1/13/25 Fires, Finances & Fraud: Safely Donating, Disaster Loans, and 401(k) Crash Protection

The Moneywise Radio Show and Podcast Monday, January 13th 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?

• 0:29Speaker 02

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

• 0:40Speaker 00

  Now, let's start the Money Wise Show.

• 0:43Speaker 03

  Welcome to the Money Wise Show. We are live from the Gero Ellis 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've got your host, myself, I'm Sharad Waite.

• 1:04Speaker 04

  And I'm Sammy Abiyawie.

• 1:05Speaker 03

  Sammy, happy Monday.

• 1:06Speaker 04

  Happy Monday to you too, Sharad.

• 1:08Speaker 03

  We have so much to cover today. We've gotten a few listener questions over the weekend, and we're going to address those questions and talk about some other headlines that are going on. But let's get right to our questions, first of all, because this addresses the fires, which we want to get to.

• 1:24Speaker 04

  Yes.

• 1:25Speaker 03

  You got it?

• 1:25Speaker 04

  Yeah, yeah. I had a little bit of trouble with my chat, but I got it. Good afternoon. First off, prayers to all those affected with the crazy fires, and I know this happens every time a natural disaster occurs. But I'm seeing fundraisers, whether it's GoFundMe, American Red Cross, et cetera. But I'd love to donate, but nervous that the money isn't going where it's needed. Is there a way to make sure before sending out a donation? Very good question.

• 1:51Speaker 03

  This is such a good question, Sammy. So let's talk about the fires, first of all, and some of the economic implications to this, the biggest one being that's addressed the question, which is how do you avoid fraud? And why is it, Sammy, that we have fraud when there's tragedy?

• 2:08Speaker 04

  Agreed. It's all about greed. People trying to take advantage of a situation that's bad for others and just trying to capitalize on it.

• 2:16Speaker 03

  You know, I hate to get dark on humanity, but it is, it is, everybody gets, you know, the vast majority of the public gets frustrated when we hear about looting and things like that are happening in L.A. People impersonating firefighters and doing these things down there. Because we're all in heightened, you know, emotional state, thinking our loved ones are in danger. They're, you know, how far is this fire going to spread? Is it going to come over the grapevine? You know, we have all of these, these concerns and at the same time, we're dealing with natural disaster. And then we're dealing with human natural disaster, just this, this innate part of us, where there's a very small percentage of the population just wants to take advantage of a horrible situation.

• 2:59Speaker 04

  I have a message for fraudsters personally.

• 3:02Speaker 03

  Get the button ready, Stephen.

• 3:04Speaker 04

  If you have, if you spend the same energy creating an idea or a process or a project, the same amount of energy you're spending on creating a fraudulent activity.

• 3:16Speaker 03

  Yeah.

• 3:17Speaker 04

  You'll actually be way ahead in life.

• 3:19Speaker 03

  Oh, yeah. Yeah.

• 3:21Speaker 04

  Right?

• 3:21Speaker 03

  Yes.

• 3:21Speaker 04

  Now, you're spending so much energy and time on, hey, buying this fake firefighter's uniforms.

• 3:29Speaker 03

  Right.

• 3:30Speaker 04

  Or creating a fake account or coming up with these ideas. Imagine if you just spend that energy in, on something good.

• 3:37Speaker 03

  Doing it the right way or doing something correct. Yeah.

• 3:40Speaker 04

  And maybe you'll, you'll slowly get there, but eventually you will get there without any trouble to yourself, your family, or hurting somebody else.

• 3:46Speaker 03

  The, you know, fraudsters are always trying to get you to get in a state of mind where you are either nervous or panicking, or they want to get you to a point where you feel like you have to make a decision. Because if they can get you there, then they can manipulate you to give up information, private information, or to just send money and send money to them. And so when you have thousands and thousands of people that are concerned and want to help

• 4:16Speaker 04

  Correct.

• 4:17Speaker 03

  the firefighters and the fire victims down there. You also have this dark side of society that is all over the news now. And so I love this question. I want us to give some tips. Yes. For what people can do to not be taken advantage of when they're donating to a cause like the like the fire tragedy that's happening in LA. First of all, regardless of what the tragedy is, there are similar patterns that these fraudsters use in all of these environmental disasters or tragedies that happen. And so if you can recognize some of these things, then you have a much greater chance of not get taken advantage of.

• 5:01Speaker 03

  And the first tip that we'll give is that the fraudsters are always are generally using a tactic to make you feel like there's a limited time or that you have to you have to take action quickly or you'll miss out on the benefit. For example, a fraudster might call you and say, hey, look, I know your house is in danger or your house is burned down. But if you file within the next few hours or if you file now with me, you will be able to be entitled to these extra benefits. Yes. And the reason why they want to get you acting right then is because they know if they let you go off the phone or off of your email contact, then all of a sudden you have

• 5:46Speaker 03

  more chance to run into a neighbor or a family member or a friend that says, hey, wait, what is that? Yes. What are you doing? And then they question it and then you start questioning it and then you don't do it. That's right. And so the first piece of advice that I want to give is scammers, anytime you need to make a donation to a charity or to a cause like this, there's no rush. You don't have to do it right then. I don't care what they say, and especially if they're calling or proposing some sort of government program that is limited. Trust me, the government takes forever for these things to be implemented and they take forever for them to close and they always end up extending it. And there's long deadline periods because the government knows it's going to take a

• 6:28Speaker 03

  while for you to get your head straight to be able to start doing some of the legitimate process to be reimbursed or whatever. So that'd be the first thing to look out for. If they're pressuring you, back off. Even if they're legitimate and they're pressuring you, it's always wise to say, This all sounds great. Let me, let me, uh, let me look, let me get back to you. And, uh, and then you can hang up and then give it some time. Give it an hour or something and

• 6:56Speaker 04

  Let me ask my spouse.

