To start the series, I thought it would be best to compare a “smart” contract with a “traditional” contract that most people are familiar with a home loan. In this blog, we’ll explore the similarities and differences between taking out a home loan using a smart contract vs a traditional contract. We’ll evaluate these two types of contracts by comparing four aspects: the parties involved, the validity of the contract, the terms and consequences, as well as their enforcement in court. By the end, you’ll be able to decide whether using a smart contract for your next home loan is a good idea.
Throughout the series, we’ll delve deeper into what a “smart” contract is. But for now, let’s define a “traditional” contract as follows:
It’s an agreement.
It’s written using English words.
It’s written on a physical piece of paper.
It’s printed out and signed with a pen by all parties involved.
And let’s define a “smart” contract as follows:
It’s an agreement.
It’s written in a programming language.
It’s written on a computer.
It’s deployed to a blockchain.
It’s signed with a private key by all parties involved.
The world has moved towards signing “traditional” contracts digitally to varying degrees. At the simple end of the spectrum, you can scan your pen-and-paper signature onto a PDF document. At the more complex end, there is software that can digitally sign a document in a way that ensures its authenticity and integrity. To avoid confusion between the latter and how we sign things in smart contracts, we’ll stick to the traditional pen-and-paper model of “traditional” contract signing.
Now, let’s set the scene. Imagine you’re considering buying your first home and need financial assistance. You approach a bank to borrow money for purchasing the house. The contract we’re going to discuss is the loan agreement between you and the bank.
There are five main parties involved in this contract in the “traditional” setting:
First, there is the lawyer from the bank who wrote the contract. Although typically a team of lawyers is involved, we’ll simplify it to one person for clarity.
Second, there’s you, the borrower, who wants to buy the house.
Third, there’s the bank as an institution providing you with the loan that has reserved funds (liquidity) gathered from other depositors.
Fourth, there is a bank representative facilitating the transaction.
Lastly, there are one or more witnesses who also need to sign the contract.
In a traditional contract, these parties are “real” people and are recognized by the law as such — even the banking institution. Each party reads the contract and signals its agreement by signing on a piece of paper, usually on a dotted line. Sometimes, initials are required on each page to confirm that they’ve read and agreed to the terms on that page. Certain rules, rituals, and checkpoints are in place to protect all parties involved when entering into a contract. Although I’m not a lawyer and don’t know all the details behind these checks and balances, our legal system has established them over many years to ensure fairness and protect the parties involved.
Here are some key points about this process:
All parties involved in the transaction have access to the entire contract before signing.
The bank will collateralize the loan using the house being bought to ensure that they can recoup their funds if they can’t pay back the loan anymore.
Although borrowers may not understand all the legal terminology, there is trust in the banking institution since other people have taken out home loans with that bank before. The borrower trusts that the contract they are signing is in order. For the average borrower who primarily cares about the interest rate, total monthly repayments, and loan term, the bank provides a service by taking care of the legal aspects.
The bank, including the lawyers and representatives, receives compensation from the borrower in fees for facilitating the transaction and ensuring all the necessary rules and rituals are followed.
The bank receives an incentive for providing their cash reserves (liquidity) to the borrower in the form of interest paid by the borrower which they pass on (taking a cut) to their depositors who initially invested the capital into the bank.
The witnesses usually do not receive payment for adding their signatures as an acknowledgment of the transaction. You might buy your colleague a beer for signing as a witness if you’re nice enough.
All parties receive a signed copy of the contract as proof that the transaction has taken place.
The language in the contract is usually airtight, but with a good lawyer, you can find so-called loopholes that could let in some air if you try hard enough.
Now let’s paint the picture of the parties and how this plays out when we start to use a smart contract for this loan agreement instead.
Instead of the lawyer from the bank who writes the contract, there is now a developer, or team of developers, that codes up the smart contract.
There’s still you, the borrower, who wants to buy the house.
Instead of using the bank as an institution that provides liquidity, we will replace the institution and its services with a smart contract, in other words, a set of instructions. To make it clearer going forward, we’ll refer to this smart contract as the “smart” bank. Again, we’ll allow depositors to “invest” funds and get enumerated when you borrow their invested funds by the interest you pay to them. Further, the developers of the “banking smart contract” will be enumerated for their effort to maintain, update, and improve the smart bank by fees being paid when interacting with the smart bank.
We are able to do away with the bank representative facilitating the transaction as you as the borrower can now directly speak to the smart bank’s reserves and choose the interest rate, currency, loan term, and repayment amounts that suit your needs.
As for the witnesses who also need to sign the contract, no need for that when we are on the blockchain as all the miners in the network will verify the transaction took place. So instead of having 2 or 3 witnesses acknowledging that the transaction took place, we now have thousands.
Below, we describe the key points mentioned above when a smart bank is used instead:
Not just the parties involved have access to the entire contract before signing, anyone who wishes can read it. In this case, the contract is written in code and not English, but for the average Joe who doesn’t understand the legal jargon in English anyway, this makes no difference.
The smart contract won’t be able to collateralize your home, and this is probably the biggest difference between taking out a loan with the bank versus taking it out with a smart contract. For a smart contract, you have to provide your collateral upfront to ensure that the smart bank can pay their depositors’ interest as well as recoup the total amount they are going to lend you if you don’t pay back the principal or the interest. This might feel counterintuitive. Why would you need a loan for $100,000 if you already have more than $100,000 that you need to supply as collateral? Usually, you need to supply 1.5 to 3 times the amount you want to borrow. Well, there are two reasons. First, you might own something other than dollars. If you own Ethereum, Bitcoin, or even an expensive NFT, you might not want to sell those assets or the person you’re buying the house from doesn’t want an NFT of an ape as payment for their house, but rather cold hard cash. In these cases, you’d like to borrow against these assets to get something more liquid and acceptable, such as dollars, to buy your house. Another reason the crypto-rich like to take out loans against their crypto assets is due to capital gains tax. If you bought 1 BTC back in 2014, there is a hefty capital gains tax waiting for you if you convert that 1 BTC into dollars. However, if you use that as collateral for a loan and take out USD, no capital gains are realized, and you can use your capital more efficiently rather than just HODLing.
I mentioned borrowers may not understand all the legal or coding terminology. However, similar to the traditional setup, there is trust in successful smart banks since other people have taken out home loans with that smart bank before. The borrower again trusts that the contract they are signing is in order. For the average borrower who primarily cares about the interest rate, total monthly repayments, and loan term, the smart bank team provides a service by taking care of the coding aspects.
The smart bank team also receives compensation from the borrower in fees for ensuring the smart contract is coded with best practices and that all the “loopholes” have been addressed.
Depositors directly receive an incentive for providing their cash reserves (liquidity) to the borrower in the form of interest paid by the borrower.
The witnesses, in this case, do require some form of payment in the form of GAS. We’ll do a deep dive into what GAS is in an upcoming blog, but in essence, this is money you pay to miners to confirm that your transaction with the smart bank is valid.
An improvement on the traditional setup is that not just the parties involved in the contract receive a signed copy of the contract as proof that the transaction has taken place. Instead, anyone can view what the loan terms agreed to be. If the “username” of the parties involved isn’t associated with the person’s identity, then everyone can see that the transaction took place, but no one knows who the particular person in real life is. This is referred to as the trustless aspect that blockchains offer. Person A can loan Person B funds without the need for either party to verify who the other is or whether they can trust each other for this particular transaction.
Similarly, as in English, with a good lawyer, you can find loopholes. Here with a good hacker, you can find loopholes, but the more tried and tested the contract, the fewer loopholes there are. And for some of the projects like AAVE, which hold upwards of $5 billion at the time of writing, if no hackers have been able to steal the funds with that much incentive on the table, chances are the code is written airtight.
Now, why is this loan contract considered valid? A contract is valid when both parties willingly agree to its terms. In the traditional case, you approach the bank and express your desire to borrow money for a home. The bank evaluates your financial situation, checks your creditworthiness, and if they find you eligible, they offer you a loan with specific terms and conditions using the house you plan to buy as collateral. If you willingly agree to those terms and sign the loan agreement with your signature using a pen, then the contract is considered valid by our age-old legal system which society has come to an agreement (consensus) that these are the rules and laws and if you stray from them, we have judges and courts to resolve any disputes.
As with the traditional system, in smart contract land, your signature represents your consent and agreement on a particular agreement. However, there is no pen, nor your scribble to prove it’s you who signed. Instead, blockchains use what is referred to as public/private key cryptography to verify your signature. This is why blockchains, Bitcoin, Ethereum, and NFTs are often referred to as “crypto”. Why should you and the rest of the world trust the crazy moon math that is cryptography? Well, because there are peer-reviewed mathematical proofs that guarantee that certain axioms will always hold if used in the prescribed way. This is one up on the traditional setting where a person’s signature scribble can easily be replicated or copied. There is one rule though, you have to keep your PRIVATE keys PRIVATE! You’d think this would be obvious from the name, but this is really where the trust comes in that a user is who they say they are, or that you agreed to the terms and conditions. Only a user with a particular private key can sign an agreement on the blockchain in a particular way, and it’s easy (using cryptography) to verify who the signer of a particular message was, without revealing their private key.
Therefore, it’s the magic moon math that is cryptography that gives blockchain transactions and agreements their validity. But as with the traditional system where if somebody fakes your signature scribble they can impersonate you, if somebody takes hold of your private keys, they can also impersonate you and sign agreements on your behalf. There is a saying, “Not your keys, not your crypto.”
The loan agreement includes important details such as the loan amount, interest rate, repayment period, and any additional fees or charges. It also specifies your responsibilities as the borrower, such as making monthly mortgage payments on time and maintaining homeowner’s insurance. The consequences of breaking the contract typically involve financial penalties, damage to your credit, and the bank taking legal action to recover their money by foreclosing on the property. This means they would take possession of the house.
For the smart bank, there is no need for any dirty legal intervention or damage to your credit score. If you default, the smart bank seizes the collateral you put forth. This is the case when it comes to smart contracts, code is law. If the rules and instructions in the smart contract say that all funds will be seized if payment is not made by a specific date, it’s seized. No takes-backsies. NO appealing in the court, no renegotiating the payment terms.
This might seem a bit harsh at first, but this ensures that all actors are held to the same standard in front of the law — something our traditional system doesn’t do very well.
If either party fails to fulfill the obligations outlined in the loan contract, the other party can take legal action.
In the traditional setting, if you default on your mortgage payments, the bank can initiate foreclosure proceedings through the court system to reclaim the property and recover the money. This involves a legal process that can be lengthy and costly for both parties. The court will examine the terms of the contract, review the evidence presented, and make a decision based on the applicable laws and regulations.
On the other hand, in a smart contract scenario, the enforcement is done automatically through the code of the contract itself. If you default on your payments, the smart contract will execute the predefined consequences without the need for court involvement. The terms and conditions are self-executing, and there is no need for intermediaries or third parties to enforce the contract.
While the automatic execution of smart contracts provides efficiency and eliminates the need for legal proceedings, it also means that there is no room for subjective interpretation or negotiation. Once the smart contract is deployed, it operates according to its code, and the outcome is predetermined.
In summary, using a smart contract for a home loan offers several advantages such as efficiency, transparency, and automatic execution. It eliminates the need for intermediaries, reduces the potential for fraud, and provides a more streamlined process. However, it also comes with its limitations, such as the upfront collateral requirement and the lack of flexibility for renegotiation or appeal.
It’s important to note that the use of smart contracts in the context of home loans is still in its early stages, and there are legal and regulatory considerations that need to be addressed. The technology is evolving, and there will likely be advancements and refinements in the future.
Ultimately, whether using a smart contract for a home loan is a good idea depends on individual preferences, risk tolerance, and familiarity with blockchain technology. It’s essential to weigh the pros and cons and seek professional advice before making any financial decisions.
By rich, I don’t mean she takes selfies on private planes. Rather, she’s achieved a level of comfort and freedom that most sensible people are striving for.
Carol lives in a nice place in the safe part of town, donates generously to charity, and spends more of her time on her passions and hobbies than on work. Her bank account balance has two commas in it, and she hasn’t really worried about money since Barack Obama held a senate seat.
Carol’s neighbors in the “Whole Foods-y” part of town are mostly lawyers, CEOs, and even a few movie stars hiding from the paparazzi. There’s even a Bitcoin zillionaire living somewhere above her, trading crypto all day and “sucking up the building’s power” she jokes.
But Carol is none of these things. In fact, she’s never made more than $60,000 a year. Instead of scaling some corporate ladder or selling a tech company, she somehow got rich just by rotating pretty normal job roles for 35 years. At some point on her career carousel, she’s been a teacher, accountant, and secretary.
So how exactly did Carol get rich? Inheritance? Luck? Buying 1,000 shares of TSLA in 2011?
When I asked her (we have that kind of blunt relationship), her tone was so mundane and matter-of-fact that you’d think she was giving me the time of day:
“Get rich slowly, hun!”
Wait, what does that mean? How can you get rich and achieve lasting comfort and freedom without selling a company or winning the lottery? Why is Carol’s method of “getting rich slow” so effective, and how can you pull it off?
In this piece, I’m going to teach you how totally normal people like Carol get rich (and you can, too). Without further ado, let’s investigate how the rich get rich (and you can, too).
What’s Ahead:
Defining “rich” to avoid a common trap
There are two types of rich people: happy rich people and unhappy rich people. The key to becoming a happy rich person is to establish your “why.”
Why do you want to get rich? After all, a seven-figure bank statement is just numbers on a screen. What do you want to do with the money?
Well, you probably want to get rich so that you can buy something.
Some people want to get rich so that they can buy something with a price tag, like a mantis green Lamborghini Huracán or a six-bedroom house. But chances are that if you’re reading Money Under 30, you’re probably more interested in something more enduring and conceptual, like freedom, comfort, safety, health, or the most valuable asset of all: time.
If you think about it, everything I just listed is a currency. You have a “balance” of each, and you exchange them back and forth all day like a personal stock exchange.
For example, when you go to work, you trade 8-10 hours of time for one day’s salary. Conversely, when you take an Uber to the airport instead of the bus, you trade $31 to save an hour of time.
For a good visual of these intangible currencies, I like to look at Maslow’s Hierarchy of Needs.
Photo credit: SimplePsychology.org
On a conscious or subconscious level, most people try to get rich so that they can take care of all of their basic needs. Naturally, they take care of their physiological needs first (shelter, food, etc.), and then keep earning to cover “safety” needs (paying off debt, health insurance, etc.).
However, level three of the pyramid is where happy and unhappy rich people tend to diverge.
Unhappy rich people keep earning piles of money and forget to convert it to needs. Although they could work a little less to spend time with family or developing their passions, they choose not to. Over time, they even give up their safety needs, working so hard that it negatively impacts their health. With heavy money bags weighing them down, they end up tumbling back down the pyramid.
The whole point of getting rich is so that you can take care of your needs, all the way from sheltering yourself to finding purpose and achieving self-actualization.
If the act of getting rich makes you miserable, what’s the point?
I enlisted the help of Varun Marneni, an advisor with Atlanta’s CPC Advisors and Raymond James Financial Services. At 31 years old, Varun is 23 years younger than the average wealth advisor in America and is passionate about making an impact on people by helping them navigate the complexities of their finances.
How to not end up rich and depressed
Happy rich people like Carol never lose sight of why they wanted to get rich: namely, to achieve freedom.
“Remember – your goal isn’t to get ‘rich’ – it’s to become financially independent” says Varun. “After a certain point, it’s time to stop trading your other needs for money, and reverse the flow. Money can (and should) buy freedom, which in turn can facilitate love, belonging, esteem, health, and self-actualization. Besides, giving up your mental health to get rich is counterproductive. Unhealthiness can affect your ability to perform, be a good person, and even make money. The simple fact is that it’s easier to get rich when you’re happy along the way.”
So how can you get rich without giving up your needs along the way? Well, let’s look at the options.
4 ways the rich get rich
In his decade-plus studying wealth-builders, Varun has seen four general ways the rich get rich. He also has an easy recommendation for the method you should use.
Let’s analyze the four most common methods to getting rich.
Method 1: save and invest
“Get rich slowly, hun!” Carol said, matter-of-factly.
Then, she silently returned to the task of fetching two Key Lime Pie LaCroixs from the fridge.
I, on the other hand, was bubbling up with questions like a shaken champagne bottle. I asked her to elaborate and mentally cleared my calendar for a four-hour coaching session. But before she could even sit, she’d already given me her entire strategy:
“I’ve saved and invested 20% of my income since I was your age.”
