It Doesn't Make Cents

We’ve talked a lot about what we’re “supposed” to do to be real adults and be considered successful on the right path. We've tackled everything from college to marriage to homeownership to having kids.Topics covered in this wrap-up episode* What makes an adult?* Do you really want to follow that prescribed path?* The importance of re-examining your life path and money to determine if you really want to do it.* Realities of today: working hard doesn’t guarantee you financial success.* What’s something each of us would have done differently if we felt we could?* What are we doing now that’s unconventional according to society?* What’s the biggest surprise from this season?* What’s something you want to delve into deeper in the future?Our takeaways from season 2* The importance of financial coaching to help you decide what really matters to you.* How we’ve made unconventional choices and they’ve worked out for us.* The research really helps us understand how the American Dream isn’t what it’s cracked up to be and might not even be attainable in the current stage of capitalism.Our financial resourceSarah and Miranda agree that the CFPB offers great tools for understanding money.* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

Geo-arbitrage is the practice of moving from an area with a high cost of living to a place with a lower cost of living. It’s one of the bits of advice some FIRE enthusiasts suggest for those looking to reach financial freedom faster. But does using geo-arbitrage always make sense?Topics covered in this episode on geo-arbitrage* What is geo-arbitrage?* Is moving really just about the money?* How to understand your lifestyle and how it fits into geo-arbitrage* Reasons to move * Realities of moving to a low-cost-of-living area and some of the challenges* Understanding taxes—it’s not just about income taxes* Living in a high-cost-of-living area can be the right choice to save your sanitySources used for this episode on LCOL vs. HCOL area* Our rant episode that includes info from Eric Rosenberg about choosing a HCOL area* Our episode on choosing whether to have kids* Cost of moving information from HireAHelper and Nerd Wallet* Find information on state and local taxes and property taxes from the Tax Foundation and Bankrate* CNN Money’s cost of living calculator that can help you compare salary needs in different areas* Cost of childcare by state according to World Population Review* Home insurance cost by state from Insurance.comOur financial resourceIf you want to learn more about geo-arbitrage and how to make it work, check out this article from Smart Asset.* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

We’ve talked a lot about hustle culture and the grindset bros and girl bosses who drive the narrative that time is money and you must be productive all day, every day. But is being a workaholic really the way to make all the money?In this episode, we discuss how you don’t always have to be productive and how sometimes it’s okay just to do something because you enjoy it and not because it makes you money.Topics covered in this episode on finding time to NOT be productive* The “time is money” concept and the reality behind exchanging time for money* “Passive” income and what that means* The horribleness that is feeling that you have to monetize everything you do* Why you don’t have to “maximize” your time to be successful* The fact that minimum wage workers often work harder than others and the reality that many people need side gigs to survive* Tips for breaking out of the productivity trap* Understanding “enough”* Using values-based spending to require less* How to use self-care effectively without breaking the bankSources used for this episode on sticking with your “real” job* How Toxic Productivity Can Affect Chronic Illness* Information on the negative impacts of toxic productivity from the Newport Institute* Drexel University’s report on how minimum wage isn’t enough for most people to live on* MIT’s living wage calculator* Miranda’s article on how hard you have to work earning minimum wage* Information from Civic Science about how many more people are taking on side hustles* Sarah’s Substack, Search For Enough* Why Do I Feel Guilty When I Relax?* American Heart Association article on self-care* Self Care: What It Is and What It Is NotOur financial resourceConsider checking out our friend Kara’s website Bravely Go. She talks a lot about sustainable finance, values based spending, and taking care of yourself in this late-stage capitalist hell. Also consider reading the book Laziness Does Not Exist.* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

