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

 Many of the reasons people are fearful of investing are myths.  Let us help you separate fact from fiction so you can feel confident investing. Investing Myths Don’t believe everything you hear. 1. It’s Overly Risky Too many people are not investing because they think it’s too risky. They’ll hand their money over to this thing they don’t understand and poof, X bad thing (they’re not really sure what a bad thing is, they’re just sure there are lots of them) happens and their money is wiped out. So instead, they leave it where it’s nice and safe, in a checking or savings account or stuffed under the proverbial mattress. What they don’t realize is that those things are even riskier than investing. When money is in a low yield account where it’s making less than 1% interest or under the mattress where it’s making no interest, inflation is eroding the value of that money slowly but surely. If your house burns down, the money under the mattress is ashes. Yes there are risks to investing but an investor can choose how much risk to take and there are ways to minimize risk There are places to invest money like dividend stocks or bonds that allow money to grow with limited risk. You can further reduce risk by having a properly diversified portfolio meaning your investments are spread out between different market sectors and different asset classes so if one area is doing poorly, you have other areas doing well to make up for it. And while the stock market can quickly plunge, historically it has always rebounded. In the nearly 100 years since the Great Depression, there have been fewer than two dozen losing years for the stock market. That means the best way to keep your investments safe is to be in it for the long haul, set it and forget it which is what LMM has long advocated and what investing in index funds accomplishes. You don’t put money in and pull it out based on screaming pundits or scary headlines, you don’t try to time the market. You put your money in and leave it alone. Stocks become less risky the longer you hold them. 2. Investing is Only for Rich People In the old days you needed a stock broker if you wanted to invest in the stock market and often they wouldn’t even take your call unless you had thousands of dollars you were ready to invest. But now that companies like Betterment are on the scene, investing has become democratized. Many investment platforms have no minimum to get started so if you have five bucks (or less) you can invest. You also need almost no knowledge of how the market works or even what it is to get started. You don’t have to be a rich person who pays another rich person to invest for you. The fees for companies like Betterment are very low and it’s passive investing. You aren’t paying a fund manager and there is no reason to as they almost never beat the market. If your employer offers a 401k you can get started there. It’s easy to start investing this way because almost everything is decided and done for you and the money is taken out of your check before you even see it; seamless investing. 3. You Need a Lot of Money to Make a Lot of Money I think this is the one that holds a lot of people back even more so than fear of risk or lack of knowledge about investing. People think, Learn more about your ad choices. Visit megaphone.fm/adchoices

Are you a materialist or a minimalist?  Let us help you find a happy middle ground so you can have nice things and still afford nice things. A materialist is defined as “someone who puts an unhealthy priority on things.”  A minimalist prioritizes living with less to achieve freedom.  Freedom can be defined in lots of ways, financial freedom, freedom from “stuff,” even freedom from a place. We all like stuff, shiny stuff, new stuff, pretty stuff, cool stuff.  Not all of us can see the connection between our love of stuff and our lack of money.  We all know people with closets full of new clothes or all the newest gadgets who constantly moan that they don’t have any money. And we know people who want to move across the country or pull up stakes and start travelling.  But they can’t because they have so much stuff.  How will they move all that stuff, where can they store all that stuff?  Stuff weighs you down, psychologically and geographically. If we can stop buying and stop holding onto all that stuff, what benefits are there to be had?  You’ll spend less, duh.  You’ll have less stuff to worry about cleaning, moving, finding a place for.  It’s better for the environment.  How much packaging is in the Amazon box that you have delivered to you a few times a month?  It doesn’t evaporate you know.  Getting rid of stuff can help you cut ties with the past.  Don’t keep a collection of t-shirts you “borrowed” from ex-boyfriends.  If he was worth remembering, you’d still be together! A study was done to find the dollar amount “sweet spot.”  How much money it took to provide day to day happiness and emotional well being.  