My name is Grant and Millennial Money is my mission and passion. It is a Personal Finance, Investing, and Entrepreneurship community. Learn How to Make More Money and Accelerate Your Financial Independence.
Hey everyone. Thanks for checking out the second Best of Money post. If you missed the last volume you can find it here in The Best in Money. The Best in Money weekly series is curated by Grant from Millennial Money and Drew from Guy on FIRE. We all know how Mondays can be a drag, so we will do our best to post The Best in Money every week. So check back every Monday for your fill of the best posts, podcasts, and videos we can find about money. Without further ado here’s this week’s best.
The Wealth Hound is a complete hustler and entrepreneur at heart. We all know that side hustling is the way to make extra money so you can invest. But The Wealth Hound (cool blog name BTW), had some really interesting side hustles growing up as well. His stories about side hustling are also super entertaining and he provides 10 great side hustles that most anyone can start today. Check it out and start hustling.
Many say the first $1 million is the hardest. I (Drew) believe that it’s actually the first $100k. Did you know it takes longer to go from $0 to $100k than it does to go from $600k to $1 million? Zach from Four Pillar Freedom, who’s a great blogger, put together an awesome article on how long it historically takes to save $1 million. Consistently saving and investing will do amazing things for your finances. Anyone can become a millionaire with enough time. Keep saving and investing.
So you think real estate is a great investment? Well maybe not. Kristy and Bryce from Millennial Revolution are good friends and great bloggers. They retired at age 31 to travel the world and are Canada’s youngest documented retirees. This wasn’t by luck either. While living in one of the most expensive real estate markets in Canada, FIRECracker passed on the real estate FOMO (fear of missing out). Her friends were buying expensive homes they could barely afford; she focused on building a portfolio that would pay her to travel the world. The couple prefers this to owning a house that would constantly cost them money. Definitely an interesting contrarian viewpoint on real estate.
I (Grant) have been reading Brandon’s blog since 2014 and I’m a big fan. Drew also loves it too. If you want to go really deep into the math (and soul) of early retirement you should definitely check out Brandon’s writing at The Mad Fientist. Brandon retired early at the age of 34. In this brilliant post, he takes a deep dive into the psychology of happiness and living a fulfilling life. After achieving financial independence, he came to the realization that money actually doesn’t matter. His psychological approach to money, happiness, and fulfillment is fascinating; I couldn’t stop reading. Definitely, a post to check out.
You don’t have to be super hardcore and super frugal to retire early. I (Grant) really dug Chris’s perspective that you can follow the principals of FIRE without going super extreme. Financial freedom really is a personal journey and no matter what other bloggers or writers or podcasters tell you to do, you need to find a way to integrate the ideas into a balanced way into your own life. Just making one small change in your financial life can make a massive difference.
Best Money Podcast Episode
This week’s best money podcast episode comes from J and Gwen at The Fire Drill Podcast with their guest Kristie Wolfe talking about how she built her tiny house empire. This is a really inspiring episode and definitely worth a listen. I (Grant) also have the opportunity to be on the Fire Drill Podcast if you want to check out the episode here.
Best Money Video
We’ve all heard the phrase “Life is the journey, enjoy the ride.” But what if life really isn’t a journey? Check out this amazing video of one of my favorite philosopher’s Alan Watts dishing for 5 minutes on money and life. While this was recorded over 50 years ago, it’s as resonate as ever (and the animations are sweet). This is one of the coolest YouTube videos about money I’ve seen recently.
Life is NOT a Journey - Alan Watts - YouTube
Subscribe To The Best in Money
If you only want to receive The Best in Money every Monday morning in your email then sign up for The Best in Money email below.
The Best in Money Weekly
Only best the best money posts, podcasts, and videos. Every Monday Morning!
Success! Thanks for subscribing to The Best in Money.
There was an error submitting your subscription. Please try again.
Have an amazing post, video, or podcast that we just have to share? Then submit the post it be featured in The Best in Money. We will review every submission and schedule them into the future – so we will be cataloguing all the posts (so even if you don’t get featured the first week, don’t worry you still have the opportunity in a future release or in a special edition that we will be dropping occasionally on a specific topic. Thanks for sharing The Best in Money.
Over the past 2 years I’ve written over 300,000 words about money, spent over 200 hours talking and recording for the podcast, answered over 1,700 reader emails, and done over 200 media interviews all about money. Many people ask me what’s my best piece of advice about money.
I usually give some sound byte answer that to the person asking me is just enough for their article or situation, but it’s actually pretty basic. See, when it comes to money, most people are surface level. They do the bare minimum if they do anything at all. They wonder why their life isn’t moving forward when they spend 5 hours a night watching Netflix and scrolling through Instagram.
Then it hit me at 6 this morning, as I’m decompressing from putting literally everything I’ve learned about money in my life into one book. As I’m watching the sunrise over the mountains in Sedona.