But… what did you invest in, I zealously inquired?
“Oh, hun, I don’t invest any of my own money. I let Andrew [her financial advisor] do it.”
In addition to her 401(k), Carol had opened an investment account in her mid-20s, contributing as much of her paycheck as possible to it while her financial advisor managed it. They set a medium-risk portfolio, and she let it mature for years.
So… that’s it? The secret to getting rich without working 12 hours a day or betting the farm on Bitcoin is to open an investment account, keep adding to it, and… wait?
“Pretty much, yeah,” Varun says.
Carol’s not just some lucky outlier, either. According to Thomas C. Corley, author of the Rich Habits series of books, roughly half of rich Americans are just average earners who saved and “prudently invested” 20% of their income for decades. No CEO salary, no crypto bets, just smart money management.
Prudent investments could be hands-on like real estate, but for most low-key rich folks, it was just depositing into an investment account managed by someone else.
So if this method is so effective, and totally normal people get rich that way, it begs the question why nobody talks about it.
Method 2: high-risk investing
Carol’s neighbor, “the Bitcoin zillionaire,”, is 29. Rumor has it that he bought thousands of bitcoins when they traded at $2 a pop, which would’ve been around November of 2011. At the time of this writing (early 2021), a single bitcoin is worth $50,000.
Stories like that create a pretty potent sense of FOMO. A few clicks and he never had to break out his resume ever again. Sigh.
But if you truly want to subject yourself to FOMO Central, look no further than r/wallstreetbets, the now-infamous subreddit for retail aka amateur investors.
“WSB” is full of 22-year-old millionaires proudly showcasing their skyrocketing portfolios after having bet the farm on individual stocks.
But if it seems too good to be true, it probably is. Such is the case with r/WSB. “This isn’t investing; it’s gambling” warns Varun.
Even if you do get lucky once, amateur day trading simply isn’t a path to sustainable long-term wealth. “Sure, you can make a 100% return on a stock – but how are you going to do that month after month?”
Method 3: earn a high salary
This method to getting rich is to work your fanny off. You can become a partner at Deloitte, for example, and make $355,000 on average (according to Glassdoor). And that’s chump change compared to your bonuses, retirement benefits, and stock options.
However, the path to becoming a partner at Deloitte isn’t short, easy, or even guaranteed. It takes more than a decade of sterling work, plus a chest full of medals and the universal approval of your clients and colleagues.
The sky-high bar for entry is why only out of 113,000 Deloitte employees, fewer than 1,000 ever reach the level of partner.
Attaining a high-salaried position is a surefire way to get rich, but it can be extremely difficult to juggle your work and your needs. In most roles earning $250,000+, you’ll end up trading most of your time and freedom: the two currencies that are the hardest to buy back.
Even getting there can take a lot of time and freedom. All of Glassdoor’s top 25 highest-paying jobs “require many years of advanced education [or] years of experience gained over time.”
Of course, there are plenty of people working high-salaried roles who love their jobs and have a great work-life balance. But it’s not the norm, and getting to that point can take decades.
Method 4: inherit wealth (or privilege)
In 2019, when Forbes announced Kylie Jenner as the youngest self-made billionaire ever, we all responded with the world’s largest collective eye-roll.
Sure, she’d built a profitable makeup and modeling empire, and claims that her parents had cut her off at 15, but was she really on an equal footing to the rest of us, as the title implies?
Certainly not, because even if she didn’t inherit cash, she did inherit her parents’ platform, network, and financial guidance; all worth way more than a lump sum.
The Forbes/Kylie Jenner drama serves to highlight a common way the rich get rich and stay rich: through the passing down of cash and assets, but also platforms, privilege, and financial guidance.
You may or may not inherit wealth in the traditional sense, and it’s safer to assume that you won’t. According to CNBC, over 70% of young people expect an inheritance, but only 40% of their parents plan to give one.
But that doesn’t mean inheritance is totally out as a way to get rich. If your folks have done well for themselves, you can ask them for other forms of inheritance, such as advice and connections. For example, if your parents are financially independent, chances are they have a great financial advisor helping them who would gladly have a complimentary planning session with you.
Overall, however, inheritance isn’t really a viable or predictable way to get rich.
What’s next?
Here’s why nobody talks about the easiest way to get rich
Getting rich slowly is the most simple and straightforward way to get rich in this country. So why does nobody talk about it?
Well, here’s my theory:
Getting rich slowly is boring as hell
How would you react to this headline?
“She saved 20% of her income for 30 years, and now she’s rich!”
You’d probably think ummm… duh? And that’s the whole point! Getting rich slowly, the way half of rich people did it, isn’t headline-worthy at all. It’s boring. Martin Scorcese simply isn’t making movies about investors who build wealth over decades of safe investing.
Getting rich slowly isn’t glamorous, either. In fact, most people who look rich are in debt. Those Instagram influencers dangling Bentley keys and Prada bags in their followers’ faces are most likely in deep financial trouble. 96% of YouTubers make under $15k per year, and as one former influencer with 340k followers confessed, “I’ve walked a red carpet with $80 in my bank account.”
“Most people who are actually rich look and act pretty normal,” says Varun. They shop at Publix, drive eight-year-old Acuras, and live in homes just big enough for them and their loved ones. “Rich people don’t buy into the ‘rich people lifestyle’ because it costs money that they’d rather invest.”
There’s nothing wrong with buying fancy things, especially if they support your needs like comfort, health, or esteem. I “invested” in an old Lexus because of its low True Cost to Own®. Likewise, my friend Amanda bought a Burberry coat because it’s well-made, long-lasting, and it simply makes her happy.
But “slow rich” people never feel the need to prove how rich they are. They get rich precisely because they don’t buy into the glamorous lifestyle.
Like vampires, truly rich people are among us, hiding in plain sight. It can be hard, then, to spot one and ask them for advice.
Thankfully, we have Varun and Carol to set us up.
How to get rich without becoming a CEO or winning the lottery
Saving and investing 20% of your income is an essential part of getting rich, but it’s only part of the picture.
“The path to financial independence is like a chair. There are four legs, and if one is too short or missing, the chair topples over.”
So, what are the other three legs to getting rich slowly?
1. “Squeeze the lemon”
As Varun puts it, “squeezing the lemon” is maximizing your existing money through:
Tax efficiency.
Patching leaks.
What I’m about to share may sound obvious, but “9 out of 10 people don’t squeeze the lemon, and it needlessly delays their financial goals.”
Tax efficiency
Tax efficiency, not to be confused with tax evasion, is simply making sure you’re not paying more taxes than necessary.
A big part of tax efficiency is filing your taxes accurately and on time. Any tax software that helps you maximize deductions, such as those for Home Office and charitable donations, is great.
Another way to become tax efficient, specific to 1099 folks, is to funnel your income through an LLC. This will slash your self-employment taxes and provide some bankruptcy protection. If you own a business with more than one employee, I recommend consulting with a tax attorney for more ways to be tax-efficient, since there are too many to list here. A phone call could save you thousands.
Lastly, always be sure to take advantage of your various retirement plans offered through employers such as 401(k)s or IRAs and Roth IRAs.
“Many employers offer 401(k) matching and it’s important to at least put enough money in to take advantage of that,” says Varun.
So that’s tax efficiency: simply making sure you’re not giving Uncle Sam freebies.
As a first step to getting rich, I strongly recommend you consolidate all of your financial information into a single dashboard. Getting a holistic picture of all of your accounts in one place is a huge stress-reliever and helps you find unpleasant “gotchas” like hidden charges and disused subscriptions.
Once you squeeze the lemon to save money, the next step is to multiply it.
2. Save and invest
Thomas C. Corley says the secret to sustainable wealth is “prudent investing.” What exactly does that mean? Are you going to have to get your Series 7 and start trading?
Not at all. In fact, it’s better if you don’t. Prudent investing just means responsible investing, and there’s nothing more responsible than letting a trained professional invest for you.
Carol has never personally traded a stock in her life.
Use a financial advisor
Human financial advisors typically charge a 1% management fee, which includes comprehensive wealth management solutions, soup to nuts. Think guidance on buying or selling a business, retirement planning, education funding help, insurance advice, and estate planning.
Use robo-advisor options
Robo-advisors typically charge 0.30%. The tradeoff is that they may not offer a human touch or personalized financial planning advice. But once you set some goals and risk parameters, they’ll manage your money for you, 24/7, for less.
Whether you opt for a real-life or AI-driven financial advisor, the important thing is that you invest. A pile of money in your checking account is just losing value due to inflation.
If you can’t afford to invest 20% of your paycheck, start with 5% and work your way up. Squeeze the lemon harder and pool that money into your investment accounts.
Invest your credit card rewards
Another great source of investment capital is your credit card rewards points. Oftentimes this is cash you didn’t even realize you had, so you might as well invest it!
A solid, “investor-friendly” card option is the Chase Sapphire Preferred® Card. It offers 5X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining, 2X points on all other travel purchases, so you can quickly accumulate points and dump them straight into your investment account.
Lastly, don’t panic and pull out your investments
Prudent investing isn’t just about putting money in; it’s about leaving it in. When markets dip or accounts lose value, people tend to panic-pull, and it’s almost always a mistake.
Per Varun:
“the most difficult thing to do in investing is disentangling personal emotions from logic and tuning out the media. The so-called pundits will always give you 100 reasons why times have never been scarier and why you shouldn’t be investing and they are usually incorrect. 1968 was a difficult year for our country with the assassination of Martin Luther King, Robert Kennedy, War in Vietnam and the highly contentious election. Since then, we have had wars, 9/11, impeachments, tariffs, COVID 19 more recently and so much more. Despite all of this, the Dow Jones Index marched from 906 in 1968 to 32,000 as of this writing”
Daily market news can challenge your investment discipline. Their messages are often meant to stir anxiety about the future and your finances.
But as Varun says, “successful investors look beyond the headlines, have a long-term approach, and follow certain time-tested principles such as diversification and suitable asset location.”
3. Protect yourself from bankruptcy
Once you’ve begun investing money, it’s time to protect it. You don’t want bankruptcy to saw off a leg on your chair!
Earlier, I mentioned a critical form of bankruptcy protection for self-employed folks: routing payments through an LLC. Having an LLC as a “middleman” is important because it means anyone paying you has to sue the LLC first before suing you personally, reducing your liability.
However, lawsuits aren’t the most common source of bankruptcy in this country. Not even close.
“The #1 source of personal bankruptcy in America medical debt.”
If you can afford it, good health insurance will help insulate you from bankruptcy. But staying healthy itself is a key component of getting rich. Running, meditating, doing yoga, and eating healthy don’t just create happiness – they’re part of getting rich. “Healthy people are less likely to end up in the ER, and they work more effectively and make better decisions.”
4. Enjoy the journey
Varun doesn’t want you to live like a pauper while you slowly get rich. In fact, getting rich slowly should be extremely enjoyable and fulfilling.
But what are rich people spending money on, if not Aston Martins?
“Rich people buy experiences, not things.”
Science overwhelmingly supports the idea that experiences make us happier than things. Plus, they’re often cheaper. That’s why most low-key rich people have come to the same conclusion:
Experiences are a good investment. Remember that happy rich people reinvest their capital into their needs. They realize that experiences provide more freedom, esteem, love, and belonging than most things can, so that’s what they choose to spend on.
Part of what makes experiences such a great investment is that the happiness you glean from experiences is infinitely renewable. Here’s some advice that Varun often offers his clients:
“In 10 years, you’ll remember the time you spent in Hawaii. You’ll remember who you were with, the laughter you shared, the experiences you had. You won’t remember what kind of watch you were wearing.”
Unlike an Aston Martin, experiences are affordable even while you’re getting rich and won’t delay your goals. Even after you put 20% of your paycheck into an investment account, you’ll probably still have enough cash left over for a pair of tickets to that funky new museum or a one-night AirBnB stay in the mountains.
Plus, experiences are less susceptible to hedonic adaptation, which drives our tendency to want to upgrade our things every few years. For example, even if you buy a brand new phone and a fast new car today, eventually you’ll get bored of both and want to pay for an upgrade. But a $20 ticket to a concert will always be fun, and never go out of style.
Even before hedonic adaptation can kick in, Varun warns of another expensive psychological trap many fall into: the Diderot Effect. In his essay “Regrets on Parting with My Old Dressing Gown,” Denis Diderot, an 18th-century French philosopher, describes how his fancy robe made his closet look cheap. So he upgraded his closet, but that made his room look cheap. Upgrading his room made his house look cheap, and before he knew it, he sat bankrupt in a mansion.
Experiences may drive the desire to have more experiences, but they don’t necessarily have to be more expensive ones. Furthermore, those experiences will help grow you as a person, provide companionship, and support your mental health.
Things are awesome, but experiences are a more cost-effective way to feel joy while you accumulate wealth.
“Getting rich slowly won’t feel slow if you’re enjoying the journey.”
Take these steps today to start getting rich
Before I wrap up, what smart moves can you make in the next 30 minutes to start getting rich?
Start unfollowing fake rich people
Fake rich people on Instagram are fun to watch, but they can create FOMO and encourage bad buying decisions. They are “influencers,” after all.
Instead, Varun strongly recommends that you “surround yourself with people who have financial discipline.”
Break the ice with your friends about financial planning, swap advice, and try to cultivate a sphere of positive influence. To prevent awkwardness, talk about how you’re investing, not how much. I have a few friends that I regularly talk to about financial planning, and it helps the process feel social, validating, and fun.
Patch the leaks in your accounts
If you haven’t already, head to your online banking dashboard and spend a few minutes browsing through all of your transactions from the last month. If there are any recurring charges you don’t recognize or don’t need, cancel them.
If you cancel $25 worth of subscriptions today, that’s $10,000 you might’ve wasted over 30 years. If you invest that $25 per month instead, it can create $15,000 in 30 years. That’s a delta in your net worth of $25,000, all accomplished in a few clicks.
Open an investment account
To get rich by investing, you don’t have to pick a single stock yourself. Again, it’s actually better if you don’t. What a wonderful world we live in where “lazy portfolios” exist as one of the best ways to build wealth.
Once you’ve opened an investment account and set goals and risk parameters, your final (but critical) step is to set up monthly auto-deposits of 20% of your paycheck (or however much you can afford).
Then, you’ll start getting rich in your sleep.
Summary
Investing 20% of your income for 30 years is a proven method that roughly half of rich Americans used to achieve financial independence. It’s boring but it works.
If you’re intimidated by the prospect of investing, that’s all the more reason to let a professional do it for you, human or otherwise. You can open an investment account and set up auto deposits in just a few minutes, and your future self will let out a massive sigh of relief when you do.
As you’re making money in your sleep, remember that truly rich people don’t buy into “the rich lifestyle.” Don’t be seduced by designer bags or meme stocks on r/wallstreetbets. If your method of getting rich feels slow and boring, you’re doing it right!
While the method to getting rich slowly might be boring, the journey should be anything but. “Investing” in experiences, passions, and relationships along the way will set you up to be a happy rich person; martyrdom to work is not necessary.
Enjoy the journey, and for more on saving and investing, stick with Money Under 30.
Automated AOT, TPO, Appraisal Fee, LOS Products; Labor Data Pushes Rates Higher
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Automated AOT, TPO, Appraisal Fee, LOS Products; Labor Data Pushes Rates Higher
By: Rob Chrisman
Thu, Jul 6 2023, 10:35 AM
Apparently China is not paying interest on its sovereign debt… What is it waiting for? If you’re waiting for lower rates to give your business a “shot in the arm,” the next few months may be difficult, but there is good news. The persistence of stubborn inflation is causing U.S. and European officials to tighten monetary policy. With both the Federal Reserve and the European Central Bank expected to raise interest rates in July, an aggregate measure of borrowing costs indicates a peak of 6.25% in the current quarter, highlighting a shift from the previous projection of 6%. Despite that, new home sales are surging, home prices are rising, and prospective buyers are engaging (as if they ever stopped) in bidding wars again. But U.S. housing prices have led to higher shelter costs and complicate the Federal Reserve’s fight against inflation. Barron’s discusses this in, “How a Housing Rebound Could Impact the Fed’s Path Forward.” Is the huge overhang of housing supply from the 2000-2007 housing bubble not fully absorbed? Yes, higher rates have impacted affordability, but, historically, LOs know that high rates don’t necessarily impact peoples’ desire to own a home. If rates go up a lot, good LOs will help with good programs, and some people will buy smaller homes. But they will still buy homes. (Today’s podcast can be found here and this week’s is sponsored by Gallus, the premier business intelligence tool for the mortgage industry. With hassle-free insights and user-friendly functionality, Gallus empowers you to make faster, data-driven decisions for enhanced profitability. Hear an interview with Jeremy Potter on the shift toward innovative lending practices and new underwriting standards.)