Any guesses?  It was $75,000 a year.  More than that amount did not provide greater happiness. We don’t advocate living in a tent out of a back pack and dumpster diving for your food but we can all be happy with less and in fact, happier with less. Show Notes Boulevard The Sixth Glass:  A dark Belgian ale. The Obstacle is the Way:  An easy to understand philosophy book Matt recommends. Maxed Out:  A documentary about debt in America. The Happy Movie:  A documentary that finds the happiest people in the world. The Queen of Versailles:  If you want to see vomit inducing materialism, watch this. I’m Fine Thanks:  A documentary about people who decided to change their lives to find more happiness. Stumbling on Happiness:  What you think makes you happy, might not in reality. Books on Happiness:  A list of books on happiness from Brain Pickings. Learn more about your ad choices. Visit megaphone.fm/adchoices

Ever heard the lottery referred to as “the fool’s tax?”  Learn why the lottery is for idiots and why the odds are always in the house’s favor in a casino. The odds of winning the Powerball lottery are more than one in one hundred and seventy five million.  That’s a lot of zeros.  If lightening struck (you actually have much better odds of this happening, one in 700,000) and you did win, one in three lotto winners are in serious financial trouble or bankrupt within five years.  In fact, the odds of you being struck by lightening FIVE THOUSAND TIMES is higher than the odds of you winning the lottery once. One of the most annoying things about working in an office is being pressured to join the lottery pool.  That and to sponsor “charity walks.”  The argument that if you buy more tickets, as you would in a pool, you’re much more likely to win is crap too.  Your odds don’t go up much until you start buying thousands of tickets.  Then your co-workers tell you it’s just good fun and you’re missing out.  Take Matt’s advice and offer them the same five dollars to do a little dance for you.  That sounds more fun than getting nothing back for the lottery five bucks. If you spend twenty dollars a month on lotto from the ages of 25-65, you’ll likely earn nothing.  If you put the same amount into a mutual fund, you’ll earn $93,000 after taxes.  Want to waste your money and get nominated for a Darwin Award?  Go play with fireworks.  You’re 146 times more likely to die in a fireworks related accident than win the lottery.  No one ever said, “Here, hold my beer,” before buying a lottery ticket. The next time your redneck cousin is bitching about having to pay taxes while holding up the line at the gas station while he scratches off lottery tickets, remind him of this.  A very small portion of collected revenue is actually used for payouts.  Most of it goes back to the government.  Hence the term, “idiot’s tax.” Gambling doesn’t get a pass either.  If you spend $100 an hour playing roulette, you lose on average, $5.26 per hour.  Gambling brings in more revenue than movies, sporting events, theme parks, cruises, and recorded music combined.  The house always wins.  If you’re a really good black jack player, the house still has odds of .5% on you.  Like the slots?  The house does too.  They have the edge on you there to the tune of 35%. There are plenty of ways to grow your money but playing the lottery and hitting the casino are not among them. Going to Vegas or Atlantic City can be fun.  Gambling can be fun too but don’t go in expecting to walk away with some winnings.  If you have a handle on your finances, take a set amount of money and have a blast gambling that.  But you don’t want to be the sad case pawning your grandmother’s wedding ring in a last ditch effort to win back what you couldn’t afford it lose.  As for lotto pressuring co-workers, tell them to stay the hell away from you unless they have Girl Scout cookies. Show Notes Boulevard The Sixth Glass:  A dark Belgian ale. Business Insider:  Some stats about winning the lottery. Kiplingers:  Five better investments than the lottery. Betterment:  Take what you would have spent on lott... Learn more about your ad choices. Visit megaphone.fm/adchoices

Student loan refinancing can save you money but it’s a confusing process.  Today we get some guidance from Mike Cagney, co-founder of SoFi.com. SoFi started in 2011 by raising two million dollars from Stanford Graduate School of Business alums to loan to students.  One hundred students were loaned $20,000 each.  The idea being that the students would be more responsible with money borrowed from their own community and the lenders would have a vested interest in seeing students succeed from within that community. SoFi has evolved into a company that consolidates  and refinances loans.  They refinanced one hundred million dollars worth this June and save former students an average of $11,000 over the life of a loan.  