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

In our ongoing series, Better Know a Millionaire, we interview Nellie Akalp to discuss the legalities involved in incorporating your own business. Nellie and her husband started My Corporation in 1997 to help small businesses handle the paperwork involved in incorporating.  After eight years of hard work they sold the business to Intuit for millions of dollars.  But like all of our millionaires to date, Nellie didn’t stop working once she had that money in the bank. Not satisfied with ultra early retirement, Nellie and her husband started a new venture, CorpNet, a one stop shop for small businesses to help with legal filings, compliance, and the paper work required to set up a business. Nellie and her husband were living paycheck to paycheck when they started the first company.  It started making money pretty quickly and they were able to pay off their student loans.  When the company was sold they found themselves with twenty million dollars.  Now they started living a little more luxuriously, a house bought with cash, a Mercedes, and lots of travel. Another thread running through our millionaire interviews is that they manage their own money.  It’s the only way to really know what’s happening with your money. They invest money back into the business and own commercial real estate.  And they do not day trade. Nellie has four children and they know not to expect to become trust fund babies.  They do chores for their allowance, mom and dad will pay for their education but then they will be on their own to make their own life. All of our millionaires agree that the money did not bring additional happiness.  Nellie advises that if you have a business plan whose end goal is to get rich, throw that out and come up with a business that you feel passionate about.  That is what brings happiness. It’s so interesting to hear each millionaire’s story and how much they all have in common.  I’m actually starting to believe them when they say that money does not buy happiness. Show Notes Corp Net:  A one stop shop to get your small business set up. Mint:  Start tracking your spending today. Betterment:  The easy way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices

  Matt started LMM knowing very little about personal finance but almost 200 hundred episodes in, he’s learned a lot.  We’ll see how he’s doing now. We all should have financial goals.  It helps keep us on track and helps us see, in real numbers, that our dedication is paying off.  If you use Mint, make sure you put all your numbers in there.  It makes you feel good to see a positive net worth but if you left out your mortgage, the picture is not accurate. Matt’s goal is to get to a zero net worth.  Which sounds bad but isn’t.  It means that his net worth is no longer negative and that’s a big accomplishment.  He still has a car payment and is still about $10,000 underwater on his house.  He has four credit cards with no overdue balance on any of them and his credit score is a whopping 788! He has $4000 easily accessible in a checking account and $1000 in a business account and about $700 in “miscellaneous” money.  In this Betterment account there is $10,652.  Six months ago he had $0 invested, a great improvement!  All total, he has a positive net worth of about $2900, surpassing his goal of a $0 net worth. Now that he has met and passed the net worth goal, his next is to pay off his car.  He could do it right now by taking money out of the Betterment account.  He plans to keep contributing $500 a month to Betterment and throw any extra money to the car which has a $300 a month payment.  Once the car is paid off, he’ll contribute that $300 to Betterment. Once Matt has a $25,000 emergency fund in Betterment, he’ll use all his extra money to pay off his house and then continue to rent it out for the extra income.  And he plans to start an IRA and invest in Vanguard as well. Remember, this podcast is not even a year old.  In one year, Matt has made huge strides.  He listened, read, and learned about personal finance.  He did it and we can all do it too. Show Notes Mint:  See where your money is going. Best Travel Awards Cards:  Start collecting miles today. Betterment:  Start investing now. Learn more about your ad choices. Visit megaphone.fm/adchoices

There is no question Dave Ramsey has helped people take control of their money. We wanted to see for ourselves how useful his financial advice is so we review his best selling book Total Money Makeover. The book easily breaks down a no-BS approach to money matters. He teaches how to lay the groundwork for a healthy financial fitness. From getting out of crushing debt to easy ways to invest in your retirement.  