
- [10:00]
Matt
Woof.
- [10:00]
Joel
So this is new stats from Edmunds.
- [10:02]
Matt
Hate, hate this. It gets two hates.
- [10:05]
Joel
Yeah, double hate. And it's because it's the only way they can afford the car they want. They're saying, well, hey, well, the rising cost of cars, interest rates going up too, that's impacted how much I can afford and how much I can take out the loan that I can take out on this car. And so if you go to the 84 month loan, that's seven years that it's going to take to pay off that car. And I think what it reveals is that we as Americans have become payment buyers, fully all the way, buy now, pay later. And then when we think about what happens with credit card loans, it's all about how much can I afford right now, this month instead of thinking about our wealth building strategy from a more long term perspective. But this trend, it's got cascading consequences, none of which are good because we want people to pay cash for cars whenever possible. And we also realize that some people find themselves in a bind and they can't. Right. Even if they're looking for a cheaper used car, hey, it's not possible. I've got to find some way to borrow some money. And I think 48 month loans are the max amount. You should consider longer loans. They just mask affordability problems. They don't actually solve them.
- [11:15]
Matt
And truly at that point one of the key things you said is that people aren't able to afford the car that they want. Like if you're in a position where you are. Yeah, in fact you are in a pinch, you don't have the cash on hand to be able to purchase a used vehicle. Like you need to look at the vehicle that you need to get you from point A to point B to get you to your job, if that's what you need it for, to take the kids to school, whatever it is that you need it for. As opposed to thinking about how this car is going to make me feel.
- [11:39]
Joel
The wants doesn't matter really. And I was talking to someone just the other day, Matt, and they owe something like $17,000 on their car. And he was talking about, oh, there's this great deal on this, this other truck. And it's like it's way. It's priced way lower than, than it should be. Man, What a deal. 50 something thousand dollars. But if I trade this in my gosh, then think I'm going to think about how much I'm going to owe.
- [11:59]
Matt
And of course, so much money, dude.
- [12:01]
Joel
Like, I try my best to help.
- [12:03]
Matt
So hold your tongue.
- [12:04]
Joel
But also how much advice do you want on that?
- [12:06]
Matt
Do you know what I do every day?
- [12:08]
Joel
That's the kind of thing that people find themselves in. We see more negative equity loans and stuff like that too. And yeah, when you trade in a car that you owe money on and you roll that into the new, new loan, not only are those term's gonna be worse, the payment's gonna be higher. Like how long are you gonna be underwater in that car? And what happens if there's some sort of emergency in your life? What we've done with financing vehicles is preposterous in this country. And so many people, their finances are suffering largely because of this. Exactly. That I'm taking on more debt than I need to for vehicles. And there's not enough money for the other important necessities.
- [12:42]
Matt
These are the folks who are still on the escalator and they're not. They're not stopping at ground level. It's like taking them down into the basement with a boiler. And that's not. But dude, let's shift gears. Let's talk about investing. Because the market has been on pins and needles in recent months. You know, whether it's the.
- [13:00]
Joel
Whether. Whether or not.
- [13:01]
Matt
Yeah, all right. I thought we were going to avoid the terrorists, but that's why.
- [13:04]
Joel
That's why I said the T word. I just didn't want to say it all.
- [13:07]
Matt
Whether we're talking about terrorists, we're talking about truth social posts, perhaps about firing Jerome Powell and then him Trump saying that's the other T word, I guess.
- [13:15]
Joel
Trump. Oh, never mind.
