Friday Flight - Student Loan Payment Pause, The Worst Car Loans, & Avoiding This Common HSA Blunder #396

bit about how much you love your credit union. Okay, so I have a love hate relationship with my credit union right now. We have talked about on the show many times about how much we love credit unions. There are a lot of reasons for that. I'm pretty sure we did a whole episode on that, like on a four or five months go. I think it was called why we Love Credit Union. It was like it was

like it was worth than a year ago. I think, well, I still dig them, but I will say I have a pain point with my current credit union right now, and it is their website is awful. It's trash, and I was trying to transfer money recently from my credit union account to a savings account with another institution, and the way the way they limit your transfers, it's just painful.

Uh it's like two thousand dollars a day max. But then you go back in like a week later, and it's like, we still haven't finished the transfer, so you can't transfer anymore. And so I just had never, Oh, you still want that to happen, and thanks for letting us. We'll get on it, um. I don't know, after we like take a nap or something, then we'll send you a fact with the confirmation. Right. So I just wanted to put that out there. Love credit unions. There's so

many reasons to do business with the credit union. I just wish that my local credit union would get their act together when it comes to, you know, a little bit better customer service. UM from in particular that website standpoint. Yeah, I mean that was one of the downsides that we presented in that episode. I think it was one of the few downsides we gave. They don't pay great interest rates if you're a saver, and they also have poor interfaces when it comes to just the online support. The

online interface. This is one area that I'm glad to see other kind of medium sized players step into mix, right, because we love credit unions because they offer great competitive rates if you're looking for a loan. But now there are folks like Rocket Mortgage or better dot Com, these players that I kind of see as like more middle of the pack kind of lenders, because before what I

felt like like there were a bunch of massive banks. Yeah, there was this huge, big guys, and then there were like the credit unions, and because of that, we said, okay, if we got to pick one over the other, let's

go with the credit unions. But now these other companies are stepping into the void essentially, and they're also offering really great rates, and then oftentimes they're selling those loans to other loan servicers who have great online portals that make it really easy to actually set up those automatic payments, the ability to transfer money in and out of those accounts very easy, even just like some basics like online statements.

One of my credit unions, they don't issue you a mortgage statement every single month, seriously, like they choose like three random months of the year. But yeah, with you like credit unions, but there is definitely some room for improvements, and they leave a little to be desired, especially on that technological front. And so I'm just putting this out

there to my local credit union. I would love to see you invest some uh, you know, a little bit of time, a little effort into making that website more user friendly and even just making a transfer. It shouldn't be as difficult as it was. Um. And yeah, I love you, I'll still I'll stick with you, but I just want you to know that you can improve, you

can do better. But as long as they're still offering those free of Letty United tickets Rember, the one time we scored those free right little Instagram Instagram challenge or something from our local credit us, we wanted. That was a lot of fun. All right, let's gonna get to the our stories from this week. This is that quick sampling that we found interesting. And let's first pick it off with student loans. This is something that's run event

too many. How do money listeners? Uh? And this was announced actually last Friday, but it was after our Friday flight was already out. It was like Friday five pm or something like. Yeah, one of those last minute things, and so it turns out that the student loan payment pause will continue. Uh, I know, yeah, if I if I had student loans, this would be pretty great news, be pretty pumped right now. But I'm more glad to

not have anything student loans currently. But not having to pay on those loans if you do have them, while also not accruing interest, is going to allow you to prioritize other financial goals for the time being. Maybe that's saving up for that down payment for your new place, investing that money if that's not something you've already done, all that is great for you, right or just building up that emergency fund if you're not where you want to be at step one. Yeah, gear number one baby.

And this is especially great news if you are on the ten year Public Service loan forgiveness plan, because that means twenty three months where payments weren't required in all. Twenty three of those months are actually going to count towards your decade long repayment period. That's incredibly good news

for those that's I mean, that's a significant show. That's almost of the time allotted that you needed to pay on your loan to be able to qualify that you didn't have a payment and so that just means more forgiveness at the end of the road, which is great. And uh, yeah, payments should resume in February. The Education Department actually emphasized that this will be the last extension.