Here’s the one thing that really sticks out to me. If you want to make more money, save more money, get a new job, follow your passion, escape the 9 to 5, whatever it is…
You need to find your next money level
Only you can find your next level, not someone else. Not some blogger’s next level or your friend’s next level or your parent’s next level or the media’s next level. The fundamentals of money and getting rich are easy – make more, save more money, invest, repeat. But how fast you can make it happen is all about finding your next level. And doing it every day. No, not monthly or yearly. Yes, daily. Saving at least $50 a day helped me reach financial independence at least 10 years faster.
Money is simply a human invention. We embed it with emotion and meaning and purpose. You can either control it or it’s going to control you. It’s something to be mastered, used, and optimized. Not something to hold you back. If it’s holding you back you need to look at the other areas of your life, it’s not money’s fault. Something’s going on that you need to change. You need to find your next money level.
The more you master money, the more control you will have over the other areas of your life. The more options and opportunities you will have.
Automation is not enough, it’s just the beginning
So many of the experts out there will tell you the key to wealth is automation, but automation is not enough. Automation is the status quo. It’s how you get complacent. It’s thinking that saving 5% or 10% of your income is enough. It’s not enough. It’s just the beginning. If you are saving 10%, you need to do everything you can to save 11%.
If you want to buy that new car you’ve been dreaming about for years, it’s about saying no and learning that just being able to buy something is enough – you don’t actually have to buy it. It’s about spending those extra few hours on a Saturday morning before everyone else wakes up working on your side hustle. It’s about knowing that you need to leave your job because you’re unhappy and actually going into your boss’s office and doing it. It’s easy to automate, to coast in life. But coasting won’t get you to the next level.
Pushing is how you get to financial freedom. How you get to any kind of freedom
Financial independence is not built on complacency. It’s built on pushing your boundaries as often as you can. It’s about being uncomfortable sometimes. It’s about growing and learning and challenging and pushing. And then pushing more.
Sure you can sit back and follow the expert’s advice – “keep doing this and you’ll be able to retire in 30 years!”. Are you kidding me? If you settle for a status quo, that’s cool, but settling for the default will impact other areas of your life. I can tell you one thing, it going to be really hard for you to get ahead unless you make sacrifices and keep pushing your boundaries, keep pushing your comfort zone.
If you want to be an entrepreneur (are you an entrepreneur?) then stop talking about it, throw away your “hustle harder” t-shirt, and actually get down to work. I’ve had the opportunity to work with many entrepreneurs and the only differences between an entrepreneur and a wantrepreneur are two things – getting started and then keeping at it. If you want to start a blog or start actually making money online, or become a writer, or whatever you want to do. Just start doing it, keep doing it, and never settle. You have to push. You have to want it.
Life and money are about taking calculated risks
It’s easy to sit back and play it safe. It’s wired into our DNA – don’t touch the fire, don’t peek over that cliff. Fear keeps us safe, it keeps us alive. But it also keeps us from truly living, from growing, and from getting ahead. Unfortunately, we live in a fear-driven world. But what’s actually pushed humanity forward is the same force that will push you forward – taking calculated risks. Finding the way around the fire and over the cliff.
Taking calculated risks is a lot different than just being risky. Don’t be dumb. Be strategic. Make a plan, weigh your options, evaluate the implications, evaluate the alternatives. Write down the pros and cons. Do a SWOT (strengths, weaknesses, opportunities, threats) analysis (learn how here). One of the best ways to take calculated risks is to develop a set of principles to help you make decisions. Principles give you a framework for making decisions. If you haven’t read it yet, definitely check out Ray Dalio’s book Principles: Life and Work– it will help you see the world in a new way and help you make better decisions. It’s one of the best books on making decisions I’ve read.
Learn to say yes to yourself and no to almost everything else
We live in a world where people are trying to take both your money and your time. “Can I just have 5 minutes, sir?” “I have a great deal for you.” Meetings, meetings, meeting. Bills, bills, bills. Etc. etc.
But if you want to get ahead with money (and other areas of your life), you’ve got to learn to say yes to yourself and no to almost everything else. No one cares about your own time or money as much as you. Give both generously when you want and protect dearly when you don’t. If you just let life happen to you, if you coast, then it’s naturally going to eat up both your money and your time. That’s just the way the world works. If you don’t push against the current, you’re more likely to get carried away.
If you want to get to the next level, you’ll need to say yes to things that push you forward and no to almost everything else. Learning to say no was one of the hardest and most important lessons I’ve learned. And I’m still learning how to do it.
Always seek the next level, and push through it
If you want to make more money look for the next level. If you want to save more money look for the next level. If you want to be an entrepreneur look for the next level. If you want a different life look for the next level. While money won’t solve all your problems, it can definitely buy you more freedom. More opportunities. More time. And remember money is not the goal, time is.
Next Level Money = Next Level Life
Here are a few next money levels
While there are many levels of money management and optimization, here are a few next steps you can take today, as in right now, to push to the next level. All of these can help you save and make more money.
Start tracking your net-worth for free using Personal Capital. Your net worth is more important than your income and is the most important measure in personal finance. Tracking it regularly will not only motivate you, but it will help you make better decisions.
