Welcome to had of money.
I'm Joel, I'm Matt.
Today we're talking accidental landlords, debilitating debt, and the work from home premium.
Happy beautiful Friday, everyonek it's beautiful at least where we are actual.
Yeah, it is.
You know what else was beautiful is the run that I got to go on. I'm sorry.
The mustache. Oh thank you, it's coming in nice.
I don't know if the mustache is doing it for me. I take that back. I love your mustache, I think there. How's the family taking to it? Yeah, your family is so much more accepting of your mustache than my family was. Even your daughter of my mustache.
The other day, she hopped in the car and she said, I like your mustache, not my dad's.
I was like, oh, okay, yours is a bit thicker. It's a bit thicker and bushier than mine. Facial hair has always been my nemesis, so that's rare. No, it's I think it's legit. Man. You kind of got like the what's the uh blonde?
Bert Reynolds is what I'm coming for? The whitet arp.
From is that tombstone?
I don't think. Let's be honest and you're just buttering me up.
Oh it is good. No, I was gonna say the beautiful morning that we both got to enjoy because we both unplanned went on a run this morning and literally you were running out onto the street that I was on at the same time section and we just kind of like linked up, high fived and immediately started talking about money on our on our un No, you would have been sorely disappointed if that's what you're expecting, just
random catchup friend stuff. We did hold hands for a second because we thought it was so funny.
And that's what people expect from us at this point, right tied at the hip.
Yeah, that's pretty funny. But I know this is our Friday flight. The most pertinent headlines we think to your personal finances. We want to talk about how changes out in the world are impacting your dollars. And first of all, man, let's touch on the government shutdown, because the threats of federal layoffs have actually finally came to pass this week. And by the way, we're not here to assess the political fallout or anything. We're going to stick to the
individual financial implication. I want to tell about personal finance here.
I forget which department it was in, but I think there was an accidental firing of double the amount of intended people Human services.
I don't remember.
Yeah, Yeah, roughly four thousand folks across a few different agencies are no longer just furloughed, but they're actually out of a job, and threats of more firings are being made in an attempt to end the shutdown. But it appears that we are still at an impass. But beyond that, close to a million federal workers are still for a
load and haven't gotten paid. Although I think I saw the news yesterday was the fact that some of our military, some of our members of the military, they're getting their their checks paid, at least for this paycheck as they're moving, yeah, offing dollars trying to make things happen. But the President has threatened that there will be additional folks who won't receive back pay that's legally due to them. I'm not
sure how that would actually play out. I'm sure would end up in courts, but I am almost certain that this is going to have broader economic implications. But I'm just going to.
Tee it up for you, Joel.
What's the responsibility that we can transfer to ourselves and how we could get by a financial little storm like this.
Let's be let's be honest that just the feeling of not getting a paycheck when you're supposed to get one sucks totally, you know, Oh yeah, and.
So on say it. I'm seeing I'm teeing it up for you.
There's a lot of personal responsibility in play at play in having your finances in order so that you're not terribly impacted by something like this. But thirty six months three, Yes, you're supposed to have thirty six months. That's why it's so important. The emergency fund is so important. But I guess I just I think it's important to speak to the fear and anxiety that people feel when they're like, how long is this going to go on? And how
long are is my paycheck going to get punted? And I can maybe I can miss one, but it's hard to miss too. And the truth is, yes, you should have three to six months worth of savings on hand. But we know this, Matt, from all the studies, we see that the vast majority of Americans do not have that, and so it puts them in a really tough place. Where how am I going to get money to cover expenses when a paycheck stops unexpectedly?
Sure, And so what's.
Really fascinating is the fact that I think a lot of folks who had government jobs probably thought that, oh, yeah, this is a type of work where I don't have to you know what, entrepreneurship. That's not for me. I
just want a steady paycheck from the government. And then all of a sudden they find themselves in a situation like this, and they might even be sort of less prepared from a mental standpoint, right, because like, if you are going to launch your own business, you kind of know that, man, it's going to be feast or foula, you know, like instead the ability to.
You're ready for the variability of income the entrepreneurship brings, whereas You're right, if you sign up for the steady paycheck life, it feels more like a gut punch. Yeah, that's so yeah, I think too. What this highlights, and this is something we talk about sometimes on the show, is the need for a BBB, a bare bones budget.