• 6:57Speaker 03

  Yeah, let me ask, that's a perfect. Ask my spouse, you know, I'd love to give you some money now, but

• 7:02Speaker 04

  That's not the best exit you can have. If you're emotionally like, you know, you, you can't say no to people. Just say, let me ask my spouse.

• 7:10Speaker 03

  Now, here's a problem though, Sammy, is a lot of these fraudsters are impersonating legitimate businesses and government agencies. Sometimes they're, they're saying they're attorneys or they're contractors or consultants. So if somebody is saying that to you, it's very difficult for you to verify that just by maybe a caller ID or by their voice or the email.

• 7:29Speaker 04

  That's why you take your time, like you said.

• 7:31Speaker 03

  Yeah.

• 7:31Speaker 04

  I mean, going back to your step number one, take your time and do your research.

• 7:35Speaker 03

  Cause, cause then what you can do is go back and say, and go to, go to the source directly. So for example, if they're calling and they're saying they're from the Red Cross, great. I love the Red Cross. I want to donate, but don't, you don't have to do it right then over the phone. What you can do is hang up and say, look, I'm going to look into this. I'd like to help where I can. You hang up and then you go to Red Cross directly. That is whether you, you call them directly or you go to their website.

• 8:01Speaker 04

  Website or

• 8:02Speaker 03

  And then, because you can donate to these organizations directly. And there's a real benefit to donating to an organization directly because then you cut out the middleman. You can just go directly to the Red Cross or directly to the, whatever the charity is that you are

• 8:18Speaker 04

  So be skeptical is what you're saying.

• 8:20Speaker 03

  Yes, be skeptical. Verify the charities. And there are ways that you can research the charity. If you're unfamiliar with who you should be giving money to. There's several free programs and free online resources where you can verify the charity. Charity Navigator is one. It's charity navigator.org. Or, uh, you can give to give.org. This is the BBB, the Better Business Bureau's website about Wise Giving Alliance. It's called give.org. Even FEMA has their own Own direct website FEMA's volunteer and donation page at FEMA.gov. So again, you're going to the legitimate source, legitimate charity.

• 9:06Speaker 03

  You go to the legitimate screener to see what the charity, if the charity is legitimate or not. And then donate directly. That avoids the unsolicited donation. Which usually means you're not doing it through social media or, or email or phone.

• 9:24Speaker 04

  Yes, definitely not through social media.

• 9:28Speaker 03

  You can use your credit card too. And let me tell you why there's an advantage to using a credit card. It's not because you don't have to pay for it because we always advocate paying your credit card off every month. It's because credit cards bring added fraud protections.

• 9:42Speaker 04

  That's right.

• 9:43Speaker 03

  Much more so. It's much easier to contest a fraud that on credit card versus a debit card.

• 9:48Speaker 04

  Or, or, or an account.

• 9:50Speaker 03

  Right.

• 9:50Speaker 04

  Number. So if you give, if you give your routing number, an account number, then you're opening yourself up.

• 9:55Speaker 03

  Yeah.

• 9:56Speaker 04

  To definitely being, being, being, being hacked or, or what have you. And please do not give your social security number. I'm talking about a special group of the population, especially the elderly. That tend to give the most. Do not give your social security number. To under no circumstance.

• 10:15Speaker 03

  Right.

• 10:15Speaker 04

  They don't need your social security number if you're going to make a donation.

• 10:17Speaker 03

  That's right. Now what they'll say though, Sammy is those like, I'm, I'm from FEMA. And I need your social security number to verify that you're entitled to this package or entitled to this benefit. And that's where people, they've already been on the phone maybe for an extended period of time where the person sounds very legitimate. The person, here's, here's another thing that fraudsters are getting so sophisticated that, that if they know a little bit about you. Then it can automatically make you feel like they have access to that information. So they can say something like, well, I know you have a Wells Fargo account. And therefore I'm calling about your Wells Fargo account from Wells Fargo. Well, if you happen to have a Wells Fargo account, you immediately are, are thinking this is legitimate.

• 11:01Speaker 03

  If you don't have a Wells Fargo account, you might think, okay, they're a scammer and you're going to hang up, but that scammer. Doesn't care if you hang up on them. They're gonna call a hundred people that they find somebody that, you know, that takes the bait.

• 11:10Speaker 04

  They're gonna have somebody that's gonna take the bait, yes.

• 11:13Speaker 03

  And, and, and so.

• 11:14Speaker 04

  That's unfortunate.

• 11:15Speaker 03

  It's so unfortunate. You don't have to do any of this over the phone. You don't have to do it over text. This all can be done directly by you contacting the organization itself. And fortunately, right now, there are a lot of really great charities that most people are already familiar with because they're nationwide. I mentioned one of them already, American Red Cross. They're one of the nation's most well-known nonprofit disaster relief organizations. They've been sending teams. They have teams out there right now. A Red Cross is very accessible. They make it easy to support. And you can call them directly, redcross.org. Another charity, United Way of Greater Los Angeles. We have United Ways all over the country.

• 12:00Speaker 03

  There's a United Way of Greater Los Angeles that has a Wildlife Response Fund. Again, you can go to unitedwayla.org. California has a fire foundation that has been set up to, for wildfire relief. And there is an online form there that you can access to donate to that. California Community Foundation, which this is great. We believe in these community foundations. We've got a great one here in Kern County. California also has a foundation that is Los Angeles-based that provides financial support for those in the area, specifically for the Wildlife Recovery Fund.

• 12:39Speaker 03

  So, and of course, GoFundMe has a lot of verified fundraisers, but GoFundMe can be trickier because.

• 12:48Speaker 04

  It can be.

• 12:49Speaker 03

  Yeah, it's like, almost anybody can be on there.

• 12:52Speaker 04

  That's right. Though they do a very good job, from my own experience when I was raising funds for the earthquake in Morocco, it took almost three weeks for them to verify my identity.

• 13:02Speaker 03

  Oh, really?

