00:11
Peter Dunn
Fire. Yeah. I have no idea whether I got the start of the show right today. You just never know. Damian Dunn. Hello.
00:21
Damian Dunn
Good morning, Damian.
00:23
Peter Dunn
I want to start the show with something so graphic, but remember when you were a teen and I was a teen and other people were teens, and based on how the changes you're going through in your body, your skin would get oily and certain conditions, and blemishes would appear on your face. Do you remember this time?
00:40
Damian Dunn
All too well.
00:41
Peter Dunn
Well, apparently I'm going through a renaissance because I have said blemish on the bridge of my nose where my glasses sit, and it is so incredibly painful that I have considered severing the head at the shoulders. Any thoughts?
00:57
Damian Dunn
I think this might be a time for a crossover episode with Dr. Pimple Popper.
01:03
Peter Dunn
The whole concept of that show gives me the heebie GB's. Really, I can't get I like, I'm so disgusted by the name of the show, by the concept of the show, the visuals of the show. I couldn't possibly get down like that.
01:18
Damian Dunn
Anybody else in your family potentially go through that or be interested in that sort of programming?
01:23
Peter Dunn
My daughter likes it, and I think my mother watches it. They watch it together, which just seems like a real bonding experience for a generation. Jump. Dame, how was your week?
01:36
Damian Dunn
It was rough. Had a little bit of illness running through the household, the northern household, but seemed to be well, most of us seem to be getting past it. Others are just beginning the process. So it's going to be a great.
01:51
Peter Dunn
Weekend in our house, Dame. So I'm excited. This weekend is the first game official game. Hello, Mike. Good to be with you. The first official game of my daughter's soccer season. She's U 13, as they call it. I've ever went under 13. I'm an assistant coach, or as my daughter calls me, an assistant to the coach, the spirit of the office. And I've introduced game analytics to the program this year. I have an app on my iPad which I could show you if I really wanted to. In fact, I might show you. It allows you to have a starting lineup. Here's what we're going to do. We're going to do this on the live stream right now. To have a starting lineup here, I'm going to go full screen, and you can move people in and out of the lineup on the screen, and you can press play.
02:39
Peter Dunn
And it keeps track of playing time, and it keeps statistics. So if there's a score, I can click on it. I can say carolyn scored, Molly Desisted, and I can add it. And then at the end of the season, all the stats line up. This, again, splits the minutes equally amongst the ladies, and I can provide real time analytics to the coach on the sideline. And I'm very excited about this. And Sarah. Pardon me. Mrs. Planner, I should say, thinks I'm insane.
03:09
Damian Dunn
Well, there's nothing like giving your parents concrete evidence for them to fire insults at you.
03:17
Peter Dunn
Let's just say that's why I'm doing no, it's not why I'm doing. We got a good set of parents. Anyway, Dame. We have a financial radio show, it turns out. Okay, so here's the topics this week. I want to talk about that article I sent over this week about people not taking distributions from their retirement accounts.
03:34
Damian Dunn
Okay?
03:36
Peter Dunn
I hate to be that guy, but I'm going to be the I don't buy it guy.
03:41
Damian Dunn
Yeah, that seemed a little unbelievable to me. I mean, I'd love to see what their sample was, the demographics of their sample, but I'm really skeptical of that.
03:52
Peter Dunn
We're also going to do that article I think you put in the system about Americans spending more, around $700 more a month. And I want to just walk through that because there's some sort of obvious elements to that. And I might do I was going to do this when Phil Schumann joined us, but we might do the colleges are struggling, Pete. Are you okay with that? Sure, of course. The bomb and news. Okay, well, good. Let me get the clock started here. Get ready for the show last week, by the way. So the podcast, I think, sounded, I believe, perfectly fine. I believe maybe it didn't, but when it went to radio, there was like this weird staticy thing on our signal last week when I edited it and put it up for the radio stations to download and play over the air. And I thought maybe my ears just hearing it because I'm sensitive to this.
04:47
Peter Dunn
And then Mrs. Planner and I were listening to the show air live on our flagship station, 93 WIBC. She turns to me and she goes, what's? That static? And I said, you just ruined my life.
05:03
Damian Dunn
So I'd like to note that we didn't do anything to try and track that down or prevent that from happening again this week. So maybe your week's ruined again.
05:13
Peter Dunn
I would like to put a bow on the Dikimbi Mutumbo story from a couple of weeks ago. So a couple of elements to this. First off, Theodore Dunn, ted Dunn just got a Dakimbi Mutumbo throwback jersey, which is incredibly awesome. It's a good one, a really good one. So I want to show it. Here he is with the Dukembi Mutumbo throwback jersey. I get very excited. Number two, and this is what people may not realize, the Kimmy Mutumbo's son, Ryan Mutumbo, naturally signed to play at Georgetown next year. He just signed this year. He's the 16th rated center in all of high school basketball. And Dame, what Mrs. Planner and I figured out this morning is the classic story I tell of Dikemi Mutumbo, of seeing him with his family at a resort, slapping a roll out of his son's hand and saying, no roll that's a true story.
06:11
Peter Dunn
The boy, he slapped the roll out of Ryan Mutumbo.
06:16
Damian Dunn
It all comes back.
06:17
Peter Dunn
It all isn't. I mean, I might be the only person enamored with this whole thing, but I think it's great.
06:22
Damian Dunn
I think you need to get tickets to a Georgetown game and sometime just yell on no Role and see if it gives a flashback.
06:29
Peter Dunn
Let's start the show.
06:30
Damian Dunn
Are you ready? Yeah.
