Steve S: Tonight, will the labor market ever weaken? The Fed says it better. You're listening to "Simply Money" presented by Allworth Financial. I'm Steve Sprovach along with Steve Ruby.

You know, there was a report that came out Friday that really upset the market watchers out there. The unemployment rate actually dropped, which is not what the Federal Reserve wants to see. Here to help explain it all is Allworth Chief Investment Officer, Andy Stout, he's gonna make sense of it all. Andy manages billions of dollars of investments from right here in Cincinnati. And, Andy, what's going on with this labor market?

Andy: Yeah, it was a fairly hot report when you see the number of jobs that were added. Employers added 519,000 jobs. What economists were thinking? They were looking for 188,000. So this blew out expectations. And when you look at it industry by industry, basically, every single industry, major industry, at least, except for technology, added jobs. The biggest contributors were leisure and hospitality which is mostly restaurants, you know, for this month. And it was really just shocked at the markets when they saw how big of a number this was.

Steve S: But this flies in the face of what the Fed is trying to do. They're trying to slow down the economy and slow down all these job-making situations, and that is gonna bring inflation down. So, you know, I think the big concern is that wait a second, they've already raised interest rates this much and it's not having an impact. Is that for real? Is there a problem here?

Andy: Well, I don't know if it's a problem. Right now it's minor adjustment because if you look at what the market is expecting from the Fed. And we can look at that by watching out what's called Fed fund futures trade which are securities that basically allow those on Wall Street to, you know, invest and predict where the fed will be in terms of number of rate hikes.

And what we saw was before the jobs report there was about roughly a 25% chance that the Fed would do two quarter-point rate hikes. Now, that's 100% chance. So what we did, we just added one more quarter-point rate hike for this year. So, that's not too, too material. And that's what the Fed has been saying too for a long time don't expect just one hike this year. So, we had one hike already last week, and expect a couple more is what the Fed is telling us and this data reinforces that.

Steve R: So, Andy, in your opinion, do you think that inflation is really gonna be able to come down with these strong job numbers without us hitting a recession?

Andy: You threw in without us hitting a recession.

Steve R: I know. I mean that's the key here, that's the scary part.

Andy: [inaudible 00:02:55.324] come down. I mean, it's gonna be tricky, right? So, you know, the Fed is raising rates, they're going to keep rates high. And that does slow the economy down because consumer spending slows down because your credit card interest rates go up, mortgage rates are higher, car loan rates are higher, it's more expensive to buy things. And if you think about consumer spending, it represents 70% of the total U.S. economy.

So, the Fed wants to slow that down because slower spending, weaker demand, lower inflation. And we're seeing inflation go down. I mean, you look at just, you know, the movement of CPI over the...which is consumer inflation since June where it peaked at 9.1% it's suddenly been moving lower, you know, that will probably continue. I mean, there's a lot of disinflationary forces in play right now.

So when you think about it from that perspective, inflation will keep going down, wouldn't surprise me whatsoever. Are there some risks that could, you know, throw a wrench in that? Yeah, there's a couple things I'm watching like the reopening of China and a weaker U.S. dollar. But that aside, still the bulk of the evidence suggests that inflation will continue to go lower. The question is though, as you threw in at the end...

Steve R: Yeah, the loaded question part, right?

Andy: Can we do that without falling into a recession? It is possible partly because of the strong job market. If enough people have jobs and they feel secure about their income, then, you know, that should help keep spending afloat.

And that raises the possibility of what's that proverbial soft landing. Meaning we're able to slow down inflation just enough, but still keep spending high just enough to keep the economy growing on a positive trajectory. When we look at the Fed's track record of actually being able to do that though, not so good. So, it's possible that we could avoid a recession. There are so many moving pieces.

And the biggest problem is that you don't know what the effects of the Fed funds rate hikes are. I mean, it's a six to a nine-month lag before it really affects the economy. And the Federal Reserve in real-time, they're raising rates, you know, three-quarters of a point at a time four times in a row last year, followed by a 50 or half-point rate cut or rate hike or 50 basis point rate hike. They're making these really, really big moves without having any idea what the effect is from the prior moves. So there's a lot of risk out there.

Steve S: You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach along with Steve Ruby. And if it's Monday, we must be talking to Andy Stout, chief investment officer of Allworth Financial. And Andy, you know, great economic analysis, but, you know, we don't invest in the economy, we invest in the market, my 401(k) reflects the market. And we had a pretty good start to this year. I mean, stocks have done well, bonds are rebounding, which is awful nice.