Introduction In the intro to TMM, Ramsey talks about the success stories, how changing your behavior is key, and how this sure fire plan can work for anyone if they follow it closely. He also tells you what the book is not; complicated, anything new, politically correct, the same as his other books (so he thinks you should buy those too), or wrong. Pros Dave believes that personal finance and most other things in life, is 80% behavior and 20% knowledge. Agreed, the vast majority of America knows what we should be doing with our money, actually doing it is another story. The book explains that what it’s teaching you is nothing new, secret, or revolutionary. Also true, saving money is like losing weight. The principles are very similar, we all know to have more money you must make more than you spend. To lose weight, you must eat fewer calories than you burn. The money/weight loss analogy is touched on throughout the book and it’s a good one. But just because those things are simple, that doesn’t mean they’re easy and the book acknowledges that. The Total Money Makeover system is designed to work in good times and bad weather those good and bad times are personal for you or happening to the economy as a whole. We agree with this too, a good plan shouldn’t need to change due to external factors. Ramsey does a nice job of explaining the 2008 economic collapse in a way that is easy to understand. Cons This book does not contain a ton of the heavy-handed Christian bible dogma that Ramsey is famous for. But it is in there, so depending on your personal tolerance for that sort of thing, it might bother you or it might not. Ramsey does warn you that it’s in the book and acknowledges that not everyone will like it. There are some pretty corny analogies in the intro, stuff about flying turkeys and skinny dipping. They went on at some length. Chapter One: The TMM Challenge Chapter One tells a little about Ramsey’s personal financial problems. He challenges the reader to acknowledge they are the problem and introduces the TMM Motto. It’s a proven plan as long as you if you follow the guidelines. Pros We are the problem with our money and that is true. It’s rare that people are ruined financially through no fault of their own, it happens but it doesn’t happen a lot. If you’re in financial trouble, you most likely put yourself there. The Total Money Makeover Motto is, “If you can live like no one else, later you can live like no one else.” Huh? I get what he’s trying to say but Adam Carroll said it better on one of our past member’s only podcasts “If you are willing to do for two years what won’t most people won’t do, you can do for the rest of your life what most people can’t do.” It means if you sacrifice and suffer for a relatively small amount of time, you can be set for the rest of your life. Live with your parents for two years after college while working full time and saving 80% of your income and you will be ahead for life. Take everything step by step. Cons Ramsey started his whole empire because of his own financial disasters. He doesn’t give a lot of details about what they were. He tells how he felt and how his family has affected but not m... Learn more about your ad choices. Visit megaphone.fm/adchoices

  We answer your questions about mortgages, how to prioritize your finances, and college savings accounts. 1.  Why shouldn’t I pay off my mortgage as soon as possible?  Unless you get a huge windfall, chances are you can’t cut out years worth of payments.  So you might not be investing for twenty years because you’re paying every penny to the mortgage.  You also lose out on the tax break, you can write off mortgage interest.  If you’re investing and still have some leftover money, go ahead and put that towards the mortgage. 2.  What is a good way to set up a retirement account for my young nieces and nephews?  A trust is the best way to give money to children.  You can set the terms such as, the money can’t be accessed until age 25 or the money can only be used to pay for college.  This also removes any threat from greedy parents stealing the money. 3.  If I’m doing everything right, can I play with Loyal Three?  Loyal Three is a fee free investing tool to buy individual stock.  Invest in what you love but if you think you’re going to get rich off an IPO, you won’t.  So if you have some extra money to play with, why not? 4.  I have an extra $150.  Should I pay down my $3000 credit card bill or re-pay money I borrowed from my roommate?  You can dodge a credit card company but you can’t dodge your roommate.  Pay that money back. 5.  I’m a college student investing a small amount of money into Betterment and there is a $3 a month fee.  Would I be better off putting it into a savings account?  If it’s short term, a savings account would be better.  If it’s long term, check out Acorns, their fees for the lowest tier of investing are cheaper than Betterment.  Whatever you decide, well done for investing so early! Thanks for the questions guys, keep them coming! Show Notes LMM Tool Box:  Everything you need to manage your money. Learn more about your ad choices. Visit megaphone.fm/adchoices

