11/25/24 Moneywise Monday with Sherod + Samy

The Moneywise Radio Show and Podcast Monday, November 25th 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

• 0:00Speaker 00

  From the padded radio room off Stockdale Highway, here is Money Wise. Call or text in at 661-396-1000.

• 0:09Speaker 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?

• 0:30Speaker 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.

• 0:40Speaker 00

  Now, let's start the Money Wise Show.

• 0:42Speaker 03

  Welcome to the Money Wise Show. We are live from the padded radio room off Stockdale Highway here on ESPN Bakersfield, 1230 AM, 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. I'm Sherod Waite, and sitting here with me is...

• 1:03Speaker 04

  Sammy Abiyawi.

• 1:03Speaker 03

  Hey Sammy, both you and I chuckling about that promo, Friendsgiving versus gender reveals, that's pretty hilarious. I've never heard somebody so passionately angry about Friendsgiving.

• 1:14Speaker 00

  Well, he's a Jets fan, so.

• 1:17Speaker 04

  That's great. Both of them, and the reveal.

• 1:19Speaker 03

  Yeah, and the reveal, yeah.

• 1:20Speaker 04

  I mean, some of these gender reveals just gone a little bit crazy and out of hand, in my opinion.

• 1:24Speaker 03

  Setting forests on fire, things like that.

• 1:27Speaker 04

  You know, there was a sad part, now you go to Morocco and you have gender reveals.

• 1:30Speaker 03

  Yeah, everywhere.

• 1:31Speaker 04

  Pink and blue balloons all over.

• 1:33Speaker 03

  America's greatest export are these trends.

• 1:36Speaker 04

  That's right.

• 1:37Speaker 03

  We import them every once in a while. I remember, I'm trying to think of that, Squid Games. Remember Squid Games? We have, we import some things, you know, here culturally, but man, we export a lot of this stuff. It's pretty crazy. Great time to send in a message or question, if you'd like. We're going to answer a couple of them right now to start the show, especially having you, Sammy, because we've got a banking question. Want to remind our listeners, though, that 24 hours a day, you can send in these comments or questions. We'd love to talk about these, and both of these questions that we're going to go through and start the show out with really spurred a lot of conversation. So, let's get right to it. Sammy, you got the first one?

• 2:18Speaker 04

  Yeah. What big changes do you think we need to make to stop big banks from doing shady stuff again and again?

• 2:26Speaker 03

  So I like this because immediately I'm thinking, oh yeah, that it's so big banks, big fat cats on Wall Street. Nobody likes the big banks. And so, but then I'm thinking, but what are, what are they thinking that these big banks are doing? Uh, you know, what comes to your mind?

• 2:45Speaker 04

  Uh, fees.

• 2:47Speaker 03

  Yeah.

• 2:47Speaker 04

  You know, a lot of the, a lot of the time, the first thing that goes to mind is interest and, you know, credit cards and stuff. Banks are not just credit cards and interest. No. Banks make their money on fee income. You know, the best banks are the ones that figured out how to create or have enough fee income to cover all their expenses. That way, if interest rate changes or moves, they don't have that risk.

• 3:11Speaker 03

  Yeah.

• 3:12Speaker 04

  Or they minimize their interest rate risk as much as possible.

• 3:14Speaker 03

  But so banks, which seems slimy because it seems like the bank, most people think the bank is charging, banks make their money off of charging interest, which they do.

• 3:27Speaker 04

  They do. Part of, part of the bank income is, is interest income, but it's not all the income. The fee income, non-sufficient funds, cashier's checks, you wanting a printed statement.

• 3:40Speaker 03

  Overdraft.

• 3:40Speaker 04

  Overdraft. All, all that are, are, are fee income that the banks would love to have because that's what covers their expenses, their running expenses.

• 3:50Speaker 03

  Kind of what you were saying, banks that, they are in the business of lending, but they're more in the business of having transactions and...

• 3:59Speaker 04

  Yeah. So, so the banks are deposit gatherers. They gather deposits and under the umbrella of the FDIC, we should have a system where depositors are secured up into a certain amount. Then what the bank does, they take those deposits and lend them out. The difference between what they pay you on the deposit you have there, either a savings account, money market, or just a checking account, and what they make on an interest income is their profit margin.

• 4:31Speaker 03

  Yeah.

• 4:32Speaker 04

  That's just one of the profit margins they have.

• 4:34Speaker 03

  One of the profit margins, but that is limited. That's what I was going to say earlier is that's limited because they're competing against other banks. And they're just, you know, those are very thin.

• 4:42Speaker 04

  Yeah.

• 4:43Speaker 03

  It's just like a restaurant, a burger, a burger place, for example. You're going to have a burger that's going to be $15, maybe $20 burger. And then you've got a $1 burger, right? And everything in between, but there's not really that much of a difference between a burger place. And same thing with consumer loans with banks.

• 5:02Speaker 04

  That's right. That's right. All banks almost have the same products and services. It's the way they give you that service or you receive that service, I should say.

• 5:12Speaker 03

  Yeah.

• 5:12Speaker 04

  That's the, that's the difference maker, right? So you're looking for great customer service. You're looking for follow-up. You're looking for just, you know, you want.

• 5:19Speaker 03

  Need markets, for example, which is why you have a lot of credit unions that are fulfilling sort of niche markets, niche markets or local banks that are feeling more local needs. So they're more in tune with local lending.

• 5:30Speaker 04

  That's right.

• 5:31Speaker 03

  So there's some advantages to working with them, whereas a, you know, a national bank you wouldn't. But again, it goes, that's why I guess there's some perception that big banks, you're not thinking about local banks, you're thinking about the Wells Fargos, the Chase.

