Speaker 1: Joe Larsgard, host of How to Money every Sunday twelve
Speaker 1: to twelve pm to two pm right here on KFI.
Speaker 1: Good Morning, Joel, Phil almost almost cuts you off. This
Speaker 1: is something that I have talked about, and we have
Speaker 1: talked about, and some people don't have any choice homeowners.
Speaker 2: And I get this occasionally on Handle on the Law.
Speaker 1: Homeowners are going without home insurance.
Speaker 2: That's insane. Explain how yeah, go ahead, Well.
Speaker 3: It's truly insane.
Speaker 4: But I get too, like, when you look at what's
Speaker 4: happened inflation wise with insurance over the past few years,
Speaker 4: it put people between a rock and a hard place.
Speaker 4: And it's one of those things where you buy a
Speaker 4: home and you're like, oh, the great thing is you
Speaker 4: know renters, their their rent goes up year after year,
Speaker 4: my mortgage.
Speaker 3: Stays the same.
Speaker 4: Well, when taxes go up or when you know your
Speaker 4: insurance costs go up, your mortgage can go up, right,
Speaker 4: And and people are just experiencing sticker shock, especially in
Speaker 4: certain parts of California, when it comes to what they're
Speaker 4: paying for homeowners insurance. And so some people are saying
Speaker 4: maybe it's maybe actually just ditch it. And the truth
Speaker 4: that this dat always shocks me. Bill, I don't know
Speaker 4: if you've heard like forty percent of Americans own their
Speaker 4: home outright, they don't have a mortgage.
Speaker 3: That always shocks me. I'm so surprised by that.
Speaker 4: But if you are one of those people who doesn't
Speaker 4: have a mortgage, who owns their home, you certainly have
Speaker 4: the ability. There's nobody forcing you to have to carry
Speaker 4: insurance on the property. But if you do that, you're
Speaker 4: taking a huge gamble. Yeah, kid, are you going to
Speaker 4: be able to actually rebuild the house with cash or
Speaker 4: with resources that you have at your disposal without having
Speaker 4: insurance come and help you out?
Speaker 3: Probably not.
Speaker 1: Now, if you if you have a mortgage, you're buying insurance.
Speaker 1: There is no mortgage company on the planet that will
Speaker 1: let you not have a mortgage a home insurance well,
Speaker 1: and if.
Speaker 4: You try, if you try to did your insurance, then
Speaker 4: the mortgage company is going to say, well, we're going
Speaker 4: to buy the insurance for you, and it's going to
Speaker 4: cost a heck of a lot more than if you
Speaker 4: had choped around in the open marketplace and gotten that
Speaker 4: insurance yourself.
Speaker 1: And also, at least in California, if you are uninsurable
Speaker 1: or don't have insurance. You can go to the fair plan,
Speaker 1: which is only for fire insurance, which is ridiculously expensive
Speaker 1: and is limited in coverage. So I lost my home
Speaker 1: insurance because so many people did.
Speaker 2: And I was.
Speaker 1: It took me two and a half weeks to find
Speaker 1: insurance after my insurance lapse.
Speaker 2: I did not have home insurance.
Speaker 1: I own my house, did not have a mortgage, but
Speaker 1: of course I'm gonna have home insurance, come hell or
Speaker 1: high water.
Speaker 2: Two and a half weeks, I was bear Joel. I
Speaker 2: did not.
Speaker 3: Sleep for two and a half weeks.
Speaker 2: It was crazy.
Speaker 1: I ended up getting insurance which cost me exactly double
Speaker 1: and the coverage was maybe two thirds Yeah, yeah, not
Speaker 1: nearly as good and it costs me twice as much.
Speaker 4: And that's the place that a lot of people are
Speaker 4: finding themselves in. And so I think at least one
Speaker 4: one way to one thing that can help at least
Speaker 4: some people. If you have been pretty good about building
Speaker 4: up your savings, is to increase your deductible and that
Speaker 4: can lower your premiums. So if you're like, oh my gosh,
Speaker 4: I try to keep everything the same and the premium skyrocketed,
Speaker 4: well you can if you can raise that deductible up
Speaker 4: higher and have more skin in the game. If something
Speaker 4: were to happen to your home, then that can bring
Speaker 4: those premiums back down. And so whether that's going from
Speaker 4: a twenty five hundred dollars deductible to a five thousand
Speaker 4: dollar reductible or up to a ten thousand dollars deductible,
Speaker 4: or sometimes there's even a percentage deductible that I've been
Speaker 4: able to get on my home, And yeah, it means
Speaker 4: that something happens to my home. When like the tree
Speaker 4: fell through my roof a couple of years ago. That's
Speaker 4: one of those things where I was like, oh man,
Speaker 4: I kind of wish I had had a lower deductible,
Speaker 4: But ultimately, over time it will save you money on those.
