2.14.19 We live in a subscription culture; Auto insurance shopping; Going to college is risky
So glad to welcome you to the Clark Howard show where it's all about you. And that Walla yours you to learn ideas to me, so you can keep more of what you make coming up in just a few minutes you want to comparison shop for auto insurance. Good luck. It's today's Clark rage. And later talk about the actual value on average of the level of education. You have what does the level of education from high school through graduate degree? What is it do to your paycheck? I'm going to share some shocking comparisons for you. Some surprising numbers talk right now about. Something that his become the thing. And that is. Subscriptions for services and products rather than paying for them as he by them. It is a massive change in the economy. It is something that is a preferred method to do things for people that are in their twenties and thirties who are the key and foreigners today, and how society works and commerce works the levers of power. Or still heavily in the hands of older generations. But the power is migrating in the consumer sense to people that are younger and one of the key things. They want is not to own stuff. Now, we got an early look at this. At how net flicks destroyed the idea of owning video. I mean, it seems so long ago that people used to own movies. I mean, that's what people did they bought entire seasons of TV shows. That's I mean if somebody loved to show. Let's say the most one of the most popular things on net. Flicks is friends, and there are people who would go out, and they'd buy these cases that had entire seasons of friends or multiple seasons of friends may be able to pop in a DVD player. Now. Netflix paid you probably have heard this a couple of months ago, they paid a reported hundred million dollars to get the rights to continue to be able to show friends for one more year because parents for a lot of people. They're one of their motivators. To subscribe to net. Flicks is so they can watch friends episodes. Again, paying a monthly fee. The depending on barebones can be like eight bucks on up for net flicks. And it taught industry. That this is what so many people want now. And we are on the edge of an all out revolution in automotive market. Where people will. Subscribe to car services. Instead of own car early Sukur. As to how the ultimate economics of that will work out for you. It's gonna take a while to figure out the economic models. But the models have told you about I started telling you about about a year and a half ago with luxury brands that you pay a monthly fee, a big one, and then you can drive pretty much any vehicle within their fleet and change them out regularly. Now, that's not for everyday people. But being able to pay a monthly subscription inhabit include auto insurance and things like that. And you're free to ditch the subscription at any time. That is going to be a prominent way that people have transportation. And I'm somebody who likes to own things. Like, I have my own scooter like the lime or bird. Probably not the smartest thing to have my own probably makes more sense to pay a dollar ride and fifteen cents a minute, which is the common price point. But I like riding my own. I know how it performs and all that. And. There are so many things that. In my mind. It's like you own it. But one thing that's becoming clearer is not just because of the unaffordable of owning your own home. There are a lot of people who prefer the relative freedom of being a Renner. Instead of owning a property. You have to take care of. So this is a major transition in our economy as we transition and people try to figure out the right price points and all the rest. No that you as a consumer need to think through before you just click. Yes. It's so easy to sign up for every kind of subscription possible. Just think through is it something you really going to use and is the price really right for you and your budget. Stephen is with us on the Clark Howard show. Hi, stephen. Hey clark. How're you doing wonderful? Stephen, how can I be of service to you? Listen to you for quite a while. Now in never really thought about a retirement until what about a year ago when I took care vice on say everything's clear dad and have about aren't thirty thousand left on my mortgage. You're pretty young to have no debt at all the mortgage debt, and what's the value of the property right now Dali pretty high it's probably about two fifty five to sixty five. So you already in your early thirties. You have fifty percent equity in your home, and no other debts. Do Nodar dad all you are saying what happened Audra lean about trying to figure out. I try to pack my mortgage and paid off weekly or put away more for my four one K retirement plan and just try to save as much. Kanner pay my mortgage, you know, as I'm been doing it for us eight years where I just pay the, you know, the the normal minimum amount. So what is your mortgage interest rate, Stephen four point five four point five? So four point five puts you in a territory where the question would be can you out earn four point five over time in your in your four one K? And the odds are really good that you could earn more in the 4._0._1._K over time. Then what you're gonna pay on your mortgage at four and a half percent. So you've got a very favorable mortgage interest rate, and is a great feeling to be mortgage debt free. But if you with thirty years left till traditional retirement age for you socking as