- [13:17]
Matt
But then it'd be like, oh, no, I'm actually not going to fire him. Because of that, though the market is reacting to this instability, to this uncertainty. Some have made changes, and unfortunately, they've panic sold again. We hold a very high standard here at How To Money. I don't think that's something that anybody in the how to Money community has done. But as we're talking about investing here, we want folks to know that it looks like pretty soon you're going to have access to even more investment choices in your 401, including private equity, which you're thinking, all right, here's the ticket. This is how I'm. This is what's going to get me to that next level. Forget the escalator. This is like an elevator that's going to shoot me straight to the top. That's right. It sounds awesome. You're getting access to these rare VIP investments that only rich folks currently enjoy. But when you, in fact, dig a little deeper, it's not all that great. There aren't many private equity ETFs, and then the ones that actually do exist, they come with really high fees. And like, the real, truly wealthy folks out there who are investing with private equity, they're not taking the ETF route here. They're opting for, like, real private equity that most folks can access unless they're accredited investor. Morningstar will link to this article, but they summed it up pretty perfectly. At the moment, these ETFs look like a distraction, which I completely agree with, man. Transparency is low, fees are high, and the benefits up here very questionable. This is very good advice from the good folks over at Morningstar.
- [14:46]
Joel
Yeah, you're just going to hear people telling you about how, man, how cool is it that you can now invest in stuff that you weren't able to before? Look at, finally, the investments of the rich available to you as a normie.
- [14:58]
Matt
Doesn't it sound like good water cooler talk as well? They're like, you know, I'm thinking I'm going to switch over, do a little bit of private equity. You know, I'm going to dabble on that a little bit. Don't do it.
- [15:06]
Joel
Yep. One question, Matt, that's come up more recently on the show and from listeners is what if you're at the point where you need to tap investments and the market is down? That's a question I think, on the mind of a lot of retirees. Parents with 529 plans. Right. They've got money in there that they need to use in the near Future that. We took a question from one of those folks on Monday. A couple of things here. One, make sure you change your asset allocation as you get closer to needing the money that you have been saving and investing for years and potentially decades. 100% stocks, like being all, all the way in on an s and P500 fund when you're months from retirement, right. Or if you have a high school senior, that's just too risky. It's totally fine for people who are in the wealth building phase of their lives and they're like a long way off from needing to tap those funds. But if you're like, hey, pretty sure I'm gonna need those soon and you're taking on too much risk, well, just know that can come back to bite you. And for some people it has. Also know this. Drawing down funds at the absolute peak of the market every single time, that would be awesome. But it's also, it's also a pipe dream. You want to have enough flexibility, you want to have enough cash on your side where you can avoid taking out huge chunks during a significant bear market. But it's also important to keep in mind that you can't time your withdrawals perfectly. And I think the stock market's down something like 6% from its all time highs. And you also have to keep the bigger picture in mind. Remember how far those dollars, how much those dollars have grown, how far they've come working behind the scenes on your behalf. And we as humans, Matt, we feel losses more keenly than we feel wins. So 6% drawdown, even if there's been a massive run up in the market over the past like 15 years overall, well, we feel that 6% blip downwards a heck of a lot more than we feel the positives of the wealth we've been able to build. The recent dip, not ideal. But if you've been investing for years or for decades, you've grown those dollars meaningfully. Still, you've got to remember that and you've just got to know what you, your risk tolerance. And hopefully this recent bout of market volatility has helped inform people of what their risk tolerance can and should be moving forward. That is true.
- [17:12]
Matt
Yeah. It's not much comfort, I think, for folks who have to have access to that money now. But for folks who, you know, they are a few years off, what you, what you said, a word, you said a flexibility. And so much of it I think comes down to flexibility. And you're not only from an income standpoint, because I think that's one Big part of it. Right. It's just like, okay, do I have the ability to perhaps generate some additional income to be able to pay for whatever you're looking to pull those investments out for? In the case of. I'm thinking about 529s. It's like, well, we're planning to count on that. But, okay, in the future or next year, next couple of years, do you think you have the ability to perhaps cash flow more of that as opposed to pull those investments out? So that's a certain amount of flexibility, but then the ability to adjust how much you're spending is on. You know, that's the other side of the equation. Right. So is there a gap year that's taking place? Again, we're talking about college here. But from a retirement standpoint, what does retirement spending look like? If that's something that there is a little bit more flexibility on? That is one way to. You gotta. You gotta find that balance between de risking and avoiding the sequence of returns. Risk. Right. That's what we're talking about here with the fact that the stock market goes up three out of four years. And so there's also the stark reality of that there is a higher likelihood of seeing a positive return than a negative return. So it often does come down to your. How comfortable you are with risk.
