Friday Flight - Panic Pre-Purchasing, Un-Trustworthy TikTok Trends, & “Recession Hair” #972

Summary

How to Money: Episode 972 Summary Friday Flight - Panic Pre-Purchasing, Un-Trustworthy TikTok Trends, & “Recession Hair”

Hosts: Joel and Matt
Release Date: April 18, 2025
Podcast: How to Money by iHeartPodcasts

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1. Introduction to Today's Topics

In this episode, Joel and Matt dive into a variety of timely personal finance topics, including panic pre-purchasing driven by economic uncertainties, the rise of untrustworthy trends on TikTok related to counterfeit luxury goods, and the resurgence of frugality manifested as “recession hair.” They also touch upon debates surrounding emergency fund recommendations and the future of overdraft fees.

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2. Panic Pre-Purchasing Amid Economic Uncertainty

Matt kicks off the discussion by observing an increase in retail car sales by nearly 5%, attributing this surge to consumers anticipating higher prices due to impending tariffs. He notes, "Americans are expecting higher levels of inflation than they have in like something close to 34 years, which can lead to pre-buying. It can lead to this self-fulfilling prophecy" ([05:31]).

Joel adds that while it's understandable to pull forward some purchases, especially items already intended for purchase, consumers should be cautious. He warns against buying non-essential items solely out of fear of price hikes, stating, "Don't buy stuff that you don't need just because you're worried about price increases" ([08:12]).

Key Points:

• Tariffs and Inflation: Anticipated tariffs are causing consumers to accelerate purchases, impacting both new and used car markets.
• Supply Chain Concerns: Tariffs disrupt supply chains, especially for imported goods like toys, potentially making items more expensive and harder to source.
• Financial Prudence: Emphasis on maintaining cash reserves rather than diverting funds into unnecessary stockpiling, which can lead to financial strain.

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3. Untrustworthy TikTok Trends: The Allure of Counterfeit Luxury Goods

Matt brings up a concerning trend on TikTok where influencers promote purchasing luxury items directly from Chinese manufacturers at significantly reduced prices. He questions the authenticity of these deals, asking, "Why would you be willing to pay Burberry prices when you can get that same luxury item for pennies on the dollar?" ([13:26]).

Joel counters by highlighting that many high-end brands like Gucci and Louis Vuitton produce their goods in countries renowned for craftsmanship, such as Italy and France. He warns listeners against falling for deals that seem too good to be true, comparing them to buying knockoff items on Canal Street in New York: "There's a reasonable chance that by the allure of trying to snag some of these luxury items for cheap, well, in fact, you're gonna get a knockoff product" ([15:05]).

Key Points:

• Authenticity Issues: Majority of genuine luxury goods are manufactured in countries with established reputations for quality, making direct steals from manufacturers questionable.
• Risk of Counterfeits: Consumers are likely to receive fake or subpar products when bypassing legitimate retail channels.
• Financial and Ethical Concerns: Purchasing counterfeit goods not only wastes money but also supports unethical manufacturing practices.

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4. Recession Hair: Embracing Frugality Through Personal Grooming

The conversation shifts to frugality trends, specifically “recession hair,” where individuals let their hair grow longer to reduce salon visits. Joel appreciates this trend, suggesting it as a smart way to cut unnecessary expenses: "But don't forget about, like Goodwill and then just making do with less. I don't think there's any shame in that" ([12:28]).

Matt humorously shares his own experience of cutting his hair himself to save money, stating, "The average Dude's haircut is 30 bucks. And typically... you're looking at over $40,000 compounded in the market" over decades ([30:11]).

Key Points:

• Cost Savings: Reducing salon visits or cutting hair at home can lead to significant long-term savings.
• Shift in Social Standards: Embracing frugality becomes socially acceptable, turning cost-saving measures into personal style statements.
• Psychological Benefits: Viewing frugal choices as badges of honor rather than sacrifices fosters a positive mindset towards saving money.

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5. Emergency Funds: Extending the Safety Net

A heated debate arises around the appropriate size of an emergency fund. Joel expresses skepticism about former guest Ramit Sethi’s recommendation of a 12-month emergency fund, arguing that the conventional 3-6 months should suffice: "I think a lot of people that the emergency fund they built up is likely sufficient for most cases" ([23:42]).

Matt partially agrees, suggesting that while the traditional 3-6 months is generally adequate, extending it may be prudent for those in less stable financial situations: "If you're somebody who works for a company that's looking to downsize significantly... maybe you should have closer to four to five or six" months ([24:03]).

Key Points:

• Standard Recommendation: A 3-6 month emergency fund is typically sufficient for most individuals.
• Extended Savings for Stability: Those in volatile job markets or with single incomes might benefit from a larger emergency fund.
• Avoiding Fear-Based Metrics: Emphasizes individualized financial planning over blanket recommendations influenced by market fears.

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6. Overdraft Fees and the Consumer Financial Protection Bureau (CFPB)

The hosts address concerns about the potential resurgence of high overdraft fees following the decline of the CFPB’s regulatory influence. Joel points out that while traditional banks like Wells Fargo and Chase impose hefty overdraft fees (e.g., "$34 per overdraft infraction" ([27:46])), newer online banks such as Capital One, Discover, and Ally have eliminated these fees entirely ([27:20]).

