Dollars and Hops

We’re back!!!

Today going to do a deep dive into Bitcoin ETFs

Money Hack of the Week: Cancel unused subscriptions.

Go to settings on iphone, click your name, tap subscriptions to review active subs

Amazon: Accounts and lists: Other subscriptions

Check your credit card statements

Main Topic: The Bitcoin ETF

• What is it?

• A way to buy into BITCOIN without opening a crypto wallet.

• Nice thing about an ETF is that it’s like owning a security

• Will get 1099 tax statements - don’t need to track on your own

• Also - very secure. REGULATED

• Essentially you’re buying into a fund that owns the bitcoin. The price of the ETF fluctuates just like the price of bitcoin.

• What are some of the best Bitcoin ETF funds?

• Is it safe?

• Do we think Bitcoin will go up in value?

• Will institutional investors drive the price up?

• Range in cost (expense ratio) from .19% to 1.5%

• Franklin Bitcoin ETF EZBC - .19% E.R.

  
  

  Bitwise Bitcoing ETF - BITB -.2% E.R.

  
  

  These funds essentially just hold Bitcoin in a coinbase account

  
  

  Questions that need answers

  -PLEASE WRITE US AT [email protected]

  • What are some strategies for listeners to build and pass on generational wealth, ensuring financial stability for future generations?

  • I have a 401k at work - what should I invest in to stay diversified- what’s best?

  
  

Money Hack of the Week: Diversify your assets

• Is your net worth all in stocks? All in real estate? All in your company’s stock? Do you own bonds?

• If you’re all in stocks - do you own all US based investments or do you also have international investments?

• Take a hard look at your net worth - see if it may make sense to diversify your assets a bit.

• While we love real estate, I don’t have all of my assets in real estate, we also own stocks, both domestic and international.

Main Topic - Net worth by Age

• What is net worth? Assets - Liabilities

• Why is this important - helps you determine if you’re on track for retirement

• How to track Net Worth - episode 1 - show notes

• Net worth is not your personal worth

Average Net Worth By Age

Age -- Average net worth -- 4% Rule

Under 35 - $76,300 - $3,052.00

35–44 - $436,200 - $17,448.00

45–54 - $833,200 - $33,328.00

55–64 - $1,175,900 - $47,036.00

65–74 - $1,217,700- $48,708.00

75+ - $977,600 - $39,104.00

Median Net Worth by Age

Age -- Median net worth

Under 35 - $13,900

35–44 - $91,300

45–54 - $168,600

55–64 - $212,500

65–74 - $266,400

75+ - $254,800

Action Step: Do you know your net worth? If not, download a copy of the net worth tracker on our website under the show notes - episode 1 - track your net worth and make sure you’re making progress toward your financial goals.

Money Hack of the Week: Automate savings and investments

• Did you know most millionaires automate savings and investments?

• Did you know you can set up multiple direct deposit accounts with your employer to “force savings” for yourself?

• You can also have multiple savings accounts with companies like ally bank and set up automatic transfers on a weekly/monthly basis 

Main Topic

• Getting out of debt!  

• 1st - need to analyze how we got here in the 1st place

• Can you increase your income?  

• Look for opportunities to grow inside your organization - or if you’re a business owner, are there additional products/services you can offer to increase your cash flow? 

• Monthly budget is key - need to free up $$ to be able to live below your means.

• Consider a side gig - temporarily to help you get out of debt

• Drive for uber, make arts and crafts, shop for instacart, do doordash.  Do something that will generate a little extra money if you’re unable to come up with extra money within your monthly budget.

Other things to note:

• Debt consolidation (personal loan to decrease credit card debt)

• Credit card transfers

• 2 main concepts to getting out of debt: Debt snowball, debt avalanche

Here's how the Debt Snowball works:

1.    List Your Debts: Begin by making a comprehensive list of all your debts, including credit cards, personal loans, student loans, and any other outstanding balances. Arrange them from the smallest balance to the largest.

2.    Minimum Payments: Continue making minimum payments on all your debts to avoid penalties and late fees.

3.    Focus on the Smallest Debt: Allocate any extra money or funds you can towards the smallest debt on your list while maintaining minimum payments on the others.

4.    Pay Off Smallest Debt: Once you've paid off the smallest debt, celebrate this accomplishment! The key to the Debt Snowball method is the psychological boost you get from achieving these small victories.

5.    Roll Over Payments: Now that the smallest debt is paid off, take the money you were using to pay it off and add it to the minimum payment of the next smallest debt on your list.

