Listen Money Matters - Free your inner financial badass. This is not your father's boring personal finance show.

Tax loss harvesting is a term you’ve probably heard but don’t know what it means. It may seem obscure, but it’s a good weapon to have in your investing arsenal. So just what the f**k is tax loss harvesting? Dan Egan, the Director of Behavioral Finance at Betterment is joining us to talk about Tax Loss Harvesting. We discuss what it is, how it works and what sort of benefits it provides you as a long-term investor. Taxes Everywhere! You pay income tax of course, and there are various types of taxes you pay on your investments too. Capital Gains A capital gain is the difference between the price you paid for an asset and the higher price you sold it for. The IRS wants a cut off that profit, and they take it in the form of a capital gains tax. There are realized and unrealized capital gains. A gain is not realized until the asset is sold. The government wants their cut, but they also want you to be a long term investor. If you hold an investment for less than one year, it’s considered a short-term investment, and you will pay a higher tax rate, the same rate that your income is taxed at. Selling investments in the short term are considered a job in a way, and you’ve taxed accordingly. If you wait more than a year to sell, you will be taxed at a much lower rate, no more than 15%. That’s a substantial difference so be sure you take that into account when you’re deciding whether or not to sell. Dividends Dividends are investment income from owning stocks. It’s a share of a corporation’s profits that is paid to investors. You can do two things with those dividends, keep them and pay taxes on them or reinvest them by buying more shares in the company. Qualified dividends are taxed at the lower capital gains rate. Non-qualified dividends are being taxed at ordinary income tax rates. To be considered qualified, dividends have to meet specific criteria; they have to be issued by American corporations who trade publicly on the big exchanges like NASDAQ or the Dow Jones. Investors must adhere to specific rules too. They must own the dividend paying stock for no fewer than 60 days out of a 121 day period called the holding period. Dividends that don’t meet those standards are considered nonqualified. Depending on your tax bracket, qualified dividends are taxed at 0, 15, or 20%. The dividend income has to be included with your other sources of income to determine your bracket. Currently, the tax brackets are: 10%: Single filers earning less than $9,275 15%: Single filers earning from $9,275 to $37,650 25%: Single filers earning from $37,650 to $91,150 28%: Single filers earning from $91,150 to $190,150 33%: Single filers earning from $190,150 to $413,350 35%: Single filers earning from $413,350 to $415,050 39.6%: Single filers earning more than $415,050 Those in the 10-15% bracket are taxed at 0%. If you’re in the 25-35% bracket, you will be charged 15%, and if you’re in the above 35% bracket, you’re taxed at 20%. Non-qualified dividends can be taxed as much as 39.6%, depending on your income bracket. Medicare Surcharge The Medicare payroll tax is 2.9%. You pay 1.45% of your earned income which is deducted automatically from your paycheck, and your employer pays 1.45%. For high-income individuals, there is an additional tax called the Medicare surcharge, an additional 0.9% for those earning more than $200,000 per year. Before 2013, you didn’t have to pay Medicare tax on investment income from things like capital gains and dividends. Since 2013, however, you could owe a 3.8% Medicare tax on some of or all your net investment income. The amount is based on whichever is lower, the total of your net investments or the amount over $200,000

