Season two of Listen Money Matters has officially reached 100 episodes. Thomas and Andrew have learned so much from each other and from the excellent guests we’ve had on the show. Today the guys discuss the top 10 things they have learned in 100 episodes this season.
Having routine changes everything. Andrew learned the power of habit and made better use of his time. Having a routine has done wonders for his productivity and has actively and consciously built himself a daily routine so he can achieve more throughout that day. #gettingshitdone.
Allison’s real estate investment strategy rocks. This episode caused a significant mindset shift for Andrew on how he approached wealth building. Allison inspired and opened his eyes to how easy it is to get into real estate investing. She was an excellent example of a typical family creating passive income through hard work and time.
Real estate investing isn’t that hard. On a similar vain, this episode further educated Andrew on how the whole process works. He learned how hands off real estate investing could be making it a great passive income stream.
Take the emotion out of money. Joan Sotkin was one of our favorite guests on the show, and her interview came just in time. Andrew was so caught up with work and was being driven by anxiety. He as approaching a burnout again and Joan was able to help him find balance. She taught him to stop worrying so much about money and focus more on healthy relationships and being in good physical health.
Turn your family into a business. Great episode! Natali Morris was very inspiring and had some great advice on how to grow your family’s wealth. Since that episode, Andrew has taken the business more seriously and reduced our families costs by utilizing business write-offs. She also introduced us to the self-directed IRAs.
The importance of Delegating Work. This was not part of an episode, but since working with Andrew, Thomas has learned to offload some work and hire some help. He was overloading himself but still resistant to the idea of having a team, but after a few of Andrews lectures, Thomas was convinced. He now has a small team, and his business is growing as a result.
Investing in yourself is important. Before he started the LMM podcast, Thomas was a set it and forget it mutual funds kind of guy. This season has opened his eyes to different types of investments. One of our latest episodes was with Doug McCormick, author of Family Inc. He talked a lot about labor as one of your most valuable assets. Thomas learned it is super important to invest in yourself and your business. In the end, it could be a much better return on investment.
The borrowing against your 401k battle. So, we got our asses handed to us on this one. After the borrowing against your 401k episode aired, Thomas began doing some hardcore research on the subject and learned a ton, but the real lesson for him here was understanding his responsibility as a podcaster. Everyone listening to the show has a different financial situation, so when discussing personal finance topics like this, we have a responsibility to our audience to talk about the good, the bad and the ugly.
Intricacies of mortgages. This was another doozy. We all racked our brain over this. After a ton of research, lots of math and a bunch of sleepless nights, what it boils down to is that the HELOC strategy isn’t a strategy. Ends up, using a HELOC will save you the same amount of money as making extra mortgage payments. The “strategy” is a glorified spreadsheet with a payment schedule. Here is a text from Thomas to Andrew after the episode aired trying to wrap his head around it.
“Ok convince me I’m wrong here. I’m running calculations. Let’s take a 30-year $100,000 mortgage at 6.5%. Paying $100 extra will result in the payoff in 20 years, nine months instead of 30, and the interest savings are $45,036. Not bad, right?
Ok, but what if we put that $100/month in a mutual fund instead? At a super-modest 5% rate of return and 15% tax rate, after 20 years you’re at $38,255 – only about $14,000 of that being interest returns.
Looks like paying off the mortgage early is a lot better, right? Saving $45,036 vs. making $14,000 seems like a no-brainer. But let’s keep going. Let’s say the investor keeps it up – $100/month. And now the debt-free homeowner starts taking the $100/month she was paying towards the mortgage and starts investing it.
The investor now has a 20-year head start – so let’s look at 30 years from this point (50 from when the mortgage payments started). Now, the homeowner has been investing for 30 years – and has $73,230 ($34,000 from interest).
Meanwhile, the investor has been doing this for a full 50 – and has $206,767 ($147,000 from interest). Purely off interest, the investor came out ahead. Investor’s $147,000 return – homeowner’s $79,036 ($34,000 return + $45,036 mortgage savings) = $67,964. A cool $68k netted by investing instead of paying off the mortgage early – and that’s assuming just a 5% rate of return and a pretty damn high mortgage rate.
So… mathematically it would seem like paying off the mortgage early is a stupid idea, which probably means the HELOC thing is stupid too. Am I crazy?
Do I need life insurance? We had our friend Francois from Policy Genius on the show to go through the ins and outs of life insurance as well as other insurances like disability. This episode got Thomas thinking about his future and what kind of insurances he should have in place. Andrew learned a lot too and even changed his life insurance plan through his employer.
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