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

We’re doing personal finance potpourri today, answering listener’s questions about investing with Betterment, unpaid internships, 401K’s, passive income, and credit scores. 1.  What is Betterment and what’s so great about it?  Betterment is an investment tool that charges a low fee, no transaction charges, and abstracts investing.  LMM’s loves Betterment because it is a great first step to investing.  It’s easy to use and allows you to choose your level of risk with a simple sliding scale. 2.  Are unpaid internships worth it?  Jackie from Personal Finance with Jackie Walters sent this one in.  An internship is valuable even when unpaid.  You gain experience, have something to add to your resume, can cultivate good contacts for the future and sometimes an internship turns into a full time job. 3.  If an employer does not offer matching 401K funds, should you contribute the minimum to participate and the rest into a Roth IRA?  We’ve done a few Roth 401K episodes and Matt paid attention!  Unless you are getting matching, the only reason to invest in a 401K is if it would drop you down a tax bracket.  This will show you the federal brackets for 2014. 4.  Is passive income possible?  Absolutely!  There are lots of ways to earn passive income.  Being a landlord, website affiliates, investing. 5.  If you want to buy a house, should you close credit cards that you don’t use?  There is almost never a circumstance where it’s a good idea to close a credit card.  Part of your credit score is made up of the average age of accounts. The longer the age, the higher the score.  Closing an account will lower the average age.  If you have a card you don’t use often, put a small recurring automatic charge on it like a Netflix or gym membership.  This will keep your account active as some companies will close an account that has been dormant. Keep the questions coming guys! Show Notes Betterment:  Use our affiliate link to help support the site and get a few free months of fee-less investing! Mint:  LMM’s chosen budgeting tool.

In this special Father’s Day episode Matt and Andrew interview their dads to find out what mistakes and victories they had with money and what lessons they have for their sons and us listeners. The apples don’t fall far from the trees.  Andrew’s dad has been good with money for a long time.  Andrew’s father didn’t grow up with money and learned important lessons watching his own parent’s struggle.  He wanted to be a musician but soon realized that life was not a secure one.  He got a full time job and went to school at night and his job covered 80% of his tuition expenses.  He eventually received an MBA. When Andrew’s dad was coming up, it was unusual to job hop.  A lot of people of that age would work for the same company for thirty years and retire with a pension.  But his father was never afraid to chase more money and even when not actively seeking a new job, he would still go on interviews to see what might be out there.  He was able to increase his salary much quicker this way than by waiting for a small yearly raise. Andrew’s dad faced a few job losses in his career when the companies he worked for went under.  Faced with unemployment, he treated getting a job as a job, spending 8-10 hours a day on it.  He would contact a few recruiters, look at a few job boards and company websites and mine his contacts.  Even at the height of the crash, following these guidelines, he had a new job in less than four months while a lot of people around him went a year or more before finding employment. Dad’s parting advice is to never give up and live within your means while still enjoying a good quality of life. Continuing the theme of the apple and the tree, Matt’s dad is a musician as well.  And like Matt, he has only become educated about personal finance recently.  Also like Matt, Matt’s dad worked from a very young age.  He worked in a laundry for the same family from the age of ten through high school.  He did attend college and wisely decided to go locally and live at home to cut expenses.  He did graduate with student loans but paid them off within twelve years.  Sadly, twelve years sounds really quick to those graduating today. Matt’s father was a professional musician for six years.  As his family grew, he knew he needed to make more money and music became a hobby rather than a vocation.  Matt’s father lived paycheck to paycheck for many years, juggling payments for everything but the mortgage. Two things convinced Matt’s dad to take charge of his finances.  He saw Matt following the same paycheck to paycheck path and knew he had to lead by example.  And a friend recommended a book, The Richest Man in Babylon, which changed his views on money and finances.  The main lesson of the book being, “pay yourself first.” Today Matt and his dad are on the same path toward financial stability and teaching each other. Thanks to all the dads out there, whether you are good with money or not, you’ll always be our dads. Show Notes Ommegang Abbey Ale:  Andrew’s Father’s Day drink. Macallan 12-Year Single Malt Scotch: The drink Matt and dad shared. Career Alley:  Andrew’s dad’s blog.  This runs in the family too! The Richest Man in Babylon:  The book that helped Matt’s dad with his finances. Custom Rooms By Design: Even though Matt’s dad didn’t mention it, here is his website.

