Friday Flight - Unemployment Uptick, Ridiculous Returns & The 4% Rule Debunked #993

Summary

Podcast Summary: How to Money – Friday Flight: Unemployment Uptick, Ridiculous Returns & The 4% Rule Debunked #993

Release Date: June 6, 2025

In this episode of How to Money, host Joel delves into a range of pertinent financial topics, offering insights and actionable advice for listeners navigating the evolving economic landscape. From shifting unemployment metrics to reconsidering retirement strategies and examining contemporary consumer behaviors, Joel provides a comprehensive analysis aimed at empowering listeners with the knowledge and tools needed to thrive financially.

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1. Unemployment Trends and Their Impact

Evolving Unemployment Metrics: U3 vs. U6

Joel begins by addressing the recent uptick in unemployment rates, particularly among recent college graduates. While the headline unemployment rate (U3) stands at 4.2%, Joel introduces a more inclusive metric—U6, which accounts for individuals who are part-time workers seeking full-time positions and those marginally attached to the labor force. He emphasizes that U6 currently stands at 7.3%, suggesting a more nuanced view of the job market.

“I'm going to point to U6 and say, Ah, it's probably closer to the low sevens. That's likely a more accurate state of what's happening in the labor market right now.”
— Joel [09:50]

Challenges for Recent Graduates

The discussion highlights the difficulties faced by recent graduates entering a job market that, while not as dire as during the Great Recession, presents its own set of challenges. Joel notes that the previously robust, worker-friendly job market has reached a new equilibrium, making it harder for newcomers to secure desired positions.

“If you're graduating and you're ready to put that degree to use, you're like, oh, I don't know, maybe, am I actually going to get the job I want?”
— Joel [05:15]

Strategies for Job Seekers

Joel offers practical advice for job seekers, such as proactively reaching out to preferred companies, leveraging alumni networks, and considering further education to enhance employability during economic downturns.

“Proactively reaching out to companies you like and you want to work for... it's a better way to go.”
— Joel [07:30]

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2. Retirement Savings: Shifting Dynamics

401(k) Contribution Trends

Joel contrasts findings from a Morgan Stanley survey with those of Fidelity, revealing seemingly contradictory trends in retirement savings. While Morgan Stanley reports that 40% of employees are reducing their 401(k) contributions due to economic uncertainty, Fidelity observes that individuals are nonetheless saving a record 15% in 401(k)s.

“A lot of people are being auto opted into their workplace retirement accounts... a lot are taking their contribution amount down because of economic worries.”
— Joel [14:10]

Understanding the Discrepancy

Joel explains that these trends can coexist as increased automatic enrollment leads to higher baseline contributions, while a subset of savers choose to reduce their allocations amid financial concerns.

“I think they actually fit together in an interesting way... yes, some people are dialing back retirement contributions and other people are saving more than they otherwise would have.”
— Joel [17:45]

Revisiting the 4% Withdrawal Rule

A significant portion of the episode is dedicated to reevaluating the 4% rule, a long-standing guideline for retirement withdrawals. Joel cites Bill Bengen, the rule's originator, who has updated his stance, suggesting that a slightly higher withdrawal rate might be sustainable given improved stock market returns and diversified investment options.

“Mr. Bengen has said, hey, actually the 4% rule is too conservative.”
— Joel [19:20]

Joel cautions against overly aggressive withdrawal rates, such as 7-8%, which can jeopardize financial longevity in retirement. He also touches on the growing interest in annuities, advising listeners to weigh the benefits against potential downsides like high fees and lower returns.

“If you're being sold or being told that you need to get an annuity... you should dig into the details before you pounce and say, sure, that sounds great.”
— Joel [21:05]

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3. Contemporary Consumer Behaviors

The Rise of Expensive Mocktails

Joel explores the trend of pricey non-alcoholic beverages, noting that mocktails can cost upwards of $15. He discusses how the demand for healthier lifestyle choices has fueled this surge, yet warns that these alternatives often carry similar price tags to their alcoholic counterparts due to the complexity and quality of ingredients used.

“Bars have caught on and many are charging cocktail equivalent prices because they can.”
— Joel [23:10]

Gen Z’s Frugal Drinking Habits

Shifting focus to generational spending patterns, Joel highlights how Gen Zers are opting to pay for each drink individually rather than opening a tab. This approach increases the "pain of spending," potentially reducing overall alcohol consumption and curbing excessive spending.

“By avoiding the bar tab, Gen Zers are saying every time I get a drink, I'm going to pay for it and then I will feel the pain.”
— Joel [26:40]

Amazon’s Dominance in Clothing Sales

Joel observes that one out of eight clothing items is now purchased through Amazon, a platform not originally designed for apparel retail. He attributes this trend to Amazon's convenience and expansive inventory, surpassing traditional retailers like Walmart.

