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McMansion Downturn, Retirement Savings, Debt & Identity Theft

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Jason Hartman starts the show with Investment Counselor Doug as they discuss protection from identity theft. They talk about 11 major companies that have had breaches just this past year. They look at two specific steps to take to help protect yourself. At the end of the show Jason looks at the McMansion market’s downturn and the need for financial literacy in the US. take a look today at how to protect yourself from identity theft. 11 major companies had breaches in the past year, nearly guaranteeing that your information was among them. Hear from these two about steps you can take to protect yourself as best you can. They also look into how the McMansion market is tanking, the need for financial literacy in today’s school system and household debt across the United States.

Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 0:53
Welcome to Episode 1168 1168. Thank you so much for joining me today. I’ve got Our investment counselor Doug here with me, and we’ve got a variety of topics to discuss with you today all important to your financial well being and, hey, important to your reduced stress level. We’re going to talk about some things that can reduce your stress too. Well, those both tied together probably right, Doug, welcome. How you doing?

Doug 1:20
Doing well, doing? Well. I was just thinking ago yeah, every time we talk, we always cover a variety of topics. Some people might say it’s because we don’t focus, but I like to think it’s because we’re Renaissance people who have a broad variety of interests. Hey, you know, sometimes focus is overrated,

Jason Hartman 1:35
the model. That’s the funny thing about life. You know, you can’t take any concept necessarily, as the gospel. There’s a quote about that, you know, no rules or laws apply universally, dot dot dot, including this one. So, you know, that’s one of the things Yeah, what would you like to kick it off with you want to talk about the rapper 50 cent and that disgraceful music do you want to talk about this identity theft new scandal or what it’s gonna

Doug 2:09
say? Well so first of all you gotta say it right it’s 50 cent fiance yeah 50 cent. And so yeah cuz it looks like he had it was a 50,000 square foot mansion and Connecticut that he put on the market for I think it was what about 18 and a half million bucks in 2,007.9.

Jason Hartman 2:27
you telling me his his mansion was only 50,000 square feet?

Doug 2:33
Yeah, 50 cent had 50,000 square feet. It was on 17 acres too. So I mean, you know, thing was practically a shack.

Jason Hartman 2:40
My dog would love to live there on 17 acres would be pretty cool. That would be pretty cool. Hey, by the way, you live on a lot of space. So what do you what do you have an acre two and three?

Doug 2:52
back? Yep, that’s it was it last October. I put an invisible fence around the whole perimeter for a dog. You know, because you know, that’s the visible Was that the control color? Oh yeah, it looks great. Yeah, it looks fantastic.

Jason Hartman 3:03
It’s easier than a real fence. But yeah, that’s a lot of land to circle with an invisible fence. Right. I

Doug 3:10
got I know Yeah. As it was, I think I had to get 2000 foot spools of wire and

Jason Hartman 3:18
bury them under the ground. So what

Doug 3:20
I did was on the fence line, I just went at ground level and then on the front road frontage, I had to be buried under the ground. Otherwise, how do you basically what I do is I just take I just took a shovel, and then I slid it in at an angle and then I just basically got my fingers dirty and I took the I took the wire underneath the ground. So

Jason Hartman 3:37
what’s a two inches under just

Doug 3:39
Yeah, something like that. Oh,

Jason Hartman 3:40
yeah. Okay. Okay, interesting. Yeah, it’s not very far. Hey, folks, on this show, you not only learn how to make a fortune with income property, but you learn how to install an invisible fence for your dog. So Very good. Very good. Okay. So, yeah, so 50 cents. mansion. Now why is this everybody listening is Like, okay, this is just celebrity news and gossip. Why is it important to us? Well, it is important, because as you know, Harry dent has been on the show many times, and a lot of people criticize them and say, Hey, he’s always wrong, but he’s not always wrong. And one of the things he predicted, which I think is interesting, and I think his philosophy of studying demographics and how they impact economics and investments is a very legitimate part of the dismal science of economics. He predicted that the mcmansions now this is not a McMansion. This is a mansion mansion we’re talking about, but it’s just an example of the concept that those would really suffer and languish on the market as baby boomers retired as they became empty nesters, and they just didn’t want to maintain these giant houses. And of course, this is a bit of an absurd example, but it has a little celebrity tinge. So You know, it’s kind of interesting, right? So his 50,000 square foot mansion has been on the market for 12 years, more than a decade. 12 whole years. And after lowering the price many, many times, he finally sold it. He originally was asking Doug what 18 and a half million bucks right 18 and a half million.

