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Last week we spoke about the future of work when automation wipes out 47% of American jobs. That episode begs the questions, will universal basic income be part of our future? Will free money be the answer to our problem? When the robots steal our jobs, we will have to havoe money coming in from somewhere to house and feed ourselves. One way to do that is through universal basic income. Today we look at the pros and cons of universal basic income and see how free money will effect out future. What is Universal Basic Income? While deciding how to implement and pay for UBI can get complicated, defining it is simple: ” The government would pay every adult citizen a salary, regardless of wealth, employment income or if they worked at all. Doing so, the theory goes, might solve a host of endemic economic problems, from poverty to chronic joblessness, that is only likely to worsen in the coming century.” The free money is not intended to make people rich, merely to meet basic needs and bring all citizens above the poverty line. The amount usually quoted to do that in the US is $1,000 per month. UBI is nothing new, not even in the US. Alaska has a UBI program and has for decades. Alaskan residents receive about $2,000 per year, and the money comes from oil revenue. Vote With Your Dollars We all know what it means to vote with your dollar. But what does it have to do with UBI? The vote is not an accurate one if not everyone gets a vote. Those without dollars don’t get a vote, but that doesn’t mean they don’t have an opinion on the election, just that they don’t get a vote. Universal basic income would ensure that everyone had at least a dollar so everyone would get a vote. It’s Not Just the Robots Until pretty recently most of us had never heard the term universal basic income, and now it’s everywhere. Why is it suddenly so ubiquitous? As we mentioned above, it’s partly due to the coming automation. But it’s not the only reason. Income inequality is another. Income inequality is defined as “the extent to which income is unevenly distributed among a population.” In the US, the top 0.01% earn $27 million a year. The bottom 90% earn $31,000. CEO compensation between 1978-2013 and adjusted for inflation rose 937% compared to the average worker’s increase of a lousy 10.2% for the same period. This model is not sustainable. People might not take to the streets because they’re underpaid, but the same won’t be said when they have no job at all. So much like universal health care, universal basic income is something that is very much on the table. Hoarders Hoarding is why trickle-down economics is bullshit. It was bullshit when Reagan touted it, and it’s bullshit now when Trump bloviates about it. The ones at the top don’t put their money back into the economy by creating jobs or spending it. They hoard it. Do you want to stimulate the economy? Then give money to low-wage workers. “All those dollars low-wage workers spend create an economic ripple effect. Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.” Pros of UBI There is a loooong list of pros for implementing UBI,

Robots are going to take our jobs. Things are changing faster now than even during the industrial revolution. We have to start planning now because the future of work is changing rapidly. This episode is not meant to scare you. It’s meant to prepare you for the changing employment landscape. Breaking the looms is not a long-term solution. The Future of Work We wrote an article on people’s biggest financial fears, and job automation was one of them. And for a good reason. Oxford University released a report detailing just how dire things are likely to become: “According to our estimates, about 47 percent of total US employment is at risk. We further provide evidence that wages and educational attainment exhibit a strong negative relationship with an occupation’s probability of computerization.” One out of every two people will be without work. Even at the height of the Great Depression, the percentage of unemployed Americans was “just” 25%.Imagine an economic scenario that is twice as bad as the Great Depression. American Productivity American workers are the third most productive workforce in the world. In 1998, American workers put in 194 billion hours. Fifteen years later, in 2013, our output increased a whopping 42%, and we were not working more hours, it was still 194 billion per year. The first decade of this century was the first in US history that there wasn’t job growth. There should have been ten million jobs created in that time, and there were zero. Why? Technology is now destroying more jobs than it creates. Who’s At Risk? Almost half of the American workforce represents a wide array of careers. Is your’s on the chopping block? There are three significant sectors likely to be impacted first. Truck Drivers Take a look at the map below. It shows the most common job by state and truck driver predominates. Even in states like California where you might think it’s tech related, nope. Truck drivers. There are 3.5 million truckers in the US and 8.7 million jobs related to the industry that don’t involve driving like mechanics and driving instructors. When automated trucking takes over, 6% of the American workforce will be impacted. How close are we to fully automated cars? Within two decades, there could be 100% autonomous penetration. The Auto Industry The auto industry will be walloped by driverless cars. In the pretty near future, people won’t own cars. Young people are already part of that trend. Don’t take our word for it. Those in the auto industry agree. *GM says self-driving by 2018 *Ford says “true self-driving” by 2021 *Honda says “self-driving on the highway” by 2020 *Toyota says “self-driving on the highway” by 2020 *Renault-Nissan says 2020 for “Autonomous Cars in Urban Conditions” and 2025 for “truly driverless cars.” *Volvo says “self-driving on the highway” by 2021

