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

We first met Adam Carroll when he came on to talk about his movie about college loan debt.  He’s back to discuss loving our kids too much. What a weird concept.  Loving your kids too much.  But it can be true.  By giving them too much, by coddling them from every possible disappointment, we turn them into ineffectual adults. From ensuring that everyone gets a trophy to always giving them money when they ask, kids today can’t handle normal disappointment and have never had to work or struggle for anything.  Mom and Dad are always waiting, poised to smooth whatever path their children are on.  But in the name of loving them, we’re taking away character building opportunities. There are good reasons parents do this.  They feel guilty for working so much and not spending enough time with their kids.  They’re divorced and feel guilty for breaking up the two parent home.  But the four most important words to say to your children are “I love you” and “no.”  But no with a reason.  When you say yes, it means so much more. You can see how this relates to money.  It’s not the amount of money you give them, it’s whether or not you teach them how to handle money.  No one values what they haven’t earned.  Even very young children can understand some simple money concepts. There is a balance between saying yes to everything and saying no to everything.  If you give your kids an allowance, split it into percentages.  Certain percentages are for spending, saving, and giving.  We spoke to the founder of Zela Wela about a similar concept in Episode 176.  There are teachable moments every day if you’re looking for them. Everyone loves their kids but that means doing what is best for them, not what is easiest for you. Show Notes Succeed Faster:  Adam’s site to help you build a bigger life. Broke, Busted and Disgusted:  Adam’s upcoming documentary about student loan debt. Learn more about your ad choices. Visit megaphone.fm/adchoices

You ask, and we answer! Today we answer five listener questions about refinancing a loan, cashing out a retirement account early, how often to pay student loans, HSAs, and getting a first mortgage. This format has become so popular that it’s now a regular feature on LMM.  We answer questions sent in by listeners. 1.  Why is refinancing a loan so important?  If you can refinance, it will lower your interest rate, thereby lowering your monthly payment and interest payments.  Refinancing works the same no matter the type of loan, student, mortgage, car, etc. 2.  If I invest in the Retirement Target fund 2055 will I invite penalties if I need to cash out early?  Can I pocket dividends or so I have to reinvest them?   You won’t get a penalty for cashing out early on that fund. It’s okay pocket the dividends; you just have to set your account to send them to you rather than to reinvest them. 3.  Is there a benefit to paying 25% of my student loan payment a week rather than 100% once a month?   Check the terms with your lender.  Some will hold the payments until the full balance is reached thereby removing any benefit you might have accrued.  If your lender isn’t a super dick, there is a benefit.  You are cutting down on the interest you will owe. 4.  What is the advantage of saving health-related receipts to turn in after cashing out your HSA for non-health related expenses?  Why not just use it for health-related expenses?   It’s really a matter of flexibility.  If you have the money in your account and plan to save it for retirement, you could pull it out to pay for an emergency if you had one. 5.  Should you pay cash for a house if you can or are you losing out on some tax benefits if you do? If parting with that much cash at once isn’t a burden, do it.  The interest you save vastly outweighs any tax benefit. Thanks, everyone, keep sending them in!  Show Notes Ommegang Valar Morghulis:  A Game of Thrones inspired beer. LMM Financial Rant Hotline:  Call 856-818-3737 and let fly with your money rant. LMM Episode 171:  Our HSA deep dive. Learn more about your ad choices. Visit megaphone.fm/adchoices

Wish you could travel more but think it’s too expensive?  Nathaniel Boyle has devoted his life to travel and will school us on finding cheap flights. There are so many air travel booking sites now, Expedia, Travelocity, Hipmunk however the prices are all about the same.  Nathaniel recommends booking directly through the airlines.  It’s often cheaper and can offer more protection than booking through a third party. It’s much easier if you need to make a change to your itinerary and some low cost carriers like Southwest only offer direct sale. The most important thing when buying a cheap ticket is time.  When you buy your ticket, the time of year you’re planning to travel, and the days of the week you choose to fly on.  The best time to buy is on a Tuesday or Wednesday.  Those are also the best days to fly. Off season will always be cheaper. Orlando over a holiday will always be expensive. Flying to Europe in March is cheaper than flying in July. Nathaniel uses Kayak as a baseline to see what they’re selling it for and then play around to see what you can do to get a lower prices than that.  But don’t over think it.  If you see what looks to you like a great deal, jump on it. Rome2Rio is another great resource.  It tells you how to get from point A to point B for the least amount of money via air or ground travel.  SkyScanner and Google Flights with give good over views of pricing.  The travel time may be longer but if you don’t mind connections, they can save lots of money. If the thought of pulling the trigger on the ticket makes you sweat, check out Flyr.  It tells you the likelihood that your flight price will go up and down.  Data nerds like Andrew love this site. I’ve actually listened to Nathaniel’s show from day one and it’s great.  He has excellent tips and terrific guests. Check him out. If you are looking for some more great tips on the best time to book your next vacation check this out! Show Notes Ommegang Valar Morghulis:  A Game of Thrones inspired beer. LMM Financial Rant Hotline:  Call 856-818-3738 and leave us your money rant. The Daily Travel Podcast: Nathaniel’s daily podcast devoted to all things travel. Airfare Watchdog Alerts:  See when your preferred flight changes price. The Flight Deal:  A site that posts crazy low airfares daily.       Learn more about your ad choices. Visit megaphone.fm/adchoices

