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

We haven’t done one of these in awhile! Better Know a Millionaire is back to see if the other 1% really live that differently to the rest of us. Today we interview millionaire Adam Dicker. Adam made his millions by selling domain names, some for as much as eight figures! Adam has been in the business for about twenty years and was a VP at Go Daddy for a few years. Adam buys and sells domains that have expired and tries to stay two to three years ahead of trends, particularly in the medical and tech sectors. You can’t just go and buy a domain name with a trade mark in it. So no, five years ago you would not have been able to purchase Applewatch.com. No need to beat yourself up about that one. This business takes a lot of research. You have to buy a name that in the future, a business would want to buy. Like a lot of millionaires, Adam wanted a business that would make passive income. He once went to dinner before replying to an offer and in the space of that dinner, made an additional $50,000 from an anxious buyer. Doesn’t get much more passive than that. Adam looks at every day like he has to make enough money to pay for food for his family. He may have made $10,000 the previous day, but he forgets that and looks at the current day as an emergency that he needs money for. According to Adam, you always have to budget, all of us. It doesn’t matter if you make $10,000 a year or $100,000 a month. If you have no idea what is coming in and what is going out, you might find yourself going broke. Like nearly all of the millionaires we’ve interviewed, Adam doesn’t live a crazy life of luxury. He would rather watch football on a Sunday afternoon or go to dinner than stay in Five Star hotels across Europe. So again, we see that your average millionaire is not some jack off you see on TMZ, but just a normal person who knows the importance of living within your means. Show Notes Morimoto Imperial Pilsner: The Iron Chef beer! Adam Dicker: Learn to buy and sell domain names. LMM Community: Come join us in the Forums to discuss all things PF! Featured Image Photo Credit: “Proudly made in America. Printing 24/7 in USA.” by Miran Rijavec on Flickr Learn more about your ad choices. Visit megaphone.fm/adchoices

Do you have kids? What are you doing to teach your kids about money? Adam Carroll joins us to talk about teaching your kids the value of a dollar. Adam is one of our favorite guests here at LMM. We first met him to discuss student loan debt. Today he’s back to talk about teaching kids about money. Under-Educated More than anything, aside from health, money can make or break your life. Not in the sense that money buys happiness but that lack of money, or knowing how to handle the money you have, is a major source of stress. In 2014, 64% of American adults sited money worries as “a significant source of stress” making it number one on the list ahead of work, family, and health. You would think that something so fundamental would be well covered in schools, from kindergarten all the way through high school. Well, it isn’t. Maybe because there are “legacy” subjects taught that leave little room for new ones. Maybe because so much hinges on standardized testing and those tests don’t include a personal finance sections. For us tin-foil hat wearers, maybe because the powers that be like the system just as it is. It makes for good consumers. Whatever the reasons, kids aren’t learning even the basics of how to handle money. So it’s up to their families to instill the personal finance lessons that will carry them through life. What Age To Start Early, even earlier than you might think. By the time children are seven, their money habits are already formed. Age three is a good age to start money lessons. You’re not going to explain what a Roth IRA is to a toddler but even at this age kids can understand basic concepts. Explain that you need money to buy things and you earn money by working. Teach them delayed gratification. You can’t have everything you want now. The Stanford Marshmallow Experiment showed the importance of delaying gratification. Children were given one marshmallow and told if they waited to eat it, a short wait of about 15 minutes, they could have a second marshmallow. The study found that the children who waited had better life outcomes which were measured by things like SAT scores, educational attainment, and BMI’s. The children studied were between the ages of 7 and 9 so it seems to be true that your money habits are set by age 7. Money Isn’t Real How often do you use cash? Almost never for some of us. How often do your kids see you use cash? Maybe never. If your kid never sees cash, it’s hard to understand that you can’t just buy whatever you want because physical money is finite and a credit card is not. Adam devised a clever way to teach his kids about real money. He gave his kids $10,000 in real money to see if it would change the way they played the board game Monopoly. It did. The kids were more careful with the real money. By showing kids that money is a physical thing, you can teach them that once they spend it, it’s gone. Money is no different to cookies. If you have three cookies and you eat three cookies, the cookies are gone. Don’t Raise “Wanting” Kids Having kids is expensive. It costs $245,340 to raise a child to the age of 18. It costs more to raise “wanting” kids. You’ve seen them, the ones having a melt down in Target because they were told no when they asked for a toy. But the reason for the melt down isn’t just th... Learn more about your ad choices. Visit megaphone.fm/adchoices