• 5:43Speaker 04

  Bank of America, Citi.

• 5:45Speaker 03

  Yeah.

• 5:45Speaker 04

  Yeah. The too big to fail, I think, is what our listener is referring to.

• 5:50Speaker 03

  There's, there's a big black eye on them because they did fail us. The great financial crisis, which, which was spurred because a lot of these banks were taking our deposits and they were going and making risky investments that were so risky. They were in real estate that wasn't even invested in true real estate. And then we ended up bailing out a lot of those banks. We, I mean, taxpayers did.

• 6:12Speaker 04

  That's right.

• 6:12Speaker 03

  And so there was a lot of risky and speculative investments that were made by the banks. And there was some tightening of the Dodd-Frank Act and the Volcker Rule, which was intended to keep banks from taking our deposits, federally insured deposits and just making risky. Investments, but I don't know if people are still mad about that. My guess is it's what you said, people are just more upset about them getting away with overdraft fees. And high interest.

• 6:40Speaker 04

  So to me, to me, there's a quick fix for that. As a consumer, read your disclosures. Banks are not gonna do anything unless they disclose all the information in the little brochures they give you when you open a checking account.

• 6:54Speaker 03

  So nobody's gonna read those disclosures, Samy. So maybe another thing is that they could do is ask your bank, ask the person that's working at the bank. So you're, you know, you can ask those questions and usually you can get a good feel from the person that you're talking to. They're like, oh, yeah, you may not want to get a feel for whether it's an appropriate loan for you.

• 7:11Speaker 04

  Correct. Now, the good thing too is with all these changes and what have you, and, and, and some of these advances. Banks are listening a little more and more to their depositors. So for you as a depositor, you can, there are some banks now that offer you the service. If you want to deposit this money, we're gonna lend it. But do you have a choice? Where do you want this money to be lent at? Do you want startups? Do you want a specific industry? Do you want medical? Or, you know, so these choices today exist.

• 7:42Speaker 03

  Yeah.

• 7:43Speaker 04

  But the key here is to know your disclosures and ask questions when you're sitting in front of that person that's opening the account for you. That's as simple as that.

• 7:51Speaker 03

  Yeah.

• 7:51Speaker 04

  Cause they'll give you all the information and then you can make a decision.

• 7:55Speaker 03

  That's why every bank's commercial talks about, and the relationship with the client and blah, blah, blah. Same thing with the financial services, yeah, the relationship. And that really does come down to the relationship.

• 8:07Speaker 04

  Bank, banks get you on, look, you have a minimum, you need to maintain a specific minimum or a dollar amount. Right?

• 8:13Speaker 03

  Yeah.

• 8:14Speaker 04

  Okay. Maintain that. Ask, what is it? Is it $2,500? Is it $1,000? What is it? You maintain that. And if you can't, look for a bank that offers a free checking account.

• 8:24Speaker 03

  Yeah, that's what I would say. You can win the bank game and that's the question is what big changes do you think we need to make to stop big banks from doing shady stuff again? Again, well, don't get, don't, don't fall prey to them. And I think the biggest thing that banks do, because banks get a lot of their money through their credit card, their credit card issuing, and getting people to pay those little fees, those, and then especially that's where there's big interest. Big interest is made off of those revolving lines of credit that banks can give. Because now we're talking about 20, 30% interest rate.

• 9:00Speaker 04

  On the credit card side you're talking about.

• 9:02Speaker 03

  On the credit card side. Yeah. Or even they have just advanced loans, like banks, some of these big banks are into the very, the easy loans to you, even if it's small amounts, but they're accessible. Super high interest or high fees, but they're, they're, they're preying on people who just need, need to get out of an emergency. They're almost like payday loans.

• 9:24Speaker 04

  That's right.

• 9:25Speaker 03

  And that's where I think there's.

• 9:26Speaker 04

  I would say, choose the right bank for you. Open it to free checking account.

• 9:32Speaker 03

  It shouldn't cost you, I don't see any reason why it should cost anybody to have any banking. It shouldn't cost you anything, right? Now, you, you find a bank that will give you the free checking, free savings, you have a free debit card, like, it shouldn't really cost you anything.

• 9:49Speaker 04

  If you maintain a certain balance, Sherod, because if you do not maintain that certain balance, then you might be a loss leader for the bank.

• 9:55Speaker 03

  But a lot, some banks have very low minimums.

• 9:57Speaker 04

  That's right.

• 9:57Speaker 03

  You know, a hundred dollars or whatever. You gotta keep a hundred dollars, credit unions.

• 10:00Speaker 04

  Credit unions, for instance, are perfect for, for, for retail and consumer type of stuff.

• 10:08Speaker 03

  Yeah, they're more, more, those consumer loans are a lot more packaged and you get more upfront pricing. You can see the pricing on upfront online generally, whereas the banks, the larger banks, you can get, you can get taken advantage because these are large national loans and so.

• 10:25Speaker 04

  And, and, and I'll tell you, my biggest advice would be probably. When you open the account, maintain the minimum balance and try to save some money. Because once you save some money in that account and you have like a mental minimum, whatever that is, then you will be able to avoid a lot, 90%, maybe 100% of these costs.

• 10:47Speaker 03

  Yeah, by just keeping the minimum in it.

• 10:49Speaker 04

  Yes.

• 10:50Speaker 03

  And don't be afraid to just, it's similar to our advice on credit cards. Don't ever pay anything to a credit card and not just the interest, but you know, fees.

• 11:03Speaker 04

  Correct.

• 11:03Speaker 03

  Because they give these away.

• 11:05Speaker 04

  That's right.