Matt underscores the importance of choosing banks that do not charge overdraft fees, advising listeners to "go with a bank that doesn't charge overdraft fees" ([27:42]).

Key Points:

• Diverging Bank Practices: Traditional banks continue to charge high overdraft fees, whereas online banks offer fee-free alternatives.
• Consumer Choice: Encourages listeners to select banking institutions that align with their financial well-being by avoiding unnecessary fees.
• Regulatory Impact: Highlights the consequences of diminishing regulatory oversight on consumer costs.

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7. Smart Technology Purchases: The Case Against 8K TVs

Matt introduces the topic of rapidly advancing technology, specifically 8K TVs, questioning their necessity and value. Joel concurs, citing expert opinions that suggest current resolutions do not offer significant benefits over 4K for most consumers: "Their take was that the older OLED technology does almost as much at a fraction of the price" ([32:03]).

Key Points:

• Technological Advancements: The leap from 4K to 8K may offer diminishing returns for everyday use.
• Cost vs. Benefit: High-end technology often comes with premium prices that may not justify the marginal improvements.
• Smart Purchasing: Advises consumers to wait for price drops and technological refinements before investing in next-generation gadgets.

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8. Guaranteed Pricing Offers: A Financial Mirage

Matt discusses the trend of companies like Verizon and T-Mobile offering guaranteed pricing locks for extended periods (e.g., three years) on their services. Joel warns that such offers often benefit the companies more than the consumers, as they prevent customers from taking advantage of decreasing prices in competitive markets: "It's what sounds beneficial. Yeah. To you is ultimately beneficial for them" ([34:22]).

Key Points:

• Consumer Caution: Encourages skepticism towards long-term price locks that may limit financial flexibility.
• Market Dynamics: Highlights the advantage of remaining flexible to benefit from market-driven price reductions.
• Informed Decisions: Urges listeners to thoroughly investigate and understand the implications of guaranteed pricing before committing.

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9. Concert Ticket Payment Plans: Financially Unsound Advice

The hosts critique the financial advice suggesting installment payment plans for expensive concert tickets, specifically Coachella. Joel dismisses the LA Times' endorsement of spreading out a $600 ticket cost, arguing that it encourages unnecessary debt: "You should skip Coachella... climb for next year's version if you don't have the money" ([36:22]).

Matt adds that installment plans can foster poor financial habits, leading to living paycheck to paycheck by automating expenses without mindful budgeting: "It in fact makes you an installment buyer... you're living paycheck to paycheck" ([37:24]).

Key Points:

• Debt Avoidance: Advises paying for major expenses upfront to prevent accruing unnecessary debt.
• Financial Discipline: Emphasizes the importance of budgeting and saving for significant purchases rather than relying on installment payments.
• Skepticism of Modern Financial Products: Critiques the prevalence of buy-now-pay-later schemes that can trap consumers in continuous debt cycles.

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10. Conclusion and Final Thoughts

Joel and Matt wrap up the episode by reinforcing the importance of making informed financial decisions, maintaining frugality where necessary, and being wary of trends and offers that may seem beneficial but carry hidden pitfalls. They encourage listeners to utilize available resources, such as their show notes and newsletter, to further their financial knowledge and stability.

Notable Quote:
"I think it's instead of a status symbol being a fancy car, it's the cool shirt I found that nobody else has because it's one of a kind because I got it from the Goodwill." — Joel ([13:07])

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Final Takeaway:
This episode of How to Money provides listeners with practical insights into navigating financial uncertainties, making prudent purchasing decisions, and fostering healthy financial habits amidst evolving economic landscapes.

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Resources Mentioned:

• letsmakeplan.org – Find a Certified Financial Planner (CFP)
• Goodwill – Thrift stores for budget-friendly shopping
• NetSuite by Oracle – Business management solutions
• How to Money Newsletter – Subscribe for more financial tips

Transcript

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[Joel]

Welcome to how to Money. I'm Joel.

[Matt]

I'm Matt.

[Joel]

Today we're talking panic, Pre buying, untrustworthy TikTok trends and recession hair.

[Matt]

Do I always have recession hair? Joel, how's my hair look right now?

[Joel]

Looks a little recession. Not because you're hanging, but just part.

[Matt]

Of entering into middle age, my friend. This is our Friday flight. This is our quick sampling of the different headlines that we came across this week and how they're gonna impact your personal finances. By the way, stay tuned. On Monday, we're gonna be talking about, I mean within this Friday flight we're talking about tariffs to a certain extent.

[Joel]

But can't Avoid it.

[Matt]

Yeah. On Monday's episode, we actually have a special ask how to money episode lined up for you, specifically addressing a whole lot of tariff concerns that folks have.

[Joel]

A lot of listener questions. Look forward to that people sent in because of course they are going to impact our lives in so many ways, depending on what form they fully realize themselves. But. Yeah, so people had a lot of questions about that. We tried to tackle as many as we could and looking forward to. Yeah. Sharing that one with you guys on Monday.

[Matt]

So you know what I've been seeing around town lately, Joel? Not only on the interstate, I feel like I've seen them most of the time on the interstate, but even this morning as I was biking into our studio, I see a Tesla pass me. And it's got the sticker. You know what I'm going to say? It's got the I bought this before Elon went crazy sticker on there. You've seen those, right?

[Joel]

I've seen those, yeah. What I found interesting though, I read about the guy who started a company selling these Elon stickers. Apparently makes like $100,000 a month. No selling these stickers now.

[Matt]

Oh, my gosh.

[Joel]

It's capitalism at its finest, man. Hey, if you guys. And I get it too, as a Tesla driver, you might want to signal, especially with the violence that's being done to Tesla.

[Matt]

What do you think about the signaling?

[Joel]

I get it because you don't want someone to come up and accost you for driving a Tesla. They think maybe it's a political stance, but for most people it's not.

[Matt]

It's a product that someone has purchased. This is not a political statement. How did Tesla's go from being a statement of like, I'm trying to help save the Earth and I'm trying to be green, or maybe I just like to drive a car that's got an amazing amount of instant torque. Till thinking that this is, you know, political statement, I think you know how.

[Joel]

It happened, but I think most people are less aware or care less about the political side of things. And they're just trying to drive a car that they like.

[Matt]

I. I guess I get it. It's certainly. How much are the stickers? How much do they cost?

[Joel]

I don't know, but apparently like five bucks or something. Yeah, apparently there's enough profit margin for this guy.

[Matt]

This guy's making a ton of money. It's a cheap form of insurance, right? Like, yeah, if you are trying to keep folks from keying your car, slashing your tires, even lighting your car, on fire. I certainly, I certainly understand that.

[Joel]

It's just sad that you would have to do that.

[Matt]

I think it probably depends on where you live too. Right. Because if you were living in an environment where maybe it's a bit more progressive or left leaning and you're driving a Tesla around, you're getting that bombastic. Is it bombastic side eye. Is that what the kids are saying?

[Joel]

But then again that's where a lot of those Teslas reside. Think about like per capita there's more Teslas in California than there are in like maybe more red leaning states.

[Matt]

So fascinating to see if it truly does become a political statement if folks who are more right leaning tend to tend to buy buy vehicles. But speaking of vehicles, actually did you see last month that retail car sales Increased by almost 5% While we're talking about cars here, not just EVs but just new vehicles across the board shot up in anticipation for the, the upcoming tariffs.

[Joel]

A little bit of that pre buying action.

[Matt]

At this point, Americans are expecting higher levels of inflation than they have in like something close to 34 years, which can lead to pre buying. It can lead to this self fulfilling.

[Joel]

Prophecy of sorts because yeah, if you think prices are going to go up, you're more likely to buy more now.

[Matt]

Sure.

[Joel]

Because you don't want to pay the higher price tag later.

[Matt]

I get the impulse and I think it can make sense if essentially you're kind of pulling some of that purchasing forward. Right. If it's an item that you were already planning on buying. But this is also hard to gauge because tariff levels are constantly changing. If there's anything that we've learned, it's.

[Joel]

That which is not normal tariff policy, but it's, it is the new normal.

[Matt]

Like if you bought an iPhone that perhaps you didn't need, well, you might be kicking yourself because they were exempted from the tariff. Consumer spending at Apple was up 20% in the first week of April. Before that carve out, before that reprieve was granted. Shelf stable foods have even been purchased at higher levels as well. I think some folks, there's reports of some folks stocking up on Christmas items as they're looking ahead. Because think about all the plastic that comes from. It's not just plastic, but we buy.

[Joel]

Most of our toys from China. And if there is 145% tariff that remains on those Chinese goods that come overseas, yeah, Christmas is going to get a heck of a lot more expensive. And companies, American companies aren't going to be able to shift on a dime. And Source those toys elsewhere. So I get some of that impulse and we don't know how this is going to shake out. Ultimately, I will say the silver lining to buying your Christmas presents early, maybe you do get a better deal. But also you don't have to worry about Christmas shopping later on. I mean, that sounds kind of nice.

[Matt]

Until Christmas rolls around and it's just like, oh yeah, I'm not interested in that hobby at all anymore. You're like, well, sorry, tariffs.

[Joel]

Mom, that was six months ago. You're totally going to disappoint your kids.

[Matt]

Yeah.

[Joel]

Well, so interesting to see the knock on effects. Right. And the kind of domino impact of tariffs. And so like used car prices have actually gone up for the first time in two and a half years because of tariffs, which we thought that the.

[Matt]

Pandemic was going to be the last time we ever saw used car prices go up because of the snarled supply chain. Right, right. Like that's why like everybody was looking to used and we're like, this is a one time blip.

[Joel]

That was an anomaly.

[Matt]

Here we go. Yep, yep, another anomaly.

[Joel]

Another anomaly. Again in short order because the supply chain of new cars is being threatened by higher prices. It's leading to less supply and that pre buying we're talking about and then higher prices on used cars as more people turn to that market to get what they need.

[Matt]

Trump is now the ever grand that's stuck sideways in the.

[Joel]

Yes. In the, in the Panama Canal.

[Matt]

Yeah, yeah. Actually it's not the. Well, yeah, luckily the Panama has not entered it into the equation.

[Joel]

I guess regarding the name changed on that one yet.

[Matt]

Oh man.