“One out of eight new items of clothing is now purchased on Amazon... it's because it's convenient.”
— Joel [29:15]

Embracing Secondhand Shopping

In response to rising costs and sustainability concerns, Joel advocates for purchasing secondhand goods. He cites platforms like Nuuly, Buffalo Exchange, and Plato’s Closet as viable alternatives that offer quality items at discounted prices, supporting both financial and environmental well-being.

“Trying to deprioritize new buys and prioritize secondhand goods, it's good for the world and it's good for our wallets.”
— Joel [31:50]

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4. Ethics and Implications of Return Policies

Abuse of Return Systems

Joel addresses the growing issue of fraudulent returns, where individuals return used or altered items, causing significant losses for retailers. He explains that over $100 billion in returns are deemed fraudulent, leading to stricter return policies across the board.

“More than $100 billion of returns that are being made are fraudulent.”
— Joel [34:20]

Consequences for Consumers and Retailers

The abuse of return policies not only increases costs for retailers but also results in higher prices for honest consumers. Joel predicts a future where return policies become more personalized and restrictive, potentially penalizing frequent returners.

“They are likely to change return policies for individual customers... 'We're going to have to curb this for you.'”
— Joel [37:05]

Ethical Considerations

Joel emphasizes the importance of ethical behavior in returns, discouraging practices like returning items after use or removing key components from products. He advocates for alternatives such as borrowing from friends or utilizing rental services to meet temporary needs without exploiting return systems.

“If you're abusing return policies for your own financial benefit, I think that is... it's wrong on multiple levels.”
— Joel [38:45]

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Conclusion

In navigating the multifaceted topics of unemployment trends, retirement savings, consumer behaviors, and ethical financial practices, Joel provides listeners with a wealth of information to make informed decisions. By critically examining prevailing norms and offering strategic advice, this episode empowers individuals to enhance their financial literacy and adapt to changing economic circumstances.

For more insights and resources, listeners are encouraged to visit howtomoney.com and sign up for the How to Money newsletter.

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Notable Quotes with Timestamps:

• “I'm going to point to U6 and say, Ah, it's probably closer to the low sevens. That's likely a more accurate state of what's happening in the labor market right now.”
  — Joel [09:50]

• “If you're graduating and you're ready to put that degree to use, you're like, oh, I don't know, maybe, am I actually going to get the job I want?”
  — Joel [05:15]

• “Proactively reaching out to companies you like and you want to work for... it's a better way to go.”
  — Joel [07:30]

• “A lot of people are being auto opted into their workplace retirement accounts... a lot are taking their contribution amount down because of economic worries.”
  — Joel [17:45]

• “Mr. Bengen has said, hey, actually the 4% rule is too conservative.”
  — Joel [19:20]

• “If you're being sold or being told that you need to get an annuity... you should dig into the details before you pounce and say, sure, that sounds great.”
  — Joel [21:05]

• “Bars have caught on and many are charging cocktail equivalent prices because they can.”
  — Joel [23:10]

• “By avoiding the bar tab, Gen Zers are saying every time I get a drink, I'm going to pay for it and then I will feel the pain.”
  — Joel [26:40]

• “One out of eight new items of clothing is now purchased on Amazon... it's because it's convenient.”
  — Joel [29:15]

• “Trying to deprioritize new buys and prioritize secondhand goods, it's good for the world and it's good for our wallets.”
  — Joel [31:50]

• “More than $100 billion of returns that are being made are fraudulent.”
  — Joel [34:20]

• “They are likely to change return policies for individual customers... 'We're going to have to curb this for you.'”
  — Joel [37:05]

• “If you're abusing return policies for your own financial benefit, I think that is... it's wrong on multiple levels.”
  — Joel [38:45]

---

Stay Connected:

For additional financial tips and resources, visit howtomoney.com and subscribe to the How to Money newsletter for the latest updates and expert advice.