- [18:30]
Joel
And yeah, that flexibility, even for someone who's saying, I was planning on retiring next year, well, it might not be ideal, but you might be able to work another year or two longer to make sure that you've got enough money stocked up and that you're not retiring into the teeth of a downturn.
- [18:47]
Matt
Yeah. You also said, you mentioned how the recent dip hasn't been ideal. I feel like that there's a lot of confusion, too, around that, because in large part that has to do with the fact that people have different definitions of what buy the dip means. Because if you are somebody who isn't investing and people start talking about buying the dip, and you're like, you know, essentially what you're doing is timing the market. But there's a big difference between that and regularly investing in the market and saying, you know, I've got some extra cash on hand, I've got a fully stocked emergency fund, let's go ahead and pour some of that money into some investments that I would have eventually purchased. It reduces the emergency fund there a little bit. But, like, that's smart, that's savvy. Like, that's taking advantage of a sale. Don't deplete it, but don't deplete it. No, absolutely not. But that's like when we see a sale at the grocery store. It's no different. Literally. I did this yesterday. Coffee was on sale, and what did I do about a few extra pounds of it? And I pulled some of that consumption forward in the same way. I think it's fine to take advantage of the dip in prices, pull some of that consumption forward, pull some of that investing forward. But the problem, I think is, is when that buy the dip mentality derails what you would normally consume or what you would normally keep cash on the.
- [19:59]
Joel
Sidelines, and you're waiting for the dip. And typically what happens when that's the case? You're missing out on gains along the way.
- [20:05]
Matt
Yeah.
- [20:05]
Joel
So that's.
- [20:05]
Matt
Or if you're attracted to investments that you otherwise would not be attracted to because you see something plummet and you're like, ooh, maybe instead of voo, oh, it's time to buy a bit more Tesla, because their. Their stock's in the tank and that's. Is that a part of your overall investing plan? If so, then okay, maybe consider that. But otherwise, the distraction element of it is, I think, the worst part.
- [20:28]
Joel
Yeah. Yeah. So I think, like, timing the market with new contributions. That's not our favorite. Like, if you are trying to hold on to cash to buy the D, well, you probably should have just been investing regularly along the way. I think there is one kind of sort of market timing exception possibility, and that is when we're talking about Roth conversions. And so if you've been a big investor in, like, traditional tax advantaged accounts, and you've built up a big nest egg of traditional 401k traditional IRA assets, well, think about that potential future tax bill. And if you're worried about how much tax you might be paying down the road because you have socked away, you know, hundreds and hundreds and hundreds of thousands of dollars or millions or more of dollars, think about doing strategic Roth conversions. But you don't want to just start converting when the market drops. You want to consider your current tax rate, your potential future tax rate, potential future income drops, because that could also make Roth conversions make sense for you. And there are calculators out there, Matt, that I was, like, searching on the Internet for this week. Fidelity has a great one. Bolden is a website that has another. We'll link to those.
- [21:31]
Matt
Oh, that's a new one. I haven't used them.
- [21:32]
Joel
Yeah.
- [21:32]
Matt
Or heard of them before.
- [21:33]
Joel
We'll link to those in the show notes. They were they're really good. And when you look at how much money you could potentially save by doing Roth conversions, there's a lot to take into consideration. You don't want to just willy nilly markets down, let me go do some Roth conversions. There's a lot of data, like I said, you have to take into consideration, but it could dramatically reduce overall, like the overall amount of taxes that you pay if you do it properly and if you're smart about when and how you do those. But all right, we've got more to get to, including we're going to talk about timeshares and just how rotten those timeshare presentations can be. You've actually been to one, right?
- [22:05]
Matt
I have.
- [22:06]
Joel
All right, let's talk about that and get your story.
- [22:07]
Matt
I'll share.
