Listen Money Matters - Free your inner financial badass. All the stuff you should know about personal finance.

We break down Dave Ramsey’s investing strategy. Can we all retire millionaires as he promises? Today we find out. Dave Ramsey is a well respected financial guru. He has helped many people begin their personal finance journey. While we disagree with the math behind Dave’s snowball method of debt reduction, you will pay off debt if you follow it. We reviewed Total Money Make Over and came away pretty (but not entirely) impressed. Today we take a look at his investment strategy. Guide Dave Ramsey’s Guide to Investing is a free PDF available on-line. It’s not exactly a weighty tome, just 17 pages, two of which are the cover page and table of contents. Dave’s investing strategy consists of just three steps: * Ask yourself specific questions. Things like at what age you want to retire, what kind of lifestyle you want to live, etc. * Diversify. This section is just four sentences long, and two of them speak of eggs and baskets. * Stay focused. This is basically the sum total of Dave Ramsey’s investing strategy. It is heavy on cliches (I counted four) and light on advice or even basic information like explaining different types of investments. If you don’t know anything about investing, Dave’s advice won’t tell you much. At LMM, we want our listeners and readers to be fully informed. That’s why we produce things like Investing 101: An Introduction to Simple Investing. Once you understand the basics, we’ll explain the various types of investments available. The Rule of 72 The rule of 72 is a method Dave recommends as part of building your investment strategy; it identifies your investing timeline. You divide 72 by the rate of return you get on an investment. That number is about how many years it will take for your investments to double in value. There are a few problems with this. Numbers and averages aren’t the same things. The bigger problem is that Dave uses 12% as the average return you can expect to earn. This number is exaggerated. At LMM, we use 7% which is a little lower than the average rate of return you can expect in the market over the long term. He posits that if you invest $100 a month from age 25-35 with a return of 12%, you will retire with just over one million dollars. The backlash was immediate. Dave’s defense was that his advice was “inspirational and instructional.” He continued, “…if you save money over time, you’ll have some.” Well, no shit Dave. I get the inspirational part. One hundred dollars a month doesn’t sound unreasonable, and a million dollars sounds like a lot. But I think most of us could do with a bit more of the instructional bit. But you don’t need instructions because Dave will hand you off to one of his ELP’s! More on that to come. Buy and Hold Dave encourages long-term investing. In order to play the long con, you have to tune out a lot of the coverage about the stock market and the economy. Good news doesn’t sell as well as doom and gloom, and if you jump every time you hear scary economic news, you will never be a successful investor. We show you how to take the emotion out of investing so that your decisions are based on data and not the lates... Learn more about your ad choices. Visit megaphone.fm/adchoices

We hope LMM is your go-to place for all things personal finance but there are other resources available. We share some of our favorites. Podcasts APM Marketplace: News on business, money, and economics. Stacking Benjamins: Our buddy Joe! If you like LMM, you’ll love this podcast. Joe was a recent guest on Episode 81. Books The Simple Dollar: Trent Ham’s guide to wiping out debt. I Will Teach You to Be Rich: Ramit Sethi’s book for young people at the start of their personal finance journeys. The Richest Man in Babylon: Personal finance taught through fables by George Clason. Wildcat Currency: Recent guest Professor Edward Castronova’s new book on digital currencies. The Intelligent Investor: Written by Benjamin Graham, Warren Buffett’s mentor. Can’t get much better PF bona fides than that. The Four Hour Work Week: Tim Ferriss’ first book which has evolved into a wildly successful series. Blogs Get Rich Slowly: We’ve interviewed founder JD Roth and writer Kristen Wong. One of the first successful PF blogs and still a major player. Jim Collins: The inspirational proponent of “eff you money.” His blog is hidden but we found it for you! Ready for Zero: Great friends of LMM’s. If you’re in debt, they’ll get you out. We spoke to Claire in Episode 42 about this invaluable service. Financial Samurai: Reach financial independence sooner. Mr Money Mustache: Early retirement through extreme frugality. Tools Mint: Our favorite budgeting tool. If you’re a beginner to PF, this is the place to start. Betterment: LMM’s favorite investing tool for beginners. Movies Maxed Out: A documentary about predatory lending practices. How the Economic Machine Works:... Learn more about your ad choices. Visit megaphone.fm/adchoices

If you read or listen to anything related to personal finance, you have heard of Vanguard Funds. But WTF are Vanguard Funds and why are they so popular? Vanguard and its founder, John Bogle, are investing legends and for a good reason. Bogle founded the first index fund, beloved of hands-off investors everywhere, in 1975. That Vanguard Fund, the Vanguard 500 Index Fund now has more than $500 billion under management. What is Vanguard? Vanguard is an investment advisor with more than $5.1 trillion under management. Vanguard is also the leading provider of mutual funds and second largest provider of ETFs. The founder, John Bogle, has long been a champion of offering low cost, low effort investing to the average person. Why are Vanguard fund fees so low? Because Vanguard is not owned by outside stockholders as most investment management companies are. Outside investors want returns, and those returns come in the form of fees charged to customers. Vanguard has no outside investors. The company is owned by its funds, and the funds are owned by their shareholders, which is everyone who invests with Vanguard. This structure is why Vanguard funds have low fees. Those low fees mean more money in the pockets of Vanguard’s investors/owners. Why Fees Matter When you see a fee of 2% (if you pay attention to investing fees at all), you think that sounds pretty good! Two percent is nothing. And that’s true. A 2% interest rate on your savings account is nothing. Getting 2% off when you buy a dress is nothing. But a 2% investing fee isn’t nothing. It’s something; it’s a lot of something. And that something is the money you have to live on in retirement. If you had $100,000 invested earning 6% for 25 years and paid no fees, your $100,000 would become $430,000. If you paid a 2% fee in that same scenario, your $100,000 would become a mere $260,000. That seemingly small 2% just obliterated nearly 40% of your retirement savings! Why We Love Vanguard Funds We love Vanguard, and we aren’t alone. “According to a recent Harris Poll, which identifies and ranks the strongest brands in nearly 100 categories, Vanguard is the only financial services company in the “Top 13 Brands of the Year with the Largest Equity Increases.” They are also ranked as the top financial services brand in the investment category.” Vanguard opened up investing to the masses. You no longer had to have a million dollars and a personal financial advisor to grow your money in the stock market. Investors also love the Vanguard philosophy that a mutual fund company should be managed with the interests of the fund shareholders at the forefront. And low fees are in the interest of the shareholders. Vanguard funds average expense ratio is 0.19% compared to the industry average of 1.08%. And putting paid to the myth that paying more means better performance, 86% of Vanguard funds have outperformed similar funds for the last five years and had an outperformance rate of 94% over a ten year period. VG Mutal Funds When you invest in a mutual fund, you are invested in hundreds of individual securities at the same time. This protects your investment by lowering your risk. All of your eggs are not in the same basket. If one basket does poorly, the other baskets can offset it. Mutual funds are an inexpensive way to invest. You pay one expense ratio rather than paying a commission each time you buy or sell individual securities. Learn more about your ad choices. Visit megaphone.fm/adchoices

Want to earn some extra cash? Have some credit card or student loan debt you would like to pay off? Maybe you want to finally take your dream vacation or have some extra money to crank up your investing. We’ll teach you how to make money on the side to put toward whatever your goals are. How to Make Money With a Side Hustle? A side hustle is a way to make some extra money that is outside of your normal day job. For many people, the hustle will be something that they’re passionate about, a hobby. The idea is to find a way to monetize that hobby. Your hustle doesn’t have to be a hobby, nor does it have to be something done online although a lot of the information you find on the web will be about online hustles. If you’re into real estate, then getting to rental property investments could be great side hustle and a great way to to make some passive income. If you baby sits on the weekends, that’s a side hustle too. Choosing A Hustle Choose your hustle carefully. It’s ideal if can monetize something you enjoy, cooking for instance. Is your cooking good enough that other people would be willing to pay for it? Can you find enough clients to make it worth your time? Just because you enjoy something doesn’t mean it’s something people will pay you for or that there is a big enough market for that thing. Maybe you don’t exactly feel passionate about babysitting the way you do about cooking but you live in a neighborhood with lots of families and they would pay you to mind their children. The hustle really shouldn’t be something you hate doing though. Great, people will pay you to mow their lawns and you found enough clients to make some good money. But if you hate mowing lawns, it’s hard to stay motivated. Money isn’t enough motivation for everyone. Try to find that sweet spot where you’re being paid and maybe not loving what you’re doing, but not loathing it either. Try to think of a niche within your chosen hustle. You love taking photos and who needs photos? People getting married! There are lots of wedding photographers though and many of them are full-time professionals which you are not. Not yet at least. You know who else needs photos? Competitive Bodybuilders. And there are a lot fewer photographers specializing in this so there will be less competition for clients. I know this is a weird example but I have a friend who did this, so it’s a real-life one! When Do You Hustle? Even though we all have the same 24 hours in a day, some people have more time than others. If you have a lot of responsibility, you will need to deliberately carve out time to work on your hustle. Getting up an hour earlier than normal is a good time to work because you are less likely to have interruptions. If you don’t have a family, you might have a fair amount of free times on weekends to work. You might also need to re-prioritize your time. If you’re spending an hour or two watching television, that is a poor use of time. Take that time and set it aside to work on your project. How To Monetize Spread the word. Let’s go back to the babysitting example. You can always tell who has kids because people with kids never shut up about them! And people who have kids are friends with other kid having people. It just takes one happy client to get word of mouth recommendations rolling. Find online forums and parent meet up groups in your area. Post your services in the forums, post signs where the meetups are happening. Attend any gatherings related to your hustle, meetups, conferences. The connections you make might not pay off immediately but the more people you meet, the more potential clients you meet. If your hustle is online, the same rule applies, Learn more about your ad choices. Visit megaphone.fm/adchoices

The finer points of my personal investment strategy including emergency funds, checking and savings accounts, and investing beyond Betterment. An emergency fund is vital as we discussed in Episode 64. But we define that a bit differently than a lot of people. You should not have a savings account. You need a checking account that contains one month’s expenses plus 150%. So if you spend $2000 a month, your checking account should contain $5000. In lieu of a savings account which makes less than 1% interest, you should use a tool like Betterment to stash your emergency fund. The money here will grow at an average of 7% a year and is liquid within a few days. This is controversial to some but it is not risky. This account should be funded up to $25,000. Should you participate in your company’s 401K? Never turn down free money. If your company matches, you should contribute the same amount into a 401K even if you have credit card debt. Now things are a bit more comfortable. Between your checking account and investment account, you have about $30,000. This is your working capital. We’re comfy now but it’s no time to get complacent. We’re going to take a little risk by investing in something like individual stocks or a fund with a company like Vanguard or Fidelity. The next step is for advanced investors with $100,000 or more invested. You can afford a little more risk. Andrew has had very good returns with Lending Club. Not for the faint of heart but the rewards can be enormous. Don’t forget, we’ve also put together a list of the top vanguard funds we know about – you should check them out! Now go out and be the best investor you can be! Show Notes The Ultimate Investment Strategy Blueprint: Andrew’s recent blog article. Vanguard: A low fee investment management company. Betterment: Where your emergency fund should be stored. Use this link and get six months free investing! Nominate our Podcast for a FinCon Spotlight Award: We all know someone in the FinCon Community or beyond that is doing interesting, far-reaching work to help people with their money. Learn more about your ad choices. Visit megaphone.fm/adchoices

