Pod Insights The Clark Howard Podcast 02.03.25 The Net Worth Gap For Renters Vs Buyers / Valentine Diamond Deals About this episode In today’s episode - Clark has new data on renting vs. buying in terms of long-term net worth and how renters can close the gap. Also, With Valentine’s Day ahead, Clark has good news if you are in the market for jewelry, specifically diamonds. Changes in the marketplace mean deals. Housing: Bridging The Net Worth Gap: Segment 1 Ask Clark: Segment 2 The Diamond Marketplace: Segment 3 Ask Clark: Segment 4 Mentioned on the show: The median renter in America has a net worth of $10,400. The median homeowner’s net worth is $400,000 Should You Take Your Pension in a Lump Sum or Monthly Payments? What Is a Fiduciary Financial Advisor and Do I Need One? Best Financial Advisors De Beers amasses biggest diamond stockpile since 2008 financial crisis Verizon administrative settlement payments are nowhere near $100. Here's why Should You Respond to Class-Action Lawsuits? How To Sell, Cancel or Get Rid of Your Timeshare Why Vacation Clubs Are Even Worse Than Timeshares Clark.com resources Episode transcripts Community. Clark.com / Ask Clark Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 0:00 Speaker 00 This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.
0:31 Speaker 01 Low energy, unfocused, foggy? You might be dehydrated. Whether it's hot yoga, over 100 degree weather, or too much sun. Gator Light, with a specialized blend of five electrolytes, was scientifically designed to help move fluids into the body faster for rapid rehydration. Shop now at retailers nationwide. Gator Light hydrates faster than water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist.
1:04 Speaker 02 It's my pleasure to welcome you here to the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. And remember that when you're trying to make a decision affecting your wallet, we've got great resources, content, advice for you at Clark.com. I am so proud of our hardworking team that all they do is try to give you advice that will empower you to act in your own best interests for your wallet.
1:44 Speaker 02 In today's episode, I got a counterpoint to something I've talked about recently, about renting versus buying. I've talked twice recently about the advantage of renting right now instead of buying a home. And what matters over the long term? I want to give a different perspective. Also, Valentine's Day is just around the corner. I want to share some great news for you if you're in the jewelry market, specifically diamonds. And I want to share with you a deal I got recently for my wife for her birthday, which she is beyond ecstatic about.
2:30 Speaker 02 So this is not great, what I'm going to tell you. There's new data out that shows what kind of money people have as a net worth, who are renters versus people that own a home. These numbers are really uncomfortable for me to share with you because specifically lately, I've talked about the difficulty for a first time home buyer buying a home, and how right now renting is so very much cheaper than buying a home.
3:11 Speaker 02 But when you look at people that roughly more than a third of people rent, the other 60, low 60% own or are buying what they live in. The average renter in the United States has roughly 10 grand of net worth. The average homeowner in the United States has a net worth of near $400,000. Forty times as much. So where is that gap? Part of it is that overall renters have a lower income overall than people buying a home.
3:54 Speaker 02 But that doesn't account for this full gap. What accounts for this gap in part is that buying a house is a forced method of saving. Not the most efficient method of saving, but it's a forced method of saving. Because all through the years, you're building up equity. Most people on a 30-year mortgage. So very slowly at first, in later years quicker, you're building up equity in your life. You're building up net worth in your life. Doesn't happen right away, it's very gradual.
4:36 Speaker 02 And real estate has a lower net return over time. The averages show pretty clearly than investing in companies. So if you look at returns from people going into simple retirement plans at work or doing your own Roth IRA and you're in a target retirement fund, over the years, those are going to have much higher returns than what you earn from a house. But here's the thing, you don't pay your mortgage, you don't stay. So the mortgage overwhelmingly, people get that paid every month. It forces you to save money for your future as inflation carries the value of the home
5:20 Speaker 02 higher, your payments over the long term bring the balance lower. That difference is the equity, the net worth you have. So there are a lot of people for very practical reasons, not because of what's going on with the housing market right now, who it's better in their lives to rent. Maybe they're not settled in a particular place in the country. And so they're renting, they're going to move somewhere else, whatever. Here's the hard part, you close this gap for people of equal incomes when you methodically
6:00 Speaker 02 save money for your future in a investment plan at work, a retirement plan at work, in your own Roth IRA. That's the key that is missing for so many people. That if you look at middle-class Americans, there tends to be very little money saved in retirement accounts, investment accounts, even in regular savings. The wealth that they develop over time.
