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<v Speaker 1>Joe Larsgard, host of How to Money every Sunday twelve

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<v Speaker 1>to twelve pm to two pm right here on KFI.

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<v Speaker 1>Good Morning, Joel, Phil almost almost cuts you off. This

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<v Speaker 1>is something that I have talked about, and we have

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<v Speaker 1>talked about, and some people don't have any choice homeowners.

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<v Speaker 2>And I get this occasionally on Handle on the Law.

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<v Speaker 1>Homeowners are going without home insurance.

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<v Speaker 2>That's insane. Explain how yeah, go ahead, Well.

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<v Speaker 3>It's truly insane.

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<v Speaker 4>But I get too, like, when you look at what's

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<v Speaker 4>happened inflation wise with insurance over the past few years,

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<v Speaker 4>it put people between a rock and a hard place.

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<v Speaker 4>And it's one of those things where you buy a

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<v Speaker 4>home and you're like, oh, the great thing is you

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<v Speaker 4>know renters, their their rent goes up year after year,

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<v Speaker 4>my mortgage.

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<v Speaker 3>Stays the same.

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<v Speaker 4>Well, when taxes go up or when you know your

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<v Speaker 4>insurance costs go up, your mortgage can go up, right,

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<v Speaker 4>And and people are just experiencing sticker shock, especially in

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<v Speaker 4>certain parts of California, when it comes to what they're

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<v Speaker 4>paying for homeowners insurance. And so some people are saying

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<v Speaker 4>maybe it's maybe actually just ditch it. And the truth

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<v Speaker 4>that this dat always shocks me. Bill, I don't know

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<v Speaker 4>if you've heard like forty percent of Americans own their

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<v Speaker 4>home outright, they don't have a mortgage.

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<v Speaker 3>That always shocks me. I'm so surprised by that.

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<v Speaker 4>But if you are one of those people who doesn't

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<v Speaker 4>have a mortgage, who owns their home, you certainly have

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<v Speaker 4>the ability. There's nobody forcing you to have to carry

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<v Speaker 4>insurance on the property. But if you do that, you're

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<v Speaker 4>taking a huge gamble. Yeah, kid, are you going to

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<v Speaker 4>be able to actually rebuild the house with cash or

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<v Speaker 4>with resources that you have at your disposal without having

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<v Speaker 4>insurance come and help you out?

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<v Speaker 3>Probably not.

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<v Speaker 1>Now, if you if you have a mortgage, you're buying insurance.

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<v Speaker 1>There is no mortgage company on the planet that will

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<v Speaker 1>let you not have a mortgage a home insurance well,

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<v Speaker 1>and if.

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<v Speaker 4>You try, if you try to did your insurance, then

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<v Speaker 4>the mortgage company is going to say, well, we're going

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<v Speaker 4>to buy the insurance for you, and it's going to

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<v Speaker 4>cost a heck of a lot more than if you

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<v Speaker 4>had choped around in the open marketplace and gotten that

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<v Speaker 4>insurance yourself.

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<v Speaker 1>And also, at least in California, if you are uninsurable

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<v Speaker 1>or don't have insurance. You can go to the fair plan,

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<v Speaker 1>which is only for fire insurance, which is ridiculously expensive

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<v Speaker 1>and is limited in coverage. So I lost my home

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<v Speaker 1>insurance because so many people did.

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<v Speaker 2>And I was.

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<v Speaker 1>It took me two and a half weeks to find

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<v Speaker 1>insurance after my insurance lapse.

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<v Speaker 2>I did not have home insurance.

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<v Speaker 1>I own my house, did not have a mortgage, but

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<v Speaker 1>of course I'm gonna have home insurance, come hell or

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<v Speaker 1>high water.

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<v Speaker 2>Two and a half weeks, I was bear Joel. I

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<v Speaker 2>did not.

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<v Speaker 3>Sleep for two and a half weeks.

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<v Speaker 2>It was crazy.

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<v Speaker 1>I ended up getting insurance which cost me exactly double

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<v Speaker 1>and the coverage was maybe two thirds Yeah, yeah, not

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<v Speaker 1>nearly as good and it costs me twice as much.