Lender and Broker Software, Services, and Products
Studies show that 78% of salespeople who use mortgage social media marketing outperform their peers. Of course, you’ll want to be up to speed on social media best practices and a few dos and don’ts to get the best results. The Black Knight team behind the Surefire, CRM and Mortgage Marketing Engine, has developed a free toolkit on Social Media Success to help you develop social media campaigns that reach the right audience at the right time and with the right message. Download it now to start connecting with more homebuyers.
Do you love your LOS? Byte clients do. And now they have even more to love with access to the digital closing automation and efficiencies of the Snapdocs eClose platform. The Byte LOS platform and Snapdocs have an integration that seamlessly helps lenders close loans faster, reduce operating costs, and improve the borrower experience. If you’re an LOS control freak, you’re going to love the exceptional level of control and customization you have with Byte. Watch the Byte – Snapdocs integration demo or visit bytesoftware.com to learn more about Byte’s free 30-day LOS test drive.
“Are you leaking revenue from uncollected appraisal fees? Book a complimentary consultation with one of Reggora’s mortgage solutions specialists to calculate how much you’re losing in fees each year. We’ll calculate your annual losses, benchmark them against 2023 mortgage industry averages from STRATMOR Group and show you how to eliminate that leakage.”
Explore Kind Lending’s Non-Delegated offerings! The KIND of service you expect: From seller, underwriting, disclosing, closing, funding, and to purchase, we’re here to help you every step of the way. Experience the Kind difference today: Speed & Price, Options, Support, Communication, Marketing & Training, Products, & so much more!
Planet Home Lending can now purchase conventional loans closed with an eNote for the Best Effort, Delegated Correspondent, Bulk Purchase, and Co-Issue programs, which means doing business with us just got even easier. Clients who close and fund with eNotes realize fast loan delivery and purchase, and shorter warehouse times on loans held for sale, simplifying and streamlining delivery. Commitment to and investment in leading-edge technology is just part of our dedication to growing your business. Contact your Regional Sales Manager for more details or reach out to SVP Correspondent Sales Jim Loving (414-270-0027). Improve your execution. Put Planet to work for you.
Webinars, Events, and Training
A list of upcoming conferences and major events can be found here under the “Conferences” tab. Meanwhile, there’s plenty going on next week… the 11th is crazy!
If you’ve ever wanted to get a book published on Amazon, you’ll want to attend this webinar! Join Ginger Bell’s Live Webinar on July 11th at 11 am PT. Discover the secrets to effortlessly publishing your own book and unlocking the power of having a published book on Amazon. Reserve your spot today and unleash the potential of being a published author!
Learn more about a Rocket Pro TPO partnership, and save the date for the next IGNITE Live on Tuesday, July 11th at 2PM ET. Mike Fawaz, EVP of Rocket Pro TPO, is sharing some lesser-known facts about Rocket Pro TPO that can benefit your business! Sign up with the link here!
Join AGENT U on July 11th at 12:30-1:30pm ET for the next installment of its free monthly webinar. This month, the hosts are speaking with top-producing agent Josh McGrath to learn about his strategies for building a reputation in one’s hometown to improve lead generation. In this fast-paced world of real estate, the game is constantly changing, and you have to adapt. BUT, some things will ALWAYS be the same for your marketing methods. Plus, get your questions answered during the live Q&A session.
National MI July 2023 webinar sessions: Creating Infinite Referrals with Rebecca Lorenz – July 11th at 1pm ET. The 4 Faces of Frustration with Andrew Oxley – July 12th at 2pm ET. How to Reduce Rate-Shopping Behavior with Dr. Bruce Lund – July 13th at 1pm ET.
October Research, LLC will host the next webinar in the Economic Forecast Series featuring Brandi Snowden, director, member and consumer survey research, National Association of Realtors (NAR) at 2 p.m. July 11th. Register today to learn the latest on home sales, pricing, market conditions, generational trends and more. Hear expert insights on the economy in just 30 minutes. Register today at DoddFrankUpdate.com.
Which direction will the economy go next? What trends are we seeing in the housing market? The National Association of Realtors (NAR) Director of Member and Consumer Survey Research Brandi Snowden will be sharing her insights on those questions and more. Join the next edition of the Economic Forecast Series on July 11th at 2:00 p.m. ET
Register for Appraiser eLearning 3hr Live-Zoom CE Course on Tuesday, July 11, Attorney Peter Christensen will offer 15 takeaways and lessons from legal situations and cases involving appraisers. What can appraisers learn from their colleagues’ legal misfortunes?
Diehl’s FHA Underwriting, Processing and Origination Live Webinar, July 11, 13, & 14, 1-5pm EST, is a comprehensive course designed and presented in a no-nonsense format. We will guide you through over 500 pages of material in the handbook including basic rules, regulations, and changes issued by HUD along with all the topics listed below. This course is divided into three 4-hour interactive webinars. Attendees will be able to download the presentation for notetaking along with calculation worksheets for a variety of scenarios.
Is your organization ready to get into Home Equity lending? If you’re already lending, are you trying to find new ways to save time and reduce costs? Join experts from Stewart Lender Services and Curinos online at 4:00 PM on July 12th, Emerging Solutions in Home Equity – Title, Settlement and Closing. The panel will go over everything you need to know about Home Equity lending and provide detailed insights into what it means for you and your organization.
Join MMLA Southeast Chapter at the Federal Reserve Bank – Detroit Branch on Thursday, July 13th, 11:30AM-1:30PM to hear from speaker, Martin Lavelle, senior business economist. Martin will provide insight into what’s really going on with our economy and what it means for our business. Get an exclusive tour of the building after lunch. All registrations need to be made before July 9th for security purposes.
On July 13th & 14th, Appraiser eLearning is hosting a workshop in Nashville for AeL faculty and aspiring instructors. Learn how to design great presentations, write great marketing copy, keep a classroom engaged, and offer your fellow professionals something they need and want.
On Friday, July 14, learn about PRMG’s non-QM Alternative AUS Solution product which provides options for conforming and jumbo loans amounts for using DU Findings to qualify, along with options like non-warrantable condos and condotels.
Join the California Association of Mortgage Professionals for the 2023 Annual Convention and Gala Extravaganza, July 14th and 15th. Education, engaging speakers, network with the area’s top mortgage professionals, a robust expo hall, & of course a good deal of fun.
Friday the 14th at noon PT is the next edition of The Mortgage Collaborative’s Rundown with Melissa Langdale and me. We’ll will be covering current events in the mortgage market for 30 minutes starting at noon PT in “The Rundown”.
Capital Markets
Mortgage Capital Trading, a leading mortgage hedge advisory and secondary marketing software firm, announced recently that it has automated the process of digital TBA trade assignment during the loan sale process for both mortgage lenders and participating correspondent investors. This automation makes assignment of trade loan sales (AOTs) faster, more convenient, and easier for investors to offer, and is expected to further expand on the $19.5 million in cumulative savings experienced by MCT’s lender clients as a result of AOTs in 2022. AOTs enable mortgage lenders to save the bid-offer spread on the to-be-announced mortgage-backed securities (TBAs) used to hedge their open mortgage pipeline. Due to market volatility these bid-offer spreads have been historically wide, averaging 11.3 basis points in 2022. Participating MCT lenders saved an average of $97,538 each through AOTs in 2022. Read the full press release to learn more or join MCT’s newsletter for timely market content.
In bond news, we had hoped that moderating inflation would have a positive impact on rates by the middle of this year. Nope. While inflation has shrunk, the interest rate environment has not cooperated, as any LO can tell you. With no points, the conforming 30 year fixed is now solidly entrenched above 7%. This, despite news that should have moved rates lower, such as the Federal Reserve’s favorite measure of inflation, Personal Consumption Expenditures hit 3.8 percent year-over-year and 0.1% month-over-month. This was great news to illustrate an improving inflation picture, but the bond market didn’t care, instead focusing on the red-hot labor market.
Did someone say labor? The Federal Reserve views increased joblessness as key to reducing inflation to their target rate of 2 percent but there are 10 million + job openings with only about 6 million people looking for work.
Everyone outside of capital markets thinks we speak a different language. For example, at the end of yesterday “crossing the tape” was this message: “U.S. markets returned after plus-or-minus one day break only for bonds to get crushed as a belly-led Treasury market selloff unnerved investors as yields tagged their highest levels since early March, 4.95 percent and 3.95 percent in the case of 2s and 10s, with damaged technicals leading to further liquidations and a pop in vol ahead of Friday’s payrolls report.” What does that mean? Well, bond prices were pushed down (and yields up to the highest levels since early March) as investors noticed that prices moved below previous “support” levels with signs that the global economy is not slowing and markets pricing in additional rate hikes from the Fed and ECB. The 2s/10s yield curve spread remains inverted by over 100 basis points.
Investors received some additional insight yesterday into the Fed’s thought process at the June Federal Open Market Committee meeting, when there was less consensus than the unanimous decision suggested in leaving rates unchanged. Some officials favored rate increases but went along with the move to leave policy unchanged, despite concerns that core inflation hasn’t moved downward much in the last six months.
Whatever the disagreement among Fed officials, it’s fair to say the key takeaway is that more hikes are coming, as almost all officials said that additional increases would likely be appropriate. We did learn last week that Core PCE inflation is still running hot, but it did edge slightly lower to 4.6 percent year-over-year in May. The annual increase in the PCE Price Index ex-food and energy (the core rate) is the Fed’s most important inflation indicator and has flitted back and forth between 4.6 percent and 4.7 percent this year. Personal spending did stall in the second quarter, which will be welcome news to the Fed. “The smartest guys in the room” think that the Fed is going to hike 25 basis points on July 26.
Mortgage applications from MBA kicked off today’s calendar, decreasing 4.4 percent from one week earlier, with mortgage rates and yields both climbing during the reporting period. We’ve also received some labor market updates ahead of tomorrow’s payrolls report starting with layoffs from Challenger, Gray & Christmas for June: U.S.-based employers announced 40,709 cuts in June, down 49% from the 80,089 cuts announced in May but up 25% from the 32,517 announced in the same month one year prior. We also had the ADP employment for June (+497k, double expectations), and weekly jobless claims (248k, also higher than expected, 1.72 million continuing claims). Later this morning brings the final June S&P Global services PMI, ISM non-manufacturing PMI for June, JOLTS job openings for May, and remarks from Dallas Fed President Logan. We begin the day with Agency MBS prices worse .250, the 10-year yielding 4.03 after closing yesterday at 3.95 percent, and the 2-year up to 5.06 on the strong labor market news.
Jobs
“At AFR Wholesale®, we are still looking for experienced and eager Account Executives for both our Wholesale and Correspondent Divisions! Knowledge of construction and renovation is a plus. If you have an overall desire to bring more families home and to make a difference, we would love to speak with you! We like to offer a close community that feels like home to thrive and make dreams become a reality. We are looking for experienced candidates because at AFR, we recognize that some scenarios can be challenging, and we want to provide a home for all possible circumstances. That is why we do what we do. At the end of the day, it’s about being proud we made it possible to turn a house into a home. AFR is an equal opportunity employer. Apply now! Contact AFR by going to www.afrwholesale.com, email [email protected], or call 1-800-375-6071.”
“Are you a Wholesale Account Executive wanting to make a change? FLCBank is looking to expand our mortgage division team in the northeast, southeast, central and northwest. If you are looking for a company with a tenured mortgage culture of collaboration, team-based success, and the security of working for a federal bank, then it’s time to contact FLCBank’s Bob Eisendrath, Strategic National Account Manager (414.350.3986). FLCBank is agency approved, offers a suite of bank and jumbo products with IO options on both conventional and jumbo loan balances. Our AEs work with Brokers, Non-Delegated Correspondents and can even offer warehouse lines to customers. FLCB cultivates a fun team environment where both sales and operations staff are passionate about delivering exceptional customer experiences with every loan. We offer competitive compensation, an energized culture, and an experienced operations & support staff. FLCBank is an Equal Opportunity/Affirmative Action Employer.
“USA Mortgage announces new leadership roles for three executives! Employee-owned national mortgage lender, USA Mortgage, has promoted three senior executives to new leadership roles. Doug Schukar, who formed DAS Acquisition Company, LLC, (marketed as USA Mortgage nationwide) in 2001, is handing off his duties as CEO to current President and COO, Linda Pring. Schukar remains Chairman of the Board. Assuming the role of President is Ron Mueller, currently Executive Vice President. Dani Ploch, Chief Administrative Officer succeeds Pring as the company’s COO. USA Mortgage is a full-service mortgage bank known for its entrepreneurial spirit and commitment to superior customer experiences. Recognized as an industry leader, it has been named to 50 Best Companies to Work For, St. Louis Titan 100, Top Workplaces Excellence Awards, St. Louis Post-Dispatch Top Workplaces, Top Lender, along with several Scotsman Guide awards, and many more. For a confidential conversation about joining us, contact Brooke Anderson at 609-500-1520, or visit us here to learn more.”
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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how checking your bills can prevent you from overspending, how to manage a raise and how to build wealth early.
This Week in Your Money: Sean Pyles and Liz Weston discuss how you can prevent overspending by double-checking all your bills and share how doing so saved Sean more than $100 on just a single bill. They also discuss some surprising ways bills can demonstrate that you’re getting shortchanged.
Today’s First Money Question: Smart Money co-host Sara Rathner helps Sean and Liz answer a listener’s question about how to prioritize spending and saving after a significant salary increase. The hosts dive into the 50/30/20 budget, how to combat the temptation of “lifestyle creep” that comes with entering a new income bracket, and methods for setting financial goals and establishing a path to meet them. They also look at how to prioritize debt repayment and retirement savings when you’re in your 40s or 50s and your budget may be more stretched.
Today’s Second Money Question: Personal finance Nerd Kim Palmer joins Sean and Liz to answer a question from a 16-year-old listener about how to get an early start on setting up a bright financial future. Kim discusses options for starting to save early, the time value of money and when it may be worth considering switching banks.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
Liz Weston: Hey, Sean. When you were 16, what were you doing to build wealth?
Sean Pyles: I can confidently say that I was doing nothing at all to build wealth.
Liz Weston: Well, today we’ll give a 16-year-old listener some ideas for how they can start to build wealth early. You’ll also learn why you should double-check all your bills and how to prioritize your spending and saving when your income increases from a pay bump.
Sean Pyles: Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.
Liz Weston: And I’m Liz Weston.
Sean Pyles: This month, we’re bringing back some of our most popular money tips from the last couple years, so if they sound familiar, no, it’s not just you.
Liz Weston: Today, you’ll actually hear two terrific money questions from listeners. The first one is how to manage a change in your income, and the second is about how to build wealth while you’re young. But first, here’s a story we did about why you should always double-check your bills. And, yes, that means all of them.
Sean Pyles: And listener, if you changed any of your money habits around checking your bills after you heard the story the first time we ran it, then please let us know. We’d love to hear your story. Leave us a voicemail or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD or email a voice memo to [email protected]
Liz Weston: OK, on with the show. For medical bills, restaurant tabs and even your insurance, it’s worth giving everything you’re expected to pay a little more scrutiny. Sean, this was inspired by a recent bill you received. You want to tell us about that?
Sean Pyles: I recently received a bill for $100 more than it should have been, and that inspired me to dig into what was going on and realize that I’m actually being charged for more things than I really should be. So let’s start with this bill. Basically, I have the same medical appointment every four months. It’s pretty standard. And every time I have it, it’s covered by my insurance even though I have a high-deductible health care plan.
For the latest appointment that I had, I received this bill that was for over $100, and I looked into it a little bit. I called the billing department, I called my insurance company. I had a lot of back and forth. It turns out that they coded the wrong appointment. The code that they used was one number off from what they typically use, and after talking with them for a long time, took over two hours to get this whole thing sorted out between all of the phone calls, they ended up reissuing the bill to my insurance company and it was covered. And if I hadn’t done that, if I had just accepted the bill and thought, “Oh, bummer, got to pay this bill,” I would’ve been out over 100 bucks that I really didn’t have to pay at all.
