MORE People Are FALLING BEHIND ON THEIR BILLS!

The tank tops will resume as soon as the warm weather does, that's all I have to say. You know, this is another subject that I get picked on a lot for repeating myself on when it comes to people not paying the bills, yet every single week it turns out I find new data and new stories about people not paying the bills. So I'm going to talk about it some more because the fact of the matter is you wouldn't be seeing even mainstream news outlets start to talk about this now and worries in the stock market and on Wall Street happening over this if it wasn't happening. Here is the headline of this story I'm referring to, it says Americans are falling behind on their bills and Wall Street is alarmed. Oh, okay, so I've been talking about that for over a year, Wall Street's only just now starting to figure this out and worry about it. But if you've been watching my channel, you've known about this for a while and have been able to prepare yourself financially for it. So the reason why Wall Street's getting upset and worried about this is because the shares of consumer lending companies slid over this past week after executives raised warnings about lower income borrowers who are struggling to make payments. And what is low income anyways anymore, guys? You know, the median household income in the United States is like $75,000. That can almost be argued as low income these days depending on where you live. So a lot of investors have already been on high alert because people want to know, is there an impending recession? Is something like this going to happen and are we going to have to worry about it? And for a long time, the government's been saying no, the Fed has been saying no, even a lot of feel-good companies have been saying no because, hey, look at our profits, look at our earnings reports, nothing to worry about here, no recession on the horizon. And you know, I saw somebody make a comment the other day, which is true, like, oh, I'm tired of hearing about this upcoming recession or if things are going to go bad. Because if you're prepared or you know what's going to happen, you can do well, even in tough financial times. And that's absolutely true. I talk about that all the time here on the channel, guys. In fact, that's the goal that I have for a lot of people who do watch my channel. Because you're going to be so much further ahead of the average person by knowing all this stuff, you will be able to come out ahead even when economic times are tough. Here we have a house for sale they just listed a couple days ago for $1.5 million, tiny little two-bedroom, one-bath house, barely a thousand square feet for $1.5 million, guys. Only in California. I'm telling you. The previous owner bought it for $1.1 million in 2017. They're currently paying about $17,000 a year on property taxes. The new owner can easily expect that to be over probably $22,000 a year. But somebody's going to buy this tiny little shack for $1.5 million and call it home and be happy. Let me know if that's something that you could ever see yourself doing, paying this much money for such little house. Now, here's the thing. Interest rates have been higher for a while now. What that does is it affects credit card borrowers tremendously. If you're carrying a balance, you are affected by this because not only are you going deeper into debt each month because of the interest payments and the amount that that interest but also the amount of interest people are paying on their credit cards has risen along with the federal funds rate. The average rate for credit cards is over 20% now. It's like 22%. A lot of the store cards, like I covered the other day, are in the 30% range or even higher. This makes sense of why people are struggling to keep up with their credit card payments because if you are already struggling to pay before rates went up, then you get smacked with inflation and you're forced to pay more for everything like all of us are and then put more of your expenses on the charge card. That's not a good combination, but this is what's happening to so many people to the point where now you have about 9.1% of all credit card balances turning delinquent over this past year. Not a sign things are going well. That's the highest amount we've seen in over a decade and since when? The 2008 recession. And that's data according to the Fed, guys. This is not me just pulling some numbers out of a hat. This is the official report from the New York Fed and I know everybody's going to say, well, how much can you trust that? Look how much all the other numbers have been off. I agree. These numbers are probably off and in their favor, right? So if you have 9.1% being the official number of people not paying, imagine how many it is there's really who are not paying. It's a lot. And of course, this is something that affects lower income people more than higher income if you live a lot on debt, you know, you can also be somebody who makes a six figure income living paycheck to paycheck because you just can't control your spending. But in general, it's something that affects people that need to charge things to the charge card. Otherwise they won't be able to live and putting your electric bill on there, financing groceries, all sorts of things like that. The CFO from Citigroup says that they've seen delinquencies picking up and more consumers carrying balances. So things are obviously not going in the right direction for these credit card companies and they're telling you about it. And remember, all of the feel good news stories we hear about the economy and GDP over the past year or so