Afford Anything: Recent Episodes
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Frank Vasquez watched his parents, ages 91 and 96, struggle financially in retirement.
They were immigrants. His dad was a physician. They raised five kids. They retired in the early 1990’s. But by 2009, they ran out of money.
When Frank was 45, in 2009, his parents would call asking for money to help make ends meet.
This reality hit Frank hard and sparked a decade-long quest to crack the code on sustainable retirement withdrawals.
At age 45, Frank set an ambitious goal: retire in his early 50’s while still supporting his parents financially.
The problem? Most financial experts simply told people to spend less rather than optimize their portfolios for higher withdrawal rates. Frank wasn’t satisfied with that answer.
You’ll hear how Frank discovered that many retirees leave money on the table by holding too much cash or following overly conservative allocation models.
Through extensive research, he found a sweet spot for stock allocation that maximizes safe withdrawal rates — something most traditional advisors miss entirely.
Frank walks us through his approach to portfolio construction, explaining why he believes in balancing growth and value stocks while keeping bonds limited to US treasuries for recession protection.
He breaks down the math behind safe withdrawal rates and reveals why property taxes pose a hidden threat to retirement security as home values climb.
You’ll learn about risk parity strategies, macro allocation principles, and why diversification across uncorrelated assets creates more stability than traditional 60/40 portfolios.
The conversation covers Frank’s Golden Ratio Portfolio, a structured approach to asset allocation designed specifically for the retirement drawdown phase.
Frank figured out how to fix what went wrong with his parents’ retirement. His approach could help you avoid the same mistakes.
Resources mentioned: All resources mentioned in today’s episode can be found by clicking on the link below:
Thanks to our sponsors!
Pretty Litter
Pretty Litter helps monitor your cat’s health, detecting abnormalities in your cat’s urine by testing acidity and alkalinity levels. Right now save twenty percent on your FIRST order and get a free cat toy at prettylitter.com/affordanything.
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. If your revenues are at least in the seven figures, download the free e-book “Navigating Global Trade: 3 Insights for Leaders” at NetSuite.com/PAULA.
MasterClass
With MasterClass you can learn from the best to become your best. MasterClass is the only streaming platform where you can learn and grow with over 200+ of the world’s best. Get 15% off any annual membership at MasterClass.com/afford.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to shop for summer deals.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Every 28 seconds an entrepreneur makes their first sale on Shopify! Go to shopify.com/paula for one-dollar-per-month trial period for one month.
ShipStation
Calm the chaos of order fulfillment with the shipping software that delivers. Switch to ShipStation today. Go to ShipStation.com and use code PAULA to sign up for your FREE trial.
Austin and his wife are worried about moving to a single-income household while supporting two kids. Should they free up cash flow by paying off a car loan, or tighten up and stay the course?
Paul has been retired for seven years, but still can’t shake his anxiety about not having enough. Is there a good way to know when he’s finally escaped the dreaded sequence of returns risk?
Jonathan wants to build up his taxable brokerage account, but he’s having trouble letting go of the tax benefits of a Roth IRA. How does he get past his psychological hurdles?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Austin asks (at 01:45 minutes): We’re at a big transition point—our second child just arrived, and we’re moving to a single income. What are your thoughts on our plan to free up some much-needed cash flow as we make this move?
I’m 31, my wife is 29, and we have two kids. We’ll earn $150,000 plus a $20,000 bonus on our single income. We have $52,000 in emergency and sinking funds, and our monthly spending is $7,000.
Our investments include $500,000 in retirement accounts, $150,000 in a taxable brokerage account, and $12,000 split between two 529s.
Our home is worth between $560,000 and $575,000. We owe $390,000 on a 5.07 percent ARM, which won’t adjust until late 2029. We also have $20,000 in federal student loans at 4 percent and a $16,000 car loan at 5.97 percent, with a $570 monthly payment.
We’re expecting a $5,000 windfall from a vacation payout and some bonuses, which leads to my question: Should we put that toward paying off the car loan to improve monthly cash flow? That $570/month would go a long way during this transition.
The complication is that we have another car. It’s fully paid off and running strong at 260,000 miles. I love this car and hope it makes it to 300,000, but realistically, we’ll need to replace it in the not-too-distant future.
We’d likely spend $18,000 to $27,000 on the next vehicle. So, should we keep managing the current car loan while saving for the next car? Or even dip into taxable investments to pay this one off?
The thought of selling from our taxable brokerage is the part that stings the most. But it feels like we wouldn’t get another used car loan below 6 percent in today’s market. Would it be smarter to free up the $570 now and start rebuilding savings for the next car purchase, or just ride this out?
Paul asks (at 25:19 minutes): We often talk about sequence of returns risk, but how do you know when you’ve escaped it? I’m 59, and my wife is 52. I’ll turn 59½ this July and get full access to my retirement accounts without penalty.
We have $3.3 million across our accounts: my traditional IRA has $1.6 million, my Roth IRA has $700,000, my wife’s Roth IRA holds $384,000, and her SEP IRA has $480,000. We also have $54,000 in a brokerage account, $61,000 in cash, and we own our home outright.
I left work in 2018 at age 52, when we had $1.7 million between investments and cash. My wife no longer works either. Our annual spending is $70,000.
So, how do we know when we’re safely past the point of worrying about sequence of returns risk? When can we just exhale and know that we’ll be okay?
Jonathan asks (at 41:34 minutes): How do I decide between making the more mathematically sound decision and the more psychologically comfortable one?
I’ve contributed enough to my Roth and pre-tax retirement accounts that, based on growth projections, I won’t need to add anything else. This frees me up to invest $7,000 a year for at least the next decade, with the goal of accessing that money before 59½.
I have two main options: Contribute to a Roth IRA and later withdraw the contributions tax-free, or invest in a taxable brokerage account. From a pure tax perspective, the Roth is better.
But psychologically, I know I’ll struggle with pulling money out of it. Even if I’m just withdrawing contributions, it just feels wrong to touch it.
So, do I go the taxable route, accept the slightly higher tax bill, and avoid the mental hurdle? Or do I use the Roth and reframe how I think about those dollars? How should I approach this tradeoff between psychological comfort and tax efficiency?
Thanks to our sponsors!
Pretty Litter
Pretty Litter helps monitor your cat’s health, detecting abnormalities in your cat’s urine by testing acidity and alkalinity levels. Right now save twenty percent on your FIRST order and get a free cat toy at prettylitter.com/affordanything.
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. If your revenues are at least in the seven figures, download the free e-book “Navigating Global Trade: 3 Insights for Leaders” at NetSuite.com/PAULA.
MasterClass
With MasterClass you can learn from the best to become your best. MasterClass is the only streaming platform where you can learn and grow with over 200+ of the world’s best. Get 15% off any annual membership at MasterClass.com/afford.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to shop for summer deals.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Every 28 seconds an entrepreneur makes their first sale on Shopify! Go to shopify.com/paula for one-dollar-per-month trial period for one month.
ShipStation
Calm the chaos of order fulfillment with the shipping software that delivers. Switch to ShipStation today. Go to ShipStation.com and use code PAULA to sign up for your FREE trial.
Two school teachers in Ohio saved their entire lives for one dream — buying a farm.
When they inherited $1.3 million and found the perfect property for $1.2 million, everything seemed perfect.
Five days before closing, they received what looked like a legitimate email from their closing company with wire transfer instructions. They sent the money and showed up at closing, only to discover they’d been scammed.
The email was fake, sent by hackers who had infiltrated the closing company’s servers for months, waiting for exactly this type of high-value cash deal.
That story comes from cybersecurity expert Dr. Eric Cole, who joins us to explain why ordinary people have become prime targets for cybercriminals.
Cole, a former CIA hacker who served as cybersecurity commissioner under President Barack Obama and advises high-profile clients including Bill Gates’ personal estate, has a message: if you think you’re too small to be targeted, you’re wrong.
While billion-dollar companies deploy teams of 60 cybersecurity professionals, you have virtually no protection.
Criminals know this. They’re not trying to steal $100 million from one person anymore — they’re stealing $50 from thousands of people every month.
You probably won’t notice the small amounts vanishing from your accounts. Cole calls it “death by a thousand cuts,” and it’s happening right now.
We talk through the most common attacks targeting your money. Bank hacking is simpler than most people realize. All criminals need is your account number — printed on every check you write — and your password. With that information, they can often perform electronic fund transfers of up to 50 percent of your account balance without triggering alerts.
We also cover the China-TikTok connection, secure messaging options, and why Cole helped configure President Obama’s smartphone to connect to fake cell towers that masked his actual location.
Cole’s bottom line: cybersecurity isn’t just for tech companies anymore. Criminals are targeting ordinary people because we’re easier prey than heavily protected corporations. Your money is under threat. Here’s how to protect it.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(0:00) Introduction
(1:17) Why ordinary people are cybercrime targets
(2:29) The “death by a thousand cuts”
(4:05) How criminals destroy your credit with fake accounts
(5:19) Cryptocurrency wallet attacks and empty life savings
(6:08) Elder scams and the devastating impact on families
(8:24) Different types of cyber attacks explained
(8:44) Bank hacking
(14:25) Phishing scams using fake toll messages
(18:53) Ransomware as a legitimate Russian business
(23:44) How scams and cybersecurity overlap
(35:31) Paula’s phone security audit
(49:54) Smartphone security for high-profile individuals
(54:55) TikTok’s data collection and Chinese government access
(59:44) Real estate scams targeting cash buyers
(1:12:18) Essential security rules
(1:27:05) What to keep in a fireproof safe
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. If your revenues are at least in the seven figures, download the free e-book “NavigatingGlobal Trade: 3 Insights for Leaders” at NetSuite.com/PAULA.
Constant Contact
Constant Contact makes it easy to promote your business with powerful tools like email and SMS marketing, social media posting, and even event management. Tackle any challenge with Constant Contact’s 30-day free trial.
Policygenius
Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $276 per year for $1,000,000 of coverage.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Every 28 seconds an entrepreneur makes their first sale on Shopify! Go to shopify.com/paula for one-dollar-per-month trial period for one month.
ShipStation
Calm the chaos of order fulfillment with the shipping software that delivers. Switch to ShipStation today. Go to ShipStation.com and use code PAULA to sign up for your FREE trial.
Emily is nervous that buying their first home will derail her family’s journey to financial independence. What’s the smartest way to deploy their savings and stay on track?
Based on cap rate calculations, Paul’s real estate investments have appreciated beyond their sensible holding point. Should he sell his assets, or is there more to consider here?
Mike is recently retired while his wife still works. With a paid-off home and healthcare already taken care of, what are best practices for drawing down an investment portfolio?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Emily asks (at 1:14 minutes): As young parents, how do we plan for a major move and our first house purchase without throwing a wrench into our financial independence goals?
I was so happy to hear your defense of renting on Episode 559. My wife and I have taken that perspective to heart as renters for the past 15 years. But now, we’re ready to buy a home.
We’re in our early 40s, married, with two kids—a 3-year-old and an almost-1-year-old. We’re approaching Coast FI, and want to be work optional within the next 10 years. We plan to move home to the Midwest and settle into a great school district before our oldest starts kindergarten.
We have $1.2 million in investments, plus $120,000 cash earmarked for a down payment. We also have $85,000 in cash as our emergency fund. We may be able to save a bit more depending on when we move, and we’re also open to renting in the Midwest before we buy.
We currently spend $11,000 monthly due to high rent and childcare. But we expect that to drop to $6,000 once both kids are in school and once we move, depending on our mortgage.
We’re estimating a housing budget of $500,000, which should be enough to get us into a good school district with access to strong job markets. That number could be higher or lower depending on what we find.
Given our ages, net worth, and timeline for reaching work-optional status, how should we approach financing this home? Should we make a large down payment? Should we consider a 15-year mortgage? Or is it okay to carry a mortgage into our seventies?
Paul asks (at 26:20 minutes): Does it make more sense to keep a high-value rental that brings in solid income, but comes with landlord headaches, or to sell, invest the proceeds, and live more passively off a 4 percent withdrawal rate?
In 2011, I bought a 3,300-square-foot primary residence as a short sale in a highly desirable neighborhood for $645,000. After a year-long battle for permits, I built a second home on the same one-third-acre lot: A 1,800-square-foot house that’s perfect for me.
I moved into that smaller home in 2017 and have been leasing out the larger one ever since. The lot can’t be subdivided, so if I ever sell, I’d have to sell both homes together as a single property.
Here are the numbers:
- The original 3,300-square-foot house (now a rental) is worth $2.3 million and brings in $10,000 a month.
- The house I live in cost $450,000 to build and is now worth $2 million.
- Together, the two homes are worth $4.3 million.
- I owe $350,000 on a 15-year loan at 2.75 percent, with six years remaining.
I love my house and the neighborhood, but I don’t love being a landlord. The time commitment is minimal, but living right next door makes it hard to hand off responsibilities to a property manager.
And at $10,000 a month, tenants tend to treat it as a short-term rental while they shop for a home to buy. So far, I’ve had almost no vacancy, but I don’t get multi-year tenants either.
The cap rate on a $2.3 million valuation isn’t great, but the rental income is $120,000 annually. If I sold and invested the proceeds from that portion of the property into a total stock market index fund, a 4 percent withdrawal rate would give me $92,000 annually.
That’s less than the rent, but it would be completely passive. Of course, I’d have to factor in long-term capital gains taxes and real estate commissions — and I’d also need to buy a new home, which would likely cost me $1.75 million to stay in the same neighborhood.
For additional context, I have a well-diversified investment portfolio of $3.5 million that already generates more than enough to cover my lifestyle.
So my question is: is it smarter to hold onto the rental and keep the $120,000 in annual income, or sell and invest the proceeds for a more hands-off return, even if it’s a bit lower? And how should I think about taxes, commissions, and housing replacement costs in this decision?
Mike asks (at 47:53 minutes): I’m 61 and recently retired. My wife is 54 and earns $100,000 a year as a W-2 employee. Our home is fully paid off and is worth $1.5 million. My healthcare is covered by my former employer.
We have $5 million in investable assets held across a rollover IRA, a Roth IRA, and a taxable brokerage account:
- $500,000 in cash
- $1.5 million in a Schwab dividend ETF yielding around 4%
- $1.5 million in Schwab’s U.S. Large Cap Growth ETF (SCHG)
- $1.5 million in Schwab’s S&P 500 index fund
I plan to withdraw $100,000 per year. Which accounts and assets should I draw from first?
Resources Mentioned:
609: Q&A: How Not To Screw Up Retirement Spending – Afford Anything | Podcast
595: Q&A: The Scary Shift from Saving to — Gulp! — Actually Spending Your Money – Afford Anything | Podcast
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. If your revenues are at least in the seven figures, download the free e-book “NavigatingGlobal Trade: 3 Insights for Leaders” at NetSuite.com/PAULA.
Constant Contact
Constant Contact makes it easy to promote your business with powerful tools like email and SMS marketing, social media posting, and even event management. Tackle any challenge with Constant Contact’s 30-day free trial.
Policygenius
Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $276 per year for $1,000,000 of coverage.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Every 28 seconds an entrepreneur makes their first sale on Shopify! Go to shopify.com/paula for one-dollar-per-month trial period for one month.
ShipStation
Calm the chaos of order fulfillment with the shipping software that delivers. Switch to ShipStation today. Go to ShipStation.com and use code PAULA to sign up for your FREE trial.
The US just added 139,000 new jobs in May. That beat expectations. But the real story isn’t in the job numbers — it’s in the bond market.
Something unusual is happening in bonds. Treasury yields are spiking. The dollar is weakening. That combination almost never happens together. And it’s signaling concerns about future inflation.
Trade wars continue on. A federal court just struck down some tariffs. The administration will appeal. Meanwhile, the EU has until July 9 to cut a deal. If they don’t, 50 percent tariffs kick in. As a result, many companies are playing defense instead of growing.
The debt situation keeps getting worse. We owe $36.2 trillion. That’s more than we owed at the end of World War II as a percentage of our economy. Moody’s just downgraded our credit rating. We’re not alone — Britain’s bonds just hit their highest levels since 1998.
The accredited investor rules could finally change. Right now you need an income of $200,000 ($300,000 as a couple) or $1 million in net worth to access private markets. Those numbers haven’t changed since they were written in 1982, even though adjusted for inflation, that $200,000 would be $662,000 today.
The SEC might start loosening enforcement of the accredited investor rules. That could open up more investments to people who’ve been locked out for decades.
Crypto is finding its footing. The SEC dropped cases against Coinbase. They’re backing away from treating most crypto like securities. Bitcoin sits near all-time highs. The US keeps building its strategic Bitcoin reserve.
The House just passed what’s being called the “One Big Beautiful Bill.” It extends 2017 tax cuts. Eliminates taxes on tips and overtime. The Congressional Budget Office says it’ll add $2.4 trillion to the deficit over 10 years. That’s sparked debate between deficit hawks and growth advocates — including one particularly high-profile debate that has been plastered across the headlines.
Consumer sentiment stays stuck at 2022 lows. People expect 6.6 percent inflation. The actual rate is 2.3 percent. That gap between what the data says and what people feel shows up everywhere.
We cover all of this in today’s First Friday economic update.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to shop for holiday deals.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. If your revenues are at least in the seven figures, download the free e-book “NavigatingGlobal Trade: 3 Insights for Leaders” at NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to shop for holiday deals.
Policygenius
Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $276 per year for $1,000,000 of coverage.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Every 28 seconds an entrepreneur makes their first sale on Shopify! Go to shopify.com/paula for one-dollar-per-month trial period for one month.
ShipStation
Calm the chaos of order fulfillment with the shipping software that delivers. Switch to ShipStation today. Go to ShipStation.com and use code PAULA to sign up for your FREE trial.
Rachel Rodgers Hello 7 PR Campaign by Dale May Photography
Rachel Rodgers graduated from law school with $330,000 in student loans. Her starting salary? Just $41,000.
Most people would have accepted this crushing debt-to-income ratio. They’d slowly chip away at payments for decades. Rodgers had a different plan.
She deferred her loans and started her own virtual law practice in 2008 — during the recession, when jobs were scarce and most lawyers were struggling to find work.
Her mom thought she was crazy.
Her first year, she made around $65,000 in gross revenue with only $300 in overhead costs. By year two, she was earning $300,000.
The key to her success wasn’t cutting expenses or living on rice and beans. Rodgers focused entirely on earning more money.
We talk about the practical steps she took to scale her business.
She waited until hitting $250,000 in annual revenue before bringing on her first full-time employee — an administrative assistant who immediately paid for herself by responding to client inquiries faster than Rodgers could manage alone.
Rodgers also shares insights from a CEO’s perspective on what employees should know when asking for a raise.
Understand your company’s goals. Know your boss’s pain points. When you spot a problem, bring three solutions — not just the issue. She usually goes with whatever option her team recommends.
“You are the asset,” she explains. This mindset applies whether you’re an entrepreneur or an employee trying to maximize your career potential.
Our interview covers her transition from solopreneur to multimillion-dollar business owner, her approach to leading employees, and her philosophy on building wealth through entrepreneurship rather than cost-cutting.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(0:00) Introduction
(2:00) Rachel’s $330,000 debt with $41,000 salary
(5:35) Why earning more beats cutting expenses
(6:40) Starting solo law practice during 2008 recession
(9:13) Hitting $300,000 revenue in year two
(11:00) Debt payments versus business reinvestment
(14:20) Small Business Bodyguard digital product success story
(21:00) Virtual law offices and perfect timing decisions
(24:30) Taking calculated risks
(39:00) Financial independence and Fat FIRE goals
(46:00) When to hire employees
(53:00) Why opportunity costs matter more than expenses
(57:00) Being invaluable employee from boss POV
(1:11:00) Salary negotiation tactics
(1:19:00) Building relationships with remote team members
(1:21:00) Launching adult kids into financial independence
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to shop for holiday deals.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. If your revenues are at least in the seven figures, download the free e-book “NavigatingGlobal Trade: 3 Insights for Leaders” at NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to shop for holiday deals.
Policygenius
Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $276 per year for $1,000,000 of coverage.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Every 28 seconds an entrepreneur makes their first sale on Shopify! Go to shopify.com/paula for one-dollar-per-month trial period for one month.
ShipStation
Calm the chaos of order fulfillment with the shipping software that delivers. Switch to ShipStation today. Go to ShipStation.com and use code PAULA to sign up for your FREE trial.
Grant Sabatier never worked in retail, never worked in a bookstore, and had no idea what he was doing when he opened Clintonville Books in Columbus, Ohio.
But that’s exactly the point.
The experiment required 1,200 hours of solo work — measuring spaces, moving 40,000 books, and navigating city regulations.
But it taught him something crucial: even experienced entrepreneurs face steep learning curves when they try something new.
The serial entrepreneur and author of “Inner Entrepreneur” joins us to share his unconventional journey from online businesses to brick-and-mortar retail.
He also explains why he believes everyone will become an entrepreneur within the next decade — whether they want to or not.
We dive deep into Sabatier’s framework for the four stages of entrepreneurship.
The first stage is experimental — you’re figuring out how entrepreneurship feels and testing ideas with minimal risk. Most people skip the crucial research phase and invest too much money too quickly.
The second stage focuses on building sustainable systems as a solopreneur. Thanks to AI and modern tools, Sabatier launched a new website in 10 minutes recently — something that would have taken two weeks just five years ago.
Stage three involves intentional growth. Sabatier warns against the common trap of scaling rapidly without considering how you want entrepreneurship to fit into your life.
The final stage is empire entrepreneurship — using cash flow from successful businesses to acquire other companies rather than investing in traditional assets like stocks or real estate.
Throughout our conversation, we explore the most common reasons businesses fail, how to avoid fragmented attention, and why Sabatier believes your story is your competitive advantage in an AI-driven world.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(0:00) Introduction
(1:15) Grant opens bookstore with zero retail experience
(3:45) Four stages of entrepreneurship framework
(5:20) Creative lease negotiation and getting the space
(8:30) Why entrepreneurs invest too much money too early
(10:45) Stage two solopreneur and building systems
(13:20) Stage three growth and avoiding scaling traps
(17:15) Three main reasons businesses die
(21:45) Stage four empire building and holding companies
(28:30) Four types of holding company structures
(32:15) Managing multiple businesses without losing focus
(48:20) Why everyone should try entrepreneurship
(59:30) Three business types products services productized services
(1:04:45) Sell to people with money
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to shop for holiday deals.
With the state of the world changing so rapidly, Lesley is struggling to accept that “this time isn’t different.” Does the past still reliably inform the present in the face of major decisions today?
An anonymous caller and her husband want to achieve financial independence through real estate within 10 years. Is it better to pay off existing mortgages or prioritize buying more rentals?
Melanie feels duped by the FICO credit scoring system. She’s doing all the right things, but her credit score is still moving in the wrong direction. What’s going on here?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Lesley asks (at 01:55 minutes): How do you reconcile the idea that “this time it’s different” is usually a dangerous mindset with the fact that, in some ways, it is different this time?
I’m thinking specifically about long-term forces like climate change and unprecedented levels of economic inequality. I’m a nerd, and I’m just genuinely curious to hear your perspective.
Melanie asks (at 21:44 minutes): Why did my credit score drop even though everything improved?
My credit score took a serious hit when I had to take out a couple of loans for a car and some unexpected home repairs. Recently, my credit score was moving up and reached 778. Then I get an alert that it decreased this week by 21 points.
The alert said my available credit went up, my total balance went down, my credit usage dropped, and the age of my oldest accounts increased. Aren’t those all good things for building credit? So why the drop? Are credit scores just a racket?
Anonymous asks (at 45:54 minutes): My husband and I are working toward financial independence (FI) through real estate. Should we prioritize purchasing another property or paying off one of our existing rental properties? Which path will get us to FI quicker?
We’re both 34, child-free, and earn $200,000 per year combined. We work full-time and want to make work optional in the next 10 years. We’re debt-free except for a $12,000 car loan at 8.29 percent interest. The payments are $250 a month with four years to go.
We have $85,000 in cash savings and contribute an additional $4,000 monthly. We also have $20,000 in a taxable brokerage account. We already have two rental properties, and we estimate that adding three more will get us to FI.
Here’s a breakdown of our current rentals:
- Property 1 was purchased in 2018. It rents for $1,600/month and has a $90,000 mortgage at a 4.875 percent interest rate. We could pay this off in the next month or two using our savings, which would significantly boost cash flow. But most of the monthly payment now goes toward principal, and the interest rate is relatively low.
- Property 2 was purchased in 2022. It rents for $1,500/month, but after a large increase in property taxes and insurance, we’re paying $140/month out of pocket. The remaining mortgage is $131,000 at a 7.125 percent interest rate. If we continue saving $4,000/month, we could wipe out this loan in a year.
Alternatively, we could keep both mortgages in place and use our savings toward a down payment on a third property, helping us reach our five-property goal faster.
Given all of that, what would you recommend? Should we pay off one of the mortgages to boost cash flow and then redirect that income toward our next down payment? Should we keep acquiring properties and worry about paying them off later? Should we knock out the car loan because of its high interest rate? And how might our taxable brokerage account factor into this?
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In 2005, Sebastien Page nearly died from a mysterious bacterial infection that doctors couldn’t diagnose for a week.
A single observant physician noticed cuts on his toes from running in wet terrain and connected the dots.
The experience forced Page to confront mortality — and completely changed how he thinks about goals.
Page, the chief investment officer at T. Rowe Price and author of The Psychology of Leadership, joins us to share why traditional goal-setting might be sabotaging your happiness.
He explains how 80 percent of millennials say they just want to get rich, and 50 percent want to become famous.
But research from Harvard’s 80-year longitudinal study reveals something surprising: people who climbed the social ladder weren’t meaningfully happier than those who struggled financially.
The real predictor of long-term happiness? The quality of your relationships with others.
We explore the dark side of goals through a concept called “goal-induced blindness.”
Page uses Mount Everest as an example — climbers have a 4 percent chance of dying, the same odds as eating four poisoned gummies out of 100. Yet people still attempt the summit because they become blinded by the goal itself.
Page shares his own experience with goal-induced blindness during his demanding career in money management. The relentless travel and pressure contributed to his near-fatal infection in 2005. He learned that working less actually made him more productive.
We dive into Page’s framework called the “three Cs”: core beliefs, curves, and control theory.
Core beliefs are the filters through which you interpret the world — like whether you trust people or believe money should be spent versus saved.
Curves refer to stress management, based on research showing optimal performance doesn’t happen at zero stress.
Control theory teaches you when to exercise “strategic patience” versus making quick decisions.
Page also introduces the PERMA framework from positive psychology: positive emotions, engagement, relationships, meaning, and accomplishment. He calls the last four “proteins for your soul,” while positive emotions are more like a sugar high.
The discussion covers practical applications for everything from hiring decisions to relationship choices, using mathematical concepts like net present value to make better life decisions.
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Eva is approaching financial independence, but she’s worried about messing up the transition. How does she set her portfolio up for success during the drawdown years of early retirement?
Former financial planner Joe Saul-Sehy and I deep-dive into this question in today’s episode.
_______
Eva asks (at 03:10 minutes): How should someone approaching financial independence (FI) start shifting from accumulation to decumulation—and what role do concepts like the efficient frontier or risk parity models play in that transition?
I met you both at the Purpose Code book launch in New York this past December, and a question that came up during the Q&A has stuck with me. Someone brought up sequence of returns risk, and it got me thinking about how to manage finances when you’re nearing FI.
I imagine many longtime listeners are in a similar place—we’ve been working toward FI for years, and after a mostly favorable market run, we’re getting close to our goals. So how and when should we transition our portfolios as we move from accumulation to drawdown?
Two ideas come up frequently in my research. One is the efficient frontier, which you’ve talked about recently—the idea that you can lower risk while maintaining return by optimizing portfolio design.
The other is risk parity, which is designed specifically for decumulation. Frank Vasquez has explored this on his Risk Parity Radio podcast, but I’d love to hear your take since I don’t think you’ve done a deep dive yet.
It seems like these two approaches could work together. For example, models like the Golden Ratio suggest a sustainable 5 percent withdrawal rate, which could shift how someone calculates their FI number.
I’d love to hear your thoughts: How should we think about asset allocation, portfolio complexity, and personal risk tolerance as we prepare for decumulation—especially for those of us who are aiming for early retirement or a work-optional lifestyle?
____
Synopsis of Our Answer:
When you’ve spent decades building your retirement nest egg, switching to the withdrawal phase can feel intimidating.
Former financial advisor Joe Saul-Sehy joins us to tackle what he calls “the hardest part of financial planning.”
Joe explains that retirement withdrawals require a different mindset than accumulation. While many people focus on simple “safe withdrawal rates,” Joe recommends a more structured approach using a four-bucket strategy:
- Lumpy spending bucket – Money set aside for specific big expenses in early retirement (travel, home renovations) that you plan to spend down to zero
- Short-term bucket – Two to three years of expenses in cash
- Mid-term bucket – Funds for years 3-10 in moderately conservative investments
- Long-term bucket – Money for 10+ years in growth-oriented investments
The strategy creates what Joe calls “a personalized target date fund” where you regularly rebalance, moving money from long-term to mid-term and from mid-term to cash.
“The biggest roadblock I’ve ever encountered is you,” Joe says, noting that behavior — not market crashes — typically derails retirement plans.
A clear bucket strategy makes you less likely to panic during market downturns because you understand the precise reasoning behind your allocation decisions.
Joe also highlights the importance of planning for “tax roadblocks” like Required Minimum Distributions and Medicare IRMAA surcharges, recommending you begin transitioning your portfolio about 10 years before retirement.
Ultimately, Joe advises starting with your goals rather than working backward from withdrawal rates: “Begin with the Great Barrier Reef, begin with Machu Picchu” — figure out what you want in retirement, then build your financial strategy around funding those priorities.
Resources Mentioned:
The Efficient Frontier Was Perfect Until HR Got Involved
Practical Investing and the Efficient Frontier with Joe Saul-Sehy
Ask Paula: How To Optimize Your Investments Along the Efficient Frontier – If You Dare
Interview with Bob Elliot
Interview with Polina Marinova Pompliano
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What happens when you spend three decades talking to retirement experts? You learn that most of what people think they know about retirement planning is oversimplified or wrong.
Christine Benz, director of personal finance and retirement planning at Morningstar, joins us on the Afford Anything podcast to share what she’s discovered after 31 years of interviewing experts across personal finance, tax planning, and Social Security.
One key insight: The standard advice about withdrawing 4 percent of your portfolio annually in retirement misses the mark. Real-life spending isn’t that simple. In your 60s, you might spend more on travel. By your 80s, healthcare costs often rise.
Benz suggests creating separate “pots” of money for different purposes – like a travel fund you aim to deplete within your first decade of retirement.
Want to protect against market crashes early in retirement? Benz recommends keeping 5-8 years of planned withdrawals in cash and high-quality bonds. This prevents having to sell stocks during downturns.
We talk about why retirement doesn’t need to be all-or-nothing. Instead of going from 40 hours to zero, Benz describes how many people benefit from a phased approach. This might mean keeping the parts of your job you enjoy while dropping the rest, or finding new ways to use your skills.
The conversation shifts to housing choices. While many assume retirees move to Florida or Arizona, the data shows most stay put. Those who do move often end up near their oldest daughter. And while single-family homes tend to make people happier until around age 75, apartment dwellers report more satisfaction after that — largely due to increased social interaction.
Benz shares her own retirement planning process. Despite being a retirement expert herself, she works with an hourly financial planner who tells her she’ll likely struggle to spend as much as she could in retirement. It’s a common problem — after decades of saving habits, many retirees find it psychologically difficult to spend their money.
The interview wraps up with a discussion about relationships in retirement. Research shows that while older adults often have smaller social circles, these relationships tend to be deeper and more meaningful. They’ve pruned away the “good enough” friendships to focus on their closest connections.
Benz’s insights come from her new book “How to Retire” and her work at Morningstar, where she creates free model portfolios and hosts The Long View podcast. Beyond the financial aspects, she emphasizes that successful retirement planning involves thinking about purpose, relationships, and how you want to spend your days — not just your money.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
0:00 What 30 years of retirement expert interviews reveal
1:34 Why spending in retirement is harder than saving for it
3:12 Beyond money: need purpose, not just leisure
4:00 The challenge: planning for an unknown time horizon
8:52 Should market fears delay your retirement?
13:42 How much cash and bonds to keep safe
15:49 When bonds don’t protect against stock crashes
18:33 Phased retirement: keep what you love, drop what you don’t
29:24 Take mini-retirements throughout your career
33:20 Spending shifts: from travel to healthcare costs
46:14 Why most retirees don’t actually move
57:31 After 75, apartment living beats houses
1:00:42 Friendship patterns change: quality over quantity
1:04:58 Virtual vs real-life connections
1:06:25 Where to find more info
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Imagine saving nearly your entire paycheck while your rental properties cover your bills. That’s exactly where real estate investor Andrew finds himself — and yet he’s at a crossroads.
At FinCon, a personal finance conference, former financial advisor Joe Saul-Sehy and I sit down with Andrew and another attendee who bring their money dilemmas live on stage.
Andrew’s question seems simple at first: should he sell his index funds to pay off his rental mortgages? But the real story runs deeper.
He feels called to entrepreneurship and wants to quit his corporate job to pursue it full-time. He could achieve minimal financial independence (lean-FIRE) if he pays off the properties, but that might limit his options.
Next, Chris, a Gen X dad, opens up about his Gen Z kids’ gloomy money outlook. His 22 and 24-year-old children, especially his daughter, believe their generation “will never retire.” They see high inflation, expensive housing, and low wages as insurmountable obstacles.
This sparks a deeper conversation about generational perspectives. We note that similar fears existed 15 years ago when millennials entered the workforce during the Great Recession. Joe shares how he helped his own kids develop healthier money mindsets by introducing them to financial voices they could relate to, like Broke Millennial author Erin Lowry.
The discussion evolves into how today’s young people actually have more opportunities than previous generations — they can work remotely, start online businesses with minimal capital, and create multiple income streams through platforms that didn’t exist before. Chris’s daughter, for instance, sometimes makes $35/hour driving for DoorDash during peak times.
We wrap up by talking about the importance of focusing on what you can control and finding purpose beyond just retirement planning. As Andrew points out, it might be worse to spend the best years of your life doing work you don’t care about than to face uncertainty in retirement. The key is taking action on the things within your control while building toward long-term security.
Throughout the conversation, both guests share personal stories that illuminate their situations – from Andrew’s experience at an oil refinery that pushed him toward entrepreneurship to Chris’s daughter storing cash for taxes from her DoorDash earnings, showing she’s more financially aware than she might think.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
0:00 Live at FinCon with Joe Saul-Sehy
1:50 Andrew asks about index funds vs real estate allocation
4:04 Could Andrew reach lean-FIRE by paying off rentals?
5:00 Joe suggests keeping investments flexible vs mortgage payoff
8:05 Debate over HELOC vs index fund liquidity
10:10 Andrew’s bigger dreams beyond real estate investing
13:40 Choosing between W2 security and entrepreneurial freedom
15:20 Andrew saves nearly entire salary while rentals cover bills
20:20 Chris worried about Gen Z kids’ financial pessimism
24:40 How Joe helped his kids find relatable money role models
29:40 Millennials faced similar fears post-Great Recession
33:20 Today’s expanded opportunities vs previous generations
39:20 Andrew’s wake-up call at oil refinery job
42:40 Chris’s daughter earning $35/hour on DoorDash
45:20 Finding meaning beyond retirement numbers
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An anonymous caller was raised to work hard, live below his means, and save. He feels undeserving of his recent $1,000,000 inheritance and struggles to spend it. What should he do?
Jack bought a house with a seven-year adjustable-rate mortgage. He’s confused about when and how he should refinance out of it. What should he do?
Jack is also wondering how to do the breakeven calculation between contributing to a Traditional IRA with upfront income tax savings versus a Roth IRA with deferred savings on investment gains.
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Anonymous asks (at 5:03 minutes): My financial life has completely changed after a $1,000,000 inheritance but I feel stuck and afraid to spend any of it. What can I do to finally feel safe about using this money?
I’m 32 and I make $80,000 a year as an accountant. I’m single and rent an apartment where I can easily afford my fixed costs with my salary. I have a paid-off old car, no credit card debt, and, no student loans.
My grandfather, who passed away in 2012, had set up a trust for me that I gained control of two years ago when I turned 30. The account is worth $1,000,000, mostly invested in mutual funds and single stocks.
I’ve been raised to live below my means, work, and save, save, save. I feel strange that I’m suddenly more wealthy than my close friends, with money that feels unearned. So I operate as if the account isn’t there.
I became a money nerd before I came into this trust. I have $100,000 of earned income invested in my 401k, HSA, Roth IRA, and a taxable brokerage account. I max out my Roth IRA and HSA and get up to 15 percent in my 401k with my employer match.
I don’t want to disrupt my investments because I understand the power of compounding. But between my monthly contributions and saving for a house down payment, I don’t have much money left over for non-essential spending.
I don’t know what my life will look like in the future, so I’m usually overly cautious with money. I want to have a family and home and leave behind money like it was done for me. But with so many unknowns, how do I predict how much I’ll need in the future?
Can I back off some of my investments since I’ve technically reached “Coast FI”? Or should I keep going since I don’t know what the future will hold? I think enough time has passed that I’ve proven to myself I won’t go crazy with a big windfall. So, now what?
Jack asks (at 30:07 minutes): My wife and I bought our first house in June 2023 using a seven-year adjustable-rate mortgage (ARM) but I’m confused about mortgage refinance. Can you explain?
We used a physician-assisted mortgage plan, which is a great option for doctors in medical education. We put zero down on a $435,000 house with a 4.875 percent interest rate.
Our credit score is over 800. We have the savings to buy the house outright but decided to keep the money in the market instead. However, I’ve been led to believe that come June 2030, I could get whacked with a much higher interest rate.
It’s only a matter of time before we have to refinance because we don’t plan on ever selling the house. So can you explain what goes into that? Do I use the same lender? Should I do it now or later? And how do closing costs work?
Jack asks (at 56:25 minutes): Is it better to max out a Roth 401k or a pre-tax 401k? Or should I do a mix of both?
If I did pre-tax, it would bring my wife and I down from the 32 percent tax bracket to the 24 percent tax bracket.
How do we weigh short-term income tax savings on a Traditional IRA against the long-term savings of untaxed growth on a Roth IRA?
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Our Afford Anything community recently lost a treasured member. Jonathan was a real estate agent, a devoted husband and father, and one of our most active and helpful students in our Your First Rental Property course community.
Jonathan was known for his generous spirit. He enriched our community with his enthusiasm, responsiveness, and willingness to help others. His passing after a battle with cancer has deeply touched our community.
Inspired by Jonathan’s legacy of giving, we’re creating a scholarship for the Fall 2024 cohort of our Your First Rental Property course. This scholarship will be awarded to one cancer survivor or fighter.
Scholarship Details:
- Full enrollment in the YFRP course, beginning Fall 2024 ($1,297 value)
- Access to all course materials, study halls, and office hours
- Lifetime membership in our community
Who Can Apply:
We welcome applications from anyone who has faced a cancer diagnosis. Whether you’re currently in treatment, in remission, living with no evidence of disease, or cancer-free, your journey and your story matter to us. This scholarship is open to you at any stage of your cancer journey.
How to Apply:
Send an email to support (at) affordanything (dot) com with the subject line “YFRP Scholarship Application” that includes:
- A brief description of your cancer journey (share only what you’re comfortable with)
- Why you want to build a rental property portfolio
- How you hope to make an impact through real estate investing
Important Notes:
- Deadline: Thursday, Nov 7th at 11:59 PM Eastern
- Applications should be written submissions
- Financial need is not a consideration
- The selected recipient will be invited (but not required) to share their story with our community
We’ll notify the recipient on Friday, Nov 8th by no later than 5 PM Eastern.
This scholarship represents our commitment to supporting those who, despite facing significant health challenges, are determined to build financial independence through real estate investing.
Have questions? Please email support (at) affordanything (dot) com.
With gratitude,
Paula
Brandon Ganch (known online as MadFientist) joins us from Scotland to share how his life has transformed since retiring in 2016 at age 34.
“I thought retirement was an age, not a function,” he said. “And when I realized it was just a math function, it changed my entire life.”
Eight years into retirement, Brandon talks about how his spending and lifestyle have evolved. While his investment portfolio has grown “exponentially,” he’s had to push himself to spend more money. He and his wife have doubled their spending in the last three years, yet still haven’t reached the 4 percent withdrawal rate that’s common in early retirement.
Having two young kids (a two-year-old son and one-month-old daughter) has changed their spending patterns. Restaurant bills and craft beer costs have dropped significantly, while they’ve invested in a house — their third, but the first one Brandon says he actually enjoys owning since he’s no longer “hyper-frugal.”
Brandon shares his few regrets from his journey to financial independence, mainly missing friends’ bachelor parties in his twenties because he didn’t want to pay for two transatlantic flights in one month. The book “Die with Zero” has shifted his perspective on spending, making him realize there are “seasons in life” for certain experiences.
Brandon suggests trying to live your “post-FI life” before actually reaching financial independence. By traveling for three months straight, he learned that constant travel wasn’t actually what he wanted.
He emphasizes that financial independence isn’t just about early retirement — it’s about having choices and power in your career.
You can find Brandon at madfientist.com or listen to his music at madfientist.com/album.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
0:00 – Paula opens with a Guy Fawkes Day reference and historical background
2:06 – Brandon Ganch (MadFientist) introduces himself as having retired in 2016 at age 34
4:09 – Brandon explains how HR discovering his Scotland location led to his early retirement
7:01 – Discusses the “power of quitting” and how having FI helped him negotiate better work terms
11:26 – Explains how spending habits changed post-retirement, especially around house ownership
13:37 – Talks about having kids and how that decreased spending on travel, restaurants and beer
19:27 – Shares his only regrets about the FIRE journey, including missing friends’ bachelor parties
26:58 – Discusses the “Die with Zero” book and its impact on his financial philosophy
33:32 – Explains why optimization and hyper-frugality are no longer priorities in his life
40:06 – Updates on his music passion project and performing live with his brother
44:21 – Advises people to start living their post-FI life before reaching financial independence
48:36 – Explains why FI might not be for everyone but financial security matters for all
51:28 – Shares thoughts on AI’s impact on software development jobs and being glad he’s already FI
A Sampling of MadFientist Articles:
Retirement Withdrawal Strategies
Baseline Portfolio vs. Optimized Portfolio
FI Spreadsheets
FI Laboratory
How To Use an HSA as a Super IRA
How to Stack Tax Benefits
And of course, his passion project in retirement — the album:
https://www.madfientist.com/album/
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NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. Head to NetSuite.com/PAULA to download the CFO’s Guide to AI and Machine Learning.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need to summer your way.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow,net worth, and more. Go to monarchmoney.com/paula to for your extended thirty-day FREE trial.
