The Fed just raised rates for the first time in more than three years, and the markets barely flinched. Your mortgage, your CDs, and your next car payment may feel it differently than the headlines suggest. The panel breaks down what a quarter point actually changes, then turns to two newer ways of borrowing against your future self: buy now, pay later apps that run almost entirely on debit cards, and a prediction market that wants Congress to let you borrow money to bet. One episode, three headlines, and one thread running through all of them.
What You’ll Walk Away With
- What a quarter-point hike does to a $50,000 car loan (the answer is smaller than you’d guess)
- Why your mortgage rate follows the 10-year Treasury more than the Fed, and why that distinction matters
- The three numbers to find in any adjustable rate loan before you decide how much risk it can carry
- Why waiting for a “return” to the rates of 15 years ago may be the most expensive plan available
- How “0% interest” buy now, pay later plans make their money, and what a single missed payment costs
- A simple test for deciding what is worth borrowing against future income and what never is
- How a $22 billion prediction market argues it isn’t gambling, and the odds it never mentions
- What the trader data shows about who actually profits on these platforms
- The meteorite that landed on a $300 car, and how much profit it really made
Why This Matters Now
Borrowing has quietly become easier to start and harder to see. A rate move shows up in a payment you might not notice for months, a payment plan splits a purchase into pieces small enough to ignore, and an app turns a market prediction into something that feels like a game. Each one trades future flexibility for something today. If you worry that one overlooked detail could sneak up on you, this is a plain-English look at where those details hide, and which decisions deserve a pause before you click.
From the Basement
The year-long trivia race enters its final quarter in a dead heat, and the gap that opens up is smaller than anyone’s confidence about it. The question involves a meteorite, a very old Chevy Malibu, and a lesson about waiting for money to fall from the sky. The show also took three tries to start, so you are hearing the one that worked.
Resources Mentioned
Personal Finance for Long-Term Investors: Jesse Cramer’s fine show
Federal Reserve monetary policy: the source for rate decisions and statements
Semafor: Kalshi to allow trading on borrowed funds: the report behind the Kalshi headline
Klarna and Affirm: the two buy now, pay later providers discussed
Peekskill meteorite: the real story behind today’s trivia
Afford Anything: Paula Pant’s rocking podcast
Our Topic: Interest rates, buy now pay later, and Kalshi.
The ‘first prediction-market election’ scrambles the midterms | CNN Politics (CNN)
During our conversation, you’ll hear us mention:
- Federal Reserve rate hike
- Rising borrowing costs
- Credit card rates
- High-yield savings accounts
- CD interest rates
- Auto loan financing
- Mortgage interest rates
- Fixed-rate mortgages
- Adjustable-rate mortgages
- HELOCs
- Interest rate predictions
- Managing financial risk
- Historical interest rates
- Buy now, pay later
- Affirm and Klarna
- Interest-free financing
- Late payment penalties
- Debit card payments
- Future income commitments
- Consumer spending habits
- Responsible borrowing
- Appreciating versus depreciating assets
- Kalshi prediction markets
- Election betting
- Gambling regulations
- Kalshi lobbying
- Leveraged betting
- Investing versus gambling
- Prediction market losses
- Financial gamification
Our Contributors
A big thanks to our contributors! You can check out more links for our guests below.
Jesse Cramer
Another thanks to Jesse Cramer for joining our contributors this week! Hear more from Jesse on his show, Personal Finance for Long-Term Investors – The Best Interest, on Spotify.
Learn how you can work with Jesse by visiting The Best Interest – Invest in Knowledge.
Paula Pant
Check out Paula’s site and amazing podcast at AffordAnything.com
Follow Paula on Twitter: @AffordAnything
OG
For more on OG and his firm’s page, click here.
Doug’s Game Show Trivia
- Write the trivia question here
Mentioned in today’s show
- Michelle Knapp paid $300 for a Chevy Malibu that was struck by a meteorite in 1992. After selling both the damaged car and the meteorite, what was her total net profit?
Join Us on Monday!
Tune in on Monday!
Miss our last show? Check it out here: Lauryn Williams: What a Four-Time Olympian Learned From Her Biggest Money Mistakes (SB1907) | Stacking Benjamins.
Written by: Kevin Bailey
Episode transcript
[00:00:00] opener: My gosh, you boys already know I’m not letting that Ramsey boy come over and play until you clean up your rooms
[00:00:11] Doug: Live from the basement of the YouTube headquarters, it’s the Stacking Benjamins show
[00:00:27] Doug: I’m Joe’s mom’s neighbor, Doug, and man, has there been a ton in the news to cover recently. First, interest rate cuts were expected, but the Fed raised rates. What does that mean for your wallet? Second, new buy now, pay later stats are out, and they’re, let’s say, concerning. And speaking of concerning, betting app Kalshi is in the news with a request to Congress that would allow you to borrow money to bet.
[00:00:53] Doug: I can’t imagine what could go wrong with that idea. But that’s not all. Our three contributors are all tied as we enter the fourth quarter of our year-long trivia competition. Who’s gonna stake an early Q4 lead? Well, we’re about to find out. And now, a guy who found out a long time ago that debt is way more fun getting into than climbing out of, it’s Joe Saul-Sehy.
[00:01:24] Joe: Thanks, Doug, and happy Friday to you, Stackers. I am Joe Saul-Sehy. Welcome back to the Stacking Benjamins show. We’re super happy you’re here with us. If you’ve been here with us on YouTube, you’re having fun watching us restart, and restart, and restart the show. But this time we’re gonna get it right because I’m here with my good friend Doug.
[00:01:42] Joe: How are you, man?
[00:01:44] Doug: I am very well, Joe.
[00:01:47] Joe: You’re just trying to make sure that we don’t have to do this a fourth time?
[00:01:50] Doug: I would just like the show to proceed.
[00:01:54] Joe: And proceed it shall. How about if we meet the contestants?
[00:01:57] Doug: Let’s meet all of the people that will be joining us.
[00:02:00] Joe: Let’s meet all the people. He’s from the east side of Michigan.
[00:02:04] Joe: He is a… W- what- what is the, the sign when you’re born in December? He’s a Libra. He’s a- He’s a
[00:02:10] Doug: Virgo who enjoys bear skin rugs and canning his own beans.
[00:02:15] Joe: Mr. OG is here.
[00:02:17] OG: No, just bears.
[00:02:19] Joe: What’s your, what’s your sign? What’s your sign, OG?
[00:02:23] OG: Peace. Peace sign.
[00:02:26] Joe: Perfect. But you just like bears. Big fan of bears. Yes.
[00:02:32] Joe: Mm-hmm. And a woman who has lots of bear encounters in New York City, Paula Pant, is here.
[00:02:38] Paula: So I’m a Libra. Uh, my birthday is in October.
[00:02:41] Joe: And she enjoys walks in the sun.
[00:02:43] Paula: W- exactly.
[00:02:44] Joe: And being on live podcasts.
[00:02:46] Paula: I enjoy being on live podcasts. I am a Libra. I, uh, have never had an encounter with a live bear, n- grizzly or brown.
[00:02:56] Paula: No bear of any sort.
[00:02:58] Joe: It’s grizzly or black bears. Brown bears and grizzlies I found out are exactly the same thing.
[00:03:03] Paula: Ah, I see. Okay. So I have neither encountered a black bear nor encountered a brown/grizzly bear, nor have I encountered a polar bear.
[00:03:13] Joe: No, never.
[00:03:14] Paula: Never.
[00:03:15] Joe: Have you ever taken something that you learned just recently and presented it like it was something that you’ve known your entire life?
[00:03:21] Joe: Like, “Oh, duh, grizzlies and brown bears, exactly the same thing.”
[00:03:24] Paula: Yeah. Did you know?
[00:03:26] Joe: Like, I learned that a month ago, Paula. And I was gonna pass it off like, “Hey, I’ve known that forever,” but… You know somebody I wish I knew forever?
[00:03:34] Paula: Who’s that?
[00:03:35] Joe: He’s in Rochester, New York. Jesse Cramer. It’s like, man, Jesse Cramer-
[00:03:40] Jesse: I’ve got some bear stories
[00:03:42] Joe: uh, do we wanna hear your bear story?
[00:03:44] Jesse: I don’t know. I, I’m trying to think. Probably the most funny one, uh, is just that one morning… This, I think I was in college. I wasn’t living at home, but one morning my dad hears something hanging from the bird feeder. Oh, and it’s… We, I grew up really rural, so it’s not uncommon to see something like a raccoon getting in your bird feeder and, like, trying to do what he can, and it was a black bear.
[00:04:03] Joe: Wow.