06:32
Peter Dunn
Three, two, one. This week on The Pete the Planner Show, we answer your money questions. Here's how the show works. You email us, askpeat@petetheplanner.com that's, askpete@petetheplanner.com, and here's what we'll do. We're not going to sell you stuff. By the way, Damien Dunn joins me on the program. He's the vice president of advice at Your Money Line and hey, Money. Dame. Hello.
06:53
Damian Dunn
Hello.
06:54
Peter Dunn
One of the things that drove me crazy for years when you turn on financial radio shows is that the answer ends up being, call me on Monday. I don't like that. I don't like the idea that we're not going to give you any really good insight because you're going to have to call us on Monday. So our show is just about answering your questions while we're here. You don't have to call us on a Monday or Tuesday or Wednesday, Thursday, Friday to have us sell you things, because that's not what we do. I don't know why I decided to throw everyone else under the bus right now. Dame here's what's in the show this week. We are going to talk about a new study that came out suggesting that most retirees aren't tapping their nest eggs before they're required withdrawals. We're going to talk about that.
07:32
Peter Dunn
I'm going to talk about why it does not pass my personal sniff test. We're also going to discuss Americans spending more than they did in 2020. Really? That one does pass the sniff test and is barely worth a mention, but we're going to go through that. And, of course, what we all knew was coming, colleges are struggling, and there's predictions that several colleges will be going out of business, which is a strange concept in the next couple of years. So, dame, let's get started. Let's understand that there is a retirement crisis in this country and it has nothing necessarily to do with COVID-19. People have struggled to retire since the early 80s. Dame since one major retirement mechanism began to switch over to another major retirement mechanism. Do you want to read the folks in on this?
08:20
Damian Dunn
Yeah, sure. Once upon a time, pensions funded the retirement of the vast majority of Americans. And pensions, if you are just getting caught up or don't even know because you've never been able to participate in one, basically, the day you retire, you keep getting paid. That's a beautiful thing. You'd say, I'm not going to work here anymore. They say, Great, we'll send your check to your address. Keep on doing. Life a very low chance for you to really hurt yourself financially because you have a constant stream of income on top of Social Security and things are likely to look really good for you. However, pensions are expensive to run and maintain. Employers figured that out and said, you know what, we're going to shift some of this risk to the employee. We're going to match some of their contributions and we're going to let the market take care of the magic for them.
09:14
Damian Dunn
And so that's where we get the plans where they are participant driven, participant guided retirement plans. You make the contributions, you choose the investments get a little bit of match maybe from your employer. And when you get ready to retire, well, however you did was how you did. You don't have any guarantees necessarily going forward into retirement.
09:36
Peter Dunn
And why this is interesting is because this is what really began to create nest eggs. This concept of I have a big chunk of money that I control and distribute at my whims. However, dame, because these pensions were going away and these defined contribution plans replaced them, what ended up happening was people then also had to create a stream of income off these nest eggs. And so this article on CNBC.com this week suggests that A-J-P. Morgan Asset Management and Employee Benefit Research Institute study say some 80% of the retirees studies didn't withdraw money from accounts before their required minimum distributions, known as RMDs. And that's shocking to me because if we're in a retirement crisis, that suggests whatever a person's nest egg is theoretically would have to supplement their Social Security income starting at age 62. And so I don't buy it because in practice, having done this for a very long time, and while I don't watch people retire today like I used to when I was a wealth manager, people tapped their assets much sooner than their RMDs, in my experience.
10:55
Damian Dunn
Yeah, way earlier than RMDs. RMD age, by the way, probably during the time of this study, I'm going to guess was 70 and a half. That's recently been changed to 72. And actually there's some push in MDC to actually get that push to 75. So hasn't happened yet. 72 is the law of the land, but 70 and a half if you figure most people are going to retire. 65 ish, give or take a year or so to be able to make it five years on Social Security and maybe whatever other cash you've got laying around or other pension money is still a chance, especially if you're in education. Pension might be in there or part time work. It's really tough for me to understand that 80% of retirees were able to make that work between the time they retire and the time they needed to tap into their art were forced to tap into their retirement accounts.
11:53
Peter Dunn
Can you put on your Pete is generally wrong hat for a second here while I give you some ideas.
11:58
Damian Dunn
Yeah.
12:00
Peter Dunn
So the Social Security Act from back in the day, what, 1933, I think, was brought around to provide a safety net in a person's retirement years. I mean, the term safety net is part of the deal here. So that is to say, if you aren't able to support yourself in retirement based on your own pension and or nest egg, then the Social Security retirement benefit you receive on a monthly basis will do that. Well, that didn't really become the safety net. It became people's sort of base level income. And I guess you could split hairs as the safety net and a base level income the same thing. But people built their foundation on Social Security and so then they began to supplement that. So here's the assertion I want to make that sounds really out of touch and arguably condescending. I have come to the conclusion, in my experience that, okay, I had to have to pump the brakes here because this is just as on the verge of just being disastrous.
12:58
Peter Dunn
What I'm about to say, in many instances you're better off living at a lifestyle prior to retirement that is in accordance with that Social Security benefit than you would be for someone making a lot more than Social Security and then trying to retire with Social Security and then the supplemental income you get from your assets. In other words, let's strip away all of the hedged language there. You're better off making 50 $60,000 a year heading into retirement than you are making $110,000 a year retirement if you've not saved properly for retirement because your lifestyle is so much higher that it's going to be harder for you to supplement the lifestyle you're used to between your income and your Social Security income. Dame am I going to get letters?