Increase your 401k contribution by at least 1% today, then every 30 days
Put an extra $20 to pay down your credit card or other high-interest debt
If you have student loans, see if refinancing can save you money (most people are leaving money on the table). Check out some good rates here.
Optimize your insurance – most people are paying to much for car insurance. Here’s the cheapest and best car insurance I’ve found here.
Save an extra $50 in your IRA today. If you don’t yet have a Roth IRA, open one
Welcome to The Best in Money from Millennial Money curated by Grant from Millennial Money and Drew from Guy on FIRE. We all know how Monday mornings are, so we are going to start dropping the best articles (and podcasts and videos) that we find about making money, saving money, side hustling, house hacking, real estate investing, money tools, financial independence, and money success stories to help you get your week started off right. It’s never been easier in history to make money and live life on your own terms. We’re here to share how others are making it happen so you can too.
There are so many new money articles being released each week that we want to be your one-stop destination on Monday morning for the best of the best. But since we are only two people and can only read so many articles we need your help to curate The Best in Money.
We want to make sure the best money tips and stories get seen – which means more traffic for you and anyone featured. We also have an email list of almost 30,000 people this will be distributed to, which include a bunch of top finance writers in the media. Who knows they might even see your story here and reach out – that’s the point. We really do want this to be The Best in Money.
Have an amazing post from the past week, month, or even year? Or read an amazing article that everyone just has to see. Then submit the post it be featured in The Best in Money. We will review every submission and schedule them into the future – so we will be cataloguing all the posts (so even if you don’t get featured the first week, don’t worry you still have the opportunity in a future release or in a special edition that we will be dropping occasionally on a specific topic.
Gwen is an ambitious and spunky millennial. She is also one of the most energetic people I’ve met. Gwen is killing the financial independence and early retirement game. Her net worth just passed $200k and she is only 27. Gwen co-hosts The Fire Drill Podcast, invests in real estate and side hustles. Even more impressively, Gwen does all of this while holding down a career in IT. Check out her story on how she saved and invested her way to a net worth over $200k.
As a fellow real estate investor, I’ve been reading Rich’s blog for the past year and actually had the pleasure of meeting Rich at FinCon. He’s an amazing guy – great to talk with, funny, and genuine. On top of all of that, he has built his real estate empire while being an active member of the military member for 18 years. Rich – thank you for your service. In this extremely detailed post, Rich shares 18 years of experience, wisdom, and success in real estate. I am not sure what is more impressive – the fact that Rich has built his real estate empire while spending a majority of his time oversees serving his country or that he has no debt and owns 21 properties.
Chris runs an awesome blog and has an entertaining writing style. Mr. AE and his wife are 30 and 28, respectively. This ambitious couple has big plans of early retirement and financial independence. Mr. and Mrs. AE were able to pay off over $60,000 in debt while saving a $90,000 nest egg in three years. It’s safe to say that Chris knows how to crush debt and build wealth. In this post, he shares some very interesting thoughts on the cost of procrastination and why you need to take action now.
I had the opportunity to meet the WOWs last year. Mr. and Mrs. WOW are one of the most fun, loving, and awesome couples I have ever met. They are full of life and energy. While they are crushing life and working towards financial independence, they still find time to enjoy life and have a leisurely meal of waffles on Wednesday (hence the name of their site). When they are not blogging – you can probably find the WOWs biking, enjoying a local brewery or hoping on a plane. This post really stuck out to me. Mr. WOW shares his secret to creating your very own mobile expense tracking app. The guide is easy to follow and very helpful. I track all my rental property expenses using this method. Highly recommend checking out this awesome money tool.
For years David’s spending habits were out of control He spent every penny he made. This is no way to live or build wealth. David realized this and sought out change. Last year, he decided to track his spending for the entire year. He also challenged himself to have as many ‘Zero Days’ as possible. This strategy allowed him to triple the amount of money he saves. His post shares great strategies to save money. He also discusses the psychology and emotional aspects of spending and saving. Definitely worth reading.
Kevin is an attorney but is best known for his knowledge on the sharing economy. He is one of the leading experts on side hustles and has done it all – AirBnb, dog sitting, and deliver for UberEats are just a few examples. Kevin publishes monthly side hustle reports showing how much each side hustle earns. His post on the value of side hustles blew my mind. I will never think of side hustles the same way again. In fact, it makes me want to have more side hustles. Definitely worth the read.
What’s your favorite article, post, or cool thing we just have to see? Submit below.
Thanks for checking out The Best in Money series. We are planning to expand it over the next month to include more types of content as week. Let us know if there is anything you think we can do to improve it.
MM Note: House Hacking is blowing up right now. We’ve written about house hacking before, but I asked one of the homies Jacob Perez, a Canadian house hacking master, to break down the basics so you could learn and share them with your friends. Jacob is killing it, he’s house hacked his way to owning 6 and a multi-million dollar portfolio and he’s still in his 20’s. This really works.
In this post, I will break down a lifestyle trend that’s booming in popularity amongst younger investors. Real Estate investing is always a hot topic, how can it not be. Homes are often the biggest financial asset individuals hold in their lifetime. In addition, houses, whether we buy them, or rent them, satisfy the basic human need for shelter.
