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Money Made Good
29 minutes | Sep 7, 2021
[E31] 6 Ways to Invest in Yourself For Maximum Income Earning Potential
At any given time, you’re either getting better or you’re getting worse. This extends to health, wealth, relationships...anything. It’s rare that you can maintain the status quo. So when it comes to improving in your job or career, you have to constantly look for ways to improve.Personal Growth FundRoughly 5-10% of your incomeSeparate from your main checking accountReclaiming Dead TimeLayer Complementary SkillsThink 12-36 Months OutMost people think 1 week to 90 days out...so they get short-term resultsAsk yourself, where do you want to be in exactly one year from now? (work backwards from there)Join Facebook GroupStart a Side HustleYou learn a lot more through doing than just by soaking up knowledgeThis includes both successes and failures
30 minutes | Aug 24, 2021
[E30] Post-COVID Revenge Spending & the Psychology of Saving
Americans are spending $765 more a month than they did in 2020.Post-COVID revenge spendingSavings rates dropping from 33% to 9%The Psychological difference between spenders and saversThe pandemic has exposed a lot about our relationship with money. When heat is applied, you see what people’s natural tendencies are. Sometimes we confront them for the first time.Factors that impact spending habitsMother more than fatherIndividual life experiences (did you lose a lot at a key moment in your life?)Amount of money you make doesn’t impact whether you’re a spender/saverMoney scripts conceptHow do you alter your spending habits to become a more intentional spender or a saver?Get clear on where you land on the spectrumIf spending stresses you out…If you love shopping and spending...You want to land somewhere in the middleUnderstand your weaknessesBe mindful of the company you keepCreate a spending planSet up guardrailsUnsubscribe from PrimeStart small with savingIRA ExampleSaving often gets a bad rap – like it’s boring – but the truth is that it gets a lot less boring the longer you do it. Because eventually you’re the one with the disposable cash and leverage to live life on your terms.
20 minutes | Aug 10, 2021
[E29] How to Stop Being a Grown Child & Embrace Adulthood
A grown child is someone who is physically old enough to be an adult, but who continues to think, act, and respond to the environment around them with childish behaviors, tendencies, words, and habits – as if they were still a young, helpless child.Grown children are everywhere. There are 25-year-old grown children, 45-year-old grown children, and even 65-year-old grown children – though it appears to be a more prominent and persistent problem with today’s younger adults.The culture is teaching young adults to stay children – even encouraging them to do as much. And while it’s too late for the culture to turn back at this point, the door is wide open for individual transformation...to those who are willing.
29 minutes | Aug 3, 2021
[E28] 7-Step Strategy for Utilizing Every Penny of Your Paycheck
This week’s episode is a primer on what to do with your paycheck.In other words, you get paid, and then what? Maybe you already have a plan and you know exactly what to do, but I find that most people just sort of play defensive money management. Defensive Money ManagementSit back and wait to see what happensBend don’t breakGeneric, safe, prevent defenseProblem: It’s almost impossible to win if you’re only playing defenseBut at a very basic 101 level of personal finance, you have to stop being reactive and start being proactive. And that begins with how you manage your money. You need to adopt an offensive approach to money management.Offensive Money ManagementControl the gameBlitzCome in with a game plan and then adaptHave a systemTake calculated chancesAt a fundamental level, having an offensive approach to money management means having a plan for where your money goes once that paycheck hits your account.===Retirement Account (straight out of your paycheck)⬇️Checking Account⬇️Necessities⬇️Emergency fund⬇️Debt payments⬇️Investments⬇️Discretionary spending
29 minutes | Jul 27, 2021
[E27] Is Renting Really like Flushing Money Down the Drain?