[00:04:03] Jesse: One time in, uh, Yellow… uh, no, Grand Tetons, saw a grizzly, like, I don’t know, not that close, but still close enough where I was like, “Really hope he doesn’t see me, ’cause there’s no one gonna come help me.” So bears are big. Don’t mess around with a bear.
[00:04:18] Joe: Doug’s enjoying the travel show that we’ve got going here early on in this podcast.
[00:04:23] Joe: Well, we’re gonna switch from bears to the bear- Minimum of bear stories, and instead we’re gonna talk about some of the recent headlines that have happened. We got three quick h- headlines. We’re gonna spend the first half of today’s show on the Fed rate hike. What does it mean when the Fed does a rate hike?
[00:04:40] Joe: What does this rate hike mean? What does that mean for your portfolio? What does that mean for taking loans? We’re gonna dive into that. And then the second half of the show-
[00:04:47] OG: It means you need more of these
[00:04:50] Joe: News about Kalshi, uh, the betting app, and news about… Well, it’s not really. It’s a predictive markets app, right?
[00:04:57] Joe: It’s not really. It’s not betting. That’s actually what they wanna make sure that you don’t call it, is a betting app. Kalshi and buy now, pay later, that’s all coming up on today’s show. Plus, our friends on YouTube hanging out with us. So we are going to hear from our sponsors who make sure we can bring this to you for the price of zero.
[00:05:18] Joe: We’re gonna hear from them, and then Paula, Jesse, OG are gonna join Doug and I in a discussion about the Fed’s recent rate hike, and what happens when rates go up.
[00:05:29] headlines: Hello, darlings. And now it’s time for your favorite part of the show, our Stacking Benjamins headlines.
[00:05:36] Joe: All right, guys, I wanna start with this.
[00:05:37] Joe: It’s been a couple weeks, but on September 16th, the Fed raised its benchmark rate 25 basis points from 3.75 to 4%, the first hike in three plus years. And in a unanimous 12-0 vote, Chair Kevin Warsh cited inflation that’s, quote, “Too high and has been for too long.” Markets were 90% sure there was gonna be a, a price hike, but, but, but let’s start with you, OG.
[00:06:07] Joe: We hear this all the time, right? Interest rates go up, interest rates go down. If I’m a regular consumer out there and I hear interest rates go up, does that mean my credit card rate goes up tomorrow? Does that mean my CDs get better rates? Does that mean my high-yield savings account does better? What exactly does that mean?
[00:06:27] OG: I, I was off stage for a moment there, so, um, I wasn’t paying attention. The question was, what happens when interest rates go up?
[00:06:36] Joe: What does that mean? I hear interest rates go
[00:06:38] OG: up- Oh, when f- when Fed rates, when Fed- Yeah,
[00:06:40] Joe: the Fed raise rates.
[00:06:41] OG: Yeah, it’s the cost at which, um, banks have to borrow money and, uh, everything rolls downhill, you know?
[00:06:47] OG: I mean, you learned this a long time ago, you know what rolls downhill. So this is one of those situations. So you’re gonna pay higher, uh, loan costs, you’re gonna pay higher borrowing costs, you know, whether it’s just credit cards or fixed interest rate stuff. If you got a mortgage and a rate lock two and a half weeks ago or three weeks ago, good for you because it’s a quarter point better than it was, uh, would be now, roughly.
[00:07:13] OG: You will get a, uh, slight increase in your savings rate, uh, maybe even a full quarter point, but it won’t happen, uh, generally right away because banks like to increase the rate at which you borrow and then sometime later in a month or so they’ll change the rate at which they pay. Little, little game they like to play of screw the customer.
[00:07:31] Joe: Well, and my understanding, Paula, is when it comes to mortgage rate, that’s not a, that’s not a done deal right away either.
[00:07:37] Paula: Yeah. Well, the mortgage rate is technically tied to a long-term Treasury rate, so the 10-year Treasury in particular is what most heavily influences mortgage interest rates. The reason for that, so imagine that y- you’re the bank, you’re thinking about either issuing a mortgage or buying a 10-year Treasury.
[00:07:54] Paula: Given the fact that even though it’s a 30-year mortgage, most people tend to on average buy and sell it out of their mortgage after about seven years, people tend to, like, buy and sell homes in about seven years or refi their mortgage. So you’re pegging the cost of a mortgage to an alternative investment that would have roughly around a 10-year duration, and that’s why the, the 10-year Treasury is the thing that most, uh, influences it.
[00:08:17] Paula: So 10-year Treasury, highly influenced by the Fed’s rate, but it’s not a direct one-to-one correlation, so the, the rate of a 10-year Treasury also takes into account investor expectations around inflation. You know, there’s more than just the Fed rate that goes into the 10-year Treasury.
[00:08:35] Joe: Yeah. Let’s go into the things then, Jesse, that are directly affected.
[00:08:39] Joe: Let’s say that I have CDs at a bank. Does this mean that my CD rates now are gonna be cha-ching? Like, it’s finally time to get investing in more CDs because, uh, the Fed raised interest rates a quarter point?
[00:08:52] Jesse: Well, most likely, I mean, it probably depends on the terms of your CD, but the one that you already own I, I would wager probably isn’t gonna be affected.
[00:09:01] Jesse: It was probably a f- a fixed rate CD that you agreed to some interest rate when you first acquired it, so to speak. The interest rate that you now go to buy today or tomorrow would probably fall somewhere under OG’s answer, which is, you know, have they actually raised the rate on their CDs yet? Maybe, maybe not.
[00:09:20] Jesse: Uh, they’re, they’re certainly, uh, loaning money out at a higher rate starting right now, most likely. But depending on are they actually going to pay you more interest right away, I don’t know.
[00:09:30] Joe: What if I need a car, and I would need to borrow for the car?
[00:09:33] Jesse: Yeah.
[00:09:34] Joe: How does this change my strategy? Does it change my strategy?
[00:09:37] Jesse: From my point of view, I mean, if we’re, if we’re really getting down to, like, nuts and bolts, yeah, I mean, the, the cost of financing your car is gonna be more expensive. And so if you need to borrow it to buy that… If you need to borrow money to buy that car, which is a questionable thing to do in the first place, I mean, all else being equal, you’d probably rather not borrow money to buy a car, certainly not at a 6% or 7% rate.
[00:09:57] Jesse: At least that’s my thoughts. I think OG might… He’s raising his hand and might disagree and, and that’s… Yeah. What, what do you think, OG? Would you borrow money to buy a car?
[00:10:04] OG: I think that when it comes to car stuff, people are too locked into a brand, and the reality is, is, like, different brands have different promotions going on at different times.
[00:10:13] OG: Mm-hmm. So you can be very strategic about your borrowing if you had to. I just wanted to frame the, the interest rate change of a quarter percent. You know, if you’re buying a car for $50,000 and you’re gonna finance it for five years, this giant interest rate change that just happened changes your payment by $5 a month.
[00:10:30] OG: I think the bigger question, like you were asking, Jesse, is should, should we even be financing an automobile purchase? You know, it’s not whether or not the five bucks makes or breaks it, it’s, it’s should I even do, be doing that at all.
[00:10:41] Jesse: Yeah.
[00:10:41] OG: Yeah. And I’m ballparking $5, by the way, so don’t @ me if your math is slightly off.
[00:10:45] Jesse: Someone out there is whipping out the spreadsheet. Uh, I really liked what OG was saying, though. So he say- OG said, “You know what rolls downhill?” And that got me thinking about gravity. Oh,
[00:10:54] OG: I
[00:10:54] Jesse: know
[00:10:54] OG: that answer, too.
[00:10:55] Jesse: And that got me thinking about, uh, I mean, the, so something for listeners I think to frame. So Warren Buffett would say interest rates are like financial gravity.
[00:11:03] Jesse: Like, every single financial instrument gets pulled on by interest rates, just like gravity pulls on everything that has mass. And so I just think that’s something to keep in mind is, like, whether we’re talking about a loan, a savings account, the stock market, if you have some sort of financial instrument, financial exposure, it gets influenced by interest rates.
[00:11:22] Jesse: And what the Fed does with their overnight rate is, is certainly kind of the, um, probably, like, the, the biggest impulse that then sends ripples throughout the rest of the, the longer term kind of interest rate ecosystem.
[00:11:34] Joe: Let’s go to those mortgages, Paula, that don’t directly correlate, but there’s a good chance that people are gonna start seeing higher mortgage rates.
[00:11:41] Joe: Mm-hmm. Does this change your strategy in buying a house?
[00:11:45] Paula: It might. So if you are planning on taking out a HELOC, for example, and using that HELOC to buy a rental property, that HELOC is gonna be a little bit more expensive. If you are thinking about getting a variable or adjustable rate mortgage or any kind of a variable rate loan, if you already are in one, those variable rate loans are going to rise.
