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“Never a borrower nor a lender be.”  We’ll discuss the pitfalls of loaning or borrowing from family and friends. You know the old saying, only loan someone money if you can afford to lose it.  It’s easier said than done.  Money is already a fraught issue, throw family ties into the mix and it can become down right volatile. Sometimes you lend money to someone out of sheer awkwardness.  It’s so surprising to be asked and so uncomfortable that sometimes we just agree to alleviate the tension. Then kick our selves immediately after. It doesn’t even necessarily matter if you’re mad about losing the money.  Maybe it was negligible  amount or maybe it was a lot but you had it to lose.  The borrower who doesn’t pay it back might feel so awkward or so guilty that they avoid you.  You aren’t mad and don’t want the money back, but the relationship is lost anyway. A loan doesn’t always mean money.  Has someone ever asked you to co-sign something with them?  It’s a slyer way of getting a loan from you than out right asking for money.  If the borrower is not responsible, it’s your credit that gets tanked. Sometimes this works out.  Usually it doesn’t.  There is almost always a solution through a third party that does not involve you.  Help them sell their stuff on eBay, steer them towards Lending Club.  Is there a job you could hire them to do, mow your grass, watch your kids (well, maybe don’t offer your junkie friends the babysitting opportunity)?  Coming to a friend or family member for a loan should be the last resort. Do you have any loan horror stories?  Share in the comments. Show Notes Long Trail Imperial Pumpkin:  September is here and that means pumpkin beer. Betterment:  Start investing the easy way. LMM’s Tool Box:  All the resources you need to manage your money. Learn more about your ad choices. Visit megaphone.fm/adchoices

Active trading is buying securities and holding them for a short time before selling.  We put the practice on trial and make a case against it. Remember, at LMM we advise you to stay in the market for the long con.  Active trading, or day trading is the exact opposite of that and a bad practice to get into. Jim Kramer, the big mouthed yelling “financial guru” advocates active trading.  Should you listen to him?  He’s on TV after all.  Let’s look at his record.  Between 2005-2007 he underperformed the NASDAQ by 2%, the S&P by 4% and the Dow by 10%. But what if you hire the best money manager out there?  Surely he or she can do it better than you.  No, they can’t.  Over a twenty year period, 80% of them underperformed the market.  And remember, no one cares more about your money than you. What if you pick a MorningStar Five Star rated fund?  It’s like Michelin stars, right?  The more stars the better?  In theory yes, in practice, the inverse is true.  Vanguard tracked funds for the first thirty six months after they received the Five Star rating and they all performed worse than the One Star rated funds. There are an unlimited amount of variables that drive the market.  More than anyone could ever account for.  Even if you had the best data at your fingertips, the vast majority of the time, you still won’t beat the market.  And unless it’s your hobby and passion, who wants to analyze all that data?  The most, maybe the only important thing is that you put your money into the market. Show Notes Arabier:  A pure malt beer. The 5 Mistakes Every Investor Makes and How to Avoid Them:  Learn what not to do in order to grow your wealth. Betterment:  The easiest way to invest. Learn more about your ad choices. Visit megaphone.fm/adchoices

