Speaker 1: Welcome to had to Money. I'm Joel, I'm not and
Speaker 1: this is your smart money guide for twenty twenty six.
Speaker 2: You know what, buddy, is twenty twenty six. Let's go
Speaker 2: New Year, New you. Baby. It's the first real day
Speaker 2: of twenty twenty six. Well, it's not really the first
Speaker 2: real day. It's the fifth, but it is. Though it's
Speaker 2: your first real day. I think it's most people's first
Speaker 2: real day of twenty twenty sixth you can't have the
Speaker 2: you can't have New Year's Day be Thursday and expect
Speaker 2: everyone to be like, Yeah, it's the new year, let's
Speaker 2: be productive tomorrow in the office. That makes almost as
Speaker 2: much sense as your kid's going back to school the
Speaker 2: last last last fall on a Thursday, right, and then
Speaker 2: we starting on a Friday, on a Friday, on an
Speaker 2: actual Friday, which made even less sense. So we skipt
Speaker 2: the first day of school. You're like, we're still going
Speaker 2: to be at the beach. No judge, that was ridiculous,
Speaker 2: I will say. Normally, so if folks haven't listened to
Speaker 2: the podcast normally on Monday episodes, we hear directly from you,
Speaker 2: our listeners. You would normally take a voice memo that
Speaker 2: you can easily record on your phone and you email
Speaker 2: it over to us. You say your name, you say
Speaker 2: where you're from, because that's always fun. And I like
Speaker 2: to google where it is that people live. People know
Speaker 2: that at this point, which is actually bizarre. Yeah, the
Speaker 2: last one she literally put her actual address so we
Speaker 2: could I don't know, I don't want to go there,
Speaker 2: but like the general town, if I haven't heard of
Speaker 2: a town, I like to click around and get a
Speaker 2: feel for it, see what they have to offer, see
Speaker 2: if I want to go visit there at some point,
Speaker 2: like if you know, if you're on a road trip
Speaker 2: and you've heard of a small town. Matt's paying house
Speaker 2: visits to listeners now, so get in there. But normally, yeah,
Speaker 2: Monday episodes ask how to money episodes, we have the
Speaker 2: voice memos and we you know, we were able to
Speaker 2: directly answer listeners personal finance questions. But with this being
Speaker 2: the first real episode of twenty twenty six, we wanted
Speaker 2: to do something special.
Speaker 1: You set the table a little bit for the coming year,
Speaker 1: and so yeah, we'll have kind of some general thoughts
Speaker 1: on getting your money together in twenty twenty six. Will
Speaker 1: cover a little bit of the money gears. We'll talk
Speaker 1: about maybe what to expect in twenty twenty six and
Speaker 1: kind of maybe a little bit of the current state
Speaker 1: of the economy will kind of yeah, hit a bunch
Speaker 1: of things. Matt run through a bunch of things that
Speaker 1: we think are important for people to consider as they're
Speaker 1: thinking about their personal finances going into this year.
Speaker 2: One. Does it Does it feel like there's too much
Speaker 2: pressure on this episode because it's like the first it's
Speaker 2: going to be the first perfect episode of the year.
Speaker 2: I don't think so. I'm okay, you know, I don't know.
Speaker 2: You were talking to me earlier like this is gonna
Speaker 2: be a good one. I'm like, I know what's going
Speaker 2: to be a good one. But also, you know, you
Speaker 2: can't pack it all otherwise we'd be sitting here for
Speaker 2: like five hours, right if it's like and then we're
Speaker 2: gonna have on a guest who's gonna deliver some brilliant nugget,
Speaker 2: and then we're gonna answer some listener questions. You and
Speaker 2: I are going to crush two Kraft beers.
Speaker 1: Because that's why I said. This is setting the table.
Speaker 1: It's like a nice tablecloth on top of the table.
Speaker 1: There's no food or anything. It's like, it's kind of
Speaker 1: going back to the basics in some ways.
Speaker 2: We're bringing the food. There's going to be some actual
Speaker 2: sustenance here. This isn't just fluff, all right, No, that's
Speaker 2: not what you meant, not what I just that's not
Speaker 2: what I meant.
Speaker 1: I think one of the things maybe I wanted to
Speaker 1: suggest starting off as we're entering into a new year,
Speaker 1: and one way to maybe at least start thinking effectively
Speaker 1: about your finances for twenty twenty six is to reflect
Speaker 1: on how things went last year.
Speaker 2: Matt. I don't know.
Speaker 1: About you, but like, yeah, what were your goals for
Speaker 1: last year? How did you do in comparison to what
Speaker 1: you'd set up to do? And then think about maybe
Speaker 1: like what were the hurdles that got maybe thrust into
Speaker 1: your path that frustrated you in your attempts to meet
Speaker 1: those goals?
Speaker 2: What sticks did you shove into your own spokes?
Speaker 1: There's that too, right, How are you your own worst
Speaker 1: enemy at times preventing you from being able to reach
Speaker 1: that goal? And I'm sure all of us if we
Speaker 1: do a little bit of thoughtful reflection, I think that
Speaker 1: is one of the first good places to begin, because
Speaker 1: it can help us then say, well, all right, now
Speaker 1: that I know myself a little bit better, I know
Speaker 1: how I did in comparison to what I want to
Speaker 1: do last year. Maybe you're one of those incredibly disciplined
Speaker 1: pace or you just got kind of lucky this year too.
Speaker 1: Maybe your goal was like to grow your net worth
Speaker 1: and like the say, the stock market doing well in
Speaker 1: twenty twenty five really helps you to be able to
Speaker 1: do that.
Speaker 2: And it's but like, what were your goals?
Speaker 1: How did you do in comparison to what those goals were?
Speaker 1: I think is a really good, really good thing to
Speaker 1: think through.
Speaker 2: Yeah, I don't think we do enough reflecting as a culture.
Speaker 2: Although with you know, with there being more attention being
Speaker 2: paid towards mental health, I think folks are or at
Speaker 2: least at least there's a whole lot of language around
Speaker 2: it though. Right, how often are people actually sitting down
Speaker 2: and reflecting and journaling and thinking about what happened? Not
Speaker 2: only what happened, but then how do you feel about that? Right?
Speaker 2: Because I think that that can have a larger impact
Speaker 2: on your the steps that you take moving forward. It's
Speaker 2: not just literally what happened and what goals you were
Speaker 2: able to achieve and not achieve, but how are you
Speaker 2: actually interpreting those results good or bad? And I think
Speaker 2: that could have an impact on whether or not you
Speaker 2: see yourself as, Oh, actually I'm a good investor, Oh
Speaker 2: I'm a good saver, or I am a diligent worker.
Speaker 2: This is what we're able to accomplish. And if you're
Speaker 2: able to like internalize essentially some of those behaviors as
Speaker 2: opposed to only fix, the results are good. Trust me,
Speaker 2: Like I'm a data's guy, like I've got the Excel
Speaker 2: spreadsheets going back. That is really important. But also to
Speaker 2: sort of internalize some of the behavior that you set
Speaker 2: out to achieve last year. I think that's really important,
Speaker 2: and you might even find that you're able to hit
Speaker 2: some of those goals and metrics that you wanted to hit.