SoFi also help graduates who are unemployed by freezing their loans and helping them to find new jobs and help former students to start their own businesses by freezing loans and helping to raise capital. SoFi can refinance loans with interest rates over 6% and can work with state, federal, and private loans.  A big benefit of consolidating is that rather than dealing with several servicers, you’re dealing with one.  If you have a job loss and need help, dealing with one servicer means things are much less likely to fall through the cracks.  You can lose some protections that you have with federal loans like loan forgiveness after public service but SoFi does offer unemployment protection.  State loans offer less protections more akin to private loans than federal. SoFi offers five, ten, and fifteen year terms.  If for instance you have six years left and opt for the five year term, your monthly payments will be higher but the interest rate will be lower. Student loans are so confusing but Mike gives us some information on how to make them less so.  First, before you borrow, understand the amount and why you’re borrowing.  Take a look at your major and choice of university and see what the earnings are for graduates.  If you take out $100,000 in loans for a field that pays $30,000, that’s not a good decision.  While in school take out federal loans so that you are afforded the protections they offer.  After graduating, consider consolidation so you are dealing with one entity rather than several.  After consolidation, you can consider refinancing to lower your interest rate. Mike’s final advice is that if you’re struggling, reach out to your servicer.  It’s in no one’s interest for the borrower to default. Show Notes SoFi.com:  SoFi has a great site that will help you decide if consolidation or refinancing are a smart choice for you. Betterment:  The easy way to start investing. Learn more about your ad choices. Visit megaphone.fm/adchoices

Just like produce, a lot of what you buy has a season.  If you know what’s “in season” you can save a lot of money.  We’ll find out when to buy what. Kitchen Appliances:  According to Money Crashers, September and October because that’s when new models come out.  Last year’s version will be reduced.  This point will be a recurring theme in the episode.  And it’s not like from year to year there are great innovations in refrigerators.  Getting last year’s model doesn’t mean you won’t have the new fridge that makes you toast or anything.  You aren’t missing much but overpaying. Automobiles:  From Auto Trader, the end of each year  and the end of every day.  Sales people are hustling to get that last sale in before the numbers come out so they’re more flexible.  Also late summer/early fall when the new models come out. Computers:  PC World suggests buying around the holidays and back to school time. Gaming Systems:  Since everyone wants these as holiday presents, lifehacker suggests January.  Your disappointed kid will hate you but you have more to add to his college fund! Airline Tickets:  There are a lot of theories about this, buy on Tuesdays, buy last minute, but CheapAir ran the numbers and found that buying fifty four days before the trip is optimal.  They monitored four million trips to cull this data! Concert or Event Tickets:  Thanks to lifehacker again, see movies during the day, for things like concerts or sporting events, the closer to the date the better to go on Craigslist to find people who really need to unload them. Televisions:  From Popular Mechanics, the usual suspects, holidays, January, but interestingly, March.  Know why?  Andrew and Matt hate sports but I’m a fan so  March Madness Baby!   July also because sales are typically slow. Furniture:  According to Go Simple Finance,  January and July.  New furniture is released in February and August.  No one knew that but LMM found out for you! Engagement Ring:  US News tells us when not to buy, between Thanksgiving and Valentine’s Day.  Unlike most of our other examples, rings are not cheaper when everyone is buying them. Gas:  According to Time Magazine, Wednesday morning.  Station owners price check each other between 8-10 am.  If competitors are increasing prices, owners will raise their own between 10-12.  Weird, but that’s Time’s take on it. House:  From Realtor.com, for more choices, April-July because that’s when a lot of homes are being listed.  If you want the lowest price, between Thanksgiving and the New Year.  No one wants to move in the winter so that makes sense. Learn more about your ad choices. Visit megaphone.fm/adchoices

