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It'll answer all of your questions

1:00

about it. Thanks so much. And

1:02

now, on to the show. Joe,

1:06

we have a really important final caller

1:08

today. We do, Paula, and

1:10

it's so frustrating because for

1:13

people that have served time, you know how

1:15

much bias we have in this

1:17

country against those people who went and

1:19

served their time for

1:22

rehabilitation? And yet, we have

1:24

these 13 states have these boxes

1:26

that say, were you incarcerated? You know,

1:28

the second you check that box, you're

1:31

screwed. And so, we've

1:33

got an important call that I

1:35

feel very strongly about. Right. And

1:38

this is something that we have never addressed before

1:40

on this podcast, which is a mistake

1:42

and an oversight and something that we

1:45

are rectifying today on this show because

1:47

this is such an important

1:49

topic and this is such an important subset of

1:51

the community that we need to serve. So

1:54

I'm really looking forward to the final caller that

1:56

we have today. Man, me too. Welcome

1:59

to the afford anything. podcast. This is the show

2:01

that knows that you can afford anything,

2:03

but not everything, every choice that you

2:05

make carries a trade off. And

2:07

that applies not just to your money, but

2:09

your time, your focus, your energy, your attention.

2:12

What matters most

2:14

and how do you make decisions

2:16

accordingly? And answering these two questions is

2:19

what this podcast is dedicated to helping you

2:21

solve. My name is Paula

2:23

Pant. I trained in economic reporting at Columbia

2:25

University and I help you focus on what matters. Every

2:28

other episode, we answer questions that

2:30

come from you. And

2:32

the former financial planner, Joseph Fihai

2:34

joins me to answer these questions.

2:37

How's it going, Joe? It's going great. I just

2:39

got back from your home country and brought

2:41

a cold with me. Yes. And you

2:43

hung out with my sister while you were in Nepal. I

2:46

did. We partied on New Year's

2:48

Day as if we'd

2:50

all hung out too long on New Year's

2:53

Eve. Right. And to be clear,

2:55

Nepali New Year's, which takes place in April.

2:58

Excited. We're not way behind on this.

3:01

Yes. Yeah. The Nepali New Year's, which

3:03

happens in April. Happy 2081, by the way. Oh,

3:06

thank you. Thank you. You know,

3:11

the expression, I wasn't born yesterday. There's

3:13

actually a point in time where you

3:15

can, if you acknowledge both the Nepali

3:17

calendar and the Roman calendar. I

3:19

should try to fool you on that day. Yes. Yeah.

3:23

Because you literally were born yesterday? There

3:25

is actually a day in which you were

3:27

born yesterday. Well,

3:29

as we mentioned, Joe, the last call that we're

3:31

going to take today is an incredibly

3:35

important call from a 24-year-old

3:37

who was recently released from prison. Before

3:40

we get to that call, we're going to answer

3:42

two other questions. One from Megan,

3:44

who wants to know about stock

3:47

pricing, about how to evaluate stocks.

3:51

All else being equal, why wouldn't you just buy

3:53

the cheapest stock? We're going to answer

3:55

that question from Megan. But first, before we get

3:57

to that, we're going to answer a question from

3:59

Susie. who wants to know how

4:02

to properly invest a big

4:04

lump sum because sometimes you get windfalls,

4:07

right? You might get a commission, you might

4:09

get a bonus at work. So how

4:12

do you deal with some

4:14

type of lump sum that you've been handed? We're going to

4:16

answer that first. Here's

4:18

Susie. Hi

4:21

Paula, this is Susie out of Washington

4:23

DC. I'm a longtime listener and a first-time

4:25

caller. Thank you so much for

4:27

the helpful advice you provide to myself and others

4:30

over the years. Thanks to

4:32

advice like yours, I have been

4:34

a moderate saver for my entire

4:36

career, which until a couple of

4:38

years ago was entirely in

4:41

government where I was learning moderate amounts

4:43

of pay. But thanks to that sort

4:45

of advice, feel like I'm in pretty good

4:47

financial shape when it comes to my retirement.

4:50

I am getting my first large corporate

4:52

bonus in a couple of weeks and

4:54

wanted to get your thoughts on it. The

4:57

slow and steady process that I have

4:59

used to save has served me well.

5:01

I am a longtime dollar cost averaging

5:03

proponent. I've also never had tens of

5:05

thousand dollars at my account at once.

5:07

I wanted to get yours and Joe's

5:09

insights into whether or not I should be

5:11

dollar cost averaging this. Letting

5:13

it sit for a long time in a

5:15

savings account doesn't seem terribly appealing to me

5:17

as I do so. But on

5:20

the other hand, dollar cost averaging over a

5:22

shorter window kind of feels not

5:24

like dollar cost averaging at all. Just

5:26

a little bit of context about me, I do

5:28

plan on using a little bit of this to

5:30

increase the size of my emergency savings. I plan

5:33

to buy a larger home in the short

5:35

term future. But I do plan on

5:37

putting most of this into a post tax

5:39

investment account. That's because I have already

5:42

on track using

5:44

dollar cost averaging to max

5:46

out my 401k and HSA

5:48

this year as well as my SEP IRA

5:50

for a little bit of my side hustle

5:53

money. Thanks. We'd really love your thoughts

5:55

here. Appreciate everything you guys do. Hope to

5:57

hear an answer soon. Susie,

6:00

first of all, congratulations on having

6:03

been a consistent favor. As you mentioned,

6:05

for most of your career, you made

6:07

a moderate income, but you still have

6:10

great savings and a really

6:12

healthy financial picture because you

6:14

put personal finance practices into practice.

6:17

So huge congratulations to you for

6:19

that. Let's tackle

6:21

the dollar cost averaging question, because this is

6:23

one of the most misunderstood concepts in the

6:25

world of personal finance. Dollar

6:28

cost averaging, which for the sake of everyone listening who

6:30

may not have heard of it, those of you who

6:33

are new, dollar cost averaging

6:35

is the practice of putting some

6:38

amount of money from every paycheck into

6:41

your investments, such as your 401k or

6:43

your IRA. If

6:46

you are putting in a steady amount

6:48

from every paycheck, necessarily,

6:50

this means that you're buying fewer shares

6:52

when stocks are expensive and more shares

6:54

when stocks are cheap. Because let's say

6:56

that you put in $500 from

6:59

every paycheck, necessarily, that means that

7:01

that same $500 is going to

7:03

buy you fewer shares of

7:05

an index fund than a share

7:08

of an index fund is expensive. And

7:10

necessarily, that same 500 will buy you

7:12

more shares when that index fund is

7:15

cheap, right? So dollar cost averaging is

7:17

a great way to automate contrarian investing,

7:20

which means that you are necessarily buying more of

7:23

stocks when they are on sale. One

7:27

incredibly important piece of this that

7:29

I want to clarify is that

7:31

dollar cost averaging works in the

7:33

context of planning for your paychecks,

7:36

because necessarily, you

7:39

can't invest money that you haven't earned

7:41

yet. And so when

7:43

we talk about dollar cost averaging,

7:45

as it applies to your future

7:47

paychecks, paychecks that you have not

7:49

yet received, it's a great

7:52

way to plan for investing a little

7:54

piece of every paycheck. But

7:57

it does not apply to lump sums. And

7:59

the for that is because if

8:02

you have a big lump sum of cash, you're

8:05

able to put that entire lump sum into

8:07

the market in one fell swoop. And

8:09

by virtue of doing so, you have

8:12

more time in the market.

