Ask HTM - Sahm Rule Recession Indicator, New App Gives Kids IRAs, & Paying for Big One-Time Expenses #931
Jan 13, 2025
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Dive into listener questions about financial strategies! Discover how the Sahm Rule can guide your investing during recession fears. Explore the new Halfmore app helping kids save in Roth IRAs while teaching them financial responsibility. Debate the value of inherited accounts for major expenses versus smart financial planning. Plus, enjoy some lighthearted discussions about coffee preferences and the importance of seeking second opinions from financial advisors. It’s a lively blend of practical advice and engaging topics!
The Sahm Rule serves as a timely recession indicator by signaling rapid increases in unemployment rates, impacting investment strategies.
The Halfmore app introduces a unique way for parents to fund Roth IRAs for their children by turning chores into legitimate income.
Online financial advice should be approached with caution, as demonstrated by a listener's costly mistake using misleading third-party services for passport renewal.
Deep dives
Cashback Rewards with Colgate Palmolive
Colgate Palmolive offers a promotion that allows customers to earn cashback rewards by purchasing their products. By spending up to $30 on products such as toothpaste, dish soap, and more, shoppers can upload a receipt to CPRewards.com to receive a digital prepaid card worth up to $10. This initiative is designed to engage customers during the New Year and encourage them to stock up on household essentials. Cashback rewards are available while supplies last, with specific limits and conditions applicable.
Navy Federal Credit Union's Debt Management Solutions
Navy Federal Credit Union promotes a 0% introductory APR on credit card balance transfers for 12 months, aimed at assisting individuals in managing their debt. Additionally, customers can earn $250 upon spending $2,500 on a cash rewards card during the promotional period. This offer emphasizes the credit union's commitment to helping members achieve financial health and alleviate financial burdens. With further details available on their website, Navy Federal caters primarily to its members and promotes various financial products.
The SOM Rule and Economic Indicators
The SOM rule serves as a recession predictor by highlighting a rapid increase in unemployment rates over three months, suggesting that economic downturns might be approaching. The rule has garnered attention for its ability to gauge the speed at which unemployment rises, rather than just the total increase. While the creator of the rule acknowledges an increased likelihood of recessions, it is not seen as an absolute indicator. Overall, it is essential for individuals to consider such factors alongside long-term investment strategies rather than making immediate financial decisions based on temporary economic indicators.
Common Pitfalls in Online Services
A listener shares their experience of inadvertently overpaying for a passport renewal by using a third-party website instead of the official State Department site. This situation highlights the risks associated with online searches, particularly regarding sponsored posts that may mislead users into paying more than necessary. The listener's cautionary tale serves as an important reminder to verify the legitimacy of online services to avoid unnecessary expenses. Moreover, they emphasize the significance of vigilance when entering personal information online, particularly in relation to identity protection.
The Importance of Kids Saving Early for Retirement
An innovative app called Halfmore allows parents to turn everyday chores into legitimate income for their children, enabling them to fund custodial Roth IRAs. This approach could potentially lead to significant long-term savings, allowing children to start preparing for retirement as early as age five. However, parents must ensure that tasks are documented and compensated fairly to meet IRS requirements. While the app facilitates this process, parents can also choose to manage it themselves using simple tracking methods if they prefer a more hands-on approach.
Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - How should the Sahm Rule Recession Indicator impact my investing?
2 - Why would my financial advisor recommend against going with a Roth IRA?
3 - Does it make sense to go with the new Halfmore app to set up a retirement account for my kids?
4 - Should I use an inherited retirement account to pay for some big upcoming expenses?
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During this episode we switched it up and enjoyed some quality coffee- Play Nice roasted by Methodical Coffee. And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