  Today we dissect listener Andrew’s finances. What is he doing right, what is he doing wrong, and what can he do better. This financial life. Andrew is a long time listener and today he shares his financial situation with us to get some advice. Before Andrew found LMM he had student loan debt, credit card debt, high fees on what investments he had, no budget AND he bought a new car. Andrew recently married and brought about $75,000 of debt into the marriage while his wife had about $22,000 from student loans. They have paid off about $20,000 in a short amount of time. He moved his investments over to Vanguard to save on fees, and set up a budget. Andrew lives in Minnesota and the couple make about $100,000 a year. They pay just $600 a month in rent on a two bedroom apartment. The monthly living expenses are about $2,000. They want to buy a house but are first working to build their emergency fund and pay off debt. The student loans have a high interest rate, over 6%. He is paying $2,300 a month in loan payments. Andrew should speak to CommonBond about getting a lower interest rate. He is currently using the snow ball method to pay his debt but we recommend the stack method. Andrew has a Roth IRA and is working toward maxing that out by the end of the year. Once the debt is paid off, in about four years, Andrew would like to travel before buying a home. Buying a home should not be a given. A lot of people just do it because it’s the next thing you do but it’s not for everyone. Because he likes his job, Andrew is not in a big hurry to retire early. But it’s not if you don’t have to work no matter how great your job. We’re glad that we were able to help Andrew take control of his finances. Show Notes Sebago Bump: A rich, black ale. Mint: The easy way to budget. Betterment: The smart way to invest.   Learn more about your ad choices. Visit megaphone.fm/adchoices

  With so much of our personal fiance information floating around the internet, how can you secure your accounts? We’ll give you a few ways to stay safe. Many of us have had some aspect of our life hacked, bank account, credit card, naked photos. You have to protect your on-line information. Some sites are more secure than others. You are pretty safe at Betterment, maybe not so safe at your local carry out restaurant. So don’t use the same password over and over! Use a site like LastPass to manage your passwords. Use tiered passwords, a complicated one for things like bank accounts but a simple one for your Disqus account. Two-factor authentication means you provide two forms of identification, something physical like a key fob and a security code. Prey will use your web cam to periodically take pictures so if someone steals your device, say “cheese” mother fucker. You don’t have to be rich to be ripped off. Hackers don’t want to steal $10,000 from one person, they want to steal $100 from 100 people. Adding numbers and characters to your password helps but not much. Using a nonsensical  string of words is more secure and easier for the human brain to remember than a string of numbers and characters. A user name is almost as important as a password. If you don’t have to use your e-mail address, use something harder to uncover than your own name. When answering security questions, lie or answer accurately but add a code word onto the end of your answer. What happens when you die? Well, you see a white light…No, put a list of your passwords in a secure place like a safety deposit box and give the key to a trusted person. This could be useful not just for death but in case you are ever locked up unjustly in a South American prison. Plan ahead. There is only so much you can do. Ever how clever we are and how sophisticated on-line security is, the hackers are more clever and more sophisticated. But you don’t have to make it easy for them. Show Notes Keymaster Farmhouse Smash Ale: A small brew with a smooth finish. Exile Ruthie: A smooth, gold lager. Betterment: A safe place for your emergency fund. Patreon: Help support LMM. Learn more about your ad choices. Visit megaphone.fm/adchoices