You ask and we answer. Five listener questions on everything from Dave Ramsey to credit cards to how to stay disciplined with spending. 1. What is Lending Club and how is it classified? Lending Club is a market place for crowd sourced loans. It should be a tiny portion of your portfolio because it’s very risky. It would be more akin to something like a penny stock than a bond. 2. Why do we rag on Dave Ramsey so much? Oh, you noticed. A couple of reasons. LMM’s doesn’t like the religious overtone to everything he says and writes. We also disagree with his snow ball method of debt reduction. It doesn’t make sense mathematically. We go into this in great detail in Episode 95. We also give Dave a lot of credit for making people think about personal finance. Anyone doing that is doing a good thing even if we disagree with the tone or approach. 3. How do you develop the discipline to not spend money? In the beginning at least, surround yourself with personal finance. Read books, listen to podcast, discuss your goals with your friends and family. Put it in the front of your mind until it’s just a habit. Also use our friend Tony Stubblebine’s Lift app to help you build good habits. 4. Is it crazy to value time and freedom over money when it comes to the hours you work? Definitely not crazy! LMM’s delved into this in Episode 41 and it’s an important issue for us. The five day work week is largely a result of our Puritan work ethic here in the states. There are plenty of examples of other countries and increasingly, companies here at home that are moving to four day work weeks. There are many benefits to both employer and employee. Try to foster this way of thinking in your own company. The government isn’t going to help us out here. It has to be a grass roots effort one company at a time. 5. I grew up being told credit cards are evil, you seem to disagree, why? And do credit scores really matter? If someone steals your cash, the cash is gone. If your credit card is stolen, you’re out nothing. With cash back rewards, your life can be a small percentage cheaper than if you had paid with cash. Spending via a credit card is easier to track than cash spending. Credit scores do matter. When you take out a loan for a home or car, the higher your score, the better your loan terms. They are increasingly mattering for things like renting an apartment and getting a job too. Having a good credit score is never a bad thing. The best way to do that is to pay your balance in full every month, no exceptions. We love these episodes. Keep sending in your questions! Show Notes The Lost Art of Negotiation: Andrews’ article on how to get a raise, more time off, maybe even a four day work week! Betterment: LMM’s favorite investing tool. Use our link and get six months free! Learn more about your ad choices. Visit megaphone.fm/adchoices

Your resume can make all the difference in a tough job market. We’ll find out what you need to build the perfect resume so you land that job. If you haven’t done a new resume for a while, some things have changed. Since most resumes are sent electronically, you don’t have to buy the fancy paper. It’s a good idea to have a few copies to bring to interviews but plain printer paper will do. Keywords are important. Some companies have a program that will scan through them. Use the words that are in the job post in your resume so those keywords get a hit. A cover letter is still important if the interview will be the first time you are meeting the interviewer. Include your skills, why you are applying and why you want to work for that company. Again, using keywords are important. Some things you want to leave off your resume: any job you worked for less than six months unless it’s covering a gap in employment. Don’t use action words like, “achieved” or “adapted.” Don’t do a “cutesy” resume, just a standard one. Don’t use an unprofessional e-mail address like [email protected]. Get a g-mail address using your name or initials. You can leave hobbies and interests off entirely unless you’ve just graduated and need something on your resume. These are some things you should include in your resume: Use a standard font like New Times Roman or Arial and a font size between 10-12 point. If you have more than five years experience, you can spill over to a second page, if it’s less than five years, it should be a single page. The bullet points under each job should number ten or fewer with the greatest amount under the most recent job and tiered down from there. Jobs that you held while going to school should be included even if they aren’t related to your field. It shows that you were ambitious and any job will develop certain skills, like dealing with customers or learning new software. If you’ve never done a resume or yours’ is out of date, there are lots of resources available to help you and I’ll include them in the show notes. There are even services that will create a resume for you so if you aren’t comfortable with Word, that is an option but they do charge a fee. Now that we’ve helped you create a killer resume, what next? Build a good Linkedin profile. This is the first place a lot of recruiters and companies go when looking to hire. Get in touch with a recruiter to let them know you’re looking and the same with your network. Get the word out to as many people as possible. The most important thing to remember is to make certain that there are no grammar or spelling errors on your resume. Not proofreading is sloppy and will turn any potential employer off. Getting a resume together isn’t hard but it does take some finesse to get it right. Use our tips and Mark’s website to get the job you really want. Show Notes Career Alley: Mark’s site featuring job search lessons. Resume Templates: Pages of resume templates for every type of job. Betterment: Get started investing the easy way. Use this link to get 6 months free! Featured Image Photo Credit: “Pen and Paper” by Guudmorning! on Flickr Learn more about your ad choices. Visit megaphone.fm/adchoices

If you haven’t noticed, everyone has been hysterical lately about Bitcoin (to say the least). We talked to Professor Edward Castronova, an expert on investing in cryptocurrency to talk about how the market works. What is the definition of money? According to economists, anything used as a medium of exchange, as a unit of accounting, and as a store of value. This is why anything from the dollars in our wallets to cigarettes in POW camp, to Bitcoins can be considered money. What makes it money? Social expectation. If you have a stone and someone is willing to trade your stone for a cup of coffee, then your stone is money and has value. The difference in forms of currency is how well they perform. Stones are bulky and heavy, dollars are small and lightweight. A dollar also has security. Legally dollars must be accepted as a form of payment. There is no such law governing stones. If a vendor won’t accept your stone for a coffee, your stone is worthless. Cryptocurrencies are not regulated And also not taxed. Crypto transactions happen at a microscale and are not easily traced by the government. When Bank of America, Visa, MasterCard, PayPal, and Western Union blocked donations to WikiLeaks in 2010, WikiLeaks set up a page to accept Bitcoin donations. Invest in cryptocurrency? One day we may all have multiple bank accounts each holding different types of currencies that we use for different things. The danger of these currencies would be if one major sector of the economy, the housing market, for example, was dominated by one type. If that currency plummeted, it could cause a panic. Of course, dollars have caused panics so that is not unique to cryptos. They will also need to become as easy to use as dollars and currently they are a bit complicated. Show Notes Wildcat Currency: How the Virtual Money Revolution is Transforming the Economy. Professor Castronova’s book on cryptocurrencies. Learn more about your ad choices. Visit megaphone.fm/adchoices

Whether it’s a holiday, a birthday or an anniversary, we all have special days to celebrate. Find out how to do it up without spending too much. It’s easy to budget for the expected holidays but what about the random co-worker birthday, the niece’s confirmation? Rather than budgeting “X” for each event, set a dollar amount on how much you spend on each gift. If you’re giving a check as a gift, make sure to log it somewhere in case the recipient doesn’t cash it right away. Be more selective about what holidays you give gifts for. Come home without an anniversary gift and you might be in some trouble. But do you and your significant other really need to buy each other Sweetest Day gifts? That is a made up holiday. Focus on the big ones. Have a frank discussion with your extended family. Once you have a significant other, the number of people you are expected to buy gifts for can increase exponentially. It’s unfair to be expected to buy a gift for your seven nieces and nephews when you don’t have children. If your family doesn’t suck I’m sure they would rather have you at the family event without a present than dodging the get-togethers because you don’t have the budget to buy endless gifts. If you want to give a gift but can’t spend a ton of money, there are some great alternatives. You can get together with other family members and buy one more expensive gift that everyone has chipped in on rather than a dozen smaller gifts. Or you can buy one gift for the entire family, like a board game they can all play together. Making a gift is thoughtful and more meaningful than some chotchke from Target. Or my dream, get together with your family and all agree to not buy anyone a gift. Everyone goes out to a nice dinner together. More fun, less money, and no crappy bread maker collecting dust in the back of your closet. Keep the spirit of the holidays and special occasions. They are meant to be a happy time spent with family and friends, not getting trampled in Walmart on Black Friday. You’ll save money and avoid finding yourself on People of Walmart. Show Notes Mint: Budget your special occasion expenses. Learn more about your ad choices. Visit megaphone.fm/adchoices

There are lots of ways to save money on food. Here are a lot of ideas for budget meals and what to eat when you’re strapped for cash. That Can’t Be Right Americans spend a lot of money on food as a recent poll found out. The GOBankingRates survey was one of five polls asking Americans about their monthly household expenses. Groceries came in as the second most expensive monthly budget item, followed by rent or mortgage. Respondents spent more on groceries at $302 per month than the combined cost of their car payment ($166), household necessities ($61) and clothing ($50). And a lot of that food goes to waste. We waste about $40 worth of food each month which is about 33 pounds. No wonder food makes up so much of our budget. But you can create budget meals that will not only cut down on the amount you spend on food but the amount of food you waste too. First Thing’s First If you want to know how to save money on groceries, the first step is to plan your meals. This is easier than it sounds. Most people are happy eating the same handful of breakfasts and lunches every day and to rotate through a dozen or so dinners. Make a list of three breakfast and lunch ideas and a dozen dinner ideas. Next list out all of the ingredients you need to make these meals. This list will make up the majority of your shopping list. When you don’t know what you’re going to eat you go to the grocery store and start grabbing stuff at random which is an expensive way to shop. Of course, you will need to add extra things to your list sometimes, you’re out of olive oil, or it’s your anniversary, and you’re cooking a special meal. But most of the time, you will stick to the list of the things required to make your go-to meals. Choosing the Meals Because we want to save money on groceries, our rotation of budget meals needs to be things that are inexpensive and reasonably healthy. Healthy is subjective in that for some of us that means Paleo, and for others it means Vegan. But we all know what kinds of things are not healthy, soda, sugary juices, breakfast cereals with cartoons on the front, Ramen noodles, cheap microwave dinners. Leave that stuff alone. It’s not good for you, and it’s often more expensive than real food. Things like eggs cooked with vegetables, yogurt (full fat, non-flavored) with fresh or frozen fruit, wholemeal toast with natural peanut butter (peanut butter with nothing but peanuts and salt) make excellent, cheap breakfasts. Soups and stews made from root vegetables and beans, lettuce salads with meat left over from the previous night’s dinner, and grain-based salads are good lunch choices. One pot dishes, rotisserie chicken and frozen vegetables, and pretty much anything made in a slow cooker (more on this coming up) can make up your dinner rotation. How to Save Money on Groceries There are a lot of ways to cut down your food budget from where you shop to what you buy. Shop Around Most big grocery stores and even many smaller ones have circulars that show what is on sale for the week and most of them are available online. When you’re making your meal plan for the week, take a look at those circulars and see who has the best bargains. If you live in a big city with farmer’s markets, the food can be expensive but smaller town farmer’s markets often have lower prices than grocery stores and the food is fresher and better. If you live in a rural area, look for farm stands, they’re often cheaper than supermarkets too. A pick your own farm offers good prices and a fun outing. Learn more about your ad choices. Visit megaphone.fm/adchoices

Listen, Money Matters celebrates our milestone 100th episode by reminiscing over listener voted best episodes. Enjoy these classics! Some of the favorite episodes surprised us. The first one? Others, like Adam Carrol’s interview are favorites of our’s too. Here they are, in no particular order. Episode 1: Introducing the Listen, Money Matters Podcast. Our debut! We learn that Andrew is the money guy and Matt is the listener, there to learn with the audience. We also learn Andrew’s first foray into entrepreneurship was selling porn to the other kids in the sandbox. Episode 14: Our New Year’s Resolutions for 2014. We shared our resolutions both monetary and personal, and introduced you to some tools to help you meet your goals. Episode 32: An Interview with Adam Carroll of Broke Busted and Disgusted. This resonated with a lot of you. Student debt increased ONE TRILLION DOLLARS between 2004 and 2014. The government decided student loans could no longer be forgiven in bankruptcy which caused lenders to throw open the vault because they would never lose money. Higher education followed suite and raised their prices knowing that the lenders would dole out money like Halloween candy and they wanted a piece. This is not sustainable. Episode 34: Money for the Love of Freedom. This one is my favorite. By the end of it Matt was sweating and I was cheering. This is why we do the show and why you listen. The dream for us all. Episode 30: The Average Investor’s Commandments. We learned the ten keys to investing whether you’re a beginner or Warren Buffett. Episode 92: Travel Hacking Tips with Travis Sherry Travel episodes are always a big hit. Travis Sherry taught us how to travel like a baller on a frugal budget. We’ll have him back in a future episode to teach us how to fly for free with miles. Thank you to each and every listener. Thank you for your e-mails, reviews, show topics, questions, and just your encouragement. We do this because we want to help and it means so much to hear from you. Show Notes Broke, Busted, and Disgusted: Adam’s eye opening documentary about the state of student loan debt. Extra Pack of Peanuts: Travis’s excellent travel hacking blog. Learn from the master. Learn more about your ad choices. Visit megaphone.fm/adchoices