8:14

And time in the market is more important than

8:17

timing the market. If you were

8:19

to hold this lump sum in cash, and

8:21

then put it into the market slowly, what

8:23

you would be doing is you'd be tilting your

8:25

asset allocation such that you would have too much

8:28

cash for too long. And

8:30

that would actually, statistically speaking, give you worse

8:33

results. There was a study that was done

8:35

by a couple of professors and I'm going

8:37

to I wrote a blog post about this

8:39

way back in the day. I'm going to

8:41

put that in the show notes. The

8:44

study was actually conducted in 1993, in which researchers from Dayton,

8:48

Ohio imagined what would happen if they converted $120,000

8:51

from Treasury bills into an S&P

8:55

500 index fund. And they ran

8:57

two scenarios. What happens if

8:59

they invest the lump sum on January 1st

9:02

and versus that scenario A scenario

9:04

B, what happens if they dribble

9:06

out that money over the span

9:08

of a year? These researchers ran

9:11

a historic analysis covering every year

9:13

from 1926 through 1991.

9:17

The result of that analysis was that

9:19

the lump sum strategy won two

9:21

thirds of the time. So based

9:23

on historical evidence, the odds strongly

9:26

favor investing the lump sum immediately.

9:29

Now the following year, the same researchers ran

9:32

another similar comparison. And

9:35

they concluded in that study, and I'm

9:37

quoting here, that dollar cost averaging quote

9:40

is mean variance inefficient compared with

9:42

the lump sum investment policy. And

9:46

that's basically researcher lingo for throw

9:48

all of your chips

9:50

into the game. Now

9:52

right around that same time, there was

9:54

a different research team and unaffiliated research

9:56

team that showed that there

9:58

is no statistical difference between

10:01

dollar cost averaging and throwing

10:03

money into the market at random intervals.

10:05

So if in scenario A, you are

10:08

putting money into the market in precise

10:10

two-week increments, whereas in scenario

10:12

B, you're doing so in a randomized manner,

10:16

there's actually no statistical difference between the two. And

10:19

a study of other studies followed, and by

10:21

December of 2001, there was a research team

10:25

that asked the question, all right, fine. We

10:29

have established from all of these previous

10:31

studies that lump sum investing may help

10:33

you gain more, but could

10:35

it be the case that dollar cost averaging helps you

10:37

lose less? So

10:39

in other words, is it a

10:42

risk mitigation technique rather than a

10:44

growth technique? Now these researchers in December

10:46

of 2001 ran a

10:48

study based on this question and discovered

10:50

the answer is no. And they stated,

10:52

and I'm quoting, quote, we find loss

10:54

aversion still does not explain the existence

10:56

of the dollar cost averaging strategy. And

10:59

so fundamentally, what all of these studies have

11:01

done, a meta analysis of these studies show

11:04

that if you have a lump sum of

11:06

money, it is better to put that lump

11:08

sum in both from a risk

11:11

mitigation point of

11:13

view as well as from a opportunity

11:16

for growth point of view. So

11:18

both defensively and offensively, it is better

11:20

in both cases. Dollar cost averaging,

11:22

again, is great when you're planning for paychecks

11:25

because paychecks are money that you haven't earned yet.

11:27

You don't have that money yet. You can't invest

11:29

money that you don't have. But

11:32

it doesn't apply to lump sums. Which

11:35

begs the question then, why would

11:37

people even consider dollar

11:39

cost averaging given all that? And

11:41

I think Paula, the answer to that question is

11:45

we can cover on two fronts. There's

11:49

the economic piece, which you covered, but

11:51

second is the behavioral economic piece. So

11:53

the economic piece is over time, the

11:55

stock market tends to go up. And

11:58

that's what these researchers showed, right? The

12:00

stock market tends to go up and if you

12:02

just give it enough time, the market will go

12:04

up. I love this chart. You can look at

12:06

it up online called an Ibbotson chart, which will

12:08

show results from the

12:10

early 1900s till today. And you

12:13

will see that given even all the

12:15

ups and downs that happen during any

12:17

normal market, things tend

12:19

to go up and to the right. The

12:22

market tends to the market tends to rise. For

12:25

those of you who are watching on YouTube, we've got this

12:27

chart showing on our YouTube video. So

12:30

youtube.com/afford anything, please follow us

12:32

there. But here's the

12:34

problem, Paula. The problem is that if

12:36

you're investing in a down market, and

12:38

this is where the behavioral piece comes

12:41

in, you just have to give it

12:43

time. You have to give it time

12:45

because what I saw when I was

12:47

an advisor was if you lump sum

12:49

your money in all at one time,

12:52

which all research shows

12:54

what you just pointed out is

12:56

the right move, you'll second

12:59

guess your strategy. And two weeks, three

13:01

weeks later, you go, I just got

13:03

aunt so and so's inheritance. She

13:06

saved this money and gave

13:08

it to me. And I now am throwing

13:11

it down the drain. So I'm going to

13:13

second guess my strategy because it's losing money

13:15

two weeks in. You can't do that. You

13:18

can't do that. You have to look bigger.

13:21

So behaviorally, the only issue we

13:23

have is not the research, the

13:25

research is solid. It's that you

13:27

will blow up your own game.

13:29

So you just have to have

13:31

patience. You have to not

13:33

look at it. You have to base

13:35

your investing on a wide index based

13:37

on your goal timeframe, right? Start with

13:39

the end of mind, look at what

13:41

investment historically has got you there, put

13:43

the money in that spot and leave

13:45

it alone. So what

13:48

I would do sometimes, Paula, and

13:50

this was just for behavior, it

13:52

had nothing to do with

13:55

the facts besides

13:57

the fact that you might blow the strategy

13:59

up. up, and that is rather

14:02

than dollar cost average, we might

14:04

do the thing where we

14:06

try to avoid the black swan event, meaning

14:09

that we happen to pick the stupidest

14:11

day to invest. So instead

14:13

of investing it all at once, we

14:16

may take a day today and then

14:18

take a day maybe two weeks from now and

14:21

invest the second half. And to Susie's

14:23

point, it's not dollar cost averaging. We're

14:26

just picking two days instead of one, so

14:28

we avoid the black swan. So

14:30

Susie, and to everyone else who's listening, I hope

14:32

this answers that question. If you have a lump

14:34

sum of money, put it in the

14:37

market right away. Get it in. Yeah,

14:39

exactly. Because if

14:41

you are holding that

14:43

money, you're necessarily allocating

14:46

far too much to cash for far

14:48

too long. And that is going to

14:50

create more damage to your portfolio over the long

14:52

term. If you find yourself-

14:54

Statistically speaking. Absolutely. Yeah.

