TOGETHER WITH

🚨 Here’s what you’ll learn today in one money minute (or less) 🚨

• 💹Gooooooooooals! 💹

• 💸 Trying to visualize retirement and can’t quite picture it? Got you covered 💸

• ⚡Don’t retire from something, retire to something! ⚡

Let’s talk about you.

Take a minute to picture your perfect retirement. Where are you living? What are you doing? Are you fishing every day on your boat? Driving the grandkids to soccer practice? Or are you jetting off to Italy for a few months? Really picture it. Close your eyes, take a deep breath, and imagine how your best retirement would feel.

Now, open your eyes.

 What did you see?

Save for retirement, invest in yourself

More than half of Americans feel behind on their retirement savings. Don’t let that be you! Open up an IRA with Public. Public is an investing platform where you can invest in stocks, options, bonds, ETFs, and crypto —all in one place. And now, you can open a Traditional IRA, a Roth IRA, or both, on Public.

Do something good for your future self and get started today HERE!

Everyone wants a one-size-fits-all, foolproof retirement savings plan. But guess what? It doesn’t exist. Your resources and your goals will determine what your retirement looks like—there’s no universal blueprint.

Now that you have an idea of your dream retirement, it’s time to crunch some numbers. Living above your kid’s garage comes with a very different price tag than sipping espresso in Milan. Get granular. You don’t have to be exact (because, well, life), but try to estimate how much you’d need to cover food, housing, transportation, healthcare, and anything else that matters to your future self.

Next step: how long do you plan to be retired? When do you want to stop working, and when will you have to stop?

Now, let’s put it all together. Multiply your estimated annual expenses by the number of years you expect to be retired. That’s your magic number.

Reaching that goal will take work—but you can do it. And I believe in you!

Oh— and where should you put that nest egg? Public of course— my favorite brokerage! Check out their IRAs today… your future self will thank you.

xo,

All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC.

Alpha is an AI research tool powered by GPT-4.  Alpha is experimental and may generate inaccurate responses.  Output from Alpha should not be construed as investment research or recommendations, and should not serve as the basis for any investment decision. Public makes no warranties about its accuracy, completeness, quality, or timeliness of any Alpha out. Please independently evaluate and verify any such output for your own use case.

TOGETHER WITH

🚨 Here’s what you’ll learn today in one money minute (or less) 🚨

• 💹 How to maximize your portfolio 💹

• 💸 Where to buy bonds 💸

• ⚡ You’re not getting old, you’re getting better.⚡

What now?

So, you’ve started investing, built a portfolio, and now you’re wondering, What’s next? Managing your investments doesn’t have to be complicated. In fact, with the right approach, you can keep things simple and still grow your wealth over time. I cover this topic in depth in my new book The Money School. But here it is in a money minute.

One place for all your investing

Make 2025 the year you invest in your future, with Public. Public is an investing platform where you can invest in stocks, options, bonds, ETFs, and crypto —all in one place. And with Public, you’re not in it alone. You can ask Public’s built-in AI tool, Alpha, questions about the market like “What are the top movers today?” or “How is the S&P 500 doing today?” Alpha doesn’t just tell you if an asset is moving; it tells you WHY the asset is moving so you can actually understand what’s driving your portfolio performance.

Get started today HERE!

You are your portfolio

Of course, we all have different financial goals and so there can’t be a one-size-fits-all strategy for investing. But if you’re looking for a place to start, one of the simplest strategies experts use for managing investing portfolios is the age strategy. This method adjusts your investments based on your risk tolerance over time. When you’re young, you can afford to take bigger risks, so experts allocate more heavily in stocks. As you get closer to retirement, it makes more sense to opt into more conservative investments, because you’ll probably need that money soon— so, you likely wouldn’t want to be 66 with a very volatile portfolio, because if a dip in your investments coincides with the time you need that money… well, that can get tricky. So, experts shift focus on bonds as retirement inches closer.

A general rule of thumb is to have your age as the percentage of your portfolio in bonds, with the rest in stocks. At 25, that means 25% bonds and 75% stocks. At 75, it flips to 75% bonds and 25% stocks. This keeps your investments aggressive when you can handle risk and conservative when you need stability. If you’re looking for an easy way to invest in bonds, check out my favorite platform for bond investing HERE.

Of course, this strategy requires a little maintenance. If you set up automatic investments and the stock market does well, your portfolio might end up with a higher percentage of stocks than you planned. That’s why checking in at least once a quarter is important— probably more as you get older. Take a look at your investments, see if they’re still aligned with your goals, and make adjustments as needed. If you’re someone who enjoys managing your portfolio, this might be a fun exercise. If not, treat it like a dentist appointment—put it on the calendar and get it done.

xo,

All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC.

Alpha is an AI research tool powered by GPT-4.  Alpha is experimental and may generate inaccurate responses.  Output from Alpha should not be construed as investment research or recommendations, and should not serve as the basis for any investment decision. Public makes no warranties about its accuracy, completeness, quality, or timeliness of any Alpha out. Please independently evaluate and verify any such output for your own use case.

Hey there,

Life has a way of throwing curveballs when you least expect them. I never thought I’d write this kind of story, let alone live it. But here I am, still delirious, running on fumes, and hanging by a mental health thread after escaping the LA wildfires with my newborn daughter.

When we evacuated, we left with nothing—just the clothes on our backs and my baby in my arms. I grabbed her, not even thinking to pack a bag or take a single thing. The fires didn’t leave us time to think, just to act. Driving through the smokey streets, I was terrified. Everything I’d worked so hard to build was suddenly in limbo.

Losing my home and everything in it was never on my life bingo card. It’s a surreal kind of grief, realizing that all your "things" are gone in an instant. Some things that can be replaced but others that cannot: my father’s signature, my journals, poetry, press passes, the glass broken on my wedding day, years of keepsakes and mementos that told the story of who I am, all I’ve built.

But here’s the thing: this experience has forced me to face something I’ve been avoiding for years. I’ve always had a deep, complicated relationship with the idea of “home.” I used to think a nicer house, a better space, or more stability would fix that ache. But this fire burned right through those illusions.

If I’m learning anything through this horror, it’s that the idea of home was never going to be solved by a bigger house or nicer stuff. The gaping wound—the one that made me crave stability so desperately—was something I’d have to face head-on. It hurts like hell, but maybe, just maybe, Rumi was right: the wound is the place the light enters you.

For now, I’m trying to focus on finding the light, the gratitude. Gratitude that my daughter and I are safe, that we’ve been met with so much kindness, and that I’m being forced to rebuild not just a home, but something deeper within myself.

To everyone else in my hometown who is going through this, I see you. I feel your heartbreak. And I promise we will get through this together, one step at a time.

With love and hope,
Nicole

P.S. I’m sharing resources and tips I’ve found helpful for navigating insurance claims and recovery on my social channels. Let’s rebuild together. ❤️

What Should You Invest In? The Clue Is Closer Than You Think

If you’re new to investing, the stock market can feel really intimidating and unfamiliar. But the truth is, investing is closer to home than you might think. Literally. If you look around right now at the things you have lying around your house, you can probably invest in most of the companies behind those products. Do you have a Mac laptop? You can invest in Apple. More of a Dell person? No sweat - you can invest in Dell, too. If you have a car in your garage, snacks in your cabinet, soda in your fridge, a cellphone in your hand— you’re already investing as a consumer, but you can invest as an investor as well— which will allow you to reap the benefits of the success of your favorite companies.

I recommend people do this exercise if they’re trying to figure out where to start investing: look around at the things you touch every day. I’m going to walk you through this exercise using a recent conversation I had on my podcast Money Assistant, a show where I talk to listeners with investing questions, and answer them with the help of Magnifi, an AI-powered investing assistant. In this episode, I talked a listener (John) through determining whether he could— or even should— invest in some of his favorite brands. We broke this down in three steps that you can try at home.

Step 1: Find Your Favs

John and I started his investing journey by brainstorming some of his favorite brands. When I asked him about his favorite apparel brands, the shoe brand HOKA came to mind immediately. Our first step was to determine if he even could invest in HOKA, because not every brand is publicly traded. To find whether a company is publicly traded, you can simply Google it, or look it up on Magnifi— which is what John and I did. We discovered that HOKA is owned by a publicly traded company, Decker Outdoor, with the ticker symbol DECK. So John can invest in DECK ✅

 … but should he?

Step 2: Evaluate The Track Record

Let’s get a reality check out of the way: just because you love a brand doesn’t mean it’s a good investment. So in order to test whether it’s a good candidate for your portfolio, you have to look at the data. A good starting point is looking at the company’s volatility and return over a five year period. Again, I’ll use DECK as an example, but many apparel brands are publicly traded like Nike, Gap, Nordstrom, H&M, Victoria’s Secret… you get it, there’s a lot, so you should look at the companies you’re most stoked about.