It doesn’t matter where you live in the U.S….the real estate market is scorching hot. And anytime you have a real estate boom, there’s a certain amount of pressure that bubbles up to the surface for younger buyers – particularly first-time buyers.Historically low interest rates (with threat of rising rates)Rapidly appreciating real estate valuesSocial media frenzy (social pressure)Fear of missing outAnytime you have financial pressures and social pressures converging, there’s a possibility for a dangerous outcome. Buying a house is not bad (and can be very smart), but here are some reasons it might not be right for you...right now:Renting offers more flexibilityMoving when you own a home is a pain + it’s expensive (8 to 10%)With renting, you can move much easier when things change (job move, salary cutback, growing family, etc.)Renting requires no maintenance costs or unforeseen expensesIf something breaks, it’s on your landlordLess stressRenting offers access to amenitiesPool, fitness center, business center, better location, etc.Renting requires no down paymentBuying a house can destroy your emergency fundRenting requires no property taxPennsylvania: 1.43% @ $300,000 property = $4,290/yr // $357/moRenting insulates you from a crashIt’s not hard to see a bubble forming...do you really want to buy before the bubble bursts?Renting requires cheaper insuranceAverage homeowner’s policy: $1,249Average renter’s insurance policy is $179Savings of $1,070 ($90 per month)
34 minutes | Jul 20, 2021
[E26] 5 Simple Principles for Stock Market Investing in Your 20s
Start EarlyMaria vs. AnaAutomate contributionsChoose good index funds (25% each)Large cap fundMid cap fundsSmall cap fundInternational fundDon’t bail when times get roughWarren Buffett Clip (Berkshire Hathaway)Bogle Clip (Founder of Vanguard)Growth example (missing best market days)Rolling ReturnsDiversifyAs time goes on and your income increases, look for ways to diversify your investment portfolio (though never abandon index funds)Index Funds (within an IRA or 401k – preferably a Roth)Stocks and mutual fundsCryptocurrencyReal estateInsurance/protection products (whole life/infinite banking, annuities, etc.Work on increasing your income and staying the courseBoredom is one of the biggest risk factors you’ll face in investingShow Linkshttps://www.moneyunder30.com/small-cap-vs-mid-cap-vs-large-caphttps://www.schwab.com/investing-principleshttps://www.thesimpledollar.com/investing/stocks/tempted-to-sell-missing-just-a-handful-of-the-best-stock-market-days-can-tank-your-returns/https://www.thebalance.com/rolling-index-returns-4061795
24 minutes | Jul 13, 2021
[E25] How a Few Smart Actions Today Can Prevent Major Financial Regret
Post-Pandemic Study on Americans and financial regrets:https://www.bankrate.com/surveys/biggest-financial-regrets/Pre-Pandemic Study on Americans and financial regrets:https://www.investors.com/etfs-and-funds/personal-finance/financial-mistakes-americans-learn-from-biggest-financial-regrets/2021 Data:20% regret not saving enough for emergency expenses19% regret not saving for retirement early enough18% regret taking on too much credit card debt10% regret taking on too much student loan debt7% regret not saving enough for their children’s education4% regret buying more house than they can afford4% regret something elseCause Of Financial Regrets"Financial mistakes generally stem from a tendency to live day to day financially. People start to get over their mistakes when they start to think about the future and think about what's possible financially in their lives. It boils down to this: People's financial mistakes stem from focusing on the near-term financially instead of the long-term." (Brian Madgett, head of consumer education at New York Life)How to Avoid Financial RegretsStop living paycheck to paycheck/build an emergency fund (episode 20)There’s no excuseEarning $50k per year, you’ll make $2M in your lifetime. ($4M @ $100k/yr)Learn how to manage a little and you’ll win with a lotStart saving and investing when you’re youngYou have decades to recover. Dips in the market are only paper losses. Unless you believe the entire American economy is going to collapse (meaning the entire world’s economy will collapse), you shouldn’t stress. It’s a long-term game.Stop trying to time the market → Stick with dollar cost averagingWhen the market pulls back – which it does regularly – if you're systematically putting money away (not trying to time the market), you get more shares as prices go lower. Then when the market rebounds (which it always does), it accelerates your growth. That's the power of dollar-cost averaging."Take advantage of employer match (Episode 7)Stop acting rich when you’re not rich...and you can actually become rich (episode 21)Don’t let escalating income lead to escalating expenses (episode 10)25% Rule: 25% goes to spending and lifestyle // 7% to saving, investing, etc.
