Welcome to a very special roundtable edition of the show! On today’s show, we’re talking about debt, and how to use it (or avoid it) as part of your financial plan. We’re joined by Afford Anything’s Paula Pant; the host of The Personal Finance Podcast, Andrew Giancola; and the host of the Earn & Invest podcast Doc G!
In the second half of the show, sponsored by DepositAccounts.com, we dive into the possible positive effects that having a large amount of debt can have – in terms of constant motivation to make progress.
Be sure to stick around for Doug’s mind-blowing trivia question about debt.
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: A Few Word Description
How I Think About Debt (Collab Fund)
During our conversation you’ll hear us mention:
- The devastating effect that debt can have on your life and finances.
- Intelligent use of debt.
- The varying opinions about debt.
- How carrying debt diminishes your options in life.
- The intangible costs of debt.
- Using leverage to enhance your lifestyle today – and the costs tomorrow.
- “Good” debt vs. “bad” debt.
- Real estate as an example of (potentially) “good” debt.
- Personal debt beyond the numbers.
- Reducing risk by paying off debt.
- The role that an emergency fund plays in reducing your personal risk level.
- Combining insurances with your emergency fund for risk mitigation.
Our Contributors
A big thanks to our contributors! You can check out more links for our guests below.
Andrew Giancola
Another thanks to Andrew Giancola for joining our contributors this week! Hear more from Andrew on his show, The Personal Finance Podcast at The Personal Finance Podcast.
Paula Pant
Check Out Paula’s site and amazing podcast: AffordAnything.com
Follow Paula on Twitter: @AffordAnything
Doc G
Hear more from Doc G by checking out his site and subscribing to his podcast: Earn & Invest.
Grab your copy of his hit book, Taking Stock: A Hospice Doctor’s Advice on Financial Independence, Building Wealth, and Living a Regret-Free Life.
Doug’s Game Show Trivia
- At the beginning of today’s show, what was the national debt?
DepositAccounts
Thanks to DepositAccounts.com for sponsoring Stacking Benjamins. DepositsAccounts.com is the #1 place to go when you’re looking to see if your rate is the BEST rate on savings, CDs, money markets, and even checking accounts! Check out ALL of the rates ranked from best to worst (and see the national averages) at DepositAccounts.com.
Join Us on Monday!
Tune in on Monday for our Memorial Day episode, when we’ll learn how to shake up your saving strategy and view the financial world like a money mutant with the host of the Money Guy podcast, Brian Preston.
Miss our last show? Check it out here: Restaurants, Your Wallet, and You (reprogramming your meal prep and patterns) SB 1521.
Written by: Kevin Bailey
Episode transcript
[00:00:00] bit: Who’s with me? [00:00:07] bit: Let’s do this. People [00:00:14] bit: live from Joe’s mom’s basement. It’s. The Stacking Benjamin Show. [00:00:29] Doug: I’m Joe’s mom’s neighbor, Doug, and on today’s round table we are talking about debt. With the woman who wants to see you indebted only to your mortgage broker, it’s Paula Pants. Then the guy who wants to help you avoid debt by maximizing your income. It’s the host of the Personal Finance podcast, Andrew Cola. [00:00:48] Doug: And finally, the man who we’re indebted to for joining us today. It’s the host of Earn and Invest podcast Doc G. But that’s not all. Halfway through the show, I’ll share my accumulated trivia question. And now a guy who owes a debt of gratitude to me, it’s Joe Saw. See? Hi. [00:01:10] Joe: It’s funny, we do owe a huge debt of gratitude to Doug ’cause people don’t know this. Doug, you had some, uh, dental work done today. We didn’t think you, you’re like a just in time. [00:01:19] Doug: Yeah. Very recently I had dental work very recently and as we speak. The Novocaine and all of the drugs is wearing off. I’m feeling it pretty good right now, so I have no idea what’s gonna come outta my mouth this next hour. [00:01:33] Doug: And that’s what makes Fridays the Stacky Benjamins just an adventure. Yeah, it’s all in prep for an emergency root canal that’s on its way screaming towards me tomorrow afternoon. You are living the dream, my friend. Yeah. I hope we’re gonna talk about emergency funds ’cause that’s exactly what’s getting tapped for my root canal. [00:01:52] Joe: We’re gonna talk about going into debt with your dentist apparently, is what we’re gonna talk about By the way, before we introduce you to everybody else, today’s episode brought to you by State Farm. If you own a small business, whatever your business might be, you need someone who understands and that’s where State Farm Small Business Insurance comes in. [00:02:07] Joe: State Farm agents are 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. Like a good neighbor, state Farm is there. Talk to your local agent today. So let’s introduce you to today’s State Farm sponsor. [00:02:20] Joe: Round table. I feel like we’re at like the Coliseum and in the right corner. No, in Manhattan right now, I believe with the Reds microphone on earth. Paula Panta here. How are you man? [00:02:31] Paula: Oh, I’m great. And look, the, uh, the jacket, uh, that’s draped across the back of my chair matches the microphone. So I’ve got some highlights. [00:02:38] Paula: I’ve got, you know, red is sort of the theme around here. Exactly, exactly, exactly. Did you do [00:02:42] Joe: that? Because today we’re gonna talk about people that are in the red and not getting in the red with. [00:02:47] Paula: Oh, uh, yes. I definitely thought ahead. Sure. Yeah. But we’re gonna, we’re gonna run with that story. I, uh, planned that [00:02:55] Joe: whole thing. [00:02:56] Paula: Yeah. Yes. And let’s, yes, but, and then, and then I have black hair because if you get out of debt, then you’re in the black. [00:03:03] Joe: There it is. It works. Yes, it flows. Absolutely. Makes total sense. And a guy who always makes sense on our sister podcast, the Earn and Invest show, we’re super happy. He’s back. Doc G’s here. [00:03:13] Joe: How are you, my friend? [00:03:14] Doc G: Well, actually, it’s, it’s not just amazing that Doug is here. In fact, I think he’s kind of a wuss. I had hernia surgery this morning, both sides, and ran five miles away after Right. And walked home five and Yeah. Walked home the five miles. ’cause they wouldn’t let me drive. So, I mean. [00:03:28] Doc G: A little wissy dental procedure. I’m not too worried about. That’s, damn, there’s no way. [00:03:33] Joe: Did you really? You did not. I [00:03:34] Doug: feel like we’re gonna square up after the show. I was like, wait a minute. [00:03:39] Joe: That is pretty good. I did have a neighbor one day that, uh, uh, Doug, you may remember these neighbors when we lived close together, brought me over frozen peas and the woman goes, yeah, we’re not gonna eat these, this bag of frozen peas, so you guys want ’em. [00:03:53] Joe: I’m like, what’s wrong with ’em? And she goes, nothing. They’re fine. And, and I put my hand out ’cause I’m like, who? You know, free food, right? Free frozen food. Who cares? And I put my hand out and then I put it back away. ’cause I realized her husband had just had a vasectomy that morning. And even though the peas were fine, I I wasn’t going near those peas. [00:04:13] Joe: No, no, no, no, no, no. Thank you. And the guy was wondering why the hell do I get to follow the vasectomy story? He’s, he’s back for the personal finance podcast. Andrew Chicola joins us. Hey man. Good to see you. [00:04:25] Andrew: Those are my favorite stories to follow, actually. And I love debt puns. And you guys are killing it right now, Ted outta 10 so far. [00:04:30] Andrew: So I love this. Well, you gotta bring one. You got one of your own. I gotta come up with one. I’ll come up with one by the end of the show for sure. He’s, he’s, I don’t have ’em locked and loaded like you guys do. [00:04:37] Joe: He’s gotta go jump on. Yeah, you gotta come here more often, Andrew, so you can, uh, you know, get the ninja, uh, dead joke stuff going. [00:04:43] Joe: Exactly. So the [00:04:44] Paula: debt that he owes us is a Oh [00:04:47] Joe: my God. That’s right. God is upon us. I dunno. Uh, Andrew, quick before we keep going, tell everybody that hasn’t seen your prior appearances, doesn’t know about the Personal Finance podcast, about the awesomeness of your show, man. [00:05:00] Andrew: Absolutely. So I’m the host of the Personal Finance podcast and we just try to make personal finance as simple as possible. [00:05:05] Andrew: So that is kind of our entire goal and uh Wow. And that’s exactly what we do. It’s a really cryptic name. I don’t know how you came up exactly. I try to make it as cryptic as possible. [00:05:13] Joe: Yeah. What exactly do you cover? Well, personal finance. [00:05:16] Andrew: Exactly. [00:05:17] Joe: Yeah. Well, I’m glad you’re here with us, Andrew. Again. We always have fun when you’re here. [00:05:20] Joe: We’ve got you. We got Paula Pant, we got Doc G, we got Neighbor Doug. Well kind of got neighbor. We got like three quarters of neighbor Doug right now. Before we get into it, there’s a reason why this show is free. We love the fact that it’s free. We’ve got amazing sponsors to help us keep it free. We’re gonna hear from one of those right now. [00:05:36] Joe: Alright, time for us to talk about debt. So let’s go. [00:05:46] Joe: Today’s piece comes to us from a guy I’ve never heard before named Morgan Huel. Is it