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

Andrew has  $12,000 of debt!  And yes, I did mean Andrew and not Matt.  Has he forsaken his Listen Money Matters principles?  Find out the shocking details. It’s not as scandalous as it sounds. Half of this is on a zero APR Home Depot credit card and those were expenses to remodel the kitchen.  The other half is a series of things that all hit at once, conference tickets, a vacation, mortgage tax.  Life got in the way and he did end up with finance charges. This episode is one of the reasons I was a fan of LMM long before I started working here.  Andrew owns up to his mistake and talks about it so he can help other people avoid the same.  Because if it happens to someone like him, it can happen to any of us, no matter how together our shit. This is how Andrew plans to redeem himself, and as penance, he’s going to document it in an article for us all to judge, (getting a little Dave Ramsey up in here.) The first thing he did was to set up an account with our friends at Ready for Zero to make payments to kill the debt fast.  He’s going to automate the payments and use the stack method.   The next step is to take out a loan from Lending Club and refinance for less than 10% which will be less than half of the rate of the credit cards. Matt asks a good question, why not just pull money from investments to pay the debt? A few reasons, firstly, Andrew isn’t in dire straights.  This is a temporary set back.  The other reason is altruistic, for the love of his listeners, he’s going to take the hit because he doesn’t want to disrupt the Betterment Experiment. This is a learning experience for us all, Andrew included.  He wants to show that one mistake doesn’t have to completely derail your personal financial plans and to show how using Ready for Zero and the stack method work. This can happen to anyone and Andrew is angry with himself like anyone would be.  But he has a plan to right the ship.  If it can happen to him, it can happen to anyone.  But by seeing him fix it, we see how we can fix our own situations. Feel free to use the comments to berate Andrew or to cheer him on! Show Notes Art of Flight:  A cool snow boarding video. Betterment:  Start today so when disaster hits, you can weather it.

Are you still getting and paying bills by snail mail?  Grab a whip and a chair and we’ll teach you how to tame them.  Also learn about duck genitals! Do you open your mail box to a flood of bills?  I hate that, not so much because I mind bills but because it’s more paper to keep track of and they cram so much crap in the envelopes. Before I started paying bills on-line I would send all the extra paper they sent me back to them with the check, ha! There is no reason you have to be bothered with all those pieces of paper.  Most bills now allow you to opt out of getting a paper statement and will e-mail you a digital one.  You can pay these on-line.  It’s so much easier to keep track of digital “paper” than actual paper.  You probably don’t even need to make a folder for it, you can just log into your account and look at the back statements if you need to. You can automate some payments too so you don’t have to do anything.  Just set up auto pay and your bank will send the payment.  You sometimes can’t do this with variable bills but for something like rent that doesn’t change often, you can automate it. If you can pay a bill on a credit card, do it.  You will earn whatever reward your card offers, the credit card company will fight on your behalf if you dispute a charge, and it gives you fewer bills to pay.  To make it even easier, call up your credit card companies and ask them all to change your billing date to the same day.  That way when you sit down to pay it, you can do it all at once. At LMM we always advocate simplifying your financial life.  Set up a system to automate your bill paying and spend the time saved doing something more fun than paying bills. Show Notes Stranger Pale Ale Left Hand Brewing:  A pale ale with citrus, hop notes. Betterment:  Start investing today. Mint:  Set up your budget. LMM Video!  Watch Matt’s frugal summer tip.

