Yesterday, the White House rolled out the biggest tariffs in a century, sending markets into their worst decline since the pandemic. While headlines focus on supply chains and inflation, there are important economic stories you’re not hearing about.
During the first half of this month’s First Friday episode, we dig into what nobody’s talking about. And in the second half, we grapple with the headlines.
Student loan rules just changed again. The government added new limits to Public Service Loan Forgiveness. Right now, 9.2 million people — one in five borrowers — can’t keep up with payments. Many folks don’t even know payments started again after that four-and-a-half-year break.
S&P just dropped a new report that backs what smart money already knows: index funds crush actively managed funds 90 percent of the time. Even with all those tech stocks dominating the market, you still come out ahead with simple indexing.
You know who’s gobbling up the mortgage market? Rocket Companies. They just bought both Redfin and Mr. Cooper. They’ll handle one of every six mortgages in America. They’ve positioned themselves at every step of the homebuying journey — from when you search for homes on Redfin to financing and monthly payments for the next 30 years.
The White House just made a surprising move with Bitcoin. They’re setting up a Strategic Bitcoin Reserve to hold coins long-term. They’re also creating a separate stockpile for crypto they seize in legal cases. Pretty clear signal that Bitcoin stands apart from other cryptocurrencies.
In the second half, we dive into those significant new tariffs making headlines.
The S&P 500 dropped 4.8 percent on Thursday — we haven’t seen a drop like that since the pandemic. The new rules put at least a 10 percent tariff on everything coming into the country. Then come the “reciprocal” rates: 20 percent for European goods, 27 percent for items from India, and a combined 65 percent for Chinese imports.
We bring in Bob Elliott to make sense of this situation. His credentials are impressive — he spent 13 years at Bridgewater Associates (the world’s largest hedge fund), served as head of Ray Dalio’s investment team, and graduated magna cum laude from Harvard.
During the 2008 crisis, he directly advised the Treasury, Federal Reserve, and White House.
Bob offers a reality check about bringing back manufacturing jobs: you can’t build factories overnight. These investments take years, and companies hesitate to make 30-year commitments when policies change every few months.
Bob breaks down four economic forces all hitting at once: tariffs jacking up prices, government cutting spending, tax policies on hold, and the Fed moving like molasses. Put them together? Yikes. He doesn’t sugarcoat it — the short-term outlook looks “pretty negative.”
By Paula Pant
#595: Q&A: The Scary Shift from Saving to — Gulp! — Actually Spending Your Money
Eva is finally closing in on her financial independence goals, but she’s grappling with how to make a smooth transition from accumulation to decumulation. What should she consider?
John has noticed a game-changing omission from recent discussions about traditional versus Roth IRAs. Is this as big of a deal as he thinks it is?
An anonymous caller is excited to convert his primary residence into a rental property. But he’ll only make a profit if he first sells some equities to pay down the mortgage. Is this a good idea?
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
By Paula Pant
#594: How to Travel on $75 Per Day, with Nomadic Matt Kepnes
Ever wonder if you could afford to travel for months at a time? According to Nomadic Matt, who’s visited more than 100 countries over the last 19 years, you can see the world on just $75 a day. That’s about $27,375 per year, less than many people’s current cost of living.
Matt Kepnes, better known as Nomadic Matt, joins us to challenge common assumptions about travel costs. He explains that long-term travel can actually be cheaper than staying home.
When you’re traveling, you shed many regular expenses that eat into your budget back home, like car payments, home insurance, and utility bills.
The key is to “travel like you live,” as Nomadic Matt puts it. This means using public transportation instead of taxis, shopping at local markets, and seeking out free activities — just like you might do in your hometown.
It’s not about staying at five-star resorts, but experiencing destinations authentically while keeping costs reasonable.
Nomadic Matt also breaks down several travel myths. The old advice about booking flights on Tuesdays? Outdated in today’s algorithmic pricing world. Using incognito mode to get better flight prices? No evidence supports this idea.
He does confirm that booking round-trip flights often costs less than one-way tickets, even if you don’t use the return portion.
For those interested in credit card points, Nomadic Matt recommends choosing cards based on your specific travel goals rather than chasing the most popular options. Consider which airlines you use most and what perks you’ll actually take advantage of.
The pandemic has transformed travel in significant ways. While prices have increased and some budget travel services have disappeared, new opportunities have emerged — especially for remote workers who can now take advantage of digital nomad visas to live abroad while maintaining their income.