[Joel]

Well, so, so this is less, I think of capitalizing on a sale and more like buying now because of looming threats. Right. This is what people are doing and I think it's okay to purchase some items ahead of time. But in these uncertain economic times, Matt, I think it's also important to note that cash is important. Right. When you're not sure what's going to happen with pricing and maybe when you're unsure what's going to happen with your income. Most folks just can't afford to stockpile or buy significant amounts of items ahead of time, particularly those more expensive items. Like I was going to get an iPhone next year, I might get it now. Well, that's, that's like a thousand bucks. Right. And most people just can't afford to do that in anticipation of saving 1200 bucks a year from now. I think more than anything what we want to communicate to people is just not don't buy stuff that you don't need just because you're worried about price increases, because those, as we've seen, are nearly impossible to predict. And it's hard to know where tariffs go from here. And I get the anxiety that people are feeling, but I also think, well, spending more of your money and having less of a cash reserve isn't necessarily the right way to approach this. And that could lead to even more anxiety and potential heartburn later on.

[Matt]

People got to have their stuff. So I think that's the mentality. Hey, let's talk about pandemic throwbacks for a second longer here. Remember the restaurant surcharges back during COVID Oh, yeah, they. Was it like specifically for ppe, the protective.

[Joel]

That's right.

[Matt]

What was it? What did that even stand for?

[Joel]

Personal protection equipment or something like that. And I think people didn't mind it in the moment, but the longer those tariff surcharges lingered on restaurant bills, that's when people started to get.

[Matt]

Yeah, yeah, it's just like, isn't the government sending out like free tests and there's masks everywhere now, like early again? Everyone gets a buy early on when we had no idea what was going on. But yeah, it didn't take very long before I at least was annoyed at some of the surcharges that we're seeing specifically at restaurants. Well, on that note, more companies are now imposing tariff surcharges. So instead of jacking up their prices, they're finding a way to communicate and to let their customers know that, hey, government policy is to blame here for this bigger bill. And depending on where different companies are sourcing their products from, depending on how quickly they're able to pivot, it won't just be a tariff surcharge that you're seeing, but actual higher base prices as well. Companies out there, particularly, particularly the small and medium sized ones, they're in a tough spot. You know, they're kind of stuck between a rock and a hard place. They're trying to figure out how to proceed. And while there is a whole lot of uncertainty now, I think it's again, sort of like early on during the pandemic, let's just kind of be kind to everyone, to all businesses as they in particular are trying to figure out how to proceed and how to stay solvent.

[Joel]

Yeah, essentially, yeah. I talked to someone the other day and they have a side business and they buy cookware from China and they just canceled a large order because they were like, well, we can't, we don't know if we can be profitable. Right. With this tariff in place. And so right now, like, this business is on hold. And I think there's a lot of people that are in a situation like that. And for businesses that can't afford to do that, they still have a product they have to get to their customers and. And they don't want to want it to look like their prices are jumping dramatically and they want to communicate. Like you said, Matt, hey, this is the reality we're all living in right now. Here's how much more it's costing. Here's why I'm passing on this higher cost. I think it makes more sense than maybe some of the long lasting restaurant surcharges we saw. Sure. But I would say use this maybe as an excuse as an individual consumer to start buying secondhand. Right. His tariffs and then the threat of more widespread tariffs, particularly on the countries that manufacture so many of our clothes. They've been great for thrift stores. People are shopping at thrift stores more often. You and I, we're like, hey, no matter what's happening in the economy, shop at your local thrift store anyway. So it's not just that folks are trying to avoid paying more for their garments. They're just also worried about more lean economic times coming about. And downturns, man. What happens in a downturn always is bargain basement options. They tend to see a whole lot more traffic. And it's also interesting. When the economy's booming, people save less. When the economy is tightening, people tend to save more.

[Matt]

More.

[Joel]

It's like the opposite reaction you would assume. And we're already keen on places like Facebook Marketplace. We like yard sales. Matt, I know you like freebies on the curb too. That's kind of your jam.

[Matt]

Curb alerts.

[Joel]

Yeah. But don't forget about, like Goodwill and then just making do with less. And I think I might sound odd, but I don't think of these shifts in shopping as like a negative thing. Really what you're doing is you're making smart changes to stretch your money. I don't think there's any shame in that. And I think actually, like, I wear my awesome Goodwill finds with a badge of honor. I think it's instead of a status symbol being a fancy car, it's the cool shirt I found that nobody else has because it's one of a kind because I got it from the Goodwill.

[Matt]

Or the shirt's one of a kind because it's got holes in it, which.

[Joel]

Some of mine do.

[Matt]

Which literally I'm going to turn around here. Can you see my back?

[Joel]

Oh yeah, that's a big holder. Pretty large hole.

[Matt]

You know what? I like this pocket tee and I was like this close to top.

[Joel]

With your recession hair combined with the holes in your shirt, people are probably worried about you, buddy.

[Matt]

We will get to that one here in a little bit. But let's talk about a recent TikTok trend that has been gathering steam. There have been videos from influencers online. Maybe you've even seen some of these influencers because you follow them. But they are claiming that luxury handbags or Lululemon leggings that are being made in China, that you yourself can in fact have them for a steal by buying directly from these Chinese manufacturers.

[Joel]

Sounds enticing. Cut off the middleman.

[Matt]

Yes. Why would you be be willing to pay Burberry prices when you can get that same luxury item for pennies on the dollar? Joel? And it sounds pretty cool, but it's not necessarily true. A decent chunk of high end luxury products are actually made in France and Italy. They're not made in these Chinese factories. The vast majority of Gucci items, for instance, are made in Italy. Same with Louis Vuitton. Some even make products in the US that experiment actually hasn't gone well. There's been reports of trying to train up US workers to make leather handbags. And it's like, oh yeah, they're really bad at doing that.