• 11:05Speaker 03

  Credit cards give away for free bonuses, cash back and all kinds of great rewards, extended warranties, and those are great as long as you never carry a balance. If you carry a balance for one payment and you've got a, you know, a few thousand dollar balance on your credit card, well, now you've just eaten up all the benefits that you could possibly recover that year through rewards. So you've just, you've voided any benefit from having a credit card. So you have to be able to just play the game. That's how you beat big banks and that's how they'll change. And you don't really care if they change as long as you don't fall prey to what they do. Be one that wins the game, like the credit card game. And now you're, that's how they'll change.

• 11:50Speaker 03

  If there's enough of us that do that, then believe, believe you me, they're going to change their credit card rules.

• 11:56Speaker 04

  That's, and also from a banking standpoint, same thing applies for the banks.

• 12:03Speaker 03

  Great question again. Want to thank our listeners for that. We're gonna, let's read this next question and then take a break because I want to spend a little bit of time on this.

• 12:11Speaker 04

  Sure, sure. Can you write off 100% of a work vehicle if it's your truck, but you drive all over the state for your employment?

• 12:18Speaker 03

  Great question. This is a tax question. We're not CPAs, but got some thoughts about it because a lot of times people are used to being able to deduct some expenses if they're driving your car around for work. Why not? All right. We're going to answer this question plus much more headlines. We're Money Wise, we'll be back.

• 12:35Speaker 00

  Have you been putting off your finances? Seize the day. Call the Money Wise office at 661-847-1000 or email [email protected] for more information on how our financial advisors can help your financial situation.

• 12:56Speaker 03

  Welcome to the Money Wise Show. We're live from the Gero Ellis padded radio room off Stockdale Highway, live on ESPN Bakersfield, 1230 AM, 101.1 FM. I'm Sherod Wait here with Sammy Abiyawie, taking your questions or comments. Got a great comment here, Sammy.

• 13:14Speaker 04

  Yeah. The second question was about the vehicle, right?

• 13:18Speaker 03

  Yeah.

• 13:19Speaker 04

  Can you write off 100% off a work vehicle if it's your truck, but you drive all over the state for your employment?

• 13:26Speaker 03

  So, yeah, this is a really good question. There were some changes in the tax laws in 2017, under President Trump's first administration, and huge changes. This is when the standard deduction was lifted, and a lot of those, or was raised, the standard deduction, and then a lot of the deductions that people were used to itemizing went away. And one of those was the ability for people to deduct unreimbursed vehicle expenses if their employer did not reimburse them. They could write off a certain amount based off of mileage or use of their

• 14:09Speaker 03

  personal car use. But that went away in 2017, and is not, no longer, the case. Now, there are a few tiny exceptions for employees of armed force, reservists, people who are qualified performing artists, fee-based state or local government officials. So remember, we're not giving tax advice, we're not tax professionals. So you don't want to consult with your CPA.

• 14:35Speaker 04

  That's right.

• 14:35Speaker 03

  But there are some exceptions. If you are working, though, it sounds like Sammy, their listener here, is working, and their employer is not reimbursing them for those expenses.

• 14:49Speaker 04

  Yeah, if they are reimbursing you, the amount is 67 cent per mile. So, the rules, when they changed, you have to print the start and the ending point on a Google map and submit that with your expense report, so just in case for audit reasons. But- Typically, an employer would reimburse somebody who's using their vehicle.

• 15:14Speaker 03

  For work.

• 15:15Speaker 04

  For work.

• 15:16Speaker 03

  Stop.

• 15:16Speaker 04

  You know, you're gonna go see a client, you're gonna drop something, whatever. Because it's not just the vehicle at that time, you're using your tires, you're using your gas, you're using your your car, basically.

• 15:26Speaker 03

  Right.

• 15:27Speaker 04

  So you should be getting reimbursed. If you're not reimbursed, I hear you, what I'm hearing you saying is there's ways for you to talk to your tax preparer and write off some of these things if.

• 15:40Speaker 03

  If you meet very specific criteria. Other than that, you'd have to be self-employed or own your own business. And there, that's where you could talk to your CPA about, you know, look, my employer doesn't reimburse me for these. But maybe your employer would allow you to set up your own business.

• 15:55Speaker 04

  Yeah.

• 15:55Speaker 03

  So that there can be some of those things that you were providing yourself that are not part of your job. But my guess is if your employer is requiring you to use your car and you're traveling up and down the state, your, your compensation is maybe based off of other things. So maybe they're not reimbursing you because they're giving you a high, they're giving you a per diem or something else.

• 16:15Speaker 04

  Maybe.

• 16:16Speaker 03

  That's, that's, that's there. But if you are self-employed and you own your own business, there are different rules that apply to how you can deduct vehicle expenses. It's usually based off of a portion of the mileage that you're using for business purposes. And that's why you would want to keep track. Either there's a standard mileage rate, like you mentioned, Sammy, or you have actual expenses that you're keeping track of. And a certain percentage of that is, is, is what can be deducted on your taxes if you're self-employed. So definitely take advantage of those if you're owning your own business or you are self-employed. Or maybe also ask your employer, hey, can I get reimbursed?

• 16:56Speaker 04

  Yes.

• 16:56Speaker 03

  For these, some of these expenses and that way it can sort of work out. So it's beneficially, it's tax benefit for you and your employer.

• 17:04Speaker 04

  If, yes, I agree.

• 17:06Speaker 03

  If that can happen, because then you don't have a way of deducting those like you did pre, pre 2017. But your employer could if it can be done through payroll. So that's a really, really good, smart question. Another great. Message here Sammy, it says, speaking of trends, my kids told me I'm old because I just found out about this chill guy meme. I'm not even that old lol.

• 17:29Speaker 04

  I, I found, I found out about this just this past weekend.

