Pod Insights The Clark Howard Podcast 12.16.24 SAVE MORE With DIY Repairs / Housing Market Update About this episode You CAN DIY - by learning to fix things, even on your own car! Believe it or not, even Clark has been able to do this! Also today, a housing market update including new vs used homes, where people are buying now and why. Online DIY Repairs: Segment 1 Ask Clark: Segment 2 Moving To Satellite Communities: Segment 3 Ask Clark: Segment 4 Mentioned on the show: WSJ: Would You Fix Your Own Car? These Amateurs Are Trying It. Clark,com - Buying Tires Best Renters Insurance Companies and Ones To Avoid 6 Best Background Check Services Is a HELOC a Good Idea? The Simple Answer What Are Index Funds? / What Is an ETF? Target Date Funds: Clark's Favorite Retirement Investment Clark.com resources Episode transcripts Community. Clark.com Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Lenspricer.com Learn more about your ad choices. Visit megaphone.fm/adchoices
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0:27 Speaker 01 Your sausage McMuffin with egg didn't change, your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just $5. Only at McDonald's for a limited time.
0:40 Speaker 02 Pricing participation may vary. Promotion pricing may be lower than meal pricing.
0:47 Speaker 03 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 so you make better financial decisions in your life. Boy, I love the topic I'm going to talk about straight ahead. Learning to fix things around your home, even things on your car on your own. Good idea, bad idea, in between. And later, I got an update on the housing market and some interesting info on where so many of us are moving now to save money.
1:30 Speaker 03 Speaking of saving money, my all-time favorite car was a Scion XB, the original Scion XB. Got it in 2005 as a used vehicle, had it nine years. Every time I see one go by now, whoever's with me says, "I know, I know."
1:52 Speaker 03 Scion XB, I loved that thing. But Scion was a youth oriented discount brand of Toyota and they couldn't make it work in the marketplace. So, no more Scions. But this car that I paid $10,700 for, one year old, wow, I loved that thing. But there was one thing about the Scion. There was a mistake that Toyota made in design or manufacture and the back hatch, the handle for it would break off. So if you see them in a parking lot, you'll see how often people take duct tape and duct
2:36 Speaker 03 tape them back on. Well, that's what mine was, but then I wanted to sell it. And I knew that having that back hatch duct taped was not a good idea, that handle. So a friend and I went on YouTube and watched videos of how to repair them because this hatch repair at a Toyota dealer was almost $1,000. And for $35, following the YouTube video, my friend and I were able to repair it like new, probably better than it was manufactured originally by Toyota. That's my biggest victory ever with a YouTube video.
3:20 Speaker 03 But I use YouTube videos and searching for information, it's not necessarily a video, but you know, I'll do a search online. A lot of times to avoid really crazy stuff, I'll do a search on DuckDuckGo instead of doing a Google search to get results that I feel more comfortable with. But there's so many. Little things that cost so much money to have like a car dealer service center do, or have somebody come to your home to fix a lock. I had a lock that broke in the home. And this is the kind of thing that, I'm not very handy, just so you know, I'm pretty pitiful
4:04 Speaker 03 at that. And this is, people who are handy, it's gonna be like, really Clark? Really? You're proud that you did this? Well, this is one of those locks that has a combination to get in and that kind of thing. And it was done. And so I was able to remove that one, bought a new one, and was having trouble installing it. Apparently, I wasn't the only one. And on YouTube, I was able to find a video that said, say, say to do this, but do this. And I was able to get it in. It's been working now for three years. So, there are a lot of things that, that may stretch too far where we're gonna make the plumber
4:46 Speaker 03 rich, is an example. When we decide we can do that little plumbing job ourselves, next thing you know, you got a big repair that you need a plumber for. But there's so much that are little tasks that you and I, and if you watch a video on YouTube or whatever, and you're like, well, I thought I could do that, you may learn that too. Or you may realize, hey, I can save a ton doing this myself. But I'd say the funniest, and it's so lame that I'm gonna share this with you. You ever had a key fob that the battery's dying, and you can't figure out how to get in that key fob to put in a new battery?
5:30 Speaker 04 Yes.
5:31 Speaker 03 You've had that?
