Cheat Sheet Q & A:


Today’s topic:  Investing when you don’t have anything to lose


I have been listening to you and Jim Edwards for many many years.  One thing I must say is that, at times, you drive me up a wall.  But, I keep listening because your show is very informative.

Here's my question:
I am a single mother.  I have approximately $6,000 saved.
I live paycheck to paycheck without touching that savings.
I hate just watching it sit there and doing nothing for me.
But I know absolutely nothing about investing.
And since it is all I have saved (and it's not a lot), it scares me to risk it at all.  Only risk what you can afford to lose right?  I can't afford to lose a penny of it.  Do you have any advice?  It's just sitting in a regular savings account right now.


Bottom Line:  Usually I leave the pleasantries out of the Q&A entries.  I included yours because of your candor which I respect endlessly.  I completely understand.  I’m passionate and sometimes that’s a good thing and other times…  I truly mean well by you and all who listen and appreciate you putting up with me.  On to the question…


I will break out food for thought with regard to the power of your savings to date, but first I want to address a bigger concern/priority I see in your situation.  We need to find a path towards free cash flow so we can slowly begin to break from the paycheck to paycheck cycle.  So first…


Do you have any debt?  If you do prioritize your highest interest debt first. 


  • For example if you have a credit card with a $1500 balance at 15% interest (that’s the average interest rate) your minimum monthly payment is likely $40-$50 per month.    

If you were to pay that $1500 off and were to take that additional $50 or so per month and use it to make additional principal payments each month on your next highest interest charging debt obligation you’d spend up your progress towards greater financial flexibility.  Each time you pay of a debt obligation roll the money each month over to the next debt obligation until you’ve paid off all of your consumer debt (everything but your auto and mortgage loans if you have them). 


Once you’ve done that you should have created breathing room in your budget.  That’s when it’s time to start investing in my view.  I don’t want you to concern yourself with investing until you’re in a strong personal financial position and you can remove your emotions from investing.  My first rule of investing is…  Never allow your money and emotions to cross paths.  That’s when we make mistakes. 


Now for the investment side of things…


You are actually taking a risk when you do just allow money to rest in a savings account.  Here’s an example:


  • If you leave $6000 in a savings account that yields 1% less than the rate of inflation (which is generally the case & currently is) it’ll have the buying power of $4666 in 25 years
  • Conversely if you invest $6000 in the average stock market investments which yield 9% per year you’ll have $51,700 in 25 years 

It’s the power of compound interest which works for or against you.  But again, first I’d recommend taking care of debt obligations and breaking the paycheck to paycheck cycle.


If you have a topic or question you’d like me to address email me:


Audio Report:




Divorces are rising and that's good for the economy:


Bottom Line:  Well I can’t say that I like the economic stimulus that comes from divorce but at least something good evidently comes from that difficult time. 


Moody’s studied the past 40 years of the US economy and found an interesting trend.  When the economy is in recession so are divorces.  So with that in mind the year with the fewest divorces over the last forty was… 2009.

Makes since right?  The depths of the Great Recession.  As the economy has slowly been growing, so has the divorce rate.  Two things are clear:


  • Married couples are more likely to stay together out of economic need
  • As the economy expands unhappy couples are more likely to risk the expense of a breakup

There also is economic related stimulus according to Moody’s data.  When a divorce occurs forced economic activity takes place.  A second home is rented or purchased by the person leaving the primary home.  A second set of items like furniture and appliances is required (all big ticket items).  It’s less than ideal economic benefit but again – at least something good comes out of a difficult situation. 


Audio Report:



Pesky CBO strikes again - shows that raising min. wage would cost jobs:


Bottom Line:  Yesterday the non-partisan CBO put another crimp into the argument that the Federal minimum wage should be raised to $10.10 per hour.  It will cost approximately 250,000 jobs per year. 


First and foremost I’ve articulated that the minimum wage is best left to individual states and cities as the cost of living is so wildly different from state to state and within cities in those states.  For that reason I don’t think it should be a Federal consideration to begin with.  Secondly I biggest concern is what it does to the person who is trying to break into the workforce. 


By the CBO numbers:


  • Raising the min. wage to $10.10 would result in an estimated 500,000 jobs being lost by 2016 (or 250,000 lost jobs per year)
  • 900,000 people would be raised above the poverty level by raising the min. wage over the same period of time


So there would certainly be benefit for some but the cost of the benefit certainly isn’t worth the cost.  Here is the unemployment rate by age currently:


16 to 19 years


16 to 17 years


18 to 19 years


20 years and over


20 to 24 years


25 years and over


25 to 54 years


25 to 34 years


35 to 44 years


45 to 54 years


55 years and over




As you can see it’s highest by a wide margin with the youngest would be employees.  As the minimum wage is raised companies need more productivity and skilled labor from those who are working in those entry level positions.  The result is that it becomes even more difficult for young people to break into the workforce.  That is causing a later start in life for millions of young people that will only become exacerbated further if the rate is raised still further.  Ask yourself this…  Why do you earn more than minimum wage?  It isn’t because the Federal Government forced your employer to do so.  It’s because you gained skill and expertise that validated higher income.  If you don’t have access to work how can you gain skills and prove your worth? 


In other words access to the workplace is the most important part of the equation.  Minimum wage is the leaping off point, not the career expectation.  We need maximum access to the workplace for young people for the purpose of upward mobility later.  The President’s proposal would do just the opposite.


Audio Report:



Don't listen to the noise - we're still doing a great job managing our personal debt:


Bottom Line:  There was a lot of noise yesterday about personal debt levels reaching the highest levels since 2007 (before the recession).  That’s just noise.  Much of the debt was home, auto and student loan related.  Those debts are indicative of consumers gone wild.  The most important debt stat to track if you’re concerned about personal debt is the credit card info.  Looking at credit card debt we’re doing a terrific job managing our personal debt:


  • Credit card default rates are currently 1.4% down from 1.6% a year ago
  • The average credit card balance by one who has credit cards is currently $5325 down from $5376


So with the most discretionary form of debt we’re still making progress.  Congrats!


Audio Report:



Dating in the work place has never been more popular Millennial:


Bottom Line:  The older we become the less likely we are to think it’s a good idea to date inside of the workplace.  But all told, more people in the workplace feel it’s a good idea to date in the workplace than ever before.  According to a survey by Workplace Options:


  • Just 29% of Baby Boomers agree with dating in the workplace
  • Just 36% of Gen Xer’s are supportive
  • Enter the Millennials though…  84% of them are supportive

That means that office romances are likely to be more common than at any time previously.  And as for me…  Well I’m a happily married Gen Xer who married a former co-worker of mine… So you can figure out where I come down on the issue.  Though I’ll mention that I’d never date an employee that reported to me…


Audio Report: