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- [00:00]
Joel
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- [00:24]
Matt
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- [00:32]
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- [01:38]
Joel
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- [01:54]
Matt
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- [02:08]
Joel
Learn more at aarp.org skills welcome to how to Money. I'm Joel and yes again Matt is not here. Promise he'll be back soon. Today we're talking about dumpster diving, insurance, dodging and pudgy penguins. Yeah, that's right. Matt has spent multiple weeks behind bars and I can't tell you the full story. No, I'm just kidding. He's. Matt spends some time with his family. He'll be back soon. This is kind of a summer summer thing where I'm hosting this Friday flight by myself. But I hope this is the last Friday flight I host solo because it's not nearly as fun doing it by myself, even though I still love getting to talk about personal finances. And I'm glad you're along for today's Friday flight. Before I get to all the stories we found interesting, including pudgy penguins, it's a really interesting one. NFTs are back with a vengeance. I wanted to quickly highlight an email that listener Donnie sent. He lives in Maryland and there are all sorts of things in the personal finance world that even as someone who hosts a personal finance podcast, I'm unaware of. And a lot of that is because there are state specific programs or just small fine nuances that I have not begun to appreciate or research in depth yet. And so Donnie sent this email and at least for listeners in Maryland, and then maybe check and see if this, something like this is available in your state as well. There are cool perks for people who stick money aside in 529 plans for their kids. And so Donnie basically wrote and told me and gave a lot of detail on this. So look it up for yourself on the Maryland529.com webpage for details. But if you meet certain income requirements, basically if you don't make a ton of money and actually a ton of money, well that's in the eye of the beholder. But you can get a state match to your 529 plan in order to save for your kids college. So not only have 529 plans gotten more flexible lately and I looked up the Maryland 529 plan to see what the cost and expenses look like on some of those investments. They're quite low. So the Maryland 529 plan is I would say at least a really good solid one. Well, if you meet certain income requirements and you're prone to interested in saving for your kid's future, you might be able to get matching funds for from the state for making those contributions. Interesting thing, you have to you can't claim a state tax deduction and get this state contribution. So it's important, Donnie said to do the math to see which one is gonna work out better for you, but you might be able to get 500 bucks and maybe you would have only saved a hundred bucks in taxes or something like that for making this contribution. And in that case you'd want to take the state $500 contribution and you're getting out. It's like a net $400 win. So again, all of the those details are available on Maryland529.com, but it just reminded me like, oh man, there's so much to learn about personal finance. It never gets boring to me. And there are so many ways that the system is set up for people who are at least curious and paying attention to benefit. And if you live in Maryland, and again, if someone else, by the way, if you live in another state and you're like my state does something similar, shoot me an email. Like we want to highlight these things on the show. We want to make people aware of incredible benefits or free money. Right? This is almost like 401k match at work on steroids though, for your 529 plan. So it's really cool. All right. Congrats to all the graduates. I'm seeing more and more pictures posted. And then there's all these yard signs, the signs in front of neighborhoods, at least where I live, saying congrats to these grads and hey, where are they going to college. Well, and for college graduates in particular, you've been putting in tons of work for a lot of years. It's paid off with a degree. And we talked about the job market last week and how it's not as good as it has been for new college grads. But here's one thing that I wasn't wasn't on my radar until I saw an article in Indy Week and it was that college graduates tend to leave a lot of their possessions behind when they fly the cooperation. When they leave the dorm or whatever campus housing or off campus housing they live in, they tend to leave a lot of their stuff. They just maybe it's they don't have like a U haul or a trailer to stick all their stuff in. And so a lot of it ends up at the dumpster. Could be some really nice stuff, right? It could be some trash that nobody really wants, but it could be a nice couch or it could be in the case of this article, who wrote for Indie Week, she talked about salvaging some really nice stuff that graduates release leaving behind at the school closest to her high end tables, luxury sneakers, Lululemon workout stuff like shoved in a bag, fancy appliances like nice toasters and microwaves and stuff like that. And it one person's trash is another person's treasure. And so the author, she basically highlighted how she was able to salvage almost $7,000 worth of stuff to prevent it from being thrown in the trash and to put it to use herself and she created a spreadsheet, and she said, hey, this. This is something I'm going to keep. This is something I'm going to sell. This is something I'm going to give away. And I thought that was so cool. I mean, it really is. The one person's trash is another person's treasure. It's the most apt phrase here. Because as the college person, you're saying, this is a burden to me. I don't have anywhere to put it. Maybe I'm moving back home with mom and dad for a few months. They don't have room for this stuff, or I don't know where I'm going to end up. Maybe I'm sleeping on a friend's couch for a couple of weeks, and then I'll figure it out. And so in the interim, you just don't have anywhere to put it. So it ends up on the curb or it ends up in the trash can. I think this happens. I've heard from people in New York City right around the first of the month, because there are fewer places to store stuff. You just find stuff on the curb that you. Otherwise you're like, why are they getting rid of this? And it's because they just can't take it with them. And it's more of a pain, more of a hassle to take it. And if you can deal with the hassle of moving it, you just are the proud owner of something fairly nice that someone else tossed out. And I think it also says something about our culture that we live in an era of disposable stuff, Right? And it makes me think that even if an item is initially more expensive, it can cost you less over time to buy the nicer thing up front and to hold on to it. But then also because of extreme wealth in this country, when you think about the fact that, like, we have, on average, as a country, we're the wealthiest country in the history of the world, there's room here for entrepreneurs to make money based on the fact that. Based on some arbitrage, right? The fact that somebody has said, oh, I used this. I no longer need it. I'm tossing it aside. And you can step in and be the middleman or woman to enjoy the profit of that. I have friends who have done this before, whether it's with used clothing, they've started businesses where they go to thrift stores and buy stuff and list it on ebay. And I'm not saying that it's not a job. It is. It takes time. But if you have an Eye for that stuff. You can make a living literally just reselling things. Another friend who said, who did that with mid century furniture. And he just knows where to go, what to look for. And once you get an eye for that, you're able to find some things for 100 bucks that sell for thousands of dollars. And this reminded me of that where people tossing stuff out, you can benefit from at least just the way people don't take care of their stuff or get rid of it prematurely at the very least. By the way, I wish folks would donate that stuff so people can benefit instead of putting it next to the dumpster, tossing it in the trash, and then I don't know, maybe you don't have time for a side hustle, you're not interested. But I think it's an underrated way to, to get cool stuff or to make a buck and you have to roll up your sleeves and get a little bit dirty. I think that's one of the things too is this is going to take maybe a little time, a little effort. But even I think that can be. It's kind of like my dishwasher story recently, buying extra dishwashers and flipping them. And it's a way to turn something that would have been a cost center into a profit center and still get something new at the same time. I just love that that's possible if you're paying attention. Makes me think of one last story here on the dumpster diving front. I had a buddy who, who there was, back in the day there was an airline called AirTran. Southwest bought AirTran back in the day and that's how they actually moved into flying out of Atlanta. But AirTrain ran a promotion on Wendy's Cups. I think it was if you collected like 64 Wendy's cups, you were able to take a free one way or round trip flight. And I don't think there were any like limits to the amount of cups you could collect in the number of flights that you were able to rack up. And so my buddy would literally jump into dumpsters to get these Wendy's Cups because it meant free travel. And so yeah, these are the kind of things where if you see something like that and you're like that one time there was a Lyft promotion for new drivers and new drivers. All you had to do was jump through the hoops to sign up for Lyft, give one ride and you were able to get a thousand dollar bonus. And I was like, that's worth my time. That's, that's worth my time. So these things don't come along frequently. I wouldn't say, but they come along often enough that if you're paying attention, you might be able to score something. All right, Is your smartphone making your car insurance more expensive? The finance journal Kiplinger, they dove into that topic the other day and they found that third party apps are feeding information to insurance company insurance companies that could be used against you in setting rates. So I'm not talking about the apps from your insurance company. Right. Which we've talked about on the show before and I have used before in order to save money on my insurance. Basically, if you drive like a granny for a month or three months or however long they tell you to, you plug something into your car, they might say, hey, you're actually pretty safe driver, we're going to knock 28% off your insurance rate, which is pretty cool. I know some people are wary of those, but I think that at least from what I've seen and experienced, they can be a good way to save money on insurance. But what I'm talking about is actually a bunch of different apps that collect other information on you. There was another article just this week about how the Chinese apps Temu and Shein, they might be spying on you when you do your shopping and selling that information. Well, could