So make sure you're you're setting yourself up financially to be ready for those payments to resume when the time comes. Be ready to make a student loan payment in February. Uh and so like seriously this time right, right? Yeah, no, we mean it, you're sure government, Okay, I would not

count on getting another one, that's for sure. The one thing you don't want to do with the money that you should be paying in student loans is to increase your lifestyle with those funds, because you're taking money that needs to be in your budget, you know, in a few months time, and you're incorporating it into your spending, and then it becomes even harder, right to untangle and

to start paying on those student loans again. Yeah, we would say set yourself up for success, don't absorb that extra money into Yeah, you're you're spending your outgoing funds. It's I mean, honestly, if you can continue making those payments, but just making to yourself, right, Like, don't just let

all the different categories of your budget just swell. Instead, make sure you're you're marking that money, and like we said, make sure you're putting that towards something more meaningful, whether that's setting up your emergency fund, investing, saving that towards other financial goals. But I mean, yeah, the worst thing you want to do is to exit this period of time and then you're like, oh, man, like that was a lot of money. Actually when I total it all up,

what was what was I actually able to do? And in reality you just maybe spend it on drinks out with friends or just spending more at the store or whatever it is. This is the perfect chance to get ahead financially and you take advantage of it, is what we would say. And we're actually you're gonna talk with a c s LP that's a certified Student Loan Professional and also a former Olympic gold medal winner, Lauren Williams on Monday Show about how to approach your student loans

given the recent news. She is a fountain of knowledge. So we're looking forward to, yeah, sharing that conversation with you. That's right, And let's talk about inflation here for a minute. If you are a regular HTM Friday flight, let's in here, or maybe just as long as you're not living in a cave or something, you know that there have been

some real inflation concerns recently. The New York Times they had an article this week detailing just how bad things have gotten recently for savers uh, and largely that's because of rising inflation. Basically, even though your savings account might be paying you close to point five percent assuming you're with one of the better online banks, if you're with one of the huge banks, they're probably paying you like

point zero five percent at best. Best. Uh, the real rate of a turn on your savings is actually negative these days, despite the fact that you might be earning half a percent, because first of all, half percent that's pretty pidily in any environment. But it's actually going to

look much worse as inflation gets worse. But the problem is, like there is just not much that savers can do investing savings that you want to have on hand for a near term purchase or putting your emergency fund money in the stock market that could leave you in a in a pickle if the market experiences turbulence and you might you know you might have actually less money than you started with, less money than just the impact of

inflation on your dollars. Yeah, it's dispiriting. I think to read that headline as someone who enjoys saving, it's like, dang it, my savings is earning. Actually it's negative returns right now, especially you feel distancentivized to do something that you know you should be doing exactly, and especially with how well the market has been doing. I think people are like, well, I'm just gonna take a chance, um, but there is there's not much wisdom there in that decision.

If you need that money in the short term, you basically have to roll with the punches. And a friend of the show, Ben Carlson, wrote this week that the current situation might be the worst ever for someone saving their money in a bank or a money market account. And yeah, we hate seeing that because saving money is a good thing. It just feels awful to be saving in this current environment. But if you are an oversaver in particular, and yes, that is a problem. There are

some people that save too much money. You want to make sure that you are investing some of your money for the future. Obviously, like Matt said, don't invest money you're gonna need in the here and now or in the next year or two. But also don't assume that investing is risky, and the keeping your money in savings in the savings account isn't. There is a very known and quantifiable risk right now to having too much money

in savings. It's getting it's getting eaten alive. Yeah, currently that risk is quantifiable because it is that five point four percent that's the Labor Department put out the consumer price Index this past week. That is the level inflation that we've seen, of course, over the past twelve months. But I will say I think we should maybe be encouraged by the it did down to it because in June it was point nine, and so July numbers have showed point five, so almost half of the increase that

