What Pop Music Can Tell Us about Personal Finance
It's Pop Culture Week at Industry Focus! In this week's Financials episode, Gaby Lapera talks with special guests Mark Reeth and Jason Moser about financial advice -- good and bad -- from pop songs.
Listen in to find out about the importance of prenuptial agreements (a la Kanye West's Gold Digger), how to save money living a Thrift Shop life, and how to avoid an awkward situation like the one in Destiny's Child's Bills, Bills, Bills. Also, the hosts talk about donating stocks to charity, how much happiness money can buy, when it's better to rent and when it's better to buy your house, how to budget, and much more.
A full transcript follows the video.
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This podcast was recorded on Aug. 1, 2016.
Gaby Lapera: Hello, everyone! Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. You are listening to the Financials edition filmed today, on Monday, August 1st 2016. My name is Gaby Lapera and joining me in the studio are Mark Reeth and Jason Moser who need no introduction, but I can introduce them if they want.
Jason Moser: I'll always take an introduction.
Mark Reeth: I was going to say ... Get the people excited. What do you have to say about us?
Lapera: Mark Reeth is sporting this season's Willie Beard.
Reeth: Thank you for that!
Moser: There you go.
Reeth: That's great.
Lapera: And hat. He's funny sometimes and I'm really excited to have him on the show.
Reeth: Great to be here!
Lapera: Jason Moser I've never actually had on the show, so I'm going to be a lot nicer to him.
Moser: Oh, you see how that works?
Reeth: Oh yeah, this is the last time on the show. That's great!
Moser: I get it. I like that.
Lapera: Jason Moser, thank you for joining us.
Moser: Thanks for having me.
Lapera: You too.
Reeth: Yeah.
Lapera: So this week on Industry Focus is called pop-culture week which we are very excited about. I'm excited to see what Kristine Harjes talks about because she doesn't know anything about pop-culture. Pretty sure she doesn't know who Matt Damon or Ben Affleck are and if presented with both cannot tell them apart.
Reeth: That's a damn shame.
Lapera: She probably would still ask them for their number though.
Reeth: So would I. I mean, come on.
Lapera: We thought that for Financials this week what we can do is we could listen to some pop songs, some popular culture songs because I don't know that any of them are actually still popular anymore.
Reeth: It sounds like you know about as much about pop culture as Kristine Harjes does.
Lapera: Songs that were once popular that I had heard of.
Moser: They live a much shorter life these days.
Lapera: Then just talk about whether or not they give good or bad financial advice, so I think just to open up, I think that what I'm going to do here is I'm going to read lyrics to you because as mentioned in our pre-production meeting, which was two minutes ago, we don't have enough money to actually buy clips to play the songs for you, so we will just be reading them and self-censoring them if necessary.
Moser: Self-censoring, I like that.
Reeth: I'm not very good at.
Moser: Sounds like trouble ahead.
Lapera: Yeah, well just, yeah. Bear with me. Ready? "I knew my rent was gonna to be late about a week ago. I worked my ... tookus off but I still can't pay it though, but I got just enough to get up in this club, have me a good time before my time is up."
Reeth: Way to stick to what people really meant there. You got the message across. I think people would be proud.
Lapera: So just in case you've never heard of the song, this is Time of our lives by Pitbull and Ne-Yo. We had to get that reference, Mark Reeth, and/or read the notes.
Moser: If he knew his rent was going to be late a week ago, this guy is obviously not very good at planning for the future, right?
Reeth: He's already in the water at this point. He might as well just go out. It makes sense to me.
Moser: My girls are listening to this stuff on the way to school and I'm going to have to have second thoughts here. I don't know that ... This doesn't seem like it has, maybe he's working his ass off but I don't know that if you don't have the money to pay your rent, does it really matter? He's telling you to live your life. He's telling you not to be just change into your wallet at all times.
