Friday Flight - Price Profiteering, ESG BS, & Secondhand Smarts #516

not the red alert to everybody out there. He's like, hey, if you if you're still banking with a crumby bank, not only can you do business with someone who doesn't hate you, but also there's a bonus at stake two. Capital One they are a legitimate online savings account, checking account. Total P likes to keep all of your They are one of the O G good online bank accounts. Yeah,

what was it? The used to be I n G Direct back in the day, and then I had that same electric Orange chetric Orage, So I'm like grandfathered in man, I've been there a long time. That was back when they were paying like five percent on that Electric Orange account back in two thousand and five. I think it was. I think it was that long ago. It's crazy. If only we had five get your faces on savings accounts,

I think those days are over. But it turns out you can get a one hundred and fifty dollar bonus if you deposit twenty dollars with Capital one and if you have fifty thousand dollars sitting around. Turns out you can get a four and fifty dollar bonus by making that deposit and keeping that account open for I think something like three months. The same thing with a checking account. To right, you can get that's two d fifty bucks just for opening a checking account doing two direct deposits.

Both of these deals and in mid to late June will link to to them in the show notes. But yeah, if you're if you're disappointed with your current bank or with what you're making at your current bank, these are great. I love not just the ability to matt earn just

a lightly higher rate of interest, but the bonuses. It's like the it's like the whip cream on top and cherry and like you knew you wanted it anyway, but this just sweetens the deal even more for a lot of people, it's like, Okay, that's gonna get me off my stuff and make it happen. Yeah. Well, simultaneously, I do think we are going to see more deals by some of the different banks because I think the competition has gotten a little more stiff as banks are saying

that folks have less less cash on hand. I mean, we we can see, like you can if you check with a FED that they've got an awesome chart where it shows that the personal savings rate it's back down to pre pandemic levels. We're back to the way things where folks have less cash on hand. But there's no guarantee that they're going to be upcoming bonuses, but I

wouldn't be surprised. Yeah, okay, Well, you know, we will continue to put out information if we see good bonuses for switching banks, and we'll also call him out in our How the Money newsletter. By the way, you can sign up at how the Money dot com slash newsletter. But Matt, let's get to the Friday Fight, the sampling of stories we found interesting this week and how they pertain to your personal finances. And let's let's start off by talking about something free that all of our listeners

qualify for and its one likes a freebie. That's right. It's been a ministers we've talked about this, but COVID cases are back up across the nation. We've seen a sixty increase in the past two weeks alone, which is obviously crappy news. But on the right side, everyone out there can get more free at home COVID tests. So just head to COVID tests dot gov and you can snag eight free antigen rapid tests for home use. What was it, Matt, We were able to get four a

few months ago. I don't keep track. Now you can get eight and so yeah, just in case you want to avoid paying fifty bucks at the store for a couple of tests, you can get them for free from the federal government. I think that's the federal government just saying, how don't we don't want to keep these sitting around and warehouses anymore. Let's just go ahead and send them out so we don't have to sign another lease. All right, let's keep moving our buddy five am Joel. He sent

us a recent survey from op you. They've got a bunch of free resources and free little classes that they offer online, but they found that seventy of folks don't have a budget that they follow regularly, which is obviously not good. Uh. Personally, I think everyone needs a budget, regardless if you are on the frugal end of the of the spectrum or if you're a spendthrift, right because

I think you need a budget for different reasons. Obviously, if you are a spendthrift and you need you need a budget to regulate your expenses because you're over spending most likely. But even folks who are on the frugal end of the spectrum, I think need to have a budget on hand to make sure that they're spending their dollars the way that they want to, the way that they have decided. Makes them the happiest if they're not freaking out every time they spend a dollar because they're like, oh, no,

I budget for that. It's okay, even and I know that my incomes go into investments and savings, you know that. I think the budget can release some stress, even for frugal people. It puts on paper what you say that you're going to do with your money, and it kind of keeps your emotions in check. I think living life without a budget sort of like like riding a motorcycle without a helmet. It's incredibly risky, or it's it's like running a football play without just winning. It's just like

everybody just run, let's see what happens. That's where you get the flee flicker. I think I think that's where that came from, exactly. But the longer that you go without tracking your spending and and creating a budget that you can actually stick to, the more likely you are to spend money in ways that don't align with your values, the more likely you are to take on debt, even for purchases that that don't move the needle for you.