- [22:08]
Joel
Okay. We'll get to that and more right after this.
- [22:15]
Matt
This episode is brought to you by Navy Federal Credit Union. They know just how fast your life moves. You have bills to pay, mouths to feed and not a lot of free time. That's why they created an all in one banking experience that lets you keep on banking on.
- [22:30]
Joel
It can save you time and money with new lightning fast direct deposit setup and it offers checking accounts with ATM refunds and no service fees. Plus, whether you have credit or not, you can build your credit score. With the new ability to report on time bill payments and with personalized financial insights on my making sense, the ability to view all your accounts in one place, custom notifications and 247 fraud protection, you can get a full picture of your finances.
- [22:56]
Matt
So if you want an all in one banking experience that lets you keep on banking on, sign up today. Learn more@navy federal.org @navy federal, the members are the mission Navy Federal Credit Union insured by NCUA Jack, our show is.
- [23:10]
Jack
Called the best one yet, but can you introduce it as a Tinder bio? Yeah, this is Jack. That was Nick. We're best friends and ex finance guys who host the best one yet, the daily podcast merging business news with pop culture. Yep, and we have a puppy. Actually on our podcast we'll tell you how Starbucks borrowed a growth hack from Ludacris. Or that blondes showing their natural brunette hair is an early indicator of a recession. Or why hot take coming. Apple's next product should be an AI smart toilet. We worked on Wall street, sold a media startup to a tech company and have done 1500 episodes of this daily show. So whether you're launching a business aiming for that promotion or just want to be the best, start your morning with our three business stories in 20 minutes. And if you don't use one of our takeaways in your next job interview, we'll give you that puppy. It's a write off the most interesting people follow the best one yet on the Wondery app or wherever you get your podcasts. You can listen ad free right now on Wonder Plus.
- [24:09]
Joel
What does the future hold for business? Ask nine experts and you'll get 10 answers. Will we have another bull market in 2025 or we're going to get a bear market? What about inflation? Will it continue to calm or will higher prices remain sticky? Wouldn't it be cool if someone could invent a crystal ball that would give us some foresight?
- [24:26]
Matt
Well, until then, Joel over 41,000 businesses have future proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory, HR into one fluid platform with one unified business management suite. There's one source of truth giving you the visibility and control you need to make quick decisions. With real time insights and forecasting, you're peering into the future with actionable data. When you're closing the books out in days, not weeks, you are spending less time looking backwards and more time on what is next. Our business is really small, but if we needed netsuite, we would be pumped about the time the cost savings that it provides. Whether your company is earning millions or even hundreds of millions of dollars, NetSuite helps you to respond to immediate challenges and seize your biggest opportunities.
- [25:12]
Joel
Speaking of opportunity, download the CFO's Guide to AI and Machine Learning at netsuite.com the guide is free to you at netsuite.com howtomoney that's netsuite.com howtomone.
- [25:27]
Matt
We've got more Friday flight goodness to get to today. And of course, now it is time for the ludicrous headline of the week. This one is from the Globe and Mail and the headline reads they worked hard to retire early. Now they're dealing with regrets. And this article profiles the quintessential early Fire adherents, specifically up in Canada who worked as hard as they possibly could in order to be done with work forever. And then of course, they just realize it was a giant mistake and that they wish they wouldn't have done that. They express similar regrets of actually working too hard, where they were missing out on hobbies and relationships along the way. And then of course, what happens? They encounter a serious amount of boredom after abandoning the work world altogether.
- [26:14]
Joel
Like where are my friends at? Dude, thought we were going to hang out. Oh wait they're still working.
- [26:17]
Matt
It's amazing how much stress, structure and intellectual stimulation work can provide us. It's just incredibly ironic how the thing that allowed anybody who has retired early so working hard, oftentimes working a lot or earning a fat paycheck that those things oftentimes are the things that are keeping you from being able to develop the other aspects of life that make life truly, I don't want to say worth living, but that just rounded out and you remove this one element. So not only, of course, are you missing out on, oh man, I'm not getting an income anymore, but also, oh, man, all my friends are still in there. Makes me think of severance, which you haven't watched.