  Do you have financial friends?  If you don’t, you should get some.  Being around liked minded people will help to smooth your personal finance path. You are an amalgamation of the five people you spend the most time with.  Think of those people.  Are any of them financially responsible?  Are any of them materialistic?  Adults though most of us are, we can still be influenced by peer pressure. Peer pressure can help you to make good decisions.  If you have frugal friends, they understand when you can’t afford to go out to dinner and are happy to split a pizza at your place. It can also cause you to make bad decisions.  If you have baller friends, they choose the expensive restaurant and you agree then spend way more than you can afford. Your friends don’t have to be financial ninjas to qualify.  Not everyone has a Warren Buffet in their life to go to for money advice.  You can both be starting from zero but as long as you’re learning together and keeping each other accountable, it is still a bolstering relationship. Immersion is the best and fastest method for learning nearly anything, including personal finance.  Listen to this podcast, read the Wall Street Journal, talk with your friends, family, and co-workers about money.  By giving it a prominent place in your life, it is easier to stay on track. If you find yourself with no financial friends, you can convert your existing friends.  I start by showing people Mint.  Then I introduce them to the podcast and Betterment.  It hasn’t worked on everyone but it has worked.  And converts always make the best zealots. You and your financial friends don’t have to discuss money the entire time you’re together.  It’s not the most exciting topic even if it is one of the most important.  But all this money stuff gets easier when you surround yourself with a support team. Show Notes Schneider Weisse Aventius:  A deep and complex wheat dopplebock. Leinenkugel Octoberfest:  A fall beer with toasted caramel malts. Mint:  An easy first step to managing your money. Betterment:  The easy way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices

  Does champagne taste hurt your wealth building?  Unless you’re a Russian oligarch, the answer may be yes.  We like nice things even if we can’t  afford them. There comes a time when we have to live within our means.  Easier said than done when you have expensive tastes.  Even harder to do in a big urban area like New York City.  The reason we are so revolted by mediocrity is because we are surrounded by excellence.  But when it comes to wealth building, this is a dangerous mindset. Dinners, cars, clothes.  We all have our weak spots.  So what to do about it?  Does everything have to be top shelf for your special self?  It’s not like you’re the Pope or anything.  So instead of the $50 bottle of Bordeaux, how about the $25 bottle?  You’re probably no wine expert either so likely won’t notice the difference.  That’s not too say you can’t ever have the really good stuff.  But save it for special occasions.  It’s part of what makes them special. Quality is sometimes largely perception.  Quality doesn’t always mean the most expensive.  It’s better meaning would be the most durable.  Many people who buy only the most expensive things often don’t recognize quality anyway.  They just follow the herd in buying what they’ve been told is the best via advertising.  People interested in quality have done enough research to discern quality from cost. We’re not condoning PBR consumption but after beer number four, what difference does it make really?  I type this as I’m listening to Matt describe Andrew rubbing his new I-Phone on his face.  So what is the point of this episode?  Do as we say not as we do?  No, that doesn’t seem like the correct message to send.  How about this?  Buy the best that you need, not the best you can afford. Show Notes Mint:  Track how many I-phones you buy! Betterment:  Invest so you have money for more I-phones!   Learn more about your ad choices. Visit megaphone.fm/adchoices

