Pod Insights The Moneywise Guys 5/4/26 Understanding Trump IRAs, HSA Tax Advantages & Today's Debt Trends About this episode The Moneywise Radio Show and Podcast Monday, May 4th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management Guest: Allyn Medeiros, Retail Branch Manager website: https://allynmedeiros.com/ The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Allyn Medeiros & Agape Mortgage are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management].
Transcript 0:00 Speaker 00 Live from the basement inside the historic Woolworths Building in downtown Bakersfield. Call or text in at 661-396-1000.
0:29 Speaker 01 Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.
0:37 Speaker 00 Now, let's start the MoneyWise Show.
0:40 Speaker 02 And welcome to the MoneyWise Show. We are live from the basement of the historic Woolworths Building in downtown Bakersfield. For the next hour, you are on News Talk 96.1 and 1230 AM, KERN, streaming live at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. We are your hosts. I'm Sharad Waite and...
1:06 Speaker 03 Sammy Abiyawie.
1:07 Speaker 02 Hey Sammy, great to be back here.
1:09 Speaker 03 Yeah.
1:09 Speaker 02 We are going to have, what we have with us also, Alan Maderos, a longtime co... I wouldn't call you a co-host.
1:18 Speaker 03 Yeah, I mean, he qualifies for it. He's experienced and he brings a wealth of knowledge.
1:24 Speaker 02 Ton, ton of knowledge. We've got some listener messages, though. Why don't we start there?
1:29 Speaker 03 Yes, yes. The first one, "Had a great meeting with Dustin. He took the time to get to know us and our financial goals. No pressure, just a great beginning to our partnership."
1:41 Speaker 02 Ah, that's nice. Thanks for the compliment.
1:43 Speaker 03 He's just described MoneyWise to the T, though.
1:45 Speaker 02 Yeah, Dustin does. Dustin is the epitome of MoneyWise. He's such a great advisor and glad they had good experience.
1:54 Speaker 03 Very, very good. Yeah, thanks for the message. Second one, "Are there any simple tax moves for us regular folks that we can make to keep more of our money?"
2:07 Speaker 02 Yeah, this is a good question. We're, of course, we're just past the tax deadline of April 15th. We're a few weeks past that, but there are still a lot of people who maybe have filed an extension or are starting to plan for next year. It was kind of the first thought that came to my head is a lot of times for us, when we think about tax planning, it's like, it comes up like a week or two before April 15th, which doesn't give you very much time to actually do the planning because most of the tax planning that happens is throughout the year. It's usually through your contributions that you're making or, you know, other planning that can happen.
2:49 Speaker 02 So I would, you know, I would, I would encourage our listeners to kind of think about next year's taxes or the taxes you're going to owe next year for 2026. Start now.
3:00 Speaker 03 Correct.
3:00 Speaker 02 We're already a quarter of the way through.
3:01 Speaker 03 This is a good time too to start because you just received your taxes or finished filing your taxes. Either you had to pay or you had a refund. So hopefully we learned something from that filing and now you can make adjustments and I hope you can give us some ideas.
3:15 Speaker 02 Yeah, that's a good point. For those who do their own taxes, that can be a little trickier because you don't, you don't really even know how to, how to understand the results other than whether you got a refund back or not. And so much of the tax return is, you want to look into it a little bit more to see what you could do to take full advantage of the tax code. There have been some changes and specifically the use of tax shelters. This is not a shelter that is only available to the ultra wealthy and the ultra rich. There are tax shelters that are designed for all of us. So especially if you work, if you're working and you have earned income,
4:00 Speaker 02 then there are ways that you can shelter that income pre-tax, increasing the amount of money that you take home by reducing the amount of money that the government takes out of your paycheck. So you can reduce, at least temporarily, your taxable. Income for 2026 employee contribution limit $24,500. And if you're older than 50, then there are catch-up provisions. And then if you're, if you're between the age of 60 and 63, there are even more catch-up provisions that allow you to contribute even more towards your retirement. So don't ignore those tax deferral options that you have.
4:40 Speaker 02 Now, if you're not working, then you, maybe your spouse works or there's some household income. So you may not have a 401k, but you can still have that individual retirement account for 2026. It's $7,500 or 8,600 if you're over the age of 50. And that's the money that you can still put away. In fact, just today, President Trump announced an executive order for individuals who maybe don't have a 401k option and you, but you can contribute to an IRA. Today, it was announced that, starting next year, the government is actually going to give a matching contribution
5:25 Speaker 02 to individual retirement account contributions.
5:28 Speaker 03 Is there a maximum?
5:29 Speaker 02 There's a maximum, yeah. The maximum amount, well, first of all, there's a maximum amount of money that you can earn before you can get that match. For single individuals, you cannot have an adjusted gross income that is greater than, I'm trying to find the number now, but I think it's somewhere around, oh, I've got it here. $20,000 for an individual. For a married couple, then that number actually goes up above that 20,000. This is not, don't get this confused with the Trump accounts for kids. This is a totally separate account.