Dollar cost averaging is a simple yet effective strategy that will help you grow real wealth. The best part is, you can put your money on autopilot. Dollar cost averaging takes the fear out of investing. Do you have a lump sum of money that you want to invest, but you’re waiting until the exact right time to invest it? You don’t just want to dump a pile, especially a big pile of money into the market at the wrong time and watch it evaporate. There are two ways you can avoid that happening; one is the wrong way, and one is the right way. All investors have two major concerns when they invest, making money and limiting risk. We all want big profits fast with no risk. But that’s not the reality of investing. To make money while limiting risk, we have to employ a good investing strategy. Dollar cost averaging is just such a strategy; it’s good for all investors but especially for those new to investing. Some Good Days and Some Bad Days On September 29, 2008, the Dow Jones Industrial Average suffered one of the worst losses in Wall Street history. Upon the news that the House had rejected the $700 billion bank bailout plan, the Dow plunged 778 points. In an instant, $1.2 trillion dollars in market value evaporated. If you had been a wary investor but finally decided to take the plunge on that day, you would have had a very bad day indeed. Just two weeks later, Wall Street saw its biggest one-day gain in history. The Dow added 936 points, and a record $1.2 trillion dollars surged back into the market. If you had invested that morning, you would have had a very good day indeed. Timing the Market If you had known to pull your money out before that big crash and known to put it back in the day of the big gain, you would have timed the market perfectly. But how would you know the crash and the rebound were coming? Some people think they can predict such things by timing the market. Market timing means trying to predict the direction of the financial market by analyzing the stock market and economic data. It’s a good idea in theory because like we explained above, you would hate to invest your money right before a big drop in the market and love to invest it before a big gain. Do you have a Magic Eight Ball? Because if you do, give it a shake and ask it when you should invest. That will give you about as good a result as trying to time the market will. Professional fund managers can’t time the market with much success and not only do they have reams more data than you have, but they also have the time to pour over all of it and to understand what that data is telling them. And they still do worse than the market more than 80% of the time! Even if you did have the time and understanding to go over all that data, why would you want to? It’s boring! This is the wrong way to go about dumping money into the market if you want to protect yourself from unnecessary market risk. But there is a way to do that. The key component if dollar cost averaging is NOT timing the market. What is Dollar Cost Averaging? The term dollar cost averaging sounds more complicated than it is. It simply means that you determine a set dollar amount that you want to invest. Then you invest that fixed dollar amount on a set schedule without regard to the share price instead of putting one lump sum investment in all at once. Here’s an example of a dollar-cost average strategy. You have $1000 you want to invest. You invest $100 a month over the course of ten months. Using this method, you will average out the cost per share so that you don’t have to worry about timing t... Learn more about your ad choices. Visit megaphone.fm/adchoices

Little tips can save you big at home. Get some money savings tips and find out if anything you’re doing now would cause Matt to punch you in the face. People love numbered lists and we found a good one giving tips on ways to save money on energy costs around the house. Most of the savings are small but can add up over time and many of the tips are pretty simple to accomplish. We picked out a few good ones for you. Your house doesn’t need to fill like the tropics in the winter or the Arctic in the summer. In the winter, set your thermostat at 68 during the day and 60 at night. For every degree it’s set below 70, you will save 3% of your heating bill. Put on an extra sweater, or if you have no pride or no shame, a Snuggy. In the summer, keep the temperature between 75-78. For every degree you raise the temperature, it will result in a 5% savings. Invest in a Nest, it’s a programmable thermostat that you can control via your phone. Turn your water heater down to 120 degrees. You don’t need to take a scalding hot shower. And it should be a shower, not a bath. A bath uses more water. Unless you like to indulge at the end of a long work day by soaking in a candle lit bath while catching up on the latest episode of Listen, Money Matters. Then you get a pass. This one is my favorite. Use a slow cooker. They are 75% more energy efficient than the oven or stove top. Don’t be put off by those nasty slow cooker dishes people used to bring to pot luck dinners in the 80’s. Slow cooking has come a long way. I use mine once a week and a can of cream of mushroom soup has never been involved. They also don’t heat up the kitchen in summer the way the oven does. As they burn out, replace your old light bulbs with compact fluorescent lights. The CFL’s cost more, but are more energy efficient and last up to ten times longer than old fashioned bulbs. If you have a swimming pool, it doesn’t have to be a money pit. Check out Matt’s site Swim University for ways to save money on your pool costs this summer including using a solar cover, running your pump after 9:00 pm, and using a robot pool cleaner. Spend a few hours around your home to improve it’s energy efficiency and you’ll save the environment and yourself a few dollars. Show Notes Nest: A programmable smart thermostat that can be controlled remotely via your smart phone. Betterment: Open your account with this link and get a free $25 to start investing. Learn more about your ad choices. Visit megaphone.fm/adchoices

Despite being promised a “paperless society” we’re still drowning in reams of paperwork. Find out what you need to keep and what you can toss. Do you all have a “junk drawer” in your kitchen? Is it filled with appliance manuals to appliances you maybe don’t even own anymore? Like the juicer, you bought for a long discarded New Year’s Resolution? Well, you can chuck it. That goes for electronics manuals too. You can google any of those. This searing revelation changed my life, or at least neatened up my junk drawer. Don’t keep bank statements, use Mint. Many financial statements are paperless now including credit cards, rent or mortgage, and utility statements. You just have to opt out of paper and select paperless on the company’s websites. This is good for the environment as well. You know those annoying slick paper ads that are sometimes included in things like cable or internet service statements? Now they don’t have to send those. Before I went paperless I use to put them in the envelope with my check and send them back. Time Warner can deal with their own hard copy spam! Educational records like transcripts should be kept for one to two years after you begin working. No one will care that you took Calc 1 after your first grown up job, maybe not even before. But better safe than sorry. Medical records for yourself and pets are important and should be kept long term. There are certain places oversees where you may need, particularly vaccination records, for yourself or your pet before being allowed to travel. Personal records such as birth certificates, marriage license, divorce papers, and citizenship documents should be kept in hard copy form in a water and fire proof safe or perhaps a safe deposit box at a bank. These forms can be replaced but if you need them quickly, it’s better to have them accessible. If you would like to keep more documents than your home can accommodate or that you can effectively organize and keep safe, there are some digital services that you can use. Shoeboxed is a company that allows you to e-mail or even mail receipts to be digitized and placed into a file that you can access. You can also buy a scanner although they can be expensive and not practical for documents that are double sided and dozens of pages long like mortgage documents. There is a balance between obsessively hoarding every Duane Reade receipt and throwing out your social security card in a depressive cleaning spree. Digitize what you can, lock up the really important stuff and let the rest go. Show Notes Ommegang Abbey Ale: The beer that heralds summer. Learn more about your ad choices. Visit megaphone.fm/adchoices

Most of us have homes full of stuff we never use. It’s taking up space both mental and physical and chances are, it is how you got into debt in the first place. We’ll show you how to reduce that debt and your clutter by selling your stuff. Take an inventory of what you plan to sell before deciding how to sell it. Small household goods, children’s items, books, furniture. These things will do well at a yard sale. Very expensive items are better suited to eBay. Not many people are going to bring $800 cash to buy a giant mixing board. Items that are too big to be carted away in a car but too heavy to drag to the post office to ship for eBay, will do better on Craig’s List. If you have mostly yard sale goods, check with your neighbors. Perhaps you can all do your sale at the same time which will bring more people to all the sales. Also check with your local town. Some have a town wide sale that you can join for free, while the town takes care of the advertising. Craig’s List can be frustrating. There is a lot of back and forth with would-be buyers, some people tell you they want to buy your item, arrange a time to collect it, and then flake out. Craig’s List is a good option for certain items but you will need a bit of patience. If the last time you listed something on eBay was ten years ago, things have changed. The process has been streamlined and is much simpler for sellers to post items. You do have the hassle of shipping but the buyer’s are more reliable than Craig’s List buyers and you can coordinate your sales so you can just ship everything in one trip to the post office. [tweet this”You dug your debt ditch with all this crappy stuff.’} Free your self of all that stuff weighing you down. You’ll feel better and be able to put the money you made toward paying off some debt or adding to your investments. Show Notes Ommegang Abbey Ale: A rich, fruity beer. One Village Coffee: Matt’s favorite coffee. Learn more about your ad choices. Visit megaphone.fm/adchoices

If you have debt, it’s time to tackle it. When it comes to methods of debt reduction, there are many options to consider. Everyone has debt, it’s how we reduce and manage it that sets us apart. But which should you use to get out of debt snowballing or stacking? Some of the more popular debt reduction strategies include debt snowballing and stacking. But, which is better? I’m going to tell you right away; monetarily speaking, stacking wins. But nothing is ever that simple. Both methods have their merits and their drawbacks. We’ll take a detailed look at each so you can decide what method will work best for you. Forty million of us have student loan debt to the tune of $1.2 trillion dollars. Seven million of us are in default on those loans. Credit card debt isn’t much better. We have $712 billion in credit card debt outstanding, an average of $15,355 per household. Your debt is an emergency, but you can pay it off. There are two ways to do it. Snowballing Method Snowballing means listing all of your debts in order of smallest to highest dollar amount and then using any extra money to pay off the smallest balance while only paying the minimums on the others. If you have a $5,000 student loan at 4% interest, a credit card balance of $6,000 with 17% interest, and a $10,000 car loan with 9% interest, you pay off the student loan first, followed by the credit card and finally the car. Once the smallest debt is paid, you move to the next smallest using the same strategy and include the amount you were paying on the first debt into your monthly payment on the next. You continue to do this until all of the debts are paid, the largest being last one to go. Snowballing Pros A big pro for this method is the psychological win it provides you. It’s so satisfying to cross a debt off your list. That boost can also give you momentum; you killed that one, you can kill all of these debts! This kind of boost is no small thing. Snowballing also makes your life just a little bit easier. Each debt paid off is one less payment you have to remember to make, one less check to mail or electronic payment to schedule. This method is also likely to be faster. Paying off the smallest debt first might mean you can get rid of it in just a couple of months. Snowballing Cons It’s a big one; it costs more money, in the end, using the snowballing method. Interest is powerful, and when it’s working against you, it’s working hard. It also takes discipline to use this method. You free up money more quickly because you’re killing off those smaller debts faster than with the stacking method. What you’re supposed to do with that money is put it towards the next debt on the list. But you didn’t get into debt because you have steel clad discipline. You might see those extra dollars in your checking account and think it’s more money to spend. No! Bad! Put it towards the next debt. Avalanche Method To use the avalanche method, you list your debts in order of highest to lowest interest rate, regardless of the dollar amount of the debt. You throw as much money as you can at the debt with the highest rate of interest. If you have the same debts we listed above, they would be ordered this way; the $6,000 credit card, the $10,000 car loan, and finally the $5,000 student loan. Once each debt is paid, you move down to the next highest interest rate one, again, Learn more about your ad choices. Visit megaphone.fm/adchoices

In our on-going millionaire series we interview Brenton Hayden to learn how he retired at 27, how he manages his money now, and what he does now that he’s not in an office everyday. Brenton started his career working in grocery stores where he met people who worked for the Kellogg company. He went from making $14 an hour to $100,000 a year. After a lay off he wanted to keep making the same money and found that real estate was the way to do that for a young person. Brenton started out as a real estate agent. He was making great numbers when one day his mentor called him into his office and fired him. But not for the usual reasons but because his boss felt he should use his entrepreneurial drive to start his own business. While working in real estate Brenton found a gap in the market. His clients were desperate for someone to help them rent and manage their properties. At age 21 Brenton started Renter’s Warehouse which is now the second largest professional landlord in the country. Brenton didn’t take the traditional college path. As his company grew, it was outpacing his experience. He took some classes at MIT and Harvard which taught him what he felt he was missing. He didn’t spend years in school, but dipped in and out so he could fill in the gaps in his knowledge and experience, a very interesting approach that could benefit a lot of people, particularly entrepreneurs. Brenton promised himself he would retire at 27. Like a lot of people though he got caught up in running his business. Until he went on vacation. While away for two weeks with his wife, he was sneaking around checking e-mails and got busted by his wife. She reminded him of his promise and he retired soon after. How does Brenton manage his money? He spends some time day trading and largely manages his money himself. He reinforces some things we’ve discussed on LMM. Brenton doesn’t use a financial adviser and doesn’t feel they’re necessary. He also monitors the news always looking for a good opportunity to “be greedy when others are fearful and fearful when others are greedy. What does he do with his time now that he’s not working 15 hour days? Prepare to be jealous and inspired. Brenton had just built a race car and is going to start amateur racing. He and his wife also travel extensively, about every seven weeks. He recently parachuted from Machu Picchu. I didn’t even know that was possible. Sure beats retiring at 65 and spending your days on the golf course. Show Notes Mint: LMM’s preferred budgeting tool. Betterment: LMM’s favorite investing tool. Learn more about your ad choices. Visit megaphone.fm/adchoices

