Personal finance is personal for a reason. Everyone is going to approach spending and saving and investing differently. So, how are you supposed to navigate through the millions of different opinions online and in books and even on podcasts? Hello. To know what the actual right answer is when it comes to your finances. Well, today, we’re going to be taking out the guesswork and sharing some of the most controversial financial opinions out there and what hot takes are right, wrong, and how they could be impacting you as you’re working towards your financial future.
Mindy Jensen: Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen, and with me today is the She-wolf of Wall Street Amanda Wolf.
Amanda Wolf: Hello, hello. I’m excited to be here, Mindy.
Mindy Jensen: Amanda is a personal finance educator and I am always excited to have her on. I am so thrilled to have her join me today to help debunk some of these seemingly absurd financial hot takes. Okay. Amanda, to start it off, before we get into these controversial financial opinions, I want to hear from you. Did you ever believe something about finances that ended up being completely wrong?
Amanda Wolf: I feel like I could probably have a whole show dedicated to just all of the wrong things that I thought about money growing up. But I would say one for me that sticks out like really at the forefront of my mind was that investing is only for rich people. Like I, when I was younger, and especially, you know, right after college, I always thought don’t invest in the stock market. It’s very, very risky. You could lose all of your money. And of course, now, I know, and hopefully most people out there know, but if not, uh you can lose all of your money if you buy the wrong things. But once you have a little bit of like basic financial literacy education under your belt, you realize, no, the way people get wealthy is by investing in the stock market. So, I think for me that was like one of the big ah-ha moments, um, as it relates to money lessons in my life. What about you, Mindy?
Mindy Jensen: Uh, one of the biggest ones, I think that has has really shaped my life once I debunked it was, you work until you’re 65. You early retirement is age 55, maybe. But that’s if you’ve like hit the lottery or you’re a CEO or something. That’s not for regular people. And then my husband found that uh super simple math to early whatever that Mr. Money Mustache blog post is. And it turns out that you can retire early. You don’t have to work until you’re 65. And that was quite eye-opening when we, when we discovered that that article. That was just changed our lives.
Amanda Wolf: I remember the first time I learned what FI was, Financial Independence, Retire Early, the FIRE movement, and being like, well, I don’t want to retire early. I’m going to be bored. I like working. And jokes on me. I was like 24, like two years into the corporate world when I learned about this. But, you know, I realized that it’s so much more than that, it’s just the freedom to decide. And I think that’s what money does for us, right? Money is power and gives us the ability to make these types of decisions and leave situations that we don’t want to be in and and all of that good stuff. So,
Mindy Jensen: Yeah. That is if you love your job, that’s awesome. I love my job. I don’t need to leave. I’m not going to leave any time soon, but I have the option should things change. All right, let’s get into these controversial financial opinions. What’s the first one you want to bring up, Amanda?
Amanda Wolf: Okay. The first one that I want to bring up that I found was around sabbaticals and temporary breaks. So this one says sabbaticals and temporary breaks from work are just as financially irresponsible as purchasing a Ferrari and can easily be more expensive when you consider the full opportunity cost of missed earning and contributions. So, for me, I could not disagree with that more, Mindy. I think that we are allowed to take breaks and I feel like a lot of us, it’s been ingrained in our head that we need to like work as hard as possible all the time for our whole life until we hit 55 or 65 or 69 or you know whatever that age is that uh you know, relates to your industry that you work in, but I think if it’s done right, if you have the means to live off of your savings. It’s not like I wouldn’t recommend taking a sabbatical and just loading up your credit card by any means, but, you know, if you have the savings in place and you have a good plan in place, I think that a sabbatical and a temporary break is an an an amazing idea for your mental health, for your like your physical health. There’s only so many years you can, you know, go hike Machu Picchu or climb out Everest if that’s what you want to do or go scuba diving and I think if you have an opportunity in your younger years, in your prime healthy years to go do something like that, I say go for it. I don’t think it’s financially irresponsible if you have a plan.
