hpr-knowledge-base/hpr_transcripts/hpr2568.txt

Episode: 2568
Title: HPR2568: Personal finance
Source: https://hub.hackerpublicradio.org/ccdn.php?filename=/eps/hpr2568/hpr2568.mp3
Transcribed: 2025-10-19 05:52:57

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This in HPR episode 2,568 entitled Personal Finance, it is hosted by Klaatu and in about 55 minutes long, and Karina Cleanflag, the summer is, how to manage personal finances.
This episode of HPR is brought to you by an honesthost.com, get 15% discount on all shared hosting with the offer code HPR15, that's HPR15.
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Hi everyone, this is Klaatu, you're listening to Hacker Public Radio. This episode is about my least favorite subject in the world, money, specifically personal finance.
I'm doing this episode not because this is an interesting topic to me, in fact this is one of those topics that I've really, really shy away from in lots of different ways.
I don't like money, I wish it weren't necessary, I don't enjoy having to make money, I don't enjoy having money.
Money is something that is just, it's a somewhat necessary evil, I guess, and eventually you have to think about it.
The problem is that a lot of us don't think about it, and when we do research, there's a lot of conflicting information about it, and generally advice on this topic comes in two different forms, at least from what I've seen.
The first form is the form of someone scolding you for not having saved enough money yet, if you'd only saved a penny every day since you were 12, then you'd be a millionaire by now, that sort of advice.
The advice that you cannot take action on because it's something that you have not done in the past.
And then the second form of advice in my experience is the very urgent sort of dictatorial, these are the things that you need to do,
but then there's never any follow-up on how to actually do those things.
So this episode seeks to remedy that.
This is a clueless person, i.e. me, speaking to you with advice, pretty much gleaned from lots of mistakes.
In other words, this may not be the best advice.
In fact, this is definitely not authoritative financial or legal advice, that's probably an important disclaimer for me to make.
Do not listen to me, but if you want to listen to this episode, take what I say and then go and do research on it and make informed decisions.
Although I challenge you to actually do research on this stuff because I'm telling you nobody ever talks clearly about this subject.
So hopefully this episode, if nothing else, will be the clearest conversation about personal finance that you will ever hear in your life.
Okay, so there's a couple of different problems about personal finance.
First of all, okay, well, we'll start with a really, really low level.
First of all, is what if you don't have any money?
Like how do you get money? Where does it come from?
How do you acquire it? How do you hang on to it? How do you manage it?
How do you save it for the future if you can barely pay rent now?
Okay, that was my first quandary back in my college days and trying to figure out how I could get into this business whilst making below minimum wage at various stupid retail jobs.
I wasn't making literally below minimum wage, but minimum wage is not a living wage in the USA at least.
And so it was a little bit of a quandary. I mean, I could literally sometimes not pay rent and my school bills at the same time.
So you had to make a choice. So you're going into the negative no matter what.
So my choice at that point was to drop out of school, save money by not going to school.
That was the smartest choice I've ever made and it's one that I highly and heartily recommend to people.
But I recognize that not everyone is going into an industry where they just kind of don't even ask about the degree in the first place.
So that's not always going to be something that you can do.
So maybe you have to go to school and maybe you're working, maybe you're not working, maybe you're going into debt.
But generally speaking, and you'll hear this from a lot of people, but I'm going to have to say it.
But I'm going to say it with a few more notes that hopefully will make it actually mean something to you.
And that is in order to live a healthy financial situation in order to have that in your life,
the key is, and I know you've heard this before, but the key is to spend less than you make.
And I know that that sounds trite and really, really frustrating, especially if you are, if you're living in a place,
and you think it's pretty much the worst place that you could possibly find.
You're living in squalor, perhaps, and you still can't pay your rent.
So you think, well, gosh, class two, that's awfully trite because I am living in poverty and I still can't afford stuff.
So what do you propose that I do?
So here's what I propose that you do.
Depending on your situation, possibly stop living in an apartment for a while.
I've done a whole episode series on being voluntarily homeless.
And one of the side benefits to that is that you have almost no expenditures.
I mean, you have to be cognizant of it. You have to say, okay, well, this is why I'm doing this.
I'm moving out of an apartment right now so that I can eliminate rent so that I can then save that rent.
So in other words, you can't do it and then spend all your money on beer at the pub, you know,
because that cancels each other out.
So if you're doing it for savings, then you have to actually follow through and make sure that you are saving
and follow that money, track that money, and see that it is adding up.
If it's not adding up, then the cause and effect is not working and you need to change tactic.
Another way possibly is to get roommates. I know that seems like an obvious thing.
But for some reason, for a long time to me, that was not obvious.
Took me a way too long to get to get roommates.
I mean, on one hand, it's a chore trying to get a roommate that doesn't trash your stuff
and frustrate you and make your life miserable.
It really is quite a chore and even finding a roommate.
But at certain times, it's a beneficial thing to do.
At least purely financially, it's a beneficial thing to do because you're splitting costs
and you can cut that rent bill in half, like literally in half, possibly even less.
I think part of the thing about that whole tactic is getting rid of your stuff.
If you have a bunch of stuff, if every time you move in a apartment, you have to rent like a U-Haul
and you're finding yourself struggling with money, then you might have too much stuff.