much money as you. Can in your 4._0._1._K is really a great choice. I got a question for you before you asked me your next question. Stephen does your employer offer you a choice between a traditional 4._0._1._K and a Roth 4._0._1._K or they only offer they do offer both Dale for both. And right now what I'm doing is doing lead a traditional and contributing about sixteen percent of it. Oh, man. I love you. You are incredible saver. So when at like, you to do is I'd like you to put a little more pinch on your wallet and stop doing the traditional in. Instead do the Roth. Okay, we're doing right now is with the traditionally they're matching seventy five percent for the first four percent. And then plenty five percent of the next four percent. So they match total eight percent. I wanted to know if I should just just go down to the minimum and just contribute a full maybe fully percent. And then just go with the box and contributed as I can't cause by June of next year. I'll be grossing almost seventy thousand dollars a year. So I'll be able to do about twenty percent total contribution. All right. So let's stop for a second. They will still do a match if you do the Roth four one K that doesn't change the match they do goes into the traditional side. But they'll still do that match for you that will not change anything about them matching. So it's really great for you to build up to piles of pre-tax pile and post tax pile of money because when you hit retirement having both piles is really Val. For money management later. Have you? If you do let's say even stay yard sixteen percent, which is outstanding that you're doing that. If you do the sixteen and you do it in the raw that means you do an after tax. So essentially, you will have raised your contribution effectively to the twenty percent you were thinking of doing at some future date anyway, but I would make that change. And I would do the raw 4._0._1._K and do that as a higher priority than paying down on the mortgage? If you're able to do sixteen percent though, and you realize you still have surplus money, and you want to exceleron paying on the mortgage go for it. I'm really impressed with you. You've set a financial plate for yourself. That is a great meal, and you're saving an enormous amount. You have minimal debt, and you have great freedom in front of you. Because of those choices you've made. Made. And I'm gonna mess up. Your name is a Rayan. No. It's Ryan Ryan. Oh, insistent misspell on the computer. I'm sorry. Right. Tell you. I'm looking at R Y N for your. No, no, no. It's Ryan how you doing Clark. How are you? I'm good good. It's pleasure to talk with you. I've been with you about fifteen years. So you're you're like my hero. Well, you were kind. Thank you. I got two quick easy questions for you. All right. The first question. So because I am Clark smart and kind of cheap. I need some new checks for my personal checking account and my credit union wants to charge me twenty one dollars for a hundred checks, and I very much like a co op owned by members twenty one bucks. I didn't think that was a good deal. So I know in the past you've talked about where to find checks, and if you could be so kind to let me know what you suggest that'd be great. Okay. So first thing Sunday newspapers, you still have a Sunday newspaper anywhere near you. I do right. So in the Sunday newspaper. They will have you'll see coupons for getting checks cheap first time. Okay. And we don't write enough checks anymore. C? You get let's say two hundred and fifty checks from one of those Sunday glossy coupons. It should last you many many years and okay checks. Now are so inexpensive ordering from one of those services. Probably somewhere in the range of maybe five bucks. Let sell. Wow. Okay. And also if you're a Sam's Club member or Costco, wholesale member. They also sell checks to members. And they're one hundred percent of the time they're cheaper than what you're gonna pay for checks ordering them. Win a credit can't believe credit unions charging that much, but a credit union or Bank is treating checks as a profit center selling you checks. They truly are. I thought that was a lot of money that is an insane amount of money. And okay. So it should be really easy for you. Find a dealer you a member of either the warehouse clubs. Oh for sure Cosco. Okay. So you can see at Costco's website what their cheapest checks are. And I think they're about half of what it is. And if you're a premium Costco, member you get an additional twenty or twenty five percent discount on check orders. I really appreciate that very much. My other question if you got time, I'll keep it quick. Okay. Do you have a book coming out and a book tour coming up anytime soon? No more books. Oh, Clark come on. Nope. No. I wrote ten I was fortunate to be on New York Times bestseller lists three times a number one once but the market is moved on. And that's why Clark dot com. We have new stuff every day. We now have to dozen writer. Irs on it because you want new content constantly. That's what the marketplace once. And that's taken the place of me having to go on six months book doors and never see my family, and they look at a picture of being that's how they remember. What I look like this episode is brought to you by ZipRecruiter. Hiring used to be hard multiple job sites. Stacks of resumes, confusing review process, but today, hiring can be easy. And you only have to go to one place to get it done. Ziprecruiter dot com slash saving. Ziprecruiter, send your