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EP8: Big Rocks & Making Money Personal With Desirae Odjick of Half Banked

Episode #8: BigRocks & Making Money Personal with Desirae Odjick of Half Banked




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Desirae-OdjickBio: This one time, Desirae Odjick decided to try saving half of her income on whim, and decided to write about it on the internet – because why not, right? That’s how her blog, Half Banked, got started, and these days she focuses more on helping other millennials achieve the financial goals that really matter to them (without giving up lattes, obviously). She’s the creator of the Quick Budget Fix, a freelance writer, and a certifiable crazy dog lady.

Your Mom Was Probably Right @Half_Banked Click To Tweet

Show Description: Desirae and I discuss Big Rocks, and other prioritization concerns with money, and other important mind games with money that are essential for millennials to know. We then translate the big rocks into actual skills we can utilize to be awesome with money!

ShowNotes:

Big Rocks

  • 1:07- Budget: there’s a better word
  • 1:45 – Big Rocks: The Key of a Natural Budget
  • 2:45 – Time Budgets: Taking out the Big Rocks
  • 3:25 – Our Roles: Identifying our Big Rocks
  • 4:20 – Living the Good Life : The purpose of our Roles
  • 5:00 – connecting our Money to our Roles

Make It Personal

  • 6:10 – Investing in ourselves
  • 6:50 – The Power of Books : Role in Role Improvement
  • 8:50 – How Desirae works with people
  • 9:20 – Desirae’s free budgeting course
  • 10:00 – Cash Flow: more than investing and accounting
  • 11:10 – Commitments role in controlling time
  • 12:55 – Accountability partners
  • 13:15 – Dollars should Vote for your dreams
  • 13:30 – Using money Intentionally

Getting to the Goals

  • 14:00 – Desirae shares how she set the goal to save 50%, and started halfbanked
  • 14:30 – finding creative ways to reach financial goals
  • 15:15 – Books: Just implement one idea, power (article below)
  • 16:00 – The Psychological impact of reaching and setting goals
  • 17:22 – When you “Fail” : Conscientious Goals
  • 18:50 – Priorities: putting goals in perspective
  • 20:25 – The most fluid part of Desirae’s budget goals : Not what you’d expect
  • 22:00 – How FinancialGinger was born

Making Money

  • 23:35 – 2 ways to fix the budget -IWT
  • 24:45 – Desirae shares skills she’s developed to make her money
  • 26:00 – RPF – Entrepreneurial mindset podcast (Link below)
  • 27:15 – Desirae’s Resource Library (Link)
  • 27:45 – Basic calculator: What’s too much to spend on housing, food, etc
  • 29:45 – You Mom Was Probably Right – Money Maxim

Money Maxim

Your Mom Was Probably Right @Half_Banked Click To Tweet

28-Desirae-ep8 -

Action Items

  • Take time to identify your Roles by Spiritual, Mental/Educational, Physical, Social Relationships. What are the Big Rocks to do in these roles each week?
  • Identify Monetary costs associated with your Roles
  • Consider where money is going that may not align with your Roles, Needs, or most important wants
  • Consider a role commitment you need and share it with your social media tag @FinancialGinger and @Half_Banked! – We can follow up with you!
  • Get an Accountability partner for one goal you have. Help them with one goal they have! You’re 70% more likely to work on and achieve (a realistic goal) with an accountability partner.
  • What is a skill you have that people would be willing to pay for? Consider implementing or starting that business you’ve been thinking about.
  • When you “fail” your next goal – consider why you failed it, maybe the reason was good.
Live Like No-One Else Does Now, So You Can Live Like No-One Else Can Later Click To Tweet

Contacts and Links from the Show

How Desirae Cut Books from her budget

Desirae’s Resource Library

Teaching your 8-year old to earn with job skills – Radical Personal Finance

Connect with Desirae

Twitter: @Half_Banked –  Facebook: halfbanked facebook – Blog: HalfBanked.com

If you made and extra $100 a month, you wouldn’t have to cut out $100 @Ramit Click To Tweet
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ep7: Behavior and Little Wins With TipYourself

Episode 7: Behavior and Little Wins with Mike Lenz




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#TipYourself #YouEarnedIt

Bio: Mike is a life long Chicagoan and cofounder of Tip Yourself. He believes positivity and small shifts in habit can be life changing. #TipYourself #YouEarnedit

“One of the main inspirations behind Tip Yourself is our belief that money is more than just dollars and cents. The true challenges with personal finance are much more about emotions and habits than they are about spreadsheets, numbers and graphs. “ – Mike Lenz

 

Show Description:

Mike and I discuss the importance of personal behaviour, and ways to increase optimism, feel good, and tackling keystone habits and little milestones to enjoy life and be happy now in your finances.

