Lazy Man and Money

What Would Your Ideal Work Be?

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Last week I saw a Tweet that almost broke my mind:

(Due to my broken mind, please be gentle with me while you read this article.)

I’m so envious that Joe, from the awesome blog Retire By 40, knows what he’d like to be. A marine biologist is so specific. I actually live in hotbed of marine biology so it’s something I’ve talked about with my kids. (This is assuming that Pokemon trainer isn’t a valid career path.)

What would I want to do for work? I’m not sure, but I think Lloyd Dobler narrows it down for me:

“I don’t want to sell anything, buy anything, or process anything as a career. I don’t want to sell anything bought or processed, or buy anything sold or processed, or process anything sold, bought, or processed, or repair anything sold, bought, or processed. You know, as a career, I don’t want to do that.”

Mr. 1500 took the idea and ran with it.

He went from pharmacy to computer programming in college. That connected with me because I loved programming computers since I was 8 or 9. I also was a pharmacy technician in college. I remember thinking, “Why would anyone want to spend their day looking at back of tablet labels?” I don’t know if I could come up with a career I disliked the idea of more. I’d get physically nauceous most of the time I went to work. It was that bad… but it paid really well.

I got my computer science degree and a few jobs after that. Unfortunately, somewhere around 20 years of programming was enough for me. I was fine if it was just programming computers, but I didn’t like the office politics. I also couldn’t deal with the business development stuff. I’d explain why something was a terrible idea, but I still had to do it.

When I left my last job, blogging filled the gap. Of course blogging is the best career ever… except it’s not. Do you know anyone who has blogged for 12 years on a single topic like personal finance? You get to the point where you run out of ideas and write articles like, “What would your ideal work be?” (Then your wife comes home and ask what you did today and the answer of “stare at my computer and hope that words come out” doesn’t sound so good. Not that this has ever happened to me.)

So what else is there? You can see what else I’m doing here. I do a lot of dog sitting as I often write about. That’s mostly great… except for when it’s raining (mud!) and there are just too many dogs that need sitting. Or worse, there was the time when one dog just freaked out and bit another dog. I suppose it’s good that it is rare enough to have happened only once in 3 years. Dog sitting doesn’t particularly pay well either.

The beauty of the question is that I don’t have to stick to what I’m doing. Almost everything that makes money is in play (sorry Pokemon training).

So here are my ideas on what I could potentially do:

Professional badminton player – My wife used to say that I should try out for the Olympics. I love the complement but I highly doubt I’m even the best badminton player on my own street… and there aren’t a lot of people who live on my street.

Football coach/writer – Sometimes I think this could actually be something I could do. Unfortunately football is so popular that the competition for almost any job in the area is extreme. Also, it seems like 90% of the gigs are just trolling Patriots fans to try to get website clicks.

Guitar musician – The combination of my baby hands and having forgot the one chord I knew 13 years ago doesn’t bode well for this.

Magikarp – I’m making sure you are paying attention.

Teaching children computer programming using toys – I saved the most serious one for the end. It’s so specific that you can tell I’m really interested in it, right? There’s only one problem, I don’t know if I have the patience to deal with children over the long term. My kids stress me out sometimes, but other times teaching them something new is one of the experiences I’ve ever had.

At the end of the day, I think Lloyd summed it up best:

I can’t figure it all out tonight, sir, so I’m just gonna hang with your daughter.

Calculate Your Financial Inflection Point

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There are tons of math rules of thumb when it comes to personal finance. There’s the rule of 69/70/72 which helps you calculate when investments will double. There’s the rule of 4% that is used to estimate financial independence.

Few people write about one of the most important numbers*: Your Financial Inflection Point

If you aren’t familiar with the term inflection point, I was able to find two definitions from Google’s Dictionary search:

  1. Math – A point of a curve at which a change in the direction of curvature occurs.
  2. Business – A time of significant change in a situation; a turning point.

When you point both of these definitions together and apply them to your own finances you get something amazing:

Your money works more for you than you do.

As my tagline has said for years, “Making my money work, so I don’t have to.” That’s where the “Lazy” brand comes from.