6:33 Speaker 02 And most of the middle class is from that forced savings in a home. What I'm saying to you is know that's consumer behavior. That's our behavior as humans and you've got to swim against that tide. And if you need to develop wealth, which is great to have, it means you develop that automatic habit. Just as somebody pays a mortgage every month, you do automatic deposits into the retirement plan at work or into your own Roth IRA. You create what's the equivalent in your own life of automatic wealth building like somebody has with a mortgage. So it doesn't have to be owning a home.
7:17 Speaker 02 But for many people, that's the easiest, most direct path over the long haul to build wealth. Otherwise, you've got to make yourself do it.
7:29 Speaker 03 Okay, we'll go to questions. This one's from Jana in Georgia. I understand how Clark feels about extended warranties and maintenance agreements. Does he recommend a service slash maintenance agreement on HVAC units? Mine has just increased to $855 annually.
7:44 Speaker 02 Yeah, this is a huge profit center. Let me tell you what's been going on around the country with, let's say you've been with a heating and air conditioning company for a long time for maintaining your heating and cooling in your house and the systems in your house. A lot of these local heating and air conditioning companies have been bought up by private equity. And what the private equity owners are doing is they are paying for the purchase by running up the cost of these maintenance agreements and by forcing the repair people to become salespeople.
8:25 Speaker 02 And so they may, depending on how much pressure they're under, they may find that they're being pushed to recommend a repair you don't need, a replacement you don't need or whatever. This is a big problem in the heating and air conditioning business. So first, back to your initial question. Heating and air conditioning service contract is different than buying an extended warranty at an electronics store. This is something that you need to maintain and truth be told,
9:04 Speaker 02 we forget to do that. So having a relationship ongoing with a heating and air conditioning contractor you trust is great. But what's important is you want to know if suddenly the annual fee went from 400 to 800, was there an ownership change? And you'll find often that there was. And so you may need to shop for a new HVAC company because you're in harm's way now with a private equity owner. Nothing good happens to you with a heating and air conditioning company. Once it changes from local ownership, family ownership to private equity.
9:49 Speaker 03 And I always keep filters in my home that I buy separately. So I don't have to buy them from them when they come to change, you know, changing the filters is really easy to do. Just as an aside, that saved me some money. Gary in Montana says, I have a large pension from the University of California, which I want to receive as a lump sum distribution. The only way to receive it is as a check through the mail. They send it via regular US mail and it's not certified. I'm very nervous about a check in the mail for a large amount. Is there any way to get a wire transfer? They are also not set up for me to pick it up at their office.
10:23 Speaker 02 Okay, first of all, that's crazy that you're talking about the University of California system, a huge operation, and they're still sending a pension distribution by check in 2025? Are they kidding? As for you?
10:46 Speaker 02 You don't have the worry or the risk they do. So the only thing you would face is a little delay if the check gets stolen in the mail. Gary, I'm going to go back to something else, though. You're taking the lump sum instead of taking a payment for life. Before you execute that decision, unless it's irrevocable and you've already done it, I'd love for you to sit down with a fee-only financial planner, not one that wants to manage your assets, but one who you pay a fee for his or her advice. We have organizations you can get referral to at Clark.com
11:29 Speaker 02 and see whether the math of that pension is better for you to receive it as a monthly check or better for you to receive it as a lump sum. But it is kind of lame that they would send it with a check in the mail for what would be a very, very large amount of money. But know that you don't bear the risk. The state of California does.