ShowNotes:

  • Mike’s Technology and Behavioral Psychology Background
  • How large the issue of Personal Finance Is and some Stats
  • Birth of Tip Yourself – Money Mindset and Emotion
  • The Role of Recognizing Success
  • 5:35 Changing the Negative Mindset of “Savings”
  • 7:15 How Tip Yourself Changes Mindsets
  • 8:43 How Real People Use TipYourself
  • 10:00 TipYourself “The Daily dose of ‘Feel Good’” – The Community
  • 11:25 Turning Away Daily Negativity through tipping yourself
  • 12:05 Its Easier To Act When You Recognize Things Aren’t Easy
  • 13:30 Huge Goals: Little Milestones
  • 14:55 College Kids Application
  • 16:25 Keystone Habits
  • 18:05 Everything is Small
  • 18:45 Happiness in the moment
  • 20:10 Guilt Free Tips : #YouEarnedIt
  • 21:30 Not Always About Money, Changing Behavior with Tips

Money Maxim

Tip Yourself

“I’ve never met anyone who struggles to save money because they haven’t found the right spreadsheet yet” – Mike Lenz

“Life is Lived in Little Moments” – Mike Lenz

Action Items

  • Get a Tip Yourself account and tip yourself 5 times! (for good reasons of course!)
  • Next Time You Get Down – Recognize That What You Want to Do Is Hard. It helps
  • Find 5 positive moments of success this week and give yourself a reward for recognizing them
  • Develop a list of your Keystone Habits (16:25), find one thing to add
  • Take the High Energy Moment of right now and make 1 positive change you’ve been telling yourself to do for a while

Contacts and Links from the Show

TipYourself.com – Iphone , Android soon!

Mike@TipYourself.com – Questions, Habits, How it works, How you use Tip Yourself

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Ep6-On Doing What’s Right For You – BurkeDoes

Episode #6: On Doing What’s Best For You – with BurkeDoes




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About my guest: Emilie is the brains behind Burke Does, inspiring millennial women to live financially, physically, and professionally fit lives. She writes about overcoming debt while balancing trying to eat healthy, stay fit, and have a little fun along the way.

Description: Emilie – BurkeDoes.com and Jacob – FinancialGinger.com talk about the overlapping areas of our lives, the power of self-improvement, and focusing on our person goals and values to create power in acting to take control of our lives both in a financial sense, and an achieve your dreams sense.

Thanks Emilie for being on the show! It was wonderful to have you!

ShowNotes:

  • Finance isn’t just Finance, it influences every part of our life.
  • The Crossfit Open – the practicality of overlapping fitness, finance, and work life.
  • Life Doesn’t Fit Into Different Silos, It Blends Together
  • The Power of Reading in Self-Development
  • Overlapping Our Effort – Overall Wellness
  • Key to Achieving: Effort and Personal Values
  • Changing Values and Goals Over Time – Ecclesiastes 3:1 (this was running through my mind the entire episode)
  • Paycheck Woes – Problems That Could Be Avoided
  • Actively Working Towards Our Goals – MyToDoLists.me
  • Goals Forgotten Aren’t Important (Or Else You Would Have Remembered)
  • What You Value, You Are Already Spending Time and Money On
  • Why We Identify Our Values
  • What Your Spending Says About You

Action Items:

  • Consider your life goals and write them down
    • Identify your values.
    • Figure out some actions you can take towards your goals
    • Develop a method of tracking progress of goals
  • Take time each period (weekly, or monthly, or quarterly) to review goals and adjust accordingly (less ye forgot)
  • With your current goals and values, consider do they align? Do your goals match your values
  • Does your spending match and correlate with your values and goals?
  • Set a recurring calendar appointment with yourself (weekly, monthly, or quarterly) to review your goals, values, and spending habits, to ensure they align and to set new goals.

Maxim

Sources

Emilie’s Crossfit experience

CultivateWhatMatters – Power Sheets ( examples of her sheets available on her store)

Mitsubishi Mirage (Best Car Ever)

Grit – Angela Duckworth

BurkeDoes.com/as-seen-on

Emilie’s To Do Lists – mytodolists.me – See what Emilie’s goals are each week

Facebook – facebook.com/burkedoes Twitter – twitter.com/burkedoes Instagram – instagram.com/burkedoes Pinterest – pinterest.com/burkedoes

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Ep5: HighFivingDollars with Sarah Li Cain




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Episode #5: HighFivingDollars with Sarah Li Cain

Sarah Li Cain PhotoI had the wonderful opportunity to talk with Sarah Li Cain from HighFivingDollars.com

I love how she explains herself as a “Money Storyteller”. Storytelling runs in my blood with my mother starting the Utah Liars Contest 10 years ago, and me spending a lot of time volunteering for the Utah Timpanogas Storytelling Festival.