A friend recently walked off a job that pays fairly well for this area because the work environment was toxic and he wasn’t getting the time and flexibility he needed to be with his son. In fact, an MIT Sloan Management Review survey from 2022 pegged a toxic work environment as the number one indicator of people leaving during the Great Resignation.You don’t need to stick with the traditional career path, staying with a job for two to three years—or longer. There are a number of interesting ways to change things up and get a little more from your life and work without following a prescribed path.Topics covered in this episode on nontraditional work arrangements* How exhausting the corporate ladder can be* General feelings about burnout* The reality that you could lose your job at any time—it’s not more stable than freelancing or being an entrepreneur* Life also contributes to burnout* Building an FU fund and concerns about having to do what you must in order to survive* Alternatives to sticking with a traditional job* Sabattical or mini-retirement* Part-time work* Barista FIRE* Job hopping and how it can lead to better jobs and better pay* The realities that you need to plan ahead, especially for healthcare, if you want to take an unconventional approach to work* Acknowledgement that it requires resources to take advantages of these alternativesSources used for this episode on sticking with your “real” job* The SHRM’s survey results on burnout* Whistleblower story referenced by Sarah* Jillian Johnsrud talks with Forbes about mini-retirements* Read about choosing a part-time job to help with Slow Fi* Money Flamingo explains Barista FIRE* Using job hopping to increase your salary* Experian offers insight into state requirements for unemployment for seasonal and part-time workOur financial resourceThis article on job hopping from Indeed offers a look at the pros and cons of job hopping, plus provides helpful information on deciding when to leave a job and gives concrete tips for successful job hopping.Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)SubscribedOr, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

We hear it all the time from hustle bros and entrepreneurial gurus: the only way to live your best life is to quit the 9-to-5 ASAP and build your own business empire. Otherwise, you’ll die sad and alone and probably poor as well.It’s easy to disparage the “traditional” job. We talk about escaping the rat race and finding financial freedom. In this episode, we talk about how even though the regular career path can be tedious at times and even lead to burnout, you don’t HAVE to quit your 9-to-5 to have a good life and build wealth.Topics covered in this episode on keeping your 9-to-5* We talk about hustle culture and how it can be toxic* There are risks that come with quitting a 9-to-5 and you need to think about them* Consider the fact that starting a business can take a lot more time than you think* Are you prepared for the stress it might put on your family?* Not everyone wants to be an entrepreneur, and that’s just fine* We talk about how you can build wealth while working a 9-to-5* Sometimes even having a business and doing entrepreneurship looks suspiciously like a “real” job* Consider adding a side hustle to your 9-to-5 if it fits your goals and objectives* If you decide to transition away from a 9-to-5, be intentional about it and plan ahead* Acknowledgement that there are issues with a W2 job and that you could easily lose that as quickly as you lose income from a freelance business or entrepreneurial ventureSources used for this episode on sticking with your “real” job* Small business failure rate as reported by Lending Tree* Collected data on how much small business owners work* As promised, the essay from Judy Brady (Syfers): I Want a Wife* Use the Investor.gov calculator to estimate your potential earnings through investing* Miranda’s post on HSAs on her website, as well as something she wrote for Money Talks News* Article on the value of employee benefits from Nerdwallet* Listen to this great episode from Buzzsprout with Sarah about her transitions from teacher to freelancer and what that decision-making process looked likeOur financial resourceHustle culture is steeped in toxic productivity. Before you decide to use it as a way to escape your current woes, take a step back. Our friend Tiffany Grant has a great look at hustle culture, its pros and cons and how it can lead to burnout.  Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)SubscribedOr, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