Liz Weston: Medical bills are notorious for being incorrect, for charging you things they shouldn’t have charged you.
Sean Pyles: It’s worth being pretty punctual about this as well. The moment I got the bill, I knew it was not right and so I called and I dug into it and it was resolved within a day, which is great, but it also can be a lot more of a lengthy process for those who aren’t as well-versed in how to do this. Anytime you get a bill for any sort of medical expense, it’s worth asking a couple questions, just making sure that the billing code is correct and that you are being charged what you’re supposed to be.
Liz Weston: And I’m a huge fan of automatic payments. I have almost everything on autopay, but the downside of that is you can let things slide. Cable bills, internet and satellite radio are really notorious for jacking up the price after they’ve given you some kind of teaser intro rates. That can wind up being hundreds of dollars that you don’t need to spend.
Sean Pyles: And somewhat similar to my experience with the medical bill, I also recently had a prescription that, because I’m on this high-deductible plan, was not covered by my insurance. So I talked with my medical office and they said, “Oh, just charge it through GoodRx. Here’s the price that I’m seeing.” I’ve talked about GoodRx before, but I’d never actually used it. So I finally signed up, and I was able to save half off what the pharmacy was originally asking me to pay.
Liz Weston: That’s something about those high-deductible plans. They really inspire you to look around for some savings.
Sean Pyles: But that’s where the health savings account comes in pretty handy. So I could have just expensed it, but again, I’m trying to have as much money in there as possible so I can invest it.
Liz Weston: One of the things you can do to make sure that you’re not overpaying is keep an eye on your transactions, whether you autopay or not, making sure that you review your transactions. I try to do it every month or so. And our app, the NerdWallet app, is a really good way to keep track of a bunch of different accounts at once and look at those transactions. Is that something you do or is that something you have to remind yourself to do?
Sean Pyles: So I am a big weirdo who pays off my credit card almost daily because I used to have credit card debt years ago and it’s something that has stuck with me, this almost hawkish approach to making sure I’m keeping my spending in check. So I look at it more than maybe I should or most people would even want to, but it helps me know that what I’m paying is what I should be paying.
I actually had another similar experience to this, touching on the whole aspect of making sure you’re getting billed correctly at restaurants and bars, where I was recently going through my credit card statement and I saw a charge for a bar that I went to. I only had one drink, but I was charged over $70. And I realized that my friend was trying to close out their tab. Everything they had been charging wound up on my credit card. So we had to sort it out. It was fine in the end, but it’s a reminder to double-check everything you’re being charged because that really stood out and if I hadn’t double-checked and looked at this closely, I would’ve been paying that.
Liz Weston: And that’s not something you want to do.
Sean Pyles: No. As much as I love my friends, I don’t want to shell out $70 for their tater tots and beer. Another thing that I’ve been thinking about, I recently discovered that Target and Best Buy in particular have excellent price matching policies. So if you’re looking for something and you see that it’s a little bit more at Target, but it’s easier to shop at Target because it’s in your neighborhood and you don’t want to rely on shipping or something like that, you can say, “Hey, here’s what I’m seeing at this other retailer. Can you price match me?” And they pretty much will.
Another area folks should look into if they don’t want to be overcharged is their car insurance. While a lot of people will just be tempted to sit with their same car insurance company year after year, one analysis found that folks could save an average of $560 by shopping around for car insurance.
Liz Weston: OK, that’s some serious cash. And I know we’ve talked about this before, but again, it’s something that’s really easy to leave on autopay or leave on automatic and not realize that you can save a ton of money with just a little bit of effort.
Sean Pyles: Absolutely, and the Nerds on the insurance team found that the ideal cadence for shopping for car insurance is once a year.
Liz Weston: OK. I think I can manage to do that.
Sean Pyles: Yeah, just set aside an hour, maybe even less, on a Sunday afternoon and just knock it out. Liz, I know you recently had an experience not getting the credit you deserved for credit card purchases and points. What happened there?
Liz Weston: Yeah, well, the big one has to do with a voucher for a trip we had to cancel in 2020, and it’s a fairly substantial voucher. It’s for $2,500.
Sean Pyles: Oh, wow.
Liz Weston: Yeah, I can’t find it on the airline site and customer service is so backed up. I actually got an email when I inquired about it. It’s like, “Why isn’t this voucher on my account?” They say they’ll get back to me in 10 weeks. Excuse me?
Sean Pyles: OK.
Liz Weston: That’s kind of a outlier, but I’ve noticed when you sign up for, say, money-back offers on your credit card, you can get $50 off if you spend $250. Half the time I have to go to the customer service line and say, “Hey, I didn’t get credit for this particular purchase.” So again, the credits are inducing you, those offers are inducing you to spend money. If you do it, make sure you follow up and make sure you got that money.
Sean Pyles: Yeah, make sure they’re following through on their word.
Liz Weston: Because they don’t always do so, and again, we all get busy and it’s easy to let it slide, but this can add up to real cash.
Sean Pyles: All right, well, I think that about covers it. Let’s get on to this episode’s money question.
Liz Weston: This episode’s money question comes from a listener’s voicemail. Here it is.
Speaker 3: Hi, guys. Thank you for doing the podcast. I really appreciate it. I have a question about prioritizing. So I’m in my late 20s and I am about to have an over $200,000 pretax income after basically never having a salary before. I’m starting at a big law firm. And I have about $100,000 in debt from grad school, some of which has, I think, a 6.8% interest rate. And I just have no idea whether to start by putting any of that excess income into a 401(k), into a Roth IRA or going against my student loans. What’s the smart order to go in here? Thank you. Bye.
Sean Pyles: To help us answer our listener’s question, we are joined on this episode by our occasional Smart Money co-host Sara Rathner. Hey, Sara, welcome back on.
Sara Rathner: Thank you. It’s fun to be on the other side of the proverbial microphone today.
Sean Pyles: Yeah. Well, we are going to grill you, so I hope you’re ready for it.
Sara Rathner: Oh, boy.
Sean Pyles: Our listener is about to experience a sudden and dramatic change in their personal finances, and I think that they should probably take some steps to set themselves up for success and make sure they’re managing their money properly going into this new phase of their life and their career. And where do you think they should start?
Sara Rathner: Well, one, acknowledge that this is a very nice problem to have. Congratulations to our listener for getting this job offer coming out of law school. That’s a big deal, so you should be proud of yourself. Whenever you experience even a somewhat major life change, like an income increase or decrease or new job or relocation for work or anything like that, it’s a great time to ask all of these questions. All the questions that this listener is asking are great. And you never really want to go into these situations just thinking that “I can just keep managing my money the way I did before,” because things are different. So it is good to take stock of what you’re doing currently, if it’s working for you, what more could you be doing with your new situation? And earning $200,000 a year, even if you have substantial grad school debt, it’s the kind of thing that can give you a really nice head start in life if you play your cards right. That’s what we are here for. We’re here to help you with it.
Sean Pyles: Right. Well, one thing I was thinking is that it would be helpful for them to take stock of their income and expenses, basically getting a grip on their new budget. One tool that we like to recommend is the 50/30/20 budget, where half of your income goes to cover needs. That’s rent. Thirty percent goes towards wants. That’s kind of fun things like travel. And 20% goes towards debt payments and savings. And with a pretty hefty income that our listener has, I think they should be able to use this pretty well.
Sara Rathner: Something that’s a big adjustment when you’re new to working is figuring out how much you cost. Because your life might have been very different when you were a student. Maybe you were being supported financially by family or you were working part time while in school, living with roommates.
Sean Pyles: Living off of ramen noodles.
Sara Rathner: Living the student life, and now you are out into the world potentially taking the rein of your finances on your own for the first time possibly. And so figuring out how much do blueberries cost. You know what I mean? It’s the little things you need to know. And that’s going to take some time, but it’s OK to take a couple of months and just sort of observe your spending and formulate a budget based on where your money is going and then also where you wish it would go if it’s not going where you want it to go.
Liz Weston: Well, and if somebody is jumping from being a broke law school student to having $200,000, it’s going to be really hard not to go nuts. Buy a new car, get a great apartment, buy clothes, do everything.
Sara Rathner: Yeah. Listen, I know you want the Tesla. OK? We can talk for a second. You don’t need the Tesla yet. This is not Tesla time.
Sean Pyles: And also there are plenty of other great cars besides Teslas. Let’s say that, too.
Sara Rathner: Yeah, if you aspire to Tesla, do it. They’re beautiful. But it is just important to recognize where you are, especially when you’re going into big law. The lifestyle creep temptation has got to be significantly higher than it is in other industries because it’s one of those industries where depending on what firm you work for, what city you live in, how you look matters.
It matters to clients, it matters to the partners, and how you look is, it’s how you dress, it’s what you drive, it’s how you arrive. You know what I mean? Do you golf on weekends? That’s a very expensive hobby. Do you ski? I don’t know. These are people who do things like this. And you are entering this world. And if this was not part of the world that you grew up in, it could be a real adjustment, too.
Sean Pyles: Well, yeah, that also brings me to the point that I think our listener should think about their financial goals and they can set them for one, three, five years down the road and then actually establish a path toward meeting them.
Sara Rathner: Yeah, that’s really big. The listener in their question asked about retirement savings and they asked about student loan debt. But there’s a lot of other things you have to plan for in life. You’re not just paying off your student loans and retiring. I would hope that you do other things and those other things are going to cost you money, like potentially buying a house or traveling, or maybe you want to help family out financially. Maybe you want to have children eventually. If you are working in a big law firm, child care is definitely going to be something to budget for because you work long hours. There’s a lot of life that happens in between grad school and retirement, so it’s important to list out what those things are for you and then begin putting some numbers behind them and begin making some monthly savings goals for those things.
Liz Weston: We should also make the obvious observation that you don’t net $200,000. And when you’re up in that stratosphere, you might be a little shocked at how much comes out in taxes. So figuring out what your after-tax income is going to be will really help with the 50/30/20 budget, but it will also help you right-size some of your expectations, so about how much you have to spend for an apartment, how much you have to spend for a car.
Sean Pyles: One tool that might be helpful is having a savings bucket strategy that I’m super fond of. And, Liz, actually, you turned me onto this.
Liz Weston: Oh, cool.
Sean Pyles: For me, I have half a dozen different savings accounts with different goals attached to them, and I have a certain percentage of my income go into them each paycheck, so that way I am saving toward different goals. One of them is just fun money, and that is my general bucket of cash that I have for things like travel and gifts for friends and restaurant night outs, things like that. So you can have fun with this, but I think it’s important to give every dollar a purpose.
Sara Rathner: Yeah, that’s super helpful. And when you name your goals, I think there’s studies that back up the fact that if you have a named goal, you save more, more quickly than if it’s just, “This is my savings account. It’s for saving.”
Sean Pyles: It can help gamify it because you’re seeing how much more you’re getting each paycheck.
Sara Rathner: Right. Yeah. And that way you can say like, “Hey, in five years I’m celebrating a milestone birthday and I want to take a big vacation and I’m going to budget five grand to do that.” OK, so you have to save $1,000 a year towards your vacation. Divide that by 12, set that money aside, make an automated transfer into your vacation account, and when you’re ready to book, you have the money. You don’t have to take on debt to take that trip.
Liz Weston: And you’re doing more than one thing at a time. People can get really focused on, “I’m going to pay off all my debt and then I’ll save for retirement.” No, you do it at the same time because you want to take advantage of the time value of money and multitasking is the way to go.
Sean Pyles: But there is also a balance between multitasking and prioritizing where you put your money, which is the question that our listener had. So Sara, what are your thoughts on how to prioritize different financial goals and ways to direct money?
Sara Rathner: All right. There are the big goals like retirement, buying a house, getting married, things like that. Retirement is big. Everybody has a different vision of what they want their retirement to look like, but there will be a point in your life where you can no longer work. So even if you want to work until you’re 80, your body might have other ideas and you’ll have to quit earlier because of medical issues. That’s unfortunately really common.
You do need to plan for an eventual time period where you’re not working anymore where you might have higher medical expenses, things like that. And so you’re young, you’re just out of grad school, you’re just getting started, and Liz mentioned the time value of money. Getting started early means that you can save less every month and end up with more money when you’re in your 60s or 70s than if you wait until you’re in your 40s or 50s to try to catch up.
That’s how compound interest works. The more time you give it, the better off you’re going to be, and the less aggressively you’ll have to save. And when you’re in your 40s or 50s, you might not have the money in your budget to save that aggressively for retirement because by then you might have kids in college and your vacation home and your fleet of Teslas or whatever, and you’re just not going to have as much money every month to put into your retirement account. And so start early when your life is a little simpler and just save, save, save.
Sean Pyles: But prioritization can also be a matter of personal preference, too. Maybe our listener really doesn’t like having that six-figure student loan debt hanging over them, so that might be something they want to prioritize just because psychologically that would benefit them.
Sara Rathner: Honestly, that’s what I did with my student loans. I thankfully did not have $100,000 in debt, but I did have debt. And every year before tax time, you get a letter in the mail that tells you how much interest you paid over the year. And I remember I was making my minimum monthly payments every month, and then I get this letter and it tells me how much I paid in interest, and that letter made me mad. I was like, “I just spent this money to literally just have debt.” And I was upset. I took a hard look at my budget and I was like, “How much more can I put toward this every month?” And I put an extra $40 a month toward the principal for a while, and when I got down to the last thousand dollars, I paid it all off.
Sean Pyles: Nice.
Liz Weston: Sweet.
Sara Rathner: If having that number hanging over your head annoys you or makes you angry, that’s a good thing. That’s power. You can put that anger to work. Even if you can put an extra $25 to $50 a month into the principal, it’s something. It will chip away that debt that much faster. If you get an annual bonus, for example, from your law firm — a lot of law firms do that — it could be that you set aside a certain percentage of your annual bonus and put it toward the principal of your loan just to chip away at that faster, so that’s another way that you can prioritize that debt.
Liz Weston: The interest rate they’re paying makes me think that they probably got federal student loans. It was probably graduate PLUS loans, and if that’s the case, they’re probably going to get pitched to refinance those loans into private loans just to lower the interest rate. And I’d be really hesitant about doing that just because federal loans have a ton of protections, as we know from the pandemic pausing the payments for so long. If you lose your job, if you have any kind of economic setback, you’ve got some flexibility there, whereas private student loans don’t have that as much.
Sean Pyles: Mm-hmm.
Liz Weston: If they do happen to be private student loans, then refinancing can be a great idea because it just lowers your interest rate and you’re not losing anything. But you do lose something very substantial if you’re trying to refinance federal student loans. And this is relatively high rate debt, and I doubt that they’re getting any kind of tax break on it. Usually we say, “Don’t worry about your student loans, let them ride, you’ve got more important things to do with your money.” But in this case, I endorse paying some of that down.
Sean Pyles: That brings me to another question from our listener, which is, what is the quote “smart order” to do things in?
Sara Rathner: That’s a million dollar question, isn’t it?
Sean Pyles: Yeah. I think the answer is that there maybe isn’t one specific, perfect smart order to do things in.
Liz Weston: Yeah, I think it’s very individual. With most people, you’ve got to prioritize retirement because most of us are going to get there, most of us are going to need the money, and it takes a long time. That’s an expensive goal. But if this debt is bothering you and you want to pay it off faster, that would be the next thing for me.
Sara Rathner: Obviously, if something’s a top priority and this listener mentioned retirement and debt, sounds like that’s on their mind. That could be a good place to start. Getting yourself set up so that you have your automated payments into your student loan so you know that money’s going out every month on time. Do you want to add to those payments and overpay your loan to some extent? Go ahead and do that. You also automate your retirement savings if it’s through your employer. That comes out of your paycheck automatically. When you start your job, there’ll be some paperwork to fill out, but get that going. Don’t delay. Get that money into your retirement account, select your investments and just let that money accumulate over time.
So once you automate all those things and you learn to live without that money in your bank account every month, that’s when you can really start thinking about, “OK, well this is what I have left. What do I want to do with it?” And that’s where that 50/30/20 budget comes in. And what you want to prioritize can change from year to year. You might prioritize living super cheaply so you can save up for travel, but then the next year you finish your trip and you’re like, “I hate my apartment. I don’t want to live with roommates anymore. Now I want to prioritize finding an apartment that’s just mine that maybe is a little bit nicer.” That’s going to cost you more money. Leave room in your plan for those changes because you’re at a point in your life where a lot’s going to change from year to year.
