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With Paula Pant

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#198: The Japanese Art of Being a Zen Millionaire, with Ken Honda

Most people have dysfunctional ideas about money stemming from childhood and society.

If your parents said, “I’m not sending you to soccer camp. You don’t practice enough during the off-season, so it’s a waste of money,” the message that you might have heard is, “I’m not worthy.”

If your parents complained about the expense of child raising, you might think, “I’m a waste of money” or “I’m an obstacle.”

These ideas stick with us in adulthood. We’re afraid to ask for a raise or promotion, because we still think we’re not worthy. We’re afraid to start our own business or speak up for our needs within a relationship, because we still think we’re an obstacle.

We soothe ourselves by projecting negative emotions onto money itself.

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#197: Ask Paula – Traditional IRA vs. Roth IRA — What Should I Choose?

Should Bret invest in a Traditional IRA or a Roth IRA?

If Amanda gets married, how will her child support be affected? What about her student loan forgiveness?

Joe is investing in bonds, which average a rate of return that’s equal to the interest rate on his mortgage. Should he switch to all-equities and redirect his bond investments into mortgage payoff, instead?

Taunia has a car loan, a 401k loan, a home improvement loan, a primary mortgage, and a second mortgage. She also has an emergency fund that only covers two months of expenses, and she’s trying to save for college for her two children. What should she prioritize?

Mickey has a six-month emergency fund. Should he leave it in a savings account or invest in bond ladders?

David made $10,000 from a side hustle last year. Can he open a Solo 401k or SEP-IRA for his side hustle business? If so, which one should he choose?

Should Andy invest in a Target Retirement Date fund, or should he split his money between a U.S. index fund and an international index fund?

Former financial planner Joe Saul-Sehy and I answer these seven questions in today’s episode.

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#196: Starting Over at 40 with Six Kids, with Wendy Mays

When Wendy Mays was in her early 20’s, she earned $12 an hour working as the office manager of a pest control company.

She wanted higher income, so she enrolled in college at age 22. By the time she finished her undergraduate degree, she was 26, married, with a child.

Her husband worked low-paying jobs to make ends meet. They struggled to pay the bills. Wendy decided to enroll in law school, so that she could bring in more money. She graduated around age 30, and became the primary breadwinner for the household. She opened her own law practice.The couple starting bringing in a combined household income of around $200,000 annually. They bought a large house, with a swimming pool.

Sounds like the American Dream, right?

Except it was all financed.

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#195: Ask Paula – I Make $168,000 Per Year and Spend $5,000 Per Year. What’s Next?

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.

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#194: The 7 Faces of Fear — with Ruth Soukup

Fear shows up in our lives in countless ways.

Sometimes, fear takes the form of procrastination. We’re afraid of botching something, or we don’t like the feeling of anxiety that a project gives us, so we avoid it, dodge it, and indefinitely put it off.

Other times, fear takes the form of perfectionism through endless iterating and tweaking. We want to keep tinkering with a project, to get it “just right.” We applaud ourselves for our attention to detail.

Fear takes the form of making excuses and rationalizations for why we can’t pursue a goal or dream. We tell ourselves that some outside factor is to blame.

Fear takes the form of throwing ourselves pity parties and locking ourselves into a negative self-talk spiral. We get easily discouraged.

Fear takes the form of thinking others can’t be trusted, and pushing people away.

Fear has many faces.

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#193: Ask Paula – I Spent Ten Years in School, and Now I’m Behind on Retirement Savings

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?

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#192: The Latte Factor, with author David Bach

“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.

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#191: Ask Paula – Would You Live in an RV to Save Money?

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.

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#190: The Next Millionaire Next Door, with Dr. Sarah Stanley Fallaw

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.

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#189: Ask Paula – How Does My Net Worth Compare to Others My Age?

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?

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