Listen, Money Matters! http://www.listenmoneymatters.com Manage your money like a badass! Tue, 27 Jan 2015 22:01:47 +0000 en-US hourly 1 http://wordpress.org/?v=4.1 Honest and uncensored - this is not your father’s boring finance show. This show brings much needed ACTIONABLE advice to a generation that hates being lectured about personal finance from the out-of-touch one percent. Andrew and Thomas are relatable, funny, and brash. Their down-to-earth discussions about money are entertaining whether you’re a financial whiz or just starting out. To be a part of the show and get your financial questions answered, send an email to listenmoneymatters@gmail.com. ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. yes ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. listenmoneymatters@gmail.com listenmoneymatters@gmail.com (ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. ) Copyright © ListenMoneyMatters.com ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer since 2013. Listen, Money Matters! http://www.listenmoneymatters.com/wp-content/themes/LMMv3/images/iTunes-Image-2015-final3.jpg http://www.listenmoneymatters.com New York Daily TTIP http://www.listenmoneymatters.com/ttip/ http://www.listenmoneymatters.com/ttip/#comments Tue, 27 Jan 2015 11:00:38 +0000 http://www.listenmoneymatters.com/?p=7551 TTIP is the Transatlantic Trade and Investment Partnership. It is being negotiated in secret and if it passes, none of our shit will remain unfucked.

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TTIP

TTIP is the Transatlantic Trade and Investment Partnership.  It is being negotiated in secret and if it passes, none of our shit will remain unfucked.

The TTIP is a series of trade negotiations, conducted mostly in secret, between the US and the European Union aimed at reducing regulatory barriers to trade. The only reason we know any of this is due to leaked documents and Freedom of Information Act requests.

Well, what’s wrong with that you might well ask (especially if you are a Fox News aficionado).  Free trade is a good thing!

Well, no.  It isn’t always a good thing.  Well, it’s almost always a good thing for big business.  It is not always a good thing for workers or society at large.  TTIP has been called, “An assault on European and US societies by transnational corporations.”

No Sovereignty For You!

The most controversial part of TTIP are “investor protection” rules.  This would allow US companies that invest in European countries to bypass European courts and directly challenge national sovereignty when they think laws in the host country meant to guard public health, the environment, labor laws, or social protections hamper their ability to make a profit.  

The cases would be heard by a private international tribunal which are not part of the normal judicial system but specifically set up for investment cases.  So a bit like the Hague but not trying war criminals but trying sovereign governments.  And if the corporation win the case, the tax payers of the country being sued will be on the hook for damages.

Vattenfall, a Swedish energy company is seeking 3.7 billion Euro in damages from Germany after Germany voted to phase out nuclear power.

France recently passed a law banning fracking.  Two companies filed suit against the country of France.  How dare those cheese eating surrender monkeys get in the way of big business trying to make a buck by stopping them from poisoning ground water with toxic chemicals.  They’re French!  They don’t need clean water, they only drink wine!

The investor protection rules have recently been getting some push back.  They may be the most nefarious part of TTIP but they are far from the only grotesque.

Agrictulture

80% of the antibiotics in the US are linked to food animal production.  In 2013 the Centers for Disease Control and Prevention linked a minimum 23,000 deaths to antibiotic resistance.  If you are eating CAFO meat, and you probably are, you are ingesting these antibiotics.  The use of them in a big reason that antibiotics are no longer as effective as they once were.

The meat industry wants the EU to remove bans on the use of antibiotics and growth hormones.  They also want restrictions on the use of animal by products in animal feed and pet food removed.  Animal by products are blamed for outbreaks of swine fever, foot and mouth disease and mad cow disease.  If you want to spend the rest of the day curled in a corner whimpering for your mother, youtube mad cow disease.

Ractopamine is a failed asthma drug that us used in food animals as a growth promoter.  The drug has been banned in 160 countries. Use of the drug has been linked to decreases in reproductive function, birth defects like cleft palate and fused digits, and enlarged hearts. TTIP would help pave the way for it’s use again.

TTIP would also weaken provisions for animal welfare.  The EU banned battery cages for chickens in 2011.  TTIP could overturn the ban.

TTIP would mandate fast track approval for GMO seeds.  I know GMO’s are controversial and some people who are against them have been accused of being right up there with anti-vaccers.  But at least with the current regulations in place, they could be tested for an appropriate length of time before being green lighted.

The Environment

In Europe, a company must prove that a substance is safe before it is approved for use.  In the US the opposite is true, it can be used until it is proven unsafe.  TTIP would allow the US model in Europe.

Deregulated trade, resource extraction and consumption under TTIP are estimated to add eleven million metric tons of CO2 into the environment.

There would be delays in stronger rules governing the use of hazardous chemicals and it would hamper innovation of safer substances.  Why spend time and money developing non-toxic alternatives when the toxic ones have carte blanche under TTIP?

Regulations, where there are any, would be based on cost-benefit analysis as defined by profit or the lack of and not costs borne by the people and communities affected by a lack of regulation.

Banking Regulations

Documents that were leaked last summer show EU negotiators putting pressure on their US counterparts to accept agreements that would scale back existing banking regulations and prevent future regulations that would come in conflict with the financial interests of big banks.

We’re all aware of the fact that banking regs were basically the Wild West before the 2008 melt down is what helped to tank most of the world’s economies.  And we’re the ones resisting!  So imagine what the EU negotiators are angling for.

Well, it turns out they are angling for whatever big Wall Street banks are whispering in their ear.  The EU negotiators and Wall Street have teamed up in an effort to exert pressure.  And as evidenced by the derivatives section of the Dodd Frank bill being rewritten by Citibank lobbyists and then passed by Congress a few months ago, Wall Street lobbying is formidable.

Public Services

Public services are in the sites of the TTIP.  TTIP seeks to take away the ability of member states to decide what services stay in the public sector and would hand over power to unelected and unaccountable corporations. Services like education, public health, and water could all be privatized under TTIP rules.  So the UK could kiss the NHS goodbye and free public education could be threatened.

They even want to control water! Many municipalities are facing budget deficits and aging water systems.  As a solution, some cities have looked to abdicate the responsibility to the public sector.  Private water costs up to 80% more than public water.

Nestle is the largest producer of food in the world.  The current chairman, Peter Brabeck-Letmathe is like Mr Burns come to life.  He has gone on record as saying, “Access to water is not a public right.”  And it’s no wonder he would like to control the world’s supply from what I assume to be his underground lair.  Nestle profits to the tune of $35 billion a year from bottled water sales.

The US loves to export our culture.  Sometimes that’s a good thing, everyone loves Levi’s and rock n’ roll.  Exporting our culture of government by the corporations, for the corporations is something that should be stopped at home, not exported abroad in order to bring the EU down to our level.

We should be demanding for ourselves the same rights EU citizens have demanded, sometimes fought for, and won.  If the TTIP was good for citizens on either side of the Atlantic, why is it being negotiated in secret?  You already know the answer to the question.

 

 

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Naked Economics, Statistics, and Politics with Charles Wheelan http://www.listenmoneymatters.com/naked-economics-statistics-politics-charles-wheelan/ http://www.listenmoneymatters.com/naked-economics-statistics-politics-charles-wheelan/#comments Mon, 26 Jan 2015 11:00:54 +0000 http://www.listenmoneymatters.com/?p=7556 Charles Wheelan is a lecturer in economics at Dartmouth and has authored five books. He joins us to discuss statistics, politics,and the economy.

