Amy: Tonight, just what we've been waiting for, we've got good news on the inflation front, but hold up, there still could be a long way to go. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Ruby. This is one of those step in the direction but we're not out of the woods quite yet, kind of a day.

Steve R.: Yeah, that's a good way to put it, Amy. Right now, I mean, the news that came out was good. U.S. inflation did ease to 6.5% in December compared with the year earlier. It's still high and it's in line with what many economists would happen. But it is good news, because it's fallen for six straight months.

Amy: Well, and let's go back to June, right? That's when we saw the peak of inflation, 9.1%. And then you fast forward to November, we were at 7.1%. This is a trend in the right direction, and it's exactly what the Federal Reserve, our nation's central bank, is looking for as they're in this really difficult situation. I don't know if you're a basketball fan. I'm a huge basketball fan, my 13 year old plays. What I like in what the Fed is doing right now, is they're playing the second half of a basketball game, but the scoreboard is still in the first half.

Steve R.: Oh, that's such a great comparison. And I am a huge basketball fan. NBA was where my faith lies. And, you know, Cavs, they're my team. But you know, enough of that.

Amy: But it's a good point in saying that, "Hey, you don't have up to date information, yet you're doing something really important and you don't really know where you stand." There's a lag time between these decisions that the Federal Reserve makes in raising interest rates, and the time that we actually see the results of them. It would be like throwing up a basket, but the scoreboard doesn't change for 10 more minutes. How do you keep track of that? How do you know in real time what decision to make next? Because you don't have real time data on the impact of that.

So as we look at these inflation numbers, good news, because we're finally seeing that kind of lag time, getting to a point where we're actually seeing movements in the economy. And as far as these inflation numbers, this is exactly what the Federal Reserve wants to see.

Steve R.: Yeah. I mean, it is definitely challenged because the Fed has to figure out whether it's done enough up to this point, without knowing what impact they've really had up to this point. And in a world where, you know, bad news can be good news and good news can be bad news, I'm certainly not envious of that. The decisions that they have to make.

Amy: Well, and I think also what we have to keep in mind is the goal here is still 2%, that is the Federal Reserve's sort of goal inflation rate. Meaning that every year we would pay about 2% more for all of the goods and services that we buy than we did last year. That's kind of a healthy rate of growth for the economy. We were at 9.1% earlier this year. We're down to 6.5%, that's still a long ways away.

Meaning we don't know yet whether the Federal Reserve has done all the rate hikes to get us back to 2% because it's gonna take longer, or whether they're going to have to continue to be more aggressive. And I think based on kind of the Federal Reserve's tone and the comments that they've made in recent days, you might think, well, they're gonna probably continue down this path of making some aggressive moves. Maybe not the three quarter point, sort of jumbo rate hikes that we saw, that kind of were the norm last year. But it's gonna take a while to get us back down to that 2% mark.

Steve R.: It is possible that they've already done enough and the rates will continue to fall naturally. But at this flip side of that, that might not be the case. They may, you know, look six months out from now and see that they've gone too far. And that's really the scary part. You know, the markets are waiting to see how the Fed sticks its landing. They don't want to go too far, because then we could end up like it was in the '80s.

Amy: I was just gonna say, I'm gonna like take on the role of my parents. Because when I was growing up, anytime I would say, "This thing is bad" they would always make this point, "Well, it could always be worse. When we were kids," blah, blah, blah, right? Okay. Well, we don't feel great about how much we're paying for our groceries or our energy bills right now. Well, guess what guys? It could always be worse. Yes. June of 1980, inflation rate, 14.4%. Talk about worse. It did not get below 4% until November of 1982. It took two and a half years of those double digit inflation numbers before they got down to, not 2%, but we're talking 4%.

Steve R.: Yeah, I went to cook breakfast this morning and I asked my wife, you know, "Why don't we have any eggs?" Have you bought eggs recently?

Amy: Yes. We buy lots of eggs in our house, and they are, I think up like 50% from last year.

Steve R.: It really is something, but you know, you're right. It could be worse. Your parents are right about that. It took, you know, two years to get it from, you know, 14.4% in 1980 to 4% in '82. And that's really what the worry is for the Fed. They don't want to raise interest rates so fast that we slide into, you know, that type of an economy.

