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Student loan refinancing can save you money but it’s a confusing process.  Today we get some guidance from Mike Cagney, co-founder of SoFi.com. SoFi started in 2011 by raising two million dollars from Stanford Graduate School of Business alums to loan to students.  One hundred students were loaned $20,000 each.  The idea being that the students would be more responsible with money borrowed from their own community and the lenders would have a vested interest in seeing students succeed from within that community. SoFi has evolved into a company that consolidates  and refinances loans.  They refinanced one hundred million dollars worth this June and save former students an average of $11,000 over the life of a loan.  SoFi also help graduates who are unemployed by freezing their loans and helping them to find new jobs and help former students to start their own businesses by freezing loans and helping to raise capital. SoFi can refinance loans with interest rates over 6% and can work with state, federal, and private loans.  A big benefit of consolidating is that rather than dealing with several servicers, you’re dealing with one.  If you have a job loss and need help, dealing with one servicer means things are much less likely to fall through the cracks.  You can lose some protections that you have with federal loans like loan forgiveness after public service but SoFi does offer unemployment protection.  State loans offer less protections more akin to private loans than federal. SoFi offers five, ten, and fifteen year terms.  If for instance you have six years left and opt for the five year term, your monthly payments will be higher but the interest rate will be lower. Student loans are so confusing but Mike gives us some information on how to make them less so.  First, before you borrow, understand the amount and why you’re borrowing.  Take a look at your major and choice of university and see what the earnings are for graduates.  If you take out $100,000 in loans for a field that pays $30,000, that’s not a good decision.  While in school take out federal loans so that you are afforded the protections they offer.  After graduating, consider consolidation so you are dealing with one entity rather than several.  After consolidation, you can consider refinancing to lower your interest rate. Mike’s final advice is that if you’re struggling, reach out to your servicer.  It’s in no one’s interest for the borrower to default. Show Notes SoFi.com:  SoFi has a great site that will help you decide if consolidation or refinancing are a smart choice for you. Betterment:  The easy way to start investing.

Just like produce, a lot of what you buy has a season.  If you know what’s “in season” you can save a lot of money.  We’ll find out when to buy what. Kitchen Appliances:  According to Money Crashers, September and October because that’s when new models come out.  Last year’s version will be reduced.  This point will be a recurring theme in the episode.  And it’s not like from year to year there are great innovations in refrigerators.  Getting last year’s model doesn’t mean you won’t have the new fridge that makes you toast or anything.  You aren’t missing much but overpaying. Automobiles:  From Auto Trader, the end of each year  and the end of every day.  Sales people are hustling to get that last sale in before the numbers come out so they’re more flexible.  Also late summer/early fall when the new models come out. Computers:  PC World suggests buying around the holidays and back to school time. Gaming Systems:  Since everyone wants these as holiday presents, lifehacker suggests January.  Your disappointed kid will hate you but you have more to add to his college fund! Airline Tickets:  There are a lot of theories about this, buy on Tuesdays, buy last minute, but CheapAir ran the numbers and found that buying fifty four days before the trip is optimal.  They monitored four million trips to cull this data! Concert or Event Tickets:  Thanks to lifehacker again, see movies during the day, for things like concerts or sporting events, the closer to the date the better to go on Craigslist to find people who really need to unload them. Televisions:  From Popular Mechanics, the usual suspects, holidays, January, but interestingly, March.  Know why?  Andrew and Matt hate sports but I’m a fan so  March Madness Baby!   July also because sales are typically slow. Furniture:  According to Go Simple Finance,  January and July.  New furniture is released in February and August.  No one knew that but LMM found out for you! Engagement Ring:  US News tells us when not to buy, between Thanksgiving and Valentine’s Day.  Unlike most of our other examples, rings are not cheaper when everyone is buying them. Gas:  According to Time Magazine, Wednesday morning.  Station owners price check each other between 8-10 am.  If competitors are increasing prices, owners will raise their own between 10-12.  Weird, but that’s Time’s take on it. House:  From Realtor.com, for more choices, April-July because that’s when a lot of homes are being listed.  If you want the lowest price, between Thanksgiving and the New Year.  No one wants to move in the winter so that makes sense.

