05.09.23 Parents Funding Adult Kids / International Travel: Purchasing Protocol

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In this episode, I'm starting out with a tricky topic. How long should young adults receive financial support from their parents? Later, I'm planning to travel outside the United States a few times this year, and it's such a great privilege that I get to travel like I do. But with that comes gotchas. I want to talk about a big gotcha that is now common all over the globe when you leave the United States. I'm going to tell you how to protect yourself. So when kids leave the nest now, it's complicated. I think about where the first generation ever, where parents are paying for their adult children's cell phones into their thirties, these family plans. I mean, it seems like it's going to go on people's whole lives where we're going to have that as an expense we're paying. Are the kids reimbursing you? Well, most cases not. And so how do you cut loose? Well, isn't this a survey in savings.com found ready? Just short of half of parents are giving much more than just paying a cell phone bill significant financial support to adult children after they have left the nest. The average amount per child that parents are supporting an adult child, average 1,400 a month. I mean, that's a lot of money out of your life as a parent that you don't have to pay for your future. If you're still in your working years and you're saving for retirement, that's $1,400 that could be going towards giving you financial security and retirement. The story I told years ago about a family where the parents kept giving money to their kids in adulthood. And then the parents got older and needed financial assistance themselves in retirement. And one of the kids, this was in a news story. One of the kids said, well, you know, they should have saved more money through the years. So they wouldn't be in this situation. Which was such a lack of self-awareness that the reason the parents were in financial difficulty in old age is because they had continued to support their adult children when they were out of the nest in a position to support themselves potentially. It reminds me what your dad used to say. Yeah, one parent can take care of 10 children, but 10 children can't take care of one parent. So there's nothing wrong with helping your kids. I mean, it's something families do. Families help each other. And if you look at other cultures, it's common that the older family members take care of, young family members, and later in life, the young family members take care of old family members. It's just what's done in other cultures. In hours, the issue is people live in different parts of this vast land of hours. Kids fall out of close contact with their parents. And parents who have not been able to save face extreme hardship later in life. So I'm not trying to put a guilt trip on you if you were an adult child still getting money from your parents month after month or big lump sums each year. This is really for your parents I want to talk about. If you want to help your adult children launch into adulthood, have a plan that you discuss with them and say, okay, this is your first year after trade school or college or whatever, we're going to give you some support to get you going. And if you need it next year, we'll give you half that amount. And then the next year we'll give you a little bit of help, but three years and out, you need to set a time limit, you need to set clear parameters and expectations. And if you don't do that, it's like an addictive habit. They're used to having that money from you. You're used to giving that money and you do it out of love, but it becomes something that can lead to real problems, even resentment. So this is a meaningful, serious conversation. And as long as you set before you get into that habit of giving money to an adult child, you set the expectations. And then more important, you got to stick to it. So if you said, as an example, this average amount, 1400, 1400 a month, that's a lot of money to subsidize somebody else's life, right? So let's say whatever it is, you're allowed to give any other individual without any gift tax implications at all, up to 17,000 a year. So this is 1400, 14,000, 20,000. Oh yeah, so that's right at that. So you could say that that's what you're doing first year as they get into their new career, new job, whatever. And then have the taper, remember, I think a three year taper into adulthood is a good thing. You're giving them the booster into adulthood. And if something really bad happens down the road, they have a medical reversal, they go through a divorce, whatever. You want to give later in their adulthood some assistance, that's fine. But to make it something that is just expected, it's almost like it's like another rent check you're paying or something like that. And the kids expect the money like a landlord would expect rent every month, that's a problem. And that's why conversation and expectations are so key here as you help kids launch into independence as adults. And by the way, I think that somebody might get us some feedback. Yes, probably so, I would guess. Okay, Catherine in New Hampshire is actually talking about something that's related