• 13:03Speaker 04

  They did a very good job.

• 13:04Speaker 03

  That's good.

• 13:05Speaker 04

  They would not release the funds until they asked so many things. They went through everything, almost, up to the point where I was getting. Upset.

• 13:11Speaker 03

  Yeah.

• 13:12Speaker 04

  I was telling myself, I was like, maybe I signed up, this is, this is fraudulent. This website, like, like now I had like thousands of dollars being donated and I don't have access to that.

• 13:23Speaker 03

  Right.

• 13:24Speaker 04

  It was scary. Until they released those funds, I was, I was in limbo.

• 13:29Speaker 03

  GoFundMe has a platform where people set up, outside people set up a fundraising program. But GoFundMe also has their own, their own company nonprofit arm. And GoFundMe has set up their own support fund for the wildfires, which is interesting. I didn't even thought about GoFundMe like donating themselves. So there is a aggregated list of verified fundraisers on GoFundMe. So you can, you know, you can find, what they've probably done here, Sammy, on GoFundMe is they've vetted some of these families that are trying to raise money for, you know, for whatever their needs are.

• 14:06Speaker 04

  Yeah, yeah. And there are multiple families, I've seen that.

• 14:09Speaker 03

  This is, I really, this is such a, such a tragic.

• 14:13Speaker 04

  It is.

• 14:13Speaker 03

  Event that's happening right now as we speak. We were on the, on the air last week when it first hit and it just continues to get scarier. We're seeing the winds now today. So our thoughts and prayers are all for anybody that's affected there in LA.

• 14:28Speaker 04

  I don't know when we're going to have a minute just to talk about a brighter thing happening, especially from the SBA side, offering a help in the, in the form of programs that are available now that Los Angeles, Ventura, Santa Barbara and Kern County. All, all four counties are declared disaster zones.

• 14:47Speaker 03

  Yes, including Kern County.

• 14:48Speaker 04

  That's right.

• 14:49Speaker 03

  And so there are some, let's talk about this after the break. Let's take our first break and then talk about the SBA and these programs that are available now that we have this declared disaster. See what you might be entitled to or be aware of if, if you have been affected by the fires. Again, we invite you to send in your questions or comments anytime throughout the show or even not during the show. 661-396-1000. We're going to take a quick break and we'll be right back.

• 15:18Speaker 00

  Money Wise Wealth Management is the only locally owned independent firm that uses a comprehensive wealth tax and estate approach. Working closely with a highly trusted CPA and attorney. For information on how Money Wise can help you invest and plan for your future. Call 661-847-1000.

• 15:37Speaker 03

  Thanks for tuning in. We're on the Money Wise Show. I'm Sherid Wait here with Sammy Abiyawie. We're your hosts today, talking about the fires that are happening down in LA and what are the, what are some of the programs that are available that might be able to help us financially, economically. I read just this morning, Sammy, that our governor Gavin Newsom has announced that they are waiving the requirement for the CEQA requirements for rebuilding in the LA area, the environmental review requirements that are generally required in these, you know,

• 16:21Speaker 03

  construction situations that that's going to be completely waived, which is fantastic news. We need more of this kind of stuff that the government can do to streamline the ability of people to rebuild. And these, these environmental reviews are a total nightmare for, for contractors to deal with and for homeowners to deal with, especially in the LA area. So there, you know, there is start, we're starting to see some beginnings of our government stepping in and

• 16:51Speaker 04

  Helping.

• 16:51Speaker 03

  Helping. We're, we're really, in all honesty, I think they, they may have failed us. We may, we may find out later what, what, how the government has let this happen. How has this gotten so bad?

• 17:02Speaker 04

  I was going to be facetious Sherid when you said he's waived the requirement for certain construction requirement. I was going to say, can he waive the requirement of dumping all that water in the Pacific and just sending it down to where it belongs, in my opinion? But I don't want to be political again on the show. I just, when I see things being burnt and people being homeless, and we could have helped a little bit, I just get upset.

• 17:26Speaker 03

  In fairness, these are problems that have been building up for decades. The fact that our forests have not been managed properly, the fact that we have not been managing our water, you know, for decades now as a state. We have so much dysfunction as a state because we're so big and tall and long. Long and skinny with a massive population, a diverse population that has a few different centers in the state. And so it's just, that's the big challenge with California, especially is is to know how to, how to support us. So fortunately though, Sammy, you've brought some information to the show today about the SBA. And when I, when I hear SBA, it's a small business

• 18:10Speaker 03

  association. I'm thinking, well, what does a small business association have to do with the fire relief?

• 18:15Speaker 04

  It's, it's, it's a government entity. And as any other government entity, they're declared the four counties as disaster zones. And the counties that are declared currently as disaster zones are Los Angeles, Ventura, San Bernardino, and Kern. Of course, the other three are affected directly. Kern is, could be affected indirectly. Some of the things that come to mind there is just, for instance, the delivery of, of, of fuel from, from down south.

• 18:49Speaker 03

  Yeah.

• 18:49Speaker 04

  A lot of our fuel is, is being either trucked over here from the refineries in Long Beach and and other areas. That's one of the things. The other thing that I read about was just the migratory labor that exists between these four counties, especially when it comes to ag.

• 19:05Speaker 03

  Yeah, we're talking about the spillover effects, proximity to these other counties. Kern County is not on fire yet, but a lot of Kern County citizens and business owners have been affected because they either commute, or they have supplies that are brought.

• 19:19Speaker 04

  Yeah. And, and our home prices have been on fire, because a lot of people are, are moving over to Bakersfield and Kern County and Central Valley in general, away from the LA, San Diego, the San Francisco areas.

• 19:31Speaker 03

  I mean, this has to be the final nail in the coffin for so many of these people down there. And

• 19:39Speaker 03

  You know, where else do they go? You don't want to rebuild in LA. A lot of them do come up in the valley and come here, which you're welcome here. By the way, Los Angelinos, we love you. Come on, come on up here. The water's fine. Our homes are a little cheaper and hopefully,

• 19:54Speaker 04

  I don't know. We're a very giving community, by the way.