14:57

If you find yourself worried ahead of time

15:00

that you won't be able to take the

15:02

market fluctuation or you're going to be very

15:04

unsure of the market fluctuation as

15:06

Paula and I were talking, you're like, I don't

15:08

know. Here's a great resource. Go

15:10

to morningstar.com and look up the fund that you're

15:13

going to put it in. Go

15:15

to the tab, which is

15:17

risk measurements, and look

15:19

at something called standard deviation. What

15:22

I love, Paula, about standard deviation is, and I'm

15:24

going to put this very simplistically in people that

15:26

are math majors, are going to come on glued

15:28

that I'm not 100% right. I'm

15:31

just trying to make it so that the average

15:33

person can use it. If the

15:35

standard deviation is 12 in

15:37

a normal market, and this is where the math

15:40

nerds are going to come on glued, but for

15:42

the vast majority of us in

15:44

a normal market, you'll go 12 percentage

15:46

points higher than what the expected return

15:49

is or 12% below. What's

15:52

cool about that, Paula, is I know this thing

15:54

can swing 24% from its normal straight on

15:59

ride. I know that's

16:01

normal. If I look at that

16:03

ahead of time, it's almost like the pilot coming

16:05

on the plane. If the pilot doesn't come on

16:07

the intercom and say we're going into turbulence and

16:09

turbulence starts on the plane, I get

16:11

jittery. But you know when I

16:13

don't get jittery is when the pilots goes, hey,

16:15

I'm going to turn on the seatbelt sign because

16:18

of the fact that I know we've got turbulence

16:20

coming ahead. Then that turbulence hits and I'm like,

16:22

oh, yeah, it's exactly what the pilot said was

16:24

going to happen. I

16:26

like standard deviation for nervous investors

16:29

because it's like that pilot. You

16:31

can show yourself, oh, you know

16:34

what? It dropped 12% from what I

16:36

expected. That's normal. I'm

16:38

still okay, which has

16:41

helped me so many times when I was

16:43

an advisor, keep my

16:45

passenger, the investor, to

16:48

stick with the right thing instead of

16:50

blowing up their strategy. Right.

16:52

And again, for those of you who are watching

16:54

on YouTube, we're showing on the screen an

16:57

example of what standard deviation looks like

16:59

in a Morningstar chart. So again,

17:01

if you want to see visually

17:03

some of the things that we're talking

17:05

about, just watch us on YouTube.

17:08

Suzy, thank you for asking that question. And

17:10

I hope that we've clarified some

17:13

of the research around dollar cost averaging.

17:15

And I do want to emphasize all

17:17

of the research that we are describing.

17:19

Again, we are speaking probabilistically. So

17:22

even that study, running

17:24

scenarios, running historic analysis from 1926 through

17:27

1991, even in that study,

17:30

Lumpsom won two thirds of the time.

17:32

That means it lost one third of

17:35

the time, right? All we can do

17:37

is speak in probabilities, knowing

17:39

that, as they say in the world of

17:41

finance, your individual results may vary. But

17:45

the most data-driven decisions

17:47

that we can make have

17:50

to come from probabilistic reasoning

17:52

that's based on historic analysis, because

17:56

when it comes to the markets, that's the best

17:58

that any of us can do. That

18:00

said, to Joe's point, if putting

18:03

this in on two different days rather than

18:05

one, if that helps you sleep better at

18:07

night, then there's a lot to

18:09

be said for the behavioral component because we

18:11

aren't logic machines.

18:15

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22:03

next question, speaking of stocks

22:05

and how they rise and fall and

22:07

how they sometimes become more or less

22:10

expensive, our next question is an important

22:12

question, particularly for anybody out there who

22:14

is new to the world of investing. So

22:18

if you've wondered the mechanics

22:20

of how the stock

22:22

market actually works, or if you know

22:24

somebody who's new to investing and they

22:26

might have these questions, this

22:28

next question sheds

22:31

a lot of light on that. This next

22:33

question is from Megan. Hey,

22:36

Paul and Jo, this is Megan. I

22:38

have a question about shares,

22:40

number of shares, price of shares,

22:42

and how that works when it

22:44

comes to capital appreciation and compounding.

22:47

I know that we talk about compounding

22:49

when it comes to stock market investing, but

22:52

I also know that really it's

22:54

called capital appreciation. So when

22:56

you own one share

22:58

of a company, that share increasing

23:00

in value is actually what gets

23:03

you paid in the end. And

23:05

that got me thinking, say I

23:08

have two different index funds, they both

23:10

track the total stock market, but one

23:12

index fund's shares cost $200 and the

23:14

others cost $100. Is

23:19

it better to invest in the

23:22

index fund whose shares

23:24

are cheaper than it is the

23:26

index fund whose shares are more

23:28

expensive? I'm trying to

23:31

figure this out on my own, but

23:33

I'm having a hard time because this

23:35

is a level of math that I'm

23:37

not that great at. To

23:39

me, it feels like the percentage of

23:41

the return is still going to be

23:43

the same, but I wanted to see

23:45

what you guys thought. I also got

23:47

this question from one of my followers.

23:50

I am also a personal finance educator

23:53

and somebody asked me this and I wasn't

23:55

even sure how to answer it and

23:58

googled it and couldn't really. figure

24:00

out an answer because it's kind of all over

24:02

the place. So I'd love your take. Thanks so

24:04

much. Bye. Megan,

24:06

thank you so much for the question. The good

24:08

news is it is straightforward, but what we have

24:10

to look at, Paula, is the difference between an

24:12

index fund and how

24:15

that works versus an

24:17

individual stock and how

24:19

an individual stock works. Once we know the

24:21

difference between the two of those, the answer

24:24

becomes clear very quickly. I

24:26

can go to any brokerage house,

24:28

Fidelity, Vanguard, Schwab, wherever, and I

24:30

can purchase shares of an index

24:32

fund. I can purchase shares of

24:34

a stock. Let's take a stock

24:36

like Microsoft. The

24:38

stock price is based on

24:41

the value of Microsoft as

24:43

a company divided by the

24:45

number of investors. So one share of

24:47

Microsoft is going to be based on

24:49

the number of shares outstanding and the

24:51

valuation of Microsoft and what investors think

24:53

it's worth and your little sliver of

24:55

that, it's going to go up and

24:57

down. An index fund is not the

25:00

same thing. An index

25:02

fund is created to track

25:04

the performance of a set

25:08

of positions that are in

25:10

index. So just to keep it very

25:12

simple, the S&P 500 is

25:15

roughly the 500 biggest companies in America currently.