Mindy Jensen: I agree with you with an asterisk. Uh, you didn’t say I want to make sure that you can afford the sabbatical. So 24-year-old Amanda who just discovered the financial independence movement and is two years into her corporate career probably is not set up to take a sabbatical. First of all, how burned out are you after two years in corporate? Although I take that back because I spent two many years in corporate and I can see how that would be real easy to get burned out. But if you don’t have the money to cover your entire expenses during the sabbatical and for a little bit afterwards. If your company isn’t going to keep your job for you, and you want it, you have a difficult time getting a job, you’re in a specialized field, something like that, then maybe a sabbatical isn’t the best choice for you right now. But if you can afford it, if your company’s willing to hold your job for you, if you have a job or a career that’s easy to replace, then absolutely 100% agree with everything you said.
Amanda Wolf: Yeah, like I so, I I think, of course, you know, like I was saying, don’t go add it like throw it on a credit card and just hope for the best. But I don’t think that there’s like a right age. I think for a 24 year old, if they have been living at home and they’ve saved up some money and they go work in corporate America and realize, oh, this isn’t that fun like I thought it was going to be and they want to take a break. I think they should be able to, especially because I remember for me, one of the hardest things about going from college to corporate America was that there was never an ending. And for me that was like really hard for me to wrap my head around because it’s like in school you had for all these years you’re in school, you have assignments, you have deadlines, you know these things are done, whereas in corporate America, it’s like you’re never done. When you’re done with that project, there’s a hundred more that you could do. Now go help your teammate. You’re never done. And if you don’t know how to like set boundaries when you get home from work. Like you could easily be on that hamster wheel where especially working from home where you’re just working all the time. So I think you could get burnt out at 24. But if you’ve been doing a good job saving and you have the means to, go do it. And, you know, at that age, you might be fine sleeping in hostels and like, you know, riding the train and you don’t need fancy things. You could probably do it a lot more cheaply then as well. Like I don’t want to sleep on the ground at this age. But I might not have minded then, you know?
Mindy Jensen: Okay, I will amend that. Take the sabbatical that aligns with your current financial situation. Are you saving enough for retirement? We’ll cover that and more after a quick break.
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Mindy Jensen: Welcome back. I am so excited to be joined today by Amanda Wolf.
Amanda Wolf: Okay, Mindy, so now it is your turn. What is a controversial financial opinion that you want to highlight?
Mindy Jensen: So I was browsing Reddit and I found this thread called, What’s your controversial opinion in personal finance? And in that thread, the very first comment was, I do not budget. Money goes in, a fixed percentage goes to savings and I spend the rest on whatever I want. And when I read that, I was like, wow, that is so anti all of the advice that you see in the personal finance space. You need a budget. I mean, there’s literally a company called You Need A Budget. Uh, but you need to budget so you know what you’re spending on. And this is a very controversial take, I don’t budget. But also, I know a lot of personal finance, uh, bloggers and podcasters and YouTubers and, this is actually a really common thread among them. They don’t budget with a formal budget where they’re saying, I’m going to spend $700 on groceries and $300 on gas this, this month. They just prioritize putting money into savings. I’m going to save 35%. I am going to invest 50%, whatever it is. They take that off the top, and then they spend whatever’s left with little regard to where it’s going. I do think that they have some idea of where it’s going. Um, you know, just loosely. They’re not buying $10,000 purses. I actually don’t budget either. I have an amount that goes into our investments, but I’m also financially independent. So I would say that just because I don’t budget doesn’t mean that the people that I’m talking to shouldn’t budget. If you’re struggling with your expenses, if you’re struggling with your spending, if you like, why do I not have any more money? I think I’m only spending this, then I think you absolutely should budget. But I also think that there’s a time and the place for people who need a budget and people who can get by with not budgeting. Amanda, do you have a budget?