To dig deeper into DECK’s track record, John and I used the AI money assistant Magnifi (for more about Magnifi and how it can help you reach your financial goals, click here).

First, we checked DECK’s volatility and return over the last five years and what we found was that DECK has returned a whopping 350%, with slightly above average volatility (see below). We also looked at the returns for DECK over the last year and found it is up 37%.

Images from Magnifi.

The track record of success, with somewhat average volatility, made DECK a good candidate for John. But if you’re going to get into the world of picking individual stocks to invest in, looking at return and volatility is just the beginning. Which leads me to…

Step 3: Have Some Fun(ds)

As you know if you’ve been reading The Money Minute for a while, investing in individual stocks is a high-risk-high-reward move. The basic rationale is the same as the one behind the old expression, “don’t put all your eggs in one basket.” If you invested all of your money in one company— and say that company was Apple in 1981, sure, that was a good move and you would have made bank. But if that one company was, say, Enron in 2000— you lost it all. That’s why in Step 2, I said looking at return and volatility is really just the beginning if you’re looking at investing in individual stocks. There are a ton of factors that can influence the financial success of a company— legislation, the economy, interest rates, inflation, the time of year, corporate leadership, world events, fickle trends of Gen Z… it’s a lot. And so in order to make a smart investment into an individual stock, it’s important to know the company and the industry really well.

This is the reason many investors recommend investing in funds instead of individual stocks; funds are pretty much what they sound like, a collection of stocks lumped together in one group. So if you invest in a fund, instead of investing in one company, you’re investing in all of the companies within that fund. Now all of a sudden there’s less pressure for one individual company to perform well, because the success of the fund is dependent on the collective performance of all of the companies in the fund. So, I told John another option for him would be to find funds that contain DECK stock. Magnifi found us a bunch of options, but we narrowed in on three: ICFSX, QCGDX and TAAGX (see below). Then, similar to what we did when we were looking at DECK individually, we looked at return and volatility scores for ICFSX, QCGDX and TAAGX and found that TAAGX had the best return at 7.57% (see below). As a side-note, this is another reason I love this exercise: it perfectly illustrates the high-risk-high-reward nature of stock picking versus investing in funds. TAAGX is up 7.57% over the last year. Remember how much DECK was up? 37%! So how you choose to invest is really a question of your risk tolerance and your time horizon.

Images from Magnifi.

And there you have it! After going through this exercise, you’ll be able to assess two ways to invest in your favorite brands— as individual stocks, or as part of a larger fund.

xo, 

—

Disclosures:

Any investments or strategies referenced in this email are for information purposes only. Nothing contained herein is to be considered a solicitation, research material, an investment recommendation or advice of any kind. The information contained herein may contain information that is subject to change without notice. Any investments or strategies referenced do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. MNN explicitly disclaims any responsibility for product suitability or suitability determinations related to individual investors.

Mutual Funds and Exchange Traded Funds (ETF’s) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

As a financial pro, I am personally stoked about all of the new money-making opportunities AI is delivering to our doorsteps. Here are my three favorite AI-powered apps that will improve your financial life:

1. Make your days more productive with Motion.

Motion is like a calendar app on steroids. It claims to increase productivity by 137%, and I agree. It bills itself as a calendar app because the AI technology manages your calendar, but it’s not just helping you find empty slots in your day to book meetings. Motion actually helps you find time in your day to do your work. This is a recurring problem I have. Between meetings and interviews and podcast recordings, I have days where I’m in back-to-back meetings for a full work day and then I wrap my last meeting and I have a backlog of unanswered emails and deadlines.

Motion helps me make sure I hold time in my calendar for things like writing this newsletter and taping my pod— things that might get bumped for meetings. And if something unexpected happens that throws off your calendar, like you get COVID (it’s me, hi, this just happened to me) Motion will automatically rearrange your calendar.

2. Automate your payroll with Booke.

Small biz owners, here’s one for you. Booke is an AI program that helps you automate everything invoice-related that eats up your time. Booke helps you communicate with customers, spot invoicing errors, and keep your records super organized so that tax season is as easy as tax season can be. And, you can integrate Booke with your bookkeeping software on Quickbooks and Xero, so you don’t have to start from scratch with a whole new app - which, as a busy biz owner, is music to my ears.

3. Meet your financial goals with Magnifi.

Magnifi is an AI-powered investing assistant. It’s like ChatGPT, but specifically programmed to answer your finance questions, and make personalized plans to help you meet your money goals. I’m going to go a little deeper on Magnifi than with with Booke or Motion because Magnifi is specifically a tool for money. And while productivity and invoices are cool, I think we can all agree, money is cooler.

So, here’s how Magnifi works: once you subscribe, you can open the app on your computer or phone and chat with the AI investing assistant. In the app, you can tell Magnifi about your goals, and Magnifi will create a personalized plan to help you meet those goals. So, you can say “Hey Magnifi, I want to buy a $500,000 house in two years, create an investing strategy that helps me build the downpayment.” Or, “Magnifi - all this natural disaster stuff is scaring me, help me put together a portfolio that generates six months of my salary as an emergency fund.”

But my favorite feature in Magnifi is the retirement resources. You can hit up Magnifi and say “I want to retire with 1 million dollars. Make me a portfolio that puts me on-track for that goal.” And then from there, Magnifi helps with three things that are super important: 1) Magnifi crunches the numbers for you to determine how likely you are to reach your retirement goals, 2) If you are not on track to meet your financial goals for retirement, Magnifi will give you recommendations on how to boost your chances— like, retiring later, or contributing more aggressively to your retirement accounts. And 3) Magnifi creates a custom recommended investing portfolio based on your goals.

This triple threat is super important. Over 55% of Americans say they feel like they’re behind on retirement. But with Magnifi, you can actually know if you’re behind on retirement. And not only that, but you get a customized plan to help catch up, delivered to you right on your phone or computer.

I am a Magnifi partner, which means that I have an “in” and you better believe I got Money Minute readers the best deal possible. So my readers can get Magnifi for only $9 a month (check it out here).

xo,

Let’s try something new!

I’m experimenting with a new format because ya girl is always learning and growing. On Fridays I’m going to share three tips, hot-off-the-presses, taken from my favorite Money News Network podcast episodes of the week. Well, only if you like this idea (LMK on the poll below!). Everything I do is for you. Duh.

1. If you’re stressed about student loans, check out income-driven repayment plans.

About 1 in 5 adults in America have student loan debt. Of those who do owe, almost half expect that they will be unable to pay their loans when they come due this fall. If this is you - then be sure to check out income-driven repayment plans. These are a type of repayment plan that sets your monthly balance at what should be an affordable amount given your income. Plus, participation in these plans can also result in your loans being forgiven after you’ve made a certain number of payments.

This tip comes from today’s episode of Money Rehab hosted by yours truly. Listen to the full shebang here.

2. Never, ever get overcharged again, and get the money talk done first.

If you’re paying someone to do a service— whether it’s a haircut, an oil change, a taxi, no matter what it is— always have the money talk before the work begins. I know this sounds obvious, but there are sneaky ways this can get by you. Recently on Help Wanted (the career advice podcast I co-host with Entrepreneur Magazine editor in chief Jason Feifer), Jason’s friend Kassi came on the show because she got overcharged by a babysitter. Not only was the rate higher than expected ($30/hour), but the babysitter also charged her for a meal she didn’t even eat? Anyway, Kassi didn’t ask the babysitter about the rate in advance, because the babysitter was referred to her by a network of babysitters that is pretty much always $20/hour. It’s easy to make assumptions once you fall into a routine. But even if it feels like overkill, get the money talk done first.

This tip comes from Tuesday’s episode of Help Wanted. Listen to the babysitter saga here.

3. Instead of a mentor, look for a sponsor.

Move over, mentors. There’s a new sheriff in town: the sponsor. But, this isn’t a #ad— we’re not talking about financial sponsor.

On Money Maker with Nely Galan, PIX11 host and PA Announcer for the New York Mets, Marysol Castro says that some of her success can be attributed to the “sponsors” in her life. Here’s how Marysol defines it:

“In a room full of people who don't know your name, there is that one person that will say, you know who would be perfect for this? And that person says your name. That’s a sponsor.”

This tip comes from today’s episode of Money Maker hosted by entrepreneur Nely Galán. Listen here.

xo,

Let’s crunch some numbers.

When it comes to retirement, I outline three levels of wealth. If these are new to you, I want to share my definitions so that you can start thinking about desires, goals and expectations for retirement.

• The first is affectionately called “Rich Enough,” where your super basic expenses are covered (think brown-rice-and-beans diet) without any frills.