Hear Sarah’s story about break ups and $9000 debt, and learn some ways to be happy with your finances while working on improving your situation. Eventually, Sarah even paid for a car in cash!

Highlights

  • Sarah’s holistic approach to talking about money
  • Sarah’s adventure to Australia, which yielded a lot of money education including a pretty messy break up.
  • Dealing with self-shame about debt (and life!) in a positive way
  • Rebuilding Financial Independence after a rough patch
  • How relationships that are bad aren’t solved by money
  • How emotions affect our finances: Ego
  • How shame and guilt about bad money choices can be positive
  • About Sarah’s book “The Authentic Budget” – using your personality and values to manage your money your way.
  • A Personal Visions’ role in controlling your finances
  • Why should I budget?
  • Banishing Financial ‘Frenemies’: It’s as simple as saying “No”
  • The role of boundaries and setting expectations with others about your money

Money Maxim

Sarah Li Cain

  • Money is neutral. It’s what we do with it that matters.

Action Items

Links and Contact info from the show

HighFivingDollars.com

Ask Sarah Anything and get a Youtube answer!

Get on Sarah’s VIP list for info about her books and new ones that come out!

Her brand-new book on Amazon!

 

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Ep4: Saving Success When Young with Justin Taylor



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Episode 4: Saving and Investing while young with Justin Taylor

Justin TaylorToday I talked Saving-Sherpa, Justin Taylor!

Listen to Justin talk about military life, a frugal lifestyle and how he now saves 70% of his income! He served in the Air Force and now is an engineer for the military. Listen about how he walked into the military for school, and ended up being financially independent from a young age, from his dad’s offer to raise a cow if Justin purchased it for profit, to being paid to go to school!

Justin’s budget is in-depth and powerful for taking control of your money and spending/saving.

Highlights

  • Growing up in a low-income area and how Justin learned frugality
  • How financial concepts like compound interest effected Justin’s money habits
  • How financial education in High School could dramatically help low-income areas
  • The role of cheap robo advisers in getting younger people started in investing
  • Why investing any amount on any day in the last 85 years would yield profit
  • The power of an in-depth budget
  • How to practice with stock trading (MarketWatch.com)
  • Don’t buy a huge house and fancy car to celebrate your first job after graduating
  • The average savings for someone that’s about to retire
  • The power of set it and forget it. (Dollar Cost Averaging)
  • How saving and having a good life aren’t mutually exclusive
  • What is a Sherpa?
  • Make More Money Does Not = Spend More Money (No Lifestyle Creep!)
  • Extracting real value from every dollar you spend.

Money Maxim

Saving Sherpa Quote

Financial and Physical Health are similar. Show me where your money is going, Show me where your caloric intake is. Most people can’t tell you either.  If you take the time to see where the money is going, you can plug the holes in your financial boat.

Action Items

  • It may not be reasonable to start investing now as a college kid, but if you can, do it! (I opened my first Betterment account March 23rd, 2017! You can too! If you have questions reach out to me on Facebook or on my question page and I’d love to help)
  • If you can’t invest now because of being in school still, create a game plan for when you’ll start investing and how
  • Track your income and outflow of money. If you know where every penny came and went, you’re empowered.

 

Pro Action Items

Download Saving-Sherpa excel spreadsheet to track all your income and expenses and track it so you know where your money goes.

Contact Info

www.Saving-Sherpa.com

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Ep3: Get Your Finances Together – Erin Lowry

Ep3: Get Your Finances Together – Erin Lowry



Erin LowryToday I talked with Erin Lowry, Author of Broke Millennial Blog. Erin shares the money lessons of her childhood. Thinking that it was normal, Erin went into the world and realized how much of a stress money was for those around her. Broke Millennial came about as a solution.

Erin also has a brand new book that officially releases next week! Broke Millennial: Stop Scrapping By And Get Your Financial Life Together!

Highlights

  • Erin’s money story
  • Living in NYC for a year on $23,000
  • Where Broke Millennial blog came from
  • The Stress of Money in Relationships
  • What’s inside “Stop Scrapping By And Get Your Financial Life Together”?
  • Seeing what you value, based on your spending
  • Taco Tuesdays are important (Tangent haha)
  • Ways parents can teach children money skills through proactive engagement and setting expectations
  • Proper Goal Setting for Finances
  • Accountability Partners and Methods
  • Behavioural Finance: Multi-Banking benefits
  • Common Millennial Money Mistakes
  • The power of habit in saving and investing

Money Maxim

Erin Lowry - BrokeMillennial
“What You Spend Your Money On Shows What You Actually Value, Not What You Think You Value” – Erin

Action Items

Read Erin’s new book! Here’s a link  (special bonus chapter if you buy it before May 2nd!)

