transcript

Speaker 1:
[00:00] Welcome to How to Money, I'm Joel.

Speaker 2:
[00:01] And I am Matt.

Speaker 1:
[00:03] Today we're talking Allbirds AI Audacity, 529 Flexibility and Horrific Helox.

Speaker 2:
[00:27] You know what, buddy, this is our Friday flight, our little collection of headlines that we've come across this past week that we're going to get to on our episode today. Let's go!

Speaker 1:
[00:36] Let's make it happen.

Speaker 2:
[00:37] Do you say let's go?

Speaker 1:
[00:41] Occasionally?

Speaker 2:
[00:41] This is on my mind because our kindergartner said it, I feel like it's like a youth sports sort of context, typically, right? Like gym bros, let's go! And our son said it yesterday after he's a kindergartner, like your son, right? And they're starting to read more and he's got these books and he read his book to his sister and she's like, good job, Weston, you did a really good job. You're only three books away from completing your whole list. And he's like, all right, let's go! Which we thought was really funny. But let's go! We're not talking about sports or literacy. We're talking about personal finances.

Speaker 1:
[01:22] For sure, as we always do. And yeah, real quick, I wanted to mention that we, and I'm gonna tell a quick story here, Matt, about something that bit me in the butt that really frustrated me.

Speaker 2:
[01:34] I don't want to get bit in the butt.

Speaker 1:
[01:35] But I want How to Money listeners to know that we love taking your listener questions. And we-

Speaker 2:
[01:40] Oh yeah, we're getting low.

Speaker 1:
[01:41] Submit some.

Speaker 2:
[01:42] We're getting low on the freshies, you know? And we put together a good variety of listener questions that create an entertaining and interesting episode, right? And so we've got a lot of the Roth IRA kind of questions. And that's why anytime someone sends in a weirder question, that we are all about those.

Speaker 1:
[02:00] And maybe it's something to deal with your personal finances, or maybe it's just like an existential personal finance question you've had. Or just some of this crossed your mind. Please send it in. And if it's awesome, I'll send you a pair of How to Money socks. We haven't given those away in a long time. We're still laying it on to some goodies.

Speaker 2:
[02:15] Let's incentivize.

Speaker 1:
[02:16] They're just as beautiful and comfy as ever.

Speaker 2:
[02:18] Okay. So is it just a subjective? Yeah.

Speaker 1:
[02:21] 100% subjective.

Speaker 2:
[02:21] Whatever you think is an awesome question, you're like, that one gets a pair of green, Aqua Green, How to Money socks.

Speaker 1:
[02:27] That's right.

Speaker 2:
[02:28] All right.

Speaker 1:
[02:28] Talk to me. I love it.

Speaker 2:
[02:30] Send them in.

Speaker 1:
[02:30] I'm the king in this case. Okay. So let me tell you a story real quick about something. You and I were two hours north of where we currently live last weekend running a trail race.

Speaker 2:
[02:41] Heck yeah. Congrats to you.

Speaker 1:
[02:42] It was fun.

Speaker 2:
[02:43] You bested your previous time by six minutes?

Speaker 1:
[02:46] Six minutes. Yeah, it was nice. So I took the kids out. They have a little candy store. It's a little touristy kind of town.

Speaker 2:
[02:52] Are you going to tell the candy apple story?

Speaker 1:
[02:53] Yeah, I do.

Speaker 2:
[02:54] Okay. This is so good.

Speaker 1:
[02:58] I was so annoyed. The guy in the candy shop, so nice. He was so nice. And then he was like, have your kids seen the candy apples yet though? And I was like, no, they were looking at some of the other. It's like a chocolate shop. I was like, they're looking at some of the other stuff.

Speaker 2:
[03:11] Touristy small town, North Georgia.

Speaker 1:
[03:13] But he draws my daughter's eyeballs over there. And she's like, candy apple with M&Ms on the exterior. Sign me up. And I'm like, okay, cool. And the prices are not well displayed in the store, so I'm just imagining everything's probably seven or eight bucks that they're picking out, right? Maybe 10. And then he rings it up, and something rings up $23.75. And I was like, can you, what? What is that? What is that? And he was like, oh, it's the apple. And I was like, oh, no wonder you steered us towards the apple. And I couldn't break my daughter's heart at that point in time. That's what she's picked. She picked the other part about that. One, it's the most expensive apple I've ever paid for in my life by far.

Speaker 2:
[03:54] Two, such a massive markup.

Speaker 1:
[03:56] You can't eat a whole candy apple. Nobody can. She ate like eight bites of it, and you trash the rest of it, which makes it even more of a gutting thing to spend your money on.

Speaker 2:
[04:06] There's very little sustenance that you actually receive from it. So yeah, half of enjoying a candy apple is walking around with it and showing it off. It's like the Jot's Keys or whatever, the light up toys at Disney World. It's just like the joy that you get from just holding it, I guess.

Speaker 1:
[04:23] You're never going to use it again when you get back home, right?

Speaker 2:
[04:25] It's broken by the time you get back to the car. Well, okay, here's my question. Yeah, because you shared this with me. I was like, oh my gosh, that is so much more expensive than what I was expecting. First of all, the markup, right? I mean, even if it was like the biggest, nicest, like what are the cosmic crisps or whatever, like the new versions of apples or whatever, even at most, you may be paying a dollar.

