The Clark Howard Podcast: Episode Summary (12.27.24) Title: BEST OF: Clark Answers His Critics on Clark Stinks / Paying For Adult Children
Release Date: December 27, 2024

I. Introduction

In this special "Best Of" edition of The Clark Howard Podcast, host Clark Howard revisits some of his most engaging discussions, focusing on addressing criticisms from his listeners and delving into the sensitive topic of parents financially supporting their adult children. The episode blends insightful financial advice with candid interactions between Clark and his co-host, providing listeners with valuable perspectives on personal finance management.

II. Clark Stinks Segment

A. Listener Criticisms

The episode kicks off with the “Clark Stinks” segment, where Clark addresses critiques from his audience regarding his previous financial suggestions, particularly his ideas on solving the housing crisis.

1. Matthew's Feedback ([02:28]):

   • "I thought Clark's idea to solve the housing issue seemed really good and unique. But one issue I see with it is most people who want to change houses want to upgrade and their new mortgage would be significantly larger than their existing mortgage, so they would still have to incur a large amount of debt at the Current higher rates."

2. Rick's Critique ([02:28]):

   • "Your proposed solution to the housing cost problem is more of the very thing that created this mess. Government intervention..."

3. J.P.'s Observation ([02:28]):

   • "Clark, your plan to make mortgages more portable is stinky because it's missing a key ingredient..."

B. Clark's Response ([03:54] - [08:22])

Clark addresses each criticism thoughtfully:

• On Portable Mortgages:

  "My idea was what if lenders were given the option under the law to allow you to move and transfer your mortgage balance to a new property at two points higher... You benefit because you're getting a loan portable below the current market rate for that amount of money and you move it across." ([04:30])

• Clarifying the 2008 Financial Crisis:

  "Back during the banking scandals, the banks were the reason it's called the banking scandals because they were doing all kinds of liar loans... This was greedy behavior on the part of Wall Street and the banks." ([06:15])

• On Government Intervention and Interest Rates:

  "Federal Reserve keeping interest rates down in concert with central banks around the world was to prevent another Great Depression... We've got problems now because of artificially low rates for too long." ([07:45])

Clark emphasizes that his proposed solutions aim to stimulate the housing market without repeating past mistakes, advocating for balanced market interventions.

III. Addressing the Rent vs. Buy Debate

A. Listener David's Comment ([08:22] - [09:04]):

"Clark, you definitely don't stink, but I feel you have a bit of tunnel vision when you talk about only renting when you move to a new town... when you get to a, it does involve a lot of costs as well."

• Co-host: David shares his personal experience, highlighting the financial drawbacks of following Clark's renting-first strategy in his specific situation.

B. Clark's Response ([09:04] - [09:43]):

"David, you're 100% right. In your circumstance, my advice about renting first would have been a financial disaster... We're in a different housing cycle now. Housing prices are extremely high. Mortgage rates are extremely high, and it makes it even more favorable right now to rent while rents on average are falling around the country." ([09:30])

Clark acknowledges that while his advice may not suit every situation, current market conditions significantly influence the best financial decisions regarding renting versus buying.

IV. Electric Vehicles and Environmental Concerns

A. Listener Michael's Critique ([09:43] - [10:10]):

"Clark, you're full of wisdom in many arenas, but in the episode I'm listening to, you stunk worse than our dying oceans. You said, 'electric cars are not a political or environmental thing. I couldn't care about that, end quote...'"

• Co-host: Michael emphasizes the environmental implications of electric vehicles, questioning Clark's stance.

B. Clark's Defense ([10:10] - [11:23]):

"Am I an environmentalist? All the way back in 1973, I started a recycling program at my college before people even knew what that was... My point about electric vehicles is you can't get people to buy an electric vehicle because it's better for Earth. It's got to be better for them." ([10:45])

Clark clarifies his long-standing commitment to environmentalism but stresses that for widespread adoption of electric vehicles, the benefits must align with consumers' financial and lifestyle needs.

V. Supporting Adult Children: A Financial Balancing Act

A. Presenting the Issue ([19:59] - [25:57]):

Clark shifts focus to a pressing financial issue: the trend of parents supporting their adult children. He cites a Savings.com survey revealing that parents are, on average, giving their adult children $1,384 per month—twice the amount they are saving for their own retirement.

