Smart Money Happy Hour with Rachel Cruze and George Kamel - Can You Answer This Money Trivia?

Episode Date: May 16, 2024

💵 Create a free budget! Sign up for EveryDollar today. If “financial literacy” is as foreign to you as our obsession with avocado toast, that could cost you a lot more than an embarrassing moment at brunch. Join Rachel and George for a breakdown of all the financial terms you need to know. But don’t worry, they’ll be attempting some random trivia of their own. Next Steps ·      💰 It’s never too late to learn about personal finance! Learn more about any financial topic at ramsey solutions dot com. ·      📱 Submit a Guilty as Charged question for Rachel and George! Send a DM to @rachelcruze or @georgekamel on Instagram. Be sure to type “GUILTY?” at the top of your message so we don’t miss it. An Offer From Today's Sponsor  This episode is sponsored by DeleteMe. 🔒 Remove your personal information from the web and get 20% off your DeleteMe plan now . Today’s Happy Hour Special:🍸 Margarita Mocktail Recipe: Sugar and Charm Ingredients: ·      1 ounce lime juice ·      1 ounce lemon juice ·     1 ounce simple syrup ·      3 ounces club soda ·      Himalayan pink salt ·      4 ice cubes Instructions: Fill a cocktail shaker with ice and add in the lemon juice, lime juice and simple syrup. Shake. Dip the rim of your glass into lime juice and Himalayan pink salt and add ice. Strain the mocktail into the salt-rimmed glass. Optional: Garnish with a lime wheel. Listen to More From Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey guys, I'm Rachel Cruz. I'm George Camel. And this is Smart Money Happy Hour. Cheers. She's salty. Wow, that's good, though. That's good. So this is the show with two friends who happen to being money.

I feel like Zoolander. So this is the show where two friends who happen to be money experts. Talk about what you're talking about. Everything from pop culture, current events, and money. Is there anything you just don't know anything about Rachel? Cars. Like finance, politics, pop culture, history. What's something you truly, like, someone brings this topic up, you're like, I'm out because of your clueless.

It might be history. Remember I thought Picasso was in like the 1500s? Which is fair. But, you know, we all have our blind spots. Yeah. And for some people, it's financial literacy. That's something I hope to know about. It's like the offense and defense of money, right?

These terms are thrown at net worth, asset allocation. You know, like these like just terms. And for some people, They don't know where to start. So we're going to break it all down this episode, George. That's right. We are. That's what today's about.

Financial terms and concepts you need to know. So nobody likes to know it all, Rachel. Just want to remind you. No, we don't. Humility is... Am I knowing it all? Why'd you look at me like that? Yeah.

What? We're going to mildly embarrass ourselves by attempting a round of random trivia, courtesy of producer Skyler. So we're going to start with the non-financial terms just so that we have a dose of humility. Because we have it. We're going to nail the financial ones,

but we're not that smart. So it's going to be a wild and humbling time. But first, Rachel, let me let you know what we're sipping on here in case you're wondering what this... Yeah, it's really pretty. Is that all the nice things you can say about it? It's lymie. Okay.

And salty. So it gives margarita vibes. It's a mocktail. So feed this to your children at home to get their sodium for the month. And enjoy this mocktail margarita. We'll give you the rating and reveal the cost per glass at the end of the episode.

Let me take another sip just to really get a vibe. Let me say. I will say this. It is very hard to make a mocktail margarita. It hits. When you don't have tequila, though. Take another sip. That's a tough, that's a tough sell.

Close your eyes. You're on the beach. You pour salt water in here. It is really salty. It's good, though. I like it. Yep. We're going to do it.

We're going to do it. And there's a trend going on on social media. I'll fill you in, Rachel. There are these people that go around asking funny man on the street type questions, and they ask basic things that people. people should know. And the answers are fairly shocking. And I want to test you. Do you know all seven continents off the top of your head? Okay, we got Asia, Africa, North America, South America, Antarctica, Europe, and Australia. Yeah, yeah. That's some public education for you.

How about this one? Let's throw a little curveball. You know the capital, Rhode Island? Providence. Providence, Rhode Island. Oh, my gosh. How good do you feel? I feel so good right now. Brayon, are we doing a quiz? Is this what I hear in this episode? Let's do it.

Give it to us. Skyler. I'm ready. Are you ready for the Skylar quiz? Okay, and then we're going to do one, two, three, and we answer. Don't look at your paper. George.