Speaker 1:
[04:47] I was going to say, yeah, for a big old apple like that.

Speaker 2:
[04:49] So for this to be like a 24X markup is just totally insane. The price though, was it displayed properly or is this user error? Is this a consumer issue?

Speaker 1:
[05:00] I should have paid more attention.

Speaker 2:
[05:01] It was on you or was he-

Speaker 1:
[05:03] The prices were poorly displayed?

Speaker 2:
[05:05] Was he unintentionally not putting the price out there? Because that's a little shady if he's doing that.

Speaker 1:
[05:10] They were displayed. They were just very poorly displayed. And I should have looked before I was like, oh yeah, get what you want. That's fine. Everybody can get one thing. That was the thing she chose. I just didn't expect it was going to cost that much money.

Speaker 2:
[05:21] Oh, you got to count on your kids going for the most expensive.

Speaker 1:
[05:24] Yeah, I guess so.

Speaker 2:
[05:24] They know dollar signs and what they mean. This is post-race, so you got the runner's hot. Oh yeah, you and I, we got our beers, we're hanging out in the river, which we did. Cooling down.

Speaker 1:
[05:35] We need to post those pics on Instagram.

Speaker 2:
[05:37] You know what, I asked Kate if we should, and she said no. It doesn't look great, because we're both standing there shirtless in the river. We're smiling, we're happy, but not everyone understands what we just went through. For like a trail half. Did you say anything to the guy when you were just like...

Speaker 1:
[05:53] No, no, I'm not, okay, no. I just bid it and I ceded about it privately to my wife later and went on about my merry day.

Speaker 2:
[06:01] Okay, because if you felt that it was like unfair, if the price is, let's say there wasn't a price there and he was just like direct marketing to the kids, which feels a little skeezy as well, right? If it was that marketing combined with a lack of transparency on the pricing, I would be like, oh man, I wish you would have had the prices out there. Maybe I should have asked, but it would have been better if that was out there for folks to make an informed decision. And depending on his, I don't know, I'm torn between leaving a review, but if he would have responded to you poorly, then at that point, that's when I would have been like, I'm not gonna one-star that guy. But I would have been like, four stars, review the place. All my review would have said is, watch out for the $24 Apple, because other parents need to be warned. That's a lot of money.

Speaker 1:
[06:51] It is a little bear trap he's setting for me. And I set into it.

Speaker 2:
[06:53] Honey trap right there, man. Sorry Paul, you can't go to college because of, remember that candy apple from 2026?

Speaker 1:
[07:00] The compounding returns that this apple could have produced.

Speaker 2:
[07:02] It's the rule of 173.

Speaker 1:
[07:03] That's right. All right, let's get to the Friday Flight, the sampling of stories we found interesting this week. And of course, they're gonna apply to your personal finances. We're gonna have some takeaways here. Let's talk about investing, Matt, for just a second. It's not hard to miss signs of exuberance in the markets right now. It's been really interesting to see the market bounce back from the war in Iran is not over, but the market is back to all time highs, taking a long. In a very blatant example, though, of kind of maybe market froth, the shoe company Allbirds, a company that was formerly worth $4 billion, which no one seems to care about anymore. I don't see people wearing their Allbirds. I don't see the tech people obsessed with those shoes instead of like bamboo and stuff like that. I think it's wool. Oh, that's right, wool, they're wool. They've now pivoted to being in it.

Speaker 2:
[07:54] Bamboo shoes, I guess, wouldn't be all that comfortable.

Speaker 1:
[07:56] I don't think so.

Speaker 2:
[07:58] There are some fabrics that are made from bamboo that are super, super soft. I think that's what I was thinking of. People are probably thinking of like ancient China.

Speaker 1:
[08:06] That's what I'm thinking of, like the clodge.

Speaker 2:
[08:09] Not comfortable.

Speaker 1:
[08:09] Well, Allbirds is now an AI company. Because of course they are. And its stock shot up instantly on the news that it was converting from being a shoe company to being an AI company. Which is just so 2026. The stock price has since come back down, at least a little bit. But when you look at all the details, Allbirds was going to sink $50 million into AI compute infrastructure. That's a drop in the bucket compared to other companies in the space, right? It's like bringing a pocket knife to a bazooka fight. They're bound to lose. And as one analyst said, the market is not pricing risk, it's pricing narrative. There's just so much froth and speculation happening right now. I'm not sure if we've reached peak AI hype, but it sure seems like we're close when we see stories like this. There are just so many ways for investors to lose money right now, and they just have to be careful. They got to watch out.

Speaker 2:
[09:00] This does feel like something that we would have expected to see a couple years ago. It makes me think of GameStop, right? But it's not just a shoe company that is pivoting to AI, Joel. MicroStrategy, which is essentially it's a company that invests in Bitcoin. They now have a new offering that is incredibly shady, which is Stretch. The pitch for Stretch is essentially that it's a preferred stock tied to two risky entities, Bitcoin and MicroStrategy. You put your money in, and then you're going to earn in the neighborhood of 11% interest, which is, you hear that, right? And you're like, oh my gosh, 11%. That's way better than your high-yield savings account. That's way better than your money market account, right? Well, we are here to warn you that if it sounds too good to be true, it usually is. And this is just blatant evidence of this. MicroStrategy CEO calls it, it's the most ambitious piece of financial engineering, which, yeah, that's totally true.

