00:11
Peter Dunn
Fire. Good day. Good day. Good day, everyone. It's your boy Pete the planner. Yeah, I started cat again. I don't know why I should take off. Hi, welcome to the show. Sorry we're a couple of minutes running behind today. We had in other event, but I want to show you the team that we're rocking with. Of course, we've got your co host, as always, Damian Dunn and Lisa Whitley, a beloved member. Hey money. And your moneyline team coming to us from the nation's capital. Hello, Lisa.
00:41
Lisa Whitley
Good afternoon to you.
00:42
Peter Dunn
I like the headset.
00:44
Lisa Whitley
Well, thank you.
00:45
Peter Dunn
Thank you.
00:45
Lisa Whitley
I think you bought it.
00:48
Peter Dunn
It felt like I was pitching for a compliment there. So, Lisa, we have a lot of regular listeners to the show, including Danza, who was listener of the year last year. She's meow. Jameson is the all time best listener to the show. He is in Texas, and I believe he has got his first vaccination. Nick says, welcome, Lisa. And Amanda. Grace says good day, too. Lisa, you wrote a great piece that we're going to start the show with this week. And so, you know what, let's actually get started. Let's work our way through that right now. The first segment, Lisa, in case you don't know, is nine minutes and 22 seconds. So if you want to set a separate clock or at least keep your eye on it's nine minutes and 22 seconds. And let me get ready to go. Dame. After this segment, we are going to do there's a piece that you read on Monte Carlo simulations, which is one of our favorite things because we're nerds, but where they fall apart.
01:45
Peter Dunn
We're going to talk about where they fall apart. And that's going to be probably segment two and three. And of course, biggest waste of money of the week. If anyone feels like I'm shot out of a cannon today, there's a couple of reasons why. Number one, I had all the coffee. Number two, I just got done with a live streaming event right before this that took me up to the second, so it became very difficult. Neil Brown joins, by the way, via Facebook live right now, says, I am live. Am I live. And the answer is, Neil, I don't know if you're live. Depends what you did last night. Ha. Okay, here we go. Starting in three, two, one. This week on the Pete the planner show, we answer your money questions. Here's how the show works. You can email us, ask Pete@petetheplanner.com that's askpete@petetheplanner.com, and we will do our best to accommodate you.
02:32
Peter Dunn
We come to you live on Facebook every Friday at noon. You can watch this show being recorded live on Facebook or YouTube live noon on Fridays eastern. Joining me, as always is Damien Dunn, vice president of advice at your moneyline in. Hey, money. Hello, dame.
02:47
Damian Dunn
Hello, Pete.
02:48
Peter Dunn
And I'm very thrilled. We've got a brand new member of the radio show today. That's Lisa Whitley, a team member from hey Money and Your Moneyline. Lisa, welcome to the program.
03:01
Lisa Whitley
Well, thank you. Welcome to you.
03:03
Peter Dunn
Well, Lisa, here's the thing. You're on here today for a number of reasons, one of which is you wrote a really great piece on your own particular blog that you have@medium.com about long term care and the costs associated with care for someone in a long term care facility and why public policy ignores this idea. Can you help us understand your perspective of why do you think just general public policy ignores our long term care need costs?
03:38
Lisa Whitley
Yeah, probably because they're a little scared of it. There was a statistic that I had put out there from Genworth that seven out of ten people are going to need some kind of long term care as they age, whether that's in a facility or whether that's at home. And the costs are enormous. It can be six figures. And I think it's just something that we just have not really come to grapple with as a country. That where retirement now is a lot different than it was 20 years ago. It lasts a lot longer, and it's a lot more expensive.
04:19
Peter Dunn
Yeah, it's not only the impact on the people that need the care, to your point in your piece, it goes a lot deeper than that. And that's where the public policy, in my estimation, completely fails, is who is this average caregiver? Lisa?
04:36
Lisa Whitley
Yeah, thanks for bringing that up. And that's really what inspired it. I had a conversation a few weeks before that with a woman who had a high paying job, left that job, and moved to a different place to take care of her mom. And in doing so, she had to work, use some of her retirement savings, but more importantly, she was out of the workforce, really, during her prime earning years. And I realized this was a conversation I had not one time or two times, or even three times, but just repeatedly, because what we're seeing is that the average caregiver is a 49 year old woman, and women primarily are the ones who are taking care of elderly parents. So they're leaving the workforce, not contributing to their own retirement, and in many cases, really drawing down their own assets.
05:27
Peter Dunn
Yeah, I think what's fascinating about that is at 49 years old, you are the epitome of the sandwich generation. I mean, you are raising young adult children at that age, depending on when you had children, if you had children, and then you're dealing with your own I'm not going to say midlife crisis, but generally when that happens, and then you're dealing with the health and financial ramifications of your parents. Lisa, let's say were blessed enough to have you make public policy around this issue. What would it look like? What things could be done to help with this?