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charles-wheelan

Charles Wheelan is a lecturer in economics at Dartmouth and has authored five books.  He joins us to discuss statistics, politics, and the economy.

Economics is the study of how we allocate scarce resources.  Poverty, health, education, are all affected by how we allocate resources so understanding that can help us to do a better, more fair job at that allocating.

To make money, you have to produce value.  Part of the reason for stagnant middle class wages is because the value it used to produce is now being produced more cheaply, either through technology or outsourcing to countries where wages are very low.

"To get rich you have to create value. Or steal money."

Money is not the only factor in economics.  Sometimes money can stop people from doing something.  Organ donation for example.  Tying it to money makes people less likely to do it. Sometimes altruism is a greater driver than monetary gain.

Most people will stay where you put them.  Many people don’t save for retirement.  Some companies now automatically enroll new employees in 401K plans.  The employee is free to exit the plan or change it but most people will just default to what the company chose.

Sometimes a small guaranteed incentive is less effective than a larger, but not guaranteed one.  Getting $5 each time you go to the gym is less attractive to people than going to the gym and being entered into a raffle to win a car.  This is why people play the lottery.

Statistics are useful because they can be used to infer patterns.  Recognizing and using the patterns can make you more money, or just help you to do things better.  Which will probably earn you more money!

Most people are pretty poor at appreciating probability.  So we worry about Ebola but cross against the light.  But the odds of getting Ebola are much smaller than the odds of getting hit by a car.

Charles is a passive investor, an Index Fund guy.  So the Dartmouth professor shares the LMM philosophy of buy and hold!  The longer your horizon, the smoother the booms and busts level out for you.

Charles is very politically active.  He advocates for a Centrist Party, where people who feel alienated by the Republicans and Democrats can join together.  We need something better in the middle, where most of us dwell.

It was great to interview a guest who understands economics and is actively trying to improve the short comings of our current two party system.

 Show Notes

Amazon:  Charles Wheelan’s books.

Mint:  The easy way to track your spending.

Betterment:  The smart way to invest.

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http://www.listenmoneymatters.com/naked-economics-statistics-politics-charles-wheelan/feed/ 2 Charles Wheelan is a lecturer in economics at Dartmouth and has authored five books. He joins us to discuss statistics, politics,and the economy. Charles Wheelan is a lecturer in economics at Dartmouth and has authored five books. He joins us to discuss statistics, politics,and the economy. ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. yes 52:24
What the F**k is a REIT? http://www.listenmoneymatters.com/fk-reit/ http://www.listenmoneymatters.com/fk-reit/#comments Fri, 23 Jan 2015 11:00:32 +0000 http://www.listenmoneymatters.com/?p=7474 Ever hear of a REIT? No? That's ok, me neither. So we're going to learn together what that is and if we should collect, them, buy them? I don't know yet.

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REIT

Ever hear of a REIT?  No?  That’s ok, me neither.  So we’re going to learn together what that is and if we should collect, them, buy them? I don’t know yet.

A REIT is a real estate investment trust.  It’s a good investment and more importantly, it’s a good investment for those who want to buy property but for whom that would be a mistake.

There are two kinds of REIT, an equity and a mortgage style.  About 90% are the first type and the remaining 10% the second.  If we’re learned nothing from 2008 and most of Congress hasn’t, it’s to stay away from mortgage stuff.

The max the holder of the REIT can take is 10% of the revenue.  That means the other 90% are passed on to the investors.

Andrew compared a traditional Vanguard fund and a REIT Vanguard fund.  The traditional had a 12.56% return and the REIT had a 30.29% return!  We advocate renting over buying a home for young people for a variety of reasons so a REIT is a way to have your cake and eat it too.

A REIT would be a good place to stash your emergency fund.  And remember, you should not be having emergencies a few times a year.  Needing a big ass TV is not an emergency.

If you’re a young person interested in buying a house for the investment but may move within the next few years or just don’t have the time to deal with all of the issues that arise with owning a home, a REIT is a good compromise for you.

Remember, we are doing a live webinar with tax expert Johnny Horta on Monday February 2 at 8:30 pm Eastern.  Go here to sign up for alerts and details about the webinar.

Show Notes

Boulder Beer Hazed and Infused:  An American pale ale.

Vanguard:  The REIT Index Fund.

Mint:  The easy way to track your money.

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http://www.listenmoneymatters.com/fk-reit/feed/ 0 Ever hear of a REIT? No? That's ok, me neither. So we're going to learn together what that is and if we should collect, them, buy them? I don't know yet. Ever hear of a REIT? No? That's ok, me neither. So we're going to learn together what that is and if we should collect, them, buy them? I don't know yet. ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. yes 38:37
Corporate Welfare http://www.listenmoneymatters.com/corporate-welfare/ http://www.listenmoneymatters.com/corporate-welfare/#comments Thu, 22 Jan 2015 11:00:16 +0000 http://www.listenmoneymatters.com/?p=7422 Welfare is a dirty word in America. Corporate welfare is the real dirty word though, x rated in fact. See just who gets the real welfare in America.

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corporate-welfare

Welfare is a dirty word in America. Corporate welfare is the real dirty word though, X rated in fact.  See just who gets the real welfare in America.

There is much nasty rhetoric and foaming at the mouth over welfare.  The very word conjures up a certain image in the minds of some people. Lazy single mothers with a parcel of kids from different fathers pulling up to the super market in a Cadillac and paying for steak and lobster with food stamps.

I go to work every day and I don’t live that well.  Why should they? The image even had it’s own meme, if there can be such a thing in the pre-internet days.  The Welfare Queen.  The term took hold during Ronald Reagan’s 1976 presidential campaign when he made reference to a South Side Chicago woman who had committed welfare fraud along with a litany of other crimes.

I get it.  I go to work every day and I don’t eat steak and lobster at every meal.  But is it an accurate portrayal?  And should social welfare be the focus of so much ire or is there a bigger, much bigger, source of welfare that seems to get a pass in this country?

Social Welfare

Social welfare includes things like Medicaid, SNAP (what used to be called food stamps), housing assistance, and home energy assistance.  But it also includes things like unemployment and veteran’s benefits.

It’s really difficult to get a hard number on what the US spends on social welfare programs because different reports include and exclude different programs.  Senator Jeff Sessions of Alabama released a report that included 83 different programs and clocked in the spending at $1.03 trillion in 2011.  The CATO Institute published similar numbers for 2012.

But both of those numbers include things like The Earned Income Tax Credit which you have to work to earn.  The clue is in the name for cripe’s sake, earned.  

They also include funding for Head Start programs. I know some programs can be abused but I’m pretty sure Head Start is something we can all agree is a good thing.  Education for little kids from low income families is pretty hard to demonize.

If we separate out those kind of programs from things like SNAP and housing voucher’s, the kind that some people really seem to resent, the spending comes in at about $212 billion per year.  That’s a lot but it’s a lot less than $1 trillion.

Corporate Welfare

The dictionary definition of corporate welfare is “government support or subsidy of private business, such as by tax incentives.”  Seems pretty innocuous until you start poking around a bit.

