The Index Card (detailed below), will tell you how to save and manage your money now. JL Collins’s book will tell you the exact steps to get rich slow by investing everything you can, after you did all this, into VTSAX over at Vanguard until you’re retirement age and then invest 60% into VTSAX through your ROTH IRA and 40% VBTLX through your IRA. Once you stop working, withdraw at about 3% every year.)
I have included notes from JL Collins’s book below where appropriate.
The $100 Startup will help you get rich fast. The goal should be for you to create a digital educational product. One that exists in the sweet spot between what you’re passionate about and what problem people have that you’re trying to solve (assuming the problem is big enough to warrant the effort.)
For my fellow creatives, the steps used to create and develop the startup, in The $100 Startup, are EXACTLY the same as developing a new comic book, film, or book.
These three books, no exaggeration, will change your financial life for the better if read together and followed precisely.
I hope you do.
Here’s the first of the three books and all the notes I took on it.
Page 4: One-third of those in relationships say money is a major source of conflict with their significant other. (It’s one of two big reasons I got divorced back in 2012.)
Page 4: “We feel as if we are falling behind because, frankly, we are, often through no fault of our own.” Jobs and paychecks are increasingly less secure. Wages have stagnated and fallen over the past 40 years, and with the Great Recession and Pandemic, all of the gains have gone to the wealthy.
Page 5- As Pound Foolish shows (Helaine’s previous book) many of our financial problems were not the result of our financial missteps. They were caused by economic trends and recessions and then compounded by the failure of financial regulators to crack down on bad behavior by those who claimed to be offering us help. So, it’s not your fault you’re broke.
Page 9: The most important advice was embarrassingly simple. It included the following: Save 10 to 20 percent of your money, or as much as you can if you can’t put that much aside.
-Saving 50% is really the goal, but getting to 20% consistently is really hard. So people should aim to land somewhere between 10% and 20% if at all possible. Then, just keep pushing as far as you can go until you can’t do it.
-One tip would be to start out at 1% each month withdrawn automatically from each check so you don’t even notice it, and you just keep increasing that withdrawn amount as often as you can. (As long as it’s not painful to do.)
Page 13: I said a while ago that common sense isn’t so common. In this book, they said it better: “This book explains how the rules work and why we chose them. They may be simple, but they aren’t self-explanatory.“
Page 14: “Simplicity — as anyone who has ever tried to perfect a golf swing knows —often takes work and insight to achieve. Just telling you financial rules to follow is not the same thing as showing you how to master them so that you can follow them with confidence.”
Page 15: “Simple, fixed-rate mortgages remain the best way to borrow money to buy your house.” I don’t think anyone should buy a house. Not unless they absolutely must have it for whatever their reason. Unless the house is a dealbreaker in your relationship, you should rent, and you should take some of the money I just saved you from buying a house and support local civic organizations working to ensure better protections for renters in your local community. Google your town’s name + Tenant Union to find one.
Rule #1: Strive to Save 10-20% of your income
Page 19: In the book, Helaine points out that during the recession, most of the wealth generated in America has gone to the wealthy. This was also true during the COVID pandemic: https://ips-dc.org/u-s-billionaires-62-percent-richer-during-pandemic/. Unfortunately for almost all of us, we’re not super-wealthy, and the cost of living and pretty much everything else (especially now with inflation in America) has continued to rise.
Page 20: Trickle Down Consumption: Despite the above, we’re constantly being inundated with messages to buy, buy, buy, and consequences be damned. “All this seems counterintuitive given our tough economic times. How could we become MORE addicted to luxury spending? Yet research says it’s just what we should expect to happen. According to economics Marianne Bertrand and Adair Morse, authors of a paper called “Consumption Contagion,” the more the wealthier people at the top of the income ladder spend on high-status luxury goods (like say, going to space), the greater the pressure to keep up across the income spectrum.
Page 23: The fact is if you’re always worried about your immediate cash flow, how to make it to next week or the next pay period, you are very likely going to make mistakes.
Page 23: “According to Sendhil Mullainathan and Eldar Shafir, the authors of Scarcity: Why having too little means so much, constantly scrambling to address money problems doesn’t strengthen our money muscles. Indeed it has the opposite result. The more little decisions you need to make, the less likely you will be able to get the big ones right. [Decision Fatigue] Our money muscle doesn’t strengthen. It weakens from stress and overuse.
Page 25: Everyone Hates A Good Budget – But you need to have one anyway. “You need to determine what day-to-day spending is necessary and unavoidable, what is a luxury that gets you through the day (Smoothies and porn), and finally, what is excess (too many smoothies and porn.) Only then can you avoid falling prey to spending traps.
Page 26: “Step 1- Monitor your spending. For three months, keep track of everything [emphasis added] you spend money on, no matter how small.
Page 27: “Step 2- At the end of each month, look at your different categories (as determined by you, like Rent, and Food, and Your Superheroine-in-peril porn fund) and see how much you are spending in each.” That first month is great for highlighting the must-pay, nonnegotiables like health insurance, rent, car payments, child care (I mean unless you’re a deadbeat), and so forth.