6.    Repeat and Build Momentum: Continue this process, "snowballing" your payments from one debt to the next as each one is paid off. As you progress, your ability to pay off larger debts increases, creating a momentum that keeps you motivated throughout the debt repayment journey.

The Debt Snowball method emphasizes the importance of behavior and motivation in paying

off debt. While it may not be the most mathematically optimal strategy in terms

of interest savings (compared to the Debt Avalanche method), its psychological

benefits can be highly effective in helping individuals stay committed and focused on their debt repayment goals.

Here's how the Debt Avalanche works:

1.    List Your Debts: Start by making a list of all your debts, including credit cards, personal loans, student loans, and any other outstanding balances. Arrange them from the highest interest rate to the lowest.

2.    Minimum Payments: As with any debt repayment plan, continue making minimum payments on all your debts to avoid penalties and late fees.

3.    Focus on the Highest Interest Debt: Allocate any extra money or funds you can towards the debt with the highest interest rate while maintaining minimum payments on the others.

4.    Pay Off Highest Interest Debt: Once you've paid off the debt with the highest interest rate, take the money you were using to pay it off and add it to the minimum payment of the next debt on your list with the next highest interest rate.

5.    Repeat and Save on Interest: Continue this process, "avalanching" your payments from one debt to the next based on their interest rates. By targeting the high-interest debts first, you reduce the overall amount of interest you'll pay over time.

-PLEASE WRITE US AT [email protected] 

Money Hack of the Week: Sim Swapping

https://clark.com/cell-phones/sim-card-swapping/

SIM swapping, or a SIM swap scam, happens when a crook is able to take control of the personal information stored on your SIM card by using it on another phone.

According to the Federal Trade Commission (FTC), a successful SIM swap can occur if a scammer impersonates you and contacts your phone service provider with a bogus story.

According to the FTC’s website, “They may call your cell phone service provider and say your phone was lost or damaged. Then they ask the provider to activate a new SIM card connected to your phone number on a new phone — a phone they own.”

Once scammers successfully take over your phone, they can access your bank account, social media accounts, email account and more. How? While two-factor authentication is typically a decent form of protection, the scammer now has access to your phone number and email. That means they have access to any codes sent through an email or text message.

What can you do?

• Depending on which carrier you have - you can essentially lock down your SIM. 

• Head to Clark Howards website via the show notes link we have in the show notes to read how to lock down your SIM.

• I am with T-Mobile - they have a process known as SIM Locking in which I have enabled to ensure nobody can get access to my SIM without me knowing. 

Main Topic

Should you buy a house with today’s interest rates, or is it better to just wait?

What is the current rate: Somewhere between 7.2 and 7.9% depending on if you go VA, conventional or FHA

What is the historical 30 year rate?

• 7.75% - as of right now we sit at 7.25% as of this recording

First off - Let’s talk about why rates are higher

• Inflation

• Federal reserve raising rates to cool buying and help strengthen the dollar

• When rates go up, it's more expensive to borrow and people are incentivized to save because savings rates increase.

If you are thinking of buying a house, you are probably well aware that interest rates have a direct correlation with how much home you can afford.

• A 500,000 loan at a 3.25 interest rate - which you could get about a year ago would be a $2,175 P&I Payment

• A 500,000 loan at a 7.25 interest rate is $3,411 = 1,200 more for the same priced house per month.

So with a $1,200 difference on a 500k house - what are the pros and cons to buying now?

Pros:

• If you can afford the house and the payment fits with your monthly budget, it allows you to purchase a home at today’s prices

• Prices could go up or down - but real estate tends to increase in price by at least the rate of inflation on an annual basis.

• You get to start paying down the loan immediately

• If you wait - you are paying someone else’s principle payment for them.

• If you plan on staying the home a long time - even if values decrease in the short term, it likely won’t matter by the time you go to sell.

• We have a supply of housing problem still in the USA. 

• If interest rates decrease - you can always refinance and pay less of a monthly payment.

Cons:

• You are locking in a “high” rate relative to what rates have looked like in the last few years. 

• Can’t predict if rates will go up or down.

• Property values are up in many parts of the country.  

• Nobody can predict where property values in the future

• Loans are not where they were in 08 and 09 when banks were loaning people money with “stated” income and interest only loans. 

• People feel like we could be sliding into a recession which could decrease housing prices

• This is speculation

So would we buy a house right now if we were in the market - or would we wait?