You can DIY a lot of your financial life, but sometimes you need some help. But you only want to choose the best people when it comes to your money. Today we’re discussing how to interview and hire a financial team. Shannon McLay from Financial Gym is our guest today. Financial Gym provides one on one personal training to help people achieve their financial goals. Don’t Be Afraid to Ask At LMM, we always tell you that you can handle your money on your own and that no one will care more about your money than you do. If you can master Mint, Betterment and Turbo Tax, you can mostly DIY it. There are some circumstances where you need to find some outside help. When that happens, you have to hire a financial team. Who should be a part of your team and how do you know a good member from a bad one? Drafting Your Team Not everyone needs all of the team members listed below. Depending on your circumstances, you might need none or all of them. Accountants, Who Needs Em? If you are a W2 employee, you don’t need an accountant. You need a bottle of wine and Turbo Tax. If you are self-employed, or have not filed a tax return for the past year or years, or have had significant life changes in the past year, gotten married, had a kid or gotten divorced, you might need an accountant. Or CPA’s? A standard accountant cannot represent you before the IRS, so if you have to deal with that particular body, you need a CPA. If a person who acts as their own attorney in a courtroom has a fool for a client, a person trying to deal with the IRS alone is equally foolish. Lawyers Most of us don’t need to hire a lawyer either. You can do a lot of simple things like basic estate planning, wills, and trusts, and assign power of attorney through Legal Zoom. You may have to have the documents certified locally, but for basic stuff, you don’t need an attorney. If you have a lot of assets or complicated family relationships, you may need to hire an attorney to handle your estate planning, but most of us can do the basics on our own with Legal Zoom. Financial Advisors This person is the quarterback of your team. They call the plays. As such, they have to be doing a lot more than just “managing” your money. This person doesn’t work for free, so if they are only handling one aspect of your financial picture, you’re wasting your money. Actively managed funds almost never beat the market. If you want your investments to make money, the important thing isn’t to have a financial advisor; it’s 90% asset allocation and 10% what kind of assets are in your portfolio. “Active funds stumbled through another brutal year, with barely 1 in 3 large-cap managers able to beat the S&P 500, according to figures released Wednesday by S&P Dow Jones Indices. The news got worse farther down the scale, with 89.4 percent of mid-cap managers falling short and 85.5 percent of small-cap managers missing.” A good advisor does a lot more than manage your money though. They help you create a financial plan and adjust it when you have significant life changes happen. Your advisor will help you stay on track with your financial goals. He or she can also serve as a tie-breaker between you and your spouse.

Data breaches have been in the news recently, and the headlines are scary. Today Farnoosh Torabi joins us to discuss protecting yourself from credit card fraud and identity theft. Farnoosh Torabi of the So Money podcast is the Chase Slate Financial Ambassador. She can give us the insider’s scoop on how to protect our data and our credit scores from fraudsters and even ourselves. All That Work One of the most important things you can do for your financial health is improve your credit score. Having a good score makes life less expensive because of the higher your score, the better interest rates you get when you borrow money for things like buying a home or a car. But if you are careless with your personal information, all of that work can be undone. Even if you are careful, you might still be at risk of having your data hacked.  “Equifax, one of the three credit reporting agencies in the US, announced that it was compromised between mid-May and July, potentially exposing Social Security numbers, credit card numbers, and other personal information for up to 143 million Americans.” Credit Fraud You don’t have to have your card stolen from you for your account to experience fraudulent charges. When a server takes your card away from the table at a restaurant to run it, they can steal the account number, expiration date, and security code just by writing those numbers down. The data on a credit or debit card is on the magnetic strip. That can be “skimmed” by attaching a card reader to legitimate payment terminals like ATM’s and gas pumps. You can be “phished,” tricked into entering your credit card details into what you think is a legitimate site or even giving it out over the phone from someone pretending to be a representative from your bank or credit card company. If a scammer has access to sensitive personal information like your Social Security number, date of birth, and mother’s maiden name, they can open new credit accounts in your name. Protect Your Accounts If you think it’s the bank and credit card companies that should keep your accounts safe, you’re correct. And these companies have entire departments dedicated to doing so. But they can only do so much. The crooks are merely half a step smarter, so those tasked with protecting you are always playing catch up. Scammers are smart, but they’re also lazy, so they are always going to look for the low hanging fruit first.That’s why some scams, like the old Nigerian prince ones, seem so ludicrous to anyone with a brain. Who would be dumb enough to fall for that?! Well, plenty of people but the scammers want to weed out the people with functioning brains first, so they don’t waste time trying to scam someone who is not going to fall for it. Scammers are looking for dumb people but also careless people so you need to take the steps you can to protect your information. Freeze Yo’ Self One option to protect your credit is to freeze it. For about $30, you can freeze your credit report. Freezing prevents anyone from accessing the report. If lenders can’t pull the report, you cannot open a new account. The problem with a credit freeze is that there are legitimate reasons for accessing a credit report. If you are applying for a loan like a mortgage or want to rent an apartment, the lender or landlord will pull your credit report to see if you are a good risk.

