Chapters
Shownotes Transcript
Between summer vacations and going to the beach and having the hot girl or guy summer of your dreams,
season can be a little hard on our wallets. A Chime checking account helps you reach your financial goals while still enjoying the summer. You can take back your finances with features like fee-free overdraft up to $200 with SpotMe or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. And you know I hate overdrafted fees. One time I overdrafted buying a latte, which was so embarrassing at the time, but hey, it happens
it happens to the best of us. And I got charged 35 bucks for a $7 latte. But Chime allows you to overdraft up to $200 with no fees, and you can get temporarily increased overdraft limits with boosts from friends. Live it up this summer and make progress toward your financial goals with Chime. Open your account in minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime.
Feels like progress.
Professional investors like Ray Dalio and Warren Buffett are in agreement. Bonds are an important part of a healthy financial diet. And the legit only place I buy bonds, this is 100% true, you can totally check my account, is public. The modern brokerage for investors looking to build an awesome multi-asset portfolio.
And a quick moment of humility here. I have been trying to work with Public for years now and low-key stock them because I am such an avid Public user and every other app or site I've tried to buy bonds on has actually made me want to rip my hair out. Public is so easy to use and has thousands of bonds to choose from and not just US treasuries, but corporate bonds too, like for the magnificent seven stocks like Apple, Beta, and Nvidia.
And you can use public for more than your bond investments. On public, you can find all other major financial food groups, stocks, ETFs, high yield cash accounts, options, and even music royalties. If you're looking for a simple yet sophisticated investing experience, go to public.com slash money rehab. One more time, because trust me, you will thank me. It is public.com slash money rehab. This is a paid endorsement for public investing. Full disclosures and conditions can be found in the podcast description.
I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Money rehab.
Money Rehabbers, I hope you had a fantastic 4th of July filled with fireworks fun… funnel cake? I don't know, I was trying to make the alliteration work there, but it was a stretch. Anyway, I hope it was a great one. Last week, in honor of the 4th, I talked about how politics affect economic systems, including the stock market. But I can't let Independence Day get too far in the past without carving out some time to cover a different kind of independence, financial independence. I
I'm not going to define financial independence because you probably have your own definition for it and whatever that is should be your North Star. For me, financial independence means having the freedom to make decisions with my needs and wants in the front seat and my money in the backseat. And I'm
I'm talking small decisions here, like being able to go to the grocery store and feel okay about adding a few things into my cart that weren't on my shopping list so I could satisfy a craving. Or the bigger decisions, like saying no to any partnerships that I am not completely and totally into.
For me, and really I think for all of us, financial independence is about having options. Want to switch careers? Go ahead. Want to travel the world? Pack your bags. Want to retire early? Hand in your resignation. True financial independence gives you the power to live life on your terms. Of course, this is easier said than done, and I have built enough financial freedom to only work with partners I'm obsessed with and to buy that weird matcha can drink thingy without feeling guilty.
It was a lot of work to get here, and I still struggle with a scarcity mindset and the financial trauma that I weathered when I was little. I am still a work in progress, as we all are. But in order to get to the matcha buying place I am now, I broke my financial journey into four major themes, debt, budgeting, savings, and investing. And I'm going to share exactly the steps I took to puzzle my finances together so that you can use the same tips and tricks I did.
Let's start with breaking free from debt. Debt is like having an annoying ex that just will not leave you alone. It keeps you tied down and it makes it really hard to move on. I'd argue that the first step toward financial independence is breaking free from debt. At least it was for me when I was in $5,000 of credit card debt. I got my debt monkey off my back by doing these three things. Number one, I faced the numbers.
My credit card debt was giving me so much anxiety that I didn't even want to open my banking app. But you cannot fix a problem you don't admit you have. And that problem isn't unsolvable, even if it feels that way. Number two, I created a debt repayment plan. It was really daunting for me to look at that $5,000 bill and know that I didn't have that much money in my bank account to spare.
But I decided to break my plan into baby steps, which felt more manageable than trying to tackle five grand all at once. I gave myself two years, which worked out to $2,500 a year, and that was $208 per month or $7 a day. Looking at my debt in those terms started to feel much less intimidating.
I mean, $7 a day? That's one glass of wine with dinner. I mean, less than one glass if you live in LA or New York, but it's some portion of wine. And I could do that, no problem. It seemed way more figureoutable in little chunks.
