Welcome to Hod of Money. I'm Joel and I am Matt, and today we're talking rusty realtors, insurance issues, and equity expenditures. That's right, man, these are the stories that we think you need to be paying attention to this week because they're the stories that are going to most directly impact our finances. To pay attention to them during this episode.
You need to pay attention to these things because these are the things that impact your bank account, you're spending, how much it is that you're able to save and invest and real quick. For some folks out there, this actually might be a repeat of information anybody who actually follows us on Instagram. But we wanted to mention that we won an award. Joel, you have I'm not used to this trophy, this award, this plaque that's now sits here on a record, actual hardware. And so this is
this is the Fleck Media Award. It's for financial Literacy and Education and communities given to the Hod of Money podcast from the good folks over at Money Management International, which is a service we talk about a lot, actually a nonprofit that helps people in debt, credit card debt and who need credit counseling. But yeah, they gave us this sole thing. Man, it's kind of I don't know, it felt it felt really sweet to get that it's earned its place here on a recording table, the Soul
so the Soule Award. Also it sits there by itself. Yeah, it's very lonely. So someone almost give us like an oscar or something like that in addition to it. That would fit. Well. So this isn't like a real Friday flight story. But did you see this is a total departure from awards or anything like that. But did you see the promotion that Subway was running that if you legally change your name to Subway. Yes, that which brought me, you have the chance of letting free Subway for the rest of.
Your life, which made me think about one of my favorite TV shows, Community where Subway comes on campus and there's actual a dude name Subway and it's it's hilarious. But I remember that episode well, it was like multiple episodes.
They it was a character season.
Yeh, shut up, a character name Subway. So but yeah, who played the character this? Okay, it was just a guy who's there for a few Such a great show, such a great show, but I don't remember that that series. Though apparently ten thousand people or at least were down for getting paid ten grand to legally change their name to subway.
I guess did they get paid ten grand? Or was subway for? Like? Oh, was it subway for? I thought I get paid too, like free sandwiches. Maybe that's even more valuable. I don't know. I mean, yeah, depending bepends on how old you are and how many times you eat. But nineteen year old me would have totally done that because I loved Subway when I was a kid, like specifically late high school, early college. You couldn't keep me away from the way.
The question is, would forty year old Matt changed his name legally for free sez.
I don't eat subway as much as I did in my younger years specifically. But here's the thing. Though you might have to legally change your name, that doesn't mean that your friend have to call you subway.
That's just because it says says it on your subways on your doesn't mean that you have to refer to me a subway.
Yes, right, So I feel like there's a there's a way around it.
I feel like if it was a contest where you had to name yourself brisket for a free barbecue. I would totally do that, but I just am not Subway. You never know what's gonna happen. You never know what's happened, what's gonna happen with the brand. Well, like I just think BacT So I was a big fan of a subway. Subway back before the whole Jared like that dude, right, I watched like he kind of ruined it for me. I watched the beginning of that documentary and it was devastating.
I can't I couldn't get Yeah, devastating. So I don't know if I've ever shared this on the show before. Have I talked about how I used to jump behind the counter at subways? You you you've never talked about this on the show, but you have mentioned sure really quickly.
But I did this a couple of times. But we would show up at a subway, there's like a bunch of us. There's like say one person working, and they're just overwhelmed. All of a sudden, they've got a ton of foot longs that they got that they gotta make. And on more than one occasion, I was like hey, do you want some help. I may have lived and said that I used to work out a subway, but in both instances, they're like, oh, yeah, sure, And so I put the gloves on, jump back behind the bar,
and start making sandwiches for my friends. They're cracking up because I think it's hilarious. It's because I was such a fan of subway. I knew how to make all the sandwiches. I knew what went out all the sandwiches, and I think in both instances they let me walk out of there with a free sandwich. They're like, hey, don't worry about paying For years, I appreciate the help. Now you and somewhere are going to be in legal troubles for that, But that is it feels like something
from a bygone era. I feel like that would not be allowed.
