Chain of Wealth - Debt, Investing, Entrepreneurship, Wealth & More

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Paying Down Mortgage vs. Investing Mar 14, 2019

Show notes

A lot of you have been interested to know more this topic and it's important for all of you to hear some pros and cons when making your decision between paying down your mortgage or investing the money.

Welcome!
[:] There is a decision to be made
● Cost-benefit analysis is a must
● Check how much interest you will be paying on your mortgage in the long term
● Additional payments toward loans will knock a lot of time off on the repayment term; use mortgage calculator to make side-by-side comparison on different terms

[:] Why you should invest instead of paying down mortgage
● You can try using Robinhood app to start in the stock market and can even start with $20
● The market is doing pretty well recently

[:] What's the total interest like for a $100K on a 30-year repayment term
● Total interest paid would be around $93K
● If double payments are made, the loan will be paid off in less than 10 years and the total interest paid would have just been $26K
● If you can, you should be paying double payments

[:] What if I grow the money instead of paying double on mortgage
● Your $536 monthly repayment for 118 months, would have only paid $45K worth of interest
● Your $536 monthly repayment for 118 months, if invested, would have grown to $95K
● With a return rate of at least 8%, the amount earned from investment over the same period of time would be enough to payoff your mortgage in cash

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Stephonee from Poorer Than You Mar 11, 2019

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Stephonee is a mom, a wife and a personal friend. She blogs over at PoorerThanYou.com where she talks all about money- where to start if you’re clueless and what you can do if you want to invest/save. Although not in a financial career, she has lot of experience- mainly starting where she ran out of money and had to drop out of college. Today, she sits with a net worth of over $100K.

Welcome!

[:] Your website, poorerthanyou has been around for quite some time. Tell us your backstory and how you started.
● I learned about personal finance blogging in college when I was so broke
● She figured out that she didn’t have enough money to stay in college, dropped out of it and decided to write about it so people can follow along my journey
● Net worth started at negative $26k when she was 20; took 12 years to turn around at 32 now
● She ended up going back to school so had to take out more student loans.

[:] What are the options when you move from one job to another with your 401K? What should you do?
● Stephonee had a great job, her dream job and but got laid off but she ended up working for a 401k administrator in her new job
● The easiest thing to do is to roll into new 401k to keep everything consolidated in one bucket
● You can also roll your 401k into an IRA; the downside is that if you do get sued, money in IRAs can be included in your personal assets
● If you already have an IRA, don’t roll your existing 401k over into your existing IRA, so don’t co-mingle your assets

[:] Do you have any specific steps as to HOW you do that?
● The administrator or company that runs your 401k or 403b, call them (whoever is gonna have the money), normally you will have to fill in a form.

[:] We had a listener write in that she is moving countries- do you have any advice as to what she could/ should be doing with her American retirement plan?
● You pretty much can’t, the money is sheltered from US taxation
● You will be charged for early withdrawal
● They could roll it into a traditional IRA as it can allow withdrawals without penalty, one is an education exclusion

[:] We’ve talked about it before on Chain of Wealth but, if a person’s job does not offer a 401K - what other retirement options are out there?
● You should be looking into IRAs
● If your health plan is a high deductible account, as long as your plan qualifies, you can open a HSA on your own
● Your best bet is often to convince your company to get a 401k if you are working for a small company
● 44 Million people in the gig economy (1099s), you are eligible to open a solo 401k on your own

[:] You’ve recently started a new project on-line called the Money-Middletons, how is this different to what is already in the blogosphere?
● Stephonee has heard a ton of people in the realm of “I can’t afford this”.
● There’s a ton of great retirement advice out there if you are able to max you retirement accounts, but the people in the middle are often left out.
● She started a blog to share posts that will help people

[:] Value Link: Grab a free copy of Damion’s new book on QRPs

[:] What does your saving and retirement plan look like?
● Big focus on taxes and reducing taxes as much as possible (legally of course)
● Low cost index funds

[:] What are some favorite books you can recommend?
● Book: The Simple Path to Wealth by JL Collins
● Book: The Bogleheads Guide to Investing
● Book: Get Money

[:] A favorite quote?
● Not really one quote but,'You’re gonna regret something and it’s ok'

[:] Any last 401K/ retirement advice
● A summary plan description is required for all 401ks, ask your employer for one.

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Traditional and Roth IRAs Mar 07, 2019

Show notes

As promised to be included in this series on retirement, here are facts that you need to know about Traditional and Roth IRA, as the two most popular types of IRAs. Check this episode and learn more about your journey to financial freedom.

Welcome!