have all been surrounded on what? Based on spending, based on the fact that people are spending more and more money, right? The credit card issuer Bread Financial, they serve more lower income borrowers than the bigger banks do. And they expect to see their charge off rates for the rest of 2024 continue to go up. Charge offs are delinquencies, guys, people not paying. And the reason why I continue to report on this stuff is because we're seeing how this progresses. First, we saw the credit card debt start to go up. Then we started hearing stories about delinquencies. Then we're continuing to see the amount of credit card debt build across the country. And now as of the middle towards the end of 2024, they're starting to tell us how they're expecting more people to continue not paying. So the situation is progressing in a worse way. It's not getting better. But don't worry. I'm just repeating myself. Another sector of the economy that's getting hit pretty hard by delinquencies has been auto loans. You know, the auto loans and credit cards are getting hit the hardest. You had Ally Financial say that charge offs on auto loans and late payments were higher than expected in the months of July and August. So they were already expecting it to be high, but it was higher than expected. They say that these borrowers have been struggling with the cost of living and are now struggling with an employment picture that has gotten worse recently. Ally's shares fell 18% this past Tuesday and have yet to recover. So these things do have real world consequences, guys. It's not just me spewing off a bunch of stuff that's nonsense. And the reason why this is worrisome is because it turns out that car loans are one of the last bills that people stop paying. So that means they've already stopped paying the credit card. Maybe they've already skipped a couple of rent payments. They've already missed a few payments from the electric company or utilities. Then they stop paying for the car because you've got to realize a lot of people need the car to get to work. So if you don't have the car, then it really is the last step before you kind of lose everything. So it's really not good. Check this out, guys. I walked this same street about a year ago. Last time I was up here and this house was condemned all the way back then. And it looks like it's still condemned. In fact, it looks like it's gotten even worse. There used to be a sign on the door, but now it's gotten so bad that the bushes are almost completely overgrowing the front of the house here. Terrible. They wanted a crazy amount of money for this house, like well over a million dollars for this teardown that is just in awful condition. So here's an interesting story for you. The other night, I went to go watch this movie called Pacific Heights. It's based right out of here in San Francisco. The movie stars Michael Keaton and Melanie Griffith. And Melanie Griffith and the husband, I forgot that actor's name, they go and buy this house in San Francisco and think they're going to be landlords, can barely afford the place unless they rent it out. Then they start having some problems with the tenant. So if you ever want to see the movie, I suggest watching it. In fact, I suggest anybody, whoever wants to invest in real estate, watch this movie. There's lots of lessons in there of things not to do if you want to become a landlord, I guess you could say. The reason why I'm bringing this up is because I went to go watch the movie on Amazon and we have Amazon Prime and they had the movie censored. I couldn't believe it, guys. The movie was censored even on a paying service like Amazon. I have no idea what's going on with that. And without getting too deep into that conversation, I found out that the same movie was available on Pluto TV, which is a free service that probably a lot of you are aware of. You can watch movies on Pluto. They have channels on there. It's 100% free. You just have to watch some commercials, just like here on YouTube. Literally, half of the commercials I was seeing on Pluto were all based on people borrowing money and getting further and further into debt. And this was kind of shocking for me because I don't have any other services where I have to watch commercials. Like on YouTube, I pay for YouTube premiums. I don't have to watch commercials on Amazon or HBO. There's no commercials on there either if you pay for the ad-free versions, right? Because I don't like watching ads probably as much as anybody else. But on Pluto, you have to watch the ads and then you had all these different ads that came up about people borrowing money that I've never even heard of before, guys. They have Chime with MyPay. They have another service they were promoting on there called Dave. All different ways to basically get access to money you don't have just to pay bills or buy groceries or whatever. They literally showed a guy at the grocery store checkout. I wish I would have recorded this. And didn't have any money in his account. He had all his groceries on the counter ready to be checked out, right? And he looks at his bank account and he's got no money in there. So he hits this magical button and all of a sudden, Dave or whoever, Chime, fills up his bank account with a couple hundred dollars so he can afford to buy the groceries, guys. That's the kind of commercials they're making right now because they know that's how desperate these people are. I just couldn't believe it, you know. As somebody who hasn't really seen any commercials in a while and then obviously knowing the state of affairs with the economy and where things are at, I was kind of