• 17:32Speaker 03

  Oh, you knew about it before?

• 17:34Speaker 04

  This weekend.

• 17:34Speaker 00

  Me too. Welcome to the club.

• 17:37Speaker 03

  Your sons, both your sons?

• 17:39Speaker 04

  My son.

• 17:40Speaker 00

  Oh yeah, my son said, it's been around for years too, maybe.

• 17:43Speaker 04

  I just, I just found out about it just two days ago.

• 17:46Speaker 03

  Oh my gosh, there's nothing that gives a, an 11 year old, or let's see, how old is?

• 17:51Speaker 04

  He just turned 12.

• 17:52Speaker 03

  Okay, even better. A 12 year old and what, a 15 year old?

• 17:55Speaker 00

  Yep.

• 17:55Speaker 03

  A 12 year and a 15 year old more joy than sharing a piece of, of, of, uh, what, what cultural Americana to their father? Who doesn't have any clue.

• 18:06Speaker 04

  I embarrass him in front of his friends. I try to use this big words that they, like riz. Like I tell his, in front of him, I tell his mom, babe, you got no riz. And he just starts laughing so hard. Like, how do you know that, that? I'm like, I do, I do, you know?

• 18:22Speaker 03

  Yeah, that's when he'll throw the chill guy meme at you though.

• 18:24Speaker 04

  That's right.

• 18:25Speaker 00

  Even before you answer that, it's like when I, I feel old when I'll hear his, some of the music he's listening to. And it'll remind me of a song that he, they ripped off. And I'm like, dude, you have to listen to the original. This is the original. And I play it and he's like, this is old crap. I'm like, never mind. I can't talk music with you, boy.

• 18:43Speaker 03

  Oh my gosh, yeah.

• 18:45Speaker 00

  Yeah, the chill guy brought up, was brought up on Friday at my house too.

• 18:48Speaker 03

  I had to look it up. I, I wasn't familiar with it. I didn't see how long it's been out, but.

• 18:53Speaker 00

  Yeah. If Ryan's correct, it came out on TikTok sometime last year.

• 18:58Speaker 03

  Oh, there you go. Yeah, it's actually pretty funny. I just started looking at what, you know, what's been posted on it. It's, it's pretty.

• 19:04Speaker 04

  Yeah, it's like a year ago, a year ago, October of last year.

• 19:08Speaker 03

  Well, you're not alone, listener.

• 19:10Speaker 04

  Nope.

• 19:10Speaker 03

  We, we're all, we all were just introduced to, to chill guy. What's it called? Chill guy.

• 19:16Speaker 04

  Chill guy.

• 19:16Speaker 00

  Chill guy meme.

• 19:17Speaker 04

  Chill guy, that's, that's it. Chill guy.

• 19:19Speaker 03

  It's just a cartoon.

• 19:21Speaker 04

  I mean, that would be a great costume for, for Halloween though.

• 19:24Speaker 03

  Yeah.

• 19:24Speaker 04

  The chill guy.

• 19:25Speaker 03

  Yeah, I agree. I agree. Hey Sammy, we were talking about banks and big bad. Banks. Here's a question. It says, is there an app that I can put money away outside of a bank? I'd like to save up money for upcoming family trips, but like to keep it out of the bank. If not, I'll keep putting it in the back freezer.

• 19:41Speaker 04

  I don't know. I don't know if an app, but here's the advice. Here's my advice as an ex banker. Open a savings account right next to your checking account and make automatic deductions on a monthly basis. Or every paycheck, hundred dollars, fifty dollars, whatever you're able to.

• 19:57Speaker 03

  Set up an automatic deposit into it.

• 20:01Speaker 04

  Into that account and call it travel funds. You know, I have a travel fund. I have a shopping fund and it makes sense because whenever I'm ready to travel, I have that ready and I'm not breaking bank.

• 20:14Speaker 03

  This is a question I'm guessing is because I don't want to put it in the bank because I don't want to pay the fees or get taken advantage of. That's what I read into this because otherwise, why would you want it somewhere else?

• 20:24Speaker 04

  Go to the bank and ask the bank for, hey, I'm going to open a checking account, but I also want a savings account. If I open both, can you waive the fees?

• 20:32Speaker 03

  There are a dozen banks within reach that somebody could do that for free right now. It's so banks, it's just shopping around. Now you don't want to just go around, open up. I think it's not wise to have a bunch of bank accounts all over the place because now you're just opening yourself up to fraud and missing the fee. You know, missing something and then, you know, introductory, you never know. You have introductory rates and then all of a sudden you realize you've been paying five dollars a month for some bank account that you've never even, don't even look at. So don't go do that. But you shouldn't have to pay for your banking is the, is the bottom line.

• 21:08Speaker 04

  That's right.

• 21:09Speaker 03

  You should not have to pay for an app that securely can put your savings in an FDIC account. I think FDIC is important. That protects you as a consumer against fraud, against working with some bank that's going to do something weird. Because now there's a lot of these crypto. Banks that are not even, not really banks, they're not regulated the way that the banks are regulated.

• 21:34Speaker 04

  Yeah, some of these fintechs are able to take on, take deposits, but then they use like more, uh, brick and mortar banks to put these deposits in. So there's a relationship between the fintech and a bank. And there's some stuff that happened, I think, July of last year, where some of these fintechs did not agree with the deposit banks. And then in the middle were these American consumers with a bunch of deposits they did not have access to.

• 21:59Speaker 03

  Correct.

• 22:00Speaker 04

  I think the name of the fintech was Synapse, I believe, if my memory is correct. So you've got to be careful too, when you go and open an online account. So you, you have to do your research and I'll be honest with you, I'm not there yet. I mean, there's apps, there's Robin Hood and there's other things where you can invest and things like that. But as far as banks, I really want to walk into a bank in order for me to trust it.