Amy: So while the Fed is probably excited doing a little happy dance today because of these inflation numbers, they're probably not doing a happy dance about jobless claims, because this is a place that just seems absolutely impervious to everything they're trying to do. Jobless claims have dropped yet again. Absolutely not what the Federal Reserve wants to see. Because of course, what you would expect as interest rates rise and it becomes more expensive to borrow money, you know, that businesses start to look at things slowing down. And the possibility would be that there would be layoffs.

We've seen layoffs in the tech sector, yet we're not seeing increases in job claims like you would expect to see when an economy is in fact slowing down. However, one sort of bright spot is that wage growth is actually showing signs of slowing. Now, you and me, well that doesn't sound great. Everyone wants a raise. Everyone wants to make more next year than we are this year. But at the same time, from the economy's standpoint, it's very much good news.

You're listening to "Simply Money" tonight here on 55KRC as Steve Ruby and I break down the headlines for you tonight. What you need to know. Speaking of headlines, Jamie Dimon, JPMorgan's CEO. This guy makes a lot of headlines, but not all of them end up being so true. And I think this is a kind of reminder to all of us as investors not to buy into the headlines.

Steve R.: Yeah. He said, he knows that there's storm clouds, but he sees it changing into a hurricane. Those are some strong words coming from somebody in such a position like he's in, and he backpedaled on that a little bit.

Amy: Yeah. He essentially said, "I'm starting to see this economic data not looking good, but I'm gonna tell everyone who's listening to me because I've got a pretty good pulpit here, that it's going to get much, much worse." This is a really smart guy on Wall Street. He is a gazillionaire himself. He's made a lot of smart investments. You would think he knows what he is talking about. So when he says something like that in June, you would think, oh gosh, the rest of 2022 is going to get downright ugly.

Steve R.: You would think.

Amy: What happened, though? It wasn't beautiful. It wasn't great. Our 401(k)s weren't growing at 10% plus, but it certainly wasn't a hurricane which Dimon apparently now, seems to be walking back a little bit. Imagine that.

Steve R.: He didn't quite admit that he was wrong.

Amy: Of course not. That would be way too much to ask.

Steve R.: Yeah. It was more of a gentle, you know, "Maybe I shouldn't have used the word hurricane."

Amy: "Here's what I actually meant." Right? Come on now.

Steve R.: Yeah. Come on, just admit you're wrong. But that's what it is. It's these headlines and, you know, we read 'em, people read 'em, and that's the scary part. People can make a bad decision, like selling to cash in their 401(k) because somebody like Dimon, you know, comes out and said there's an economic hurricane on the horizon.

Amy: He's a big name. You pay attention.

Steve R.: We need to take this news with a grain of salt. Especially because look, you know, the guy said it and he backpedaled. He won't admit that he's wrong, but he said, "Maybe I shouldn't use the word hurricane."

Amy: Well, and Jamie Dimon, even in his beautiful silver and glass platinum palace on whatever Wall Street that he has, he does not have a crystal ball in it. He doesn't have anything that we don't have, that is going to tell him exactly what to expect in the future. And I think that's what really bothers me about so many of these people making these predictions is, you read 'em and when you start to read, oh, Jamie Dimon said this, but then Jamie Dimon and Cathie Wood also said...

You start to put together these names of these people that are either in charge of these big banks or these large funds, and you start to say, "They must know something." But they don't. None of them have that crystal ball that can tell them about the future. So changing your own financial plan, going to cash at a time when you're reading headlines like that, it's only going to harm you. Another headline I wanna talk about now, because you'll probably recognize this name, Nelson Peltz.

This is the guy that came into Cincinnati several years ago and said, "Procter & Gamble, you need to change some things. And I'm gonna tell you what you need to change, because I'm gonna get a seat on your board." And they fought it, and they fought it, and there was actually a big proxy vote. He lost that vote to get on the board. And then ultimately the CEO of Procter & Gamble said, "Fine. Like, just come on board." Right?

Steve R.: Yeah. You know, "Fine. Do your thing. Be here." He wound up on the board, but he did leave in 2021. I know there was a lot of talk about what that might look like for Procter & Gamble, especially, you know, being in Cincinnati. There was concerns that he would try to force layoffs and, you know, maybe move the company's headquarters somewhere else. But he's got another mission now, not Procter & Gamble. He's looking at Disney.