Transcript

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Welcome to how to Money. I'm Joel and Matt's not here today, but I'm going to be talking about the unemployment uptick, ridiculous returns, and the 4% rule debunked. That's right, my good friend, my compadre, my bestie. He is not with me today, which is a little disappointing. You might find at times during this episode that I ask a question of Matt and then I just hear crickets chirping, just crying into my microphone? No. But for this, this Friday flight and next Friday flight, Matt will not be with me and I will be offering my take on the headlines that I found interesting this week. Matt didn't get to have any say just me. Will the power go to my head? That remains to be seen. But first thing I wanted to talk about actually real quick was just a heads up that today only it was happening earlier this week. But today is the last day Southwest extended their sale. We've kind of run Southwest through the ringer recently. They haven't. I don't love the free bags going away. I don't love some of the changes happening at Southwest. I think they're going to lose loyalty. They're definitely going to lose loyalty from me. But what will gain loyalty back is low prices and so up to 50% off on fares right [e-mail] so if you're looking to travel and you're flexible on where you go and when you go and you just want to get a cheap fare somewhere cool, go check it out. I'm looking to go to New York in the fall potentially for a few days and found some ridiculously cheap fares. So this. But again, today's the last day for that. That is word of the wise. Love a good deal, especially on airfare. Oh, and you can pay with points. I've got some Southwest points loaded up that I plan to use for that trip. So yeah, if you got some points lounging around, the discount counts on airfare that you buy with points as well. All right, I want to talk about specifically unemployment for a little while. And we are not at Great Recession levels of unemployment. We're far from it. In fact. I mean, you think about that. I remember I was graduating college in the teeth of the Great Recession and man, I just remember havoc tumult all around. Shortly after graduation and especially for people graduating the year or two after me, the job market just continued to get worse. But recent college graduates, they're getting more nervous about entering the job market right now. They're kind of assuming and feeling like things aren't as good as they have been. And I think it feels worse for recent college grads than it has been, largely because the job market was so worker friendly for the past few years. When you think about just how good things have been, it makes sense that they can't stay that good forever and we've reached more of an equilibrium now. Right. So it's kind of like housing prices. They couldn't Continue to go up and to the right at the insane rate that they were, that they were traveling upward for the coming years like they had to come back down to earth. Home prices couldn't outpace wage growth for forever. And that's why I think we're starting to see a softening in the housing market. But the same thing is true of the job market. People jumping ship and being able to get paid 20, 30, $40,000 more because there was such a short of workers. We've reached this, I think, new place of equilibrium, which does mean it's harder for new graduates to find work. Even as the unemployment rate remains low. Recent data found that the unemployment rates for people in their young 20s is higher than average. It's 6% compared to 4%, still relatively historically low, but not as good as the overall job market. So if you're graduating and you're ready to put that degree to use, you're like, oh, I don't know, maybe, am I actually going to get the job I want? Some even suspect that companies are leaning more heavily on artificial intelligence. That's part of the reason why I think there is some anecdotal evidence to that and potentially some, some, you know, reality, some feet to the ground for that claim. But I also think it might be overblown like the Shopify. No, we. You can't hire anyone until you can prove that AI can't do that. That's few and far between, at least at this point. Where that goes in the future. That's a good question. I'm not an expert on that, but I think, yeah, it's true that graduating into a tougher economic climate, it's emotionally difficult. It can have long term personal finance consequences as well. So if you're graduating into a down job market and you feel like you have to take a job that you otherwise would not have taken, or you might have, you're more highly qualified than the job your first job suggests. It could have lifetime career earnings impact. And so I would, I would do a couple things. I would suggest proactively reaching out to companies you like and you want to work for. Don't just lazily toss out resumes online. If you look at the job boards of companies that you really dig, I think that's a better way to go. And then just kind of keep barking up that tree. Also, your network might be small right now, but don't neglect it as you're job hunting and also your school's alumni department, they might offer helpful resources. Hey, I just got a degree here, I'm going to hold your feet to the fire. You help me find this job. What connections do you have? For me, I think that's always a good place to turn as well. And this might sound counterintuitive, but if a graduate degree would help your lifetime career earnings and you can mostly avoid debt, you don't have to take on loads of debt to get that extra degree. And at the same time, you feel like you're having trouble securing the kind of job that you want and you feel like you should be capable of achieving in a better job climate, consider getting more education. I think it's a way to wait out a potential recession and to come out better on the other side again. Is a recession gonna happen? I don't know. But if the job climate, if you feel like you are having a harder time finding the job that you deserve or you think your education and experience level qualifies you for, this is a kind of a normal approach for a lot of people over time, has been, you know what, I'm going to hunker down during the tough economic climate, get that education, I'll come out on the other side a little bit better, a little bit stronger, ready to get that fancier job. But also, this was making me think, is unemployment worse then maybe the headline number suggests? And there's this new study that found that what they called functional employment in the US is closer to 25%. And I was like dumbfounded when I read that statistic. 