Looking for a way to make cheap meals that hit the spot? The shopping trolley is one of the easiest places to cut spending. Here is our ultimate guide to saving money on groceries and making good food on a tight budget. Most of us spend too much on food. You can still eat well or maybe better than you currently are, and spend less money. Here are the five steps to planning, buying, cooking and storing the food you want to eat. 1. The Planning Take a few minutes to plan out what you want to eat for the week so you won’t be tempted by the siren song of the cheese counter. Meal Planning Not food shopping hungry is a hackneyed bit of old advice. If you’re that hungry, eat something while you shop, just keep the package and give it to the checker. Otherwise, you’re a dirty thief. The advice that will save you more money is to make sure you shop with a meal plan. Search sites like Budget Bytes, Allrecipes, or Epicurious to get some meal ideas. Or go digital. Food on the Table is a site that asks your preferences, checks for sales in your area, and sends a list of five meals to your smartphone. Go armed with your list, written or digital for a week’s worth of meals and stick to the list.  Check The Circular If you don’t get the weekly sales flyer delivered with your newspaper, you can find most store circulars online. Have a browse through that and plan your meals around what’s on sale.  Check out staple items that might be on sale so you can stock up. Don’t want to clip coupons? Then check out Ibotta. Ibotta is an app that gives you cash back on purchases you make in places like grocery and drug stores, general retailers, and online retailers. There are no paper coupons to cut out, keep track of, or annoy the checker and the people behind you in line at the store. Check Your Fridge And Pantry There is bound to be some veg that’s almost past it’s prime that needs to be used up or a can of something that’s been lurking in your pantry for ages. Incorporate what you’ve already paid for into your plan for the week. Throwing away food is throwing away money. Maybe once a month, have a week where you don’t buy any groceries and just live on the bounty of the pantry. 2. Where To Shop Prices from one shop to the next can vary widely. If you’re just in the habit of driving to the closest big box store, do a little research. You might be able to get better deals and even better, more interesting food elsewhere. Shop Around This doesn’t mean driving across town, wasting gas because one store has two things you need for ten cents a pound cheaper than the store nearer to you. Now that most circulars are available on-line, you can shop around before you even leave home. Shop Ethnic Markets If you have an Asian, Mexican, or Middle Eastern market near you, you might hit the jackpot.  These stores tend to be cheaper than their big-box counterparts. They have less overhead, they have less space for storage, so the food is turned over more quickly, and you can find all sorts of exotic things you’ve never tried. Spices and produce in particular tend to be less expensive in these markets. Even checking the ethnic aisle at your regular store can be cheaper. Goya spices are cheaper than McCormick spices in the regular grocery in my neighborhood. Shop Online There is a gorgeous Whole Foods one block from my apartment that is only about five years old. I loved shopping there at first.

There are a lot of personal finance terms thrown around that many of us don’t understand so when we hear them, we just nod and smile. But LMM is all about education, so we’re going to devote this episode to understanding economic bubbles. Our episode a few weeks back on cryptocurrencies got us thinking about economic bubbles. It’s an interesting subject and Bitcoin might be the next one, so we wanted to delve further into bubbles. What is an Economic Bubble? A bubble is a fast rise in an asset’s price followed by a contraction. Bubbles happen when the price is not justified by the asset itself but rather by the over-exuberant behavior of investors. When there are no more investors willing to pay the overinflated price, people panic and sell and the bubble bursts. Peter Kugis of Stanford University defines bubbles more simply, “A bubble is where investors buy an asset, not for its fundamental value, but because they plan to resell, at a higher price, to the next investor.” Economic bubbles rely on the greater fool theory. The people who enter the bubble early may not necessarily believe what they’re buying is useful but what they do think is someone in the future will pay them more for it than what they paid themselves. Somewhere out there is a bigger fool, but at some point, there is the last fool. Kind of sounds like a Ponzi scheme doesn’t it? There are some similarities, but a Ponzi scheme is a deliberate fraud. The money people think they’re investing is never actually invested. Instead, it’s used to pay “returns” to earlier “investors.” The scheme has to grow fast to keep paying the early investors. When the growth finally slows down, those investors are no longer getting the expected returns, and the whole thing collapses. Bernie Madoff was the most recent and probably most spectacular example of this. Fraud can be part of a bubble, but fraud isn’t necessary for a bubble and bubbles do involve real investments. Historic Economic Bubbles Bubbles are nothing new. The first bubble may have happened nearly 400 years ago. The Housing Bubble The most recent bubble was the 2008 housing crisis. Banks were handing out mortgages like Halloween candy. Investors got so greedy they ignored how much risk they were taking. Mortgage companies like Country Wide were churning mortgages. They only held the mortgages for a short time before selling them off which means they were assuming none of the risks. That’s why they were giving million dollar mortgages to waitresses. When people who could never afford those mortgages started to default the companies who were overexposed in the sub-prime mortgage market like Lehman Brothers collapsed. Lehman going down wasn’t the first domino to fall but it caused a massive chain reaction. The whole thing is too complicated to cover as part of another show but if you want to understand it better, watch The Big Short. TL: DR, greed caused this. Dot-Com Bubble In the 1990’s there was a ton of money from venture capitalists looking to fund the next Facebook or Amazon. Investors in their greed lost their sense of caution and threw cash at startups. At the peak of the market, some big tech companies placed big sell orders on their stocks which made investors panic and start selling off. Many of the startups began to fail, and the Fed hiked interest rates several times. At the end of 2001, most publicly traded dot-coms went under and all of that v...