Some people might not understand the concept of making their money work. It’s letting your investments make money passively. Even if you aren’t personally familiar with investing, you’ve probably heard the saying, “The Rich Get Richer.”

Let’s pretend you won a medium-size lottery and after taxes and getting the money at once, you had $10 million. If you invest it and earn 7% a year on it, they’ll make $700,000 a year. It takes a lot of McDonalds workers a lot of years to make as much money. Those investment dollars are working hard.

It’s fun to pretend winning $10 million dollars, but what if we looked at something more realistic?

Let’s take off a zero. If you amass a portfolio of a million dollars, your money can make you $70,000 a year (assuming 7% investment gains). That’s a very good second paycheck, perhaps even better than what you make working for yourself. While a portfolio of a million dollars may sound out of reach, the magic of compound interest can make easier than you think. (This may require you to earn a lot of money and/or avoid significant debt hurdles like tons of student loans or health problems. Here’s how you can get to a million dollars in 20 years.)

Calculate Your Own Financial Inflection Point

Over the last couple of years, I’ve noticed that our investments are doing very well. It’s not my imagination, investments have been well for almost a decade now. It got me thinking, have we reached our own financial inflection point?

The calcuation turned out to be surprising easy. It’s:

Income / Expected Return = Inflection Point

So let’s say that your income is $50,000 a year. You expect the markets to return 7.5%. The math of 50,000/.075 = $666,666.66. While that number looks evil, it’s actually not so bad. Maybe you want to call it $700,000 if the markets don’t peform as well as you think they might. It seema a lot more achievable than the million dollar example above, right?

When I initially did the math, I was extremely surprised to learn that we are far off of our financial inflection point. It felt like we were there.
What went wrong?

There were three problems:

  1. Our income has jumped a bit lately as I’ve taken on some substantial freelance work. The income number has recently grown. This raises the bar for the inflection point.
  2. I plugged in an expected return of 7.5%. While that’s a reasonable expectation, I was comparing it to the returns of the last few years… which were NOT reasonable. Someone should slap me with a mutual fund prospectus because “past performance is no guarantee of future results.”
  3. I was looking at the growth of our net worth, not just our investment gains. I have no excuses other than just being a bonehead.

When I first realized how far away we were, I was disappointed. Then I realized that two out of three of these “problems” were very good “problems” to have. Who doesn’t more income? Who doesn’t mind a period of double-digit investment gains skewing their expectations? Who doesn’t mind being a bonehead? (Ummm, ignore that last one.)

Fortunately there’s an easy fix. My wife has to retire next March when she’s elibible for her military pension (at age 43) and I have to remove all advertising here and quit any freelance work. That will solve that pesky income problem. I’ll also assume the markets will return 12% annual, because there was a time where that was normal. I won’t even get into any pesky asset allocation problems that could lead to less than my optimal expectations.

What’s the Value in your Financial Inflection Point?

If you didn’t catch my sarcasm in the last paragraph, shame on me for not being a little more obvious. I wanted to illustrate that on some level reaching your financial inflection point may not mean much. It’s definitely a great milestone, but it might not be realistic.

If you are a doctor making $300,000 a year, your financial inflection point would be $4 million (at 7.5% investment gains). If you “only” have half that amount in investments leading to $150,000 in gains each year, you’ll probably do okay.

Your financial inflection point is most helpful when it is combined with your expected expenses.

Last May, I projected our expected expenses over the next 45 years. (Yes, it was insane and you should read it, right away).

The quick and dirty answer is that we’ll likely have around $35,000 in expenses per year. We don’t need to replace our income completely like the financial inflection point suggestions. Our money only has to work hard enough for what we need it to do. This was one of the considerations in buying solar panels. While we might not be investing towards our inflection point today, we are investing in reducing our expenses in the future.

* At the time of publishing, I decided to do a search and found that The Green Swan covered this topic very well, but in a different way.

Alternative Income Update: July 2018

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July is in the books. Now it’s the time of the month that I pause and think, “I can’t remember what I ate for dinner last night… how am I going to remember last month?” LOL.

I think July, 2018 will always be known as the month of fighting for air conditioning. We had central installed in 2013 and I think we’ve had to have it repaired around 5 times now – an average of about once a year. We had Restivo’s by about 3 times in July and finally by the end of the month, they were able to get the system they installed working as multiple parts failed this time.

