M.O.N.E.Y.

M.O.N.E.Y.

United States

Real and uncensored. Hosts Paula Pant and J. Money dive into chasing the dream and creating financial independence. They rap about net worth, investing, real estate, killing debt, budgeting, business, entrepreneurship, saving money and how to be a hustler. Grab a beer, put your spreadsheets away, and get ready to retire early.

Episodes

#074: Ask Paula - How to Repay $50k in Student Loans on a $31k Income, What's the Deal with Bonds, and Do I Really Need Insurance  

Former financial planner and friend of the show, Joe Saul-Sehy from Stacking Benjamins, joins me to answer the following listener questions:

Kicking off today's episode, Nicky asks:

I'm young and healthy. My car is old and not-worth-much. And my personal property isn't exactly fancy-pants.

Do I *really* need health, auto and property insurance? Or can I drop these insurances and save the money?

_______

Next, Shelbi says:

I'm 26, recently earned a graduate school diploma, and I'm taking the first steps into my career.

I take home $2,600 in monthly income, and my cost-of-living is $1,900 per month.

I maintain a $5,500 emergency fund and invest 20% of my income into a Vanguard Target Date Retirement account, with a Roth tax setup. I'll get an employer match after I've spent another year on the job. My employer also contributes $100 per month into my H.S.A. account, which is the only money that I'm putting into that fund.

I hold $49,000 in student loans (yikes!!) at 6.8% interest. I pay $400/mo towards this debt, which is included in my $1,900 cost-of-living and is more than the minimum required.

My goal is financial independence and early retirement.

She asks these three questions:

-- Should she lower the 20% she's putting into her 403b in order to max out her Roth IRA and HSA, instead?

-- Should she prioritize repaying her student loan debt over retirement savings?

-- Should she schedule a private coaching call with me? (Surprisingly, I said no. Tune into the episode to find out why.)

_______

Next, Nicole asks:

What types of investments can you hold inside a self-directed IRA? If I open one of these accounts, what custodian should I use?

_______

Finally, our friend anonymous asks:

What's the deal with bond investing? What's a coupon payment? A maturity date? WTF? Can you help me make sense of the world of bonds and bond funds?

_______

Joe and I tackle these four questions ... plus reveal a top-secret recipe for the Best. Oreo. Cookie. Dessert. EVER.

Like, *ever.*

Enjoy!

-- Paula


_______



Resources Mentioned:


Interview with Andrew Hallam, the man who became a millionaire on a teacher's salary: Here's Part 1 and Part 2.


Want to hear your voice on an upcoming episode? Leave your question at http://affordanything.com/voicemail

 

Who are you? Please take this 7-question survey: http://affordanything.com/whoareyou

#073: What Chess Taught Me About Making Smarter Life Moves -- with Steve Gossett  

Last January, I went to a party at a trailer park that featured a huge bonfire, a few llamas, and a member of Public Enemy.

(I realize that sounds like the setup to a joke. Welcome to my life.)

While I was there, I met a former competitive chess player named Steve Gossett. Steve is a Los Angeles-based filmmaker who creates Princess Rap Battle videos for a YouTube channel with more than 1 million subscribers.

But that's not why I invited Steve onto the show.

I asked him to join me on the podcast to discuss the lessons that chess taught him about money, work and life.

On this fascinating episode, Steve and I discuss:

 - Opening Theory: At the start of the game, you have a limited selection of moves. Yet you can quickly lose the game if you choose the wrong moves. Don't lose at the outset.

- Muddled Midgame: While the first few moves are (relatively) simple, even the experts don't quite understand the complexities of the mid-game.

- Gambit: Sometimes, you need to be willing to give up a piece on the board for the sake of getting another strategic win.

- Eliminate options: You'll fatigue yourself if you try to consider every move. Learn how to quickly eliminate options so that you can focus on choosing between a small handful of optimal moves.

- Think ahead: Don't just think about the consequences of the next move. Think many, many moves ahead on the board. Also, realize that every move carries an opportunity cost: once you move a piece on the board, it's not in that same position anymore -- for better or for worse.