job to over one hundred of the web's leading job boards, but they don't just stop there with their powerful matching technology. Ziprecruiter scans thousands of resumes to find people with the right experience and invite them to apply for your job as applications come in ZipRecruiter analyzes each one and spotlights the top candidates. So you never miss. Great match ZipRecruiter is so affective that eighty percent of employers who post on ZipRecruiter get a quality candidate through the site within the first day and right now Clark Howard podcast listeners can try ZipRecruiter for free at this exclusive web address ZipRecruiter dot com slash saving. That's ZipRecruiter dot com slash S. A V, I N G ZipRecruiter dot com slash saving. Ziprecruiter, the smartest way to hire. You're not gonna believe this. A new report out that only one in four people who shop around for auto insurance. Like I recommend. You do have been successful buying new auto insurance online. The industry is intensely hostile to you shopping around except for the small number of insurers who specifically push you towards shopping around like gyco and. Progressive and it is a fear in the industry that people will become price oriented, and they're not gonna measure up most insurers. So I believe that the stubbornness and the fear of old line auto insurers being afraid is going to lead to a much better model for you buying insurance. And it's gonna be buying insurance on an app on your phone. And if the old line players don't wanna play new Windsor going to continue to emerge that are going to make it possible for you to buy insurance as you need it or by by the mile. I know this is weird. But the marketplace will much better be supported and pricing will be more obvious and more competitive when auto insurance alternately is sold by the mile, and we're not far from that point. And it will be a great day when it happens. This episode is by Comcast business. Every industry will see some form of digital transformation. When Comcast built the nation's largest gig speed network. Most businesses were fixated on megabits per second. Now with new needs to be met. Comcast business is moving beyond beyond. Connecting business to applications that help you create innovative new experiences beyond network complexity to the efficiency of zero touch one box world beyond the best products for your money to the best solutions for your business at an even greater value. The company that delivers unrelenting speed in more places is also the company making digital transformation possible for more businesses. Comcast business beyond fast. Take your business beyond at Comcast business dot com. It's my pleasure to have you with us here on the Clark Howard show where it's about your empowerment with knowledge. So you can save more and spend less and don't let anyone ever rip you off. You got a question for me and go to Clark dot com slash ask. And post to way, and we'd love to answer your questions. So. So there's a real movement today to try to discourage people from getting a college degree. It's more and more talk about how people get a college degree or having a hard time. Finding jobs that even need a college degree four, and it's a real backlash against the traditional four year college experience, and I wanna tell you there's more nuance to this than this react going on. I I wanna share with you. New data from the US census. And it shows that the earning power you have per year for everybody who has college degree high school degree, whatever this average. So don't compare yourself to this. This is showing the relative earnings of people based on education. So let's start with somebody who gets a advanced degree a master's or some other form of graduate degree. They average ninety five grand per year. According to the census, the average person with a college degree averages whisker under seventy thousand. The average person has some college which a lot of people go to college don't finish go for year or two maybe. And then they life happens, and they're not going to college anymore. Listen the difference. So the average person who's got the four year degree earns almost seventy the average person just has some college earns forty a massive credential gap. And it's in the life's not fair department is a lot of people who've had some college have learned really great stuff in their earning power should not be crushed that much. But that's what the marketplace says. How about if you have a high school diploma? Little more than thirty five thousand a year. So the big gap there's some gap between high school and some college. But the big gap is between some college and getting the degree. And that is a giant difference is another leap from the college degree to graduate school. But the biggest one by far is some college versus a college degree. So where's Elvis lead me to? Not everybody is college material. It's not your thing. It may not be of interest to you. But virtually everybody will benefit from getting a skill from getting a trade and. There are jobs that pay very well. Would you have that skill or trade? But there's a new factor is that really new, but it's one that people are not grabbing hold of. And that is historically in America different than a lot of people in western Europe. We have really had a fixation that you gain your education from your late teens to your mid twenties. And then you're done with education, but education today because of the changes in the workplace, the changes in jobs, education