Something You Should Know - How to Avoid The Summer Travel Chaos & Preventing Regrets About Money

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Starting point is 00:00:17 You can now make the first move or not. With opening moves, you simply choose a question to be automatically sent to your matches. Then sit back and let your matches start the chat. Download Bumble and try it for yourself. Today on Something You Should Know, why if there's bird poop on your car, you need to get it off. Then, air travel this summer has become chaotic. But there are some things you can do to minimize the chaos. For instance, the old advice, which by the way still holds true in many markets, is pick the very first

Starting point is 00:00:51 flight of the day. But I'm going to add a wrinkle to that. What you want to do is book the very first flight of the day on an airline that is not based at the airport you're departing from. Also, if your dog or cat wears a flea collar, there's something you need to hear. And how to eliminate those regrets about money that we all seem to have. So there's this great saying that we all know, if I knew then what I know now, things would be different. And that's speaking from regret. And my whole idea is to help people never say that phrase again. All this today on Something You Should Know. People who listen to Something You Should Know are curious about the world,

Starting point is 00:01:35 looking to hear new ideas and perspectives. So I want to tell you about a podcast that is full of new ideas and perspectives, and one I've started listening to called Intelligence Squared. It's the podcast where great minds meet. Listen in for some great talks on science, tech, politics, creativity, wellness, and a lot more. A couple of recent examples, Mustafa Suleiman, the CEO of Microsoft AI, discussing the future of technology.

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Starting point is 00:02:55 car washed. As soon as you get your car washed, they show up and poop on your car. And a lot of people don't worry too much about the bird poop on their car, figuring they'll just remove it the next time the car gets washed. But that's actually a bad idea. Bird poop can do real damage to your car's paint. I've seen it several times. Bird poop contains a lot of uric acid, and that can be murder on a car's paint if it's left on,

Starting point is 00:03:24 especially in hot summer weather. So the sooner you get it off, the better. If it's been on there a while, one way to get it off is to soak a microfiber cloth in water or a safe cleaning solution and let it sit on it for 15 minutes and then wipe it off. Another way is with seltzer water or club soda. The carbonation from the seltzer water helps break down the poop's natural acidic qualities. If it's really dried on, WD-40 can help get it off. And there's also a product you can buy online called Drop Wipes that is specifically for this purpose that does seem to work. But however you get it off, get it off as soon as you can. Otherwise, when you finally do clean it off,

Starting point is 00:04:10 you can start seeing faded spots of paint all over your car, which looks terrible and could decrease the car's value. And that is something you should know. It seems that lately, travel, particularly air travel, has gotten pretty horrible. Lots of flights are canceled or delayed, airfares are up, airports are packed, rental car prices are through the roof if you can even find a car to rent, and, well, traveling has just generally gotten difficult and expensive. So what can you do? Well, to the rescue is Peter Greenberg. No one knows travel like Peter Greenberg. Peter is

Starting point is 00:04:53 the travel editor for CBS News and has a number of shows on PBS, one called The Royal Tour and another called The Travel Detective. They're also available on Amazon Prime and Apple TV+. So, Peter, why does it seem that travel has, you know, it's kind of gone to hell, particularly air travel? It didn't used to be so bad, but today it's just chaotic, it seems. Well, you know, it's not just today. This goes back over a year ago, because during the pandemic, the airlines received an amazing amount of money from the federal government, federal aid still looking to raise revenue or to save revenue. So somebody thought it would be a great idea to offer early retirement packages and buyouts to a lot of their senior employees. The problem was they thought only about 4% would take the

Starting point is 00:05:54 buyout. About 11% to 12% did. But by May of 2021, travel already started to come back, and they already had a problem. They didn't have enough people to operate the planes. And we're not just talking about pilots. Everybody talks about a pilot shortage. It's also about the people who work under the wing, the ground handlers, the baggage loaders, customer service agents. And then, so you have those two things going on, add fuel prices to that, and then while you're at it, throw in a little weather and you see where we are. So I get that. I understand that. But if this problem goes back a year, why a year later haven't they figured out, you know, there aren't enough pilots to fly the planes and baggage handlers to handle the baggage. Maybe we should stop scheduling so many flights.

Starting point is 00:06:42 Then we wouldn't have to cancel so many flights, then we wouldn't have to cancel so many flights. What we had was a classic case where the scheduling people were not talking to the operations people because they saw the demand. They tried to satisfy it. They just didn't have the assets. I think what's going to happen now, after we saw the meltdowns over Memorial Day weekend, over Father's Day weekend, and of course the mess over the July 4th weekend, is that it's not going to be legislation, because under federal deregulation, very few people can do that. It's going to have to be the U.S. Department of Transportation and what we call rulemaking.

Starting point is 00:07:15 Now, you may remember something called the tarmac delay rule. That came out of the USDOT after airlines were pushing back from gates and keeping passengers essentially prisoners for hours and hours and hours. And there was such anger about that that finally the TSA weighed in and came up with that rule. And the rule says that once you push back from the gate, if you keep your passengers out there for more than three hours, you're liable to a fine of up to $27,500 per passenger. So do the math. On a 737, you're alreadyable to a fine of up to $27,500 per passenger. So do the math.