Amy: Yes. So, he has some issues with Disney. He's critical of their succession planning, their compensation, their direct to consumer strategy. I was actually just talking to... My best friend is leaving later tonight to go to Disney. And she's telling me, "Well, there's this pass that you have to buy and this extra thing that you have to get." And I'm thinking, "I don't know, Disney seems to have it all figured out when it comes to making money." I would question Disney, but Nelson Peltz apparently is.

Steve R.: I know, that's what I thought when I saw this too. You know, I think Disney will be fine without, you know, Mr. Peltz interfering and trying to get on the board.

Amy: I will say, because I covered this whole Nelson Peltz story a lot, I was in the room when the vote went down, I've interviewed Nelson Peltz, I was really not so sure what I thought about this outsider coming into Cincinnati thinking he knows better. And there was a lot of concern, to your point yes, about him moving the headquarters outside of Cincinnati, but also breaking up the company into different business units.

And his whole point was there's just too many layers here, we need to kind of flatten out the management structure. I actually think, and I'm not in the boardroom at Procter & Gamble, but probably some of the people who are, would say that maybe some of the points that he made were taken into accounts in actually maybe not such a bad way. And then when Procter & Gamble's stock was way up, as I think he probably was a small part of moving it in that direction, he sold, he got out. That's what he does.

Steve R.: Oh, good for him. I wonder what he's gonna do with Disney, if anything.

Amy: Yes. Stay tuned, right?

Steve R.: Mm-hmm.

Amy: One other thing I wanna bring up for anyone that's been traveling and following this major story, airlines seem to be back on track today after a major weird kind of computer outage forced the FAA to halt everything yesterday. Huge story. As of today, there were less than 500 flights that were delayed, according to FlightAware. So this is kind of moving in the right direction, and thank goodness this didn't happen on a holiday.

Steve R.: Yeah, I can't believe. One thing after another with these airlines. And you know, it's important to look at your portfolio and make sure that you don't have one single security making up too much of your net worth. I'd say this is a pretty darn good example of why not.

Amy: Well, and you could look at even the entire travel sector and say, "Well, it's post pandemic, everyone's gonna get out there and travel. I'm gonna invest in all these travel stuff." Well, no one saw this coming, right?

Steve R.: Yeah. Curve ball, after curve ball, after curve ball with the holidays, and now this, and... You know, a general rule of thumb, I would say no more than 10% or 15% of one single security making up your entire portfolio. Any more than that and you're putting your net worth at risk, because these can be affected greatly by something that we don't expect.

Amy: Lot of risk. Here's the Allworth advice. When you hear us talking about all of these daily headlines, it's to help you make sense of them and put 'em into perspective. Don't react though to the headlines, just stay the course with your long-term plan. Coming up next, business is booming for the Bengals, and some financial mistakes we wanna make sure you avoid in 2023. You're listening to "Simply Money" here on 55KRC, THE Talk Station.

You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Ruby. If you can't listen to "Simply Money" every night, well we do have a daily podcast for you. You can listen to it any time. Share the word with your friends. All you've gotta do is search "Simply Money" on the iHeart app or wherever you get your podcast. Straight ahead at 6:43, we've got pensions, mortgages, prenups, we're covering it all in our Ask the Advisor segment.

Well, the Cincinnati Bengals, the darlings of this city. We're fickle fans around here but over the past couple of years, the Cincinnati Bengals have given us lots of reasons to be proud and to cheer for them. And well, yeah, it's a lot of entertainment and fun. It's also a big business and yeah right now, Bengal's business is booming.

Steve R.: Yeah. Attendance at Paycor Stadium soared 10% this year on a per game average. This is a big deal. I mean, I have a confession...

Amy: It's a big deal when it comes to dollars and cents for sure.

Steve R.: That's right. I have a confession to make, Amy.

Amy: Let's hear it.

Steve R.: I'm born and raised in Cleveland, Ohio. I live in Cincinnati because my wife is from here, we met in college. And most of my life I've been a Browns fan.

Amy: Oh, well that's a tough thing to even have to say out loud.

Steve R.: It is, it is, and...

Amy: Is that your confession?

Steve R.: No, it goes a step beyond that actually. The confession is, I think I might be switching allegiances to the Bengals. I've been here since 2007. Honestly, it's a better product. And the fact that, you know, attendance soared 10%, I think shows that that's the case.

Amy: So, I think what you're saying is you've jumped on the bandwagon.

Steve R.: Yeah, and that's okay. I'm comfortable with that. I still get to hate against the same two teams. I don't enjoy the Steelers, I don't enjoy the Ravens.