- Study/practice/knowledge can reduce time pressure: Chess is a timed game with a ticking clock. You can make smarter, faster decisions through study and practice. Knowledge is your competitive advantage.


I hope you find this conversation as fascinating as I did. Enjoy!

 - Paula

Links to the Princess Rap Battle and Whitney Avalon's YouTube channel can be found in the show notes at http://affordanything.com/episode73

 

#072: Ask Paula -- Should I Loan Money to Friends? Stay Sane While Repaying Debt? ... and More  

Spaghetti is a major part of my life.

I eat it, of course, as many people do. I also spill it all over my pants, despite the fact that I’m 33 and should’ve learned the rules of gravity by now.

But most importantly, I use spaghetti as a metaphor for my business. If I’m not sure if something will work or not, but I want to experiment with an idea, I tell myself that I’m just “throwing spaghetti at the wall.” Maybe it’ll stick; maybe it won’t. Either way, I have permission to try, permission to fail, and permission to get pasta stains all over my drywall.

This week, I’m starting a new spaghetti-throwing-experiment on the podcast: I’m going to broadcast “Ask Paula” episodes every-other-week, followed by interviews with guests every-other-week. This allows me to handle the awesome volume of questions that are flowing in (which I LOVE), while still enjoying intriguing conversations with fascinating people.

This every-other-week thing is just an experiment; I’d love to hear what you think. Do you want more “Ask Paula” episodes? Or should I return that segment back to its original once-a-month placement? Or am I overthinking this and I should really just get on with the show notes for this week’s episode?

Assuming you’re like, “Option C, Paula — get on with the show notes!,” here they are.

___________

 
Our first question comes from David, who asks: Could you ever find yourself in a situation in which you could justify helping a friend by paying off their credit card, and in exchange, they pay you a modest but respectable interest rate?

Here’s his situation:

His friend holds $6,000 in credit card debt, with carries an interest rate ranging between 11 to 17 percent. This friend also holds $30,000 in student loans. Yikes!

David, however, is debt-free, maxes out his retirement accounts, and holds cash savings of $56,000. He’s thinking of loaning his friend around $3,000 of this money, which she could use to pay off the 17 percent loan. In exchange, David would get a decent-but-not-outrageous return, perhaps in the neighborhood of 7 percent-ish.

Should he do this? If so, how? Should he sit down with a lawyer?


Next, Amy asks:
We’re carrying debt, although fortunately it's low-interest. We're paying it off, and we're doing the best we can; this debt will be gone in a few years. How do you stay patient and calm, when progress is happening at a snail's pace?

Later, Alexa says:
I’ve realized that I haven’t followed my true passions, which are travel and dance. I’d like to save money for a few years, and then pursue these twin goals. What should I do with the money that I’m saving for travel? Should I keep it liquid or in stocks? Should I put it in a taxable account or a retirement account?

Lyra asks:
I have 5 goals: repay debt, save an emergency fund, help my son pay for college, save for retirement, and buy a rental property. How do I split my money between these five goals?

Next, Kim asks:
What are the pro's and con's of portfolio lending for an investment property? I keep getting hung up on the "balloon payment," in which you need to repay the full loan after a particular period of time. How would you qualify for a refinance, given that you need a portfolio loan in the first place?


Finally, Daan wants to know:
I’m a Dutch citizen who moves to a different country every 2-3 years. Is real estate a viable option for me?

#071: Can I Retire Yet? - with Roger Whitney, the Retirement Answerman  

Roger Whitney is known as the "retirement answer man."

"All I think about, all day long, is how to make that [retirement] transition successfully," he says.

But he holds a dirty little secret.

"I don't believe in retirement. And the most successful clients that I work with ... technically they're retired, but they're still working."

Huh?

What does that mean?

In today's episode, Whitney and I discuss the nuances of 21st-century modern retirement -- and how this ain't nothin' like the traditional retirement that you've been taught to expect.

Enjoy!