Lapera: I think he's just trying to say "Money doesn't buy happiness", but what I'm actually more concerned about is the last line that I read which is "Have me a good time before my time is up". A little bit ominous. It sounds like he might have medical bills to pay as well.
Moser: Distinctly possible.
Reeth: He should pay those first. Well, you should pay your rent first. What do you pay first? Pay yourself.
Moser: Well, I think--
Reeth: Have some fun.
Moser: Well, I think you better pay the rent or the mortgage or else you're not going to have any happy place to sort of have those dreams about your aspirations and whatnot. At least pay the rent or the mortgage. You've got to have a roof over your head.
Reeth: Sure, sure and just for actual financial advice for the show, it's common knowledge to spend 25-35% of your income on rent.
Moser: Sure.
Reeth: But that's not always feasible.
Lapera: Yeah. That's a rule of thumb.
Reeth: It's a rule of thumb, but here in the Washington DC area, one of the most expensive housing markets out there, you can always make rent but you always want to go clubbing.
Lapera: Sometimes you need a couple thumb's worth of rules. Definitely pay your housing bill first would be the second thumb rule.
Moser: I think also if you think of ... You talk a lot about rent versus own and I think for a long time, maybe 2000, the early 2000's into the middle 2000's where it seemed like everybody was taking advantage of the low interest rates and trying to buy a home, but buying and owning a home isn't necessarily always the best option for people out there. The way today works as far as the employment picture, you can work off location, so to speak, and you're probably not at the same job for as long as maybe was the norm a decade or two ago, so it's kind of helpful be able to say "Well I got this new offer somewhere else so I can just pick up and move and I don't have to worry about selling a house or buying a house", because there's a lot of money that's wasted in that process unfortunately. Sometimes renting actually could be the better way to go.
Reeth: Okay, so I rent, personally. I don't see myself becoming homeowner anytime in the near future. It's just how my financial situation is. It's also being a part of that generation that you just talked about. I value mobility and mobility comes with not putting down my roots by buying a home, but of course there's the security that comes with buying a home. You're a homeowner. I have to imagine a large portion of your wealth, either now or at one time was tied up into your home and you can rely on that for future expenses. If push came to shove, you go sell your home and take that money back, so I see where you're coming from and it's certainly, renting is definitely something I see myself doing for very long time for a variety of reasons, but there are definite of damages to being a homeowner as well.
Moser: Sure and you made a very good point there with the word "value", and I think that goes back to what you mention, Gaby, and that money doesn't necessarily buy happiness. It is a matter of what each individual really values in their life, what stage of life they're in. Fortunately, we live in a country where you can have a number different choices at your disposal.
Lapera: Definitely. I think that just to sum up the point, make sure that you pay your rent and/or mortgage.
Moser: I like that.
Reeth: We give real advice here, ladies and gentlemen.
Lapera: And if you are going to move in less than three years, then maybe choose to rent because you're going to lose a lot of money on closing costs otherwise.
Reeth: That's for sure.
Lapera: Also millennials tend to move around a lot. I think those were all the major points that we covered for that song. Thank you Pitbull and Ne-Yo for inspiring that deep conversation.
Reeth: Oh, Pitbull.
Lapera: Next we move on to Billionaire by Travie McCoy and Bruno Mars. Would one of you gentleman like to do the honors?
Reeth: I think you should sing it this time.
Moser: I think you should sing.
Lapera: Thanks, Jason! Yeah, you should sing it.
Reeth: We want people to listen to these. Billionaire by Trevie McCoy and Bruno Mars. "I'd probably pull an Angelina and Brad Pitt and adopt a bunch of babies that ain't never had blank, give away a few Mercedes like "Here lady have this" and last but not least, grant somebody their last wish". Billionaire.
Lapera: Yeah, that was like spelling be like. I kind of liked that. So there's a couple different parts of me here. Part of me is like "Man, I don't know how you became a billionaire, but you should definitely diversify and put some of that money in bonds, yo!" and then another part of me is like "Oh, that's so nice. You want to help people." What do you guys think?