6:11 Speaker 02 And this is based off of the statistic that there are. About 41 million workers between the ages of 18 to 65 that do not have an employer provided retirement account. That's a lot of people, over 40 million people. And this is the, they're calling this the Trump IRA. There will be a website that will be set up for this. And again, this is a federal savers match. The big hook though, is that you have to be an individual that is making less than $20,000 a year.
6:52 Speaker 02 So if a married couple, it's over $40,000. And you are eligible to up to $1,000 or $2,000 per household. So that's a significant amount of money. However, there's some contradictions here because for somebody who is making $20,000 a year, for them to contribute that maximum amount to their IRA would be virtually impossible. I mean, I don't know anybody who can contribute, who's making $20,000 a year, but can, you know, can put $7,000 into their IRA so that they can get that $1,000 from the government?
7:35 Speaker 03 Yeah.
7:36 Speaker 02 You know, it just seems like an odd program. I like any government program that incentivizes us to save more, but this one's-
7:44 Speaker 03 The math has to work.
7:45 Speaker 02 The math has to work. And this math, I don't know, it seems kind of shady. What you're gonna see is the headlines are saying, of course, this is classic, you know, mass media where they're saying President Trump is saying that, you know, that you can get rich and you can save $465,000 in retirement. And, and so then the, you know, the media comes back and they go, okay, well, is $465,000 considered wealthy in America? And you go to, to go to surveys. Surveys over the years have expressed that at least Americans on average thinks that it takes, how much would you guess? Have you heard this before?
8:29 Speaker 02 How much would you think that the average American would say you have to have in wealth to be considered rich?
8:36 Speaker 03 Million?
8:37 Speaker 02 Two million, 2.3 million, that's the net worth.
8:40 Speaker 03 Like at the bank or overall asset?
8:42 Speaker 02 Overall assets, yeah, so like your overall wealth. 2.3 million is considered, that's where I guess the average American says that you would be considered rich. But you know, 465,000 is no, no jump change and that would help.
8:59 Speaker 03 It's not.
8:59 Speaker 02 I just don't know who, again, who would, it's 19,000, not 20,000 dollars a year, but either way, you know, who's going to be saving that much for their, you know, 40 year lifespan? And if you make over 20,000, then you don't get that match. And so it doesn't, you know.
9:16 Speaker 03 Yeah, the math, the math has to work, the math has to math.
9:18 Speaker 02 The math has to math and that math is not mathin' for me. But at least there's some, maybe that'll incentivize some people to save. And that's, that's where the real issue is, we need to have more people saving more money.
9:29 Speaker 03 That's right.
9:30 Speaker 02 So, good, good stuff.
9:31 Speaker 03 Yes.
9:32 Speaker 02 Any other, did you have anything else there Sammy in terms of?
9:35 Speaker 03 No, you, you, you mentioned the 401K, HSA accounts, if, if, if you qualify for the HSA account, that's one, one way for, for, for you to save a little bit more and, and on, on taxes. So if your employer offers that, look into it.
9:53 Speaker 02 For, for those who don't know, HSA is a health savings account. And this may be one of the best tax accounts available. That's because your contributions can be deducted, the growth can be deferred, the, the taxes on the growth can be deferred. And then when you withdraw it, as long as they're for medical expenses, it's tax free. So it's one of those very few benefits where you get the deduction, you get the tax deferral and you get the tax free withdrawal.
10:19 Speaker 03 I mean, if, if, if, if it's offered by your employer and you, you find a way how to qualify for that from, from an, an amount standpoint, HSA is definitely a, it's a triple tax win is what you just said.
10:34 Speaker 02 Triple tax win, that's it, the triple tax win.
10:37 Speaker 03 Yeah, and, and I mean, for people that have investments, hold your investments over a year. That way you're not paying for short-term capital gains. Now it, it, it moves into a long-term capital gain if you hold the investment longer than one year, longer than 12 months, those are some of the things that come to my mind.
10:54 Speaker 02 Yeah, and for some people, they pay no capital gains taxes. If their income is below a certain threshold, you don't pay any taxes on capital gains. So, it's long-term capital gains. So that's good.
11:05 Speaker 03 Yeah, I have one more.
11:06 Speaker 02 Great.
11:06 Speaker 03 I enjoyed your guest about give big Kern. I was wondering if you have the time to break down charitable deductions and any changes made in California this year? Thanks.
11:17 Speaker 02 Yes, there's, there were some changes that were made. This is going to affect not just Californians, but everybody across the country when it comes to deductions. And this is a big benefit because right, the, the first Trump tax break that, that took place in 2017. That was the Jobs Act. That revolutionized the way that most Americans file their taxes. At that time, there were about 70% of Americans were just taking the standard deduction. Just that, you know, they weren't itemizing their deductions at all.
11:54 Speaker 02 They were just giving whatever the government, that government, uh, US government was giving us for a standard deduction. And that means, you know, 30% were able to itemize these other things. After that jobs cut in 2017, it dropped down to less than 10% of Americans that actually itemize on their taxes. And so today, you know, nine, over 90% of Americans, like you don't, you don't, like, you don't get to deduct your mortgage interest. You don't get to deduct even charitable contributions and things like that until it reaches that, that limit, that, um,
12:38 Speaker 02 standard deduction limit. And the, uh, the, the, to compensate for that, the IRS has allowed those who do not itemize their charitable deductions to itemize up to a thousand dollars for single filers and 2,000 if you're a married couple filing jointly. So that means even though you aren't putting it as a standard, you're not putting it as, you're not itemizing all of your deductions. You can still itemize up to a thousand or 2,000 for a household of your, of your charitable contributions. So that's, that's cool.