Open a second bank account and put savings into that, so you can’t see it! (makes it harder to spend your savings)

Check your bank/credit card statements and see what you truly value. What does your spending say about what you value?

Parents: talk with your children about money and how it works! Teach them principles of finance so they can have healthy relationships with their money

Parents: give your children some skin in the game. If they want to buy a new game, or get on soccer team, make them pay for part of it. Give them ways to make money, or guide them to achieve, but hold them responsible.

Couples: Be open with your spouse about all your finances. Money Fidelity is important to have trust in each other.

Start saving now! If you’re a college kid, start with $5 dollars each month, because of the power of habit.

Contact and Links from Show

Erin’s new book or buy it at barnes and noble or you can see it on her website

Send proof of purchase to info@brokemillennial.com for a free bonus chapter (purchase before May 2nd!) amazon or Barnes and Noble

BrokeMillennial.com

See Erin online at Facebook Twitter
Check out this episode!

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Ep2: Budgets with AskAllea

Episode #2: Budgets with AskAllea



AskAlleaToday I talk with Allea about Budgeting and some tips for creating and acting upon good budgets

Allea is a huge fan of budgeting, minimalism, and works as a financial coach! Yes its Allea  (pronounced like Allie or Aly) She works with a lot of millennials to make proactive plans for right when graduating college and moving into their first jobs. Allea has the skill from helping so many of her peers already create action plans for finances right after school.

She thought, “How can I help people transition into financial adulthood” and AskAllea was born. It was made to reduce and make finances simple in a world of heavy duty information that is hard to discern. Let alone garbage and untrue information being out there in the internets. Her proven process that’s been trial driven on friends and colleagues has become a powerful process for empowering those who Allea works with to be in control of their money so they can put it towards what they want.

It seems that Allea and I both got in Car Accidents this January. We both have gone through learning curves in budgeting and both certainly have had issues of our own and made mistakes. No-ones perfect, but we can all at least be adults and learn how to handle money well. So enjoy!

Highlights:

  • How Allea organized a friend’s budget over 3 intense hours of work, how you can too!
  • Why a budget can empower you to spend money how you want. Even if it’s a $200 Taylor Swift concert ticket
  • Why budgeting for the responsible and boring things allows you to not be stressed when spending the other money on what you want your money to go on
  • What is Budgeting “gravy” and how to stay healthy in budgets
  • The importance of Emergency Funds
  • The emotional aspect of money and how to fix those nerves
  • The importance of saving for a rainy day now (automated savings)
  • Why everyone needs a coach or financial accountability partner like AskAllea or FinancialGinger
  • The role of emotions in bad financial decisions
  • How you can pay off debt, and still live your life!
  • Allea’s biggest financial success: (No spoilers! listen at 15:00)
  • Why talking about money is important for kids and couples
  • Average debts for student loans and credit cards are astounding!
  • Why everyone needs to learn skills in finance
  • The snowflake method of paying off debt

Money Maxim

Allea Grummert Maxim

“Living Within Your Means Doesn’t Have To Suck” – Allea

Action Items:

Organize your finances into a budget. (you can work with Allea or Me if you like)

Have an accountability partner.

Build an Emergency Fund, start with building up to 1 full paycheck, make a goal and plan to get to 3 months of spending.

Know it takes time to improve, and it’s okay to live life and have fun while working on debt.

It’s okay to say “I don’t know” and to get a coach to help.

Don’t call Allea “Ah-lee-uh” like Jacob did.

 

—————–

If you want to work with Allea you can visit her at AskAllea.com and visit her coaching page! She has a new 17 page guide the “Real Life Money Guide and explanations of what they are, with some sass and fun. You can also ask her your own question that she will answer!

Find her on Twitter at AskAllea and Facebook at AskAllea and Pinterest

Get the starter homework and then sit down to make a beautiful organized budget.
Check out this episode!

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Ep1:Health Savings Accounts with Jackie Koski

Episode #1: Health Savings Accounts with Jackie Koski



Dream of LiteracyToday I talked with MoneyLetters2.com head Jackie Koski about Health Savings Accounts (HSA’s)! She wrote a wonderful book called Money Letters to my daughter. Why? Because most schools in the US don’t require students to take personal finance courses. As she wrote, many schools and groups became interested in what she taught her daughter. She ended up giving lectures in high schools and in the community of South Carolina. Her wisdom and keen eye for detail in finance speaks for itself when you listen to her. Listen for her story in collecting $2 bills, and also the power of Health Savings Accounts!

