Amy: Tonight, you know, it's funny, what a difference one year makes. You're listening to "Simply Money." I'm Amy Wagner, along with Steve Sprovach. Steve, this is the week, the world's central banks meeting in Jackson Hole. They do this every year and, of course, all eyes as they have been for months and months now will be on the Fed Chair, Jerome Powell, the comments that he's expected to make on Friday. But it's interesting because when you look back on one year ago at this very event is when Jerome Powell said, "Hey, everyone, inflation is affecting us but it's transitory. It's temporary. It's not gonna stick around."

Steve: Yeah. One year. Absolutely.

Amy: How about that?

Steve: Just one year. And, well, the first thing I had to do when he said that was look up the word transitory because, you know, I'm not the brightest bulb on the tree.

Amy: That's not in your, like, everyday language? Yes, nobody's.

Steve: No, I don't like using words I can't spell. But no, I mean, you know, yeah, okay, you know, inflation's starting to get serious, hey, nothing to see here, folks. It'll be gone before you know it. And, you know, that was this time last year. And I wanna make something clear on this, Amy. This is not just, you know, Jerome Powell and a couple of his buddies getting together. These are the banking leaders of the world. I mean, this Jackson Hole deal is a really big deal. So, when somebody makes an announcement of the stature of the Federal Reserve chairman of the United States, people are listening. And he should be very, very careful with his comments. Maybe he really believed that at the time but if he did, I have a hard time wondering how accurate is the information he's getting and his opinion, you know?

Amy: Well, because at that time, there were already a number of other economists starting to speak out, right?

Steve: Yeah, yeah.

Amy: There were this buzzing out there that, hey, maybe this isn't so temporary. At the time, what Jerome Powell was pointing to is, "Hey, we've got these microchip issues. We've got these shipping issues. We've got all of these, like, you know, issues that are kind of one-offs coming out of this pandemic. And once we get supply chain things resolved and cargo ships moving again, we're all gonna be fine." This was in August of last year. It wasn't until December, that he actually started to change his tune and say, "Hey, that transitory comment that I made actually might be sticking around a little later." And, of course, fast forward to now, still dealing with inflation.

Steve: Well, and the biggest problem that markets and the average investor has with this is, you know, regular people were talking about, "Hey, Jerome, this is pretty serious. Aren't you waiting a little bit too long to do something about it?"

Amy: You said that.

Steve: I know I did. You know, and when every blind squirrel and acorns, whatever that phrase.

Amy: Every once in a while.

Steve: Every once in a while I have a moment of lucidity and say something smart, you know, but, you know, that's why this is such a big deal with this meeting that they're in right now, and he'll have a few words to say at the end of this week. And the world is kind of waiting. And the reason is inflation obviously is not transitory. And I think the last time he had comments come out a few weeks ago after the last meeting that the Fed had in July, I think a lot of people wanted to hear, "Hey, you know, we're almost done with this inflation and we're gonna be seeing interest rates coming down sometime in 2023." Everybody heard what they wanted to hear and markets took off. And it reminds me of his predecessor at the Federal Reserve who talked about irrational exuberance that was pumping up stocks. And, well, stocks jumped 17% this year from the June 16th low, that's a huge run. And, you know, unfortunately, I don't think this whole deal is settled. I don't think it's over. And there's a lot of concern about what the next couple of months are gonna bring.

Amy: Jerome Powell has one heck of a pulpit. Truly. I mean, if he looks sideways to the right and up a little bit, markets think one thing.

Steve: Yeah, exactly.

Amy: If he pauses at a certain time or wears the navy blue tie on Tuesday, the markets responded in another way. I mean, I say this, and it's an exaggeration, but...

Steve: Not much.

Amy: ...just a little bit. I mean, parsing out every syllable of each word to figure out maybe where the Federal Reserve will go next. And, of course, the importance of that is the markets want to see kind of the light ahead, the hope ahead that we've seen peak inflation that we're coming back down from this, and more importantly to markets, that the Federal Reserve will not need to continue to be as aggressive as they have so far this year, and raising interest rates. I mean, we haven't seen a Fed take this aggressive of steps in decades.

Steve: Yeah. And let's get a reality check. I mean, we'll get through this. We're not worried about this long-term.

Amy: Yes, we will.