shocked, you know. But at the same time, I'm not because I know people are hard up for cash and these companies are trying to take advantage of people in this situation. They claim they're trying to help, but the reality is if you can't afford a couple hundred dollars worth of groceries today, the chances of you being able to afford it next month on top of that month's groceries is pretty slim to none. And while all this is going on, you have people in the housing industry trying to convince would-be homebuyers to just, you know, buy hope and pray. You know, buy the property, hope that it goes up in value and pray nothing goes wrong. It doesn't sound like a very good strategy to me, but yet this is kind of the status quo of how real estate agents want people to handle purchases moving forward. Now right now, homeownership across the country stands at about 66% and during the 2000s housing boom, it was around 69%. So you have fewer homeowners today than we had 25 years ago. And of course, affordability is the biggest challenge for everyone right now. And a lot of younger people who are buying today are getting all sorts of help from the bank of mom and dad. Other people are dipping into retirement savings just to be able to come up with enough cash for the down payment. But they say, you know, the longer that people wait to buy a home, it affects all sorts of things from your life moving forward. It affects household formation. It affects long-term financial health. And by age 60, homeowners who bought between the ages of 25 and 34 had $72,000 more in housing wealth than those who bought a decade later. This is according to the Urban Institute. Well, $72,000 is a decent chunk of change, but let me tell you guys, if you can have that wealth built up in another way outside of housing, who cares if it's in housing or not? This is something I've talked about on the channel extensively in the past. If you can build up a nest egg in some way outside of owning real estate, who cares? As long as you have that money and as long as you have that wealth for your future self is all that really matters, not how you obtain it. And I always like to use my own personal story for this because I am the living example that it's not always better to buy real estate first thing, okay? Because what they say here is if you don't get into your starter home, it prolongs your period of rent and hinders your savings in the form of building equity. Well, I disagree with that because for a long time, I was paying under market rent, which allowed me to save up enough money to actually buy a nice place to live. If I would have bought a place without renting first, then I would have been forced to buy a crappier place that I really didn't want to live in, less desirable spot. And on top of that, I would have had to deal with all the ongoing expenses of being a homeowner there, which would have costed me more than renting, ultimately hindering my ability to move somewhere nicer in the future. And listen guys, you're already starting to see the market shake out to somewhat of a normalcy. We're starting to see inventory at levels that were about 75, 80% of where it was pre-pandemic. So we're not that far away from getting back to normal levels of inventory. You see a lot of markets with a ton of price cuts, and that's a good recipe for future buyers. I'm not saying that home prices are going to come all the way back down to where it was pre-pandemic. That's probably unrealistic, mainly due to inflation. On a nominal basis, it probably won't happen. But when adjusted for inflation, absolutely, I think it can happen. This is a house that was listed at 1.7 million, it's currently under contract, a little bit bigger than the other one, at least. And check this out. If you remember my video from yesterday, I showed you guys a Bozo that is overpaying for a house right now, just right down the street from this one. Well, here's a perfect example. This house sold in May of 2022 for 2.025 million, today was listed at 1.7 million and is now selling for less than it did two years ago. There are so many examples of this around here, it's not even funny, but people are still overpaying for homes. And if this person's lucky, they should actually see their property tax bill go down. Because the current assessed value here is 2.1 million, which is far above what they're paying for this property. And if it doesn't go down, they should definitely contest it, which we're going to get into in some future videos. But here's my issue with all of this, telling people that you should get on the property ladder now and do the buy, hope and pray strategy is a terrible idea when home prices are literally coming down in many places, meanwhile, the cost of ownership continues to rise. That's not a good combination for a fresh homeowner, trust me. You want to be building equity, not losing equity, and at the same time, if it costs you more to maintain that house and own that house than your previous rental, it can put even further financial strain on someone who's already having a tough time. Even things just as simple as like electricity costs, guys. Look at here in California, PG&E, which is the electric company for the state, they just got approval to do the fourth rate increase for just this year in 2024. That's four increases just this year, not including all the increases that they made over the past several years. And many people here have said that their electric bill has gone up 100, 200% in some cases. Of course, people here are outraged by it, but there's nothing you can do about it, especially if you're stuck with everything being