Starting point is 00:07:48 On a 737, you're already into seven figures. So guess how many tarmac delays they've been in the last three or four years? Maybe three. And nobody paid the full fine. The point was the message was taken and received. And that may be what has to happen now where the DOT comes in and says, okay, you cannot publish a schedule unless you can justify and prove that you can actually operate the flight. That's part one. And if you can't, there will be severe financial consequences.

Starting point is 00:08:27 And then part two, just as important, if you delay or cancel a flight, passengers are liable to huge compensation, hotels, etc. Because right now, there is no rule from the DOT that specifies what that is and how much it is. That may be coming. Is there any pattern to it? In other words, the flights that get canceled or delayed or whatever, are they long flights, short flights, or is it just we need to cut flights? Well, in essence, there is a pattern. Of course, the pattern gets disrupted, but there is a pattern. Airlines do not like to cancel long-haul flights. Those could be big revenue bankers for them. They tend to cancel the short-haul flights that feed the long-haul flights for a number of reasons. Just recently, American Airlines parked 100 of their 50-seat regional jets that serve secondary and tertiary airports around the country,

Starting point is 00:09:11 claiming they didn't have the pilots to fly them. Well, that's just part of the story. The real part of the story is with fuel prices increasing so much that those particular aircraft were essentially unprofitable to fly, even if they were loaded up to 85%. So a lot of secondary and tertiary airports find themselves with either severely reduced service or by Labor Day, no service at all. And that means the people who live in Toledo, Ohio, or Dubuque, Iowa, or Ithaca, New York, or Long Island, or Islip Airport, they find themselves traveling between 30 and 100 miles to get to another airport just to get their flight. Knowing what you know, given the situation the way it is,

Starting point is 00:09:53 is there any advice or is it just roll the dice and hope your plane doesn't get canceled? My advice, you won't like it. I don't like it. And that is, don't fly this summer. Wait until September 15th. That's when kids are back in school. Many more people are back at their workplace.

Starting point is 00:10:11 And one other thing is going to happen. They're going to get their credit card statements and realize what they spent for travel this summer, which clearly wasn't in their original budget, because airfares in some markets have quadrupled. And most Americans may make a decision saying, all right, I'm done for travel for 2022. I'll reconsider travel for 2023. So by September 15th, you may see airline schedules start to stabilize, flights becoming normal again, airfares coming down to reasonable levels, your ability to cash in a frequent flyer mile award might actually be possible, and we move forward from there. But between now and then, I don't see a lot of short-term solutions.

Starting point is 00:10:47 For starters, you can't train pilots fast enough. I took a trip not long ago, L.A. to New York, and I was amazed how many, given all that people were saying about how expensive travel is and how horrible it is, it looked pretty packed to me, and it wasn't like anybody was staying home yet. No, it was packed for two reasons. One, people were absolutely determined they were not going to be kept home this summer, no matter what. They hadn't reached the tipping point yet of what they thought they could afford. They were denying themselves additional retail purchases of clothing or a new car or maybe going out to dinner more than they normally do.

Starting point is 00:11:27 But they weren't going to be denying themselves the opportunity to travel, even knowing they could be abused by delays, cancellations, or over full flights. That's just in our nature, right? We don't just want to travel. We need to travel. And we're exercising that need right now. Come September 15th, everybody wakes up and goes, okay, we're not doing that again. So it certainly makes sense, given the price of fuel, that airline tickets would be higher. But can you explain why rental car prices have really gone up?

Starting point is 00:12:00 It goes back to the beginning of the pandemic, where the rental car companies looked out their windows and saw hundreds of thousands of unperforming or non-performing assets, otherwise known as their cars, sitting in lots. And the accountants came in and said, they're just sitting there, let's sell the fleet. And they sold most of the fleet. Then when travel came back, you had a shipping problem in the supply chain, you had a chip shortage with manufacturers. And the automobile manufacturers could not deliver the new fleet of rental cars to those companies. So it was a lot of supply and demand.

Starting point is 00:12:33 We saw an average rental car go for about $350 a day domestically. In Hawaii at one point, you really better fasten your seatbelt for this one, it was up to $1,200 a day. I could have gone out and bought a Kia and paid off the entire car with 20 rentals. So have you stopped traveling? You haven't stopped traveling. That's your job. It's what I do. I produce television shows for CBS and PBS. I'm out there all the time. So I'm confronted with the exact same challenges that everybody else is. I just try to figure out a practical way to do it and build in extra time because it's not just the nonstop flights that are causing problems.

Starting point is 00:13:14 It's the connecting flights. Because if you miss or if your first flight is delayed and you miss that second connecting flight, in the old days, the airlines would say, oh, we'll put you on our 5 o'clock instead of our three o'clock. Well, guess what? They either don't have a five o'clock, or if they do have a five o'clock, it's already full. So you'll be sleeping in that rocking chair at Charlotte, whether you like it or not. So the real problem here are connecting flights. If you're asking people where they're sleeping at airports these days, more of them than not are sleeping at the secondary airports. To which you might think, well, maybe it's worth joining one of those airline clubs

Starting point is 00:13:48 so you can, at least if you have to spend time at the airport, you can spend time in one of those lounges. But even they're having problems. The problem is they're so full now, there's a line to get in from members. And some airlines are limiting the time you can spend there to like two or three hours. But let's be honest. Why do you go to the airport? I'll make it mine.