   It’s time for listener questions.  We’ll discuss stock earnings, home renovations, side hustles, emergency funds, and money for freelancers. 1.  How does a company’s quarterly earnings report affect my stock?  Yes, but it’s not just about whether the company made or lost money.  The report also contains information about what is going on inside the company.  So just because the company made money doesn’t necessarily guarantee a positive report.  It’s more important to read the report and get a sense of what’s happening within the company than to just make decisions based strictly on numbers. 2.  How do you do home improvement and landscaping on a budget?  Plan and budget!  Before you go crazy at the plant store, how many will you  need, how much sun does your yard get?  Repurpose things, good for your wallet and the environment.  The most important thing is to do some of it yourself.  Potting plants isn’t something you need a professional for.  Re-wiring your home, you probably do.  See what you can borrow from friends or neighbors.  Don’t buy a tool that you’ll only use once.  And you can be proud of the work you did to make your home nicer. 3. Are podcasting and blogging actually good side hustles to make extra money?  They can be.  LMM’s makes some money through affiliate links on our blog.  So if you sign up for Zip Car through this link, we get a small cut of it. Making money via a podcast is possible too.  Marc Maron makes $14,000 per episode of his WTF podcast. Does LMM make money?  Not just yet.  We bring in some money but it doesn’t yet cover expenses like me, hosting the site, hosting the podcast, equipment. You can make money but it takes time.  Matt’s “day job” is Swim University.  He’s had the site for four years, has been working on it full time for two years and has made $40,000 so far this year, mainly through affiliate links.  The end goal for a podcast is to have companies sponsor you, to sell advertising on the podcast. If podcasting isn’t your thing, there are plenty of ways to make extra cash. 4.  A listener has recently had to put a $3300 air conditioner on her credit card.  Should she pay if off over time at 21% interest or use some cash in her Fidelity account to pay it off more quickly?  There are a few ways to do this.  Open a new credit card with limited time 0% interest and transfer the balance so you can pay it off over time without interest.  If the money in the Fidelity account is your emergency fund, no AC in Georgia constitutes and emergency.  If that would completely wipe out the emergency fund, look into Lending Tree to get a low interest rate loan. 5.  What advice do you have for a freelancer in a physical job that can’t be done forever, who’s income varies month to month and needs to kick investing into high gear?  Do what Matt calls the “freelance sprint.”  Take on as many jobs as possible in a short amount of time to earn a lot of money quickly.  The goal is to create a big cushion to see you through until the income is more steady.  One way would be to have someone film you doing your job and put it on Youtube as a tutorial.  A lot of people don’t know how to change the oil in their car or unclog their drain so there’s an audience out there and you make money from the ads on Youtube. Thanks for the questions everyone!

Betterment CEO Jon Stein gives us a  behind the scenes look at how the company operates and makes your money work for you. Betterment is an automated way to invest your money based on your goals and time frame. Answer a few simple questions and Betterment will set up a diversified portfolio that is managed for you. After studying economics and human behavior, Jon started his career consulting for banks.  He saw that they didn’t care about customers and their products were almost designed to help people fail.  He experimented with several brokerage companies and couldn’t find what he was looking for.  So like all good entrepreneurs, he decided to make what he couldn’t find elsewhere himself.  A company that made it easy to invest and served the client, not the bottom line.  That’s how Betterment was born. A listener asked why Betterment is better than Vanguard given that Vanguard has better fees.  Betterment does some things that Vanguard does not.  Betterment invests in fractional shares, each time you deposit money into Betterment, your account is automatically rebalanced in order to lower taxes, and  Betterment does tax loss harvesting. We advocate keeping your emergency fund in an investment account.  In Betterment, short term money will be invested more conservatively.  If you leave an employer who provided a 401K, roll it over into a Betterment IRA.  Many times, once you leave an employer, you will be charged a higher fee for the management of the 401K.  It takes about seven days to do a roll over with Betterment, the industry average is thirty days. Jon sees Betterment moving into the same league as companies like Vanguard and Fidelity in the next ten years and managing over one trillion dollars.  And when that day comes, we’ll be able to say we knew him when. The Betterment Experiment Check out our experience using Betterment with our own money: Show Notes Betterment:  See for yourself what we discussed today.  Use this link and your first six month of investing are free. Boulevard Unfiltered Wheat Beer:  A lively, refreshing ale sent to LMM from listener Drew! Nudge:  Improving Decisions about Health, Wealth and Happiness:  A new look at how we make decisions. The Winner’s Curse:  A look at the difference between how people should act economically and how the actually act. Thinking, Fast and Slow:  The hidden things that influence the way we think and make decisons.

