Created with Sketch.
Dollars and Hops
44 minutes | Sep 28, 2022
043 | 7 Financial Principles To Live By | Budget Hack Of The Week | "What Do I Do With My Extra Money?"
Money Hack of the Week: Libby App - Free audio books and e-books through your existing library subscription - everything is free Main Topic Core principles we live by: Live on less than you make This sounds simple enough, but so many people do not do this. All of the other things we talk about don’t matter if you’re not following this #1 step. You MUST free up cash flow by living on less than you make or you will NEVER be able to get ahead. Tips on how to achieve this: Keep Housing costs <25% of your income. Don’t think you can do this? If you’re young -think about house hacking. Buy a small house, rent out one or two of the rooms, get your expenses as LOW as possible, especially in your early years. Keep auto expenses as low as possible - Average american spends almost 9,000 per year on automobile expenses. This is $750 per month. Get a cheaper, but reliable car. Take the extra money and put it to work for yourself. These are the two largest expenses in people’s budgets. Keep the overall costs of these two things low and make sure your I.R.’s on both are as low as they can be. 2. Get rid of any high interest debt. Anything higher than 5-6% - get rid of it from your life. If it’s low interest rate debt - keep it and pay as agreed on it. 3. Automate your savings Invest at least 10% of your income.. After you have your emergency fund locked down and high interest debt is paid off. Make this automatic by 401k deferral or automatic deduction on recurring basis to your roth or other tax advantaged account. Short term savings - automate these in an account like Ally/Capital one 360. Can automate By living on less than you make. You should free up some cash flow to be able to invest some of that income each and every paycheck. The more income you save, the greater flexibility you have. 4. Invest in low cost mutual funds and ETF’s OR Buy assets that will make you money. Episode # 5 gives you our favorite ETF’s Pay attention to fees when investing - you don’t get what you pay for when it comes to fees and investing. Want to spend money on other things besides just using excess money to invest? Consider buying assets that offer passive income potential Examples include: Real Estate investing or businesses 5. Track your spending Budgeting tools: YNAB, Mint.com 6. Know your net worth Episode # 1 - net worth tracker, Mint.com. Make sure you’re tracking your net worth on at least a monthly basis. This is important for helping you to track your progress and to ensure you’re accomplishing your goals 7. Set big goals so you know if you’re on track - episode 13 Questions that need answers -PLEASE WRITE US AT QUESTIONS@DOLLARSANDHOPS.COM
48 minutes | Aug 31, 2022
042 | "How Should I Invest During A Recession?" | Money Hack Of The Week | "Should I Invest Differently In A Bear Market?"
*This not official legal or investment advice, and this is for entertainment purposes only. All investments involve risk. Do your own research before making any investments for yourself* Money Hack of the Week: Look at your 401k, your old IRA’s, and investment accounts - figure out what funds you’re invested in and look up their expense ratios. If you are in high-fee funds inside of your 401K, change to investment options that are low fee. How do you do this? Go to your 401k or IRA online, look at the positions, you will see a symbol - usually 3 to 5 letters long, pop that into google, look at the expense ratio. What’s high? Anything over .25% is pretty high. Some of you may be looking at expense ratios of around 1% which is entirely too high. If that’s the case - I want you to look at your plan and the investments offered. Some good options may be: s&p 500 fund, target retirement fund, etc… What’s a good expense ratio? Below .10% This 1 change can literally save you tens of thousands of dollars by retirement. If you have listened to our old podcasts - we have found that the higher the fee the fund doesn’t necessarily get you more money in retirement. It often costs you money in retirement. If you’re someone who invests 15k annually in your 401k, a 1 % difference in expense ratio between investment options can mean a 400k difference when you get to retirement (over 30 years) Main Topic We’re talking recession now - It doesn’t really matter what news source you turn on right now - everyone is talking about whether or not we’re in a recession. Here are the latest worries: Gas prices Interest rates are rising Housing costs rising Housing affordability is a problem Food costs through the roof Inflation at 40 year highs Crypto currency has taken a dive Slowing growth War in ukraine Supply chain issues COVID is still an issue impacting global markets - today wuhan just shut down So, how do we invest if we’re in a recession? Don’t panic sell Selling now is the worst possible thing you can do. You’re essentially buying high and selling low. If you’re a long term investor - you need to take a longer view of things. Do nothing - Did you know that fidelity just did an audit of their customer base and found that the best investors (from a return standpoint) were either dead or inactive accounts. Meaning - you won’t beat the market. Make sure your portfolio is well diversified and balanced If you invest in multiple funds - are your allocations still where you want them to be? If not, sell some of something and buy more of another to get your ratios back in order. Buy more of the assets that are now on sale Warren Buffet says be greedy when others are fearful Don’t chase individual sectors or stocks that look “cheap” Pelosi’s husband (NVDA), etc… Some things will go down 50% + Just b/c you believe they’re a good deal doesn’t necessarily mean they are. Try to stick with broadly diversified assets. Millionaires are made during recessions Many of the worlds most popular businesses are formed in a recession - names like Microsoft, AirBNB, GE, NetFlix, and Disney BEAR MARKET GRAPHIC https://www.investopedia.com/a-history-of-bear-markets-4582652
50 minutes | Aug 22, 2022
041 | Invest In Crypto Inside Your 401k? | "Should I Take Out A HELOC To Invest?" | Coffee Budget Hack