Oh, okay. George. I'm not looking. George. Cover up your paper. All right, so we're going to do a quick speed round. Eyes closed, head that. Okay.

Okay. And we go. Okay. And we go. Correct. Which U.S. president was a licensed bartender. One, two, three. Roosevelt.

Is Abraham Lincoln? Lincoln? What? They didn't have licensed bartenders back then. That's, I don't believe it. Okay, keep going. What is Barbie's little sister's name? One, two, three.

Margaret. Skipper. Skipper. What's Barbie's last name? She didn't have one. But she, her litter. She has a sister? Skipper, yes.

All right. Next one. What was the name of Ramsey's board game? Back your way. George. One, two, three. You're not doing a countdown. It's every man for himself.

Wow, fine. Here we go. The unicorn is the national animal of which country? Netherlands. Scotland. Oh. Wow, what a special... It all felt right.

What a special... What a special animal. Yeah. Special... There's so many real animals they could choose. It's Colin, though. I choose a mythical creature. Our last question is, what was the Ramsey show originally called?

Oh, I love it. Going to do it the same time? Do you know it? Three, two, one. The money game. Nice. I still love that name. It's a great, yeah, great name.

Let's play the money game, Rachel. It's our own money game. I'm going to ask you a question. You can toss one back to me, and one by one we'll do our part to make sure all of the people out there can impress. their parents and friends with their financial terminology. Yeah, so we're going to go through some terminology, George, and see how we're doing here, okay? All right.

Let's do this. I guarantee that people listening won't know at least a few of these, or at least know the full correct sort of definition. We'll make it fun and conversational. We're not going to go full websters on you. Yeah. Okay. Let's go first.

Number one, compound interest. Oh, that's a good one. You hear about it a lot, and you're like, that sounds good. I hear it's a good thing. I'm not sure. This is essentially the magic sauce that makes your money grow exponentially over time and it's through the power of earning interest

on top of your interest. So you start with 10,000, you earn 10%. Right? That's 1,000. Well, now you have 11,000 earning 10%, which is more than 1,000. And you see as that snowball starts to roll, it gains more snow, that's the power of compound interest. So when you put money in,

you're not just making money on just the money you put in. Over time, you make money on the growth of that money too. So it is. It's like this... Without you doing anything. Yeah, your money's making money and it's a beautiful thing. All right.

Next. Asset allocation. Such a $10 word. It almost bothers me how it sounds so pretentious. But here's all this is. It's the art of spreading your investments across different types of assets. When you think of an asset, think of stocks, bonds, real estate. And what this does is helps you manage risk and maximize your returns.

So you've heard the term you don't want all your eggs in one basket. That's what asset allocation is. It's making sure that you have. have different types of assets, like we say mutual funds. You want four different types of mutual funds. Yeah, and that's specifically in investing. But when we met with our SmartVestor Pro, they're always looking at our percentages too, like how much is in your house, how much you have in retirement, how much you have just cash, right? So you do want to make sure there's a good amount spread out so that you're able to get to what you need to. But yet, if something goes down, usually the other

market isn't. So yeah, it's a good allocation to have. Risk management. rounds. Yeah, which is good. Okay, stocks and bonds. That's a fun one. Stocks and bonds. We hear about this a lot. It's a fun thing to say. What does it mean?

Stocks and bonds. Well, these are two sides of the investment coin. Yeah, so stocks on one hand is like you own a very small portion of a company. So if a company is publicly traded and you buy a stock into it, then you own, I mean, realistically, a tiny piece of that company. Point zero zero one percent of it, right? But as that company grows, and you buy. grows, depending on how much money you have invested in it, you make more money. So that's the

stock end of it. Whereas bonds are a little more conservative. They don't have as big returns, but they also don't see the losses that stocks can have. And so what's interesting is that bonds are actually debts. It's a debt instrument that governments can use or other corporations to basically give you an IOU. So we'll say, Rachel, buy one of our bonds and we'll pay you back with interest. And so it's sort of a more, it's a more guaranteed investment. But But it's not very impressive at the end of the day. Yeah, you don't get a large return. The SMP 500, George.

Another buzzword. I know. That's a fun one. Yeah. You know what S&P stands for? Standard and poor. Standard and poor. So it's basically the measurement of the top 500 companies. In the U.S.

Yeah. So you have like the Dow Jones is one measurement, but the S&P a lot of people like to look at. The NASDAQ? Yeah. Love the NASDAQ. It's a fun one to say. So this is like tech companies, all this stuff. but the S&P is 500 largest companies.