13:48
Damian Dunn
Probably. But unfortunately reality says that you're probably more right than wrong if you have very limited resources looking at you for retirement, you better get used to living on less dollars or figure out a way to extend your working career, whether it's part time or full time, because that's just math. At that point, your expenses may outstrip your income, resources, or at least what they can support on a month to month basis and put you in a really uncomfortable position in pretty short order. So if you are relying on Social Security to provide the majority of your income and retirement, you better make sure that your expenses are getting close to lining up with what that Social Security benefit is projected to before you get to retirement, or you're going to have a really nasty crash course in what life's going to look like.
14:44
Peter Dunn
Albeit this is condescending, I am willing to say here that this is one of my favorite elements of money is that a person who makes significantly less income over the course of their career can have a much more. Sustainable, reasonable retirement if that income more closely mirrors their Social Security benefit than someone who makes significantly more because of the lifestyle that second person chose to live during retirement. And not that there's this great equalizer or it's a contest, but I like the idea that someone making $60,000 through their entire career can actually have a more sustainable, safer retirement than a physician that spent years making hundreds of thousands of dollars, which is, again, a weird thing to say, because what is being proven to whom? But it's still interesting.
15:40
Damian Dunn
Yeah, it's one of the interesting ways on how Social Security is set up to benefit people who don't make as much as others. And it's not a horrible approach.
15:49
Peter Dunn
Let's take a break. Coming up after the break, we're talking about why Americans are spending more in 2021. You know that. But now the data supports it. I'm Pete the Planner. This is the show. Look at you watching the clock so I don't get burned on the way out. I gave you not much time, and you're a professional because you're a radio star now, as everyone knows.
16:06
Damian Dunn
Trying to help my brother from another mother.
16:09
Peter Dunn
That's true. Okay. Oh, can I do a show review? I've started the show manifest on Netflix. It's the show about these people that took a flight and then they landed. And when they landed, it was actually five and a half years later.
16:27
Damian Dunn
That's a network show, wasn't it?
16:29
Peter Dunn
Yeah, it was like an ABC or NBC. No one knows. And I was like, I'm bored. I need a show to wind down at night. Like when Mrs. Planner is not available to watch our stories. And so I started watching it. The concept is really interesting. You leave the Bahamas or Bermuda or something like that. Interesting concept. You land, and it's five and a half years later, everyone else has moved on, but you have an age, and no one knows why this happened. That's the concept of the show. So interesting. But now I'm sucked into the show, and it's real stupid. Like, I can't get out of the show because now I got to know what happens, but it's just getting dumber and dumber. So that's my review of Manifest.
17:10
Damian Dunn
Just Google it, see if they ever told you exactly what it is and move on. Please tell me that one of the shows you and Mrs. Planner are watching is Ted Lasso.
17:19
Peter Dunn
Oh, of course. Yeah. If the new episode comes out today, we're ready to go.
17:24
Damian Dunn
Well, you and I hadn't discussed it since the new season started, and every time I sit down to watch the next episode, I was like, oh, Pete and I haven't talked about this yet. I hope he's watching.
17:35
Peter Dunn
That's great. It's just fantastic. Such a great show. All right, you ready for Americans spending more money?
17:43
Damian Dunn
Yes. Americans spend more money.
17:49
Peter Dunn
Back on the Pete the Planner show. Dame, I don't know if you know this, but Americans are spending more money that is according to a recent report by Mass Mutual Consumer Spending and Saving Index. Before we get going on this one passes the sniff test. You and I in the last segment weren't buying that last study, but I am buying this study, and if no other reason because of stimulus dollars. Right?
18:18
Damian Dunn
Totally. People have well, for a few reasons. They didn't spend anything in 2020, or at least it was restricted, and they got a lot of money through stimulus checks, mud burning holes in their pocket, got to go spend it on something. And the world opens back up and they're walking around like they've got it just fallen out of their pockets.
18:37
Peter Dunn
Yeah, I mean, an average family of four right now, young kids that qualifies for the Advanced Child Tax Credit is getting somewhere between $500 to $600 a month from July 15 through December 15 of this year. So that alone accounts for a big portion of the, on average, $765 more a month Americans are spending between dining out and taking trips. This passes the sniff test. But here's my here I don't have a beef with this, but I think here's the context. Number 1, April of 2020, no one's spending anything other than black market toilet paper because you couldn't and you were scared and it just seemed prudent to not spend money. So the fact that spending has increased over last year's spending, I think people are just getting back to their regular spending levels plus a little bit from stimulus. No?
19:37
Damian Dunn
Yeah, I think that's the problem that we see with so many of these headlines that are saying people are spending more or saving more, saving less, or whatever it is than they were last year. Well, yeah, let's think about the events that we all went through in 2020. A lot of these things are just reversion to the mean at that point. We aren't breaking new ground or we aren't going nuts in a lot of different ways. It's just we're not all terrified, sitting at home trying to figure out if we can go find disinfecting wipes at this grocery store or the hardware or Facebook Marketplace, and we're doing life like we did in 2019.
20:14
Peter Dunn
What is the most ridiculous in retrospect thing you did from a safety perspective? I'll give you an example of mine so you can think of yours. Early in the pandemic. Early in the pandemic. When I would go to the local CVS to grab sundries, I think at one point I taped my pant leg, closed them at the ankle with a form of tape. I don't know why. I was not sleeping much. I was working a lot. I may have been just not in a good place mentally, but I feel like I was going to get Et.
20:55
Damian Dunn
Out of the closet. I am not laughing at you. I am laughing at the image of you. Oh, man.
21:03
Peter Dunn
And I don't think I was wearing? Was I wearing goggles? I don't know. It was hard. But I will say this. Did you have anything you didn't have anything remotely?
21:18
Damian Dunn
No, nothing close to that.
21:19
Peter Dunn
You're having people breathe in your mouth. You're a real toughie.