Rob Greenfield is an adventurer and environmentalist who’s mission is to teach people to be happier with less and to make yourself and the earth happier. Rob recently biked from Madison, Wisconsin to New York City with no money.  His journey really started three years ago when he started to notice the impact his actions had on the world around him.  He started educating himself and learned he was unknowingly creating a lot of destruction.  But it didn’t have to be that way. Money can be used for good or evil.  But it takes more time to do good than to throw money at a problem and that’s what many of us do.  America has 2% of the world’s population and consumes 25% of it’s resources. You can’t change this overnight but you can take small steps every day.  Rob made a list of things he wanted to change.  Only shopping with reusable bags, buying locally rather than at a big box store.  Rob started easy but as he progressed, the bigger changes didn’t seem that hard. Yes, Rob is a dumpster diver. He set two rules for himself, he could only eat locally grown food or food that was going to go to waste.  And the waste food goes into dumpsters.  Two thirds of his diet came from dumpsters during the trip.  He never went hungry.  One day he drank $100 worth of unopened, not expired juice from Whole Foods. Because such a large portion of our tax dollars goes to war, Rob advocates living a more “moneyless life.”  Enjoy the things in life that are free, nature (for now), friends, family.  Ride a bike rather than drive a car. Rob indeed walks the walk.  His next project is building an tiny house from trash.  We’ll have to introduce him to Ethan Waldman!  Show Notes Rob Greenfield:  Rob’s blog about making yourself and the earth a happier through minimalism and sustainability. Tethered:  Rob’s upcoming show on Discovery.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Fellow Best New Blog winner Stephanie Halligan talks to us about student loan debt, negotiating and Matt’s favorite, the side hustle. Like a lot of teenagers, Stephanie took out a lot of college loans without realizing what that meant.   She graduated with $30,000 in debt.  She was asked through an internship if she wanted to teach personal finance to newly migrated refuges. The more she learned, the more she wanted to help her students and herself manage money and get out of debt.  Prioritizing not only debt, but what mattered to her most was the first  lesson.  Spending money on the things that really matter to you and scrimping on things that matter less is key. Negotiating is lesson two.  Negotiating salary, with debtors, when buying big ticket items, are things everyone should do but few of us attempt.  We talked about negotiating in Episode 191 but that was from a male perspective. Things are a little different for women.  Stephanie recommends Get Raised to help you learn how to get more money from your employer.  Women are generally more concerned with preserving relationships at work so it’s important to come into the conversation about a raise from that angle.  Particularly if you’re negotiating with a female boss. Side hustles have been a big topic on this show and Stephanie is in agreement.  If you can bring in even a few hundred extra bucks a month, it helps.  Particularly if you don’t know what you want to do with your life. Stephanie reached out to companies she was interested in and offered a few weeks of free work.  It led to some freelance work and helped to build relationships. Stephanie found that she liked writing about finance and that’s what inspired her to start her blog.  Had she never had that debt, she wouldn’t be where she is today but she’d like to smooth the path for those coming after.  $30,000 is a lot of money. Stephanie started The Empowered Dollar while she was still working.  It started as a “mommy blog” (I hate those words the same way Matt hates side hustle) to help moms teach teens about finance. But evolved to an audience Stephanie was more comfortable with, Millennials.  She does the drawings on her site to bring a little lightheartedness to a sometimes dry subject. Stephanie took $30,000 in debt and turned it into a career she loves. Show Notes Rogue Farms Pumpkin Ale:  A great fall beer. Empowered Dollar:  Stephanie’s blog that explains PF through comics! Learn more about your ad choices. Visit megaphone.fm/adchoices

  We get a lot of questions about bankruptcy at LMM but it’s a complicated subject so we brought expert Steve Rhode to help explain the fine details. Some people consider bankruptcy the easy way out but it’s more complicated that.  Any time money is concerned, there is no quick fix.  But in some cases it’s also not as dire as some of us believe and may be the best option. It takes seven years for bad marks to fall off your credit report but you don’t have to wait seven years to start rebuilding your credit.  According to Steve that is just not as big a deal as people make it out to be.  Missing payments stays on your record just as long but you’re still paying that bill.  About twelve months after declaration, you can get secured credit cards, get better rates on loans and even qualify for a mortgage and car loan.  It might not be a great idea to do that, but it is possible. Bankruptcy doesn’t have to be a last resort.  If the amount of debt you have is going to really hamper your ability to retire, screw it.  Declare bankruptcy.  It’s no moral failing.  Do you think the banks and student loan creditors have any morals?  Well why in the hell should you take the high road? Student loans are a different story.  Some can be discharged in bankruptcy.  Federal loans almost never can but private loans can be under these three criteria: 1.  The statute of limitations for repayment have expired in your state. 2.  If your loans were for more than the cost of tuition, the amount over the tuition expense can be discharged. 3.  If the school you attended was not accredited. If you are struggling with college debt, look into these three criteria and see if you qualify. What is the fallout if you declare?  You likely won’t lose your home.  Bankruptcy may save your house because in some states it removes the second mortgage.  You will still be able to get a job, even a job that requires security clearance.   Bankruptcy doesn’t solve an over spending problem though.  If you’re filing because you have an out of control shopping habit, this won’t solve the root of the problem. Declaring bankruptcy does not make you a bad person.  Do you really think you’re worse than the bankers who immolated the economy in 2008 and then took massive bailouts and bonuses?  Bankruptcy is the only tool that allows you to take some of the power back from creditors. Show Notes Rogue Farms Pumpkin Patch Ale:  Pumpkin beer for October. Village Idiot Punk O’Lantern:  Pennsylvania brewed pumpkin beer. Get Out of Debt:  Steve’s site about getting out of debt. Learn more about your ad choices. Visit megaphone.fm/adchoices

