05.05.23 Clark Answers His Critics on Clark Stinks / Timeshare Resale Scams Just Got Worse

It's great to have you here on the Clark Howard Show, our mission to serve you and empower you. You see, make better decisions in your financial life. Friday is a fun day. And I get to make mine even better. I look so forward to this, Krista. I know you do. Because this is our weekly Clark Stink segment. We get to hear how I can do a better job serving you aware I'm just plain dumb. Now, somebody went and talked about later, time shares. I got to give you an update on them. What you've got to know, because the story I'm going to share with you, I went and validated it as a second source because I thought this can't be true. This has to be a spoof. Turns out what I'm going to share with you later about time shares is actually a real thing. You're not believing it. But right now, the real thing you get to hear is what people have posted at clark.com slash Clark Stinks, where I fail to serve you as I should. I should have never encouraged you to speak. You almost think I'm pretty stupid. You should be ashamed of yourself. Well, maybe I'm wrong. Maybe I'm wrong. Maybe I'm right now. All right, I'll start with this. If I didn't know how empathetic Clark is, a story he told would have made me think he's a Scrooge. He talked about a woman in a store who couldn't pay for an $8 purchase with a credit card due to the store's $10 minimum for credit card purchases. I was ready for a real hallmark moment. When Clark mentioned the little stash of cash he carries, I thought he was going to leap in and save the day. I thought he'd offer to have the woman at his small purchase to hers so she could use her credit card. Then he'd pay her in cash for his purchase. But he paid cash for only his purchase and left her blowing in the wind. Opportunity missed Mr. Mason. Mr. Mason, what I did not say, I realized, I realized by this post, I didn't say, is the woman got the manager to override the $10 policy and did take her credit card. She was very, very aggressive and she did get the ability to use her card. Good for her. Okay. Someone asked of paying their mortgage every two weeks instead of monthly saves the interest paid. You said it does not make any difference. While you're correct about the interest paid, you know that making payments every two weeks adds two additional payments a year, helping to pay off the mortgage quicker. In my case, by doing that, my 30 year loan was reduced for 20 to 25 years. For someone debating between the 30 and 15 year mortgage, I have a tip. In my case, the difference in monthly payments between a 30 and 15 was $1,400 at a 2.85% rate. When I calculated my scenario, I realized that if I paid an additional $1,500 monthly on my 30 year mortgage, I could pay off my loan in 14 and a half years. I've been paying more monthly and I'm actually on the way to paying it off at about 10 years, although I have a 30 year mortgage. This option gives me peace of mind that I can get away with lower monthly payments if my income changes then. Ben, thank you. Krista, is this a pen name for you? No. How many times have you and I had the debate about the 15 year loan? I know I have a 15 year loan, but it does. We did it because- Yours now is a 15. After all those years, you would- Yeah, that's why I got that amazing rate. 1.875% rate. Okay, so yes, as I recall that question and I may be wrong, person said they were making two payments a month. What you said is absolutely right. If you pay half a payment every two weeks, 52 weeks in a year, you've made 26 half payments for the equivalent of 13 monthly payments. And that's why paying biweekly as long as your mortgage company will accept you paying that way, will get your loan paid off potentially years earlier, the higher the interest rate, the bigger the impact on getting the loan paid off earlier. And I'm really excited for you that your 30 year loan is becoming essentially a 10 year loan. I love the show, but you made a comment today about private mortgage insurance that it was highly profitable for banks. This is not correct. You are likely thinking of mortgage life or another insurance product. PMI is mandated for loans greater than 80% if the lender is going to sell to the GSEs, right? Fannie Mae and Freddie Mac. The lender doesn't make any money from PMI, Tony. Tony, I stand corrected. I thought the lenders were getting commissions on the sale of private mortgage insurance. And if I'm wrong about that, I stand corrected. I'm going to look that up because I always thought that that was a profit center for lenders. And you're telling me it's not. Clark, you stink like a Portland rose one day past its prime. And other Portland rose. In other words, you don't stink at all. Oh, you are such a great proponent of setting and reaching one's life goals. One of your goals was to visit all seven continents. And so far you have visited six missing only Antarctica on a recent show a listener informed you how you could go without cruising the challenging turbulent waters of Cape Horn. One of your other goals was to visit all 50 states missing only North Dakota. I was in the same boat. A few years ago, my beloved Aunt Martha passed away in eastern Montana. I flew to Montana for the funeral. This was my chance to hit North Dakota. I got up early the morning of the funeral and drove two hours to the North Dakota border. As I approached the welcome to North Dakota sign, traffic stopped due to road construction. I was worried that by the time I made it passed the sign and after taking the first exit to return, I might again get stopped because of the construction heading in the opposite direction and miss the funeral. What is one to do? Well, I