[00:12:07] Paula: And if you’re not in one yet, you’re a bit playing a guessing game as to are rates gonna keep rising or not. But given Kevin Warsh’s statement about how inflation has been persistent, given that it was a unanimous vote, given that the Fed has a dual mandate around both inflation and unemployment, and we have a historically speaking, a low unemployment rate, there’s a decent chance that rates might continue to rise.
[00:12:36] Paula: And so if you’re already in an adjustable rate mortgage, that’s likely to go up. And if you’re not yet in one, you now have a kind of a difficult choice. Like, do you lock into a fixed rate mortgage at what is now over seven percent? Or do you get a variable rate mortgage with the hope that it might come down, but knowing that you’re accepting the, the risk that it might continue to go up if we don’t battle inflation adequately?
[00:13:01] Joe: Which would you do at this point? Would you lock in this rate on a 30-year, or would you take a chance on a, on another adjustable rate mortgage- It- … to try to keep your rate low and just punt another three to five years?
[00:13:13] Paula: Yeah, it would depend on the delta between my living expenses and my income. If I had a bunch of wiggle room, then I might take that risk.
[00:13:23] Paula: But if I didn’t have a whole lot of wiggle room, then I wouldn’t. If you do take an adjustable rate mortgage, one of the chief things to keep in mind, with any adjustable rate mortgage, there is a, a cap. You have a maximum cap as to how bad it can get. So with an adjustable rate mortgage, number one, that rate gets changed periodically.
[00:13:39] Paula: It doesn’t get changed daily or weekly or anything like that, like it gets changed at some type of a periodic interval. So check your loan documents to see what that periodic interval is. Now, each periodic interval, it can only go up by a maximum of X.
[00:13:55] Joe: X.
[00:13:55] Paula: Find out for every periodic interval, what is that maximum of X, and then in total, it can only go up to an absolute max, max, max of Y.
[00:14:08] Paula: What is that variable Y? Which is to say, what is the absolute worst-case scenario that it can go to? And if you can live with all three of those scenarios, then it might be a risk worth taking. It’s a can you live with that litmus test.
[00:14:25] Joe: Oh, gee, in this particular market, with all the people predicting that interest rates were gonna go up anyway, and the Fed with their unanimous decision, would you refinance to an adjustable rate loan if you were on the hook or maybe, let’s say, a year away, you’re trying to, trying to keep your payments under control and your interest rate under control?
[00:14:44] OG: Well, again, I think if you did the math on it to see what the difference is, you know, I think you’d be surprised to learn that it’s not that profoundly different. You know, it’s a few bucks for sure. If I was in an adjustable rate right now, and it was in the period of time where-
[00:15:00] Joe: Say you got 12 months to go on your adjustable rate loan
[00:15:02] OG: it was fixed, yeah, for a period of time. Yeah. I would let it ride, personally, just because now you’re trying to decide, uh, ostensibly your adjustable rate right now is lower than the current market, so you’re gaining ground every month. And so then how many months after do you have to lose ground to be even money?
[00:15:19] OG: Does that kinda make sense? I would take that gamble. If it was up right now, I would probably switch to a fixed, just because certainty is kind of pleasant, especially with, like what Paula said, with the forecasting that kind of appears to be on the horizon, or at least the language from the people that are in this, in the decision-making power on this.
[00:15:39] Joe: Jesse, people talk about, you know, wow, these rates are high. These rates are high, but we talked about this live at FinCon, these rates ain’t high.
[00:15:45] OG: Mm-hmm.
[00:15:45] Joe: These are getting back to, like, historic norms. If I’m a person out there who’s trying to stack some Benjamins, do I look at this as a norm, or do I hope for things to come back down?
[00:15:55] Jesse: Yeah, it’s hard, because all of us, we’re all wired to, you know, have this recency bias in us that we, we look at the way the last 5 or 10 or 15 years have been and, and that kind of becomes the new normal. It’s why so many investors today are like, “Market crash? Like, what do you mean market crash? Market might lose 50%?
[00:16:11] Jesse: Like, what are you talking about? That hasn’t happened since, uh, 2008.” But right you know. But these things do happen and, and yeah, it’s, uh… We’re coming off of a period of just these historically anon- anon- anonymous, anon- anon- W- what word is it? Anomalous. Anomalous. Anomalous. Anomalous. Mm-hmm. Phenomenon?
[00:16:30] Jesse: ‘Cause it’s an
[00:16:30] OG: anomaly. Use, use a lower dollar word.
[00:16:32] Jesse: Uh, we’re coming off this period of weird low interest rates, and so I guess, you know, it is hard, ’cause in the moment you think to yourself like, “Wow, this really sucks.” You, you’re filled with regret. I’m filled with regret. I really wish I’d secured like a 3% mortgage five years ago instead of the six and a half percent mortgage I have right now.
[00:16:52] Jesse: Uh, but, but to some extent, I just think from a long-term planning point of view, you know, you, you just gotta deal a little bit with the chips that you’re dealt and lock in the things that you know you, you can treat as certainties. Like, there’s enough uncertainty in life. There’s enough uncertainty in investing.
[00:17:06] Jesse: And so to some extent you just have to deal with some of the certainties that you’re given. And yeah, we had these weird low rates for a while. Who knows if we’re ev- if we’re ever gonna get back there again, and you just gotta make the best decisions going forward today that you can. Predicting the future of interest rates doesn’t strike me as a particularly smart, wise thing to do.
[00:17:24] OG: Okay, then that, uh, th- yeah. Sorry, Joe, I was gonna say, and I like the people who are like, “Those were the days when everything was shut down and the economy was in shambles, and people were dying by the hundreds of thousands. At least my interest rates were nice and low.” “That was great. Let’s go back to those days.”
[00:17:39] OG: But let’s
[00:17:39] Joe: see the upside,
[00:17:41] OG: right? Yeah, that’s… I think a lot of people like to look at their old money decisions and go, “Well, I wish I would’ve done this.” It’s like, well, you didn’t purposefully try to put yourself in a bad situation, right? You made the best decision you could with the information that you had at the time, with the circumstances that you had at the time.
[00:17:58] OG: I wish I would’ve put 2,000 bucks a year into a Roth IRA when I started my career in 1999. I didn’t. If I’d have known that, what I know now, I would’ve moved heaven and earth to do that, but I didn’t.
[00:18:10] Joe: With all these headlines today, we’re gonna be talking about predictions, playing games, right? And Paula, when I think about then mortgage strategy, let’s just talk mortgage strategy for a second.
[00:18:20] Joe: Is the best game then not to play the game? To, you know what? I’ve got these fixed rate loan options. I’m gonna choose a fixed rate loan, ’cause the second I start getting into adjustable rate mortgages, into balloons, even into HELOCs, I gotta play a
[00:18:45] Paula: where do I think
[00:18:49] Joe: interest rates are going game. Have you ever bought an adjustable rate loan?
[00:18:51] Paula: Uh, no, I have never gotten an adjustable rate loan. It is for exactly that reason. Uh, with certainty, I can then go out and take bigger risks both by buying rental properties and by being self-employed, and then, uh, later transitioning from self-employment to, to business ownership, to employing others, right?
[00:19:09] Paula: Both of those carry an enormous amount of risk with them, and my way of looking at risk across a person’s life is instead of narrowing it to a single domain, I like to look at it holistically across your life. So how much risk are you carrying in other domains of your life, and where are the areas where you want to reduce risk and/or increase certainty as a counterweight?
[00:19:33] Joe: Jesse, have you ever had an adjustable rate mortgage?
[00:19:35] Jesse: No. No, I’ve had two fixed rate mortgages, and like Paula alluded to earlier, I’m trying to think. The first one I got was in 2018, and then that one only lasted for, for four years, and then we moved and got a second one in summer of 2022. So we’re now four years into our second fixed rate mortgage.
[00:19:53] Jesse: Yeah, never an adjustable one. My understanding of adjustable rate mortgages was like it was one of many factors that led to, uh… I skipped the complicated word there, OG, just for you. It was one of many factors that led to, um, just the real estate 2008 bubble was all these adjustable rate mortgages, and so I just have always had a uncomfortable feeling with them
[00:20:14] Joe: Oh, G, you had an adjustable rate loan.
[00:20:17] OG: I have one right now.
[00:20:19] Joe: You have one currently. Yeah. And then y- your thought process on, on the strategy here with interest rates moving up?
[00:20:26] OG: I mean, just like I said, it’s still in the kind of initial term. I, I haven’t even bothered to look at what the max it can adjust is, because it’s maybe two years away.
[00:20:35] OG: So it’s already better. It’s a six and, uh, eight maybe.
[00:20:40] Joe: Yeah.