Amanda Wolf: Before I answer that, I’m I want to say that I kind of like disagree with what you’re saying because I think that you are budgeting. You’re just not like neurotically budgeting to the penny. Just like the person in this reddit thread, right? Money goes in, a fixed percentage goes to savings, hopefully and investments, and then I spend whatever else I want. So you are doing what is called paying yourself first. So you’ve already decided how much you want to save and invest and then you spend the rest. So, you are budgeting. I think that not budgeting is when you get a paycheck, you then decide what to do with it. It’s like, oh, maybe I want a Birkin bag and that’s my whole paycheck plus more. I again, I don’t know how much a Birkin bag is either. If you are like getting paid, you know, 50 grand every two weeks, you do you, boo, if that’s what you want. But like, I think that the, you are, you are budgeting. You’re just not budgeting line by line by line to the penny. So, to answer your question, I do budget, but I also do not neurotically budget in the spreadsheets line by line by line by line. But there was a time in a place in my life where I did need to do that where I had some debt and it’s like, no, I need to know where all the pennies are coming from and where they’re going right now. And then once I really had a good grasp on that, then I went to what I I like to say like it’s the no budget budget. You, you know, you save and invest what you want in advance, then if you have like a quarterly bonus or you get a chunk of money, then you know, you get to decide what to do with it at that point too, but then you spend the rest and it doesn’t matter. If you decide you want to go to Nobu one night and then you’re going to eat ramen noodles with the rest of the cash that’s in your account, again, whatever works for you. I don’t think you need to neurotically track it if if you have a good grasp. So like, do you see what I mean? Like, I think you are budgeting, Mindy. You’re just not budgeting the way that some people think of budgeting.
Mindy Jensen: Okay, I think that’s a great way to look at it. So I do budget, just not formally.
Amanda Wolf: Mindy, you’re such a budget-er. But also, I agree, like if you are financially independent, that is different. But also, I think it’s a good idea to check in, make sure lifestyle inflation, lifestyle creep hasn’t seeped into your life too much and that you’re going to like potentially run out of money one day, right? Because you got a lot more free time when you’re financially independent a lot of times.
Mindy Jensen: Speaking of running out of money, Amanda, what’s your next controversial take?
Amanda Wolf: Okay, so this was a good Reddit thread. So the one I found was around savings and it says, I believe we are all overestimating our needed savings for retirement. And I disagree with that. I think that most people are not saving nearly enough for retirement. At least, I would say, you know, the millennial group whom I interact with the most, I would say is not saving nearly enough money. We have grown up in a YOLO culture where we are not doing the budget or no budget budget, like we just talked about. Um, where we’re just saving and investing whatever is left over versus making that, um, decision upfront. So I don’t think that, I do not think that a lot, that most people have nearly enough saved for retirement.
Mindy Jensen: Okay, I read this comment and I took it a little differently. I thought it was more like the people in the financial independence community are saving too much. We’re overestimating our needed savings for retirement. Um, in, in which case, I would tend to agree because just because of the people that I interact with on a daily basis, on a weekly, monthly basis, are people in the financial independence community who decided that based on the 4% rule, my financial independence number is X. They reached that, they quit their jobs, they stopped working, they stopped generating meaningful income. A few dollars here and there, I’m not going to worry about, but they stopped generating meaningful income, they started withdrawing from their retirement accounts, and their retirement accounts continue to go up even as they continue to withdraw their funds. So, a perfect example of this is Christie and Bryce from Millennial Revolution. We had Christie on the FIRE show a few months ago, and she said that she and Bryce have been withdrawing 4% from their portfolio of X. They, any money that they generate outside of that, they’ve written a book, they’ve got a blog, any money they generate outside of that goes into a different account. So they’re just living off of the 4% rule. And they have more money now than they did when they retired 10 years ago, but they’re still pulling 4% out every single year. So I agree that the financial independence community is probably saving too much for retirement, or rather, not spending enough during the course of their life. I’m not saying look for ways to spend, but I’m saying, you know, get the, get the helicopter ride when you’re in Hawaii because it’s amazing and don’t look at the fact that it’s $1,500 per person, um, or however much it is, I don’t remember. Um, but do the things that will bring joy or add richness to your experiences while you’re in the moment. Don’t be so cheap.
Amanda Wolf: So, okay, I could, I could see where you’re coming from there. But also that is assuming that our most recent performance will continue. Right, that the S&P 500 and the stock market in general has like really been on a run. It’s been in a really good place like over the last 10 years and I I don’t know how long you’ve been tracking yours, but and I don’t know what that percent is off the top of my head. I would probably have to go Google that, but that is assuming that things continue the same. So I would say that you guys are like, count your lucky stars. You know, some of it is just luck, right? You you got in at a good time. You saved a lot of money at a really good time, but we we always hear past performance doesn’t equal future performance. And so I think that’s something that you have to also remember.