[Joel]

The artisans in Europe are better at this.

[Matt]

Apparently it's taken years and all they're doing is just like a minimal leather pocket or something like that on a handbag. It's actually pretty funny. But many luxury items are actually manufactured in China and then shipped elsewhere to be quote unquote finished. So if you opt to go this route, it reminds me of buying on the streets of New York. Jewel. There is a reasonable chance that by the allure of trying to snag some of these luxury items for cheap, well, in fact, you're gonna get a knockoff product. You're not getting a crazy deal because you bought direct. You're buying a fake product. Have you ever specifically gone up to New York and gone to Canal Street?

[Joel]

Oh, for sure. I remember going in high school and we called them Focalis. Cause Oakleys were really cool back then. And you would buy a pair of Focalis, you knew what you were getting. I mean, you Knew they were $8 for a reason, not because they were real Oakleys that had been cut out. The middleman. It was because they were a knockoff that was much cheaper.

[Matt]

I think that there's a certain sort of badge of honor in getting certain fake items. Like, the first time I went to, I drove up there in my Jeep with my buddy Kyle, actually. So we didn't drive to New York. We drove to Poughkeepsie and took a train from Poughkeepsie to New York. It was the opposite of the something corporate song. We didn't wake up in the car, but we specifically, of course, you wanted to do like, hit all the highlights in New York City. And I can't remember what kind of watch it was. I think it was like a Breitling. But of course I knew I was getting a fake. I think it was like a pritling or something like that.

[Joel]

I don't know.

[Matt]

But the hands on the face of the dial. Right. Like, they fell off in like a year. But, like, I knew that was gonna happen. But it's also. That's part of the allure.

[Joel]

Yeah, exactly. I mean, it's like a fraction of the price. It's interesting to see these. These, like, people literally work in some of these Chinese factories, trying to reach out directly to American consumers and say, hey, skip the name brands. We have something very similar. Or they're basically making it sound like it's the exact same, but you can get it directly from them for a lot less. And there are.

[Matt]

There are some source it direct, baby.

[Joel]

Yeah. And obviously we know that a lot of luxury items are kind of handmade and expensive for a reason. But then other luxury companies use manufacturers in China and in India. Right. And then sometimes they'll finish the item in Europe, so they can say that it's made in Italy because. Yeah, for some reason, consumers don't value items made in China as much as they do as something that at least seems like it's handcrafted in Europe fully. This reminds me of dupes, too, which we've talked about on the show. Some folks pursue dupes passionately. You know, people. People want the vibe without forking over the big bucks. Walmart, for instance, had the. The fake Birkin bag, the workin that sold out incredibly quickly. And then people are reselling on ebay for ridiculous sums of money.

[Matt]

Workin bag.

[Joel]

Yeah, but you know, for like the real Hermes Birkin bag, those are made by individual artisans, like with a single piece of leather. Right. And I think they're hand stitched by a single artisan. They sell for many, many thousands of dollars, if you can even get one. I've got no problem with people buying luxury items. I don't partake. I don't care about luxury goods, but. And I don't care about attempts to mimic those goods and create something that is similar, even if it's lower quality. Just don't think that you're getting a real Louis Vuitton handbag for five bucks or something like that. I mean, there's this one video where this lady is like showing these persons, she's like, $2, $2, $2. It's just not going to be the same thing. It's not going to be the same quality.

[Matt]

Nope.

[Joel]

And most luxury goods, of course, we all know this, they're an attempt at signaling wealth. But if you spend a lot of money on luxury stuff, it has the opposite impact. You're draining your bank account to signal wealth that you no longer have. And I think there are always exceptions. There are ways to get something similar in this kind of wild west consumer environment that we live in. But you got to do your due diligence and you got to realize that the thing that's being sold to you for five bucks is not the same thing as being sold to you for 1500. And hey, maybe you don't need either.

[Matt]

That's right, man. But we've got more to get to. We got more personal finance stories to get to. We're going to talk about the cfpb. We're going to talk about Coachella. What other show is going to talk about both the CFPB and Coachella in the same podcast? We got that and more right after this. 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.

[Joel]

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[Matt]

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[Joel]

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 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?

[Matt]

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[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 hey there folks.

[Matt]

I am Matt.

[Joel]

And I'm Joel from the how to Money show. Matt, it's April and I've got spring break on my mind. Please tell me you got something fun lined up.

[Matt]

Oh, dude. Typically I am a planner, but we're actually switching things up this year. We're gonna go a bit more spontaneous. I've been searching on Airbnb for some inspiration. You know, we've narrowed it down to trying to find some warmer temperatures. We kind of got that spring fever. So we're gonna try to find something. Maybe, maybe some sand to dip my toes into.

[Joel]

I like it.

[Matt]

But how about you?

[Joel]

Okay, so we've actually got our plans locked in. I'm taking the fam to this charming little Bavarian style town called Helen. It's up in the Georgia mountains.

[Matt]

I know about Helen.

[Joel]

Yeah, well, I found the perfect cabin on Airbnb, complete with a hot tub. Which I'm definitely going to need after running a trail half marathon while I'm up there too. Oh, that is right.

