Welcome to episode 57 of the Nerd Journey Podcast [@NerdJourney]! We’re John White (@vJourneyman) and Nick Korte (@NetworkNerd_), two Pre-Sales Technical Engineers who are hoping to bring you the IT career advice that we wish we’d been given earlier in our careers. In today’s episode we discuss how to prepare for unanticipated career opportunities, part 5, Lessons in Personal Finance.

Original Recording Date: 10-27-2019

Topics – Preparing for Unexpected Career Opportunities, Part 5

A Review of the Series to Date

• Go back and listen if you missed these episodes…
  • Part 1 – Preparation
  • Part 2 – Contact
  • Part 3 – Agreeing to a Discussion
  • Part 4 – Decision Time

1:27 – Update on John’s Employment

• John is officially employed now and is a Customer Engineer at Google representing the Google Cloud portfolio of products.

2:54 – Personal Finance

• We realized a lot of the advice we gave in previous episodes centered around being in a financially health place and wanted to dig into that a bit further.
• Financial struggles are an emotional strain whether you are employed or unemployed. Debt applies pressure and drains mental energy from people.
  • John cites lack of debt as a way to provide freedom during a job search.

6:08 – Advice from Manager Tools

• Check out the following episodes from Manager Tools:
  • Getting Laid Off – Finances Rule
    • Their main advice in the event of a layoff is control expenses event before applying for other jobs.
    • They recommend a 6 month emergency fund to cover expenses in case this happens to you.
  • Annual Layoff Immunization
    • They advise have a number of items readily available at home…
      • Printed personal contacts list
        • This is not something proprietary from your last company…don’t be that person.
      • Printed recruiter list
      • Access to business reviews
      • Current resume

9:54 – Sharing Our Favorite Sources

• John
  • Personal Finance for Dummies Cheat Sheet
  • Bogleheads Personal Finance Planning Start-Up Kit
    • Inspired by John Bogle
    • There are articles on a number of immediate actions one can take to change personal finance situations.
• Nick
  • Dave Ramsey’s 7 Baby Steps
  • Advice from The Automatic Millionaire by David Bach
    • The advice given here helps enable behavioral change needed for financial changes.

13:27 Credit and Debt

• Personal Finance for Dummies
  • Don’t buy consumer items that lose value over time on credit. Buy thinks with a stable or increasing value on credit.
  • Use credit cards only for convenience and not carrying debt.
• Bogleheads
  • Pay down bad debt (high interest debt.
  • Prioritize investing in retirement, savings, and paying down loads.
    • See paying down loans vs. Investing article for more on this.
    • Getting rid of high interest debt can save the most money.
• Dave Ramsey
  • Try the debt snowball – start by focusing on the smallest debt, then use that same money to pay off the next largest until everything paid off except the house.
    • This is more psychologically rewarding and changing to help build the habit.
  • Should you stop saving for retirement to pay off debt?
• David Bach
  • It is more beneficial to start saving for retirement as early as you can.
  • Tackle the highest interest debt first if you can, but the snowball method is also acceptable.
  • Make your bill payments automatic so there is no need to make a decision to do it every month.
• Nick and John’s Advice
  • Stick to it, and get your spouse / family on board with the plan to succeed.

21:37 Expense Management

• Personal Finance for Dummies
  • Live within your means. There is no need to keep up with co-workers and peers. This is challenging when you have children.
• Bogleheads
  • Track expenses, and stay within budget. Live below your means to help pay off debt.
• Dave Ramsey
  • Determine where you spend your money first.
• David Bach
  • The Latte Factor is real. What small changes can you make now to improve your financial state?
• Nick and John’s Advice
  • Order water when you go out to eat, or go out to eat less often.
  • If the psychological reward of paying off debt is not enough, treat yourself now and then (within your means) to stay focused.
  • The latte is a stand in for any incremental indulgence. Keep in mind large expense mistakes as well.

25:34 Savings

• Personal Finance for Dummies
  • Save and invest at least 5-10% of your income after paying off bad debt.
• Manager Tools says save 10% of what you make.
• Dave Ramsey
  • Invest 15% of income in retirement after you pay down debt and have 3-6 months of living expenses.
• David Bach
  • Invest in retirement from the beginning, even if it is only a little and increased later.
  • Pay yourself automatically BEFORE living expenses.
• Nick and John’s Advice
  • Take joy in your progress. Substitute for the joy of spending money.

28:29 Emergency Fund

• Bogleheads
  • Save 3-12 months of living expenses (all household expenses).
• Dave Ramsey
  • Save $1000 for a liquid starter emergency fund before paying down the debt.
  • Once debt is paid down, save 3-6 months of expenses.
• Nick and John’s Advice
  • Use the emergency fund only for emergencies!

30:23 Retirement Investment

• Personal Finance for Dummies
  • Avoid financial products carrying commissions and expenses.
  • Invest the majority of your long-term money in ownership vehicles that have appreciation potential, such as stocks, real estate, and your own business.
• Bogleheads
  • Look at…
    • Target Retirement Date funds
      • This types of funds are auto-balanced as you get closer to retirement to decrease risk. It is far more difficult to select a single stock for investment than leveraging something like this.
    • Three Index Fund Portfolio for Vanguard, Fidelity, Schwab, etc.
    • ETFs (Exchange-Traded Funds) from Blackrock, Schwab, Vanguard, State Street, etc.
    • Employer matching funds (guaranteed rate of return)
• John and Nick’s Advice
  • Remember employee stock purchase programs (ESPP) and access to RSU (restricted stock units – vest based on tenure with the company) are investments as well.
    • Putting more money into ESPP is a way to get a greater return down the road for further investment or payment on debt if needed.
  • Diversify your investments. Investing in stock of only your employer may be too much risk to carry.

36:41 Home Ownership

• Personal Finance for Dummies
  • Their verdict is own your home because it gains value
• Bogleheads
  • The own vs. rent decision – backed by analysis
• Dave Ramsey
  • Pay off the house early, and save on the loan interest.
  • The majority of people do not regularly make an extra payment on the house.
• John and Nick’s Advice
  • John’s pay as if method
    • Think about the type of down payment needed, what you have, price of house you are targeting, HOA fees, insurance and tax rates
    • Boil down to a monthly payment, and compare with your current rent.
      • If you could make up the difference between the two right now, start saving the difference.
      • If you can’t make the payment today, how can you make it when you own the home?
    • Maybe you can’t afford to own a home in the area where you live currently. Is relocating a better financial option?

43:15 When You’re Doing Well

• The sources we gave give advice in these areas too (not to be covered in this episode)
  • College funds
  • Broader insurance coverage
  • Charitable giving

44:03 Closing Thoughts

• Living debt free allows you to make better career decisions in bad situations (or even in good situations).
• There are financial workshops out there as well as Dave Ramsey’s Financial Peace University.
• Search YouTube for free videos on financial topics.
• Talk to your mentees about finances to make sure they are making wise decisions. Not every family teaches this to their children.
• Credit cards can be like financial cocaine.
• Promise yourself you will pay down debt and make smart decisions. This makes your existing take home pay higher and gives you a raise.
• John learned the "live as if" methodology from his mother. Maybe it can provide a lesson for you.

Contact us if you need help on the journey.