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Lightning Round Q&A

Mister is wondering how does bankruptcy fit into this if you get to that point where that something you're considering is that something ever wanna consider yeah I mean bankruptcy can make sense for a very small amount of people in you the common idea is that people go they declare bankruptcy because they spent too much on you know, just a bunch of crap they bought a bunch of cars and so they have to declare bankruptcy that's not actually accurate one of the leading causes of bankruptcies healthcare costs etcetera so people don't want to go bankrupt okay let's be very candid they don't want to go bankrupt it's terrible it's a harrowing process it's debilitating in many ways but if you have to declare bankruptcy you can now we'll say that recent law changes have said you can't actually discharge student loans so you might be making twenty k a year and have two hundred fifty k and student loans you gotta pay that that's a political discussion that's larger than we can talk about today bu...

t bankruptcy can make sense if there have been certain things that have happened to you particularly health care but I will say that a lot of people can actually do different things before they declare bankruptcy they can negotiate with hospitals hospitals will take pennies on the dollar okay people don't know that was anyone else surprised by james negotiating settlements with his credit card by the way a lot of people don't know that again more stuff that I cover on how to negotiate in the course in the book etcetera so bankruptcy will affect your credit will be hurt, etcetera, etcetera, but one thing to consider is like, hey, do I really what would I rather have perfect credit or what? I rather pay off these debts okay? And there's a moral question about bankruptcy too don't get all this stuff today but let's just say it's an option but it's a very rare option that most people should not consider what else does anybody ever successful negotiating down student loans? Yeah, you could negotiate in a different a couple different ways you can negotiate interest rates, you could get deferrals let's say that you're working, you've got laid off, you call and say, look, I I just can't pay this right now can you give me a little bit of deferment, etcetera, their different ways of playing around? I cover that in chapter one of my book so student loans are a bit malleable but you know you're going to pay and there are ways to get around it and you can also plug in some numbers. For example, if you pay an extra fifty bucks a month, you could potentially save tens of thousands of dollars in interest from just a small amount so there's a lot of things you could do a student loan dolphin twelve is wondering life cycle funds I know you want us to buy into them and leave them alone but what about micro managing it bit for example, setting up stop losses, selling it off and re entering when the sun goes back up you can't really time the market well, this guy see, I like this question the get a little bit too smart for your own good sometimes all right, people get a little read a couple words and like stop loss order? How about derivatives for me? No, this is what I would say start the basics to the eighty five percent solution. Get a target date fund in there if you want if you still have extra money, you want to play around a little bit, go ahead. In fact, in the book, I cover things like take ten percent of your money and play around if you really want to buy individual stocks or you want to do some really advanced stuff, go ahead as long as you are maxing out all these other accounts that I talked about. So if you really wanted to stop loss in this and that, honestly, I wouldn't recommend it for most people cause I believe you and me and everyone here are like most people and you're probably going to mess up when you do these more advanced investing things but if you want, if you're maxing out everything and you want to take five, ten percent your money and you can afford it, be as aggressive as you want. I do. Angel investing. I do a couple of other very aggressive types investing. I bet my friends a lot of money, but that's, because I'm maxing out all the rest of my accounts, okay? For people who aren't familiar. What is angel investing angel investing with? Oh, yeah. That's something I should clarify because it sounds really sexy. And then everybody's gonna lose all their money. So angel investing means you invest in start up companies or companies that are not public to be an angel investor, you have to be certain types of qualifications. So you have to have made a certain amount of money, etcetera. But we have different. I have different angel investments. And so that some other investors highly risky now, and this is money where, when you write to check, you basically expected to never get it back. It's entertainment, for the most part. Okay, most the vast majority people should not be doing that. Thank you for clarifying. Kind of a question from adrian far who is in england, who said I spent a year putting off um putting all of my income towards debt and getting it paid off and now I have no savings and recently got made redundant or let go and I'm now looking to go self employed should I have done this differently? Yes that's a great question and what what a terrific set up because a lot of people they just want to pay their debt off so aggressively you have to understand your psychology some people hate having debt like no matter what you feel that way making yeah