Speaker 2: And as you reflect back, you're like, man, I was
Speaker 2: exhausted at the end of the year, and I needed
Speaker 2: that break right like the fifth of January. I'm back
Speaker 2: to work, like I'm a little worried because I don't
Speaker 2: think I can keep up the pace and so maybe
Speaker 2: you overdid it. Like that's even worth considering too. I
Speaker 2: think for some people, especially people who listen to out
Speaker 2: of money, Matt. They are like go getters, and so, yeah,
Speaker 2: did you overdo it to the extent that maybe you
Speaker 2: actually need to dial back some of those goals so
Speaker 2: that you could live a little bit more of your life.
Speaker 1: In the here and now. Totally, that's worth considering as well.
Speaker 1: So and really, like the truth is, twenty twenty six
Speaker 1: is going to be different than twenty twenty five. We're
Speaker 1: going to face different challenges, different opportunities, and there were
Speaker 1: a lot of both, Matt in twenty twenty five for
Speaker 1: investors and for people trying to get smart with their money.
Speaker 1: And I think that the more you have your eyes
Speaker 1: on your money in a healthy way, the more you're
Speaker 1: going to be ready for whatever challenges come your way,
Speaker 1: and you're going to be able to take advantage of
Speaker 1: opportunity when it strikes. Think about even just the beginning
Speaker 1: of last year, and like it was tariffs, Man, they're
Speaker 1: going to destroy the economy, And there was a lot of.
Speaker 2: You shouldn't have sold I was telling you you shouldn't
Speaker 2: sell out the bottom.
Speaker 1: Joy See I didn't, And I was one of those
Speaker 1: people who were like, man, tariffs are going to have
Speaker 1: a massive impact. They had a more muted impact than
Speaker 1: even I thought they would. It felt like a COVID blip.
Speaker 2: Yeah, it did. Like honestly, it's like a mini little
Speaker 2: COVID blip. When we look back, it's like similar actually
Speaker 2: a lot of similarities, like kind of towards the beginning
Speaker 2: of the year, just this false oh no, the world's ending.
Speaker 2: But then in reality, oh, we are actually more resilient
Speaker 2: than we think. And I think for economy, a lot
Speaker 2: of investors, what the truth is, there are blips that
Speaker 2: you can take advantage of, or there are ways that
Speaker 2: maybe you might say, I don't know, man, that news
Speaker 2: is freaking me out, or that agnostication prediction is freaking
Speaker 2: me out, and so I'm going to invest less or
Speaker 2: something like that. And then if you had done that,
Speaker 2: if you had listened to those predictions, even then you
Speaker 2: you would have missed out on ind abundance of returns totally. Yeah.
Speaker 2: By the way, I want to mention too, you might
Speaker 2: hear some leaf flowers in the background and Joel, Joel
Speaker 2: almost called you something different what you want to call me?
Speaker 2: I think that only speaks to kind of our like,
Speaker 2: uh down homeness. We're just two dudes, best friends. We
Speaker 2: record in this carriage house that we rent, and you
Speaker 2: know what, We're surrounded by honestly beautiful like one hundred
Speaker 2: year old oaks, but they drop a lot of leaves
Speaker 2: and dude, I gotta hate the leaf blowers. They get
Speaker 2: under my skin. They like find their way into like
Speaker 2: my sinuses, like where the sound resonates rattles it around. Yeah.
Speaker 1: No, And it's truly the bang of a podcast or existent.
Speaker 2: Unless you live in the middle of some giant building
Speaker 2: where there's no windows. But that's that's the other thing.
Speaker 2: I mean. You can literally go to our website and
Speaker 2: see a picture of us here recording. But like, I
Speaker 2: love this space because we have windows to the outside
Speaker 2: and the true real environment, the sunlight. Man, I don't know,
Speaker 2: would you trade off having a view to the outside
Speaker 2: world in order to have like perfect silence And no,
Speaker 2: I don't think when I don't care that much about
Speaker 2: it not sounding perfectly polished like a studio.
Speaker 1: When I worked at a radio station, we had all
Speaker 1: of these pristine recording studios that had no windows to
Speaker 1: the outside world, and.
Speaker 2: You come out of their pale and yeah, a lot
Speaker 2: more terrible attached from the outside world. You feel like
Speaker 2: a vampire. You feel like a vampire. How we roll
Speaker 2: here well?
Speaker 1: And Matt like, when we're talking about what this show is.
Speaker 1: By the way, if you are new here, like, this
Speaker 1: show is all about removing jargon, keeping things simple. We
Speaker 1: want you to achieve financial independence. We talk about all
Speaker 1: facets of money, from saving and investing to debt payoff
Speaker 1: and intentional spending. We also touch a lot on the
Speaker 1: behavior and the mindset stuff too, because that really does matter.
Speaker 1: Your emotions factor into your money, maybe more than you
Speaker 1: think they do, and we just we attempt to run
Speaker 1: the gamut so that you can make meaningful changes.
Speaker 2: In your life.
Speaker 1: Deal for you is that money would become a less
Speaker 1: painful endeavor, that you get more joy out of your
Speaker 1: life because you handle money so effectively. We want everyone
Speaker 1: listening to know that frugality does not equal deprivation.
Speaker 2: Matt.
Speaker 1: I think too often those two terms have become synonymous.
Speaker 1: So you're telling me to become frual. You're telling me
Speaker 1: that I need to hate my life. Not true. Frugality
Speaker 1: can be fun. And want to give you thoughtful ways
Speaker 1: to think about frugality and the truth is it can
Speaker 1: lead to meaningful results, but it's also not frugality all
Speaker 1: the way down.
Speaker 2: That's not how we roll. It's not frugality on top
Speaker 2: of frugality all the way down. No, by the way,
Speaker 2: we didn't mention our beer, and I feel like we're
Speaker 2: kind of all over because this is because I'm used
Speaker 2: to like list our questions and just the structure that
Speaker 2: comes with us. So because of that, I feel like
Speaker 2: this is a little more free wheeling. But we do
Speaker 2: enjoy a beer during every episode, and we're enjoying if
Speaker 2: only to be thoughtless once more, which is an ipa
Speaker 2: by burial. We're enjoying that and we're gonna share our
Speaker 2: thoughts at the end of the episode. Why do we
Speaker 2: drink beer on this podcast? Because we talk about our
Speaker 2: craft beer equivalent. This is something that we are splurge
Speaker 2: on in the here and here now, in the moment.
Speaker 2: Is it the best use of our money? There's an
Speaker 2: argument to be made that it is, because sure, we
Speaker 2: can forego all the pleasures of life today in order
Speaker 2: to invest in safe for larger amounts down the road.
Speaker 2: But you got to find that balance for you as
Speaker 2: an individual, how are you going to enjoy and embrace
Speaker 2: and seize the day today while also preparing for the future,
Speaker 2: and for us, craft beer is one of the ways
Speaker 2: that we literally demonstrate that and enjoy it here on
Speaker 2: the podcast.
