The Clark Howard Podcast

Latest Episodes:

3.5.20 How to shop for life insurance; Show some love to your 401k Mar 05, 2020

Show notes

Life insurance agents are only there to pitch policies with some kind of add-on - the equivalent of a savings or investment account, or something they claim can be used for retirement, will ultimately pay for itself, etc. They have to push ultra-complicated policies to gain more commissions. A straight up policy isn't worth their time. Complicated policies have very high commissions and high costs for consumers. Think whole life, variable life, universal variable life, index universal life etc. When the name gets long, it gets bad for your wallet. For those of use who earn less than $400k, level term life insurance makes sense - derisively referred to by agents as 'just death insurance'. The purpose of life insurance is to provide for the living after you're gone - replacement of income for family. And nothing does that more efficiently or cheaper than level term insurance. In general, buy 10 times what you earn per year. Level term offers coverage for 10 to 30 years that pays only if you die during the term. If you outlive it, it pays out nothing. But premiums are hyper cheap and won't impact your living standard. See our buying guide to insure and protect your family.

For investors, fears of market losses are common. The market bottomed in 2009, essentially tripled by 2016 and has risen since. Many believe we're on borrowed time. Investing goes through cycles, and some investors are compelled to move their money into safe, stable choices, like CDs. But even if the market fell off a cliff next week and stayed that way for a few years, for anyone in their 40s or younger, this would have no long term effect. It might actually make you more money to just stay the course and leave your money well diversified. The easiest answer for most of us is the target retirement fund closest to the year of your retirement. Remember when the market tanks, every contribution buys more shares for the same money. When the market eventually recovers, it boomerangs to give you more money than you would have had in a steady market. Declines are your friend the younger you are. Closer to retirement your portfolio should be more conservative, but you don't stop putting money into the market. Just dial back risk at 60, as you may live another 30 years. Being older doesn't mean you bag investing. You simply reduce risk, done automatically by target retirement funds, while maintaining opportunity for meaningful gain over time.

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3.4.20 Home renovations that pay off; Buying used clothing and furniture Mar 04, 2020

Show notes

We’re moving into the home renovation season. The National Association of Realtors and National Association of the Remodeling Industry | NARI conduct value studies and have found that a homeowner will get back 50 cents on the dollar for a kitchen remodel. So a 10k kitchen redo will increase the value of your home $5900 at best. The return on adding a master bedroom suite also yields around half. What does pay? Hardwood flooring, HVAC updates and insulating come close to recovering costs. Clark’s simple rule: The reason you renovate or add on to a home is enjoyment. Don’t con yourself into thinking you’re investing for a positive return in cash.

People are stretching their dollars by taking advantage of how much things depreciate from new to used, particularly in the area of high end women’s clothing. Nordstrom is now actively selling used clothes, joining Macy’s and others. Independents include ThredUp, and TheRealReal. Used furniture is another high depreciation category – not so much for upholstered furniture. If relocating, check Freecycle and Craigslist for furniture.

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3.3.20 Roth conversions post SECURE Act; Making your employees feel appreciated Mar 03, 2020

Show notes

The SECURE act has brought changes to how retirement accounts work, how they're taxed and inherited. Pre-taxed money goes into traditional IRAs. Contributions + earnings are all taxable upon withdrawal. With SECURE Act changes and tax rates only expected to rise in the future due to massive budget deficits, there's a big advantage to convert money over time from traditional to Roth IRAs. Once you pay the taxes at today's lower rates, that money becomes tax free for the rest of your life. Also, it's best for beneficiaries to inherit a Roth IRA vs. a traditional. If you have IRA money and can pay the tax, come up with a plan to steadily move the money over years. Exception: those who make more than $350k a year. Everyone else will see benefit from moving money to a Roth.

Business owners have the responsibility to treat employees well and let them know their voices are heard. Truth: Most employers aren't very good at truly appreciating the people who work for them. But valuing employees is key to success. You treat employees well, they in turn treat the customers well - everybody wins. Lip service doesn't count. Actions do. How do you let your workers know they're truly valued? Interests have to be aligned. Employees need to understand how they benefit from the success of the business. A paycheck isn't enough. Many workers now need to know that what they're doing benefits society. If you as a worker feel you're not valued and the workplace is unpleasant or the culture is corrosive, search the strong job market and find a place that really does value you.