33 minutes | Jun 29, 2021
[E24] The 8 Reasons Why People Hate Budgets
Reasons Why People Hate BudgetsFeels constrictingPuts us on the hookWe’re in denialSeems like too much work (laziness)Not sure where to beginWe’ll say we’ll budget when we make $X per yearWe tried it once and it didn’t workWe think people will make fun of us (pride)How to Actually Start (and Stick With) BudgetingReframe your view (think of it as a “Spending Plan”)Put yourself in charge of the budgetCreate a discretionary expense fundMake it automaticTweak the system to work for you.It’s not 100% or nothing…
13 minutes | Jun 22, 2021
[E23] Just Do It: Why Smart Money Always Moves
If you’re anything like me, you know there are decisions you need to make with your money, but you’re hesitant to take action until you feel like you’ve read enough books, listened to enough podcasts, or talked to enough people. And while I’m all for research, there comes a point when you just have to do something. You have to take action. Potential Energy vs. Kinetic EnergyLearning vs. doingIf you’re 80% there, act now.Use what you know and do what you canObserve what happens, learn from the mistakes, iterate to greatProgress not perfectionThe goal is not to do something perfectlyIf you look at the people who are most successful with their money, they’re rarely the people who took years and decades to carefully plan everything out. They took action, made mistakes, and learned from them.Show me a successful person, and I’ll show you someone who has a long list of mistakes and failures in their past. (Why do we glorify these stories, yet try to pretend like we can be the exception to the rule?)Resources:https://taraenergy.com/blog/potential-and-kinetic-energy-explained/
33 minutes | Jun 15, 2021
[E22] How to Add Value to The People Around You (And Build a Successful Career in the Process)
How do you add value?Stop trying to impress everyone and start impressing the people that actually matter by doing work that adds value. Trying to make friends with everyone is something that a high school kid does to fit in. An actual adult doesn’t care about short-term happiness nearly as much as long-term happiness – which is rooted in assurance. If you’re always trying to please others, you’re fixated on short-term happiness. And if you’re fixated on short-term happiness, you’re unable to provide maximum value to the people that are in charge of your income (whether that’s an employer, clients, customers, etc.) Stop trying to please people who will never like you anyway and focus on doing what it takes to plant long-term seeds that will eventually grow into something far bigger and better.Intentionally architect your dayStart on SundayPrep the the night beforeBegin the dayRest at the midpointBrain dump before finishing your workdayWake up with purposePut your alarm/phone on the other side of the room.Prep the night beforeMinimizing decision fatigue Fight the first 90 secondsLeverage the UOA strategyUnder PromiseOver DeliverAsk for Feedback
24 minutes | Jun 8, 2021
[E21] Would You Rather Look Rich or Be Rich?