Ashley wrote a question for the pod and I decided it was important enough to make a whole show out of this topic. Question is: My employer is going to be allowing us to invest in digital assets including Bitcoin within my 401k coming soon. Is it a good idea to be investing in bitcoin within my 401k? Earlier this year- in May - Fidelity announced that they would be allowing bitcoin as an investment option in employer sponsored 401k’s. About 23,000 employers currently use Fidelity for their 401k administrator - so it’s likely this will impact you soon if it hasn’t already by the time you have heard this. Fidelity will allow retirement investors to allocate up to a maximum of 20% of their investments into Bitcoin. But before you get too excited, understand that Bitcoin won’t be showing up on your 401(k) plan’s investment menu immediately. Fidelity is still building its digital asset platform, which should become available in plans later this year. Employers will have to approve crypto investments inside the plans they provide to their workforce. And because of their fiduciary duty—placing the needs of plan participants above all else—companies may be reluctant to provide immediate access. Many will likely take a wait-and-see attitude before making a move to offer crypto as part of their retirement plans. Pro’s: Digital assets - including bitcoin have done well over the last 10 years. You may have a little bit of FOMO with these assets and they have done well. This would give you exposure to an asset class that could possibly out-perform stocks in the short or long term. Con’s: These digital assets have no real long-term track record. Many of these digital assets could go to zero BTC is down 57% this year ETH down 70% this year The system itself has not been tested - What happens if crypto platforms go bankrupt? Back in 2014 - Mt Gox - which was the coinbase of today went bankrupt. It caused the price of bitcoin to plummet. Terra Luna went to 0 and was supposed to be a “stable coin” Coin Flex - major exchange halted withdrawals due to “extreme volatility” Celsius - freezed customer accounts - Under investigation currently. Crypto lender babel finance freezes all withdrawals from customers Liquidity could be an issue at a point in the future In a May Quarterly filing - Coinbase stated that in the event of their bankruptcy - it’s entirely possible that the digital assets the customers own may not actually belong to its customers. Crypto markets are not FDIC insured Digital Assets that have no utility are only worth what someone else will pay for them.
47 minutes | Jul 11, 2022
040 | What Is A House Hack? | Why House Hack? | Employee Work Trends, Work From Anywhere, And Be Your Own Boss
Money Hack of the Week: Spray and forget: Do you powerwash your house or deck every year? Spray and forget instead of power washing - save time and money Rant - Get upside Main Topic What is house hacking? House hacking is a real estate strategy that can help you live for free or close to free - dramatically decreasing your monthly expenses Great way to start investing career - whether that be in real estate or not Premise is simple - you buy a multi-unit property… could be a duplex or triplex (meaning 2 or 3 separate entrances to the property) - Live in 1 and rent out the other 1 or 2 units. How to rent out the other units: Long term tenant lease Short term rentals - think Air BNB and VRBO Ways to house hack: Buy a duplex, triplex, fourplex, etc… Buy a house with an ADU - Accessory dwelling unit ADU is a non-attached dwelling on the same property as the primary house. Can rent it just as you would a duplex or triplex. Rent out a single room in your existing home House hacking as an investment strategy: Scott Trench (Set for life) and David Greene Can house hack and buy a new house every 1-2 years Why 1 year: Can buy a new house every single year and qualify for low down payment as it’s your primary residence, and then simply move after a year and turn all the units into rentals. Why 2 years? You could sell the property and pay no capital gains tax on any earnings as long as you have lived in the property for 2 of the last 5 years. This strategy will dramatically decrease the amount of time it takes to build wealth. Why house hack? Allows you to live for a dramatically reduced cost in most cases. Allows you to sometimes make income while someone else is paying for you to live. Take the excess cash flow from house hacking and reinvest into other ventures such as more real estate or stocks Fastest way to build wealth - your house is generally your largest expense and it’s not even close Who is house hacking for? Single people Married couples with or without kids Could really be anyone People that don’t mind sharing common space in certain circumstances People that feel like they can’t afford a monthly payment for a house even though they may qualify for a house. Questions that need answers -PLEASE WRITE US AT QUESTIONS@DOLLARSANDHOPS.COM
45 minutes | May 23, 2022
039 | Net Worth Tracking | How To Track Your Financial Health | Cash Out Re-Fi To Invest?
Money Hack of the Week: Nest or SMART thermostat - learns your habits - saves on energy bills. Knows when you’re away, knows when you come home. Main Topic: Tracking your financial health What do I mean when I say financial health? I think of financial health as a measure of how well we’re doing with our money IT’S NOT: Our credit score, how well we pay our bills, etc… IT IS: How much money do we have in our wallets and what type of assets do we have. Put most simply - financial health generally equates to: how is our net worth looking and ARE we tracking our net worth? Way back on episode #1 of the podcast - 1.5 years ago…. We did a show talking about net worth and why it’s so important. Buried in that episode, we told people they should be tracking their net worth. It’s the one truth serum there is. Why tracking net worth is SO important: It tracks exactly what you owe on all your debts It shows you quickly how much equity you have in property And IT CAN show you in real time what your investments are worth r What Lance and I do: We have a Google Spreadsheet - we share it Using google sheets, you can actually track in real time the value of your investments. So we track all of the following on this spreadsheet: Retirement accounts Brokerage accounts 529 accounts Our mortgages Our home values Checking/Savings We add up all the assets and subtract out all of the liabilities At the bottom of the sheet - on ANY GIVEN day, we can see exactly what our net worth is. Record your net worth on a monthly basis. You will be amazed at how this makes you look at money from a different perspective. It shifts your mindset. You start seeing how things impact your net worth. For example: You go buy a nice car - you now get to depreciate the value of that car You put money into investments, you will see how that money grows Your real estate investments - you will see gains in value when your tenants are paying down the value of the house while the house appreciates in value Going back to episode # 1 We provide a copy of the net worth spreadsheet we use. You can download it here . There are 2 tabs to the spreadsheet: 1st is to track all of your assets and liabilities 2nd is to track your net worth from month to month If you ever wonder if you’re on the right track - this is the best way to figure it out. Start tracking net worth and you will find out if you’re going forwards or backwards. Other things to note: If your net worth is below 0 - don’t let that discourage you. Almost everyone starts out with a negative net worth. College is expensive, life is expensive, especially when you’re just starting out. Don’t confuse net worth with self worth - this doesn’t define you as a person Think of this as a tool for evaluate your financial health.