A report from the General Accounting Office found that in 2011 the US spent a nearly identical amount on corporate tax expenditures as it collected in corporate taxes, $181 billion. Again, it’s hard to get the numbers to add up.  Each report seems to categorize subsidies, tax credits, tax incentives differently.

Some separate federal from state and state from local.  But whatever metric you use, it is billions of dollars, maybe hundreds of billions that profitable corporations are siphoning out of your pocket.  Siphoning probably isn’t even the right term.  More like they are reaching right into your wallet and daring you to do something about it.

The Real Welfare Queens

So where are those billions going?  Let’s look at some of the biggest and most grotesque beneficiaries.

-State and local subsidies account for about $80 billion. GM was gifted  $1.7 billion in subsidies.  Amazon, Boeing, and Microsoft  each got over $200 million.

-Hedge fund managers receive a special tax break that allows them to pay a 20% rate, the people they make money for pay 35%.  That has been estimated to cost $6 billion.

-Wal-Mart.  The odious Walton family could have a whole list devoted to how much welfare they suck up and the list would run several chapters.  Here are a few highlights.

"The Waltons, America's biggest dole dossers."

-Wal-Mart gets $7.8 billion dollars a year in corporate welfare.  $6.2 billion of that are in           the form of social welfare their employees get via things like Section 8, SNAP, and    Medicaid because Wal-Mart doesn’t offer a living wage for most employees.  They are  America’s biggest private employer.

-But don’t think Wal-Mart is completely heartless!  In 2013 a store in Canton, Ohio held a food drive for employees who would otherwise have not had anything to eat for Thanksgiving.  Those Waltons, is there no beginning to their generosity?  I don’t know.  There is certainly no beginning to their shame. 

-Another $1 billion is saved using tax breaks and loop holes to write off capital investment costs.

-$607 million in federal taxes are avoided through lowered tax rates on capital gains.

-Double dipping! Not only does Wal-Mart pay their low wage employees so little that they require SNAP benefits, but Wal-Mart captured 18% of the SNAP market in 2013.  Henry Ford paid his workers well enough so they could afford to buy his cars. The Waltons  pay so little that their employees can only afford to shop at Wal-Mart. And food pantries I guess. Genius!

-Remember this article about getting money out of politics and how lobbyists spend big money buying Congress?  Wal-Mart spends $6-8 million a year lobbying. And it’s working if the numbers above are what we judge by.  A better return on investment than the measly 7% us plebs are getting in the stock market.

-In 2013 the state of Washington gave an extension on tax breaks to Boeing that will total $8.7 billion.  That is the single biggest state tax subsidy ever granted to an American company.  That little deal, along with “worker concessions” that will move them away from pension plans, secured production of the 777X aircrafts will remain in Washington.

Boeing lobbyists were understandably delighted with this outcome.  Such was their gratitude, they threw a party for Washington state lawmakers.  I wonder if the goody bags were big suitcases full of unmarked bills.

All things considered, Boeing is not the worst company to subsidize.  They pay their workers pretty well so they aren’t on the bread line like Wal-Mart’s employees.  But it continues the dangerous precedent of big companies black mailing state and local government with the threat of job losses to wring ever bigger subsidies out of the treasury.  Which we all pay for, whether you work for Boeing or not.

The Bottom Line

So just what is all this government largess as your expense costing you?  About $6000 a year for each American family.  Would some of us just blow that money on dinners out and updated tech gadgets?  Yes, of course.

But some of us would put that money into a retirement account, save it for a child’s college fund, pay down our own college loans.  I can tell you what none of us would do, hand it over to any member of the Walton family.

 

 

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Inside LearnVest with Alexa Von Tobel http://www.listenmoneymatters.com/inside-learnvest-alexa-von-tobel/ http://www.listenmoneymatters.com/inside-learnvest-alexa-von-tobel/#comments Wed, 21 Jan 2015 11:00:56 +0000 http://www.listenmoneymatters.com/?p=7471 LearnVest is Turbo Tax meets financial planner. The founder and CEO tells us what they do and why they are the fastest growing financial company in the US.

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LearnVest is Turbo Tax meets financial planner.  The founder and CEO tells us what they do and why they are the fastest growing financial company in the US.

LearnVest will help you create a step by step financial plan right from the comfort of your own home.  We interview Alexa von Tobel to find out how the company works and if it might be right for you.

Alexa started the company five years ago after dropping out of Harvard Business School.  It began as a simple newsletter.  It’s morphed into a subscription based business that gives you access to a personal financial planner.  The cost is $299 to join and $19 a month. LearnVest does not sell any products, only their services.

LearnVest believes in three steps to financial security, covering the basics, wealth building, and investing.  Many people jump straight to investing which can be a dangerous thing.

It takes about twenty minutes to build your account.  You will fill out a profile so the planner has a sense of where you are currently and where you would like to be. LearnVest is open from 7:00 am to midnight seven days a week.

They will build a step by step plan for you to help you reach your goals. You are all special snow flakes to me but when it comes to finance, we’re all pretty similar with the same problems and the same goals.  So don’t worry if you think your situation is too complicated to handle through LearnVest.  They’ve seen it ten times already that day.

LearnVest has some free tools and advice too.  To set up an account where you can track your money is free, they have free apps and when you set up the account you will get a free 15 minute “health check” call with an adviser.  You can also use the promo code Listen50 to get a $50 credit on your account.

At LMM we advocate being your own financial planner.  It takes some time and research but you can do it.  However, if you aren’t willing to put in the time or simply don’t have it, LearnVest will be helpful to you.

Show Notes

LearnVest: America’s fastest growing financial planning company.

Ommegang Three Philosophers:  A Belgian style blend.

 

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Goals Versus Dreams http://www.listenmoneymatters.com/goals-versus-dreams/ http://www.listenmoneymatters.com/goals-versus-dreams/#comments Tue, 20 Jan 2015 11:00:04 +0000 http://www.listenmoneymatters.com/?p=7514 The serenity to set goals, the courage to follow your dreams, and the stupidity of not knowing the difference.

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The serenity to set goals, the courage to follow your dreams, and the stupidity of not knowing the difference.

 There is an awful lot of talk out there about following your dreams, finding your passion (or why you shouldn’t), and how you should do what you love. Setting goals seems to get lost  in the noise.  Often no more than a foot note. Oh yeah. Goals, you should get some of those too.

So what are your goals? To get rich? To land the perfect job? To earn enough to leave the rat-race and retire to a life of simplicity, tranquility, and a pet goat? Awesome!

Actually, no. The vast majority of people who peddle simplistic ideas of how to get what you want are leaving out a very important part of the picture: the distinction between goals and dreams.

Focusing on the dream instead of the goal can only lead to disappointment. What are the differences? I’m glad you asked…

 Imagine A Game Of Soccer

The goal is not the end of the game, it’s what a team consistently works toward. When you score one goal, you immediately move on to trying to score another. Sometimes you miss so you try again. Sometimes your team screws up and someone scores a goal at your expense. Sometimes your team scores an own goal, ugh. But the game keeps going.

Imagine yourself as the goalkeeper and you are holding the ball. Obviously, you want that ball to go into the net at the other end of the field. Is that a goal? No. Wanting the ball to go into the net is not the goal; for now it’s the dream.

Here’s the thing, setting a goal requires a certain level of practicability.