Speaker 4: You just have to be prepared with cash in the
Speaker 4: bank if something actually does happen then to the property.
Speaker 1: Now, I had an insane deductible because I view insurance
Speaker 1: as catastrophic insurance.
Speaker 3: That's it same.
Speaker 1: Yeah, and I had a twenty five percent twenty five
Speaker 1: thousand dollars deductible, figuring God forbid it all goes up
Speaker 1: and I can always borrow twenty five thousand dollars if
Speaker 1: you know, I have land value. You can. It's it's
Speaker 1: not easy, but you can always somehow scramble twenty five
Speaker 1: thousand dollars a loan from the bank or whatever you
Speaker 1: can do.
Speaker 3: Or your buddy Neil Savedra, he's got your back.
Speaker 1: Right, yeah, Neil, Joe you have Neil, you have insurance?
Speaker 5: What's you're deductible? I couldn't even my wife could. I
Speaker 5: have no idea, all right, but but I am right
Speaker 5: in line with you, guys. I feel the same way
Speaker 5: you deal with catastrophic and you suck it up if
Speaker 5: you have to to pay lower monthly.
Speaker 1: Yeah, otherwise it's you can't afford it. And you're absolutely right.
Speaker 1: So insurance is not any fun anymore. It used to
Speaker 1: be not a lot of money. You know, hey, you
Speaker 1: buy insurance. It was not the end of the world.
Speaker 1: It was sort of the cost of doing business. Today
Speaker 1: it can be absolutely astronomical. Coming back, talk a little bit.
Speaker 2: About unemployment, and man, you know this is statistics.
Speaker 1: We have a four point three percent unemployment rate nationally.
Speaker 2: It is spectacular.
Speaker 1: It's considered full employment at four point three percent. However,
Speaker 1: there's a caveat and we'll come back with that. Back
Speaker 1: we go Joel Larsguard, who is with us from eight
Speaker 1: Day thirty Thursday, a host of how to Money Sunday
Speaker 1: twelve pm to two and his social address at how
Speaker 1: to Money.
Speaker 2: Joel.
Speaker 1: Joel, you talk about this insane headline in Fast Company
Speaker 1: saying that functional unemployment is near twenty five percent, and we.
Speaker 2: All agree that's kind of nuts.
Speaker 1: But it's all also not four point three, because this
Speaker 1: is is looking at statistics. You know, for example, the
Speaker 1: Great Depression, I think unemployment was officially pegged at twenty
Speaker 1: five percent and it was probably closer to fifty percent.
Speaker 1: All right, let's talk about what's going on and what
Speaker 1: do you mean what do they mean by functional unemployment?
Speaker 4: Yes, so it's this study that came out from this
Speaker 4: pointy headed economic institution basically saying that what they think
Speaker 4: the true rate of unemployment is what they're calling the
Speaker 4: functional rate. It takes into account people who are not
Speaker 4: not just.
Speaker 3: The traditional things that the.
Speaker 4: US Labor Service is taking into account, but it's people
Speaker 4: who are have full time jobs and they're just not
Speaker 4: making enough money, like they're making under twenty five thousand
Speaker 4: dollars a year.
Speaker 3: So they're saying, we're workaking into a.
Speaker 4: Broader account the kinds of people who just don't have
Speaker 4: the kind of jobs that they would otherwise want to have.
Speaker 4: And so they're saying, well, hey, that the functional unemployment
Speaker 4: rate based on our statistics is something closer to twenty
Speaker 4: five percent, and that would obviously be far cry from
Speaker 4: the just over four percent rate that we're seeing the
Speaker 4: headline rate. And I think the truth lies closer to
Speaker 4: the four percent rate, but somewhere in the middle. And
Speaker 4: that's because there is an employment statistic known as U six,
Speaker 4: which is the headline rate that we see bandied about
Speaker 4: is known as YOU three. And when you look at
Speaker 4: YOU six, you're actually measuring people who are underemployed or
Speaker 4: people who are working part time and they wish that
Speaker 4: they were working full time. So maybe they are, you know,
Speaker 4: sidelined into something that isn't making them as much as
Speaker 4: the otherwise. And I think I think U six is
Speaker 4: a better reflection of what's going on in the labor
Speaker 4: market because U three is maybe a little overly optimistic
Speaker 4: or not taking into account people who have jobs that
Speaker 4: they otherwise they wouldn't actually want.
Speaker 3: In reality, one.
Speaker 1: Of the stats that when we talk about unemployment, for example,
Speaker 1: there are x number of people unemployed who are looking
Speaker 1: for jobs and they're unemployed, and there are people that
Speaker 1: just gave up because they just can't find employment. And
Speaker 1: that's right. A lot of people they're no longer unemployed.