• 19:56Speaker 03

  So giving. I've been impressed with LA's reaction. We talked about the bad and the fraudsters, but the vast majority of Los Angeles, it's been really touching to see how the people are rallying together down there and supporting each other. But, you know, bringing it back to Kern County, we're talking about some of the benefits that those who are affected by the fires, even though we're one county away. Let's talk about the, what this is. So what is the?

• 20:27Speaker 04

  Some of the programs are available now. The good thing about this is Small Business Administration has the word business in it, but some programs are available for homeowners. If you qualify, if you're eligible, you can qualify, you may apply up to $500,000 to replace or repair your primary residence. This also applies for renters. If you're renting a property, you can apply for up to $100,000 to replace your physical, your personal property, clothing, furniture, cars, appliance and things like that.

• 20:56Speaker 03

  That's substantial. Renters can apply for $100,000 of lost assets.

• 21:02Speaker 04

  And some people that are renting, that have been renting in this affected area, these homes are of course expensive homes. They're renting at a higher price. That means that the stuff that they have, the personal property they have inside that home might be substantial.

• 21:15Speaker 03

  Sure. Yes.

• 21:17Speaker 04

  The use of the proceeds are, could be to rebuild, upgrade the home, fix whatever the fire has affected. The terms are very good terms, up to 12 months of deferred interest.

• 21:34Speaker 04

  Then the rate cannot exceed 4%. And typically, you get a maturity of up to 30 years.

• 21:41Speaker 03

  Oh, come on. So they amortize it out over 30 years and no more than 4%? That's?

• 21:46Speaker 04

  That's phenomenal. This is for homeowners. This, the same. Same program exists for business, small businesses as well, up to $2 million, depending on the need and depending on what you can qualify for. Again, the terms are the same, 12 months of deferred interest with a maximum interest of 4%. According to what I read in the SBA website.

• 22:07Speaker 03

  It sounds like though, if you are a Kern County resident and you are looking to, if you've had an economic loss in Kern County, it would have to be because you either have a business down there. Or you have a business here that relies on that LA area and it's being disrupted. So if you have, I'm guessing in Kern County at least, it's going to be mostly indirect impact like smoke damage, disrupted supply chains, evacuations that had to happen that disrupt your business.

• 22:44Speaker 04

  Yeah, there's an application process and it's fairly simple, really self-explanatory. And you can go through that and you submit and you see if you're eligible or not. And typically on circumstances like these, the answer is pretty fast. You get an answer pretty quickly.

• 23:04Speaker 03

  They've learned a lot from the pandemic. SBA was very active. They were the ones that were administering, was it the PPP?

• 23:10Speaker 04

  That's right. Well, they did the PPP and EIDL loans, Economic Injury Disaster Loans.

• 23:15Speaker 03

  And they made that process a little too easy.

• 23:19Speaker 04

  Again, fraudsters, some fraudsters took advantage of that, especially because, you know, the government made millions, billions of dollars available and eventually got forgiven. So a lot of people that needed it took advantage of that and some other people that did not need it, basically took advantage of that too. And they caught a lot of people. And I think given some resources, they might catch some additional people in my opinion, if they go back.

• 23:49Speaker 03

  If customers or suppliers are dealing with evacuations or road closers and you're a business owner here in Kern County, that could be an economic loss for you. So, you know, just be aware that. That you could be impacted and you could you could be there could be some benefits here for you if that if that's the case.

• 24:10Speaker 04

  Yeah, very good program. I know people used it in the past during the pandemic in addition to the PPP alone. So if you feel that you can qualify and you have the need for it, please take advantage of it.

• 24:26Speaker 03

  What about fire insurance and sort of the challenges that have come with that?

• 24:31Speaker 04

  You had a personal note for me because I've been struggling getting insurance coverage on my rental property, my house and my the house I just purchased. Basically, my my rate doubled, if not two and a half times almost.

• 24:46Speaker 03

  Yeah.

• 24:47Speaker 04

  For an insurance that's, I think, maybe 75% as good as what I had before. And a lot of it has to do with fire and the fire risk.

• 24:58Speaker 03

  Yeah.

• 24:58Speaker 04

  And I'm not in a forest area, I'm not surrounded by trees, but there's that that risk, I guess, that insurance companies are taking into consideration. In fact, that's what's causing a lot of this drama right now is one of the largest insurance companies in the state canceled what 70% of the policies in the area affected by the fire just a couple of months ago.

• 25:24Speaker 03

  Yep. Yeah, we had we had several insurance companies leave the state of California or no longer issue new policies. And again, coming back to decades of mismanagement.

• 25:34Speaker 04

  Of the insurance.

• 25:34Speaker 03

  Insurance of the insurance companies because the politicians have not have basically bowed to the insurance companies or to the

• 25:47Speaker 03

  citizens.

• 25:48Speaker 04

  Correct.

• 25:48Speaker 03

  Like the

• 25:49Speaker 04

  They did not let the market flow.

• 25:51Speaker 03

  Exactly.

• 25:51Speaker 04

  The market dictate the rates.

• 25:54Speaker 03

  Right.

• 25:54Speaker 04

  That's what the insurance companies are saying.

• 25:56Speaker 03

  Right.

• 25:56Speaker 04

  Like we've had increased losses.

• 26:00Speaker 03

  Right.

• 26:00Speaker 04

  But our premiums were not allowed to increase accordingly.

• 26:04Speaker 03

  So California politicians are trying to protect us and say we don't we can't have these policies go up, the premiums go up too much.

• 26:11Speaker 04

  You know why? Because that's going to affect the values of the houses. So if your premium on your, on your, on your insurance is going up, right? And you're paying a lot more, then the demand for the housing is not going to be as, as an investor.