it end up at insurance companies? Maybe, maybe. And so apps you would not think of as spying on you or collecting information that could be used to create a dossier and sell that information are doing so. So it's weather apps, shopping apps, navigation apps. Those are all those apps are all collecting some data if you allow them. And then they're selling that data to data brokers who sell it to insurance companies. And one of the main apps that was highlighted in this, and I swear we've talked about this on the show before, but I guess it just, it refreshed it in my called life 360. And this seems, this app seems like a benign app. It actually seems like it's an app that's poised to help families share location and keep track of each other and stay in touch with each other. Well, this app in particular seems to be collecting information that is being sold and it's leading to unexpected premium hikes for insurance, auto insurance in particular. But because of the data it's able, the robust data, it's able to collect about where you are and what you're doing. And the insurance companies are like, yeah, we'd like that because the more information we have, the more we can dial in rates for specific people if they're engaged in behaviors that we deem unsavory or unhealthy. And it is part of the brave new world that we live in. But it scares me and it makes me think that you should be really careful what apps you download. And also you should be careful what you let those apps share. There are permissions, right, that you give apps. And, and the tough thing about something like Life 360 is the permissions that you need to grant it are pretty crucial to the functioning of the app. So that's one of those app. Well, hey, you might want to find a different way to stay in touch with your family because if they're collecting that data and using it in a way that's not just to allow you to use the app for pro family purposes, they're using it to actually, you know, spy on you and sell, sell your data, then to me, that app would not be worth downloading. Opt out of sharing your data with apps whenever possible. And because of the quickly rising insurance rates we've seen around the nation, the number of uninsured is rising, especially on the homeowner's insurance front. And having insurance is crucial for most folks. And by the way, if more motorists are going around uninsured, it means you having insurance is even more necessary. Think about that uninsured motorist protection that protects you in case you get into an accident with somebody who doesn't have insurance. That could be your saving grace in case of an accident, a car accident. But on the homeowner's insurance front, statistics recently revealed that 7% of all homeowners report not having any insurance coverage on their house. And this might not be horrific given that. And this is a surprising, this statistic has always surprised me. Something like 40% of all homeowners own their homes mortgage free. And it's funny because I know very few of those people. Actually, this local woman who babysits our kids, Wonderful. She, we were just talking this morning and she doesn't have a mortgage on her home. And I was like, that's incredible. How incredible is that? I look forward to joining you in the ranks of that someday. But there aren't many people out there that I know of who own their homes mortgage free. But apparently the statistics show that 4 out of 10 people do own their home and they don't have a mortgage attached to it. And in that case, you can opt to go without insurance. But do you want to? Well, if you own your home outright, could you still afford to rebuild that home in the event of an emergency. That's a really important question. Those are the only folks who should be willing to take that gamble. And if you have a mortgage, right, your mortgage holder will find out if you ask your insurance. So you cannot ask someone with a mortgage on your home, say, I'm going to keep paying this mortgage, but I'm not going to have insurance. I'm going to take that risk. Because that puts the risk also on the bank or the credit union where you got your loan, and they're going to make sure you have insurance. They're going to get it for you, but it's going to cost a heck of a lot more if they buy it. So you want to be the one shopping around for insurance in order to find the best value for yourself because. Yeah. And if you're looking to save money, if you're looking to save money on insurance, raising your deductible, if you have the savings on hand can be a way to kind of split that baby right where you're saying the insurance is getting really expensive. And that is certainly true. We've documented the rise in homeowners insurance costs over the past few years. They've been significant. As costs have risen, the home prices have risen, insurance costs have risen too. And so the raising the deductible is a way to save on premiums and you have more skin in the game if you were to file a claim. But you got to have the cash on hand, right, in order to, you got to have the money to back up that increased deductible that you're taking on. One of my neighbors has a second property and he did not have insurance on this property. And a hurricane came through and wiped it out. And it was one of those things where obviously just super sad and definitely felt awful for him. He knew what he was getting into, though, and he knew, hey, insurance costs down here are so expensive, I just have to chance it. And the homeowners in certain parts of Florida, certain wildfire prone parts of California, who are, who have enough money to back up the, you know, to not go