got out of the car and walked the 100 yards to the sign. I then walked around the welcome sign officially now in North Dakota and reaching my goal. A spin on your never, never, not ever. We should always, always, always strive to reach our goals. And PS, the two feet of North Dakota that I was in was fantastic. Brian. Okay. Brian, I still regret that. I was nine miles from the North Dakota border decades ago and thought, do I really want to go those nine miles out and back? What a big mistake, big mistake. And I was sure I was going to get to North Dakota because the University of North Dakota, UND has one of the most respected flight schools in America. And so my son Grant wants to be a pilot. We've been going and looking at flight schools all around America. And then he looked at the weather in North Dakota during winter when he'd be, you know, core months of being at school, average daytime high, 21 degrees for three months. And so he decided he didn't want to visit UND. And I lost my opportunity for my 50th state. Now, after we had the thing about the crew stand article, I went to look at what that cruise costs that gets you past the Drake passage and you get past the massive waves. It is so expensive. I can't believe it's going to have to be like a once in a lifetime kind of splurge to spend that money. But I think I will someday, but I was shocked how expensive it was. But I got to get to North Dakota and I got to get to Antarctica. Mr. Stink, you discussed not paying for deposits with debit cards or cash. Great advice. I didn't hear you discuss the time limits on credit card charge back rights. Some deposits are far in advance and you should keep your charge back rights time limit in mind when making a deposit on something Steve. Thank you, Steve. This just came up in my TV work as well with the fact that a credit card is not an open and shut protection for deposits. If you are paying a deposit for product or service, you'll receive greater than 60 days. When you pay that deposit on a credit card, your federal rights are pretty much over. It depends on the credit card issuer itself if they honor a dispute past those 60 days. That is a very valid thing that I should always say when I talk about why I like for you to use a credit card for a deposit and I fail to do so in that case. I'm a fairly new listener. I'm surprised by two topics that you repeat constantly. Your love for Costco and how everything impacts your credit score. I can get past the Costco thing, but I'm confused by the constant inference to your credit score. Your credit score does not impact areas of our lives, but it is being marketed as an absolute must to be successful. Having a higher credit score does not make anyone more successful. The goal should be to have financial independence and the ability to borrow more money is not part of that goal. Can you dial down the credit score talk, Ross? Ross, thank you. As much as the credit score should not determine so many things it does, it determines whether an auto or homeowners insurer will insure you and what price they'll charge you for that insurance. They see the report, not necessarily the score. The score determines what kind of rates or whether you can get various loans. I think about over the years, people who've contacted me because they've never had credit before and then they want to buy a home and they can't get a mortgage because they've never had any credit. Let's call it a necessary evil to have a credit report with good payment history and a good score. You're right, it's not life itself, but it is a facet that affects things in your life, which is why you hear me talk about it in so many different ways. Clark doesn't stink, but our Costco gas station does. Our local Costco gas station has no squeegees for cleaning windshields. I love the lower gas price, but this is a safety issue. Why can't we clean dead bugs off of our windshields? I have asked the attendants repeatedly at Costco about getting squeegees. They clean management once the gas line moving, so no squeegees. Help Clark, Luigi. Luigi, that is the answer that we found out years ago about why Costco does not offer squeegees because they're trying to just have people pump the gas and get going. It is a safety issue. You're right about it. Next is Costco at the tire center. It's put in self-service things to pump air in your tires. It seems to me out of the line for pumping your gas, they could have an area where they could have squeegees for people to clean their windows. Just a thought that I think would be very simple and very much appreciated for the members of Costco. You don't fully stink. You just went jogging and forgot your deodorant. For advice, I'm moving emergency savings to a Roth IRA to avoid it being counted when applying for financial aid was incomplete. It's a good idea if someone isn't already able to max out the Roth. What you fail to mention is what it should be invested in if it's an emergency fund. If it's money that may be needed, it should not be in equities but instead in fixed assets like bonds or CDs. I'm not sure if you mentioned, but if you're married, you can also do a spousal Roth even if your partner doesn't work outside the home, Pete, and we did have a couple people right in it. Pete, thank you and everyone else who mentioned that. I should have mentioned that if you're using Roth as a vehicle to reduce obligations before qualifying for financial aid for college, I should have said just as you did and the others did. Thank you for bringing that up. What happens, because that's the second time someone's mentioned, I left out a key detail, because I'm answering a question I get kind of, is it called myopic? Myopic? Where I'm