06:02
Lisa Whitley
Well, the big one, the big cahoona would be Medicare. Medicare, as it currently is does not cover long term care costs, which is a huge hole. So if you could imagine a Medicare program where you could cover the costs of having someone in your home to take care of an elderly parent, that alone would, for example, free up the ability of that parent or that child who's usually a woman, to stay in the workforce. So Medicare would be huge. Health savings accounts is a very weird thing where you can use your health savings account to meet the cost of long term care insurance premiums but you can't use health savings account to meet the costs of the things that you would be buying with long term care insurance. It's this weird issue. I can't really explain why that is. There was a bill in Congress a couple of years ago to fix that obvious error.
07:03
Lisa Whitley
It went nowhere. And then finally I point to dependent tax credit. There's a very small tax credit that you can get for dependent care but it's a very small number. It maxes out at a pretty low income and frankly, it's just not really designed for the kinds of costs you would have if you're taking care of a dependent parent as opposed to a child.
07:31
Peter Dunn
Yeah. Dame, you and I have been talking a lot about this advanced tax credit that is possibly coming our way and a form of stimulus because maybe Congress realizes how the burden of dealing with and raising young children. It's quite obvious that when it comes to supporting an adult loved one or becoming you have someone as a dependent who isn't your child, the burden is just as bad. It's just like they have no clue, though entirely.
08:00
Damian Dunn
I mean, we have this notion, or at least many people in the country do, that taking care of your parents is something that is a noble act, something that you want to try and do and yet we receive very little assistance to do that. When the alternative in many cases is to really start drawing down on your own assets, which is fine, you've saved it, you got to use it for something. But beyond that, it comes out of the government's pocket for the vast majority of people. So if there's a midway point that we can somehow meet to make it very reasonable and affordable to keep parents in home and be able to care for their needs, I think that's the best alternative for a number of reasons. Not only for probably their mental benefit and their physical benefit, but as we've seen, there's a lot of bad things, bad infections and whatnot that can be easily passed in facilities and maybe safer for everybody just to try and avoid those if at all possible.
09:05
Peter Dunn
Now Lisa, there's a couple of reasons that one would think of as to why the government has not addressed making long term care as part of medicare. Right. The two that I can think of and I'd like to hear if there are more that you can think of, and I'm more interested to hear what the main one is. But the two are cost, right? The cost to underwrite this. Now, the second it's one that some people love talking about and other people frustrates is that then you get into this moral hazard situation where by somehow relying on the government for that service, then you are somehow ignoring some other sort of personal responsibility that you have to prevent it. What do you think that the main culprit is here?
09:50
Lisa Whitley
I think the main culprit really is cost. If you think back when medicare first started, even prescription drugs weren't covered because it just wasn't important at that time. And then later, when prescription drugs became more feature of medical care, it was added in. I think we're in a position now where people are living a lot longer. These long term care costs are enormous. And I think if you were going to create a Medicare today, you would put that in. It would be the obvious thing to do. But, yeah, I think it's probably a cost issue more than anything else.
10:31
Peter Dunn
Yeah. Dame, we talk a lot on this show about how sometimes from a political perspective, some policy doesn't get through because some people feel like it's a disincentive to do something else. As Lisa states here, this does feel like more of a cost issue. Do you agree? Do you think that's the main issue or do you feel like it bleeds into personal responsibility as well?
10:54
Damian Dunn
I think there's some of both there. And when you're fighting for dollars, stuff that's not included at this point is going to have a really tough uphill battle to try and get a seat at the table at this point. So even though it may make sense to everybody and it's something that we feel would be a valuable benefit, where are you going to get the money from? So it's a practical argument as well.
11:15
Peter Dunn
If people want to read Lisa's work, which I encourage you to do, because I always do, she has a blog at Lywhitley. There's an H in there. Lywhitley media. I encourage you to do so. Lisa, of course we will have you back. Thank you for joining us here today. Thank you.
11:32
Lisa Whitley
It was a lot of fun.
11:33
Peter Dunn
All right, coming up after the break, the Monte Carlo simulation where it falls apart and what you need to do. Next on the Pete the planner show. I'm Pete the planner. All right, ladies and gentlemen, that was Lisa's. Amazingness. Hello, Lisa. Thank you. Oh, she took off. I didn't get to oh, man. I told her that afterwards she could leave, but I meant like I wanted to praise her for a while.
11:56
Damian Dunn
This is all your fault, Pete.
11:58
Peter Dunn
She is good at that. First of all, dame, I know that you get to work very closely with Lisa. She's an amazing writer. She brings a lot to our team. And her knowledge on public policy as it relates to people's financial lives is unmatched, truly unmatched. There's a lot to love about her, but she understands the ramifications of policy. And I don't know if it's because she lives in DC and cares about those things or what, but she's incredible.
12:25
Damian Dunn
She's very tied in with everything that goes on the Hill. She is in regular contact with I don't know if they call the representative for DC or not, but she has regular communications with them. And she is just as up to speed on whatever's going on inside the Capitol as anybody else that I've ever known.
