December 24, 2019

10 Money Tips for 2019

38 minutes

In today’s episode, you’ll hear from just your Hosts! That’s right no guests to save the day.

As a reminder, Justin chronicles his life at Saving-Sherpa.com and Cody writes at FlytoFI.com

In today’s episode, the guys tackle 10 financial tips they always hear and give their take on what’s true.

Hopefully, you enjoy this special episode!

Listen, learn, and let us know what you think.

Episode Summary

Credit Card Balances

We discuss why you should ALWAYS be using a credit card

The need for setting up autopay to pay off the full balance

Neither of us recommends carrying any balance

Some think it helps build their credit

In reality, you’re just setting yourself up to pay a ton of fees

The actual factor that relates to this is credit history which doesn’t require a balance

Rent vs Buy

Justin calls out the importance of keeping in mind closing costs, HOAs, insurance, etc

It’s much more complicated than comparing a mortgage to just your rent

These things are especially true if you’re moving every two or three years

If you can go beyond and do things like house hacking, then buying is certainly a great option

Also, keep in mind the non-money part of the decision

Owning a house can be stressful and add in more variables to your life

New vs Used

Justin recommends buying a car that’s 5 years old on a deal

Then keep that car for two to three years and try to sell before you hit 100k

Justin prefers these cars to be under $10k

Cody discusses depreciation and interest rates

Justin then compares buying a car and keeping it for 20 years vs rebuying periodically

Good vs Bad Debt

Obviously there is some debt that’s terrible such as credit cards with 15% interest

Then there is a middle ground where it’s debt that doesn’t earn revenue but allows you to invest more

Both felt like anything that 4-5% range in interest should just be paid off as quickly as possible

Going to College

Going to a community college first isn’t a no-brainer

Many scholarships that universities offer are only given to incoming freshman

Justin would have missed out on 10s of thousands if he went to community college

Cody calls out how important it is to just be intentional

He also calls out the cool trades and technical skills that don’t require a college degree

Filling Up Savings Accounts

Justin highlights how destructive inflation can be

It’s also scary to see how many people have avoided investing during the last five years

These people are often terrified that we’ve hit the top

Both guys highly recommend buy and hold as well as getting into the market right away

Financial Advisors

Justin does see value for some to have a tax specialist but doesn’t see the need for a financial advisor

It may be a good idea to pay a one time fee for an advisor to help set up a plan you’re comfortable with

That could help you get off the sidelines without being tied down to fees long term

These advisors often charge at least 1% which can really add up

You can see how much these fees are costing you by using Personal Capital’s Fee Analyzer tool.

If the only reason you’re using an advisor is to give you a scapegoat when things go bad, rethink that

To round it out, Justin cautions employees from having too much of their portfolio in their employers stock

Whole Life Insurance

Justin highlights that no reputable financial independence writer has recommended Whole Life insurance

People want to sell you these because the salesman gets a royalty for life

Whole Life mixes insurance and investing which means neither is as efficient as it could be

This doesn’t mean you should necessarily cancel your plan if you’re already deep into it

If you’re really interested in this topic, we covered it previously in-depth

You can find that episode with Sa El here

Also, don’t forget to check out our sponsor Bestow for great insurance quotes

Financial Infographics and Rules of Thumb

Justin really hates these generic infographics

“How much you should spend on housing”, “What you’re 401k balance should be by age”

These articles can both enable you and handcuff you

It enables you to do some minimum threshold but handcuffs you to not go beyond

If you read that saving 15% is your goal, you may be less likely to shoot for 25% or 50%

These infographics can also turn people off from chasing goals at all

Increase Pay and Decrease Spending as Much as Possible

The guys discuss how dangerous it can be to fixate on both of these

Obsessing can take you too far and lead to burning out

In reality, just by chasing financial independence you’re already ahead of 95%

Finding a balance is so important

There’s also an ROI for both of these things

You can do a ton of work to increase your savings rate just 1-5% but may barely change your retirement date

As always it’s important to enjoy your journey to financial independence

Key Takeaways

It Depends: So many people try to push rules of thumb on each other but it’s important to tailor things to your life

Don’t limit yourself: The internet is full of answers, but it may give you some that are well beyond what you’re capable of

Enjoy the journey: We can always make a little more or spend a little less, but always consider what the real cost of those decisions are

Call to Action

Find someone you know who is struggling or just curious about these topics and share this episode with them!

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Learn More About Your Hosts

Fly to FI (Cody’s Blog)

Saving-Sherpa (Justin’s blog)

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By Cody Berman and Justin Taylor

4.8

296296 ratings