• 22:23Speaker 03

  Yeah.

• 22:23Speaker 04

  I'm not saying this just as an ex banker, but that's just me.

• 22:27Speaker 03

  For me, FDIC is the, is the key. And because FDIC, if for a bank to have that insurance coverage, which is now, the government has said basically a blank check for any bank that fails. And we saw this last year, year before, when we had a, a string of banks go bankrupt.

• 22:46Speaker 04

  In the Bay.

• 22:47Speaker 03

  Right up, right up the state. And what did the government do? They came in and they, not a single person lost a dime in terms of the consumer. The investors that were owning the stock in the banks may have lost money, but the depositors, there's not a single depositor that has lost a dime, uh, that has had FDIC coverage.

• 23:09Speaker 04

  And I, and, and, and with all honesty, I agree with that a hundred percent. FDIC needs to make people whole in case there is a bank failure. Why? Because it's the. It's the responsibility of the FDIC to make sure that the bank is healthy.

• 23:23Speaker 03

  That's right. The bank's not doing anything weird with depositors' money. They're not over leveraging, all of that stuff.

• 23:30Speaker 04

  All the audits and exams they do, it is the responsibility of the FDIC if the bank is failing.

• 23:36Speaker 03

  Right.

• 23:37Speaker 04

  Because there's red flags all around that you can, you can pick on in order for you to avoid a catastrophe.

• 23:44Speaker 03

  The banking game is one that you can win and meaning you don't have to get taken advantage of. You can win it by not paying any fees. Now, ultimately, you have to rely on a bank when you need a big loan, like for your, for your home, a car, college, things like that, that are, are generally viewed as, as worthy investments. Then that's where there's the, some negotiation and that's where you're going to have to work with a bank, unfortunately, because very few people can save $400,000 to pay cash for a house. So you're going to have to get in bed with a bank eventually. Just be smart about it and up, up to that point, there's no reason for you to pay a, a bank a dime.

• 24:29Speaker 03

  You can get away without paying a bank anything as long as you follow their rules and do the shopping.

• 24:34Speaker 04

  I agree with you. Like anything else, you've got to shop.

• 24:38Speaker 03

  That's it.

• 24:39Speaker 04

  Like anything else.

• 24:40Speaker 03

  Great stuff. Got a few more messages. Keep them coming our way. Great comments and questions, 661-396-1000. We're going to take a break and we will be right back.

• 24:50Speaker 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.

• 25:18Speaker 03

  Welcome to the Money Wise Show.

• 25:21Speaker 03

  It's been too long since we've had Taylor Swift. Welcome to the Money Wise Show, 661-396-1000. I'm Sherwood here with Sammy Abialy.

• 25:28Speaker 04

  Are you a Swiftie?

• 25:29Speaker 03

  Yeah, well, I can't say that anymore. Emily has knocked me down, said, "You can't call yourself a Swiftie."

• 25:35Speaker 04

  Why not?

• 25:36Speaker 03

  I guess it's politically...

• 25:39Speaker 04

  Not correct?

• 25:40Speaker 03

  Not correct?

• 25:41Speaker 04

  Oh.

• 25:41Speaker 03

  No, I mean, I think if to be a Swiftie, she says, "You have to be able to name all of the albums in chronological order and, you know, be able to, you know, sing a certain number of songs."

• 25:52Speaker 04

  Songs and stuff, okay.

• 25:53Speaker 03

  I'm not there, I'm not quite there.

• 25:54Speaker 04

  I'm definitely not there.

• 25:55Speaker 03

  Yeah, no, no, neither am I. There's a question, a comment here, Sammy. It says, "For Gero and his beautiful family, what was the fake family he would always use for examples?" Been bugging me, trying to remember something. It's, Stevie, you know what this is.

• 26:09Speaker 00

  McGillicuddy.

• 26:10Speaker 03

  McGillicuddy, right?

• 26:11Speaker 00

  McGillicuddy.

• 26:11Speaker 03

  Mrs. McGillicuddy.

• 26:14Speaker 04

  McGillicuddy.

• 26:14Speaker 03

  From Tisha, Oklahoma?

• 26:18Speaker 00

  Oh, man.

• 26:19Speaker 03

  I can't remember where it was, from Oklahomans.

• 26:21Speaker 00

  He's mixed it up so many times.

• 26:22Speaker 03

  Yeah, thanks for thinking of Gero. We think of Gero all the time. We'll never forget. Gero's co-founder here at Money Wise and still recovering from a stroke that happened earlier this year. So, we still get a lot of love and really appreciate the love and prayers that continue to come in for Gero Ellis here in the Gero Ellis padded radio room off Stockdale Highway. Sammy, over the weekend, actually just today, Warren Buffett, one of our Money Wise mentors, heroes, really, financial investment heroes, released a letter giving some more information about his estate plan. A lot was already known. Warren Buffett, many years ago,

• 27:03Speaker 03

  committed to giving away 99% of his estate, which today is worth almost $200 billion.

• 27:11Speaker 03

  So he committed along with a slew of other billionaires to essentially give away all of their money to charity and to pass on just a small amount to their children. Warren Buffett's case, 1% of $200 billion is still a lot of money that his kids are gonna get.

• 27:35Speaker 04

  Yeah, and I don't know if this is true or not, but I read somewhere where a lot of these foundations are actually operated and ran by some of his kids. I don't know if there's truth to that or not, but that's...