[:] Difference between Traditional and Roth
● Traditional IRA is pre-tax similar to a 401k while,
● Roth IRA is typically tax-free or after-tax

[:] Until when can I contribute for tax year 2018 and what are the contribution limits?
● You can contribute up to April 15, 2019
● 2019 limit increased to $6,000 from last year's $5,500, if you are under the age of 50
● If you are 50 or older, this year's limit is set to $7,000

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Damion Lupo of Qualified Retirement Plan Mar 04, 2019

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Damion Lupo is the author of many books but we are going to talk mostly about his book called The QRP book today. Damion has actually appeared on the show before, where he has talked about how he went from being a multi-millionaire to being broke and building his net worth back up again.

[:] What is a QRP?

Qualified Retirement Plan, broad term for these tax plans
Most people are familiar with 401ks
This gives a different option that most people don’t know about
Damion has created EQRP - it’s different in that it’s a 401k that you can invest yourself
It’s strange to think about because you are the custodian

[:] What are the benefits?

Match from company and then an IRA
Over 20 years, you’re not going to save up a ton of money from that
QRPs allow you to do up to $50k a year.
You could even get a tax credit- paid out
Most of the withdrawal rules are the same

[:] You explain the 8th world wonder in your book, for anyone grappling with this idea, what advice do you have for them?

The easiest way to think of it is compound interest- if you don’t pay it off you owe a ton more money next month.
On the flip side if you are earning it it works the same.
72 divided by your interest rate is how long it’ll take for your money to double
However it’s not just about a fixed return, you need to choose what you want to invest in

[:] How do you set up a QRP?

You need to have business activity
Giant trust document
Rollover money
You typically need a firm to set one up for you
If you aren’t wanting to do the research then you might want to use someone

Value Link: Grab a copy of Damion’s new QRB Book

[:] What is your saving or retirement plan?

Damion keeps his money moving
Money goes in and out and he continues to get paid
Store money in gold

[:] Favorite Quote?

[:] Parting piece of advice?

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What You Should Know About Your 401k Feb 28, 2019

Show notes

Here's what you should and shouldn't be doing with your 401k. Based on the recent poll we did, you guys wanted to know about 401k as a retirement plan so here are the eye opening facts from our research.

Welcome!

[:] Things to always be mindful of
● Don't withdraw 401k early mainly to avoid penalties
● The value of your money now will considerably grow in the next 20-30 years from now
● It can be disastrous to use your 401k money to payoff loans

[:] What you should do with your 401k account
● Decide wisely on how much your contribution amount should be
● Check your available investment options

[:] What to expect on 401k fees and taxes
● All contributions toward your 401k are pre-taxed
● Withdrawals made during retirement age will be taxed

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Tailor-Made Budgets with Ericka Young Feb 25, 2019

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Erika has gone from 100,000 of debt to debt free in 5 years! Her and her husband decided early on that it was time to take hold of their financial life together. After paying off her debt, she realized how passionate she is about helping people better their lives, thus Tailor Made Budgets was born!

Welcome!

[:] You have quite an interesting story when it comes to your personal life and debt. What position were you in? How did you work your way out of it?

Didn’t start at $100k, but Ericka got married young with about $65k worth of debt.
She and her husband started buying goods like cars, even though they weren’t unreasonable it pushed them over the edge.
After just over a year they realized how much debt they were in, especially with a new born baby.
Got a second job.

[:] Where do you see people, mostly millennials making their biggest mistakes? Not paying off debt? Not investing?

The amount of student debt that is allowed to be taken on and people actually take it on and not pay it off.
People don’t realize the impact of their debt

[:] So you and your husband paid off 100,000 worth of debt together- what advice do you have for anyone in a relationship or will be in one someday when it comes to working as a team and your money?

You won’t always see eye to eye.
Where do you want to be as a couple then figure out what you want to do.
Ericka and her husband decided they wanted to take charge as a couple together

[:] Go ahead and give us the 30 second elevator speech for tailor made budgets

Help couples get on the same page and achieve financial independence

[:] Value Link Round

[:] What is your saving or retirement plan?

Long terms person- mutual funds
Accelerating the house payment plan (sell house to buy something cheaper for cash)

[:] Favorite Quote?

Sacrifice is giving up something good for something better
The best preparation for the future is the present well tended

[:] Parting piece of advice?

The finances are hard, be easy on yourself we all make mistakes

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The Basics of Retirement Feb 21, 2019

Show notes

One of the most important life goals many of us want to achieve is to have the best retirement experience. Whether it's for personal or financial perspective, retirement requires a lot of preparation and planning. Please join us as we share our experience.

Welcome!

[:] When do you start getting that retirement plan?
● Start as early as you can
● Stop thinking that retirement is not gonna happen soon. That's the worse idea.

