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For Financial Literacy Month in April 2021, Steve Mayer joined Books Inc. to discuss his three books, and to talk with webinar participants about personal finance. (Note: none of the below should be taken as finance or investing advice.)

Q: 6% yield sounds good, where is yield today and in an environment where the dollar is being increasingly devalued, what are hedges against possible economic collapse?

A: I’ve always thought that you should try to control both, the things that you can control and the things that you cannot control, if you worry about them it’s going to kill you. The three tools, one was diversification. Interest rates are low, in your bank account now you get less than a half percent – so that’s not very good. But there was a time not too long ago where interest rates were high and the stock market, over a very long period of time, will yield 6, 7, 8% over a long period of time. Sometimes it doesn’t do very well and sometimes it does fantastic, but the idea is you want to invest for a long period of time and you want to invest in different things. So, putting in your 401k is great. Putting money, if you can afford it but a Roth IRA is even better because the money comes out tax free. Always saving a little bit of money for a rainy day is terrific, being able to buy a home is a great hedge against inflation because as you pay off your loan the loan is less and the value of the house goes up. It is helpful to have life insurance as well- I recommend cash value life insurance. All of those things tie together to make it.

Q: Are we going to have an economic collapse? 

A: I don’t think so. The United States is very strong, at the end of the day we have a very diversified economy. There are going to be ups and downs, but there are a lot of people who took all of their money out of the market at the beginning of COVID. In fact, they took it out after it went down by 20% and now it’s gone up by 40% and they are still out. So think about investing a long time, if you don’t know how to do it yourself ask for help. There are a lot of very competent people who can help you. If you Google, financial planning, how to get started, there are a million things out there. A great start is to get our two books.

Q: What is the biggest mistake you see new college grads making with respective to financial planning?

A: They get a job and they buy an expensive car, start using credit cards and don’t pay it off, start paying too much in rent. All of those types of things…. My friend Stan McGinnis used to tell me that “if you eat a Big Mac it’s not going to matter that much, but if you eat a Big Mac every day, at the end of a couple years it’s probably going to matter a lot.” The idea is, you can do some of those things and it won’t kill you, but if you ask your parents they will tell you to save money, be careful, don’t be cheap, but it’s where they think they’re making a lot of money and something happens to the economy, they get laid off, and it’s really hard. So I think if you save a little bit, spend a little bit less, have a budget – all of that stuff is going to help you. Read the Adulting 101 book.

Q: What has been your most profitable investment over the years, stocks, real estate, or something else?

A: Clearly the most profitable investment is my family. What I mean by that is, I’m not a rich guy, we have a nice house and money in the bank and I still have my ‘83 Saab but I think the most profitable investment is really the diversification.I am lucky enough to have a house, cash value life insurance, money in a retirement account, some stocks and bonds, some sort of inheritance one day. So all of these things, But I can also tell you that investing in my community – my wife and I and my family, we all have contributed a lot to the community because the community is where we grew up – to our schools, colleges, neighborhoods, all the things that helped us get where we are, we are reinvesting in it. I don’t have one thing that I could say is the greatest thing ever, I think it’s a combination and the lessons that I learned really have paid off. Those lessons are in all three of the books.

Q: What are your thoughts on ScholarShare 529, are they worth it at the end of the day?

A: Compared to a 529 plan, if you bought an insurance policy for your child that you were putting the money in for, you would do a lot better for a long period of time. I put no money into 529 plans, I put the money I would’ve put into those plans into buying cash value life insurance for my three kids. We got through college, we borrowed on those policies sometimes to get through college, we even had to borrow on those policies to buy our rental home for my kids in San Luis Obispo. But those policies now have a lot of cash value in them and my kids are all guaranteed to have insurance for the rest of their life. So I call these life insurance policies duct tape, it has a lot of purposes. Having said that, 529 plans are very good too. The problem with them is that not everybody is going to go to college, and what happens then? You have to plan around that. So, I think you have to talk more specifically if that is something you are interested in.

Q: What do you recommend to people who have low incomes and are trying to save? Is it as simple as trying to put aside 1-5% each paycheck just to get going?

A: Absolutely.hen I was little and I overheard my Mom and Dad talking,they had their checkbook out and I came out and I was watching and they were writing a check for $2 to the dentist and for $1 to this guy and $3 to this guy, and I asked them “What are you doing?” They said, “well, you had a cavity and it takes us about a year to pay it off. And we weren’t poor, but we never had a lot. My parents always saved a little bit, my dad always took a little bit of his paycheck and saved it. He said, “everytime you get a raise, if you can, take half of the raise and save that.” And it really adds up. And I know if you don’t have a lot of money and you could barely make it work, it kind of works.

Q: Do you have any suggested resources or can advise how an individual considering consolidating or refinancing several student loans should proceed?

A: The student debt is in the Adulting 101 book. Some of these people, it is really a bad thing to have and it takes a while to make it go away – but sometimes it is what you need to get through school. There are a lot of places you can go to consolidate all of your payments – it is best if you can consolidate them all to one payment. However, it’s probably a specific situation and it’s hard to give advice without knowing all of the factors.

Q: For the bookstore lovers, can you elaborate your thoughts on Amazon?

A: My personal feeling is Amazon is great and buying on the internet is fantastic if you can’t find it anywhere else, but if you can get it locally, that’s even better. Going there and talking to people in stores, you get a high quality of knowledge. Support the local guy, buy local, because the local guy is the one that is going to end up hiring your grandkid for that summer job – that’s just the way it works.

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