And if you get rid of stuff, you will find yourself much more free to sort of explore cheaper options.
So if you can find dirt, dirt cheap rent by just crashing on someone's sofa and throwing them,
you know, a little bit of money every, every week.
And that's the only semblance of an apartment that you have is you get to sleep indoors on that sofa
for 25 bucks a week versus renting an apartment for 500 a week or would that be realistic?
I don't know what U.S. prices are anymore.
But, you know, whatever amount of money that would be, then obviously it's very intelligent.
But if you've got like two sofas in a bed and a wardrobe and all these other things, then it's a lot harder to just say,
hey, I think I'll just move into this, you know, just crash on this person's sofa for 25 a week.
Because now you've got all this, you know, good apartment full of stuff.
So where are you going to put it?
I mean, you could probably put it in storage.
In other words, what I'm trying to say is think outside the box, really think about how you can cut prices or cut costs no matter what.
And I know that people's situations are different.
And if you have maybe a child or a family, then that sort of thing becomes a lot more difficult to be flexible with.
And sadly, I have no experience with any of that.
So I have no advice. That's how that works.
So that's kind of the base level financial thing, right?
The principle is to realize that if you spend less than you make, then you are okay.
I mean, some people say, you're rich if you do that. That's a lie.
But you are definitely not, you're not living, you're not in debt at that point.
Well, you may be in debt, but not from your expenses.
And that's kind of how you can get out of debt is by spending less than you make and then taking all that excess money that you are no longer spending and dumping it into the big hole that you dug at some point in your life that is your debt.
So that's how that works.
It's not easy. Sometimes you have to make huge, huge sacrifices.
Like at one point in my life, believe it or not, I had no internet at my home.
Yeah, I had no internet bill. Like, I know a lot of people think, well, that's not possible.
You cannot do that in the modern day and age, but it is actually possible.
You cannot have the internet at home. You can go to places with the internet and do things like you can check the internet.
You can check email at a cafe or whatever and it works. It works perfectly fine. You can do that.
You can set up an account on a free server and use that as kind of a check point, like a VPN sort of thing.
You can do all kinds of cool things and there's no internet bill there.
You can have no TV bill. You can get used books for really cheap.
You can play games. You can do lots of things to entertain yourself at home that do not involve bills.
So really think outside the box, reduce the cost of living such that whatever you are making, however,
regardless of how little or how much that is, that you are not spending more than you make.
Okay, so sorry if that seemed super basic and not very informative.
Like I say, most of us have probably heard that advice before, but I think it does bear repeating and it does bear repeating with an action plan.
That's how you do it. Think outside the box, eliminate bills, do whatever you have to do to get those two columns balanced.
Okay, so the bigger problem, the long-term problem I think that really made me think to do this episode is retirement.
How do you say for retirement and do you even need to say for retirement?
For a long time, I figured retirement was but a myth because frankly, I don't really have any sense of how anyone can plan for retirement or how that's being taken care of at all
or how that will ever come to fruition. I just figure I'll be working for the rest of my life until I die, I'll probably be working.
Now lately, I've kind of just come to think that maybe I don't want to work until I die, like maybe I don't literally want to die on the job.
Like maybe I want to have like a couple of years buffer between working and going home and saying, okay, yeah, it's time to die now.
Okay, so retirement in the USA, of course, is the conventional wisdom there is that social security is your retirement plan.
There's a program in the US, it is called social security, so if you ever hear an American talk about their social security number, that's it.
That's there, there was this system that developed, I think, somewhere after World War II, I think don't quote me on that social security and it was this thing where you would send you the government money and they would tuck it away for you into a safe little place.
And when you get to a certain retirement age, which of course is a flexible number, it's not, it isn't something that's hard coded into our DNA, it's just the number, it's the number that the government called out and said, hey, at this age, we will start taking the money that you sent us in your social security account and we will send it back to you at intervals.
The deal is that you're investing in the US government and that they would, they would keep that money on in their bank essentially and it would be acquiring interest and it would be growing, I mean, they'd be spending and stuff, but I mean, generally, it would be in their books now.
And so by the time that you are 70 or whatever it is, then all that money has accrued and grown and compounded and all this other good stuff and now they'll be able to send it back to you in social security payments.
That's the idea behind social security.
Now, there's not really a guarantee that when you retire, there will be a social security account anymore. Like, I mean, it's, it's this program that the government started, but it doesn't necessarily mean anything.
It just means that it's, it's something that was promised, but I mean, as we all know, promises are not always delivered upon.
Dets are not always paid. If there's no money in the social security bank account at the end of it all, when you're not the, not the end of it all, but like when you're ready to retire, then you're not going to get those checks and it'll be, I'm sure, very embarrassing for the government and they'll have to, they'll have to kick their feet in the sand a little bit and apologize, but I mean, what are you going to do?
That's just how it's going to be and that that might not ever happen. Maybe they will, maybe they've been safeguarding that social security money really, really well and it's all guaranteed and when I get to retirement age, I will be getting a social security check. Who knows?
Now, part of the social security thing is though, is that you, there is an expectation that you've been paying into social security. Now, a lot of us don't really, we're not very cognizant of social security Americans.
We're not, I mean, we know that it's a thing and we know that we, we pay into it, but we, there's not really a great, at least that I've found, there isn't really a great system of sort of keeping track of social security. It's very abstract. It's very sort of separated from us.