While weddings are a wonderful way to celebrate the love between two people, it can come with a hefty price tag. But it doesn’t have to. You can have the wedding you want without going broke. I did. Here’s how beautiful party without blowing your wedding budget. It is important to bear in mind during the whole process that a wedding and marriage are two separate things. What is crucial on your wedding day is you, the one you love, a marriage officiant and your wedding license – everything else is extra. Your wedding will last a few hours, but your marriage is for a lifetime. With that said, who doesn’t want to have a party and share that special day with all the people they care about? There is a lot of planning and money that comes along with it, and it can quickly become out of control. Who is Paying? Your wedding is probably the priciest party you’ll ever throw in your life. As of 2015, the average wedding in the U.S. ran about $32,000. Of course, it depends on where you live and what kind of wedding you want to have. Last year in NYC, the average wedding cost $86,000. Yup, that’s a down payment for a home. Who is dishing out that kind of money? In the past, it was traditional for the bride’s parents to pay for the wedding, but lately, more couples are paying for their wedding giving them control over how and where the money is spent. Couples paying for everything themselves have maximum flexibility. Just like you have dreamed of what your big day will look like, so do your parents. If they are paying, they can have a say in planning as well. If mom wants to invite 45 of her closest friends, then she can. Many couples make concessions to make their family happy but it’s so important to remember, this day is about the two of you, not the whole family. Paying your way is much easier because you can make all the decisions. If the family is paying, make sure there is clear communication and expectations are set. What To Spend On Day Of Coordinator You want to enjoy the day as much as possible and having a day of coordinator will help you do that. I had one, and it was the best thing I ever did. Everything happened seamlessly while I danced, drank and had a great time. A coordinator is a cheaper alternative to a wedding planner. Although they are not with you for months planning the whole event, the day of they act as a liaison between the DJ, caterer, florist, and coordinate the logistics of your wedding day to make sure that everything goes as planned, so you don’t have to. They can also act as a “Brides Guard” to help fend off anyone trying to steal your attention when you need a minute to yourself. You don’t necessarily have to hire someone to do this; it could just be a friend who likes to take control. Photographer After all the food is eaten, drinks drank and favors given out, the only thing you two walk away with are photos of the day (and a whole lot of envelopes filled with money). Those the memories you’ll have forever so don’t skip on a photographer. You can find one for a great price, just make sure to look at their portfolio. Check that they have experience taking photos of people moving. If you only see still life pictures in their portfolio, they probably won’t be the best fit for your wedding. We ended up getting a friend of the family who was a wedding photographer on the side and spent next to nothing. We have wonderful memories and even saw things we missed! Also, check out an app called Wed Pics where guests can join your party and take their pictures and videos that are shared with you and all of your guests. Food & Booze (but mostly booze) Don’t skimp on the bar! People are coming to a party and expect to have a drink….

The process of buying or selling real estate can be intimidating and overwhelming to both the first-time and experienced buyers. Today we talk to our agents, Dean and Gerard from GD Group Moves Real Estate in Hoboken, NJ about the anatomy of a real estate deal. Every market is a little different, so if your looking to buy or sell a home in your area, you should talk to a real estate agent in your community. In this episode we will cover some of the important things to know before going into one of the largest financial transaction of your life. Choose Your Agent Wisely Buying or selling a home has a lot of steps, mountains of paperwork and a ton super important decisions so, you want to make sure you choose an agent who will be on your side and able to guide you through the process. Don’t fall into the ” I know a guy” trap. Just because you’re best friend’s Uncle is an agent in the neighborhood doesn’t mean he will be the best at marketing your property or negotiating a great deal. You need to do your own research. Start by looking at agents in your neighborhood with good reviews. Zillow is a great place to start. There you can check out the premiere agents in your area. Once you find an agent you are interested in working with, you’ll need to learn out a little more about them. Ask them questions about their professional experience and track record. Think of it almost as a job interview, you want to hire the right person for the job.  It is also an excellent way to get to know them and gauge compatibility. It’s a long process so you don’t want to work with someone you don’t get along with. Here are some important questions to ask before choosing an agent. * How many properties have you sold last year/this year? Many real estate agents work part time to make extra cash but you really want someone who is doing this full time for many years with a lot of experience. If you are a buyer, you’ll want someone who can show you new listings ASAP. If you are a seller, you’ll want an agent who is always ready to show your home to buyers. So if you had a choice between someone who sold 5 homes last year compared to 50 homes you know what the clear choice is. * How long have you worked in this market?  You’ll want an agent who knows the area inside and out and may even be part of local networks. For buyer and seller agents, neighborhood expertise is a must. Also, the real estate market is always changing so it is important to find someone who is up on the current trends. * Do you have a team? There are many people involved in one real estate deal – lawyers, inspectors, agents, appraiser, etc. With all of these moving parts you need to make sure no one drops the ball. If your agent has a team behind them all the transactions will move smoothly. * What kind of marketing do you do? If you’re selling a home, marketing is a key. By increasing exposure of your property through online marketing, you can grow your buying pool dramatically. Asking your agent on how they plan on getting the word out about your property is a must. Running Facebook, Google or Zillow ads can really help reach your potential buyers. What Sells a Home? There are two important things when selling a home, marketing, and pricing. Doing both of these rights will open the market to 100% of your potential buyers which will get you the best price as quickly as possible. Also, taking professional photos of your property is super important. If your place doesn’t look great online, it’s going to get overlooked. Dean and Gerard got their photographer in to take photos of our listing and the place looked A-MAZING on Zillow. We couldn’t even believe it was our apartment.

