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The process of buying or selling real estate can be intimidating and overwhelming to both the first-time and experienced buyers. Today we talk to our agents, Dean and Gerard from GD Group Moves Real Estate in Hoboken, NJ about the anatomy of a real estate deal. Every market is a little different, so if your looking to buy or sell a home in your area, you should talk to a real estate agent in your community. In this episode we will cover some of the important things to know before going into one of the largest financial transaction of your life. Choose Your Agent Wisely Buying or selling a home has a lot of steps, mountains of paperwork and a ton super important decisions so, you want to make sure you choose an agent who will be on your side and able to guide you through the process. Don’t fall into the ” I know a guy” trap. Just because you’re best friend’s Uncle is an agent in the neighborhood doesn’t mean he will be the best at marketing your property or negotiating a great deal. You need to do your own research. Start by looking at agents in your neighborhood with good reviews. Zillow is a great place to start. There you can check out the premiere agents in your area. Once you find an agent you are interested in working with, you’ll need to learn out a little more about them. Ask them questions about their professional experience and track record. Think of it almost as a job interview, you want to hire the right person for the job. It is also an excellent way to get to know them and gauge compatibility. It’s a long process so you don’t want to work with someone you don’t get along with. Here are some important questions to ask before choosing an agent. * How many properties have you sold last year/this year? Many real estate agents work part time to make extra cash but you really want someone who is doing this full time for many years with a lot of experience. If you are a buyer, you’ll want someone who can show you new listings ASAP. If you are a seller, you’ll want an agent who is always ready to show your home to buyers. So if you had a choice between someone who sold 5 homes last year compared to 50 homes you know what the clear choice is. * How long have you worked in this market? You’ll want an agent who knows the area inside and out and may even be part of local networks. For buyer and seller agents, neighborhood expertise is a must. Also, the real estate market is always changing so it is important to find someone who is up on the current trends. * Do you have a team? There are many people involved in one real estate deal – lawyers, inspectors, agents, appraiser, etc. With all of these moving parts you need to make sure no one drops the ball. If your agent has a team behind them all the transactions will move smoothly. * What kind of marketing do you do? If you’re selling a home, marketing is a key. By increasing exposure of your property through online marketing, you can grow your buying pool dramatically. Asking your agent on how they plan on getting the word out about your property is a must. Running Facebook, Google or Zillow ads can really help reach your potential buyers. What Sells a Home? There are two important things when selling a home, marketing, and pricing. Doing both of these rights will open the market to 100% of your potential buyers which will get you the best price as quickly as possible. Also, taking professional photos of your property is super important. If your place doesn’t look great online, it’s going to get overlooked. Dean and Gerard got their photographer in to take photos of our listing and the place looked A-MAZING on Zillow. We couldn’t even believe it was our apartment. Learn more about your ad choices. Visit megaphone.fm/adchoices

The guys tackle five great listener questions today. For full answers listen to the episode below. Question One Longtime listener, quick question. I currently put about 25% of my income toward my betterment retirement fund. I rent now but eventually would like to buy a house within the next 10 years. Should I go 15% retirement and 10% home? I would create a new betterment account rather than keeping all in one. Let me know what you’d do. If you are able to save 25% of your income then you are definitely on the right track! The split of the savings really depends on your situation, the percent is arbitrary. What is really important is if x% is enough to reach your retirement and other goals. Taking into consideration how much you make, what kind of raises you can expect in the future and how much of a down payment you’ll need to purchase a home, will help you figure out if 10% over 10 years will be enough for the kind of home you would like to buy. You also need to figure out if saving 15% a year is enough for the retirement your looking for. Question Two Hi Guys- I’m 26, in sales (salary plus bonuses) and also work at a restaurant every Saturday. My salary is $42,000, and my bonuses usually total $5,000 per year. Serving money obviously fluctuates, but let’s say its $130.00 a week on average. (520/mo ~ $6/yr) = total $53k I have $3,300 in credit card debt and paying that off is my immediate financial goal. I’ve tightened my budget and am using the money i’m saving there plus my serving money to pay that off. Basically, i’m throwing every extra dollar I have at that debt. My question is what should I do when I pay that off. I have 19k in federal student loan debt, but I have friends and co-workers who say thats “not bad debt” and I should start saving for a house/investing my money instead of putting all my resources into paying that off as quick as possible. Any thoughts or suggestions will be greatly appreciated. Thanks again guys. We get this question a lot and most of the the time the answer is pay off your student loan debts after you you have suitable emergency fund in savings. You can’t wipe out your bank all accounts to pay off your debt. Leave yourself some breathing room and make sure you have some money saved up for any unaccepted bills or situations. Also depending on your debt interest rate, it might be ok to start investing. If you have a low rate (3.8%) putting a little into the market is ok. If you have a high interest rate (7%+) the 19k in loans will become 21, 22, 23k if not paid down quickly. The market average is 7% so if your loans are 7% or higher mathematically it’s a better choice to pay off debt first and fast. The freedom you feel when it’s all gone will be worth it. Question Three I am 31 years old and married. My wife and I make about 80k per year combined and live in Colorado. I contribute to my employers 401k up to match each year. I have an online high yield emergency fund account with about 10k saved. We only keep about 5k in our checking account to pay off the credit cards and mortgage payments each month. Here’s where it gets interesting: When I was a child I inherited a large amount of money, around 250k which was set aside until I was 18. Since then it has been in a portfolio of mutual funds actively managed by a financial advisor. The returns have been a meager 4% since 2004. This is where I’m concerned after hearing about the awesome returns you guys have been getting through betterment and vanguard. My financial advisor seems to be making a lot of money off me in quarterly fees (about 2500 per year) with very minimal returns compared to what I could be doing with betterment and vanguard. So my question is, what you would you guys do with the 250k? I always thought I wasn’t financially capable of actively... Learn more about your ad choices. Visit megaphone.fm/adchoices

Small businesses are a big part of our country’s economic growth, so you would think the government would make starting a business as easy as possible. Of course, this is not the case. If you need a business tax strategy- listen up. You might think coming up with a great idea and creating a solid business plan would be the most difficult part- that is until tax season comes along. Today we talk to expert business tax planner Diane Gardner about the importance of having a well thought out business tax strategy. After filing mountains of tax returns, Diane works as a coach the rest of the year using pro-active tax planning to help her clients keep more of their hard-earned cash. She loves creating business tax strategies to help successful entrepreneurs across the United States pay the least amount of income tax they can legally pay. Don’t Half-Ass Your Taxes If you are planning to start a small business, it is critical you research all of the federal, state and local requirements. If you don’t cross all your T’s and dot all your I’s it will cost you. There are many regulations and the rules that can vary between locations and business structures. Find out what your state requires and how often you need to file. Business taxes need to be filed throughout the year, not just during tax season. This can be challenging, so if you don’t feel comfortable submitting them on your own, there are companies out there that can take care of this for you (of course at a cost). Not filing your taxes properly can cost you and your business a lot of money. Believe me; Listen Money Matters has had their fair share of fines. Like us, many business owners starting out choose to file their taxes using products like Turbo Tax and that’s a huge no-no. Although products like Turbo Tax work ideal for simple personal taxes, using it for business is not a good idea if you don’t know what you are doing. If you have done your taxes before and fear you may not have done the best job, no fear! You can revise your returns for up to three years. Anything before that you can kiss well. Consider it a donation to your country. A good rule of thumb is to save all your tax paperwork for at least seven years in case of an audit. Structuring Your Business When starting a business, you’ll need to figure out how you will structure your company (partnership, LLC, S-corp, C-corp, etc.awesome). Choosing a company type can be a great tax planning tool and can come with impressive tax advantages. It will also protect you from any liabilities such as a lawsuit. This part can definitely be confusing so consult your attorney to figure out what would work best for your business. Most likely you will want to go with an LLC because it can act as a Sole Proprietor, S Corp, C Corp -basically anything. However some states are not LLC friendly, like California, so do all your research before filing. The image below links to a great infographic that will help you understand the difference between each structure. Moving From Hobby To Business Most people are not making millions when they first start out. Actually, most are making nothing or close to it and that’s ok. When you are still working on growing your business it can be referred to as the hobby stage. So when does it go from hobby to business? You may have heard that after three years if your company has not made any profit it will be considered it a hobby and not a legitimate business. This is a myth. After a few years with no profit, the government will look at each business case by case to see if you have a well-conceived business plan they show intention to make a profit... Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s been a while but we are back with our Better Know a Millionaire segment and today the guys talk to an entrepreneur, speaker and house painter Matt Shoup. Matt has an incredible story from being six figures in debt to becoming a millionaire. There were many ups and downs on his journey of success. Listen to hear how he started his business with a hundred dollars and how a customer’s baby ended up completely covered in paint. Yup, true story. From early on in his life, Matt had that entrepreneurial spirit. At the age of 10, he was shoveling snow for extra cash and started his first business selling candy out of his locker. He started to hustle in college when he joined College Works Painting where he received training on how to run a successful painting business. After training, it was up to him to grow his business and began simply by knocking on doors around the neighborhood selling his services. Before he knew it, Matt as making a six figure salary at 22 years old. The problem was he was also spending a six figure salary and then some. Two times his salary to be exact. He spent a lot of going out with friends and partied – but it didn’t stop there. After graduation, Matt got married and bought more house than he could afford to put himself in even more debt. Around the same time, he also left the painting business to find a “sexier” job and became an employee of a mortgage company- real sexy ;). He soon realized he hated it and didn’t like the practices that were going on. It was too corporate. The bank culture wasn’t for him, and the morals were too sketchy. On a March afternoon in 2005, his life came to a crashing halt after getting fired from the bank, and he stood in a parking lot with all he owned in a bankers box. Now a jobless 23 year old with $172,000 in debt he realized he had to get his shit together. Matt made a decision that changed his life forever. With the last $100 to his name Matt started M&E Painting Company. He made thirty bucks worth of business cards and just like he did in college, began knocking on doors and hanging out in the Home Depot paint aisle looking for work. After working his ass off and living as minimally as possible for three years, Matt was able to get himself out debt. He was able to breathe again and start saving for the future. He decided to grow M&E Painting into a multimillion dollar business and become financially free as fast as possible. Now in 2016, it has become one of the fastest growing companies in Northern Colorado and the United States. Show Notes Become an Award Winning Company -Matt’s Book Matt Shoup -Matt’s website Founders Brewing Company Porter Learn more about your ad choices. Visit megaphone.fm/adchoices

You often hear “overnight” success stories when it comes to people who have quit their jobs to start a business, but it doesn’t happen that way. It takes a lot of work and planning to get there. If you’re fed up with the 9-5 grind, you may have considered starting your own business. We did it and you can too. We’ll show you how to quit your job and actually start a business. Know what you’re getting into before leaping from your cushy paycheck to starting your own business. The Bar Has Never Been Lower If you want to start your own business, it has never been easier or less expensive to do so. The internet and all of the tools it has opened the possibility of starting a business to almost anyone. Funding can be raised on Kickstarter. An online store and drop shipping website can be created with Shopify. You can target local customers with Facebook ads; you can take credit card payments on your cell phone with Square, you can outsource payroll and other HR stuff to Paychex Flex. What is Your Passion? I don’t believe that you have to be crazy passionate about something to create a successful business around it, but you do have to enjoy to some extent what you do when you start your own business. Why? Because you are going to spend a lot of time doing it and if it’s something you hate, you won’t be able to stick with it long term. You can stick with a 9-5 you hate if you’re making enough money or can go home and not have to think about work until the next day. But starting your own business is so all-consuming that there is no getting away from it, at least in the beginning so while your business doesn’t have to be your one true love, you can’t hate it either. Before You Bail Quitting your 9-5 job to start your own business is not just taking a plunge, it’s more like submerging yourself into a whole new world. It takes a ton of planning, and there are many considerations. Is it Realistic? Take your product or service for a test drive to see if people will pay for it, don’t go all in cold turkey. Test, test, and test again. Don’t sink $50,000 into making cat sweaters only to find out cats don’t get cold. Do small trials, see what works and what doesn’t and make corrections based on those findings. Make it Official If you haven’t already done it, make your business legitimate by setting up an LLC or S Corp. Legal Zoom makes this process easy. Becoming legit also lets you take advantage of the many tax deductions that are available for small business owners. Not a Unilateral Decision If you have a spouse, you can’t decide to quit your job and start your own business without their approval and support. Presumably, your spouse knows that you have been working on your own business for some time. Before you tell them you are ready to quit your job to work on your business full time, make sure all of your ducks are in a row and show them. You have a runway; your business is already making enough to support you without your 9-5, you have health care lined up, quitting means you will have more time to spend together. Whatever qualms your spouse has, you need to have an answer for. If they are not on board, you may not be able to quit yet. If that is the case, ask them what they need to feel comfortable with your decision to quit. And then start working toward that. Set Some Benchmarks Set a series of goals for yourself and don’t quit your job before you reach them. You need to be free of credit card debt; you need to make enough money each month to pay your rent or mortgage for six months in a row, Learn more about your ad choices. Visit megaphone.fm/adchoices