Amy: It feels very comfortable for you, I get that. And that's exactly what's happening here. When you look back to 2019, Bengal's attendance was 47,000. We're up 20,000 people on average more, in the stands for games now than just a few years ago. That's up 40 plus percent. I have been a lifelong Bengals fan, and again my heart goes out to a lifelong Browns fan as well. Because it has spent some tough times, and is really amazing to see the city rally around the team as it's kind of rebuilding and it's gotten so much better. And I love to see that the stands are packed. Although I will say, my husband and I were just saying the other night, "Why did we not buy season tickets a few years ago?"

Steve R.: Oops. Yeah.

Amy: Can't afford them now. Can't touch them now. But as the Bengals build this team, there are going to be higher and higher paychecks for these players. And so butts in seats means more money, more money for ticket sales, more money for concessions. The TV deals get more lucrative, that's why there's the name Paycor on that stadium now. They're gonna have to pay some hefty paychecks in order to keep these players here, and to keep this level of football here in Cincinnati. And I think we can all agree that's something we don't want to go away, so I will cheer for more people in the stands.

Steve R.: Yeah. I don't think it's gonna change anytime soon with the borough.

Amy: Even if I can't afford a ticket to actually sit there and watch the game, I'm happy to watch a winning team from home. I mean, so we've got a new year, which means there's new opportunities for your money. It can also mean new opportunities, new chances to make mistakes. So we wanna look at some things that we would say, hey, if you avoid this in 2023, you're probably going to be in pretty good shape.

One of those is, sticking to outdated financial goals. There was a commercial in the past couple of years, some financial services firm, and it was...the people keep popping up in different places in their life. And they're saying to their advisor, "Well, we thought this was gonna happen but this happened." And he is like, "Well, that's okay. We planned for things to change." But if you plan for things to never change and you stick to something that maybe in your 30s, you thought, well, this is my plan. It's down on paper. I don't ever have to do it again. This is gonna carry me through to retirement. Well, that probably doesn't work.

Steve R.: Yeah, financial situations change, goals change, needs change. That's why I meet with...

Amy: Lives change.

Steve R.: Yeah. I mean, that's why it's important to meet with, you know, folks at least once a year. I try twice a year. Because we need to keep up with people's changing financial situations. And you know, if you're sticking to outdated financial goals, then you can fall into a pitfall of not optimizing the cash flow that you have towards other goals.

Amy: Yes. So review. Go back and revisit those goals that may be are set in the past. I always am a huge proponent of having these conversations often with your spouse, kind of like a regular cadence of it. And I'm not saying listen, like... Steve Sprovach makes fun of me because I talk about money so much. He's like, "Oh my gosh, your dinner conversation must be so boring."

But every once in a while, a couple of times a year or quarterly, it's good to get together and say, "Hey, last year we said that our priority was helping the kids pay for college. Is that still our number one priority?" "Last year we said we wanted to build a house, we wanted to..." Whatever it was, revisit those priorities. And I think that by talking about what your money priorities are, keeping those goals kind of right out there in front of you, makes it so much easier to achieve them because they're just front of mind. So revisit the old ones. Go back and see if they still make sense.

Here's another huge one, not reviewing your credit card statements. This is a huge miss. My husband again, he hates...I was just doing this the other night. I go over every single expense and then I say out loud, like, "Was that necessary? Was that..." But you do kind of start to see some trends.

Steve R.: It goes beyond necessary expenses too, because you wanna make sure that something isn't on your credit card statement that doesn't belong there.

Amy: Absolutely.

Steve R.: Because there's a time limit before you can fight those. And, you know, looking at it, you know, not just the spot trends and whatnot, but make sure there's nothing fishy on your credit card statement.

Amy: Yeah. Another thing we would say, hey, this is something you could really focus on in 2023, is maxing out your retirement account. At the very least, you've gotta get the full company match. Otherwise it's the same thing as your boss with their handout stretched, with cash in their palms, saying to you, "Hey, do you want this money?" And you're saying like, "No thanks. I don't want it."

Steve R.: Yeah, "Here's free money. Do you want it?" "No."

Amy: Yeah, "thanks, but no thanks." Right? That's the same thing.

Steve R.: Absolutely. And it's so easy too. If you're gonna contribute somewhere, make it your 401(k) first, especially if there's free money on the table.

