Pod Insights The Moneywise Guys 11/18/24 Credit, Equity, Loans, and... Kohl's Cash? Moneywise Monday Unwrapped! About this episode The Moneywise Radio Show and Podcast Monday, November 18th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management instagram: MoneywiseWealthManagement
Transcript 0:00 Speaker 00 From the padded radio room off Stockdale Highway, here is Money Wise. Call or text in at 661-396-1000.
0:09 Speaker 01 I need a dollar, dollar, dollar, that's what I need. Hey, hey. Well, I need a dollar, dollar, dollar, that's what I need. Hey, hey. Said I need a dollar, dollar, dollar, that's what I need. And if I share with you my story, would you share your dollar with me?
0:29 Speaker 02 Securities offered through SEF Securities, Inc., member FINRA/SIPC. Investment advisory services offered through SEF Investment Advisors, Inc. SEF Securities, Inc. and Money Wise Wealth Management are independently owned and operated.
0:39 Speaker 00 Now, let's start the Money Wise Show.
0:42 Speaker 03 Welcome to the Money Wise Show. We are live from the padded radio room off Stockdale Highway on ESPN Bakersfield, 1230 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, you have your hosts, myself, I'm Sharad Waite, and sitting here with me is...
1:05 Speaker 04 Sammy Abiyawie.
1:06 Speaker 03 Hey, Sammy. Good seeing you.
1:08 Speaker 04 Yeah, same here. How are you doing?
1:10 Speaker 03 I'm doing great. I'm doing great. Happy Monday.
1:13 Speaker 04 Yeah, excited to be here today.
1:14 Speaker 03 You know, we've got a little light crew in the office. There's a bunch of golf tournaments, I guess, going on. Fundraisers? It's that time of year.
1:22 Speaker 04 Fundraisers.
1:23 Speaker 03 Yeah, right.
1:24 Speaker 04 You know, quotation marks, fundraisers.
1:26 Speaker 03 Well, you and I are here doing this show. We are so grateful for our listeners out there that send in questions or comments, and we've got one that came in over the weekend, and why don't we get right to it, Sammy?
1:37 Speaker 04 Yeah, good afternoon, guys. I love the show and hope, I don't sound stupid, but what should I do if I'm not able to max out my retirement contributions each year? Is there other ways to build up my retirement savings? Thank you a ton.
1:50 Speaker 03 So Sammy, this is a great question because I mean, we can kind of interpret it a couple different ways. Usually I hear the question is, look, I've maxing out my retirement at my work. How can I save more? But this question almost sounds like I'm not able to contribute what I can to my retirement, to my employer retirement. Is there other ways that I could save for retirement?
2:18 Speaker 04 Yes.
2:19 Speaker 03 You know, what comes to mind? It's not a stupid question, by the way.
2:22 Speaker 04 No, it is. It's a great question, and especially if you're on the younger end and you're starting and you want to maximize. First, maximize. If your job is allowing you to put in a certain amount, max that amount so you can participate and get the match. Some of the other things for me personally, just save money. Decrease leverage are a couple of things that come to mind as an ex-banker. Decreasing leverage, which if you have, in case of personal or consumer, if you have a five-year-old car and you're like itching to go and get that newer version of it, wait a couple of years, right?
3:06 Speaker 04 Drive a free of debt vehicle, right? That's going to, that's going to help you put away about, whatever, $500 now on average a month for a couple of years. Then all of a sudden, you're breathing better.
3:21 Speaker 03 Right. Now, you're talking about $6,000, let's call it $6,000 a year. You delay that new car a couple of years. You've got 12 grand in the bank after a couple of years without really changing anything other than maybe delaying that new purchase a little bit.
3:36 Speaker 04 That's right.
3:37 Speaker 03 So it's interesting because a lot of, if you, if you can't max out your retirement, your employer response, your employer-sponsored retirement account, then...
3:53 Speaker 03 So I don't know if there is a savings there for emergency as well. Cause you generally want to have your emergency savings before you have sort of your other long-term savings. Because you'd want to avoid some catastrophic financial event that can really can can spin people into financial devastation. Like needing to rely on a payday loan.
4:15 Speaker 04 Very good point, very good point. And I would always, always caution people and also encourage them six months at least. Six months of operating type of cash.
4:26 Speaker 03 Cash, right. Back in your banking days, Sammy, you had somebody come to you saying, look, I need a loan. And you're looking at their finances, you're obviously going to look at what they have in debt and what they have in income. And if they're, if, you know, it's going to restrict people's ability if they don't have any cash. Like they're coming to you for a loan at the bank and they don't have money to, they're, they're trying to come up with money to pay their electrical bill the next month. You're like, you don't have enough cash to pay your bills next month?
4:57 Speaker 04 Yeah. And that's, that's, that's where the payday type of lenders are making a killing because they charge you, you know, 20%, 25%. It's like a credit card.
5:07 Speaker 03 Yeah.
5:08 Speaker 04 But now they're, they're, you know, taking it straight from your, from your paycheck. And you're living not just paycheck to paycheck, you're actually spend the money before you collect your paycheck.
5:17 Speaker 03 Right.
5:18 Speaker 04 So save, have some savings on the side. I, I really like what you said. For your immediate needs for the next three to six months before you start thinking about your long-term stuff. Some of the things that also came up for me shared is like health savings. We all have health things. So if, if you can do or open an HSA, if your job allows you to. That's one way for us to also save money because a lot of these savings can be used. Towards medical expenses, especially if you have kids.
5:50 Speaker 03 Yeah.
5:50 Speaker 04 Daycare.
5:52 Speaker 03 Right.
5:53 Speaker 04 Things like that. Those are all pre-tax dollars that you can maximize or take advantage of. Roth IRA, which you're an expert in, I'll let you talk about that.