focused on specifically what that question was and sometimes leave out an important element and obviously I should always mention that you don't invest money in a Roth if really it's a vehicle to be able to help with college and the money is going to be used in a short while it has to be in a parking space inside that Roth not invested. Your advice about using hardware keys is a second factor for online security left quite a stink. It's right that these hardware keys are best practice for securing online accounts, but you're putting people at risk of permanently losing access. If you don't also mention the best practice of always pairing two hardware keys, one you use to log in and one you keep locked away as a backup. You see the security key only provides security if you remove all other fallback options like a text or email and if you only have a single key, you're putting your listeners at risk of losing account access for good. I know multiple people who have lost access to their Google accounts of more than 10 years by using hardware keys without thinking through the risks. Chad. Thank you for mentioning that. When I first talked about security keys, I mentioned you always buy two. You do a Noah's Ark rule. Just as you described, I have two. The reason is exactly as you said, if you lose your first one, you have the second one as a backup. Eric from North Carolina asked about seeing his IRA from Schwab and TD Ameritrade in one place. I think what he meant was he asked about putting them together in one place. He also has accounts at Fidelity. Clark talked about security keys or merging accounts with Fidelity. What Clark did not mention is that Fidelity has a feature on its website called Full View. It provides login details and it pulls in totals from banks, credit cards, brokerages, mortgages, etc. and even provides a total net worth. It is a great feature. Rolden. Rolden, thank you. And those are known as ScreenScraper programs. And most financial houses offer those where you can see on one dashboard your accounts at various companies. It's something that has been controversial over the years. Some of the big banks hate it, but it is a very good way of you keeping track of all your assets. In your case, you're also keeping record of liabilities, people you owe money to as well. And you are 100% right. This is a great feature. As far as ScreenScraper programs, dashboards that show all your money being a ripe target for fraudsters stealing your money. That is a theory I've not ever heard of that being an actual real issue or real problem. And I appreciate all of you who wrote in suggestions, corrections or additions to things that I've said. Coming up ahead, in industry I didn't think could get any worse. Timeshare reselling scams. You're not going to believe it actually has gotten worse. I'm going to tell you straight ahead. 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Progressive Casualty Insurance Company and Affiliates price and coverage match limited by state law. So you get into timeshare and you may love your timeshare. Unfortunately for many people, there comes a time where the timeshare doesn't fit in your life anymore. And then you go to try to unload it and it turns out there is no market to buy your timeshare. In fact, that's why I call timeshares a defective product because even if you love your timeshare, eventually your life circumstances change. Something happens, maybe you hate it up front and you're like, why did I buy this thing? And then you're stuck with it because there is no viable secondary market for timeshares. People desperate to get out of the timeshare though are susceptible to the con artists that run timeshare resale services that say, oh yeah, we're going to get all this money for you for your timeshare. You're going to be amazed. I mean, we've got buyers right now who so want your weeks that we can even make a profit for you. All you have to do is pay us X number of dollars up front. Fish hook and mouth, they got you. They real yen and then they're gone with the win. So of the things you need to hear that is just beyond belief, it's now an organized crime activity according to the US Treasury Department. Yes, criminal rings have decided it's so lucrative to cheat people by pretending that they can get your timeshare resold that is valuable enough that con artists from organized crime are doing this as an activity. Listen to this. One of the wings of a Mexican cartel, drug cartel, is now doing this as a side activity. I mean, while illegal drugs are obviously a very profitable enterprise for the criminal rings involved in it and they've decided that there's even more profit to be made and timeshare resale scams, you want any more proof how close you are to having your problem compounded by believing somebody who says, hey, pay us this money. We're going to get you top dollar for your timeshare. What's the real truth? You're probably going to have to pay somebody to take over your week because most timeshares actually from the second you buy them have a negative market value. You pay 10, 15, $20,000 for that week. Basically that timeshare isn't worth even zero dollars. It's worth a negative amount because the ongoing obligations that come with it. The important thing is if you ever think you want to buy a timeshare, you've heard a pitch and you're excited about it, take over somebody's timeshare where they pay you potentially thousands of dollars just to take over their obligation instead of being the one who pays 10, 15, $20,000 to buy one or go use your timeshare. While you're there, the likeliest people to be willing to take over your week is going to be somebody who's there enjoying themselves. They love the place