21:22
Damian Dunn
Yeah. Just you're trading germs from people around the country, seeing what we could build up in ourselves. I guess.
21:31
Peter Dunn
I will say this. So early in the pandemic, were spending like nothing. Mrs. Planner and I noted that we probably were spending $750 less a month. I think we actually did the math on it. We were spending significantly less. And then that came back. I think by the fall, were spending more. I say even this earlier this year, were spending more. I don't know why. It might just because we're busy or we're focused or something. Right now, we're spending a lot less on carry out. So I'm curious, from a dining out carry out standpoint, I don't know what that means for you all, but were always pre pandemic, generally a two dine out meals a week, probably a Friday and a Saturday. Where were you pre pandemic?
22:14
Damian Dunn
Oh, boy. That's really tough to pinpoint because of the events that our kids are involved in and trying to make sure that they are not turning into angry little monsters because they're hungry all the time. And the amount of travel that we have to do that stuff. We were probably a little bit more than two meals per week. Not necessarily for Cassie and I, but just to make sure that there were some calories going in those mouths. So probably closer to three for the kids.
22:46
Peter Dunn
Yeah, we could trend that way. I would say this, though. Once the pandemic happened, went to zero for a long time. And what became interesting is that we learned how to make pretty reasonable meals pretty quick. We learned food prep became a skill and a necessity. So even now, like last night, we thought were going to get carry out. Well, soccer practice got canceled and I was like, Well, I'll just make something now. And so previously we had made the decision were getting carry out. Now we just were like, well, now we have the time and we'll just cook. And so I think I'm curious with this study that people are spending $765 more a month on travel and dining, I wonder, would it be higher if people didn't have those new sort of preparation skills from food, from a standpoint? I don't know. Do you feel like you've evolved that way, too?
23:44
Damian Dunn
I think you might be. I don't want to say the exception, because I think there's a lot of people in your boat, but maybe in the minority on that, because I think you enjoy cooking anyway.
23:55
Peter Dunn
I love it. Yeah.
23:55
Damian Dunn
And you found out that it's really not as much of a burden as maybe you thought it was two years ago with prep and get the family to chip in and all that other stuff. So now it becomes a welcome part of your life for some family time as well. I think a lot of people are still just as crunched as ever with the need for convenience and time management and they see an easy out in having somebody else make their food for them. So I wouldn't anticipate a lot of people to necessarily feel the same way you do, but man, I wish I did feel more like you do.
24:34
Peter Dunn
I will say that the travel component of this study I 100% buy because of how expensive it is to travel right now. Our family trip to California this summer was expensive. Thank God for Airline Miles. It was really expensive. And we're going to on a long weekend over Labor Day and it's going to be super expensive. I think a lot of this $765 a month is just extrapolated out of people's travel budget. I'm curious what you think.
25:06
Damian Dunn
Yeah, I think that's real reasonable. I mean, travel is ridiculous. I mean, for a while you couldn't even find cars when you get to an airport. It was nuts. So a lot of this chunks going towards travel. And if you got to eat while you're on vacation too, chances are you're not making food while you're in your hotel room, so you're going to go out and do all that too. So there may be some overlap in these categories as well.
25:29
Peter Dunn
Of course, we stream every week on Facebook live Friday at noon, restaurant tour. Neil Brown notes right now, I find a lot of people felt like they had to cook more during the pandemic and they are getting that time back now by eating out more. I bet that is actually the more common sentiment. And Zonda notes also that prices in restaurants are going up. That I have noticed. I've absolutely noticed. Restaurants are a lot more expensive. And I don't say that judgmentally. I say that observationally. They are absolutely going up. It goes almost back to our tipping conversation from last week, Dame.
26:10
Damian Dunn
Yeah, it's just a fact of the world that we're living in. Their costs are going up on all fronts for restaurant owners and they've got to provide for their own families, make sure they're running a profitable business. So those costs are going to get passed on to the customers in some way, shape or form.
26:25
Peter Dunn
All right, Dame, here's what we're going to do. We're going to take a break. Here we come back. 74% of colleges are facing financial challenges, according to a new survey of higher ed professionals. This would be a remarkable story if it was 20% of colleges are having an issue, Dame. 74% of colleges are struggling financially. So we're going to talk about why, what's going to happen and the role the enrollment cliff will play in all of this around 2025. When you see significant decline in college enrollment. All that's next. Is your alma mater going under is mine. I hope not. All that's next right here on the Pete the Planner show. I'm Pete the Planner. When I started winding up on that early, I could see your face, like, really, dude? You're going for a 52nd outro.
27:21
Damian Dunn
Well, you're the pro.
27:23
Peter Dunn
Apparently I am. We got done with last week's show Dame. I don't know if anyone else felt this way. We got off the air, and what did I say to you?
27:33
Damian Dunn
I'm sorry.
27:34
Peter Dunn
Yes. It wasn't good. I wasn't good. You were fine. But I was so tired. I had nine live shows last week, and I was just exhausted.
27:43
Damian Dunn
How many live shows did you have this week?
27:46
Peter Dunn
Nine. I'm getting used to it, though.
27:53
Damian Dunn
I'm sure that's it.
27:55
Peter Dunn
I will say this. We serve hundreds and hundreds of thousands of organizations or not organizations, people, participants through what we do. And to reach people on an individual basis used to be a lot harder than it is now. And so we've just pivoted to the point where I'm live, streaming, broadcasting, doing TV shows, whatever you want to call it, all day long, and it's just such a better mechanism for helping people change their finances than anything we've ever had before. And I don't think that's changing anytime soon.
28:28
Damian Dunn
No, I love how we do it, and I think we've got a nice push, almost a tip of the spear with you kind of leading the charge on making sure we're in front and on the front of people's minds. Then they call my team and we can help them through whatever they're dealing with. So I think it's a really good set up.