6:02 Speaker 03 Yeah, it's perfect. A Roth is something that, or a traditional IRA, if you're not contributing to your, even if you are contributing to your employer-sponsored retirement account, you can still, in many times, open up an IRA and either have a Roth or a traditional contribution. So there's a lot of different retirement savings outside of work. However, don't minimize the benefits that come from that retirement savings that your work provides because even if they don't offer a match, which most employers do offer some sort of free money match, what they do offer is automated savings for you. It's automatically taken out of your paychecks.
6:42 Speaker 03 You sort of don't think about it. And that's one of the biggest hacks in we have to tricking ourselves to saving is make it automatic so that you don't think about it.
6:54 Speaker 04 And you get used to it.
6:55 Speaker 03 Yeah.
6:56 Speaker 04 All of a sudden, in your mental budget, you're already, you already know that $200, $300, whatever you're putting away, it's no longer yours.
7:04 Speaker 03 Companies have already figured out the enormous amount of profit that they can make by getting people to sign up monthly for a few bucks, whatever it is, whatever app or service that you're provided, they recognize that that recurring revenue, most people don't, they get used to it.
7:21 Speaker 04 That's right.
7:22 Speaker 03 And then they just bake in that $20 or $30 a month into their normal expenses and it's automatic, so they don't really thinking about it. Just do the same thing for yourself. Set it up so it's automatic. Every month, something, a bill is being paid to yourself. You're paying yourself through, you can even do it through bill pay.
7:37 Speaker 04 That's a very good point shared, and that's what I started with, limiting or reducing your leverage. So if you are able to reduce your leverage, it's like you're paying yourself.
7:47 Speaker 03 Yeah.
7:48 Speaker 04 And a car loan nowadays costs about 7%.
7:53 Speaker 03 7% of, oh yeah, the interest on a car loan.
7:56 Speaker 04 Interest on us. So, so, so let's say if you drive a paid off car for two years and you're able to put that money away, you're paying yourself.
8:04 Speaker 03 Yeah.
8:05 Speaker 04 That's 7%.
8:06 Speaker 03 Not just a 7%, but also you're, you're, you're saving the, the depreciation on the car.
8:11 Speaker 04 Yes.
8:11 Speaker 03 Happens, you know, a new car that you buy.
8:14 Speaker 04 So, so it's, it's, I mean, those are for me ways to, to, and, and to save, but also to build, to have a plan and eventually to have a much stronger type of cash flow management.
8:29 Speaker 03 Yeah. Great question. Um, you know, it kind of leads me, there are a lot of, we're kind of, we can keep talking about some of the, the tricks or the hacks that people have, but there is a, an ongoing sort of dangerous, I don't know what you call, I don't want to call it a flaw, but it's, it's a common mistake that people make, a money habit mistake that people make. And it's, sometimes it can be called lifestyle creep or funflation, money dysmorphia, which we've talked about on this show before, or doom spending. It's lots of different ways to talk about the way mentally that we view and the relationship
9:11 Speaker 03 that we have with money. There's a lot of these unhealthy behaviors or habits that creep up and you don't recognize that it's, that it's going on. And I kind of bring up this doom spending idea because we've just gone through an election where a lot of people were stressed out about whether or not their person would be elected and the impact that that would or wouldn't have on the economy. You had a lot of people saying, well, I, you know, sort of like, I'm going to bury my head in the sand. I'm, I'm, I'm, I need something to, to soothe my anxiety and my stress. So I'm going to go ahead and take that trip or I'm going to go ahead and like you said, maybe buy that new car as a way to boost
9:54 Speaker 03 that mood. And, and it turns out that, um, that, that's not a, that's not a real, uh, positive move for most people. There's a recent survey Credit Karma found that 27% of Americans were doom spending leading up to the election and it was even higher if you are a little younger. If you're a millennial, about 40% are were doom spending. Gen Z'ers 37%. Again, this is because of their feelings of uncertainty or anxiety or depression. They're feeling sort of these forces going against them. And that's, that's an issue.
10:32 Speaker 04 Retail therapy, man, that's how retailers get you.
10:35 Speaker 03 Yeah.
10:35 Speaker 04 Retail therapy, you go to the mall and you see that red sign, you know, in that back rack. And you're like, okay, I'm making a really good deal. Have I talked to you about Kohl's bucks?
10:45 Speaker 03 Oh, yeah, you've said it before.
10:47 Speaker 04 Man, they got me.
10:50 Speaker 03 The Kohl's bucks.
10:51 Speaker 04 Oh, my God. Kohl's cash, baby. Kohl's cash, baby.
10:54 Speaker 03 Yeah.
10:55 Speaker 04 I, I, I think AJ from Mission Bank told me about it. And then I started going for the first two trips. I'm like, I feel like I'm a dumb shopper right now. Seriously, I do. And I'm like, I gotta, I gotta, I gotta stop.
11:11 Speaker 03 Yeah. They had you going.
11:12 Speaker 04 Addictive.
11:13 Speaker 03 They had you going on the points, right? It's essentially it was a points reward system.
11:17 Speaker 04 Yeah, you spend this and you get this.
11:18 Speaker 03 Yeah.
11:19 Speaker 04 And then you can go and spend it between these days. Then you go and you spend more and then they give you more. And you're like, man, this is, oh, seriously, man. It was, it was worse than losing in a casino.
11:30 Speaker 03 There's, you know, speaking of, we're talking about flaws that we have as consumers. Retailers have just learned to prey on these so easily by, I mean, look at any advertisement. It's, it's all about how we're gonna, we're gonna make you happy and we're gonna, you know, buy these new things and it will satisfy that empty hole within your soul. Basically, they're all, they're all promoting that. And, and, you know, be aware that, that, that this is, this is the genius behind having a budget.
12:03 Speaker 04 Yes.
12:03 Speaker 03 Because then you can know when you can deviate from your normal spending, but still be within budget.