Speaker 1:
[10:01] Where did ambition get Icarus, Matt?

Speaker 2:
[10:03] That is not a good thing, right? MicroStrategy is, I can't even say it, a microStrategy. They're essentially using inflows into Stretch in order to help them to buy even more Bitcoin, which feels like a total MLM-esque investment product, right? As long as the money keeps flowing in, we're going to be able to post incredible numbers. And I think Stretch is just another sign of FOMO, essentially. Fear of missing out, investing, that is likely to come back and buy a whole lot of investors in the butt one of these days. And I'm going to be very content to sit back and chill with my VU, my S&P 500 index fund all day long.

Speaker 1:
[10:41] Burning A&F-esque, right? When someone says, hey, you can stick money in here, 11% is going to be your return on that capital.

Speaker 2:
[10:47] But it's just a new flavor, and folks forget the sort of underlying principle of the fact that it's not necessarily producing anything.

Speaker 1:
[10:56] And I think when a financial services firm offers something, there are a lot of people who are just like, well, then this must be legit. How can they offer this if it's not for real? But there's a lot of things offered out there that aren't for real, like expensive candy apples. Let's talk about retirement masks.

Speaker 2:
[11:13] No, no, expensive candy apples. That's an actual product. That's the difference here. That's true.

Speaker 1:
[11:17] I did get a product.

Speaker 2:
[11:19] Like the expensive candy apple kind of feels like maybe the original Albert shoe as opposed to hype.

Speaker 1:
[11:25] This is going to be even more of a rug pull for a lot of people. So the assumption of how much individuals think that they're going to need in retirement keeps growing. It could be part of the reason that folks feel compelled to take on more risk is because, hey man, I just, if I'm not growing my net worth and I'm not getting closer to that like multimillion dollar threshold, then what am I even doing here? The belief is now that you need $1.46 million to retire comfortably according to the average American. That's up from-

Speaker 2:
[11:53] Is that the new like a million? It's like, oh, you don't need to be a millionaire. You need to be a 1.46 millionaire.

Speaker 1:
[11:59] That's right. If you're not there, what are you even doing with your life? That's up 15% last year. The people's expectations of what they need are just growing in way. You just can't keep up with that. How are you going to be able to keep up with prognostications or feelings that you need just more and more and more and it's insatiable? The truth is, it's really important to point out that most folks really don't need that much in retirement. We think a lot of How to Money listeners are going to amass a million dollars plus. A lot of people out there, Matt, who listen to this show, I hear from them, they're going to get two million, they're going to hit to three million or beyond. Like Buzz Lightyear, right? And that's not a bad thing. We're not against that. But I guess what I'm trying to say, we're also trying to convince average Americans to invest less money. But if you project unrealistic needs without knowing your numbers and your likely future needs, it can create undue stress. And I think it can create this drive towards taking more speculative risk. And so those big round numbers also tend to ignore other factors, like reduced spending in retirement. If you've paid off your mortgage or, hey, I don't have to save anymore, now I'm drawing down on my investments. Social Security income, that's something else. And I think it can also lead to nihilism for a lot of people. Saving less because you think you're never going to get there leads to panic or risky investing decisions. And that's what I want to avoid. When someone tells you, hey, you need $1.46 million to retire, and you're like, I'm never gonna get there, guess I'm just gonna give up. That is the kind of reaction we sometimes see that I want people to avoid. Sure.

Speaker 2:
[13:38] There's a part of me that thinks that folks continue to strive after what they've been striving after because they're not actually doing the work of figuring out what is enough, what do I want my life to look like. They're just doubling down on what they're good at, which I understand. You start getting good at something. We talk about this a good bit, you and I do personally, how it's good to hit reset on something in your life from a skills perspective to essentially relearn what it's like to not be good at something and to reacquire the skill of actually learning. And in this case, I think a lot of folks are just doubling down on what they're good at and they're needing more money as the excuse to continue doing what they've been doing.

Speaker 1:
[14:14] If you're really confident in a few areas in your life, it's really fun to start something new that you're really bad at and to grow. Because at some point, sometimes as an adult, you forget what it's like to be really terrible at something. Yeah, exactly. And that exponential growth curve, it's super fun to experience it again.

Speaker 2:
[14:32] And in particular, if you want to be a well-rounded human being. Let's continue this conversation, though, Joel. We're talking about investing, we're talking about retirement. This is how to money is bread and butter. Another tactic that we're going to see more folks taking inside of their retirement accounts is to invest in alternative assets. So, we're talking about everything from private credit to real estate to cryptocurrencies as well. There was an executive order last year that, coupled with a Department of Labor proposal from last month, are likely to make it easier for riskier choices to be available to regular investors inside their 401k. The context is that we have found ourselves in this era, essentially, of falling fees for asset managers for years. Essentially, all the finance bros, all the Wall Street bros, are not making quite as much money because, for instance, Vanguard, they have made it harder for those folks to make a living.

Speaker 1:
[15:24] Those guys must hate Vanguard and Fidelity so much.

Speaker 2:
[15:26] Vanguard and Fidelity, yes. And so, the way to increase fees, and at least to kind of hold the fees, in a lot of cases, to where they are, is to ratchet up the complexity. It makes me think about, like, target date funds even. For instance, we have seen a pretty precipitous drop in expense ratios on target date funds, but if you offer, let's say, a target date fund with a slice of the alternatives in there, well, an asset manager can then justify a higher fee.