• 26:26Speaker 03

  Sure.

• 26:26Speaker 04

  Or as a homeowner, if I'm gonna buy a $500,000 home and my insurance now is costing me three times the amount that I was paying 10 years ago.

• 26:33Speaker 03

  Right.

• 26:34Speaker 04

  Then I might reconsider that.

• 26:35Speaker 03

  That's right.

• 26:36Speaker 04

  And if somebody's coming from out of state, they're gonna reconsider that.

• 26:39Speaker 03

  Right. Yeah.

• 26:40Speaker 04

  Right?

• 26:40Speaker 03

  Yeah.

• 26:40Speaker 04

  Now, politicians, in my opinion, are playing the game where they want these homeowners and values to, to go up a little bit to make sure that the state is looking a certain way. That's the reason why they've been pushing the insurance companies around, in my opinion.

• 26:56Speaker 03

  They've been pushing the insurance companies around because they were able to get away with it until the insurance companies started pulling out and started saying, we can't issue these policies, because I think that's, that's what, that's what proved to the politicians that this isn't going to work. State of California is finally starting to address this. Last year passed legislation that allows companies to adjust their premiums accordingly. And, and I believe there's some more funding towards the fare program, which is the state-funded program, last, insurance of last resort. If you can't get your own insurance, you go to that. But that, those premiums are so expensive. I, I, it's unbelievable how, how expensive even just the government fare program is, insurance program.

• 27:37Speaker 03

  And again, it's been, it's been a disaster, the government trying to manipulate the free market. Now, you can say, well, if the, if the government would let the free market go in the insurance world, 15 years ago, we would have seen higher premiums. Well, yeah, maybe you would have, but you wouldn't have seen people now that were just getting cut off with no other option.

• 28:00Speaker 04

  That's right. That's right. So you said earlier that maybe we, we were failed by the government. The analogy I have in mind is a dam. It has a lot of water stored, and then we're seeing cracks, but we're not addressing them.

• 28:14Speaker 03

  Yeah.

• 28:14Speaker 04

  We have not been addressing the cracks for the last 15, 20 years.

• 28:18Speaker 03

  Yeah.

• 28:19Speaker 04

  And now the dam is almost like, in my opinion, coming down, and we're seeing a bunch of this water all like... Destroying a bunch of things in its way.

• 28:28Speaker 03

  Yeah.

• 28:28Speaker 04

  And it's hard for us to stop it.

• 28:30Speaker 03

  Yeah, yeah, I I fear now we may be at a point where I don't know what's going to happen to the insurance world. Uh, this is not a great thing. This is this could this is on track. The LA fires on track to be the most expensive or one of the most expensive in fires in California history.

• 28:45Speaker 04

  Hundred fifty billion, I think today I read somewhere today.

• 28:48Speaker 03

  I wouldn't be surprised if it's in the hundreds.

• 28:51Speaker 04

  You know, we put this in a monetary, but this morning I was listening, a sixty four year old lady that lived in one of these houses since she was four years old. So now she's retired and living in this house and then the house burns. Everything she's known is gone. This is not a movie, um, star. She's just a normal, you know, American lady that saved enough to live and retire in a home where she lived since she was four years old. And now everything is gone for her. To me, that's what I keep in mind when I look at the fires versus talking about all this

• 29:32Speaker 04

  movie stars and expensive houses and so there are regular people that live there, just like you and I shared.

• 29:38Speaker 03

  Even if you have insurance, Sammy, you've got your your homeowner's insurance, your fire policy in place and you lost everything. And you have the money, like you know, you're going to get the money to to to buy what you need eventually. We're talking months, years potentially, and then even then, the the photo albums are gone. You know, the the portraits are gone, the the furniture, the grandma's china, you know, all of these things that were that were handed down that, you know, we put a lot of value in.

• 30:08Speaker 04

  My Polamalu jersey.

• 30:08Speaker 03

  Disappears. What's that?

• 30:10Speaker 04

  My Polamalu jersey that that I have. I don't want that to get burnt.

• 30:14Speaker 03

  Right. I mean, it's just like.

• 30:16Speaker 04

  But see, people have. Years, like decades of memories in these houses.

• 30:21Speaker 03

  Yeah.

• 30:22Speaker 04

  And now they're gone.

• 30:22Speaker 03

  And not only the house, but like whole neighborhoods. And I saw there were over 20 historically significant buildings. These are buildings or structures that are on the National Register of Historic Places or historic buildings or have some historic, you know,

• 30:38Speaker 03

  significance to them. You can imagine in that area of LA. This is just an absolute tragedy. Do you think Sammy, there will be, what changes do you think will happen? Do you think we'll see anything different in the state after this? You know, when the dust settles, the smoke settles?

• 30:55Speaker 04

  Are you asking my?

• 30:57Speaker 03

  Yeah.

• 30:57Speaker 04

  Personal opinion?

• 30:58Speaker 03

  Yeah.

• 30:59Speaker 04

  I want leadership change. If we do feel that leadership has failed, then that leadership has to be gone.

• 31:06Speaker 03

  Yeah.

• 31:06Speaker 04

  And we need to try something different.

• 31:08Speaker 03

  Yeah.

• 31:10Speaker 04

  Look, I don't give, I can't care less how you are or what religion you are or what, you know, how you live your life. But you've got to, if you're in a position of leadership, you've got to address the risks that are associated with the area that you're managing. Shame on whomever was in charge, not to look at the water reserves and the water tanks in an area that's prone to fire and not have water in them.

• 31:38Speaker 03

  Right. And now there's, you know, this controversy over the mayor of LA's decision to not fund the fire department as much as the fire department was asking.

• 31:48Speaker 04

  We, they fired 100 firemen or more because they were not vaccinated for COVID. Again, I'm going back to, I can't care less how you live your life as long as you do your job correctly and you're protecting people. And in this case, I think we failed.