5:32 Speaker 04 Absolutely.
5:33 Speaker 03 What'd you do?
5:34 Speaker 04 I finally figured out. You'd look online, of course.
5:36 Speaker 03 Yeah, you look online, you watch a video. I have an older Tesla where you get an actual physical key. Those of you on the YouTube show, you see it right here, right now.
5:45 Speaker 04 It's adorable.
5:46 Speaker 03 And, well, there's just an adorable little case on it.
5:49 Speaker 04 Oh, a case for it, okay.
5:50 Speaker 03 And you'd think that changing the battery on this would be really simple. It's not. But thanks to YouTube, this is not a YouTube commercial, by the way. But it's true that people go and they post these things. I mean, it's really, really great that you're able, instead of having to go to a battery store and have them do it for you, whatever, all the money you save.
6:15 Speaker 04 All right, well, let's go to Larry in Indiana's question. He says, "My daughter had new tires installed on her 2019 Volkswagen Atlas, and her original equipment custom wheels were damaged. The store offered her a $100 credit. The wheels are scratched badly and blemished. They originally said they could use paint and touch them up. She was then told that they would contact their corporate headquarters and give back with her. The manager initially told her she had probably hit a curb. That was the wrong thing to say to her because she's a spark plug. What are her options? She's as honest as they come."
6:49 Speaker 03 Okay, so Larry, I love that your daughter stands up for herself. So with this company, never have an intermediary, "Oh, well, I'll talk to people at headquarters." No, your daughter talks to people at headquarters. And this particular tire chain, in the Consumer Reports rating of tire installers, is not at the bottom of the list, but they don't rank that high. But it is a family-owned one, and you talk to headquarters yourself. And by the way, since it is family-owned, you can look up online. You can see the name of the family members that run it. Try to contact one of the family members.
7:34 Speaker 03 Get out of the bureaucracy. And as we had an explanation last time this came up, that came in, I think it came in as Clark Stinks, from somebody at a tire center, said that they hate when people come in with fancy wheels because, you know, they get damaged. They could get damaged. So anytime, this was a suggestion that came from somebody in a tire center, always take pictures of fancy wheels before they take your car from you at the tire center so that you have proof of the condition of the wheels before new tires were put on it.
8:18 Speaker 03 Right now, Larry, your daughter's in a he said, she said kind of situation. But taking pictures, you know, tight pictures of all four wheels? Do you know how much wheels cost? Oh, fancy wheels can be in the thousands of dollars. So this is real money here. And that's why before the new tires are installed, you want those pictures. And when I say tight, I mean, full detail shots of those wheels.
8:48 Speaker 04 Daniel in Texas says, I'm 23 and about to move into my first apartment.
8:53 Speaker 03 Congratulations to you.
8:54 Speaker 04 Says, I'm a late bloomer. After living at home for so long, I know how to save more and spend less. You'll probably tell me to stay home, but I think it's time for me to spread my wings and be free. Aside from finding the best phone and internet plans, which I'll be using your site for, what are some tips you have when it comes to things like renters insurance, utility bills, extreme couponing, and avoiding apartment scams? Some tough love here is okay, since I tend to be a little loose on my spending and hard-headed. Thanks for everything you do, and I promise to put some money into that Roth IRA that I opened up two months ago.
9:28 Speaker 03 All right, Daniel, so tough love. We're going to start in reverse order. You're saving more, spending less, but at the same time, you tend to spend a little money. You opened up the Roth, fantastic. Here's what I want you to do, not some money. I want you to come up with a set amount of money you put in that Roth every month. So it becomes a regular habit, and your good intentions don't go by the wayside that you're doing that. Okay, and I love the questions you're asking. You want renters insurance. Typically, whoever you have car insurance from will also sell renters insurance. And I like a policy bought from an insurer you already know or use in your family, rather
10:12 Speaker 03 than buying whatever policy the apartment complex may try to sell you that won't be as good and will be more expensive. Utility bills, and this, this is something you don't have enough control over when you're in an apartment, because the apartment may be well-built, may not be. And so, the apartment's not going to have an automatic thermostat.