The start of a new series!  We teach you about finance, but we want to teach you some economics too so you can apply what you learn to decisions you make. We first met David Stein on our Better Know a Millionaire series.  You loved him so much we brought him back! He joins us today answer the question what is sunk cost. Do you know what a sunk cost is? Even if you don’t, you’ve probably fallen victim to sunk cost fallacy at some point. Today we’ll explain what sunk costs are so you can avoid them. Abandon A Sinking Ship A sunk cost is a past cost that you can’t recover. The sunk cost fallacy is convincing you that you can’t give up because of all the time and money you’ve already spent. Here’s an example; you’ve spent $10,000 repairing your car over three years. That $10,000 is the sunk cost. Then the engine blows. What do you do? If you replace the engine, that’s, even more, money spent on a car that is unreliable and needs to be replaced. Good money after bad. But if you junk the car, you’ve wasted thousands of dollars. That’s the sunk cost fallacy. What should you do? There are two answers; one is the correct one. What kind of answer you get depends on the type of economist you ask. Old School Economists Traditional economists theorize in a bubble. They believe that people only allow future costs, not past ones, to affect decisions. To say nothing of experience, emotion, or psychology. A traditional economist uses hard numbers to create the ideal model of what a human should consider and decide when making an economic decision. They expect that human beings will always act rationally. Ha! I don’t know what kind of human being these economists are meeting, but I’ve never met a similar one. If you ask this kind of economist what you should do with the car, they’ll tell you to get rid of it. You lost the money; it’s over, and you have to focus on the future. The lost money should not influence your decision. The economist would tell you to sell the car and buy a new one. Your Caveman Brain But human beings are not rational, and we don’t make decisions in a vacuum. We also have something known as loss aversion. Loss aversion means that people would much rather avoid a loss than acquiring a gain. Imagine if your boss said you were going to get a $500 a week raise. You would be psyched. Now imagine that your boss said you had to take a $250 a week pay cut. People are typically more upset at the thought of that pay cut than they are excited about the pay raise, even though the amount of the cut is smaller than the amount of the raise. Our lizard brain is not inclined to rationally evaluate sunk costs. Many people are likely to think, “I’ve put $10,000 into this car. If I walk away, I’ve wasted that money.” If you were operating in a vacuum, you would not spend any more money on this car and buy another. The money is gone and should not factor into what you do next. Behavioral Economists Behavioral economists interject human emotion into their study of economics. They study the effects of psychology, social, and emotional factors that on economic decisions, why people make seemingly irrational decisions and why their behavior doesn’t follow the predictions made by traditional economists. They realize that we do cry over spilled milk, and it influences our decision making. They understand why we would have a hard time walking away from that car. It’s hard to make a decision without thinking of the past and being influenced by it. You Can’t Have Your Cake And Eat it Too Some people confuse sunk costs with opportunity costs, but they aren’t the same. An opportunity cost is the cost incurred when you choose one thing over another.

How do you define success?  For many it’s making a certain amount of money, driving a certain car, living in a big house.  But that is changing. The actual definition of success is “the accomplishment of an aim or purpose.”  That gives us a little more leeway than defining it solely based on making a lot of money. If your aim was to get to work on time today and you did, you’re successful!  Success can be measured in small things too, not just a big bank balance or fancy vacations. For some of us, success could be defined as freedom.  We talked about this is in Episode 34.  Matt defines success this way, he wakes up when he wants, starts work when he wants, takes a vacation when he wants.  Those of us doing the 9-5 office grind can’t say the same. Happiness is a good indicator of success.  And as a study showed, the sweet spot of happiness is earning between $50-75,000 a year.  Those making more did not show increased rates of happiness.  So as the cliche goes, money doesn’t buy happiness. For millennials, the definition has already changed.  Much to the chagrin of marketers, real estate agents, and economists, they don’t care about things like home and car ownership the way their parents and grandparents did.  They care less about society’s expectations and more about happiness, building community and creating sustainability.  Not exactly music to the ears of the corporate overlords. The most important thing to remember about success is to not let anyone else define it for you.  Success is not judged by those looking in from the outside but by what makes you happy. Challenge to you all.  In one paragraph, tell us how you define success and e-mail it to Listenmoneymatters@gmail.com.  We won’t use your last name. Show Notes Clown Shoes Clementine Beer:  A Belgian style white ale. Back in Black IPA:  An American IPA with rich, dark malts. Betterment:  Be successful at investing. LMM Videos:  Check out Matt’s frugal tip video. LMM Book Club:  Check out some of our recommendations.  If you shop via the link, LMM gets a small part of the sale, but it doesn’t cost you money.  We want Amazon to fund this show, not our listeners!