we saw in June. Uh, and so hopefully that might mean that we're actually kind of, you know, reaching the kind of the top of the hill. Hopefully we'll see things continue to settle down in the coming months. Yeah, I hope so, But yeah, I think you know, Matt, we talked a while back in episode sixty nine about investing and how investing involves risk, in not investing is signing yourself up for this other kind of risk, right,

this guaranteed risk of baked in losses. And so yeah, inflation is going to steadily erode the spending powers of the dollars that you're saving. Savings has a place in personal finance for sure, But not investing and being too scared to put some of your money uh in the market is a recipe for like certain doom for those dollars over time. That's right, man, speaking of guaranteed losses. Turns out that the lack of competition is ensuring that

more money is being parted from our wallets. There is this interesting article over in Bloomberg recently about how much money reduced levels of competition cost the average American family. The White Houses National Economic Council estimates our collective losses at roughly five thousand dollars a year. I want my money back, But where does it come from? Against it works? Uh, it comes from all the different companies that we pay because they are able to jack prices up raise prices

when there is a lack of competition. Much of that loss is due to companies merging, which creates fewer competitors. In an industry. And they also point a finger at increased regulations as well. Apparently thirty percent of jobs require a license now, where as only five percent required one back in the fifties. Uh, non compete agreements, that's another factor that are keeping prices high. And you know, we believe that capitalism it's not full proof, it's not without

its own issues. But you know this warning about the high price that we pay, that we all pay when competition is diminished, this is an important one to heed. Yeah, that's a big headline number. Like to think about the average family has five thousand dollars less every single year to spend or to say or do whatever they want with because there's not enough competition in certain sectors of our economy. That was that was eye opening to read.

I mean that's almost a raw fire a right, I mean just think about that over the years, how much that could grow to if you invested that instead exactly So it made me think, Matt, like, I started thinking about the industries where competition is the stiffest, right, like grocery stores for example, price competition is alive and well it benefits consumers in society as a whole, that you have a lot of options of where you want to go in order to shop and get your groceries. Right.

You know, each chain is attempting to heel to a different kind of customer with different budgets and different tastes. Uh. The airline industry is another perfect example. The Wall Street Journal actually reported this week that airfare prices have barely

budged over the last twenty five years. Uh So, the price you would have paid for a ticket to Europe years ago, like a quarter of a century ago, is basically the same as what you pay now, in large part thanks to competition and innovation, right and so, yeah, that it should cost a lot more given inflation and the rising prices of everything else, but they haven't exactly

And this was actually evidence to by Jet Blue. They announced this week that they're gonna uh start partaking in round trip service from New York to London, which is gonna lower prices in a big way. They're gonna be this new low cost competitor to some of the major airlines who are flying that route consistently, and it's gonna lower prices for every single person that wants to go from New York to London. Um and fancy folks, even some of those just general you know, European trips in

general too. But uh yeah, then take an industry where competition is essentially not existent, like getting home internet service. Like all of our listeners can identify with how painful it is to get home internet service set up at their house and how expensive it is. Prices are high. They're often not even transparent. You don't even know what's your first months bill is going to be, what taxes

and fees are going to be included in there. So at the same time, customer service is abysmal from those companies. There's just no incentive for companies like Comcast and and A, T and T to do better. So one of the fundamental truths of capitalism is that competition drives businesses to

make things better, faster, and cheaper. Let's hope that the the NBC, the National Economic Council, is looking for ways to bring competition back, because too little of it seems to be costing all of us quite a bit of money every year. That's right, man, All right, we are only halfway through our Friday flight. We've got several other stories that we're gonna get to after the break. Including how there seems to be bidding wars taking place on

rental units. Will get to that story, plus several others right after this break. All Right, we're back. We got some more stories to get to. But of course, sweet always have to get around to our ludicrous headline of the week. Alright, I'm I'm concerned, are you? That was my hagrid voice from Harry Potter. I thought I was gonna have to rush you to the hospital. Do you like that? One? That was good? That was good. We've talked about how are reading Harry Potter to the to

the kids. We're getting pretty close to the end of book three, which so far, dude, book three is like easily one of the greatest. It's so good. I gotta say, I know that Pixar is not reaching out to us to do any voiceovers for any of their characters. That's not gonna happen. But let's let's get to this week's ludacrous headline, and it is from The New York the week You're a You're a wizard? Harry. That was better, though, that's because you can hear him saying that exactly exactly.