Reeth: I just think that was a great "Diversify your bonds" shout out. This is the kind of show we're doing. Well, I can certainly talk about giving away a Mercedes. Well, it wasn't a Mercedes, but I actually just gave away my car, my old car, to a charity. I got a new car a couple weeks ago and last week I ended up donating my old car to Wheels For Wishes which is associated with the Make-A-Wish foundation so I certainly stand behind the idea of charitable giving. I think you get a lot from it, both from an ethical and moral perspective, but there are also obvious financial benefits as well.
I'm going to get a little bit off my taxes this year, hopefully, when they sell that car and I get a receipt for it. It's a junker but I hopefully will get something out of it. There's also you can always, people always forget this, you can donate stocks to charities. You can make--
Lapera: I did not know that.
Reeth: Yep, absolutely. You can donate stocks and it helps, I think it actually completely eliminates -- maybe you know this, Jason -- completely eliminates the capital gains tax.
Moser: I am no tax expert, Mark, so I'm going to defer.
Lapera: That's really sneaky if that's the case.
Reeth: It is. You're still giving away money but there is something to be said about again, avoiding that capital gains tax and hopefully making somebody's day with a charitable donation so that's again, something people always forget about, but stocks are just as donatable as a car.
Moser: Sneaky maybe but you know I've always had this idea that, we espouse long-term investing here at the Fool. We talk about holding these businesses three, five, ten years, even longer. I would be on board if we said capital gains wise, if you've owned shares in a particular business for five years or longer then I would think: "Hey, let's just wipe out any exposure to capital gains tax all together", and you can alter it on the other side there as well so that if you're selling before five years is up, perhaps your short-term capital gains exposure is greater than it is currently today, but I think that would certainly promote at least the benefits of owning of longer-term investing like we talk about here. I think that would be kind of an interesting one to at least debate the pros and cons.
Lapera: If you are a huge jerk, you could also unload some like SolarCityor something.
Reeth: Well, neither Jason nor I are huge jerks, so we would never do that.
Moser: And I don't own any SolarCity so.
Lapera: Could a charity just be like: "Nah!"?
Reeth: "Do I really want Container Store right now? Nah."
Lapera: Okay, you guys feel good about that?
Moser: I do. I think it's ... You always think about if I ran into this big windfall of money, if I do all of a sudden woke up tomorrow and I had $5 million, what would I do with it? Maybe $5 million isn't the best example but regardless, I think it's important to recognize that it's a big world. We've got a lot of things going for us here. It feels good to help when you can and I think as long as you can approach life from that perspective, it kind of helps you make better decisions.
Lapera: Building on point number one, make sure you can pay your rent and then help others.
Reeth: Right, maybe don't adopt a bunch of babies but you can always give away a Mercedes.
Lapera: That's a Mark Reeth.
Reeth: That was Travie McCoy and Bruno Mars.
Lapera: I know. If you want to give away a Mercedes to Mark Reeth, it's mreeth@fool.com.
So I think most people when they think of rap stars, rap/pop icons, people who make popular music, they think of people who perhaps don't give the best advice. They're saying "Drink some really nice champagne," when box champagne would work just as well to celebrate your major occasion.
Moser: For Shizzle.
Reeth: Do they make box champagne? You would know.
Lapera: If they don't, they should.
Moser: Here's your next million dollar idea right there.
Lapera: There are some songs that give good advice, I think anyway. I think that the song that comes immediately to mind for me is Macklemore's Thrift Shop. For our listeners who haven't heard it, "I'm going to pop some tags. Only got $20 in my pocket. I'm hunting looking for a come-up. This is ...
Reeth: F bomb.
Lapera: "Intensifier awesome". And later on in the song, he goes on to say "They be like "Oh, that Gucci, that's hella tight". I'm like, yo, that's $50 for a T-shirt."
Moser: I see where he's going with this.