Steve: It's just in the short-term, okay, gas prices have come down a little bit, people wanna say, "Oh, okay, maybe we'll see them stay down or maybe even go down further. I'm not so sure about that." You know, when you go out shopping and go to Kroger, prices are up. I'm not sure they're coming down. You take a look at the stock market and stocks are trading at about 18 times forward price earnings. Multiple, it's a fancy way of saying maybe they got a little bit over-excited and maybe these aren't levels that they can hold. So, in the very, very short-term, you know, there's a lot of concern out there, did we overreact in a positive mood? And maybe we need a reality check and maybe we need to see what Powell says this week, because he may have to keep raising interest rates as aggressively as he did in the second half of the year as he did in the first half. We'll see.

Amy: You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. Looking back one year ago is when Fed Chair, Jerome Powell said, "Hey, inflation, this is temporary." And if you're laughing, well, we are too because a year later, we are all very much dealing with inflation. Every time we go to the grocery store, every time we pay a bill, every time we fill up at the pump, but looking forward as to what is it exactly that the Federal Reserve is looking at, trying to make sense of, do we need to continue to be as aggressive in September, maybe as we have been in these past months, so we've had to hike rates, or can we slow things off? There is so much data that they look at. It's like a waterfall, right? I mean, I can't imagine trying to sift through all of this and make sense of it, especially Steve, when some things are pointing to, hey, maybe we've seen the worst of it. And there are some things that are pointing in the exact opposite direction to, eh, still not very good.

Steve: Well, and there's a couple of different ways of looking at inflation, Amy. I mean, inflation is all right, if you've got a central government, and they're printing money, and spending more than they're taking in, yeah, that's gonna be a cause of inflation. But, you know, everything is local. And when you get down to brass tacks, it's going to Kroger and spending, you know, I told you about the $9 a pint guacamole. Oh, yeah, we saw, you know, it's like, that's kind of crazy. And, you know, filling up a gas tank that used to cost you 45 or 50 bucks and now it's 120. You know, that's the kind of stuff that drives you absolutely crazy. And there's two ways to get inflation down. You can reduce demand or you can increase supply. You make more of something, and the prices are gonna come down? Well, what the Fed is doing is basically trying to reduce demand. They're raising interest rates so that it costs you more to borrow money, and that slows down demand, everybody takes a second look, maybe I'm not gonna buy that car right now, maybe I'm not gonna buy that house right now, and that slows the economy down and brings inflation down. The problem is it causes a whole lot of pain by doing so.

Amy: Yes. Well, and I think, you know, as you look at...you mentioned gas prices, right?

Steve: Yeah.

Amy: Gas prices have been down recently, but experts who look at these things day in and day out don't have the utmost optimism that we're gonna continue to slide back...

Steve: No, it might go back up. Yeah.

Amy: Yes, exactly. And so, you know, when you look at that as probably the largest contributing factor, you know, to the fact that maybe we've looked at inflation at its peak, if it's going back up, if it could go back up, well, it's hard to say, "Okay, we can breathe a sigh of relief here." And when you look at home prices, still insane. And, by the way, rent prices for those who rent, through the roof, things like that, right, things that we're paying for on a monthly basis are pegging this inflation pretty high.

Steve: Yeah, they are. I mean, Cincinnati saw some of the most rapid price increases in the country, and that's why we're seeing some of the most rapid rent increases. The number I saw was over 30%. Now, it's gonna settle down. We'll get back to normal with rent increases and the price of real estate. But yeah, the whole problem, Amy, I'm not gonna say it's not inflation. It is inflation. But there's no solid direction on where the economy will be in 6, 9, 12 months down the road. We're still getting data in, and that's why markets are volatile when... You know, it's almost like Wall Street doesn't care what the equation is. They just wanna know what the equation is. You know, where are we gonna be at? Then we can plan...companies can plan on their spending, and buying, and hiring, and firing, and all that stuff when they know what direction the economy is in. And we're getting conflicting information. I mean, some supply chains are resolved. Two-by-fours, were 10 bucks a two-by-four, what, 6 months ago, they're back down to four. Okay, so that's good.

Amy: Normal prices down. Yeah.

Steve: Exactly. Computer chips, okay, major disruptions there. Well, unfortunately, there's still some disruptions there. So, you know, we're seeing some good news, some bad news. We just need to see that there is a solid trend towards normalcy. And once we start getting those numbers, things will get back to normal, markets will settle down but we're just not there yet.