Doug 5:20
He bought it from Mike Tyson for 4.1 million in 2004. Wow.

Jason Hartman 5:26
Yeah. Well, I hope mike tyson didn’t bite off his ear or anything but yeah, so so he bought it from Mike Tyson he for 4.1 million put it on the market originally for 18.5 and what he end up selling it for 2.9 million point nine. Wow. Wow. And here.

Doug 5:44
Here’s the last 1.2

Jason Hartman 5:46
Yeah, yeah, well, yeah, but it all the time value of money lost and the opportunity cost obviously right. And a big difference between his expectations. And here’s the most interesting thing of all. His real name is Curtis James. Jackson the third. So now you know 50 cents real name in 50 cent 5050 cent. Yeah. Okay, there you go. So anyway, a little little interesting story there. So we’re seeing this now, listeners, we are seeing the McMansion glut, almost everywhere it is a big glut of mcmansions. And they are pretty soft on the market. And maybe if Harry dent is right, they’ll get a lot softer. Now, Harry really predicted I remember this prediction back from 1995. When I first read it in his book, and he was talking about that this would happen around 2010 to 2013. He was a little late, so I guess you could say he was wrong or early. No. So it’s kind of an interesting story. One of things I was thinking is Yeah, the the upshot of that is that if you’re gonna buy a McMansion, make sure that you’re okay with staying there for a really really long time, right and make sure you get a good Wouldn’t have deal on it to actually get a good deal. Exactly. Yeah, really interesting. What else on the agenda Doug,

Doug 7:06
one things I saw there was a really interesting article on investopedia about how there’s a push to make, make personal finance required curricula. The one we always talk about is how there’s one and a half trillion dollars of student debt. I also saw that the average household credit card debt is up at I think about 80 $200, which doesn’t sound like a lot

Jason Hartman 7:27
but but real to regular people to the to the hoi polloi. The masses. That’s a lot of credit card debt. Yeah.

Doug 7:34
Look, as you think about it like this, right. Your average, I think average household incomes private, like around 45,000 50,000, something like that. Yeah, I think it’s like 52,000. But yeah, 32,000 Yes. So you figure that this 8000 is like 15% of household income. In unsecured credit card debt. This isn’t even attached to an asset. When attached to a depreciating asset, you know, at least a car loan is at least attached to something that goes you know, goes down in value, but at least it’s an asset Right. And of course, you know, your mortgage is attached to a hopefully appreciating asset couple

Jason Hartman 8:04
of interesting bullet points here in the investopedia article 40% I mean, this is so sad, this really makes me sad. 40% of US adults don’t have enough savings to cover a $400 emergency. Now that that is just terribly sad. And you know, I can attest to that because when I was a kid growing up, my mom didn’t have that money to cover that $400 emergency adjusted for inflation either way if you want it but I remember her being incredibly stressed about her car insurance costs going up, and all this type of stuff and I you know, it finally when I got to about ninth grade, and you know, that’s when I kind of noticed that all the good looking girls were hanging out with all the rich kids and in junior high school, and I thought, I think I want to be in that group or like it better than my group. So that’s, that’s when I come Sort of paying attention to money, but who wants to live like that? It’s awful. Right? So, you know, take care of this,

Doug 9:06
like, sure that nobody wants to live like, Well,

Jason Hartman 9:09
you know, you’d be surprised.