When it comes to storing your cash, you have three choices, under the mattress, a credit union, or a bank. Don’t do the first one. That leaves us with credit union vs. bank, which one is better for your money? If you’ve contemplated ditching your bank and joining a credit union, we’ll lay out the differences between the two so you can make the best decision for your money. Banks Suck Banks have almost always had bad press, and much of it they have earned. We all remember 2008 when they nearly collapsed the world economy or more recently, Wells Fargo underhanded little scheme that involved opening accounts without customer’s knowledge or permission. After all the recent bad press, it’s not surprising that people want an alternative to traditional banks. Credit unions provide that alternative. What is a Credit Union? A credit union is a non-profit money making cooperative where members can borrow from pooled deposits at lower interest rates. They exist to serve their members rather than maximize corporate profits. Credit unions range from small, volunteer-run organizations to quite large with thousands of members run by a professional board. Credit unions are started by corporations or organizations to serve their employees or members. Arkansas AM&N College Federal Credit Union is an example of a small credit union. It was started by and for the employees of the university in 1952 and serves fewer than 1,000 members made up of university employees, alumni, and their family members. The largest credit union in the U.S. is Navy Federal Credit Union with more than seven million members. It started in 1933 with just seven members! Members are made up of all Department of Defense and Coast Guard active duty, veterans, civilian and contractor employees and family members of all those groups. When you join a credit union, you become part owner just as you own part of a company when you buy its stock. Members vote to select the board of directors and for decisions that will affect the credit union. Each member has an equal vote without regard to how little or how much money he or she has in their account. Currently, about one-third of Americans belong to a credit union. But Do They Have Lollipops? Credit unions offer the same core products that banks offer; checking and savings accounts, home, auto, and personal loans, debit cards, online bill paying, paper checks, CDs, certified and cashier’s checks, money orders, and safety deposit boxes. How Credit Unions Differ From Banks Investors own banks and banks have a responsibility to make money for them.. That might be through legitimate means like loaning money and earning interest or illegitimate means like opening fraudulent accounts. It can also mean earning money by charging customers outrageous fees. That isn’t illegal, but something doesn’t have to be unlawful to be ethically questionable. Credit unions exist to serve their customers/owners. Looking after the bottom line for a credit union means operating in the best interests of their customers/owners. That means that credit unions often offer better interest rates both on checking and savings accounts and on loans than do traditional banks. Credit unions charge fewer fees than banks,

Moving is third on a list of  life stressors behind the death of a partner and divorce.  Learn how to save money during the process to help reduce the stress. 1.  Don’t pay for boxes.  There are lots of sources of free boxed, but Matt knows a tip to get extra sturdy boxes for free.  Ask at a hospital, lab, or pool store.  The reason is that all of those places are shipped chemicals so the boxes are thicker and more durable. 2.  Move less stuff.  We don’t recommend Andrew’s method of having all of your belongings swept away by a hurricane but there are ways to reduce how much you take to the new place.  We discussed several in Episode 96.  Sell some stuff to get some extra cash and that will save you money because there is less stuff to move.  Less to pack and unpack too so you can’t go wrong with this one. 3.  Screw bubble wrap.  Fun for the cat but expensive for moving and unnecessary.  Use clothes, towels, sheets, newspaper to wrap and cushion your breakables. 4.  Keep track of all your moving expenses.  Moving expenses can sometimes be deducted on your taxes.  Find out if you meet the criteria here. 5.  Pack your own stuff.  Now that you sold the stuff you don’t need, you don’t have enough to justify paying someone to pack it for you.  Order some pizzas, buy some beer and find out who your real friends are. 6.  Let the post office help you.  If you have a lot of books, the post office has special shipping rates for them that might be cheaper than moving them yourself. 7.  Use a pod.  If you don’t have a lot to move, you can use something like this.  It’s like a portable storage unit  the company drops off and picks up. 8.  Move at off times.  Move during the middle of the month, some companies have lower rates because the first and last of the month are busier for them.  Time of year can make a price different too.  Moving between October and May can be cheaper than warmer weather months. 9.  Get money for your move.  If your move is tied to your job, you may be able to get relocation expenses covered. 10.  Moving trucks.  If you are moving a long distance, make sure the company you rent the truck from allows you to drop it off at a different location from where you picked it up.  Make sure you use the smallest truck possible because larger ones are more expensive.  Booking in advance may get you a discount. 11.  Moving additional vehicles.  If you have something can be towed or hauled, check out the cheaper option. 12. Insurance.  A bit like trip insurance, do some research and decide if you can live without it.  If you’re moving across town, it’s less necessary than a cross country move. 13.  Do an inventory and figure out what moving accessories you need.  Things like dollies, ropes, blankets.  If they have to be rented, it can add up.  See what you have or can borrow to make do. If you know someone moving soon, share this with them and maybe you can consider that your contribution and won’t have to help with the actual move! Show Notes Unita Brewing Sum’r Ale:  A refreshing, summer golden ale. MSN Real Estate:  Where we found some of the tips. About.com:  More moving tips.  