Starting point is 00:14:10 Why do I go to the airport? I don't go to the airport for fine dining. I don't go to the airport to entertain my friends. I don't go to the airport to do retail shopping. In fact, I don't want to go to the airport. I just want to get through it. So the only reason why you join one of those lounges is if your flight is delayed or canceled. That's why the lounges are overcrowded, because everything's being delayed and canceled. So that's not the answer.

Starting point is 00:14:32 The old advice, which by the way, still holds true in many markets, is pick the very first flight of the day. But I'm going to add a wrinkle to that. That's not enough anymore. What you want to do is book the very first flight of the day where you want to go on an airline that is not based at the airport you're departing from. And they don't have a crew base there either. Because what that means is the plane assigned to your flight already overnighted at that airport the night before, and there's about a 95% chance the crew stayed with that plane. So when you get out there on the 6.45 the next morning, you're not waiting for a crew, you're not waiting for a plane, you actually get out. When you, and I imagine you've had the opportunity perhaps to talk to people that run airlines,

Starting point is 00:15:15 what do they say? What's the, not the excuse necessarily, but what do they say? Well, they don't necessarily want to acknowledge that they're the sole culprit here. And you know what? They're probably not. You know, the CEO of Delta Airlines is blaming the FAA for air traffic control staffing shortages. The air traffic controllers are blaming the airlines for publishing unrealistic schedules. The pilots are saying the airlines are scheduling them to the point of fatigue. Guess what?

Starting point is 00:15:42 I think they're all correct. And something needs to be instituted to make a more realistic schedule because in the world of competition, nobody wants to be first at cutting their flights. They may not have a choice. So the advice is to not fly, but then if you don't fly, you drive, and gas prices are so high that becomes prohibitive for some people. Well, actually, but actually not necessarily right now. I don't think we've reached the tipping point for car travel, because I'll give you an example. My airfare a couple of weeks ago from Los Angeles to San Francisco, a flight that takes 38 minutes, was $93. That same flight today

Starting point is 00:16:18 is $410. So if you're a family of four, you're now looking at a $1,600 airline ticket expense. Yes, it would have to be $18 a gallon for you not to drive that distance between Los Angeles and San Francisco, because remember, you're cramming four kids in the car, probably granny strapped on the roof, and you can amortize that cost for the moment. So we haven't reached that tipping point yet. Is it painful? You bet. But that's why 42 million Americans use their car over the July 4th weekend. By the way, Peter, I would not strap your granny to the roof. I think you might get in trouble for that, but you know, whatever. Maybe. We're talking about travel, in particular the challenges of

Starting point is 00:16:59 traveling in the summer of 2022. My guest is Peter Greenberg, the travel editor for CBS News. Contained herein are the heresies of Rudolf Buntwine, erstwhile monk turned traveling medical investigator. Join me as I study the secrets of the divine plagues and uncover the blasphemous truth that ours is not a loving God and we are not its favored children. The Heresies of Rudolf Bantwine It's pretty common for me to be asked to recommend a podcast. And I tell people, if you like something you should know, you're going to like The Jordan Harbinger Show. Every episode is a conversation with a fascinating guest. Of course, a lot of podcasts are conversations with guests, but Jordan does it better than most.

Starting point is 00:17:59 Recently, he had a fascinating conversation with a British woman who was recruited and radicalized by ISIS and went to prison for three years. She now works to raise awareness on this issue. It's a great conversation. And he spoke with Dr. Sarah Hill about how taking birth control not only prevents pregnancy, it can influence a woman's partner preferences, career choices, and overall behavior due to the hormonal changes it causes.

Starting point is 00:18:26 Apple named The Jordan Harbinger Show one of the best podcasts a few years back, and in a nutshell, the show is aimed at making you a better, more informed, critical thinker. Check out The Jordan Harbinger Show. There's so much for you in this podcast. The Jordan Harbinger Show on Apple Podcasts, Spotify, or wherever you get your podcasts. So Peter, we've been talking mostly about all the problems, but is there any good news? Is there anything on the horizon or anything right now that you would label as good news? Well, there is. We're seeing a number of, talk about timing, we're seeing a number of new low-fair competitors enter the market, ranging from Avalo or Avello to Breeze and a number of other carriers that are not flying through major airport hubs. They're going, let's say, between Grand Rapids and Myrtle Beach nonstop. Are they going every day? No. But you're saving a lot of time, and they're low-fair carriers. You're going to see those in secondary and tertiary markets

Starting point is 00:19:25 because they're going to fill the void left by those legacy carriers. Again, that'll happen when the fall rolls around. One thing I've discovered, my travel tip, is I live in Southern California, and so the major airport here is LAX, Los Angeles International, and it's a very big, difficult, crowded airport to get in and out of and to park. So whenever I fly, the first thing I check is to see if I can leave from one of the surrounding airports, Burbank, Ontario, Long Beach, because when I do fly out of those secondary airports, it just makes life so much easier.