The question I've got when these numbers came out have we gotten ahead of ourselves? Are investors just too optimistic assuming the Fed is gonna slow down and eventually pivot? And these numbers are telling me maybe not, maybe we're getting ahead of ourselves.

Andy: Well, when you look at the history of the market, Steve, it doesn't ever move in a straight line, you know, it's 10 steps up and back down. It's a squiggly line, right? But if you look at the trend in it, the squiggle trends upward over time. And that's one of the benefits of having patience and focusing on the longer and not trying to time every squiggle.

Yeah, can we pull back? Would it surprise me at all? No. I mean, we could be ahead of ourselves in the near term. In the intermediate to long term, you know, I think that's a different story. The squiggle is gonna keep going up. I mean, that's what has always happened before. No reason to think that that won't continue. Doesn't mean the squiggle won't go lower for a little bit, right? Wouldn't shock me at all because there are risks out there and these are real economic risks. But if you can tell me when, you know, the bottom is in or a temporary opposite, you know, more power to that.

Steve S: We all know better than that. Yeah, exactly.

Steve R: Yeah. That's like what Nathan Bacharach used to say. He would say that the markets are like walking up the stairs while playing with a yo-yo. So that's what you're talking about with a squiggle. So, you had mentioned that the markets generally run six to nine months ahead of good news. Is that what we're seeing here by any chance, Andy?

Andy: I think the market is a little too optimistic right now when it thinks about the Federal Reserve. And we can see what the market is thinking by looking at where those Fed federal fund futures are trading at. So you can see what's been priced into the market.

And when the Fed met last week, it was...they did everything that was expected, right? They released terms of actual actions where they raised interest rates by a quarter of a point, 100% expected. And after that meeting, there was expectation that there would only be one more quarter-point rate hike this year.

And that was even in spite of chair Powell, Fed Chair Jerome Powell saying there's gonna be a couple more rate hikes. Or in the official Fed statement where they said ongoing rate increases. Plural on the increases, by the way, so more than one rate hike.

However, what markets keyed in on was some keywords from Fed Chair Powell, and that was that the disinflationary process has started. As soon as he said those words, Steve, what you saw, you saw the markets turn on a dime. They're like, okay...

Steve R: Big swing.

Andy: ...we're pretty much at the end here. They've acknowledged inflation is going lower, we're good to go. Then the jobs report came out that was really, really strong, and higher jobs, more people being added, that is an inflationary positive contributor from that perspective. So, when you think about it collectively, the markets were a little too optimistic heading into it. I think we've kind of readjusted back to probably where we should be.

Now. I will say though, we're still too optimistic because markets pricing in a rate cut later this year and a second one early next year. I don't know if the Fed is gonna move that quick. A lot will determine how the economy evolves if we do fall into a recession. But the Fed has repeatedly said, Jerome Powell, specifically, that the biggest mistake the Fed has ever made was loosening monetary policy in the late 1970s when the economy appeared to slow down, and that helped to fan the flames of the early 1980s inflation. Jerome Powell is acutely aware of the Feds mistakes.

Steve R: Yeah, he's terrible.

Andy: Quite honestly, if he makes that same mistake twice, he'll probably go down as the worst Fed chair in the history of...

Steve S: He doesn't want that.

Andy: ...all the Fed chairs. No one wants that legacy. That tells me he might be open to pushing the economy into recession if that keeps inflation at bay. He'd rather go down as the Paul Volcker of Fed chairs and he [crosstalk 00:09:59.238].

Steve S: I was gonna bring that up. Yeah, because that's what Volcker did is he got real aggressive after they were too easy with interest rates and threw us not in one recession, but into two back-to-back recessions.

So, we've got a lot of speeches coming up this week. Jerome Powell, Chair of the Federal Reserve, I think he's slated this week. And we generally have 8, 9, 10 speeches coming up from various Federal Reserve participants. And I think most of them are scheduled this week. Any surprises that you're expecting out of these discussions, or anything else coming up this week?

Andy: Well, there will always be a headline or two from every Fed speech that comes out that's going to tilt the markets, at least in the next hour, couple hours, how it works. But what will really be telling is Jerome Powell's interview tomorrow. So when you see that come out, I'm looking to see what Powell does to essentially massage the message from last week, or maybe update or change the narrative a little bit in terms of what expectations should be regarding the Fed.