Amy: Well, and as you look, dig into the numbers, right, how much consumers are spending. It looks like there is a little softening.

Steve: A little bit. Yeah.

Amy: And, well, normally, that's not great news, right, because two-thirds of the American economy is what you and I spend as consumer spending. When you're trying to pull spending down in order to ease inflation, that's exactly what they want. So, there are some indications, okay, that maybe this is working. And we've seen though employment numbers, right, recently they said, there were half a million jobs added to the economy last month and we were expecting 200,000, which is moving in the wrong direction as far as what the Federal Reserve is looking at.

Steve: I know.

Amy: So, talk about walking on a tightrope, and I think there's, like, arrows coming at them from a bunch of different directions. I would not wanna have to make the call on that.

Steve: It is so weird, when you're trying to get inflation to come down, that good economic news, good growth, good job growth...

Amy: Good news is bad news.

Steve: ...that's bad news. Yeah, it's Bizarro World. Exactly. You don't walk in, and, "Give me some bad news so markets go up." You know, that's a weird thing to say but that's what the economists are looking for. And it's not all bad news, Amy. I mean, you mentioned consumers, God love the American consumer. Well, I mean, we just keep spending money.

Amy: We spend. I think we are up close to record credit card debt once again. It's the American way. And you and I joked kind of during the pandemic that people were saving more, and spending less, and paying down credit card debt.

Steve: Oh, we knew that wasn't gonna happen forever.

Amy: As much as we wanted to celebrate that, we knew, once Americans have the opportunity, we will start spending again.

Steve: But here's why that's important. I mean, we're already looking for the third quarter GDP numbers. We saw, you know, down numbers, and they'll be revisions, but first and second quarter were down. So, that's why there's talk about a recession. Well, you know, the early estimates are that GDP in the third quarter may be up about 1.5%, partly because consumers continue to spend. I mean, that's a good number if we do, in fact, see that. So, it's not all bad news. And the Michigan consumer sentiment survey is looking to turn positive again, which I think that's partly because people are paying less at the gas pump so they're happy. We'll see if that sticks. But, you know, there's good news, bad news. And that's why I say there's no solid direction yet, and that's why markets are volatile.

Amy: Here's the "Simply Money" point, the Fed continues to have a tough job ahead. Expect their number one priority to continue to be tackling inflation. And as a Fed stays their course, you should too, stick with your long-term financial plan. If you can't listen to our show every night, subscribe to our weekly podcast, it's the "Best of Simply Money," you'll find it on the iHeart app, or wherever you get your podcasts. Coming up, what you can learn from the biggest retirement regrets of others, you're listening to "Simply Money" here 55KRC, THE Talk Station.
You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. What you need to know before you use that QR code the next time you see one, this is coming up in a warning from our tech expert. So, if you're planning to buy a car this year, a bit of a heads up for you, the cost of owning a car right now, more expensive than ever. And, you know, Steve, you expect that something's gonna get more expensive year after year, but this is a significant change.

Steve: Huge jump. Yeah. Eleven percent. I mean, the cost of ownership is up 11% in 1 year.

Amy: From last year.

Steve: Yeah, I mean, fuel, obviously, it's costing more. So, that's a big part of it. But depreciation is higher, insurance and maintenance is higher. I mean, everybody's struggling to get people to... I mean, a place that fixes my car, you know, they were struggling to find somebody to replace a retiring technician. So, you know, the costs are going up across the board. And here's the crazy part, Amy, that increase of 11% year over year, that doesn't include the increase in the price to buy a car. And that's high. That's at record levels.

Amy: Yes. So, last year, it was under $900 a month, right? Typical kind of upkeep of the car, what you would be paying now, 10%, up 11% since then. So, crazy, crazy numbers. And, you know, Steve, I think it's worth repeating that we kind of have a rule, the 20/10/4 rule when you're buying a car. It's 20% down, then you don't wanna finance that for longer than 4 years. But I wanna focus here on the 10% because I think this is what we miss a lot of times. Ten percent is what you can pay out of pocket, right, out-of-pocket costs, 10% for that car, but that includes your insurance, your upkeep, your gasoline, all of those things.

Steve: The loan. I mean, most people borrow money to buy a car and, yeah, it's...gotta include that.

Amy: Don't consider all of that.