As the goalkeeper It’s completely unrealistic to think that you’ll kick the ball into the net from the other end of the field.  It happens and it’s awesome when it does.  But it’s about as likely as winning the lottery. There are obstacles between you and the net that are beyond your influence.

What you can influence, though, is where the ball goes next. You can influence, with strategy, which side of the field the play is concentrated on, the pace of the play, etc… These are goals, because it’s what you do next that will determine whether or not they happen.

 Soccer? I’m Here Because I’m F***ing Broke

 Think about some of your goals. Write them down and look at them.  If they involve lots of variables or seem vague, then they’re probably dreams. Here are some examples of goals I’ve heard people say they’re working toward:

I want to land a job in a top architecture firm.

I want to travel more.

I want to learn to play the bassoon.

I want to be a named partner at my office.

While all of these sound like goals, pretty much all of them are dreams (except playing the bassoon, that’s just… I don’t know…).

 Attach Goals To Your Dreams 

With these dreams in mind, plan some goals to reach them.

I want to retire early.  In order to do that I  need to save $700,000. That means I need to save 30% of my salary for the next twenty years.

I want to land a job in a top architecture firm. I need to be specialized in an area that is useful to these firms. I will take on projects that train me in these specialized areas.

I want to travel more. I need flexibility in my job and some extra cash. I will discuss working remotely with my boss. I will put aside a percentage of my salary to fund my travels.

  And To Reach These Goals?

 Now that you can clearly see what steps need to be taken to achieve your goals, it can be as simple as building or modifying a habit. There is so much information out there about forming habits as well as resources and apps to make it easier. LMM has done a few episodes on this topic.

Once you have established a habit, it will just be a matter of time until you start reaching the goals that will support your dreams.

 What’s My Motivation?

 Keeping yourself on the straight and narrow through the whole process will require some motivation and discipline.

Remember why you set the goal in the first place. If you set out to start a blog, for no other reason than to start a blog, odds are it won’t fare very well. It’s too general.

However, if you start a blog about bee-keeping because you have a burning desire to be an apiarist, and this blog documents your journey from the very beginning to your sideline business selling honey at local fairs, it’s easier to chart your path stay focused.

Why? Because you will have regular rewards. You’ll see the progress you make as you’re making it, and that will give you a feeling of accomplishment. This feeling of watching your project grow and take shape is like the old saying, “Hard work is its own reward”.

Likewise with a financial goal.  If you set out just to save money, you might have a rough time of it. Deciding one day to save money, without a particular goal attached to it, may result in saving for a while but then falling back into old habits of unnecessary spending.

But let’s say you have a dream to own a home. One of your first goals would be to save for your down payment, meaning you’d need to form the habit of saving a certain amount extra each week, month, year. Watching that amount grow closer to what you need for a down payment will help spur you on.

Physical rewards are great as well. Going out for a fancy meal with a loved one, a new suit for getting that big job, or something as small as a new coffee mug to reward yourself for finally kicking a nail-biting habit.

Tread carefully though. Make sure that your reward is suitably matched to the goal you’ve just reached. If your goal was to lose five pounds, a tray of donuts might not be the best reward!

One final thing to be careful of: achieving your goals is, in and of itself, rewarding. Don’t fall into the trap of thinking the opposite – that the reward is the goal. Whenever you’re working toward achieving goals, always keep the dream in mind. This will keep you focused, and able to accept the smaller rewards on the longer path.

Habits are the vehicle, goals are the route you take, dreams are why you’re driving.

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Taxes 101 with Johnny Horta http://www.listenmoneymatters.com/taxes-101-johnny-horta/ http://www.listenmoneymatters.com/taxes-101-johnny-horta/#comments Mon, 19 Jan 2015 11:00:33 +0000 http://www.listenmoneymatters.com/?p=7469 Tax time is nearly upon us. Past guest, contributing writing, and tax expert Johnny Horta joins us to explain the vagaries of the US tax system.

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Tax time is nearly upon us.  Past guest, contributing writing, and tax expert Johnny Horta joins us to explain the vagaries of the US tax system.

Until we get a flat tax (which will never happen) taxes will continue to be a monumental pain in the ass.  So we brought on a guest to give us some expert advice.

Turbo Tax is easy to use but it doesn’t help you understand tax law.  A tax pro can help you interpret the laws to get the most money back you can. According to H&R Block, Americans left $1 billion dollars on the table last year.  Turbo Tax doesn’t seem so cheap now.

Putting money into a tax shelter account can drop you a bracket and is a good practice but it won’t save you tons of money.  The IRS will take that into account and use your adjusted gross income to determine your tax bracket.

Now you have your AGI and you can deduct standard or itemized deductions and personal exemptions.  Are you married and filing jointly or separately, do you have dependents?  Now we get into itemized deductions, medical expenses, mortgage interest, charitable donations, etc.  Compare that to the standard deductions and see which is higher.

"The name of the game is itemized deductions."

Single people with no dependents, claim yourself, so put a 1 on the W4 form.  I always wonder this and no one ever knows the answer!  If you’re getting too big a refund, adjust the W4.  You shouldn’t be giving the US government an interest free loan every year.  I know that big ass check is fun though!

Now we get to credits which you can get for a variety of things, child care costs, education costs, earned income.  These credits are then applied to your tax bill.

This was a lot of technical information so we’re going to give you some time to digest it for now but we will doing a series of tax based shows in the coming weeks.

We are also hosting a webinar where our hosts and Johnny will answer your tax questions live.  Don’t e-mail Andrew tax questions, come to the webinar and ask there.  It will be Monday February 2 at 8:30 Eastern.  Go here to sign up for information about how to join.

Show Notes

Keegan Ales Mother’s Milk:  A dark, creamy milk stout.

Left Hand Brewing Milk Stout:  A creamy, sweet stout.

Horta Tax & Financial Services:  Contact Johnny for expert advice.

W4 Calculator:  Plug in your numbers to see what your witholdings will be.

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http://www.listenmoneymatters.com/taxes-101-johnny-horta/feed/ 9 Tax time is nearly upon us. Past guest, contributing writing, and tax expert Johnny Horta joins us to explain the vagaries of the US tax system. Tax time is nearly upon us. Past guest, contributing writing, and tax expert Johnny Horta joins us to explain the vagaries of the US tax system. ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. yes 42:22
Don’t Let Money Control Your Life with Jen McDonough http://www.listenmoneymatters.com/dont-let-money-control-life-jen-mcdonough/ http://www.listenmoneymatters.com/dont-let-money-control-life-jen-mcdonough/#comments Fri, 16 Jan 2015 11:00:26 +0000 http://www.listenmoneymatters.com/?p=7428 Jen McDonough paid off $212,000 in four years. She works now as a motivational speaker and has authored three books. Meet The Iron Jen.

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Jen McDonough paid off $212,000 in four years.  She works now as a motivational speaker and has authored three books.  Meet The Iron Jen.

Jen’s world changed when one of her children developed a chronic medical condition.  As the medical bills piled up, other bills fell behind. Jen found herself unable to afford $20 worth of groceries. That’s the low point that caused Jen and her husband to really tackle their debt and change their relationship with money.

The first step is to assess the reality of the situation.  Open every bill, check every account.  Jen and her husband also attended Dave Ramsey’s Peace University to learn how to handle money and pay off debt.  It took them about six months to get on the same page.