The guys tackle five great listener questions today. For full answers listen to the episode below. Question One Longtime listener, quick question. I currently put about 25% of my income toward my betterment retirement fund. I rent now but eventually would like to buy a house within the next 10 years. Should I go 15% retirement and 10% home? I would create a new betterment account rather than keeping all in one. Let me know what you’d do. If you are able to save 25% of your income then you are definitely on the right track! The split of the savings really depends on your situation, the percent is arbitrary. What is really important is if x% is enough to reach your retirement and other goals. Taking into consideration how much you make, what kind of raises you can expect in the future and how much of a down payment you’ll need to purchase a home, will help you figure out if 10% over 10 years will be enough for the kind of home you would like to buy. You also need to figure out if saving 15% a year is enough for the retirement your looking for. Question Two Hi Guys- I’m 26, in sales (salary plus bonuses) and also work at a restaurant every Saturday. My salary is $42,000, and my bonuses usually total $5,000 per year. Serving money obviously fluctuates, but let’s say its $130.00 a week on average. (520/mo ~ $6/yr) = total $53k I have $3,300 in credit card debt and paying that off is my immediate financial goal. I’ve tightened my budget and am using the money i’m saving there plus my serving money to pay that off. Basically, i’m throwing every extra dollar I have at that debt. My question is what should I do when I pay that off. I have 19k in federal student loan debt, but I have friends and co-workers who say thats “not bad debt” and I should start saving for a house/investing my money instead of putting all my resources into paying that off as quick as possible. Any thoughts or suggestions will be greatly appreciated. Thanks again guys. We get this question a lot and most of the the time the answer is pay off your student loan debts after you you have suitable emergency fund in savings. You can’t wipe out your bank all accounts to pay off your debt. Leave yourself some breathing room and make sure you have some money saved up for any unaccepted bills or situations. Also depending on your debt interest rate, it might be ok to start investing. If you have a low rate (3.8%) putting a little into the market is ok. If you have a high interest rate (7%+) the 19k in loans will become 21, 22, 23k if not paid down quickly. The market average is 7% so if your loans are 7% or higher mathematically it’s a better choice to pay off debt first and fast. The freedom you feel when it’s all gone will be worth it. Question Three I am 31 years old and married. My wife and I make about 80k per year combined and live in Colorado. I contribute to my employers 401k up to match each year. I have an online high yield emergency fund account with about 10k saved. We only keep about 5k in our checking account to pay off the credit cards and mortgage payments each month. Here’s where it gets interesting: When I was a child I inherited a large amount of money, around 250k which was set aside until I was 18. Since then it has been in a portfolio of mutual funds actively managed by a financial advisor. The returns have been a meager 4% since 2004. This is where I’m concerned after hearing about the awesome returns you guys have been getting through betterment and vanguard. My financial advisor seems to be making a lot of money off me in quarterly fees (about 2500 per year) with very minimal returns compared to what I could be doing with betterment and vanguard. So my question is, what you would you guys do with the 250k? I always thought I wasn’t financially capable of actively...

Small businesses are a big part of our country’s economic growth, so you would think the government would make starting a business as easy as possible. Of course, this is not the case. If you need a business tax strategy- listen up. You might think coming up with a great idea and creating a solid business plan would be the most difficult part- that is until tax season comes along. Today we talk to expert business tax planner Diane Gardner about the importance of having a well thought out business tax strategy. After filing mountains of tax returns, Diane works as a coach the rest of the year using pro-active tax planning to help her clients keep more of their hard-earned cash. She loves creating business tax strategies to help successful entrepreneurs across the United States pay the least amount of income tax they can legally pay. Don’t Half-Ass Your Taxes If you are planning to start a small business, it is critical you research all of the federal, state and local requirements. If you don’t cross all your T’s and dot all your I’s it will cost you. There are many regulations and the rules that can vary between locations and business structures. Find out what your state requires and how often you need to file. Business taxes need to be filed throughout the year, not just during tax season. This can be challenging, so if you don’t feel comfortable submitting them on your own, there are companies out there that can take care of this for you (of course at a cost). Not filing your taxes properly can cost you and your business a lot of money. Believe me; Listen Money Matters has had their fair share of fines. Like us, many business owners starting out choose to file their taxes using products like Turbo Tax and that’s a huge no-no. Although products like Turbo Tax work ideal for simple personal taxes, using it for business is not a good idea if you don’t know what you are doing. If you have done your taxes before and fear you may not have done the best job, no fear! You can revise your returns for up to three years. Anything before that you can kiss well. Consider it a donation to your country. A good rule of thumb is to save all your tax paperwork for at least seven years in case of an audit. Structuring Your Business When starting a business, you’ll need to figure out how you will structure your company (partnership, LLC, S-corp, C-corp, etc.awesome). Choosing a company type can be a great tax planning tool and can come with impressive tax advantages. It will also protect you from any liabilities such as a lawsuit. This part can definitely be confusing so consult your attorney to figure out what would work best for your business. Most likely you will want to go with an LLC because it can act as a Sole Proprietor, S Corp, C Corp -basically anything. However some states are not LLC friendly, like California, so do all your research before filing. The image below links to a great infographic that will help you understand the difference between each structure. Moving From Hobby To Business Most people are not making millions when they first start out. Actually, most are making nothing or close to it and that’s ok. When you are still working on growing your business it can be referred to as the hobby stage. So when does it go from hobby to business? You may have heard that after three years if your company has not made any profit it will be considered it a hobby and not a legitimate business. This is a myth. After a few years with no profit, the government will look at each business case by case to see if you have a well-conceived business plan they show intention to make a profit...