This financial life episodes give us a chance to delve into a listener’s personal finance life and to give them some advice to improve it. Today we have This Financial Life with Connor. Connor is 23, lives in Manhattan, has been working in finance as a commercial underwriter for about a year and is making $70,000 annually before bonus.  He has no debt,  credit card debt or student loan. Connor has some money invested in individual stocks.  He bought GM after the recall fiasco because the price was low.  A smart move as GM might have dipped, but it’s “too big to fail” so not going anywhere anytime soon.  At least until Elon Musk decides otherwise.  He also bought stock in an e-cigarette company because it’s a fast-growing trend.  And WWE (disclaimer:  Connor is not a pro-wrestling fan) after it dropped 43% on news that it did not get enough monthly subscribers to offset lost pay-per-view orders.  So Connor does his research and makes a move when other’s fear to tread.  A favorite LMM trait. Once again proving he is an attentive LMM’s fan, Connor has maxed out his 401K and Roth IRA accounts.  At present, Connor has about $54,000 invested, and the majority of that money is saved from part-time jobs he held while in high school and college.  If only us older folks had been as savvy as Connor. So what is there to improve upon?  Well, Connor might be living a little too baller.  Not because of his salary but because of where he lives.  Manhattan is expensive people.  Even though Connor has roommates, he’s spending 43% of his income on rent.  A good rule of thumb for rent expense is about 30%. Connor also makes the mistake that a lot of us make by keeping too much in a savings account.  That money is better utilized for something like Betterment.  A Betterment account can be liquidated in two days.  Unless you need bail money or something, there aren’t too many emergencies that will require faster access. We all wish we could be as smart as Connor was with his money so early on.  He has some room for improvement, but he is nearly a textbook case of smart money management.  As long as Connor continues to listen to our podcast, he’ll do well. Show Notes Mint: LMM’s budgeting weapon of choice. Betterment:  The source of your emergency fund for everything other than bail money.

What are the five mistakes you’re making in your financial planning?  Joe Saul-Sehy from Stacking Benjamins is here to let us know. 1. The curtains don’t match the… Maybe Joe came up with this innuendo because the best example of it came from a stripper.  The non-X rated version of this simply means that your stated priorities don’t match your spending habits.  If you’re a stripper looking to retire from the poll, you should not be spending $550 a month on weed.  If you want to buy a house, don’t spend $1000 on holiday presents your family doesn’t care about and will discard after a few weeks.  Match your shit up! 2. You don’t think or talk about money If you’re single, this can mean reading books on finance, listening to personal finance podcasts, I can recommend a good one, or reading the financial section of the paper.  If you have a family, it might mean a weekly meeting where you discuss that week’s budget.  Don’t shove money issues into the back of the closet. 3. You have no ideas what your goals cost You want to retire in ten years and buy a house on the beach.  How much does a house on the beach cost?  If you can’t answer that, you have no idea how much you should be saving.  Remember that your goals are not society’s goals.  List your goals and when you get to about #4, that’s probably the one you should be focusing on.  A lot of people spend more time planning their ten day vacation than planning the last thirty years of their lives. 4. Obsession with data over action Economic news is scary.  Watching obscure videos on Youtube by tin foil behatted conspiracy theorists is scarier.  Do that enough and you’ll be filling up your bunker with gold bars and K-rations.  Whether they’re right or they’re wrong won’t change the fact that if you don’t save money, you’ll be screwed.  Use economic news to occasionally tweak your plan but don’t let it rule your decisions. 5.  Failure to launch This is disorganization.  You tank your credit score not because you don’t have the money to pay your bills but because you forget.  Automate the process and you won’t even have to think about it. Joe loves Listen Money Matters and our listeners so much he has set up a page to direct us to his podcasts episodes that will be the most helpful. Here’s the special link that Joe created for us: StackingBenjamins.com/listen Thanks Joe! Show Notes Stacking Benjamins:  Joe’s website Stacking Benjamins Podcast:  Joe’s Podcast