here. Can you direct me to the resources for college students who need help managing their money? I work with college students and see a pattern of waiting for their financial aid refund, not free money and taking extra loans to get through school. Besides your excellent resources, what do you suggest to help these young people? So somebody who is living on borrowed funds, which is what we're doing in college, should use a budgeting program. I mean, MENT is really easy. M-I-N-T dot com. Thank you. And if the problems are severe for a college student, just as I would recommend for an adult, you need a budget, Y-N-A-B, which you have to pay for. MENT is free Y-N-A-B, you have to pay for. And so you need a budget as much more like taking a baseball bat and stop spending that money where MENT is a tracking tool, but either will help with the idea of keeping the spending under control. The thing, it's hard for somebody with the way loan money is made available, that it's like it fell out of the sky, right? But you gotta pay it back. And so being prepared for all of life's ongoing expenses and obligations means you want that student loan debt to be as small as possible. So that doesn't create a burden for you year after year, decade after decade. It's a logical consequences thing that's hard for an 18 to 22 year old to really grasp. And that's why I think using a budgeting tool is maybe the best companion to those loans that I could think of. I mean, I also see, I'm sure there are people who've paid off their loans, but it took them forever. And there are stories out there about them and how painful it was that students can maybe, maybe if you bring sort of those stories to them, it might make them. Well, interesting enough in polling repeatedly, when people who have student loans are asked if they had it to do over again, would they have taken out the student loans? Overwhelmingly, the answer is a big no. This is from Jason in Wisconsin. Somehow using a recent trip, my Apple card was compromised. I don't know how as you need my phone to activate Face ID to use the card. I contacted them and they said it would take up the two billing cycles. Why two billing cycles? Also, do you know how my card could have been compromised as they had no answer for me? I'm afraid to use it again, help. Okay, so what has Apple done that's unique with their physical card? There's no number on the card. So no one could surptitiously take a picture of the card and get the three digit code off of it, your expiration, all that. Apple, along with Goldman Sachs, that does the card for them, they designed it in a way to make it as fraud proof as possible. But of course, with any card, there's gonna be activity of fraud. The two billing cycles. You dispute the individual charges and those charges are temporarily suspended. The two billing cycles as well, they investigate what could have happened. You are not responsible for those charges. They'll sit there kind of like in suspended animation. And I don't know how it was explained to you, but you have to go through the actual process of disputing the fraudulent charges. And on the website that you sign into for your Apple card, you do that. Just talking to somebody on the phone is not enough. And the dispute process, very important you do it. My wife bought two freestanding lamps. And when they came, one of them was very heavily damaged. The company involved has a horrible reputation for customer no service, not responding to people, fighting them on the money and stuff like that. And it had been, it took 40 days for the lamps to show up. What did I do right away? Disputed the charge. That's right. I signed into the website for the card and I went to the item, hit the dispute button, wrote the reason for the dispute said that I needed to get on record before the 60th day and said if they properly take the item back and give a refund, then I'll release the dispute. And so now I've established my legal protection. Doesn't mean that I'll automatically win. Doesn't mean that the online merchant's gonna do what they should do. Doesn't mean that the credit card company will behave the right way with the dispute. But it's the process you have to put in place. And if you've not done it in writing through the website with the Apple card people, then you gotta do that to protect yourself. Ben in Alaska says I've listened to you for years and loved the program. I recently made the biggest financial oops I've done in years and I don't know what to do about it. Long story short, I got into a car loan, 72 months, 4.99% for $60,000 that I can't afford. I knew- And 60,000 for six years? Yeah. Woo. I was signing the paper, I knew as I was signing the papers that it was a bad decision. And now my job recently decided to do cutbacks. And at this point, I either will have to stop paying on my credit cards or stop paying on the car loan and get it repoed. I was wondering what you thought the best option is. I realized it's a lesser of two evils situation, but I do not see anything else working at this point. Is there one option that will harm my credit less than the other? Ha. Ben, given the either or choice you gave me, you default on the credit cards and pay the vehicle loan. Because when a vehicle is repossessed