Huel? Is that how it’s pronounced? So a little, a little known personal finance author. Yeah. I might have thought a thing or two before, but for those of you that don’t know who Morgan Hausel is, uh, he has been on the Afford Anything podcast [00:06:03] Paula: many times. [00:06:04] Paula: Yes. He’s incredible. One of the most brilliant minds in personal finance. [00:06:07] Joe: Yeah. Behind the present company. Right? That was what you were gonna say next. Wow. [00:06:12] Paula: Present company excluded one of the most brilliant minds in personal finance, right? [00:06:17] Joe: This is inspired by, I wanna go through Morgan’s peace first, but we’re certainly not gonna end with Morgan’s peace. [00:06:21] Joe: But Morgan says how I think about debt, and the second Morgan Hausel says how I think about debt, I’m mean, they’re gonna call Morgan Hausel. Or in this case, I thought, you know what, with Andrew being here and, and personal finance and Doc G and Paula, this is the perfect group to kind of bandy about, as mom says all the things that, uh, Morgan talks about. [00:06:38] Joe: So Morgan begins, and by the way, if you don’t have this in front of you, stackers, no big deal. You can go to the website, stack your Benjamins dot com and, and look it up, but you’re not gonna need it. We will tell you everything you need to know about this. He begins. Talking about this quote from a guy, uh, Kent, Bert, he says, debt defines your future, and when your future is defined, hope begins to die. [00:07:04] Joe: Andrew, when you read that debt defines your future, when your future is defined, hope begins to die. What did you think of that quote? [00:07:09] Andrew: I thought, uh, that was a, a very interesting quote and, you know, when it comes to, to looking at the difference between debt and no debt, it is something that overall for me, there’s, there’s a huge debate back and forth, and there’s a lot of things that we can talk through as we go through this episode today. [00:07:21] Andrew: I just think that that is something that is a drastic quote when you think about debt and how you kind of think through, you know, this entire scope of debt and something that I think is one end of the spectrum for sure. You know, there’s what I call the Ramsey end of the spectrum, which is just no debt whatsoever. [00:07:36] Andrew: And on the other end of the spectrum, you can kind of see people who are way too aggressive, which we can talk through today. [00:07:40] Joe: Yeah. Leveraged all the time. Yeah. Morgan continues, not only does hope begin to die, but the number of outcomes you can endure does too. Paula, he talks about then all the things that are gonna happen in your life, right? [00:07:51] Joe: We’re going to have recessions, wars, divorces, illness, moves, floods, change of heart. Mm-Hmm. All these different things are gonna happen and those might change our financial situation. And he says, if you don’t have debt, well then this volatility that’s in your life. What does he say? Does he say that you can [00:08:07] Paula: handle it better without debt? [00:08:09] Paula: So essentially what he says is that if you imagine a graph of your life, right, and you imagine the volatility, so just just have that visual in your mind, right? So you can imagine these ups, these downs, glorious moments and treacherous moments. And if you imagine what you’re currently able to handle as an upper threshold and a lower threshold, right? [00:08:31] Paula: What without debt, the upper and lower boundaries of that threshold are fairly wide. But with debt, those boundaries start to narrow. That range narrows. And with the more debt you have, the narrower that range goes. So debt essentially narrows the range of volatility that you are able to withstand. [00:08:51] Joe: Let’s take a second, Paula though, and talk about why that is for people that are new to this game. [00:08:55] Joe: ’cause there was a time when I thought, and Andrew, you alluded to this earlier, using other people’s money was great. I didn’t understand any of it. I just had my first credit card and I was like, man, you know, we are going out to dinner, everybody and American Express is paying for it. So Paula, why is it that the range is narrower? [00:09:12] Joe: If you have [00:09:12] Paula: debt, you have a given obligation, and we all inherently have certain obligations that we can never escape. We have to eat, for example. There’s no escaping that we have to live indoors. There’s no escaping that. But beyond the unchanging obligations, debt adds yet another burden that then shackles us and decreases the amount of autonomy and freedom that we have. [00:09:39] Joe: Is the shackle though, just to define this a little more for people that are as dumb as I was when I had debt, is the shackle the amount of money you owe or is it that monthly obligation? Of committed future paychecks that shackling you or is it both? [00:09:56] Paula: I would say the monthly obligation is the shackle and the total amount of money that you owe is the long-term impact on your net worth. [00:10:05] Paula: For example, if you owe a hundred thousand dollars, but your monthly payment is 10 bucks a month, it’s not that much of a shackle. But if you owe that same a hundred thousand dollars and the monthly payment is a thousand dollars a month, it’s a much bigger shackle. Um, so that shackles what you can do in the short term. [00:10:21] Paula: But let’s say, let’s go back to the, your monthly payment is 10 bucks a month, but you owe a million dollars. All right. That’s gonna have a significant impact on your net worth, even though it doesn’t necessarily shackle the Now [00:10:31] Joe: Doc, I’m happy to have everybody here, but I’m especially happy to have you here today ’cause we’re gonna couple two things together that, uh, people don’t normally put together. [00:10:38] Joe: And these are the discussions I know you like to have, but you are people that don’t know you are finishing a book about purpose that will come out next year. And it’s interesting, it seems to me that the way Morgan talks about this. It might be harder to think about what your purpose is in life when you’re indebted to other people. [00:10:55] Joe: Would you say that’s true? [00:10:56] Doc G: I think debt and responsibilities, especially responsibilities towards things that don’t light you up are always going to subtract away time you can spend from doing things. You wanna be doing things that feel purposeful. And so the question is, what role does debt play in your life? [00:11:12] Doc G: And let me give you two scenarios. I could take out debt to become a world-class skier, and that’s something that really excites me. And skiing really lights me up. In this case, debt actually isn’t an enabler for me to do something I really wanna do. On the other hand, if I take out too much debt or I can’t make money doing the skiing, or I don’t have some kind of backup plan, I might get that short term boon of doing what I wanna do, but eventually run out and then maybe never get to do that again. [00:11:42] Doc G: So let’s compare that to something else. Let’s say I really am not that connected to owning a house, but I’ve heard that everyone should own a house. So I’m gonna take out a huge amount of debt to buy this really, really big house. ’cause that’s how I’m gonna keep up with the Joneses and. That’s something I think is important. [00:11:58] Doc G: But the problem is that debt doesn’t go to something that’s really purposeful for me. So I have this big house, but that doesn’t really light me up. And then I’m really shackled by that debt. And so what I really think about is debt can be both an enabler or it can be an inhibitor, and it really depends on how you use it. [00:12:12] Doc G: And I would also argue it depends on what season of your life you use it in. ’cause I think when we use debt when we’re very young and we have a high risk tolerance, we can manage some of that volatility that comes with debt and risk. Whereas when we get older and we have a lot more to lose, and going bankrupt when you’re 60 or 70 is a big difference than going bankrupt when you’re 25. [00:12:35] Doc G: Debt doesn’t serve us nearly as well as we get older, but could really serve us when we’re younger. In fact, I always tell people the best way to make a lot of money if you don’t have a trade, if you don’t have a skillset that’s gonna make you a lot of money, is through real estate. And how do you do that? [00:12:50] Doc G: Well, as a young person, you do it through leverage. Debt can be a wonderful enabler [00:12:55] Joe: if used correctly. Paula, I remember Josh Dor and the creator BiggerPockets having, I’ve had wonderful discussions with Josh, but a great discussion Josh talked about during the Runup after 2007, 2008 of real estate over the, the subsequent decade. [00:13:10] Joe: And he was talking about how, you know how just before that 2007, 2008, you saw all those infomercials on TV for older people. Carlton Sheets was a guy, Doug, you remember that guy? True. Carlton Sheets. Mm-hmm. They had all these guys on TV talking about make money quickly in real estate. And we have that today still, right? [00:13:26] Joe: We got these people make money now. Not as many as we had a few years ago. But we have all these people there. And Paula, I remember Josh telling me to Doc’s point that, uh, real estate creates millionaires faster because of leverage, and it also flushes the toilet faster when things go bad because so many people wash out and get