So maybe they send you statements, maybe they don't, maybe they can't catch up with you. I've moved all over the place so I have no idea what's going on with social security.
And yeah, so you, you pay into this thing and I'm not entirely sure that you have any good sense for like how you're doing, you know, there's no, it's very difficult, at least in my experience, to set a goal, a logical goal and say, okay, by the time I am this age, I should have this much money in my social security.
And if I don't, I should probably, I should probably work harder to get more money into that. And even then, once again, there's this kind of, there's a sense here that, that you've been on top of it from, you know, 15 or 16, whenever you were eligible to get your first job.
Now, whether or not you were able to get your first job at 15 or 16 is up in the air, right? Maybe you didn't have a car. Maybe you didn't have an effective way to get to a job. Maybe you had other, other things that you thought were important at that age.
Maybe people were telling you don't get a job, work on your school stuff so that you can then go to college and then you go to college and you discover that that's super expensive.
And so now you think, I should have just gotten a job, but you didn't. And all of this is in the past, so it doesn't matter.
In other words, what I'm saying is that social security is not necessarily something that you, unless you're very good at managing your social security and you've found ways to track it and you have been contributing to it very regularly, it may be something that you don't want to count on.
Maybe it's something that you could think of as a great bonus that might possibly appear when you turn 70 or 80 or whatever the age is, but it might not be something that you want to just assume.
Well, I know that I contributed to social security from, you know, this year to that year, so it'll probably be like a million dollars by the time I'm 70.
You know, there are no numbers associated with this, typically very difficult to kind of wrap your head around how well or how poorly your social security account is doing.
And it's a little bit difficult to manage it because, like I say, it is a bit hands off. It's just money that gets sent away to the government.
As far as I know, there's not really like a log-ins that you can't log into your account and look at the number and then add money to it.
You know, if you have, oh, I've got $200 set aside, you know, like I didn't spend this month, that's pretty cool.
Just send that to my social security to get that. You can't do that as far as I know. Maybe there is a way.
Hey, if you know about all this stuff, you should be doing a hacker public radio episode because me and lots of other people would probably love to hear about this.
Okay, so what are your options if you either have no faith in social security because maybe you haven't been contributing long enough or maybe you just don't believe that it will actually be there when you hit 70 or whatever it is.
Or maybe you don't live in America and there is no such thing as social security where you come from.
I mean, don't get me wrong. I got great instruction on how to format a business letter in Microsoft Word 95.
But not so much about what a bank was and how to interface with that and how to make sure that you're not spending more than you're making and all that other good stuff.
I'm not really ever clear on the priorities in the American school system, but anyway, I digress.
So people often say, oh, you should save for retirement, but they generally forget to tell you how that is possible.
How do you actually implement that desire to save, to put away money for the future?
So for me, there are, or as far as I can tell, there are two levels or two methods of direct investment in yourself.
So, and by direct, I mean where you can have the money more or less in your control, you can track it, you can see how much it's making, you can add to it, you can in an emergency, I guess, maybe with draw, that sort of thing.
Like there's a very direct relationship between you and the money that you are trying to ostensibly put away for the future.
Again, if there are other ways, then by all means, do an HPR episode about this, because I think it would be great information to have.
So as I've already said, the two, well, I've mentioned social security, that's not very direct.
Another fairly indirect method, so this is not one of my two direct, this is another indirect method, at least from my point of view, is a 401k.
A 401k, again, very specific to America, and don't worry, I am actually going to talk about other countries here.
But for the 401k is an American thing, and it's kind of, it was the government, as far as I can tell, sort of like everyone had lost confidence in social security and the concept of social security.
And so businesses started offering these things called 401k plans.
Nobody really knew what a 401k plan is, all you know is that it's magic, it's the great savior of social security.
Sadly, it's quite abstract and fairly indirect, unless you take great pains to take a very active role in tracking it and managing it.
It apparently can be done. The 401k, there is sort of an interface to interact with it a little bit, and I didn't find out about this interface until probably 10 years after I first got a 401k plan.
Some employer of mine in college, I think, had like some kind of 401k plan.
And if I recall correctly, I did sign up for it because everyone was telling me, oh, you should probably invest, or save up for the future.
So I did sign up for it, but apparently I never put any money into it.
Or if I did, that money has since disappeared because it's not there.
But yeah, apparently the 401k plans are kind of, as far as I can tell, they're kind of the free enterprise version of a social security.
And so they get put into these big mega banks, like a fidelity, for instance, that's a big one.
And if you go to netbenefits.org, you could probably discover whether or not, first of all, you actually have a, I'm sorry, it's not.org, it's.com.
Netbenefits.com. You can find out possibly whether you have a 401k plan at all.
You might not find it on the website, but you might be able to call fidelity and give them all your information, your social security number, name, and all that other stuff.
And they can look up to see whether you actually have a 401k plan.
And they may be able to tell you whether it has money in it, and that sort of thing.
And if you sign up with netbenefits.com, then you can sign in, and I think you can look at your 401k and kind of like see how it's doing and that sort of thing.
It's all very direct feeling, but in my experience, it has been very indirect, very hands-off.
It's kind of like, don't you worry about what is happening with your money.
We've got it. You can't really interact with it. Maybe you can look, but sort of keep your distance.