and most states, and I don't know if Alaska is what's known as a recourse state or non-recourse state, but if it's a recourse state, what happens is they repo the vehicle and then they get a judgment against you for the loss and you end up paying for the vehicle, you're not able to drive. So paying the vehicle is really, really important. And even may I dare say more important than the credit cards, which there's no security for the credit cards. They are what are known as signature loans. They're unsecured debt. Doesn't mean the credit card companies wouldn't come after you as well, but it would be the lesser evil of the two. But what you didn't pose an option to me that is really the best option in a bad situation. Your pay has been cut back where you work. And I know it's a burden to do so, but the better thing to do would be to pick up a part-time job somewhere or gig work and put eight or 10 hours a week into doing something else that would hopefully free up enough cash that would allow you to service the credit card debts and keep up the payments for the vehicle loan. If you can work your way through this, the great news is you'll never buy a vehicle like that again. It'll be a lesson learned for the rest of your life, but having the vehicle repode is brutal for your credit, even if Alaska is not a recourse state, but most states are and you can look it up. I mean, you can search online and see if Alaska is quote unquote, a recourse state for auto loans. And if it is, it means you'll pay for the vehicle anyway, which is why you absolutely don't want the repossession. Now, I'd love to hear back from you in a few months and hear how you've navigated the process. One other thing you could consider doing is sitting down either virtually or in person with a counselor and an affiliate of the National Foundation for Credit Counseling to see what they can negotiate for you at nfcc.org and best to you with it. Coming up ahead, this is a lighter issue. A lot of people are traveling much more than they have been. The airlines reporting bookings, they've never seen for the summer and people going overseas in record numbers likely this summer. There's something you need to know about how people are trying to separate you from your money when you travel overseas. If you haven't been overseas since pre-pandemic, what I'm gonna share with you in a couple of minutes is a plague against your money. Hi, I'm Don McDonald from the Talking Real Money podcast. Simple, honest financial advice is hard to find because there are too many people in the financial services industry and even the media who will do or say anything to get your money. Well, for decades, my co-host Tom and I have been trying to help people better manage money on the radio, TV and in our podcast. About five times a week, we share simple, low-cost advice on building the wealth you need to enjoy a better future without making your broker richer and ironically, you broker. Listening to talking real money could not be easier because you're already listening to a podcast. Just search for talking real money on your podcast service or ask your smart speaker. Give us a try. You have absolutely nothing to lose except a few minutes of time and you might just discover something to help you enjoy a more prosperous and secure future along with a simpler present. Just visit talkingrealmoney.com or search for talking real money in this podcast service. It's that easy. I love travel. I mean, I absolutely love it. Other than my family, it's my favorite thing to do and the best traveling with my family going somewhere and it goes to follow. I mean, early in my adult life, I was in the travel agency business, had a chain of travel agencies. I have always loved travel, special emphasis on going wherever the deal is and it's how I decide where to travel. The trips I take are because, oh, there's a bargain there and I go and then I figure out what I'm gonna do there or why I would go there. Well, when you travel, something that has gotten much easier over the years and then recently become more complicated again, is how you pay for things. I mean, you think back to before the Euro and if you went to Europe, every time you crossed a border, you had to change your money again. Nobody took credit cards. Credit cards were almost nonexistent. Europe adopted credit cards much later than we did in the United States, Asia even later yet. And so you'd cross from, let's say France to Germany, you were already paid an ugly exchange rate to exchange dollars for French francs. Then you get to the German border, you'd have to exchange the French francs for German marks, Deutsch marks. And then you were paying another exchange rate and on and on and on. So your dollar just didn't go very far as you went through continually having to pay the rip off exchange rates and carry around these currencies. Well, obviously roll forward. Now you can use credit cards almost anywhere you go in the world and Europe credit cards, if anything, paying with plastic or paying with a phone, even more the way it's done than in the United States, it's just what you do. So the banks love to make money. So they have come up with ways to rip you off when you travel outside the United States and you're paying with a card. So