The Clark Howard Podcast: SAVE On Internet Service / American Train Travel
Episode Date: December 19, 2024
Introduction
In this episode of The Clark Howard Podcast, host Clark Howard delves into two primary topics: reducing expenses on home internet services and the burgeoning potential of train travel in the United States. Throughout the episode, Clark addresses listener questions, offering practical financial advice and insights into evolving consumer landscapes.
1. Saving on Home Internet Services
[01:00] The High Cost of Home Internet
Clark Howard opens the discussion by highlighting the increasing costs associated with home internet services. He criticizes major providers like AT&T, Verizon, and Comcast (Xfinity) for their monopolistic practices and escalating prices. Clark points out that these companies often lure customers with "teaser" rates for high-speed internet, only to hike prices substantially after the promotional period ends.
Key Points:
- Monopolistic Practices: Major ISPs dominate local markets, limiting consumer choices.
- Teaser Rates: Initial low prices for high-speed internet that spike after the introductory period.
- Unnecessary Speed: Most households do not require gigabit speeds, making expensive plans unnecessary.
[05:00] Affordable Alternatives
Clark introduces more budget-friendly alternatives to traditional cable and phone company internet services. He emphasizes the emergence of Google's G Fiber, which undercuts traditional providers by 20-30%. Additionally, he highlights Verizon's wireless home internet and T-Mobile's expanding home internet offerings as cost-effective options that, while offering lower speeds, are sufficient for typical household usage.
Notable Quote:
"Unless you're a gamer who really needs that enormous capacity, you're fine at 300 megabits or even 100 megabits. You can stream all you want without wasting your money on exorbitant speeds." — Clark Howard [05:45]
[06:30] Conclusion on Internet Savings
Clark advises listeners to evaluate their actual internet needs and consider switching to slower, more affordable plans if they meet their usage requirements. By doing so, consumers can potentially save over $100 annually on their home internet bills.
2. The Revival of American Train Travel
[17:22] The Potential of Rail Travel in Congested Corridors
Transitioning from internet savings, Clark discusses the growing congestion in major metropolitan corridors and the corresponding rise in interest for train travel as a viable alternative. He cites the example of Brightline, a privately funded rail service operating in Florida and expanding to California and Texas. Clark underscores the inefficiencies of air and car travel in these regions, advocating for the development of high-speed, reliable rail systems to alleviate traffic congestion and provide a dependable transportation option.
Key Points:
- Brightline’s Expansion: Successful privately financed rail projects in Florida and Los Angeles-Las Vegas corridors.
- Congested Corridors: High traffic volumes in areas like Texas (Austin, San Antonio, Dallas, Houston) and the Northeast.
- Benefits of Rail: Reduces reliance on unpredictable car travel and inconvenient short-haul flights.
Notable Quote:
"High-speed, reliable rail as an alternative to getting on an airplane or getting in your car with the big question mark of traffic – that's the kind of innovation we need." — Clark Howard [17:45]
[21:36] Listener Interaction on Train Travel
Listener Krista shares her enthusiasm for trains, recounting her experience riding the Maglev in Shanghai and the Shinkansen in Japan. Clark acknowledges the efficiency and speed of international train systems, contrasting them with the current state of American rail infrastructure.
Notable Quote:
"In America, we need to rethink our approach because many Americans feel like we just don't do things as well as we used to. We can achieve the same efficiency; we just need to focus on it." — Clark Howard [22:05]
3. Listener Questions and Answers
Throughout the episode, Clark addresses several listener inquiries, providing tailored advice on financial matters.
a. Investing Tax Withholdings
[07:31] Kip from Utah's Query:
Kip considers stopping tax withholdings to invest the withheld amount in a high-yield savings account, intending to pay taxes from this separate fund.
Clark's Response: Clark warns against this approach, explaining that the IRS imposes underpayment penalties with an effective interest rate exceeding 8%, making the strategy financially detrimental despite potential high-yield savings returns.
Notable Quote:
"The IRS charges you over 8% interest on your tax bill due to underpayment of withholding. Have your employer withhold taxes; there's no free lunch here." — Clark Howard [07:51]
b. Tracking Household Net Worth
[08:40] Steve from Missouri's Inquiry:
Steve asks whether tracking household net worth is important or a waste of time.
Clark's Response: Clark advocates for annually tracking net worth, emphasizing its role in setting and achieving financial independence goals. He suggests creating a simple statement of assets and liabilities to monitor financial progress over time.
Notable Quote:
"Having a household statement of assets and liabilities gives you a roadmap and helps with goal setting. It's like taking your financial temperature each year." — Clark Howard [09:01]
c. Amazon Prime Trial Fraud Issue
[11:11] Rex from Indiana's Concern:
Rex describes a problematic experience with Amazon's Prime trial, where unauthorized purchases led to requests for a government-issued ID to process refunds.
Clark's Advice: Clark acknowledges the frustration but explains that Amazon's customer service requires ID verification to prevent fraud. He advises weighing the $55 against the risk and suggests complying if comfortable with the minimal risk.
Notable Quote:
"Decide the value of the $55 versus the remote possibility that something bad happens from supplying the ID." — Clark Howard [12:15]
d. Saving for a Home
[22:19] Richard from Delaware's Question:
Richard seeks advice on where to stash savings for a home purchase planned in three years, debating between investing, CDs, or high-yield savings accounts.
Clark's Recommendation: Clark recommends placing the funds in a high-yield online savings account or a brokerage money market account with firms like Vanguard, Schwab, or Fidelity. He advises against investing in the stock market or opting for CDs given the uncertain interest rate environment.
Notable Quote:
"Put the money in an online savings account where you can earn roughly 5%, instead of locking it into CDs or the low returns of traditional banks." — Clark Howard [22:39]
e. Gifting Money to Children
[24:47] Jamie from Georgia's Query:
Jamie seeks the best method to gift $500 to each of her children, aged 8 to 12, with the intent that the money not be accessible until their mid-20s.
Clark's Suggestion: Clark suggests establishing custodial investment accounts at discount brokers like Fidelity. He advocates for investing in low-cost index funds, which offer growth potential over time, while also serving as an educational tool for children to learn about investing.
Notable Quote:
"Use a custodial investment account at a discount broker and invest in a Fidelity Zero fund, providing long-term growth and a teaching opportunity for your kids." — Clark Howard [25:20]
f. Target's Secure Gift Card System
[26:46] Elise from Massachusetts Shares:
Elise commends Target's new system where gift cards require cashier activation with unique codes, reducing theft opportunities.
Clark's Reaction: Clark praises Target's initiative to combat gift card fraud, highlighting its effectiveness in preventing unauthorized access and enhancing customer trust.
Notable Quote:
"It's a great idea to cut down on gift card theft. This step from Target is a move in the right direction to prevent gift card draining." — Clark Howard [27:19]
Conclusion
In this episode, Clark Howard offers valuable strategies for reducing monthly expenses, particularly focusing on home internet services, and explores the promising future of train travel in managing urban congestion. Through addressing listener questions, Clark provides actionable financial advice, reinforcing his mission to empower consumers to make informed financial decisions.
Upcoming Topics:
- Addressing metro congestion and the role of rail travel.
- Continued exploration of cost-saving measures and consumer advice.
Engage with Clark: Listeners are encouraged to submit questions and join the conversation at www.clark.com/askclark.
This summary encapsulates the key discussions and insights from The Clark Howard Podcast episode aired on December 19, 2024, providing a comprehensive overview for both regular listeners and newcomers.