Our listeners send in some great questions, and today we are going to tackle five of them. We answer five questions about down payments, debts, IRAs, 401k fees, and investing during a chaotic period in the stock market. You asked, and we answered your five questions! Question One Hey Guys- My fiance and I are getting married next month, and we are trying to get our finances in order as we plan to buy a house. We are looking for something in the $300K range in about two years and will have minimal savings following the wedding. However, we also have about $100K in student loans, with varying interest rates from 4.5% up to 7.6%. With proper budgeting, we think we can save about $70K over those two years. Would it be better for us to save all of it for a 20% down payment and closing costs? Or should we use the first $30K to pay down the highest rate student loans and use the other $40K for a 10% down payment and closing costs, knowing that we will have a higher interest rate, PMI, etc.? The first thing you need to do is consolidate your debt and refinance any student loans you might have. Lowering your rates and monthly payments will help you make ground quicker. If you go with a variable loan that extra percent off your interest rate will help you gain 2-3 years of progress. Don’t overextend yourself. Rent until your loans are paid off before you even start thinking about buying a home. Your debt will factor into getting your mortgage loan. As for a smaller down payment, without 20% down you will basically throw money away with PMI. Question Two Hey guys- I’m currently trying to save for a house with my partner, and while she has a substantial amount for a deposit, I have near to nothing. We really want to buy something in the next year and a half. I might mention too that I have a bit of credit card debt….($8000) I earn abut 1400 a fortnight. I know it might be a broad question but what do you suggest I do to be able to get on top of everything? Do you think it is smart to take out a loan to consolidate the credit card debt? The short answer is yes. Take out a loan to consolidate your debt. The interest rate will be so much better than the credit card interest you are paying. There are many companies that can make the process painless like Sofi, Lending Club and Prosper just to name a few. If you plan on taking out a loan remember that there is a loan origination fee that will be a percentage of the loan amount. It will be different between companies. Do the math and be sure the fee is worth the amount you will be saving in the long run. Question Three Hi- A little background on myself… I am 25 years old with my career being in Chicago, IL. I am working to get to the point where I am saving 15% regularly through 401K, the match, and Betterment IRA. However, you all talk a lot about retiring earlier than the old school 60 years old and such, which sounds amazing. Ha. My question is: With the goal of continuing to add more money into my accounts as my salary increases and retiring as early as possible, is it better to invest my money into a Betterment Roth IRA or Betterment General Investment Account? Pros? Cons? Thoughts? Suggestions? If you are planning to retire early, Learn more about your ad choices. Visit megaphone.fm/adchoices

What features do novice and experienced investors get from Wealthfront? How does Wealthfront stack up against the other Robo-Advisors and what sets them apart? We’ll be answering these questions and more in our Wealthfront Review. Luckily (or skillfully) we got an interview with the Wealthfront CEO Adam Nash. After doing our research, chatting with him for nearly two hours and then doing a metric ton more research we’ve got a pretty good idea of where they stand in the Robo-Advisor space. Wealthfront has more than earned their spot at the table. Remember the epic rap battles with the East Side vs the West Side? Sharks vs Jets? In the Robo-Advisor space that’s Wealthfront vs Betterment. Wealthfront is a San Francisco startup with a boatload of funding and Betterment is an NYC startup with an equally large boat filled will funding. If you’re on the east cost you probably know more about Betterment, if you’re on the west cost, the same is probably true for Wealthfront. We’re based out of NYC (ok, fine, Hoboken) so you’ve heard us talk more about Betterment. Now it’s time for you to learn about what’s been happening on the other side of the country. Robo-Advisor’s are competing for my money? If you’re as excited as I am that there is another serious competitor on the scene, this review is for you. In this review we’re going to break down the good and the bad sides of Wealthfront as well as suggest where it might be able to fit into your portfolio. Hint: It might have something to do with the free part. A Quick Look Wealthfront’s pricing and feature set is very straight forward. * Everything below $15,000 (for LMM fans) is managed for free. Ideal for the beginning investor. * Minimum balance is $500. Instead of charging a rather high percentage fee for beginning investors, they set the low bar at $500 and once you’re in it’s free as per point #1. * Tax Loss Harvesting for everyone. Not only will they capture your losses to offset taxes on your gains, everyone has the potential to benefit here. Even the $500 investor. * Advanced features for accounts above $100,000. With features like Direct Indexing you stand to make quite a lot more through economies of scale than you would below that price threshold. * Portfolio Review is the optimization tool you’ve been dreaming of. Want to avoid some capital gains on your existing investments while slickly transferring that money over to Wealthfront for better management/diversification? That’s what Portfolio Review is – more on that later. * Path – Financial Planning Experience. Path connects to all of your outside bank and brokerage accounts to give you an accurate and real-time view of your finances. Their PhDs handled complex calculations on the backend to show you how saving and spending impacts what you will have in retirement. * Wealthfront’s Portfolio Line of Credit. Portfolio Line of Credit is available for any Wealthfront client with an Individual or Joint Wealthfront account valued at $100,000 or more. You can request cash up to 30% of the current value of your Wealthfront account and they you’ll receive it as quickly as 1 business day. Learn more about your ad choices. Visit megaphone.fm/adchoices

We all need and use money nearly every day of our lives but do you know where it comes from? Today the guys cover payment history, the creation of money and how it affects our economy. The IOU Economy You can’t talk about the creation of money without first talking debt. As most of us might think, money was created to make paying for things easier, but that is not the case according to the book Debt by David Graber. The exchanging of goods was always based on debts from the beginning. Let’s say a caveman needed some berries. He wouldn’t go to his neighbor with two goats and try and trade for five bags of berries. Instead, they would give two goats expecting the other person to repay them at a later time. Their economy was not quantified by money but debts to each other. Think about it as using ious like a currency. The use of money came about during war, and new empires were being created. There needed to be a way for soldiers to buy the things they needed in other lands without owing a debt. A Brief History Of The U.S. Monetary System In the United States, dollars used to be backed by some amount of silver or gold, but now money is not supported by anything except faith. Let’s start with the Panic of 1907, a financial crisis that took place when the New York Stock Exchange fell almost 50%. In the course of the three-week period market collapsed, stock prices tanked, and there was a massive run on the banks. The Treasury provided over $30 million in aid to the situation, and with the help of J.P. Morgan and others worked to channel money from healthy banks to weaker ones bring confidence back to the financial market. The aftermath of the Panic prompted the created of the Owen-Glass Federal Reserve Act in 1913. You guessed it; the Federal Reserve System was created. The Fed is NOT government owned but a federally sponsored banking cartel. It’s stock is held by member banks, and it’s licensed to lend money into existence. At this point, we were still backing out money with gold, but one disadvantage of a gold standard is that the size and health of a country’s economy are dependent upon its supply of gold, not the resourcefulness of its people and businesses. So, in 1933 Roosevelt takes US citizens off the gold supply. The Fed seizes all the gold, and exchanges are for 11 billion dollars in currency out of thin air. Yes, it’s like magic. After the wars, U.S. keeps increasing dollars to gold ounce ratio until Nixon closes the gold window in 1971, which removes the monetary system’s last physical limit. All global money is unbacked. Now nothing requires U.S. Dollar to remain the reserve currency, and anything does not back it. How Money Is Created It is pretty simple. The Fed creates money out of thin air in exchanged for government debt (bonds and notes). Let’s say Company X is asking the Fed for ten million dollars. All the Fed has to do is add a booking entry and POOF! A check is written out to the company, and the Fed get a bond. Only 3% of our currency is paper money and coins. The rest is all just bookkeeping. The U.S uses this debt-based money system so when money (debt) is created interest needs to be paid. To pay this interest, the money supply has to keep being expanding to perpetuate the modern banking system. At a minimum, each year, enough new money must be loaned into existence to cover the interest payments on the previous years. Each and every year, it must grow by some percentage. By design, it’s exponential, Learn more about your ad choices. Visit megaphone.fm/adchoices

Everyone wants to make money, it’s usually what turns people on to personal finance. Today we’re going to teach you how to make more money in the sharing economy – on your own terms. Uber brought this concept mainstream and as a result, it’s sometimes called the Uber Economy. The idea at its core is that there is slack in our economy – resources that are not being utilized. Your car parked in the garage. Your brother’s carpentry skills. The free time of a math honors student. The goal of the sharing economy is to monetize this slack and provide income to those who would have otherwise been beholden to a 9-5 schedule and boss. Now, you can get paid for work and pick some people up during you drive home to make a few extra bucks. The best part about these sharing economy jobs is that often money doesn’t directly change hands. It’s all handled digitally which allows for you to focus on your task at hand and for your clients to focus on the work you’ve completed. Uber is just the most discussed service in this new economy. With it, you can get in your car, turn on the app and wait for taxi requests to come in. If you’re ready, you accept someone’s request and you’re off. It’s also important to know the difference between Uber, and its biggest competitor, Lyft. Laura and I have used AirBNB very often when we go on vacation. We’d rather stay in a local neighborhood and get the feel of where we’re visiting than the impersonal feel of a hotel. It’s pretty awesome because you can get a big place with keys to enter and leave as you please for a fraction of the cost of a hotel. The only thing you have to give up is having a stranger enter your room while you’re not there to fluff your pillows. I always found that a bit creepy so we’re happy to pay less for that not to happen. There is also a lot of money to be made renting your home out on AirBNB. If you’re going to be away on vacation or a business trip you should absolutely make some money on your place while you’re gone. AirBNB is an awesome service for that and they automatically insure your place for up to $1mil in damages so there’s nothing to worry about. With Handy you can signup for handy-man type work around your neighborhood. Have free time on a Saturday? Install someone’s ceiling fan. Learned plumbing from your Dad? Install a bathroom sink for someone close by. Since you set your prices and compete against other people’s quotes it’s recommended that you start low, get a few successful jobs under your belt and then increase your price. Complete odd-jobs via TaskRabbit like picking up groceries, waiting in line for a new iPhone, cleaning someone’s home or helping them run a party. According to peers.org, the average TaskRabbit hourly wage is $48 an hour. Perhaps the most interesting job was that of a professional “looker”. There’s a need for people who are buying things across the country and can’t be there physically to have an impartial 3rd party verify its condition. With WeGoLook you can either hire someone or be hired to do just that. Take pictures of a car someone is looking to buy for them, or, hire someone to go check out a rental home you’re looking t... Learn more about your ad choices. Visit megaphone.fm/adchoices

We have all asked ourselves at some point, do I need life insurance? You’re young and healthy, nothing is going to happen to you, right? Sorry to be a debbie downer, but the reality is anything can happen to you at anytime. Will someone suffer financially once you’re gone? Will your family be able to afford mortgage payments and other living expenses? Funerals are really expensive, will they be able cover the cost? If the answer is yes to any of those questions, then it’s probably a good idea to look into an insurance policy. Life insurance will help replace your income so your family can meet important financial needs if you are no longer around. This week we have Francois de Lame from PolicyGenius on the show to answer our questions about life insurance. Who Needs It? You’re Married Most people start to think about life insurance when they get married because they are starting a life another person and building a future together. If something happens to you, will your spouse’s income be enough to pay off debts and cover living expenses? If you are the breadwinner, your partner could find themselves in a really bad financial position if they are left with good amount of debt- like a mortgage or students loans, for example. You Have Kids For most families two incomes are necessary to make ends meet. If you died suddenly, could your family continue their standard of living on one spouse’s income? Would the plans for your children’s future, like going college, be affected? Even if you’re planning to have children soon, you’ll want to buy life insurance now before the pregnancy. Prices can go up. Getting a policy will insure they can still have the future you saved for even if you are not around. You’re a Single Parent If you are a single parent and don’t have life insurance stop reading this and look into getting some right away. With so much responsibility resting on your shoulders, you need to make sure you have insurance to protect your children’s future. Although it is super important, only about 4 out of 10 single parents have life insurance. The ones that do usually need more. As the sole breadwinner and caregiver, your children depend on you and only you. What would happen if you were no longer around? You’re a Stay-At-Home Parent Just because you don’t get a paycheck every week doesn’t mean you don’t make an important financial contribution to the family. Besides taking care of children, there are so many other important tasks and the value is often underestimated. Average cost of daycare in NYC tops $16G. It’s the largest annual household expense for many families leaving them struggling to find affordable care. Without the stay at home parent around, the cost of living significantly increases for the other parent, Life insurance can help your family preserve their quality of life. You’re Single Most single people don’t need life insurance because no one depends on them financially. However, don’t wait too long to get a policy. It’s much cheaper to get a policy when you’re young and healthy. In the insurance world, the older and less healthy you are, the more you pay for insurance. If you are providing financial support for another family member like a aging parents or a sibling you may want to consider life insurance when you’re single. How Much Do I Need? Figuring out how much life insurance you need is different for everyone. It depends on your personal and financial situation. There are three main drivers that affect the amount of coverage you need. Family Size– How many kids you have and thei... Learn more about your ad choices. Visit megaphone.fm/adchoices