  Ever had someone try to sell you Amway, or worse, try to recruit you to sell Amway?  Today we discuss pyramid schemes and how to protect yourself from them. Robert Fitzpatrick joins us to discuss money making schemes.  They pre-date the internet but have exploded in number since the advent of the net.  Find out how to spot and avoid them. There are two main types of these schemes.  One that is presented as a money making opportunity, as a career.  These are multi-level marketing schemes.  The other type is sold as a social opportunity and commonly known as a gifting circle. The three biggest MLM schemes are Amway, Herbal Life and Nu Skin.  Someone recruits you to sell products and get a portion of your sales and you recruit others and get a portion of their sales and the “endless chain” grows.  In a regular sales job there is none of this cultish recruiting.  It’s cut and dry.  You sell product X for $X and make a portion of that price.  In these MLM schemes, you are told the amount you can make is nearly limitless because you get a portion of the money those you recruited make and a portion of the money those they recruited make into infinity. Well, hell.  Making money into infinity sounds great.  What’s the problem?  Well, if you follow the model of you get five people, they get five and so on, you’ll reach a number that is bigger than the world’s population thirteen levels in.  So that’s a problem.  There is a limited number of people available but these scams don’t tell you that. Ask yourself if you could make a living just selling the product, not recruiting.  Have you ever seen anyone selling Herbal Life?  The money comes from enrolling people who then buy the products, they have to buy the products.  The bottom group will always lose out and represent the biggest portion of the entire group. Still not dissuaded?  Herbal Life is currently being investigated by the FTC, FBI, and SEC, all the acronyms!  Companies like this have not been taken down for so long because they have a lot of lawyers, lobbyists, and PR people working for them.  Many people who have been taken in by the scam are too ashamed to report it and so these companies have been unchecked for a long time. A gifting circle works much the same way.  It’s often disguised as a women’s networking group.  It costs $5000 to join and that money goes to the top recruiter.  There aren’t even any products in these stupid things.  You just laid down five grand to sit and the mean girls table, good job dummy. These things have broken up families and ruined marriages.  The person buying in has so much on the line that when someone close to them calls them out, they double down, making the problem worse and sometimes destroying the relationship with the person who pointed out this was a scam.  People have lost their homes because of their complete lack of incredulity. Come on guys.  If you are smart enough not to send your bank details to a Nigerian prince, you’re smart enough to avoid this stuff too. Show Notes Pyramid Scheme Alert:  Robert’s site to protect consumers from money schemes. Betterment:  Make money the legitimate way. Learn more about your ad choices. Visit megaphone.fm/adchoices

When you first get interested in managing your money the newness keeps you motivated but staying motivated is once the newness wears off is the hard part. We’ll help you with that. It can be hard to find motivation towards your money when you’ve been at it for awhile but staying on top of things is important. 1.  Clearly Define Your Goals.  You have to know where you’re going in order to get there.  If you want to pay off a $500 credit card balance, what you need to do to achieve that is very different from what you need to do to save for a 20% down payment on a house. 2.  Focus on Today.  This means having the positive things you did toward your goal every day outweigh the negative things you did. You transferred $100 into your Betterment account and bought a $3 coffee.  You can still consider that a positive day for reaching your goal. 3.  Have  a Buddy.  Have someone in your life that shares your goals.  This keeps you motivated and accountable. 4.  Utilize Smaller Sub Goals.  Sometimes if you’re slogging away towards a big number, it can be disheartening.  Maybe you have $10,000 in credit card debt spread over four cards.  You can’t pay that off in a month but if you can kill off one of the smaller balances, it gives you a psychological boost. 5.  Minimize Distractions and Small Obstacles.  Be on the look out for things that pull you off track.  Stay away from things that tempt you to sabotage you goals. 6.  Use Visual Reminders.  It’s like when you want to lose weight so you stick a photo of someone with your desired body type to the fridge.  Makes you think twice about opening the door.  Tape a picture of your goal to your credit card.  Every time you pull out the card, you will be reminded of what you are trying to achieve. 7.  Have Some Breathing Room.  If you live in a state of constant deprivation, soon the only thing you can think of is what you’re being deprived of.  Build a little room in your budget for money that you have permission to blow.  Otherwise, the deprivation can lead to a binge which will hurt much more than a few small indulgences. 8.  Restructure Your Social Circle.  If all of your friends are into baller nights out, you may need to move away from them in order to stay on track. Or you can try to organize activities that aren’t so expensive, host a movie night or pot luck at your place. 9.  Focus on Your Own Actions.  There are things you cannot control.  Do what is within your control to improve your situation. 10.  Watch the Numbers.  You know we don’t recommend obsessing over your Mint or Betterment accounts but you do need to check in from time to time to make sure things are where they should be. Financial independence is not about instant gratification.  It’s a journey, do what you need to do to stay on the high road. Show Notes Abbaye De Saint Martin :  A blonde ale. LMM Tool Box:  Everything you need to manage your money. The Simple Dollar:  Stay motivated towards your financial goals. Learn more about your ad choices. Visit megaphone.fm/adchoices