Lapera: Currently wearing a thrifty T-shirt right now. Thank you, Hailey Douglas, for giving me this shirt. It cost me zero dollars, so I am totally on the thrift store bandwagon with Macklemore.
Reeth: I'm right there as well. I think a thrift store would actually be a step up for my fashion statements here. I've got a free Motley Fool shirt on. I've got a hat I stole from some kid in college. These shoes, I had a coupon for them and they were on sale, so yeah I'm definitely living that thrift store life. Jason Moser, you're looking classy in this button down.
Moser: See that's funny because I used to work at a bank and an insurance company where I had to actually wear real clothes to work like suits and ties and stuff and so it's very easy for us to speak this way because we don't have a dress code here and you really actually can just dress however you like to dress. I think yeah, for me, especially when we had kids, I started to recognize there's a lot of money that people burn on things like clothes when you don't necessarily have to, so I look at things like Old Navy today with ... To me, it's just a greater option. It's not an alternative I necessarily would've thought about perhaps a decade ago but Old Navy gets a lot of our money today.
Baby clothes, gee whiz, when you're raising kids, they just grow so fast you can't keep them in them so you go to those consignment sales where you ... Sure, they're clothes that are used there, but half of them haven't been used because the baby never got to wear them because they grew too fast, so clothing is one of those things that ... I like that, "Yo, that's $50 for a T-shirt." That's insane.
Reeth: That's insane, yeah. Absolutely. I get "dress for the job" that you want. Obviously, the job I want is hobo but you've got to dress for the job you want. I personally whenever I'm not dressed like this, I only shop sales if I need a button-down that. I'm a huge sale shopper. It's all I do. Black Friday, I think we talked about that on Market Foolery in the past. One thing that's actually come up recently regarding sales is Sports Authority. You guys see that Sports Authority--
Moser: Oh, yeah.
Lapera: Yeah.
Reeth: It went bankrupt and had its going out of business sales and everybody hears that and says: "Oh, it's going to be rock-bottom prices. This is a great time to go visit Sports Authority and get the shoes that cost $200 for $100 now", let's say as a random example. The problem is people forget that those stores, those companies are still looking to make as much money as possible.
Moser: Of course.
Reeth: Especially when they're going bankrupt, they need as much money as possible so in the case of Sports Authority, they hired a third-party to kind of manage their bankruptcy. This third-party came in and jacked up the prices at Sports Authority stores, before the sale and then when the sale hit, the prices went back down to almost exactly where they were before. People have been freaking out about this.
This happens all the time. Sports Authority just got caught. You just, you need to do your research. I think if there's anything that comes out of this entire show, it's: do your research before you make any serious financial purchases or decisions even as far as shopping for sales.
Lapera: I thought the charitable stock-giving was sneaky but that's way sneakier.
Reeth: Way sneakier. It's a sneaky world out there, Gaby.
Lapera: Yeah, I just want to say that I ... There's a good portion of my shopping at Goodwill for a long time and you can find brand names too. I think that's one of the things people think that you go in there and you can only find those dresses that your third-grade teacher wore that were kind of like jumpers with cats playing with balls of yarn on them.
Reeth: That's all I get from there too.
Lapera: Well, yeah. I get the Under Armour. Mark, where's the dresses? So to reiterate our points: pay your rent, give charitably, live frugally and give to charity shops where other people can buy your Under Armor.
Reeth: Nothing wrong with it.
Lapera: Physical responsibility for the win. So the next song we have on our docket is an oldie but a goodie. It was once popular and maybe will be again. It's Money, Money, Money by Abba. Anyone?
Reeth: Speaking of an oldie but a goodie, Jason Moser, would you ... Do you have the lyrics in front of you?
Moser: I do, yeah.
Reeth: Give it a shot.
Moser: "I work all night. I work all day to pay the bills I have to pay. Ain't it sad? And still there never seems to be a single penny left for me. That's too bad."
Reeth: That is too bad.
Moser: Isn't it? It's kind of a sad story there.
Reeth: How can we prevent this this situation?
