BiggerPockets Money

Financial mistakes can have a HUGE impact on your future retirement savings - the opportunity costs can be enormous!

In this episode, Scott and Mindy discuss some of the biggest mistakes you can make financially, and ways to avoid them so you can give yourself the highest potential for financial independence.

Mindy and Scott move past previously discussed mistakes such as housing and transportation, and dive deep into relationship money mistakes, travel, spending, retirement planning and tax issues that can cost you tens of thousands of dollars in your retirement accounts.

Scott and Mindy shed light on some of the “low-hanging fruit” money missteps as well as touching on spending and lack-of-planning issues that can have an even larger impact on your financial future. 

This episode truly is for anyone who has money AND wants to have more.

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Personal finance is easy, right? You read a blog or listen to a podcast and just follow everything they did. Easy, Peasy, Lemon Squeezy.

Except that’s not how the world works. What brought success to one person may bring misery - and ultimately failure - to someone else. Personal Finance is P-E-R-S-O-N-A-L!

Of course that said, there are some general principles that apply to everyone: 

Chris Mamula, Brad Barrett and Jonathan Mendonsa are the authors of ChooseFI: Your Blueprint to Financial Independence, a new book for ChooseFI Publishing. They join us today to share the basics of Financial Independence, and to remind us that Financial Freedom is available for everyone.

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Melanie Lockert joins us today to share her story of student loan debt and her subsequent inability to find a job when she graduated into one of the worst job markets America had ever seen, and her spiral into depression and shame over her debt.

Melanie is not alone - as of 2018, more than 44.2 MILLION borrowers owe more than $1.5 TRILLION! (link https://en.wikipedia.org/wiki/Student_debt)

September is National Suicide Prevention month - and Melanie hosts a Suicide Prevention Blog Tour every year due to the sheer number of people who find her blog when they search "I want to kill myself because of debt".

Melanie advocates sitting down and figuring out exactly how much your debt is costing you per day, which was both a big source of shame as well as a HUGE motivator for her to pay it off. She also shares her journey out of debt - and out of depression through therapy.

Melanie also shares resources for people feeling overwhelmed. Find counseling options at www.openpathcollective.org, talk to someone through text by texting HOME to 741741, which is the Crisis Text line or call the National Suicide Prevention Hotline at 1-800-273-8255.

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Mindy sits down with Billy Hensley from The National Endowment for Financial Education to talk about Financial Education in America, and how NEFE is working to improve student and adult access to this oh-so-important information.

They discuss state-mandated financial education courses and the success rates for students in these states. Billy also shares his take on the mandates, and how YOU can get involved if your state does not yet have this requirement.

Billy also details how parents can get involved and bring this education into their children’s schools, where this is so desperately needed.

This shortened episode of BiggerPockets Money is especially important for parents who are trying to teach their children how to handle money.

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When Melissa found out she was pregnant, she was a sophomore in college. Her counselor gave her a pretty alarming statistic: a frighteningly small number of women who get pregnant in college actually end up graduating. 

Melissa threw herself into her studies, and prepared as much as she could for the birth of her son. And while her plans may have been changed by this unexpected addition, she pushed on and beat the odds - in more ways than one!

Not only did Melissa graduate on time, she graduated with a degree in Mechanical Engineering while working an internship in California and attending school in Michigan.

Melissa’s story shows that bumps in the road of life do not have to define your path and that financial independence is STILL achievable even if life throws you a curveball.

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Rob Berger grew up literally with Rich Dad, Poor Mom. While his mother almost lost her house after his parents divorced, his father was filthy rich, picking him up in a Rolls Royce for weekend visits. 

Throughout high school and college, he spent every dime he made, and graduated with around $55,000 in debt - and a wife.

Upon graduating law school, he felt that “If I don’t save something, it would be a missed opportunity - even if it was $100 a month.” 

Keeping up with the (lawyer) Joneses took him in a big way - fancy car, fancy watch - and it wasn’t until he started listening to Dave Ramsey and hearing all those people scream “I’M DEBT FREE!!!” that it clicked. He didn’t want the fancy things anymore, he wanted to be debt free. 

