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How to make it, spend it, and invest it

The Clark Howard Podcast

Clark Howard is the watchdog for consumers everywhere, and we feel Clark is a perfect fit. Protecting your wallet and keeping you apprised of the latest in consumer technology every weekday.

Reverse mortgages have been a caller topic for Clark for 2 decades. When people are house rich and cash poor, reverse mortgage -wherein the mortgage company sends you a check every month while you still live in the home, appears to be a solution. Routinely Clark goes through a checklist to determine the severity of the financial situation, and warns of the high fees involved. USA Today investigated the industry, finding many bad players looking to steal people’s homes via foreclosures. This opened a floodgate of people confirming this was their experience. The reverse mortgage market has been dirty forever. Ads with trusted spokespersons lure people into this. There are situations where a reverse mortgage does make sense. But any legit lender has you go through independent third party financial counseling for evaluation to see if reverse mortgage really is appropriate. Have a knowledgeable family member or lawyer review any documents before signing up for a reverse mortgage because of thievery is so prevalent. Shame upon them. They know this is wrong and do not care. 

Special Warning: Ads in print and online for CDs with high interest rates are appearing. But they’re not really CDs and the rates of 4.5 to 5.5% aren’t that high historically. These are NOT CDs, NOT FDIC insured. Your money is at risk. This is a version of a promissory note and many people over the years have been burned by this. Some of these offerings are from crooks, others from fly by night outfits. In either case you can end up losing ALL the money.

Clark went into the travel agency business at age 25, sold out his chain of agencies at 31 and essentially retired. Circumstances brought him into broadcasting. The industry has changed greatly since he sold his agency in 1987. Travel is much more popular today, and we can book ourselves. But most of us travel infrequently and become bogged down in details when trying to plan travel. See our updated guide to make planning easier, the Clark Howard way. Barring work travel, Clark’s key rule is that everything is driven by finding a deal. By so doing, he has been to every continent except Antarctica. For those with wanderlust – there are so many deals! Follow the bargains, have to guts to go to new places and see the world. Follow deals so great you’ve got to buy them. That’s the Clark Howard way!

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Carl Richards, “Sketch Guy” columnist for the NYTimes, breaks down financial advice to simple sketches and is able to address motivation and how we work against ourselves. Clark is unapologetically dull and believes creating financial security should be dull as well, achieved slow and steady like a turtle. Many are always looking for the big score, the hot tip. So Clark’s favorite Sketch Guy message: “The path to long term change is slow, simple and boring”. Your investing should be boring so that you can have an exciting life. If your goal is to become a millionaire, if you start in your early 20s, it can be done by retirement. That goal is a heavier lift the longer you wait to start. But you start when you start investing what you can. The earlier you start and the more money you add over time, the more financial security you create for your life. Start early in a Roth or your retirement plan at work.

Many bought smart TVs on sale over the holidays. Many of these TVs are vulnerable to hackers getting into your home system. Dig out the owners manual and implement a secure password – replacing the default password. You may have brought a potential trojan horse into your home. Secondly, cover up the camera. You do NOT want a hacker able to spy on you. 

What to do after a car accident to ensure your safety and best consider insurance options. Check out Clark’s online guide here.

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Optometrists are independent. Even as they’re renting space in a Costco, Sam’s Club, Walmart or Target – the remain independent. This results in different prices within a retail chain. But as a general rule, the cost of getting a full eye exam and prescription averages around $70. If you go to an optometrist in a traditional office or an ophthalmologist, the price goes up. With a prescription plan through work, a once a year eye exam may be covered with just a copay for most practices.

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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Teachers, non-profit workers and some hospital workers are shuttled into inferior 403b retirement plans. 401ks have gotten more affordable with steadily lower costs for employees, lead by Vanguard and Fidelity. Teachers on the other hand get cheated repeatedly. 403b plans are often sold by insurance company sales reps, selling ultra high cost plans often wrapped in annuities. A WSJ investigation has uncovered just how dirty this system is, rife with horrendous kickbacks paid for by the 403b workers without disclosure. Worse still, an analysis reveals the same contributions over time in a typical 401k adding up to $250K in retirement savings, would only yield $155K in a comparable 403b, ravaged by expenses. A private sector 401K with $500K is equivalent to a 403b of $310K – all contributions being equal, typical expenses on both. A 401k One million vs $620K in a 403b having made the same contributions – all because of rip off fees in 403bs. While members of the House and Senate indulge in partisan fits, they could be stopping the rip off of teachers by insurance companies.

Allegedly, $722 million has been stolen in a cryptocurrency Ponzi known as BitClub Network, which for 6 years solicited funds from would-be investors to go into cryptocurrency mining pools. There were big money incentives to recruit others into the network. 5 men are charged with running a scheme “built off the backs of idiots” – to use their words, NBC reports. Recall the cryptocurrency mania of recent years. That money evaporated as it became hot with con artists. Be careful jumping on bandwagons.  

New federal data shows the change in the nature of work is so extreme, you ignore it at your peril. College is not a normal path in every family. The latest data shows nearly half of all factory workers have a college degree. As recently as a generation ago, factory and manufacturing jobs did not require higher education, but the nature of manufacturing has changed. The manufacturing industry has roared back in the U.S. But employment in this sector is minimal as advanced robotics and computer tech is increasingly engaged. The human jobs in factories now require highly skilled workers with advanced tech educations. Well-paying jobs require thoughtful, strategic levels of education – not necessarily college. The idea that education ends isn’t compatible with the pace of technological change. We need to be prepared for the nature of work to steadily morph. To sit still is to fall behind. Stay in an education and training cycle through your working lifetime to maintain career mobility. State technical colleges should design curriculum in concert with what employers are looking for, anticipating where jobs are and where they’re going, and offering affordable training for those jobs.   