Moser: I feel like I've been there before at least once or twice.
Reeth: Been there, done that.
Moser: It seems that way sometimes though, doesn't it? I guess it definitely can feel that way. We were talking to the areas where the rent is particularly high and living expenses can take up a lot of paycheck and obviously you are paying taxes and insurance, and all sorts of other things that you have no real control over whatsoever. It can certainly feel like at the end of the day that there is no money left for you in the check.
I think the one thing I would take out of this is because you get that check and all those things already taken out before you really have anything to say about it, go ahead and just pile on there and make sure you're contributing to your 401(k) plan or whatever retirement opportunity your employer is offering because it's very easy to get that paycheck in then say: "I just don't have enough to contribute to my savings account or whatever." Have it done for you automatically. You really ... I feel like if you get a job then you should be required to opt out of the 401(k) as opposed to opting in.
Lapera: That makes a lot of sense.
Moser: I think that would be better for everybody. It's not about the freedom. I think you should have the freedom to choose, but I think from the perspective of the employee, it's a far easier decision to make. I think they typically don't opt in because they're kind of lazy and don't want to deal with it.
Reeth: No, absolutely.
Moser: Opting out would be the same thing. It would require some work and initiative on the individual's part and they're probably just going to be like "Eh, I'm good. Whatever." It's still your money. It's just being put away for you to save your from a rainy day.
Lapera: There's that obscene figure floating around that one in three Americans have $0 saved for retirement.
Moser: Yeah, that's really scary. I don't even understand how that is possible.
Reeth: There are three of us at this table. Who is it? I'm just going to say, it's me. It's clearly me. Look at my outfit. It's clearly me, guys. I'm spending all my money on clothes.
Lapera: It's hobo chic. You and Mary Kate and Ashley can all hang out.
Reeth: Yep, me and the Olsen girls get together, talk about our fall line.
Lapera: I will say that that if the ladies of Abba were dating Pitbull and Ne-Yo maybe they wouldn't be going out to the club and spending all their money.
Reeth: Mm-hmm
Moser: Perhaps not.
Reeth: Yeah, no. To Jason's point, I think paying yourself first and foremost makes a lot of sense. Another take away from this I had was budgeting. Budgeting is hugely important. It was something I absolutely struggled with for a very long time. You know we talked about rules of thumb earlier, or rule of thumbs, if you're Gaby Lapera. One of them is the 50, 20, 30 rule of thumb. It's a common way of looking at your budget every month. 50% of your income every month goes to fix costs like rent. 20% goes to your financial goals like a 401(k) or retirement or even maybe a vacation and then 30% is more flexible spending so gas, groceries, whatever comes along that month and whatever you have left over, you put back into that 20%, those financial goals. So I absolutely agree Jason. First things first, you've got to pay yourself and budgeting is an easy way to make that happen.
Lapera: Yeah. Definitely. I think we covered that sufficiently so we're going to move on to Gold Digger by Kanye West which has one iconic line of a financial advice. "If you ain't no punk, holla, we want prenup, we want prenup'"
Reeth: Yeah.
Lapera: Exactly. That's how the song goes.
Reeth: It is how the song goes. It's a great song.
Lapera: So prenuptial agreements, this can be a hotly contested topic among couples, but it's something you guys should definitely talk about before getting married. Neither Mark nor I are married. Not to pry into your financial, personal life.
Moser: That's OK. Pry away!
Reeth: Jason!
Moser: I'm an open book. No, I think it ... My wife and I neither one of us came from obscene wealth, so we didn't have the need for something like a prenup because we both kind of came to the marriage with us and our futures. But yeah, I think that ... I guess the raw statistic is that one out of every two marriages ends up failing and for whatever reason that may be, it seems like divorce is just kind of standard in our society today and I think a prenup ... I think maybe it's just the best way to look at a prenup is to say it doesn't necessarily have to favor one versus the other, but what you can ... If you can figure out a way to frame this with your significant other and say: "Hey, listen. It's not about me. It's not about you. It's that if for some reason this doesn't work out some slimy," no offense, "lawyer out there isn't gonna make obscene amounts of money off of us because we've already kind of laid the framework out from the very beginning", because if you're getting divorced, then you think about it. The lawyer has all the incentive in the world to try to drag this thing out as really as long as possible.