It’s been a while but we are back with our Better Know a Millionaire segment and today the guys talk to an entrepreneur, speaker and house painter Matt Shoup. Matt has an incredible story from being six figures in debt to becoming a millionaire. There were many ups and downs on his journey of success. Listen to hear how he started his business with a hundred dollars and how a customer’s baby ended up completely covered in paint. Yup, true story. From early on in his life, Matt had that entrepreneurial spirit. At the age of 10, he was shoveling snow for extra cash and started his first business selling candy out of his locker. He started to hustle in college when he joined College Works Painting where he received training on how to run a successful painting business. After training, it was up to him to grow his business and began simply by knocking on doors around the neighborhood selling his services. Before he knew it, Matt as making a six figure salary at 22 years old. The problem was he was also spending a six figure salary and then some. Two times his salary to be exact. He spent a lot of going out with friends and partied – but it didn’t stop there. After graduation, Matt got married and bought more house than he could afford to put himself in even more debt. Around the same time, he also left the painting business to find a “sexier” job and became an employee of a mortgage company- real sexy ;). He soon realized he hated it and didn’t like the practices that were going on. It was too corporate. The bank culture wasn’t for him, and the morals were too sketchy. On a March afternoon in 2005, his life came to a crashing halt after getting fired from the bank, and he stood in a parking lot with all he owned in a bankers box. Now a jobless 23 year old with $172,000 in debt he realized he had to get his shit together. Matt made a decision that changed his life forever. With the last $100 to his name Matt started M&E Painting Company. He made thirty bucks worth of business cards and just like he did in college, began knocking on doors and hanging out in the Home Depot paint aisle looking for work. After working his ass off and living as minimally as possible for three years, Matt was able to get himself out debt. He was able to breathe again and start saving for the future. He decided to grow M&E Painting into a multimillion dollar business and become financially free as fast as possible. Now in 2016, it has become one of the fastest growing companies in Northern Colorado and the United States. Show Notes Become an Award Winning Company -Matt’s Book Matt Shoup -Matt’s website Founders Brewing Company Porter

You often hear “overnight” success stories when it comes to people who have quit their jobs to start a business, but it doesn’t happen that way. It takes a lot of work and planning to get there. If you’re fed up with the 9-5 grind, you may have considered starting your own business. We did it and you can too. We’ll show you how to quit your job and actually start a business. Know what you’re getting into before leaping from your cushy paycheck to starting your own business. The Bar Has Never Been Lower If you want to start your own business, it has never been easier or less expensive to do so. The internet and all of the tools it has opened the possibility of starting a business to almost anyone. Funding can be raised on Kickstarter. An online store and drop shipping website can be created with Shopify. You can target local customers with Facebook ads; you can take credit card payments on your cell phone with Square, you can outsource payroll and other HR stuff to Paychex Flex. What is Your Passion? I don’t believe that you have to be crazy passionate about something to create a successful business around it, but you do have to enjoy to some extent what you do when you start your own business. Why? Because you are going to spend a lot of time doing it and if it’s something you hate, you won’t be able to stick with it long term. You can stick with a 9-5 you hate if you’re making enough money or can go home and not have to think about work until the next day. But starting your own business is so all-consuming that there is no getting away from it, at least in the beginning so while your business doesn’t have to be your one true love, you can’t hate it either. Before You Bail Quitting your 9-5 job to start your own business is not just taking a plunge, it’s more like submerging yourself into a whole new world. It takes a ton of planning, and there are many considerations. Is it Realistic? Take your product or service for a test drive to see if people will pay for it, don’t go all in cold turkey. Test, test, and test again. Don’t sink $50,000 into making cat sweaters only to find out cats don’t get cold. Do small trials, see what works and what doesn’t and make corrections based on those findings. Make it Official If you haven’t already done it, make your business legitimate by setting up an LLC or S Corp. Legal Zoom makes this process easy. Becoming legit also lets you take advantage of the many tax deductions that are available for small business owners. Not a Unilateral Decision If you have a spouse, you can’t decide to quit your job and start your own business without their approval and support. Presumably, your spouse knows that you have been working on your own business for some time. Before you tell them you are ready to quit your job to work on your business full time, make sure all of your ducks are in a row and show them. You have a runway; your business is already making enough to support you without your 9-5, you have health care lined up, quitting means you will have more time to spend together. Whatever qualms your spouse has, you need to have an answer for. If they are not on board, you may not be able to quit yet. If that is the case, ask them what they need to feel comfortable with your decision to quit. And then start working toward that. Set Some Benchmarks Set a series of goals for yourself and don’t quit your job before you reach them. You need to be free of credit card debt; you need to make enough money each month to pay your rent or mortgage for six months in a row,