When did tipping become such a minefield? Who do you tip, how much, how often? We are going to sort it all out for you. We are giving you just the tips and will tell you how much to tip pizza delivery and everyone else. It seems that everywhere you go, no matter what you do, there is someone you need to tip. And tip well. A decade ago for instance, 10 percent was an acceptable tip — 15 percent if the service was impeccable. Now, anything less than 15 percent is considered inappropriate. For good service, 20 percent is the norm. In more expensive restaurants, patrons are sometimes expected to tip up to 25 percent on the total amount of their bill (taxes included). Sometimes you expect it. If you are out to dinner, you know you are expected to tip the server. But there are a lot of other situations where you might not be so sure. We will explain what you should tip in both kinds of situations. Food Tipping around food probably causes the most consternation for people simply because there are so many scenarios. Unless you shop for your own groceries and cook all of your meals at home, these are some of the situations you will run into that require a tip. Restaurants Standard practice is to tip 15-20% on your restaurant check, and yes, that includes drinks. Sometimes there is a workaround for this. If the restaurant allows BYOB, do that. Sometimes BYOB places require a corking fee, a charge incurred for the server opening and pouring the wine. See if the corking fee is less than it would cost to buy wine in the restaurant. If you have a wait for a table, grab a drink at the bar and drink it slooooow then cash out before moving to your table. It’s customary to tip the bartender a dollar or two for drinks purchased at the bar so doing this may save you some money on the tip. Even if you do order more drinks with dinner, at least you won’t have to factor that first one into the tip when you get the bill. If you want to earn a little money when you go out to eat, book your reservation through Seated. You’ll get a $10-50 credit for Lyft, Starbucks, or Amazon. It will basically cover your tip! What if you had poor service? Unless the service was really egregious, it’s not cool to leave no tip at all. Servers generally tip out support members of staff so when you stiff a server, you stiff people like runners and bussers too who did nothing to deserve it. If you had poor service, consider who exactly is at fault. Was the food cold? That’s likely the server’s fault. They didn’t get the meal out to you in a timely way, so it sat in the window getting cold. Was the food of poor quality? That’s the restaurant’s fault, not the server’s. Tip them the standard 15-20% and just don’t return. Pizza and Food Delivery Well, you could have taken your lazy ass to the restaurant and eat in or brought the food home, but you couldn’t be bothered for whatever reason. So the person carrying food right to your door deserves something for doing so. But they aren’t refilling your drinks or checking to make sure everything was to your liking once you began eating. A fair tip for delivery is 10%. However, if the weather is terrible, tip at least 20% and preferably in cash. Delivery workers have a hard, dangerous job on a nice day; it’s ten times worse in searing heat, pouring rain, or driving snow. Pickup Orders You were too lazy to cook but not too lazy to go out and pick up your food. Do you have to tip on a pickup order? If it’s a small, simple order and there is a tip jar on the counter, throw a dollar or two in there. You don’t have to, but it’s a nice gesture.