13:15 Speaker 03 Yeah.
13:15 Speaker 02 That's, that's going to impact a lot of people. And the, the standard deduction, by the way, was, as I mentioned, was raised in 2017. The, uh, the current, um, standard deduction for married couples. Dang it, now I've lost it. You guys know off the top of your head?
13:33 Speaker 03 No.
13:33 Speaker 02 What it is? Uh, I'll find it, but it's a, it's a, it's a threshold, obviously, that most Americans don't reach.
13:42 Speaker 03 Yeah.
13:43 Speaker 04 It's pretty high.
13:44 Speaker 02 Yeah.
13:44 Speaker 03 Was it 25? If my memory is correct, from a couple of years ago when we had John Duffield, I think it was 25, but I'll, I'll.
13:52 Speaker 04 So 31,500 for 2026.
13:56 Speaker 02 Oh, there you go.
13:57 Speaker 04 And 15,750 for single filers.
14:00 Speaker 03 Yeah.
14:01 Speaker 04 So, so 30, that's actually 2025, so that's current. This is a big point because there were years ago, people that were selling the fact that mortgage interest deduction was a reason why you should buy a house, right?
14:15 Speaker 02 Yes.
14:15 Speaker 04 So it was a big tax strategy in their mind, but that's all but gone away. Most people don't have $31,000 worth of deductions. So that itemization doesn't really benefit you. I didn't know about the $1,000 for single filers and $2,000 for joint filers for charitable. That's actually a good benefit. It doesn't seem like much, but it reduces your taxable income. And I think that's what people miss the understanding of why it's important to have deductions versus, say, credits. But yeah, it's, that's, that's a big number.
14:46 Speaker 02 I mean, credits are great. Tax credits are great.
14:49 Speaker 04 Yeah, that's why having kids to, to have tax credits are a huge benefit until they age out and you're like, oh.
14:56 Speaker 02 Yeah. But, but also like same to your, to your argument, you know, don't make the mistake of getting a mortgage loan just so you think you can deduct the interest. Don't have a kid so that you can get the child, child tax credit.
15:08 Speaker 04 They cost more than the deduction. I can tell you.
15:10 Speaker 02 Way more, way more than that. Good questions. Keep the comments and questions coming our way. 661-396-1000. We're going to take a quick break. We come back, we're going to talk to Alan about loans and mortgages. We're MoneyWise.
15:30 Speaker 02 Thanks for tuning in to Money Wise. I'm your host today with Sammy. I'm Sharon. Also joined by Alan, longtime guest of the show. Hey Alan.
15:39 Speaker 04 Hello.
15:40 Speaker 02 There is a lot of movement today in the bond market. Bond yields are up after the Strait of Hormuz attacks or rumors of more attacks this morning. The average 30-year rate is back above 6.5%. Their highest level in over a month. This is, you know, obviously, we care about the bond yields because those yields eventually trickle down to the yields that people are paying on their mortgage. So I know we're talking nationally, 6.5%. What do you see going on in the bond market?
16:15 Speaker 04 6.5%.
16:17 Speaker 02 Yeah.
16:17 Speaker 04 Yeah, no, so there, I mean, here's the thing that I think a lot of people don't realize is that the markets move just like the price of gasoline, right? So you may see a 6.5% rate, but that comes with some form of cost, right? So depending how much money you have into a transaction for purchase, meaning you're putting down 20 or 30, 35%, anything you see advertised online will likely have to have 30% or greater down with a 760-plus FICO score owner occupied. So these are very important distinctions because when you start seeing rates quoted to you, and I'm talking about conventional loans now, not government loans like FHA,
16:57 Speaker 04 VA, USDA, but when you see someone quote you 6.75, you immediately want to hang up the phone because you heard that the rates were 6.5%. But you have to realize that every loan has something called a loan level pricing adjustment. It's just a risk-based adjustment. And that has to do with you putting less money into the transaction. Maybe your credit score isn't a 760 or higher. And maybe the mortgage insurance is higher than what was expected because these are all protections that the banks take into consideration when a rate is given. So, but national average right now is just hovering around 6.5%.
17:32 Speaker 02 So that's for conventional loans?
17:33 Speaker 04 Conventional.
17:34 Speaker 02 The other loans, FHA?
17:36 Speaker 04 So FHA and VA have just eclipsed 6%. Like they're at 6. They're 599 to 6%. They were as low as 5.5 about two weeks ago. Before February 27th, they were around 5.25 to 5.375 for those government loans, but now they're
17:56 Speaker 02 Is February 27th the
17:57 Speaker 04 The day before the Iran
18:01 Speaker 03 Conflict, not a war, not a war, conflict.
