00:00
Peter Dunn
So what happens when your co host is on vacation and your other co host is under the weather? You go old school. It's the Pete the planner show today starring only me. Hello, everyone. Hello, everyone on the podcast. Hello, everyone on the live stream. I'm not saying hi to the people on the radio because this part isn't on the radio. It is good to be with you. Here's how today's show is going to work. First off, Dame is on vacation. My man earned a vacation. Good morning, Rick Swink. It's good to be with you. Dame's on vacation, queen of content. She's not feeling good, right? So we need her to heal up. So here's what we're doing. I'm going back to 2009 today. I'm taking live calls on the show. Who's going to call in? I have no idea. How are they going to call in?
00:51
Peter Dunn
I'm going to figure that out on the fly. So here's what I have to offer you. The people that are watching on the live stream right now. If you have always wanted to be on the show, if you've always wanted to be on the show and all you have to do is jump on the show, ask me a question and we can talk about it. This is your opportunity here today. Now you got to have some choices. Do you want to be on video? Maybe not. Maybe you didn't put your face on today. Maybe you just want your audio. We can accommodate both. So you will be on the live stream. Hello, Andrea. Good to be with you. So here's what I need you to do. If you are interested in this, email me right now. pete@petetheplanner.com. I will send you a link to join the live stream.
01:37
Peter Dunn
You do not have to turn your camera on. All you have to do is turn on your mic. You can ask me a question. We will do a radio segment that way. And that's how today's show is working. We took last week off because of the Indy 500, because we're preempted on all the stations we're on, because Indy 500 again today. This is a very special live show. So if you want to be on the show today, email Pete@petetheplanner.com. So if you want to be on the show today, email Pete@petetheplanner.com. That's Pete@peteeplanner.com. I will send you a link to join the live stream and you can ask me your question. In the interim, here's what we're doing. We are going to talk about the article that was all around the internet this week. One third of Americans making $250,000 live paycheck to paycheck survey fine.
02:28
Peter Dunn
So we're going to talk about that. We're going to dive back into gas prices briefly, because here's the thing you need to consider. At some point in time, everyone's desire to have workers come back into the workplace is going to be head on this idea of rising fuel prices and people are not going to want to drive to work. So we will discuss that and, of course, your question. So who will be the first brave soul to be on the live show this week? If you're watching on the stream right now and you plan on emailing me, just drop a note in the comments, say, hey, I want to ask you a question. So this is your offer this entire hour. If you have a question, let me know. I will connect with you and you can ask me live on the air and we will make some radio.
03:12
Peter Dunn
Here's my ask of you. Please do not use profanity. I don't want to edit it. I just don't. I got other stuff to do today. It's not that I'm too busy for you. I just don't need your profanity today. Number two, just don't try to be funny. I think sometimes when you listen to radio shows that are funny, you're saying, I got to be funny too. And that's not how that works. So please don't try to be funny. I will try to be funny for both of us. Big Rick Swing says he wish he could, but he's got other work to know. I understand. Me too. This is my work. All right, so let's get started. Again. If you want to email me, Pete@petetheplanner.com, you can ask your question live on the air and it'll be fantastic. I'm depending on you. Ask me anything, really.
03:58
Peter Dunn
AMA. All right, let's start the show. I need to get my stuff ready. Oh, boy. Well, that's not ready to go. It's always good when you don't charge your iPad so you can't time the segment. So that's nice. All right, so let's do it this way. Podcast listeners love when I do visual things on the show. All right, segment one, here we go. In three, two, one. This week on the Pete the Planner show, we answer your money questions. Here's how the show works. Typically you email us? Askpete@petetheplanner.com that's. Askpete@petetheplanner.com. Today we're going to try something a little different. Damian Dunn, not my brother, not related at all. Our normal co host is on vacation. Our other normal co host, Kristen, is under the weather. So I'm going solo today. We're going back to 2009 when there was a one point in time I would host a two hour radio show by myself, which also means we may actually take live calls today.
05:02
Peter Dunn
All right, but in lieu of that, here's what we're going to start with. We're going to start with the article that's been tearing up the Internets and social media this week, and it comes from Bloomberg. One third of Americans making $250,000 live, paycheck to paycheck, as survey finds. I've had numerous people send this to me, and I appreciate them sending it to me. So we're going to talk a little bit about it. As always, anytime we talk about people that make relatively high incomes, which we'll call $250,000 a high income, I believe it to be a high income. We are not shaming these people. Just because you make a lot of money and you don't necessarily do amazing things with it doesn't mean that you're not very smart. It just means that you've made some bad decisions. And I think for the most part, when you make bad decisions, it doesn't make you a bad person.
05:58
Peter Dunn
Okay? So no shame. No shame. However, let's dig into the data a little bit. Some 36% of households taking in nearly four times the median US. Salary devote nearly all of their income to household expenses, according to a survey by industrypublicationpayments.com. And that's payments without an know, because to be a startup, you've got to move. Oh, it's removing the e as well. It's Pyments.com. You know your company's good when you basically just take all the vowels out. That's the first thing everyone should learn in business. And Lending Club also participate in the survey. So here's what it suggests. In particular, millennials who are now in their mid twenty s to early 40s, more than half of those top earners in that generation report having little leftover at the end of the month. That is to suggest 63% of millennials who make between 100 and $150,000 say they have nothing left over at the end of the month.