Step 3- Refine your expenses over time. Over the course of 90 days, you’re going to find a routine, but sporadic (nonmonthly) expenses (car repairs, doctor appointments, vet bills). I would argue this is the most important step because, at least for me, this is where most of my money vanishes.
Page 28: Step 4- It’s less a budget and more like a wave. You get the basics scheduled and paid for. Keeping an eye on things every 90 days helps you find what to cut, what to keep, and what to adjust to keep you within your budgeted salary each month.
Page 29: Why emergency funds matter: “An emergency fund brings stability and calm to your financial life. Instead of panicking at every little unexpected expense or needed to take money away from other wants and needs, you’ll have a small pot of money at hand, ready to use. What constitutes an emergency? An emergency is an expense that is both immediate and absolutely necessary. (Car breaks down, medical emergency for you or your dog, shit breaks on the house I told you not to by, ect.)
-They recommend three months of living expenses in a savings account. “We mean three months of your non-negotiable living expenses, things like mortgage payments and grocery bills. This will give you breathing room if you suddenly lose a job while also offering a source of cash for the unexpected doctor bill.”
Page 30: Don’t buy a house, but also, don’t buy a car either. God forbid you lease the thing as well. If you need to get around, and in America most of us do because we don’t believe in properly investing in our mass transit systems, get the shittiest car you can find that runs reliably and get that.
Or, you can do what I did and save up to buy a decent, reliable used car all in cash. (This is easier said than done these days with the supply chain issues and all that other shit, but buying a used, reliable car will beat buying a new car (almost every day of the week).
The one exception? When you’re able to go buy an Aston Martin in cash. You shouldn’t do this. It’s really fucking stupid, but if you got the cash and you did everything else we laid out for you in this book, I’m not going to stop you either, you know?
Page 31 The Non-Latte Factor. David Bach wrote a book called the Latte factor. You have ALL heard this one before: IF you give up that latte and save the money instead, you can retire as a millionaire. Except, as it turns out, this is really only true on paper. First, because there are expenses beyond your control (see: The supply chain issue making used car purchases more expensive: https://www.cnbc.com/2022/04/07/demand-drops-for-used-cars-but-high-prices-arent-budging.html).
This is what Helaine Olen calls the Non-Latte factor. You can save all you want, but when you get hit with a surprise bill and you’re like most Americans with little to no savings, all that money you put aside from not buying lattes is going to get wiped out every time. So buy all the fucking lattes you want. Jesus. I’m tired of this shit being peddled as financial advice “Don’t buy the latte”. Fuck you. I want my latte.
Page 32- Ways to Save:
-Look over your monthly bills and make sure you know exactly what you’re being charged with and why. If there’s anything on there that is a mystery or doesn’t seem right, investigate. You could be paying for some random bullshit you don’t need that the company stuck you with when you weren’t looking.
-A lot of tech companies like monthly, recurring revenue over one-time purchases. So watch out for any kind of service you signed up for and no longer use.
-The exercise from the book’s co-author Harold is to pretend that your credit card was stolen each month, and you have to start over. That means you have to re-up with all these services. Ask yourself which ones you REALLY want to keep and cut the rest. Note – Steal Harold Pollack’s credit card.
-My biggest weakness and the numbers suggest I am not alone: Planning your meals for the week. Americans often waste up to $3,000 worth of food each year
Page 33- You can save up to 20% more when it comes to your purchasing when you use cash. I know. This one is really had. I can’t think of many places where I use cash. So what I do instead is put whatever my budgeted amount is each month into a checking account, and once that account is empty, I am not allowed to put anything in it until I get paid again. You should absolutely use cash whenever possible, but sometimes that’s easier said than done.
(According to the authors, people will spend up to 20% more when they make purchases with their debit or credit card. This is because, again back to trickery, we don’t think of our cards as actual money, so we’re more likely to spend with them than we would if we have the literal physical dollars in our hands that we have to part with when we make a transaction.
Page 35 – Make your savings automatic. This is what I do every month with my credit union. When I get paid, they automatically put 10% into a Savings Account and 10% into my 401K.
I don’t ever have to think about this because the 10% that goes into my 401K I don’t even notice, and the remaining 10% I know is there but don’t (often) touch it. I just let it accumulate until it reaches my target ($3,000 in an emergency fund, three months’ worth of expenses in my Money Market Account, then 6 months, then 12 months, and then everything else into VTSAX, and later, VBTLX after I turn 55.)
-One tip that I liked from this book from Helaine, as a fellow freelancer, is putting all her money automatically into savings and then giving herself the money she needs out of that for bills each month. That’s really smart. You can’t spend what’s in your checking account, so keeping all of your money in another account makes sense.
Page 38 Destroy all credit cards (and if you can’t, pay one-off in full each month, starting with the one you have the most debt on, and keep chipping away at it until it’s dead.)