We all want to be successful and college used to be a route to success. But with college costs so high, it’s out of reach for some so we’ll explore alternatives to college. The cost of college tuition has risen 1,120% since 1978. There is $1.3 trillion in outstanding student loan debt in the US. Even if you do go to college, a degree is no longer the almost guaranteed ticket to the upper middle class it once was. But not going to college, or not going via traditional routes, doesn’t mean you are destined for a life of low wage jobs and poverty. There are many paths to success and they don’t all require higher education. Invest Most of us are not going to get rich simply from our 9-5 jobs and even if we do, it’s still important to have at least one form of passive income, something that makes us money with very little effort on our part. The best form of passive income is investing and the most important way to make a lot of money through investing is to start early. The more time your money has to grow, the better and there is no substitute for time when it comes to investing. If at 18 years of age, you started with $1,000 and invested an additional $100 every week for 30 years at 7%, at the end of the 30 years, when you are 48, you would have more than half a million dollars, $539,643. You would have contributed just $156,000, the other $382,643 you made just from interest, from doing literally nothing. If you don’t start until you’re 28 but start with double the amount, $2,000 and invest double the amount, $200 a week at the same 7% for 20 years, at the end of the 20 years when you are 48, you would have $461,451. You contributed $208,000 and the other $251,451 you made just from interest. You can see what a difference time makes. We started with and contributed twice the amount but we still ended up with nearly $80,000 less because of the additional ten years our money had to grow in the first example. I’ll say it again, there is no substitute for time when it comes to investing.  Our favorite gateway drug to investing is Betterment. The fees are low, there is no minimum, and you don’t have to know anything about investing to get started. Rental property is another great form of passive income. You might not think it’s passive if you think you have to be a hand’s on landlord and you would be right. And if you’re a hand’s on landlord, you’re restricted to buying property in an area close enough to where you live to attend to the property which is limiting if their isn’t a lot of stock or the area is very expensive. But, when you partner with Roofstock, all of those problems are gone! They are a turnkey real estate investment property and do everything from find you a home to collecting the rent and taking care of repairs and maintenance. Not only do they do the work for you, but they greatly expand the areas where you can own property since they do the day to day stuff for you. We did a full review of Roofstock. If you can’t afford to buy a rental property, you can still invest in real estate. Fundrise is crowd funded real estate. It allows individuals to invest in commercial property through an eREIT. We did a full

PT Money, one of the most influential people in personal finance and founder of FinCon, shares some tricks to make budgeting easier and more effective. We all know we need a budget but that means something different to us all.  For some it’s a restriction, for others a path.  However you look at it, a budget is something we all need in order to meet our goals, financial and otherwise. An effective way to budget for a one time expense like a house down payment or vacation is to set up a dedicated account that has a certain amount of money transferred into it automatically once a month.  Depending on the situation, you can tap your emergency fund for a one-off expense. Sometimes you have an unexpected expense, like a friend’s birthday party.  If you didn’t have enough warning to set aside money for it, you may have to take it from another area.  Or you can start an emergency fund for “fun” if you have a lot of these kind of expenses. If you’re budgeting for a family, it can be more complicated.  Do you use joint accounts or separate?  What if one person’s income is significantly higher than the other’s?  As we heard in Episode 85, communication is key.  Discuss finances with your partner and agree on a system.  For a couple with a large difference in income and separate accounts, using the bucket method is a solution.  A percentage of each income is put into an account for shared expenses. Pay yourself first is the most important part of any budget.  Making sure to max out retirement contributions will go a long way towards this. Spending one third or less of your income on housing is a good rule of thumb.  Lenders and real estate brokers will try to push you above this but you don’t have to buy the biggest house on the block or a house that costs the maximum amount you were approved for. Tracking your expenses is important.  By keeping an eye on your finances, you can plug holes that you might otherwise have not been aware of.  Phillip assesses his budget quarterly.  For those of us new to budgeting, we may have to check in more often. Don’t go crazy separating everything out.  You don’t need a budget for the phone bill, the cable bill, and the electric bill.  That can all be lumped under utilities.  There will be less to track this way. Remember, we don’t budget because we’re greedy or selfish.  We budget so we can take care of ourselves and our family. Show Notes Lagunitas Dog Town Pale Ale: A pale ale with notes of citrus and pine. PT Money:  Phillip’s site dedicated to doing more with your money in half the time.