Sean Pyles: You kind of touched on getting things set up to begin with, and I think that’s something that is very smart to do first, if possible, because there’s a certain amount of administrative overhead involved in setting up your savings accounts. As you mentioned, getting your retirement savings and contributions and investments all organized. And that might take a good Sunday afternoon set aside to dive into, but then once that’s done, you pretty much have it going in the background and your money is going where you want it to.
Sara Rathner: Yeah, you revisit it every couple years, but for the most part, those things can run on autopilot for a while.
Sean Pyles: Right. All right, Sara, do you have any final thoughts for our listener?
Sara Rathner: Well, it’s just like we said, this is a huge change for you. You’re going from being a student to making a substantial annual salary, which is amazing, and this gives you options. Don’t sleep on how well you can set your life up with this income. This is a really great time to sit down and make a plan for yourself and really think about where you want your money to go, how hard you want it to work for you. You do work for clients as a lawyer, right? So think of it as if you are your money’s client, and it’s got to work for you or else you’re going to fire it. Well, you can’t fire it, but you know what I mean? We’re trying to make a metaphor here. Just go with it. But really the people I know who have made it to their mid-30s and later who are financially comfortable for where they are in life are people who didn’t ignore this stuff when they were in their 20s.
They’re the people that used that time to set a good foundation for themselves. The people who just kind of, well, winged it, they’re like, “I make money, I spend money, whatever, it’s all in my checking account. I don’t know,” they’re the ones who are hitting their mid-30s and they’re like, “Why can’t I afford a house? I don’t have a retirement account. Should I have a retirement account?” Yeah, yeah, you should. Because, yeah, we’re millennials. We’re not going to have any social safety net, right?
We do need to save for these things. That’s the advice I would give to you. As somebody who’s been out of school long enough and who has friends in the same boat to see all the different choose-your-own-adventure paths people have taken, I would say, “Use this time wisely.” You can still have fun. You can still do all the things you want to do, but you could do it because you know you’re also doing the things you have to do.
Liz Weston: That is an excellent point, Sara.
Sean Pyles: Well, thank you so much for talking with us.
Sara Rathner: Thanks for having me back, guys.
Sean Pyles: Before we get into the next money question, I wanted to mention that this is probably not the first time you’ve heard us suggest the 50/30/20 budget and it probably won’t be the last. The tool is a handy framework to get a grip on your spending so you can be more intentional about directing your income. If you haven’t already looked into it, then I hope you do now or maybe the next time we bring it up, and we definitely will. OK. Now let’s get on to the next money question.
This episode’s money question comes from Luca. Here it is. Hi, Wallet Nerds. I have used NerdWallet for quite some time and recently discovered your podcast, and I am a very big fan. I have a few questions I would like to ask of the show. I’m 16 and, as you can tell by me emailing you, a personal finance nerd. I want to know if there’s anything I can do now to help my financial future. I have a job, IRA, checking/savings account, and I am an authorized user on my parents’ credit card. Is there anything else I can do? Because I’m a personal finance nerd, I also like looking into various accounts. I am not very satisfied with my current bank and want to switch. Are there any cons to having multiple accounts? What about closing old accounts? I feel confident in my ability to manage them and keep track of my money. Thank you very much. Sincerely, Luca.
Liz Weston: I love Luca. Luca is our kind of nerd. Getting an early start with investing is always good, but getting started as a teenager, that is huge. Those extra years could more than double the amount that Luca can put aside for retirement. This is awesome. Anyway, to help us answer Luca’s question on this episode of the podcast, we’re joined by one of our own personal finance Nerds, Kim Palmer.
Sean Pyles: Welcome back to the podcast, Kim.
Kim Palmer: Thank you so much for having me.
Sean Pyles: Our listener, who is the youngest that we’ve ever heard from, is looking for some advice about how to jump-start their financial future. What do you think?
Kim Palmer: First, I think we have to acknowledge that they’re off to such a strong start because so many people aren’t even thinking about money yet. I think it’s really great that they’re already so far ahead. There’s one area actually that they didn’t mention and that is spending. I think it might make sense to take a deeper dive into how they’re currently spending money.
One thing I’ve noticed is that once you get in the habit of saving and of spending less than you’re earning, it’s easier to maintain. What a perfect time to start that habit when you’re a teenager. One tool we love at NerdWallet is the 50/30/20 budget, and that basically allots your take-home income into three different categories. You have 50% going toward needs, you have 30% going towards wants, and 20% going towards any debt payments and savings. Now, as a teenager, everything might not apply to you there. For example, you don’t probably have rent right now or a mortgage, but I still think it’s a useful tool just to start thinking about where your money is going.
Sean Pyles: I also think our listener should appreciate the really unique opportunity they have by starting building wealth so young. There’s the saying that youth is wasted on the young and for so many, so is their time horizon for saving for retirement and investing. But I think that Luca might be an exception to this, and as you nodded to, Kim, because they’re starting so young, they don’t have as many financial obligations. They probably don’t have student loans or a car payment or a rent, so they can maybe fudge the 50/30/20 to make it so that they can save a lot more right now.
Kim Palmer: I think that is a great idea. When it comes to investing, you do have to be 18 to actually go ahead and open up a brokerage account, but it can definitely be something that you do along with your parents and, as Liz mentioned, when you do start investing early, you have a head start. You have so much more time to grow your money.
One thing I like to do with my kids is go through a company like Stockpile and buy fractional shares of really big companies that you’re already familiar with. For example, with my kids, they can take $25 and buy Netflix or Disney and see how the stock fluctuates, and I think it can just be a way to get your head around what investing feels like, see if you like it.
Liz Weston: Yeah, because one of the problems with getting started with investing is that sometimes the buy-in is really high. Shares of companies that kids know and recognize might be $100 or more, and that’s not easy to get started with. Or if they’re looking at mutual funds, they can have an even higher minimum investment, so these fractional shares are a good way to get an early start.
Sean Pyles: But they will have to be 18 to open one of these accounts? How can they get around that? Is it that they’ll open one with their parents, and are there also any other limitations that Luca shouldn’t look out for because they are still under 18?
Kim Palmer: There is definitely a limitation in that you have to be 18 to open some of these accounts, but the easiest way around it is if you do have the help of your parent, then they can do it for you or you can do it jointly. Liz, do you think I’m missing anything else he should be thinking about?
Liz Weston: You’ve got to consider financial aid. If you think that you’re going to need financial aid to go to college, then you don’t want to have this money in the child’s name. Or you can do a workaround, which is to open a Roth IRA. Now, there are contribution limits to those, but Roth IRA and other retirement money is not counted in financial aid formulas, so that’s a way to get around that concern that your holdings could interfere with how much financial aid you get.
Sean Pyles: One thing I keep thinking about is how lucky Luca is to have parents that have encouraged their kid to start building a solid financial foundation really early on. Adding them as an authorized user on the credit card, for example, will give Luca an early start on building good credit. Kim and Liz, I’m wondering if you can share any other tips that you have as parents for how parents out there can help their kids get started like Luca’s parents did.
Liz Weston: Well, I think it’s like most things with parenting is that you start talking about it early and often so it’s not a subject that’s being brought up at the last possible minute. When you take your child shopping, you can talk about the cost of things and how you decide what to buy and what not to buy.
With our daughter, as soon as she was recognizing that money bought things, which was very early, like 3 years old, I want to say, that’s when we started her with an allowance. And that’s very early, but we had some good experiences with it. That’s something to consider.
Sean Pyles: And she seemed ready, right?
Liz Weston: Oh, yeah. Well, we’ve talked about this before. She was ready to save. She was ready to spend. She didn’t understand the sharing part. Why should she have to share her money? Then as she got older and she got jobs and started her own little business, we would match her earnings with Roth IRA contributions.
Sean Pyles: Oh, that’s cool.
Kim Palmer: That is very cool. My parents did the exact same thing, and I really think it helped me. I think it helped me learn how to save. One thing I’ve noticed with my kids is that from a very early age, like toddlerhood, they start asking for things, and they have no qualms about spending your money. The good thing about that is that it gives me a chance and parents a chance to say no and to explain the whole idea of scarcity. We can’t have everything we want. That’s really the basis of learning how to budget right there.
As they get older, it morphs into a more complex conversation. For example, with my 12-year-old, we can have a more nuanced discussion about saving and putting money aside so you can afford something bigger. And I think as the kids get older, you can start having those more nuanced conversations, but it really starts, I think, around age 2.
Liz Weston: Luca’s also wondering about switching banks. Kim, what do you think they should know when they’re shopping around?
Kim Palmer: It’s a really good question to look into switching banks. A lot of people are afraid to switch banks, and they just go with the flow of their current bank even though they’re not happy. I really encourage this line of thought to look at if another bank could serve your needs better. What you want to do when you start thinking about opening a new bank is first see what would be a good fit.
That starts with some online research. Where can we make sure we’re paying as few fees as possible? Where can we earn the highest APY? Where can we get the most for our money? Once you do that comparison and you choose a good fit with your new bank, you just go ahead and you transfer any money that you have into the new account, you close your old one. And it’s really not as complicated as I think a lot of people worry that it is.
Sean Pyles: Or as a lot of banks might want you to think it is to switch banks like that. I did this in the past year. I had had a goal for a while to go from the big national bank I’ve been using since high school to a local credit union in the Pacific Northwest, and it took me a while to actually muster up the energy to do it, and it took me five minutes. It was shockingly easy.
Liz Weston: Yeah, I think it’s more complicated when you have more bills to pay, especially if you’re autopaying through your bank account, so you may need to keep your old account open for a while for those to clear, but if you’re somebody like Luca who’s just starting out, you can choose whatever bank you’d like. And an online bank might be a good fit because they tend not to have minimums and a lot of fees. You can start with a small amount and build from there.
Sean Pyles: But, again, they’ll probably have to have their parents help to open any sort of account like this.
Liz Weston: Luca is obviously in pretty good shape today and is already saving for their future.
Kim, what else should Luca consider going forward?
Kim Palmer: Well, I think it really all goes back to getting in the habit of saving money. I think some of the habits that they’re establishing now really will last possibly their whole life. Of course, as a teenager, you might not have the same priorities that you will have in your 20s or 30s or beyond, so I think when you’re focused on saving and you have that savings cushion, it helps you have that flexibility. So wherever you turn, whatever priorities emerge over the next decade or two decades, if you have that savings habit, I think that gives you such a strong backbone to rely on.
Liz Weston: Yes. Absolutely. And I love the fact that you talked about the importance of saving while you’re young because a lot of people just keep putting it off thinking, “Well, in the future I’ll have more money. It’ll be easier in the future.” It is never easier in the future. Start now, do it now, and you’ll have a lot more flexibility down the road.
Sean Pyles: Well, Kim, thank you so much for talking with us.
Kim Palmer: Of course. Thanks for having me.
Liz Weston: So Luca gave us a chance to talk about the power of compounding, which is another of our favorite topics, and how an early start can make a huge difference in how much you can save over time. But we don’t want people to despair if they’re coming late to investing and wealth building. We want them to have some kind of hope.
Sean Pyles: Right. Because even small changes can make a big difference over time. Just getting a handle on your budget can be a great first step. And that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]
Liz Weston: Remember to follow our show on your favorite podcast app to automatically get new episodes. If you’re listening on Apple Podcasts or Spotify, then tap that five star button to rate the show. We really appreciate it.
Sean Pyles: This episode was produced by Liz Weston and Cody Gough with help from me. Kaely Monahan mixed this episode with additional audio editing by Cody. And a big thank you to the folks on the NerdWallet copy desk for all their help.
Liz Weston: And here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean Pyles: And with that said, until next time, turn to the Nerds.
High above the Las Vegas Strip, solar panels blanketed the roof of Mandalay Bay Convention Center — 26,000 of them, rippling across an area larger than 20 football fields.
From this vantage point, the sun-dappled Mandalay Bay and Delano hotels dominated the horizon, emerging like comically large golden scepters from the glittering black panels.Snow-tipped mountains rose to the west.
It was a cold winter morning in the Mojave Desert. But there was plenty of sunlight to supply the solar array.
“This is really an ideal location,” said Michael Gulich, vice president of sustainability at MGM Resorts International.
The same goes for the rest of Las Vegas and its sprawling suburbs.
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Sin City already has more solar panels per person than any major U.S. metropolis outside Hawaii, according to one analysis. And the city is bursting with single-family homes, warehouses and parking lots untouched by solar.
L.A. Times energy reporter Sammy Roth heads to the Las Vegas Valley, where giant solar fields are beginning to carpet the desert. But what is the environmental cost? (Video by Jessica Q. Chen, Maggie Beidelman / Los Angeles Times)
There’s enormous opportunity to lower household utility bills and cut climate pollution — without damaging wildlife habitat or disrupting treasured landscapes.
But that hasn’t stopped corporations from making plans to carpet the desert surrounding Las Vegas with dozens of giant solar fields — some of them designed to supply power to California. The Biden administration has fueled that growth, taking steps to encourage solar and wind energy development across vast stretches of public lands in Nevada and other Western states.
Those energy generators could imperil rare plants and slow-footed tortoises already threatened by rising temperatures.
They could also lessen the death and suffering from the worsening heat waves, fires, droughts and storms of the climate crisis.
Researchers have found there’s not nearly enough space on rooftops to supply all U.S. electricity — especially as more people drive electric cars. Even an analysis funded by rooftop solar advocates and installers found that the most cost-effective route to phasing out fossil fuels involves six times more power from big solar and wind farms than from smaller local solar systems.
But the exact balance has yet to be determined. And Nevada is ground zero for figuring it out.
The outcome could be determined, in part, by billionaire investor Warren Buffett.
The so-called Oracle of Omaha owns NV Energy, the monopoly utility that supplies electricity to most Nevadans. NV Energy and its investor-owned utility brethren across the country can earn huge amounts of money paving over public lands with solar and wind farms and building long-distance transmission lines to cities.
But by regulatory design, those companies don’t profit off rooftop solar. And in many cases, they’ve fought to limit rooftop solar — which can reduce the need for large-scale infrastructure and result in lower returns for investors.
Mike Troncoso remembers the exact date of Nevada’s rooftop solar reckoning.
It was Dec. 23, 2015, and he was working for SolarCity. The rooftop installer abruptly ceased operations in the Silver State after NV Energy helped persuade officials to slash a program that pays solar customers for energy they send to the power grid.
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“I was out in the field working, and we got a call: ‘Stop everything you’re doing, don’t finish the project, come to the warehouse,’” Troncoso said. “It was right before Christmas, and they said, ‘Hey, guys, unfortunately we’re getting shut down.’”
After a public outcry, Nevada lawmakers partly reversed the reductions to rooftop solar incentives. Since then, NV Energy and the rooftop solar industry have maintained an uneasy political ceasefire. Installations now exceed pre-2015 levels.
Today, Troncoso is Nevada branch manager for Sunrun, the nation’s largest rooftop solar installer. The company has enough work in the state to support a dozen crews, each named for a different casino. On a chilly winter morning before sunrise, they prepared for the day ahead — laying out steel rails, hooking up microinverters and loading panels onto powder-blue trucks.
But even if Sunrun’s business continues to grow, it won’t eliminate the need for large solar farms in the desert.
Some habitat destruction is unavoidable — at least if we want to break our fossil fuel addiction. The key questions are: How many big solar farms are needed, and where should they be built? Can they be engineered to coexist with animals and plants?
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And if not, should Americans be willing to sacrifice a few endangered species in the name of tackling climate change?
To answer those questions, Los Angeles Times journalists spent a week in southern Nevada, touring solar construction sites, hiking up sand dunes and off-roading through the Mojave. We spoke with NV Energy executives, conservation activists battling Buffett’s company and desert rats who don’t want to see their favorite off-highway vehicle trails cut off by solar farms.
Odds are, no one will get everything they want.
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The tortoise in the coal mine
Biologist Bre Moyle easily spotted the small yellow flag affixed to a scraggly creosote bush — one of many hardy plants sprouting from the caliche soil, surrounded by rows of gleaming steel trusses that would soon hoist solar panels toward the sky.
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Moyle leaned down for a closer look, gently pulling aside branches to reveal a football-sized hole in the ground. It was the entrance to a desert tortoise burrow — one of thousands catalogued by her employer, Primergy Solar, during construction of one of the nation’s largest solar farms on public lands outside Las Vegas.