12:10 Speaker 04 So I, I, I, I have a friend. I'm not gonna say his name, but he taught me this. He's a banker as well. And he taught me this. He was like, look, even for retail therapy, he's got a budget. It's like that money that he knows he's gonna go out and just splurge and stuff. But he puts it away on a monthly basis. And maybe every six months he goes and splurges, but it's all part of his plan.
12:32 Speaker 03 Yeah, yeah.
12:33 Speaker 04 But he's planning for it. It's not like where he's gonna use the credit card. He does not have a plan. How to pay off for that credit card. He's got a plan.
12:40 Speaker 03 And I'll mention something. You kind of, this is your, one of your own personal examples, but we were just talking about some traveling that you had to do. And you said, listen, if I'm gonna travel, I'm not going to, I'm gonna maybe spend a little bit for a nicer seat. Or a better ticket. But I'm gonna give up, I'll give up eating out for whatever a few months that I need to do so that I can justify that upgraded. So that way, when you get to that airport, Sammy, you're going, look, I'm not blowing up my budget by spending so much more here at the counter. That I can get this upgrade. You're gonna look, I have this sort of budgeted in. And you still get that dopamine hit of, wow, look at me, I'm, you know, I'm spending this like the Kohl's cash buzz that you got.
13:24 Speaker 04 Kohl's, they got me, man. They got me. Not anymore, but they got me before.
13:29 Speaker 03 Yeah, it's a classic retail trick is you change the concept of the currency it just slightly. And it allows you to think that you're not spending real dollars.
13:42 Speaker 04 Yeah. So as a shopper, I can assure you, you're not gonna win against the retailer. Because they're, they're, they're whatever formulas and things they came up with to come up with that Kohl's cash or Old Navy cash or whatever. They've already studied it multiple times, came up with a formula for them to always win and make margins.
14:01 Speaker 03 You don't win against the retailer unless you really can think of it. And you know exactly what you're buying and now you're comparison shopping. Where the retailer will get you is if they get you go to their website, you start browsing around, you start going, oh yeah, I'll get this and I'll get that. And you start justifying, I can afford this, or I'm getting a discount, the more I buy, I'm getting a discount somehow. Thinking you're still going to save money at the end by spending more. That's how they get you.
14:26 Speaker 04 That's right.
14:27 Speaker 03 If you were more strategic in your yoga, look, I need, I need two shirts. I need six pairs of socks and I need two pairs of pants. Now go, now go shop.
14:38 Speaker 04 Yes.
14:38 Speaker 03 Okay, now you can compare and that. But otherwise, if you kind of go in going, I've got, I don't know, I need to spend some money. I don't know how much I'm going to spend, but I need clothes and.
14:47 Speaker 04 I, I, I realized when I moved a couple of months ago from one house to another, how much stuff I have. So I've, I've, I've, I've made a decision that if I'm going to buy something, I'm going to get rid of something. And if I'm not able to get rid of that something, I'm not buying that new thing.
15:03 Speaker 03 Yeah.
15:03 Speaker 04 That's, that's like, because the closet gets all messy and it's just, it's a simple life. I'm, I'm trying to simplify it.
15:11 Speaker 03 Yeah. So this is really great. We got another great message here. We're going to answer it when we come back from the break, asking more about budgeting and finances. If you've got a question or comment, now's a great time to send it our way. 661-396-1000. We're going to answer more questions when we come back from the break. Don't go anywhere.
15:27 Speaker 00 If you're a business owner who provides a retirement plan for your employees, contact Money Wise Wealth Management to see if you're maximizing your options and minimizing your liabilities. Money Wise 401K plans are customized to you and your company's needs. 661-847-1000. That's 661-847-1000.
15:55 Speaker 03 We're Money Wise. Thanks for tuning in. That's Steven Nicholas, our producer extraordinaire. I'm Sharad Waite. I'm here with Sammy Abiyawi. Got a couple of great messages. Keep them coming our way. 661-396-1000.
16:08 Speaker 04 I'll read the first one. Wife and I are back on our feet after I was out of work for about eight months last year and have about $25,000 of credit card debt. We are talking about taking $30,000 out of our home to pay off the debt. Do you think that would be smart or just to try and take a bank loan instead? Thanks, guys.
16:27 Speaker 03 Sammy, this is right down your alley. You were, you're, you know, the loan business and banks love. To let lend people money based off the equity in their home. It's just an easy loan for a bank, right? Cause they're going to be protected. The question though, really comes down to you've got credit card debt. How do you pay off the credit card debt? Do you get a home equity loan and pull some of the equity out? Or do you just, you know, tighten your belt and try to pay it off?
16:55 Speaker 04 Or both.
16:56 Speaker 03 Or both.
16:57 Speaker 04 Or both, because if you have past due payments on your credit card debts, it's going to affect your credit, your credit score and what have you. Definitely you want to take initiative or take, take, uh, take a step to start paying those off. So the home equity is a great product, especially if you have equity in the house.
17:14 Speaker 03 Yeah.
17:15 Speaker 04 Okay. Why? Because it's, it lowers your interest rate. Okay. Now with a credit card, on average, you're going to be above 20%. And now you're going to be dealing with the prime, maybe prime plus one. So you're going to.
17:28 Speaker 03 With a home equity.
17:29 Speaker 04 Correct.
17:29 Speaker 03 Yeah.
17:30 Speaker 04 Or, or sometimes some, some banks have a product for home equity where they fix your rate.
17:34 Speaker 03 Right.
17:34 Speaker 04 From day one.
17:35 Speaker 03 Right.
17:35 Speaker 04 So you're looking at six and a half, seven percent, maybe eight percent. But that's a much better rate.
17:40 Speaker 03 And it can be, it can be an amortized loan.
17:42 Speaker 04 That's right.
17:43 Speaker 03 Not something that is revolving line of credit.
17:46 Speaker 04 That's correct.
17:46 Speaker 03 Doesn't have to be like that credit, normal, traditional home equity line. It can just be.
17:51 Speaker 04 Yeah.
