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

  Time for listener questions.  We’ll discuss refinancing, repairing damaged credit, and being a spendaholic. We love answering your questions.  If you want to know, your fellow listeners are probably wondering too. 1.  How do I turn my spendaholic friends into the budgeting, investing machine LMM has turned me into?  First, tell them about the show!  You have to let each person realize they need help.  New Year’s resolutions are around the corner and money is a big one.  If they resolve to improve their finances, suggest some learning materials.  Podcasts, books, blogs that will help them learn.  If they suggest going out, offer up a cheap night.  A potluck, movie night at your place.  Remember, the host always gets to keep the leftover booze!  Inspire them, don’t lecture them. 2.  I have a secured credit card as I’m trying to rebuild my credit.  What’s another good card to help me repair the damage?  When Matt had bad credit, in the low 600’s, Discover gave him a credit card.  Set up an account on Credit Karma to check your credit score to see if things are improving.  Getting more than one card and putting a small charge (Netflix, gym membership) on each one will boost your credit score because it will show a history of on-time payments.  We wrote an article on credit scores with some additional information. 3.  How do on-going payments work in an index fund?  Inflation is usually 2-3% and no savings account offers anything close to that.  Through investing, over time, you can expect returns around 7%.  Make a deposit into your investment account every month and let it ride. 4.  My wife and I are looking to enter the property market.  After doing so, we’ll still have $20,000-$40,000 left over.  How do we stay ahead of inflation?  Betterment and Vanguard have great returns.  If you don’t need your money to be liquid, Lending Club is a great investment.  It’s not for everyone but it’s worth looking into.  If you’re more conservative, stick with Betterment. 5.  We are considering refinancing through SoFi.  Our rate could fluctuate  up but the term would be reduced.  Is this the right move?  It’s more than likely that interest rates will go up in 2015.  By re-financing now, you’ll pay less and pay the loan off more quickly. Thanks for the questions everyone.  Keep sending them in. Show Notes Betterment: The smart way to invest. Flying Fish Red Fish: A hoppy red ale. LMM Toolbox:  Some credit cards we recommend.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Ever feel that you’re just kind of stuck, just total complacency?  Grant Peelle made a documentary about people who felt that way and did something about it. Grant Peelle is a documentary filmmaker.  His film I’m Fine, Thanks documented the lives of people who got fed up with being in a rut and what they did to change it. Grant found himself feeling complacent.  Life wasn’t terrible, he didn’t hate his job.  But something was missing.  Life was routine, filled with consumption.  He longed to do a film. The idea for the film was hashed out in a weekend.  They raised private money before doing a Kick Starter campaign once some footage was filmed. The theme of the film is why do we trade our dreams for a scripted life?  Grant interviewed people who broke free from that and people who were still immersed in that life but working on breaking out. It doesn’t explain how, it explains why.  That’s the nature of the story Grant wanted to tell.  The biggest lesson from the film is that you’re not alone in your fear.  Many of us feel a vague dissatisfaction but we’re afraid to make the leap into the unknown. But there is a whole community of people who share your fear, did it anyway and can help smooth your path.  Whatever you want to do, the internet has a community for you.  If Bronies can find each other, people who want to quit their 9-5 can too. I’m Fine, Thanks is an extraordinary film.  If you need a bit of uplifting or a bit of encouragement, this is the film for you. Show Notes I’m Fine, Thanks:  Grant’s documentary about complacency and what to do about it. #Standwithme:  Grant’s documentary about knowing where your products come from. LMM Financial Rant Hotline:  Call 856-818-3738 and rant about anything finance related. Texas 4000:  Help us beat Stacking Benjamins and help a good cause. Betterment:  The easy way to invest.   Learn more about your ad choices. Visit megaphone.fm/adchoices

In honor of Veteran’s Day we join other podcasts in giving voice to Veterans.  Matt’s friend Ryan Carlson joins us to share his story. Ryan joined the Air Force immediately after high school.  He was in college and then his entire base was activated after 9/11.  The base had jets in the air nearly 24/7 for almost a year. Ryan graduated in 2005, the same year his enlistment was up.  He entered the private sector and didn’t like it so re-enlisted for six more years.  He worked as an avionics technician until 2012 and then was commissioned as an officer. He spent time in Qatar and Iraq.  Ryan was considered a veteran even before going to Iraq because he served during 9/11 when the country was at war.  Ryan is currently a component maintenance flight officer in charge.  His job is to deliver ready to deploy jets to the pilots. He also sets up teams to work on disaster relief.  They worked on Hurricane Sandy.  He will also shortly begin training on preventing sexual assault in the military. Personal finance in the military is a little different than in the private sector which we discussed in Episode 63.  Ryan was lucky.  Unlike a lot of young people, his parents taught him about money from a young age.  He’s the friend who tried unsuccessfully to convince Matt to use a spread sheet. Ryan has a side hustle (wrote that to annoy Matt) with Amazon.  He ships product to Amazon warehouses and when the item is ordered, Amazon handles the shipping.  It’s more expensive than selling direct but it’s less hassle. Ryan uses Betterment to invest the money he makes from Amazon.  His allocation is conservative, 35% stocks and 65% bonds. Thank you to all of the military personnel, past and present, for their service. Show Notes River Horse Belgian Freeze: A Belgian style ale. Flying Fish Oktoberfish:  An homage to German Octoberfest beers. Voices for Vets:   A collection of podcasts giving voice to the stories of veterans on 11/11. Lancaster Brewing Baked Pumpkin Ale:  Just like pumpkin pie. Betterment:  Start investing today. Learn more about your ad choices. Visit megaphone.fm/adchoices