This article will examine a lifestyle trend born out of financial need, that has shifted Millennials’ mentalities towards the real estate market.
We’ve gone from complaining about real estate prices to capitalizing on opportunities and choosing to build portfolios of property from a young age vs. saving for our forever home. Forget rent vs. buy, buying real estate can be the best investment decision you’ll ever make.
This trend is known as House Hacking.
What is House Hacking?
House Hacking is having your cake, and eating it too.
It’s a mix between buying a personal residence and an investment property. Simply put, House Hacking is buying a multi-unit property, and living in one unit, while renting the other(s) for supplementary income.
Now I’m one of the lucky ones, I have a roof over my head provided by my parents, which has allowed me to save a lot and invest directly into rental properties without thinking about where I have to live. So, in reality, I take house hacking one step further by living free.
Six properties later, a multi-million-dollar portfolio, and several tangible case studies of success to sell to investors if you want or need investors later to build an even larger real estate profile, I would say the small lifestyle sacrifice of being in my parent’s basement has been worth it. The case studies of success are the most valuable piece of the pie because they can be used to raise more money.
Many of us are not escalating in our careers financially at the same pace the real estate market has accelerated. Houses are now viewed as an asset, business, & retirement plan. Enter House Hacking.
Why House-Hacking is a Game Changer:
1. Dramatic Cost Savings
Mortgage payments can be expensive, having a separated unit paying rent will decrease your month-to-month costs, this is obvious, but consider this:
House Hacking will allow you to pay LESS month-to-month, even while buying a SIGNIFICANTLY more expensive house.
The following is a cost breakdown of buying a starter home for $300,000 vs a Multi-Unit Home for $400,000 as it relates to mortgage payments.
Disclaimer: These figures may not represent your exact market, however, it’s food for thought, and is a real example directly from a market in Ontario.
In this scenario – Purchasing a home worth $100,000 MORE can potentially SAVE you $1,000 per month in costs. Think about that. You pay $5,000 more in down payment up front, to save over $12,000 in year one. You get your money back in 6 months. You also now own a more valuable property. Later in the article, I’ll break down the other profit centers found within house-hacking.
In addition to monthly savings – the versatility of house-hacking is a big reason for its popularity.
2. The home hacking irony, it actually gives you more flexibility
Your 20s & 30s bring significant changes in your life. If you’re like me, you probably have commitment issues. This is why I haven’t left my parents house. Committing to a home long term is tough for me. On the other hand, I have no problem committing to something long-term if it pays me every month, which is what makes house hacking and investment properties so attractive.
House Hacking provides the flexibility needed to create a living experience that suits your life as you evolve.
Want to save the most money possible? Live in the least desirable unit in your home, in the basement or even on the couch if you roommates are down with it.
Feel like you deserve the nicer suite? Upgrade yourself and rent out the less desirable unit.
Want a new place and maximum money saved? Rent your less desirable unit, and get a roommate for your unit.
What if you’re only comfortable with exclusive access to the backyard and driveway parking? You’re the landlord, specify the use of common spaces in your tenant’s lease.
Received a Job offer out of town, what now? Rent your unit out, move, and use the cash flow towards your rent elsewhere while you figure out your next move.
You love the neighborhood and don’t want to move, but your family has grown….Convert multi-unit to a single family residence and stay in the neighborhood you’ve grown to love.
The point is house hacking is extremely versatile, & won’t leave you stuck in one place facing a mountain of debt. It’s a no-brainer in absolutely every sense for people beginning to build wealth.
3. Financial Growth through Passive Income
This benefit could really be its own post, I’ll try to keep it concise.
House hacking will get you to your second home faster while allowing you to hold on to your first.
Grow Your Savings Fast
We now know that house-hacking decreases your month-to-month costs significantly. The result is you’re able to save more money faster, to allocate towards your next purchase (don’t stop at one property). In fact, house hacking can be the perfect side hustle.
Increased Principal Paid Monthly
While your personal month-to-month costs are lower, your mortgage payment itself is still higher. As a result, you’re paying more principal towards your mortgage by choosing a more expensive property. Using the scenario built out earlier, even though we pay $1000 less per month, we’re still paying just over $200 more principal per month.
The result is an additional $12,000 in equity paid down after 5 years (all while saving more month-to-month). More savings to go with your savings.
Increased Benefit from Appreciation
I’ll make this simple – If your $300,000 starter home and $400,000 duplex both appreciate by 6%, which makes a greater return? Of course, the $400,000 asset.
When you factor this is compounded year over year, the difference gets a lot larger.
Ability to Refinance & Maintain Cash Flow
If you purchase the correct property, you’ll be able to receive cash flow a healthy amount above your monthly expenses with all units rented.
Having a healthy cash-flow will allow you to refinance equity out of your existing home, and leverage that cash to place a down payment on your second property.
If you make enough cash flow above your expenses you’ll still be able to break even, or produce cash month-to-month on your first property with an increased mortgage payment from your refinance.
Building a portfolio of property as you upgrade from home to home will act as the building blocks towards your retirement, children’s future, or whatever projects are more in line with your goals.