Page 38 on cutting back: “Sudden deprivation — which is what committed saving can feel like, rarely works. No one is perfect at trying to lose weight. No one is perfect on a financial budget either. The important thing is to keep at it and make steady progress without going crazy.”
Page 39 – Stary by saving 1% each month of your gross (pre-taxes and fees) pay each month. Then increase it slowly each month, as you can afford to do so, all the way up to 20%. Bonus points if you can get to 50%.
50% is like the Holy Grail. Nearly, if not completely unattainable, but you want to get to as close to it as you can.
Rule #2 Pay Your Credit Card Balance In Full Every Month
-Page 44- You should stay the fuck away from all these buy now, pay later deals that are popping up everywhere. Easy credit is evil. Credit is evil. Buy your stuff with your own money whenever you can and just avoid the debt treadmill entirely when you can.
I’m convinced if you aren’t going to buy a house and you’re going to buy a piece of shit car, the only time your credit will ever come into play is if you go to apply for an apartment or something. So if you want to build up some credit history, get one card with the lowest APR and interest (don’t get hung up on the points, that’s almost always bullshit), buy a pack of gum each month, and then pay for that gum. That’s it. That’s all you ever use that card for. The longer the account is open, not having any debt, and making regular on time payments is what matters most here. But again, avoid credit whenever you can.
Page 46 “There is no better way to simplify and gain control over your financial life than by eliminating high-interest debt. So pay off your credit card and other high-interest loans ASAP. For most of us, this is by far the best investment opportunity we’ll ever see.
(If you’re going to do a credit card in place of your debit card and then pay the credit card off at the end of the month, that’s totally fine. But ask yourself, are you the kind of person who is going to be mindful of every purchase made with that credit card during the month and make sure to pay off the credit card bill IN FULL at the end of the month? Because if you’re not, then a credit card is not for you.)
P48 Rank Your Debt Exercise. It works like you think it does. Get a spreadsheet, put your debt in the first column, your interest in the second column, and additional expenses tied to each loan in the third, and then you rank your debt.
The debt with the highest amount owed and highest interest is the one you should start to pay, in full, every month on. Then once that son of a bitch is paid off, you can move on to the next.
PS debt can follow you into the afterlife. After my grandfather died, this guy from Sears kept calling because my grandpa bought a refrigerator from them and was late on his payment.
So, paying off debt is one of the toughest things you will ever do, but it will literally follow you beyond the grave if you don’t. ←Problem and maybe good sales copy talking points for RMBY. This note will make no sense to people who don’t work for me.
One other thing on Rank Your Debt, and they talk about this in the book: It can be super fucking depressing. Like you can easily use that exercise to depress yourself. Don’t do that. When you do this exercise, do it first thing in the morning, and then go buck wild the rest of the day. All the fun shit you’ve been waiting to do all your life? WELL TODAY IS THE DAY, SIR! (Or MAM!, SIR was just funnier for the joke.)
P53 -(A Discord for accountability buddies to help each other pay down debt? Seems like a great business idea for someone to jump on.)
P54: Every year, call the people you owe money to, like the credit card companies, and ask for a lower interest rate. Will they say yes? Who knows! But you won’t know until you ask. (For further reading, I could pull from Influence Is Your Superpower.“
P57 Debt consolidation is a scam, use the strategy we laid out here instead.
P59 Super controversial, but since it works so well for the corporations, and I am BEGGING you to pay for cash for everything and never use credit again, don’t hesitate to file for bankruptcy.
These motherfuckers do it all the time. So you know what? Don’t get hung up on that old-fashioned bullshit that bankruptcy is for losers. It’s not true. It never was.
Because if America has shown us anything, it’s that the big winners are the corporations, and they use bankruptcy (Among many, many other loopholes) to their benefit all the time. So if they do it, we all should too.
It is NOT your fault: The 21st century has been a hellscape financially for everyone starting from just before it began with the Dot Com Bubble and rolling all the way to me writing this during COVID’s third (?) year, inflation, supply chain shortages, looming recession, and the renewed constant threat of nuclear annihilation because one old asshole wanted to make sure everyone knows how big his dick was before he died.
Also, it goes without saying that you should support laws and regulations that prohibit landlords, employers, and other parties from looking at your financial history as part of any decisions they’re going to make about you.
P61: “These loans that we assume to help train us for adulthood often end up determining it instead.” Yup.
P62 The sneaky way to protect yourself economically, if you’re still in high school:
1. Enroll in a trade school like plumbing. I’m not kidding. The world always needs plumbers. And if you do this right, you may never actually need to plumb anything. It’s just something to fall back on when you need it (if you need it) when other stuff doesn’t work out.
2. Then you can apply to whatever school you want. If the one you really want rejects you? That’s ok. What you do is go to the school that accepts you, get as good grades as you can get, and immediately apply to transfer. Most schools will never admit this, but it’s way easier to get into your school of choice by transferring than it is by getting admitted as a freshman.
That’s because nobody ever thinks about churn as it results to freshmen going through college, and there is always churn, and schools are a business and will want customers to come in and make up the difference that they would have lost. Of course, now that I tell you this trick, a lot more people are going to do it. If they’re smart. But that’s how you can get into pretty much any college you want. The learning the trade part is just to cover your ass if whatever it is your degree is in doesn’t pan out. (Hint: Get the degree you want. Everyone’s got a bachelor’s now, so it doesn’t mean shit. Enjoy college. Get a Liberal Arts degree.
What the difference is between YOU and your fellow graduates is what you make of your degree or passion to solve other problems people have. If you can do that, you’ll rarely be out of work.
Oh, and never consolidate your student loans. Always get federal over private whenever possible / if needed.
God forbid you just can’t afford your payments, I couldn’t for a REALLY long time, tell your student loan provider. https://www.consumerfinance.gov/ has more resources on what you can do if you find yourself in this situation.
Rule #3 Max Out Your 401K and Other Taxed Advantaged Savings
Page 70- If I did my job right, you are a fellow Xennial reading this article/book/thing. Whatever. Look I’m high half the time I write these.
Anyway. If you’re a Xennial, or if you’re younger, I got some bad news: There’s no chance Social Security will be there for us. The Republicans and a whole lot of Democrats take their orders from corporations, and what corporations want are no taxes and regulations. So if the corporations aren’t paying their $1T a year that they avoid every year: https://www.nytimes.com/2021/04/13/business/irs-tax-gap.html) the money needs to come from somewhere to keep the lights on for the federal government a thing, and I can’t believe I’m saying this in the year of our lord 2022, we need. (We’ve always needed the federal government. It’s insane that I need to remind people of that.)
The truth of the matter is, that we’re fucked financially as a society. Unless, of course, you follow the directions I’m sharing here.
P150 (Simple Path to Wealth): Tips on getting the most from your 401ks:
“Fund 401k-type plans to the full employer match, if any.
Fully fund a Roth if your income is low enough that you are paying little or no income tax.
Once your income tax rate rises, fully fund a deductible IRA rather than the roth.
Keep the Roth you started and just let it grow.
Finish funding the 401k-type plan to the max.
Consider funding a non-deductible IRA if your income is that you cannot contribute to a deductible IRA or Rother IRA.
Fund your taxable account with any money left.”
When you leave your job (it’s always when not if), “remember to roll over your 401k and/or your 403b (“but not your Thrift Savings Plan) accounts into your personal IRA”
Rule #4: Never Buy or Sell Individual Stocks
It’s just gambling, dude. Yeah, sometimes you might win, but most of the time? You lose.
Just do the following with your money instead:
Rule #5: Buy Inexpensive, Well Diversified Indexed Mutual Funds
“The great irony of successful investing is that simple is cheaper and more profitable. Complicated investments only benefit the people and companies that sell them.” – JL Collins (p181 Simple Path to Wealth)
And keep in mind, you ain’t going to work forever. I hope you do. Or, wait. That came out wrong. I hope you work as long as you’d like, but life ain’t fair, the universe is chaos, and shit happens.
So this not having social security thing is going to be a real problem because people our age and younger aren’t exactly planning for a rainy day. First, because it’s almost impossible to save anything and second, when you do, it’s even harder to keep it saved.
Saving for retirement the new way:
-Open up a Roth IRA at Vanguard and have that IRA own exclusively VTSAX (an index fund) and then fully fund that Roth.
-Open up a Regular IRA at Vanguard and have it own ALL of VTSAX (until you reach 55, at which point this is where you would start buying and keeping your VBTLX)
-Open up a Brokerage Account at Vanguard and keep buying shares of VTSAX
-Put 100% into VTSAX until age 55 (or when you stop working), then split your investment to 60% in VTSAX and 40% in VBTLX.
-Make these deposits automatic so you never have to think about it (otherwise it won’t get done).
-When you turn retirement age, you withdraw from these funds at or around 3% (always less than 4%, never more). You can also do this automatically via Vanguard, but it’s important not to set it and forget it.
That’s it. That’s all you need to do.
Make sure you read the rules carefully about when to withdraw and read up on the taxes and penalties for early withdrawal, and then you’re set, man.
(This is different from other countries, so I can’t quite help you if you live outside the US. Hopefully, your country is going to do a much better job of taking care of you when you get old than ours will.)
P79 ALWAYS take the employee match, you’re pissing away free money by not doing so.
Never withdraw this money until the correct day for you arrives. Usually around 60, but sometimes 6 months earlier.
Don’t touch this money.
Pretend it’s not even there.
Do you know what I do with my 401K email notifications? I set up a filter in Gmail to flag them, mark them as read, label them (so in the event I need them I can find them), and archived them. This way I’m not reminded about the bigger and bigger pot of money that’s growing. As far as I’m concerned, that fund just doesn’t exist.
If you leave your job, something we all do often and frequently without our say-so, you can call up Vanguard and ask for their help rolling over the funds from your 401k into your accounts with them.
-Just stick with Vanguard, its clientownedd, meaning everyone who is a shareholder owns the company and that’s what keeps their costs super low, which is why you want to invest with them.