11:54 Speaker 03 V in Texas says, I was T-boned in an auto accident after shortly returning from deployment.
12:00 Speaker 02 Oh, my goodness.
12:01 Speaker 03 Yeah.
12:01 Speaker 02 You're on deployment, fighting for our country, putting your life on the line. You come back and then you're T-boned? Well, thank you for your service to our nation.
12:14 Speaker 03 Luckily, I stopped and took pictures and it was obvious I was not at fault. I have USA Insurance and I did inquire with them after the accident. From the pictures, they confirmed I was not at fault and they would take care of me or I can file with the person who hit me, their insurance. And then they put the insurance company name.
12:31 Speaker 02 You did it exactly right down the line.
12:34 Speaker 03 I inquired with the other insurance company and for the most part, they took care of me after a much increased supplemental claim. Their initial estimate utilizing an app was very low. I have a 2022 Chevy Bolt, so I was very limited taking it to a shop that was certified Chevy shop.
12:51 Speaker 02 Sure.
12:51 Speaker 03 The repairs were not perfect on a bright white car, but it was good enough. I tried. To file diminished value claim toward the end, but they would not even entertain it, stating that the car was fixed at a shop of my choice and they wouldn't do anything else.
13:05 Speaker 02 That has nothing to do with diminished value, by the way.
13:08 Speaker 03 I'm thinking of filing a BBV complaint. Anything else you would suggest? My husband and I are in the air force and have been in for almost 20 years. I'm an immigrant and we are both very grateful to serve in the world's greatest air force. Thank you and keep being our financial and life mentor.
13:24 Speaker 02 Well, V, thank you and you say you're in Texas now. So, the Texas Department of Insurance is who you need to call to see if law in the state of Texas gives you a right to seek diminished value. Certain states diminished value is either something that has been instituted through the court system or through legislative process. No idea whether diminished value is a standard and customary practice with insurance or is legally required in the state of Texas.
14:06 Speaker 02 I would start there and let's see if there is a valid, normal claim for diminished value in the state of Texas because your vehicle, after being T-boned and having major repairs to it, will never have the same value as it had before, even after it's repaired. And the idea of insurance is you're supposed to be made whole. You're not without a reasonable payment for the loss in value in your vehicle and that's why in many states diminished value is part of the claims process. But if it's not in Texas, then they get away with it and you do not receive the amount
14:51 Speaker 02 of money you should and you were harmed from the accident you didn't cause. So, start there, let's see what you find out and then you proceed. The Better Business Bureau in a circumstance like this will not be of help. And coming up ahead, I want to tell you, the diamond market is going two ways at once.
15:17 Speaker 02 And we need to talk about it because with Valentine's Day coming up, people's birthdays, things like that, there's stuff you gotta know.
15:27 Speaker 00 This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.
15:58 Speaker 04 Low energy, unfocused, foggy? You might be dehydrated. Gatorade Zero powders have been scientifically designed to help improve hydration balance in the body. With a clinically proven electrolyte blend and no artificial colors or flavors, great tasting hydration no matter where you're going. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist.
16:26 Speaker 05 Now at Kroger, your points add up to more ways to save every trip. Use them your way to take dollars off groceries at checkout or save at the pump. You can even save up to $35 on your next fill-up. Same points, more choices. And with low prices on fresh, quality food, plus digital and personalized offers tailored to how you shop, your dollar goes further. Redeem your points online or in the app. Kroger, fresh for everyone. Restrictions apply. See site or store for details.
16:57 Speaker 06 We just moved into our new house and I didn't realize just how close we were to the neighbors. That's when my friend told me about blinds.com. Blinds.com isn't a medication, but it can improve how you feel about your home.
17:09 Speaker 04 Customers who shop at blinds.com experience excellent customer service from consultation to installation. Side effects include increased privacy and better sleep. Talk to your partner today and see if blinds.com is right for you.