18:03 Speaker 02 Yeah, so that, that, oh, then it just immediately
18:06 Speaker 04 Correct, because the bond market
18:08 Speaker 03 Yeah.
18:08 Speaker 04 Basically pooped on itself, so.
18:10 Speaker 02 Yeah.
18:11 Speaker 04 Mortgage backed securities got, got hammered and you can see it clearly, you guys follow these charts pretty closely, you can kind of see this Just cascade downhill as far as price of the mortgage backed securities and that's, you know, what affect interest rates, so. Um, what bothers me the most, we've had two alerts to lock today, is that we've broken below some Some floors of support and the next floor is pretty far down, so. My message to consumers out there is it's going to get worse before it gets better.
18:40 Speaker 02 You're saying it, the, the support range or the price for bonds is going down?
18:46 Speaker 04 Mortgage backed securities specifically.
18:47 Speaker 02 Or mortgage backed securities.
18:49 Speaker 04 Because the 10 year bond is in the opposite direction, generally it goes up when the mortgage backed securities is going the other way. So we are just seeing that The flight to safety, you're going to see money going into the 10 year bond right now. And it's not dramatic, but we're down 33 basis points today in the mortgage backed securities, whereas The 10 year is up five basis points, so.
19:10 Speaker 02 Yeah, and it's up about eight basis points, the 10 year treasury is up eight basis points since a week ago. Uh, for, or about almost four and a half right now. And it's, it's kind of weird, like, does it seem weird to you that we have essentially Uh, a war going on in the Middle East, we have a, a energy, a global energy crisis? And we have rates at like Pretty
19:37 Speaker 04 Historically low, right? If you look at consider, yes. But here's the problem. Psychologically, it just does not feel right. And the reason why is because we were going in the right direction and people had been given this narrative that you should Date the rate, right? But marry the house. So you buy the house and date the rate?
20:02 Speaker 04 And the, the promise was, is that in the future, it's going to get better. Well, we don't have that crystal ball. We can look at metrics. We can look at all kinds of analysis of where we've been and where we could go. The truth of the matter is, is that incomes are not keeping up with inflation expenses. And with rising expenses for just everyday items, including fuel, the pinch is to add more debt. So most consumers are leaning on credit cards more than they want to. And that translates later as needing to consolidate. So we had, um, just recently talked to somebody had a, a two and a half, no 2.75% rate.
20:46 Speaker 04 And they had about $42,000 in credit card debt. And we did all the math with a consolidation loan, because that's sufficient equity. Even with them leaving, you know, a sub 3% rate, their overall monthly obligations lowered by almost $850.
21:05 Speaker 02 What? Uh, I want to hear more of that math. Uh, this might be interesting to some of our listeners who are finding themselves in debt trouble right now. And, but yet they're locked into an ultra-low mortgage. So fortunately or unfortunately, for some people, their only place to go to try to get out of that trouble is the equity in their home. But now they're going from a, you know, 2% or 2.5% rate to a 6.5% or whatever. Uh, I'd like to hear more about that math. Obviously people want to stay out of, you know, debt trouble, but if people can get out of it, we'll talk more about that when we come back. We're the Money Wise Guys, 661-396-1000. We'll be right back after this break.
21:57 Speaker 02 Thanks for tuning into Money Wise. We're your hosts today. I'm Sharad here with Sammy. We're also joined by our guest, Alan Maderos. Alan, you just gave a example of somebody who had over $40,000 in credit card debt, sitting on a sweet mortgage of 2.7 or whatever.
22:16 Speaker 04 2.75, yeah.
22:17 Speaker 02 And so, a lot of people listening maybe have these mortgages that were locked in a few years ago, you know, sub 4% mortgages that, for better or for worse, man, those are hard to get out of, you know, free money loans. Some are below 3%.
22:34 Speaker 04 Yep.
22:35 Speaker 02 And it would be really difficult for somebody to have to refi out of that. But, carry on with your example and how somebody was able to pay off that debt.
22:45 Speaker 04 Very simply put, when you look at the average credit card interest rate, it is above 25%. The minimum payment required, there's actually a box now on all statements that are required to disclose. It says, "If you make the minimum payment, it will take you this long to pay off the debt." The challenge is, is that people don't stop using a card, even if they're trying to pay it down. Now, this is not everybody. If you're very disciplined and you say, "I want to get out of debt," you need to be hyper-focused on paying more than the principal that's being accrued, if you will, plus interest. And you also need to not use that card.
23:26 Speaker 04 Where people get stuck, as I mentioned earlier in the show, was is that the incomes are not increasing to cover the inflation expenses, but their lifestyles are trying to remain the same. So I know we've used this on the show before, is lifestyle creep. It means you earn a little bit more money and you absorb that in more lifestyle. So you really didn't make any more, meaning you didn't create any margin there to save. So, this happens quite often. And we've noticed that the average consumer debt that I'm looking at is between $15,000 to $30,000 worth of consumer credit card debt. Depending upon how many cards is where it really makes a difference. It's just not that you have one debt at 30,000 with this payment amount.