46 minutes | May 13, 2022
038 | What Is The FIRE Movement? | Term Life vs. Whole Life Rip Off Insurance
Money Hack of the week: Rakuten - Google chrome extension Get cash back when you shop If you go to a website where there is cash back, it will give you a pop-up letting you know to sign in through their link… get cash back on things you would have purchased anyway. Main Topic FIRE- Stands for financial independence, retire early. The FIRE retirement movement takes direct aim at the conventional retirement age of 65 and the industry that has grown up to encourage people to plan for it. Typically people that embrace this movement are looking to retire in their 30s and 40’s The way people avoid the 65 y/o retirement: Saving between 50% and 70% of their income Finding a business they can start that’s not 100% passive, but it’s something they enjoy doing Air BNB could be an example Types of careers How can anyone ever save 50% of their income or more? Early in your career you cover your expenses, as you get raises, just act like you never did, never change your lifestyle…. Delay gratification. Idea is to build up a massive bucket of money in investments that you can eventually draw down when you enter retirement. Apply the 4% rule to this So if you know you need 50,000 to live off, you can essentially take that number and multiply by 25 to get your FIRE number. 25x of 50k is 1.25M Where do people doing the FIRE movement typically invest? Low cost index funds / ETF’s Real Estate Businesses The FIRE movement isn’t for everyone Some people don’t mind working - they are busy bodies Some people don’t make a large enough income to even think about doing FIRE Some people LOVE their jobs and it’s a part of their identity It’s OK to live a typical lifestyle and keep working. FIRE just gives you freedom
53 minutes | May 1, 2022
037 | Kids And Money | How To Help Your Kids Learn About Money | "Should I Get A Timeshare?"
Kids And Money Episode Headline of the week: Food prices are on the rise, but you can still save money on groceries. Here are 5 ways how Kids and Money Research has shown that money saving habits and attitudes have likely been formed by the age of 7 Start with the basics: Connection between money and work - Phase 1 Money comes from investments - Phase 2 Pre-School is around the time that children can start to grasp what money is and when it’s used Can take children to the store - show them that you’re paying with cash/card and that you’re using your money to buy things. Even if you’re using a credit card, you can show them the receipt for the money you paid. Teach them about savings Most of the time they’re going to be using money to buy things, but it’s also important to instill the idea of saving for things at an early age Get a piggy bank or a give/save/spend jar. Savings should be short term in nature to start with so they can understand that delaying gratification can get them something they want in relatively short order. As they get older- savings can be for longer term things and you can start to introduce the idea of retirement and long term savings Allowance VS commission Create opportunities for kids to earn money Consider starting a list of chores and giving allowance if they accomplish those chores. A lot of people do the allowance in the amount of their ages (per week) If kids ask for additional money, know that it comes with a price. Some also consider having a list of chores that provide no allowance, and then a list of chores that come with an allowance. Help kids learn healthy spending habits. App called Green Light / Fam Zoo - helps kids with budgeting. Give them an allowance and make them stick with it. Allows kids and parents to do a schedule for chores and approve that chores have been complete. Comes with a debit card that money is loaded onto. Gives parents insight into their children’s spending habits in real time. Show kids the value of giving Help children plan out the money they have in their giving jars What things are important to them? What organizations would they like to support and why? Teach kids how money can grow Set up custodial investment accounts for kids - this can start when they’re in elementary school. You can sit down with them, set up the account, and make the first investment. Periodically check in with them and show them how their money is growing over time. Model good financial behavior If you want your children to have good financial habits, they need to see you making good financial habits. Tell them what you’re doing and why you’re doing it to save money. This should be a part of everyday life.