Do you have bad habits?  Are they costing you money?  We learn ways of breaking those bad habits and replace them with healthy ones with James Clear. James Clear’s first site, Passive Panda, is dedicated to helping people earn more money through freelancing, employment, and entrepreneurship. He started studying the psychology of why people clicked on certain links, read certain articles and bought certain things. The more he learned, the more interested he became in how habits shape our lives and his new project was born. How Habit Shapes Our Life We repeat about 40% of our behavior almost every day. Think about it. Do you brush your teeth every day, wipe down your countertops, take your vitamins? Yep, those are habits. Over time, certain habits can become part of our identity. I’m a runner and when I broke my foot (not running) several years ago, I had to give it up for weeks. It felt strange like I was not myself anymore. This applies to bad habits too. Do you always drink a soda with your lunch, have a cigarette with your first cup of coffee? You probably don’t even think about these things anymore, they’re just automatic, a habit. Creating A Habit There are three steps to creating a habit:  reminder, routine, and reward. Even bad habits have rewards, that’s why they become habits. James uses the example of your phone ringing. The sound is the reminder, the routine is to answer the sound, and the reward is finding out who is calling. If the reward is a positive one, even if the habit is negative, you will start to repeat the behavior, or routine, each time you receive the reminder. If this happens enough, you’ve developed a habit. Take The Emotion Out Of It Do you wait until you “feel like” doing something to do it? What if you never feel like doing it? Or by the time you feel like doing it, you haven’t left enough time to actually get it done. If you have things that need to get done, set a schedule and do them. Don’t wait until it’s easy to start. James sticks to a specific publishing schedule and that is what has  made the biggest difference to his work. Habit Stacking Habit stacking is a method that can build a new habit into an existing one. Look at something you do regularly, laundry for example. You can stack a new habit into this routine. Every week when you do your laundry, you also set up your budget for the week. Doing the laundry is the reminder, including budgeting with the laundry makes it a routine, and the reward is better managed finances. Now you’ve attached a new habit to an existing one, making it more likely to stick. Tiny Gains James wanted to build a habit of gratitude. He chose a time of day and started thinking of one thing to be grateful for. This on its own, one thing, doesn’t seem like a lot but over a week or a month or a year, that’s a lot of gratitude stacking up. Even if the behavior is small, the gains are cumulative. Breaking Bad Habits How do you break a bad habit? It’s easier to replace a bad habit than to eliminate it. Figure out what reward the bad habit is giving you. Do you eat when you’re bored? Eating alleviates the boredom because it gives you something to do. In order to break this habit, find something healthy to do that isn’t eating. Write an e-mail, call someone, go for a walk, clean one drawer in your dresser. Because habits identify us to some degree, associating a negative identity to the habit you want to break can help. When you think of a smoker, what do you think of? Dirty, smelly, weak, unhealthy? Those are things none of us want to identify as. But if you smoke, Learn more about your ad choices. Visit megaphone.fm/adchoices

When you become an expert at something, it stops the learning process and stunts your growth.  But knowledge is infinite and we should always be learning. Charles Holland Duell was the commissioner of the US Patent and Trademark office between 1898 and 1901.  He once famously said, “Everything that can be invented has already been invented.”  Ok, that was debunked, he never actually said that but think about the ridiculousness of that statement. If that were true, air travel, space travel, the internet would never have been invented.  That’s the point of the expert paradox.  You can never know everything about anything because there are new things to learn all the time. For some people, the “expert” label becomes such an integral part of their ego, that they can’t bear to come down from their ivory tower to get back in the trenches to learn something new.  Soon enough the label no longer applies because they haven’t kept up with the movement in their field. Learning should be an on-going process for everyone in every area of life.  