Because when he's talking and doing the press conference, he doesn't always know, you know, in real-time, you know, how that's actually being interpreted. And it's not always afterwards when you can go back and see, you know, what happened. So, he might use this opportunity to change the narrative around things to maybe try to talk a little bit tougher on inflation than, you know, what he has talked about. We'll see. It'll be something very interesting to watch.

Steve S: Great perspective as always from Andy Stout, chief investment officer of Allworth Financial. Here's the Allworth advice, the Feds actions, and perceptions of those decisions. They're going to continue to drive markets this year. It's impossible to know what's gonna happen so we encourage you to ignore the day-to-day noise, keep your eye on the long term.

Coming up next, a new report about annuities that concerns us. We'll explain why. You're listening to "Simply Money" on 55KRC, THE Talk Station.

You're listening to "Simply Money" presented by Allworth Financial. I'm Steve Sprovach along with Steve Ruby. If you can't listen to "Simply Money" every night, subscribe to get our daily podcast. You can listen the following morning during your commute, at the gym, whatever you're doing. And if you think your friends can use some advice, tell them too. Just search for "Simply Money" on the iHeart app, or wherever you find your podcast.

Straight ahead it's 6:43. The three financial habits you've got to embrace in 2023. You know, Ruby, I'm a big Cincinnati Reds fan, baseball fan. And the Reds are gonna get a little bit richer. Big announcement from Kroger.

Steve R: Yeah, so thanks to Kroger they're gonna be putting a patch on the sleeve of jerseys, and Kroger is gonna be paying $5 million a year for this logo to appear on the Reds uniform.

Steve S: This shocks me because we've...I mean, the Reds are a classic uniform, and they...

Steve R: They are.

Steve S: ...and Major League Baseball they've never allowed advertising like that on uniforms. I can't imagine the Yankees. Yankees don't even put their players' names on the backs of their jerseys. You know, you gotta wonder if every team is gonna sign on for this, but it's a big deal and big advertising opportunity for Kroger.

Steve R: Yeah. So, 2023 is when this door has opened allowing uniform sponsorships. And you bring up the Yankees that's a good point, you know, it makes me wonder will some of these small market or smaller market teams take more advantage of this than some of the big market teams?

Steve S: You think?

Steve R: Because $5 million I mean, that's a lot.

Steve S: That's pocket change for the Yankees.

Steve R: Yeah, it's nothing for the Yankees but, you know, for the Reds, I don't know I say fill up those uniforms with patches I don't care.

Steve S: I just hope it doesn't get to be...I don't know if you ever watch English soccer, premiership soccer, but you don't even know what teams are on the field. I mean...

Steve R: It's just ads.

Steve S: ...literally. Yeah, it's their major sponsor is the front of the jersey and you've gotta who's red and who's white again. I mean, you know, that's how far it's gotten there. I don't think Major League Baseball will get to that point but we'll see.

Hey, you know, with all the market volatility we've seen over the past year, people are trying to minimize their risk, but the way they're doing it has got us a little bit concerned. Big numbers coming out of the annuity markets.

Steve R: Yeah, there was a report on annuities that came out. And, you know, due to recession fears, potential loftier payouts, consumers last year they actually pumped a record sum of money into annuity numbers.

Steve S: They funneled in $310 billion in 2022, $310 billion into annuities.

Andy: And that just destroys the record that was in 2008 of 265 billion. And we're not anti-annuity. I mean, they have their place. My personal opinion, I think they're sold sometimes to people that maybe other products are a little bit more appropriate.

But this tells me that there's some concern out there. And you tend to see just like in 2008 when there's concern about the economics of this country, about market drops, that's where at least, it seems to me, we see during those years, a lot more flow going into annuities for, you know, the guarantees that are being promised. Because it's really an insurance product that you're buying when you buy an annuity.

Steve R: Yeah, yeah. So as fear goes up, so does the desire to have this insurance. So, annuity is essentially a contract, long-term binding contract between the person that purchase it and an insurance company. So it can be an insurance product, it can be a hybrid insurance investment product. But, you know, when it comes down to it, this is a way to get some kind of return over the long term when you're not exposing your pool of money to a ton of risk.