17:21 Speaker 07 Shop Black Friday all month long at blinds.com. Don't miss huge deals dropping every week.
17:27 Speaker 02 If you're looking at buying your sweetheart a diamond of any type, it could be, it could be an engagement ring, it could be a necklace, it could be a bracelet, it could be earrings, whatever. You've got to understand the changes going on in the diamond marketplace and nowhere more around the world than in the United States. De Beers, which is the biggest player in the diamond market, is sitting with a very, very large unsold inventory of traditional dug out of the earth diamonds. According to the Financial Times of London, they're sitting right now with $2 billion
18:11 Speaker 02 worth of diamonds that they as a wholesaler, cartel type organization, can't get anybody to buy in the diamond business. And the reason is that consumers, one by one, are seeing the much better deals on lab diamonds than on dug out of the earth diamonds. Chemically identical and the lab diamonds, because the production of lab diamonds is skyrocketing around the world and the cost of manufacturing a lab diamond has fallen
18:51 Speaker 02 so much as production methods have improved, that the price gap between a dug out of the earth diamond and a lab diamond, it's like never been like this. For my wife's birthday, I bought her from one of the lab diamond sellers. Each ear is one and three quarter carat, so not quite two carat diamonds. Total weight, three and a half carats, one, three quarters each ear. They are so beautiful and so sparkling that I got her these for, oh my goodness, she's going to know, somebody tells her. It was a thousand bucks.
19:34 Speaker 02 So she's wearing them after her birthday and her mom is going crazy about these diamonds, that they're just magnificent. And so I call my father-in-law and I said, "You gotta get Martha's set of these earrings. She's just as crazy about them." He said, "Well, they were a lot of money, weren't they?" I said, "No, and I've got a referral voucher."
20:02 Speaker 03 Martha's worth it.
20:03 Speaker 02 That cuts $200 off the price. Hopefully she doesn't hear this from anybody. So she got them for, was it $880, something like that. They're just sparkling beautiful. Same week, I see from Costco, they're selling one-carat total weight diamond stud earrings, one-carat. This was three and a half. And the Costco ones were much more money for the one-carat than the lab ones for three and a half carat. I mean, the market is not equivalent anymore. And you cannot tell the difference because there's not a difference. They are chemically identical.
20:47 Speaker 02 And so you don't have to worry about, what was that stuff they used to call them?
20:52 Speaker 03 Blood diamonds? Blood diamonds, yeah.
20:54 Speaker 02 You don't have to worry that there's some war going on and an eight-year-old boy is living underground in dangerous circumstances, digging out diamonds and all that. These are made in a factory. Doesn't sound as...
21:06 Speaker 03 It could still be bad, but probably not as, I mean, horrific.
21:10 Speaker 02 No, no, the diamond manufacturing is clean-room kind of manufacturing, almost like when they make computer chips. There's no abuses I've heard of anywhere. But I just want you to know that the price difference is so extreme now that there's now ads I'm seeing during football and my TV's about to go...
21:31 Speaker 03 Dark.
21:32 Speaker 02 Dead till September, or late August if I watch the Week Zero college games. Anyway. All these ads saying, "Buy her a real diamond." I just love this, that the jewelry industry is terrified of the truth. And so now they're trying to create this perception that you're cheap and out, and you're buying somebody something inferior if you buy a lab diamond instead of a dug out of the earth diamond? No, let me tell you, these things are a deal and they look great.
22:08 Speaker 03 Duke in Georgia says, "I received a modest payment through Venmo from the Verizon administrative settlement administrator. Is this legitimate or a scam?"
22:17 Speaker 02 It's legit. The money people are receiving, you said a modest payout? I've been hearing plenty amounts because people thought from the settlement notices, they were going to get like a hundred bucks or something like that. People are getting $3, $5, whatever. Verizon was allegedly, they settled this without admitting, allegedly cheating people by having undisclosed junk fees on their monthly cellphone bill. They settled the case and so many people made claims or were eligible in the pool that the hundred dollars became a couple of dollars.