  Why do so few succeed in the stock market and so many fail?  We interview the man who literally wrote the book on the subject, author Steve Sears. One of our favorite quotes in from Warren Buffet, “Be fearful when others are greedy and greedy when others are fearful.”  But that takes balls and his willingness to buy fear is one of the reasons he has amassed a fortune. We advocate long term investing and that strategy is better and more successful than jumping in and out of the market.  So why do so many people do that?  They’re driven by what they hear and read in the news and follow the “market mob.”  They hear about a fast rising stock and jump on it without doing even the most rudimentary research.  A successful investor stays away from this like the plague.  Until the stock bottoms out, that’s when they buy. Fifty percent of your gains will come from doing nothing.  Buy stocks that pay steady dividends and make them the foundation of your portfolio. Bad investors think of ways to make money and good investors think of ways not to lose money.  You have to learn to tune out the noise that is just information without value.  It’s not easy when we are subjected to it constantly.  I even wrote an article on it.  Focus only on what has value. The most basic step is to pay yourself first.  At least ten percent.  Make sure some of that percentage is in non-taxable accounts like an IRA.  You have to live a little less today to live a little better tomorrow.  Empathize with your future self.  The future is not some vague, foggy thing, it’s creeping up on you every day. Sorry guys.  Steve did not provide us with the magic bullet.  He confirms the cold hard truth.  Put your money in the market and leave it.  You are unlikely to strike it rich an an IPO or whatever the latest stock the media is shouting about.  Slow and steady to win the raise. Show Notes The Indomitable Investor:  Steve’s book on success and failure in the market. Betterment:  The easy way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices

  By now as a long time LMM listener, you have a financial plan.  But do you know how to prioritize it?  We’ll explain how best to get your ducks in a row. Matt and Andrew got into a pillow fight the last time they tried to do a show on this topic this takes two.  The good folks over at LearnVest set out a list of three financial priorities.  Retirement, emergency savings and debt. 1.  Retirement comes first.  Because of inflation, the dollars you have now will be worth less than when you retire so you need to accumulate those dollars now.  Most of us will also not be able to rely on social security or pensions once we stop working.  Pay yourself first whatever that means for you, 401K, Ira, Roth IRA etc. 2.  Emergency Savings.  Have a rainy day fund otherwise, you have to rely on a credit card which may mean racking up lots of interest charges or you’ll draw from your retirement account which means robbing the future you. 3.  Debt.  Debt is an emergency, this is a no-brainer. We have some issues with this list.  If you have debt, that should be higher on the list.  We would put retirement first only so far as you are getting matching funds from your employer. Mortgage and student loan debt with low-interest rates get a bit of a pass on the “debt is an emergency” category.  If your student loan interest rate is high, refinance with a company like Earnest to get the rate reduced. Credit card debt and in some cases, car loan debt, are emergencies and should be dealt with first.  Once you have money going into your matched 401K and your credit cards are paid off, save one and a half to six month’s expenses in a checking account.  Once you reach that you start investing in something like Betterment or Vanguard up to $25,000. Now you can start playing around a bit.  Maybe buy individual stocks you are interested in, emerging markets, Lending Club.  You can also start going after your low interest student loans and mortgage. There was some contentiousness in this episode because some of these rules are so dependent on each person’s situation and various interest rates.  The interest rate drives the urgency. Show Notes Rogue Farms Pumpkin Patch Ale:  The perfect October beer. Village Idiot Punk O’ Lantern:  A local Jersey brew. Betterment: The easy way to invest. Vanguard:  Next level investing. Learn more about your ad choices. Visit megaphone.fm/adchoices