The Personal Finance Podcast - Should You Pay Your Student Loans Since They Keep Postponing Payments? (Plus the Best Investing Books!)

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Starting point is 00:01:05 I'm your host, Andrew, founder of Master Money. and today on the personal finance podcast we are going to do another episode of money Q&A if you have any questions hit me up on instagram or tic-tok at master money co and follow us on spotify apple podcast or whatever podcast player do love listening to this podcast and if you want to help out the show leave a five star rating and review on apple podcasts and today we have three questions on Money Q&A. And the first one is should I be paying student loans since they keep postponing payments? This is a question we get all the time now at Master Money. So we're going to be answering that one. In addition, we're going to be talking about the best books for investing and personal finance.

Starting point is 00:01:55 I'm going to give you my top five for each category. And we're going to give you a bonus one as well. And lastly, we're going to be answering the question about saving 20% of your income. Should that be gross or should that be your net income? So if that's something you're into, let's get into it. What are the best books to read for investing in personal finance? So we have a number of books that we talk about here at Master Money in the Personal Finance podcast all the time. And there's some great ones that we have.

Starting point is 00:02:23 Now, we have a book list, which I will link down below or in the show notes so that you can check those out. But we have a bunch of different books that we talk about all the time. Today, I will give you five personal finance and five investing books to get started, especially if you're just starting out. Now, you may have heard me talk about a number of these things as well. See, I personally read a book a week. And we have an episode talking about how I do that.

Starting point is 00:02:46 I read a book every single week. Now, there's a number of ways that I'm making that a hybrid method now, where I used to only read physical books because I do enjoy reading physical books more. But as I've gotten busier and busier, I'm now adding audiobooks so I can keep up with that book per week habit. Now, there's a number of ways that you can do this. And if you want to read a book per week, we have a challenge that does that as well. The way to do that is take a book, divide the number of pages by seven, and read that many pages

Starting point is 00:03:10 every single day. And you'll finish a book every single week. It's a very simple system. And we talk about some more details in that system in that episode that I'll link up. So for personal finance books, the first one that I would start with is the simple path to wealth. Now, the way the simple path to wealth works, it's J.L. Collins. He's talking to his daughter. and he's teaching his daughter everything he knows about financial independence.

Starting point is 00:03:33 Now this centers around financial independence. J.L. Collins retired very early. I think he was in his 30s when he retired. And he's talking to his daughter on exactly what he would do if he was going to do it again. And he talks about investing. He talks about personal finance. He talks about about a number of different issues in that book that are absolutely fantastic. There's one page where he just lays out all the tips that he has in one-liners. And just that page alone is worth buying the book. The second one is that. The Millionaire Next Door. Now, the Millionaire Next Store is one of the best personal finance books out there.

Starting point is 00:04:04 The reason why is it shifts your mindset from thinking, hey, I need to ball out and have a Ferrari if I want to be rich. No, instead, what actual wealthy people do is they live below their means and then they invest the difference. And the Millionaire Next Door surveyed a ton of different millionaires to find these findings. And there's some great stats in that book as well, but it is one of my favorite reads. And when I read The Millionaire Next Door when I was in high school, it turned a light ball ball on in my head and I all of a sudden realized, hey, this is how money works.

Starting point is 00:04:32 The millionaire next door actually helps you understand the difference between being rich and being wealthy. And trust me, you want to be wealthy. The next one is I will teach you to be rich by Rameet Safi. Now, this is one of the best books that literally gives you the guidelines on how to set up a financial system. We've talked about some of those systems on the personal finance podcast. There's a number of different things that you want to look into. But Rameet is one of the first people who brought to my attention the fact that money is there to bring you value. It's not there to just save and hoard away. Money is there to be spent on things that bring you value. Another great part of that book is how he automates his investments. And he lays out the exact strategy of exactly

Starting point is 00:05:14 how to automate your investment so you can do the same exact thing. It's very cool and he's very precise in this book. And the newer version, the updated version is the one that I would look into because I think he adds additional stories, talks about different things that happen throughout his life and I think it's a very cool book. The next one is a new one and it's by Nick Majuli and we had him on the personal finance podcast and it's called Just Keep Buying. And it's one of the best personal finance books that I've read recently. And Nick goes through everything from saving to investing to should you buy or should you rent. There's a number of different topics that he covers in that book and he has great stories in there but he's also got tactical tips and it's all

Starting point is 00:05:48 backed by data. And the thing that I love about this is that anything backed by data is something that I really want to spread the word about because this is an incredible book. Nick does a great job actually making it engaging and it makes it more fun. Then the last one we'll talk about on the personal finance front is get good with money by Tiffany Aliche. Now she has a fantastic book that literally lays out how to get better with your money, how to actually get good with money, just how the title talks about. So it has strategy, just has tons of great stories as well. And she is a fantastic teacher when it comes to personal finance. And she, shout out to Tiffany, if you want to come on the podcast, holler at your boy.