[Matt]

I forgot about the half marathon. Man, it sounds like an adventure. And you know what? While you're enjoying that hot tub, you could actually have your own place listed on Airbnb. Earning some extra cash while you are away.

[Joel]

True. And now with Airbnb's co host feature. I hear it's easier than ever for anyone who's been overwhelmed by the idea of hosting. A co host can do the hosting for you and help manage your reservations and your guests. Find a co [e-mail] host all right, Matt, we're back. We got more money saving information we got to get to on this episode. This, this is of course time for the ludicrous headline of the week. This One comes from MarketWatch. The headline reads, Experts now recommend a 12 month emergency fund. And I hate to do this, Matt. I don't want to throw a well intentioned person under the bus here.

[Matt]

You gonna throw me under the bus? I like 12 month emergency funds.

[Joel]

I'm not. I just think. Okay, so this was a specific recommendation of a former guest, Ramit Sethi. And we've had him on before. We like Ramit, but he's been making the rounds. He's now telling folks that 12 months is the emergency fund they need now. And I think there's a difference, Matt, versus telling people, hey, if you really want to save up to 12 months, more power to you, go for it. I get the impulse to tell people to save more. I like savings too, and I have a larger than six month emergency fund personally. But I think also this is moving the goalposts on people. When you've told people for so long, hey, you need three to six months worth of savings, which by the way, most people don't have anywhere close to that. I'm sorry, but changing the metrics and then telling everyone to quickly amass six or nine months more worth of expenses, it sounds like a panic reaction to me. And so I get the destabilizing effects of tariffs, the higher potential for a recession, and really the stomach churning nature of bigger market drops that we've seen. But either three to six months of emergency money, either it's enough or it isn't. And I don't think that changes. Like we know the whole reason of an emergency fund is to save for potential tough times. Just because things have gotten a little more squirrely doesn't mean we need to change the prescription, I think for potential tough times.

[Matt]

All right, I might disagree with you just a little bit here. I might kind of side with Ramit because when things change, when like the facts on the ground change, I think it's worth considering how much money you've got in cash set aside as savings. And so like for someone who's got three months, you know, I think this might be a call to say all right. Hey, maybe I should have like closer to four to five or six. Or if you're somebody that has like.

[Joel]

Nine, you're saying 45.

[Matt]

Oh man, you're 45 months is a bit extreme. Full stop. I'll put that out there. But I certainly hate what seems like fear mongering though, like, and that's the part that kind of drives me crazy is that if it is like a knee jerk reaction to the headlines, it's just like, oh man, you need to be doing this, then certainly I don't like that. But if you are someone who believes that and maybe you're somebody, your financial situation isn't super stable. Maybe if you're a one income household, if you're somebody who works for a company that's looking to downsize significantly, I.

[Joel]

Would have said you should have already been towards that six month range. Not totally.

[Matt]

Yeah, yeah, absolutely. But then beyond that, given the sort of uncertainty that we've seen in the destabilization of our economy in certain specific industries as well, I think it's. If you think that there are big changes coming. Well, I think it would not just be worth considering that advice, but I think it would be wise and even prudent to sort of follow your gut to what you as an individual feel comfortable with. Because I just don't want there to be like a blanket prescription of like, no, you shouldn't be doing that. Because when, you know, folks batten down the hatches when they see a storm coming. And I think that this could be a way for folks to do that. I don't like that personal finance in this way feels like it's getting slightly political because a lot of times you see the different headlines and it seems like it's just a reaction to different publications that are trying to stir up a whole lot of clicks and eyeballs, basically.

[Joel]

Yeah. So I guess you as an individual can determine how big your emergency fund should be and whether you should be more worried right now increasing your savings. And I think you make a good point, Matt. I think it can make sense to reassess how much you have in savings and how vulnerable you are to changes right now. But I guess just a blanket prescription to change how much you have in savings feels like a little too much to me. And I think a lot of people that the emergency fund they built up is likely sufficient for most cases. And the truth is too, we can't prepare for everything. We cannot be fully prepared for everything. And so it might mean missing out on some of the investments that you would have made and some of the tax advantaged accounts you would have stuck money into if you were to say, oh, wait, 12 months is now the standard. Guess I got to get there asap. And that could, you know, create other problems in your financial life too. That's true. All right, while we're talking about savings and banks, should we worry about overdraft fees coming back? Well, USA Today had a headline that said it's time to worry about overdraft fees. And they, they highlighted the demise of the Consumer Financial Protection Bureau, which we've talked about on the show.

[Matt]

Speaking of negative headlines.

[Joel]

Yeah, they're not looking, they're not looking so hot right now. And they talked about the scrapping of the proposed rule to bring overdraft fees down to five bucks later this year. That was supposed to happen in October and now it ain't going to happen. So yeah, some fear mongering articles are being written about that. And yes, it's true, when you look at the numbers, overdraft fees have become a lot more costly over the past decade. But at the same time, there's also been a trend reversal led by some of our favorite online banks, to eliminate those fees altogether. So the disparity is significant.

[Matt]

Right.

[Joel]

Even if overdraft fees don't have a federally mandated cap, you as a person, you can still avoid them by doing business with banks that don't charge them. So Capital One, Discover, Ally cit, all of those banks that we typically recommend, they don't charge any sort of overdraft fee at all. They've eliminated them altogether.