Lapera: Yeah and not to be a pessimist but I think it's something like 60% of U.S. marriages end in divorce.
Moser: That's just a lot.
Lapera: Better safe than sorry.
Moser: I'll say, I'm getting ready to hit 15 years in December.
Lapera: Congratulations!
Moser: 15 years, so I feel like we've been through a lot, but thankfully, we just didn't have that situation where we had, neither one of us had anything really to defend. I'd like to think that after 15 years, well shoot we've probably got it figured out to the point where we can make it the rest of our lives. Anything is possible, right?
Reeth: Uh-huh! We get a little postnup.
Lapera: Just so you know. That's actually a thing, postnuptial agreements.
Reeth: Oh my God!
Lapera: In case you guys are curious. Just in case you're curious, Jason, the 15th anniversary gift is crystal.
Moser: That is good to know.
Reeth: Mrs. Moser, I hope you're listening.
Moser: I appreciate that, and Austin will happily edit that out or I'll just tell my wife to not listen to Industry Focus this week.
Lapera: Yeah, prenuptial agreements, good thing to talk about even if you're not super wealthy, worth a thought. Also, astounding number of people don't talk about finances at all before they get married.
Moser: Yeah.
Lapera: Maybe you guys have a very different spending habits and that's something you should talk about.
Moser: How do you feel like, when you guys grew up, do you feel like as a child your parents were open with you about money and things like this or do you feel like they felt like it was a taboo subject that didn't really didn't have a place in the home?
Reeth: I think it fell into that category of "Why would I talk about it?" It's like politics or religion. You don't talk about, especially with your kids at least for my folks. Though credit where it's due, when I started becoming more aware, started doing all the things you teach a little kid about money with, allowances and budgeting and stuff like that, yeah they were always open. My dad was the first one to get me into investing. He kind of taught me paper trading over on Yahoo finance.
I never knew much about my parents' financial situation, only that I had a roof over my head and didn't really want for anything growing up, which was more than enough for me. It was never a deep dive into "Here's how much we make. Here's what we're doing with it. Here's how this affects you", which I actually think would probably been very beneficial for me growing up. Again, I said before, I struggled with budgeting for a long time. I think seeing my parents do it and knowing what they had to do would've helped a lot. Is that something you do with your daughters?
Moser: I do, yeah. I was going to say, the reason why I do it is because my mom and dad were pretty open with stuff like that when I was growing up and it was never, I wasn't doing their taxes or anything, but it was, we just understood kind of where money went every month. There is insurance, there was a mortgage payment, there was clothing, there was food and all this stuff and got to kind of recognize it at all. It is not just like magically there so my wife and I just sort of talk to our daughters and just sort of frame it like our household is like a business.
Every month, we have expenses that the business incurs and this is how we pay for those expenses. Then we take some that's left over and all that good stuff and we're helping them with savings accounts. They had their little investment accounts, which is pretty cool and again the idea is that when they're old enough, they won't be stuck wanting that knowledge or needing that knowledge. They'll at least have the background to move forward and then sort of do what they decide to do. How about you Gaby?
Lapera: I had a very similar experience to what your daughters are apparently experiencing right now. My parents opened a credit card in my name very early to me build credit. My first Excel spreadsheet ever was made by me and my father. Proud moment for him.
Reeth: That's the nerdiest sentence I've ever heard.
Moser: Is your stockings stuffed with FICO scores?
Lapera: We talked about budgeting. My parents are also from South America, so one of the things with them was they always like a pretty big, they kind of hoard that they had. Emergency reserves were always really big in my house, everything from actual bank accounts to what we call it "closet de golpe", which translated to English is the coup d'tat closet, which also still has French in it.