Policygenius
Go to policygenius.com for free quotes and comparisons across many insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1 million of coverage.
The U.S. jobs market hit a surprising speed bump in October, adding just 12,000 new jobs — way below the expected 100,000.
A mix of natural disasters and labor unrest explains the slump. Recent hurricanes in the Southeast wiped out somewhere between 40,000 to 70,000 jobs, while strikes at Boeing and other companies added to the slowdown. Against this backdrop, the Federal Reserve looks ready to cut interest rates next week by 0.25 percent.
Meanwhile, gold is having its biggest moment since 1979, but not for reasons you might expect. Central banks, especially in China and India, are loading up on physical gold like never before. Poland’s central bank has grabbed 167 tons of gold and wants to keep 20 percent of its reserves in gold — a move that hints at banks preparing for possible global shake-ups.
Remember when I-Bonds were the hot ticket in 2022, paying out 9.6 percent? Those glory days are gone. The new rate has dropped to 3.1 percent, making your standard high-yield savings account look pretty good in comparison.
In the stock market, it’s all about the “Magnificent Seven” — Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla. These tech giants account for 62 percent of all S&P 500 gains over the past year. The other 493 companies aren’t doing too shabby either, with profits expected to grow 13 percent next year.
As for the upcoming election, both presidential candidates’ economic plans would push the federal deficit higher. The Wharton School of Business says Trump’s proposals would add $5.8 trillion to the deficit over 10 years, while Harris’s would add $1.2 trillion. There’s also talk about tariffs that could spark inflation and maybe even kick off a global trade war.
Here’s the kicker: during the 2016 election, a 24-year-old Sam Bankman-Fried correctly predicted the outcome before anyone else and made $300 million in a single night trading on that information. But by morning, the markets had swung so wildly that he’d lost $600 million.
The lesson? Even if you guess the election right, predicting how markets will react is a whole different ball game — one that you should avoid. Think long-term, buy-and-hold.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
0:00 October jobs report falls short
3:42 Fed signals likely 0.25 percent rate cut next week
8:15 Gold prices surge to 45-year high
12:30 China and India lead global gold buying spree
18:45 I-Bond rates plummet from 9.6 to 3.1 percent
24:10 “Magnificent Seven” tech stocks dominate market gains
29:35 US economy outpaces Germany, other G7 nations
35:20 AI’s transformative impact on Generation Alpha
42:15 Inflation risks and tariff concerns ahead of election
48:30 US deficit hits 6 percent, tops G7 countries
52:45 Wharton analyzes Harris vs Trump economic plans
58:20 SBF’s $600M election night trading disaster
Resources Mentioned:
Wharton’s Trump Campaign Economic Analysis | Website
Wharton’s Harris Campaign Economic Analysis | Website
The Economist, Editorial Board Endorsement | Website
Bloomberg Endorsement | Website
The Financial Times (behind a paywall) | Website
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This is the third and final episode in a three-part series. Dr. Brad Klontz and Adrian Brambila join us to share 21 harsh truths about building wealth.
This episode focuses on the final 11 harsh truths, following up on their previous conversations about the first 10 harsh truths.
The conversation begins with a key distinction: poor people buy stuff, while rich people buy time. They explain how wealthy people focus on building passive income streams rather than trading hours for objects. Brambila shares how he learned this lesson personally, discussing his pickleball court purchase through investment income rather than active work hours.
The duo challenges common assumptions about luxury brands, arguing that people who constantly show off designer items are usually compensating for insecurity. Klontz shares his own experience of buying an expensive watch early in his career to prove his success.
They examine whether college, marriage, and homeownership are necessary for wealth building. While data shows these traditional paths often lead to higher net worth, they acknowledge these aren’t the only routes to financial success.
On the topic of retirement, both guests argue that completely stopping work can be psychologically harmful, sharing examples of successful people who stayed active well into their later years.
They break down specific money-saving strategies like getting roommates, using public transportation, and cutting your own hair. Brambila demonstrates how women can cut their own hair during the interview.
The discussion covers specific side hustle opportunities, with detailed explanation of how to make money doing Amazon product reviews. Brambila shares how his videos have generated significant income, including $2,000 in a single day during Black Friday.
They address money myths about credit cards, particularly the misconception about carrying balances to improve credit scores.
Real examples and personal stories illustrate their points. Klontz shares how his 11-year-old son is making $5,000 monthly doing Amazon reviews, while Brambila discusses living in a van while earning six figures to demonstrate that wealth isn’t about outward appearances.
The episode concludes by connecting financial security to Maslow’s hierarchy of needs, explaining how building wealth enables higher-level personal growth and positive impact.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.
0:00 Introduction
2:02 Poor people buy stuff, rich people own time
13:20 Wealth mindset invests in passive income vs trading time
21:20 Only insecure people flex luxury brands
30:00 Debating necessity of college, marriage, homeownership
38:20 Why retirement can harm mental health
48:40 Wealthy people aren’t afraid to ask for help
54:40 Don’t rely on politics for financial freedom
1:03:20 Complaining keeps you poor
1:05:20 Alternative saving strategies: roommates, bus, sobriety
1:15:20 Netflix binging vs side hustles
1:19:40 Making money with Amazon product reviews
1:28:20 Credit cards must be paid in full monthly
1:31:00 The importance of thinking rich
1:33:30 Where to find more resources and bonuses
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Dr. Brad Klontz and Adrian Brambila join us for part two of their three-part series on “harsh truths” about building wealth.
The first truth sets the tone: being poor sucks. But they quickly distinguish between being “broke” (having no money, which can be temporary) and having a “poor mindset” (which keeps people stuck).
Even high-income earners can have a poor mindset, they explain, sharing examples of pro athletes and celebrities who earned millions but lost it all.
The discussion moves to whether the financial system is “rigged.” While acknowledging real systemic challenges, they argue that viewing it as a rigged system leads to powerlessness. Instead, they suggest viewing wealth-building as a game with specific rules to learn and master.
Several guests share candid stories about their own financial journeys. Brambila describes living in a van while earning seven figures, challenging assumptions about what wealth looks like.
Klontz reveals how he lost money day trading during the tech bubble, using that experience to warn against get-rich-quick schemes.
The conversation tackles touchy subjects like distancing yourself from friends with poor money mindsets. Klontz shares how he had to end a friendship with his best man when their different approaches to business created tension. They emphasize this isn’t about income levels – it’s about mindset and habits.
Through personal examples, they explore why people often undervalue their work. Brambila describes initially pricing his online courses too low due to imposter syndrome. They discuss how both employees and entrepreneurs need to understand their true market value.
The duo challenges common beliefs about jobs, arguing that “only liars love their jobs” since most people would change how they work if they had financial freedom. They use the example of petting puppies – even a dream job becomes less appealing when you lose control over your time.
On lottery tickets, they expand beyond just criticizing gambling to examine how get-rich-quick mindsets distract from real wealth-building strategies. Klontz shares research showing 97% of day traders lose money, using this to illustrate why seemingly easy paths to wealth usually fail.
Throughout the episode, the guests weave together psychology, practical advice, and frank discussion of uncomfortable truths about money. While some of their statements spark controversy, they back up their positions with research and real-world examples from their own lives and their work with clients.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
0:00 Opening announcement about part two of three-part series with Dr. Brad Klontz and Adrienne Brambila
3:35 Difference between being “broke” (temporary) vs having a “poor mindset” (permanent)
14:00 Why the system isn’t rigged; it’s just a game with rules to learn
21:00 Your teachers can’t teach you to be rich – who to take advice from
30:00 Only liars love their jobs – a discussion of work and fulfillment
47:00 Why you’re getting paid what you’re worth right now
54:00 How lottery tickets and get-rich-quick schemes keep you poor
1:04:00 Getting rid of friends with poor money mindsets
1:19:00 Stories about failed business partnerships and lending money to friends
1:28:00 How successful people handle growing wealth gaps with old friends
1:39:00 Discussion of negative friend behaviors that can sabotage wealth building
1:48:00 Closing thoughts and where to find more information
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Financial psychologist Dr. Brad Klontz and Youtuber Adrian Brambila join us to talk about money psychology, starting with a dark but revealing story about an experiment with dogs.
Scientists put dogs in electrified cages from which they couldn’t escape. Eventually, the dogs stopped trying to escape and just lay down, even when later moved to cages where escape was possible. This ‘learned helplessness’ mirrors how people can get trapped in negative beliefs about money when they grow up with financial hardship.
The conversation explores four main “money scripts” – deep beliefs about money that shape our behavior:
1. Money Avoidance: Thinking money is bad and rich people are evil
2. Money Worship: Believing more money will solve all problems
3. Money Status: Equating net worth with self-worth
4. Money Vigilance: Being careful and anxious about money (this one actually leads to the best financial outcomes)
Adrian shares his journey from making $27,000 at a call center in Iowa to becoming successful through YouTube, explaining how he had to find mentors online since no one around him understood his goals. He talks about feeling like a “lone wolf” with uncommon aspirations in a small town.
Dr. Brad reveals some surprising findings – like how meditation is linked to lower net worth (because being present-focused can work against future planning). His solution? “Automate before you meditate” – set up your savings and investments first.
They discuss how your friend group shapes your money views. The FIRE (Financial Independence Retire Early) movement, for example, creates status around having high savings rates instead of fancy cars. But they note some FIRE followers end up “FIRED” – Financially Independent Retire Early Depressed – because they never learned to enjoy spending money.
Dr. Brad shares a personal story about realizing in couples therapy that his fear of becoming poor was causing harmful stress, even though he was financially secure. This highlights a key theme: money scripts affect both rich and poor, and having more money doesn’t automatically fix unhealthy money beliefs.
All these insights come from Dr. Brad and Adrian’s research and personal experiences, which they’ve collected in their book “Start Thinking Rich.” The core message? Your money beliefs probably came from your childhood and culture, but you can change them once you understand them.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.
0:00 Intro to 3-part series on thinking rich
3:01 Psychology experiment reveals how learned helplessness affects money habits
8:12 Adrian’s journey from call center worker to YouTuber
14:16 How friend groups sabotage financial success
19:52 Brad’s struggle sharing book-writing aspirations
29:30 Being the lone ambitious person in a small town
40:24 Introduction to the concept of money scripts
48:20 Money script #1: avoiding wealth and villainizing rich people
56:52 American consumerism vs other cultures
1:02:40 Money script #2: believing money solves everything
1:09:20 Money script #3: equating net worth with self-worth
1:16:40 Money script #4: vigilance leads to better money outcomes
1:20:40 Why meditation correlates with lower wealth
1:22:48 When parents can’t enjoy their retirement money
1:29:44 Overcoming the fear of becoming poor again
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Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Field of Greens
FIELD OF GREENS is unlike any fruit and vegetable or green product. Each fruit and vegetable was selected by doctors to help support vital body functions like heart, liver, kidneys, metabolism, and immune system. Go to fieldofgreens.com/paula for 15% off and free shipping.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow,net worth, and more. Go to monarchmoney.com/paula to for your extended thirty-day FREE trial
Paul Merriman, a former wealth manager turned financial educator, joins us to share investing wisdom that could reshape how you think about your money.
We kick things off talking about portfolio diversification. Paul suggests a simple four-fund strategy that includes large cap, small cap, and value stocks. He says this mix has historically beaten the S&P 500 with lower risk.
We then dive into international investing. Paul explains that while adding international stocks doesn’t necessarily boost returns, it can help smooth out the ride. He keeps half his equity portfolio in international stocks, even at age 81.
Got kids? Paul’s got some advice for you too. He tells us about putting money aside for his new granddaughter, aiming to fund her Roth IRA as soon as she can earn income. He breaks down how investing just a dollar a day from birth to age 21 could turn into millions by retirement age. It’s a powerful lesson in starting early and the magic of compound interest.
We also chat about some common investing mistakes. Paul stresses that young investors often underestimate the power of stocks over bonds for long-term growth. He shares some eye-opening numbers: $100 invested in bonds since 1928 would have grown to about $12,000, while the same amount in small cap value stocks would be worth nearly $15 million.
Paul wants you to think of investing as a partnership with businesses. When you buy a mutual fund, you’re becoming a senior partner in thousands of companies. At first, your contributions drive most of the growth. But over time, market returns take over, and you become the junior partner to a much larger fortune.
We wrap up with Paul sharing his excitement about a 40-hour financial education program he helped create at Western Washington University. It’s designed to teach students essential money skills throughout their college years, from budgeting as freshmen to understanding 401(k)s as seniors.
Throughout our chat, Paul’s message is clear: start early, stay diversified, and think long-term. He believes that with the right education and mindset, anyone can build a solid financial future.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.
0:00 Intro to Paul Merriman and podcast topic
0:57 Two-fund portfolio strategy
3:55 Four-fund portfolio strategy explained
5:31 Large cap performance concerns
7:06 S&P 500 vs Total Market Index
10:59 AI impact on large companies
14:43 Market trends and historical performance
20:41 International equity in portfolios
25:26 ETFs vs index funds
29:41 Non-US investor asset allocation
38:41 Setting up kids financially
43:57 Early investing importance
48:37 Common investor mistakes
50:25 Investing as business partnership
52:51 Evolving financial education landscape
Resourced Mentioned:
Merriman Financial Education Foundation | Financial Education (paulmerriman.com) | Website and Links to Free Books
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NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. Head to NetSuite.com/PAULA to download the CFO’s Guide to AI andMachine Learning.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need for your holiday.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow,net worth, and more. Go to monarchmoney.com/paula to for your extended thirty-day FREE trial.
Steven is stuck on the question of financial stability. How do you know if you have it? Is there an objective answer based on net worth? Or is it a calculation relative to your income and age?
Jack isn’t sure how to factor his house into his net worth. It’s an asset, but he has a mortgage against it, and there are transaction costs associated with selling it. How should he frame it?
Patricia and her husband are debt-free with a $2.2 million net worth, but she’s constantly stressed about their finances. Are her concerns valid? Or is she a financial hypochondriac?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Steven asks (at 02:53 minutes): In Episode 542 when you interviewed “Money With Katie” about money dysmorphia, you said that “the objective truth of somebody’s situation is that they’re financially stable and they just don’t realize it.”
How do you define the objective truth of financial stability?
“The Millionaire Next Door” provides a formula to calculate that number based on your income relative to your age. Is that the standard we should follow? And if you don’t meet that formula, does that mean you’re financially unstable?
What’s the objective truth? And how do you decide?
Jack asks (at 35:04 minutes): I don’t know how to factor our house regarding our net worth. It’s an asset but we have yet to own it outright, plus there are fees, closing costs, and interest to consider. So do we use the Zillow estimate and subtract the debt? Or should we just leave it out of our net worth?
Patricia asks (at 52:09 minutes): Am I a financial hypochondriac? My husband and I are 58 and 56 with a debt-free $2.2 million net worth but I’m stressed about our finances. How do we know if we’ll have enough in retirement?
My husband works from home and I retired when our first child was born. He makes $165,000 a year with additional cash bonuses of up to $100,000 gross, plus restricted stock and performance units, averaging $35,000 annually.
We spend $100,000 a year on living expenses. This will drop to $65,000 a year in retirement after direct costs associated with our kids are gone.
For the past three years, we used the cash bonuses to buy cars for our 19-year-old son and 18-year-old daughter, and replace our much-loved travel van.
Both kids have college costs covered between scholarships and tuition reimbursements. They also have 529 accounts with $60,000 each for additional expenses.
We have $1.2 million invested between our IRAs, a target date 401k that we max out, and an HSA that we max out and don’t touch. We also have $150,000 of emergency funds in a high-yield money market account.
The remaining $950,000 of our net worth is our primary residence valued at $625,000, a second home near Lake Michigan, and our cars.
My husband plans on taking a pre-retirement in 2030, where he’ll work from a travel trailer while we tour the US with an eye out for possible retirement locations. If we don’t find anything, we’ll stay here or head back to Michigan.
Full retirement will be in 2031 when I’m eligible for Medicare. I’ll start taking my Social Security of $1,700 a month and use our savings and investments for living expenses until my husband takes his $4,300 a month of Social Security at age 70.
Even with this plan in place, I feel like we’re not doing enough. Am I right to feel this way?
Resources Mentioned:
The Millionaire Next Door | Book
The Next Millionaire Next Door | Book
Marketing to the Affluent |Book
Selling to the Affluent | Book
Networking with the Affluent | Book
190: The Next Millionaire Next Door, with Dr. Sarah Stanley Fallaw – Afford Anything | Podcast
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NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. Head to NetSuite.com/PAULA to download the CFO’s Guide to AI and Machine Learning.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need for your holiday.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula to for your extended thirty-day FREE trial.
Kat feels thrown off. She’s realizing that the simple investing strategy that nearly 5x’d her portfolio in six years might be unwise. Should she course correct? And how?
Ryan and his wife are torn between buying what they want (a single-family house) and what seems prudent (a multi-family house). How do they decide? Is there a third way?
At 30, Danielle has saved enough for a traditional retirement. But she’s confused about how this meshes with planning for an early retirement. How should she think about money buckets?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Kat asks (at : minutes): Can you clarify your positions on the VTSAX and Chill strategy? I’m confused about your conclusions from a recent episode “Is Your DIY Investment Strategy Holding You Back?”
Thanks to the VTSAX and Chill approach, my husband and I went from $150,000 in retirement savings in 2018 to $700,000 in retirement savings. We thought we were taking the best approach, but now I’m uncertain.
I’d been under the impression that Paula, you largely opposed working with a financial advisor and favored a set-it-and-forget-it approach that involve investing in index funds that track the S&P 500. And Joe, you see great value in working with a financial advisor.
But in this episode, you both favor a more nuanced approach to investing once one reaches a certain level of investable assets. When does one reach that threshold? And what is the ideal alternative approach?
Is it a professional advisor? Is it a robo-advisor? Is it hand-picking an array of index funds that track different markets I’ve heard are doing well, because I don’t have time to do the research myself? If so, how do these other approaches even work?
What should we consider to maximize our retirement savings in our investment journey? At what point does one go from DIYing a simple one-fund portfolio to something more complex? And how do we make that transition?
Ryan asks (at : minutes): My wife and I live in Worcester, Massachusetts. We’re both 30 years old and torn between buying a single-family or a multi-family home.
I’m an engineer and she’s pursuing her PhD in molecular biology with two to three years left in her program. We’d also like to start a family in two years.
Our take-home income is $10,000. We save between $6,000 to $7,000 per month. We have $235,000 in a high-yield savings account and I have a stock portfolio of $55,000
I contribute $3,000 to my HSA, five percent of my salary to a 401k, and one percent of my salary to company stock. We’ve maxed out our Roth IRA for the last three years. All of this is invested in index funds.
The single-family homes we’ve seen are located near our future job opportunities and range from $550,000 to $650,000. We looked at condos, but a two-bedroom condo would still cost $3,200 to $3,300 before utilities because of high HOA fees.
With 20 percent down, I’ve estimated fixed monthly costs for a $600,000 house to be $5,000. This would not only increase her commute to an hour-long drive from a seven-minute walk, but I think it’ll make us house-poor.
On the other hand, we could buy a multi-family home near our current apartment, but I’m nervous about my lack of experience with tenants.
Or should we continue saving and wait to buy when my wife graduates in two to three years? We’ll have more buying power and options for the location and the house we can afford then.
How do we decide?
Danielle asks (at : minutes): I’m 30 and have already saved enough for retirement. My current question is how much more I need to save to make work optional. Where do I start?
I have $400,000 invested in retirement accounts. According to the Rule of 72, this will turn into $3.2 million: more than enough to fund my anticipated annual spending of $120,000 from ages 60 to 90.
For ages 30 to 60, according to the Four Percent Rule, I’d need another $3.2 million to fund my current lifestyle in early retirement. But that seems like crazy overkill.
What am I missing and how should I think, in general, about different savings buckets?
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NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. Head to NetSuite.com/PAULA and download the CFO’s Guide to AI and Machine Learning.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
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Remember that time you found a $20 bill in an old jacket pocket? The rush of excitement, followed by the quick mental math of what you could buy with it?
That’s your money mindset at work.
In this episode, we dive deep into the psychology behind our financial decisions.
You’ll hear about the three money mindsets: anxious, obsessed, and avoidant. Ever clutched onto every penny out of fear? That’s the anxious mindset. Spent big to impress others? Money obsession. Ever thought “I’d rather be happy than rich” or felt uncomfortable talking about money? These could be signs of a money-avoidant mindset.
The episode shares a personal journey from being terrified of running out of money to developing a healthier relationship with finances. It’s not just about saving or spending – it’s about using money as a tool to express your values.
You’ll learn why being “good with money” isn’t as simple as “just don’t spend it!” Think about Ebenezer Scrooge – he had plenty of cash but lived like a pauper. Is that really good money management?
On the other end of the extreme, you have Montgomery Burns from The Simpsons as another example. He’s loaded but obsessed with getting even richer, showing how the endless pursuit of wealth can leave you lonely and isolated.
The talk covers how your beliefs about money can become self-fulfilling prophecies. If you think you’re bad with money, you might make poor financial decisions without realizing it.
You’ll hear about the balance between time and money. Both are limited resources, and sometimes it’s smart to spend money to buy back your time. After all, you can always make more money, but you can’t make more time.
This episode tackles the myth that work is always a drag. It suggests finding work that gives you a sense of purpose can lead to both job satisfaction and financial success.
Investing comes up too. You’ll learn why it’s often simpler than the financial industry wants you to believe. Sometimes, doing less with your investments can lead to better results.
We wrap up by talking about imposter syndrome – that feeling that you don’t deserve your financial success. If you’ve ever felt like a fraud because your bank account looks better than it used to, you’re not alone.
Throughout the episode, you’ll get insights into how your past experiences shape your current money habits. By the end, you’ll have tools to start examining your own money mindset and working towards a healthier relationship with your finances.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Field of Greens
FIELD OF GREENS is unlike any fruit and vegetable or green product. Each fruit and vegetable was selected by r doctors to help support vital body functions like heart, liver, kidneys, metabolism, and immune system. Go to fieldofgreens.com/paula for 15% off and free shipping.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. Head to NetSuite.com/PAULA and download the CFO’s Guide to AI and Machine Learning,
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula to download the CFO’s Guide to AI and Machine Learning
Picture this: You’re at a car dealership, trying to get the best price on your dream car. The salesperson hits you with a “take it or leave it” offer. Your palms are sweaty, your heart’s racing. What do you do?
That’s just one of the tricky situations we dive into in this episode. We’re tackling seven types of hardball negotiation tactics that can trip you up in all sorts of situations – from asking for a raise to haggling at a flea market.
First up, we break down the “take it or leave it” tactic. We share a real-life story of Sarah, a software developer, facing this exact situation in a job interview. You’ll hear how she turned it around and got what she wanted.
Next, we talk about psychological warfare. Sounds intense, right? It can be. We tell you about Emma, a graphic designer, who had to deal with a client trying to throw her off her game. You’ll learn how she kept her cool and came out on top.
Ever heard of the “good cop, bad cop” routine? It’s not just in movies. We share a story of how this played out in a business deal and give you tips on how to spot it and handle it like a pro.
Then there’s the “snow storm” – when someone dumps so much information on you that your head spins. We break down how to cut through the clutter and focus on what really matters.
We also cover what to do when someone’s holding back important info, how to spot a fake-out (when someone pretends to care about one thing but really wants another), and the sneaky “nibbling” tactic where people ask for just one more small thing… and then another… and another.
For each tactic, we give you the lowdown on:
– What it looks like in action
– Why it works (yep, there’s some psychology involved)
– How you can spot it
– What you can do to counter it
We wrap up with a handy checklist for each tactic. Think of it as your negotiation cheat sheet. By the end of the episode, you’ll have a toolkit of strategies to help you navigate tough negotiations, whether you’re buying a car, negotiating your salary, or just trying to decide where to go for dinner with your friends.
Remember, negotiation isn’t about “winning” at all costs. It’s about finding solutions that work for everyone. With the tips from this episode, you’ll be better equipped to do just that, even when things get tricky.
Timestamps:
Note: Timestamps will vary on individual listening devices due to dynamic ad lengths
0:35 Introduces five pillars of financial management
1:56 Outlines seven challenging negotiation scenarios
2:27 Explains “take it or leave it” offer tactic
4:53 Role-play: Sarah negotiates job offer
18:28 Discusses psychological warfare in negotiations
24:51 Strategies for handling psychological warfare
26:28 Explains “good cop, bad cop” routine
32:28 Role-play: good cop, bad cop tactic
44:23 Describes information overload tactic
47:31 Role-play: information overload in action
54:40 Explains information withholding tactic
1:00:11 Role-play: information withholding in car sales
1:06:00 Discusses “fake out” negotiation tactic
1:11:20 Role-play: job candidate uses fake out
1:14:40 Explains “nibbling” tactic and counters
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Ever feel like you’re never doing enough with your money, even when your finances look good on paper?
You’re not alone.
Katie Gatti Tassin, host of the Money with Katie podcast, dives into a phenomenon called “money dysmorphia” in today’s interview.
She shares how she got flooded with responses when she asked her listeners about money dysmorphia. Folks with hefty savings and investments still worry they’re not doing enough. It’s like they’re always waiting for the other shoe to drop.
Where does this come from? Katie points to a few culprits. Social media is an obvious scapegoat. But traditional media plays a role too. Think about all those TV shows where “normal” families live in massive houses and drive fancy cars. It skews our perception of what’s average.
Location matters too. Katie talks about how moving from Dallas to Fort Collins changed her spending habits. Different cities have different vibes and social norms around money.
The conversation takes an interesting turn when Katie shares her own experience buying a Porsche. She felt conflicted, worried her FIRE (Financial Independence, Retire Early) community would judge her. It highlights how even personal finance experts grapple with these issues.
They also touch on how the pandemic shook up financial priorities. When faced with uncertainty, some people realized saving for a far-off future might not be the only goal worth pursuing.
Katie and Paula discuss the importance of balance. It’s good to save, but not at the expense of living your life now. They suggest seeking out voices in the personal finance world to get a more rounded perspective.
Travel comes up as a way to gain financial perspective. Seeing how people live in other parts of the world can make you appreciate what you have or show you where your own country could improve.
Katie and Paula offer food for thought on how to navigate our complex relationship with money. It’s a conversation that might make you think differently about your own financial mindset.
Timestamps
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.
0:00 – Introduce Katie Gatti Tassin, host of the Money with Katie podcast
1:13 – Define money dysmorphia concept
2:22 – Social media’s influence on financial perceptions
3:57 – Traditional media’s impact on financial normalcy
6:03 – Wealth displays in TV and movies
9:52 – Regional cultures affect spending habits
11:35 – Social engineering in consumer culture
14:36 – TV shows shape perceptions of normal lifestyles
17:19 – Lower-income portrayal in media
20:22 – Social circles influence financial habits
23:35 – Importance of balance in financial perspectives
26:34 – Travel’s role in gaining financial perspective
29:12 – Key takeaways about money dysmorphia
31:30 – Media’s influence on financial normalcy perception
33:46 – Balancing future planning with present enjoyment
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Shopify
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NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula to download the CFO’s Guide to AI and Machine Learning
Fabric
Fabric by Gerber Life was designed by parents, for parents, to make it easy to plan for and manage your family’s financial path. Start investing in your child today at fabric.com/paula.
Wayfair
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Ever wondered if you’re making the right choice between a Traditional and Roth 401(k)? You’re not alone.
In this episode, Katie Gatti Tassin, host of MorningBrew’s Money with Katie podcast, joins us to tackle this common retirement savings dilemma.
We deep-dive into the debate between using Traditional vs. Roth 401(k) accounts for retirement savings, in the context of:
- Future tax rates
- Tax complexities for small business owners and high earners
- Social Security uncertainty
- Stock-based compensation
- Incentives for business owners vs. employees
Katie explains her strategy for maximizing retirement savings while minimizing taxes. She suggests that for some people in higher tax brackets, maxing out a traditional 401(k) and then investing the tax savings elsewhere might be the way to go.
But as we dig deeper, it becomes clear that there’s no one-size-fits-all answer.
We explore the Traditional vs Roth question, discussing how your current income and expected retirement spending can affect your choices.
It’s not just about the math, though. The unpredictability of future tax rates and policies adds another layer of complexity to the decision.
Social Security plays a major role, as well. We discuss its current funding situation and the challenges it might face in the future.
This leads to a fascinating discussion about how AI might impact future costs and lifestyles. Could things actually get cheaper in the future?
Taxes for high earners and small business owners is another focus. We break down some misconceptions about who falls into high tax brackets. It’s not always as simple as it seems.
Stock-based compensation is another hot topic. We discuss how it affects corporate decision-making and the wider economy. This leads to an interesting comparison of the incentives for business owners versus employees.
Throughout the episode, we keep coming back to one key point: no matter which type of account you choose, the most important thing is to contribute as much as you can.
Your contribution amount has a bigger impact on your retirement savings than the type of account you use.
By the end of this interview, you’ll have a better understanding of the factors that go into choosing between a Traditional and Roth 401(k). More importantly, you’ll see how this decision fits into the bigger picture of retirement planning and overall financial health.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.
0:00 Introduction
1:46 Katie explains strategy for maximizing retirement savings
3:19 Discuss assumptions behind traditional vs Roth 401(k) decisions
5:54 Compare scenarios of traditional and Roth contributions
8:54 Explore how income affects retirement account choice
13:51 Talk about media’s impact on financial perceptions
15:20 Discuss unpredictability of future tax policies
18:03 Explain current state of Social Security funding
21:05 Explore AI’s potential impact on future costs
24:41 Discuss how location influences spending habits
28:16 Examine tax implications for high earners
31:12 Talk about effects of stock-based compensation
33:55 Compare incentives for business owners vs employees
36:06 Emphasize importance of contribution amounts
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Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula to download the CFO’s Guide to AI and Machine Learning
Fabric
Fabric by Gerber Life was designed by parents, for parents, to make it easy to plan for and manage your family’s financial path. Start investing in your child today at fabric.com/paula.
Wayfair
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What can M&Ms, McDonalds, Harry Potter, Aquafina, Taylor Swift, Jeopardy, and Bed Bath & Beyond teach us about landing a dream job or securing a promotion?
Plenty.
Imagine you’re at a job interview.
You’ve rehearsed your answers, polished your resume, and you’re feeling confident.
But what if the key to landing that job isn’t just about your skills and experience? What if it’s about how you make people feel?
How you make people feel is your brand, Zane says.
That’s what Leslie Zane, a Harvard Business School alum and prominent branding expert, talks about in this interview.
She says that whether you’re trying to get a new job, a promotion, or more customers for your small business, it all comes down to how you build your personal brand.
Zane breaks it down into three main ideas: be salient, be relevant, and be distinctive.
Being salient means making sure people remember you. It’s not just about doing your job well, but about connecting with people all over your company.
Zane gives an example of a dental hygienist who calls patients after their appointments to check on them and offer advice. This extra touch helps the hygienist stick in people’s minds.
Being relevant is about focusing on the good stuff. Zane says if you make a mistake at work, don’t dwell on it. Instead, do more good things to push out the bad memory.
She talks about how McDonald’s dealt with rumors about “pink slime” in their food. Instead of denying it over and over, they started showing how they make their food with fresh ingredients. This helped people forget about the pink slime and think about good things instead.
Being distinctive means standing out, but in a way that still feels familiar.
Zane tells a story about the game show Jeopardy. When the longtime host Alex Trebek died, the producers tried inviting different celebrities to host the show. But viewers didn’t like it. The ratings only rose when they chose Ken Jennings, a former champion contestant, as the new host. He was familiar enough that viewers felt comfortable with him.
Zane also talks about how these ideas can help small businesses. She says it’s important to reach out to new customers, not just focus on the ones you already have.
She suggests finding ways to connect your business to things that people already enjoy.
If you run an accounting firm in Kansas City, for example, you might talk about local sports teams or famous barbecue to help people feel a connection to your business.
Throughout the interview, Zane emphasizes that building a strong personal brand isn’t about bragging or being fake. It’s about creating genuine connections with people and consistently showing your best qualities. You’re creating buzz about yourself. The more positive connections you make, the stronger your brand becomes.
Zane’s advice goes against some common ideas about marketing and self-promotion. She says you don’t need to stick to just one thing or only target a specific group of people.
Instead, she encourages reaching out to as many people as possible and finding ways to connect your skills or business to things they already care about.
In the end, Zane’s message is that success in your career or business isn’t just about what you know or what you can do. It’s about how you make people feel and how well they remember you.
By focusing on being salient, relevant, and distinctive, you can build a personal brand that turns heads in meetings, gets your resume pulled from the stack, or has customers lining up at your store’s door.
Zane’s approach suggests that the right personal branding can make you the first choice, not just another option.
Timestamps
Note: Timestamps will vary on individual listening devices based on dynamic ad lengths
0:00 – Importance of becoming a personal brand for career growth
6:04 – Tapping into the instinctive mind
8:54 – How brands grow in people’s minds
13:40 – Situational salience using M&M’s example
18:40 – Why Harry Potter is a salient brand
24:23 – Three key elements of building a personal brand
29:20 – McDonald’s addressing negative brand associations
35:40 – Be distinctive, not unique
41:00 – Jeopardy! host change and brand continuity
46:56 – Creating buzz about yourself at work
52:40 – Why core customers can be a business trap
57:20 – Handling negative feedback or associations
1:02:40 – Tips for standing out in job interviews
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula to download the CFO’s Guide to AI and Machine Learning
Policygenius
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An anonymous caller feels trapped. She owes $100,000 in back taxes on earnings she had to give up as a result of a lawsuit with her former business partner. What should she do?
Saul and his wife want to retire in Mexico but they don’t want to give up the ability to continue investing in US stocks. Can they buy a primary residence that doubles as a short-term rental?
Nina and her partner are eager to start a $500,000 renovation on their home but they’re still three years away from saving enough. How can they bridge the gap without risking too much?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Anonymous asks (at 01:27 minutes): During the last several years, I was involved in a business partnership that went sour and ended with a lawsuit. I worked as a 1099 contractor but never paid estimated taxes because I couldn’t predict how much I’d earn.
Long story short, much of the money I was paid was retracted and I was asked to return a significant portion of it during the legal dispute.
I made $90,000 in the first year, $160,000 in the second, and $360,000 in the third. This translated to a tax bill of $70,000 in federal taxes, $20,000 in state taxes, and $10,000 in city taxes.
I’m in a bind. I don’t have the money to pay it in a lump sum and the balance continues to increase in interest penalties and fees. Where do I go from here? Are there tax abatements I can look into? Do I talk to a tax professional? What do I do?
Saul asks (at 21:43 minutes): My wife and I are 48 and live in Virginia. We plan to retire to our fully paid home in Mexico in five to seven years where we can live comfortably on $4,000 to $5,000 monthly.
If we relinquish our US address we can no longer buy new mutual funds or open new accounts at our brokerage. For this reason, we’d like to sell our properties in Virginia and buy a primary home with cash in a no-income-tax state such as Houston, TX, or Las Vegas, NV.
We don’t plan on living there for more than three months a year. Can we legally use our primary residence as a short-term rental in this situation? Does this vary by state or neighborhood? What’s your advice for us?
Nina asks (at 45:07 minutes): My partner and I love our home and community, but it’s becoming too small for our expanding family. How do we plan for the cost of a $500,000 renovation? Is it even a good idea?
Four years ago, at 29 and 30, we bought a small home in San Francisco with a 10 percent down jumbo loan. We eventually refinanced to a 15 percent down loan with a 3.25 percent fixed interest rate. We’ve just passed the 20 percent down mark.
We have one child and hope to have one more soon. Since it’d cost more for us to buy a larger home in the same neighborhood, we feel that building an addition to add two bedrooms and a bathroom makes the most sense. I’d like to begin the process as soon as possible.
We bought our home for $1.36 million, and it’s appreciated $200,000 in value. We have $150,000 in investments, $60,000 in our emergency fund, and $20,000 in our toddler’s 529 plan. My husband has $200,000 in retirement and I have $180,000.
I make an annual salary of $200,000 with a possible 10 percent bonus, and my husband makes $210,000 with a 50 percent bonus. We’re fortunate to make an amazing living. But, given the high costs of living in our area, most of our savings come from annual bonuses.
We want to save the $500,000 in cash but that’ll take another three or more annual bonus cycles. In the meantime, we plan to take out a Home Equity Line of Credit (HELOC) for emergencies.
Are there any financial programs or loans we should tap into as we begin this addition? Are there any building resources that we don’t know of?
How do we think through this?
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Indeed
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Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula to download the CFO’s Guide to AI and Machine Learning
Policygenius
Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1,000,000 of coverage.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need to summer your way.
The latest jobs report just dropped, and it’s a game-changer. Job creation numbers are lower than expected, at 142,000 new jobs in August. This comes on the heels of the biggest downward revision in job numbers since 2009.
We’re diving deep into what this means for the Federal Reserve’s long-anticipated first rate cut. Are we looking at a modest quarter-point cut in interest rates, or a more substantial half-point drop?
The Fed’s decision could mean the difference between that dream house being within reach or slipping away. We’ll break down the latest data and translate what it means for you.
In our second segment, we’re celebrating Warren Buffett’s 94th birthday by exploring how he continues to lead Berkshire Hathaway with razor-sharp acumen — and what this teaches us about aging.
Finally, we’ll turn our attention to Selena Gomez, who just became a billionaire. Around 81% of her wealth comes from her makeup line; only 3% of her net worth comes from acting and singing. Her story highlights the power of entrepreneurship in building massive wealth.
Join us for a blend of timely economic analysis and inspiring success stories.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Frequent contributor Joe Saul-Sehy shares an emotional, personal story of getting into a soul-crushing level of debt in his 20s and early 30s.
He owed so much in back taxes to the IRS that he didn’t file a tax return for three years.
He ran out of gas and was stranded on the side of the highway, with 85 cents remaining in his bank account.
By the time he pulled himself out of debt, his twin son and daughter were seven years old.
Learn the gripping, gut-wrenching story of Joe’s past money mistakes in today’s episode.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
NYU Psychology Professor Dr. Tessa West has spent nearly two decades studying relationships, including those in the workplace. She talks about her research on why people feel disconnected from their jobs and what to do about it.
Dr. West breaks down five main ways people might feel unhappy at work:
- Crisis of identity: This is when you’ve poured a lot into your career, but you’re starting to question if it’s really who you are anymore.
- Drifting apart: This happens when your job changes, not you. Maybe your company’s gone through some big shifts, or your day-to-day tasks are different now. Or maybe your industry has totally changed.
- Stretched too thin: We’ve all been there – too much to do and not enough time.
- Runner up: Always close to that promotion or raise, but never quite getting there.
- Underappreciated star: You’re doing great work, but no one seems to notice.
Dr. West digs into each of these, explaining what they look like and why they happen. She talks about how work relationships are a lot like romantic relationships — just as you might feel disconnected from a partner, you can feel the same way about your job.
She describes a matrix that shows how satisfied you are with your job versus how much you identify with it.
She also gets practical stuff, describing how to manage distractions at work and be more productive. There’s a neat concept called “working spheres” that might help you organize your tasks better.
If you’re thinking about leaving your job, Dr. West suggests doing some self-reflection and networking to learn about other industries or companies. She warns that there’s often a lot of “hidden” stuff about jobs that you won’t find in the job description, so it’s essential to dig deeper.
At the end, she talks about how to figure out if a new job will actually be better. Her main tip? Ask tough questions in interviews. Don’t be afraid to dig into the not-so-great parts of the job or company.
Dr. West doesn’t sugarcoat the tough parts of work life, but she offers practical advice for dealing with them. Whether you’re happy in your job or thinking about a change, you’ll find something useful here.
Timestamps
Note: Timestamps will vary slightly on individual listening devices based on dynamic ad lengths.
1:09 – Dr. Tessa West. Psychology professor. Workplace relationships.
3:10 – Five major ways people feel disconnected from work.
4:55 – Work relationships mirroring other relationship types.
9:04 – “Crisis of identity” at work.
13:40 – Matrix: job satisfaction vs. identity centrality.
18:20 – “Drifting apart” from your career.
21:40 – Common changes causing career drift.
25:55 – “Stretched too thin” at work.
29:35 – Managing external work disruptions.
31:40 – “Working spheres” for better productivity.
37:37 – “Runner up” at work.
40:29 – Common reasons for not getting promoted.
47:51 – “Underappreciated star” at work.
51:18 – Next steps if unhappy at work.
55:56 – Determining if a new job will be better.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Policygenius
Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1,000,000 of coverage.
NerdWallet
NerdWallet’s expert team of Nerds dives into the details to help you find smarter financial products. Compare and find smarter credit cards, savings accounts, and more today at NerdWallet.com.
Melissa and her partner are preparing for the best earning years of their lives. Could they benefit from automated tax-loss harvesting and transition from DIY investing to a robo-advisor?
An anonymous caller just learned something surprising about their Roth 401k and feels squeamish about making future contributions to this account. What’s Paula and Joe’s advice?
Hampton is following up on a question from Episode 524 to spark an intriguing discussion on the generational tax advantages of a Roth IRA.
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Melissa asks (at 02:10 minutes): An upcoming job change is launching my partner and me into our highest earning years over the next decade. Given our higher tax bracket, what do you think about robo-investing with features like tax-loss harvesting?
We’re in our early fifties with a paid-off mortgage, $1.6 million in retirement accounts, and $400,000 in a taxable brokerage account. We’re DIY investors with mostly total market index funds. Our last kid is finishing college with those costs already set aside.
Since our expenses will be much lower, we’ll have more cash to invest after maxing out tax-advantaged accounts. We’ll need some of that money to bridge us from retirement in 10 to 12 years to age 70.