We’re talking Roth and traditional IRA’s today with Darin Hayes, author of Beer Money: A Beer Drinker’s Guide to Personal Finance and Investing. Let’s put this in drinking terms.  Taxes are a hangover.  A Roth IRA gets the hangover out of the way before the drinking even commences because the money contributed is taxed before the contribution.  A Traditional IRA let’s you drink first and the hangover comes later because the money is taxed once it’s withdrawn. How should you decide when you want to suffer your hangover?  A very simple way to determine is whether or not you receive a tax refund.  If you get money back, do a Roth.  You likely are in a lower income bracket and don’t need the tax deduction.  A lot of young people with years ahead to work and invest will fall into this category.  If you’re older, making more and in a higher tax bracket, a Traditional IRA will give you that deduction that may drop you into a lower bracket. A Roth IRA also has the advantage of having no penalties for early withdraw on the principal.  This makes a Roth a good place to invest your emergency fund.  If you pull out any gains, there will be penalties but not on the initial investment. What is the difference between an IRA and a 401K?  A 401K is an employer sponsored program.  For those whose employer does not offer a 401K or are self-employed, an IRA can be set up by an individual and serve as your retirement account. A SEP-IRA is something for self-employed individuals to consider as well.  You can contribute up to $52,000 a year depending on income.  A SEP-IRA can be opened with a brokerage firm or an on-line investment account. How’s that for a simple break down?  Putting things in drinking terms makes everything easier to understand! Show Notes Beer Money: A Beer Drinker’s Guide to Personal Finance and Investing:  Darin’s easy to understand book on managing your money. Get Beer Money:  Darin’s website. Ommegang Hennepin: A rustic golden ale. Blindfold Black IPA: A light bodied IPA with a bold, hoppy character.

For many working Americans, a 401(k) is often the single largest asset they have. Unfortunately, managing a 401(k) can be extremely complicated, resulting in the poor management or complete negligence of this very important savings account. Fortunately for most Americans thought, they have some time to plan. As one of my favorite retirement quotes says, “Hang in there, retirement is only about 30 years away” – My jerk Uncle Dave. This is why Blooom was created. The robo-advisor-based service helps Americans of all income brackets with managing their investments through their employer-sponsored retirement funds, including 401(k), 403(b), 401(a), TSP, and 457 accounts. Blooom aims to make managing a 401(k) simple, easy and accessible — no matter how much money is in your account. In this Blooom review, we’ll cover the ins and outs of the service, along with areas where Blooom stands out and falls short, so you have a better idea of if the service is right for you. What is Blooom? Blooom is an automated online tool that manages your workplace retirement plan for a flat fee each month. As a Registered Investment Advisor with the U.S. Securities and Exchange Commission, Blooom is a fiduciary, meaning the company is required by law to act in your best interest and does not invest your funds based on conflicts of interest or additional revenue for the firm. For only $10 per month, Blooom applies its proprietary algorithm to allocate funds for you to help you achieve a greater return by the time you retire. Its direct management approach makes it, unlike other robo-advisors that merely analyze your 401(k) and send advice on how to manage your investments on your own. Once Blooom allocates funds to bonds and stocks on your behalf, your account will be rebalanced every 90 days to ensure appropriate investment. A considerable benefit of the Blooom service is that it works with virtually every retirement savings account that can be accessed online. All you need is to provide some personal information and the login information you use to access your online 401(k) account — and Blooom does the rest. Users can receive a free portfolio overview that shows the strengths and weaknesses of the account before choosing to enroll in Blooom’s services. Founded in 2013, Blooom currently manages more than $2 million in assets, with customers ranging from 18 to 76 years of age. One of the founding principles of the company was to provide day-to-day management of retirement funds to the overlooked Americans who may not qualify for additional investment assistance. Blooom is also currently the only robo-advisor that focuses specifically on 401(k)s. While this tool is great for individuals who need more assistance managing their 401(k), it may not be the best option for those who have multiple types of investments, such as IRAs. It is also designed to execute more high-risk investments, although this feature can be altered by the user. If you are interested in Blooom but are not quite sure if it is right for you, the rest of this article will provide a deeper dive into how the service works, including its strengths and weaknesses. Blooom quick view: Pros and cons How Blooom works Users start with Blooom by creating an online account and providing basic personal information like a...