• Solid credit score  = 720 or more

• You have a monthly budget and you’re living and giving on less than you make

• You have money in an emergency fund - for maintenance costs

• Your debt is manageable

• You have the money for a down payment.

• You’re steady in your career and relationship

• You know what you want

Then it’s probably time to go ahead and buy that house!

Money Hack of the Week: 30 Day financial audit / challenge - put in spreadsheet/categorize it

What type of investor are you?

• Co-host- someone who is managing someone else’s property and is taking a management fee.  Management fees are typically between 25-35% and you manage marketing, guest communication, cleaners, maintenance, etc….
  • Great way to have a side hustle that is super flexible in nature.  Generally when a property is automated, it only takes 2-4 hours a week to manage the property.
• Rental Arbitrage- Rent from a landlord and sublease on Airbnb to guests.
  • Downsides are - landlord can terminate lease and Upfront cost of furnishing without guarantee of long term lease
• Buy and Hold - buying a house/condo/apt and renting it out on Airbnb.  Capture the long term appreciation and the short term cash flow.

General:

• Invest in a training program.  This is truly a business - learn from someone who has already done it.  It may cost you $1k to $2k to buy into a coaching program, but it’s 100% worth it.  It will dramatically expedite the learning process.
• Make sure the local county and city allow short term rentals
• Avoid HOA’s if possible as they could ban STR’s.
• Look for unique homes

Evaluating an investment property:

• Have an investment analysis spreadsheet - can get these from others for free online
  • With this spreadsheet, it will take an all encompassing view of all the expenses you need to think about when operating a short term rental.
    • Will include mortgage, set up costs, down payment, monthly maintenance, utilities, trash, TV, Internet, HOA, Landscaping, etc…
• Air DNA, STR insights, Data Rabu
  • These are tools that scrape the data from Airbnb/VRBO and forecast how current and active STR’s are doing that are on the market.  This can help you get a gauge on what is possible from a revenue standpoint.
  • Help to forecast how much a home can make on Airbnb
• Cash on cash return:
  • Using an investment analysis spreadsheet, calculate your cash on cash return - this is the number of years it will take to get your money invested back.  Typically - 25% or better is a good cash on cash return.  That would mean you would get all your money back on the investment within 4 years, and then from there you’re just making profit.

Intro: Lance and I have both dipped our toes into the water when it comes to Airbnb investing.  We are excited to share some tips/tricks we have learned as we have launched our first couple properties.  We will also explore the ROI you can earn by investing in Airbnb and what sort of work it takes to get started with AirBNB Investing.

Money Hack of the Week: Turo

• Turo is the Airbnb for car rentals
• Not only is it most of the time cheaper
• It’s also easier
• Deal with P2P instead of a big monster company that makes you wait in line for sometimes hours to rent a car.
• Pro tip: rent only from All-star hosts

What is Airbnb?

• A way to share your home or a space within your home with people traveling through.
• Airbnb started as a room sharing thing and has morphed into a major industry
• People who want more privacy or have bigger groups than a hotel can reasonably host tend to gravitate toward Airbnb
• Airbnb revenue in 2021 was $6 Billion dollars
• This is a new industry and it’s growing rapidly

Lance’s Limiting Beliefs

Technology

• Schlage Lock
• Hospitable
• Price Labs
• Ring Camera
• Multiple Platforms

-Build Your Dream Team: Self management can happen from a-far.

• Find a cleaner who specializes in short term rental cleaning
  • Not bad to have a backup cleaner or at least a short list of people who you could call if your primary cleaner falls through for some reason.
  • Smaller the team the better- you want to be able to communicate directly with your cleaners
• Find a group of handymen - have multiple on call if something goes wrong

Who is Airbnb investing right for?

• Someone who is looking to diversify into real estate
• Someone who is looking for additional cash flow on a monthly basis
• Someone who’s looking to accelerate their path to financial freedom.

STAY TUNED FOR PART 2

Questions that need answers

-PLEASE WRITE US AT [email protected]

Money Hack of the Week: Libby App - Free audio books and e-books through your existing library subscription - everything is free

Main Topic

Core principles we live by:

1. Live on less than you make

• This sounds simple enough, but so many people do not do this.  All of the other things we talk about don’t matter if you’re not following this #1 step.  You MUST free up cash flow by living on less than you make or you will NEVER be able to get ahead.
• Tips on how to achieve this:
• Keep Housing costs <25% of your income.  Don’t think you can do this? If you’re young -think about house hacking.  Buy a small house, rent out one or two of the rooms, get your expenses as LOW as possible, especially in your early years.
• Keep auto expenses as low as possible - Average american spends almost 9,000 per year on automobile expenses.  This is $750 per month.  Get a cheaper, but reliable car.  Take the extra money and put it to work for yourself.
• These are the two largest expenses in people’s budgets.  Keep the overall costs of these two things low and make sure your I.R.’s on both are as low as they can be.