Does it make sense to look at something like the Schwab Intelligent Portfolio? My partner prefers an aggressive portfolio, but I’d like to mitigate the volatility since we’ll need that money earlier than the typical 30 to 40-year investing timeline. How do we think through this?
Hampton asks (at 21:50 minutes): I usually try to predict what your answers are going to be, but I was way off on episode 524 when Mark asked about how to use a $300,000 inheritance from a Roth IRA.
When you interviewed Ed Slott in episode 307, he discussed inherited versus traditional IRAs and the tax implications. He mentioned that the Secure Act changed the inherited IRA rules to require a withdrawal of the full balance within 10 years.
Given the tax rules on a Roth IRA, I think the wisest thing for Mark to do is to leave the inheritance alone for 10 years until he’s forced to withdraw the money. The $300,000 would become $600,000 at 7.2 percent interest.
He could use his other savings for a down payment to buy the house and let the inheritance grow. At the end of the 10 years, he could easily pay off the house with beautiful tax-free money.
What do you think?
Anonymous asks (at 32:19 minutes): I recently rolled over a Roth 401k from a previous employer into a Roth IRA. After rolling it over, I learned that I’ll have to pay taxes on the part of the rollover that is earnings, as opposed to contributions. Is this true?
If so, I’m turned off from contributing to a Roth 401k. I know you’re big proponents of Roth accounts but I’m worried that this degrades the benefits of this account. Is there something I’m missing? Should I continue contributing to a Roth 401k in the future?
Resources Mentioned:
Interview with Nick Maggiulli: #375: The 2X Rule (and Other Wealth-Accelerating Advice), with Nick Maggiulli – Afford Anything
Interview with Paul Merriman: #300: The Two-Fund Investment Portfolio, with Paul Merriman – Afford Anything
Interview with Dr. Wade Pfau: #119: How Much Can I Spend in Retirement? – with Dr. Wade Pfau – Afford Anything
IRS Page Discussed in Anonymous’ Question: Rollover to a Roth IRA or a designated Roth account | Internal Revenue Service (irs.gov)
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NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
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Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1,000,000 of coverage.
NerdWallet
NerdWallet’s expert team of Nerds dives into the details to help you find smarter financial products. Compare and find smarter credit cards, savings accounts, and more today at NerdWallet.com.
We sit down with David Novak, the co-founder and former CEO of Yum! Brands, the giant parent company behind KFC, Taco Bell, Pizza Hut, and the Habit Burger Grill. David shares stories from his remarkable career, offering insights into leadership, decision-making, and personal growth.
We dive into one of David’s most memorable projects: the creation of Crystal Pepsi. David talks about how the idea was born out of a gut instinct when he noticed a trend toward clear beverages. The media buzz was massive, and he was convinced it was a winner. But the Pepsi bottlers pushed back, saying it didn’t taste enough like traditional Pepsi. David pressed on anyway. The product launched to a lot of fanfare but ultimately flopped.
David reflects on this experience as a lesson in the importance of listening to feedback, even when you’re sure you’re right.
The conversation then shifts to David’s unique upbringing. He lived in 23 different states before high school. This taught David to adapt quickly, make friends fast, and assess people and situations—a skill set that became invaluable in his leadership roles.
David then takes you through his early career, from being a mediocre student who found his passion in advertising, to making a pivotal move from marketing to operations at PepsiCo. This shift was crucial, setting him up to eventually lead Yum! Brands.
David’s journey is filled with stories of hard decisions, like turning down a bigger job at Frito-Lay because it didn’t align with what truly made him happy. He shares his philosophy on prioritizing joy and finding fulfillment in your work, a principle that guided his entire career.
Leadership is a major theme in the discussion. David talks about the balance between confidence and humility, using Warren Buffett as an example of someone who embodies both. He also shares his thoughts on how to handle criticism and feedback.
According to David, the key is to listen carefully, avoid being defensive, and understand whether the feedback is valid before making decisions.
David also offers practical advice on personal development. He talks about his “Three by Five” exercise, where he regularly assesses who he is today and what he needs to work on to become more effective. This habit of self-reflection has helped him stay grounded and continually improve as a leader.
The episode wraps up with a discussion on company culture. David believes that creating an environment where everyone feels valued is essential for success. He emphasizes the importance of leaders modeling the behavior they want to see in their teams and being the first to extend trust and positivity.
David’s stories and insights provide a deep dive into what it takes to lead a major company, make tough decisions, and continually grow both personally and professionally.
Timestamps
Note: Timestamps will vary on individual devices due to dynamic advertising run times.
0:00 – Introduction to David Novak and his leadership background
6:17 – David’s personal journey and learning framework
11:25 – Importance of listening to feedback in decision-making
17:31 – Impact of frequent childhood moves on David’s adaptability
23:32 – Identifying and focusing on what brings joy in life and work
29:26 – Value of learning that leads to action
35:58 – Overcoming challenges by reframing your approach
42:20 – Learning from mentors who have succeeded in your field
48:35 – Criteria for board membership: contributing and learning.
54:47 – Building a high-performance culture at Yum! Brands
1:01:02 – Mapping out learning needs for project success
1:07:25 – Gaining confidence and skills for leadership
1:13:23 – Maintaining integrity and taking the high ground
1:19:03 – A mentor relationship that shaped David’s leadership
1:26:02 – Evaluating what successful companies are doing right.
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Credit: Chris Guillebeau
Kristin is floored by the 60 percent increase in her homeowner’s insurance this year. Should she cancel the policy and self-insure instead?
Susana and her husband are torn. They bought their dream home last year but now need to relocate indefinitely. What should they do with the house?
An anonymous caller wants to help his soon-to-be wife invest a five-figure gift she received in another country. How do they untangle the complexities of managing money from abroad?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Kristin asks (at 01:35 minutes): When is it a good idea to self-insure a house? I live in Arizona and our insurance recently increased from $3,000 to $5,000.
I’ve been told that’s normal, but that sounds like an insane number to me. The house is paid off, worth $570,000, and as strong as an underground cement bunker.
Our house resembles a hobbit house: built into a hill and made entirely of concrete. If we don’t think much can happen to this house, why are we spending $5,000 a year to insure it?
Can you help me think through this?
Susana asks (at 21:41 minutes): What should I do with my house while I live out of state for an undetermined amount of time?
Last year, my fiancé and I bought our first home 25 minutes from downtown Austin, Texas with a five percent down payment. We love our house and want to live here for the long term.
However, we’re moving out of state for one to three years without an exact end date. We want to rent our house out, but how do we decide between a long-term and short-term rental?
The house is 25 years old and needs cosmetic renovations in the kitchen and bathrooms. Even after renovations, it likely won’t cash flow as a long-term rental.
It could cash flow as a short-term rental, but it would cost more upfront. The renovations would include higher-end finishes, furniture, and landscaping to compete with other listings.
Most of these renovations include things we’d want to do for ourselves if we didn’t have to move, but we’d do them slowly over time, rather than within less than a year.
Also, a short-term rental would give us the flexibility to move back anytime and allow us to stay in the house when visiting family.
We’re both in our early thirties. We have no debts other than our mortgage and a car loan. I’m a PhD student on a stipend so we haven’t been able to invest as aggressively as we’d want to.
Our household income will double when I finish in three months and start my full-time job. We could use the extra income to pay for upfront costs or take the hit of negative cash flow.
A third option we’re open to is selling the house. However, with the little equity we’ve built up, we wouldn’t profit much from the sale and may even have to pay something out of pocket.
What are your thoughts? How would you go about making this decision?
Anonymous asks (at 47:34 minutes): My girlfriend received a large financial gift of €40,000. She’s young and doesn’t know what to do with the money. How can I help her?
So far, she’s spent €10,000 to buy a new car and plans to use an additional €3,000 to €5,000 to fix it up. The rest of the money is being kept in a savings account in Germany, but I’m afraid it won’t accrue much growth there.
She’s from Germany but we both live in Kenya together. She runs a successful business with her family which allows her to save quite a bit. I’m an entrepreneur with a fitness business that doesn’t bring in much money. 70 percent of it goes to my living expenses.
Should we keep it in Germany and look at the investment options there? Or move it to Kenya and look at the investment options here? Should we invest in bonds, ETFs, or real estate?
I realize my question is vague, but I’d like to hear what you’d do with a large financial gift like that. We plan to get married next year and want to have two kids within five years.
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We’re diving deep into the art of negotiation, especially when it comes to asking for a raise. The episode is broken down into three main parts, each designed to give you practical tools and insights that you can apply right away.
First up, setting the stage. Before you even think about negotiating, it’s crucial to understand the difference between “interests” and “positions.” You’ll learn why knowing the underlying reasons behind what both you and the other party want is key to finding a win-win solution. We’ll also talk about how to prepare yourself, including knowing your BATNA (Best Alternative to a Negotiated Agreement), your aspiration point, and your reservation point. Plus, you’ll get tips on how to build rapport and strategically frame your requests to set the tone for a successful negotiation.
Next, we move into taking action. Here’s where you get the practical strategies you can use during the negotiation itself. We’ll cover techniques like anchoring—where you set the initial offer to guide the conversation—and how to make strategic concessions. You’ll also learn about the power of silence, managing your emotions, and making sure that any concessions you make are balanced by getting something in return.
Finally, we tackle more complex situations. Sometimes, negotiations aren’t straightforward. Maybe you’re dealing with a difficult negotiator who’s being aggressive, uncooperative, or even deceitful. In this part, we’ll discuss how to handle these tricky scenarios while still aiming for a win-win outcome.
Throughout the episode, you’ll get a clear, actionable framework that you can use to negotiate effectively, whether it’s for a raise, closing a business deal, or even in your personal life. The focus is on preparation, understanding what both sides truly want, and using smart strategies to reach an agreement that works for everyone.
____
Timestamps
Note: Timestamps will vary on individual devices based on dynamic advertising run times
1:15 – Introduces negotiation, focusing on asking for a raise
3:45 – Explains interests vs. positions in negotiation
6:10 – Prepares by knowing your BATNA, aspiration, and reservation points
9:30 – Builds rapport and trust before negotiating
12:20 – Frames arguments to align with other party’s interests
15:05 – Introduces anchoring to set the tone
18:40 – Makes concessions while ensuring reciprocity
22:10 – Uses silence strategically in negotiations
25:55 – Manages emotions, avoids triggers in tense talks
29:40 – Creates value by expanding negotiation scope
33:25 – Prioritizes and bundles issues in multi-issue negotiations
37:15 – Deals with difficult negotiators like aggressors and stonewallers
41:00 – Recognizes closing signals to finalize a deal
44:45 – Documents agreements to avoid post-settlement disputes
47:30 – Reflects on each negotiation to improve
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NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
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Let’s talk about negotiations. You know, those back-and-forth talks where you try to get the best deal possible on a used car, a house, or a couch on Facebook Marketplace? Or when you ask your boss for a raise? Turns out, asking the right questions can be a game-changer.
According to Jeff Wetzler, Ed.D., people often hold back information when they’re negotiating. They might be worried about looking bad or giving away too much. But if you can get them talking, you can learn a lot. It’s like peeling an onion – layer by layer, you discover what really matters to the other person.
The key is to be curious and listen carefully. Show the other person you’re interested in what they have to say. And don’t just focus on what they’re saying; pay attention to how they say it. Their body language and tone can tell you a lot.
By understanding the other person’s point of view, you can find ways to work together and reach a deal that benefits everyone. It’s all about building trust and finding common ground.
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Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
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Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need to summer your way.
Justworks
Justworks makes it simple to hire and manage remote employees across all 50 states. It’s a cloud-based platform that enables managers and employees alike to quickly and securely access benefits, payroll, and other HR functionality from anywhere, anytime. That’s justworks.com/podcast.
We sit down with financial educator Brian Feroldi to dive into the often-overlooked world of stock-based compensation. This form of compensation is becoming more common, especially in large companies, but many employees don’t fully understand how to make the most of it. Brian helps break down the basics, explaining what stock-based compensation is and why companies use it to attract and retain employees.
We start by discussing why companies offer stock options or restricted stock units (RSUs) instead of just higher salaries or bonuses. Brian explains that stock-based compensation is a way for companies to align your interests with the success of the business. When you own a piece of the company, you’re more likely to care about its performance, which can drive you to work harder and stay longer. This also allows companies to conserve cash while still offering competitive compensation packages.
Brian also highlights the importance of understanding the different types of stock-based compensation. He breaks down stock options, where you have the right to buy company stock at a set price, and RSUs, where you’re given shares of stock that vest over time. Each has its pros and cons, and understanding these differences can help you make better decisions about your compensation.
One of the key takeaways from our discussion is the importance of negotiation. Brian emphasizes that the best time to negotiate stock-based compensation is when you’re first hired. Companies often have more flexibility with stock options than with salary, so it’s crucial to ask for more stock or a shorter vesting period upfront. This can make a big difference in your long-term financial gains, especially if the company’s stock value increases over time.
We also touch on the tax implications of stock-based compensation. Brian explains that different types of stock options are taxed differently, and understanding these tax rules can help you minimize your tax bill. For instance, holding onto stock after exercising options can lead to lower taxes if the stock price rises and you qualify for long-term capital gains.
Throughout the interview, Brian shares practical tips for you, such as targeting companies in industries like technology and healthcare that are known for generous stock-based compensation packages. He advises you to educate yourself on your company’s specific policies and to be proactive in managing your stock options to avoid leaving money on the table.
By the end of the episode, you’ll have a clearer understanding of stock-based compensation and how to leverage it to build wealth. Brian’s insights are particularly valuable if you’re switching jobs and want to maximize your compensation package.
Timestamps:
Note: Timestamps will vary on individual devices based on dynamic advertising run times.
2:16 – Explain why companies offer stock compensation over salaries
4:00 – Discuss how stock compensation aligns employee and company goals
7:28 – Introduce types of stock compensation: stock options vs. RSUs
12:24 – Explain the significance of vesting schedules
17:00 – Discuss tax implications of stock options and RSUs
28:00 – Emphasize the long-term impact of stock-based compensation on financial independence
34:00 – Identify industries with high stock compensation, like tech and healthcare
40:00 – Discuss benefits of Employee Stock Purchase Plans (ESPPs)
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Policygenius
Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1,000,000 of coverage.
Field of Greens
FIELD OF GREENS is unlike any fruit and vegetable or green product. Each fruit and vegetable was selected by r doctors to help support vital body functions like heart, liver, kidneys, metabolism, and immune system. Go to fieldofgreens.com/paula for 15% off and free shipping.
Anonymous, 60, recently lost her job and is worried about retirement. She owns a paid-off triplex, living in one unit and renting the others for $30,000 a year. She used her 401(k) funds to buy the triplex and now has $50,000 in retirement savings and $150,000 in cash. She expects only $2,400 a month from Social Security at age 67. After losing her son two years ago, she’s seeking advice on managing her underfunded retirement.
Noelle, 40, and her husband, 49, want to cancel his whole life insurance policy. They are debt-free, own their home, and plan to retire soon, relying on Noelle’s $80,000 income. They have $504,000 in retirement savings. Should Noelle keep her $100,000 term life policy until she retires?
Sleepless in San Antonio, age 35, plans to retire at 45 but is concerned about how this will affect Social Security benefits, which is calculated based on the top 35 earning years. Should they work longer in order to boost their Social Security benefits?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Anonymous asks (at 02:13 minutes): I was recently laid off from a job I held for three and a half years. I’m 60 and not feeling confident about my ability to become re-employed.
I have $50,000 in 401k retirement funds, $150,000 in cash, and a paid-off triplex. I live in the smallest unit and rent out the other units short-term which generates $30,000 net per year.
It’s a long story, but I used my 401k funds as a down payment when I purchased my triplex. At the time, I was a single mom struggling to support kids during an economic recession.
It enabled me to generate income from a 401k that I otherwise couldn’t touch and it was vital to my survival then. Overall, it’s proved to be a positive move.
However, I’m 60 now and don’t have enough saved for retirement. I use the Rollover as Business Startups (ROBS) account and haven’t yet figured out an exit strategy.
I can probably get by on some part-time work and the $30,000 income from my triplex, but I feel uneasy. Do you have any thoughts on ROBS and my underfunded retirement account?
I lost my 24-year-old son to cancer nearly two years ago. And everything has changed. I don’t expect much Social Security, maybe $2,400 a month when I turn 67.
I have no real pile of money, but I have a house that makes a decent amount and I live here happily. What are your suggestions for me?
Noelle asks (at 43:15 minutes): How do you know when you no longer need life insurance?
I’m 40 and my husband is 49. We don’t have any children. We own our home and we don’t have debt. We plan to retire at 50, which would be next year for him and in 10 years for me.
We have $33,000 in cash savings and $504,000 in investments between our 401k, Roth IRA, brokerage account, and Health Savings Account (HSA).
We plan to live off my $80,000 annual income until I retire. When I retire at 50, he’ll be 59 and a half and we can start taking minimum distributions from his retirement accounts.
We want to cancel his whole life insurance policy and invest the money instead. I’m not a fan of whole life and it’s expensive. We pay $52 monthly for a $100,000 policy.
But we’re not sure about my life insurance policy. I have a $100,000 term life insurance policy for myself. We pay $16 a month for it.
I’m leaning toward keeping it until I retire. If something happens to me in the next ten years, he might need that income so he doesn’t have to return to work.
How do we think through this?
Sleepless in San Antonio asks (at 1:01:14 minutes): How do you think about the impact of early retirement on Social Security benefits?
I looked up my Social Security benefit recently. The government estimates I’d receive $3,800 monthly in Social Security if I retired at full retirement age.
The calculation is based on the average of the top 35 earning years of work. But if I’m 35 and plan to FIRE at 45, I’d have less than 35 working years.
In this case, should I lower the amount of Social Security benefits in my calculations of what I could expect for early retirement? How would I make this calculation?
Does it make sense for someone to delay their early retirement plans to achieve more Social Security earnings in their later working years?
Resources Mentioned:
-
472: Happiness Habits, with Harvard Professor Arthur Brooks – Afford Anything | Podcast
-
363: Two Types of Intelligence, with Harvard Professor Arthur Brooks – Afford Anything | Podcast
- From Strength to Strength: Finding Success, Happiness, and Deep Purpose in the Second Half of Life | Book
- The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future | Book
- The Creative Habit: Learn It and Use It for Life | Book
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Policygenius
Go to policygenius.com for free quotes and comparisons across more than 30 insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1,000,000 of coverage.
Field of Greens
FIELD OF GREENS is unlike any fruit and vegetable or green product. Each fruit and vegetable was selected by r doctors to help support vital body functions like heart, liver, kidneys, metabolism, and immune system. Go to fieldofgreens.com/paula for 15% off and free shipping.
The Federal Reserve recently decided to hold interest rates steady, leading to significant shifts in the stock market. The Dow dropped over 850 points, and the NASDAQ entered correction territory, falling more than 10% from its peak.
But what do these numbers mean for you? We break down the latest jobs report, which shows a rise in unemployment to 4.3%, triggering a recession indicator known as the Sahm Rule. This isn’t just economic jargon; it affects real lives, impacting job security, investments, and financial planning.
We discuss potential ripple effects on various sectors, such as real estate, where interest rates influence housing affordability.
We also examine the technology sector’s volatility and how recent market corrections might influence tech stocks and the overall investment landscape. Understanding this can help you make informed decisions about your investment portfolio.
Every First Friday of the month, we bring you our “First Friday Monthly Economic Report,” where we help you make sense of these trends.
We aim to make complex economic concepts accessible. Join us as we explore these pressing economic issues.
Timestamps
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.
1:23 – Discuss the Fed’s decision to hold interest rates steady and its economic impact.
3:15 – Explore how recent economic changes affect the Dow and NASDAQ for investors.
5:30 – Explain the SAM rule and why unemployment rising to 4.3% matters.
7:45 – Analyze how interest rates affect housing affordability and real estate.
10:05 – Examine tech sector volatility and its impact on stocks and investments.
12:30 – Look into how economic trends influence consumer spending patterns.
14:42 – Offer tips on managing debt, building emergency funds, and smart investments.
17:03 – Stress the importance of informed decision-making and understanding trade-offs.
19:27 – Highlight the role of “First Friday Monthly Economic Reports” in understanding trends.
21:15 – Wrap up with insights for applying knowledge to financial decision-making.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Christina is worried. She’s retired with a paid-off condo in Florida. But rising fees, insurance rates, and a major HOA assessment are killing her cash flow. Is it time to become a renter?
Les is surprised by Paula and Joe’s allocation recommendations for international equities. Based on market capitalization, it makes no sense. What’s he missing?
Luke and his wife are breaking some personal finance rules in the name of financial independence. Are they right to take this approach or is there a better way?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Christina asks (at 06:04 minutes): I’m 60 years old and retired due to health issues. I own a paid-off two-bedroom condo in Florida but the fees are getting expensive. Should I sell it?
My only income source is $1461 a month from Social Security and my monthly expenses are $2,000.
Since retiring, I’ve been hit with a $10,000 assessment and my condo fees have increased 20 percent to $600.
I have $330,000 in retirement accounts, half in Roth and half in Traditional IRAs. My home is worth $200,000. If I sell, I’d become a renter and use the proceeds to invest instead.
Another option is to sell, invest half of the proceeds, and use the other half to purchase a smaller one-bedroom condo with lower fees.
Should I stay put, sell and rent, or sell and downsize?
Les asks (at 27:36 minutes): I was surprised to hear you say on Episode 517 that it’d be crazy for someone to have more than 30 percent of their portfolio in international equities.
When you look at market capitalization, the international market makes up 38 percent. Before the most recent bull market in the United States, it was up to 50 percent.
The Vanguard Total World Stock Market index has a higher capitalization and proportion of their stocks in internationals than the 20 to 30 percent that you and Joe suggested.
I currently have 40 percent of my portfolio in international index funds. Am I missing something?
Can you also discuss your thoughts on the small-cap value premium? If you think it’ll continue, what percentage should one consider allocating to this momentum factor?
Luke asks (at 43:39 minutes): My wife and I want to become financially independent in five years and we’re breaking some personal finance rules to get there. I wonder what you think?
We’re in our late thirties with a high income in a 35 percent federal tax bracket and live in a state with a 5 percent tax rate. We save $150,000 to $200,000 per year towards investments.
We’re attempting to pay off five doors of rental real estate in the same timeframe. We’re not sure we’ll retire completely, but I expect we’ll scale things back a bit.
My wife maxes out tax-deferred accounts in her business. I max out Roth 401k amounts with my employer, and we contribute everything else to after-tax accounts.
Considering our high tax rates, I understand it’d be more optimal for my Roth contributions to go into a tax-deferred account instead. Still, I like the flexibility of a three-bucket strategy.
If and when we slow down, we could pursue Roth conversions then. What are your thoughts?
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Recorded LIVE on stage at the Morningstar Conference in Chicago! We chat with behavioral finance professor Meir Statman. He breaks down the differences between standard finance and behavioral finance, making it clear that understanding human behavior is an essential part of investing.
Statman starts by explaining that standard finance assumes people are rational. They make decisions purely based on logic and aim to maximize wealth. However, behavioral finance sees people as normal, not always rational. We often act on emotions and cognitive shortcuts. For instance, people might prefer receiving dividends over selling shares, even if both result in the same financial gain. This is because dividends feel like income, while selling shares feels like dipping into savings.
He uses a great metaphor to explain how investors view their portfolios. Think of a dinner plate: behavioral investors like their investments separated, like mashed potatoes on one side, vegetables on another, and steak in the middle. Rational investors don’t care if it’s all blended together because they only focus on the total nutrients. This shows that normal investors have different needs and want to balance safety with growth.
Statman talks about the importance of diversification. He recalls a lunch with Harry Markowitz, the father of Modern Portfolio Theory, who supported the idea of having a mix of safe and risky investments. Markowitz himself had municipal bonds to avoid poverty and stocks to grow wealth. Diversifying helps investors manage risk and meet both their safety and growth needs.
We then dive into how people manage money across their life cycle. Statman points out that young people know they need to save but are tempted to spend. They often control this urge by putting money into retirement accounts like 401(k)s. As people get older, they become so good at saving that they sometimes forget to spend and enjoy their money. Statman gives a funny example of his mother-in-law, who refused to replace an old sofa because she didn’t want to dip into her savings.
Statman also touches on asset pricing and market efficiency. He explains that while traditional finance focuses solely on risk, behavioral finance considers other factors like social responsibility. Some investors are willing to accept lower returns to stay true to their values. Additionally, he argues that market prices do not always reflect true value, and it’s hard to predict when they will.
Towards the end, we discuss the broader aspects of wellbeing. Statman emphasizes that financial wellbeing is just one part of a happy life. Family, health, work, and community are also crucial. He believes financial advisors should help clients achieve overall life wellbeing, not just financial success.
TimestampsNote: Timestamps vary on individual listening devices based on advertising run times.1:23 – Explain the differences between standard and behavioral finance.
4:30 – Discuss Harry Markowitz’s influence on modern investment strategies.
6:08 – Highlight life cycle investing and saving/spending behaviors over a lifetime.
10:02 – Explore mental accounting and differentiating between income and capital.
11:14 – Talk about common trading mistakes due to cognitive errors.
14:26 – Discuss utilitarian, expressive, and emotional benefits of financial decisions.
17:41 – Explain the difference between System 1 and System 2 thinking.
21:39 – Discuss how emotions and moods impact investment decisions.
25:59 – Explore the concept of regret and how it affects financial decisions.
30:21 – Emphasize the importance of human touch in financial advising.
44:00 – Discuss the impact of AI on different industries and investment decisions.
48:24 – Highlight the need to balance financial wellbeing with overall life wellbeing.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need to summer your way.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
We chat with renowned financial advisor Michael Kitces at the Morningstar Investor Conference in Chicago.
Kitces answers a big question: Is the economy worse than we think? He explains that a few big companies like Nvidia, Meta, and Alphabet are holding up the S&P 500. But this doesn’t mean the economy is bad. It’s common for a small group of companies to drive the market. Since it’s hard to predict which companies will do well, he stresses the need for diversification.
Kitces tells us to focus on long-term growth instead of trying to time the market. He shares a famous quote from economist John Maynard Keynes: “Markets can remain irrational longer than you can remain solvent.” This means it’s better to invest broadly and wait for the market to grow over time.
Kitces also says that career development is important. He believes boosting your income through career advancements can have a bigger impact on your financial health than trying to get the highest returns on your investments. He says, “Spending more time focusing on my career and getting a raise… will actually be more meaningful than trying to improve the returns on my own money.”
We discuss the importance of index investing and proper asset allocation. Kitces advises owning a diversified portfolio that includes international and small-cap funds. Even if these funds aren’t performing well in the short term, diversification helps spread risk and capture growth from different sectors and markets.
Kitces talks about the cyclical nature of markets. Some people worry that the market will go down just because it’s been up for a long time. He explains that markets don’t “die of old age.” Many factors influence market cycles, and it’s hard to predict when a downturn will happen. This reinforces the idea that staying invested and diversified is usually the best strategy.
Finally, we talk about inflation and interest rates. Kitces explains that it’s hard to predict when inflation will return to the Fed’s target rate of 2 percent. This means that interest rates might stay high for a while. It’s important to keep a long-term perspective and not make drastic changes based on short-term market movements.
This episode offers practical advice on investment strategies, the importance of diversification, and why focusing on your career can be more beneficial than trying to outsmart the market. Kitces’ insights help anyone who wants to reach financial freedom.
Timestamps
[Note: Time codes will vary on individual listening devices based on advertising run times.]
1:23 – Discuss becoming a famous financial advisor.
1:50 – Talk about Michael’s keynote at Morningstar Conference.
2:08 – Discuss the role of a small number of companies in holding up the S&P 500.
3:28 – Explain historical trends of a few companies driving market returns.
4:06 – Discuss the unpredictable nature of markets.
5:11 – Discuss NVIDIA’s role in AI and cryptocurrency.
5:34 – Explain how some companies act as proxies for broader economic trends.
6:12 – Confirm the common phenomenon of a few companies driving the market.
6:52 – Emphasize the importance of diversification.
7:38 – Discuss historical changes in dominant companies.
8:27 – Predict the future performance of large-cap value stocks.
9:24 – Discuss the cyclical nature of growth and value stocks.
10:19 – Caution against market timing.
11:27 – Explain the irrationality and efficiency of markets.
13:23 – Discuss the importance of broad-based diversified portfolios.
14:03 – Talk about the aggregate growth of markets over long periods.
14:46 – Explain how index investing works.
16:26 – Discuss the role of international and small-cap funds in diversification.
17:05 – Address listener questions about international and small-cap funds.
18:10 – Discuss the impact of regulatory frameworks on AI development.
18:45 – Talk about comparative advantage in the global economy.
19:04 – Discuss the benefits of trade and specialization.
20:13 – Predict economic success without AI development.
21:05 – Explain how more people and productivity drive economic growth.
22:23 – Emphasize the importance of diversification in the portfolio.
24:18 – Explain the zig-zag nature of different investments.
25:22 – Discuss the impact of AI on small-cap companies.
26:09 – Highlight niche markets and specialized AI tools.
27:03 – Predict future success of specialized AI companies.
28:18 – Discuss the range of successful companies in different sectors.
29:03 – Explain the importance of economies of scale in AI.
29:42 – Talk about the variety of AI applications in different industries.
30:20 – Emphasize the breadth of the economy beyond just tech.
31:11 – Discuss emerging markets and their potential for growth.
32:11 – Explain the demographic advantages of emerging markets.
32:49 – Discuss the risks of political instability in emerging markets.
33:30 – Highlight the impact of global trading partners on economies.
34:13 – Discuss the importance of geopolitical factors in investing.
34:42 – Address country-specific investment bets and risks.
35:06 – Explain how ETF structures allow for specific investment strategies.
36:27 – Caution about the time and effort needed for detailed investment research.
37:02 – Emphasize the efficiency of markets in pricing opportunities.
38:18 – Discuss the challenges of beating the market.
39:34 – Explain the inherent risks in individual stock investments.
40:01 – Address the cyclical nature of markets and investor fears.
41:24 – Discuss the impact of economic cycles on market predictions.
42:58 – Emphasize the difficulty of market timing.
44:18 – Talk about the importance of focusing on career development.
45:01 – Highlight the long-term benefits of career growth over investment returns.
46:15 – Discuss the potential of earning power as a personal asset.
47:07 – Emphasize the value of career investments over small investment gains.
48:14 – Address the benefits of seeking raises and promotions.
49:21 – Discuss the impact of career choices on financial outcomes.
50:37 – Address the challenges of career-related decisions.
51:30 – Talk about inflation and wage growth.
52:19 – Predict the persistence of inflation and high interest rates.
53:08 – Discuss the relationship between inflation and economic slowing.
54:16 – Compare inflation trends between the U.S. and England.
55:11 – Explain the complexity of the U.S. economy and interest rates.
56:23 – Discuss the difficulty of predicting inflation rates.
57:12 – Address global inflation and its impact on the U.S.
58:20 – Explain the long-term impact of global economic trends.
59:32 – Discuss deflation and its risks compared to inflation.
1:00:27 – Highlight the dangers of a deflationary spiral.
1:02:11 – Discuss the cyclical nature of markets and the difficulty of predictions.
1:04:01 – Emphasize the importance of long-term investment strategies.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need to summer your way.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
An anonymous caller and his girlfriend are musicians who dream of building a home with a monetizable recording studio. How do they untangle personal wants from business needs?
Will feels stumped about the options in his defined benefit pension plan. When should he choose a guaranteed annuity over a lump sum payment?
Mark and his partner will soon inherit an IRA worth over a quarter million dollars. With today’s elevated interest rates, would throwing it all at a primary residence be the smartest play?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Anonymous asks (at 02:36 minutes): My girlfriend and I are 27 years old. We’re tired of dealing with the quirky old buildings of New England and we’d like to build a new home within the next two to five years.
Our dream is a five-bedroom home with a basement, a two-car garage, solar panels with batteries, geothermal-assisted HVAC, an EV charging station, a deck, a fenced-in backyard for two dogs, and a recording studio.
This is a lot, and we don’t expect to complete everything together. We’d like to start with a small house and add extensions as we move along.
We project the cost to range from $250,000 on the bare bones end to $700,000 for everything we want. What should be our order of operations, and, most importantly, when should we build the recording studio?
We’re both part-time musicians. I recently pivoted from full-time musician to IT. My annual salary is $67,000, and my girlfriend makes $59,000. Our side hustle earns an extra $20,000 to $50,000. We expect our annual earnings to be $250,000 combined in three to five years.
She has $22,000 saved as an emergency fund. I have $4,000 in credit card debt and my girlfriend has $14,000 in student loan debt. We own our cars outright. We can save $6,000 a month, not including the income from our music business.
The ballpark cost of the studio is $100,000 to $300,000. This would be the only income-producing part of the house. We’d like to rent it to artists as a recording studio, a small venue to shoot music videos in, or as a practice space for local bands.
Our current home studio is in our shared apartment. We can’t record anything too loud because quiet hours restrict personal practice time. And our bands and musical acts struggle to find practice space.
I’m torn. Building it sooner means we’d have a business asset for longer to increase our income even more. On the other hand, it also means we’d have to wait to build the rest of the house.
What should we do?
Will asks (at 25:10 minutes): How do I choose between a guaranteed annuity and a lump sum payment in a defined benefit pension plan?
I’m 28. I have an investment portfolio of $121,000 and no debt. Along with my W2, I run a small knife-sharpening business that grosses $40,000 annually.
The pension offered by my employer allows for two options. Option One is a guaranteed annuity starting from age 65 until death. Option Two is a lump sum payment I’d roll into a Traditional IRA to self-manage when my employment ends.
Option One sounds easy and would help with longevity risk, but it also sounds like it’ll yield less of a return than Option Two. Of course, more money in the future is better than less money, but, is there a situation where the annuity is a better choice?
What are the unknown unknowns and how do I think through this?
Mark asks (at 40:48 minutes): My partner and I want to buy a $700,000 to $800,000 home within the next year. With this goal in mind, what should we do with the $300,000 inheritance I’m expecting to receive?
We have an additional $80,000 saved for a down payment. Should we offset high interest rates by throwing everything at the down payment? Owning a $700,000 house with less than a $400,000 mortgage sounds nice.
Our household income is $175,000. We rent a single-family home for $3,000 monthly. We have a fully funded emergency fund, max out our Roth IRAs each year and I contribute to my work’s 401k plan up to the company match.
How can we save and grow this windfall while keeping it safe and accessible? And since this is an inherited IRA, are there any tax considerations to watch out for?
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need to summer your way.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
How much is an hour of your time worth?
Google’s Executive Productivity Advisor, Laura Mae Martin, joins us to answer that question.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Go to wayfair.com or the Wayfair mobile app to get everything you need to summer your way.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Emily Anne is worried about her obsessive tracking behavior. She’s in great financial shape but struggles to shake the constant compulsion to check her accounts. What should she do?
Kevin and his wife are having second thoughts about their Delaware Statutory Trust (DST) real estate investments. How do they back out without compromising their estate plan?
An anonymous caller and his partner plan to use geo-arbitrage to retire early before reaching their financial independence number. Can they have their cake and eat it too?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Emily Anne asks (at 01:38 minutes): Do you have advice for letting go of obsessive-tracking behavior and looking at finances more holistically?
I’ve kept track of my spending and savings in detail since I started working. I used Mint for 10 years and was a big fan. When I switched over to Monarch after Mint shut down, it was an even better experience.
The problem is I’ve become obsessive. I’m checking it too much – multiple times a day – even if nothing’s changed. I’m in a great spot with my finances. I don’t need to spend all this time on the apps but I can’t seem to curb this behavior.
What should I do?
Kevin asks (at 20:12 minutes): My wife and I are 69 and 70, retired, and wondering how to simplify our real estate investments for estate planning.
Several years ago, we sold a highly appreciated Southern California home that we used to live in but then rented out for 10-plus years. We no longer wanted to manage rental property, so we did a 1031 Exchange into Delaware Statutory Trust (DST) investments.
One of the main lures was passive mailbox money that also allowed us to defer capital gains and depreciation recapture until it became an estate issue and went away. But internal costs and fees are not trivial and I’m not excited about the future of the DST market.
We’re both in great health and although there are no guarantees, we don’t see the estate piece happening anytime soon. We’d still be short of income-related monthly adjustment amount (IRMAA) and Net Investment Income Tax (NIIT) thresholds.
Does it make sense to strategically reduce our DST exposure over time to simplify our overall portfolio, particularly for our kids when the eventual estate events happen?
Anonymous asks (at 41:15 minutes): My partner and I want to retire before we hit our $3 million financial independence (FI) number. Could we use geo-arbitrage to quit our jobs now and still achieve our savings goals?
We have $1.8 million invested in the Vanguard Total Stock Market Index Fund (VTSAX). We’d like to relocate to a dramatically lower cost-of-living area where we could live off less than three percent of our current portfolio.
While this will slow down our savings, we’re flexible and would be open to part-time work in this new location. When we eventually reach our $3 million goal, we could move back home or to another high-cost-of-living area.
What do you think of this plan? Do you see any obvious problems? What else should we consider?
Resources Mentioned:
How to score 8% on your money (and maybe regret it) | Stacking Benjamins Podcast
303: A World Without Email, with Cal Newport | Afford Anything Podcast
495: Cal Newport: The Shocking Secret of Productivity | Afford Anything Podcast
42: The Incredible Value of Deep Work, Instead of Distraction, with Cal Newport | Afford Anything Podcast
Vanguard Real Estate Index Fund Admiral Shares | Website
The Power of Fun: How to Feel Alive Again | Book
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Policygenius
Go to policygenius.com for free quotes and comparisons across many insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1 million of coverage.
If you’re a longtime listener, you’ll enjoy this candid, behind-the-scenes conversation about entrepreneurship and growth between Paula Pant and former financial advisor and Stacking Benjamins host Joe Saul-Sehy.
Thanks to our sponsors!
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Policygenius
Go to policygenius.com for free quotes and comparisons across many insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1 million of coverage.
Happy 248th birthday, USA.
In this 5th of July First Friday economic update, we cover five topics: the economic impact of elections in the UK; the S&P 500 topping 5500; the effect of the Supreme Court’s Chevron ruling on Social Security and retirement planning; the latest jobs report; and California’s new law allowing accessory dwelling units to get sold separately as condos.
Resources Mentioned:
UK’s Office for National Statistics: May 2024 report
SupremeCourt.gov: Loper Bright Enterprises v. Raimondo
Federal Register: SSA
Social Security Administration: Will Social Security Be There for Me?
Bureau of Labor Statistics: June 2024 jobs report
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We sit down with Jim Kwik, a brain coach and expert in memory improvement, speed reading, and optimal learning.
As a child, Jim suffered a brain injury that made learning difficult. He was labeled “the boy with the broken brain,” which deeply affected his confidence and performance in school.
Fast forward to college, and Jim is still struggling. Overworked and stressed, he ends up in the hospital.
This becomes a turning point. Jim dives into brain science. Today, he’s an expert in memory, focus, learning, cognition and mental performance.
He’s here to remind us that our brains are our number one wealth-building tool.
Jim explains that asking yourself WHY you want to remember something, like a person’s name, can boost focus. He highlights the power of being present and attentive in conversations. He shares an anecdote about Bill Clinton’s impressive memory, crediting Clinton’s remarkable presence and focus.
Jim introduces the Explanation Effect, a method where you learn with the intention of teaching. This deepens understanding. If you prepare to teach something, you’ll engage more actively, take better notes, and personalize the material.
The conversation shifts to the concept of a good brain diet. Jim lists foods great for brain health, such as avocados, blueberries, and green leafy vegetables. He underscores that what you eat significantly impacts cognitive functions.
Jim debunks myths like multitasking being efficient. He stresses the importance of focusing on one task at a time for better productivity and mental performance.
He also talks about the negative impact of digital distractions and the myth that we only use 10% of our brains.
Jim wraps up with tips on maintaining brain health, such as regular exercise, a good diet, and surrounding yourself with positive people.
This episode is packed with practical advice. If you want to improve your memory, learn faster, and maintain better brain health, you’ll enjoy Jim Kwik’s tips.
Timestamps:
[Note: Time codes will vary on individual listening devices based on advertising run times.]
0:00 – Introduction to the podcast and guest, Jim Kwik.
0:58 – Jim shares his childhood experience with a traumatic brain injury.
2:26 – Impact of being labeled “the boy with the broken brain.”
3:59 – Struggles with school and a turning point with a friend’s father.
5:33 – Encouragement to write down dreams, leading to a new perspective.
8:22 – Introduction to personal development books and reading challenges.
9:59 – Consequences of overworking and lack of self-care during college.
10:45 – Realization of the need for better learning methods.
11:50 – Breakthrough in understanding learning and memory techniques.
12:25 – Teaching others and a student’s powerful story.
13:35 – Importance of knowledge as a superpower.
13:50 – Introduction to the concept of building a better brain.
15:03 – Description of the four brain types and their traits.
17:23 – Significance of understanding one’s brain type.
19:18 – The forgetting curve and memory retention.
20:11 – The three keys to a better memory using the “MOM” method.
21:01 – The importance of motivation in remembering names and other information.
22:37 – The role of observation in memory and being present.
23:15 – Anecdote about Bill Clinton’s exceptional memory and presence.
24:55 – Connection between being present and having a powerful memory.
26:11 – The concept of “digital distraction” and its impact on focus.
26:56 – The “four horsemen of the mental apocalypse” driven by technology.
29:18 – The myth of multitasking and its negative effects.
30:59 – The importance of monotasking for better focus.
31:15 – Introduction to the “Faster” method for learning.
32:06 – The role of forgetting in learning.
32:50 – The misconception of multitasking and the benefits of focusing.
33:35 – The significance of state and emotion in learning.
35:22 – Tips for maintaining a positive learning state.
36:11 – The power of teaching to reinforce learning.
37:20 – Common misconceptions about learning.
39:20 – The myth of using only 10% of our brain and neuroplasticity.
41:08 – Importance of challenging limiting beliefs.
43:08 – Influence of self-talk and belief systems on performance.
45:04 – Scheduling time for learning and implementing new knowledge.
47:04 – Making the most of conferences by setting aside time for implementation.
48:48 – Application of AI to enhance human intelligence and learning.