What exactly are dividends and how do they work? When you invest in a company you get paid a portion of a company’s profits as a way to compensate you for your investment. These payments are called dividends and they are a form of passive income. What are Dividends? When you own stock in a company directly or through a fund you may receive dividends. A dividend is a distribution of a portion of a company’s profits. They are decided by the board of directors and can be issued as cash payments, as shares of stock or other property. It’s an opportunity for a company to reward shareholder loyalty. The amount you receive depends on how much stock you own and how much profit there was to divide. Why Buy Dividend Stocks? Investors, particularly retired investors, like the steady income that dividend stocks provide and also like the option of reinvesting dividends to buy more shares of stock. Not All Companies Offer Dividends Most companies don’t offer dividends, and if they do, they can cancel them if it’s a bad time to make a payout. Companies can increase dividends if times are good. Startups and some high-growth companies in certain sectors like tech and biotech usually don’t pay dividends because all of the profits are plowed back into the company so they can maintain higher than average expansion and growth. If a company wants to increase it value (which increases the share price) it may opt to reinvest earnings rather than pay out dividends. Some companies choose to use that money to fund new projects, buy new assets, buy back some of its shares or acquire another company. What Kind of Companies Pay Dividends? Bigger well-established companies are more likely to pay out dividends regularly. Companies in certain sectors including oil and gas, financial, healthcare and pharmaceuticals, historically have had some of the highest dividend yields. Why Pay Them? A bird in the hand is worth two in the bush. Investors are less sure that they’ll receive capital gains at a later date when earnings are reinvested as retained earnings than they are of receiving current dividend payments. In other words, better the sure thing now. There are tax reasons too. In some countries income derived from dividends is taxed at a lower rate than regular income. This is particularly an incentive for investors in high tax brackets. We’ll cover taxes below. If a company has a long track record of paying dividends, eliminating them or reducing the amount might be taken as a sign by investors that the company is in trouble. The reliable income that dividends can provide is appealing to many investors, so they’ll be more tempted to buy stock in a company that pays them. Paying dividends is also typically a sign that a company is healthy and that management expects future earnings. When Should You Buy? Should you buy before or after the dividend payment goes out? Bird in hand theory means you buy before the payment goes out while the stock is more expensive because you can expect a payment soon. Once the payment goes out, the stock will, in the short term, be worthless. For a bigger yield, buy after the payment has gone out. Cum Dividend And for your daily dose of the sophomoric, a share is said to be “cum dividend” when it is offered for sale with an entitlement to the next dividend payment attached. See also, “jizz dividend.” Don’t google that, Matt just made that up. When are Dividends Paid? If a company is going to pay dividends, shareholders are notified by a press release sent to the big stock quoting services. A record date is set. All investors who own stock as of that date will receive dividends. The ex-date is the day after the record date, the day the stock starts trading “ex-dividend.