There’s been much hand-wringing over birthrates in recent years. And, depending on where you grew up, you might even be told you’re selfish for not wanting to have children. Or mutliple chilren. In this episode, we’re going to look at the financial realities of having children and explore our society’s obsession with popping out babies—even if we don’t prioritize actually caring for them once they’re in the world. Topics covered in this episode on choosing whether to have children* Having kids is expensive. From birth to age 18 and beyond, you’ll spend hundreds of thousands of dollars on having a kid.* Millennials and Gen Z aren’t sure that they can afford to have children.* Our society, despite giving lip service to the concept of having children, doesn’t actually support them. There aren’t robust community and societal supports.* Families know they’re largely on their own when it comes to the costs of raising kids, and we’re in the top three OECD countries for child poverty rates.* Investing in children offers high economic ROI, but in the U.S., we don’t do it.* We talk about the dismal lack of support for children and families in our states of Idaho and Florida.* We tackle the fact that’s ok to just not want kids—even if you can afford them.* Gen Z’s reasons for not wanting kids include climate collapse, physical danger to pregnant women, lifestyle, and the labor involved.* It’s not selfish to avoid having kids. In fact, if you’re not ready or don’t want them, it’s the unselfish choice to not bring kids into the world.* You can also change your mind. Sarah talks about how she changed her mind about not wanting kids and now has a son.* If you like kids but don’t want them yourself, we talk about ways to care for others’ children.* Finally, it’s fine just not to be interested. We talk about the Western obsession with children and its roots in white supremacy.Sources used for this episode on buy vs. rent* The Institute for Family Studies uses USDA data to calculate that it costs more than $200,000 to raise a child to 18. The cost of the birth itself ranges from almost $11,000 to more than $20,000, and your out-of-pocket cost depends on your insurance.* Millennials say having children is too expensive, and Gen Z also includes cost as one reason they’re reluctant. They also cite impending climate collapse, labor, and other reasons to avoid having children. Pew Research information on a declining desire to have children.* Data from the Center on Budget and Policy Priorities on how direct support to families reduces child poverty. The National Bureau of Economic Research shares the economic ROI of investing in programs that benefit children.* The Journal of Economic Perspectives examines our safety net and finds that the U.S. ranks third among developed (OECD) nations for child poverty. * Pew Research and Justworks share information about the U.S. and parental leave (including maternal). * Information from the World Economic Forum and the White House on affordable and accessible child care.* Our stats for Idaho:* Living wage from MIT* Hunger in Idaho from the Idaho Foodbank* Idaho’s ALICE report* Our stats for Florida:* Living wage from MIT* Hunger stats from Second Harvest* Census data for Florida* Florida’s ALICE report* Maternal mortality on the rise, reports from Yale Medicine and The Commonwealth Fund* Pregnant women in Idaho are encouraged to get extra coverage to be life flighted out, as well as a study showing the loss of OB-GYNs* Report on maternity wards closing* Johns Hopkins reports on how the Texas abortion ban has INCREASED infant mortality* Items from Politico, NPR, and the American Sociological Review about natalism and white supremacyOur financial resourceIf you need help finding financial help as you raise children, check out ChildCare.gov, which offers information on assistance programs that might be available if you qualify. Also check out our friend Brynne’s site, Femme Frugality, which includes a lot of resources for parents of special needs children.Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)SubscribedOr, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

It Doesn't Make Cents is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.We’re often told that owning a home is the ultimate in adulting and achieving the American Dream. You hear a lot about “throwing money away” as a renter. But are you really? And can you still build wealth even as a renter?In this episode, we’re going beyond the numbers, and which is the “smarter” financial choice. We’re looking at the rent vs. buy debate in terms of lifestyle and your individual money goals.Topics covered in this episode on rent vs. buy* Do expenses truly stay the same when you buy a home? Or do those costs go up, similar to renting?* What’s “throwing money away,” really?* When does it make more sense to rent vs. buy?* How do you decide if it’s time to buy a house?* Building community and putting down roots as a renter.* Buy vs. rent isn’t just about the numbers.* Using your home as a store of value.* Exploring the options when you decide to move out of a home: sell or rent it to someone else.* What you need to know about the upfront costs of renting and buying.Sources used for this episode on buy vs. rent* An interesting article on how more people see homeownership as a lifestyle choice rather than a financial necessity.* We mention Alyssa Davies of Mixed Up Money.* Miranda’s numbers from the episode when comparing her rent vs. buy experience:* I use the quick and dirty rule of 3% a year to average out inflation. Rent was stable for three years, then went up 4% last year. Rent next year will go up 2%, so I just factor that in. When I had a home, my property taxes increased between 2% and 5% yearly.* Right now, in Idaho, with our homeowner's exemption capped, some people see property tax increases that amount to my increase in rent—or more. For example, in the last five years, my rent has gone up by $350. Property taxes on the median home value in my area have increased by about $357. So, my increases are in line with what someone paying property taxes in my area is seeing. * Check out our Season 1 episode on deciding to pay off your mortgage early.* Miranda’s first-person story from Newsweek about choosing to rent after having owned a home.* Information about CCDs, HOAs, CC&Rs, and other important terms that you might need to know when you buy.* Understanding Section 8 vouchers.* Some people are being priced out of homebuying.* Sarah has an article on Zillow about misconceptions related to homebuying.* Jannese Torres tells her story to CNBC about buying in Puerto Rico, even though she rents in Florida.* How to plan to save for renting.* Home Loan Toolkit from the CFPB.* An in-depth article from HomeLight on deciding to sell your home or rent it out.* Government-backed housing and home loan help.Our financial resourceInterested in learning how to build a secure financial future as a renter? The New York Times has an article featuring a variety of successful renters (including Miranda). This is a helpful resource as you decide what works best for you.Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)SubscribedOr, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