[:] What's your advice? Where can people start?
● Start contributing now
● Make sure you are contributing enough

[:] Quick takeaways
● Don't rely your retirement on your social security
● Start contributing on your 401k
● Use IRA as an alternative

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Kathy Longo The Independent Woman Feb 18, 2019

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Today we have Kathy Longo, she is a CFP, CAP, CDFA and author of Flourish Financially – Values, Transitions and Big Conversations. Kathy is an expert in advising women about money challenges and believes too many women rely on their husbands for their financial planning.

Welcome!

[:] Den and I were discussing prenups last night as we’re getting married in July. We talked about how they are good for each others financial security in the off chance a relationship doesn’t work out. What are your views on a prenup and would you say there is any advice you have for people before they get married?

Disclosure of financial assets are disclosed early on.
Debt disclosed as well, it’s important to discuss finances before you get married.
If someone comes into inheritance, the prenup takes care of those assets.
People don’t always think very protectively when they receive the money

[:] What’s the fundamental first step for women toward building financial confidence?

Becoming in tune to their finances, understanding spending, income source and building an emergency fund
Knowing your credit score
Understanding your own finances
Money still defer the financial decisions to their husbands

[:] Is it wise for a married woman wanting to build her financial strength to have separate accounts, or does that often cause marital friction?

It’s definitely something you want to consider but there is no right or wrong answer
Have honesty with each other

[:] Most women outlive their husbands so at some point if you’re a woman you are going to need to manage your money. In what financial area are many women least prepared when they find themselves alone?

Sudden events are the most inopportune time to learn how to manage money
The best thing to do is be involved in the finances

[:] Tell us a bit about your book Flourish Financially – Values, Transitions and Big Conversations

Just came out in September
Helps you have good financial conversations with people

[:] Value Link Round

[:] What is your saving or retirement plan?

Been in the business for 25 years, saving is super important
Started 401(k) in the first year of her business which started 5 years ago
Building her business for her retirement

[:] Do you have any other books or podcasts you can recommend?

Flourish Financially – Values, Transitions and Big Conversations
Traction
Secrets of wealth women

[:] Parting piece of advice?

Start having money conversations and take responsibility

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Payday Loans Feb 14, 2019

Show notes

Denis and Katie love watching documentary TV shows and lately they have been watching a TV show that features payday loans to people. You also maybe you are just curious as to what a payday loan is. We would like to share our experiences about it and how these loans work.

[:] Beware of the loan that you getting
● Katie was a victim of a student loan scam
● Be sure to do your research before you apply for any type of loans

[:] Takeaways to paying your loans
● Be wise. It's more important to have that emergency fund instead of getting that salary loan.
● If you are a single mom, know where you can cut back to pay your loans
● Get more side hustles

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Rob of Getting Canned Feb 11, 2019

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Rob is an experienced investor in his early 40’s that is looking to pursue financial independence. He has some entrepreneurial experience, real estate experience, loves world travel, food, and computers. After finishing up at his latest contract office job, he moved to Taiwan to pursue a life with more freedom. He blogs at gettingcanned.com

Welcome!

[:] Your blog gettingcanned.com was created as a result of you losing your job. Can you walk us through where you were in your life and how you felt when you got fired?

● Got a great performance review but ended up getting pushed out of his job after 4 years after the financial crisis
● Rob had recently found financial independence so it was a natural fit

[:] You’ve been working in Asia quite a bit lately, what has living there taught you about money specifically with regards to how money is handled differently to what you were used to in the United States?

● After wrapping up latest contract gig, rob packed up his two bags of luggage and went over
● So many things got cut out when he lived over to Asia
● One of the biggest things he got rid of was his car- it’s actually a very expensive asset to have.
● The geo-arbitrage is quite intense, it’s a lot cheaper overseas.

[:] How are you making ends meet? You mentioned in your email to use that you are freelancing?

● It’s been a long journey, Rob has 2 condos rented out in the US
● Background as a system analyst
● Teaching english is a nice thing to have in your pocket as well
● Hours are very different to a 40 hour work week

[:] I’m not going to lie, Asia is very very far away to the US- what ultimately made you decide to go to Asia and what were the steps you took to get there? Had you been there before?

● Original time going out was desperation
● Unemployed for 2 years -Rob was desperate to find work
● Chance encounter by meeting a random stranger at a party who has recently gone over
● Rob decided there weren’t many option for him at the moment so he asked a ton of questions and found out the requirements weren’t all that high

Value Link Round

[:] What is your saving or retirement plan?

● Saved up enough that the bare minimum needs are met
● Eventually get social security
● Lived a pretty frugal lifestyle in the US- but in Asia you can get by on much less. Living costs changed from over $2,000 a month to about $1,500 a month.

[:] Do you have any other books or podcasts you can recommend?