Starting point is 00:06:27 So those are the first five that I want to bring up that you guys should definitely check out. I think those are five fantastic books to start. And if you read those five books, you're going to know more about personal finance than 99% of people. Now let's get into the investing books because there's a bunch of really good investing books that are out there. The first one I would look at is the Warren Buffett way. Now, I've talked about this book in the past before and a lot of people don't talk about this book. But what I love about this book is this shows how Warren Buffett actually invests his And it goes through a bunch of companies and why he bought those companies and profiles some various things as well.

Starting point is 00:06:59 So if you're interested in buying companies, buying businesses, buying individual stocks, all of those different things, the Warren Buffett way is a fantastic read for that reason. The next one is the little book of common sense investing. Now this is a really short read. If you're brand new to investing, I would read this one first because you're going to get a lot of information packed into a small book. And this is a great book to read so that you can learn about passive investing and what the difference between passive and active investing. are because it is the baseline to everything we do when we start to invest are dollars. Now, if you're interested in dividend investing, there's a fantastic book, and this is when I dividend invest, this is the exact strategy I follow. It's called the single best investment by Lowell Miller.

Starting point is 00:07:39 And this is one of my favorite investing books because he talks about the power of growth dividends and how you can make it a compounding cash machine. And his exact strategy is laid out on this book and it has worked tremendously for me so far. I read that book about seven or eight years ago and that system really is kicking into gear now over time, and it's a very cool book that I would definitely read if you're interested in dividend investing. Or if you're just trying to learn about investing, there's a ton of great information on how to evaluate companies

Starting point is 00:08:05 in that book as well. The next one is by Peter Lynch, who is one of the best investors of all time, and it's called One Up on Wall Street. And what Peter Lynch does is he was a hedge fund manager who outperformed the market for a very long time in the late 80s and 90s. And what he does is he walks through how he evaluated companies.

Starting point is 00:08:21 And some of the ways that he evaluates companies are very real boots on the groundways, where he would go to the mall or go to stores and say, what stores are really crowded? What stores have a lot of people in them? And he would figure out how to invest in companies in some boots on the groundways and then go look at their financials

Starting point is 00:08:35 and then figure out, is this a good company? So he actually did a lot of sweat equity when he was investing in companies as well. And that book is fantastic for new investors as well. And then another great one is a random walk down Wall Street. And this is going to teach you how the psychology of the market works. It's going to teach you how a lot of things and how the market ebbs and flows.

Starting point is 00:08:53 is a fantastic book as well. And one, if you are absolutely brand new to stock investing and you really want to learn more about stock investing, I'm going to give you a bonus one. And Brian Ferraldi, the author of this book, was on this podcast and it's called Why Does the Stock Market Go Up? And this is another fantastic book to learn why the market moves the way that it does. Because when you understand why the market moves the way that it does, then you can control your emotions and control your psychology. So when the market goes down, you understand that this is normal. And when the market goes up, you also stay calm because staying calm is the biggest thing when it comes to investing. So those are 11 books that you can start reading on personal finance and investing.

Starting point is 00:09:33 If you want our full book lists, they are always in the show notes or down below. So check those out as well. And trust me, if you start reading this stuff, if you start digesting things about investing in finance, you're going to have so many ideas open up. And then as you do that, after you read five or six of these books, open up to business books as well because you're going to have a bunch of various ideas along those lines. But reading is one of the best things that you can do. So make sure you're continually doing it. If you listen to podcasts, naturally audio books would be great for you as well. Should I be paying student loans since they keep postponing payments? Now, this is a question that I get all the time now. And we're in a very unique time where student

Starting point is 00:10:11 loan interest and student loan payments are being frozen. Now, before I dive into this deeper, do I want student loans to be forgiven? I would absolutely love it if student loans are forgiven. That's coming from a person who paid off their wife's student loans very early on. And what I've seen is a lot of people coming out and saying, I don't want student loans to be paid off because I paid my loans. Am I going to get my money back? That type of thing. But here's the thing. If student loans were paid off, a lot of people would have extra cash and affordability would go up. And what I want you guys to be able to do is to build wealth. So the more people that could build wealth and join this community is better for everyone. I would love it if student loans were paid off. But then

Starting point is 00:10:46 there becomes a caveat. Do I think it's likely? Because this is a much more complicated thing than what people are saying. Because there's a bunch of private companies who have student loans. There's a bunch of federal companies who have student loans. And just magically paying them all off is not as easy as it sounds. So do I think it's going to happen in the short one? I don't know. I'm not going to give an opinion on do I think it's going to happen because I'm not going to try to predict something. You guys know I don't like predicting things. I don't like predictions. But would I rely on the government to bail me out with something? Absolutely not. Because relying on the government to bail you out is just a wish. It's not a strategy. And we want to strategically

Starting point is 00:11:20 pay down debt when we pay down down. We want to have a plan in place so that we can get rid of that debt as fast as we possibly can. So having that plan in place, you've got a couple of options here when student loan debt and interest is frozen. Because if the interest is frozen, you can start aggressively paying down those student loans and get rid of those loans much faster because there's no interest payment involved there. Or the second option is you don't have to aggressively pay them down and see what happens. Now, if I was personally, the person in this situation, I would most likely start aggressively paying down those loans. Because what I know is I want to get those loans paid off so that I can start building wealth