12:46
Peter Dunn
That's amazing. That's amazing. So, Dame, we're able to have more guests like Lisa now because we've switched off of how we record the show, which makes everyone happy because I have less technical issues, and we get to have awesome people like Lisa. Now, Dame, this past week you read a piece and went through some training around Monte Carlo simulations and where they begin to fall apart. And in my book, Mock Retirement, the concept of mock retirement is where you practice being retired before you retire to validate your retirement plans. It does rely heavily on Monte Carlo simulations. So I'm fascinated with them. I know you love them, but I'm really excited to dig into them. And the biggest thing that people will learn on this is, of course, it's a hypothetical situation. It can fall apart. But what we're going to talk about is where financial advisors often fail in respect to fixing these challenges.
13:46
Peter Dunn
So there you go.
13:47
Damian Dunn
Now, to be fair, I watched a webinar. I really didn't read anything. Let's not give me too much credit.
13:54
Peter Dunn
Look, I'm feeling very generous today, okay? And so I think it's a 40 week study that you just went through.
14:02
Damian Dunn
It felt like that at times.
14:06
Peter Dunn
Okay, you ready to go?
14:08
Damian Dunn
Yes.
14:09
Peter Dunn
Three, two, one. Back on the Pete the planner. Lisa is great. Dame. I love Lisa.
14:17
Damian Dunn
I love working with her every single day.
14:20
Peter Dunn
So we have this mechanism within our organization that whether you are your money line client, which means you get to our guidance through your employer or if you're a hay money client, which means you get to advice through your own good decision to go, to Callhaymoney.com and to get a little birdie on your shoulder. A financial birdie on your shoulder like Dame or Lisa or anybody else from our team. This mechanism within our system is that we get feedback as to, hey, this was my experience with Lisa or whoever. Lisa's are always all our teams are great, but Lisa is always the same thing. It's like, oh, my gosh, I feel so much better. She's so smart, and she's a great listener. And so that is the truth, man.
15:02
Damian Dunn
She has the fantastic ability of being able to distill very complex things down to easily understandable bits. So she's a huge asset to our team.
15:12
Peter Dunn
Speaking of complex things, there is a concept called a Monte Carlo simulation that financial advisors often use. It helps a person determine, based on different variables, how much money will be left over in their retirement plan. There's a better way to say that it is how successful will their retirement income strategy be. And it's based on how much money you're plugging in, what your assumed rate of return is based on your asset mix, how much money you take out on a regular basis. A couple of other factors. Dame, I love them. They help us give people confidence by saying, okay, if you take 4% out a year, this could be your chance of failing. Or if you take 3% out a year, then your chances increase at success. And on paper it's pretty clinical. This is your choice. This is what happens. But Dane, based on this webinar that you had a chance to spend a lot of time on this week, where do these things fall apart?
16:11
Peter Dunn
Where does this great analytical tool fall flat?
16:15
Damian Dunn
There's a couple of areas that really need to be addressed and I think some financial planners may have been blind to these things as well. Just because we lean really hard into chances of success. And when you get a really good score back, you feel pretty good about it. But Monte Carlo only really addresses one dimension. Is it going to work, yes or no? Forgive me. I seem to remember you using the illustration of if you were going to get on a plane and you had an 80% chance of making it, you're probably not getting on that plane. Am I making that up or have you used that illustration?
16:54
Peter Dunn
Yeah, you know what? That's how I did it. And I'll even go further. It was an 8% chance of failure, right? If there's an 8% chance of rain, you aren't taking umbrella. In fact, you might even wear suede. But if there's an 8% chance of a plane crash, you're not getting on the plane. When people look at Monte Carlo failure rates, they for some reason, and this is wild and advisors let people get away with this. They'll say 8% chance of failure, I'm comfortable with that. Why are you comfortable with that?
17:26
Damian Dunn
Well, let's talk about that. So we're not judging the magnitude of the failure and we're not planning for change in your plan as time goes on either. So if you find out there's a really horrible year in the markets, hopefully you're set up to where you can spend less money, have less, draw down on your resources during those times to hopefully maintain or maybe even increase the likelihood of success. And how many of those 8% chances of failures or that failed 8% of the time, how drastic were they? What was the magnitude of failure during those times? Were you just a few thousand dollars short for a number of those? Were you $100,000 short for some of those? Those are drastically different scenarios that you need to be aware of.
18:12
Peter Dunn
Yeah, I think as we solve problems not you and me and our organization, I'm saying all just as people, humanity, as you solve financial problems throughout your working years, you come across an issue, you analyze what the issue is, and then you get to work on it. Right. In retirement, if the challenge you run up against is you ran out of money, dude, there's no plan B. And that's where when we talk about distribution rates and decumulation in the retirement world, it's a completely different ballgame. It's not problem solving as a person with not only working capital but earned income to deal with those challenges, it's out of money, no plan B, no recourse. And that's what when people are dismissive of the failure percentages of their retirement, my mind is blown. I'm like, you don't realize that there's no backup plan. You're out of money.
19:11
Peter Dunn
You're moving in with Junior at that point.
