Feel free to ignore this outdated financial advice

Money sent this email to their subscribers on July 12, 2023.

July 12, 2023 • Issue #197

Money dollarscholar Figuring out personal finance, one question at a time

Hi y’all —

I’m back! Did you miss me?

My trip to Italy was AMAZING. I ate all the pasta, drank all the aperol spritzes and soaked up all the art. And while I was doing that, I found myself continually struck by just how innovative everything is.

Walking around, it’s easy to see how Italians changed their minds over time based on new information. For instance, did you know Ancient Romans started out building lots of lead pipes — but once they realized the material was poisonous, they began preferring ceramic aqueducts for drinking water? (Meanwhile, much of the U.S. still uses lead pipes today.)

Or that Michelangelo initially sculpted David to sit on top of the Duomo in Florence — but once it was complete, the committee in charge decided the statue was too heavy and too beautiful to be hauled up there?

I’m impressed by Italy’s ability to realize when an approach is no longer working and needs to be adjusted. Now that I’m back on American soil, I keep wondering whether that applies to personal finance, too.

What outdated money “rules of thumb” should I avoid because they don’t apply in the year 2023?

Here’s what experts told me:

I need three to six months of expenses in my emergency fund.

“Actually, you need enough money in your emergency reserve to cover expenses over the time period it would take you to find a new job. The higher your job ranking and income, the longer it will take for you to find a job (the process is just longer for senior positions).

For single-income households, your emergency reserve should be at least nine months of expenses. For dual-income households, your emergency reserve should be at least six months of expenses. Adjust [it] based on the dynamics in your industry and role.” — Niv Persaud, managing director at Transition Planning & Guidance

Owning a house is better than renting.

“Even if you can afford to buy a home in your area, it doesn’t mean you should. Renting can be an especially wise choice if you need to stay flexible due to career uncertainty or you aren’t sure which city/neighborhood you want to commit to yet.

You’ll know it’s the right time to buy when you’re fairly certain that you plan to stay in the home for at least five years. Anything less than that, and your home purchase decision has the potential to set you back financially rather than move you forward.” — Andy Baxley, senior financial planner at The Planning Center

Rosehill @Kailikapu i miss the good old days when $100 was a lot of money 4:08 PM - Apr 7,2021

I should save 10% of my income.

“People want to retire at younger and younger ages, and yet we're living for longer and longer. The expansion of our non-working years is wonderful from a lifestyle perspective — but it puts massive strain on your assets, especially if you've been following old guidelines to save 10 to 15% of your income each year. Even if you are very dedicated and always meet that target, it might not be enough to support a retirement that might last 30, 40 or even more years.

We recommend a baseline rate of 20 to 25% to our financial planning clients ... the more aggressive their financial goals, the more we recommend they save today in order to build the wealth they need to fund what they want.” — Eric Roberge, founder of Beyond Your Hammock

All young people should invest aggressively.

“That may be true for retirement, but young people also need to build an emergency fund (that shouldn't be aggressive), pay down debt (that's not investing at all) and save for upcoming major life events (wedding, down payment, etc.).

Those major life events are so short-term that they shouldn't be aggressive either.” — Nick Holeman, director of financial planning at Betterment

I should max out my annual IRA contribution no matter what.

“Depending on the person’s situation, [this] may be suboptimal or even detrimental. Many investors don’t realize there are phaseouts in their eligibility to make Roth IRA contributions or take a deduction for traditional IRA contributions.

Someone who files single on their tax return cannot contribute to a Roth IRA if their Modified Adjusted Gross Income is over $153,000 in 2023. If they aren’t aware of the rule and they make Roth contributions, they’ll be charged with a 6% penalty on the excess contribution(s) EACH YEAR until it’s fixed. If that same person is also covered by a workplace retirement plan (like a 401(k)), they can’t take a tax deduction for their traditional IRA contribution if their MAGI is greater than $83,000.” — Matt Garasic, president of Unrivaled Wealth Management

Homeownership is a critical part of achieving the American dream.

“Americans value homeownership and view it as a key life achievement of greater freedom and prosperity. While I don't deny these feelings or the fact that home ownership can be a part of a wealth building strategy, you're also faced with the financial challenges and burdens associated with buying and owning a home, including mortgage rates, home prices, and the related costs and time to maintain.

Over the years, I've worked with clients to help them achieve their goals, which more times than not include downsizing or simplifying their lifestyle so they can pursue happiness — often defined as travel, time with friends and family, hobbies, and helping others.” — Tracy Sherwood, president at Sherwood Financial Management

The bottom line

(but please don't tell me you scrolled past all of my hard work)

Just because something used to work doesn’t mean it still does. I have to stay flexible and up-to-date on the best modern money practices.

via Giphy

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*Chime SpotMe is an optional service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.

