2.20.20 Side hustles becoming more popular; Car dealerships faking income to sell cars; Extended warranties

California has passed a law requiring gig employers to classify most workers as employees vs. independents. A Gallup survey reveals this may be a mistake. Over 90% of tax filers have W2 income. One in 4 workers has a side gig in addition, in order to earn more money. Half work extra simply because they want to. More tax filers than ever are working side hustles in addition to regular income. There are cases where large companies lay people off to hire independent workers to avoid paying benefits. But for the most part, we're doing side jobs for the money and by choice, so it's likely best to keep government regulation out of side job classification. Perhaps in trying to do the right thing, California did the wrong thing in this case. Workers are driving the trend in supplemental self-employment. According to the NYT story: "Some politicians and places, like California have sought to curb self-employment, on the theory that employers have created the gig economy in an effort to evade their tax and regulatory obligations. The reality is more complicated."

It's gotten difficult for dealers to sell vehicles and they're desperate. So fraud on loan applications has become a big problem that could land you - the buyer - in jail. Dealership finance departments are more tempted to put down false incomes, that the buyer unwittingly signs. The WSJ reports nearly 1 in 4 auto loan apps have inflated income numbers to facilitate approval. Remember, you're on the hook if later you can't pay and they say you lied about your income. If you're working a deal, read the paperwork and don't sign your name to a lie on income, because you could end up as a defendant. 

Long time listeners know Clark despises extended warranties. These are peddled mostly on electronics and appliances, but can extend to products like running shoes! Clark has new math on TV warranties, heavily pushed by retailers. UPA and Northwestern University research found that people assume things will break often, so at least 1 in 5 consumers will buy into the "protect your investment" warranty pitch, paying 1/4th the cost of the item extra on average. Over a 6 year period, these researchers tracked 45,000 TV purchases. The fail rate was roughly 5 out of 100. So people are spending 25% more for a 5% fail rate. NOPE. Electronics are far more reliable than we realize. The failure rate on appliances is higher, while the warranty purchase rate is lower. We're not as excited about appliances. Either way, forgo warranties. You're better off paying for repair or replacement than for warranties. These purchases are not investments. They're consumption. 

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