Five listener questions answered, establishing credit, monetary gifts, Betterment security, IRA migration, and the pros and cons of renting out a room. 1.  What is the best way to establish credit?  A secured credit card is a good start.  You give the bank a set amount of money and that amount is the card limit.  So it’s a bit like a debit card but it helps build credit.  It’s no risk to the bank because they have your money. Getting a store credit card is usually pretty easy and will build credit.  If your landlord uses something like Cozy.com to collect rent, you can build your credit by paying rent this way. 2. What is the best way to give my children financial gifts?  You can still buy savings bonds but no one knows what the hell to do with them.  A better idea might be to set up a trust account in something like Betterment.  You can set parameters, like the beneficiary can’t withdraw the money until they reach a certain age or the money can only be used to pay for college. 3.  How secure is your money in a Betterment account and how difficult is it to access the money in the account?  As a broker dealer, Betterment is required to keep their money separate from yours.  If they went under, the money would just move to another brokerage company.  If they were doing something illegal and lost your money, the money is insured up to $500,000 per customer through SIPC.  The money in the account is easily accessible.  You could have it back within a few days with no transaction fee. 4.  If I own securities in an on-line Roth IRA brokerage account and want to transfer them to Betterment is there a transfer fee?  And because Betterment has less flexibility with securities would I pay a fee for each security transferred?   If you move to Betterment, the securities don’t come with you. You’re buying into their strategy.  You would sell the securities with the original holder, the transfer itself to Betterment does not have a fee.  Betterment is recommended for those who want to be more hands off with their IRA’s. 5.  Pros and cons of renting out a room in your big house?  Extra money is a big pro.  The con is that you have a stranger in your house.  Just make sure to be safeguards in place if the situation goes south so you can get rid of the renter quickly.  Maybe give Air B&B a try to see if you don’t mind having someone living with you or if you just hate it.  This way you aren’t locked into anything. Keep sending in your questions and we’ll answer them during the show! Show Notes Build Credit without a Credit Card:  Andrew’s article for those new to credit. What Happens to My Money if Betterment Closes:  If you’re worried, read this and set your mind at ease. Tool Box:  Everything you need to manage your money.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Got too much stuff?  Want to do a big purge before the cold weather sets in, maybe make a few bucks?  Take the LMMs’ Sell Everything Challenge! Are you a hoarder?  Not like the demented ones on those gross shows, but just a little bit of a hoarder.  We challenge you to clean out your life, toss, sell, or donate all that stuff and see how much better you feel. First of all, round up all your stuff from where ever it has been banished to.  Your parents attic, the back of your closet, the storage unit full of stuff you are paying to home. What you do with it next depends on a few things.  Do you have sacks full of ripped, stained clothes that are not nice enough to donate?  Recycle it!  The Council for Textile Recycling site lets you enter your zip code and find a facility that recycles things like old clothes and bedding.  Much better than filling up landfills. If your clothes are of a higher quality and still in good shape, maybe they just don’t fit anymore, donate them to an organization like Dress for Success.  They accept women’s business clothing for women who need a nice outfit for interviews or a new job. If you want to make some extra cash, there are a few options, depending on how much time or inclination you have to go this route.  A consignment shop is the least effort, you drop it off and get a percentage if it sells.  Some cities have eBay consignors.  The same principle, drop it off and they sell it on eBay which might bring in higher prices than a conventional consignment shop.  Craigslist is good if you like dealing with weirdos and tons of people who will flake but I wouldn’t recommend it.  If you want to keep all the money for yourself, you can DIY eBay.  This will probably make you the most money but it’s the most labor intensive.  Particularly if it’s a big item that has to be shipped.  It might be yard sale time for things like that. If you just want the stuff the hell out of your house, you can use a service like 1-800-GOT-JUNK.  You have to pay to have the stuff hauled off but it will be gone, gone gone.   So are you up for the challenge?  Sell as much as you can during the month of September, let us know how many items you should, how much money you made and what you plan to do with that money. Show Notes Mint:  The easy to use budgeting tool. Betterment:  Start investing your e-Bay gains today. LMM Tool Box:  Everything you need to manage your money, recently updated. Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s Labor Day and most of us are not working.  We’ll tell you the reason you have the day off and the story of those who sacrificed so you could sleep in. Labor Day celebrates the American Labor movement.  It became an official holiday in 1887.  If you think you’re job is oppressive now, imagine what it was like before the concept of organized labor.  At least we get paid in money.  At some points, workers were paid with “company chit” that could only be spent at places that were conveniently owned by their employer. Once upon a time, workers labored as apprentices under master workers.  You then became a journeyman and eventually, a master yourself.  By 1815, journeymen began to outnumber masters due to migration patterns.  As a result, investors began building labor intensive businesses on a big scale. When the workers began to collude to raise wages, the practice was made illegal by the government.  Commonwealth vs Hunt made collusion to raise wages a legal activity.  That was the beginning of the modern labor movement. The 20th Century is when labor really gained ground as far as wages and hours were concerned.  Between 1890-1914, unionized manufacturing wages rose from $17.63 a week to $21.37 and hours fell from 54.4 a week to 48.8. In 1933 as a response to the Great Depression, FDR instituted the National Recovery Act to protect collective bargaining rights. It created the minimum wage and regulated working hours. Unions are increasingly under fire today.  Which company is notorious for it’s poor treatment of employees?  If your answer was Walmart, good answer.  Walmart employees are not unionized, in fact, it is actively discouraged and people have been fired for scurrilous reasons that were really to do with trying to organize fellow workers.  Would a union fix everything?  No, but it would go a long way to improving worker conditions in that shit hole.  Does your job offer a pension?  Probably not.  If you were a union member, you would have one.  You would probably have health insurance superior to what you have now as well. Fourth of July is honored as the holiday that exemplifies American sacrifice but as a Detroit girl, I think those who fought and died for the forty hour work week and a living wage are just as deserving of celebration, respect and gratitude. Remember  that when you toast at your back yard barbecue. Show Notes Imperial Pumpkin Ale:  It’s September and that means pumpkin beer! Facebook Beer Season: That magical time when the fall beers are in season. Learn more about your ad choices. Visit megaphone.fm/adchoices