Dan Green is an expert negotiator. He joined us on an early podcast. Whether you want to land that deal or get that raise, Dan will teach you how to do it. Dan’s favorite tool is something he calls the Four P’s; purpose, product, people, and process. If you have those four things clear in your head before you start a call or a meeting, you’ll be in a more powerful position. There are three books Dan recommends to help you become a master negotiator: Getting to Yes: Brings a new perspective to negotiating by taking the adversarial stance out of the equation. Getting Past No: This book will teach you the tactics you need to negotiate. Difficult Conversations: What to do when conversations are going poorly. Two more books Dan recommends  are The Magic of Thinking Big which talks about helpful ways to approach your career and life in general and Money Master the Game. In Money, Tony Robins interviews twenty of the world’s leading investors and distils their advice for us. Warren Buffett comes up a lot at LMM and he said Dan’s favorite quote, “The best investment you can make is in yourself.” Bonus: Dan’s favorite documentary is His Way.

Our listeners send in some great questions, and today we are going to tackle five of them. We answer five questions about down payments, debts, IRAs, 401k fees, and investing during a chaotic period in the stock market. You asked, and we answered your five questions! Question One Hey Guys- My fiance and I are getting married next month, and we are trying to get our finances in order as we plan to buy a house. We are looking for something in the $300K range in about two years and will have minimal savings following the wedding. However, we also have about $100K in student loans, with varying interest rates from 4.5% up to 7.6%. With proper budgeting, we think we can save about $70K over those two years. Would it be better for us to save all of it for a 20% down payment and closing costs? Or should we use the first $30K to pay down the highest rate student loans and use the other $40K for a 10% down payment and closing costs, knowing that we will have a higher interest rate, PMI, etc.? The first thing you need to do is consolidate your debt and refinance any student loans you might have. Lowering your rates and monthly payments will help you make ground quicker. If you go with a variable loan that extra percent off your interest rate will help you gain 2-3 years of progress. Don’t overextend yourself. Rent until your loans are paid off before you even start thinking about buying a home. Your debt will factor into getting your mortgage loan. As for a smaller down payment, without 20% down you will basically throw money away with PMI. Question Two Hey guys- I’m currently trying to save for a house with my partner, and while she has a substantial amount for a deposit, I have near to nothing. We really want to buy something in the next year and a half. I might mention too that I have a bit of credit card debt….($8000)  I earn abut 1400 a fortnight. I know it might be a broad question but what do you suggest I do to be able to get on top of everything? Do you think it is smart to take out a loan to consolidate the credit card debt? The short answer is yes. Take out a loan to consolidate your debt. The interest rate will be so much better than the credit card interest you are paying. There are many companies that can make the process painless like Sofi, Lending Club and Prosper just to name a few. If you plan on taking out a loan remember that there is a loan origination fee that will be a percentage of the loan amount. It will be different between companies. Do the math and be sure the fee is worth the amount you will be saving in the long run. Question Three Hi- A little background on myself… I am 25 years old with my career being in Chicago, IL. I am working to get to the point where I am saving 15% regularly through 401K, the match, and Betterment IRA. However, you all talk a lot about retiring earlier than the old school 60 years old and such, which sounds amazing. Ha. My question is: With the goal of continuing to add more money into my accounts as my salary increases and retiring as early as possible, is it better to invest my money into a Betterment Roth IRA or Betterment General Investment Account? Pros? Cons? Thoughts? Suggestions? If you are planning to retire early,