28:45
Peter Dunn
Yeah, it is almost like I'm the cheerleader. I'm just up there like the ringmaster. And then people come to you and get the help, your team, and it's good. I've got it.
28:58
Damian Dunn
You are the infomercial that motivates people to call us.
29:01
Peter Dunn
Oh, let me do an infomercial. Yes. Let's see. What topic do we want to do here?
29:10
Damian Dunn
College.
29:11
Peter Dunn
College. Okay. Let me see what I can do here. Let me go full screen. Do you want a weird voice?
29:15
Damian Dunn
No.
29:16
Peter Dunn
Now from the creators of Mock Retirement, you have I failed again. I'm sorry. I don't know. This portion of the program is brought to you by Kirkland signature cold brew coffee, 100% Colombian. So Dame Oz got these for me at the office, and they are like nitro fuel. I can't have 11:01 A.m because if I do, I can't sleep. But if I have one of these within 20 minutes of a live stream, I don't even need the Internet. I've never had illicit drugs. This is not surprising when looking at me. I've had a lot of sandwiches. That is obvious. I believe this is just canned cocaine. I'm not sure.
30:06
Damian Dunn
Did they just take some four loco and put it in a different can? And that's what. You're at right now?
30:11
Peter Dunn
I don't know. I highly recommend Kirkland signature cold brew coffee. 100% Colombian. This is like this really provocative Jaguar face on the can. Can you see it?
30:24
Damian Dunn
Barely.
30:26
Peter Dunn
I'm going to see if I can do this for the this is where the podcast people are always like, can you just do this show again? But you know what? Look, sometimes you get rewarded for being here with us, so let me do this. All people are going to see the big blemish on my face too.
30:42
Damian Dunn
Can you make sure Oz cuts this segment and sends it to Kirklands or Costco for some sponsorship?
30:49
Peter Dunn
Look at that jaguar. Can you see it?
30:52
Damian Dunn
Oh, green eyes.
30:55
Peter Dunn
I'm going to go a little inappropriate here. It's kind of sexual, you know what I mean? He's sort of looking at you. He's trying to seduce you. Any thoughts about that?
31:04
Damian Dunn
It's staring deep into my eyes. It's hard to look away. Is it like one of those paintings where the eyes just follow you all over the room?
31:12
Peter Dunn
It kind of looks like it. Oh, man. This is delicious, though. But I can only have one. It's still got less coffee or caffeine than a Starbucks venti. All the people who are listening on the podcast right now, I'm sorry. Do you remember when were still trying to figure out how we're going to do the flow of this and the first couple of shows, it became the show behind the show. And then people were commenting on itunes.
31:41
Damian Dunn
Like, go back to the old format.
31:44
Peter Dunn
I don't care. I like this.
31:46
Damian Dunn
I can't believe you read comments.
31:49
Peter Dunn
I don't know. I have all sorts of weird thoughts these days. I got to catch up with our good buddy friend of the show and he's going to be on the show here soon. Phil Schumann, executive Director of Financial Wellness at Indiana University. Dave, you and I have to actually catch up about that conversation. Phil's a genius and I have to tell you about what they've done.
32:04
Damian Dunn
I'm looking forward to it. And I just want to give you a heads up. It has started raining here and I heard a rumble of thunder. I have no idea what's going to be picked up by my microphone if there is a legit thunderstorm.
32:15
Peter Dunn
Sounds like someone had chili last night. They're just trying to make excuses.
32:18
Damian Dunn
Sorry.
32:22
Peter Dunn
I don't know what that means. Okay, in three, two hold on, everybody. I got to start the clock.
32:28
Damian Dunn
And you know exactly what that means.
32:30
Peter Dunn
I know exactly what that means. In three, two, one. Back on the Pete the Planner show. Dame colleges, we're always going to be in trouble by around 2025 because of birth rates in our country. Round about the Great Recession. Is that the one I'm thinking about? Yeah, great recession. People stopped having children and so that means that there were less 18 year olds 18 years later to go to college. Which means enrollment in these universities who've spent a tremendous amount of money on physical buildings and infrastructure and all sorts of other things were going to be in trouble unless they made some serious changes. Well, throw in a pandemic, throw in other issues that way and now you have 74% of universities, colleges and universities under major financial constraints to the point of some of these places may actually go out of business. Isn't that shocking to think, like, huge storing institutions can go out of business?
33:43
Damian Dunn
We've seen a lot of lot is an exaggeration, but we've seen a number of smaller institutions already go that way. They've closed up and said, we don't have the enrollment numbers and we don't have the cash flow to try and make this happen on a year in, year out basis. So go find your education elsewhere and we'll transfer your credits on your behalf. But it was going to or at least it's been presumed that it was going to start finding its way into bigger institutions, more mainstream institutions that people have some name recognition with, and we are knocking on that door. And then, as you said, with the inclusion of the challenges, the pandemic is thrown at it. This may be a bigger event than originally anticipated.
34:28
Peter Dunn
Here's why I bring this up, because for years many parents have said something along the line of this idea. It is college is going to have to get less expensive because of all the alternatives and the efficiencies created by technology. It's just going to have to because it can't continue to increase at this pace. And so compare that to the idea that there's going to be less revenue coming into these institutions because of less enrollment, yet they have increasing expenses to deal with. Those two concepts don't line up. In fact, according to Citizens annual Student Lending Survey, 56% of college students and their parents expect their costs, including tuition, room and board, meal plans, travel and activities, to increase this year by $8,700 on average. Dame, this is how this shakes out. College isn't about to get cheaper because of efficiency and virtual learning. It's about to get more expensive because there's fewer students to pay the salaries of all the faculty and staff.
