EduCounting

Episode 108: Dad wants to be a Trekkie

The importance of saving goals with Mak and G

SHOW NOTES

Today, Mak and G look at why it’s so important to have a plan when you’re saving and what the power of having a goal can have… 

 

This episode, Mak and G discuss the different goals people might save towards and how to work out which one is best for you.

 

They also discuss the importance of having a plan and different software applications that can help track your progress…

 

“About 78% of people with a plan pay their bills on time and save money each month, but those without a plan only about 38% of people do that.” – Mak

 

“You can’t hit the target if you can’t see what you’re aiming for, start with your goals.” – G

 
Time Stamps:

00:53 – The Indy 500 and how much racers get paid for winning.

03:10 – How much it costs to enter the race and compete.

04:30 – Our updates on the market movements this week and what the CPI is.

06:30 – My trip to Las Vegas and the business behind gambling.

09:07 – How to pick which of your goals to focus on.

10:01 – The importance of having a plan and how software can help.

11:40 – High-interest debt and why not all debt is bad.

12:15 – How best to plan for retirement.

 

Resources:

Mint

Quicken

Personal Capital

 

Connect with Ben Jones:

 

TRANSCRIPT

DAD:  Welcome back to Money with Mak & G, don’t forget to LIKE, SUBSCRIBE and COMMENT on the podcast.  This episode is for the week ending May 28th, 2021

MAK: Whoohoo!!  Finals are done, and the burden has lifted!

GRANT: School is OOOVER and it’s summer break baby!

MAK: Time to relax by the pool, enjoy long walks and watch the days get longer!

GRANT: We need to take some killer bike rides while getting some good sun, and maybe tape them with our GoPros.

MAK: I’m good with that.  Congrats to all the kids who made it through another year of uncertainty, in school and out of school, brought to us by crappy COVID! But, the clouds are starting to make way for the sunshine.

GRANT: It’s Memorial Day weekend, and that’s pretty special. The pools are open up, and it’s time for the Indy 500.  It just finished and Helio Cas-tro-nevis has won his 4th Indy 500. Congratulations!! The 500 is known around the world.  When dad was in school in France, nobody really knew Indiana. But, when he said he was from Indianapolis, they DID know about the Indy 500.

MAK: It’s actually part of the Triple Crown in Motorsports, which means it’s one of the three MOST prestigious motorsport events in the WORLD.  The Monaco Grand Prix is another which traditionally falls on the same day, but it was last weekend.  You also have the 24 hours of LeMon, which is actually 24 hours of driving. Shear ENDURANCE.

GRANT: The Indy 500 has a lot of people who come here just for the weekend. This is the biggest travel weekend of the year.  It sounds like it might be one of the biggest events during the pandemic with around 135,000 people. Hey, it’s much lower than it’s 300,000 capacity. I gotta know, do the drivers wear a diaper during the race, since they can’t get out of the car?

MAK: Great question. During the 24 hours at LeMon, they actually have a system where a tube goes down their leg and out the car.  GROSS.  For the Indy drivers, it’s only 3 hours and there is NO system and NO diapers.  If they have to go, let’s just say nature takes its course, and it’s a mess.  It’s like when mom reminds us to go to the restroom before a long trip.  They have to be careful how much they drink before it starts because you definitely get bounced around the whole time doing 225 miles per hour. That’s about 40 seconds around the 2 ½ mile oval track.  

GRANT: You have to dodge the 33 cars out there too.  Let’s talk money.  The purse is the total paid out to ALL the racers. It was $7.5 million last year during COVID, which was half of normal, because no tickets were sold to fans. The winner gets about 20%, so Takuma Sato won about $1.4 million but that’s better than the $14,000 Ray Harroun received in 1911 as the first winner.

MAK: Those are some big numbers. But, it costs $12,000 for the entry fee.  Fuel is about $1,500 for the month because the cars get around 4 miles per gallon. Plus, get this, because they use so many tires, it costs around $85,000. You can’t forget the car costs around $3-8 million.  I bet insurance isn’t cheap!!

GRANT: That is crazy, but many parts are mass produced, which means you don’t have to build them yourself, and are MUCH cheaper. The Federation International Automobile, who oversees Formula 1 Racing, which is different from Indy Cars, caps their F1 construction cost at $175 million.  Now that is CRAZY.