[00:20:40] OG: So it’s already better than what the market is. Still better.
[00:20:42] Joe: So- Right …
[00:20:43] OG: why would I, why would I touch it?
[00:20:46] Joe: It’s interesting when you’re putting your strategy together for a house, are there a lot of times when you say, “You know what? Let’s take the adjustable rate loan,” when you’ll advise clients to go that way?
[00:20:56] OG: Oh, from a client standpoint, I would rarely recommend that. You know, just again, like Paula said, from a risk standpoint, it kind of depends on where you are in your life with other things. I’m okay with the fact that on occasion this will not work out. I mean, my primary house is a regular fixed, but this is a different property, so it’s part of the deal.
[00:21:16] Joe: I wanna have a little fun here. Where do you think the Fed goes next, OG?
[00:21:20] OG: Can I not answer? I’ll, I… Here’s my answer: it doesn’t matter. My answer is I don’t care. It doesn’t matter.
[00:21:29] Joe: Paula?
[00:21:31] Paula: I think the Fed continues to raise rates maybe by another quarter point if, if, if, if two things happen. If inflation stays in a three handle, meaning three-point-something, and if the jobs report continually comes back showing strong or at least acceptable job growth.
[00:21:53] Joe: Jesse?
[00:21:55] Jesse: Yeah, it’s funny. It’s like where’s this inflation coming from at this point? Is it like AI build-out and stuff like that, and is that gonna slow down any time soon, and, and is a little quarter point interest rate hike gonna convince the, the hyperscalers to stop building these AI data centers and that kind of thing?
[00:22:11] Jesse: So I don’t know. I’m with Paula. If I had to make a bet, I would say it, it’ll keep on climbing more.
[00:22:16] Joe: Doug?
[00:22:17] Doug: I think the Yankees take it in five.
[00:22:22] Joe: That’s exactly what we wanted. All right. We’re at the halfway point of today’s show. In the second half we’re gonna talk about big news in buy now, pay later. Some interesting stats just hit the streets, and we’re gonna review those.
[00:22:34] Joe: And Kelshi in the news last week. It’s funny, when I sent the text to our group of contributors, Paula’s like, “What?” “Kelshi did what?” This is a good one, and I can’t wait to see the collective eye roll that everyone has. But before we do that, we got something that definitely isn’t eye roll. It is hot, hot, hot here in mom’s basement because we’ve got one quarter to go in the 2026 edition of our year-long trivia competition.
[00:23:01] Joe: Doug, it couldn’t get any closer. Can’t get any better. It could not get any closer.
[00:23:05] Doug: It’s as good as it’s ever been right now. We are in the golden age of SB trivia right now because we have a three-way tie, a legitimate three-way tie. Each of our contestants has 10 points.
[00:23:21] Joe: Here’s the deal. We go with last year’s score, which means, Jesse, you’re gonna go first as our- Okay
[00:23:27] Joe: champion from last year. OG is in the weird spot this year of going second. And Paula gets the benefit of going last. So here we go. Doug, you’ve got today’s question. And I think your mic might be a little hot too, bud.
[00:23:44] Doug: Hey there, Stackers. I’m Joe’s mom’s neighbor, Doug. October 9th marks the anniversary of one of the greatest financial windfalls in American history, and I mean that literally. On this day in 1992, 18-year-old Michelle Knapp was sitting inside her family’s home in Peekskill, New York when she heard a huge crash outside.
[00:24:06] Doug: She ran out and discovered that a 26-pound meteorite had fallen from space, smashed through the trunk of her 1980 Chevy Malibu land yacht, and buried itself in the driveway underneath. Now, that’s a bad day, or at least you’d think it was. Michelle had just recently bought that 12-year-old Malibu, which even in 1992 means, I’m guessing, that meteorite wasn’t the first thing to make weird noises in the back of that car.
[00:24:34] Doug: Know what I mean? Anyway, here’s where things get interesting. That rock was estimated to be about 4.4 billion years old, and suddenly Michelle had two things collectors wanted: an honest-to-goodness meteorite from outer space and the Chevy Malibu it had just punched a hole through. Eventually, she sold them both.
[00:24:57] Doug: Stackers, do you realize what this means? For years Joe’s been telling me that waiting for money to fall out of the sky is not a financial plan. Yeah, well, who’s the idiot now, Joe? So here’s today’s trivia question. Michelle Knapp paid $300 for that Chevy Malibu. After selling both the damaged car and the meteorite that hit it, what was her total net profit?
[00:25:22] Doug: I’ll be back right after I move the El Camino out of the garage and into the driveway. Come on, universe, daddy needs to fund his Roth.
[00:25:30] Joe: What a great money-making scheme, or was it a great money-making scheme? So Jesse, she paid $300 for the Malibu and then sold the meteorite, sold the car that got hit to collectors.
[00:25:48] Joe: What’s her net profit?
[00:25:50] Jesse: I gotta think the meteorite especially sold for quite a bit. 20, was it 26 pounds? 22 pounds?
[00:25:57] Joe: 20… How
[00:25:58] Doug: many
[00:25:58] Joe: pounds,
[00:25:58] Doug: Doug? Like, like he knows the average cost per weight of a meteorite and he’s gonna do the math.
[00:26:04] Joe: He’s about to.
[00:26:04] Jesse: You’d be surprised. Take away some inflation. Uh, blah. You said Peekskill, right?
[00:26:12] Jesse: So this is a North American meteorite? No, I’m kidding. There is a- It’s a Hudson Valley meteorite? This is Peekskill, yeah. Uh, I’m gonna say her- Took a
[00:26:20] Joe: right turn in Albuquerque …
[00:26:21] Jesse: I’m gonna say her profit was, uh, one point seven, uh, three, two… Uh, $1.25 million.
[00:26:31] Joe: 1.25 million-
[00:26:33] Jesse: $1.25 million …
[00:26:34] Joe: dollars. That’s a good day, OG, 1.25 million.
[00:26:39] OG: I know you guys are gonna roll your eyes at this, but I actually know a guy that sold a meteorite- … to my hometown. I think Jesse’s kinda onto something because I don’t know how big it was, but it was a solid six figures, like upper six figures that he sold it for. However, this was in the, um, call it late 20-aughts.
[00:27:04] OG: So I gotta subtract 20-odd years of inflation. I think Jesse’s high, and I gotta, I gotta play the game to give Paula a little something.
[00:27:14] Jesse: You’re high.
[00:27:15] Doug: We all think Jesse’s a little high.
[00:27:17] OG: To deal with. Um, I’m gonna say, you said one point, uh, some odd million? He said
[00:27:22] Jesse: 1.25.
[00:27:23] OG: Two five. Two five. Okay, so I’m going to do the exact opposite.
[00:27:28] OG: I’m saying, uh, a very smooth, very smooth and buttery $100,000.
[00:27:36] Joe: Hmm. Wow. Goes the opposite way. Still b- good money for something that hit a car.
[00:27:42] OG: Great money. Yeah, I, I’m playing this as a game. I don’t know the answer. I think it’s six figures, but I gotta get Paula to decide if she’s gonna sandwich me or if I’m sandwiching Paula.
[00:27:52] Joe: Paula, who are you gonna sandwich?
[00:27:56] Paula: Well, let’s see. I also think it was six figures- You said 1992?
[00:28:06] Doug: I did.
[00:28:07] Paula: So 1992, that was right around when the Barenaked Ladies put out that song, If I Had a Million Dollars.
[00:28:14] Doug: Ooh.
[00:28:14] Paula: So even back then, a million was considered a lot. Like, it, it was a lot, but it was attainable.
[00:28:20] Doug: Can Paula just win right now because she made a pop culture reference?
[00:28:24] Joe: I know, right? I was just wondering too if the Barenaked Ladies, uh, did like, you know, if somebody were to cover that song, like an up-to-date cover, would it be, If I Had a Million Dollars, adjusted for inflation, which it would now be 2.6 million.
[00:28:37] Paula: I, I actually just did the math. I posted it on Twitter the other day, uh, which is why I thought about that song.
[00:28:42] Paula: I think it’s, uh, 2.7 million in today’s dollars.
[00:28:44] Joe: I was close.
[00:28:45] Paula: Yeah. Oh, that … Oh, should’ve been a trivia question. Geez, I would’ve nailed that one.
[00:28:51] Joe: Well, we follow you on Twitter, s- we saw, so we weren’t gonna do that.
[00:28:55] Paula: Uh, I’m gonna go with $100,001.
[00:28:58] OG: 101. That’s a lot of room for Jesse. You sure you don’t wanna nudge that a little higher?
[00:29:04] Paula: Yeah, yeah, yeah. I think I’ll, uh-
[00:29:06] OG: Maybe like 450 or something?