Receipt of the week

check out this wild celebrity purchase

via Instagram

When actress Lana Condor got engaged last year, she immediately jumped into wedding mode — and then stopped. “I was planning this whole big thing, and then I realized it’s so much money,” she said on the Today show last month. Instead, she and her fiancé put that cash towards a down payment: “We ended up getting our first family house together, and we’re going to do the wedding in the backyard and make it more chill.” Lana Condor, Adult Budgeter!

Internet gold

five things I'm loving online right now

MSCHF, the Brooklyn art collective that brought you Big Red Boots and Eat the Rich Popsicles, is up to its tricks again. Last month, MSCHF auctioned off a tiny handbag measuring 657 by 700 microns — that’s smaller than a grain of sea salt — for a whopping $63,750. “There are big handbags, normal handbags and small handbags,” MSCHF said in a statement, adding that this is ”the final word in bag miniaturization.”

This is a great breakdown of the 21 greatest outfits in Succession history, including Roman’s Walmart T-shirt, Gerri’s “corporate noir” boat ensemble and (of course) Shiv’s power pants. But I feel we’re overlooking Kendall’s meme-worthy headphones?

I love this cool project from Rest of World: a party playlist featuring chart-toppers from countries like Nigeria, Colombia and Pakistan. What’s your favorite?

Something weird is going on with the star Betelgeuse, which has recently gotten a lot brighter than usual — causing some scientists to predict that the red supergiant is on the cusp of going supernova soon (aka exploding)! Admittedly, “soon” here means “within a few decades,” and a lot of researchers disagree with this timeline, but still. Space.com says that “if Betelgeuse were to go boom it would be the nearest supernova explosion in more than 400 years, and it would be so bright it would be visible even in daylight.” 👀

Cat at bar.

401(k)9 CONTRIBUTION

send me cute pictures of your pets, please

via Tim Solyan

Meet Gertie, an adorable pup who’s constantly checking to see whether the financial tips she’s following still make sense in the pawdern age.

It's good to be back.

See you next week.

P.S. Are there any money tips you think are outdated? What’s your favorite constellation? What cocktail do you think the cat ordered at the bar? Send a Dolla Scholla holla to [email protected].

This newsletter is free because Money earns a commission when you click or make purchases from the links in this email and on our site. We also receive compensation for some of the products and services featured in this message. Offers may be subject to change without notice. Learn more about how we make money.

