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Good Morning, It's the Bill Handle Show.
He is on vacation, Wayne resnick in And normally we love to talk to Joel Larsgard, who hosts How to Money right here on KFI on a Thursday, and we will talk to him on a Thursday, but he was kind enough to come on today because it's the last shopping day before Christmas, and you betcha there's a lot of financial considerations.
So Joel, welcome two days early.
Hey, thanks for having me. Wayne.
So I guess let's get into this.
This is the last shopping day before Christmas, and what do you know about the consumer feelings this year in terms of how their finances are and therefore how much they might be spending on presents and compare that to the reality of the economic situation in this country.
Yeah, I mean, I think the stakes are high when it comes to how people feel about what they need to spend in order to have a good Christmas. And I think it's important for when you look at the statistics, it's kind of unnerving the amount of people that are still paying off what they bought last Christmas, like they still haven't caught up to their overspending from last year,
and maybe they're doing the same this year. Something I get a third of people are still paying off credit card debt from twenty twenty three, and NERDWHILET just did a recent survey and they found that ten percent of consumers are planning on taking money out of their emergency fund to buy gifts, and that they even more like something more people are going to instead of paying bills that they have due, they're going to spend that on
Christmas presents. And so I think we're in a tough situation, or at least some people find themselves in a tough situation. Instead of of having the hard conversation which probably should have been had weeks ago, it's tough to have that conversation now. But instead of doing that with friends and family and talking about financial limitations, people are spending money they don't have.
So the thing we're used to and hearing about, we've been hearing about for years and years and years are people who run up their credit cards to buy things that maybe they can't afford to buy otherwise. And now they have big credit card debt, But you're talking about something different now these people are not necessarily adding to their debt load. Instead they are taking from, or possibly wiping out, any contingency fund for an emergency.
Yeah, it's a bit of both, right.
And the other thing is now they're even more unique ways to pay for the items you want. There's buy now, pay later, which I think people are more reliant on this year than ever before. It's kind of become we've normalized it so and people are instead of buying something put on a credit card and not paying it off, they're buying more things than they otherwise would because it just seems less egregious to do it via buy now,
pay later, to just pay it in installments. But the truth is then you spend even more than the otherwise would. There's data about that about how big the shopping carts balloon when you don't have to pay for it all in one lump sum. So people are more reliant on that than ever before too. And the more reliant you become on future funds to pay for current purchases, the worse of a financial position you're putting yourself, and you're
putting yourself behind the eight ball. So I guess yeah, since we're basically at we're almost to Christmas, I just want people to realize and to note you don't feel like you have to go out and overdo it and overspend, and in fact, if you feel like you have done that, you might want to save some of those presents, hold them back, make some returns.
And I swear it's not going to ruin your Christmas.
The Christmas season is about so much more, even though in this country we've made it incredibly consumeristic, there's so many other beautiful things about this season. And I know it can feel demoralizing, or it can make you maybe feel like you're not enough, you're not living up to expectations of your kids, or your spouse or the rest of your family. But I think it's really important to not harm your finances for years to come based on one special day.
So you already brought up one thing I wanted to ask you about. I'm fascinated with the psychology of this phenomenon, and what I can't tell is this. You just talked about people feeling pressure in essence, performance anxiety. If you will, it's about giving enough presence Okay, so I thought, well, one reason you would drain your emergency fund to buy presence is because you feel a big obligation to do it, which would mean and this is where I need you
as the reality test. That way of thinking is basically, these are people who who know that they're doing something financially irresponsible. They know it, They are well aware there will be consequences, or at least it's likely there will be consequences, but they do it anyway because of the pressure that they feel.
Is that the idea.
I definitely think there are a lot of people that fall into that camp where they're doing it because it feels like, well, that's how you show people that you love them on the holidays, or they normalize a certain amount of spending for the holidays, they see other people do it. The commercialization of Christmas has kind of gotten to them, and they bought into it, and I totally
understand that. In fact, there was another article I read the other day just about how people feel there's a higher percentage of Americans now been shopping and they feel
like they're addicted to shopping, and that's disconcerting. Also, I think all of the technological tools and the algorithms at the disposal of TikTok and Instagram and Amazon are kind of fueling us towards spending more and normalizing it, and so we feel compelled to spend more, even if we deep down we know that it's it's not best for us and that we're digging ourselves a deeper hole.