58 minutes | Mar 22, 2022
036 | Social Security Deep Dive | "When Should I Take Social Security?" | "Will Social Security Run Out?" | Myths And Best Practices
Headline of the week: Social Security cash reserves could be cut to 1.35 Trillion in 8 years What is social security: Program signed into law by FDR back in 1935 and is a sort of social welfare program. It provides cash payments to people who are in any one of three categories: Retired individuals and some family members Disabled individuals and some family members Survivors aged widow(er)s, aged surviving divorced spouses, disabled widow(er)s, disabled surviving divorced spouses, paternal and maternal orphans, and widow(er)s caring for minor or disabled children How is it funded? Payroll taxes fund social security. You will actually see a line item on your paycheck for social security taxes that are removed from your paycheck. My social security website - https://www.ssa.gov/myaccount/ Excellent resource to utilize when evaluating your social security and how much you can expect to earn. Free to set up an account Look up your personalized statement Will show you: Personalized monthly retirement benefit by age of when you take social security 62-70 Medicare eligibility Disability benefits/ Survivor benefits Important Things to Know about Your Social Security Benefits Social Security benefits are not intended to be your only source of retirement income. You may need other savings, investments, pensions, or retirement accounts to make sure you have enough money when you retire. You need at least 10 years of work (40 credits) to qualify for retirement benefits. The amount of your benefit is based on your highest 35 years of earnings. If you have fewer than 35 years of earnings, years without work count as 0 and may reduce your benefit amount. Social security uses cost of living adjustments so your benefits will keep up with inflation. The age you claim benefits will affect the benefit amount for your surviving spouse. If you get retirement or disability benefits, your spouse and children also may qualify for benefits. If you are divorced and were married for 10 years, you may be able to claim benefits on your ex spouse's record. If your divorced spouse receives benefits on your record, that does not affect your or your current spouse's benefit amounts. When you apply for either retirement or spousal benefits, you may be required to apply for both benefits Link for the rolling 8 year s&p 500 averages TIPS information: Can buy TIPS from: Treasurydirect.com - not our preferred method (harder to keep track of them) Mutual fund - just search for TIPS mutual fund. Yield is typically paid out once annually. Also a bit more liquid in nature as they’re ETF’s/Mutual funds Vanguard: VIPSX - .20 expense ratio Schwab: SCHP - .05% expense ratio - favorite Fidelity: FIPDX - .05% expense ratio - favorite
47 minutes | Mar 14, 2022
035 | What's The Deal With Inflation? | How Inflation Affects Us All | How To Protect Against Inflation
Headline of the week: Half of Americans with retirement accounts have taken an early withdrawal What is inflation? The decline of purchasing power of a currency over time. So as an example, the way the government measures this is by effectively tracking the cost of certain common everyday items. Currently: Inflation is at about 7% in our economy right now. Economists claim that some of this is transitory (meaning not permanent). They claim some of this has to do with supply chain issues which will eventually subside Our thoughts on this: is it transitory? Money supply and its impact on inflation Fed “printed” money by buying government securities to the tune of trillions of dollars. That money is in essence injected into the economy. As more money is pumped into the system - it effectively decreases buying power Housing shortage: Between Oct 2020 and Oct 2021 - the average price of a house went up by 18% This could be because we’re in a housing shortage in certain areas According to the national association of realtors: In New York and New Jersey - 1 new housing permit is issued for every 11 new jobs Pittsburgh: 1 permit for every 11 jobs Philadelphia: 1 permit for every 4 jobs Maryland: 1 permit for every 3 jobs Charleston SC - 1 permit for every 2 jobs Comes back to simple supply and demand. If there isn’t enough supply for something and demand far exceeds supply, that’s going to inevitably push prices higher. Our thoughts: I think prices will continue higher Between a shortage of housing and inflation - it’s bound to continue higher What could slow the demand? Interest rates What could actually help slow inflation up a bit: Higher Interest Rates Make homes more expensive via mortgage payments Businesses don’t have the access to cheap money to invest into their business How do we protect ourselves from inflation? Invest Stocks, bonds, mutual funds, ETF’s Real estate Businesses that produce returns at a greater rate than inflation Stay invested - Don’t panic!
56 minutes | Mar 3, 2022
034 | Winning Mindsets - Rich Dad Poor Dad | NEW Budget Hack | "Do I Need Umbrella Insurance?"
Intro: Today is a winning mindsets episode - we’re going to be discussing some of the concepts taught in a world famous book called Rich Dad Poor Dad by Robert Kiyosaki. Book came out in 1997 - concepts are timeless 25 years later. He really forces people to think differently about money and Lance and I wanted to discuss some of the concepts taught in this book with you, our listeners today. Book is about Robert’s 2 fathers growing up - and how they taught him to think about money. Real (poor) dad - was a teacher Father of his best friend (rich dad) Lots of background to this story - but there are some key takeaways (6) from the book that we feel are super important: The rich don’t work for money: The Poor and middle class work for money. The rich have money to work for them. -What is meant by this? Rich buy assets that generate income for them. Assets: Stocks, Real Estate, Businesses These assets generate money for them - sometimes actively, sometimes passively. Rich people will dedicate their time and energy to acquiring as many assets as they can - so that their money is working for them. Eventually their money works for them, they don’t work for money. 2. Why teach financial literacy (Cash flow of rich vs poor) Run through cash flow of poor/middle class Work at job - money goes towards expenses Expenses: taxes, food, rent/mortgage, clothes, fun, transportation Run through the cash flow of a rich person Assets that they own generate income Takeaway: You need to buy assets that generate income ASAP to get ahead. Those can be businesses, stocks, real estate, etc…. 3. Mind your own business People that go to school for law become lawyers People that go to school to study cooking become chefs People confuse their profession with their business Their business is not where they work, it has to do with what’s in their asset column. These are things generating income: Businesses that don’t require my presence Stocks Bonds Mutual funds/etfs Income generating real estate Royalties from intellectual property such as music/patents Anything else that has value and produces income and appreciates and has a ready market. Another interesting concept in the “mind your own business” chapter is that robert says most people should not start their own business. They should work a job and mind their business. And when they start putting money into their business - don’t take any money out… let it compound upon itself. That’s how the rich get richer. 4. The history of taxes and the power of corporations In summary - Robert is trying to convey how important it is to understand the tax code. People that do own businesses have the ability to take advantage of writing off a lot of their everyday expenses. Cell Phone Internet Car expenses / Mileage Office supplies Educational Courses Professional services fees (accountant / lawyer) When you own a corporation you earn, spend, then pay taxes When you work for corporations - you earn, pay taxes, then spend Big difference is that you’re paying tax on what's leftover after expenses when you’re a business. 5.
43 minutes | Jan 24, 2022
033 | Bitcoin ETF | Protect Yourself From The Unexpected | Emergency Fund Guidelines | You Need An Emergency Fund!