and training need to be looked at as a long-term lifelong pursuit and dropping out of college in particular. Should not be the terminus of it. If it means you didn't find it relevant. It didn't work for you. So go to trade school or apprentice programs aren't as big in this country. They are there places. But that's something. You can look at too. And money's not everything. I know a lot of people who are in middle age. Got a particular skill when they were young specifically because it paid well, but they're miserable. Do what you love. Do. What you love. It's what educators refer to is the intersection where you do what you love. But you also look for where what doing what you love can also generate a paycheck. Can do it a lot more than you realize? It's not as obvious as OEM starting to be an electrical engineer. I'm studying to be this that or the other. But there are many possibilities when you do pursue. What you love. Denise is with us on the Clark Howard show. Hi, denise. Hello. How are you, sir? I'm doing great. Thank you. How can I serve you? Well, you were just speaking acquire about the education. I spent fifteen years getting my education one class at a time while I home schooled my kids off and on. But our they do, oh, they're doing great, man. My youngest son is in in his last two years of high school now. Great. Okay. I I've got a little more to run with my youngest. He's a seventh grader. Oh, good luck to you. Yeah. So I I managed to graduate with my bachelors degree and then with my master's in class at a time and landed a good stable job with the air force. And as I started earning a living wage, I went to my local credit union. They have a basically a retirement finance counselor there. And I asked them for vice on how I should start preparing for retirement because I'm starting Soleil in the game. And I was a little disappointed because his advice was essentially just save as much as you can. That's all I can tell you. And I thought no there's got to be something more that I could do because I don't really have the time on my side to do the compounding interest. And so I have a real estate license on the side. Although I don't work in that field at all. I mostly got it because I'm really interested in. Real estate, and I've always had a kind of in the back of my mind. I'd like to invest at some point. But I was wondering if you had any advice for somebody starting leading to the game for those of us who are late bloomers? Well, let's talk this through. So are you a civilian employee of the air force or you contractor? I am a civilian employee of the for, sir. All right. Well, thank you so much for your service. And I wanna tell you that that makes you eligible for the T S P. Yes. And the TSP is the greatest retirement plan that we have as earthlings. It's fantastic. Oh, that's good to hear. And so you, you know, you can pursue this other interest in real estate. But the thing I want you to do is is. Start at with the amount you can feel you can afford in your budget in the TSP. But I want you to keep stepping up the amount you contribute because TSP has the lowest cost of any retirement plan any of us could possibly have. It's extremely well managed and because you're a civilian employee. You get a match, correct. Up to three percent. We get dollar for dollar. And then the next two percent is fifty cents on the dollar during five percent, which would pick up all the match money. That's not going to be enough for you. How much are you putting in at this point is a percent at this point? I'm doing five percent because I'm paying off all of my consumer debt. I figure I can't get a better return than not paying eighteen nineteen percent on credit cards. But I would like you to I'm going to ask you to do a stretch. Okay. Okay. I'd like you every six months to step up the amount you're contributing TSP one percent. Oh, sure. 'cause we don't notice it and little increments like that. And you can stay on your path to pay down on the credit card debt. Makes sense. In addition on the credit card debt, you said you're a credit union member. Yeah. Do they offer a balance transfer that will get you a lower interest rate on that debt? Actually, I already did that and I've almost paid off that credit card. Oh, great. Yeah. So I only have about three thousand dollars left. I started about forty two thousand good job. Yeah. Thanks. Yeah. Feels pretty good. I I sense. The shackles falling off now. Wonderful. So in that too. Yes. Pe- as soon as you finish paying off that debt step it up more than just a percent or two because what you need starting later. You do have to devote more of your paycheck to building money as a war chest for retirement than someone who started younger and keep on going till you get to the maximum eventually that you can contribute to the TSP cheer and go into the life cycle fund. That's appropriate. That one I actually already in that one. That's the right thing for you to do. So that's the most important thing. If in addition to that, if you have the energy and the time, and you wanna pursue doing real estate on the side, go for it. They weren't. I mean, it's different kinds of ways of creating more wealth overtime or more income in the current time with the TSP is where I want your efforts really concentrated, and congratulations to you for what you did raising all these kids homeschooling and getting all that education for yourself. You should be really proud of what you've done. Millard is with us on the car coward show. Hi