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Wall Street analysts predicted the demise of Costco Wholesale not that long ago, believing it had no chance against Amazon. But Costco and Sam’s Club are doing well. In fact Costco is booming. People willingly pay membership fees. The Krazy Coupon Lady reports that consistently across items, Costco and Sam’s Club are 10 to 15% cheaper than Amazon. Many use both warehouse clubs and Amazon. Though Costco offers savings, they also offer temptation to buy more. Clark’s answer: Not cart. Hands only shopping limits the purchase and preserves the savings.

Outstanding credit card debt has gone up roughly 50% in the last 8 years in the U.S. A Wallethub survey reports more than a third of card users have maxed out their credit cards. Another third are afraid of doing so. This is NOT good for your long term financial health. The average card carries an interest rate of 16 – 18%. Buying on credit when you can pay the bill in full monthly is great. But maxing out your credit card costs you big in interest and demolishes your credit score. Seriously think this through before you pull out a credit card and charge it.

Clark reported on his experience going from a professional home burglar alarm to a self-install system. Clark chose Ring and took 3 hours to install it. Monitoring works out to $8 a month when paid annually. Feedback centered on privacy issues with Ring, owned by Amazon. Back to the drawing board. Independent alternatives are getting good reviews. Google’s Nest and Simplisafe charge around $300 a year for monitoring. Kangaroo – Kangaroo Home Security | Simple and affordable alarms and sensors rotates specials and like Ring, costs around $100 a year for monitoring. Kangaroo’s equipment is comparable, but independent from giant ecosystems. TechHive reviews Minut Smart Home Alarm – a very different system using heat technology. Instead of arming the doors and windows, it senses intruders to trigger the alarm. Minut monitoring is $8 a month, sold around the world – quick and easy to install. Technology is a big disrupter in this industry. Traditional systems have high equipment and monitoring costs and often come with contracts you should never sign. 

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The merger between wireless giants T-Mobile and Sprint has cleared a major hurdle as a federal judge ruled in favor of the deal. Clark explains his take for consumers, including information about the impact on home internet service.

Today, we pause to salute companies that value their employees. One great way to do so is profit sharing. Especially in a service businesses, workers are core and key to progress. Delta has paid huge bonuses, having profited from the grounding of the Boeing Max, while Southwest suffered losses from the Max grounding, but still made a profit and gave their employees bonuses equal to about 6 weeks pay. Only 1/3 of companies share their profits. Business doesn’t exist without employees. Rewarding workers with a share of what they made happen is KEY to motivating them. The companies that do best take care of their employees first. No matter what industry you’re in, its ultimately about serving the customer. Rewarded employees are more committed.

The word ‘password’ has been used as a password. It’s important for security to do better. Firefox and Google Chrome users have access to password managers. More sophisticated password managers generated unique passwords as needed. We creatures of habit tend to use the same passwords, which basic pw managers simply echo. More advanced programs offer more protection, including Dashlane and LastPass. Many more have entered the market. A WIRED review rates 1Password as the best overall manager, which auto generates unique passwords for $36 per year per person, $60 for a family. Bitwarden gets great reviews for free. These tools help place a barrier between you and a hacker.

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Some have lost a tremendous amount of their savings betting on Tesla. Know that betting on any one enterprise is risky – Apple, Amazon – stocks that become stories. Amazon went through a cycle that wiped some stock holders out. When you invest in an individual company, you’re creating risk. You could come out ahead, or lose a great deal or both. First build a base and create a strong core in funds wherein your money is well spread out. The U.S. represents 3% of the world’s population and 22% of the world’s economic activity and declining. Make sure your diversification includes international funds. Schwab teaches to build core investments first. Only then should you chance individual stocks with money you’re not depending on. Protect the future you’re building. Live on less than what you make, and protect the rest of that money going forward.  

Clark was given a fake debit card from AT&T for dropping DirecTV. He was issued a partial refund on a debit card – receiving a check is not an option. Clark’s card kept being declined. He then registered the card and was texted the balance. The declines came because the balance was less than attempted purchases. It won’t allow another form of payment! Clark tried to get it to 0, and now it’s expired with .72 cents left on the table. So the company keeps that money – what’s known as breakage. This is why many companies use debits – knowing it won’t all be spent and they’ll get that much back. Clarkrageous that companies think this way, instead of doing right by their customers.

A type of data breach has become a life and death threat for many businesses. Many ransomware attacks don’t hit the news unless the company must publicly disclose they’ve been hacked. School boards and local governments must disclose. But we usually don’t hear about it from companies, who often have to pay to get their operations back. This crime is escalating, hitting companies of all sizes and can destroy a business. Have automatic backup of your data daily on a hard drive or cloud service. This can help restore your business activities. Have cyber insurance added to your business liability coverage. Backup data every 24 hours and have cyber insurance. The insurer will want to know what steps you’re already taking to protect your business. Take the time to make these things happen.

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Mortgage rates have plummeted recently. This is creating even more competition in the housing market. If you are planning on staying in your home for a while you could save a lot of money in interest payments by refinancing soon.

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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