I think I think it was highlights is that both you and I are willing to go to kind of ridiculous links just to save money. Sometimes it makes me think of, or for a laugh, of wrapping my car and how that people thought it was the goofiest thing, and for.
You do that not when you were eighteen, but when you were thirty.
Exactly, And people are like, what do you really are you that hard up? And I'm like no, I'm just willing to do like a lot of things to save or make it a little bit of money, which I think is a good way to go through life, Like don't don't be too proud to do something silly.
Should make that all things considered.
Yeah, okay, but let's move on to the Friday flight mat the real stories, the real stories that we found interesting this week on the personal finance front, and let's talk about jobs for a second. The job market is it's still great for basically almost everyone, right. Unemployment levels
remain near all time lows. There are apparently still one point six jobs for everyone who's hunting for one, which is good news for the economy and for workers across the country for wages and for the ability to go get a better job or a different job if that's what they're going forth, that's what they're interested in. And it's it's not blazing like it was a year ago, but workers still have.
A lot of laboratory it's not Yeah, it's not two job openings for every applicant, right, everybody that's looking for a job.
Yes, so it's died down a little bit, but still workers are in control right now in the job market. But there's one exception, and I found this interesting matter. It's a really bad time to be a realtor. In particular, stats show that there are something like two and a half reeltors for every house that's currently on the market.
Yeah, the complete opposite Yeah of when the job market was boom and Lene.
Right, it's like the ratio you normally want. It's probably the exact opposite, like multiple homes for every realtor. But this is just not great news if you're a realtor currently, and it's even worse, by the way, if you're trying to break into the business. If you're like, you know what that's going to be my tickets to riches or my new job is going into real estate. Well, realtors
are hard up right now. And familters how many tough time and programmers software well just with AI and now that's putting the kabash on hiring at least in that sectors. Lenders to think about all the people that are doing home refinances and now they're not really doing it not so much.
Yeah, I saw that there are six hundred thousand more realtors than there are actual homes listed. I was just insane, But this is happening for a few reasons. One, there aren't many houses for sale, and you know, with higher interest rates, folks are less likely they don't have a desire to move because they don't want to give up that sweet rate. We've talked about that. But secondly, a lot of realtors they only dabble, right that they work part time, and some industries like this there are more
cyclical than others. It makes me think back to when I was a photographer. There are a lot of photographers that just dabbled because the barrier to entry. Yeah, to get yourself a digital camera and take some pictures, that's that's fairly easy. It's a lot harder to make that a full time gig like we did. But there's a lot of folks that would pick up the camera and shoot some say during the fall when family sessions are booming, because folks are wanting to get those pictures taken for
their Christmas card. Yeah, the holidays coming up. But what this means for you as a consumer is that you need to be careful who it is that you choose to represent you within a real estate transaction. If you actually are buying a home because a bad or a rusty realtor, there you go. That could end up costing you money. A recent piece in Insider It details how easy it is to become a realtor in many states. Again, the bar to entry is fairly low. It's like a
multiple choice question. Tests that you take it two plus two, you could be a realtor. It's not that easy to all of our real realtor friends out there. But if you offer an agent who isn't at the top of their game, you could be getting subpard i, which is going to cost you serious money in the home buying process. The ideal choice is to find an agent who has been working in your neighborhood regularly for years. They know the ends and the now, they know individuals, and they've
obviously got rave reviews from friends and neighbors. That's the kind of agent that you want to be looking for, not somebody that you just whose name you just happen to see on a single sign. You see a name on a bunch of signs, that's good. But if you just happen to choose a name because it sounds cool, that's not how you know about it.
That person goes to your church or you. If they don't do much business, then you probably want to go with a realtor who does more business. Not necessarily the person on the billboard. I wouldn't necessarily she's that person either, But yeah, I think you want to choose someone.
You avoid the extremes. Yes, yeah, exactly.