We spent years accumulating money for retirement, but when we finally get there, it’s all about decumulation, counting down your money. Learn how to retire and what to do with your time and money. We talk a lot about early retirement, but today we’re talking to someone who’s living it. J. David Stein retired at 46 and had since launched his successful podcast, Money for the Rest of Us. Retirement is a Dirty Word If you’re fairly young and tell people you’re retired, two things will happen. They’ll be jealous and maybe even resentful, or they’ll feel sorry for you, sure that you’re bored and unhappy and will come up with all sorts of projects you should work start. As it turns out, retirement in the conventional sense of it isn’t so good for you either. Retirement is ranked #10 on the list of the 43 most stressful life events. Below is how the Harvard School of Public Health described retirement; “A life course transition involving environmental changes that reshape health behaviors, social interactions, and psycho-social stresses” that also brings shifts in identity and preferences. In other words, moving from work to no work comes with a boatload of other changes.” Work provides a lot of benefits that we overlook. Work gives us a purpose, a reason to get out of the house, a routine, and social interaction. We can forget all of those pluses when all we can think about is how aggravating the commute is or how much we hate getting up in the morning. Don’t believe it? Just look at Andy Rooney. He retired from 60 Minutes on October 2, 2011, and died on November 4, 2011. Or Keith Richards. Look at the guy. The only thing keeping him alive for the past 30 years is the fact that the Stones still tour. Redefine Work If you’re going to retire at 46 like J. David did or 35 or even 60, you are going to want to find something to fill your time. The average life expectancy in the US for a woman is 81, for a man, 76. If you retire even in your 60’s, that’s a long time to play golf or sit on the porch in a rocking chair yelling at the neighborhood kids for playing on your lawn. It does not work that you dislike (mostly), it’s the lack of freedom. The same day J. David retired, he launched his first post-retirement project. It wasn’t his last, and it took a few tries to get it right. J. David got it right with Money for the Rest of Us. After the first year, the show was bringing in $55,000. It now makes significantly more than that and requires only 25-30 hours a week of his time. You don’t have to make a ton of money with whatever project you decide to take on in your retirement or any money at all. Money isn’t the point. The point has a purpose, having a routine, having something to discuss with other people. No one wants to hear about your backswing or whatever golfers talk about. How To Retire Decumulation means spending down the money you’ve saved for retirement. The second those paychecks stop coming in, you realize, shit, this is it. Whatever I have now, I have to make it last. There are a lot of strategies for retirement that are supposed to make sure you don’t run out of money. We’ve talked a lot about the 4% rule, and we like it for its simplicity. You can withdraw 4% of the money you have invested to live on each year. So if you have $500,000, you can spend $20,000 a year and theoretically never run out of money. Theoretically might be a problem though.

We’ve covered many of the basics about rental property, and now we’re going to go deeper. We will explain the BRRR strategy and how cash out deals work. Rental property is LMM’s favorite form of passive income. But if you want to maximize your real estate investments, you’ll have to get a little less passive. If you like paperwork and money, you’re going to love the BRRR strategy! BRRR: It’s Nothing to do With Winter If you are a Bigger Pockets fan, you’re familiar with the term BRRR or cash out deal. Let’s break it down for the beginners. B is for Buy The first step is to buy an undervalued rental property. Why would a place be undervalued? It could just be a “psycho deal,” your lucky day when you get a great deal because the family member who inherited the house lives far away and just wants to get rid of it quickly. Maybe the home is undervalued because it needs some work. If that’s the case, it brings us to us first R. R is for Renovate You’ve got yourself a fixer-upper. In the case of a relative selling the house, it might need some updating. If it was undervalued for the neighborhood, it might need serious renovation like a new roof or foundation. Some renovations will increase the value of the home more than others. According to Investopedia, these are the top five improvements for 2017. 