Highlights

Most schools don’t require any form of finance! It’s important to get some sort of Financial Literacy in during school if you can!
Jackie’s $2 bill collection, over 1600 $2 bills!
What an HSA account is and how It’s used
HSA vs FSA Triple Tax Benefits of HSA accounts. (Now, Growing, and Later)
How HSA’s can help us prepare for common expenses in retirement
Jackie shares how much her accounts have grown
Things not to with an HSA account
HSA account hacks
How to write off HSA accounts from taxes
Don’t be scared of health care and big acronyms
HSA’s are relatively new, only been around about 10 years
Visiting doctors and labelling doctors’ visits for proper HSA coverage

Money Maxim

Maxim 27 - Jackie Koski

  • We measure everything else, but we don’t measure how much we know about money, something that everyone will deal with. Learn something new each day.

Action Items

  • Open an HSA account! (which requires a Qualified High Deductible health insurance, it may not be right for everyone!)
  • Read this article from Mad Fientest about HSA’s
  • Keep a file system of all medical receipts that you incur after opening an HSA account. So, you can pay yourself from your HSA account later if needed. (or don’t and let that money grow)
  • Whenever possible ask medical professionals to label your visits as “routine visits”
  • Share this episode with someone who could benefit from an HSA account.

Contact Info

Jackie Koski works with groups and schools to increase financial literacy in a fun enjoyable yet simple matter. She wrote a book that can be found here all about how she taught her daughter about money. She is enthusiastic and extremely knowledgeable.

www.Moneyletters2.com is her website to connect with her!

Facebook LinkedIn Twitter @MoneyLetters2

Correction: When speaking of Vanguard I spoke incorrectly, Their math ends up being 18% 401(k) not 28%. Pardon!
Check out this episode!

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The Basic Financial Plan

Basic Plan

A frequent question that people ask their one financial friend all the time is, “What should I expect when…” and the next bit is usually the part about getting a new job, or paying for a house, or what a good interest rate looks like for a car. Sometimes these questions are about saving for retirement, what a realistic return is for their 401(k), and how they should prepare to retire. Occasionally the question is “why is it important that…” or “Do I really need…” of course the answer is usually yes.

“Yes if you save younger it’ll make it so you can retire easier”, “Yes, Life Insurance is beneficial for most people who have dependents or debt like a mortgage”. The fact that you’re asking, is a sign you have a general idea of what you should be doing.

I figured I’d try to compile a bunch of basic principles that will get any individual to retirement in a relatively save and aware way. The purpose here is to help you set your expectations of what you need to do and understand in order to have enough money to one day be able to say, “You know what? I don’t need a job anymore, and I can live the rest of my life off of my own money.”

 

There are three basic parts of our financial life: Saving, Investing, and Diversifying.

First: Saving

Everyone hears a ton about saving, so I’m not going to hash why you should save any more. Just a few stats. The average person that should retire, (I.e. is 65+ years of age), only has about $80,000 according to Dr. Craig Israeleson of UVU. The Motley Fool recently found numbers could be potentially as high as $148,000 for those between 65 and 75.

Why does that matter to you as a 20-30 year-old? Here’s why, those people that can’t retire, they are holding your jobs. Once they retire, everyone down the line can start moving up.

The amount you save will directly relate to how much money you have for retirement. Many experts recommend saving 10% of your income, Dr. Craig Israelson, who performs research and analysis on portfolio theory, and investment returns suggested in a lecture at UVU that many millennials should adopt a rate of 15% of savings for retirement. Once you graduate and get that first job, immediately start saving 15% of every dollar you earn for retirement, and according to the experts, you’ll be very much secure for retirement.

Second: Investing

Being a Millionaire has nothing to do with income, but everything to do with Net Worth. Think about how time affects the value of money. Its been exhaustively said, so you can just google it, but the difference between the same $5,000 invested at the age of 25 and invested at 50 when you’re 65 is dramatic and exponential.

Consider a Crockpot. Have you ever gone to church on a beautiful Sunday morning, come back in the afternoon, and decided, “I want a nice roast and potatoes for dinner” then set the crock pot at 5pm for dinner at 6?

If you have, you should seriously reconsider your dining experiences. Waiting until “Later” to save if you’re not in school, is the same as setting the crock pot a-cookin’ after church, instead of the morning of, so it can simmer and soak in goodness all day.

Investing: I’m sold, but WHERE?

This is where everyone says, “Jacob, you’ve sold me on this. Where do I put my money?”