  We answer your questions about emergency funds, whether should you prioritize debt or investing, and is being frugal the latest hipster trend?  Find out! I have $30,000 in a savings account and am moving it into Betterment as LMM recommends.  How much should I move over monthly until it’s all relocated? The answer will be different for everyone.  Andrew followed up with Dillon and found he was saving $1100 a month.  Andrew advised 2.5 times that amount be put into Betterment.  Once Dillon has $20-30,000 in Betterment, he should stop contributing and consider that his emergency fund.  Then start diversifying into something like Van Guard. I have a Capital One Quicksilver card with 0% APR until January 1, 2015.  Will I be charged interest if I don’t use this card after December 30 if the bill is due on January 12th? Even with a 0% APR card, you have to pay at least the minimum every month, otherwise you get an interest charge on the entire balance. Automate the monthly payment so it won’t slip your mind. I disagree with your stance of paying off debt over investing.  Even if the market has a down year, the money should be invested with a time horizon of at least five years.  This isn’t really a question but a statement.  We’ll allow it anyway.  When we make our argument, we are referring to high interest debt like credit card debt.  For something like  student loans or a mortgage with a low interest rate, you can invest your money before throwing huge amounts at those debts. In Australia banks allow you to open a trading account linked to your checking account.  I can buy and sell shares through my account.  Should I use Vanguard or stick with my bank? You can invest that way through Fidelity too here in the States.  If it’s like a 401K and you only have access to a limited amount of funds, the fees will likely be high. Vanguard has very low fees and as Betterment isn’t available in Oz yet, Vanguard is the best option – these are our favorite Vanguard funds. Do you think frugality is a trend right now? Absolutely, having really picked up steam after the 2008 crash.  There are even shows about couponing!  It seems to trend during crashes and then fade away a bit when things are better. We love doing 5 questions shows.  Keep sending your questions in.  If you want to know you can bet others are wondering too. Show Notes Betterment: The place to stash your emergency fund. Vanguard: For the more sophisticated investor. “All My Money” Personal Finance Rap Video: If you’re new to the show, you might not be aware that in February of 2014, we self-produced a rap video about personal finance. I’ll include the video below, but you can click the link to see a behind-the-scenes videos, lyrics, and more. Ommegang Hennepin Farmhouse Saison: This is the beer that Andrew enjoys on the show in a big-ass bomber bottle. See photo below.

Do you know how much your time is really worth? Today we discuss when to trade money for time and vice versa. There are things we all hate to do, mowing the lawn, painting, cleaning, food shopping.  Or maybe you’re a weirdo who loves those things.  That’s okay. Takes all kinds.  How do you decide if you should do these kinds of things yourself or pay someone to do them for you? Math, that’s how.  The simplest way to get a yes or no answer is to work out how much you make an hour, even if you’re not paid hourly.  You’re worth $20 an hour, it costs $5 a week to have Fresh Direct deliver your groceries.  It would take you two hours to drive to the store, shop for your items, pay, drive them home and bring them inside. Unless you’ve turned food shopping into a speed sport like Matt has and can bang the whole process out in fifteen minutes.  If you hate food shopping, then it makes sense for you to pay for Fresh Direct. But it’s not always just a matter of dollars and cents and time.  Maybe you work from home you lucky duck.  And you have plenty of time to clean your house.  You’ve done the math and financially it doesn’t make sense to pay someone to do it for you.  But you really hate cleaning your house.  So maybe from a quality of life stand point, it does make sense for you to outsource a hated but necessary task.  That’s okay too. Or on the flip side.  You loooove cleaning the house.  But you make thousands of dollars an hour.  While you’re happily mopping the floor, you could be making bank by spending those two hours working.  By all means, clean that house you freak!  Come do mine too if it will make you happy.  I want the best for you. So while you can easily answer this question with math, life is a bit more complicated than that.  As long as you’re not putting yourself in a hole, outsource what you don’t like to do and spend your time doing something you enjoy. Show Notes Red Hook Audible Ale:  Today’s tipple of choice. Rescue Time: A resource to help you eliminate time drains.