Everyone else is constantly looking to jack you in exchange for their alleged expert knowledge and funds and it’s all just bullshit man. Because those guys are owned by someone. And that someone wants your fucking money. Why? So they can keep buying off your politicians and getting favorable policies that keep the money flowing.
There’s no secret to how to change America: It’s the money. If you control the money, you control the politicians. So people, you and me, need to exercise our economic power far more often than we currently do.
P116 “An index fund doesn’t seek to do better than the index it is meant to replicate. On the other hand, it won’t do worse. That, it turns out, is the magic investing formula. It’s the opposite of active management, it’s passive management.”
Once you have 25X your annual expenses put away in these funds, and you’re withdrawing up to 3% each year from them, you have achieved Fuck You Money Status. (p247 Simple Path to Wealth)
(Easier said than done, of course.
Rule #6: Make Your Financial Advisor Commit to The Fiduciary Standard
P135 “This word lets you know if the people or companies you sought out for financial advice have a duty to put your best interests first, or if, alternatively, they can prioritize their own bottom line at the expense of your own. This word is “fiduciary”.
The Fiduciary Standard vs. The Suitability Standard- Fight! FIGHT. FIGHT!
A fiduciary is a financial advisor who has a legal and regulatory duty to put your interests ahead of his or her own. A financial advisor working to the fiduciary standard:
1. Has a legal duty to act in your best interests; and
2. Is not getting paid to steer you into buying overpriced investment products you don’t want or need.
A majority of men and women offering financial advice don’t work to the fiduciary standard.”
Remember: Asking is important (another Zoe Chance reference!).
A fiduciary does NOT have to tell you if they are following the fiduciary standard. You HAVE TO ASK THEM. I highly recommend having a financial advisor if you’re making enough to have strong feelings about taxes, but for everyone else, if you follow what we say in this book you’ll be just fine.
P138 There’s no such thing as a personal advisor, only a salesperson. The “financial advisor” is not your friend. They are there to sell you things you don’t need. These brokerages and banks have been brainwashing us all our lives to think they’re safe and trustworthy people to do business with, but they’re not.
P150 when asking if someone follows the fiduciary standard, make sure to include the words: AT ALL TIMES. Yes. Sadly. This too needs to be clear and specific because the banks and brokerages are a bunch of unethical fuck weasels.
PS: Yes. You have to ask the robot fiduciaries also this very question. See the comment above about fuck weasels.
Rule #7: Buy A Home When You Are Financially Ready
Just don’t fucking do it, man. It’s a trap.
P164 do not spend more than a ⅓ of your income on housing. If you do, you’ll feel the pinch financially. All the time. Without fail. Forever and forever. Seriously. FOREVER.
P165: “It’s easy to fall in love with a home. Many come with high-end designer appliances, guessed-up spa bathrooms, or other bells and whistles. But here is what you need to remember: The three most important things in real estate purchases are…”, yup, the old cliche. I don’t even need to say it out loud, do I? Location, location, and (gag) location. God, it feels awful to say cliches. Like I feel that bavarian cream Dunkin donut creeping back up my esophagus as I type these very words.
That’s not a joke, by the way.
“The creakiest home in a desirable;e neighborhood will likely do better for you — at least financially — over the long run than a gorgeous home in a lesser locale.”
If you’re going to buy a home, only buy it with cash. If you’re looking at million-dollar homes in the Hollywood Hills, like the one they film Bosch out of, then I suspect you have more money than most of the people reading this book. (Bravo to you, my friend, for reading this. Welcome to the revolution.)
If you do buy a home though …
Don’t buy more home than you need. Make sure you have your emergency funds and VTSAX set up before you do this. And then, buy it with cash. (if you need a mortgage make sure you shop around for one, don’t just grab the first thing that comes your way. And go with the credit unions whenever possible, they’ll almost always give you better rates and terms.)
-Your home is not a goddamn investment. DO NOT buy a home with that mindset.
-Put down at least 20% on any mortgage and shop around for a 15 and 30-year fixed mortgage rate. (Also make sure you are pre-approved!)
-Get the homeownership insurance with the highest deductible and use your emergency fund to pay for repairs unless something hilarious and horrible happens. (My Dad discovered that our oil tank had been leaking into the ground for 30 years and … Look. Again. Don’t buy a home.)
Renting is always better.
But we need better protections for renters.
You can and should form tenant unions in your building and this will give you power against shitty landlords. There are lots of great landlords out there, and then there are the corporate weirdo assholes in places like Arizona that are constantly buying up properties and jacking up the rent while simultaneously preventing new apartment buildings from being built.
Listen: The future of our planet requires us to live in cities.
We don’t have a choice. Climate change will force everyone to relocate (if the UN is correct, 250 million people at the minimum), so it’s important that we take the time now to know how to protect renters from shitty landlords while also making sure we are not taking advantage of by corporations in our very own homes. It’s not like any of us knows where the Noid lives, you know?
Rule #8: Insurance – Make Sure You’re Protected
Page 178 “Going without the proper insurance could destroy all the hard work you did in the previous parts of this book.”
