What are the four main pillars around financial health? Join us today as our roundtable discusses this topic and debates what takes priority. Joining is are Jesse Cramer from the Best Interest Podcast, Paula Pant from Afford Anything, and OG.
In the second half of the show our team dives into the final two laws.
Be sure to stick around for Doug’s shockingly heavy trivia question!
Here’s what’s covered in today’s conversation:
- Tracking Expenses: How knowing where every dollar goes can give you financial clarity.
- Financial Alignment: Strategies for aligning your money goals with what matters most to you.
- Goal Specificity: Why setting realistic, concrete goals can make all the difference.
- Budgeting with Precision: Using numbers to bring structure to your spending plans.
- Power of Small Contributions: The big impact of consistent small actions over time.
- Automating Savings: Tips for making saving effortless and consistent.
- Diversifying Income: Why having multiple streams of income provides security.
- Lifestyle Inflation Awareness: Avoiding spending more just because you earn more.
- Progress Tracking: Techniques for monitoring your journey and staying motivated.
- Celebrating Milestones: The role of rewards and recognition in financial planning.
- Financial Adaptability: Adjusting budgets in response to life changes and new priorities.
- Social Influence on Spending: How to resist the urge to keep up with social media-fueled lifestyles.
- Defining Success: Crafting a personal vision of success that fits your unique goals.
- Impulse Control: Avoiding spending pitfalls that come from peer pressure and societal expectations.
- Evaluating Financial Habits: Identifying what’s working and what needs improvement.
- Time as an Asset: Maximizing productivity and treating time management as a financial tool.
- Setting Purpose for Savings: Creating specific intentions behind each financial goal.
- Financial Flexibility: Choosing options that keep you adaptable rather than just “free.”
- Revisiting Goals Regularly: Reviewing and adjusting your targets for maximum relevance.
- Goal Stages: Understanding the differences between short-term, medium-term, and long-term goals.
- Overcoming Mental Blocks: Breaking through the mindset challenges that hold you back.
- Emergency Fund Essentials: Why liquidity matters for unexpected life events.
- Success Beyond Wealth: Finding satisfaction in achievements that go beyond money.
- Discipline Challenges: Common obstacles to maintaining financial discipline and how to beat them.
- Practicing Patience: The virtue of staying committed to your financial journey.
- Intentional Habits: Building daily routines that reinforce positive money behaviors.
- Value of Mentorship: Learning from others to reach your goals more effectively.
Deeper dives with curated links, topics, and discussions are in our newsletter, The 201, available at https://www.StackingBenjamins.com/201
Enjoy!
Watch On Our YouTube Channel:
Our Topic:
The Laws of Financial Health – by Mark Newfield (The Uncertainty of It All)
Our Contributors
A big thanks to our contributors! You can check out more links for our guests below.
Jesse Cramer
Another thanks to Jesse Cramerfor joining our contributors this week! Hear more from Jesse on his show, The Best Interest at The Best Interest – Complex Personal Finance Made Easy Podcast Series – Apple Podcasts.
Learn how you can work with Jesse by visiting The Best Interest – Invest in Knowledge.
Paula Pant
Check Out Paula’s site and amazing podcast: AffordAnything.com
Follow Paula on Twitter: @AffordAnything
OG
For more on OG and his firm’s page, click here.
Doug’s Game Show Trivia
- How many pounds of actual fat did Oprah wheel out on stage to make a point about the importance of losing weight?
Mentioned in today’s show
- Hidden Genius: The secret ways of thinking that power the world’s most successful people
- Stacking Benjamins meetup
Join Us on Monday!
Tune in on Monday when our mentors kick you into action needed to improve your financial situation.
Miss our last show? Check it out here: How Can Artificial Intelligence Help You Plan Better? (SB1602).
Written by: Kevin Bailey
Episode transcript
[00:00:00] bit: It is easy to grin when your ship comes in and you’ve got the stock market beat. The man worthwhile is the man who can smile when his shorts are too tight in the seat. [00:00:19] Okay. [00:00:25] Doug: Live from the basement of the YouTube headquarters. It’s the Stacking Benjamin Show. [00:00:41] I am Joe’s mom’s neighbor, Duggan. You know how there are laws of the universe? How about laws of financial health? Well, one blogger says there are four. What are they? How do you fast track them? On today’s round table discussion, we welcome the woman who’s fast tracking her way to affording anything, Paula Pant, and she’s joined by a man who’s hoping his newborn fast tracks her way to a nap. [00:01:08] The host of the Best Interest podcast, Jesse Kramer and the guy fast tracking his way to nowhere. It’s a long story. We’ll get to it later. It’s our own og, but that’s not all. Halfway through, we’ll follow the law of this podcast, which is that we always stop and contemplate my mind bending trivia. And now a guy whose personal law states that it’s always about the donuts. [00:01:34] It’s Joe Salt Sea. Hi. [00:01:41] Joe: I think it’s gotta be law number one in the universe. Doug. It’s always about the donut. Hey everybody, welcome to Friday Fry. Yay here in Mom’s basement. We are parting with you. So sit back and relax because we’ve got a great topic today and a wonderful crew. So let’s meet them, starting with a guy across the table from me whose, uh, leg may or may not be. [00:02:03] Well, og you’re on the injured reserve. I hear [00:02:06] OG: I was upgraded today from, uh, doubtful to day to day. That’s pretty nice. Um, feeling pretty good about that. Got some treatment. Um, I, I don’t know what else to say. Those are the only things I know in the context. I had a s sports related non-contact injury on Saturday and tore my calf muscle. [00:02:24] Doug: Have there been injections or just pills? [00:02:26] OG: In the treatment? [00:02:27] Doug: Yeah. Yes. [00:02:28] OG: Oh really? I’m on the ice and compression path. Boring. Yeah, I’m, I’m not that important. I’m, I’m not a starter, so I don’t get the, uh, stem cell treatment to make sure I can You got that? [00:02:39] Joe: Rub some dirt on it, kid. [00:02:41] OG: I, I got a little of that. [00:02:42] Joe: Wait a minute. So is this a sports injury or is this, that type of injury you get when you’re older where you like, woke up funny or you know, uh, got up too fast and then something strained? How did it happen? Yep. [00:02:52] OG: It involved sport of some kind and I was doing something and it just, uh, you know, took a step. [00:02:59] Funny. I. You know, it’s this, it’s the thing I don’t talk about, so I’m not gonna really talk about it. Oh, is sport a [00:03:05] Joe: euphemism? [00:03:06] OG: It’s not. That’s [00:03:07] Joe: until I was wondering Paula, it’s the thing nobody talks about. Watch why this? [00:03:10] OG: I’ve been married 25 years. There’s no sport injuries. That would be a great story. [00:03:17] That’d be fantastic. Let’s have another sport injury, sweetheart. We would all happily get injured. No, this was definitely something that I do quite regularly in the fall. And um, the funny thing was, was that I never stretch and this week I stretched. Then this happens. See there, [00:03:33] Joe: that’s the point, right? [00:03:34] OG: Do not stretch. [00:03:35] Right. That’s the moral of that story. [00:03:37] Joe: Right? That’s why the one comedian Dave, tell Doug, remember that? That’s why I, Dave tell, said he, he never runs five Ks because it’s always the jogger who finds the body in the park. You never find it while you’re eating donuts, sitting on your couch. You’re just not involved. [00:03:53] It’s great. And by the way, the woman with all the journalistic questions asking about whether it’s a euphemism Paul pants, or how are you? [00:04:00] Paula: I am, I’m doing well. What can I say? Oh, I early voted to, oh, I guess we’re this, this is gonna be outdated because of this, when this airs. I was gonna say, I early voted today, but by the time this airs, that will be old news, so nevermind. [00:04:13] Okay. [00:04:13] OG: Give it away. Give it away. You’re vote counted though. Your vote counted. By the time you hear this, you know somebody won. It’s a whole new world. [00:04:21] Paula: Exactly, [00:04:21] Joe: yes. [00:04:22] OG: One way or the other. No. Or [00:04:23] Joe: it’s not. My money’s on. We probably have another three weeks till we figure out who won. [00:04:26] OG: Right. You think it’s a tie? [00:04:28] You’re gonna go hanging Chad. I’m not going that. I’m just [00:04:30] Joe: going that they’re recounting the votes for the 57th time [00:04:33] Doug: at the moment. The polling is show. As we record this, the polling is showing that this is set to be the closest race in 24 years. Holy mo. Wow. [00:04:40] Paula: What happened 24 years ago? Which one was that? [00:04:43] Doug: I think that was the hanging Chad one. Yeah, go bush. [00:04:46] Paula: Oh my gosh. Was it, oh my [00:04:48] OG: geez. That [00:04:49] Paula: that, gosh was 24 years ago. [00:04:51] OG: Can you believe it? I was like, my brain immediately went to, let’s see, Nixon. That’s exactly [00:04:56] Paula: what I was