Steve: Yeah. I mean, I've had cars where the monthly maintenance fee, they might have been paid off for the car, but the monthly maintenance fee was another car payment. You know, so, these things, they add up a lot. And, you know, now everybody's talking about electric cars. Well, they're not free. I mean, the depreciation on an electric car is higher than on a gas car, and it still costs money to charge them. You know, so, it's not the answer. It certainly helps the environment, but it's not the answer to reduce costs down to zero by any stretch.

Amy: Just don't go into this with your eyes closed, right? Eyes wide open about how much a new car is going to cost you at this point. So, maybe you're counting down, I don't know, the years, months, maybe you're down to the days left to retirement, but how do you make sure that once you get there, it's everything you had hoped for? You know, Steve, as we've helped thousands and thousands of people retire through the years, there are certain common regrets that you start to hear from people of, "Wish I would have done this differently or maybe I should have thought of that."

Steve: Are you talking about this because you think maybe I'm counting my days to retirement? Is that...?

Amy: You're never retiring. You're gonna be doing the show with me for years and years and years to come.

Steve: But it's true, and I've seen it both with clients and with family members. I mean, you know, everybody wishes they started earlier. They wish they had more money to retire with. And, you know, at some point, you gotta say it's water under the bridge, but you want to pass this information along to the next generation so they don't have to worry about this after it's too late. And, you know, kind of surprisingly, but one of the biggest issues that retirees say they wish they had done was hire a pro to help them through retirement.

Amy: Yeah. Because, again, we've helped many, many people do this through the years. There are financial factors that are involved in this as well as social and emotional ones but we've kind of been there and done that. When you held the hands of so many people who have kind of walked through this space, we're able to say, "Have you thought about this? Have you considered that? Hey, someone that I was just talking to last week had a major hiccup when it came to this." It is a very comprehensive thing planning for retirement. I think for so many people, you think of it as what are the returns I'm getting on my 401(k)? That's as simple as retirement planning. And it's far more complex than that, right? What's your plan for healthcare? What about long-term care? Where are you gonna pull that money from? And one of the major concerns too or regrets a lot of retirees have is not being diverse enough in their investments. Yes, that 401(k) is probably your main vehicle to investing but if that's a traditional 401(k), all of your money is tax-deferred, meaning any money that you pull out of that account, you're gonna pay taxes on.

Steve: Yeah, it's diversification both of investments inside of your 401(k) and diversification in types of accounts in addition to your 401(k). You know, here's the most extreme example, and this is a true story, personal experience when someone said to me, "Hey, I just got my quarterly statement and I want you to sell everything with minuses next to them. I don't want anything that goes down like that." Well, as you can imagine, that was a reason for a very serious heart-to-heart conversation about what investments mean. But, you know, diversification means that, you know, sometimes you're gonna lose money. So, that, [inaudible 00:17:54.098] that lost money...

Amy: Pull back. Only give me winners, no losers, please.

Steve: Exactly. Exactly. But you need something that loses sometimes, because that may be going up when the other investments are going down. That's the whole idea is something is down when something else is going up so that the opposite happens, and you come as close to a straight line on the growth of your investments as possible. And you don't get that when you put all your eggs in one basket.

Amy: Another huge regret that we see retirees have is not thinking ahead. And there are certain things that you just have to do in planning for retirement and beyond that aren't pleasant. But once you think about the end of life, you know, estate planning, and what happens if I'm in a hospital and I can't make decisions for myself or speak for myself, who is gonna have that power of attorney? These are all things though, that we would say long before you get to that point, you need to have in place... I'm 45 years old, and I'm redoing these documents right now with my attorney, because I just wanna be prepared. And one of the things I think you have to think about is the people you love, right? Making sure that they're not left behind or making these difficult decisions on your behalf trying to figure out what you'd want when you could easily and lovingly put those into words.

Steve: And you might think that you don't have enough money to worry about it, you know, estate planning. "I don't have an estate. I just barely survive." But little things like powers of attorney, there are medical and financial powers of attorney, who's gonna make the decision if you're incapacitated? I mean, this is something that will save so much effort for your loved ones that if you don't have it, it's a mess, and I've seen it become a mess. Please take care of your legal documents.

Amy: And they have that phrase out there, "Practice makes perfect." And this is for a reason and I think it applies to retirement too. If you have been working for the same company for years and you've accrued all of this paid time off, take several weeks together and call it a practice retirement. Are you bored out of your mind?