Starting point is 00:20:06 I'm a big fan of alternate airports. Look at Providence, Rhode Island instead of Boston, Oakland instead of San Francisco. You mentioned Long Beach, a great alternate to LAX. Midway, not necessarily Midway in Chicago. People think that's the alternate. It's not. You know which one it is? It's Milwaukee.

Starting point is 00:20:23 Milwaukee is Chicago's third airport. If you look at the parking lot of Mitchell Field out there in Milwaukee, one-third of those cars have Illinois plates. They know. So yes, there are plan Bs that work. Are there any new trends in travel, either in terms of destinations or, you know, I get these things in the mail about these river cruises that I hadn't heard much about before. Is there anything new that really floats your boat? Well, since you mentioned boat, let's talk about cruises. Bottom line is they're back. During the pandemic, the shipyards were still full, meaning there are 24 new ships that have come online.

Starting point is 00:20:58 There is a little bit of an excess capacity, so cruise ship fares have not gone up. They've stayed relatively stable. And remember, in order for them to sail, they had to comply with about 75 different new protocols from the CDC before they were given permission to sail, and they've done it. I've taken two or three cruises for one of our shows, and no problems. So, they are available now, and they're so popular in some cases, they sell out. Since airline tickets have gotten so expensive, are there any strategies, any tactics, any way of buying a ticket that will help bring down the cost? We're both conditioned and inclined that we make an airline reservation, we buy a round-trip ticket. We go online, we say, I want to go from LA to Chicago or New York to San Francisco, and we punch in the round-trip thing and we see the price is quoted. What I want people to do is to consider buying two separate one-way tickets on two separate airlines. For example, I took a look at a round-trip ticket the other day from L.A. to New York.

Starting point is 00:21:59 It was a whopping $980. And then I went on one website, Delta, and wanted to know what their one-way ticket was from L.A. to New York. It was $380. And I looked at JetBlue for their return flight from New York to L.A. It was $390. Well, that's $770. I saved $210. So I'm not going to say it's going to work every time, but a lot of times it does.

Starting point is 00:22:27 So be creative. When I go online to book travel things, airfares, hotels, rental cars, there's the usual travel sites, Expedia, Kayak, Priceline, those kind of websites. Are they all more or less the same? Are they all dipping into the same pots? In many cases they are, but there's a myth there. How many times have you gone online to see a little notation next to the fare saying, only two seats left, only three rooms left? That's a lie, because that means there's only two seats left in the allotment that online travel agency was given by the travel provider. This is the time to talk to a travel agent or the provider directly, because what they're seeing on their screens is clearly not what you're seeing on yours, and you might get a better deal. It does seem that given the state of affairs and the confusion and all this other stuff that a travel agent, which, you know, we thought that industry was going to die, is probably coming back to some degree. I'd rather pay a few extra

Starting point is 00:23:21 dollars and let somebody else do it. Not only are they coming back, they're back bigger than ever because travel agents today are specializing. I use about seven of them, right? I use one for cruise travel, one for airline travel, and then one for affinity travel, if I want to go on a hiking trip or if I want to go on a biking trip. So have those conversations. You need them. But what you learn in those conversations is that many of these travel agents have preferred to fly relationships so that when you see something online that says sold out, it ain't necessarily so.

Starting point is 00:23:51 But do you think if you're just the occasional traveler, a couple times a year you fly to visit grandma or whatever, that you're better off doing it yourself, or are you better off going to a travel agent? And I guess it depends on what you mean by better off, but I mean in terms of price, I guess, primarily, are you better off going to a travel agent? And I guess it depends on what you mean by better off, but I mean in terms of price, I guess, primarily, are you better off? You know, it's not just price, it's value. You know, airlines and hotels want to be competitive on price. Very few of them are competitive on value. That's why you get dinged with these terrible resort fees that you didn't see online. It's time to have those conversations because the internet cannot answer those questions. Can my kids stay free? Can we eat free for the kids? Will you throw in the $9

Starting point is 00:24:29 bottle of water or the $15 internet? What about free parking? No, that gets answered online, but all of it's factored in the total price you're going to pay. So why wouldn't you have those conversations? I remember you saying years ago when we spoke that when you make a hotel reservation, you're always better off calling the hotel rather than the 800 number. Does that still hold? More than ever. If you call a hotel number 800 number, you're not getting the hotel. You're getting a clearinghouse that's been given a set number of rooms at a fixed price.

Starting point is 00:25:03 They have no ability to have a conversation with you or to negotiate. They're just going to book the room. You really do need to call the hotel, but don't ask to speak to reservations. They'll just rewrite you to the 800 number. And don't ask to speak to the front desk. They'll do the same thing. Ask to speak to the manager on duty, that's known as the MOD, or the director of sales, because those two people are the best arbiters

Starting point is 00:25:24 of what the real inventory is of that hotel. And if the Schmidlap wedding is canceled, we all know the Schmidlaps, if the Schmidlap wedding is canceled when they have 60 rooms, that may not show up on their internet or at their clearinghouse, but they know that an unsold hotel room is revenue they'll never be able to recruit once the sun rises. You're actually in a pretty good negotiating position. The Schmidlap's wedding was canceled? Oh, they cancel all the time. They're notorious, yes.