17:51 Speaker 03 Using the equity.
17:52 Speaker 04 If, if you are a good steward of your finances, a, a home equity line of credit is a good product to have because you avoid using credit cards in, in times of a financial stressful situation. So you'll always use that instead of using a credit card because your interest rate is much, much lower than your credit card.
18:11 Speaker 03 Yeah.
18:12 Speaker 04 When you already have a vehicle to term it out. You can always go to the bank and say, hey, you know what? I used this. Now I'm done. Can you please put this on a term? And then they'll turn that out over a 10 year period.
18:23 Speaker 03 Right.
18:23 Speaker 04 Because they're real estate secured, even though they are on second lien position behind your first mortgage. As long as the bank is within that 75, 80%, that's a good lender.
18:34 Speaker 03 Yeah.
18:35 Speaker 04 They are secured.
18:36 Speaker 03 And it's, it likely is, so likely it can save you, let's say, twice the interest, a home equity loan versus just paying off that credit card over a period of time. Best case scenario is getting rid of the debt as quickly as you can.
18:52 Speaker 04 That's right.
18:52 Speaker 03 The next best would be, yeah, find other finance, refinance it with more favorable financing like.
18:59 Speaker 04 Yeah, you can, you can always go and get a personal loan. However, I would not encourage that because with, with, with the, HELOC or home equity line of credit, you have some tax benefits. Because that interest is actually tax deductible versus a personal loan where the interest is not tax deductible.
19:17 Speaker 03 Right. If you're itemizing, if you itemize your taxes, remember that the standard deduction has been lift, has been up.
19:23 Speaker 04 That's right. That's correct.
19:25 Speaker 03 That's a great question though. And congratulations on getting back on your feet after being out of work for eight months.
19:30 Speaker 04 And congratulations on the integrity because a lot of people would walk away from credit card debt. So I wanna, I wanna thank this listener for standing up and, and making sure that he's, he's paying his dues back. So that's awesome.
19:42 Speaker 03 Do you, do you see that a, a bank would loan, if it's not a home equity line, would a, I mean, you could still find just a refinance with the banks. And look, I want to pay off my credit card. Can you give me a better loan than that and just chop that out?
19:55 Speaker 04 Yeah, especially credit unions. They have programs where you can go and just get a personal loan.
20:00 Speaker 03 Yeah.
20:01 Speaker 04 You know, for, in this case, it actually makes sense. I, I've seen people where they come in and they borrow money for a personal loan for, to take a vacation.
20:08 Speaker 03 Yeah. Yeah.
20:09 Speaker 04 $10,000, $15,000.
20:11 Speaker 03 They're really going for it, huh?
20:12 Speaker 04 Yeah.
20:13 Speaker 03 That's risky.
20:15 Speaker 04 Yeah. Thank God I was in a business lender and not a consumer lender because I've, I've, I don't know.
20:21 Speaker 03 That'd be tough.
20:22 Speaker 04 Yes.
20:22 Speaker 03 It'd be hard to do that. Another message here, Sammy says, Kohl's Cash and Victoria's Secret Rewards has got my wife. And after a few years, I had to put a stop to it or slow it down. Great marketing.
20:35 Speaker 04 That's right. That's right. Both my wife and I both got got.
20:40 Speaker 03 It led me down a reminder of some of the psychological and strategic techniques that employer that large retailers use. I want to, I want to mention some of these real quickly to you, Sammy, because we can all relate to this. Well, we all can, can, can be, I guess what's victims of this sort of retail theater is what they do. So everybody knows about the store layout optimization. Every store does quite a bit of research, retailers do to make sure there's decompression zones, essentially right in the beginning of the entrance. It's a way to slow the customer down, ease them into the shopping experience. Usually you have eye catching displays or seasonal items. You have a lot
21:25 Speaker 03 of strategic products that are placed in eye level and, and, and on the shelves right when you walk in. You also, retailers are looking for impulse purchase zones. They think of like the checkout aisle where you've got these-
21:41 Speaker 04 Do you really need that piece of chocolate while checking out at Kohl's?
21:45 Speaker 03 You have pricing tactics that use anchor pricing. This is one we've talked a lot about on the show. It's where you're showing a higher original price next to a discounted price that makes the discount seem even more significant when really the retailer's like, no, that's just our retail price. We're showing a higher price that we never, ever really charge. It's like every, like every day will say that is sale day. Every day is sale day, right? Carpet Outlet Plus figured that out many years ago.
22:09 Speaker 04 We have one downtown. It's always liquidation.
22:13 Speaker 03 Yeah, there you go. Liquidation, furniture liquidator.
22:17 Speaker 04 What's that place downtown? Timeless Furniture? It's been in liquidation process for as long as I've been in Bakersfield.
22:23 Speaker 03 Yeah, yeah. Constant. Just retailers are always doing that. That's anchor pricing.
22:28 Speaker 00 It's this time of the year where you'll hear all the commercials, it's the end of the year. We're closing all, everything and everything's got to go.
22:34 Speaker 03 Yep. And they're, they're still there. Yeah, they're still there.
22:37 Speaker 04 Well, they're opening the other side of the mall, right after.
22:39 Speaker 03 Yeah. The anchor pricing is one of the most common ones that I see at retail experiences because it tricks you into thinking you're getting a deal. You're not really getting a deal. It's, you're just-
22:49 Speaker 04 I, I, when I, when I was a lender, I used to attend this, these conferences for gas station conferences or C-store conferences. And and and basically, these guys teach you how to place your product.
23:00 Speaker 03 Oh, yeah.
23:01 Speaker 04 There's a strategic place for everything.
23:03 Speaker 03 Yeah.
23:03 Speaker 04 Right? As you're walking, that's why the the coolers are in the back and then the candy is in the front.
23:09 Speaker 03 That's right.
23:09 Speaker 04 You're gonna weave through multiple things.
23:11 Speaker 03 Yep.