Whether you believe it or not, we have all heard the age old saying money can’t buy happiness, but there certainly is a relationship between your personal finances and your happiness. Maybe it’s time to change your mindset. People who earn a more are often happier than people who live in poverty, but it’s not just about the money itself. It is about providing insurance that you and your family can live a comfortable life no matter what life throws at you. Many of us think we only need so much to be happy, but you have no way of knowing how much you’ll need at some point in the future. Today the guys talk about how to change your mindset from “how much I need” to “how much is possible”. It doesn’t mean you have to constantly think about money or compromise your other values and interests, but you can simply think differently about your money. It’ll start to shift your choices. Unless you can predict the future, you do not know what you will need or want beyond today. Building your financial resources will help you deal with life’s uncertainties. Money takes time to grow, so you need to start now. Even if you have a job that pays well, the chances are it doesn’t pay quite enough to create financial independence. Your job is your job but building financial wealth is something else. Show Notes LMM Community: Join the conversation! The Millionaire Real Estate Investor: Thomas’ latest read Lapsang Souchong: The whiskey of teas Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s been too long since we’ve done a five questions episode. Today we talk about lotto, stock games, APR, diversification, and student loans. Five questions are back! We answer questions we get through e-mail and the LMM Community. 1. What would you do if you won the lottery? Thomas doesn’t want money he didn’t earn so if he somehow won the lottery, he would hand it over to various charities. Andrew actually did buy tickets, $20 worth. He thinks winning the lottery would ruin his life because it would take away his drive and his purpose. He would keep his job and just stick the money in US Treasury bonds which are one of the safest investments you can make. Even with the low-interest rate on bonds of about 2%, taking the lump sum of the recent Power Ball would still earn $1.2 million per month. 2. Do you recommend any on-line stock simulator games for those new to investing? Motley Fool has a good one. Most games focus on the dollar value but Caps, the Motley Fool game, removes that and base wins on percentage gain instead. The community is very active too, and it’s a good place to research stocks. People do reports and even blog about their picks. Investopedia has a simulator, and you can track stocks in Google Finance where you can create folders for your picks and track them over time. 3. I have $9,000 in credit card debt and a 15 month 0% APR. Should I take out a loan through Lending Club to pay this off? If you roll a balance over to a 0% APR card, there is a fee. Even with zero interest, you have to make the payment each month, or it triggers the interest. Pay off that $9,000 as fast as possible, ideally, before the 0% runs out because no loan is going to give you 0% interest. For more on APR check out this guide. If you can’t pay it back within the 15 months, then Lending Club is a good option. 4. I have an IRA with Fidelity. What should I do to diversify my investments? The Fidelity account you have has a high expense ratio. Even a 1% fee over thirty years of investing means a loss of more than a quarter of your investments. Fees are a killer. A 1% fee doesn’t sound like much, but over time, it is. A better Life Cycle Fund would be with Vanguard because no one beats their fees. If you don’t want to do a ton of research and compare funds, Betterment is the way to go. 5. I know it’s important to pay off debt before investing but is that still true if my student loan debt will be forgiven in twenty years? The interest is high at 6%, and while you’re on the income-based repayment plan, your income will (hopefully) increase over that time. Because interest is one of life’s biggest expenses, pay it off. Build your emergency fund up to six to twelve months worth of expenses and then start killing the loans. Thanks for the questions everyone! Show Notes LMM Community: If you want personal answers to more money questions, join us in the Community. Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s the time of year to reflect on the past twelve months and set goals for the new year. What does figure skating have to do with it? Tune in to find out. At LMM we prefer the word “goals” to “resolution.” Resolution has almost come to mean failure in three weeks time. We think framing our resolutions as goals will help us reach them. Sometimes you just have to trick your brain! Why January 1? You can see the appeal. Everyone likes a clean slate and the slate is never cleaner than it is on January 1. But what if you woke up with a hangover and despite resolving to eat more healthfully, you order breakfast from McDonald’s? Are you going to wait 364 days to try again? Of course not. You don’t have to wait for a certain day to change a habit. Year End Review Rather than making the same old tired resolutions, which at a certain point become traditions, look back at the year that just passed. What would you have liked to do better? What did you not manage to get to at all that you still want to pursue? If you did achieve some goals, what helped you to do so? By looking back at this things, we can better craft goals for the new year and put systems in place to help us reach them. Day, Week, Month If the goals are too vague, “save money,” lose weight,” they are hard to track and hard to work towards. Each day, week, and month should have things to do in order to reach the end goal. If you want to save money, how much money? If you want to save $1000 to start an emergency fund, you can have a daily goal of not buying coffee on your way to work. You can have a weekly goal of bringing lunch from home just three of five days a week (because you want some wiggle room or you’ll get sick of it and give up). You can have a monthly goal of cutting your grocery bill by 20%. Any goal you set for yourself should have a timeline and a deadline. Marking off time in smaller chunks like day, week, and month helps you to move forward and track your progress. If you get to the end of the day, week, or month, and haven’t achieved what you set out to, you can reassess before much larger chunks of time have passed so you’re not content with giving up and waiting for that clean slate of January 1 to come around again. Priority(ies) Priority: “Something that is more important than other things and that needs to be done or dealt with first.” That definition makes perfect sense. A priority is the most important thing. So how can you have more than one? You can’t but somehow, we all do. And that’s why so many of us fail to achieve our priority because we spread our focus across multiple priorities. This year make it a goal to do almost nothing. But do a small number of things that matter. Those two statements might seem contradictory, but not as contradictory as having more than one priority. Some Goals Can Be Fun! Not all of your goals have to be a slog. Saving money and losing weight, while wonderful things to do that will reward you in many ways for many years, are not really very fun things to do. So pick at least one goal that is fun to do. For Thomas, it was to have more fun after work. A lot of us can probably relate to this. You come home from work and make dinner, tidy up, pay bills, watch TV. Except for making dinner, for some of us at least, none of those things are fun. So Thomas signed up and paid for, an ice skating class. A goal like this can kill a few birds; the original of doing more fun stuff after work, because another friend has signed up, Thomas gets to spend more time socializing, and skating is good exercise, although I know he was already doing pretty well in that area. If you can find a way to wrap up a few goals into one, you’ll get more done in less time. No Is A Complete Sentence Learn more about your ad choices. Visit megaphone.fm/adchoices

Want to level up your life? Steve Kamb from Nerd Fitness joins us to discuss turning your life into a game. We’ve discussed the ways being physically fit and financially fit are similar. Steve Kamb learned that when he started Nerd Fitness. His health improved alongside his finances. He turned his life into a video game with himself as the protagonist. Now he’s written a book on how we can do that too, Level Up Your Life. Nerd Fitness Steve was working a sales job he hated and wasn’t very good at when he saw Tim Ferris’s book, The Four Hour Work Week. In the book, Ferris details how to start a very small company that solves a problem that a lot of people have. Steve was becoming increasingly interested in fitness and if there is a problem a lot of people have, (aside from money problems. LMM will handle those) it’s being unfit and unhealthy. As with any good side hustle, you need to find a niche. There are a lot of fitness sites out there. There aren’t a lot of fitness sites geared toward people who love video games. Steve bought his domain at Hostgator and sat on it for a year. He didn’t know the first thing about building a website. After a new job, Steve decided to make the leap and start really working on Nerd Fitness. He quit his job with about eight weeks of runway money and 3,000 subscribers. He wrote an e-book that sold enough copies to keep the lights on and he worked a series of odd jobs to fill in the gaps. He was right to make the leap. Within six months, the site was generating $2-3 a month. Motivation Is Not Enough The problem with motivation and willpower is that they’re fleeting. We’re all motivated in the new year to save money, lose weight, quit smoking. We all have the willpower to resist the cookies in the beginning. How motivated are you in February? How many cookies did you eat in March? Steve advocates putting systems in place that will help you succeed. He wanted to spend less time watching television and more time working on the site, so he got rid of cable. He would eat the entire bag of chips in one sitting so he stopped buying chips. People are lazy, we really are! Of course, you can leave the house at 9:00 pm to procure the chips, but you probably won’t. No motivation or discipline needed for this strategy. You have a system in place that supports your goals. Anti-Fragile Antifragile by Nassim Taleb teaches that not all chaos is bad. There are three types of things; fragile things that break when you drop them, sturdy things that survive the fall intact, and antigragile things that get stronger from the impact. Steve applied this to fitness. Throwing the unexpected, the chaos, at your body strengthens it and makes it grow. The same theory can help improve your life too. Pushing yourself beyond your comfort zone makes you a stronger, better person. Steve drew up a list of things he wanted to accomplish, a bucket list and published it so his readers would help keep him accountable. He made conquering the list a game. Every time he crossed something off, he awarded himself points and moved to the next thing on the list. Success Through Habits Thomas is a big believer in the power of habit too. Learn more about your ad choices. Visit megaphone.fm/adchoices

Look at your family, just sitting there costing you money. Slackers should be making you money, pulling their weight! We found a way to do it. We will show you how to turn your family into a profitable business with Natali Morris. Incorporate Your Family The tax system is not set up to benefit the individual; it’s set up to benefit businesses because businesses drive the economy. That’s why eleven companies on the S&P 500 who made profits last year paid less in income tax than you. How much less? Well, they paid nothing. If you want to get in on that, incorporate. Set up an LLC, S-Corp, whatever is the most appropriate for your situation. What if you don’t have a business? Well, you might and not realize it. Do you babysit, clean houses, mow lawns? Because if you do, you set up and LLC or S-Corp. No? Well, start! And incorporate your hobby, side hustle. However, you term it, as a business. Remember what Adam Carroll told us in last week’s episode? The two most significant expenses in life are taxes and interest. Incorporating your family is one way to maximize those tax savings. Teach Kids About Money Children have established their ideas and habits about money by the age of seven! So the earlier you start teaching them about money, the better. For the most part, many of us can afford to give our kids almost anything they want, at least when their they’re little. We can afford the stuffed animals and the action figures. That’s why it’s important to put a system in place to help them understand what money is and how it works. Natali gives her children an allowance but not in the traditional sense. Each kid has responsibilities that come with being part of a family; keeping communal areas and their own rooms clean. Taking care of their possessions. If she wants them to do work for her, washing her car, for example, they are paid for those kinds of things. The kids also have real jobs, things like helping Mom scan and then shred documents, that pay them from the family’s LLC, and they pay taxes on those earnings. Because the money is taxed, it’s eligible for an IRA, and that’s where it goes. The IRA’s are Roth which means they only pay taxes on them during the years they contribute. The children are given three, clear glass jars. The clear part is important; it lets kids see the money accumulating, something they won’t get using a traditional “piggy bank. “The jars are “give,” “save,” and “spend.” The kids can buy whatever they want with the spend jar money, even if Mom knows they’ll lose interest in five minutes. It teaches that once the money is spent, it’s gone, so make it count. Self Directed IRA A self-directed IRA is a retirement account that gives you control over your investment choices. You’re not limited to stocks, bonds, or mutual funds. This allows you to invest in alternative assets like real estate, limited partnerships, and gold through your self-directed retirement account. These IRA’s are more work than the average IRA, but the advantages can outweigh that for some. Natali buys rental property through her IRA, the proceeds come back into it and all expenses, property management fees, repairs, utilities, are paid out of it. Learn more about your ad choices. Visit megaphone.fm/adchoices

Adam Carroll joins us to discuss how to actually save thousands on your mortgage with home equity lines of credit. When we interviewed Adam for our new Rich Tips series, he mentioned how he is paying off his mortgage years ahead of schedule and saving thousands of dollars in interest. We were intrigued and asked him to join us to explain his strategy in greater detail. What Is A Home Equity Line Of Credit? A home equity line of credit, HELOC, is “An open ended line of credit extended to a homeowner that uses the borrower’s home as collateral. Once a maximum loan balance is established, the homeowner may draw on the line of credit at his or her discretion. Interest is charged on a predetermined variable rate, which is usually based on prevailing prime rates.” Most institutions will lend up to about 90% of loan to value. Strategy Adam has an ingenious use for his HELOC and you can use his strategy too. The HELOC is used as a checking account. All of your income is deposited into it and all of your expenses are paid out of it. Depositing your paycheck into the HELOC acts like a payment so you aren’t adding a monthly payment. The money left over at the end of the month gets sent to the mortgage. What this does is send a massive payment to your mortgage each month. The trick to make this work though is that you have to make more than you spend. Let’s look at an example: You bought a home for $100,000 with a $20,000 down payment. You can immediately take out a HELOC for $10,000. You then put that toward your mortgage. In order for this to work though, you must make more than you spend. You make $5,000, spend $4,000 and have $1,000 left. That $1,000 goes into the HELOC until it’s paid off, so for ten months. Let’s say your interest rate is 5%. So that’s $500 over 12 months, $41.33 the first month in interest but when the income goes in, you’re paying a little less each month because you’re slowly paying the loan down with that $1,000 a month. Rather than taking ten months to pay off, it takes around 7. And because your mortgage went from $80,000 to $70,000, you will pay less interest not just over ten months but over the entire life of the loan. What If You Don’t Own A Home? You can still use a similar strategy if you don’t own a home. You can get a personal line of credit, PLOC. A PLOC is “A loan that you use like a credit card account that you access without using a card. Instead, you write special checks or request a transfer to your checking account by phone or online. You have a credit limit, receive a monthly bill, make at least a minimum payment, pay interest based on your outstanding balance, and possibly pay a fee each time you use the account. PLOC are unsecured, unlike HELOCs, which are backed by a mortgage on your home. PLOCs are offered by banks and credit unions and usually require that you also have a checking account with the same institution.” PLOCs have their drawbacks. The interest rate is higher than a HELOC and the interest is not tax deductible. But if you have high-interest debt and don’t own a home, they can be beneficial. What Keeps Us In Debt It’s the way we bank and borrow. Taking out a 30 year mortgage is just SOP in the United States. Amortization is the process of paying off a debt, like a mortgage over time with regular payments. An amortization schedule is a table detailing each periodic payment on an that loan. We borrowed $80,000 to buy our home above. With a 30 year mortgage at 3.5%, you will pay $50,000 in interest when it’s all over! Your first mortgage payment will be $359, Learn more about your ad choices. Visit megaphone.fm/adchoices