I was on LinkedIn today and one of the headlines in the curated “LinkedIn News” section of the news feed read “Millennials Face Wealth Conundrum.” It piqued my interest, so I clicked...and the content was pretty predictable.Scott Olster: “As the oldest members of the millennial generation — born in 1981 — turn 40, many are struggling to build wealth at the rates of their generational predecessors. While baby boomers in the U.S. enjoyed an average of $113,000 in wealth (in today's dollars) in their early 40s, millennials only had $91,000, according to Bloomberg. What's behind this wealth gap? Part of it is unfortunate timing, with millennials facing both the Great Recession and the pandemic's economic shocks at key moments in their economic lives. Mounting student debt and skyrocketing housing costs have only made matters more challenging.”I’m not going to argue what boomers (or any generation did or didn’t have, in terms of circumstances – though the successful boomers I know worked their tails off...and many still are...so I’ll be the first to push back on that). But my question is, why are we wasting time comparing how difficult our situation is today to how “easy” theirs was?Who cares?There’s absolutely ZERO value in doing that.Do you want to know the real reason most millennials don’t have any wealth and probably never will?It’s because our generation would rather look rich than actually be rich. 3 Things That KILL Your Ability to be Rich1. Settling for an average incomeAlways look for ways to increase your value in the job marketplace:You’re either adding value to your employer/clients, or you’re not. People will pay you anything if you can add more value than you command in payment (E19)Nothing wrong with earning a middle class salary, but are you using some of that money to create additional streams of income?2. Investing in depreciating assetsCars, Boats, Phones, etc. The value of these items – with very rare exceptions – goes down every single day. And if you hold off on buying these things before you actually accumulate wealth, you’ll be able to get your hands on as many of them as you want down the road. Embrace the concept of delayed gratification.3. DivorceAccording to a study recently reported on Bloomberg.com: Divorce leads to very grim outcomes for the majority of couples – and it gets worse as you age.If you get divorced after age 50, expect your wealth to drop by about 50%Researchers found that when women divorce after age 50, standard of living plunges 45%. Older men see their standard of living drop 21% after a divorce.And the later you get divorced in life, the more difficult it is to bounce back.Linkshttps://www.linkedin.com/news/story/millennials-face-wealth-conundrum-5074252/https://www.bloomberg.com/news/articles/2019-07-19/divorce-destroys-finances-of-americans-over-50-studies-show
26 minutes | May 25, 2021
[E20] Why an “EF” is the Key to Fixing Your Money Problems (And Putting You On the Path to Wealth)
The Real Secret to Being Successful With MoneySuccessful personal finance is really just the combination of doing dozens of small things right – at first for days, then for weeks, then months, and then years. It’s not picking the right stocks or waiting until you start earning a higher income. What is an Emergency Fund?A pile of money that’s intentionally set aside to cover unforeseen emergency expenses that come your way. This includes things like car problems, medical expenses, and unexpected home repairs. Why Do You Need an Emergency Fund?Keeps you out of debt26% of people have unpaid medical billsPreservers your retirement and helps maintain momentum14% of people have had to take a loan against their retirement account10% of people have taken a hardship withdrawal from a retirement accountProvides peace of mindHow Much Do You Put In an Emergency Fund?Conventional school of thought is 3-6 months of essential expenses. 6 months is ideal if you’re single or in a one-income household.3 months should be okay if you’re in a two-income household.What are essential expenses?FoodShelterTransportationMedicalNot essential:Eating outVacationAmazon shoppingInvestingIn most households, only a percentage of monthly spending is essential. You might spend $5,000 per month, but don’t be surprised if just $3,000 is essential. (In that case, you’d need to set aside somewhere between $9,000 - $18,000.)An emergency fund is not designed to “float” your normal lifestyle. It’s intended to keep you solvent when everything goes wrong. Ideally, it’s used as a stopgap for random emergencies. In a worst-case scenario, it should be able to cover you for a period of several months if you lose 100% of your income.What to Use an Emergency Fund ForAn emergency is something that you don’t foresee coming at the beginning of the month when you draft your budget, but that must be dealt with quickly. As previously mentioned, it’s something like car problems, medical expenses, or unexpected home repairs. Recently had the water pump on my car bust…$800 fixAC unit and furnace at old house...$6,500 expenseEmergency room visit….several hundred dollarsTips for Starting an Emergency Fund (and Keeping it Fully Stocked)Start by cutting everything for 90 daysEliminate non-essential expenses and put all of that money to your emergency fund (this includes investments and retirement contributions)After the 90-day blitz, you can relax a little bit. But you still want to be putting significant money toward the emergency fund. (Still no investing or retirement contributions. Min payments on debt is fine.)Once you fill it up, keep your hands off it. (Out of sight out of mind. Separate account if needed)Refill immediately w/ next month(s) budget
28 minutes | May 18, 2021
[E19] A Foolproof Method for Earning $1,000 (or More) Per Week