thinking. I, Eisenhower Carter 24 years ago was kind of Dukakis, Michael Dukakis. Where was Michael [00:05:03] OG: Reagan kicked everybody’s ass, like I like literally went back 50 years, not 25. [00:05:07] Same. Same gross. Yep. [00:05:08] Paula: I was thinking, okay. 24 years ago, so the 1970s. Right. [00:05:13] Joe: Pretty much. Right. And on that note, I have no transition. Jesse Kramer’s here with us. How are you, Jesse? [00:05:19] Jesse: Hey, I’m doing good. But it was fun. You know, when OG was talking about his injury, I, I’ve been diagnosed, I’m permanently concussed, so if I’m a little bit slow today or in general, it, it might just be I’ve been living in the concussion tent. [00:05:30] I thought maybe OG and I could talk about our experiences there in together. But, uh, other than that, doing great. Doing really good. [00:05:37] Joe: Do you blame like your slowness all the time on Oh, I’m sorry. I have a concussion. [00:05:41] Jesse: That’s one of my, that’s one of my go-tos. Yeah. Yeah. It’s one of your go-tos. Yeah, I just [00:05:45] Doug: throw it back at him. [00:05:46] That took me back to the days of your, when Len Penso would set us up with a joke when he said, I’m permanently concussed. I just waited for that to be a zinger, [00:05:56] Jesse: that there was something coming. That’s [00:05:57] Doug: just the crutch you’re leaning on. [00:05:58] Jesse: Yeah. Yeah, yeah. Yeah. Len and I, we, we, we, you know, we occasionally share ideas. [00:06:03] We actually don’t, I haven’t met Len, but, um, but no, you know, on with the show on, with the show deal, [00:06:09] Joe: you, you know what we’re gonna get on with Jesse. [00:06:13] Jesse: Uh, a cool sponsor, [00:06:14] Joe: well, specific, cool sponsor, state Farm. This episode is brought to you by State Farm. If you own a small business, whatever your business might be, you need someone who understands and maybe that hasn’t been concussed. [00:06:27] And that’s where State Farm Small Business Insurance comes from. State Farm agents, they’re small business owners too, and know what it takes. They can help you choose personalized policies that fit your budget. Small business insurance from State Farm. Ready? Like a good name like State Farm is there? [00:06:43] State Farm is there. Talk to your local agent today. Oh, it’s so fantastic that State Farm’s on board. So fantastic. You guys are all here. We’re gonna talk about the four laws of personal finance. Are there four laws? Is this, does this blogger that we’re gonna talk about today have it right? Are there more laws? [00:07:02] Do these laws stink? Are they fantastic? And if they are fantastic, how do you fast track them, get them into your life and avoid making mistakes? We’re gonna go into all that, but before that, we have a couple more sponsors that make this show free so that, uh, we can keep bringing it to you every week. [00:07:17] We’re gonna hear from them. And then we’re off and running. Jesse’s here. Paula’s here, OG and Doug. Let’s get the party started. [00:07:31] Today we’re gonna go to a Substack. I don’t know that we’ve done a piece on Substack yet. I can’t believe it’s taken us this long, but hello Substack. Stacking. Benjamins is finally here. We have, we have done a Substack piece before. This is, uh, the uncertainty of it all. Blog, uh, from writer Mark Newfield, and it’s the laws of financial health. [00:07:53] This piece starts off with a guy named Phil Perlman, who has four simple rules he developed regarding long-term health and wellness. Isn’t that, uh, feeding Phil? The shows that are on, that are on, uh, I dunno, cable tv, whatever the TV channels are. I think it is, is that Phil Pearlman? [00:08:10] Jesse: Phil Pearlman is like a stock twit guy, wall Street guy. [00:08:13] Um, I, I had him on his podcast. That’s, or on my podcast rather. That’s how I know. But he’s like this Wall Street behavioral finance guy who kind of segued into health more recently and works with a lot of people in the finance space on, on their own health. So he is not the feeding Phil guy. [00:08:27] Joe: He [00:08:27] Jesse: wants to be the feeding Phil. [00:08:28] Correct. They might have the same name, but not the same person. [00:08:31] Joe: Well, they might swing in a miss the, the welcome to the things I could have looked up before we went live podcast. But I didn’t. Anyway, this led the author Mark here to ask, with prompting of someone on Twitter, how many personal finance books do you actually need? [00:08:48] Like how many different rules are there? Right? And he came up with, with four of them. I wanna start off with this premise though, Paula, this idea that Mark has around simplification, like it seems to me this is a good thing. I think when you first become a money nerd, you’re like, you’re so overwhelmed with all these different concepts, all this stuff. [00:09:09] Mm-Hmm. And your brain trying to simplify it probably is a wonderful place to start. [00:09:13] Paula: Yeah. Yeah. It’s a good approach because he is correct. At the core, when you boil it down, the, the essence of good financial management is actually quite simple. Everything that we talk about, you know, should I put my money into a tax deferred account or a tax exempt account, and what percentage should go into which bucket? [00:09:34] All of that is really optimizing around the margins, and it’s important, it matters, but the foundation of it is spend less than you make. And if you’re not doing that, then none of the rest of it, you, you’re not ready for any of the rest of it yet. [00:09:49] Joe: Oh, gee, we learned a little bit about this in, uh, strategic Coach, the coaching that you and I both get. [00:09:54] There’s two types of people. There’s simplifiers and multipliers, they say, and you and I are both simplifiers. [00:09:59] OG: I’m a hundred percent a simplifier for sure, but looking at money from a, from that standpoint, or health or whatever, it’s these big broad brush strokes. There’s some benefit to. All the different things, you know, in terms of like what Paula was talking about, of tax deferred or tax free and there’s benefit there, but you’re gonna get the biggest lever with a few key ideas. [00:10:22] You know, take like asset allocation or investment performance, for example. 90% of your results is just where the stuff is. Do you have big companies or small companies? Do you have US based ones and non-US based ones? That’s 90% of the battle. Yeah, there’s still opportunity with that other 10%, but get the 90% done first. [00:10:43] Focus on that, and then you can nickel and dime the other things. [00:10:45] Joe: You didn’t take the bait. I said you and I are both simplifiers and you were nice enough to let that go. That was good. [00:10:50] OG: Well, I don’t know if you are or not. My guess would be that you’re a multiplier actually. Very, very much. Very. That’s why we work well together. [00:10:56] Honestly, I need to remind myself it’s simplifiers need multipliers [00:10:59] Joe: and I need myself hang out with you to simplify stuff more. It’s crazy. Law number one. Paula nailed it. Jesse, let’s start with you on law number one, she said, spend less than you make, and that’s number one on Mark’s list. Mark writes, our society’s evolved into one that consistently and constantly encourages you to spend. [00:11:19] I mean, Jesse, the marketing messages are all around you. It’s, it’s harder than it looks to spend, less than you make. [00:11:25] Jesse: Could you imagine a world without advertising? It’s so cre. It’s just embedded in our culture in such an interesting way. I mean, think about the, the cave people. However, many years ago that was no advertising, or at least if it was, it was like very, yeah, [00:11:38] OG: life was great back [00:11:38] Jesse: then. [00:11:39] I, it was awesome. I didn’t say that og I, it’s different. All I said was the magic that how far [00:11:43] Doug: we have to go back to find people who didn’t live above their means. [00:11:47] Jesse: Potentially, potentially. But no people [00:11:49] Doug: with no means. [00:11:50] Paula: If you don’t have any means, you can’t leave, but live above it. [00:11:52] Jesse: That’s my new tagline. [00:11:56] Joe: This mammon is brought to you by, [00:11:59] Jesse: yeah. Now there’s no shortage of things to spend money on and then, right. There’s no shortage of people out there trying to influence you to spend money on those things. I think that was your point, Joe, and No, it’s totally true. And listen, we we’re all here. We all either work in, in some sort of capacity with helping people organize their finances or it’s the kind of content that we produce here, and we’ve all heard the stories of people who simply can’t out earn their spending habits and basically they go nowhere. [00:12:26] It’s like Paula has said, it is the foundation. It is the foundation upon which your financial building gets built. And if it’s not a sound foundation, then the building’s definitely gonna fall down. [00:12:37] Joe: Here’s how foundational it is, Paula. I’m thinking of two people and their core messages are specifically in this area, two financial quote gurus. [00:12:49] The first one is a big financial guru that more people listen to, I think, than any personal finance. Podcast, whatever it might be then than anybody. You know who I’m talking about there? [00:13:00] Paula: I, I have a guess. I have a guess. Mm-Hmm. [00:13:02] Joe: Yes. Somebody in, uh, Nashville. [00:13:04] Paula: Yes. Yeah, that’s exactly who I was guessing. [00:13:07] Joe: So Mr. [00:13:08] Ramsey, but then for the fire movement. Mm-Hmm. There’s one blog post that when you’re around fire people, they’re like, I was tired of my job and I, I put into Google, like, how do I quit my job? And up came this piece from Mr. Money Mustache. [00:13:21] Paula: Yes. And, and his viral piece is called The Shockingly Simple Math to Early Retirement, [00:13:27] Joe: which is Spend Less Than You Make, if I remember right. [00:13:31] Paula: Well, yes. In, in that piece, he also illustrates the, the reason it went so viral is because he illustrates the math of how if you were to live on 50% of your income, this is how quickly. Assuming, you know, normal market returns, this is how quickly you would be able to replace that 50% of your income that you’re living on. [00:13:52] So he, he lays it out in a graph and he shows you, hey, you would, if you can get used to living on half of your income, you can generate that half from your investments shockingly fast. [00:14:05] Joe: I think OG you would agree this is, this has gotta be, if not law number one, very close to law number one. [00:14:12] OG: Well, I’m thinking about a couple of scenarios. [00:14:14] I’m thinking about the person that is, the person that has whatever, $40,000 of income or $50,000 of income going, uh, you know, it’s really snug around here. It’s really snug. Certainly all the message of like, cut your spending and don’t go out to eat and stuff like that. It’s like, if I’m making 40 grand a year, I’m not going out to eat. [00:14:32] I’m like, yeah, no kidding. I, I’m not doing that. I’m living in a tiny apartment. I’ve got three roommates. I’m doing all those things and I’m still kind of at this thing. Then I think the job number one is how do we raise your income? Because we can raise your income to infinity. There is no limit to how much money you can earn in a, in a year within reason, I suppose. [00:14:54] But you, you get the idea, but you can only cut your expenses to so much. So I think if you’re in that stage of, yeah, I don’t think I actually make enough money to have that buffer, then you have to focus on the other thing. I think that the biggest thing when it comes to spending and income is that lifestyle creep component. [00:15:13] The more I think about this, the more I think about you just have to hit pause for a short period of time. You know, if you think about your expenses increasing, your income increasing every time, it’s like right at the exact same amount. You’re always gonna be, you know, lips just above water. And to what Jesse said earlier, it’s like if you’re not doing it with 50 K, you’re not gonna do it with 70. [00:15:32] You’re not gonna do it with a hundred. It’s a foundational thing. ’cause you can’t out earn your, your bad spending. So if you can just pause it for a short period of time. Establish what that gap is gonna be, whether it’s 10% or 20% or whatever, and then let lifestyle creep happen. Then do it. You’ve got that permanent 20% gap where you’re like, sweet, I can raise every time I get a raise. [00:15:54] I don’t have to worry about it. I’m just gonna keep saving my money and my 401k in the same percentage, and that gap consists forever. It’s really, I think a lot of times with money, we look at it and say, oh God, it’s like dieting, right? I can never eat bread again. This sucks. I like bread. It’s like, well, no, it’s not forever. [00:16:10] It’s just tighten a little bit first, and then now you can eat bread later. You know, you just, you just can’t eat bread all the time. Have can eat, have to hit pause for a second. Yeah. Well, no, but within reason, right? Sure. Right. Like you can have cookies. You just can’t only have cookies. Yes. You know, and, and early on you, no, you can’t. [00:16:26] For the first little bit you can’t have any cookies. That’s just how it is. You have to get that gap. Then you can have a, this [00:16:31] Doug: house is a prison. You know? I have a question for all four of you. Whenever we’re having this conversation, why do you think people generally gravitate first towards cost cutting instead of income adjustment? [00:16:46] Paula [00:16:46] Paula: has the answer, Paula. It’s all over that one. Yes. I have a theory. I think it’s for a couple of reasons. Number one, there is immediate, ironically, immediate gratification, increasing your income. There’s a ramp. It takes a while to do that. The fastest way to increase your income is some gig economy. [00:17:01] Okay. You can drive for only fans, DoorDash, or Uber. Yes, exactly. Doug. I mean, you, I mean, it works for some of us, some people. I mean, that is clearly what you were born for. But especially if you want to build some type of scalable business. If you want to, I don’t know, you wanna start selling candles on Amazon or whatever, you’re a graphic designer. [00:17:21] You want to open a consulting arm or a freelance arm and develop that side business, it takes a while. So you don’t get that immediate gratification, whereas there is an immediate payoff as soon as you cut. So I think that’s one reason. Also, there’s no fear of failure. If you’re trying to grow a business, there’s a fear of failure associated with it, so you have to face your insecurities. [00:17:42] That doesn’t happen when you cut back. It’s also tangible, right? Like growing a business is amorphous, but not going to restaurants. It’s a tangible thing. [00:17:52] Joe: Jesse, if we wanna fast track this from the side of either making money or or cost cutting, let’s talk about some, some hacks, some tips. What’s tip number one to help you begin spending a lot less than you make? [00:18:09] Jesse: I think tip number one has to be actually measuring what you’re spending. And again, it’s super simple. It’s a super simple tip. Like this whole list is super simple, but the number of conversations I have where I ask someone, how many dollars did you spend last month round to the nearest 500? Right? Was it 5,500? [00:18:26] Was it 6,000, was it 6,500? And the answer comes back, I have no idea. I’ve never, I don’t do a budget, I don’t track anything. I don’t use any sort of tool. I mean, that has to be step one because I mean, that’s the only way you’re gonna be able to look under the hood and say, oh wow, I spent $1,400 on Doug’s only fan account last month again for the third month, straight subscription. [00:18:50] And just, you can’t cancel it. And right. And you have to ask yourself that value proposition, you know, the foot picks just aren’t worth it anymore. So maybe you cut that out. You have to screenshot him, obviously. Hey, saving yourself. Hey, don’t give him [00:19:00] Doug: any ideas. She’s taking money outta my mouth. [00:19:02] Jesse: He’s running a business here, og, my bad. [00:19:05] Anyway, on a serious note, you, you have to measure, you have to measure in some way, shape, or form. Some people budget ahead of time. Some people track the numbers after the fact. I don’t think I know anybody who’s financially successful, who simply doesn’t measure what they spend or like that doesn’t care what they spend. [00:19:21] You have to measure, [00:19:22] Joe: Jesse, to your point, back when I was a financial planner, I would ask this, or I’d even ask, how much do you think you withheld this year in taxes? And people would miss it by a factor of 10, right? Right. Which just so far off it, it’s actually worse than our trivia, right? We get it so bad. [00:19:38] og, what’s another quick tip or hack for somebody to spend less than they make? [00:19:42] OG: I think when you, you know, kind of dovetailed to what Jesse said here, when it comes to budgeting or looking at your cash flow, I think that the best way to do it is to just live your life and keep track of it. And then when you’re making decisions, remember that everything counts in that decision. [00:19:56] So many times people look at their expenses and say, well, I can’t you, I mean, I have to have a car. So I can’t get rid of my car payment, or I have to live in this apartment. I can’t change. It’s like, no, no. Those things are all changeable. Those big, those big numbers are changeable. Everything has to be fair game. [00:20:13] You may choose, but just make a conscious choice. I’m gonna have a car payment that’s $800 a month, despite the fact that, you know, it’s a terrible financial decision. But be okay with the fact that you’re making that decision. Don’t just abdicate that and say, oh, I can’t do anything with that. You can. You can go sell the car with negative equity and go buy a crappier one and get a $300 payment instead of 800. [00:20:34] It’s doable. It’s not fun to do, but it’s doable. [00:20:37] Joe: Well, and on that line, og, I like the advice to start with the big stuff, right? Everybody starts with the small things. Oh, [00:20:42] OG: start [00:20:43] Joe: with your housing. Start with the The car. Start with the gr [00:20:46] OG: housing, transportation, and food. Yeah. Yep. Those are the [00:20:48] Joe: biggest things. [00:20:48] Paula, what’s another hack to get on the right. Track. [00:20:51] Paula: Track Well, alright, so he says, I’m trying to do this from memory. The corollary to spending less than you earn is paying yourself first, which is, oh wow. Look at that memory. Look at that memory. Damn. The corollary is automated. Well, it’s not