10:38 Speaker 03 You know, like a Nest or one of their competitors. So you're going to manually have to do a note by the door that you always remember when you leave to go to work, that you adjust the thermostat manually to reduce those utility bills. I mean, you do those basic things, you'll be fine. Apartment scams? There aren't that many apartment scams. There are a lot of home rental scams where someone pretends that they have an apartment for rent and they scam you out of money. That's not likely to happen with an apartment community. The great news with apartment communities, you can shop them, come up with a list of ones you're interested in, shop what they're offering online specials, and then go see
11:23 Speaker 03 them, and then you put them in competition with each other. And that's how you'll be able to save money on that apartment every single month.
11:33 Speaker 04 Caitlin in Washington says, "I had an unscrupulous renter who stopped paying rent, destroyed the rental unit, and then after I followed the legal process for eviction, sued me for tens of thousands of dollars. What can I do to protect myself from this happening again in the future, other than carefully screening renters? Is there insurance for landlords? Thanks for all you do. I've been listening since 2011 and I was just out of college."
11:57 Speaker 03 Well, Caitlin, first of all, thank you for being a long-term listener. And I think it's fantastic you have a rental property. I've had rental properties since, gosh, 1983. I love being a landlord till I have a problem with a tenant who doesn't pay, tenant that damages, tenant who skips. I've had all three of those circumstances at different times over the last 40-plus years. But other than those rare cases, don't let it sour you, it works out almost always. I'm really sorry, everything you went through with this, obviously terrible tenant, that
12:41 Speaker 03 I'm hoping you're now done with. And I'm assuming that the suit they filed was just a nuisance suit, just to try to get you to back off. And other than the loss of income, that you can just wash your hands of this one. Don't get discouraged. It is truly all about the tenants that you screen. And there are now many landlord tenant screening services for independent landlords like yourself. You can find from local real estate investor groups that might be in your area in Washington State. You can shop for those online, very easy to find.
13:25 Speaker 03 You are, you're allowed to have an application fee, just like a regular apartment complex. And charge an application fee to go with the application. So the prospective tenant is giving you information and paying for the background check that you do on them. And having decent security deposits are important when you're renting a property that you own. And I like what I call discount rent. So what I've done with my tenants over the years is I give them a small rent discount. If the rent is paid before the first day of the month.
14:09 Speaker 03 A lot of people who are really incentivized by that are going to be people that are more careful with their money anyway. And then if they don't have it paid by the fourth, on the fifth and forward, they've got penalties on the rent. So they get a slight discount paying before the first and they pay penalty on the fifth. So as long as you background and give the tenant incentive to make sure that money's in your hands every month. I think you'll find that being a landlord for the long haul is going to work just fine. Speaking of the housing market, I want to talk about something that people are doing now, buying a house. That is a real shift in the marketplace that I want to make sure you're aware of.
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15:36 Speaker 02 Pricing participation may vary. Promotion pricing may be lower than meal pricing.
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16:39 Speaker 03 The housing market is going through such odd things right now. I want to make sure that you're up to date on. Number one.
16:50 Speaker 03 The price difference between buying a used home per square foot and a new home is so, I can't think of a time in history, maybe the late 1940s, this may have been true, but I can't think of any other time. Do you know that the price of buying a new home that historically is 15 to 20% more than buying a used home today is 3% more? And in some places, absolutely the same or cheaper buying new than used. The supply of used homes for sale, although the listings have grown around the country,
17:33 Speaker 03 is much smaller in terms of what they call month's supply than new homes. So, everything is turned upside down. But there is something clear about home buyers. During COVID, people adopted in significant numbers, a new lifestyle where people were living wherever they wanted to live if they were white collar kind of workers, because they were working remotely. Today, a lot of companies have people back in the office, five days a week. Many others, three days a week. Being fully remote, not completely
18:14 Speaker 03 rare, but very unusual today. But changes happen with the mentality of people, plus this shift of people buying new homes. People are buying homes much farther out of core metro areas. What's different than what happened in 20 is people were living all the way across the country, from where the company they worked for, the office was based.