Steve: Good call.

Amy: Are you missing meetings? Are you missing the people that you work with? Well, then you need to figure out what your purpose is for work or for retirement and who you're gonna hang out with during that time. Here's a "Simply Money" point, learn from the mistakes others have made so you don't repeat them during your own retirement. Before you grab that phone to use that QR code and maybe bring up that menu, we've got a warning you need to hear that's next. You're listening to "Simply Money" here on 55KRC, THE Talk Station.
You're listening to "Simply Money" tonight, I'm Amy Wagner along with Steve Sprovach. You have probably used a QR code at some point, especially since this pandemic has started, right, when you weren't touching menus anymore in restaurants. You would just scan a QR code with your phone. Now, there's an issue though, that maybe you can be hacked. So, joining us tonight with a great warning on what you need to know is our tech expert, Dave Hatter, from Intrust IT. Dave, this is crazy. I've used QR codes so many times over the past year, and now you're telling me they're not necessarily all safe?

Dave: Yeah, Amy. I'm really glad you decided to bring this up, because I think it's so important for people. QR codes have really kind of exploded since the pandemic, as you mentioned as a result of the whole, you know, everything should be touchless at the beginning of the pandemic when folks were trying to figure out, like, how was COVID, you know, transmitted and that sort of thing. And, you know, they're very easy to use. And just for what it's worth, QR stands for quick response code. This is those weird square barcodes that you'll see on things like in a restaurant's table rather than a menu where you scan it with your phone. And these have taken off because most people have smartphones, you just point the phone, take a picture, it scans it. That's the problem, though, Amy, is that because they're so easy to use, and because they've become very prevalent, and because the bad guys as you know, are very creative, very devious, and frankly, downright evil, they've realized that a good way to scam people is through QR codes, whether that's physically by going into somewhere like a Kroger, or a restaurant, or anywhere where someone might be inclined to wanna scan a QR code because they wanna get a coupon, or a menu, or whatever, right? There's all kinds of different legitimate ways these are used, you know, I can walk through a store, I could have my own QR codes made up, put them over top of the legitimate QR code. And now, when you scan it, depending on, you know, how far I wanna take my hack, I can take you to a site that looks just like the Kroger site and try to lead you down a path or whatever it is.
But there's another interesting angle. And I guess why this is important is because most people don't realize that a QR code, in addition to launching a website can do things like send a text, make a phone call. There's a variety of different things you can make them do if you know what you're doing. But there's no way from the naked eye to look at a QR code and know what it does, and know that it's malicious. And hackers, in addition to what I've just outlined, have gotten wise, and they've seen these attacks in Germany where you get an email that purports to be from a bank, and it has a QR code in it, rather than a link to click, or a button, or something like that. And the reason why they're doing this is because most antivirus software is not currently capable of scanning that QR code to determine it's malicious. You as a human being can't tell that it's malicious. You get it, it looks like it came from a legitimate organization, you take a picture of the thing, and now you're down their rabbit hole. And they have been able to probably, in most cases, get around any kind of security software you may have running that might have caught that if that were just a link, or a button, or something. So, it's pretty nefarious and pretty evil, and just, you know, yet another example of how creative these folks are in terms of trying to steal your money and your data.

Amy: Dave Hatter, our tech expert joining us tonight, telling us about QR code, right, these quick response codes. You see them in restaurants, retailers, everywhere. Dave, when I think about it, you know, two years ago, I think, okay, my 73-year-old father would have had no idea how to use these. But they have become just so normal during the pandemic that I've seen him sit down at a restaurant and pull out his phone. So, we're all using these. If this is something that can be used against us, is there anything that we can do to protect ourselves?

