#160: When Jonathan Mendonsa was 18, he researched which college degrees lead to the highest income. Pharmacy was near the top of the list of high-paying degrees, so Jonathan decided to become a pharmacist. He wasn't motivated by passion or calling. His decision was purely tactical. He wanted to make money. He spent four years in college, followed by another four years of graduate school. By age 28, he held a Doctorate in Pharmacy and an astounding $168,000 in debt. This debt burden might have been bearable if Jonathan loved his chosen profession. For people who love their fields, tuition is the price of being able to enjoy a lifetime of work they love. Unfortunately, that wasn't Jonathan's story. He never held a passion for pharmacy; he viewed it purely as a means to an end. Perhaps it wasn't surprising, then, that shortly after becoming a pharmacist, he realized that this wasn't what he wanted to do with his life. He wanted to change careers. He wanted to pursue more meaningful, fun, interesting work. He spent the next four years repaying his student debt. And finally, at age 32, he brought his net worth up to zero. _____ Brad Barrett wasn't thinking about income when he chose his profession. He had received acceptance letters to some Ivy League schools, but he wanted to graduate from college debt-free, so he enrolled at the University of Richmond, which gave him a partial scholarship. While studying there, Brad encountered an accounting professor who challenged him and his classmates in the best possible ways.  Brad felt inspired to major in accounting. His decision didn't come from a rigorous analysis of lifetime income potential. He wasn't scrutinizing labor statistics spreadsheets. He was simply following a route that he found fascinating. After he received his undergraduate degree, Brad decided not to enroll in any further education. Instead, he started working for one of the Big Five accounting firms, with a starting salary in the low $40,000's. He and his future wife both lived at home with their parents for the first few years of their professional life, which allowed each of them to save dramatic amounts. Brad saved more than 90 percent of his after-tax income.  Perhaps it's not surprising that the couple, who now have two children, are financially independent. ____ Both Jonathan and Brad are college-educated professionals in their thirties. They both live in Richmond, Virginia. They're both married with children (Jonathan has a son; Brad has two daughters). Yet their stories could not be more different. What can we learn about careers, work, income, spending, and financial independence from their life experiences? Find out in today's podcast interview with Jonathan and Brad, the co-hosts of the ChooseFI podcast. Learn more about your ad choices. Visit podcastchoices.com/adchoices

#159: Should a 36-year-old father of three invest primarily in Traditional or Roth retirement accounts? Should Rose, a grandmother of four, open a Vanguard account for each of her grandchildren?Should Nancy, who lives overseas and is the sole breadwinner in her family, invest in a Traditional or Roth TSP? Should Scott’s wife rollover her 403(b) from her former employer into an IRA? Should Patrick, age 35, cancel his life insurance plan?Former financial planner Joe Saul-Sehy and I answer these five questions in today’s episode.Our first caller is Mr. “Three Kids and Still Hoping for FI,” who asks:Should I be trying to grab as many Roth dollars as I can before I can’t contribute anymore? Or should I just pour dollars into my traditional 401(k) and have my Roth conversion ladder and/or SEPP-72(t) ready?Rose asks:I have about $1,200 for two of the kids. Can you please suggest the best fund I can start with?Can you also suggest options for birthday gifts? I like giving money, and the kids don’t need anything materialistic. Stocks, perhaps? One stock at a time? Government bonds? I’d like it to be something I can give to them inside a card instead of cash.Nancy asks:I’m 33 years old, married, and have an 8-month old. I work for the Federal government and we have a TSP. We’re living abroad and my spouse isn’t working. I’d like to retire within the next 20 years.We’re conflicted about whether we should invest most of our money into a Roth or not. We keep getting conflicting information about whether we should take the tax deferment now, or whether we should pay the taxes now and not worry about it when we retire.We don’t have much debt, and we have international properties as well as two properties in the Washington DC area. We’d like to know how best to manage the tax issue.Scott asks:My wife recently left a job at a hospital where she had a 403(b) and a Health System Defined Contribution Plan. What can I do with that money? Can I roll it over into something else?Second, what do we do with the 403(b)? My first instinct is to roll it over into an IRA, where I have more control, but my wife and I (with our current income) cannot contribute to a Roth IRA so we’re making use of the Backdoor Roth conversion. It’s my understanding that rolling money from a 403(b) into an IRA will affect our ability to execute a Backdoor Roth conversion. Am I understanding that correctly?Patrick asks:I’m about 35 years old and recently married. My wife and I have a combined gross income of about $100,000.I have some concerns about our MassMutual life insurance retirement accounts. I think MassMutual is a good product, but I think we are over-invested.We’re both putting away a premium of about $500 a month (about $1,000 combined) into our MassMutual. The payout that we’re expected to receive at the end is about $350,000 for me, and about $400,000 for my wife.I’m concerned that our premiums are too high and we could be using that money in better, more effective places. I tried to reduce my MassMutual payment a few months ago, and the cut in benefit was pretty drastic and not proportionate … it didn’t seem very fair to me. Any advice?________We answer these five questions in today’s podcast episode. Enjoy!By the way -- TRIVIA TIME!! At roughly the 36-minute mark of today’s episode, Joe and I talk about the late Senator William Roth, the namesake of the Roth IRA and Roth 401k. His birthday is July 22, 1921, which means his half-birthday is January 22. Which means we can celebrate his half-birthday soon!! Tune into the episode to hear our only-half-joking conversation about this. :-)  #AllTheCheesyBiscuits Learn more about your ad choices. Visit podcastchoices.com/adchoices

#158: Clark Howard loves the FIRE movement. That's because he's one of us.Clark began investing in real estate at age 22, started a travel agency at age 25, and retired at age 31.He sold his travel agency, moved to the beach and relaxed for four years; then he started a second career as the host of The Clark Howard Show, a popular radio show that's syndicated nationwide.Today, he's a personal finance celebrity. His website receives more than 50 million views per year. He has more than 1.1 million followers on Facebook.Clark is a consumer advocate and personal finance voice who walks the talk. He doesn't accept sponsorships that conflict with his values. He loves frugality and efficiency. Last week, he was traveling in New York on a company expense account, yet he still rode the subway, because he didn't like the idea of wasting money on a taxi ... *even if it wasn't his own money.*He's a philanthropist who leads with a service-first framework. During Hurricane Katrina, he volunteered with a team that handled medical evacuations. After September 11th, he joined the Georgia State Defense Force, which is an unpaid, unarmed volunteer component of the state Department of Defense.He sponsored the construction of 74 houses through Habitat for Humanity. He's provided toys for more than 150,000 foster children at Christmas.He's a multimillionaire and he flies in coach.When the now-infamous Suze Orman episode came out, Clark immediately issued a response on his own syndicated radio show. He came out in strong support of the FIRE movement. He said that he couldn't imagine how anyone could criticize the notion of saving half of your income.When I heard his remarks, I invited him on this show to elaborate. What does he think about the FIRE movement? Why does he like it? How would he respond to the objections?For more information, visit the show notes at http://affordanything.com/episode158 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#157: We're back with another Ask Paula - Real Estate Edition of the show! In this episode, we cover down payments, cash flow, investing in condo hotels, building a rental on the side of your own house, selling your properties, and whether it's better to buy actual properties or REITs. Erin asks: Would you ever put 30% down (or more) in order to make a rental property cash flow positive? Avy asks: In 4-5 years, I'd like to have a rental property for diversification and passive income. Is it better to stick with the plan to buy rentals, or should I go into REITs? Additionally, if I want to invest in rentals, where should I look? Rod asks: Could you tell me if investing in condo hotels as a rental property is a good idea? I'm 10 years away from retirement, and I was thinking of buying one in Las Vegas, since I plan to move there when I retire. Being a traditional landlord doesn't appeal to me - I don't want to deal with the hassle of bad tenants or repairs when I'm retired. I'm hoping a condo hotel might be a way for me to get income from a rental property without all the hassle. What are the pros and cons I should consider? Tom asks: I want to build a small two-bedroom house on the side of my personal residence (located in Texas) to use as a rental. What advice can you offer to help me execute this plan? Sandra asks: I live in California, and 5 years ago I purchased 3 properties free-and-clear in Memphis, TN. While they’ve been working great for me, I think they have much more potential, but I’m no longer interested in managing them, or my property managers. It’s too much for me as I changed careers; I’m now going in a much different direction. All I want is to cash out and invest that money into my new business, as that’s more fulfilling to me. I know to sell them cash is the first choice but investors are in the game of low-balling - way too low. Selling retail is an option, but it’ll take longer, and I don’t know if the market is in my favor. Seller financing drags things out, and lease options are not great for me, so I’m interested in your feedback. Learn more about your ad choices. Visit podcastchoices.com/adchoices

#156: James Clear wanted to start flossing, but he never managed to follow through. Despite his best intentions, his dental floss sat unused in a bathroom drawer. Fortunately, James had learned a thing or two about human behavior and habit formation. As a self-improvement writer, he'd spent hours pouring over scientific data about behavior changes. He decided to apply a few of these concepts to his own quest. First, he placed the floss on the bathroom counter, rather than tucking it inside a drawer. He made the floss visible. Second, he realized he didn't enjoy the tactile sensation of wrapping floss around his fingers, so he replaced it with floss picks. He made the floss more enjoyable. Finally, he decided to floss immediately after brushing his teeth. He used a technique called "habit stacking," in which a new habit is more likely to stick if it's tied, or triggered, by an existing habit like toothbrushing. Thanks to these techniques, James built a flossing habit. He shares these tactics and more in today's podcast episode. James Clear is one of the most well-respected and widely-known thinkers and writers in the world of habit formation and behavior change. His website, jamesclear.com, gets more than one million visitors every month. In this week's episode, we deep-dive into how to create impressive habits and how to break the terrible habits that hold you back If you'd like to start new habits like exercising, saving more, investing, meditating, journaling, practicing yoga or flossing, but despite your best intentions you can't seem to make the habit stick, then this week's podcast episode is for you. Learn more about your ad choices. Visit podcastchoices.com/adchoices

#155: How can a schoolteacher dad and stay-at-home mom send their four kids to college? Where should a 23-year-old keep the savings that she’s accumulating to buy a home by the time she’s 27 or 28? What should we know about retirement planning if we have a pension? And should I rollover my 401k from my old employer? Former financial planner Joe Saul-Sehy and I tackle these four questions in this week’s episode. Here are the details. Miguel asks: When I hear friends and coworkers talking about college tuition for their kids, all I can think about is how in the world am I going to send my four kids to college? I think I have a plan - I’d love to hear your opinion. From what I hear, college can be between $20-50k per year. I currently own two houses - one is a rental and one is our personal residence. We’re working on paying those mortgages down in about 7 years. I want my kids to get their basic courses from a community college to save some money, but for the rest I really think that taking a loan will be the best option. Usually these loans don’t have to be paid until they graduate, so I feel like that will give me some more time to become more financially stable. If I get to pay those mortgages in the time that I’m thinking, I’d like to buy a couple more rentals. I’m currently halfway to max out my contribution for my 403(b) plan. I’m a teacher, I’m making about 91k per year and my wife stays home. I would love to hear your opinion on my plan. I feel like if I had that kind of cash - $20-$50k a year - I would rather invest it and help my kids down the road. Anna asks: I am 23 and I’m saving to buy a primary residence in 4-5 years. In the meantime, I’m wondering where to invest my money so that it will grow but won’t be too susceptible to market fluctuations since I’ll be needing the cash relatively quickly. Andy asks: You’ve written before that if we contribute 10% of our salary towards retirement and our employer matches 5% automatically, we are saving 15% for our retirement. My question is, does the same principle apply to pensions? For instance, if I’m contributing 5% of my salary towards my pension and my employer is contributing 9 to 10%, making it around a 15% contribution overall, should that then count as a 15% retirement savings? Drew asks: I have a question about a 401(k) rollover. I recently switched employers and so far I’m very happy with the transition. With my new compensation, I’m now able to more than double my 401(k) contributions, and I’m on track to max out my new HSA while still maintaining the same take-home pay from my old job. My old employer had a 401(k) through Merrill Lynch and I was able to do a mix of contributions to both Roth and Traditional. My new 401(k) through Charles Schwab has this option. According to the documentation I’ve received from Merrill Lynch, I have four options at my disposal: 1. Keep assets where they are 2. Roll them into some kind of IRA 3. Transfer them into a new 401(k) 4. Take a cash distribution
 With this in mind, here are my questions: • Aside from the four options presented to me, are there any other options I should consider? • Are there any time constraints I should consider for this kind of roll over? • What would you recommend I do with these funds? I’ve heard you repeatedly mention the benefit of having all of my assets under one dashboard, so I am leaning towards transferring the assets into my new 401(k). I currently do not have an IRA, and I’ve been meaning to get one set up for a while. This seems like a great opportunity to get one up and running as an alternative strategy. 
 Enjoy! Learn more about your ad choices. Visit podcastchoices.com/adchoices

#154: Want to retire early? You'll need at least $5 million, more likely $10 million, says famous financial personality Suze Orman. I should know. She said that to me, directly, on my podcast. I asked Suze for her opinion about a frugal, flexible person who wants to retire early with a $2 million portfolio. She warned that retiring would be a massive mistake. "Two million dollars is nothing," Suze said. "It's nothing. It's pennies in today's world, to tell you the truth." Wait, what? "Listen," she said. "If you have $20 [million], $40 [million], $50 [million] or $100 million dollars, be like me, okay. If you have that kind of money ... and you want to retire, fine." "But if you only have a few hundred thousand dollars, or a million, or $2 million, I'm here to tell you ... if a catastrophe happens ... what are you going to do? You are going to burn up alive." But what's wrong with retiring early on $2 million? Assuming it's invested 50/50 in equities and bonds and harvested at a 4 percent withdrawal rate, a portfolio of $2 million could create annual investment income of $80,000. Surely that's enough, right? *Riiiight?* Nope. Suze says that's not enough. "I think that in the long run, $80,000, especially after taxes and as you get older, is not going to be enough. You may think it's going to be enough, but it's just not," she told me on the Afford Anything podcast. "You can do it if you want to. I personally think it is the biggest mistake, financially speaking, you will ever, ever make in your lifetime." I asked her if a $3 million portfolio at a more conservative 3 percent withdrawal rate would be okay for an early retirement. She said no. "Think about it logically," she said. Supporting a disabled family member who needs full-time care could cost $250,000 per year, she said. Ordinary cost-of-living would cost another $100,000 per year. This means you'll need $350,000 per year after taxes to cover your costs, which is $500,000 per year before taxes, which at a 5 percent withdrawal rate means that you'd need a portfolio of $10 million. If you don't have at least $5 million or $10 million, don't retire early, Suze said. "Here's what the FIRE people, you are not thinking about, so I'm going to give it to you straight here now," she said. She described the possibility of getting sideswiped by massive taxes and catastrophic emergencies. What if your home gets destroyed by an earthquake or flood and insurance denies your claim? What if you're in a tragic car accident and you need full-time care? What if the U.S. experiences 25 percent unemployment, which means you won't be able to find another job if you wanted one? What if your investment income gets consumed by massive future tax hikes? "When you get older things happen," Suze said. "You're hit by a car, you fall down on the ice, you get sick, you get cancer. Things happen." "Alright, you can do it if you want to," she said. "I'm just telling you, you will get burned if you play with fire." For more, visit the show notes at http://affordanything.com/episode154 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#153: A few weeks ago, Suze Orman's team reached out to me and asked if I'd be interested in chatting with Suze on my podcast. "Um, duh," I replied. Sure Orman is one of the most famous voices in the world of personal finance. From 2002 to 2015, she hosted The Suze Orman Show on CNBC. She's the author of 10 mega-bestselling books, she wrote a financial column for O, The Oprah Magazine, and she's made multiple appearances on The Oprah Winfrey Show. I turned to Twitter and Facebook and asked this community, "What would you like me to ask Suze?" One question stood out far ahead of all others in popularity: What does Suze Orman think about the FIRE movement? I opened with that question. And Suze's response shocked me. "I hate it," she replied. "I hate it. I hate it. I hate it. And let me tell you why." That's a direct quote. (Really.) She spent the next 30 minutes explaining why she thinks pursuing FIRE could be the biggest mistake of a person's life. Well, then. Why does Suze Orman hate the FIRE movement? Find out in today's episode, and join the discussion and help spread the FIRE by sharing your thoughts on today's episode in the show notes, on Facebook, and on Instagram. Learn more about your ad choices. Visit podcastchoices.com/adchoices

#152: Dr. Brian Portnoy is an expert in making decisions. He holds a Ph.D. from the University of Chicago, he's a Chartered Financial Analyst, and he's the Director of Investment Education at Virtus Investment Partners. Dr. Portnoy joins me on the podcast to discuss how to make smarter decisions -- not only about investments, but also generally in life. How do we sharpen our decision-making skills? How do we improve our critical thinking processes? Here are some of the takeaways from our conversation. 1. Beware of resulting. Great results can come from poorly-planned decisions. And wise decisions can lead to good results on occasion. Don't judge a decision based on its results; judge a decision based on the soundness of the thinking process through which you made that choice. 2. Manage your expectations. Your happiness with an outcome will depend on the gap between your expectations and reality. If you can't control reality (at least, not completely), then manage your expectations. It's the happiness variable that's most under your authority. 3. Don't make hasty evaluations. When you go to a restaurant, you order a (vegan?) cheeseburger, and based on the taste of that burger, you can immediately evaluate your decision. You can't do that with investments. When you make an investment decision, there's a huge time-gap between when you make the choice and when you see the results of that choice. This time-gap may last for decades. And this means that your decisions are tough to evaluate. Don't judge an investment decision on one-year or two-year results, as tempting as that may be. Judge your decisions based on the soundness of the thinking, not the short-term ramifications. 4. Automate. It's the best way to save you from yourself. 5. Define risk. Some people think that "risk" is synonymous with volatility. Others think that "risk" refers to the loss of capital. Know what "risk" means to you. Personally, I define it as probability x magnitude. Today's guest, Brian, points out that magnitude can happen in a multitude of dimensions and verticals. 6. Diversification, risk management, and behavior. When in doubt, pay attention to these three factors. In order to better manage your investing choices, manage these qualities. You cannot control broad market outcomes, but you can control your exposure, risk, and choices. 7. You're the average of the 5 people you spend the most time with. Surround yourself with frugal, ambitious, reasonable, wise, intelligent, kind, adventurous people -- and you will become stronger in those qualities. You are in charge of the community with whom you surround yourself. Even if you can't change your physical neighborhood, you can form an online or digital community of people who support your goals and reflect your philosophy. 8. Keep a decision-making journal. What gets measured, gets improved. If you want to improve your decision-making skills, keep a journal of the way in which you make decisions, e.g. your thinking process. Then in the future, when you have the benefit of hindsight, you can look back on your decision-making process. Remember, don't judge your choices based on outcome; judge your choices based on the soundness of the decision-making process itself. Dr. Portnoy dives into detail about how to make better decisions in today's episode. Enjoy!   For more, visit the website at https://affordanything.com/episode152 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#151: We’re back with another “Ask Paula” episode of the show! As usual, my friend and former financial advisor, Joe Saul-Sehy joins me in answering your questions! Let’s dive right in. Hailey: I just graduated from college with a major in Computer Science and minor in graphic design. The whole time - it was rough. I come from a family that didn’t have a lot to give me going into this journey of getting a college degree. So I did it basically on my own - they gave me things here and there - but college is expensive. I wound up getting scholarships and taking on student loans to get through. It was a lot of hard work. Some days, I wanted to quit. I felt like I was never ever going to see the benefits of what I was doing. Well, I am now at a point in my life where I was able to secure a job (I started a week after graduation) making $80k a year. Obviously, this is great - this is what you’re supposed to do when you graduate with a Comp Sci degree. But for some reason, I don’t know if it’s guilt or shame, but I feel bad watching my friends and family struggle, while I don’t have those struggles anymore. I find myself asking if I deserve this - to have a nice apartment, to have nice things. Inherently I know I deserve it because I worked so hard, but I don’t know … My question  is - do you have any advice for me to help me understand what it is I’m feeling? How I can feel better about it? Chris: I’m 45 and my plan is to retire early - not super early - at 57. To keep numbers straight, I’m hoping to have a million dollars in a 401(k) and a million dollars in a taxable account with stocks. My thought was to - at 57 since I won’t have any income - to convert the 401(k) over to an IRA and then start converting that to a Roth at the max, keeping me in the 12% tax bracket, which is roughly $77,000, potentially more, and live off of the stock which will be at 15% tax and that shouldn’t go against my AGI because it’s an asset. Then at 67 I would start taking full retirement Social Security. Hopefully by age 70 I’d have very little to none in the 401(k) and most of that money would be in the Roth. Thoughts? Am I overthinking this?   Rose: My goal is FI in about 5 years. After maxing out my 401(k), I make automatic monthly contributions to a robo-advised fund, specifically a Schwab intelligent portfolio. I like that it rebalances and has tax loss harvesting because I’m in a high tax bracket. To me, it feels somewhat safer than putting everything into VTSAX because it’s diversified, but I don’t fully understand all of the different funds that I’m invested in through the robo advisor. Should I keep putting money into the robo advisor, or should I switch to VTSAX? Does your answer change at all with ongoing economic uncertainty and the benefits of being balanced across stocks and bonds?   Juan: I’m 24 and I live in NYC. I just graduated from engineering school and found a full-time position earning $75k/year before taxes. There’s a possibility of overtime so I might be able to make another $5-10k a year. I have $15k saved in cold hard cash; I have $6k in a Robinhood account which is doing well; and I have $5k in a Wealthfront account. I am planning on maxing out my Roth IRA ($5,500 a year starting now) and I have $2k there already. I also plan on participating in the employer’s contribution for the 401(k) traditional - which is maybe a 4% match. I don’t know where exactly I should put the money that I’m going to save to get the most out of it (mostly to beat inflation). $75k after taxes is probably around $55k and I plan on saving around 50% of that, or $30k a year for the next 3-5 years. I live by myself but my expenses are not high. I am very good with budgeting and everything is on track. I just want to get your suggestions/advice on where to put my money or what to do with it starting now. I am going to open an online savings account where I can get at least 2%. Learn more about your ad choices. Visit podcastchoices.com/adchoices