07:09
Peter Dunn
56% of millennials say that they've got nothing left over if they make between 150 and 249% of millennials say if they make between 200 and 250, they've got nothing left over. And 55% of millennials who have an income of $250,000 plus have nothing left over at the end of the month. So I really think the crux of today's conversation in this regard revolves around what is it to live paycheck to paycheck? It's got a very negative connotation. You hear check to paycheck and you think that you are just tapping your fingers waiting for midnight to strike. So direct deposit fills your bank up account, bank account up with more money. And I would note, while this is true, I've long felt that paycheck to paycheck isn't as negative as a lot of people think. In fact, in the Bloomberg article, it goes on to say, quote, living paycheck to paycheck doesn't necessarily mean hardship.
08:13
Peter Dunn
And Lending Club makes the distinction between those who can pay their bills easily and those who can't. Only a fraction of high earners roughly one in ten reported issues recovering all of their household expenses in April. Okay? So the big headline that they put out there was that half of people can't pay their bills or people are living paycheck to paycheck. So they want you to think that half of people making over $250,000 a year are struggling when in fact it's just one in ten people. This is the fun with stats, right? The headline that everyone was tweeting and sending me says one third of Americans who make over quarter million dollars can't pay their bills. That's not what's really going on. So let's take a look here. I make a decent living, not in a position to disclose my income on the air, and I don't really want to go that path today.
09:05
Peter Dunn
But I can note this. I 100% live paycheck to paycheck. I'm putting it out there right now. It's because I budget. I don't have money left over at the end of the month. I don't. The worst thing you can do is just have a bunch of money left over at the end of the month because you've not allocated it. The second I get paid, which is the 15th and the last day of the month, my money is pretty much divvied up. The only discretionary spending I have is for food, increasing fuel prices, and maybe a little leftover, but not much. And technically, that means I'm living paycheck to paycheck. I would also note that this survey was done in April in a time of great inflation. So as people are trying to sort out and see what they spend at the grocery store and the gas pump, I think more people are living paycheck to paycheck.
10:02
Peter Dunn
So this is sort of a weird article, a weird survey. So what I would love to do today is I actually want to teach you how to live paycheck to paycheck. As much fun as it is to make fun of people making a quarter million dollars a year or more because they claim to live paycheck to paycheck, there's really no lesson there. So let's actually learn how to live paycheck to paycheck. First off, the most obvious statement of the day, I would like you to live paycheck to paycheck. I absolutely would. But what I don't want you to do is I don't want you to need your next paycheck in order to save your financial life from despair. Now, I do realize there's a lot of Americans, there are a lot of people all over the world who need their next paycheck to save them from despair because they don't have access to borrowed funds.
10:51
Peter Dunn
They also don't have access to an emergency fund. In my estimation, when we talk about someone suffering hardships if they don't get another paycheck, what we're really talking about are people who don't have savings. That portion of the population is one in nine of one in nine Americans don't have $400. Okay? And so those are the people that are struggling. Everyone else, I would say people are just simply unorganized or they don't have their financial goals in front of their mind. So let's discuss how to do that. Number one, when you get paid, a lot of things are already taken care of. In most cases, you've already paid for your health care. In many cases, you've already set money aside for retirement, and you've already made your tax obligations. You've met your tax obligations. Beyond that, the first thing your money should do when it hits your bank account is it should take care of your other priorities.
11:54
Peter Dunn
And if you do this appropriately, including your savings, you won't have money left over. This idea that having a bunch of money left over at the end of the month is somehow productive or healthy is absurd. If you've ever tried to accumulate funds by seeing what was left over, how does that go? Imagine this scenario for a second. Let's say you are married to a personal finance expert who happens to live in the Midwest, whose name rhymes with Skeet the scanner. Okay? Let's say you're in this horrible nightmare scenario in which you're married to this personal finance expert, and one day you think, okay, I'm going to make a tray of Rice Krispie treats because the kids friends are coming over later. It would be really great for them to enjoy these snacks. And then let's also paint the picture here for a second that your husband, this horrible person, comes home and you mention to the person in passing, hey, I made Rice Krispy treats.
12:56
Peter Dunn
But what the husband didn't hear was the kid's friends were coming over later. And let's say the husband has a lot of issues in terms of control when it comes to Rice Krispy treats. So he eats a vast majority of them, and then there are no Rice Krispy treats left over for the kids and their friends. That's what happens when you see what's left over without setting something aside at the beginning of the month. And in that nightmare scenario, you find yourself in an argument you never thought you'd be in yet. Who is to blame? I'll tell you who's to blame pete the Planner. All right, so here's what we're going to do. Coming back, we're going touch more on this paycheck to paycheck thing. Like, how do you make sure that you do live paycheck to paycheck? That is the goal. The goal is not to have a bunch left over.
13:45
Peter Dunn
That's next on the Pete the Planner show. I'm Pete the planner. That may or may not have been a true story that I just told you, okay? Dancing notes, living paycheck to paycheck here. My expenses are laid out until the end of 2023. Right? See, nothing wrong with that. All right? So if you want to be on the show today, you can actually be on the show. We are now in commercial break. Damien is not here. He's on vacation. Kristen is under the weather. So it's Solo Planner here for you today. And so here's what I'm offering you, all you viewers on YouTube live, Twitter Live and Facebook Live, if you want to be on the show today, you can. Like, I'm offering you a chance to talk to me on the air, which is not nearly as exciting once I said it out loud.
