Listen Money Matters - Free your inner financial badass. All the stuff you should know about personal finance.

Veterans financial challenges are different from those faced by civilians. Too many come home from service with a lack of knowledge on how to handle their personal finances. Many also struggle to find jobs and need some guidance on how to navigate their new life in the civilian world. Financial literacy is desperately needed for veterans, and today our guest works to help service families secure economic future they feel good about. In honor of Veterans Day, the guys talk to Douglas McCormick about economic empowerment of veterans. Learn more about your ad choices. Visit megaphone.fm/adchoices

Emotions impact every financial decision we face and sometimes it causes us to make choices out of fear or greed. Today on the show the guys talk to Dr. Daniel Crosby, a psychologist, behavioral finance expert and asset manager. He is the co-author of the New York Times bestseller Personal Benchmark: Integrating Behavioral Finance and Founder of Nocturne Capital. In Daniels’ latest book, The Laws of Wealth, he talks about principles for managing your behavior and how emotion and psychology influence our financial decisions. What is behavioral finance? The concept of behavioral finance is a fairly new idea that looks at behavioral, psychological theory together with economic explanations for why people make irrational financial decisions. Why do so many smart people making the wrong choices with their money? Daniel wants to find out what causes some people to behave illogically when it comes to finance and how to build investment portfolios based on unvalued investments created by investor’s emotional behavior. Daniel works as a sort of a financial therapist and asset manager centering his work on helping his clients stay away from making irrational emotion-driven mistakes. Investors can often be their own worst enemy and are to blame for poor investment returns. Volatility in the market can cause investors to act unpredictably at times – not in their best interest. You control what matters most You can’t control the stock market but what you can control is human behavior. Over the last 30 years, the market has returned about 11% a year while the average investor has only held about 4% because of emotional decision making when markets are going up and down. “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” – Warren Buffett Investing needs discipline and rationality. Being in control of that takes planning and executing. Take your power back and gain control of your situation no matter is going on in the markets. Set up systems for yourself and follow simple rules of thumb so you mitigate potential harm to your financial lives. Daniel believes you cannot do it alone. People who work a financial professional tend to do 3% better than people who don’t. Advisors don’t have all the answers, but they can help you not to make emotionally driven mistakes. Do you want to be average? Two of the well-known investment styles are growth investing and value investing. Growth investing is investing in stocks that have shown higher than average growth over the previous years, compared to the market average, and show promise to continually grow into the future. They are riskier than average stocks but have the possibility to multiply in value. The other is value investing strategy. Value investors like Daniel actively seek stocks they believe the market has undervalued. He believes many of these stocks get overlooked due to human behavior and fear. He finds pockets of disproportionate value which are created by human behavior. The strategy has been used by Warren Buffet for many years. Daniel takes a quantitative approach to choosing his investments basing his choices on the The 5 P’s – Price (valuation), properties (quality), pitfalls (risks), people (what are the insiders doing), push (momentum/potential growth). Risk is not a squiggly line Risk is different for everyone when it comes to investing, and that’s why Daniel believes in personal benchmarking. He helps his clients create a personalized definition of risk and using their top motivations to make better decis... Learn more about your ad choices. Visit megaphone.fm/adchoices