   It’s time for listener questions.  We’ll discuss stock earnings, home renovations, side hustles, emergency funds, and money for freelancers. 1.  How does a company’s quarterly earnings report affect my stock?  Yes, but it’s not just about whether the company made or lost money.  The report also contains information about what is going on inside the company.  So just because the company made money doesn’t necessarily guarantee a positive report.  It’s more important to read the report and get a sense of what’s happening within the company than to just make decisions based strictly on numbers. 2.  How do you do home improvement and landscaping on a budget?  Plan and budget!  Before you go crazy at the plant store, how many will you  need, how much sun does your yard get?  Repurpose things, good for your wallet and the environment.  The most important thing is to do some of it yourself.  Potting plants isn’t something you need a professional for.  Re-wiring your home, you probably do.  See what you can borrow from friends or neighbors.  Don’t buy a tool that you’ll only use once.  And you can be proud of the work you did to make your home nicer. 3. Are podcasting and blogging actually good side hustles to make extra money?  They can be.  LMM’s makes some money through affiliate links on our blog.  So if you sign up for Zip Car through this link, we get a small cut of it. Making money via a podcast is possible too.  Marc Maron makes $14,000 per episode of his WTF podcast. Does LMM make money?  Not just yet.  We bring in some money but it doesn’t yet cover expenses like me, hosting the site, hosting the podcast, equipment. You can make money but it takes time.  Matt’s “day job” is Swim University.  He’s had the site for four years, has been working on it full time for two years and has made $40,000 so far this year, mainly through affiliate links.  The end goal for a podcast is to have companies sponsor you, to sell advertising on the podcast. If podcasting isn’t your thing, there are plenty of ways to make extra cash. 4.  A listener has recently had to put a $3300 air conditioner on her credit card.  Should she pay if off over time at 21% interest or use some cash in her Fidelity account to pay it off more quickly?  There are a few ways to do this.  Open a new credit card with limited time 0% interest and transfer the balance so you can pay it off over time without interest.  If the money in the Fidelity account is your emergency fund, no AC in Georgia constitutes and emergency.  If that would completely wipe out the emergency fund, look into Lending Tree to get a low interest rate loan. 5.  What advice do you have for a freelancer in a physical job that can’t be done forever, who’s income varies month to month and needs to kick investing into high gear?  Do what Matt calls the “freelance sprint.”  Take on as many jobs as possible in a short amount of time to earn a lot of money quickly.  The goal is to create a big cushion to see you through until the income is more steady.  One way would be to have someone film you doing your job and put it on Youtube as a tutorial.  A lot of people don’t know how to change the oil in their car or unclog their drain so there’s an audience out there and you make money from the ads on Youtube. Thanks for the questions everyone! Learn more about your ad choices. Visit megaphone.fm/adchoices

Betterment CEO Jon Stein gives us a  behind the scenes look at how the company operates and makes your money work for you. Betterment is an automated way to invest your money based on your goals and time frame. Answer a few simple questions and Betterment will set up a diversified portfolio that is managed for you. After studying economics and human behavior, Jon started his career consulting for banks.  He saw that they didn’t care about customers and their products were almost designed to help people fail.  He experimented with several brokerage companies and couldn’t find what he was looking for.  So like all good entrepreneurs, he decided to make what he couldn’t find elsewhere himself.  A company that made it easy to invest and served the client, not the bottom line.  That’s how Betterment was born. A listener asked why Betterment is better than Vanguard given that Vanguard has better fees.  Betterment does some things that Vanguard does not.  Betterment invests in fractional shares, each time you deposit money into Betterment, your account is automatically rebalanced in order to lower taxes, and  Betterment does tax loss harvesting. We advocate keeping your emergency fund in an investment account.  In Betterment, short term money will be invested more conservatively.  If you leave an employer who provided a 401K, roll it over into a Betterment IRA.  Many times, once you leave an employer, you will be charged a higher fee for the management of the 401K.  It takes about seven days to do a roll over with Betterment, the industry average is thirty days. Jon sees Betterment moving into the same league as companies like Vanguard and Fidelity in the next ten years and managing over one trillion dollars.  And when that day comes, we’ll be able to say we knew him when. The Betterment Experiment Check out our experience using Betterment with our own money: Show Notes Betterment:  See for yourself what we discussed today.  Use this link and your first six month of investing are free. Boulevard Unfiltered Wheat Beer:  A lively, refreshing ale sent to LMM from listener Drew! Nudge:  Improving Decisions about Health, Wealth and Happiness: A new look at how we make decisions. The Winner’s Curse:  A look at the difference between how people should act economically and how the actually act. Thinking, Fast and Slow: The hidden things that influence the way we think and make decisons. Learn more about your ad choices. Visit megaphone.fm/adchoices