• 32:02Speaker 03

  This is, talking about the mayors, you know, cutting funding to the fire department, this is something we deal with here in Kern County. There was, we barely passed Measure M. I don't remember what the county's measure was where we increased our sales tax so that we could start recruiting sheriffs deputies. And we weren't paying our sheriff's deputies enough here in Kern County. They were starting to leave to different counties to get paid more. It took over a year, it took a couple of years for us as citizens to vote for and agree on funding the county fire department. And we're a fire. Department supporting county, you know?

• 32:42Speaker 04

  And, and we did not vote until we started making 911 calls. And the police officer or the sheriff does not show up or they take forever to show up. That's the only reason why we voted, I think, in my opinion.

• 32:54Speaker 03

  And, and on, and on that, we may, this might be the only reason is this tragedy happening in L.A. That we actually see some reform in the state in terms of homeowner's insurance, fire protection, uh, uh, fire, uh, forest management, all of those things.

• 33:08Speaker 04

  Water management. Yeah, I agree with you. So, so, so in my opinion, we definitely need a change now. I'm, I'm not a resident of L.A. So they have to make their own decisions regarding the mayor and, and other people in leadership, but as from a state standpoint, Newsom gotta go.

• 33:23Speaker 03

  This is, yeah, this is a state, a whole state issue. All right, we're gonna take a break. We're a little late now. We're Money Wise. We'll be right back.

• 33:28Speaker 00

  Are you curious to learn more about how you can be money wise? Check out the Money Wise website at MoneyWiseGuys.com to get more info about what we do.

• 33:42Speaker 03

  We're Money Wise. Thanks for tuning in. I'm Sherwood Wade here with Sammy Abiawi, taking your calls, questions, comments. Keep them coming our way, 661-396-1000. There's a message here, Sammy. It says, does FEMA help with fire damage in California?

• 33:55Speaker 04

  I believe so.

• 33:56Speaker 03

  Yeah.

• 33:56Speaker 04

  I believe so, and they have been actually since the fire started. And, and there's, there's, they, they help with property assistance, transportation assistance, temporary housing, and, and there's an application process that you can, you can, or the, the people can go through. It's, uh, visit disasterassistance.gov and, and you can start the process if you need, if you need help, of course.

• 34:20Speaker 03

  Yeah, but again FEMA is a federal, uh, program that requires a declaration of a, uh, by the federal government as being a disaster, which happened last week. President Biden joined Newsom and, and giving, uh, support to California and releasing those funds that are available to help pay for the firefighters and so on. And again, there are other programs that are administered by FEMA that can help in, in disaster relief. And, um, so hopefully anybody that's listening out there is not going to forego some of these benefits if they've been affected, you know, by, by the fires. Um, so Sammy, let's go, let's go to, to change gears a little bit and, uh, get to our next message.

• 35:04Speaker 04

  Yeah. Hello Money Wise. If you have time to cover my message, but how do I protect my 401k from a stock market crash? Or can I?

• 35:11Speaker 03

  Or can I? I love that last part of the question. Thank you, listener, for that question because there is a commercial that has aired on radio, this station including, that is talking about you investing in your 401k or your IRA, not in the stock market where you can lose, but in something that doesn't lose. And it's usually gold. They're promoting gold and/or life insurance. A life insurance, bank on yourself sort of style of investing. And it drives me crazy. It drives me absolutely nuts because when I hear somebody mention that they want to invest,

• 35:54Speaker 03

  but they don't want to have losses, I immediately think about, well, that's not investing. I mean, it's very, it's very conservative investing because anything that you don't, if you don't take risk, generally you don't get the reward.

• 36:14Speaker 04

  That's right.

• 36:14Speaker 03

  There has to be some risk that you have to take in order to get that reward. So that relationship between risk and reward, which is the more risk you take, the higher the reward the investor deserves, the less risk, the less reward that you deserve in your portfolio, is being attacked by companies, marketing, fraudsters, scammers, people that are playing on our innate fears and our innate greed that we have as humans. Because the stock market is going to go up and down. If we're talking about investing in 401ks, 90% of the people, 90-plus percent are investing, we're talking about the stock market or the bond, a mix of the stock or bond market.

• 36:56Speaker 03

  There's very few people in their 401ks that are investing in a savings account, right? Or a CD or just bonds. Now, that does happen. And there are cases where somebody would want their 401k to be invested very conservative, especially if you're older or close to retirement. But generally, a 401k is your employer sponsoring this thing. They're generally giving you some side, some sort of benefit in terms of a match or, or, or credit into your 401k. And you're also generally in your working years, which means you have, you have a long time before you're

• 37:36Speaker 04

  You're retired.

• 37:37Speaker 03

  Going to access it.

• 37:37Speaker 04

  Mm-hmm.

• 37:38Speaker 03

  Access and you retire. And then even then, when you access that 401k, when you retire, you don't retire on a lump sum of money. Nobody retires on a lump sum. They retire on a stream of income. And so your nest egg or your 401k, once you reach retirement or get close to retirement, you start to restructure that nest egg a little bit so that it's not, it's starting to work more towards providing a lifelong income for you rather than riding the ups and downs of the stock market. Which you can, you want to ride the ups and downs of the stock market. In fact, we talk about many times, let me ask you Sammy, would you prefer to have this, if, if you have 20 years to retirement and you're contributing to your 401k,

• 38:23Speaker 03

  over the next 10, 15 years, would you prefer the stock market to go up? Or remain flat? Or go down?

• 38:33Speaker 04

  Up, of course.

• 38:34Speaker 03

  Why?

• 38:35Speaker 04

  Well, because I'm going to benefit.

• 38:37Speaker 03

  Yeah.

• 38:37Speaker 04

  A long term.

• 38:39Speaker 03

  Right.

• 38:39Speaker 04

  Right? I mean, if I have the three choices, I would, I would pick, if it's going to remain going up for the next 15 years, I would pick that up.