23:12 Speaker 04 The chips are strategically placed, and then there's the fight between Pepsi and Coke.
23:17 Speaker 03 Yeah.
23:17 Speaker 04 Where is the the product gonna go?
23:20 Speaker 03 Right.
23:20 Speaker 04 And these two, those two just go at it.
23:22 Speaker 03 Yeah.
23:22 Speaker 04 It's amazing. It's amazing that the the tricks and things and research has been done in order for the retailers to take advantage.
23:31 Speaker 03 The the retailers have figured out the psychology of consumers many, many years ago, and they just keep refining it. It's the same tricks. Price, uh, charm pricing, which is very common. It's essentially ending prices in point nine nine or point nine five. So you never see, you know, things that are $10, always $9.99, right? Even though one penny.
23:51 Speaker 04 Yeah.
23:51 Speaker 03 It was one penny less, but if you paid, if it was marked for one penny more, psychologically, it feels like it's a few dollars more.
23:59 Speaker 04 That's true.
23:59 Speaker 03 Even though it's just, it's just literally just ending in point nine.
24:03 Speaker 04 That's true.
24:03 Speaker 03 Or you'll find charm pricing at restaurants in the form of not putting the dollar sign in front of it, just the number. It'll just say nineteen, right?
24:13 Speaker 04 Nineteen ninety-five.
24:14 Speaker 03 Yeah, and it's so much better than a dollar sign with nineteen. It's like, oh, this is real money. It comes, come back to the Kohl's cash idea. It's not real cash you're spending. These are numbers that you're just sort of using.
24:26 Speaker 04 And be aware of the server that's asking you, do you want extra cheese?
24:29 Speaker 03 Exactly. Would you like some extra cheese? Lost leaders is selling certain items at low, at where they actually lose money, but they're drawing you in to buy extra items or other things.
24:41 Speaker 04 Question for you, Sherrod. How many times did you go to Costco for a hot dog and spend two hundred bucks?
24:45 Speaker 03 That's it. That's it. The perfect example is the Costco hot dog. That's a loss leader.
24:50 Speaker 04 A dollar fifty and you you you walk out, I'm like, oh, man, I just saved some money on this hot dog.
24:55 Speaker 03 Yeah.
24:55 Speaker 04 With the drink, wow, spending two, three hundred bucks.
24:58 Speaker 03 Well, promotions and discounts is the, is one of the most common and and long-lasting tricks that retailers use, thinking that some sort of promotional deal. Limited time, or you or or you have to be a member or have some loyalty to the program, which there's all types of rewards programs that it's incentivize you and giving you things that you think are free, like free shipping thresholds where you spend above a certain amount. Now you're going to save $10 on shipping, but you end up spending 100 over $100 because you're looking for that extra shipping. So, you know, again, psychological manipulation is something be aware of as much as possible as a consumer. It will save you lots of money and
25:43 Speaker 03 you still can enjoy buying fun things. It doesn't mean you don't have to live a boring life. Just, you know, just, just be aware and don't get taken advantage of.
25:53 Speaker 04 That's right.
25:54 Speaker 03 Great discussion, great comments and questions. Keep them coming our way. We're Money Wise. We're going to take a quick break and we'll be back.
26:00 Speaker 00 Don't forget, Money Wise is more than a radio show. We're an independently owned local wealth management firm with 60 plus years of collective experience. Our financial advisors are here to help you, Kern County. Together, let's be smart, be safe, be money wise.
26:22 Speaker 03 We're Money Wise. Thanks for tuning in. Got some great questions and comments here, Sammy. I think we struck a nerve with the credit card.
26:31 Speaker 04 Yeah, coming into the season and all that. I agree. Can I, can I go and read?
26:35 Speaker 03 Let's hear it. Yeah.
26:36 Speaker 04 Hi guys, I have a Visa card that I got from Costco when things are on sale. I use my Costco card and then at the end of the month, I pay, I pay that off. Well, I paid off what I owe completely. If I pay minimum payments, I'm going to pay that high interest rate. That means I'm not going to save anything when I do that. And then I think about having a Costco Visa card. At the end of the year, I get Costco bucks and I use that to buy the stuff that I want to get. Have a great day, Money Wise guys. I love you guys.
27:06 Speaker 03 This is, this is great, Sammy. I love this comment because it's, it's a smart way to use credit cards. Not everybody has. It's not for everybody to use credit cards, even if you could pay it off every month and get these points. You can find that you get yourself into trouble for whatever reason every once in a while. And so stay away from credit cards if that's the case for you. But you and I are big fans of using credit cards and not paying them a dime. Don't pay a credit card a single penny. You don't, there's too much that they're offering for free because there's too many people out there that don't have the discipline that will subsidize the cost of the credit card for you.
27:43 Speaker 04 That's right.
27:44 Speaker 03 So for free, you can get these credit cards, there's no annual payments. And like this, the Costco card, for example, I'm familiar with this, you get cash back.
27:51 Speaker 04 Great vehicle, yes, and great way of using it. I do the same exact thing, great comment.
27:57 Speaker 03 Just pay it off each month and then you're winning that game. And you can find that not only can a credit card provide the cash back, but you have extended warranty on products. You have oftentimes travel insurance or coverage in case there's an issue with your flight or your travel. There's all kinds of other benefits that are there for us that can use a credit card responsibly. So that's great comment.
28:24 Speaker 04 We have another comment. I think that's from the listener that talked about the credit card earlier that actually started the conversation. I had no idea banks will do loans for credit debt. Maybe I need to check that option out before taking home equity. Thank you. Now, too bad, Kohl's won't take Kohl's cash to pay off my wife's Kohl's card.
28:46 Speaker 03 That's right, use your Kohl's cash. You know, people have used credit card points or cash back to pay off credit cards. In fact, some people, I don't know if we mentioned this as another idea is, you know, be careful. But if you can open up another credit card that has a trial, you know, one year, no interest, cash balance transfer promotion, hey, transfer it over, pay it off real quickly. The idea is to save on interest and fees to the bank.