Speaker 1: They don't exist anymore in this system, that's right, they
Speaker 1: just fall out. Well, they're still unemployed, and so you
Speaker 1: would think that would add to the numbers of people,
Speaker 1: and the stats don't tell us.
Speaker 3: That, that's right.
Speaker 4: Yeah, So those people then get out of the statistic
Speaker 4: pool because they gave up. Because they gave up, but
Speaker 4: it doesn't mean that they got a job. It just
Speaker 4: means that they don't count anymore as looking for a job,
Speaker 4: which is what makes the unemployment numbers a little wonky
Speaker 4: at times or a little maybe untruthful. And that's why
Speaker 4: I think U six at least does a little bit
Speaker 4: of a better job. And this functional unemployment rate is
Speaker 4: a little ridiculous because maybe it's taking too many things
Speaker 4: into account, and so the truth does lie somewhere in
Speaker 4: the middle. The interesting thing too, is that right right now,
Speaker 4: and this is hasn't been really the case since the
Speaker 4: Great Recession, is college graduates are having harder time a
Speaker 4: harder time finding a job than they have been typically,
Speaker 4: and so their unemployment rate is higher than the average
Speaker 4: on employment rate. So college grads are having an unemployment
Speaker 4: rate or having a harder time finding a job, and
Speaker 4: so it's bumping up higher and higher, And I think
Speaker 4: it could be difficult right when you graduate from college
Speaker 4: to figure out what you do. Do you take the
Speaker 4: first job offer that's given to you because or do
Speaker 4: you hold out for something something better that's going to
Speaker 4: help you on your career. And the truth is, when
Speaker 4: you look at the statistics, that first job, on average
Speaker 4: has a really large impact on what you're going to
Speaker 4: earn down the road. So I think it's really important
Speaker 4: for college grads to be careful in a work environment
Speaker 4: like this. And some college grads find, and this might
Speaker 4: sound a little counterintuitive, that in an economic cycle, if
Speaker 4: we are in a ring and recession or something like
Speaker 4: that and things are getting tougher, that going back to school,
Speaker 4: as long as you're not taking on too much debt
Speaker 4: to get that additional degree and kind of waiting it
Speaker 4: out and getting an additional degree while the recession is
Speaker 4: happening can set the them up for more success when
Speaker 4: as the economy is recovering.
Speaker 1: Yeah, that's precisely what's happening to my daughter, Pamela. She
Speaker 1: has her degree, finish her degree in computer science. She's
Speaker 1: got a several degrees because you know, Dad pays for school.
Speaker 1: They're a five twenty nine plan, so it's much easier
Speaker 1: going to school and sitting on your ass and actually
Speaker 1: going out and working. She cannot get a job in
Speaker 1: her field, and so she's going.
Speaker 2: Back and getting a master's degree.
Speaker 1: She starts her master's program in computer science and she's
Speaker 1: going to specialize in cybersecurity. And so she's now unemployed
Speaker 1: or in her field that she wants.
Speaker 2: To work in with a bachelor's degree.
Speaker 1: And I can't wait for her to then be unemployed
Speaker 1: with a master's degree because that's going to be.
Speaker 2: A thrill too.
Speaker 1: It's the y app and the underemployment part is that
Speaker 1: that bothers me.
Speaker 2: You have people with skills who should.
Speaker 1: Be employed and they're working as a barista, or they're
Speaker 1: working at a job that they are way overqualified for
Speaker 1: and not even full time. As you pointed out, that's
Speaker 1: still considered employment as part of the statistics, and I
Speaker 1: don't think it.
Speaker 4: Is well and people who find themselves in the absolute
Speaker 4: worst place are people who went to college, racked up
Speaker 4: a certain amount of college debt but didn't finish and
Speaker 4: get a degree, and has that has been the case,
Speaker 4: But those people, their situation has been exacerbated as the
Speaker 4: cost of college has been driven up, and so the
Speaker 4: amount of debt they've taken on has just accrued and accrued.
Speaker 4: And then yet they'd say I'm two years into this,
Speaker 4: I'm three years into this, but I'm not going to
Speaker 4: stick it out, and they don't actually get the degree.
Speaker 4: Then they find themselves out. I've got to pay back
Speaker 4: these loads of student loan debt, but I don't have
Speaker 4: the degree to be able to get the job that's
Speaker 4: going to offer me higher pay. So that's I think
Speaker 4: the position I want people to avoid. Like the plague,
Speaker 4: that's the worst case scenario.
Speaker 1: All right, Joel, this Sunday two to twelve to twelve
Speaker 1: to two, and always find I'm listening to you.
Speaker 2: We'll catch you over the weekend. Take care sounds good.
Speaker 3: Thanks Bill,