Steve S: Yeah, but you've gotta take a hard look at...I mean, they write a book...

Steve R: They do.

Steve S: ...it's called a prospectus on how you can get your money back out after you give it to the insurance company. And that's the rub. That's where you've gotta take a look at the fine print because some annuities are better than others.

The one I have the least problem with is an immediate annuity where you give your money to an insurance company, and they set up a pension for you. You know at least I hope you do if you buy an immediate annuity, that money is gone. That money is now in the hands of the insurance company and they guarantee you a payout every month, every year, however you set it up for the rest of your life.

If you live to be 130, they make payments till you're 130 even though they might have run out of your money years before. If you pass away, you know, a week after buying it, well, depending on some of the features of it but you may be completely out. I mean, that's...but that's one way you know that okay, they're on the hook for guarantee and payout. So, you know, that's an immediate annuity. That's not the type everybody buys, though.

Steve R: Yeah, what you're doing then is you're buying a guaranteed cash flow. And that can be very helpful for some people, you know, those that are terrified of the markets, there are situations that a financial planner that makes sense.

Steve S: Or they spend too much money...

Steve R: Yeah, they spend too much money.

Steve S: ...they're afraid that they're gonna just blow it, you know, instead of rolling it into an IRA or something like that. That's a possibility. How about a fixed annuity?

Steve R: So, a fixed annuity is what we've been chatting about here. A variable annuity is, you know, where the payment can increase or decrease based on performance of the funds which the annuity is invested in.

Steve S: Kinda like mutual funds. They go up and down.

Steve R: Yeah. So, as annuities get more complex, as they get more and more riders attached to them, this is where fees start to come in that maybe you don't see clearly. A fixed indexed annuity, it guarantees you that minimum payment, but there's a possibility that the payment increases depending on how markets perform. So this can be beneficial because your fixed annuity isn't gonna keep up with inflation. But the variable and the index annuities can depending on market performance.

Steve S: Here's the issue that I've got with some annuities. And, you know, if you go in with your eyes wide open, and you're aware of this, and you're comfortable with it, that's fine, you know, let the buyer beware.

But, you know, a lot of people don't realize that these things pay commissions that are up in the 7 and in some cases, even 10% range to the person selling it to you. That's your money. That doesn't come from the insurance company out of the kindness of the heart. That is out of the money that you write a check on that you give to the insurance company.

And, you know, you can do the math, if you bought $100,000 annuity you may be, you know, giving $7,000 in commissions to that person that just sold it to you. Are they being on the up and up and are they explaining all the pros and cons? I hope so. But, you know, that's a big incentive for them to maybe just say the high points of that annuity.

So, very high commissions. And there's also something called a surrender period that you've gotta be crystal clear on. Surrender period is how long does it take before you can get your initial investment back out without penalty.

A lot of these annuities if you change your mind, or you just need that money in the first year, may have a 10% charge on your money. That's how they make up what they pay in commission to that individual [crosstalk 00:19:13.530].

Steve R: A lot of folks...and I'm sure you've seen this over your career. But a lot of folks that I work with is we build out financial plans, and we project future, you know, income streams, and we analyze the type of investments that people hold. A lot of the times they show me old contracts for annuities that they purchased and, you know, that they need money, but our recommendation boils down to let's sit on that, let's wait because if you take that out now you're gonna lose a big chunk of it through that surrender charge.

Steve S: I think the big question you should ask anybody selling you any financial product, but especially an annuity is where does the insurance company make their money? That's the key. Here's the Allworth advice before considering an annuity. It is a must to meet with a qualified fiduciary who understands your entire financial picture.

Coming up next, millions of Americans are living paycheck to paycheck and it's not just the lower-income earners. We'll break down the numbers next. You're listening to "Simply Money" on 55KRC, THE Talk Station.

You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach along with Steve Ruby. When you think of people living paycheck to paycheck, you might think of those who don't make a lot of money. But I'll tell you what, there's some new data out there that shows that even higher income earners are dealing with that. And to talk a little bit about it is an old friend, Britt Scearce, mortgage lender with Wesbanco, who is our local mortgage and credit expert. Tell me about this survey. What's going on here?

Britt: Well, believe it or not, even if you're making over $100,000 a year right now at least about 64% of U.S. consumers, about 166 million of them are actually living paycheck to paycheck. So even if you are earning a salary of over $100,000, this economy is definitely stressing your budget.