Headline of the week: https://www.marketwatch.com/story/should-i-buy-a-bitcoin-etf-heres-what-some-pros-say-you-should-consider-11634839325?mod=article_inline How to protect yourself from the unexpected The topic from this show actually came from a listener (John) who sent us over an article. Came from CNBC - Headline is just 39% of Americans could pay for a 1,000 emergency expense. The 61% mentioned in this article that CANNOT cover a 1,000 emergency expense are using credit or a personal loan to cover unexpected expenses. People that cannot come up with 1,000 on short notice for an unforeseen expense likely have: More stress in their life - the stress of knowing they have nothing to fall back on Their life needs to be perfect… can’t have anything go wrong Some “emergency expenses” Car repairs / new tires Pet emergency Major healthcare expense Home repair Dental expense Unexpected travel - death in the family Losing a cell phone Traffic accident ***Ally Bank Buckets Best way to protect yourself is by having an emergency fund. Financial playbook - episode 3 and 4 - we talk about having a 3-6 month emergency fund (3-6 months of expenses) That can sound daunting….. Dave Ramsey says 1,000 - don’t love this If you’re the type of person who cannot come up with 1,000 to cover an unforeseen expense, here is the number one tip on how to get started with an emergency fund: Decrease your expenses Find somewhere cheaper to live Drive a different car Decrease unnecessary spending Automate your savings Ever heard the saying “pay yourself first”? What is meant by this is actually paying yourself (investing, saving, etc…) before you pay your bills. In this case - take the money you need to save or invest - right when you get paid, and transfer it out of your bank account and into your investing account or in this case - your online savings account. Automatic savings can truly be automatic. Ally Savings account "buckets" You can set up recurring transfers each week for savings accounts. I’ve spoken about this in other podcasts, but I get pretty granular with this, I have automatic savings set up for car repairs, christmas, vacations, home repairs… you name it, I have a savings account for it!
53 minutes | Dec 16, 2021
032 | Invest In Real Estate Or The Stock Market? | We're Back! | Index Investing Recap
Discussion around real estate investing versus mutual fund/index fund investing. Recap of index fund / ETF investing: Opening an account with Schwab/Fidleity/Vanguard Investing in low cost ETF’s/mutual funds Own a piece of many different companies Completely passive - you invest and you don’t have to manage anything at all. On average, you earn roughly 10% per year on the money. Set it and forget it. Let’s look at the three primary ways you can make money in real estate: Cash Flow When you buy an investment property - you’re likely going to put some money down to acquire it. That money doesn’t really impact your net worth statement. You’re essentially just trading cash for equity in the property. Assuming you take a loan, you will have a payment amount that includes the debt service (paying down the loan) + taxes Now let’s say you buy a house, your monthly mortgage with taxes included is $1,500. Let’s say you’re able to rent that home for $2,400 per month. Your cash flow is $900 per month. That’s income that you’re generating from the property. Understand that there are other expenses that can occur with maintenance items, etc…. But you get the point…. You CAN generate income through cash flow by owning property. 2. Appreciation Appreciation happens when the value of a house goes up over time. We know that on average most homes go up in value about the same amount as inflation, but in some markets and in some years the average home price can rise by much more than the rate of inflation. It’s estimated that the value of a home went up around 15% or so in the past year. Appreciation is obviously on the whole home amount, regardless of your loan amount or what you owe… and this can be huge. Can’t realize all of the appreciation until you sell. 3. Equity Over time, the renter(s) are paying down your loan. You are thus reducing the loan amount over time and increasing equity in the property. Increases your net worth on paper, but not money in your pocket until you either refinance or sell. Other things you must consider when buying real estate Not a passive investment Must maintain/update the property. Must deal with tenant issues. Calls at night/holidays/weekends solving problems the client has. Risk - What if you can’t get a renter, what if the estimates you prepared for STR cash flow are wrong, what if you need cash and the market is down and nobody is buying properties. Are you putting yourself in a bad position financially? Quick example: Let’s say you have 100k to invest. Lance invests in an ETF all 100k. At the end of 30 years he has $1.75M assuming a 10% interest rate return over the 30 year period. Scott buys a short term rental property for $450,000 in a vacation area. Puts 90,000 down and another 10,000 into furnishing the property. He manages the property himself and cash flows 15,000 in profit annually from the property (very realistic). His cash flow increases by 3% annually. At the end of 30 years: Property is worth ~1.35M (assuming a 3.7% increase in value annually) His mortgage is paid off Cash Flow over 30 years is ~700k Total earned: 2.05M (300k more than passive investing) What did I give up in that example?? Time! Consider Liquidity as well - Index funds are more liquid than RE
48 minutes | Oct 11, 2021
031 | Winning Mindsets - Risk Taking | Invest In Music Through NFT's? | "Should I Buy Whole Life Insurance?"
Take Risks! Continuing on with our Winning Mindsets series. Today we’re going to be discussing risk taking as it pertains to you and your personal finance journey, your career, and even relationships. Headline of the Week: Invest in Music- Share in the royalties - Republic Winning Mindsets: Risk Taking Life is short—yet many of us spend time wondering what we should do with our lives, rather than actually going out there and trying. As hockey legend Wayne Gretzky once said, “You miss 100 percent of the shots you don’t take.” It’s important to actually strike out and follow your heart—even if the odds do not seem to be in your favor. That’s the beauty of life. We never know what can happen unless we take a chance. Here are five reasons why taking risks is important and why you should do more of it! 1. Generate New Possibilities - Horizon changes by stepping out 2. You Will Always Gain - Even through failure, maybe even especially through failure, we learn more lessons perhaps than when we succeed. 3. Inaction Leads Nowhere - If you do nothing, then you can expect nothing to happen. 4. Overcome Fears - Fears of failure, what others might think, disappointment, hurt, financial loss, exposure to vulnerability or emotional stress. 5. Model a Good Example - What would you want your children or your friends or your family to think, or what kind of risks would you hope that others might take? Inspire others. The One Thing Risk-Takers Have in Common? Confidence Failure might turn us into better people, but that doesn’t make it any less difficult to take risks. It turns out that building confidence can help in overcoming the fear of risk-taking. Questions that need answers PLEASE WRITE US AT QUESTIONS@DOLLARSANDHOPS.COM
44 minutes | Oct 7, 2021
030 | You Need A Will! | "Do I Need Long Term Care Insurance?" | What is AngelList?