-Unless you’re like BJ and no life insurance company will cover you because you almost died once, you MUST get life insurance. Especially because …
Page 179 “Or maybe your elderly parents are counting on you to help them out in their old age”.
My job is to take care of them. So, again, unless you can’t, you should get insured because most if not all of my generation and younger are going to be taking care of our parents and grandparents. There are too many of them and the healthcare system in America is not prepared for the strain we’re about to put it through. So again, get insured.
“Most people think about life insurance as replacing the wages of the primary earner, but many stay-at-home parents should also consider purchasing coverage.” YES!
P180 “The best type of insurance to protect your loved ones, at the least cost to your pocketbook, is called term insurance. “Term policies also come with various add-ons that can increase the cost of the policy. We recommend a policy that keeps the price of the insurance the same amount every year for the period of time covered by the policy. This is called level term. Why? Without the level term guarantee, the cost of your annual premium can suddenly surge.”
-This book recommends a 30-year term life policy, and since I knew nothing about insurance until I read this book and this very chapter, who am I to question this advice?
-No but seriously. Why 30 years? “Because if you guess wrong, there is no guarantee you will be able to get another life insurance policy or other policy at a price that you can afford.”
-” You can also just cancel it after 20 years if you decide you don’t need it. “It’s a rental after all. You can move on any time.” And like the mortgages, make sure you comparison shop, don’t just go with the first provider you find.
-Insurance people are salespeople, like personal financial advisors, both want to sell you all kinds of shit you don’t need. Just make sure you are only interested in Term. Not whole. Not universal. Term. TERRRRRRRRRRRRMMMMMM.
Don’t rely on a policy you get through your employer because, as we said earlier, you’ll probably be moving around a lot. Just go and take out your own policy. (But if your employer offers disability insurance? Snatch that shit up immediately!”
Page 190 On that PIECE OF SHIT CAR we told you to buy? Get max coverage to protect yourself. Never settle for the minimum.
Of course, I prefer you have no car at all and just uber or Lyft wherever you need to go but I know that’s not practical nor affordable for everyone to do. And again, mass transit is balls in this country, so I totally get it with needing a car. So make sure you get your shit box from hell (sorry, dumb family joke) insured.
Yes. You need renters insurance. Just get it, again, the highest deductible. Just do me a favor? I know too many people who had priceless records and comic books ruined in some hilarious way in their home, and if you don’t itemize that shit, the insurance will not cover it.
So if you own anything that’s valuable to you or just valuable in general (ask yourself, “Is this the kind of shit BJ may break into my house and steal during the night?” If the answer is yes, then you should itemize it with your insurance company and make sure you get it valued properly.
My heart weeps for all the Revised Dual Land cards lost to moist basements.
P192. Most bankruptcies in the US happen because of medical debt. I know this firsthand because I had to declare bankruptcy due to medical debt some years back. (I was putting my insurance premiums and doctors’ bills/medications on a Southwest Airlines Credit Card that I should have never got in the first place, for many reasons, but one of them being that it was for Southwest Airlines.)
What can I tell you about health insurance? Well, it should be universal in America like it is in actual big people countries everywhere else.
If your employer takes it, you should without a doubt take it.
If your employer doesn’t, and you need to freelance, then you can go on your state’s exchange (unless you live in what we call Red States but what we really mean by “Red States” is “States where black and brown people are kept from voting”. If you live in a red state and don’t have an exchange. I don’t know what to tell you, man.
I’ve had to use New York State’s exchange a bunch of times. It’s gotten easier over the years, but that’s also because I live in New York State. Do your best. Get coverage that your doctors take if you can, and godspeed.
I’ll see you all in my underground meth lab at the end of this book to talk about how to become a ruthless supervillain because you were born in the wrong country.
Rule #9: What Can You Do To Support The Social Safety Net?
P205 I think this needs to be put on billboards and on every democratic and left-leaning outreach letter from now until the Sun explodes: “According to Suzanne Mettle, a professor of government at Cornell University, 96% percent of us have, at some point in our lives, turned to government financial support to either gey by or improve our own personal financial situation. When Mettler ran surveys asking people who had taken advantage of various government subsidies or benefits, she discovered a nation of people in denial. More than 40 percent of people who have received Social Security, unemployment insurance, or a student loan did not appear to realize the source of the largesse. When asked, they denied they had ever used a government social program.”
So listen, you should pay your fucking taxes. You should also ask your federal representatives to lobby for a fully-staffed and fully-funded IRS, so that they can go after the 1 trillion dollars lost EVERY YEAR to tax fraud and corporate bullshit.
Plus you know what will come from this? Lower taxes for us. Because whenever taxes go down for corporations, taxes go up on us.
You should also take your money out of any commercial bank you’re using and put it in a credit union. Seriously. Right now. Go to your nearest credit union and transfer your accounts over to them. That’s something you can do, right now, that will piss off the banks and get the attention of the politicians they control.