Speaker 1: It's the balance that we're trying to strike right It
Speaker 1: is that like, let's be thoughtful and intentional about what
Speaker 1: we want to achieve five, ten, twenty years down the road,
Speaker 1: but not forget that we have a life to live
Speaker 1: in the here and now. There's a lot of that,
Speaker 1: I think in parts of the personal finance space, where
Speaker 1: it's like nose to the grindstone, head down so that
Speaker 1: you can achieve this massive savings rate in this goal
Speaker 1: that you know it's at the end of the rainbow,
Speaker 1: and really what happens for a lot of those years
Speaker 1: it's a slog And I've met too many people who
Speaker 1: went so dang hard for a slew of years that
Speaker 1: it feels like they didn't even lift their head up
Speaker 1: to enjoy their life. For like, for a lot of people,
Speaker 1: it's it's in those like twenties and thirties that are
Speaker 1: like years that you'll never get back when it comes
Speaker 1: to forming relationships or making memories. So, just in case
Speaker 1: you're wondering, we're not all about that lifestyle totally.
Speaker 2: And you mentioned goals, Joe. So, Joel, why do I
Speaker 2: almost keep saying, Joe, I think that's what I'm saying.
Speaker 2: Am I speaking too quickly? Joel? My best buddy? I
Speaker 2: need to actually appreciate a new best buddy that's okay
Speaker 2: over the holidays. His name is Joseph. I was gonna
Speaker 2: say you mentioned goals, and I'm guessing that a lot
Speaker 2: of folks are already tired of hearing about people setting goals,
Speaker 2: sitting smart goals, setting you know whatever goal acronym, strategy,
Speaker 2: approach to setting your goals. But still, and we're only
Speaker 2: going to spend a second on this, but I do
Speaker 2: think asking what it is that you want to achieve
Speaker 2: this year is just so important to hitting the mark. Joel.
Speaker 2: You mentioned like review and kind of looking at how
Speaker 2: you did last year, But it's equally important to maybe
Speaker 2: have a conversation with your spouse or your significant other,
Speaker 2: your part, or do this by yourself if that's where
Speaker 2: you're at. But I just think writing those goals down
Speaker 2: to make them concrete, enacting some sort of plan is
Speaker 2: going to be so vital to you seeing progress and
Speaker 2: then just keeping those goals just front of mind, like
Speaker 2: like literally in front of your face. I think actually
Speaker 2: you can literally write it on a post a note
Speaker 2: stick on your mirror in order to help remind you
Speaker 2: of that. But I think knowing what it is that
Speaker 2: you want to achieve and then just knowing that that
Speaker 2: is what is fueling you to get up every day,
Speaker 2: get up earlier in order to work a little bit
Speaker 2: harder to self deprivation a little bit. Right, Like you
Speaker 2: talked about frugality, not spending in a way that's going
Speaker 2: to allow you to sock away a little bit more.
Speaker 2: Maybe you're trying to eliminate some debt and you know
Speaker 2: that every dollar that you're not spending on yourself is
Speaker 2: something that's buying you some of that financial peace of mind.
Speaker 2: And I said paying down debt, But it could be anything, right,
Speaker 2: Like the name of this episode is your smart money
Speaker 2: guide for twenty twenty six, but this could also be
Speaker 2: like your guide to being a first time home buyer.
Speaker 2: This episode could be your guide to paying down debt.
Speaker 2: It could be your guide to juicing your four O
Speaker 2: and K. Guess what money is fungible and everything that
Speaker 2: we're gonna talk about here on the show. Certainly in
Speaker 2: this episode, but like for the rest of the year,
Speaker 2: you can apply to whatever specific goals that you might
Speaker 2: have in your life. And so keep that in mind.
Speaker 2: We're not talking about money generically, but it is up
Speaker 2: to you to figure out what it is that you
Speaker 2: are that you're striving after, and hopefully, man, you really
Speaker 2: do need to think about this, because it's not just
Speaker 2: about increasing your net worth, right, Like, if you're somebody
Speaker 2: and you're just fueled by seeing bigger number, good, Like
Speaker 2: that's boring, you know, Like I hate to say it,
Speaker 2: but like I don't want to hang out with that
Speaker 2: kind of person, someone who is only interested in the stats.
Speaker 2: Like I don't know. I'm sure you might know as
Speaker 2: statistician who's very interesting and fun to be around, but
Speaker 2: like getting invited to Matt's Super Bowl party, it's just well, actually,
Speaker 2: I don't know. If you're playing the odds and you're
Speaker 2: doing more betting, we won't get into that right now,
Speaker 2: but I'm just saying that the people who are striving
Speaker 2: after like audacious, really cool, fun things. That is interesting,
Speaker 2: and I think that's what It just makes you a
Speaker 2: more well rounded person. And if you haven't done the
Speaker 2: work to identify what it is that you're making these
Speaker 2: sacrifices for man.
Speaker 1: That is your first step, and I think it's so easy.
Speaker 1: The further along you get into the personal finance sphere
Speaker 1: to you kind of start to understand how some of
Speaker 1: these accounts work. You start to actually realize the impact
Speaker 1: of compounding returns, and you're like, WHOA, that's really cool.
Speaker 1: My money is starting to work really hard for me.
Speaker 1: And at some point you even hit that place where
Speaker 1: maybe your money is working harder for you than you
Speaker 1: can work for it, and it's kind of enthralling. But
Speaker 1: that is also we strive to recognize that's not the
Speaker 1: end goal, because if that were the end goal, You're right, Matt,
Speaker 1: that is a really boring end goal. The goal the
Speaker 1: goal is to use that money to create a life
Speaker 1: that you can enjoy, and part of that does take
Speaker 1: some sacrifice now so you can set yourself up for
Speaker 1: more options down the road. But it doesn't mean full
Speaker 1: on deprivation now, that's for sure.
Speaker 2: Totally agree, And I don't know, Matt.
Speaker 1: I like the idea of coming a person who enjoys
Speaker 1: saving or who sees the value in fugality instead of
Speaker 1: like that kind of forced mechanism of like, I guess
Speaker 1: I got a handcuff myself so I can make progress
Speaker 1: with my money. Maybe instead of could your goal be
Speaker 1: to become the kind of person who enjoys some of
Speaker 1: those things. Maybe like, man, I gotta go to thrift
Speaker 1: store to save money instead of buying it on my
Speaker 1: favorite clothing retailer.
Speaker 2: Well, maybe you can turn turn it into.
Speaker 1: The fun of the hunt, right to find something that's
Speaker 1: completely undervalue to the thrift store, like your favorite name
Speaker 1: brand sweater or something like that that's five dollars instead of fifty. Like,
Speaker 1: that's a cool perspective to take on going to the
Speaker 1: thrift store.
Speaker 2: That's my identity is shifting this place. There's still a.