Headline of the week: Will You Really Need Long-Term Care? The Odds Are Higher Than You Might Think Main Topic Why everyone needs a will - A will is what is used to decide where assets transfer to in the event that you pass away….. As the old adage goes, you can’t take them with you! AARP study finds that 6 in 10 adults DO NOT have a will Many people think only rich people need a will, but that’s simply not true…. It does so much more. If you own a home or have any assets to your name or have a child - you should have a will. A will allows you to: Decide who inherits which assets and when they should receive them. Decide who will manage your estate as executor and/or trustee. select a guardian for your minor child. Provide instructions for any business you may have owned or sale of a business you owned There are two types of property that pass on in the eyes of the law: Non-Probate Property - this is property that has a beneficiary designation (meaning you have named someone to get it before you passed on). This property DOES NOT have to be passed through the courts. Your loved ones can get access to this property pretty much immediately upon your passing. Probate Property - Assets without a beneficiary designation. These items must pass through a court proceeding before they can be transferred to their new owners. Essentially THE STATE decides what happens with your assets, who takes care of your minor children, and who takes care of your estate. How do you get a will set up? Use a low cost software - for non-complicated situations LegalZoom.com Quicken WillMaker Plus Fabric.com - Free FreeWill.com - Free TrustandWill.com Hire an attorney who does wills estates and trusts - for more complicated situations (I.E. You have a business, you have lots of assets, or you don’t have the confidence that how you build it out with a software is entirely accurate. How to Make Your Will Legally Binding If you decide to go the DIY route with a software program that we mentioned, you will need to follow a few steps to make your will legally binding: Find two disinterested witnesses to verify that you are of sound mind at the time of signing. Could be co workers, but can’t be people that are named in the will or would be directly/indirectly benefiting from the will itself. Have them sign an affidavit of attesting witnesses. Have a notary authorize the affidavit. Sign your will. Store the will in a safe place. Contact the executor of the will and another person to tell them where the will is stored. At this time, the only states where you wouldn’t have to go through this process include Indiana, Nevada, Arizona and Florida as they recognize a digital will as legally binding.
51 minutes | Aug 26, 2021
029 | Debating Dave Ramsey | The Pros and Cons of "The Baby Steps" | DHP Financial Playbook Review
Debating Dave Ramsey Headline of the week: Treasury Secretary Janet Yellen to discuss stablecoins with regulators next week Dave Ramsey discussion - This isn’t us trashing Dave Ramsey Dave has helped LITERALLY MILLIONS of people get out of debt His teachings have helped people get control of their finances Lance and I both enjoy listening to Dave on occasion, Lance actually loves Dave Ramsey and his podcast. Hard to say anything bad about Dave…. But there are some things that Dave teaches that we question from a math perspective Math vs. Psychology - Dave is a big believer in psychology over math when it comes to personal finance. There are things that we will mention later where we will say - well this is a better use of the money…. But that takes discipline…. Dave tends to think people have poor discipline, and also tends to measure risk very differently. Dave Ramsey discussion: His primary principles broken into baby steps: Save $1,000 in an emergency fund -Why not more- what if you lose your job? 3-6 mo emergency fund seems like a more safe plan. $1,000 doesn’t even cover a month's worth of expenses for most people. 2. Pay off all debt besides the house -What about low interest car debt? What about low interest rate debt in general? Things with below 4-5% interest seem like they should take a back seat to the rest of this…. 3. Save 3-6 Months of expenses in an emergency fund. 4. Save 15% of your income for retirement. -Doesn’t specify where to save, how to save, etc… -Is 15% enough to meet your goals? 5. Save for college for your children 6. Pay off home early -Would recommend never paying off low interest debt like a home early. Would much rather see you invest the money you would put toward the extra principle payments on the house. This can DRAMATICALLY increase your net worth faster and more significantly than paying toward low interest debt. 7. Build wealth and give Dave-isms Dave hates credit cards Says you should never use them We like using credit cards as a payment system. Take advantage of 2% in rewards on ALL spending. Can even use this as an investment mechanism - Fidelity VISA has 2% cash back to a fidelity investment account. No brainer Credit cards are a powerful tool everyone should take advantage of Dave hates debt on investment properties Dave once went broke - he over leveraged himself on mortgage debt and when the cycle went south he ended up having to file for bankruptcy. This happened back in 1988 when he was 28 years old. Dave believes you should never buy rental property when taking a loan. He thinks you should pay for it, cash. Dave was using some risky loan types to finance his loans - they were not 30 year fixed rate loans where the payment remains constant over 30 years. If you can find a property that cash flows well - in a good area with a great renter pool, real estate can be a powerful way to grow your net worth - even faster than stock market investing - if you have the time to dedicate to it.
53 minutes | Aug 16, 2021
028 | How To Buy a House | Is Robinhood Legit? Or Are They Like Cockroaches? | What is Affirm?