Conclusion – Why House Hacking is so awesome
Your month-to-month costs are determined by the type of home you buy, as much as the purchase price.
House hacking is done by design, can suit any lifestyle, and will keep you flexible enough to pursue the many opportunities that will come your way in life.
House hacking allows you to save money now by paying less out of pocket month-to-month. In addition, you’ll pay down more principal in the process, and benefit more from appreciation.
House hacking allows you to enter the market with confidence, and build a sustainable portfolio of property as you periodically upgrade from home to home.
The whole idea here is leveraging real estate. So, whether you’re house-hacking it, or living at home with your parents like me, this is a no-brainer. You can leverage the wealth made through real estate for so many things, help start a business, build a brand, pay for a wedding, travel, whatever you want. What’s better than that?
Jacob Perez a Mortgage Agent by trade, has been investing aggressively in the Canadian Real Estate market since he was 23 years old. After some early success, Jacob began raising capital & leveraging joint-venture money partners to grow his real estate portfolio.
MM Note: I like to showcase cool startups that are making it easier to invest, especially ones where I live in Chicago. I really like the Digs concept, which makes saving up for a down payment easier and thus homeownership more accessible. While they are currently only in Chicago they have plans to expand into other cities shortly.
There has been an increase in new apartment developments across the US as investors take advantage of the growing rental trend among younger generations. Some speculate that this could spell the end of the American Dream of owning a home. However, that simply is not the case. Millennials have been delaying many of their major life events compared to past generations; whether it be marriage, kids and now buying a home. Just because people are renting for longer doesn’t necessarily mean it is their end game.
Renting vs. Owning by the Numbers
According to a report by Apartment List, 80% of millennials plan to eventually buy and only 1.8% say they have no intention of buying a home. So why are so many still renting into their 30s? To put it simply, people can’t afford to buy as early in life as their parents. This is due to a number of economic factors coupled with high student loan debt. According to a 2017 report by the National Association of Realtors, 46% of millennial buyers have student loan debt, with a median amount totaling more than $30,000. And those statistics are just for those who have already purchased a home!
For many young renters in debt, saving the large amount needed for a home down payment might seem impossible. It can make the rent vs. buy calculation impossible. It’s no surprise that over half of millennials surveyed claim saving for a down payment is their biggest obstacle to buying a home.
Introducing Digs – The Startup that Wants to Help you Buy your First Home
One startup is trying to help renters reach their goal of homeownership earlier in life. Digs is a Chicago based startup that allows renters to earn cash back on the rent they are already paying. This money gets put into a savings account that they are then able to use when purchasing their first home. Renters can also earn move-in bonuses when they change apartments, as long as they stay within the Digs Network. The renter’s savings account never expires, and in fact, it actually earns interest.
This concept is similar to what is known as rent-to-own, which has been around for many years. The intention of the traditional rent-to-own model is to help renters build equity in a home before they are ready to buy. This is done through a legal agreement between a landlord and a renter, which allows the renter to start building equity in the home by paying their rent every month. At the end of a set term, the landlord agrees to sell the home to the renter and the equity built while renting is used towards their purchase.
The Problem with Traditional Rent-to-Own
There are many problems with the traditional rent-to-own model, which is why it is not a very common way to buy and sell real estate. For one, the renter is only building equity in a specific home with a specific landlord. For many younger renters, they are still testing out different neighborhoods and are not ready to make a commitment. There are also high upfront costs which make entering into these agreements a hassle, and usually, the rent is inflated by the landlord. For these reasons, traditional rent-to-own has received a bad name and there are countless stories of landlords pulling scams on uneducated renters.
How Digs is Changing the Game
Digs allows renters to open a savings account that can be used for the purchase of any home. One is not tied into a contract with a specific piece of real estate like the aforementioned traditional model of rent-to-own. In fact, renters can actually earn move-in bonuses towards their account when they move into other apartments within the Digs Network. Digs understands that renters are not ready to settle down and encourages people to explore their city and find what feels right for them. Lastly, there are no upfront charges or inflated rent payment when using Digs. Currently, they offer a $100 bonus for signing up.
As mentioned earlier, there are a number of economic factors that are likely having an effect on the current shift away from homeownership, but that doesn’t mean that an entire generation is not interested in owning a home. They are just having trouble building the upfront savings necessary to do so. Rent-to-own was once the only way to build equity while renting, but it was littered with pitfalls and restrictions. Digs is reinventing this concept and allowing a new generation to start saving for a home without the risk.
One of the most important numbers you should calculate and track consistently is your net-worth, which is your total assets (those things worth money like your house and any investments) and your total liabilities (what you owe money on like credit card, mortgages, and student loan debt). Your net worth is how much money you would be worth if you paid off all of your debts.
Assets – Liabilities = Net-Worth
Over time as your investments grow and you pay down your debt, you net-worth will go up. this is why it’s so essential to invest while paying back your students loans. Ever since I started my financial journey I’ve been tracking my net worth using free tools like Personal Capital.