51:09 – Best practices for brain health and cognitive performance.
57:25 – Importance of taking care of your brain as a wealth-building asset.
59:04 – Steps to improve brain health, including diet, exercise, and positive peer groups.
1:03:33 – Role of brain supplements and nootropics.
1:06:00 – Influence of a positive peer group on behavior and performance.
1:09:22 – Conclusion and final thoughts on brain health and continuous learning.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
NetSuite
NetSuite is the number one cloud financial system, bringing accounting, financial management, inventory, HR, into ONE platform, and ONE source of truth. By popular demand, NetSuite has extended its one-of-a-kind flexible financing program for a few more weeks! Head to NetSuite.com/PAULA.
Picture this:
A 12-year-old boy, one of four kids, sits at his computer in the early 1990’s, planning a family vacation.
Using travel points from his dad’s consulting work, he books a trip for his entire family of six to the Caymen Islands.
His fascination with travel points only intensifies as he grows older.
In college, he becomes known as the guy who can turn a handful of points into luxurious trips. Classmates and friends seek his advice.
After graduation, he accepts a job with a $65,000 annual salary. During evenings and weekends, he builds a travel blog as a side hustle. He assumes he’ll share what he knows, offer a little coaching, and maybe make a few hundred extra dollars.
Fast-forward, and this kid is now the mastermind behind The Points Guy, a global brand with 140 employees.
His name is Brian Kelly, and we met up recently to talk about how he turned a small side hustle into a multi-million-dollar company.
Here’s what that meeting looked like:
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Obviously, I’m challenging him to a basketball shoot-off the next time we meet.
Our interview is on YouTube. If you haven’t watched it yet, I’d highly recommend you check it out — whether or not you’re interested in travel.
He talks about how his income skyrocketed from a few hundred dollars to over a million in six months. He describes sitting at a hotel in Madrid, seeing a payment come in for $394,000, an amount that felt surreal.
He was a twentysomething with a salary of $65,000, and somehow his little weekend pet project was producing seven figures. He felt imposter syndrome. Success felt fleeting, confusing.
His reflections about how he grappled with this shift — internally and externally — holds lessons for everyone.
Not everyone will experience a massive windfall. But we all have moments when we feel pushed beyond our limits. Moments when we’re facing the unknown, swimming outside of our usual depth. Out of bounds.
When there’s no roadmap. No checklist. No script. No dress rehearsal. And we’re navigating this uncharted landscape while carrying enormous self-doubt.
His story of how he handled that situation carries lessons that resonate across situations. Take a listen if you haven’t heard it yet.
Have you ever thought:
- “I’m bad at money.”
- “I’m not tech-savvy / not handy / not organized.”
- “I suck at math.”
- “I’m not, like, a business-y type of person.”
- “I’m a spender. I’m bad at saving money.”
- “I’m terrible at investing.”
- “I’m not good at making money.”
What’s the common thread?
These are fixed mindsets. These statements reflect an idea that your skills and situation are innate and unchangeable.
You have it or you don’t.
You’re smart or you’re not.
You’re born with it, or you’re S.O.L.
But there’s another mindset — growth mindset — that embraces the opposite perspective.
Growth mindset believes that talent, skills and abilities are potentials. These can develop.
We all have a mixture of fixed mindset and growth mindset ideas within us. These ideas live along a continuum, and our beliefs traverse that continuum based on our environment, our social circle, our information diet, and our mood.
Mindset is momentary. We have a mindset “set point” where we chronically hang out, but as soon as we interact with others, our mindset starts to shift along the spectrum.
The more we need to prove ourselves or perform — for example, at work, school, on a sports field or stage — the more our mindset shifts.
Whether it teeters closer to fixed vs. growth, in those moments, depends on the people around us.
Stanford psychologist Dr. Mary Murphy described the research underpinning these insights in a recent interview.
Watch it on YouTube to learn how to tilt yourself towards a growth mindset.
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After earning his MBA in accounting and finance, Jason Tartick took a job in the banking industry.
He spent a decade as a banker, the guy with the rubber stamp that says “approve” or “deny.”
Jason’s life took a turn when he rose to fame on Season 14 of The Bachelorette, which led to appearances on The Bachelor, Dancing with the Stars, Live with Kelly and Ryan, and Good Morning America.
He decided to use this national spotlight to drive attention towards financial literacy, particularly focusing on relationships and money — a fitting intersection for a banker-turned-reality-TV star.
Although he’s in an unusual position — People Magazine writes articles about his breakups and new flings — Jason’s advice is geared towards couples outside of the paparazzi’s glare.
He joined me in last week’s episode to discuss critical questions that couples should ask each other, such as “What’s your debt-to-income ratio?” This answer sheds light on each persons’ attitude towards debt.
He also shared this horror story during our interview:
One newlywed couple had different credit scores. Hers was excellent. His was poor. They decided to buy a home together.
The husband suggested that his wife apply for the loan, which was granted only in her name. However, since they were married, he wanted to add his name to the deed.
As soon as he did so, the IRS confiscated the house. He owed hundreds of thousands in back taxes, which he never disclosed to his wife.
The couple divorced, and his now ex-wife is still on the hook for a portion of his debts.
Yikes.
Jason shares tips on how to spot financial infidelity — and how to have healthy, productive conversations about money with your spouse or partner — in our interview.
Don’t miss this one. The stories are fire.
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Enjoy these three interviews — as well as all the Q&A episodes and economic updates that you’ll find on the podcast.
Rachel Rodgers Hello 7 PR Campaign by Dale May Photography
If you want to learn about building wealth through entrepreneurship, you’ll enjoy this episode.
When Rachel Rodgers graduated from law school, she didn’t take the conventional path to working at a big law firm. Instead, she opened her own practice, specializing in intellectual property law. Many of her clients were entrepreneurs and small business owners.
Rachel quickly realized that many of her clients faced significant challenges in trying to grow their business. This ignited a new vision in her: to not just provide legal services but to help entrepreneurs achieve financial success.
She pivoted, shutting down her law practice to open Hello Seven, a company that offers comprehensive business strategies to help entrepreneurs reach seven-figure incomes.
She joins us today to share actionable insights that can help any entrepreneur, side hustler or small business owner reach seven figures in revenue.
Timestamps:
[Note: Time codes will vary on individual listening devices based on advertising run times.]
1:10 – Rachel introduces herself and her background in intellectual property law.
3:45 – Decision to start her own law practice.
5:27 – Challenges faced as a new lawyer and entrepreneur.
7:15 – Importance of financial independence and wealth-building for marginalized communities.
10:05 – Inspiration behind founding Hello Seven.
12:30 – Vision for Hello Seven and its mission to help entrepreneurs reach seven-figure incomes.
15:20 – The need for scaling businesses and making strategic decisions.
18:45 – Transition from a legal practice to a broader business coaching platform.
22:10 – Impact of Hello Seven’s programs on entrepreneurs’ lives.
24:55 – Concept of the “Million Dollar Badass.”
28:30 – Success stories of clients.
31:15 – Challenges of balancing business growth with personal life.
34:05 – Importance of mindset in achieving business success.
37:20 – Introduction of the Hello Seven Foundation and its focus on supporting black mothers and babies.
40:00 – Plans for the future of Hello Seven and commitment to social impact.
42:30 – Advice for aspiring entrepreneurs looking to build successful businesses.
45:10 – Importance of mentorship and community support in entrepreneurship.
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Kimiko is dismayed that the asset allocation books she’s read led her down a path to an underperforming portfolio heavy in ex-US stock investments. Where should she go from here?
Julie and her husband dream of owning a vacation rental in the Denver area even though the math doesn’t add up. It seems like everyone around can make it work though. What’s missing?
Casey is excited to build his real estate portfolio and purchase his third rental property. He’s also worried that his plan to fund the purchase with his 457 Plan is flawed. What should he do?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Kimiko asks (at 02:07 minutes): On episode 501, you spoke about the differences between the US and ex-US stock market since 2008. Can you elaborate on that?
I was stunned to discover that my ex-US stock investments only gained 25 percent since 2010. Heeding the advice of a number of books, I’d put a sizeable chunk of savings in these indexes.
Conceptually, I understand that underperforming asset categories have a better chance of doing better than overperformers in the future. But I feel burned by the history of the past 15 years.
What are your current recommendations regarding foreign asset allocations, especially in light of projected growth due to AI? My financial institution recommends 35 to 55 percent.
What’s your approach to this in your own portfolio? And what are others in the personal finance community doing with their holdings?
Julie asks (at 27:20 minutes): My husband and I want to buy a second home as a vacation home and rental in the Denver area. The math seems to work for everyone but us. What’s missing?
We’re 45 and 42 and our three kids are aged 15, 14, and 10. For 10 years, we’ve tried and failed to figure out how to make a vacation home purchase a wise financial investment.
We’d love a mountain house to use over the summer and some weekends, and rent it out short-term for the rest of the year.
But the math just doesn’t add up, especially when HOA fees are factored in. In our area, HOA fees range anywhere from $500 to $1500 or more per month.
This typically includes trash, cable, heating, etc. but doesn’t include special assessments and other one-time fees or major expenses.
We’re confused because we know a lot of families our age or older who own these kinds of places. We imagine that somebody has to be making money.
Can you help us understand how they’re making it work? Are these people paying cash for their properties and as a result they can cover the HOA fees using their rental income?
From our calculations it seems like you could probably break even if everything goes perfectly, but there isn’t much room for error.
We don’t have $500,000 cash to put towards a property like this so we’d have to make it work with a mortgage. Even if we did, would that make a difference in the calculation?
How do we make this a good investment for us?
Casey asks (at 48:41 minutes): (References Episode 484)
I’ve been getting my foot into real estate over the past five years and recently had the itch to buy a third property. Should I tap into funds from my 457 to finance my next purchase?
I bought my first single-family rental property a year ago. It’s a long-term rental with a solid tenant so far. The rent on the property easily pays the mortgage and then some.
I also live with a roommate as a house-hack and their rent effectively pays the monthly mortgage on my condo.
I’d like to buy a vacation condo on the coast in Florida for my third property. The cost ranges from $150,000 to $200,000. I’d rent it out short-term and use it as a vacation pad for myself.
I can access $50,000 in a line of credit on my primary residency and $50,000 in a 457 plan through my employer. My parents would also be willing to lend me $50,000 to $100,000,
This would give me $150,000 to $200,000 to purchase a property in cash. I’d then get a mortgage on the property to repay the HELOC and my parents.
However, I’m hesitant to use the $50,000 in my 457 plan to accomplish this goal. On the one hand, this isn’t money that I plan on using for retirement and there’s no early withdrawal penalty.
On the other hand, I’d be giving up a tax shelter and I’d be taxed on the withdrawal based on my marginal tax bracket of 35 percent.
Is this a good idea? What are the key points I should consider as I think through this dilemma?
Resources Mentioned:
Morningstar Portfolio Visualizer | Website
IRC 457b Deferred Compensation Plans | Website
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Have you ever wondered how small, seemingly insignificant actions can have massive impacts on your financial life?
In today’s episode, we talk to Dr. Brian Klaas, a Professor at University College London and an affiliate researcher at the University of Oxford.
He explains how our decisions can lead to unintended and unanticipated consequences.
He describes why resilience is more important than efficiency when it comes to protecting your investments and career from unexpected shocks.
You’ll learn how to tell the difference between predictable problems and those that are full of uncertainty, giving you a new way to think about your decision-making process.
Timing of Discussion:
Note: Timestamps will vary on individual listening devices based on advertising run times.
00:00 – Introduction: We kick off the episode by introducing Dr. Brian Klaas and setting the stage for our discussion on chaos theory and its relevance to our lives.
03:15 – The Butterfly Effect in Life: Dr. Klaas shares a personal story about his great-grandfather to illustrate how small actions can have significant ripple effects.
07:30 – Chaos Theory Applied to Human Systems: We explore how chaos theory helps us understand human behavior and decision-making in unpredictable ways.
10:45 – The Snooze Button Effect: Dr. Klaas introduces the concept of how minor decisions, like hitting the snooze button, can drastically alter life trajectories.
15:00 – Unpredictable Consequences of Actions: We discuss how well-intentioned actions can lead to unforeseen outcomes and the importance of probabilistic thinking.
20:00 – The Philosophy of Resilience: Dr. Klaas emphasizes the importance of resilience over optimization, using the example of power grid design in Latin America.
23:45 – Over-Optimization in Modern Life: We highlight the risks of over-optimizing systems, illustrated by the Suez Canal blockage, and discuss balancing efficiency with resilience.
28:00 – Everything is Signal, Not Noise: Dr. Klaas challenges the idea that some events are just noise, asserting that every action has potential impact.
32:45 – Embracing Uncertainty: We delve into the difference between “everything happens for a reason” and “everything has an effect,” stressing the importance of acknowledging randomness.
37:30 – The Story of Joseph Lott and 9/11: Dr. Klaas recounts how a series of small, random events saved a life on 9/11, illustrating the unpredictability of life.
45:30 – The Rubber and Rice Problem: We discuss distinguishing between predictable problems and those fraught with uncertainty, using the example of Southeast Asian farmers.
50:15 – Resilience vs. Optimization: Dr. Klaas offers practical advice on building resilience in financial and professional life instead of striving for perfect efficiency.
55:00 – Auditing Decisions vs. Outcomes: We talk about the importance of assessing decision-making processes rather than just outcomes, with lessons from the Challenger explosion.
1:00:30 – Balancing Hard Work and Reflection: Dr. Klaas shares the value of self-reflection and experimentation in achieving meaningful success, citing Keith Jarrett’s improvisation at the Cologne Opera House.
1:05:15 – Open vs. Closed Systems: We discuss the difference between open and closed systems in life and their implications for decision-making.
1:10:00 – Learning from Black Swans: Dr. Klaas talks about dealing with unpredictable events (Black Swans) and building systems to withstand shocks.
1:15:00 – Final Thoughts on Resilience: We wrap up with the need for resilience in personal worldview and practical strategies for coping with uncertainty.
1:18:00 – Closing Remarks: We summarize key points discussed and Dr. Klaas offers final words of advice, encouraging listeners to embrace uncertainty and build resilient system
Thanks to our sponsors!
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If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
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Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Policygenius
With policygenius.com, you can find life insurance policies that start at just $292 per year for $1 million of coverage. Some options are 100% online and let you avoid unnecessary medical exams.
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Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Jessica and her husband are juggling two home sales and one home purchase within the next two to four years. How do they execute wisely while navigating a tight real estate market?
Zerai works two jobs that both offer a pension and retirement plan. Can he take advantage of everything at his disposal or must he make some tough choices?
Emily and her husband bought their home a year ago. But a national builder tempts them to sell and upgrade using a 3-2-1 buydown mortgage. Should they do it?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Jessica asks (at 03:48 minutes): My husband and I want to sell the two properties we own to upgrade to a larger home in the Midwest but we’re unsure about the order of operations.
Our primary residence is located in the Midwest and our rental is located in Brooklyn, NY. We want to move within the next two to four years. How should we juggle these three transactions?
Here is our situation:
- Our Brooklyn apartment is worth $1 million with $350,000 equity. This was our primary residence for three years before we started renting it out. We plan on selling this apartment when our renters move out in 2025.
- Our little house in the Midwest has $280,000 left on the mortgage at a 5.75 percent interest rate and monthly payments of $2,800. Our family of four will probably outgrow this house in two to four years.
- The next house we want to buy will cost somewhere between $800,000 and $1.2 million. We want to put down a hefty down payment to keep the monthly costs low.
Given our numbers and timeline, should we use the proceeds from the sale of the apartment to pay off the mortgage on our little Midwest house and live mortgage-free for two to three years?
Or do we leave our mortgage alone, put the money into investments, and earmark this account as our down payment for the bigger home? Or is there a third option that I’m not thinking of?
If we paid off the mortgage and lived rent-free, we’d still “pay” the mortgage amount to ourselves in a high-yield savings account or investments or both.
My concern with paying off the mortgage is that we’d lose out on our dream home because of a home sale contingency. The area we want to buy in has had very limited inventory for years.
What should we do?
Zerai asks (at 29:07 minutes): If I have a full-time and part-time job, can I max out my retirement plans for both jobs?
I have a full-time job with the state government that offers a 457 retirement plan plus a pension. My part-time job with a nonprofit also offers a pension and a 401k.
Since these are two different entities, both nonprofit, can I max out my 457 contributions at my full-time job and contribute to the 401k at my part-time job?
Please help. I can’t find a clear answer anywhere.
Emily asks (at 43:47 minutes): Should we move on an opportunity to use a 3-2-1 buydown mortgage to upgrade our home in anticipation of long-term needs?
My husband and I bought our current home a little over a year ago. We have a 15-year mortgage with a 5.125 percent fixed interest rate and $266,000 in equity.
Our home is small. While it works for us now, we can see the need for a larger home as our son gets older. The area we live in is expensive, with limited land to build new homes.
Right now, a new home from a national builder that would suit our long-term needs costs $900,000 to $1 million. The builder is offering a 3-2-1 buy down on the mortgage.
The first-year rate would be 3.99 percent, the second-year rate would be 4.99 percent, the third-year rate would be 5.99, and the remaining years 4 to 30 would be 6.99 percent.
Is there anything to watch out for with these types of mortgages? If we know we want to live in this area for the long run, does it make sense to sell our current home and move now?
Resources Mentioned:
Salary Deferral | Website
IRC 457(b) Deferred Compensation Plans | Website
Stacking Benjamins + Jon Acuff | Podcast Episode
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Policygenius
With policygenius.com, you can find life insurance policies that start at just $292 per year for $1 million of coverage. Some options are 100% online and let you avoid unnecessary medical exams.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
The S&P 500 hit a record high — and the GameStop guy is back, and he now owns 9 million shares of GME, making him the 4th largest shareholder.
Interest rates from remain the same, and are expected to hold steady until September. Inflation remains unchanged from last month.
Last month we saw a massive explosion of new jobs, at 272,000 — nearly 90,000 more than predicted. But we also saw unemployment tick up, which created mixed signals.
Learn the implications of the latest economic news — and how it impacts your wallet — in this month’s economic update.
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Jason Tartick, a former banker and TV star from The Bachelorette, discusses finances in relationships. He describes eight crucial questions about money that every couple should discuss.
When a couple is dating, but before they get serious, he says, each person should divulge their debt-to-income ratio.
This is your monthly debt payments divided by your gross monthly income. Keeping this ratio below 30-40% is crucial for financial stability.
Banks consider this when approving loans.
Couples still in the dating stage should also discuss their credit scores.
If you’re thinking about becoming serious with someone, you need to understand their history with debt, and their attitude towards debt, since you’ll likely be co-borrowing together if the relationship lasts.
A couple with a good credit score can save around $100,000 on a $300,000 mortgage over 30 years.
Couples should avoid shaming or blaming each other during these money conversations, he says. The goal is to understand each others’ financial attitudes, habits and history — not to point fingers or make judgments.
After marriage or lifetime commitment, Jason emphasizes the importance of having both individual and joint bank accounts. This allows each person to enjoy autonomy, while also contributing towards shared expenses.
Regularly reviewing your net worth as a couple provides transparency and helps avoid misunderstandings.
He also talks about financial infidelity — what is it, and how can you spot it?
Finally, Jason encourages couples to discuss spending habits, in order to understand each others’ values and goals.
Here’s a great question to ask your boyfriend, girlfriend, spouse or partner: “If you had an unlimited budget, what’s the first thing you would you spend it on?”
The answer reveals the persons’ priorities.
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Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
An anonymous caller who received a large inheritance feels paralyzed by all the investment philosophies he’s read about. How does he pick a winning strategy he can stick with?
Josh is an expectant dad looking to buy a bigger house but doesn’t know how much everything will cost. Should he save more or invest more?
Another anonymous caller worries that large expenditures like buying a new car or replacing her home’s roof will blow up her budget in retirement. How does she plan for unexpected expenses?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Anonymous asks (at 03:47 minutes): I received an inheritance a year and a half ago and in the fog of grief just left it invested as it was when I received it.
I’ve been a keep-it-simple index investor since I found this community, increasing my savings rate and investing those savings across my retirement accounts.
But now I’m figuring out how to align it with my existing investments and I’m stuck for several reasons.
- It’s a large sum relative to my existing portfolio, so the stakes feel much higher.
- Half the funds are in a taxable brokerage and individual stocks. Despite receiving a step-up in basis, they’ve accrued substantial capital gains. Changing course now would make things difficult tax-wise.
- There are so many investment theses available. And then decisions within those decisions. It makes my head spin.
Even if I limited myself to “lazy portfolios”, there are still more than 10. After that, I’d still have to figure out asset allocation. And then I worry if my portfolio falls on the efficient frontier.
I also understand the value of diversification and planning for scenarios such as the lost decade or turnabouts in the U.S. economy. It’s all very overwhelming.
Each personal finance book I read, I’m like “Yes! I get the rationale behind that approach”. Then I read a book with another approach, and I find myself saying, that makes sense too.
I’d like to reprogram my inherited funds. But I don’t want to make a mistake, cost myself excessive taxes, or take a strategy I won’t stick with because I don’t believe in it.
Can you help me see through this fog?
Josh asks (at 36:54 minutes): I don’t know how much I’ll need to save for my short-term goals. How do I decide how much of my income should go towards savings versus investments?
My wife and I are expecting our first child in November. We’d also like to move to a larger house in the next one to two years and rent out our current one.
With our future fixed costs going up, but by an unknown amount, how should we allocate our excess cash each month between a savings and a taxable brokerage account?
We save $3,000 monthly, splitting it 50-50 between savings and investments. Should this change once we have a kid?
We also don’t have a true goal for our investments besides assuming we’ll need it for ourselves as we grow older and our kids grow older. Is that okay?
Anonymous asks (at 53:37 minutes): How should I plan for large expenditures in retirement? Should they be part of the year’s budget or should a sinking fund be established?
For example, if our four percent withdrawal amount is $125,000, a $25,000 roof is a substantial piece of that budget. How do we pay for major expenses without blowing up our retirement?
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Policygenius
With policygenius.com, you can find life insurance policies that start at just $292 per year for $1 million of coverage. Some options are 100% online and let you avoid unnecessary medical exams.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Every style is welcome in the Wayborhood. Visit wayfair.com or get the Wayfair mobile app.
Sara is five years from retirement with a paid-off house. But she’s worried that her money will run out before she turns 80. What does she need to do now to protect her future self?
Lauren is a personal finance nerd who gets it. But one question perplexes her: When should she choose an ETF over an index mutual fund? What about vice versa? Paula and Joe explain.
An anonymous caller plans to sell her house and live a “slow-madic” lifestyle. But she’s on disability and needs to keep her money safe. How should she invest her $500,000 windfall?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Sara asks (at 01:28 minutes): I’m 60 and want to retire in five years, but I’m worried my money will run out before I’m 80. What do I need to do to avoid that?
My house is paid off, but it needs a remodel which will cost at least $65,000. I make $35,000 annually, and my social security benefit after retirement will be $1,000 monthly.
I have $250,000 invested between my brokerage and IRA accounts. And I have $250,000 saved in a Certificate of Deposit (CD) account earning 5 percent interest.
My three children are grown and no longer live with me. I love to travel and plan to leave the house when I retire.
Am I on track for retirement at 65 or do I need to add a part-time job to maximize my income? Should I adjust my retirement investments to 70 percent stocks and 30 percent bonds?
Lauren asks (at 24:13 minutes): I have a pretty solid handle on personal finances, but I don’t understand the difference between index mutual funds and exchange-traded funds (ETFs).
I have $190,000 in a 401k, $63,000 in a Health Savings Account (HSA), $190,000 in an IRA, and $160,000 in a taxable brokerage account invested mostly in S&P 500 index funds.
Is there a benefit to switching to an ETF equivalent for any of my accounts? Does it vary by account type?
Anonymous asks (at 41:42 minutes): I’m about to sell my paid-off home for $500,000 so that I can move around like a “slow-mad”. How should I invest the windfall to best support my lifestyle?
I’m on disability and don’t plan to buy another home for a while. It’s hard for me to travel but if I do it carefully, I’m able to cater to my needs without having a flare-up with my disability.
I successfully did a test run last year, so I’m confident this is the right decision for me. What kind of safe and diversified investments would you suggest for me?
Resources Mentioned:
Benefit Calculators | Website
How One Ex-Inmate is Building a Better Future | Podcast
What is efficient frontier? | Website
Asset Allocation Portfolios | Website
Asset Allocation Portfolios | Morningstar | Website
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Policygenius
With policygenius.com, you can find life insurance policies that start at just $292 per year for $1 million of coverage. Some options are 100% online and let you avoid unnecessary medical exams.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Every style is welcome in the Wayborhood. Visit wayfair.com or get the Wayfair mobile app.
Maybe you’re trying to convince:
– Your spouse | to embrace the FIRE movement.
– Your teenage kids | to invest some of their summer job money in stocks.
– Your neighbor | to sell you their house in a private, off-market deal.
– Your boss | to give you more vacation time.
– Your client | to pay you more.
Today’s episode is about how to change minds, build trust, navigate conversations, and influence and persuade others.
We chat with Michael McQueen, a social researcher, strategist, and the author of 10 books.
He’s spoken alongside Bill Gates, Apple co-founder Steve Woznick and Dr. John C. Maxwell, and was named Australia’s Keynote Speaker of the Year. His latest book, Mindstuck, focuses on how to be more persuasive.
Here are some of the ideas we cover:
Stubbornness: We tend to be stubborn because of our inherent desire to protect our existing beliefs and identities. This is partly due to the fact that the human mind has a tendency to make quick judgments and resist challenges.
Logical Fallacy: People often rely on confirmation bias and tribalism when evaluating information. We tend to favor information that aligns with our existing beliefs and groups we identify with.
Complexity over Extremes: When presented with opposing viewpoints, exposure to extreme viewpoints can – counterintuitively – make people more entrenched in their own beliefs. Introducing complexity and nuance can foster a more open-minded approach.
Here are some of his tips:
Uncover the Hidden Fear:
We often hear people resist change. But McQueen suggests a deeper truth: people fear losing something valuable. This could be certainty in their beliefs, a sense of control, or even self-worth. When someone seems stubborn, recognize it might stem from fearing a loss like this.
Address the Loss Aversion:
Instead of just highlighting the benefits of change, acknowledge potential losses people might associate with it. Can you reassure them or show how the change won’t diminish their power, security, or self-esteem?
Use “Right and Reflect” to Get People Talking:
This technique helps people reflect on their own reasons for change. Here’s how:
- Ask about willingness to change: Use a 1-10 scale, with 10 being most willing.
- Reflect on their answer: Listen to their response and acknowledge their hesitation (e.g., “Sounds like a 3 out of 10. What concerns you?”).
This simple approach encourages people to explain their resistance, potentially revealing underlying fears. You can then address these concerns directly and work together on solutions.
Build Rapport and Choose the Right Moment:
Trust and rapport are crucial, especially in formal work settings. When facing disagreements:
- Acknowledge the awkwardness: Let the other person know you understand the conversation might be difficult.
- Start with humility: Avoid being overly assertive. Show willingness to hear their perspective.
- Choose the right moment: Not all times are created equal. Pick a time when both parties are calm and receptive.
Frame Your Message for Impact:
The way you present information can significantly influence how it’s received. Here are two effective framing tips:
- Align with values: Use language that resonates with the other person’s values and moral foundations.
- Focus on the positive: Highlight positive aspects of the person or situation when giving feedback.
Move Beyond Persuasion and Focus on Progress:
The ultimate goal shouldn’t be to win an argument or force someone to agree with you. It’s about creating a space for open communication and exploration.
- Focus on progress, not victory: Changing minds is a gradual process. Celebrate small wins and focus on making sustainable progress together.
- Be open-minded and collaborative: Be open to considering the other person’s perspective and work collaboratively to find solutions.
- Avoid manipulation: Ensure your goal is to benefit the other person, not just yourself. True persuasion comes from a place of genuine interest in helping others grow and improve.
McQueen elaborates on these tips in today’s podcast episode. Enjoy!
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Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Every style is welcome in the Wayborhood. Visit wayfair.com or get the Wayfair mobile app.
An anonymous return caller took Paula’s advice and ran with it, doubling her income within a few years. Should she update her investment strategy now that she’s in a higher tax bracket?
Humaira is tired of paying rent with nothing to show for it. Can she leverage some benefits by using her credit card to pay the bills?
Rob wants to retire early, but a real estate investment led to $30,000 of credit card debt. Should he take on more debt to pay it off?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Anonymous asks (at 03:27 minutes): I’m starting a new job that’ll more than double my current income. Given this significant pay bump, how should I structure my investments going forward?
My salary will go from $140,000 to over $290,000, including RSUs and bonus payments.
I am 47 and single. I have a flexible goal of retiring by age 55 with $80,000 in annual retirement income and a paid-off primary residence.
I’ve got $220,000 in a Roth IRA, $20,000 in a Traditional IRA, $520,000 in a Traditional 401k, and $140,000 in a brokerage account where I have 75 percent invested in laddered T-Bills.
The combined equity between my existing home and one rental property is $500,000. Lastly, I have $90,000 cash in high-yield savings accounts and Certificates of Deposit (CDs).
I’m considering making these adjustments in 2024:
- Roll my previous 401k into my new employer’s 401k. Despite entering a higher tax bracket, should I make partial or all Roth 401k contributions into this new account? I will have an employer match.
- I want to convert my Traditional IRA to a Roth IRA. My taxable income will be less this year because the new job starts mid-year. And, keeping the pro-rata rule in mind, if I convert all of the existing IRA it’ll clear the way for future backdoor Roth contributions.
What are your thoughts on these adjustments? Even though I prefer to be a DIY investor, should I involve a financial advisor in some of these decisions?
Humaira asks (at 24:09 minutes): Would be better if we paid our rent with a credit card where we can earn cash back or miles for travel?
Is this something that people have done before?
Rob asks (at 35:33 minutes): I’m 31, married, with no kids. My goal is to quit my job in three and a half years.
My wife hasn’t worked since 2020 when I quit my corporate job and we sold our house. I earn $65,000 annually from freelance consulting, rental properties, and employment.
We have $325,000 saved up. Our expenses are $3,000 a month and $5,000 in travel a year.
I own real estate through two rental property partnerships. Partnership One has had issues, but I’m working through it based on your advice from previous episodes.
But I need help with Partnership Two, where I’m a 50 percent owner of two properties worth $160,000 and $125,000.
The mortgages are $92,000 and $78,000, respectively, at 3 percent and 2 percent. The combined monthly cash flow is $700 after all costs are factored in.
I underestimated the repair costs when we purchased the properties, so I contributed an extra $30,000 to pay for the difference.
The business is paying me back $2,500 a year, but at this rate, it’ll take years to recuperate these costs. We’ll also continue to be low on reserve funds.
We’re considering a $40,000 to $50,000 cash-out refinance in Fall 2025 when the mortgages renew. I’ll be paid back in full and we’ll replenish our reserves by $10,000 to $20,000.
With a six percent interest rate and a larger loan balance, there’ll be a significant increase in our monthly payments. We’d still have free cash flow, but something still nags me.
What do you think of our plan? Are there red flags that I’m not seeing?
Resources Mentioned:
504: The Points Guy: Growing a Side Hustle into a 140-Person Business | Podcast
How to Travel for FREE: Insider Secrets | Youtube
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Every style is welcome in the Wayborhood. Visit wayfair.com or get the Wayfair mobile app.
Recently I chatted with Stanford researcher Dr. Mary Murphy, a renowned expert in the field of psychological and brain sciences.
Dr. Murphy, who is a Professor at Indiana University and conducts research at Stanford University, shared insights into the concepts of fixed mindset and growth mindset.
We deep dived into her extensive research on how these mindsets impact motivation, performance, and relationships at work and home.
She conducted research alongside legendary psychologist Dr. Carol Dweck, who created the original studies around fixed vs. growth mindset.
If you’ve ever read about fixed vs. growth mindset in the past, you’ve undoubtedly heard of Carol Dweck, who is legendary in the space. Dr. Dweck mentored Dr. Murphy at Stanford, the university from which Dr. Murphy received her Ph.D.
Dr. Murphy’s insights can help you cultivate a growth mindset to overcome challenges and achieve your goals.
If you want to improve your performance — at work, at home, at the gym, as a world traveler, as an investor, or in any other domain — understanding the research behind mindset is critical.
We’ll also cover:
How do we get our understanding of mindset wrong? – 03:42
Thinking about mindset on a continuum – 07:02
How behaviors shape mindset – 09:28
How mindset affects our money decisions – 15:12
The four triggers that can influence our mindset: 25:52
And SO much more! Enjoy!
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Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Suzy is excited to deploy her first corporate bonus but scared to invest everything in a lump sum. Should she stick with what’s worked in the past and just dollar cost-average?
Meghan doesn’t understand how stock pricing affects capital appreciation. Is it always better to buy when share prices are low?
Robert was recently released from prison and wants to start his life on the right foot. What’s Joe and Paula’s advice for him?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Suzy asks (at 04:23 minutes): I’m about to get my first large corporate bonus. Should I invest the lump sum or dollar cost average into the market?
I’ve been a slow and steady saver for my entire career, and thanks to dollar cost averaging, I’m in good financial shape for retirement.
I’m on track to max out my 401k, HSA, and SEP IRA for the year, so the bulk of the money will be put into a post-tax investment account.
Letting the money sit in a savings account for a long while doesn’t appeal to me. On the other hand, dollar cost averaging over a shorter window doesn’t feel like dollar cost averaging at all.
How should I think through this?
Meghan asks (at 22:33 minutes): How do the number of shares and the price per share of a stock relate to capital appreciation and compounding?
With all things being equal, is it better to invest in an index fund whose shares are cheaper than in an index fund whose shares are more expensive?
Say I have two different index funds that track the total stock market. If one fund’s shares cost $200 and the other costs $100, is it better to buy the fund with the cheaper shares?
It seems it’d be the same because the returns would grow as a percentage, but I’m wondering if there’s something else to consider.
Robert asks (at 41:10 minutes): I’m 24 years old and recently released from prison. I want to move out of my mom’s house within a year.
Once I start working, I plan to save $510 a week. I also want to start investing in index funds after I meet my savings goals.
I want to get into real estate eventually, possibly buying foreclosed properties to get started. But first I need to get my life on track.
What’s your advice for recently released or current inmates who listen to this podcast? More importantly, what’s your advice for me to get my life started?
Resources Mentioned:
Work Opportunity Tax Credit | Internal Revenue Service (irs.gov) | Website
About | U.S. Department of Labor (dol.gov) | Website
Why Dollar-Cost Averaging Stinks
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Today’s guest, Brandon Ganch, also known as the MadFientist, reached Financial Independence (FI) and quit his job as a software developer at 34. But then he faced a vexing question: what should he do with the rest of his life?
In this episode, Brandon shares his journey with FI, revealing the gap between the ideal life you envision on spreadsheets and the reality that unfolds. He talks about reaching FI sooner than planned, having more money than anticipated, and the adjustments he had to make to his lifestyle. It’s a refreshingly honest look at FI that goes beyond the numbers.
We also dive into the changing landscape of work and the impact of automation, artificial intelligence and machine learning. Brandon talks about what he would do differently if he were in his 20’s, and shares valuable insights on tools you can use to stay relevant and future-proof your career.
You’ll enjoy this if:
— You’re on the FI path and want to ensure your plans are flexible enough for life’s surprises.
— You’re curious about the unexpected realities of achieving FI.
— You’re concerned about automation impacting your job security.
Resources Mentioned:
1=2 | Spotify
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Quince
Quince offers a range of high-quality items at prices within reach. Gto Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Ryan Johnson isn’t your average CEO. He’s a visionary reimagining city life, one car-free community at a time.
In this episode, we chat with Ryan, the co-founder of Culdesac, about building walkable neighborhoods designed for human connection, not just traffic.
We’ll dive into his experience with Opendoor, his passion for electric bikes (he owns over 60!), and his audacious plan to revolutionize urban living.
Buckle up (or maybe don’t) for a conversation about the future of cities, the power of community, and why you might not need a car ever again.
In this episode, we cover:
What led to Ryan’s decision to drop out of Harvard Business School – 01:33
How Ryan helped found OpenDoor – 04:09
The development that will have the biggest impact on real estate decades – 07:40
How to better understand yourself as an entrepreneur – 27:12
How to think through building a big business vs. building a smaller business – 29:38
The relationship between the layout of a city and happiness, health, and wealth – 40:03
Why are investors funding car-less residential developments? – 50:38
And so much more!
Resources mentioned:
Cities For People Not Cars | Culdesac | Website
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Brian Kelly faced a harsh reality during the Great Recession – $65,000 in income and crushing credit card debt.
He started a simple side hustle, a website called The Points Guy, as an attempt to earn a few hundred dollars a month.
Fast forward to today: The Points Guy boasts 11 million monthly visitors and a thriving team of 140 employees.
In this episode, Brian pulls back the curtain on his incredible journey, transforming a fledgling side hustle into a multimillion-dollar enterprise.
He also shares his signature expertise – the art of redeeming airline miles and points – empowering you to travel smarter.
In this episode, we cover:
How The Points Guy started as a side hustle, before growing to 140 employees – 02.14
How Brian played to his strengths, his understanding of the industry, and a long term approach to set himself apart from his competitors- 07:54
Getting over the guilt of success and working through negative reactions from others – 18:57
Tips to making travelling with kids more manageable – 44:37
How to think through point accumulation – 47:25
Tools that will help with point redemption – 49:44
And so much more!
Resources mentioned:
The Points Guy (@thepointsguy) | Instagram
The Points Guy – Maximize your travel. | Website
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
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Go to policygenius.com for free quotes and comparisons across many insurers. With Policygenius, you can find life insurance policies that start at just $292 per year for $1 million of coverage.
Justworks
Justworks makes it simple to hire and manage remote employees across all 50 states. It’s a cloud-based platform that enables managers and employees alike to quickly and securely access benefits, payroll, and other HR functionality from anywhere, anytime. That’s justworks.com/podcast.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Wayfair
Wayfair is the go-to destination for everything home, no matter your style or budget. Every style is welcome in the Wayborhood. Visit wayfair.com or get the Wayfair mobile app.
Lindsay’s husband struggles with a mental disability. She’s worried about the impact on her family’s finances. How does she maintain harmony in her marriage and protect her kids’ future?
An anonymous caller is stoked about her young nephew’s interest in saving for retirement. What’s Paula and Joe’s advice for a teenage saver?
Following up on a discussion from episode 494, Melanie has exciting news to share about automating ETF investments at Vanguard.
Another anonymous caller wants to get personal about Paula’s personal finances.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Lindsay asks (at 01:25 minutes): What’s your advice to someone who wants to stop sharing control of money in their marriage to protect the family’s financial future?
I’m 44 with three beautiful children and a husband who’s neurodivergent and self-admittedly unreliable with money.
My husband is a beautiful artist but makes a variable income due to his mental disability. He can be highly productive but sometimes he’s not capable.
I make $104,000 a year and on average, he makes $50,000 a year. I have $40,000 saved in an IRA at Vanguard.
My company’s 403b plan offers a two percent match and I plan on ramping up my contributions to set myself up for retirement.
I want to separate our finances to ensure that the money I’ve put away for myself is safe and will eventually go to the kids. How do I keep my family secure financially?
Anonymous asks (at 30:29 minutes): My 15-year-old nephew recently asked me if he should open an Individual Retirement Account (IRA) and this was the happiest day of the year.
He has a summer job lifeguarding, and he’s ready to open a Roth IRA for 2023 before the tax filing deadline.
My question is, where? Fidelity has a youth account for teens aged 14 to 17, but I’m not sure what happens when he turns 18. Is it big fees? We could always pivot then if we needed to.
He’s also planning to ask his parents where they invest, so maybe he can get a no-fee account there. But I don’t think he’ll earn enough to invest the required minimum of $50 to $100 a month.
What’s your advice for us? Would a broker let him open an account where I have investments as his aunt? I’m so excited to get him started, but I want to start him off on the right foot.
Melanie asks (at 49:18 minutes): I’m currently listening to episode 494 and someone mentioned that there isn’t a way to automate buying ETFs.
I want to let the listeners know that there’s a way through Vanguard with a pilot they just started. I recently received an email invitation for it.
After clicking the link and logging in, I now have an option to set up weekly, monthly, or bi-weekly ETF investments. I set up a monthly investment, and the first transaction hit last week.
I set it up on a Monday to start once a month, and on Wednesday, it executed my trade for VTI.
And so now I don’t have to think about it. At least once a month, some ETFs are going to be purchased.
Anonymous asks (at 1:01:36 minutes): Paula, given your recent life changes and many accomplishments, I’m wondering if you could talk about your personal financial planning goals?
Among other things, you moved to New York City, completed a fellowship at Columbia, starred in a Netflix documentary, and continued to grow the Afford Anything business.
Some questions that come to mind are:
- How do you think about personal financial risk currently? And is it different than what it looked like three years ago?
- Are you looking to expand your real estate portfolio today? Why or why not?
- How are you shifting your broader investment portfolio over time, if at all?
- How and where do you see your time, energy, and focus allocations changing? And can you comment on which of those changes have been intentional?
I realize that these are deeply personal questions, so feel free to ignore any and all of them, but I’d love to hear what you’re thinking about these days.
Resources Mentioned:
Episode 494: My Husband Makes Double My Income, But Saves Nothing! Should I Be Worried? | Podcast Episode
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The big and bummer news this week:
Interest rates remain at a 23-year-high, and they’re likely to stay that way for longer than anticipated.
The Federal Reserve met earlier this week and, unlike some earlier expectations, decided to hold rates steady. While the Fed typically meets every 6.5 weeks (8 times a year), they’re expected to maintain this stance for several upcoming meetings.
This shift comes as a surprise. Back in January, analysts and investors predicted a decrease in rates by now. Discussions even centered on whether the drop would happen in Q2 vs. Q3.
Nobody is talking about that anymore.
Inflation hasn’t cooled as much as hoped. As of March, the consumer price index stood at 3.5 percent, well above the Fed’s target 2 percent. (April’s CPI data will become available on May 15).
The Fed released a statement on Wednesday citing “a lack of further progress toward the Committee’s two percent inflation objective” in their decision to hold rates steady.