But yeah, this week's headline is titled even your allergist is now investing in startups? This is a good one. Yeah, this was sent our way by listener Livy, And yeah, if you see a ludical US financial headline, please send it our way. We would love to check it out and maybe feature it on an upcoming episode. But yeah, this one was basically touting the fact that everyone can become an angel investor these days. But we would say that's actually a bad thing. I mean, you, should you

be investing in companies with massive quote unquote potential? We would say no, Right, big time angel investors like Mark Entrees and Matt He's been one of the most successful angel investors of all time. He knows this very well. I've heard him say it that to be a successful angel investor, you need the best opportunities and you also

need to get extremely lucky. Basically, you're investing in three companies hoping that three of them are lucky enough to just outperform the competition to an incredible degree, and that infinitesimally small success ratio makes up for the other investments that fall flat on their face. But yeah, risky forms of investing seem to be the normal these days. In our society, but for our listeners, you should opt out of the angel investing arena. This is not something you

should pursue. The fees are also really high, so that you're gonna get eaten alive from that standpoint, and then you're also just like hoping on a wish and a prayer. And I guarantee you, if it's available to you, it is probably not one of the best angel investing possibilities out there, assuming you're just one of these casual angel investors,

you know. I think shows like Shark Tank have put angel investor within the vernacular, right, like it's a it's part of folks vocabulary now and they think, oh well, and like when they're watching it on TV, they think, I knew that product was going to be a hit, Like you know that their armchair quarterback, and it's only had Mark Huban's money, it would be doing the same thing.

But there's a huge difference between the billions of dollars that Mark Cuban has and like the thousands of dollars that you have, And just from a diversification standpoint, we don't want you to be an angel investor. The New York Times they also had this great in depth article about crypto and how easy it is now to make your own crappy crypto coin. You can launch a token for as little as eight bucks these days. I think they the writer launched one called Idiot. Just try to

see who would bite. Yeah, I mean, just investing in most of these different crypto idiot coins or attempting to become an angel investor with some of your your spare cash is likely going to lead to you seeing that money disappear. And so if you do really want to go this route, just make sure that you aren't investing

money that you can't afford to lose. UH. First, make sure that you're prioritizing socking away just a solid chunk into tax advantaged retirement accounts before you even consider these these other riskier forms of investing. And then also just remember that you can always support UH that startup company in other ways, like just buying their product, buying their service.

Support them that way, and honestly, the amount of money that you would put towards that product or that service, it's going to be more likely to be in the like a healthy relationship to the amount of money that you have set aside as you would see somebody like Mark Cuban where he's setting aside thousands or hundreds of

thousands of dollars because that much to him. It might be like you going out and you know, buying some fancy underwear that somebody's selling, uh through their new startup company. I've never bought fancy underwear, but maybe someday, maybe with like a special anti Microbia keeps the punk out out. Uh. Yeah. I think this sort of angel investing trend. It just makes me think just because you like Big Max doesn't

mean you should invest your money in McDonald's. And just because I like shopping at Costco doesn't mean I need to go out and put a lot of money where my mouth is when it comes to buying Costco stock. You can enjoy something or enjoy a product without investing

in that company. And granted I own a little bit of Costco because I own index funds, but it's one of those things where I think you want to People want to support a company they believe in or they think it has a good trajectory, but there are so many things you need to know about a company before you invest in it. That's why I avoid single stock investing. Or investing in you know, one particular company over to this one altogether. If you've dedicated your whole life to it,

somebody like Mark Cuban, it's a different story, right. But for most of our listeners who have day jobs and stuff like that, let's hit the easy button, go the diversified route, and just stay away from this investing space altogether. Yes. Uh. In speaking of investing, while Americans collectively they have over eighty billion dollars in their hs A accounts, so their health savings accounts, they aren't taking full advantage of that benefit.