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3.2.20 Pharmacies exiting supermarkets; Cheapest cell phone plans for low usage Mar 02, 2020

Show notes

The pharmacy business is shifting and market share is moving to a smaller number of players. CVS and Walgreens are taking a huge volume of prescriptions. Many with employer insurance use mail order pharmacies. Others are free agents using supermarkets, warehouse clubs or independent pharmacies. If you don't have pharmacy benefits, check your options. Take Walmart's $4 Rx list with you to doctor appointments for direct prescribing there and save. Know that the cheapest overall place is Costco pharmacy, and Good Rx provides transparency and potential discounts. Some pharmaceutical manufacturers provide help with costly prescriptions. Some PBM - pharmacy benefit managers via employment - will not approve some costly meds. If you have an Rx benefit that turns you down for coverage, many drug companies offer enormous help with a coupon to obtain that med free for a year or at a monthly discount. The more questions you ask and the more you look around, the more you'll save.

See our continually updated cell phone plan guide to pay as little as you can for reliable service. Now there's a plan offering unlimited talk and text for free, via ads- from TextNow, with a $10 SIM card. Unlimited data with Wi-Fi, otherwise talk & text only when roaming. TING allows use over multiple networks including Verizon and Sprint, and offers purchase of minutes and text blocks for under $10 a month. You can also buy data, but it's not a deal if you need a lot.

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2.28.20 Don't put your tax refund on a gift card; Clark Stinks Feb 28, 2020

Show notes

Recently Clark discussed how AT&T issues refunds on stored value cards. These cards are intentionally tricky to spend down – disallowing partial payments by design to keep some of your money through ‘breakage’. Several tax preparation services are now trying to sell customers on accepting their refunds on stored value cards or even Amazon gift cards. These cards have ridiculous junk fees – monthly fees, per transaction fees etc. Putting a tax refund on any kind of spending card is a bad idea. The best use of a tax refund is to pay down debt or contribute to a Roth. Don’t fall for these pitches. They’re all about you spending, paying fees, and giving them the ‘breakage’ money left on the card that you end up forfeiting. It’s your money!

Christa reads listener posts about how Clark has missed the mark in his advice this week. If you have a "Clark Stinks" to share you can leave it here.

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2.27.20 Apartments with no lease; MGM data breach; Saving on prescription drugs Feb 27, 2020

Show notes

Being stuck in an apartment lease when you need to move quickly is a long time problem. Very few leases have any kind of out. Now, a company called Landing, designed around the lifestyles of young adults, rents through membership agreements. You rent an apartment within their system, and are allowed to move to any other property in the Landing system on 3 days’ notice – no penalty. This allows the nomad in you to wander. You pay $200 a year for this advantage. If you choose to move outside Landing, you need to give 30 days’ notice – still no penalty. Landing operates in several states now with plans to be in most major cities by year’s end. Wouldn’t this work well for retirees as well as a way to travel and experience new places? Landing provides ultimate flexibility. Units come furnished so moving is easy.

MGM resorts has been hit by a massive data breach affecting roughly 11 million people. Criminals got email, phone numbers and physical addresses – ‘phone book information’. Marriot suffered a large breach a year and a half ago. Potentially half a billion people around the world are exposed through hotel chain hacks. Consider having a specialized email address. Don’t compromise your main personal email at the heart of your life and data. Have a separate email address for commercial activity.

The core to saving on meds is to be proactive. Before a provider writes a script, you can check costs and offer an alternative. Have a pricelist from your pharmacy, check your prescription drug plan. You can use a discount program like GoodRx and spend less by not going through insurance. See our guide comparing 5 major prescription drug programs: SingleCare, GoodRx, Blink Health, RxSaver and WellRx. Among the 15 common meds tested, RxSaver was consistently the cheapest, but that doesn’t mean it will always be. GoodRx came in next. We discovered that using 2 of these is likely to get you the best price. Clark checks his insurance coverage and then otherwise. It’s surprising how often meds are cheaper outside insurance using a discount program. There’s great advantage to checking up front before a med is prescribed. Medical professionals don’t know costs. It’s up to us to manage what we pay.