Speaker 1: Feeling like you have to or can you make cooking
Speaker 1: at home more delightful because I think for a lot
Speaker 1: of people it can feel really painful. How can you
Speaker 1: set yourself up for success on that front? Because the
Speaker 1: truth is, and we all know this, that eating out
Speaker 1: has got become incredibly expensive. The more you do it,
Speaker 1: the more money you are tossing down the drain. And
Speaker 1: it's okay to carve some money out for that in
Speaker 1: your budget, but maybe think of it as not just
Speaker 1: something you have to do to save money, but something
Speaker 1: that you can enjoy. Maybe whether it's like making the
Speaker 1: meal together with your spouse or something like that. I mean,
Speaker 1: whatever it is, I like the idea of becoming that
Speaker 1: kind of person. Like, one of my goals this past
Speaker 1: year was to run twelve hundred miles. And it wasn't
Speaker 1: literally just to hit that number crazy. It was not
Speaker 1: I have a friends who ran a lot more than that.
Speaker 1: They're even crazier than I am.
Speaker 2: But say, I feel like that's when there's like at
Speaker 2: a certain point it's too much, but I feel like
Speaker 2: you're not there yet.
Speaker 1: Yeah, we'll see if I get there, I'll try to refrain.
Speaker 1: I'll try to refrain. But like part of that goal
Speaker 1: was yet to hit a numerical number at the end
Speaker 1: of the rainbow. That was pretty arbitrary. But the other
Speaker 1: goal for me, the main goal for me, was to
Speaker 1: become the person. It wasn't like, oh, I'm training for
Speaker 1: this one race that I want to do well in.
Speaker 1: It was like, I want to be the kind of
Speaker 1: person who in twelve hundred miles. Literally I said one
Speaker 1: hundred miles a month because I wanted to be the
Speaker 1: kind of person who was consistent doing it regularly and
Speaker 1: and feeling you better because of it. You are a
Speaker 1: runner because this is who you are as opposed This
Speaker 1: is the kind of life that you're leading, as opposed
Speaker 1: to some arbitrary goal, is what you're saying. So guess what,
Speaker 1: the likelihood of me running like two hundred miles this
Speaker 1: year is not high because I have become the kind
Speaker 1: of person even though I don't actually I don't really
Speaker 1: know what my running goal is yet for this year,
Speaker 1: but I know it's not gonna be two hundred miles
Speaker 1: because I'm just the kind of person who enjoys running now.
Speaker 2: And I couldn't have said that four years ago. You've
Speaker 2: moved past that. Yeah, Like I think what I hear
Speaker 2: you saying is like it might be even worth considering
Speaker 2: like a theme for your year. So for some people,
Speaker 2: I think this could be the year of like, let's
Speaker 2: say you just are looking for some more financial clarity, right,
Speaker 2: like like you are someone who understands you've gained more
Speaker 2: insight about your financial mechanic, like where things are going,
Speaker 2: like the nuts and the bolts. Right. For others, I
Speaker 2: think the thing could be like a year of more
Speaker 2: intentional spending, especially if you found that you spent way
Speaker 2: too much over Christmas and you need a bit of
Speaker 2: a financial detox. But I really like this idea because
Speaker 2: it's less focusing on a specific numerical goal. It's less
Speaker 2: it's even less like, oh, I want to completely eliminate
Speaker 2: my student loans this year, or some folks are just
Speaker 2: like dudes, I'm so far away from being able to
Speaker 2: purchase my first home right like, So these are all
Speaker 2: the whole. These are all like the pot of gold
Speaker 2: at the end of the rainbow kind of goals. And
Speaker 2: what we're talking about instead are habits, and these are
Speaker 2: behaviors that you can put into action now before you
Speaker 2: even know what it is that you're looking to move towards.
Speaker 2: We talk about big savings goals for folks and having
Speaker 2: cash on hand in liquidity, and we always talk about
Speaker 2: how our tastes change and something new comes on the
Speaker 2: horizon and all of a sudden, I want a new
Speaker 2: car or whatever it is, right, And if you have
Speaker 2: worked towards building up just a savings bucket for something
Speaker 2: that you don't even know what it is that you
Speaker 2: want to spend on, yet, it's going to lead to
Speaker 2: you being able to achieve that obviously much quicker. And
Speaker 2: so in a similar way, this is I think by
Speaker 2: lashing onto a theme of different behaviors or actions that
Speaker 2: you might take, even without an end goal, I think
Speaker 2: that that's going to get you closer to whatever end
Speaker 2: goal it is that you might end up identifying. Yeah,
Speaker 2: later this year or a couple of years from now,
Speaker 2: but you are going to be in such a better
Speaker 2: financial position because of, hopefully some of the things that
Speaker 2: you've done here.
Speaker 1: From listening to the podcast, it makes me think of
Speaker 1: like families who come up with a motto, and I
Speaker 1: think we did that in a while back. I don't
Speaker 1: remember what it is now, Like I need to go
Speaker 1: back and revisit that, because I've seen other families who
Speaker 1: create one and they live by it right, And it's
Speaker 1: like in this family, we prioritize this, and then when
Speaker 1: you're trying to decide what you do with your time,
Speaker 1: your efforts, and your money, it's really easy to revisit
Speaker 1: that moto and be like, are we the kind of
Speaker 1: family who does this thing? Yeah, because it's in our motto,
Speaker 1: Like our motto says that we care about fun and
Speaker 1: so of course we're going to get the season pass
Speaker 1: to six Flags or whatever it is.
Speaker 2: But we're also the.
Speaker 1: Family who cares about generosity, but we're not the family
Speaker 1: who cares about this. And so like, maybe a theme,
Speaker 1: Maybe it's not this overarching, lifelong theme, but just a theme.
Speaker 2: For the year.
Speaker 1: And the truth is we go through seasons things ebb
Speaker 1: and flow, So maybe this season is maybe this year
Speaker 1: is like the year of less, a year of minimalism,
Speaker 1: a year of decluttering. Maybe you know, maybe it is
Speaker 1: the year where you're like, debt payoff, I'm going so hard,
Speaker 1: like this is going to be the year where I
Speaker 1: get rid of credit card debt finally and I'm done
Speaker 1: with it for good. Like but I love that idea
Speaker 1: of having a theme so that you could always revert
Speaker 1: back and be like, does this jive this move that
Speaker 1: I want to make with my money? Does this go
Speaker 1: along with what I'm trying to accomplish this year? And
Speaker 1: sometimes just a theme, a few words spoken over what
Speaker 1: you want to happen this year can make all the
Speaker 1: difference from a mindset perspective.
Speaker 2: Totally agree. Let's keep this party going, though we're going
Speaker 2: to take a quick break. But when we come back
Speaker 2: from the break, we're going to talk about the money gears,
Speaker 2: which is what you should be doing with your money
Speaker 2: and when you should be taking those actions. We'll get
Speaker 2: to that and more right after this. All right, we're
Speaker 2: back and that in just a bit.
Speaker 1: I want to talk let's talk about like the K
Speaker 1: shaped economy and specifically kind of where things are happening
Speaker 1: in what's happening in the economy right now, how people
Speaker 1: can identify where they are on that spectrum, and how
Speaker 1: we think that's like an informative way of thinking about things.