What features do novice and experienced investors get from Wealthfront? How does Wealthfront stack up against the other Robo-Advisors and what sets them apart? We’ll be answering these questions and more in our Wealthfront Review. Luckily (or skillfully) we got an interview with the Wealthfront CEO Adam Nash. After doing our research, chatting with him for nearly two hours and then doing a metric ton more research we’ve got a pretty good idea of where they stand in the Robo-Advisor space. Wealthfront has more than earned their spot at the table. Remember the epic rap battles with the East Side vs the West Side? Sharks vs Jets? In the Robo-Advisor space that’s Wealthfront vs Betterment. Wealthfront is a San Francisco startup with a boatload of funding and Betterment is an NYC startup with an equally large boat filled will funding. If you’re on the east cost you probably know more about Betterment, if you’re on the west cost, the same is probably true for Wealthfront. We’re based out of NYC (ok, fine, Hoboken) so you’ve heard us talk more about Betterment. Now it’s time for you to learn about what’s been happening on the other side of the country. Robo-Advisor’s are competing for my money? If you’re as excited as I am that there is another serious competitor on the scene, this review is for you. In this review we’re going to break down the good and the bad sides of Wealthfront as well as suggest where it might be able to fit into your portfolio. Hint: It might have something to do with the free part. A Quick Look Wealthfront’s pricing and feature set is very straight forward. * Everything below $15,000 (for LMM fans) is managed for free. Ideal for the beginning investor. * Minimum balance is $500. Instead of charging a rather high percentage fee for beginning investors, they set the low bar at $500 and once you’re in it’s free as per point #1. * Tax Loss Harvesting for everyone. Not only will they capture your losses to offset taxes on your gains, everyone has the potential to benefit here. Even the $500 investor. * Advanced features for accounts above $100,000. With features like Direct Indexing you stand to make quite a lot more through economies of scale than you would below that price threshold. * Portfolio Review is the optimization tool you’ve been dreaming of. Want to avoid some capital gains on your existing investments while slickly transferring that money over to Wealthfront for better management/diversification? That’s what Portfolio Review is – more on that later. * Path – Financial Planning Experience. Path connects to all of your outside bank and brokerage accounts to give you an accurate and real-time view of your finances. Their PhDs handled complex calculations on the backend to show you how saving and spending impacts what you will have in retirement. * Wealthfront’s Portfolio Line of Credit. Portfolio Line of Credit is available for any Wealthfront client with an Individual or Joint Wealthfront account valued at $100,000 or more. You can request cash up to 30% of the current value of your Wealthfront account and they you’ll receive it as quickly as 1 business day.

We all need and use money nearly every day of our lives but do you know where it comes from? Today the guys cover payment history, the creation of money and how it affects our economy. The IOU Economy You can’t talk about the creation of money without first talking debt. As most of us might think, money was created to make paying for things easier, but that is not the case according to the book Debt by David Graber. The exchanging of goods was always based on debts from the beginning. Let’s say a caveman needed some berries. He wouldn’t go to his neighbor with two goats and try and trade for five bags of berries. Instead, they would give two goats expecting the other person to repay them at a later time. Their economy was not quantified by money but debts to each other. Think about it as using ious like a currency. The use of money came about during war, and new empires were being created. There needed to be a way for soldiers to buy the things they needed in other lands without owing a debt. A Brief History Of  The U.S. Monetary System In the United States, dollars used to be backed by some amount of silver or gold, but now money is not supported by anything except faith. Let’s start with the Panic of 1907, a financial crisis that took place when the New York Stock Exchange fell almost 50%. In the course of the three-week period market collapsed, stock prices tanked, and there was a massive run on the banks. The Treasury provided over $30 million in aid to the situation, and with the help of J.P. Morgan and others worked to channel money from healthy banks to weaker ones bring confidence back to the financial market. The aftermath of the Panic prompted the created of the Owen-Glass Federal Reserve Act in 1913. You guessed it; the Federal Reserve System was created. The Fed is NOT government owned but a federally sponsored banking cartel. It’s stock is held by member banks, and it’s licensed to lend money into existence. At this point, we were still backing out money with gold, but one disadvantage of a gold standard is that the size and health of a country’s economy are dependent upon its supply of gold, not the resourcefulness of its people and businesses. So, in 1933 Roosevelt takes US citizens off the gold supply. The Fed seizes all the gold, and exchanges are for 11 billion dollars in currency out of thin air. Yes, it’s like magic. After the wars, U.S. keeps increasing dollars to gold ounce ratio until Nixon closes the gold window in 1971, which removes the monetary system’s last physical limit. All global money is unbacked. Now nothing requires U.S. Dollar to remain the reserve currency, and anything does not back it. How Money Is Created It is pretty simple. The Fed creates money out of thin air in exchanged for government debt (bonds and notes). Let’s say Company X is asking the Fed for ten million dollars. All the Fed has to do is add a booking entry and POOF! A check is written out to the company, and the Fed get a bond. Only 3% of our currency is paper money and coins. The rest is all just bookkeeping. The U.S uses this debt-based money system so when money (debt) is created interest needs to be paid. To pay this interest, the money supply has to keep being expanding to perpetuate the modern banking system. At a minimum, each year, enough new money must be loaned into existence to cover the interest payments on the previous years. Each and every year, it must grow by some percentage. By design, it’s exponential,