Amy: Yes. And maxing it out. And listen, for some people, this sounds like the craziest thing ever. And then there was a time in my life when it sounded like the craziest thing ever, but I have made this a huge priority that in my 40s, I'm at the point where I take very seriously trying to max out my 401(k) every year. It's not a rule, it's not the only way to be successful in retirement, but I'm telling you, it's a great way to help get yourself there.

Steve R.: Yes, it is.

Amy: Another thing I would say, talking about kind of credit card statements and things to do, automating your bill payments. This is...you talk about credit score and bringing it up. The number one ding on your credit score is not paying your bills on time. And I know like for the longest time, my dad would say like, "Well, I don't wanna autopay, I want the bill to come in. I wanna look at it, I wanna see it, and then I wanna pay it." And I do understand that way of thinking, but it's also the way that mistakes are made. Bills get misplaced, you lose things, you can't find 'em, and all of a sudden you're 30 days over in major ding on that credit score.

Steve R.: Yeah, this is a good way to take advantage of technology in this day and age. There's no point in not automating because there's no excuse for late charges if you are.

Amy: Here's the Allworth advice. Avoiding these common financial mistakes can only save thousands of dollars, it could make you thousands of dollars over time. Do you know what TikTok is? No clue? We're gonna tell you, you might need to know next. 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. Dave Hatter, your name came up over the Christmas holiday with my family because my 13 year old came to me and said, "Mom, all of my friends have TikTok. I'm really responsible with my phone, with my devices. Please, please, can I have it?" And I said, "Well, I'm gonna pick up my phone and I'm gonna call Dave Hatter, our tech expert, and he's gonna tell you all the reasons why you shouldn't have TikTok." So for all the parents out there who have teenagers coming to them asking for this platform, and let's face it, it's really, really popular, what do we need to know?

Dave: Yeah Amy, you're right. Unfortunately, it is super popular and it has so many privacy and security problems, which have been just ongoing really since its inception. You know, we would need like a whole three hour segment to really cover it all, but I'll just try to hit the high points here. You know, again, since its inception, it's had all kinds of privacy and security problems. But the fundamental thing that most experts have pointed out is A, TikTok is owned by a Chinese company in China, where the Chinese Communist Party has laws that dictate that any company in China has to turn over any information they have at will.

TikTok is well known, and this is easily researched, to be one of the most aggressive apps in terms of the amount of data that it collects from your devices. So, you know, whether you read the privacy policy in the terms of service or not, once you install the thing, its objective is to collect as much information as possible. And they do it in a lot of nefarious ways.

A researcher recently pointed out, and this is not exclusive to TikTok, most of the Facebook apps are similar. You know, if I send you a link inside TikTok to a website, when you click that link, rather than opening in let's say a Safari browser on an iPhone or a Chrome on, you know, on an Android phone or something, it opens in its own browser so that it can literally track everything you're doing which could include capturing your usernames, passwords, or anything that you type in, in that device. So it's extremely aggressive in its data collection. All of that data... Yeah, go ahead Steve.

Steve S.: So are you saying that if you put TikTok on your phone, that TikTok potentially can go into your phone and get other data that has nothing to do with the TikTok app?

Dave: Oh, that's absolutely true. And frankly Steve, that's true for just about any app you install. Now, you know, Apple to their credit, through the introduction of their app tracking transparency framework about a year and a half ago, not only requires that before you publish an app in the Apple Store, you have to tell people what data you're gonna collect. It gives you the option as the owner of the phone to opt out of it.

Now, most people still don't really understand what all that means. And then again, TikTok is doing these nefarious things to try to circumvent that as much as possible. So is Facebook, so is just about any social media app, and just about any app you install on your phone. I know this is gonna be shocking to your listeners, but believe it or not, software developers like to eat too. They're not building all this stuff for you for free because they're nice people. And when they give it to you "for free," you know, the tradeoff is you're not paying with money, you're paying with data, you are the product.

Steve S.: You are the product. Yeah, exactly.

Dave: You're the product. But this is different... Oh, go ahead Amy. Go ahead.

Amy: I've got four teenagers in my house. My son, the 13 year old, is the youngest. The three girls have TikTok. And so, how do you explain...and maybe I think a lot of these kids are like, "But what information do I have on my phone that's even interesting to anyone else?" Like, let's explain it so parents can have these conversations with their kids about how they can protect themselves and why this is so important.