Well and just makes me think of Matt someone buying a home in your neighborhood. Right now, this was a it was an off market listing, like it never actually made it to MLS. And so the people who know about that stuff are the realtors who do a lot of business, and they might have a lead on deals that other realtors might not know about. And so who
you choose to represent you matters. And by the way, speaking of realtors, there have been a bunch of lawsuits through the years that have been filed against the National Association of Realtors for essentially being a monopoly right, and those are still working their way through the court system. But if the plaintiffs win, there's likely to be a massive shift in the way agents get paid, which we
think would be a good thing. There are some estimates that actually predict that consumers would save like twenty to thirty billion dollars every single year if this stranglehold the three percent fee sort of payment system times to get struck down. Yeah, yeah, six percent exactly. And it's not that agents shouldn't get paid. Like Matt, you and I, we use agents when we buy and sell homes, and we've had great experiences. We've got great agents that are
you know, they're worth a lot. It's just that almost nothing else in the world works on a flat percentage feed like that, right, and this this system deserves a shakeup. So I would love I'm kind of waiting with baited breath to see what happens with some of these lawsuits because it's going to be good for consumers if this model gets kind of torn us under.
Yeah. One of the like the NRA, right, So the National Association Realtors the argument that they're in RA. I'm sorry, and those are two very very different groups of people, but their argument is that it's the best model because some of the folks are advocating for like a flat fee, right, just like okay, just say it's going to cost us much and this is how much that you get paid.
The argument against that is that, well, there's a lot of folks who are have less money, right, Like, if you have a smaller, smaller home or a home that's not going to sell for very much, they're not necessarily in a position to pay an upfront fee. And so I mean, I think the percentage framework, I think that that can still work, but it's just it's got to
come down. Yeah, Like that's the biggest issue is that it is such it's like six you're paying six percent if you're selling your house, and that is so much money.
It makes me think back to like financial advisors who have portfolios that they over like the assets under management style or whatever, and like that's even that you're looking at one percent, And with like ETFs and neutral funds, you've seen the expense ratios on those things come down over the years as technology has allowed individuals access directly
to be able to invest. I'm actually kind of surprised that different platforms like Zilo, where folks are very comfortable going on there and searching themselves, that they haven't introduced some sort of marketplace that is able to eliminate so much of the mentalmen when it comes to the ability to purchase a home or in this case, selling a home without having to pay gigantic fees.
I mean redfinn is trying to do that. They've been trying to break that three percent. Few model take it down to like one and a half and one percent in some cases. But it's just hard when there's things more folks with m less monopoly. Yeah, yeah, it's true.
Yeah, And again I don't want to short change realtors because there's a lot of folks. This is the largest purchase that you ever make in your entire life, and so there are a lot of folks who are really nervous about that. I understand that. And so the ability to have somebody who has done many, many of these transactions to walk alongside you, to hold your hand, to provide that negotiating experience. There's so much value that they
do bring. It's just that is at worth six percent, and when you're talking about more expensive homes, that is a ton a ton of money for sure.
Well, the other upside to reducing realtor fees, I think it would help lubricate the real estate market. Like if the price the transaction costs go way down, people are going to be much more likely to sell their home, even if it means giving up a sweet interest.
Right, and then does that all of a sudden cause prices to go up even more? Who knows? Yeah or yeah? Yeah either way?
Yeah, all right, let's talk about something else on the homeowner front, homeowners insurance and listener Anastasia she sent us an interesting article last week about insurance specifically in the state of Florida. But I think there's something that we
can all take away from the article that she sent over. First, Florida and California are two of the biggest states in the nation, and these are the two that are both losing insurance companies, which is going to drive up costs in both of those states on insurance, and the reasons
why are completely different though. Right, this might be the most simplistic explanation ever, But insurance companies are bowing out of doing business in Florida because of the increased risk they endure, largely because of hurricanes.
Yeah, And honestly, I don't think that's oversimplifying. Like literally, it's what is it a peninsula like sticks out there, sure, out in the ocean, a big finger out in the ocean. Yeah, right in the eye of the ocean. Hurricanes love to just cut that corner. They do.
It's what happens, It's true. And yeah, and so Florida homeowners, they already pay some of the highest home insurance prices in the nation, and they're likely to get even higher as companies reduce their presence, issue fewer policies, cancel some of the policies that they currently have with consumers, or maybe they just like leave completely, they skid out all they're out of there.