Jen advises us to be patient when starting a budget.  It takes about three months to get used to it.  That first year, Jen and her husband took on ten jobs between them.  And most of them were $8-10 an hour jobs.  They began to look at every purchase in terms of how many hours of work it would cost.

Every extra dollar that came in, went straight to debt payment.  They paid of about $50,000 of debt each year for four years.

"Money is finite."

Once  the stress of debt was removed, Jen and her family were also to focus on more important things.  What direction they wanted to take their lives in.

Inspired to help others, Jen shares her story so people who are where she once was won’t feel alone and ashamed.  She particularly enjoys speaking to and working with public servants, like police and fire fighters. Jen travels as a motivational speaker, has written three books, and hosts a podcast.

If Jen and her husband can work ten jobs, I think you can work one extra job if you have some debt that is hanging over you.

Show Notes

The Iron Jen:  Leveraging adversity to reach your potential.  You can also find Jen’s books here.

Mint: The easy way to budget.

Betterment: The smart way to invest.

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2015 Financial Goals http://www.listenmoneymatters.com/2015-financial-goals/ http://www.listenmoneymatters.com/2015-financial-goals/#comments Thu, 15 Jan 2015 13:00:40 +0000 http://www.listenmoneymatters.com/?p=7415 I want to share my family's financial goals and plan to reach them for 2015. To drift is hell, to steer heaven. Which will you do in 2015 money wise?

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I want to share my family’s financial goals and plan to reach them for 2015.  To drift is hell, to steer heaven.  Which will you do in 2015 money wise?

It is that time of year again, time to look forward and map out where you want to be by the time 2015 comes to a close. Below is my family’s plan for 2015. I hope you find some lessons in my story that you can use to challenge yourself to make 2015 your best year yet.

I have always been a huge goal setter. One of the best things my dad ever did for me was to give me a book called Go For It! when I was around twelve. It talked about how to set goals and how to write them so they are measurable and completed within a clear time frame.

Since then, every year I write down my goals broken down into four areas: financial, physical, work and personal. I keep the goals in a folder in my desk so I can look back at them over the years, but I keep the current year’s goals on our financial spreadsheet where I track our budget, return on investments, Lending Club data and rental property expenses.

I look at our goals each month when I enter in the month’s data to make sure we are on track. I do use Mint and other apps to track our accounts but I find manual entry onto the spreadsheet really helps us stay focused on the goals.

Choosing the right annual goals that are achievable and challenging helps you to reach your longer term goals. A few months ago I read a book, Secrets of the Millionaire Mind by T. Harv Eker, and it really made me think about how I view money and our long term goals.

For as long as I can remember, my biggest financial goal was to have a net worth of one million dollars by age forty. Now at age thirty eight, we are getting very close to meeting that goal.

In the book, Eker refers to your “financial thermostat” and how the setting you choose will dictate your actions and your results. Our thermostat had been set at one million by age 40, so to reach it I increased our workplace retirement contributions each year, invested in the stock market, purchased rental properties and reduced our spending.

But perhaps I didn’t challenge myself enough. What if I had set my financial thermostat to two million by age 40? What would I have done differently? Perhaps your goal is to eliminate your student loan debt or become net worth positive in 2015.  What will you do to achieve that?

What changes are you willing to do now to reach your goals and increase your financial thermostat? How high can you set your thermostat and how will that affect your financial position in the long term?

The average American’s long term savings rate is only 8.4% according to the Bureau of Economic Analysis. This raises the obvious question: what are the average American’s long term goals? I do not want to be average and this year I am going to challenge myself, and my family, much more than we have in the past. We have set a savings goal of 50%!

Why save so much? The answer is early retirement. My husband and I both enjoy our jobs but we do not want to work into our 50s or 60s. It took me more than a decade to realize that retiring before your social security checks arrive was an option for a non-ultra rich person!

But thanks to sites like Listen Money Matters, Mr. Money Mustache and the Mad Fientist, I learned that early retirement is a real possibility for people like us and now that is our goal!

In order to reach our 50% savings goal we have decided to try something new this year and breakdown our combined income from 2014, $160,000, into three categories and set a goal for each. This let us look at what we did last year and how we can improve each area.

Investments:  50% of income will be saved = Goal $80,000.
2 Roth IRAs (Betterment 90/10 allocation) = $11,000.
2 Workplace 401k (2050 Target funds) = $36,000.
Son’s investment account (Vanguard) -$250/month = $3,000.
Lending Club -$25/week = $1,300.

Saving for the next rental home (Betterment 60/40 allocation) = $28,700. We begin with the basic goals of maxing out our retirement accounts, and then move into more diverse investments like my son’s college account, Lending Club and our rental property savings account.

In 2014 we saved 40% of our income, so we will need to enact a few changes to meet our higher goal. Currently Betterment automatically receives $300 every Monday for the down payment on the next rental property, but that only equals $15,600 —leaving a gap of an additional $13,100 during the year to meet my goal.

That money will have to come from reduced spending or earning more money at work when possible. My husband is salary, but I am hourly and do have the option to pick up extra hours to earn more income.

Debt Reduction:  25% of income will go towards debt with the goal of a $40,000 reduction in mortgage principal. Student loans and car loans were paid off many years ago and all credit card balances are paid in full each month so this section is all related to real estate.

Rental home #1 Refinance – Reduce principal owed by $18,500.

0% Credit Card – Pay remaining $6,500 balance by October when the 0% offer expires.

Rental home #3 – Reduce principal owed by $1,500.

Primary residence – Reduce principal owed by $12,500.

In 2014 we used 30% of our income to pay down mortgages; I am actually going to decrease this area to 25% in 2015 to maximize how our money is allocated. The interest rates on all the mortgages are between 2.875%-4.5% so our money will be better off invested in the stock market, which historically has returned 7%.

Our next rental property purchase is planned for Spring 2016, so we are prioritizing our highest interest rate rental debt for any extra payments we make during the year. Debt is a burden, even debt which, in our case, I consider an investment and one that provides us with good cash flow every month. If you have any credit card debt or other high interest debts, this area has to be your primary focus.

Spend:  25% of all income will go towards living expenses, down from 30% in 2014. This is the “everything else” bucket, utilities, insurance, my son’s school, groceries, dining out, travel, shopping, etc.

This is where you can make the most changes, but can also be the most challenging. Some expenses like electric, water, car expenses are not going to change much. The areas we could improve on are eating out, cable TV and impulse Amazon shopping. In 2015 you can get HBO directly from HBO and I think that will finally let us cut down our cable bill.

As for Amazon, we have started putting things in the shopping cart and only ordering once a week. This short pause has helped us control our impulse shopping and frequently we remove items from the cart deciding we really don’t need to buy them.

Our other big savings will come from my son, mid-2015 he will start elementary school and the days of paying over $1000 a month for preschool will be over!

We are gearing all our savings goals towards the day my military husband is eligible for his pension. We could be spending money each month on car payments, dining out more, giving in to every toy request my five year old has, but we don’t.

We choose to live well within our means. Being military and having to move every 3-4 years also helps keep our belongings in check. You don’t collect much when you are forced to pack it up every few years. This decluttering has also proven to be a surprising source of revenue as we regularly sell excess belongings on eBay and Amazon.