Our guest, the Mad Fientist delves deep into advanced IRA strategies. Find out why you should have one and which one will best fit your needs. Brandon shares the same goal as many of us, to retire at a young age and avoid paying as much tax as is legal! How you handle your IRA’s can be a big part of achieving both goals. Traditional IRA A Traditional IRA is not taxed upfront but at the point of withdrawal. The money grows tax-deferred. Upon withdrawal after age 59 1/2, the money is taxed as income. For 2016, you can contribute up to $5,500, $6,500 if you are aged 50 or older. Roth IRA A Roth IRA is taxed upfront and not upon withdrawal after age 59 1/2. For 2016, the contribution limits are the same as for a Traditional IRA. 401k Many people have a 401k through their employer. A 401k is similar to a Traditional IRA. The money goes in tax-free. When you leave your job, whether it’s to take a new one or to retire, roll that account into a Traditional IRA. This simplifies things so you aren’t trying to keep track of several accounts, and it gives you more control over fees. You may not even know how much you’re paying in fees for your 401k, and if you take the time to find out by reading the prospectus, there isn’t much you can do about it anyway because your options are selected by your employer. And investment account fees can cost you a lot of money. Americans pay over $6 billion dollars in investment fees per year. Vanguard makes rolling over your 401k easy, and they have very low fees. Why Traditional Over Roth? When you’re in the prime of your career, you’re being taxed at a higher than you are likely to be in the future. You want the tax advantage of the Traditional IRA during your highest earning years because once you give up those tax advantages, they’re gone forever. Will tax rates be raised in the coming years? Yes, probably. But new loopholes will be added too and as long as there are people like Brandon around, we will know ways to take advantage of them. Is it a risk? It is, but it’s a calculated one. Roth IRA Conversion Ladder Both types of IRA’s are used at different stages of life to reap the most tax benefits possible. Brandon has a method for this, the Roth IRA Conversion Ladder. You contribute to a Traditional IRA during your working life because it’s likely that your tax rate is higher now than it will be after retirement. After you leave your job, you will have less taxable income. During this time, you slowly roll the Traditional IRA to a Roth. This rollover counts as ordinary income so to do this tax-free, convert a dollar amount equal to your tax deductions and exemptions. During this time, you live off your capital gains and dividends because they are taxed at 0% so long as you’re in the 10 or 15% tax bracket. For 2016, anyone making less than $9,225 is in the 10% bracket, and anyone making between $9,226-$37,450 is in the 15% bracket. LLC As we learned in our Natali Morris episode, it’s the people who earn salaries from an employer who take the hardest tax hit. The reason a bunch of LMM listeners are rushing out to start LLC’s! Unsurprisingly, Brandon has a way to super hack your LLC to mine even more tax benefits. We did a little calculating during the episode, and if you paid yourself $80,000 a year via dividends from your LLC, you would only be liable for $5,000 in taxes! If you were making $80,000 from a salaried job, you would pay over $19,000 in taxes! What To do With $3,

Social security is a decisive topic but we’ll give you the facts while leaving the politics aside so you can draw your own conclusions. Social security was established by FDR in 1935 as part of The New Deal.  It was intended to alleviate poverty for the elderly, unemployed, and fatherless children.  Workers pay in during their working lives and draw from it once retired, each generation funding the previous one. Since 1983, the cash flow has been positive, more coming in than going out.  By 2021, just seven years from now, it’s forecast to be paying out money faster than it comes in.  Some experts think this is not apocalyptic and the money will be diverted from somewhere else to continue the program.  The surest way for a politician in America not to get elected or re-elected is to try to mess with Social Security so the government will always find a way to fund it. One way to save the program is to privatize it.  It would be less like a tax and more like a 401K.  This way the money could be left to family after death, the money could be invested in the market, and it would reduce the role of government as they would not longer manage this enormous pool of money.  The problem with this plan is that during the transition, it would add one trillion dollars of debt to the economy.  There is also no way to know exactly how much you will receive as there is with the program as it stands. Two more realistic plans are to raise payroll tax by 2%.  This would ensure solvency for the next seventy five years.  Another option is to decrease the benefit by 13.3%.  This would ensure solvency indefinitely. The takeaway is that people of working age now will probably collect social security but it is not something that should be depended on for the entirety of your retirement income.  Keep investing, continue maxing your 401K, those are things you can control unlike the future of social security. Show Notes Betterment:  Our favorite investing tool.  Use this link to get six months without fees. SSA Calculations:  See an estimate of what you will collect from Social Security in the future.