Until inflation drops, interest rates are likely to stay high.
———————————————————————————————————————————————————————-
High interest rates are keeping both homeowners and renters in a bind.
Homeowners Handcuffs vs. Tenant Trifecta
The rapid rise in interest rates is creating a logjam in the housing market.
The national average 30-year fixed rate on a mortgage is 7.75 percent, according to USA Today.
Around 70 percent of homeowners have mortgage interest rates that are more than 3 percentage points below the current rate.
This creates a golden handcuffs scenario — a “lock-in effect” due to the financial penalty that comes from selling.
While this might sound like a ‘champagne problem’ — a problem of abundance — the reality is that many homeowners are reluctant to change jobs, relocate for work or family, or make other moves that would be beneficial to their lives.
The result? A 57 percent plunge in existing home sales last year, according to a report from the Federal Housing Finance Agency.
This drop in supply is one reason why nationwide home prices rose 5 percent last year.
Rising home prices makes life tougher for renters, who feel increasingly shut out of the housing market.
Any renter who aspires to own a home faces a tough trifecta: high interest rates, high home prices, and low inventory.
It’s the opposite side of the coin. Both renters and homeowners face a problem that stems from the same source: a constrained housing market.
There’s not enough supply.
——————————————————————————————————————————————————————-
What can you do?
If you’re a renter who aspires to own:
Househack. Buy a duplex, triplex, or 4-plex, which will offset some of the high housing costs you face.
If you live in an area that lacks multiunits, buy a single-family home and retrofit a portion of it into an autonomous dwelling. Convert the basement or garage into a separate unit. Build an accessory dwelling unit (ADU), which in some regions is called a casita, in-law suite or granny flat.
This holds a dual benefit: you contribute to the solution (creating more supply), while also collecting income to offset your housing costs.
This email won’t cover everything, but a few days ago, I did a YouTube livestream in which I answered a question from a VIP List subscriber who wants to househack. This person calculated that their out-of-pocket housing costs would come to $300 per month. They asked for feedback. Here’s what I said. [Starts at 8 min, 15 seconds]
If you’re a homeowner feeling trapped:
Feeling trapped in your home but the desire to move is strong? Let’s break it down.
First, how urgent is the move? Is it a non-negotiable career or family situation? (These are big reasons to move). Or is it more about wanting a bigger space? (This can potentially wait.)
If moving is crucial, consider becoming an accidental landlord. Here’s the idea:
- Hold your current home and rent it out.
- Find a rental place in your new city as you save for a downpayment on your next home. (Bonus: reduced transaction costs; higher likelihood of buying after rates decline, which eliminates the cost and hassle of a refi).
Don’t sweat squeezing every last dollar out of your accidental rental. This isn’t a dedicated investment property; avoid the “comparison trap” if you chat with experienced rental investors.
Focus on finding a good tenant who takes care of the place. The rental income should primarily help cover your costs, not maximize your profits.
The profit-maximizing properties are bought with that intention. This is a holding, not an acquisition.
———————————————————————————————————————————————————————
Jobs boom, stocks soar … yet inflation stays high, money is expensive to borrow, and both homeowners and renters feel stuck.
Confused by mixed economic signals? Listen as I break it down in this First Friday podcast episode.
Enjoy!
— Paula
Hi friends,
Let’s talk about the bull market.
We’ve gotten used to a rising market. Since 2009, the bull run stumbled briefly in March 2020 before powering back up. The past 15 years have been mostly a one-way street for stocks.
Are we getting a little too used to the good times? Is there a chance we’re fooling ourselves, thinking this can last forever?
And the big question: should we be worried about a correction coming around the corner?
It’s natural to feel nervous after such a long bull run. Markets are cyclical, but that doesn’t mean we need to panic.
In Episode 500 of the Afford Anything Podcast, I chat with Brad Barrett, the host of the ChooseFI podcast, about how to handle a “fear of heights” around how much the markets have climbed.
Brad and I recorded LIVE in Brooklyn, at a comedy club in front of a sold-out audience.
(Thanks to Brad for coming to NYC from Richmond, VA just for this taping!)
Here are two versions of Episode 500:
–> For a deep dive into the math, listen to the audio version.
The audio version includes a bonus track in which I crunch the numbers on historic stock market returns, answering the question: What would happen if you invested a $100,000 lump sum at the worst possible time?
–> For the joy of seeing the live comedy club taping, watch the video!
It was a wonderful night, in the close company of the Afford Anything x ChooseFI communities. Watch the taping to see it unfold.
Brad and I discuss how to invest in today’s climbing market, and how our thoughts about financial independence has evolved over the past decade.
Thanks to everyone in this community for supporting us through 500 episodes and counting. Enjoy the show!
— Paula
Feeling stuck in a job you hate, dreaming of exotic adventures? This episode is your escape hatch.
Brad Barrett, host of the ChooseFI Podcast, takes the interviewer role in this special episode, recorded LIVE at a comedy club in Brooklyn.
Brad interviews me (!!) about how I quit my reporter gig and traveled the world for over 2 YEARS! This episode spills the tea on my transformation from newspaper reporter to world wanderer, and talks about how this podcast (now over 500 episodes!) got started. Feeling inspired? This episode is your travel hack manual for designing your dream life on a budget.
Enjoy!
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The Fed met earlier this week and elected to keep interest rates at a 23-year high, in an effort to wrestle inflation closer to its two percent target.
Despite this, the April jobs report, which was released today, shows that jobs grew for the 40th consecutive month, and unemployment remains under 4 percent, an historic low, for the 27th straight month.
The 12-month inflation rate is 3.5 percent, based on March CPI data.
Stocks remain on a tear, but performance is lopsided, with 10 companies driving 85 percent of this years’ gains.
We cover this and more in our First Friday economic update episode.
Enjoy!
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Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Let’s talk about the bull market.
We’ve gotten used to a rising market. Since 2009, the bull run stumbled briefly in March 2020 before powering back up. The past 15 years have been mostly a one-way street for stocks.
Are we getting a little too used to the good times? Is there a chance we’re fooling ourselves, thinking this can last forever?
And the big question: should we be worried about a correction coming around the corner?
It’s natural to feel nervous after such a long bull run. Markets are cyclical, but that doesn’t mean we need to panic.
In Episode 500 of the Afford Anything Podcast, I chat with Brad Barrett, the host of the ChooseFI podcast, about how to handle a “fear of heights” around how much the markets have climbed.
Brad and I recorded LIVE in Brooklyn, at a comedy club in front of a sold-out audience.
(Thanks to Brad for coming to NYC from Richmond, VA just for this taping!)
Here are two versions of Episode 500:
–> For a deep dive into the math, listen to the audio version.
The audio version includes a bonus track in which I crunch the numbers on historic stock market returns, answering the question: What would happen if you invested a $100,000 lump sum at the worst possible time?
–> For the joy of seeing the live comedy club taping, watch the video!
It was a wonderful night, in the close company of the Afford Anything x ChooseFI communities. Watch the taping to see it unfold.
Brad and I discuss how to invest in today’s climbing market, and how our thoughts about financial independence has evolved over the past decade.
Thanks to everyone in this community for supporting us through 500 episodes and counting. Enjoy the show!
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Shopify
Diversify your business by selling physical and digital products through Shopify’s all-in-one platform. Go to shopify.com/paula for $1/month trial and get full access to Shopify’s entire suite of features.
Monarch Money
Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Quince
Quince offers a range of high-quality items at prices within reach. Go to Quince.com/paula for free shipping on your order and 365-day returns.
Eugene and his wife are retiring with a $10 million net worth and a guaranteed income that exceeds their annual budget. Do they still need things like life insurance and a financial advisor?
An anonymous caller’s HOA costs have doubled since she bought her condo. She’s wondering if it’s still a good investment. Should she keep it or sell it?
Nandini and her husband save tons every month toward no goal in particular. What should they do with all their extra cash?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Eugene asks: I’m 55, my wife is 56, and our two children are 20 and 17. We each make over $1 million a year as physicians.
We have $1.14 million in a joint brokerage, $3.5 million in our 401k’s, and $1.1 million in our Roth IRAs for a total of $5.6 million in retirement funds.
Our children’s education is fully funded with 529 plans. When my wife retires in four years, she’ll receive a $1 million payout from her employer.
Our primary home has a $197,000 mortgage at a 2.55 percent interest that’ll be paid off in four years. Our three homes are worth a total of $2.53 million.
At age 60, we’ll have a combined pension of $272,000 annually. At age 71, we expect to collect $96,000 a year from Social Security. We have free healthcare for life.
Our total retirement expenses, including travel, will be $265,000 a year.
What should we think about as we prepare for our retirement years? Should we pay for a financial planner that’ll cost $52,000 to $70,000 a year? What about our life insurance policies?
We have four indexed universal life policies with a cash value of $873,477. We stopped paying the premium on our two children, but we’re still paying ours at $1,000 and $500 a month.
My policy death benefit is $1.5 million and my wife’s policy is $750,000. We have separate term life insurance policies from our employers for $500,000 and $2 million respectively.
The policy has a downside protection of one percent and an upside cap of 7.5 percent. The 20-year rate of return is 5.64 percent compared to the S&P 500 return of 7.62 percent.
Some financial planners have wanted us to buy more life insurance. Others are using the asset under-management model.
We presently use a DIY financial planner that charges $4,000 a year, but we’re looking for other options. What should we do?
Anonymous asks: My husband and I plan to purchase a single-family home in late 2024 but we’re unsure what to do with our condo amid rising HOA costs.
I originally purchased my condo intending to rent it out one day. It’s a 1000 square foot, two bed, two bath in a walkable area with lots of development activity.
I bought it for $385,000 at a three percent interest rate. I have $285,000 left on the mortgage. The monthly payment is $1420 and it’s worth $440,000.
The HOA fees started at $350 a month. They’ve now risen to $640. It covers water, gas, trash, maintenance, landscaping, snow removal, insurance, and management fees.
We had a major plumbing repair that drained our community reserves and resulted in a special assessment. The building also anticipates a boiler replacement in five years.
My neighbor rented out a comparable unit for $2,350 a month, including all utilities except electricity. My cash flow at this rate would be tight after accounting for expenses and vacancies.
On the other hand, if I sell, I’m concerned that the rising monthly fee and recent special assessment would be a red flag to any buyers.
What should I do?
Nandini asks: My husband and I save $5,000 post-tax per month. How should I invest this money?
We contribute to our 401k, max out our Health Savings Accounts (HSA) and backdoor Roth IRAs, and put 10 percent towards an employee stock purchase plan (ESPP).
We have $50,000 cash in a high-yield savings account earning 4.3 percent interest. Our only debt is a primary mortgage of $390,000 at 3.8 percent interest.
Here are some investment options I’m considering:
- Max out our 401k’s. We both have traditional and Roth 401k options.
- Utilize a mega backdoor Roth offered through our companies. The annual limit is $44,000.
- Invest in index funds or mutual funds through a brokerage. We’re both very busy, so we’re thinking of picking easy index funds like the S&P 500.
Apart from these options, what else would you suggest?
*Timestamps will be available by 12 PM Eastern on Monday, and can be found by viewing the episode description on Apple Podcasts, Spotify or wherever you listen.
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Financial literacy includes understanding NFT’s, DeFi, and cryptocurrency. But it’s hard to separate education from hype.
Harvard Business School’s Scott Duke Kominers, a professor in Harvard’s Entrepreneurial Management Unit, and a Faculty Affiliate of the Harvard Department of Economics and the Harvard Center of Mathematical Sciences and Applications, joins us alongside Web3 expert Steve Kacizinsky to explain the financial, technological and social significance of NFT’s.
NFT’s, or Non-Fungible Tokens, are a rapidly growing digital asset. Comprehensive financial literacy requires understanding NFT’s. While NFT’s are emerging opportunity for investment diversification, they are also highly speculative and volatile.
NFT’s also represent how digital ownership is evolving, and have implications for the economic futures of a myriad of industries. These assets stand at the intersection of art, technology and commerce.
This episode provides a deeper understanding of NFT’s, taught by a Harvard Business School professor and a Web3 expert.
In this episode, we cover:
What an NFT is, and how they differ from other blockchain technologies – 04:54
How you can add value to an NFT -17:03
How to build community and identity around an NFT – 19:39
What is the Linux era -28:15
Addressing the lack of security – 38:00
Predictions on what’s coming next – 56:37
And so much more!
Resources mentioned:
The Everything Token: How NFTs and Web3 Will Transform the Way We Buy, Sell, and Create | Book
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If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
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Monarch is the top-rated, all-in-one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions, cash flow, net worth, and more. Go to monarchmoney.com/paula for an extended 30 day free trial.
Credit: Chris Guillebeau
Princeton Professor Daniel Kahneman never took an economics class. But he won the 2002 Nobel Prize in economics, thanks to his advancements in understanding the psychology of money.
In today’s episode, we pay homage to the late Dr. Kahneman, who passed away on March 27 at age 90.
We also discuss the jobs report, inflation data, the booming stock market, the next Bitcoin halving, Capital One’s acquisition of Discover, and the National Association of Realtors settlement.
Enjoy!
Thanks to our sponsors!
Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 job credit to upgrade your listing and start hiring today.
Policygenius
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| Welcome back to First Principles, the newsletter from Afford Anything.In 1896, a young Marie Curie, Polish physicist and mathematician, became fascinated by uranium.She was inspired by scientist Henri Becquerel’s discovery of radioactivity, which took place that same year. Curie herself coined the term “radioactivity” to describe the occurrence of radiation caused by atomic decay.Curie focused her research on pitchblende, a mineral rich in uranium. She observed that pitchblende was far more radioactive than pure uranium, leading her to hypothesize the presence of additional radioactive elements in the mineral.She was on the verge of the discovery that would lead to the first of her two Nobel Prizes, which she won for both physics and chemistry.But before she achieved her scientific triumphs, she … went on vacation?!Huh?!After publishing a notice about her research to the scientific community, Curie took an extended two-month sabbatical.She spent the summer with her family in the rural hills of France. Unplugged. Disconnected from the laboratory, the competitive world.Returning to her lab in the fall, Curie resumed her research.In 1898, she discovered two new elements: polonium, which she named in honor of her home country Poland, and radium.Four years later, in 1902, after processing several tons of pitchblende, she and her assistant isolated tenth of a gram of pure radium chloride. For her groundbreaking discovery, she was awarded the Nobel Prize in physics the following year.
Today, few of us could imagine taking a two-month sabbatical while on the precipice of a trailblazing, career-defining discovery.Our modern sensibilities scream: “This project is too important! You can’t take that much time off!”But Curie took a different approach to work. She measured productivity in years, not weeks or months.This is the practice of slow productivity.
In a quiet, suburban office on the outskirts of Washington, D.C., I sit at a conference room table across from Dr. Cal Newport.Newport is a computer science professor at Georgetown University. His academic work focuses on distributed systems theory.
| |
Many years ago, I saw a video clip featuring a slide from one of his academic presentations. It featured a formula written with a terrifying assortment of Greek letters and symbols. His academic work is rigorous, dense.Yet somehow, Newport found time to publish books unrelated to his field. Eight books, in fact.His books grapple with questions related to productivity, focus, and efficient work habits. Several are New York Times bestsellers.He contributes articles to The New Yorker. He hosts Deep Questions, a podcast with nearly 300 episodes. His YouTube channel has 566 videos and 184,000 subscribers.When I meet him, I’m struck by one immediate observation: He looks incredibly relaxed.He’s in the middle of a book launch, a notoriously busy time for authors, even those who aren’t also balancing academic responsibilities.Yet he’s … just. so. relaxed.We sit across the table. We chitchat about my visit to D.C.; we discuss the weather. Eventually we enter his studio and begin our formal interview. I don’t know how long the interview lasted, but the edited — ahem, EDITED — published version features a runtime of 80 minutes.Cal Newport is not in a rush.
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I realize, while talking to him, that his relaxed demeanor is a result of his dedication to three principles:1: Do fewer things2: Work at a natural pace3: Obsess over qualityThe first point, “do fewer things,” may initially seem at odds with Newport’s lengthy list of achievements. At first blush, these sound contradictory.But a deeper look reveals that Newport can achieve so much — eight books, a successful podcast and Youtube channel, a role as a contributor to The New Yorker, and an academic career at Georgetown — precisely because he’s selective about the projects he undertakes.He avoids social media and minimizes email. He’s not a heavy mileage accumulator on the conference and speaker circuit. He’s not on TikTok.I didn’t ask, but I’m guessing he doesn’t cold plunge.Doing fewer things is the prerequisite to the second principle: work at a natural pace. Pause. Take breaks. Stretch. Eat a snack. Chitchat with the personal finance podcaster that just dropped by. Newport says this is key to the “art of accomplishment without burnout.”Marie Curie epitomized working at a natural pace when she took multi-month sabbaticals in the middle of her research, Newport says. Her work varied in intensity: acute bouts of research punctuated by sustained rest.It’s an interval training approach: sprint, rest, sprint, rest.Doing fewer things, at a natural pace, allows a person to obsess over quality, Newport says. When attention isn’t fragmented, life isn’t frenetic, and email and Slack isn’t pinging constantly, you’re free to focus on deep work.Deep, excellent-quality work will build your career, reputation, impact and legacy, he says. Across a lifetime, you’ll be seen as productive and prolific.But on a random Tuesday, you may just be staring at the clouds, thinking through a tough problem.That’s the art of slow productivity.Watch our conversation here:
| |
While is my third time interviewing Newport, it’s our first interview face-to-face. It’s one of the most enlightening and inspiring conversations I’ve recorded in awhile.If you’re stressed, overwhelmed, or dreaming of an extended break, you’ll benefit from watching our interview.Enjoy!— PaulaP.S. Shout out to my video editor, Steve, who sprinkled in funny little easter eggs. |
How much of a pay cut would you take for a lighter workload?
Paul, 35, is grappling with that question. Like many of us, Paul says he loves his job, but the hours are demanding. He would love to work less. But he didn’t think the opportunity would come so soon.
You see, Paul is a dedicated saver. He’s spent years trying to build financial independence. He’s amassed a net worth of $910,000, with no debt.
His ideal early retirement, which would be filled with travel and hobbies, requires more money. Besides, he enjoys his career.
That’s why Paul thought he’d work full-time for several more years. He felt happy with that plan.
But an interesting opportunity recently arose.
Paul’s workplace has offered him the chance to drop his hours – and his salary – by 25 percent. He’d love to work less. But the salary cut is earlier than he’d planned.
Should he take it?
Today, we kick off the podcast episode with this question.
After that, we turn our attention to an anonymous caller. She and her husband want to retire at 55. They also want a bigger home, a better car, and to start growing their family. Can they afford it all?
Meanwhile, Tim spent his 20’s in medical school. He missed out on retirement savings during those years. He’s eager to catch up. What’s the shortest path to get there?
Finally, Matthew and his family dream of leaving Florida for the Pacific Northwest. Will they regret selling everything to start over?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Paul asks (at 02:38 minutes): I’m 35, single, and don’t plan to have kids. Though I love my job, I aim to achieve financial independence and eventually work less.
I’d planned to wait at least a few more years, but my company is preparing for staffing changes this year that would allow me to reduce my working hours to 75 percent full-time.
Should I take this opportunity? I’d still be considered a full-time employee with benefits, but my salary would drop by 25 percent to $100,000 annually.
I have no consumer debt, and I could survive on $35,000. However, I usually spend more because I like to travel and enjoy my life.
My net worth is $910,000. I have $20,000 in cash, $390,000 in investments, and $500,000 in real estate equity between a primary home and five rental properties.
I’d like to build up more cash savings. I have safety nets, though, including a Home Equity Line of Credit (HELOC) that I could access in an emergency.
I know I’d be fine, but this reduction will slow down the growth of my net worth and make it harder to grow my real estate portfolio.
On the other hand, after reading the book “Die With Zero,” I think I need to make more time for my hobbies.
How should I think through such a big decision?
Anonymous asks (at 21:32 minutes): My husband and I want a financial plan where we can both retire at 55. Are we on the right path?
We’re in our late 30s and make $200,000 a year in the public sector with pension retirement plans.
Our expenses range from $4,500 to $5,000 per month. Our car payment is $400, our student loans total $500 a month, and our mortgage is $1,500 a month.
Currently, we plan to:
- Start growing our family next year
- Trade our current car for a new one but keep the payment at $400-$500 a month
- Upgrade to another home within three years
- Switch our term life insurance policies to universal life.
- Start investing in a brokerage account at $500 monthly with an initial investment of $1,000.
- Continue saving $1,000 a month in a high-yield savings account
We have $200,000 in home equity, $60,000 in savings, and $30,000 in our IRA. We max out our HSA accounts, and we both have a term life insurance policy.
Are we making the right moves to set us up for a financially stable future?
Tim asks (at 36:11 minutes): I’m 28 years old and late on retirement savings due to years of low income during medical training. What’s the best strategy to catch up and build out a tax triangle?
I’m getting married this May. My fiancée makes $140,000 a year in W2 income, and I make between $100,000 and $130,000 a year in self-employed income at my therapy practice.
Last year was our biggest contribution year by far. We maxed out our Roth IRAs and we both contributed to Roth 401ks. We don’t have access to a Health Savings Account (HSA).
We have minimal student loan debt, own our cars, and rent for housing. Accounting for tax treatment and our late start, what retirement accounts should we prioritize?
Some options we’re considering are:
- Focus entirely on our Roth accounts. We have no dependents and we can stomach a full tax bill, but this option wouldn’t allow us to build our tax triangle.
- Split our 15 percent retirement savings between Traditional and Roth 401ks. My fiancée would contribute to her Roth 401k and I’d contribute to my Traditional 401k.
- Focus entirely on our Traditional accounts. We’d use the extra tax savings to help us save for our five-year goals of buying a house and upgrading our cars.
I’m not sure what our income or expenses will be in retirement, but we’d like to have enough to continue our current lifestyle.
Matthew asks (at 55:17 minutes): My wife and I are both 40, and we have four children, aged three through ten. Our “Afford Anything” is to move from Florida to the Pacific Northwest.
To paraphrase the old saying about the best time to invest: the best time for us to have moved was 2019. The second best time for us to move is now.
How can we do this in a financially savvy way?
Our target area is the suburbs of Portland, Oregon. We’re committed to living at least two years in our next location.
A rental would cost $2,500 a month. A home purchase would cost $425,000 for an acceptable place, and $500,000 plus for one that’d make everyone in the family happy.
I can access a VA loan that would allow for a small down payment and below-market interest rates. We prefer to own the house that we live in, but I’d be willing to rent for a year or two.
Our home in Florida is worth $400,000. We owe $170,000 on our mortgage at 3.5 percent with $1,400 monthly payments. We could rent it out for as much as $2,700 a month.
Should we rent our current house or sell it outright? If we sell, I’m very concerned that we’ll be priced out of ever returning to Florida.
I’m an intensive care nurse and hope to make $120,000 a year after the move. We have $10,000 saved in cash and should be getting another $7,000 back on our income tax return.
I have three monthly loan payments:
- A $500-a-month payment at five percent with $20,000 outstanding.
- A $600-a-month payment at six percent with $25,000 outstanding
- A $200-a-month payment at 0.9 percent with $6,000 outstanding.
If we can find a home close enough to work, I’ll be able to sell my current car and get rid of the $600 debt payment.
I still contribute to retirement, but I’ve comfortably reached Coast FI without accounting for Social Security income. I should be able to walk away from work in 15 to 20 years.
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Marie Curie won the Nobel Prize in Physics in 1903 and the Nobel Prize in Chemistry in 1911. She’s famous for her work in radioactivity.
Lin-Manual Miranda is a songwriter, producer and director who won the Pulitzer Prize in Drama in 2016, as well as several Tony awards.
What do they have in common?
They lived a century apart. They innovated in disparate fields. But they shared a similar productivity practice.
Both achieved greatness by embracing the practice of slow productivity, says Georgetown computer science professor Cal Newport.
Slow productivity is a three-part practice, Newport explains: (1) do fewer things; (2) work at a natural pace; (3) obsess over quality.
We’re used to thinking of productivity as doing more in a short amount of time. This flips that idea on its head, focusing on doing less, but excelling.
Slow productivity is the practice of doing fewer tasks better.
In this episode, Newport explains how the practice of slow productivity diverges from the normal ways that people in modern society tend to work.
Life can be stressful. Your to-do list might feel never-ending. This episode can help you focus on the few things that matter most.
It can help you feel less stressed, less busy, and yet — paradoxically — more productive, at the same time.
Enjoy!
Discussion as of March 2024:
00:00: Introduction to Cal Newport
01:24: Marie Curie’s approach to progress
04:41: How to figure out what works when you’re producing results with your brain
06:41: The story behind Lin-Manual Miranda’s success
08:39: Discerning between slow productivity, procrastination and distraction
18:01: The importance of taste
20:24: How to refine your taste
29:42: How to apply slow productivity to your work environment
40:39: Tactical suggestions for staying on task
54:34: How to surface your workload
Resources Mentioned:
Slow Productivity: The Lost Art of Accomplishment Without Burnout
Deep Work: Rules for Focused Success in a Distracted World | Book
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Constant Contact
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Tatyana is about to pay off her house at age 39! What’s next? Her husband, who earns twice as much (and whom she met after she bought the home), has no savings. They want a boat. Should she focus there?
Matthew recently ended a relationship that resulted in a real estate buyout with an 8.1 percent interest rate. With rates expected to decline, how long should he wait to refinance the loan?
Rachel’s friends know her as the finance gal, but she’s stumped about closed-end funds. What should she know about these investments?
Erin and Angelique call in with a loan strategy to tackle Steve’s double mortgage dilemma from Episode 478.
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Tatyana asks (at 03:15 minutes): My husband and I entered our marriage with mismatched financial situations. How do I balance personal goals with our financial goals as a couple?
I purchased my house before meeting my husband. For 13 years I worked incredibly hard to pay off my mortgage. I’m now 60 days away from that goal, just a day shy of my 39th birthday.
My small business pays me a salary of $50,000. I have no other debt. My husband makes $100,000 and pays home expenses such as utilities and groceries.
He has no independent savings or assets other than a paid-off vehicle. He’s working towards a pension with 16 years to go and has an unmatched Roth retirement account.
We won’t be having kids. But we have a goal to purchase a boat to get into the cruising lifestyle, which can be expensive. We’ve saved $40,000 in joint cash to start that dream.
I’d also like to rebuild my cash savings and open up a retirement account, though I’m not sure what kind of account to use.
How do I decide what to do with my extra income once the mortgage is paid off?
Matthew asks (at 15:55 minutes): How do I determine the optimal timing to pull the trigger on a mortgage refinance?
I recently got out of a long-term relationship and had to buy my ex out of our jointly-owned house.
This was the right move, emotionally and personally. But I didn’t have much control over the timing and I was stuck with an 8.1 percent interest rate on the refinance.
It’s a $78,000 loan with a $920 payment. I can afford it comfortably with my current take-home pay of $4,250 a month and a lodger who pays half the mortgage.
Regardless I think it’d be wise to refinance when rates go down. The question is, how do I know when it’s the right time to do it?
I understand the economy is unpredictable, but it seems likely that interest rates are going to fall in the next couple of years.
Should I set an arbitrary target rate, like five percent, and refinance once rates reach that level? Or is there a different way to run the numbers?
Not questions but feedback from 2 callers re: Steve Stewart’s question from Episode 487.
Angelique (at 36:49 minutes): Steve is in the same situation as I am. I chose to take a loan with a recast provision on our new house.
When I sell my current house, I can put the money toward the mortgage. They’ll re-amortize the loan, creating lower minimum monthly payments. I’m not charged a fee to use this provision.
Erin (at 37:54 minutes): After listening to episode 487, I had a comment for you. One thing you didn’t mention to Steve was the option of mortgage recasting, where you go in and make a lump payment and then the mortgage lender recalculates your monthly payment going forward.
I know some friends who do it when they make home purchases and want to change their monthly payment on their existing mortgage after they sell other properties.
Rachel asks (at 38:55 minutes): What’s a closed-end fund and is it a good investment?
One of my friends inherited several investments. Among them is an investment called the Blue Rock Total Income Real Estate Fund.
As far as I can tell, it’s a closed-end, private, interval fund. I don’t believe the returns are very good, it has a very high expense ratio and she wants to get rid of it.
How should I advise her? Should she participate in the quarterly buyback? What else is there to know?
Resources Mentioned:
487: Ask Paula: “Should I Put My Dreams on Hold … and Buy a House Instead?” – Afford Anything | Podcast
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Do you ever wonder what happens behind closed doors on Wall Street?
Vivian Tu, also known as Your Rich BFF, is here to spill the tea.
Vivian grew up in a modest immigrant family. After college, she found herself working insane hours on Wall Street after college.
While working on Wall Street, Vivian saw some weird things.
Once, a coworker stumbled hungover into the office after a trip to Atlantic City, carrying a duffel bag with thousands of dollars in cash inside.
Vivian realized that there’s a group of high-income and high-net-worth people who handle money in drastically different ways than she learned in her frugal upbringing.
She learned about investing, taxes, legal loopholes. She discovered new ways of thinking about money.
She shares these insights — gleaned from her Wall Street days — in today’s podcast episode.
Discussion Timing as of March 2024:
01:10: Introduction to Your Rich BFF
08:38: The power of mentorship
11:16: Moving away from scrimping and savings
15:03: When it’s ok to break the rules
16:03: When it’s ok to NOT do as your told – and what to do instead
17:10: Habits that we can learn from the rich
22:30: Money and the abundance mindset
25:32: The best skills to have in the workplace
32:02: Rules around sides hustles
40:00: Debt is not a four letter word’
51:37: How to calculate the value of a purchase
Resources mentioned:
Rich AF: The Winning Money Mindset The Will Change Your Life | Book
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Christine’s business is struggling. She needs more income. If she adds a full-time remote job to her plate, how will her retirement and finances change?
Rob enjoyed a banner year in 2023. He made over $1 million. But the sting of income tax has him making moves that violate his investment strategy. Is his tax tail wagging the dog?
Gena is excited to make the most of business deductions. Can she contribute 100 percent of her wages to a 401k and have the company match that?
Christina is tired of living like a pauper in the name of student loan repayment. Is Public Service Loan Forgiveness the answer?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Christine asks (at 02:11 minutes): I run my own business, but I’ve had a downturn in clients recently.
My friend suggested I get a full-time remote gig while still running my business. I have plenty of extra time each week and I think I could do both.
This leads me to questions about funding my retirement accounts:
- Would I be eligible to max out my Solo 401k if I’m contributing to another employer-sponsored retirement program? What would the tax implications be?
- Would I be able to contribute to my Roth IRA if my overall Modified Adjusted Gross Income (MAGI) is too high?
- Would this trigger a backdoor Roth scenario?
I started investing late at age 38 with a $70,000 portfolio.
Today I’m 43 and I’ve grown my portfolio to $285,000. After I fund my accounts with $46,000 at the end of the year, my portfolio will be worth $335,000.
How should I think through this decision beyond an income perspective?
Rob asks (at 12:28 minutes): 2023 was a record year for me. My income was substantially more than $900,000 and my passive income from real estate investments was more than $250,000.
I have a net worth of over $10 million, comprised of vacation rentals, apartments by the beach in San Diego, and Vanguard Total Stock Market ETFs (VTI).
My target asset allocation is 50 percent stocks and 50 percent real estate. I worked hard to achieve that balance between 2017 and 2020.
But when the 2017 Tax Cut Jobs Act introduced 100 percent bonus depreciation for full-time real estate professionals, I expanded my real estate portfolio significantly in 2020 and 2021.
Additionally, my high income this year compelled me to look for additional tax savings by buying another apartment building for bonus depreciation offset income.
I want to get back to a 50-50 split. Instead, my latest purchase will swing me further away from that goal. To pay cash for the apartment building, I need to sell off $2.1 million in VTI.
What are your thoughts on moving away from my target strategy for the sake of tax savings?
The property is located in a prime coastal neighborhood close to the ocean in San Diego. It offers over $700,000 in upside after remodeling.
It’s a trust sale that’s being sold significantly under market value with an opportunity to add Accessory Dwelling Units (ADUs) for additional income.
The acquisition aligns with my professional expertise and offers substantial tax benefits, which I need with my income this year.
Would you make the same decision in my shoes? Or would you prioritize maintaining the 50-50 asset allocation and pay the taxes?
A follow-up comment in response to Knoxville’s question:
Kris asks (at 28:29 minutes): Regarding Episode 467 about the HELOC loan and the 401k loan, one thing that I think was possibly missed was the risk of having a 401k loan.
If she separates from service or gets fired, for many plans, that loan needs to get paid back immediately. And if not, then it’s distributed as ordinary income.
So then she’s going to have to pay ordinary income tax on that rate. So I was curious about your thoughts as far as including that as a risk on a 401k loan.
Christina asks (at 30:36 minutes): I recently called about my loan repayment plan. At the time I was planning to throw as much money towards my loans as possible upon graduation.
My plans have changed since then because I’m tired of living in squalor.
I’ve decided to pursue Public Service Loan Forgiveness (PSLF) using the Saving on a Valuable Education (SAVE) Plan.
I just graduated from school as a physician assistant and I’ll start work in March making $100,000 a year.
What I should do during the grace period if SAVE doesn’t start until June of next year? Is it worth consolidating and skipping the grace period or should I wait six months?
Do you think this plan is a good idea at all?
Gena asks (at 43:10 minutes): Is there a maximum limit that my business is allowed to contribute to a 401k match?
My spouse is building a consulting business, and I’m going to help with office management and billing on the side.
As part of the business plan, I’m deciding how much to include for my wages as a 401k self-employed retirement contribution and company match.
I’ve read that I could contribute as much as 100 percent of my wages, but I haven’t found a specific limit as far as the company match.
This is a part-time job for me while I’m in law school, so I don’t anticipate reaching the $22,500 cap for personal contribution.
But this looks like a great way to reduce our tax liability while further building our retirement.
What should I pay attention to? Are there particulars to worry about, or other important tips I should consider?
Resources Mentioned:
-
195: I Make $168,000 Per Year and Spend $5,000 Per Year. What’s Next? | Podcast
- One Participant 401k Plans | Internal Revenue Service (irs.gov) | Website
- 2024 Solo 401k Rules | Website
- SAVE Plan Forgiveness | Website
- 401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000 | Website
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Mental toughness is the bedrock of starting a business, growing a multimillion-dollar portfolio, investing in real estate, crushing your debt, retiring early.
Today’s guest, Dr. Nate Zinsser, mentors elite athletes, soldiers and executives in confidence and mental toughness. He is the sports psychology mentor for two-time Superbowl MVP Eli Manning and the Director of the Performance Psychology Program at the U.S. Military Academy at West Point.
He’s mentored the NHL’s Philadelphia Flyers and NCAA teams, and has been a consultant for the FBI Academy, U.S. Army Recruiting Command, and the NYC Fire Department. He holds a PhD in sports psychology from the University of Virginia.
In today’s episode, we discuss how to develop the type of mental toughness and confidence that can help you grow your investments, start a business, take risks in your career, make offers on houses, and overall master your financial life.
Andrey is a savvy 10-year-old wondering what’s the best way to save up for his first car.
Ingrid wants to know if her parents’ preference for Retiring on Dividends is a better approach compared to the 4 Percent Rule.
Erica’s part-time work schedule will place her in an unusually low tax bracket this year. Should she take this rare chance to execute a Roth conversion? Or is it better to prioritize debt payoff?
Chloe is worried about the end of student loan forbearance. Should she pull back from making retirement contributions to focus on debt payoff?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Andrey asks (at 01:28 minutes): I’m Andrey and I’m 10 years old. I’m wondering what I should do with my $1,000 since I want to save up for my first car. Should I invest in cryptocurrency or put it into a bank for safekeeping?
Ingrid asks (at 31:30 minutes): My parents recently learned about a strategy called Retiring On Dividends. They’re no longer convinced they should follow the 4 Percent Rule.
The articles they read cite many reasons why buying high-yield dividend stocks is superior to using a safe withdrawal rate.
For example, dividend stocks tend to pay out more dividends when the market is down, shielding you from sequence of returns risk.
What’s your take on this?
Erica asks (at 46:31 minutes): I have a window of opportunity to convert my Traditional IRA to a Roth IRA at a lower tax bracket this year. Should I take it?
I just graduated from nursing school and accepted my first job. My salary will start at $131,680 per year which is triple what I made as a public school teacher.
My job starts in August, so I’ll be in an unusually low tax bracket this year with only 5 months of income.
I have a Traditional IRA with $78,000 and a Roth IRA with $4,000. If I convert the entire amount. I’d pay $19,738 in taxes.
I also have $36,000 in private student loans with a variable interest rate of 6.2 percent right now. And $24,000 in federal student loans with a 5 percent interest rate. I plan to refinance the variable to a lower fixed rate of 4.8 percent.
So should I make minimum payments on my student loans in order to capitalize on a discounted Roth conversion this year?
Or is it more important to start slamming on the debt and get rid of the student loans?
I can only afford to do one or the other and I feel torn.
Chloe asks (at 55:27 minutes): I lived at home after graduating from college in 2019. That plus the pandemic allowed me to max out my Roth IRA and contribute to other savings goals.
But with student loan forbearance ending on September 1st, I have questions about my financial setup.
I’m a 27-year-old teacher with a $61,000 annual salary.
My employer requires a 4 percent minimum contribution to my 403(b) and matches that with a 6 percent contribution.
I contribute an additional $500 a month to my 403(b) on top of the minimum requirement. Between my and my employer’s contributions, I save $1,000 a month in that account.
I contribute $300 a month to my HSA and some smaller amounts to my sinking funds.
In total, I have $29,000 in my 403(b), $21,000 in my Roth IRA, $28,000 in a taxable brokerage account, and $3,000 in my HSA. All this money is earmarked for retirement.
I also have a $10,000 emergency fund.
I’ve paid down my federal student loans from $30,000 to $16,000 since 2019. The highest interest rate among the loans is 4.45 percent. I have the option to defer payments because I’m enrolled in a master’s program.
I had the remaining $16,000 set aside in my high-yield savings account, but I invested $10,000 into my brokerage account when the forgiveness plan was announced.
My questions are:
- Should I use money from my taxable brokerage to max out my Roth IRA for 2024? Or should I stop making extra contributions to my 403(b) and put it towards my Roth IRA instead?
- Should I use my remaining $6,000 cash as a lump sum payment on student loans and then pay monthly towards the remaining $10,000 with money from my brokerage account? Or should I make the payments monthly from the $6,000 and then cash flow the payments after that?
Resources Mentioned:
How I Discovered the 4% Retirement Rule, with Bill Bengen | Podcast
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If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula for a $75 sponsored job posting to upgrade your listing and start hiring today.
Monarch Money
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Today we chat with Scott Trench, the CEO and President of BiggerPockets, a real estate investing education company with more than 2 million members.
He joins us to share cutting-edge insights on today’s real estate market. We discuss economic trends, demographic shifts, and talk about how interest rates impact home buyers.
Whether you're a potential homebuyer, an investor, or simply curious about the housing market, this conversation will shield light on what’s REALLY happening in today’s confusing real estate market.
Angie sold all the stocks in her retirement account last year. And now the market’s climbing. What should she do with her $500,000 cash position?
Christina will be graduating with six figures of student debt. Should she refinance out of a federally protected loan to lower her interest rate?
An anonymous caller wonders how Paula and Joe handled their primary residences when they moved out of state.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
Today, Stanford psychology professor Jamil Zaki shares his research and findings around the science of empathy – and how we can apply this to improving our relationships with colleagues, clients, customers, co-founders, and business and investing cohorts. Zaki is the director of the Stanford Social Neuroscience Lab, and the author of “The War For Kindness.” We'll break down the science. We talk about why empathy matters in business, investments, and in career growth, and we’ll discuss its digital age dynamics. How does AI impact the way in which we relate to others? If you want to learn the science of emotional intelligence, and how to apply this to your career and business interactions, you’ll learn a lot from today’s episode.
Enjoy!
Yvette recently retired with the goal of reaching a $10,000 monthly income from her real estate investments. Should she put her money toward debt payoff or portfolio expansion?
Carly wants to buy a second home and convert her current home to a rental. What are the pros and cons of tapping into existing equity versus saving cash for a down payment?
An anonymous caller plans to move back to her touristy hometown in six to seven years. Is it smart to buy something now and take advantage of a thriving Airbnb market?
I tackle these three questions in today’s episode.
Enjoy!
Amy says she hit “rock bottom” with her finances. She says she struggled to ask for help before her situation became an emergency. How can others ask for help sooner?
Rebecca is a mother of four, which means she’s juggling four distinct college timelines and 529 plans. How does she make a withdrawal plan when there are so many unknowns?
Anne Marie switched jobs. What should she do with her old retirement accounts?
And Dylan wonders if the IRS Rule of 55 applies to Roth 401k accounts.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
Today, I sit down with Simone Stolzoff, the brilliant author of “The Good Enough Job.”
Simone has extensively studied the intricate role of work in our lives, asking the question: “How do we see work as just a piece of an awesome of our life?”
He also uncovers what we lose when work becomes more than just a job, challenges the prevailing narratives of work as a calling or dream, and shares strategies that can help us build more well rounded lives.
Together, we explore groundbreaking perspectives on reframing work as an integral part of life, rather than allowing it to consume our entire being. Prepare to be inspired and enlightened as we uncover the keys to unlocking a balanced and fulfilling relationship with work.
Peter Atwater, an economics professor at The College of William and Mary and author of “The Confidence Map,” joins us to discuss how confidence shapes our financial markets.
He explains how The Hunger Games relates to the Lehman Brothers collapse. He describes why you should “Buy Adele and Sell Pharrell.”
From the Panic of 1857 to the patterns behind modern media consumption, Peter talks us through the intricate web of behavioral oddities that extend beyond finance.
He talks about the “K-shaped recovery” – how different segments of the population are experiencing different economic realities.
He touches upon economic, political, and social trends, and the hidden dynamics that shape market behavior and reveal the profound impact of consumer confidence.
Our conversation will leave you with a deeper understanding of how behavioral patterns shape the financial landscape – including your investments.
Enjoy!
Rachel’s car is nearing its end of life and she’s short on cash. Should she sell before she’s hit with a major repair?