Doug 9:11
Surprised. You’d be surprised

Jason Hartman 9:13
I, whether it’s their stated goal or not. You know, you could argue that by default, they wanted to live like that because they failed to plan and failing to plan is planning to fail. it’s debatable, but it Listen, a large part of life is luck and circumstances. I will not deny that. Either way. It’s just very sad. It’s very sad. Median retirement savings for Americans between 55 and 64 is 104,000. But here’s what that really means. It means $310 per month invested in an annuity. That’s what that’s not a lot of cheese. Yeah, that’s not a lot. No, no question about it. You mentioned the credit card debt at $284 highest level in a decade. student loan debt insane

Doug 10:02
one thing that all kind of an anecdote I’ll put on that so my wife and I we just took our kids to Cabo San Lucas for spring break my in laws have a timeshare there. And of course you know it’s fine it was sunny kids

Jason Hartman 10:14
will stop. You let you let your in laws buy a timeshare you know they only own you.

Doug 10:22
They had it long before they met me. They bought it in like 1991. But one thing I did do was they really wanted another week. And they were getting pitched by the people at the resort and I was like, No, no, no, no. If you really want another week, just go buy it on the open market and get it for a quarter of the price. Yeah, absolutely. Good. They got it on the open market for a

Jason Hartman 10:40
price carrier deal. fair deal. Yeah, timeshares are pretty much a rip off everywhere. But if you get a good enough deal on it, it could make sense. But the thing that will kill you is the maintenance fees, maintenance.

Doug 10:53
Yeah, the thing that’s actually interesting is that timeshare businesses actually going away from the timeshare model because the way that it used to work was you’d have a fractional ownership. And you basically have an entire week that you had to occupy the unit. Whereas the way that a lot of the pitches are going now is in clubs and different. Yeah, it’s like it’s usually some kind of point based Vacation Club. Because I think the pitch that we heard when we were down there last time, is that they’re actually trying to reconstitute the contracts so that they’re actually tied in with real estate versus being a fractional lease so that you can, you know, so you’re able to legally list your time on a site like Expedia, because Expedia is really looking for premium inventory. Because for some of these places, yes. And these places, especially like Cabo San Lucas, and spring break, there’s no inventory, there’s just none. And so it’s actually kind of interesting to see how the extremely overpriced and the real estate segment is even adapting a little bit.

Jason Hartman 11:49
Yeah, very, very interesting. But anyway,

Doug 11:51
that I’m distracting me from what my actual point was, which was that, of course we were down there during college spring break, and so there were college kids just everywhere. I mean, everywhere. And What amazed me was how you know how they were at? Well, exactly. Yeah, they start drinking about 10 in the morning. It’s disgusting. Yeah. And they’d keep going till about four in the afternoon, at which point they get ready to go out for dinner. And then usually they’d come back from the clubs about one o’clock because that’s when I can hear him in the halls of course, you know, I was asleep by like, 930 cuz, you know, I’m a parent now.

Jason Hartman 12:23
That’s while Early to bed early to rise. To do it. Yeah,

Doug 12:28
cuz I go, you know, but yeah, you know, my kids are nine and 12. You know, my partying days are long over. But anyway,

Jason Hartman 12:34
I don’t I can’t ever imagine you as a partier.

Doug 12:37
That’s just I really wasn’t, I really wasn’t, but and so you’re

Jason Hartman 12:40
not very fun.

Doug 12:43
I’m a lot more fun than you give me credit for Jason. Okay, well, I can’t wait to see it.

Doug 12:49
I’m a lot more fun than you give me credit for.

Jason Hartman 12:51
You do have really good ideas, though.

Doug 12:55
But anyway, what happened was, these kids are all partying this whole time and I’m like, okay, no I know that number one partying is expensive. And I’m like, okay, where in the heck are these kids getting the money to party so much? Because I remember back when I was going to college I was broke all the time. I was always broke. Like I never had any money. I didn’t have two nickels to rub together ever. I was literally rolling dollars to pay my car insurance. I

Jason Hartman 13:20
think we got the point. Okay, go ahead.