Yeah, they have the insurance companies, they've been losing money for years in Florida. It's kind of been like a lost leader in a sense for those businesses. Peron's not really leaving anything but more losses. But California it's another story. Insurers are leaving there because they're also dealing with large payouts, mainly due to the risk that wildfire's pose. I saw that in the past five years, something like thirty nine
thousand homes have been destroyed due to fires. Wow, that is so I had a hard time understand, like, Okay, is that a lot of homes or maybe this not that many. There are eighty thousand single family homes in the city of Atlanta, so it's almost as if half marched through and just like burned up half of the city.
But as many insurance companies are looking for for reasons to cancel policies, they're like, so they're even using drones to identify trouble spots on different properties to degenerate reasons for cancelation. That's a bit extreme, it's a bit ridiculous, of course, but it's true. Insurance companies are doing that.
But a big problem is that the state, they are refusing to let these insurers increase premiums on homeowners, which will of course, it's going to decrease competition because these insurers are pulling out altogether, and it's going to lead to a more strained insurance market within the state of California. That's a perfect example of government policy completely backfiring and instead of helping those that they're seeking to protect, like, it's literally causing them more harm.
Church companies are saying, no, no, look look at the numbers. We are losing money. I think All State just had their credit rating down graded, kind of like the United States just had their credit rating downgraded last week as a country, like All State just did, and so insurance are insurance companies are facing tough times. They're trying to increase premiums to make up for the losses they're experiencing and win.
But if you can't do that, right, what do you say? You say, all right, well then we're gonna pull yeah, providing coverage within the state, right, more policies in Idaho, I guess, or something like that. I don't know, but yeah, like that. The number of insurance companies in Florida that left, it's staggered. I couldn't believe it. Like in the past eighteen months, I think it's like fifteen stopped writing new
policies in Florida. Three of them just said, yeah, we're out of here altogether, and like a bunch of others just went bankrupt.
Like yeah, they were insolvent. So I guess, first off, just don't an emoji tier face. For people in California and in Florida, it is difficult to own.
It's tough.
It's really really tough, and there's no easy solution. But in general, right, even not in those two states, prices for insurance have gone up quite a bit, right. The cost of supplies and labor have risen a whole lot over the past few years, and that means that repair bills right when a claim gets filed are more substantial. I think about at the tree growing through our house. We're finally just about the dumpster gets taken away today, Like, yeah, very nice.
I know our neighbors are gonna be able to get your garage back. I know. That's honestly the biggest downside of that on that dumpster.
That's true, our neighbors are gonna be thankful to like, well, they'll like us more now that we don't have dumps around, Like glad, we don't have a rat problem anymore. But to add to the pricing problem, right, home values have increased substantially too. It's been a perfect storm that's led to these increasing insurance rates and coverage is getting more sparse.
Right These insurers are saying, well, okay, well, if I have to write the policy, well then I'm just not I'm going to write less favorable terms for the consumer. The coverage is going to be smaller, and that's the only way you're going to be able to maybe not see a massive increase in your premiums. It's just not easy right now, right, And so it's regardless of where
you live, shop around. If you're looking to hit the button, just enter your information over at policygenius dot com, get some quotes from insurance companies they work with, or you can always reach out to an independent broker or agent over at Trusted Choice dot com as well. That can be easy, but don't take it lying down. It's not easy to fight back against these price increases. They're happening
no matter what. But you still have a role. There's still something you can do to be able to save money while it's happening.
That's all right. Well, we've got additional stories to get to, including Joel whether or not we will be able to continue watching our favorite Disney Plus content. We'll get to that story plus others right after this.
All right, Matt, The Friday flight continues, and it looks like you might not be able to watch in Conto anymore soon.