like like you could have debt with a one percent interest rate and you could be making six eight percent in the market you're like no I want this debt off my plate wright this is very common however on you could do that but this is the situation that might happen where you pay off your debt aggressively and all of a sudden you're laid off fired or something happens you have no savings so there are different approaches to take but I really like to split a little bit put some money in savings because you never know what will happen I put a little bit away and and I would say that the other thing is if I was laid off and I have no savings I might not be starting my own business which is super risky I might get a job build up some savings first start earning money on the side and then grow it into a full business we'll talk about that tomorrow. Um beauty of the lake from st pete florida is wondering is the schwab bank high yield investor checking the one you recommend it requires setting up a schwab one brokerage account. So is that the right one that's correct. You can open up the brokerage account and just ignore it if you want to invest there you can it's a good investment account pretty low cost funds but I just set it up and pretty much left it empty good? What else? We'll do this for a couple more minutes and I think we'll go to break sure that's great anyone in our studio audience I just wanna make sure you ask pop in uh mrs d doing bill pay is a nice way to keep bills systemized but I know people who avoid doing auto bill pay because the amount of income is inconsistent what's the advice on this to be effective we'll take this after the break. This is the classic irregular income. Okay? By the way, a lot of people you know what one barrier for people to automation is which no one has said but a lot of people are thinking it is I don't wanna make because I like to be in control I like to see everything well guess what here's the difference it's a profound psychological different uh when you automate you will still see every bill you will see everything emailed to you you will see it on your credit card statement etcetera the difference is that when it's automated you don't have to do anything and it's all paid if you want to stop payment or not pay that you could do that the difference is you're changing the defaults you see what I mean right now by default since you're not automated you have to pay everything by default manually now with an automation system by default everything's getting paid what if you want to be in control but one month you're on vacation you forget to pay something you get all your credit gets jacked up etcetera in this case by default you're goingto automatically pay everything so you're still in control with a system like this okay well one more question uh from dallas well we could take a few more butt from dallas is there a max amount of savings even in a money market that you should have right now the f b I c will ensure your money up to two hundred fifty thousand dollars so if you have more than that in a savings account you probably want to open a second one other than that you know you're fine you can keep ten twenty fifty whatever okay let's do a couple more I will goto yeah? What about the automation I do that because I travel a fair amount and so I set up all my bill payments on automatic payment just to cover me so that I don't miss anything but I find that I easily slip into a false confidence where I say, oh, it's okay, these is going to get paid, you know, electrics, whatever it is and then I stopped checking I don't look, I don't go back and look so I could have false charges there, but I get a bit lazy. Yeah, I totally agree the system can make you so confident that you're just like whatever like I said, I spend one hour a month. One thing that I do is I just set up a calendar reminder I use google calendar or whatever and it'll just say like check accounts and it actually has the direct earl to log into it has my user name I don't think about anything, right? The only thing I remember is my password and I go there, I just review the charges done that's like a five minute process on one account per month yeah, or you could do it for five accounts or fifty doesn't matter right five accounts three minutes each because you're just reviewing does everything look in order done that's it and use this the key said a counter reminder so you're not depending on yourself thought of me let's, do a last question that we go to break. Okay, uh, kiera wang is wondering, what should you do if you're already locked into an ira account with high fees and we'll get penalized for attempting to switch to an investment company with lower fees? God, um, okay, so what you can do is basically stopped contributing there and open up a new account. Okay. Now, when you open up a new account, you can start putting your future money into there. You could you should also call this company the new company and say, listen, I have this old ira over here. Can you roll it over? So there's this thing called a rollover ira and it's don't want to get too technical. Sometimes you can sometimes you can't they may be able to help you, so go to the new company, open up an ira or whatever account, start contributing their soul. Your future money goes there and ask if they could do something with it. If not, you know what that's the cost of doing business, you're going to let it sit there and just let it grow and eat up some fees. Fine, but let's not get too carried away with that let's, just focus on the future as well.