Doug 13:24
But anyway, I’m like, okay, they’ve either got really rich parents who are financing them, or they have a lot of debt or both, and my estimate would be both

Jason Hartman 13:34
Yeah, that’s that’s that’s really sad. This the student loan debt scam. We’ve talked about it many times, but financial literacy now does this apply to college or grade school or the whole thing? I mean, what are they saying here? Because the it is absolutely disgusting. That the school system does not teach financial literacy, and I was a Junior Achievement instructor. For three years, I just volunteered. And I would go into a class one day a week. And you know, what I was really doing there is I was just giving the teacher some time off. So, you know, the teacher could sit there and do busy work or whatever. And so I teach the class. And I did like fifth and sixth grade. I did senior high school. I did ninth grade, I think once and you know, moved around, it was mind boggling to me how these kids just knew nothing. They had no concept. You know, like in high school, I always get the questions about cars, right? Should I buy a car? Should I lease a car? What should I do use new what should my goal be? And I would help them figure that out and, you know, give examples on the whiteboard. When I went to school. It was a chalkboard. And it was uphill both ways in the snow and Southern California. But that’s another subject. Joking, joking, joking.

Doug 14:56
Isn’t you’re not being accurate? Yes, that’s right. I know.

Jason Hartman 15:00
Hopefully nobody will sue me for that comment, because it’s not accurate. But anyway, it’s amazing. They just don’t get that kind of education. Financial literacy is a real thing. You know, it’s not math. It’s different than math. It’s a math is part of it. But it is a field of study. There’s no question about it. No,

Doug 15:22
yeah. For example, there’s a couple of things that are that are counterintuitive. So it just think you’re human beings naturally think linear. So for example, you would think interest, okay, you know, if I have $100 and a 2% interest, okay, I have I have $102 at the end of the year, but then if you do, people are generally speaking pretty bad about intuitively compounding that out and they’re extremely bad at adjusting it for inflation because if I get 2% interest and inflation is 4%, I’m actually losing 2% every year in real purchasing power. You know, now of course, inflation is dependent on what you’re buying. If you’re buying anything made out of technology to deflating if you’re buying anything that’s real or consumable, it’s probably inflating. But still, I think the reason why your financial literacy topics they’re so difficult for a lot of people to pick up is because they’re not in they’re not naturally intuitive to most people. And a lot of times they don’t really figure it out until not it’s too late. But until they’ve already made some mistakes, yeah, good point.

Jason Hartman 16:22
It would be great to see something like this. And I tell you that the student loan scam, it is just unbelievable how they are talking these kids and these parents into these student loans. We’ve talked on the show before about stories where grandparents, a little old lady grandmother is getting her house foreclosed on because she cosign on a student loan for her grandkid. I mean, this is awful. They are just scamming people left and right. That industries is really, really, it’s it’s pretty shameful. Okay, let’s talk about a very important part of financial life. And that is we talk a lot about making money and creating wealth on the show, and so forth. But what about protecting what you already have, I have been the victim of various forms of identity theft several times, this is the crime of our time, because it’s not that likely anymore that your house won’t get broken into everybody’s got alarm systems and so forth nowadays, so that’s a little less likely than it was maybe in the old days. It’s not as likely you’re going to get mugged on the street. Of course, this is context sensitive, depending where you live. But most people are on guard for these types of things in one way or another, right,

Doug 17:45
but identity theft,

Jason Hartman 17:47
it is just so pervasive, and I would encourage all of our listeners to never give out their credit card numbers. Do not ever do phone orders. Where you tell another human your credit card number. The funny thing is to in Europe, when you pay the bill at a restaurant, the waiter comes to your table with the credit card machine. That card is never out of your sight. Okay, now, if they had some sophisticated way of stealing it electronically, they could still steal the information, but the card is never out of your sight. The new Apple card in conjunction with the crooks at Goldman Sachs has no number on it. There’s no card number at all. It’s simply a chip that you insert. So when using a credit card, only swipe or place an order on a secure website. Do not actually give the number to anybody. That would be one tip obviously have a paper shredder that is a cross cuts shredder and shred everything. Everything. Even the envelopes that have your name on them. I shared them all. It’s just too risky. It’s a huge problem. So this is inspired by this news story, Doug. And you know if you shopped at any of these 11 major merchants with, I guarantee you, almost everybody listening has shopped in the past year, your information has been exposed. Guess what? There are all these underground websites out there that have whole databases of credit card numbers, social security numbers, date of birth. It’s mind boggling, isn’t it?