in trouble because they use so much debt. [00:13:50] Joe: As a real estate investor, what do you think of that? [00:13:52] Paula: I absolutely agree with that. So two points. Number one is that the word leverage is perfect because it evokes the image of a lever, right? And a lever is simply something that propels you either upward or downward a lot faster. So leverage is actually a perfect it. [00:14:08] Paula: It’s, it is a lever in either direction. Uh, the second thing is with real estate, specifically real estate is the one type of debt that the. Average person, the average middle class person in the US is able to access. Most people are not able to access small business loans without a lot of hassle and headache. [00:14:31] Paula: Most people, I don’t believe are able to access buying stocks on margin or if they are, it’s just a very small amount. But real estate is the one type of debt that the average middle class American can access. And so I think that’s why it becomes that lever for so many people. [00:14:48] Joe: Andrew, when Doc was talking, he’s talking about early in life and using debt. [00:14:52] Joe: It brings up this phrase that you and I hear all the time, man, you ready for these two words? Good debt. Is there such a thing as good [00:15:01] Andrew: debt? I think that there can be, and I think real estate’s a great example of something that can be good debt. Because one big thing with real estate obviously is you make all your money When you run the numbers upfront, it’s all made in the, in the beginning and you’re making sure that you’re actually running the numbers properly and that the property is actually cash flowing. [00:15:15] Andrew: And when you do that, a lot of times you can figure out, hey, is this going to cashflow? Is this going to make me extra money and can I pay off the mortgage in, in addition to making sure all the, all the other numbers are correct and factoring in all the expenses. And so when you do things like that where you can utilize that in a way that can create more income for you, I think there can be good debt out there. [00:15:33] Andrew: Another way to do this, and the cool thing about real estate is you can also get really creative in the way you structure debt. So for example, you can find off market properties. Where you can talk to the seller and do seller financing. Seller financing is one of my favorite ways to find good debt because the amount that you guarantee is more so on the property, uh, instead of owing the actual total amount left if something were to happen or some catastrophic event. [00:15:54] Andrew: So there’s a lot of things where you have reduced guarantees when you do a seller financing with businesses and or when it comes to real estate. So there are situations where you can find good debt. Another great example is going out and buying a business like we’re talking about here, where this is something I didn’t over the course of the last year and we structured it in a seller financing, uh, way where we had this seller financing set up, but the personal guarantee renews once a year for one year, every single year. [00:16:17] Andrew: So the guarantees are a little bit different how we structure those, but there’s just various creative ways that you can do some of this stuff when it comes to good debt. So I see good debt as something where it’s gotta be, you know, you gotta understand and really know what you’re doing. You have to understand what you’re investing in. [00:16:30] Andrew: And if you do have an understanding of that and you do it in the right way upfront, I can see that there can be good debt as long as you’re cash flowing. [00:16:36] Joe: So many questions, but what, what? What does the personal guarantee mean? [00:16:39] Andrew: So a personal guarantee is where you actually guarantee that you will pay back a specific amount. [00:16:44] Andrew: So spec, you know, typically if you’re doing something like a mortgage for example, the personal guarantee is gonna be for the entire amount of the mortgage. Whereas if you have a personal guarantee on something like seller financed, where you have a seller financing deal there, you can really structure these terms in different ways. [00:16:58] Andrew: For example, one way that you can do it is the actual house is the guarantee they get the house back. If you default on the loan, that’s one big way that you can do it, whereas you’re not gonna owe the rest of the amount. Another way to structure it, like with the business that we did, was you personally guarantee one year of payments, and then outside of that, everything else is something worth just rolling one year every single year. [00:17:18] Andrew: And so when you have those structures in place, it reduces your liability if anything were to ever happen. [00:17:23] Joe: It’s funny, doc, as Andrew’s talking, you know, and the way he talks about debt and numbers, I realize that companies have CFOs and that CFO’s job is to structure debt in a way that makes the most sense for the company. [00:17:36] Joe: But I don’t think Doc, most people think of debt as if they have any type of debt strategy like A CFO may. I don’t know, maybe we should. [00:17:43] Doc G: Well, I mean, we’re really talking about risk mitigation here, and I think that’s the name of the dam, NA, that’s the name of the game, name of when it comes to debt, it’s the name of the dame. [00:17:50] Doc G: If, if debt is the Damme, it’s the name of the dame when it comes to debt. Because really what you wanna do, and again, especially when you’re younger, you can take more risk. So your risk mitigation may not be as strong as, as you get older, you start mitigating that risk more and more. And so even if you’re, for instance, a real estate investor, you’ll see when they’re young, a lot of people use a ton of leverage. [00:18:12] Doc G: But as they get more properties and more cash flow, what do they do? They start paying down those debts. And so what you’re doing is you’re slowly reversing the lever. Changing the risk mitigation as you accrue more wealth. And I think that’s, again, what we’re really looking towards is how do we mitigate so that we can take some of these risks maybe when we’re younger in such a way that it doesn’t ruin us, but gives us maybe the best chance at having a high amount of success. [00:18:37] Doc G: And then as we get older and we get more successful, we’re really mitigating down and decreasing those levers and taking more control. And I think this gets back to what Morgan Hauser was saying is as you get older, your ability to take the bumps both up and down are less. And so you really don’t wanna inhibit yourself with huge amounts of debts as you get older and older. [00:18:58] Doc G: But again, when you’re younger. You might be a lot more agile. [00:19:02] Joe: You mentioned Andrew earlier a business, but I think about the number of people that open restaurants every year and I’m gonna have a hot take that’s stupid. Agreed. If you look at the number of restaurants that close every year in America, you’ve never run a restaurant before and, and you’re gonna be the one that succeeds. [00:19:17] Joe: Like it seems like it isn’t just running the numbers like you talked about Andrew. It’s also if you’re gonna use it the way Doc’s talking about to take a chance. I think you also have to kinda [00:19:28] Andrew: look at the success probabilities, right? 100% agree. Because something like a restaurant, in fact the restaurant I think is the number one, uh, business that has the highest failure rate across the country. [00:19:38] Andrew: So when you look at something like a restaurant, I would be much less likely to take on debt for a business like that than a business that’s actually already cash flowing in something that you know is actually working already. So there’s two different sides to that coin. If it’s a startup or something like that, I’d be less likely to take on a ton of debt. [00:19:51] Andrew: I’d rather bootstrap that business. I. And then if it’s something else where, you know it’s already cash flowing and you can actually kind of run those numbers and see real data, then it would kind of change my decision making. And I, I, along the same lines, you know, I think, you know, you can take some of those small risks when you’re younger, but as you get older and as you approach retirement age, I’m a big proponent of not having really any debt as you approach retirement age and really have that freedom and flexibility in retirement. [00:20:13] Andrew: Because I think over time it’s just reducing that debt liability. ’cause that’s really what it is, is you’re just increasing your risk, the more debt that you take on. And so by reducing that risk as you get closer to retirement age, that’s gonna be really, really important for a lot of people. [00:20:26] Joe: You know, Paula Andrews talking about using debt strategically, but what Morgan talks about is life sneaks up on you, right? [00:20:31] Joe: Unforeseen health crises, career transitions, wayward children. I have a friend with some wayward with that’s had some, some wayward children. Root things, root canals, uh, good kids’ root canals. Yeah. I thought Doug was, uh, speaking of restaurants, I thought Doug was hungry and that’s why he was drooling. And then I found out that wasn’t why he was drooling at all. [00:20:50] Joe: But all of these things, Paula debt sometimes sneaks up on you. Right? And now we’ve got this bad debt that we just have to take on. Mm-Hmm. How do we mitigate