14:36
Peter Dunn
If you don't want to have your face on the air, that's fine. You can just not turn your camera on and we can just talk. You can ask me any personal finance question you want. The show is structured this way today. So here's what you do. Like right now in the moment, email Pete@peteheplanner.com. I'm giving you the real Deal email address here pete@petetheplanner.com, email me. I will send you a link to the live stream and then we're going to see what happens on air. My only ask of you once again, do not use profanity because I do not want to edit it. I just don't. I'm lazy. Number two, don't try to be funny because that never works. I haven't taken calls on my show in well over ten years. You know why? Because I generally think that call in shows are not that interesting.
15:29
Peter Dunn
You know what I mean? I just don't because I turn the radio off or to another station generally when callers are calling. No offense, and I'm not trying to dissuade you from calls because you're going to ask me personal finance questions. I'm just saying sometimes the show doesn't have a shape when you have to just figure out what a caller is going to say. I feel like I've just talked people out of calling in when I'm trying get people to call in. Or Big Rick Swink notes. I also love when people say living on a fixed income when they're on disability or Social Security or something. Most folks are on a fixed income and they aren't business owners or a commissioner or something. I 100% agree. I 100% agree. Here at Your Moneyline, we've got something called a stability index Score that helps a person understand where their stability exists.
16:18
Peter Dunn
And Rick, to your point, having a fixed income adds more stability. It does not detract from stability. Oh, by the way, we're about to have our first oh, it's happening. Oh, it is happening. Okay, so I'm replying I'm not going to say her name because I'll let her decide if she wants to say her name. Okay? So now I'm going to invite the person this is all happening live on the air. Oh, who's excited? Okay, I've sent the email. This person is going to join us on the air. I don't know if they're going to identify themselves or not. That is their decision. How excited are you for this about to happen? Dame's on vacation, and I'm guessing he's watching this and just watching it, hoping things go wrong. I will also note when Damian gets back, he's going to give his Top Gun Maverick review.
17:13
Peter Dunn
You know, if you're a listener to the show, he's been waiting for well over a year for that movie to come out. And he did call me and tell me it was wonderful. But I will let him give you his actual definition. We've got another person who's going to be on the air next. All right? So I'm going to send them the link as well, and they will be the Third Segment. So the first our. I think we've got a person coming on here. Oh, it's all happening. It's all happening. All Right. By the way, we got some really good feedback from a good friend of the show. People love having Kristen on the show. I have to agree. Kristen adds a lot to the show. She will be on the show quite a bit going forward. And we've got our first caller. Oh, my gosh.
18:01
Peter Dunn
All right, here we go. I'm going to add you to the stream. Can you nod your head if you want to be on camera? Nod your head yes or no if you want to be on camera. All right, here we go. You're on. Oh, my gosh. You hear me?
18:15
Andy
Yes, I can. Pete.
18:17
Peter Dunn
This is fascinating. Are you nervous? This could go horribly.
18:21
Andy
Yes, totally aware.
18:25
Peter Dunn
Okay, let's do this. Because I was telling a coworker this morning what I was going to do, and he's like, aren't you afraid this could go wrong? And it's like that's the only way to live is to feel like something could crash and burn. So, Andy, here's what we're going to do. We are not going to talk anymore right now. We're going right to the air.
18:41
Andy
Okay.
18:42
Peter Dunn
We're just going to undo this whole thing on the air. And I don't want any context right now. I just want it all on the air. And I will say this, Andy. We have to stick within nine minutes and 20 seconds. So if you see me give you the wrap up sign this is not a misogynist telling a woman to shut her mouth. A radio host saying, we got bills to pay. Okay. Is that fair?
19:07
Andy
Got you. Totally Fair.
19:09
Peter Dunn
Do you agree to use no profanity?
19:11
Andy
I agree to use no profanity.
19:12
Peter Dunn
And don't try to be too funny.
19:14
Andy
I will do my best.
19:16
Peter Dunn
Okay. Oh, my gosh. This is exciting. Okay, here we go. Make sure to speak up because I don't know your mic situation? Because I'm guessing it's just a phone or a laptop or anything. And here we go. In three, two, one. Back on the Pete the Planner show. Damien is on vacation this week. Kristen is under the weather. So that means we're doing something I've not done in ten years on this radio show. I'm actually taking live calls every Friday at 10:00 a.m. Eastern. We live stream our show on Facebook, twitter. And something else. YouTube. And so today I said, hey, you want to be on the show? I'm going to answer your question. And we have our first caller in ten years. Her name is Andy. She joins us now. Hello, Andy.
20:02
Andy
Hey, Pete.
20:03
Peter Dunn
Well, Andy, we are on the live stream, and you waved. But you also have to realize we're on radio. So the radio audience did not see you wave. So this is fantastic. Andy whereabouts in this country are you calling?
20:15
Andy
We my Husband is beside me calling in from Washington, DC.
20:20
Peter Dunn
Washington, DC. The great Pacific Northwest. Okay, Andy, what is your question today?
20:28
Andy
So my husband and I have set up 529 plans for our nieces and nephews, and the oldest one just graduated from high school. We road tripped to Iowa and actually drove through Indianapolis and thought of you, Pete.
20:44
Peter Dunn
Nice.
20:46
Andy
And we are wondering what advice or instruction we can give to them now that they start to think about taking the money out instead of just putting the money back in.