And it'll likely also take a lot longer to get some financial breathing room, much less for you to reach some of those bigger financial goals that you might have. And so definitely make sure to check out Mint. You can use their software for free wide NAP. We've talked about you need a budget before, but you're gonna pay nine dollars a month in order to use their software.

But maybe that is the sort of buy and maybe that's the skin in the game that you need in order to actually follow through every everyone I talked to who has used wine they love. I was literally talking to a parent at at school yesterday and she didn't know what I did. Got to talk about the podcast and she looked at me like locked eye. Oh, then you know about why NAP right, And I was like, oh, yeah, you are you a fan? She's like, I love Why NAPA And so if you have not checked amount, make

sure to look into it. And by the way, back in the episode three sixty two, we actually talked about why it is that not only that you need a budget, but that you need a bare bones budget, and that when we shared why it is incredibly important for you to know how little you could potentially live on, we're stuff to hit the fan, especially with the looming recession talks Matt, It's it's nice to have that bare bones budget in your back pocket, knowing that you can cut

your spending and dramatically improve your finances overnight. So we love people going through that practice and having that on hand. So let's talk about housing, because not having a budget is obviously something you're you're likely to regret. You're not gonna be optimizing where your money is going, and that will have significant ramifications in the short and the long

term on your financial health. But another regret that folks are having that also has disastrous financial consequences is waving a home inspection and we've seen people doing that hand over fist lately. Bad idea. Yeah, and buying a car. We've for people talking about buying a card that's a lemon that just like has the same issue on repeat that ends up costing people. It's it's just a it's a money pit. Well that's a bad thing, but buying a home that's a lemon is catastrophic. It's far worse

than even buying a car that's a lemon. But so many folks have been doing that over the past eighteen months as the housing market has heated up. You know, we've warned on the show against waving inspection rights. I know a lot of folks were doing it in an effort to win a bidding more because like they felt like there was no other way for them to get the house they wanted, but still they needed to take us up a drastic step to set them apart from

the competition. That's right, but a lot of people are finding out on the backside of that that there are a lot of issues with this house that they didn't they weren't aware of because they didn't have an inspection done. And now some folks are regretting it and they're having a hile a ton of money into a house that they thought had a clean bill of health. But yeah, it's been especially risky for for home buyers lately, especially inexperienced home buyers. It's it's incredibly risky to wave a

home inspection. We want to wave a large red caution flag to to make you think twice before you wave a home inspection with any offer. And hopefully is the housing market appears to be cooling off at least a little bit, that will feel less necessary for lots of folks to yet Yeah, well, I mean, honestly, it's better just to keep renting than to get in over your head with the house that has a ton of issues. But yeah, we I think we are seeing a little

bit more supply on that. You know, within the housing market, we're seeing some more price cuts. We're seeing some houses sitting longer on the market. Uh, And that means that a home inspection clause that you would normally include is going to be less likely to prevent your offer from being considered moving forward, we believe, and a home inspection

isn't a necessity in every single case. In some instances, some home sellers have actually been providing their own home inspection, provided by a third party, just to kind of grease the wheels, grease the skids a little bit, uh, to kind of smooth out the process. But that is not something we would recommend. We would still should get your own,

want you to get your own exactly. Yeah, you want to make sure that that multi hundred thous and dollar purchase is in good working order before you drop down all of that change. Yeah, there are certain things that certain regrets that people have in life. This is one we don't want you to have because it can cost you a ton of money and just a lot of headaches too. Let's talk about financial literacy for a second, Matt.

There's a there's this thing called the spillover effect, which you and I we've never really talked about on the show, but there was a white paper written recently just released that talks about this very phenomenon. And you know, you and I were big fans of virtually any form of financial literacy, and and we're always looking to highlight when states are making it a priority in K to twelve education.