Most of us are not going to get rich simply from our jobs – we have a limited amount of time for actively working. To reach financial independence, we have to create sources of passive income. Smart real estate investing can bring in big returns and grow your net worth.  Like investing in the stock market, real estate investing can seem intimidating. It’s really not though. There are just some key fundamentals you need to know before you get started. Everyone wants to be the Donald Trump of their neighborhood. But with less turnover. Fewer walls. Better inter-neighbor relations.  OK, maybe that was a bad example. But, maybe not. “It’s tangible, it’s solid, it’s beautiful. It’s artistic from my standpoint, and I just love real estate.” – Donald Trump Maybe this human candy corn topped with cheese whiz is on to something. Real estate is a physical asset you can touch and is not going out of business any time soon. Unless people all of sudden choose to live off the land again…  Nah! No matter how you slice it, real property is here to stay, which is why many choose to put their money into it. Investing in real estate has crossed all of our minds at one point or another. But if this is an investment option you’re considering, you may have no idea where to start. To successfully pursue investment opportunities in the real estate market, you must first do your due diligence to ensure that you understand the intricacies of your local market and the factors that dictate the profitability of what you’re investing in. In this article, I will offer you a broad overview of just about everything you need to know about beginning with investing in property; the very basics. And I promise, no more bear attacks or Trump references. An overview of real estate investments At a basic level, real estate investing is a method of making money by renting, flipping or owning residential, industrial, commercial properties, or parcels of land. Some investors may find these properties on their own, or through the use of an online real estate marketplace like Roofstock, the Multiple Listing Services, or Zillow. Residential real estate investments are the most common forms of real estate investing. These include single-family homes, condos, and townhomes that can be re-sold or rented out to turn a profit. For example, you buy a condo in Beach City 5 miles from you for $100,000, you rent it out on Airbnb for $100 a night, you make a lotta tuna. Simple as that. Well, maybe there’s a bit more to it. But more on that later. Larger residential properties and those that are intended for use by businesses fall under the category of commercial real estate. Owners can make money from commercial properties by leasing out office space or multifamily residential units. The rule of thumb is anything that’s rented out to a business and any residential building with more than 4 units inside it, is classified as commercial. These types of properties have different lending criteria when applying for a mortgage. Regardless of the type of property you own, you can benefit monetarily profit from an investment property in four key ways: rent, appreciation, tax benefits, and interest. Rent The owner of a single-family home, condo, townhome, multifamily property, commercial building, crowdfunded real estate or industrial real estate may generate rental income by leasing out all or ... Learn more about your ad choices. Visit megaphone.fm/adchoices

  Today we have a This Financial Life episode with listener Lindsay. We break down her finances to see what she’s doing right and where she can use some help. Lindsay is a second grade teacher living in Seattle. We’ll help her get her financial life in order. Lindsay’s salary is a little over $58,000 a year, it’s spread over twelve months and she makes a few extra thousand teaching summer school. Lindsay decided that 2015 would be the year she stopped ignoring her finances, partly thanks to LMM! Lindsay divorced in 2013 and it caused some tax problems. Your marital status matters on the last day of the year. So even though the Lindsay was married for almost all of 2013, for tax purposes, she was considered divorced. She ended up owing $2,400. She had about $20,000 in credit card debt after the divorce. Lindsay got a loan from Prosper to help conquer the debt. She also used Ready For Zero to help pay things back. Within three years she will have killed all that credit card debt! Lindsay also has $56,000 in student loans. Once she has paid off her credit cards she will focus more on the student loans. Lindsay has investments too. She has about $15,000 in a Traditional IRA but she is focused on debt for the time being rather than investing. Her rent is not unreasonable, her car is paid off although she has a bit of a long commute. What can Lindsay do better? Her Prosper loan interest rate is high. She should try Lending Club to see if she can get a better rate through them.  She can contribute more to her IRA to reduce her taxable income. Lindsay has a lot of debt but she also made a plan that she is sticking to. We’re happy that we were able to play a small part in her success! Show Notes Lindsayliving.com: Lindsay’s lifestyle blog. Mint: Find out where your money is going. Patreon: If you appreciate LMM, donate here. Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s important to get the most out of your day. But you can take the quest for productivity too far resulting in burn out. Find the productivity sweet spot. During Andrew’s recent burnout, he realized he was taking the need for productivity too far. Sometimes you just need a night vegging out in front of a video game. We’re all motivated by different things, the key is to find out what motivates you so your productivity isn’t scattered and ineffectual. External forces, internal? Are you a morning person or a night owl? Knowing what moves you is important to get moving. If you have a month to do a project does it take you a month or three days? If it takes you a month, is the whole thing done the last day of that month? Do you like a stark space or one full of clutter and color? Are you a list maker? Especially for your long term list, go through it once in awhile and make sure you still need to do all the things you wrote down. Crossing things off is satisfying but things change and still doing something just because it’s on the list is anti-productive. Make sure you focus your productivity. Every minute doesn’t have to be accounted for, that’s how your get burn out. Show Notes Better Than Before: Mastering Habits of Our Everyday Lives Patreon: Donate here to keep LMM ad free. LMM Tool Box: All the tools you need to be more productive. Featured Image Photo Credit: “Xbox One Controller” by mastermaq on Flickr Learn more about your ad choices. Visit megaphone.fm/adchoices

  Larry Ludwig from Investor Junkie is our guest today to explain what the Federal Reserve is, does, and why you need to know. Put simply, the Fed sets monetary policy and either adds or removes money from the system. There are twelve regional Feds across the country to help manage local banks. It was created in 1913 as a way to prevent feature economic disasters. Bit of a fail I think. The chairperson is appointed by the president but is supposed to operate independently of the government. Prior to 1971, we operated on the gold standard so the Fed made sure the amount of money matched the amount of gold. Now we operate on a “faith based” system where we rely on the government to determine the value of money. In order to help stimulate the economy after the crash, the Fed allowed banks to borrow money at 0% interest. The rate has been that low for seven years. Lowering the interest rates is meant to stimulate the economy. When rates are low, people can borrow money to buy things they couldn’t afford before. When interest rates are raised, that means that the economy is doing well and is at nearly full employment. The Fed is also tasked with keeping inflation/deflation in check. They have not always been successful but the average rate of inflation has been about 3% since the Fed’s creation. The Fed also determines how much cash banks must have in reserve. Ultimately it’s productivity that grows an economy and not slight of hand by the Fed. And a lot of economists consider all this smoke and mirrors to be merely kicking the can down the road, just delaying the next 2008 style melt down. Is the Fed good or bad? That’s up for debate. The Fed has helped pull us out of crisis but did they create the crisis in the first place? Are they creating artificial cycles? What can you do to protect yourself against the whim of the Fed? Make sure to have a good asset allocation strategy. Aside from that and repatriating, there isn’t much else you can do. It’s good to understand the Fed but ultimately, invest your money in the LMM set it and forget it style and don’t worry too much about what they are doing. Show Notes White Beer: A crisp, summer beer. Investor Junkie: Larry’s site dedicated to helping you become a better investor. The Creature from Jekyll Island: A look at the Federal Reserve. Betterment: Don’t worry about the Fed and invest your money. Patreon: Want to keep LMM ad free? Donate now! Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we interview Benjamin Miller from Fundrise. Fundrise is a crowdsourcing site that allows anyone to invest in real estate. Real estate can be a great investment but you need some serious money to do it. Not anymore. Fundrise allows you to invest small or large amounts of money in various properties. We even wrote a full review of Fundrise – you should check it out! The commercial real estate market has outperformed other investment vehicles for the last thirty years. It would be great if we could all become commercial land lords but most of us probably don’t have hundreds of thousands of dollars sitting around. With Fundrise, you need $1,000 to open an account. They have dozens of people looking at hundreds of possible investments. Finding a good commercial real estate investment