that risk knowing that these volatile things, so Morgan’s talking about these volatile things will happen to you. There’s a hundred percent chance it’s gonna happen to you. [00:21:05] Joe: Mm-Hmm. How do we mitigate that risk so that the debt monster doesn’t creep up on us? [00:21:11] Paula: Well, I mean, I know it’s been said a thousand times before, but sometimes things get repeated because they’re true. The emergency fund or the rainy day fund. Right. I think you’re gonna say wear a helmet. Yes. And a seat belt. [00:21:22] Paula: Kids wear a helmet and a seat belt. Emergency fund. Yes. Yeah. Yeah. The good old classic emergency fund. And the emergency fund. You know, it’s funny because when the stock market is going bonkers, right? A lot of people become allergic to emergency funds. A lot of people I. You know when the stock market is doing really, really well, you hear from people who kind of start thinking of the market as a high yield savings account. [00:21:50] Paula: And so they’re like, why should I keep my money in cash? Why should I keep my money in this emergency fund earning? If you think back to like pre pandemic, what, during the Zer era in that era, money in a savings account was making basically nothing, right? Pre pandemic, whereas the stock market was like going gangbusters. [00:22:07] Paula: And so, so many people were like, why should I lock up my money in the savings account that’s earning next to zero interest when I could be putting it in the s and p 500 and it’s gonna go like, but then something like 20, 20 hits. Wait minute. Yeah, exactly. Like precisely. Precisely. But it’s when those moments hit that you realize, A, the stock market is not a high yield savings account, and B, this is precisely why it’s so necessary to have cash on hand. [00:22:38] Joe: I don’t know, as we record this about, uh, a week and a half before people hear it, I just keep all my emergency fun. GameStop [00:22:46] Paula: don’t forget a MC theaters, Nokia Black Blackberry are, are [00:22:50] Joe: are those going up [00:22:50] Doug: today too? No, they did. I didn’t get past GameStop. I mean, GameStop doubled overnight. Yeah. Not as much as GameStop, but I think people were anticipating he might put Roaring Kitty might put his thumb on the scale of those other ones as well, and so they did raise a little bit, even though he didn’t say a word about it. [00:23:05] Joe: Yeah, that’s where I keep my emergency fund works out. Great. Something when it works, it works, right? When it doesn’t, you’re, you’re in big trouble, doc G. Is there [00:23:12] Doc G: another way we could handle this? Yeah, I think the other thing to keep in mind is insurance. And that’s what it’s exactly there for, are those bumps in the road that we’re not expecting. [00:23:21] Doc G: And in fact, you can combine the emergency fund and insurance. Our friend Brian Preston, who’s been talking about his book, has a financial order of operations. And actually step one for him is not an emergency fund. Step one for him is covering your highest deductible, right? So if you’re at the really beginning of this process and you wanna start risk mitigating, save enough money to cover your highest deductible, it’s a start. [00:23:43] Doc G: And that way you let insurance do some of the heavy lifting, but at least you can cover that deductible if you need to. [00:23:48] Joe: Well, and I love you saying that because I think this is where young people get it wrong often. So if you’re hanging out your stackers and you’re just starting. I see young people with a limited amount of money to get into savings, put all the money in savings, and don’t they forego insurance? [00:24:03] Joe: They skimp on insurance. You actually need more insurance when you don’t have assets. And then as your asset base rises, then cancel those coverages. And I also see older people get it wrong. So older stackers, I see older stackers that are covering all this stuff and I’m like, you got a pile of money over here that you could totally use to get this taken care of. [00:24:21] Joe: Andrew, you look like you wanna say something on that. [00:24:23] Andrew: For sure. And I think that it is really important to kind of have that in play because, especially early on, most people don’t understand this, but they need to have that insurance in place and it helps just cover them in that, from that standpoint. [00:24:32] Andrew: And when it comes to the the emergency fund and having that cash on hand as well, I really see people say, you know, three to six months, I think three months is way too low. I think you have to be up to closer to six months cash on hand when it comes to your expenses. And as time goes on, the more debt you take on if you’re a business owner or whatever else, I think that number needs to creep up even more. [00:24:49] Andrew: And a lot of people will say, Hey, I’d rather have those dollars invested, but really it’s risk mitigation. And if you’re taking on some of this debt or you’re a business owner, there are things that are gonna happen, right? Life is gonna happen, something’s gonna happen to you. I’ve had 12 things happen to me this month already that I didn’t expect. [00:25:01] Andrew: And so that’s something where we definitely have to have that on hand to protect ourselves. So that combination of insurance and having that emergency fund is really, really important. [00:25:08] Joe: I think there actually is, as we’re talking, I keep extending this half of the show, but I do think there’s one more thing too, too many people do back of the envelope math when it comes to their monthly expenses. [00:25:16] Joe: And I think the lack of a budget often gets you into trouble. ’cause I know for me, that was part of it for me, man. My kids were born, I had no idea how expensive diapers were gonna be. I would not factor in if my car broke down. Like my back of the envelope math in my head was if everything goes perfect, and because of that, I thought I had a balanced budget. [00:25:36] Joe: Once I figured out that that was part of the problem, several years later after I was way in debt, all of a sudden I realized I had to, I had to budget for these things, like the new tires or whatever. The, to your point, Andrew, the, the problem of the week, right? The problem of the day. I had to, I had to budget for that. [00:25:51] Joe: So I think the budget has a lot to do with it too. In just a few minutes, we’re going to make this a little more philoso philosophical. There we go. Easy for me to say. But before we go into debt and philosophy, and maybe a couple hot takes here on debt that I’d love to run by our panel, we’re gonna get a little contrarian. [00:26:10] Joe: We have in the middle of every Friday episode in Epic Battle to the Death. Except it’s not to the death, it’s just to the end of the year. Between our three contributors, the Pollant, Mr. og, and, uh, since we got OG and Doc GI think we should keep the GS together and we’ll have, uh, doc G play on behalf of OG and my mom. [00:26:29] Joe: My mom never placed on her own behalf. She can’t be bothered to come down those stairs. So, Andrew, you’re playing on behalf of Mom, which brings up good news and bad news. Which one would you like first? [00:26:40] Andrew: I’ll go with the bad news first. [00:26:41] Joe: Well, the bad news is that, uh, mom took over for Len Penso, and Len won last year. [00:26:46] Joe: So mom defacto is our champion and she’s tied for first with five points, which means you have to guess first this time. That’s the part that sticks perfect. The good news, though, is you’re in first place. The weird news, you wanna hear the weird news, Andrew? I do. You’re tied with Paula Pant, which everybody’s going, what the hell? [00:27:05] Joe: How did this happen? Mom’s got five, Paula’s got five. Oh gee, two time winner of this thing. Is in last with four. So dock, he’s already in last, so you can’t do much more damage. So you’re good. All I can [00:27:18] Doc G: do is bring him up. [00:27:19] Joe: That’s it. It’s the only upside for you. All right, those are the stakes. It’s 5, 5, 4. Uh, Doug. [00:27:25] Joe: You’ve got some trivia. If you can get through this without drooling. [00:27:30] Doug: Hey there, stackers. I’m Joe’s mom’s neighbor, Doug. Today, our panel’s discussing the one topic I’m more of an expert on than probably anyone. Debt. I don’t mean to sound cocky, but I’ve always had a knack for it. Whenever the Powerball gets to an astronomical amount, you always hear people say they could never spend that in their lifetime. [00:27:49] Doug: Ha. Amateurs, I could spend any amount of money in a week tops. I wouldn’t even have to win it first. I’ve racked up tens of thousands of dollars in debt on all kinds of things. Endless accessories for the El Camino. Duh, no brainer. A lock of David Lee Roth’s hair I found on eBay. A $9,000. Oh wait, totally had [00:28:10] Joe: to go into debt for that Doug. [00:28:11] Joe: Totally had to. Yeah, [00:28:12] Doug: my hands were tied. A $9,000 haunted bobblehead I got at a garage sale. That one. That one was an extra impressive purchase considering I got him to accept a credit card at the garage sale. I’m probably the only person in history who’s ever done that. It’s mostly about charming people, although, yeah, I’m sure being handsome helps too. [00:28:32] Doug: Today’s trivia question is, at the beginning of today’s show, what was the national debt? I’ll be back after these guys squirm and try to come up with some answer. I like [00:28:47] Joe: watching all three of ’em. If you’re here with us on YouTube, you just got a great one. Like, whoa. Hello. Well, Andrew, guess what? [00:28:53] Andrew: You get to guess the national debt first. [00:28:54] Andrew: Can I ask a question on the question first? Is it con Yes. Consumer debt or is it US National debt? It’s US [00:29:01] Joe: government national debt. You know, the debt clock, Doug went to the debt clock at the beginning of the episode, and he’s gonna try to figure out what all those commas mean in the, in the [00:29:12] number. [00:29:13] Andrew: Okay. [00:29:13] Andrew: I am, let’s see. I have no idea. Let’s see here. Uh, let’s, I’m gonna say this is gonna be, I feel like this is gonna be too low. $950 trillion. [00:29:24] Joe: $950 trillion. Paula, what are you thinking? It’s so weird to call you second. I [00:29:32] Paula: know, right? This never happens. First, I have to say, in full disclosure, I am currently, for those of you watching on YouTube, I’m currently sitting in a. [00:29:42] Paula: An office that I have a rented office in Times Square and somewhere in Times Square there is the clock deck clock. [00:29:49] You [00:29:49] Joe: could, yes. That would suck so bad if it was out your [00:29:53] Paula: window. So I was like creating my net. Oh, it got it to the dollar. Yeah, exactly. Yeah. From this particular chair. I cannot see it out my window, but it’s right there. [00:30:08] Paula: It’s right there. So it’s so close. So yeah, it’s going to be, I know. So close and yet out a visual range. Oh man. Nine 50 trillion. Let’s see. I need to give some type of a range. I’m gonna go with how much is a trillion? Uh, 500 trillion. [00:30:34] Joe: 500 Go with [00:30:35] Paula: 500 trillion [00:30:36] Joe: trillion. What’s 450 trillion between friends? [00:30:39] Joe: I mean, that’s, that’s keeping it pretty close. [00:30:41] Paula: Well, you know, I, hold on. Can I take back that answer? [00:30:47] Doug: We’ve never allowed that before in the history of Doug trivia. We’re making [00:30:52] Andrew: history today [00:30:52] Joe: because Doc hasn’t given his yet. I think she can. [00:30:55] Andrew: I’m okay [00:30:56] Paula: with it. Okay. Let’s go to 100 trillion. Well, he’s, she’s going lower. [00:31:02] Paula: I’m going low. I’m going low. She’s going lower. Yeah, [00:31:05] Doc G: going low. I, I think the one’s too low and one’s too high. So, and the laziness of not giving you the exact number. I’ll go with one oh 1 trillion. So that gives you, Paula, a little space in between because I didn’t do like. 100 trillion in 1 cent. I’ll give you that little tiny slice. [00:31:24] Doc G: You’ll give you half the trillion. Just, just watch the answer. Be [00:31:26] Paula: 500 trillion. [00:31:28] Doc G: Yeah. I have to tell you, I was more scared of your 500 trillion. I’m a little bit more comfortable with your a hundred trillion [00:31:33] Joe: tell the truth. Yeah. If it is 500 trillion, Andrew gets it now, right? Yeah. He’s closest to that. So we got nine 50, we got a hundred, we got 101 trillion. [00:31:41] Joe: Who’s gonna win the day? We’ll be right back. Andrew, you thought you were too low with 950 trillion? These people thought you were too high. What do you think? [00:31:51] Andrew: I think I am prob now after thinking it through, I, I’m probably a little too high, but at the same time, uh, we’ll, we’ll see what happens here. I think, uh, I give you my logic behind it, but I was thinking through like just personal debt and I know what some of those numbers are and they’re, they’re in the trillions for sure. [00:32:05] Andrew: Uh, and so that’s where I went way, way up. [00:32:06] Joe: This might be the first show. Stacky Benjamins has had any, any podcast has had in the past 10 years where we’re thinking the national debt, our, our national debt numbers are too high. Exactly. The debt’s way lower than what we think. Yeah. Paul up 100 trillion looked good until, uh, doc G took half of that equation. [00:32:23] Paula: Yeah. You know, so the reason that I, I lowered it is because I remember Sam Altman, who’s the CEO of OpenAI, said that he wanted to raise some amount of money, and then commentators were saying that that amount of money is equivalent to some major global. Something very specific. I know exactly. I don’t remember any of the details, but I remember it being a smaller ish number. [00:32:49] Paula: I don’t know, it just kind of inspired me to move the number down. [00:32:52] Joe: Yes. Well, if, if, if Sam Bateman freed inspired you, I’m not sure how great that is. Sam Altman. Sam Altman. Oh, Sam Altman. One of the Sams. Yeah, one of ’em. One of the Sams. That’s a much better Sam. [00:33:03] Paula: Uncle Sam. Uncle Sam. [00:33:05] Joe: Two ends of the Sam spectrum. [00:33:06] Joe: Totally different ends of Sam. Yeah. Uh, [00:33:08] Doc G: and Doc 1 0 1. You feeling good? No, but nah, it seemed like the thing to do. I think it’s, I, my guess was it was closer to Paul’s number than Andrew’s, but I have no idea. [00:33:18] Joe: I think Doc G’s just happy. He’s in the middle. He’s not a hundred million above everybody. Like some weeks that he’s here. [00:33:24] Joe: Yeah. I will not be the last. All right, well we’re gonna find out if you’re first though, doc. Uh, Doug, what’s our trivia answer? [00:33:34] Doug: Hey there, stackers, I’m strange item collector and spiraling into more debt by the minute. Joe’s mom’s neighbor, Doug, just to prove to you that I’m the expert I claim to be during the break, I racked up another $9,000 in debt, holy within three, but just check this out. Within three to five business days, I’ll have my very own outdoor gazebo and sunroom. [00:33:57] Doug: That was only 6,000, so then I had to buy all the sweet new furniture to put in it as well as one does. Today’s trivia question is at the beginning of today’s show, what was the national debt? The answer. While the US is in an impressive amount of debt, we don’t even crack the top 10 countries. When you measure by percentage of GDP. [00:34:18] Doug: Lebanon is at the highest, at roughly 350% of their GDP while the US sits in 12th place at just over 121% of our GDP. What’s the answer? Well, you know, I never tell you that. First, I will say that Andrew guessed, uh, 950 trillion, which means he was over by just a mere 916 trillion. Paula guessed a g guessed 101 trillion. [00:34:45] Doug: He was over 16. Oh my God. This isn’t gonna happen, [00:34:47] bit: is it? [00:34:48] Doug: Paula was over by 66 trillion with her guess of a hundred with the United States GDP at roughly $28.8 billion. The total dollar amount of our national debt at the beginning of today’s show was 34 trillion. $736,409,115,214 and 36 cents. [00:35:12] Doc G: Paula is truly stunned. [00:35:13] Doc G: Wow. I can see it on her face. She’s truly stunned. Wow. She’s [00:35:16] Paula: not the only one. Stunned. What the hell’s going on? [00:35:18] Doc G: Well, [00:35:19] Paula: well this time I do have a speech prepared. I’d like to thank Sam Altman, the good side of the Sam Spectrum. [00:35:26] Joe: I would not thank Sam Bateman Freed. [00:35:28] Paula: Yes, exactly. But I would like to thank Sam Altman for asking for some amount of money for open AI that’s comparable to some other amount of money that made me want to lower the, the guests. [00:35:39] Paula: Yes. [00:35:40] Joe: That is fabulous. Uh, of course, AI wins the day again, Paula, there it is. Yeah, exactly. Exactly. Onto the second half of today’s show about debt. Uh, uh. ’cause we don’t want Paula to get a big head and glow too much. The second half of the show is brought to you by deposit accounts.com. Andrew, you know what happens when you go to deposit accounts.com? [00:35:58] Andrew: I can’t wait to hear. [00:35:59] Joe: Dude, you find out that that brick and mortar bank where you’ve got your savings account, your cd, your checking your money market, you know what? It might suck. It might not be that great@depositaccounts.com for free. You could compare more than 275,000 deposit rates from over 11,000 banks in credit unions for free. [00:36:15] Joe: So you could compare, see just how you’re doing and you might wanna change because you look at the top banks, they’re nowhere near the national average. As an example on a savings account, national average 0.52, I was talking to somebody at Bank of America the other day, I think they’re at 0.04. National average, 0.52, top 1% savings account. [00:36:36] Joe: As we record this 4.97, almost 5%. All I did was went to deposit accounts.com and I saw what the top 1% was. And you can click on that button, see where those are. Compare, ditch, switch, and save. Alright, let’s dive into the second half of this. And I wanna go right for the jugular, doc G, of course. I want to talk course. [00:36:54] Joe: I want to talk about purpose here for a moment. Because what’s interesting, we talk about purpose is I have been visiting some art museums lately and there was a trend that I saw among many of the greatest masters on Earth, and that is that they only created these things ’cause they were up to their fricking eyeballs in debt. [00:37:14] Joe: While Morgan talks about the possibilities that debt takes away from you, does the hurry up nature of, I gotta make this thing because I owe somebody actually help you get crap done. [00:37:29] Doc G: I think it depends who you are. I mean, I think some people are driven by fear, anxiety, having the pressure put on them. [00:37:37] Doc G: And so I, I certainly think for some people that’s a good