Speaker 1:
[15:54] It's now a sexier product.

Speaker 2:
[15:56] It's now an actively managed fee. It's gonna charge you more. That's right. It's gonna cost you more. And whether being sold, though, are, oh, you're gonna earn higher returns, but there's no guarantee that that's actually gonna be the case. This is something we talk all about on the show. For instance, publicly traded REITs, they perform better than private real estate funds. This is just a PSA, a warning out there for folks. These alternative investments are not all that they're cracked up to be. We don't want you to get distracted. And we're also not saying that index funds are the only way to invest, right? Like there are other options out there, but it is hard to beat the broad market, especially when you've got minimal to non-existent fees. You can't, it's hard to compete with a guaranteed, oh, you're at least gonna earn this much because we're not gonna charge you that much.

Speaker 1:
[16:44] But the marketing behind index funds, Matt, it's just not good. There's a reason it's not good.

Speaker 2:
[16:48] It's boring.

Speaker 1:
[16:49] It's boring? And because it's so inexpensive, there's not all this extra money to go out there and put awesome commercials on TV or great web ads as you're scrolling down, reading your favorite New York Times article. Vanguard's not like, hey, VTI, 03%. Like, it's just, you just don't see much marketing from Vanguard.

Speaker 2:
[17:08] We ought to reach out to the folks at Vanguard and encourage them to make VU t-shirts.

Speaker 1:
[17:13] There you go.

Speaker 2:
[17:14] Because I would wear it.

Speaker 1:
[17:15] Yeah. But the alternative asset class is...

Speaker 2:
[17:19] It's inherently interesting and new and shiny and fresh.

Speaker 1:
[17:22] And so, I get it. So, I think you and I both read the Morning Brew newsletter pretty regularly. And man, some of the investment options they have in there, I would classify them in alternative investors. They're pulling out big spreads inside of the Morning Brew newsletter, which it makes sense. It's the kind of crowd they're trying to attract. But every time I scroll past it, it's like Invest In This Robotics Company or whatever. I'm like, oh my gosh. I bet there's a lot of people who are like, okay. Don't like it. It's probably not in their best interest.

Speaker 2:
[17:48] Don't like it. Even though I myself am in alt.

Speaker 1:
[17:52] You are.

Speaker 2:
[17:52] That's true.

Speaker 1:
[17:53] That's true. That's a good point.

Speaker 2:
[17:54] I feel slightly offended that we're taking such a aim at.

Speaker 1:
[17:56] I hate all the alts.

Speaker 2:
[17:58] The alts.

Speaker 1:
[17:58] Except for one.

Speaker 2:
[17:59] You know, alt means old in German. So I think it had, you know, altmix.

Speaker 1:
[18:05] Well, then you fit the bill, sir.

Speaker 2:
[18:06] Yeah, well, I'm getting there. Keep moving.

Speaker 1:
[18:09] Let's talk about 529 plans for a second. One in five parents who aren't saving for their children's future education are holding on to that money because they're uncertain about the future of college. Basically, they're looking at the current job market for college grads, the uncertainty of AI models in the future, which makes sense. There's a lot of uncertainty there. And they're opting to forsake the 529 because there's like, is college going to be around in the same way? Is it going to make as much sense?

Speaker 2:
[18:38] That's a good question to ask.

Speaker 1:
[18:39] Should I be investing money ahead of time for a college degree for my kid when I just don't know what the reality is going to look like a decade down the road? This is becoming a trend. And the Wall Street Journal had an article about a financial advisor who has four kids, and he's boycotting 529 plans, even though he's investing something like six figures every single year. And so you would think somebody who has that much money to invest, well, you're gonna dish a little bit out for your kids, like start saving for them, because you've already maxed out your 401k, your IRA if you're able, and a bunch going in the taxable brokerage. Like you've got a lot of money to invest, but he's like, hmm, no, 529's no go for me. I'm curious, do you think that's a short-sighted?

Speaker 2:
[19:22] Well, I'll say that I felt an immediate kinship to this guy. Because he's got four kids, he's like staring down the barrel, he's just like, uh, I might have to make a principle decision here and maybe justify. I don't know, do you feel like your opinion has shifted on 529 plans?

Speaker 1:
[19:38] I think I'm similar.

Speaker 2:
[19:41] I think for, over the years, we've taken like an optimistic but cautious approach. And I think that is still where my head's at.

Speaker 1:
[19:49] As they've gotten more flexible, I think, before, like, before the, what was it, was the bill when?

Speaker 2:
[19:56] The SAVE Act.

Speaker 1:
[19:57] The SAVE Act. Before the SAVE Act that made, that allowed you to turn $529 into Roth dollars, that also freed up that money for K-12 education. I was like, sorry, too pigeonholed. I'm just not very interested. Now I'm more interested and I have money in 529 accounts for my kids. But I'm also not like, let me find a way to pay for their whole college by investing on their behalf. Not interested in that either.

Speaker 2:
[20:19] Yeah, because I'm struggling too. I think about higher education. I think about what they should be learning. Because I think about, to your original question, is it too near-sighted? I think about my views and my opinion immediately after college when Kate and I started our own business. And I remember thinking then, I shouldn't have gone to college. Wasted a lot of time, a lot of money. And we're able to do this completely, essentially on our own. It felt very self-made. But then you get older and a little wiser and you realize, oh, there's a lot that I learned in college. We're talking about being well-rounded people.