all electric, guys. That's what I've been telling people. There's all these incentives here in California to drive an electric car, to switch over your appliances to electric instead of gas. And what do you get? You get four rate increases on your electric bill in one year in return as a thank you for switching everything to electric, now you have to pay more. People literally cannot afford groceries, people cannot afford their bills, people cannot afford to buy medicine, all because of these increased electric bills right now. One person said that they're a student and I cannot afford to pay more for our electricity. They're pricing me out of my livelihood. But don't worry, just get the electric car or get the electric stove and that'll somehow fix all this and make it better. Get this guys, the PG and E bills across the state right now average about $281 per month for both gas and electricity. And they say the same thing as insurance companies, well, we need the extra money because of how much we've had to pay due to all of the storms and fires and things that have happened here. We've had to make lots of repairs and upgrades to the electrical grid. Like just to give you my own personal example, it's the first time I've ever paid an electric bill here in California. My first full month's bill was $98.64. That does not include gas. It only includes electric. At this apartment I rented, gas is a separate thing billed through the apartment complex. And this is for a small one bedroom apartment, about 700 square feet. There's no air conditioning in the place, so I don't use any air conditioning. And I only use the power mainly at nighttime for the TV and some lights in the kitchen when I'm cooking. You know, the bathroom lights, simple things like that, nothing crazy going on. And of course, laundry every couple of weeks. So it's almost $100 for one month, no air conditioning. If I had air conditioning in there, I can guarantee the bill easily would have been well over $200, maybe even close to $300 for this small little apartment. And to put that into perspective, my huge three bedroom, three bathroom condo, even in the middle of summer when it's scorching hot and I have to run the AC every day, the highest electric bill ever paid was like $270 a month for a place that's almost triple the size of this rental. So the utility costs here are pretty outrageous, and yet they want people to switch to everything all electric. They want people to jump in and buy hope and pray that nothing's going to go wrong, when clearly it's all going wrong right around us. And anybody who falls into this trap right now is kind of a fool. Now, obviously you can say, well, Michael, everybody has to pay utilities, even if you're a renter, which is true. You do have to, but at least you don't have to pay for all the other expenses of maintaining and owning a home if you just rent, right? Like for example, one of my viewers, Nicholas, he wrote me an email talking about how much his homeowner's insurance just went up recently. He says he lives in the Chicagoland area and his renewal paperwork came in and they're increasing his rate by 25% year over year, guys. So just one year, homeowner's insurance is up 25% for him. He's in the middle of the country. He's not living in a hurricane prone area. He's not living in a wildfire zone. He's not living in earthquake territory. Why the increase? Well, because that's what insurance companies are doing right now to cover their losses everywhere. But he said, it's not the rate that's the bad part. He says the insurance company is introducing a special deductible on the wind and hail coverage. My current year, the deductible is $1,000 on all other perils and $1,000 deductible on wind and hail. The renewal is $1,500 on all other perils and $18,280 deductible for just the wind and hail. He said they've never made a claim and they built the home in 2017, brand new. So it's a fairly new home, which usually get the best insurance rates. The reason why this is a problem is because this big of an increase from the deductible negates any claim besides a total loss. So needless to say, he's surprised by this and he's shopping around for a new carrier, which is the smart thing to do right now. So when you get a bill like this, you essentially don't even have insurance coverage anymore for a wind or hail event. You know, even though you're technically paying for it, the deductible is so high that if you ever have to make a claim, you might as well not because you're going to have to pay so much out of pocket, it probably won't even make sense. And understand guys, those are just a couple of the expenses that are rising right now if you want to become a homeowner. So if you have somebody that tells you you should just jump in and get your feet on the home ownership ladder right now before it's too late, I would strongly second guess that advice and pay attention to what's happening in your local market. You know, ask your friends, ask your neighbors, how much is their homeowner's insurance bill? How many other expenses did they have to pay for throughout the year that was not the mortgage or the taxes or the insurance? Okay, what were the additional expenses? Find out because you might be surprised to hear the answer and it might be higher than you expect or it might be lower than you expect. You might say, okay, I will buy a house now, but the thing is you have to know. So if you enjoyed this video, make sure you subscribe to the channel and if you don't want to wait for my next video to come out, check out this one on the screen right over here and I'll see you in the next one.