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Published Nov 16, 2022

Popular Money Advice That Just Ain’t Right #593

    Critically examining widespread financial myths, this episode debunks misleading advice on savings, investments, and education, emphasizing the importance of nuanced strategies for debt management, diversified investing, and reconsidering traditional spending and earning habits for financial security.
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    • Beyond 10%

      The common advice to save 10% of your income is often seen as a financial milestone, but Matt Altmix and Joel Larsgaard argue that it's insufficient for achieving significant financial goals. They emphasize the importance of saving beyond this threshold to ensure flexibility and progress in both current and future financial aspirations. Joel highlights that other cultures, like Japan, save a much higher percentage of their income, suggesting that Americans can aim higher.

      If you get complacent just saving 10% of your income, it's going to be tough to save up to pay cash for a car or amassing a big old down payment for a home purchase while simultaneously socking away enough for retirement.

      --- Matt Altmix

      By aiming for higher savings, individuals can better prepare for unforeseen expenses and long-term goals 1.

         

      College ROI

      The value of a college education is increasingly scrutinized, with Joel Larsgaard and Matt Altmix urging listeners to weigh the costs against potential benefits. They argue that while college was once a clear path to success, today's economic landscape requires a more nuanced approach. Joel points out that not all degrees offer a good return on investment, especially if they lead to significant debt without a lucrative career.

      College truly was a no brainer 30 to 40 years ago. But it's much more of a specific value proposition that young adults have to consider beforehand these days.

      --- Joel Larsgaard

      They advise considering alternatives and ensuring financial priorities are aligned before committing to such a significant expense 2 3.

         

      Spending Focus

      Critiquing the 'latte factor', Matt Altmix and Joel Larsgaard suggest focusing on larger financial decisions rather than small daily expenses. They argue that while cutting back on coffee might save a few dollars, it's the bigger ticket items that offer substantial savings opportunities. Joel emphasizes the importance of reallocating mental energy towards these larger financial decisions.

      You're majoring on the minors, and we would say that there's a whole lot more financial ground you can cover focusing more on those big ticket items.

      --- Matt Altmix

      By prioritizing significant expenses, individuals can achieve a more impactful financial transformation 4 5.

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