He started saving in his retirement accounts, while simultaneously paying down debt because “it would be insanity to forgo contributions to your 401(k) so you could pay off your 6% student loan debt or credit card debt you can transfer to a 0% card. Even if you don’t have a match, you only have that one year to contribute. When the year is gone, that opportunity is gone.”

Rob discovered that small changes in his daily habits didn’t have a very big impact in his daily life, but these small changes had a HUGE impact in his net worth. As he turned down opportunities to spend money, he saw his net worth skyrocket, until his money was making more money than he was!

Rob has taken everything he learned on his own journey, and put these tips into a book aimed not at Early Retirement, but Financial Independence - encouraging everyone to attain the freedom to pursue their best life.

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Ashley Likely grew up with parents who provided everything she needed, but not necessarily everything she wanted. They were able to pay for her housing in College, but not for much else. So (spoiler alert) she graduated college with $77,000 of student loan debt.

A conversation with a ‘preachy’ coworker showed her the light of paying down debt, saving aggressively and starting to invest. They started encouraging each other at work, learning about investments, contributing to 401(k)s, listening to podcasts and doing research. 

Ashley stumbled across a blog post written by Scott Trench where he shared “Reducing your debt is similar to increasing your income.” She had $56,000 in student loan debt at the time she read this article and says “Scott’s post changed my life.”

She thought, if I could eliminate the student loan, what could that do for me mentally and financially? As a speech language pathologist, she has the opportunity for overtime, which she took every chance she got. 

Her naturally frugal ways kept her from going into further debt with car loans, vacations and all the trappings of “adulthood” by simply avoiding them. Avoiding these debt traps allowed her to bust out her debt and prepare for her future as a real estate mogul!

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In Episode 83, Scott and Mindy discussed how to buy your first property. And they were peppered with questions about the buying process after it came out, but the top question they got was “How do you save for your downpayment?”

In today’s episode, Scott and Mindy dive deep into the process that happens BEFORE you start looking for a property. Things like getting your credit score as high as possible, getting your taxes in order, and the TRUE cost of closing.

They also explore PMI - when it makes sense to pay it down and when it’s OK to continue to pay. They even share a story from a listener who was able to buy out his $100 a month PMI payment for $1500.

If you’re looking to buy a house, but not sure where to start, this episode will definitely put you on the right path.

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David Stein reached out to us after Erin Lowry’s Episode 81, where we talked about the basics of investing. He really liked that episode, and wanted to dive a little further into the different TYPES of investments you can choose from.

In this episode, we explore asset classes we haven’t really discussed before: Closed End Mutual Funds, REITs, Mortgage REITs, and the different types of stock you can buy. (Yes, there is more than one!) We even touch on Gold and Cryptocurrency! 

Investing isn’t limited to stocks, bonds and real estate, and David introduces these ideas so you can start investigating the asset classes that appeal to you and works best for your financial goals.

David also shares his Investing Principles and his top tip is so simple, yet such an EXCELLENT piece of advice: Be able to describe in detail what you are investing in. If you can’t, you’re not ready to invest in that just yet.

If you’re looking for different asset classes, better returns or even just to diversify your portfolio, this episode is a must-listen!

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Jacob Wade knew nothing about money growing up. Any money he made at his mall jobs was instantly blown on mall food and silly teenage expenses.

His father passed away when he was 4, leaving him an inheritance of $100,000 when he turned 18. Jacob quickly spent it on a truck, customized to the hilt. He soon had nothing to show for it, and at his lowest point, had to move in with his girlfriend’s mother, because he had no money to pay rent.

Enter Dave Ramsey’s Total Money Makeover. Jacob devoured this book and of course, lightbulb!

Jacob did what most new-to-FI people do, he cut out everything! He started tracking his spending and preaching to everyone who would listen. Finally fed up with his constant preaching, his wife said “I don’t want to hear about this anymore - go start a website!” And I Heart Budgets was born, where Jacob could preach to his heart’s content.

Jacob and his family are now on a year long road trip around America, a mini-retirement to spend time with their young children before school starts, taking advantage of their financial position.

Later in the episode, Jacob drops a knowledge bomb on Mindy & Scott, sharing the existence of the “Spousal IRA,” a way for non-working spouses to contribute to an IRA.

Thinking you made such a big mess of your finances that you won’t ever recover? Jacob’s story shows that it’s never too late to start, and that poor financial choices don’t have to define you.

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