Mindy Jensen: Yes. And that is a really great point. Um, I just quickly looked up the historic stock returns. The average annual return of the S&P 500 over the last 150 years is 9.352%. Assuming dividends are reinvested. Okay. Uh, adjusted for inflation, the average return is 6.99%. So, this is taking into account all the ups and downs. The 10-year return is 12%. Um, the 30-year return is 9% again. The 50-year return is 8%. And you are absolutely right. Past performance is not indicative of future gains. But it’s still, there’s this 150-year history that says if the stock market goes down, it will recover. And I can’t guarantee that it will always recover, but I do have faith in the economy of the United States. So that and I mean I can’t predict the future. Oh, I wish I could. Do you know how much, how much money could I make? Allah Biff Tannen in back to the future two or three, if I just had that book that told me the stock market returns.
Amanda Wolf: Do you have a crystal ball, email both of us, because we’re both interested in in that.
Mindy Jensen: What is the next hot stock tip? But you’re right. Uh, we can’t predict the future, we can only go by what’s, you know, the historic information that we have. Uh, but again, I still think that we might be saving too much. Did that stop me? No. Is it stopping me when I’m talking to other people from saying, oh, $150, you’re good. Quit. Like I’m not going to say that either.
Amanda Wolf: One more thing though that we have to take into account is um if you, hopefully this other show is coming out before tell me if not, but if you remember the show that we did with the Kyle one? Yeah. If you remember the show that we did with Kyle and Scott, we were talking a lot about inflation and I think that inflation has also been on the rise over recent years and again we don’t have this, we don’t have a crystal ball. At least I don’t and it sounds like you don’t either Mindy, but what is that going to look like? I think that I would rather have more money than less money. I’ve never in my life been like, I wish I had less money. So I think that we have to also remember inflation has been a little cray-cray and is probably going to continue.
Mindy Jensen: Yes, I I can’t argue with that because you’re completely correct. Um, there is no prediction about where inflation’s going except up. The prediction is up. Inflation, it’s going to go up. Um, it might come down and then it’s going to go back up again. Uh, but there’s this concept called Coast FI where you reach the the level in investments that will allow you to have a comfortable retirement at age 65. And I think that’s a great first goal. I’m going to get to my Coast FI number, and then I’m going to take stock. If I’m going to be Coast FI and I work in a job that I hate, maybe I start looking for a new job while continuing to invest and continuing to save. And but I’m not going to just go with any job that I come across. I’m going to find a job that’s a really good fit for me. And then kind of regardless of what the income is. I’m not saying go from, you know, 150,000 to 20,000, but if you’re going from 150,000 to, you know, 130,000, but your quality of life is so much better, I would absolutely get behind that because I have worked at jobs where I hated everything about it. And I have worked at jobs where I loved everything about it. Let me tell you, the I love everything about it is way better.
Amanda Wolf: Snaps for Mindy, I completely agree. I think we started, we disagreed. Uh, I think we’ve come around. I totally agree with everything that you just said there. Um, so why don’t you tell me then, what is your next one? What is your next controversial finance take?
Mindy Jensen: Sort of different from what we were just talking about. Frugality is kind of overrated. Income matters more and 80% of your effort should be dedicated towards getting higher paying jobs. Change fields, get a new degree, move companies, cities, countries, whatever it takes, it’s way more effective once you’re at a reasonable level of frugality. I think that I spent too much time being cheap and being frugal just for the sake of putting more money away. And I didn’t take time. What is that? What is that phrase? Stop and smell the roses. I didn’t take time to stop and smell the roses. So, I agree that this with this, although again, that’s not just cart blanche to spend on everything. But your income does matter and if you’re in a low- paying job right now, how can you get more money? How can you, you know, can you take a class or get another degree and increase your income in that same field? Or can you change fields and significantly increase your income? We had two episodes, almost back to back, episode 98 with Financial Mechanic and episode 110 with a Purple Life. Both of them talked about how they uh systematically job hopped to much higher incomes. And the reason they were able to do that is because the hiring budget is much larger than the retention budget. So, if you’re in a job where they don’t appreciate you, they’re not paying you well, maybe it’s time to look at what you can do differently. But, if you are in a low-paying job, frugality is going to be a better choice than, you know, spending everything.
