Joe Larsgard, host of How to Money every Sunday twelve to twelve pm to two pm right here on KFI. Good Morning, Joel, Phil almost almost cuts you off. This is something that I have talked about, and we have talked about, and some people don't have any choice homeowners.
And I get this occasionally on Handle on the Law.
Homeowners are going without home insurance.
That's insane. Explain how yeah, go ahead, Well.
It's truly insane.
But I get too, like, when you look at what's happened inflation wise with insurance over the past few years, it put people between a rock and a hard place. And it's one of those things where you buy a home and you're like, oh, the great thing is you know renters, their their rent goes up year after year, my mortgage.
Stays the same.
Well, when taxes go up or when you know your insurance costs go up, your mortgage can go up, right, And and people are just experiencing sticker shock, especially in certain parts of California, when it comes to what they're paying for homeowners insurance. And so some people are saying maybe it's maybe actually just ditch it. And the truth that this dat always shocks me. Bill, I don't know if you've heard like forty percent of Americans own their home outright, they don't have a mortgage.
That always shocks me. I'm so surprised by that.
But if you are one of those people who doesn't have a mortgage, who owns their home, you certainly have the ability. There's nobody forcing you to have to carry insurance on the property. But if you do that, you're taking a huge gamble. Yeah, kid, are you going to be able to actually rebuild the house with cash or with resources that you have at your disposal without having insurance come and help you out?
Probably not.
Now, if you if you have a mortgage, you're buying insurance. There is no mortgage company on the planet that will let you not have a mortgage a home insurance well, and if.
You try, if you try to did your insurance, then the mortgage company is going to say, well, we're going to buy the insurance for you, and it's going to cost a heck of a lot more than if you had choped around in the open marketplace and gotten that insurance yourself.
And also, at least in California, if you are uninsurable or don't have insurance. You can go to the fair plan, which is only for fire insurance, which is ridiculously expensive and is limited in coverage. So I lost my home insurance because so many people did.
And I was.
It took me two and a half weeks to find insurance after my insurance lapse.
I did not have home insurance.
I own my house, did not have a mortgage, but of course I'm gonna have home insurance, come hell or high water.
Two and a half weeks, I was bear Joel. I did not.
Sleep for two and a half weeks.
It was crazy.
I ended up getting insurance which cost me exactly double and the coverage was maybe two thirds Yeah, yeah, not nearly as good and it costs me twice as much.
And that's the place that a lot of people are finding themselves in. And so I think at least one one way to one thing that can help at least some people. If you have been pretty good about building up your savings, is to increase your deductible and that can lower your premiums. So if you're like, oh my gosh, I try to keep everything the same and the premium skyrocketed, well you can if you can raise that deductible up
higher and have more skin in the game. If something were to happen to your home, then that can bring those premiums back down. And so whether that's going from a twenty five hundred dollars deductible to a five thousand dollar reductible or up to a ten thousand dollars deductible, or sometimes there's even a percentage deductible that I've been able to get on my home, And yeah, it means that something happens to my home. When like the tree
fell through my roof a couple of years ago. That's one of those things where I was like, oh man, I kind of wish I had had a lower deductible, But ultimately, over time it will save you money on those. You just have to be prepared with cash in the bank if something actually does happen then to the property.
Now, I had an insane deductible because I view insurance as catastrophic insurance.
That's it same.
Yeah, and I had a twenty five percent twenty five thousand dollars deductible, figuring God forbid it all goes up and I can always borrow twenty five thousand dollars if you know, I have land value. You can. It's it's not easy, but you can always somehow scramble twenty five thousand dollars a loan from the bank or whatever you can do.
Or your buddy Neil Savedra, he's got your back.
Right, yeah, Neil, Joe you have Neil, you have insurance?
What's you're deductible? I couldn't even my wife could. I have no idea, all right, but but I am right in line with you, guys. I feel the same way you deal with catastrophic and you suck it up if you have to to pay lower monthly.
Yeah, otherwise it's you can't afford it. And you're absolutely right. So insurance is not any fun anymore. It used to be not a lot of money. You know, hey, you buy insurance. It was not the end of the world. It was sort of the cost of doing business. Today it can be absolutely astronomical. Coming back, talk a little bit.
About unemployment, and man, you know this is statistics.
We have a four point three percent unemployment rate nationally.
It is spectacular.
It's considered full employment at four point three percent. However, there's a caveat and we'll come back with that. Back we go Joel Larsguard, who is with us from eight Day thirty Thursday, a host of how to Money Sunday twelve pm to two and his social address at how to Money.
Joel.
Joel, you talk about this insane headline in Fast Company saying that functional unemployment is near twenty five percent, and we.
All agree that's kind of nuts.
But it's all also not four point three, because this is is looking at statistics. You know, for example, the Great Depression, I think unemployment was officially pegged at twenty five percent and it was probably closer to fifty percent. All right, let's talk about what's going on and what do you mean what do they mean by functional unemployment?
Yes, so it's this study that came out from this pointy headed economic institution basically saying that what they think the true rate of unemployment is what they're calling the functional rate. It takes into account people who are not not just.
The traditional things that the.
US Labor Service is taking into account, but it's people who are have full time jobs and they're just not making enough money, like they're making under twenty five thousand dollars a year.
So they're saying, we're workaking into a.
Broader account the kinds of people who just don't have the kind of jobs that they would otherwise want to have. And so they're saying, well, hey, that the functional unemployment rate based on our statistics is something closer to twenty five percent, and that would obviously be far cry from the just over four percent rate that we're seeing the headline rate. And I think the truth lies closer to
the four percent rate, but somewhere in the middle. And that's because there is an employment statistic known as U six, which is the headline rate that we see bandied about is known as YOU three. And when you look at YOU six, you're actually measuring people who are underemployed or people who are working part time and they wish that they were working full time. So maybe they are, you know, sidelined into something that isn't making them as much as
the otherwise. And I think I think U six is a better reflection of what's going on in the labor market because U three is maybe a little overly optimistic or not taking into account people who have jobs that they otherwise they wouldn't actually want.
In reality, one.
Of the stats that when we talk about unemployment, for example, there are x number of people unemployed who are looking for jobs and they're unemployed, and there are people that just gave up because they just can't find employment. And that's right. A lot of people they're no longer unemployed. They don't exist anymore in this system, that's right, they just fall out. Well, they're still unemployed, and so you would think that would add to the numbers of people, and the stats don't tell us.
That, that's right.
Yeah, So those people then get out of the statistic pool because they gave up. Because they gave up, but it doesn't mean that they got a job. It just means that they don't count anymore as looking for a job, which is what makes the unemployment numbers a little wonky at times or a little maybe untruthful. And that's why I think U six at least does a little bit
of a better job. And this functional unemployment rate is a little ridiculous because maybe it's taking too many things into account, and so the truth does lie somewhere in the middle. The interesting thing too, is that right right now, and this is hasn't been really the case since the Great Recession, is college graduates are having harder time a harder time finding a job than they have been typically, and so their unemployment rate is higher than the average
on employment rate. So college grads are having an unemployment rate or having a harder time finding a job, and so it's bumping up higher and higher, And I think it could be difficult right when you graduate from college to figure out what you do. Do you take the first job offer that's given to you because or do you hold out for something something better that's going to
help you on your career. And the truth is, when you look at the statistics, that first job, on average has a really large impact on what you're going to earn down the road. So I think it's really important for college grads to be careful in a work environment
like this. And some college grads find, and this might sound a little counterintuitive, that in an economic cycle, if we are in a ring and recession or something like that and things are getting tougher, that going back to school, as long as you're not taking on too much debt to get that additional degree and kind of waiting it out and getting an additional degree while the recession is happening can set the them up for more success when as the economy is recovering.
Yeah, that's precisely what's happening to my daughter, Pamela. She has her degree, finish her degree in computer science. She's got a several degrees because you know, Dad pays for school. They're a five twenty nine plan, so it's much easier going to school and sitting on your ass and actually going out and working. She cannot get a job in her field, and so she's going.
Back and getting a master's degree.
She starts her master's program in computer science and she's going to specialize in cybersecurity. And so she's now unemployed or in her field that she wants.
To work in with a bachelor's degree.
And I can't wait for her to then be unemployed with a master's degree because that's going to be.
A thrill too.
It's the y app and the underemployment part is that that bothers me.
You have people with skills who should.
Be employed and they're working as a barista, or they're working at a job that they are way overqualified for and not even full time. As you pointed out, that's still considered employment as part of the statistics, and I don't think it.
Is well and people who find themselves in the absolute worst place are people who went to college, racked up a certain amount of college debt but didn't finish and get a degree, and has that has been the case, But those people, their situation has been exacerbated as the cost of college has been driven up, and so the amount of debt they've taken on has just accrued and accrued.
And then yet they'd say I'm two years into this, I'm three years into this, but I'm not going to stick it out, and they don't actually get the degree. Then they find themselves out. I've got to pay back these loads of student loan debt, but I don't have the degree to be able to get the job that's going to offer me higher pay. So that's I think the position I want people to avoid. Like the plague, that's the worst case scenario.
All right, Joel, this Sunday two to twelve to twelve to two, and always find I'm listening to you.
We'll catch you over the weekend. Take care sounds good.
Thanks Bill,