Whether you’re planning a two-week vacation or dreaming of becoming location-independent, Nomadic Matt’s practical advice shows how international travel is more accessible than you might have thought.
By Paula Pant
#593: Q&A: You Made a Money Mistake. Now What?
An anonymous caller is brooding over a mistake he made in 2023 when he decided to contribute to his Roth instead of a pre-tax account. How does he get over this?
June is annoyed that she triggered short-term capital gains and wash sales when she sold assets in her taxable brokerage last year. How does she avoid these issues in the future?
Zerai wants to add mid and small-cap exposure, but his 457 plan has a limited selection of mutual funds. What’s the proper way to select the best fund among the available options?
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
By Paula Pant
#592: Why Your Brain Rewards You for Avoiding Your Boss, with Dr. Joel Salinas
Ever wonder what’s happening in your brain right before you knock on your boss’s door to ask for a raise? Dr. Joel Salinas, neurologist and brain health expert, joins us to explain the neurology of negotiation.
When you avoid difficult conversations, your brain actually rewards you with a small dopamine hit. That temporary relief feels […]
By Paula Pant
#591: Harvard Negotiation Expert: Why Conflict Avoidance Costs You More Than You Think
Imagine you’re about to ask your boss for a raise. Your stomach tightens. You’ve rehearsed what to say, but doubt creeps in. Should you be more assertive? More understanding of company constraints?
Bob Bordone, who has taught negotiation for 25 years including 21 years at Harvard Law School, joins us to explain why you don’t have to choose between empathy and assertiveness. In fact, combining them is key to successful negotiations.
“It might feel like a tension, but it’s not an actual one,” Bordone explains. “I can fully appreciate what you’re feeling without ever giving anything up in a negotiation.”
Bordone breaks down his three-part preparation framework:
1. Mirror work: Identify the different sides of yourself in a negotiation — the empathic side that understands company constraints, the assertive side that knows you deserve recognition, and perhaps an anxious side worried about finances.
2. Chair work: Give each side a voice through role-playing exercises, literally sitting in different chairs to embody each perspective.
3. Table work: Bring these voices into the actual negotiation in an authentic way that doesn’t make the other person feel attacked.
He also introduces fascinating concepts like “conflict recognition” — how quickly we perceive something as a conflict — and “conflict holding” — our comfort with leaving conflicts unresolved. These differences often cause relationship problems when we’re unaware of them.
“My best friend and I might debate over Flaming Hot Cheetos for 25 minutes. For me, with high conflict recognition, it’s completely fun. I go home and sleep like a baby,” Bordone says. “For someone with low conflict recognition, they might think, ‘That was horrible. Did I hurt the relationship?'”
When someone tries to shut down your request with policy (“that’s just how we do things here”), Bordone recommends what he calls the “Wizard of Oz tactic” — asking a few more questions rather than immediately accepting defeat.
The skills you develop asking for a raise transfer to other challenging conversations — from family inheritance discussions to political disagreements with colleagues.
Bordone emphasizes that conflict isn’t something to avoid but rather a normal part of relationships. The question isn’t whether we’ll have conflict, but how we handle it when it inevitably arrives.
Want to hear the full conversation? Listen to the latest episode wherever you get your podcasts.
By Paula Pant
#590: Small Cap Showdown! Paul Merriman vs. Dr. Karsten Jeske Battle … with Millions Hanging in the Balance
In the left corner, we have Paul Merriman, the seasoned finance veteran weighing in at 183 pounds. In the right corner, Dr. Karsten Jeske, the scrappy newcomer at 208 pounds. The bell rings, and the small cap value debate begins.
This episode features a financial boxing match between two investment heavyweights with dramatically different perspectives. Paul Merriman champions diversification through the efficient frontier, which means adding small cap value to your portfolio. Dr. Karsten Jeska has “thrown cold water” on this approach, favoring simpler strategies like “VTSAX and chill.”
The stakes are high — we’re talking potentially millions of dollars in your retirement account over decades.
Merriman argues that history shows clear evidence for small cap value’s premium. From 2000 to 2009, small cap value outperformed the S&P 500 in all but one year, compounding at 10 percent while the S&P 500 returned negative 1 percent. He believes this pattern will continue, creating a powerful diversification effect when combined with broader market indexes.