Speaker 1: But let's get to the money gears.
Speaker 2: Matt. I feel like the money gears is. It's basically,
Speaker 2: if you go to.
Speaker 1: The Ada money dot com you click start here, you'll
Speaker 1: see the money gears, and it's been our way of
Speaker 1: telling people an order of operations for your money so
Speaker 1: you can figure out, well, where am I along this
Speaker 1: spectrum in order to know what to do next. And
Speaker 1: we call it the money gears because you and I
Speaker 1: were fond of biking.
Speaker 2: We love biking. We still bike all the time, but
Speaker 2: biked here today, Will Okay, Yeah, I'm gonna explain it.
Speaker 2: And the reason we call it the money gears is
Speaker 2: because everyone knows. When you are at a standstill and
Speaker 2: you need to get biking, do you start on the tallest,
Speaker 2: most hardest, fastest gear. No, absolutely not in my fastest gear.
Speaker 2: I mean also, I can't turn the pedals if you
Speaker 2: would hurt yourself or you might even like break your bike.
Speaker 2: I mean eventually, yes, you will get rolling, but it's
Speaker 2: going to be like literally it could be painful. And
Speaker 2: in a similar way, you could start with more sophisticated investing.
Speaker 2: But you know what, if you don't have a basic
Speaker 2: emergency fund set aside, there are gonna be setbacks. You
Speaker 2: can essentially, when you're on a bike and you're on
Speaker 2: the proper gear, you can achieve your goal destination a
Speaker 2: lot more efficiently. You can, you can, I think, achieve
Speaker 2: it much quicker and in a similar way, that's what
Speaker 2: we think about the money gears. By going in order,
Speaker 2: we think that you're going to be in a stronger
Speaker 2: financial position.
Speaker 1: So you mentioned emergency fund. That is always, always has been,
Speaker 1: always will be money gear number one. We updated it
Speaker 1: this past year though, because of inflation. We updated the
Speaker 1: amount of money that you should be setting aside in
Speaker 1: your high yield save music account and I'll tell you why.
Speaker 1: I said hoig yield save us account just a second,
Speaker 1: But it used to be two four hundred and six
Speaker 1: and fifty seven. That's Arler, and that was because of
Speaker 1: a survey by economists, and they said that most people
Speaker 1: would be able to be able to get through an
Speaker 1: everyday emergency with that kind of cash on hand for
Speaker 1: without having to resort to using credit cards. Well adjusted
Speaker 1: for inflation, that number is now three thousand and forty
Speaker 1: five dollars. So that is the number we're rolling with
Speaker 1: right now, thirty forty five. Yeah, So if you can,
Speaker 1: if you haven't met this goal yet, that is going
Speaker 1: to be the first thing on your to do list
Speaker 1: is to find a way to slowly, surely get that
Speaker 1: money in a high old saves account. I say high
Speaker 1: old Saves account Matt too, because you and I were
Speaker 1: not fans of the big banks. They don't pay much
Speaker 1: on your money. They often have fees that are associated
Speaker 1: with your account that some of our favorite online banks
Speaker 1: do not. You could find those references to those our
Speaker 1: favorite online banks up on our website. But this is
Speaker 1: this is the first money gear and it is literally
Speaker 1: like the easiest way to get going it's gonna save
Speaker 1: you a lot of potential headaches down the road, if
Speaker 1: you like, If you don't have liquid cash on hand,
Speaker 1: it just puts you in a plethora of uncomfortable situations.
Speaker 2: That's right. So that's money gear number one. Money Gear two.
Speaker 2: The next most important thing to do is to get
Speaker 2: your company match if you have one available to you.
Speaker 2: If you are getting let's say, like a fifty percent
Speaker 2: or one hundred percent match in your four O one K,
Speaker 2: there is no greater return on your money. And jel
Speaker 2: do you know why I love money Gear number two
Speaker 2: in the fact that it's the second thing that most
Speaker 2: folks will pretty quickly be able to achieve. A side,
Speaker 2: Why do you love this? Is it because plenty of reasons?
Speaker 2: I love it? But why do you think I'm choosing
Speaker 2: it right now asking I'm asking you to step into
Speaker 2: my brain.
Speaker 1: That's the next one in line. But also, I think
Speaker 1: part of the reason you love this is because you've
Speaker 1: ever had access to one. You always wanted a match.
Speaker 2: That is true. Although you know we once we started
Speaker 2: this company, we we technically have a solo four one
Speaker 2: K and we matched, but you never had like that's
Speaker 2: still us A third party. Yeah. Yeah, it's just me
Speaker 2: taking off my employer hat and put taking off my
Speaker 2: employee hat podcaster hat and sticking on the What am
Speaker 2: I the CFO slash co founder employeer hat? I'll call
Speaker 2: you the CEO. I don't know if that's one, so
Speaker 2: also co founder. No. The reason I love it so
Speaker 2: much is because it is I'll be the c CEO,
Speaker 2: the chief creative officer. How does that sound? Oh, what's
Speaker 2: the CBA chief beer Officer. No. I really like it
Speaker 2: because it gives folks a taste early on of what
Speaker 2: it means to be an investor. Right. It gives you
Speaker 2: a taste early on of what it might feel like
Speaker 2: to have compounding returns work in your favor as opposed
Speaker 2: to against you, which a lot of folks that's that's
Speaker 2: how they experienced interest, Right. They experience having to pay
Speaker 2: more for less as opposed to as opposed to the opposite. Right.
Speaker 2: And so let's say you sock away like five thousand
Speaker 2: bucks into your four to one K and you got
Speaker 2: a match on you know, like five percent of your
Speaker 2: salary or something like that, and you basically at the
Speaker 2: end of the year you get to see that grow
Speaker 2: from five thousand to ten thousand at least, that's assuming
Speaker 2: zero percent return in the market.
Speaker 1: That's just the employer match. And then let's say there
Speaker 1: were returns.
Speaker 2: On top of that. Let's say it might be even
Speaker 2: more than that. Yeah, but like that's incredible, because early on,
Speaker 2: I think it can be disheartening. I think it can
Speaker 2: be demoralizing because you're working and you're like, oh, I
Speaker 2: feel like I thought I was investing, and then you
Speaker 2: look down. There's not a ton of money there. Man's
Speaker 2: it's fully purely one hundred percent dependent again, nine hundred
Speaker 2: percent dependent, Like there are some returns from the market,
Speaker 2: but your ability to grow your net worth by you
Speaker 2: sacrificing and you depositing that money into your account, Like,
Speaker 2: that's what it's predominantly dependent on. And you don't really
Speaker 2: get to experience those ways of compounding until much further
Speaker 2: down the road, right where your money starts working harder
Speaker 2: for you than you are. This is like a nice
Speaker 2: little foretaste of things to come where you can say, oh, man,
Speaker 2: not like there is and just an aspect of this
Speaker 2: that I am able to appreciate now, knowing that it'll
Speaker 2: be amplified even more down the road.