Everyone wants to make money, it’s usually what turns people on to personal finance. Today we’re going to teach you how to make more money in the sharing economy – on your own terms. Uber brought this concept mainstream and as a result, it’s sometimes called the Uber Economy. The idea at its core is that there is slack in our economy – resources that are not being utilized. Your car parked in the garage. Your brother’s carpentry skills. The free time of a math honors student. The goal of the sharing economy is to monetize this slack and provide income to those who would have otherwise been beholden to a 9-5 schedule and boss. Now, you can get paid for work and pick some people up during you drive home to make a few extra bucks. The best part about these sharing economy jobs is that often money doesn’t directly change hands. It’s all handled digitally which allows for you to focus on your task at hand and for your clients to focus on the work you’ve completed. Uber is just the most discussed service in this new economy. With it, you can get in your car, turn on the app and wait for taxi requests to come in. If you’re ready, you accept someone’s request and you’re off. It’s also important to know the difference between Uber, and its biggest competitor, Lyft. Laura and I have used AirBNB very often when we go on vacation. We’d rather stay in a local neighborhood and get the feel of where we’re visiting than the impersonal feel of a hotel. It’s pretty awesome because you can get a big place with keys to enter and leave as you please for a fraction of the cost of a hotel. The only thing you have to give up is having a stranger enter your room while you’re not there to fluff your pillows. I always found that a bit creepy so we’re happy to pay less for that not to happen. There is also a lot of money to be made renting your home out on AirBNB. If you’re going to be away on vacation or a business trip you should absolutely make some money on your place while you’re gone. AirBNB is an awesome service for that and they automatically insure your place for up to $1mil in damages so there’s nothing to worry about. With Handy you can signup for handy-man type work around your neighborhood. Have free time on a Saturday? Install someone’s ceiling fan. Learned plumbing from your Dad? Install a bathroom sink for someone close by. Since you set your prices and compete against other people’s quotes it’s recommended that you start low, get a few successful jobs under your belt and then increase your price. Complete odd-jobs via TaskRabbit like picking up groceries, waiting in line for a new iPhone, cleaning someone’s home or helping them run a party. According to peers.org, the average TaskRabbit hourly wage is $48 an hour. Perhaps the most interesting job was that of a professional “looker”. There’s a need for people who are buying things across the country and can’t be there physically to have an impartial 3rd party verify its condition. With WeGoLook you can either hire someone or be hired to do just that. Take pictures of a car someone is looking to buy for them, or, hire someone to go check out a rental home you’re looking t...

We have all asked ourselves at some point, do I need life insurance? You’re young and healthy, nothing is going to happen to you, right? Sorry to be a debbie downer, but the reality is anything can happen to you at anytime. Will someone suffer financially once you’re gone? Will your family be able to afford mortgage payments and other living expenses? Funerals are really expensive, will they be able cover the cost? If the answer is yes to any of those questions, then it’s probably a good idea to look into an insurance policy. Life insurance will help replace your income so your family can meet important financial needs if you are no longer around. This week we have Francois de Lame from PolicyGenius on the show to answer our questions about life insurance. Who Needs It? You’re Married Most people start to think about life insurance when they get married because they are starting a life another person and building a future together. If something happens to you, will your spouse’s income be enough to pay off debts and cover living expenses? If you are the breadwinner, your partner could find themselves in a really bad financial position if they are left with good amount of debt- like a mortgage or students loans, for example. You Have Kids For most families two incomes are necessary to make ends meet. If you died suddenly, could your family continue their standard of living on one spouse’s income? Would the plans for your children’s future, like going college, be affected? Even if you’re planning to have children soon, you’ll want to buy life insurance now before the pregnancy. Prices can go up. Getting a policy will insure they can still have the future you saved for even if you are not around. You’re a Single Parent If you are a single parent and don’t have life insurance stop reading this and look into getting some right away. With so much responsibility resting on your shoulders, you need to make sure you have insurance to protect your children’s future. Although it is super important, only about 4 out of 10 single parents have life insurance. The ones that do usually need more. As the sole breadwinner and caregiver, your children depend on you and only you. What would happen if you were no longer around? You’re a Stay-At-Home Parent Just because you don’t get a paycheck every week doesn’t mean you don’t make an important financial contribution to the family. Besides taking care of children, there are so many other important tasks and the value is often underestimated. Average cost of daycare in NYC tops $16G. It’s the largest annual household expense for many families leaving them struggling to find affordable care. Without the stay at home parent around, the cost of living significantly increases for the other parent,  Life insurance can help your family preserve their quality of life. You’re Single Most single people don’t need life insurance because no one depends on them financially. However, don’t wait too long to get a policy. It’s much cheaper to get a policy when you’re young and healthy. In the insurance world, the older and less healthy you are, the more you pay for insurance. If you are providing financial support for another family member like a aging parents or a sibling you may want to consider life insurance when you’re single. How Much Do I Need? Figuring out how much life insurance you need is different for everyone. It depends on your personal and financial situation. There are three main drivers that affect the amount of coverage you need. Family Size– How many kids you have and thei...