Jeske counters that small cap value’s outperformance is mostly “front-loaded” in history, happening before anyone knew about it. Since 2006, small cap value has underperformed. He argues that once an advantage becomes widely known, it disappears in an efficient market. Adding small cap value might even be “di-worsification” — increasing complexity without improving returns.
The debate expands beyond small cap value to touch on:
• Active vs. passive investing strategies
• Market timing vs. buy-and-hold approaches
• Simplicity vs. complexity in portfolio construction
• The role of faith vs. evidence in investment decisions
While both experts disagree about small cap value’s future, they agree on fundamentals: invest early, stay invested for the long term, and understand that no one can predict markets with certainty.
What starts as a technical debate evolves into a philosophical discussion about evidence, probability, and the limits of our knowledge — all with millions of retirement dollars hanging in the balance.
By Paula Pant
#589: Q&A: How Much Risk Should My Mom Take in Retirement?
Kimmy is worried that her mom’s retirement portfolio is invested too conservatively. Is she right to advise her to take on more risk?
Peyton has heard the financial advice about staying away from Whole Life Insurance as an investment, but what about as a savings account for children? Is there good a use case for this?
Jeff and his wife are in a great financial position, but they fear that their retirement savings are too heavily apportioned in traditional IRAs. Will they run into tax problems in the future?
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
By Paula Pant
#588: First Friday: The Economic Maze We’re Navigating Together
Jobs are growing, interest rates are holding, and your student loan options just hit pause. Welcome to this month’s economic rollercoaster.
The economy is sending mixed messages this month. We added 151,000 new jobs in February, slightly better than January’s 143,000. But unemployment ticked up to 4.1 percent.
Health care is booming (52,000 new jobs). Restaurants and bars? They’re hurting (lost 27,500 jobs). Federal government shed 10,000 positions while state and local governments added 21,000.
The Fed isn’t making any sudden moves. They’ll likely hold interest rates steady at 4.25 – 4.5 percent when they meet March 18-19. Fed Chair Powell made this clear: “We do not need to be in a hurry and are well-positioned to wait for greater clarity.”
Meanwhile, Treasury Secretary Scott Bessent is working a different angle. He’s targeting 10-year Treasury yields instead of pressuring the Fed on short-term rates. His strategy? Use fiscal and regulatory reforms to convince markets that inflation will be controlled long-term.
Energy costs are a key part of his plan. Bessent believes lowering gas and heating oil prices does double duty: saves consumers money and boosts economic confidence. This matters because consumer spending is 70 percent of our economy.
Speaking of confidence – it’s plummeting. February saw the largest monthly decline in consumer sentiment since August 2021. People across all age groups and income levels are increasingly pessimistic. They expect inflation to hit 6 percent in the coming year (significantly higher than current rates).
Got federal student loans? Applications for income-driven repayment plans are temporarily on hold. This affects all plans, even the older ones not being challenged in court.
The pause came after a federal appeals court expanded a suspension of the SAVE plan. About 8 million borrowers had enrolled in this program, with more than 400,000 having their debts erased. If you’re working toward Public Service Loan Forgiveness, this is particularly important since income-driven plans are a key requirement.
In crypto news, bipartisan legislation for stablecoins is moving forward. The Senate has the GENIUS Act while the House has the STABLE Act (yes, that spells “stable genius”).
These bills would establish clear rules about who can create stablecoins and require them to be fully backed by high-quality assets like U.S. dollars or Treasury bills. They would also officially classify stablecoins as payment instruments rather than securities – a significant regulatory distinction.
The housing market? It varies dramatically by location. In DC, some zip codes are seeing prices climb rapidly while others face steep declines. The lesson: real estate is hyper-local. Success comes from becoming an expert in just a couple of specific zip codes rather than trying to understand entire metropolitan markets.
As Fed Chair Powell wisely put it, the key is “separating the signal from the noise as the outlook evolves.” That’s solid advice for navigating our current economic landscape.
By Paula Pant
#587: Q&A: Should You Cash Out Your ETFs? The Hidden Consequences of That Decision …
Debi is stressed about saving a down payment to buy a house in her high-cost-of-living area. Should she cash out her brokerage account to speed up the process?
Lucas and his wife are high earners, but they’re tired and ready for a change. What strategies can they use to maximize their investments and confidently step away from their jobs?
Grant is thrown off by recent discussions about the efficient frontier. It sounds a lot like market timing to base an investment strategy on an arbitrary set of historical dates. What’s he missing?
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