Oh yeah, and the BBB is ideally something that you would kind of figure out and and and suss out before you hit this point where you don't have money coming in, but also, hey, like if you don't have if you're already in hard times, sometimes you just gotta go with what's gonna work. And the bear bones budget
is one of those things that is it's underrated. And what you're doing is you're really separating your needs and your wants and you're saying, well, these are these are just these are things I enjoy saving up for the vacation, or saving up for that new car, or streaming services, whatever it is. I you know, buying stuff on Amazon willy nilly, that's just kind of fun to have, Like buying new clothing, like those are all things that can really be kind of shoved aside until the bleeding is stopped,
until the paycheck's resumed. So we have an article up on the site about creating a bar bone budget. The goal isn't to live like that forever, right to not be able to enjoy the fruits of your labor and buy some of those things that you care about that you've put into the wants category. But the goal is too safe for the time being. Wants are off the table until that inflow of cash is restored.
It feels like a like an intermittent financial fasting, right, Like you're focusing all the things that are going to allow you to survive, but you're cutting out a whole lot of the other stuff, Joel, As you alluded to in the title of this episode, we are seeing a rise in accidental landlords. There are folks who want to sell their home, but they aren't very enthusiastic about the price that they're able to fetch on the market, and they're finding that renting their home out that it might
be a better bet. There's a research group, Parcel Labs, and of course parcel they leave out the E. That's how you know it's a new hit think tank anything.
My son was asking the other day about a hat I was wearing and it's from a running company brand. It's called Runner Runner yess that's what they're called. But it's like are in n R? And he was like, what does that spell? And he's in kindergarten, so he's liked, where are the vowels? Man Like, sorry, Bud, He's like, those aren't that's not that's not.
A real word. This is how all brand names are made.
Yeah, Unfortunately, but this research group found that more homes are being taken off the MLS in order to be rented out rather than being sold for a lesser amount, and this is another sign that the housing market is a little less friendly to sellers these days, and that buyers are likely to see better prices in the coming months, I think. And the housing market it's really complex, man, it's a little fickle, and what happens with race are going to have a significant impact on the buyer demand.
But just know that selling a home and running it out are quite different decisions. You've got to be ready to take on the reality of landlording and it might make financial sense, but it might not. And so we would encourage folks to run the numbers. We want folks to consider the time that's going to be involved, that it's more like a part time job as opposed to this passive stream of income. We're just kind of kicking back and just cruising down the stream of cash flow.
I don't know.
I will say though, that terms such a tough one, the passiving Yeah, just because I think people believe something.
That's not actually true. Absolutely absolutely.
But I think what could be helpful too is the different folks have heard of the the one way door and the two way door decision matrix in selling your home certainly falls into the category of more of the one way door where you can't easily undo that. You can't get your house back, You can't hit command Z, you can't you can't undo that transaction and say you know what, actually I don't want to do that anymore. No, sorry, you don't have that three and a quarter percent mortgage anymore.
You sold that, You sold that house. As opposed to a two way door where you can I think Jeff Bezos actually is the one. He coined this or made it popular. But like a two way door allows you to experiment, try things out at a very low cost, and because it's no big deal if it doesn't work out, well, no harm, no foul.
Yeah I hate landlording.
Well you can already that pretty quick, exactly exactly. And so I think that being said, if you know you are and did potentially in being a landlord, and you have a house and you're not it's sat there on the market, it's definitely something to consider.
Makes me think actually of a house right around the corner from ust Matt that was listed for well, I think nine hundred thousand and ended up selling for less than six hundred thousand.
Right, Oh yeah, yeah, like I know what's what you're talking about.
Yeah, because we looked up the records.
We were curious to see what it sold for after sold, and we're like, oh my gosh, I did not realize it sold for that much less than asking price. So sometimes that that bitter reality hits you in the face when you were assuming, based on the listing prices of homes around, you were gonna get a lot more. But the market isn't quite what it used to be, and yeah, it might be a lot.
We'll say this particular home, I think they were shooting for the moon. Yeah, then they probably realized, oh lady, this house hasn't been touched in forty years.
There's a lot of a lot of issues with it.
So I feel like I'm seeing a lot more multi hundred thousand dollars price cuts on homes, just people shooting for the moon and realizing the market ain't there. And another reason homeowners are staying put I think two which is making things difficult in the market, matters because they're going to owe tax if they sell. Because if someone has owned a home for a long time, and the
value of their home has appreciated significantly. Capital gains taxes are going to kick in right if they were to sell, which offers another reason to stay put. It's it's not just oh, I'm abandoning a three percent mortgage. It's gosh, my home is worth eight hundred thousand dollars more than it used to be, and I don't want to pay forty five thousand dollars in tax because of it. This is particularly true for many older homeowners who live in
expensive markets. But Business Insider had an interesting article about whether or not capital gains taxes on primary homes should just be eliminated altogether, and similar to a lot of legislation,
this hasn't been updated since nineteen ninety seven. So if we were to index inflation for inflation caps on what you would pay from a tax perspective when you sold your home, they wouldn't be what they are right now, which is two hundred and fifty thousand for single individuals and five hundred thousand dollars for people married filing jointly. They'd be something like double that. Maybe five hundred thousand and a million dollars would be the exclusion.