Speaker 1: I remember those first years being an investor. I had
Speaker 1: to trust what other people were saying to me that
Speaker 1: compounding returns were coming down the pike, because hard to
Speaker 1: believe it. It feels like, especially with like the low
Speaker 1: salary I was making shoving six or eight percent, then
Speaker 1: trying to grow it eventually into more. Putting that money
Speaker 1: into the four one k. Getting a little bit of
Speaker 1: a match, I was like, gosh, it still still feels paltry,
Speaker 1: Like how I'm never going to get like become wealthy
Speaker 1: this way?
Speaker 2: Yeah, did you have much of a match?
Speaker 1: I had a fifty percent match up to three percent?
Speaker 1: So if I put in six, they put in three, Okay,
Speaker 1: So I mean that's I would say that nothing. Actually,
Speaker 1: probably the average people are exactly expecting. And I've heard
Speaker 1: from more people actually this past year where their matt
Speaker 1: got cut. And that's a tough position to be in.
Speaker 1: But I think, give you know where things are with
Speaker 1: the economy, you might see more employers doing that. Then
Speaker 1: you have to like reassess how much I'm going to
Speaker 1: put in and how much is it worth it? But
Speaker 1: I think money year number two taking advantage of the match.
Speaker 2: You're right, it's you can't be the You can't be
Speaker 2: that return on that money, man.
Speaker 1: It's the free money. It's the investor mentality after that money.
Speaker 1: Year number three is to work towards paying down high
Speaker 1: interest credit card debt. And that was I think one
Speaker 1: of the top stories of this past year, Matt, was
Speaker 1: that credit card interest rates got worse, which means if
Speaker 1: you have revolving credit card debt, it is doing more
Speaker 1: damage to your finances than ever before. Instead of seventeen percent,
Speaker 1: it's like twenty two percent right on your credit card.
Speaker 1: It makes it harder to pay it off because you're
Speaker 1: accruing more interest. Our thing here is to make a
Speaker 1: plan to get it paid off quickly. And if you
Speaker 1: feel like you're in over your head, you might want
Speaker 1: to even turn to a nonprofit like Money Management International
Speaker 1: or something like that. Think about the website undebt dot.
Speaker 1: It is a good place to kind of create a
Speaker 1: plan plot up. That's a few and like DII Wyatt.
Speaker 2: Yeah, if you want a DIY and you still have
Speaker 2: if you feel like it's not completely out of control,
Speaker 2: that's a great great resource for me.
Speaker 1: Yeah, and you can kind of have them list the
Speaker 1: debts in order how much free cash do you have?
Speaker 1: List out those debts and how long is it going
Speaker 1: to take me to pay this debt off? I would
Speaker 1: think that actually AI would probably be a good tool
Speaker 1: for like in putting your debts and then saying, here's
Speaker 1: how much free cash I have? HUW should I attack this?
Speaker 2: Fascinating? I haven't done that yet. I've actually used it
Speaker 2: for some other things where I'm like trying to figure
Speaker 2: out Yeah some time. Doesn't that seem like that would
Speaker 2: be a perfect agains awesome? Yeah, I would like to
Speaker 2: think that, it would say, but depends on how you
Speaker 2: see the world. Yeah, what's the kind of nuance that
Speaker 2: you would expect to find here on how to money? Eachol? Right?
Speaker 2: Guaranteed human? Well, you know that's.
Speaker 1: Us I we I did episode six twenty back in
Speaker 1: the day, the full Proof Plan to ditch that. You
Speaker 1: can go back and listen to that, especially especially if
Speaker 1: you're new here. But that credit card debt, in particularly
Speaker 1: the high interest rate debt, is the kind of stuff
Speaker 1: that if you don't make a plan to stop the bleeding,
Speaker 1: it's triage, it's going to continue to be a massive
Speaker 1: problem for you. You have to have, Like I think
Speaker 1: that needs to be a square focus after the first
Speaker 1: two money gears, getting rid of that high intratrate debt.
Speaker 2: Yeah, it doesn't matter how much broccoli you're eating and
Speaker 2: if you're getting enough sleep and taking your vitamins and
Speaker 2: drinking enough water. If you're like bleeding out, you need
Speaker 2: to fix that first. And that's like, that's the same
Speaker 2: thing when it comes to cutting out some of these
Speaker 2: just the worst debts, and we'll get to some of
Speaker 2: the less worst debts, some of the lesser damaging debts.
Speaker 2: But it makes me think of like folks will talk
Speaker 2: about toxic relationships like that's something that's really bad, right,
Speaker 2: They're like, oh, yeah, I toxic relationships. And I don't
Speaker 2: know if this is this feels like counseling relational advice,
Speaker 2: but like imagine you got somebody in your life and
Speaker 2: you're like, man, every time I hang out with them,
Speaker 2: they just want to tear me down or they're discouraging
Speaker 2: blah blah blah, and you're like, I want to go
Speaker 2: find some new friends. I would venture to say that
Speaker 2: maybe you have to like be proactive about not hanging
Speaker 2: out with that some of those toxic relationships before you
Speaker 2: even have room in your mind, like before you have
Speaker 2: like the mental bandwidth to get out there and to
Speaker 2: meet some new folks. Or maybe it's you know, like
Speaker 2: a partner who wasn't that great for you, If that's
Speaker 2: somebody that needs to be completely cut out as opposed
Speaker 2: to like keeping it around and being like no, no, I
Speaker 2: can incorporate that relationship with these other relationships. I don't
Speaker 2: think that's how it works. I think that really bad
Speaker 2: relationship might end up like poisoning some of these other relationships.
Speaker 2: There are certain things that we have to completely remove
Speaker 2: in order to make some of the four progress. And
Speaker 2: I think this is an instance where like you're kind
Speaker 2: of streamlining too. It's like less is more, so like
Speaker 2: in this way, you know, because like again you're freeing
Speaker 2: up some of this mental bandwidth that you have in
Speaker 2: your mind is not just like running circles around itself
Speaker 2: trying to figure out how to just you know, make
Speaker 2: minimum payments on some of this credit card debt?
Speaker 1: Yees, so did your toxic relationships and your toxic debt
Speaker 1: in twenty twenty six debt? Yeah, Matt, I think you
Speaker 1: just inspired people in multiple fronts. Congratulations the relational event.
Speaker 2: Yeah, don't come to me for your relations advice.
Speaker 1: Money gear number four, so we'll move on. Then GOAT
Speaker 1: is really going back to the emergency fund. So money
Speaker 1: gear one, the basic emergency fund. Next, get the company match.