Starting point is 00:11:55 and get as many dollars as I possibly can into investments. The reason why for that is so that my money can start to grow because when you have those extra dollars to allow them to grow, you can build wealth that much faster and you can reach financial independence that much faster as well. Because say for example, your student loan payment is $5, $700 a month. Well, you know what, five to $700 a month more can do for you by investing those dollars, it's a massive difference. I mean, it is millions of dollars over the course of 30 years once you get to that point. So there is a massive opportunity available here if you want to aggressively pay down these loans. Now, if you want to wait to see what happens, I completely get it because I can be saying

Starting point is 00:12:34 this and you start aggressively paying down your loans and then all of a sudden the loans are forgiven. And how are they going to handle that with people who just paid off a bunch of debt? I don't know. But that is why this is more complicated than a lot of people think. There's a lot of different companies. There's a lot of different entities involved here. And to just forgive all the student loans is very complicated. Would I love to see it happen? Absolutely.

Starting point is 00:12:55 I want every single person in this world to be able to build wealth. And I think student loans hold back a lot of people from the millennial generation and younger because they have the most student loans. Student loans are at the highest they have ever been right now. Is that frustrating? Absolutely. Because the rising cost of education is causing that to happen because people can't afford it. So they have to go out and get loans so that they can afford

Starting point is 00:13:16 their education. So in this situation, what I would personally do if I was in that situation, and I would pay down as fast as possible because then you're just paying down the principal instead of having these interest payments involved as well. And if you don't know what the principal is, the principle is just the amount of loan that you actually took out. And in addition, when you're making those payments, there's interest. And that's how the banks make money is on that interest. So you're making additional payments as well. So if you have that zero percent interest rate, consider paying it down aggressively. Or if you want to wait to see what happens, you can absolutely do that, but in my personal opinion, what I would personally do is I would

Starting point is 00:13:48 get after it, pay it down as fast as possible. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy, clothes don't fit anymore, and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring, making sure the safety net we have in place actually matches the life that we're building.

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Starting point is 00:16:28 Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of our business. I want to be able to lifetime. I wonder if my out of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IG PrivateWealth.com. You always talk about saving 20% of your income to start. Is that gross or net? So this is a question I get a lot, and I'm trying to make sure that I'm more clear on it when I

Starting point is 00:17:06 talk about it as of late because I get this question all the time. So if you're new to the podcast or you're new to the channel, you're going to hear me talk about saving a percentage of your income all the time. And typically we talk about at least saving 20, 25% of your income to start. The reason for this is because if you save 10% of your income, you'll be working for well over 50 years. So we want you to retire as fast as possible and start to really build wealth. And you're going to see the results of building wealth much faster if your savings rate

Starting point is 00:17:32 is much higher. So when I talk about these percentages, it is your net income. I'm not talking about your gross income because your net income. because your net income is what you actually see, what is actually tangible right in front of you. So I want to make sure that that is clear, because your net income is what we're always talking about. The same thing goes for the percentages

Starting point is 00:17:48 when I talk about 30% or less of your income should be spent on housing. What I mean by that is your net income, not your gross income, because it's the actual money that you see. Because when you really think about it, when taxes are taken out, you're not going to see that money

Starting point is 00:18:02 unless you get a tax return. And really you don't want a tax return because you're just giving a free loan to the government if you get that tax return. Now, most people obviously get tax returns, but that's what's actually happening. Now, if saving 20% sounds daunting to you,

Starting point is 00:18:15 then here's what I would do. I would start saving as much as you possibly can, then increase that amount by 1% every month or every other month. What this does, it allows you to save more money over time. You're going to save 12% more by next year. And in addition, what it's going to do is you're not going to feel it as much because you're just very slowly increasing the amount. For example, if you're,

Starting point is 00:18:37 If you're lifting weights, you add a little bit of weight every single month so that you can get a little bit stronger. It's the same thing when you're starting to save money because saving money is not a fun thing for a lot of people until you start to see those dollars work. So as you put those dollars away, make sure you're just increasing that percentage little by little. And as you get bonuses or tax returns, throw some of that money towards your savings rate as well. Because doing these little things is going to add up over time to a lot of money, especially if you're investing those dollars, small amounts of money, turn into large amounts of money if you invest those dollars over time. So whenever you hear me talk about these percentages, I'm talking about your net income. Thank you guys so much for listening to this episode of Money Q&A.

Starting point is 00:19:22 If you have any questions, hit me up on Instagram or TikTok at Master Money Co. And we will take those questions and answer them here on the podcast. Thank you guys again so much for listening. We will see you on the next episode. M-Lazania, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-O-Jo.

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The Personal Finance Podcast - Should You Pay Your Student Loans Since They Keep Postponing Payments? (Plus the Best Investing Books!)

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