Relationships are hard enough as it is without talking about finances. So we’re gonna lay it down about how to handle money in a relationship. You have a better chance of staying married than winning the lottery so that’s good news!  But how can we increase the chances that you’ll stay married when money issues arise? To prenup or not prenup?  Oooh, sticky.  If there is a chance that the man or woman of your dreams is marrying you for your vast wealth or celebrity, a prenup might be the life choice for you.  But if you’re just a regular guy or gal, a prenup is probably not that important. A good solution to avoid money arguments is a joint checking account where each partner contributes a percentage of their income for household expenses. Each partner can also have a private account that they can spend on whatever they like. Open, on-going communication is better than the occasional fight.  This is especially important before moving in together or getting married.  Imagine finding out on your honeymoon that your beloved has brought $80,000 in credit card debt to the marriage. Money issues are an uncomfortable conversation to have and they should not begin with you asking but by you telling.  By putting your cards on the table first, the other party will feel more comfortable and less ashamed about disclosing their own financial situation.  Once a week or once a month, go over expenses together and see where one of you might be a bit over the top and need to cut back. Discuss large purchases before making them.  If your spouse comes home with a new outfit that’s probably not the end of the world.  If one of you comes home with a new car, that’s probably going back. Or driving you to the divorce lawyer’s office. In some situations a domestic partnership can be more beneficial than marriage.  Many employers offer health benefits to domestic partners and you can avoid the “marriage tax,” because joint filers are sometimes taxed at higher rates. Money is one of the biggest stressors in a relationship but it doesn’t have to be.  Follow our advice and live happily ever after. Show Notes Mint: LMM’s preferred budgeting tool.

 Listener Daniel Murrell to analyze his financial situation.  He shares a great strategy for making college affordable. Daniel is twenty three, lives in Southern California, works and goes to school.  And he has a smooooth voice.  Daniel works in overnight freight for Home Depot.  Daniel shares an apartment with his brother.  His portion of the rent is $475 a month and the utilities are $65 a month.  Daniel makes about $1300 a month, paid bi-weekly.  He’s able to use one check for living expenses. He drives a motor cycle to work rain or shine.  Daniel’s transportation situation is one of the things working for him and working against him. He rides his motorcycle to work rain or shine.  Daniel bought the bike used, spends $13 for gas a week and pays $140 a year for insurance.  However, Daniel bought a car with a personal loan a few years ago.  The car is long gone, traded in for the awesome bike but he’s stuck with the payment.  The balance on the loan is about $3500. Daniel is investing monthly in Betterment.  He has a few credit cards with $0 balances one with a small limit that usually carries a balance.  Daniel keeps about $800 in an emergency fund. What can Daniel do better?  The biggest problem is the personal loan used to buy the car.  Daniel is no stranger to hard work.  In the past he has worked multiple jobs and doesn’t mind doing so again.  By picking up another job for a few months, Daniel can get that loan paid off and use that money to invest more in Betterment.  Daniel should keep his unused credit cards open.  Closing those cards will lower his credit rating by shortening the length of his credit history and lowering his available line of credit. What did Daniel teach us?  He goes to school for two semesters, takes a semester off to work and pay off the previous semesters.  Genius!  This is something all students should consider. We also steered Daniel to Jim Wang’s site Microblogger so he can monetize some of his hobbies.  But I think he should do voice over work or record audio books.  People would pay to listen to Daniel read from the phone book! Show Notes Shiner White Wing Belgian White: Andrew’s tipple. Betterment:  LMM’s and Daniel’s favorite investing tool.