Do YOU need a life insurance policy?  Liran Hirschkorn from Best Life Quote will give us the criteria to answer that question. There are two reasons you should have life insurance.  Personal reasons and professional reasons.  If you have family who depend on you for income, you need it.  If you own a business, you need it.  But there must be an “insurable interest” on the insured.  So sorry, but you can’t take out a policy on the neighborhood junkie hoping to cash in when they cash out. If you’re a single person and you don’t have any dependents, you don’t really need a policy.  But if you are pretty young and healthy and plan to have a family eventually, you can lock in a low rate by buying now. Life insurance is meant to replace future income.  So if you’re twenty five and making $100,000 a year, you would want a policy worth a couple of million dollars.  This allows your family to continue paying the mortgage, day to day expenses, college fees, all the things the deceased would have paid for. If you’re young, you can buy a cheap term policy. By the time you reach fifty five or sixty, you should have built up some assets.  When the policy expires the rates will increase but if you’re healthy you can renew the policy and you’ll need less coverage than you originally bought.  If you’re in poor health, it’s cheaper to convert the policy a few years before it expires to a permanent policy. Whole life insurance is much more expensive then term.  If you buy term, you should use the difference to invest and you will come out ahead.  A whole life policy is appropriate for people who have a lot of assets and whose family would be responsible for a lot of estate taxes.   Whole life can also provide some yearly income.  After about ten years, it breaks even so the money put in is equal to the value of the policy.  After twenty or thirty years, you can arrange for a yearly distribution and withdraw money.  The return isn’t huge, about 4-5%.  It should be considered protection and not a large source of income. Liran says that for 95% of us, an inexpensive twenty or thirty year term policy is sufficient. If you are the bread winner for your family, life insurance is a good investment. Show Notes Best Life Quote:  Compare quotes on life insurance. Betterment:  Start investing today.

Student loans are expensive but they aren’t the only thing that costs money when you go to college.  Learn how to save money while in school. Thomas Frank of College Info Geek and Martin Boehme of Powlygot will teach us how to save money while still attending college. Textbooks are one of the biggest rackets going.  Thomas has a flow chart on Pinterest that shows you the cheapest way to get access to the information you need without walking into the overpriced campus bookstore and being robbed blind. If you have the option and the patience to live at home while attending college that will be the cheapest option.  But part of the college experience is moving out.  Look into joining a fraternity or sorority for cheap housing. Becoming a resident adviser usually means free room and board.   Meal plans can be crazy expensive.  If you can make it on two meals a day you’ll save a ton.  If you live off campus and have a kitchen, cooking at home rather than going out is much cheaper and healthier. A lot of college towns have great public transit and sometimes it’s free for students to use.  Getting a bike will help you get around more quickly and cheaply too.  And it’s good exercise. When choosing a college, it’s cheaper to go in state.  But some states have reciprocity agreements.  You will pay in state tuition or a rate reduced from the regular out of state tuition fees. Use your student discount!  If you have a college ID, a lot of businesses or places like museums offer discounts.  Student Rate is an aggregater  for businesses offering discounts.  If you’re unsure, it never hurts to ask.  You can get access to a lot of free stuff too.  You can use the fitness center and some health services are free or low cost.  Some campuses offer free tax preparation. Graduating early is the best way to save money but it does require cutting through a lot of red tape.  Not only will you save on regular college expenses, you’ll start working and earning full time money sooner. College is a business decision.  Don’t let parents, teachers, or advisers pressure you into a decision you don’t feel ready to make.  College isn’t going anywhere if you take a gap year to travel or work. Show Notes Allagash Beer:  Belgian style beers. Jack Daniel’s Watermelon Punch: A summertime malt beverage. Curious Traveler Shandy:  A citrus accented beer. College Info Geek: Thomas Frank’s site devoted to getting the most from your college experience. College Info Geek:  Don’t buy into the text book scam! Powlygot:  Martin Boehme’s site that will teach you a new language. Thug Notes:  Cliff Notes for thugs! Nerd Fitness:  Thomas’s guide to eating cheap and healthy in college.

Living in a city doesn’t mean there aren’t tasty things to eat, you just have to know where to look.  Steve Brill tells us what’s edible in the big city. Urban foraging means finding wild foods.  Things like berries, herbs, seeds, mushrooms, and roots.  These are things humans have been eating for thousands of years.  They are delicious and filled with anti-oxidants.   And they’re free for the foraging.  Steve has been teaching urban foraging in New York City and the larger New York area for thirty years. Surprisingly, urban parks have more foragables than less dense areas.  In the city they only have to worry about lawn mowers which don’t reach everywhere.  In other areas, they have to contend with deer. Mushrooms are the thing people are most leery of eating.  Some mushrooms can be eaten safely but you have to be able to identify the safe ones.  Mushrooms that grow on wood and look like shelves are generally safe to eat but some are not very tasty.  Always consult a guide before eating anything you forage. Some of the things available right now in the North East are blackberries, carnelian cherries, lamb’s quarter, sorrel, and chicken mushrooms.  I’ve seen the berries and cherries in the park this week and I wasn’t even really looking.  I ate some too! If you wanted to get started on your own, begin with easily identifiable things like mulberries, dandelions, and cat tails.  You can eat cat tails!  You can’t buy mulberries because they are so perishable so the only way to get them is to find your own. There is a park full of free food just waiting for you to harvest it.  Free and healthy, food doesn’t get much better than that. Show Notes Wildman Steve Brill:  Steve’s site devoted to urban foraging, includes his tour schedule. Wild Edibles App:  Steve’s app to help you identify things in the field. ReAnimator Coffee: A locally roasted Philly coffee.