Steve R: Wow. I mean, you know, if you're a higher income earner and you're living paycheck to paycheck, it sounds like a wise strategy to, you know, cut your spending. But is it possible?

Steve S: Simple.

Steve R: Yeah, it really does. Is it possible that these folks are living above their means in the first place? What's going on?

Britt: Well, I think that's the actual crux of the whole thing because we as Americans in general, tend to live above our means or at our means. And obviously, we've seen a big change with inflation over the last year, and we've seen cash prices go up, we've seen food prices go up. And guess what is taking the slack here, if you haven't been budgeting for that sort of thing well, it's going on Visa, it's going to MasterCard, it's going on American Express.

Steve S: Well, I think that's the issue, is people just haven't built up...I mean, we are always preaching about emergency funds. And I was feeling some hope early in the pandemic, our savings rates were skyrocketing. I mean, people were finally doing what they were supposed to be doing. But being Americans, we reverted back to the way we were before, once we started coming out of this thing. And it seems like people are back to, you know, doing the old not saving enough, and just well when in doubt, throw it on the credit card we'll worry about it later, that's gonna get you in trouble.

Britt: Absolutely. And we had a lot of the pandemic money flowing from the government to folks to help during the pandemic and everything. And, of course, that has all dried up. And, you know, we're in a situation now where again we had...I think we also had a lot of pent-up demand from the pandemic where people, you know, they were cooped up, they wanted to travel, they wanted to get out and do things.

And I think a lot of people's mentality was I'm gonna spend just to heck with it. And then, of course, the inflation after all of that ticked up and now everything's become more expensive. So, now we're in a situation where...and of course, the Federal Reserve as we all know has been trying to do demand disruption. They've been raising rates, they've been trying to get consumers to stop spending. And I think it is finally starting to work and we're definitely seeing the debt starting to increase, especially as you said Steve, the savings has started to dwindle.

Steve R: And again, you know, this survey that we're talking about here, millions of these people earn a good income according to that survey.

Britt: They do. And our challenge has been as Americans for many decades is budgeting, it's living below our means. And...

Steve R: That's the key.

Britt: ...we just do a bad job of that. And, you know, there are so many things that compete for our dollars. You know, you just think of all the subscription services, just all the streaming services. If you wanna watch this show, well you're gonna have to get this, you know, you have to get Netflix or you have to get Hulu, you have to get...all these little drains on our budget.

And then when you add to it that credit card rates are going up as the Fed continues to raise short term, you know, the Fed funds rates, that affects your credit card rates, that affects your home equity lines of credit, obviously, gas and all that sort of thing. Everything going up in price in addition to just all the drains, you know, on our budgets that we don't pay attention to.

Steve R: So, you know, if we're talking about this affecting, you know, those that have good income, part of me wonders is this study affected by the term lifestyle creep. Have we heard this before? Because I certainly talk about it with folks that I work with. As income rises...

Britt: Yeah, because what...

Steve R: ...so does how much you spend, so does your lifestyle choices. How much of it do you think is due to lifestyle creep versus, you know, inflation and pent-up demand like you're talking about, Britt?

Britt: Well, I think it has a lot to do with that too. Like you said whenever people make more money, they tend to find a way to instead of just keeping expenses where they're at they say, well, hey, maybe I should buy a second home. Or maybe I should...you know, maybe we could buy, you know, a nicer car, or whatever the case is. Or let's take another vacation this year or something like that.

So, yeah, we tend to find ways to...any of that extra income that comes in from raises, or maybe, you know, right now we see a lot of people that are switching jobs, right? And a lot of them are switching and they're making more money. Instead of budgeting that for like you said, an emergency fund or increasing 401(k) savings and things like that, we're continuing to be building our lifestyle.

Steve S: You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach along with Steve Ruby, and we're talking with Britt Scearce, our local mortgage and credit expert. So, Britt, we're talking about okay, people they're spending more money than ever, they're living paycheck to paycheck. You know, it's getting tougher and tougher to make ends meet, you're paying 50 bucks more for a tank of gas, maybe 20, $50 more every time you go to Kroger.

There are a lot of obstacles in the way, but you've gotta make a change at some point to be able to start saving and building an emergency fund. What's your advice on how to break this chain?