There is no doubt about it, being broke sucks. But that isn’t to say you can’t learn valuable lessons from being broke. These are the most important lessons I learned from being broke. * Credit cards are a good thing when used correctly.  You can earn cash back, free flights, and free hotel stays, win! * Debt is the devil.  It is the devil waiting to poke you with its pointy pitchfork.  No one likes that. * Banks are the devil too.  Fees, fines, charges, crap interest.  The banks are the devil with two pointy pitchforks. * Mint is mint.  We have a lot of love for Mint at LMM.  For a lot of us, it was our first step in taking control of our finances. * Investing is what makes people rich. Starting your own business is one path to riches, but  not everyone can or wants to start their own business.  But all of us can and should be investing.  Always be investing. * I don’t need everything.  Neither do you.  Stop buying shit! * Staying home is ok.  Invite friends over to cook a meal, watch the game, play cards.  Not only will you spend less than if you go out, but unless you have crappy friends, they’ll bring some booze! * Education is critical (books, not college).  This one is controversial, but for the same eleventy billion dollars you spent on college you could buy a lot of books.  College is one path to education, but it’s not the only one. * Don’t be afraid to ask for money.  Whether this means not getting low balled on freelance work or asking your boss for a raise, no one is going to give you money unless you ask. * Job security is a myth (except for teachers).  The days of being a “company man” and retiring after thirty years with a pension and gold watch are over folks.  You have to be flexible and always looking for the next opportunity even if you feel secure in your current situation. * Owning a home is not for everyone.  This ties into #10.  If you lose your job and can’t find work in your area, you can’t pack up and go if you are tied down with a house.  There are a lot of hidden costs both regarding money and time when you own a home. * Build an emergency fund for peace of mind.  Having that cushion allows you to sleep easier at night.  You could survive a job loss or a pay cut or an expensive car repair. * Junk mail.  The clue is in the name.  Credit card offers, coupons for stuff you don’t need and won’t use.  Don’t even open it, straight into the shredder. * Bad habits are killing you.  Overeating, smoking, drinking to excess.  You are wasting money, harming yourself, and costing the future you tens of thousands of dollars in medical expenses and missed work. * Choose Your Friends Wisely.  Don’t spend time with toxic people.  Surround yourself with people who support your goals and chuck anyone who makes you feel bad about yourself. * Do what makes you happy.  Just the simple things, a good cup of coffee, a walk in the park, spending times with your now detoxed list of friends. * Hobbies are important.  Choose a hobby that you enjoy, that teaches you something, that enriches your life.  Maybe you can even make a little extra money at it! * You are your own worst enemy.  We are the choices we make.  You don’t need to be told that a credit card is not free money.  You don’t need to be told that letting your student loans default is a terrible choice.  Whatever you tell yourself that allows you to continue that kind of behavior, stop.  Just stop, it’s that simple. Here is the original article. Show Notes

J Money of BudgetsAreSexy.com discusses the pros and cons of being a landlord.  Should you become a real estate mogul? J Money has been a personal finance blogger since 2008.  His first site was Budgets are Sexy and he recently started Rockstar Finance.  J Money found his way to PF blogging like a lot of other bloggers, from making a huge financial misstep.  He bought a too large house in 2007 in the DC area. Finding himself underwater and unable to sell the house, J became an accidental landlord when he decided to rent out the home he owned and rent a place himself.  But he was leaving the DC area so he had to figure out a way to make his situation work. J decided to hire a property management company to handle the day to day.  The company does everything from finding a tenant to taking care of repairs.  There is a lot of up front cost and stress but once a good tenant is settled in, the process is pretty smooth. If you are planning to remain geographically close to your rental property you may be able to manage the property yourself but if you are leaving the area, a property manager is going to be a necessity. Knowing your renter personally is a big bonus.  You’ll trust that person more and have a closer relationship which will decrease the odds of the renter trashing the place.  A renter who is a member of the military can also be a good bet as their personal and financial behavior has a direct effect on their career. Just like running any business, renting your home will have hidden expenses.  If it takes a month or two to find a tenant, you will be paying the management company as well as the mortgage payments until the place in rented.  But the peace of mind that comes with paying someone else be the first contact when the air conditioner brakes will be worth it for most people. Show Notes Budgets Are Sexy: J Money’s Budgeting Blog Rockstar Finance:  J’s collection of money articles. Red Hook Audible Ale: Andrew’s drink of choice today. Sierra Nevada Nooner Session IPA: Matt’s much more interesting than coffee choice of the day.

