By Paula Pant
Financial psychologist Dr. Brad Klontz and Youtuber Adrian Brambila join us to talk about money psychology, starting with a dark but revealing story about an experiment with dogs.
Scientists put dogs in electrified cages from which they couldn’t escape. Eventually, the dogs stopped trying to escape and just lay down, even when later moved to […]
By Paula Pant
Paul Merriman, a former wealth manager turned financial educator, joins us to share investing wisdom that could reshape how you think about your money.
We kick things off talking about portfolio diversification. Paul suggests a simple four-fund strategy that includes large cap, small cap, and value stocks. He says this mix has historically beaten the S&P 500 with lower risk.
We then dive into international investing. Paul explains that while adding international stocks doesn’t necessarily boost returns, it can help smooth out the ride. He keeps half his equity portfolio in international stocks, even at age 81.
Got kids? Paul’s got some advice for you too. He tells us about putting money aside for his new granddaughter, aiming to fund her Roth IRA as soon as she can earn income. He breaks down how investing just a dollar a day from birth to age 21 could turn into millions by retirement age. It’s a powerful lesson in starting early and the magic of compound interest.
We also chat about some common investing mistakes. Paul stresses that young investors often underestimate the power of stocks over bonds for long-term growth. He shares some eye-opening numbers: $100 invested in bonds since 1928 would have grown to about $12,000, while the same amount in small cap value stocks would be worth nearly $15 million.
Paul wants you to think of investing as a partnership with businesses. When you buy a mutual fund, you’re becoming a senior partner in thousands of companies. At first, your contributions drive most of the growth. But over time, market returns take over, and you become the junior partner to a much larger fortune.
We wrap up with Paul sharing his excitement about a 40-hour financial education program he helped create at Western Washington University. It’s designed to teach students essential money skills throughout their college years, from budgeting as freshmen to understanding 401(k)s as seniors.
Throughout our chat, Paul’s message is clear: start early, stay diversified, and think long-term. He believes that with the right education and mindset, anyone can build a solid financial future.
By Paula Pant
Steven is stuck on the question of financial stability. How do you know if you have it? Is there an objective answer based on net worth? Or is it a calculation relative to your income and age?
Jack isn’t sure how to factor his house into his net worth. It’s an asset, but he has a mortgage against it, and there are transaction costs associated with selling it. How should he frame it?
Patricia and her husband are debt-free with a $2.2 million net worth, but she’s constantly stressed about their finances. Are her concerns valid? Or is she a financial hypochondriac?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
By Paula Pant
Economist Dr. Karsten Jeske talks with us about the current economic landscape. Karsten, who retired at 44, breaks down the Fed’s recent decisions and how they might affect our finances.
He explains how markets often anticipate interest rate changes before they happen. Karsten challenges traditional views on inflation and unemployment, telling us that textbook models don’t always match reality.
Karsten shares his personal investing experiences, covering both market highs and lows. He emphasizes the value of consistent investing regardless of market conditions.
For those eyeing retirement, Karsten dives into safe withdrawal rates. He advises paying close attention to current market valuations when planning. On the topic of mortgages, he offers clear guidance on when refinancing makes sense.
We also touch on economic history, discussing the Weimar Republic’s hyperinflation. Karsten uses this to critique modern monetary theory, expressing skepticism about unrestricted money printing.
Throughout our conversation, Karsten explains complex economic concepts in accessible terms. He draws on his background as both an academic and a Wall Street professional to provide well-rounded insights.
Karsten, also known as Big ERN, is the author of EarlyRetirementNow.com, where he writes about safe withdrawal rates and personal finance while enjoying his retirement.
By Paula Pant
An anonymous caller and her husband have a $2 million net worth at 40, but they’re worried that the one-fund portfolio that got them there isn’t good enough anymore. Are they right?
Jared feels frustrated that so much personal finance media is centered around tech and freelance workers. Does Paula and Joe have negotiation advice for someone in the union?
Sam owns two overseas properties in a country that’s experienced runaway inflation for the past decade. He’s worried he’ll lose $500,000 worth of assets. How does he control the bleeding?
Steve is calling back with an exciting update on his house-swapping journey from Episode 487.
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
By Paula Pant
The Federal Reserve slashed interest rates by half a percentage point. What does this mean for your mortgage, your savings account, and the economy at large?
In this First Friday economic episode, we dive deep into the Fed’s decision. But that’s just the beginning.
As the presidential election looms, we’ll also unpack the economic proposals from both candidates, examining how their plans for housing, taxes, and more could shape your financial future.
We emphasize critical, non-partisan analysis of economic proposals. We want you to understand complex economic issues and their potential impacts, rather than advocating for specific political positions.
Here are more specifics about this episode:
The Federal Reserve’s decision to cut interest rates by half a percentage point – the first rate reduction since the pandemic – is the biggest economic story of the month.
We start by exploring the implications of the Federal Reserve’s rate cut, from falling mortgage and auto loan rates to potential increases in home prices and a tightening housing inventory. We also touch on the flip side: declining yields on high-interest savings accounts and CDs.
We unpack the reasoning behind the Fed’s decision, including shifting concerns from inflation to unemployment. We delve into economic indicators like the “dot plot” and “R-Star,” explaining their significance in predicting future interest rates and economic trends.
Then we discuss the latest jobs report, with 254,000 new jobs added in September, surpassing expectations. We break down the unemployment rate’s drop to 4.1 percent.
As the conversation shifts to the upcoming election, we take a nonpartisan approach to examining economic proposals from both presidential candidates.
The episode focuses on policy rather than politics, encouraging critical thinking about each proposal’s potential impacts.
One area of bipartisan agreement – a proposal for no tax on tips for service workers – is scrutinized. We explain why economists across the political spectrum view this idea skeptically, highlighting the lack of specificity in defining “service workers” and “tips.”
Housing policy takes center stage, with both candidates proposing regulatory streamlining for home construction and opening federal lands for development. We discuss the limitations of federal intervention in what are often local zoning and regulatory issues.
The episode also examines proposals for first-time homebuyer assistance, explaining how subsidizing demand in a supply-constrained market could potentially lead to higher housing prices.
Throughout the discussion, we emphasize the importance of evaluating these policies based on their potential economic impacts rather than political affiliations.
This episode will help you make more informed decisions about personal finances and policy preferences.
By Paula Pant
Kat feels thrown off. She’s realizing that the simple investing strategy that nearly 5x’d her portfolio in six years might be unwise. Should she course correct?
And how?
Ryan and his wife are torn between buying what they want (a single-family house) and what seems prudent (a multi-family house). How do they decide? Is there a third way?
At 30, Danielle has saved enough for a traditional retirement. But she’s confused about how this meshes with planning for an early retirement. How should she think about money buckets?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
By Paula Pant
Remember that time you found a $20 bill in an old jacket pocket? The rush of excitement, followed by the quick mental math of what you could buy with it?
That’s your money mindset at work.
In this episode, we dive deep into the psychology behind our financial decisions.
You’ll hear about the three money mindsets: anxious, obsessed, and avoidant. Ever clutched onto every penny out of fear? That’s the anxious mindset. Spent big to impress others? Money obsession. Ever thought “I’d rather be happy than rich” or felt uncomfortable talking about money? These could be signs of a money-avoidant mindset.
The episode shares a personal journey from being terrified of running out of money to developing a healthier relationship with finances. It’s not just about saving or spending – it’s about using money as a tool to express your values.
You’ll learn why being “good with money” isn’t as simple as “just don’t spend it!” Think about Ebenezer Scrooge – he had plenty of cash but lived like a pauper. Is that really good money management?
On the other end of the extreme, you have Montgomery Burns from The Simpsons as another example. He’s loaded but obsessed with getting even richer, showing how the endless pursuit of wealth can leave you lonely and isolated.
The talk covers how your beliefs about money can become self-fulfilling prophecies. If you think you’re bad with money, you might make poor financial decisions without realizing it.
You’ll hear about the balance between time and money. Both are limited resources, and sometimes it’s smart to spend money to buy back your time. After all, you can always make more money, but you can’t make more time.