[00:29:08] Paula: If I had $450,000.
[00:29:12] Joe: Nah,
[00:29:13] OG: sticking with
[00:29:13] Joe: it. Yeah. Just keeping it at 101.
[00:29:15] Paula: Yeah, yeah, 100,000 and $1. Just
[00:29:17] Joe: keeping it at 101. 101. That does give Jesse a lot of room. All right. Jesse’s at one and a quarter million. Paula and OG at 100,000. And 101, who’s going to take the lead here in Q4?
[00:29:30] Joe: We’ll find out in just a minute.
[00:29:34] Joe: All right, Jesse, you, uh, boy, they said you were high. You were quite high compared to the other two. You’re at one and a quarter million dollars, 1.15 higher than anybody, 1.1499 higher than anybody else. How you feeling?
[00:29:49] Jesse: It’s like I’m in orbit, you know? It’s how high I am.
[00:29:53] Joe: Feeling good, though? I’m
[00:29:54] Jesse: galactic.
[00:29:55] Jesse: I’m interplanetary.
[00:29:57] OG: Intergalactic.
[00:29:58] Joe: It could’ve been $50, OG, in which case-
[00:30:02] OG: Yeah, no, it’s not 50. I- my gut says it’s probably around 3 to 375, but I wanted to pick a number low enough that Paula might go halfway between me and Jesse and still give me a bunch of room, and, um, and I don’t agree with her strategy.
[00:30:20] OG: I gotta be honest. I, this does not benefit me in the least.
[00:30:24] Joe: Paula, do you think it doesn’t benefit OG with the one you did?
[00:30:27] Paula: Well, I mean, he has the downside.
[00:30:29] OG: I have zero.
[00:30:30] Joe: He does. He has zero.
[00:30:31] Paula: Yeah.
[00:30:31] Joe: If she lost money on the deal.
[00:30:33] Paula: Right, or if she made, like, you know, 75,000 or something, which, you know, in 1992 was, was a lot of money.
[00:30:40] Joe: This trivia’s awesome if she couldn’t sell them and it was minus 300 bucks.
[00:30:43] Paula: Right?
[00:30:47] Joe: That’d be great. I hope
[00:30:48] OG: that’s the answer.
[00:30:49] Joe: All right, we’re gonna find out if that is the answer. Doug, you’ve got the answer. Who’s taking home the big win, man?
[00:30:58] Doug: Hey there, Stackers. I’m certified astrophysicist and guy who spent the entire break standing in the driveway looking straight up, Joe’s mom’s neighbor, Doug. Nothing yet. N- I mean, although a bird flew over about five minutes ago and let’s just say the El Camino’s now worth slightly less. Before the break, I told you about Michelle Knapp, whose $300 Chevy Malibu was minding its own business when the universe dropped a 26-pound rock through the trunk.
[00:31:25] Doug: Turns out, destroying the car was the best thing that could’ve happened to it. Michelle reportedly sold the meteorite for $50,000, which was a pretty good return for something that came with free shipping. But here’s the part I love. The Malibu was suddenly a collector’s item, too. That’s a lesson for anybody trying to sell an old car.
[00:31:44] Doug: Don’t waste your money fixing dents. You just need a much better story about how they got there. From now on, I’m telling people the front right bumper on the El Camino’s crunched because I rear-ended Ryan Seacrest. Although, I guess technically that would make his car more valuable. Well, y- you get the point.
[00:32:00] Doug: She reportedly sold the Malibu, the same car she paid $300 for, for another $25,000. So after subtracting Michelle’s original $300 investment, what was her total net profit? Well, the correct answer was 1.175, 300 lower than Jesse’s guess, $25,301 lower than Paula, just 25,300 lower than OG’s guess, which means OG is today’s winner because Michelle Knapp’s total profit, $74,700.
[00:32:33] OG: Wait. Did you say- Wow … that she sold the meteor for 50K?
[00:32:36] Doug: Yeah, 50K.
[00:32:37] Paula: Wait a second. Oh. I l- I thought
[00:32:39] OG: for sure that was mid-six figures.
[00:32:40] Paula: I literally was like, “Well, if it’s $75,000, he’s got-” Yeah. What?
[00:32:48] Joe: So close. How many times have you done that, Paula?
[00:32:51] Paula: Wow.
[00:32:52] OG: Okay.
[00:32:53] Paula: It’s like there’s a part of me that knows.
[00:32:55] Joe: Some of the stuff that comes out of your mouth, if you just stick to it-
[00:32:57] Paula: Man
[00:32:58] Joe: it could’ve been. It could’ve been. OG takes the lead going into the fourth quarter. Okay. Reclaims the top end of this. Hey, let’s go into the second half of today’s show. We got two more headlines. Uh, let’s start with this one Buy now, pay later apps. Let’s talk about Affirm and, um, what’s the other big one called?
[00:33:21] Paula: Uh, Klarna?
[00:33:22] Joe: Klarna. There we go. Mm-hmm. Thanks, Paula. I kept thinking Kelshi, ’cause- Mm … that’s coming up next. Yeah. But Klarna, yes. Buy now, pay later adoption climbing fast, driven largely by credit skeptical younger consumers. I’m gonna ask you about that in a second. Notably, nearly 90% of buy now, pay later purchases now run through debit cards, the new numbers say, rather than credit cards.
[00:33:48] Joe: So what that means is, if you’re running it through a debit card, you’re not worried about the interest, right? You’re not worried about avoiding a credit card, you’re worried about the timing of this purchase. You’re either buying it ’cause you can’t afford it right now, or you want payments at a certain time so that, uh, so that the payments line up It lets you stack all these small, small loans.
[00:34:13] Joe: So let’s start with, is this, Jesse, a harmless alternative to credit, like the way young people seem to be using it? Or is this a dangerous trap?
[00:34:26] Jesse: Well, the cool thing is I had a burrito today, and I don’t have to really pay for it until next summer. I mean, that’s, that’s what we’re talking about here. We’re talking about essentially it’s a free burrito, if you really wanna mince words here.
[00:34:39] Jesse: Uh, no, I think it’s a terrible thing. I think it’s really stupid. I think it’s pretty bad. I think what… What’d you say, Joe? You said that people are, are suspicious about credit, and so that’s why they’re going to buy now, pay later? Well, what are we talking about here?
[00:34:50] Joe: Because they want zero interest. They think the zero interest thing is-
[00:34:54] Jesse: Well-
[00:34:55] Joe: is great. But now they’re using it versus a debit card instead of… Or they’re, they’re paying for it with their debit card, so.
[00:35:00] Jesse: Well, they, they ought to be more suspicious of the so-called free lunch, just like you have to be more suspicious of the free burrito. It’s not free. You pay for it eventually. And similarly, I mean, I, I guess maybe in some cases these Klarna and, and others are truly offering, like, teaser interest rates that are essentially zero, just to get people hooked on them.
[00:35:18] Jesse: But, but more likely than not, I mean, the interest is embedded in the payments themselves. You know, the $12 burrito actually costs you 10 payments of $1.40. It’s $14 total. I mean, right? There’s a 17% interest rate embedded in those payments. To you, though, it just feels like 10 even payments or something like that.
[00:35:37] Joe: Well, no, but there’s no interest. On the buy now, pay later apps, I mean, the, the cool thing about them is that there’s zero interest. Or am I missing something that you’re saying?
[00:35:46] Jesse: I guess I’m not sure. Uh, my understanding, whenever I’ve seen it offered at checkout, usually what I’ll see is you buy it today for 100, or you have four even payments-
[00:35:56] Joe: No, those are…
[00:35:57] Joe: Yeah, those are not the Affirm or Klarnas. The Affirm and Klarnas are 100 bucks or 10 payments of $10, and as long as you make them on time, 0%.
[00:36:07] Jesse: I, I guess that’s news to me and, and kind of interesting, ’cause I don’t understand exactly where their profit comes from then.
[00:36:15] Joe: Oh, let’s talk about that. Paula Pant, do you know where their profit comes from?
[00:36:18] Paula: Well, if you miss a payment-
[00:36:20] Joe: There it is … then
[00:36:21] Paula: the penalties get very severe.
[00:36:22] Joe: Yeah, they’re not small, Jesse. Got it. They are big, big, big payments.
[00:36:27] Jesse: Has it always been that way?
[00:36:28] Joe: It is always… For Klarna and for Affirm, it has always been that way. Okay. That’s been the thing. Hey, 0%. So Paula, is… I’ll ask you, then, the same question.
[00:36:37] Joe: You seem to be a little more familiar with these. I’m sure you use them regularly. What’s the … What’s-
[00:36:42] Paula: Never.
[00:36:43] Joe: Well, well, why not? If it’s free money.