Headline of the week: Robinhood: The $30 Billion Dollar Cockroach of Fintech Steps to the home buying process: Are you sure you need to buy a home in the first place? Things to consider: Will you be able to stay in the home for 5-7 years minimum? Is your job stable or do you feel like you could possibly move companies/locations in short order? Are you married or single? If you’re married, it may make more sense to buy as there is someone else tying you down a bit to a single location. 2. Determine how much house you want to afford. Notice we didn’t say how much house you CAN afford The lender will pre-approve you for a loan of up 30% of your income. We believe it’s a better idea for you to work up a budget and determine how much you’re comfortable paying on a monthly basis to back into the amount of home you can afford. 3. Save up 20% to put down on the home / Get credit score above 750 Down payment money: We recommend 20% so you can avoid PMI. Save this money in an online savings account (Ally etc..) Use credit karma.com to look at your credit score and see where it’s at. Get your credit score over 750 ASAP to qualify for the best possible rate on a loan. If you have a low credit score - pull all three copies of your credit report for free from annualcreditreport.com - find out what’s causing you issues and if the items they’re reporting are incorrect- dispute them with the credit bureau. 4. Get pre-approved for your loan We recommend going to multiple credit unions - applying for a 30 year fixed rate loan for the amount of money that fits into your budget. You can apply for as many home loans as you want during a 14 day period and it only counts as one inquiry on your credit profile. Don’t make any purchases once you’re pre-approved as it could hurt your ability to close on the loan. 5. Start looking at homes online / drive neighborhoods to see which ones you like. Great tools for this include Zillow, Redfin, Realtor.com Start identifying the neighborhoods you want to be in. Use a tool like Zillow to identify recently sold listings to get an idea of comps and how much you can expect to spend. 6. Hire a real estate agent Recommend finding a local expert. When driving through neighborhoods - see who’s selling a lot of the houses. Develop a small list of realtors that do business in the neighborhoods you’re looking in. 7. Put in a contract on the home you want to purchase. Use your real estate agent to help you negotiate the best possible offer. This is where real estate agents should be able to earn their commission - use their expertise of the neighborhood to help you get the best deal. 8. Lock in your interest rate with the lender They may ask you to pay points for a better rate. In general - it’s best to not pay any points - take the lowest rate with no points. 9. Hire a home inspector / Get an appraisal 10. Lock in home insurance & Close the deal
44 minutes | Jul 15, 2021
027 | Introducing: Winning Mindsets - Delayed Gratification | The "Millionaire Next Door" Explained
Headline of the week: Are you a millionaire next door? Story from the Atlanta Journal Constitution - Wes Moss This is an article about what the typical millionaire family actually lives like by studying the book “Millionaire next door” You may be thinking millionaires drive around in porsche/Bentleys, BMW’s, order dinner out every night, but it’s actually quite the opposite. The average millionaire didn’t inherit their millions, they worked for it and came up in the low/middle class lifestyle. Millionaires likely: Have a college degree 50% of millionaires own a business Still in their first marriage Millionaires save on average 25% of their income Hold at least half of their investable assets in stocks/mutual funds/etfs Millionaires budget and live below their means Millionaires keep track of where their money goes Takeaway: The habits of a millionaire are not based upon how much money they make, its how much money they SAVE. Delaying gratification - Forgoing SOMETHING now - for a future reward (often far better). Powerful tool in life to learn EARLY to teach yourself impulse control. As children we are hardwired to have instant gratification. As we get older we’re able to rationalize risk vs reward and the value of delaying gratification. Are we born with the ability to delay gratification? Most likely not. Start small - maybe if you eat lunch out 4 times during the week, cut it back to 3 - invest the difference. Here are some tips: Tip No.1 – Focus on your goals. Reminding yourself of the goals you are saving for is a great way to improve your willpower. By visualizing achieving your goals, you will find it easier to stick to saving. Tip No.2 – Surround yourself with people with willpower. As social animals, we are heavily affected by others around us. If you hang out with people with poor self-control, you are setting a low bar for yourself. On the other hand, if you surround yourself with people who are also working towards bigger goals, you will find it easier to say no to temptations. Tip No.3 – Research shows that healthy eating, sufficient sleep, and exercise can improve your ability to delay gratification. What does our culture say about delayed gratification? We have a culture built on instant gratification and debt, AKA, buy/experience now - pay later. Instant gratification - instant everything - the opposite of delayed gratification. Delayed Gratification and everyday purchases: Assuming you’re retiring at 65. Average rate of return is 10% Every $1 you forgo becomes this much at 65 years old: 20 year old: $1 becomes $72 25 year old: $1 becomes $45 30 year old: $1 becomes $28 35 year old: $1 becomes $17 40 year old: $1 becomes $11 45 year old: $1 becomes $7
48 minutes | Jun 29, 2021
026 | Should I Use Credit Freeze? | Can I Count On Social Security? | Social Marketing
Headline of the week: The time is now for action on social security Credit Freeze The best way to protect your financial information from criminals. It 100% prevents others from accessing your credit information. It also 100% locks down anyone from opening credit in your name. A credit freeze has to be implemented with each of the three credit bureaus (Transunion, Equifax, and Experian). The credit freeze is governed by the federal government and the three credit bureaus have to allow for this procedure under federal law How it works You go to each of the three credit bureaus websites and request a freeze. The process usually takes about 5 minutes or so to set up with each Bureau. Once all three bureaus are frozen, you no longer have to worry about someone opening credit in your name. PIN/CODE: Some of the bureaus may assign a PIN number or a Code to be able to thaw your file. PLEASE PLEASE PLEASE make sure to save this PIN number somewhere safe - I even recommend saving in your email archives somewhere so you can access it if you’re not at home. When YOU want to get a loan or be able to have someone pull your credit for a legitimate reason - the bank or lender WILL NOT be able to access your credit profile until you temporarily thaw your credit report. I typically ask the lender which bureau they use, and then just go thaw that credit report at the bureau's website To Thaw: similar process to doing a freeze, just go to the credit bureau website, fill in the information they have requested and/or login to your account and tell the credit bureau how long you want your file to be thawed. The credit freeze and thaw process is pretty much immediate. Typically takes effect within about 5 minutes. What to do BEFORE you freeze your credit Sign up for a free credit monitoring service like Credit Karma or Credit Sesame. These two companies will send you notifications when a new credit account is opened or if there is any suspicious activity. Both companies will send you credit card offers through their website or by email. You can opt out of this stuff, but this is how they make money. Process for freezing credit Each Credit Bureau has a dedicated page on their website that will help you with credit freeze and thawing Experian: Once at their website, select “Add Security Freeze” Transunion : Once at their website - select “Add a freeze” Equifax: Once at their website - select “Place a freeze” *Please remember to save your code/PIN if they provide one.