Depending on where you are in your career, reaching $52k a year may be a big leap, or it could be something you’re pretty close to already.For me, whenever I’m setting financial goals, it helps to break it down into the smallest increments possible.52,000 is a big number (and 365 days is a long time). If you want to be successful in reaching your goal break it down further:$1,000 per week = $200 per day$200 per day = $20/hr (10 hours) OR $25/hr (8 hours)Simply reframing the goal makes it look even more manageable than it originally seems.Tips and Tactics for Earning $1,000 (or More) Per WeekIf you go online and look for answers on how to earn $X per week, you’re always going to get the same generic answers and recycled suggestions. Someone who probably has no experience generating money online will tell you to start earning passive income. (Well, duh!) And they’ll give you a list of options like:Affiliate MarketingDigital Marketing ConsultantDropshippingAmazon FBARefurbishing itemsFreelance WritingStock PhotographyFilling out surveysStarting a blogThere’s nothing technically wrong with these suggestions, but they’re so saturated and it’s going to take you forever to start making $200 per day. If I woke up tomorrow and had no clients and no income, this is precisely what I would do. And I have no doubt that I could scale to $1,000 week by the end of the month. And I’m confident you could do the same, too.For starters, it’s all about adding value. (People will pay you anything if you can add more value than you command in payment.) Understanding this, here are some suggestions:Brand yourself with authority & put yourself out there (FB & LI groups)Know your skills and know what value you add (be bold with your rate)Find people you can help (ideally business owners) and reach out in a non-spammy wayLinkedIn Profile → Loom VideoBombBombDo this three times per dayDo away with the notion that certain work is beneath youDo anything on a short-term basis if it creates potential for long-term gainIf you’re looking for a generic answer, you’ll find plenty of message board warriors who will point you in the direction of taking online surveys and other bogus. But if you’re serious about growing your income to $1,000 per week (and eventually $2k, $3k, or $5k or more per week), then you have to figure out how to add value. I think this formula of branding yourself + building authority + reaching out is the best approach.Linkshttps://bombbomb.com/https://www.loom.com/
23 minutes | May 11, 2021
[E18] Money & Relationships – Why is it so Hard to Talk About Money?
Data for couples that are dating:88% of men and 96% of women do NOT bring up the topic of money on dates.The majority of men (64 percent) and women (53 percent) say they talk about money with their SO "only when necessary."When talking about money with their SO men are most likely to (50 percent) feel "confident;" while women (34 percent) are most likely to feel "comforted."Data for couples that are married:nearly one-in-three (30%) couples say finances cause the most stress in their relationship, followed distantly by intimacy (11%), their children (9%) and their in-laws (4%).12% of the general population say they’ve never talked about money with their spouse.Among those surveyed, $275 is the average threshold at which couples need to consult with their partner before making a purchase ($395 among affluents and $249 among young professionals).Forty percent believe their partner spends more money than they do on things outside of household expenditures. The same number (40%) consider themselves more diligent than their partner when it comes to saving money and budgeting.While only 43 percent of the general population talked about money before marriage, the number rises to 57 percent for affluent couples and jumps to 81 percent for young professionals.Problem: Lack of Communication over Finances Often Leads to Financial Infidelity and/or Can Create Resentment Examples:Keeping your full income a secretHiding a bank account from a spouse when you have a joint account togetherOpening a credit card your significant other doesn’t know aboutHiding money before divorce so it’s not included in the settlementUsing a partner’s credit card or credit identity without their knowledgeSecretly saving money from your spouse so they don’t spend it“When you talk about how much you make, you are assigning a value to your worth, and that puts you in a really vulnerable position to be judged or discredited,” Dr. Madeleine Katz (psychologist).Reasons to open up:Getting on the same page financially does more than align dollars and cents – it aligns your goals and values. (Money talks are rarely about money.)You shouldn’t be making important financial decisions in a silo. (“The prefrontal cortex, the part of the brain that allows us to think critically and make decisions, doesn’t fully develop until the early 20s for women, and the mid-20s for men,” Katz says. “Technically speaking, that is probably not the best time to be making big financial decisions.”)How to be more open:Take small stepsTalk about each other’s financial upbringingUnify around a shared goalDo away with separate accounts (for married couples)Idea of equal value, but not equal responsibility Have a weekly/monthly money meeting
24 minutes | May 4, 2021
[E17] Spring Clean Your Finances & Get Your Money in Order
Here are some specific ways you can spring clean your finances and get organized this year:How do you spend money?CashDebitCredit card(s)Set up a spreadsheet and/or password managerGet clear on subscription servicesOrganized bill paymentsSame dates if possibleSet up remindersDevelop a filing systemPhysical: Receipts, Taxes, Temporary Hold, BillsDigital: Google Drive Cloud FoldersCurb “Account Sprawl” (consolidate accounts)Update or create a willUpdate beneficiaries on accountsStop the clutter (opt out)Reset your budgetThe goal is progress not perfection. Take small steps. One foot in front of the other. It might not feel like you’re going anywhere fast, but you’ll look back and see major progress in three months or six months from now.FTC.gov Opt-Out: https://www.consumer.ftc.gov/articles/0262-stopping-unsolicited-mail-phone-calls-and-email
25 minutes | Apr 27, 2021
[E16] Is Financial Literacy a 21st Century Survival Skill?