Median Net Worth in the United States
Recently, a friend and I were discussing an interesting statistic from an article about net-worths. The statistic that we were talking about was was from an article in Business Insider from Jim Wang showcasing the average net worth for the different age groups of Americans.
This is a recipe for disaster. All of these numbers paint a bleak picture of Americans and the hole is getting bigger to get out of.
It also doesn’t get any prettier for just millennial net worths either based on a more detailed analysis on The College Investor:
source: The College Investor
My friend asked me why I thought more people in our age group are stuck at a certain net worth or why I thought it was hard for many to change their financial situations. Then he asked, “Was it that hard for you to change your situation?” In a simple answer: Yes and no.
Top 5 Money Excuses Holding You Back
But after we had some back and forth text messages, I realized there are are a few common excuses people make about money that keeps them from saving and investing. These are the same money excuses that are keeping people from pursuing (and eventually achieving) financial independence.
Send this to any of your family or friends who are making excuses and need to start saving more money. All of our futures depend on it. Let’s get those net worths up!
Excuse #1: “ I don’t have time to budget and look at my personal finances”
One of the main excuses I’ve heard among my friends, colleagues, and others is the same old excuse for most things: a lack of time. Sure, pretty much everyone has busy schedules whether it be school, work, family, kids, etc. A majority of people lead extremely busy lives.
Yet, I bet that majority also find time to binge watch Netflix for hours (Hey, me too!), play sports, watch sports, and go shopping, etc. Americans watch an insane amount of television each week. The average millennial watches television 26 hours a week (3.7 hours a day) and older Americans (35-44) watch it 36 hours a week (5.14 hours a week).
And those things are all fine to do in moderation, but it’s fairly easy to take 20-30 minutes a month to devote to planning and managing your finances. Seriously that not much time. And it actually takes a lot less time than you think.
There are tons of free tools out there like Mint and Personal Capital. Use them.
Excuse #2: “Personal finance is too confusing”
This was the biggest excuse that personally held me back in my own financial journey. Thinking personal finance was confusing was one of my biggest money mistakes.
The biggest reason people think that personal finance is too complicated is for two primary reasons: 1) the financial industry is set up so personal finance seems complicated, with its acronyms and fine print, so that some finance companies can make more money and 2) we are aren’t taught much about money in school.
A vast majority of personal finance you can learn online for free by reading blogs and listening to money podcasts. Or by reading the best money books.
Excuse #3: “It’s too hard to get out of debt”
Whether it’s student loan debt, car debt, credit card debt, personal debt, or mortgage debt, it feels like everyone is swimming in debt these days. But paying off debt is really a numbers game – always pay down the highest rate interest rate first, then move onto the next one. In almost all cases credit card debt will have the highest interest rate and should be paid off first.
But no matter how large your debt is (some people actually have over $1 million in student loans and they were able to pay them off). While I used to have a lot of debt, every year I’m surprised how much more debt I paid off when at first it only seemed like a minimal amount. The sooner you start crushing it the sooner it will be gone. No one likes having debt, but you need to face it head on instead of the, “I’ll worry about it later.”
Excuse #4: “I’ll worry about it later”
This is the money excuse that bothers me the most. I’m guilty of it. Too many of us put off our finances until later. The longer you wait to invest or to save or to pay down debt, the longer you will miss out on potential investment gains.
The first company I worked for after graduating college had a pretty solid 401k, but I knew very little and wasn’t too concerned. “I’ll worry about it later,” I’d say to myself. All I knew at the time was having a 401k was good to do, so I did sign up, but I only contributed 2% when the company matched at 6%. D’oh! Facepalm. SMH.
Well, the after working at the company for 4 years I was let go. During that entire time, I never increased my contribution rate once! I easily missed out on $50,000 – $100,000 in future potential investment gains by not increasing my 401k contribution rate. Now, of course, I got to keep the money I did save, but I kick myself for not spending the time (man excuse #1 keeps creeping up) and just looking into it.
No matter what financial decision you are putting off making it today, like right now. Get it off your plate. As an added bonus, current neuroscience research shows that making decisions makes you happy.
Excuse #5: “What if I lose money?”
Who hasn’t heard this money excuse? Seriously. In my opinion, far too many people think that investing is gambling. They worry that they are either going to win big or lose it all. They see stories like the 20-year-old Florida man who won $450 million in the Powerball lottery and think that’s the way to get rich. The odds of winning that Powerball was 1 in 262 million (aka pretty much impossible).
But in reality getting rich isn’t about betting everything or putting all your eggs in one basket, it’s about coming up with a good investing strategy and keeping at it for the long haul. And taking calculated risks.
The stock market is going to go up and down, but it’s always gone up over the long run. And you’re never going to lose all of your money in the stock market (we’ll if that does happen we will all have much bigger problems like the entire financial system collapsing).
In reality, the stock market will only go up and down a couple percentage points a day – on the worst day the stock market was down was 22.61% on October 19, 1987. Here are the biggest stock market gains and losses in a single day. So if you invest in a total stock market index fund then that’s about the most money you could lose in one day – and that was the worst day ever! And when you invest in the stock market it should be for the long haul so sure you can lose money investing, but over the long haul, the stock market is always up.