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2.26.20 Discount brokerage consolidation; Check scam hitting millennials; Beware bad car-buying advice Feb 26, 2020

Show notes

The investment industry is going through consolidation that will lead to fewer players. Weakened mutual fund companies, stock brokerages and investment houses are merging. A small number of huge players will emerge. All this has come about because of the enormous strength of the big 3 discounters. Vanguard, Fidelity and Schwab have essentially demolished the competition. Traditionally, investors paid massive fees to bank investment arms or full commission stock brokers. Some still do but the movement is to lower costs. Full commission outfit Morgan Stanley is buying discounter E*Trade, ostensibly to sell E*Trade customers on their products. It’s important to know what you’re buying with any organization you invest with. Understand what you’re getting and what you’re paying.

The FTC warns the phony check scam is roaring back, now successfully targeting young adults – those in their 20s and 30s who have never been check writers. They’re less likely to suspect a check is bogus, especially if it clears. In addition to elder loved ones, make sure the young adults in your life know that if they get a UFO check with instructions to deposit, keep part of the money and do something else with the rest, they’re about to get scammed big time. The check that cleared will usually bounce in 4 to 6 weeks, and they’re liable for all that money.

Right now there are various disasters associated with trading in a car. Simple rule: DON’T trade in a car that is not paid off. Around 30 – 40% of people are dumping cars they’re upside down in. Danger zone. There are dishonest car dealers that know they can’t get a loan to cover an upside down trade, so they’ll encourage the customer to buy a new car with a fresh loan, and just default on the vehicle they wanted to trade in, and turn it in to the lender. In the auto industry, this is called ‘kicking the trade’. These dealers are NOT telling people that allowing a repossession will ruin their credit for 7 years. The lender sells the vehicle at auction, and in most states you’re liable for the difference between what it sold for and your balance plus expenses. You no longer have the vehicle, your credit is ruined and you’re responsible for all the money the lender lost. This eats up your future. If you hate your car and owe on it, tough it out, keep driving it and pay off that loan. Get out of the cycle of owing more on vehicles than what they’re worth. Long loans leave you upside down, and paying way too much interest.

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2.25.20 Personal preparation for economic slowdown; Wells Fargo settlement; Best value supermarkets Feb 25, 2020

Show notes

The coronavirus is spreading but know fatality rates are very low. It is creating enormous impact on economies around the world. The U.S. travel industry is hard hit. Airline and cruise line stocks are down and Expedia is laying off 3,000 people. Expect more lay off announcements as part of a response to economic slowdown. It’s unlikely we’ll follow much of the rest of the world into a recession cycle this year, because it’s an election year. But the tremendous job engine we’ve seen in the last 9 years will slow, pause or reverse. This is our signal to do what we can to prepare by getting our finances in order. Rethink impulse purchases. Build up a reserve of cash. Consider how you’d handle fewer work hours or a lay off. We may go into a growth recession, wherein technically the economy is still growing but the job market is weak. This is a yellow caution light moment in the economy. Interest rates are an economic tell more than stocks, and expectations are for lower interest rates moving forward. Look at what you’re spending and what you owe. Think through what you can do to get your finances in order to prepare.

Wells Fargo committed criminal acts against its own customers for a full generation, with cheating scandals that go back to 1998 according to Federal prosecutors. In the court filing they only admitted to unlawfully misusing customers’ sensitive, personal information. They paid a $3B fine and avoided criminal conviction, prosecution deferred. If Wells Fargo doesn’t engage in anymore such activity over the next 36 months they will not face criminal prosecution. WF engaged in massive ID theft, cheated their auto loan and mortgage customers and cheated their checking and investing customers over a generation and no one is going to prison. If you rob a bank, you get 20 years. But if a bank robs you, the executive leaves with $millions in their private jets for the country club – no jail.