bust in case of their home burning down or, you know, succumbing to a hurricane, they can, I think, go without insurance. But again, you have to do it in a really calculated way. And the vast majority of people could not stomach that loss. And so you have to stomach higher insurance costs to avoid the potential disastrous cost of full replacement of that home that most people cannot actually afford. All right, one tweet, one tweet. Can cause a firestorm, and it can drive a news cycle. Right. Or one Truth Social post. And I don't even know if they're called tweets anymore. And I don't know if Truth Social is actually a social media network as much as the personal microphone of the president. But in similar way, one company can drive a narrative. And we saw that this past week, actually, as Campbell's Soup announced that consumers are cooking at home again, and in much higher numbers. Basically, they're saying, we're cooking at home, kind of like we were early in the pandemic days. Campbell's, yes, they sell soup, but they sell other items, too. So they're not just saying, oh, we're sold more cans of soup. So this is how we know this. They sell stuff like pasta and crackers. And so they're saying, we sell enough stuff in the grocery store aisle. And we saw an uptick in sales. This makes us think that people are cooking at home more. And I think there's probably some truth to that. Right. But I don't even know if we can call this a meaningful trend. But I will say this, that it's a good reminder that cooking at home saves you a ton of money. And that Americans have historically spent more on food at home than eating out. But that has shifted dramatically over the past decade. We've all gotten so used to. To restaurant culture, to eating out culture, that we're spending less time around our kitchen, our stoves, and around our tables at home. And we're spending a good bit more now of our money eating out than we are on groceries. And we've talked about grocery inflation, but guess what? Grocery. The increased prices of food has actually hit restaurants harder than it's hit grocery stores. So every time you eat out, you're shelling out a heck of a lot more money than you are when you're eating at home. And everyone kind of knows this, but when you put numbers to it, I think it helps. A meal at home costs the average. It's like $4 a person on average. And a meal out at a restaurant is like $17 a person on average. Obviously, it varies wildly. If you're going to McDonald's versus a Michelin star restaurant, that depends, right? But somewhere in the middle, $17 on average per person, that just simply. That means that the more you eat at home, the more you're going to save. And it makes me think that. I think the biggest cause of eating out versus eating at home is that people haven't planned ahead. And if you were to plan ahead a little bit more where like meal planning, batch cooking, thinking ahead on the weekends, what are we going to cook? And having everything on hand that can help you avoid those in a pinch. Ah, let's just go get a pizza. Ah, let's just go get fast food. And the other thing is frozen foods. So I think for us like Costco, frozen foods can be helpful in a pinch where we're like, what we would have done because we didn't plan very well was go out, but now we can throw in something that's frozen, whether it's even like salmon and rice, right? We get the frozen salmon at Costco and that's like a decently healthy meal that we didn't necessarily have to plan incredibly well for because life happens, right? So having those frozen foods on hand has at least been helpful to us. Trader Joe's is obviously another place where you can get great frozen meals. So think, think about, think about that. Because I love what Campbell's is saying. Hey, more people are starting to eat at home again. But the trend has gone so far in the other direction that even this small correction is just not enough. And if you, with groceries being one of those top line items in our budget, you could easily save, I think something like if you were just to cut your eating out in half from what it is currently the average person, you would save something like $7,000 a year. And that is not chump change. That is, that is insane that you could save that much by that one simple thing. Say, I'm still going to eat out. I'm just going to make it more rare. I'm just going to do it half as much as I'm doing now. And then it would make that big of a dentist. I just mentioned Costco if it weren't enough of a reason to be a Costco member. There's so many reasons I not to. You know, Costco doesn't pay to advertise on this podcast, but I will advertise for them just because I think they're such a good company and they can save you so much money. Matt, he's a big Aldi fan, but he's not here to defend Aldi today. So I can just talk great about Costco, right? Without hearing him chime in and be like, Aldi's better. But Costco actually just announced that they're going to be offering extra perks for, for executive members and the executive membership is $130. And some people say, well, that's why don't I just get the regular Costco membership. It's half the price. Well, if you're an executive member now, there are additional reasons to consider it or to enjoy it. And then if you haven't become an executive member, there are additional reasons to consider it. They're going to open up the warehouse an hour early for executive members starting at 9am starting June 30. They're also going to stay open an extra hour on Saturdays until 7pm but only for executive members. So if you got the basic membership, sorry, you don't get in during those hours. I