25%. No, I have not seen any sign that we are experiencing unemployment at those levels. And this study, it made for shocking and clickable headline, but I just don't think it's accurate. I think the real truth though, lies maybe somewhere in the middle. We see the headline rate, 4.2% unemployment rate, and that headline rate that gets the vast majority of the headlines right. But maybe that's not quite as accurate as we would assume either. And so maybe now is a good time for me to quickly put on my pointy hat. Not really an economist, but I'll play one for just a second and dive into different stratifications of the unemployment rate and what they might mean. So there's the headline rate, that 4.2% that I just mentioned is known as U3. But there's this other unemployment metric called U6. And it might be a better indication of what's really going on in the job market because U6 includes another segment, multiple other segments of folks that U3 does not. And so U6 says actually we're going to include just beyond people who are just actively looking for work, who don't have work, that's U3. We're going to actually include people who have part time jobs who wish they had a full time job. And if you look at U6 then that unemployment rate is currently at 7.3%. So is unemployment 4%? Is unemployment 25%? Well if you were to ask me, I would point to U6 and say Ah, it's probably closer to the low sevens. That's likely a more accurate state of what's happening in the labor market right now. So U3, that's what hits the papers. U6 is more reflective of real employment conditions and actually U6 is still historically low when we're talking about it. So where does the job market stand? Certainly not as good as it was a few years ago. But I think there's still opportunity for people who are go getters. And yeah it's, it's also helpful to realize that maybe the, the U3, if you are working hard to find a job and you feel like it's harder to get, don't be demoralized. The unemployment rate not quite as rosy and glossy as it seems in some of the headlines. Our worries about the state of the economy are leading workers to reduce 401k contributions right now. There was this new Morgan Stanley survey and IT found that four in 10 employees are reducing what they're contributing to their workplace retirement accounts because of the uncertainty that they're feeling. They're like things just don't feel good. It's a vibes based on approach to how much they're setting aside for their future. The vast majority are still contributing something. They're not dialing all the way back to zero but they are cutting back how much they invest. The first thing I thought of when I read this was this actually might not be the worst news. If people are saying I'm going to invest a little bit less, I'm going to stick some money into my savings account, I'm shoring up that liquid savings because that's what I need to be worried about. If I really do have concerns about the economy in the near term, my own employment, am I going to have a job six months from now? I don't know if you're worried about that. Having more cash on hand makes sense but 67% of folks in this survey said they're not prioritizing savings either. So they're not dialing back on retirement contributions to sticking in a high Yield savings account. They're funneling it into their monthly spending. You know, I don't want you investing a big chunk of your paycheck if you haven't prioritized liquid savings. Go look up the money Gears. Go to howtomoney.com, click start here. You'll find our money gears there. See where you're at and what the next step is for you. But if your job or industry, right. Feels particularly vulnerable, erring on the side of more savings could be wise. It's okay to dial back in order to bulk up savings for a limited time, but I also don't want you to cut back on contributions because you're worried about the stock market, right? That is the classic mistake that so many people make. I was literally just reading about. There's this old adage of when it comes to investing in the stock market, and we're in June now, but it's go away in May, don't invest in May because stock market doesn't usually perform as well as it does in other months. And actually, when you look at the historical performance of the stock market in May, it's pretty darn good. It's not as good as the average stock market returns, but it's still pretty good. And if you look at what happened to the stock market in May 2025, it was pretty awesome, too. And so even with all of these concerns, even with all the tariff concerns and the steep stock market declines, we've seen a recovery and then some. And so to change your investing goals, attitude and percentage because of headlines and vibes and uncertainty, well, if you did that, if you followed that advice, it'd be like shooting yourself in the foot from an investment perspective. And interestingly, there was this other study from Fidelity that came out this week. It found something really different than what this Morgan Stanley survey found. It found that people are saving a record amount in 401 s. It feels like there's this dissonance to these two separate findings that came out in the same week. Fidelity says people are saving almost 15% in 401s, which is the minimum recommended amount to invest for your future from most personal finance nerds, myself included. I want to see people hit that as a minimum threshold for what they're contributing to their future. I think these things are actually not mutually exclusive. Let me explain why. I think they actually fit together in an interesting way. I think the reason that both of these things are true is that more folks are being auto opted into their workplace retirement accounts in record numbers. The Bulk of folks who were contributing nothing to their retirement accounts are now contributing 3% or 5%, whatever their employer has said, hey, this is like the minimum amount we're going to auto opt you in at. A lot of people who get auto opted in don't end up changing that back to zero, which is something I love to see, because more people investing for their future is a good thing, even if it's kind of against their