29:14 Speaker 04 If you have a good, if you're bankable and you have a good credit score and credit cards will open a card for you, definitely a balance transfer.
29:23 Speaker 04 Is another way to save on high interest rates because the first year you have zero interest. So mo- all the payments are actually going to principal. So that's another way. Again, just there's, you have to be really careful how to use credit cards. Because you have to have a certain plan and you have to execute it to the T in order for you not to pay these guys a dime of interest.
29:45 Speaker 03 That's right.
29:45 Speaker 04 Which for me is the key.
29:47 Speaker 03 That's the key. Just win that credit card game by not paying any fees or interests and benefiting from the perks. Sammy, last month, I remember we were talking about McDonald's and over a hundred people got sick across 14 states. There were several lawsuits.
30:05 Speaker 04 E. coli with cheese?
30:05 Speaker 03 E. coli with cheese, that's right.
30:09 Speaker 03 E. coli with cheese. It, uh, McDonald's obviously had some issues due to the bad press. Today, it was revealed, according to CNN Business, they found a memo that was released by McDonald's, the corporation, saying that they're going to spend about a hundred million dollars on marketing to help offset the recent E. coli outbreak problems. This is a hundred million, about 35 million is going to go towards marketing. About 65 million is going to go directly to the franchisees that lost business in the states where the outbreak took place. They're going to offer some promotions to individuals to try to bring back sales.
30:52 Speaker 03 They're going to have a marketing campaign for some, some, uh, meal deals. And it just so happens that today also, we heard news about one of the Bakersfield's proud companies that was founded and, and run here and still is headquartered out of here, Grimway Farms. If you haven't heard, Grimway has had a Similar E. coli outbreak across the country. Grimway has already had, it's already been reported that there's one person who has died. Dozens have been sickened after eating carrots that contain E. coli. And these were all processed based out of the Grimway Farms. It's based in Bakersfield, California, right here.
31:34 Speaker 04 While I'm eating carrots?
31:35 Speaker 03 You know, I saw this this morning, immediately went into our fridge, looked at the carrots. So we buy almost, if you look in your fridge, it's a Grimway product, likely. It's, it's the world's largest carrot producer. Their revenues, I did a little digging, close to $5 billion in revenues. That's a lot of carrots, Sammy.
31:56 Speaker 04 That's a lot of carrots. Well, I think Kern County is one of, if not the largest producer of carrots. Not just in the United States, but probably the world.
32:05 Speaker 03 Yes. Yeah, definitely. They're definitely one of the largest.
32:09 Speaker 04 It's, it's, it's amazing. I mean, it's unfortunate that somebody died, you know, to, but, but Grimway. They do a lot in this community. It's not, this is not the publicity. I bet you this is not the publicity they want.
32:22 Speaker 03 Right.
32:23 Speaker 04 That's very, very unfortunate.
32:24 Speaker 03 I don't know if they have to pay 100 million like McDonald's will, but it's going to cost them for sure. So the baby carrots, by the way, that's the organic carrots. So I looked at, we don't buy organic carrots. Um, we just buy the regular carrots. And so we didn't have to throw out any of ours. But if you have the Cal organic, nature's promise, oh, organic or Trader Joe's and Wegmans brands, they're all based out of Bakersfield's Grimway Farms. It's just, you know, different labeling. Those have all been recalled. And there's, like I said, there's already somebody's died, 15 people in the hospital across 18 states.
33:02 Speaker 04 That's a big deal.
33:03 Speaker 03 Good. That's a big, I mean, oh yeah. Have you, have you seen that commercial? Baby carrots, Grimway was one of the pioneers, if not the pioneer in promoting and creating a brand around baby carrots.
33:16 Speaker 04 They came up with the idea of baby carrots just from the waste that they had.
33:20 Speaker 03 Right. Right. It's like, ah, these are, people like these little, small carrots that you can just.
33:24 Speaker 04 When I first came to America, I thought, you know, they grow them like that.
33:31 Speaker 03 Who do they not feed their carrots enough here? Why are they babies?
33:34 Speaker 04 That's amazing. And then I'm like, I'm like, is this? No, that's just big carrots that are waste and they cut a couple of small carrots from it.
33:42 Speaker 03 Oh, my gosh, that's funny.
33:44 Speaker 04 That is funny. Things I've learned in the last 24 years here in America.
33:48 Speaker 03 The land of good and plenty.
33:50 Speaker 04 That's right.
33:50 Speaker 03 Just the carrots can just, they can cut them when they're babies.
33:56 Speaker 00 My son thought the same thing about those cotton candy grapes.
33:59 Speaker 03 Oh, that's awesome. That's awesome. Good stuff. There was, uh, anybody watch the fight over the weekend? Or I guess it was Friday, Netflix?
34:09 Speaker 04 I didn't.
34:10 Speaker 00 The fight's Friday and Saturday.
34:12 Speaker 03 Oh, oh, that's right.
34:13 Speaker 00 There was some, uh, John, John Jones was Saturday night. That was a good fight.
34:17 Speaker 03 That wasn't a Netflix streaming though thing.
34:19 Speaker 00 That one, uh, was much better than the Friday edition.
34:22 Speaker 04 Yes, the Friday edition I heard, I just saw the highlights because I refused to watch. I, I don't like.
34:27 Speaker 03 You staying out of it.
34:28 Speaker 04 Well, I don't like Jake Paul personally.
34:31 Speaker 03 Either did anybody in that stadium. They were all booing him.
34:35 Speaker 04 I wanted them to get knocked out.
34:36 Speaker 03 Well, yeah, it's funny. You know, he, he, he, he rents out a stadium for 60,000 people to boo him. Uh, he did all right making $40,000.
34:47 Speaker 00 Forty million.