Speaker 1: Next is to pay down high interest debt and then
Speaker 1: go back and fully fund your emergence fund. And so
Speaker 1: much of how much money you need to save, there
Speaker 1: is no number, there's no patented stock number for this,
Speaker 1: like we did having money g you're number one because
Speaker 1: it depends on the specifics of your household income. Right
Speaker 1: three to six months should worth of expenses should suffice
Speaker 1: for most people. And the truth is three thousand and
Speaker 1: forty five dollars just isn't enough to get you through
Speaker 1: bigger emergencies that can come along. It does not allow
Speaker 1: for enough flexibility if you decide you want to make
Speaker 1: a big pivot in your life, or if some like yeah,
Speaker 1: let's say job loss or something like that, or you know,
Speaker 1: hits you, or some sort of terrible medical diagnosis comes along,
Speaker 1: the forty five dollars isn't going to be enough for
Speaker 1: you to have the flexibility you need if you're compatied
Speaker 1: with a larger emergency that three thousand dollars, that's like
Speaker 1: for basic stuff right, like, hey, my transmission just went out,
Speaker 1: and even that, I don't know, three thousand dollars quite competent.
Speaker 2: Oh yeah, transmission is the number one. I'm pretty sure, Agil.
Speaker 2: As I look at my twenty twelve into odyssey, that
Speaker 2: is the repair that might total the van for a
Speaker 2: big risk for you, It's like, yeah, it's just I've
Speaker 2: just as it shifts, I'm like, oh, is it starting
Speaker 2: to is it starting to slip a little bit. It's
Speaker 2: something that I'm trying to stay on top of it.
Speaker 2: If we get to that stage, I'm like, oh my gosh,
Speaker 2: we have to get a new ride.
Speaker 1: I recently changed the transmission fluid and helped make it
Speaker 1: shift a lot better.
Speaker 2: We talked about that. Yeah, privately, have you done it?
Speaker 2: My next goal change? I'm one percent okay because I don't.
Speaker 2: I was like, oh, dang, when's the last time I
Speaker 2: had a fluid flesh And I don't know if I've
Speaker 2: ever done that. Okay, it's time. There's some maintenance that
Speaker 2: we've stayed on top of, like clockwork, but then there's
Speaker 2: other things. When you bounce between different mechanics, it almost
Speaker 2: like resets the clock on some of these other also
Speaker 2: very important things that you need to do that are
Speaker 2: going to maintain the longevity of your car. But yeah,
Speaker 2: I think I've been a bit negligent. But let's keep
Speaker 2: moving money gear number five. You just mentioned your number
Speaker 2: four the fully funded emergency fund, oh, by the way,
Speaker 2: which you're totally going to keep where in your high
Speaker 2: deal savings account. This is not money that you invest
Speaker 2: because you need it to be there, liquid, ready to
Speaker 2: go in case case stuff hits the fan about money
Speaker 2: year five tax sheltered retirement accounts, that is what's next.
Speaker 2: You might be tempted to continue to hoard that cash
Speaker 2: because for the first time you're like, oh my gosh,
Speaker 2: this is what margin feels like. I can breathe. I
Speaker 2: am not living paycheck to paycheck. And you might think, oh,
Speaker 2: more of a good thing is just a good thing, right,
Speaker 2: And no, because investing is going to be key to
Speaker 2: outpacing inflation, it's going to be key to growing money
Speaker 2: for your future for retirement. And there are a whole
Speaker 2: slew of different accounts available and depending on where you work,
Speaker 2: you know, you might have access to a four to
Speaker 2: one K, you might have access to a TSP thrift
Speaker 2: Savings Plan four fifty seven B. If you're a teacher
Speaker 2: working for a nonprofit, you can also invest in an IR.
Speaker 2: We're big fans of the roth IRA never having to
Speaker 2: be taxed on those dollars ever. Again, but more than that,
Speaker 2: I think prioritizing low costs and versification. What you're not
Speaker 2: gonna hear us talk about are buying individual stocks. Occasionally
Speaker 2: we'll say because less than five percent, we're okay with that.
Speaker 2: For you to invest that much of your overall net
Speaker 2: worth in individual stocks just for fun, But like that
Speaker 2: should be I can't even believe I said that, because
Speaker 2: like that should just not even be an issue. If
Speaker 2: you are investing in tax deferred retirement accounts for the
Speaker 2: first time, you need to be looking at total stock
Speaker 2: index funds or the S and P five hundred and
Speaker 2: specifically paying attention to the expense ratios on that. Anything
Speaker 2: that's less than zero point two percent is okay. I
Speaker 2: would prefer to see folks, though, closer to like point
Speaker 2: zero three percent, because that's all it takes. Yeah, or
Speaker 2: if not free with Fidelity, you got the FC rocks.
Speaker 1: And there are a lot of personal finance folks out
Speaker 1: there who will talk a lot about a bunch of
Speaker 1: different investing tactics you can take. And the truth is, man,
Speaker 1: there's some really good content creators who are really smart
Speaker 1: out there in space. We've even had some of them
Speaker 1: on the podcast, even like Ben Felix, who we had
Speaker 1: on at the end of last year, talks a ton
Speaker 1: about investing. He's so smart. Loved talking to him. But
Speaker 1: it's also possible, especially for a show like this, to
Speaker 1: really over complicate things to actually the detriment I think
Speaker 1: of listeners, and so if you feel like you're at
Speaker 1: that place and you're like, man, I'm ready to create
Speaker 1: my own like twelve fun portfolio, there are awesome folks
Speaker 1: out there who you can listen to to figure that out.
Speaker 1: But I think for the vast majority of folks, Matt,
Speaker 1: they want just like simple and effective, low cost and diversified.
Speaker 1: And so that's really what we talk about here on
Speaker 1: the show.
Speaker 2: And that is literally how we invest as well. Yeah, exactly,
Speaker 2: ninety seven, ninety eight percent of my net worth is
Speaker 2: invested in either the total stock market index funds offered
Speaker 2: by Vanguard or Fidelity YEP, or S ANDP with Fidelity.
Speaker 1: And so until you're investing fifteen percent of your income,
Speaker 1: you're in money gear five. Don't beat yourself up if
Speaker 1: it's taking while I think we're talking about these money gears, Matt,
Speaker 1: like you just kind of moved through them like clockwork.
Speaker 1: The truth is, especially think about money gear number one
Speaker 1: might take somebody hopefully no longer than six months, but
Speaker 1: it just depends on a whole lot of what's going
Speaker 1: on in your financial scenario. Money gear number two that
Speaker 1: hopefully doesn't take too too long to get the full match.
Speaker 1: But like, the further you get along these money gears,
Speaker 1: the longer it's gonna take to build up like let's say,
Speaker 1: six months worth of expenses in a save these account.
Speaker 1: That can take a really, really long time. So yeah,
Speaker 1: be generous with yourself, be gracious. The same thing is
Speaker 1: true with money year number five. Until you're really investing
Speaker 1: fifteen percent, you're gonna be in money gear five. So
Speaker 1: money gear number five all about getting more money than
Speaker 1: into your investment accounts and just growing the amount of
Speaker 1: overall amount of your income that you're able to stash
Speaker 1: away for your future.