21:01
Peter Dunn
All right, so I have questions. I have questions. So was this an effort to help fund their college, or was this an effort to solidify yourselves as the cool aunt and uncle? I want to know the truth.
21:15
Andy
Initially, were sort of not the cool aunt and uncle because we put money in the 529 instead of matchbox cars and cool toys and whatnot. But the last three or four years, we have very much become the cool aunt uncle.
21:33
Peter Dunn
Oh, man. I think I'm the creepy uncle, and it's not because I do creepy things on purpose. Anyway. All right, so the question is what's advice for taking money out and how to use it? Do they have other sources of college funds as well, I assume?
21:50
Andy
Yes, my nephew got quite a few scholarships, and I think a fair number of those are just for the first year or for the second semester, basically to prove that they're going to stay in college for more than a semester.
22:10
Peter Dunn
All right? Yeah. So a couple of notes here. Number one, congrats to your nephew. Number two, so there's a couple of elements here, right? So every piece of college funding has advantages and disadvantages, right? So there's scholarships, there's parents pay, there's the kids own money, there's loans, and then there's the cool aunt and uncle's 529 plan, right? And so when I think about this situation, I always think about what sort of flexibility exists with this piece of money, this 529. And here's where the flexibility is and is not. It has to be used for qualified expenses. It has to be used for tuition and fees and books and stuff like that. It can't be used for spring break trips. So there needs to be some level of a paper trail to create there. I have a scholarship at the high school I used to go to.
23:04
Peter Dunn
Actually, the kid was just awarded a couple of weeks ago. Jaden Head is the young man's name. First generation college student. I give a jaden can use the $1,000 for whatever Jaden wants to use the $1,000 for. This means, Andy, that Jaden could go get cheese bread every night at 01:00 a.m. His freshman year like I did and put on 25 pounds, or Jaden could put that towards tuition and books. In this situation, your nephew needs to view this money is not flexible for what it can go towards, unlike maybe your nephew's personal savings, or maybe your nephew's parents, your siblings, or your husband'siblings, maybe they have money in their savings account, or they funded money into your nephew's checking account. That has a lot more flexibility. I would also note that if tuition is more or less fully paid this year, I would encourage your nephew to sit on those funds even into sophomore, junior year, if they can make that happen.
24:07
Peter Dunn
I think the biggest challenge are you managing the investments, or do you let your nephew manage those investments?
24:12
Andy
We are managing the investments, and because we're a military family, we have it through another state, not that we live in and not the state they live in. So it's a separate one entirely.
24:25
Peter Dunn
First, thanks for your service coming off this Memorial Day weekend. Appreciate that. Tell me, do you have an age based portfolio, or have you chosen your investments more specifically?
24:35
Andy
I will say my husband has been doing a little bit more with that than I have, but I believe it's an age based portfolio.
24:42
Peter Dunn
Okay, awesome. So if that's the case, Andy, do you think that your nephew can sit on these funds at least through freshman year and maybe look at him as sophomore, or do you think those funds need to be deployed now?
24:53
Andy
No, I definitely think he can sit on them at least through freshman year.
24:57
Peter Dunn
All right, well, then that's got to be it. So then the question becomes the question I always hate asking, but we're going to ask it anyway. What in the world is going to happen in the market in the next 14 months? Because now we have a more identified time horizon for those funds. Because when you were saving, when you were just becoming the cool aunt and uncle, the time horizon was murky, right? Because you didn't necessarily know that it was going to get deployed freshman year in August or what. But now, you know, 14 months. So I think all of your focus goes around not only educating your nephew on that process, but also trying to invest the funds over a 14 month time horizon. Do you think the funds will be vanquished in sophomore year, or do you think they can extend into other years?
25:49
Andy
That's a good question. He will be in state, so that'll help. It's not a lot. It's under $10,000. So with college these days, it potentially could go out in a year.
26:07
Peter Dunn
Yeah. What's interesting here is and there was a huge report this week about Parent Plus loans and the impact they can have on families. And so on some level, if part of your nephew's college funding journey turns to taking on federal student loans, he's likely to cap out somewhere between $32,000 to $36,000 in that range. And so then the math becomes a little more complicated. It becomes okay. Freshman year seems okay, right. Sophomore year may be okay, too, potentially. Right. Then it becomes junior or senior year, where you say to stay at that in state school, the student would probably need to take on 75, could take on $7500 to $8,000 of federal loans. And then what funds the rest of it? Is it parents? Is it parents taking on loans? And it's always junior year, where families unknowingly, find themselves in a bind without telling us too much.
27:10
Peter Dunn
Do you have a concern with that?
27:14
Andy
I don't think so. I'm not 100% sure. I know his parents also have a 529 for him, and his sibling will not be in college yet. At that point, she's got five more years, so I think they'll be okay, but I'm not entirely certain. My brother is a farmer, so that has its own level of ups and downs.
27:42
Peter Dunn
Yeah, no, I totally can appreciate that. How involved is your nephew in understanding how the money goes and flows and how it's invested? Does he have interest in that?
27:53
Andy
I think he does have interest in that. Being from a distance, it's been harder to be able to talk with him a lot about that, but we're hoping to have him more engaged about where the money goes and what types of expenses he wants to use it for. So we're hoping to kind of bring that into part of the 529 experience, I guess.