Talk about a spike in popularity and the ensuing just decreases. Yeah, I mean, you can't talk about Bruno. That was everywhere I know what three months. I haven't heard it in a while now, but I know you. The fire stayed lift for you the whole time. You love that we have enjoyed it. I will say Westy, our youngest, he recently discovered it, like over the summer, there's just there's
more TV watching Goal. Yeah, let's be honest. And when they're not in school, and he was walking around saying, we don't talk about Bruno even though he didn't even say it. Right, it's only three, but that's awesome.
All right, Let's get to our Lucro's headline of the week before we get to that story. And this one comes from Investment News and listener Gabe sent this one our way and it reads stop contributing to IRA's and four oh one K's no wonder. Gabe said, this one our way, this is.
Doesn't sound like the kind of kind of advice that we would get.
Sounds like financial malpractice. But you know, we've had listeners, by the way, Matt before, especially participating in the how to Money Facebook group, who were really really into real estate investing, and they made similar claims. They are like, why would you that was their argument put money in that scam four oh one K or Ira, when you could you know triple what you're going to make by investing in real estate and you and I were not
against real estate investing. In fact, we'll talk to somebody next week who is like one of our favorite real estate investor influences creators out there. But why would a semi respectable site their rights about investing really want the masses to stop contributing to their retirement accounts?
Completely?
Right? It turns out no, that's not what they're after. They were just going for a shocking headline, which that's the internet thea's surprise, right, But the main gist of this article we actually agree with. Right.
They basically wanted folks to know that WROTH accounts are better than traditional accounts for most folks. They don't want you to contribute nothing, They just want you to instead funnel that money into the WROTH. All those contributions send them into the ROTH four one K and IRA instead of the traditional versions. You'll be much better off. Yeah, yeah, the Beauty of the Wroth. IRA will link to that in our show notes. But it's a silly headline, but
they're spot on. We have been all about roth's basically since since day one for most people, because I mean the downside, Yes, you miss out on the tax break now, but given where tax rates are, when we take a look back at history, they're actually fairly low. And given our country's current fiscal situation, and we talked about this last week, tax rates are very likely going to be
going up come end of twenty twenty five. And in addition to switching those contributions from traditional to ROTH, it actually might even make sense for some people to come up with a WROTH conversion strategy for the money that they currently have sitting within a traditional IRA or a
traditional four one K account. You do need to be strategic about this because of the tax consequences, Like once you make that conversion, the taxes are going to be due because of course those were those accounts were funded with pre tax dollars and so by moving it to a post tax account, well you got to get tax.
That's yeah, don't hear us sayings tax the ross are so much better that you should go and convert two hundred k in IRA money right now to traditional iron money to WROTH money because huge tax bill.
If you got a word plan, Yeah, it takes a lot of planning to get this right, and you might find that you don't have the money to pay the taxman when that happened to pay the piper yeah, it's typically something that you want to do gradually, and honestly.
We we should maybe work on a Roth conversion or a rap Roth conversion ladder article up on the site because it can get confusing. But this is how if you are into early retirement, this is how you're able to tap those retirement dollars early by setting up a
Roth conversion ladder. So basically by moving it from one of those pre tax accounts like a four to one K or traditional IRA and moving it over to a Wroth IRA, you're able to tap those funds because they count as quote unquote contributions from those other accounts as long as you've got to wait five years. But after those five years are up, you have access to that money, or that money can just sit there and continue to
grow tax free. You withdraw it tax free, but also if you want to pull it early, it's penalty free as well. Right.
I think the biggest takeaway though is for listeners who say, oh, I love getting the tax break, it's so fun, so nice, but that you're going to pay the tax at some point, and you might pay at a much higher rate in the future, and so taking the Wroth in the hand right now is for a whole lot of folks, Not for everyone, but for a whole lot of folks, is the better choice. Even though it means paying more in tax today, it's gonna mean a whole lot less tax in the future.
That's what we believe, yep.