“I wouldn’t stand on this side of it,” Moyle advised us. “If you walk back there, you could collapse it, potentially.”
I’d seen plenty of solar construction sites in my decade reporting on energy. But none like this.
Instead of tearing out every cactus and other plant and leveling the land flat — the “blade and grade” method — Primergy had left much of the native vegetation in place and installed trusses of different heights to match the ground’s natural contours. The company had temporarily relocated more than 1,600 plants to an on-site nursery, with plans to put them back later.
The Oakland-based developer also went to great lengths to safeguard desert tortoises — an iconic reptile protected under the federal Endangered Species Act, and the biggest environmental roadblock to building solar in the Mojave.
Desert tortoises are sensitive to global warming, residential sprawl and other human encroachment on their habitat. The U.S. Fish and Wildlife Service has estimated tortoise populations fell by more than one-third between 2004 and 2014.
Scientists consider much of the Primergy site high-quality tortoise habitat. It also straddles a connectivity corridor that could help the reptiles seek safer haven as hotter weather and more extreme droughts make their current homes increasingly unlivable.
Before Primergy started building, the company scoured the site and removed 167 tortoises, with plans to let them return and live among the solar panels once the heavy lifting is over. Two-thirds of the project site will be repopulated with tortoises.
Workers removed more tortoises during construction. As of January, the company knew of just two tortoises killed — one that may have been hit by a car, and another that may have been entombed in its burrow by roadwork, then eaten by a kit fox.
Primergy Vice President Thomas Regenhard acknowledged the company can’t build solar here without doing any harm to the ecosystem — or spurring opposition from conservation activists. But as he watched union construction workers lift panels onto trusses, he said Primergy is “making the best of the worst-case situation” for solar opponents.
“What we’re trying to do is make it the least impactful on the environment and natural resources,” he said. “What we’re also doing is we’re sharing that knowledge, so that these projects can be built in a better way moving forward.”
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The company isn’t saving tortoises out of the goodness of its profit-seeking heart.
The U.S. Bureau of Land Management conditioned its approval of the solar farm, called Gemini, on a long list of environmental protection measures — and only after some bureau staffers seemingly contemplated rejecting the project entirely.
Documents obtained under the Freedom of Information Act by the conservation group Defenders of Wildlife show the bureau’s Las Vegas field office drafted several versions of a “record of decision” that would have denied the permit application for Gemini. The drafts listed several objections, including harm to desert tortoises, loss of space for off-road vehicle drivers and disturbance of the Old Spanish National Historic Trail, which runs through the project site.
Separately, Primergy reached a legal settlement with conservationists — who challenged the project’s federal approval in court — in which the company agreed to additional steps to protect tortoises and a plant known as the three-corner milkvetch.
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The company estimates just 2.5% of the project site will be permanently disturbed — far less than the 33% allowed by Primergy’s federal permit. Regenhard is hopeful the lessons learned here will inform future solar development on public lands.
“This is something new. So we’re refining a lot of the processes,” he said. “We’re not perfect. We’re still learning.”
By the time construction wraps this fall, 1.8 million panels will cover nearly 4,000 football fields’ worth of land, just off the 15 Freeway. They’ll be able to produce 690 megawatts of power — as much as 115,000 typical home solar systems. And they’ll be paired with batteries, to store energy and help NV Energy customers keep running their air conditioners after sundown.
Unlike many solar fields, Gemini is close to the population it will serve — just a few dozen miles from the Strip. And the affected landscape is far from visually stunning, with none of the red-rock majesty found at nearby Valley of Fire State Park.
But desert tortoises don’t care if a place looks cool to humans. They care if it’s good tortoise habitat.
Moyle, Primergy’s environmental services manager, pointed to a small black structure at the bottom of a fence along the site’s edge — a shade shelter for tortoises. Workers installed them every 800 feet, so that if any relocated reptiles try to return to the solar farm too early, they don’t die pacing along the fence in the heat.
“They have a really, really good sense of direction,” Moyle said. “They know where their homes are. They want to come back.”
Primergy will study what happens when tortoises do come back. Will they benefit from the shade of the solar panels? Or will they struggle to survive on the industrialized landscape?
And looming over those uncertainties, a more existential query: With global warming beginning to devastate human and animal life around the world, should we really be slowing or stopping solar development to save a single type of reptile?
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Moyle was ready with an answer: Tortoises are a keystone species. If they’re doing well, it’s a good sign of a healthy ecosystem in which other desert creatures — such as burrowing owls, kit foxes and American badgers — are positioned to thrive, too.
And as the COVID-19 pandemic has demonstrated, human survival is inextricably linked with a healthy natural world.
“We take one thing out, we don’t know what sort of disastrous effect it’s going to have on everything else,” Moyle said.
We do, however, know the consequences of relying on fossil fuels: entire towns burning to the ground, Lake Mead three-quarters empty, elderly Americans baking to death in their overheated homes. With worse to come.
The shifting sands of time
A few miles south, another solar project was rising in the desert. This one looked different.
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A fleet of bulldozers, scrapers, excavators and graders was nearly done flattening the land — a beige moonscape devoid of cacti and creosote. The solar panel support trusses were all the same height, forming an eerily rigid silver sea.
When I asked Carl Glass — construction manager for DEPCOM Power, the contractor building this project for Buffett’s NV Energy — why workers couldn’t leave vegetation in place like at Gemini, he offered a simple answer: drainage. Allowing the land to retain its natural contours, he said, would make it difficult to move stormwater off the site during summer monsoons.
Safety was another consideration, said Dani Strain, NV Energy’s senior manager for the project. Blading and grading the land meant workers wouldn’t have to carry solar panels and equipment across ground studded with tripping hazards.
“It’s nicer for the environment not to do it,” Strain said. “But it creates other problems. You can’t have everything.”
This kind of solar project has typified development in the Mojave Desert.
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And it helps explain why the Center for Biological Diversity’s Patrick Donnelly has fought so hard to limit that development.
The morning after touring the solar construction sites, we joined Donnelly for a hike up Big Dune, a giant pile of sand covering five square miles and towering 500 feet above the desert floor, 90 miles northwest of Las Vegas. The sun was just beginning its ascent over the Mojave, bathing the sand in a smooth umber glow beneath pockets of wispy cloud.
On weekends, Donnelly said, the dune can be overrun by thousands of off-road vehicles. But on this day, it was quiet.
Energy companies have proposed more than a dozen solar farms on public lands surrounding Big Dune — some with overlapping footprints. Donnelly doesn’t oppose all of them. But he thinks federal agencies should limit solar to the least ecologically sensitive parts of Nevada, instead of letting companies pitch projects almost anywhere they choose.
“Developers are looking at this as low-hanging fruit,” he said. “The idea is, this is where California can build all of its solar.”
We trekked slowly up the dune, our bodies casting long shadows in the early morning light. When we took a breather and looked back down, a trail of footprints marked our path. Donnelly assured us a windy day would wipe them away.
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“This is why I live here, man,” he said. “It’s the most beautiful place on Earth, in my mind.”
Donnelly broke his back in a rock-climbing accident, so he used a walking stick to scale the dune. He lives not far from here, at the edge of Death Valley National Park, and works as the nonprofit Center for Biological Diversity’s Great Basin director.
As we resumed our journey, the wind blowing hard, I asked Donnelly to rank the top human threats to the Mojave. He was quick to answer: The climate crisis was No. 1, followed by housing sprawl, solar development and off-road vehicles.
“There’s no good solar project in the desert. But there’s less bad,” he said. “And we’re at a point now where we have to settle for less bad, because the alternatives are more bad: more coal, more gas, climate apocalypse.”
That hasn’t stopped Donnelly and his colleagues from fighting renewable energy projects they fear would wipe out entire species — even little-known plants and animals with tiny ranges, such as Tiehm’s buckwheat and the Dixie Valley toad.
“I’m not a religious guy,” Donnelly said. “But all God’s creatures great and small.”
After a steep stretch of sand, we stopped along a ridge with sweeping views. To our west were the Funeral Mountains, across the California state line in Death Valley National Park — and far beyond them Mt. Whitney, its snow-covered facade just barely visible. To our east was Highway 95, cutting across the Amargosa Valley en route from Las Vegas to Reno.
It’s along this highway that so many developers want to build.
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“We would be in a sea of solar right now,” Donnelly said.
Having heard plenty of rural residents say they don’t want to look at such a sea, I asked Donnelly if this was a bad spot for solar because it would ruin the glorious views. He told me he never makes that argument, “because honestly, views aren’t really the primary concern at this moment. The primary concern is stopping the biodiversity crisis and the climate crisis.”
“There are certain places where we shouldn’t put solar because it’s a wild and undisturbed landscape,” he said.
As far as he’s concerned, though, the Amargosa Valley isn’t one of those landscapes, what with Highway 95 running through it. The same goes for Dry Lake Valley, where NV Energy’s solar construction site is already surrounded by energy infrastructure.
What Donnelly would like to see is better planning.
He pointed to California, where state and federal officials spent eight years crafting a desert conservation plan that allows solar and wind farms across a few hundred thousand acres while setting aside millions more for protection. He thinks a similar process is crucial in Nevada, where four-fifths of the land area is owned by the federal government — more than any other state.
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If Donnelly had his way, regulators would put the kibosh on solar farms immediately adjacent to Big Dune. He’s worried they could alter the movement of sand across the desert floor, affecting several rare beetles that call the dune home.
But if the feds want to allow solar projects along the highway to the south, near the Area 51 Alien Center?
“Might not be the end the world,” Donnelly said.
He shot me a grin.
“You know, one thing I like to do …”
Without warning, he took off racing down the dune, carried by momentum and love for the desert. He laughed as he reached a natural stopping point, calling for us to join him. His voice sounded free and full of possibility.
Some solar panels on the horizon wouldn’t have changed that.
Shout it from the rooftops
Laura Cunningham and Kevin Emmerich were a match made in Mojave Desert heaven.
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Cunningham was a wildlife biologist, Emmerich a park ranger when they met nearly 30 years ago at Death Valley. She studied tortoises for government agencies and later a private contractor. He worked with bighorn sheep and gave interpretive talks. They got married, bought property along the Amargosa River and started their own conservation group, Basin and Range Watch.
And they’ve been fighting solar development ever since.
That’s how we ended up in the back of their SUV, pulling open a rickety cattle gate off Highway 95 and driving past wild burros on a dirt road through Nevada’s Bullfrog Hills, 100 miles northwest of Las Vegas.
They had told us Sarcobatus Flat was stunning, but I was still surprised by how stunning. I got my first look as we crested a ridge. The gently sloping valley spilled down toward Death Valley National Park, whose snowy mountain peaks towered over a landscape dotted with thousands of Joshua trees.
“Everything we’re looking at is proposed for solar development,” Cunningham said.
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Most environmentalists agree we need at least some large solar farms. Cunningham and Emmerich are different. They’re at the vanguard of a harder-core desert protection movement that sees all large-scale solar farms on public lands as bad news.
Why had so many companies converged on Sarcobatus Flat?
The main answer is transmission. NV Energy is seeking federal approval to build the 358-mile Greenlink West electric line, which would carry thousands of megawatts of renewable power between Reno and Las Vegas along the Highway 95 corridor.
The dirt road curved around a small hill, and suddenly we found ourselves on the valley floor, surrounded by Joshua trees. Some looked healthy; others had bark that had been chewed by rodents seeking water, a sign of drought stress. Scientists estimate the Joshua tree’s western subspecies could lose 90% of its range as the world gets hotter and droughts get more intense.
But asked whether climate change or solar posed a bigger threat to Sarcobatus Flat, Cunningham didn’t hesitate.
“Oh, solar development hands down,” she said.
Nearly 20 years ago, she said, she helped relocate desert tortoises to make way for a test track in California. One of them tried to return home, walking 20 miles before hitting a fence. It paced back and forth and eventually died of heat exhaustion.
Solar farms, she said, pose a similar threat to tortoises. And at Sarcobatus Flat, they would cover a high-elevation area that could otherwise serve as a climate refuge for Joshua trees, giving them a relatively cool place to reproduce as the planet heats up.
“It makes no sense to me that we’re going to bulldoze them down and throw them into trash piles. It’s just crazy,” she said.
In Cunningham and Emmerich’s view, every sun-baked parking lot in L.A. and Vegas and Phoenix should have a solar canopy, every warehouse and single-family home a solar roof. It’s a common argument among desert defenders: Why sacrifice sensitive ecosystems when there’s an easy alternative for fighting climate change? Especially when rooftop solar can reduce strain on an overtaxed electric grid and — when paired with batteries — help people keep their lights on during blackouts?
The answer isn’t especially satisfying to conservationists.
For all the virtues of rooftop solar, it’s an expensive way to generate clean power — and keeping energy costs low is crucial to ensure that lower-income families can afford electric cars, another key climate solution. A recent report from investment bank Lazard pegged the cost of rooftop solar at 11.7 cents per kilowatt-hour on the low end, compared with 2.4 cents for utility solar.
Even when factoring in pricey long-distance electric lines, utility-scale solar is typically cheaper, several experts told me.
“It’s three to six times more expensive to put solar on your roof than to put it in a large-scale project,” said Jesse Jenkins, an energy systems researcher at Princeton University. “There may be some added value to having solar in the Los Angeles Basin instead of the middle of the Mojave Desert. But is it 300% to 600% more value? Probably not. It’s probably not even close.”
There’s a practical challenge, too.
The National Renewable Energy Laboratory has estimated U.S. rooftops could generate 1,432 terawatt-hours of electricity per year — just 13% of the power America will need to replace most of its coal, oil and gas, according to research led by Jenkins.
Add in parking lots and other areas within cities, and urban solar systems might conceivably supply one-quarter or even one-third of U.S. power, several experts told The Times — in an unlikely scenario where they’re installed in every suitable spot.
Energy researcher Chris Clack’s consulting firm has found that dramatic growth in rooftop and other small-scale solar installations could reduce the costs of slashing climate pollution by half a trillion dollars. But even Clack said rooftops alone won’t cut it.
“Realistically, 80% is going to end up being utility grid no matter what,” he said.
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All those industrial renewable energy projects will have to go somewhere.
Sarcobatus Flat may not be the answer. Federal officials classified all three solar proposals there as “low priority,” citing their proximity to Death Valley and potential harm to tortoise habitat. One developer withdrew its application last year.
Before leaving the area, Cunningham pointed to a wooden marker, one of at least half a dozen stretching out in a line. I walked over to take a closer look and discovered it was a mining claim for lithium — a main ingredient in electric-car batteries.
If solar development didn’t upend this valley, lithium extraction might.
On the beaten track
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The four-wheeler jerked violently as Erica Muxlow pressed her foot to the gas, sending us flying down a rough dirt road with no end in sight but the distant mountains. Five-point safety straps were the only things stopping us from flying out of our seats, the vehicle leaping through the air as we reached speeds of 40 mph, then 50 mph, the wind whipping our faces.
It was like riding Disneyland’s Matterhorn Bobsleds — just without the Yeti.
Ahead of us, Muxlow’s neighbor Jimmy Lewis led the way on an electric blue motorcycle, kicking up a stream of sand. He wanted us to see thousands of acres of public lands outside his adopted hometown of Pahrump, in Nevada’s Nye County, that could soon be blocked by solar projects — cutting off access to off-highway vehicle enthusiasts such as himself.
“You could build an apartment complex or a shopping mall here, and it would be the same thing to me,” he said.
To progressive-minded Angelenos or San Franciscans, preserving large chunks of public land for gas-guzzling, environmentally destructive dirt bikes might sound like a terrible reason not to build solar farms that would lessen the climate crisis.
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But here’s the reality: Rural Westerners such as Lewis will play a key role in determining how much clean energy gets built.
Not long before our Nevada trip, Nye County placed a six-month pause on new renewable energy projects, citing local concerns about loss of off-road vehicle trails. Similar fears have stymied development across the U.S., with rural residents attacking solar and wind farms as industrial intrusions on their way of life — and local governments throwing up roadblocks.
For Lewis, the conflict is deeply personal.
He moved here from Southern California more than a decade ago, trading life by the beach for a five-acre plot where he runs an off-roading school and test-drives motorcycles for manufacturers. His warehouse was packed with dozens of dirt bikes.
“This is my life. Motorcycles, motorcycles, motorcycles,” he said, laughing.
