Afford Anything

Category: FIRE

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#554: The Most Expensive Election Trade Ever Made (A Cautionary Tale)

The U.S. jobs market hit a surprising speed bump in October, adding just 12,000 new jobs — way below the expected 100,000.

A mix of natural disasters and labor unrest explains the slump. Recent hurricanes in the Southeast wiped out somewhere between 40,000 to 70,000 jobs, while strikes at Boeing and other companies added to the slowdown. Against this backdrop, the Federal Reserve looks ready to cut interest rates next week by 0.25 percent.

Meanwhile, gold is having its biggest moment since 1979, but not for reasons you might expect. Central banks, especially in China and India, are loading up on physical gold like never before. Poland’s central bank has grabbed 167 tons of gold and wants to keep 20 percent of its reserves in gold — a move that hints at banks preparing for possible global shake-ups.

Remember when I-Bonds were the hot ticket in 2022, paying out 9.6 percent? Those glory days are gone. The new rate has dropped to 3.1 percent, making your standard high-yield savings account look pretty good in comparison.

In the stock market, it’s all about the “Magnificent Seven” — Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla. These tech giants account for 62 percent of all S&P 500 gains over the past year. The other 493 companies aren’t doing too shabby either, with profits expected to grow 13 percent next year.

As for the upcoming election, both presidential candidates’ economic plans would push the federal deficit higher. The Wharton School of Business says Trump’s proposals would add $5.8 trillion to the deficit over 10 years, while Harris’s would add $1.2 trillion. There’s also talk about tariffs that could spark inflation and maybe even kick off a global trade war.

Here’s the kicker: during the 2016 election, a 24-year-old Sam Bankman-Fried correctly predicted the outcome before anyone else and made $300 million in a single night trading on that information. But by morning, the markets had swung so wildly that he’d lost $600 million.

The lesson? Even if you guess the election right, predicting how markets will react is a whole different ball game — one that you should avoid. Think long-term, buy-and-hold.

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#553: The Brutal Money Truth No One Wants to Hear, with Dr. Brad Klontz and Adrian Brambila

This is the third and final episode in a three-part series. Dr. Brad Klontz and Adrian Brambila join us to share 21 harsh truths about building wealth.

This episode focuses on the final 11 harsh truths, following up on their previous conversations about the first 10 harsh truths.

The conversation begins with a key distinction: poor people buy stuff, while rich people buy time. They explain how wealthy people focus on building passive income streams rather than trading hours for objects. Brambila shares how he learned this lesson personally, discussing his pickleball court purchase through investment income rather than active work hours.

The duo challenges common assumptions about luxury brands, arguing that people who constantly show off designer items are usually compensating for insecurity. Klontz shares his own experience of buying an expensive watch early in his career to prove his success.

They examine whether college, marriage, and homeownership are necessary for wealth building. While data shows these traditional paths often lead to higher net worth, they acknowledge these aren’t the only routes to financial success.

On the topic of retirement, both guests argue that completely stopping work can be psychologically harmful, sharing examples of successful people who stayed active well into their later years.

They break down specific money-saving strategies like getting roommates, using public transportation, and cutting your own hair. Brambila demonstrates how women can cut their own hair during the interview.

The discussion covers specific side hustle opportunities, with detailed explanation of how to make money doing Amazon product reviews. Brambila shares how his videos have generated significant income, including $2,000 in a single day during Black Friday.

They address money myths about credit cards, particularly the misconception about carrying balances to improve credit scores.

Real examples and personal stories illustrate their points. Klontz shares how his 11-year-old son is making $5,000 monthly doing Amazon reviews, while Brambila discusses living in a van while earning six figures to demonstrate that wealth isn’t about outward appearances.

The episode concludes by connecting financial security to Maslow’s hierarchy of needs, explaining how building wealth enables higher-level personal growth and positive impact

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#552: The Harsh Truth About Getting Wealthy

Dr. Brad Klontz and Adrian Brambila join us for part two of their three-part series on “harsh truths” about building wealth.

The first truth sets the tone: being poor sucks. But they quickly distinguish between being “broke” (having no money, which can be temporary) and having a “poor mindset” (which keeps people stuck).

Even high-income earners can have a poor mindset, they explain, sharing examples of pro athletes and celebrities who earned millions but lost it all.

The discussion moves to whether the financial system is “rigged.” While acknowledging real systemic challenges, they argue that viewing it as a rigged system leads to powerlessness. Instead, they suggest viewing wealth-building as a game with specific rules to learn and master.

Several guests share candid stories about their own financial journeys. Brambila describes living in a van while earning seven figures, challenging assumptions about what wealth looks like.

Klontz reveals how he lost money day trading during the tech bubble, using that experience to warn against get-rich-quick schemes.

The conversation tackles touchy subjects like distancing yourself from friends with poor money mindsets. Klontz shares how he had to end a friendship with his best man when their different approaches to business created tension. They emphasize this isn’t about income levels – it’s about mindset and habits.

Through personal examples, they explore why people often undervalue their work. Brambila describes initially pricing his online courses too low due to imposter syndrome. They discuss how both employees and entrepreneurs need to understand their true market value.

The duo challenges common beliefs about jobs, arguing that “only liars love their jobs” since most people would change how they work if they had financial freedom. They use the example of petting puppies – even a dream job becomes less appealing when you lose control over your time.

On lottery tickets, they expand beyond just criticizing gambling to examine how get-rich-quick mindsets distract from real wealth-building strategies. Klontz shares research showing 97% of day traders lose money, using this to illustrate why seemingly easy paths to wealth usually fail.

Throughout the episode, the guests weave together psychology, practical advice, and frank discussion of uncomfortable truths about money. While some of their statements spark controversy, they back up their positions with research and real-world examples from their own lives and their work with clients.

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#550: Paul Merriman: The 4-Fund Strategy That Beats the S&P 500

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.

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#549: Am I Wrong to Worry About Retirement, with $2 Million Saved?

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!

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#547: Ask Paula: “We Have $2 Million at 40 – Now What?”

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!

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#545: Retire at 30? The Math Behind Making Work Optional

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!

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#544: How to Face Your Financial Fears

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.

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#543: How to Handle 7 Types of Hardball Negotiation Tactics, so You Can Earn More and Spend Less

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.

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