If there are two things we love at Listen, Money Matters, they are saving money and having a few drinks. Let us teach you how to best combine these two loves into a great night out. We owe thanks to our friends Thomas Frank from College Info Geek Kristen Wong from Brokepedia for their great articles teaching us how to have fun at the bar without blowing our budgets. These are Thomas’s tips. 1. Know your number before leaving home. Once you start drinking, your inhibitions will be lowered. That might mean a regrettable decision to bring home a double bagger or spending your rent money on rounds for the whole bar. Before you leave home, decide how much you will spend that night. Even better, take out that amount of cash and leave your credit and debit cards at home. 2. Pay attention to drink specials. Find happy hours in your area or drink at a local brewery. Sometimes the special will be on drinks, sometimes you’ll get snacks with your drinks. Since drinking makes us hungry, this can be a savings. 3. Pregame. This means having a few drinks before going out for the evening. This tip can help if you suffer from social anxiety too. 4. Tip your bartender well. If you’re generous to your bartender, they may hook you up with free drinks or more generous pours. 5. Planned logistics. This is important if you’re doing a pub crawl. Plot the bars out so you aren’t spending money criss crossing town. Now Kristen weighs in. 1. Use sites and apps. Save on Brew searches the best beer deals in your area. Find my Tap will help track down which bars serve your favorite beer. 2. Second label wines are a cheaper but still quality version of more expensive ones. There is a site, cunningly called Second Label Wine to help find a cheaper version of your preferred vin. 3. Drink Owl will show you a list of great drinks specials in your area. 4. Buy in bulk. Buying a case of wine will usually net you a 20% discount. My local wine store does a 30% a few times a year so look out for those specials. 5. Look at unit price. This is a nasty trick deployed in a lot of sports stadiums. A bigger beer may be double the price of a small but it’s not double the ounces. Do your math! 6. Drink shit beer. LMM’s cannot promote this tip. Yes it’s cheaper and cheaper doesn’t always mean worse, but in the matter of beer, it does. Please don’t so this to yourself. Finally, beware of adulterated beer. Beer is not made with cheap subsidy crops like corn. Watch Beer Wars to make sure you are getting the real deal. We love our listeners so have a good time, go out, but don’t do anything stupid. Drinking is not a hobby nor a vocation. Drink responsibly! Show Notes College Info Geek: Thomas Frank’s excellent site to help you upgrade your college experience. Brokepedia: Our friend Kristen’s money saving site. Ommegang Abbey Ale: A rich, fruity ale, great for summer. Learn more about your ad choices. Visit megaphone.fm/adchoices

Travis Sherry from Extra Pack of Peanuts teaches us how to see the world without spending a lot by seeking out cheaper destinations, scoring the best flight prices, and alternatives to hotels that will save you a fortune. Traveling is on top of nearly everyone’s list of goals but many people don’t because they believe they can’t afford it. Traveling doesn’t have to be expensive and there are options for almost any budget that will allow you to see the world. If you want to drink on the plane without paying ridiculous airline prices you have a few options. If you’re flying international, choose an international carrier rather than a domestic one. The drinks are usually free. You can also bring those little bottles of alcohol in the quart bag you’re allowed through TSA checkpoints as long as each bottle is 3 ounces or less. Buy them at your local liquor store, not the airport to save even more. Chat up flight attendants during their downtime. If you’re charming you can score free drinks from them, maybe free snacks too. For a long flight, first of business class will be a lot more bearable than cattle class. The difference in ticket price can be as much as fifteen times higher though. This is where frequent flyer miles come in handy. A coach round trip ticket bought with miles will be around 35,000 miles, business just double that. You can obtain miles through credit card sign up bonuses and by flying the same airline as much as possible. Check to see what airline has a hub at your local airport and sign up for their free frequent flyer program. Price flights through ITA Matrix. You can’t book via this site but the price you find can be booked through a site like Kayak or Hipmunk. ITA Matrix will provide you with lots of comparative data such as the best date to book the flight and the cheapest airport to fly out from. The other big expense when traveling aside from the flight is accommodations. There are so many better alternatives to hotels, especially for long term stays. Airbnb rents apartments or homes for way less than a hotel. You’ll also have more amenities like a full kitchen which allows you to save money by cooking some meals at home. Hostels are cheaper than a hotel and a great way to meet fellow travelers. You can even house sit and stay for free. Travis’s friend runs Trusted House Sitters which can show you opportunities all over the world for free accommodations. You can stretch your travel dollars by choosing less expensive regions. In Western Europe, Spain and Portugal offer greater value than places like Paris or London. Eastern or Central Europe are about half the price of Western Europe. South East Asia will allow you to have a five star experience for a fraction of the price of a lot of places in the world. Packing is always a travel bugaboo. Travis recommends the Tortuga Travel Back Pack. Pack what you would need for a week no matter how long your trip. You can do laundry anywhere. Traveling is something everyone of us deserves to experience. It changes your life in ways that nothing else can. Stop thinking it’s an impossible dream. Travis is flying to Brasil for the World Cup for $5. Anyone can do it. Show Notes Extra Pack of Peanuts: Travis’s site where h... Learn more about your ad choices. Visit megaphone.fm/adchoices

Matt and Andrew bicker like two five-year-olds fighting over a toy about what is the better choice, buying a car or leasing one. Andrew gets sweary and Matt gets hangry. Who will prevail? Unlike some of our topics, there is no clear answer to this question. Should you invest? That one is easy. Yes you should. Should you go to college? That question does not have a black or white answer. The decision to buy or lease a car is one that will depend on the stability of your current situation and your priorities. We’ll list some pros and cons of each. Leasing Advantages: A lower down payment and monthly payment. Maintenance and repairs will be covered. You can drive a brand new car every two or three years. When it comes time for a new car, there is no trade in hassle. Leasing Disadvantages: You will never own the car. You have limited mileage, typically 12-15,000 a year. The contract can be confusing. If your circumstances change, ie. you get a new job further away or move to a city where having a car is expensive and a hassle, you’re stuck with the lease. Buying Advantages: You can make modifications like a new stereo system. You can drive as many miles as you like. Eventually you will have no car payment. You can sell the car anytime you like. Buying Disadvantages: Your down payment and monthly payments are higher. You have to pay for maintenance and repairs outside the life of the warranty. The trade in process can be a hassle. A big chunk of your cash is tied up in something that depreciates. These are all things that you will want to consider when deciding to buy or lease. Or maybe just take Andrew’s advice and buy a bike. In order to end an argument with no clear answer, I sent Matt and Andrew both to time out. Andrew had to wash his mouth out with soap and we gave Matt a snack so his hanger would subside. Show Notes Edmunds.com: A list of pros and cons for buying versus leasing. Allagash Tripel Reserve: A strong, golden ale. Motherfucking Bike: You just have to watch. Learn more about your ad choices. Visit megaphone.fm/adchoices

With the cost of college growing ever more expensive, more and more people are choosing to forego a degree and all of the debt that comes with it. I’ll explain why I didn’t go to college and if I have any regrets over my decision. For a lot of people, college is the natural next step after high school. Our parents tell us to go; our teachers encourage us to go, all of our friends are going. Once upon a time, there was no question that college was the path to riches. But things have changed so does college still make sense? From an economic standpoint, the numbers are still in favor of obtaining a college degree. People with a bachelor’s degree will earn 84% more over a lifetime than a high school graduate. A degree will also open more doors. Some companies will not even look at the resume of someone without a degree, no matter how much experience they may have. It’s not fair, but it’s what a lot of companies use to screen the huge volume of resumes they receive. Which college and the grades you got are less important. There are questions to be asked before making the decision though: * What kind of job do you want? * If you want to be a doctor, then the decision is already made. * Do you need to go to the most expensive, prestigious school that accepted you? Maybe you don’t. The first few semesters will be pre-requisites, so maybe the best choice is to go to a local college part-time, work part-time, and live at home. If more people took this route, there would be a lot less crushing student debt. College is not for everyone. For some people, the past thirteen years of school are enough for a while. There is no rule that you must start college at eighteen. Maybe work for a bit, save some money and do some traveling. Just living life can teach you not only what kind of job you want, but perhaps more importantly, what type of job you don’t want. There is plenty of time to decide on college so don’t let anyone rush you. It’s you who will be on the hook for those loans so make sure the decision is your own. Show Notes iTunes U: Complete courses from leading universities available for free download. Khan Academy: A free online educational resource. Learn more about your ad choices. Visit megaphone.fm/adchoices

What is inflation, what is deflation and what benefits to knowing? We’ll explain the basics and what you need to know to make sure your money keeps pace. Inflation and deflation are terms you hear thrown around a lot but what do they mean and what impact do they have on us? What is Inflation? The value of a dollar is determined by its purchasing power, the number of things or services which that money can buy. When inflation increases, the purchasing power or our dollar decreases. In the US, our rate of inflation is 3% a year on average. That means the newspaper that costs $1 now will cost $1.03 the following year. Inflation means your dollar doesn’t go as far as it once did. Types of Inflation Demand-Pull Inflation: This is caused when there is an increased demand for something which drives up the price. When demand grows faster than supply, the price goes up. Cost-Push Inflation:If the cost to produce a good increase, a company increases the price to maintain their profit margin. Monetary Inflation: This happens when there is too much money in an economy. Too much of anything makes the value or price go down. The Impact of Inflation Inflation is not always a bad thing across the board. There are winners and losers when inflation happens. If you owe money to a creditor, you win! The cost of your debt is reduced. You really make out if the rate of inflation is higher than the interest rate on your debt. Inflation hurts your savings. A dollar saved now is worth less in the future when you need to spend it. If your raise at work is not more than 3%, it’s not really a raise because it doesn’t preserve the buying power of your dollars. If you are someone who lives on a fixed income that is not adjusted for inflation, your dollar is worth less too. If inflation in one country is higher than that of trading partner countries, the goods of that country are more expensive than imported goods. That can impact domestic producers and in turn, their employees How Inflation is Measured Inflation is measured by a market basket. It’s an imaginary basket of goods whose prices are totaled up. The number is called a price index and the cost of the basket is compared over time. This number is the price index, the cost of the basket today as a percentage of the cost of the same basket in the starting year. There are two price indexes used to measure inflation, consumer price index and producer price index. Consumer price index measures the change in price for consumer goods and services from the consumer’s perspective. Producer price index measures the average change of selling prices over time for companies that make goods and services, so changes in price from the seller’s perspective. The Federal Reserve is tasked with controlling inflation. Uncontrolled inflation can cause a recession. If the growth rate of the GDP exceeds 2-3%, demand can drive up prices leading to demand-pull inflation. The Fed slows growth by tightening the money supply, they allow less credit into the market. This makes it more expensive to borrow money which slows growth and demand and brings prices back down. What You Need to Know Year after year, inflation eats into the power of your dollar. You can buy less with that dollar. You have to protect your dollars by investing your money where it earns more than the average rate of inflation, 3%. The average return of the stock market over time is 7% so you’re beating inflation. The average interest rate on a savings or checking account is less than 1%, less than inflation so you are losing money when you have it parked in one of those low yield accounts. When inflation is high, interest rates go up so if you want to buy a house or a car or borrow money to start a business, Learn more about your ad choices. Visit megaphone.fm/adchoices

We all fail and we’re all afraid to fail. Today we’ll discuss why failure is not always the end of the road and may even be the beginning of a new path. No one likes to fail but if that fear is stopping you from trying, it can hold you back in every walk-off life from investing to dating. Every failure should be mined for lessons. What could you do differently the next time you try? Maybe the endeavor you failed it should be scrapped entirely. There is a difference between quitting and failing. If you start a babysitting business and your town is mostly comprised of retired people, quitting as soon as you realize that is not so much a failure but a reassessment of your situation. Maybe you decide to start an in-home companion business and now you’re making money. When it comes to investing a lot of people are fearful and not well informed. Because of this you listen to an “expert” when deciding what to buy without doing any research yourself. Well, experts get it wrong too and if you lose money, you’ll blame them and decide the stock market is stupid and you’ll just keep your money under the mattress. You can learn from this. Doing your own research will always be more tailored because you have your own specific circumstances an expert doesn’t have knowledge of. There is more than one way to do nearly anything. If you need to budget you can use Mint, you can use a spreadsheet, you can use the envelope method. Just because you failed at one option doesn’t mean nothing will work. If you burned dinner would you never make dinner again? No, you would learn that you should not put dinner in the oven and then take a nap. Once you succeed, no one will remember your failures. Every time you fail, learn a lesson and try again. If it makes you fell any better Einstein probably failed more times then you ever will. Show Notes Betterment: No hassle investing site. Think Like a Freak: The new book from the authors of Freakonomics Learn more about your ad choices. Visit megaphone.fm/adchoices