[00:36:46] Paula: Well, in order to promise that you will never miss a payment, you will never be late on a payment, to promise that degree of behavioral compliance, every I dotted, every T crossed, with such severe consequences if it’s not, that’s a hefty promise to have to make in an uncertain future, you know, where you might lose a job, you might have some emergency, medical emergency that comes up.
[00:37:16] Paula: You’re essentially committing your future dollars to something Where you just don’t have, uh, w- we talked about wiggle room earlier on this show, to something where you really don’t have any wiggle room. You know, if things don’t work out in the way that you envisioned, the penalties are gonna be pretty severe.
[00:37:35] Paula: So when we talk about Klarna and Affirm and these buy now, pay later, when we talk about what you purchase with it, we’re talking relatively small purchases. Retail purchases, groceries, clothing. We’re talking fairly low dollar amounts. If you are in such a dire position that you need buy now, pay later to buy some clothes, then there’s a deeper problem that we need to address.
[00:38:04] Paula: Uh, there’s a much, much deeper problem about lack of income that needs to be addressed first. Let’s address that. Let’s find ways to get you a side hustle, to get you a, some other gig, to get you cheaper housing, to maybe get you living on your brother’s couch or in your mom’s basement for a little while.
[00:38:22] OG: Don’t knock it till you try it.
[00:38:24] Paula: Yeah, you know, like, there’s some deeper things that need to be addressed if you are in such a dire position that you need buy now, pay later for a relatively small dollar item. And by contrast, if you are in such a good position that you don’t actually need it, then why would you put yourself on the hook with risk of such severe penalty for something that you don’t actually need?
[00:38:47] Paula: So either, in either case, it doesn’t make sense.
[00:38:50] Joe: Yeah, either there’s a different way, or your definition of need might be a little too wide. Oh, gee, is there a problem here with betting, as Paul is talking about? Y- y- you’re really betting your future income here. This piece even talks about how younger borrowers are reticent to use a credit card.
[00:39:08] Joe: Credit card versus buy now, pay later, which one do you think is the bigger devil?
[00:39:12] OG: Well, I haven’t seen the data on consumer spending of younger people, whatever that looks like on credit cards, but I do know that credit card balances are s- somewhat at an all-time high, right? They’re, yes. Like a most, like all-time, all-time, all-time high.
[00:39:27] OG: But my question on this is a little more devil’s advocate-y maybe. So if it’s never good to commit future income to a purchase, like, where does it make sense? ‘Cause we just got done talking about mortgages, for example. Mortgage. Sure. And, or cars. So I think Jesse said, well, not cars, but yes on mortgage.
[00:39:48] OG: And if it’s, I mean, from a financial standpoint, honestly, if I could take all of my expenses this month and pay for them in future dollars, like way future dollars, like let’s say 10 year from now dollars, that’s a really good trade from a finance standpoint. Avoid all that inflation. It’s a very risky trade from a cashflow standpoint.
[00:40:09] OG: I understand that they’re small purchases, like Paula said, at lower dollar, lower volume type of purchases, but I’m just kind of curious, like, where do we draw the line on I’m okay with committing my future income to this purchase, but I’m not okay committing my future income to that purchase?
[00:40:25] Joe: Where do you draw the line there, Jesse?
[00:40:26] OG: Consumerism maybe.
[00:40:28] Joe: Yeah.
[00:40:28] Jesse: Yeah.
[00:40:28] OG: And maybe that’s the thing that I see a lot of is if it’s offered to me, it’s like, “Hey, you just bought a pair of Nikes. Do you wanna pay this over four payments?” It’s like, it’s like 100 bucks. Like, no.
[00:40:38] Joe: Right. Let me change the question. Now that you know that this is interest-free debt, as long as you make the payment on time, is there a way to use this responsibly?
[00:40:46] Joe: Is there a way to use it, to use it to your advantage, or is OG right? Maybe we need to re- and Paula, you know, maybe we need to rethink our consumerism
[00:40:56] Jesse: Yeah, it’s kind of hard because it’s just philosophically it’s for the purchases that hopefully you, you wouldn’t need to borrow in the first place. Like, like, again, not, not to make this the, the Buffett show, but he does have this quote of just like, “You, you can never get the loan that you desperately need when you want it.”
[00:41:11] Jesse: Like, banks love to offer you loans when you don’t necessarily need them. It’s when you really, really need the loan, that’s when they say you’re not credit-worthy. And similarly, if I really need to borrow $25 to buy a couple burritos, that’s not the purchase that I need any sort of loan for. What I need a loan for is to buy a $500,000 house, and my understanding is I, I don’t think I can get the 0% rate there.
[00:41:37] Jesse: So I do think it just comes down to, you know, the, the size of the purchase that we’re talking about here ought not to be big enough to put it on any sort of credit in the first place. ‘Cause again, it’s, it’s on credit. It happens to be free credit until you mess up, and then it becomes… W- did we already talk about it?
[00:41:52] Jesse: I mean, what’s the exact interest rate that they can start to put on you?
[00:41:55] Joe: Very expensive. Doug, do you mind looking up what the interest rate is on Affirm if you miss the payment?
[00:41:59] OG: I mean, I would never do this, but, but, you know, to Jesse, to your point about, yeah, a $25 burrito, you probably shouldn’t do it, but what if it’s, like, everything for the entire month?
[00:42:07] OG: Your entire spending is $10,000, and you can get it all at 0% for the next year, or the next six months. It’s not a $25 burrito. It’s your gas bill, and your gasoline, and your grocery bill. And, like, why wouldn’t you… I’m, I’m just playing devil’s advocate here. I would never do this. Yeah. But, but, like, why not just spread it out and just, like, I could keep my $10,000 in my account at 4%.
[00:42:27] OG: I’m gonna make a few extra bucks.
[00:42:29] Jesse: Is it an unlimited credit limit?
[00:42:31] OG: I’m not sure.
[00:42:31] Jesse: That’s the other thing. I’m not… You
[00:42:33] OG: know what? I- I mean, for a guy like you, probably.
[00:42:35] Jesse: Maybe.
[00:42:35] OG: I don’t know. For the rest of us, we have limits.
[00:42:37] Jesse: Stop.
[00:42:37] Joe: Well, we also talked on Monday’s show about the idea of even with, even with credit cards, buying things that you might not need.
[00:42:44] Joe: Like, if you get used to using Affirm, don’t you think, Paula, there’d be a… Like, if you just get used to using Affirm and you see, oh, they take Affirm, like, aren’t you more likely to say yes to the purchase than if they don’t take Affirm?
[00:42:57] OG: They probably have, like, a magazine like SkyMall. They send you the Affirm-
[00:43:00] OG: the Affirm SkyMall magazine. You’re like, “I never knew that I needed a, a specific ice maker.” Makes Chick-fil-A ice.
[00:43:08] Paula: Well, I think that, Joe, to your question about, or I guess, O- OG, it was your question, what’s the difference, like, where do you draw the line? You know, a mortgage versus a burrito. I think the, the delineating factor is, is it an appreciating asset, or is it something that depreciates?
[00:43:25] Paula: Like, a burrito, uneaten, depreciates over time. Even
[00:43:31] OG: the ones that you do eat depreciate over time
[00:43:33] Paula: Yeah, exactly. Um, you know, clothing that you buy, like you, you talk about a car losing its value the moment you drive it off a lot. Clothes lose their value like the moment that you wear it even once, right?
[00:43:46] Paula: They, they lose the bulk of their value. Br- brand-new clothing, as soon as you wear it, now it’s suddenly used clothing, and it has just immediately lost a ton of its value. So a house is the one thing, of all the examples that you listed, even, even a car, a house is the one thing that you buy that is historically speaking, probabilistically, but not in all cases, but probabilistically likely to be an appreciating asset
[00:44:11] OG: I think that’s a good answer.
[00:44:12] OG: Yeah.
[00:44:12] Joe: I think so, too. Our last topic is the one … This one hit as we record this. It hit late last week, and I just found this amazing. CNN ran that this is going to be the first prediction market election that we’ve ever had. In other words, we’re not just electing people to all these different offices.
[00:44:32] Joe: There’s gonna be a ton of money on people predicting, AKA betting, who’s going to win, and Kalshi, the prediction markets platform, and there’s other ones as well, has become deeply embedded in 2026 midterm coverage, and it’s fighting hard in Washington to stay lightly regulated. Listen to this. Kalshi is valued right now at $22 billion, and they spent 1.8 million
[00:45:00] Joe: This is a record. They spent $1.8 million on lobbying in the first half of 2026 alone for Congress to leave them alone. It’s using the FTC federal jurisdiction to position itself as a financial derivatives platform. This is not a betting app, Paula Pant. This is a financial derivatives platform which lets it sidestep state sports betting and gambling laws.