   2.  Get rid of any high interest debt.  Anything higher than 5-6% - get rid of it from your life.  If it’s low interest rate debt - keep it and pay as agreed on it.

   3.  Automate your savings

• Invest at least 10% of your income.. After you have your emergency fund locked down and high interest debt is paid off.
• Make this automatic by 401k deferral or automatic deduction on recurring basis to your roth or other tax advantaged account.
• Short term savings - automate these in an account like Ally/Capital one 360.  Can automate
• By living on less than you make.  You should free up some cash flow to be able to invest some of that income each and every paycheck.
• The more income you save, the greater flexibility you have.

  4.  Invest in low cost mutual funds and ETF’s OR Buy assets that will make you money.

Episode # 5 gives you our favorite ETF’s

• Pay attention to fees when investing - you don’t get what you pay for when it comes to fees and investing.
• Want to spend money on other things besides just using excess money to invest?  Consider buying assets that offer passive income potential
• Examples include: Real Estate investing or businesses

  5.  Track your spending

• Budgeting tools: YNAB, Mint.com

  6.  Know your net worth

Episode # 1 - net worth tracker, Mint.com.

• Make sure you’re tracking your net worth on at least a monthly basis.  This is important for helping you to track your progress and to ensure you’re accomplishing your goals

  7.  Set big goals so you know if you’re on track - episode 13

Questions that need answers

-PLEASE WRITE US AT [email protected]

*This not official legal or investment advice, and this is for entertainment purposes only.  All investments involve risk.  Do your own research before making any investments for yourself*

Money Hack of the Week:

Look at your 401k, your old IRA’s, and investment accounts - figure out what funds you’re invested in and look up their expense ratios.  If you are in high-fee funds inside of your 401K, change to investment options that are low fee.

How do you do this?  Go to your 401k or IRA online, look at the positions, you will see a symbol - usually 3 to 5 letters long, pop that into google, look at the expense ratio.  What’s high? Anything over .25% is pretty high.  Some of you may be looking at expense ratios of around 1% which is entirely too high.

If that’s the case - I want you to look at your plan and the investments offered.  Some good options may be: s&p 500 fund, target retirement fund, etc…

What’s a good expense ratio? Below .10%

This 1 change can literally save you tens of thousands of dollars by retirement. If you have listened to our old podcasts - we have found that the higher the fee the fund doesn’t necessarily get you more money in retirement.  It often costs you money in retirement.

If you’re someone who invests 15k annually in your 401k, a 1 % difference in expense ratio between investment options can mean a 400k difference when you get to retirement (over 30 years)

Main Topic

We’re talking recession now - It doesn’t really matter what news source you turn on right now - everyone is talking about whether or not we’re in a recession.

Here are the latest worries:

• Gas prices
• Interest rates are rising
• Housing costs rising
• Housing affordability is a problem
• Food costs through the roof
• Inflation at 40 year highs
• Crypto currency has taken a dive
• Slowing growth
• War in ukraine
• Supply chain issues
• COVID is still an issue impacting global markets - today wuhan just shut down

So, how do we invest if we’re in a recession?

• Don’t panic sell
  • Selling now is the worst possible thing you can do.  You’re essentially buying high and selling low.
  • If you’re a long term investor - you need to take a longer view of things.
• Do nothing - Did you know that fidelity just did an audit of their customer base and found that the best investors (from a return standpoint) were either dead or inactive accounts.  Meaning - you won’t beat the market.
• Make sure your portfolio is well diversified and balanced
  • If you invest in multiple funds - are your allocations still where you want them to be?  If not, sell some of something and buy more of another to get your ratios back in order.
• Buy more of the assets that are now on sale
  • Warren Buffet says be greedy when others are fearful
• Don’t chase individual sectors or stocks that look “cheap”
  • Pelosi’s husband (NVDA), etc…
  • Some things will go down 50% + Just b/c you believe they’re a good deal doesn’t necessarily mean they are.  Try to stick with broadly diversified assets.
• Millionaires are made during recessions
  • Many of the worlds most popular businesses are formed in a recession - names like Microsoft, AirBNB, GE, NetFlix, and Disney

BEAR MARKET GRAPHIC

https://www.investopedia.com/a-history-of-bear-markets-4582652

Ashley wrote a question for the pod and I decided it was important enough to make a whole show out of this topic.  Question is: My employer is going to be allowing us to invest in digital assets including Bitcoin within my 401k coming soon.  Is it a good idea to be investing in bitcoin within my 401k?