• 27:49Speaker 03

  There's definitely truth to that. He mentions it in his letter, which was made public today. Warren Buffett converted 1,600 A shares and 2.4 million B shares of his company stock, Hathaway, and Berkshire Hathaway shares, which totaled just over a billion, 1.1 billion dollars that he is gonna give away to charity. He's been giving away about a billion dollars every year, at least for the last, I think, six years. So this is just right on track with what Warren Buffett has already said he's going to do. And I think it's a really interesting subject in terms of some of the information that he gave out in this letter.

• 28:34Speaker 04

  Yeah, that's very interesting. What's interesting to me is that he's including his kids and his kids know about his will and what his plans are. And he's making them part of the execution plan eventually, which is awesome. In my banking career, I've seen business owners and people get into a certain age trying to exit the business. It was hard for them to have these types of conversations with their kids. I don't know if it's taboo or whatever, but the fact that he's doing this is awesome and hopefully setting an example for others to follow.

• 29:12Speaker 03

  Yeah, he's been a big advocate of sharing with your kids your will before you even sign it and having that conversation with your kids. He's made it clear that he's against dynastic wealth. He doesn't believe in just leaving on a massive amount of wealth to your kids or grandkids or great grandkids because he feels as though you don't, that dynasties or wealth dynasties could have negative consequences. There's some personal growth that he feels is not, can't be accomplished and it complicates

• 29:50Speaker 03

  relationships when you're a trust baby and you've got that enormous safety net where you never really need to

• 30:00Speaker 04

  Work.

• 30:01Speaker 03

  Produce anything. You can see how that could cause some concerns for Warren Buffett, but his kids are no dummies. They've been involved in these philanthropies for many, many years and he gives them credit for not over focusing on wealth. And he says that he and their mother would be very proud of how much they are not obsessed with wealth, but in giving back. And I think that that's maybe made it easier for him to talk to his kids. But there is a taboo and that's what I wanted to ask you, talk to you about Sammy is, as a financial advisor, I've often give that advice to my client to, for them to talk to their children if they have not already about what they can expect in their will or in their trust.

• 30:45Speaker 03

  And it's not always well received.

• 30:47Speaker 04

  No, no.

• 30:48Speaker 03

  And I get that, I get some of the pangs that can happen as a parent, having those discussions with your kid, but I feel like I'm not, I don't quite understand where it comes from.

• 30:59Speaker 04

  When I was a banker, I was asked by one of my clients to actually sit with their dad and talk about estate planning and introduce them to that because they were fearing, not in the sense of a fear, but they, it was taboo to talk to their dad about, you know.

• 31:18Speaker 04

  Wills and state planning and having life insurance, all of a sudden they were, they were thinking that their dad might think that, oh, these guys are waiting for me to, to pass and go on in order for them to start, you know, collecting and, and, and that's what may, makes these conversations very, very difficult, especially in certain cultures. You know, we have a lot of immigrant families that come to this country, Eastern Europe, North Africa, Middle East, Southeast Asia, and it's taboo for people to talk about death and, and, and inheriting after I die and all that, because the family is so close to each other that they don't even want to think about, hey, my dad is gonna pass. That's not something that they want to think about. They'll just deal with it when it happens.

• 32:02Speaker 03

  And then when it happens and there hasn't been any communication, that's where there's problems.

• 32:07Speaker 04

  That's right.

• 32:08Speaker 03

  Yeah, I'm guessing that's, no matter what culture you come from,

• 32:11Speaker 04

  Yeah.

• 32:12Speaker 03

  The, if the lea-, the less communication you have, the more probability there to be problems after you're gone. And as a father, it would break my heart to think of, man, I could have just sat my three boys down, my wife and I could have had that dinner conversation and, and gotten this out and faced it now, rather than, um, gone and now they're just gonna fight over

• 32:35Speaker 04

  That's right.

• 32:35Speaker 03

  Things that you didn't even think they could fight over, that don't even matter to you.

• 32:39Speaker 04

  That's right.

• 32:40Speaker 03

  That may not even matter to you, but you didn't have that conversation with them.

• 32:43Speaker 04

  I love the idea of just sitting down with your kids and telling them about your plans, because some of these plans might be very, very appealing to them as well, and they want to be part of them.

• 32:51Speaker 03

  What's the, what's the fear, though? Is there a fear of not, what comes to your mind in terms of, why wouldn't you do it?

• 32:58Speaker 04

  I would do it personally, but why wouldn't I do it?

• 33:00Speaker 03

  Yeah.

• 33:01Speaker 04

  It's just culturally, like, it's tough.

• 33:03Speaker 03

  Yeah, but what, what culturally comes to mind, like, you just

• 33:06Speaker 04

  Oh, I'm from, I'm originally from Morocco.

• 33:08Speaker 03

  Yeah.

• 33:08Speaker 04

  And, and, you know, Arab culture in general, you know, you start talking about death, because in the Arab culture, especially in, in Islamic faith, God is

• 33:18Speaker 03

  In charge of that.

• 33:19Speaker 04

  In charge of that. Like, he's, he's got the plan, you just, you just need to trust.

• 33:23Speaker 03

  Right.

• 33:24Speaker 04

  Right?

• 33:24Speaker 03

  So, so sort of

• 33:25Speaker 04

  But also, I mean, I, we have an apolitical and a-religious show,

• 33:29Speaker 03

  Yeah.

• 33:30Speaker 04

  But since we're talking on, about the subject, God also says, hey, plan.

• 33:34Speaker 03

  Right.

• 33:35Speaker 04

  There is the talk about will and, and the holy book and, and, and what have you, so There is a way for you to create a will, make sure that there's a plan and talk to your kids and make them part of the plan. Right? So the, the, there's the culture and there's the religion and people sometimes omit one over the other or mix them up.