So that's a very indirect method of saving for retirement as well.
That being said, I essentially have no 401k.
So it may be brilliant in other people's minds. This might be serving some people very well.
All I'm saying is that if your workplace says, hey, we've got 401k, then first of all, make sure that you're eligible.
Because I mean, whatever the hiring department says doesn't necessarily mean that it's going to ripple through down to your pay grade.
I've been clearly, I've been at a place that had a 401k plan.
I'm almost sure that I had signed up. And years later, when I finally look into it, there's nothing there.
So if you're going to go that route, and even with social security, if you go those, if those are your plans for the future,
then you have to take a direct and conscious effort to track them, to look at them, and to understand them.
It's not easy. They don't make it easy. They make it very difficult. I mean, I'm not saying it's a conspiracy, like they don't want you involved.
I'm just saying they do not effectively, if they are trying, they do not effectively make it easy.
It is very difficult to understand these plans. Now, there are other alternatives.
There are alternatives to these things, social security and 401k in other countries that are a lot different.
And I didn't know about these until I moved to another country.
And so I'm going to kind of do lip service to those, and just kind of tip my hat at them, just so that you understand that social security and 401k does not...
It doesn't actually have to be as mysterious and indirect and hands-off and confusing as at least I find...
And a lot of people that I know find them very confusing, they doesn't have to be that way.
So, for instance, in New Zealand, there is a thing called KiwiSaver, KiwiSaver. If you are a Kiwi citizen or permanent resident, you can open a KiwiSaver account.
And it is essentially, maybe not essentially. It is, I think of it as a 401k plan, or you could think of it as social security, but it's...
I think it's more like a 401k plan because what you do is you have a job and your employer may or may not, as I understand, contribute some extra money into your KiwiSaver if you contribute.
So, you can put up, I believe, up to 8% of each paycheck that you get, and I think that's net not gross.
I think that's the... That's like before taxes and everything. You can put 8% of your income into your KiwiSaver account, and then your employer may or may not match some portion of that.
So, they won't put another 8% in, probably. Maybe if you're putting 8%, they'll put another, you know, 100 or 200 or 400.
I don't know what it is off the top of my head, and I don't know what the rules are.
I know that my current employer is quite good at that, and they put quite a lot of money into my account, although I am also saving 8% into my KiwiSaver, so I'm building that up.
As much as I possibly can, because I got a very late start on KiwiSaver.
The cool thing about KiwiSaver, though, is that it's very, very easy to track. Like it is part of your bank account, you can transfer your KiwiSaver account into whatever bank you have.
So if I'm with co-op bank, then I can make some calls or do some stuff on the internet and have my Kiwi account sort of show up as a sub-account of my main co-op account.
So then if I've got a mobile app or an internet app where I can go into an internet site, is what they're called, where I can go into my bank and check my statements and things like that, which I think all modern banks pretty much have.
Then right there, along with my checking and my savings account, there's this Kiwi account, which, or KiwiSaver account, rather, which you may be able to put more money into it.
So again, if you do have $200 left over at the end of the month and you're thinking, well, I could either spin that on something frivolous or I could do that responsible grown-up thing and put it into my KiwiSaver account.
You can just throw it in there. It's as easy as a couple of mouse clicks.
So it's a very direct hands-on kind of thing. You cannot withdraw from it for stupid stuff unless I think there are some pre-approved major purchases.
Like if you want to buy a home, I believe you can actually take your KiwiSaver money and put it into your home or something like that because it's considered, I guess, a big future kind of investment.
So I'm not sure what the rules are. I haven't really looked all that much into it.
All the point that I'm really trying to make is that social security in 401k shouldn't be as complicated as they are.
Unless maybe I've just somehow missed the, like I say, the class on how to manage that stuff.
I just don't even understand how you're supposed to interface with them at all.
Well, now I do. Netbenefits.com if you're 401k is with fidelity, but I didn't find that out so much later.
And only by accident, I found that out by a completely different method, which I'm going to transition into now.
So direct methods of investing in your own future.
As far as I know, there are basically two ways to do this.
One is completely self, just your own resources.
By sheer force of will and discipline, you save up money.
It's possible. A lot of financial experts, oh, look at those air quotes, say that that's not very effective because you're not, you know, if you're just, if the analogy is always stuffing money under your mattress, right?
It's not, you know, your money is not, again, air quotes working for you.
So you're just kind of, you're throwing it somewhere and it's not, it's not gaining interest.
You're, you're just relying on this money being there, like existing.
And, and that's all you're doing. And, and it's not growing with you.
And it's probably in some kind of economic theory probably says that it's actually devaluing because of inflation and stuff like that.
I don't know. So however you want to manage that, that's up to you.
Maybe you invest in, I don't know, gold or whatever. I'm not really sure how you protect your own investments.
I don't know that sort of thing. But that is one method is, is just by your own, by your own resources, you, you collect money.
Now, the, I think probably the, the very middle of the road method of doing that is what is called a certificate of deposit or a mutual fund.
And you've probably heard of these. They are really, really low risk, but also by the same token, they, they typically are low return investment.
That you can do it, it's just your bank. You just go into your bank.
You talk to one of the people, not, not like a teller, but like one of the people at the desks around the place that you always think,
what do those people do all day? They look, they look like, they must be like bankers, whatever that means. But what, what do they do?