Money is the currency of living but gratitude is the currency of life.  WTF does that mean?  We’ll let Andrew explain it because we don’t know either. Practicing gratitude sounds like some trite thing Deepak Oprah tells her legion of house wife minions to do but there is something to it for those non-Kool Aid drinkers among us.  Particularly when you tell someone you’re grateful for something they’ve contributed to your life, it makes you both feel good. Most of us don’t get enough gratitude in our lives.  When was the last time some expressed gratitude for something you did at work?  Maybe that’s never happened.  When was the last time you told your significant other you were grateful for some small thing they did, emptying the dishwasher without being asked or picking up the dry cleaning?  If you aren’t getting enough kudos, most people around you probably aren’t either.  So instead of waiting for the gratitude to be bestowed, be the bestower.  That sounds like something a wizard would say doesn’t it.  You know what I mean though? Fake gratitude is not very, well, gratifying.  Make sure that any expression of your appreciation is genuinely meant.  Telling someone who demonstrably sucks at their job   that they’re doing top notch work makes you feel like a liar and makes them think you’re a liar. Here is a little exercise, write a letter to someone you are grateful for, tell them why.  And then send the letter.  Imagine if you were on the receiving end of a letter like that.  Wouldn’t you like to make someone feel like that?  You can, just write the letter.  Or if that is too corny for you, use the Lift App to make gratitude a habit. What or whom are you grateful for?  Let us know in the comments.  Show Notes DuClaw XX IPA:  A double IPA with a big hop flavor. LMM Tool Box:  What we use to get things done. Ted Talk:  The happy secret to better work. The Happiness Project:  Tear up as people show their gratitude. Learn more about your ad choices. Visit megaphone.fm/adchoices

Despite the dire warnings, it is possible to graduate college free of debt.  Shanice Miller will tell us how to do it. Most people go the route of taking out massive student loans to pay for college but it’s possible to get all or at least some of your expenses covered through scholarships and grants.  You don’t need a perfect GPA either.  There is money available for everyone if you know where to look. The best time to start looking around is your junior year of high school and the best place to look is with your guidance and career counselor.  Start early, the beginning of the school year is ideal because it allows you to make a strong application before the deadlines which are usually in late winter or early spring. The application process can be ponderous but you can use the same application or essay for multiple opportunities, just customizing each as you would with a job resume.  The average award for a scholarship is $2000.  So if you take three hours to apply, that is great value for time. Big, national scholarships that are open to everyone are harder to get and require a lot more work.  The smaller ones local to your area will put you up against less competition.  Your high school’s website may provide information for the smaller, less competitive scholarships. Graduating high school doesn’t mean the end of the road for scholarships.  You can continue to apply in college, grad school, and professional school.  You can also re-new some scholarships that were previously rewarded.  They already know your worth and the process will be easier. Shanice’s biggest piece of advice is not to get hooked on your dream school.  The bucolic, tree lined campus on the front of the brochure will be a distant memory if you’re living with your parents after graduating because you’re mired in debt. Remember, college is a business decision.  Part of that decision should be how much free money you can get to pay for it all. Show Notes Space Walker American Belgo:  A bold beer with spicy, fruity flavors. Debt Free College Graduate:  Shanice helps you how to graduate debt free. Betterment:  Start investing today. Learn more about your ad choices. Visit megaphone.fm/adchoices

So, what is an expat? Want to live and work abroad and reduce your tax burden? We talk to David McKeegan, an ex-pat tax expert to learn the tricks. Many people dream of leaving the US and it’s taxes behind to start a life and a business in a new, exotic place.  It can give you a brand new life and reduce your taxes to near zero if you know how to play the game.  Seven and a half million of your fellow Americans have done it so why not you? If you move abroad to live and work, you don’t have to renounce your US citizenship although increasingly some people are doing so for financial or political reasons. But to qualify to pay zero US taxes, you will have to reside outside the country for 330 days per year.  If you meet this threshold, your first $99,200 in income, is US tax free! You may still have to pay taxes in your new home.  Or maybe you don’t.  In Dubai for example, there is no personal income tax.  So the lesson is, investigate the tax codes as part of choosing your new country. If you are able to work from anywhere you can get a Wifi connection, consider becoming a digital nomad.  Many countries will not subject you to local taxes until you’ve been there for 180 days or more, so just pack your bags every few months and move to greener pastures. Imagine the pictures you can post on Facebook if you went this route, yourself lounging with your laptop in exotic locales, on a big pile of tax free money! Remember, if you choose to move abroad, the first consideration should be quality of life and if you can reduce your tax burden, that’s the icing on the cake. Show Notes Greenback Expat Tax Services:  David’s company that will help you unravel ex-pat tax filing. Space Walker American Belgo:  An American beer with spicy, fruity flavors. Betterment:  Start investing today to fund your ex-pat dreams. Learn more about your ad choices. Visit megaphone.fm/adchoices