Britt: Well, first off, you need to figure out where your money is going. So, number one first, you know, find out. Do a budget or do some sort of a list an inventory if you will.

Steve S: Just track it, yeah.

Britt: Yeah, track. It's hard to track how you're doing unless you're tracking how you're doing, right? So...

Steve S: Exactly.

Britt: ...definitely go out, take a look at where the money is going every month. And look at ways that, you know, hey, I don't need five streaming services, or, you know, I don't need to belong to all these other things. You know, maybe only one wine club is good, you know, you don't have to go and give up...

Steve R: Don't get crazy now.

Steve S: Yeah, how can we only have one wine club?

Britt: Figure that out, you know, work on your budget, look for ways where you can cut expenses. And then, you know, look at the debt level and look at how you can stop adding to the debt, and then start to reduce it either through the debt snowball making extra payments.

We also...right now I know a lot of people don't wanna talk about this because, you know, interest rates on mortgages, you know, they've gone up from the twos and threes and so forth. And a lot of folks have, you know, very low mortgage interest rates on their first mortgages. But first mortgage rates have started to come down as inflation has come down. And we do have a lot of home equity right now.

We had a couple of years where home prices went up 20%, year over year. So, you know, we're up...even if property values start to come down just a little bit, we're probably still gonna be up over 30% over, you know, a couple of years ago. So, you may consider some sort of a home equity loan or a way to restructure debt to be able to manage it with a shorter term or something like that. Could be another option in addition to doing, you know, just better budgeting and debt snowball and that sort of thing.

Steve R: That's good proactive feedback.

Steve S: Great advice as always from Britt Scearce, mortgage lender and credit expert from Wesbanco. You're listening and "Simply Money" on 55KRC, THE Talk Station.

You're listening to "Simply Money" presented by Allworth Financial. I'm Steve Sprovach along with Steve Ruby. Do you have a financial question you'd like for us to answer? There's a red button you can click. If you're listening to the show on the iHeart app, simply record your question, it goes straight to us. We listen to them, we'd love to get you on the air.

Coming up, how scammers are targeting home buyers. You know, Ruby, we're now over a month into the new year and, you know, whether you do resolutions, whether you hate resolutions, the problem is not just making them, but keeping them. I know my gym, that wave has already passed, it was crowded for about three weeks, and it's gone. And, you know, you can do exercise resolutions, go to the gym, you can do financial resolutions and that's what we wanna talk about a little bit here.

Steve R: Yeah. The first financial resolution is an easy one, you save more by going into your 401(k) increasing your contributions even by 1%, or setting up automatic contributions if your employer allows it within that plan.

You know, I would challenge you because that's one of those things that just doesn't go away. You sign up for a gym, you're there for three weeks, you know, that resolution falls off. But if you can find a way to incrementally creep up your 401(k) contributions, it can make a huge difference over the course of your accumulation phase of retirement planning as we call it.

Steve S: Here's what you don't wanna do. Hey, I'm gonna save more this year. How? I mean, that's just too vague, you know? And what you've gotta do is say, okay, I'm not just gonna save more this year I'm going to do it by I'm gonna crank up. I'll talk to HR on Monday and I'm gonna crank up my contributions 1%, 2%. As long as you do something that's a concrete action, not just a vague concept. It's an action.

And, you know, the great thing about a 401(k) is if you don't see it, you don't spend it, it's gone, it's already put away. Now you have to make a conscious effort to change it back if you wanna save less, and that's not the game plan. I think that's great advice. How about finding the sweet spot about paying down debt versus saving money?

Steve R: So this can be a tricky balance, you know, debt is a thief essentially.

Steve S: What do you do first, right? I mean, you got a ton in credit card debt, you can't pay off the balance, and you need an emergency fund, which do you...you know, that's the quandary, which do you do first?

Steve R: You know, you ask that type of question to a certified financial planner and oftentimes, the answer is, it depends. It depends on the individual's financial situation. But what I really don't like to see is people shutting off 401(k) contributions missing out in free money via company match to pay down debt. So find that balance.

You know, if you have an emergency fund, keep a little bit there maybe 500, maybe $1,000 in case something happens to your car, but then attack the high-interest rate debt. If you're sitting on credit card debt, attack the high-interest rate debt without turning off your 401(k) contributions if you can ideally.