35:37
Damian Dunn
Yeah, it's going to be a big challenge. Colleges have expanded their offerings and their staff. A lot of extra administration or what people feel as extra administration type positions as well as providing amenities to attract students to their campuses. And that's all going to change. It's changing already. And if the money is not there, they've still got fixed costs they got to cover and that means that cost is going to go up, sticker shock is going to go up and families are going to be tasked with really tough decisions. Do they take out more loans? Do they choose different institutions? Do they go a trade route instead of college altogether? It's going to be a very interesting decade that we're facing.
36:23
Peter Dunn
Yeah. What's weird? I'm wrong a lot. That's actually not weird. You know that you've known me for a while now. I'm wrong a lot. And my assertion was college is just going to get cheaper and cheaper because of efficiencies. But I think there's some additional elements that I just didn't take into account. I didn't take into account there'd be a global pandemic in which international students and out of state students for public institutions would not attend at the same rate they were prior to the pandemic. And that's a big problem. International students pay a tremendous amount more to a university as do out of state students, and colleges are seeing the impact of that. So here's what I think is going to happen. This is prediction time. All right, Mark, the date today is as we record this here. What is today? No one knows.
37:14
Damian Dunn
20 something 7th.
37:15
Peter Dunn
All right. 27 August 2021. Put in the time capsule. The rise of community college will continue. I believe, like in the Great Recession, community colleges will dominate the higher ed landscape as people look for alternative, cost sensitive ways to get that big degree. What are your thoughts?
37:42
Damian Dunn
I hope they're taken more seriously, for sure, because they are a very cost effective way to get some of those gen ed credits out of the way, where the differences in level of instruction aren't going to be all that great between a four year institution and a community college. Sometimes, in some cases, the same instructors are teaching. They just walk across the street to teach the class in a different building. So it's a fantastic way to minimize your overall college expense. Bill, as a parent who's trying to figure out how to make this all work, so if you have this opportunity available to you to look at a community college for whatever education program your child wants to do, look into it. You could save significant amounts of money. Significant amounts.
38:29
Peter Dunn
You and I talk about this a lot professionally. I was going to say we talk about it personally, too, but that makes us seem like real dull people. Parents, when it comes to college decisions, oftentimes they go the wrong route. They go the hey, we'll make it work route, which is, oddly enough, about the worst thing you can do other than, like, rock climbing without a rope. It's the worst time. You can say, hey, we'll figure it out, is college planning for a kid because you can create this escalation of commitment where the student it does work for two years to two and a half years or seven semesters, five semesters, and then you're trapped. You have to borrow and borrow. The parent has to borrow to have that child finish the degree and we see more and more of it. Now, I will say, changing topics within the topic, this is such an issue that colleges are struggling financially.
39:23
Peter Dunn
That even one of the biggest endowments in all of the land. Stanford university let workers go here recently because of the pandemic. Now, you could argue that this was a shrewd, overly shrewd maneuver to save money within the endowment, but you could also say if they're struggling that bad that they have to let people go. Aren't all schools going to struggle? Although I'm going to disagree with myself and say it might have been overly shrewd.
39:56
Damian Dunn
Well, a lot of endowments have a big portion of their assets tied up to very specific uses. So to say that, well, they've got a $2 billion endowment, how can't they make this work? Well, if 80% or 90% of that has to be used for identified purposes and not for the general use of the institution itself, it's really not all that helpful. So you have to always take that endowment number with a grain of salt. You don't know how much is actually available to the institution for operating expenses, for example. So, yes, you would think that there are some schools that are definitely going to have to start sharpening the pencil and maybe you don't offer 150 different degrees and you got to trim that down a little bit. But they're going to have to figure out a way to cut expenses because they can't keep raising the prices and expect people to keep going.
40:54
Peter Dunn
Did I tell you that? Of course. With Phil Schumann at Indiana university, we had a partnership with it's called money smarts, and we help educate college students through their universities. One of the schools that uses those service is a school that my nephew matriculated to last week as a freshman, and he doesn't know, but he's going to be required to watch his uncle teach him about money. And I cannot wait for the text message of just absolute face palming from both he and my sister. I think it's going to be great.
41:28
Damian Dunn
Are you going to give him pop quizzes to see if he was paying attention?
41:32
Peter Dunn
Yeah, everyone wants to be the cool uncle, but I'm pretty sure his other uncle, like his dad's brother is the cool uncle and his dad's sister's husband. I think they're the cool uncle.
41:44
Damian Dunn
Yeah, without a doubt.
41:45
Peter Dunn
I'm pretty sure they are.
41:47
Damian Dunn
Yeah.
41:47
Peter Dunn
You know what I mean? Because I'm not the cool uncle. That's the thing. No, it's too bad. All right, dame, let's do this. Coming up after the break biggest waste of money of the week. I'm feeling pretty good about the waste of money this week. I like a really soft, comfortable t shirt, but I'm not sure it's worth this cost, especially given what they're saying the value is in buying it. I will share that with you next right here on the Pete the Planner show. I'm Pete the planner. My wind ups are long today.
42:18
Damian Dunn
It's all right.
42:19
Peter Dunn
I don't know. I'm definitely not the cool uncle. I wish I was. I should text him and ask him if I'm the cool uncle.
42:27
Damian Dunn
Do you really want the answer to that question?
42:29
Peter Dunn
No, that's real passive aggressive. Anyway. Do you have any nieces or nephews?
42:37
Damian Dunn
Yeah, two.
42:38
Peter Dunn
Are you cool uncle?
42:40
Damian Dunn
I am the only uncle. No, that's not true. That's not true. By the other side of the family.