Awareness + Sound Principles + Discipline + Money = WealthAwareness: You have to be aware of the fact that you have a problem/need. If you’re disillusioned by the idea that your finances are fine or that you can spend your way out of the issue, you’ll never make the changes needed to discover financial freedom. Sound Principles: You need the right techniques, tactics, and frameworks to get from where you are (broke, paycheck to paycheck, anxious, stressed, envious, etc.) to where you want to be (no longer anxious, financially free, able to spend time doing what you enjoy). Discipline: The principles I teach are proven. They work. (And they’re easy to understand.) The difficult part is putting them into action and developing the mental muscles to make smart decisions over and over again. If the principles are the technical element in the equation, this is the soft side - the psychological/mental side of things. Money: Finally, you need money. I intentionally include this last on the list because I think it’s the least important of the four. But you do need money to build wealth. And it helps if you’re proactively working to elevate your career so that you can gradually increase your earnings over time. Because while it’s not necessary to make $100k, $250k, $400k per year to gain financial freedom, it can certainly accelerate the process. Financial literacy rates are lower than they’ve ever been among young people, which is a byproduct and a consequence of a broken system. It’s not your fault. Your educators, the government, and even some of your parents have let you down...and they aren’t going to pick you up or show you the way.It’s up to you to seek out financial education and understand how to earn, spend, save, invest, and give with intentionality and purpose.“Financial literacy is a 21st century survival skill; everyone should be learning that.”Just five states – Alabama, Missouri, Tennessee, Utah, and Virginia – require a standalone personal finance course for high school graduation in 2021. That means 90% of states have no personal finance requirement!If you’re a young adult listening to this, there’s one thing I want you to know: It’s not your fault.If you commit to learning for the next 90 days, your entire mindset will change. I can promise you.My biggest piece of advice would be to learn from as many different voices as you can:Go back and listen through all of the previous episodes of the Money Made Good PodcastResearch questions on YouTubeFind personal finance blogs and Reddit boards Read books! (I’ve discussed some of my favorite money books in Episode 13)Surround yourself with people who have a higher financial IQ. Ask questions...then be quiet and listenIt doesn’t matter if you’re 15, 20, 25, 30...even 35 or 40 – two things are true:It’s never too late to become financially literateThere are no shortcuts to becoming financially literateNobody can learn the skills required to build wealth other than you. Yes, you eventually have to go out and execute...but for right now I want you to focus on acquiring that baseline understanding of how to earn, spend, save, invest, and give.It is, however, your responsibility to pick yourself up and learn.