Ever wonder what goes on behind the scenes at Listen, Money Matters?  Trust me.  It’s as glamorous as you probably imagine it to be!  No, it’s really not. Andrew started the LMM website while he was displaced by Hurricane Sandy. He wanted to share what he had learned about personal finance with others and one day make some money through sharing that knowledge.  Matt and Andrew met in late 2013 on Fizzle, an online business training service and community. The two of them started out by advising each other on their respective projects, LMM and Swim University. It was a marriage made in heaven because each brought to the other, something that had been lacking.  Andrew is the business guy and Matt is the creative guy. The two of them spent a lot of time on Skype.  Andrew’s wife overheard all this discussion and said they should start a podcast.  That’s how this podcast was born in November 2013! In the beginning there was a podcast a week.  But you demanded more!  So in May, LMM launched Money May, a podcast every single day.  It was so successful that we decided to continue with a new episode daily. How do we manage to get out that many episodes when both your hosts have full time jobs?  They discuss the topics on Tuesday evenings and batch record on Wednesdays.  Andrew’s wife Laura or I contact and schedule guests that we find or that you all suggest. On Thursdays Matt edits each episode and creates the images that you see at the top of the posts.  Matt sends them to me.  I listen and write the show notes, what you’re reading now, insert relevant links and the Tweetables,  schedule them to go live and there you go! What does the future hold for LMM?  We would like to be your ultimate personal finance resource.  If you need to know it, we want you to be able to find it on the site or in the podcast. If you feel intimidated or left out of the conversation on other personal finance sites, podcasts, or books, we want you to find a home here. A lot of that stuff is geared to a much older, already pretty savvy audience and we want to fill the gap for younger people or people just starting their personal finance journey no matter what their age. How do you make money?  Well, we don’t really yet.  How we don’t want to make money is from you.  People who need help with their finances shouldn’t be put in a position to pay for that help.  We feel that help should be made available to you at no cost.  We want affiliates and sponsors to fund what we do for our listeners. A good example of an affiliate is Amazon.  On Swim University, when Matt recommends a product with a link and a reader uses that link to buy that product, he gets a cut.  That cut does not cost the buyer anything, Amazon pays that cut. A sponsorship is a company that pays to advertise on an episode.  So we would ask a company like Mint or Ready for Zero to buy advertising on the podcast. The hope is to get enough of these sponsors to fund the show and allow Matt and Andrew to do LMM full time.  What we can promise is that we won’t take the easy money.  If you hear an ad for something, it’s something that we believe in and something that will help you. So that’s what really goes on behind the scenes and what we hope to do going forward.  Thank you to all of you.  We wouldn’t be able to do any of this without you. Show Notes Boulevard Brewing The Sixth Glass:  A dark ale.

The job market is still pretty bad and wages are stagnant.  It might be time to create your own opportunity.  We’ll discuss ways to do just that. If you can’t find a job, just start your own business!  Well, it’s not as easy as that.  And that isn’t an option for everyone.  Creating an opportunity is also about being able to see an opportunity and being ready to take advantage of it. This podcast was created because Matt saw the website that Andrew started and reached out to him.  They talked and worked together and the podcast was born.  I got involved in a similar way.  I started out as a listener to the show.  They asked for topic ideas and I e-mailed with mine.  The three of us began a dialogue and within a few days, I was hired!  I didn’t send that e-mail with the intent of landing a job but, I was ready when the opportunity was made available to me. The opportunity might not always be apparent.  Practice saying “yes.”  Invited to a party you’d rather not attend?  Say yes.  Old college roommate in town and wants to get together?  Say yes.  The more people you meet, the more opportunities you will find.  Maybe the old roommate is in town interviewing for a job at a company you’d like to work for.  If they get the job, now you have a connection there.  You have to put yourself out there to make things happen. Opportunity can be found in your current job.  Offer to take on additional responsibilities.  Offer to do the things everyone else hates to do.  You may not get a promotion or a raise immediately, but being willing to do more gets you noticed and can pay off down the line. Just ask!  No one is going to offer you anything if they think you’ll work for less.  We gave some more specifics on getting a raise in Episode 52. You might be amazed at the results if you ask for a raise or a promotion. Take the initiative, put yourself out there, step out of your comfort zone and see what happens.  A lot can happen in a life, especially nothing. Show Notes Boulevard Brewing The Sixth Glass:  A strong, dark ale. Things a Little Bird Told Me:  Biz Stone, co-founder of Twitter, on the power of creativity.