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Mindy Jensen: All right, let’s jump back in.
Amanda Wolf: So you are saying that you do think frugality is overrated?
Mindy Jensen: I do. Just based on all of my personal years of experience of being super frugal and really worrying and stressing over the money that I was spending when I didn’t really have to be. Like, does it matter if I have a 95% savings rate or a 90% savings rate? I mean, we were really saving so much money. It doesn’t really matter.
Amanda Wolf: Right. But then I think you also made a really good point in the beginning when you were talking about the difference between being frugal and cheap. And, will you tell me what you think those two things, how those two are different?
Mindy Jensen: Being frugal is making smarter choices with your money. Um, you know, you you compare the cost of laundry detergent and oh, this off brand is less expensive than the main brand and I know that they’re going to be similar in quality. Cheap is I’m buying the off brand even though I know I have to use twice as much or it doesn’t get my clothes as clean because it’s cheaper. You make decisions based solely on price and have nothing to do with anything else. So sorry. Uh case in point, I once bought a gallon of $15 paint and I was painting my wall and I’m like, wow, I could see all the paint behind it. So I painted a second coat and I could still see, it took five coats of paint to cover up that wall. And I had to go back and get another gallon, so that’s $30. Well, okay, the good quality paint is like 25 or $30 and it covers in one coat. So I did five times the work for and spent the same amount of money. I mean, that was just a waste. But because it was $15, I went with the the price. Like maybe frugality isn’t overrated, cheapness is overrated, but it’s difficult to change the two.
Amanda Wolf: Totally. Well, because I I was wondering what your definition is because when I think of frugality, I think of, um, a cost analysis, like you said, but also, um, doing things that like sometimes don’t make sense, like going to a different grocery store to buy your blueberries because you know they’re a dollar cheaper. to me, I’m like that is that worth your time? Yo this I guess that’s the equivalent of your five, five coats of paint. Like when I think of like the super frugal people, I think of that. Whereas I think me comparing two laundry detergents and if I know they’re the same thing and one is just the private label brand and like, I think that’s just being smart with your money. I don’t think that’s even being frugal. I think it’s just caring what you spend your money on. And then when I think of cheap, I think of cheap being like I am, I’m depriving other people or hurting other people along the way. So, you know, um, or or I guess maybe even myself. So like I think, you know, I need caffeine in the morning, but I’m going to get the crappy Foldgers. You guys don’t have a partnership with Foldgers, right? Hopefully not. Like I’m going to get the crappy Foldgers even though it doesn’t taste good and I don’t like it. To me, that’s being cheap. Or, you know, not tipping your waiter or waitress. Like that’s cheap. Um going out with your friends and having them all buy a round and then you don’t, that’s cheap. So I think like, for me that’s how I think of cheap and then frugality, I think of as like going out of your way, like I said, the blueberry example. But then I also think it’s okay to to compare prices. So, I I think frugality is overrated to a degree. I think if it deprives you of life’s experiences or your hurting other people along the way, no bueno, not for me. But I think if it helps you cut a couple of things along the way to get you closer to your goals, I’m all for it.
Mindy Jensen: That’s a great way to say it. All right, Amanda, what’s your next controversial take?
Amanda Wolf: Okay, the next one that I found is around hustle culture. So it says, hustle culture is mostly spinning your wheels and wasting your time. Focus on your primary income first. Once you level up your career, trying new things or spinning up profitable side projects, it’s infinitely easier.
Amanda Wolf: Yeah, so for that one, I don’t think hustle culture is mostly spinning your wheels or wasting your time, but I I do think there is a time and a place for it. I think that while you’re younger and you have more time and energy, you don’t have a family or kids, that is the time to go hustle, baby. Like go get a side job, um, go learn a new skill, make some extra money, because we know how compound interest works, the more time it has, the better. So I think do that in your younger years. I don’t think, I I I feel like hustle culture was like super popular with the boss babe movement and then it was like, we don’t like the boss babe movement, everybody’s tired and wants to take a nap and I think that there is a happy medium in there somewhere where I don’t think it’s just spinning your wheels. I think it’s it’s leveling up your finances. And I would much rather see somebody do that for a few years in their 20s or 30s than have to do that in their 50s or 60s because they don’t have enough. So, you know, while I do think hustle culture can get a, get a bad rap, I don’t think it’s all bad.