isn’t easy. Fundrise negotiates the deal and writes then check and then offers the opportunity to investors. The investment management fee ranges from .33-.50% per year. How fast can you pull your money out of Fundrise? Not as quickly as you can with something like Betterment. Their notes have an average age of two years. You don’t have to be an accredited investor to invest through Fundrise. They have worked with the SEC to open certain investments to anyone who has the $1,000 minimum. You don’t want this to be a huge part of your portfolio but as the average returns are around 13%, this type of crowd sourced investing is something to seriously consider. There isn’t a deal for investors who aren’t accredited right now but Benjamin suggests setting up an account so you can see when there is a deal that you can get in on. Show Notes Fundrise: Crowd sourced real estate investing. Fundrise Extinction: Cool subway ad! Fundrise Internet: Next to be extinct. Fundrise Jobs: Welcoming all out of work bankers. River Horse Baltic Porter: Aged in Peruvian rum barrels. Molson Canadian: It’s the NHL play offs,what else would you drink? Learn more about your ad choices. Visit megaphone.fm/adchoices

Yeah, backdoor Roth IRA sounds pretty badass – badass but complicated.  Many of us have tossed around the idea of having a traditions IRA or a Roth but what if you can have the best of both worlds? There are not many times in life that allow us to have our cake and also to eat it, but this is one of those times. Quick IRA Re-Cap We could do a year of shows devoted to all things IRA and there would still be questions. They are confusing so here is a bit of a refresher on the basics. IRA stands for an individual retirement account. It’s a tax-advantaged investment vehicle to save for retirement. There are several kinds, including SIMPLE, SEP, Traditional, and Roth. The last two are the ones we will be talking about today and the two that are most commonly used. Traditional IRA A traditional IRA lets you invest pre-tax income into an account that will grow tax-deferred. The money is not taxed until you withdraw it. You can withdraw funds after age 59.5. Putting money into a Traditional IRA lowers the amount of taxable income for the year you made the contribution. Not only does it lower you adjusted gross income, doing so can help you qualify for other tax breaks like student loan interest deductions or child tax credits. Roth IRA A Roth IRA is similar to a Traditional, but the money is taxed up front and not upon withdrawal after age 59.5. Roth contributions (but not earnings) can be withdrawn without penalty and tax-free at any time. After five years have elapsed after the first contribution, you are allowed to withdrawal up as much as $10,000 of the earnings penalty-free to pay for certain qualified expenses. Contribution Limits Both Traditional and Roth’s have the same contribution limits, $5,500 per year for 2016 ($6,500 if you’re aged 50 or older.) But there are income limits for high earners. If you’re single and earn over $129,000 or file jointly as a married couple and earn over than $191,000 you are forbidden to contribute to a Roth IRA entirely! Penalties Withdrawals from a Traditional are considered regular income, and if you are younger than 59.5 when you make the withdrawal, the amount you take out will be hit with an early withdrawal penalty of 10%. You can pull contributions to a Roth anytime without tax or penalty. The rules for earnings are different. If it has been less than five years since your first contribution, you may be taxed on earnings even if the funds are used for one of the exceptions described below. Exceptions The thought of locking up your money for so long puts many people off the idea of an IRA, but there are exceptions: You can use up to $10,000 from your Traditional or Roth IRA toward the purchase of your first home. You can use IRA money to pay for higher education expenses not only for yourself but also for immediate family members (your spouse, children, and grandchildren). There is no dollar limit. You can make withdrawals to pay for unreimbursed medical expenses if those expenses are more than 10% of your adjusted gross income, or to pay for health insurance premiums for you, your spouse or children during a period of unemployment. Which is Right for You? If you expect your tax rate to be the same in retirement or higher than it is now, the Roth IRA is a stronger choice. A traditional IRA makes more sense if you expect your tax rate to be lower in retirement. But what if you could have the best of both worlds? There are not many scenarios in life that allow us to have our cake and also to eat it, but the MF has figured one out when it comes to IRA’s. Why rollover 401K? The best reason to roll an old 401K into an IRA is that there are a lot of hidden fees in some 401k’s and the investment options a... Learn more about your ad choices. Visit megaphone.fm/adchoices