We answer your questions about saving for a home, credit cards, multiple checking accounts, teacher’s pay, and college expenses. 1.  Should I use a Roth IRA account to save for a home down payment?  No, a Roth IRA is a long term investment geared toward retirement.  You can withdraw the principle without penalty but cannot access any gains until you reach fifty nine and a half.  Just opening a standard Betterment account will be more useful to earn money towards a down palyment. 2.  Is it bad to open a credit card, get the promotion on offer, pay if off and then close it right away?  It’s not bad to open the account and can be beneficial.  The more available credit you have, the higher your score.  The more creditors you have, the higher the score.  More people have judged you a good risk.  Opening a new account does lower the average age of accounts which is one of the components of a credit score.  Closing the account is a bad thing though.  It lowers your available credit.  All of this advice with the caveat that all cards should be paid in full each month. 3.  I have four checking accounts, all with different purposes.  None of them have fees.  Should I have less?  Having multiple accounts makes things more complicated.  If you were to need a large sum of money for something, you may have enough but you have to transfer money around so that it can be covered from a single account. 4.  I’m a teacher with the option to receive my salary over the nine months I work or over the entire year.  I currently spread it out over the year, is this the right decision?  This depends on your ability to do the right thing.  If you’ll take the extra money from getting paid for nine months and invest it, then that’s the right thing.  More time and money to grow the investment.  But if you tell yourself you’ll do it and don’t follow up, then you’re going to be mowing lawns over the summer. 5.  I have two years of high school before college.  What can I do now to cut down on college expenses?  Choosing whether or not to got to college is a business decision.  Will going cost you more money than you can ever pay back?  A state school will be more affordable than a private one.  Going to a community college for the first two years and then moving on to get your bachelor’s is also much less expensive.  Get a part time job now and while in college and use the money for expenses, not dinners out. Apply for scholarships before and during school.  See if you can test out of some classes to save time and money. We love to answer listener questions.  Keep sending them in! Show Notes Boulevard Brewing The Sixth Glass:  A dark, full bodied ale. Betterment:  An investing tool to help grow your money for anything from retirement to buying a home. College Info Geek: The real cost of student loans. College Info Geek:  Saving money on text books. College Info Geek:  Tips I learned my sophomore year. LMM Episode 32:  Our interview with Adam Carroll discussing the college loan debt crisis. LMM Episode 58:  Money mindfulness.

  With tuition costs rising, there is a new  debate over whether a degree is worth the expense.  We’ll discuss the pros and cons in a roundtable discussion. Thomas Frank of College Info Geek and Martin Boehme from Powlyglot join us to discuss who should go to college, how to skip pre-reqs, and why college vs not college is not the only question we should be asking. Thomas has been out of college for a little over a year.  While he believes the actual classes were not that helpful, college does give you a unique opportunity to make a lot of contacts that you can use for the rest of your life.  Contacts that can help you find things like a job, or a place to live in a new city.  While contacts can be made outside of college, you’ll likely never have access to so wide a variety again. Martin was  able to save some time and money by skipping  some prerequisites.  Speak to the professor and inquire if you can test out. A lot of these debates ignore that there are options that are not so black and white as going to college or not.  You don’t have to go to the most expensive or prestigious college that will have you.  According to CNN, nearly 30% of people with associate’s degrees are out earning those with bachelor’s degrees.  The associate’s can also be tens of thousands of dollars less expensive than a bachelor’s. College should not be the default immediately after high school.  There are many options out there so spend some time researching them before you take the plunge. Show Notes College Info Geek:  Thomas Frank’s site to help you get the most from your college experience. Powlyglot:  Martin Boehme’s website that will teach you a new language. Uncollege.org: An alternative to college.