Number three, I cut unnecessary expenses. This one is obvious, but your unnecessary expenses might not be. I combed through my bank account and I found subscriptions that I thought I canceled months earlier. And honestly, yeah, I did have to get creative when it came to hanging out with friends because the default hang was always going out to dinner or going out to drinks or going out to brunch, which meant more swipes on a credit card.
I didn't not want to see my friends because that would have just bummed me out to no end. So I came up with a bunch of ideas for things we could do together for little or no money, like a slumber party in Animal Onesies. This is a true story. I also had girlfriends who were in a similar financial boat but did not want to make any changes to their lifestyle while paying down their debt. So instead, they tried to find ways to increase their income by taking on side hustles, freelancing, or even asking for a raise at their job.
Paying off debt takes time, discipline, and let's be honest, it's not that fun. But I can promise you when you make that last payment, you are going to feel the weight of the financial world off your shoulders. And financial independence will be so much closer, you'll be able to taste it.
Once you've tackled your debt, the next step is building up your savings. This not only provides a safety net, but it also sets the stage for future investments and growth. For me, I got my savings on lock by taking four steps, which I did in this order. Number one, I got my emergency fund in check. I built up six months of bare bones savings in the bank that I could pull from when I needed to. Typically, experts recommend having three to six months of living expenses squirreled away for an emergency fund. But after all the craziness of 2020,
I'd recommend erring on the side of a bigger buffer and shooting for six months, if you can, of bare bones expenses and savings. This fund is your financial cushion and the answer to the reality that you know what happens. After I swiped my left side mirror off my car and then the right side mirror off my car the very next day, true story, I can confirm, emergency funds are very helpful.
Number two, I made savings goals. I identified my short-term and long-term savings goals. This was a fun one. Whether it's buying a house or starting a business or having kids or taking a dream vacation, having clear goals can motivate you to save more effectively. It certainly worked for me.
And the show that you are listening to right now is on a network that I started with my life savings. Had I not been saving for a goal of doing something big, I wouldn't have been able to pull off making this show for you every day. Number three, I opened a high yield savings account. Remember that emergency fund? I parked it in a high yield savings account to maximize my returns. The average savings account at a big bank is going to earn you less than 1% on what you save.
but a high-yield savings account can earn you many, many times that. Public right now, for example, has a high-yield savings account that has a 5.1% APY. And would you rather have less than 1% or more than 5%? I'll wait. Okay, waiting's over. I know your answer. Number four.
I automated my savings. I set up automatic transfers from my paycheck to my savings account so that I could set it and forget it. The way I framed it for myself was that I was contributing to my savings account just like I was any other bill I had to pay every month. That way, I was consistently building my savings without having to think about it. Once I had mapped out my goals and started saving for them, I created a budget.
Honestly, I struggled with this part. I looked around at other budgeting systems to try to find something that would help me balance paying my bills while also building toward a greater financial future. I couldn't find a budgeting system that I really liked, so I just built my own. I created the three E's rule for my budget, or as I like to call it, a spending plan, because it doesn't sound as scary.
Here's how I broke it down of what I spent. I said 70% should be on essentials. So the stuff that you have to pay every month, your rent, your mortgage, your utilities, food, transportation, bills, insurances, loans, all that stuff, the basics. 15% should be on the end game. So that's things that you think about for the future. A great trip, having a sweet retirement, buying a home or investment accounts or supporting a child or parent.
And 15% should be on the extras. That's the fun stuff, the eating out, the ordering in, the price of your shoe, just because it's pretty and you want it. At the time, I was working in a busy newsroom, so I loved deadlines and structure. So having a blueprint for what my spending looked like really helped me stay disciplined and make sure all of my financial bases were covered.
And speaking of endgame, it's time to talk about the final piece of this puzzle, investing. This is such an important part of your financial independence plan because investing is how you get rich straight up. Before I started investing, I had to realize that my salary was never going to give me the financial flexibility and freedom that I wanted for my lifestyle. And the truth is, very few people make it big just off their salary alone. If you work at an
amazing job. You might get a 3% raise year over year. But you know what the historical amount of inflation is year over year? 3%. So even if your job is offering these magical annual raises, and if you do have that hookup, please let me know because I would like to be your coworker, please and thank you. If you are getting that 3% boost every year, sure, inflation isn't knocking you backward, but you're still only running in place.
The stock market, however, has historically grown 8 to 10% year over year. So adjusted for inflation, that's 5 to 7% year over year. No job is going to give you that. So you have to give it to yourself by investing. So where do you start? Well, I just released an episode that's the deepest dive I've ever done for people who want to know exactly how to invest for the very first time. I'll link that episode in the show notes in case you missed it.
