New to personal finance and money management? Start here to learn about the basics like paying off debt, saving more, spending less, and budgeting.
In mid-1700’s France, there lived an artist and writer on the brink of poverty.
His name was Denis Diderot.He had been born into an established family, the son of a successful craftsman, and he had obliged the social standing of his birth by pursuing a formal education. He obtained a Master of Arts in philosophy, and seemed bound for a respectable profession in clergy or law.
But Diderot dreamed of becoming a writer.
Alex makes $168,000 per year, combined between her full-time job and her side hustle. Her company pays for breakfast, lunch and dinner during the work week, plus a cell phone subsidy, health, dental and vision insurance, a gym membership, and commuting costs. She also househacks, so her living expenses are only $400 per month. What should she do with her ample savings?
Christine is 38 and earns $70,000 per year running her own business. She holds $70,000 in investment accounts, has another $16,000 in savings, bought a condo with 20 percent down, and has no debt. What can she do to fast-track her path to financial independence?
Amy is unsure whether she should pay off her mortgage, downsize to a smaller home, or invest.
Katherine is 23 and househacking into a duplex. How much should she set aside for cash reserves?
Miriam started a podcast and wants to know how to morph a passion into a lucrative income stream.
Nick wonders if the FIRE movement should plan an annual gathering … you know, like a FIRE Festival. (But not like the Fyre Festival.)
I tackle these six questions in today’s episode.
Lori is behind on retirement savings, as a result of being a full-time student for more than a decade. She makes good money and lives frugally, but she’s aware that she’s behind for her age. What should she do?
Sierra wonders whether she should apply her savings towards paying off her mortgage or building investments.
Jenessa plans to retire at age 35, and she’s wondering if the 4 percent withdrawal rule applies for such a long time horizon. Her friend swears that it’s designed to cover a 30-year retirement, not a 60+ year retirement. Is that correct?
Jacqui is 24 and recently married. She’d like to open a 529 College Savings Plan for her future children, which she doesn’t plan on having for another 8 to 10 years. Should she do this?
“Don’t buy lattes.”This classic snippet of personal finance advice isn’t specifically anti-Starbucks. “Lattes” are a metaphor for the tiny expenses that leak money from our pockets, often without us realizing how much we’re spending.
Your “latte” could be a pile of subscriptions: HBONow, YouTube Red, Spotify Premium, Netflix, Hulu Plus, the CostCo membership that you haven’t used in two years, and — for that matter — the gym membership that you also haven’t used in two years. (Ahem.)
Your “latte” could be buying bottled water and snacks at the airport, or absentmindedly shopping online when you’re bored, or ordering restaurant take-out or delivery too often.
Should Russell rent a cheap apartment, or should he take out a loan for an RV in order to save money on rent?
Carl is working two jobs that each pay $12 per hour. He has $5,000 in student loans. What can he do to improve his situation?
Caroline is about to finish paying off her student loans, and in the next few years she wants to buy a home. Where should she park her savings in the meantime?
Philip is saving for financial independence, but he’s not sure what to do with his time once he quits his job. How can he discover what ignites him?
Amanda is receiving an inheritance, a New York City 4-plex valued at $500,000. How should she handle this?
And an anonymous caller wants to know what the step-by-step path to wealth building would look like.
I answered all of his questions in today’s episode, plus I feature a short follow-up interview with Kim, the firefighter whom we met in Episode 139.
[smart_track_player url="https://traffic.libsyn.com/paulaandjaymoney/AA190.mp3" title="The Next Millionaire Next Door, with Dr. Sarah Stanley Fallaw" artist="Paula Pant" social="true" social_twitter="true" social_facebook="true" social_gplus="true" social_linkedin="true" social_stumble="true" social_pinterest="true" social_email="true" ]More than 20 years ago, affluence researchers Dr. Thomas Stanley and Dr. William Danko surveyed a vast number of millionaire households in the United States.What they discovered was groundbreaking at the time.