- [26:54]
Joel
Still haven't.
- [26:54]
Matt
Kate and I actually recently finished season two. I'm a fan. Some folks aren't happy with how it ended. I also can't wait to see where it goes next. I'm a huge fan, but I'm mentioning this because we have to be so incredibly intentional and proactive when it comes to fostering and cultivating and growing the other aspects of life that we can oftentimes just completely forget about. Like, I'm talking about physical health, intellectual stimulation, relationships specifically was. Was highlighted in this article. The ability to grow these areas of our lives in ways that require that just take an iota, honestly of thought. And unfortunately, that's just a touch more than what most folks are doing. And, and of course, there's folks who are finding a whole lot of, yeah, sadness, regret. They're going back to work when they don't even need the money.
- [27:41]
Joel
Yeah, big chunks of like 60% of those people.
- [27:43]
Matt
Because it provides some of the. Some of the structure, which is fascinating.
- [27:46]
Joel
We've seen that in our own lives of friendships with people in the fire space. And yeah, it's. There's some. Like the first month you're just recovering from burnout, essentially from the job you had. And then after that you start twiddling your thumbs. You're like, what am I going to do? And maybe pick up a project or two. But there's so much time in the day then, and you don't have the people around you that you want to spend your. That you want to spend that time with so often. And many of them have gone back to get jobs, sometimes gig work and stuff like that, which has been interesting to watch. I don't know, maybe instead of fire, we should think about working longer. Like not retiring at age 40 and working fewer hours. Now. Interestingly enough, Gallup found that that's been a real trend actually over the past five years that full time employees have been reducing the number of hours they work on average. And this is basically a post Covid trend where young workers, they've limited work hours even more. They've reduced the number of hours that they work by about two hours a week, which when you think about it, that's a decent chunk of what, 6% off of your work week every week. That's kind of a big deal. And as Gallup put it, they said over a year that's the equivalent of older employees taking an extra week off of work and younger employees taking essentially an extra two weeks off of work. Every single one of us has different goals and Matt and I aren't going to prescribe your goals or the exact way to get them because that's for you to figure out. But yeah, while some of our fire friends are really enjoying themselves, some of them aren't. And we want you to think twice before you knee jerk jump up to like a 70% savings rate or something like that so you can quit work before everyone else that you know and decide whether or not that's the life you want or if maybe a more sustainable way is to reduce the amount of time that you're putting toward work in the here now. I kind of, I kind of like this trend, Matt, where people are saying I'm going to claw back some of my life now. I'm not waiting till this proverbial future retirement date.
- [29:39]
Matt
Well, yeah, I mean none of us are promised that future. Like I think, I think that's one of the biggest things. Right. I'm actually, I'm still thinking about the Canadians, the Canadian fire adherents. And how much of that do you think has to do with the fact that they're in Canada? Like it's colder up there, it's further north, there's less sunshine. And so like truly the workday, like that's maybe the, like the highlight. It's, it's actually like spend time outdoors, like where there's all the Canadian listeners.
- [30:05]
Joel
Out there are going to send you all the hate mail.
- [30:07]
Matt
Well, even within the U.S. like, I do wonder if it's less of a problem in the US because even within the United States, folks are. Where are they moving? They're moving to the Sunbelt. They're moving to the southern states because they want to be in an environment that's just more comfortable. And if you have to go on a map like a big vacation in order to experience warm temperatures, there's a big difference between that and being able to step outside, going for a walk around, like, the neighborhood or visiting the park. Right. Like, that's way more affordable. That's something that you can do on a sustainable basis versus saying, all right, we gotta, you know, step out of the tundra. Yeah, yeah, I know. All of Canada isn't frozen. No, I think, like, frozen desert.
- [30:45]
Joel
Alberta, for sure.
- [30:46]
Matt
Yeah. But a lot of fantastic cities.
- [30:48]
Joel
There's a lot of Canada that's frozen and very cold.