Mindy Jensen: I will agree to a point. I think that what this guy is saying is, uh hustle culture is mostly spinning your wheels and wasting your time. If you are working in corporate America, you have a decent income, going out and driving for Uber for, you know, $3 a ride or whatever an Uber driver gets is going to be wasting your time. You should be focusing on your income, your primary income more than that kind of side hustle. Scott is actually, Scott Trench is a perfect example of this. When he was younger and he wasn’t married, he wasn’t working at bigger pockets, he would do all of these, these hustly things. And he quickly learned that he’s not really making any money off of it. He’s putting wear and tear on his car driving for Uber or, you know, doing door dash or things like that and he’s not really increasing his savings, his net worth, his ability to invest. And he stopped that. And I think that that is, you know, if that’s what this guy is talking about, then great. But you’re a perfect example of side hustle being a really great idea. Uh Amanda has this tiny little side hustle project called The She-Wolf of Wall Street. And she is teaching people how to get their finances in order, teaching them the basics, teaching them, you know, things that they don’t know, all while happening to make income that is more than $3 a Uber ride.
Amanda Wolf: Right. Right. Definitely. Definitely. And but I’ll say like, I did drive for Lyft at some point, at one point as well. I did not know Scott did that, so that is a fun fact. Um, but like I made decent money, but of course, once you find something you’re passionate about doing, like if you hate driving a car, don’t go drive for Lyft or Uber. If you hate social media and it makes you sad every time you go on Instagram, don’t start an Instagram, right? But I think it’s like being aligned with what do you, what do you like doing? For me, you know, Lyft had a time in a place in my life. I made a few hundred bucks a week. I got to do it in my free time. Then I started She-Wolf of Wall Street and I made no money at first. I made, I didn’t make a single dollar for six months and I spent an enormous amount of time. So, it’s like, sometimes you have to put some, some time into something like that. Um, with no return and just hope it works out. So, I think that a lot of people probably in the beginning would have been like, you’re spinning your wheels with this side hustle. But if you’re passionate enough about it and you have a long-term vision, if especially for something like that, I say go for it. I think that there are, I think that so many people don’t understand, like nobody can see inside your head, right? So nobody really understands what it’s like to take a risk like that. And I think that, I think if it’s something you’re passionate about, you should go for it. If it’s just to make a few extra bucks, do whatever is easiest and you don’t hate, especially if it’s a second job.
Mindy Jensen: Amanda, I think that’s awesome. I think that’s a really great way to look at it. And, uh, how long did it take you when you were doing your She-wolf of Wall Street? How long did it take you before you clicked, before you started making money and feeling like, you know, this really has some teeth?
Amanda Wolf: Um, like I said, for, I started it in, what was it, July and I, I think I did my first, let me see, August. So I guess it was about seven months later, I did my first brand partnership for a thousand dollars. And to tell you that it was the most exciting thousand dollars I have ever made is an understatement because I don’t think a lot of people understand how much work goes behind content creation and engaging with your community and answering questions and DMs, like there’s so much work behind the scenes. So, you know, being on Instagram constantly for seven months, finally making a thousand dollars, super exciting. And that’s when I was like, oh, okay, I hadn’t actually really initially even expected or planned to make money. It was just something I was passionate about. Then I saw things growing and I realized that there was a need for financial literacy. Then I started doing some like, some coaching on the side. So I think, you know, after that first year that I, that I made money, it was probably, I don’t know, maybe like $25,000. So not enough to live on at all, obviously, not not enough to live on. Um, but it wasn’t nothing. And as your audience continues to grow, then your brand partnerships can get bigger, then you, you know, you you gain a little more legitimacy. So then things really, I would say, kind of snowballed from there. But yeah, seven months of, six and a half, seven months of daily non-stop work before I made $1,000.
Mindy Jensen: And and that’s something to to consider. The the hustle culture can feel like spinning your wheels. So do something that you’re not hating doing, I mean, otherwise you’re just creating an unpaid job.