Kris has tried all the budgeting apps but they’re cumbersome and time-consuming. Is there a better way to track his monthly expenses?
An anonymous caller feels stretched thin with a high mortgage on a single income. Should she sell off some stocks to lower her monthly payments?
Cam wants to arbitrage a hefty low-interest loan with a three-year payback period. Is this the opportunity of a lifetime or a disaster waiting to happen?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
On the First Friday of each month, we roll out a bonus episode that’s totally different from what we usually produce.
These bonus episodes are special, unique, and – we hope – round out a fuller, more multifaceted picture of what we think about.
Today, I’m introducing you to a business and economics correspondent from Moscow who I’m honored to call a close friend. Her name is Andrea Palasciano. She’s covered business stories from Paris, Marseilles, Rome and Moscow. She’s fluent in Italian, German, Spanish, French, English and Russian. She’s covered stories ranging from diamond mining in Siberia to sleep deprivation.
She’s close friends with Evan Gershkovich, the 31-year-old Wall Street Journal reporter who’s currently in a Russian prison. Today is his 100th day behind bars.
Andrea and I were both Knight-Bagehot Fellows and bonded during our year of immersing ourselves into deeply understanding how to tell better stories about business and economics. She joins me in this special episode to talk about the stories she’s covered, the sabbatical experience, and why it’s critical to understand how a bond works (!!).
Enjoy!
Jackie is a 42-year-old paralegal with two rental properties. She wants to buy three more. She asks for Paula’s thoughts about today’s economy. Should she buy under these economic conditions?
Jen’s husband will retire with a pension that pays twice their living expenses. Does she still need her own retirement account?
Rachael just bought a duplex, which she wants to househack. But she’s having second thoughts. Did she bite off more than she can chew?
“Minouche” is a return caller with new information: she believes that borrowing from Dad is her only path to home ownership. Does this change Paula and Joe’s advice to her? (And is it even true?) And Molly, a concerned mom, shares some thoughts about this situation.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
An anonymous caller is dealing with guilt over spending a large cash gift. What’s the best use if she doesn’t have an obvious financial goal to throw at it?
Eric reached financial independence a few years ago but he hesitates to quit his job. What the heck is a Roth conversion ladder and how can he overcome his psychological barriers?
Another anonymous caller and his wife earn $300,000. He feels like they should be financially independent but they’re far from it. What’s going on?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
We talk to Stanford economist Nick Bloom about his groundbreaking research on working from home.
Nick has been studying remote work for more than 20 years – since the 1990’s, when people were “telecommuting.” His research, in real-time, looked at how events such as 9/11 shaped attitudes about remote work.
The pandemic created a surge of interest in his research. It brought many newcomers to the field. But Nick has the benefit of historical knowledge. He’s spent his career deep-diving into this topic.
Nick sheds light on the advantages and challenges of remote work, drawing from extensive data and analysis. He shares surprising numbers and statistics.
We discuss productivity, collaboration, employee well-being and organizational dynamics. We also discuss the impact of remote work on cities and housing.
Enjoy!
Paul suffered a stroke at 48. He’s on disability and feeling lost. How does he figure out what’s next?
Should Ashley’s aging parents spend a third of their retirement savings on a house?
Margaret is wondering if she could use her 401k for a down payment and save on her taxes.
An anonymous caller is concerned she won’t have enough access to cash if she retires at 50. Is an Indexed Universal Life policy the right solution?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
We sit down with Steve Chou, an accomplished entrepreneur who, alongside his wife, built two businesses that each bring in seven figures – and gives them the freedom to spend more time with their kids.
We delve into the challenges he faced in the early stages of his business and how he overcame these obstacles.
Additionally, Steve opens up about the personal and emotional aspects of running a business. He candidly discusses the fears, doubts, and sacrifices he and others have encountered during this transformational journey, emphasizing the importance of resilience and avoiding the comparison trap.
Whether you're contemplating leaving your job to start your own venture or simply seeking inspiration from a seasoned entrepreneur, this episode with Steve Chou is a must-listen.
The student loan pause is coming to an end.
A moratorium on student loan repayments has been in place since the start of the pandemic, but starting Sept. 1st, millions of borrowers will be required to start making payments on their loans again.
What does this mean for borrowers? In this episode, we’ll discuss what borrowers can do to prepare, including an in-depth look at the variety of repayment plan options.
We’ll also talk (in general terms) about how to handle ANY surprise new monthly bill – whether it’s a medical bill, a family member who needs ongoing financial help, or a student loan repayment that’s about to restart.
Sources and Resources Mentioned:
New Debt Ceiling Deal Will Require Student Loan Payments to Restart Soon
(Bloomberg News, May 30, 2023)
As the Student Loan Payment Pause Ends, Here’s What to Know
(The New York Times, June 1, 2023)
Why America Keeps Delaying Student Loan Repayments
(The Economist, April 16, 2022)
StudentAid.gov:
- Standard Plan
- Graduated Plan
- Extended Plan
StudentAid.gov Repayment Strategy Calculator
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As a former corporate powerhouse turned successful entrepreneur, Amy knows firsthand the challenges and triumphs of building a business from scratch.
Amy is the host of the top-ranked podcast "Online Marketing Made Easy," and the owner of a multi-million dollar digital course business. She is also the author of “Two Week’s Notice,” a guide to quitting your job and building your own business.
Get ready to be inspired as we uncover Amy's secrets to building a thriving business and learn how you can apply her proven techniques to achieve your own entrepreneurial dreams.
Whether you're just starting out or looking to take your business to the next level, this episode is packed with actionable advice that you won't want to miss.
An anonymous caller is struggling with a tempting offer from her family to buy her first house.
Tyson is wondering if it’s a good time to convert his bonds into treasuries.
“Jaula” wants to know if she should count her side hustle income as part of her retirement money.
Chris recently tripled his income. How should he manage this unexpected surplus?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Anonymous asks (at 01:41 minutes): I rent an apartment with a roommate in Jacksonville, Florida. Our rent went up 17 percent last year and another 7 percent this year.
I feel stressed and I want to buy a house to stabilize my expenses.
I’m 26 and I make $77,000. If I save a 7 percent down payment over the next couple years, I could afford a $190,000 house with a 6 percent interest rate.
However, my dad is offering to lend me cash to buy a home at a 4 percent interest rate.
He’s pointing out houses that are $350,000. Factoring in maintenance costs and homeowner’s insurance, which is expensive in Florida, my monthly payment would be more than half of my take-home pay.
Should I consider this?
I’m concerned about being indebted to my dad, but the security of a fixed housing cost would alleviate a lot of stress for me.
How should we structure an agreement so that it doesn’t alter the dynamics of our relationship?
Tyson asks (at 21:36 minutes): The more I read about bonds and treasuries, the more confused I get. Can you explain the differences in simple terms?
I currently park 20 percent of my investments in Vanguard Total Bond Market (BND), but I’m wondering if I’d get a better return in treasuries.
Two funds I’m considering are Vanguard Federal Money Market Fund (VMFXX) and Vanguard Treasury Money Market Fund (VUSXX).
“Jaula” asks (at 29:35 minutes): I retired at 58 and my husband will work for two more years. I’m not sure how to think about my side hustle income as it relates to the 4 percent rule.
If I make a modest $20,000 per year for the next five years, do I multiply it by 25 and act as if we have an extra $500,000 in the portfolio?
Our net worth is $2.5 million in various IRA accounts, brokerage accounts, and cash.
Can you give me some ways to think about this extra income?
Chris asks (at 36:13 minutes): I recently switched careers and tripled my income, leaving me an excess of $6,000 to $7,000 per month after expenses, debt repayment, and taxes.
How do I take full advantage of this unexpected abundance of money?
I have $225,000 in retirement accounts, $18,000 in emergency funds, and $14,000 in cash that I use to dollar cost average into investments.
I bought my house for $265,000 in October of last year and I owe $210,000 on it. My car is worth $38,000 and I owe $27,000 on it.
I contribute 23 percent of my income to retirement. I have no other loans or credit card debt.
I want to enjoy life and give to my family when they’re in need, but also keep in mind that I have a future to plan for.
My questions are:
- Should I continue paying down my mortgage? I pay an extra $600 a month towards my mortgage, effectively making my 30-year loan into a 15-year loan.
- I contribute $200 a week to a total market fund. Should I increase that amount or diversify into other types of funds?
- Where can I find out more about Efficient Frontier Investing?
- Should I convert my 401k into a Roth account? What happens to my investments upon conversion?
- Should I get a financial advisor with an assets-under-management fee structure? Why or why not?
- I want to rent out my current home and buy a second home to improve my lifestyle. Should I use my home equity or wait longer to save?
Resources Mentioned:
Episode 357: Practical Investing and the Efficient Frontier with Joe Saul – Sehy | Podcast
Episode 380: Ask Paula: How to Optimize Your Investments Along The Efficient Frontier – If You Dare! | Podcast
portfoliovisualizer.com | Website
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It’s GRADUATION WEEK!
For those of you who’ve been following along this past year, you know that I’ve been completing the Knight – Bagehot Fellowship at Columbia University.
This week, my family and I are celebrating the countless hours of studying, all-nighters and eye opening experiences, so here at Afford Anything, we’re airing an important episode from our archives.
This episode addresses important questions we’ve been getting from the Afford Anything community, including:
- Where do I invest?
- How do I diversify outside of the stock market?
- How many individual stocks should I hold?
I’m looking forward to returning to the amazing Afford Anything community full-time as of June 1st, and eagerly anticipating sharing everything I’ve learned with YOU!!!! The team has big plans for the next year, so enjoy this episode and stay tuned for future announcements.
Resources Mentioned:
- Book – Smarter, Faster, Better by Charles Duhigg
- Money for the Rest of Us Podcast
- Money for the Rest of Us YouTube Channel
- How to Start a Blog in 5 Minutes
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“Barbara,” an anonymous caller from Episode 422, is struggling with a scarcity mindset. How does she stop worrying about the future and build the confidence to enjoy life now?
Samantha and her partner have lived out of their truck for 20 years. They sorta-kinda feel ready to buy a house and settle down. But they’re hesitating. What if they hate it?
An anonymous caller wants to retire and travel in 20 to 30 years. How does she know if she’s saving enough?
Trace plans to take a mini-retirement next year. Where should she keep her savings until then?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Barbara asks (at 01:06 minutes): (Follow-up response from Episode 422: “We’re Saving 72 Percent of Our Income and It Sucks”) Your thoughtful responses to my last call really got us thinking that we’re suffering from a deep-rooted scarcity mindset because of financial insecurity in our past.
My husband is experiencing burnout from running a business he can’t back away from, but I promise we’re not miserable.
We moved closer to the beach during Covid and I shifted to a career I enjoy. We lead a wonderful love-filled life surrounded by two sets of parents and an abundance of close friends.
While we’d be most comfortable waiting until the end of 2024 to increase our spending, I wonder if we’re still letting fear hold us back too much.
We’ve chosen to prioritize saving and investing because we don’t want to end up in the financial situations that our parents are in.
We want to help them out without sacrificing our own future. And we want to get to a point where we no longer feel stressed about money.
We’re on track to be “Coast FI” at the end of 2024, so we’ll no longer need to contribute to our retirement accounts at that point. We’ll also have a brokerage account with $400,000 in it.
We’re debt free, we have a meaty emergency fund and plenty of cash on hand for a reasonable down payment in our medium-cost-of-living area.
Our ultimate dream is to buy a piece of land with a house to live in and a converted barn for an event space.
That said, are we not prioritizing happiness enough? How can we build the financial and emotional confidence to take action now instead of waiting to enjoy more in the future?
Samantha asks (at 10:50 minutes): We’re in our forties and we’ve lived out of our pickup truck or a van for the last 20 years.
We don’t have a primary residence but we’re working towards saving for a house.
We found a place we really love and we bought a piece of land there before the pandemic, but now we’re getting cold feet.
What if we don’t actually want to settle down yet?
We handle work contracts across the U.S., often in the middle of nowhere. We’ll work for a few months until the contract ends and then take off to go to national parks or travel internationally.
Our income ranges from $80,000 to $400,000 a year. We have $350,000 in savings, including a $50,000 emergency fund.
We’ve saved $600,000 in retirement accounts and own three rental properties free and clear. One is a short-term rental and two are long-term. Together they profit anywhere from $40,000 to $60,000 a year.
The area we’ve chosen is incredibly expensive at $500 a square foot for a simple square box. It’ll cost $500,000 to build a 1,000-square-foot house.
We would take out a $300,000 mortgage or HELOC to pay for it.
Our life goals are to work less and we hate debt. We love the freedom we currently have and we’re reluctant to give that up.
On the other hand, I think our future selves would be psyched to have this house paid off in 5 or 10 years.
Could you help us figure out what we want?!
Anonymous asks (at 26:16 minutes): My husband and I started maxing out our traditional retirement accounts this year, but we don’t know if we’re doing enough to retire comfortably in 20 to 30 years.
I’m 33 and he’s 39, and we have two children under 5. We’re both federal employees. He also runs a small project management business.
I make $161,000 and my husband makes $85,000 a year with the opportunity to increase if he takes on more clients for his business.
I’ve saved $100,000 for retirement and he’s saved $70,000.
I have 3 key retirement questions:
- Should we factor in our pensions when looking at our overall plan for retirement?
- How do we figure out our retirement number if the goal is to live comfortably and travel often? I imagine a light version of FAT Fire.
- How do we know if we’re on track? Assuming a 7 percent rate of return, no salary increases, and a continued contribution of $22,500 per year for each of us, I should have $2.5 million by the time I turn 59. My husband should have $1 million by the time he turns 59.
We file our taxes separately because I have significant student loan debt, which makes it hard to contribute to a Roth IRA. But I’m eligible for the public service loan forgiveness program and my loans will hopefully be forgiven in 2.5 years.
We also plan on contributing to a SEP IRA, but I’m not sure how much.
Our mortgage is $2,500 a month and we won’t be done with our 30-year term when we turn 59. Should we increase our working years to cover the difference, or can we make up for it with a separate brokerage account?
With so many moving parts, how do we determine if we’re saving enough and saving in the right places for a successful retirement?
Trace asks (at 40:14 minutes): I’m 27 and I plan to take a mini-retirement in February 2024. Where should I store my funds for a maximum return?
Beyond my emergency fund, investments, and 401k, I’ve saved one-third of the $25,000 I’ll need for my time off.
I’m currently using an Ally high-yield savings account, but I won’t draw from these funds until the summer of 2024. How do I make my savings work harder?
Resources Mentioned:
#422: Ask Paula: We’re Saving 72 Percent Of Our Income…and It SUCKS – Afford Anything
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There are massive rapid changes unfurling in the financial world. This week’s biggest news: First Republic Bank collapsed; JP Morgan Chase acquired it. (As it happens, I was one of 12 people who was lucky enough to have dinner with Chase CEO Jamie Dimon exactly one week ago – just days before the acquisition. I tell that story around the 8-minute mark of today’s episode.)
The Fed issued a 10th consecutive rate hike, raising interest rates another quarter of a percentage point. Inflation is still double the target rate. And public confidence in bedrock financial institutions, as measured by a regional banking index fund, is in the toilet.
I talk about these issues for the first 18-ish minutes of the podcast, and then we switch to a replay of an interview that we held with acclaimed financial advisor Michael Kitces, which originally aired as Episode 64.
Enjoy!
Resources Mentioned:
Websites:
- Kitces.com
- How to Build Human Capital
- Amazon Prime
- Google Express
- XY Planning Network
- Interview with Laura Vanderkam
Books:
- Essentialism, by Greg McKewon
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“Do you want to save money? Or do you want to enjoy your life?”
That’s a common question, but it’s strange. It assumes these ideas are opposites: frugality is synonymous with deprivation; spending is a proxy for enjoyment.
That premise is wrong.
Let’s stop conflating spending with happiness. Let’s stop using “savings” or “free” as a euphemism for second-tier or sucky.
Most online articles that discuss free or frugal enjoyment are poorly-thought-through listicles that offer half-baked ideas, like “go to the park” or “host a potluck.” Not only are these insufferable, they also miss the point. Behavioral change doesn’t come from a laundry list. It comes from cognitive reframing.
To facilitate this reframe, we’ve invited Yale-educated former attorney and world-renowned happiness expert Gretchen Rubin to return to our show.
Gretchen was a guest on Episode 40, when she cited research about effective habit formation. She returns with a methodical, structured look at how to derive more joy from daily experiences through heightened sensory awareness.
She draws from science, philosophy, medicine, literature and psychology to tell a layered story about how to find simple pleasures in everyday things. Her latest book, Life in Five Senses, came out on April 18 and immediately hit the New York Times bestseller list.
Enjoy!
Timestamps as of April 2023:
10:44: Why you should visit the same place everyday
11:55: How going to the same place can change over time
16:40: Advantages of being in tune with our senses
24:07: How to deepen your sense of smell
31:00: How culture impacts senses
37:19: How does your age impact your sensory experience?
Resources: The Five Senses Quiz | Gretchen Rubin
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Do you feel like if you want to do something right, you have to do it yourself?
Do you try to wind down after the end of a long day, but your energy levels are just not quite restored?
If you answered “Yes!” to any of these questions, then this episode is for you.
Psychotherapist Katherine Morgan Schafler, a former on-site therapist at Google, and author of “The Perfectionist’s Guide to Losing Control,” joins us to chat about her research on perfectionism.
She shares a framework on five types of perfectionism. She describes the pros and cons of each type, and how to work through some of the negative tendencies to build a more emotionally healthy life.
Enjoy!
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Jeremy wants to attend graduate school. Should he take student loans or cash out his investment portfolio?
Andy is wondering if the 4 percent rule stands up to high inflation. (There’s a shockingly simple answer!)
Did Rudolfo discover a hack to supercharge his 401k investing?
Nandini is overwhelmed by her investing choices. Which accounts should she use? Which funds should she pick?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Jeremy asks (at 02:30 minutes): What’s the best way to finance a grad school education?
I work as an emergency department nurse and I want to pursue a doctorate degree that’ll allow me to transition to a lucrative specialty of nursing.
The future earnings of this career change will more than pay for the degree in the long run, but what are the risks of taking on debt in the short term?
The three-year program will cost $160,000 in tuition and fees.
I’ll cover living expenses with part-time work while I’m in school, but I won’t be able to cash flow the tuition.
I’m considering one of two options:
- Student loans: When I was an undergrad, I had a Dave Ramsey debt-averse mindset. I paid for school by applying for scholarships and working. My views have since softened and I’m willing to take out a student loan but I’m worried the interest will bury me for 10-plus years, until the loan is paid off.
- Tap my investment portfolio: I have $70,000 invested in a taxable brokerage account. If I cash it out and continue to save for another year, I could pay for most of the tuition outright.
How do I weigh the cost of interest on student loan debt against the loss of potential earnings on my investment portfolio?
Rudolfo asks (at 22:38 minutes): I think I’ve found a way to skirt 401k contribution limits by taking out a loan and paying it back. Am I onto something?
For example, the 2023 401k contribution limit at age 50 and above is $30,000.
I understand that there’s no penalty to take out a 401k loan as long as the funds are returned to the account with interest.
Assuming an interest rate of 5 percent on a $50,000 loan, would it be possible to take out a loan and immediately pay it back with 5 percent interest, or $2,500?
If this could be repeated four times a year, this would result in an additional $10,000 contribution.
Can I do this? Is there a limit on the number of times I can do it?
Nandini asks (at 34:16 minutes): If I already contribute to a Roth 401k, are there any advantages to opening a Roth IRA?
I’m not currently maxing out my Roth 401k and my income only allows for a backdoor Roth IRA contribution.
My company also offers an after-tax mega backdoor Roth account with a limit of $44,000.
How do I decide between these three options?
Beyond that, I feel overwhelmed by all my investing options.
What’s the best way to identify which funds to invest in? Are expense ratios and average returns the main factors?
Andy asks (at 46:19 minutes): How do higher inflation numbers affect the 4 Percent Rule?
I understand that the 4 percent withdrawal rate is meant to be inflation-adjusted, but where does that number come from?
Should the rule be seasonally adjusted according to the inflation data? If so, how do we make this calculation?
Resources Mentioned:
Podcast | Practical Investing and the Efficient Frontier with Joe Saul Sehy
Podcast | The 4 Percent Retirement Rule with Bill Bengen
Youtube| Stephen Colbert eats Ranch ice cream
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Apartments.com
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Zocdoc
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Mint Mobile
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Lee is 30 and facing a tech layoff. She can live for a year on her savings. She’s thinking about taking the rest of the year off. How should she prepare her investments?
Stacy wants to buy an Airbnb but she’s scared she’ll regret selling her company stock to do it.
An anonymous caller is tired of living paycheck-to-paycheck as a freelance artist. How can she stabilize an inconsistent income?
Danelle is a DIY investor. She can’t find a financial advisor who gives advice without insisting on managing her investments. Is she looking in the wrong places?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Lee asks (at 01:47 minutes): I’m 30 and I’m facing one of those tech layoffs that’s been in the news.
My company is doing a “soft layoff” by giving me two months to look inside for a job. But the severance package is too hard to pass up.
I have a year’s worth of expenses saved up, so I might take the rest of the year off.
How should I organize my investments as this layoff approaches?
Should I max out my traditional 401k and, as a result, lower my tax bracket? Or invest in my Roth 401k?
Or should I zero out my retirement contributions and invest in an after-tax brokerage account?
Also, I’m in California and will qualify for unemployment. Can I take it later? If I do take it, will it affect me later in life?
Danelle asks (at 12:28 minutes): My husband and I are approaching retirement. We’ve managed our own investments for years, but we’d like to talk to a financial advisor concerning our transition strategy.
We’ve tried for three years to find a fee-only fiduciary advisor.
But everyone claims there’s no way to offer comprehensive advice if they aren’t managing our money for a fee.
How does someone actually find an advisor that simply offers advice and perspective for a flat fee?
Anonymous asks (at 26:06 minutes): I’m 54 and I’ve never had a traditional or full-time job. My late husband was a musician and I’m a self-employed artist.
Sometimes I make $250 and sometimes I make $25,000.
I live off a line of credit that I’ve cleared twice since 2018. When a paycheck comes in, I pay the HELOC off or I dip into savings when there’s not enough.
Then the cycle repeats itself.
I’m worried because I’m in serious debt. I’ve used most of my savings, and I still have credit cards to pay off. I also have a negligible retirement fund.
The good news? I own my house free and clear in a desirable vacation spot. The taxes are low and my only other housing expenses are insurance, maintenance, and repairs. I could scrape by on $1,500 per month.
My accountant suggests I cash out some assets – like my gold and vintage instruments – to repay my debt.
I’m working on increasing my income, but I don’t know what to do with my money when it comes in.
I’m considering taking retirement, taxes, and tithing off the top, and then trying to live off the remaining cash while making regular payments on my debt.
But what do I do during the years when I don’t have much income? I don’t know how to organize this and I feel I need a plan.
Stacy asks (at 50:11 minutes): I’m eager to buy a short-term rental property, but I’m scared I’ll regret selling my company stock in order to make the downpayment.
I’m a senior executive assistant in tech. My previous company had an IPO in September 2021 at the height of the market.
I exercised my shares in advance, at $1.50 a share, because the company had the potential to go public. It went up to $70 at one point, but today, it’s back to $12 a share.
It cost $15,000 to sell $70,000 worth of stock, which I used to pay off our credit card debt.
I have 11,000 shares remaining. 9,000 shares could be sold anytime, and 2,000 would need to wait another 6 months.
Am I crazy to sell 9,000 shares to put a down payment on a rental property?
I’ve wanted to buy a short-term rental for a long time. Coming from a hospitality background, I’m super passionate about it.
I’m married and we own our home with a comfortable mortgage.
I make $164,000 with stock options and my husband makes $125,000 a year.
We have zero debt, we max out our 401ks, and we have $16,000 in single stocks.
Resources Mentioned:
- Podcast episode featuring financial planner Sophia Bera
- Podcast episode featuring financial planner Michael Kitces
- Forbes article on “financial planner” Max Tailwagger
- Investopedia article on top (human) financial planners
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The majority of financial advice is geared to people with 9-5 jobs:
- “Negotiate for a raise.”
- “Max out your 401k match.”
- “Budget based on your income.”
Where’s the financial advice for people who earn money in tips: restaurant servers, bartenders, hairstylists, concierge, valets, ushers, nail salon workers, strippers, or other service industry professionals?
What about gig economy workers, freelancers and entrepreneurs? People who don’t earn a regular paycheck?
Not only do these workers earn a volatile and unpredictable income, they also often don’t have job-provided health insurance, retirement plans, and paid time off. They need to provide themselves with these benefits. What should they do?
That’s where Barbara Sloan comes in. She’s a financial coach and author of “Tipped: the life changing guide to financial freedom for waitresses, bartenders, strippers, and all other service industry professionals.”
Her book and advice applies to anyone who works outside of the traditional confines and systems.
If you (or someone you know) works for tips, you’ll love Barbara. And if you’re curious about exploring work outside of the normal 9-to-5, and wonder how to set yourself up for financial success when your income is hit-or-miss, this episode is for you.
Enjoy!
Estimated Timing of Discussion Points as of March 2023:
01:59: The tipped workers we may forget
03:54: Financial challenges for tipped workers
05:57: The importance of thinking like an entrepreneur
23:02: Tips for the self employed
25:19: Budgeting with volatile income
27:13: Tracking income vs. tracking expenses
32:15: The distinction of budgeting based on income vs expenses
36:13: Budgeting as a trigger for disordered behavior
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Blue wants to rent out his East Coast home, take a sabbatical from work, travel to the West Coast with his family, and start a YouTube channel and other entrepreneurial projects. How should he manage his money to make this happen?
Should “Walker,” an anonymous caller, give up a cushy job to take a year-long sabbatical in Europe?
Melissa regrets buying a house two years ago in Ft. Lauderdale. She’s poured $30,000 into repairs, all of which she borrowed. Her home-related debts have mounted. She’s over-extended. Should she cut her losses?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Blue asks (at 03:46 minutes): We’re in our mid-30s, and we’re disenchanted with our jobs and the area where we live.
We’d like to take a sabbatical, move out West for a little while, and try out some entrepreneurial ideas.
We have $110,000 in our retirement accounts. We’re also building our emergency fund and hope to have $12,000 in the next few months.
Recently we purchased a home for $500,000 with a $2,400-a-month mortgage. We secured a $150,000 homeowner’s line of credit (HELOC) for emergencies, though we’ve never needed to tap it.
Our home is set up for Airbnb guests. We hope to start renting it out in the next month. We’d start by welcoming Airbnb guests over the weekend, while we’re camping, to see what kind of income we can generate.
Ideally, we’re hoping that we can earn $5,000 a month from Airbnb, but that would leave us homeless whenever it’s occupied.
Between our retirement accounts, HELOC, and passive income from Airbnb, I’m wondering if we’re ready to move into a Coast FI position. We hope to land new jobs in a new area that’s more in tune with our passions.
I also want to start a YouTube channel around my interests which include bike riding, skateboarding, traveling, local food movements, and farming.
Are we making the right move?
Anonymous asks (at 34:59 minutes): My wife and I want to take a year-long sabbatical in Europe with our two children, but we’d have to give up our cushy jobs.
We have easy jobs that earn us a decent standard of living, and we love the town where we live. We’ve been with our company for a long time.
If we take a sabbatical, we’d start at the bottom floor when we return. Our income wouldn’t change, but we’d have to work long hours again.
While we’d like to spend more time with our kids and expose them to a new culture at a young age, we also love our life now.
Is this tradeoff worth it? Or should we not let “great be the enemy of good”?
Melissa asks (at 57:45 minutes): I’m 44 and I’d like to retire at 60.
I purchased my first home two years ago, but it’s put me in a major financial rut.
I barely had enough money to buy the home with an FHA loan. Within 18 months, I had to take out an additional loan to cover $15,000 in repairs. Now I’m facing another $15,000 repair for electrical work.
I earn $112,000 a year, but I have no savings and nothing for retirement. My debt-to-income ratio is at 45 percent. What should I do?
Resources mentioned:
Website | https://affordanything.com/airbnbtools/
Website | https://affordanything.com/airbnb-experiment-impulsively-started-vacation-rental-business/
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Have you ever worried about running out of money after you retire?
Do you keep checking your net worth to make sure you have enough? Does this always feel a little … unsatisfying?
This episode discusses why.
Today’s guest, Michael Lynch, is a certified financial planner and author. His most recent book, “It’s All About The Income,” says that we’re obsessed with the wrong thing. Retirement planning is focused on growing assets. But your assets aren’t going to keep the lights on. Your INCOME, not your assets, is the centerpiece of your retirement.
He shares real-life examples of the biggest risks to your income — the risks that might halt you from enjoying your retirement years. He shares tips on how to make sure your income is smooth and secure, even when you’re not punching the clock anymore.
Enjoy!
Timing of discussion points as of March 2023:
00:06: The disconnect between living on income vs. assets in retirement
00:53: “There’s no such thing as safe”
03:36: The three-bucket approach to retirement
07:58: Sources to learn the history of the stock market
10:44: This historical best hedge against a declining stock market
13:49 The ideal asset mix for short-, medium- and long-term investments
14:30: The need to distinguish between money you’ll need vs money you’ll need to generate income
18:03: When to be a saver vs. an investor
26:46: How to approach the medium-term bucket
33:15: Lowering sequence of returns risk with the three-bucket method
34:20: Inflation risk and the impact on retirement
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The title says it all. Paula Pant interviews Mr. Money Mustache about his dating life.
We chat about why he wants to date inside the FIRE community (financial independence, retire early) – and whether he’s had any luck.
We discuss the perils of navigating into the dating world after a divorce, which he did at age 43.
And – AHEM – HE’S ON THE APPS. Well, specifically, he’s on one app. And it’s technically not an app, it’s a website. Whatever. HE’S ONLINE DATING, FOLKS. We talk about the difference between flirting in real life vs. online, and he dishes about what he looks for in a dating profile.
Our conversation also covers:
- What’s the point of dating someone inside the FIRE community, anyway? Do you really want to talk about money all day? (Hint: nope)
- Is he a serial monogamist?
- What should you do if one person is more interested in frugality, while the other is into investing?
- Personality, values, communication, chemistry … how can you find that ideal fit?
- How long does it take to figure out if you’re compatible?
- How quickly has he introduced his teenage son to his former (then-current) girlfriends?
- What advice does he share with his son about dating?
Mr. Money Mustache is the pseudonym of Pete Adeney, one of the most prominent figures in the FIRE movement. He co-stars with Paula, Tiffany Aliche and Ross Mac in the 2022 Netflix documentary Get Smart with Money.
Enjoy!
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D is worried that she’s going to suffer from her parents’ poor financial choices. Is it time to confront them about it?
An anonymous caller and her fiance both own a house. Which one do they move into after the wedding?
In a world of rising inflation, Nick wants to know if it’s time to change the way he saves for his future.
Another anonymous caller wants to buy a second home within a decade. How does she start planning now?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
D asks (at 01:09 minutes): I’m a 35-year-old working mom. My father and mother-in-law are in their mid-60s and have a lot of credit card debt.
Is this something that my partner and I will be saddled with when they pass?
What are the conversations we should be having with parents and next of kin when their affairs can deeply affect our lives?
Nick asks (at 10:49 minutes): How do I save for a rental property in an inflationary environment?
The current inflation rate feels like a game-changer. In the past, I kept my short-term savings goals in cash.
Home prices in my market will appreciate 5 percent over the next year. The best I can achieve in a high-yield savings account is 3 percent.
If inflation remains at 8 percent, what are my best options to hedge inflation while I save for my next rental property?
Anonymous asks (at 24:13 minutes): My fiance and I both own our houses and we’re not sure which one to live in after we’re married.
I bought my house in 2021 for $172,000 at a 1.375 percent interest rate. The mortgage payment is $755. The remaining principal is $163,000, and it’s worth $244,000.
My fiance bought his house in 2020 for $168,000 at a 3.8 percent interest rate. The mortgage payment is $1,000, the remaining principal is $150,000, and it’s worth $280,000.
We’d like to start trying for kids shortly after our wedding next year. My house has two bedrooms while his house has three, and we both work from home.
We’d love to keep both, but my loan prevents me from renting my house out until I sell or pay off the mortgage.
How do we choose which house to keep?
Anonymous 2 asks (at 46:01 minutes): My husband and I bought our first home in 2021. We’re happy with it but we’d like to prepare for an upgrade in 7 to 10 years.
We’d like to keep our current house as a rental and we have questions:
- What would our financial situation need to look like when we buy the next house?
- Do we need to save a separate 20 percent down payment in cash for the next home, or is there a way to leverage our first house without being underwater in mortgage debt?
- How much should we be making to float two mortgages?
- How much additional cash should we have to safely cover both mortgages in the event that we can’t find a renter?
We’re in our mid to late 30s with a toddler and a baby on the way.
Our townhouse in the DC area is worth $500,000 with a 2.5 percent interest rate.
Resources mentioned:
-
249: How to Talk to Your Parents About Retirement and Beyond – with Cameron Huddleston – Afford Anything | Podcast
- Comparison of TIPS and Series I Savings Bonds | Website
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Have you ever thought about remodeling a kitchen? Retrofitting a camper van for #vanlife? Converting your basement into an Airbnb? Building a custom website? Recording an album?
Did you worry that this project will cost more and take longer than you expected?
This episode is all about how to complete projects on-time and under budget.
Today’s guest, Dr. Bent Flyvberg, is an Oxford University professor with a Ph.D. in urban geography. He’s published more than 200 scholarly articles on megaproject planning and management, decision-making, and social science methodology. He’s written or edited 10 books, including recently co-authoring “How Big Things Get Done.”
He shares examples ranging from the Sydney Opera House to Pixar movies to the California High Speed Rail, illustrating why some projects flourished while others flopped.
He joins us on today’s episode and talks to us about why some projects succeed while others turn into colossal disasters. He offers tips for how we can apply lessons from megaprojects to our own lives.
Enjoy!
Timing of discussion points as of February 2023:
02:19: Why are some projects on time and under budget and others aren’t?
03:24: The difference between successful and unsuccessful projects
07:38: Which questions do you ask when you’re choosing someone to work with on the project?
11:44: How cognitive biases and power dynamics and influence project outcomes
24:22: Why people forsake common sense when it comes to big projects
29:34: How to plan and iterate, knowing that things will change
39:26: The biggest risk to projects
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Jamie currently lives at home and dreams of reaching financial freedom by her early 30s. How can she take advantage of her low expenses to accelerate her wealth building?
An anonymous caller has enough to retire in 5 years. Does she still need her financial advisor or is it time to do it on her own?
Meghan is a personal finance enthusiast who wants to start a coaching side hustle. What’s the best way to get started?
Former financial planner Joe Saul-Sehy and I tackle these five questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Jamie asks (at 01:26 minutes): I’m 28 years old, debt-free and make $74,000. I live at home, so my only bills are my phone and a gym membership.
I have a $4,500 emergency fund and I also invest in my 401k.
My dream is to reach financial freedom by age 32. Should I start investing in mutual funds? What is your advice for someone in my position?
Anonymous asks (at 20:46 minutes): I’m 5 years away from retirement. Is it time to simplify and manage my own investments?
I’m 60 with $2 million in retirement, a $300,000 mortgage, and kids who are independent adults.
I like my advisor, but I pay hefty fees every year. Why shouldn’t I put my investments in a Fidelity S&P 500 and let it grow?
Meghan asks (at 46:30 minutes): I love personal finance and want to start a small business to coach others about the subject.
There are so many resources available. I’m not sure where to begin.
My questions and concerns are:
- How do I weed out the noise and develop my philosophy on money?
- Do I need to take a course or acquire a license?
- How do I legitimize myself?
- What do I need to do to tackle my own childhood money trauma and remain objective for my clients?
I trust Afford Anything’s overall philosophy on money management and I’m looking for your advice on the best next steps to take.
Resources Mentioned:
Four Unhealthy Attitudes Towards Money – with Dr. Brad Klontz | Podcast
How to Build Financial Resilience, with Dr. Brad Klontz | Podcast
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Okay, maybe the phrase “side hustle” is overused. But it’s also misunderstood.
“Side hustle” is a catch-all term that people use to describe everything from low-paid gig economy labor – Doordash, Uber Eats, Rover – to six-figure consulting for Fortune 500 companies.
On the remote-work side, it includes everything from freelance graphic design (services) to selling bundles of presentation deck templates (digital products).
On the physical goods side, it includes everything from wholesaling (real estate) to flipping antique grandfather clocks (personal goods).
On the e-commerce side, your side hustle might mean starting your own manufacturing, white-labeling and shipping services, in which you distribute toothpaste or trash can lids or desiccant packs.
How do we make sense of such an umbrella concept?
In this interview with Nick Loper, we learn how to wrap our minds around the huge world of hustles. We talk about how to understand the options available, choose a path, and start with minimal capital.
This interview originally aired as Episode 85.
Enjoy!
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Rocket Money, formerly known as Truebill, is a personal finance app that finds and cancels your unwanted subscriptions, monitors your spending, and helps you lower your bills, all in one place. Cancel unwanted subscriptions and manage your expenses the easy way by going to rocketmoney.com/paula.
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Behavioral researcher, Vanessa Van Edwards, talks to us about the critical importance of charisma – and how to use the perfect blend of warmth and competence to be charismatic.
Dr. Michael Slepian walks us through what secrets mean, what they cost, and how we think about them.
We dive into the world of long-distance real estate investing, and talk about two of the major components of investing – Cash and mindsets – to help you determine if long distance real estate investing is right for you.
International best-selling author, Julie Winkle Giulioni, reviews eight dimensions of career development and how to navigate them.
Chris Hutchins, entrepreneur and life hacker extraordinaire, spills his best secrets on optimizing spend to travel more cheaply.
Kiersten and Julien Sanders join us to discuss money topics for couples, and their framework for being financially independent in 15 years.
Stanford professor Jeremy Utley breaks down the art of creativity and producing new ideas – and shares actionable tips on how we can be more creative and have better ideas.
Dr. Daniel Crosby discusses how we are not wired to be good investors, and how to overcome our evolutionary wiring.
Enjoy this compilation of our favorite episodes to air in the second half of 2022.
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Credit: Chris Guillebeau
Ellen’s dad died unexpectedly. Her mom is clueless about finances. How does she help a 70-year-old unravel financial complexities?
Mike has an opportunity to buy into his friend’s growing business. What should be his legal, financial, and relationship considerations?
Pepp wants to know what’ll happen to her Restricted Stock Units when her company goes private.
An anonymous caller needs to build her nest egg. She’ll be a full-time student with no income. She has 20 years until retirement. Should she execute a Roth conversion?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Ellen asks (at 01:45 minutes): My father unexpectedly died a few weeks ago. My mom is really struggling and I don’t know how to help her.
My father managed their money in a complicated fashion. They had multiple bank and investment accounts, along with a few properties.
My mom has a job that’ll pay her a good salary until she dies, but she also spends a lot.
Her understanding of finances is so rudimentary that she doesn’t know how to log in to her checking account. My mom is in her 70’s, the learning curve to be able to manage everything on her own doesn’t seem realistic.
It’s overwhelming. I’m starting to realize that I can’t take over for her. I could see it really damaging our relationship if we don’t find a solution.
Are there clever ways to manage the condos that she now owns?
Mike asks (at 35:39 minutes): My old coworker offered me a partnership in his business. I deeply respect and have a great relationship with him.
He started his company in the engineering services sector eight years ago. He’s close to hitting $1 million in annual revenue and he thinks there’s lots of room to grow.
I’d be making $120,000 per year, similar to my current salary.
We’ve discussed the possibility of buying into his business by setting aside portions of my paycheck, but I have zero experience in business ownership.
Some questions I have:
- Is there a structure for buying in that works best?
- How do I protect myself and my own assets?
- How do I set myself up for short-term and long-term profit?
- How do I determine what the company is worth? How much should I own?
- Should I look for professional or personal support from a third party?
- Are there books or online courses you recommend?
- What are the other legal, financial, professional, and relationship perspectives I should consider?
I’m okay with being hired as an employee, but I’m more excited about the prospect of being a partner in this business.
Pepp asks (at 56:02 minutes): What are the financial consequences for employees when a public company goes private?
I work in tech and my publicly traded company is being acquired. What’s going to happen to my Restricted Stock Units (RSU’s)?
Will I take a loss? For someone with a lot of stock, how can I deal with the tax fallout if I’m forced to sell all of my shares at once?
Anonymous Caller asks (at 1:05:01 minutes): I quit my job in Virginia and moved to Texas to become a full-time student in an accelerated Bachelor of Nursing program.
I’m proud to be in a position to go back to school debt-free, but I wish I had more retirement savings.
I’m 40, single with no kids, and not planning to have children. I’ll graduate in January 2024 and plan to work until I’m 65.
I have $20,000 in emergency cash and $165,000 in retirement accounts: 80 percent is tax-deferred, and 20 percent is tax-exempt.
In the future, I want to travel or buy a home, but adding to my retirement is my number one goal for the next five years.
2023 provides an interesting opportunity to do a Roth conversion because I’ll have no income as a full-time student.
If I have $5,000 to invest, should I put it into an IRA?
Or should I use the money to pay taxes on a Roth conversion? I could move $40,000 from a tax-deferred account to a tax-exempt account.
Resources mentioned:
When a Company is Acquired | Website
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Annie Duke
We’re taught to stay in the game.
Persist. Be gritty. Try, try again.
But sometimes, the best decision is to walk away. Move on.
How do you know when that’s right? When should you double-down … and when should you fold?
Today’s guest, Annie Duke, won more than $4 million as a professional poker champion. She wrote the bestselling book Thinking in Bets and co-founded a nonprofit that teaches kids decision-making skills.
Her most recent book, “Quit: The Power of Knowing When To Walk Away,” teaches the behavioral science, mental models and recognition of cognitive biases needed to successfully quit.
It highlights real-world examples of startup founders, athletes, mountaineers, and entertainers who either quit – or didn’t – and explains how to make a wise, grounded choice.
She joins us on today’s episode to describe the forces that hold us back from quitting – and how to recognize when quitting could lead to a better life.
Approximate timing of discussion points as of January 2023:
02:32: Interview begins
02:51: Why should we know when to quit?