It was also a month where my 5-year old went to a wilderness camp while my 4-year old went to a more traditional camp. That meant for a bit more driving and an earlier pick-up (day ending at 3PM instead of 4:30PM). These are also my wife’s busiest months. When she had time off we tried to make the most of it. Summer in Newport, Rhode Island is a special time and it really feels like you are living the island life.

Let’s get to the good stuff. (Regular readers may notice that I have a template for this article, but new readers will need all this information for it to make sense.)

Alternative Income Update: July 2018

For those that don’t know the term, “alternative income”, I started using it 11 years ago to be purposely vague. I needed something to cover blogging income. Blogging income can be very erratic, but there’s a residual nature to it as well. Some popular bloggers are still struggling to categorize it. I think alternative income was more passive back in 2007 before social media, podcasting, and video. Today it seems like every blogger talks of hustling (as in moving quickly, not grifting people) and by that they mean “being everywhere.” I feel like the only one dumb enough to just keep writing blog posts… blog posts that often don’t have cool “pinnable” images. My kids say dinosaurs are cool, so maybe dinosaur bloggers are cool?

In general, I call alternative income everything that comes from passive investment and these side hustles. The best way to think of it is income where you aren’t directly trading your time for money. This report is about all my alternative income. To include my investments into that paradigm, I have to fudge the numbers a bit. You’ll see what I mean as we go along… or you can see a more detailed explanation back in January, 2017.

The last month I reported, June, my alternative income added up to $7,403.28. June was the best month of the year, despite the fact that I was away on vacation or on adventures with kids for half the month. I had also started a freelance customer support gig that wasn’t included in the numbers (but certainly takes time).

In any case, June is ancient history now, so let’s move on to more recent history… July.

Lazy Man’s Alternative Income – July 2018

In looking at our alternative income, I break it down to 3 main sources… each with their own caveats.

1. Blogging + Dog Sitting Income

My “real world” friends have asked me, “What do you do?” I’m not a fan of the question… because it’s simply rude. I feel it’s used to size up or pigeonhole someone. My responses of “software engineer” has received very differently reactions than “dog sitter.” Nonetheless, some response is required. I rotate among all the things that I do. What are those things:

I suppose the best answer is that I’m a stay-at-home dad. The kids go to school for about 6 hours a day. So my “non-Dad stuff” is 30 hours a week. That gives me time to do some basic family errands (shopping, cooking, dishes, laundry, walking my own dog, etc.) and dog sitting and blogging fills in the gaps.

At blogging conventions a popular question is “Are you a full-time blogger?” I say yes, but then explain that I spend very few hours blogging. I don’t think most people grasp the concept of not having a full-time job, but still having a full slate of activity. I’m doing much, much more now than I ever did at a full-time job. If you really cared to read much more this gives you even more on that. I think everyone assumes that Boss Lazy Man will tell Employee Lazy Man to take the day off from the blog to do non-blogging stuff. That’s not really how it works. People with standard jobs have a lot of insulation where they can say, “See, my boss says that I’m not available.”

I’ve spent too many words on it, but if you want a very short list of what I’m doing check out my “Now” page.

I don’t break out blogging income vs. dog sitting income. One impacts the other. When I have a lot of dogs, I don’t have as much time or the focus to blog. When I’m blogging a lot, it’s usually because I don’t have too many dogs to sit… and there isn’t some other great catastrophe going on. (Sometimes it feels like life is a series of catastrophes. Fortunately, for me, they’ve been minor. I’m sure I’m not alone in feeling that it’s just one thing after another derailing your progress.)

You may be asking right now, “Isn’t alternative income about NOT trading time for money?” Isn’t dog sitting and blogging TRADING time for money? That’s a solid point. However, I don’t do it directly. Let me explain:

Sitting dogs itself isn’t a time-intensive job… at least with the number of dogs I typically have. However, there is considerably more overhead than you might think between booking dogs and meeting dogs for suitability. The important differentiation with dog sitting is that I can “double-dip” and earn money from another side hustle, such as blogging, at the same time. It’s very different than being an Uber driver. The police tend to frown on blogging and driving. (Hmmm, maybe if I had a voice recorder and translation software I could compose some rough drafts. Nah… I’m sure clients wouldn’t want to climb over my kids’ child seats. Also studies show that Uber drivers make far below minimum wage when accounting for their expenses.)