Starting point is 00:25:49 God. As much as I've listened to your advice and other people's advice over the years about trying not to check bags but to only carry on what you need, I find that difficult, particularly for longer trips. So give me some advice on how to do that. Okay. Well, I haven't checked a bag domestically during the week in about 14 years. I believe there are only two kinds of airline bags, carry-on and lost. And in fact, during the pandemic, the airlines have misplaced and mishandled 21% more bags than they did a year ago.

Starting point is 00:26:25 So that should give you some indication of the issue. So what I do, this might shock you, is I FedEx my bags. Now, I'm not FedExing 200-pound bags. But what I'm doing is I'm saving two and a half hours of my life every time I travel domestically. And I said during the week because I don't do it on Saturday or Sunday. The FedEx doesn't really work those two days. And I don't send it that it has to be there at 1030 the next morning. I usually have an idea of where I'm going.

Starting point is 00:26:50 I send it three days in advance at a discounted price. And so for about $20 more than what the airline wants to charge you for losing your bag, consider how much time you're going to be wasting, I save two and a half hours of my life. And when I get to where I'm going, guess where my bag is? It's in my room. What's your sense of all the stories we've heard about disruptive travelers, the chaos on airplanes and fights breaking out? Is that just frustration coming out? No. No, it's not. not what it is i hate to say it it alcohol sales at the airport

Starting point is 00:27:28 uh... people are not coming on the plane and then getting drunk they're coming on the plane already drunk and my suggestion and i hope somebody listens is a sentence of the fourth quarter nfl rules airports meaning no retail establishment an airport can serve you or me any alcohol within 45 minutes of the time posted on my boarding pass as the boarding time of that flight. The minute they do that, we're all going to be better off.

Starting point is 00:27:53 Well, great. I think this 20-minute conversation has yielded some really good advice to help navigate through all the mess of travel this summer and also any time of year. I appreciate you sharing your advice. Peter Greenberg has been my guest. He is the travel editor for CBS News. He also has a number of shows on PBS, one called The Royal Tour and another called The Travel Detective. They're also available on Amazon Prime and Apple TV+. Thank you so much, Peter. This is great.

Starting point is 00:28:25 You got it. Happy to do it. And let's hope things get better. Do you love Disney? Then you are going to love our hit podcast, Disney Countdown. I'm Megan, the Magical Millennial. And I'm the Dapper Danielle. On every episode of our fun and family-friendly show, we count down our top 10 lists of all things Disney.

Starting point is 00:28:42 There is nothing we don't cover. We are famous for rabbit holes, Disney themed games, and fun facts you didn't know you needed, but you definitely need in your life. So if you're looking for a healthy dose of Disney magic, check out Disney Countdown wherever you get your podcasts. Hey everyone, join me, Megan Rinks. And me, Melissa Demonts for Don't Blame Me, But Am I Wrong?

Starting point is 00:29:05 Each week we deliver four fun-filled shows. In Don't Blame Me, we tackle our listeners' dilemmas with hilariously honest advice. Then we have But Am I Wrong?, which is for the listeners that didn't take our advice. Plus, we share our hot takes on current events. Then tune in to see you next Tuesday for our listener poll results from But Am I Wrong? And finally, wrap up your week with Fisting Friday, where we catch up and talk all things pop culture. Listen to Don't Blame Me, But Am I Wrong on Apple Podcasts, Spotify,

Starting point is 00:29:33 or wherever you get your podcasts. New episodes every Monday, Tuesday, Thursday, and Friday. Financial advice on a podcast is always a little tricky because everyone's different people have different amounts of money they have different time horizons they have different ideas about money so it's hard to generalize however my next guest has some really good ideas about money that he developed through experience and research, and they apply to just about everybody, probably you too. Sam Dogen runs the Financial Samurai blog.

Starting point is 00:30:13 It's a personal finance website with well over a million page views a month. Sam has worked as an investment banker. He is a contributor at CNBC, and he has a book out called Buy This, Not That. Hey, Sam. Thanks for being here. So I think when people think about money or talk about money, there's always a lot of regret in the conversation of, you know, I wish I'd saved more. I wish I'd gotten into real estate sooner. It's always this, I wish I had. Exactly. So there's this great saying that we all know, if I knew then what I know now, things would be different. And that's speaking from regret. And so I started Financial Samurai

Starting point is 00:30:57 in 2009 because it was in the middle of the financial, and I was losing a lot of money, 35% of my net worth in six months. That took 10 years to build. And I had some regrets, and I wrote out my thoughts. And my whole idea is to help people never say that phrase again. So given all you've done, and you've talked to a lot of people, and you've thought about this and written about it. What do people need to do first? What's the mindset? What's the first few things that people need to do to kind of get their financial house in order? Well, one of the key philosophies is to encourage people to think in probabilities, not absolutes. And so I encourage people to think in a 70-30 decision-making framework.

Starting point is 00:31:46 And that framework states that if you believe there's a 70% probability or greater that you're going to make the right decision, go for it while having the humility and understanding, knowing that 30% of the time you're going to get it wrong. But unless it's an absolute disaster, you're going to learn from your mistakes and make better decisions going forward. And with personal finance, you can't wing it. It's really important to understand you cannot wing it. If you want to achieve financial independence, you must plan. You must plan meticulously and you must really jump in there for you to one day experience that freedom. By doing things like what?