-Man do I hate this trend in personal finance books to complain about taxes, equating them to theft. The federal government provides us with protection, natural parks, healthcare, social security, and student loans, and it takes care of the people who can’t take care of themselves either because of age or disability.
Pay your taxes. And if you just want to look at shit from a “what’s in it it for me?” perspective, remember this: Climate change means hotter summers, lots of flooding, and hundreds of millions of climate refugees. Who exactly do you think is going to come and bail your ass out when shit gets really bad this century with the weather? Because it’s going to get worse than it is right now, buddy.
So if you can only see the world in a what’s in it for me? perspective, the answer is: that the federal government could very well be the difference between your life and your death. And that’s not an exaggeration. That’s a promise.
One other important thing you can do: We live in an age of epistemological warfare. Basically what that means is that there are dueling realities.
That’s just a fancy way of saying this form of warfare leads to mass shootings and terrorist attacks right here on our soil.
And yeah, that’s scary as hell, but there’s a way to end that war, and it’s each of our responsibility to do so.
When you hear shit like “Social Security is a scam” and “the president is a hologram”, you have to take a moment to address it.
A lie told often enough becomes the truth, and the only way to stop a lie, which as another cliche tells us, can travel around the world before the truth has a chance to put its pants on, is to correct it.
Not in an aggressive way.
Not in a hostile way.
You can just politely say “I’m glad you mentioned that, here are the facts.”
You’re not giving your opinion, because they’re not going to listen to that.
You can just leave the facts out and hope that it will be enough for them to find their way out of the other reality’s wormhole.
Rule #10: Remember The Index Card
P210: “The only defense against the onslaught of information and the warp speed at which we’re expecting to process it is still good old-fashioned simplicity and common sense.”
1. Print out your bank statement from the last 90 days. Look them over carefully. Is there anything you’re paying for that you could cut back on? Don’t worry; I’m not going to tell you to cut out the lattes. Drink as many as you want. What you and I are looking for here are recurring expenses charged to your card that you might have forgottenabout. We are also looking for things that keep coming up that you haven’t budgeted for. Once you’ve found these expenses, make a plan to budget for them or cut them.
2. Did you finish Step 1? Good. Now add up the three months’ worth of your Must Pay bills. Whatever that amount comes to, put it into a Money Market Fund at your local credit union. What’s a Must-Pay bill? If it’s the difference between having a guy name Vinnie show up to your house wanting to show you “this cool hammer I just found” and not having Vinnie show up, it’s a Must Pay Bill.
3. Take all your money out of a commercial bank like Bank of America and put it into a credit union. The corporations are in charge. Our politicians only respond to them. So. If you want that to change, you need to exercise your economic power. This is just one example that will also save you money from bullshit bank fees every month. You can use tools like the Credit Union Locator to find one near you.
4. Automate Your Savings. An easy way to do this is to ask your payroll department, or if you have a platform like JustWorks that pays you, and put that 10% into a separate saving account at the credit union. This way, the money is there if you need it, but it’s being put aside without you having to think about it. This is what I do, and it was a game-changer for me because now I didn’t have to think about saving the 10%. It’s being done automatically.
If you can’t save 10%, and a lot of us can’t, just start with 1% each month. Then, once you can do that comfortably, keep increasing it. 10% savings is great. 20% is better. 50% is best. But I’m a crazy person. I once tried to get high and record an audiobook. (Your proof is on my YouTube channel.)
5. Where do you put your savings? First, put $3,000 into an Emergency Fund. Then put up to a year’s salary into a Money Market savings account.
6. Get Term Life Insurance. Do not buy any other kind of Life Insurance. Many life insurance companies will offer you investment opportunities, and while they’re perfectly fine, you can do better with your money by following the directions found in the next step.
7. NEVER buy individual stocks. The stock market is like a rigged claw machine. Yeah, you might snag a beautiful Michigan J. Frog plushie if you stick with it long enough, but the machine is rigged, so you’re going to waste a lot of money before you do.
Was it worth it? (Hint: It rarely is.)
8. Once you have your Emergency Fund and Money Market accounts created, invest the right way. Put your money into VTSAX and VLBTX over at Vanguard. VTSAX is an index fund, this is what JL Collins calls your Wealth Builder. VLBTX is a bonds fund, this is what JL Collins calls your Inflation Hedge, and your money market account (set up at your local credit union) is your Deflation Hedge and Cash reserve, also according to Collins.
Here’s what I recommend:
-Open a Roth IRA that’s 100% invested in VTSAX.
-Once you’ve maxed out your Roth IRA contribution, open a regular IRA and max that one out at an allocation of 60% VTSAX and 40% VLBTX. Depending on your age and appetite, you could also do 100% VTSAX and then slowly change over to bonds as you age.
-Once you’ve maxed that IRA, open a brokerage account with Vanguard to continue buying shares of both funds.
-When it comes time to retire at age 65, you can withdraw about 4% each year and have enough money to cover your retirement.
This is important: If you are under 40, you can put 100% of your savings into VTSAX if you’ve completed creating an emergency fund and a one-year-salary fund.