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<v Speaker 4>And that's the place that a lot of people are

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<v Speaker 4>finding themselves in. And so I think at least one

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<v Speaker 4>one way to one thing that can help at least

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<v Speaker 4>some people. If you have been pretty good about building

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<v Speaker 4>up your savings, is to increase your deductible and that

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<v Speaker 4>can lower your premiums. So if you're like, oh my gosh,

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<v Speaker 4>I try to keep everything the same and the premium skyrocketed,

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<v Speaker 4>well you can if you can raise that deductible up

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<v Speaker 4>higher and have more skin in the game. If something

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<v Speaker 4>were to happen to your home, then that can bring

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<v Speaker 4>those premiums back down. And so whether that's going from

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<v Speaker 4>a twenty five hundred dollars deductible to a five thousand

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<v Speaker 4>dollar reductible or up to a ten thousand dollars deductible,

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<v Speaker 4>or sometimes there's even a percentage deductible that I've been

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<v Speaker 4>able to get on my home, And yeah, it means

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<v Speaker 4>that something happens to my home. When like the tree

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<v Speaker 4>fell through my roof a couple of years ago. That's

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<v Speaker 4>one of those things where I was like, oh man,

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<v Speaker 4>I kind of wish I had had a lower deductible,

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<v Speaker 4>But ultimately, over time it will save you money on those.

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<v Speaker 4>You just have to be prepared with cash in the

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<v Speaker 4>bank if something actually does happen then to the property.

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<v Speaker 1>Now, I had an insane deductible because I view insurance

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<v Speaker 1>as catastrophic insurance.

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<v Speaker 3>That's it same.

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<v Speaker 1>Yeah, and I had a twenty five percent twenty five

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<v Speaker 1>thousand dollars deductible, figuring God forbid it all goes up

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<v Speaker 1>and I can always borrow twenty five thousand dollars if

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<v Speaker 1>you know, I have land value. You can. It's it's

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<v Speaker 1>not easy, but you can always somehow scramble twenty five

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<v Speaker 1>thousand dollars a loan from the bank or whatever you

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<v Speaker 1>can do.

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<v Speaker 3>Or your buddy Neil Savedra, he's got your back.

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<v Speaker 1>Right, yeah, Neil, Joe you have Neil, you have insurance?

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<v Speaker 5>What's you're deductible? I couldn't even my wife could. I

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<v Speaker 5>have no idea, all right, but but I am right

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<v Speaker 5>in line with you, guys. I feel the same way

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<v Speaker 5>you deal with catastrophic and you suck it up if

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<v Speaker 5>you have to to pay lower monthly.

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<v Speaker 1>Yeah, otherwise it's you can't afford it. And you're absolutely right.

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<v Speaker 1>So insurance is not any fun anymore. It used to

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<v Speaker 1>be not a lot of money. You know, hey, you

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<v Speaker 1>buy insurance. It was not the end of the world.

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<v Speaker 1>It was sort of the cost of doing business. Today

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<v Speaker 1>it can be absolutely astronomical. Coming back, talk a little bit.

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<v Speaker 2>About unemployment, and man, you know this is statistics.

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<v Speaker 1>We have a four point three percent unemployment rate nationally.

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<v Speaker 2>It is spectacular.

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<v Speaker 1>It's considered full employment at four point three percent. However,

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<v Speaker 1>there's a caveat and we'll come back with that. Back

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<v Speaker 1>we go Joel Larsguard, who is with us from eight

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<v Speaker 1>Day thirty Thursday, a host of how to Money Sunday

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<v Speaker 1>twelve pm to two and his social address at how

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<v Speaker 1>to Money.

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<v Speaker 2>Joel.

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<v Speaker 1>Joel, you talk about this insane headline in Fast Company

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<v Speaker 1>saying that functional unemployment is near twenty five percent, and we.

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<v Speaker 2>All agree that's kind of nuts.