24:08 Speaker 04 It's that you have 15 cards that have balances and they have different interest rates. So when we did all the math, we found out that the monthly payments between these $42,000 with the payments was around $1,700. The mortgage payment was around 21, but by consolidating that additional debt and, you know, giving them some cash out, their fixed payment jumped around $3,100. So you can see this is significant monthly savings, but here's the, here's the mindset. They're like, well, I'm resetting them to pay for 30 years. And I said, you'll never get out of the other debt. The, the credit card debt will not go away even in 30 years if you keep up doing what you're doing.
24:51 Speaker 03 Yeah.
24:51 Speaker 04 At least when you have a fixed amortization, you can beat up the schedule. And I like to say that because it gives you a visual, like you're literally trying to beat something up. You're trying to pay that debt down by paying additional principal and beating the schedule. Because it's a fixed monthly that's going to go to principal and interest. If you start making additional principal payments, you will look at your amortization schedule. Look, I paid a thousand dollars extra this month. I can skip two payments. Depends on your interest rate and terms, but this is the way that you can get a 30-year mortgage paid off in 11 years, 12 years. It just depends on a good strategy, but nothing works without discipline.
25:27 Speaker 03 Yeah, the discipline is very important.
25:29 Speaker 04 And this is where I think if you put things in an auto payment amount that you have fixed, some people have gone to the method of doing a bi-weekly or weekly or even, you know, a semi-monthly payment. Not all servicers will allow that, but if it does do that, it's almost like it's a part of your financial rhythms and you're just going to pay it, you know, during that time. But you just need to be focused on the outcome. Once you start seeing results, and this is why I love 15-year mortgages, is month one, year one on that amortization, you pay more principal than you do interest. And when you start seeing results, it's like trying to work out. If you start saying, hey, I'm losing a little weight. I feel better, I have more energy, you're more motivated to keep going.
26:11 Speaker 02 We had this morning, every week at Money Wise, we have an all-staff meeting and we rotate giving a devotional, like a weekly devotional, you know, motivation Monday, we call it. And this morning, the employee that was giving the presentation, their topic was, and they pick a random topic, and their topic was discipline over motivation. And a couple of quotes were shared, and one is motivation gets you started, discipline keeps you going. And it's so appropriate with finances that, you know, you could be motivated as long as you want, but like, it's only going to get you so far.
26:53 Speaker 02 You have to be super disciplined when it comes to managing your household assets when you have debt, and you have consumer debt, and you're managing a mortgage debt. And it can be a difficult position to be in where you're trying to choose between two debts, and like, debt is bad in the first place, and now you gotta get like, the worst bad of the two debts. And so, but what happens, some people, is they just, instead of dealing with it, just bury their head in the sand. I'm sure you've seen this. I mean, you were telling a story off the air of somebody who had been putting off paying their taxes for 10-plus years, or whatever, and now that's come back to bite them as
27:35 Speaker 02 they're trying to get a mortgage, and there's this, you know, this outstanding debt to the IRS. You know, I think it's important for people to know, like, there are ways out of this. There's ways out of your dire financial position. I'm going to ask you, Alan, about your opinion of the Federal Reserve Chairman, Jerome Powell. And, you know, he's got, his days are numbered, and a new president will be coming in, it looks like it's going to be Kevin Warsh. But Jerome Powell's been in for a bit, and obviously, he's from somebody like you, who your career's built around interest rates. How do you, how do you feel Jerome Powell has done?
28:18 Speaker 04 So again, this is not my personal opinion because I don't know enough to be dangerous in this, but reading a lot of commentary, we have found that the style in which Jerome Powell has been leading the Fed is reminiscent of what Janet Yellen did is almost like, you know, pulling this idea that we're looking backwards on results versus forward thinking on what market is actually telling us. So a lot of the decisions were made without having some type of, I guess, projection. And as a result, they should have been lowering rates faster and then increasing rates faster as we were coming out of the pandemic. And they didn't do it.
29:01 Speaker 04 So as a result, they just held too long. And when you're doing that, it's it's not reactionary, but it's not moving the needle enough. So Kevin Warsh, I think, is a little bit more forward thinking. He wants to change some of the parameters in which they're looking at for the future of what the markets are doing. So a good example is the BLS jobs report. Okay, so how many times have we had this blockbuster number that comes out for jobs created? Only to have it revised. But I'm not talking by, you know, 10,000, we're talking 75, 120, 200,000 jobs. How? If we had to
29:47 Speaker 04 base our earnings based off of projections, you're always going to project high, right? But then when the results come in, are you going to be really that trusted? To make decisions in the future for somebody?
29:58 Speaker 02 No.
29:58 Speaker 04 And that's basically what we're seeing. So the last Fed meeting, basically Jerome Powell says, hey, I'm not leaving.
30:06 Speaker 02 Yeah.
30:07 Speaker 04 I'm going to stick around. And I know Kevin Warsh is, you know, I think, was he confirmed? I didn't check to see that.
30:13 Speaker 02 I don't think he's been confirmed yet.
30:14 Speaker 04 Okay, so there's still this this idea that the old guard is going to stay in there. How popular that is, it depends on who you talk to.
30:25 Speaker 02 Yeah, and Jerome Powell will step aside as the, as the president and he'll just be a, a board, not just a board, but he'll be on the board.