You know, our fine state of Georgia just made a requirement for personal finance classes moving forward starting next year. We're excited about that. But there might be some naysayers out there. I don't know who they are, but bring

them my way and I'll set them straight. Who they might wonder if, well, is it any of that's really making a difference, right, or even just some skeptics who are less enthusiastic because of how long it's going to take for these financial lessons to make their way into the real world, Like should we actually be teaching kids about how to handle money well? Or is it a

waste of time? But I feel like those are the same folks who are not willing to plant an acorn or like a seed link to see that tree grow up in shade the house, because it's like, well, it's not going to benefit me at all. But even still,

I think what we're talking about here is paying it forward. Yes, I agreed, And some recent research actually proves that there's a large what's called a spillover effect of this newly acquired financial knowledge that kids partake in in elementary, middle or high school, and you know it's it's actually it's interesting because it's not just the students who are benefiting,

it's the parents too. This study was done over the course of a full semester, and researchers found that there was quote unquote and economically significant increase in financial literacy not only from what the students encountered in the classroom, but in the knowledge that their parents acquired secondhand as well, because those kids are bringing the lessons they're learning back to the dinner table, they're having family conversations, and so

the parents are benefiting from what the kids are learning to exactly. And we love hearing this, of course, because it reinforces our belief that learning how to money will not only create a better life for yourself, but also for those around you. Uh. There's also another interesting aspect

of the research. It showed that the spillover effect it didn't apply to all parents equally, but not surprisingly, there was more of an increase in the parents who had more of these face to face interactions with their kids throughout the week, Meaning the more we talk about personal finances, the better we should be doing with our personal finances. So the t l d R is just to keep

talking about money with with everyone that you love. We're all about making personal finance and talking about money more commonplace. We do not want it to be to do and so we're gonna encourage you to do the same. Yeah. It makes me think of a conversation Matt, you and I had years ago with Dan Lessal, who is now he's a principal, I think, but he at the time he was a teacher, and he like made money tangible for the kids the personal finance classes at this inner

city school in Philadelphia. He gave them money, he gave them jobs, they had actual cash on hand to start investing. And one of the side effects that he mentioned was that parents of these kids who didn't know much about personal finance. As these kids were learning a ton, the parents were learning a lot too, And I thought that was cool. The spillover effect. We never really talked about it, but now that I'm thinking back, I'm like, oh, well,

we kind of referred to at least that's what that was. Yeah, that's what was happening in that case. That's right. Okay, let's keep moving. Let's talk about how the Washington post they wrote this article about an airport beer. You'll know, we're not against paying more for some great beer, but we're not talking about paying that much for an incredible barrel aged stout or some meticulously crafted fruited sour. I'll

pay a lot of money for a cantio on my friend, right. No, No, this is a dollar Sam Adam summer ale ouch, which is what I'm not going to knock on Same Adams. Seven bucks is a lot. It's not worth it, and it set off this crackdown on concession prices by the New York Ports Authority. I think this beer was sold at La Guardia. It's kind of funny that just a really expensive, generic, some somewhat craft beer can set off

like some sort of government intervention. Well, honestly, like that's that That's a part of why we're talking about this, right because the real question is should there be a bunch of interventions just because someone decided to pay that much for the for a beer, Like, let people make their dumb decisions if they want to with with their money, right.

I mean if I had seen that, of course I would have been like, wait, the same amount of summer and this is worth maybe a third of this at most, and I would have kept I would kept walking or ordered water instead, or ordered another beer that didn't cost as much. But I'm usually like, I'm not much of an airport beer guy, just because the prices are inflated at the airport. Like, just keep moving on down the road.