- [30:50]
Matt
Yes. But there's also a lot of fantastic cities that are basically the United States. Just the thought I had. But one of the alternatives to, like, going crazy, making massive sacrifices in the here and now in order to be able to retire early could look like taking what folks are calling mini retirements. This is actually something we've talked about on the show a couple times, actually, in the more recent podcast episode History. But the New York Times, they just highlighted folks who have been jumping on this trend, the mini retirement trend. And so instead of retirement being this all or nothing sort of thing, a better goal could be just taking some work breaks, like take a month off, take two or three months off. Certainly plan for it. But you don't have to have millions of dollars saved in order to pull this off. You can use that time to travel. Certainly not mandatory, though, especially if you don't have the savings in order to pull this off. It could just look like taking an extended break.
- [31:47]
Joel
Was it Katie north that we talked with recently? And I thought she had a lot of good tips for what it could look like to plan a sabbatical and to talk about kind of what goals you might be seeking to achieve during that time.
- [31:56]
Matt
Heck, yeah. Yeah. Whether or not you kind of prescribe or subscribe to what Joel mentioned, which is like, all right, finding a way to sort of build a more sustainable lifestyle where you're still working, or if you're looking for something where you're like, you know what? I just need a bigger break. I think both of these could be healthier alternatives to jacking up that savings rate to extreme levels, to where you're planning to kick work to the curb altogether. Because, man, work provides ultimately a lot of fulfillment.
- [32:25]
Joel
All right, let's talk about travel, and let's specifically talk about timeshares. Matt, I saw an article this week about. The writer basically said, hey, I used a timeshare to get a discounted vacation. The writer was able to score three nights in Vegas for 150 bucks. And then they snagged, like, a bunch of Hilton points on Top of it. Which was probably going to give them four or five free hotel nights or something like that.
- [32:46]
Matt
Here's the big reveal. I wrote that article. Just kidding.
- [32:50]
Joel
No, but you did something very similar in the past. And so the catch, of course, is that you have to attend a mandatory timeshare presentation.
- [32:57]
Matt
That's right.
- [32:58]
Joel
Or you're charged for the full price of the stay. And so the author correctly outlines just how costly a timeshare can be, which I appreciate in the article. And then the ongoing fees that go up every single year. And she didn't really talk about this much, but when you think about the sales tactics that are often used in these timeshare presentations, they can be pretty intense.
- [33:19]
Matt
A lot of pressure, man.
- [33:20]
Joel
And you. You might go from one salesperson to another being kind of shoved around from room to room, kind of like hot lights under the hot lights or something like that. Like, sign on the dotted line. Here's how it graded is here's the discount we're gonna offer you today.
- [33:32]
Matt
They employ the whole good cop, bad cop.
- [33:34]
Joel
Oh, for sure.
- [33:35]
Matt
Yeah.
- [33:35]
Joel
And I've got kids, too. Let's. They try to identify with you. Get down on your level. There are all sorts of things that happen in a timeshare presentation that could get you to sign on the dotted line when you shouldn't. And so, yeah, I don't know. I guess I'm curious to hear your take. She was pretty thrilled because she got to go on a Vegas vacation. Saved her, like, you know, 900 bucks or something.
- [33:53]
Matt
I was thrilled when I did it as well. Man, this has been years since we did this, but I attended one of these during spring break in college. Actually, I just graduated college, and I went on spring break with Kate and her friends. So it was a lot of fun. And as we're checking into the hotel, they're like, hey, by the way, if you attend this timeshare presentation. You know, I don't even know if they called it a timeshare presentation. I felt like we were completely vacation package. Yeah, I feel like they weren't very clear as to what it was. All we knew.
- [34:18]
Joel
That word is so tainted now.