22 minutes | Apr 20, 2021
[E15] Pulse Check! 7 Personal Finance Formulas & Ratios to See Where You Stand
50-30-20 Budgeting Ratio20% Savings (cash savings, investments, retirement)30% Wants (entertainment, eating out, travel, etc.)50% Needs (housing, food, bills etc.)6X Month Emergency Fund RatioStrip your budget down to basic expenses (What does it take to survive? Food, shelter, transportation, insurance, minimum debt payments, etc.) Multiply this by 6. (If your basic expenses are $4k, you need $24k)This is how much you need in an emergency fund to be reasonably secure. If you’re a dual-income household, you can probably get away with 3 to 4 months ($12k to $16k on $4k/mo expenses)Targeted Net Worth Ratio Age X (Pretax Income / 10)Don’t get too hung up on this ratio, because it can be intimidating. However, it’s a good figure to keep in mind. It can take you well into your 30s or 40s to finally meet/surpass the recommended threshold, but keep it in sight. (That’s when income starts to increase dramatically and student loans start to slide off.)10X Ratio for Life InsuranceTake your income and multiply it by 10. This is how much term life insurance you need.If your income is $50k/mo, that means $500k in life insurance. If your income is $100k/mo, that means $1 million in life insurance.This ratio is designed to allow for 4% annual withdrawals – i.e. roughly 40% of your annual salary each year. (Invested properly, this means your life insurance ‘nest egg’ will actually get bigger each year.)(Quick note: If you’re single and have no kids or dependents, you don’t need to follow this ratio. Even if you’re married with no kids, you probably don’t need to worry about a massive life insurance policy, in my opinion….)Mortgage Ratio2.5 X Primary Income = Maximum Mortgage BalanceIf you make $100k per year, this means your maximum mortgage balance should be $250k. This doesn’t mean you can’t buy a house worth more than this – just that your mortgage should remain within this limit. If you want more house, put down more money.Debt-To-Disposable Income RatioMonthly Non-Mortgage Debt / Monthly Disposable IncomeExample: You have $400 car payment, $250 in student loans, and $100 credit cards = $750 per month. // Your disposable income is $2,500. Debt-to-Disposable income = 30%You should ideally keep this ratio below 15%. And unless you have a lot of good debt – meaning investment real estate, savvy business investments, debt that produces income – the closer you get it to zero, the better.10% givingOthers may disagree, but this is the rule of thumb I like to use. It’s sort of the biblical framework for giving, but you don’t have to be a Christian to see the value in giving.Giving is something you have to practice at all times, not just when your income skyrockets. It’s a muscle that you have to work. If you wait for some future point, it’ll never come.Find causes that you believe in and want to support. Giving should make you slightly uncomfortable. It should cause you a little discomfort, but it should also bring joy.
23 minutes | Apr 13, 2021
[E14] The Positive Side of Comparing Your Finances to Others
Welcome to the Money Made Good Podcast where we teach people how to handle the Big 6 of money and personal finance:EarningSpendingSavingInvestingGiving DreamingIf this is your first time listening to the podcast, I’ll give you my 10-second definition of what it takes to build wealth. I’ve boiled it down to a simple equation with four variables.Awareness + Sound Principles + Discipline + Means = Wealth That last variable one is pretty important. I’m a big believer in living within your means. And as boring as it sounds, it’s one of the foundational elements of wealth-building. It doesn’t matter which way you slice it – it’s impossible to build wealth without living within your means. Living within your means means spending less than you bring home every month and using that surplus to to save and invest.I’ve laid this out in previous episodes (like Episode 1 and Episode 10)One of the keys to punching back against Aspirational Wealth is escaping the “Keeping Up With the Joneses” mentality.HOWEVER, it can be interesting to look at what others are doing and to use it as a measuring stick for positive financial decision-making.This is something you can actually do using a website called StatusMoney.comEvery year , the average American spends:• $18,886 on housing (including property taxes) ($1,573 per month)• $9,049 on transportation ($754 per month))• $7,203 on food ($600 per month)• $2,913 on entertainment ($242 per month)How to Combat Social Pressure SpendingWho are you spending time with? Limit cash on hand (spending limits // out of reach)Focus on earning/creatingLearn to say no
30 minutes | Apr 6, 2021
[E13] 8 of My Favorite Finance and Money Books!