• Earlier this year-  in May - Fidelity announced that they would be allowing bitcoin as an investment option in employer sponsored 401k’s.
• About 23,000 employers currently use Fidelity for their 401k administrator - so it’s likely this will impact you soon if it hasn’t already by the time you have heard this.
• Fidelity will allow retirement investors to allocate up to a maximum of 20% of their investments into Bitcoin.
• But before you get too excited, understand that Bitcoin won’t be showing up on your 401(k) plan’s investment menu immediately. Fidelity is still building its digital asset platform, which should become available in plans later this year.
• Employers will have to approve crypto investments inside the plans they provide to their workforce. And because of their fiduciary duty—placing the needs of plan participants above all else—companies may be reluctant to provide immediate access. Many will likely take a wait-and-see attitude before making a move to offer crypto as part of their retirement plans.

Pro’s:

• Digital assets - including bitcoin have done well over the last 10 years.  You may have a little bit of FOMO with these assets and they have done well.  This would give you exposure to an asset class that could possibly out-perform stocks in the short or long term.

Con’s:

• These digital assets have no real long-term track record.
• Many of these digital assets could go to zero
  • BTC is down 57% this year
  • ETH down 70% this year
• The system itself has not been tested - What happens if crypto platforms go bankrupt?
  • Back in 2014 - Mt Gox - which was the coinbase of today went bankrupt. It caused the price of bitcoin to plummet.
  • Terra Luna went to 0 and was supposed to be a “stable coin”
  • Coin Flex - major exchange halted withdrawals due to “extreme volatility”
  • Celsius - freezed customer accounts - Under investigation currently.
  • Crypto lender babel finance freezes all withdrawals from customers
  • Liquidity could be an issue at a point in the future
  • In a May Quarterly filing - Coinbase stated that in the event of their bankruptcy -  it’s entirely possible that the digital assets the customers own may not actually belong to its customers.
• Crypto markets are not FDIC insured
• Digital Assets that have no utility are only worth what someone else will pay for them.

Money Hack of the Week:

Spray and forget: Do you powerwash your house or deck every year?

• Spray and forget instead of power washing - save time and money

Rant - Get upside

Main Topic

What is house hacking?

• House hacking is a real estate strategy that can help you live for free or close to free - dramatically decreasing your monthly expenses
• Great way to start investing career - whether that be in real estate or not
• Premise is simple - you buy a multi-unit property… could be a duplex or triplex (meaning 2 or 3 separate entrances to the property) - Live in 1 and rent out the other 1 or 2 units.

How to rent out the other units:

• Long term tenant lease
• Short term rentals - think Air BNB and VRBO

Ways to house hack:

• Buy a duplex, triplex, fourplex, etc…
• Buy a house with an ADU - Accessory dwelling unit
  • ADU is a non-attached dwelling on the same property as the primary house.  Can rent it just as you would a duplex or triplex.
• Rent out a single room in your existing home

House hacking as an investment strategy: Scott Trench (Set for life)  and David Greene

• Can house hack and buy a new house every 1-2 years
• Why 1 year: Can buy a new house every single year and qualify for low down payment as it’s your primary residence, and then simply move after a year and turn all the units into rentals.
• Why 2 years?  You could sell the property and pay no capital gains tax on any earnings as long as you have lived in the property for 2 of the last 5 years.
• This strategy will dramatically decrease the amount of time it takes to build wealth.

Why house hack?

• Allows you to live for a dramatically reduced cost in most cases.  Allows you to sometimes make income while someone else is paying for you to live.
• Take the excess cash flow from house hacking and reinvest into other ventures such as more real estate or stocks
• Fastest way to build wealth - your house is generally your largest expense and it’s not even close

Who is house hacking for?

• Single people
• Married couples with or without kids
• Could really be anyone
• People that don’t mind sharing common space in certain circumstances
• People that feel like they can’t afford a monthly payment for a house even though they may qualify for a house.

Questions that need answers

-PLEASE WRITE US AT [email protected]