34:47 Speaker 03 Forty million. That's right. Tyson made 20, right? I think Netflix is gonna do all right. You know, the stock is taking a hit a little bit today. Netflix stock, um, I think it's sort of settled. Okay.
35:02 Speaker 04 My son, who was 12, who turned 12, told me that it was, daddy was so staged. It was just not, not a good show.
35:09 Speaker 03 Yeah, yeah.
35:10 Speaker 00 I think the, the slapping before and all that was kinda staged, but I mean, Tyson, after the first two rounds, you could tell he was gassed. Like he's just, he's getting up there in that age. So.
35:22 Speaker 04 He's 59 years old.
35:24 Speaker 00 He, he had no energy left. Plus, you know, he was really sick a couple of months ago. They had to postpone the fight. But I mean, as, as a fan of Tyson, I, I grew up, Tyson was my favorite. So I was hoping to just see, you know, a glimpse of what I watched growing up, but. You could tell he was, he was there for the money. And sadly, you know, Netflix had some glitching issues. I mean, it was loading, loading. I had to refresh the Netflix three or four times during the main event.
35:54 Speaker 03 Yeah.
35:54 Speaker 00 And you know, Netflix just signed a huge deal with the NFL. You know, they'll have some games on Christmas Day this year for the first time. They've, uh, they also signed with the WWF. Um, starting in, in, uh, January, they'll have their big televised, uh, event every Monday night.
36:14 Speaker 03 And that'll be exclusive on Netflix.
36:15 Speaker 00 Exclusive on Netflix. So I mean, they've got, I mean, this was kind of a test run for them to kind of see. And I believe there was 60 million viewers for this Tyson fight.
36:26 Speaker 03 Right.
36:26 Speaker 00 And I mean, it was crashing.
36:28 Speaker 03 And they, they paid 60 million Netflix played, paid 60 million just to Tyson and Jake Paul for this. So, you know, I, I, I, and then they had to put money into the production of it. So I don't know how Netflix is going to make money off of this. But I think Netflix is trying to kick the cobwebs off of the,
36:44 Speaker 00 Oh, yeah.
36:45 Speaker 03 The system to see what could work, especially with that.
36:47 Speaker 00 Expand that bandwidth and,
36:48 Speaker 03 Yeah.
36:49 Speaker 00 Cause it was, it was crashing. Those people posting, you know, memes of the old Mike Tyson punch out saying, this is what the fight looks like on my Netflix, you know, looking like the old NES game.
37:00 Speaker 03 We're in a new world where you're streaming live sporting events. Live sporting events are being streamed and it's a huge moneymaker. How, how has it affected you, Stephen, this, this year in terms? Cause so many of the NFL games now are all streaming. Have you been, have you had any issues?
37:14 Speaker 00 Um, not, not really, but I'm, I'm kind of nervous with the Netflix. I mean, Prime is, has been good. Peacock on the Sunday night games have been good.
37:24 Speaker 03 Google.
37:24 Speaker 00 I've had no issues.
37:25 Speaker 03 Google's been fine or YouTube's been fine.
37:27 Speaker 00 I've had no issues with YouTube plus, um, but I, I'm starting to get nervous now with, with the NFL. I believe there's three games on Christmas.
37:36 Speaker 04 That it'll be their first time.
37:38 Speaker 03 Yeah, this was.
37:39 Speaker 04 It'll be trippy.
37:39 Speaker 03 This is the first time for a boxing event of this scale being streamed in this way that wasn't charging. I mean, you're charging to have a subscription to Netflix, but you don't have the pay-per-view fee. So it was really fascinating, sort of in that sense, that we're finally moving into that era where everything will be, everything is pretty much streaming now, including live sporting events and something like that.
38:02 Speaker 04 Which makes sense.
38:03 Speaker 03 Yeah.
38:03 Speaker 04 I mean, where we're going technology-wise, it just makes sense.
38:07 Speaker 03 We're gonna take our final break of the day. Don't go anywhere. We're Money Wise. We'll be right back.
38:10 Speaker 00 Need to get your financial fix on the go? If so, subscribe to the Money Wise Podcast and catch up on all past shows whenever and wherever you want.
38:25 Speaker 03 Welcome to the Money Wise Show. Thanks so much for tuning in. I'm Sharad Waite here with Sammy Abiyawi. Thanks so much for the comments and questions. Sammy, I took finance in college. One of my professors, early on in one of my financial management courses that I took here at Cal State, I remember very clearly the professor talking about, very passionately saying, "If you want to ruin your life financially, get a divorce." And went on and on about divorce is just, that is the financial ruin. And I think now in retrospect, he had just gone through a divorce.
39:07 Speaker 04 He was talking from experience?
39:08 Speaker 03 Yeah, he was talking from experience. You know, and since then, you know, I've had many years since that class and life experience. I have not divorced, fortunately, myself. I'll be married almost 30 years coming up next year, fortunately. But it's so common. Divorce is so common. And I have seen how divorce can actually, does. Ruin people financially. It's obviously emotionally, it's very difficult, but
39:34 Speaker 04 Yeah.
39:35 Speaker 03 Financially, it's just absolutely devastating.
39:38 Speaker 04 Yeah, I've seen, I've seen it in my, in my career. I've seen it as well. I mean, having lent money to couples, to business owners that are couples, or it's, it's, it could ruin you.
39:49 Speaker 03 Yeah.
39:50 Speaker 04 As a couple, a husband and wife, definitely, if you don't have an exit plan.
39:55 Speaker 03 That's right.
39:56 Speaker 04 What I call, what I, what I, what I mean by an exit plan is just an understanding, even though things are not working out.
40:01 Speaker 03 Right.
40:01 Speaker 04 Try to have an understanding how to exit before ruining each other's lives, because it could be devastating.