So that is our current plan, which continues to evolve with increased knowledge and experience. My family is committed to our goals and plans and when a family has a joint goal it is easy for everyone to get on board to reduce wasteful spending.

The Florida beaches are calling us, hanging out on a boat fishing all day sounds amazing. We want to be retired in ten years, living off our rental property income and investment dividends. A few more years of saving hard, letting the dollars do their compound interest magic, and then we will have reached the big goal, financial freedom. What will you be doing in 2015 to reach your goals?

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This Financial Life with Thomas Frank Part 1 http://www.listenmoneymatters.com/financial-life-thomas-frank-part-1/ http://www.listenmoneymatters.com/financial-life-thomas-frank-part-1/#comments Wed, 14 Jan 2015 11:00:01 +0000 http://www.listenmoneymatters.com/?p=7425 Thomas has been a past guest but we don't know much about his financial life. Today we'll see what he's doing well and where he could improve.

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Thomas has been a past guest but we don’t know much about his financial life.  Today we’ll see what he’s doing well and where he could improve.

If you’re going to be a host on LMM, you have to come clean with the audience about your financial habits and mistakes.  We don’t judge and these shows prove that none of us are perfect and even financial podcasters have some lessons to learn.

Currently Thomas has a net worth of about $30,000.  But it wasn’t always that way.  From October 2012 through March 2013, he got serious about paying off his student loans which totaled about $14,000.

His site started making money, he was working part time and by the time he graduated in May 2013, he was debt free.  He was only twenty one.

One of his tips is once money hits your account, transfer it straight to debt.  The longer it sits in your checking account, the more likely you are to spend it. The moment it comes in, it should go straight back out.  Like you never even had it.

"Our finances are a team effort."

Thomas knew he wanted to make College Info Geek his full time career.  He was averaging $5000 a month via the site. It’s currently making between $4,900 and $8,500 a month.  And Thomas lives in Iowa where the cost of living is cheap.

Thomas contributes $500 a month into Van Guard.  He has $16,000 in an IRA.  His goal, along with his girl friend Anna (hi Anna!) is to have $900,000 invested by age forty and live off 4% of that, or $36,000 a year. They each need to save $25,000 a year to reach that goal.

Because Thomas runs a small business, there are tax implications.  He uses tax deferred investments to lower his taxable rate.

Is Thomas making any mistakes?  Not in Part 1.  Stay tuned for Part 2 to find out.

Show Notes

Wild Devil Ale:  An India pale ale.

The PF Missing Manual:  The book that Thomas read to learn investing.

Van Guard:  Where Thomas and Andrew both invest.

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http://www.listenmoneymatters.com/financial-life-thomas-frank-part-1/feed/ 2 Thomas has been a past guest but we don't know much about his financial life. Today we'll see what he's doing well and where he could improve. Thomas has been a past guest but we don't know much about his financial life. Today we'll see what he's doing well and where he could improve. ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. yes 48:44
Managing Your Finances While Between Jobs http://www.listenmoneymatters.com/managing-finances-jobs/ http://www.listenmoneymatters.com/managing-finances-jobs/#comments Tue, 13 Jan 2015 13:00:20 +0000 http://www.listenmoneymatters.com/?p=7391 A job loss is a major life stressor, not least of all due to money concerns. see how to best handle your money until you are back on the career ladder.

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A job loss is a major life stressor, not least of all due to money concerns. See how to best handle your money until you are back on the career ladder.

A friend of mine called the other day. We used to work at the same company. We talked for awhile, catching up on what was new and the whereabouts of former coworkers and friends. Then he told that he had lost his job and he asked for my help with things like contacts and leads.

What shocked me was that he had lost his job seven months ago and was still looking for a job. Seven months is a long time to go without a paycheck. Severance, when available, lasts only a few weeks and unemployment does not cover much. Especially if you have a family to support.

Too few people have emergency funds and fewer still have funds that will last more than six months.  My friend was already into his savings and unsure how long that would last.

Losing your job is incredibly stressful, second only to the loss of a spouse. What we do defines so much of who we are. Not being able to provide for your family weighs heavily and can be extremely distracting.

We spend a lot of time on things like resumes and cover letters when we’re looking for a job and we spend too little preparing for a possible job loss.

Managing Your Money While Out of Work

There are four categories to managing your money while out of work. Outflows or what you spend. Inflows, the money coming in, budgeting, and available resources.

Outflows

Burn Rate: This is the first thing you should figure out. Burn rate calculates the net outflow each month and estimates when you will run out of cash. I know that is a scary thing to contemplate but it’s something you must know. You need to live on the smallest amount of money possible until you land a new job. Your burn rate should be monitored regularly, about once a month.

Recurring Bills: This list includes your regular monthly bills, utilities, housing, credit card payments, etc. Go through your bank and credit card statements and see where you are spending.

Discretionary Spend:  This is money you spend but don’t really have to or could spend more efficiently.  Things like eating out, going to the movies, gym memberships.

Emergency Spend: This category is for those unplanned but necessary expenses.  Your car needs repairs or your refrigerator conks out. You can’t predict how much you would need to spend on an emergency but you should leave some room in your budget to allow for the unexpected.

Inflows

Unemployment: The very first thing you must do when you’ve lost your job is to sign-up for unemployment benefits. This is not a hand-out. You’ve paid your taxes and now it’s time to collect. While the maximum benefit is not all that much, it is more than zero.  Sign-up and collect. Another benefit of most unemployment programs is training and job search support.

Savings Plans: Savings plans and retirement accounts can be a source of  cash but should only be accessed as a last resort . Be careful to minimize tax and penalty implications when withdrawing from these kind of accounts. This will explain how to withdraw money from your IRA penalty free. If you have a regular transfer to a these account, you will want to suspend them for now.

Other Sources of Income: Depending on how dire things are, you may want to consider other ways to make some money in the short term. Keep in mind, some of these, a part time job for instance, will impact your unemployment benefits.

Since you have time now, go through your house and see what you can sell.  It will keep you occupied and make you some fast cash.  Ask friends and family if they have anything you can do for them to make some money.  Babysitting, errands, house cleaning.

Budget

Now that you know what is coming in and what is going out, you can create your new budget.

Spending:  It can be tempting to be a bit reckless with your spending when you first lose your job.  You think you will get another job right away.  Or maybe you have a pretty healthy emergency fund.  Or maybe you’re bored or depressed and are spending money to entertain yourself or to make yourself feel better.

Don’t fall into those traps.  You have no idea how long you will be out of work or how much money you will be making once you do find work again.

Negotiate:  Another thing you should do as soon as possible is call your mortgage and credit card companies. Explain your situation and ask for a modified payment plan that will not impact your credit rating.

If you have student loans, contact your lenders.  You will probably be eligible for a period of forbearance during which your payments will be suspended entirely with no affect on your credit score.

Keep in mind that you will be paying your balances more slowly and, therefore, increasing the amount of time and overall cost of paying off your debt. Once you’ve landed your dream job, be sure to set these payment plans to what they were previously.

Resources

One important lesson in life is knowing what you don’t know. While I know quite a bit about job search, I am not an expert on managing your money or creating a budget. Therefore, I’ve included some links below so that you can consult with the experts on some tips, tools and specifics.