Identity theft can wreck your life and your credit.  Security expert Robert Siciliano joins us to discuss how to protect sensitive information. There are two main types of financial identity theft:  new account fraud and account take over. New account fraud is when someone gets your social security number and starts opening new lines of credit in your name, credit cards, even car loans.  You start getting calls from collection agencies wanting their money. Account takeover is the most common form of ID theft.  This is when someone hacks your bank account or gets your credit card number. New account fraud is easier to prevent.  Making sure your devices are protected from spyware and being careful where you give out personal information will go a long way in preventing it. Account takeover is harder to avoid.  Every time you hand over your credit card to pay for something, it can be stolen.  The best thing to do is to monitor your bank and credit card statements for unauthorized transactions. There are new technologies coming that can help prevent ID theft.  Chip and pin are long overdue in the States.  It’s been standard in Europe for years.  We will get it in October 2015.  The magnetic strips will be replaced by the chip and pin which are harder to hack because the chipped data is encrypted. NFC technology is in the offing too.  This is tap and pay or wave and pay technology.  Apple Pay uses NFC. The best way to stay safe is to use multiple layers of protection.  Use Mint, check your statements, some banks and credit card companies allow you to set your alerts to be notified of every transaction.  Amex is the gold standard for this. You have sixty days to refute a charge on a credit card.  You have two days to refute a fraudulent debit card charge.  This is why we advocate always using a credit card rather than a debit card. If you use Cloud storage, Robert recommends mulit-factor authentication. Otherwise, all your naked pics will end up on Reddit, The Fappening II.  Are you willing to risk it? Don’t use one password for more than one account.  I know this is a pain in the ass but sorting out ID theft is worse.  At least don’t do it for anything connected to your finances. Get a credit freeze.  It locks down your credit report. In order to “thaw” your report, for legitimate applications for credit and loans you’ll receive a one time PIN. I’ve had both my checking account and a credit card hacked and it is annoying to have to sort out so get your security measures in place now. Show Notes ID Theft Security:  Robert’s site that will teach you how to safeguard your private details. Mint:  Alerts you to unusual activity on your account. Best ID Theft Companys:  ID protection companies ranked. LMM Financial Rant Hotline:  Call 856-818-3738 and rant about anything finance related. Learn more about your ad choices. Visit megaphone.fm/adchoices

Being charitable is important but when you’re minding your money it isn’t as simple as writing a big check.  But you don’t have to give money to contribute. A lot of people start to think about the best way to give around the holidays.  But with so many demands on your money this time of year, how can you best give back to your community and the world around you without going broke? When you’re a kid being charitable is set up for you.  Through the Boy or Girl Scouts, through your school, through your church if your parents dragged you.  And it didn’t cost you anything.  You did good deeds, donated your time, or collected things like clothes or food for others. When you’re an adult, it can fall by the way side.  Demands on your time and money mean that charity takes a back seat.  But there are small ways to help.  A lot of stores will give you the option to add some extra money onto your purchase for charity.  Pet Smart does this and it gets me every time.  Puppies and kitties! A lot of people get involved in a charity because of a tragedy or near tragedy close to them.  Matt filmed a series of videos for Learn 2 Swim on pool safety for children after a child in his family nearly drowned.  It didn’t cost him money.  He donated his time and expertise which can be more valuable than money. Please be selective when choosing a charity to give your time and money to.  Don’t just default to the big name charity.  Do a bit of googling on Susan Komen and you’ll realize they don’t deserve a cent of your money or your time.  Give Well is an excellent resource that vets charities. Sometimes the best reason to give to charity is because you are pissed off. When Tim Tebow’s mother did an anti-choice ad that aired during the Super Bowl, I made a nice, fat donation to Planned Parenthood in her name. Yes, donating time to charity is a great way to score!  Someone who is generous with their time may be generous with their other talents too.  Ulterior motives still help the charity and you get some.  Win win.  And please remember, charities are inundated around the holidays but people need help and money all year round.  We know each of you have unique skills and talents that any charity would be thrilled to take advantage of. Show Notes Betterment:  Invest now so you have more to give. Charity Navigator: Another site to vet charities. Donors Choose:  A charity for school children. Texas 4000:  Help us beat the Stacking Benjamins audience and help a good cause. Ted Talk Michael Norton:  How to buys happiness through charity.   Learn more about your ad choices. Visit megaphone.fm/adchoices