• If you feel best maintaining your current lifestyle, complete with occasional splurges like dining out or buying some designer duds, great. It’s the “Pretty Rich” life for you. Being Pretty Rich in retirement allows you to live comfortably with some indulgences but doesn’t factor in a ton of future growth.

• And, finally, we have the “Super Rich” level, which entails having more money than you can reasonably spend, a.k.a. baller status.

You may already have a sense of which lifestyle you want to shoot for, but the next step is to crunch the numbers to see how much you’d need to save in order to achieve this lifestyle. We need an exact number so that you know what you’re working toward on your own without feeling beholden to a job or another person to keep that flame alive. There is no one right number (although there are a couple wrong ones) for how you want to spend now or how you want to spend when you retire, or if you want to retire at all. The only wrong way to do this is to not think about it at all. Your plans can and will change but having a realistic idea of what you’re aiming for is the only way you’ll be able to figure out how to get there.

Your numbers may not look like exactly this, but here’s a pretty educated guesses, just so we can talk hard figures (or, if you want to find your exact spending plan, use my template here):

Rich Enough

The median household income in the United States is about $63,000 before taxes. The average annual burn rate, that is, how much you spend per month and per year, is about half of that, or about $30,000. On average, we spend only about $5,000 a year on entertainment, personal care, and clothes (with the rest going to taxes, ugh).

Typically when I coach clients on calculating their goal retirement savings, I recommend that they anticipate spending twenty nonworking years in retirement. Other financial experts recommend budgeting for thirty nonworking years. Really, that’s a personal decision. How many years you plan on being in retirement depends on when you want to stop working and how long you think you’ll live. “Sheesh! Warn us before you bring up our mortality!” I get it—no one actually wants to crank up that Paula Cole’s song “I Don’t Want to Wait” and think about how much time they have left, but it is the elephant in the room—and here at the Money Minute, I don’t let the elephant in the room go unacknowledged. That elephant can grab a desk and join the rest of the class.

If we go off the average American needs, that’s twenty years x $35,000/year = $700,000 needed to live Rich Enough in retirement. Sure, that’s a lot of money, but it’s not in the millions like you may have started out thinking. Of course, there are many ways you can make $700,000 in cash or broken up as interest payments from your investments—and we will go over all of them in Second Period. But for now, keep this $700,000 number in mind so your imagination and reality are at least in the same book, if not the same page.

Pretty Rich

For the purposes of examples, here, I’m going to use $67,000 as the target annual spending in retirement, because it’s the average salary in the US. That means, you’ll need to have 1.3 million in your savings account for Pretty Rich-level retirement. By the way, researchers have found that earning $75,000 to $100,000 a year is the sweet spot for optimal happiness.

Super Rich

If you want to be Super Rich and your annual spending is clocking in at something like $100,000, then you will need to aim for around two million bucks to live out your days in the (Tuscan) sun.

What happens now?

Checking in on you: are you panicking? If so, it’s time for your pep talk: we’re on step one. We’re facing the music (er, well, numbers), which makes this the hardest step— and the most important.

The next question, of course is how do you get there? And, spoiler alert: your income isn’t going to be the entire source of funding your retirement accounts. And spoiler alert^2: your savings aren’t going to be your entire retirement pot either. Investing is going to be the best tool in your toolkit.

If you need a hand getting started, I’d recommend using Magnifi— an AI-powered investing assistant, designed to help you meet your financial goals. I’ll tell you how it works and how I use it to work toward my financial goals: on the app, there’s a chat feature you can hit up— think ChatGPT, or Siri, but, trained to answer your investing questions and registered with the SEC. So, you can ask Magnifi for help putting a retirement plan together based on your Rich Enough, Pretty Rich or Super Rich target number. From there, it looks like this (screenshot of my own Magnifi chat below)— it will ask you some q’s about how old you are, how much you have saved for retirement already, when you want to retire, and a few other things. It’s basically a mini version of a first meeting you would have with a wealth advisor or a financial planner.

From there, Magnifi helps with three things that are super important: 1) Magnifi crunches the numbers for you to determine how likely you are to reach your retirement goals, 2) If you are not on track to meet your financial goals for retirement, Magnifi will give you recommendations on how to boost your chances— like, retiring later, or contributing more aggressively to your retirement accounts. And 3) Create a custom recommended investing portfolio based on your goals. The reason these steps are so important is that, even though knowing what your retirement goals are is essential, knowledge can’t help you actualize your goals. But Magnifi can.

Meet your new money assistant here, do it for your future badass retired self.

xo,

New to investing? Start here.

Say you just opened a brokerage account. Yay!

Now you get to start investing. Yay!

You might be asking yourself…

When I was a new investor, here are three things I looked into:

1. Index Funds. I would definitely stay away from picking individual stocks when you’re just starting out. After all, you don’t start out surfing 20-foot waves. You have to learn to get comfortable in the water first. One way to dip your toe in the investing water is through index funds. An index is a collection of different stocks by a certain set of parameters (like a particular industry, or size of a company). When you buy an index fund, instead of buying stock in one company like Apple or Tesla, you are basically buying a little slice of many companies. Index funds are less risky because if one company fails within the fund, you have all the others to prop it up. Fun fact: mutual funds are managed by professionals who pick stocks for a living and they can’t manage to outperform index funds.

2. Target date funds. Target date funds are packages of stocks and bonds that change depending on how close you are to retirement. So, when you first buy target date funds, they will have an asset allocation more on the “high-risk-high-reward” side of the spectrum— so, more stocks, less bonds— and as you get older, the asset allocation will shift to be less risky, which makes sense, right? You don’t want to risk losing a big chunk of your retirement savings on the eve of your retirement. Investing in target date funds is a way to make sure your portfolio is appropriate for where you are in your investing journey, without having to be hands-on. If you want to learn more about how to buy these, check out my conversation with author Ramit Sethi where we did a deep dive on all things target date funds.

3. Robo-advisor. There’s no shame in the robo-advisor game. And for a little Nictionary note here: robo-advisors are a feature offered by many brokerages, and it’s just a fancy term for a computer program that will invest for you based on your goals. Robo-advisors are a really good way to enter the market as a new investor. To set it up, you need to first create an account with a brokerage, find their robo-advisor program and then answer a survey where there are no wrong answers. On this survey you will be asked about your retirement goals, how much risk you feel comfortable taking - things like that. Then, you transfer some money to that brokerage account and boom! The robo-advisor invests your money for you based on your goals, and you don’t need to buy the stocks yourself. And as an added bonus: investing with robo-advisors is cheaper than working with a human financial advisor, because a robo-advisor isn’t trying to send their kids to private school.

   xo,

Let’s Fuel Some Savings 🚗

But first - thank you! Last week I took to IG to ask you all what you want more of in this newsletter: news or tips. And the results were clear—

DONE! Ask and you shall receive! You can look forward to The Money Minute doubling down on the best money tips and tricks, served up with no-frills or jargon. Thank you for taking the time to make this newsletter better for you.

Back To Your $

Earlier this month, oil futures jumped after Saudi Arabia announced that it would cut oil production this July by one million barrels per day for at least one month. This announcement caused the benchmark for oil futures to rise 2.5% in just one business day to $78 a barrel. This indicates that investors think that cutting oil production in July will make the price of oil go up. And this makes sense, right? We know our laws of supply and demand: with less supply, and demand holding steady, prices will rise. And that is exactly what Saudi Arabia is trying to do: stabilize, but ultimately drive up, oil prices. This means that Americans can expect to see gas prices rise at the pump… again.

You might be getting pre-déjà vu from the outbreak of the Russia-Ukraine war when gas prices went bananas. I remember gas hitting over $8/gallon in LA. As we brace ourselves for higher gas prices, get to know and love these five lesser-known tips for saving on gas.

1. Make Wednesday gas day. Wednesday is typically the best day to fill up for less. Prices tend to rise on Thursdays in anticipation of weekend travel. A study found that refueling on Tuesday or Wednesday instead of the weekend saved 8 or 9 cents a gallon, saving more than $60/year on average. In this economy, I’ll take it.

2. Early birds get the deal. Gas station owners tend to hike prices after 9:00am or so, once they’ve had time to check out the prices at competing stations.

3. Don’t top off. You know when you’re filling up your tank and you hear that first click? You may be tempted to double check the nozzle and give your tank a little extra, but don’t! Quit while you’re ahead! That extra squeeze is likely to evaporate or splash out. And make sure your gas cap is on extra tight so that none of your fuel escapes as fumes. 1 in every 5 people have loose, damaged or missing gas caps, causing 150 million gallons of gas to vaporize every year. Not only is a tight gas cap good for your wallet, but it’s also good for the environment. Win-win.

4. Pay with cash. Some stations charge you less per gallon when you pay in cash because it means they won’t have to pony up for credit card fees. This hack could save you 10 to 15 cents/gallon… which could really add up depending on how often you refuel your car.

5. Use loyalty programs. See if the station you visit most often has a rewards or loyalty card. But don’t stop there. Some grocery store loyalty programs offer gas rewards; meaning, you earn points for shopping at the grocery store, and then you can redeem those points for cash. The last place to check is gift-card resale sites. You may be able to score a gas card worth $100 for just $90 by buying from someone who wants fast cash over gift cards.

xo,

Do you want to get rid of debt, lock in that raise, plan for your best retired life, find unclaimed money and generally cruise along the road to financial freedom? Here are more ways to get it together and get it all:

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What’s Going On?

It’s officially summer now but what's the vibe? I want to drink spicy margs by the pool and talk about literally anything other than the debt ceiling. So at least it’s not a Hot Government Default Summer? But what can we expect from this next quarter? In this weekly headline round-up we’re going to talk about three stories that may end up defining the summer.

1. Student Loan Repayments

AKA — I Know What You Owed Last Summer.

And okay, mea culpa, we do need to talk about the debt ceiling really quickly to give some context on this one. As I mentioned last week, the new debt ceiling deal officially ended the pause on student loan repayment; payments will need to resume 60 days after June 30th, which is, the week of August 28th.

If you had automatic payments set up before the pause (this is an 🚨 Important Announcement Alert 🚨), you need to opt back in. I repeat: if you had auto-pay set up for your student loans before the pause, don’t assume it is still active. Before August, you need to get auto-pay back up-and-running again, and please don’t miss a payment because of this.

You can also negotiate a new payment plan if your financial circumstances have changed. There are two types of repayment plans available. One is income-driven payment plans. These plans calculate your payments based on your income and family size. But be aware these plans are a little in flux right now. There is pending legislation that would make these plans more generous to low-income families; that legislation sent for review on May 23, which means that the new guidelines should be out riiiight before the payment pause ends. I hate these buzzer-beaters, but here we are. The second option is fixed payment plans which just have you paying a set amount every month.

Remember, you can start making payments before the interest starts again. You can start right now! This gives you a chance to pay down just the principal on your loan, which means paying less over the life of the loan.

2. Get Serious About Flood Insurance

The climate crisis is fast becoming a financial crisis. It’s hard to deny the mounting cost of storms, floods and fires (helloooo, did you see New York this week?). These rising costs have led two major insurance companies in California, All State and State Farm, to stop selling new policies.

In understanding this story, the first thing we need to understand is that costs have gone up. This has been caused by a couple of things. First, property values have gone up. Way up. Meaning, the total value of new policies is higher. But it’s not just the cost of existing buildings that has increased. The cost of building new structures has gone up as well. This is mostly because in a lot of places, notably, California, there are pretty strict building codes designed to make new buildings more durable in the face of natural disasters. But building a better building takes more money. And that ties into the third and final reason that insurance companies are having to make bigger payouts: construction costs for labor and materials are higher than ever.

So what can you do to protect your home? When it comes to flood insurance, if you already own your home, not much. The only move you have is to check and see if your rate is going to go up, and budget for that. If you’re buying a home, check the FEMA flood maps for the area and ask the seller if the home has ever flooded. If you live in a state where it is difficult to get private coverage, look for a state plan. These can be a little more difficult to enroll in but they can provide protection that you may not be able to buy on the private market.

If you rent, be aware that your renter’s insurance policy almost never protects you from water damage from external flooding. If a pipe bursts, renter’s insurance has got you covered. If the creek rises… not so much.

To be protected from a flood as a renter you need to buy “contents coverage” from the National Flood Insurance Program. And fun fact! The NFIP is super picky about what it will cover in your basement. Anything that is part of your house, like the hot water heater, is covered; as are most things that are plugged-in like washing machines and freezers. Anything else in the basement that isn’t explicitly listed in the policy is not covered. So if you’re storing, oh I don’t know, a Chanel bag down there: either move it to the attic or get it listed on your policy. Because summer isn’t just for hot girls. It’s also for wildfires and hurricanes. Bummer.

Pride Backlash

June 1st kicked off the official start of Pride Month. But this may be the summer of backlash … which is, not so not hot it’s insane. In prior years, the corporate tendency to slap a rainbow on anything and call it "Pride" has always been a sort of uncomfortable balance. Is it true support? Or is it rainbow washing? Well, brands across the spectrum have been tested this spring to show their true colors.

It started with the Bud Light backlash over their decision to work with a trans influencer. The latest brand to face customer criticism for celebrating Pride is Target. Target has long sold pride products during June and most of the historical criticism has been of the rainbow-washing variety. And now for the first time, Target is facing serious backlash against the sale of Pride-branded merch in the form of customers not just complaining on social media but also trashing displays and threatening employees. This comes at a time when retail workers are experiencing more threats to their personal safety than ever. Target has a difficult line to walk to protect their employees but also to show that their support of Pride is more than just a marketing campaign - it’s a meaningful commitment to equal rights. So maybe this is the summer of standing up for what you believe in. I hope it is.

xo,

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“Net Return" refers to the annualized internal rate of return net of all fees and costs, calculated from the offering closing date to the date the sale is consummated. IRR may not be indicative of Masterworks paintings not yet sold and past performance is not indicative of future results. See important Regulation A disclosures at masterworks.com/cd.

We Did It, Joe!

As I write this, the debt ceiling deal is headed to President Biden’s desk. He has already said that he will sign it— so, it looks like we have a new debt limit. No default. Phew.

This deal will suspend the debt limit for two-ish years, until January 1st, 2025. So that is good news for the debt ceiling and tough news for anyone hoping to win the presidential ticket in 2024. Along with the Oval Office, they will inherit a multi-trillion dollar problem.

But until then, the people who will be impacted most from the new rules are people who have student loan debt, who are on food assistance programs, or people who love the environment and/or live in Virginia. If you fall under one of these categories, you will be affected by the proposed debt deal. But no sweat, I’ll walk you through it.

Student Debt

So, as of right now, student loan repayment requirements are paused and interest is not accumulating on any outstanding debt. This new debt deal will press play on payment requirements and allow interest to once again snowball. Under the deal, borrowers will need to start making payments again by the end of August.

But, to be honest, this doesn’t change much for people with student debt. The biggest change, of course, would have been some wide-sweeping debt forgiveness. In debt ceiling negotiations, Republicans were keen on slashing any student debt relief - but, those decisions were punted to the Supreme Court.

Biden’s debt relief plan is on the Supreme Court docket for this summer. And the game plan, even before the debt ceiling negotiations started, was for student debt repayments to resume 60 days after the lawsuit in the Supreme Court is resolved, or, if not resolved by June 30th, 60 days after that.

… In other words, the end of August: same-same as what is written into the current debt deal proposal. So, again, even though this debt deal would officially resume student loan payments, it actually doesn’t change much from what was already decided. And for everything else, the arena where big student loan change will be decided is the Supreme Court.

Mama Earth

This debt deal is not good news for the progress that climate activists have been making over the last few years. The big consequence of the debt deal where the planet is concerned, is that this agreement would freeze spending for the Environmental Protection Agency - which is the federal agency that protects people and the environment from health risks, and enforces environmental regulations. Beyond that, Biden made a really big concession to Republicans and agreed to expedite permitting for the Mountain Valley Pipeline, a 303-mile gas pipeline that will run through the Blue Ridge and Appalachian regions of Virginia and West Virginia, all the way to North Carolina. Construction of the pipeline has been stalled with dozens of environmental violations, but Biden gave a yellowish-green light in the debt deal.

Pro-pipeline voices say the main benefits of the project will be jobs created to construct and maintain the pipeline, and local residents will have better gas service. The anti-pipeline peeps say that this pipeline will hurt regional clean water and endangered species, as well as increase dependence on gas. It’s a tale as old as time: new jobs versus quality of life, and I think we’re all ready for a world in which there’s an emphasis on new green jobs that can actually help our quality of life.

Food Assistance

More than 42 million people were enrolled in Supplemental Nutrition Assistance Program benefits (also known as “SNAP benefits” or food stamps) at the top of this year. That’s a lot of people that depend on these benefits to put food on the table for their families. And, to cut to the chase: the debt deal would trim SNAP spending overall, but expand access to the program for some groups.

There are three big changes to SNAP that are in the proposed debt deal, and heads-up, there’s some jargon here, but I’ll break it down:

1) Raising the age of food stamp recipients subject to work reporting time limit requirements from 50 to 54, but only until 2030

2) Placing new restrictions on how often states can waive work requirements for food stamp recipients

3) Requiring the Agriculture Department to publish a report of which state waivers it approves and rejects

Again, that’s a lot of jargon. Let’s unpack this. So, in order to qualify for SNAP, generally, your household income needs to be at or below 130% of the poverty line. For a three-person family, for example, you are eligible for SNAP benefits if your household income is a little under $30,000 a year.

In order to get SNAP benefits, if you are able to work, you will need to meet the general work requirements. And these requirements are basically that you need to be trying to work, or get a job. There are some exceptions, but that’s generally the prerequisite.

But, if you are between the ages of 18 and 49, you may also need to work at least 80 hours a month in order to be eligible - and that definition of “work” is pretty flexible; it can be 80 hours of paid or unpaid work, or even volunteering or going through a federal training program.

The new debt ceiling agreement basically raises the age where you can stop reporting those 80 hours of work in order to get SNAP. As of right now, if you’re able to work, you probably don’t need to report those 80 hours of work if you’re over 50… but under the new deal, you would need to report those hours until you’re 54.

The second and third changes will make the biggest difference to SNAP: restricting when states can waive work requirements, and requiring more reporting around when states have waived these requirements. Most Democrats are looking at this as an effort to weed out more people who can claim SNAP benefits, and therefore, cut SNAP spending.

There is one last important change when it comes to food assistance: this debt deal actually expands SNAP access for veterans, unhoused people and young adults transitioning out of the foster care system. So, net-net, the SNAP point of the debt deal tells a pretty decent story of cooperation and compromise from both sides of the aisle.

xo,

Do you want to get rid of debt, lock in that raise, plan for your best retired life, find unclaimed money and generally cruise along the road to financial freedom? Here are more ways to get it together and get it all:

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Here is your weekly roundup of headlines that affect you and your finances. On deck today: WTF is going on with the debt ceiling, a pulse-check on car prices and good news on inflation.

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Will Congress Raise the Roof?

As I write this, the debt ceiling debate has not been resolved. Generally, I try to be chill about market fluctuations and recessions. I’m a millennial, right? If we’re not living through a once-in-a-lifetime recession, pandemic, or wildfire season, we probably wouldn’t even know what to do with ourselves! I started my career right in the middle of the Great Recession. Fun fact, my first business was called “Recessionista.” So I know that bad times don’t last forever. But until resolution comes, this debt ceiling debate thing? It sucks.

It feels like our leaders are the parents driving the economy and threatening to turn it around if we don’t stop fighting in the back seat. And the whole country is in the back seat going “We’re not fighting! We’re not fighting!”

I still have a lot of hope that our leadership won’t drive the family car into the ground. But this situation is not ideal and makes me worry about the deeper issues here: that politics are so bad we can’t agree on a national budget.

I want to zoom in today on two little stories that are part of a larger picture. Sometimes looking at little details can help us get a sense of the larger story.

Slugs

First up: I want to talk about a little piece of the bigger debt ceiling puzzle. Slugs.

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Okay, not actually the slimy kind of slugs. I’m talking SLGS, or, State and Local Government Securities. These are a type of treasury only available for purchase by state and local governments.

There are a lot of rules about what state and local governments can do with their money. Obviously, you don’t want your city to just hand all of its funds over to Bob the Investor. The local government must have enough cash on hand to meet their budgetary needs. Beyond that, while Bob could be a careful money manager, he could also spend the city’s money on a yellow Lambo with a matching buttercup Air Force 1s. Nobody wants that… so local governments are legally required to be very careful with their money.

This is true of profits made from the sale of bonds. If a state or local government has extra cash as the result of the sale of tax-exempt bonds they are forbidden to give it to Bob to invest for them. They can only use those profits to buy SLGS. These come in two types: demand deposits (think money market style assets) and fixed deposits (think traditional bonds).

Let's say your city is going to build a bridge. The government has budgeted the money, collected taxes, sold some bonds, and made a little profit, but they haven’t started the project yet. Your city will use SLGS to invest their money for the project.

… Or they would normally.

Right now the SLGS window, the name for the federal office that issues SLGS, is closed because of the debt ceiling hullabaloo. Now, this has happened before because it’s a way for the federal government to reduce its debt obligations. In the past when the office has had to close, they have honored SLGS that matured during that time, but that's not guaranteed.

You may be wondering: Nic, why do you keep talking about SLGS? I can’t buy or sell them to make a profit. So why should I care? Because it’s your money! And it’s your bridge! The more difficult this kind of financial transaction is for cities and states, the more likely they are to delay that bridge project or seek other more reliable forms of funding… like taxing you! The SLGS window is just one more cost of the debt ceiling standoff.

But, the SLGS window closure makes sense, because we have the debt ceiling issue dragging the economy down at the same time that the Fed is trying to fight inflation without crashing the economy. That’s not easy. Especially because the Fed only has one tool: interest rate hikes. Now, I know it doesn’t feel like it when you’re in line to pay for groceries, but inflation is easing. But it hasn’t gone away as fast as the Fed, and all of us, would like.

Can We Drive Down Car Prices?

Just as we looked at one little impact of the debt ceiling, now we’re going to look at one little part of the inflation story: the price of cars.

To recap, pre-pandemic, car makers produced more cars than the market really needed. Car dealers made their profits in two ways: 1) by volume, meaning, the number of cars sold or 2) from the interest and fees on financing deals. But then the pandemic hit. Factories shut down, and no one could find enough semiconductors, which resulted in a low supply of new cars. This meant that dealers could charge a lot more. Now instead of making their profit off of volume, they were able to mark up the price of cars by a serious amount. I know this personally. Dealer markups could make up as much as 62% of new car prices through 2022. So that was the “new normal” for a while.

But not anymore. Production is back to normal and many dealers are fully stocked again, some are even overstocked. And yet car prices aren’t dropping very quickly. Except for Tesla…

But for everyone else: what gives? The law of supply and demand teaches us that if there is a greater supply of something then the price should be falling. Prices are down from last year. It is no longer normal to pay thousands of dollars over the asking price. This means that dealers are back to trying to make their profit on volume. Dealers also borrow the money they use to pay for the cars on their lot through what’s called a “floor plan.” Because of higher interest rates, having a fully stocked lot is costing dealers a lot more than it did a year ago. So, dealers want to sell their cars ASAP, so that they can stop paying interest on them. And, they want to sell a ton of cars, so they can make a profit.

To do that, they need to be able to offer incentives and discounts… but automakers, who have a lot of control over pricing, aren’t allowing dealers to do that. As a result, the price of cars has stayed relatively high despite a far more robust supply.

Now unlike SLGS, I’m sure we all can see how car pricing impacts us. But it has one larger unintended consequence. Car prices factor heavily into how the Consumer Price Index (CPI) report, what we use to track inflation, is calculated. April’s CPI numbers are a bit unusual. After months of very low, but steady, inflation, new vehicle pricing fell slightly. Real slightly. Like, 0.2% slightly. Which could be a sign that the rules of supply and demand are finally in effect again. But out of nowhere, the price of used cars, which had been steadily falling for the last 6 months, popped up with an increase of 4.4%. This was enough of a bump that it had an outsized impact on the overall CPI numbers.

This story illustrates that raising interest rates is working. Buyers want cheaper cars because rising interest rates are making loans more expensive… and dealers want to drop prices to sell more cars, because higher interest rates are making it more expensive for them to have a load of cars on their lots.

The buyer and the seller both want a cheaper product, or a product with a less inflated price, as a result of interest rate hikes. The sticking point here is the manufacturer: who is somewhat removed from the interest rate problem and thus still trying to sell cars for as much money as possible.

But overall, good job J-Pow.

xo,

Do you want to get rid of debt, lock in that raise, plan for your best retired life, find unclaimed money and generally cruise along the road to financial freedom? Here are more ways to get it together and get it all:

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Here is your weekly roundup of headlines that affect you and your finances. On deck today: Elon’s muzzle stays on, Vice files for bankruptcy and the EU gives Microsoft and Activision Blizzard their blessing.

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Let’s start with Elon.

Elon, Elon, Elon. He’s the guy who kind of ruined Twitter; tweeted a picture of his nightstand covered in empty cans of caffeine-free Diet Coke and two fake guns; and tweeted incorrect details about the death of his own child to win an argument on the internet. All of which would make you think that maybe Musk should think twice before he tweets?

Musk, however, has been in court trying to avoid exactly that. Musks’ now-infamous tweet, “Funding secured to take Tesla private,” cost Musk and Tesla a minimum of $40 million. After that incident, it was decided that anything Musk tweets about Tesla should be vetted by a lawyer first. Which, considering some of the out-of-pocket stuff he’s tweeted over the years and how much it has cost him, having a lawyer review his tweets seems like something that should be standard practice for him. However, Musk tried to get this ruling appealed. But, on Monday, a federal appeals court rejected Musk’s bid to free his tweets. So what Musk has referred to as a “muzzle” is going to have to stay on.

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Vice’s Vices

Speaking of lawyers and CEOs behaving badly, let’s talk about Vice. The company filed for Chapter 11 bankruptcy on Monday after trying to sell itself with no takers. I must admit, have a soft nostalgic spot for all the startup journalism ventures that were trying to make it big in traditional media. And Vice made it. The company was valued at $5.7 billion in 2017 and it was being branded as the future of media. But those glory days did not last… and before finally declaring bankruptcy, the company struggled to find a buyer willing to pay just $1 billion dollars for the company. Because despite Vice’s early promise, the day-to-day was problematic.

In the late 2010s, many young female writers came forward about being sexually harassed at Vice and its musical vertical Noisey. Now, reports are surfacing that there may have been financial misdeeds as well. The co-founder, former CEO and current executive chairman of Vice, Shane Smith, is notorious for fostering an environment in which sexual harassment, hard-partying, and blurred lines were the norm. During Vice’s financial glory days, Shane Smith was almost legendary for his excessive and showy lifestyle. He bought a $23 million mansion in Santa Monica and allegedly once spent 300k on a single dinner in Vegas. Some reports have Smith describing himself as “post-economic” and pocketing $100 million from the company's $500 million fundraising round in 2014. If these reports are true, it may go a long way towards explaining Vice’s fall from power.

Microsoft ❤️ Activision Blizzard

Since we’re talking toxic work environments, let's check in on Microsoft's deal to buy Activision Blizzard.

Microsoft makes the Xbox gaming console, which is a big player in the gaming space (pun intended). But despite acquiring some significant games like Minecraft, Microsoft has generally struggled in the game development department, with their most successful property being the Halo series. In order to bulk up their gaming intellectual properties, Microsoft decided to acquire Activision Blizzard. Now you may not have played some of Activision’s most successful games, but you’ve definitely heard of them— like World of Warcraft, Call of Duty and Candy Crush, to name a few. This collection of games would be a logical pairing for Microsoft and a chance for them to bulk up in an area where they have struggled.

It’s been reported that the acquisition will cost Microsoft a cool $69 billion— which, some tech bros are calling a bargain.

And why would this awesome portfolio of games and developers be available for cheap? Because of a culture of sexual harassment. There are a lot of stories of sexual harassment at Activision Blizzard, but one particularly nasty one is what has been nicknamed “cube crawls” - where men in positions of power would get drunk and literally crawl through the cubicles of women who worked for them and grope them. Which is the stuff nightmares are made of.

The United States and the UK have both attempted to block the purchase because of concerns over Microsoft having too much of a monopoly in the cloud gaming area if it was permitted to purchase Activision. This has been interpreted as a sign the United States government is going to attempt to limit the expansion of the tech companies which increasingly touch every corner of our lives. However, the deal was unexpectedly approved by the European Union. This adds another layer of complication to the United States government's ability to limit the expansion of giant multinational companies like Microsoft.

At their center, all these stories are about how a toxic boss can tank a company. While Vice may never have been worth what everyone wanted it to be worth - Activision was and is a digital gold mine. And while Elon Musk was one of Tesla’s greatest assets for many years - he has also become their biggest liability.

xo,

Got a cool mama in your life you’re celebrating this weekend?

Mother’s Day is right around the corner— it’s this Sunday, May 14th. For those who are tight with their moms, this day is a big deal. Also, if you’re a parent and have a mama co-parent, and your kiddo is too little to put something together for Mother’s Day— surprise! Mother’s Day coordinating is on you. But as much as we want to celebrate our moms on Sunday, we also want to make sure we’re not straying from our spending plan. So here are three ways to do something special for mom, without breaking the bank.

#1. Lean into Bed Bath and Beyond’s fire sale.

As you know from last week’s newsletter, BB&B is closing its doors forever. This means there are some gigantic discounts and going-out-of-business sales right now. On the BB&B website, everything is 10-40% off. But, if you can, try to visit a store IRL; because in order to get something to your mom by Sunday, at this point, you may need to pay for expedited shipping… and there’s no need to do that, if you don’t have to.

#2. Buy gift cards at a discount.

I’ve mentioned on before on my podcast that a quick way to get a few bucks is to sell unused gift cards for a cash discount; well, now you can take advantage of that same system, in reverse! If you haven’t heard of this, there are several sites where people can sell unused gift cards for cash, at a slight loss. So, for example, you might be able to pay $40 cash for a $50 Target gift card that you can use towards a gift for mom. That’s free money— and we love that!

#3. Unite with your tribe.

We know a golden rule of shopping is that discounts come to those who buy in bulk. So, if you’ve been eyeing a necklace for your mom— or if your mom has been eyeing a necklace and has dropped some not-so-subtle hints— coordinate with a couple of friends that are down to go the jewelry route for Mother’s Day. Then, see if the store will give you a discount if you buy more than one thing. If your negotiation works, you can spread the discount love when you and your friends settle-up. Not to mention: if you lead the charge on buying bulk for your group, then you get the added bonus of helping your friends find the best deals. Brownie points for you, ice for your mom.

If you want two extra tips, I got you! Check out my special Mother’s Day ep of Money Rehab here.

xo,

I think it’s time to talk about First Republic, don’t you?

The big headline of the week, of course, is that First Republic Bank was pronounced dead and JPMorgan Chase bought the bank’s $92 billion deposits and $203 billion in loans and other securities. When I think about how this unfolded, I have this little daydream— it goes like this: do you have an ex saved in your phone as “Nope” or “Do Not Answer”? Well, because of JP Morgan Chase CEO Jamie Dimon’s debacle in 2008 with Bear Stearns, I picture his phone ringing with First Republic’s contact changed to “Do Not Answer.”

But, he finally caved and picked up the call from First Republic this weekend. More on Bear Stearns and First Republic in a minute, but for a quick fun-fact: bailing out banks is one of the long-standing legacies of JP Morgan, and I’m talking about the man here, not the bank. This legacy goes back to a series of bank runs known as the Panic of 1907. To stop the financial system from collapsing, JP Morgan, again, the guy, invited all the financial heavyweights in New York City to his office, and— I’m dead serious here— JP Morgan locked them in his office, and forced them to pool together $25 million to prop up the financial system. And it worked! He released them in the morning, the financial system was saved and the panic of 1907 ended.

So, net-net JP Morgan, the man and the company, has a history of stepping in to help act as a backstop to the American economy. So when in 2008 JPMorgan Chase, led by Jamie Dimon, bought a failing Bear Stearns to save the baking system, Dimon was just bringing a long-standing tradition into a new century. At the time, the purchase of Bear Stearns was viewed as a brilliant business move. Dimon negotiated a deal to pay $2 a share for the company, which had been trading at $170 a year prior. And while Bear Stearns came with a lot of risk because many of its assets were subprime mortgages, the Federal Reserve agreed to insulate JPMorgan Chase from some of those risks.

But, alas, the deal was doomed… and while the bail-out may have mitigated some of the impact of the subprime mortgage crash, it didn’t prevent the Great Recession. Worse yet, the Bear Stearns deal came with a lot more legal risk than JPMorgan had accounted for. Even seemingly simple things, like selling the Bear Stearns office for 1.1. billion, landed JPMorgan Chase in court. Jamie Dimon has said repeatedly that he regrets buying Bear Stearns and wouldn’t do it again. In fact, he’s gone so far as to say he doesn’t even think the board of JPMorgan Chase would let him take the call about buying a failed bank.

Well, the board must have been sleeping this weekend because Jamie Dimon and JPMorgan Chase have done it again and purchased a failed bank: this time, First Republic. To be fair, he tried to resist. Dimon led a group of bankers who deposited $30 billion in First Republic to try to keep it solvent. No word on if he had to lock them in his office to get them to do it like JP Morgan did in 1907… But, that $30 billion wasn’t enough to keep First Republic solvent.

Wait… what?

$30 billion is a lot of cash… why wasn’t that enough to save First Republic?

As we know, when Silicon Valley Bank crashed, there was a panic that transcended SVB and infected other banks, and really, the industry as a whole.

First Republic had a unique reputation of being the bank of choice of very high-net-worth customers who enjoyed First Republic’s customer service. But despite the story of happy customers at First Republic, the bank’s financial filings revealed that even with the $30 billion boost, clients had been steadily withdrawing their deposits. Ultimately $102 billion flowed out of First Republic. This made First Republic’s position even more precarious. Like SVB, they had a lot of assets, like bonds, that were premature and essentially not ready to sell for a good return. To make matters worse, First Republic also had a lot of loans out to their high-net-worth customers. These were largely in the form of low-interest rate mortgages, which didn’t require payments toward the principal for several years. In terms of risk profile, these loans are sort of the opposite of subprime mortgages. It’s reasonable to expect that the uber-wealthy clientele of First Republic will pay these loans back, but it’s going to be 30 years before they do… and much like the treasuries First Republic invested in, these loans would sell for far less than their face value.