19:15
Damian Dunn
Yeah, I don't disagree with you at that point. I do think, however, there's again, other things that Monte Carlo doesn't take into account for when we set up a financial plan. I have no idea how many you ran, Pete, but probably a number of them. You plug in a certain amount of money that you want to spend per month or per year into that plan, and the program takes it from there. It will inflate it will do all sorts of great stuff. However, studies show that there's a natural decrease in spending as you get older in retirement as well. Our plans model the exact opposite. They model an increase in spending. So we're modeling something that has a small likelihood of happening as well. So we're stacking the deck against us and the client at that point.
20:00
Peter Dunn
How do you think is this basically just fuel as to why you need to meet with your advisor on a regular basis and adjust your plan to me? Because I know this training you went through, this webinar you watched, is from a financial advisor that's encouraging other financial advisors to have better relationships with their clients, which, by the way, you and I are both proponents of. But is that the proposed solution?
20:22
Damian Dunn
I think that's part of it, to make sure there's a good communication there. However, I think it's a little bit more than that, too. I think this needs to translate into being well prepared for retirement, to be able to have that flexibility in retirement. So if rocky markets happen for an extended period of time, you're prepared for that, and it has as little impact on your overall plan as possible that you have the flexibility to spend less in certain years if you can. And there's another concept that we're not going to get today that brings in guardrails to this conversation to where if you have a really good year, maybe you give yourself a raise that following year. Or if you have a really bad year, it's already planned in. It's baked into the plan that you're going to spend less that following year. So it's more of just let's be prepared for all sorts of situations and build off of that.
21:11
Peter Dunn
Yeah. Sequence of return risk is a thing. And what's wild about is if you even look at the year 2020, the first three months of 2020, february 19 to March 23, to be even more specific, if for some reason you took action during February 19 to march 23 because of your fear around sequence of return risk. What I'm saying is you panic, sold. And then missed the opportunity for the early year of your new retirement to be a fruitful one. Wow. Dame, I don't want to get dramatic, but you could have ruined your entire retirement entirely.
21:53
Damian Dunn
You have to make sure that you are preparing for retirement well in advance of retirement. If you don't have a plan for what your investments are going to look like, you could very well find yourself in the position that you just described, making what feels like an emotionally correct decision, only to have it turn out to be one that really hampers you from any real chance at long term success.
22:16
Peter Dunn
What's that approach called? It's like the bucket approach or something like that, where you have two years worth of income essentially set into a bucket. So that when February 19 to March 23 happens, because from time to time it does actually happen. There's usually not a 34% bear market in a one month period, but that you don't feel compelled to have a self own in the world of sequence of return risk. It's the bucket approach.
22:45
Damian Dunn
Yeah, the bucket method, the bucket approach. And you can expect three 5% drawdowns and 110 percent drawdown every year. It just happens. So if you guess wrong, you're in trouble.
22:56
Peter Dunn
So what's the takeaway here with the 30 seconds we have left? Are we asking people that if their advisors run a Monte Carlo simulation, that you ask them to run another one? Or are you asking them to ask, how do we need to make adjustments to this going forward?
23:10
Damian Dunn
Just have a conversation with them to ask them what that Monte Carlo really means? Is it addressing everything in real good clarity, or is there some additional calculations that need to be made?
23:21
Peter Dunn
Coming up after the break, I think richly we'll hit a listener question. I had one come in this week that I want to hit. I know it's been a while. All that's next on the Pete the Planner show. I'm Pete the planner. Yeah. I feel like we hit that topic enough that I feel like we could move on.
23:36
Damian Dunn
That's all right.
23:42
Peter Dunn
You and I are not financial planners. To take on individual clients. We're not. We were at some point. I still view myself as a proponent for that industry because the complexity of what you and I have just discussed, even though we skimmed the surface, is so intense. I don't know how the average person successfully retires and stays successfully retired and doesn't run out of money without a good financial advisor. I have no idea.
24:13
Damian Dunn
It gives you a tremendous amount of peace when you know what you're expected to do on a year in, year out basis. Does it mean that you can spend $30,000 a year in combination with Social Security and maybe a pension or whatever else? Does it mean you can spend $60,000 a year? And if you have a great year or bad year or taxes change or anything like that, inflation goes up, there's a million different factors that could go into how long that pool of resources last for you in retirement. And unless you've considered different angles and variables, the average person just doesn't have any idea. And honestly, the best shot at that for long term success is not needing a lot of money at that point. Because then it really doesn't matter all that much if you can get by, if all of your fixed expenses are covered with fixed income and you don't have a whole lot of variable needs going forward, demand on that pool of money decreases significantly and you've got a shot at it.
25:09
Damian Dunn
But if you are highly dependent on that pool of money, your IRAs, your 401 KS, whatever it may be, non qualified accounts, you better know what's going on because little changes could add up to big problems.
25:22
Peter Dunn
I feel like sometimes you either purposefully or not so purposefully. Poke the bear with me with how upset I get at the financial industry, at stoking these beliefs that the solution is to have a lot of money. Right? You watch commercials during golf, on TV and it's painting this picture of wealth and abundance when the fact of the matter is the vast majority majorians yeah, that sounds like a word.
25:56
Damian Dunn
Are they in the big ten.
25:57
Peter Dunn
The majorities? Yeah. It's actually a high blood pressure medication. And if you use majority doesn't it sound like something?