Doesn't surprise me.
Yeah, but this happened in ninety seven, and so they would be even higher, by the way, if they were indexed to home price growth. But this is something that we as individuals don't really have any control over. But it is interesting food for thought that is just a kind of another lock in mechanism, that is, I think,
hampering home sales. And if something were to be done from a legislation perspective, which again I think there are a couple of different proposals, one to eliminate and then one just to increase like that, that could actually move things forward.
Yeah, those capital gains are just one of the manufacturers keeping houses from being on the market being opened up for folks who really want to live there. Let's touch on the cost of utilities. Man, Inflation has calmed down in many parts of the economy, but certainly not all parts. And we've recently discussed how how much more expensive healthcare is getting, but electricity prices are going up at a similar ten percent clip year over year.
Do you blame artificial intelligence and the power sucking to idea? Actually, yeah, it has a lot to do with It's got to be part of it. I literally went too chachipt to ask it if it was the problem behind higher electricity product crisis, and it was like, hey, dude, list and this is a multi fasted problem.
Don't just play me. But wasn't getting defensive, But yeah, it might be part of it. You're picking up on the tone.
No, it was pretty straightforward in its approach. But it was funny how it was like trying not to take all the blame.
What's so crazy is? I mean? I saw I just saw the headline yesterday. I didn't read it, but talking about how the AI data centers they're building their own power plants because of the amount of electricity that they are requiring. And you were recently in Memphis, which is where Elon Musk's newest the Colossus. Did you swing by there? No he didn't. Friend of the show. Yeah, yeah, are the world's richest buddy. He didn't give you a tour?
But no, he didn't.
It wasn't it Microsoft that bought a defunct nuclear power plant trying to bring it back online.
So it's crazy, yeah, but it also it makes a ton of sense because it's it almost seems like AI has become this public utility. But oh, no, no, no, we In that sense, it is sort of like a public utility because we are all paying the price to a certain extent in higher electricity prices. But it makes sense though that seventy eight percent of folks are saying that their energy bills just across the board are a
source of stress. And so one tip if you live in a state where you can shop with different natural gas marketers, we'll certainly do that. And there are all sorts of other ways to make your home more efficient and still get tax credits for doing it at the end of the year, right, yeah, well, and yeah, and depending on the state as well, Like so for instance,
our local there's we've a tax rebate for thermostats. Yeah, and guess what, I didn't replace all my thermistats this year, just the ones you get, just the two because I'm wait until next year. Yeah, because those are still going to be there. But you can also make other changes to use less energy as well. I'm thinking of the ability to wear warmer clothes so you can lower thermistat temperature.
Thanks dad, I can't wait. Man, you sound just like my dad, but now I'm a dad and I say the same. No, that's what's it's crazy? I think about one of our daughters and she loves and I know you've got a daughter this way too. What is up with these girls they love? Like in the summer months, they're wearing these very warm robes. Yeah, and then they're one in the air to be a little bit cooler. And I go in her room and the fans on full blast. It's like a like a wind tunnel, and
they're so typical dad fashioned. I say, hey, sweetie, you know if you took off your robe and only Warrior Jamie's you could lower the fan from high on to low that way. It wasn't you know your your mouth wouldn't get so dried out in your eyes are so dry because the wind's.
Blowing so hard. I don't quite understand.
She just stares at me with that like that blank preatine stare like that, you don't understand anything.
We're at the.
Point now in their progress as adolescents where I think they really think we they're getting the point where they don't they think they know more than us.
Yeah, yeah, they think we're idiots. I don't know how I feel about this, but in some ways we are idiots. That's true some ways, we are not.
They're pointing out the truth in some ways. But yeah, I think it's important to note that the tax credits for a lot of these home, these green improvements, they are federal tax credits. Yeah, through the end of the year. And one of the things I think Matt people don't consider is insulation. And this is a DIY project you can do. I've done it in the past. You can like rent that gear by the product and hurl it
into your attic and it's not that difficult. Me and a buddy did it in like hour and a half, like insulating the attic at one of my old houses. And so think about that, and then just think about how much you can save. You can get it deeply discounted thanks to the federal government, and then at the same time you're going to reduce those those energy costs. So and then there might be another way to save Matt outside the box way here. Space heaters could be a good way to save money this one.