So you can really get a good picture of what the S&P is doing is usually what the market's doing. It's a good benchmark for how the economy is doing as a whole in America. That's right. Cash flow. Ooh, this is one that's used by a lot of like the gurus out there. It's a hot thing to say, like, bro, cash. It's all about cash flow.

We've all heard that. This is essentially the lifeblood of financial success. And so this is about the money coming in versus the money going out. And cash flow helps you build wealth. So a lot of people think cash flow in terms of passive income. So the cash flow from my rental property or my investment accounts. But cash flow for some people can just mean my income. Yeah. It's literally the cash coming in to you. The flow of cash. The flow of pay. Yes. Let's go tax credits versus tax deductions. Oh. So a tax credits will minimize your actual

tax bill. So it's like, okay, you owe this much in taxes. Well, a tax credit will shrink that or a tax deduction shrinks your income on how you're taxed. Oh. Yeah. So the deduction is on the front end, credits on the back end. Yeah, that's right. Let's go equity, George. Ooh, also a fun one to talk about.

This is essentially your ownership in something. So the equity you have in your house is how much of it you actually own compared to your mortgage, which is how much you don't own. What you owe. Yep. And some people take their equity and borrow on it. Oh, don't do that. But it represents your ownership in an asset.

That's right. Rate of return, George. This is the scoreboard of investing. So basically measures how much your money is making. So, you know, average rate of return, we always say, is between 10 and 12% in the market. But when you look at it, this is how much percentage my money is making on itself. That's the rate of return.

I like that. And one of my favorites, Rachel, the rule of 72. Oh, that's a good one. This is an interesting one. This is sort of a nifty mental shortcut that will show you how long it will take for an investment to double. And the way it works is you calculate by dividing 72 by the rate of return. So, for example, let's say the rate of return is 10%.

Well, you take the rule of 72. That means that your money would double every 7.2 years. So it's a fun way to think about. If the market does 10%, my money, my $200,000 and my 401k, would double the $400,000 within seven years. if I get an average rate of return of 10%. Yeah. Term life insurance, George.

Life insurance, you guys, is a, it's a must, but there's different products of life insurance out there. So you got whole life, universal life, term life. So term life is only for a term. A specific amount of time. 15 year, 20 year term, 10 year term, you get to pick. It's usually the least expensive option out there. And our goal for you guys is to be self-insured

to get to a point where you don't owe anyone anything. You're paying off debt. you have good investments. So when it gets to that point that you're like, oh, I may not even need life insurance because I have no debt and tons of investments, anyone that is dependent upon me is going to be fine. They're going to be taken care of.

So that's the goal. That's one reason the whole life insurance is like a... That's one point, but there's a lot of others because it's very expensive. Don't mix your investments and your insurance, which like a whole life would or even a universal life. So term life insurance, it's the way to go. Go to Xander.

Insurance.com. It's awesome. That's where Winston and I get our insurance. I get mine through them too. Yep. It's great. But get life insurance, you guys. Get life insurance.

That's good. A lot of helpful terms here. George, I don't know. How was that pop quiz? What do you think? I think we did pretty good. I think some of those people at least go, I need to look into that.

I didn't fully understand it. I've never understood it that simply. So we try to keep the cookies on the bottom shelf for you all. And Rachel, if anyone wants to know more about these and you don't want to just Google around, our website, ramesysysyslutions.com, we have tons of articles that break these down in real simple way. and I hope it helps. I use them sometimes to re-educate myself

on what's going on and what the deep dives are on these terms. So check it out. Ramsey Solutions.com is such a great place. We have calculators to help you, tons of articles, Financial Peace University. All of these are meant to educate you and empower you on your financial journey. All right, George, it's almost the end of the episode. And we close out every episode with Guilty as charged.

And this is where our producer, Skylar, gives us a new Guilty-a-charge question every week. And if we are guilty, we take a sip. Skyler. This is from a listener, Ellen Dunlap 10, and Ellen is asking, have you ever cut someone off in traffic and then regretted it? Oh, man. Yeah. I'm sure I have.

Do you know what I do? I kind of, I've heard this term. I think it's for my brother-in-law, who you still have it close to Boston. Oh, you talk about this. It's a Bostonian thing, aggressive driving. Bullying? That's what he'd call it, just like you kind of bully your way in. If you got to get in, you got to kind of kind of...