And it's also true in a lot of ways too. Just well, I don't know, it's complex. Well, well we'll leave it there for now. All right, let's talk about streaming for a second, Matt, Disney Plus and Hulu are about to start charging people more money. AD free versions are going up in price in October by twenty seven percent and twenty percent, respectively. So it's not just a
tiny little bitty hike to keep up with inflation. It's like a no time to turn on the earnings bigot for the for Disney right, and so that means that Disney Plus has doubled in prices at launch just a few years ago. Not only that, though, they're taking a page out of the Netflix playbook, and they plan a crackdown on password sharing. So you and I we currently share this Disney Plus log in so you can watch in conto with your son. But if the prices go
up and we can't share. I feel like Disney's on the chopping block the rest, right, it's a different prop is this it's like a double price increase.
Well, in one of the reasons they're doing this, their plan previously was expanding to other markets, but that's really really expensive, and it's some of those subscribers don't stick around either, and so they're trying to squeeze more money out of their existing customers, you and me, because they're counting on consumer inertia, like status quo bias kicks in and you think, well, I don't want to do this.
We do not want you to be like those individuals who are just like, oh, well it's already set up. I don't want to have to create a new password if I want to resubscribe that whole thing. No, if you are not getting the value out of this scene, Yeah, like you said, it should be on the chopping block.
And I know there's a new half season of Bluey and it's it's great, and but has it already come out?
Yeah? I think okay, yeah, I thought they both come out over the summer. Did one come out at the end of the summer. I don't know. That's a good question. I know I can't watch dude. I wish I had enough time to sit down with the kids and watch Blue because it's the best kids show.
Yeah it really is. Far it really is. But here's the thing. My kids might be, you know, crying into their blankets because they might be upset, but there's no more Bluey. Loyalty is going to cost you, right, and like we always say, you can cancel and you can always subscribe again later. So yeah, if there's a specific show you want to watch, sign up and then cancel after you've watched it.
Be strategic.
Yeah, don't be loyal just because for the sake of loyalty. As all these streaming services continue to just massively increase what they're charging, it's i mean starting to feel on par with, if not exceeding, what cable bills used to be.
That's right, man. All right, let's talk about some credit card debt because we have officially hit the one trillion dollars in credit card debt mark. This is actually we kind of jumped the gun slightly on this, like maybe a couple months ago, and we were talking about this. It wasn't official from the FED yet, but we knew we were Yeah, we knew what was having. And of course this headline number is not great, one trillion dollars, but it's also maybe not as bad as you might think.
Consumer debt. It is still below the US norm. Actually credit card debt. It's actually just six percent of the total deposits that households have in the bank, which is basically the lowest percentage in the past twenty years. It was actually double that twenty years ago. So I'm playing devil's advocate here. That was the arguments saying, hey, it's
not that big of a deal. Here's the thing. The biggest spending areas that have led to this balloon and overall credit card spending and debt are dining, travel and experiences and blasted check. These are all optional categories. We're going into debt for once, not needs. And there is nothing wrong with a credit card itself. It's a tool.
We are huge fans of using credit cards for the different rewards and points that they provide, but it is how you use it, and if you can't pay off the balance on time and in full every single month, we want you to stop using it. Yeah, if you keep bashing your finger with the hammer stop using the hammer, right. The same thing with the credit card. Yeah, and again, with interest rates continuing to rise all across the board, with everything, we're seeing credit card debt being even worse
for you than the normal. And I wonder because I recently, I've only ever had one credit card on my Apple pay within my wall, but I recently he said, I need to have all the cards in there. That way I can if I don't happen at my walt. I don't want to be stuck using the one unoptimized card. I want to be able to funnel my spending the right way. I wonder if that has any sort of impact on individuals usage as well, when you can just
double click it and top the phone. But regardless, it is becoming more costly if you are a careless user sure of your credit card.
Yeah, that's true. And late payments have gone up to right, which which means those purchases are costing folks even more in interest and penalties than they were a couple of years ago. And this is good news for credit card companies, but it's just it's not for us as individuals. The US norm when it comes to handling debt is not that great. And so if you're shooting to be normal, to be like everyone else, you're you're going to be in a bad financial spot.
Right.
The average person has about six thousand dollars in recurring credit card debts and an average illustrate of about twenty percent, which means they're paying twelve hundred dollars a year just be able to use that piece of plastic to make privilege.