Or like inside the box space heater box.
Yeah, I guess they come into box.
I was just trying to lean into the whole Dad Dad jokes.
Well seen at ran the numbers which I appreciated specifically about how much a save space heater can save if you opt to use that, and they can basically save depending on how you're getting your energy where you live in the country. They can help you save hundreds of dollars a year if you use it. And this is really important to heat specific spaces over keeping the heat
on throughout your home. So this I think, yeah, especially Matt, for people who work from home, who maybe they're alone in the house and they don't need to heat the whole entire house. They can turn the temp way down this winter and they just have their space heater warming up their little space you're heating. Instead of heating twenty five hundred square feet, you're heating three hundred square feet,
whatever it is. I think not heating the whole house, but just the space you're using is a smart way to go. And this is going to be actually even more impactful for people who live in the States where home heating oil is the main source of energy because it is a much more expensive form of energy.
Yeah, heating oil and propane.
Yeah, less helpful if you use natural gas, But I think it's also even more helpful if you have a larger home, because yeah, if you're turning on the heat everywhere, and the bigger your house is, the more you're spending to keep that house warm.
Yeah. Yeah. What I like what you said though about insulation, though, is that that is a passive form of energy saving. Whereas the space heater, though it's better than heating the whole house, it's still active, it's still costs you money. And so yes, heating let's say, one floor as opposed to the entire house, is better than heating the whole house. And yes, heating one room is better than heating the entire floor. But you know what's better than heating an
entire room just heating yourself. And uh, put that roadback on, sweet, because it's winter.
And you know what you're you're probably number one tip to stay warm in the winter. What am I gonna say?
Oh, man, I can't wait to start drinking hot water. Water. We definitely aren't in that season yet.
But occasionally, every once in a while, you it's too hot, you burn your tongue, and I look over that and you're like, oh, I feel bad for you.
I yeah, I have gotten better about always testing the water before chugging it, but uh, Okay, one other monthly cost that's been going down the price of cell service, and Mint Mobile is pushing to make the same true of home internet.
They've got a thirty.
Dollars a month for at home five G internet plan. This is if you already have a mit mobile plan. But that's pretty great. This is another more competition, ways to integrate lower prices or ways for us to be or to have available to us some of these different providers.
I love that.
Well, for the longest time it was cable company and phone companies where you can get internet from. And now that you can get them get you know, internet service five G from a bunch of different players now, which we talked about not too long ago. But it's nice to see mint Mobile entering this space as well. Thirty bucks a month. And I was looking at the speeds. If you look at they have like their little cards almost like nutrition fact labels, telling you about how fast
your download speeds are going to be. They're pretty fast. I mean they're not a terabyte, but they're like, you don't need a terabyte. Somebody between one hundred and thirty and four hundred megabyte, which which is.
Most that's what most people need me, right, most people don't even need that much. Yeah, that's crazy. So if you're gonna be a serious techie, if you're w in over five hundred.
I think saw a Facebook post in the how to Money Facebook group this week someone said, I spent fifty six minutes on the phone to try to lower my internet bill. But hey, I saved sixty bucks a month. That's a lot of money to save that much money. But if this might be one of those ways where you don't actually have to get on the phone with anybody. You literally just go to mint Mobile's website, you sign up for this thing. The equipment is free as well.
There's no extra fews for that. So thirty bucks a month will save a lot of people out there listening quite a bit of money, and they'll still get pretty fast internet.
That's right. I would even say that that is a form of creative destruction, Joel. Which is another story that we're going to get to. We'll touch on the perceived importance of college and more right after the break.
All right, Matt, we're back.
Let's get to the Ludacris headline of the week. Da Luda this one cous Does he appear like in the state farm commercials.
When you do that, that's just our new little jingle Ducas headline.
Okay, I like it.
So this one comes from CNBC and it says attending a wedding can cost you as much as a typical month's rent. And this is not getting married. This is not throwing a wedding. This is going to a wedding.
This is a study from Zillow which found that going to like being involved in the wedding party, essentially going to the bachelor bachelorette party plus travel, that's going to cost the average attendee more than two thousand bucks, which I think just slightly over the typical renters monthly rent. And Matt, you and I were no longer in the friends getting married phase of our lives. We talked about
that recently. We're no longer in the friends that are getting or having kids phase of our lives, although I guess that still happens on occasion.
Yeah, we're hey, you speak for yourself. I hold babies occasionally.