Just nudging. Nudge. You got to keep going. And then I do the, like, sweet, like, Tha. Rachel gets away with this. Yeah, I'm a happy, I'm a happy cutter offer if I have to. I really try not to, though.

And I hate when people like tailgate you. Oh, yeah. Well, I used to do this more, but there's serious road rage in America today. And I'm not, like, some people are willing to just risk their entire life in order to get back at you. And that's why I don't, I don't do it anymore. But there was one time driving to New York with my brother. He's sleeping in the passenger.

seat. Yeah. And I, you know, I had to get in before the toll at the turnpike in New Jersey, New Jersey Turnpike. The turnpikes. And I cut a guy off. And so what he did, he hard break checked me so fast that I almost slammed into him after that.

Oh, my gosh. And so, yeah, my brother woke up the hard way on that one. George. Almost hit his head on the windshield. So I learned my lesson from that. Wow. Don't cut people off. Don't cut people off.

Yeah. Even up in New Jersey. Especially in New Jersey Those people have nothing to lose Not a lot going for them I'm kidding I love new I have friends in New Jersey Eboo's from New Jersey

And she made this drink Which is very salty Much like the people of New Jersey Might as well call this The Jersey Shore That's my new name For Ibu's mocktail margarita Jersey I love people from Jersey

Salty much like the Jersey show So good Oh Love it, love it All right You were loving this moktail Look at this. Who finished her drink first?

It was like a cold soup. It was like a gazpacho. It was so much sodium. Okay. Here's what's in the Mottoe margarita, Rachel. Can you guess what's in it? Salt. Number one ingredient on the board.

Ding! What's your rating for today's drink? I'm so sorry. I'm going to go four out of ten. It's fair. It's honest. It's balanced. Yeah.

You're going like 10 out of 10, George. I'm going to go, I'm going to go 6 out of 10. Okay. I think there's something I like about the pain. You know what I mean? Every time I take a sip of my... I'm getting stronger. Like my stomach is getting stronger.

Your body's just screaming. Water. Yeah. Water. I'm destroying the lining of my stomach by drinking this, but it will make me stronger in the end. Just pain is beauty, George. That's right. That's my rating.

Cost breakdown, though, very affordable. An affordable way to get your sodium. $1.23 per glass. And hey, I've been on a health kick, and sodium is the new thing. Element packets. You have those? They want you, yes, electrolytes, salt sodium.

Not a sponsor, but reach out, element. People are, they're all about the sodium these days. Apparently we're not getting enough. I thought we were getting too much. Well, that's what the government wants you to think. I'm just kidding. The government's like, don't use butter. Use butter.

They said don't use butter. They said don't use cholesterol and eggs. Eat eggs. It has good protein. So whatever the government is. government says not to do, Rachel's like, do it. Get in the sun. Yes. It is true. I'm like a, I am. I'm on a rebellious kick for my health.

Wow. Wow, that was very strong. I don't know if I'm not passionate about it. But I do know sodium. The government's like, pay your taxes. And Rachel's like, I'll never pay my taxes. No, I do. I do. I'm honest there. Okay, here's the ingredients. Oh, I thought you already did it. It's not just salt. Oh, okay. That's what I was.

Rachel thought of just salt. No. Go. There's lime juice. Yeah. You can taste that. Yes. There's lemon juice. Oh, okay.

Simple syrup. Wow, a little sweetness. Could you use maybe a little more of that. Club soda add a little zip and zang. I don't even if you put in simple syrup. She didn't add simple syrup? Oh, you did. Oh, okay.

Just a little. And finally, and most importantly, pink Himalayan salt. Which more tasting. I feel like I'm in the Himalayas right now. It's in my mouth. You've seen salt off a mountain. Salty air of the mountains. Oh, man.

That's pretty good, though. So good. Well, George is closing time. Sad. You guys, thanks for being here for the old pop quiz. Can I be honest with you, people are mad at you. Why?

The listeners. Because the show is called Smart Money Happy Hour and you only go like 30 minutes. They want a whole hour. You're a coast. You call the shots. I know. Anna, talk about me moving my hair.

I do move my hair a lot. I'm sorry. So all of you know. We read the comments. I see you. I hear you. I feel you. It is what it is.

So, all right. So make sure to subscribe. Leave a review. We're here for you guys. And we'll see you next Thursday on an all new episode of. Salt money. Happy hour.