We’re breaking down Listen Money Matter’s Twelve Financial Philosophies.  Think and meditate on them and then live by them. 1.  You are responsible for your own wealth.  Don’t expect to marry rich, inherit a fortune or win the lottery. Don’t blame your back ground, the economy, or any other excuse you can come up with.  If you want to build wealth, the onus is on you. 2.  Getting out of debt is an emergency.  If you have debt, use the stack method to pay it off. 3.  Always take free money.  If your employer offers matching 401K, take it.  Even if you have debt, contribute to the 401K. 4.  Super frugality is a waste of time and money.  We’re all for frugal but if it takes two hours to make your own laundry soap, that’s perhaps not the best use of your time.  You would save more batch cooking for two hours so you don’t have to buy lunch at work for the week. 5.  Credit cards make spending cheaper when correctly used.  A good cash back card will save you a small percent on your purchases. 6.  Avoid bank fees and find low investing fees.  Seek out a bank that doesn’t charge crazy fees for things like checks, automatic payments, and minimum balances.  Choose an investment tool that has low transaction fees.  We discussed bank fees in Episode 9 and Vanguard, a low fee investment company in Episode 109. 7.  Automate your finances.  Set it and forget it.  Use auto pay, use Mint, use auto transfers.  Andrew explained how in this article. 8.  Savings accounts are stupid.   In episode 107 we explained where your emergency fund should be kept and it’s not in a savings account. 9.  Materialism inhibits wealth building and leads to debt.  A house full of stuff you don’t use costs you money when you buy it and money in the future because you didn’t invest it. 10.  Budgeting makes smart people smart with money.  You’ve got to know what you have to work with and where it’s going otherwise you’re navigating blind. 11.  Health is always more important than wealth.  The money you spend on your health whether it’s good food, a gym membership, or regular check-ups, will more than come back to you in the future.  Being sick is expensive, especially in America. 12.  Investing is a long-term strategy.  Once you start investing, remember you’re in it for the long haul.  Be fearful when others are greedy and greedy when others are fearful. That’s it, LMM’s raison d’etre in twelve simple ideas.  Let us know in the comments what your philosophies are. Check out this fun little money-saving tip video I did over the weekend: Show Notes The Obstacle is the Way:  A modern philosophy book. Betterment:  An investing tool that let’s you set it and forget it.  Use this link and get six months of fees waived. Mastering Mint:  Our book on how to get the most from Mint.  Listen to the episode and find out how to get it for free.

Debt affects your credit score and makes life more expensive. We’ll show you the cost of debt and reasons you need a kick ass credit score. A good credit score saves you money in many ways. You don’t have to achieve the “perfect” score but having a score above 760 will go a long way towards making life cheaper. What is a Credit Score? A credit score is a number calculated using a number of factors to show how creditworthy you are. Lenders use this number to decide whether or not to lend you money, what rate of interest you will pay on that loan and in the case of credit card companies, whether or not to issue you a card and what your limit will be. Credit card interest rates are pre-set so your score doesn’t affect that. What Makes Up a Credit Score? There are six major components that make up your credit score. We did an in-depth article on it but to quickly re-cap, these are the factors; Payment History: If you pay your bills on time. Utilization: How much of your available credit is being used. Derogatory Marks: Do you have delinquent accounts, past bankruptcies, judgments against you etc? Length of Credit History: How long you have had a credit file. Total Accounts: How many credit accounts you have open and how many types (credit card, mortgage, student loan, etc) Credit Inquiries: How many times has your credit been checked because you’ve applied for a new credit card or loan. What is a Good Score? There is a range your score can fall into. Each credit bureau has their own scale but in general, the ranges are as follows *300-630 is bad. * 630-689 is fair. * 690-719 is good. * 720-850 is excellent. Either end of those is pretty hard to achieve and some people obsess over their credit score way more than necessary. There are lots of reasons you need a kick ass credit score but kick ass can be achieved at 760. So if you are there, you’re set. Reasons You Need a Kick-Ass Credit Score If you don’t have a kick-ass credit score, here are some reasons to get one. Interest Rates This is the big one. The two most expensive things in life are taxes and interest and if you can avoid them, you will reach financial independence much faster. If you want to buy a home, a car, or borrow money for anything from starting a business to renovating your house, your credit score will determine the rate of interest the lender sets for the loan. What’s a point here and a point there? A lot when we’re talking about interest rates. If you buy a $300,000 house with 20% ($60,000) down with a 30 year fixed rate mortgage at 4.5% rather than 5.5%, over the life of that loan, you will save $52,794. Your monthly payment at 4.5% will be $1,216 versus $1,363 at 5.5%. That’s an extra $147 per month. If you invested that $147 every month at an average return of 7% a year and did that for 30 years, the same length of your mortgage, you would have $180,381.86. Just that little one percent difference could mean a difference of more than $200,000. Job Search Employers may pull your credit report as part of a back ground check. This is most likely to happen if the position involves handling cash, access to personnel files or a senior level position that requires a lot of decision making. You can see why a potential employer would want this information in those circumstances; people who have poor credit could be thought more likely to steal either money or the