Think you can make money flipping houses? We talked to Justin Williams of House Flipping HQ about the art of making money remodeling houses. If you’re a fan of HGTV, flipping houses looks like a fast way to make some money.  But as is true of all reality based shows, things aren’t what they seem.  Justin flips houses off camera and lets us in on how it really works. Justin started as a real estate wholesaler.  He found owners who wanted to sell quickly and not be bothered with things like repairs or evicting a non-paying tenant.  He put the homes under contract and then sold the contract to to another buyer who was responsible for the repairs or evicting the tenant.  Justin then collected a fee from the actual buyer. Justin is now the final buyer in the equation and flips houses like a business.  This isn’t a little weekend DIY hobby.  He looks to make a 40-45% return on each house, purchased with money borrowed at 12-18%.  This makes his net return between 28-30% per house.  His goal is to flip each house in three to four months. Justin doesn’t use a bank to purchase the homes.  He uses private investors and hard money investors.  The investors are not taking a great deal of risk because the house itself is collateral on the investment. You can make money in this game but for most people who become successful, it takes six months to a year.  The hardest and most important aspect of flipping is knowing what data to analyze and how to analyze it.  How much the property is worth, the closing and holding costs, how much of a return you want on the investment. If you decide flipping is something you’re interested in, be careful out there.  There are a lot of scam artists charging thousands of dollars to teach you this business.  Check out Justin’s site and podcast before jumping in. Show Notes House Flipping HQ:  Justin’s website and podcast that will teach you the business of house flipping. Betterment:  Start investing today.  

 Many of the reasons people are fearful of investing are myths.  Let us help you separate fact from fiction so you can feel confident investing. Investing Myths Don’t believe everything you hear. 1. It’s Overly Risky Too many people are not investing because they think it’s too risky. They’ll hand their money over to this thing they don’t understand and poof, X bad thing (they’re not really sure what a bad thing is, they’re just sure there are lots of them) happens and their money is wiped out. So instead, they leave it where it’s nice and safe, in a checking or savings account or stuffed under the proverbial mattress. What they don’t realize is that those things are even riskier than investing. When money is in a low yield account where it’s making less than 1% interest or under the mattress where it’s making no interest, inflation is eroding the value of that money slowly but surely. If your house burns down, the money under the mattress is ashes. Yes there are risks to investing but an investor can choose how much risk to take and there are ways to minimize risk There are places to invest money like dividend stocks or bonds that allow money to grow with limited risk. You can further reduce risk by having a properly diversified portfolio meaning your investments are spread out between different market sectors and different asset classes so if one area is doing poorly, you have other areas doing well to make up for it. And while the stock market can quickly plunge, historically it has always rebounded. In the nearly 100 years since the Great Depression, there have been fewer than two dozen losing years for the stock market. That means the best way to keep your investments safe is to be in it for the long haul, set it and forget it which is what LMM has long advocated and what investing in index funds accomplishes. You don’t put money in and pull it out based on screaming pundits or scary headlines, you don’t try to time the market. You put your money in and leave it alone. Stocks become less risky the longer you hold them. 2. Investing is Only for Rich People In the old days you needed a stock broker if you wanted to invest in the stock market and often they wouldn’t even take your call unless you had thousands of dollars you were ready to invest. But now that companies like Betterment are on the scene, investing has become democratized. Many investment platforms have no minimum to get started so if you have five bucks (or less) you can invest. You also need almost no knowledge of how the market works or even what it is to get started. You don’t have to be a rich person who pays another rich person to invest for you. The fees for companies like Betterment are very low and it’s passive investing. You aren’t paying a fund manager and there is no reason to as they almost never beat the market. If your employer offers a 401k you can get started there. It’s easy to start investing this way because almost everything is decided and done for you and the money is taken out of your check before you even see it; seamless investing. 3. You Need a Lot of Money to Make a Lot of Money I think this is the one that holds a lot of people back even more so than fear of risk or lack of knowledge about investing. People think,