motivation, but I think you burn out really quickly in life if that becomes your major motivation. We see this often in people who are driven to become what they become often because of childhood trauma, often because they feel were feeling like they weren’t enough as kids, or they went through some horrible trauma where they grew up in poverty, they lost a parent, and that really drives them to become the wonderful things they become. [00:38:01] Doc G: But that doesn’t necessarily lead to happiness, and certainly it often leads to burnout. And so I think it’s a double-edged sword. I mean, ideally we’d love to take those kind of things, put ’em in a bottle and use them for short periods of time to help us do ridiculously amazing things. Uh, but you don’t wanna live a whole life that way. [00:38:17] Doc G: But you start thinking about [00:38:18] Joe: that Paula, personal happiness versus a legacy. Your stuff is in the top, museums in the world. You are remembered forever by people forever and ever and ever. [00:38:32] Paula: But there’s no guarantee that that’s going to happen. You know, in fact, many great artists were never many great artists died in obscurity and their works, uh, did not become famous until much later, and so many of them died unaware that they would ever have a legacy that would one day be remembered. [00:38:52] Paula: I’m counting on that. [00:38:54] Doc G: Wait, what? I think something really interesting to remember here is. The people who create the Monets and the Renoirs and all these people, we always talk about their legacy. But the truth of the matter is, for every million people who wanna be someone like that, they’re actually gonna fall laughably short and feel anxiety and stress. [00:39:13] Doc G: But think about the people who really made a difference in your life. They weren’t the renoirs. They weren’t the Monets. If you love baseball, it wasn’t the Mickey Mantles. The people who probably made a big difference in your life, who truly left a legacy, were those people you were close to, who connected with you, who taught you something, who gave you something of importance. [00:39:28] Doc G: It was those people who in very little ways, showed you who they were, and therefore modeled this wonderful behavior that you have eventually took with you. And those are the people who probably leave a much bigger legacy than the people who create these amazing things that we all strive to. [00:39:42] Doc G: Unfortunately, for a lot of people, those amazing people actually leave a legacy of anxiety and stress, because a lot of people will never be good enough to be those people. [00:39:50] Joe: But is that a reason, Andrew? What he’s saying is that a reason not to try. [00:39:53] Andrew: Yeah, so overall I think it’s something like we talked about a little bit earlier too. [00:39:57] Andrew: I think it’s worth your time if you know what you’re doing to, to try. But over time I think you know that stress and anxiety is gonna come up over time, and I think that’s something that we wanna really reduce. I think money is there to reduce your stress and anxiety, and once you figure out how to actually utilize it as a tool in that way, I think it’s much more important to reduce that stress and anxiety for most people than to long-term do something that would be a detriment to your finances. [00:40:19] Andrew: But it’s worth trying and if it’s something that you are willing to stick with over time, I think it’s really, really powerful what you can do with debt if you do it the right way. I. [00:40:27] Joe: It’s funny what you and Doc are both talking about is kind of building a rubric around how you think about debt and how you think about the path that you’re on. [00:40:35] Joe: And it’s funny, Paul, I’m gonna go to you because you and I are both enamored. It’s funny, I was super enamored by this guy the first time we talked about him, and then Paul and I had like an uh, maybe Paula, an hour and a half discussion, and I’m not kidding. We talked about this guy for an hour and a half, and then Paula, I think became obsessed with him too. [00:40:52] Joe: His name’s Ken Honda and Ken Honda talks about the way to think about debt, and he talks about Paula debt in a whole different way. Like if you’re in debt, you’ve got distress and anxiety. Do you remember the way he talks about debt? I, I don’t remember offhand. I remember many of [00:41:06] Paula: the things he said. I don’t remember offhand. [00:41:08] Joe: Yeah, this one really caught me as a guy that was in huge debt about instead of thinking Woe is me, I don’t have any great outcomes. Like I could read that Morgan Hausel piece we did in the first half and go, I’ve got a lot of debt. So the answer is, I’m screwed. Ken Honda says, how lucky am I. That these people trust me enough to have loaned me this money and I have the honor of being able to repay that trust and to give them back that trust every month. [00:41:36] Joe: And it was so funny, I think, I think seriously if I had thought about my debt that way more in the nineties, I would’ve not suffered. Doc some of that stress that you were talking about. [00:41:44] Doc G: Yeah, I mean, Ken talks a lot about, you know, happy money. This idea that if you do things you love, that light you up, you’ll bring in happy money and then it’s actually you need to take that money and spend it on things you love. [00:41:57] Doc G: So the idea is happy money coming in and happy money going out. And so interestingly enough, he’s not against spending, he’s more of the ilk of do things you love, connect with the important people in your life, and happy money will come in. And then you have to send it flowing back out into the universe. [00:42:14] Doc G: And I, I, I love the idea of that ’cause it really changes the way we look at things like debt and leverage, et cetera. Yeah, there’s a paradigm shift here. Yeah. It again gets back to what I think Andrew just talked about is realizing that money can be a really wonderful tool to show your intentions and your joy and your purpose, and I think that’s what Ken often talks about and maybe an elevated way to start thinking about these things once we have the privilege and luck to be passed sustenance, right? [00:42:43] Doc G: Once you get past sustenance, once you can support your family and do some of the basic stuff, what if we could take this more elevated look and see it as much of, more of a joyful thing? That allows us to take our intentions and our purpose and, and create legacy, not, not in doing something amazing and outsize that everyone can look at in a hundred years, but just putting goodness into the world and hopefully affecting other people around us. [00:43:07] Joe: I thought about this, Paula, and I was originally coming to you with that before I realized, with all the purpose stuff that Doc G talks about, but what I, I’ve just become the purpose guy. Well, yeah, he’s a purpose guy. There’s, that’s his purpose is talking purpose. He’s all purpose. That’s all purpose, not a purpose. [00:43:21] Joe: All purpose. Paul, initially what the reason I was coming to you is I was thinking about just this idea, you know, I brought up the debt and the masters for a reason. These people were indebted to these people that commissioned these artworks. Often they even ripped off the masters, right? They, they got ’em for a lot less because the people owed ’em so much money. [00:43:38] Joe: They’re like, how about if I just paint something for you instead of pay you money? But this idea being indebted to people, there’s sometimes I don’t mind being indebted to people feeling a sense of debt is almost like Paula in some ways, a sense of gratitude toward the, I’m indebted to that third grade teacher who taught me so much about life or whatever it might be. [00:43:58] Joe: I don’t think being indebted has to be, uh, as negative as Morgan’s talking about. [00:44:02] Paula: I think the distinction is, is it voluntary or is it compulsory? So if you feel indebted, spiritually indebted to your, your third grade teacher because of the impact that she had on you or he or she had on you, that’s a voluntary desire to want to do something to honor that impact. [00:44:21] Paula: And that’s different from compulsory. You owe the IRS money. Right? Well, but the fact that I owed the IRS [00:44:28] Joe: money, let’s get on. ’cause I’ve, I’ve been there too. I’ve, I don’t think there’s anybody on earth I haven’t owed some money to before when I was having my debt problem and the fact that I got out of that, I now feel this, pay it forward to other people that are in debt. [00:44:40] Joe: Right. Part of the reason why I think we all do what we do is we wanna pay it forward to these people because we got so much help getting outta debt. I mean, Andrew, the idea of debt, is this really what for some of us cons spur us on. [00:44:52] Andrew: For sure. I think that’s the biggest reason why we talk about it all the time, is we wanna help people as much as possible, get out of debt if they are in debt, specifically high interest debt. [00:45:00] Andrew: And that’s the one that really is, is something that is a big deal to me. ’cause it’s compound interest working against you essentially. And so that’s one that you definitely wanna make sure you know, that consumer debt, that credit card debt, all of those types of things are really, really important. And so getting people free from those chains, which that’s what it is, it’s a chain that is holding you down against you. [00:45:16] Andrew: Being able to build wealth and getting free from those changes is one of the most powerful things you can do, especially if you had no idea how detrimental it’s to your finances. [00:45:24] Joe: This idea of no debt though, Andrew, let’s talk about that. I will see people that have no debt, they’re not indebted to anybody. [00:45:32] Joe: They feel very free. And because of that, they get absolutely nothing done in their life. Is the absence of debt sometimes in this chase that I don’t owe anybody anything really. I. Could it be killing us? [00:45:47] Andrew: It can be, I think, a detriment to some people. And really what it comes down to is what is your ultimate financial goal? [00:45:52] Andrew: Are you trying to have a couple million dollars where you can retire and you know, you have a, uh, portfolio that’s like lean fire, for example? Or are you trying to have a larger portfolio because you have a larger purpose? And so when it comes to that ultimate goal. At the end, that kind of dictates partially what you’re gonna be doing when it comes to taking on some debt. [00:46:09] Andrew: So for example, if you’re interested in fat fire, you may wanna be a little more aggressive on taking on specific pieces of debt and investing in real estate and assets, those types of things. Whereas if you are happy in your job and you enjoy what you do every single day, you’re thinking about working until you’re in your sixties and you wanna retire in your sixties, then maybe you don’t have to take on as much debt and or you may not have to take on any debt whatsoever. [00:46:28] Andrew: So it kind of depends on that final goal, but it can be a detriment to some people, specifically because the trade-offs of investing versus taking on debt. So for example, if you’re paying cash for a house right up front where you could be investing those dollars instead, where there’s a low interest rate on your mortgage, then it may make a lot more sense to invest those dollars and take on that mortgage and pay a, you know, a two, 3% mortgage rate like we saw in 2020, for example. [00:46:48] Andrew: So there are just situational things where it makes more sense to invest those dollars, but it depends on that situation. [00:46:54] Joe: Doc, let’s go to you. Same question. Is the lack of debt, can that also. Mean, lack of purpose? [00:47:01] Doc G: No, I mean, I think the problem is if you require being under the gun or being in debt to either get something done or feel a sense of purpose, then the story you’re telling yourself about yourself is really not a story of agency. [00:47:16] Doc G: It’s a story of putting yourself in high risk situations in order to motivate you. And so if someone really is in that position, I would say, you know what? You really need to look at the stories you tell yourself about yourself, because they’re probably somewhat unhealthy stories. You shouldn’t have to put yourself in a position that might not be good for you in order to motivate you. [00:47:35] Doc G: If you are, then that says a lot about your psyche. I mean, it kind of says, how do I feel about myself? I feel I’m not good enough to do the things I need to do or pursue the purpose I want, or accomplish what I want accomplish unless I’m literally being threatened with disaster. And so the problem with that is, while it may work, all it needs to do is fail once, and you can get yourself in a really bad position. [00:47:58] Doc G: Paula, same question. [00:48:01] Paula: So, uh, I’d like to draw a distinction between being under the gun versus being in debt. So if, if you are the type of person who needs the adrenaline of being up against a deadline and you know, gotta get this done, the way that you could artificially create that sense within yourself, let’s just assume that you’re starting from right now today, that you are debt free. [00:48:25] Paula: Let’s, we’ll assume that as a starting point, what I would do then is all of your current cash, all of your investments, just hide it from yourself. Put it in a bank account like any cash savings that you have. Put it in a separate bank account. Cut up the debit card and tear up the checks and purposely lose the login information to your online portals so that the only way that you can access that money is you have to get in your car and physically drive to the bank. [00:48:53] Paula: Now you have forgotten about the cash that you have. You’ve forgotten about the investments that you have, and now you’re staring at. I gotta make enough money to eat this month. Like I’ve gotta make enough money to survive this month. And it’s a way that you could sort of artificially create that type of pressure without going into debt. [00:49:13] Joe: It’s, it’s funny, I don’t know if docs gonna think that’s healthy or not. Either, Paul. Well, I mean, [00:49:18] Doc G: there’s, but that’s much more healthy than actually getting yourself in trouble, right? So what you’re talking about is gamifying it, and that’s great. I mean, if that’s really what you need. I would much rather have you do that, which is incredibly more healthy than actually putting yourself in real risk, because that’s what you need as a motivator. [00:49:33] Joe: Hmm. I know there’s a bunch of stackers out there thinking that’s a, a question I just asked all three of you. It’s a ridiculous question. I’ll tell you it isn’t. The reason it’s not is that when I was a financial planner, I would see people work very diligently to get outta debt. Getting outta debt was a goal, so I would get outta debt and then, you know what they would do once they got outta debt, they had no real goals and they would go blow money on stupid stuff and just waste time, waste energy, waste purpose. [00:49:57] Joe: I mean, they would waste. There was so much waste that I remember during my career as a financial planner saying over and over, getting outta debt is not a goal. Somebody would come in, I say, what’s your goal? They’re like, oh, my goal is to get outta debt. I’m like, that’s not a goal. That’s a hurdle. Is a hurdle. [00:50:09] Joe: We need a goal because getting outta debt will not sustain you. What sustain you is having a real life afterwards. And uh, that’s really where I wanna leave this because I don’t know, doc, I still look at those great masters and I’m like, maybe there’s something here with debt. Maybe I don’t care if it’s bad or not. [00:50:25] Joe: I could have people know me forever. But also, uh, most of those people, to your point, did die young. And Paula, to your point also, uh, were obscure, you know, died in obscurity and, uh, only Yeah. Appreciated by, yeah. And there [00:50:35] Doc G: are a lot of people out there. I mean, I look at the Steve Jobs and the Elon Musks and all these people are so deeply driven and I think try to gamify things the way you’re talking about with debt, where they’re so deeply driven, but then you look at ’em and none of ’em look particularly happy. [00:50:50] Doc G: Like, I don’t know about you, but Elon Musk does not look happy to me. I don’t know if I wanna live that life. Like yeah, it’s really, supersized stuff sounds really great at the outset, but the, the emotional calisthenics people put them through themselves through to get there doesn’t look like a happy life to me in the end. [00:51:09] Joe: I wanna ask you guys one more question because you’re all people that are very good with money, unlike, uh, mom’s, neighbor, Doug here. Maybe, maybe just hypothetically, but what’s the dumbest debt you’ve ever had? Ander? What’s the dumbest debt you ever took out? [00:51:22] Andrew: I took out a loan. I was really young, I just had credit card debt, like a couple thousand dollars. [00:51:28] Andrew: When I got my first credit card it was ’cause I was living paycheck to paycheck and I just didn’t realize how to manage my money. And then immediately, once I started utilizing a budget, like I got out of it, you know, within a couple of months, which was great. And that was just the key is just kinda like tracking where my money was going to get out of it. [00:51:41] Andrew: But I was in credit card debt at like $3,000, uh, really early in my career when I got my first big job and then all of a sudden realized, hey, I can’t do this anymore. And then, you know, immediately got out of it, uh, really quickly. Thankfully I realized that otherwise it could’ve got a lot worse. [00:51:54] Joe: What’s the uh, uh, what’s the dumbest thing you bought on credit card debt then? [00:51:57] Andrew: So I would just buy a bunch of little stuff. And this is kind of something I talk about a lot too, is you can, you can walk into a store with like no plan whatsoever and just start buying stuff and just kind of put it in your cart. And it was all just these small things I did not care about or value. [00:52:08] Andrew: And so that’s where like my whole mindset changed to spend your dollars on things that you actually value and don’t frivolously just spend your money on just anything. You know, in any store when you walk in, just [00:52:16] Doug: say Pokemon cards, Andrew. Just say it. [00:52:20] Andrew: That’s what, yeah, that’s what we gotta say is just, I can’t think of like something very specific. [00:52:24] Andrew: ’cause it’s all just these little tiny, small, dumb things that were just like, you know, absolutely absurd. [00:52:29] Joe: Well, and it’s funny Andrew, because it reminds me of a spoof video I saw on TikTok a a couple weeks ago. This this person that was anti Costco. Like, I’m not going in Costco. And then