believe that's kind of a riff on Sam's Club. I believe they do something very similar. Another thing, if you like Costco same day, and I've talked about this, when you can get the discounted Instacart gift cards, which they're not selling at Costco anymore right now, sadly. But I found some on Amazon just earlier this week. $10 off per $100 gift card. So I stocked up with as many as I could. But if you like Costco same day, which is fulfilled through Instacart, you'll get a monthly $10 for free on orders of $150 or more, which is just another perk when you think about that. That's $120 over the course of the year. And again, if you have the discount gift cards, then it can make financial sense. But the executive membership is essentially paying for itself. And the other thing, the other thing about the executive membership, I tell people to always go with the executive membership and not with the basic, because you can get a refund of the difference in up not getting enough benefit from that executive membership over the year. So if you're like, okay, I'll try it, but I don't know if I spend enough money there. Well, you can go up to the front desk at Costco and say, hey, I got the executive membership. My savings were like 20 bucks. It wasn't good enough. And they'll say, oh, cool, we'll just give you the difference, the $45 difference or whatever it was between the basic membership and the executive membership. Here you go. And so that is the guarantee that Costco has, which just means, like, especially now, everybody should be an executive member. All right, we've got more to get to on this episode, including, what if God was an investor? How would that work out? We'll talk about that. And I might throw some shade at the cybertruck for a second, too. We'll get to all that and more, right after this, it's an interesting time for business. Tariff and trade policies are dynamic, supply chains squeezed and cash flow tighter than ever. If your business can't adapt in real time, you're in a world of hurt. You need total visibility from global shipments to tariff impacts to real time cash flow. That's NetSuite by Oracle, your AI powered business management suite. Trusted by over 41,000 businesses, NetSuite is.
- [25:47]
Matt
The number one cloud ERP for many reasons. It brings accounting, financial management, inventory, HR into one suite. You have one source of truth giving you the visibility and control you need to make quick decisions. With real time forecasting, you are peering into the future with actionable data. And with AI embedded throughout, you can automate a lot of those everyday tasks, letting your teams stay strategic. We're a super small operation with just the two of us, Joel. But if we were any bigger, NetSuite by Oracle is what we would use.
- [26:17]
Joel
Yeah, if your revenues are at least in the seven figures. Download the free ebook Navigating Global Trade. Three insights for leaders@netsuite.com howtomoney that's netsuite.com.
- [26:28]
Matt
Howtomoney the first step in solving any problem that we have in life. Whether we're talking about a conflict in a relationship, why the check engine light is on right, flashing on the car, or even why we can't seem to set aside enough money for different goals we have, the first step is to clearly define the problem. We've got to assess the situation. What's going on with your spending? And that is where Monarch money comes in. But Monarch is more than just a budgeting app. It works as your own personal cfo, giving you full visibility and control over all your accounts, investments and financial goals.
- [27:02]
Joel
Monarch is truly a game changer and I love how you can choose goals that you want to hit and then you can rank them in order of priority. It's pretty rad. It it makes those goals a lot more concrete and tangible. My top goal has been funding our family summer travels.
- [27:17]
Matt
Nice.
- [27:17]
Joel
So start managing your finances to build the life you actually want. The truth is, without a clear financial picture, your financial dreams really can feel out of reach. And Monarch makes managing money simple, even for busy lives.
- [27:29]
Matt
That's right, man. Get control of your overall finances with Monarch Money. Use code how to money@monimalmoney.com in your browser for half off your first year. That's 50% off your first year@monimalmoney.com with code how to Money running your own.
- [27:45]
Joel
Business hits different in the summer because we take more time off to be with our family. It means we have to be even more thoughtful ahead of time so things run smoothly. But just like having the right plan helps us to avoid podcast nightmares, well, you can ensure that you and the people you care for most are prepared for anything too. Trust and Will makes estate planning simple and secure. So you can confidently create a will designate power of attorney, secure your digital assets and more. Visit trustandwill.com howtomoney to get 20% off their simple, secure and expert backed estate planning services.
- [28:20]
Matt
Yeah, when you're young and life is simple, getting a trust or will in place is not a high priority. But life gets more complicated. And when you start throwing kids into the mix, once you add an investment property or two, once that's a part of the equation, I know I've got the peace of mind knowing that I've got this checked off my to do list. And you can too. Because Trust and Will's website is easy to use, it's simple to navigate. Plus all your information and documents are securely stored with bank level encryption. Each will or trust is state specific, it's legally valid, and it's customized to your needs.
