It's my pleasure to welcome you here to the Clark Howard Show. Our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. And it's the weekend almost. It's Friday. And that means it's time for Clark Stinks. and I'm excited to learn what did I mess up on this week. And also today, if you've got a little extra money, should you be using it to pay off your mortgage, pay extra to your mortgage, or should you be investing that money for your future? I want to tell you how you make that decision. There's not an automatic right answer, but I want to give you the trend that would support making that decision one way or the other. But right now it's time for Clark Stinks. I should have never encouraged you to speak. You must think I'm pretty stupid. You should be ashamed of yourself. Well, maybe I'm wrong. Maybe I'm wrong. Maybe you're right, pal. All right. John in Michigan says, Clark, you and Krista dropped a stink bomb and I've got to call you out. Your take on airport lounges stinks. First, you mentioned it costs $45 to bring a partner into the lounge with a Capital One Venture X card. That's simply not true. It's $35. Second, these lounges typically include complimentary food and drinks. Split between two adults, I'd challenge you to find a better deal on a meal or two at an airport anywhere. I'll wait. I've got the Venture X a year ago, and I'm already planning to use that benefit on our trip to Italy this year. My wife gets in with me, and our daughter under two is free. So just $35? That's a travel hack, not a ripoff. All that said, thanks so much for everything you do. I still remember listening to you after you came on the radio in my mom's car right after Kim Commando. I picked you up on your podcast right after graduating college and your advice over the years has helped me save smarter in so many ways and build the kind of financial security that makes special trips with my growing family like these possible. So the lounge thing, people have very strong feelings about the lounges. I'll say the Capital One Venture X lounges are the best that I've seen. They're better than the Chase Sapphire Reserve lounges, which are better than the American Express. What are theirs called? Platinum? No, Centurion. Centurion lounges. So you can tell I spend way too much money and time in airports that I can review all the various lounges. and as to the value of them, the worth of going in. It's each person's opinion. And I hear you on the 35 bucks because of what it costs to eat almost or drink almost anything in an airport. Would you pay for one-time use? It would depend on how long I had to wait and if I was going to have a meal, things like that. So, okay, Patrick in Virginia says, Clark smells like a dirty pair of gym socks here. Free, just poking fun at how he says free, when he talks about the newsletter, Clark wrote about how going to the dollar store is a good idea. What he fails to note in that is that the unit price and price per ounce is generally significantly higher than at the grocery store or warehouse clubs. Sure, it might be cheaper as a one-off purchase, but if it's a staple someone needs frequently, it makes more sense to shop elsewhere. Love listening to the podcast and reading the free newsletter, but this takes stank. Thank you for this. All right, so Dollar Tree has really, not for you and me, good margins. Their business is amazingly, what you pay for an item versus their cost is a lot more markup than you're going to have at the warehouse clubs. But they tend to be very heavily private label, and a lot of their private label items are cheaper than even with the higher markup than you're going to pay for goods from other people and places. It just depends on the item. Okay. Branton, Arizona says, Clark, you're a great guy and I admire your disposition. No stink there. Yet a viewer recently posted that he wanted to know why you recommend EV over a hybrid or internal combustion engine. Your answer was because they're fun. There are a lot of other fun cars, but let's give the viewers some real answers about EVs. Shedding light on the hesitation that many share on the subject. I do drive an EV for transparency. Number one, maintenance is significantly less expensive and more convenient. With an EV, there are obviously no gas fumes or oil drippings in your garage. Minimal maintenance after purchase. There are no tune-ups, spark plugs, brake pads, etc. Additionally, minimally scheduled service events, 50,000 mile fluid exchanges, etc. Charging at home is dirt cheap. P.S. Slow charging is recommended for long battery life. If your schedule makes you need an at-home supercharger, you don't understand charging or you should not go EV and EVs are cleaner and better for our health. Thank you for all that. The areas that are more difficult with an EV, the negatives tend to pay more for insurance at this point. And the tires tend not to last as long often with EVs. But, I mean, you're talking to somebody who I can't even picture buying something other than a battery-powered vehicle. I'm just all in on it. And that makes me a very rare American because I think only 8% of Americans drive electric vehicles, I think, is the percent. Carl in Oregon says, regarding the article report, how much you need to save in each state to retire comfortably, On Clark.com and many similar articles, they never seem to say whether the estimates are for one person or a couple. Obviously, these are two very different scenarios. I don't understand why this important detail is usually left out. That's an absolutely great question you ask, Carl. And I guess it's just they do it per capita cost for state by state. And I should mention, and I sent a message to a friend who lives in Oklahoma, that Oklahoma has the lowest cost of living now of any state in the country. And my friend wrote back and he said, well, you say that's