just automated, it’s decide how much you wanna save, pull that off the top first and then live on the rest. [00:21:11] So it’s functionally the anti budgett. You’re choosing that savings rate, whether it’s a raw dollar amount or a percentage of your income that’s coming off the top first, and then you naturally then have to adjust to whatever is left over. [00:21:23] Joe: I think for a lot of people that try to do that first because they don’t want to budget, what I would often hear is, well, you know, I don’t budget. [00:21:30] I just pay myself first. And I’m like, so where’d all this credit card debt come from? If you don’t do what Jesse talked about for a while, paying [00:21:35] OG: myself first. Right. [00:21:37] Joe: I pay my first, then I pay Citibank second. Right? [00:21:41] Paula: Yeah. That, that only works in a debt-free context. [00:21:43] Joe: Yeah. At least for a while. You gotta get on board with how much you’re spending. [00:21:46] Number two on this list, Jesse, understand how much savings is needed to achieve your goal. Do you see this as one of the big four, like he does? [00:21:54] Jesse: Uh, that’s a good question. Do I see it as one of the big four? I mean, I definitely see it’s importance. Lemme start with that and I’ll, I’ll kind of dive down that path a little bit. [00:22:03] The idea that at at least my approach to financial planning is right. What, what are your future goals? How much money you’re gonna need to accomplish those goals, how far out in the future is your timeline to that goal? And, and then we can work backwards to figure out a, a savings rate that’s appropriate or an investment. [00:22:17] Asset class that’s appropriate for that specific goal. So to that end, it’s like, yeah, you do need to understand how much you need to achieve your goals. Now, is this one of the top four? Uh, it, it might be, it, it’s definitely very important, let me put it that way. I do think it’s part of just about every single financial plan that anyone could put together for themselves or their family. [00:22:35] I mean, after all, what’s the point of all this? The point of all this is that you’re, you’re working hard. Ideally you’re putting some money away after step one, and you’re applying that money to your future goals so that you can live some sort of better lifestyle or lifestyle that you, you want for you and your family. [00:22:49] So as I’m meandering around this answer, Joe, I think I’m settling on that. Yes, I agree with it and I do put it in the top four. [00:22:57] Joe: og uh, uh, you think this is in the top [00:22:59] OG: four? I do. I think that there’s another reason for not just knowing how much you’re gonna save, but know when your savings is good enough. [00:23:07] There’s so many people, and this is far fewer people than are the other side. So the one side of the coin is I’m not saving enough money, right? I have no idea how much I need to have. I’m not saving anywhere remotely close, but there’s another side for successful people, and they get kind of trapped into that success of continuing to save money when they don’t actually have to. [00:23:25] That’s not necessarily a good thing either. If you don’t have a purpose for your money, then you’re gonna make bad choices with it. And once you get to the point where, from a savings or investing standpoint that you’re on track for your goals, you need to have a serious discussion. I think about what do you wanna do with the rest of the money? [00:23:42] You know, if you’re in your peak earning years and you’ve been saving your whole life and you know you have a huge portfolio and life is good, and you’ve still got this mentality of, well, I still need to save like 30% of my income, otherwise I’m not, no, no, you, you’re good. You can do something else with that 30%. [00:23:58] You can benefit somebody right now. You can take 30% time off. You can spend that time with your family. Make, again, back to conscious decision making. Make a conscious choice for your time and resources that make the most sense for your family. Many times people are on the right track. Then just keep on doing it. [00:24:17] And then it’s like, now you’re way overfunded, you’re, you know, you can’t get that time back. You know, you can’t have that time with your family or you can’t have that time that you could be doing other things or those resources that you could be benefiting other people with right now, if that’s important to you. [00:24:30] So having that goal in mind of, I need to be on this path helps to prevent you from saving too little, which is probably the far greater problem. But then also saving too much and know when you’re, know when you’re good. [00:24:44] Joe: Yeah, I do. I mean, this reminds me of the conversation we have with Seth Godin, where Seth was talking about strategy and the average person’s like, why do I need to strategy? [00:24:52] I. And Paula, this reminds me of the kind of stuff you talk about. He says strategy and people in business say strategy, but in your personal life, we call it intentionality. We call it about not wandering around. Why are we so afraid of setting up these concrete goals? Right? You, you see OG talks about this. [00:25:11] Jesse talks about this. You and I talk about this, and yet yes, the average person out there, even though we’ve been saying it forever, what is your concrete go? Well, I dunno. You know, I’m, I’m kind of up in the air about what I really, really want. We take forever to set a goal. [00:25:24] Paula: Mm. I think to some people, goals feel limiting because they’ll see that as the closing of other doors. [00:25:31] So I, I think that what is important to anybody who might feel that way, uh, I’d like to convey the message that you are not shackled to your goal. You have the freedom to choose to change that goal at any point. But it’s important to have a goal, even if you are going to change it later, because going in some direction, no matter which one it is, is better than going in no direction at all. [00:25:56] Joe: So is that then, ’cause I’m gonna ask everybody for their hack on this side, I think your hack then would be set something. [00:26:03] Paula: Yeah, exactly. It’s like when you begin your career, you know, like I have friends who they never quite knew what they wanted to do and so they just worked a whole bunch of odd jobs. [00:26:12] Eventually they turned 30 and they’re like, alright, I’ve just been working odd jobs throughout my entire twenties versus I know other people who, they picked something and they got career related experience in a field and then later, even if they decided to pivot their field, they still had. Skills. They had references. [00:26:33] Even if they decided to make that career change at the age of 30, they had a much stronger foundation that allowed them to go into that change from a stronger position than the people who had just been working odd jobs. [00:26:46] Joe: It reminds me of a discussion I have with David Green about the same thing. I mean, he was working at Baskin Robbins and his first job, Paula wasn’t, his first goal was not a big one. [00:26:56] It was just to make the kind of money that his brother was making busing tables at a Mexican restaurant instead of Mm-Hmm. Working at Baskin Robbins. Then he ends up with a manager at Quiznos and he slowly makes his way up to being the number one waiter at a high end restaurant in his community. Wow. [00:27:12] Just making money hand over fist and all the skills he made to then now negotiate these big real estate deals. He did because he knows how to make people happy. He knows how to talk to people. He knows how to move at a pace that a lot of people don’t know. Yeah. And it was just from not working at Baskin Robbins. [00:27:27] Wow. Going number one. Wow. [00:27:28] Paula: That’s awesome. [00:27:28] Joe: Yep. Jesse, what’s a hack in this area? [00:27:32] Jesse: Well, the whole goals question made me think of, wasn’t it here a few weeks ago when we talked about quests going on, quests over, setting goals. Yes. Something along those lines and, and what your original question, Joe was like, well, we’re all goal oriented, or at least we say we’re goal oriented. [00:27:46] And a lot of people say they’re goal oriented and yet they don’t always set goals. Why? And I think one of the things we discussed then that popped back into my head is, well, if I don’t set a goal, then I’m, by definition not gonna fail. [00:27:58] Doug: Mm. [00:27:58] Jesse: If I wanna retire by 50 with $2 million, I’m setting that mile marker out there and it’s a little scary. [00:28:04] ’cause now I’m setting myself up for the potential of failure. Whereas if I just say, eh, I just wanna save some money and we’ll see what happens and we’ll figure it out in the long run. Well, okay. The, the fear of failure isn’t really there. ’cause I haven’t really defined a goal yet. So I think, I wonder, I’m do playing arm share psychologists here a little bit, but I wonder if in the back of people’s heads, whether they realize it or not, that fear is, it exists. [00:28:28] Joe: I think of the quote, uh, the Michelangelo quote as you’re talking, Jesse, which I have to remind myself of all the time. It’s better to make a really, really big goal and not reach it than to make that goal. That’s super easy to get, and I easily achieve it. [00:28:41] Jesse: A lot of people compare me to Michelangelo, but they’re referring