Mint:  For those who do not know, is an amazing, FREE tool that you can use to help budget and manage your money.  It takes all of the math out of budgeting and just tells you what you need to know, when you need to know it.

LMM’s book Mastering Mint will teach you how to maximize Mint’s features to get the most out of it.

Ready For Zero: Once you’re back on your feet, Ready For Zero can help you tackle any debt that you were unable to make progress on or new debt incurred during your period of unemployment.

Career Alley:  Career Alley is a great resource to help answer questions you may have and to provide advice to help you find a new job, or even a whole new career.

A period of unemployment is hard, mentally and financially.  The most we can to is to be as prepared as we can to survive it.

 

 

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The Evolution of Resolutions http://www.listenmoneymatters.com/evolution-resolutions/ http://www.listenmoneymatters.com/evolution-resolutions/#comments Mon, 12 Jan 2015 11:00:28 +0000 http://www.listenmoneymatters.com/?p=7408 Making and failing to fulfill the same old New Year's resolutions? LMM will teach you new ways to make sure this time they actually stick.

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Making and failing to fulfill the same old New Year’s resolutions?  LMM will  teach you new ways to make sure this time they actually stick.

Once the hangover subsides, we are all gung ho to really stick to our resolutions.  But by February (at the latest), we’re back in the same old habits.  Despair no more!  Meet the Impossible List!

The impossible list is not so much a bucket list as an evolving, active guide for what you want to do with your life. You need to have goals, but you need to track them too.  And improve upon them.  So you ran a 5K, congrats!  Maybe now that evolves into doing a triathlon.

You get some confidence on a small goal and use that momentum to spring board to a bigger, better goal.  Focus is important too. Write down a goal and then write down each day, what you did to work toward that goal.

And take care not to scatter your focus.  Concentrate on what is important and don’t get distracted by shiny objects.  We don’t want you to be a savant, there’s a lot to be said for being well rounded, but save your real energy for what is important.

At this point Andrew and Thomas started talking about the approaching zombie apocalypse.  WTF?  I’m still trying to figure it out.

Getting back on track.  All your resolutions don’t have to be year long odysseys.  You can have monthly resolutions that are measurable.  Never underestimate the power of quick results. It takes a lot longer to save $10,000 in a year than it does to save $100 in a month.  And the quick payoff propels you forward.

If there is a single piece of advice that will help foster your goals, it is get up early and go to bed early.  It is not a crime to go to bed at 10:00.  In NYC in particular, people love to brag about how they get so little sleep.  I always say, “That sucks.  I slept nine hours last night.  It was awesome.”

You will be so much more productive if you rouse your ass out of bed before 7:00 am.  More time to exercise, pack your lunch, read, meditate, have sex.  All of those things will improve your day so much more than an extra hour of sleep.

2015 will pass as quickly as 2014 seemed to.  A year from now you can be where you are now or you can be where you want to be.

Show Notes

Wild Devil:  An India pale ale.

Hitachino Nest Beer:  A fermented ale.

The Power of Habit:  How to harness the power of habits.

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http://www.listenmoneymatters.com/evolution-resolutions/feed/ 17 Making and failing to fulfill the same old New Year's resolutions? LMM will teach you new ways to make sure this time they actually stick. Making and failing to fulfill the same old New Year's resolutions? LMM will teach you new ways to make sure this time they actually stick. ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. yes 54:40
Finishing What You Start http://www.listenmoneymatters.com/finishing-start/ http://www.listenmoneymatters.com/finishing-start/#comments Fri, 09 Jan 2015 11:00:18 +0000 http://www.listenmoneymatters.com/?p=7387 Starting a new thing is exciting. But some of us quickly lose our initial enthusiasm. We'll discuss how to see things through to the end.

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Starting a new thing is exciting.  But some of us quickly lose our initial enthusiasm.  We’ll discuss how to see things through to the end.

College is a good example of something you should finish once started.  Maybe you won’t use your particular degree, but it does show to an employer that you saw something through to completion.

Remember the Warren Buffett quote, “Be greedy when others are fearful and fearful when others are greedy.”  That is finishing something.  Leave the money in the market when it’s tanking, maybe even put more money in.

"Success is the meeting of preparation and opportunity."

What does make you stick with something?  Sometimes it’s the time and money you invested in it.  Sometimes it’s because there are already so many tombstones in your idea graveyard and you can’t stand the thought of adding another.

Debt is an area where a lot of people give up.  You’re making progress and then disaster strikes, you have an emergency expense or maybe have to miss work due to an illness.  Suddenly overwhelmed, you give up.  You know what happens next.  The debt continues to grow and now you’re even further behind.

It’s easy to keep moving forward when everything is going well.  You need a plan in place for when things go to shit.  So if you miss work and lose money, you might reach out to something like Ready For Zero to help you continue to pay down the debt.

Having a way to relieve stress is important to helping you finish things.  When you’re overwhelmed, go for a run, read a book, listen to music.  Whatever it is you do to blow off steam.  Once you are in a calmer state, you can pick up your project again.

There is always something to pull you from what you should be doing.  But the bigger that graveyard of failures gets, the more regrets you’ll have.  People rarely regret finishing something even if it doesn’t quite work out as they had hoped.

Show Notes

Garun Icelandic Stout:  Intensely rich with notes of chocolate and licorice.

I Don’t Feel Like It:  Thomas’s video about getting over that mindset.

Betterment:  The easy way to invest.

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http://www.listenmoneymatters.com/finishing-start/feed/ 0 Starting a new thing is exciting. But some of us quickly lose our initial enthusiasm. We'll discuss how to see things through to the end. Starting a new thing is exciting. But some of us quickly lose our initial enthusiasm. We'll discuss how to see things through to the end. ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. yes 50:13
It’s Never Too Late http://www.listenmoneymatters.com/never-late/ http://www.listenmoneymatters.com/never-late/#comments Thu, 08 Jan 2015 11:00:47 +0000 http://www.listenmoneymatters.com/?p=7365 If I knew then what I know now. I hate that saying. There is so much regret and blame in that sentence. But I hate it most of all for the futility of it.

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If I knew then what I know now.  I hate that saying.  There is so much regret and blame  in that sentence. But I hate it most of all for the futility of it.

Well yes, if you did than you would know not to marry that person, drop out of school, pass on buying Apple stock when it was cheap.  If ifs and buts were candy and nuts, every day would be Christmas.

No lamentations for what could have been but isn’t.  So rather than bemoaning what you didn’t know, you can be grateful that you know it now.  Because as long as you use what you know now, it’s almost never too late for that knowledge to benefit you.

I beat myself up a lot about this.  As I’ve mentioned in other writings, I came late to personal finance.  I never really thought about money until about two years ago by which time I was already in my late thirties.

I think back to how much money I could have if I had known anything about how to manage or invest what money I did have.  Even if had been nothing more complicated than opening a Betterment account fifteen years ago (Betterment is not that old, but you get the point) rather than this past summer.  A moment of silence please for all my lost gains.

I think the money regret is worse than other regrets in some ways.  If you knew then not to marry that person for example.  Well, it couldn’t have been all bad. You married them after all.  Maybe got some kids out of the deal or at least a honeymoon.

All you have if you didn’t start saving and investing until later is no fucking money.  No fond memories, no good friends you would otherwise not have met.  Just no money.