If you are interested in dog sitting, I wrote a very detailed article on the subject: Pros and Cons of Dog Sitting on Rover.

Blogging is usually much more time-intensive than sitting dogs. (The summer months are the exception). However, it isn’t directly trading time for money either. If I write an article for the blog today (such as this one!), I don’t necessarily get any significant money for it. The money I make from blogging now is a direct result of having built a reputation and a collection of nearly 2500 articles over 12 years of blogging.

Like June, July was a great month for sitting dogs. The locals took advantage of kids being out of school, while the strong tourist season brought in more business. July has always been one of the best months, so this was no surprise.

Blogging income was solidly above average in July. There was a minor hit as my advertising company noted that budgets at the end of Q2 (June) are historically more than the start of Q3 (July)

While on the topic of blogging, I’d like to add that it isn’t all about the money. I highly recommend personal finance blogging. I wouldn’t aim for creating the greatest blog in the world. Instead, I’d think of it as a way to keep yourself accountable. That’s worked for me. Here’s how to get started blogging with any type blog you might be interested in.

In June, these two categories combined for a year high of $4,280.06. But for July it was…

Total Blogging + Dog Sitting Income: $3,953.29

As you can tell the needle didn’t move much. That’s great considering everything else on my plate.

In addition to the dogs and blogs, in July I added some straight-up, freelancing work. I’m not including it as it is plain old, regular income. I feel it is important to mention it, because it’s another thing that I’m focusing on. At the end of the month, more ongoing freelance work fell into my lap. Between the two gigs, it could be as much annually as the dogs and blogs.

2. Rental Property Income

Here is where I need to fudge the numbers. Sorry, but it’s necessary.

We have three rental properties in our real estate accidental “empire”. (“Empire” is in quotes for a reason – it is a joke.) They are all on 15-year fixed mortgages. This means that we don’t make money on them now, but we are paying down those mortgages more quickly than most people. In 9 years, we should be able to collect an estimated income of $40,000 a year (in today’s dollars, after expenses) on them.

So here’s why I have to fudge the numbers. For the purposes of this report, it doesn’t make sense to count the properties as zero income. I don’t want this report to push me towards a bad decision. It might make me sell them and invest the money differently just to make the numbers look better. For example, if someone offered you a million dollars in 10 years or $10 per year right now, you’d wait for the million (I hope). However, for this report, the $10 per year would give you better numbers.

It’s an extreme example, but it shows how sometimes the short-term plan is the enemy of the long-term plan.

Here’s how I’ve decided to fudge the numbers.

I add up all the properties equity and values. Zillow is accurate for these condos as it has a lot of data points to work with. Next I calculate an equity-to-value ratio. In short, this is the percentage of the property value that we own vs. the bank. Then I calculate the rents of all the properties as if they were owned free and clear. Thus we can say that we are “banking” (in a completely fudgey sense) a percentage of the rent that we would expect to have in the future (rents are typically in line with inflation in the simplest sense).

If you are confused (and you probably are), this article on calculating cash flow of cash flowless real estate explains it in more detail.

Here are the numbers for July. We have 49.64% of the equity in our properties with an estimated combined rent of $3,325. (This number is after insurance, property taxes, and condo fees.) We were able to raise the rents earlier this year a little bit as the rental market has been good and we turned over to new tenants.

Ugh… so close to 50%. We’ve made more progress in this than I thought we would this year.

If you multiply $3,325 by 49.64% you get $1,650 in “fudged” monthly alternative income. At the beginning of 2017, we only owned 36.4% of the properties and they had lower rents. The math worked out to $1,174 back then. So in 18 months, we’ve seen the number grow $476/mo. As the years march on, the ratio will grow to 100% of the $3,325 monthly inflation-resistant rent. That’s what gets us to that annual $40,000 I mentioned above.