This is not a list of the best books I’ve ever read – or even my favorites – it’s more a list of useful resources that sort of run the gamut in terms of different financial ideas and beliefs.Some you’ll find in the “personal finance” section of the bookstore, while others don’t actually have anything to do with money (but provide useful frameworks that can be transposed to how you handle money).The Richest Man in Babylon (by George Clason)Think & Grow Rich (by Napoleon Hill)Stop Acting Rich (by Thomas Stanley)Everyday Millionaires (by Chris Hogan)Thinking Fast and Slow (by Daniel Kahneman)Mistakes Were Made...but Not by Me (by Carol Tavris and Elliot Aronson)Atomic Habits (by James Clear)Tools of Titans (by Tim Ferriss)So those are a few books that have influenced my financial DNA, so to speak. Obviously some of them are finance specific, while others are more or less psychology books. But I think one of the keys to creating wealth and mastering your ability to earn, spend, save, invest, and give with purpose is to hear from multiple voices and then figure out which pieces work for you.Maybe there’s a book or two in here that piques your interest? Also, I’d love to hear if you have a favorite book or resource...so just let me know!
27 minutes | Mar 23, 2021
[E12] An Alternative Way to Pay for College (and Build a Competitive Career)
Data from EducationData.org:The student loan debt crisis:Student loan debt in the United States totals $1.71 trillion and grows 6 times faster than the nation’s economy.*43.2 million student borrowers are in debt by an average of $39,351 each.15% of all American adults report they have outstanding undergraduate student debt; 7% report outstanding postgraduate student loans.Student debt experience:52% of students who had taken on student loan debt did not feel it was worth it.Student loan payments have an annual growth rate of 6.6%.53% of millennials have not bought a home because student loan debt either disqualified them or made it impossible to afford a mortgage.Average Payments:The average student loan monthly payment: $393The percentage of borrowers with growing loan balances: 47.5%Just 37% of all borrowers saw their student loan balance shrinkAverage repayment period of 21 yearsCollege isn’t for everyoneIf you rewind to the 1940s, somewhere around 5% of the U.S. population had a bachelor’s degree (25 and older). Today, 35% of the U.S. population aged 25 and over has a college diploma. Over that time, the population has more than doubled. So the number of college-educated Americans has ballooned from 6 million to something like 110 million people.The graduate degree is really the new college degree...but even that is fairly commonplace in many industries. (And costs even more to secure another degree.)I’m not telling anyone not to go to college, but I would think very carefully about going into massive debt just to secure a degree that no longer sets you apart. And, unfortunately, the old way of paying your way through college doesn’t work. (Waiting tables, part-time work, etc.)Scholarships and grants remain the best option, but there’s another alternative. Deferred Tuition / Income Share Agreements (ISAs)What? According to NerdWallet: “An income share agreement is a contract in which you receive money for your education. In return, you promise to pay the ISA provider a fixed percentage of your income for a set amount of time after you finish school. You may repay more or less than the amount you received, depending on your agreement's terms.”Why? Greater accessibility to education (don’t have access to loans and/or don’t want to go in debt)Greater motivation for the school to prepare you to find a job (and help you obtain one). They have a vested interest in your success.Gives you time to build up your finances until you make enough to afford to make payments.Removes most of the risk for the student: If you don’t end up getting a good job, you aren’t saddled with a massive student loan that gives you value in return. How to find them?Colleges offering ISAsISA LendersStride FundingAvenifyBootcampsApp AcademyThe Grace Hopper ProgramThe Lambda SchoolConclusion: I hope you found this discussion today helpful. It’s a little different than what I typically do on the podcast, but is a relevant issue that I don’t feel like gets discussed nearly as much as it should. Everyone seems to think it’s a four-year college or nothing, but there are so many more options. Yes, there’s a lot to be said for the college experience, moving away from home, growing up, and maturing in a semi-controlled environment, but it’s not always worth tens of thousands of dollars in student loan debts.Whether you’re a high school student preparing for the next step, someone in your mid-to-late 20s who is contemplating getting a degree, or even a parent who has children nearing “college age,” give ISAs some thought. If nothing else, explore the different options that exist – including apprenticeships, trade schools, and alternative forms of education.
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