05:39: The three reasons it’s hard for us to walk away
11:29: Making decisions based on expected value
14:28: The role of ambiguity aversion and preferring the status quo
21:15: Thinking through the risk of ruin
24:54: Making decisions and the option to quit
31:50: Acting on good news vs bad news
50:12: How do we get better at quitting?
Resources Mentioned:
- Quit: The Power of Knowing When To Walk Away | Book by Annie Duke
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We’ve heard the warnings about following your passion.
People ask if you can actually make money doing what you love. They frame the question “passion or profit?” as though these are in opposition.
The majority – who have never tried – decry, “what if you fail?”
Nobody asks the more important question: what if you succeed?
Are you still going to love your passion when you rely on it to pay the bills?
We grapple with that question in today’s episode, which is devoted to side hustles and starting a business. We use questions from two of our listeners as a jumping-off point to discuss the realities of going into business for yourself, doing what you love.
We share examples from our own lives as professional podcasters, as well as from the lives of friends who are full-time photographers, musicians, writers and other creative entrepreneurs.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Gearet asks (at 01:43 minutes): How do I monetize my passion without burning out?
I’ve always loved music. Since I started focusing on monetizing it, I’ve been booked most weekends with paid shows. Playing music is fulfilling, but the other work such as social media, marketing, booking, and accounting feels like a drag.
I’ve heard the warnings about turning a hobby into a job and I’m especially wary because I work an intense 9-to-5.
How do I determine my next steps, and how I can pursue my passion in a smart financial way?
Liza asks (at 41:31 minutes): My husband and I want to take a mini-retirement or retire early to spend more time with family. At 44 and 47, which changes can we make to allow us that flexibility?
I run a seasonal inn, which is also my family’s home. The business covers most of our housing costs, but the net income is small. The income varies between negative cash flow and $15,000. The Inn is valued at $1.4 million. It has an outstanding mortgage of $205,000.
My husband nets $90,000 per year. He wants to quit working to spend more time with a sick parent in Europe. He may return to work immediately or wait six months to a year and start another job that may pay significantly less.
We have $130,000 in retirement accounts, $300,000 in cash, and €100,000 in an account in Europe. We also have a paid-off rental property worth $380,000 that cash flows $12,000 per year.
I’m considering paying off the mortgage on the Inn. It’s on a commercial loan with 15 years left. The first five-year ARM ends in December this year. Then the interest rate will likely rise above 6.76 percent for the next five years.
I’d also like to invest some cash in index funds and the Euro while it’s cheap, but I’m not sure how much to reserve with our impending loss of consistent income.
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Emily is saving aggressively for financial independence, but it’s hard to enjoy the present. Is it time to increase spending?
Monroe wants to stop working. Forever. Which is more important: debt payoff or investing?
Another anonymous caller and his spouse dream of building a homestead on an expensive piece of land. How much is too much to spend on housing?
Given the high costs of moving, Sarah wonders if buying a starter home is the best decision. Should she and her fiancé jump straight to buying their forever home?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Sarah asks (at 01:53 minutes): My fiancé and I are ready to start a family and we’ve found a community we want to settle in.
The area is expensive, especially with today’s mortgage rates.
If we plan on staying in the area, does a starter home truly make sense? Should we spend more on a house we want for the long run?
I’m considering one of four options:
- We could purchase a forever home, despite the high costs.
- We could purchase a small fixer-upper and upgrade down the road.
- We could buy a house with a basement apartment that would generate rental income, but this would only moderately offset the cost.
- We could rent.
I like the control that comes with being an owner, so I’m leaning toward a starter home. But what about moving and real estate transaction costs? I also worry about being priced out of this market whenever we’re ready to upgrade.
I’m 29 years old and make $155,000 a year with a 25 percent target annual bonus. I have $150,000 in cash, $320,000 in taxable brokerage accounts, and $160,000 in retirement funds.
I own two properties, one of which I live in. The combined rental income is $15,000 per year with $210,000 of equity. I don’t plan to sell either of them.
My fiancé makes $65,000 a year and doesn’t have any significant assets. He’ll likely pay a quarter of the monthly housing costs, and I’ll be responsible for the rest.
I’m not pursuing early retirement, but I value financial freedom and flexibility. How do I find a balance when my financial concerns seem to be in conflict with my ideal lifestyle?
Monroe asks (at 26:12 minutes): I want to generate enough passive income and wealth to stop working.
I sold a property that netted almost $500,000. With the proceeds, I bought seven rental units that generate $4,000 a year in income.
I also have $65,000 in the market, $30,000 in a 403b retirement plan, and $100,000 invested in a syndication deal that I expect to get back within the next year.
Should I pay off my mortgages with the income from my rental properties, or is there a better way to spend that money?
Should I prioritize investing or debt payoff?
Anonymous asks (at 36:38 minutes): My husband and I are on track to reach financial independence within a decade. It’s also hard to enjoy the present with such aggressive savings goals.
We bring in $250,000 a year, spend $70,000, and save the rest. (Editor’s note: holy smokes … assuming that you’re bringing in $250k after taxes, that’s a 72 percent savings rate!!)
My husband co-owns a business and has already agreed to terms that may allow him to sell it in three years. The lump sum payout would surpass our FI number.
We haven’t included the possibility of this sale in our financial plan. But now that it’s close, can we loosen the reins? What if the sale doesn’t go through?
Anonymous Caller asks (at 52:53 minutes): My spouse and I want to buy a property for small-scale farming or homesteading in a high-cost-of-living area.
It’s hard to grapple with the $1.6 million price tag for our dream.
We’re 30 years old and our combined gross income will be $450,000 in the next month. We have no debt, we save 60 percent of our income, and have a $350,000 net worth allocated mostly in retirement accounts.
We’re not interested in a McMansion, but most of the properties in our ideal location have McMansions on them. We’re considering buying land to build on instead.
Our plan is on a 10-year timeline: We would first put two tiny houses on the property to live in while we build our permanent home. Eventually, we would rent out the tiny homes and possibly one of our bedrooms to offset the costs.
We estimate $800,000 to buy the land and $800,000 to build a 1,500-square-foot house. Many calculators I’ve seen suggest we could afford $1.9 to $2 million based on our salaries.
But we’re in sticker shock.
Is this a fool’s errand? Or is it appropriate for our circumstances?
Resources Mentioned:
- How to Talk to Practically Anybody About Practically Anything | Barbara Walters
- Money and Investing Has Changed, with Chuck Jaffee | Podcast
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Life is busy.
We spend too much time on chores, errands, commuting, emails and other draining tasks. We lack time for joy and hobbies.
Or do we?
Today’s guest, Laura Vanderkam talks to us about how to make the most of our time and carve out more space for gratifying experiences.
Laura Vanderkam is a time management and productivity expert. Her latest work, “Tranquility By Tuesday: 9 Ways to Calm the Chaos and Make Time for What Matters” shares actionable steps to help you fill your schedule with more of what you love.
Enjoy!
Timing of discussion points as of January 2023:
05:00: How time has changed for people
06: 06: Where the time management focus should land
13:44: What is tranquility?
15:22: How to structure your hours
16:33: Set your bedtime: the foundational rule for time management
24:18: The power of planning on Fridays
29:05: Move your body by 3 pm
35:02: Create “backup slots”
37:10: The impact of various time management guidelines
38:43: The Big Adventures Rule
44:06: Taking a night for yourself
47:51: Batch the little things
50:16: The effortful before the effortless
Enjoy!
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Harvard professor Arthur Brooks described two types of intelligence – and explained, in scientific terms, the wisdom that comes with age.
Dr. Ellen Vora, M.D., shared insight into the roots of procrastination, offering evidence-based tips for how to overcome our own inner demons of anxiety, fear and laziness.
Psychology professor Bill von Hippel described why too much happiness is just as detrimental to our long-term health and wellbeing as too little happiness.
Wall St. Journal columnist Spencer Jakab observed the perfect storm of conditions that gave rise to meme stonks and other oddities of our era.
Former financial planner Joe Saul-Sehy argued for “strategic under-diversification” and explained the Sharpe Ratio.
Data scientist Nick Maggiulli explains the save-invest continuum.
And financial planner Bill Bengen, the creator of the 4 percent retirement withdrawal rule, talks about what most people misunderstand about the safe withdrawal rate.
These are just some of the highlights from the Afford Anything podcast in this 2022 year-in-review episode.
Enjoy!
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Your First Rental Property
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Casey isn’t happy at her job. If she leaves before her one-year mark, she’ll lose her 401k contributions. Should she stay or find a new job?
Ryan’s investing for his son. If the yield is the same between two mutual funds, can he leave his son with more money if one mutual fund pays dividends more frequently?
Emily already maximizes her 401k contributions. Should she contribute to an after-tax 401k next?
Daan resides in a high-cost-of-living area where real estate appreciates rapidly. But there’s no cash flow. How should he evaluate real estate as an investment?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Casey asks (at 01:36 minutes): I work at a nonprofit making $48,000 a year, but my earning potential is $20,000 or more in a different sector.
I like my current job, but management is stressful and disorganized. I want to find a job where I feel respected.
However, I’d lose $2,000 of employer contributions to my 401k if I leave before a year.
When should I find a new job?
Ryan asks (at 14:24 minutes): I’m investing for my son in Charles Schwab’s Total Stock Market Fund (SWTSX), which pays a dividend annually. Vanguard’s Total Stock Market Index Fund (VTSAX), on the other hand, pays quarterly dividends.
The yield is virtually the same, but will VTSAX provide higher returns because it distributes dividends more frequently?
Emily asks (at 18:59 minutes): I have traditional and Roth IRA accounts. I’m also maxing out my 401k.
Should I contribute to my employer’s after-tax 401k plan? I could convert additional after-tax dollars to Roth, making my investment growth non-taxable.
Are the benefits and drawbacks of backdoor Roth IRAs also applicable to Mega Roths?
Would my existing IRA accounts interfere with the Mega Roth?
What are the downsides of an after-tax 401k?
Daan asks (at 29:14 minutes): I live in Asia. Many people invest in real estate here because property prices rise quickly, even though the average income is very, very low, and therefore rents are low.
How can I evaluate properties when there’s no cash flow and the only way to earn a profit is through appreciation?
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When Jordan Grumet was a child, his dad died unexpectedly.
That was decades ago.
Jordan is a father today, but he thinks often about the possibility of dying young.
And he wonders how to balance enjoying today vs. saving for tomorrow, given that none of us know how long we’ll be on this earth.
How do we think about our lives when the clock starts to run out?
Beyond money, what other tools can we use to live a fulfilling life?
Jordan Grumet, a hospice doctor and host of the Earn and Invest podcast, discusses this in today’s episode.
Timing of discussion as of December 2022:
01:17: The conundrum of delaying gratification vs. YOLO
03:33: Ernesto and the argument for not delaying gratification
07:31: Questions to navigate your best path
10:45: Building financial plans at different speeds of gratification
18:10: Money is a tool, but not the only tool
20:31: Tactics to bring more of the other tools into our lives
34:18: The impact of purpose, identity and connections on financial plans
Resources Mentioned:
Ep 355: Hospice Doctors Advice On Financial Independence – with Dr. Jordan Grumet
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Our first anonymous caller is getting married. What are the financial considerations the couple should be thinking through since there is a large income gap between them?
Our second anonymous caller is concerned about her ability to continue working due to major depression. Should she consider disability insurance?
Carly is an accidental landlord and would love to keep her rental property. The problem? It’s losing money right now and she’d probably take a loss if she sold it. What should she do?
Shelby has an amazing opportunity to relocate to Tokyo for work, but she’ll have to take a pay cut. How should she think about her investment options?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
Anonymous Caller asks (at 03:04 minutes): My partner and I are getting married. We are wondering what we should be thinking about because there’s a sizable difference between our respective incomes.
My annual salary is $71,000 per year, and my fiancé makes $250,000.
Our only debt is federal student loans, which we expect to have forgiven under the public student loan forgiveness program in the next three years.
I’ve saved $83,000 in retirement accounts; I max out my Roth IRA and contribute 10 percent of my salary to a 403B. My fiancé is maxing out her 403B at $20,000 per year, and she thinks that I should max out my 403B contribution so that we’re able to retire at the same time.
We’re saving to buy our first home in the next year or two and would like to have two kids.
We won’t have a prenup, but we’re still deciding how to combine finances and plan a life together.
What sorts of models would you consider? What are the pros and cons of combining our income into a single account? Should we keep our individual accounts and set up a joint account for shared expenses?
We are also thinking about how we should file our taxes. Would you recommend filing jointly? Should there be additional considerations, because of the gap in our incomes?
Another Anonymous Caller asks (at 27:28 minutes): I’m 25, I make $70,000 a year, and I rent in North Florida.
I don’t have kids, a spouse, or dependents. I’m debt-free, and I own my car. I have a 5-month emergency fund and about $18,000 in investments spread across Roth IRAs, Roth 401ks, and brokerage accounts.
I have major depression that was undiagnosed and unmedicated until I graduated college. I couldn’t work for a year after college and the only way that I wasn’t in a box under a bridge was because I was able to live with my parents.
My dad doesn’t think I need disability insurance because I’m 25, but I have an uncomfortable relationship with my parents. Accepting money or support from them isn’t a backup plan that I desire. It’s not a good family relationship.
There’s a disability plan provided through my workplace that’s 100 percent employee paid. Should I consider this? What should I look for in a policy and what are the questions I should ask? I’m afraid.
Carly asks (at 41:52 minutes): I bought a condo in 2017 for around $195,000. Two years ago, we moved across the country for our military posting. We decided to rent the condo because we would’ve taken a big loss if we’d sold it.
However, we’re taking a cash flow loss of $500 to $600 per month by renting it.
I have $98,000 in student loans, $5,000 in an emergency fund, $3,000 in a tax deferred retirement account, $4,000 in a tax advantaged account, and $25,000 in a taxable brokerage.
The condo market in that city is not great.
Would you recommend selling it after the market improves? Or should I keep it as a rental?
Shelby asks (at 53:22 minutes): I have the opportunity to relocate to Tokyo for work. I’m excited for this incredible experience, but I’m struggling with the pay cut.
I’m 28 and debt-free. I have $200,000 in a taxable brokerage, $90,000 in my 401k and Roth IRA, and a $15,000 emergency fund. My current salary is $145,000, and my salary will be approximately $105,000. I’ll also have about $80,000 of Restricted Stock Units vesting each year over the next two years.
When I move, I’ll no longer be eligible to contribute to my 401k. However, I could contribute to a pension through the Japanese government.
I recently opened a traditional IRA for a backdoor Roth conversion. Should I continue to contribute this way despite the poor exchange rate, or would I be better off saving this money in yen until the exchange rate improves?
My next question: should I exchange my yen to US dollars and continue investing in my Vanguard taxable brokerage account, or should I look at foreign investment opportunities?
If so, do you have any resource recommendations?
Finally, my company provided a tax consultation with the provider who will support my tax returns while I’m abroad. Are there any questions that I should ask in our next discussion?
Resources Mentioned:
Couples Who Combine Finances Are Happier | Wall St. Journal
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Crypto is tanking. Household debt is climbing. Student loans are tangled up in the court system. And the house market…did what?!Today’s bonus First Friday episode takes a look at the latest economic headlines, with analysis, commentary and hot takes.Enjoy!
The average American donates 2.1 percent of their income to charity, according to data from the Giving Institute.
But an ordinary couple living in Nashville, Bob and Linda Lotich, refuse to be average.
When they were both 31, they decided to “give their age” – they pledged to donate 31 percent of their income to worthwhile causes.
They’ve increased their charitable giving every year since, to match their age. The couple is now 41 years old, and they give away 41 percent of their income.
When they began this project, the Lotich’s were earning a combined household income in the high five-figures. They were making just under $100,000 combined, living in St. Louis. They carried a mortgage on their home. They worried that their commitment to giving might impact their ability to pay the bills.
Over the last decade, their income has fluctuated – up some years, down in others. They moved to Nashville and had three children. These higher living costs have drastically impacted the family budget.
But their commitment to giving persists.
In today’s episode, Bob Lotich joins us to talk about why and how he committed to the “give your age” philosophy – and shares his advice for anyone who wants practical tips for increasing their capacity to donate to meaningful causes.
Enjoy!
Natasha thinks she and her husband have saved enough to retire early, but they’re scared. Are they ready or are they delusional?
Should Krista tap into the equity from one of her rentals to rebalance a portfolio that is weighted heavily in real estate?
Anonymous is a savvy investor who wants to retire early. She wonders if she should hire a financial advisor, or if she can manage her investments herself.
Amanda is worried that her recently diagnosed health condition might force her to stop working. How should she financially prepare her family?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
If an idea dominates the headlines, we notice it.
But maybe we shouldn’t.
Today’s guest, psychologist and behavioral finance expert Dr. Daniel Crosby, says there’s a difference between a prediction that gets repeated, and one that’s likely to unfold.
What’s salient isn’t accurate, he says. And vice versa.
He also talks about how money problems have morphed over time. He chats about how our evolutionary wiring is at odds with our goals. And he even discusses how we’re wired to be ‘lazy’ – and how to work with that tendency instead of fighting an uphill battle against it.
Dr. Crosby researches the intersection of mind and markets. His latest work, The Behavioral Investor, is an in-depth look at how sociology, psychology and neurology impact our investment choices.
Taylor recently graduated. She wants to reach financial independence as soon as possible. What should she do first: invest or repay low-interest debt?
Carter doesn’t want to pay too much for his investments. He’s worried about the tax drag. He wants to know how to improve cost efficiency in his portfolio. How should he manage decisions about basis points, dividends and capital gains?
Our first anonymous caller has been working and investing for a decade. Today her portfolio is large enough that she and her husband can finally take a mini-retirement.
They’d like to rebalance their portfolio. They want it to reflect the fact that they won’t be working for a while. They’d also like to calculate how much money they need to travel with their children. How should they handle this?
Our second anonymous caller is worried that their portfolio is out-of-whack. Their money is in a target date retirement fund. They’d like to move some of it to a three-fund portfolio. But this is a scary time to sell. Stocks are low. What should they do? Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode. Enjoy! P.S. Got a question? Leave it here.
Welcome to Invest Anywhere, our monthly series on long-distance real estate investing.
Invest Anywhere airs on the First Friday of each month and is co-hosted by Paula Pant and Suni Rao.
__________
In the final installment of this two-part mini-series, we walk you through becoming a subject matter expert in your investment city of choice.
We discuss who you should talk to, where you can find them and what you should talk to them about.
You face plenty of problems.
But you have a scarcity of good solutions.
Stanford Professor Jeremy Utley can help.
He says that solving complex problems requires creativity. And creativity comes from deliberate practice.
It’s not an innate talent. It’s a skill. And it’s useful in any occupation, from accounting to zookeeping.
Jeremy speaks and writes on the history of invention, discovery, creativity, and innovation. He also leads Stanford d.school's work with professionals.
Today he talks to us about how some of the greatest innovators produce new ideas. He tells us about their creative process.
He describes how researchers and authors improve their skills.
And he shares pointers to help you understand how to do the same.
Liz and her husband are planning to retire in 5 to 10 years. They have rental income properties, but Liz is bored of managing these, and she’s intrigued by the idea of buying stocks at a discount when the market is low. Should she sell her rental properties and use the money to buy stocks instead?
Rebecca is a high income earner and thinking about investing in a Roth 401k … but she’s scared of how much she’ll have to pay in taxes. Should she do it anyway?
Anonymous made big changes last year: she got a new career AND sold a house! Now she needs help figuring out capital gains and lowering how much she’ll have to pay in taxes … and she won’t have access to her company’s 401K for most of the year.
Kyle and his wife are moving into their dream home! What should they do with their current place?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
Liz and her husband are planning to retire in 5 to 10 years. They have rental income properties, but Liz is bored of managing these, and she’s intrigued by the idea of buying stocks at a discount when the market is low. Should she sell her rental properties and use the money to buy stocks instead?
Rebecca is a high income earner and thinking about investing in a Roth 401k … but she’s scared of how much she’ll have to pay in taxes. Should she do it anyway?
Anonymous made big changes last year: she got a new career AND sold a house! Now she needs help figuring out capital gains and lowering how much she’ll have to pay in taxes … and she won’t have access to her company’s 401K for most of the year.
Kyle and his wife are moving into their dream home! What should they do with their current place?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
When Kiersten and Julian Saunders began dating in 2012, they fell in love quickly, and their relationship felt strong – until they started talking about money.
They broke up as a result of their first money conversation.
Luckily, they got back together, figured out how to have tough conversations, and paid off $200,000 in debt over the next five years.
Then they started thinking about how to hack their careers. They came up with a plan for a 15-year career.
Today, they join us on the podcast to talk about the 15-year career framework and how to approach your career - and your finances - in 5 year stints.
When Kiersten and Julian Saunders began dating in 2012, they fell in love quickly, and their relationship felt strong – until they started talking about money.
They broke up as a result of their first money conversation.
Luckily, they got back together, figured out how to have tough conversations, and paid off $200,000 in debt over the next five years.
Then they started thinking about how to hack their careers. They came up with a plan for a 15-year career.
Today, they join us on the podcast to talk about the 15-year career framework and how to approach your career - and your finances - in 5 year stints.
Ionnie wants to vet her tax professional as diligently as she assesses her financial advisor – how should she go about doing that?
Anonymous needs a career change, and she needs help figuring out how to approach the decision making process when choosing and preparing for her next field of employment
MM prefers the simple path to wealth and investing in real estate but is looking for more information on a more intentional and selective approach to investing.
Ingrid calls in to ask whether she should include her rental income when trying to figure out how much she can contribute to her Roth IRA.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
Ionnie wants to vet her tax professional as diligently as she assesses her financial advisor – how should she go about doing that?
Anonymous needs a career change, and she needs help figuring out how to approach the decision making process when choosing and preparing for her next field of employment
MM prefers the simple path to wealth and investing in real estate but is looking for more information on a more intentional and selective approach to investing.
Ingrid calls in to ask whether she should include her rental income when trying to figure out how much she can contribute to her Roth IRA.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
Welcome to Invest Anywhere, our monthly series on long-distance real estate investing.
Invest Anywhere airs on the First Friday of each month and is co-hosted by Paula Pant and Suni Rao.
__________
In this two-part episode, we first tackle the data points needed to assess various investment locations within your city of choice.
We will [...]
Daniel and his wife want to go on an extended vacation and leave their jobs next year…and still have money in case there’s a problem at their rental properties. Would a HELOC help them?
Anonymous and her husband have received a large commission and want to understand how to better plan for their future by optimizing for these inconsistent windfalls.
Brian has hit coast F.I.R.E and would like guidance on how to prioritize between tax advantaged accounts and retirement accounts.
Anonymous and his wife have been focused on getting short term rentals in a single location - is his portfolio too focused on this singular strategy??
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
When Rand Fishkin was 25 years old, he carried $500,000 in credit card debt.
Less than a decade later, Rand was the Founder and CEO of a company that grossed $35 million in annual revenue.
In this podcast episode, Rand shares the story of hitting his financial rock-bottom and making the ultimate comeback.
When Rand Fishkin was 25 years old, he carried $500,000 in credit card debt.
Less than a decade later, Rand was the Founder and CEO of a company that grossed $35 million in annual revenue.
In this podcast episode, Rand shares the story of hitting his financial rock-bottom and making the ultimate comeback.
Chad Carson’s friends called him a “nerdjock.”
When former college football linebacker Chad Carson graduated from Clemson University, he decided to start a business. But he didn’t have any money.
He was a 235-pound athlete who attended college on a football scholarship. He graduated debt-free with $1,000 in savings from various odd jobs. He wanted to become an entrepreneur, and he knew he was starting from zero.
As Chad viewed it, starting from zero meant he had nothing to lose.
He started jogging around local neighborhoods near the university. Whenever he noticed a property in disrepair, he’d ask if it was for sale.
If he noticed a ‘For Sale by Owner’ sign in the yard, for example, he’d dial the number.
If he noticed a home with an overgrown lawn and no curtains in the windows, he’d leave a note on the door, or he’d knock on the neighbor’s doors to get the owner’s phone number.
By doing this, Chad started a real estate wholesaling business. He’d find off-market properties, enter into a sales contract with the owner, and then ‘flip’ the contract to an investor. He earned around $5,000 for each deal.
The benefit to a wholesaling business, Chad discovered, is that he could get a foothold inside the real estate industry without much access to capital. He was a recent college graduate without any official employment, so most banks weren’t interested in offering him loans. Wholesaling gave him a start in the industry.
But after awhile, he wanted to chase bigger deals. He and a business partner decided to start flipping houses themselves. They earned profits of around $20,000 to $30,000 for each deal.
While this was great, Chad wanted to transition into something that would provide a steady, stable income stream. He was running an active business; he wasn’t accumulating a portfolio of passive investments.
He and his business partner stopped flipping homes and began accumulating buy-and-hold rental properties. Today they have 90 units between the two of them.
A few years ago, Chad realized that the passive income from his investments made him financially independent. He and his wife decided to enjoy their newfound freedom by moving to Ecuador with their two children, ages 3 and 5.
They spent 17 months living in Ecuador, learning Spanish and enjoying a slower pace of life. They recently returned to the U.S. and are considering moving to either Spain or Germany — or maybe Colorado? — for their next adventure.
In today’s episode, Chad and I discuss real estate, financial independence, and international travel with children.
Chad Carson’s friends called him a “nerdjock.”
When former college football linebacker Chad Carson graduated from Clemson University, he decided to start a business. But he didn’t have any money.
He was a 235-pound athlete who attended college on a football scholarship. He graduated debt-free with $1,000 in savings from various odd jobs. He wanted to become an entrepreneur, and he knew he was starting from zero.
As Chad viewed it, starting from zero meant he had nothing to lose.
He started jogging around local neighborhoods near the university. Whenever he noticed a property in disrepair, he’d ask if it was for sale.
If he noticed a ‘For Sale by Owner’ sign in the yard, for example, he’d dial the number.
If he noticed a home with an overgrown lawn and no curtains in the windows, he’d leave a note on the door, or he’d knock on the neighbor’s doors to get the owner’s phone number.
By doing this, Chad started a real estate wholesaling business. He’d find off-market properties, enter into a sales contract with the owner, and then ‘flip’ the contract to an investor. He earned around $5,000 for each deal.
The benefit to a wholesaling business, Chad discovered, is that he could get a foothold inside the real estate industry without much access to capital. He was a recent college graduate without any official employment, so most banks weren’t interested in offering him loans. Wholesaling gave him a start in the industry.
But after awhile, he wanted to chase bigger deals. He and a business partner decided to start flipping houses themselves. They earned profits of around $20,000 to $30,000 for each deal.
While this was great, Chad wanted to transition into something that would provide a steady, stable income stream. He was running an active business; he wasn’t accumulating a portfolio of passive investments.
He and his business partner stopped flipping homes and began accumulating buy-and-hold rental properties. Today they have 90 units between the two of them.
A few years ago, Chad realized that the passive income from his investments made him financially independent. He and his wife decided to enjoy their newfound freedom by moving to Ecuador with their two children, ages 3 and 5.
They spent 17 months living in Ecuador, learning Spanish and enjoying a slower pace of life. They recently returned to the U.S. and are considering moving to either Spain or Germany — or maybe Colorado? — for their next adventure.
In today’s episode, Chad and I discuss real estate, financial independence, and international travel with children.
Do you wrestle with the idea of leaving your savings in an account earning next to nothing versus investing it in the stock market?
Do you use investment strategies that allow you to work with your nature, rather than against it?
Are you careful to seek investment advice from those who share your investment goals, or do you get caught up in the trends of day traders?
Morgan Housel, author of The Psychology of Money, joins us to discuss why investing is not the study of finance, but the study of how people behave with money. Morgan is an award-winning financial journalist, former columnist for the Wall Street Journal and The Motley Fool, and one of the foremost thinkers in the world of investing.
As a long-term investor who shares our buy-and-hold philosophy, Morgan has behavioral finance insights that can help us invest for financial independence with more clarity and a better understanding of ourselves.
We discuss how to develop self-awareness around biases, the importance of flexibility for long-term strategies, saving like a pessimist and investing like an optimist, becoming durable in the face of market adversity, the key difference between patience and stubbornness (and how it affects your mindset), expectation management, the importance of bonds and emergency funds, and a difficult lesson about tail risks that Morgan learned at age 17.
Do you wrestle with the idea of leaving your savings in an account earning next to nothing versus investing it in the stock market?
Do you use investment strategies that allow you to work with your nature, rather than against it?
Are you careful to seek investment advice from those who share your investment goals, or do you get caught up in the trends of day traders?
Morgan Housel, author of The Psychology of Money, joins us to discuss why investing is not the study of finance, but the study of how people behave with money. Morgan is an award-winning financial journalist, former columnist for the Wall Street Journal and The Motley Fool, and one of the foremost thinkers in the world of investing.
As a long-term investor who shares our buy-and-hold philosophy, Morgan has behavioral finance insights that can help us invest for financial independence with more clarity and a better understanding of ourselves.
We discuss how to develop self-awareness around biases, the importance of flexibility for long-term strategies, saving like a pessimist and investing like an optimist, becoming durable in the face of market adversity, the key difference between patience and stubbornness (and how it affects your mindset), expectation management, the importance of bonds and emergency funds, and a difficult lesson about tail risks that Morgan learned at age 17.
Jen Sincero says she used to be a “grouchy broke person.”
In her early 40’s, Jen lived in a converted garage, buried in credit card debt and scrounging for spare change.
She was the type of person who’d join her friends at a restaurant for dinner, order nothing except tap water, and fill up on the complimentary bread basket. She used duct-tape to repair her shoes. Her “splurges” consisted of buying new windshield wipers.
Despite her struggles, Jen believed that pursuing wealth was…icky. She’d internalized negative social attitudes towards money, such as:
Money isn’t important. People are. Rich people are lucky / gross / shallow. You can’t make money doing [insert your-dream-here]. You have to attend a good college to make money. Money is out of my reach. It’s lonely at the top. Who has that kind of money? He/she is only about the money.
Those negative attitudes, Jen says, were holding her back. So she created a more positive script — such as “I’m good at making money,” and “Money is a tool that helps me live my best life.”
This attitude shift made all the difference.
In today’s interview, Jen describes her journey from broke to badass, and she explains how everyone can become more of a maverick at making money.
Jen Sincero says she used to be a “grouchy broke person.”
In her early 40’s, Jen lived in a converted garage, buried in credit card debt and scrounging for spare change.
She was the type of person who’d join her friends at a restaurant for dinner, order nothing except tap water, and fill up on the complimentary bread basket. She used duct-tape to repair her shoes. Her “splurges” consisted of buying new windshield wipers.
Despite her struggles, Jen believed that pursuing wealth was…icky. She’d internalized negative social attitudes towards money, such as:
Money isn’t important. People are. Rich people are lucky / gross / shallow. You can’t make money doing [insert your-dream-here]. You have to attend a good college to make money. Money is out of my reach. It’s lonely at the top. Who has that kind of money? He/she is only about the money.
Those negative attitudes, Jen says, were holding her back. So she created a more positive script — such as “I’m good at making money,” and “Money is a tool that helps me live my best life.”
This attitude shift made all the difference.
In today’s interview, Jen describes her journey from broke to badass, and she explains how everyone can become more of a maverick at making money.
F.I.R.E. holds four pillars: Financial psychology, Investing, Real estate, and Entrepreneurship. This September, we’re running four weeks of episodes focusing on each of these four pillars, plus one bonus episode sharing impactful lessons learned from those who have reached F.I.R.E.
Enjoy!
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Today we’re sharing three talks given at the EconoMe conference, with each of these talks relating to F.I.R.E. The three discussions are:
FI-Landia is a lie - What I Learned On My Journey To F.I.R.E., with Carl Jensen What If You Achieve All Your Goals But You’re Still Not Happy, with Rich Jones How To Never Again Say, “I Can’t Afford It”, with Paula Pant
Bella is SO CLOSE to reaching F.I.R.E and is worried about her withdrawal rate if the stock market drops. If the stock market does drop, can she withdraw as much as she had originally planned?
Sam has been investing for several decades and thinks that he should stay invested in his portfolio, despite the recent drop in value…but he is still wondering if there’s a chance that he should sell.
Meisha is making more money at her new job but can’t contribute to her 401(k) for the first six months - what should she do with her extra money in this interim??
Kyria is a young investor with multiple goals: she’s wondering how to best save for a down payment without it being eroded by inflation and also whether her investment choices should take on more risk, since time is on her side.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
Chris Hutchins is an avid life hacker, a financial optimizer and the host of the top ranked podcast “All The Hacks”, where he shares his quest to upgrade his life without having to spend a fortune. These passions have led him to being featured in a documentary on financial Independence called “Playing with FIRE” and collecting millions of points and miles.
If you want to learn more about optimizing your spend so that you can travel with less of an impact to your bank account, you’ll want to hear what Chris has to say.
Nick’s parents are forced to confront earlier than anticipated retirement…and they aren’t financially prepared. Now, a bank is offering to buy a part of their mortgage or a part of their house. Is this a scam?!
Jon from Colorado is curious about after tax contributions to a Roth 401k, and would like us to talk about why we wouldn’t recommend it.
Anna is househacking, and she locked down an awesome interest rate. But, she’s still carrying PMI and is wondering if there’s a way to remove the PMI without refinancing.
Courtney from Denver is a real estate investor who wants to invest in new locations and wants tips on building out her network.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
International best-selling author and leadership speaker, Julie Winkle Giulioni, talks through a multidimensional career framework that features eight dimensions of career development.
She spells out how to apply the dimensions of contribution, competence, connection, confidence, challenge, contentment, choice and climb to different parts of your professional life, whether that’s assessing your current job, navigating a conversation with your superior or setting yourself up for the next progression.
Welcome to Invest Anywhere, our monthly series on long-distance real estate investing.
Invest Anywhere airs on the First Friday of each month and is co-hosted by Paula Pant and Suni Rao.
__________
In this episode, we tackle the challenging decision of how to evaluate a city for rental property investment.
We will cover three specific [...]
Bill listened to our episode with Bill Bengen, father of the 4% rule, and he wants to know if there was a way for him to figure out how much money he should be keeping in cash.
Heather inherited an IRA but MUST empty it within ten years - but she doesn’t need it right now. What should she do??
Sheryl gets stock from her company, and she would usually sell it…but the stock value has decreased. And now, she isn’t sure what she should do.
Julie and her husband have access to an HSA for ONE MONTH. Can they max it out before they lose access to it?
In today's episode, former financial planner Joe Saul-Sehy and I tackle these tough questions.
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
Chuck Jaffee, a forty-year veteran financial journalist who regularly writes for the Wall Street Journal and is also a nationally syndicated financial columnist, discusses how money and investors' attitude towards investing has changed over the last few decades.
Colleen and her husband own SEVEN paid off rental homes. Now they’re heading into retirement and disagree on what to do with some of that equity.
Kevin wants to hit FIRE (Financial Independence, Retire Early) and believes his motivation comes from witnessing the financial trauma of the Great Recession. He’s wondering if others are motivated to reach FIRE for similar reasons.
Anonymous wants to learn more about utilizing HSA accounts and Susan wants to learn more about investing in tax liens.
My friend and former financial planner Joe Saul-Sehy joins me to answer these questions on today’s episode. Enjoy!
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Dr. Reza Abraham, an international leadership consultant, walks us through a framework of staying in control of your career and your life. This framework utilizes a singular core, three cornerstones and twelve principles. He explains how to apply and execute these principles to reinforce personal fulfillment, growth and progression.
0:00:47: Introducing Dr. Reza Abraham
0:02:48: [...]
We start this episode with two anonymous callers who have opposite problems: one says her bills are too high, while the other is worried that she’s saving too much.
Anonymous (“Izzy”) saves A LOT. She wants to relax about her spending more, and start including more joy into her life. How should she approach the next 10 or 20 years, so that she can enjoy her financial security?
A different anonymous caller (“Starlight”) has the opposite problem: her expenses are mounting. Her bills make her uncomfortable. She wants to shake up her investments so that she can tap her assets in order to make her payments. Ideally, she’d also like to buy a house in Europe within the next 10 years. How should she do this?
John liked the episode with Bill Bengen, where we discussed the 4% rule. However, he questions whether that rule should really be applied to the FIRE community.
Steve is a landlord who needs his property to cash flow, but doesn’t like to raise rents. What should he do?
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
Welcome to Invest Anywhere, our monthly series on long-distance real estate investing.
Invest Anywhere airs on the First Friday of each month and is co-hosted by Paula Pant and Suni Rao.
__________
Today we tackle one of the most common questions we hear:
“Should I bother investing in real estate?” “Is the hassle worth it?” “What’s the upside? Is this worth my time and effort?” “Do I really want to do this?” “Maybe I should just stick to index funds …”
How can you methodically, systematically dig into answering this question?
In this episode, we’ll help you take a personal inventory of four factors: your time, capital, relationships, and mindset.
Time, capital and relationships are the resources at your disposal, and your mindset governs how well you’ll use those resources.
These four factors will have a major influence on your experience as a long-distance investor.
And there’s good news:
Plenty of successful investors start out with empty coffers in one or more of these arenas.
They’re strapped for cash. They’re pressed for time. They lack connections.
In this episode, we discuss how to inventory your time, cash and connections (you might have more than you think!), as well as what to do if you’re lagging in one or more of these arenas.
Enjoy!
Recessions are terrifying.
Market crashes often bring out the worst in people’s anxieties and fears.
This fear triggers us to act even more irrationally than usual – which can lead to making expensive mistakes in our investment portfolios.
In today’s episode, Scott Nations, who spent his career studying market volatility, describes some of the most common cognitive biases and irrational behaviors that investors make. He shares tips on how to master the mental game of investing, especially in turbulent times.
Here are a few irrational biases that destroy wealth:
1: The disposition effect – Humans have a tendency to sell their winners and hold their losers.
Why? We get a dopamine hit when we sell a winning asset and lock in our gains. Meanwhile, sunk cost fallacy makes us want to hang onto the loser ‘until it comes back.’
How can we avoid falling prey to this?
First, if you’re thinking about selling off an asset that’s performing well, ask yourself: What’s the real motivation? Do you want to book a profit for the sake of booking a profit? Or do you believe that some underlying fundamental has changed?
Next, compare this decision to your investor policy statement, which is your written statement about your goals, timeline, risk tolerance, risk capacity, strategy and style as an investor. Is this decision aligned with your written personal policies?
2: Status quo bias – Our tendency to overvalue our current situation, such as the mix of assets that happens to already be inside our portfolio. We demand a higher burden of proof to justify any change than we do to justify holding the status quo.
This is often triggered by information overload – when we feel overwhelmed by excess information and too many options, we react by doing nothing.
Psychologist Barry Schwartz calls this the “paradox of choice” – the more choices we’re offered, the more likely we are to not make any decision.
How can we protect ourselves from this? One tactic is to adopt a low-information diet, in which we carefully curate the amount of news and information that we receive.
Another tactic is to look at our resources and imagine that we’re starting from a blank slate. If we didn’t have our current mix of stocks, bonds, real estate, crypto, etc. – if we imagine that we’re starting with our entire net worth in cash – how would we allocate our capital if we were starting from scratch?
3: Overconfidence - Research shows that people consistently overestimate both their abilities and their predictions of positive future outcomes.
The majority of people think they’re an above-average driver, which is mathematically impossible.
Most people overestimate their probability of getting and staying married forever, of not grappling with fertility issues, choosing a winning investment, or becoming a millionaire.
Today’s interview guest says that he’s aware that, among all the cognitive biases he describes, he’s personally the most susceptible to overconfidence bias. Staying aware of his personal susceptibility helps him keep it in check.
4: Loss aversion - The sting of a loss is more emotionally profound than the joy of a gain. As a result, our brains are hardwired to avoid losses, rather than pursue gains.
This closely relates to the sunk cost fallacy that fuels the disposition effect, which we described above.
We describe many more cognitive biases in today’s episode. Enjoy!
Lila is concerned about inflation and the risk of a recession. Should she invest in the stock market, despite the scary headlines? Or should she pay off her primary residence or her investment properties?
Linda invested in a 529 for her son’s college, and he’ll be starting in the fall. But, the value of the plan dropped right before she was planning on using it and she is wondering how to keep from losing more money.
Jen and her husband want to retire in 8 years. They’re hoping to have paid off their mortgage AND hit their net worth goals when they stop working. How should they prioritize between these two goals?
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
We all have our secrets.
We keep some secrets from bosses, colleagues and clients, like the fact that we hope to retire early, change careers, or start a business.
We keep other secrets from friends and family, like our income, net worth, spending habits and investing mistakes.
Research from around the world shows that we [...]
Anonymous (“Jennifer”) keeps hearing us say that you should “start with the end in mind” – that your investments should match your goals and timeline. But what if you don’t have any specific financial goal? What if your risk tolerance is different than you once thought?
Rachel’s new employer won’t let her contribute to retirement for more than a year - what should she do??
Carri’s parents are in poor health and can’t work much - what should they do about their life insurance policy and their health insurance?
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
Welcome back to the third episode in our special series, Afford Anything Presents: Invest Anywhere.
Invest Anywhere is a new monthly series that runs on the First Friday of each month. It lays out the information you need to invest in real estate at a distance.
Many of you want to invest in real estate, but you live in a high-cost-of-living area. (Ahem, California and New York). The homes in your city are prohibitively expensive, and they offer lackluster returns.
You could invest in a lower-cost area like Cincinnati, Indianapolis, Omaha or Wichita … but HOW? That sounds terrifying.
We’re here to dismantle that fear, piece by piece, by sharing our knowledge and experience.
The Invest Anywhere series is dedicated to giving you the guidance you need to make smart, confident choices about investing out-of-state.
It’s co-hosted between myself (Paula) and esteemed real estate investor Suni Rao, who’s experienced everything ranging from buy-and-hold rental investing to (accidentally) wholesaling. She’s managed short-term and long-term rentals. She’s owned houses, multi-units, and even a mobile home park.
She joins me in this episode to talk about a variety of strategies that will help you make money in real estate.
Behavioral researcher Vanessa Van Edwards, who runs the research lab Science of People, breaks down the psychological secrets behind feeling and looking more confident, competent and charismatic.