Reeth: Sounds really carry over, but I get it. Okay!
Lapera: I still remember the first time I went to someones how and I was like, "Oh wait, you don't have a pantry full of canned goods just in case government gets taken down?"
Moser: Things happen.
Reeth: I was going to say.
Moser: I've lived out of the United States for extended periods of time and we are very unique here, I think. The rest of the world is a unique place, too.
Lapera: Yeah, my parents came here in the 80s, so they were very much shaped by their experiences before that, but they were always all about fiscal responsibility and budgeting and understanding how credit works, and my mom worked for Fannie Mae so I got to talk about mortgages starting from a very young age. Fun dinner table talk.
Moser: Well, you should have no trouble buying a house when you're ready to buy a house.
Lapera: So, onto the fiercest lady of all time, Beyonc and her song Bills, Bills, Bills. Moser, I would love to hear you read this.
Moser: Well, OK.
Lapera: Give it some sass!
Moser: "Now you've been maxing out my card/ Gave me bad credit, buyin' me gifts with my own ends/ Haven't paid the first bill/ But instead you're headin' to the mall/ Goin' on shopping sprees/ Perpetrating to your friends like you be ballin'."
Reeth: That was good! I would watch that concert.
Lapera: That was fierce.
Reeth: That was solid.
Moser: She's serious.
Lapera: This speaks to a few different topics that we've already covered. One, picking a good partner. That speaks to the prenuptial agreements, but also here we see some stuff about bad credit so clearly Beyonc is on top of her FICO score, checking it regularly on creditkarma.com. I'm not a shell for them, I actually just think they're a really great free service. Now that I've said that though ...
Moser: Now you've got to go use it, creditkarma.com
Lapera: I don't know. What do you guys think about this?
Reeth: I think you made a good point. You've got to keep an eye on your credit score. Again, not to expose my own financial flaws to thoroughly today, but I definitely didn't pay attention to my credit score for very long time and living in Washington, D.C., as we mentioned earlier, is not cheap. I learned that very much the hard way when I came into some credit card debt for a couple months there a little while back. It took me a while to unbury myself from that. I think a lot of that could've been avoided if I was paying more attention, if I was looking at my FICO scores and my credit scores and my credit card in general, and not just hoping for the best. So yeah, I think Beyonc like you said, she's on top of it and you should be to.
Moser: I like also the idea here, going all the way back to the very beginning here when you were talking about money doesn't necessarily buy happiness, and it's this individual buying something for someone with that person's money thinking is going to make her happy and really he's making her doubly as angry because he's giving her something that she doesn't need and he's putting her in debt in the process.
Lapera: Beyonc maybe should've thought twice about adding him as an authorized user on her credit card.
Moser: Very good point.
Reeth: Yep, absolutely.
Moser: Very good point. Protect your identity. Protect your financial resource. It's tough to do. We live in a credit-based economy. I mean, there's nothing wrong with that. It's just you have to understand how that works.
Lapera: Yeah.
Moser: Credit can be good. You just need to make sure you don't overextend yourself.
Lapera: That's true. You need to have a credit card. That doesn't mean you need to go into debt. I think that's one of the most common misconceptions about how to build your credit scores. People think you should carry a balance from month-to-month and really that doesn't help you. In fact the credit companies are looking to see that you're paying off your bill in full every month.
Reeth: Credit where it's due, to Beyonce. That's some good financial advice.
Lapera: The last line of this is also interesting "Perpetrating to your friends that you be ballin'" and harking back to Dublin's conspicuous consumption.
Reeth: Liar!
Moser: Sure, and what is that theory again?
Lapera: In the most basic terms basically kind of keeping up with the Jones', buying stuff to make people think that you have special power.
Reeth: Balling.
Lapera: Yeah, balling, that you're balling. That's what Dublin said in the 1800's--
Reeth: Is that you balling?