25:17

It's a few more than that. 503.

25:20

Well, it's 500 companies representing 503 ticker symbols

25:22

because some companies have multiple stocks.

25:29

We end up with, though, the biggest companies

25:31

in America. And the value of

25:34

the S&P 500

25:37

is the aggregate of all of these positions

25:40

each day and how they perform. So

25:43

the only thing an index fund is trying to do,

25:46

it's trying to replicate two things.

25:48

The risk level of

25:50

that fund, so we talked about standard

25:52

deviation earlier with Susie, it's

25:54

going to try to bounce the same

25:57

way up and down that the individual

25:59

positions would. that the index would

26:01

and at the same time end

26:03

up with the same return minus

26:05

the very, very small fee that

26:07

they charge to give you that

26:09

return. That is the goal.

26:12

So because it's a tracking device, Paula,

26:16

the share price actually is

26:18

irrelevant, which is what I

26:20

believe Megan is thinking. The

26:23

share price is irrelevant. Whether you're buying one of

26:25

these funds for $100 a share or $200 a

26:27

share, they're

26:30

going to go up and down

26:33

based on the same percentage

26:35

return. Not the case

26:38

when it comes to buying

26:40

individual stocks. If

26:42

you buy a micro cap stock

26:45

that's trading for 20 cents, studies

26:49

show that you're going to either lose your

26:51

money way quicker or gain money way quicker.

26:54

So for a stock to go from 20 to

26:56

40 cents versus a

26:58

stock to go from $500 to $1,000 is crazy. But

27:04

when it comes to an index fund, it's not

27:06

crazy because all it's trying to do is mimic

27:09

the exchange that it

27:11

is trying to replicate the result of.

27:14

So Joe, let me ask you, as

27:16

we were prepping for this question, we looked up

27:19

two ETFs that both track the S&P 500. One

27:22

is ticker symbol SPY, the

27:25

other is ticker symbol IVV. As

27:28

of the time that we are recording this, despite

27:30

the fact that these two ETFs track,

27:33

both track the S&P 500, they have

27:35

different share prices. On

27:39

the day that we're recording this, IVV is trading just

27:41

over $500 a share. And

27:45

SPY tracking the same, S&P

27:47

500 is trading for below that, $497.

27:52

Dollars a share. So there's a difference. So you would think

27:54

SPY is the smarter buy. But

27:57

you know what, Paula? It isn't. And

28:00

the reason it isn't, we can go to

28:02

Morningstar again and we can

28:04

look up what the fee is to

28:07

purchase these funds. Because as I've said

28:09

before, when I rant about fees, we

28:11

pay way too much attention, but where's

28:13

a spot poll where we should pay

28:15

attention? We should pay attention if we're

28:17

getting the exact same thing. Literally

28:21

when it comes to buying the S&P 500,

28:24

my goal is to buy the S&P 500. Give me the cheaper

28:26

one, please. Because they

28:28

are very much the same thing and

28:30

you will find that ticker symbol IVV has

28:34

a lower cost than ticker

28:36

symbol SPY. So

28:38

in this case, IVV,

28:42

which tracks the S&P 500, has an

28:44

expense ratio of 0.03%, according to

28:49

Morningstar. Tractor

28:51

symbol SPY tracking the

28:53

same exact thing, doing exactly the same

28:55

thing, 0.095. So

29:01

three times, over three times

29:03

more expensive than buying

29:05

IVV. By the way, back

29:08

to my rant about fees, you're

29:10

going to be okay either way. You're

29:12

going to do fine if you go with SPY. However,

29:15

if I'm thinking about fees, I'm buying

29:17

IVV even though it appears on paper,

29:19

if I'm looking at them as if

29:21

they're stocks, it's a pricier thing. It's

29:23

not a pricier thing. It's

29:26

actually a much cheaper thing than

29:28

ticker symbol SPY. So

29:31

big picture, don't get overly

29:34

hung up on expense ratios, which we sometimes

29:36

see people within the personal finance community do,

29:39

but all else being equal, and

29:41

this is a perfect example of two

29:43

ETFs that track the same underlying index,

29:46

all else being equal, go for

29:48

the one with the lower expense ratio. Yeah.

29:51

And by the way, as you get more esoteric,

29:53

Paula, you can still run into

29:55

problems here. And let me tell you a recent

29:57

story that happened just a few years ago. in

30:00

the oil sector. And you've invested in

30:02

the oil sector in the past. I've

30:04

invested in the oil sector. And

30:06

when the price of oil a few years ago

30:08

went through the floor, a lot

30:10

of investors got caught in a trap.

30:13

A company called PowerShares had a version

30:15

of an ETF that

30:18

was less expensive than another

30:20

one. However, expenses

30:23

were not the only difference. There

30:25

was a material difference in how

30:27

the two funds operated. One was

30:29

actually buying derivatives and

30:31

was buying futures contracts while the other

30:33

was purchasing the underlying position. So if

30:36

all you looked at was these, you

30:39

got sucked into buying an exchange

30:41

traded fund that actually lost more

30:43

money in a speculative spot when

30:46

the more expensive looking one actually was doing

30:48

what you wanted to do. So there's still

30:50

more research to do. Now,

30:52

I wouldn't let that worry you if you're

30:54

going with a broad index like we, like

30:56

99% of us should do. We should be

30:58

buying the total stock market index. We should

31:01

be buying the S&P 500. We

31:03

could even buy the small cap value

31:05

index. We'd still be okay.

31:08

But we start getting into biotech,

31:10

healthcare. We get into technology

31:13

ETFs or some of

31:15

these more obscure ones. You gotta know

31:18

how they're investing because companies will just

31:21

sell you on the name of some

31:23

of these really quote sexy products. And

31:27

you could end up owning something that you have no

31:29

idea really what you're buying. Which

31:31

is where the all else being

31:34

equal caveat comes in. Right? Because

31:38

oftentimes what seems to be an

31:42

equivalent purchase on the surface is not when

31:44

you look at the underlying composition of what

31:47

you're getting. And Megan, honestly, Joe and I

31:49

were discussing this question before we started recording.

31:52

My original interpretation of your question

31:55

was that

31:58

that might be what you're asking about. Now, the

32:01

way that you phrased your question was, all

32:04

else being equal, what happens if I

32:06

buy two index funds that appear to

32:08

be identically composed? And

32:10

so if we accept that assumption

32:13

as fact that these

32:15

two index funds do have identical

32:18

composition, then it becomes a

32:20

matter of, as Joe just

32:22

described, evaluating the fee structure.