Are you a materialist or a minimalist?  Let us help you find a happy middle ground so you can have nice things and still afford nice things. A materialist is defined as “someone who puts an unhealthy priority on things.”  A minimalist prioritizes living with less to achieve freedom.  Freedom can be defined lots of ways, financial freedom, freedom from “stuff,” even freedom from a place. We all like stuff, shiny stuff, new stuff, pretty stuff, cool stuff.  Not all of us can see the connection between our love of stuff and our lack of money.  We all know people with closets full of new clothes or all the newest gadgets who constantly moan that they don’t have any money. And we know people who want to move across the country or pull up stakes and start travelling.  But they can’t because they have so much stuff.  How will they move all that stuff, where can they store all that stuff?  Stuff weighs you down, psychologically and geographically. If we can stop buying and stop holding onto all that stuff, what benefits are there to be had?  You’ll spend less, duh.  You’ll have less stuff to worry about cleaning, moving, finding a place for.  It’s better for the environment.  How much packaging is in the Amazon box that you have delivered to you a few times a month?  It doesn’t evaporate you know.  Getting rid of stuff can help you cut ties with the past.  Don’t keep a collection of t-shirts you “borrowed” from ex-boyfriends.  If he was worth remembering, you’d still be together! A study was done to find the dollar amount “sweet spot.”  How much money it took to provide day to day happiness and emotional well being.  Any guesses?  It was $75,000 a year.  More than that amount did not provide greater happiness. We don’t advocate living in a tent out of a back pack and dumpster diving for your food but we can all be happy with less and in fact, happier with less. Show Notes Boulevard The Sixth Glass:  A dark Belgian ale. The Obstacle is the Way:  An easy to understand philosophy book Matt recommends. Maxed Out:  A documentary about debt in America. The Happy Movie:  A documentary that finds the happiest people in the world. The Queen of Versailles:  If you want to see vomit inducing materialism, watch this. I’m Fine Thanks:  A documentary about people who decided to change their lives to find more happiness. Stumbling on Happiness:  What you think makes you happy, might not in reality. Books on Happiness:  A list of books on happiness from Brain Pickings.

Ever heard the lottery referred to as “the fool’s tax?”  Learn why the lottery is for idiots and why the odds are always in the house’s favor in a casino. The odds of winning the Powerball lottery are more than one in one hundred and seventy five million.  That’s a lot of zeros.  If lightening struck (you actually have much better odds of this happening, one in 700,000) and you did win, one in three lotto winners are in serious financial trouble or bankrupt within five years.  In fact, the odds of you being struck by lightening FIVE THOUSAND TIMES is higher than the odds of you winning the lottery once. One of the most annoying things about working in an office is being pressured to join the lottery pool.  That and to sponsor “charity walks.”  The argument that if you buy more tickets, as you would in a pool, you’re much more likely to win is crap too.  Your odds don’t go up much until you start buying thousands of tickets.  Then your co-workers tell you it’s just good fun and you’re missing out.  Take Matt’s advice and offer them the same five dollars to do a little dance for you.  That sounds more fun than getting nothing back for the lottery five bucks. If you spend twenty dollars a month on lotto from the ages of 25-65, you’ll likely earn nothing.  If you put the same amount into a mutual fund, you’ll earn $93,000 after taxes.  Want to waste your money and get nominated for a Darwin Award?  Go play with fireworks.  You’re 146 times more likely to die in a fireworks related accident than win the lottery.  No one ever said, “Here, hold my beer,” before buying a lottery ticket. The next time your redneck cousin is bitching about having to pay taxes while holding up the line at the gas station while he scratches off lottery tickets, remind him of this.  A very small portion of collected revenue is actually used for payouts.  Most of it goes back to the government.  Hence the term, “idiot’s tax.” Gambling doesn’t get a pass either.  If you spend $100 an hour playing roulette, you lose on average, $5.26 per hour.  Gambling brings in more revenue than movies, sporting events, theme parks, cruises, and recorded music combined.  The house always wins.  If you’re a really good black jack player, the house still has odds of .5% on you.  Like the slots?  The house does too.  They have the edge on you there to the tune of 35%. There are plenty of ways to grow your money but playing the lottery and hitting the casino are not among them. Going to Vegas or Atlantic City can be fun.  Gambling can be fun too but don’t go in expecting to walk away with some winnings.  If you have a handle on your finances, take a set amount of money and have a blast gambling that.  But you don’t want to be the sad case pawning your grandmother’s wedding ring in a last ditch effort to win back what you couldn’t afford it lose.  As for lotto pressuring co-workers, tell them to stay the hell away from you unless they have Girl Scout cookies. Show Notes Boulevard The Sixth Glass:  A dark Belgian ale. Business Insider:  Some stats about winning the lottery. Kiplingers:  Five better investments than the lottery. Betterment:  Take what you would have spent on...