How do you stop yourself from burning through all your hard earned money like a drunken sailor on shore leave? Today we discuss a few mind hacks that can help curb your baser monetary urges. The easiest way to not spend money is to stay home. No siren song of the bar, no annoying co-workers forcing Girl Scout cookies on you against your will or asking you to sponsor their self-congratulatory charity walk. Staying inside like Howard Hughes is not really an option for most of us but you probably encounter at least one invitation a week you could say no to. You spend forty hours a week or more with co-workers. Do you really want to spend more time and your money with them at happy hour? Turn down those invites that you really aren’t that interested in. It’s hard to say no to spending money unless you have a reason. Maybe it’s “eff you” money. The money that allows you to tell your idiot boss to go to hell when he or she asks you to work the weekend one too many times. Maybe it’s a vacation or the ability to send your kid to college unburdened by student loans. Put a picture of your goal in your wallet so you are confronted by it before you pull out that credit card. Maybe you discover a new hobby and go nuts buying every accessory for it under the sun. You don’t need enough gear to outfit a pack of Sherpas because you’ve suddenly discovered camping. Borrow or even rent the gear to test out the new hobby. Hundreds of dollars of camping equipment stuffed in the back of the closet with your home brewing accessories and do it yourself taxidermy kit is not a good investment. Our favorite tip is the “Thirty Day List.” Every time you see something you think you can’t live without, it goes on the list. If at the end of thirty days, you still want it, then maybe you can honestly justify the expense. This is even easier if you’re an online shopper. Put the items in your virtual basket and leave them there for thirty days. Some online retailers will even send you promo codes for discounts if you don’t check out right away. Taking away decisions will also decrease your spending. Not spending takes willpower and willpower is finite. If you are something of a creature of habit, take away some decisions. Eat the same breakfast every day, develop a “uniform” that takes the decision-making process out of what to wear. When you have to replenish those things, food or clothes, etc, you can find what you need and get in and get out. This cuts down on temptation. The longer you spend in Whole Foods, the more your will power will be sapped. The final tip is to budget. If you have $100 to spend on lunches for the month and you reach the limit, you’ll be brown bagging it until the budget re-sets. Show Notes Mint: LMM’s budgeting for dummies. Magic Hat Elder Betty: A great summer beer. Learn more about your ad choices. Visit megaphone.fm/adchoices

Travis Pizel from Enemy of Debt tells us how he and his wife accumulated $109,000 of credit card debt through lack of communication and how they paid off the debt and strengthened their relationship in the process. HOW does a couple accumulate that much debt? Buying Faberge Eggs, eating panda steaks marinated in unicorn tears? The answer is pretty mundane. Never budgeting, never tracking spending, vacations, dinners out, and perhaps the biggest problem, never discussing money. Travis and his wife both had good jobs and always figured the next pay raise would put them in a position of eventually having enough money that they couldn’t possibly spend it all. But that never happened and eventually Travis began to insulate his wife from how bad it had become. Opening the bills after everyone had gone to bed, shifting balances to newly opened cards, asking for limit increases on existing cards. The watershed moment came when Travis got five identical letters from a company that he had five different cards with. The minimum payment amount was going to be raised from 1% to 2.5% and there was no way he could meet that. Together Travis and his wife contacted this debt management company and were put on a plan. The couple sent a monthly payment to the management company who had negotiated lower interest rates with each credit card company. The monthly payment, including the company’s fee was $2489. As part of the agreement the family had to close each credit card account and not open any more. Over 55 months, the entire debt was completely paid off. The total fee paid to the company was about $2700 but it saved Travis $50,000 in interest. The debt was being paid but Travis and his wife had to fix the underlying problem that caused the situation. They now meet twice a week to discuss what needs to be done that week and how they did. It also required a lot of sacrifice. No more fancy dinners out, no more vacations, a meal plan so they weren’t just throwing things into the grocery buggy. Now that the debt has been paid and the family is communicating openly, they have never been happier. Travis and his family realize that if they could make it through this, they can make it through anything. And Travis found a great source of side income. He is now a freelance writer in addition to his regular job as a software engineer. UPDATE: This is Matt! I mentioned on the show that my brother used a debt consolidation company — that is not true. He corrected me and instead he used a credit score fixing company to improve his credit score. Here’s the link if you’re interested. Show Notes My Personal Finance Journey: One of the blogs Travis writes for. Learn more about your ad choices. Visit megaphone.fm/adchoices

We’re doing personal finance potpourri today, answering listener’s questions about investing with Betterment, unpaid internships, 401K’s, passive income, and credit scores. 1. What is Betterment and what’s so great about it? Betterment is an investment tool that charges a low fee, no transaction charges, and abstracts investing. LMM’s loves Betterment because it is a great first step to investing. It’s easy to use and allows you to choose your level of risk with a simple sliding scale. 2. Are unpaid internships worth it? Jackie from Personal Finance with Jackie Walters sent this one in. An internship is valuable even when unpaid. You gain experience, have something to add to your resume, can cultivate good contacts for the future and sometimes an internship turns into a full time job. 3. If an employer does not offer matching 401K funds, should you contribute the minimum to participate and the rest into a Roth IRA? We’ve done a few Roth 401K episodes and Matt paid attention! Unless you are getting matching, the only reason to invest in a 401K is if it would drop you down a tax bracket. This will show you the federal brackets for 2014. 4. Is passive income possible? Absolutely! There are lots of ways to earn passive income. Being a landlord, website affiliates, investing. 5. If you want to buy a house, should you close credit cards that you don’t use? There is almost never a circumstance where it’s a good idea to close a credit card. Part of your credit score is made up of the average age of accounts. The longer the age, the higher the score. Closing an account will lower the average age. If you have a card you don’t use often, put a small recurring automatic charge on it like a Netflix or gym membership. This will keep your account active as some companies will close an account that has been dormant. Keep the questions coming guys! Show Notes Betterment: Use our affiliate link to help support the site and get a few free months of fee-less investing! Mint: LMM’s chosen budgeting tool. Learn more about your ad choices. Visit megaphone.fm/adchoices

In this special Father’s Day episode Matt and Andrew interview their dads to find out what mistakes and victories they had with money and what lessons they have for their sons and us listeners. The apples don’t fall far from the trees. Andrew’s dad has been good with money for a long time. Andrew’s father didn’t grow up with money and learned important lessons watching his own parent’s struggle. He wanted to be a musician but soon realized that life was not a secure one. He got a full time job and went to school at night and his job covered 80% of his tuition expenses. He eventually received an MBA. When Andrew’s dad was coming up, it was unusual to job hop. A lot of people of that age would work for the same company for thirty years and retire with a pension. But his father was never afraid to chase more money and even when not actively seeking a new job, he would still go on interviews to see what might be out there. He was able to increase his salary much quicker this way than by waiting for a small yearly raise. Andrew’s dad faced a few job losses in his career when the companies he worked for went under. Faced with unemployment, he treated getting a job as a job, spending 8-10 hours a day on it. He would contact a few recruiters, look at a few job boards and company websites and mine his contacts. Even at the height of the crash, following these guidelines, he had a new job in less than four months while a lot of people around him went a year or more before finding employment. Dad’s parting advice is to never give up and live within your means while still enjoying a good quality of life. Continuing the theme of the apple and the tree, Matt’s dad is a musician as well. And like Matt, he has only become educated about personal finance recently. Also like Matt, Matt’s dad worked from a very young age. He worked in a laundry for the same family from the age of ten through high school. He did attend college and wisely decided to go locally and live at home to cut expenses. He did graduate with student loans but paid them off within twelve years. Sadly, twelve years sounds really quick to those graduating today. Matt’s father was a professional musician for six years. As his family grew, he knew he needed to make more money and music became a hobby rather than a vocation. Matt’s father lived paycheck to paycheck for many years, juggling payments for everything but the mortgage. Two things convinced Matt’s dad to take charge of his finances. He saw Matt following the same paycheck to paycheck path and knew he had to lead by example. And a friend recommended a book, The Richest Man in Babylon, which changed his views on money and finances. The main lesson of the book being, “pay yourself first.” Today Matt and his dad are on the same path toward financial stability and teaching each other. Thanks to all the dads out there, whether you are good with money or not, you’ll always be our dads. Show Notes Ommegang Abbey Ale: Andrew’s Father’s Day drink. Macallan 12-Year Single Malt Scotch: The drink Matt and dad shared. Career Alley: Andrew’s dad’s blog. This runs in the family too! The Richest Man in Babylon: The book that helped Matt’s dad with his finances. Custom Rooms By Design: Even though Matt’s dad didn’t mention it, here is his website. Learn more about your ad choices. Visit megaphone.fm/adchoices

This financial life episodes give us a chance to delve into a listener’s personal finance life and to give them some advice to improve it. Today we have This Financial Life with Connor. Connor is 23, lives in Manhattan, has been working in finance as a commercial underwriter for about a year and is making $70,000 annually before bonus. He has no debt, credit card debt or student loan. Connor has some money invested in individual stocks. He bought GM after the recall fiasco because the price was low. A smart move as GM might have dipped, but it’s “too big to fail” so not going anywhere anytime soon. At least until Elon Musk decides otherwise. He also bought stock in an e-cigarette company because it’s a fast-growing trend. And WWE (disclaimer: Connor is not a pro-wrestling fan) after it dropped 43% on news that it did not get enough monthly subscribers to offset lost pay-per-view orders. So Connor does his research and makes a move when other’s fear to tread. A favorite LMM trait. Once again proving he is an attentive LMM’s fan, Connor has maxed out his 401K and Roth IRA accounts. At present, Connor has about $54,000 invested, and the majority of that money is saved from part-time jobs he held while in high school and college. If only us older folks had been as savvy as Connor. So what is there to improve upon? Well, Connor might be living a little too baller. Not because of his salary but because of where he lives. Manhattan is expensive people. Even though Connor has roommates, he’s spending 43% of his income on rent. A good rule of thumb for rent expense is about 30%. Connor also makes the mistake that a lot of us make by keeping too much in a savings account. That money is better utilized for something like Betterment. A Betterment account can be liquidated in two days. Unless you need bail money or something, there aren’t too many emergencies that will require faster access. We all wish we could be as smart as Connor was with his money so early on. He has some room for improvement, but he is nearly a textbook case of smart money management. As long as Connor continues to listen to our podcast, he’ll do well. Show Notes Mint: LMM’s budgeting weapon of choice. Betterment: The source of your emergency fund for everything other than bail money. Learn more about your ad choices. Visit megaphone.fm/adchoices

When did tipping become such a minefield? Who do you tip, how much, how often? We are going to sort it all out for you. We are giving you just the tips and will tell you how much to tip pizza delivery and everyone else. It seems that everywhere you go, no matter what you do, there is someone you need to tip. And tip well. A decade ago for instance, 10 percent was an acceptable tip — 15 percent if the service was impeccable. Now, anything less than 15 percent is considered inappropriate. For good service, 20 percent is the norm. In more expensive restaurants, patrons are sometimes expected to tip up to 25 percent on the total amount of their bill (taxes included). Sometimes you expect it. If you are out to dinner, you know you are expected to tip the server. But there are a lot of other situations where you might not be so sure. We will explain what you should tip in both kinds of situations. Food Tipping around food probably causes the most consternation for people simply because there are so many scenarios. Unless you shop for your own groceries and cook all of your meals at home, these are some of the situations you will run into that require a tip. Restaurants Standard practice is to tip 15-20% on your restaurant check, and yes, that includes drinks. Sometimes there is a workaround for this. If the restaurant allows BYOB, do that. Sometimes BYOB places require a corking fee, a charge incurred for the server opening and pouring the wine. See if the corking fee is less than it would cost to buy wine in the restaurant. If you have a wait for a table, grab a drink at the bar and drink it slooooow then cash out before moving to your table. It’s customary to tip the bartender a dollar or two for drinks purchased at the bar so doing this may save you some money on the tip. Even if you do order more drinks with dinner, at least you won’t have to factor that first one into the tip when you get the bill. If you want to earn a little money when you go out to eat, book your reservation through Seated. You’ll get a $10-50 credit for Lyft, Starbucks, or Amazon. It will basically cover your tip! What if you had poor service? Unless the service was really egregious, it’s not cool to leave no tip at all. Servers generally tip out support members of staff so when you stiff a server, you stiff people like runners and bussers too who did nothing to deserve it. If you had poor service, consider who exactly is at fault. Was the food cold? That’s likely the server’s fault. They didn’t get the meal out to you in a timely way, so it sat in the window getting cold. Was the food of poor quality? That’s the restaurant’s fault, not the server’s. Tip them the standard 15-20% and just don’t return. Pizza and Food Delivery Well, you could have taken your lazy ass to the restaurant and eat in or brought the food home, but you couldn’t be bothered for whatever reason. So the person carrying food right to your door deserves something for doing so. But they aren’t refilling your drinks or checking to make sure everything was to your liking once you began eating. A fair tip for delivery is 10%. However, if the weather is terrible, tip at least 20% and preferably in cash. Delivery workers have a hard, dangerous job on a nice day; it’s ten times worse in searing heat, pouring rain, or driving snow. Pickup Orders You were too lazy to cook but not too lazy to go out and pick up your food. Do you have to tip on a pickup order? If it’s a small, simple order and there is a tip jar on the counter, throw a dollar or two in there. You don’t have to, but it’s a nice gesture. Learn more about your ad choices. Visit megaphone.fm/adchoices