• 33:56Speaker 03

  And I think that you hit on something that makes it really hard for us as parents to talk about with our kids because you're, you're outlying. There's a fear I know that I have. I've talked to my kids about what they're going to have. I've been as transparent as I can with my kids. But there is, and before we had these conversations, when our kids were younger, I would have this fear of imposing something onto my children.

• 34:17Speaker 04

  Yeah.

• 34:18Speaker 03

  Maybe when they're too young, um, some sort of expectation or, or, or I can tell where for some people, they would be concerned about their kids becoming lazy. Or not motivated because they're just, you know, they're going to be expecting this.

• 34:33Speaker 04

  That's right.

• 34:34Speaker 03

  Well, my, my answer to that would be really think about that. And as a parent. And you know, this is what Warren Buffett says, I've observed my children and how they've dealt with money. As a parent, you would hope that you would have some influence on your, on your children, even if they're adult children. That there may be an opportunity for you to still have some apparent influence on your kids. Like I know, son, I know you're in your 50s. And I, maybe I should have had this conversation a long time with you. But this is what was meaningful to me about why I saved this money, or why I have these properties that you, you and your sister are going to have.

• 35:11Speaker 04

  And you're completely right because just as an FYI, the kids or Warren Buffett's children are 66, 69 and 70, 71.

• 35:19Speaker 03

  Yeah.

• 35:19Speaker 04

  You know, we say kids, but they're adults.

• 35:21Speaker 03

  Adults. Yeah. And my kids are all adults. My youngest is 20, but they're, they're adults.

• 35:26Speaker 04

  Yeah.

• 35:27Speaker 03

  So I can have a different conversation. But I remember when our kids were young, us at the dinner table going, Dad, how much money do you make? And me kind of scratching my head and going, how do I answer this? Because I don't know, you know, what, what these numbers mean to them. And so it led to a discussion, well, I don't know, how much money do you think I make? How much money do you think somebody should make?

• 35:49Speaker 04

  Yeah.

• 35:49Speaker 03

  Things cost. So as as young children, when they're younger, that's why, you know, yeah, eventually my kids knew exactly, not exactly, but they had an idea of how much money I was making, why I was making. And it's sort of, they've learned of my relationship with money and why I had, what, what my relationship to money and investments and finance was. And I was hopefully modeling a healthy relationship with money, just like I would, I was modeling my diet, you know, with my kids and my exercise and my sleep habits and, you know, my hygiene, you know, hopefully my, my boys picked up on all of these things.

• 36:28Speaker 04

  You have an audience. See with kids, you have an audience that sometimes they're watching, but they're not saying much, but they're still watching. And every little thing that you do, including your finances, they're learning from it.

• 36:41Speaker 03

  So in their lives, I'm kind of answering the question again, Sammy, why we struggle as parents to talk to them about our, our finances and ultimately what they could expect if we were to die is because most of us, myself included, I'm not perfect, have problems or issues. We, we have gaps, we have failures. Maybe we haven't saved enough. Maybe we've got these, these, these credit cards on the side that we've been paying for years and there's some, some shame involved in, in that. And again, I would say you are not alone. The vast majority of Americans, I don't remember the latest statistic is, but the vast majority of Americans cannot come up with a few hundred dollars if there was an emergency and the, and their paycheck wasn't there.

• 37:25Speaker 04

  400 bucks, I think the last time you and I talked, it was like 400 dollars.

• 37:29Speaker 03

  Yeah.

• 37:30Speaker 04

  They cannot cover an emergency of 400 dollars.

• 37:32Speaker 03

  And I think it's somewhere around 70 to 75% of Americans are living paycheck to paycheck. Literally, you know, you're, you're putting off paying bills until that paycheck comes. So this is not, this is a human problem that we all have, but it gives you an opportunity to get, getting your own finances in order and feeling more confident about where you are financially, even if it's not the prettiest picture, will help your children, especially your adult children. And maybe it gives you some motivation to get your financial house in order, get that will, get that trust. Like, how do you have that conversation with your kids if you don't even have a will, you know, or a trust?

• 38:11Speaker 04

  Look, there's a lot of social pressure for us to conform. To certain things, like having the house and having the car and having a certain house in a certain neighborhood and all that. Look, you gotta do you. You gotta have a plan. You gotta execute the plan and you gotta go step by step. That's what I learned personally because I was that person that wanted to compete and be and it's kind of like a race. They call it a rat race. Is that what they call that?

• 38:43Speaker 03

  Yeah.

• 38:44Speaker 04

  Yeah, that didn't get me anywhere.

• 38:46Speaker 03

  Yeah.

• 38:47Speaker 04

  Then I got off that treadmill, created my own plan, going at my own speed. I got happier, man.

• 38:54Speaker 03

  Yeah.

• 38:55Speaker 04

  Got happier because I am no longer having those social pressures anymore. And if you don't like me this way, guess what? I'm okay with it.

• 39:04Speaker 03

  Yeah, it's what you've described is oftentimes there's a there you have a relationship with money, money and debt. You can either be enslaved to it or you can be the master of it.

• 39:15Speaker 04

  That's right.

• 39:16Speaker 03

  And you being the master of that and rather than being enslaved to it, isn't dependent on how much money you're making. It's a mindset.

• 39:23Speaker 04

  That's right.

• 39:24Speaker 03

  And you can get yourself into that into trouble. That's what how many how many millionaires you know, Sammy, that you couldn't give a loan to and they're making millions of dollars every year and the bank is can't touch it, right?

• 39:35Speaker 04

  Yeah.