Dave: Well, yes, and no. Unfortunately, I agree with you completely, they are everywhere now. And for the most part, they are super convenient and easy to use. And, you know, for anyone that's got a smartphone, it is kind of point and click and it goes, right? But that, of course, is the downside. So, really about all you can do, at this point, until the antivirus endpoint protection software out there can kind of catch up with this is have awareness that any QR code you come across could be bogus, right? Whether it's a physical one, again, you walk into a restaurant, there would be nothing that would stop me as a hacker from going into a restaurant, maybe a restaurant that has, you know, a lot of customers every day and putting stickers over top of the existing QR code sticker for the menu. Now, obviously, if it does something crazy, people are gonna report that to the restaurant, and that's probably not gonna last very long. But, you know, depending on what a hacker's objective is, you know... And you may even go as far... And this is kind of getting out there but if I knew someone I was trying to target, maybe I'm a private eye, maybe I'm an enemy spy, if I knew someone I was trying to target ate at the same place every day or ate at the same place frequently, what would stop me from going in, slapping a QR code down on that table, they show up, and then, you know, I am now potentially in a place where I can try to hack them? Again, that's kind of an extreme example, but it's a real example.
So, it's awareness that these things could be malicious. And it's not scanning them unless you either, A, absolutely positively have to, or, B, or absolutely positively certain that the thing is legit. Going back to the email example I gave earlier, a hacker can send these to you via email, knowing that it's probably gonna circumvent your anti-virus software, and that when you scan it, they can, you know, take you down whatever sort of dark path they wanna take you down. Because the average person doesn't realize these things can be used maliciously. So, again, right now, it's mostly awareness and, frankly, not scanning any QR codes that you don't absolutely have to scan. And I will just remind folks, almost always, if there's some kind of QR code you're supposed to scan, there's usually some kind of website address or something that goes along with it. You know, you could type that in, or if the thing purports to be for a coupon for Kroger, or whatever, go to Kroger's website and look it up on your own. You know, we always talk about go out of band. Don't click the link, don't click the button, don't click the link in the text or whatever, understand anything practically nowadays can be faked. And, you know, go start your own transaction, open your browser on your own, and go do whatever it is you're trying to do. Don't fall for the, "Oh, this thing is so convenient. I'm just gonna scan this," and then potentially something bad happens.

Amy: Well, I miss my frustration, right? Like, this is so convenient. It would be so easy if you could just go into a restaurant, scan the QR code and not have to worry about it. But I love that you are kind of bringing to light the fact that it's not that easy, right? Wherever something is convenient, there's always going to be someone who's trying to take advantage of that. So, maybe you ask for the menu now, maybe you go directly to the website, whatever it takes. But, you know, how this has kind of become second nature to scan these QR codes, you're saying, "Hey, think twice."

Dave: Yes, because there are real-world examples out there of these kinds of hacks in the wilderness, where people are exploiting these kind of things. You know, if you go to the local skyline and you scan the QR code, in all likelihood, it's probably legit, it's probably okay, but understand that it might not be. And you know me, Amy. I'm the tinfoil hat guy. I'm not going to scan the QR code. I'm going to ask for the menu because I'm just that guy and I know that this is a possibility. And, again, I think it's unlikely that most people are just gonna randomly run into one of these things. I think the bigger threat is this phishing thing we talked about where you might get an email that looks legit, it's got a QR code in it because they're purposefully trying to circumvent your antivirus software. And I would definitely not scan any QR code that gets sent to me via text, email, shows up on a social media-type site. I absolutely, positively will not scan those under any circumstances, you know, the [crosstalk 00:28:03.542].

Amy: Right? If you've not solicited that information and it comes to you, avoid those QR codes. A great warning tonight from Dave Hatter, our tech expert on ways that you can continue to make sure that you are safe. Talk to your loved ones about this, right, over the holidays, your parents, your children. Make sure they understand that these QR codes aren't necessarily safe. You've been listening to "Simply Money" tonight here on 55KRC, THE Talk Station.
You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. Coming up, it might seem like they are so far away with the holidays right around the corner. We're gonna dive into how inflation might affect your holiday spending this year. So, at one point or another, Steve, I think, you know, you'd like to say, "Just stay in your lane, look at yourself," but it's easy to look into the other lane and say, "That person is driving a nicer car. And here I am with my Honda Civic." Whatever it is, you look at other people and you can say, "What are they doing that I'm not doing?" It turns out some of the answers might be found in census data.

Steve: Yeah, they are. And they're not really surprising to me at least. And I hate to say it but, you know, as much of a problem as I've got with the cost of college and how expensive it is, a college degree still matters. I mean, people make more money with a college degree. It doesn't necessarily have to be in the field that you're currently in. But I'll tell you what? Net worth on personal asset... Net worth is personal assets minus debts. And when you have a college degree, you're gonna have a lot higher net worth on average.