We’re talking Roth and traditional IRA’s today with Darin Hayes, author of Beer Money: A Beer Drinker’s Guide to Personal Finance and Investing. Let’s put this in drinking terms. Taxes are a hangover. A Roth IRA gets the hangover out of the way before the drinking even commences because the money contributed is taxed before the contribution. A Traditional IRA let’s you drink first and the hangover comes later because the money is taxed once it’s withdrawn. How should you decide when you want to suffer your hangover? A very simple way to determine is whether or not you receive a tax refund. If you get money back, do a Roth. You likely are in a lower income bracket and don’t need the tax deduction. A lot of young people with years ahead to work and invest will fall into this category. If you’re older, making more and in a higher tax bracket, a Traditional IRA will give you that deduction that may drop you into a lower bracket. A Roth IRA also has the advantage of having no penalties for early withdraw on the principal. This makes a Roth a good place to invest your emergency fund. If you pull out any gains, there will be penalties but not on the initial investment. What is the difference between an IRA and a 401K? A 401K is an employer sponsored program. For those whose employer does not offer a 401K or are self-employed, an IRA can be set up by an individual and serve as your retirement account. A SEP-IRA is something for self-employed individuals to consider as well. You can contribute up to $52,000 a year depending on income. A SEP-IRA can be opened with a brokerage firm or an on-line investment account. How’s that for a simple break down? Putting things in drinking terms makes everything easier to understand! Show Notes Beer Money: A Beer Drinker’s Guide to Personal Finance and Investing: Darin’s easy to understand book on managing your money. Get Beer Money: Darin’s website. Ommegang Hennepin: A rustic golden ale. Blindfold Black IPA: A light bodied IPA with a bold, hoppy character. Learn more about your ad choices. Visit megaphone.fm/adchoices

For many working Americans, a 401(k) is often the single largest asset they have. Unfortunately, managing a 401(k) can be extremely complicated, resulting in the poor management or complete negligence of this very important savings account. Fortunately for most Americans thought, they have some time to plan. As one of my favorite retirement quotes says, “Hang in there, retirement is only about 30 years away” – My jerk Uncle Dave. This is why Blooom was created. The robo-advisor-based service helps Americans of all income brackets with managing their investments through their employer-sponsored retirement funds, including 401(k), 403(b), 401(a), TSP, and 457 accounts. Blooom aims to make managing a 401(k) simple, easy and accessible — no matter how much money is in your account. In this Blooom review, we’ll cover the ins and outs of the service, along with areas where Blooom stands out and falls short, so you have a better idea of if the service is right for you. What is Blooom? Blooom is an automated online tool that manages your workplace retirement plan for a flat fee each month. As a Registered Investment Advisor with the U.S. Securities and Exchange Commission, Blooom is a fiduciary, meaning the company is required by law to act in your best interest and does not invest your funds based on conflicts of interest or additional revenue for the firm. For only $10 per month, Blooom applies its proprietary algorithm to allocate funds for you to help you achieve a greater return by the time you retire. Its direct management approach makes it, unlike other robo-advisors that merely analyze your 401(k) and send advice on how to manage your investments on your own. Once Blooom allocates funds to bonds and stocks on your behalf, your account will be rebalanced every 90 days to ensure appropriate investment. A considerable benefit of the Blooom service is that it works with virtually every retirement savings account that can be accessed online. All you need is to provide some personal information and the login information you use to access your online 401(k) account — and Blooom does the rest. Users can receive a free portfolio overview that shows the strengths and weaknesses of the account before choosing to enroll in Blooom’s services. Founded in 2013, Blooom currently manages more than $2 million in assets, with customers ranging from 18 to 76 years of age. One of the founding principles of the company was to provide day-to-day management of retirement funds to the overlooked Americans who may not qualify for additional investment assistance. Blooom is also currently the only robo-advisor that focuses specifically on 401(k)s. While this tool is great for individuals who need more assistance managing their 401(k), it may not be the best option for those who have multiple types of investments, such as IRAs. It is also designed to execute more high-risk investments, although this feature can be altered by the user. If you are interested in Blooom but are not quite sure if it is right for you, the rest of this article will provide a deeper dive into how the service works, including its strengths and weaknesses. Blooom quick view: Pros and cons How Blooom works Users start with Blooom by creating an online account and providing basic personal information like a... Learn more about your ad choices. Visit megaphone.fm/adchoices

We answer your questions about emergency funds, whether should you prioritize debt or investing, and is being frugal the latest hipster trend? Find out! I have $30,000 in a savings account and am moving it into Betterment as LMM recommends. How much should I move over monthly until it’s all relocated? The answer will be different for everyone. Andrew followed up with Dillon and found he was saving $1100 a month. Andrew advised 2.5 times that amount be put into Betterment. Once Dillon has $20-30,000 in Betterment, he should stop contributing and consider that his emergency fund. Then start diversifying into something like Van Guard. I have a Capital One Quicksilver card with 0% APR until January 1, 2015. Will I be charged interest if I don’t use this card after December 30 if the bill is due on January 12th? Even with a 0% APR card, you have to pay at least the minimum every month, otherwise you get an interest charge on the entire balance. Automate the monthly payment so it won’t slip your mind. I disagree with your stance of paying off debt over investing. Even if the market has a down year, the money should be invested with a time horizon of at least five years. This isn’t really a question but a statement. We’ll allow it anyway. When we make our argument, we are referring to high interest debt like credit card debt. For something like student loans or a mortgage with a low interest rate, you can invest your money before throwing huge amounts at those debts. In Australia banks allow you to open a trading account linked to your checking account. I can buy and sell shares through my account. Should I use Vanguard or stick with my bank? You can invest that way through Fidelity too here in the States. If it’s like a 401K and you only have access to a limited amount of funds, the fees will likely be high. Vanguard has very low fees and as Betterment isn’t available in Oz yet, Vanguard is the best option – these are our favorite Vanguard funds. Do you think frugality is a trend right now? Absolutely, having really picked up steam after the 2008 crash. There are even shows about couponing! It seems to trend during crashes and then fade away a bit when things are better. We love doing 5 questions shows. Keep sending your questions in. If you want to know you can bet others are wondering too. Show Notes Betterment: The place to stash your emergency fund. Vanguard: For the more sophisticated investor. “All My Money” Personal Finance Rap Video: If you’re new to the show, you might not be aware that in February of 2014, we self-produced a rap video about personal finance. I’ll include the video below, but you can click the link to see a behind-the-scenes videos, lyrics, and more. Ommegang Hennepin Farmhouse Saison: This is the beer that Andrew enjoys on the show in a big-ass bomber bottle. See photo below. Learn more about your ad choices. Visit megaphone.fm/adchoices

Do you know how much your time is really worth? Today we discuss when to trade money for time and vice versa. There are things we all hate to do, mowing the lawn, painting, cleaning, food shopping. Or maybe you’re a weirdo who loves those things. That’s okay. Takes all kinds. How do you decide if you should do these kinds of things yourself or pay someone to do them for you? Math, that’s how. The simplest way to get a yes or no answer is to work out how much you make an hour, even if you’re not paid hourly. You’re worth $20 an hour, it costs $5 a week to have Fresh Direct deliver your groceries. It would take you two hours to drive to the store, shop for your items, pay, drive them home and bring them inside. Unless you’ve turned food shopping into a speed sport like Matt has and can bang the whole process out in fifteen minutes. If you hate food shopping, then it makes sense for you to pay for Fresh Direct. But it’s not always just a matter of dollars and cents and time. Maybe you work from home you lucky duck. And you have plenty of time to clean your house. You’ve done the math and financially it doesn’t make sense to pay someone to do it for you. But you really hate cleaning your house. So maybe from a quality of life stand point, it does make sense for you to outsource a hated but necessary task. That’s okay too. Or on the flip side. You loooove cleaning the house. But you make thousands of dollars an hour. While you’re happily mopping the floor, you could be making bank by spending those two hours working. By all means, clean that house you freak! Come do mine too if it will make you happy. I want the best for you. So while you can easily answer this question with math, life is a bit more complicated than that. As long as you’re not putting yourself in a hole, outsource what you don’t like to do and spend your time doing something you enjoy. Show Notes Red Hook Audible Ale: Today’s tipple of choice. Rescue Time: A resource to help you eliminate time drains. Learn more about your ad choices. Visit megaphone.fm/adchoices

Relationships are hard enough as it is without talking about finances. So we’re gonna lay it down about how to handle money in a relationship. You have a better chance of staying married than winning the lottery so that’s good news! But how can we increase the chances that you’ll stay married when money issues arise? To prenup or not prenup? Oooh, sticky. If there is a chance that the man or woman of your dreams is marrying you for your vast wealth or celebrity, a prenup might be the life choice for you. But if you’re just a regular guy or gal, a prenup is probably not that important. A good solution to avoid money arguments is a joint checking account where each partner contributes a percentage of their income for household expenses. Each partner can also have a private account that they can spend on whatever they like. Open, on-going communication is better than the occasional fight. This is especially important before moving in together or getting married. Imagine finding out on your honeymoon that your beloved has brought $80,000 in credit card debt to the marriage. Money issues are an uncomfortable conversation to have and they should not begin with you asking but by you telling. By putting your cards on the table first, the other party will feel more comfortable and less ashamed about disclosing their own financial situation. Once a week or once a month, go over expenses together and see where one of you might be a bit over the top and need to cut back. Discuss large purchases before making them. If your spouse comes home with a new outfit that’s probably not the end of the world. If one of you comes home with a new car, that’s probably going back. Or driving you to the divorce lawyer’s office. In some situations a domestic partnership can be more beneficial than marriage. Many employers offer health benefits to domestic partners and you can avoid the “marriage tax,” because joint filers are sometimes taxed at higher rates. Money is one of the biggest stressors in a relationship but it doesn’t have to be. Follow our advice and live happily ever after. Show Notes Mint: LMM’s preferred budgeting tool. Learn more about your ad choices. Visit megaphone.fm/adchoices

Listener Daniel Murrell to analyze his financial situation. He shares a great strategy for making college affordable. Daniel is twenty three, lives in Southern California, works and goes to school. And he has a smooooth voice. Daniel works in overnight freight for Home Depot. Daniel shares an apartment with his brother. His portion of the rent is $475 a month and the utilities are $65 a month. Daniel makes about $1300 a month, paid bi-weekly. He’s able to use one check for living expenses. He drives a motor cycle to work rain or shine. Daniel’s transportation situation is one of the things working for him and working against him. He rides his motorcycle to work rain or shine. Daniel bought the bike used, spends $13 for gas a week and pays $140 a year for insurance. However, Daniel bought a car with a personal loan a few years ago. The car is long gone, traded in for the awesome bike but he’s stuck with the payment. The balance on the loan is about $3500. Daniel is investing monthly in Betterment. He has a few credit cards with $0 balances one with a small limit that usually carries a balance. Daniel keeps about $800 in an emergency fund. What can Daniel do better? The biggest problem is the personal loan used to buy the car. Daniel is no stranger to hard work. In the past he has worked multiple jobs and doesn’t mind doing so again. By picking up another job for a few months, Daniel can get that loan paid off and use that money to invest more in Betterment. Daniel should keep his unused credit cards open. Closing those cards will lower his credit rating by shortening the length of his credit history and lowering his available line of credit. What did Daniel teach us? He goes to school for two semesters, takes a semester off to work and pay off the previous semesters. Genius! This is something all students should consider. We also steered Daniel to Jim Wang’s site Microblogger so he can monetize some of his hobbies. But I think he should do voice over work or record audio books. People would pay to listen to Daniel read from the phone book! Show Notes Shiner White Wing Belgian White: Andrew’s tipple. Betterment: LMM’s and Daniel’s favorite investing tool. Learn more about your ad choices. Visit megaphone.fm/adchoices