will, but they're too lazy to change it. I think that's awesome. Then other people are taking their contribution amount down because of economic worries. And so you can have this effect where, yes, some people are dialing back retirement contributions and other people are saving more than they and investing more than they otherwise would have. So both of those things can be true at the same time. It's just kind of fascinating to see both those come out simultaneously and be like, oh, yeah, okay, yeah. As I noodle it out, I was like that there really can be possible. I'd be curious to hear Matt's take, but he's not here, so, yeah, I'll keep talking. I want to talk about 401k withdrawals for a second. And I think lots of times we talk about this in the context of retirement, but especially given the younger audience of how to Money. I think this actually means something for you today too. And I'll explain why. The father of the 4% withdrawal rate, which essentially says you can withdraw 4% of your portfolio every single year in retirement and not run out of money, his name is Bill Bengen, and this has been his methodology and the way that he rigorously defined and came to the 4% rule conclusion. It's been a mainstay of personal finance for a long time. Fascinating enough, it wasn't 4% originally, it was 4.15%. He rounded it down to 4% because it just seemed more palatable and like it would catch on. And yeah, it did catch on like wildfire. But. But even Mr. Bengen, who came up with that rule decades ago, has basically said now it's too conservative. And. And he says he's amended the rule to be the 4% rule to the 4.7% rule based on new calculations of stock market returns over the past few decades alongside better inflation data. The. The option to be able to invest in a greater diversity of assets. Mr. Bengen has said, hey, actually the 4% rule is too conservative. I think this is really good news for a lot of reasons. One, this is something that's gotten in the news more recently as Dave Ramsey was like, you could have a 7% or 8% withdrawal rate and you won't outlive your money. That's not great advice. It can hold up. Yes, it's certainly possible that that works out for you, but there's just too high a percentage of the time where if you're taking out 7, 8% of your money from your portfolio every year over the course of decades, you do run out of money and then what do you do at that point? But this allows a couple things. It allows you to take out more of your assets every single year in retirement and still stay solvent over the course of your retirement. Basically, if historical trends continue, this is backward looking, projecting into the future, you can't know what the future will bring. But the flip side is also that people can retire with less money than they assumed, right? If you, if you need less, you can amass less. And I think that hopefully should ease the mind of some type A retirement savers who are like, I need to have $4 million in my retirement account by the time I'm 65. Maybe you don't, right? Maybe you can aim for a smaller number. And obviously the 4% rule is contextualized. It's a rule of thumb because so much depends on, do you have a mortgage still when you reach retirement age, do you have other sources of income? Are you delaying Social Security and planning on taking that then? There are so many other factors that go into whether or not you actually need 4% of your portfolio in perpetuity for decades on end. Or you can actually withdraw more, one year, less another year. I think just even knowing and seeing that the guy who created the 4% rule, Mr. Bengen, that he's saying actually you can withdraw a bigger chunk of your retirement savings every year, that should, I think, help us all maybe feel, take a deep breath and say, actually, I probably don't need to be quite as intense as I otherwise thought I needed to be. And maybe that can be a little breath of fresh air as you're pursuing your retirement savings goals. And for folks who want a guaranteed stream of income in retirement, instead of fretting over withdrawal rates and stock market moves, annuities are becoming a more and more popular choice. Kiplinger wrote about how buying an annuity inside of your 401k is becoming an even more popular approach these days. But I'm not a huge fan of this. And there are also big potential downsides to the income certainty that you'd achieve by having an annuity inside of your retirement account. The main things are the fees and the likelihood of lower returns. Is your peace of mind for having the guaranteed stream of income really worth those two fairly significant trade offs? I'd say probably not. If you're being sold or being told that you need to get an annuity or should get an annuity, you should dig into the details before you pounce and say, sure, that sounds great. Because what sounds good on the surface when someone's selling it to you could mess you up. And it means more certainty. Yes, but it could also mean, and will likely mean fewer dollars to spend because you're taking some of that risk off the table. And don't forget Social Security functions like an annuity. So do you need to also annuitize the money that you have invested and saved up for many, many years and decades as well? Probably not like having the guaranteed annuity of Social Security and then having an investment portfolio to tap from. I love the idea of having both. Remember, your retirement can last for many decades. You don't want to be overly conservative and sometimes if you lean too heavy in the hyper expensive annuity direction, you are taking too conservative of an approach. Got more to get to solo here on today's Friday flight, including going to talk about mocktails and why Gen Z treats a bar tab a lot differently than previous generations and what why I actually think it's smart. We'll get to that and more right after this Looking for a smarter way to teach your child to ride a bike and support American jobs at the same time? Most kids bikes are just cheap imports. They're heavy, clunky, hard for kids to control. Guardian Bikes is changing that. They're assembling bikes right here in the USA with plans for full US manufacturing in the next few months. It's a commitment to higher quality and American craftsmanship you can trust. Each bike is lightweight, low to the ground and built to help kids learn to ride faster, many in just one day. No training wheels needed.