And if you want to get a list of five stocks I invested in when I was getting my financial independence in order, I'll send that to you too. All you have to do is subscribe to my newsletter at moneyminute.co slash subscribe, and it will be all yours in your inbox whenever you're ready.
And that's it. And I'll be honest with you, it sounds simple, but it's not easy, nor is it fast. But there are no shortcuts to true financial independence. The best thing you can do is to try to enjoy these steps along the way and take a moment to celebrate your wins as you earn them.
For today's tip you can take straight to the bank. When you're focusing on that savings pillar of your financial independence plan, create sub-savings accounts for your goals. A sub-savings account is just a little nest egg within your greater savings account that you can label with a specific goal, like vacation fund or new car fund or whatever your financial goals are. Research has shown that actually labeling them helps us stay strategic and focused on reaching those financial goals.
Between summer vacations and going to the beach and having the hot girl or guy summer of your dreams,
season can be a little hard on our wallets. A Chime checking account helps you reach your financial goals while still enjoying the summer. You can take back your finances with features like fee-free overdraft up to $200 with SpotMe or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. And you know I hate overdrafted fees. One time I overdrafted buying a latte, which was so embarrassing at the time, but hey, it happens
it happens to the best of us. And I got charged $35 for a $7 latte. But Chime allows you to overdraft up to $200 with no fees, and you can get temporarily increased overdraft limits with boosts from friends. Live it up this summer and make progress toward your financial goals with Chime. Open your account in minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime.
Feels like progress.
While you're binging the pod, how about a little bonus tip? As a starting place for your investment allocation that you can, of course, tailor depending on your goals, pros recommend making your bond allocation your age. How about a second bonus tip? When you want to invest in bonds, use public. The modern brokerage for investors looking for a simple yet sophisticated investing experience.
Public is truly the only place I buy bonds, legit, because every other app or site I've tried to use is so complicated, but on Public, I can buy a bond on my iPhone in less than five minutes. This is a major upgrade because most investing platforms that offer bonds design their user experience before the iPhone was even invented. I'll let that one sink in. And you can use Public for more than your bond investments.
Public is the brokerage I use for all my investing needs, whether I'm looking for stocks, ETFs, a high-yield cash account, options, and other assets, even music royalties. To build the multi-asset portfolio of your dreams, go to public.com slash money rehab. One more time, because trust, you will thank me, public.com slash money rehab. This is a paid endorsement for public investing. Full disclosures and conditions can be found in the podcast description.
Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes.
Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.
Money rehabbers, you have money hidden in your house. Yeah, just hiding there in plain sight. Okay, so I don't mean you have gold bars hidden somewhere in walls, treasure map style, but you do have a money-making opportunity that you're just leaving on the table if you're not hosting on Airbnb. It's one of my all-time favorite side hustles. By hosting your space, you are monetizing what you already own. It doesn't get easier than that. For me, hosting on Airbnb has always been a no-brainer. When I first signed up, I remember thinking to myself, selling
you pay a lot of money for your house. It is time that house returned the favor. And to get real with you for a sec, I felt so much guilt before treating myself on vacation because traveling can be so expensive. But since hosting on Airbnb, I feel zero stress for treating myself to a much needed vacation because having Airbnb guests stay at my house when I'm traveling helps offset the cost of my travel. So it's such a win-win. I mean, if I could do it
you could do it. And your home might be worth more than you think. Find out how much at airbnb.com slash host. Money Rehabbers, you have money hidden in your house. Yeah, just hiding there in plain sight. Okay, so I don't mean you have gold bars hidden somewhere in walls, treasure map style, but you do have a money-making opportunity that you're just leaving on the table if you're not hosting on Airbnb.
It's one of my all time favorite side hustles. By hosting your space, you are monetizing what you already own. It doesn't get easier than that. For me, hosting on Airbnb has always been a no brainer. When I first signed up, I remember thinking to myself, self, you pay a lot of money for your house.
that house returned the favor. And to get real with you for a sec, I felt so much guilt before treating myself on vacation because traveling can be so expensive. But since hosting on Airbnb, I feel zero stress for treating myself to a much needed vacation because having Airbnb guests stay at my house when I'm traveling helps offset the cost of my travel. So it's such a win-win. I mean, if I could do it, you could do it. And your home might be worth more than you think. Find out how much at airbnb.com slash host.