There is no doubt about it, being broke sucks. But that isn’t to say you can’t learn valuable lessons from being broke. These are the most important lessons I learned from being broke. * Credit cards are a good thing when used correctly. You can earn cash back, free flights, and free hotel stays, win! * Debt is the devil. It is the devil waiting to poke you with its pointy pitchfork. No one likes that. * Banks are the devil too. Fees, fines, charges, crap interest. The banks are the devil with two pointy pitchforks. * Mint is mint. We have a lot of love for Mint at LMM. For a lot of us, it was our first step in taking control of our finances. * Investing is what makes people rich. Starting your own business is one path to riches, but not everyone can or wants to start their own business. But all of us can and should be investing. Always be investing. * I don’t need everything. Neither do you. Stop buying shit! * Staying home is ok. Invite friends over to cook a meal, watch the game, play cards. Not only will you spend less than if you go out, but unless you have crappy friends, they’ll bring some booze! * Education is critical (books, not college). This one is controversial, but for the same eleventy billion dollars you spent on college you could buy a lot of books. College is one path to education, but it’s not the only one. * Don’t be afraid to ask for money. Whether this means not getting low balled on freelance work or asking your boss for a raise, no one is going to give you money unless you ask. * Job security is a myth (except for teachers). The days of being a “company man” and retiring after thirty years with a pension and gold watch are over folks. You have to be flexible and always looking for the next opportunity even if you feel secure in your current situation. * Owning a home is not for everyone. This ties into #10. If you lose your job and can’t find work in your area, you can’t pack up and go if you are tied down with a house. There are a lot of hidden costs both regarding money and time when you own a home. * Build an emergency fund for peace of mind. Having that cushion allows you to sleep easier at night. You could survive a job loss or a pay cut or an expensive car repair. * Junk mail. The clue is in the name. Credit card offers, coupons for stuff you don’t need and won’t use. Don’t even open it, straight into the shredder. * Bad habits are killing you. Overeating, smoking, drinking to excess. You are wasting money, harming yourself, and costing the future you tens of thousands of dollars in medical expenses and missed work. * Choose Your Friends Wisely. Don’t spend time with toxic people. Surround yourself with people who support your goals and chuck anyone who makes you feel bad about yourself. * Do what makes you happy. Just the simple things, a good cup of coffee, a walk in the park, spending times with your now detoxed list of friends. * Hobbies are important. Choose a hobby that you enjoy, that teaches you something, that enriches your life. Maybe you can even make a little extra money at it! * You are your own worst enemy. We are the choices we make. You don’t need to be told that a credit card is not free money. You don’t need to be told that letting your student loans default is a terrible choice. Whatever you tell yourself that allows you to continue that kind of behavior, stop. Just stop, it’s that simple. Here is the original article. Show Notes Learn more about your ad choices. Visit megaphone.fm/adchoices

Andrew and Matt calculate the absolute minimum they could each live on. We hope it will inspire you to cut some of the frills out of your spending. If you cut your expenses to the bone, how much could you live on? And what does “live on” mean? Would you be willing to eat ramen for every meal or would you still need a weekly Whole Foods run? Is it realistic to get rid of your car? We pad our expenses with a lot of unnecessary fluff. If you lost your job or if you decided to quit your job, you would get by on a lot less than you are spending now. As a hypothetical, list out your expenses, or check your Mint account and decide what you could cut but still maintain a good quality of life and be happy. Now see what you could cut to live like a recluse, never going out, eating only two meals a day, no alcohol, no public transport. Of course you could try one of these approaches for a month and see how you do but it’s really just an exercise. It can be reassuring to know that if you had to live on $1500 a month you could. Imagine if you did it though. For just one month. How much money you would accumulate and the things you might discover you could live without for longer than a month. Maybe some of those changes will become a permanent part of your life. Our mental attachment to things is strong but once that attachment is broken, we usually see that not having cable does not really change day to day life in a negative way. It may even have a positive impact. Now you have to fill those hours spent in front of the TV with something else. Maybe you read more, cook more, start exercising, spend more time with your family. Take the one month challenge and let us know how you do! Show Notes Shiner White Wing Belgian White: With hints of coriander and orange peel. Mint: The easy way to budget. Betterment: The smart way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices

We get lots of questions about student loans so we decided to bring on an expert to help. Heather Jarvis joins us to answer of your pressing questions. Heather graduated from Duke Law School with $125,000 in student loans. She wanted to use her degree to help poor people so it wasn’t going to be a big salary helping her pay that back. Heather has worked on the government’s student debt relief programs but admits they are complicated and tricky to access. Heather’s site is designed to make things easier for those who already have student loan debt. We asked Heather to explain some of the programs to help deal with student loan debt. 1. Income-Based Repayment Plans This is an income-based repayment for federal student loans. You do need to show financial hardship in order to get it. Which shouldn’t be too hard as student loans are a financial hardship. Your monthly payment will be based on the income reported on your tax return and compared to the national poverty rate. 2. Public Service Loan Forgiveness Program Public servants can apply to have their loans forgiven after ten years. Heather says, “It’s all about making the right kind of payments, on the right kind of loan while working the right kind of job.” 3. Deferment or Forbearance If you’re having trouble paying your loan no matter how much the monthly amount is lowered to, you can apply for a forbearance, which allows you to defer your loan payments for a certain period of time. The interest still accrues during this period though so keep that in mind. Basic Student Loan Tips from Heather * Everyone should be filling out the FAFSA forms, even if you think you won’t get it. * Try to get federal loans over private loans because they tend to have lower interest rates. * Use StudentLoans.gov and check out some of the tools and services there. * State loans are the worst of both federal and private loans. * Be careful about what you borrow. Understand what kind of loans you have and what your options are. * Think more carefully about the cost of the colleges you plan to attend. * Consider community college for a few years to do your prerequisite courses. College debt can be crippling but there is help out there. If you are struggling, consult Heather’s site and get some help. Show Notes Ask Heather Jarvis: Take control of your debt. Mint: The easy way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices

We share stories about how we found awesome jobs in the past and new ways you can go about getting the job of your dreams on this episode. If you want to walk the path of financial success (following our Wealth Wheel, of course), then you need to begin with income. You can’t get out of debt, budget or invest without money. But money isn’t everything. You also want a job that you enjoy or at least don’t feels miserable going to every day. What Kind of Job? Before you start scouring the want ads (no one does that anymore),you should ask yourself a few questions to determine what kind of job you want. Do You Hate Dealing With People? Whether it’s because you are an introvert or you just have little patience for the stupidity of the average person, if you hate dealing with people, find a job that limits contact with them. Become an economist, a software developer, or an accountant and you will have a blissfully people-free career. How Much Do You Want to Work? Some careers provide more work-life balance than others. If you’re young and single or have a lot of debt to pay off, you might not mind working a lot of nights and weekends. But as you get older and have a family, it might not be ideal any longer. If you don’t want to spend all your time working, consider a career in corporate recruiting, data analysis or insurance sales. Be sure to research the culture of the particular company you are applying for though. Some companies may “encourage” working long hours even in jobs that don’t traditionally require it. How Much Schooling is Required? You may have enough education to get hired at entry or mid level but if you want to move up, will you need more? If the answer is yes, you shouldn’t automatically be deterred. There are many options to go to school part time and continue to work and your employer may pay for all or part of your education. How Much Do You Need to Live On? Many of us harbor dreams of doing something creative or working at a non-profit for a cause important to us, but we also need to pay our bills. Know the minimum you can earn to pay your bills, pay any debt, and save for the future. If you’re still determined to take a job for love over money, that’s okay. There are plenty of ways to be frugal and make money on the side. Getting the Interview Now that you have an idea of what you want to do, here are some ways to get an interview. Have a Killer Resume We did a whole episode on this. Unless you have an “in” at the company you are applying to, your resume is your only chance to get the attention of someone in a hiring position. Clean Up Your Social Media Anyone considering calling you in for an interview is going to Google your name first. What will they find? If you’re this piece of shit, you can expect never to get a job, ever. But you probably just have some embarrassing Facebook posts and Instagram pictures. Clean that stuff up and make every account you have private. Set Up a Killer LinkedIn Profile Recruiters are using LinkedIn to find candidates and businesses are using Google to find new employees, so if you don’t have a profile set up yet... Learn more about your ad choices. Visit megaphone.fm/adchoices

Interested in purchasing individual stocks? Listener Patrick Kenneally teaches us how to research stocks. Patrick had his first taste of investing while in college where he was part of Huntington 360, the student-run group that invested a portion of the school’s endowment in mutual funds. There are some tools that Patrick recommends, the first is an SEC site that will give you any publicly traded company’s quarterly filings. The next is from Business Week which provides financial statements as well as ratio calculations. Aside from hard numbers, it’s also important to consider emotions that could be inflating or deflating a stock price. Several months ago a Tesla car caught fire and affected the stock price. Conventional cars catch fire too but as Teslas are new, this was suddenly considered a safety issue specific to them. Another important consideration when buying single stocks is your familiarity with the company’s products. If you are researching something you have no knowledge of, you won’t understand the data you are finding. If mutual funds are more your thing, Morningstar’s compare tool is a good starting point for your research. Loyal3 is a site geared towards beginners in the stock market that allows you to make small volume trades for no fee. Robin Hood is a similar site that is not live yet but poised to shake up the big investment banks. Thanks to Patrick for spending some time with us and teaching us all how to be more like him and Andrew! Show Notes Morningstar: They’re mutual fund comparison page. Learn more about your ad choices. Visit megaphone.fm/adchoices

Travel expert Andy Steves teaches us how to travel abroad affordably while having an authentic experience. Andy grew up traveling to Europe with his father, the travel guru, Rick Steves. He worked college summers as a tour guide for his dad’s company and saw a gap in the market while spending a semester studying abroad in Rome. In 2010 Andy set up his own travel company, Weekend Student Adventures Europe to take study abroad students on affordable intra-Europe three day weekends. For a lot of students, their semester abroad is the first time they have had to budget their money. Dealing with a new currency makes this even harder as does the “foreignness” of a new place. Young people perhaps outside the US for the first time might be too timid to venture off the well trodden tourist path and end up spending more money for a less authentic experience. By doing some research, which is half the fun of a trip for some of us, you can avoid the tourist traps and really experience a new place. When looking for a restaurant, don’t go to the place on the main strip with menus in every language. Walk a few streets over and find the place the locals go. The food will be better, cheaper, and the experience more memorable. The same applies to bars and clubs. Every city has an American ex-pat bar but why did you spend $1000 on airfare to spend the evening drinking with the same people you can drink with back home? We all have romantic dreams of Parisian cafes and Roman trattorias but we don’t all have the budget. There are so many beautiful places in Central and Eastern Europe that are much more affordable. You can have a three course dinner in Krakow for 5-6 Euros which is $8. You can spend an afternoon in a thermal spa in Budapest for 4 900 forints which is about $22. As Andy’s dad taught me, “Travel is a force for peace.” It makes you a better person and gives you the ability to make the world a better place. Show Notes WSA Europe: Andy’s site providing affordable weekend travel. Mint: LMM’s favorite budgeting site. Learn more about your ad choices. Visit megaphone.fm/adchoices

Tony Stubblebine, CEO of Lift.do discusses how his habit building app can help us build good habits be they financial or another realm of our lives. Tony has a long background in tech startups. We was the head of engineering when the first version of Twitter was built and was involved in the site Wesabe which was a precursor of Mint. Tony is now the CEO of Lift which is a habit building app and a support system for over 200,000 goals including saving money, improving diet, and meditation. Tony likes to call it “a personal coach that lives on your phone.” He was inspired by the level of support he saw as a guest at a Twelve Step meeting and thought if we could have that level of support for the smaller goals in life, we could make succeeding so much easier. Like a lot of apps, Lift is free so how will they eventually make money? The plan is to charge a fee for higher levels of coaching involving one on one interaction with one of Lift’s experts. What are some of Tony’s success building habits? Rather than looking at a to do list,he actually blocks out time to accomplish the list. This adds a level of accountability to an easily ignored list. Tony likes to keep it simple. You don’t need an elaborate scheme cooked up by a bunch of un-touchables living in their parent’s basement to ask a girl out. You need, a job, clean clothes, and the ability to look her in the eye. That’s it, the old K.I.S.S. method works whether you are scoping chicks or saving money. What’s Tony up to next? Lift is adding a Q&A function. The community is one of the friendliest and most helpful on the internet. We encourage you to join Lift to find some support for your goals, ever how big or small they may be! Show Notes Lift: The habit building app co-founded by Tony. How to Meditate with Lift: Start meditating everyday with Lift. The Quantified Diet Project: The diet project that Matt and Tony talk about at the beginning of the episode. Tony’s Twitter: Connect with Tony here! Learn more about your ad choices. Visit megaphone.fm/adchoices