Whether you believe it or not, we have all heard the age old saying money can’t buy happiness, but there certainly is a relationship between your personal finances and your happiness. Maybe it’s time to change your mindset. People who earn a more are often happier than people who live in poverty, but it’s not just about the money itself. It is about providing insurance that you and your family can live a comfortable life no matter what life throws at you. Many of us think we only need so much to be happy, but you have no way of knowing how much you’ll need at some point in the future. Today the guys talk about how to change your mindset from “how much I need” to “how much is possible”. It doesn’t mean you have to constantly think about money or compromise your other values and interests, but you can simply think differently about your money. It’ll start to shift your choices. Unless you can predict the future, you do not know what you will need or want beyond today. Building your financial resources will help you deal with life’s uncertainties. Money takes time to grow, so you need to start now. Even if you have a job that pays well, the chances are it doesn’t pay quite enough to create financial independence. Your job is your job but building financial wealth is something else. Show Notes LMM Community: Join the conversation! The Millionaire Real Estate Investor: Thomas’ latest read Lapsang Souchong: The whiskey of teas  

  It’s been too long since we’ve done a five questions episode. Today we talk about lotto, stock games, APR, diversification, and student loans. Five questions are back! We answer questions we get through e-mail and the LMM Community. 1. What would you do if you won the lottery? Thomas doesn’t want money he didn’t earn so if he somehow won the lottery, he would hand it over to various charities. Andrew actually did buy tickets, $20 worth. He thinks winning the lottery would ruin his life because it would take away his drive and his purpose. He would keep his job and just stick the money in US Treasury bonds which are one of the safest investments you can make. Even with the low-interest rate on bonds of about 2%, taking the lump sum of the recent Power Ball would still earn $1.2 million per month.  2. Do you recommend any on-line stock simulator games for those new to investing? Motley Fool has a good one. Most games focus on the dollar value but Caps, the Motley Fool game, removes that and base wins on percentage gain instead. The community is very active too, and it’s a good place to research stocks. People do reports and even blog about their picks. Investopedia has a simulator, and you can track stocks in Google Finance where you can create folders for your picks and track them over time. 3. I have $9,000 in credit card debt and a 15 month 0% APR. Should I take out a loan through Lending Club to pay this off? If you roll a balance over to a 0% APR card, there is a fee. Even with zero interest, you have to make the payment each month, or it triggers the interest. Pay off that $9,000 as fast as possible, ideally, before the 0% runs out because no loan is going to give you 0% interest. For more on APR check out this guide. If you can’t pay it back within the 15 months, then Lending Club is a good option. 4. I have an IRA with Fidelity. What should I do to diversify my investments? The Fidelity account you have has a high expense ratio. Even a 1% fee over thirty years of investing means a loss of more than a quarter of your investments. Fees are a killer. A 1% fee doesn’t sound like much, but over time, it is. A better Life Cycle Fund would be with Vanguard because no one beats their fees. If you don’t want to do a ton of research and compare funds, Betterment is the way to go. 5. I know it’s important to pay off debt before investing but is that still true if my student loan debt will be forgiven in twenty years? The interest is high at 6%, and while you’re on the income-based repayment plan, your income will (hopefully) increase over that time. Because interest is one of life’s biggest expenses, pay it off. Build your emergency fund up to six to twelve months worth of expenses and then start killing the loans. Thanks for the questions everyone! Show Notes LMM Community: If you want personal answers to more money questions, join us in the Community.