In the previous report, the rental property income was $1,614. This number usually moves slowly, but a $36 montly jump is huge. This number only changes if one of two things happen: 1) The properties go up in value. 2) We charge more for rent. I don’t control the housing market, so I can’t change much here. Tenants are typically locked in for at least a year. The monthly paying down of the mortgages creates some equity each month.

In July, Zillow upped the value of the properties significantly. We are finally starting to see a recovery since the crash in 2009, but there’s still a ways to go for it to get to the highs of 2006.

Slow and steady wins the real estate race. In previous reports, I hoped that by the end of this year, we’d be looking at having 50% of the equity with $3,325 in rent or $1662.50 a month in fudged alternative income. I’ll knock on wood, but we might blow it away if the housing market continues to appreciate. Maybe we can get to 53% for $1762.25 for fudged money.

Total Rental Property Income: $1,650

3. Dividend Income

Like the rental property “income”, I’m going to play a game with the numbers. You can decide if the game is fair. I always appreciate comments!

We don’t focus on putting our money in dividend stocks, but I’m going to imagine that we do for sake of this exercise. In reality we a vast majority in index funds, but I do some stock picking with a small percentage of our portfolio. Though the index funds do pay dividends, it’s not their core goal. I’m also fudging the numbers in another way. The money I’m referring to here is in our retirement accounts, so it isn’t something that we would tap as “income.”

Even though all this money is in retirement accounts, we could pull the money out and use it. We’d get tax penalties so we won’t do that. However, like the mortgages on the rental property, there’s real value here that I feel should be accounted for. My goal here is to capture the nearly 20 years of mostly maxing out retirement contributions.

Just like the rental income, we can pretend what the portfolio would earn if we moved all the money into dividend stocks or indexes. For the sake of pretending, I estimated that we could earn 2.50% in dividends. Most people estimate a 4% safe withdrawal rate, but withdrawal is not our plan here. We are only thinking about the cash that these investments could yield to pay for our living expenses.

July was another solid month for our portfolios. The stock market did it’s thing in going up. We did our thing in putting more money into it. The end result is:

Total Dividend Income: $1,526

Last month, it was $1509, so we gained $17 of theoretical monthly money from theoretical dividends. Like the rental property number, slow and steady wins this race. This keeps moving in the right direction.

Very Close to Passive Income

Most people consider rental property income fairly passive income. It’s not, because you have to deal with tenants. However, when things are going well, there might only be “work” every couple of months. For sake of argument, I think we can agree it is “more” passive than writing blog posts and sitting dogs. I spend a lot more time on the later than the former.

Of course dividend income is completely passive, so I don’t need to argue much there.

This “very close to passive income” category is a combination of “rental property income” with “dividend income.” (Yes, that’s a lot of quotes.)

It’s interesting to me that these two numbers are so close for us. It’s like the stocks vs. real estate debate, but for our personal finances. I think of it as putting them in an arena to fight out which is the strongest. The dividend income started out the year with a big, nearly $50, lead. In June the real property income is up over the dividends by $105.

The stock market goes up and down which makes the dividends fluctuate as well. The rental property income keeps going up, because the mortgages are always getting paid down every month. The stock market can more a lot faster than the housing market. In any case, I like having both of them working for us.

July’s Very Close to Passive Income: $3,176

Last month it was $3,123, so it’s up another $53! That’s grown from a combined $2,354 in January 2017. Since then, this has gone from an estimated annual income of $28,252 from these sources to $38,115. Investing (in this bull market) is awesome! It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet. However, looking forward to 9 years from now when the investment properties are paid off and how the stock market might grow (assuming a conservative 4%), this number could reach 80K a year. I estimate our long-term expenses to be around $35,000 a year (with the house paid off).

Yes we ignored some minor (but important) details. Details such as our investments being in retirement accounts and an unwillingness to sell some rental properties to pay off others. It’s possible that these two could cover our future expenses (without drawing down on principle).

Final Alternative Income

Adding up “dogs and blogs” to the “very close to passive income”, this month we on the investment stuff had $7,129.29 in monthly “alternative” income. That would be $85,551.48 a year. I’m excited even if it is a little fudgey math.