[Matt]

Those are the good ones.

[Joel]

Yeah. Wells Fargo, what do they charge, Matt, per overdraft infraction?

[Matt]

More than ally 35 bucks. That's ridiculous.

[Joel]

Chase.

[Matt]

So much money.

[Joel]

Chase gives you a deal at 34 per time you overcharge your account in.

[Matt]

Case that $1 was going to make a difference for you.

[Joel]

Right.

[Matt]

There you go.

[Joel]

And then the incredibly benevolent folks at bank of America, they charge a much less offensive $10 per overdraft infraction. That's still offensive in my book, but it's less offensive still.

[Matt]

Infinitely more than zero, right?

[Joel]

Exactly. And so I guess people might read this and they might be upset at the fact that banks aren't being mandated to remove overdraft fees or reduce them significantly. And I say, well, there's actually a lot of competition in that space and some awesome banks have made that part of their marketing materials. Kind of like Southwest did for free checked bags. No longer, sadly, but it's one of Those things that makes you stand out in this banking environment. Go with a bank that doesn't charge overdraft fees. And hopefully you're paying enough attention to your finances, too, and you've got enough padding in there where overdraft fees aren't a problem.

[Matt]

On the note of Southwest, what if them dropping the free checked bags is just a head fake and then they bring it back? Oh, my gosh, we've all been played. And it just engenders more love for them because they're like, you know what? We listen to the people and we are a company for the people. That would be smart.

[Joel]

I would love that because. Well, I will say this. I booked a trip for this fall, and I booked before they stopped the free checked bag thing because this is my backpacking trip. It's a really big bag I'm bringing, and so I was glad to get in under that free checked bag wire.

[Matt]

Yeah, let's keep going. The word recession, We've heard that being tossed around a whole lot more right now. Understandably. We actually covered recessions in our latest newsletter.

[Joel]

Plug for the how to Money newsletter.

[Matt]

Go sign up if you're not howtomoney.com newsletter well, Joel, in times of greater uncertainty, frugality starts to become cool again. Ways to save more, they're starting to trend in ways that they didn't when the economy was firing on all cylinders. And that's where recession hair comes in. This appears to be one of those where ladies, they're waiting longer between salon visits. They're letting their roots show more power to you ladies. I'm all about that. Letting their hair grow long and going back to the natural color. I think the male equivalent is certainly what I did during the pandemic. Letting the hair go really long or cutting it yourself.

[Joel]

We should post a picture of that for people. You let it grow really long.

[Matt]

I look significantly older.

[Joel]

That was like double your length, man.

[Matt]

It was pretty crazy, you know, And I did the math because this kind of behavior compounded over time, Joel, it makes a big difference not cutting. So the average Dude's haircut is 30 bucks. And typically depends on who you are. But most guys go to the barber anywhere between three and six weeks. So I figured, all right, 30 bucks every month. You do that for 30 years, which is how long I've been cutting my own hair. Now you're looking at over $40,000 compounded in the market. Isn't that not insane? Just by this one little thing that.

[Joel]

I do myself well, and a set of hair Clippers once a month costs what, 30 bucks? And with the additional, because you have some additional lengths that you have for the top of your hair so you don't have to use scissors on it because that's where things get a little squirrely at things if you're using scissors.

[Matt]

Where it gets a little dicey.

[Joel]

And I know for, for women it's different. I know. And everyone has their different kind of fashion standard what they want to present.

[Matt]

Got their own craft beer equivalent.

[Joel]

But I kind of like when people lean into this stuff and they, and they make it cool to be frugal.

[Matt]

Yeah.

[Joel]

Because I think it just gives people the hall pass to say, okay, cool, yeah, I'm going to jump in on that. I'm not doing this. And it's similar to, it's like wearing that frugal, that frugal change as a, as a badge of honor instead of feeling like ashamed about it or feeling like that cost cutting endeavor is somehow badly reflected on you for the whole world to see. That's right. Yeah, exactly. Well, and then say some other ways we could save. Matt is not buying cutting edge technology. Right. Well, I didn't realize this was a thing. I just saw that this week. 8K TVs. Did you know that was a reason?

[Matt]

These are like. Yeah, these are like the super fancy ones.

[Joel]

Somehow I didn't know that the resolution on TV screens had gotten twice as good, I guess, in the last couple.

[Matt]

Of years than the newest iPhones. Or maybe it's just as good. But that makes sense. Like if you're looking at an iPhone because it's a foot from your face or whatever, but a TV is supposed to be far away. Like, can you even tell the difference?

[Joel]

That's a good question. And it seems like you've seen. So the tech nerds at cnet, they wrote about this in particular and they said actually that you shouldn't buy one of these because they're too expensive. And if anybody is going to tell you to buy a new fancy tv, it's the people at cnet because they're super into electronics and they want to tell you how awesome it is and why it's worth the more expensive price tag. But their take was that the older OLED technology does almost as much at a fraction of the price. And on top of that, what I would say is if history is any indication, 8K TVs are going to get better and cheaper in a matter of years, if not months. So, you know, waiting until price drops happen and technology improves is wise you don't want to be the early adopter of the new technology that's overly priced. It's similar to basically every other thing in the technology realm. The advances just aren't as groundbreaking as they've been in the past. When you go from 720 to 4k, man, that's a big jump. When you go from 4k to 8k or 16k in a couple years or something like that, you're just not going to notice as much of a difference. Now.