We thought we would share all the things that teach us, help us, and make us more productive throughout the day.  The best of the best curated for you. Not all of these are money related and they are all new ones that we’ve discovered since we covered this topic in the early days of LMM. Podcasts APM Market Place:  A quick summary of the day’s financial markets and big stories. How To Start A Startup:  From Stanford University. Hard Core History:  Epic history podcast. Money for the Rest of Us:  From our past guest J David Stein! Ted Radio Hour:  Portable Ted Talks. Freakonomics:  All the money topics you never thought to ask about. Fizzle:  How to build your own side business. Smart Passive Income:  Pat Flynn’s podcast. Nerdist:  A podcast about things and stuff. Tim Ferris:  From The Four Hour author. Extra Pack of Peanuts:  Past guest Travis Sherry’s travel podcast. The College Info Geek Podcast:  From our frequent contributor Thomas Frank. Blogs and Books Brain Pickings:  Well curated articles for the creative and curious. QZ:  Data driven news. Oliver Emberton:  Oliver writes about life and how to better it. How To Win Any Argument:  Great for married people but useful for anyone who deals with people.  Which I guess is all of us except the hermits. Good To Great:  How some companies make the leap while others don’t. The War of Art: How to fight your inner resistance to getting things done. Steal Like an Artist:  About creativity. ... Learn more about your ad choices. Visit megaphone.fm/adchoices

Minimalism can be defined many ways.  We’ll talk to Joel Zaslofsky about how to become a minimalist. He has embraced the lifestyle to learn why and how it has improved his life. What is a minimalist? Joel defines it as embracing what is important to you and stripping away the excess. He began down the path of minimalism five years ago when he and his wife were expecting their first child.  Prior to that, he was following the prescribed American path, college, wife, house, dog, kid. Having a child was the kick in the ass he needed. Joel wanted to be a good father and knew some of the extraneous things in his life needed to go in order to do that.  It’s not just stuff that needs to go. Toxic relationships need to be jettisoned too. Or just those that have become perfunctory. Joel started hard core and video games were the first thing to go. I’m not sure if I recommend this.  I’ve seen you pasty video game players walk into the sunlight and it’s scary for you and us too.  Tread carefully. Sugar was second and I do endorse this.  Life improves 100% after this change based on the highly scientific study I just conducted. If you like that stat, look into Paleo which Matt and I both hardily endorse. Simplifies things to an incredible degree.  He also recommends meditation and yoga.  I’ve failed on both those fronts, I’m too wriggly. If you embrace minimalism even in just a few areas of your life, you will see an improvement in your finances. Less stuff equals more money. Joel’s advice is to not focus on what you’re giving up but what you will gain.  Time, money, peace.  All of which are more important and more fulfilling than stuff.  Show Notes Ommegang BPA:  A Belgian style pale ale. Flying Fish Hop Fish:  A hoppy red ale. All My Money:  The LMM rap video. Value of Simple:  Liberate your time, money and talent. Smart and Simple Matters Podcast:  Find freedom from stuff and live intentionally. SimpleRev: Workshops on simple living. Becoming Minimalist:  Celebrating simplicity. Betterment:  Stash the money you’re saving here. Learn more about your ad choices. Visit megaphone.fm/adchoices