26:06
Damian Dunn
It does.
26:07
Peter Dunn
The majority of Americans will successfully retire not because they have a lot of money, because they don't need a lot of money. And the advertising, this abundance mentality that the financial industry perpetuates is I'm not saying it's a causation situation, however it's not exactly helpful.
26:26
Damian Dunn
Well, it's really the demographic that's going to watch those tournaments and see those commercials. If they don't already have a decent amount of money saved up, they're probably going to have to lean towards not needing a whole bunch of money. And so those ads are not landing at that point.
26:43
Peter Dunn
Do you think it's because the withdrawal rate for that people that watch that sport is 4%? Four.
26:53
Damian Dunn
I got it.
26:56
Peter Dunn
Four. Let's start the next segment in three, two, one. Back on the Pete the Planner show. Dame got a questioner. Fresh questioner. A question straight in the email. Dear Pete, were on a 20 year mortgage loan. Decided to free up cash flow refinanced in the fall to a 30 year with intention to pay it as 15 year once we got the other things in place. It hasn't sat well for the last five or six months. It didn't sit well at the time of signing, but went forward. Cash flow was to get our emergency fund to a three, six to six months. We're at four to fund retirement to 15. We're at six. Company match coming back and setting up Roth with our investment guy soon. And they go back to contributing to a 529 plan for our seven year old savings pots for plumbing, windows, future AC furnace and other house maintenance.
27:55
Peter Dunn
We try to help our 22 year old with college and loans when we can. She's a senior at a local university to get her masters. We hope to pay off her loans completely when the time comes. If we have all else in place, we're cosigners on some of our loans. We have no other debt. We have two paid for cars that are ten and 15 years old. My ten year old car is having maintenance issues, the other is not. Now we know we'll stay in this house for at least another ten years. Could be. We always keep this house. It values probably 450,000. We owe 275 and we need to make updates. It was built in 1980. We bought almost seven years ago. Also has a large yard which requires a lot of maintenance costs. Trees can be costly. My thought is refinance now to a 15 year, but want a home improvement loan with our equity to have these upcoming expenses stay within the value of the home.
28:49
Peter Dunn
25% of our take home pay with my research going back up to 2020. Sorry, I'm trying to decipher this email. Basically our mortgage payment would go up. Who and what is the best company or program to do this? Rates seem great. Should we do this? The debt scares me, but knowing it's going back into the house, we would get it back up helps. Okay. D***, there's a lot there. I'm trying to read it on the.
29:22
Damian Dunn
So did I understand correct that refinanced from a 20 to a 30 to try and free up some cash so they could accomplish a whole bunch of other goals that they've got. And I think every single one of them that I heard was good would be a good way to free up some cash flow for that. Okay. Didn't sit well though.
29:44
Peter Dunn
Does that mean that the intention was paved with the road to wherever was paved with good intention? That was the plan. But they haven't done it. Is that what I've.
29:54
Damian Dunn
Heard it seems like it. Because in theory it sounds like that cash should have been available and they should have been able to accomplish a whole bunch of goals. But now they want to refinance to a 15 year mortgage, take some cash out, speed up the process of getting all those things taken care of, and then pay a 15 year mortgage and over a longer period of time. Is that right? Am I close?
30:24
Peter Dunn
Yeah. So, Dame, you and I last week talked about this concept of a next dollar plan, that when you have so many needs financially and so many priorities plural, it's really easy to get distracted and chaos to ensue. And as I said last week, you got a bunch of baby birds chirping for a worm and you just don't know which bird that you should spit. Shoot up worm into their mouth. Right? I mean, very succinctly that's the issue. Is this not why we had that conversation last week? Because when you've got so much going on and you can't actually figure out which is the priority, like, what is the number one thing we should be doing? Then you try to solve everything at once and you try to use this combination magic bullet to solve all of them and then you end up making mistake after mistake.
31:17
Peter Dunn
Because to me, as Danza so eloquently put it in our Facebook Live chat, right now, this person is using their home as an ATM and their net worth is going backwards, not forwards.
31:31
Damian Dunn
In theory, the money should be there on a month to month basis. If they are going to refinance from a 30 to a 15, we're probably talking about multiple hundreds of dollars at this point, difference in what their payment is going to be. And so I think you're exactly right, Pete. I think you're going to have to start identifying what really matters at this point and making that money work for you, instead of just saying, I have no idea what I'm going to do with all these issues. I'm going to just take a big chunk out of my house and solve it that way.
32:06
Peter Dunn
A few weeks ago I said I'm going to try not to be a tough guy and how I'm less of a tough guy than I used to be. But Dame, the other element of this that admittedly, I'm not there in my life yet, my daughter turns twelve next week, she's not a college age student. The one thing that always I can't get my head around is borrowing for your kids education. And this isn't me being like you're a dummy. I just can't make sense of it. Other than the love you have for your kids and an obligation you feel like you have to their future, it makes no sense to the point of it makes so little sense that the lack of sense cannot overcome how much you love them.