Forbes Magazine published a list of common money mistakes many of us make. Which ones are you making? 1. Not having a budget. Chances are you have more than Matt’s three monthly expenses and unless you’re budgeting, you can’t keep track of them. No need to be old fashioned and create a spread sheet. There are plenty of online tools available to make this a painless process. 2. Avoid bank fees. Bank fees are for suckers. There are plenty of banks that don’t charge you for the privilege of housing your money while paying you crap interest. 3. You have no emergency fund. There are different definitions of what an emergency fund is. For some it’s $1000 in a checking or savings account. For others it’s a year’s worth of expenses invested. For most of us, it’s somewhere in between and having any emergency fund is better than none. 4. 5. Not taking full advantage of matching 401K funds and not contributing from your first pay check. What if your employer doesn’t match? It’s still worthwhile to contribute because it takes money from your check before you can miss it and if you can contribute enough to drop you down a tax bracket. 6. Not knowing how much you should save for retirement. If you don’t know this, listen to our episode on the 4% rule. 7. Not choosing the best student loan repayment plan. There are several options depending on the type of loans you have, your income, and the field and sector you work in. 8. 9. 10. The next three address estate planning, disability and life insurance. Perhaps not something a lot of you are thinking about just now, but become more important the older we get and if we start a family. 11. Using an investment adviser as you financial planner. LMM is going to make the editorial decision to tell you that you don’t need either of these. No one will ever care more about your money than you and these guys rarely beat the average. So save your money, listen to us and learn to do this yourself. 12. Only considering the upside when choosing investments and choosing those investments based on ratings or headlines. Yes you could absolutely pick a stock, get a lucky hit and retire at 25. You could also lose your ass. Do your research, don’t choose based on media hype, that’s what the media does. Today’s Tesla could be tomorrow’s Edsel. We know our listeners are savvy and getting savvier but take an overview of your situation and see if you are making any of these mistakes. Show Notes Betterment: On-line investment tool. Mint: On-line budgeting tool. Learn more about your ad choices. Visit megaphone.fm/adchoices

Your future self will you for establishing an emergency fund now. It’s important to set aside emergency savings can help you get in case your home needs an urgent repair or something more serious like unemployment. We will help you figure out how much you need and how to get an emergency fund started. Having an emergency fund is one of the most important things you can do. It’s part of adulting. Your savings should be able to cover your major expenses for three to six months. What is an Emergency Fund? An emergency fund is a pool of liquid money set aside for unforeseen expenses like a medical expense or a car repair. Having an emergency fund can be the difference between a small bump in your financial life and complete disaster in your entire life. Having a robust emergency fund gives you peace of mind. No one wants to live one paycheck away from not being able to pay the rent or one car breakdown away from not being able to get to work. It also gives you some freedom. If you decide to leave a relationship or your job becomes so unbearable that you have to leave before finding another or you want to go back to school or start your own business, having an emergency fund gives you the freedom to do those things. Keeping that money separate from the money you use to pay bills can help curb frivolous spending. Sometimes when you see a big number in your checking account you get a little cocky and a little more reckless. Keeping the money separate can help you avoid temptation. What is an Emergency? You should only dip into your emergency fund for a real emergency; to keep yourself afloat between jobs, for a car repair, a medical expense, or a home repair. You cannot use your emergency fund for things like a vacation, a shopping spree or to upgrade your perfectly good cell phone or laptop. An emergency is not an expected expense, like buying Christmas presents, that you didn’t budget for a few months ahead of time. That’s what a sinking fund is for. How Much Should You Save? Ideally, your emergency fund should be 3-6 months of expenses. That sounds like a lot and it is but keep in mind, that number can be your bare-bones expenses. If you were to lose your job your spending would be (at least it should be) different than it is when you have money consistently coming in. The number you use to calculate your three to six months would include expenses like rent, utilities, car payments, etc. It does not have to include dinners out, entertainment, and clothing expenses or saving for retirement. Even still, 3-6 months of basic expenses will still add up to thousands of dollars for most of us so it can be daunting to save up that much. But you don’t have to accumulate it all at once. Set a reasonable time frame to get to the six-month number. Don’t give yourself too much time though. Growing your emergency fund should be a priority. Let’s say your ultimate goal is $12,000. That means your bare-bones expenses are $2,000 a month. If you saved $400 a month, it would take 2.5 years to reach that number. That’s a reasonable timeline as long as you are saving that $400 every month. Remember though, this is a priority. If you can throw an extra $100 a month in there, do it. Or you can use any “extra” money you get, a bonus, a raise, monetary gifts, to help you reach your number faster. Feeding Your Emergency Fund Feel like you’re all tapped out and have no extra money to put towards your emergency fund right now? No fear. Learn more about your ad choices. Visit megaphone.fm/adchoices

In honor of Memorial Day, we interview our listener Johnny who is a member of the Air Force, working in the finance office. Members of the Armed Forces have their own set of challenges when it comes to their finances. Many recruits are fresh out of high school and learning to manage their finances is just one of the new arenas they find themselves in. As a new recruit, most of the day to day living expenses are covered, housing, meals, and health care so a lot of their income is disposable and they make the same mistakes a lot of young people make when they suddenly find themselves with some money. Buying expensive cars, fancy gadgets, nice (well earned) vacations dinner out when they tire of eating the same thing on a ten day rotation. The military does provide some personal finance classes but they’re voluntary. The military does provide investment options. There is the TSP which is similar to a 401K program and subject to the same caps as the civilian sector. Military personnel are also given a pension. After twenty years of active duty, they receive 50% of their base pay. Some states don’t tax retirement income so this is something for members to consider when deciding where to live after retiring. The GI Bill is another program available to members. It helps to pay for college and provides a stipend to help cover living expenses. For deployed members there are some added financial benefits that are location driven including hostile fire pay, combat tax exclusion, and family separation pay. Johnny’s final advice to his fellow military members is to know your benefits and if you have a question, ask someone. Thank you to Johnny and the millions like him for serving our country. Show Notes TSP: The military’s Thrift Savings Plan GI Bill: The military’s college payment plan Learn more about your ad choices. Visit megaphone.fm/adchoices

Meet Dan, Matt’s financially savvy brother to discuss what he’s doing right, wrong, and what he could do better. Are money smarts genetic? We learn early on the difference between Matt and Dan. As children, Dan asked for stocks for Christmas while Matt asked for XBox games. Their Mom told me they still do that actually. Dan also took personal finance classes while in high school, again underscoring the importance of teaching PF in school. Dan started college majoring in finance but changed to management information systems after one semester. He graduated with $45,000 in student debt and bought a house soon after. He did not take Matt’s advice to “live a little” but put 10% down while maintaining a cushion of about $10,000. Half of that is in Betterment and the other half is slowly being moved from savings to Betterment. Dan has a private IRA and a pension through his job. Dan has no credit card debt and owes $4,000 on his car. Dan has some changes that are coming up to his situation. When he bought his house he was given a five year tax abatement. When the five years is up, the mortgage payments will increase. He is also eligible for a program that will partially forgive his student loans after he has worked for a public institution for ten years, he’s five years in. How can Dan do better? Turns out, Dan is doing pretty damn well. His portfolio is diversified and he’s interested in his financial situation. He should pay off the car loan within a few months to free up $300 a month that could be better spent in Betterment. He may also start researching 3-4 individual companies that he’s interested in and can invest in. He should also make better snack choices. Show Notes Betterment: An on-line investing tool. Mint: LMM’s favorite budgeting tool. Learn more about your ad choices. Visit megaphone.fm/adchoices

Why not turn doing what you love into a way to make a bit of money on the side? We share ideas on how to make money with your hobbies. The difference between a hobby and a job is that a job has aspects you don’t enjoy. A hobby is doing only the things you like to do. Can you make money watching TV? Kind of sad if you consider TV a hobby but none the less, you can turn it into cash. You can use sites like Swagbucks or Bing Rewards to play videos while you’re doing something else, cooking or working. You may have to occasionally click on the screen but it’s not terribly distracting or time-consuming. You can even use something like Bing Rewards Bot to automate the system. Matt’s brother Dan makes anywhere from $40-70 a month this way. How Stuff Works lists ten hobbies that can pay off. Several of them like dog walking, organizing, and coaching a sport have little to no start up costs. If you love to take photos, upload them to a site like i-Stock. Someone looking for a photo of a beach for example, will pay to use your shot. Ask yourself what you’re good at and find a way to turn that into a job. Think carefully though. Cooking a big meal on a Sunday afternoon with a glass of wine is fun and relaxing. Slaving away in a restaurant kitchen for crap wages is less fun and could ruin the enjoyment of your hobby. Show Notes SwagBucks.com: An on-line rewards program. Bing: Earn credits toward gift certificates while on-line. PogoCheats.com: A bot to help automate earning Bing Rewards. Reddit Beer Money: A sub-reddit devoted to discussing ways to make money online. Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s interesting to hear someone else’s personal finance story, and we are lucky enough to have listeners willing to share this financial life. Today we are joined by one such listener. Join us for this financial life with Robbie. Robbie is getting married in a few weeks. His fiancé is in graduate school. He has no debt aside from $44,000 in student loans. The student loan payment is $165 a month, but Robbie usually pays $250. The interest rate on the loan is about 6%. Robbie has no car payment, rent is $765, and groceries run $400-500 a month. Robbie puts some money each month into his Betterment account. Those are the facts. How is Robbie doing? Pretty well actually. He’s a long time listener and has learned a lot from LMM. Andrew suggests that he invest three months of living expenses into Betterment to serve as an emergency fund. The rest of the extra money will be better spent paying off the student loans. Once Robbie’s fiancé finishes graduate school and starts working, they plan to live on one salary and use the other to pay off the loans. If they can buckle down and do this for a year or two, they will put themselves ahead of the game. Robbie has low expenses, paid cash for his car, and has a plan to attack the student debt in a relatively short amount of time. Another thing he should consider is filing his taxes individually instead of as a couple once he’s married. Two incomes combined have a higher tax rate. Best of luck to Robbie on his new marriage! Keep us posted on the student loan progress. Show Notes The federal student loan repayment program. Betterment: On-line investment tool. Learn more about your ad choices. Visit megaphone.fm/adchoices

J David Stein of Money For the Rest of Us visits for our ongoing Better Know A Millionaire series. David went to work as an institutional investment advisor at the age of 30 after spending years in corporate finance. David retired at 40, already a millionaire. David tells us that most millionaires, as in The Millionaire Next Door, live a frugal lifestyle. And the best way to become a millionaire in the United States is to start and own your own business. David lives in Idaho and drives a used BMW with a cracked windshield. What does a retired millionaire do to bring money in? The bulk of David’s income now comes from investing. He is more cautious now than he was when he was still working. He reiterates some ideas we have discussed in the past. Keep your fees low and be greedy when others are fearful and fearful when others are greedy. David’s greatest pleasure now that he’s retired is travel. He travels as he lives, frugally. Taking advantage of sites like Airbnb for cheap and comfortable accommodations. David has found that travel has teaches us to “be amazed at how many ways there are in the world to live.” Another lesson that David reinforces for us is that the best mind’s best ideas did not out perform the market. The average person can match or beat the best money managers out there and without the fees. But I think David’s greatest wisdom is that living frugally and investing wisely so that we can retire at the young age he was able to are worth the trade off for complete freedom. We all want to be David when we grow up. Show Notes JDavidStein.com: David’s personal finance blog. SilenceLikeThunder.com: David’s site devoted to his personal writings. Learn more about your ad choices. Visit megaphone.fm/adchoices

It's easy to dismiss mindfulness as some kind of woo-woo new age nonsense, but it's not all navel-gazing and chakras. But when we are mindful of the things that are important to us, including money, we can greatly improve our lives. Full Article Here Show Notes Investable: Research and evaluate rental properties. Tool Box: All the best stuff to manage your money. Lift App: An easy way to make a good practice a habit. Calm.com: A guided meditation site. Learn more about your ad choices. Visit megaphone.fm/adchoices