to the, the Teenage Mutant Ninja Turtle, not the famous Italian, the other. [00:28:48] Joe: Well, you know, that one’s cool too, right? [00:28:50] Jesse: Cheese pizza. [00:28:51] Joe: You love pizza. Absolutely. We’re going to stop right there. We’ve got two more of these, uh, to get into, but before that, at the halfway point of every. Friday podcast, we pause for this year long competition, which got interesting before the end of our eight weeks, which is Paula Pant had a necessary and big win, which meant that Paula has 10. [00:29:16] She’s only one behind mom. Now with 11. Oh Gee’s got 15. Jesse’s playing on behalf of mom. So Jesse needs to make a move. Paula needs to make a move. OGs trying to wrap this thing up with just a few to go. Who’s gonna win? Well, we need a question. Doug, what’s our trivia question today? [00:29:39] Doug: Hey there, stackers. I’m Joe’s mom’s neighbor, Doug, and on today’s date in history, pop group, milli Vanilli was exposed as lip syncing their hit song. Girl, you know it’s true. Wow. You thought I played like the actual song, didn’t you? You’re lip syncing. All right, girl, I gotta tell you, I think lip syncing is the bomb. [00:30:01] In fact, I’m lip syncing this trivia question right now. Check this out. If you’re not hanging out with us on YouTube, you’d never know that my lips are moving perfectly in time with this announcer guy who was an amazing voice. I know you think I’m awesome, or fat as the kids say, that’s PHAT. Of course, these kids my age say that, but speaking of fat Oprah Winfrey, she is, no, no, no, no, [00:30:29] Joe: no, no, no, no, no, no, no, no. [00:30:30] Let [00:30:30] Doug: low you got, you’re getting this all wrong, Oprah’s fantastic. Just don’t do that. Don’t take your mind there, but just follow me here. Oprah, on this day in history, back in 1988, had a fat show. Settle down PHAT. It was a fat show when she discussed her weight loss and encouraged her viewers to take up the journey as well, to make her point about how important weight loss is to improving your vitality. [00:30:56] Here’s today’s trivia question. How many pounds of actual fat, in this case, FAT, did she wheel out on stage in a cute little wagon thing to make her point? How many pounds of fat did she wheel out on stage? I’ll be back right after I go do some jumping jacks. I mean, totally unrelated, but I haven’t seen my belt buckle in years. [00:31:24] Joe: All right, well, Doug goes to do that. We’re gonna start with OG it. It’s funny, this is forever ago talking about going back to Nixon, like thi, this was a long, long time ago, but I remember this. This was a big, big, you would, this is a big thing. You watched Oprah. It was, uh, just a year or two ago. Oh my gosh. [00:31:46] OG: I, I have a few questions for the judges first. Um, how many weeks are left in this trivia contest? I, [00:31:52] Joe: I have any idea. Do we gotta count this live? We’ll get back to you next week. How about that? [00:31:56] OG: Ugh, I don’t wanna, I wanna know why. I wanna know what I gotta do now. [00:32:01] Joe: You gotta guess. How many pounds of fat. So [00:32:03] OG: let me just understand the question. [00:32:05] Oprah Winfrey lost some weight and she wanted to demonstrate how much she lost. Is that [00:32:10] Doug: Not necessarily. The question is simply how many pounds of fat did she wheel out on stage? [00:32:18] OG: I feel like that’s gotta be related to how much weight she lost. It [00:32:21] Doug: could be, but that’s irrelevant. [00:32:22] OG: I mean, is that not the topic of the show? [00:32:28] Look at, look at how skinny I am. This is how much weight I lost. [00:32:32] Doug: Maybe, I don’t know. [00:32:32] OG: All right. That’s what I’m gonna go with. So how much weight did, uh, what, what would be a market? Uh, amount of weight. So like Biggest Loser people, they go from like 2 50, 2 80 to like, you know, 180, right? I mean, that’s other worldly. [00:32:49] So that would be like a hundred pounds, but some of that is muscle mass. Um, Oprah, I’m sure was not two 80, dropping to 180. Probably like 180 dropped to one 40 or something. Uh, I’m gonna say that she demonstrated her her personal fat loss of 50 pounds and, and, and wheeled out 50 pounds. I’m gonna say she lost 50 pounds and went, here’s 50 pounds of fat. [00:33:19] This is what it looks like. [00:33:20] Joe: 50 pounds is OGs answer. Jesse, what do you think? If I’m interpreting the question [00:33:26] OG: correctly? Yeah. She could have been like, and this is how fat you guys all are. And could have been way more so, who knows? [00:33:33] Jesse: Yeah, that’s interesting. My thinking is very much in line with OG and therefore my initial answer is gonna be, was gonna be very much in line with og. [00:33:42] In my head I was like, is it 45? Is it 50? Is it 55? So now I’m more thinking game theory in there. Do, do I wanna box OG in with a mean guess or do I wanna just go off the wall and do something completely different? So I’m gonna go off the wall and do something completely different. And I’m gonna say that she only wheeled out weight to kind of show the audience this is what X pounds of fat looks like. [00:34:08] ’cause like that’s probably on you, right? Like, hey, this is on you. So I’m gonna say, uh, 22 pounds. Which I believe was my same answer for the Jim Kramer hedge fund debate. 22 pounds. [00:34:23] Joe: 22 pounds. Paula, we’ve got 50 pounds and 22 pounds. [00:34:28] Paula: Okay. My thinking is entirely different. Oh. So I don’t think that the answer relates to any amount of weight that Oprah herself personally lost. [00:34:35] The way that Doug asked the question, he said that she wanted to illustrate the effect of weight loss on the health of a human person. I don’t remember his exact words, but it was something to the effect of she wanted to demonstrate the significance of fat loss on overall health. To me, that has nothing to do with her. [00:34:58] That is simply, here’s what losing an amount of weight would do for you, the viewer. So if we take her out of it and think, all right, what is an amount of weight that is large enough that it would. Be visually interesting on television, yet small enough that it would relate to the average viewer regardless of if they just had a little bit to lose or a lot to lose. [00:35:29] So my initial thinking was maybe five pounds, maybe she just wanted to demonstrate five pounds. But the thing is she wouldn’t have to wheel that out on a cart. ’cause if it was only five pounds, you could lift that. So I actually think that the answer is 10 pounds, but in order to capture the under, my official guess will have to be 21. [00:35:52] Joe: 21. So 22 for Jesse, 21 for Paula to get even less. OGs way up there at 50, it’s probably [00:36:02] OG: like 6,000 or something. Or it’s like two, like Paula said. But I’ve seen the Dr. Oz thing where he goes like, this is three pounds of fat and it’s like the big jiggly thing that they have. Mm-Hmm. To your point. I don’t think they have to wheel that out. [00:36:17] They just carry it. [00:36:19] Joe: We’re about to see, we got the answers locked in. We’ll be right back to see who’s got this one. Ochi. You started off with 50. Both Jesse and Paula think that you are way, way, way up there. How you feeling? [00:36:33] OG: I actually think it’s low. I think it’s gonna be some multiple of that where she says like, this is how much you know the audience has 300 people in the stands. [00:36:42] You guys could all lose 10 pounds. 10 pounds of fat is like 3000 pound. You know, it’s gonna be like this huge amount. Let’s all rally together and let’s lose this weight. Woo. Lose this weight and a free car for everyone. [00:36:54] Jesse: We were thinking like a red rider wagon of fat, but OG iss like a Conestoga. He’s like an F three. [00:36:59] It’s like the Oregon Trail. I heard [00:37:01] OG: wheelbarrow. Was it? You said? Did you say wagon? I heard wheelbarrow. I don’t know. Oh, I might have. That’s what I heard. I [00:37:06] Doug: actually was worried that I may have given it away or given you too much of a clue because I threw in a cute little wagon, is what I said. Yeah. As I’m saying it, I thought, oh, I’ve ruined the whole thing. [00:37:18] I did not ruin the whole thing. [00:37:23] Paula, you [00:37:23] Joe: feeling good? You’ve got the under. [00:37:25] Paula: Yeah. Yeah. I think the under is that’s, that is the, especially [00:37:28] OG: with cute little red wagon, huh? Yeah, [00:37:30] Paula: exactly. That only. Amplifies. Why I, I think it’s a small number. Well, [00:37:34] Joe: is Paula gonna come back and tie Jesse slash Mom? Jesse and mom gonna make it a run on OG here at the end of the year? [00:37:42] Or is OG gonna pull further ahead? Doug, what’s our answer? [00:37:49] Doug: Hey there, stackers. I’m famous trivia lip Syner and your guy with some fat trivia. Joe’s mom’s neighbor, Doug. Today’s question is both fat and fat, if you know what I mean. We asked you before the break, how many pounds of fat Benjamin Stacker extraordinaire Oprah Winfrey wheeled out on stage in her cute little red wagon to show proof of the effects of weight loss? [00:38:14] The answer, well by now, you know, I don’t make it that easy. But what I do do specifically to annoy og, some do do here, some do do coming, I do, do, is I say that the real answer is. 46 pounds more than what Paul guessed. 