30:32 Speaker 04 He will have influence, there's no question about that.
30:35 Speaker 02 Yeah, it's just, it's always tricky to judge, you know, they, these people who make our interest rate decisions, because it's, there's just so much data that you have to understand and you're trying to read the tea leaves in so many different ways and it just seems like a nightmare position to be in, a Federal Reserve Chair.
30:58 Speaker 04 One thing that they, they've been watching, but it hasn't been really responded to, is the actual cost of living expenses that consumers are going through. Now, understand the Fed funds rate is the overnight borrowing rate between banks, but it also affects home equity lines of credit, student loans, credit cards, auto loans, right? As those items start to become more affordable, people will borrow more. So in some senses, are we trying to make things more affordable to borrow more, to add more debt? Are we trying to get people to curb spending? And that's the reason why they raise the Fed funds rate. Remember, that's to slow inflation, to slow the amount of debt that's taken on.
31:38 Speaker 04 So we have a debt problem as a country. That's been known for literally 60 years.
31:45 Speaker 03 Yeah, yeah, I would, 100% as an, as an ex-banker, I would definitely not argue with that at all. We have a debt problem because it's so easy to borrow. And we, when we are a society that does not save money. I mean, to your point from earlier, you get an extra in your income, your lifestyle changes versus that going into savings.
32:08 Speaker 04 Correct.
32:09 Speaker 03 Our mentality is not to save, it's just to live it up. And sometimes living it up... Using credit cards and that's why we see credit card spending in the trillions today.
32:20 Speaker 04 Of course.
32:20 Speaker 03 With with with the people not paying back on time. That that rate is also rising like the default rate on credit cards is rising not alarming. Like two thousand six, seven and eight alarming, but it is going up.
32:41 Speaker 04 Statistics argue that actually one missed payroll will affect most families.
32:48 Speaker 02 Yes.
32:49 Speaker 04 That are W two wage earners.
32:50 Speaker 02 Yeah.
32:51 Speaker 03 Yeah, we talked about this statistic a lot on on the show shared always speaks about this $400 savings that a family, an American family. Well, no, not a saving, sudden expense.
33:02 Speaker 02 Yes.
33:03 Speaker 03 $400 because there's a huge percentage of American families cannot afford a 400 sudden like emergency expense. $400.
33:12 Speaker 02 Right, yeah, it's over over half of.
33:14 Speaker 04 That's kind of alarming to me, to be honest with you, but it's also not surprising from what I've seen as well. So one of the challenges in the mortgage industry is is and we'll probably bring this up if we talk about the Crabtree report, but. Is the idea that home values are not dropping. And mortgage rates having stayed kind of consistent have not made it more affordable. So as a result, more of your monthly income is going towards a mortgage. But for those people that can afford it, the home is still one of the single greatest form of wealth building tools that are available to most people that can qualify.
33:56 Speaker 02 Yeah, it's a it's a forced savings account and you have a forced expense, whether you like it or not in your housing. You might be getting it for free right now because you're living on your parents' couch or your friend's basement. But it's still that you're paying a cost for that.
34:12 Speaker 04 Sure.
34:13 Speaker 02 Somebody's paying the price for that. And so the the the the quickest way for somebody to to to move towards financial independence for them to have. Secure housing and the most secure housing is you own it. You're paying it off and you're not, you know, you're not paying rent. You're paying rent. Now you're subject to all the interest, the inflation and the interest.
34:37 Speaker 02 Not interest, but inflation rate that's going to go up each month with your rent. You don't get that when you, when you buy. And, and so, you know, the, if you can afford, that's what we always say that the right time to buy is when you can afford it. And it seems like even with the way interest rates are now, you're reporting, Alan, that applications are actually up.
35:01 Speaker 04 They are. I think people just couldn't wait any longer. So they have to take some action and that is applying for a loan, whether it be a refinance or purchasing a house. Because everyone's been kind of waiting for the next shoe to drop in their mind. Hey, I think the market's going to crash. This is going to happen. The housing values are going to go down. The truth of the matter is, if you look at the report that Gary Crabtree put together, we've actually seen a small appreciation year over year.
35:30 Speaker 02 Yep.
35:31 Speaker 04 Do you guys know what that number is?
35:33 Speaker 02 I haven't looked at it yet.
35:34 Speaker 03 3%? We're going to guess?
35:35 Speaker 04 Point 82%.
35:37 Speaker 02 Year over year, home, home values?
35:39 Speaker 04 Appreciation. So what that basically tells me is that it's been flat, but it's still fair. Right? It's not a 7%, 10% increase. Between 2020 and 2022, we saw a 40, 41% increase in appreciation in Kern County.
36:01 Speaker 04 That amount has only gone up maybe about 3% since that time. But collectively over 40% increase. So what does that do to the home buyer that wants to get into the market? They feel like they've been priced out.
36:16 Speaker 02 Yep.
36:16 Speaker 04 Right? But where the power really lies, and I'm just going to say it, it's now going to be your millennials. And your Gen Xers that have all of the power because they are the ones that now are in position where they have equity, they're getting to that age point where they want to start moving equity, right? So I brought this stat up a couple of times ago, what's the average, what's a percentage of homes that are owned free and clear in the United States?