- [28:50]
Joel
Yeah, we can't control everything, but Trust and Will can help you take control of protecting your family's future. So trustandwill.com howtomoney and get 20% off. That's 20% off@trustandwill.com howtomoney all right, we're back from the break, of course. Got to get to the ludicrous headline of the week. This one comes from a website called Alpha Architect and the headline reads, even God would get fired as an active investor. And this is one of the best headlines I've seen in a while. And just, it's just kind of ludicrous to think that the creator of the universe would not be able to make it as an active investor. And this article did a really good job setting up why and then talking about just how even if you had perfect foreknowledge you as an investor, you wouldn't ultimately be able to make it. The people who you're investing on behalf of would be so mad at the drawdowns that they experienced during the tumultuous months that they would fire you. And so the gist was that even with like perfect foresight that active investors are going to get fired before their strategy is allowed to play out. They're saying, no, no, no, stick with me. This company, I know the drawdown is significant right now, but if you just hang on for the ride, I promise, like we're going to have a comeback and we're all going to make money. Well, the truth is, when you own the best performing stocks over time, the still individual stocks, those drawdowns can be so gut wrenching over months or even years that even if you had the conviction to stay the course, your clients as an investor would be like, sorry, dude, I'm not hanging with you. My portfolio is down 75% in the last 12 months. And that. So even if you knew ahead of time, you would have to be incredibly convincing to get people to stick with you during those times of greater volatility. And I think as individuals, right, if we had perfect foresight, we would say, I'm okay with greater levels of volatility if I know that at some point it's going to pay off in the long run. But as people who are investing our money with somebody who's making the calls on our behalf, we wouldn't be right. Because we don't have that perfect foreknowledge. They're trying to tell us that they do. And this is honestly kind of how some parts of the investing world function. You're believing somebody else's conviction. But those people don't have perfect foreknowledge, which means that their outcomes are even worse. But it was just fascinating to see that even if you did, even if you knew which stocks were going to be big, those drawdowns would be so significant that people wouldn't be able to stomach them. And very few people have the conviction to hold on during the toughest of times. I think about just a stock recently where there's this company called Carvana and they're trying to, which we've talked about on the show for selling your car to them or buying a used car and their stock price just got torched. Last year, it looked like Carvana might go away altogether. Even though they'd created this inventive new business model. Carvana stock got obliterated so hard and a lot of people thought it wasn't going to be around. If it hadn't stuck around, investors would have been wiped out. Then you think about what's actually happened with the turnaround of Carvana and their stock price zooming. But did people have the conviction to be able to hold on during those most tumultuous times? Some investors did and they reaped the rewards. But a lot of other people got out because a 90% drawdown in a stock price is really tough to stomach. And this is just another Pro, I think in the index investing camp the drawdowns are less severe. And you might say, well, I think I can pick the winners. But the truth is one, can you? And then two, even if you pick a winner, can you stick with that winner even when the going is tough? A la Carvana or a la Think about Apple. There have been times where Apple is a company was. It looked like they were almost dead. They recovered from the verge of bankruptcy back in those early Steve Jobs days. And so are you the kind of person that has the conviction that that stock is worth holding onto for the long term? I don't know about you, but I don't know that I have the time, the intelligence to study companies enough to have that sort of conviction that I'm willing to hold on through thick and thin in order to attempt to experience those greater levels of return. 54% of stocks, by the way, never recover after experiencing a 90% drawdown. And by the way, you could get even more risky by investing in leveraged funds which are becoming more widely available inside of retirement accounts or are set to become available inside of retirement accounts soon. The thought, I think behind these leveraged funds is that you can finance a vehicle, you can finance your education, you can finance a home. Why not use debt to increase what you're able to buy? Investment wise too. And this has always been if you're a real estate investor or if you've heard us talk about real estate investing, it's always been a big part of what makes real estate investing in particular attractive. Because if it weren't for leverage, almost nobody would want to participate in real estate investing. The returns just wouldn't be as robust. There's something about putting 10% down or 20% down on a property and saying I don't have to actually have the cash to buy the whole thing upfront. That juices your returns, right? Especially if you have a locked in low interest rate, it can make the investment look a whole lot more attractive. And the problem here though is greater potential reward equals greater risk. Leverage is something that can either make you look smarter, it can make you look really stupid. And if the market goes through an