Amy: Yes, higher salary, higher net worth, right? Both of those things, according to the census data says people who have that college degree, that's where they land. This is interesting to me and a little bit surprising. Marriage, being married tends to show that you're more financially successful and you could be like, well, Amy, one and one equals two. You're bringing in two different salaries, so, of course, that makes sense. But that's not even just what the data shows, it's not to scale. People who are couples planning together for the future tend to save several times more what their single counterparts do. And I don't know it's because they're having conversations about, "Hey, this is what we wanna do in retirement. And, you know, maybe we wanna buy a new house, or maybe we wanna travel." But together, it seems like married people tend to sock away more for later.

Steve: I might need to rethink my whole strategy because I've been keeping my net worth negative, it takes away Anne's [SP] incentive. You know, I mean, if she knows she can walk away with a lot of money...

Amy: Oh, that's why she's sticking around.

Steve: ...I'm gonna wake up and there's gonna be an empty spot next to me. But no, but it's true. You know, and from a pure dollar standpoint, married couples have a higher net worth. And the median net worth is $269,000 for a married couple versus $50,000 for single men, $36,000 for single women.

Amy: Huge difference.

Steve: I mean, it's not just double, it's yeah, quadruple, quintuple. It's a massive difference. And I think you're right. Part of it is, well, it's cheaper for two people who live together than to live apart. But, you know, I think it's more than that, Amy, I kind of think it's bouncing different ideas, getting a consensus, not doing something stupid, because the other person says, "Oh, no, you're not." You know...

Amy: The checks and balances, right?

Steve: There are definitely checks and balances in a marriage. And I think that that is key in, you know, growing your net worth and being in a more solid financial position in retirement.

Amy: Something else, I think, that's kind of interesting, as far as a common denominator, according to census data for people who are wealthier, who have made better, kind of, financial decisions is what they're invested in, right?

Steve: Yeah.

Amy: And you might think, oh, cryptocurrency or they were the first people... I saw an article today about what you need to know about investing in space tourism. And I was thinking...

Steve: You gotta be kidding.

Amy: ...what! Really? Is this where we are? So, no, actually, these financially successful people maybe aren't invested in space tourism, they are invested in really two key things. The stock market, and housing, real estate.

Steve: Yeah, and I get that the stock market, and usually it's in your retirement account, that's generally worth, you know, the bulk of your net worth is, but you know, here's what bothers me a little bit. And I've never fallen into this trap. But you know, people want the bigger house, just constantly upgrading, upgrading, upgrading. And we have a saying, in our business, "when you do financial planning, you can't eat the bricks." I don't care how big your house is, you're not gonna sell your house and go rent an apartment so that you can live comfortably in retirement. So it's okay if you want a big house, but you really need to have a plan. If you don't have enough money saved up in retirement, what are you gonna do with your big house after the kids are gone and you're ready to retire? Can you financially downsize? And I know from a lot of friends, the concept of, "Yeah, we'll sell that big house and we'll buy a smaller house. And we're gonna come out so far ahead." Put pencil to paper on that one, because you've got moving costs you're gonna get new furniture, you're gonna have to do this, and we wanna upgrade the house, or we're gonna build, and we're not gonna go with the standard, we're gonna go with the uptick. And you know, all that. You don't necessarily save a lot of money when you go from a big house to a smaller house.

Amy: Well, and this is why I think it's so important to have someone that you're working with in your corner. And I'm thinking of several years ago, a friend of mine came to me, this was someone who was maybe 5, 10 years away from retirement, and they had found the dream home. And these are Westsiders, so it was in the right neighborhood and the right parish, you know, three houses down from the parents. But when you looked at it, taking out a mortgage at that time, even a 15-year mortgage, what they were gonna have to pay. It's like, "Can you pay this, to have this money going out every month and still have the kind of retirement that you'd want?" When it was posed to them that way, they were like, "No, actually, we can't afford this house. We can today, but in retirement, right, and looking down the path toward the future, probably not the best idea for us."

Steve: Yeah, and it pains me to say but cars are not the answer, cars don't make [crosstalk 00:34:11.006].

Amy: Sorry, Sprovach.

Steve: I know. As much as I love cars, I also know through personal experience that they can be a money pit. And, you know, that the really, really wealthy people, you know, there's a few of them that are car collectors, but for the most part, you know, they're buying nice cars, but it's just a way to get from here to there. And it's probably more expensive than you or I own, but it's not, you know, they don't reach for that Bugatti, they don't reach for that Aston Martin.