Marriage is considered an essential part of life. Money is part of that. Recently, society has lamented the cost of being single. But sometimes the costs aren’t financial. And there’s a move—especially among those who identify as women—to eschew marriage.* The marriage age has risen over time, especially since Miranda got married.* CNBC gathers information about how money issues can stress a marriage and lead to divorce.* We discuss the expense of marriage, and you can find information about that from the Wall Street Journal and Fidelity.* Here’s some information about the tax benefits of marriage.* What you need to know about married filing separately.* Disability is a different issue. We discuss divorce to qualify for disability benefits and whether you could lose SSI benefits if you get married.* Research on women and heterosexual marriages/relationships:* Unmarried, childless women are happiest people of all, expert says* Pew Research Center* Gender gaps in sharing household responsibilities* More Pew Research Center on women doing more around the house* Married women with children spend more time on housework than single moms* Is Marriage a Bad Deal for Women?* Women and divorce:* More couples are divorcing* Median age at first divorce* Why women file for divorce more than men* Miranda wrote about how women no longer have to settle for someone who doesn’t contribute to housework or support in non-monetary ways.* Sarah shares about ending one relationship and finding her husband when more financially stable.* Financial aspects of divorce:* Debt and divorce* Cost of divorce* How Does Divorce Impact My Business?* Our friend Kate Dore’s article about hiding assets in crypto* Prenuptial agreements:* Savvy Ladies* Kiplinger* Britannica Money* Erin Lowry on Miss Be Helpful* We have resources on managing household finances if you aren’t married and dealing with family issues when unmarried.* Being single is fine:* Miranda writes about enjoying being single* TIME on single people being happy* University of California on unwedded blissOur financial resourceCheck out a guide to managing divorce and your finances from Britannica Money. It breaks down what you need to think about as you’re financially decoupling.Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)SubscribedOr, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

As Gen Xers and millennials, we’re used to hearing that college is the way to success in jobs and life. But is a “traditional” four-year degree the way forward? We tackle the idea of college and whether it makes sense for you. Topics covered in this episode on higher education * Cost of college vs. lifetime earnings* Trade school vs. “traditional” four-year degree* Careers that pay more* How to decide which path to take for you* Should you take a gap year first?Sources used for this episode* We mention Steve Jobs, who received help from his family who made sacrifices to move across the country to give him a leg up, and Jeff Bezos, who received an investment from his parents.* We touch on the book The Millionaire Next Door.* Student loan debt statistics and how people are impacted.* Our Season 1 student loan debt episode. * NPR and the New York Times have stories on the impact of debt on those who don’t finish college.* We mention the SAVE plan, but it’s important to note that it has been put on hold since recording this episode.* Georgetown University’s study on how much degrees are “worth.”* Forbes offers insight on why Ivy Leagues are considered valuable. Additionally, the NIH has an article from the Journal of Graduate Medicine focused on networking.* Indeed offers a list of the highest-paying trade jobs.* We mention tool and die makers, welders, and quality assurance.* Check out this information from the New York Fed on the most profitable bachelor’s degree.* We cite information on taking a gap year from the NOLS Blog, Wall Street Journal, and Gap Year Association.* Some companies support gap years, and some schools provide resources for taking a gap year.Our financial resourceStruggling to figure out what to do next with your life? Consider using the My Next Move Interest Profiler. We love how it asks questions, helps you figure out potential careers, and then goes into how much preparation you need for them.Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)Or, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

The whole point of It Doesn’t Make Cents is to look at different ways to do money. There are so many different strategies you can use to manage your finances. So we asked some friends what they do with their money—and you might be surprised at how it’s a little different. Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)Or, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