But some folks would argue that, like, oh no, the airport beer is the best kind of beer, you know, like like there's all there's there's all different types of beers that are dependent upon the situation in which you drink, like a hot tub beer, shower beer, the beach beers. Also, I didn't know airport beer was included in that. Oh I think not for me personally, because I'm not willing to pay the inflated rates as well. But for those who want to pay stupid prices for that airport beer,

I think they should be allowed to do so. It's not like they're being forced to pay that for something that they must have in order to survive or something like. It's not like it's it's not like we're talking about baby formulas, right, Like, there's a big difference between big difference formula and a summer ail. But we've actually got more to discuss in the realm of ridiculous prices, and we will get some more of that right after this. All right, we're back and it's it's time to get

into the ludicrous headline of the week. Matt. We were just talking about expensive beer at the airport. Well, this week's ludicrous headline comes from the New York Times and it reads, I listened in on big business. It's profiting from inflation and you're paying for it. Time to talk about price gouge. Let's talk about price gouging, price profiteering. It's it is true than in this time of rising prices,

many businesses have actually seen increased profits. You know, some of these businesses have been able to pass higher costs and a little bit more onto consumers. Uh. In recent months, this has led to more folks, including some politicians, pointing fingers at Corporate America with accusations of price gouging. But here's the thing. In a market based economy, a company that rips off its customers doesn't often perform well in

the long term. Like to that beer example, most folks see the price and they keep walking on because they say that's ludicrous, even though it was. I also saw that still more than a dollar announced my friend, very very expensive. Well, plus, many of these businesses are taking those profits, they're investing more back into the business, training more employees, offering raises to their employees. Other businesses are

actually reporting less than stellar numbers. Look at what happened with Walmart and Target and their earnings reports this week. You know, if customers get taken advantage of, they tend to vote with their wallets and they go elsewhere in the future. Profit padding, I would say, is is not real. You know, it's not the reason that we're seeing higher

than normal inflation. Yeah. Again, going back to the beer story, I think only like three people had purchased, had had spent that much money on that on that dumb beer. But my question would be, like those people probably had expense accounts and you know, they had experiencing their employer was paying for it, because it's not an individual who

is price sensitive paying for that, right. But it's it's not like a bunch of companies got together and you know all at once decided to become a little more greedy, but actually caused the change because competition is still strong in most sectors of our economy. Uh. And even though yeah, there are some corporations that have seen increased profits, that doesn't mean that these profits are going to continue to be inflated uh in the coming months into the future.

And here's the thing, you don't even have to This is more of kind of like the opinion corner right now, proud of money, but you don't have to op ed section. Take our word for it. A survey of economists shows that the vast majority of economists disagree with the narrative that businesses are exploiting the inflationary environment to rake in

more dough. And on top of that, almost all of these economists disagreed with the idea that government use of price controls would help rein in inflation as well COVID delays, supply shortages, these these have all been difficult for many businesses to deal with, but it's important to remember that healthy businesses helped to create a healthy economy that we

all end up benefiting from in the end. Yeah, we can talk about a lot of reasons that inflation has taken off the way that it has, and I know that it's painful for consumers, but if you want things to get more painful. Just try instituting price controls. Just try creating more levers over who can charge what for what good or service. There are some historical examples we can point to you of how that works out. But a perfect example also of what we're talking about was

reflected in another story actually from Bloomberg this week. A T and T and Verizon are raising prices on cell phone plans. It's not by a ton, it's not a big move forward, but millions of customers are going to start seeing an increased administration charge on their bill, meaning they're gonna pay a dollar thirty five more moving forward starting next month. Are these companies trying to eke out some additional profit? Maybe? Do Do we hate fees? Yes?

We do. Is this gouging though? We would say no. And the great thing is you can leave those companies whenever you want to. You can do business elsewhere. And we would say, if you're with either of those two companies, you should, Yeah, you should leave right now, you should go down the road. Just like the bonuses for the different checking accounts. This is the perfect opportunity for you to say, you know what, Like from a principal standpoint, it is time for me to move all it's just

a buck thirty. But guess what, I don't want to deal with that, and I'm already paying more than I should be in so Mintmobile, Visible and Google five are all vastly superior options, and those companies have actually been reducing rates and fees in recent months. So competition is alive and well in most sectors and it's benefiting all of us. Yeah. Again, as long as we have options to spend our money in the ways that we want to,