Betterment is an amazing place to invest your money. Acorns isn’t half bad either. Wealthfront is a newer online investment site that utilizes algorithms, often called a robo-advisor(LINK TO 7 TYPES OF INVESTMENT ADVISORS), and your risk to make your money grow too, and its free for portfolios smaller than $15,000. It’s also not hard to go directly through a major company like Schwab, Fidelity, or VanGuard.

Part of your portfolio (your money for retirement), will be in your 401(k) at work. You’d better be matching that sucker to 100% of the matching contribution, because if not, that’s free money you’re missing out on. Make sure the limit of up to $5,500 a year beyond your 401(k) is going into an IRA with whatever advisor you’re using, because that can create some tax savings. Then, any above that can go into either a personal brokerage account through your investing institution or other more complex retirement accounts you can work with a professional on. (The secret is to get started).

Third: Diversify

Here is where I’m going to teach you some amazing truths about investing. If you’re invested in 10 different things and they are all going up by exactly 6% a year. There is some serious issues. That means all of your investments are perfectly correlated, which means if they drop one year by 40% (cough 2008) then they are all dropping. A good portfolio has uncorrelated assets. Meaning that at least part of the time, when one is going up, another will be going down. Some parts of the global economy will be having rough weeks or days or years, while others have awesome times, then 5 years down the road it’ll switch. Because the market is unpredictable, meaning that it’s impossible to know exactly what will happen, a diversified portfolio that has a little bit of money in all types of markets is proven to generally outperform any one specific investment type.

Three Analogies: Baseball, Salsa, and Cereal

Imagine that stocks are like baseball players. If one stock bats at .365 and another bats at .127 but only hits home runs, you want a little bit on both players! According to portfolio theory, the more batters you have, the higher your average becomes, while reducing variance. Stocks bat at about .700 and bonds bat at about .960. Enough to be in the hall of fame for any baseball player in the history of ever.

So, what does this mean? It means you should put money in stocks, put some in bonds, put some in Mutual Funds that use active aggressive algorithms and research to try to find opportune moments to buy and sell stocks to make you money, use some passive ETFS that just automatically balance 50 or 100 stocks in a particular category like large healthcare companies, or medium growth companies that pay dividends.

Imagine this investing like making Salsa. If you invest in the S&P 500, sure, you have some diversity, but you just purchased 500 different types of tomatoes. Of course, you can’t invest in the S&P500 but you can invest in ETFs and mutual funds that invest in it. So, if you invest in some large cap stocks for your tomatoes, then you buy some bonds for your onions, purchase some commodities for your cilantro, and so on and so forth, you’re going to be making a good salsa.

In fact, experts have shown that the recipe (allocation) of your salsa (investments) accounts for 94% of the deliciousness (returns) in them. Meanwhile, the ingredients (actual funds and investments) only account for less than 6% of the taste (return). Using a great recipe for salsa makes better salsa then just getting good ingredients, but having an awful recipe. If you have perfect ingredients, but the wrong recipe? You’re not even making salsa any more.

Many people have told me, “I’m invested in a mutual fund, I’m diversified”, or “I’m invested in an ETF” or “Target-date Fund”. Well, yes, this is diversity, but it’s the 200 types of tomatoes diversity. Think about Cereal boxes. Do you remember those funny boxes that had 8 miniature boxes inside of them? This is how you should think about a mutual fund. Each box of cereal is a specific investment, the Mutual Fund, or ETF, or Target Date Fund, is the whole package. It choose those 8 investments and said, “here’s a good deal”. If you choose a Mutual Fund for 12 different asset classes: Large Stock, Small Stock, Mid stock, non-us stock, emerging markets, real estate, resources, commodities, US bonds, TIPS, non-US bonds, and Cash, you’d have a pretty awesome set of cereals.

You will have created a beautiful portfolio, a fund of funds of funds. That is a recipe for success, that now only needs your savings added.

 

Remember your basic financial plan.

  • Save (now)
  • Invest (all of it above emergency funds and short term purchase plans)
  • Diversify (so 2008 doesn’t get you)
  • Retire (at 45, okay maybe not, but still retire)

You’ll thank yourself later (about the retiring side of it, and the stressful side of it, and the peaceful side of it)

 

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Why you should NEVER buy an RV in retirement

“When I retire, I’m gonna buy an RV and travel the country”.

This may be great and all, but the year you turn 65 (or retire, pardon if I offend those who retire at 45 or 70) $60-80 thousand dollars could be a bit much.

I’m going to show you why buying an RV in retirement is a poor choice for most people.

Let Me Explain

Most motor homes people purchase cost somewhere between $50,000 and $300,000. This cost can be significant especially to the future value of your money. This graph is an example.

This is using a low-end camper probably used at about $60,000 dollars. ( https://www.rvtrader.com/dealers/American-River-RV—Sacramento-3018028/listing/2017-Coachmen-Freelander-26RS-119765660 ) over 30 years of retirement, that money can become quite substantial.