Steve S: I'm with you on that because, you know, if I said to somebody, I've got a guaranteed 22% rate of return on an investment I wanna talk to you about it, people are gonna run. And they should run. But that's what you're doing if you're paying off a credit card balance. I mean, you might not realize it, but these interest rates on credit cards...you know, the Federal Reserve didn't just raise general interest rates, the overnight Fed funds rate. That impacted credit cards. And don't be surprised if you're paying even more than 22%. You pay off 22% interest credit card balances, you just made yourself 22%. That's key.

Steve R: It is. And as debts fall off, this is another opportunity to pivot around where some of your cash flow is going. All this falls back to that b word or budgeting, make sure you have an understanding of where money in is going out. And from there, you can identify opportunities to save more. Just like a quick increase to your 401(k) contributions, it's very easy. If credit card debt is paid off, then maybe pivot that to another bucket of money like your emergency fund or your 401(k) investments.

Steve S: You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach along with Steve Ruby, and we're talking about resolutions financial in nature instead of exercise. And I think one of the most important ones is let's be open about talking about finances between yourself and your partner or spouse. I think that's hugely important.

Steve R: Yeah. Oftentimes, you know, when I'm meeting with new folks, I almost feel like a marriage counselor or a psychologist. Bridging the gap between conversations between, you know, husband and wife is extremely important to understand where you are financially.

Steve S: Yeah, if you can't talk about money without an argument, you've gotta start changing things and just be more open about talking about money. Here's the Allworth advice. If you didn't resolve on January 1st to improve your financial situation this year, it's only February, go ahead and get started in February. It's fine.

Coming up next, the new scam hitting homebuyers right in the pocketbook. You're listening to "Simply Money" on 55KRC, THE Talk Station.

You're listening to "Simply Money" presented by Allworth Financial. I'm Steve Sprovach along with Steve Ruby. Is this the year? Is it time to buy a new house? If it is, you don't hand your down payment to a scammer. Sounds simple but it's going on all the time. There's a scam for everything and homebuyers in particular have to be aware. There are some tricks that are being made by people that have gotten really, really good at stealing your money. What's going on with this Ruby?

Steve R: I can't stand this stuff. The fact that there's individuals out there that would scam people when they're doing something so important. So, you know, first of all this one, we've talked about it before, carefully examine any emails that look like they're from your realtor. If you see one that includes any documents or instructions for wiring your deposit money, call to verify its legitimacy. And quick shout-out to Steve, by the way. He got a shout-out in a company-wide email for number one at noticing phishing email, simulated phishing emails.

Steve S: You get them all the time whether it's work or at home. And this is big money because the FBI said Americans are losing over a billion dollars a year. That's serious money and that's what they know about. I learned about this when we bought our place I guess that's about two years ago. And, you know, I'm wiring money like you do when you buy a house. I'm wiring a substantial amount of money to be there at the escrow agents for the closing. And they were...and this caught me by surprise.

Our escrow agent said, "You're gonna get an email from us and I'm gonna tell you not to trust it. I want you to call our office and say I received email instructions, let me go over these, is this the correct bank?" Make sure you're calling your escrow agent to confirm that information and not just, oh, we've got a change in banks that we're using, here's the new information. You do not take that for granted, you've gotta confirm this information.

Steve R: Yeah, it sounds like you have a heck of an escrow agent there because I don't care about the extra steps if I'm wiring money, I wanna make sure I'm wiring it to the right place.

Steve S: So, how do you avoid becoming a victim? I mean, that's the key.

Steve R: I mean, be diligent is important here. Now, there's another scam going around and I guess this isn't new. Stuff like this has always existed. But, you know, how they get you is a little bit different with, you know, digital emails, those types of things. But if you're shopping around for the best mortgage rates, scammers, they know this, and they're creating their own bait-and-switch scams using phony websites to offer you a good deal and you give them your personal information. They switch the deal and now they have information that they shouldn't have.

Steve S: Yeah. And this isn't the Nigerian prince kind of stuff that we saw years ago. These guys are good. I mean, they're actually they're copying and pasting, they're producing documents electronically that are identical to the real deal. And that's what makes it very difficult to check. So you cannot confirm this information enough. You've gotta pay attention, make sure you're not gonna get taken.

Thank you for listening. Tune in tomorrow. We'll talk about How To Spot a Ponzi Scheme. You've been listening to "Simply Money" presented by Allworth Financial on 55KRC, THE Talk Station.