a couple of things you need to know. First, if you don't have one yet, if you are going to travel internationally, you need a card that does not rip you off with foreign currency transaction fees. This is an idiotic junk fee that a lot of banks use as an unethical way to steal your money. So you use your card in a foreign country and they charge you a junk fee of three, four, five percent just for using your card. It is unbelievable. It is dishonest, crooked, dirty, but there are plenty of cards now that don't charge foreign currency transaction fees. And you just got them look for one because they are so readily available. Next thing, so there you got this card, there's no foreign currency junk fee and you go somewhere to buy something. Okay, now this is diabolical. The banks have programmed now the terminals all over the world where they override the currency of the country you're in and whatever currency of the country you're from, it pops up on the terminal, whether you're paying with Apple Pay, GPay, paying with a tap to pay with a credit card, you insert it with the chip, whatever. Okay, so what they're doing is let's say you're in Italy. And your meal that you had, that you can't believe the food was that great and the meal for two was 22 euro, including wine, you just can't believe it, how great the food was and what a deal. And you go to pay and instead of having 22 euro, it's gonna pop up in dollars. You're being like, wow. And they automatically will pop up in dollars. And if you just take the bait and sign for that or whatever you have to do, sometimes in Europe often you don't have to sign. What happens is you're then charged typically a seven to 10% junk fee for having had them do a courtesy conversion of your purchase from euro to dollars. It is an unbelievable new way to steal your money by the world's banking industry. Unbelievable, where the ethics, where's the decency, where's the honesty, it's not in the bank. So what you need to do is when you go to tap to pay or whatever you do, there will be a thing where you say no, usually option two, that you want it cleared in local currency. You wanna do that because otherwise your trip is gonna cost you seven to 10% more than you thought it would. Hotels, when you go to pay for your hotel room, same thing will happen and the stakes are higher for the hotel room. And we have a list at clark.com of our favorite no foreign currency transaction fee cards. But you get one of those, it's still not gonna protect you if you don't protect yourself at the rip off payment terminal. Wanna make it clear? It's not the restaurant, it's not the hotel, it's not the store you're shopping at that's trying to steal your money. It's the bank they use for processing that is charging you the rip off additional amount for paying for your item and it shouldn't be. I have a fun way to remember it, can I just say? Sorry to interrupt. If you pay in dollars, your wallet's gonna holler. Ooh, I like that. Just because I can, sometimes I forget. So you got good rhyming there and all of that. You made it nice and simple. I ran my mouth all that time and all we had to do was have you say, If you pay in dollars, your wallet's gonna holler. And one other thing for people who spend extensive time traveling around the world, I've talked about Revolut before and there are competitors of it. These are payment cards that are free to have that allow you to use them in local currency in most countries around the world. And it's a really good deal. It's also these services like Revolut allow you to send money ultra cheap to a relative or friend overseas without paying the massive money-changing fees that are so often charged when you wire money, you send money to someone outside the United States. This is from Chris. He says, I wanted to share a tip. I'm not sure if Clark has ever mentioned this, but too good to go is an amazing app that lets you buy food from shops and restaurants at their end date at a very reduced price. I live in London and travel to France all the time. And my tip for Clark is that too good to go is an excellent way to save money on food when traveling. In Paris, you can launch the app by bags of croissants, baguettes, and other delicious food in the afternoon for just a few euros. It also works in Italy, the UK, and worldwide. It's always a surprise with what you will get, but the amount of food is sometimes too much to eat. The app works in big cities in the US as well. Keep up the good work and be sure to try this app next time you guys are overseas. And FYI, I'm from North Carolina originally and would love to hear Clark talk about US expat issues sometime, taxes, voting, et cetera. I'd be glad to offer help with 23 years outside the US. Wow, 23 years. There are several million Americans now. I think it's three and a half million, something like that, that are now living outside the United States for an extended period of time or permanently outside the United States. And there are so many issues. I remember we had a question from someone who was living in Canada and the enormous financial problems you have with the government on both sides of the border if you're an American living in Canada or Canadian living in the United States. I mean, this is actually a