36:48 Speaker 02 Oh, I can't remember the number, but I know it's high, it's higher than I thought.
36:52 Speaker 04 It's over 40%.
36:54 Speaker 02 Yeah, that's insane.
36:55 Speaker 04 So the crazy part of that is, is that all of that home equity has to be eventually passed on, whether it be through inheritance, through sale, there's this demand that's going to be, you mentioned the, the, the son, daughter, sleeping on the couch. Okay, so what do you think the average age of first time home buyers are now?
37:16 Speaker 02 Uh, 30.
37:18 Speaker 04 Oh, I wish it was that low.
37:20 Speaker 02 Oh, 40?
37:24 Speaker 02 45?
37:25 Speaker 04 40.
37:26 Speaker 02 40 year old?
37:27 Speaker 04 40. It was 37, three years ago.
37:31 Speaker 02 So it continues to go up?
37:32 Speaker 04 Correct. And the reason why is because
37:36 Speaker 04 underemployed versus full-time employed, we're seeing less underemployed, meaning they have a job, but they're not getting full-time hours, or there's a situation where their wage increases are not commensurate with what inflation is doing. Second thing is, is that overall, the big picture is this, they have student loans.
37:56 Speaker 02 Yeah. Yeah, that's a big problem.
37:59 Speaker 04 And as a result, there are loan programs that allow you to qualify with student loans, even if you're not in active payment. So it's case specific, but we can certainly run through it. I've had people that have graduate degrees that have 250 plus thousand dollars in student loans, and they qualify to buy a house. So it's just how it is that you look at your planning before you go out to the marketplace, right? But again, all of this to say, real estate in Kern County has been stable, values have slowly, you know, increased, it is still not truly a buyer's market, it is still a seller's market in the sense that we have seen more inventory selling.
38:40 Speaker 04 So year over year, the number of units, meaning the number of homes that have sold is actually up a little bit and houses during the spring season, we're in it, they're moving. Like I've had situations where some of our clients have made offers and there've been multiple offer situations where the seller calls what they call highest and best. What that basically means is that bring us your best offer and we'll make a decision. So you're not in a situation where houses aren't getting any offers. Now, if it's ugly, it needs work. You lots of deferred maintenance and you started out way higher because you think that, you know, your countertops are better than the people in the neighborhoods.
39:20 Speaker 04 You need to really price your home appropriately and use a qualified professional to help you to do that. That's really it.
39:28 Speaker 02 We have a message here from a listener. You can help us with this, Alan. It says, "I've got some credit card debt that just won't seem to go away. Should I focus on paying that off first or still try to save at the same time? I was hoping when I moved to a 15-year, I'm assuming 15-year mortgage, that if I keep my credit debt under $10,000, I would be able to pay it all off when I don't have a mortgage payment anymore. Not the best way to look at it." It's kind of interesting, right? I think this, this person is trying to cope and manage debt. And at one point, refi'd, cashed out, went to a shorter mortgage, 15-year,
40:10 Speaker 02 with the idea of, well, I'll still have a little bit more debt, but then when that 15-year mortgage is up, then I'll take that extra payment and put it towards the credit. I've never heard of that strategy before. It seems like a, really, you're playing the long game. I mean, you're, you're letting some credit card debt, any, if you're leaving a balance on the credit card, any balance, then you're losing.
40:31 Speaker 04 Yes, that's, that's what I was gonna say. To answer the question, focus on the credit card debt. Get that to zero as fast as you can.
40:37 Speaker 02 Yeah.
40:37 Speaker 04 And the reason why is, once you get to zero, you can use credit to maintain a credit rating. But just like back in the day, do you remember when you were given, well, I don't know, I was given five bucks, you know, as a kid, and that was a lot of money. But when that $5 was gone, I was broke. Like I, you know, I had no money.
40:57 Speaker 02 Yeah.
40:57 Speaker 04 Because I didn't have credit. You know, it was a $5 bill and that means that I could go to Jimmy's Arcade, play for a while, right? I could do certain things. I could go to 7-Eleven, get some, you know, a Slurpee and maybe, you know, some candy bar or something, but I'd still have a little change. But once that change is gone, you start counting the pennies. Well, the credit card doesn't give you anything other than interest. And your goal should be get to zero, use the card, pay the balance in full. This is a wonderful lesson that I've always been very, very grateful to have learned. The greatest generation, not many left, but because of the Great Depression,
41:40 Speaker 04 they were amazing with their money and they always saved. And they saved to the point where they themselves didn't ever live their life comfortably, but they had a little nest egg. And that thought process protected them through death.
41:59 Speaker 02 Mm-hmm.
41:59 Speaker 04 They always had something to leave for their kids. But the thing that was most important to me is that I rarely had ever seen any of those clients not come to me with a balance checkbook, not written out, and every single line with a check mark and the balance and the register there. They knew where every penny went.