42:45
Peter Dunn
If you're the only uncle, that would also make you the creepy uncle.
42:48
Damian Dunn
It's true. Well, I mean, I can wear both those shoes. I've got 2ft.
42:53
Peter Dunn
Can you imagine? You're at school your freshman year, you're away from home, you're like, I got some distance from my family. You log on your computer to take the financial wellness course, and your doofus uncle is doing it.
43:07
Damian Dunn
What's better is your friends are going to be like, do you see that guy on the financial wellness? What a weirdo.
43:15
Peter Dunn
And, you know, I've owned video a lot the last ten years or so. It's basically the barbershop haircuts poster for me. From, like, bad haircuts to worst to no hair and beards. And no beards, I believe. I don't remember, actually, but I remember when we shot those videos, I think I was a bearded haired man, and now I have neither.
43:39
Damian Dunn
I think you were too. That was like right before me, if I remember correctly.
43:43
Peter Dunn
Yes. Was it?
43:46
Damian Dunn
I mean, there were some that were done yeah. At the beginning of my tenure, but I think there was an entire seasonish, whatever you want to call it, done before my arrival.
43:56
Peter Dunn
All right, let's do this. Are you ready to do I almost hit a button that may have closed the whole show just now, and I didn't thank God.
44:06
Damian Dunn
I am going through my stories because we just talked about two of them. So I'm trying to figure out what my news stories are going to be.
44:12
Peter Dunn
Sorry. Hello, Brian pinkens joins the show. Hello, Brian pinkens. Is it weird to say I saw a picture of him the other day? Just like, someone joins in, like, oh, I saw a picture of you the other day. Is that a creepy thing to say to someone?
44:24
Damian Dunn
It could be.
44:25
Peter Dunn
I think it's creepier if I were to say it to a woman. Like, let's say, oh, Madeline Jenkins, hey, I saw a picture of you the other day. That would be creepy, right?
44:37
Damian Dunn
Some people might find it, but maybe you've known Madeline for years.
44:42
Peter Dunn
It just sounds creepy. I certainly don't try to be creepy. I don't believe to be a creepy person, but I think you get to a certain age as a guy in your 40s, I'm not cool anymore. I have a tween daughter. I think I inadvertently say creepy things, and it's not because I'm a creep, but just because I become more awkward. You feel like you're becoming more awkward? Your daughter's almost not old enough for me to be awkward yet.
45:08
Damian Dunn
Yeah, nobody told us about this phase of our life where everybody tells you about the awkwardness in your teens. Nobody told us about the awkwardness in your 40s.
45:18
Peter Dunn
That is so true. I'm stealing that. Do you need no more time or not?
45:25
Damian Dunn
No, I'll figure it out.
45:26
Peter Dunn
Okay. Three, two, one. This week's biggest waste of money of the week right here on the Pete the Planar show is the Volback black algae t shirt. Algae is the new black, at least at Volback's black Algae t shirt, the single celled organism is being used to create a sustainable algae based ink. Instead of using traditional black dyes made with fossil fuels, this shirt gets its slate hue from black algae Ink. Developed with biomaterials company Living Ink, the nontoxic pigment is made using carbon dioxide absorbing algae harvested from giant open air pods. The ink is then printed on an ecofriendly fabric crafted from responsibly harvested eucalyptus, beach, and spruce, where it continues to lock in the carbon dioxide emissions for the next 100 years. After printing, the shirt is prewashed with a softener made from mangoes to give it a lived in feel, while the UV resistant ink will continue to look as fresh as the day it was purchased for years to come.
46:33
Peter Dunn
Now, dame, here's the thing. I'm not anti environment. I believe in climate change. I want to do everything I can. I don't want to own this t shirt, though. It just seems like a little much. It's like telling the people at Starbucks what temperature you want the drink served at. You know what I mean?
46:53
Damian Dunn
I appreciate a nice, comfortable t shirt. Yes. This sounds like this t shirt got a nice spa treatment before it got sent out to find its new owner with eucalyptus and mango and who knows what other stuff is going on there. This has to be a $250 T shirt.
47:15
Peter Dunn
It's a pretty good guess. It's $110. But I don't want a T shirt. I don't want to wear a piece of a T shirt that is more important than I am. And I'm not saying I'm an important person, but this t shirt has a history. It has, like, a legacy, and I don't need that sort of pressure. I just want to wear, like, a Hope plumbing t shirt that my friend Jack gave me and just wear it around. That's all I want.
47:36
Damian Dunn
It does look incredibly comfortable, though.
47:38
Peter Dunn
It does look really comfortable. You can tell by the way the wrinkles are in the shirt that those wrinkles just go over my fat folds in such a nice way. Dame, what's in the news this week?
47:50
Damian Dunn
I'm still thinking about seeing if you and I could just go together one t shirt, and we could share custody of it.
47:57
Peter Dunn
Would you share T shirt with me? I mean, that seems a little weird, because what if you use a different detergent than we use, and then I smell you when I wear you? I don't want to do that.
48:11
Damian Dunn
The Supreme Court put an end to the moratorium that protected renters from being evicted during the pandemic yesterday. That'd be Thursday. For those of you listening on the radio. In a six three decision last night, the court said that the CDC, which imposed the moratorium, didn't actually have the legal authority to do that. In practice, that means hundreds of thousands of people in the United States could potentially be evicted from their homes now that the protections have been tossed.
48:38
Peter Dunn
We've been talking about this for a very long time and we have been making the assertion that this is one of the scarier things that's going to happen in the midst of the recovery is when the reckoning comes. And I say that respectfully. I don't mean people are due a reckoning. I really don't mean that. I am curious though, at this point with people not paying rent and landlords being stuck with the problem and landlords being vilified like they've done something wrong. I wonder if the moratorium ending is the solution we need. And I say that with kid gloves. I feel like this is going to bring us a new level.