45 pounds more than what Jesse guessed in just 17 pounds. More than what OG guessed, because the correct answer is 67 pounds of fat making OG our big fat winner. [00:38:43] We’re [00:38:43] Joe: not saying [00:38:43] OG: PHAT either there, [00:38:45] Doug: og, not that. I mean, I was gonna, but then he won. So Yeah, no, it’s just the regular kind. [00:38:50] OG: So it was the amount of weight that she lost. [00:38:51] Doug: It was the amount of weight she lost. Oh, [00:38:53] OG: she lost 67 pounds. That’s pretty good. I mean, that’s a lot. Yeah, it’s a lot. You know, to be fair, it wasn’t 67 pounds of fat. [00:38:58] Some of it was muscle mass. [00:38:58] Joe: It is. She talked about how life transforming it is and all the other things that come. I. They come with that, uh, weight loss and just a powerful statement. When you see that, you think about people walking around and to your point, og, did you say this about the like five pounds of fat? [00:39:12] Like just Yeah. When they walk over that you’re, it’s a huge [00:39:14] OG: amount. [00:39:14] Joe: I know. You’re like, oh my goodness. [00:39:16] OG: Or I like to say 17 Oreos. [00:39:19] Joe: I look at 17 Oreos and I gained five pounds. All right. The second half of this discussion, we’re gonna dive back in. Uh, we’ve got two more here to do. Let’s Paula’s start with you. [00:39:30] Maintain sufficient cash reserves is his third law, personal finance. You put this on the big four. [00:39:37] Paula: Yeah, absolutely. Sufficient cash reserves are the only thing that’s keeping you outta credit card debt because there’s fluctuation in the amount that you spend every month. And sometimes, sometimes you log in to your credit card statement and you look at it and it’s just way bigger than what you thought it would be. [00:39:55] You know? And you’re like, ah, was there fraud? And you go through it and you’re like, no. Accurate. Accurate. Accurate, accurate. Darn no fraud. That was all me. It was my fault. Yeah. And you need some cash reserves to tide you over for when that happens. [00:40:10] Joe: I prefer that it was fraud. Like I would still tell people it was fraud. [00:40:14] No, it was fraud. Somebody got into my wallet and went and bought all this, all this stuff, Jesse, uh, what is a hack or something to make sure that we get cash reserves. ’cause, you know, starting to get that money in an emergency fund when you’re not used to having one man. I remember when I first tried to do this, that money always seemed to come right back outta the emergency fund. [00:40:34] Jesse, very quickly. [00:40:36] Jesse: Yeah, I get it. I do get it from that point of view, Joe, I mean, it comes back to the whole, the whole spending habit and, and just a matter of making the decision that building up an emergency fund has to be a higher priority than spending that money down. And maybe it just comes with time. [00:40:50] ’cause I know I, I’ve talked to some people who will say like, yep, my emergency fund’s $15,000. And they have the problem where as soon as they see $16,000 in their account, well that extra thousand is gonna get spent. So, like, for that person, maybe they need to develop a, a habit afterward to siphon off the extra money and do something more productive with it. [00:41:07] Especially when I’m talking to younger people out there who are just building that emergency fund for the first time. I mean, it is a, it, it takes some work. If you’re one of the folks that OG was talking about before and, and you’re already on a, a lower income than I, than you’d ideally like, and you’ve got plenty of places where you’re spending money just to kind of keep your head above water and maybe you can only afford to put in a hundred or $200 a month away into your emergency fund, well, it’s gonna take a long time for you to build up. [00:41:32] Three or six months of living expenses in that emergency fund. So there’s nothing to do though, but keep on grinding, keep your nose down and, and do it because in the long run, as Paula mentioned, it can be a real safety net. And one last note I will say is semantics. This is purely semantics, but I might expand this particular top four a little bit to say like, yes, maintain a sufficient cash reserve. [00:41:55] I’d expand it just to say like, maintain sufficient safety nets. ’cause there are a few other financial safety nets that people ought to think about and are, are really important. [00:42:02] Joe: Like what? What are you talking about? [00:42:04] Jesse: Well, I would just think about like basic insurance needs, whether it’s health insurance or life insurance if you have a family. [00:42:09] But some of those basic safety nets in life. You know, insurance being a safety net for a, a risk that otherwise your finances couldn’t overcome. Those have to be pretty high up in the financial priority list. [00:42:21] Joe: It’s funny say that Jesse, because you know, as people get more assets it makes sense to lower the amount of insurances that you have ’cause you can now self-insure. [00:42:30] And yet I rarely, when I was a planner, saw that I would see people that had nothing skimping on insurances because you know, they were gonna take a risk on it ’cause they didn’t think they could afford the premium. And those are the people that especially can’t afford to do that. [00:42:46] Jesse: Yeah, it’s challenging though. [00:42:48] That’s a challenge ’cause right, if, if you already are struggling in your financial life to then go spend money on insurance that you probably, hopefully won’t need anyway. That’s a really hard argument to make for someone. [00:42:59] Joe: Oh gee. Is there a simple way for us to kind of build a wall between us and these reserves so we only get it if it’s an emergency? [00:43:05] OG: No, I listen to you say, the problem is as you build it up and then it goes away. I think it’s doing what it’s supposed to be doing. That’s the whole purpose of it, is to provide that cushion for you to not go into credit card debt with it. And I expand on what Paul was saying before. It’s not just the ebbs and flows of the spending, but the timing of the spending. [00:43:24] There is very, very, very few people out there who are using cash as their kind of main source of spending. Some people use debit, which, okay, cool. But most people don’t do that either, you know? And so the timing of the cash flows also matters, right? So you’re spending all this money and hopefully all the money that you’re earning during the time you’re spending, you’re holding onto. [00:43:45] To then turn around and pay back the money that you spent while you were earning. It’s a little different in terms of the timing of the cash flows. And then you drop a large expense in there, all of a sudden car repair bill or a home repair bill, and all of a sudden it’s like, oh crap, the timing got screwed up. [00:44:00] So that’s why you have to have that, that extra emergency component. And I’m also with Jesse on this, that there is no fast path to it. It’s just gonna take a while, and you have to be okay with the fact that it’s gonna take a little bit. And if you’re saving a hundred dollars a month and you’re trying to accumulate $10,000, what’s gonna take a hundred months? [00:44:19] That’s the math. You know? So I would try to figure out ways to accelerate that, use bonuses, use extra income earning, whatever, as an opportunity to kind of get that as quickly as you can. Because the cash reserve component is the thing that allows you to do investing [00:44:33] Joe: and again, try to raise your income, like you said earlier. [00:44:36] OG: Yeah, if you don’t have a emergency fund, you can’t invest because you’ll end up using your investments at the wrong time when something bad happens. In terms of your cash flow correctly. So not going into debt, but usually things don’t go wrong when the market’s up. 30% things go wrong. When the market’s down 30% and then you’re like, well, I put in all this money in my account, it’s down. [00:44:59] Now I gotta take it out ’cause I lost my job. You know? So I’ve lost money on this endeavor. Investing sucks. It never works. You know what I mean? Like all the negative emotion that comes with it. Yeah, the cash reserve is the thing that gives you the, the key to the investing, investing room. [00:45:13] Doug: So, so wait, you’re saying when I invest in something, I’m not supposed to touch it again after that. [00:45:17] OG: If you touch it too much. Doug. What did mom say? [00:45:20] Joe: No, go blind. Paula, let’s talk about one more aspect of this before we move on, which is you’ve got a section of our audience who’s like, yeah, emergency fund, I don’t need that. I got access to credit. And even a high yield savings account earns a really crappy return. [00:45:36] What do you say to those people? I. [00:45:37] Paula: The purpose of an emergency fund is not to generate a return, so don’t evaluate it based on the return that you’re getting, because that’s not the point of it. When you say you have access to credit functionally, what you’re saying is, I’m going to go into debt, ask anyone who has ever really struggled to come out of debt, how much fun that was, and do they want to do that? [00:45:58] Again? [00:45:59] Joe: I’m hearing Dr. Phil, in your voice there, Paula, how’s, how’s [00:46:01] OG: that [00:46:02] Joe: working for [00:46:02] OG: you? [00:46:03] Paula: How, how’s that working for you? Yeah. [00:46:05] OG: Well, and the other piece to this, Paula, is that