1. Install fiberglass insulation in the attic Average cost: $1,200 to $2,000 Expected Recoup: 107% 2. Replace your front door Average cost: $1,500 to $2,500 Expected Recoup: ~90% 3. Install new vinyl siding Average cost: $12,000 Expected Recoup: 80-84% 4. Upgrade your garage door Average cost: $2,300 to $3,000 Expected Recoup: ~80% 5. Switch to hardwood floors Average cost: $5,000 to $6,000 Expected Recoup: 78-91% Don’t go crazy with the renovations. If you got a psycho deal and paid $60,000 for a home that is worth $85,000, don’t spend $30,000 renovating the place. R is for Rent The 1% rule is an easy way to calculate how much rent you should charge. According to the 1% rule, the charge for rent each month should be equal to (or greater than) 1% of what you paid for the house including any renovations, repairs, and improvements. We bought our house for $60,000 and put $15,000 into renovations so the rent we charge should be $750 per month. The less time you are without a tenet, the better. You never want a rental property to have negative cash flow because it’s sitting empty, especially when we get to the next R. That said, you want to vet tenets thoroughly. A vacant property is better than one with deadbeat tenants who don’t pay their rent and damage your property. R is for Refinance When we hear the word refinance, we usually think the goal is to get a new loan at a better rate. That’s why we refinance student loans. We’re paying 8% interest, but when we refinance with we get a new interest rate of 4%, and that saves us a lot of money. Saving money is not always the goal when you are refinancing a rental property. The goal is a cashout deal, to get cash out of the house but still own the home. It’s your equity that you’re taking out of the house when you refinance. You bought an $85,000 house for $60,000. That’s already $25,000 in equity. You put down 20% which was $12,000, so in reality, you have $37,000 in equity. You can pull out 20% which is $17,000 and use that money to buy another home. If you pull out 100% or more of your initial investment in a cash out deal,

Do you want to buy a home but think it’s out of reach? You may be eligible for the American Dream Program which can help you buy a home for just a few thousand dollars down instead of a 20% down payment. We know a lot about personal finance, but we can’t know everything. That’s why we love it when a listener educates us! That’s the inspiration for this episode. Home is Where the Heart Is We have talked a lot about buying a home, but many of the discussions have centered on rental property. And with good reason, it’s a great way to earn passive income and achieve financial independence. But for many people, a home is more than a chunk of their investment portfolio. A home is a place to call your own, a place to raise your family, and a place to make memories. Getting on the Property Ladder When we talk about buying a home, whether to live in or for a rental property, we stress the importance of saving up for a down payment of at least 20%. That is so you can avoid PMI but depending on the housing market in your area, that can put buying a home out of reach of many. PMI When you buy a home with less than 20% down, conventional lenders will require PMI, private mortgage insurance. PMI is to protect the lender if you default on the loan, and your home goes into foreclosure. The fees for PMI vary according to the size of your down payment and your credit score. Typically it ranges from 0.3% to 1.2% of the loan amount on a yearly basis. There are a few ways to pay for PMI. Most commonly, the PMI premium is part of your monthly mortgage payment, but some lenders require buyers to pay the entire premium up front at closing. Paying upfront is not ideal because if you decide to refinance, you may not get the premium back. Be sure to know what your lender requires if you don’t have the 20% down payment needed to avoid PMI. Just Say No The median sale price of a home in the US is $225,262 so if you have a PMI of 1% you will add $188 to your monthly mortgage payment! PMI is one of the things people mean when they talk about the hidden cost of owning a home. PMI has no benefit to the homeowner; it’s for the protection of the lender. PMI payments do not go toward paying down the principal on your loan or to building equity. Mortgage insurance is tax deductible, but PMI is only deductible for married taxpayers who make less than $110,000 per year. If spouses file individually, the threshold plummets to $55,000. PMI is nothing more than a fee you get stuck paying if you can’t come up with a 20% down payment. Most lenders cancel the PMI requirement once you have reached 20% equity, but some require you to keep PMI for a specified period meaning even once you reach 20%, you have to keep paying. Be sure to know what your lender’s PMI requirements are. You’re Not Getting Any Younger The average age of first time home buyers in the US is 33. The average age of a first-time mother is 28, and for fathers, it’s 30. So by the time you’re 33, your kids are pretty tired of sleeping in a dresser drawer in your one bedroom apartment. We would add one more commandment to the list above. Never pay PMI. But you need to buy a place now, to hell with PMI! Not so fast.