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[A]

All right, we're back. Still Talking Friday flight. And of course, it's time for the ludicrous headline of the week. This one comes from the Wall Street Journal, and it said, Mocktails cost 15 bucks. And nobody knows why. And I'm not a mocktail guy, but I was like, mocktails for real cost 15 bucks. That's insane. So I read the article and there are obviously a couple different takeaways from this. I think it's interesting that we as a society are more aware of the effects of alcohol and we're all avoiding alcohol more and more. And this comes from the guy who drinks beer on his podcast. But even I am drinking less than I have in the past and on purpose to say I want to be healthier, I want to enjoy a good drink on occasion. But I also think that drinking a lot less frequently is better for me. I feel better. So I get why people are dropping alcohol, some people dropping it altogether. And I wish Matt was here today to tell me what Andrew Huberman would say. Probably something like, alcohol is poison, Lift heavy stuff and then live forever. And there's a point for that. Except for living forever. None of us are going to do that. But I also, I love that we're not teetotaling and dropping alcohol out of this legalistic moral duty, but it's more of just an effort to treat our bodies well. Non alcoholic beer is gaining popularity in a big way too. And even craft brewers are saying, oh, we have to have non alcoholic beer to cater to that segment of the population because they're growing. And I've had a couple solid ones. I'm still a fan of real craft beer, but it's nice to see the non alcoholic stuff getting better. But mocktails, they're hot too. And you would think that a mocktail would save us money because the most expensive ingredient is being left out of the equation. But they don't. Bars used to charge less for non alcoholic drinks, like a Shirley Temple or something like that. But bars have caught on and many are charging cocktail equivalent prices because they can, I guess. And also because the more you dig into it, like the, you can make non alcoholic spirits like gin and vodka and stuff like that, and they're really hard to make and they're expensive to make. And so if you want those put into your drink to get more of the flavor profile you were hoping for, it's going to be just as expensive as a drink or very close to as expensive as the alcoholic version of that drink. So a lot of abstainers are taking the smart route of Opting for tea or Diet Coke or sparkling water or something like that instead when they're out in the bar. So just know if you're cutting out alcohol and part of your reasoning is not just health, but an effort to save money. Well, it might not save you money if you're buying the expensive mocktails, the ones that are attempting to most closely mimic your favorite cocktails. Be aware, when you go out with your friends, you might be racking up just as high of a bar tab. And I do. Obviously, drinking at home or making your own cocktails or mocktails at home will save you a lot of money as well. And there's this other drinking trend that I thought was worth covering. It's Gen Zers saying, we're going to open a bar tab or we're not going to open a bar tab, we're just going to pay for each drink individually. So if you order three beers in a night, you literally pay three times over the course of the evening instead of opening a tab and paying for it all at once at the end. And one of my friends, he texted me about this, and he's a millennial like me, and he just couldn't understand the logic. He's like, what is up with these young people, the Gen Zers, who don't open up a bar tab and they pay for every drink as they get it? He's like, this baffles me. I don't understand, but I actually do. And I think that this kind of makes some sense. And I think it actually might be financially savvy, it might be smart. Because when we talk, or when we've talked in the past about the gamification of money, part of what helps you spend less is increasing the pain of spending. In a society of ever reducing amounts of friction for buying stuff, it's much easier to get parted from your money and not feel a thing until you realize, oh, man, credit card bill just came in and I owe more than I thought I did. Or your savings get depleted because you just were more thoughtlessly spending. And it's of course easier to do that now than it has ever been in human history to spend money and not think about it. Buy now, pay later makes it easy. Credit cards have made it easy. So every and even just retailers where one day shipping or, hey, you know, you can get it the same day, get it later this afternoon, that sort of frictionless response, or grubhub, whatever, everything is conspiring to get us to spend money thoughtlessly. And so what Gen Z ers are doing here. In my opinion by avoiding the bar tab is saying is every time I get a beer or a drink or whatever it is or a mocktail, I'm going to pay for it and then I will feel the pain and maybe it'll mean I drink less because I don't want to spend as much as I realize I'm spending. So paying for each drink individually, maybe it slows you down, maybe you drink less. Overall, it might decrease what you ultimately spend when going out. I'm going to call this a win. I'm going to say Gen Z ers, you're being smart here. I like this. If it's frugal versus cheap, I'm going to say it's frugal. And if you would prefer to make cocktails at home but you want to make them the easy route One of my favorite sub stacks from a guy who is a raging cocktail enthusiast. He tried Kirkland Signature from Costco, their new Old Fashioned in a bottle. So it's not just bourbon. And then you mix the other ingredients like the bitters and the sugar and stuff in yourself. You just get pre made in a bottle and then you can add some lemon zest on your own I guess if you want. But he said it's actually not too bad. So it wasn't like this ringing endorsement. Like it's incredible. But he said yeah, decently delicious for the price you pay. And the new Old Fashioned in a bottle Kirkland Signature brand is less than a dollar a serving, which ain't bad. So that's one of my go to cocktails at home. I might have to try this out at some point. But that's another hey, if you're looking to save money, the pre mixed Kirkland Signature cocktail, drinking it at home might make sense. All right. Another story I found interesting this week. One out of eight new items of clothing is now purchased on Amazon. Amazon feels like the sun that our universe revolves around now, at least for some people. I was talking to somebody this week and they said my wife buys stuff on Amazon like it's her job and the the returns get overwhelming. We're going to talk