Starting point is 00:32:31 So one is to plan and to have targets, income targets by age, net worth targets by age. It's not enough to compare yourself to the median or average person. You need to compare yourself. And it's a plus and a minus, but you need to know where you stand among your peer group. And once you have these targets, then you can extrapolate backward and figure out a savings plan, an investing plan to get to where you want to go. You might not get there or you might blow past your targets. But the great thing about all of us is that we are dynamic thinkers and we will change and adapt to the environment. Well, when you say, you know, have targets for your income and your net worth and all, where does that come from? I wouldn't know if I was 18 years old,

Starting point is 00:33:11 what that target would be. So it all comes from math. So for example, there's a famous rule called the 4% rule that states that if you withdraw from your retirement portfolio at a 4% withdrawal rate, you will likely not run out of money for the next 30 years. So let's do some math. Let's say you build a $1 million portfolio and you withdraw at 4%. That means it can provide $40,000 a year in income, relatively low risk. So you've got to decide, is $40,000 a year a lifestyle that you want? And if it's not, then maybe you need to accumulate more capital. Maybe a million dollars by the age of 60 is not enough. Maybe you need 2 million because you want to spend $80,000. So a lot of it depends on you have to know yourself, know your expenses, figure out how much capital you need to accumulate.

Starting point is 00:34:08 And then you have to figure out what is a safe withdrawal rate or a safe return rate. And so if you look at the risk assets, such as stocks, historical return is about 10% a year. Historical return for bonds is about 5% a year. For real estate, historical returns anywhere from 3% to 4% unlevered a year. And so you can basically build your financial plan that way by knowing what you want, knowing your expenses, knowing your returns. And then how do you not have this, you know, that's great to have those targets and what you need to do, but sometimes you don't

Starting point is 00:34:45 make enough money to do it you sometimes or you get expenses that throw you off course and and and it's it's hard to stick to the plan even if you have a plan yeah that's why the plan has to include contingency plans variables have a base case blue sky, and a bear case scenario. Because life happens, life is unpredictable. The idea is the more you plan, the more you can prepare for the unknown. Certainly a problem that a lot of younger people have and a lot of older people have is they get into debt, credit cards, all kinds of loans, student loans, that kind of thing, car loans that really

Starting point is 00:35:27 screw them up. And what's your approach to that? Joe Carlasare So I do believe that debt acts generally as a drag to your financial independence. And there's definitely different types of debt. Credit card debt is probably the most common bad type of debt. The average credit card interest rate is about 18%. And so if you're a lender, you're doing very well because you're

Starting point is 00:35:52 beating the average return on the S&P 500 by about 8%. And you're even beating the returns from the illustrious Warren Buffett, who is one of the richest people on earth. So bad debt, credit card debt, payday loan debt, all this consumer type of debt where you take out debt to buy things you don't really need, bad debt. And then the better debt, student loan debt, education is the most powerful, powerful asset you can have to build wealth and to live the life that you want. And then there's debt that can help potentially make you money. And that most common debt is mortgage debt, which is relatively low in terms of interest rate compared to every other debt.

Starting point is 00:36:34 If you find yourself with credit card debt and it's just sucking the life out of you, what's the best way? What's the best approach to get rid of it? So if you have revolving credit card debt where you don't pay off the full balance every single month, that needs to be one of your priorities. I have the Financial Samurai Debt and Investment Ratio. And that ratio states that you take a percentage of your free cash flow every single month to pay down debt or to invest. And it's based on the debt interest rate. For example, if your interest rate on your debt is 8%,

Starting point is 00:37:11 you take 8% times 10, which is 80%. So you take 80% of your monthly free cash flow to pay down debt and you use the remaining 20% to invest. So in other words, if you have debt, I want you to be always paying down debt and investing, so you're always winning. However, after about 10%, which again is the S&P 500 historical return average, you should allocate 100% of your free cash flow to paying down that debt. Now, obviously, you can do other things such as transfer that balance to a zero introductory fee, but it's kind of dangerous because you're kind of kicking the can down the bucket. You really need to, if you have revolving credit card debt, you really need to focus on paying that down with as much of your fee cash flow as possible. Take on side hustles if you can to

Starting point is 00:38:02 make more money to really pay down that debt because the return on paying down that debt is that interest rate and if you're talking about an 18 average credit card interest rate i mean that's a phenomenal return where all of us should be investing all of our net worth into any asset class that can provide an 18 rate to which a lot of people say but if i just pay the minimums it I just pay the minimums, it's hardly much of a burden. And I'll just do that. Yeah. You're making the lenders rich. And if you just do the minimum, you're never going to reach escape velocity. Because in order to achieve financial independence, the debt, the consumer debt should be the least of your worries because you should not have any.