• 38:45Speaker 03

  Well, let me add to this. You're contributing though each month, or let's say every two weeks. You're paid every two weeks and you're contributing every two weeks. You still want it to go up?

• 38:54Speaker 04

  I mean, no changes to the market now whatsoever?

• 38:58Speaker 03

  No, yeah, what?

• 38:59Speaker 04

  Just, just up.

• 39:00Speaker 03

  Yeah. Like the general market. So let me say this. I'll make it even more simple. This is really dumbing it down. So you, you have the option to buy one stock.

• 39:08Speaker 04

  Uh huh.

• 39:09Speaker 03

  And your hope is that that one stock is worth a billion dollars when you retire.

• 39:13Speaker 04

  Uh huh.

• 39:13Speaker 03

  But you're going to be buying that stock for 20 years.

• 39:16Speaker 04

  Stable.

• 39:17Speaker 03

  You want it stable, exactly. You want it stable, or even down every once in a while would be fine. We call it dollar cost averaging, and that is you're buying in each month at whatever the share value, the share price is at that time. You want to buy those on sale. It seems as though stock is the only thing that nobody wants to buy on sale.

• 39:34Speaker 04

  No, I agree with you. I agree with you. I think for me, as I'm 47, so I still have some years to work, right? I still want my, I want to contribute towards my 401k, but also if the stock market is down, I see it as an opportunity because I can contribute more and buy more.

• 39:52Speaker 03

  That's right.

• 39:53Speaker 04

  Of my, of my stock.

• 39:54Speaker 03

  That's right.

• 39:55Speaker 04

  The stocks I want, or whatever things that I want to, I want to add to my portfolio, my 401k portfolio.

• 40:01Speaker 03

  Right.

• 40:02Speaker 04

  So I see that as an opportunity, as long as I have a long-term vision that I'm sticking to.

• 40:07Speaker 03

  That's it. So if you have, if you have a good plan and you know what your, what your, what your long-term plan is, then the best-case scenario is that it's, your stock prices stay pretty, pretty level, because you're buying in, and you buy in, when you buy in, the stocks are, are, are level, and then when you sell, they're high.

• 40:28Speaker 04

  That's right.

• 40:28Speaker 03

  And when are you going to sell? Well, you're going to be selling like way into retirement, or just once you get into retirement. So the best case on a 20-year timeframe would be first 10 or 15 years, you're kind of flat, but you've been buying in every month, and then the last five years, the stock market takes off, gets back to its averages. We're assuming that the stock market is always going to go back to its average, let's say 8%, that it's returned since the 1920s. So assuming that, that, you know, stock markets are going to keep their averages going, that's the best-case scenario, because what you'll have is those last few years, the stock market, you know, gets back to its average.

• 41:01Speaker 04

  That's right.

• 41:02Speaker 03

  And so, which means you can invest in your 401k in a way that is fairly predictable in the long run, which means that we've only gone through one period where we had a 10-year period where the stock market was essentially flat. That just happened in the last, last decade that, that we just, just experienced. And, but that's a very rare. Rare scenario, we're talking about the 2000 roughly from the dot com bubble from 2000 to 2010. We essentially saw a fairly flat stock market. If you throw in dividends in that, okay, you had a little bit of gain.

• 41:41Speaker 03

  That was a very, very rare scenario. Generally, the stock market, you know, will, over a 10-year period is going to be up. So you want to recognize that inside your investment portfolio and your 401k, you can, you can have the risk adjusted to where it's volatile, you can, you can control some of the volatility essentially.

• 42:05Speaker 04

  Correct, because hopefully some, I mean, the employer through the 401k plan you have, has some options or investment options that fit whatever profile, risk profile you want to be in.

• 42:16Speaker 03

  Yes, yes. Yeah, so, yeah, our listener, if you have a 401k and you want to avoid a crash, likely you can, which means you can just put your 401k all in cash.

• 42:26Speaker 04

  Correct.

• 42:26Speaker 03

  I'm not recommending you do that, but that might help you avoid a crash. Don't time the market, though. You're gonna, you don't want to do that. What you can do, though, perhaps, is work with a financial advisor or work with your 401k provider that can do an assessment for you, look at the investment options that are available for you, look at what your time horizon and your risk tolerance is, and then help you decide what is the best mix of investments for you. If it turns out that you're trying to avoid a crash, they're generally, your 401k does have some investment options that can make you much more conservative, so you can, you might be able to avoid a crash. Now, that means you might avoid a crash, but at the same time, you're avoiding, you're gonna avoid some future gains.

• 43:08Speaker 03

  So you want to be careful about that. You just want it to be invested just right, just right for you.

• 43:12Speaker 04

  I also think just review your 401k. So a lot of the time, here's what I see, especially like this example comes from my family. People take advantage of the 401k offering from their employer because it's offered. So they see it as an advantage and they take it. They sign up for it. But then they don't educate themselves about the offerings that are available to them, and they don't even understand what type of risk profile they're in.

• 43:37Speaker 03

  Right, right.

• 43:38Speaker 04

  Okay, so if you have a plan through your employer, definitely you have a financial advisor or somebody that's administering that plan. Ask. Ask to meet with that person so they can assess your risk profile, so you can be in whatever.

• 43:53Speaker 04

  Portfolio that fits you and your long-term vision or short-term vision or what have you.

• 44:00Speaker 03

  Well, this is a great question from our listener. Along with this, the S and P 500 has just done something that has only done four times in the last 96 years. And I think it's worth mentioning that what I'm talking about is the last two years in the stock market, 2023 and 2024, we saw a 20%, at least a 20% gain. And that has not, that's not normal. That's not a normal, you know, two 20% plus gains in the stock market. Does not happen that often. In fact, it's only happened four times in the last 96 years.