It’s only when you’re approaching 40 that you’ll want to switch to a 60% VTSAX / 40% VLBTX distribution.
And if you MUST have one, never buy more space than you need.
Oh, and also? NEVER view your home as an investment. Your home is not an investment.
If you don’t want to take my word for it, ask my Dad.
He’ll give you a long list of things he needs to repair and an update on a mortgage he’s still trying to pay off at age 73.
10. Max out your 401K contributions and get the employer match if it’s offered. NEVER pass up the employer match. If you don’t know how to do this, talk to your Human Resources department immediately. Don’t piss away free money.
11. Make More Money: Create and sell a digital-only educational product that combines something you are passionate about with the solution to a problem at least 1,000 people have.
Do your research. Talk to at least ten potential customers. (If you can’t find potential customers, that’s a sign you might need to come up with something else.)
Consult with experts on solving that problem once you have a possible solution, and then make your product with your own unique spin and personality.
Look, man, I put Street Fighter 2-looking comic book characters in the personal finance book I’m publishing this year. Do you know why? Because I was high at the time and thought it’d be funny.
Rinse and repeat this step as often as you can, but go slow. Do your research. Tweak until it’s ready, publish it, and then you can move on to the next step. If you try to move too fast, you’ll make mistakes and mistakes cost you money.
12. If you have credit card debt, pay the balance in full each month for the card with the most debt. Then, get a calendar and put aside some money (as you can) to pay off this significant debt, and every time you put that money aside to put toward the monthly payment, put an X on the calendar. Aim to put an X on as many days as possible. Then move on to the next largest debt you have and repeat the process. Having the Xs on a calendar that is physical and visible is a helpful way to stat motivated and stay on track with completing a challenging goal like this one.
13. Make sure anyone you go to for any matter concerning managing your money has committed to following the fiduciary standard in all their dealings with you. This is a non-negotiable because otherwise, those people will act in their own best interests or that of the fund/bank/whatever other financial institution. Not your own.
14. Pick two or three things to spend freely on, like books or travel, and then cut back on everything else.
(We also recommend checking out this book for more helpful tips like what you’ve found here so far. Between Ramit’s book, Collins, and The Index Card, those are the only personal finance books you’ll ever need to read.)
15. Never buy something new if you can help it. For example, buy the most inexpensive car you can find if you need a car. As long as it has four wheels and runs reliably, that’s good enough. NEVER buy a new car. Don’t buy a new anything if you can help it.
16. There is no such thing as “good debt.” The only good debt is no debt. This includes debt created by “buy now, pay later” installment plans. Remember: The goal of our current financial system is to get you to use your debit or credit card and then “forget” about how much money you have in your account or how much money is coming out of your account so that you can keep spending. And the banks do their best to encourage this so they can ding you with overdraft fees.
17. In God We Trust, All Others Pay CASH! Not only is this the name of a great book by Jean Shepard (it also served as the basis for A Christmas Story) it should also be your personal policy whenever possible.
Pay for things in cash at every opportunity.
It’s not in the best interest of corporations for you to pay for everything in cash and keep track of your transactions. They want you to go into debt. That’s why they want to add more and more friction to having you use cash and less friction to buy something and forget about it online.
Since it’s not always possible to pay for things with cash, that’s why I started this guide by telling you to keep an eye on your bank statements. Because if you don’t keep an eye on your bank statements, your money will vanish like your patience in a bad Atlantic City magic show.
Put another way, like democracy, you need to guard your expenditures with constant vigilance.
18. Get involved. Protect Your Fellow Renters.
When I tell people not to buy a home and rent instead, two objections arise: 1) Shitty Landlords. 2) The desire to own more space.
As far as point #2 goes, I understand this. So, I want to reiterate: If you want to have something you own as a home, by all means, go and buy that home. But. Don’t buy more than you need, and don’t think that your home or property you purchased is some asset. It’s not. Your home is not an investment. You will, in most cases, lose money on it. So, own it because you want to own it, but don’t own it for any other reason.
Now, what about Shitty Landlords? They exist. They suck. And I encourage you to find organizations in your local community that advocate for renter protections on the community, state, or national level.
Find these organizations, support them, join them if you can, and fight. There are great landlords, and nobody is looking to punish them. But there are also a lot of large corporations that buy up property and look to jack up the rent and cut costs wherever they can. We need to advocate on behalf of everyone who wants to rent to ensure they are protected from these corporations.
By doing the things I listed here, however, you’ll be in better shape than most people.
That gives you a chance to fight back against the fascists and their enablers because money and how much you have of it is what really determines your freedom in our world.
So the more people I can help save, the more people I can empower to do the same for others until we’re all free.
I forgot the last one.
19. Pay your goddamn taxes. Every personal finance book I’ve read, and I’ve read dozens at this point, includes some conservative garbage about how you should pay as little in taxes as possible.
Always pay your taxes.
If you’re mad that your taxes are high, remember that your taxes only go up when the taxes on the corporations go down. And wouldn’t you guess it? They keep going down. (Because the politicians work for them, not us.)
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