32:25

But my original interpretation of your question

32:28

was to wonder if perhaps

32:32

you might be approaching

32:34

a situation in which

32:36

the funds that you are evaluating actually

32:39

do not have materially

32:42

similar composition, meaning

32:45

they may be marketed in similar ways,

32:48

but when you look

32:50

under the hood at the

32:52

composition of these funds, you

32:55

actually discover that these index funds

32:57

are comprised of different baskets. And

33:00

where we see this sometimes is

33:05

in the world of index fund investing, which

33:08

underlying index a particular fund

33:11

tracks is relevant.

33:14

So there are multiple underlying

33:16

indices that cover

33:18

the same type of asset

33:20

class. For example, there is

33:22

one that's called the MSCI

33:24

World Index, which represents

33:27

large and mid cap stocks

33:30

across 23 developed markets, 23 countries.

33:34

So the MSCI World Index is

33:36

a global equity index, but it

33:38

is not the only global equity

33:41

index out there. There's a

33:43

different one that's called the MSCI All

33:45

Country World Index. And

33:47

so you might be looking

33:50

at two different

33:52

funds that both promote

33:55

themselves as tracking a

33:58

global equity index. index, but

34:01

because they are tracking

34:03

different underlying benchmarks, they

34:06

are not actually giving you the same thing.

34:08

But the marketing at the surface level might

34:12

make it appear as though they are. And

34:14

so that my original interpretation of your

34:17

question was that perhaps that

34:19

might be one of the

34:21

challenges that you or your followers

34:23

are dealing with as you're trying to weigh

34:26

some of these different index

34:28

funds against one another. In

34:31

that case, I think, Paula, it's important

34:33

for an investor to go into that

34:35

same resource, Morningstar, and to look at

34:37

the underlying holdings. A

34:40

big point of contention for

34:42

people investing internationally, people will use

34:44

a fund that is

34:46

a world index versus

34:48

an international index. Well, world will include

34:50

much of the S&P 500 in it,

34:53

which you already own. So to

34:55

be truly diversified internationally, you want to make

34:57

sure it's ex-US, that there isn't United States

35:00

in there if you're going for an international

35:02

approach. And investors will often miss that. But

35:04

if you go to Morningstar and you look

35:06

at the underlying holding, you go, wait a

35:09

minute, I'll go back to Microsoft. Microsoft

35:12

is in here. Well, it's a US-based company.

35:14

Yes, that's because you're investing in a world

35:16

index. And then you start getting an idea

35:18

of what you own. And it makes it

35:21

easier to see, not always

35:24

easy, but easier to see whether

35:26

you're doing something that is truly

35:28

diversifying your portfolio, or if you're

35:30

buying more of the same. So

35:32

as always, it comes back to all

35:35

things being equal. But what

35:39

if they're not? What if they're not?

35:41

Precisely, precisely, it comes back

35:43

to that. What

35:46

if they're not? Thank you, Megan,

35:48

for the question. Home

35:50

is where you go to relax, to recover

35:52

from the day, to get ready for the next day.

35:54

And you want it to feel nice, but you

35:56

don't want to spend a lot of money. You

35:58

need something that's in budget. something affordable, but

36:01

also something that fits your style

36:03

and taste. Wayfair has you covered.

36:05

They have everything from appliances to

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36:16

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36:27

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36:32

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37:00

You know, spring is a good time for new beginnings.

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could save. That's policygenius.com. We're

38:23

going to get to the final question in

38:25

just a moment, but first we're gonna hear

38:28

from Orvis, who quadrupled

38:30

his income and quadrupled

38:32

his retirement savings. Hey,

38:36

Paul and Joe, this is Orvis. I found

38:38

Joe when I was trying to figure out what to do

38:40

with my landmark artist's hourly wage of $15 an hour in

38:42

2015. I

38:45

started my Roth IRA and have been an avid

38:47

fan of both of you since then, jumping on

38:49

the money show, later called

38:51

Afford Anything, as soon

38:53

as it aired. I love

38:56

y'all's complimentary approaches to financial

38:58

education, personal financial education and

39:01

entertainment and bad jokes. I love

39:03

you both. I just finished

39:05

the Michael Kitz's interview rerun and it reminded me

39:07

of how far I've come listening to y'all. When

39:10

I heard it the first time, it was the perfect push for

39:12

me to invest in my personal capital. I

39:15

upgraded my skills over the next few years and made a

39:17

big career pivot to engineering in 2021 after

39:20

maxing out my career as

39:22

an artist at $25 an hour with

39:25

100K in retirement savings built over six

39:27

years. You'd

39:29

be amazed at how well skills built from

39:31

building puppets translated to software engineering. Who knew?

39:35

Three years later, I've nearly quadrupled my

39:37

income and retirement savings, helped

39:40

friends and family start investing and now

39:42

different kinds of FIM life goals feel

39:44

so much closer and more

39:46

tangible. So no question

39:48

for you, just thanks. Thanks

39:51

for the education. Thanks for the entertainment.

39:54

Thanks for the interviews, food for thought

39:57

and thanks for sharing your enthusiasm.

40:00

brilliance with everyone. Oravis,

40:03

thank you so much for the

40:05

note and huge congratulations to you

40:07

for taking action and

40:10

doing the things that led to

40:12

such great financial growth. I mean,

40:14

we can give financial education,

40:16

we can teach you what to do,

40:18

but you're the person who actually puts

40:21

it in action. And so I want to applaud

40:23

you and I want to applaud

40:25

everyone who's listening who actually

40:27

converts knowledge into

40:30

action because that's how

40:32

you grow wealth. And like

40:34

you said, in three years, you've

40:36

quadrupled your income and you've

40:38

quadrupled your retirement savings. That's

40:41

an enormous, enormous testament

40:44

to the action that you've

40:46

taken. So congrats to

40:48

you and congrats to everyone listening who

40:50

has also improved their lives as

40:53

a result of learning and then implementing.

40:57

Our final question today

40:59

is an incredibly important question that

41:02

comes from a member of

41:04

our community who was

41:07

recently released from prison and wants to

41:09

know what financial advice

41:12

we would give to recently

41:14

released inmates. Our final

41:16

question today comes from Robert. Hi

41:19

Paula. Hi Joe. My

41:22

name is Robert and I'm 24 years old. I've

41:25

been listening to your podcast for about two years

41:27

and it has helped me a lot in my

41:29

knowledge. I've also been

41:31

released from prison recently. I

41:34

want to be able to move out of my mom's house

41:36

within a year. My plan is,

41:39

once I start working, is to save $510 a week and

41:41

also invest into index funds once

41:47

my savings is adequate.

41:50

Usually I want to get into real estate, possibly

41:52

looking into foreclosed properties to

41:55

get started. But first,

41:57

I need to get my life on track. any

42:00

advice you can give to any

42:02

recently podcast

42:05

or any inmates who are still

42:07

in prison listening to this podcast.