______

For the "WTF?" -- Vocabulary guide from this episode - visit http://affordanything.com/episode71

 

#070: Erin Lowry on Raising Children Who Are Enabled, Not Entitled  

Erin Lowry shares some entertaining money stories from when she was growing up and why she needs to become a millionaire 7 years prior to the age her dad achieved the same thing. Hint: She adjusts for inflation :)

Visit the show notes at http://affordanything.com/episode70

 

#069: Ask Paula - The Real Estate Edition  

So many Afford Anything listeners have great questions about real estate investing. That's why this episode of Ask Paula is dedicated to answering them.

Our first question comes from Ade, who has $25,000 to invest in real estate and lives in the Bay Area. Understandably, he's thinking of investing out-of-state, and wants to know if Atlanta is still a good city to invest in. Where can the best deals be found?

Krystina lives and has four rentals in Vermont, but she's sick of the cold. She's thinking of selling the properties and moving elsewhere. She asks: if you had to start over, where would you buy and what type of property would you buy?

The next question comes from Kayla, who wants to know how to report rental income on your taxes when you also live in the property. Are there any tax implications to be aware of?

Claire is relocating to California, and is curious to know if she's better off renting, or if she should max out her mortgage loan potential and buy a house that has a detached garage she can rent out to cover the increased mortgage.

Our next question comes from a listener with a paid-off rental who also has an Airbnb on her property. Nice! But, she has a $160,000 mortgage on her own house. She has $30,000 in the bank and wants to know: should she put it toward her mortgage, or use it to buy another property?

Our last question comes from Katie, who's eyeing a vacation rental in one of her favorite destinations. Does it sound like a good idea? And how can she estimate the cap rate (and her expenses) without a ton of information on the property?

We dive into these topics - and more - in today's episode. Enjoy!

To be included in Paula's Real Estate Course, click on the link in the show notes at http://affordanything.com/episode69

 

#068: Ask Paula - How to Invest Your Tax Refund, Save for College, and Avoid Massive Pitfalls  

My buddy Joe Saul-Sehy, host of the Stacking Benjamins podcast, joins me this week for another episode of "Ask Paula (and Joe!)" -- in which we workshop through questions that came from you, the Afford Anything community.

This week, Joe and I answer questions such as:

- I'm getting a $2,500 tax refund. Should I use this to invest, repay debt, or upgrade my home?
- I'm debt-free (except a reasonable mortgage) and maxing out my retirement accounts. What else should I be doing?
- I've started savings accounts for my two daughters, ages 3 and 6, so that they can access this money for big-ticket expenses when they're young adults. How should I invest this money?
- I'm interested in socially responsible investing. What specific funds should I look at?
- What's your opinion of high-dividend ETFs?
- What's your opinion of using whole life insurance as a 'creative' wealth-building strategy?

Enjoy!

-- Paula

P.S. If you'd like to ask a question for a future episode, leave a voicemail here.

#067: Ask Paula -- How to Care for Aging Parents, Buy a Car, and Organize a Business  

It's the first Monday of the month, which means it's time to answer questions from the Afford Anything community.

Our first question comes from a caller in a tough spot: Her mother-in-law is 66 years old. She's divorced, holds no retirement savings, and will only receive a tiny Social Security check. Her health is worsening, and she'll need to step away from work shortly. The caller wants to help her mother-in-law ... but how?

Our second question comes from Erin, a listener who's moving to California and needs to buy a car. She's new to the world of car-buying, and wants to know how she can get a great deal. What red flags should she watch out for?

Our third question comes from Hong, a 32-year-old mother of two who's interested in early retirement. She's thinking about saving money in a 401k until she maximizes her employer match, then switching to a Traditional IRA, and then switching back to saving in her 401k. Should she pursue this strategy? How can she maximize her tax advantages?

Our fourth question comes from John, who wants to know what I've learned from building an online course. He's contemplating creating one of his own.

Finally, I answer a question from Adalia, who wants to know if my online business and real estate business are structured as part of the same company, or operated as two separate entities. She asks if I can talk about how I made my business structuring decisions.

Have a question? Record it from your smartphone or computer. Go to http://affordanything.com/voicemail and leave a short message.