Around 5 regional supermarket chains have filed for bankruptcy over the last month. Many will disappear. Americans have changed our profile on how we buy foods, now more price focused. Supermarkets at all price points are pushing private labels more than ever. Most feared is Aldi – which is around 93% private label. An industry survey reveals Aldi is the cheapest place to shop, with a 40% price advantage over traditional mainstream supermarkets. Competitors are cutting hours to lower their costs. New England based Market Basket follows, WinCo is 3. Lidl is 4 in pricing followed by Trader Joe’s, a corporate sibling to Aldi. Amazon is also trying to complete. They’ve just opened their first of what they hope to be a chain of cashier free stores. They reportedly intend to sell this technology platform to other retailers to eliminate check-out lines, a convenience for shoppers and cost saver for retailers.

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2.24.20 Fraudulent tax returns; Get a Real ID; Coronavirus affect on markets Feb 24, 2020

Show notes

The IRS has announced they’re going to send out revenue agents to homes and business of people who owe or who have failed to file. Crooks see this as a huge opportunity to impersonate agents and fake demands for money. The IRS is targeting business owners and those who make over $100K a year. But the crooks will go after anyone. The IRS claims their agents will be highly trained and will not require the purchase of any type of prepaid card – which is a scam tipoff. The IRS is short staffed. If someone shows up at your door, the odds are it’s a scamster. A real agent would at most ask for a check made out to the U.S. Treasury. Legit visit or scam, do not be intimidated. Knocking on people’s doors is wrong, mean and stupid. Meanwhile, Tax ID thieves are circumventing the IRS fraud indicators by going for more refunds with lower amounts, going now for hundreds vs. thousands per refund. If you can’t file, you may be a victim of tax ID fraud, and will need to go through a separate, manual IRS procedure to process your return.

Real ID started 15 years ago with the final deadline repeatedly delayed. After the deadline, you cannot fly without Real ID. Compliant licenses display some form of star logo. Only around 30% of Americans have a compliant license. The Dept. of Homeland Security has a new procedure allowing application online. Individual states will have to design systems to allow this. Flying will require Real ID DL, or a passport, military ID – some form of verified ID. In person DL renewal requires special documentation now. Know what you’ll need before you go or apply online.

In the wake of spreading illness and loss of life, coronavirus is having a devastating effect of economic activity in concentrated areas of Asia, moving into Europe and Iran. There is potential for continuing spread of this virus. Economic effects are increasingly global. Markets that have been highly valued in the U.S. could see a breather from these inflated values. If coronavirus becomes a risk to health and life in the U.S and Canada, markets will be affected. Keep funding your retirement funds. With dollar cost averaging, a stock market decline in 2020 means you’re buying more shares and should make more money over time as those shares recover. If you’ve got money in savings including online banks, those rates are likely headed lower. For money you won’t need soon, lock your money in a one year CD to preserve a better interest rate with an online bank or credit union, never a traditional bank. Mortgage rates are also in decline, making now a good time to refinance.

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2.21.20 How to live longer and healthier; Clark Stinks Feb 21, 2020

Show notes

Harvard University researchers began a health study in 1980. Time Magazines reports subject lifestyle factors were tracked for 40 years. Healthy lifestyle factors include no smoking, no excessive alcohol, regular exercise, healthy weight and a low-fat, plant-based diet. Findings indicate those who practiced 4 out of these 5 healthy lifestyle choices enjoyed more disease-free years - After age 50, 10 more years for women, 8 more for men. Women's lifespans increased by 14 years, men's by 12. So both quality and quantity of life are enhanced with healthy lifestyles. Diabetes, heart disease and cancer were the areas of risk examined. CA HMO Kaiser Permanente has been testing Samsung heart monitoring watches. Among the 4,000 distributed so far, KP finds that after a year of monitoring, the readmission rate for program members is much improved over non users. Those without monitors were 5 to 8 times more likely to have a recurrence of heart trouble. This monitoring program is set to expand.

Christa reads listener posts about how Clark has missed the mark in his advice this week. If you have a "Clark Stinks" to share you can leave it here.

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