This episode tackles the myth that work is always a drag. It suggests finding work that gives you a sense of purpose can lead to both job satisfaction and financial success.
Investing comes up too. You’ll learn why it’s often simpler than the financial industry wants you to believe. Sometimes, doing less with your investments can lead to better results.
We wrap up by talking about imposter syndrome – that feeling that you don’t deserve your financial success. If you’ve ever felt like a fraud because your bank account looks better than it used to, you’re not alone.
Throughout the episode, you’ll get insights into how your past experiences shape your current money habits. By the end, you’ll have tools to start examining your own money mindset and working towards a healthier relationship with your finances.
By Paula Pant
Picture this: You’re at a car dealership, trying to get the best price on your dream car. The salesperson hits you with a “take it or leave it” offer. Your palms are sweaty, your heart’s racing. What do you do?
That’s just one of the tricky situations we dive into in this episode. We’re tackling seven types of hardball negotiation tactics that can trip you up in all sorts of situations – from asking for a raise to haggling at a flea market.
First up, we break down the “take it or leave it” tactic. We share a real-life story of Sarah, a software developer, facing this exact situation in a job interview. You’ll hear how she turned it around and got what she wanted.
Next, we talk about psychological warfare. Sounds intense, right? It can be. We tell you about Emma, a graphic designer, who had to deal with a client trying to throw her off her game. You’ll learn how she kept her cool and came out on top.
Ever heard of the “good cop, bad cop” routine? It’s not just in movies. We share a story of how this played out in a business deal and give you tips on how to spot it and handle it like a pro.
Then there’s the “snow storm” – when someone dumps so much information on you that your head spins. We break down how to cut through the clutter and focus on what really matters.
We also cover what to do when someone’s holding back important info, how to spot a fake-out (when someone pretends to care about one thing but really wants another), and the sneaky “nibbling” tactic where people ask for just one more small thing… and then another… and another.
For each tactic, we give you the lowdown on:
– What it looks like in action
– Why it works (yep, there’s some psychology involved)
– How you can spot it
– What you can do to counter it
We wrap up with a handy checklist for each tactic. Think of it as your negotiation cheat sheet. By the end of the episode, you’ll have a toolkit of strategies to help you navigate tough negotiations, whether you’re buying a car, negotiating your salary, or just trying to decide where to go for dinner with your friends.
Remember, negotiation isn’t about “winning” at all costs. It’s about finding solutions that work for everyone. With the tips from this episode, you’ll be better equipped to do just that, even when things get tricky.
By Paula Pant
Ever feel like you’re never doing enough with your money, even when your finances look good on paper?
You’re not alone.
Katie Gatti Tassin, host of the Money with Katie podcast, dives into a phenomenon called “money dysmorphia” in today’s interview.
She shares how she got flooded with responses when she asked her listeners about money dysmorphia. Folks with hefty savings and investments still worry they’re not doing enough. It’s like they’re always waiting for the other shoe to drop.
Where does this come from? Katie points to a few culprits. Social media is an obvious scapegoat. But traditional media plays a role too. Think about all those TV shows where “normal” families live in massive houses and drive fancy cars. It skews our perception of what’s average.
Location matters too. Katie talks about how moving from Dallas to Fort Collins changed her spending habits. Different cities have different vibes and social norms around money.
The conversation takes an interesting turn when Katie shares her own experience buying a Porsche. She felt conflicted, worried her FIRE (Financial Independence, Retire Early) community would judge her. It highlights how even personal finance experts grapple with these issues.
They also touch on how the pandemic shook up financial priorities. When faced with uncertainty, some people realized saving for a far-off future might not be the only goal worth pursuing.
Katie and Paula discuss the importance of balance. It’s good to save, but not at the expense of living your life now. They suggest seeking out voices in the personal finance world to get a more rounded perspective.
Travel comes up as a way to gain financial perspective. Seeing how people live in other parts of the world can make you appreciate what you have or show you where your own country could improve.
Katie and Paula offer food for thought on how to navigate our complex relationship with money. It’s a conversation that might make you think differently about your own financial mindset.