48 minutes | May 28, 2021
025 | The HSA Hack | Health Savings Account Strategies | How to Optimize the HSA
Intro: On today’s show we’re going to be talking about HSA’s and how they can be used as a useful tool in your financial planning picture. We will also be talking about what we call the HSA HACK for early retirement or to supplement your retirement income. Headline of the week: Inflation speeds up in April as consumer prices leap 4.2%, fastest since 2008 - CNBC The Consumer Price Index rise for April from a year earlier was the sharpest since September 2008. Economists surveyed by Dow Jones had been looking for an increase of 3.6%. What does this mean for us: A result is that goods/services are going to cost more. What can you do to protect yourself against inflation? Stay invested! Stocks provide a shelter in an inflationary environment. Main Topic In this episode we’re going to be doing a deep dive on HSA’s. What are they, what are some of the tricks that make this a really useful retirement tool… What is an HSA? An HSA is a health savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. Think of it as a bucket of money that’s there to pay for anything from a medical standpoint. Instead of paying out of pocket for anything your health insurance plan doesn’t cover, you can utilize the HSA account to do so. If you don’t use the money in a given year, it runs over into the next year AND stays with you if you change up employers or take a new job. History of the HSA Enacted back in 2003 and were spun out of the Medicare Prescription Drug, Improvement, and Modernization Act. Put in place to help consumers start thinking more about their medical costs - goes hand in hand with the HDDP (High Deductible Health Plan) If consumers have to pay the first few thousand dollars in health care costs, they’re going to think twice about what they need and where they get care - is the thinking. Link to qualified medical expenses / BIG list: https://www.hsabank.com/hsabank/learning-center/irs-qualified-medical-expenses How much can you contribute to an HSA account? In 2021 - you can contribute $3,600 for employee only and $7,200 for a family insurance policy. Investing inside of an HSA HSA’s allow you to INVEST inside of them. They can be used like a brokerage account or 401k or Roth IRA. Just like a 401k at work - they have investment options you can choose inside of an HSA. We obviously recommend choosing a fund with LOW FEES that is broadly diversified, like an S&P 500 fund or a broad market mutual fund or ETF. Reimbursement You are permitted to reimburse yourself for qualified medical expenses from an HSA account as long as the expenses are incurred after the HSA was established. NO TIME LIMIT ON REIMBURSEMENT, but you must retain documentation/receipts Use the HSA as a retirement tool, and reimburse yourself in the future tax free
41 minutes | May 19, 2021
024 | Should You Be Worried of an Impending Bear Market? | Robinhood Trader Faces $800k Surprise Tax Bill | Investing Strategies
On this episode we discuss what a bear market is, if we think a bear market is coming, and what you need to do to prepare for the next bear market. Headline of the week: Robinhood trader may face $800,000 tax bill A bear market is when a stock market index experiences a decline in prices of at least 20%. As we know from previous episodes, an index is basically just a bunch of stocks that make up a broad range of the American economy (think s&p 500). Understanding Bear Markets: Stock prices are made up of cash flow, future expectations, and profits from companies. As growth decreases - expectations tend to go down on future returns, thus decrease stock prices. Typical causes for growth to be expected to decrease is when we have high unemployment, lower disposable income, decreased productivity, which leads to a decrease in business’ profits. Studying prior bear markets: The last bear market was in March of 2020 - when we first were locked down due to Coronavirus. In March of 2020, the S&P 500 was down 26.9% from its highs earlier in the month, the DOW was down more than 22%, and the NASDAQ was down over 26% in just a single month. 2007-2009 - great recession - led by the housing bubble - S&P 500 was down 50.9% from it’s highs 2000-2002 - Dot Com bubble - S&P 500 tumbled by 44.7% over the course of 2 years Great depression - 1929 - S&P 500 down 83.4% at it’s lows. The bear market lasted almost 3 full years. Important notes from bear markets: Stock market declines can often happen before a recession gets underway. Typically the bear markets are short lived - most of the time if you look 2, 3, or 4 years out, you’re generally approaching all time highs What should we take away from bear markets: Stocks will recover Use it as an opportunity to BUY - buy low, sell high If you are lucky enough to still be employed - stay the course - tune out the noise “This too shall pass” Do we think a bear market could happen today? It’s certainly possible - but nobody really knows. Average price/earnings ratio in the stock market is generally in the 18-19 range. What this means: stocks are trading (their value) is roughly 18 to 19 times what they’re earning in a given year. So if a company is earning 1 billion in profit. The company value is about 18 to 19 billion dollars. Currently - the P/E ratio of the S&P 500 is about 41. Obviously, history shows us that stocks - from a historical context are overvalued. Does that mean you should sell? NO - at the end of the day, we could have said stocks were overvalued at 20 times earnings, 25 times earnings, 30x earnings - yet - here we are at 40x earnings - you would have a missed a huge bull run had you sold.
Terms of Service
Do Not Sell My Personal Information
© Stitcher 2022