again, you’re relying on somebody else to fill their obligations, right? Mm-Hmm. And an unsecured line of credit is just that. It’s unsecured. [00:46:15] And guess what happens? When do you need your emergency fund? When stuff’s going sideways in a hurry, when the economy sucks, what does the bank do? Mm-Hmm? When things are going sideways, they contract their lending, right? And they say, oh, hey, by the way, you know, I know that your credit card limit was 10,000. [00:46:29] It’s five. I, I personally have had this experience where we had a $15,000 limit on a credit card with a $14,980 balance, and we needed to spend $7,000 on the credit card. They had no option to pay any other way other than to charge it. We paid $8,000 on the credit card and the charge didn’t go through, and they’re like, yeah, the charge doesn’t go through. [00:46:49] It’s not going through. We finally called Discover. We’re like, what’s going on? We made a 8,000. They’re like, yeah, we changed your credit limit. It’s now 8,000. Wow. Like literally we went from 15 to eight because we made that $8,000 payment. They’re like, oh, thank God. Wow. And so relying on that as an option is risky at best, because at any moment, unless they’re contractually obligated to give you that line of credit, which guess what, no bank is, they can at any time go, oh, you know what? [00:47:18] I feel like people, there’s so many egos out there. [00:47:19] Joe: Yeah. I feel like people that say that, don’t remember 2008 when that was. Well, they just weren’t part [00:47:23] OG: of it. You know? They were in a different part of their lives perhaps. Sure. [00:47:26] Joe: 2008 again. But the [00:47:27] OG: algos are so much smarter now than they were 16 years ago. [00:47:30] I know algorithms know this stuff cold, right? They know what’s going on, you know, and all these credit reporting agencies all talk to one another. All the credit bureaus release information to all the lenders. They know what’s going on in your life. You know what I mean? Like they’ve got it pretty well wired. [00:47:45] And when all of a sudden they go, whoa, whoa, what’s going on here? OG usually carries a 20,000 balance. All of sudden he has 50,000 now. 60, now 70. Some banks somewhere goes, ha, I’m out. Not me. I’m not getting stuck with this. Cash is your key. [00:48:00] Joe: Last one on this list is to systematically and automatically save and invest. [00:48:05] I don’t think we have to bandy about, as mom says this, this point, I think this one’s the one you hear all the time, right? Paula said it earlier, pay yourself first and make it automatic. Let’s talk about the thing that OG brought up though, the confidence, right? If, if you feel like it’s tight, and I don’t know a person that doesn’t think it’s tight, it didn’t matter who I met with, most people thought, man, the budget’s pretty tight this month. [00:48:29] How do we give them the confidence to systematically and automatically either begin or save more? Paula, what would you say? What? What’s your locker room? Talk to the team. Mm-Hmm. To get them inspired to go save money. They’re not sure they have. [00:48:45] Paula: I’d say start small. I’m a big fan of what I call the 1% challenge, which is whatever amount you’re saving this month, just save 1% more. [00:48:55] And so 1% is $10 per every $1,000 that you make, right? So if you make $5,000 a month, if that’s what you bring home, save 50 bucks this month, 50 additional dollars beyond what you’re currently saving. If you make $6,000 a month, it’s 60 bucks. So just increase your savings rate by an extra 1% and then do that this month, and then next month do 1% more. [00:49:21] That way you go incremental. Every month you’re saving one additional percent, and if every month is too frequent of a time to UPG grow, fine, save 1% and then hold, hold to that for the next two months. Just get used to that for two months, and then in month three, ramp it up by an extra 1%. Cool. Go that route. [00:49:43] Joe: And after a few months, you’re at a hundred percent. [00:49:46] Paula: Yeah. Well, okay. If you hold for two months and then ramp it up by an extra 1%, that means you’re saving by the end of the year an additional 6% above and beyond what you’re already saving now. Right. That’s huge. [00:49:59] Joe: Which is nice. I You just remind me of the meme that says always give a hundred percent. [00:50:04] Except when giving blood. That’s not, not good. Jesse. Let’s inspire people beyond what Paula said. How do you inspire somebody to save money they don’t think they have? [00:50:13] Jesse: Well, what I’m about to describe is a play on what Paula just said. ’cause it reminded me of what’s happened to me, and it reminded me of a bunch of conversations that I’ve had before, is that you will reach a point, even if you’re starting from zero right now. [00:50:26] And even if you are starting slowly, which I recommend too, just like Paula described, you’ll reach a point when you look at the particular saving. I mean, we’re talking, investing here, right? Automating investing. So you look at the particular investing account, you’ll see a surprising amount of dollars in there, and you’ll start to wonder to yourself like, whoa, suddenly I have $5,000 in this account. [00:50:46] It’s invested in this thing that I learned about. Through some smart person online, it’s a VTI or what, whatever it may be. It’s the Merriman portfolio. And that amount of money invested in a way that you, let’s be honest, at this point in your financial life, you don’t fully understand. You are just following someone’s directions. [00:51:04] It’ll start to self perpetuate, right? And you’ll essentially begin inspiring yourself to learn more, to save more, to spend less, to do all these things better because you, you’re starting to see the positive that can happen when you put these ideas into practice. You got 5,000 bucks in the Merriman portfolio. [00:51:18] So anyway, that’s my inspiration to everybody is it can be hard to start, it can be a little bit scary to start, but you will reach a point that we’ve all reached in our lives when you’re like, whoa, this is really working. And that’s a, a fun inspiring self perpetuating point. [00:51:33] Joe: Oh gee. Got the last one. Big locker room, pregame speech. [00:51:37] What’s it gonna be? [00:51:38] OG: Um, I was just thinking about this in the context of Paul’s 1% component, and I like that a lot. I like the Just do a little bit. Do a little bit, do a little bit. But I also like playing the other game too. And I know everybody here has gotten a massage before, had a stiff muscle or you know, a torn whatever, and maybe have masseuse or a loved one, or somebody, you’re like, I got a little, and they go, is it right here? [00:52:01] And you’re like, oh, oh yeah, it’s right. Ouch. You know, it’s right there. And they go right here and they just kinda keep pushing on it. And then finally that pressure releases, right? I think it’s equally effective to do the little 1% deal to also go the opposite direction and go, what would be the insane amount of money to save? [00:52:17] Right now I’m saving a hundred dollars a month. You’re going the fire route. Could I save a thousand? Screw it. Crank that automatic savings up to a thousand. What’s the worst that happens? The money goes into your savings account and you go, that didn’t work. I got a thousand dollars credit card bill, or, that didn’t work. [00:52:33] I have an $800 credit card bill. Pay your $800 off and boom, you save 200 bucks. You know, just see how far you can stress it. Before it breaks. And you’ll find where that point is very quickly. And you can do this down to the week, right? You don’t have to wait a whole month to see the, to see the impact. [00:52:50] You can say, this week, this week’s paycheck, I’m putting half away. I’m gonna put half into a different account and I’m gonna live for this week. See what happens. And if you have the opportunity to, you go, well, I wasn’t able to do all that, but I, I was able to save a quarter or I was able to save 10% or whatever. [00:53:06] It’s just an interesting approach or an interesting way to find out where that breaking point is in conjunction maybe with the other side of it, right? Do the 1% thing and then also just kind of crank it up every so often just to see where, where you can stress that. [00:53:18] Doug: Can we go back to the massage part? [00:53:20] Like where would one go to find a massage like that [00:53:23] OG: where they [00:53:25] Doug: No [00:53:26] OG: o f.com/harry feet picks [00:53:32] Joe: And [00:53:32] OG: Doug’s Doug’s OnlyFans account [00:53:34] Joe: like and subscribe. I just don’t want to end there, but, uh. [00:53:37] OG: Smash that like button hit the bell. [00:53:39] Joe: Normally at the end of the show, I’m like, that’s a great place to leave it. So you know, he posts new [00:53:42] OG: content, [00:53:42] Joe: but that’s a terrible place to [00:53:43] Doug: leave. This [00:53:45] OG: hairy feet picks. [00:53:47] Doug: My goal is always to say something that I immediately see Joe’s face going, is there a spot where I can edit that out? [00:53:52] Let’s see. [00:53:53] OG: Is there enough of a space to make that go away? Any actual podcasts? How quickly can we get that done? [00:53:58] Joe: Let’s find out. Speaking of getting it done, what each of you are getting done in your little area of the universe. Oh gee, this fine November