Amy: Didn't Warren Buffett drive a Buick for years?

Steve: Yeah. He doesn't care. He can drive whatever he wants.

Amy: He can drive any car out there. And the dude drove a Buick for, like, over 10 years. I think it was maybe a 20-year-old Buick that he was driving. And I think another point too that's worth making is savings accounts, right? It's not someone who's got $100,000 in a savings account because those who are financially successful realize the growth and the power of compounding. So it's invested in the stock market, right, where they can see that growth. So how much they have in a bank account for most people really isn't the deciding factor in how financially successful they are. Here's a "Simply Money" point. The answer to building wealth isn't striking it rich in an investment scheme, for many, it involves getting the right kind of education and having the right kind of investments.
Coming up, inflation, will it be the Grinch of the holiday season? We're gonna take a closer look. You're listening to "Simply Money" here on 55KRC THE Talk Station. You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. All right, I know we're in August, and so you're cringing because I'm talking about holiday shopping. But for a lot of people, you're starting now or you're starting soon, and there's so much left up in the air this year as to what can you expect, right? Last year was crazy holiday shopping and you couldn't find this, and there was a chip shortage, and everything was sold out. So what can we expect for this year?

Steve: Well, you know, supply chain issues, they're not gone yet. And that's one of the big problems that we've got. They're a lot better, no question about it. But, you know, we're still seeing yard furniture just making it to store floors right now, you know?

Amy: [crosstalk 00:36:18.496].

Steve: Spring fashions are finally in, you know, it's... And this is a problem in retail because everything showed up so late that they ordered a year ago that they're holding big sales, good for the consumer, bad for the retailer, I suppose. But, you know, it seems every year we have to look at Christmas earlier and earlier and earlier. And there's a few things that we may want to start shopping for sooner than later. And one of them is if it's got a chip in it just like we said last year, Amy, you might not want to wait.

Amy: Gaming consoles. Didn't your grandkids want them and it took, like, everything possible for you to track one down last year?

Steve: We literally got one of the last ones that we can find in the region for the grandkids. And, you know, I don't know if it's going to be much better, but I don't...boy, I hope it's not any worse this year.

Amy: Well, experts are saying retailers still can't get enough of those game consoles. So if that is on your list, there is no way waiting until Black Friday and Cyber Monday to see if there are better deals. If you find one now, you should snatch it up. And, you know, we talk a lot about earnings, right, how big companies are doing. One of the things, one of the trends that we've seen in a number of retailers this year like Walmart, like Target is that they have so much inventory now with supply chain issues somewhat being resolved that they had to lower prices. They took a big hit because there was too much on their shelves. So, now, they're trying to order for the holiday shopping season, and I think there's a lot of experts out there that are saying they might cut back and not be nearly as aggressive. So people who are your last minutes, right, might not have a lot of options on the shelf, Steve.

Steve: They're not gonna have it happen a second time. They, you know, overordered in the spring, stuff showed up in the fall. They're not gonna overorder again for this Christmas. So yeah, be smart about that. And what shocks me, Legos are talking about a huge price increase. They're, you know, based in plastic, made out of oil. Well, how much higher can they get? Have you priced what Legos are? They are expensive.

Amy: Yes. Well, I have because that was on my son's Christmas list every year for years and years and years and years. And it was like, 100 bucks for you to put together...

Steve: Yeah, no lie.

Amy: ...a police station that you're going to play with for one week and then it's done? If Legos are on the list, keep in mind, you'll be paying more for them, there may not be as many deals. And for anyone, I would just say "Hey, maybe this year if you've got kids or grandkids that you're shopping for, ask for the list early." And there are certain things, if there's electronics, chips in them, or the Legos, things like that, get those in your basket as early as possible because waiting this year I don't think is gonna pay off for anyone.

Steve: I agree, and you could cheap out like I did with going to Legoland and letting the kids play with Legos instead of buying them. That's just cheap Steve.

Amy: Yeah. You know what, no, research shows that most people prefer experiences to gifts. Keep that in mind this year when you're holiday shopping. I know we're several months out, but we're telling you plan early. You're listening to "Simply Money" here on 55KRC, THE Talk Station.