Well, that's what they do. They sit around and wait for someone to come up to them and say, I want to invest. And I don't know anything about investing.
And they say, okay, well, we'll open you a mutual, we'll, we'll, we'll get you into a mutual fund. And that's, that's their job, I guess.
And so CDs or, or certificate of deposits or mutual funds, they're, they're, they're very closely related. And there are, there are minor differences that I'm not really too clear on.
But a CD, as far as I know, is basically part of a mutual fund. And then a mutual fund is a bigger thing. I could be wrong on that again. If you know these sorts of things, you should do an HPR episode on it.
But you can sign up, you can, you can take some chunk of money. So let's say you've got, I don't know, let's say a thousand dollars, because that way it's super simple math.
So you got a thousand bucks. And you think, I really, that, that's my retirement fund right now. So I should really put that thousand bucks into something where my money will quote unquote work for me.
And so you go to the bank, you ask to see one of the, the people at the desks and, and you sit down and you say, hey, I want to invest my thousand dollars.
And they look at you with like this little rye smile and they think, oh, how cute this person thinks a thousand dollars is an investment. Well, that's good.
And so they tell you encouraging and positive things like, oh, it's very good that you want to invest your money. And so then they sign you up for a certificate of deposit or a mutual fund or whatever.
They ask you, maybe do you want to do high risk or low risk. And you say low risk, I guess. And then they take your thousand dollars out of your bank account. They put it into a certificate of deposit or a mutual fund.
And pretty much you've just invested money in a stock market. The mutual fund, as far as I understand, are lots of little purchases of a bunch of different stocks.
So rather than you sitting down and or going to the New York Stock Exchange and shouting into the air like they do on movies and invest and buy buy sell sell that sort of thing.
You're just kind of you're giving money over to this sort of fuzzy group that manages mutual funds and they just they push money around and the money is fed by your certificate of deposit.
So when they think how much money as a bank or as a group as a mutual fund, do we want to to to to push over into this stock region.
And usually it's a lot of different industries, right. So some they'll they'll invest in oil and but but not too much oil, just a little bit of oil.
And they'll invest in. I have no idea. That's the only thing I know people in the tech technology, not too much technology, just a little bit of technology. And then they invest in farming. Is that a thing? I don't know.
And and so you've got this is nice little diverse thing. So as one market goes up, your money goes up. But then the other market's going down. So your money goes down. But you kind of hit this magical sort of middle ground where over the long term, over six months, three year, which is usually those are usually this.
Usually those are usually the two standard frames of time that you're allowed to give your money away for during that time your money goes up some, some small percentage. And I swear I've had several of these certificates of deposits.
And I used to think point eight percent was a lot of money. Like I would I would get my money back at the end of the thing. I would be like a thousand and eight dollars.
Like one zero zero eight. And I would think, Oh my gosh, that's amazing. I've made eight dollars. And all I had to do was like give my money over to the bank for for six months. This is for a year. This is fantastic. And that was a big deal to me.
And that's about the level of return that I've ever seen in a certificate of the deposit. Now your mileage may vary. And I might be I might be misremembering point is that it's not going to like if you if you give them a thousand, you're probably not going to get 2000 back in a year.
It's just it's not that level of investment. And that's just something to be aware of. It is as many people have said better than not investing it and just staying with your like little, you know, your your three percent or two percent or whatever it is savings account.
There's a slight improvement and there's not a whole lot of risk and it's out of sight and out of mind, which is a pretty powerful trick if you're the sort of person who who sees the oh man, I've got like three grand in my savings account. This is really exciting.
I could probably afford to take a thousand out and spend it on this really nice get away for the weekend because I'm poor and I deserve something nice. How dare you think that.
So don't do that. Put it into your certificate of deposit and get eight dollars back after a year. You'll be so much happier as a poor person if you do that trust me.
I'm sorry if I'm being sarcastic about all of this. As I said, money's not really one of those things that really interests or turns me on. It's something that I kind of I really am not a fan of.
But anyway, point being, if you want to try to invest for your future, it is better than putting it into a mutual fund or a certificate of deposit is better than having it at your fingertips ready to be spent if you're that sort of person.
And I guess by the numbers, it's better than just leaving it in a a lower interest savings account or whatever wherever you have your excess money, assuming you have excess money.
Now again, if you're sitting here saying, but clats who I don't have the money to invest like I don't even have three thousand dollars in my savings account, I don't have the spare thousand dollars to put into a CD.
Okay, so slow down. First of all, go back to the beginning of the show. As I said, in theory, you can reduce your expenditures and then you can take that whatever excess money you do have from reducing your expenditures and putting it into some place where you cannot get to it to spend it.
It is not easy. It is difficult and it only gets more difficult as you go lower on the spectrum. If you are really, really poor, it is super, super hard to save anything at all because you're up against these hard ceilings of you don't have money.
This is your zero balance and and that's it. And if you hit, if you even go close to your zero balance, we're going to charge you more money for being too poor.
Banks do that. It's a beautiful, beautiful system for the bankers. So I understand that it is very difficult and the only advice I have really is to reduce expenditures.