You old babies too.
Oh baby, We've got plenty of friend who are having babies. Okay, I'm just saying personally, we are not. I'm saying we're old, we don't fingers crossed.
I'll go to weddings as much as they used to.
Know, And that's actually kind of sad. Weddings are a ton of fun. They are so fun, so much fun. Well, you definitely go to a lot less than you used to.
Used to photograph them, used to be there, be there all the time, right, But I guess I too. I just I feel for young folks who are put in this position. I remember being in that position of someone saying, hey, be in my wedding, and it'll be and I'm like, yeah, you're my friend. I would love to be in your wedding.
And then you're like they're like, oh, you gotta buy this suit, and you need to travel here, and we're gonna throw this party, and like there were all these expenses that were expected from from you as a participant in the wedding. And that can feel especially as someone who's trying to be frugal, trying to save money, trying to make progress. And typically when you're in that young phase of life, it's not like you got tons of money rolling in and you're like, oh, yeah, this is
no big deal. It's like two thousand bucks feels like a lot of money in a lot of money your mid twenties, right, but there's a lot.
Of money in your even if someone were to be in their mid forties, on the mid forties, even if you're.
Getting close up early forties. Baby, Do you think there are.
Still ways though, for people be able to tone down the cost of stuff like that.
I mean, I think maybe.
Having conversations, yeah, and there's ways to even I think be involved in the planning a little bit, Like you're talking about bachelor. Maybe not the actual wedding, but when it comes to the plans for a bachelor or a bachelorette party, it's like, hey, guys, maybe we don't order that bottle of crystal hall because it's too infuensive for my taste. Why it is that? Anyone?
Like?
Why is that? That is? Even? The thing is like mind blowing, Like just the whole club culture, like ordering a bottle at a club, being there with a bunch of other people who are also doing the same thing, Like why would you not do that in your own home or like a place that you would rent on area. It's such an old school way of doing things, but.
It still happens. Your friend blowing. I'll buy the case of beer. Let's do board game n at my house. That's the bachelor party, right, Yeah, make the suggestion like.
That, although I will say, I mean, we want folks to be there for their friends. But yes, if you have especially if you have other financial goals, I think find a way to do it a little bit more on the frugal side. But prices or what it is that folks were spending on weddings have it has gone down in the past twenty years pretty significantly?
Really Yeah?
Okay, well, I mean, like not the actual prices, Like when you adjust for inflation, it peaked around two thousand and seven, the amount of money that folks were spending on, and so it's it's I think it's around like twenty five percent less now than it was twenty years ago.
Wedding's just aren't that crazy matter in the same way.
So yeah, I think folks are just they're just spending much less on getting married and all the events surrounding the wedding. Folks I think, I mean, folks obviously are still getting married, but they're just not throwing the massive traditional parties that one might assume needs to be thrown as opposed to more alternative ways to elope or to get married at the courthouse and then hey, we're running
out our favorite little restaurant here. Everyone's invited. That's basically the reception, right like that, think about how much more affordable that is and throwing like a one hundred and fifty percent wedding. Yeah, that's going to cost you thirty thousand dollars.
So I think I think young people to maybe what this speaks to as well is that they're they're thinking about those bigger financial decisions are coming up for them, including wanting to buy a house.
Yeah.
Instead they're saying, like, should we spend all this money on a party a single day? And I think that, Like, I love the party atmosphere, like I love that the weddings are so much fun. I think back on mine with tons of fondness, and I wouldn't want to do it any differently. Yeah, we also didn't spend too much
money on it. But yeah, like I think if you're saying we're prioritizing this instead, we want the long term benefit of owning our own home, it makes sense that you might spend less on a wedding.
I get it. We've already touched on working from home, but the trend away from working from home is in full swing, so hybrid work I think. I don't know. My impression is that it's still pretty normal, but some companies are playing hardball. Their employees aren't loving it, and man, there are some folks who are just straight up opting to quit their job rather than going back to commuting, you know, driving into.
The office four or five days a week.
And on top of that, many folks are willing to get paid less elsewhere in order to keep that work from home perk, that flexibility. There's a new study from Harvard that found that software engineers and data scientists with multiple job offers, they declined the higher paying ones that required in office attendance in order to keep that work from home flexibility to the tune of twenty five percent
less pay, which is significant. Man, Like I would have expected something like, oh, yeah, I'll take out ten percent cut, but twenty five percent is major. Yeah.
It just shows how much haircut? No, man, that's like it's like taking it down to the scalp. Yeah, yeah, straight edge undercut like to this, yeah, to the scalp.