• 44:43Speaker 03

  The last time that it happened, besides just now, 2023 and 2024, was in 1995. And it happened in 1954, and then it happened in 1935. And all of those times, again, those were, those are the four other times that the stock market had two years of at least a 20%, or 20% plus gain. What would you?

• 45:07Speaker 04

  What are the years again?

• 45:09Speaker 03

  It happened in 1935, 1954, 1995. Actually, in 1995, we went four years in a row with 20-plus percent gain.

• 45:22Speaker 04

  Who was president then?

• 45:24Speaker 03

  Was it 90, 95? I don't know. Was it Clinton? 95, we had 96, 97, and 98. We had all big gains. And, and then, of course, we know it happened in 99 and 2000, stock market pulled way back. And then in 2023, we had a 24% gain. 2024, we had a 23% gain. So, you know, this is, this is significant because what we saw, what would you guess happened?

• 45:55Speaker 03

  Following, generally what happens following two years of 20 plus gains.

• 46:01Speaker 04

  I'm very interested to know now.

• 46:02Speaker 03

  It goes down. Generally, you see some, you see some corrections. So, following the two-year gains in 1935, stock market was down 39%. Following the gains in 1954 and 55, we saw a 14% drop. And then, of course, we know after 1998, what happened, or 99, what happened? And, and so, there's not a good track record for having two consecutive years. It's worth pointing out that five of the S and P 516 years of double-digit percentage declines since the Great Depression have ended, have occurred immediately or shortly after 20-plus, 20% plus gains.

• 46:48Speaker 03

  And so, I'm just sort of, you know, these statistics are always great, I think, for us to recognize that not, the stock market is not built to go up every year. It's also not built to go down every year. What it's built to is that the more time that you're in it, the higher the probability is that you have more money than what you started out with. And when I say the stock market, that's difficult because I'm talking about S and P 500 or the broad US equity market, when really, the stock market for most people is so much more than that. We have international, we have bonds that are thrown in there. And, and so, it's, it's deceptive. If you have a properly diversified and allocated portfolio,

• 47:28Speaker 03

  that's the best-case scenario because that's what gives you the best, the best probability of making it through some of these, some of these difficult periods. So, I wanted to bring that up, you know, before we.

• 47:40Speaker 04

  Very good, very good point. We still have a couple of minutes.

• 47:44Speaker 03

  Yeah.

• 47:45Speaker 04

  We, you, you brought something up earlier. I don't know if you want to talk about it or not, then that's just paying off your mortgage early.

• 47:51Speaker 03

  Oh, my gosh. I, I saw that article, I think it was Business Insider that said, "For reasons," the, the title's "For reasons we're paying off our mortgage early even though the interest rate is under 2%."

• 48:02Speaker 04

  Yeah.

• 48:02Speaker 03

  Sammy. Would you? What?

• 48:07Speaker 04

  No. The answer, the quick answer to that is no, this, this, this person is, is, is seems like a smart person. Holly Johnson. She's a credit card specialist, I believe, according to the article you, you just mentioned. And having a 2% and 1.99%.

• 48:23Speaker 03

  Mortgage.

• 48:23Speaker 04

  Mortgage.

• 48:24Speaker 03

  Fixed rate mortgage on your house. Here's the, here's the four reasons that they gave for why they still going to pay off their home early. They say debt freedom makes early retirement easier. That's excuse number one, which I, I don't understand because if you are using money to pay off debt, there's a cost to using that money. There's an opportunity cost to now you're not having that money sitting in an investment or in a savings account. It's now gone towards eliminating interest. So that's a mathematical question.

• 48:52Speaker 04

  Yeah. So you're paying 1.99%.

• 48:54Speaker 03

  Right.

• 48:54Speaker 04

  Right?

• 48:55Speaker 03

  Right.

• 48:56Speaker 04

  You take your money and you invest it, the S and P on average, what 7, 8%.

• 48:59Speaker 03

  Right.

• 49:00Speaker 04

  Those, there, there's a delta there.

• 49:02Speaker 03

  There's a big delta.

• 49:02Speaker 04

  So.

• 49:03Speaker 03

  Yeah. So I, I don't know how that makes sense. Number two reasons we're hedging our bets, which means they think that, uh, paying off their, they're paying off their mortgage by just increasing it monthly. Gives them more stability, which it doesn't make any sense because they're essentially saying like dollar cost average paying off debt. Okay. Well, you get that anyway. And, and then, uh, you know, saving their number three reason, saving money on interest.

• 49:30Speaker 04

  1.99.

• 49:32Speaker 03

  Yeah.

• 49:32Speaker 04

  $751 extra on 1.99. That's not a lot of money.

• 49:35Speaker 03

  It's not a lot. And then also can't you get 1.99 somewhere else? So the extra money that you're putting towards your mortgage, can't you get higher than 1.99% interest? So you're not saving money on interest because you're, you're paying less and on your loan interest, but you're receiving less on your savings interest. And then the last one is we're getting peace of mind. This is actually the only argument that I could agree with.

• 49:56Speaker 04

  Yes. Being debt-free provides peace of mind. That's probably the only thing I would agree with too.

• 50:03Speaker 03

  Yeah, but put a dollar amount, a true dollar amount to that and make it, whether it's make that warm and fuzzy in your gut of saying you're debt-free. Make sure that you have a number to that. Like, is it really worth that warm and fuzzy to save what you think you're saving? And it may surprise you. Now, if you don't have to borrow, great, don't borrow. But sometimes borrowing makes sense, especially when you're talking about your home. Man, this show flew by, Sammy.

• 50:33Speaker 04

  It did, did a lot of good information.

• 50:35Speaker 00

  See what happens when you prep, Sammy? No, I'm just kidding.

• 50:38Speaker 03

  Sammy did a great prep, did a lot of prep. And he's going to be leading here soon, so good job.

• 50:44Speaker 04

  Thank you.

• 50:45Speaker 03

  Thanks, Stephen. Remember these three things: be smart, be safe, and always be money wise.