This Week In Your Wallet: Your Costco Shopping List - Paper Towels, Cereal…And Gold?

This Week In Your Wallet:
Your Costco Shopping List - Paper Towels, Cereal…And Gold?

As often as we cover the gender pay gap at HerMoney — and we cover it a lot for the reasons you might expect — there isn’t generally much to celebrate. That changed yesterday as Harvard University Professor Claudia Goldin took home the Nobel Prize in Economics for, as the Stockholm-based committee stated, her work putting together “the first comprehensive account of women’s earnings and labour market participation through the centuries.” As the AP aptly remarked: “Fittingly, the announcement marked a small step toward closing a gender gap among Nobel laureates in economics: Out of 93 economics winners, Goldin is just the third woman to be awarded the prize and the first woman to be the sole winner in any year.” Kudos, Professor Goldin! Thank you for the work you’ve done and continue to do.

Inflation Isn’t Keeping Experiential Spending Down

For many, it’s gotten harder to make ends meet. Thanks to inflation, costs of almost everything are up. Interest rates have skyrocketed. For tens of millions, federal student loan payments have resumed following a three-year pause. Despite it all, spending was up 5.8% in August compared to the year before. What’s surprising is Americans aren’t just spending more on life’s necessities, but instead, on experiences. As the Wall Street Journal reports, that sector of the economy went gangbusters over the summer, with Delta Airlines reporting record revenue in the second quarter and Ticketmaster selling more than 295 million event tickets in the first six months of 2023.

“A tough housing market has more consumers writing off something they’d historically save for, while the pandemic showed the instability of any long-term plans related to health, work or day-to-day life,” explains Rachel Wolfe for the Journal. “So, they are spending on once-in-a-lifetime experiences because they worry they may not be able to do them later.” That was the case for Josh Richner, who cut back on saving for retirement to take his family on a $7,000 Alaskan cruise. “I just hit a point where the thing that we had been talking about maybe hopefully doing some day, we’re going to do it now,” he says. “I’m not going to worry about money anymore. I don’t have it in me.”

Is this the new normal? Experts say it’s too soon to know. “Consumers might not be able to keep splurging forever," writes Wolfe. “Labor strikes and student loan repayments could both lead people to pull back. Rising gas prices could also deter travel.” Time will tell whether the spending surge is here to say, but in the meantime, I’d love to hear your thoughts. Are you putting off saving for bigger goals to enjoy life now? Tell me about it, here.

A New Hurdle When It Comes To Home Buying

For many people, getting a mortgage was just one of the boxes that needed to be checked before you buy a home. These days though, that’s not the case. As Jared Mitovich reports for CNBC, last year, the number of loan applications denied by lenders for “insufficient income” hit highs not seen since 2018.

As Mitovich explains, lenders are looking for applicants to meet what they call the 28/36 rule. “Ideally, your mortgage, property taxes and insurance should represent less than 28% of gross monthly income, and total debt — including your mortgage, credit cards and auto loans — shouldn’t exceed 36%,” he writes. Higher mortgage rates, increasing home prices and of course, inflation, have made that ratio much harder to achieve for many potential homebuyers.

If a new home is in your future, before you start shopping around, figure out your “DTI” or debt-to-income ratio. “If your overall monthly debt, including auto loan, student loan and mortgage payments, totals more than 40% of your total income, you have a greater chance of being denied,” Ted Jenkin, CEO of oXYGen Financial tells CNBC. “If that’s the case, you may need to adjust your housing expectations.” At what point will mortgages start to become easier to qualify for again? According to Zillow research, 6%.

Your Costco Shopping List: Paper Towels, Cereal…And Gold?

There’s a new item Costco can’t seem to keep in stock: Gold…gold bars, to be exact. Recently, the members-only warehouse chain began selling one ounce gold bars exclusively online and they continue to sell out. On an earnings call last week, Costco’s CFO, Richard Galanti shared that the bars, which go for just under $2,000 when available, are “typically gone within a few hours” of being listed.

What’s behind Costco’s gold rush? As the Associated Press reports, “recent bank failures, inflation and individuals’ concerns about the U.S. dollar, for example, can cause some to start looking for alternative places to park their money.” But is it wise to buy gold? It depends on who you ask. Some say there’s value in having “tangible” investments. Others, like David Wagner III, head of markets and equities at Aptus Capital Advisor, who the AP spoke with for its report, believes it to be “one of the worst things that you can ever own.” Investing in precious metals can be risky, and as the Commodity Futures Trade Commission warns, “when economic anxiety or instability is high, the people who typically profit from precious metals are the sellers.”

If you’re thinking about going for the gold, experts can’t stress enough the importance of getting up to speed on safe trading practices. Those new to buying could be an easy target for scammers and will need to be extra aware of people who may try to sell you counterfeit coins or bars.

…And ABC Strikes Ratings Gold With Its First “Golden Bachelor”

And now, another type of gold, “The Golden Bachelor.” The reality franchise, which typically features attractive 20-somethings looking for love, decided to switch things up this season. The new bachelor is Gerry Turner, a 72 year-old widower seeking a second shot at romance. People, not surprisingly, are into it, with the show’s series premiere drawing record ratings for ABC and Hulu.

While the show is a guilty pleasure for many, as CBS News reports, there’s a lot more to it. At its core, it’s an attempt to cater to a very important and growing demographic…Baby Boomers. “Too often they're portrayed as clueless about tech and baffled, especially in commercials,” Alain Wolk, co-founder and lead analyst of TVREV, a media and TV analyst group, tells CBS News. “So showing them in a light where they are sexy and have lives is a smart move to remind advertisers this is who is watching shows, and these people have a lot of money.”

A good opportunity for advertisers, yes, but as Roxanne Roberts writes for the Washington Post, the cast of “The Golden Bachelor” is also showing people their retirement years can be the best of their lives. “They’re not looking to buy their first home and start a family and figure out their careers,” showrunner Jason Ehrlich tells the Post. “They have fully realized lives that they have been living, and they’re looking to really have a companion to live out — as Gerry would say — the fourth quarter of their life with. And, as Gerry would also say, that’s the best quarter.”

Have a great week!

Jean

HerMoney Media, Inc. ("HerMoney") is not a client, agent, representative or affiliate of Edelman Financial Engines ("EFE"). EFE is a sponsor of the "HerMoney with Jean Chatzky Podcast," created by HerMoney. HerMoney receives a sponsorship fee from EFE depending on the number of podcast downloads, which is paid on a quarterly basis each year. In turn, HerMoney also provides promotional deliverables regarding EFE on the HerMoney podcast, newsletter, and social media channels. Due to this sponsorship arrangement, HerMoney has an incentive to endorse EFE and its services.

*The HerMoney podcast is proudly sponsored by Edelman Financial Engines. Unlock your wealth potential with our sophisticated wealth planning. Continue your journey at EdelmanFinancialEngines.com. Sponsored by Edelman Financial Engines – Modern wealth planning. All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM3082631.

We maintain a strict editorial policy and a judgment-free zone for our community. We strive to remain transparent in everything we do. Website posts and newsletters may contain advertisements, links and mentions of products from our partners. Learn more about how we make money.