extended tough time, investors who are putting money into these leveraged funds, they could be wiped out. I'm not against all forms of debt. We talk about smart forms of debt on the show that there are some kinds of debt that in proportion used wisely and intelligently and not overdone, can actually help your ultimate wealth building goals. Smart use of leverage can benefit. What I would Call shrewd investors because we see what happened in 2008. Unwise investors who took on too much debt, who bit off more than they could chew, found themselves between a rock and a hard place. But investing in these sorts of leveraged funds, it's a little too risky for my blood as well. I'd avoid them again, stick to regular old index funds because the only certain thing about these leveraged funds is, is the extra fees they assess because of the added complexity that they are putting into your portfolio. So if you see these leveraged funds, yeah, they're a way that you could potentially increase your earnings but you're taking on more risk and I just don't think it makes sense. But even worse than leveraged funds would be investing in memes. And that is of course becoming, has became more common during the crypto heyday and the nft, the NFT invasion that we experienced. But you can now or very soon buy NFTs in ETF format in an exchange traded fund. So there was, there is a new ETF that is set to launch that you know, and it is passing the regulatory hurdles as we speak. And you might have thought NFTs were dead, that pictures of bored apes and stuff, they were talking about them on all the nighttime comedy shows, that those were gone for good. But they're not. And now there is a, something you can invest in NFTs. The an NFT ETF that invest essentially in this Pudgy Penguin project, Pudgy Penguins, which sounds, I don't know, exciting and cutting edge. Right? I'm kidding. I'm joking. Of course not. It's, I think a great way to lose your money quickly if you're, if you're interested in that. I went to the website because I was just so curious. Okay, what is the Pudgy Penguins NFT project all about? And they use some of the new techno jargon, of course on their website they say that they're here to. Well and they also use some goofy language to proliferate the penguin memetic culture. Not like, like meme culture and good vibes. And they're also fostering creativity, community and freedom. I don't know how Pudgy Penguins is fostering community and freedom. Creativity. Maybe they're kind of cute penguins but yeah, you can also go to their website and you can buy ridiculously expensive merch. Maybe that's how they're hoping to make money here. And maybe I'm not online enough, but this is just another investment I'm completely avoiding. I think we greatly disparaged NFTs back in the day, and I still feel the exact same way. Way, let's learn from the fact that bored apes are worth a fraction of what they used to be. The fact that NFTs are on the comeback and potentially you can invest in them in a even simpler form. Publicly traded ETFs. I don't think of that as a good thing. And yeah, I would just do it at your own peril. NFTs still make so little sense to me. I would rather own real art that I can hang on my walls than a jpeg that that is mine, but that can be copy and pasted. It still just baffles me that this is a segment of the market. But I think for most people who enter into it, you're going to lose money. And it's just the rare person who times it properly who makes money. All right, Depreciating assets are once again flipping the script. They're going up in value. Supply chain issues during COVID led to a situation where people were seeing their used car increase in value. It was a rare phenomenon. It was interesting to document on the show because it's something we don't see. Like, we always talk about cars as depreciating assets. Hey, that thing is going to go down in value. And just for a hot minute there, it was like, wait a second, your used car is actually, it's worth more today than it was yesterday. And in an even more rare feat, there were people who leased cars and then if they bought it out after the lease was up, they were able to make money too, because there was a spread on what they had to pay for. And typically this is almost never the case, right when the those contracts are written that you can buy the car and that it's actually worth more than what you have to pay to the dealership to buy the car then. And so people would, instead of just turning the car over, they would say, wait a second, I can pay $15,000 for this car, but it's actually worth 19 or 20,000. So, yeah, I'll take it. Even if I don't plan on keeping it, I'll sell it and I'll make the difference. So that was really interesting. But we're seeing maybe signs that this is coming about again, that the used car market, it's getting tighter because of tariffs, and demand for used cars seems to be going up. Supply seems to be dwindling, and then prices seem to be rising again. How long this is going to last depends on a Number of factors including tariff policy, which as we all know has been very, very whiplashy, very back and forth, you know, where tariffs land or if they land is anybody's guess. And I don't even know if the person in charge of tariff policy really knows where things are going to land right now. And so I think this is just another reason to hold onto your used car longer and to feel comfortable putting money into it. Within reason. There are obviously like rules of thumb of when, hey, my car needs $7,000 worth of work and it's worth $5,000. Yeah, I'm not putting that money into it, but it makes. I've been thinking about my 05 Acura. It's summer right now and the AC doesn't work and I've just been sweating it out like an idiot. And I've finally come to the