When it comes to storing your cash, you have three choices, under the mattress, a credit union, or a bank. Don’t do the first one. That leaves us with credit union vs. bank, which one is better for your money? If you’ve contemplated ditching your bank and joining a credit union, we’ll lay out the differences between the two so you can make the best decision for your money. Banks Suck Banks have almost always had bad press, and much of it they have earned. We all remember 2008 when they nearly collapsed the world economy or more recently, Wells Fargo underhanded little scheme that involved opening accounts without customer’s knowledge or permission. After all the recent bad press, it’s not surprising that people want an alternative to traditional banks. Credit unions provide that alternative. What is a Credit Union? A credit union is a non-profit money making cooperative where members can borrow from pooled deposits at lower interest rates. They exist to serve their members rather than maximize corporate profits. Credit unions range from small, volunteer-run organizations to quite large with thousands of members run by a professional board. Credit unions are started by corporations or organizations to serve their employees or members. Arkansas AM&N College Federal Credit Union is an example of a small credit union. It was started by and for the employees of the university in 1952 and serves fewer than 1,000 members made up of university employees, alumni, and their family members. The largest credit union in the U.S. is Navy Federal Credit Union with more than seven million members. It started in 1933 with just seven members! Members are made up of all Department of Defense and Coast Guard active duty, veterans, civilian and contractor employees and family members of all those groups. When you join a credit union, you become part owner just as you own part of a company when you buy its stock. Members vote to select the board of directors and for decisions that will affect the credit union. Each member has an equal vote without regard to how little or how much money he or she has in their account. Currently, about one-third of Americans belong to a credit union. But Do They Have Lollipops? Credit unions offer the same core products that banks offer; checking and savings accounts, home, auto, and personal loans, debit cards, online bill paying, paper checks, CDs, certified and cashier’s checks, money orders, and safety deposit boxes. How Credit Unions Differ From Banks Investors own banks and banks have a responsibility to make money for them.. That might be through legitimate means like loaning money and earning interest or illegitimate means like opening fraudulent accounts. It can also mean earning money by charging customers outrageous fees. That isn’t illegal, but something doesn’t have to be unlawful to be ethically questionable. Credit unions exist to serve their customers/owners. Looking after the bottom line for a credit union means operating in the best interests of their customers/owners. That means that credit unions often offer better interest rates both on checking and savings accounts and on loans than do traditional banks. Credit unions charge fewer Learn more about your ad choices. Visit megaphone.fm/adchoices

Moving is third on a list of  life stressors behind the death of a partner and divorce.  Learn how to save money during the process to help reduce the stress. 1.  Don’t pay for boxes.  There are lots of sources of free boxed, but Matt knows a tip to get extra sturdy boxes for free.  Ask at a hospital, lab, or pool store.  The reason is that all of those places are shipped chemicals so the boxes are thicker and more durable. 2.  Move less stuff.  We don’t recommend Andrew’s method of having all of your belongings swept away by a hurricane but there are ways to reduce how much you take to the new place.  We discussed several in Episode 96.  Sell some stuff to get some extra cash and that will save you money because there is less stuff to move.  Less to pack and unpack too so you can’t go wrong with this one. 3.  Screw bubble wrap.  Fun for the cat but expensive for moving and unnecessary.  Use clothes, towels, sheets, newspaper to wrap and cushion your breakables. 4.  Keep track of all your moving expenses.  Moving expenses can sometimes be deducted on your taxes.  Find out if you meet the criteria here. 5.  Pack your own stuff.  Now that you sold the stuff you don’t need, you don’t have enough to justify paying someone to pack it for you.  Order some pizzas, buy some beer and find out who your real friends are. 6.  Let the post office help you.  