Dave: Well, think about it like this. Okay, again, TikTok extremely aggressive in what they're collecting. All that is going back to China. There's no control over it. You have no idea what they're using it for. You have no idea how long they'll keep it. You have no idea how long they'll store it. Assume that TikTok could have access to every text, every phone call, every email, every contact, and really just about anything that's in your phone. So, something you say today as a 15 year old as a joke, could show up 10 years from now and you could be fired as a result. You could not get into the college you want to go to.

I mean, these are real things, not necessarily TikTok related, but these are real things that have happened to people countless times. It's easy to research this. You may not get the job, you may get fired, you may not get the college you want, etc., etc., etc. Because as a kid you don't really understand, you know, what you're saying. You don't necessarily mean anything malicious by it, yet there it is. Digitized forever. Stored forever. And then through, you know, some sort of malicious act, a data breach, a mistake, whatever, there it is, 10 years later.

Steve S.: Can you imagine asking your teenage son or daughter, is there any text you've ever sent that you would prefer I or anybody else not see?

Amy: The world.

Steve S.: Yeah, exactly.

Dave: Yes.

Steve S.: That should get their attention. So, I'm not so big on social media. I'm not a tinfoil hat guy, but I don't really have a use for Facebook or anything like that. But I do go on YouTube and I noticed that they have shorts now on YouTube, which are short clips and more than a couple of them have TikTok up in the corner. So I don't have an installed TikTok app, but I see TikTok videos. Does that mean my phone is compromised also?

Dave: That's a good question. And there are other companies trying to get into this short video space that TikTok is so popular around. You know, if you just click a link and watch a TikTok video, you know, there is potentially some information it could capture, but nowhere near the kind of information that installing the TikTok app on your device could capture. Now, because I'm just anti-TikTok top to bottom, I'm not gonna watch any videos. I'm not gonna do anything that helps them in any way, because here's the second part of the TikTok piece we haven't gotten to.

So they're collecting all this information, it's going to China, who knows what they're doing with it. And by the way, they've lied about this numerous times and been caught in it.

Steve S.: Shocking.

Dave: And last I checked there were at least 21 states who have taken some kind of action against TikTok, either banning it out right on their devices, suing them, etc. The Senate has come out and blocked it. The House has blocked it. So people are waking up to this.

But the second piece is, you have these whole TikTok challenges. Kids have died as a result of these idiotic things they're suggesting that you do... But the other piece I think is the most insidious and least understood and also well documented, there are essentially two versions of TikTok. In China, if you're a kid using TikTok, you get videos about science and, you know, careers and how to be smart. Over here, you're just fed a continuous stream of the most idiotic crap you can imagine, like these challenges where people die. It's a well-documented fact. It's basically a propaganda tool. And you know, they're using all this that they know, every video if you watched, they know how long you watched it. You know, the thing is just bad top to bottom, there is nothing good about TikTok. And my advice is, get rid of it as soon as you can.

Amy: So, for parents who are saying, "Okay, maybe your..." You know, I don't think it's also healthy to say to your kids, "No social media." Because this is the new world and they have to learn how to be sort of healthy and protect themselves in it. So if we're saying not TikTok, are there any other platforms that you would say, "Okay, maybe this is a good place to start?"

Dave: Well, that's a good question, Amy. You know, these things come and go fast. What's hot today is gone tomorrow. You may recall there was something called Vine, which Twitter bought. And it was kind of like TikTok and then Twitter shut it down. And there's at least been rumors that they might bring that back. I agree with you completely. I'm not saying you should not use any social media at all. Now I'm not a fan of most of these players. I do use Twitter, Facebook, and LinkedIn for various business related purposes and so forth, to some degree. But I also do it without using their apps. I don't have the Facebook app installed on anything. I don't use anything but Facebook, I don't use WhatsApp or any of their other platforms. I don't have...

Amy: So you just get to it through the browser?

Dave: I use it, yeah, in a privacy friendly browser where I have a lot more control over what kind of information they can collect. And for the most part, they're only getting whatever I give 'em. So there are ways you can do this smartly. You know, again, reminder, you are the product, not the customer. They're collecting your data to make money. So, you know, that's part of the tradeoff you're making.