32:57
Damian Dunn
No I agree. I think there's a big challenge for a lot of families who may have not been able to go to college themselves for whatever reason, but they want their kid to be the first one to go and they don't want anything to stand in the way. And if that means they have to mortgage their own future to get their kids to go there, they're willing to do that. But they don't see how that's going to fully impact them in the long run.
33:27
Peter Dunn
It usually goes, how would they do it? The constant that they choose is that they're going to go to this predetermined university with a predetermined cost. They never say, oh well, if went to a less expensive school, there's a mechanism for people without funds to pay for college and they're called student loans. And I don't love student loans, but I also understand that if someone's going to take a student loan, I want it to be the kid and not the person who is in their forty s to fifty s. You've got your.
34:05
Damian Dunn
Own problems at that point. You are closing in rapidly on retirement at that stage. And as I think somebody else pointed out in our Facebook chat, there's no retirement loan store. You can't go and do that mortgage dame. Yeah. You got to make sure your house is in order before you start spending money that you need in the future.
34:35
Peter Dunn
This is one of those situations that, again, talking heads, personal finance gurus, they'll talk tough about various things and a lot of times when they do, I'll see the other side of it. I'll say, all right, I appreciate the tough talk. I understand that you're doing a thing here. You are doing verbal clickbait, I feel you right, been there. But there's another side to it. Their tough talk sort of falls on deaf ears to some degree because they're either not viewing it empathetically or they just are not accounting for something. With this particular tough talk point of don't borrow for your kids college education, I just struggle to see the other perspective.
35:18
Damian Dunn
So here's what Pete and I are doing. And if you've got a financial advisor, hopefully what they're doing too. Our concern is for you yes. And your financial well being, not your kids at this point. We're here to make sure tough to hear, dude. Yeah. That you are being taken care of first and foremost. If we can manage to take care of your kids education outside of that, happy to do it, love to see it, but we have to make sure you're ready.
35:49
Peter Dunn
That's so hard, isn't it? Yeah. That's where, again, part of me talking less tough these days is me saying I haven't been there yet, so I don't know exactly what that feels like. But the other field logic with this is that you assume, oh, well, they'll take care of me someday if I'm able to take care of them. I don't know. There's nothing to say that I mean, that's neat. It could be a great after school special or Lifetime movie, but I don't think it works that way.
36:21
Damian Dunn
Better get your long term care insurance.
36:24
Peter Dunn
Is this whole show a callback to itself? All right, Dame, coming up after the break, the biggest waste of money of the week and current events. All that is next right here on The Pete the Tough Guy show on The Pete the Tough Guy Radio Network. Oh, boy. All right, Dame, I assume you have a bunch of current events all lined up. I have not pulled I do have my biggest waste of money. Yes. I sent it to myself earlier this week. I almost sent it in our current events slack channel, but I didn't want to oh, my gosh, I cannot wait to show you this. I didn't want to let the cat out of the bag, so to speak.
37:08
Damian Dunn
I'm hoping it has something to do with cats now.
37:11
Peter Dunn
Oh, man, I'm so excited. I am so excited. Okay, this is brilliant. Okay, are you ready? We're just going if you're ready. I'm ready. Because this might be the dumbest thing I've ever shown anyone on the show.
37:35
Damian Dunn
I cannot wait to see it.
37:37
Peter Dunn
Okay, here we go. Jameson says Pete the tough guy. You started with the cat, dude. I know, but cat's going to be tough. I mean, Jameson, I'll tell you right now, if a jungle cat came to your house and clawed at you, would you not catch some hands? I don't know.
37:55
Damian Dunn
Pause.
37:57
Peter Dunn
Pause. Dame, did I ever tell you about my pet doula service that I wanted to have? Your pet what doula that helps with birth? Oh, it's called pregnant. Pause.
38:15
Damian Dunn
Pete the tough guy, everybody.
38:17
Peter Dunn
This is a day, bro. All right. Three, two, one. Back on the Pete the Planner show. This week's biggest waste of money of the weeks, right here on The Pete the Planner show is the pet hoodie. No. The puppet hoodie from Louis Vuitton. Exclusively made to order. This hoodie is all about the public. Pardon me? The puppet. Details from this season's Louis Vuitton Friends theme. Crafted from a blend of crochet and cotton silk jersey and features embroidered eyes, the puppets are sewn onto a classic hoodie shape in compact Felpa cotton. The pieces signed with the collection's new black satin label with beige lettering. All right, so I need to help you picture this. Here's what we're dealing with here. It is a hoodie, a black hoodie in which full sized puppets are just sewn to the hoodie. Dame, what do you think this full sized puppet hoodie costs?
39:22
Peter Dunn
It's from Louis Vuitton. It's exclusive. There are 3D puppets sewn to the shirt. What do you think it costs?
39:32
Damian Dunn
That has to be priced at $950.
39:38
Peter Dunn
$950 is your choice. And Dame, I have to tell you how horribly wrong you are to have puppets sewn to a black hooded sweatshirt is $7,450. And that's why it's this week's biggest waste of money.