Speaker 1:
[20:51] You met your wife there, too.

Speaker 2:
[20:52] Yeah, I certainly can't discount that. And so I think that also informs, though, my opinions of higher ed. I am optimistic. I think my kids are going to go to college. But I do think paying attention to whatever the threshold is of dollars that you can, without penalty, transfer into rollover into a Roth. So right now it's $35,000. And so if you have $35,000 in there, great. If you are looking at investing and stocking away even more than $35,000 into a 529, I think you need to start being careful and start really weighing the options because you're going to have a whole lot less flexibility when it comes to that. That being said, we're talking about the flexibility of 529s. There are new proposals that can make them even more flexible, including the ability to use $529 for non-degree certification programs. There's actually-

Speaker 1:
[21:40] Which I like, but that could also open up a can of worms. What do you think about all the fly-by-night companies that are going to be like for-profits? We offer a certificate over- The How to Money Certificate of Personal Finance Excellence. I mean, spend your $529 here, folks.

Speaker 2:
[21:55] Dude, we could spin up that academy in no time. I feel like using AI, we could vibe code our way to create something that looks really nice.

Speaker 1:
[22:03] But for legit organizations, I'm thinking of someone going to get some sort of blue collar certification. That's wonderful. You could use $529 for that sort of education.

Speaker 2:
[22:12] Well, what do you think about... There's also proposals about being able to use $529 for a down payment on a house as well. Do you feel similarly about that?

Speaker 1:
[22:20] I think it could make sense, especially if you put it after a certain age. After the age of 25, you can use...

Speaker 2:
[22:28] Yeah, you're still incentivizing folks to use it for higher ed.

Speaker 1:
[22:31] But if you have money left over, then you can still use it for another good cause.

Speaker 2:
[22:36] Yeah, they're not totally nailing you to the wall just because you didn't use all the money. Yeah, I like the sound of that. You just have to think about why 529 plans exist, and specifically why they're tied to states. You think about how states offer certain incentives to say, hey, we will reward you from a tax perspective if you invest your dollars here with us. You're incentivizing folks, I think, to stay in state, not necessarily from a college standpoint, but you're attracting a certain constituency in your state. I think states, the way they're thinking about it is that, hey, I'm willing to take a hit on the income, the tax income, that we would normally be able to generate, the tax revenue, by offering you a break and saying, hey, you don't have to pay state income tax on the dollars that you set aside in the 529 plan, knowing that the long-term benefit for the state is gonna be overall better for the state, right? And so this is why even when it comes to certifications, like blue collar, skilled trades, essentially, is that even though the return on your investment going to a four-year college and getting a degree, even though that is declining and we're seeing folks not able to immediately get a job, it's still significantly higher. It's still a lot higher on average than a blue collar worker or skilled trade. And so if you're thinking about it that way and what you're incentivizing, yes, I could see the near-term, oh, this is great, we've got a lot more optionality as an individual to be able to set those dollars aside, potentially use it for skilled trades, potentially use it for a home, but it doesn't lead to sort of that long-term healthy, I hate to say this, but like tax-paying base that the state is looking to attract.

Speaker 1:
[24:18] They want a more highly educated populace because that's the rising tide that lifts all the boats.

Speaker 2:
[24:22] Exactly, and then you start to think about if folks are able to use those dollars towards down payment, I think immediately the folks who take advantage of that initially are like, yeah, and they're coming out ahead, but what does that do to the housing prices overall? Drives up the prices, right? And then you are left with potentially a more expensive asset, a home, but then you don't have the person behind it to be able to continue to contribute to society, right? There's no engine that powers the homes. It's a bad analogy.

Speaker 1:
[24:52] The second order effects of laws like this, you gotta think through some of that. You gotta think about the space. And then you're like, but what's actually gonna happen? What's the domino effect of something like that?

Speaker 2:
[25:01] Yeah, so that's what policy makers wrestle through as they're trying to figure out what to incentivize and the immediate problems they're also trying to solve.

Speaker 1:
[25:09] All right, well, we got more to get to, including we're gonna talk, Matt's gonna offer his thoughts on Bieber's performance at Coachella. We'll get to that and more right after this.

Speaker 2:
[25:26] Yes, we will get to some of the different cultural events that have been happening around the world.

Speaker 1:
[25:31] Matt's a belieber.

Speaker 2:
[25:32] Oh my gosh, don't even.

Speaker 1:
[25:34] That's what they call themselves, right?

Speaker 2:
[25:35] I don't even know, dude. I feel culturally illiterate, to be honest with you. Same, I've got my own cultural interests, but I don't think they overlap with the wider My interests aside are becoming more and more narrow, as opposed to narrower and deeper, as opposed to broader and more shallow. But that being said, we've got our ludicrous headline of the week, which is from Yahoo. Headline reads, helox have changed, and some homeowners may not like the new rules. Yes, that is so true. Before we get to that, it's worth mentioning that helox have become more popular, as refinancing makes very little sense these days.

Speaker 1:
[26:11] And let me get out of my 4% mortgage and do a 6-something percent one. Exactly. And take money out.