Ace Chapman joins us to explain how to buy a business. Something he’s been doing for sixteen years and it’s made him a millionaire. Ace was on the usual college path when the opportunity to buy a business fell into his lap. He was playing with an online stock simulator that crashed a lot and found the company unresponsive. He reached out with an offer to help, merely hoping for an internship. Instead, he was offered the chance to buy the business for $70,000. Ace had just $3,000. What he also had was no idea how such transactions usually work so he asked if the sellers would finance half of the deal. They agreed! Ace got some money from a similarly entrepreneurial minded friend and financed the rest of credit cards. Ace grew the product from 10,000 members to 250,000. He turned down seven-figure offers to sell but lost it all in the first dot-com bust. But he had a school of hard knocks bestowed MBA and decided to buy businesses was what he wanted to do. Due Diligence Ace had a big advantage when he bought that first business; he had been a long time user of the product so he knew it well. He had spoken to many of its other customers to find out what they did and did not like about the product. It’s not a requirement but it will certainly give you a leg up when it comes time to take over running the business. Why Are They Selling? If this business is so great, why are the owners looking to get out? It could be one of a million reasons; a divorce, failing health, boredom and the desire to move onto the next thing. As the Boomers start thinking of retirement, there will be a lot of established businesses on the market. Don’t Start From Scratch Many people don’t really give much thought to buying an already existing business. Starting your own business is something that is woven into the American Dream and we all think we could be the next Bill Gates. But the stark truth is that about half of new businesses fail within five years. So why not let someone else do the hard work and pour in the capital that the early years of a new business require? Where To Find An Opportunity You aren’t very likely to walk into a business and see a for sale sign in the window. There are some sites that have listings like bizbuysell, but the large majority of businesses for sale don’t advertise that way. You can advertise though, that you’re looking for a business to buy. Let them come to you. So you have to hunt around for something to buy. Because some businesses are sold due to things like death and divorce, attorneys who handle divorces and estates are a good resource to find an opportunity. The sellers in these situations may be highly motivated which can net you a bargain. Attend events related to the industry you’re interested in, meetups, conferences, seminars and use them as an opportunity to network. The pay off may not be immediate; Ace once bought a business that he had sent a letter to the owners of four years after he sent it. But the owners kept the letter and when they were ready to sell, Ace is the person they called. The lesson is to have a long-term view. The Valuation The formula Ace uses when deciding what a business is worth is to multiply the net monthly earnings by two. He likes to employee opportunistic due diligence to find a way to buy at two times but within a few months, increases the revenue by four times. There are a few things to look for that can make this possible, the business has a hidden asset, a unique opportunity or can be part of a joint venture with someone else in his network of clients. Face Of Business Learn more about your ad choices. Visit megaphone.fm/adchoices

Our listener Eric has made an appearance in the past to school us on bonds. Today he’s back to teach us about inflation. What Is Inflation? Economic concepts can be broken down into the micro and the macro. Micro looks at the smaller picture concerning the behaviors of individual consumers and businesses. Macro is the study of the economy as a whole and where inflation falls. Inflation is one economic concept that most of us see on a regular basis. It’s the purchasing power of your money, the general increase of the cost of goods and services over a specified period of time. Your dollar that is worth X today will not be worth X five years from now. Consumer Price Index One of the best measures of inflation is consumer price index. CPI measures changes in price of a set of consumer goods and services purchased by households. There are eight major groups that include the costs of things like cereal, rent, dresses, gas, prescription drugs, televisions, college tuition and funeral expenses. The Big Mac index was founded as an informal way to compare purchasing power between different currencies but has been expanded to include the amount of time someone has to work in order to buy a Big Mac. Demand Pull Inflation In most cases, we want inflation to increase, but not too steeply. Controlled inflation can erode the cost of debt. Good inflation is known as demand pull inflation and happens during periods of economic growth and increased income. Consumer demand increases. Wartime is a good example. Who buys a lot during wartime? The government and it buys from the private sector. When a big order comes in to Lockheed Martin, the company hires more workers. More people have money and they too, spend money in the private sector buying cars and homes and electronics. Cost Push Inflation Cost push inflation is the “bad” kind of inflation. A good example would be when there is a drought. There is less food available which causes price increases. The producer has to make money but they have less product to sell. So what do they do? They raise the price. The ongoing drought in California and the water restrictions being imposed because of it, are going to make rice more expensive. California is the country’s second biggest rice producer(who knew!) and will grow 25% less than last year. So your sushi is going to get more expensive. Federal Funds Target Rate The federal funds target rate is “the interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution overnight.” The higher the federal funds rate, the more expensive it is to borrow money. The Federal Open Market Committee meets eight times per year to set key interest rates. Stagnant Wages Inflation has been low, but our wages have been stagnant for decades. After adjusting for inflation, today’s average hourly wage has just about the same purchasing power as it did in 1979. Productivity and Gross Domestic Product have increased, but wages for the average worker have not. This stagnation is one of the reasons the Fed has been reluctant to raise rates. Deflation Deflation is a drop in consumer prices and measured using the CPI. This sounds like a good thing for consumers but is a sign of a long term decrease in demand and signals that a recession is probably already happening. Manufacturers and sellers of goods start cutting prices and if this goes on long enough, it also means they will cut employee wages or even go out of business entirely. Disinflation Disinflation is the slow down in the rate of inflation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we interview Bobby Monks and Justin Jaffy about their book, Uninvested and understanding the pitfalls of Wall Street. Bobby Monks calls himself a “chronic entrepreneur” and as such, understands the dirty dealings happening on Wall Street and how they effect the average investor. Justin was new to the subject of finance but a journalist who wanted to know more. Together with a third author, Bree LaCasse, they wrote Uninvested: How Wall Street Hijacks Your Money and How to Fight Back. The Book To the average person, investing seems like this complicated thing that no lay person can possibly understand. So they hand their money over to a “financial advisor.” The authors wanted to demystify investing for the average investor using simple language. They spent four years interviewing people like Barney Frank, Jack Bogle, Carl Icahn, mutual and hedge fund managers. Financial Advisors There are 450,000 people providing financial services in the United States and 90% of them are sales people. Just 10% are registered investment advisors. What’s wrong with that? When you go to a car dealership, 100% of the people are sales people. The difference is that you know the person trying to sell you a car is a sales person. The standards for most of these advisers is low. They are under no obligation to put the best interests of their clients first and many of them don’t. Their priority is making money for the company they work for. There is a lot of confusion among consumers about who is and who is not a sales person in the realm of financial advisors. Financial advice that is skewed by a conflict of interest costs investors $17 billion a year. If you were a paranoid person it might be enough to make you think the industry has been deliberately set up this way. The Fiduciary Standard The fiduciary standard was established as part of the Investment Advisors Act of 1940. Investment advisors are regulated and required to put client interests above their own. Investment brokers are only held to a standard of “suitability.” Under this standard, a broker can look at two funds which are similar but still recommend the more costly one that will also give him or her a higher commission. Brokers are paid based on the dollar amount of assets they manage so there isn’t necessarily any incentive to recommend the best investments, just to get the highest amount of assets under management. They often still get paid even if they lose you money. Isn’t More Expensive Better? If one financial advisor is more expensive than the others, doesn’t that mean he or she is better, smarter, more educated? Not in this case but it’s a common fallacy. None of these people can predict the future and past experience does not indicate future experience. The more fees you pay, the less money you have. Generally, the lower the fee, the better the performance of your portfolio. The Retirement System Many workers used to have a defined benefit system, a pension basically, that paid a certain amount of income for life after retirement. The system went bankrupt and had to be bailed out by the government. That system has largely been replaced by the one we have now, which relies heavily on 401k’s and IRA’s. But it’s expensive to manage a 401k and you’re paying for that. The average fee is over 2%. That doesn’t sound like much does it, a 2% fee? Consider this; if you have $25,000 invested over 35 years with an average yield of 7% and a fee of just 1%, that will cost you $65,000. The fees are often obscured because people tend to focus on the employer match and the tax advantages. Index Funds And Individual Stocks The best way to increase the chances of a good return over time is to pay the lowest fees possible. The lowest fee way to invest is to buy individua... Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we interview Joan Sotkin of Prosperity Place, who approaches money in a holistic way. Because listen, emotion matters when it comes to money. Joan’s Story Joan comes from a family of compulsive debtors. She was born in 1940, a time when women’s roles were pretty prescribed. Joan got married and started on the prescribed path. She became a teacher but didn’t like teaching any more than she liked being married. She felt out of place. Looking for something else, she started studying what she terms, “woo woo stuff,” like astrology and healing crystals. In the 1980’s she began selling crystals and minerals for healing and meditation and was making great money. In 2015 money, she was bringing in $50,000 a month! And then she went bankrupt. Joan didn’t know how to manage cash flow. Her father died and she has since learned that people often deal with a big trauma by overspending. Her field started to grow and she didn’t know how to compete. Eventually, the business closed. Early Adopter In 1995 Joan discovered online business and taught herself how to build websites. A year later she moved to Santa Fe with $200 and whatever possessions fit in her car. In 1997 she started Prosperity Place. It’s a place for her to teach people what she learned from her mistakes and successes. Joan was an early podcaster too. She started podcasting in 2005. When Word Press came out she started building websites for other people. Insanity Defined Joan found that old saying, “Insanity is doing the same thing over and over and expecting a different result” to be true. She sees people acting out emotions through business and financial decisions over and over. You have to get in touch with your emotions in order to sustain success. We can know intellectually what to do but it still has to be done by a person (us) and a person can get in the way of doing it. Money And Emotion Our thoughts, beliefs, and emotions are what form our decisions. If you’ve had emotional issues in childhood, they sometimes manifest themselves in the decisions we make. If certain needs aren’t met, we feel deprived. If there is abuse or neglect, there is a feeling of being trapped in a situation. These emotions have to be expressed one way or another. That way can be healthy or it can be unhealthy. If your “story” is always ending the same way and you don’t like the ending, you can change it. Worrying about the future doesn’t help the future. Life doesn’t happen to you, it happens to you. Stress As A Motivator Does stressing over a situation motivate you to work harder? In that case, stress can seem like a beneficial thing. If you weren’t stressing so much, you would sit around playing video games instead of working toward a goal that will allow the stress to be alleviated. Being chronically stressed can cause adrenal fatigue which can lead to chronic disease. Making decisions based on fear can lead to poor decisions. You Are Not Required To Worry Do you feel as though if you don’t worry, you’ll fail? Some people who are very afraid to fly feel this way. Through the entire flight, they concentrate on the plane not crashing. When it doesn’t, they’re convinced that it was their worry that kept that plane aloft. They believe worry makes things happen or can prevent things from happening. Worrying is a waste of time. It’s creating a future that does not exist. You’re making it up! This doesn’t mean you stumble blithely along through life with no plan. But there is a difference between anxiety and concern. Whenever Joan starts worrying about money, she says to herself, “A large sum of money from an unexpected source.” Because that is as likely to happen as any doomsday scenario she could come up with thro... Learn more about your ad choices. Visit megaphone.fm/adchoices

You may have a budget but what if you have a big life change? Move cities, have a baby, buy a home. Budgeting for a lifestyle change can make or break you. You got the new job in a new place, your family grows, you need to care for a parent. Your old budget won’t do. A New Place What if your new job involves a big change of location? Moving from the suburbs to a city for example. Will you still need a car? Will there be a place to park your car? Maybe, but it might not be free and if it is free, you’ll likely be competing for lots of other people for the spot. Not many attached garages in the big city. What is the cost of living like compared to your current location? You might be getting a $20,000 jump in income but in the right (or wrong) city, that can be gone just paying deposits and broker fees. City-Data is a great resource to help compare the cost of living between cities. The Best Laid Plans Hopefully you’ve planned when to start your family but accidents happen. What if that happened to you? Would you be financially prepared? One of the biggest considerations before having a kid is day care costs. Prices fluctuate widely and sometimes the cost is so expensive, it actually makes more financial sense for one parent to stay home. A family situation that is harder to predict is that of your parents. None of us want to think about our parents aging and getting ill but it happens and you might have to step in. How much money do they have set aside? Would they want to live with you, stay in their own home, move to an assisted living facility? Who will make medical decisions if they cannot? Have these discussion with your parents before any of this happens. Buying A Home You found a $100,000 home and you have $20,000 to put down, great 20%! No, not great to the bank. They don’t want you to be cleaned out making the down payment. You won’t be able to pay the mortgage or the taxes. You might want to do some renovations so you can put your own stamp on the place. You moved from a studio to a house. Your futon and bean bag chair will look pretty lonely in a 2,000 square foot place. Twenty percent is not enough. Start A Business You have a killer idea and you long to quit slaving away for the man and want to start your own thing. Great! How much run way money do you have? What are the start up costs? Is your spouse on board or will they freak out if there isn’t a regular pay check coming in? How will you pay for insurance now that you no longer have it through your employer? Get A Baseline Where is your money going now? Before you make any big changes or decisions, you need to know this. If you had to cut to make room for something else, what could you sacrifice? Some things become such an ingrained habit, that you don’t notice anymore just how expensive they are (booze). Not everything has to be completely axed, some things could just be reduced (booze). Think back to your past. There was probably, hopefully, a time, when you spent less money than you do now but were still happy. Now think how much more you’re spending currently. Does the level of happiness correlate to the greater amount of money you’re spending? Probably not. It certainly costs more to be an adult than it does to be a college student but if your costs have sky rocketed, it’s unlikely that all of that money is going to fixed costs. A lot of it may be going to lifestyle upgrades, a bigger place, better car, nice clothes. The longer you can live like a student while earning like an adult, the further ahead you will be for the rest of your life. How Much Do You Cut? Let’s say you make $50,000. Use a base of 60%, so $30,000 after taxes and savings. Divide the $30,000 by twelve months to get $2,500. Learn more about your ad choices. Visit megaphone.fm/adchoices