And if you're telling me you've reduced all of your expenditures and still have zero money, then you either don't have a job or you need to start like dumpster diving for your food or something or get another job where they feed you for free or something like that because there's got to be some way where you can cut expenses so far back that that you have something
to start a savings account. Even if it's like maybe it's not a thousand dollars at first, maybe it's like ten dollars and then next month it's twenty dollars and then eventually you'll have like a thousand bucks and you can put that into a CD or a mutual fund.
And it's a miserable, miserable existence. It's a horrible way to have to live and I know that because I've been there and all you have to do is keep at it and it will be very, very discouraging in like three years.
You'll look at your financial state and you'll think wow I went from having barely a thousand dollars to my name to now a thousand twenty four and it only took me three years. Well this is exciting but that's not your only vector of getting out of your situation.
Like that thousand dollars is the savings. That's the emergency fund. There's other stuff in your life that you may be able to do learn some new skill to get a better job, that sort of thing.
So don't look at that as your only escape from poverty. Oh thousand twenty four dollars. That's going to get me rich in I don't know probably two million years. Well that's not going to all happen from that thousand dollars.
So don't look at it that way. Look at that thousand dollars is you being disciplined and being able to save some money.
Okay so that's mutual funds and certificates of deposits. That again you just do it your regular bank wherever you go to deposit your paycheck or to withdraw money from your account or whatever you do at a bank.
You probably don't even go to a banking or you probably do it all online but presumably there's some place in your city where your money is placed.
And if you go there and you say hey I have a little bit of extra money I would like to invest it in a CD or a mutual fund.
They will guide you to the correct person to make that happen. Okay super simple and as I've said it's probably on the on the end of investment sort of how cool it is.
That's pretty low but it is very easy as well. So you've got that. All right the more the more difficult and more advanced method of investing is directly into the stock market.
Now stock the stock market everyone when you say stock market everyone thinks about the US stock the New York stock exchange that's that's the stock market to most people now that's actually not the only stock market.
I mean it is the stock market but there are other stock markets so in New Zealand for instance it's called the share market or the yeah the share market I believe.
And so you can go to this place in New Zealand and you can't not a physical well I mean I'm sure there's a physical place but yeah you go online and you can sign up and do all of these things in the share market.
So you're investing in local industry and hopefully getting money back. The stock market itself like the New York stock exchange is kind of the big the big and famous one because it's not surprisingly it's the most successful.
I mean there's a country of rampant capitalism. Yes their market is really really healthy. It's or unhealthy the way depending on your the way you look at it but if you're there to make money that's definitely a place to go.
That is one of those one of those things in life where popularity really really matters because if you if you if you want to throw money around you need to go to place where there's lots of money to throw around.
So that would be the US stock market now it's it's not necessarily super easy to get into the US market from outside I mean I'm sure there are ways and if you have enough money I'm sure it gets infinitely easier for you to do that now by some weird chance I was born in American so I have this free ticket into the US stock market and it's
puzzlingly difficult even if you're an American to really get into the stock market like how does that work how do you how do you how do you invest how do you take out you know how do you invest in a company company how do you get stocks how do you buy how do you sell how do you trade stocks like what is that all about.
Well there are lots of different ways to do this and once again if you're one of those people who knows a lot about this stuff you should do in a hacker public radio episode on it because I only know what I know and the way that I found all of this stuff out was if you get a job in the tech industry at least when I was first getting jobs in the tech industry then it was pretty pretty standard for your employer to offer you stocks like you were going to get employee stock what is employee stock discount or something like that ESD or employee stock distribution I'm not really sure.
But it's it's some deal where you get stocks in the company in the company that you work for and that seems to be pretty common within the tech industry I'm not saying it's it's all over the place but I am saying that that in many many of the companies that I have worked within technology I have gotten stock allotments but you don't have to be employed in tech to get stock you can do that obviously yourself.
So how do you get stock and how do you interact with stocks once you get them well there are lots of different sites online that that manage stocks and and it's part of the internet thing where you can actually you know you don't have to go to New York to to Wall Street and go into that stock exchange place where you see on the movies you don't have to go there and and and do stuff you can just do it all from your from your living room you can just do it or if you if you're opting not to have a house you can do it from the cafe you can just do this online couple of days.
Different sites will will help you with this so there are there's a merit trade which I know nothing about Charles Schwab fidelity and E trade those are the four as far as I know those are the four big ones they usually require at least about a thousand dollar investment or like a thousand dollar starting deposit and and that's all these places are is their online banks I mean they're probably more than that but but you can think of them as an online bank that they may or may not have a physical brick and mortar.
They probably do somewhere but but not in your neighborhood it's not something that you will go down to the shopping center and and and go into the place and and sign up it's something that you have to do online obviously you would want to make sure that you're doing it with something that's fairly well known.
So stick to the stick to the big ones and if you're not sure which are the big ones aside from the ones that I've just listed a merit trade Charles Schwab fidelity and E trade then do some research and find out what's reliable.
So what you do is you sign up with these guys and you make some kind of deposit so they'll usually require you to verify that you you have a bank account elsewhere and then you will somehow transfer money from your from your bank to their bank and and how you do that will depend on what kind of infrastructure they have set up.
There's always those those weird bank numbers that you have to throw around and so there might be some phone calls involved you might have to sort of get in there and really kind of wiggle things around and and make things happen but but the initials so the initial setup will be a little bit of a chore but after that you're done you've got a site you've got a you've got an account rather on this website so let's say you're you're with E trade or yeah let's say you're with E trade so you're in E trade and you you've got an account and and they have several different kinds of accounts they have savings and checking.