#066: Take Radical Responsibility for Your Life -- a Breakfast Chat with 26-Year-Old Millionaire Emma Pattee  

You know that rare moment when you meet someone with whom you connect *instantly*?

I felt that way when I met Emma Pattee, the 26-year-old millionaire and mini-real-estate-mogul who joins me on today's episode.

Emma and I share similar stories: we're both young female artists and entrepreneurs who figured out that wealth is a tool for creating the freedom that allows us to live on our own terms.

We both hustled harder than words can describe, living and breathing our commitment to breaking free from the trading-time-for-money cycle. We refused to accept the defaults that were handed to us. We viewed our investments as a way to create a more sustainable, meaningful life.

We rejected the limiting belief that a creative, meaningful life is somehow more 'pure' when it's lived in scarcity and deprivation. We embraced abundance. We asked "how can I create this?" We viewed every problem as inherently solve-able. We took responsibility for everything that crossed our paths.

Most critically, we decided that we weren't going to let any excuses hold us back.

We accepted radical responsibility for our own lives. We wouldn't allow ourselves to get trapped in a victim mindset, a comparison ("they-have-it-easier!") mindset, or an external-factors-are-holding-me-back mindset.

I rarely meet people who have committed to the inner work of internalizing these lessons. Emma is one of those rare people.

And that's why I'm excited to share our breakfast conversation with you.

I hope you enjoy this episode. And to paraphrase Seth Godin, more importantly, I hope this episode spurs you to take action.

Lots of love,
Paula

 

#065: How to Improve Your Relationship with Money  

I've always taken an approach to life that puts my freedom first.  My one and only 9-5 lasted only 3 years. Since then I've been self employed and built financial independence through rental real estate.

And while most see this podcast as being about money, it's really about a philosophy around life that is disguised as a finance blog and podcast.

Today I get real about this whole money thing. I hope you follow along the mental journey with me.

#064: Michael Kitces -- Your Mind is More Powerful Than Money  

Your potential is unlimited.

I realize that's the type of cliche that you normally find embossed in cursive script on the side of coffee mugs. It's trite and impersonal and overused.

But it's also true.

Your potential to earn and grow is limitless. But it's not free. You need to invest time and money into developing your potential.

Your time and money are limited, though, and you could also choose to invest in market-based assets, like stocks, bonds or real estate.

How do you make that decision?

Are you going to invest in yourself? Or the market? Or both -- and in what proportion?

How do you make these choices?

When you're buying a few shares of a total stock market index fund, you have a generally clear idea of what you're getting. You've seen the historic returns. You can predict, to a reasonable degree, the consequences of that investment over a multi-decade span.

But when you're investing in yourself -- e.g. learning a new skill, developing a side business, or taking a class -- you can't rely on the same formulas or models. There's no chart mapping the historic returns.

Financial capital is easy to track. Human capital is harder to quantify -- but potentially more rewarding.

Can you compare investing in assets vs. investing in yourself?

How can you make a smarter decision about your own path?

On today's podcast, I talk to Michael Kitces -- a financial planner, entrepreneur, and all-around smart guy -- about this million-dollar decision.

Find more helpful information at http://affordanything.com/episode64

 

#63: Ask Paula - Travel vs. Passive Income, Proximity in Real Estate Investing and Selling Off Properties  

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?

#062: Ask Paula - Q&A Featuring Special Guest Joe Saul-Sehy from Stacking Benjamins  

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!

#061: John Lee Dumas - From Small-Town Kid to Multimillionaire Entrepreneur  

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

#060: Andrew Hallam (Part Two): The Nine Rules of Wealth You Should Have Learned in School  

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.

#059: Andrew Hallam: How I Became a Millionaire on a Teacher's Salary  

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

#058: Ask Paula -- Death, Taxes, Crushing Debt and Moving in with Mom  

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

#057: Philip Taylor - Top 5 Financial Lessons PT Learned in the Past Decade  

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

#056: Billy Murphy - Expected Value, or What Professional Poker Taught Me About Running a 7-Figure Business  
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

#055: From Money Moron to Millionaire, with Scott Alan Turner  

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

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