If you have a lot of books, the post office has special shipping rates for them that might be cheaper than moving them yourself. 7.  Use a pod.  If you don’t have a lot to move, you can use something like this.  It’s like a portable storage unit  the company drops off and picks up. 8.  Move at off times.  Move during the middle of the month, some companies have lower rates because the first and last of the month are busier for them.  Time of year can make a price different too.  Moving between October and May can be cheaper than warmer weather months. 9.  Get money for your move.  If your move is tied to your job, you may be able to get relocation expenses covered. 10.  Moving trucks.  If you are moving a long distance, make sure the company you rent the truck from allows you to drop it off at a different location from where you picked it up.  Make sure you use the smallest truck possible because larger ones are more expensive.  Booking in advance may get you a discount. 11.  Moving additional vehicles.  If you have something can be towed or hauled, check out the cheaper option. 12. Insurance.  A bit like trip insurance, do some research and decide if you can live without it.  If you’re moving across town, it’s less necessary than a cross country move. 13.  Do an inventory and figure out what moving accessories you need.  Things like dollies, ropes, blankets.  If they have to be rented, it can add up.  See what you have or can borrow to make do. If you know someone moving soon, share this with them and maybe you can consider that your contribution and won’t have to help with the actual move! Show Notes Unita Brewing Sum’r Ale:  A refreshing, summer golden ale. MSN Real Estate:  Where we found some of the tips. About.com:  More moving tips.   Learn more about your ad choices. Visit megaphone.fm/adchoices

We all want to be successful and college used to be a route to success. But with college costs so high, it’s out of reach for some so we’ll explore alternatives to college. The cost of college tuition has risen 1,120% since 1978. There is $1.3 trillion in outstanding student loan debt in the US. Even if you do go to college, a degree is no longer the almost guaranteed ticket to the upper middle class it once was. But not going to college, or not going via traditional routes, doesn’t mean you are destined for a life of low wage jobs and poverty. There are many paths to success and they don’t all require higher education. Invest Most of us are not going to get rich simply from our 9-5 jobs and even if we do, it’s still important to have at least one form of passive income, something that makes us money with very little effort on our part. The best form of passive income is investing and the most important way to make a lot of money through investing is to start early. The more time your money has to grow, the better and there is no substitute for time when it comes to investing. If at 18 years of age, you started with $1,000 and invested an additional $100 every week for 30 years at 7%, at the end of the 30 years, when you are 48, you would have more than half a million dollars, $539,643. You would have contributed just $156,000, the other $382,643 you made just from interest, from doing literally nothing. If you don’t start until you’re 28 but start with double the amount, $2,000 and invest double the amount, $200 a week at the same 7% for 20 years, at the end of the 20 years when you are 48, you would have $461,451. You contributed $208,000 and the other $251,451 you made just from interest. You can see what a difference time makes. We started with and contributed twice the amount but we still ended up with nearly $80,000 less because of the additional ten years our money had to grow in the first example. I’ll say it again, there is no substitute for time when it comes to investing.  Our favorite gateway drug to investing is Betterment. The fees are low, there is no minimum, and you don’t have to know anything about investing to get started. Rental property is another great form of passive income. You might not think it’s passive if you think you have to be a hand’s on landlord and you would be right. And if you’re a hand’s on landlord, you’re restricted to buying property in an area close enough to where you live to attend to the property which is limiting if their isn’t a lot of stock or the area is very expensive. But, when you partner with Roofstock, all of those problems are gone! They are a turnkey real estate investment property and do everything from find you a home to collecting the rent and taking care of repairs and maintenance. Not only do they do the work for you, but they greatly expand the areas where you can own property since they do the day to day stuff for you. We did a full review of Roofstock. If you can’t afford to buy a rental property, you can still invest in real estate. Fundrise is crowd funded real estate. It allows individuals to invest in commercial property through an eREIT. We did a full Learn more about your ad choices. Visit megaphone.fm/adchoices