[00:45:24] Joe: States in the traditional gaming industry say that’s exactly the point. It’s, quote, “indistinguishable from legal sports betting without any of the regulations or taxes.” Here’s some stats. Well, you know what? I’m gonna save the stats during this. But here’s the deal. Now Kalshi is petitioning the government so that you can now not bet, ’cause this is not betting.
[00:45:46] Joe: You can now borrow money, Jesse Cramer. You can borrow the, somebody else’s money to bet. You can let … Or excuse me, to predict, to predict where you think this is gonna go. What could possibly go wrong if now I can predict where things are using leverage cash? Sounds like I can make my win even bigger.
[00:46:10] Jesse: I mean, as long as I can spread those, uh, repayments out over, uh, a year at 0% interest rate, what’s the big deal, right?
[00:46:17] Joe: Repayments, you mean them repaying me. Them repay after I win.
[00:46:20] Jesse: Correct. And I, assuming that, you know, the, the Kalshis of the world and the buy now, pay laters of the world are kind of joined at the hip in some way so that I can … My, my margin is free, I, I would assume. I am the grumpy old man shaking his fist at the sky when it comes to these things.
[00:46:35] Jesse: Like, I just cannot believe we’ve come this far. And, uh, yeah, now that we’re calling outright gambling, we’re just calling it, like, options contracts I don’t know. It’s, it’s pretty perverse, and it’s just interesting to me that this gambling platform has a $22 billion valuation. Like, where does that valuation come from?
[00:46:53] Jesse: Where does that revenue actually come from? I know it’s maybe not my place to dictate how other people gamble their money, but it’s just, it just seems like such a perverse way to run a civilization, as they would say.
[00:47:06] Joe: It’s incredible, OG. They talk about, uh, they talk about this not being a gambling app, and yet on TikTok I see Calci ads all the time, and it’s always every Saturday, “Whoa, whoa, whoa.
[00:47:19] Joe: How is Ole Miss an underdog versus the University of Florida? How is this? I can’t believe that it is. Well, you know where I can predict on Calci that they’re wrong?” You’re like, wow, that sounds, that sounds a lot like DraftKings to me.
[00:47:34] OG: I do find it kind of interesting that you can guess on the price of gold in the next 15 minutes, and there’s a little countdown timer that shows how much time is left for you to guess.
[00:47:46] OG: Or what will the news reporter say on ABC News tonight? Like, you can literally gamble on anything that you want, is… Sorry, predict. You can predict market option trade, whatever the hell they’re calling it. Who’s gonna be eliminated on Dancing With the Stars in episode four? It’s a really stupid way to consume time.
[00:48:10] OG: That’s all I can say about it.
[00:48:11] Joe: Here’s the stats, OG, that I, I promised earlier. 51% of PredictionMarket’s users already, outside of the app, have borrowed money. Now you can do it inside Calshi, maybe, assuming that this goes through, right? You’ll be able to do it inside Calshi.
[00:48:26] OG: Well, if they’re saying on margin, though, wouldn’t that be like basically like gambling…
[00:48:30] OG: Sorry, investing. Sorry, option trading. What are we talking about? With your own investment money on top of your own investment money, so you get like a levered return? So basically, it’s like buying a fourplex rental property, right, Paula?
[00:48:44] Paula: Okay. I did some reading into the argument that they make as to how they call themselves not a gambling platform.
[00:48:53] Paula: The thesis of their argument is that in traditional gambling, you are playing against the house. So for example, if you think of like a craps table or roulette, right? You’re playing against the house, and so the house has an edge. And because the house, even if the house only has a very slight edge, the house can stay solvent for a lot longer than you can.
[00:49:18] Paula: And so the house’s longer duration plus the slight edge, even if it’s only 51 to 49, you know, it’s still at that slight edge, they can stay in the game without the risk of ruin long enough that the house always wins. And that’s how gambling works. And PredictionMarkets, the argument that they make is, well, you’re not playing against the house.
[00:49:39] Paula: You’re, you’re betting against each other. And so their thesis is in investment markets, people bet against each other all the time. Like, you have a buyer and a seller, and they can’t agree on what the price of cattle or oil or corn is going to be a week from today, and that’s why that you have a buy and a sell trade because two parties fundamentally disagree on the future price of that commodity.
[00:50:09] Paula: The counterpoint to that is if you are making a bet on the price of corn or cattle or oil, you have a whole lot of research and information at your fingertips. If you’re making a bet on who’s gonna be eliminated from Dancing with the Stars- … there’s no research that you can do. There’s no information. I- if there is information, it’s insider trading because you’ve got your buddy’s the producer.
[00:50:35] Paula: Other than insider trading, there is no edge that you can reasonably develop, and that, I think, is the fundamental difference. I’m sorry. I’m on my soapbox. What was the question?
[00:50:45] Joe: I like that soapbox because it does make me wonder in some of these areas-
[00:50:48] Paula: Mm-hmm …
[00:50:49] Joe: like if I do some homework, is it better than 50/50?
[00:50:52] Joe: Is there maybe a 70% chance of me winning, 80% chance of me winning if I’ve done some research into the, into the, uh-
[00:50:59] Paula: No. I think the inherent aspect of these prediction markets is assuming it is not insider trading, right? Assuming that you don’t have some kind of behind-the-scenes knowledge, then no, you don’t have an edge necessarily.
[00:51:15] Paula: You are betting on events that are completely random, and that is what distinguishes it from buying Lululemon or Nike or Coca-Cola, where if you were to spend long enough, like reading all of the SEC reports and the filings and all of the publicly available information, and you know. I mean, there are investors who like they want a deep, deep understanding of the soda industry in general and where the, where the beverage industry is gonna go, and they fly out there and they talk to executives, and they talk to employees, and they walk the floor, and they read beverage industry trade publications, and they really try to develop a deep knowledge of the space.
[00:51:55] Paula: And that knowledge becomes their edge. Philip Fisher, the investor, called it scuttlebutt. Scuttlebutt is basically talking to a bunch of people on the inside. Not insider trading, but just like talking to insiders to get the gossip so that- Get the feeling
[00:52:09] Joe: of the…
[00:52:09] Paula: Yeah Yeah. Get the vibe, get the gossip, get the feeling so that you, you develop a sense of where this space is headed.
[00:52:18] Paula: And by virtue of doing that, you can then make informed, educated bets. They are still bets, but you can make informed, educated bets on where the space is headed, and that’s what investing in a stock is or in a commodity is. And yeah, with these markets, you just don’t have an edge.
[00:52:35] Joe: Jesse, what’s the chance of winning in stocks in a given year?
[00:52:38] Joe: Just over 50%, somewhere 50-55%?
[00:52:42] Jesse: In a given year? Um, well, it depends. I, I guess if you own, like, a big diversified portfolio of stocks, then I think it’s, it’s closer to, like, three quarters. I think three quarters of all years are up. Something like that. And if you own an individual stock, I actually think your, your odds of success are less than 50%, just the way that the skewness of the stock market goes.
[00:53:03] Joe: Looking at some more of these Kalshi numbers, 79% of these people, 79% of the people who have done Kalshi are net negative over the last year. Yeah.
[00:53:12] Jesse: I, I was gonna share, if you don’t… I was gonna share… Yeah, I’m looking at an article from Inc., from May. Uh, this is Polymarket, not Kalshi. Out of more than two million users, fewer than 2,000 accounts, that’s 1/10th of 1%, fewer than 2,000 accounts took home 67% of all profits.
[00:53:29] Jesse: Wow. You’ve got a tenth of a percent who are dominating, and then you’ve got all the suckers who are doing nothing, and then there’s a quote later in the article from a former professional poker player and statistician who places 60 trades a minute and modifies his bids and asks 30 times a second.
[00:53:45] Joe: Oh, God.
[00:53:46] Jesse: And that stands in a sharp contrast to the young social media influence users that the platforms are actively courting, many of whom discover the sites through influencers p- promoting their wins online. Basically, it’s a whole bunch of poor fish- … against, you know- It’s like- … a tiny number of sharks who are just-
[00:54:01] OG: Just a couple of pros, and everybody else is a sucker.
[00:54:03] Jesse: Yeah.
[00:54:05] Joe: 18 to 21 year olds over the past year traded an estimated 5.4 billion, with a B, dollars on Kalshi. 18 to 21, that, that small demographic. But OG, hey, you know what? I mean, there’s some stuff we can learn from this. Gamify it, right? If you gamify your savings, if you’re in savings mode and you’re trying to begin getting the savings habit, turn it into a game.
[00:54:28] Joe: Make it fun. Make it, you know, have the, like, Cheryl and my weekly meeting, we have pancakes or wine, depending on what time of day it is. Put some music on, you know. Keep it to 20… Like, the gamification of Kalshi, I think is what’s driving the charge here.