Amanda Wolf: Exactly. Well and I think that’s also when we think of hustle culture like, are you just looking for a little side job to make money or are you looking to own your own business and become an entrepreneur one day and do your own thing. Like those are two different goals, right? So I think that that that leans it, I think that that really depends on your view of it as well. So, okay, Mindy, what is your next uh controversial finance take?
Mindy Jensen: Well, since this is Bigger Pockets Money, uh Bigger Pockets is all about owning rental real estate. This one says I prefer to rent and invest the difference between an apartment and a mortgage in a high cost of living area. In retirement, I’d expect to buy in cash a lower cost of living area where rent versus buy comparison makes more sense, or pay for rent from all the proceeds from investing. I get bizarre looks from friends when I mention my total lack of interest in owning a home. So, all of my landlords out there from Bigger Pockets who are listening to this, who is going to rent your house if everybody is buying? I think that in especially in a high cost of living area, but in any cost of living area, if you don’t want to own a home, that’s the best time to not own a home. So, I love owning a house, but there are times when I am, you know, shoveling water out of the basement and thinking to myself, man, I wish I could just call a landlord and have somebody else take care of this too. So, if you don’t want to rent, then don’t rent. Buy a house. If you don’t want to buy a house, then rent and anybody telling you that you are wrong is themselves wrong.
Amanda Wolf: I I completely agree with you 1 million%. I think that society puts a lot on us and makes us think that we want things we don’t want and to be able to break free from that mold and think independently is huge. Like, you know, the American dream is you have a house with a white picket fence and 2.4 kids or, you know, whatever that is, and it’s like you’re allowed to want different things. If the idea of maintaining a home or staying in one place, if the idea of maintaining a home or staying in one place sounds like zero out of five stars fun to you, then don’t do it. Ignore the noise. And if somebody gives you, you know, crap for that, you said people look at you crazy because you you don’t want to own a home. If people look at you like that, then just say we’re allowed to want different things. And I think that’s what it comes down to at the end of the day. But don’t get bullied into buying something, especially as expensive as a house. It’s not like a dinner.
Mindy Jensen: Exactly. Don’t get bullied into buying something like a house. If you don’t want to do it, don’t do it. I love that. All right Amanda, I think we have time for one more. What is your last controversial financial take?
Amanda Wolf: So, my last one says, having a 6 to 12 month emergency fund is totally unnecessary once you have a decent nest egg and a high credit limit. I have enough for about a month and a half. Anything bigger than that is covered by my credit limit or I can wait a couple of days and sell stock. Blomp, bloomp, bloomp. I so disagree with this. Um, I know several people even in the find the personal finance space who say I don’t have an emergency fund because I have a big enough brokerage account or you know I have enough investments. And I think that that is very short sighted. I think it’s really optimistic of you. Like, you know, we love a glass half full queen out there, but we gotta be realistic sometimes. And I think that we have to remember that sometimes things happen. Anybody remember Covid? Where you could lose your job, your stocks could tank, all in a freaking day and then cash is king again. Like I I think that is so short sighted to think that you only need one and a half months worth of cash. I think it also probably depends on a few different situations where you are in your life, if you’re financially responsible for anybody else. I don’t think everybody needs 6 to 12 months worth, but I think one and a half months is not nearly enough. What do you think, Mindy?
Mindy Jensen: I agree with you and we’ll extrapolate even more. Uh, if you have one and a half months of security or uh emergency fund, what’s going to happen at the end of the second month if you still haven’t gotten a job? I mean, COVID we we were shut down for what, five or six months? You said does anybody remember COVID? I do, but I don’t remember how long the the country was shut down. Uh but essentially the country was shut down. You weren’t working, you and you went from you have a job today to you don’t have a job tomorrow. It was in in a snap, in a heartbeat. So, even having a 6 to 12 month emergency fund during COVID would have maybe gotten you through okay. Um I think this is even more important when you are self-employed. We spoke with Farnoush Torabi who said that in terms of monthly spending, she keeps around 18 months of spending in her account. I believe she’s the either the primary breadwinner or the main breadwinner of her family and if something goes wrong, like you’re a content creator, Amanda, if the internet went out for seven months, doesn’t matter how many videos you’re making, nobody is seeing them. You’re not making any money when nobody is seeing your videos. So, I don’t think the internet’s going to go out, but I also didn’t think a pandemic was going to happen four years ago. So, the, gosh it would be awesome to have a crystal ball.