Speaker 2:
[26:16] Folks aren't doing that. They've got that locked in low mortgage, you're hanging on to that. But still, there is a lot to consider before you take out a helox. It doesn't mean that helox are an automatic slam dunk. And one of those considerations is where you should go to get that helox. And this article documents a rise of non-bank helox lenders. And these are new players who are offering far worse terms. Yes, their website might be very slick. Wow, this interface is much more attractive than what it is that the local credit union is offering.

Speaker 1:
[26:51] Because let's be honest, the local credit union sites.

Speaker 2:
[26:53] It doesn't take much. They're so bad. Yeah, I'll get to this in a second. I'm thinking about one of the credit unions I'm with. But these new players, the terms are just worse. They've got immediate drawdown requirements. They've got inactivity fees. They're nickel and diming you. And so you've got to read the fine print because if you're forced to, let's say you've got to borrow $50,000 immediately on $100,000 alone, or you're going to be paying interest right away. This is going to happen immediately as opposed to just on the amount that you need when you need it, which is like the whole point of a HELOC. That's why you go with a HELOC instead of a home equity loan.

Speaker 1:
[27:30] Is that flexibility?

Speaker 2:
[27:31] It's the flexibility. You get that line of credit available to you. It's almost like a hybrid product, right? Like where they're marrying a HELOC with a home equity loan, where they're forcing you essentially to get some of that. It makes me think of like hard loans that might have like a prepayment penalty, right? Like it's like, oh, well, if I get the advantage of getting the discount, and maybe I'll go ahead and finance it, and immediately pay it off, but you gotta read the fine print. And if they are forcing you to immediately start making payments, may not be worth it.

Speaker 1:
[27:58] And you might be used to, if you've gotten a home equity line of credit before from a credit union, that flexibility and the lack of fees, like no closing costs typically. And you might be shocked if you look elsewhere, that the headline rate might be a touch better, might not, but that some of the underlying rules have gotten much, much worse.

Speaker 2:
[28:19] Exactly.

Speaker 1:
[28:20] A lot of gotchas. Yeah. Speaking of.

Speaker 2:
[28:22] And you're not used to reading all the fine print because you assume.

Speaker 1:
[28:24] Right.

Speaker 2:
[28:24] Oh, no. Helix or helix.

Speaker 1:
[28:26] That's right.

Speaker 2:
[28:26] These helix are a little bit different.

Speaker 1:
[28:27] Not all created equal.

Speaker 2:
[28:28] And going to my local credit, dude, it's awful. It's awful. Like, I remember when I first opened it up, I couldn't even figure out how to get money into the account because the way that the accounts are named and then they've got these additional products. And it's like, oh, well, you have to move the money from your regular bank to this account. And then you have to pay from that. It's ridiculous. It's the fact that I have to call somebody up and figure out, and it's not intentional. It's just, it's so antiquated. It's just how they've always done it. It's like the entire credit union has run off of like a singular PC in the back room, running off of like Windows 98.

Speaker 1:
[29:01] Yeah, yeah, it messed off something. Yeah, it's, you're right. It is a bummer. And I wish they had better websites and better interface for customers. But at the same time, like it comes down to the dollars and the cents for me, I'd rather go with the credit union with far better terms, better interest rates, than go with one of these half-baked new online lenders. Agreed. While we're talking about housing, even with prices moderating, property taxes continue to go up. They're up roughly 3% year over year. And the average person, I think, if you were to take a poll, Matt, they probably don't feel like the services they've gotten are a ton better.

Speaker 2:
[29:40] Everything feels the same.

Speaker 1:
[29:41] Yeah, everything feels the same, but the costs continue to rise. And so their property tax bill might have risen something like 100% in the past eight years or so. But they don't feel like things have gotten 100% better in their neighborhood. And you might think that's because the only certain things in life are death and taxes. That is mostly true. And you can't fight death. That's coming for all of us. But you can, fortunately, fight back on your property tax bill. So it's certain that you're going to have a property tax bill if you own a home. But can you reduce or mitigate it? Yes. We're getting to the time of year where most counties and cities actually send out property tax bills.

Speaker 2:
[30:19] Is it that time of year?

Speaker 1:
[30:20] It's happening. Just be ready.

Speaker 2:
[30:22] Oh man, I was talking. Sorry.

Speaker 1:
[30:24] Keep going.

Speaker 2:
[30:25] I was talking to a friend of ours recently and he was talking about escrow and he's getting new insurance. And he's just like, oh, property taxes and I was like, hey, heads up. Your house hadn't been sold prior to you buying it for like the past seven years and values have gone up significantly. So you might want to prepare for a shock on the next assessment.

Speaker 1:
[30:46] Which is true. And usually, hopefully the lender helps you prepare for that as they're figuring out how much you're going to put into escrow. But if they don't make a smart prediction, your escrow account is short and you're going to have to make up for that at some point in the future. So I would say the first thing is first, check it for accuracy. Make sure your property tax bill is accurate. If it seems too high, challenge it. And by accuracy, I mean like, is the square footage actually correct? Like does the county know how big your home is? You might be valued to more highly than similar comps. So it's worth checking recently sold homes nearby. This is something you can do yourself, but you can also enlist help. And there are lawyers out there who, I've hired a lawyer in the past, Matt. I forget, I think I paid like 250 bucks and it was totally worth it because he fought on my behalf and reduced my property tax bill. And in our state at least, they locked that in for three years. There's also a service and we have an article on our website about them called Ownwell. And Ownwell is kind of that super easy way to go if you want them to fight your property tax bill on your behalf. They take a cut of the savings, but hey, if you're like, I don't know how to do this. I don't want to do this. I don't want to figure it out. But I do want to reduce my property tax bill. That's a good way to go.