18:43 Speaker 03 That's not really happening any significant amount anymore. But what is happening now is people have decided in cities where this metro areas was historically was not a thing. People are living in what are known as satellite cities. Cause you know, you have the urban core, you have the close in suburbs and then the further out suburbs called exurbs. And now people are moving to what are known as satellite communities, which could be 50, 60 miles away from the core city. It's not unusual anymore. I'll talk to somebody and they say, well, I live blah, blah, blah. And I'm thinking, wow, and you're commuting that far.
19:26 Speaker 03 But people are making the choice to be able to have their housing dollar go further or potentially in a satellite city, community, lower taxes. They may like the quality of life, which is a term that's hard to define, but means something to different people. So it means that you're in the car a lot more and it means that the cost of transportation in your life is something you may not be budgeting appropriately for. Because even though you may be living, you know, 40, 50, 60 miles away from where you commute for work and that's working for you, you may not also budget in how much more
20:11 Speaker 03 you're paying for a fuel if you're driving a gas vehicle. You may be somebody who with how depressed the prices are of used electrics, it might be a great idea if you have a used electric vehicle for that commute. I mean, there are things, if you are going to go way out of the urban ring and you're going to live pretty far away. My middle brother, who still works full time, lives in a satellite city that's about 65 miles away from the core downtown of his metro area. And he and his wife love that. They love doing that. So it is a really valid.
20:57 Speaker 03 Housing choice, it just comes with other things you really need to think about. As far as shopping, retailers are smart and they go where the customers are. And so even if you move out to a satellite community 40, 50 miles away, and at first, there may not be a lot of stores nearby. They'll come. They come when the number of housing units being built are going up. And I was reading about, I think it was in the business journals, Savannah, Georgia, which is a coastal community of, I don't know how many hundreds, thousands of people,
21:42 Speaker 03 that a developer is building 25 miles from central Savannah, they're building 2,500 homes, 2,500 in an area that used to be a rural community. And the demand is apparently there and they're building that far away from not a huge metro area, but a relatively small metro area and building this very, very large number of homes because the mentality of the market has changed.
22:16 Speaker 04 All right. Speaking of moving, Charles in Georgia says, "My wife and I are planning to move from Atlanta to North Carolina in the coming months to be closer to family. We are flexible in timing and would like to find the perfect house in North Carolina before finalizing plans to move. That also includes listing and selling our Atlanta home. While we have about half the amount needed for a 20 to 25% down payment on a new home, we're evaluating liquidity and financing options for the other half needed. Of course, the best financial option would be to sell our Atlanta home first and take the profit proceeds from the sale to finance our new home purchase, but we really want to be patient on finding the right home in North Carolina. I've researched other options to build the cash amount needed for this new home purchase,
23:01 Speaker 04 and it seems the easiest would be to sell investments, but I would like to avoid the capital gains fees associated. It seems like a less expensive option in terms of taxes and fees to take out some type of financing with a bank, including a bridge loan, home equity loan, or HELOC. I'm very curious to hear Clark and team's advice on how to navigate this situation."
23:22 Speaker 03 So Charles, you have an additional advantage in buying this home in North Carolina because you're moving near family, you're very familiar with the area you're moving to. And although, yes, I'd love for someone to sell their existing home before they buy a new one, I get the whole thing about being patient, and you're going to find the spot that's the right one in North Carolina, you want to buy it, and then be able to go through the process of selling and moving from the Atlanta home. Which means, and I'm going to tell you the right answer to your question in a second, it means you've got to think through, can you and your wife float two mortgages?
24:04 Speaker 03 If, let's say it takes a while, longer than you expect, to sell the home in Atlanta, are you in a position to ride that for a meaningful period of time that could be, let's say, worst-case scenario, the longest I ever got stuck with a home I was selling was 14 months. So let's just use a year as an example. If it took you a year to sell it, are you going to be okay handling those two mortgages? The one in Atlanta, the one in North Carolina? Because you don't say much about the home you have in Atlanta, how much mortgage debt you might have on it. The answer, though, to your question of the options to come up with the other half of
24:46 Speaker 03 the 20% down is a home equity line of credit on your existing home. Lenders really love offering those right now. The best terms are usually with a credit union. You live in a very credit union-heavy market in Atlanta, and you may already have a credit union account. Set up that home equity line of credit. The setup may, in fact, be free, or virtually free, to set it up. You'll be able to come up with that other part of the money you need for the down payment in North Carolina, you'll be good to go. But again, back to the first thing.