39:57
Damian Dunn
Can we think about the puppets here? I mean, how do you think they feel being stitched to a garment that probably some of their brethren were shredded for the material? They're walking around on a blanket of friends.
40:12
Peter Dunn
When my daughter Ali, who will be twelve next week, when she was probably three or four years old, I got her a balloon, like a big mylar balloon, and it deflated. And then she made it into a puppet. And I said, that's a balloon, it's not a puppet. And Dame, she said, My hand to the sky. Anything can be a puppet. You just have to stick your hand in its hole. I think the puppet community is completely overrated. And as my daughter said, anything can be a puppet. You can just stick your hand in its hole. Dame, what's in the news this week.
40:48
Damian Dunn
Senator Elizabeth Warren on Monday introduced a bill in the Senate that would impose a new tax on the assets of America's wealthiest individuals. The bill would levy a 2% tax for people with a net worth between 50 million and $1 billion. Taxpayers with assets worth over a billion would be subject to a 3% tax. The bill sponsors estimate that it would raise about 2.75 trillion in tax revenue over a ten year period. Last week, Treasury Secretary Janet Yellen said a wealth tax has been discussed, but given very difficult implementation problems, the Biden administration would rather look at increased corporate or capital gains taxes. Pete, I know you're concerned, but this bill isn't expected to pass even with Democratic control of Congress and the White House.
41:40
Peter Dunn
What's the threshold? 50 million.
41:41
Damian Dunn
50 million.
41:43
Peter Dunn
All right, guys, so as it stands now, and I don't like to overshare about what I've got going on, I currently don't have $50 million. No, I don't. Dame, did you bring this up? Because you know how much I'd squirm and I'd have to talk about it. I hate this. I know why I hate this bill. And yes, I feel that I want good tax rates for the uber wealthy. Taxing their net worth, though, makes close to zero sense to me. And I do realize that wealthy people will constantly use tax evasive maneuvers to avoid particular types of taxes. But taxing someone's net worth as opposed to their income oh, my God. Why am I going to why did you do this, Dan? I'm about to say something that I'm going to grow to hate in the comments, in the whatever. It doesn't seem fair.
42:51
Peter Dunn
It just doesn't.
42:53
Damian Dunn
No, taxing anything twice doesn't seem like it's fair. I mean, somebody might say, well, capital gain. Well, no, you're taxing the gains. That's what capital gains is. You're not taxing the original amount that was invested. If you've taxed it once, leave your hands off it. I don't care if you make $50,000 or $50 million let the government take it once. That's it.
43:16
Peter Dunn
I saw something, some dumb Twitter thing. A guy was like, Jeff Bezos. Bezos. Jeff Bezos made $50 billion in a single day during the pandemic. And I was like, no, his net worth went up billion based on this person's math or whatever. And it's like, okay, so let's say that we'll use these dumb numbers. Let's say it went up $50 billion, right? And he was taxed at what, 2%? Is that what he's getting taxed on? $50 billion?
43:50
Damian Dunn
2%, correct.
43:52
Peter Dunn
So what's that? $100 million?
43:54
Damian Dunn
Sure. You're asking me? Yeah, that sounds right.
44:00
Peter Dunn
All right, let's say that's right. Actually, it might be a billion. It is a billion. It went up 50 billion. So let's say he got taxed a billion right then and there. Then the next day the stock fell and his net worth went down by let's say it went down $52 billion. The dude just lost significant money. How is that so? On that basis, it makes no sense. And the double taxation is the topper, if not the entire cake.
44:33
Damian Dunn
You got to pay to play, Pete. That's all I know.
44:36
Peter Dunn
I think Elizabeth Warren is brilliant. I think she has her finger on the pulse of consumer advocacy needs like no one else in Washington, and I mean that. I think she's a wonderful government leader. I think this makes no sense to me, and I don't have $50 million to complain about, but it just makes no sense.
44:59
Damian Dunn
The US is temporarily suspending tariffs on Scotch, cheese and cashmere sweaters from imports from the UK on Thursday as the nation's work to resolve a long standing trade dispute over commercial aircraft subsidies.
45:15
Peter Dunn
My pent up demand just got spent on cashmere cheese and Scotch. Scotch or bourbon better.
45:23
Damian Dunn
I'm more of a Scotch guy, really.
45:26
Peter Dunn
I didn't expect that.
45:27
Damian Dunn
Yeah.
45:28
Peter Dunn
Do you like rye? Compared to bourbon?
45:31
Damian Dunn
I do. You got me a bottle of rye a couple of years ago that I still think about every once in a while.
45:36
Peter Dunn
Was it the weller, what was it?
45:38
Damian Dunn
High country.
45:40
Peter Dunn
Oh, yeah. That's good. Anyway, continue with our show.
45:47
Damian Dunn
The decision to suspend 25% duties was announced in a joint statement by both governments and follows the UK's decision that took effect on January 1 to lift duties on products including US. Rum, brandy, and vodka. Levies on us. Bourbon and other whiskeys remain because they are delicious and the English market for them is substantial, potentially hurting US. Distillers. However, it could also because they were taxed separately in response to a US steel and aluminum tariff. Your choice could be either one. The UK shipped nearly $500 million worth of single malt Scotch to the US. In 2018. Before the US tariffs were implemented the next year. That accounted for roughly two thirds of the $750,000,000 in items affected by the 2018 duties in the aircraft dispute.