we will see the market correct itself. We will see people looking because because here's the thing, if there's not competition like there wasn't ten years ago in the cell phone service provider space, you're gonna see companies like Visible and Mints and Google five pop up because they see

that opportunity is going to happen overnights. No, and so there will be I think some periods of time when we might be paying a little bit more than we would like to, but that is leaving the door open for opportunity for somebody who is willing to be a little more entrepreneurial and to provide a service that people are willing to pay for. So, Joel, you know, we're not sold on the company's gouging US narrative necessarily, but gouging is taking place in some industries. Consumer Reports they

detailed car repair loans, not car loans. Car repair loans that uh. I didn't even really know these worthing until I read this Consumer Reports article. Yes, some I went some car repair chains are engaging now in this practice. Like, we're not even fans of taking out a loan to buy a car, much less than getting a loan for repairs on your car. But some of the more well known car repair brands like Amco, Jiffy Lube, Precision Tune

sat up well known, I would say notorious. It's probably they're charging massive rates of interest on loans that they're dolling out to customers who can't afford to pay for that repair upfront. Some of these loans had interest rates up to one and eight nine percent. That's paid a loan territory. It's pretty messed up. The CFPB. They're seeing a rise in complaints for these sorts of predatory car repair loans as well. So our advice don't ever take out one of these loans. Never. It's a it's a

financial necessity to save up for potential future car repairs. Uh. And you do this by just setting aside money every single month. You know it's inevitable, Like you know that at some point in time, even if you have an ev you're going to have to make some repairs to your car, whether that's just paying for like new winchell wipers or new tires or something larger. Uh. And you take out a loan for winch of wipers, than you're

in a really bad position. But even if you absolutely had to borrow somebody to make a larger repair something and you know, bigger than wiper blades, your credit union that is likely going to have much better options for you. Do not take out a car repair loan. No, yes, please do not, especially from one of these chains that

is charging ridiculous amounts of interest. So something that could might cost uh repair couldn't end up costing you or something like that because of the interest that they're charging on It makes sense though it's it's sort of like, I mean, these different car pair of places, they're taking a leaf out of there, taking the page out of Victoria's Secret, but in a Republic's playbook right where they're trying to get people to sign up for financing because

that is how they make so much money, right, so they make their money. Speaking of financing, Matt, and you just mentioned we don't even like car loans. Well, um, the average car note as it stands is six fifty dollars a month and the average length of that car loan is almost six years. That's according to Edmunds. So those are recent stats. Man. I couldn't believe it when

I saw it. So not only people are taking out these these car pair loans, when people are also just have on top of that some sort of six hundred fifty dollar a month uh debt in their life that they're paying religiously. It's crazy. So you could have a seventh grader and by the time you pay off that car, they're a freshman in college. Yeah, that's frightening. That's uh, that's really scary that it would take you that long to pay off your car loan and that it would

cost you that much every single month. You know, Like Matt said, we're big fans of having no car payment at all. Paying cash for your next car is a great goal to have, and that means, uh, starting to save money for that now. So for these things, like you mentioned whine App earlier, Matt whine App is great at helping you plan for future expenses like that, but you know you don't need software to help you do that.

You can do that on your own. And starting a sinking fund for that next car purchase so that you aren't signing yourself up for some sort of ridiculous six eight hundred dollar a month car payment is is crucial. Your car might be driving fine right now, but it can't hurt to start planning for something a few years down the road totally, especially if you're driving a much older car you know that's starting to have maybe a few more issues than I think. Starting a sinking fund

for that new car purchase would be wise. Even just talking away a hundred or two hundred bucks a month would be a massive help, you know, when it comes

time to buy that new car. Unfortunately, actually, use car prices are finally going down after a couple of years of those prices defining gravity and rising like a balloon go by a two year olds what was up was down And someone had told me three years ago, guess what use car prices are going too sore, I would like what, no way, that's like the opposite of everything