So, First Republic had some assets that were also kind of liabilities. But it also had other assets like physical banks, a trained workforce with established relationships with clients, and a company culture that its customers seem to like. Altogether, the assets were valued at $186 billion. Which, hello… duh… is a lot of money. So, finding a buyer was going to be difficult.

But, after going over the books and bidding against other banks, JPMorgan bought First Republic Bank for $182 billion… which is a bit of a discount, but not a huge one. The FDIC has also agreed to help assume some of the risk for the loans First Republic made, which, given the nature of these loans, isn’t actually that much of a risk. And the FDIC loaned JPMorgan $50 billion to make the purchase. You may be wondering why JPMorgan would need a loan. They do have the cash. But as a bank, they need to keep a set amount of cash on hand in case of a bank run… that’s one of the issues that got us into this whole SVB-First Republic mess in the first place. And actually, by helping to guarantee those loans, the FDIC is further helping JPMorgan adhere to banking regulations about capitalization. Right now this looks like a good deal for JPMorgan. But at the time so did Bear Stearns… But², First Republic isn’t facing the kinds of legal issues that cost JP Morgan so much money on the Bear Stearns deal.

So, if you’re a nerd like me, you think this stuff is interesting. But you also might be thinking: cool, good for Jamie Dimon, but what does this mean for me? Totally fair. So, if you have a First Republic account or mortgage or stocks— what happens now? Well, if you are a First Republic Bank customer - congratulations! You are now a JPMorgan Chase customer. All First Republic branches will become JPMorgan Chase branches. The FDIC has actually had a fair amount of practice with this after last month and so corporate leadership is optimistic there shouldn’t be any major issues. So, I’d expect the growing pains of a fairly sizable transition, but you should be able to continue banking as normal, and please pay that mortgage on time. For the homeowners out there, what I would do is get on the phone with a human, or go to a physical JPMorgan branch, and confirm the instructions for paying your mortgage throughout this transition. I know it’s 2023 and we don’t want to talk to humans anymore, but the last thing you want is to accidentally pay using the wrong instructions and take a credit score hit.

So, if you had stock in First Republic, the transition will also be smooth. You now own… nothing. And there’s no way to sugar-coat it: it sucks. When trading was halted on Monday, the stock, along with First Republic, basically stopped existing. Interestingly, it seems like most brokers allowed users to exercise their put options. Nictionary note here: put options are a type of financial asset that allows you to make money when a stock’s price drops. However, Robinhood, in a move that’s pretty on-brand, is being accused of forcing users to allow their put options to expire worthless. The lawsuits are sure to follow.

And even if you aren’t invested in First Republic, if you invest in anything, yesterday was probably a tough day for you. The market decided that it actually hated the news about First Republic and dropped across the board. But not only that, stocks of several regional banks like Comerica and Zion dropped significantly. The hardest hit banks were Western Alliance Bank and PacWest Bancorp— their stocks dropped so quickly that trading was actually halted on those company’s stocks to keep them from going into freefall. That does not mean they will be the next to fail, or even that any more banks will fail. However, trading on First Republic’s stock was halted in April in an attempt to stabilize the price. I never want to unduly panic anyone, but if you bank with any of these companies, it’s probably worth making sure that your deposits are under the $250,000 limit protected by the FDIC.

xo,

Do you want to get rid of debt, lock in that raise, plan for your best retired life, find unclaimed money and generally cruise along the road to financial freedom? Here are more ways to get it together and get it all:

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First thing’s first: WE DID IT! We won a Webby! We got the People’s Choice Award for the best Advice & How To podcast. For all of you who voted — thank you. It really and truly does mean the world to me. I literally could not have done this without you, so this is for us.

Now, let’s get into the big news on Wall Street.

The time has come to ask: Reddit meme stock boys, who hurt you? Who made you think that it was a good move to keep buying the stock of a dying company like Bed Bath and Beyond? Are you okay? Do you need Money Rehab? We all know the answer to that question…

But okay, look, sometimes Reddit is right. And there are thoughtful people on Reddit. But sometimes it falls into an echo-chamber-confirmation-bias situationship. In case you happened to have totally repressed 2021, here’s a refresher: there’s a long-standing subreddit called r/wallstreetbets. At the time, it was mostly dudes who made dirty jokes and questionable options plays. But occasionally, they would identify a profitable company and people would make serious money as a result. That was the exception and usually, those so-called bets were exactly that: bets— and losing ones. In 2020 and 2021 the market was in what can only be called “easy mode” and during this time, lots of new investors and traders were playing around in the market for the first time.

It’s a longer story than this but during this time, wallstreetbets latched on to the GameStop stock (yes, GameStop, the mall store that sells used video games to 12-year-olds). Anyway, Reddit folks were hot for this stock, and market conditions were, to put it bluntly, very weird. As a result, a short squeeze popped off and stock stayed high. So, a fair number of people made money. When this was all going down, I actually talked to one of these people on my podcast Money Rehab who had just made a million dollars on GameStop. This gold-rush triggered the meme stock craze and it was a whole thing… until it sort of fell apart when brokerages started playing defense.

But the mentality of there being “free money” around and a chance for the little investor to make it big has persisted on Reddit. Some companies have leaned all the way into this. For example, AMC, the movie theater company, became popular during the meme stock craze. Some people involved in the meme stock craze would refer to themselves as “Apes.” So AMC began selling financial assets with the ticker “APE” to raise money by marketing to the meme stock crowd. There’s an ongoing lawsuit about these assets in particular, so how well this works out for everyone remains to be seen…

But AMC wasn’t the only company that got caught up in the stonks' energy. Bed Bath & Beyond also featured heavily in the 2020-2021 stock market chaos. Bed Bath & Beyond used to be known for their abundantly stocked stores and their regular coupons in the mail. Over the years, the coupons have been harder to come by, and the shelves increasingly bare. Plus, one of their recent CEOs tried to make a Bed Bath & Beyond branded line of products happen. And nobody wanted any of that. The company has been circling the drain for a while and by December 2022, they were ready to declare bankruptcy. But they had one weird trick up their sleeve. Because remember: they’re one of the OG meme stocks and they have a recognizable brand. Even if people weren’t actually shopping there… they were familiar with the store.

So, Bed Bath & Beyond struck a deal with a company called Hudson Bay Capital. The deal is incredibly complex but the simplest way of explaining it is that Hudson Bay bought the rights to sell $1 billion in Bed Bath & Beyond shares, plus financial assets that could be turned into shares. But the deal hinged on the stock price staying about $0.72 a share or above. Which yes— you heard that right, is less than a dollar, so, penny stock territory. Retail investors bought the stock and it almost worked. But, remember: this is a company that is failing. It has no turnaround plan. They are closing stores. Which leads me to the fundamental question - Why buy?

If you go into threads or watch videos about this, the pervasive narrative was that someone is going to come along and save Bed Bath & Beyond. Or that there’s going to be a short squeeze. Or that you should buy the dip and dollar cost average down to … zero, I guess?

The whole thing has been wild. But, spoiler alert: it’s over now. And Bed Bath & Beyond is officially declaring bankruptcy. So call your mom and tell her to use her coupons if she’s got ‘em… assuming she can find anything left in the store to buy. Although there are sure to be lawsuits The bankruptcy filing means that shareholders will get absolutely nothing.

xo,

Do you want to get rid of debt, lock in that raise, plan for your best retired life, find unclaimed money and generally cruise along the road to financial freedom? Here are more ways to get it together and get it all:

🎙Click here to subscribe here to my daily financial advice podcast, Money Rehab.

📖 Click here to order my latest book, Miss Independent.

Listen, I won’t sugarcoat it: filing taxes… sucks. Even though I love nerding out on money stuff, I can’t lie to you: I hate tax season. Even when I get money back from the IRS, I still hate it, because a tax refund isn’t free money from the government, it’s exactly what it implies: it’s a refund! It’s the IRS giving you back money they over-borrowed and are now playing nice and giving it back. But today is not the day for that rant…

Instead, we’re digging into my top five tax hacks for small business owners.

1. Incorporate your biz.

Make sure you are using the best corporate structure for the type of business you have. From LLCs to S Corps, there are several types of business structures available to owners. They each come with a different tax burden and liability risks. You need to know exactly what your profits are to determine what type of structure is best for your business. It’s also important to know that as your business grows and evolves, different types of business structures may become more efficient. It’s worth checking with your accountant from time to time to make sure you are using the most beneficial structure to save you money.