Lewis has worked to stir up opposition to three local solar farm proposals. So far, his efforts have been in vain.
One project is already under construction. Peering through a fence, we saw row after row of trusses, waiting for their photovoltaic panels. It’s called Yellow Pine, and it’s being built by Florida-based NextEra Energy to supply power to California.
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Lewis learned about Yellow Pine when he was riding one of his favorite trails and was surprised to find it cut off. He compared the experience to riding the best roller-coaster at a theme park, only to have it grind to a halt three-quarters of the way through.
“I don’t want my playground taken away from me,” he said.
“Me neither!” a voice called out from behind us.
We turned and were greeted by Shannon Salter, an activist who had previously spent nine months camping near the Yellow Pine site to protest the habitat destruction. She and Lewis had never met, but they quickly realized they had common cause.
“It’s the opposite of green!” Salter said.
“On my roof, not my backyard,” Lewis agreed.
Never mind that conservationists have long decried the ecological damage from desert off-roading. Salter and Lewis both cared about these lands. Neither wanted to see the solar industry lay claim to them. They talked about staying in touch.
It’s easy to imagine similar alliances forming across the West, the clean energy transition bringing together environmentalists and rural residents in a battle to defend their lifestyles, their landscapes and animals that can’t fight for themselves.
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It’s also easy to imagine major cities that badly need lots of solar and wind power — Los Angeles, Las Vegas, Phoenix — brushing off those complaints as insignificant compared with the climate emergency, or as fueled by right-wing misinformation.
But many of concerns raised by critics are legitimate. And their voices are only getting louder.
As night fell over the Mojave, Lewis shared his idea that any city buying electricity from a desert solar farm should be required to install a certain amount of rooftop solar back home first — on government buildings, at least. It only seemed fair.
“Some people see the desert as just a wasteland,” Lewis said. “I think it’s beautiful.”
The view from Black Mountain
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So how do we build enough renewable energy to replace fossil fuels without destroying too many ecosystems, or stoking too much political opposition from rural towns, or moving too slowly to save the planet?
Few people could do more to ease those tensions than Buffett.
Our conversation kept returning to the legendary investor as we hiked Black Mountain, just outside Vegas, on our last morning in the Silver State. We were joined by Jaina Moan, director of external affairs for the Nature Conservancy’s Nevada chapter. She had promised a view of massive solar fields from the peak — but only after a 3.5-mile trek with 2,000 feet of elevation gain.
“It’ll be a little StairMaster at the end,” she warned us.
The homes and hotels and casinos of the Las Vegas Valley retreated behind us as we climbed, looking ever smaller and more insignificant against the vast open desert. It was an illusion that will prove increasingly difficult to maintain as Sin City and its suburbs continue their march into the Mojave. Nevada politicians from both parties are pushing for legislation that would let federal officials auction off additional public lands for residential and commercial development.
Vegas and other Western cities could limit the need for more suburbs — and sprawling solar farms — by growing smarter, Moan said. Urban areas could embrace density, to help people drive fewer miles and reduce the demand for new power supplies to fuel electric vehicles. They could invest in electric buses and trains — and use less water, which would save a lot of energy.
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“As our spaces become more crowded, we’re going to have to come up with more creative ideas,” Moan said.
That’s where Buffett could make things easier.
The billionaire’s Berkshire Hathaway company owns electric utilities that serve millions of people, from California to Nevada to Illinois. Those utilities, Moan said, could buck the industry trend of urging policymakers to reduce financial incentives for rooftop solar and instead encourage the technology — along with other small-scale clean energy solutions, such as local microgrids.
That would limit the need for big solar farms — at least somewhat.
Berkshire and other energy giants could also build solar on lands already altered by humans, such as abandoned mines, toxic Superfund sites, reservoirs, landfills, agricultural areas, highway corridors and canals that carry water to farms and cities.
The costs are typically higher than building on undisturbed public lands. And in many cases there are technical challenges yet to be resolved. But those kinds of “creative solutions” could at least lessen the loss of biodiversity, Moan said.
“There’s money to be made there, and there’s good to be done,” she said.
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It’s hard to know what Buffett thinks. A Berkshire spokesperson declined my request to interview him.
Tony Sanchez, NV Energy’s executive vice president for business development and external relations, was more forthcoming.
“The problem for us with rooftop solar,” he said, is that it’s “not controlled at all by us.” As a result, NV Energy can’t decide when and how rooftop solar power is used — and can’t rely on that power to help balance supply and demand on the grid.
Over time, Sanchez predicted, a lot more rooftop solar will get built. But he couldn’t say how much.
Rooftop solar faces a similarly uncertain future in California, where state officials voted last year to slash incentive payments, calling them an unfair subsidy. Industry leaders have warned of a dramatic decline in installations.
As we neared the top of Black Mountain, the solar farms on the other side came into view. They stretched across the Eldorado Valley far below — black rectangles that could help save life on Earth while also destroying bits and pieces of it.
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Moan believes the key to balancing clean energy and conservation is “go slow to go fast.” Government agencies, she said, should work with conservation activists, small-town residents and Native American tribes to study and map out the best places for clean energy, then reward companies that agree to build in those areas with faster approvals. Solar and wind development would slow down in the short term but speed up in the long run, with quicker environmental reviews and less risk of lawsuits.
It’s a tantalizing concept — but I confessed to Moan that I worried it would backfire.
What if the sparring factions couldn’t agree on the best spots to build solar and wind farms, and instead wasted years arguing? Or what if they did manage to hammer out some compromises, only for a handful of unhappy people or groups to take them to court, gumming up the works? Couldn’t “go slow to go fast” end up becoming “go slow to go slow”?
In other words, should we really bet our collective future on human beings working together, rather than fighting?
Moan was sympathetic to my fears. She also didn’t see another way forward.
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“We really need to think holistically about saving everything,” she said.
The sad truth is, not everything can be saved. Not if we want to keep the world livable for people and animals alike.
Some beloved landscapes will be left unrecognizable. Some families will be stuck paying high energy bills to monopoly utilities, even as some utility investors make less money. Some tortoises will probably die, pacing along fences in the heat.
The alternative is worse.
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This is a guest post for Earth Day from Beth H., who writes about saving time, money, and the environment at Smart Family Tips.
Going “green” has a bit of a bad rap. As soon as marketers realized it was profitable to be green, suddenly all sorts of products flooded the marketplace with eco-friendly claims. It can be overwhelming. Is it really necessary to buy all this “stuff” to be green? Are these products really as green as they say they are? We’re in a recession — I can’t go into debt to save the planet!
The good news: At its most fundamental, being “green” is nothing new. It’s actually built around a very old philosophy of consuming less, buying only what you need, using things until they’re worn out, and wasting not. Unsurprisingly, frugality and green-living are closely tied. You don’t have to buy expensive “green” products in order to be environmentally friendly. The real goal is to mind your consumption, and that’s good for your wallet and the planet.
Where to start?
Reduce Consumption
Think of all the things you consume in a given day — or a given week. What can you use less of? I’m not talking about self-denial. As J.D. mentioned in a prior post, it may not really be necessary to use two tablespoons of cocoa instead of three. But on a larger scale, can you use less or use things in a different way to avoid waste? Some areas to consider:
Fewer Disposables. Try using fewer paper towels and paper napkins. I picked up a package of 50 terry cloth shop towels at Costco for the same price as a mega-pack of Bounty paper towels. The shop towels are the perfect size for a paper towel replacement (and more absorbent), and that one-time purchase will last indefinitely. I can’t say that I never use a paper towel for anything, but I use far fewer now than before. We’ve also started using basic cotton cloth napkins almost exclusively. They’re just as easy as paper napkins and far less expensive in the long run.
No more bottled water. Consider buying a reusable, BPA-Free bottle and fill it with tap water. Most bottled water is tap water anyway. If you don’t like the taste of the water that comes out of your tap, consider an inexpensive filter. Depending on how much bottled water you and your family drink, you could see tremendous savings here — not to mention the positive impact on the environment when you reduce the number of plastic bottles coming out of your home.
Conserve
When you conserve resources, you’re not only helping to ensure there will be resources left for future generations, you’re saving money, too.
Water. Turn off the faucet when you brush your teeth. If you have children, teach them to do this as well. Install low-flow shower heads. The newer models don’t sacrifice water pressure like the older ones used to. Wash full loads of clothes and dishes. Consider a rain barrel if you have a garden. The benefit: lower water bills and a happier planet.
Energy. Turn down the thermostat a couple of degrees. Set your hot water heater temperature to no more than 120 degrees. Arrange errands so that you drive less.
Food. Plan meals so you waste less food and make fewer trips back and forth to the store. Grow your own. J.D. and Kris have written a lot about their garden project. Having your own garden not only saves you money on food, but conserves resources — your food doesn’t haven’t to travel long distances to make it to your table.
Remember that most of the time, being frugal is being green. Reuse what you can, and try to wear things out. When you do buy new products, try to purchase items that are more efficient and have the least packaging. And of course, recycle. Happy Earth Day!
J.D.’s note: For more on this subject, check out this article from the archives: Want to save the environment? Buy less stuff.
Whenever my siblings and I misbehaved growing up, my mom knew the perfect punishment for each of her children.
Josh, the social butterfly, would be grounded. Will, the gamer, would get no screen time. And whenever I disobeyed, mom was quick to announce my dreaded sentence. “No sweets.”
As an adult, I’d take a glass of wine with cheese and crackers over a bowl of ice cream any day, but the 12-year-old Kate was devastated every time my parents deprived me of sugar; and although my mom hasn’t punished me in years, my budget has assumed the role of disciplinarian in adulthood.
For the sake of our present and future, we, the grown-ups, must limit frivolous purchases to prioritize saving. Yes, it’s a challenge to monitor your own spending habits (especially when you’re the one to determine those habits), but I hope we can also agree it’s absolutely necessary.
With all this said, here’s the good news: budgeting doesn’t have to suck!
Next time you’re struggling to say “no” to dinner and drinks or that fancy new TV, revisit the following tips to keep your spending in check and stay focused on saving for tomorrow!
What’s Ahead:
1. Remember why you’re budgeting
If money wasn’t a limiting factor, I’d be quite the shopaholic. I’d buy some waterproof hiking boots, a new rug for my living room, a Patagonia sweater, an exercise ball and desk, and so on and so forth.
This is why my budget is essential. While spending money isn’t inherently bad, letting your spending habits run wild will come back to bite you in the long run.
Whenever you feel frustrated and limited by your budget, remember that it’s there to help you, not hurt you. It may not feel like it at the moment, but that’s why it’s imperative that you pause to remind yourself why you’re budgeting in the first place. The same can be said for eating one thin mint and not the whole box or watching one episode of Schitt’s Creek and not a whole season.
For the sake of your health and your wellbeing, you need to maintain a little restraint every once in a while. Your future self will thank you for it.
2. Accept all the help you can get
It’s not easy to decline dinner with friends or ignore a sale at your favorite retailer. It’s even harder to do it over and over again.
Luckily, there are a number of budgeting services available to help you manage your spending and keep up the healthy habits. PocketSmith integrates with more than 12,000 financial institutions so you can monitor all your money in one convenient location. You can break your budget down into manageable chunks of time, such as weekly or even daily, and categorize and organize your past transactions and upcoming bills.
With all this said, one of the best features PocketSmith has to offer is you can forecast your saving and spending habits up to 30 years in the future!
3. Set aside some “fun money”
A couple of years ago, I had the opportunity to chat with a nutritionist. I asked her opinion on individual ingredients like eggs and tofu. We talked about multiple small meals versus breakfast, lunch, and dinner. But, there’s one statement she made I clearly remember.
“I don’t like diets,” she said.
Her reasoning wasn’t that diets are ineffective or unhealthy, but that they’re not sustainable. Sure, you can lose 15 pounds in a couple of months, but then what? If you want to keep the weight off, she said, you need to find a long-term solution.
The key to sustainable dieting is moderation, and personal finance fits this same rationale. If you deprive yourself of dinner out indefinitely, not only will you feel a little sour when your friends grab a drink without you, but your relationships may suffer too. Whether you enjoy splurging on clothes, food, experiences, travel, or something else entirely, cutting those joys from your life completely will probably do more harm than good.
The best long-term solution for your budget is to make “fun money” a priority. Evaluate your budget and set aside a little cash each month for a few pleasant purchases. When you want to spend on a new pair of boots or a weekend vacation with friends, you’ll have some money available to make the purchase.
4. Make a list of what you want to buy
About a year ago, I had a conversation with a former coworker about money.
He was preparing to transition to a new job, and I was getting ready to start freelance writing full-time. We both had some major modifications to make to our budgets, and he told me that one habit that has helped him and his wife monitor their spending was making a list of everything they wanted to buy. Every time they had extra cash to spend, they’d refer to their list and buy whatever item or experience sat at the top.
I went home that day and made my own list.
Instead of feeling like you don’t have enough money to buy the things you want, restructure your spending habits so it feels like a positive experience. Every time you have the money to buy something you want, checking that item off your list will feel like you’re accomplishing a goal rather than missing out on a new gadget or adventure.
5. Become a bargain hunter
One of my husband and my favorite activities is thrift shopping. In fact, many of our date nights include a quick trip to Goodwill before heading to the local brewery.
We certainly love the quirky paraphernalia, the surprise deals, and the one-of-a-kind finds; but, our appreciation for secondhand goods has also risen out of necessity. I really enjoy shopping, for instance, but if I shopped at Lululemon I’d run out of fun money in the first few days of the month.
Whether you opt for clearance racks or not, there are always ways to cut costs so you can save (or spend) more each month. If you’re like me and are prone to overspending on groceries, seek out budget-friendly meals and stock up on non-perishable items like pasta and dry beans. If trips are your kryptonite, try a hostel instead of an Airbnb, learn how to hack travel rewards, and make use of vacation packages on travel booking sites like Expedia and Kayak.
With just a little research, you’ll find there are a variety of sites and services available to help you put away a little extra money each month. Take some time to seek these out and start implementing some new, cost-cutting habits today!
6. Prioritize easy investing
I feel like investing is one of those tasks I’ve always been encouraged to do, but have never felt motivated to learn how and have even been intimidated to try.
Fortunately, investing doesn’t have to be a time-consuming, daunting to-do. There are a variety of financial services out there that have designed investing platforms uniquely for the folks who feel ill-equipped to jump right into the process.
With Acorns, for example, you can invest a little spare change whenever you make a purchase. They call the feature “Round-Ups,” and it’s designed to make investing automatic, so you don’t have to spend time thinking about it.
You can also schedule automatic “micro-investments” as often as daily. Acorns is a multi-function financial app, but the Acorns Invest service provides an easy, low-cost introduction to investing, so you can familiarize yourself with the process without committing too much money or time.
7. Make budgeting a pleasant experience
At the beginning of every month, my husband and I sit down to review our spending from the previous month. I won’t lie; it’s not my favorite to-do. It typically takes a couple of hours to make sure every transaction is categorized correctly, reassess our budget categories, and make sure we’re both prepared for the upcoming month’s expenses.
To help us stay focused and happy through those two hours, we’ve implemented a couple of things to make budget meetings something to look forward to. We’ll grab a couple of glasses of wine or tea, turn on some jazz, and maybe even pick up a couple of bars of dark chocolate. Sometimes those simple joys make the evening feel a little less like a meeting and a little more like a date.
When it’s time for you to sit down at the kitchen table with a stack of receipts and bills, grab a treat first. It’s a once-a-month occasion, so pick up something you’re craving. Make the environment a little more relaxing with some music and maybe a cozy fire or candles. Associate budgeting with positive things, so you’ll feel more motivated to keep up the habit and happier while you do it.
8. Give yourself grace
When I started dating my now-husband Steve, it was apparent immediately which one of us managed money best.
Not only had Steve paid down his student loans, but he’d also even purchased his own house. I, on the other hand, was still buying boxes of ramen and frozen pizzas. So when we got married, I told him to take the lead when it came to finances.
It’s been six years, and I’m sad to say I still end some months wondering where all my cash went. It’s a little embarrassing to review my “whatever I want” fund’s long list of iced coffees, shopping trips, and dinner out, next to Steve’s occasional purchase for outdoor equipment.
But, here’s the important detail to remember: I have improved.
It’s not always easy to see the progress you’re making, but don’t let that deter you! Every minor success is worth celebrating. Every step in the right direction deserves a little praise. And when you look back on the month and wonder where your money went, don’t beat yourself up. Instead, give yourself a little grace and keep trying. If you keep up the hard work, you’ll look back someday with pride at how far you’ve come.