• 39:36Speaker 03

  And then you have somebody that's on the on the other end as well. You know, there's no money you can't touch it, but you have people on both ends of the spectrum where you can't. They're very financially secure because they have that mindset that you just talked about where you went from being on a treadmill, not having a plan, not really knowing where you're going. You're just paying your bills as you do every month. Well, trust me, if you're just using the balance on your checking account ATM, you know, every every every time you make a withdrawal to keep you within budget, you're just going to be like every other American that's just out there spending and accumulating debt, not really going anywhere.

• 40:12Speaker 04

  Saving is, yeah, I agree with you.

• 40:14Speaker 03

  Saving is the key. Setting up, you know, easy automated savings is by far the most simple way to get into a sense of financial security.

• 40:27Speaker 04

  Hundred percent agree.

• 40:28Speaker 03

  All right, we're gonna take our final break. We're Money Wise. Don't go anywhere.

• 40:30Speaker 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.

• 40:53Speaker 03

  Thanks for tuning into the Money Wise Show. That's Sammy Abiyawi. I'm Sherod Wade. We're your hosts today. Great questions and comments. We really appreciate it. Here's another message, Sammy. It says, "Is a court order settlement taxable for pain and suffering?" Put on your lawyer hat, Sammy.

• 41:10Speaker 04

  Very good question. Having gone through the process of collecting some pain and suffering that was due to an accident, it was physical. I did not have to pay taxes. That's my own experience. With that being said, I would recommend talking to your tax professional because it could be and it cannot be. So, mine wasn't, I guess because it was physical, but the emotional one could be.

• 41:35Speaker 03

  Physical injury or sickness, if the mental stress is directly linked to a physical injury, for example, the settlement is generally not taxable. This would include compensation for emotional distress arising from a physical harm. That's kind of what we're saying. But the non-physical injury, so if the settlement compensates for emotional distress without any associated physical injury, it's typically taxable, similar to punitive damages. Generally, punitive damages are generally taxable regardless of the nature of the underlying claim. Again, we're not attorneys, but that's in California, that's generally the rule. If you think of, most people think of car accidents, you know, in a car accident, you

• 42:16Speaker 03

  have a physical injury. Those settlements generally, our compensation for the injury and the stress involved from that injury generally are not taxable. But ask a competent attorney. That's what we recommend. Sammy, the, there was a...

• 42:38Speaker 03

  A visit today from Governor Gavin Newsom, our state governor. He was in town today. I didn't see what he had to say, but it did coincide, at least with the press release that the governor gave today issuing a statement about clean vehicle rebate program, essentially saying if the federal government and President Trump comes in and takes away the federal tax credit or eliminates the federal tax credit for EVs, he's basically saying, we're going to bring back the tax credit that we were previously providing to California citizens. We're essentially going to come make that up and keep those rebates going.

• 43:21Speaker 03

  And this is a tricky, tricky territory right here.

• 43:25Speaker 04

  Yeah, very tricky, especially for us in Kern County, where we're an oil county. We produce oil and we know that this industry has taken a beating, especially from his office, for all the regulations and what have you that he's put on the production in all state, not just in Kern County. So to me, it's a little bit baffling because we're already in a deficit and now we're adding this.

• 43:53Speaker 03

  How does the state afford this? The state has been getting federal compensation through the federal programs to help compensate for people who are buying electric vehicles, a federal, so it's sort of like a federal program. If the federal program does away with that, no longer state has that credit, so we're essentially just going to start doing it ourselves again. And I don't have a problem with that. If we can afford it, we can see how economically this works out for us. The way that this only works out for us, though, I see, is if the rest of the federal government follows suit and the rest of the country follows suit.

• 44:29Speaker 04

  Yes.

• 44:29Speaker 03

  Otherwise, we're sort of, in many ways, supplementing the rest of the country that is not willing to play ball. That's what upsets, that's what can be troubling.

• 44:38Speaker 04

  What's upsetting to me also is that we have a lot of need. Our infrastructure needs a lot of help.

• 44:46Speaker 04

  The way we we help that infrastructure, we invest in it is through these taxes that we pay at the pump. So what's his plan through these EVs, sales and rebates? And how is he planning on increasing the income for the state so we can afford fixing our crumbling infrastructure?

• 45:06Speaker 03

  Well, because right now, a lot of that's coming from gas taxes.

• 45:09Speaker 04

  That's right.

• 45:09Speaker 03

  You don't pay that if you have an electric vehicle. 26% of all new vehicle sales in the state of California in the fourth quarter, in the third quarter of this year were electric vehicles. Can you believe that?

• 45:21Speaker 04

  Yeah, but.

• 45:21Speaker 03

  Almost a quarter of all new vehicle sales are electric vehicles in California.

• 45:25Speaker 04

  Let's research how many people go back after their first electrical vehicle. How many people go back and buy another one?

• 45:31Speaker 03

  Oh, yeah, that's a good question. Yeah, how many repeat?

• 45:34Speaker 04

  How many repeat clients do we have that buy EVs and go back and buy another EV?

• 45:39Speaker 03

  Well, yeah, there's definitely the demand is going down. The question is, how are we going to transition? And, you know, the state of California is, you know, bless its heart, is a pioneer in so many ways, but the taxpayers of California are the ones that are going to be paying for it. And I wish that there was.

• 45:56Speaker 04

  Just need a better plan.

• 45:57Speaker 03

  A little more clarity, a better plan. There you go. I want to thank all our listeners for tuning in. We will be back tomorrow. You don't want to miss this show. If you did, go to Spotify or Apple Music. And remember, be smart, be safe, and always be money wise.

• 46:11Speaker 02

  Securities offered through SCF Securities, Inc., member FINRA/SIPC. Investment advisory services offered through SCF Investment Advisors, Inc. SCF Securities, Inc. and Money Wise Wealth Management are independently owned and operated.