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͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ July 12, 2023 • Issue #197 Money dollarscholar Figuring out personal finance, one question at a time Money dollarscholar Figuring out personal finance, one question at atime e Sponsored c h I m e Hi y’all — I’m back! Did you miss me? My trip to Italy was AMAZING. I ate all the pasta, drank all the aperol spritzes and soaked up all the art. And while I was doing that, I found myself continually struck by just how innovative everything is. Walking around, it’s easy to see how Italians changed their minds over time based on new information. For instance, did you know Ancient Romans started out building lots of lead pipes — but once they realized the material was poisonous, they began preferring ceramic aqueducts for drinking water? (Meanwhile, much of the U.S. still uses lead pipes today.) Or that Michelangelo initially sculpted David to sit on top of the Duomo in Florence — but once it was complete, the committee in charge decided the statue was too heavy and too beautiful to be hauled up there? I’m impressed by Italy’s ability to realize when an approach is no longer working and needs to be adjusted. Now that I’m back on American soil, I keep wondering whether that applies to personal finance, too. What outdated money “rules of thumb” should I avoid because they don’t apply in the year 2023? Here’s what experts told me: * I need three to six months of expenses in my emergency fund. “Actually, you need enough money in your emergency reserve to cover expenses over the time period it would take you to find a new job. The higher your job ranking and income, the longer it will take for you to find a job (the process is just longer for senior positions). For single-income households, your emergency reserve should be at least nine months of expenses. For dual-income households, your emergency reserve should be at least six months of expenses. Adjust [it] based on the dynamics in your industry and role.” — Niv Persaud, managing director at Transition Planning & Guidance * Owning a house is better than renting. “Even if you can afford to buy a home in your area, it doesn’t mean you should. Renting can be an especially wise choice if you need to stay flexible due to career uncertainty or you aren’t sure which city/neighborhood you want to commit to yet. You’ll know it’s the right time to buy when you’re fairly certain that you plan to stay in the home for at least five years. Anything less than that, and your home purchase decision has the potential to set you back financially rather than move you forward.” — Andy Baxley, senior financial planner at The Planning Center Rosehill @Kailikapu i miss the good old days when $100 was a lot of money 4:08 PM - Apr 7,2021 * I should save 10% of my income. “People want to retire at younger and younger ages, and yet we're living for longer and longer. The expansion of our non-working years is wonderful from a lifestyle perspective — but it puts massive strain on your assets, especially if you've been following old guidelines to save 10 to 15% of your income each year. Even if you are very dedicated and always meet that target, it might not be enough to support a retirement that might last 30, 40 or even more years. We recommend a baseline rate of 20 to 25% to our financial planning clients ... the more aggressive their financial goals, the more we recommend they save today in order to build the wealth they need to fund what they want.” — Eric Roberge, founder of Beyond Your Hammock * All young people should invest aggressively. “That may be true for retirement, but young people also need to build an emergency fund (that shouldn't be aggressive), pay down debt (that's not investing at all) and save for upcoming major life events (wedding, down payment, etc.). Those major life events are so short-term that they shouldn't be aggressive either.” — Nick Holeman, director of financial planning at Betterment * I should max out my annual IRA contribution no matter what. “Depending on the person’s situation, [this] may be suboptimal or even detrimental. Many investors don’t realize there are phaseouts in their eligibility to make Roth IRA contributions or take a deduction for traditional IRA contributions. Someone who files single on their tax return cannot contribute to a Roth IRA if their Modified Adjusted Gross Income is over $153,000 in 2023. If they aren’t aware of the rule and they make Roth contributions, they’ll be charged with a 6% penalty on the excess contribution(s) EACH YEAR until it’s fixed. If that same person is also covered by a workplace retirement plan (like a 401(k)), they can’t take a tax deduction for their traditional IRA contribution if their MAGI is greater than $83,000.” — Matt Garasic, president of Unrivaled Wealth Management * Homeownership is a critical part of achieving the American dream. “Americans value homeownership and view it as a key life achievement of greater freedom and prosperity. While I don't deny these feelings or the fact that home ownership can be a part of a wealth building strategy, you're also faced with the financial challenges and burdens associated with buying and owning a home, including mortgage rates, home prices, and the related costs and time to maintain. Over the years, I've worked with clients to help them achieve their goals, which more times than not include downsizing or simplifying their lifestyle so they can pursue happiness — often defined as travel, time with friends and family, hobbies, and helping others.” — Tracy Sherwood, president at Sherwood Financial Management The bottom line (but please don't tell me you scrolled past all of my hard work) Just because something used to work doesn’t mean it still does. I have to stay flexible and up-to-date on the best modern money practices. Just roll with it, girl via Giphy Advertisement chime: Chime SpotMe®️ - Fee-free overdraft up to $200*. We’ve got your back - Apply Now! *Chime SpotMe is an optional service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions. Receipt of the week check out this wild celebrity purchase Lana Condor via Instagram When actress Lana Condor got engaged last year, she immediately jumped into wedding mode — and then stopped. “I was planning this whole big thing, and then I realized it’s so much money,” she said on the Today show last month. Instead, she and her fiancé put that cash towards a down payment: “We ended up getting our first family house together, and we’re going to do the wedding in the backyard and make it more chill.” Lana Condor, Adult Budgeter! Internet gold five things I'm loving online right now 1 MSCHF, the Brooklyn art collective that brought you Big Red Boots and Eat the Rich Popsicles, is up to its tricks again. Last month, MSCHF auctioned off a tiny handbag measuring 657 by 700 microns — that’s smaller than a grain of sea salt — for a whopping $63,750. “There are big handbags, normal handbags and small handbags,” MSCHF said in a statement, adding that this is ”the final word in bag miniaturization.” 2 This is a great breakdown of the 21 greatest outfits in Succession history, including Roman’s Walmart T-shirt, Gerri’s “corporate noir” boat ensemble and (of course) Shiv’s power pants. But I feel we’re overlooking Kendall’s meme-worthy headphones? 3 I love this cool project from Rest of World: a party playlist featuring chart-toppers from countries like Nigeria, Colombia and Pakistan. What’s your favorite? 4 Something weird is going on with the star Betelgeuse, which has recently gotten a lot brighter than usual — causing some scientists to predict that the red supergiant is on the cusp of going supernova soon (aka exploding)! Admittedly, “soon” here means “within a few decades,” and a lot of researchers disagree with this timeline, but still. Space.com says that “if Betelgeuse were to go boom it would be the nearest supernova explosion in more than 400 years, and it would be so bright it would be visible even in daylight.” 👀 5 Cat at bar. 401(k)9 CONTRIBUTION send me cute pictures of your pets, please Gertie via Tim Solyan Meet Gertie, an adorable pup who’s constantly checking to see whether the financial tips she’s following still make sense in the pawdern age. It's good to be back. See you next week. P.S. Are there any money tips you think are outdated? What’s your favorite constellation? What cocktail do you think the cat ordered at the bar? Send a Dolla Scholla holla to [email protected]. Facebook Twitter Instagram Youtube This newsletter is free because Money earns a commission when you click or make purchases from the links in this email and on our site. We also receive compensation for some of the products and services featured in this message. Offers may be subject to change without notice. Learn more about how we make money. • Advertise With Us • We're Hiring! To stop receiving these emails, or . Copyright ©2023 Money Group, LLC. All rights reserved. Metro Office Park Calle 1, Building 7 Suite 204, Guaynabo, Puerto Rico 00968, USA

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