There can never be a certainty that everything is known about anything.  I am a (very) amateur expert on Percy Shelley. Everything he is ever going to write has been written.  But everything he has written has not necessarily been found. Right now his magnum opus could be lurking in a trunk in someone’s attic, one day to be discovered.  The thought thrills me and if there is a topic you love, you should be thrilled that there is always the possibility of more to learn. How does this relate to personal finance? If you want to move up in your job, you had better always be learning.  Because if you aren’t you can bet there is someone younger than you who is savvier about the new developments in your industry who will happily take your place. The same goes when it comes to your money.  HSA’s weren’t really a thing a few years ago but if you listened to Episode 171, you know they are a great place to park your money. Read, talk to knowledgeable people, keep up with the changes around you. Show Notes Abbaye De St Martin:  A blonde ale. LMM Tool Box:  Everything you need to manage your money in one place.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Can you get a top notch education for free?  Scott Young shows you how to DIY your own top shelf education.  Also find out what autodidact means! Scott wanted to go back to school for computer science without all the hassle of enrolling in classes.   He discovered that MIT and lots of other universities put their classes, projects, and final exams on-line.  He went through the process and passed the classes.  And he did it in twelve months rather than four years.  He spent about $2000 and that was mostly on text books.  Nine months tuition and room and board at MIT is about $56,000. Keep in mind, you’re getting an education this way but not a degree.  So can you get a job?  Apparently you can.  Recruiters have contacted Scott to let him know that people with this kind of drive are exactly what they are looking for.  You will have to be a little more creative with your resume to get an interview but if you can get in the door, you have as a good a shot as someone who spent tens of thousands of dollars for that piece of paper. To get the most out of this kind of educational experience, you need to practice all the time, much the way you learn a new language.  It’s shown that sitting through a lecture is one of the least effective methods of learning.  Scott spent a lot of his time during this project working on problem sets. If you’re still skeptical, Scott recommends the Do It Yourself Degree, it’s a hybrid where you take some classes in person, some at distance, and test out of what you can.  You can also transfer credits between universities to lower the cost of education. Scott isn’t trying to over throw the university system.  Employers will have to be the ones leading that charge.  He just wants to show people there are alternatives to crippling student loan debt and show people who just want to learn a new skill that they don’t have to go back to college. Show Notes Scott H. Young:  How to get more from life. Scott’s Ted Talk:  Can you get an MIT education for $2000? MOOCS:  Massive open on-line courses.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Today we get to know millionaire Jordan Harbinger of Art of Charm where ordinary guys become extraordinary gentlemen. In our on-going effort to break the social taboo of talking about money, we continue our Better Know a Millionaire series.  If you didn’t know how to cook, you would ask a chef.  If you don’t know hot to get rich, you ask a millionaire. Jordan was a Wall St attorney and saw how people made money and how companies wasted it.  He knew if he ever started his own business, he would not be wasteful.  He founded The Art of Charm podcast with a friend in a basement, learned how to sell it and now it’s a multi-million dollar business. Jordan drives a Ford Fusion not an Escalade.  He spends his money on self improvement, he invests in himself.  Speaking classes, broadcasting training, high end networking conferences.  He invests a few thousand dollars a month in mutual funds and has an IRA but doesn’t day trade. Something our young millionaires have in common is caring more about their business than their wealth.  Jordan reinvests most of his money back into the business and would gladly take a 50% pay cut if it would help his company. So what is The Art of Charm?  It’s a live academy that trains people to win friends, earn respect, and get girls. It’s not just information, we all have access to more information than we could ever possibly digest.  The academy provides real world training to improve social interactions.  And it’s not just some smarmy attempt to get skeezers laid, it’s training that can impact all areas of your life. If you could do with a little more confidence in any area of you life, check out The Art of Charm website and podcast. Show Notes Brew Dog Cocoa Psycho:  a stout with flavors of chocolate, vanilla and coffee. Southern Tier Imperial Pumpkin:  Pumpkin flavored ale.   Learn more about your ad choices. Visit megaphone.fm/adchoices