Today we’re joined by Wes Chapman, founder of A Human Project. Wes shares his story and tells us how getting rid of the victim mentality can bring us greater success. Wes is the founder of A Human Project, an organization that incubates creative, scalable solutions to systemic problems and gathers together the greatest minds to solve global issues in education, health, and society. With a background in technology, design, and entrepreneurship, Wes has worked with clients like Verizon, Microsoft, A&E and has been the recipient of multiple “App of the Year” awards from Apple. Wes is also co-creator of The Human Gathering, named “The #1 Leadership Conference” by Forbes, which brings together leaders in business, technology, philanthropy and the arts. Social Media: Good or Bad? Social media is a daily part of life for most of us but is it a good thing or a bad thing? Like a lot of things in life, social media is a tool that can be used well or used poorly. Social media lets us stay in touch with family and friends who don’t live near us, we can use it to buy and sell things, we can use it as a news source (this can be good or bad), or to find out about events in our local community. We can also use it to compare ourselves and out achievements unfavorably to other’s; we can use it to diagnose ourselves with diseases and conditions we don’t have, and we can use it to stir up drama and attention for ourselves. Maybe most damaging, we can let social media feed a victim mentality. We all know people who do this. They post their woe is my tale, a bunch of people gives them attention and they continue to do it. It doesn’t work forever. Eventually, even the most dedicated friends get fed up, but while it works, it works well as a source of attention. What is a Victim Mentality? A victim mentality is, “An acquired personality trait in which a person tends to recognize themselves as a victim of the negative actions of others, and to behave as if this were the case in the face of clear evidence of such circumstances.” Wikipedia In simpler terms, a victim mentality is using the things that have happened to you as an excuse not to do the things you could or should do. I can’t do X because Y happened to me. Bad things happen to everyone, and some of them are horrific. But you can use those bad things to grow yourself or to stop yourself. Money and the Victim Mentality The victim mentality is a really comforting place to dwell. You are not responsible for the things that have gone wrong in your life. You’re powerless; things happen that are beyond your control. Nothing is your fault. Being blameless is pretty nice. The problem is, thinking that way changes nothing. The bad things keep happening, and you do nothing to change them. This mindset can be especially powerful when it comes to money. It’s not your fault you have credit card debt; your parents never taught you about money. It’s not your fault you can’t pay off your student loans; your cheap boss doesn’t pay you what you’re worth. It’s not your fault you had to declare bankruptcy, and the bank should never have loaned you more money for a house than you could afford to pay back. You should have started saving for retirement sooner; it’s too late now so you may as well forget about it. Breaking Out of the Victim Mentality Leaving the victim mentality behind is scary. You will lose attention and validation; you will have to take risks, you will have to make changes,

We get a lot of great questions from listeners and readers. And if one of you asks a question, dozens of other people have the same question. In order to reach you all, we like to do five questions episodes. So here they are, five awesome questions from you! Is there such a thing as being too frugal, Betterment or Vanguard, how can you save money in college, what should you do with an IRA, where should your emergency fund live? We’re going to find out. Question 1 I just discovered your podcast yesterday and have been bingeing it at work ever since. A little about me, I’m a recently graduated 23-year old that just got my first full-time job four months ago. I’m really into budgeting and keep track of every dollar I spend in an effort to save money in case of a surprise expense (medical bills, lawsuit, car accident, accidental child (lol), etc.). I wanted to pick your brains about a few things because I feel conflicted about my spending.  * I spend as little as possible, I now go out maybe twice a month, and feel guilty about it after. I stopped buying things that I enjoy consuming as well. I hate “impulse buying” because I did that a lot in college and I would always feel stressed about the lack of funds in my account. My question for you guys is how do you decide what to buy and spend money on and what is your justification every time you pull out your wallet for non-essentials? * Sometimes I feel like my frugality caused stress in my relationship. You guys are both married or have girlfriends from what I heard on your show, how do you balance being frugal and showing your significant others a good time? Hope to hear back from you, keep making awesome content. -Tanner Are you paying yourself first; maxing out your 401k if your employer offers one, investing with Betterment, do you have an IRA? Do you have credit card or student loan debt? Do you have an emergency fund? If you answered yes, no, yes, relax! The level of angst you have surrounding money is understandable in people who answered no, yes, no but if you have a solid grasp on your finances, you shouldn’t be this stressed out. Life would be pretty grim if we only worked to spend money on essentials. What is the point of working hard if you don’t get some pleasure out of the money you worked so hard to earn? We can understand your fear of impulse spending because you’ve had a problem with that before. An easy way to address that is to write down any purchase you would consider an impulse buy or over a specific dollar amount on a 30-day list. If you still want the item after 30 days, it’s not an impulse buy. Figure out what your spending priorities are. Some people don’t care so much about fashion and are happy with clothes from Target but absolutely must have the latest iPhone. Fair enough. You can have more of some and less of something else. More iPhones and fewer clothes. Romantic partners, those worth having anyway, won’t mind frugality but no one likes a miser. You can be frugal but don’t be cheap. Most people won’t object if you choose a flight with a stopover for your vacation because it’s $100 less expensive than a direct flight. But most people will object to a 24-hour Greyhound ride because it’s even cheaper than flying non-direct! You also don’t have to spend a lot or any money to have a fun date. We wrote an article that will give you 16 fun, cheap date ideas.