they go in Costco, they’re like, oh my God, you see what the prices of this chicken, we gotta get like 18 of these packs and then ketchup, and then, oh my God, bring the whole pallet thing over. [00:52:45] Joe: You know? Well look at what the price of wine here is. Incredible. Before you know it, they bought half the store. So you’re right. It’s easy if you’re not mindful to just, uh, buy anything. Paula, what’s the dumbest debt you’ve had? [00:52:56] Paula: You know, I, other than mortgages, I haven’t had any, any debt, but I have taken, oh, brag, Greg. [00:53:03] Paula: No, but I have paid, I have misfiled taxes, you know, and so then I, you end up getting the, the statement from the IRS, and then you have all these fees that you have to pay on top of that, like late fees and penalties and things like that. So I would say that’s my big one, is just like being sloppy about bookkeeping and then misfiling, and then you end up with a bunch of fees and you end up with penalties and all of that. [00:53:28] Paula: That is the worst letter, by the way. I open up my [00:53:30] Joe: mail and I’m like, oh, I got this, this, and there’s one that says IRS. Yeah. Yeah. And I remember, you know, and, and sometimes it’s like, oh, here’s your new EIN number, whatever you’re, and you’re like, oh, thank God. Oh, thank you. [00:53:40] Doc G: Yeah. [00:53:41] Joe: Doc, a dumbest debt you’ve had. [00:53:43] Doc G: I’ve also been lucky enough to be born pretty much with a golden spoon in my mouth. Oh my God. But look at you. You, I’ll say that. I, um, it didn’t blow up in my face, but could have, we bought. Our first house with a doctor’s loan back in 2000 doctor’s loan, no money down, 8% interest rate. And we knew we weren’t gonna live there more than a few years, and so we only owned the house for two years. [00:54:08] Doc G: We happened to sell it for a huge profit, which was complete luck. Uh, but that could have really blown up in interface. [00:54:14] Joe: Mine, uh, I guess might have to win then because I used, uh, my student loans to buy a personal computer so I could play video games specifically and look [00:54:22] Doc G: how [00:54:22] Joe: successful he is today. So it’s obviously it didn’t hurt him one bit at the time. [00:54:26] Joe: I justified it that, oh, I’m gonna do a bunch of schoolwork on this thing. Are you kidding mean 1990? Two. And the internet didn’t exist yet. Right. And I’m gonna do quote schoolwork on this computer. Nope. I was gonna play radio. You just ahead your time. Yes. Before I wasn’t ahead of my time. Right ahead of your time. [00:54:42] Joe: Alright. I think this game’s over, guys. How about that for a transition? Huh? Ninja? Uh, let’s find out what’s going on, where each of you are. So all of our, uh, stackers can follow more of your amazing work. Let’s go ladies first. Paula, what’s happening at the Afford Anything Podcast [00:54:59] Paula: on the Afford Anything podcast? [00:55:01] Paula: So we recently had an interview with the CEO of Cul-de-Sac, which is a walkable community based in Arizona. He also was one of the founders of Opendoor, which is a real estate transaction company. And so he talks about walkable cities, you know, and designing cities to be car free and designing a car free life. [00:55:18] Paula: We also have Brian Kelly, the points guy who talks about how to fly all over the world on points like he flies first class, not even business class, first class entirely on points. And we have the mad scientist, a, uh, very loved character in the fire community. Yes. [00:55:37] Joe: That’s like seeing a groundhog now or seeing the, you know what I mean? [00:55:40] Joe: You’re like, oh, I saw it. [00:55:41] Paula: Yeah, exactly. Exactly. Yeah. He doesn’t, uh, you know, he’s, he’s. Got his, his life in Scotland. So he doesn’t work the podcast rounds very often, but I actually went out to Scotland and I saw him there. Um, we had a really nice meal together and we were going to record together in person, but then we just couldn’t find a quiet place to record and we were having too much fun hanging out. [00:56:00] Paula: So we ended up just doing it, uh, virtually once I got back to the us. [00:56:05] Joe: We all do love that guy and getting a mad scientist sighting is, is awesome. And that’s at the Afford Anything podcast where finer podcasts are distributed. Doc, what’s going on at Earn and Invest these days? My [00:56:16] Doc G: friend, well, we are interviewing her. [00:56:19] Doc G: I have interviewed Sierra Rogers. She wrote a book called The Outsider Advantage. She is the creator of multimillion dollar fashion design. She creates products for. People who are not your average body type. I’ll just put it that way. Uh, she has dressed Kim Kardashian, Beyonce Knowles, and she wrote a book called The Outsider Advantage. [00:56:39] Doc G: She talks about growing up being homeless, living out of a car, uh, to where she’s arrived today, and how she did it by being an outsider. [00:56:47] Joe: Wow. That’s cool. I love those stories by the way. It’s like Doc G meets how I built this. Yeah, for sure. Yeah. Good stuff at Earn and Invest. Andrew Mann, thanks for coming out and hanging out with us again. [00:56:59] Joe: I appreciate it. Thank you so much for having me. It was so much fun, dude. So what do we got coming up at the Personal Finance podcast? [00:57:05] Andrew: Along the same lines as today, we have an episode that came out yesterday called, uh, should You Pay Cash or Finance a Car? So we go back and forth on the pros and cons of that, which is fun. [00:57:13] Andrew: And then we have an episode coming up tomorrow. I think it’s the, the Step-by-Step Guide to actually negotiating your salary and getting a raise. And we have a very specific six month system that we kind of talked through. That’s worked a ton of times and we’ve talked about this with some of the, the people that we’ve done in the past. [00:57:25] Andrew: And they’ve, they’ve negotiated 30, 40% raises by using the system. So it’s, we’re really excited about that. And then Brian Preston comes on next week, the money guy that you guys were talking about too. So he’s talking about his new book, millionaire Mission. [00:57:36] Joe: I love Brian Preston. Just such a, such a nice guy. [00:57:39] Joe: Just defines nice guy. [00:57:40] Andrew: He is. He really is. [00:57:42] Joe: And that is at the Personal Finance Podcast. Again, we’re finer. Podcast are are distributed. Alright guys, you’ve got lots and lots of fun listening, uh, to take you till our next episode. So go listen to those three podcasts. We’ll link to them all on our show notes page at stacky Benjamins dot com and uh, Doug, I think you got it from here man. [00:58:01] Joe: And by the way, we can’t go away without saying a quick shout out to our friends hanging out with us live. Uh, we got Colin here with us. Guess who else is here with us guys. Stephen Boyer is in the audience. Stephen Boyer from Camp Phi. Everybody, uh, go to Camp Phi. They gotta go to Camp Phi. So Stephen, thanks for hanging out with us and hello to everybody else, uh, hanging out in YouTube land. [00:58:23] Joe: If you want to see us live on YouTube, uh, become a member of our Facebook group and that’s where we post what’s coming up next on YouTube or just come to our YouTube page and we post it a couple days ahead of time about the exact, uh, day and time so you can hang out with us and watch the show being made. [00:58:39] Joe: Alright, all of you get to hear this amazing piece though, Doug. What should be on our to list today? [00:58:46] Doug: Well, Joe, I’ll tell everybody what should be stacked up on your to-do list today. First, take some advice from Doc G. Debt can be either an enabler or an inhibitor based on how you use it. Want to be a World Cup ski racer. [00:58:58] Doug: Doc says, go for it. That’s absolutely the best reason to go into debt. Second, he said it. Second, take a note from Andrew Cola. Money should be a tool to reduce stress and anxiety. Debt used the right way can help with that, but used the wrong way. It can add more stress than a letter from a woman named Karen on your local HOA board. [00:59:20] Doug: But what’s the biggest to do? I gotta find a couple of side hustles to pay my credit card bills next month. If anyone needs coaching on how to get into debt, I’m available. I even accept credit cards and am willing to let you pay me as much as you can to kickstart your debt accumulation. Thanks to Andrew Cola for joining us today. [00:59:43] Doug: You can find his amazing podcast, the Personal Finance Podcast, wherever you’re listening to us right now. We’ll also include links in our show notes at Stacking Benjamins dot com. Thanks to Paula Pant for hanging out with us today. You’ll find her fabulous podcast, afford anything wherever you listen to the really good podcast. [01:00:03] Doug: And thanks also to Doc G for joining us. You can find his podcast, earn and Invest wherever you’re listening to me. And my sultry tones right now. This show is the Property of SB podcasts, LLC, copyright 2024, and is created by Joe Saul Sea High. Our producer is Karen Repine. Karen and Joe. Get help from a few of our neighborhood friends. [01:00:26] Doug: 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. 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. [01:00:45] Doug: 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. [01:01:08] Doug: No credit scores were harmed in the making of this podcast.
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