Learning how to negotiate is not just a nice to have skill – it’s critical. Everything from your salary to your purchases to even your relationship requires it. Here we break it down for you and give you the knowledge you need to hit the ground running. Perhaps the most important thing you need to understand is that most successful negotiations come with skill and practice, not force. We’re not going to show you how to strong arm your opponent or debate them into submission. Instead we’ve created an epic resource with everything you need to know to get what you want and walk away from the table with everyone happy. Podcast Episode Want to learn but would rather do it during your morning drive or while you’re working? Give this episode a listen, it’s pretty awesome. (show note links are at the very bottom of the article) Negotiation Vs Bartering Before we jump into it we think it’s important to discuss the difference between negotiation and bartering. There tends to be a lot of confusion around the two. It comes down to knowing your goal and having the right approach. Negotiation: This is not about winning. It’s about achieving your goal or objective. It’s not an argument but a constructive discussion. Since success is measured by achieving your goal or objective it’s then easy to eliminate certain approaches immediately. We’ll get into them later in the article. Bartering: This is also not about winning. It’s about exchanging your commodity or service for something of comparable value with a minimum effort or time commitment. Right off the bat we’ve taken two big departures from negotiation. You don’t want to work too hard or spend too much time here. If you have a fruit stand at a fair you may barter with potential buyers. However, if you’re selling (or buying) a car you’re negotiating. Bartering is about value where as negotiation is about something much larger. The 7 Core Negotiation Tactics There are a few key things you need to keep in mind for a successful negotiation. While some may seem immediately obvious we really encourage you to read deeper. Because negotiation is about achieving a win-win situation and not a win-lose situation it’s really important to keep these core principles in mind – and refine them over time. If you ignore following a strong approach you’re at best opening yourself up to a less than optimal deal and at worse looking at no deal at all. Come Prepared You might have heard the saying “Don’t bring a knife to a gun fight.” Well, the same idea applies here. You’re not going to go to a car dealership and purchase a car originally having no idea how much it costs or what its positives/negative attributes are. The same applies to all negotiations. If you’re looking to get a raise, do you know how much other people with your skill set and background get paid? We talk about price anchors in the episode and this is a great place to use them. Head over to sites like Glassdoor or Payscale and do your research. Site’s like Indeed.com will also show you a data-driven aggregate of what they’ve seen people make for the position you have (or want). Use resources like these to ground yourself in reality, improve the chances of your success and logic for how you’ve approached your position. Remember, you’re looking for a win-win outcome. For a negotiation that’s a bit more nuanced like a big purchase you need to understand the value you’re getting, the main features as well as the weaknesses. Learn more about your ad choices. Visit megaphone.fm/adchoices

Have you ever thought about starting a Kickstarter campaign? We interview Chez Brungraber about how she did it for her travel bag. It takes some doing to get people to give you money for something that doesn’t yet exist. Chez tells us how she did it. Kickstarter is a place to get funding for a product that is still a prototype or a project that hasn’t been completed. The first rule is to have a product that you believe in. Once you have that, you have to get the word out, friends, family, bloggers, media. You have to keep your backers updated with how the project is progressing and when they can expect it to be complete. Chez’s company makes money but not enough to make large capital investments in things like new products. And it doesn’t make enough for a bank loan. That’s why she chose to fund this way. You have to hit your funding goal in order to receive the money towards your project. That sense of urgency helps to reach the goal. Most campaigns over $10,000 fail on Kickstarter so don’t ask for an insane amount of money. Keep in mind too that Kickstarter will take a percentage of your earnings, so factor that in. Once the goal is reached, you can set a “stretch goal.” Extra features that will be added to the existing product as higher funding goals are met. Chez recommends making sure you know what your stretches will be before starting the campaign. She had three days to come up with her first. Kickstarter isn’t a place for free money. Chez took four months to craft her initial campaign and more time to change it for her stretch goals. Make sure you have your basics set up, you’re incorporated, have a business bank account, you can’t deposit that money into your checking account! There are tax implications too. Kickstarter can be a great place for small businesses to get funding but do your research before starting a campaign. Show Notes Pumpking: A pumpkin beer from Southern Tier. Kickstarter: Chez’s new campaign for her travel bag. Gobigear.com: Here you can find more of Chez’s awesome gear LMM Community: Join the money revolution! Learn more about your ad choices. Visit megaphone.fm/adchoices

We haven’t done a Five Questions for awhile! We’re back to answer your questions about minimum wage, lending money and debt. We get a lot of questions and if one of you is wondering, more of you are wondering. How can you get by on minimum wage? Well, first of all, you have to live in a place like Iowa where the cost of living is very low. You also need to take advantage of any social programs you might be eligible for, low income housing, food assistance, reduced cost utilities. Work as many extra hours as you can to save up enough for a $1000 emergency fund. Next, try to build a marketable skill using all the free resources you can find, the library, the internet, Coursera, Khan Academy. A minimum wage job should be something you have while you build additional skills toward getting a better paying job. Apply to jobs you’re not qualified for. It may not always work but it only has to work once. At the very least you may get some interview experience. How do you know what tax bracket you’ll be in when you retire so you can choose the best IRA? When you retire, you won’t be earning money, or earning less, so the money withdrawn will be taxed at a lower rate. Unless, you have a separate revenue stream, like rental income. In that case, you might be earning more than when you worked. So it depends on your idea of retirement. Golfing all day or running a small property empire. If you’re going to relax, go traditional. If you’re going to earn, go Roth. Should we wipe out our savings to pay off student loans and then focus on retirement savings? Take the money in the savings account that isn’t earning interest, except for 3-6 months of expenses, and put that towards the loans. As for your investment money, the interest rate on your loans is low so leave that money where it is. What should we do with retirement plans from old jobs? Roll them over to avoid administration fees. How can you help manage parent and sibling debt? Just handing over a chunk of money is usually not a good idea. Agree to help with the caveat that the family member shows you how they plan to get out of debt and the steps they’ll take not to get into debt again. Thanks everyone. If you want to get an answer to your questions fast, come join us in the Community. Show Notes Allagash Dubbel Reserve: A malty, Belgian ale. LMM Community: Come join the money revolution! Learn more about your ad choices. Visit megaphone.fm/adchoices

Early retirement sounds ideal but is it always? Retire or not to retire with Roger Whitney, the retirement answer man. Roger believes rather than setting retirement goals, we should set retirement priorities. Not that you shouldn’t have goals. But when retirement is decades away, priorities are more flexible. The closer you get to retirement, the more you can concentrate on making concrete goals. Roger believes you should decide what your ideal retirement would be, not what you think you can afford. This allows you to see what your priorities really are and you can work harder towards those and spend less energy on the things that are not as important to you. Even if you retire at 65, you may still have twenty or more years of life ahead. You don’t want to get bored! Roger suggests crafting a life you don’t want to retire from. You don’t have to stay at your 9-5 but you don’t have to give up working for money forever either. But try out the life you don’t want to retire from before you retire! It’s a romantic notion to start your own farm and may help you make it through the crappy times at your job, but what if you don’t know anything about farming? Dip your toe into the life you think you want before you just dive right in. We don’t think you need a financial advisor. You can figure all this stuff out on your own with some educating and research. But if you must, make sure you use a fiduciary. They are held to certain standards that those advising under the blanket term “financial planner” are not. It’s never too early to start planning for retirement. Show Notes River Horse Hipp-O-Lantern: A carbonated pumpkin beer. Roger Whitney: The retirement answer man. Learn more about your ad choices. Visit megaphone.fm/adchoices

We receive a lot of questions on these topics so we brought in an expert. Today we discuss wills, trusts, and estate planning with Tyler. This is a big topic so we brought in a member of the LMM Community Forums who deals with this for a living. Tyler and is estate planner and a lawyer in the military. Put simply, estate planning is deciding where you want your stuff to go when you die or are incapacitated. Do you need a will? Probably. Do you need a will if you have a kid? Absolutely. You can’t count on the state or sometimes even family, to carry out your wishes. An asset that doesn’t have a next owner listed, some checking accounts for example, has to be assigned by a probate judge. A non-probate asset, like a life insurance policy or some brokerage accounts, bypass the process and are paid out pretty quickly. If you die in debt, creditor’s get first crack at your estate. But your family will not be held responsible for that debt unless they have co-signed for the debt. A living trust can help to take some of the burden off your family when you die. It takes some of the work and hassle out of the probate process. Power of attorney gives someone else the power to make financial decisions for you. They can handle things like paying your bills. Health care power of attorney allows someone to make medical decisions for you. You can leave money in a trust and set the parameters under which it will be distributed. Tyler recommends age, the age of 30 as the parameter. Having a big life event is a good time to check in with your estate planner to find out if you should update your will. You can have a will drafted for between $400-1500. A trust is more expensive because they’re more complex. This topic brings up things that none of us like to think about but making sure that your family is taken care of is worth it. Show Notes Estate Planning: A Primer: Tyler’s in depth article on the subject. Featured Image Photo Credit: “Fountain pen nib” by Ben FrantzDale Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we welcome Forum member Chloe to discuss her finances. We’ll tell her what she’s doing well and where she needs some improvement. Chloe is a 28 year old nurse who recently got her masters and has been looking for a full time job with benefits. Even working part time, Chloe is doing pretty well. She went to small, inexpensive colleges on scholarships, federal aid, and one small loan. Most of her loan was forgiven due to her public sector work. Chloe made an incredibly detailed pro/con list of the two job offers she received in our Forums. She got some great advice and that helped her make her decision. In the end, she chose the lower paying job with better quality of life and better future prospects. It’s not always about the money! Chloe uses Mint to budget. Like most of us, food is her biggest budget problem. She maxes her 401k and Roth IRA but doesn’t have a lot of room to save for things like a wedding or a home. Chloe has a net worth of $140,000! She attributes this to having priorities. Saving and travel. And always living below her means. Chloe’s dad started an investment account for her to use for college but because of scholarships, she didn’t have to use it. It wasn’t a large initial investment but because the account is so old, the money grew. As we advise all of you, Chloe has an emergency fund. She invests in a few individual stocks. Lucky for Chloe, her dad introduced her to investing early. One of Chloe’s investments has a high fee. She needs to sort this out, you can lose a big chunk of your money to fees. One of Chloe’s problems is dealing with parental finances. Her mother’s situation is not ideal and it may be something Chloe will have to deal with in the future. Chloe is doing well for someone of her age. She may have some challenges with her parents but she’s on the proper track. Show Notes Yuengling Black and Tan: A rich, malty beer. Shipyard Pumpkinhead: Pumpkin beer season is here! Two Roads Roadsmary’s Baby: A pumpkin ale. Learn more about your ad choices. Visit megaphone.fm/adchoices

We interview Chris Clothier from Memphis Invest to explain real estate investments without the mess. Collect the rent check while someone else does the dirty work! Passive Income If you’ve listened to LMM for any length of time, you know how much we emphasize the importance of passive income. One of the keys to building wealth and achieving financial independence is to have more than one source of income and because there are only so many hours in a day, some of that income should be passive. Passive income is income generated with minimal effort on your part. Good sources of passive income can include your investments and retirement accounts, making money from things you already do like driving, shopping, or going out to dinner and our favorite, rental property income. Becoming a landlord can generate significant passive income. But how can owning rental property be considered passive income if you’re searching for homes to buy, tenets to live in them, and handling any repairs that have to be done and the whole list of other things a landlord has to do? The secret to making rental property a source of truly passive income is hiring a management company to deal with the day to day hassles of being a landlord. Turn Key Turn key rental property means that the home is ready to be rented out as is. Any needed repairs or upgrades have been completed and it’s ready for occupancy. This is the best kind of property to buy if you’re going to be an out of state landlord. It’s hard enough to deal with renovations when you’re local, almost impossible if you’re trying to do everything from a distance. There are turnkey management companies too. The right turnkey management company can do nearly everything for you from finding the property and renovating it, to putting a tenant in place and dealing with any repairs and maintenance that might need to be done. They collect the rent and send you a check. They also handle the sometimes protracted process involved when a tenant has to be evicted. You pay a management fee which is typically 8-12% of the monthly rent, some charge additional fees to cover expenses, and some charge a flat monthly fee. You can’t just blindly turn such a big investment over to anyone. You need to do your research when looking for a management company. Are there any real estate centered Meet Ups you could attend either in your local area or the area you want to buy in? It might be worth a trip to talk to some local investors and get recommendations for a management company. If you can’t travel, the internet has plenty of reviews for management companies so you at least have a starting point. Once you have a few recommendations you can start interviewing companies. The preliminary round can be over the phone but once you have your list further narrowed down, you probably want to make a trip down in person. Some key questions are: * How long has the company been in business in the local area? * What services do you offer? * How many properties do you manage? * Can the renter and I reach someone 24 hours a day? * What are the fees? * Under what circumstances can I cancel my contract? * Do the fees change when there is no tenet in the property? * How do you screen tenets? Learn more about your ad choices. Visit megaphone.fm/adchoices