Small talk only gets you so far. If you want to improve your career, your relationships, and your life, you have to move past small talk to something deeper. Today we interview two experts on the art of meaningful conversation. Mollie Kinsman Khine and Taylor Buonocore are the inventors of  Convers(ate), a game designed to spark conversation. The Lost Art of Conversation Why have our conversations become so “surface,” often rarely moving beyond mundane things like the weather or what the local sports team is up to? Partly thanks to things like texting and social media; neither medium is conducive to meaningful conversation. Maybe also because people have become more and more contentious when their opinions differ. We used to be able to have a civil, meaningful conversation about topics we disagreed on but now we either avoid those kinds of topics because the conversation degenerates into a shouting match or we’re simply too afraid to bring them up at all. Jeffersonian Dinners Thomas Jefferson hosted conversation focused dinners. A small number of guests from all over the country (which was a bit smaller then) would meet to discuss one topic. The guests spoke one at a time, everyone listened and participated, and the goal was that each guest would learn something and take it home and share it with those in their community. If you want to host your own Jeffersonian Dinner, these are the rules; * 8-14 guests from diverse backgrounds. You don’t want a roomful of doctors from Michigan. You want a mix of races, careers, income levels, genders, and political affiliations. * One topic. It can be anything but should be something that will have some relevance to each guest. The topic should be revealed before the dinner so the guests will have some time to ponder it and what they might like to discuss. * Five to seven questions that will help move the conversation forward. * A facilitator to keep things on topic and flowing along. * Food and drinks. Neither have to be fancy, you can order some pizzas and buy a few bottles of wine. The food is not the focus of the evening. Each guest starts by sharing a little about themselves and how the topic is personal to them. Everyone is allowed to speak without being interrupted but the facilitator may need to prevent some of the guests from dominating the conversation and not giving others a chance to speak. While there is some structure, in the beginning, the rest of the conversation is allowed to flow naturally. At the end of the night, each guest shares something they’ve learned and can propose a potential topic for the next dinner. The Game This all sounds great, you want to host your own Jeffersonian Dinner! But it can be a little intimidating. What if you can’t think of a topic, or can’t think of any good follow up questions? That’s why Convers(ate) was invented. There are 28 topic cards in each box; some are lighthearted and some are more thoughtful. They include topics like wealth, endurance, and parenthood. Each topic card has questions meant to explore it from different angles. The wealth card, for example, asks things like the difference between wealth and money, wealth as legacy, and how people manage their money. The questions aren’t random or disconnected from each other. They are designed to engage the guests on one topic but without letting the conversation get stale or repetitive. Why Having the Right Conversations is So Important Conversation generates opportunity whether it’s the opportunity to make more money, find a career you actually care about,

What even is cryptocurrency? Some kind of dog coins and bits of coins or something. I don’t know so if you don’t either, we can find out together because this episode is the newbie’s guide to the cryptocurrency market. What is Cryptocurrency? Money has been around for thousands of years and now there is a new form of money on the scene. A cryptocurrency is a form of digital money. It uses cryptography to create secure, digital transactions that are in theory, anonymous. That’s why it’s the preferred medium of payment when buying illegal things like drugs on the dark web. BitCoin was the first cryptocurrency, created in 2009 and is the most well-known. How The Cryptocurrency Market Works Cryptocurrency is a decentralized currency network. Users can pay for things with anonymity and without the need for a bank. The currency is generated by “mining.” A computer solves extremely complex math problems to generate the coins. Once the coins are mined, they can be stored in digital wallets and sent from one wallet to another. Blockchains Cryptocurrency is decentralized; there is no governing body tasked with its oversite. But the payments have to be secured in some way. Otherwise, it’s too risky for either side of buy/sell equation to rely on. The security comes from the blockchain, a ledger of each transaction. Each transaction is received by a mining node, and it puts each one into a block, each block contains all the transactions that have happened in the last ten minute period. Each transaction uses encrypted validation to link to the next one forming a continuous chain. It takes an enormous amount of energy for a computer to confirm each transaction by solving a very complex math equation. That expenditure is the proof that the transaction has been validated. Why would anyone want to spend so much time and energy doing this? Because it’s very, very lucrative! The reward for mining a block is 12.5 BitCoins, and currently, one coin is worth $6,007.01so a miner makes $75,087.63. Thinking about mining? It’s not a hobbyist pursuit. You would spend way more on the kind of computer and the amount of electricity required to mine than you would make back. People pool resources to mine and then split the proceeds kind of like a lottery pool. The Purpose of Cryptocurrency Why do people use cryptocurrency? We already have a well-established currency system in place. It’s very secure. Cryptocurrency can’t be counterfeited and once sent, the transaction cannot be reversed like you can stop payment on a check or request a chargeback like you can with a credit card payment. You are not risking all of the coins in your wallet when you make a payment, only the amount you send can be pulled from your account. When you use a credit or debit card to make a purchase, the entire amount of your credit limit on that card or all of the money in your bank account can be fraudulently charged. The fees to use BitCoin are low compared to other forms of payment. The fees are set by time. If you want your transaction to be verified in 10 minutes, the fee is currently $2.09, it’s the same for 30 minutes and the fee for 60 minutes is $1.64. You can see how this is appealing to those sending large sums; senders aren’t charged on a percentage of the amount being sent as you are with many conventional transactions. No bank account is required to use cryptocurrency, only an internet connection. Many people in the world do not have or have access to a bank account for a variety of reasons, so cryptocurrency is an alternative open to them.