weekend. What do you got going on while you’re not doing your sports thingies? [00:54:11] OG: Well, as the kids say. I don’t know what they say. Um, I am not skipping my, my sport activity. I’m powering through. I am, I I ain’t no fool. I was gonna say something a little bit race here, but, um, I’m doing it, man. I’m just, it’s okay. I, I can’t get worse. Can’t tear your calf more than once. To my knowledge. [00:54:31] I’m no doctor can. No, I’m pretty sure not. I’m, I’ve researched this. I love the phrase, [00:54:37] Joe: I’m no doctor at the end of that. [00:54:39] OG: I’m no doctor, [00:54:41] Joe: while the entire audience goes, duh. [00:54:45] OG: So get a little weekend here and then all next week, I’m actually with my, uh, a bunch of firm owners, really excited about this. We go every year there’s, there’s seven oth, there’s eight of us total. [00:54:54] And, uh, Roger Whitney’s part of the group and, uh, a couple other people that have been on the show. And we take a week and we go do a bunch of guy stuff, mostly around golf, but we spend time talking about our businesses and talking about how we can have a better client experience for our, for our clients and better content for the show, that sort of thing. [00:55:10] So, uh, this coming week are gonna be in Stream song. Which is a golf, uh, resort location in central Florida, south of, uh, Orlando a little bit. And, uh, sounds tough. There’s gonna be eight guys who are just up to their eyeballs in tequila. Oh boy. Yeah. Talking shop. And you’re gonna be driving the beer. We’ll be down at Stream Song. [00:55:27] Can we get some? Oh boy. What’s that? Dougie. You’re gonna be driving the beer cart this year? I might be, yeah. I mean, we’re recording this 10 days before that. So again, day to day, that’s what the trainers have put me at at this point. But the doctor that, the actual physician who I went to see, I said, he said, what do you got going on? [00:55:44] I said, I have this stuff and this whatever. He says, okay, we’re not explos to movements. I said, what about golf? And he just went, ha no, that was his answer that quick. He went, huh? No. And cut. So we’ll see. [00:55:56] Joe: Paula pant you hanging out at uh, girls Weekend with Tequila. Four days. Golf. [00:56:00] OG: That was last weekend. [00:56:01] Weekend playing golf at Paul’s birthday party. [00:56:06] Paula: No, no. Uh, uneventful. Uneventful. It’s an uneventful November after a highly eventful October. [00:56:12] Joe: Isn’t that always nice? It’s so nice. [00:56:13] Paula: October, I had a whole bunch of family in town. Sister and brother-in-law and niece all came in from Cat Mandu. It was for two out of three of ’em. It was their first time in the United States. [00:56:22] Joe: I think it’s pronounced Ka Kaka. Katmandu, by the way. Yeah, [00:56:25] Paula: I’ve, I’ve heard so. I’ve heard. So yeah. It was a highly eventful October, like introducing my family to the United States for the first time. And so November is totally low key. I’m doing absolutely nothing. [00:56:37] OG: Getting ready for the SB team to show up in December. [00:56:40] That’s right. Exactly. [00:56:41] Paula: Exactly. That’s [00:56:42] OG: right. [00:56:43] Paula: It’s interval training. Right? I gotta rest in November to be ready for December. Got a [00:56:47] OG: detox to retox. [00:56:49] Paula: Exactly. [00:56:50] Joe: We gotta see if we can get Jesse Kramer downstate to hang out with us. Oh yeah. As well. Come on down. Oh yeah. All is [00:56:55] OG: buying us a big dinner at La Barine. [00:56:57] She said. Ooh. [00:56:58] Joe: Well, December 12th. Stackers Stacking Benjamins dot com slash meetup. We’ve got, uh, details to come, but um, and probably by the time this is out, we’ll have the details ’cause Doc G is nailing down exactly where we’re gonna have the meetup. You wanna come? Doug? [00:57:12] OG: We’re gonna have a little party. [00:57:13] Paul is paying. I [00:57:14] Doug: absolutely do want to come, [00:57:17] Joe: Paula, but what’s going on at the incredible podcast while you’re relaxing [00:57:21] Paula: Oh, on The Afford Anything podcast we have, let’s see, what do we got going on? Paulina Pompano, she’s the author of a book called Hidden Genius, all about what we can learn from some of the most interesting people. [00:57:36] So, you know, if we look at bios of people who have done really incredible things, what can we learn from them? So she is on the podcast talking about that. Uh, we’ve also got, let’s see, Matt Schultz the author of a book on Saving More. [00:57:51] Joe: Oh, I love Matt. [00:57:52] Paula: Yeah. Yeah. So he talks about, um, it’s a lot of the, you know, foundational principles of personal finance. [00:57:58] That’s a [00:57:58] Joe: lot of tactical stuff. Cool. Tactical stuff, right? Exactly. Yeah, [00:58:01] Paula: exactly. Actionable, tactical, practical. [00:58:04] Joe: And that’s at the Afford Anything Podcast. Where On the Afford Anything Podcast, the Finest podcast are distributed. Jesse, thanks so much again, brother. Uh, what’s happening at the Better Interest At the Best Interest podcast? [00:58:18] No, [00:58:18] Jesse: no. Yeah, it, it is The Better Interest podcast because when our fine stackers are hearing this right now, our most recent episode will have been instructive and surprising. Questions to ask before you retire featuring. Joe Sell Cihi. [00:58:32] Joe: Shut up. Really, when [00:58:34] Jesse: Joe appears it’ll be episode 93, we adopt the moniker, the Better Interest Podcast because if you haven’t heard this story, that’s what Joel seriously called it Eight Times Live while recording the episode. [00:58:46] Uh, the first time he was on. But yes, so we have Joe on to talk about some. It’s a fun retirement conversation. And then I think depending on when Stackers hear this, the following episode will be another a MA, which are always big hits. [00:58:57] Joe: Those are big hits. I love your AMAs. And by the way, ask Paula every time I’m on there, I called it the Afford Whatever You Want podcast. [00:59:04] So [00:59:06] Jesse: it’s equal opportunity for everything. It’s only our brand. It’s only our brand. Joe, no big deal. I don’t [00:59:10] Doug: know if you caught it, Joe, but while Jesse was describing the story about how you called it wrong. Eight times he called you Joel. Oh, I heard [00:59:19] OG: it. I thought that was great. [00:59:21] Doug: Which was, that was pretty slick. [00:59:23] I was impressed. Look at the time. [00:59:25] Joe: Thanks to everybody for hanging out with us. Sorry, we can’t stay. That’s gonna do it for this week. And, uh, Doug, you’ve got it from here, man. What should we have learned on today’s show? [00:59:34] Doug: Well, Joe, here’s what’s stacked up on our to-do list for today. First, take some advice from Paula who had that, uh, that, that amorphous idea about setting goals. [00:59:45] Paula a uh, can you amor ize that thought for our listeners again and. And B um, what, what does amorphous mean? [00:59:54] Paula: Oh, well, so I said that the idea of making money feels a little bit, um, amorphous, meaning vague, but if you want some specifics, what you do is you get Doug to set up an OnlyFans account and then [01:00:10] Doug: through a it right back at me, [01:00:11] Paula: and then you take a cut of Doug’s OnlyFans and that’s how you make money. [01:00:16] Doug: We gotta cut the hair on those feet. I still don’t know what that word means. Second, how about that thing OG said about changing your savings rate when you finally hit the big time? I mean, it brought me to tears. Can you say the thing about the stuff again, og? [01:00:31] OG: Absolutely. Just like when you go to the masseuse and they put their thumb right on it, just drill it in there. [01:00:37] Oh yeah. Just find out where the pain is. Oh, so good. Feels so good. Feels so good to find where the pain is. [01:00:43] Doug: That could have been a mic drop moment, but do you know the big lesson for today? Here it is. Never tell Joe’s mom anything about being fat. Fat with the the pa. She’s gonna tell you you’re mid and you got zero Riz Man, seniors these days. [01:01:07] Thanks to Jesse Kramer for joining us today. You’ll find the best interest podcast wherever you are listening to us right now. Really, I promise. We’ll also include links in our show notes at Stacking Benjamins dot com. Thanks to Paula Pan for hanging out with us today. You’ll find her fabulous podcast, afford anything wherever you listen to the finest podcasts and the best news, you can afford all of her podcasts because they’re free, incredible deal. [01:01:34] And finally, thanks to OG for joining us looking for good financial planning, help head to Stacking Benjamins dot com slash OG for his calendar. This show is the property of SB podcasts LC copyright 2024, and is created by Joe Saul-Sehy High. Joe gets help from a few of our neighborhood friends. You’ll find out about our awesome team at Stacking Benjamins dot com, along with the show notes and how you can find us on YouTube and all the usual social media spots. [01:02:05] Come say hello. Oh yeah. And before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s Mom’s neighbor, Duggan. We’ll see you next time back here at the Stacking Benjamin Show. [01:02:32] bit: What was that? It’s called the medium sketch. The Medium sketch, yeah. It wasn’t rare and it certainly wasn’t well done.
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