42:21 Speaker 02 Yeah, there is a, just today, in fact, I read and USA Today, there was a survey conducted by the Allianz Center for Future of Retirement. This is a survey that's come out every year. I've always been interested and essentially it asked two questions. They ask what in, choose between the bigger of these two worries, death or running out of money? And of course, every year, everybody answers, not everybody, but the majority of Americans answer that they are more scared about running out of money. This year, it found that 67% of Americans worry more about running out of money than death. Which is interesting because what you're talking about, the greatest generation are those
43:06 Speaker 02 of those of our of our grandparents that were parents that lived in the Great Depression. Like, they basically were witnessing that. And and they I think that's one of the thing they witnessed the devastation that happens when, like, dad loses his job, nobody has money, there's a line out the street for the food bank, and that had motivated them to get to the point where they never have to worry about that. They don't have to worry about that again. So they're really diligent about saving.
43:32 Speaker 04 And many of them didn't. And that's kind of the crazy, but they also didn't spend anything on themselves.
43:38 Speaker 03 Yeah.
43:39 Speaker 04 So that that's where the heartbreak comes in.
43:43 Speaker 02 Yeah, yeah, if they're, you know, they were so they were so frugal that they sacrificed their own, you know, self, you know, for that.
43:52 Speaker 03 Lifestyle or whatever, to leave some to their kids.
43:55 Speaker 02 Yeah, yeah.
43:56 Speaker 04 And I I use this example, I said, what do you call, how do you spell inheritance? L O V E.
44:09 Speaker 04 Truth of the matter is, is that you don't have to leave anything.
44:12 Speaker 02 Yeah, that's right.
44:13 Speaker 04 But you do so because you have someone you care about.
44:17 Speaker 02 Yeah, and I I think for a lot of Americans, it's that, yeah, they want to they want to they want to leave money for their family, but they're really mostly concerned about their own, like, emergency healthcare event. I mean, it's a big concern, like, what happens? Something happened.
44:31 Speaker 03 We talk about it upstairs at the Money Wise, where we we we give plans to to customers. Some of them overspend, and some of them don't want to spend because they are afraid of running out of money. And even though you sit with them, you create the plan, you go through all sort of variables that might happen, inflation, taxes, this, that, they still will hold back and just like, you know what, I'm just going to spend my social security. I'm not going to even touch, like, my 401K. I'm going to take the minimum distribution because I'm of a certain age, but I'm not going to over. I'm like, dude, just go ahead.
45:09 Speaker 02 Yeah, relax.
45:10 Speaker 03 Relax, you're good. Well, how about if I live until 95? Well, how about if you don't live?
45:15 Speaker 02 Right.
45:16 Speaker 03 At all, right? So it's, it's, we, we, we see it's upstairs like at MoneyWise Wealth.
45:21 Speaker 04 But I think that's also a prudent financial plan though, right? They just, they're given a choice. You just need to kind of push them to say, hey, live a little.
45:27 Speaker 03 Yeah.
45:27 Speaker 04 Right?
45:27 Speaker 02 Yeah. Because the opposite side of that is somebody who is living way above their means. And so they're borrowing each paycheck from a credit card to help supplement that. Like that's, that's worse, I think, than you under, over saving, I think, is better than under saving.
45:48 Speaker 03 Yes.
45:48 Speaker 02 Or, or, or over saving is better than overpaying for debt. Have you experienced any, any good examples of tricks that people have done that weren't financially responsible? And then they needed a mortgage and they're like, okay, I gotta get rid of this credit card debt. And they came up with the, anything, anything ingenious?
46:10 Speaker 04 No, nothing ingenious. Equity is what drives it. If you're able to do it, it's because you have equity, you've maintained a decent credit score. But it's almost like, uh, at the beginning of the Incredibles movie, do you guys remember that Pixar movie?
46:23 Speaker 02 Yeah.
46:23 Speaker 04 There's a scene in there where Mr. Incredibles asked a question and he said, "I kind of feel like the maid. I just cleaned this all up. Can't you guys keep it clean for a while?" Right? So, I mean, sometimes I have clients that come in and I give them a plan. We execute the plan and then three years later they come back and said, huh? And I was like, we'll fix it again.
46:43 Speaker 03 You just described my, you just described my dieting problem.
46:46 Speaker 02 I was going to compare it to a diet. There's no quick shortcut to losing weight.
46:50 Speaker 04 You just have to be disciplined. And the reality is, is that change your lifestyle and that's, that's the hard part.
46:54 Speaker 03 Yeah.
46:55 Speaker 04 Or make more money.
46:56 Speaker 02 Yeah. Yeah. Make more money or change your lifestyle. That's it. There's no shortcut to it, unfortunately, but there is hope. You can get there. Just hang in there and, uh, and keep doing the right thing. If you'd like to listen to this show or any of our past programs, go subscribe to the MoneyWise Podcast. It's commercial free on all major podcast platforms. And remember, be smart, be safe and always be money wise.
47:20 Speaker 01 Securities offered through LPL Financial, member FINRA, SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.
Previous 4/29/26 Hard Money Loans + Checklist When Selling Your Business with Patrick Collins Next 5/6/26 Taxes, Trump IRAs & Creative Lending in Today's Housing Market Page updated November 6, 2026 · transcript and summary are machine-generated