Speaker 2:
[32:00] That's right. And if you have recently purchased a home, by the way, make sure that you have filed for homestead exemption, which shaves something like 40% off, typically, the appraised value. Let's talk about your credit scores, Joel, because credit score provider, FICO, they did a little bit of research, and they found that Gen Z is opening up more credit cards than any other generation, which kind of intuitively makes sense, right? They're out there starting their, it's a fresh slate. They're starting their beautiful financial lives. And obviously, the result is going to be a temporary score drop, yeah, but if handled wisely, it's going to reap rewards over the long haul as you boost your credit score and establish that history of on-time payments. But similar to every other American generation, they are turning to those credit cards in a pinch. So when faced with income reduction or job loss, Gen Z is relying on the credit card that they've opened up to make ends meet, which is not good, right? It's okay to open up a new card here or there, if it makes sense for how it is that you spend, but build up those savings too. And remember that this recurring credit card debt that you might be getting a little too comfortable with is going to lead to you slowly digging a hole for your future financial self that you're going to have to somehow find a way out of.

Speaker 1:
[33:17] Yeah, and that's when we hear from people who are in credit card debt, Matt, it usually was like a slow dig. It wasn't like, oh man, I just like went hog wild on QBC for like three months, and now I slowly get used to it.

Speaker 2:
[33:30] The water that you're in just slowly, the temperature starts ratcheting up, and the balance creeps up. Before you know it, it's unsustainable. You're living beyond paycheck to paycheck in some cases.

Speaker 1:
[33:40] But it's easier to get into the credit card debt than it is to get out. So preventing it in the first place is the best way to live. And there was an article in the Wall Street Journal about high earners embracing thriftiness with the exception of a few crucial line items in their budget. I like this article, Matt, because it shows that some people even, like with high incomes, they're purposely working to reduce certain costs in their lives that they thought maybe were immovable. So like their grocery budget, cutting back on their frilly sort of purchases, like instead of the fancy shampoo, I'm going with the bottom shelf shampoo. What is it? The suave, right? That's what I'm going with, the suave.

Speaker 2:
[34:25] V05.

Speaker 1:
[34:25] Yeah, that's like the dirt cheapest one. Super cheap.

Speaker 2:
[34:28] I've gotten that before.

Speaker 1:
[34:29] In the pharmacy, I recently picked up a med for my kid, and I was like, how much does that cost now? It's still like $1.59.

Speaker 2:
[34:35] Okay. It used to be $0.99 for the big bottle.

Speaker 1:
[34:37] It did. So inflation has hit it, but think about how much cheaper that is than any other shampoo you're going to use. I'm not smart enough to know or I haven't looked into it at least enough to know. Is the nicer shampoo actually better for your hair? My hair is just fine most of the time, no matter what shampoo I use, but I know especially...

Speaker 2:
[34:55] You don't have to have a brillo pad up there, Joel. You could have smoother locks.

Speaker 1:
[34:59] I did use conditioner for the first time in a long time recently.

Speaker 2:
[35:02] And you're like, oh, I get it.

Speaker 1:
[35:05] So soft. I don't even think it was nice conditioner. Is that the crummy Airbnb we stayed in?

Speaker 2:
[35:10] But you're like, what's this white shampoo? I'm used to the gels. Oh. Conditioner.

Speaker 1:
[35:17] But it was interesting.

Speaker 2:
[35:18] Before you know it, Joel's gonna be talking about face moisturizer. There's this thing called lotion? Have y'all ever heard of it?

Speaker 1:
[35:23] I'm gonna be a whole new man. Well, these people are also more willing to shop at Walmart or Aldi to save money in order to essentially put more money towards the stuff that they care about the most, like the experiences that they really want to achieve. And this is something we talk about all the time, all the show, Matt, this is the craft beer equivalent that we advocate for. We've been recommending for at least a decade, you know, thrift store clothes, older cars, means if you make those intentional decisions, you have more optionality, you can make bigger splurges on the other stuff you care about. I think sometimes as Americans that we get into this rut of like, I got to have it all and we can't, like we all have limitations and their financial limitations are like for real, the math don't lie. And so if you can cut back in those other areas, even if you're just like, hey, I'm going to try to save four or five percent on my grocery budget every single month moving forward. So I can allocate that towards this travel budget that I, man, because I really want to go to Spain before I die. I can probably make it happen by 2028 if I'm thoughtful and intentional. But if you keep buying the fancy shampoo, it sounds ridiculous because it's just one thing, but it adds up when you think of that over a bunch of different light items.