23:00 Speaker 02 So Verizon paid the settlement, the lawyers took their cut. Consumers have their money, but there was nothing in it that compelled Verizon, that I'm aware of, to stop charging hidden junk fees. So just know that with a cellphone bill, what matters isn't what they tell you the monthly bill is. It's what they're actually billing you is what counts. So the payment you're receiving is the real deal.
23:30 Speaker 03 Brent in North Carolina says, "I bought a new vehicle last month with a 4.49% loan for 48 months."
23:36 Speaker 02 That's fantastic.
23:37 Speaker 03 They didn't have a 42-month loan option from my credit union. "My savings rate from my online savings account is on its way down and likely to drop below the 4.49% very soon.
23:48 Speaker 02 Yeah.
23:49 Speaker 03 Should I pay off my auto loan when my savings rate drops below the loan rate? Is there a benefit to keeping the loan payments as is if it's not earning as much as the interest I'd pay on the auto loan? Some context: If I pay off the auto loan, I'll still have plenty of rainy day money left to last six to nine months if I needed to pay for an unexpected expense. I max up my Roth 401K, contribute heavily to my kids' 529 accounts, and a Vanguard brokerage account. My mortgage is at 2.375% with only five years left."
24:18 Speaker 02 Okay, this is a great story, Brent. What should you be doing? When interest rates do fall on savings to a point that there's a clear ongoing gap, yeah, you take that savings account money, you blow out the auto loan, you're done. Now, your auto loan at 4.49, other than one that the manufacturer's subsidizing, because yours is actually from the credit union, that's the lowest rate I've heard from anybody in a long time. The typical new vehicle buyer is going out the door with a 7% new vehicle loan. Used vehicle loans are in double digits now on average.
25:01 Speaker 02 That's a fantastic loan you've got, but if savings rates become really puny, yeah, do just what you said.
25:09 Speaker 03 Okay, Andy in Ohio says, "I recently discovered your podcast and I'm loving it as well as your website."
25:15 Speaker 02 Thank you.
25:16 Speaker 03 You're like the Consumer Reports magazine brought to life.
25:18 Speaker 02 Oh, Consumer Reports hates hearing that.
25:23 Speaker 03 On a recent episode, you were talking about how horrible timeshares are, and it really caught my attention. My sister-in-law has been a member at this big timeshare.
25:34 Speaker 02 Oh, go ahead and say it, because I've talked about them in the past.
25:36 Speaker 03 Club Wyndham for a long time, and the fees have gradually increased over time to $2,000 a month.
25:43 Speaker 02 You sure that's not a year?
25:45 Speaker 03 It's gotta be a year.
25:46 Speaker 02 Gotta be a year.
25:47 Speaker 03 It says that is not a typo. I'd never heard of anything costing that much. Who would buy this from her? She says she still has a lot of points even after using some for a trip to Hawaii recently. Her husband said to just stop paying the monthly fees and forget about it.
26:01 Speaker 02 No.
26:01 Speaker 03 What happens if she does that?
26:03 Speaker 02 Yeah, her credit will be ruined. She may get sued. You don't just walk away from paying, Andy, but I'm glad I had you say Wyndham because Wyndham is really worried about all those sites out there that are trying to get people to contact them and they scam you or they charge you all kinds of terrible fees to try to get out of your timeshare. Wyndham actually, on their website, has a thing I think they call Wyndham Cares? Is that what it's called, Krista? Yeah. Wyndham Cares. And don't know yet till you talk to them if they really do care,
26:46 Speaker 02 but they don't want people to just stop paying. They don't want people to go to these third parties. And I think it's worth hearing them out what they'll do, what the requirements would be to relieve her of her obligation on the timeshare. Now, your sister-in-law may love it. She may love having the Wyndham thing. She may hate it. So if she loves it, I wouldn't talk to her about it. But if you know she's really frustrated by it and maybe would like to get rid of it, then this is what I would recommend.