about returns in just a second because she is just like clothing, whatever it is. Amazon is the center of her retail universe and I don't think she's alone in that. And it is kind of frightening to me because one out of eight items being sold clothing items being sold on Amazon. Now Amazon's not even like was not originally a clothing retailer. And when you think about that's not Their bread and butter, but it's becoming the bread and butter, at least more than I suspected. That's double the amount they're selling. Double the amount of clothing items of any other retailer, Walmart included. And think about Walmart. They've got physical locations around the country. Amazon doesn't. They're just online. I'm not an Amazon hater and I don't think everyone should just boycott Amazon or anything like that. But Amazon has been expanding their wardrobe selection and when you're shopping for other stuff now, they're going to make suggestions and say, hey, had you thought about maybe adding a pair of socks or a dress or this nice shirt? Did you realize that we have these Amazon basic shorts that you would look so good in? And so they're making suggestions. And because this is the place where most people are shopping on a regular basis, they're just more likely to buy clothes there now. And it is adding up. So it might not be because they have the most fashionable items in existence or because they even have the cheapest items, but I think it largely comes down to the fact that it's convenient. And yet maybe some of their stuff is a great value. I think I have a pair of Amazon shorts and they're good, they're fine. They're worth the money. I would say they fit good. They're not the highest quality. I've got some nicer shorts that I like more. But I think the main reason people buy stuff on Amazon and buy clothing on Amazon, it's because it's easy. I know. That's why my wife shops there. She buys stuff on Amazon and then she's like, yeah, it's fine. Yeah, it works. But I think if I've been trying lately to help her shop for nicer, even more expensive items that I think are going to last longer for her. She just doesn't love to shop online. And so the more I can kind of pitch in and say, oh, look at this stuff I found for you. It takes some weight off her plate and she actually likes me being her kind of secret shopper of sorts. But I think taking Amazon, the Amazon app, off your phone is a good way to maybe stop some of that mindless shopping if you feel like you've gotten into a rut. So consider, reconsider how much clothing you're buying on Amazon, whether you need it, and whether or not you're actually wearing the stuff that you buy. And just don't buy it because it's easy. And consider buying stuff, more stuff secondhand. We Talked about how tariffs are making secondhand goods more enticing. There's no arbitrary additional cost added on when you buy stuff used, whether it's at a garage sale, a Goodwill, anything like that. Right. But everyone is getting in on this action. My wife, I was just talking about her clothing habits. Well, she's a big fan of Anthropologie clothing, but it's incredibly expensive. And so actually buying stuff there, she just never does it because it's. So one dress is like 250 bucks or something like that. And she's like, I'm not doing that, which I'm thankful for. But she actually, I talked about this recently. She rented some stuff from Nuuly where you spend 10125 bucks and you get like six different pieces for the month. And she needed a fancy dress. And she was like, great, this is a perfect chance to try this. And it was awesome. And what I just came around to realizing is that Nuuly has to at some point sell the stuff they've been renting, and they sell it at a massive discount. So some of the dresses that you can get, or a lot more than just dresses, items of clothing that you can get that were rented by people on Nuuly are now being sold on Anthropologie's site that they're cleaned up and then shipped out to you. It's amazing. You can get $200 dresses for like 30 bucks. That's kind of where we've been sourcing her wardrobe lately. We've gotten some really cool stuff there that hasn't cost much money, but it's high quality. I think other places to prioritize buying used goods. If you haven't heard of Buffalo Exchange, that's like a growing chain that's being added to more and more c. Plato's Closet, that's another one. And that's too, where you can make money selling your old stuff at both of those stores. And then they'll turn around and sell your stuff for more. They're kind of the middleman of sorts. Goodwill, obviously. Even on sporting goods, I was thinking Play it Again Sports is a great place to go because buying used it saves. It's good for the planet. It's green, but also saves you money. I'm looking for a used stationary bike for my wife right now. And I'm like, yeah, I probably need to head over to Play It Again Sports if I don't find what I need on Facebook Marketplace. But yeah, I think it's also important to mention that Some of these retailer websites, they're getting into the secondhand goods game. Like Levi's has done this. Well, Peloton just launched a secondhand peloton store online this week. And the what what I found because I, like I said I'm looking for a stationary bike. I went on to Peloton site and we're talking about starting prices at like 900 bucks. But if you look on Facebook Marketplace and you buy from someone in your area, you're talking about being able to get one for close to half that price. So just make sure that you don't knee jerk, go to the brand's website and not look to your peers in your community because you might find that they're cutting out the middleman is going to save you the most money. And this is a way, I think, to follow Ashley Piper's advice from the Wednesday episode. No new things. Adding no new things to your life. It's not easy, but it is a beautiful way to live. So trying to deprioritize new buys and prioritize secondhand goods, it's good for the world and it's good for our wallets. The how to Money Facebook group recently had a post that made me scratch my head. And then a lot of people chipped in in the how to Money community and they didn't, they didn't love the post, but it was essentially about returning something after using it. And the New York post had an article that had some overlap with that post. In the how to Money Facebook group this week, there was a listener specifically saying, like, well, yeah, what if I, what if I know that I need this item for just one use and then I return it after the fact? Like, is that frugal or cheap? And people were like, that's cheap, man. That's super messed up. To return something that you use for, like borrow it instead, but don't cheat the retailer. Which I think the how