And unfortunately, I think it's because it's called a health savings account. They make you think, like, mentally, what do you picture when you think of a health savings account? You think, Oh, I'm gonna put this money into that account and I'm gonna save it. It's just gonna sit there. But that is not what we want you to do.

This is a case of bad branding, dude, Totally. It should be what HI account, health investing account because only seven percent of folks are actually investing the money that they put into an hs A that they have available to them. And this is according to the Employee Benefit Research Institute. And that's understandable because no one you know, talks about what a great investing vehicle hs as can be. I mean, we talk about it here, but it's not

often something you hear about. We actually did a deep dive back in episode one oh five, So go back and check that one out. If you're putting money into an hs A and you're not in investing those funds, he wants you to use your hs A to its full potential. Uh. It really is the best stealth retirement

account out there. And I've also heard some folks to say, well, make sure that you set aside enough in cash to be able to at least cover your health deductible but even still like you should have enough money in your

emergency fund to cover any unforeseen health costs. In fact, is too you can count on the fact that you're probably going to go to the doctor at least once or twice during the year, So just set up another account within your savings buckets or however you have your budget set up, but have an out of pocket medical costs category that you can count on when it comes

to things like deductibles or out of pocket costs. Yeah, and that's really because you want to maximize the H s A. You want to maximize that account because it has so many benefits that, like you said, Matt, kind of go unnoticed or they don't get talked about. And so yeah, if you do have an H s A and you haven't started investing inside of that, go listen to episode one oh five because it's gonna gonna be

really eye opening. I think for how much power that HS say holds, it's almost like having a Lamborghini and then putting a governor on it to max it out the speed at like twenty um there. The H s A s are just so much more powerful than the way that they're being used by most people these days. Totally,

all right, let's let's keep moving mat. There was an interesting article on Jelopni's website this week about how awful car Loans can be and uh sadly actually this article was in slideshow formats, which is is that the worst? The worst? It's like AutoPlay videos and slideshow format like get those out of my face? Please? Can we be

doing those general pop ups honestly? Now, like the cookie pop ups kind of drive me crazy now, like I don't care, just like take my info, Like, I know that I'm giving up a certain amount of privacy by going to the site. Don't interrupt me, right, Yeah, So gelot Make detailed actually the gorgous details of the worst car loans that their readers have experienced or that they've seen friends take on. And it was kind of all

inducing to see how bad car loans can get. And you might be asking, well, what was the worst element that many of these car loans had in common? Trading in another car that someone was upside down on in order to purchase another new vehicle. That was kind of the common denominator mat for a lot of these worst

car loans. You know, some folks actually rolled multiple vehicles, like not just one, like two or three with negative equity into a new loan on another vehicle, which of course landed them not just like um greatly inflated loan amount, but also a much much higher interest rate because there's a lot more risk to the lender. We're really not

fans of car loans at all. We'd prefer to see our listeners never ever have one, but definitely these kinds of loans where you still have a loan on the car that you currently own and you're trying to get another one and you're rolling it into another loan. That's like the worst case scenario. Yeah, that probably goes to explain why car loan debt has doubled over the past decade, which is an insane stat But one other big pitfall was folks buying their vehicle from a buy here, pay

here a lot. Those are the absolute worst places on earth to purchase a vehicle you. Like you mentioned, ideally, listeners aren't going to finance their cars at all, and you can do that when you have a more affordable vehicle. It's it's not too difficult to find something that's reliable in the five to ten thousand dollar range, uh, if

you're able to search diligently. But you know, if you are going to take out a loan in order to buy a vehicle, make sure that you do shop around for that loan with your local credit union kind of bring it full circle again. Like we said, oftentimes they offer the best rates, and it also might be worth checking online lenders as well because those rates are getting more competitive. The other thing too, don't extend the loan

terms in order to buy a more expensive car. If you can't afford the monthly payments on a thirty six to you know, forty two months loan, then you can't afford that vehicle. Look at something a little more affordable. And the problem is when people take out an eight year loan and then four or five years into it, they're like, I want something new or this this this car is giving me issues. Now it's time to trade it in and get something else, But you still owe

money on it. That put puts you like behind the eight ball in a big way when it comes to your finances and the monthly payment you're gonna have on that loan as well. By the it is important to note that cars are going back to becoming depreciating assets. For a hot minute, Matt, basically for the last year that the prices of used cars have been going up and up, and uh, it appears that that was a

blip that is now kind of subsiding. The prices of used cars aren't going to go back to normal levels overnight, but it is a good sign that cars are back to being a depreciating asset. That was kind of one of those mind blowing things for I don't know, for us, I think, and for everybody out there, it's like, how in the world are used car prices skyrocketing to this level. Obviously, the supply chain issues, the chip issues that are put

into new cars that are being built. There were so many different things impacting this market and driving prices higher. But it's good to see that correction kind of starting to happen. Yeah. So if you were maybe hanging onto a used car thinking that like, hey, if I hang onto it for like one more month, maybe I'll see its value increase, chances are that is not going to be the case. I feel like we're again like at the top of a roller coaster and you're we're only

going to see the prices continue to drop from here. Yeah, we're always in favor of you getting rid of one of those extra cars that's in your life. So yeah, Matt's right, sell now if you if you've gotten next one you're hanging onto. Matt. Let's talk about bidding wars in the rental market. Is that a thing? It turns out it is. It's actually happening. We've seen obviously a lot of headlines about bidding wars when it comes to buying a house, but it's also happening now in the

especially single family home rental market. An article in CNBC this week reflected exactly what I actually recently saw when I listed one of my rental properties for homes in some of the hotter areas of the country. Some landlords are receiving an abnormally high number of applications, Matt, I had nearly forty people reach out in less than forty eight hours when I listed my little tiny Atlanta in

town house recently. And uh, yeah, it turns out that high demand is increasing the average price of rent to at a pace of almost seven were cent annually. First rent price increases last year, and it's even leading to bidding wars for some of these properties. Right, So if you're a renter, it's important to know that prices are going up, that it's a competitive environment in certain locations,

and that could affect your ability to find affordable housing. Yeah, and hopefully you're several months away from having to find a new place, because that should give you enough time to turn your credit score around if maybe it's in the dumps. You want to make sure that your credit score is in a good spot, typically at least seven forty, if not a bit higher, because This is something that

laylords are going to be looking at pretty closely. They're gonna want to see how responsible you are with your payments pretty closely. If there's a you know, such a large pool of applicants, and another sort of tactic, if you have enough cash on hand, even consider offering to

put down a larger security deposit. Just essentially, anything you can do to stand out and make yourself a more attractive tenant can help good communication, that's always a plus, But you might even need to get a little more creative, like offering to take care of the lawn. If the laylord says, hey, you know, you know outside lawn maintenance that's included, just like, well, hey, what if I take care of that for you? You don't have to worry

about it. Look ways to kind of sweeten the deal for the landlord to what to pick you over the

other thirty nine people who are applying for that same house. Yeah, and depending on where you live, you're gonna know, you're gonna know, you're gonna see you can you can look on Zillo and see like how many hits some of these properties are getting, and it's like they've got the little yeah popularity chart built into it, so it's like, okay, cool, if this is a popular spot or you know if if the if it's priced, well you've gotta be ready to move. And it's funny, Matt like here, I always

tell people this. I'm not trying to pressure them to to sign on the spot or anything like that, but I'm like, they're like, well, I'll get back to you in a couple of days, and I'm like, Okay, they're gonna be there, and I'm just letting you know, like somebody usually asks to apply, uh, and that process moves quickly and they're usually ready to sign by that day

or the next day. So um, it's just one of those things too where you have to know what you want and you have to be willing to kind of jump on it, to pounce when the right you know, rental house comes along that you want to stay in. So all right, that's gonna do it for this episode for folks who want the show not for this episode links to some of the articles that we mentioned on this Friday flight, you can go to our website at how to money dot com. That's right. We hope everyone

has a fantastic weekend. We will see you back here on Monday with that interview with Lauren Williams and Joel Until next time, Best friends Out, Best Friends Out,