Amanda Wolf: Yes. Well, well and to your point, you know, the the amount of time like COVID, I just, I just did a quick little Google search while we were chatting and the stock market, the stock market has always recovered, we know that, but it took about four months to get back to where it was. So if you’ve been sitting on one and a half months worth of cash, you lost your job overnight, you’re going to be taking a loss on your investments. That’s why we want to only invest money that we don’t need in the short term and for the long term, because you would have had to, you would have had to dip into your investments and taken a loss if you could not wait four months. And uh the 2008 financial crisis. I graduated college in 2009 and I remember it was real hard to get a job. So I was like struggling to make any money at that point. And if you had just planned to sell your investments, I think you would have been sorely disappointed if you didn’t have a little bit of cash to tide you over, because you’re going to have to take a loss on that money.
Mindy Jensen: Let’s look at the 2008 financial crisis. If you have a month and a half of emergency fund and this guy says anything bigger than that is covered by my credit limit or can wait a couple of days for me to sell stock. So your stocks are down, you’ve got a month and a half, you can’t find another job for six months. You’re going to cash flow on your credit card for six months. I mean how much interest are you racking up, how much are you able to pay that like nothing because you just used up your your emergency fund and your stocks are way, way, way down. You don’t really want to sell. I wasn’t keeping track of our net worth prior to I think 2013, so I’m not sure what what our uh stock portfolio dropped by in 2008. Someday I’m going to do that homework and and see what we lost on paper. Um because you’re only losing it on paper until you sell. But it once you sell, that loss is now cemented. So, I just I think that 6 to 12 months is a really great start. And again, this is determinant on your, your, your job. Until 2020, I have historically said, oh if I lost my job, I’ll just go get a waitressing job. How many restaurants were open in April of 2020?
Amanda Wolf: Not a whole lot. Or they were but there weren’t any waitresses.
Mindy Jensen: Yeah. You’d be a line cook.
Amanda Wolf: Yeah.
Mindy Jensen: You could be a line cook. Waiting tables is a great way to generate some pretty instant cash if you got anybody to wait tables on, but you can’t sit in a restaurant, you don’t have any tables that you’re waiting on. And it’s just, it’s a, I think it’s shortsighted to not be cognizant of the fact that you need access to cash easily.
Amanda Wolf: Absolutely. And more than a month. Like again, I don’t think 12 months is necessary for, I mean it is necessary for some people. I don’t think it’s necessary for me. I don’t have 12 months worth. Um but I think one and a half months is like you are living risky out there because anything could happen in a flip of a switch, things that we never saw coming because again, we’re going to bring it back to that crystal ball, Mindy. None of us have a crystal ball. But my crystal ball tells me you need more than one and a half months for sure.
Mindy Jensen: Absolutely. All right, this was really fun Amanda. Thank you so much for joining me today. What is going on over at She-Wolf of Wall Street?
Amanda Wolf: What is going on over at She-wolf of Wall Street? We are, as usual, talking money. So we’re talking about how to budget, a no-budget budget, that is my my go-to like we chat about earlier. Um, how to invest in the stock market. We’re talking about how to take care of you, um, regardless of what is happening in the world around you.
Mindy Jensen: Okay. And where can people find the She-wolf of Wall Street?
Amanda Wolf: So you can find me on Instagram, She Wolf of Wall Street, and that is Wolf with an E, or shewolfwallstreet.com is my website. If you are taking a social media hiatus and I have lots of good freebies, newsletters and all that good jazz um over on my website.
Mindy Jensen: Awesome. Amanda, again, thank you for your time. It’s always great to talk to you.
Amanda Wolf: Yeah, thanks again for having me.
Mindy Jensen: All right, that wraps up this episode of The Bigger Pockets Money podcast. She, of course, is the Amanda Wolf, the She-Wolf of Wall Street and I am Mindy Jensen saying, goodbye, little fly.
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