She explains how to apply these techniques to critical conversations around money, whether you’re negotiating your salary, buying a home or car, or arguing with your spouse about your household spending.
People who are liked tend to earn more money and enjoy more opportunities, Van Edwards says.
There are practical, quantifiable financial benefits to working on the soft skills of warmth, likeability and charisma.
In this episode, we cover:
• The distinction between encoding and decoding – and why it matters • How subtle shifts in your body language can make a big impact in your ability to connect with others • The key “warm” words to say whenever you’re opening a conversation, whether you’re talking to a boss, colleague, client, or neighbor • How to handle your hands, especially if you find yourself awkwardly standing around at a networking event • The “sound cues” and vocal inflections that can either boost your perceived competence – or that can subtly discredit your message • The visual cues that make people notice you and want to conduct business with you
Enjoy!
Sara wants to leave her job to spend time with her children, and she needs help in calculating her FIRE number. But is this possible?
Joe is buying his first house hack and would like to understand if the FHA loan or the doctor loan would be better for him.
Kat received a windfall and is wondering if she should invest it in stocks, real estate, or a combination of both.
Aisha is moving to the US and wants to start investing ASAP - how should she approach her goal to reach FIRE?
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
Maybe you’re envious of your friend who bought Bitcoin in 2015 and held until it hit 7-figures.
Maybe you’re anxious about rapidly rising home prices.
Maybe you regret that you didn’t buy a rental property five years ago, because – at the time – you felt like prices had already risen so much (from 2012 to 2017) that you just couldn’t justify paying 2017’s pricetag.
Our lives, finances and careers invoke many strong feelings. In today’s episode, Mollie West Duffy, the co-author of Big Feelings, shares strategies for not letting our feelings hijack our choices.
Mollie and her co-author, Liz Fosslien, run an Instagram channel about emotional management with half a million followers. Fosslien is an economist and behavioral scientist whose work has been featured by The Economist, Freakonomics and NPR. Duffy is an organizational and leadership development expert who’s written for Harvard Business Review.
They tackle relatable workplace issues like perfectionism, productivity guilt and Zoom fatigue, among much more.
Enjoy!
Hi there!
This post is an illustrated, pared-down version of my recent "Inflation, Explained" podcast episode.
It was created as a simple, easy-to-digest guide to help you understand the current inflationary environment in the US.
Ready? Let's dive in!
What is inflation?Simple definition: too [...]
Anonymous and her spouse are both in the military and about to reach retirement. They have an expensive whole life insurance policy, costing $550 per month, and wonder if they should switch to term life insurance.
Ionnie just rolled over her Roth IRA and would like to understand how to withdraw her contributions without getting penalized
Matt wants to optimize his portfolio and wants to know if he should invest along the Efficient Frontier – despite the fact that the asset allocation it recommends is absolutely bonkers; it’s wild and risky and tilted like nothing he’s ever seen before.
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Also – we’re launching a book club!! Each month, we’ll read and discuss a book written by an Afford Anything podcast guest, starting with Morgan Housel, James Clear, Ken Honda, and Dr. Susan David.
Welcome to our First Friday bonus episode.
Once a month, Afford Anything presents a special feature called Invest Anywhere, in which we teach our audience how to invest in real estate from thousands of miles away.
We kickoff today’s episode by discussing current market conditions. Yesterday the Fed raised interest rates by another 50 basis points, which means mortgages are more expensive than they’ve been in years. Additionally, jittery investors worried about an impending recession led the stock market to its worst day of the calendar year so far.
How should we interpret the current market conditions? Is this a good time to buy an investment property? We cover this in the first 20 minutes of today’s episode.
Next, we discuss 5 challenges associated with investing in long-distance real estate investing: (1) fear, (2) accountability, (3) traction, (4) stress, and (5) relationships.
We elaborate on each challenge and offer solutions.
Finally, we discuss 4 benefits to investing out-of-state: (1) competitive ability, (2) diversification, (3) returns, and (4) repeatability. We elaborate on four types of diversification: economic, strategy, business cycle, and asset based.
Enjoy!
Anonymous is 25. She has a job offer that comes with a substantial raise. Hooray!
Buuut … there’s a problem. If she accepts this job offer, her new employer won’t allow her to contribute as much money to her company retirement accounts.
How should she think about the trade-off between increasing income and funding her retirement?
Meanwhile, Dan from California is retiring soon and wants to know what he and his wife should do with the loan they took out against their 401(k).
Finally, an anonymous caller who goes by “Daughter” has a whole life policy that only costs her less than $50 per month. Since her policy is so cheap, should she keep it?
Today’s episode is sheer retirement nerd bliss.
We talk to the creator of the 4 percent retirement safe withdrawal rule, Bill Bengen.
If you’re new to retirement planning, you might not yet grasp the gravity of this. Let’s cut to the chase: the 4 percent rule is one of the most revolutionary, groundbreaking insights in the field of retirement research in the past 30 years.
To understand why, let’s climb in our time machines and return to 1994.
Back then, many financial advisors were telling their clients that they could safely withdraw 7 percent of their retirement portfolio each year.
After all, the simplistic logic went, the stock market has historically yielded between 7 to 9 percent returns, so that type of withdrawal rate shouldn’t dwindle the principle … right? ⠀ ⠀ Bill Bengen, an MIT graduate and former rocket scientist, decided to build a better model. He looked at the performance of investment portfolios across 30-year time horizons, beginning in 1926.
Under the assumption that the portfolio is invested 50 percent in an S&P 500 Index and 50 percent in intermediate-term bonds, in a tax deferred account, he found that retirees could only withdraw 4.2 percent of their portfolio in the first year of retirement, and that amount adjusted for inflation each subsequent year.
He called this the “safe withdrawal rate” that gave people a reasonable chance of not outliving their money, based on historic performance.
He published the results in the Journal of Financial Planning and caused a stir. This was revolutionary. It upended the assumptions that dominated the field at the time.
And it remains a cornerstone of retirement planning to this day.
We talk to Bill Bengen about his discovery – and his latest research – in today’s episode.
Meghan’s mom is 64 years old and suffering under a toxic boss. It’s tough to switch jobs at her age. How should she think through the next steps?
Ellen has a 20-year-old son with physical and developmental disabilities. Her other child, age 21, will need to look after him for the rest of their lives. How should she handle their inheritance?
Joe wants to start working part-time in four years, and fully retire four years after that. He worries he’s investing too aggressively for his retirement date.
In today's episode, former financial planner Joe Saul-Sehy and I tackle these tough situations.
Enjoy!
Here’s the deal:
The majority of people who write about personal finance repeat the same tired aphorisms and cliches.
“Millennials aren’t investing enough,” they’ll lament. “Millennials are amassing wealth at a slower pace than previous generations!”
But when you ask for their source, they turn up blank. Each writer points to a headline, which sources another headline, in a neverending circular secondary-source-citation that fails to point to any primary data source.
Nick Maggiulli doesn’t play that game.
If you haven’t heard the name Nick Maggiulli yet, prepare to meet one of the most original, insightful voices in the media landscape of personal finance and investing. (His last name is pronounced “ma - julie,” and his godfather refers to him as “paper hands,” but that latter point is a different story for another day.)
Nick is a data scientist with a knack for clear written communication, a rare Venn Diagram intersection of skill sets. He holds a laser-focused interest in the arenas of personal finance and investing, and he’s eager to share fresh, nuanced, evidence-backed takes about savings, spending and investing with anyone who will listen.
He recently released his first book, Just Keep Buying; the title reflects a user-friendly reminder to continue dollar-cost averaging. It also speaks to the main idea behind wealth creation: accumulate income-producing assets, consistently, for as long as you possibly can.
It’s an honor to welcome Nick Maggiulli onto the Afford Anything podcast for what I hope is the first of many appearances. In today’s episode, we discuss actionable strategies for managing your money, including assessing your spot along the save-invest continuum, implementing the 2X rule into your spending decisions, and saving half of your inflation-adjusted future raises.
Enjoy!
Jake wants investment cash flow until he’s eligible for his military pension in 10 years. Should he buy small multifamily properties right now, wait a few years and invest in syndications or should he invest in index funds through taxable accounts?
Andy in Palm Springs is shoveling money into a taxable brokerage account. He wants to use these investments to create another stream of income. But there’s a problem: his tax bill is going to be high. What should he do?
Anonymous is a U.S. citizen, lives in London, and can’t invest in index funds. Can he emulate the index fund experience by directly buying a huge number of individual stocks?
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
On the First Friday of each month, we air a special bonus episode.
Historically, these episodes have been the same as our normal weekly shows. They alternate between interviews and community Q&A episodes.
But for more than a year, I’ve wanted to create something special, something that makes these monthly bonus episodes stand out [...]
Eve has been investing in her brokerage account and the tax liabilities are starting to add up. She wants to retire in 12 years and is wondering if she should invest in after-tax contributions and plan on a Roth conversion.
Anonymous has rental properties and wants to start building his kids credit histories. Is it a good idea to add them as co-borrowers on the mortgage?
Lily is really excited about investing in real estate, but househacking wasn’t the right fit. She’s looking for advice on investing in opportunity zones through crowdfunding platforms.
When our earliest ancestors noticed their immediate surroundings change – the trees began disappearing and their environment morphed into open savannah – they sensed they had a huge problem on their hands.
They were easy prey. They lacked adequate speed, strength and sharp sense of smell that would be useful for protection from predators.
But if they huddled together, they would be more protected. So like a school of fish or a herd of zebras, early humans began to band together as they roamed the dangerous and exposed plains.
But in any herd of zebras, a few slowpokes, the very young or old, the ill or injured, get eaten alive. This needed a solution.
Early humans improved their odds of survival by using handheld tools to kill predators from a distance, for example, by throwing rocks at lions in a coordinated defense.
Once they developed a coordinated, weapon-centric defense, they began using these same weapons offensively, in order to hunt.
They enjoyed the most successful hunts when they cooperated, communicated and coordinated, imagining future scenarios, strategizing and planning together. This required sharper cognition.
They traded brawn for brain.
And so an unprecedented cognitive revolution began, one that made humans the most remarkable species the world has ever seen.
In today’s episode, psychology professor Bill von Hippel explains the evolutionary science behind how we’re hardwired as humans.
We’re wired to be social, to connect, to communicate and cooperate.
We’re wired to want to learn and teach, to build a collective body of knowledge that stretches beyond what any single individual could ever learn in their lifetime.
We’re wired to feel surges of happiness that fade, so that we’re intrinsically motivated to keep repeating behaviors that lead to additional surges of happiness.
Once we understand the evolutionary science behind what makes us happy, Dr. von Hippel explains, we can apply this knowledge to making better decisions for our work, money and lives.
Bill von Hippel is a graduate of Yale University and the University of Michigan. He’s currently a psychology professor at the University of Queensland in Australia. He joins us to share his insights into the history and science of happiness.
Michelle makes $190,000 and is going to switch to a career that pays $40,000 on average. To prepare for this lower salary, she’s selling her current home and buying a different one. Should she pay off her new home with the proceeds from the old one? Or should she invest her profits?
Kristen is 32, and she and her husband want to retire in less than 20 years. They make too much to contribute to a Roth IRA. Should they use back door Roth conversions to speed along their path to early retirement?
Anonymous lives in a high cost-of-living area and is wondering where to keep her down payment and emergency funds. Should she use I-bonds, TIPS, or some combination of these two?
In today’s episode, former financial planner Joe Saul-Sehy and I tackle these tough situations.
Enjoy!
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Michelle asks (at 4:41 minutes): I’m 33 years old and make $190,000. I’m planning to make a career change in 3-4 years that would change my annual salary to $40,000.
I am selling my old primary residence and I should pocket about $500,000. My initial plan was to pay off my new primary residence, with enough leftover for a 12 month emergency fund. I would then be able to bank the next 3 years at my higher salary in investments and savings until I make the career change.
I’m now having second thoughts about my plan.
I’m wondering if I was overreacting to having a high level of debt and my overreaction was to pay off all of my personal debt. Now, I’m wondering if I should try to make more money by investing the $500,000 in the market or in other real estate instead of paying off my house.
Before I switch careers, I need to pay off my primary residence or supplement my income by $60,000 to $70,000 in order to afford the house.
Kristen asks (at 22:33 minutes): I’m 32. My husband has a pension and we plan on retiring when he is 53 and I am 51.
My husband will be taking home roughly $95,000 with his pension. We’re hoping to live off the salary, allowing compounding in our retirement accounts until we can withdraw at 59 ½.
I’m not sure if we’ll start different careers or work part time once we hit retirement age. Most likely, our contributions will stop when we retire.
In addition to his pension, my husband has $119,000 in a deferred compensation plan and he contributes $14,000 a year. I currently have $106,000 in my rolled over, traditional IRA and my Roth 401K is at roughly $60,000. I max out both accounts yearly in our traditional IRA and our Roth 401K.
When our incomes were lower, I didn’t think to put our annual contributions into a Roth IRA. Instead, the traditional Rollover has been receiving contributions for at least 5 years now. However, we are now at the max income limit that the Roth IRA allows so we will have to do a back door Roth conversion.
Should I open a Roth IRA and start the back door conversions or convert any of the traditional IRA funds over to a Roth since it will grow tax free? Am I diversified enough between the traditional IRA’s and Roth 401k’s accounts?
Anonymous asks (at 43:12 minutes): We’re holding a large amount of cash in a high yield savings account for an emergency fund and also for a down payment on a house.
We live in a high cost of living area so the down payment is probably going to be well over $100,000, and inventory is extremely low right now. We don’t know when we’ll actually find something that we want to buy – we don’t want to rush into buying something that’s not suitable for us.
I am thinking about putting some of this money in I-bonds, TIPS, or both. We are looking to protect our capital from inflation drive erosion.
We don’t want to put this money in the stock market because we already have significant money in retirement and non-retirement accounts and we don’t know when that house is going to come up and we need to have liquidity for emergencies.
I’d like help thinking through I-bonds vs TIPS and how we allocate between the two.
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Why does the stock market rise? Why does it crash? Why does it recover?
To answer these questions, we need a deep, tree-trunk understanding – a core, fundamental understanding – of how the stock market operates.
What, exactly, IS a stock – and how are stocks valued? What’s the difference between the Dow Jones, the S&P 500, and the Nasdaq? Why is the market a voting machine in the short-term, but a weighing machine in the long-term?
Brian Feroldi, the author of “Why Does the Stock Market Go Up?,” joins us for a Stocks 101 explainer episode.
If you’d like a deeper understanding of the world of stocks, you’ll enjoy this explainer episode.
And if you have a friend/spouse/coworker who’s said, “I need to learn more about investing,” share this episode with them.
Enjoy!
Resources Mentioned:
- Why Does the Stock Market Go Up? by Brian Feroldi (available for pre-order) | Book
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Alex is curious about cryptocurrency. How should she analyze the returns promised by different platforms and where can she go to learn more about crypto in general?
Grace wants to buy a manufactured home for rental income. Should she calculate her returns differently for a manufactured home?
Thomas and his wife have parallel goals of saving for a down payment and contributing to retirement accounts. How should they balance both of these goals?
In today’s episode, former financial planner Joe Saul-Sehy and I tackle these tough questions.
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
Alex asks (at 04:11 minutes): I’m more of a traditional investor who has invested in tax deferred accounts for years. I have joined different FIRE communities on Facebook. Most of the time, people talk about traditional investing opportunities.
Once in a while, I’ll connect with people claiming to make a lot of money investing through other investment vehicles, like cryptocurrency – I don’t understand the metrics I should be using to evaluate specific investing opportunities related to crypto.
There are platforms for investing crypto that seem legitimate: They have been around for at least six years, they offer a wide range of opportunities, and they present a set of options to prospective investors. They are based on the amount of money that anyone can start with.
They are able to provide a daily, weekly, and monthly return estimate; I find this interesting because my understanding is that crypto returns are highly speculative.
How would one go about analyzing a firm or a platform and deciding that this opportunity with crypto trading is a good deal?
I’m also interested in learning about crypto but I don’t know where I can find legitimate information about it. How can a responsible investor who is really trying to understand crypto, go about doing so?
Grace asks (at 30:21 minutes): I am calling to get your thoughts on purchasing a manufactured home as a rental property.
I’m an out of state investor looking at a manufactured home right outside of my alma mater in upstate New York. Even accounting for the monthly rent of the lot that the manufactured home is on, the cap rate on this property would be 19-20%. It seems too good to be true so I’m wondering if I’m not doing something right.
Would there be an additional calculation for the depreciation of the home since its lifetime is much shorter than a typical rental property? How would you change the calculations for using a manufactured home as a rental property?
Thomas asks (at 49:11 minutes): My wife and I are forecasting a move for our children to be closer to family in about five years. I’d appreciate your insight into how to achieve some additional financial goals while also saving for a significant down payment on our forever home.
Due to a recent job move, my wife can also contribute to a 457b plan, and we have a set goal to maximize these contributions as well. We are curious how a move in five years could impact those contributions.
Due to unforeseen lost wages in 2020 due to COVID, I took an early 401k withdrawal of $18,000, allowed by the CARES Act. I now have three years to repay that distribution and gain some tax relief. Because I work in a unionized job, I know that my salary should increase over this time, as long as the industry I work in remains healthy.
With an emergency fund already replenished, 401k matches from our company and back door Roth IRA contributions maxed out each year, how would you balance saving for a down payment with our 401k contributions, our 457b contributions and repaying my CARES Act withdrawal.
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Since the start of the Covid-19 pandemic, many commentators have remarked that we’re living in an “epidemic of anxiety.”
More than 40 million Americans suffer from anxiety, and countless millions more notice themselves “acting out” against their responsibilities in smaller, self-sabotaging ways: procrastinating, lacking motivation, grappling with an inability to concentrate.
In today’s episode, Dr. Ellen Vora, M.D., discusses both the internal and environmental factors that can exacerbate anxiety. She talks about nutrition and sleep, as well as the fact that, frankly, your job just might suck.
She applies these ideas to tactics that allow us to better handle our finances, investments, careers and lives.
Dr. Ellen Vora holds a B.A. from Yale University and a medical degree from Columbia University. She’s a board-certified psychiatrist.
Enjoy this conversation, and share your comments and feedback with members of our community at affordanything.com/community.
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Micheal’s parents just sold their home to pay off debt and fund their retirement. How should he invest the profits?
Ryker would like to understand what it would take for cryptocurrency to be considered as a good investment option for a diversified portfolio.
Megan has qualified for her employer’s 401k and needs help deciding between investing in a Roth 401K and a Roth IRA.
In today’s episode, former financial planner Joe Saul-Sehy and I tackle these tough questions.
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
Micheal asks (at 3:25 minutes): My mom is 66 and my dad is 69. They’ve always struggled with money and debt. I convinced them to move in with me and to sell their house to pay off their debts and help fund their retirement.
They currently have about $10,000 saved in a 401k. My dad is a retired logger and draws about $1,250 a month from social security, while my mom is still working and drawing social security of about $1,500 a month. She grosses about $30,000 annually and plans to retire in about a year.
They’ve already moved in with us and their house is under contract. They only need enough money for living expenses, since I’m taking care of their housing.
How should we invest the money they make from the sale? Can I be more aggressive with their retirement allocation so that I can grow their funds AND allow them to start drawing 4% when my mom retires?
Ryker asks (at 28:05 minutes): I listen to alot of financial podcasts, and it seems like there’s a lot of uncertainty and doubt in regard to cryptocurrency. My interpretation is that it’s not really recommended to be held in a portfolio; it seems to be regarded as “play money”.
What would cryptocurrency need to achieve in order for it to be a recommended hold in a diversified portfolio?
Megan asks (at 47:46 minutes): I’m 30 years old, I have no debt and I have $9,000 in non-retirement savings. I also earn about $60,000 pre-tax in a meaningful, nonprofit job that I love.
Still, it is work and I want to at least partially retire by age 50. This is my first-year eligibility for an employer sponsored 401k.
This 401k is through Guideline. It has a 4% match and a 0.08% expense ratio. I chose a Roth option due to my current low tax bracket.
Should I put all of my savings in my Roth 401k, or should I also put in a portion in my Roth IRA?
My Roth IRA has an expense ratio of 0.25%, has tax loss harvesting, and currently holds my retirement savings of $30,000.
Is the lower expense ratio a reason to prioritize funding my 401k or is there an advantage to the IRA that I’m missing?
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Nearly every financial news story for the past several months has centered around inflation – but what, exactly, is inflation? What are its causes? What are its effects? How is it measured? What notable inflationary events have unfolded throughout history, and what can we learn from these?
In this episode, we peel back the layers of the onion in order to deepen our understanding of the concept of inflation. We discuss hyperinflation, biflation, stagflation; we discuss the CPI, the PPI, and core inflation. We discuss the demand-pull inflation, cost-push inflation and the wage-price spiral. We resist the temptation to make predictions about the future, choosing instead to focus on refining our understanding of the present.
Enjoy!
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Wealthfront
Want to create a portfolio of globally diversified, low-cost index funds personalized just for you? There are no manual trades, picking stocks, or watching the stock market every day with Wealthfront. They handle all the investing based on your preferences. Wealthfront is trusted with over $20 billion of assets, and you can get your first $5,000 managed for free by going to wealthfront.com/paula.
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Hypothetical from the Hampton Inn is curious about whether he should keep his 30 year term life insurance policy or let it lapse with 12 years left on the policy.
Ramon asks us about the details behind infinite banking.
Anonymous Emily is wondering which financial products would work best to cover care and expenses as she ages.
Max is thinking through real estate and stock market returns as they relate to future population trends.
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
Hypothetical from the Hampton Inn asks (at 1:48 minutes): Eighteen years ago, I purchased a 30 year, $1M term life insurance policy for $100 per month. The monthly payment is locked in for the next 12 years and I’m in pretty good health.
Once I have a net worth of $1M, should I let the policy lapse and invest that $100 per month or should I keep the policy until the 30 years is reached, no matter what my net worth is?
Ramon asks (at 13:00 minutes): Can you talk about infinite banking? Apparently, this is when an individual takes out a whole life insurance policy and then takes out a loan against that policy to fund their lifestyle, thereby becoming their own banker and eliminating the need to get money from a bank. Is that all that there is to it or is there more to the story?
Anonymous Emily asks (at 23:23 minutes): I’m 42 years old. I have no plans to marry or have kids, and financial security is a huge priority. I must put systems in place that’ll provide the kind of security that others might get from having a spouse or kids, especially as older age approaches.
It seems like an annuity would guarantee that basic expenses are covered in retirement, even if the stock market goes down. Long-term care insurance would cover nursing care or in home care, especially since I won’t have family around to share that burden. Umbrella insurance would help in protecting my savings.
I estimate I’ll be able to retire around age 65 with approximately $2M in investments. My annual spending is low and shouldn’t exceed $50,000 in retirement, considering inflation and healthcare. Social security should conservatively take care of $15,000 of my annual expenses. I’d want the annuity to cover roughly $20,000 of essential expenses.
I’m not sure when to purchase these different financial products: I think I should get umbrella insurance within the next year, especially with my savings and retirement balances growing, and I’d wait to buy the long-term care insurance and the annuity until I’m in my 50’s. I’d like to wait at least a few years because I’m really focused on paying off student loan debt and reaching a coast FIRE level. I think I can do that in the next five years.
After that, I can contribute to my retirement accounts, but not as much. Also, without the student loan I’ll have more money in my budget.
I’d like to hear your thoughts on a timeline, if these financial products are worth it to someone in my situation, and if you have any other suggestions on how a single person could build a successful retirement plan.
Max asks (at 53:59 minutes): My partner and I are comfortable in our early thirties, have fulfilling jobs, are hoping to buy our first home soon and are about to welcome our first child. As I think about investing in the market and in real estate, I’ve read about the forthcoming population deceleration.
I’ve heard about South Korea closing schools and colleges because they don’t have enough young people who need them and about Germany razing homes to create parks, for similar reasons. A NY times article from earlier this year also talks about this trend.
When we talk about historical stock market and real estate returns, it’s in the context of the US population growing from 76 million in 1900 to 282 million people in 2000, or nearly quadrupling. By comparison, from the 2000 population of 282 million people to an estimated 500 million people in 2100, the population doesn’t even double over the same time span. This, coupled with the fact that the population pyramid is going to skew towards retirees, has me worried that historical data won’t hold for the remainder of the century, and we might be heading into uncharted waters.
For me, the math adds up to a lower demand, generating lower returns for real estate over the next eighty years and a shifting of the balance with retirees drawing from their retirement accounts and fewer young people adding to them, resulting in lower investment returns.
It would be beneficial to hear how the both of you think about these issues.
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In our 20’s and 30’s, we have high levels of fluid intelligence, or raw intellectual horsepower. We can ace tests, impress people with our memory and recall, and analyze facts, documents and data.
But in our 40’s and 50’s, we have higher levels of crystallized intelligence, which allows us to draw together novel insights from across domains.
Fluid intelligence allows us to analyze, or break apart.
Crystallized intelligence allows us to synthesize, or put together.
Each type of intelligence invites us to express different skills, to pivot our role at work – or perhaps even to change careers or industries altogether.
In today’s episode, Harvard professor Arthur Brooks discusses these two types of intelligence, and outlines how we can gracefully move from one strength to the next.
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David is questioning how to better manage his spending. He’d like a stronger framework to think through budgeting challenges.
Elisa and her husband bought a home, and now they’re saving extra income every month. She has a pension and her husband is an entrepreneur. How much should they be saving for retirement and how should they invest their extra money?
Geoff invested primarily in taxable brokerage accounts for the last twenty years. He’s built a $6 million portfolio and reached financial independence. He wonders about the smartest strategy for withdrawing from those taxable brokerage accounts to efficiently manage capital gains?
Jenni and her husband are planning on buying their next home in a few years. She wants to know if I-bonds are a good way to save for the down payment and closing costs.
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
_______
Here are the details:
David asks (at 2:28 minutes): I’m really confused and I can’t believe that no one has really solved the budgeting issue among the whole savings and podcast crowd.
I like your “anti-budget” and I think that’s a key part of it but that’s a little too small or simple for me. I’ve tried other budgets that have involved cash and envelopes, as well as Quicken, and Mint budgeting options which take too much time and don’t give me much feedback.
Can you spend some time discussing other budgeting processes, issues, ways to analyze your finances that may give me some of the answers that I am looking for?
I think the first issue I’m looking for help with is: “How much can I afford to spend this weekend”? For example, if something popped up earlier in the week, how do I think about going to that movie this weekend?
The other thing that I think I’m missing are the items that we sign up for these days: The subscriptions, the phone bill – what are the expected values that come right after how much I save?
Elisa asks (at 33:06 minutes): My husband and I aren’t sure what to do with our extra income.
We just bought a house and all of our extra income was going into our “house fund”. We have funded a $10,000 “emergency account” and now have between $1,000 and $1,500 leftover every month. I’ve also been contributing to a Roth and our accountant says that next year, we won’t be able to contribute to the Roth because we’ll be over the income limits.
My husband owns his own business, and I work full time. My employer contributes 12% of my salary into a pension fund so I have some retirement funds but my husband hasn’t been contributing to a retirement fund.
I have two questions:
- How much should we be contributing to retirement?
- Where should we be putting our additional funds? Should we put them in retirement accounts or an IRA?
Geoff asks (at 55:16 minutes): I’m 50 years old and I’ve reach financial independence through what I think of as “Dumb FI”.
During the first dot com boom twenty years ago, I was lucky enough to sell a small web company for approximately $500,000. I used that money to buy individual stocks, reinvested the dividends and pretended that money wasn’t there.
For the last twenty years, I continued to work in the tech industry, continued to live within the means of that employment, saved a little bit more, and let that original amount grow.
Today, I’ve got about $6 million in investments, plus a paid off house.
Of that $6 million, only around $1 million is in retirement accounts. The other $5 million is in taxable brokerage accounts, and a huge chunk of that is capital gains.The most extreme example is buying Microsoft stock for $50,000 and that’s now worth $820,000.
In terms of current income: We get dividends of about $60,000 a year. I consult a few hours a week and my wife tutors at the elementary school for fun. That brings us another $50,000 or $60,000 a year.
I’m kind of at a loss for strategies to realize those capital gains in a way that makes sense. For example, do I sell stock every year – even if I don’t need the cash – to spread out the gains? Is there a strategy to which stocks I should sell first?
I like simplicity, peace of mind, and don’t want to deal with this stuff – I’d rather be hiking, skiing and travelling, instead of poring over spreadsheets. I want to be smart about this but not obsess over the perfect optimization.
Jenni asks (at 1:08:32 minutes): I recently learned that I-bonds have reached over 7% interest. I’m thinking my husband and I should buy the maximum allowance of $10,000 each.
A bit about us: We recently refinanced our mortgage to 2.875% with the thought that we would stay here for another 5 years and then move to a larger place. We have one child and will try for another in a year. If we’re both still working from home in 5 years, our 3 bedroom house will feel small..
If we stay in our current high cost of living area, we’d be looking at a $200,000, 20% down payment. We have at least $140,000 equity in our current place and some market estimates put our equity at almost $200,000.
I-bonds seem like a great option to help us save for a down payment and closing costs in five years.
I see three potential downsides:
- The 7% seems to be reset every six months. Is there a risk that it will substantially drop?
- With I-bonds, we can’t cash out for a year. This seems fine as I am fairly certain that we would not want to touch this for a year – we have a $40,000 emergency fund that would cover 6 months of expenses and were recently able to weather a layoff by tightening up our belts and living on one income and not touching this income. Our combined income is now $270,000.
- There is the greater risk of wanting to move sooner than five years. We could probably make due without the exact $20,000 in funds if we really wanted to move sooner – we have $130,000 in a taxable brokerage account, $100,000 in Roth funds where we could tap into our contributions without penalty, although that’s not our preference. We’re saving those funds for Coast FIRE. The 3 month interest penalty for I-bonds for cashing out before five years seems quite small.
Are I-Bonds a substantial way to get low risk returns now?
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Wall Street Journal columnist Spencer Jakab marks the one-year anniversary of that weird time when the subReddit Wall St. bets pumped shares of meme stocks like GameStop and AMC Theaters, triggering a short squeeze that forced several hedge funds to lose billions.
What did we learn from that experience? And how do we actually take down Wall Street? How do we launch a truly effective financial revolution?
We share those insights in today’s episode.
Enjoy!
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I’m worried my parents are getting ripped off by their financial advisor. What should I do?
My wife is trying to qualify for student loan forgiveness … but we might lose a bunch of tax benefits in the process. Is it worth the risk?
I’m enrolling in grad school, and I want to optimize how to pay for rent and groceries. Should I use money from a 529 plan?
Three callers. Three questions.
In today’s episode, former financial planner Joe Saul-Sehy and I tackle these tough Q’s.
Enjoy!
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Anastasia asks (at 03:25 minutes):
I’m worried that my parents are being taken advantage of by their financial advisor.
But I don’t know how to raise this issue with them.
Here are the details:
One of my mom’s career paths led her to become a certified financial planner with Ameriprise. She never practiced as a CFP but she did work for one, doing paperwork, scheduling meetings, and moving their investments with him, where they stayed after she stopped working for him.
I worked through high school and saved $7,000 to invest. The advisor’s recommendation was to shelter this money from FAFSA for college by putting it into my dad’s IRA annuity, not a custodial Roth IRA, which would have accomplished the same goal.
I withdrew this money at the beginning of this year. The money was invested in 2007 or 2008, and grew to $13,500, which strikes me as low, given the ten-year bull market we’ve had.
Red Flag #1 is that the advisor didn’t suggest a custodial Roth IRA.
Red Flag #2 is that I remember my mom saying that his clients didn’t pay him because he got paid by the products he sold them. I know that is a hallmark of an advisor that is in it for themselves.
Red Flag #3 is $20,000 my sister received from a settlement when she was young was also put in an annuity. She got it out last year and it grew to $50,000 within the annuity. If invested in a market tracking fund, it would’ve grown to almost $200,000.
She also shared how difficult the advisor’s office was when she wanted to withdraw at the end of 2020.
When I ask my parents how much they pay their advisor, they tell me it’s just $50 a month. I find that hard to believe and suspect there are hidden fees.
What questions can I ask my parents to figure out if they are being taken advantage of and help them realize that they are paying excessive fees, if that’s the case?
Secondly, how can I help them get this money out of their advisors hands and into somewhere more secure, where they still feel taken care of? They really like the interactions and explanations they get from their advisor. Even though my mom got her CFP, as far as I know, she’s never really invested for herself in the last decade.
Lastly, in past conversations about their investments, I’ve come across as an aggressive know-it-all and I’ve made my mom defensive.
I need to approach this topic in a way that gets them to open up, instead of putting them on the defensive. Any tips?
Anonymous asks (at 27:21 minutes):
I make $110,000 and my wife makes $55,000.
We have about $90,000 in cash and about $200,000 in various retirement accounts. Our goal is to relocate in the next 1-4 years and purchase a home at that time.
My wife and I recently got married and we’re trying to figure out the best strategy for my wife’s loan repayment plan. She owes about $61,000 at about a 6 percent interest rate.
She works for a nonprofit and has the option for loan forgiveness if she makes minimum monthly payments for ten years on an income-based repayment plan.
Three options:
- Filing separately, which would result in about a $300 monthly payment for 10 years
- Filing jointly, which would result in $900 monthly payments for 8 years to pay off the loan in full
- Filing jointly, paying $10,000 to $20,000 upfront and continuing to make monthly payments.
To be eligible for student loan forgiveness, my wife would need to stay in the nonprofit field, which should be do-able but isn’t guaranteed.
The other factor is that we’re both 20+ years from retiring. If we were to file taxes as married and filing separately, we would lose our eligibility to contribute into the Roth, which is important to us.
We would use extra cash to start funding a taxable brokerage account or buying a series I savings bonds.
Lucia asks (at 42:38 minutes): I’m 32 years old and will be entering graduate school in the Fall of 2022 to complete my masters degree in computer science. I currently have $20,000 saved up for school in a regular savings account and another $20,000 in a brokerage account, invested in VTSAX.
I plan to use these monies for school related costs and don’t have any debt. The total cost of my graduate program is $70,000. I intend to take out some loans to cover my tuition and plan to use the $40,000 saved to cover my living expenses for the duration of the program.
I don’t plan to work during the first year of school and plan to work part time for the second year.
I’m concerned about leaving the $20,000 in a savings account since I plan to only withdraw little by little for my living expenses in the fall. My thought is to move the $20,000 into a 529 plan and use the funds for room and board since I will be in school at the time.
You’ve recommended target retirement funds or bond indexes for short-term investing, if we plan to use the funds in less than 5 years. What about the 529 plan, since I will be using the funds for educational purposes? Do you see value in that?
Resources Mentioned:
Interview with Cameron Huddleston, Episode 208
Book: Mom and Dad, We Need to Talk, by Cameron Huddleston
Interview with Annie Duke, Episode 281
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Money, relationships, health and purpose: life is running smoothly when all four of these elements are working together in tandem, like wheels on a car.
But how can we make spending and investing choices that facilitate stronger relationships, better health and a deeper sense of purpose?
Andrew Hallam, who became a millionaire on a teacher’s salary, shares researched-backed, evidence-based insights into how to find balance, drawing from the worlds of behavioral finance and stock market history.
Enjoy!
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Where is the balance between the risks and potential returns of actively and passively investing in index funds?
Where do you place your savings after you max out your retirement and HSA accounts?
How do you finance building a rental unit when there’s already a home on the lot?
Is it more beneficial to buy back pension time with post tax deductions or a 457b plan? Or should I not buy back pension time at all?
In today’s episode, former financial planner Joe Saul-Sehy and I discuss the purpose and practice of mindful money.
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
Adam asks (at 02:27 minutes): I’m onboard with the passive investment approach that involves buying low cost index funds and holding them for years. This is what I’ve done in my Roth account, where most of my holdings are in Vanguard’s total stock market index ETF. I’m currently 33 and hope to retire by 50.
To reach retirement sooner, I’m wondering if I can beat VTI’s return by taking a more active approach. I know that active investing strategies rarely outperform passive investing strategies over the long run.
However, I don’t plan on picking individual stocks. My approach would be to change chosen index funds based on observed market trends. For instance, since large cap growth stocks have led the market for the last several years, I’d move my assets into something like Vanguard‘s mega cap growth index fund, which is still diversified.
If trends began to shift into small cap performance, I’d move into Vanguard’s small cap ETF. To avoid market timing, I’d wait one – two years before making big changes to ensure that the trends I’m seeing aren’t temporary. I’m unconcerned with volatility since retirement is still more than ten years away.
The primary benefit of this active/passive approach would be higher returns, if it works.
On the other hand, I can think of at least two risks: First, while I can easily move between funds in my retirement account, moving funds around in my taxable accounts would trigger taxes, thereby lowering the net returns.
There could also be a psychological cost to taking an active approach if I’m worried about whether my portfolio is beating the total market fund or the S&P 500.
I would love your opinion on this since it’s not something I see discussed much in the active vs. passive debate.
Chris asks (at 22:22 minutes): I’m 32 years old. I used a retirement calculate to determine how much I’d need to maintain my current lifestyle of about $40,000 a year and came out with roughly $1.5 million needed to retire at the age of 50, with an 8% average yearly return.
I started investing seriously about 3 years ago and I have $5,000 in my retirement accounts, not counting emergency funds and cash. I have $18,000 in a money market account for emergencies, $15,000 for down payment, and $5,000 in a sinking fund for a car that I’ll need in the future. No loans or any other debt.
I maxed out my Roth IRA, 401k, and HSA this year and $95,000 is invested in total market funds. I’m a saver and single with no kids, but plan to have a family in the next five years. My rent is $1,500 a month and my gross salary is $90,000 in DC.
My goal is to with reach FIRE at 50 and continue to work optionally. To reach FIRE, I’d have to invest $3,000 per month. I plan to move to Houston or Dallas for family, lower cost of living and lower income taxes.
Because I maxed out my Roth IRA, 401k, and HSA contributions, my next step is to open a taxable account but frankly, I’m not sure where to place that money since I’m already invested in total market index funds. Should I repeat this strategy in my taxable account?
Secondly, I have REIT’s in my Roth and I’m interested in the real estate market but have no experience. I’m slowly learning about real estate investing and am open to renting a home after living there for a few years or purchasing properties to rent out that need a face lift and using a management company. Would you recommend using a property manager for the first rental? Would you create an LLC?
Yvan asks (at 39:36 minutes): I’m a physician in California, in my thirties, married to a beautiful stay at home wife and have a gorgeous three-year-old daughter. I didn’t know anything about personal finance until I finished my residency – becoming a doctor was the only thing that mattered. I have no plans to retire early, just looking for optimization.
After my residency in September 2019, I had zero savings. I had almost $600,000 in student loans, car loans, and personal debt. My county hospital base salary was $220,000 and a pension contribution of 9.97%. After three months, I switched to a new contract with a $242,000 base, but no pension or 401k.
By the summer of 2020, I was debt free except for my student loans and had built a three-to-six-month emergency fund. Since then, I’ve investing $19,500 in a 457b plan and $6,000 in a Roth annually, $6,000 in an HSA annually and contributed $1,200 to my employer match.
I’m thinking about going back to the original contract with the pension and continue with the 457b, back door Roth, and continue with the HSA contributions as well. I could just use the 457b to buy back the pension time or I can do post tax deductions over one or two years to buy back the pension time. I could also stay with my current contract. Which one would be best?
I also have a paid off home in Miami. It was purchased in 2010 and have not lived in it in five years. I want to use it as a rental, and I currently have family members living in it. I’m worried that I may not have enough money to do everything– I may have to wait to renovate in 2023 or 2024. Which of these options do you think is best?
Anonymous asks (at 56:42 minutes): I own a home in a desirable neighborhood in southern California. Part of the reason that I bought this home is that it’s zoned for multiple units, even though it’s a single-family home and it has quite a large lot.
I’d like to build a rental unit on the back of the property. I’m not looking to build an ADU because of the tight square footage requirements. Instead, I’m looking to build a 2-bedroom, 2-bathroom home, and I expect to get $2,000 – $2,500 in rent.
I’ve had a hard time finding resources for this kind of “build to rent” project.
What’s your opinion on building to rent on a property that you already own?
Secondly, I’d love to know if there is a rule for construction of this type, like the 1% rule.
Third, I’ll have to take out a loan for construction but I’m not sure if the best way to do that is a home equity line of credit or a construction loan and then refinance once the project is complete. Do you have any recommendations around financing?
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Grove.co
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I’m wearing my Betabrand pants on a flight – they’re that comfortable!
Betabrand
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Discussing advanced investing topics with me is former financial planner Joe Saul-Sehy.
You may recognize him from the Ask Paula episodes, but we discuss financial topics shared in his new book “STACKED: Your Super-Serious Guide to Modern Money Management” – co-authored with Emily Guy Birken.
Enjoy!
Thanks to our sponsors!
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Back in the 1960’s, Jack Bogle thought that actively-managed mutual funds performed better than a passive indexing strategy.
He pseudonymously published a paper saying so.
But academic data from the University of Chicago challenged his preconceived notions. He attended seminars that showed how the drag on returns that come from management fees and trading costs, coupled with the reality that the bulk of gains come from a hard-to-predict handful of equities (a concept known as “skew”), lead to index funds holding long-term outperformance.
At the time, index funds were only available to major institutional investors. Regular folks couldn’t access these winners.
And that might have continued for a long time …
… except history turned on a dime.
In the early 1970’s, Jack Bogle got fired. Rather than accept defeat, he turned into a renegade.
He launched Vanguard and began offering index funds to ordinary individual investors.
And the rest, as they say, is history.
In today’s episode, we learn about the revolutionary ideas that paved the path to passive investing.
We learn about the radical invention of the index fund.
We discover the drama, the tenacity, the betrayal and redemption behind it.
And we discover the lessons that the history of the index fund holds.
Enjoy!
Thanks to our sponsors!
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Daniel Pink joins us to discuss an unusual theory:
(1) that our energy rises, falls, and then rises again;
(2) that this pattern plays out across our days (morning energy, afternoon slump, nighttime second wind);
(3) this also plays out across our lives, with serious implications for how we spend those “muddled middle” years of our 30’s, 40’s and 50’s.
Enjoy!
Thanks to our sponsors!
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LendingClub Bank
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Rothy’s
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