Of everting those points that maybe you're not even actually fully taking advation.
So it's my contention, it's ark the normal sucks, right, The average person is very little saved, which sucks. And we talk about talked about last week the average length of a car loan, it's really long. And we talked about the average price of a car what people are paying now. It's a lot of money, and that's normal, but it shouldn't be normal. So so don't base your goals on what the average American is doing with their
finances based on don't don't do. Don't take your cue from what normal people who do the average American does, yeah, because normal people are, you know, screwing over their futures for current consumption. Yeah, the average American also throws away a third of all the groceries and watches seven hours of TV a day or something like that.
These are not things that we want you to do. We want you to be weird. But let's talk about a different kind of borrowing. Let's talk about taking money out of your home. As anyone who who wants to buy a home nose, it's really expensive these days. Prices have gone up significantly over the past few years, especially interest rates as well, and this has created an affordability crunch.
But if you bought a house between let's say a two thousand and nine to twenty twenty ish or maybe twenty twenty one after the run up, you've definitely accumulated
a chunk of home equity. And some analysts out there are predicting that the next place that consumers are going to be tempted to grab money so that they can continue to spend in a way that they've become accustomed to right spending on dining, travel and experiences, is that they're going to end up tapping the equity in the form of a cash out refinance or maybe a helock
or a home equity loan. These are all forms of borrowing that were almost scared because there's a large amount of money sitting there, you know, in the piggy bank of your home. And if folks turn to that with dollar signs in their eyes and they're thinking, oh, I want to continue this luxury living that been accustomed to, it could lead to some bad things for sure.
Yeah, taking out that money can lead to a lot of financial heartache, a lot of financial difficulty. And the total mortgage debt right now in the country stands as something like twelve and a half trillion, but there's almost thirty trillion in home equity, and so it starts to get tempting. Right Like you said, Matt, you see dollar signs, it starts to get like.
It starts a swell little yeah, like bursting. Not the same.
You're like, my saving's council low, but my helock is fat, so maybe I should grab some of that. But a cash out refive is a bad idea for almost everyone with a low mortgage rate. Right now, you're giving up something great that you have locked in for a whole lot of years. You're giving up the equivalent of a
luxury item for jeloppie. Right, That's that's what's happening in the financial terms in Yeah, if you train it in your three percent mortgage for a seven percent just because you want access to that cash, that's a that's a terrible ideat.
It says. If you won the prize of free Subway for life and you're like, I'm just tired of my name being Subway, I don't want the free sandwiches anymore. Yeah, yeah, and changing your name to brisket.
Don't give those sandwiches up unless that means free barbecue, in which case it's a smart move.
Would you do it for just a chance a free barbecue? Though? Oh no, No, to keep a bird in the hand.
Yeah, But most folks should avoid the temptation to use those funds to fuel their consumption. Right homeowners are, they're in a pretty solid position right now, but it's easy to undo that by treating your home like an ATM, by by snagging those funds and doing dumb.
Stuff with them.
If you're like making home upgrades, that's one expense that can make real sense with some of those funds. But don't over leverage yourself while using that home equity line of credit. And in one additional caveat, by the way, opening a helock can function like a backup emergency fund. We think that homeowners should in all likelihood most of the time have a helock on hand. It's nice in the case of emergency, but it's like, uh, but it's the same thing as like break glass in case of emergency.
You don't grab that hatchet or the fire extinguisher out unless it really is a fire, and so you don't want to concoct a fire in your mind to grab the funds only if it's a real emergency. Doesn't make sense to actually draw that down.
Yeah, that's right. And this way is just like a credit card. It's a tool. It comes down to how it is that you use it. But Buddy, that's going to be it for our Friday flight. We hope everyone has a fantastic weekend and we will see back here on Monday. We've got a great listener questions episode lined up for you. You can find the different stories and any resources that we mentioned up in the show notes for this episode at howdomoney dot com. Buddy, that's gonna
be it for this one. Until next time. Best Friends Out, Best Friends Out,