Andrew and Matt calculate the absolute minimum they could each live on.  We hope it will inspire you to cut some of the frills out of your spending. If you cut your expenses to the bone, how much could you live on?  And what does “live on” mean?  Would you be willing to eat ramen for every meal or would you still need a weekly Whole Foods run?  Is it realistic to get rid of your car? We pad our expenses with a lot of unnecessary fluff.  If you lost your job or if you decided to quit your job, you would get by on a lot less than you are spending now.  As a hypothetical, list out your expenses, or check your Mint account and decide what you could cut but still maintain a good quality of life and be happy. Now see what you could cut to live like a recluse, never going out, eating only two meals a day, no alcohol, no public transport. Of course you could try one of these approaches for a month and see how you do but it’s really just an exercise.  It can be reassuring to know that if you had to live on $1500 a month you could. Imagine if you did it though.  For just one month.  How much money you would accumulate and the things you might discover you could live without for longer than a month.  Maybe some of those changes will become a permanent part of your life. Our mental attachment to things is strong but once that attachment is broken, we usually see that not having cable does not really change day to day life in a negative way.  It may even have a positive impact.  Now you have to fill those hours spent in front of the TV with something else.  Maybe you read more, cook more, start exercising, spend more time with your family.  Take the one month challenge and let us know how you do! Show Notes Shiner White Wing Belgian White: With hints of coriander and orange peel. Mint:  The easy way to budget. Betterment:  The smart way to invest.

We get lots of questions about student loans so we decided to bring on an expert to help.  Heather Jarvis joins us to answer of your pressing questions. Heather graduated from Duke Law School with $125,000 in student loans.  She wanted to use her degree to help poor people so it wasn’t going to be a big salary helping her pay that back. Heather has worked on the government’s student debt relief programs but admits they are complicated and tricky to access. Heather’s site is designed to make things easier for those who already have student loan debt. We asked Heather to explain some of the programs to help deal with student loan debt. 1. Income-Based Repayment Plans This is an income-based repayment for federal student loans. You do need to show financial hardship in order to get it. Which shouldn’t be too hard as student loans are a financial hardship. Your monthly payment will be based on the income reported on your tax return and compared to the national poverty rate. 2. Public Service Loan Forgiveness Program Public servants can apply to have their loans forgiven after ten years. Heather says, “It’s all about making the right kind of payments, on the right kind of loan while working the right kind of job.” 3. Deferment or Forbearance If you’re having trouble paying your loan no matter how much the monthly amount is lowered to, you can apply for a forbearance, which allows you to defer your loan payments for a certain period of time.  The interest still accrues during this period though so keep that in mind. Basic Student Loan Tips from Heather * Everyone should be filling out the FAFSA forms, even if you think you won’t get it. * Try to get federal loans over private loans because they tend to have lower interest rates. * Use StudentLoans.gov and check out some of the tools and services there. * State loans are the worst of both federal and private loans. * Be careful about what you borrow. Understand what kind of loans you have and what your options are. * Think more carefully about the cost of the colleges you plan to attend. * Consider community college for a few years to do your prerequisite courses. College debt can be crippling but there is help out there.  If you are struggling, consult Heather’s site and get some help. Show Notes Ask Heather Jarvis:  Take control of your debt. Mint:  The easy way to invest.