And I agree with your point, Amy. You know, in today's hyperconnected world, when it comes time to try to go to college or get a job or whatever, complete lack of any social media presence whatsoever may not be helpful to you either. But you need to be smart about it. You know, as a parent you should be monitoring what your kids are doing to the extent you can. But part of the problem is, again, you know, five years ago who heard of TikTok? You know, Clubhouse, these things come and go very quickly and usually the kids are way ahead of the parents. I mean, even for people like me in the business, you know, I probably am not aware of whatever the latest cool thing is.

Steve S.: Well, once the parents start using it, the kids are gonna give up because now it's tainted. Oh, dad's on TikTok.

Amy: My mom's on here, forget it.

Dave: Like Facebook, you know, it's kind of like the geriatric crowd like me now, you know. Kids mostly sort of disdain Facebook and like Facebook, you don't [inaudible 00:30:23].

Steve S.: Next you're gonna tell me Myspace and AOL are getting old. Don't do that to me.

Dave: Yeah, Myspace. The perfect example.

Amy: Well, let's hope that TikTok goes by the wayside quickly then. But if not, parents, this is what you need to know about these platforms. Your kids are on there or they're asking to get on there, and you need to know. You're listening to "Simply Money" here on 55KRC, THE Talk Station.

You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner along with Steve Ruby coming up next, misconceptions about credit scores millions of Americans have, maybe even you. We wanna make sure that you don't fall into these traps. Do you have a financial question you'd like for us to answer on the show? Easy way that you can do it. There's a red button you click on while you're listening to the show. It's right there on the iHeart app. Record your question. It's coming straight to us. Speaking of your questions, it's time to ask the advisor. The first question tonight comes from James who lives in Newtown. "I have a state pension, don't know whether I should take the lump sum or receive the money in monthly installments. Is there a rule of thumb? What say you?" Steve Ruby.

Steve R.: James, first of all, congratulations. Pensions are, you know, a dying breed and this is a decision that you have to make that I'm certainly jealous of. I'll never have a pension. And short answer about a rule of thumb as to what you should do, I would say no. There really isn't a rule of thumb explanation on this choice because each person has different needs, different financial situations, different goals. You know, there's some questions that can sway in one direction or another. Are you healthy? Is longevity on your side? Did your parents and grandparents live till they were 102 years old? If so, then maybe we explore the idea of annuitizing and guaranteeing that lifetime income stream.

Are you married? Is there an age difference between you and your spouse? Because you could leave some of that behind your spouse when you're gone, continuing that cash flow. Do you have any other portfolio assets? If no, then making sure that you have something that can keep up with inflation and, you know, go towards other financial goals, and maybe you look at a lump sum.

Amy: Yeah. I always say, and we've said this in the show for many years now, rules of thumb are often rules of dumb because there's just no one thing that applies to everyone. And I think when you look at, "Okay, do I want this big pot of money now or do I want a certain amount every month for the rest of my life?" What makes the most sense? James, get up, go to your bathroom, look yourself in the mirror and ask yourself, "Can I handle a lump sum or would I spend it all at once?"

Steve R.: That's a good point.

Amy: If you think, "Yeah, I can take this money, and I can be really responsible, and I think I will invest it, and I will do these things," well then that money could last even beyond you if you're smart about it. However, if the first thought of that money coming in is that new car or that...

Steve R.: A boat.

Amy: It's always the boat, exactly.

Steve R.: I'm gonna buy a boat eventually, I don't care.

Amy: If the mind goes there, then maybe you want the monthly payments. And I think that's kind of a great way to look at figuring out, but there's, there's no exact rule of thumb that goes into place here. Next question comes from Paul who lives in Avondale. "Fifty four years old. I've got $170,000 left on my mortgage. My rate is just under 3%. I just received an inheritance, I wonder whether I should wipe out that mortgage or invest those dollars. I'm always told, "You don't wanna have a mortgage." So should I pay it off? And also my net worth is about half a million dollars."

Steve R.: I mean, again, it depends. There's no rule of thumb here because everybody has different needs and goals, but, you know, it depends on what other savings you have. For example, what other debt you have. Right now if you do look at the numbers, if your interest rate is just under 3%, turning around and putting those dollars into the market over the long term, you're probably gonna return more than 3%. I don't have a crystal ball. I can't make guarantees, but a fully diversified portfolio is a pretty darn good chance you're gonna net more than the 3% that you save while wiping out the mortgage.