This season, we’ve looked at debt from a different perspective. So often, we believe that debt = bad. Even worse, our society often views it as a moral failing. The reality is that debt is sometimes necessary—and it can even be a tool to help you better your finances. Listen to our season wrap up with more perspectives on why debt may be a necessity.Some of the things we bring up include:* How the rich use debt to borrow and spend using stocks and other assets as collateral and to avoid selling anything and reducing taxable events* Our propensity to consider what rich people as superior while doing the same thing as a poor is considered inferior or “trashy”* How the financial order of operations might work for some people, but can be overly prescriptive and doesn’t always work if you run into a problem* Much of the “regular” personal finance advice works best if nothing goes wrong for 20 years* Concerns that prescriptive finance a la Dave Ramsey is making its way into some schools* There’s a lot of “financial porn” out there that glorifies strategies that are inaccessible to most people, even though those they feature are outliersFinancial strategies that include debtWe featured a few people who shared their stories of how debt is necessary in some cases, including some of their own stories of using debt as a financial tool:* Brynne Conroy* Tiffany Grant* Dustin Heiner* Deacon HayesAnd don’t forget to check out our recommended resource from Dana Miranda of Healthy Rich, Dealing with debt without shame.Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)Or, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

We all have social debts that we’re supposed to pay. Whether it’s spending money to go to your BFF’s bachelorette or buying Girl Scout cookies from your co-worker's daughter, we’re all expected to conform to small social niceties to get along in society. Sign that sympathy card for the PTA president and chip in for flowers.Sometimes, social debt is less about money and more about time. We’re supposed to reciprocate favors and make time for people in our lives. If you committed to it, you could attend a family event every single week of the year. That might not cost a lot of money, but you might get burned out fast.Our information on social debt* This 30-year-old Washington Post article on social debt explores the costs that come with discharging these debts.* Another view of social debt and its emotional and mental impact comes from a LinkedIn newsletter.* The Charlotte Observer offers information on the cost of being a bridesmaid.* WKYC has a story on Girl Scout cookies and costs.* Ever Loved offers some information on funeral flowers.* There are a couple of articles on workplace happy hours from Slate, Business Insider, and SHRM.* Learn more about mutual aid from the University of Georgia and Nonprofit Quarterly. Our friend Vee Weir does regular mutual aid drives.* How we sometimes use social debts as a way to keep score in relationships. The National Library of Medicine has some research on how this works and its impacts.* Check out the Instagram account Sarah referenced, Overheard New York.Check out our financial resources and guest insights* Wandering Aimfully has a great post on figuring out your non-negotiables.* Clever Girl Finance offers amazing advice on setting healthy financial boundaries.* Lingjie, who shared information about social debt, is part of Worst Asian Podcast.* Check out Rob Phelan at The Simple Startup.Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)Or, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

This episode is about how sometimes you really need debt to move forward in your life. And even if you don’t need it, sometimes it can be a big help and well worth it to use debt as a tool to level up.Where we got examples of costs:* The average cost to move across the country when you have two to three bedrooms is between $3,000 and $9,500.* On average, divorce lawyers cost $270 per hour, with a total average cost of $11,300. * The average cost of immigrating to the U.S. is $1,200 to $8,000, depending on a variety of factors.* The average cost of in-state tuition at a four-year public college is $9,678 a year.* Depending on the type of business, you could spend anywhere from almost nothing to thousands of dollars. According to a Shopify survey, it’s common for business owners to spend about $40,000 in their first year.* The referenced “Boots” theory of socio-economic unfairness from Men at Arms by Terry Pratchett.Resources for getting help* National Domestic Violence Hotline* National Resource Center on Domestic Violence* Local food banks from Feeding America* National Immigrant Justice Center* SBA’s 7(a) loan program* Unemployment benefits* DOJ list of credit counseling agencies* CFPB information on credit counselingThanks to our guests who shared their stories* Adrienne Taylor from Tailored Wealth Saver* Ashley Patrick from Budgets Made Easy* Eric Brotman from BFG Financial AdvisorsWe recommend checking out the Borrowing Basics game and resource page from the FDIC.Consider supporting us by upgrading to a paid subscription on itdoesntmakecents.com (so we can continue to keep doing this work).Or, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

In the last 20 years, tuition costs have soared in the U.S. In-state tuition at public universities has increased about 158 percent during that time. Long gone are the days that our boomer parents reminisce about, you know, when you could work for a summer and save up enough money to cover tuition for a full year of school.Many of us, especially Gen Xers like me and millennials were told to go to school and get a good job. Even with student loans, our parents told us it was worth it. Surely we'd get good jobs and be able to pay off the student loans with ease. So let's take a look at student loans. Let's talk about the realities of where we are right now and how it's okay. If you don't plan to pay off your student loans early or even at all.Consider supporting us by upgrading to a paid subscription on itdoesntmakecents.com (so we can continue to keep doing this work)Or, for a one-off donation, buy us a refreshing beverage on Ko-fi. Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