This week the guys tackle five questions from the audience on windfalls, real estate, and building credit. Question One First off, let me start by saying I’m loving the Investment Property series you guys are doing. I totally want to get into this, just need to figure out how to save for that first down payment… My question is this…you guys talked about saving 15% a month for the reserve account to cover vacancy and break fixes…Let’s say you own a great property, and you don’t have to dip into the reserve account much for a long time. Is there a point where you cap it and stop contributing to the reserve account? Aaron via Email You won’t want to keep all of the property earnings in your reserve account because in the unlikely case you do get sued – say goodbye to that money. Part of our strategy is to choose insurance policies with high deductibles so for fixes and updates that are not major will pay out of pocket. By not making small claims, our monthly premium low.e are keeping the reserve account up to our deductible. We don’t want to use the insurance unless we have to to keep our monthly payments low going forward. What we are keeping in our reserve account is the amount of our deductible. So, if let’s say our deductible is $10,000, we want to be able to cover anything below that therefore we keep $10,000 in our reserve account. There will be big fixes eventually if you hold the property for many years so plan for significant expenses. If you know, you have to replace the AC unit or roof in the next year, plan for that by putting extra money aside in the reserve account the months leading up to it. Question Two Could you walk me through your decision to go with Roofstock as opposed to Memphis Invest or some other traditional turn-key company? My wife and I have spoken with Memphis Invest, and it seems like they run a tight ship and have an excellent reputation in the REI community. Were you simply looking for higher returns than their markets offered? I’m drawn to the fact that the properties are completely rehabbed before being rented, and they seemingly do an excellent job of reducing risk within their property management (minimum of 2-year leases, very in-depth vetting, etc.) Joseph via Email Memphis Invest is an extremely high-quality operation and great company. For us, the properties Roofstock offered were more what were-were looking for as a beginner investor. The homes were cheaper with Roofstock so we were able to try it out without investing a significant amount of money. As new investors, homes with Memphis Invest were just more than we wanted to spend on a property. We also wanted to spread around the risk by investing in multiple properties rather than putting all our eggs in one basket. This strategy has worked well for us making our average returns are higher with the less expensive properties. Question Three Is there anything I can do credit-wise/savings-wise/career-wise to increase my likelihood of getting approved for a mortgage loan? Nyequita Smith via Email Getting approved for a mortgage is all about your attractiveness to creditors. To improve that you’ll need to increase your credit worthiness. Try for more on time payments. If you only have one credit card and then you only have one on time payment a month regardless if it $3,000 or $30. Get more credit cards and put really small things on them like Netflix, Hulu, coffee, etc. Pay each of them off every month. This is a simple way to increase your number of time payments and credit score. Increase credit utilization. Call your card companies and request to increase your limit. When you have more available, your percentage utilize is lower. If you are maxing out your cards everything it doesn’t look good to creditors. If you increase your limit and only using a small amount ... Learn more about your ad choices. Visit megaphone.fm/adchoices

How would you feel if you made $3.75 million in bonuses a year? It hard to imagine but our guest has done it. And he wrote a book about it! Today we have a chat with Sam Polk, author of For the Love of Money. For most people, that amount of money would be enough to live a more than a comfortable lifestyle for many years. I can’t even begin to imagine what that would feel like, but if I had to guess, I would say it would probably feel pretty damn good. For today’s guest, 3.75 million just wasn’t enough. Today we have Sam Polk on the show to talk to us about his book For the Love of Money. The guys go deep on what life on Wall Street was like, money addiction and redefining success. Meet Sam Polk At only 30 years old Sam Polk was doing very well in his career working as a senior trader on Wall Street. He was offered an annual bonus of $3.75 million and was not happy with it because it wasn’t enough. At that moment he knew he had lost himself in his obsessive pursuit of money. He was addicted to it, and no matter what the amount was, it would never be enough. He knew he had to make a change and decided to walk away from it all – the power, the money, and may other self-destructing behaviors. For the Love of Money For the Love of Money is about Sams’ journey to find out what he really wanted and where he fits into the world. He still wanted success but wanted to do something that contributed to humanity. Sam came to the realization that fulfillment comes from doing work he cares about. Sam wants to help others truly find out what they believe is important. Figure out where your puzzle piece fits in the world, not just where it makes money. After leaving Wall Street behind, Sam moved to Los Angeles where he lives with his wife and daughter, and soon son. He is now the co-founder and CEO of Everytable, a company that sells fresh, delicious meals at prices everyone can afford. If that wasn’t enough, he is also the founder of Groceryships, a nonprofit that helps low-income families struggling with food-related illnesses like obesity and diabetes. His mission is to create businesses are for solving problems but not by funneling profits to those at the top. Through his companies, he wants to “be part of creating a new economy that harnesses the dynamism of capitalism and also fosters the connectedness of a true democracy in which every vote and every voice count the same.” If you want to read more about Sam Polk, you can find him at http://sampolk.me/ Learn more about your ad choices. Visit megaphone.fm/adchoices

We like to check in with our listeners and see how their financial life is going. Today we will take a look at This Financial Life with Corey. We will show him how to make more money by starting a music teaching business. Corey lives in the Boston Area, and he sure is a hustler. He currently, works six different jobs throughout the year and has been saving as much as he can to improve his financial life. One of his gigs is teaching private lessons on trombone, and he wants to expand that to make it a full-time business. Right now he has two students but doesn’t know how to grow his side gig. On this episode, Andrew and Thomas will go through the steps of legitimizing and marketing a side project like Corey’s. Corey’s Financial Life Corey neglected his finances for many years, ignoring his debt, forgetting payments and spending money recklessly. After spending the good part of his four years at college majoring in video games, parties, and girls, he left with student loan debt, no degree and depression. At 22, his financial situation was pretty bleak. He spent a summer without a job making the debt and depression even worse. Corey ended up in a mental hospital over Thanksgiving weekend where he experienced a sort of a financial epiphany.  When he was released, he knew he could never let himself get that low again. Corey is taking the first steps to improving this financial life. He is getting his spending under control with a  30-day money crunch so he can save a meaningful amount of money. What he is still struggling with is being too emotional about finances and getting too close-minded when it comes to ways to improve his situation. Learn more about your ad choices. Visit megaphone.fm/adchoices