true. It sure doesn't feel like the cost of living is great. But it was interesting looking at state by state what the actual cost of living is for equivalent cost. Krista, one guess. What's the most expensive state in America? Hawaii. Hawaii by far more than double the cost of living in Oklahoma And there are some differences in retirement but the trends of what the cost of living is in different states is pretty clear. Where you went to college is, that may be the most expensive mainland state, Massachusetts. And Florida, that used to be a deal, isn't a deal at all. Florida has become a relatively expensive state to live in. So it's useful when somebody's trying to think, you know, I daydream about I'd like to live wherever. I mean, for me, it's Hawaii. And I'm such a cheap guy. And Hawaii is so crazy expensive. So seeing these stats, yeah, you're right. We could be more precise and deal with single individuals, married couples, things like that. But it's really the whole idea of getting you to think about what it costs to live somewhere. And I know Wes was asked about the statistics and how much you need for retirement. And what he said was, it's usually done for a couple. It's like, it's assumed that it's a couple will need this amount for retirement in most of those articles. Matthew in Georgia says, you don't stink, but your beloved falcons certainly do. Groomy is even worse than you stated. Looks like they don't have to honor your cancellation requests. And I love the language about users cannot claim they were unaware of the subscription. And here's the quote, an offer to pause refill subscription plans is at our sole discretion and subject to change. All users are notified of recurring refill and subscription plans on the product pages and at the time of checkout. Therefore, users cannot claim they were unaware of subscribing to a refill plan. Okay, you want to explain the background on that? Well, that was the, it was like a Razor membership program that someone asked about them having trouble canceling. They could not figure out how to cancel. They said they didn't know that they had subscribed. They didn't remember saying anything about it. That's not really a Clark Stinks though, because what I said when we were talking about- Well, they're adding to what you said about Groomy. Oh, okay. That's even worse than you said. Because there were a lot of, when we talked about it before, there were a lot of complaints about grooming online. And I had not heard about it until we had the original complaint about it. So here's another note from the original complainer, Alan. Not that you're a complainer, Alan. The original author of the post. Alan in Florida says, thanks, Clark, for answering my grooming club dilemma. I wanted to let you know that Discover, my credit card company, has agreed to block them from posting any additional charges to my account. Although I suppose they could post under a different name, at least Discover was cooperative and is sympathetic to my problem. If it doesn't work, I'll cancel this account and reopen a new one. I will also follow up with a BBB. Yeah. So the thing about the credit card companies, when a credit card company starts getting an excessive number of chargeback requests, then they mark that company and they start holding back more money from them, don't release that money. and then they're in a position to protect their customers. This is a pattern issue. And obviously, from what we've heard, what I've read, Groomy is a buyer beware organization. Derek in New Jersey says, Clark, you only stink a little like fresh mulch in the spring. When callers ask about a credit card for their child, you never mention the PayPal debit card. The card is linked only to your funded PayPal balance, not your checking account. So the amount that can be charged is easily controlled. Best of all, it's free. Okay, I love this, Derek, and I was not familiar with it. Perfect example of why we do Clark Stinks, because a lot of the things geared towards kids create risk or have fees or both. And you're saying that PayPal is a perfect solution. I'm going to check it out and make sure we let people know based on what you've said here. I appreciate it so much. And Pete from that fine state of expensive Massachusetts says, Hey, Clark, recently had a caller asking about bank account bonuses and whether they should continue to do them. Definitely worth it. But what you didn't mention is the best practice is to keep these accounts open at least six months. This makes you look like a more real customer and makes it more likely the bank will keep offering these things. Also, you do need to keep very good records. I have a spreadsheet with multiple tabs for each year as I continue to do these, and I've been doing it since 2016. Wow, your 10th anniversary of beating the banks at their own game. I get these all the time. Okay, here's something you need to know about me. I'm really flaky and I can't do something like one of these things where they say, we'll pay you $1,000 if you open this account and keep it open this long. And then remembering how long and that I got to close it and all that. I'm just, I mean, my brain just doesn't work that way. So the fact that you've been able to be successful, taking advantage of these bank bonus offers for 10 years is just great. And so my congratulations to you. Speaking of banking, I want to talk about mortgages. When is it a good idea to prepay on a mortgage? And when shouldn't you prepay on a mortgage? And it's going to sound like I'm going to give you a red light, green light. What I'm really going to do is it's going to be kind of like a scale. In this case, more and more you should prepay. This one more and more less you should prepay. That's straight ahead. My goodness, at a time that so many Americans are drowning with debts just trying to