40:08 Speaker 03 Yeah, it's, it's, in most cases, it's financially devastating. Why? Because you've got to split assets, and then if, you know, on and on, it just, it can be very, very troubling. There's a, a misconception, though, that divorce is becoming more prevalent in the United States. And it turns out that in the United States, the divorce rate actually peaked in the eighties and nineties, and has been going down ever since. And we currently sit at a divorce rate around thirty-nine percent of all couples get a divorce. And it peaked at about fifty percent of all couples getting a divorce in the eighties and nineties. So even if it's, you know, at today's rate of thirty-nine percent, or say forty percent of couples getting a divorce, that means forty percent of couples
40:49 Speaker 03 are going through a major financial situation. And it gets worse the older you are. Divorce rates have been coming down if you're under fifty. If you're over fifty, since the nineteen nineties, divorce rates have tripled. They've tripled. This is according to a Bowling Green State University study that took place in twenty twenty-two. They found that since the nineteen nineties, for those over age sixty-five, divorce has tripled. Now, there's a few reasons for this, according to the study. Life expectancies have gone up, especially for women. And you also find that women have a more, um, um...
41:38 Speaker 03 There's just a higher probability of the fact that you have more women that are working, that are older and working, that it creates the ability for more women to feel like they can divorce, sort of step away from that, whereas before, maybe financially, it wasn't as feasible because they weren't working as much.
41:58 Speaker 04 That makes sense.
41:59 Speaker 03 Women and wives are hit especially difficult in this. Women who divorce after 50 see a 45% decline on average in their standard of living versus a 21% drop for husbands of the same age. So, all things being equal, women are hit nearly over twice as much in terms of their standard of living due to a divorce. Again, there's a lot of historical reasons for this. The disparity between pay between women and men, there's all kinds of disadvantages there for women, but divorce for everybody is financially devastating.
42:34 Speaker 04 You know, I have a controversial idea here.
42:37 Speaker 03 Uh-oh.
42:38 Speaker 04 Why don't you, I mean, when you get married, and this is not, this is not me, I'm not speaking from experience, let's just keep everything separate, finances separate. Is that, I mean, a lot of couples are actually choosing to do that nowadays.
42:49 Speaker 03 Yes.
42:50 Speaker 04 Especially younger couples.
42:51 Speaker 03 Yes, absolutely. That's definitely something that can happen. It would be, it would usually happen in the form of a prenuptial agreement, so you're sort of, you know, deciding who owns what and what would happen. The state of California, we're a community property state, us along with, I believe, eight other states, essentially you're saying it's all 50/50.
43:11 Speaker 04 That's right.
43:11 Speaker 03 Unless you've got some other agreements, you know, what you, what you build together as a couple is going to be split 50/50.
43:18 Speaker 04 50/50.
43:18 Speaker 03 There's ways, you don't always have to follow what the, what the laws are, if you both can agree on how you're gonna, how you're gonna separate and divorce, then that is definitely not controversial. I think it's okay for people to consider that, Sammy. I thought you were gonna say the controversial thing was just don't get married.
43:33 Speaker 04 Well, which, no. No.
43:37 Speaker 00 That was the same, when I was not expecting that.
43:39 Speaker 04 That are interesting things too, to me, is divorce is going up, not just in America, but in the rest of the world as well.
43:46 Speaker 03 Yes, yeah, and it's for older people in America, it's going up substantially. It's just going down depending on the on the demographic. And, you know, it's just, it's, you know, just be careful, be careful. And like you said, maybe consider a prenup.
44:02 Speaker 04 Yeah, if you're very particular about your finances, the way I live in or whatever, yeah, consider a prenup.
44:09 Speaker 03 We've got a follow up here comment, Sammy, we were talking about the cash, Kohl's Cash and Costco says, hey, guys, I just want to point out one thing. I've called the Costco card to lower my interest rate and instead of them blowing my interest rate, they increased my credit limit. So now I have a credit limit on my Visa. Now I have a credit limit on my Visa card from Costco for $30,000, but it's still at 26% interest. Very smart of them. They don't want to lower your interest, but they they'll give you more credit.
44:37 Speaker 04 Well, it sounds like you're you're a repeat client and you've been paying or you've been making payments, or you're definitely an ideal one to raise the limit. So you can, they haven't caught you yet.
44:47 Speaker 03 Yeah.
44:48 Speaker 04 So maybe with this, you're going to spend a little bit more and that's how they're going to catch you.
44:51 Speaker 03 If you're smart, you know, if you're smart and you have your credit limit raised and you don't ever use it, that's great for your credit because it's showing that optimization level, the credit optimization level being lower.
45:03 Speaker 04 That's right.
45:03 Speaker 03 You have, banks love to see that you have available credit to you that you haven't touched.
45:08 Speaker 04 That's right.
45:08 Speaker 03 But so that's the thing, don't touch it. If you're going to touch it, make sure that you can pay it off. But yeah, that's, that's interesting. Credit cards would definitely, they'd love to raise your limit if you're a good, if you're a good steward. Great stuff today, Sammy. We covered a lot.
45:20 Speaker 04 Yeah, we covered a lot.
45:21 Speaker 03 Fantastic.
45:22 Speaker 04 We didn't get to to talk about Elon Musk and his upcoming cuts, but also he's, he knows, he knows a lot about divorce too, so we could talk about that.
45:31 Speaker 03 Yeah, he does. He knows how to make companies efficient, or at least how to cut some fat out of the companies, whether or not they survive, we'll see. But yeah, maybe we can talk about that tomorrow if there's some Tesla news and some things that's going on in the economy. Of course, we'll have tomorrow with John Duffield will be on our show. Great CPA and tax consultant here in town. So we'll talk about him about all the upcoming laws that are changing. Remember these three things, be smart, be safe, and always be money wise.
Previous 11/15/24 Back to the Basics: The 'Dumb Dow,' Fight Night Profits, and Financial Fundamentals Next 11/19/24 Taxman Tuesday: Taxes, Gold, and Financial Strategies with CPA John Duffield Page updated November 7, 2026 · transcript and summary are machine-generated