That largely hypothetical $85,551 a year on investments, writing on a blog, and taking care of dogs is fantastic. In the long term, we can get by on half of that income, and it doesn’t include any of my wife’s bread-winning pharmacist income or her potential military pension if she retires next year.

Just like every month, I’m still hoping to writing a book to boost my alternative income. I had always planned it to be an eBook, but if any readers out there know a publisher, I’d appreciate the hook-up. Seriously… it seems everyone in personal finance is getting a book deal except for me. I think I can make a compelling argument for a book that you’d see in a bookstore… that is if bookstores still exist by the time I’m done writing it.

Net Worth Update

Since I don’t share real numbers of our net worth, this isn’t very exciting. That’s why it’s just a footnote.

I truly believe that net worth is one of the most important numbers in personal finance so it is worth sharing in some way. Showing relative growth can be useful, I think? (Let me know in the comments.)

I use Personal Capital to track my net worth and it makes everything easy. It’s free and you should give it a try. For full disclosure, I might make a few dollars if you do.

In July, our net worth grew 0.73%. Yay! That’s a year to-date-gain of 9.42% in our net worth this year. As a reminder, percentages can be weird… Imagine with someone with a net worth of $100 finds a $100 bill on the ground. Instantly it doubles his net worth. As the numbers get bigger, I’d expect percentage to come down.

How was your July? Let me know in the comments.

Teen Titans Taught My Kids Personal Finance Before Me

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Sometimes I find personal finance lessons in unexpected places. Sometimes it’s in a a Jack Johnson song. Other times it’s a kids’ cartoon. They can even pop-up in old re-runs of Fantasy Island that I started watching.

Note: This article may sound like an advertisement, but it isn’t (though Warner Brothers should reach out me). I’m simply a fan of the Cartoon Network show Teen Titans Go!

It started as simple self-preservation. On one hand, I could watch the “Fat Controller” berate Thomas the Tank Engine and his Friends for not doing their job, while ignoring the employees who are on the train. On the other, I could look for another show.

While we’ve tried a variety of other shows, the one we keep coming back to is Teen Titans Go!

For those who don’t know the Teen Titans Go! characters, it’s a basically a five teenage superheroes being teenagers. Instead of saving the day, they are usually doing something silly like finding out what the Tooth Fairy is really doing with all the teeth he (yes, “he” in the show) is doing with all our teeth.

Before we get to the personal finance lessons from the show, I have to mention the Teen Titans Go! to the Movies that’s in theaters. It’s very watchable for people who know nothing of the show and gets a 90% on Rotten Tomatoes, which is very, very good. It’s been compared to Deadpool for kids. Since I haven’t seen Deadpool, I can’t give an opinion on that.

Rather than write about the individual characters (as I could do for days), I’ll jump into:

Top Personal Finance Lessons from the Teen Titans

Money is Whatever Currency We On

In the episode Two Bumble Bees and a Wasp, Robin (of Batman fame) tries to teach the rest of the gang about money:

“Money is not to be wasted on things that bring you happiness and joy! Money is to be hoarded, until your have enough money that your money makes more money.”

I’m not sure too many children are going to pick up on that last point, but it certainly caught my attention.

Turning to a cartoon representation of money we get this lesson:

“I am paper, but I am also money. All I am is an agreed upon representative of credit. Something you trade for goods and services! So I can be anything.

They go on to ask whether money can be a pineapple. (Actually pineapples have been used as money in history.)

After Beast Boy insists that money is evil and rips up a dollar bill, Robin decides not to pay anyone until they respect money.

Flash forward to later and Beast Boy has a pizza. Robin would like a slice and offers to buy one with a dollar. He soon learns that the rest of the team has agreed that the new currency is bumble bees.

Yes, bumble bees. I told you it was a silly show.

It ends with this hilarious song and dance:

If you are interested, there’s a complete script of Two Bumble Bees and a Wasp here

Focus on Health and Wealth

In the episode, Think About Your Future, Robin announces that he’s buying the Teen Titans all jackets. Raven has an epatheny:

Raven: Aren’t you guys worried about wasting money?… So we have some later?
Starfire: But the later is not until the later. Currently it is the now.
Raven: I know, but aren’t we going to get old one day?
Beast Boy: Yeah, but later .
Cyborg: And it’s the “now” right now.
Raven: Oh, okay, that makes sense.