Amy: Yeah. I think math would say exactly what you're talking about Steve. If you do the math on it, that you'll probably come out ahead, if that money is invested. But the key is making sure that money is invested. And at the same time, also know yourself here. Money not going out is the same as money coming in. You're giving yourself a raise by paying off that mortgage. And if that makes you sleep better at night, not having what for most people is their largest bill going into retirement, then maybe that makes the most sense. I don't think either of these options is a bad option.

Steve R.: Yeah, it's a psychological component to it. If it helps you sleep at night and your financial plan still works at the end of the day, then maybe you don't need to return more than that 3%.

Amy: I wanna quickly get to Peter's question from Fort Thomas. Another rule of thumb question, "Is there a rule of thumb for how much umbrella insurance you should have?"

Steve R.: You know, maybe this is one of the exceptions to the rule about a rule of thumb. Really, a quick short answer for Peter is, enough to protect your net worth.

Amy: Yeah. And also even a million dollars' worth of umbrella insurance sounds like a lot, but it's actually pretty affordable. It would just be a few hundred dollars for the year.

Steve R.: Yeah, the premium doesn't go up much when you're talking about 1 million and 1.5 million. It does have a big impact when we're looking at, you know, $3 to $5 million of umbrella insurance.

Amy: But if you have kids and there's trampolines, or swing sets, or people playing in your yard, or someone could fall at your house. Even if you coach a kid's basketball team, I mean, there's so many things that this is just makes a lot of sense for, for the low cost of it. I'm telling you, if something were to ever go wrong, you'll be really glad you actually have this insurance. Coming up next is, new surveys suggest that maybe there's some major misconceptions about credit scores. What you really need to know, next. You're listening to "Simply Money" here on 55KRC, THE Talk Station.

Amy: You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Ruby. Credit scores, these are incredibly important your entire life as far as, anytime you go to get a loan, or open a credit card, or buy something, this is probably going to come into play. But it's amazing to me how many misconceptions there are. Credit card myths, credit score myths that are out there that if you don't understand these, you could make a major mistake. The first one being, a credit score that's too low maybe will keep you from getting any type of credit card.

Steve R.: Yeah. This just isn't accurate. What it will do, is narrow your options. But narrowing your options isn't the same as no options. You can still get a credit card if you have a low credit score, and you can use that credit card to help bring it up.

Amy: You might not be able to get the Amex with a Delta SkyMiles. But there likely is some option for you. And if you are able to get a credit card, use that as a tool to build that credit score. Make those payments on time. Don't use the entire amount of credit that is allotted to you. Those are actually healthy, smart choices that you can make, that will build that credit. Myth number two here, hard credit checks by a business or company won't affect your credit score.

Steve R.: Yeah. What? Quarter percent of the survey respondents didn't think that this was the case, but that is absolutely not correct, it will affect your credit score.

Amy: I can tell you. Well, my husband and I have been pretty outspoken about this. My husband and I have bought some several small businesses over the past year. Every time, there are these hard inquiries. And my husband makes fun of me because I am so obsessed with my credit score that I'm like, "We can't do this anymore, my credit score just went down 10 points." And he is like, "Oh my gosh, Amy, you know, it's still 800 plus." But if you understand how these things work, then it makes it much easier, I think, to keep that score up.

Steve R.: Yeah. Credit bureaus, they do look at, you know, somebody that's applying for credit cards over and over and over again, as a greater credit risk. So these hard credit checks, they do have an effect. But, you know, I think you're fine, Amy.

Amy: Hopefully. Here's another one that kind of goes hand in hand with that. Yes, other companies checking your credit score is a hard inquiry. You checking your credited score, however, is not, and I would say it's something that you very much need to do.

Steve R.: Yeah. You can get the full picture in your credit score once a year, by going to one of the three major credit card bureaus, there's Equifax, there's Experian, and there's TransUnion. And they'll give you a very detailed report of what your credit score is, without actually having an impact on it at all. Even beyond that...I mean, for example, my bank tracks my credit score for me. So that app, I get an update when it says, "Hey, your credit score is ready to view, take a look." I just put my thumb on my phone and boom, there's my credit score right in my face. Not having an effect on it just because I'm checking it.

Amy: Understand. Truths versus these myths go a long way. Thanks for listening tonight. We hope you'll tune in tomorrow. We're getting back to the basics, the fundamental rules of investing. You've been listening to "Simply Money" presented by Allworth Financial, here on 55KRC, THE Talk Station.