Doug 19:26
Absolutely. Absolutely. I was. I was waiting for the punch line because when I was listening to you talk about the shredding your envelopes. I was like, okay, so it’s the next thing Jason’s going to tell us how to make a tin foil hat to put on your head. So the government satellites can’t read your brainwaves? Well,

Jason Hartman 19:40
that would be that’s coming, but we’re not there yet. I don’t I don’t think they have the technology yet. But Doug, or you’re I mean, I know you’re teasing me but you shred everything right? I mean, you’re smart enough to do that. I hope

Doug 19:52
anything I don’t retain absolutely a shred. Yeah.

Jason Hartman 19:54
And a lot of times if I’m traveling, you got to be careful about this too. I actually I’ve never done this, but I looked up a YouTube video about it, you know, because I’ll have documents with me, and I’ll take them with me on a trip. And you don’t want to just throw them away. Okay, and some trash can, right? And so there is a way to basically effectively shred paper, not by shredding it, but chemically shred it when you travel. And I remember, it’s like, take the trash bucket and put some soap and water in it, and, or something like that, and you know, it’ll make it unreadable. So I thought that was pretty cool, but I can’t repeat how to do it. Okay, so data breaches are becoming so common. We’ve all heard the stories targeting, you know, in airline, they all get hacked, the data is breached. Okay, so Buca di beppo restaurant, Planet Hollywood, Earl of Sandwich, chicken guy. I’ve never heard of that one. Never heard of that one. mixology, 101 Marriott, hotels, you probably see Marriott. Maybe for our last event. was at a Marriott Newport Beach. Kay Jewelers, Jared the Galleria of jewelry shatters scratch kitchen, Macy’s. I mean, probably everybody listening shopped at Macy’s last year at least once right again, it is Saks Fifth Avenue, Lord and Taylor underarmor armour. And that was hacked through the My Fitness Pal app

Doug 21:23
that’s surprised by that at all.

Jason Hartman 21:25
And they are a bread I like paneer I go there a lot. So that’s just an example. Probably everybody listening shop, your information has been compromised. There you go.

Doug 21:34
Well, and because I think the thing that I was just thinking about is right, there’s two sides of it right side number one is the prevention or kind of the perimeter prevention, which is basically to say, okay, you know, how do you try to keep your information secure so you don’t get hacked in the first place? And inside number two is if you do get compromised, how do you make sure that you can get all your stuff locked down and then rebuild everything so that your life doesn’t completely stop for Three weeks,