"According to a Savings.com survey, parents are giving their kids $1,384 a month... parents are giving twice the amount to adult children that they're saving for their own retirement." ([20:05])

B. Implications and Advice:

Clark discusses the potential long-term consequences of this trend, including:

• Financial Strain on Parents:

  "A lot of times, mom or dad... don't have enough money to live on in retirement because they were funneling money to you as an adult child." ([22:30])

• Creating Dependency:

  "The money becomes almost like, expected, like a paycheck... they don't know how to stop the momentum." ([23:15])

C. Recommendations for Parents:

• Gradual Reduction:

  "Have a conversation with that adult child and don't cut them off cold turkey... taper it down, say... I'm going to be able to give you less money six months from now." ([24:10])

• Prioritizing Financial Health:

  "Can you afford to give money... Does it need to be less? Does it need to be zero for you to be able to take care of your own financial needs and especially your own financial future?" ([25:00])

Clark advocates for open communication and strategic planning to balance supporting adult children while safeguarding parents' financial security.

VI. Listener Questions and Interaction

A. Max's Query on Family Planning ([26:07] - [29:42]):

"How do you recommend thinking about money when deciding on what number of kids to have?... with two, it will be tricky for the next decade due to some residual student loans and the cost of daycare, etc."

• Co-host: Calls Max’s question addressing financial considerations in family planning.

B. Clark's Insight ([27:39] - [29:42]):

"If you decided to have a second child, there are sacrifices you make and things you enjoy doing... One thing I will tell you, if they're close in age together though, 1 is 1, 2 is not 2, it's 10." ([28:20])

Clark emphasizes the significant impact of additional children on family finances and lifestyle, encouraging listeners to weigh personal priorities and financial readiness carefully.

C. Moving Considerations – Listener Matt ([29:42] - [31:35]):

"Is it worth the roughly $600 to $700 added expense?... do you have any other suggestions to make this move even more budget-friendly?"

• Co-host: Matt seeks advice on the cost-effectiveness of renting an SUV for a long-distance move versus using his own vehicle.

"I think your plan is a smart one versus putting those miles on your own vehicle." ([30:25])

Clark supports renting an SUV to prevent mileage wear on a leased truck, highlighting the long-term savings compared to potential vehicle depreciation.

D. Realtors' Real Estate Advice ([31:35] - [32:05]):

"In 1971, the interest rate for a mortgage was 7.33%. If you waited for interest rates to go down, you wouldn't have purchased a home until 1993. The value of real estate quadrupled."

• Co-host: Shares a Realtors' perspective encouraging immediate real estate investment over waiting for interest rates to drop.

"Buy real estate and wait. Marry the house. Date the rate." ([32:00])

Clark concurs, noting historical interest rate trends and advocating for real estate investment despite fluctuating mortgage rates.

VII. Notable Quotes with Timestamps

• Clark Howard on Podcast Mission ([00:55]):

  "Our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life."

• Clark Responding to Criticism ([02:20]):

  "Clark Stinks. I should have never encouraged you to speak. You must think I'm pretty stupid. You should be ashamed of yourself. Well, maybe I'm wrong. Maybe you're right, pal."

• David on Renting vs. Buying ([08:22]):

  "Clark, you're full of wisdom in many arenas, but... when you get to a, it does involve a lot of costs as well."

• Michael on Electric Cars ([09:43]):

  "Electric cars are not a political or environmental thing. I couldn't care about that, end quote..."

• Bob on Premium Fuel ([15:36]):

  "Select premium unleaded gasoline with an octane rating of 91 or higher required for optimum performance and fuel economy... damage to the engine may occur and may void the warranty."

• Clark on Adult Children Financial Support ([19:59]):

  "According to a Savings.com survey, parents are giving their kids $1,384 a month... parents are giving twice the amount to adult children that they're saving for their own retirement."

VIII. Conclusion

Clark Howard wraps up the episode by emphasizing the importance of informed financial decisions and recognizing the diverse challenges his listeners face. He extends a heartfelt tribute for Memorial Day, honoring those who sacrificed their lives for freedom.

"Memorial Day is looked at as the unofficial kickoff of summer. It's also a time that we remember people who lost their lives. Paying the ultimate sacrifice for your and my freedom." ([32:00])

Clark encourages listeners to join the Clark.com community for ongoing discussions and support, fostering a space for shared financial growth and understanding.

This episode of The Clark Howard Podcast offers a blend of expert financial advice, listener interactions, and thoughtful responses to critiques, making it a valuable resource for anyone navigating personal finances and family dynamics.