So they buy the jackets. And then they celebrate with pizza, but not just any pizza it’s “extra-large, extra-extra cheese extra-extra-extra pepperoni, plus “large jugs of the soda” and “a gallon of ranch dip.”

Raven once again warns that perhaps they should eat healthier to avoid health problems later. Again, the rest of the gang doesn’t care about “later.”

The scene ends and we jump ahead to 70 years later.

The gang is old with many health problems. They can’t afford their medications because they don’t have any money.

They suddenly realize that Raven was right. So they do what anyone would do. They build a time machine and send their old selves back to talk to their teen selves into making more sensible choices.

That brings us to this clip about learning how to eat healthy, starting a 401k plan, and an explanation of compound interest.

Everything goes perfectly. In fact it goes a little too perfectly. The rest of the episode isn’t educational, but it is entertaining.
Again, if you are interested in the script, you can find it here

Building Wealth with Rental Properties

No cartoon is dumb enough to create an episode around a boring topic as building equity from rental properties. No cartoon except for Teen Titans Go!

With episode after episode about silliness, the writers created, “Finally a Lesson.”

The best part of the episode is Robin explaining rental property and how to build equity:

If you can’t watch it, here’s Robin’s explanation:

“Equity is the amount of a property you truly own. It’s the difference between your loan balance and your property’s market value. If you sold your property and paid off the bank, the value of your equity is what you’d walk away with. When you build equity, you increase the net value of your asset. One way to do this is by paying off your mortgage.”

The episode takes them through all the steps. First they find the right property – a run down apartment building. Then they get to the financing, which involves getting 20% down, the way that “everyone else does” ask someone else for that 20%.

Then we get to the other fun parts of securing a rental property… the loan process. There’s an explanation of credit scores, securing the right lender, filling out the paperwork, and getting a good faith estimate.

The gang is starting to get very bored, but Robin assures them they’ll be very satisfied in the end. For now they have to turn their attention fixing all the problems with the building.

There’s a fun twist, but finally, Robin gets us to the satisfying end, “It takes decades to actually build equity, but in 30 years, it will provide a modest cash flow to pay for our numerous old people medications.”

For a cartoon geared at kids, it’s as good of an overview that you’ll get. When my kids are older and ask why we have rental properties, I’ll just cue up the episode on the DVR and ask if they have any specific questions.

You guessed it, the script is available here.

Pyramid Schemes Will Make You Broke

I almost didn’t include this episode, but my wife mentioned that I should. I’ve written extensively about MLM Pyramid schemes, so I didn’t feel this addressed the topic very well. On the other hand, many adults can’t understand pyramid schemes, so I can’t expect the Teen Titans to teach kids this complex topic. As usual, my wife is correct and it’s just my own extensive writing that artificially raised expectations.

There’s actually a very good description of a pyramid scheme in this 2 minute clip:

The key money quotes almost always come from Robin and this is no different:

Robin: This is a pyramid scheme!… Not that kind of pyramid! A pyramid scheme is an unsustainable business model, that promises payments to participants, based on the amount of additional people they enroll in the business, instead of focusing on the sale of goods or services to the public… As you can see here, the exponential growth of the “business”, will eventually cause the entire operation to collapse, leaving the participants at the bottom of the pyramid bankrupt, while those at the top walk away rich…

Starfire: I do have the question. Did the mummies build the pyramids?

Robin: There are no mummies! It’s not a literal pyramid!

Almost everyone in MLM doesn’t understand this concept and still go meetings to learn how to show the plan or enroll people in the business. In fact, the people who make the most money in every MLM are the people who have the largest downlines of enrolled people, not sales of goods or services to the public.

Beast Boy joins and makes Pyramid Scheme money which leads to this awesome song:

Of course the rest of the gang (sans Robin) want all the money, so Beast Boy enrolls them as “money deputies” with himself as a “money sheriff.” Robin warns them, “You are participating in a fraudulent business” and “This pyramid scheme is going to leave you broke, Titans.”