Now, Let’s consider vacations. Using “Get Away Guru’s” and other exciting promotionals. It’s not hard to find vacations. If you could budget $10-15,000 in travel a year during retirement that would be great! Maybe your goals are higher, but here’s the deal. In retirement you can travel a lot easier and on a moment’s notice. If you suddenly leave for 2 weeks in the middle of January to the southern hemisphere for warmer weather on a jungle safari, or to travel New Zealand, it won’t be as big of an issue as a family with kids going to school.

The mobility of being retired makes it easier to find travel opportunities at discounted prices.

Figure out what you want to do with retirement. Are you going to do several week-end trips, or do you want to do a 2-week expedition every year? How about several 4 day weekends at national parks around the country? There are so many options. Remember to consider that most people in retirement have a little bit less energy than a 30-year-old.

This is only assuming $80,000 of an investment in an RV type home. If you’re dropping $200,000 on an RV the numbers will only be bigger. With $200,000 the income at 6% being $12,000 a year.

How much vacation and travel can you get out of $5000 a year?

Remember, owning an RV doesn’t mean costs are gone, that’s just the cost of buying it. You’re still spending other money from retirement on gas, maintenance, RV parking, licencing, registration, and more.

Here are three articles that give some awesome consideration to costs, and lifestyle of owning an RV.

Consider the Costs of an RV- https://www.budgetsimple.com/blog/rvs-timeshares-and-vacation-homes-a-good-idea/

More thoughts on the expenses behind an RV – http://livingstingy.blogspot.com/2011/05/future-of-rving.html

Is an RV lifestyle right for you? – http://wheelingit.us/2012/10/17/the-darker-side-of-fulltime-rving-5-thoughts-to-ponder-before-making-the-leap/

My advice is If you are going to buy an RV in retirement to take trips in multiple times a year, save the money instead and use it on hotels and airfare. The bang for your buck is much stronger there, plus you aren’t putting your limited retirement savings into one of the fastest depreciating things you can. AAANND lets be honest, if you want to take an RV out for a couple of days, go rent one for one of those trips.

Ultimately it comes down to this: Keep it invested, the investment return is your play money in retirement.

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5 Ways to Take Dividends From Your Life Insurance Policy

Everyone at some point gets a Life Insurance policy. Why? Because if you die and you’re a parent, what is going to take care of your kids? If you have a spouse, what will keep your spouse running?

But I’m not here to argue whether you should or shouldn’t have life insurance.

I’m also not hear to deep dive insurance or explain the process of buying insurance.

This is about what you do when they ask you “How would you like to take your dividends?” My what? Aren’t dividends a stock thing? (Some maybe even asked, “What’s a dividend”?) To be brief: Dividends are the little extra bits a company pays to you for owning their stock. Some companies don’t give dividends because they reinvest earnings. Many life insurance policies pay dividends in some form, any policy that either invests in the market directly, or allows you to control the investments in the market will yield dividends.

There are 5 ways you can receive dividend payments. Here’s the simple way to remember: CRAPO

Cash

Reduces your basis and is not taxable. Basis is how much money you’ve put into the investment. If you’ve invested $2000 in a stock, and then sell it for $3000 later. You made $1000 dollars. Your basis is that $2000 you put in. With this option you’re reducing your basis by the amount paid out. This also has no tax consequences immediately.

Reduction of Premiums

This is just reducing your premiums. Premiums are how much you pay for your insurance contract. So, you can use the dividend money to make your expense a little less.

Accumulate Interest

With this option you basically keep the dividends invested. The insurance company keeps this money in the same account, but tracks its earning separately. The reason for this is that it’s taxable in the future. The rest of your invested money is still in that tax advantaged insurance.

Paid-Up Additions

Think of Paid-Up as “Paid-In-Full”. You utilize the dividends to add a tiny little bit of permanent insurance to your policy that you no longer pay premiums for. A lot of life insurances have options where you can convert your entire policy over to a permanent paid-up insurance. Of course, this reduces the amount of coverage, or money you get at death, due to the fact that you’re no longer paying into it.

One Year Term

Term insurance is a lot cheaper than Paid-Up insurance. This is when you use the dividends to buy term insurance that lasts one year then expires. The reason someone may do this is because they decide Paid-Up doesn’t add very much. If you look into the cost of permanent insurance compared to term insurance, you’ll see really quickly that term insurance pay-outs can be huge compared permanent insurance. The other real difference though, is term insurance expires. So, if you don’t pass away during the time, then it expires.

Most people usually go with Paid-Up additions, but depending on your situation you may choose another.