survive them and survive paying monthly bills, there are other Americans that are fortunate enough to have extra funds each month and trying to figure out the right priority with them. So let me set a baseline for you. I despise debt. I can't stand having debt. I live a debt-free existence. Even though I use credit cards as a payment system, always pay them in full, never carry debt. That's just me. So a lot of people feel like burned by having mortgage debt and they want to get rid of it. The question is, when is it a more efficient thing for long-term financial security for you to prepay on a mortgage so you're done with it sooner, paying less interest? And when are you better off if you are somebody who's living a life where you have extra money, where you're trying to decide, invest, pay down debt, invest, pay down debt? How do you decide? Well you know today almost one the people are carrying a mortgage at an interest rate of 6 or above That means there are a lot of people who either bought something with a mortgage or refied when rates were being artificially manipulated lower by the Federal Reserve and are sitting there with 2%, 3%, maybe 4% loans. But you start looking 6% and above, it's still roughly around a quarter of people. So you start moving above 6% and it really becomes a dilemma. Should you prepay on that mortgage or should you focus on investing? You can't eat your house. So building up money is an example. You know, my obsession with Roth 401ks, Roth IRAs, the money you build grows tax-free and you spend it tax-free. very high priority in your life to build up money that you can use in your life that is tax-free money. At the same time, it's a very worthy goal to be mortgage debt-free by the time you're anticipating retirement because it relieves financial pressure in your life. But you don't want to be mortgage debt-free and not have enough money to live on in retirement. So these are not automatic answers. There are directions with these. And certainly if you're in one of those ultra artificially low mortgage rates, you don't prepay a penny because your odds are higher that you can earn more money in investments than what you're going to benefit from paying down balance on a mortgage that's at 2%, 3%, or maybe 4%. But if you are at a higher rate of interest, how do you decide? When is it a good decision for you to prepay? So we have developed a new tool I want you to know about at Clark.com that takes you through a series of questions to decide. And again, it's a direction, not a decision. It's guidance, but not making the decision for you. but we have a new thing, payoff mortgage or invest calculator. And so we ask you a variety of questions to help you make that decision, which would be a better idea. And so we'll give you an indicator, and it's based on our number crunching, putting in your exact situation, which is going to be a better decision for you. So hopefully it will help you if you are somebody running excess money in a month and you're trying to figure out highest priority. By the way, let's go to something more basic. If you have a mortgage that you're focused on getting rid of, but you're running other debts, the mortgage is not your highest priority normally. It's going to be lifestyle debts that you have going on. It's just one piece of a puzzle. When you're living on less than what you make, you're talking about choosing the best option. But they're all good at that point because you have managed to set up your finances where you're getting control or have control because you're living on less than the money you have coming in and good for you. And I should say for those of you who are watching our YouTube version of our podcast, Krista is appropriately wearing green since we've been talking about money so much today. Yes. Okay. Mike in Ohio says, hey, Clark, we had an energy audit on our house and the auditor highly recommended aero sealing our duct work. It's an aerosol spray that can seal the air gaps in the system. They claim it will seal 90% of air leakage and the average home regains 300 CFM after treatment. Have you heard of this and it would be something you would recommend? Okay, here's what I know, Mike. Most of us lose an enormous amount of money in cooling or heating by having ineffective duct work in our home. And there's a lot of debate among people who do this work how properly to get to the leaks of the duct work. I am not willing to say that this exact way of doing it is right. There is debate about it. I mean, the big movement in heating and air conditioning is ductless work, where the systems that go into your dwelling don't involve ducts because the duct work is such a frightful, incredible waste of money. I mean, it was what looked right in the past, but now ductless is really where things are going. How does that work? So you're going to make me get really technical? No, just give me a big picture. All right. Basic. I don't need to know. Please don't get me. Now I'm going to jump all the way in here. Okay. Because how does it get around from the system? So what happens is with ductless is you have a unit that provides the cooling or heating and it comes straight out of it instead of a central unit that goes around the house. Like what they have in Europe? Europe, Asia. The air conditioners are kind of, it's like an air conditioning system in the room. Okay. So it's getting better. Okay. I got something even better. Right now, only available in California because energy costs are so high in California. There are new systems for doing ductless heat pumps because heat pumps reduce your energy bill by 70, 80%. And this new system is one that's been patented that instead of having to have somebody come out and try to figure out what's it going to cost to install this in your home and that because of the technical difficulty, the prices go