28:20
Peter Dunn
Yeah. I always, like, in a situation like this is to say, well, let's say it's $8,000. This is first semester. It's like putting your name on a bench in a park. We paid for Billy's sophomore year, second term. I love that sort of stuff. So, Andy, I wish you the best of luck. Thank you for calling in. Being the first caller on our show in ten years, it takes a village to raise the young people in this country, and it's so cool that as a family, you're doing it well. So thanks so much. Coming up after the break, more of the live call in Pete the Planner show. Yeah, it's back. I'm Pete the planner. Andy, that was fantastic. Is this the first time you've ever been on radio?
28:57
Andy
Yes.
28:59
Peter Dunn
How'd it feel?
29:00
Andy
It felt awesome. My husband and I listen to you all the time, and I'm actually a financial coach. I'm an AFC.
29:09
Peter Dunn
Oh, my gosh. Yes.
29:11
Andy
So we just got back from visiting for his graduation, and I was like, I am going to start Friday mornings seeing Pete the Planner.
29:21
Peter Dunn
I'll tell you, I love meeting colleagues that are out there trying to help people their financial lives. So for those that don't know, an AFC is an accredited financial counselor. It's a designation that you work hard for. Andy dedicates her time to helping people find financial contentment. And so I love meeting people like you, Andy. So first, thanks for listening to the show, thanks for being part of it, and thanks for all the work you do for people here in the United States.
29:48
Andy
Thank you. So much. This was great, Pete.
29:50
Peter Dunn
All right. Hey, have a great weekend and good luck to your nephew.
29:53
Andy
Thank you.
29:54
Peter Dunn
All right, see you later. That's it. Okay. That was fun. Some nice person. It's a nice person. Okay, so now what we can do is we can take our next caller, I believe. Let's add them to the stream. It's audio only. This is fun, right? All right, you're on the Pete the Planner show. Who am I speaking with?
30:16
Michael
Hello, pete, this is Michael.
30:18
Peter Dunn
Michael. Oh, my gosh. Michael, you've got a lovely voice. Dare I say you have a voice for thank you.
30:28
Michael
Thank you. Sorry I didn't put the camera on. I'm like, super nervous.
30:33
Peter Dunn
Don't be nervous. Here's what I tell people when they're on radio for the first time. It's just conversation. Just conversation. It's like you and I talking on the phone. That's not weird, is it?
30:44
Michael
No, not at all.
30:45
Peter Dunn
Okay. Mikhail, am I saying that right?
30:48
Michael
Michael.
30:48
Peter Dunn
Michael, okay. Nothing worse than having your name mispronounced, you know what I mean? I'm guessing that might be your journey from time to time, though.
30:56
Michael
It has been my journey for 48 years.
30:59
Peter Dunn
It's a beautiful name. What's the origin of that name? I've never seen Mike Hill.
31:03
Michael
My dad's name is Michael.
31:05
Peter Dunn
Wow.
31:06
Michael
They were hoping quite happened that way.
31:09
Peter Dunn
Yeah, I know. I feel it. It's like if I name my son repeat, you know what I mean? It's just like it's just a different version of Pete. I will say I went to Starbucks once and I said my name was Pete, and they spelled it on the cup peet. And I was like, that's weird because Pete's is a coffee company. Anyway, okay, Mike Hill, is it okay if I don't ask you any other questions about what we're talking about until we get to the air?
31:38
Michael
Yeah.
31:38
Peter Dunn
Okay, fantastic. All right, so this is going to be nine minutes and 40 seconds. If you happen to have a watch or something in front of you, that's how long our segment will be.
31:47
Michael
Okay.
31:49
Peter Dunn
Can you see me on your computer or phone or whatever?
31:52
Michael
Yes.
31:52
Peter Dunn
Okay. Sorry about that. I probably lost your appetite looking at me. However, if I give you the wrap up sign, it just means I got to move on to the end of the segment and I'm not incredibly rude. You agree to that?
32:03
Michael
Yes.
32:03
Peter Dunn
And you're good with no profanity today? Of course, because I would just have to edit it and it's like, come on, I want to go have lunch with Greg. All right, well, let's do it. In three, two, one. Back on the Pete the Planner show. It's a special live call in edition of The Pete the Planner Show today. Every Friday at 10:00 a.m.. Eastern on Facebook Live, YouTube Live and Twitter, we stream our show, and since Damien's out this week and Queen of Contents out this week, I put it to the listeners you call me, and we'll send you a link, and you're on the show. So joining us now is Mike Hill. Mike Hill, welcome to the show.
32:48
Michael
Thank you, Pete.
32:51
Peter Dunn
Do you want to say where you're calling from? Where in the country?
32:53
Michael
I am not too far from you, Pete. I am in Muncie, so about, what, 50 miles from you? So not too far.
33:01
Peter Dunn
I believe it's pronounced funsy because that's how good a time it is in Muncie, Indiana. Michael, what are we working on today?
33:11
Michael
So my question for you is this. So I have about $15,000 in credit card debt. Just paid off a bunch of it, about $10,000. So I've been doing the debt snowball.
33:24
Andy
Sure.
33:26
Michael
Interest rates are really high, really nervous about what's going to happen. Interest rates are already increasing. And so I was looking at consolidating, and so I was looking at doing a HELOC, and I was thinking about doing HELOC because I wanted the line of credit to pay some of that debt down, and I needed to do just some renovations to my house. So that's why I was kind of thinking about the line of credit. So just wanted to see what your thoughts were on that.