You have a budget, great! But what about your budget categories? Setting them up without losing your sanity can be a tall order. Having a budget is only the first step. You need to set up budget categories that are detailed enough to show you where your money is going but not so detailed that you go nuts trying to keep track of them all. Budgets are Personal Finance 101 No matter how little or how much money you have, everyone needs a budget. Every other aspect of successfully managing your finances are built on knowing how much money you have coming in, how much is going out and where it’s going. But there are so many ways to budget that it can be confusing. How many budget categories is too many? How many is too few? If a budget is too complicated, you’re unlikely to stick to it. You want a system that is simple and straightforward. The 50/30/20 method fits the bill. 50/30/20 This budgeting method is simple. You allocate your total budget at these percentages. We’re going to break down what expenses fall under each. And to be clear, the numbers you’ll be using are post-tax, so the amount of money you get in your paycheck each month, not how much you earn. And we recommend Mint for budgeting. It’s free and easy to use, and once you get your account and budget categories set up, Mint does most of the budgeting work for you. You can certainly just use 50/30/20 as your categories for the most straightforward system ever, but unless you have your finances on 100% lockdown, you probably need to expand out a bit. 50%: The Essentials The 50% represents the essentials in your budget, expenses like housing, hoa fees, utilities, transportation, parking fees, insurance premiums, and groceries among them. This also includes things like child care and child support. That these expenses are essential doesn’t mean we can’t reduce them though. We’ll cover that. Housing is the most significant expense for most of us so how much of the 50% should be devoted that and what exactly does “housing” encompass? “Housing should comprise 35 percent of your take-home income. That includes the mortgage or rent, all home repairs and maintenance, property taxes, utilities such as electricity, gas, water, and sewer, and homeowners or renters insurance. In short, it includes every housing-related expense.” That is one take on it, but it’s pretty unrealistic. I think it’s more realistic to budget that 35% just for your rent or mortgage payment. It might mean you have to tighten up in other areas of the 50% but housing isn’t cheap, and unless you take on a roommate, live really far from your place of work in the case of city dwellers or can live with your parents rent free, there aren’t a lot of ways around the high cost of housing. 30%: The Fun Stuff The 30% is to be budgeted on nonessentials, things that you spend money on but could live without (although the living might be pretty miserable). This percentage includes things like meals out, leisure activities, clothes (clothes are a necessity, yes, but presumably you haven’t been running around nekkid to this point, so you already have some), hobbies, and grooming. 20%: The Important Stuff This budgeting category too many people overlook, but it’s the most important. The 20% is for debt repayment, (if you have any) saving and investing. It’s easy to leave this category out and just tell yourself whatever is left over at the end of each month is the money you’ll put towards these things. But the problem is, when you don’t dedicate money to these areas up front, Learn more about your ad choices. Visit megaphone.fm/adchoices

As technology advances, it enables people to become more connected and informed. One of the biggest effects of new technology is on the financial world. Now, investments are incredibly accessible to all people searching to live a more flexible financial life. People can invest their money more easily than ever before Online financial planning and management services allow people to invest money and manage their portfolios from their computers or phones.  Online management takes the guesswork out of investing. It gives users the opportunity to establish and develop a portfolio of investments with ease. Because let’s face it, we aren’t Warren Buffett. Picking the right stocks, at the right time, and holding on through the ups and downs, can be impossible. Enter Personal Capital One such online investment platform, Personal Capital, has made a name for itself as a comprehensive investment checkup tool that offers a range of services at a low cost. But does this platform live up to the hype? Below you will find a comprehensive Personal Capital review—the pros, cons, and whether or not it can help you improve your financial situation. Let’s get started. About the Personal Capital app Personal Capital has been around since 2009, and the platform has since developed a user base of more than 165 million investors. These investors have a combined account holding of $7 billion. There are two basic services offered through a Personal Capital account: free finance aggregation, and paid advisory service. Most advisors use the free aggregation tools, but higher net worth investors tend to opt for the paid service. To be eligible to use their paid services, investors must have at least $100,000 to start their accounts. Personal Capital targets these higher net worth investors with its paid service.  This helps bolster its free service for other users. Therefore, the platform truly offers something for everyone. There are several different features that investors using Personal Capital have access to. And, the platform is frequently expanding to increase its offerings. Personal Capital budgeting Having a budget—and sticking to it—is one of the best things you can do for your short and long-term financial health. Unfortunately, budgeting can be a struggle for many people. The Personal Capital budgeting tool draws information from your various bank accounts to help keep track of how much you’re spending and what you are paying for. This allows you to get a better grasp on your spending habits. And, ultimately, make changes to help support your saving and investment goals. Personal Capital retirement planning When people start investing, they often do so in an attempt to prepare for retirement. The retirement planning tool offered by Personal Capital. It gives users an overview of their retirement savings to help them stay on the right track. You can use this tool to help you determine whether you are saving aggressively enough. It will tell you then are you meeting your retirement goals on time. Personal Capital users can access this feature from the online dashboard or on the iPad, iPhone or mobile app. Account integration options Personal Capital enables you to plug in cre... Learn more about your ad choices. Visit megaphone.fm/adchoices