This episode dives into personal loans and how they can be helpful for managing cash flow and how sometimes debt is a lifeline for some folks who need a leg up.We cited information about debt, specifically student loans. Here’s where we got it:* Lending Tree personal loan statistics* Credit card trends before and after the pandemic (Government Accountability Office)* Bankrate personal loan rates* Bankrate credit card rates* Reuters reports credit card debt topping $1 trillion* Clever survey results: people using credit cards for necessities* New York Fed household debtConsider supporting us by upgrading to a paid subscription on itdoesntmakecents.com (so we can continue to keep doing this work)Or, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

One of the biggest rules in personal finance is to buy a used car with cash. You hear stories about how your car loses value as soon as you drive it off the lot. That used car has already seen its biggest depreciation and borrowing just makes it all worse.But what if it makes sense to buy a new car with debt, as long as you acknowledge what you’re doing and you have other plans for your money?Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)Miranda’s strategy for buying a carWe talk about how Miranda manages her vehicle purchases:* Buy a car with low-cost financing (60-month loan)* In 2001, 1.9% APR* In 2021, 2.49% APR* Keep the money she would have used to buy a depreciating asset in the stock market, where it earns more than what she’s paying on the debt* After 8 to 10 years, use the car as a trade-in for the “down payment” and finance the next car at a low rateIt’s important to note that this approach works best if you can get a good rate. However, in some cases, you need the car for work and might need to finance a used car at a higher rate just to get access to the transportation you need.Sarah has also used a loan to get a car. It was more convenient and easier than getting a cashier’s check from the bank. Her approach was to pay off the loan within a few months. But she maintained flexibility to get the car and keep the loan if the money ended up being needed for something else.Lifestyle factorsWe talk about lifestyle factors that might influence how you buy your cars. * If you like getting cars more frequently, leasing might not be a bad option. * If you expect to drive the car for a short period of time but want to sell it, buying it with cash can make sense.* Think about how you use your cars: work, travel, family, etc., and make a plan that fits with your lifestyle.* Carefully evaluate whether financing a car works (or is required) in your situation. Financial resourcesWe encourage people to check out the following resources before getting a vehicle:* CFPB page on auto loans: https://www.consumerfinance.gov/consumer-tools/auto-loans/* CFPB page on buying vs. leasing: https://www.consumerfinance.gov/ask-cfpb/what-should-i-know-about-leasing-versus-buying-a-car-en-815/Big thank you to Ashley Barnett for sharing her story! Check out her LinkedIn profile if you’re looking for a top-notch content director or check out her Hit Publish course for writing better content.Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)Or, for a one-off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