It just shows Wait, is thatways called undercut, like when you, yeah, still out their hair on top. Yeah, I don't want you to think like under No, that's an uppercut, like a punch, punch to the gut. I don't want you to think I was confusing, mixing, mixing up my metaphors. But it shows you how much individuals these days are valuing that perk. And it also it just makes sense to not just commuting to work, Like if you think about the total amount of time that you're spending away
from home. Like we were just touching on people being in their homes. There's like a lot of young professionals who spent a lot of money on their home, right, Like they spend money on that nice new wallpaper or the nice new piece of art that they've got up
on the wall. And if you think about the amount of time you dedicate to getting ready for work, commuting to work, the time actually being at work then coming back home, think about how little time you spend at home as opposed to some drab office part where if you want to go for a walk after work, it's you're walking in a parking deck or or walking the stair well as opposed to walking around and your you know, your beautiful, sunny neighborhood.
And also I think your tone on this is also revealing maybe a more introverted way of existing in the world. I'm more of an extrovert, and so I don't think of coming into the office in that same.
Way I'm showing my cards. Everybody feels.
People feel differently about it, right, And I think most people can admit that, like, oh, if I'm stuck in like an hour plus long traffic slog to and from work, that that commute can really can be unsatisfying, to say the least. But I do think for especially for younger workers, this is something we've talked about, Matt, but I think it can bring increased connection, increased joy in your work,
and then specifically more ability to advance. But then it's also true that maybe you've been working in the same industry for fifteen years or something like that, you have a lot of connections, and you have other priorities, and so working from home is something that you're more than willing to trade off less paid for. I do think this this this perk of work from home is not
seen as a perk anymore. It's almost seen as for a lot of people like table stakes for me to even consider, you're working at your job in this place, and I think the companies who are saying no, no, you're gonna have to work in person, they're going to have to come up with a compelling reason why, and part of that is going to have to be increased pay.
I think, yeah, I agree. I do think it does feel more like a middle aged slash introvert benefit working from home, yeah, as opposed to like that younger but also more extroverted approach.
It's also interesting, right that this study was done of tech workers, and it's easier to take a twenty five percent pay cut when you're talking about a job that pays two rand one hundred fifty grand. It's harder to, I think, take that twenty five percent pay cut if you're talking about a job that pays one hundred grand and seventy five grand or the stakes are different there too, So I don't know that everyone's willing to make that exact same trade off.
Not everyone has the.
Same ability to turn down a much bigger paycheck, and part of that is because of the propensity for Americans to be in debt. And there was a study debt keeps seven in ten people from building wealth. This was, according to a new survey from the National Foundation for Credit Counseling, not shocking at all. Really, that's why we're against most forms of debt because they keep you spinning your wheels, they keep you locked in place, they keep you unable to make decisions that are in your best
future interest because you're paying for past mistakes. And for most folks too, it takes a while to dig that debt hole, in quite a while to dig out of it. So if you find yourself in that scenario, you're one of those seven and ten people, you're like I hear Matt and Joel talking about building net worth. This is something that I would love to do, but my goodness, I feel like I just can't get out of this
perpetual debt hangover that I'm living in. Facing the facts is crucial because there's no way to really start taking yourself out until you do look at head on and say, hey, list out all your debts, know what you actually owe, and figure out what the monthly payments are. That's a
really important part of it. And going back to the beginning too, Mat I think that barebones budget might be the right thing for some of these people who are saying I can't build wealth because I'm in lots of debt, cutting back significantly for a time in order to make sure that you can pay off those debts.
In shorter order.
With that kind of goal in mind, it makes it easier for a lot of people to actually make progress, not just from a financial standpoint, but from that sort of myopic focus standpoint. And so I would I'd love to see more people who find themselves in that position just kicking it up into top gear to be able to pay off that debt more quickly.
Totally and at the very least. I mean, I think another way to think about a baarbones budget too, is it's sort of like a financial bug out bag, you know, for the preant bugapag bug out bat like preppers like folks are just like, oh, in case, like you know, it hits the fan or there's a natural disaster, like a lot of times, it'll include some nonperishable meals like a flashlight, I don't know, cash, things like that, but something that allows you to hit the road soon without
having to sit there and figure it out, right. And so that's why figuring out a bare bones budget ahead of time before some of the furlough.
Pay takes place.
But what you're talking about implementing it right now, not like off way off in the future, but putting it to use right now. But I don't know. I'm just helping folks to try to help folks understand how to potentially use a bare bones budget. You know, it's just a plan for where the the worst financial outcomes were
they to happen. Yeah, Like it's like a fire drill, right, Like the reason you do a fire drill is like you hope you don't have to do that, but if it gets really bad, you know exactly what it is that you should be doing.