27:25 Speaker 03 I think she is frustrated because she said her husband told her to just stop paying.
27:29 Speaker 02 Well, because the fees are higher.
27:31 Speaker 03 Yeah.
27:32 Speaker 02 So then mention to them, go look at the website yourself, the Wyndham site, wyndhamdestinations.com.
27:42 Speaker 02 And then along the top, one of the last things on the right-hand side is Wyndham Cares. Click on it and let me see what propaganda they put here.
27:53 Speaker 03 What great products these are that they have to have this whole thing.
27:56 Speaker 02 Well, I mean, the timeshare thing is terrible. Here it is. Travel preferences or finances change when they do. Wyndham Cares is here to help you find a solution that works for you now and into the future. So you may be wondering what's in it for a timeshare seller like Wyndham or any of the other well-known brand names. They don't care about reputational harm. Many times what's in it for them is they get your stuff back in inventory, they turn around and sell it at retail again to somebody else. And that would be a good way potentially for an exit. Who knows if they're going to charge all kinds of ripoff fees or whatever, but at least try that first.
28:39 Speaker 02 The worst thing to do though is just stop paying, or maybe worse, worse, is to get ripped off by one of the scammers. But the thing with timeshares is I've always said like a broken record, it's not whether you love your timeshare or not, it's what happens when you don't love it anymore. They're not something you can easily dispose of. And that's what makes timeshares a defective product because they're easy to buy, but they don't have a real market to sell when you want out.
29:15 Speaker 03 And you can always rent one from people who want to get out if you really want to stay there.
29:19 Speaker 02 You can, or you can buy one from somebody where they pay you to take it over after they paid 20, $30,000 to buy it. They want out so badly, they'll pay you to take over their obligation.
29:33 Speaker 03 Then you're stuck with whatever fees happen.
29:34 Speaker 02 You are stuck with it.
29:35 Speaker 03 It's terrible.
29:35 Speaker 02 You are stuck with it, but the worst is to pay the retail for it upfront and then pay all the huge fees over time with no way to exit. At least if you get paid to take it over, you go in with your eyes open and you know you're paying all those fees, but you didn't pay anything to enter the obligation, if that's some kind of positive. But enough about timeshares.
30:04 Speaker 02 You know, this is the time of year during February ugly where people are much more susceptible to buying a timeshare. If you live in the part of the, in a part of the country with really terrible weather, winter looks like it's never going to end. And Andy, you're talking about living in Ohio where you've got that thing that looks like ceiling tiles over your head for months with the gray skies and the cold and all that. It feels like when is spring ever coming? You're more susceptible, more vulnerable to being taken in a timeshare pitch. And the thing to do is to understand just taking a vacation when you want to, where
30:45 Speaker 02 you want to go, beats owning a timeshare every day of the year. And I hope you have great, great rest of your week and today. And know all week long, we have free one-on-one advice for you from a member of the Team Clark Consumer Action Center. Something we've done since, well, this is our birthday, February of 93 is when we started providing free one-on-one advice and guidance. To get that, go to clark.com/cac. And every day, know what we're here to do for you.
31:28 Speaker 02 Give you ideas to save more, spend less, and don't ever let anybody rip you off. See you Wednesday.
31:36 Speaker 05 Now at Kroger, your points add up to more ways to save every trip. Use them your way to take dollars off groceries at checkout or save at the pump. You can even save up to $35 on your next fill-up. Same points, more choices. And with low prices on fresh, quality food, plus digital and personalized offers tailored to how you shop, your dollar goes further. Redeem your points online or in the app. Kroger, fresh for everyone. Restrictions apply. See site or store for details.
Previous 01.31.25 Warning: Vacation Rentals / Best Ways To Buy A Vehicle Next 02.04.25 Ask An Advisor With Wes Moss - DeepSeek Shockwave: What It Means for the Economy and Your Investments Page updated November 7, 2026 · transcript and summary are machine-generated