25:23 Speaker 03 Be comfortable that you and your wife could handle two mortgage payments for a period of time, up to 12 months, if the market turned and it took you a while to sell the Atlanta property.
25:35 Speaker 04 Cheryl in Oregon says, "My husband has communicated to me that per a Clark Howard podcast, I should remove my Fidelity app from my phone. I understand there is a risk that if I'm active with my phone open, I could be prone to a run and grab, which would expose access to my apps to a theft. However, I have money transfer lockdown on my Fidelity accounts. I like my Fidelity app. It uses face recognition. And when I log in online on a computer, it uses my app to prove computer access. Does Clark really want me to remove my app from my phone?"
26:05 Speaker 03 You don't have to Cheryl, because you've taken the right precautions. The important thing from that podcast is to be aware of the danger about why criminals are stealing phones now. They are not doing a grab and run, or whatever they go smash and grab, whatever they call it. They're not doing that to have your phone. Nobody cares about the phone anymore. It's all about what the phone opens up with access to the money you have in your life. And the funny thing is, as an Android user, not an iPhone user, the criminals target
26:45 Speaker 03 people with iPhones, because the assumption is, people with iPhones have money, people with Androids don't. So just know that you got a bullseye target on you, if you have the latest, greatest iPhone. But if you've taken all the precautions you have with Fidelity, including locking down transfers, then you can breathe easy. Just be aware that the criminals have a bullseye target on you.
27:15 Speaker 03 And you should be okay.
27:17 Speaker 04 Jim in Georgia says, how important are expense ratios and do they correlate with fund performance? I have a traditional IRA with, here's the company name, Clark. Overall, they have higher expense ratios for similar funds as opposed to say Vanguard. Does this mean that they have active fund managers that are more in tune with my portfolio and really care about the performance? Moving investments over from one brokerage to another looks easier than ever since the investments are managed online, but I'm just wondering if I should be so concerned with chasing the lower expense ratios or just leave my IRA where it is. What are your thoughts, Clark?
27:51 Speaker 03 So, over the long haul, the low expense ratios went out. The company that you have your IRA with is a very good company, very respected company. They are pretty expensive, though, to have your money with. Your investments have much, much, much higher expenses embedded in them. You buy them commission-free, which is great, but they have much higher expenses than you're going to have in index funds with any seller of index funds or the very popular exchange traded funds that have, the costs are so close to zero, it's crazy.
28:35 Speaker 03 So, if you look in the short term, an actively managed fund with very bright men and women managing the investments, making the investment decisions, these are not dummies at all. These are brilliant people who work their tails off. The reality is, even if over a short number of years, they outperform index funds, over the long haul, over the years, you're saving money in an IRA, Jim, to retire with, the index funds went out because they are so streamlined and the expenses in them so extremely low.
29:14 Speaker 03 It is so hard, even with the brilliance of these managers of these funds, the expense ratio is such a drag on their performance. Over time, that even performing better, they're still going to trail because of the extra expenses. So that's why I'm team ETF, team index fund, in an IRA, team target retirement fund. If the target retirement fund is an index-based target retirement fund. That's significant because like with the example of Fidelity and Schwab, they offer a managed target retirement fund and then they offer an index version of a target retirement fund.
29:59 Speaker 03 I want you in the index version because the expense ratios are so much lower than when managed by, again, very brilliant people. And I hope you have a great, great day today. Know what we're all about. You, learning ways to save more, spend less, and avoid getting ripped off. And we are now nine days from Christmas. So this is the last week you have a chance, this year, I guess, to get one-on-one free advice from the Team Clark Consumer Action Center. If some of this is bugging you, you're having a problem with the company, you have a question
30:42 Speaker 03 about your money or whatever, and you need that advice, we got it for you, as we've been doing now since 1993. Free one-on-one advice. Go to Clark.com slash C A C to see how to do it. And spend the rest of your day saving more, spending less, avoiding getting ripped off, and have some fun today, too.
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