millard. How are you? Hey Miller Clark. It's great to talk to your right to have you here. Millard? I understand your aggravated with how I praise credit unions. All the time is that accurate. Well, kind of I've heard you go on rants about the evil megabanks. No, no, giant monster. Megabanks? Exactly. I couldn't agree more. I'm proud to say that I'm with a small locally owned Bank with less than a dozen branches and very very happy. They've been great to me. But here in my community, which is a metropolitan area of nearly a million people. We're dominated by a mega credit union. And it's very very hard to get away from them, the smaller credit unions are farming off some of their services to the large credit union. So that we get caught in the same loop of no customer service that the big banks have been offering for years. You are you are bringing up a very valid point. Credit unions are going through kind of an awkward adolescence right now. And it's for a specific reason the credit union industry is having to pivot because people who are in their twenties and thirties only want to do banking on their smartphones and setting up really really sophisticated apps requires huge money and a lot of smaller. Credit unions don't have enough funds to super serve the people in their twenties and thirties who were never going to Bank. Like, maybe I did growing up. And so the credit unions are having to bulk up, and as they become larger or is they go into these cooperative efforts with other credit unions. They become more bureaucratic and not as personal as the experience. People have been used to. The problem that I had with the large credit union was that I left them because of problems servicing my mortgage, and I refinanced at a much better rate a couple of years ago to my local credit union only to find out that my local credit union was outsourcing all of the service for the mortgage loans to the mega credit union. So when you talk about a mega credit union. There's only one Jain normal credit union in the country. That's a nother Clark term and that is navy federal. But even navy federal is like one twenty fifth the size of one of the giant mega giant monster megabanks. So I support that you are leading your feet walk to where you were happy and where you're getting the best service. And that's a great decision on your part, and you know, credit unions the way, they're structured are going to be generally a better choice than a Bank. But credit unions are not a monolithic can be good ones. Bad ones in between. Just like there are with banks. This episode of the Clark Howard podcast is brought to you in partnership with health IQ an insurance agency dedicated to awarding the investments you make in your healthy lifestyle health IQ treats health, equity, like an asset class using science and health literacy data to save cli-. Up to thirty three percent. Have you run a marathon? Or do you cycle regularly? Do eat a healthy diet. See how much the investments you make in your health? Conserve your family by getting a quote at health. I q dot com slash save. That's health. I q dot com slash S. A V E Mike is with us on the Clark Howard show. And Mike I understand that. You are a proud member of team Clark in that you're going to protect your fellow listeners from some form of scam. Is that right? Yes, we have. We have got phone calls that our home, and I've got on my cell phone and everything else from these places wanting to fix your computer and. I mean, they they call eight thirty in the morning, and it's like, oh, we we weren't we wanna recur your computer. That's that. And and every time you call in in. I don't know what they wanna do my dad, and I just hang up on them or tell them, we don't have computer. But I got a phone call one time on my laptop. And this thing is just all those new out of the box, and it, and he said always said you put my first off to office on there. There's something wrong with the server and can cause within crash, and this that the other course, I want to charge money. No, it's much worse than them charging money. Let me tell you. Well, they what they want to charge affects us they a. It's like well there. Nothing wrong with it. If I any problems all apple. Yeah. It's just that you get some of these older people or starts they and they don't still fall for that. Steph. Oh, no, no, not just older people the has been on ocular, my well, so popular let me pretty different way. It's been very successful at stealing people's money. But even worse locking down their computers. And then you have to pay what's known as ransomware to get your own computer back working. Yeah. Well, that's what this one guy said on the internet. He said he said my computers now paperweight, you know, he said, it's just ridiculous. So let me say something about this just for your fellow listener what they do is. They actually convince you that they're gonna fix the computer. And they ask you for certain information that allows them to. Seize control of your computer remotely. And that's when they predicted the future because then they make your computer paperweight and put deadly viruses on it. Don't engage any of these people in conversation to just what you've been doing hang up the phone and avoid the crooks. This is the Clark Howard show. Thanks for joining us today that Clark Howard show is produced by Kim droves. Joel LARs guard, Debra Reese and gem airs and remember twenty four hours a day where there to serve you at Clark dot com and Clark deals dot com.