to Money community was right on this one. Well, this tactic, apparently tactics like this are becoming increasingly common and more than $100 billion of returns that are being made are fraudulent. Some people are making returns, they're just shipping back an empty box. Others are returning like bricked electronic goods. Like they take the insides of the electronics out, the parts that make the thing work properly, and they take the goods, they use that for their own purposes, and then they send back the hollow electronics item to the retailer, hoping that the retailer doesn't notice, at least before they get their refund. That is dirty. It's not okay. It's unethical. So if you're like, I don't know, I mean, these big retailers, these corporations, these greedy corporations making money at our expense, that's not how it works. And if you are abusing return policies for your own financial benefit, I think that is. Yeah, it's wrong on multiple levels. And so what. This is what's going to happen. It's already leading to more draconian return policies for all of us. We talk about L.L. bean kind of changing their return policy. Costco had to do this with electronics. They still have one of the most generous return policies in the history of return policies, but with the electronics man, people were abusing the crap out of it. And especially in the electronics department, where prices go down over time, it was costing Costco a significant amount of money. It's okay to return stuff that wasn't up to snuff. Buying clothes, wearing them, then returning them, though I think that's wrong to say, oh, I'm going to use it one time and then return it. That's not okay. Borrow from a friend instead, or try one of those online rental sites. I think something else is going to come of this. With the data that companies are generating on each individual customer, they're likely to change return policies for individual customers in the future. I think we're bound to get more personalized return policies in the future where they say, oh, hey, Matt, we noticed you've been returning stuff at twice the rate of the normal customer. I'm throwing Matt under the bus because he's not here today. You're cut off from making returns in the near future, or we are going to have a higher threshold for your ability to make returns. I think they're going to punish habitual abusers of return policy on the individual level. Instead of just saying, this is our corporate return policy. I think they're going to cut people off and say, oh, you're an Amazon prime customer. You've been here with us a long time, but your return rate is significantly higher than average. We're going to have to curb this for you or. Or Costco at some point, don't you think Costco is going to say, hey, you spend less than the average person and you return three times as much. No Costco membership for you. Kind of like no soup for you from Seinfeld. I could see that being the case, almost like dynamic pricing for airlines and other companies out there saying, actually, if you buy it this time, we're going to give you a better deal. I think they're going to say it's like dynamic return policies for individuals. I don't think they're wrong. Because when you look at the way individuals are, not everyone obviously, but a small few could ruin generous return policies for the rest of us. And I just hope that this doesn't get to the point where we all get punished because of the awful actions from a small minority of people that just return a bunch of stuff thoughtlessly and uncaringly, almost attempting to on purpose punish that retailer. So not cool. And I hope that the how to money community realizes that these kinds of tactics really cost all of us more money. The loss and shrinkage that retailers experience, it gets passed on to us in the form of higher prices. It's not like there's no harm caused when we abuse these systems. All right, thank you as always for joining me today on the show. It was weird to do this one solo. I miss my buddy. We'll be back though, very shortly together. And if you've got money questions, well, we've got a lot of money content up on our website howtomoney.com go check that out. If you've got a money question, we've probably answered it in written form somewhere on the how to money website. So please do go check that out and sign up for the howtomoney [e-mail] Newsletter all right, until next time, best friend out. Get this Adults with financial literacy skills have 82% more wealth than those who don't. From swimming lessons to piano classes, us parents invest in so many things to enrich our kids lives. But are we investing in their future financial success? With Greenlight, you can teach your kids financial literacy skills like earning, saving and investing. And this investment costs less than that. After school treat start prioritizing their financial education and future today with a risk free [e-mail] iheart greenlight.com iheart are there.

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Any pictures of you online? Then you could already be in a massive police database without even knowing it.

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Clearview scrapes together images from Facebook, from LinkedIn, from Venmo accounts.

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I'm Dexter Thomas, host of Kill Switch, a podcast about how living in the future future is affecting us right now.

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Police, they are trusting this software with this magical ability to lead them to the right suspect.

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In this episode we dive into how cops are using AI and facial recognition and sometimes getting it wrong and putting innocent people behind bars.

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So if your accuser is this algorithm, but you're not even being told that it was used, let alone given any of the details about how it works.

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Listen to Kill Switch on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. OpenAI is a financial abomination, a thing that should not be an aberration, a symbol of rot at the heart of Silicon Valley. And I'm gonna tell you why on my show, Better Offline, the rudest show in the tech industry where we're breaking down why OpenAI, along with other AI companies, are dead set on lying to your boss that they can take your job. I'm also gonna be talking with the greatest minds in the industry of about all the other ways the rich and powerful are ruining the computer. Listen to Better offline on the iHeartRadio app Apple Podcasts. Wherever you happen to get your podcasts.

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This is an iHeart podcast.