DAD: That’s amazing stuff. Sounds like there are all kinds of money facts.  Auto racing always seemed like a difficult sport, but ESPN rated it #32, right after Badminton. Isn’t that funny? But it is rated higher than Rowing and Calf Roping.  And, I thought rowing was insanely hard.  It’s based on things like endurance, strength, power, speed and other stuff. Anyway, all of those athletes have to DO the work to be good. And, we have to DO our work to be good at money.  But, it doesn’t have to be hard. So, let’s jump in. 

MAK: This is Mak and these are the markets… Over the last two weeks, the Dow dropped and bounced back, still up double digits, as a percentage and still in record territory.  The same happened with the S&P.  The Nasdaq saw a bit of strength over the last two weeks, so we’ll keep watching. One thing to talk about is the CPI, also known as the Consumer Price Index. It tells us how much the price of stuff that we buy has risen over the last year. Yep, that’s stuff like food, gas, cars and clothes to name a few. Over the last 12 months ending April, it’s up over 4% which is more than originally expected.  Which makes most people think inflation is either here or coming.  A big increase compared to last year has been gas prices and used car and truck prices. That’s a longer story, though.

GRANT: Mak, another increase in price that has jumped this year is the cost of wood.  If you’re building a house the cost of wood will have increased the cost of your home by almost $36,000.  That’s JUST the wood, and it’s continuing to rise.  So, interesting things are happening. Bitcoin fell HUGE last week, due to Elon Musk saying it would no longer accept Bitcoin for payment of a Tesla, because it takes lots of energy to maintain and mine a Bitcoin. He said it had “Environmental concerns.  But, it jumped back and is up ONLY up 23% on the year, compared to more than 100% previously.  Apple continues to fall a bit and is down almost 7% from the beginning of the year.  (PAUSE) I wanted to mention something that happened this week that was interesting.  Amazon bought MGM, the entertainment company which makes movies and TV shows. Amazon wanted more content for Prime Video.  They paid almost $8.5 billion and got over 4,000 movies and 17,000 TV shows, including James Bond, Creed, Basic Instinct, Fargo, Vikings and more.  Netflix better watch out!

DAD: This past week was a bit interesting for me, as I went to Vegas for an 80th birthday.  For anyone who’s been to Vegas, it’s a pretty interesting place for many reasons. You have access to awesome shows and entertainers like Cirque du Soleil, magicians like Criss Angel and David Copperfield, singers like Lady Gaga, Elton John and lots of comedians like Carrot Top and even Jerry Seinfeld.  Anyway, I have to think about all of the money running underneath the Las Vegas Strip just like the slime on Ghostbusters. 

GRANT: Dad, are you talking about the ghost called “Slimer” who slimed people.  He was the first ghost caught by the Ghostbusters and the slime was pure ectoplasm. He always left a trail of slime, hence the name “Slimer”. 

MAK: Grant, you’re thinking about the FIRST Ghostbusters movie, but I think dad’s talking about the sequel, which had the Psycho-magno-theric Slime, which is the byproduct of the high levels of PKE also known as psycho-kinetic energy. It was running like a RIVER under New York.

DAD: You are SO right Mak.  Very impressive.  No matter whether it’s Psycho-magno-theric slime, or just a green river of money, it’s the visual I get whenever I go to Vegas.  Gambling is an interesting business, especially if you like numbers and calculate the odds of winning and losing. The games can be addictive too.

GRANT:  So, they’re fun to play?  But most people lose money, right?  Didn’t we read that if you gambled for just a day, you have about a 30% chance of winning?  

MAK: That’s true, but that also means you have a 70% chance of losing. And, if you keep playing, the Wall Street Journal found that only around 10% of all players had any winnings after 2 years.  For the online gamblers they studied, it showed an average total winning of less than $150.  That’s a lot of time, effort and risk for very little return.

DAD: So very true Mak.  Studies show that those that gamble too much tend to be disorganized and impulsive among other things.  Being in a good financial situation while growing your wealth requires a little bit more control, organization, and staying with the plan.

MAK: Isn’t this where you have to DO the work after getting in the right mindset and assessing your situation? 

DAD: Yep, it sure is.  You’ve got the right mindset, you’re organized and you know where you stand since you assessed your situation. It’s time to set up your goals and prioritize which goals are more important. Then, start saving and investing.

GRANT: That sounds pretty simple.  But, isn’t it hard to choose between your goals?  Vacations should always be first, right?

MAK: Seriously G? Some people really want to buy a home.  Others want to be able to retire with enough money to travel, or some parents want to pay for college, while some people dream of having a vacation home on the beach.

GRANT: Can’t you get them all?