33:59
Peter Dunn
Can I ask you a million questions?
34:01
Michael
Sure.
34:02
Peter Dunn
And if I ask something that you don't want to answer, just say punt. Are you okay with that?
34:06
Michael
Yes.
34:07
Peter Dunn
Okay. How did the credit card debt come into your life? So you had 25,000, you paid down ten, and you're at 15. How did that happen?
34:18
Michael
How did what happen?
34:20
Peter Dunn
How did you accumulate yeah. How did you accumulate credit card debt? Was it just living beyond your means? Was there a job loss? Help me understand how you got the credit card debt.
34:28
Michael
Just behavior, say. Behavior? Yeah.
34:32
Peter Dunn
Now it's hard work to pay off $10,000 in credit card debt, which you've just done. Are you telling me that the behavior has fully shifted or mostly shifted to a good place.
34:46
Michael
Has shifted. Just sticking to my budget stuff that I already knew before and just really budgeting because I've always made enough money, just didn't make some good choices, went on vacation, that kind of thing?
35:02
Peter Dunn
Sure. Do you feel yourself more aware right now because of inflation and where we are as an economy, or are you the same level of awareness you've had over the last year or so?
35:14
Michael
Well, I think it's a combination of both. I've always been aware. I knew what I should have been doing, and then, of course, the economy was like, I need to do something. I really need to buckle down.
35:26
Peter Dunn
All right, so here's what I'm thinking. How much equity is in your home right now?
35:35
Michael
About 80%.
35:36
Peter Dunn
Okay. So you only have a 20% loan. Is that what you're saying? Okay. House is in good condition.
35:44
Michael
Yes.
35:45
Peter Dunn
You said you need to do some repairs or something with the additional money.
35:49
Andy
Yes.
35:50
Michael
And those can wait. So I really wanted to really knock out the debt before I do those things or just finance it in cash, but it was a call.
35:59
Peter Dunn
How much is in your savings account? Like an emergency fund right now?
36:04
Michael
Like 3000.
36:07
Peter Dunn
Okay, about what is your monthly take home pay? Can you answer that one?
36:20
Michael
No, 4000.
36:21
Peter Dunn
Okay, 4000. Okay, so when it's all said and done, about a month's worth of expenses. And what do you think, with the $15,000 in credit card debt left, how much do you think you pay a month all toward that debt?
36:36
Michael
I think it's about, like, right at 1000. I think my budget said right at 1000.
36:41
Peter Dunn
Okay, so a third of your income right now is going towards that. Have you calculated yet what taking $15,000 on a HELOC? Have you calculated what your payment would be?
36:54
Michael
Yes.
36:55
Peter Dunn
And what would it be?
36:56
Michael
Well, you only have to pay the interest. And so it was going to be like 60 some dollars. But of course I was going to pay a heck of a lot more than that.
37:07
Peter Dunn
All right, so here's where we're at. Is there anything else I need to know? You've got an incredibly wealthy aunt who is 130 or something like that. Do I need any other information?
37:18
Andy
I wish, but no.
37:20
Peter Dunn
May she rest in peace. Okay, so here's what I got. You would be out of credit card debt in less than two years if everything else stayed the same. Is that your math, too?
37:36
Michael
Yes.
37:37
Peter Dunn
And there are rising interest rates. However, it sounds like you're really chipping it away at it. How many credit cards are involved here using the snowball method? So that means there's at least multiple debt lines here.
37:53
Michael
Like four.
37:55
Peter Dunn
Okay, what's the smallest balance? Okay, so, Michael, I have answer for you, and it's going to be answer you don't actually you want to hear this. This is the whole reason you asked, but it's also one of those questions that you asked because you already knew the answer. I don't think you should take out a home equity line of credit. Oh, and you can do what you like, of course, because I have no say in your life, Mike Hale, unless you wanted to grant me rights to make your decisions. But here's my thinking, and I, of course, don't know everything about you. I've known you for six minutes. Here's why. I think you're making incredible progress, and that turning on that faucet of relief with the HELOC will do two things behaviorally to you. Number one, you will exhale. Not to make reference to an amazing film, but are you not waiting to exhale in the situation?
38:56
Michael
Yes.
38:57
Peter Dunn
Right. Amazing film, right?
38:59
Michael
Yes.
39:00
Peter Dunn
Oh, boy, those ladies. Anyway, you were waiting to exhale. If you take the HELOC out, you will go, oh, that was hard. And what you've just gone through, this behavior modification, this progress of paying down $10,000 in debt. I'm not going to say it's been wasted, but I'm going to say you will lose most of the momentum that you have scrapped and saved to create. Are you fearful of that, or are you going to try to tell me that you would not exhale?
39:29
Michael
Oh, I would exhale for sure.
39:33
Peter Dunn
Do you have one source of how many sources of household income do you have?
39:37
Michael
Two.
39:39
Peter Dunn
Okay. You and another person or you and two jobs?
39:42
Michael
Two jobs.
39:43
Peter Dunn
I feel you. I love a good hustle. All right. Is that second source of income the smaller source of income, is it variable or is it pretty fixed in terms of how much comes in each month?
39:54
Michael
Fixed.
39:55
Peter Dunn
Okay. Yeah. First of all, that's amazing. You've got 80% equity in your home. Have you lived there for a long time?
40:07
Michael
15 years.