As demonstrated in Vimes’ theory of boots, sometimes it saves money  long term to spend more up front.  What items are worth the splurge and which are not? Quality versus cost is not about being fancy and always buying the most expensive version of everything or being cheap and always buying the least expensive version of things.  It’s about making sure what you buys lasts as long as possible so you don’t have to spend more money constantly replacing the same item. Technology is a great example.  Apple products are less vulnerable to viruses than pcs.  A virus will cost you money either having to pay for repairs or replace the computer entirely. A good rule of thumb on where to spend the extra money is “anything that comes between you and the ground.”  So shoes, mattresses, and tires.  You spend a third of your life in bed so mattresses are not the place to save some money. Anything that needs to last a long time is worth the extra money.  Things like cushioned furniture and appliances.  What you put into your body.  You don’t have to buy only the most pure, organic vegetables harvested at the light of the full moon by Buddhist monks, but thinking you’re getting a deal by eating from the dollar menu everyday is a costly mistake in the future. Where can you choose the less expensive option?  Matt says clothes.  I would say you can spend less on casual, around the house clothes but a little more in dress and office clothes.  Wood furniture will last a long time without spending a fortune.  The only caveat would be weight bearing furniture like book cases which can bow if they’re the ultra cheap press board ones. Let’s hear from you in the comments.  What do you spend more on and where do you save? Show Notes Terrapin Mosaic Red Rye India Pale Ale: “A liquid art form.” Sierra Nevada Blindfold Black IPA:  Bright hops and roasty darkness. Betterment:  Our favorite investing tool.  Use this link and get six months free.

A shopping sniper knows what they want, gets it, and gets out.  We’ll teach you a few tricks to become the shopping sniper with the most confirmed kills. [share] Welcome to your training. I hope you enjoyed the video. But now it’s time to begin. It’s time to know all the secrets on how to spend less money. This is a 2,000-word training manual that will walk you through becoming a Shopping Sniper, and in turn, teach you how to spend less, save more money and allow you to focus on what’s really important. Why Are Americans Addicted to Shopping? You’d think because of the economic crash in 2008 that Americans would be a lot more conscious of their spending. You’d also think Americans would have toned down their shopping just a little bit, but instead, shopping totals have increased. In April of 2013, retail shopping sales increased by 0.1%. Not a huge increase, but an increase nonetheless. We are a culture of consumerism. It’s been ingrained in our DNA to want stuff, to keep up with the Joneses, to “shop till you drop.” It’s no wonder why American’s have trouble saving their money — they’re spending it while they shop. Shopping is so popular that we have TV shows based on it, including: * My Shopping Addiction * Supermarket Sweep * HSN & QVC * Million Dollar Shoppers * Extreme Couponing * The Entire Style Network * Guy’s Grocery Games We are being brainwashed into shopping. Shopping has become a skill and a sport in our country. In fact, the only way to avoid being sold to is to go to sleep. That is until dream TV is invented. Exposing 5 Retail Store Marketing Secrets I’ve been working in retail stores since I was 13 years old. I’ve also spent time as the head of marketing for a chain of retail stores. My job was to make people buy more stuff, and I learned these secrets from the best and the biggest stores in the country. As a former marketing director, I know what goes into making people buy more and buy often. My job was to create colorful circulars (newspaper ads), packed to the brim with coupons. I filmed funny TV commercials, created ads for magazines and spots for radio. I did whatever it took to get my brand in front of your face, over and over again. I’ve learned a lot during my time, and I think it’s time I expose myself…I mean my secrets to retail marketing. Having this knowledge will give you power and make you a better Shopping Sniper Secret #1: No Clocks, No Windows The simple reason for the this is because the stores don’t want you to pay attention to the time. They also don’t want you to realize how nice it is outside. By denying you insights to the outside world, they hope to keep you in the store and shopping longer. They also play very easy-to-listen music throughout the store. This music is meant to put you in a good mood to increase your shopping time. Oh, and they always crank the AC in the summer. Feels so good to shop in the mall during the summer, doesn’t it? Secret #2: Loss Leaders Walmart is well known for this marketing tactic, especially during the holiday season. Loss Leaders are products that are very popular and desirable, so the stores will sell these items at the lowest possible price without losing any money — however, Walmart is known for actually losing money on these items. The trick is to get you into the store by pricing these desirable items so low that you can’t pass up that kind of deal.