And I do think for some of these people who are saying I can't build wealth because I'm in debt, like that might be really bad, right and that.
Might just be like finally fed up and tired of the situation that they find themselves in.
And maybe maybe you implement halfway me But I don't know. I think sometimes for a lot of people, like halfway measures can be like you want to make more progress on your goal quickly, and it just depends on where your mindset's at and how fed you fed up you are with the debt that you've got on hand, But like, if that were me, because I know what's possible, I'm like, I don't want to live in this for longer than
I have to. And then once you reach a certain point of stability where you're starting to make where you've gotten rid of a lot of that debt, you're starting to make progress on your net worth, that's when you can kick that barebones budget to the curb and start living a life that's more measured in how you spend, so that you're not going back to that place, but you can also enjoy more of that stuff that you care about totally.
What are you thinking about college these days, Joel, I'm not going back. Have I talked to you about the preparation? Have we talked about that.
This guy that's.
Coming up with this like alternative plan for his for his son, I think he's like, I think he wrote a book or something about it. But uh, it's like all these different paths that you can explore, and they each have like kind of a cutesy name, but allows you to explore like an entirely different industry, different activities to do. I don't know it was really fascinating kid, so is high school kids. He's like he's got a teenager that yeah, that I think he's putting through that.
But it did really well. I don't know, just the way the hym and somebody else got together and you can created a book on that, because there are more folks who are just not sure if the high cost of college are going to be worth it for you. Yeah, no, that's cool. I've not heard about that off. Like like one is like the medic and it's basically like I wish I knew it better. But for instance, you go to an EMT like training course, you do this, you've
all you working a volunteer in hospital. It's just all these different avenues of what it looks like to be in healthcare to a certain extent. But like at the end of the day, after you do like the little course, like in that sector, you actually have marketable skills. You
have not talents, but ability skills that you've learned. Maybe maybe a certificate of some yeah exactly, like one of them, Like okay, so what maybe one was like home building, And I think this certificate costs a lot, like a larger amount of money, like the outlays a little bit more, but you learn how to operate bulldozers and stuff like that, which evidently that costs a lot of money, but it kind of makes sense given the distruction that you can that you could renk on a site.
Yeah, but like that's.
Something that even if you choose not to be a quote unquote homebuilder and you're not totally sure what you want to do with your life, at the end of the course, you've got this certificate that then allows you, well, instead of driving for Uber, which is of course the lowest hanging fruit for a lot of folks because they can just download it under their smartphone, you can go and work for a company. Yeah, earn way more per hour. In the meantime, well the very least.
You if you become a homeowner at some point, you have the ability to fix your own home, probably in ways that you wouldn't have before.
And you're just getting exposure.
I like that because you're getting exposure to instead of just saying, hey, you're eighteen, what is the thing you want to do for the rest of your life? Pick that thing right now, you're getting exposure to a bunch of different things before you get to that point the way, Yeah, yeah, Well, I think is fascinating while you're bringing this up, is because there was this like Gallop Pole, and basically Gallop found that the importance of college is being questioned now
more than ever before. Only thirty five percent of Americans think that college is very important. That's compared to seventy five percent twenty ten. It's interesting to see that the decline across every subgroup of American life, that nobody really thinks college is as important as it used to be.
But that's not surprising to me, right, And this is why people are coming up with alternative routes to tease their kids or to help their kids figure out what they want to pursue in the future before they just go off send them to an expensive four year school. I think it's escalating cost, mounting student loan debt. Those
are big parts of the reason. And we're just seeing a higher percentage of college graduates not putting their degree to good use, feeling like they could have gone without and then they wouldn't have been saddled with that debt. I don't know that a college degree is the same crucial stepping stone to living in a middle class lifestyle
as it once was. I mean, to be fair, the other side of the equation, the average college graduate, it still makes a lot more over their lifetime that someone with just a high school diploma, but the value proposition isn't what he used to be. And I just don't know if that reality is going to hold over the next thirty years in the way that it has over the past thirty Exactly.
Yeah, we should mention one silver lining. Yes, overall college costs are going up, but so are the discounts that colleges are offering. And we got to mention in front of the show Ron Lieber because he reports that the average discounts for full time students at private colleges is fifty six percent, which is that's a big discount man.
Yeah.
So basically they say it's going to cost forty grand, and then it costs nowhere near that ultimately because of than.
Half of that aid that's offered.