40:09
Peter Dunn
Wow. So do you have 15 years left in your mortgage?
40:13
Michael
No, I only have five.
40:15
Peter Dunn
Oh, yeah. Don't please don't take out the HELOC, because here's what I think. I think you're likely feeling the stress, the pent up stress of the last 24 to 27 months. Is that fair to say? I mean, it's been a pretty stressful two years, my friend.
40:33
Michael
Yes.
40:34
Peter Dunn
Don't exhale yet. Don't do it yet. I think you would grow to regret it, and I think the math wouldn't support doing that. But, look, if you got to do what you got to do because you know all of the ins and outs of your life, but I think you need to have continued courage that you've already showed to keep going.
40:54
Michael
Perfect. Thanks, Pete.
40:56
Peter Dunn
Well, that was fun. Mike Hale. So awesome. I'm excited for you. Keep going. And I would look for here's the next point of relief. Bust your hump until next tax refund season and let that help you solve the problem yet again. If you happen to get a tax refund, I think, like breaking down your financial life from a time perspective to say, I'm going to bust my hump for the next ten months so I can get a tax refund. Which will complete this portion of the gig. Then you can see the relief in sight and you can exhale on that point as opposed to the HELOC. Can you hopefully try to do that?
41:29
Michael
Yes.
41:30
Peter Dunn
Awesome. All right, thank you for calling. I'm going to set you in the waiting room right now, and so we can go to biggest waste of money of the week is next here on the show. And since Dame's not here to read current events, I don't know what's going to happen. Are we going to take another call? Are we just going to read news headlines? We'll find out next on a very special edition of the Pete the Planner show live. Call us for the first time in ten years, who knows what's going to happen next segment? I certainly don't. I'm at Pete the Planner. And this is the Pete the Planner show. All right? I'm going to get my kale back on. Mike, are you still there?
42:06
Michael
I Am.
42:07
Peter Dunn
You did a great job. Were you nervous?
42:09
Michael
Yes.
42:10
Peter Dunn
At the beginning, you sounded great.
42:13
Michael
Thank you.
42:15
Peter Dunn
You talk to people for a living, don't you?
42:18
Michael
Yes, I'm an HR. Director So? Yes.
42:21
Peter Dunn
Yeah. You've got such a nice presence. You can tell when you talk to someone. So I hope you're able to use those skills in the workplace. It. And I know as an HR. Person. You certainly do.
42:32
Michael
Thank you. I appreciate you, Pete. Thanks.
42:36
Peter Dunn
No Problem. Good Luck. Have a good weekend.
42:37
Michael
Thanks. You Too.
42:38
Peter Dunn
Bye Bye. All right, so there's Michael. All right, so here's your last chance. If you want to be on the show this week, email me right now. Pete@peteeplanner.com. Pete@peteeplanner.com, you can be in the final segment. This kind of worked hail. Okay. I do have a pretty good biggest waste of money of the week. Let's let's see. If you want to be on the show, I will bring you at the last part. You don't even have to ask a serious question. Just don't try to be funny or use profanity. Those are the rules. Which is funny because on a regular basis I use profanity and try to be funny. I'm just asking you not to do that on my show. We're in a new pair of pants today. They're a little tight in the calf. Got them yesterday. Tight in the calf. I'm sitting here. I'm feeling like an Olympic pentathlete or something.
43:30
Peter Dunn
Like my calves are really thick with three C's today. Okay, let's do biggest waste of money of the week in the news. Oh. How are we going to do news? All right, well, we're going to figure this out. This is where Damien asked for a raise because it sees how hard it is. Big Rick Swank with always the great advice. He says, go, boot cut. Pete. Always boot cut. Yeah, I feel you. All right, here we go. In three, two, one. This week's biggest waste of money of the week right here on the Pete the Planner show is if you're just joining us on the show this week. Damien's on vacation, kristen's under the weather, so I'm going solo. We took live calls for the first time in ten years on the show. So that was fun. But this week's biggest waste of the money of the week is the aged and Ore bottle Flight.
44:26
Peter Dunn
Great. Bourbons, whiskeys and other spirits are meant to be shared. The aged and ore bottle flight makes it easy to transport tasting sized amounts of your favorites, whether it's across town or across the country. The set includes four custom silicone wrapped, wide mouth bottles, each with a TSA compliant max capacity of 3oz. On one side, an opening in the silicone exposes the measurement markings, while the other side's opening exposes a labeling window, letting you keep track of what's what. Using the included glass marker, a protective carrying case rounds out the set and can hold all four bottles or two bottles and two cigars. Okay, so here's the thing about this. This is genius. This is absolutely genius. And it's actually not that expensive. It's only $38. But here's the bigger issue, and this is one I'm grappling with myself as I talk about this. Do you have to travel with your favorite booze?
45:40
Peter Dunn
I have bottles of whiskey that I enjoy at my home, and maybe if I went to my brother in law's house who also enjoys whiskey out in California, I would want to take him some. But wouldn't I just stop and buy a bottle of like this is one of those things. It's like, I think if you buy this, it's an admission of a bigger issue, right? I don't know. Or you could just buy airline bottles and take those on as well. Anyway, so hard pass on this week's biggest waste of money of the what's in the news, dame? Well, Pete, that was me trying to replace dame here on the show this week. Lots of economic news this week. You have Jamie dimon from Morgan Chase saying that he thinks we're headed for a perfect storm of a recession or something like that. Elon musk came out on Friday morning saying that he wants to cut 10% of the workforce from Tesla, saying he has a, quote, super bad feeling about the economy and wants to cut jobs at the company by 10%.