DAD: You can. But, you have to set your priorities.  Which ones are the most important? For us, we had to make concessions, which means cut down on some of our goals like future travel plans so we could boost our college savings for you and Mak. Sadly, I had to cut the purchase of a jet.

MAK: Seriously a jet?

DAD: A guy can dream, right?

GRANT: I guess so, and a jet would’ve been AWESOME. We want to make it easy to digest. We can go into many different areas. It can also appear complicated, but there is help. I’ve been looking online, and I found a couple softwares that are free, or inexpensive to create your plan.  I know you can do it with pen and paper, but software usually helps make sure you get it all.

MAK: “Mint” is one that can help.

GRANT: Another big name is “Quicken” 

MAK: And “Personal Capital” can do it too. They’re NOT the only ones, so you may find a better one.

GRANT: It’s a DIY project, where you can “Do It Yourself”.  It gets you to put together goals, it helps track expenses, helps you set up a budget and even helps with taxes.  Very cool.  Here is a great fact.  About 78% of people WITH a plan, pay their bills on time and they save money each month.  But, of those without a plan, only about 38% do that.  So, MAKE A PLAN!!  

MAK: You know you can’t hit the target if you can’t see what you’re aiming for. No matter what you do, start with your goals. Don’t forget to make sure one goal is having an emergency fund of 3 to 6 months of spending. When assessing your situation you figured out how much you spent monthly, so use it.  Things can change quickly in anyone’s life, and COVID was a great example of when an emergency fund was key.  Many people lost their jobs and needed it.

GRANT: You’re right Mak! As mentioned, after the plan, track your money and put the savings towards your goals. You can start with small goals like saving $10/mo to get started.  We know you can hit that. Now, with a  plan you’ll be in that 78% of people paying bills on time AND saving!

DAD: Work your plan, and build the habit.  It is not instant gratification. Part of your plan should be on tackling high-interest debt, like credit cards. This is BAD debt that doesn’t build wealth. Debt used to buy an investment, like an apartment building or your home is good debt. Joan Rivers was a famous comedian who was in $37 million in debt after her husband died. 27 years later she was worth $150 million.  She said, and I quote, “People say that money is not the key to happiness, but I always figured if you have enough money you can have a key made.” She always had a unique way of looking at the world that made me laugh.

MAK: Most companies will help with retirement planning.  This should definitely be in your plan.  Don’t expect anyone, not even the government, to take complete care of you when you’re older.  If your company is giving you FREE money where they literally MATCH your savings, ALWAYS get the free money, and increase it yearly if you get a raise. Dad, you did a quote from a famous person, how about this one.  Another old comedian named Jackie Mason was a rabbi. But, after his dad died, he went into comedy and said “Somebody in the family had to make a living”.  He did make a living and was worth several million when he died. I like this quote from him “Money is not the most important thing in the world. Love is. Fortunately, I love money.”

GRANT: Nice one Mak! Don’t forget to make sure you have insurance in your plan as well. If something happens to you.  We all want to make sure our families are taken care of! Then, to finish it up, you have to check in on your progress regularly!! We’re definitely going to continue to talk about options for investing in future podcasts.  But, wouldn’t it be cool to take an extra vacation and still have control of your money. Or for me to have enough saved in my plan for any video game I wanted!! That would be awesome!! As for a quote, most people know Star Trek and William Shatner was the original Captain Kirk of the USS Enterprise.  He’s worth over $100 million.  He said something great. “If saving money is wrong, I don’t want to be right!

DAD: I love it G!! I think I’m going to be a Trekkie now because I love that quote so much.  And, you should want to as well because saving is cool. Setting up your plan and working your plan is all about doing the work.  Write down all your goals. Just get them down on paper. Prioritize them by importance.  You assessed your situation, which means you know your incoming and outgoing dollars.  So, you have to create your budget based on the general guidelines we discussed about housing, transportation, clothing, fun and others in the prior podcast.  Make decisions to reduce spending so you can save and then put those savings to work by investing for your goals.  Remember, many times we buy to keep up with the Jones’ or by things we really don’t need. If you need professional help, get it. I’ll end with a quote that Will Smith used to say. He’s worth $260 million, but supposedly remained humble.  He used to say Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” Live your own life that you choose for yourself, and put it in your plan.

MAK: Thanks for being here, and don’t forget to LIKE, SUBSCRIBE and COMMENT on the podcast and we’ll see you next time.

GRANT: For more “Money with Mak and ME!!!!””

ALL: BYE!!!

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