Final Thought: Never get too comfortable
Many of us, myself included, often get too comfortable with our money strategy once we get it humming. Maybe your finances aren’t that bad, you have a decent job, some debt, but generally everything is paid on time. Yet, your saving rate stays stagnant and you do not see much growth year after year. As soon as you feel yourself being too comfortable, that is the time to recognize it and get ready for a change. The time to push the limits.
When it comes to time and saving money, there are plenty of unexpected surprises. Things like health issues, losing a job, and other unexpected costs, but you have to remember it’s a part of everyday life. If you are going through it, someone else is too or even worse, yet you have to fight through it.
I lost my first job during the month of December and did not find a new full-time gig for almost 9 months. But I found a way to not only make enough to pay the bills but enhance my career worth as well.
I still have a lot of work to do on my own financial independence journey, but I want to see my friends and as many people as possible succeed with money.
Todd Kunsman is currently the Digital Marketing Senior Manager at EveryoneSocial, runs his own music blog in his spare time, and helps other companies and startups with digital marketing and growth. Feel free to connect with him on LinkedIn or follow him on Medium.
Since some of you have been asking for my thoughts on Bitcoin and cryptocurrencies. Originally published as “Bitcoin millionaire: Don’t invest in bitcoin” on Dec 13, 2017 on CNBC.com
I first invested $5,000 in bitcoin back in 2013 at $72 per coin and now own approximately 69.2 bitcoins.
While I had first heard about bitcoin in 2011, it wasn’t until I watched a documentary and started reading forums about the cryptocurrency that I decided to buy it. It was easy to see how bitcoin could disrupt the entire financial system.
I decided to buy as a long-term experiment and used less than 1 percent of my net worth at the time to buy into bitcoin. Sure, I wanted to make money on it, but if I lost everything, it wasn’t going to change the course of my life.
As of this writing, Bitcoin is trading at $16,600, which makes my bitcoins now worth $1,148,720. It took me five years working 80-hour weeks to make over $1 million saving and investing in the stock market, but with bitcoin, my coins have increased to over $1 million in 2017 alone. It’s by far, without a doubt, the easiest money I have ever made.
But I don’t recommend you invest in Bitcoin today.
On my blog Millennial Money, I’ve received over 100 emails from readers asking about investing in bitcoin and other cryptocurrencies. I was even talking to a reader last week who told me he put his entire life savings into bitcoin, buying in at around $11,000. That’s a terrible idea.
I got another email from a 22-year-old who is looking to invest his first $5,000 and wanted to know if bitcoin should be his first investment. That’s also a terrible idea.
Here’s why, even though I’m a bitcoin millionaire, I don’t recommend that you invest in it today.
1. It’s impossible to actually value bitcoin
Bitcoin is a global craze. Even my barber, who has no idea what a blockchain is, is buying it. Because so many new people are buying it (and so quickly!), it’s impossible to accurately value.
When the price of anything fluctuates 20-30 percent in one day, it’s obviously unstable, so you could lose all of your money very quickly. Especially if you need your money in the next year, don’t buy bitcoin. With the insane short-term fluctuations, bitcoin is short-term gambling, not investing.
2. There may not be any value in bitcoin at all
The value behind bitcoin is the blockchain technology, which has been easily replicated by other digital currencies. Many of those have actually built better and easier-to-use versions.
Litecoin is a good example. Sure, bitcoin has an early mover advantage, but it was created to buy and sell things online securely, which no one is doing right now because the price is so insane and transaction costs are skyrocketing.
All of the trading volume is also causing significant delays, with some exchanges reporting up to 10 days to get your money in or out and more than a week for your bitcoin to be sent.
The cost of sending bitcoin is also skyrocketing since the price is fluctuating so wildly, the value of it could be significantly higher or lower than when you sent the money.
Most people aren’t buying into the value of the technology, they’re buying into the hype. This is gambling, not investing.
3. Bitcoin still isn’t that secure
You might think that digital wallets are secure, but cryptocurrency exchanges and wallets continue to get hacked regularly. More than $70 million in bitcoin was hacked from NiceHash, a bitcoin mining marketplace, last week.
Just because exchanges like Coinbase have $200 million in venture funding and a nice shiny marketplace doesn’t mean that they can’t get hacked either. Because there is no central governing body guaranteeing your bitcoin, if you lose it, it can be difficult to get back. If it gets stolen, then you are out of luck. Hacks will continue to happen.
If you do decide to buy bitcoin, I encourage you to buy responsibly. Don’t buy using more than 1 percent of your net-worth, and be honest with yourself: Bitcoin is a gamble, not an investment. It’s super risky and there are far better places to invest your money securely for both the long- and short-term.
Over the past year I’ve tried over 100 new Fintech apps like Cinch Financial, so I feel like I’ve seen it all. Sometimes I get access to early beta’s and in a few cases, companies have even paid me to take a look at their pitch decks or analyze their wireframes. If you’re a regular Millennial Money reader, you know that I only recommend apps that I use or stand behind personally. In fact, one company recently offered me $5,000 to review their app, but it was really crappy so I said I couldn’t do it. I also write all of the reviews myself!
The rise of technology and ability for me to track and manage my money online were key drivers in fast-tracking my financial independence. It’s why I like to say that I’ve made over $1 million just by clicking my phone! I gotta admit, over the past 6 months I’ve have been pretty disheartened by many of the new money apps I’ve tried – they are all just the same clones of each other. But a recent trend has started to emerge that I am really excited about and will undoubtedly change the money app game – leveraging artificial intelligence and machine learning to make money easier to manage.
When it comes to saving and investing money, not only is there a good, better, best money decision, sometimes there is a “right” and a “wrong” decision. AI and machine learning actually have the power to help you make the right decision – which ultimately will not only help you save more money, it will also help you make more money as well. In many instances, the “right” money decision is the mathematically correct one.
Here’s an episode of the podcast we did on the topic.
Cinch Financial App Review
But then an app like Cinch comes along and actually surprises me. I had the opportunity to chat with the Cinch team recently and I was also struck by their earnest desire to actually help people with their money – not just make a quick buck on them. They let me know that they’ve spent over 5 years building Cinch and spend thousands of hours testing the best ways to help people save more money.
In my conversation with Kerri Moriarty, who is the Head of Company Development and part of the founding team at Cinch, she touts Cinch as “the comprehensive, holistic, and totally unbiased intelligence platform driving the future of autonomous financial management.”
They say it’s like having a CFO (chief financial advisor) in your pocket. Their goal is to be the “first autonomous personal finance platform” that helps you by “regularly analyzing your financial behaviors to optimize your financial health.” But what does this mean?
Cinch Features – (w/ more on the way)
In short, Cinch analyzes your spending patterns, your accounts, and your cards to see if there are better deals for you out in the world. It looks for problems you are clearly having and makes optimization recommendations.
Cinch have massive goals, which if they can even pull off a few of them, it couldn’t be game-changing. They haven’t rolled out all of the features yet – but I’ve had the opportunity to peek behind the curtain and it’s insane. They really might be able to track (and autonomously optimize) all aspects of your financial life. The home-base of the app is known as your playback, which is essentially a dashboard where you can see your personalized recommendations based on Cinch’s 4 pillars. My favorite feature in the app so far is the transparency – you can click on “let’s break it down” to analyze the specific reasoning behind their recommendations.
While, as of this writing Cinch users are required to make the implementations themselves, the next phase is to roll out automation – where Cinch can move your money for you. This has massive potential.
As of this writing Cinch can currently analyze:
1. Your cash flow to see how well you are doing this money. I was stoked to be greeted with this message: “More money comes in than goes out”
2. Your monthly expenses in savings. They will let you know, based on your spending patterns and average monthly cash flow, how many months of your expenses you have saved (aka your emergency fund)
3. Your checking fees to make sure you aren’t paying some crazy fees on your accounts.
4. Your student loans. They keep an eye on all of your loans and when payments are due.
5. Your payment strategies to make sure you are paying off your debt intelligently. I really loved this – since it’s all about making sure you are making the “best” decision for your money. Their credit card and student loan repayment strategies are spot on.
6. Your insurance coverages to make sure they are not only adequate but that you are also getting the best deal. Currently, they analyze your life insurance and car insurance but have plans to analyze other types of insurance as well.
7. Your Vantage Score, which is essentially your credit score – the higher your score the better terms you can get on new credit cards and loans. I got an 808, which I guess is pretty legit.
8. Your credit cards. Most people, in my opinion, underutilize credit card rewards, so if Cinch can help you realize if your cards have a high fee and which cards could be better based on your goals and spending patterns.
Cinch is a fiduciary (aka they are required to do what’s in your best interest) – super refreshing in this space
Trust in the finance space is tough since everyone seems to be out to make a buck. One cool thing is that Cinch actually acts a fiduciary so they don’t just try to sell you random products like a lot of other apps – they are required to act in your best interest. This also means you won’t see paid advertisements inside the Cinch app or have to worry about whether the tool they are recommending is just because they are getting paid to promote it.
So your probably wondering, like I was, how does Cinch get paid? You start with a 90 day trial and then it’s $4.99 per month. It seems like a minimal amount for all of the savings it could generate. One feature that they don’t have yet, but I’d love to see is a Cinch ROI calculator, which would basically show you how much money all of their recommendations (if you take them) would save you today and in the future. If the compound benefit is, say tens of thousands of dollars, that would make the monthly fee a no-brainer.
The big question – are we ready to hand over the control of our finances to an app?
Cinch is rolling out in phases – which is a smart idea, since users will need to get comfortable with them first, before handing over the management of their finances. Their next rollout will include features ” like moving money between your checking and savings accounts, allocating your credit card payment across your cards to reduce the amount of interest you’ll pay, and paying your bills on the optimal day of the month based on your behavior (all with your permission, of course).”
The technology is really promising and I’m excited to keep using the app and test out the new features. I’ll keep updating this review as they roll out features in the future. If you haven’t yet, definitely check out Cinch.