Yeah, yeah, you're paying nowhere near that the shockingly high list price. It is not the real price. This is the good news. But only for the folks out there who know this and who are acting accordingly, who are pushing for a financial aid, who are pushing for just different merit aid that might be available to them, and who are searching for schools that offer more of both
of this aid. But still the lack of transparency about what discounts are offered and to whom it is being offered to is It's a frustrating part of the process. But certainly know that the list price is not the actual cost of attending that school.
Yeah, all right, let's quickly touch on the Nobel Prize in Economics was warded to three different economists secons early this week. I'm not going to lie and say that, oh, I followed their work mostly or anything like that, because that's not true.
I did not.
But in reading about kind of why these guys won the Nobel Prize, that I thought was at least worth mentioning because their work centered around explaining and quantifying the reality of creative destruction, which is an important concept in economics. And I don't know that you and I have touched on it a lot because we mostly talk personal finance microeconomics, but this is truly one of the most important features of our economics system, and it ensures that the top
dogs aren't going to be there forever. It realizes that innovation drives competition, increases standard of living for all of us, and then it drives down prices as a whole over time. And while it can suck, I guess to be in the industry that's on the fritz, that's kind of in decline, like being in typewriters right when computers are coming.
Around the processors.
Yeah, you're like no, but ultimately it's better for humanity as a whole, and so we shouldn't want the typewriter industry to stick around. It makes you think of this happens all the time all the time, and we just assume that the top dogs are going to be there forever. So like Kodak, they found out about digital technology in photography before anybody else and they kind of sat on it and then they were usurped by a bunch of
other players in the photography industry. Same thing even with Google and AI right now, there's I think Google wrote this incredible. They had a lot of in house work on that. They wrote white paper on it in twenty seventeen, and other people have surpassed them quickly. Because Google didn't want to cannibalize the money maker, which was paid search.
Ads ad sense.
Yeah.
So it's just fascinating to see that the companies you think right now are unstoppable, they probably won't be forever. And if history has anything to say about it, creative destruction means think, yeah, some companies are going to lose, but that we're.
All going to benefit from that losing.
Yeah, And to allow for that creative destruction is so important. And this is not to go take a political turn or anything, but this is like my beef with the government shutdown, because what's at the center of the government shutdown.
It's a healthcare subsidies.
Yeah, right, and so which is the government reducing the price of a system that is not working very well. And so the fact that the government is subsidizing the cost of health care, it only like, do the insurance have any in the healthcare providers? Do they have any incentive to reduce the prices or to get creative or for there to be more competition.
No, and so there's already very little incentive based on the way that the structure is set up.
And yeah, so actually, but yeah, I want to see more creative distruction, specifically in healthcare, because that's something that a lot of folks are talking about these days, there need to be more competitors, there need to be more alternatives, and maybe this is on my mind. We never listened to the radio, but we were in a while. We were in a loner vehicle yesterday and the radio was on and there is an ad for a health sharing company that I never heard of, and my daughter was like, well,
what's that? And I got to explain to her what that is, and that's how that's actually something that we are on. This is not that particular one, but just explaining basic essentially creative distraction and how like this is coming up because there is a desire for there to be alternatives.
So favorite podcast episode I've listened to recently was specifically on the healthcare topic, and it was an actually an episode from like ten years ago from this podcast called econ Talk, Oh Yeah and Man, which is just one of the greatest if you care about economics at all, and Russ Roberts is such a great host's been doing it for.
A long time, but he's very smart individual. Yeah, he spoke with.
A guy who started the Surgery Center of Oklahoma and they don't take insurance, and he talked about the way they've created an actual free market health system inside of their location, and this has spread to many other parts of the country. But that's just not how it works for the most part in healthcare. It is such an opaque, non market based system. And so I love seeing stuff
like that pop up. And actually, people with insurance go to the Surgery Center of Oklahoma or other similar places because it's actually cheaper to pay the cash rate at a place like that than it is to pay the insurance adjusted rate in going to your local hospital.
So and guess what, they're probably getting better service, better providers, better surgeons because of the fact that they don't have to deal with all the red tape, they don't have to deal with insurance, and they're attracting the talent. They're offering a superior product essentially, and then patients are going there because they want that.
Superior service, superior product.
Okay, was that we dabbled too much in politics for the end there?
How about that?
I think we're good. But if you have angry emails, send them directly to Matt. Send him to Joel how money Pot atjmail dot com.
We read them all we do we do.
Please reach out holler at us We love to hear from you, and we hope you have a great weekend. But until next time, Matt. Best friends Out, best Friends Out,