The importance of budgeting can’t be overstated. Today we talk to the king of budgeting tools, Jesse Mecham the CEO of You Need a Budget and give you an honest YNAB review. We talk about budgeting with Mint a lot and it’s a great tool. But there is always talk of You Need A Budget within the personal finance community so we wanted to check it out. And because we provide only the best for you, we brought on the founder to discuss the tools so we can provide an in depth YNAB review. YNAB was originally a spreadsheet that Jesse and his wife used to budget their money when they were newly married and expecting a baby. He had just intended to sell it to make a little extra income on top of his accounting job, but it soon proved so successful that it become his career. Zero-Based Budgeting Zero-based budgeting forces you to “spend” every dollar. At the end of the month, the goal, as it is with any budget, is to have brought in more money than you spent. And that’s where most traditional methods of budgeting end. Great! You paid all of your bills and have an extra $600 left over. For a lot of people, that leftover money is “fun” money, to be spent on things like clothes, dinners out, movies. Zero-based budgeting gives those dollars a job, rule one of YNAB. It’s like the difference between your unemployed friends and your friends who have a job. The unemployed dollars are sitting around all day smoking weed while the dollars with a job are contributing. In this case, contributing to your financial goals. And that’s what YNAB is, zero-based budgeting. If you’ve tried budgeting before and not had success, it’s probably not you! It’s like dieting. Sometimes you just need to find a different method that will work for you. Four Principles There are four principles behind YNAB: Give Every Dollar A Job Not one dollar just gets to sit on its dead ass, not pulling its weight. Every dollar is working, working for you. Some jobs are more fun than others. Some jobs are paying your bills but some jobs are buying you drinks! Just because a dollar has a job, doesn’t mean it’s job is to be spent. Your holiday money might sit dormant for ten months of the year, but when the shopping season arrives, it leaps into action. Save For A Rainy Day If you’re living paycheck to paycheck, you don’t have anything left over for a rainy day.This rule is for large but not regular expenses like holidays, vacations, school tuition. Look ahead to these large, less frequent expenses and break them down per month. That monthly amount is added into each month’s budget. Rule two makes sure that you are planning for these expenses well before they come due and budgeting for them each month. Roll With The Punches You’re going to make mistakes, the unexpected will happen. That’s okay. If you overspend in one area, you’ll find money from another and move it over to the category you came up short in. Live On Last Month’s Income When you use YNAB, you will save enough of last month’s income to pay for this month’s expenses. What you earn in January, you spend in February. Depending on your current bank balance, this might take a few months to achieve. That’s okay, you’ll get there. This rule is especially helpful for those who have variable incomes, freelancers, and realtors for instance. This system puts an end to living on money you don’t yet have. Getting Started Step One There is a free 34 day trial for YNAB. You download and install the program which runs on both Windows and Mac.  Step Two You can choose to use Cloud Sync so your information is updated across your multiple devices and is backed up. To back the data up, you’ll need Learn more about your ad choices. Visit megaphone.fm/adchoices

We should strive to be the best we can in all areas of life. One of the key areas to be the best is at work, the work you do for a boss or for yourself. If you feel like you aren’t doing the best you can at a job, it might be time to reevaluate what you’re doing for a living.  Most people aren’t bad at things they like to do (singing maybe for some of us) so maybe you don’t like what you’re doing.  If you don’t like it, you have no motivation to improve so it’s best to move on. Being good at your job gives you more job security, a rare thing these days for a lot of people.  The company can’t fire the indispensable ones.  You don’t have to be the CEO to make yourself invaluable.  No job is unimportant or the company would have cut it by now. Ever been to a restaurant with so-so food but a great waiter?  Or a restaurant with great food and a bad waiter?  Which experience would you prefer?  I can cook tasty food at home myself and I consider eating out to be a total experience so I prefer the place with the great waiter.  Any person in a business can give you a great experience or a bad experience.  They can make you come back or keep you away forever. Being really good at what you do can also help combat a lack of experience.  If you’ve spent ten years designing pretty crummy websites and the new hire is doing great ones straight out of college, who do you think will advance more quickly? You don’t have to be a genius to be the best at work.  You just have to have a good work ethic, be willing to learn new things, and to take on additional responsibilities.  Spending some of your down time educating yourself about your industry goes a long way towards out-achieving your co-workers. We hope you found some inspiration in this episode and it made you think.  You can even get something out of a job you hate so you can take that with you to the job you love. Show Notes LMM Tool Box:  Everything you need to manage your money like a bad ass. Learn more about your ad choices. Visit megaphone.fm/adchoices