49:19
Damian Dunn
It's going to have, I feel like, some impact that was not necessarily foreseen by everyone. There's going to be some surprises, I think, that come out of this. However, if you find yourself in a position or know of somebody who is in a position where they are probably going to be evicted based on what's going on in their lives, there is assistance out there. Have that individual call two one and see if they can find either the state or the local program for rent assistance because there is a ton of it out there. In fact, I have a story about it. Would you like to hear it, Pete?
49:56
Peter Dunn
I do want to hear it, but one, that's awesome that you just gave that number. Two, when you started to give that number, I thought it was going to be a full length number and my head was going to spin. But someone dials two one like a 911, but they're done two one. What is that to? Is it? To Rental assistance.
50:16
Damian Dunn
No, it's typically to a phone number that's staffed and run by a local or regional United Way that can connect you with all sorts of different programs for whatever challenge you might be facing at that point in time. However, the government has used them in the two one number to try and get people connected with the rental assistance programs in their area. Now indiana, for example, a lot of the major metropolitan areas have their own programs that are going on. So if you live in Hamilton County or in the Fort Wayne area or things of that nature, you're going to have a different program. You could still call two one and get directed in the right place. But people who live in some of the more rural counties will have a different program to go through.
51:04
Peter Dunn
Yeah, I read an article. I think it's the one you're going to right now is that a vast majority of the funds set aside with rental assistance have gone completely unclaimed.
51:13
Damian Dunn
Indeed, only 11% of the tens of billions of dollars in federal rental assistance have been distributed at this point.
51:21
Peter Dunn
What do you attribute that to? I mean, it probably says in the article, but what's your best guess? Is it just not connecting the program with the user?
51:31
Damian Dunn
Yeah, I honestly think that's a lot of it been some administrative, not administration, administrative issues going on from the individual states because these are programs that the states were required to implement on their own. So you've got some administrative issues going on with potential red tape in the individual state themselves. Then you've got marketing this out to the individuals who need the assistance. Even if you set up the best program to get this money out dispersed as quickly as possible, if you can't get that message in front of people or crime, I would have pushed it to landlords too, in their organizations to try and let them pass that on to their renters. It's going to fail. If you have no customers, it's going to fail. It doesn't matter what type of program or business you're running. So there's been a monumental screw up along the way, and it's going to be somewhat difficult to pin the tail on the donkey on this, but it was not executed well at all.
52:34
Peter Dunn
Yeah, I agree, because I feel like the whole Eviction moratorium pitted landlords versus tenants in just an unnecessary way because we empathetically said, hey, we get it. You're not going to be evicted. Okay, I'm down. I agree 100%. I'm in. But why did that get put on the landlords? To stomach that it's like this funding, which has gone untapped, 89% of it that has gone untapped is driving the wedge deeper between the landlords and the tenants when it actually would be the solution to them. And that's frustrating. Like, I know a lot of things have gone well in a reactive way in the last 18 or 19 months. We as a country have done good things. We have done some less than ideal things. This one sort of stinks, man. I feel like we had the idea to set the money aside, but then the execution on this has just been terrible from day one.
53:33
Damian Dunn
The funding was not the issue on this. Well, we'll never know. Maybe it wasn't enough. Maybe it wasn't enough money, but we'll never know because it just never connected. And it's a shame because it could have prevented a lot of heartache and a lot of hand wringing for individuals and landlords alike.
53:54
Peter Dunn
I will say this, think about this. What if it now increases now that the eviction moratorium is ending, that people actually tap it. Maybe it was the Eviction moratorium that sort of gave this idea that, well, I can't get kicked out anyway, so I'm not going to go look for assistance. Wonder if this is what changes. I'm trying to think. There's a term I can't think of that's not helpful for doing a radio show anyway. It made it so renters wouldn't go seek out this program because they couldn't get kicked out. And maybe this is what changes it. I don't know.
54:31
Damian Dunn
Could be. Could be.
54:33
Peter Dunn
I hate when I can't think of a really witty term and then it just doesn't come out. And then meanwhile, like, dead air. That's a good time. Broadcasters. What else? Dame oh, we have no more time. No, that's it. That's all there is. Dame I hope you have a wonderful Labor Day. I believe that is next weekend.
54:51
Damian Dunn
Yes.
54:51
Peter Dunn
All right. For everyone else, I also hope you enjoy your Labor Day by not working, because that's how Labor Day works, I think. All right. Hey, send me good vibes, because good vibes are all that's in the budget. I'm at Pete the Planner, and this was the Pete the Planner financial radio show. What is the term I'm thinking of? Moral hazard.
55:15
Damian Dunn
Oh, yeah.
55:17
Peter Dunn
Moral hazard.
55:19
Damian Dunn
You can just go back in and edit the last 30 seconds or so of the show.
55:25
Peter Dunn
Dame I'm going to end the show because this thing is sending me out the other way.
55:33
Damian Dunn
Yeah.
55:36
Peter Dunn
Hey, everybody, I'm going to sincere message in the show. I'm going to go my screen only. Dame okay. I'm going to kill the banner. The podcast is going to love this.
55:46
Damian Dunn
Can you change the lights?
55:47
Peter Dunn
Oh, yeah. Let's change the lights. I'm going to change the voice. Listen, I want you to know how much I love you. I care for you. I'm thinking about you at appropriate times, not inappropriate times. I'm thinking about you at appropriate times. I hope you have a wonderful week, and as always, stay getting money. Bye.