There's a whole "order" you're supposed to be following when working toward financial freedom. In fact, some gurus -cough- Dave Ramsey -cough- will tell you that you need to pay off ALL your non-home debt before you start investing. But should you really tackle your lower-rate student loans or other debt before you let compounding returns work in your favor?We're not so sure. Let's take a look at investing while you have debt and how to decide what to tackle first—or even if you need to choose.There’s a lot of talk about how you should go about paying down debt and putting off investing for a minute. We look at:* https://www.cnbc.com/2018/10/03/suze-orman-pay-off-debt-asap-and-not-because-it-costs-you-money.html* https://www.bankrate.com/personal-finance/debt/good-debt-vs-bad-debt/* https://www.ramseysolutions.com/debt/pay-off-debt-before-retirementA quick and dirty look at Miranda’s situationOne of the big things we talk about in the show is the fact that Miranda just went ahead and invested instead of paying down her low-rate student loan debt. Here are some of the deets about the student loan payments:* $53,400 (undergraduate + graduate), consolidation in 2005 for payoff in 2030* $223.79 monthly payment* 1.9% interest rateUsing the Student Loan Planner payoff calculator, Miranda could have saved $3,941 by making an extra payment of $100 per month and being done in a little less than eight years. Instead, by putting that extra $100 per month in the S&P 500 via an index product and reinvesting the dividends, the result is a final value of $66,498.65, not accounting for capital gains taxes, by investing from December 2005 to December 2023. Even subtracting the $4,000 in savings in interest, that’s still coming out ahead by more than $62,000. Miranda still has some years to go before those loans are paid off, so the value is still there. (Calculator used is from DQYDJ.)If Miranda had started in December 2013, after paying off student loans early, the value of her portfolio with only that $100 extra payment, would have been $22,360. Miranda’s total interest cost will be $13,724 at the end of 2030. With a total overall value of nearly $53,000 after interest costs are subtracted. But only with gains through December 2023. This doesn’t account for gains through the end of December 2030. Let’s start with $53,000, assume only 7% annualized returns, and $100 a month. According to the Investor.gov calculator, the portfolio value would be close to $95,500.As it is, Miranda will be Coast FI before the student loans are paid off, and she has invested much more than that extra $100 a month over time. Consider running the numbers on your own, taking into account interest rates and potential returns before deciding to put ALL of your extra money into debt paydown before investing.Why you might want to invest, even with debtInvesting can help us look forward to the future. We reference the idea of “prospection” and how it can help your mental health. * https://greatergood.berkeley.edu/article/item/how_thinking_about_the_future_makes_life_more_meaningful* https://www.amazon.com/Tomorrowmind-Resilience-Creativity-Connection_Now-Uncertain/dp/1982159766We also reference a study that indicates 48% of credit card users have to use them for living expenses (https://listwithclever.com/research/average-american-credit-card-debt-2023/), so investing a little bit now can give you something to look forward to while slogging through daily life. Even if you’re just putting a bit of your paycheck into a 401(k).We reference wages, and how they aren’t keeping up with anything resembling a living wage.* MIT’s living wage calculator: $25.02 per hour, average in the U.S.* Statista: Average hourly wage for all U.S. workers is $11.05* DOL: Federal minimum wage is $7.25It’s practically impossible to prepare for the future without some type of investing, even if you have debt.How to decide between investing vs. paying off debt more aggressively* Consider potential annualized returns: Rule of thumb is about 9%, based on S&P 500 returns over the last 25 years (see: https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/the-strategy-and-corporate-finance-blog/markets-will-be-markets-an-analysis-of-long-term-returns-from-the-s-and-p-500)* Look at your APR: Debt below 6% might be worth slowly paying down while you invest. Maybe start with debt above 15% APR for aggressive paydown* Create an allocation: Maybe put 90%-95% of your available income toward debt reduction when tackling high-rate debt while still investing 5%-10%. Then, as you get rid of higher-rate debt, shift the allocation, so you’re putting more toward investing with lower-rate debt remaining.This episode’s financial resource: https://www.britannica.com/money/start-investing-student-loan-debtConsider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)Or, for a one off donation, buy us a refreshing beverage on Ko-fi.And make sure you check out our websites as well:* Sarah Li-Cain* Miranda Marquit Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

Paying off debt early is considered a “guaranteed return.” But what if you can get better returns elsewhere? Could you use the “extra” you’d put toward paying down your mortgage for other financial goals, like retirement, investing, saving for college, going on vacation, or reaching some other goal?While paying off your mortgage early is a noble goal, it’s not the only way. In this episode, we tackle some of the realities—including the reality that not everyone lives in an area where home prices appreciate dramatically over time.For stats and resources mentioned in this episode, head to itdoesntmakecents.comConsider supporting us by upgrading to a paid subscription on Substack (so we can continue to keep doing this work)Or, for a one off donation, buy us a refreshing beverage on Ko-fi. Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe

Introducing It Doesn’t Make Cents, a podcast by Sarah Li Cain, AFC© and Miranda Marquit, MBA, launching January 16th.Are you REALLY doing money wrong? Good news: you aren’t doomed to a lifetime of financial failure because you aren’t saving to buy a house, buy a TV with a credit card, or have student loan debt. Get away from all the “supposed-tos” and stop beating yourself up over perceived mistakes. We’re here to debunk prescriptive money rules and inject a little nuance into your financial life. This season we’re talking about the common misconception that debt is ALWAYS bad in season one. You don’t have to pay that mortgage off early. Go ahead and finance that car. We’ll also tackle the controversial aspects of debt. How much social debt are you carrying around? Are you really immoral if you have your student loan debt forgiven? The best way to support It Doesn't Make Cents is to share our work. Get full access to It Doesn't Make Cents at itdoesntmakecents.substack.com/subscribe