Opportunity cost sounds ominous. Like you are really going to be missing out or possibly making a big mistake if you choose wrong. Without realizing it, we make minor decisions in our lifestyle choices that involve calculating opportunity cost. Opportunity cost is basically considering what you can’t do as the result of each possible decision you make.  Don’t worry. We are here to teach you how to calculate opportunity cost and how it works so you always make the best decisions. Our professor on the show today is Dan Egan from Betterment and he’s drinking beer brewed at Betterment! What is Opportunity Cost? Opportunity cost is what you give up when you choose between options. No matter what we choose, there is a next best choice that we give up or an opportunity forgone, that is the opportunity cost. We want to minimize our opportunity cost by choosing the option that benefits the most. Considering that almost every decision you make has a potentially beneficial alternative, you will never be able to eliminate opportunity cost entirely. The important thing is not to brood over “what ifs” and “should haves”. Rather be pragmatic and responsible each time you are decision making. “One of the most important concepts of economics is ‘opportunity cost’ – the idea that once you spend your money on something, you can’t spend it again on something else.” Malcolm Turnbull Decision making typically involves constraints such as time, resources and rules – risk vs reward, cost vs quality, salary vs quality of life. Opportunity cost is considering what you can’t do as the result of each possible decision. Opportunity Cost = Return of Most Lucrative Option – Return of Chosen Option Scarcity We have to weigh opportunity costs because of scarcity. Scarcity means limited resources. All of our resources, time, money, effort, are not infinite and could be used in a variety of ways. You may be able to allocate the time you spend earning a new certification or degree into advancing within your current position, for example. In this situation, you would have to decide what the most valuable allotment of your time is and what would have the greatest potential for the greater return on your chosen investment. So we have to carefully consider our decisions to make sure what we are gaining by making one choice over another is more valuable than what we are foregoing. Simple Examples of Opportunity Cost Even simply deciding where you want to eat comes with unavoidable missed opportunities. You want to go out to dinner. You decide to go to the French place over the Italian place. The enjoyment of an Italian meal is the opportunity cost of that decision. Although you might thoroughly enjoy your meal at the French restaurant, even more so than you would have at the Italian place, you will still have missed out on the good food and enjoyable experience. And the baguettes. Oh, the baguettes! Opportunity cost can apply to your everyday purchases, as well. You want Netflix for the month and a new book. You don’t have money for both. You choose the book. Watching Netflix is the opportunity cost. Investing Examples Of course, there are situations where the opportunity cost of a decision is much higher than eating steak tartar instead of pasta. Choosing an investment vehicle is one area where opportunity costs must be more carefully considered. Any time you invest your money in the stock market, there are certain trade-offs that you must expect. Learn more about your ad choices. Visit megaphone.fm/adchoices

  It’s time for five listener questions.  Today we talk about life insurance, budgeting, and buying a home. 1.  What do you guys know about life insurance?  Not everyone needs it but if you have someone who depends on your financially, then you should have it. Term is the best option.  If you can get it through your employer, take it.  We did a deep dive on this subject in Episode 140. 2.  When accounting for expenses like travel, do you mark it when you decide to spend the money or once it’s actually spent? Mark it when you spend the money, so it you buy the plane ticket now but the trip is in January, it counts for November’s budget. 3.  You should buy when stocks are low.  Are you still feeding money into Betterment while the market is down?  Yes, absolutely.  Buy fear, things are never as bad as they seem.  As a new investor, stay the course.  I know it’s hard to not keep checking the numbers but just let it ride. 4.  What’s the smartest thing to do with a windfall?  Because that money will push you into a higher tax bracket, start a solo 401k or a Roth IRA.  We’ll look the other way if you still decide to spend a small portion on video games and flesh lights. 5.  We are a couple in our mid twenties.  Is there an ideal time to buy a home? If you’re going to buy a home, it should be bigger, better, and cheaper than the place you’re renting.  But you’re young, go travel a little before you think about buying a home.  Don’t rush buying a home.  Ask Matt what happens when you rush it. We have been getting a lot of good feed back on the five questions episodes.  Keep sending in questions and we’ll keep answering them. Show Notes Introverts Should Lay Off the Coffee:  I would never but here’s the article. Betterment:  Now is a great time to jump in. Featured Image Photo Credit: “Question Box” by Raymond Bryson on Flickr Learn more about your ad choices. Visit megaphone.fm/adchoices

You’re investing, great!  Now we can take it a step further and learn how to optimize your taxes while investing.  Larry Ludwig will explain the best tax efficient investing practices. The tax man gets enough of your hard earned bucks. Larry Ludwig from The Money Tree Investing Podcast will teach us how to optimize our investments for the biggest tax benefit. Larry recommends eight steps to maximize your tax savings: 1.  401k up to your employer’s match. 2.  Traditional IRA 3.  401k post match. 4.  Roth IRA 5.  529 Savings Account if you plan to send a child or yourself to college. 6.  US I Savings Bonds, low yield but a good place to keep some emergency cash. 7.  MLP and Muni Bonds for higher net worth, more sophisticated investors. 8.  Taxable and Non Taxable Accounts, depending on your goal, buying a house, getting ready to retire, create a balance between taxable and tax deferred investments. If you’re looking for the most simple option, funnel money into a Roth IRA.  If you are self employed, start a solo or SEP 401k.  All the more reason to start your own business.  It gives you so many more investing options than when you work for the man. Tax forms will be going out in a few months so you still have some time to get that money into an account that will give you the most tax shelter.  Don’t overdo it though.  You can have so much in tax deferred accounts that you don’t have anything liquid for an emergency. Show Notes Tax Efficient Investing: Here’s a link to Larry’s post that outlines all the concepts talked about on the episode. The Money Tree Investing Podcast:  A weekly interview podcast devoted to personal finance. Betterment:  Sign up today for six months free investing. HSA Accounts:  Explanations about age restriction. Learn more about your ad choices. Visit megaphone.fm/adchoices