Lapera: That's me balling. I'm throwing a basketball. This goes back to our thrift store conversation being OK with hand-me-downs, frugality. There's no reason you can't be balling while saving money.
Reeth: Balling on a budget, absolutely.
Lapera: Balling on a budget, I like that.
Moser: Balling really is just a state of mind.
Reeth: Amen. Amen.
Lapera: Yeah.
Moser: You could be balling by starting your own sort of trend. It's very easy to follow along. It's much more difficult to stray from the path and start your own little thing.
Lapera: Yeah, there's a lot of wisdom here with Beyonc.
Reeth: Well, it's Beyonc so.
Lapera: That's so true.
Reeth: Of course it is.
Lapera: She tells women to be independent and I agree with her. You go, girl! Our last song, I would love to hear in Reeth's resonant tones, if you could read it out for us.
Reeth: I'd be happy to. The song Cream, the artist Wu-Tang Clan. "Cash rules everything around me. Cream, get the money. Dollar, dollar bill y'all."
Lapera: Yeah and unabashed ode to capitalism.
Reeth: Absolutely and Wu-Tang Clan, they got it right. Cash does rule everything around me. I will say this Wu-Tang Clan, they always got to diversify your bonds but you also need to just stay out ... So a lot of people whom I know just rely on their savings accounts and their checking account. As you said before, there's some horrible statistics about folks who just aren't planning for retirement at all and aren't taking advantage of the returns you can get out from your other options. Savings accounts, checking accounts, the best you're going to get there interest rate wise is 0.5%, something like that. The average return of the stock market is around 8% a year or so, annualized. Keep that in mind. Maybe cash does rule everything around you, but you don't have to keep your money in cash. You don't have to keep a box of cash under your bed or in a closet.
Lapera: Yeah, no.
Moser: A box of cash sounds kind of nice though. I mean ... "What's that? -- That's my box of cash."
Lapera: You could Scrooge McDuck it.
Moser: I just like looking at it every once and a while.
Reeth: Scrooge McDuck, we all know that it wasn't real. You can't dive into a vat of pennies like that.
Lapera: Dude, did you see that guy that free fell -- I don't know how many thousands of feet -- without a parachute over the weekend?
Moser: I was hearing. I was listening to that this morning.
Reeth: Yeah, set a world record.
Lapera: Imagine how much more of a baller that would've been if he'd dove into a pile of cash.
Moser: Somehow or another it worked out.
Reeth: That would've ended poorly, I think.
Lapera: It would've ended very poorly.
Reeth: For those people including that guy.
Lapera: But no, the Wu-Tang Clan, yes. Physical cash, something that you should maybe consider not having a ton of on your person like, "What happens if there's a house fire," stuff like that, but I think that it gets to the point which is that you can't just rely on other people to take care of you all the time. Money ultimately can buy you some degree of happiness. There is a study showing that. I'm not saying that just to be mean.
Moser: Well, it can certainly buy you your independence and give you your ability to make your own decisions and pursue your own interests in life. There is going to be a level of happiness associated with that, right?
Lapera: Yeah, absolutely.
Reeth: Cash rules everything around me.
Moser: There's always money in the banana stand.
Lapera: And on that note, thank you, everyone, for joining us! Thank you, Jason Moser and Mark Reeth for your critical insights into pop-culture and financial literacy.
Reeth: Ballin'!
Lapera: As usual, people on the program may have interest in the stocks they talk about and The Motley Fool may have recommendations for or against, so don't buy or sell stocks based solely on what you hear. Contact us at IndustryFocus@fool.com or by tweeting us @MFIndustry Focus. Thank you to you all for joining us. Everyone have a great week!
Gaby Lapera has no position in any stocks mentioned. Jason Moser owns shares of Under Armour (A Shares). Mark Reeth has no position in any stocks mentioned. The Motley Fool owns shares of and recommends SolarCity and Under Armour (A Shares). The Motley Fool owns shares of The Container Store Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.