[00:54:45] OG: Yeah. I mean, look, it’s, it’s a form of entertainment.
[00:54:48] OG: If it’s your vibe for a little bit of entertainment, have at it. If you’re trying to get rich doing it, you’re a fool, and it’s never gonna happen in a million years. Even the most safe bets eventually screw you, basically Uh, it’s, this is no different than going to the casino. Like, people go to the casino and they just have fun, drink a couple beers, play the craps.
[00:55:11] Joe: It’s great.
[00:55:11] OG: You’re, you’re enjoying what you’re doing, and you’re just… It’s social. This is not social, unfortunately, which takes away all the cool part of the casino, and you have the same outcome, which is you make a few bucks, and then you lose a bunch of money, and then you throw the app in the trash and go, “I’m never doing that again.”
[00:55:27] Joe: I love it every time I hear somebody call Kalshi investing. In fact, on Kalshi commercials, I’ve seen people go, “Oh, I invest $100 a day- … or I invest 50…” You don’t invest. What are you talking about? All right, three, three interesting headlines. What happens when the Fed moves? We covered that, thank you, guys.
[00:55:47] Joe: And then in the second half, buy now, pay later and predictive markets. Oh, boy. Oh, boy. Just if you’re using either one of these or if you have a friend using either one of these, I think you need to, to listen to Jesse Powell, an OG today. Doug, before we go to the end, I never came back to you. Did you get the number for buy now, pay later?
[00:56:04] Joe: What’s the interest rate on Affirm?
[00:56:06] Doug: I did, Joe. Actually, I’m confused, or let’s say I am, uh, a little bit skeptical because the source on my research is Affirm itself, but says, “Affirm does not increase your interest rate just because you miss a payment, and it does not charge a late fee. Your loan keeps the fixed APR you agreed to when you took it out,” and Affirm offers plans currently ranging from zero to 36%.
[00:56:31] Joe: Ah, so Jesse, you are partly right. You can do that. I see that Affirm charges no late fees at all. Klarna has a cap late fee of up to $7 or 25%- $7 … of the missed payment, whichever is lower. However, w- when you look at the numbers, the amount of money they’re making, a lot of people missing payments, Doug.
[00:56:51] Joe: There must be a lot of people- Yeah … missing payments. Yeah. That’s interesting. Well, I’m glad to hear that nobody on our panel is an expert in Affirm interest rates. Oh, I got that one from these jeans I’m wearing, right?
[00:57:03] OG: Hold on just a second.
[00:57:06] Joe: All right, uh, let’s find out what each of you guys are doing. It is the second weekend in October.
[00:57:12] Joe: What do you got going on, OG?
[00:57:15] OG: I am, uh, just coming back from, uh, a week of amazing golf in northern Michigan that, uh-
[00:57:22] Joe: Ooh, fall colors … I will
[00:57:23] OG: never invite Jesse Cramer to ever again. ‘Cause he turned me down once, and once you’re on the, uh, do not fly list, you’re on the do not fly list for life.
[00:57:34] Joe: Well, there you go, Jesse.
[00:57:35] Joe: You had your big chance. Better you than me, by the way. I I, I, but I, but OG says I wouldn’t get invited anyway, so.
[00:57:42] Jesse: It was hard to turn down, but, uh, you know, I, I had to
[00:57:46] Joe: make a hard- Two young kids at home.
[00:57:47] Jesse: Yeah, yeah, exactly. Yeah. It was just one of those ones where I know, I know.
[00:57:51] Joe: Spending all those chips to hang out with OG, I wouldn’t do it either.
[00:57:54] Jesse: I know, and now I’m on OG’s list for life, which apparently means we just can’t hang out. Like, oh, no. I don’t get to hang out with OG for the next 50 years? Oh, no.
[00:58:02] Joe: That is bad. That, that actually- … is worse than you know. You have no idea how, uh, after a few adult beverages, how OG becomes the, uh… W- well, let’s, let’s put it this way, he’s the king of karaoke at that point.
[00:58:15] Joe: Oh. Yes. I’m missing
[00:58:17] Doug: out.
[00:58:18] Joe: Right. Uh, Jesse, what’s going on at Personal Finance for Long-Term Investors podcast?
[00:58:23] Jesse: Uh, let’s see. Second weekend of October, we just released an episode inspired by a friend of Stacking Benjamins, uh, Dr. Daniel Crosby.
[00:58:31] Joe: What
[00:58:31] Jesse: a nice man. Uh, inspired by some of his research. Dr. Crosby’s on my list.
[00:58:35] Jesse: I gotta get him on the show sooner than later. He’s not on this particular episode, but I, I leveraged his research and just loved some of the stuff he’s put out there and, and so put out an episode based on some of his really cool kind of behavioral psychology stuff. It’s a good one.
[00:58:48] Joe: I thought you were gonna say, “We just use his, his research, and we don’t quote him, ever.”
[00:58:51] Joe: Geez.
[00:58:51] Jesse: Yeah.
[00:58:52] Joe: I have these interesting things from an unnamed source. And that’s at Personal Finance for Long-Term Investors, where only the finest podcasts are found, such as The Afford Anything Show.
[00:59:05] Paula: Yes, and on The Afford Anything Podcast, we have an interview with Jared Dillian. He was on the ETF desk at Lehman Brothers in 2008 when Lehman Brothers collapsed.
[00:59:15] Paula: Oh,
[00:59:15] Joe: something went bad there in 2008?
[00:59:17] Paula: Yeah. In one day he lost half a million dollars of his own money, and, uh, he joins us, he shares that story, talks about being at Lehman during the collapse, and then talks about how to reduce volatility in your portfolio.
[00:59:34] Joe: It just- I’m sorry. Somebody that’s lost just a ton of money becomes an expert in volatility.
[00:59:40] Joe: Yeah.
[00:59:41] Paula: Well, it’s, it’s ’cause he learned the hard way. No,
[00:59:43] Joe: sure.
[00:59:43] Paula: You know? Yeah.
[00:59:44] Joe: No, I’m laughing- Like he- … because it’s like, I’m gonna, I’m, this is never gonna happen again. Exactly. I’m gonna know more than any human being in this topic.
[00:59:51] Paula: Exactly.
[00:59:52] Joe: That’s great. Wow. Good stuff happening at the Afford Anything Podcast.
[00:59:57] Joe: Well, thanks to everybody who hung out with us on YouTube. You guys saw a fun episode today as we struggled to get the bus running, but we finally did. And if you know somebody who needs maybe some, uh, help because they’re constantly on their phone with the prediction markets or coming home with buy now, pay later stuff, you definitely want to cue them into this episode.
[01:00:17] Joe: Or somebody who has an interest rate decision coming up on a car loan, a CD maybe, or a mortgage. You’ll learn how th- all that works. All right. The one thing we know how this podcast works is this, Doug, what should we learn at the end of today’s episode? What should our takeaways be?
[01:00:36] Doug: Well, Joe, take some advice from Paula.
[01:00:38] Doug: There’s a decent chance that rates may continue to go up. If you’ve got some wiggle room in your monthly expenses, this may be a time when you can take some risk on an adjustable rate loan. Second, remember what Jesse said about uncertainties in investing. We may never see the ananamalanimonous, the anan- ananemone, the animalalic, animalistic low rates of 15 years ago.
[01:01:02] Doug: Locking in now can help stabilize your financial weirdness. But the big lesson, when Joe asks you to go do some research on a financial topic, he’s gonna take his sweet time coming back to you. He’s just trying to get you out of the room for a while so he can eat all the Cheetos. Thanks to the Jesse Cramer for joining us today.
[01:01:25] Doug: You’ll find Jesse’s personal finance for Long Term Investors podcast, or as we call it, the FLTI podcast, wherever you find podcasts like this one. Trust me, it’s out there. You’ll love it. We’ll also include links in our show notes at stackingbenjamins.com. Thanks to Paula Pant for hanging out with us.
[01:01:43] Doug: You’ll find her fabulous podcast, Afford Anything, wherever you listen to finer podcasts. And last and least, thanks also to OG for joining us today. Looking for good financial planning help? Head to stackingbenjamins.com/og for his calendar. This show is the property of SB Podcast, LLC, copyright 2026, and is created by Joe Saul-Sehy.
[01:02:08] Doug: You’ll find out about our awesome team at stackingbenjamins.com, along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. And oh yeah, before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know.
[01:02:27] Doug: This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s mom’s neighbor, Doug, and we’ll see you next time back here at the Stacking Benjamins show
[01:02:47] bit: Why do you suppose they call that a novelty act? I don’t know, but it wasn’t too bad. Well, that’s a novelty.
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