So maybe your thousand dollars got put into your checking account and from your checking account now you can spend money at the stock market and in order to do that you would open a brokerage account or possibly it'll already be there but you would click in the brokerage section of the website and look up a stock symbol.
So let's say that you want to invest in in new world order incorporated so you look up new world order for their for their stock symbol and it's GWO okay cool so you look at the GWO prices and they are currently going for one one share which is an arbitrary division of a of a company like they've for whatever reason
the new world order incorporated has has decided that they have a hundred shares to offer the public they they're willing to to give a hundred imaginary pieces of their company to the public they have
decided or or maybe the market has decided that their hundred that that for one share out of their hundred it's pretty it's pretty reasonable to ask for ten dollars.
So that means that if you look on on e-trade or fidelity or whatever you're using and you look up GWO and they're saying okay cool so here's here's GWO the current asking price for their shares are the for the current trading price for a share of GWO is ten dollars per share.
So that means that you could take in theory you could take twenty of your dollars from your checking account transfer it over to your brokerage and issue a cell request a buy request of of two shares of GWO.
Now that goes off into some kind of computer and there's this request and at some point a bid is placed on your behalf for two shares of GWO.
Obviously speaking there that that happens there's usually lots of shares out there there it's I would I would find I would believe it was probably pretty rare for you to ask for a share of something and not be able to get it and all these prices are sort of dynamically created by the market.
So if at noon you ask for two shares of GWO and you're saying well it looks like they're worth ten bucks and so here's twenty bucks for two shares then in theory as long as GWO is a fairly stable kind of price then you ought to just get two shares and and that's that now you will probably be charged a little bit more than twenty because fidelity or e-trade or whatever site you're using will take their cut right they'll they'll they'll take a cut of your of your transaction.
So they'll they'll take your twenty and an extra two bucks for for their for their work that's pretty standard I don't know of a way around that I mean there is a way around that you can go to New York to Wall Street and and just do your own trading I guess but but for us normal folk that's that's part of doing business and and as long as you're not share as long as you're not buying and selling like on a daily basis those price you know the cuts that you have to endure in order to make a sell or a buy transaction it's not that big of a deal.
So and I guess that would be an argument for like buying lots at one time you know maybe maybe that way you get sort of your the cut gets taken out and it's sort of locked in at a certain price and you have to worry about it I don't know.
So you get two shares so now you have two shares of of GWO great what do you do with it well you don't do anything now you've basically assembled your own little minimal mutual fund on a very low level like I mean that's what it is it's just an investment you've got two shares of GWO.
Now the good news is that next year or or two days from now if GWO shoots up to $15 per share like more people want their shares for some reason like for some reason people want to buy GWO.
That makes your two shares look mighty good to somebody out there that means that if you put it up for sale right now you could expect to get $15 for it.
So you paid 20 bucks for it and if you sell two of them now you get 30 bucks back or maybe 28 because of the transaction fee but you're going to get more money for what you just know the the the quandary there is how much of this sort of transaction do you actually want to do do you want to sit there every day and watch the stock prices.
And then there's this big question of well if you do that how frequent are your updates are you seeing like this is a big concern among people who do serious stock trading.
They need to see price fluctuations like right now and I imagine once you know if you're doing like thousands and thousands or hundreds of thousands of shares.
Just the the bearest fluctuation in the market may actually mean like a thousand dollars to you or ten thousand dollars to you it might be a big deal to I think normal people like you and me well me then that's not going to matter.
So if GWO goes up to $15 and I paid 10 I'm probably realistically just going to sit there and and think cool I have more imaginary money than I had yesterday and that's the extent of it now ideally and I think the long term investment kind of mentality is ideally in 20 years those shares are going to go from 10 they'll go up to 15 and they'll go back down to 12 and they'll go up to 17 and they'll go back down to 10 and they'll go up to 20 and then maybe they'll go back down to 8 and you'll be really excited.
And you'll be really sad for a day and they'll go back up to 30 and now you're starting you know over over 20 years you look back you walk away and you come back in 20 years and you look at your investment you think oh my gosh instead of I paid $20 for these things back in 2018 and here it is in 2038 and not only have all the all the clocks stopped but it looks like I've got a thousand dollars now and it was just it was a mere $20 20 years ago how exciting is that.
So that's the theory that that in in some allotment of time the level of growth will be so great that it'll all have paid off for you now realistically you probably don't want to do that with just two stocks of some random company prevailing theory seems to be that you should buy stocks in several different companies some here some there different kinds of industries all that other sort of it so you are kind of building your own mutual fund right you're so you're investing a little bit.
In technology you're investing a little bit in something else you're and you sort of just sort of gather stocks you collect them over time and and some lose money and some gain money and some lose money and some gain money and at the end of it all in 20 or 30 or 40 or 50 or 60 years you can look back at that and say well all of those stocks have you know cumulatively they have now earned me a lot of money and that is the fund upon which I am going to retire.
That's the theory I don't know if it works I'm not there yet but I do know that stocks are are something that you can invest in and it's a very direct kind of investment.