46:52
Peter Dunn
Now, I don't want to turn this into a segment about me griping about elon musk because I don't know Elon musk. All I know is how he puts himself out there in the general public and what he adds to our overall zeitgeist. And I will note this, he threw a little bit of a fit on Thursday because he sent an email to his colleagues at both Tesla and SpaceX saying that they are pausing all hiring worldwide and that employees must return to their offices and at least work 40 hours a week. And if they don't come back to the office and work 40 hours a week at the office, they will be let go because it will be assumed that they're not doing their jobs. And so here's my challenge here. And I am a CEO of a company. I am not the CEO of Tesla or the almost CEO of twitter, and I don't have thousands of employees.
47:56
Peter Dunn
I have tens of employees. But I can tell you this. If you are standing on the bully pulpit and you use it as a bully pulpit, you will not endear yourself to your coworkers, to the general public, and to your investors. And so I don't think Mr. Musk needs business lessons from me. But I can just tell you if you're going to have to lay people off because of a super bad feeling you have about something at least tell them that's the reason as opposed to tell them it's not because of their commitment to their jobs. If we are getting to a point of $6 a gallon gas, which is already going on in California, here indiana, on June 3 of 2022, we're going to get to a point where gas is going to tip over $5 today, if not tomorrow. You're completely ignoring the financial realities of a person who is tasked with driving to work.
48:58
Peter Dunn
And you might say, well, that's why they should have a Tesla. But the reality is the wages of people who work in these factories don't necessarily make enough money to buy a Tesla. Now, of course, he's referencing a lot of white collar jobs of which of course, people in a factory have already been working. These are people who are theoretically paid more and that should be buying a Tesla and not be subject to six dollar gas fuel prices. But I just have to say when big business leaders come out and they say things like this, when Jamie Dimon says he feels the economy is going to crash, I get that. That makes sense to me because he's the head of a financial organization that has a lot of data to suggest that when someone comes out and says they just have a super bad feeling, I view that as wholly irresponsible.
49:46
Peter Dunn
It doesn't help move the conversation forward. Do I think there's going to be a recession? Yes. Am I going to send out some passive aggressive email to my coworkers to tell them about how that might impact them? Probably not. So that's my concern. I will say this. I love working in the office with my coworkers. I like messing around, having a good time getting work done. But I'm going to admit, as we make our way to August, as we make our way to a time frame in which gas prices are going to get to $6, potentially $7 a gallon, it's not my job to tell someone that they shouldn't come into the workplace. But I will gladly accept the fact that some people are going to have to make a decision about the commute that they have. I have a six mile commute. I have a six mile commute.
50:40
Peter Dunn
I get 31 miles to the gallon. I can drive an entire week on two gallons of gas. Okay? So I will say this as we approach the fall and as your employer, if they offer hybrid options, do the math. Because when you come into the office, not only are you spending money, but you're also going out to eat. You're stopping on the way home to grab this or that. You're taking your lunch hour to go to the mall and buy pants that don't fit because they're too tight in the calves. I think when we look at not only the recession that looks to be on the horizon, but we look at rising gas prices and how that will impact back to work. I think that's going to perpetuate the recession a little bit longer. I don't think we're headed towards 2008 and 2009, I don't think we're headed towards March of 2020 and we sure as heck aren't necessarily headed towards the.com bust of 1999.
51:47
Peter Dunn
But I think because the Fed is increasing interest rates so much and it's already working, I think this could be a shorter recession. To be fair, here's where I've been wrong recently. I said inflation wouldn't last past the end of 2021. Wrong. I was wrong. Number two, I've also suggested that gas prices would not infinitely increase like they have with no sign of letting up. In fact, not only isn't there a sign of letting up, there is a sign that it's going to keep going up on this very show. I did the math of how it's not actually really impacting people, so I was wrong about that. One last note in this regard, janet Yellen was asked about her take on inflation and why she was wrong. And while you never want someone in her position to be wrong about something, I found it incredibly refreshing that she admitted she was wrong.
52:49
Peter Dunn
I think so often mistakes are made at the highest level and because people want to stay in power, that they simply don't tell the truth, that they deflect, they don't answer the question. Good for her for admitting that she was wrong. There is nothing wrong with making mistakes. There's a huge problem with not admitting your mistakes and learning from them and acknowledging them so we can move the conversation forward. Think how much more difficult our economy would be if she didn't only not admit her mistakes, but she doubled down on them and we all suffered for it. So it's with that. Speaking of suffering, we end this suffering here today. This was the solo Pete the Planner show. Because my people were out this week. We had a live show. Thanks to Andy Mikel for being guests on the show, sending good vibes, because good vibes are all that's in the budget.
53:40
Peter Dunn
I'm Pete the planner. This is Pete the Planner show. That felt like a weird and here's my final thought, the no spend zone. Anyway, thanks for being on the show this week, everybody. Thanks for hanging out. Next week, I believe we're promised to have Dame and Kristen back. Hopefully they can just do the show themselves. I can take a break. Thanks for being here. Thanks for everyone to contributed again, Andy Mikel, appreciate you very much. Thanks for being regular listeners and viewers of the show. Podcast listeners, I hope you enjoyed this stay. Getting money.