Thinking about a 401k loan? A 401k is meant to fund retirement, but you can withdraw money from it earlier. There can be negative consequences if you borrow from your 401k but they are not as dire as we have been led to believe. Using the money to make or save money or to pay off high-interest debt can pay off. It goes against personal finance philosophy to take money out of a retirement account before retirement, but under the right circumstances, it is something to consider. 401k Recap By now most of you know what a 401k is but for those new to the site, this will get you up to speed. A 401k is an employer-sponsored retirement account. Employee contributions are deducted directly from your paycheck before they are taxed. The money is invested into one of the funds offered by the employer. If you’re lucky, your employer matches your contribution. This is free money. For the year 2017, you can contribute up to $18,000. Because that money is meant for retirement, withdraws are discouraged before you reach age 59 ½. If you withdraw money before that age, you will be hit with a 10% penalty. There are some exceptions.  If you are no longer working at age 55, if you are using the money to pay medical expenses, or if you have become disabled for example, you can withdraw the money penalty-free. Another way to access that money without the penalty is the subject of this podcast. You can borrow money against your 401k without being penalized. FYI: If picking funds in your 401k, 403b or TSP gives you anxiety, or you fear you’ve made terrible choices than you need Blooom. You’re welcome. Why a take a 401k loan? There are lots of good reasons to invest in a 401k. Not many people get a pension anymore so a 401k may be their only retirement plan. There is also a low bar to invest in a 401k. Your employer does the work; you just have to opt-in. You don’t have to know anything about investing to get started. Contributions are taken directly from your paycheck, so you never have a chance to spend the money. For some people, this is the only way they will save for retirement. The money goes in and grows tax-free. This can help reduce your taxable income and bump you down to a lower tax bracket. When you retire and need the money, most of us will be in a lower tax bracket than we were during our working years, so that is a tax saving. A 401k can also be a great place to borrow money from. How it works Borrowing against your 401K means, you are borrowing from yourself. Unlike borrowing from a bank, the interest you pay, you pay to yourself. The amount you borrowed is no longer invested so rather than getting investment gains; your “gain” is the interest you pay back. You can borrow up to $50,000 if you have a vested balance of at least $100,000 or 50% of the value, whichever is less. You indicate the account you want to borrow money from. Those investments will be liquidated. You will lose any gains those investments might make during for the duration of the loan. Depending on the plan rules, you may or may not be allowed to continue making pre-tax contributions. You have five years to pay back a 401k loan, then if the loan was used to buy a home that will be used as your primary residence. There is no early repayment penalty. Most plans allow you to repay the loan through payroll deductions, the same way you invested the money.  Good Reasons to Borrow Against a 401k If you need money fast and for a short period, a year or less, borrowing from your 401k can be a good solution. You’ll have the money quickly sometimes within a few... Learn more about your ad choices. Visit megaphone.fm/adchoices