46:40
Peter Dunn
I never thought we'd say duty so much on our show. Without having to explain it. Dame as I wrote in my Indianapolis Business Journal column this week, our consumer habits are about to shift. We're going to go from spending money on bread making supplies, exercise equipment, and booze to airline tickets, different sized wardrobes, and booze. That is the constant. Always is. You drink for sorrow and bad times, and you drink to celebrate in good times. Let's pour scotch on our face.
47:14
Damian Dunn
Not a bad racket to be in.
47:19
Peter Dunn
The dead air was on me. Dame last story. We've got about 40 seconds left.
47:23
Damian Dunn
Hershey company announced Tuesday that it will be releasing a new Reese's Cup that will be all peanut butter and no chocolate.
47:30
Peter Dunn
Get out of here. Eat. No. This is a nightmare.
47:33
Damian Dunn
I don't understand how they're pulling this off.
47:36
Peter Dunn
Well, I'm telling you how they're pulling this off with low sales. That's just the dumbest thing ever. The Reese's Cup is the greatest piece of candy ever invented. And more specifically, the Reese's Peanut Butter Egg has the best ratio of peanut butter chocolate. So to take the chocolate and just to 86 it altogether is just a poor decision. Dame that's all we have time for this week. Thanks for your contribution. Thanks to Lisa Whitley, true genius of the team, sending you good all good vibes. Because good vibes are all that's in the budget. I'm Pete the planner. Don't buy the all peanut butter cups. That's just stupid.
48:07
Damian Dunn
Dame I don't know who told them this was right.
48:12
Peter Dunn
Dumb people.
48:14
Damian Dunn
The market for this is going to be incredibly small.
48:20
Peter Dunn
I can't imagine that being good. I just can't. And by the way, the inside of a Reese's Peanut Butter Cup, it's peanut butter and confectioner sugar, right? That's what it is, right? It's delicious. It's a texture, it's grainy, it's lovely. The glossy, candied peanut butter on the outside, another thank you.
48:44
Damian Dunn
Yeah.
48:47
Peter Dunn
No, I'm not going to make light of peanut allergies. I'm really not. And I don't want anyone to take this that way. But if I had a peanut allergy, it would literally be the worst thing in my life. Not because of the imminent chance of death. It's because I love peanut butter so much that it would be like taking away one of my great pleasures.
49:03
Damian Dunn
Are you one of the people that leaves a peanut butter jar out or within easy to reach at all times?
49:07
Peter Dunn
No, because a peanut butter needs to have a friend. A peanut butter by itself is okay. I mean, it's good. George Washington Carver himself said actually, he didn't. But I love peanut butter. But the idea of all peanut butter, it's like, no, I need a dance partner, bro.
49:28
Damian Dunn
I was going to say, what if you could dip it in chocolate? But what's the point? No, there's no reason for that.
49:34
Peter Dunn
Yeah. So here's what I'm going to do, dame, as soon as we hang up here, I have some administrative work I need to complete, I need to edit, put the radio show up to the Pete the Grumpy Guy Radio podcast or tough guy.
49:46
Damian Dunn
Tough guy.
49:46
Peter Dunn
And then I'm going to go down to the CVS, which is not far from my house, and I'm going to put on a mask and I'm going to buy some Reese's peanut butter eggs. I'm going to put them in the freezer for at least two and a half to 3 hours. And then I'm going to have one h*** of a night.
49:58
Damian Dunn
I have never been more jealous of you in my life.
50:00
Peter Dunn
Wife yesterday was Mrs. Planner's birthday, and I was like, so what do you want to do? I took a half day, right. You know that. What do you want to do? She's like, why don't we go on a run together? So, Dame, to celebrate my wife's birthday, we ran five and a half miles together. And do I tell you this to brag that I ran five and a half miles? Partly. But I just think of the difference of people and opinions that's like, if my wife is like, hey, it's your birthday, what do you want to do? I'm probably not going to say, let's go run five and a half miles together.
50:31
Damian Dunn
How long did her workout take after she was finished jogging around with you?
50:35
Peter Dunn
Exactly. It's funny. We were running at a pretty good pace. I think we did 820 pace for five minutes. That's good for me. I look over her, she's like, running in place. She just can go a minute and a half faster than that.
50:53
Damian Dunn
Could have been grading papers if it was back in the day. Anything at that point.
50:58
Peter Dunn
All right, Dame, are you taking the rest of the day off? That's not judgmental. I'm just asking.
51:02
Damian Dunn
I'm planning on it.
51:03
Peter Dunn
Yes. All right. Hey, everybody, keep getting your vaccinations. Hopefully my parents are soon. Hopefully you're soon. This economy is going to be a rocket ship. It is going to be a rocket ship. Hang on. Keep your head. Have a plan. Get a financial advisor. Don't buy those stupid all peanut butter cups. Goodbye, everybody.