[Matt]

That's true. Let's keep the frugal live and train going. Joel. Another way that some companies out there are trying to cater to price conscious consumers is to offer guaranteed pricing for longer periods of time in order to combat this uncertainty that everyone is experiencing. Which sounds nice, but here's the thing, you actually don't need it and you would be overpaying in most cases if you opted for it. So Verizon in particular, they're offering this guaranteed three year price lock in basically for streaming customers. T Mobile is doing something very similar with their wireless service. But first of all, their prices are higher than our favorite MVNOs on the note of T Mobile here. So our favorite mobile virtual network operator carriers like Mint and US Mobile are right out of the gate more affordable. But then secondly, phone bills have been going down in recent years and so a price lock is actually the opposite of what you want. You want to be able to shop around as the competition has increased and as the competition has increased, prices, they have dropped and we want you to take advantage of those dropping prices.

[Joel]

Yes, someone would benefit, a company would benefit from you price locking when they charge more and when that thing is actually experiencing deflation, which is what's happening in the cell phone space, what they're.

[Matt]

Doing is they're looking to provide stability for themselves as the company as opposed to you.

[Joel]

It's what sounds, it's a mirage. What sounds beneficial. Yeah. To you is ultimately beneficial for them. So yeah, don't. When you see those price locks, you might think, what a great company. That's so sweet. I can't wait to take advantage of that. But actually the opposite might be true. So dig one level deeper. And it's no secret too, Matt, that concert prices have soared in recent years. That's partly because of Ticketmaster's monopoly. But demand, it's also up as people prioritize those in real life experiences like live shows. So going to a concert, it's amazing. I think people assumed in the age of the Internet and I can literally stream shows from my favorite artists online, but that only gets me more excited to go see the show in person. And I think that's kind of what most people are feeling well now. And of course, of course you can pay for those concert tickets in installments instead of paying for it all up front. There have been a few articles written about Coachella payment plans. Coachella is like two weekends happened this past weekend and this coming weekend. Well, the LA Times called the Coachella payment plan financially smart to pay for your $600 Coachella ticket over the course of many months.

[Matt]

A lot of booing during the segment.

[Joel]

Of course, we think that is trash advice. LA Times get your game up. You pay an extra $41 for the privilege of paying for those tickets over time. And I get that 600 bucks is a lot to pay. It's a lot of money for a weekend festival to go see your favorite bands. Still, we think, and this might sound incredibly old school, Matt, maybe we're like trad dads for suggesting that you have the cash to pay for the thing you want to do up front, man. Like, okay, Boomer, but that's truly the advice that we have for you, and it's just tried and true. It makes sense. Yeah, you should skip Coachella, you should skip the concert you want to go to and save up for next year's version if you don't have the money.

[Matt]

To pay for it. To the LA Times defense or to the specific writer, he did say if it's in your budget, but it's not.

[Joel]

Your budget if you have to pay for it all the time.

[Matt]

It kind of depends on what your definition of what's in your budget. Right? Because in a similar way, we'll say, well, if you have the cash on hand, if it's in your budget, then sure, put that expensive charge on your credit card. But even beyond that, it's the buy now, pay later, the installment buying method, even if they're not charging you. Right? Because a lot of them, they don't charge interest. A lot of them actually do, or they have options where you are paying interest. But what I think I've realized about the buy now, pay later where you're paying it in installments, is that it in fact makes you an installment buyer. And it's a slippery slope before you're carrying a balance on your credit card because, oh, well, that's also an installment. And then boom. What has magically happened right in front of our eyes here that you haven't even realized you are living paycheck? To paycheck. Like that's what that does when you get on this, when all of your expenses are essentially being automated without you even thinking about it. Like, that's like the very definition of living paycheck to paycheck. And I think that's what I'm realizing that I dislike about the buy now, pay later is the, the habit formation that is taking place.

[Joel]

It's the proverbial frog in the water that gets hotter and hotter and doesn't jump out. And again, I don't know if that's scientifically accurate or not, but it's a good analogy, It's a good illustration. But I was talking about that with a friend this morning, just questioning the things that seem societally normal because where they're gonna lead to is some pretty piss poor financial circumstances. So we want you to avoid what's quote unquote normal, be a little more abnormal. And what that means is like paying cash up front or putting on the credit card, but having the money in the bank account to pay the balance off on time and in full. If you have to take the payment plan that costs extra money in order to afford the ticket, you can't afford the ticket.

[Matt]

Agreed, buddy. That's going to be it though for our Friday flight. We hope everyone has a fantastic weekend. And if you're looking for our show notes, some of the different articles we mentioned, you can find that [e-mail] also we've got a fantastic page of resources that we will link to in the show notes for this specific episode. If essentially you're looking for the outline of what it is that you should be doing with your money. And of course that's resources where you can find those. But buddy, that's gonna be it for this episode. Until next time, best friends out. Best friends. 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. Nerd. 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.

[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.

[Matt]

Asking the right questions can greatly impact your future, especially when it comes to your finances.

[Joel]

So if you're looking for a financial advisor, you can Trust Certified Financial Planner professionals are committed to acting in your best interest. That's why it's got to be a CFP. Find your CFP [e-mail] this podcast is.

[Matt]

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