Jason Hartman 22:00
you think it’s just three weeks? It’s way worse than that. I mean, it’s, you know, identity theft problems. They just keep haunting you and haunting you stuff shows up on your credit report. Stuff shows up in the public records. And it’s not you. And one of the things to realize to Doug, is that it’s not just financial, okay? There are various forms of identity theft, health insurance, identity theft, medical record, identity theft, criminal record identity theft, where someone can go out and commit a crime, be caught, and use your identity. And you can have a criminal record and not even know it. I’ve heard stories about a pregnant mom, police walk up to her house and arrest her and like she didn’t do anything. You know, although not all pregnant moms are innocent. Okay. Some of them are crooks, okay. But all of this stuff can happen. There are many forms, oh, college tuition, identity theft, you know that one getting big? Yeah, there are many forms of this. Most of us think of it is simply financial. And that is one of the worst. I remember once a few years back, I got a call from someone who said he was a police officer. And he said the right thing, and this is exactly what you should do never give out any information to someone who calls you. You know, people call me all the time. And they say I’m with so and so company, you know, or I’m with your bank, or I’m with your credit card company. And I need to ask you some security questions before I can go on. And I turn around I say, wait a sec, I need to ask you some security questions. You need to be able to tell me something that confirms that you are who you say you are. You need to ask them the security questions. Now. I got this call from this police officer and he really was a police officer and he said, I want you to hang up and I I want you to look up the police station I’m with and it was some place in Central California. And I want you to look up that number online and call me back at that number. So you know, I’m who I say I am. And I, you know, that’s exactly what you need to do. Anyway, I called him back and he said, someone went into a bank of america in this central California town somewhere and presented a check one of your checks for 40 $600. And they tried to cash it. Did you create such a check? And I said, I definitely did not. And so the bank teller got suspicious, thankfully, and, you know, asked some questions and the person ran out of the bank, and that’s when they call the police. But usually it doesn’t happen that way. Usually, they actually succeed in the crime. So folks, this is a big deal. You’ve got to protect yourself from identity theft. And you know, there are many monitors offering services and restoration services out there, you’ve heard the commercials, I don’t have one to recommend. But using one might be a good idea, although Be careful of them too because they get hacked. So the best thing to do is once again, become educated. commandment number one thou shall become educated in my 10 commandments and be your own best advisor. Protect yourself first. That’s the first thing to do on this list. Okay,

Doug 25:28
any other thoughts on that? Doug? I think that identity theft and how you can you know, and just information security and identity security that this isn’t going away and there’s there’s going to need to be a lot of evolution. I don’t know if there’s a way to crack the code. But I think it’s definitely a wave of the future there’s going to be a lot of need to really figure out ways that you can keep information secure, you know, without becoming a tinfoil hat conspiracy theorist right now because you know, all the Paranoid screen here guys been running around saying the hackers are coming for decades. And they’re here. Yeah. And they’re here, you know, but the whole thing is that okay, you know, do I want to completely stop my life just to protect my identity? Probably not. And so the thing that we have to figure out is how do you still live your life, but maintain a reasonable amount of identity security, right.

Jason Hartman 26:17
So here’s another, I want to give one more tip, and this just happened to me. I went to the dentist last week. And I’ve seen this so many times over and over on the form, you fill out the new patient intake form. It’s what is your driver’s license number? What is your social security number? Are you married or single? What is your birth date? Like? None of that stuff matters to my dentist. They don’t need any of it. So I write on those forms. I just write decline, decline decline, I write the word decline, and they don’t need it to clean my teeth. I’m going to pay with a credit card and we’re done. The transaction is over. You don’t need any other information. It’s just absolutely ridiculous. So start protecting Your information and this will help spread the word throughout society, refuse to give people your credit card number. Do not give a credit card number to anybody. Use your credit card. I mean, I use credit cards all the time. I love my credit cards, like Robert Kiyosaki says, you know, but I pay them off every month, of course, and only type that in a secure website on a secure internet connection or swipe it or you know, insert the chip do not give the number to people over the phone or or in any other way. Do not give out needless information. Your doctor and your dentists do not need your social security number. They do not need your driver’s license. And well the doctor probably needs your date of birth. Okay, but that’s it. So start being stingy with information. Okay, you really got to do that. That folks. One more thing on your social media accounts. Change your date of birth. Don’t let your 5000 Facebook friends know your exact birthday. There’s another tip for you. Okay, so Doug, we gotta wrap it up. Thank you for joining me today. Any final thoughts?

Doug 28:03
No problem, basically just that I hate just your copier saying, but it isn’t an awesome, interesting time to be alive because it’s both amazing and terrifying. But it doesn’t have to be terrifying. As long as you take some reasonable precautions and do a little bit of planning ahead. That’s it. We’re for it. We’re here for and if anybody wants to talk about how to do that, feel free to drop me a line and we’ll talk on the phone. Good stuff and he’s Doug at Jason Hartman, calm and everybody thank you for listening today. We will be back with another episode tomorrow. Until then, happy investing, happy investing.

Jason Hartman 28:39
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.