specialized area of law and accounting now for people who live who are American citizens living somewhere else. And thank you for the too good to go app. I guess that's one I gotta get. This is from Brian in Kentucky. I got an automated email from my credit union in the middle of the night regarding unauthorized activity in my account. I contacted customer service that morning. It appeared I was not the only one by far with this issue as I was told several other people had called with the same problem. Although the representative was telling customers like me only what corporate had instructed them to, it appears someone was trying to access accounts using names on email accounts, likely stolen or purchased off the dark web and trying those as usernames to access accounts. I was instructed to change my username to one that did not reflect any personal information on my account as well as my password. Clark, have you heard of this happening at other banks or is mine an anomaly? This is not an anomaly. There's so much data floating out there and there will be, there's a term for it among hackers but they'll do a massive attack on a single institution overwhelming their fraud protection systems in place and so often just as you experience these attacks tend to happen overnight. Data centers tend to be very lightly staffed overnight at financial institutions and we're doing what we should be doing. We're sleeping so this is a common occurrence. You pointed out something very important is something that I've mentioned in the past with a brokerage account bank or credit union never use your email address as your username. I don't know how many financial institutions tell you to use your email address anymore. I'd say it's very unusual that any would want you to do that. Your email address is so readily available out there to crooks you don't want to use that as a username and never repeat a password for a financial account bank credit union brokerage retirement account anything like that that you tend to use for other things. Those need to be unique and not even the same one for each financial house. I have a separate one for every financial organization I do business with the hard part for me remembering them all. Chris and George, as I've noticed that many if not most optometrists now require all patients coming in for eyeglass prescriptions frequently covered 100% by vision insurance to submit to digital retinal imaging exams not covered by vision insurance. These exams are not recommended by the US Preventative Services Task Force and to my knowledge are not necessary unless the patient is indicating signs or symptoms of a medical condition such as glaucoma or macular degeneration. Nevertheless, these unnecessary exams are revenue generators for optometrists and I believe a scam. If you agree, I'm running to you with the hope that you will make your audience aware of this scam and encourage your listeners to push back whenever possible. In either case, I'd appreciate your opinion. All right, I'm familiar with this because I've read about it for the medical equipment salespeople go to optometrists and apparently ophthalmology practices as well and they convince them to get this very expensive equipment. Many times they pay a flat rate per month plus a licensing fee every time they do it. There's tremendous pressure once an optometrist or ophthalmologist has chosen to get this equipment in their office that's frightfully expensive equipment to make it as you describe mandatory requiring it. It's because they now are on the hook typically in a long-term contract for this incredibly expensive equipment. Now, the idea of this equipment, are you familiar with it? Yeah, I mean, it's been an option for me when I've gotten my eye exams, it was like $40, but I did it each time. So, and it should be an optional thing. I don't know how many optometrists or ophthalmologists are saying, hey, you're gonna come to our place. You have to pay for this equipment and it's not gonna be covered by insurance. It's coming straight out of your pocket. And it requires that if you're in a position where the optometrist you're going to is requiring you to do this that you don't wanna do, then you gotta go somewhere else. I don't know that the practice of requiring it is a common thing in optometry practices or ophthalmology practices, but it is something that should be optional in your part, particularly because it's not covered by vision insurance and it's a lot of money coming out of your pocket. And that this is an alternative to... Having your eyes dilated. That's right. You know what happens to me when I have my eyes dilated? Most people can read again in like 90 minutes. It takes me six to eight hours to be able... Everything's just boring to me, trying to read anything. I don't like doing that. So I'm willing to opt in for this stand. You know what we should do one day? I should have my eyes dilated just before we do the podcast and then see me struggle trying to do anything. Yeah, I'll put that to the consideration file. You think that would be... We'll see. On that note, I want to thank you so much for listening today. I want to tell you, if you enjoy our podcast, please leave us a review and make sure to click that subscribe button. ♪♪♪♪