Starting point is 00:38:44 You should put that to bed and look at it as someone who's trying to drag you down and never let you escape. It really is a mindset where you have to look at consumer debt as the evil empire that you need to conquer. I like that. I like that. It is. It is the, as someone who's had debt in the past and had to get out of it

Starting point is 00:39:06 and gotten out of it. Wow. I mean, the relief you feel when you get out of it and it is, it's a trap that is very hard to get out of. Yes. It is really a trap that just holds you down. And the freedom, once you get out of that debt, it's like a monkey off your back. And so please, if you have consumer credit card debt, please focus on paying that off first. I almost think that you have to have it to understand how good it is not to have it, but you have to really experience the pain of, oh my God, I'll never pay this off to realize how you never want to be in that position again yeah and and and the reason why we get into debt i mean i think we have to be honest with ourselves there is a psychological component to it so why do we buy the things we cannot fully afford with cash and the simple answer is i think it's because we believe we deserve more

Starting point is 00:40:06 than we truly do. And in the old days, hundreds of years ago, there was not a lot of people buying things with debt because the debt system wasn't built out that way. We paid in cash. And so as the debt markets or the credit markets have expanded and evolved, you've got this buy now, pay later. It feeds into our beliefs that we deserve things. And one of the core philosophies on Financial Samurai is you only deserve what you've earned. What about real estate? I don't know too many wealthy people who don't have real estate as part of their investment portfolio. It seems like real estate is a pretty important piece. Owning real estate for the average person, the average

Starting point is 00:40:52 American or wherever you're listening, is one of the tried and true ways to build long-term wealth over time. And it's one of the best ways to create generational wealth. Real estate is a hard asset and it goes up with inflation. And right now, inflation is elevated at over 8%. And so you're riding the inflation wave. You're only neutral real estate if you own your primary residence. So you're neutral. Think about a boat going up and down with the water. It's stormy water, calm water. You're riding the wave. You're short real estate, which means you're negative on real estate. You can only benefit on real estate if it goes down.

Starting point is 00:41:31 You're short on real estate if you're a renter because you're a price taker. You're at the mercy of ever-rising rents. And you're only long real estate. You can only benefit financially from real estate, really, if you own more than one property. And this is a really important concept that I want listeners to understand, the short, neutral, and long real estate. And over time, real estate has done well. It's performed a little bit better than inflation. It provides utility, a place to live.

Starting point is 00:42:00 It provides steady, relatively passive income. And it can do very well for you in the future in terms of stability, in terms of you won't wake up one day and see your real estate values down 30 to 50% like you might with stocks or cryptocurrencies. What about commercial real estate? That always seemed to be, many ways pretty solid, but with the pandemic and a lot of office buildings empty because people have not gone back to work, what about that? Yeah, commercial is quite interesting. Office commercial real estate obviously is going to be hit, has been hit, but then there's other commercial types of real estate, such as multifamily

Starting point is 00:42:45 properties, storage. And there's also a spreading out of America where you don't have to be in an expensive city anymore for many people, right? You don't have to be in San Francisco or New York City, Boston, Los Angeles. You can spread out because a lot of work from home is becoming more ubiquitous and more accepted. And so you're going to see that capital spread out to, I think, the Sunbelt, the heartland of America. And I think this is a multi-decade trend, which real estate investors should be aware of and should probably participate in. So when I was starting out and pretty pretty young i remember wanting to buy real estate and of course the biggest obstacle for young people to buy real estate is the down payment

Starting point is 00:43:33 where do you get it how do you where do you gonna where are you gonna come up with 20 to put down to start your real estate empire well all, all good things come with planning. And so you find out your target real estate that you want, whether it's the median home price of about $400,000. You take 20% of that, that's $80,000. And then you figure out how long will it take for you to get to $80,000 based on your income and saving rate.

Starting point is 00:44:02 That is the main way most people do it. Now, you're seeing about 20, maybe more, percentage of first-time homebuyers in America getting help from the bank of mom and dad. And that's another way to do it. Be good to your parents because they surely have more money than you, especially if they've been investing and saving over the past 20 to 40 years. And there's also a win-win component to that. Every single parent wants their child to do well, to have a stable, safe home, so they can do the things that they want to do. And if you can pay your parents instead of paying a bank and you can get that loan easier, I think that's a win. And so planning and being nice to your parents is something

Starting point is 00:44:47 important. And also just having perspective. The median home buyer in America, the age is around in the early 30s, like around 34, 35. So that anxiety you might feel at 22, 23 to buy a home is a little bit unwarranted if you look at the bigger picture. If you say, well, if the median age is 34 to 35, and if you graduate college at 22 or you graduate high school at 18, you've got a long time to plan and save. And so what about the stock market? What's your advice there? It seems that for most people, buying individual stocks is a pretty risky venture and that mutual funds or ETFs are... But what's your take? Well, we know from history that the returns are about 10%. Now, going forward, many investment houses believe returns will be lower in the 5% to 6% range.

Starting point is 00:45:41 The reality is nobody knows the future, but if you zoom out over a 10-year period, you've not lost money in the S&P 500, especially over a 15, 20-year period. Therefore, chances are high using a 70-30 decision-making framework that your investment in a stock or in an index fund will turn out to be greater 10 plus years from now. So you have to look at your investment time horizon. I recommend the average person invest 90% or more of their public equity capital into an S&P 500 index fund or ETF. There are many of them and they all do about the same. You want to lower your costs and just gain exposure to the top 500 companies in America. Now, with the remaining 10%, you can speculate if you want. You can buy individual stocks.