Speaker 2:
[36:33] Forget the latte factor, this is the shampoo factor. That's right. But splurging when you don't have the money is a bad idea. It turns out that more than 60 percent of the massive crowd at Coachella, more than 60 percent, not 16, 60 at Coachella used Buy Now, Pay Later to buy their tickets, which, yeah, it's ridiculous. Of course, Coachella, they charged a fee making the cost of the already expensive event even more costly. And on top of that, it's not just the tickets to get in, it's not admission. Folks are also using Buy Now, Pay Later for their lodging, for food, for merchandise, and pretty much everything else that you can buy there at the festival, which makes for a really fun time until you have to eventually pay the bill over the next four months, I guess. So yeah, reducing the upfront cost, it seems like a good thing, and it allows you to do all the things you want to do, even if you don't have the money on hand, but it's creating really bad habits for folks. You got things that you want to do, and you haven't planned for it, you are becoming more by now pay later reliance, and this is yet another sort of case where I think that you should be saving up, like something like a concert. Pay for that in cash, and I feel like it's just more of an old school approach to saving up for your stuff, as opposed to becoming payment buyers and constantly putting yourself on this sort of payment cycle.

Speaker 1:
[37:58] The hamster wheel, right? Yes. And at some point, yeah, you're just, oh, you're really making it hard for yourself to succeed if you lean on buy now, pay later. And that's like, if you lean on credit cards, getting into credit card debt, if you're using credit cards and spending it in the way we advocate for it, then you're using them intelligently. I just don't know that there's really any reason to use buy now, pay later. Because if you're using credit cards intentionally, buy now, pay later is worthless to you, essentially, right? And buy now, pay later, it's really just a, for most people, it's a psychological mechanism to alleviate the pain. It's the crutch of a $600 Coachella ticket or whatever it is that it costs. And yet, it's going to ultimately cost you more and you're gonna be less on top of your finances if you use buy now, pay later on the reg. And what did you think of Bieber's set where he sat down at a desk and played old YouTube videos of himself?

Speaker 2:
[38:54] I did hear about that, but I've got no opinion.

Speaker 1:
[38:56] Okay, I don't really either. Okay, okay.

Speaker 2:
[38:57] Because that's not the stage of life we're in.

Speaker 1:
[39:00] No. I feel bad for the guy in some ways because he's so well known for music he made when he was a child, right? And I guess people still want to hear that stuff and probably that's frustrating after a while, too.

Speaker 2:
[39:14] Yeah, he's kind of like the modern day Macaulay Culkin.

Speaker 1:
[39:16] Yeah, perhaps. Something like that. But yeah, I guess.

Speaker 2:
[39:19] He's doing better than Britney Spears, let's say that, I guess. I do believe that's true.

Speaker 1:
[39:24] See, we know some stuff about pop culture.

Speaker 2:
[39:26] Conservatorship, is that what they recently filed again?

Speaker 1:
[39:31] Oh, she's back in one.

Speaker 2:
[39:32] Yeah, I think she checked herself in recently.

Speaker 1:
[39:35] They made some documentary about it. People were really advocating for Britney.

Speaker 2:
[39:38] Free Britney.

Speaker 1:
[39:39] Yeah.

Speaker 2:
[39:40] Okay, there's our cultural dose for the week.

Speaker 1:
[39:44] You know something about what's happening out there in the real world.

Speaker 2:
[39:47] I know just enough to be dangerous and sound like an idiot.

Speaker 1:
[39:51] There's also new information about how expensive the quote unquote annoyance economy has become. Apparently, it's costing us $165 billion collectively. This is according to a few economists who work together to figure this out. Basically, what they're saying, Matt, is that we're being nickeled and dimed everywhere we turn. Little fee here or there. Just like that. Coachella might not pay later. Well, yeah, you can pay it off in four, but we're going to charge you $38 for the ability to do that. Like, okay, sure, a $38 fee, who cares, why not? It's a drop in the bucket of my expensive ticket. Well, that's part of it, right? Frustrating cancellation policies, that's another part of it. We also end up wasting more time because of the added roadblocks that companies are putting in our way, making it harder for us to cancel. And so we're just like, ah, screw it, I'll do it later. Which means we stay signed up for another month or two or something like that. Like canceling a gym contract or a streaming service sometimes can be frustrating. And so I guess this just makes me think that we should be even more careful when we're signing up for a service in the first place. It can seem really good in the moment. Like, yes, this is great. I can't wait to sign up for this service. It's going to be awesome. Thinking about, especially this time of year, Matt, a car wash membership sounds so good at the time. And oh my goodness, it's like the cost of the membership is barely more than just one wash and I'm going to come here all the time. What if you stop going there regularly and it's frustrating to cancel it? Well, maybe now you're paying for a car wash membership and you're not actually using it. That sucks. That's a bummer. That's a waste of money. So make sure, I would say it's going to be worth the headache that you're going to incur when you try to cancel down the road. If it is, do it and then just be prepared for that hassle on the back end. Am I thrilled that this annoyance economy exists and that there's more fees and frustrations for all of us? No, but I also don't know that there's any silver bullet around it except for us kind of watching our own backs.

Speaker 2:
[41:46] That's right, buddy, and you know what? Let's get out of here. It's Friday. We hope everyone has great plans for the weekend, and we will see you back here on Monday with a fresh Ask How to Money episode. Of course, you can find any resources we may have mentioned during this episode up on the website at howtomoney.com. So, buddy, that's gonna be it. So until next time.

Speaker 1:
[42:04] And that new certification program, too.

Speaker 2:
[42:06] And that.

Speaker 1:
[42:07] Only $5,000 and potentially can come out of your 529 Fund stuff.

Speaker 2:
[42:10] But what do we say?

Speaker 1:
[42:11] Until next time, best friends out.

Speaker 2:
[42:13] Best friends out.