2. Get your home office on.

The good news is: you can claim your home office! The bad news is: you can only claim your home office. So unless you happen to be a TV reviewer, you can’t claim your couch. It needs to be a dedicated workspace. There’s a simple way to claim this deduction which is to just figure out the square footage of your office and multiply the square footage by $5. For most people, that should be sufficient. But if you live in a high-cost-of-living area like LA, or if your workshop is over 300 square feet, it’s worth checking to see if you should take your deduction in the more complicated way. Again: this is a good time to phone-a-friend (an accountant or rep at an online tool like H&R Block).

3. Take Uncle Sam on your travels.

Travel is a qualifying business expense, even if you do mix business with pleasure. Hotels, airfare, rental cars, meals, and working drinks are tax deductible. But don’t get it twisted: to expense the entire vacation, it must be entirely business. For example, attending a two-day seminar in Florida or visiting a client in California, would be qualifying travel.

When you mix business and personal trips, you can only deduct the portion that is for business. That means that if you head to Disney World after that seminar in Florida, you can only deduct airfare and the lodging for the two days of seminar fun. Anything after that is on your dime.

4. Give back.

Most people know that you can donate to charity and take a deduction. And many small business owners do just that through fundraising or charitable work in the community. It can be a great way to help others, raise your brand's profile and save yourself money on taxes. But did you know that instead of donating goods or money to a charity you can donate stocks? That’s right! Plus, you get to claim the current marker value of the stock as well! So if you paid $20 a share and it’s now worth $30 you can get a $30 deduction. This is a very savvy way to get more value for your deduction.

5. Give your retirement account some love. 

Now, so far we’ve talked about deductions but this final tip is a tax credit. And Nictionary note for those who need the refresher: deductions reduce the amount of income you owe taxes on. But credits reduce the amount of taxes you owe. If you or your employees don’t have retirement plans you can receive a tax credit for setting up qualifying plans such as 401(k) or 403(b). You can also get credit for the administrative costs you incur for educating your employees about the new plans. To claim these credits, you need to file an 8881 form. This is a great way to help your employees plan for their future and reduce your tax burden.

xo,

Do you want to get rid of debt, lock in that raise, plan for your best retired life, find unclaimed money and generally cruise along the road to financial freedom? Here are more ways to get it together and get it all:

🎙Click here to subscribe here to my daily financial advice podcast, Money Rehab.

📖 Click here to order my latest book, Miss Independent.

I don’t know if it's the interest rate hikes or something in the finance stars but right now is a wild time in financial news. We’ve got a lot to cover with today’s weekly news update. But before we get to our main stories about crypto bros and juicy Wall Street gossip, let’s check in on the situation over at Silicon Valley bank.

On Sunday regulators arranged for First Citizens Bank out of - checks notes - North Carolina to buy Silicon Valley Bank. That means SVB is back to being a normal bank. For a while, the FDIC was fully protecting all deposits at the bank. But now that SVB has been purchased, the FDIC isn’t doing that anymore and are only insuring deposits up to $250,000. For a couple of weeks, it was the un-safest, and then the safest, bank in America. Now it’s just a normal bank. It remains to be seen if the folks over at First Citizens can continue SVB’s reputation of being the start-up investment bank of choice. Or if they even want to. However, this purchase has been great for First Citizens' stock price which shot up after the news of the purchase.

Moving onto the big gossip on Wall Street: on March 22nd, Hindenburg Research dropped a hint that had my group chats blowing up. Now, I’ve talked about Hindenburg Research before on my podcast, Money Rehab. Hindenburg Research is a short-selling group. The way they make money is by identify companies that are deeply flawed or criminally corrupt, borrow shares of their stock to sell, release their information on what is wrong with the company, buy back their borrowed shares at a lower price, pocket the difference, and return those borrowed shares.

Now, you may not agree with that business model, but that is how Hindenburg Research operates. This business model only works if your research is on point. You have to have receipts for your receipts for this to work. And Hindenburg? They have receipts for days. And this time, the target of their investigation is the company Block, formally known as Square, and its CEO Jack Dorsey. Yes, the OG Twitter guy.

There are many different allegations. Hindenburg is saying that Block has misled investors, uses predatory practices that profit off of poor people, and knowingly allows their app to be used for crime. The fraud aspect of this story is central. Block claims to have 51 million active users each month. But the Hindenburg reports say that up to 75% of these accounts are fraudulent accounts. Hindenburg learned this by studying all the available records and talking to former and current employees. But during their research, they also discover just how easy it was to get a fake Cash App account and credit card. To prove this, they got accounts in the name of Elon Musk and Donald Trump, sent money between the accounts, and managed to get Cash App to send them a Donald Trump credit card. Even Jack Dorsey, the CEO of the company, isn't safe from fraud. Hindenburg found five different fake accounts for him. They also looked at the issues with the way Block is being valued. In digging into this, they argue that the profits the company is making are often the result of pretty sus decisions. For example, there are caps on how much large banks can charge in “interchange fees” or merchant fees. Despite essentially being a large bank, Block avoids the limits on those fees by routing a lot of its transactions through smaller banks so that they can charge merchants far more in fees than would be otherwise allowed.

Block also purchased Afterpay, which is one of those buy now, pay later companies. They technically don’t charge interest in the same way a credit card does but by Hindenburg calculations they are charging some of the most vulnerable users— those who can not access traditional credit or afford to pay for things in full with cash— upwards of 289% in interest when you calculate what all the late fees mean for users. And all those fake ghost accounts on Cash App? A large number of them are being used for nefarious means. In particular, a lot of them are for receiving payment for drug and sex trafficking.

This tees us up depressingly well to talk about our next big story: the US Commodity Futures Trading Commission's, or the CFTC’s, lawsuit against Binance. There are two main points of this complicated lawsuit. The first is this: it is illegal in America to allow people to trade unregistered derivatives and no one in America has ever been given permission to sell registered crypto derivatives. Crypto derivatives essentially allow traders to profit off the price change of crypto without owning the actual asset. It’s risky stuff. The allegation here is that Binance was subtly telling customers how to use a VPN (software that obscures their location), to get around American laws and trade crypto derivatives on Binance’s global crypto exchange. This is a no-no, you can’t tell your customers how to break local laws.

Here’s the second prong of the suit: Binance has a lot of criminals exploiting the platform. Or as Binance’s Money Laundering Compliance Officer said in an internal chat “I HAZ NO CONFIDENCE.” And that line is directly from the federal case. A few lines down it has the Chief of Strategy discussing how HAMAS limits its deposits to avoid money laundering suspicions, and when discussing Russian users says: “Like come on. They are here for crime.” To which the cheeseburger Compliance Officer replied, “We see the bad, but we close 2 eyes.” Which is yeah, that’s not what a Compliance Officer is supposed to do. They are supposed to have both eyes on preventing crime.

Absent in these charges is any allegation that Binance is mishandling anyone’s money. But “I haz no confidence” in anything about this situation.

Our final story is another crime, but this time a “who-done-it?”

It fits in nicely because it’s about derivatives as well. This one is about buying futures. Basically, these are the rights to buy a commodity at a set price. Let’s say you buy a $5 coupon that will let you buy Mac lipstick for $10 and it expires at the end of April. Which is a good deal since Mac lipstick typically costs about $20. Using the coupon, you will pay $15 for a $20 lipstick. And you could totally use that coupon! Or, you could sell your coupon for its face value and make a $5 profit. If the price of the lipstick goes down $5, you may decide to not buy the lipstick at all, and just eat the $5.

This is (generally) how commodity futures work except the underlying asset is 100 drums of oil or tons of corn, or as is the case in this story, $2 million worth of nickel. So, less practical assets to the average person than a new tube of Velvet Teddy lipstick, but far more valuable. Now, these commodity futures get traded around, sometimes companies use them as a hedge to get better prices on raw materials, and other times they’re just traded as an investment asset.

This was the case with tons of nickel in a JP Morgan warehouse in Rotterdam. But something was rotten in Rotterdam and these bags of nickel turned out to be… rocks.

That’s right. For some amount of time, JP Morgan had been involved in a Schrodinger's cat commodity trade— since they were mostly just trading the paper with no intention that anyone would ever claim that particular pile of nickel. As long as no one went to the warehouse and kicked open the bag, they were fine and trading a valuable asset, but as soon as someone did kick the bag open and discover that they were filled with plain ol’ rocks, JP Morgan's futures were worthless. This also meant that now there’s a massive scramble to kick bags at warehouses around the world to make sure that the nickel is all where it should be, and I do mean literally kick bags. Steel-toed boots are recommended and apparently, you’ll know you’ve kicked nickel because it hurts more. This is real life.

At this time, the suspicion is that persons unknown stole the nickel from the warehouse, as the records show that it was checked and found to be correct when it came in initially. No word yet on who will be selling the futures on the movie rights.

xo,