The average U.S. millionaire, they found, lives a frugal lifestyle. They are disproportionately clustered in modest, middle-class neighborhoods. They drive used cars. They don’t spend money on jewelry, watches, boats or other high-ticket items. They’re self-made, meaning they did not inherit their wealth; they’re first-generation millionaires.
In 1996, the researchers published their findings in a book called The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. The book became a mega-bestseller and, to this day, remains a top personal finance classic.
Fast-forward to 2012.
[smart_track_player url="https://traffic.libsyn.com/paulaandjaymoney/AA189.mp3" title="Ask Paula - How Does My Net Worth Compare to Others My Age?" artist="Paula Pant" social="true" social_twitter="true" social_facebook="true" social_gplus="true" social_linkedin="true" social_stumble="true" social_pinterest="true" social_email="true" ]
Julie, age 27, calculated her expected net worth based on the formula taught in the classic personal finance book The Millionaire Next Door. She’s concerned. Her current net worth is significantly lower than the number that the formula revealed. Is she on-track?
Anonymous wants to save for a downpayment on a home. Should she reduce her 401k contributions in order to amass these savings? Should she store some of that money in a Roth IRA?
Samantha is more than halfway finished with paying off her debt. In order to make this happen, she took on a second job. How much will she owe in taxes?
Maxime works at a job in which his 401k only offers expensive choices. Should he put his money in a taxable brokerage account, instead?Leslie’s parents are going to retire in five years, but they’ve only saved $65,000. What should they do? How can she help?
Clare is creating an estate plan. What should she be thinking about?
Hello from Austin, Texas! I’m living in an Airbnb here for the next 5 weeks. Listen to the end of today’s episode to find out why … and discover how these next 5 weeks, for me, exemplify the “why” of financial independence.
In the meantime, though, the show must go on! Here are the questions that we’re answering in today’s episode.
An anonymous listener named Seeking FIRE wants to know how she can talk about financial independence with people who ridicule the topic. What do you say to those who laugh at the very idea?
Russell owns a landscaping company and is also a part-time student. He’d like to earn more money on the side, but his schedule is overbooked. What can he do?
Nick and his family are moving to the Washington D.C. area for approximately two to six years. They own two rental properties free-and-clear, and would like to buy a personal residence when they move. How should he save for the downpayment?
Gerardo lives in Mexico and wants to retire on his investment portfolio, using the 4 percent withdrawal rule. How should he invest, given currency fluctuations and other international factors?
Anonymous left her job and wants to know if she should roll over her 401k from her old employer.
We tackle these five questions in today’s episode. We also answer a comment from a listener who says that individual stock-picking and active management doesn’t get the credit it deserves.
Millions of smart, educated and successful people make dumb mistakes with their money … and they don’t realize it.
I’m not talking about obvious dumb mistakes, like spending 85 percent of your income on a fleet of Ultra-Luxe-Fancymobiles for your 16-car garage. That’s clearly a bad idea.
Instead, I’m talking about hidden dumb mistakes that you may not realize until it’s too late.
Imagine that you’re going to take a 6-month to 9-month mini-retirement. How should you plan? What should you do? Sure, you’ll need to have enough savings to cover your expenses. You might want to find some part-time work. You may need to sell off a few investment. And of course, you’ll need to think about health insurance.
But what else should you consider? And how will your first taste of voluntary unemployment impact your mental and emotional health?
Former financial planner Joe Saul-Sehy and I discuss this in today’s podcast episode.
We also answer a question from a New York-based father of two who’s trying to choose a health insurance plan.
We talk to a woman who wants to roll her six-figure SEP-IRA balance into a Roth IRA account.
We answer a question from a listener who’s moving back to Amsterdam with his wife and two children, and is wondering what to do with his 401k in the U.S.
And we answer a question from a man who’s wondering if he should invest in a taxable brokerage account, rather than focusing on so many tax-advantaged retirement accounts, so that he can more easily access this money before he turns 59 and a half.