crazy. this new technology is one where you buy it like you'd be buying an appliance. What's it going to cost for that new washer or that new dishwasher or that new refrigerator? You can now buy these ductless heat pumps that way and you know the price up front. And because it doesn't require so much extra labor it much cheaper with a much quicker payback I mean we making progress on how we heat and cool really quickly if you look at the overall scheme of things but a little slow when you think about it in people's own lives right now. It's only going to get better and better over the next few years. So the answer to your question, I think, requires you get additional quotes and look online and see what you can find about this particular promise that's being made to you. Because saying they're going to take the inefficiency of ductwork and seal 90% of the leaks, that would be fantastic. And you heard me use a word, would be. I can't verify independently that that's really what's going to happen. Maybe talk to some prior customers, ask for three prior customers and see what their bills did or something. and see if there's any industry writing about doing this as a way to improve the efficiency of the ducks. Logan in Iowa says, Hi, Clark and team. A few years ago, I asked for advice on home buying. With the help of your advice, my wife and I have happily been living in our new home for almost two years now, and we're expecting our first child, a daughter, in a few weeks. Congratulations. My wife and I make a pretty comfortable living and both contribute to our work-sponsored 401ks, along with a similar IRA where we add some extra money each month. Everything is currently in Roth. Yay! We only have one vehicle that isn't paid off, needed a slightly larger vehicle for the car seat, and I still have some student loans, but that's really it in terms of debt. What else can we do to make sure our daughter is set up for financial success from the very beginning? We've already looked at starting her 529 and plan to do the growth or aggressive growth age-based savings track and thought about using our tax refund to seed the account. So I wouldn't do the aggressive growth 529 of age-based. I would do the regular. Stock market is at historic highs. And I think it's better to do steady as you go. You've got 18, 19 years before your daughter enters college. And then again, the beauty of the 529 now under the law, if she doesn't go to college, it can be moved to her own Roth IRA tax-free eventually. So, but 529 is the right way to do it. I want to make sure though, before you put too much effort into her 529, that you've got a clear schedule to pay off your student loans. I want you rid of those is sooner rather than later. and with your child being a newborn any day now, you'll have time to pay those off and still have a number of years to build up the 529 account. Tim in Virginia says, I'm 43 years old, married, and a new father, another new father. I'd like to get term life insurance for $2 million and for 40 years. Is that possible? What would you recommend? 43. So you'd have congratulations on your child. Lots of baby Clarkies. Yeah. So we're talking about buying a term life insurance level term policy that would be in place till you're 83 years old. Make sure with a quote on 40-year level term, particularly since it would be going into your 80s, that you get a level term quote, not one that is annual renewable term. annual renewable term goes up in premium every year based on your actuarial risk becoming greater each year. So you want one that stays level. Now for you buying one at 43 that you would keep into your 80s, not a lot of companies do that. Most companies only risk out to 30 years to carry you into your early 70s. And that would be the way I would do this, is I would get 30-year level term quotes and see what you can find 40-year level term. And you may end up feeling like, yeah, maybe I just need this into my early 70s. The reason you wouldn't normally buy into your nearly mid-80s is odds are you're going to be retired at that point. And the need for replacement of income from life insurance is not as high. And also the insurers are going to charge you so much more if they will write the 40-year because the mortality risk for them down the road is so very high. is you move through your 70s into your 80s. I love that you're looking at the level term insurance. A lot of people, when they do think about it, is when they do have kids. But even if you don't have kids, your spouse, significant other, partner, whatever, they likely have a need for replacement of income too. Even if you don't have kids, a lot of people who are married to someone are in a long-term relationship also have a need for life insurance to protect each other and have not done so. But especially people do it just like when you're talking about when you're having this wonderful episode in your life of having a new child. And so, Tim, congratulations to you. Logan, congratulations to you as well. and I hope you have a great weekend straight ahead. It's been our pleasure being with you this week and providing advice, information, guidance, direction and today giving me direction on today's Clark Stinks because I'm just one person and there's so much to know, so much to learn and I can get stuck in opinions that I need to think about, you know, and maybe expand beyond where I think. So I appreciate more than you know, you taking the time to post your questions, to post your Clark Stinks, and that we all learn and grow together. Have this weekend just be a great one for you and know that moving forward what we're about at clark.com clarkdeals.com and our newsletters on social media everywhere is about you having empowerment through knowledge so you can save more spend less and don't let anyone ever not ever rip you off and see you monday