So if you are late to this whole thing like me, you need to play catch up.

 Pay Off All Credit Card Debt ASAP

This has to be step one. You are not going to get any return on an investment that trumps the ridiculous interest rate you are paying on credit card debt.  An average return on an investment is 7%.  The average interest rate on a credit card is about 15% but some are much higher, well into the twenties.

 Cut Closer To The Bone

The kind of money you need to start chucking into investments isn’t going to be found by ditching your daily Starbucks habit.  You need to start investing a significant percentage of your income, not a few dollars here and there.

Consider taking a part time job. The second job doesn’t have to be forever.  Just grit your teeth and do it for maybe six months.  If at the end of the six months you find that it wasn’t really that bad, keep it up.

Consider finding  a way to make some extra money on the side.  We have done a few episodes on “side hustles.”  Maybe what started as a side hustle becomes something more.  Some big companies started out as side businesses, Yankee Candle and Gibson Guitars among them.

Downsizing is what will free up the kind of cash you are looking for.  Do what you have to in order to become a one car family.  Move to a cheaper house or apartment or rent out a room in your existing home.   Move to a cheaper area in which to live.  I know these things seem drastic but your situation requires drastic action.

 Max Out 401K

This is true at any age but especially important if you are late to the party.  If you invested $17,500 a year into a 401K, assuming 8% returns and no employer match, you would have a little over $1.3 million by age 65.

 Strike The Right Balance

The younger you are the more your portfolio should be weighted towards stocks rather than bonds.  But if you’re coming off the bench in the second half, you need to be a little more daring.  I have mine balanced at 90/10.  Conventional wisdom says this should be more like 80/20 but I don’t have that kind of time anymore.

 You Might Have To Have “The Talk” With Your Kids

If you have children, you probably want to at least help them pay for college.  If you’ve listened to some of our past episodes about student loan debt you know how crippling it can be.  We all want the best for our kids but given the state of higher education, we may have to redefine what the best is.

People with college degrees earn about $830,000 more over a lifetime than those with only a high school diploma.  So college remains a good investment but college doesn’t have to mean all four (or more) years at the best school that will take you.

It’s much cheaper to do part of your college education at a community college.  Not only is the tuition cheaper, but it enables a student to live at home further cutting expenses.

Exhaust every avenue for scholarships and grants before you start filling out those loan applications.  There are millions of dollars available for education if you know where to look.

 The Most Lucrative Period of Your Life

Here’s a bit of good news.  If you’re in your mid thirties to early fifties, you are making more money than you ever had or likely ever will.  Of course there are some exceptions to this but in general, these are your prime earning years.

Remember when we talked about lifestyle creep?  Put what I taught you to use here.  Every time you get a raise or a bonus, pretend you didn’t.  Invest the full amount (or close, you can treat yourself a bit as a reward for your hard work) and continue living as you currently are.  Don’t run out and use that money to buy a new car or a bigger house.

 Have “The Talk” With Your Parents Too

As we get into our 40’s and 50’s, some people will become part of the “sandwich generation.”  Still taking care of children while also taking care of aging parents.  Taking care of in the physical sense, the financial sense, sometimes both.

Have a frank discussion with your parents about their finances.  Do they have enough to see them through retirement?  Do they have the proper insurance in place should they get a chronic illness?  Discuss with them what would happen if they were no longer able to live independently.

What measures do they want taken to prolong their lives?  Some people want to be hooked up to machines even if all other signs of life are extinct.  Some people loathe the thought of a very low quality of life that can result when extreme measures are taken to prolong life.  Do you know which camp your parents fall into?

Who will make health and financial decisions if the parents are no longer able to do so?  Is it you or is it your shady ass worthless brother your parents still seem to think can do no wrong?

Will they have the money to live in an assisted living facility or are they expecting to live with you?  Have they made plans for their funeral expenses? Funerals cost on average between $7-10,000.

These are unpleasant things to talk about and having to become the parent to a parent is devastating, especially for those of us who were always daddy/mommy girls or boys.  But if your parents don’t have these kinds of things already sorted out, the financial and emotional burden can fall on you.  This discussion not only protects your parents’ financial future but your own as well.

I’m sorry for all of you out there who are in this same boat with me.  That’s one of the biggest reasons I care so much about what LMM does.  I don’t want other people to have that moment of panic I had when I realized how old I was and how little I had.  But even for us, it’s not too late.  It’s not getting any earlier either though so get it together!

 

PS Yesterday a terrible blow against freedom of expression and freedom of the press was struck in Paris.  As a writer and a human being nothing is more sacred or important to me than the preservation of those two ideals.  If you would like to do something to help protect press freedoms, The Committee To Protect Journalists has worked for thirty years to defend the rights of journalists to report the news without fear of reprisal.  I made a donation in the memory of those Charlie Hebdo employees martyred to the cause.

“The moment you say that any idea system is sacred, whether it’s a religious belief system or a secular ideology, the moment you declare a set of ideas to be immune from criticism, satire, derision, or contempt, freedom of thought becomes impossible.”

Salman Rushdie

 

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Habits and Thomas’ Ridiculous Morning Routine http://www.listenmoneymatters.com/habits-thomass-ridiculous-morning-routine/ http://www.listenmoneymatters.com/habits-thomass-ridiculous-morning-routine/#comments Wed, 07 Jan 2015 11:00:08 +0000 http://www.listenmoneymatters.com/?p=7351 Your morning routine can make or break your day. It can set you up for a good mood and good productivity or send you screaming back under the covers.

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Your morning routine can make or break your day. It can set you up for a good mood and good productivity or send you screaming back under the covers.

Not all of us are morning people.  But you don’t have to be one in order to organize a routine that will set you up for a productive day.

Thomas is a freak who starts his day at 5:50 and finishes thirteen habits practically before the sun comes up.  He wasn’t born that way which means any of us could do the same.  It’s a routine that has evolved over time.

How does Thomas get up so early?  He has monetized sleeping in.  If he doesn’t get up, he stands to lose $30.  Not worth it.

These don’t all have to be monumental habits.  It can be something as simple as taking your vitamins every morning.  Or just getting up fifteen minutes earlier so you can relax into your day rather than rushing around all flustered.

They don’t have to number into the teens either.  Start small.  Wake up early and drink a cup of warm water with the juice of half a lemon in it.  Lemon water is crazy good for you and is a small, easy thing that will make a big difference.

"If I sleep past 8:00, I feel like I've wasted the day."

We have a series of podcasts and articles that list some great productivity apps.  There is nothing wrong with having a little help and prompting until the things you want to get done become habits.

Remember, start small but keep at it.  Once you become a morning person with good habits, you will notice lots of positive changes in your life.

Show Notes

Buffer:  A social media scheduling tool.

Dogfish Head World Wide Stout:  A dark, roasty ale.

HabitRPG:  A super geeky way to help you build habits.

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http://www.listenmoneymatters.com/habits-thomass-ridiculous-morning-routine/feed/ 6 Your morning routine can make or break your day. It can set you up for a good mood and good productivity or send you screaming back under the covers. Your morning routine can make or break your day. It can set you up for a good mood and good productivity or send you screaming back under the covers. ListenMoneyMatters.com | Running laps around The Dave Ramsey Show, Suze Orman and Jim Cramer’s Mad Money since 2013. yes 53:41