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<v Speaker 1>But it's all also not four point three, because this

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<v Speaker 1>is is looking at statistics. You know, for example, the

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<v Speaker 1>Great Depression, I think unemployment was officially pegged at twenty

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<v Speaker 1>five percent and it was probably closer to fifty percent.

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<v Speaker 1>All right, let's talk about what's going on and what

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<v Speaker 1>do you mean what do they mean by functional unemployment?

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<v Speaker 4>Yes, so it's this study that came out from this

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<v Speaker 4>pointy headed economic institution basically saying that what they think

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<v Speaker 4>the true rate of unemployment is what they're calling the

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<v Speaker 4>functional rate. It takes into account people who are not

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<v Speaker 4>not just.

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<v Speaker 3>The traditional things that the.

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<v Speaker 4>US Labor Service is taking into account, but it's people

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<v Speaker 4>who are have full time jobs and they're just not

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<v Speaker 4>making enough money, like they're making under twenty five thousand

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<v Speaker 4>dollars a year.

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<v Speaker 3>So they're saying, we're workaking into a.

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<v Speaker 4>Broader account the kinds of people who just don't have

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<v Speaker 4>the kind of jobs that they would otherwise want to have.

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<v Speaker 4>And so they're saying, well, hey, that the functional unemployment

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<v Speaker 4>rate based on our statistics is something closer to twenty

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<v Speaker 4>five percent, and that would obviously be far cry from

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<v Speaker 4>the just over four percent rate that we're seeing the

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<v Speaker 4>headline rate. And I think the truth lies closer to

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<v Speaker 4>the four percent rate, but somewhere in the middle. And

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<v Speaker 4>that's because there is an employment statistic known as U six,

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<v Speaker 4>which is the headline rate that we see bandied about

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<v Speaker 4>is known as YOU three. And when you look at

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<v Speaker 4>YOU six, you're actually measuring people who are underemployed or

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<v Speaker 4>people who are working part time and they wish that

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<v Speaker 4>they were working full time. So maybe they are, you know,

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<v Speaker 4>sidelined into something that isn't making them as much as

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<v Speaker 4>the otherwise. And I think I think U six is

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<v Speaker 4>a better reflection of what's going on in the labor

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<v Speaker 4>market because U three is maybe a little overly optimistic

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<v Speaker 4>or not taking into account people who have jobs that

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<v Speaker 4>they otherwise they wouldn't actually want.

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<v Speaker 3>In reality, one.

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<v Speaker 1>Of the stats that when we talk about unemployment, for example,

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<v Speaker 1>there are x number of people unemployed who are looking

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<v Speaker 1>for jobs and they're unemployed, and there are people that

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<v Speaker 1>just gave up because they just can't find employment. And

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<v Speaker 1>that's right. A lot of people they're no longer unemployed.

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<v Speaker 1>They don't exist anymore in this system, that's right, they

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<v Speaker 1>just fall out. Well, they're still unemployed, and so you

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<v Speaker 1>would think that would add to the numbers of people,

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<v Speaker 1>and the stats don't tell us.

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<v Speaker 3>That, that's right.

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<v Speaker 4>Yeah, So those people then get out of the statistic

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<v Speaker 4>pool because they gave up. Because they gave up, but

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<v Speaker 4>it doesn't mean that they got a job. It just

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<v Speaker 4>means that they don't count anymore as looking for a job,

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<v Speaker 4>which is what makes the unemployment numbers a little wonky

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<v Speaker 4>at times or a little maybe untruthful. And that's why

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<v Speaker 4>I think U six at least does a little bit

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<v Speaker 4>of a better job. And this functional unemployment rate is

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<v Speaker 4>a little ridiculous because maybe it's taking too many things

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<v Speaker 4>into account, and so the truth does lie somewhere in

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<v Speaker 4>the middle. The interesting thing too, is that right right now,

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<v Speaker 4>and this is hasn't been really the case since the

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<v Speaker 4>Great Recession, is college graduates are having harder time a

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<v Speaker 4>harder time finding a job than they have been typically,

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<v Speaker 4>and so their unemployment rate is higher than the average