Everything spins out of control and gets mixed in with mummies wanting their money back and the Teen Titans not being able to deliver. They get out of it with some silly stuff that doesn’t make sense, but by this point, they’ve addressed the topic fairly well.

Once again, you can find a transcript of the episode here

Final Thoughts

I really don’t know how much financial information my kids are absorbing from this, but I know that they remember nearly everything they see.

I’ve watched my share of cartoons and I can’t think of any other general cartoon that covers half of the financial topics in Teen Titans Go! There are still a lot of episodes that I haven’t seen, so I might have missed a few money lessons.

Where are the surprising places you’ve found money lessons? Let me know in the comments.

Two Months to Take Charge of Your Money

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This article contains affiliate links.

Three weeks ago my son discovered Pokemon. It derailed my grand Summer of Math plan. At first I tried to ignore Pokemon, but I soon learned that wasn’t going to work.

Magikarp - Gyarados
Magikarp is a joke of a Pokemon with no powers, except the ability to evolve into Gyarados one of the most powerful Pokemon

Instead, I did the exact opposite, I embraced the phase. I evolved from Magikarp to Gyarados. I went to the library and got a this Pokemon guide/directory. My 4 and 5 year old are now teaching themselves dictionary skills as they look up various Pokemon and their abilities.

The lesson here is simple: Ignoring a problem doesn’t make it go away. Embracing it can be an opportunity to learn and grow.

Right now you are reading the money blog that I started in April, 2006. I didn’t know where the blog would go, but I knew I didn’t want to get down to my last few dollars like I did with the dot-com bust. I knew I wanted a strong Plan B (and C an D) in case software engineering jobs continued to get outsourced to foreign countries.

Today, I can look back and say there were a lot of pieces of the puzzle. I started tracking my net worth (first with a spreadsheet, then with Personal Capital. That forced me keep my spending in check as I wanted to see that number grow every month. There were other factors, the greatest being marrying well. There was a lot of good luck as well, even if some of that was just avoiding disastrous bad luck.

However, everything started with one initial spark. I saw a few blogs where people wrote about money. I decided why not give that a try? I quickly realized something that I that I had forgotten:

The best way to learn is by doing.

By pressuring myself to write about money every day, I had to some up with something to write about. Some people lose weight by making food journals. Starting a money blog is your food journal. (If you are looking for a cheap, easy place to get started, Bluehost can help you out.)

Maybe I’m living up to my Lazy moniker, but I often find that I get excited about something and then forget about it as life “happens.” After all, even though most people don’t think I work, I’m always busy with a number of things.

This is where the “two months” comes into play. In about 2 months, the biggest personal finance blogger conference is happening: Fincon 2018. That’s enough time to establish a yourself as a blogger. It’s also around the time when the initial excitement of starting a blog seems to wear off. It’s really the only place where you can meet face-to-face with more than a thousand of people who are (more or less) like you.

Prices go up at the end of the July (Tuesday midnight), so you may want to sign up for this first.

Finally, if you book the conference now, you’ll lock yourself into blogging consistently until then. It’s a little like committing to running a race. Whether, it’s a 5K, half marathon, or marathon you’ll have created a goal in the future.

I will be the first to admit that going to Fincon is not cheap. Between tickets, flight, and hotel, it can add-up quite a bit. It certainly isn’t for everyone. Personally, I’ve been to every one except for the one where I stayed home to see my son being born. This year, the whole family is going, and we’ll celebrate his 6th birthday in Orlando. Do you think we’ll find any fun things for kids down there ;-)?

As I wrote in the beginning, this article has affiliate links. Roughly 10,000 of them, give or take several thousand. That means that if you click on pretty much anything other than the Summer of Math article (or how I keep myself busy) and decide it is a good service that you’d like to try, I’ll get a little money. That includes even the free Personal Capital service. However, I honestly believe that if you track your finances, start a money blog, and network with other money bloggers, it will put you on the right path to improving your finances.

I can’t think of a single personal finance blogger who has seen their financial lives get worse since they’ve started blogging. In a dozen years, I’ve probably talked with several hundred personal finances bloggers.

I feel that’s a very strong percentage and great odds at success.

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