42:10

But more importantly, you give me the

42:12

advice so that I can get my

42:14

life started. Thank you. Robert,

42:20

thank you. Thank you for being a

42:22

member of this community. Thank you for

42:24

reaching out with that question. And

42:27

I am so excited

42:29

for the future

42:32

that you are about to build and everything that

42:34

is going to come next for you. Let's

42:37

address your question. The first thing to

42:40

focus on is career

42:43

development. Now, I don't know what

42:45

type of skills you have. I don't

42:47

know what kind of work you do. I don't

42:50

know what your any of your

42:52

training or your interests are. But

42:55

the number one asset

42:57

that you have is

43:00

your ability to earn

43:04

an income, your ability to develop

43:06

and sharpen your skills in

43:08

order to make money. And you're

43:11

24. So time is on your

43:13

side. The

43:15

more that you can focus on

43:18

skill development in some way that

43:20

will increase your earning

43:22

potential, the better, because

43:24

there are two ways to make money.

43:27

Number one, you can trade your time for money.

43:30

And number two, you can use your

43:32

money to make more money, right? So your time

43:35

can make money, and then your money can make

43:37

money. When you're

43:39

24, or when you're

43:41

at the beginning of your career, you

43:44

typically have more time than

43:46

money. And so

43:48

increasing the value of that

43:50

time, increasing the value of

43:52

every hour, or every week,

43:54

or every month, or every year, right? Focusing

43:58

on that side. of

44:00

the equation yields the biggest bang

44:02

for your buck, particularly

44:06

when you're just getting started. Eventually,

44:09

over time, the more

44:11

that you increase your earnings potential and

44:14

the more valuable every hour of your time becomes

44:16

worth, you start

44:19

to accumulate enough money that

44:22

deploying that money

44:24

so that it can go to work for you becomes

44:27

the equivalent of sort of having

44:30

this invisible other person who

44:33

is also working on your

44:35

behalf, right? When your money is allocated

44:37

out there and your money is making

44:39

money, you're basically doubling

44:42

yourself. But

44:44

that is the second phase. It's

44:48

an important second phase, but it's the second

44:50

phase. The first phase is making sure that

44:53

you increase

44:55

the value of an hour of your time

44:57

or a year of your time so that

45:02

that compensation is as

45:04

high as it possibly can be. And

45:06

again, I don't know what kind of

45:08

work that you do, but

45:11

choosing a high paying field and

45:14

developing skill sets within that high

45:16

paying field is the backbone

45:18

of everything that follows. Robert,

45:20

you have a strike against you, which has nothing

45:23

to do with you. There

45:26

is a movement underway called Ban the

45:28

Box. And as

45:30

you may know, Paula, in 13 states

45:34

and in many communities, there is

45:36

a box which is allowed on

45:39

employment applications that

45:42

says, have you been incarcerated? And

45:45

if you check that box, your chance

45:47

of being employed de facto

45:50

goes pretty close to zero. And

45:53

so in the states, it

45:55

takes your jail time, which was

45:58

meant to be paying your your debt

46:00

for whatever the situation

46:02

was, and it makes

46:05

it really punitive. And so

46:07

this ban the box movement, whether

46:09

you join it or not is up to you, but you have

46:11

to know whether the state where

46:14

you're living in the area you're living if

46:16

this box exists or not, because

46:18

that will tell you how difficult the interview process

46:20

is going to be. It's gonna be difficult no

46:22

matter what, it's gonna be even more difficult if

46:25

there is no ban against that

46:27

box on your employment

46:30

application. So

46:32

I think that something that works for you, which

46:35

doesn't work for a lot of people, I agree

46:37

completely 100% with what Paula

46:39

says, but there's something

46:41

that used to work a lot for people in

46:44

the workplace that doesn't work for most anymore,

46:46

but I think Robert works for you, and

46:48

that is the idea of loyalty. When

46:51

you get your first job,

46:55

you're gonna really need that employer

46:58

to write a glowing recommendation

47:00

for your next job. And

47:02

so being an employee who is

47:04

known as going above and beyond

47:06

is going to be super important

47:08

because of the fact that

47:11

you have this knock already against

47:13

you. And

47:15

once again, whether it's justified or not, not

47:18

really important. What is important is that it's

47:20

there and that people are going

47:22

to judge you based on that, and

47:25

that the best way to overcome that, the

47:27

best way to overcome that is to

47:29

have people write glowingly about you. But

47:32

this is where it gets annoying for me. It

47:34

gets annoying that you have to even play that

47:37

game, which means that for me,

47:39

I think we need more people advocating for

47:42

people that have fulfilled

47:44

their obligation, that

47:47

have paid the price, that government

47:49

asked them to pay, and

47:51

now it's time for them to move on

47:53

with their life and build a future, which

47:56

is exactly what you called us about. I

47:58

think we need more people advocating. Eighty four

48:00

that. And. I think that. Instill.

48:04

That day comes, it's still going

48:06

be difficult. But. I really

48:08

like entrepreneurship. I super like

48:10

entrepreneurship. That's exactly what I was

48:12

about. I was biting my tongue. I was

48:14

that. that's exactly what I was about to

48:17

say. Because you don't have to think about

48:19

setting a box when you are the owners.

48:21

The. Company. And the customer

48:23

doesn't care. The customers not

48:25

even gonna ask the customers, not even

48:27

going. think about it. Let's say again,

48:29

robber, I don't know what you do.

48:31

I don't know if skills or interest

48:33

sorry but let's just say hypothetically that

48:35

you learn how. To. Code right?

48:38

You learn a particular type of computer programming

48:40

and I know there can be people saying

48:42

well you know Ai is changing things. I.

48:45

I get that, but let's just. Run

48:48

with this example here. let's see

48:50

that you learn to code and

48:52

it's you take on some freelance

48:55

programming projects that box becomes irrelevant.

48:57

I. Can't imagine any client.

49:01

I spent a decade as a freelancer.

49:03

That question never came up. right?

49:05

There is no client that I'm aware

49:07

of unless you are doing some very

49:09

highly sensitive. Project. for

49:12

media government project or something

49:14

like that. but for ninety.

49:17

Five. Percent. Of projects

49:19

particularly if you are clients

49:22

are. Small. To mid

49:24

sized businesses. Question just

49:26

never comes up. So.

49:28

You could be a freelance. Programmer.

49:31

Or a freelance graphic designer

49:34

or a self employed. Corporate.

49:37

Recruiter. Matching. Other

49:39

job applicants with jobs, right? That's

49:41

there are so many. Services.

49:45

That you can provide you can. Specialize

49:48

in a niche of working with

49:50

a particular. Crm.

49:52

Or Sas products. right?