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<v Speaker 4>on employment rate. So college grads are having an unemployment

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<v Speaker 4>rate or having a harder time finding a job, and

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<v Speaker 4>so it's bumping up higher and higher, And I think

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<v Speaker 4>it could be difficult right when you graduate from college

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<v Speaker 4>to figure out what you do. Do you take the

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<v Speaker 4>first job offer that's given to you because or do

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<v Speaker 4>you hold out for something something better that's going to

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<v Speaker 4>help you on your career. And the truth is, when

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<v Speaker 4>you look at the statistics, that first job, on average

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<v Speaker 4>has a really large impact on what you're going to

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<v Speaker 4>earn down the road. So I think it's really important

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<v Speaker 4>for college grads to be careful in a work environment

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<v Speaker 4>like this. And some college grads find, and this might

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<v Speaker 4>sound a little counterintuitive, that in an economic cycle, if

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<v Speaker 4>we are in a ring and recession or something like

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<v Speaker 4>that and things are getting tougher, that going back to school,

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<v Speaker 4>as long as you're not taking on too much debt

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<v Speaker 4>to get that additional degree and kind of waiting it

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<v Speaker 4>out and getting an additional degree while the recession is

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<v Speaker 4>happening can set the them up for more success when

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<v Speaker 4>as the economy is recovering.

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<v Speaker 1>Yeah, that's precisely what's happening to my daughter, Pamela. She

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<v Speaker 1>has her degree, finish her degree in computer science. She's

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<v Speaker 1>got a several degrees because you know, Dad pays for school.

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<v Speaker 1>They're a five twenty nine plan, so it's much easier

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<v Speaker 1>going to school and sitting on your ass and actually

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<v Speaker 1>going out and working. She cannot get a job in

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<v Speaker 1>her field, and so she's going.

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<v Speaker 2>Back and getting a master's degree.

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<v Speaker 1>She starts her master's program in computer science and she's

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<v Speaker 1>going to specialize in cybersecurity. And so she's now unemployed

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<v Speaker 1>or in her field that she wants.

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<v Speaker 2>To work in with a bachelor's degree.

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<v Speaker 1>And I can't wait for her to then be unemployed

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<v Speaker 1>with a master's degree because that's going to be.

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<v Speaker 2>A thrill too.

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<v Speaker 1>It's the y app and the underemployment part is that

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<v Speaker 1>that bothers me.

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<v Speaker 2>You have people with skills who should.

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<v Speaker 1>Be employed and they're working as a barista, or they're

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<v Speaker 1>working at a job that they are way overqualified for

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<v Speaker 1>and not even full time. As you pointed out, that's

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<v Speaker 1>still considered employment as part of the statistics, and I

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<v Speaker 1>don't think it.

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<v Speaker 4>Is well and people who find themselves in the absolute

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<v Speaker 4>worst place are people who went to college, racked up

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<v Speaker 4>a certain amount of college debt but didn't finish and

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<v Speaker 4>get a degree, and has that has been the case,

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<v Speaker 4>But those people, their situation has been exacerbated as the

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<v Speaker 4>cost of college has been driven up, and so the

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<v Speaker 4>amount of debt they've taken on has just accrued and accrued.

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<v Speaker 4>And then yet they'd say I'm two years into this,

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<v Speaker 4>I'm three years into this, but I'm not going to

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<v Speaker 4>stick it out, and they don't actually get the degree.

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<v Speaker 4>Then they find themselves out. I've got to pay back

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<v Speaker 4>these loads of student loan debt, but I don't have

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<v Speaker 4>the degree to be able to get the job that's

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<v Speaker 4>going to offer me higher pay. So that's I think

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<v Speaker 4>the position I want people to avoid. Like the plague,

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<v Speaker 4>that's the worst case scenario.

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<v Speaker 1>All right, Joel, this Sunday two to twelve to twelve

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<v Speaker 1>to two, and always find I'm listening to you.

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<v Speaker 2>We'll catch you over the weekend. Take care sounds good.

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<v Speaker 3>Thanks Bill,