It takes a little bit more effort than everything else that we've talked about so far because you do have to go find a stock trading website and and now in in reality you can also go and you can find a broker like you can actually contact someone who who does this all day and will will take your money and play with it.
They'll invest with it they'll they'll make money and they'll you know they'll manage it for you they'll take their cut just like the websites do and they will do that that is something that you can you can hire people to do those things and they will they will manage that for you.
Now whether or not you have enough money for them to bother is a different question entirely.
Some some brokerages are they don't want to deal with you unless you you're you're bringing $100,000 to the table otherwise it's just not worth their time they're not going to make the amount of money that they want to make on on a fund like that.
So just to some degree I think the internet website sort of manual trading is probably your first step that's probably the way toward stocks initially.
Now the nice thing about the tech industry where they throw stocks at you as part of your paycheck is that they generally sell you you know they sell you where they they grant you the stock at a lower price than the selling price.
So let's say that GWO has jumped up to $20 per share and they've now started hiring an employee and so their employee they say well we'll we'll pay you this much and we'll give you a stock stock thing as well.
So to their employee they give they give a $20 stock to their employee for 10 as if though the employee had bought it at 10 so they'll take 10 of your of your paycheck money and give you a $20 stock for it.
So right off the bat you've made $10 so if you turn around and sold that stock today you would make you get your $10 that you were supposed to get in your paycheck anyway plus another 10.
So that's that's nice and that's one of those options that if you are in the tech industry and you hear a buzz about how you can get employee stocks and stuff like that.
It's definitely something to look into because that is apparently a good deal.
Okay so again stock the trading thing I mean there are there's this thing called day trading where some people will go on and they will buy a stock on Monday and they will watch that stock and if it goes up by Friday they will sell that stock.
And so they will take the you know the $10 that they the $10 increase on those stocks that they got from Monday to Friday and that's their transaction and now they've made they've made $10 or whatever they've made $100.
However many stocks we're talking about you don't have to do it that way and a lot of people don't I think for a lot of people stock is just it's a long term investment where you you dump money into these fluctuating industries that go up and go down.
But you invest in enough different industries that it all averages out in the end to a total to an overall gain for you and in the end is like you know 20 or 40 or 60 years from from when you start investing.
It's something that you can do it's something that you can go into and kind of manage and monitor it's a little bit harrowing because like I say if you've got stocks and they're there and you can see them they'll go up they'll go down.
You won't know you'll it'll be very confusing if you're not used to it and it'll be a little bit upsetting possibly I mean certainly when I first got my tech stocks from from one of the many companies now that I've been paid in stocks by.
I would occasionally go in and look at it and not really know what it was all about I didn't even know at the time that I had access to it I just knew that I could look.
And so I would look at the prices and they would go up and then they go down and it would it was a roller coaster you know like one day I think oh my gosh I'm rich now I'm totally rich I could retire and then the next not not really and then the next day you know it's it's lower and I think oh no I've lost $3,000 over night well it's $3,000 I didn't really even have in the first place it was just it was the asking price for these things so it's all very hazy and abstract and theoretical and it's terrible way to live but it is an investment that you can make that's the stock.
Mutual funds or certificate of deposits step down from there and then of course as I say 401k Social Security who knows what those even are I don't know how to get into the US stock market from outside the US I do know as I've said in other countries there are other stock markets or or share markets or some kind of market you may be able to invest in those now in New Zealand as far as I can tell the share market is something that is for high ranking investors like they don't I I can.
I cannot find any information on investing locally unless you are investing lots and lots of money maybe I'm just not looking in the right place but if you want to invest in New Zealand directly I cannot find a way to do that other than some brokers up north and all of them flat out on their website say hey if you don't have a hundred thousand dollars don't even bother knocking on our door so I don't know really what the situation is outside of the US stock market and even the US stock market
I'm not really too clear on all the details so again take all of my advice as just as as as experiential advice I am not trained in economics I'm not trained in business I don't know how money works and I don't even like money so really take everything that I have said with with with care grand assault but do your do your homework research this topic and and as they say start now because if you start saving now then you'll be that much farther along the later.
And if you don't ever see yourself retiring as I pretty much don't see myself retiring you never see yourself retiring then that's fine but even so build up some kind of emergency fund for yourself because even if you think well I don't even want to retire I wouldn't I wouldn't know what to do if I did retire you just never know what's going to happen there you don't know if you're going to get sick and you're going to be money to fall back on.
You don't know if the housing market's going to drop and you should I bought that apartment or that house when you had a champ whatever I don't know the future is uncertain you may want to have some money sort of built up to to buffer against unforeseen circumstances what about the argument that the future is so uncertain that possibly money will be meaningless because of some cataclysmic event yes there is that argument as well good on you so do your research do what you need to do for finances most importantly though talk about it like get people good people's
put field get people's strategies listen to other people look at what how they're doing and and really really try to try to figure this stuff out for yourself because there's a lot of misinformation out there there's a lot of maliciously disinformation out there and and there's a lot of just kind of omission like lots of people not talking about it at all and I don't know if that's because they don't understand it or if that's just because they don't want you in on the good thing that they have I'm really not clear on why people just don't get any kind of
guidance about finances in this life but start thinking about it if you want to and try to plan for the future hopefully this has helped a little bit and if you have
more information on this by all means do a hacker public radio episode talk to you next time
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