- [34:19]
Matt
They will try to use other words. But even at that point in time, I don't know if we would have even known. Either way, all we knew was that we sit through this meeting, we get free breakfast, including mimosas, by the way, which was a huge perk. We're like, oh, that sounds nice. Fancy. I didn't realize the spring break was gonna be so nice. As well, as we each were gonna receive a $100 Visa check card or whatever. And, dude, I don't know if it was because we didn't have the money to spend, but we sat through, chatted with the lady. Actually, I do remember she turned to us and said, y'all aren't gonna sign anything and get one of these, are you? We're like, no, we don't have the money to do that. And she was like, well, you'd never know some kids were in here. And we were kids at the time, basically. But some folks were in here last week and one of them busted out an amex black card. And at that point in time, I didn't even know what an amex black card. I was like, oh, okay, sounds nice. But like, it's like a invite only sort of fancy card. They were rolling in. The money is basically what she was pointing to. But okay. But it didn't take her long to realize that we were not rolling.
- [35:17]
Joel
Would you do that same thing now?
- [35:19]
Matt
It depends on how long, right? You got to know how to value your time.
- [35:22]
Joel
Yeah, exactly. It depends on how good the perk is. Because a hundred dollar gift card to spend an hour and a half of your time, like, I don't think I do that today. When you're 22, you're like, all right, cool.
- [35:32]
Matt
Huge deal.
- [35:32]
Joel
100 bucks is a lot.
- [35:33]
Matt
Huge deal. Yeah, that allowed us to.
- [35:35]
Joel
And she made a lot more. She's gonna get a bunch of free nights, hotel stays on top of that vacation. But you also just have to realize and understand maybe how susceptible you might be to the hard sale, because those timeshare presentations are not for the faint of heart.
- [35:48]
Matt
Gotta be able to say no.
- [35:49]
Joel
Talked to someone else recently who said, man, they try to, like, bar the door on my way out. And, like, it can get truly that sort of vicious in a timeshare presentation. So I have not been to one. Makes me want to do one just so I can talk about it here on the show and just so I can have had that experience. Oh, gosh.
- [36:05]
Matt
What was it? Was it last year, a couple years ago, there was a steak dinner that was being presented for something. And you and I, we thought about actually going because. And honestly, it was a.
- [36:14]
Joel
We wanted the insider pitch, but also.
- [36:16]
Matt
It was at a, like, a pretty good steakhouse. And so we're just like, oh, why not? Then we can talk about it on the show. But again, it came down to us, not. We're like, dang it, I don't want to drive all the way in town.
- [36:25]
Joel
Do that on a sit through the presentation Thursday night.
- [36:28]
Matt
Exactly.
- [36:28]
Joel
Yeah. Okay. Let's talk about hotels too. Booking a hotel can be kind of crazy these days. There's all these third party sites, some of what you've heard of, some of what you haven't. And then prices can vary meaningfully, mostly because of extra fees that are added from site to site and it's tough to know which ones are legit and if they're even going to save you money. Copycat hotel sites in particular are ripping people off. This is according to an article from the Wall Street Journal. And so even if they're showing up in Google results, I think some people assume, Matt, that oh, if I Google this hotel and a range of dates that whatever sites they feed me, they're probably gonna be fine. Like I can book through here and I'm gonna get a better deal.
- [37:07]
Matt
Especially if it's a well designed site. Yeah, you know, I think that's sometimes where folks are getting, making, not making the best decision as well because it's like, oh man, this actually looks, I've been to the real web or the actual hotel's website, but this looks even better. So certainly I'm gonna get a better deal over here.
- [37:22]
Joel
Yep. But no, alas, it's not true. And the fees are typically ridiculous when you like what looks like a better, better price initially. Well, when you click all the way through and you see the price after fees, you're going to pay way too much. And most of these sites are non refundable. Like the rooms are non refundable on those sites. So you make the booking and there's nothing you can do about it. There's no recourse. I would say check the, check the URL of the site that you're, you're looking at when you're going to book a hotel and just be careful where you book and what, what what seemed like. And I think you can still get a better deal on hotels through Hotwire and Priceline. But the deals aren't as good as they used to be. Like 10 years ago those sites were incredible and like the savings you could get were ridiculous. But the hotel chains have caught on and they are often offering great deals directly to consumers. When you book through their website they're also, you might be able to get that refundable room in case you're not sure about where you want to stay and you want still the ability to shop around, have that bird in the hand. But just watch out where you're Booking and compare prices on multiple different sites, including the hotel's website before you just like, click book.
- [38:30]
Matt
That's right, man. So speaking of travel, make sure your driver's license is real ID compliant or you're not going to be able to get on the airplane next time you are traveling somewhere for a trip. This is, by the way, starting a lot of deadlines. So May 5th for the student loan being student loans being resumed. May 7th is the deadline. That's the cutoff for the Real ID. And this is yet another requirement. The that's been punted for years, but it appears that this time they're actually sticking with it.
- [38:59]
Joel
I swear, it's been like five years.
- [39:01]
Matt
Yeah, I think so.
- [39:02]
Joel
Punting on this.
- [39:03]
Matt
Yeah, yeah. Apparently one in five folks traveling right now has not updated their id, which isn't good. That's gonna be a lot of folks stranded at the airport leaving to, you know, snarls in the security line. Perhaps if you have updated your license in recent years, you are likely id, real ID compliant. But the way you can tell is there's the little star up in the upper right hand corner. That's the easiest way to know. Most states have the star. California, they've got the awesome grizzly bear.
- [39:31]
Joel
The star in the bear.
- [39:32]
Matt
Yeah. Yeah. There's actually a couple, I think Maine and Michigan, they've got like the star within the outline of the state, which also looks cool, but not as cool as the grizzly. But if you haven't upgraded, make sure that you book that DMV appointment as soon as possible. But you do. There's another option, though. Let's say you're like, oh, shoot, my flight. I'm leaving this afternoon or tomorrow morning.
- [39:55]
Joel
You'll be fine because it's not till May 7th. But let's say you're leaving May 8th.
- [39:58]
Matt
Let's just say you can't get that appointment made in time. Show up with your passport because you are able to get on with your valid, unexpired passport.
- [40:06]
Joel
Yeah. So the real ID is essentially trying to make the state IDs federally compliant. And it's been a whole process. But I think probably a lot of our listeners when they've updated their license, like, I swear I've had mine for a long, long, long time now. But if you haven't updated it, probably need to go do that so you can actually get on a plane. All right, Matt, that's going to do it for this episode. We'll put links in the show notes to some of the stuff we mentioned and let's do a newsletter referral Shout out to Juan M. Juan Thanks Juan, thanks for referring the how to Money newsletter to your friends and family. So Juan, all of your closest acquaintances.
- [40:39]
Matt
He is flying through the ranks. He got the immediate referral here. We bought him a beer recently as well. So Juan, we appreciate you my friend.
- [40:48]
Joel
And you. If you refer the how to Money newsletter to your friends and family, we'll mention your name here on the podcast and maybe even buy your beer too. If you refer enough folks.
- [40:58]
Matt
That's right.
- [40:58]
Joel
So you can find that@howtomoney.com newsletter. Matt that's going to do it for this one. Until next time, Best friends out.
- [41:04]
Matt
Best friends out. Joel We've all got different tasks in life that we enjoy doing. For me, that would be closing out the books on our family's personal finances every month.
- [41:27]
Joel
Nerd.
- [41:28]
Matt
But then there are some chores that are more of a pain, and for me, that would be grocery shopping, something I try and avoid if at all possible.
- [41:36]
Joel
Well, that's where Walmart steps in, because their subscriptions help you to stay stocked on the items you use most, whether that's milk and eggs or kitty litter and cleaning supplies. Find everything you need for your home at Walmart, in stores, online and in the app.
- [41:51]
Jack
In a world of economic uncertainty and workplace transformation, learn to lead by example. From visionary C Suite executives like Shannon Schuyler of PwC and Will Pearson of iHeartMedia, the Good Teacher explains the great teacher inspires. Don't always leave your team to do the work that's been the most important part of how to lead by Example. Listen to leading by Example executives making an impact on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.