Fights over money are a leading cause of divorce. Andrew’s wife Laura joins us to talk about getting a reluctant spouse on board financially. Laura does a lot behind the scenes for LMM but this is her first time on the show! She was the spender to Andrew’s saver when they met. But after a few years, he whipped her into shape. Laura’s parents aren’t bad with money but they didn’t teach her enough growing up to be good with money. By the time she met Andrew, her wages were being garnished. When the couple moved in together, Andrew said one thing he never wanted to fight about was money so they needed to communicate openly and often about it. Strong arming any topic, especially money, is a fast way to fail. A crash course in what someone should have learned over a few years isn’t helpful either. Addressing money issues as they come up is less contentious and less intimidating. If one partner has a business the other is not involved in, large business expenses can cause problems. You’ll need to “open your books” and help your partner understand things like return on investment for those big expenses. Money inequality can cause resentment on both sides and poison a relationship. This is why communicating often about money is important, to talk these things out before that resentment starts to build. Money isn’t the only way to value things. If one partner takes care of things like cleaning, laundry, cooking, home repairs, the other spouse is getting those things for free. Things like those have value too. Sometimes the problem is one partner thinks about the future much more than the other. If this is the case, show your partner what the future could be like if you’re on the same page with money: early retirement, exotic vacations, starting a business. No relationship should end over something like money. Communicate with your partner, show them why you manage finances the way you do. To help you to both have a better future. Show Notes Betterment: The easy way to invest. Jabbercast: A new way to listen to LMM! Learn more about your ad choices. Visit megaphone.fm/adchoices

If you are tired of your time and your income being tied together, you might have considered a career as a freelance writer. But can anyone actually make money writing? You can, and I do. I finally quit my full-time gig and now work for myself. I’ll show you how to become a freelance writer and quit your full-time job. Many people dismiss freelance writing, considering it not a real career. But a career is something you get paid to do. And if you can crack how to become a freelance writer and get paid a decent amount for it, guess what? You can have a career as a writer. How to Become a Freelance Writer You can begin to make money writing by starting your own blog and monetizing it. The problem is, this takes some time. You often hear about “overnight successes” in blogging or lots of other careers, but that is rare, very rare. It’s much much faster to get someone else to pay you to blog. That’s how I get paid to blog. You still need to start a blog though. Your blog is your personal portfolio. It’s a way to show potential clients what you can do. What’s Your Passion? It doesn’t matter. I enjoy writing about money because it helps people, but I wouldn’t call it my passion. If you want to make money freelance writing, find out what people are paying for. If one of those things happens to be something you’re passionate about, great! But telling people, they will automatically make money by following their passion is bullshit. So spend some time on freelancing sites and see what topic people are hiring bloggers to write about and start a blog about that. The more niche your topic, the better. If you want to blog about vegetarian cooking, guess what? A million other people already did it, and there are a handful of big, well-known sites gobbling up all the traffic. A Google search for those words brings up 15,900,000 results. You can still write about vegetarian cooking but how about vegetarian cooking for children or for menopause? Those bring up 2,800,000 and 802,000 respectively. The more niche you are, the faster you can make an impact. You don’t need to be an expert on a topic though. Here’s a secret. I didn’t know hardly anything about personal finance when I started writing for LMM. I listened to tons of podcasts, read tons of articles and books on the subject and learned as I went. You’re Not a Techy Great, you have your topic all picked out, and you’ve been educating yourself about it. Now you need to design your site and get it up on the web. But you don’t know how to do either of those things. You don’t have to be a web designer or developer to start a blog. Your grandmother could make a blog using WordPress. A staggering 30% of all websites were made with WordPress. WordPress offers hundreds of templates to choose from, and you can customize them with your branding. And WordPress is free to use. If you want to use some of the premium plugins, there is a cost but to build your site is free. You need to host your site too. You can do that at HostGator starting for just $2.75 a month, and HostGator is compatible with WordPress. Engage Your Audience Let’s be honest. Personal finance is not the most scintillating subject. It’s a vital one, but it can be pretty dry. But if I do say so myself, LMM takes a dry subject and makes it funny and interesting while providing easy to follow, actionable advice that will improve your finances. That’s what you want to strive for no matter what subject you choose to blog about. Use your own voice. I write as I speak (that’s why there are so many swear words in my articles) and it makes my posts more c... Learn more about your ad choices. Visit megaphone.fm/adchoices

We haven’t done one of these in awhile! Better Know a Millionaire is back to see if the other 1% really live that differently to the rest of us. Today we interview millionaire Adam Dicker. Adam made his millions by selling domain names, some for as much as eight figures! Adam has been in the business for about twenty years and was a VP at Go Daddy for a few years. Adam buys and sells domains that have expired and tries to stay two to three years ahead of trends, particularly in the medical and tech sectors. You can’t just go and buy a domain name with a trade mark in it. So no, five years ago you would not have been able to purchase Applewatch.com. No need to beat yourself up about that one. This business takes a lot of research. You have to buy a name that in the future, a business would want to buy. Like a lot of millionaires, Adam wanted a business that would make passive income. He once went to dinner before replying to an offer and in the space of that dinner, made an additional $50,000 from an anxious buyer. Doesn’t get much more passive than that. Adam looks at every day like he has to make enough money to pay for food for his family. He may have made $10,000 the previous day, but he forgets that and looks at the current day as an emergency that he needs money for. According to Adam, you always have to budget, all of us. It doesn’t matter if you make $10,000 a year or $100,000 a month. If you have no idea what is coming in and what is going out, you might find yourself going broke. Like nearly all of the millionaires we’ve interviewed, Adam doesn’t live a crazy life of luxury. He would rather watch football on a Sunday afternoon or go to dinner than stay in Five Star hotels across Europe. So again, we see that your average millionaire is not some jack off you see on TMZ, but just a normal person who knows the importance of living within your means. Show Notes Morimoto Imperial Pilsner: The Iron Chef beer! Adam Dicker: Learn to buy and sell domain names. LMM Community: Come join us in the Forums to discuss all things PF! Featured Image Photo Credit: “Proudly made in America. Printing 24/7 in USA.” by Miran Rijavec on Flickr Learn more about your ad choices. Visit megaphone.fm/adchoices

Do you have kids? What are you doing to teach your kids about money? Adam Carroll joins us to talk about teaching your kids the value of a dollar. Adam is one of our favorite guests here at LMM. We first met him to discuss student loan debt. Today he’s back to talk about teaching kids about money. Under-Educated More than anything, aside from health, money can make or break your life. Not in the sense that money buys happiness but that lack of money, or knowing how to handle the money you have, is a major source of stress. In 2014, 64% of American adults sited money worries as “a significant source of stress” making it number one on the list ahead of work, family, and health. You would think that something so fundamental would be well covered in schools, from kindergarten all the way through high school. Well, it isn’t. Maybe because there are “legacy” subjects taught that leave little room for new ones. Maybe because so much hinges on standardized testing and those tests don’t include a personal finance sections. For us tin-foil hat wearers, maybe because the powers that be like the system just as it is. It makes for good consumers. Whatever the reasons, kids aren’t learning even the basics of how to handle money. So it’s up to their families to instill the personal finance lessons that will carry them through life. What Age To Start Early, even earlier than you might think. By the time children are seven, their money habits are already formed. Age three is a good age to start money lessons. You’re not going to explain what a Roth IRA is to a toddler but even at this age kids can understand basic concepts. Explain that you need money to buy things and you earn money by working. Teach them delayed gratification. You can’t have everything you want now. The Stanford Marshmallow Experiment showed the importance of delaying gratification. Children were given one marshmallow and told if they waited to eat it, a short wait of about 15 minutes, they could have a second marshmallow. The study found that the children who waited had better life outcomes which were measured by things like SAT scores, educational attainment, and BMI’s. The children studied were between the ages of 7 and 9 so it seems to be true that your money habits are set by age 7. Money Isn’t Real How often do you use cash? Almost never for some of us. How often do your kids see you use cash? Maybe never. If your kid never sees cash, it’s hard to understand that you can’t just buy whatever you want because physical money is finite and a credit card is not. Adam devised a clever way to teach his kids about real money. He gave his kids $10,000 in real money to see if it would change the way they played the board game Monopoly. It did. The kids were more careful with the real money. By showing kids that money is a physical thing, you can teach them that once they spend it, it’s gone. Money is no different to cookies. If you have three cookies and you eat three cookies, the cookies are gone. Don’t Raise “Wanting” Kids Having kids is expensive. It costs $245,340 to raise a child to the age of 18. It costs more to raise “wanting” kids. You’ve seen them, the ones having a melt down in Target because they were told no when they asked for a toy. But the reason for the melt down isn’t just th... Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we dissect listener Andrew’s finances. What is he doing right, what is he doing wrong, and what can he do better. This financial life. Andrew is a long time listener and today he shares his financial situation with us to get some advice. Before Andrew found LMM he had student loan debt, credit card debt, high fees on what investments he had, no budget AND he bought a new car. Andrew recently married and brought about $75,000 of debt into the marriage while his wife had about $22,000 from student loans. They have paid off about $20,000 in a short amount of time. He moved his investments over to Vanguard to save on fees, and set up a budget. Andrew lives in Minnesota and the couple make about $100,000 a year. They pay just $600 a month in rent on a two bedroom apartment. The monthly living expenses are about $2,000. They want to buy a house but are first working to build their emergency fund and pay off debt. The student loans have a high interest rate, over 6%. He is paying $2,300 a month in loan payments. Andrew should speak to CommonBond about getting a lower interest rate. He is currently using the snow ball method to pay his debt but we recommend the stack method. Andrew has a Roth IRA and is working toward maxing that out by the end of the year. Once the debt is paid off, in about four years, Andrew would like to travel before buying a home. Buying a home should not be a given. A lot of people just do it because it’s the next thing you do but it’s not for everyone. Because he likes his job, Andrew is not in a big hurry to retire early. But it’s not if you don’t have to work no matter how great your job. We’re glad that we were able to help Andrew take control of his finances. Show Notes Sebago Bump: A rich, black ale. Mint: The easy way to budget. Betterment: The smart way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices

With so much of our personal fiance information floating around the internet, how can you secure your accounts? We’ll give you a few ways to stay safe. Many of us have had some aspect of our life hacked, bank account, credit card, naked photos. You have to protect your on-line information. Some sites are more secure than others. You are pretty safe at Betterment, maybe not so safe at your local carry out restaurant. So don’t use the same password over and over! Use a site like LastPass to manage your passwords. Use tiered passwords, a complicated one for things like bank accounts but a simple one for your Disqus account. Two-factor authentication means you provide two forms of identification, something physical like a key fob and a security code. Prey will use your web cam to periodically take pictures so if someone steals your device, say “cheese” mother fucker. You don’t have to be rich to be ripped off. Hackers don’t want to steal $10,000 from one person, they want to steal $100 from 100 people. Adding numbers and characters to your password helps but not much. Using a nonsensical string of words is more secure and easier for the human brain to remember than a string of numbers and characters. A user name is almost as important as a password. If you don’t have to use your e-mail address, use something harder to uncover than your own name. When answering security questions, lie or answer accurately but add a code word onto the end of your answer. What happens when you die? Well, you see a white light…No, put a list of your passwords in a secure place like a safety deposit box and give the key to a trusted person. This could be useful not just for death but in case you are ever locked up unjustly in a South American prison. Plan ahead. There is only so much you can do. Ever how clever we are and how sophisticated on-line security is, the hackers are more clever and more sophisticated. But you don’t have to make it easy for them. Show Notes Keymaster Farmhouse Smash Ale: A small brew with a smooth finish. Exile Ruthie: A smooth, gold lager. Betterment: A safe place for your emergency fund. Patreon: Help support LMM. Learn more about your ad choices. Visit megaphone.fm/adchoices