49:54

Specialize either they say that the riches or

49:57

in the niches you can specialize in a

49:59

narrow subs. set of being

50:02

particularly talented at working

50:05

with very specific

50:09

software programs. And

50:11

then you can offer that service-based

50:13

business model to clients, all

50:17

of which can be done remotely, all of which can be

50:19

done in your own time. And

50:21

because it's not a traditional W2

50:24

employment type of situation, because

50:26

that's 1099 freelance work,

50:30

the question of that

50:33

box, Joe, that you're talking about, it just

50:35

never comes up. That doesn't

50:37

come up in a 1099 contractor situation.

50:40

And then, you know, we're talking right now

50:42

about freelancing, but I think the thing that people

50:44

often forget is freelancing is

50:47

just the first step towards building an

50:50

agency, right? Because what happens is

50:52

you begin as a freelancer, and

50:55

it takes maybe a year or

50:57

so to like get started and get going and

50:59

build a reputation and get word of mouth referrals.

51:02

But eventually, your reputation as a freelancer

51:04

grows to the point where you start

51:06

getting more job offers than you can

51:08

handle. And so what do you do? You

51:11

hire another freelancer to work under you

51:14

and take a cut from

51:16

what they're making. And you

51:18

do that enough, you hire freelancer A, freelancer

51:20

B, freelancer C, who are all working under

51:22

you. Now all of a sudden, what's happened

51:25

is you have just sort of naturally,

51:28

organically developed an agency model where

51:30

now you're running a service based

51:33

agency, you're running a service based

51:35

business, which means that you

51:37

can then sell that business. Absolutely.

51:42

And selling the business is where the

51:44

riches lie. Right. I

51:47

wouldn't advise you though, Robert, to become an

51:49

entrepreneur immediately at 24 years old. I

51:52

would still go that very difficult route of working

51:54

for someone else because I think

51:56

that you will learn the marketplace. But

51:58

what's cool about that is

52:00

when you have this job and you're a

52:02

model employee for someone else, you have a

52:04

clear cut agenda. You're looking

52:07

at the systems, the processes, the

52:09

clients, the way they operate so

52:11

that you can do it yourself.

52:14

And I think that gives your career

52:16

a direction. It gives you

52:18

a focus. It gives you a clear

52:20

desire to wake up every morning and not have

52:23

it be like the morning before, which is a

52:25

pretty exciting place to be when

52:27

you're putting on your clothes to go to work

52:29

every day. And by the way, Paula, what I

52:31

wanna also mention is when Robert

52:34

owns this business and he has people

52:36

working for him, he can

52:38

then become that advocate that I'm talking

52:40

about. And what's cool here,

52:42

Paula, is there's a couple

52:44

of programs I wanna point to, not

52:47

just for you, Robert, but for other

52:49

people that might employ people. Because

52:51

there are tons of studies about

52:53

the great work that

52:55

many people that have been incarcerated

52:58

can do for your business. And

53:00

the government will give you some

53:02

help if you decide to

53:04

hire these people. There are two

53:06

programs I wanna point to specifically. The first

53:08

one is called the Work Opportunity Tax Credit.

53:11

And that is a federal government program

53:13

that gives a tax credit to incentivize

53:16

employers to hire previously

53:18

incarcerated individuals and applicants from

53:20

other groups with work entry

53:22

barriers, such as veterans

53:25

and receipts of temporary assistance and

53:27

food stamps. Other people that sometimes,

53:29

believe it or not, there's a

53:31

bias against. And

53:33

then second, there's also a federal bonding

53:35

program where if an

53:37

employer is worried about hiring someone

53:39

who's been incarcerated, the federal government

53:42

will sell the employer an insurance

53:44

policy at a very, very, very

53:46

low price, which lowers

53:49

the risk to the employer

53:51

of hiring a person who's

53:53

been incarcerated. We know statistics

53:55

are actually against anything

53:57

bad happening. I mean, it is

53:59

amazing. the statistics of

54:01

hiring people who have been incarcerated.

54:04

And I love those statistics, but people don't follow those.

54:06

They follow their emotion. And if you

54:08

want to get around the emotion, the federal bonding

54:10

program is another thing. So those two programs, not

54:12

just for Robert as a potential

54:14

future employer of people, but also for any

54:16

other employers out there, you can use those

54:19

two programs to

54:21

really, really help this

54:23

direction. Right, right.

54:26

So yeah, I think Robert, your first step

54:29

is develop a skillset that's going

54:31

to get you a good paying

54:33

job and develop a niche

54:35

skillset. The more specialized

54:37

your skillset is, the

54:40

more it tends to be valued in the

54:42

marketplace. So develop a particularly

54:45

niche skillset, go

54:47

temporarily work for an employer, as

54:49

Joe said, but also freelance

54:52

during your time off. You

54:54

spend 40 hours a week working for somebody

54:56

else, spend another 10 to 15

54:59

hours a week working

55:01

for yourself, building out that client roster.

55:05

Cause that's going to do two things. It's not only going

55:07

to bring more money into the door, but

55:09

it's also going to start that

55:12

flywheel spinning that

55:15

can eventually grow to the point where

55:18

you can be the boss of yourself

55:20

and then you can start hiring others.

55:22

And that A, circumvents

55:26

the questions that arise when,

55:28

you know, if

55:30

you're constantly dependent on an

55:32

employer for a

55:34

paycheck, then you're

55:37

always going to have to, unfortunately,

55:39

answer these questions about your past.

55:42

When you no longer have to depend

55:44

on an employer for a paycheck, when

55:46

you only have to depend on yourself,

55:50

you don't have to talk about that anymore.

55:52

You don't have to answer those questions. You're

55:54

the boss. It Takes a

55:56

while to build, but start building that.

55:58

And That's what's beautiful about. Service

56:01

based businesses in particular that are.

56:03

Built around a niche skill

56:05

is that service. These businesses

56:07

have such. Low. Barrier

56:10

to entry. Because. You

56:12

don't have to go through product development. By.

56:14

There's if you think of their

56:16

products based businesses and their service

56:19

based businesses product. These businesses have

56:21

higher. Costs. Associated

56:23

with product development. There's

56:26

a higher cost to starting that. A

56:28

service based business is a time for

56:30

money model that eventually grows and skills

56:33

into an agency model. So

56:35

the injury. Costs are. Substantially.

56:38

Lower and it's something that you

56:40

can do remotely. So. It's

56:42

a flexible and it can work around

56:45

your day job. The

56:47

other thing? Robber you mentioned that you

56:49

have a goal of moving out of

56:51

your mom's home within a year. I.

56:55

Don't. Know your situation there. I don't

56:57

know how good of a relationship you

56:59

and your mom have. I don't know

57:01

how comfortable that home is to live

57:03

and I'd I don't know anything about

57:05

that situation. So. But. The

57:08

one thing that I will say in

57:10

a very broad generalized sense is that.

57:13

S and it this is a been

57:15

on it's an If is. You

57:18

and your mom has a good relationship.