So that's one aspect.
But here's a different kind of person who might be taking all the money out of their emergency fund and buying presents. And this would be the person who doesn't think they're doing anything financially irresponsible because they have such optimism about how they will be able to replace that
money soon enough. That would that be the rose the rose colored glasses people who are saying, look, I can afford to do it now, because I don't know what they're thinking specifically, I'm going to get a raise, I'm going to get a better job, inflation's going to go away, whatever it is, but I'm going to just replace that money and three months from now we'll be back to where we were anyway.
Yeah, I definitely think there's some of that as well, and that's why you see people in January oftentimes try to cut back and push more money towards paying off that debt that they accrued. But I also think that that's probably not a great way to go, is to dig yourself in a hole and hope that you can fill that hole in in the coming months. I guess that would be because you just never know what other
emergencies are going to come along. And that's really what like when I talk about people tapping their emergency fund to pay for gifts, that the emergency fund is not for that, right, it is for the unforeseen unexpected. And that's why, at least for like twenty twenty five Christmas, I want people to start to think about starting something called a sinking fund, where you're funneling money in every
single month. Let's say you're like, I want to spend you know, eight hundred dollars next Christmas on gifts for my friends and family. Then I'm going to start setting aside seventy bucks a month, every single month.
In preparation for that.
These are things that it's I know it's not easy to have that foresight, like, but it's really crucial if you want to have if you don't want to, if you want to kind of avoid that future come next year to start planning about that for that early. But yeah, I think there are some people who basically just like don't think it's as bad as it actually is, or maybe they're assuming that everything is going to go just fine in the first few months of the year and
they'll dig themselves out quickly. But that just might not be the case because you never know what's coming down the pike.
All right, Joel, thank you so much.
We're going to talk to you again Thursday at the normal time about some other personal finance stuff, and in the meantime, check out the podcasts of your show How to Money and listen to it live when it airs. You're on Sunday noon to too.
Sounds good, Thanks Wayne.
There was there was an implied question mark at the end of that sentence, even though it didn't sound like it.
Yes, and of course you're on social media at How to Money, Joel, Joel.
Lars Guard, everybody, Thank you sir, talk to you on Thursday.
Of course. Sounds good, looking forward to it, all right.
Do you know about Nike ID. This is where you can completely customize the shoe and you get a personal ID for the shoe that can be any combination of letters and numbers when that had when Nike came out with that. This is not an ad for Nike. When they came out with Nike ID. Some people will buy shoes, make them for themselves, and others will customize a shoe.
As a present.
Now, nobody thought when they came out with this that it would reveal deep insights about human psychology and gift giving. But here comes a study from the journal Psychology and Marketing, and it doesn't have to do specifically with Nike shoes. It has to do with giving somebody any kind of personalized gift and what that does in their brain. And the bottom line, I'll just flip all the cards and
then I'll tell you how they found out. When you give somebody a personalized gift, this could be a journal with their name inscribed on it. It could be a chocolate bar. There are places where you can have a chocolate bar made with the exact combination of flavors that you specify. Anything like that, they appreciate it more and specifically, it causes something called simulation.
Emotional simulation.
Simulation theory is that people can recreate mentally other people's experiences and emotions. You know, how your uncle the sports fan and when his team wins, he acts like he was in the game because he can mirror how the team must feel. Or you've seen the parent and their kid was in the school play, and oh my god, they pride about the kid in the school play because they are mirroring how the kid feels about doing a
good job in the school play. So when you give somebody a personalized gifts, you usually feel really.
Good about it.
You feel a sense of accomplishment that you made a specialized gift or bought I mean, you didn't necessarily make it. And then the receiver taps into your sense of pride about how you handled giving them the gift. And they did four different studies. One of them they took they had people give people a piece of personalized clothing, and they also had people given regular clothing. And then they go, hey,
look at all this stuff you have. You have this shirt, you have this shirt that's got your name on it. Tell us what you would change about all these things. And sure enough, they had very few ideas for what they would change about the personalized gift. They had a lot more ideas about what they would change on the non personalized gift. That was one of the experiments they did. The next thing is they compared They showed videos to people.
One of them is making a custom T shirt and the other one is a video.
This talk about a boring video.
It's a video of somebody going online and browsing for a T shirt and just selecting a generic T shirt to buy. And even when they took into account how long was spent doing these things customized presence more appreciation. See, it used to be the amount of time that you spent selecting the gift. We thought, oh, that really shows you care. If you spent an hour thinking about what could I get this person, that meant you really cared. But now it turns out you don't have to spend
a lot of time. You can just go to things remembered and go give me that and put that on it. You didn't spend any time at all. But it's personalized and the person that you've given to it's gonna love it.
So that should reshape.
I guess if you're looking to get maximum response and maximum good feels from your gifts, really, I guess think about personalizing or customizing the gift, which they expect to grow to a thirteen billion dollar industry in the next three years, the customized gift market. So that's probably the way it goes. Now for me, here's the way I consider it. Give me cash, and I feel like it's already personalized because each bill has a unique serial number on it.
Good enough. Should cops be able to lie? Okay? Yes? But also no, here's the yes.
Let's get this out of the way as an example of how cops absolutely one hundred percent should be able to lie and must be able to lie. And that is the classic are you a cop? You have to tell me if you are. First of all, that is not true, and it's a good thing it's not true because there are all kinds of investigations that could never, ever, never happen if it was as simple as saying, are you a cop?
And that's the end of the investigation.
Into your drug dealing or your sex trafficking, or you're anything odometer rolling back, or you're dumping of illegal chemicals into the river or anything. So that's an example of yes, of course, cops should not have to tell you their cops if they're working under cover.
But what about.
This, This is the story of time Thomas Perez times two, Thomas Perez and Thomas Perez J. Thomas Perez went missing and for some reason, the Fontana police decided that Thomas Perez J. Was a was a suspect into possible bad behavior. And even they decided for themselves that he had killed his father. So they bring him in for an interrogation for hours hours, and of course he said, I didn't do anything, and cops don't believe that. And then they
told him that his father was dead. They told him about his father's body on the slab in the morgue, and then they kept interrogating him for hours and hours, and finally he admitted that he had killed his father. Then he tried to hang himself. Luckily it was not successful. But guess what, he didn't kill his father. Guess what, nobody killed his father. His father was alive. His father
was found alive and well. Several hours after this young man tried to hang himself after being coerced into falsely confessing to killing his father, probably honestly to a great extent, just because they had him there for hours and hours and they wouldn't let up. But telling him his dad
was dead definitely pushed him over the edge. Now, that's perfectly legal for cops to tell you your father's dead when they have no reason to think he's dead, and in fact he's not dead, and it is allowed, and it is allowed as part of a technique that has been in place for quite some time called the Read technique.
And the Read technique of interrogation was put together by a guy named John Reid, who was a Chicago cop and a polygraph expert, which is now we now know being a polygraph expert is like being an expert in astrology. But he was, and another guy, fred Enbow I believe his name was, he was a criminologist. Anyway, they put together this the Read technique where.
And it's not as bad.
Well, hold on, I'll tell you what it's not as bad as in a second. So it has three steps. The first two are totally good, gather evidence, talk to the people involved in a non confrontational interview designed only to get information. But then step three, anyone you think is guilty, boom, get them, interrogate the but Jesus out of them. And one of the things you're allowed to do is lie. Now, you can't lie about anything you want.
You can't lie. For example, if you say we have your DNA on the body, you can and you don't. You can't say that. But this kind of thing like your father's dead, your friend has already said that you did it totally fine. And therefore the read technique causes quite constantly false confessions.
Now I said it wasn't as bad as something I guess it's not as bad as what it replaced. You know, the.
Phrase give them the third degree, they gave them the third degree, or don't give me the third degree? That actually comes from a police tactic. In the early parts of the twentieth century. Police officers would routinely beat the hell out of suspects, not let them have food, water the bathroom, not let them sleep, keep them in confinement for days at a time.
It was illegal.
It was illegal, but it happened a lot, and as you might imagine, a lot of people confessed to things just to make it stopf I Am six forty Live everywhere on the iHeartRadio app.
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