Most of us are not going to get rich simply from our jobs – we have a limited amount of time for actively working. To reach financial independence, we have to create sources of passive income. Smart real estate investing can bring in big returns and grow your net worth. Like investing in the stock market, real estate investing can seem intimidating. It’s really not though. There are just some key fundamentals you need to know before you get started. Everyone wants to be the Donald Trump of their neighborhood. But with less turnover. Fewer walls. Better inter-neighbor relations. OK, maybe that was a bad example. But, maybe not. “It’s tangible, it’s solid, it’s beautiful. It’s artistic from my standpoint, and I just love real estate.” – Donald Trump Maybe this human candy corn topped with cheese whiz is on to something. Real estate is a physical asset you can touch and is not going out of business any time soon. Unless people all of sudden choose to live off the land again… Nah! No matter how you slice it, real property is here to stay, which is why many choose to put their money into it. Investing in real estate has crossed all of our minds at one point or another. But if this is an investment option you’re considering, you may have no idea where to start. To successfully pursue investment opportunities in the real estate market, you must first do your due diligence to ensure that you understand the intricacies of your local market and the factors that dictate the profitability of what you’re investing in. In this article, I will offer you a broad overview of just about everything you need to know about beginning with investing in property; the very basics. And I promise, no more bear attacks or Trump references. An overview of real estate investments At a basic level, real estate investing is a method of making money by renting, flipping or owning residential, industrial, commercial properties, or parcels of land. Some investors may find these properties on their own, or through the use of an online real estate marketplace like Roofstock, the Multiple Listing Services, or Zillow. Residential real estate investments are the most common forms of real estate investing. These include single-family homes, condos, and townhomes that can be re-sold or rented out to turn a profit. For example, you buy a condo in Beach City 5 miles from you for $100,000, you rent it out on Airbnb for $100 a night, you make a lotta tuna. Simple as that. Well, maybe there’s a bit more to it. But more on that later. Larger residential properties and those that are intended for use by businesses fall under the category of commercial real estate. Owners can make money from commercial properties by leasing out office space or multifamily residential units. The rule of thumb is anything that’s rented out to a business and any residential building with more than 4 units inside it, is classified as commercial. These types of properties have different lending criteria when applying for a mortgage. Regardless of the type of property you own, you can benefit monetarily profit from an investment property in four key ways: rent, appreciation, tax benefits, and interest. Rent The owner of a single-family home, condo, townhome, multifamily property, commercial building, crowdfunded real estate or industrial real estate may generate rental income by leasing out all or ... Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we have a This Financial Life episode with listener Lindsay. We break down her finances to see what she’s doing right and where she can use some help. Lindsay is a second grade teacher living in Seattle. We’ll help her get her financial life in order. Lindsay’s salary is a little over $58,000 a year, it’s spread over twelve months and she makes a few extra thousand teaching summer school. Lindsay decided that 2015 would be the year she stopped ignoring her finances, partly thanks to LMM! Lindsay divorced in 2013 and it caused some tax problems. Your marital status matters on the last day of the year. So even though the Lindsay was married for almost all of 2013, for tax purposes, she was considered divorced. She ended up owing $2,400. She had about $20,000 in credit card debt after the divorce. Lindsay got a loan from Prosper to help conquer the debt. She also used Ready For Zero to help pay things back. Within three years she will have killed all that credit card debt! Lindsay also has $56,000 in student loans. Once she has paid off her credit cards she will focus more on the student loans. Lindsay has investments too. She has about $15,000 in a Traditional IRA but she is focused on debt for the time being rather than investing. Her rent is not unreasonable, her car is paid off although she has a bit of a long commute. What can Lindsay do better? Her Prosper loan interest rate is high. She should try Lending Club to see if she can get a better rate through them. She can contribute more to her IRA to reduce her taxable income. Lindsay has a lot of debt but she also made a plan that she is sticking to. We’re happy that we were able to play a small part in her success! Show Notes Lindsayliving.com: Lindsay’s lifestyle blog. Mint: Find out where your money is going. Patreon: If you appreciate LMM, donate here. Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s important to get the most out of your day. But you can take the quest for productivity too far resulting in burn out. Find the productivity sweet spot. During Andrew’s recent burnout, he realized he was taking the need for productivity too far. Sometimes you just need a night vegging out in front of a video game. We’re all motivated by different things, the key is to find out what motivates you so your productivity isn’t scattered and ineffectual. External forces, internal? Are you a morning person or a night owl? Knowing what moves you is important to get moving. If you have a month to do a project does it take you a month or three days? If it takes you a month, is the whole thing done the last day of that month? Do you like a stark space or one full of clutter and color? Are you a list maker? Especially for your long term list, go through it once in awhile and make sure you still need to do all the things you wrote down. Crossing things off is satisfying but things change and still doing something just because it’s on the list is anti-productive. Make sure you focus your productivity. Every minute doesn’t have to be accounted for, that’s how your get burn out. Show Notes Better Than Before: Mastering Habits of Our Everyday Lives Patreon: Donate here to keep LMM ad free. LMM Tool Box: All the tools you need to be more productive. Featured Image Photo Credit: “Xbox One Controller” by mastermaq on Flickr Learn more about your ad choices. Visit megaphone.fm/adchoices

Larry Ludwig from Investor Junkie is our guest today to explain what the Federal Reserve is, does, and why you need to know. Put simply, the Fed sets monetary policy and either adds or removes money from the system. There are twelve regional Feds across the country to help manage local banks. It was created in 1913 as a way to prevent feature economic disasters. Bit of a fail I think. The chairperson is appointed by the president but is supposed to operate independently of the government. Prior to 1971, we operated on the gold standard so the Fed made sure the amount of money matched the amount of gold. Now we operate on a “faith based” system where we rely on the government to determine the value of money. In order to help stimulate the economy after the crash, the Fed allowed banks to borrow money at 0% interest. The rate has been that low for seven years. Lowering the interest rates is meant to stimulate the economy. When rates are low, people can borrow money to buy things they couldn’t afford before. When interest rates are raised, that means that the economy is doing well and is at nearly full employment. The Fed is also tasked with keeping inflation/deflation in check. They have not always been successful but the average rate of inflation has been about 3% since the Fed’s creation. The Fed also determines how much cash banks must have in reserve. Ultimately it’s productivity that grows an economy and not slight of hand by the Fed. And a lot of economists consider all this smoke and mirrors to be merely kicking the can down the road, just delaying the next 2008 style melt down. Is the Fed good or bad? That’s up for debate. The Fed has helped pull us out of crisis but did they create the crisis in the first place? Are they creating artificial cycles? What can you do to protect yourself against the whim of the Fed? Make sure to have a good asset allocation strategy. Aside from that and repatriating, there isn’t much else you can do. It’s good to understand the Fed but ultimately, invest your money in the LMM set it and forget it style and don’t worry too much about what they are doing. Show Notes White Beer: A crisp, summer beer. Investor Junkie: Larry’s site dedicated to helping you become a better investor. The Creature from Jekyll Island: A look at the Federal Reserve. Betterment: Don’t worry about the Fed and invest your money. Patreon: Want to keep LMM ad free? Donate now! Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we interview Benjamin Miller from Fundrise. Fundrise is a crowdsourcing site that allows anyone to invest in real estate. Real estate can be a great investment but you need some serious money to do it. Not anymore. Fundrise allows you to invest small or large amounts of money in various properties. We even wrote a full review of Fundrise – you should check it out! The commercial real estate market has outperformed other investment vehicles for the last thirty years. It would be great if we could all become commercial land lords but most of us probably don’t have hundreds of thousands of dollars sitting around. With Fundrise, you need $1,000 to open an account. They have dozens of people looking at hundreds of possible investments. Finding a good commercial real estate investment isn’t easy. Fundrise negotiates the deal and writes then check and then offers the opportunity to investors. The investment management fee ranges from .33-.50% per year. How fast can you pull your money out of Fundrise? Not as quickly as you can with something like Betterment. Their notes have an average age of two years. You don’t have to be an accredited investor to invest through Fundrise. They have worked with the SEC to open certain investments to anyone who has the $1,000 minimum. You don’t want this to be a huge part of your portfolio but as the average returns are around 13%, this type of crowd sourced investing is something to seriously consider. There isn’t a deal for investors who aren’t accredited right now but Benjamin suggests setting up an account so you can see when there is a deal that you can get in on. Show Notes Fundrise: Crowd sourced real estate investing. Fundrise Extinction: Cool subway ad! Fundrise Internet: Next to be extinct. Fundrise Jobs: Welcoming all out of work bankers. River Horse Baltic Porter: Aged in Peruvian rum barrels. Molson Canadian: It’s the NHL play offs,what else would you drink? Learn more about your ad choices. Visit megaphone.fm/adchoices

Yeah, backdoor Roth IRA sounds pretty badass – badass but complicated. Many of us have tossed around the idea of having a traditions IRA or a Roth but what if you can have the best of both worlds? There are not many times in life that allow us to have our cake and also to eat it, but this is one of those times. Quick IRA Re-Cap We could do a year of shows devoted to all things IRA and there would still be questions. They are confusing so here is a bit of a refresher on the basics. IRA stands for an individual retirement account. It’s a tax-advantaged investment vehicle to save for retirement. There are several kinds, including SIMPLE, SEP, Traditional, and Roth. The last two are the ones we will be talking about today and the two that are most commonly used. Traditional IRA A traditional IRA lets you invest pre-tax income into an account that will grow tax-deferred. The money is not taxed until you withdraw it. You can withdraw funds after age 59.5. Putting money into a Traditional IRA lowers the amount of taxable income for the year you made the contribution. Not only does it lower you adjusted gross income, doing so can help you qualify for other tax breaks like student loan interest deductions or child tax credits. Roth IRA A Roth IRA is similar to a Traditional, but the money is taxed up front and not upon withdrawal after age 59.5. Roth contributions (but not earnings) can be withdrawn without penalty and tax-free at any time. After five years have elapsed after the first contribution, you are allowed to withdrawal up as much as $10,000 of the earnings penalty-free to pay for certain qualified expenses. Contribution Limits Both Traditional and Roth’s have the same contribution limits, $5,500 per year for 2016 ($6,500 if you’re aged 50 or older.) But there are income limits for high earners. If you’re single and earn over $129,000 or file jointly as a married couple and earn over than $191,000 you are forbidden to contribute to a Roth IRA entirely! Penalties Withdrawals from a Traditional are considered regular income, and if you are younger than 59.5 when you make the withdrawal, the amount you take out will be hit with an early withdrawal penalty of 10%. You can pull contributions to a Roth anytime without tax or penalty. The rules for earnings are different. If it has been less than five years since your first contribution, you may be taxed on earnings even if the funds are used for one of the exceptions described below. Exceptions The thought of locking up your money for so long puts many people off the idea of an IRA, but there are exceptions: You can use up to $10,000 from your Traditional or Roth IRA toward the purchase of your first home. You can use IRA money to pay for higher education expenses not only for yourself but also for immediate family members (your spouse, children, and grandchildren). There is no dollar limit. You can make withdrawals to pay for unreimbursed medical expenses if those expenses are more than 10% of your adjusted gross income, or to pay for health insurance premiums for you, your spouse or children during a period of unemployment. Which is Right for You? If you expect your tax rate to be the same in retirement or higher than it is now, the Roth IRA is a stronger choice. A traditional IRA makes more sense if you expect your tax rate to be lower in retirement. But what if you could have the best of both worlds? There are not many scenarios in life that allow us to have our cake and also to eat it, but the MF has figured one out when it comes to IRA’s. Why rollover 401K? The best reason to roll an old 401K into an IRA is that there are a lot of hidden fees in some 401k’s and the investment options a... Learn more about your ad choices. Visit megaphone.fm/adchoices

What is a robo advisor and should you use one? Larry Ludwig from Investor Junkie joins us to tell us what we need to know. A robo advisor is an on-line money management service that uses automated algorithms to give investment advice. It takes humans out of the equation. These are companies like Betterment, which was the first robo advisor, Wealthfront, and Personal Capital. They are geared towards younger people who are comfortable with transacting business on-line and are less expensive than traditional investment advisors. Robo advisors use a lot of complicated math but basically they look at past returns to determine future returns. A problem with some robo advisors is that while they’re tax efficient within their portfolio, they don’t all have an over all picture of your investments so are not tax efficient overall. A robo advisor should be easy to use and inexpensive. Larry recommends Betterment above the others. Robo advisors aren’t perfect but it’s better than just throwing your money into an account and hoping for the best. And if you are the set it and forget it type, they’re the easiest way to do that. Show Notes Son of a Peach: An American wheat ale. Investor Junkie: Larry’s site about all things investing. Betterment: The easy way to invest. Personal Capital: Invest with confidence. WiseBanyan: Free financial advisors. Learn more about your ad choices. Visit megaphone.fm/adchoices

A few months ago we did an introduction to bonds episode. We wanted to get a little deeper into the topic and a listener, Eric, agreed to help us out. As you heard in the disclaimer, this is a complex topic. Stick with it though, it will all make sense by the end of the episode. There are many types of bonds but the most basic description would be, a bond is an IOU. A coupon is the interest payment and you get that on a semi-annual basis until the bond matures. At maturity, you get the face value back. A government bond is a treasury bond. These are often the benchmark that other bond rates are based on. Agency bonds are issued by government-sponsored agencies like Fannie May. Mortgage-backed securities are mortgages sold off by the mortgage lender. Corporate bonds are what many of us are familiar with. These are sold when a company needs to raise money. A municipal bond is issued by a city, town, state, or even a water company to fund expenses. Even Yankee Stadium has bonds! The yields are lower but from a tax stand point, they are a good investment. Bonds are affected by interest rates and their credit ratings. Triple A is the highest rating. Anything rated below Triple B- is considered a junk bond. Since most of our audience are buy and hold investors, we don’t need to be concerned with bond pricing on a day to day basis. You just need to be happy with the coupon payments you will receive and the credit rating of the bond. This is why Treasury bonds are a good investment for buy and holders. Phew, get all that? Show Notes Backpocket Brewing Penny Whistle: A Bavarian wheat with spice notes. Betterment: The easy way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices

Being completely burnt out can happen to the best of us and it is not uncommon. Especially for vacation deprived Americans. But we can’t all quit and go live on the beach. So we have to recover somehow. You can bounce back. A break and a few deep breaths and back on track. We did an episode on burnout which generated a ton of emails and still does. Many of you have suffered or are suffering burnout yourselves. What can we do about it and what can we do to prevent it in the future? What Is Burnout? “Burnout is a psychological term that refers to long-term exhaustion and diminished interest in work.” That’s the technical definition. In real speak, “fed up with this shit!” The Symptoms Do you know the difference between being physically tired versus mentally tired? I’m a big fan of physically tired. Being tired from a long hike, a good run, helping your best friend move out of their fifth-floor walk up. That kind of tired quiets the mind and lets you sleep like a baby. Mentally tired sucks and it’s the kind of tired that being burnt out produces. When you’re mentally tired, your brain won’t shut up. It’s the kind of tired that won’t allow your thoughts to stop long enough to let you rest. Being burnt out can also result in cynicism and detachment. “This job sucks. Things will never get better.” “Nothing I do makes any difference.” “This job creates nothing of value in the world. I sit at a desk eight-plus hours a day and don’t engage my brain at all.” Hard to find motivation with those kinds of thoughts ringing in your head. Being burnt out sucks the meaning and engagement out of work life. The Causes When the economy tanked in 2007-8, many employers began laying off workers. Those lucky enough not to lose their jobs now were expected to do the work of two, sometimes more, people. And they did it and did it without complaint lest they be next. By mid-2014, all 8.7 million jobs lost were replaced. But in the interim, a lot of people got burnt out. During that time, people felt a lack of control. They felt they had no control over things like scheduling, what assignments they got, the amount of work they were now expected to make up in the face of layoffs. Because people were now expected to take on work once handled by someone else, expectations were unclear. And if you had a question about how to do something, there was no one to ask. The person that used to do it was long gone. Workplace dynamics weren’t exactly pleasant either. If it was you or the guy next to you, you would be looking for any reason to throw him under the bus and he was doing the same to you. Not exactly a healthy, supportive environment in which to spend eight or more hours a day. Where Does It Happen? Well, work is the most likely spot but not the only place it can happen. Even stuff you normally enjoy can burn you out if you do too much of it. I had a friend who liked playing soccer in the organized leagues in the city. He was a keeper and a pretty good one. Eventually, people he played with who also played on other teams, started calling him when they needed a ringer for a playoff game or when the regular keeper couldn’t make it. Eventually, he got sick of playing soccer, something that had once been an enjoyable pass time. Or those parents, usually mothers, who get sick of doing everything around the house and go on strike. They refuse to cook, clean, or do laundry until they get some help. Usually, they fold because a house full of kids can stand dirt, smelly clothes, Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we’re answering listener questions. Student loans, home equity loans, over paying your mortgage and a day in the life of a data engineer. We love to answer your questions on the podcast. If you are wondering, odds are someone else in the audience would like to know too. 1. I miscalculated and took out too much in student loans. Should I pay it back right away? Yes, pay it back if you don’t need it. Pay off the higher interest rate loan first. 2. Should I take out a home equity loan to pay for roof repairs? Yes, a home equity loan will have a lower interest rate than a personal loan or heaven forbid, putting it on a credit card. 3. Should we use Betterment as a savings account for a down payment, to bulk pay student or car loans, and as a place to keep a 3-6 month emergency fund? If you’re going buy a house in less than five years, no. Yes to the loans again applying the five year rule. Yes to keeping your emergency fund there. 4. How to allocate extra money to mortgage payments versus to a retirement fund or emergency fund? It’s almost never best to over pay the mortgage. It’s better to throw extra at the retirement account. If you do want to pay extra to the mortgage, pay more than once a month to cut down on the interest you pay. 5. What’s a typical day for a data engineer? Data engineer is a niche job so it commands good money. Andrew has an undergrad in info technology. He pulls data from various sources, builds warehouses to store it, and gathers insight from the culled data. He goes to lots of meetings. Show Notes: Betterment: The easy way to invest. Patreon: Help support LMM. Learn more about your ad choices. Visit megaphone.fm/adchoices

Balance is important in all aspects of life, including your financial portfolio. Find out what well-balanced means when it comes to your portfolio. What makes up a well-balanced portfolio? Andrew breaks it down for us. Part of it depends on your age. The younger you are, the more risk you can afford. Diversity is important too. Many Americans have the majority of their wealth locked up in their home. Owning stocks and having retirement accounts is important too. If your employer offers any matching, take it. Even if you have debt, it’s free money! Have some money invested internationally. Vanguard’s International Developed Market ETF can get you there. US investments only account for one-third of the world’s market so by only investing in US companies, you’re missing out on the rest of the world. Never spend more than one-third of your take-home pay on rent. The same percentage goes for owning a home. The home you live in should not account for more than one-third of your wealth. If you like to buy individual stocks, one company should never make up more than 10% of your investments. Make sure you have an emergency fund. Six months of expenses is the gold standard but get something together if you can’t manage that just yet. Keep 6-8 weeks expenses in a checking account. Any start into investing is a good start. Once you have a handle on what you’re doing, make sure you follow these tips to help perfect your portfolio. Show Notes Personal Capital: The investing version of Mint. LMM Ultimate Investment Strategy: Andrew lays out a blueprint for you. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we break down listener Sylvain’s financial life. What is he doing right, what is he doing wrong, and what could he be doing better? Our This Financial Life series is back. One of our listeners lays out his financial picture for us and we critique it. Sylvain immigrated to the US from France in 2009. He does not have student loan debt because education is heavily subsidized in France. He’s now a permanent resident working for a private company. He currently lives in the Berkeley area which is expensive. Sylvain and his wife bring in about $7,000 a month and spend between $4-5,000. They share a credit card, split the bills, have $10,000 each in an emergency fund and are saving for a home. They expect to spend about $500,000 to buy a place. The money they are saving toward a home is invested currently. They discuss finances once a month. Sylvain was leery of getting a credit card but wanted to build credit in the US. He only uses it when he has the cash to pay it off immediately which is how we should all use our cards. He has a 401K which he plans to use to fund his retirement. Sylvain is doing well. His family has an emergency fund, they pay off their credit cards every month, have their savings invested and have a retirement account. And now if you’ll excuse me, I’m going to start packing for France. A few of you probably had the thought too. Show Notes Patreon: Help support LMM Betterment: The easy way to invest. Mint: Start tracking your spending today. Learn more about your ad choices. Visit megaphone.fm/adchoices

We haven’t done a five questions for awhile. Today it’s back! Andrew and Thomas answer five questions submitted by our listeners. Today we answer questions about bonds, interest rates, and one of our favorite subjects, retirement. 1. If you’re young and looking to grow wealth, why bother have 10 or even 5% invested in bonds? If you’re in your early 20’s, go ahead and go 100% stocks. As you get closer to retirement, you move more to bonds. This is what a life cycle fund does for you. 2. Am I going to incur a lot of fees if I take money in and out of my Betterment account frequently? When you pull money out, Betterment will let you know the tax implications of doing so. That’s one of the reasons we tell you to buy and hold. But even with the taxes, you will almost always make more in Betterment than making dick interest in a savings account. The bigger question is why Joe is not leaving that money alone. 3. Wouldn’t it be beneficial to have a traditional IRA for your working life, retire, wait a year, and then withdraw the money? Yes, your tax rate will be lower after retirement. You can even start slowing converting to a Roth. 4. How does the Fed lowering or raising interest rates affect me? Banks offer us loans with interest rates that are based on the Fed rate. The higher the Fed sets it, the higher the interest rate the banks will charge us to borrow money. 5. I have unvested stock options. What are the implications of exercising them before the IPO? It depends on the price. You could clean up or you could end up under water. The most important thing to consider is the taxes. Thanks everyone for sending in your questions! Show Notes Patreon: Help support LMM Keegan Ales Hurricane Kitty: An India pale ale. Betterment: The smart way to invest. PS: Gawd, PF nerds don’t know who Vince Lombardi is! Embarrasing. Learn more about your ad choices. Visit megaphone.fm/adchoices

We are anti-fee at LMM whether they be bank fees, credit card fees, or investing fees. Uri Levine from FeeX joins us to discuss avoiding investing fees. You probably go out of your way to avoid having to pay a $3 ATM fee but you might be losing much, much more than a few dollars through investing fees. Americans pay $600 billion in investing fees every year. That is 4% of the Gross Domestic Product! On an individual basis, you lose about one third of your retirement money to these fees over time. Types Of Fees Expense Ratio: This fee is charged for mutual funds, ETF’s and no-load funds. Expense ratio is what it costs an investment company to operate a mutual fund. Expense ratio is determined by a yearly calculation. The fund’s operating expenses are divided by the average dollar value of its assets under management. Operating expenses are taken out of a fund’s assets and lower the return to a fund’s investors. Plan Fee: If you have a 401(k), the provider may be charging you a plan fee for the privilege of holding your money. Your bank is already doing that! Advisory Fee: If you use a financial advisor, you’ll be charged a percentage fee. This is often negotiable. Real Dollars You might know what percentage you are paying but how much is that in real dollars? The average actively managed fund charges 1.25%. That doesn’t sound like much but over time, it adds up. It adds up to a lot. If you invest $100,000 in a fund with a 1% annual fee, which is less than average, it will cost you nearly $28,000 over twenty years, according to Securities and Exchange Commission calculations. If you had that $28,000 to invest, you would have earned another $12,000. How To Pay Fewer Fees Tailored investing advice is expensive. It might seem like paying a “highly trained expert” would guarantee higher returns than all those slobs who can’t afford an advisor are getting but a big chunk of those returns will be eaten up by fees and commissions. Under 1% is a good percentage to look for and you’ll find fees that low and lower with Index Funds and ETF’s. The average traditional index fund has a fee of 0.74% and the average ETF fee is 0.44%. Vanguard’s lowest fee fund is the Vanguard 500. The fee is 0.17%. Betterment charges a fee of 0.35% on the first $10,000 invested. If you’re choosing funds through your employer, it’s likely that no one in your HR department is an expert investment advisor so don’t count on them to explain the fees to you or even know what you’re talking about. Read the prospectus of each choice. That’s where you’ll find information about the fees charged. If you don’t like what you see, do some research on your own to find a fund with better fees and suggest it be included in the choices. FeeX As the saying goes, if you want something done right, or in the case, fairly, you’ll have to do it yourself. Uri was once charged thousands of dollars in fees on a retirement account. After lots of phone calls and time wasted on hold, he got the fees waived. But it made him wonder how many other people were being charged fees and if they were even aware of it. So he did the only logical thing; started a company to help root out those hidden fees and find alternatives. That’s when FeeX was born. FeeX will analyze your investments to uncover where you are paying fees and how much you’re paying. They will then find you cheaper alternatives with the same asset allocation. Learn more about your ad choices. Visit megaphone.fm/adchoices

What is a penny stock? Can they make you rich? Well, it worked for our guest Timothy Sykes who turned $12,000 into $4.2 million by trading them. Timothy took his bar mitzvah money and started trading penny stocks against his parent’s wishes. What they warned him would be a hard lesson in the value of a dollar, turned into a small fortune. What Is A Penny Stock? Penny stocks are stocks sold by speculative companies for under $5 per share. Penny stocks are usually growing companies that have limited cash and resources or companies in dire financial trouble, often already in bankruptcy. As such, they are much riskier than traditional stocks. You don’t trade penny stocks with the intention of finding the next big thing, rather, you’re trading momentum. If you’re wrong about a pick, get out fast. This is not a buy and hold discipline. When a “conventional” stock is down, over time, it’s likely to bounce back. That’s not the case with penny stocks. The companies often go out of business before a bounce back can happen. Short Selling You can make money betting against a company too. You take a negative position and sell first, then buy. If you see a stock that you think is over valued at $10 a share, you sell it and buy it back later at $2 a share. How do you sell a stock you don’t own? You borrow from your broker. You’re betting on failure. What Makes A Penny Stock Risky? This all sounds good, take a small amount of money and turn it into millions through penny stocks. But nothing is that easy and the vast majority of penny stock traders lose money. There isn’t much publicly available information on these companies and some of what you can find is from dodgy sources. Never risk disaster, don’t be sure of anything. Some of the companies are very young so there isn’t much information to be had. Many are in bankruptcy making it hard to find a fair valuation. The exchanges that these stocks are sold on do not have any minimum requirements to remain on the exchange. Because these stocks don’t have a lot of liquidity, you might not be able to sell them. More Is Not Always Better If you have $1000 to buy Apple stock with, that won’t get you much, currently less than ten shares. But if something is selling for .50 a share, you can snap up 2000. It seems more likely that your .50 cent stock will rise to $1 a share and you’ll double your money. But you have to consider the value, not just the price. The value is what someone else is willing to pay for something. In this case, part of the value of the stock is the value of the company. And a company selling shares so cheaply, is not doing well. It’s better to own part of a company that is making money than losing it. Do Your Research This kind of trading takes a lot of research. Timothy spends about 17 hours a day doing this. And as mentioned above, it isn’t easy because there sometimes isn’t much information to be had and what you find might not be accurate. Look for momentum, look for warning signs. Yahoo Finance is a good resource. The SEC website also contains a search engine where you can find all official filings made by a penny stock or any notices about an enforcement action from the SEC directed at any particular penny stock. You can use the lack of coverage for penny stocks to your advantage. CNBC and the Wall Street Journal aren’t following them. But you are and if you see some momentum, the company just got a big order for example, there is a lag between the time you see it and the time more casual observers see it. General Rules Look for big movers based on a big earnings win or a big contract win. Look for signs of economic value gains. Learn more about your ad choices. Visit megaphone.fm/adchoices

College costs are rising. If you have kids and want to help them pay for college, the earlier you start a 529 Savings Plan, the more it will grow. Kathryn Flynn from Saving For College will explain the fine points. A 529 Plan is like a retirement account for college. You contribute with after tax dollars and are not taxed when the money is withdrawn as long as it is spent on educational expenses. You do have to name a beneficiary but can change it once a year. There are two types. Pre-paid which is more restrictive. You are locking in current prices. The more common type is the college savings plan. You can invest in any state’s plan. If your kid forgoes college for the starving artist route, you can change the beneficiary, use the money to fund your own education or make a non-qualified withdraw. You will pay income tax and a 10% penalty on earnings. You can control the level of risk of the investment with an aged based investment option. The closer your kid is to college, the less risk you want to take and can weight the investment appropriately. Kathryn’s site has a cool planner. You input some information and it will generate how much you need to save for college. You can buy 529 Plans direct or through an adviser. You can use 529 money to pay for lots of different types of education, community college, a four year college, trade schools and some study abroad plans. If you want to start even before you have a kid, you can designate yourself as beneficiary and then change it to the child once they have a social security number. While funding your kid’s education is important, it is not more important than your retirement. Always fund retirement first. College isn’t getting any cheaper so start saving now. Show Notes Saving For College: Kathryn’s guide to 529 plans. Betterment: The easy way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices