Afford Anything

#63: It's the first Monday of the month, and you know what that means - another Ask Paula episode. Our first question comes from Richard, who wants to know if he should focus on creating a travel fund or building passive income through real estate. What did I do, and how did I manage to come back from my world travels and start building a real estate portfolio only a few years later? The next question comes from Andrew. He's contemplating purchasing two houses on the cul-de-sac he lives on and then renting them out. He only plans on living in his current house for another five years, at which time he also wants to rent it out. Is he crazy? Would proximity give him an advantage? Jennifer asks the next question. She and her husband owe $150,000 on a rental property in Portland, OR that's worth $350,000. Should they sell the house and buy more properties? What would I do with the equity in the property?   Find more resources and Ask Paula episodes at http://podcast.affordanything.com/tag/ask-paula   Learn more about your ad choices. Visit podcastchoices.com/adchoices

#62: Joe Saul-Sehy, a former financial advisor and host of the Stacking Benjamins podcast, joins me to answer your questions in this bonus episode of Ask Paula. Joe and I are goofballs; we tell PG-13 dirty jokes; we disagree on several answers, and we have a grand 'ol time. Hopefully you'll learn something, and you'll probably end up laughing along the way. For a full list of questions and more about today’s episode, visit http://affordanything.com/episode62 Enjoy! Learn more about your ad choices. Visit podcastchoices.com/adchoices

#61: Even though John wasn't never an entrepreneur at heart -- even though he didn't (yet) self-identify as an entrepreneur -- he decided to throw himself, full-force, into the one and only business idea he'd ever had. Listen to John's story, in his own words, as he describes his journey from a small-town college kid to a successful 7-figure business owner. For resources mentioned in this episode, go to http://affordanything.com/episode61 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#60: Andrew Hallam grew a million-dollar investment portfolio on a schoolteacher's salary by his mid-30's. In his bestselling book, Millionaire Teacher, he describes these nine lessons in detail. He shares these nine rules on this podcast, and his ideas are so substantive that -- for the first time -- I decided to release his interview as a two-part series. In last week's episode, Andrew shared the first three rules of building wealth. This week, Andrew dives into the final six rules that can turn middle-class people into millionaires. Here's a sneak peek:     •    #1: Learn how to think and spend like a millionaire.     •    #2: Start investing early. Time is your greatest investment ally.     •    #3: Choose low-cost index funds. Small fees pack big punches.     •    #4: Understand your inner psychology. Conquer the enemy in the mirror.     •    #5: Learn how to build a balanced, responsible portfolio.     •    #6: Create an indexed account, no matter where you live.     •    #7: Don't resign yourself to taking this journey alone.     •    #8: Inoculate yourself against slick sales rhetoric.     •    #9: If it sounds too good to be true, it probably is. These rules may sound simple, but our discussion took an advanced turn. Andrew and I dive deep into thorny topics like hedge funds, casinos, and human psychology. Enjoy this two-part series, and don't forget to check out Andrew's excellent book, Millionaire Teacher. Learn more about your ad choices. Visit podcastchoices.com/adchoices

#59: By his mid-30's, Andrew Hallam became a millionaire on a teacher's salary. He began by investing $100 a month upon advice given by a mechanic. Then he began saving nearly half his $28,000 teacher’s salary. Andrew rode a bicycle 35 miles to work, found ways to avoid paying rent, and regularly ate pasta and potatoes as well as clams he picked himself for added protein. In today's interview, Andrew shares that story. Find more comprehensive details at http://affordanything.com/episode59 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#58: Ashley is a single mom saving diligently for her 2-year-old son. What alternatives are there to 529s and brokerage accounts? Julie and her husband invest quarterly. Should she try buying European equities when they are much cheaper due to Brexit? Nicholas and his wife make too much money for a Roth IRA. Should hey do a backdoor Roth? Melissa has money to save, invest, or pay down rentals. What’s her best option?   Find more in the show notes at http://affordanything.com/episode58 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#57: Philip Taylor, aka PT, is one of the most well-connected guys in the personal finance world. He’s spent the past half-dozen years building tight relationships with some of the most influential authors and speakers in this space. Today he shares his top five money lessons learned over the past decade. PT shared several tactical tips, including:     •    Buy term life insurance, rather than whole life.     •    Focus on low-cost investing, such as passively-managed index funds.     •    Automate your savings.     •    Focus on income growth.     •    View frugality as a discipline. It’s not a means to an end; it’s a lifestyle and a core value. For a full explanation of PT’s 5 takeaways, visit http://affordanything.com/episode57 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#56: Former professional Poker player Billy Murphy has an intriguing story. He achieved financial independence at age 29, and he did this by applying a concept known as "expected value" to his online businesses. In this episode, I chat with Billy about how expected value is more than just a formula; it’s a framework for how to evaluate your options; how to assess risk, reward, probability, and variance. Let's back up a little. What is expected value? It’s the sum of all possible values for a variable, with each value multiplied by its probability of occurrence. “Whaaaa? What does that mean?” Here’s a simple example:   Imagine that you have a full-time job. You’ve also built a side business that’s earning $20,000 per year. You’re trying to decide whether to stay in your full-time job vs. quit your job and focus on growing your side hustle into a full-time business. You ask your two best friends for their opinion. One says, “that’s risky! What if you fail?” The other says, “you could become a millionaire! Whoa!” You realize that both of those remarks are fueled by emotion and speculation. You want to make a more informed decision, so you decide to compare the ‘expected value’ (EV) of both options in Year One. After assessing the market (e.g. studying customer demand, etc.) you determine that in your first year of running the business full-time, under best-case-scenario conditions, you could earn $250,000. There’s a lot of promise within your field; you calculate a one in four chance of this happening. In worst-case-scenario conditions, you don’t make a dime of additional money; your business stagnates at its current income. There’s a lot of competition within your field; you assess that there’s also a one in four chance of this situation unfolding. In middle-case-scenario conditions, you’d make around $100,000 per year. This is the most likely outcome, and you give it 50% odds. What’s the expected value of diving full-time into this business? EV of biz = 25% chance of earning $250k = $62,500 50% chance of earning $100k = $50,000 25% chance of earning $20k = $5,000 EV = $117,500 Okay, great. Next, what’s the expected value of staying at your current job? EV of job = Salary + $20,000 in additional income Of course, this is an over-simplified example, for the sake of illustration. Obviously, the decision gets more complex, because you need to account for future growth of your business — the 5-year outlook, the 10-year outlook — as well as future career growth potential within your 9-to-5 job. You’d also need to assess revenues vs. profit margins, etc., etc. But this simple example illustrates the concept of using the expected value formula to inform your decision-making. Rather than just saying, “oh, that’s risky!” without any data, you can use EV as a starting point for a conversation about probability and risk. The point is, when you're making a decision, your emotions and other people's opinions often override any rational thought you might have. Those emotions don't take risk or variance into consideration. Expected value does. By running the numbers and identifying the worst-, mid-, and best-case scenarios, you can take calculated risks that have a higher likelihood of paying off. Find out how Billy built a seven-figure business by applying this one incredible rule to his decision making process in this episode. Enjoy! -- Paula Resources Mentioned: Billy's site, Forever Jobless
 Wikipedia - Expected Value   Find more about Billy Murphy and his podcast, Forever Jobless, in the show notes at http://affordanything.com/session56 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#55: Scott Alan Turner used to be a money moron. (In his words.) He traded a Jeep for a Porsche in his 20s, purchased a 3,000 sq. ft. house with two mortgages, and bought luxury furniture on credit. The Porsche cost him $800 per month. The house cost $200,000. The furniture? Who knows.
 Scott didn't have a budget and never tracked his spending. He only knew that he could afford the monthly payments on these luxuries ... until one day he realized his mortgage was due in a few weeks. And his bank account was rather empty. And he didn't have an emergency fund. Oops. Scott realized he was drowning in debt. So he decided to make a change. He sold the Porsche and paid $6,500 cash for a truck. He paid off his credit card. He aggressively attacked the mortgage on his house. Step-by-step, he made strides toward improving his financial future. After listening to Clark Howard on the radio, he realized it was important to free his money from the grip of debt and put it toward savings and retirement. Once he got married, he sold his house and downsized to his wife's town home. They then downsized to a 1,000 sq. ft. rented house, and downsized once more to a 300 sq. ft. bedroom with his in-laws.
 Throughout all of this downsizing, Scott kept saving money. He eventually saved enough to become a millionaire at age 35. Today he writes and speaks about personal finance full-time. He hosts the Financial Rock Star podcast. And he's stayed debt-free -- including mortgage-free -- since 2009. How did he go from money moron - buying expensive cars and furniture - to disciplined saver? He can answer that question in one word: Contentment. He doesn't need to buy more, because he's happy with what he already has. Scott credits his frugality to feeling satisfied with his possessions, rather than running on a hedonistic treadmill of always wanting more. While he still appreciates fine craftsmanship -- a gorgeous house, a designer car -- he realizes that he doesn't need to own luxury items. He can appreciate art and design without making a purchase. He prioritizes spending on his values: more time with friends and family; more life experiences. He doesn't spend to impress others, which is a losing game. Discover Scott's fascinating philosophy on the link between frugality and contentment (and learn from his money mistakes!) in this episode. Enjoy! -- Paula For a full list of resources, or to leave a comment, visit http://affordanything.com/episode55 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#54: It's the first Monday of the month, which means I'm fielding questions from the audience. We start with a question from Nicole. She's a new listener, and she's stuck in a confusing situation. You see, Nicole is self-employed. She'd like to save a percentage of her income -- but she doesn't get regular paychecks. How can she automate her savings, when she doesn't know how much she'll make each month? She asks a second question, as well. Nicole has $15,000 in savings and wants to buy her first rental property. However, she's intimidated by the unknown market. What should her first steps be? Next, we move to a question from podcast listener David. Should he invest his emergency fund? David is contemplating putting his emergency savings in the Vanguard Immediate-Term Investment Grade Fund (VFICX). Is this a good idea? Saul, another podcast listener interested in real estate investing, recently sold his home and has a decent chunk of change. Should he buy a 3 bed / 2 bath townhome with a small commercial space on the first floor? Or should he buy a duplex? Podcast listener Albert is wondering: should he buy a home for himself, and rent it out a few years later? He'd like to travel and work remotely. What are the downsides to this idea? It can't be that easy ... right? Finally, Abbey started a personal finance blog, and wants to know:     When should she start promoting her blog?     How much content should she write?     Does she have to share her blog with her friends and family, or can she stay anonymous?     Should she write about other things besides money and travel? I tackle these questions in this month's edition of Ask Paula. Enjoy! -- Paula P.S.  Trying to make a decision? Ask your question at http://affordanything.com/voicemail Resources Mentioned:     Renting is Throwing Money Away...Right?     Everything I Know About Blogging Condensed Into One Post     Should You Invest in This Rental Property? _______________________ To view this information online, visit http://affordanything.com/episode54 Learn more about your ad choices. Visit podcastchoices.com/adchoices