conclusion, you know what, this is a good car. I'm going to put some money into it. I've kind of been holding out and not putting money into it in hopes that I would at some point just ditch it. And I'm like, you know what? No, I think I'm going to hold on to this thing longer. I'm going to put in the money that it needs to keep this thing around. And I do think for, even though it's a 20 year old car, I do think for a lot of people that is a wise move. Part of the reason I love used cars so much and I love holding onto cars so long is because it's such a significant part of most people's budgets and I love making it a really insignificant part of my budget so I can spend more on stuff I care about more. And one of the other main reasons that I just hate new cars, it's really hard for me to stomach buying a new car is, is because they tend to depreciate in value so dang quickly. And this is a great time for me to talk trash about the cybertruck and not because I have a vendetta against Elon or anything like that. Not, not it's not just a political thing, but, and obviously, you know, Elon has found himself in some the political fray largely of his own making. He seems to have annoyed everyone from every side at this point. But the value of the cybertruck has plummeted far more than the average new car that gets sold. Apparently cybertruck prices are down something like 40% just a year after being in customer hands. And this was, this is like a far cry from even just the normal depreciation that a new car typically experiences of 20%, that's still a lot, right? To buy, let's say a $50,000 car, and for it to be worth $40,000 a year later, that's a lot of money to lose in just a short period of time. But if you bought the $100,000 Cybertruck and it's now worth $62,000 just a year later, you just burned a whole pile of cash. And so that has been fascinating to watch. And I think this is, I think it's particularly true of the cybertruck, but I think it's also true of brand new models that it's hard to know what the customer demand is going to be and whether or not they're going to retain their value. In the same way, depreciation is something that we all face as car owners. The car, at least in normal times, the car is not going up in value, but the ownership timeline. And holding onto it longer, it can help kind of COVID up for some of those depreciation flaws. And the other thing that helps is to just buy older cars that are in good condition and hold onto them longer. Because if you buy a car that's at least five years old and you hold onto it for five or 10 years, the longer you hold onto that car you're paying, you're buying someone else's depreciating asset. And it's going to depreciate a heck of a lot less during the time that you own it. And the thing is, if you're smart about getting your car checked out and you're smart about looking at places like Consumer Reports for reliability ratings, you can hone in on cars that are going to be more reliable over time, that are going to be a better bet. Buying a 5 year old car doesn't mean buying even a 10 or 15 year old car doesn't mean you're doomed to be in the repair shop all the time if you buy smartly. And if you need one more reason not to buy a new car. I was just talking to a friend the other day, financing terms are getting worse. And my friend was saying he was being pushed into an eight year car loan. And he was like, but I wanted to do a six year car loan, but if I do eight, can I pay it off more quickly? And I was telling him about my four year rule that you don't ever want to finance a car more than four years. I don't know if he listened or not, but that's, and that's really up to you as an individual. But if you want to, my advice is to not buy a car that you can't afford to buy in cash. And if you absolutely do have to finance it, 36 to 48 months at absolute most and get that loan from a credit union. And I know cars can be like a status symbol in this country, but that's not something I buy into. And I think of it as a point A to point B, transportation. And if you want to think of it as a status symbol, that's fine. But only buy it if you can actually afford it. And if you have to finance it over a long period of time, you can't afford it. All right, last but not least, the Smartless guys. The guys from the Smartless podcast, Jason Bateman, Will Arnett, and Sean Hayes. They're launching their own cell phone service. I haven't seen all the details, but it's just funny because I think celebrities the two things they love to launch now, it seems like, are smartphone plans and tequila lines. But this is, this is a straight up Ryan Reynolds invitation. The dude who invested a massive amount in Mint Mobile and then finally sold Mint Mobile to T Mobile. After gaining a lot of subscribers and increasing the value, this seems like it might be another good option. I'm all for competition in this space, but Mint and US Mobile are still two of my absolute favorites for saving money. You could save a ridiculous amount of money by going with the MVNO carriers, mobile virtual network operators. And yeah, if you're with one of the the big companies, you're probably paying too much. So just a reminder and maybe the Smartless plan is going to be awesome and take the cake. I'll wait till they have a website up and more details on how much these plans cost. But always good to have more competition in a space that's already seen prices drop dramatically. All right, that's going to do it for this episode. I can't wait to have my best friend back in the near future. But I hope you have a great weekend and I'll see you back here on Monday for a brand new episode. Adios, Best friend Out.
- [46:36]
Sponsor
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- [47:35]
Joel
This is an iHeart podcast.