and you sell it to them for a dollar or a penny or you pay them to take it over just to end that ongoing perpetual financial obligation. Krista? Farron in Texas says my parents aren't very good with money and they currently don't have any retirement saved. My dad is 53 and my mom is 63. They have a lot of health problems as well. My question is should I include them my financial plans? Should I plan to save a retirement for them? Should I try to help them make better financial decisions? Then I wanted to read this too. She said thank you for all your help and podcasts and articles. My husband Adam and I are fans but my husband is your ultimate fan guy. He listens to your podcast religiously. It has been for years and whenever we have a financial question, your website is the first he visits. It's his birthday on May 6th. If you said hi to him on your podcast, it would be the best birthday gift ever. Alright, so Adam, I will not sing to you for tomorrow but I will tell you this, even though it's the fifth and your birthday is tomorrow, celebrate this way. It's already your birthday as we're speaking in New Zealand, Australia and much of Asia. So happy birthday from the people of the extreme South Pacific and from Asia. I hope it's a great one. Now do your question. Gosh, a lot of adult children are finding as their parents age that the parents have the dual problem you described. No money saved for the future and medical problems. I just had a call from somebody who was a family friend asking me this exact question as they were dealing with a destitute older relative. They were all trying to figure out what to do. For your parents, it's really late in the game for them to build up savings. If you are willing to take on the burden of helping with the saving for retirement and if they would not squander the money, what I would do, you're able to put, because of their age, up to $7,500 each in a Roth IRA and their names. That's a transfer of generational wealth and reverse. But if you do that, the money can grow tax-free for them. And the second aspect of this is it's a non-taxable event for you because you're able to give any other person up to $17,000 a year without any tax implications at all. Now, as someone pointed out, this is an added thing. I won't dwell on it. If you don't have millions of dollars, you don't have to worry about that. You can give them whatever amount you want. But the smartest, most efficient thing to do if they would leave the money alone and let it grow is the $7,500 each year in a Roth IRA for them, preparing for when they are not able to earn and not able to take care of themselves, they at least have that money growing tax-free for the years until that would occur. Kristen? Kristen Illinois says I'll be retiring soon and luckily with the pension at the age of 50. Wow. I have a hobby of upcycling furniture and would like to continue in retirement. What are your thoughts on creating an LLC and taking the tax advantages I hear so much about? There's some startup equipment costs as well as ongoing purchase of materials. I would consider this a part-time gig. How neat. So upcycling is when you get furniture cheap, you repair it and you put it back for sale. You don't need an LLC to do that unless you're worried that somebody might sue you because a chair you upcycled, put them on the ground or something. I'm just being silly. I'm trying to think of any liability risk you'd face. There's a limited liability company specifically for you to do business within and as that LLC and limit exposure to liability for you personally. I can't imagine with what you're doing that that's really an issue. You can be what's known as a sole proprietor. There's a tax form for this that is pretty easy to fill out. You just keep a record of your expenses and setting this up. Your income from it and you report the net on your tax return each year. The LLC is not really necessary until this becomes like you start hiring employees or anything like that. There's more liability, exposure and risk. Then you would definitely want to establish an LLC at that time. The tax benefits are equivalent doing it as a sole proprietor versus not. And showing Californians says I'm going to be doing a big remodel on my 60 year old mother-in-law apartment near my house. I think mother-in-law's apartment probably. It's in decent shape but needs a total cosmetic update. I plan on putting in new kitchen appliances, kitchen countertops, flooring and bathroom shower towel. Should I be buying the large appliances and other things when I see them on sale this year or wait until just before the contractor starts working? Is the savings on money not worth the risk of buying early? In this case, surely because appliance costs have been declining. We had a big spike during COVID because of supply chain disruptions. The deals on appliances continue to get better. The economy is slowing down. I'm not worried about appliance deals you see now evaporating. Before the remodel is done, you have to store these things. You got to deal with all that. I would wait and there's sales on appliances all the time. So I would feel much more comfortable with you holding on to that money till you're in the renovation cycle where we make sense to go ahead and when you see a good sale during the renovation cycle, then you buy the appliances. And there is not really a risk to buying early just hassle and no benefit to that hassle right now. And I want to tell you that does it for today's episode and this week. I hope the rest of your day and your weekend is absolutely fantastic. This is the time of year I love so much now. We're in May and I hope this month brings great joy to you and beautiful weather. ♪♪♪♪