Starting point is 00:46:34 You can buy the stocks that you, the products that you use and love. I own Apple. I own Netflix for 10 years. It was a great run until 2022. Nike stock, whatever it is, you can speculate. And chances are, 80% chance you're probably going to underperform the S&P 500 index because professionals over a five, 10-year period, 80% of them have underperformed their respective benchmarks. And you just have to be okay with that because even if you blow yourself up and invest in the most speculative investment ever with 10% and it goes to zero, you still have 90% of your capital. However, if that 10% turns out to

Starting point is 00:47:12 be a home run, let's say it's a 10 bagger, you're basically doubling your overall portfolio's performance. There is this philosophy. My grandmother used to tell me, you've got to save money. And my parents would say the same thing. You've got to save money. And saving money meant or means don't spend it, save it. But it isn't just saving it, right? It's where you save it. Because if you just save it in a bank account, I mean, a savings account doesn't pay much interest. And so it's got to be more than just not spending and saving. It's got to

Starting point is 00:47:46 be actively involved in where you put the money. So your goal should be to be a beneficiary of inflation, the economy, and the world growth, right? So to be a beneficiary, you need to be an investor. Investor in the companies where people are working hard to try to generate more revenue, generate more profits, because our system is a capitalistic system where the majority of us want to progress, make more money, and gain wealth. So you're able to benefit from that by investing. And it's the same thing with real estate. Real estate is a great beneficiary of inflation because real estate is a component of inflation. If you invest in real estate, maybe you might not be able to join that next hot startup or that awesome company because they have

Starting point is 00:48:35 just huge requirements for you to get in. But if you own rental properties in that area, you're selling the picks and shovels in the sense that you're going to be able to benefit as well. You don't want to be on the other side for too long. You don't want to be that worker who's stuck at a minimum wage job who doesn't invest for too long. You don't want to be the renter who is always at the mercy of ever-rising rents for too long. That's the mindset you have to have if you want to build wealth and invest. You need to be on that right side where you're a beneficiary of growth instead of being hurt by that. Well, I like your approach because it's really common sense. It's planned out. It's rational. It's not difficult to do if you just stick with the plan. And your advice is really accessible to really everybody.

Starting point is 00:49:27 I've been speaking with Sam Dogen. He runs the Financial Samurai blog. It's a personal finance website that lots and lots of people visit, and I'll put a link to that in the show notes. He's also a contributor at CNBC, and his new book is called Buy This, Not That. And there's a link to that book in the show notes as well. Thank you, Sam. Really appreciate the advice. Thank you so much for having me. If you put a flea collar on your dog or cat, you should be concerned. A lot of flea collars contain chemicals that reportedly have caused poisoning to animals and children, and possibly

Starting point is 00:50:06 adults. Now, there's a lot of controversy over this. Some veterinarians still advocate using flea collars, claiming that serious problems are rare, but apparently the EPA has received thousands of reports documenting harm to pets from some of these collars. And there have been cases of pets who have died from exposure to flea collar chemicals. And just from a common sense point of view, it doesn't appear safe to have insecticides on your pet, your pet's fur, your children, your home, or yourself. The whole idea of flea collars is to put pesticide on the animal to ward off fleas. But the pesticides rub off.

Starting point is 00:50:47 They rub off on your hands as well as furniture and bedding. Now the problem is serious enough that Petco and PetSmart no longer sell flea collars that contain certain chemicals that have been linked to this problem. But many other retailers still do. So if you use flea collars, or you and your kids are around dogs or cats who wear flea collars, you should educate yourself. And that is something you should know. Now, I get a lot of emails from listeners telling me how much they enjoy sharing what they learn on Something You Should Know with their friends and family, and turn them on to the podcast. And I kind of hope you would do the same.

Starting point is 00:51:29 I'm Micah Ruthers. Thanks for listening today to Something You Should Know. Welcome to the small town of Chinook, where faith runs deep and secrets run deeper. In this new thriller, religion and crime collide when a gruesome murder rocks the isolated Montana community. Everyone is quick to point their fingers at a drug-addicted teenager, but local deputy Ruth Vogel isn't convinced. She suspects connections to a powerful religious group. Enter federal agent V.B. Loro, who has been investigating a local church for possible criminal activity. The pair form an unlikely partnership to

Starting point is 00:52:05 catch the killer, unearthing secrets that leave Ruth torn between her duty to the law, her religious convictions, and her very own family. But something more sinister than murder is afoot, and someone is watching Ruth. Chinook, starring Kelly Marie Tran and Sanaa Lathan. Listen to Chinook wherever you get your podcasts. Hi, I'm Jennifer, a founder of the Go Kid Go Network. At Go Kid Go, putting kids first is at the heart of every show that we produce. That's why we're so excited to introduce a brand new show to our network called The Search for the Silver Lining, a fantasy adventure series about a spirited young girl named Isla

Starting point is 00:52:47 who time travels to the mythical land of Camelot. Look for The Search for the Silver Lining on Spotify, Apple, or wherever you get your podcasts.

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