Allison Karrels has been investing in rental properties for several years. She is back to explain lessons learned investing in rental properties. Allison has been our rental property expert for many years. She currently owns nine properties so she has a lot of experience. She shares her lessons learned investing in rental properties. Location, Location, Location Like many people, Allison started out by buying rental properties in her local area. That is until her insurance company put a cap on how many homes they would insure. Why would they do that? In order to spread their risk. Having too many homes in one area means too many eggs in one basket. What if the area was hit by a hurricane and all or several of the houses were destroyed or so damaged that they wouldn’t be ready for tenets for several months? That would mean plenty of money going out but no money coming in. So the lesson is that if you plan to own several rental properties, you need to buy in several areas. But how can you do that? You can’t travel around all the time looking at potential homes, can’t be there to deal with any repairs or problems that might arise. The answer is to work with a turnkey rental property management company like Roofstock. They can sell you a home that has already been rehabbed, already has a tenant in place, and take care of the every day running of a rental property. You can learn a lot from Google Street View. Are there lots of cars up on blocks, old toilets used as decorative planters, a whole street nearby dedicated to bail bondsmen and pawn shops? Street View will show you. You can also hire a local to go take a look at the place for you with We Go Look. It’s certainly not a bad idea to go see for yourself when you are in the final stages of choosing a home and you can write parts of the trip off as a business expense. The 1% Rule Most of the homes Allison owns cost about $90,000 and rent for around $900 per month, she follows the 1% rule. The one percent rule isn’t some complicated formula you need an abacus to figure out. It just means that what you charge for rent each month should be equal to (or greater than) 1% of what you paid for the house. Because Allison invests in turnkey properties there haven’t been a lot of major repairs required. A good home inspection will alert you to any future issues. It might tell you that the roof or the HVAC system has another five years before they need to be replaced. You need a reserve fund for these expenses so you can pay for them when they happen. Allison puts $100 a month into a Betterment account with a 50/50 split between stocks and bonds. This is her reserve fund and where she keeps the money she plans to use to buy more properties in the future. She also keeps two months worth of mortgages for all of her properties in a checking account. This gives her padding should any of the homes sit empty between tenants. Worst Case Scenario Allison has been pretty lucky with her tenants. She even has one house who has had the same tenet in it since she bought it, about six years ago. Her worst story involves what had been a normal tenet until the tenet went through a break-up. She became a hoarder and when the property manager saw the state of the place and told her it had to be cleaned up, she broken the lease early, moved out and left the mess behind. It took four months to get the place to a point where it was habitable. Allison used that time to update the kitchen so in the end, she was able to rent it for more money than she had been previously.

What the f**k are commodities? After dozens of episodes this is our first on the topic so for all of us who don’t know, today we are going to find out. Carley Garner, author of Higher Probability Commodity Trading, joins us today to teach us all about commodites. What are they and why are they important. What the F**k Are Commodities? Commodities are an asset class like stocks, bonds, or real estate. The reason many of us aren’t familiar with them is that unlike those other classes, commodities are not geared towards individual investors. The entities buying commodities are more often companies who need commodities to operate; airlines buying oil commodities to hedge against high prices is an example. Commodities are not manufactured things like cars but things from the natural world like grains, minerals, or oranges. There are soft and hard commodities. Soft commodities are things that are grown like cocoa, corn or cotton. Hard commodities are things that are mined from the earth like oil or copper. Buying and Selling Commodities Buying and selling commodities is speculative and the transactions are leveraged which is an easy way to get into trouble. If you think the price of corn is going to go up, you enter into a contract to buy it at the current price in the hope that the price will go up in the future and you will sell it for a profit. Here’s an example of how commodities work. There is a drought predicted for the Mid West which means corn prices are going to go up. You own a corn chip factory. You buy corn futures now while the prices are low so you can still set your budget and know how much you are going to pay for the corn you need. You locked the price in. You paid $3.50 a bushel. The price was $3.25 a bushel. You lost money. But for the chip factory owner, commodities aren’t necessarily an investment designed to make money. They are things that they need to operate and when they buy futures, they can keep their books balanced whether or not they were on the right side or the wrong side of speculating. If you are just an individual investor in the corn/drought scenario, it is about making money. If you bought corn at $3.50 a bushel and it sold for $3.75, you made money. But who keeps both parties honest? What if the chip company refuses to pay the agreed upon price or the farmer holds the corn ransom until they get a better price? Commodities are traded on an exchange. Most commodities are traded on the Chicago Board of Trade or the New York Mercantile Exchange. These exchanges are what guarantee the trades. If you want to get into commodities trading you can buy a seat on an exchange which costs hundreds of thousands of dollars or you can hire a broker as a middle man. You can make trades on the broker’s platform which is not so different from buying and selling stocks with TD Ameritrade. You’ll pay about $7 per trade. Opening an account with a broker is like applying for a loan. Being a broker is risky because most of the purchases are heavily leveraged. You can trade $50,000 worth of commodtities as long as you have $3,000 in your account. If you lose $50,000 from an account with just $3,000, the exchange is still going to get their money but they come after the broker. And the broker is left to get their money back from you. Risky indeed. That’s why there is vetting involved and you have to meet the broker’s criteria to open an account. Where Does it Go? You want to trade commodities but you don’t have an corn chip factory. What are you going to do with 5,000 bushels of corn? If you get a delivery notice, you don’t have to clear out the garage. You can sell your delivery notice. Doing so is known as a retender. The buyer of the futures contract doesn’t want to take delivery of the commodity. When you retender the delivery,