you learned in personal finance one on one. Yeah, I mean, they're unlikely the crater back to pre pandemic levels in the near future, but it's good at least to see that we're starting to see signs of normalcy within that used car market inventory. Yeah, alright, Matt on a on a similar note of cars, well, there was an interesting story this week about electric car manufacturer Tesla and it's

intersection of them with sustainable Investing. Yes, they're CEO is like outspoken then brash on Twitter apparently, um never heard of that guy who knew? But what's known as e s G funds that that prioritize environmental, social, and governance factors when it comes to the companies they invest in, while the S and P actually has its own E s G index, And they announced this week that they're

kicking Tesla out. And of course, uh elon Musk, he's always got a response, he's always got some sort of something to say about everything that happens, but specifically anything happens with Tesla, and he called E s G funds the devil incarnate um overkill. Yeah, maybe maybe just a little bit. But my friend Jack, he writes over a Young Money Matt, he actually wrote this week that E s G and I quote isn't real, And I think

he's onto something. We've talked about this before, that people place too much value on E s G funds, and the companies that are included in these e s G funds varies across the board, depends on who, depending on who's picking and uh for instance, like you know, if Tesla, the world's foremost e V maker, isn't worthy of inclusion in this e s G index, but x on Mobile is. I guess I'm just really confused about what the actual credentials are for for inclusion or for a company that's

considered to be doing socially responsible things. So it goes to show that your definition of sustainable investing it may not be someone else's definition. So our advice is to invest in these funds with caution and do it for

the right reasons. Make sure that you're doing your due diligence to make sure that any E s G fund you're for taking in is actually investing in the companies you think are doing good work, and also pay attention to the fees these e s G funds are come with much higher fees typically than the index funds that Matt and I recommend. And I get the desire to invest in companies that are also doing good. It's just

that not every E s G fund is actually doing that. Yeah, and I like what you said about making sure that you're investing for the right reasons, because I do think a lot of folks are making these investments just to kind of soothe over their conscience a little. You feel good, we've we've gotten into the habit I think of outsourcing our own responsibility towards the world and the environment and some of the other charitable causes that maybe folks used

to participate in. But instead they buy a pair of socks, or they buy a pair of shoes, or the buy a pair of glasses, and guess what, they take care of the donation part of that. And I do think it's great that companies have more of a mission right,

like they have more of a riitable mindset. But I do believe that that lets people off the hook a little bit, and then when it comes to something like this and how they invest they think, oh, E s G. That's much better when in fact, it's not necessarily better from the standpoint of the companies that they invest in, and like you said, oftentimes they are more expensive, even Vanguard.

If you look at their total stock market e t F expense ratio of point zero three percent uh, their total stock market E s G fund is point zero nine that's three times more expensive. And granted that's not really it's still really cheap, right, Like we're talking about hundreds of a percent in here, but principally speaking, it's literally three times more expensive. And so are you going to going to see a bigger gap with a whole

lot of other fund providers. So absolutely, yeah, this is van Like basically, this is as affordable of an E s G fund I think that you can get. If anyone's beating them, maybe it's Fidelity because they like to go zero with things. But again, just keep that in mind, makes make sure that you are investing for the right reasons. But as it stands, it seems like E s G

investing is just a bunch of signaling. It's a bunch of theater unless you've been able to identify that the particular fund that you're investing it is excluding a certain type of industry that you don't want to be investing in. Yeah, and depending on how you view social media and what it's doing to the fabric of our society, an E s G fund might be creating more division in our culture as a whole because it is investing in some of the social media companies that maybe you might not

be a big fan of. So much of it comes down to the particulars of each individual fund and it's something just just want to put that on your radar this week. But Matt, that's gonna do it for today's Friday flight. Uh. We hope everyone out there has a great weekend, and on Monday, we'll be back with a fresh episode with It's an interview with our new friend, Erica Young, who is a legit excellent money coach, and she's gonna talk all about what benefit you can derive

from having a money coach in your corner. It's an excellent conversation and we look forward to sharing it with you. Then that's right, So that's gonna be it for today though, until next time, Best Friends Out, Best Friends Out.