Buying a rental property is fun, but it certainly needs to be done with care and a ton of research. Since a rental property is a long-term investment, you want to make sure you review all considerations. You are putting a lot of money into a property for a down payment, so you need to arm yourself with all the information you need to make a profitable investment. This is week four of our real estate investments series.  The guys talk in depth about buying a rental property, assembling your team and reducing risk. Are the local laws in your favor? EVICTION LAWS! Find out what the eviction laws are before committing yourself (and money) to a particular area. Of course, you don’t want to have to evict a tenant, but if someone is living in your place and not paying you to rent for months, you got to do what you got to do. How long does it take to evict someone? In places like NJ, it can take months to have someone legally evicted while you wait around losing money. How easy is it to raise the rent? There could be rent stabilization laws in place to don’t allow you to raise rents as you see fit. How likely is it that you can use their security deposit for damages? Getting answers to all these questions is super important. Start by looking for a place that are “landlord friendly states.” The top 8 states – Texas, Indiana, Colorado, Georgia, Kentucky, Mississippi, Arizona, Florida General Property Grade Location, location, location. The location is critical in buying a rental property. Each rental property you look at will have a grade, A through D. This will help you determine if the property is investment grade. It’s In summary, buying an “investment grade” property is about focusing on the key criteria that will keep your property occupied and stress-free. Here is the breakdown of the ratings. A Property: Newly built properties in the nicest areas. High-quality buildings that are newer (built within the last 15 years) They may include premium with top amenities attracting high-income families. You will also see much higher and much less maintenance, but it comes with a much greater down payment and lower returns. B Property: The slightly older property, but still nice. Might be not quite as nice of an area. Tend to have middle-class tenants. Rental income is typically lower than Class A and may have some small maintenance issues. For the most part, they are in good condition, live in ready and will some upgrades can be moved to a Class A C Property: Older properties, more than 20 years old and located in fewer desirable areas. Likely, they also really could use some work. However, for investors, these rentals have high returns D Property: Run down properties in bad areas. The area and the property can be described separately. It’s possible to have a run-down property in a great area. Harder to have a great property in a bad area, though. It’s important for an investor to understand that each class of property come with varying levels of risk and reward. Crime rates and school quality also need to be taken into consideration. We will soon have these ratings pulled into our Rental Property Tool, but the info is readily accessible. Understanding Vacancy Rates and Potential Tenants When buying a rental property vacancy is inevitable. The vacancy rate is the percentage of all available units in a particular area that is unoccupied at a given time. Look at the US Census data on vacancy rates in the area you’re seeking to purchase in. With 2 minutes of research, Learn more about your ad choices. Visit megaphone.fm/adchoices

Does Roofstock live up to their promises? In our Roofstock review, we dig into their selection of turnkey rental properties and put our money on the line to find out. I’ll admit, I’ve been obsessed with rental properties for a few months now. It took me about that long to wrap my brain around it all. There is so much to think about and consider – the topic of turn-key real estate investing is littered with “rabbit holes.” Now, before we jump in you may be wondering, “why would I ever want to get into rental properties?” If so you should probably start here: The Case for Real Estate Investment Properties. Eventually, after much research, Laura and I decided that we were going to get rental properties far away from the NYC area. In starting our search for turn-key rentals, here were some of the biggest sticking points for us: * How could you possibly purchase a property sight unseen? Is the internet full of crazies? * How do I find properties in my price range that aren’t in a war zone and produce a respectable cash flow? I’m not exactly a well-connected real estate professional. * How can I be sure that I’m not being sold hot garbage by an “expert”? Is there any way to undo it all if I wake up the next morning in a cold sweat regretting my decision? * How do I evaluate and track the profitability of these properties? There are a lot of moving pieces in turn-key real estate investing. * How do I make sure I don’t get stuck with “the worst property management company ever” and wind up with more work/stress than I bargained for? Few people say they love their management company, and that scares me. * How can I set it up such that I do the least amount of work possible, today and in the future? Simply put, I ain’t got time for that shit. * Does my ass need to be the only one on the line? Is there anyone that will stake their reputation on my continued success? In this review, we’re going to cover the above questions and go into extraordinary detail of our experience with Roofstock. After speaking with their CEO and many others on the team, we decided to go ahead and make a turnkey real estate investment with them. Twice. What is Roofstock and what do they bring to the table? Roofstock is a turnkey rental property online marketplace. A core requirement for properties to be listed on their marketplace is that a property needs to be occupied by tenants who meet Roofstock’s strict screening guidelines. Since we’re investors and not real estate professionals, we only look at turnkey solutions. This is the target market for Roofstock, busy professionals who want high yielding successful rental properties without the time commitment or the need to put work in themselves. Unlike most places you’d go to find turnkey rental properties, Roofstock does not own any of the properties listed in their marketplace. Instead, their expertise is in evaluating, negotiating and closing property transactions. So they aren’t trying to sell you anything but instead are looking to add value to an existing and usually convoluted process. What originally got me excited about Roofstock was their inventory. It’s probably what gets everyone excited.  Currently, there are over 100 Roofstock properties available for sale, 20 awaiting listing and 75 with a sale pending. This dwarfs the size of any other turnkey seller Laura and... Learn more about your ad choices. Visit megaphone.fm/adchoices