Summary
For the vast majority of Americans, I think it’s safe to say spending is a little easier than saving. Unfortunately, spending too much is also pretty easy.
Budgets are incredibly helpful when it comes to keeping your finances in check, but they’re also a little depressing. It’s not fun to say “no” to a spontaneous trip to the movies or a sudden sale at your favorite online retailer — but it’s also not fun to run out of money.
Fortunately, there are ways you can get the best of both worlds! To stick to your budget and stay happy, take advantage of budgeting services like PocketSmith and learn how to cut costs by bargain hunting. In addition, be sure to check in with yourself every so often. Remind yourself why your budget matters and find ways to make the experience of budgeting a little more enjoyable.
Next time you’re feeling short on cash and down in the dumps, remember you are capable of taking charge of your finances and your mental wellbeing. You can do this, and your future self will thank you for it!
A townhouse is a multi-story home that’s owned by individuals and is attached to at least one other similar unit. This type of hybrid dwelling combines features of a single-family home with a condominium — having some of the benefits and challenges of each. It’s also sometimes called a townhome or a row home or house.
Differences Between Townhomes and Condos
Differences between a detached home and a townhouse may be clearer than differences between a townhouse and a condo. After all, a home is a freestanding structure while a townhouse, like a condo, is part of a complex.
So, how is a townhouse different from a condo? Well, for one thing, although townhouses would share walls with units that are right next to theirs, there wouldn’t be a dwelling above them or below, as could be the case with a condo.
Typically, people who own a condo are responsible for the interior of their units, while funds that they pay into their homeowners’ association (HOA) are used to maintain shared areas and the outside of the building.
Townhouse owners, though, are usually responsible for maintaining the inside and outside alike, which is more like owning a home.
Because townhouse owners are usually responsible for more maintenance than condo owners, their HOA fees are often smaller and they typically have more freedom on how to renovate their dwellings. Neither of these is universally true, though, so it’s important to check the specifics of the property of interest.
Potential townhouse owners may be asking themselves, “Is buying a townhouse a good investment? What are the pros and cons?”
Let’s take a look at the pros and cons of buying a townhouse, along with insights into getting a mortgage loan.
Pros of Buying a Townhouse
Having control over the inside and outside of a townhouse might make it more appealing than the purchase of a condominium. Townhome owners might appreciate how they have more ability to make decisions about their property. Additional benefits of buying a townhouse include:
More Affordable
A townhouse can be an affordable option in communities with higher home prices, providing a space-savvy housing choice in places where available land can be scarce. Although townhouses may be more expensive than a condominium in a community of choice, they tend to be less expensive than a detached home.
Less Maintenance
Townhouses may be appealing to those that are busy; there’s no big yard that needs time and attention and, if owners travel for work and/or pleasure, security services that may be covered by HOA fees can help to protect the dwelling without any extra steps needed — and the complex may even be gated for added security.
Amenities
There may be great shared spaces and amenities for families to enjoy. These can include gyms and pools, and people who own units each have an ownership interest in these common-area benefits — which means they have a legal right to use them.
You Own the Land
Buyers of a townhouse will actually own the land where the property exists. In contrast, the condo owner would only own their unit, not any of the land. This means that someone owning a townhouse is typically less restricted on how the land could be used, perhaps being allowed to grill dinner outdoors, as just one example.
Pay Less in Property Taxes
Owners of a townhouse usually pay less in property taxes when compared to a stand-alone home. This is typically true because of the smaller lot size.
Townhomes could be ideal for first-time homebuyers who are looking for a more affordable option in densely populated areas. It can also be a good choice for people who aren’t interested in doing much home maintenance.
Cons of Buying a Townhouse
Townhomes may not be ideal for everyone. If you don’t want to share walls with another family, for example, a townhouse may be eliminated.
Other potential downsides of buying a townhouse include:
Limited Lot Size
The limited lot sizes that make it easy to minimize maintenance also means that townhouse owners don’t have the benefits that come with a larger yard, whether that means hosting larger picnics, setting up a swing set for the kids, or creatively landscaping the space.
Less Privacy
Townhouses are less private than single-family homes. While there are no units above or below, as there would be with a condominium, walls are shared and backyards are fairly small. This may be problematic if young children living in the townhouse want to run around and play.
Potentially Many Stairs
Townhouses are built upward to maximize limited land, meaning a townhouse could be three or four stories with only a couple of rooms on each floor. This means stairs. Perhaps lots of stairs. And, if someone in the home has physical challenges or has just had surgery, as just two examples, this can make navigation of the townhouse challenging.
Less Appreciation
In general, the value of a townhouse does not appreciate as quickly as single-family homes. Because of this, it may not make sense to buy a townhouse if the idea is to invest in real estate, rather than simply having a desired place to live.
Recommended: Track the Value of Your Home and Real Estate
After reviewing the pros and cons, is buying a townhouse a good idea? Here’s one more consideration: financing the unit.
Financing a Townhouse
Seeking a mortgage loan for a townhouse is similar to one for a single-family home. That’s because, unlike a condo purchase, the buyer of a townhouse also owns the land beneath the dwelling.
When buying a townhouse, lenders will typically want to see a buyer’s monthly income and outstanding debt to determine their debt-to-income ratio and see how much of a mortgage they can afford.
If the townhouse has HOA fees, those would be included in the mortgage calculations. Just as with a single-family home, it can make sense to get preapproved for a dollar amount before townhouse shopping, save money for a down payment and closing costs, and so forth.
Home Loans at SoFi
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: Simple, smart, and so affordable.
*SoFi requires PMI for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Minimum down payment varies by loan type.
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What’s the most boring sport to watch? After polling the internet, people voted these ten sports to be the most boring to watch of all time.
1. Professional Fencing
Pro fencing could be more entertaining. Fencers are moving so fast that you have no idea what is happening. One person added, “So it’s a couple of people with swords bouncing back and forth for about 30 seconds, SOMETHING happens, and then it’s over.”
2. Little League Tee Ball
Another user suggested, “Little League Tee Ball when your kid isn’t up.” Finally, a third agreed, “There is nothing as excruciatingly painful as that first year of “kids pitch” baseball in the heat and humidity of a Midwestern Summer day. I cried tears of joy when my kid gave up baseball in favor of Summer vacations.”
3. Drone Racing
Did you know Drone Racing was a sport? Someone confessed, “I saw a drone racing on ESPN the other day, and I was like “what the heck am I watching?” While many agreed with the sentiment, others suggested it’s probably fun to play.
4. American Sports
American sports came in number four on this list. One said, “They’re probably not the most boring, but the endless commercials and time-outs make American sports unbearable to watch.”
Several people agreed that the commercials make watching American sports, especially football, dreadful. One admitted to loving NFL football but not watching because it takes too long with advertisements. Another shared, “Redzone is your friend. Seven hours of commercial-free football.”
5. Golf
Many people agreed that watching golf was dull. One added, “I thought watching golf was terrible until I had a long drive with my old boss during the U.S. Open. It turns out golf on the radio is worse.”
However, a ton of golfers argued in favor of watching the sport. Alledging that if you play the sport, it is not boring to watch. But they understood why people who don’t play would find it boring.
6. Rowing
“Rowing,” one confessed, “I have been rowing competitively for years, and I understand the nuances, yet it’s still the dullest thing in the world.” While most others agreed, one admitted to enjoying watching rowing at the Olympics.
7. Boxing or MMA Fight With Two Defensive Opponents
Someone replied, “A boxing or MMA fight with two defensive fighters. Nothing is more boring than watching two people circle one another and actively avoid doing the one thing everyone is paying to see them do.” “Especially a heavyweight fight. The fighters are either bangers or duds, with no in-between,” another added.
8. Fishing
Fishing made the number eight spot on this list, and I’m honestly surprised it’s not higher. One user shared, “I used to film and edit for a fishing show, and can confirm.
I would have maybe 6-8 hours of footage that I’d cut down into the most exciting 22.5 minutes, which, if you don’t get excited by slow-mo fish thrashing, you’re in for a boring time.
9. Electronic Sports (Esports)
If you don’t play the game they are playing, watching esports is dull. One admitted, “As an Overwatch and OWL fan, even I can see how no one new to the game understands what’s happening.”
10. Surfing
Surfing. Hours of contestants are just bobbing around the ocean, and commentators are trying their best to fill the gaps in the action. One user admitted, “I still watch almost every primary contest, though.”
Another added, “The first time I watched it was during the Olympics. I realized that there is not only skill but also strategy since you’re head to head. I also learned there is so much waiting and bobbing.”
Who is one actress you can never stand watching, no matter their role? After polling the internet, these were the top-voted actresses that people couldn’t stand watching.
10 Actresses People Despise Watching Regardless of Their Role
These 7 Celebrities are Genuinely Good People
We’ve all heard the famous adage that “no publicity is bad publicity,” and while it tends to be accurate, there are certainly exceptions. But what about those few stars who stay out of the limelight and get along without a hint of trouble?
These 7 Celebrities are Genuinely Good People
Have you ever known someone and thought you liked them—until you learned about their hobbies? Then you get to know them and then you’re like, “Wow, red flag.” Well, you’re not alone.
These 10 Activities Are an Immediate Red Flag
Some celebrities definitely seem to enjoy the limelight and keep working to stay in the public eye. While others quickly move out of the spotlight. Many of these actors and actresses stepped out of the spotlight to live a more private life without constant media pressures.
10 Celebrities That Made the Big Times Then Disappeared Off The Face of the Earth
We’ve all been there – sitting through a movie that we can’t help but cringe at, but somehow it still manages to hold a special place in our hearts.
These 10 Terrible Movies Are Still People’s Favorites
Find yourself a Boston apartment that takes its outside space as seriously as Bostonians take their sports.
There are so many cool neighborhoods in Boston that it’s sometimes hard to narrow your search down. Once you pick a few spots that look good though, you have to start thinking about amenities. Do you want a pool? Do you need a place that’s pet-friendly?
As you think about what features make up the perfect Boston apartment, don’t forget to explore the outdoor space. Having a great spot to hang with friends or just relax, that’s not inside your apartment, is a huge bonus for all renters.
To ease the strain of your search, check out these apartments with some of the best courtyards and gardens in Boston. They’ll keep you headed in the right direction toward finding a gorgeous apartment with a stunning green space.
Source: Rent. / West Square
‘Courtyard perfection’ is the phrase that immediately comes to mind at West Square. This neat and tidy space combines succinct landscaping with umbrella-covered seating. The small lawn space is ideal for picnics or games, while the choices in flowers and greenery really make this space feel calm and complete.
Situated in South Boston, within the D Street – West Broadway neighborhood, this thriving spot has it all. You’re within walking distance of the Red Line, so it’s easy to hop on the subway and explore the entire city, but there’s also plenty to entice you right outside your door. This neighborhood is full of shops, restaurants, a popping nightlife and a diverse assortment of recreational activities. Needless to say, you won’t have a problem keeping busy when you call West Square home.
Source: Rent. / Alcott Apartments
A true gathering place for all, the courtyard at Alcott Apartments is lush and green and full of comfortable seating. Walk across the lawn to grab a seat at the two-top tables beside the rows of mature trees. Settle into one of the rockers, or let your kids sway back and forth on the modern rocking horses. There are umbrella-clad tables for those who need shade and additional seating under the cabanas, which sit beside the state-of-the-art gas grills.
Another jam-packed Boson neighborhood, living in the West End puts you close to so much of the city’s activity. You’re near the Charles River for casual walks as well as boating or rowing. There’s also the TD Garden within walking distance, home to the Bruins, Celtics and plenty of concerts. All around this area are lively pubs, bars and so many delicious pizzerias to boot.
Source: Rent. / Garrison Square
A garden and a courtyard all in one; you’ll find a hidden gem in the center of Garrison Square. This space includes an appealing combination of landscaping and hardscaping, with lots of seating. You can pick what part of the courtyard to enjoy, whether it’s a green space or one that features rocks and slender shrubs. There are even a few fountains adding a relaxing soundtrack to the space and upping the overall calming ambiance.
A more refined section of Boston, the Back Bay neighborhood is home to most of the city’s boutiques, art galleries and designer shops. Cafes dot the area as well. Smack dab in the middle is Copley Square, a nice place to sit on a bench and people-watch. You’ve got also the Boston Public Library right here, which is an absolute treasure to explore.
Source: Rent. / Avalon at Newton Highlands
Surrounded by a stunning garden space, the Avalon at Newtown Highlands makes landscaping a top priority. You’ll find carefully designed beds of greenery everywhere you turn. With a combination of mature trees, cropped bushes and flowers blooming here and there, there’s natural beauty to greet you at every turn. Benches spaced throughout make it easy to enjoy the view.
Set within Newton, living here requires a commute if you want to head into Boston proper, but you’re only about 10 miles away. Public transportation does extend out to some areas, so it’s easy to get in via train if you can’t hop on the highway. A quieter place to live, there’s also a good chance you’ll see a lot of students in this area as Newton is home to quite a few colleges and universities, including UMass Amherst and Boston College.
Source: Rent. / Piano Craft Guild
The aged brick facade and cobblestone path give the garden at Piano Craft Guild an old-world feel. It’s the history of the city seeping through among the leafy bushes and healthy trees in the raised beds throughout this area. There’s a definite character here, making it an ideal spot to seek out a little peace and relaxation.
Another perfectly walkable slice of Boston, the South End is a diverse and family-friendly neighborhood that combines all the pieces that make this city so great. There are unique restaurants and bars, trendy spots and low-key hangouts and a funky art scene. While it’s easy to head closer to the center of Boston on foot, you’re also near the Orange and Green subway lines.
Source: Rent. / Third Square
Across the Charles River, in Cambridge, you’ll find Third Square. This apartment community has a massive ground-floor green space and courtyard. You’ll also find a sweet gardening area complete with raised soil beds for planting flowers, herbs and veggies. The whole area has close-cropped grass and a few trees and bushes to enhance the space.
Located in Kendall Square, this area is near the Massachusetts Institute of Technology and is also home to many tech companies. There’s a great food and drink scene and an underlying indie vibe throughout the area as well.
Source: Rent. / Christopher Columbus Plaza
With a courtyard that’s more focused on water than greenery, you’ll get something a little different at Christopher Columbus Plaza. This centrally-located community uses the local style to create a beautiful courtyard with soothing pools of water and sprouting fountains. This is also where you’ll find the community grills for some outdoor cooking. A few mature trees also offer up some shade and light landscaping gives the suggestion of nature.
Living in the North End of Boston is quite a treat. This is the city’s Little Italy, so there’s no shortage of wood-fired pizza, fresh seafood and amazing homemade pasta. What’s also great about this area is its proximity to the waterfront and its ever-present local history. Along the cobblestone streets, you’ll find Paul Revere’s house as well as Old North Church.
Source: Rent. / Prism Apartments
It’s a jam-packed courtyard at Prism Apartments in Cambridge. This large space has it all, including a modern fire pit surrounded by tons of seating. Strings of lights help keep this spot bright even as the sun sets and a wood panel separator breaks it off from the rest of the courtyard for a more intimate feel.
Within this area, you’ll also find plenty of tables for dining alfresco and a dual grill cooking station. There are also additional pockets of seating and plenty of string lights overhead.
Source: Rent. / Lofts at Kendall Square
An industrial overhead framework gives this garden space at the Lofts at Kendall Square a little something special. With curvy beds of bright green line the walkway below, bushes, small plants and large rocks combine to create a welcoming and calming spot.
Situated between the Charles River and Harvard Square, living here puts you in an excellent spot to enjoy the beauty of the city while easily getting around. Whether you need to head deeper into Cambridge or shoot across the river to Boston, you can see it all from right here.
Find an apartment with one of the best gardens in Boston
Boston is a busy and beautiful city and living here may prompt you to want an apartment that gives you a quieter spot to retreat to. Finding awesome courtyards or gardens in Boston that provide a little escape from the city’s bustle can prove essential, so keep an eye out. This is one feature you’ll definitely want in your next Boston apartment.
Featured Image Source: Rent. / Alcott Apartments
Lesly Gregory has over 15 years of marketing experience, ranging from community management to blogging to creating marketing collateral for a variety of industries. A graduate of Boston University, Lesly holds a B.S. in Journalism. She currently lives in Atlanta with her husband, two young children, three cats and assorted fish.