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7 Types of Financial Companies

There are 7 basic types of firms that provide financial assistance, support, guidance, education, investments, and solutions/products.

There are Registered Investment Advisors (RIA), Broker Dealers (B/D), Insurance Companies, Robo Advisors, Accounting firms, Tech Companies, and Discount Broker Dealers.

First we have our Registered Investment Advisors. These are, as a general rule, partnerships or smaller corporations that manage the overall financial situation of clients, and in some cases institutional investors as well. They must be registered with the Securities and Exchange Commission (SEC) for each individual state that they have clients in.  An RIA Financial Advisor will conduct information gathering, Risk tolerance, and spend time getting to know your goals and needs. Most of the time they also educate a client as to what the implications are of making different financial decisions. One of my favorite things about an RIA, is that many of them will be full service. They’ll help with investments, real estate, insurance, estate planning, power of attorneys, wills, and more. They may outsource part of it, or bring in an expert to do estate planning, etc. But they keep you aware of the broad scope of protecting, growing, and sheltering your money. You may not have heard of any of these, but here are some RIA’s: Geneva Advisors, HighTower Advisors, Mill Creek Capital Advisors, Ferguson Wellman Capital Management, Swan Global Investments, and True North Advisors.

Broker/ Dealers are those companies that are like The Wolf of Wall Street. I mean, except that fact that they aren’t awful money laundering devils. They call people to sell them financial products, usually in the form of stocks or bonds. Investment advice is given, and they range from small boutique firms to large commercial companies and investment banks. The difference between an RIA and a Broker/Dealer is a B/D historically purchases their own securities (stocks and bonds and other products) and then sells them to the customer, whereas an RIA buys securities on the client’s behalf. The Broker of a B/D is buying and selling on behalf of clients, the Dealer side is when the company trades their own securities. Examples of Broker/Dealers include Raymond James, Wells Fargo, AXA, Waddell & Reed, Voya, and Edward Jones

Insurance Companies usually deal with just that… Insurance! Northwestern Mutual, Geico, Allstate, State Farm, Progressive, Farmers, Liberty Mutual, and New York Life are a few examples. Most of the ones that have huge TV ads. There isn’t much else to say. These companies are very important, and having specialized skills in specific insurances can be very beneficial in reducing premiums and having quicker turnaround times when claims are made. Some RIA’s and B/D’s will have specific individuals/teams in their group that specialize in either selling insurance, or working with insurance companies to get your insurance. One thing I like is how an RIA can work with many insurance companies, whereas an agent for a specific company only sells that Insurance. Some insurance agents will be licensed with several companies and can sell you policies from different companies depending on your needs.

The way of the future is Robo-Advisors. The basic concept here is that you can break down risk tolerance and needs into numbers, and computers can then spit out information about what you should do, or you can authorize a computer to auto-invest and rebalance and work out your investments for you based on your information you give it. Very smart people back these up and as a result of mass users for one program it can be cheaper to use a Robo. Remember though, that holes are usually left, and Robo’s can only do so much.

Tech companies are companies that leverage tech with finance. Lending Club is an example of that. You add money that is utilized in creating loans that then pay you back as the person pays back lending club. Robinhood is a financial app that has free stock trades. Stripe is a payment taking company. Some finance companies create platforms for making trades like TDAmeritrade or TradeKing, (though some may be better classified as Robo-Advisors, depending on how they are used). Some create plateforms for financial planning, like MoneyGuidePro, or SilverTree, that allow you to maintain and track financial data and policies for insurance and estate documents all in one location. One company local to Utah is TradeWarrior, which can auto rebalance any portfolio while taking specific needs and illiquid assets into account.

Accounting Firms are our next stop. These are a finance tracking type of company for businesses and self-employed individuals. They may provide book keeping for paying employees, create budgets and financial statements for companies, and also deal with tax-returns. I suppose they are for everyone in the sense of tax-returns, many individuals go to accounting-firms for taxes, though some companies will specifically only do taxes. Beyond the actual tax returns, accounting firms can help consult on risk management and tax implications of certain operations.

The last of the seven is Discount Broker/Dealers. These are just really really low-cost Broker/Dealers. Think Fidelity, and Vanguard. Vanguard is the most notorious of all of these, as the regularly create huge market changes. Some of their funds will have expense ratios of 8 Bips, which to be simple is nearly three times cheaper than most funds to invest in.

Which ones you’ll want to work with depend on your needs, interests, comfort, and knowledge surrounding the individual companies. Many people want to lump all companies in one category as ‘good’ or ‘bad’ or ‘lazy’ or ‘smart’, but the truth is, there are losers and winners all around. You just have to find someone who is trust worthy, and has a good track record of helping people achieve their goals.