57:20

If she's happy to have you, there

57:22

is you. Enjoy living there. Is.

57:24

There's no compelling reason to leave.

57:27

I would. Try to

57:29

stay there for as long as possible

57:31

because that is. A fast

57:34

track. To. Saving as much money

57:36

as you can. If you can,

57:38

avoid having a rent payments, Avoid

57:40

having a rent payments. Avoid it

57:42

for as long as you can.

57:44

In that the United States there

57:46

is this. Cultural

57:49

construct that states that.

57:51

People. In their twenties are supposed to

57:53

be living on their own and that

57:56

is. You know in in many. asian

57:58

and latin american culture that that

58:00

cultural construct isn't there and it's

58:03

always been a little difficult for

58:05

me to understand why Americans seem

58:08

pretty attached to this idea and seem to

58:10

have a lot of identity built

58:12

around it because in in the

58:15

Nepalese culture and in many other

58:17

Asian cultures even if you have

58:19

the money to move out of

58:21

your parents home it's considered sort of insulting

58:23

to do so you know

58:25

it's frowned upon by the community it's

58:27

sort of seen as a well what

58:30

do you not love your parents why would you want to move out in

58:33

fact in the Nepalese community it's actually

58:35

very normal to have multi-generational homes where

58:37

you have the grandparents plus the husband

58:40

and wife plus their kids plus sometimes

58:42

even great grandkids all living in the

58:44

same home and not that I'm suggesting

58:46

that people do that but I'm sharing

58:48

that story to reflect a

58:51

the cultural set of norms that informs

58:53

my viewpoint but be that I

58:56

just don't understand why

58:58

there's any shame

59:01

around living with your parents

59:04

I don't understand I really don't understand

59:06

this cultural construct that we have in

59:08

the US now I do understand that

59:10

some situations are untenable I do understand

59:12

that sometimes you've

59:14

got three people or four

59:16

people all living in a studio apartment

59:18

or sometimes there's a rift between two

59:21

family members and there's animosity

59:23

there like I do understand that there

59:25

are logistical barriers

59:28

so I don't want to discount those and

59:30

certainly if there's a circumstance in

59:32

which a family member is toxic

59:34

or abusive then yes absolutely

59:37

get out but if in

59:39

the best case scenario if everybody

59:41

gets along and everyone

59:43

is happy to live together I don't

59:46

understand what the hurry is to

59:48

move out and again Robert I don't

59:50

know your situation there at all this is more

59:52

of a general statement this is a statement that

59:54

may or may not specifically apply to you but

59:57

in a vacuum the most expensive part

59:59

parts of your life are housing,

1:00:02

transportation, and groceries.

1:00:05

So by lowering the

1:00:07

cost of housing, if he

1:00:09

wants to get into buying foreclosed homes

1:00:12

or entrepreneurship, could

1:00:14

be both, then staying at

1:00:16

home could

1:00:18

be the answer, again, not knowing his

1:00:20

situation. Exactly. Exactly. And

1:00:23

the final thing I'll say, Robert, I want to

1:00:26

congratulate you on the specificity. You

1:00:28

said that once you start working, you want to save

1:00:30

$510 per week. There

1:00:34

is a specificity to that

1:00:36

number that I know

1:00:39

reflects the fact that you

1:00:42

have carefully looked at what you expect to be

1:00:44

earning, what you expect to be spending, and precisely

1:00:47

to the dollar, $510 every week, precisely how

1:00:49

much you can save. And

1:00:53

$510 a week is a lot, right? That's

1:00:56

going to accumulate fast. We're

1:00:58

talking about a savings of $26,520 per year, which is enough to

1:01:01

max out a Roth IRA. It's

1:01:07

enough to put money away in other retirement accounts

1:01:10

if you choose to do so. It's

1:01:12

enough to start saving up for that down payment on

1:01:15

a foreclosed rental property.

1:01:18

And it's enough to pay for any

1:01:20

specific skills training that

1:01:23

you might want to obtain, right? That's

1:01:26

a substantial amount. And so I want

1:01:28

to congratulate you on the fact that

1:01:30

you have this clear

1:01:32

plan for precisely how you

1:01:34

are going to use your

1:01:36

money to improve your net worth.

1:01:40

So keep saving the $510 per week. And

1:01:44

as your skills develop,

1:01:46

as your income grows to

1:01:49

the greatest extent possible, keep

1:01:51

your expenses where they are now. Keep

1:01:54

them as low as you can for

1:01:56

as long as you can so that

1:01:58

that delta... what

1:02:00

you spend and what you earn keeps increasing.

1:02:03

In other words, as your income increases,

1:02:06

keep your lifestyle fixed so

1:02:08

that that 510 per week grows to 610 and 710 and

1:02:11

810 per week, because

1:02:15

that is going to fast track

1:02:18

your progress. Please call back

1:02:20

from time to time and give us updates. Let

1:02:23

us know how you're doing. Well,

1:02:25

Joe, we've done it. I

1:02:27

can't believe that, yeah, what

1:02:29

great questions. Just great, great

1:02:32

questions. Well, Joe, thank you

1:02:34

for being the former

1:02:36

financial advisor on this show. Where

1:02:39

can people find you if they would like to hear more

1:02:41

from you? You know, one aspect

1:02:43

of Stacking Vegemans that I think even

1:02:45

some of our long-time

1:02:48

listeners don't know about is that my

1:02:51

incredible spouse, Cheryl, and I have

1:02:53

begun detailing our our

1:02:56

journeys around the world. And so our

1:02:58

Nepal trip is definitely going to be a

1:03:00

travel log that we'll have, but we're just

1:03:03

putting the finishing touches on a six-part series

1:03:06

of our trip to Jordan

1:03:08

and Egypt, Egypt that you just went to

1:03:10

as well, Paula. But we did a trip.

1:03:13

We used a travel agency.

1:03:15

We talked about what we like, what we

1:03:17

didn't like. So if you're thinking about traveling

1:03:19

to Jordan or to Egypt, you can stop

1:03:22

by the Stacking Vegemans blog and just put

1:03:24

in Jordan or Egypt as a keyword and

1:03:26

you'll come across this six-part series where we

1:03:29

dive into our experience,

1:03:32

the good, the bad, and the

1:03:34

ugly, because we had all the

1:03:36

above on that trip. Mostly great

1:03:38

though. Highly recommend

1:03:40

seeing some of these amazing

1:03:43

sites in antiquity, but come

1:03:46

read our travel log. Fantastic. Well,

1:03:49

thank you, Joe. Well, thank you, Paula. And

1:03:53

thanks to all of you for being part of the

1:03:55

Afford Anything community. If you enjoyed today's show, please subscribe

1:03:57

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1:04:00

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1:04:56

Pant. I'm Joe Solsiheye, and

1:04:58

I'll meet you in the next episode.