Speaker 2: That's right. Next, money gear number six, that's when you
Speaker 2: can start paying off low interest debt with vigor. And
Speaker 2: that could be if you've got one, that could be
Speaker 2: a car loan. It could mean paying more on your
Speaker 2: student loans than just the minimum. It could mean paying
Speaker 2: off a heelock home equity line of credit more quickly
Speaker 2: if you've if that's something that you've utilized. But in
Speaker 2: money Gear number six, we've got savings, we've become good investors,
Speaker 2: and now we are just eliminating some of the less offensive,
Speaker 2: some of the less nefarious kinds of debt. That being said,
Speaker 2: your mortgage. If you have a low rate interest rate
Speaker 2: home loan, mortgage, hold off, don't do that just yet. Yeah,
Speaker 2: that feels that's more like a money gear number seven.
Speaker 1: Action item, right, Although I will say in money Gear
Speaker 1: number six, if you were the kind of person if
Speaker 1: you bought a house that's say, in the last two years,
Speaker 1: and your interest rate is in that seven percent range, boom,
Speaker 1: that fits in money Gear number six, you might want
Speaker 1: to then be paying more towards your mortgage. Yeah, because
Speaker 1: it's you're not able to earn more legit just in
Speaker 1: a savings account than you are paying an interest right
Speaker 1: towards towards your home lender.
Speaker 2: Yeah, and you said seven percent because that's what's that's
Speaker 2: where it's If it's any more than that, absolutely slam dunk.
Speaker 2: Any less than that, that's when it's like it's tough,
Speaker 2: like that seven percent mark, it does not make it easy. Yep.
Speaker 1: So money gear number six is really about paying off
Speaker 1: a lot of those other kinds of debt, with the
Speaker 1: exception of the mortgage, or if you have some other
Speaker 1: kind of debt like I don't know, Matt from people
Speaker 1: who have student loans from twenty years ago, it might
Speaker 1: still be at a really low interest rate, Like maybe
Speaker 1: you can pump those off a little bit further, maybe
Speaker 1: I can make those a top priority. And it's been
Speaker 1: fun this year. Matter of fact, I feel like we've
Speaker 1: seen a lot more money. How the money listeners reach
Speaker 1: money gear number seven. Once you get here, yeah, you
Speaker 1: can go in a million different directions, Like you can
Speaker 1: go back to school to pursue another career. You can
Speaker 1: pay for it with savings that you've been able to
Speaker 1: ramp up, or you can increase your investment percentage so
Speaker 1: you can reach financial independence sooner. So instead of stopping
Speaker 1: at that fifteen percent of your income, now you're like, boom,
Speaker 1: let me see if I can hit twenty or thirty
Speaker 1: percent of my income just in money that I'm putting
Speaker 1: into my investment accounts every month. That's a cool goal,
Speaker 1: and it just allows you a lot more flexibility, sooner
Speaker 1: you can take a sabbatical. We've got episodes on that
Speaker 1: we took a sabbatical this summer. That was one of
Speaker 1: those things where like we're buying more of our time back.
Speaker 1: The truth is, once you're hitting those later money gears,
Speaker 1: you're kind of cruising downhill. And a lot of folks
Speaker 1: never achieve this. But I think a whole lot of
Speaker 1: people in the how to Money community mat are going
Speaker 1: to And it's not even because they make six salaries.
Speaker 1: It's not like we've got everyone who lives in Silicon
Speaker 1: Valley listening to this podcast. But it's because the people
Speaker 1: who listen to this podcast are living intentionally. They're watching,
Speaker 1: they're spending their prioritizing investing over consumption they could be
Speaker 1: doing in the here and now, and they value the
Speaker 1: lifestyle that you can't buy on Amazon right as the
Speaker 1: Grinch would have said a few weeks ago, like it
Speaker 1: came without packages, boxes or bags like that. We realize,
Speaker 1: as how to money people that the truth is, the
Speaker 1: best things in life are not consumables, and consumables can
Speaker 1: be good, but they're not the end all be all.
Speaker 2: That's right, But we've got more to get to. Man.
Speaker 2: We are going to cover some additional steps that you
Speaker 2: can take to help your money to go further for
Speaker 2: you to reach your financial goals. We'll get to all
Speaker 2: that right after this.
Speaker 1: All right, Matt, We're back talked about the money gears,
Speaker 1: which I think is just such a helpful framework for
Speaker 1: most people just who are new to personal finance to
Speaker 1: figure out. And even if you've been listening for a while,
Speaker 1: you're like, oh, man, that's a good refresher. I forgot
Speaker 1: where am I at? Oh I'm on money gear number four. Okay,
Speaker 1: that's what I need to do next. It's a good idea,
Speaker 1: and we'll link to it in the show notes, but
Speaker 1: it's also on the start here button of our homepage
Speaker 1: if you're like, I need to do more digging into
Speaker 1: those and how they function. We just kind of gave
Speaker 1: a brief overview. We actually have individual articles for every
Speaker 1: money gear so that you can dig in and see
Speaker 1: exactly how to attack it. But let's get a little
Speaker 1: more current here. For the last section, Matt, and maybe
Speaker 1: we'll even share our own priorities for twenty twenty six,
Speaker 1: our financial priorities here at the end of this episode.
Speaker 1: But I want to talk about the K shaped economy
Speaker 1: for just a second. We've talked about like where you
Speaker 1: are in the money gears, but it's also important to
Speaker 1: think about what trajectory you're on. And we just hear
Speaker 1: so much in the media about the extremes, like the
Speaker 1: richest folks in the world, the people with multiple yachts,
Speaker 1: and then folks living in impoverished situations. But I was
Speaker 1: talking to my friend Pam recently Matt about this, and
Speaker 1: we agreed that the K shaped visual is more accurate
Speaker 1: and more representative, more helpful. I think that we exist
Speaker 1: along a spectrum typically, and sometimes we're moving up that spectrum,
Speaker 1: sometimes we're moving down it, or maybe we feel like
Speaker 1: we're staying static. We're just kind of in the middle
Speaker 1: of the K. And that K is like really just like, hey,
Speaker 1: who's making improvements, doing better whether it comes to income
Speaker 1: and lifestyle and the downward part of the K where
Speaker 1: people feel like they're not doing as well as they
Speaker 1: used to do. And I think people are increasingly worried
Speaker 1: about the possibility of moving down rather than up. I
Speaker 1: do think that's something that's on the top of people's minds,
Speaker 1: especially higher prices and stuff like that. But instead of
Speaker 1: thinking about the average or the extremes, I think the
Speaker 1: visual can help you think more about your specific situation,
Speaker 1: how you're doing right now, and where you feel like
Speaker 1: you're headed, because I think that has so much to
Speaker 1: do with how we feel about our money in our lives.
Speaker 2: Yeah, yeah, I agree, but yeah, hopefully folks are when
Speaker 2: they see, like you say, K shaped economy and everyone
Speaker 2: pictures the K and you're like, well, hopefully, like I
Speaker 2: want to be on the K part that's going up.
Speaker 2: And I mean, I do think that there are a
Speaker 2: lot of listeners that is where they are. I do
Speaker 2: think that there are a lot of folks and they're
Speaker 2: they're encouraged by what's ahead. Like I always get frustrated
Speaker 2: when folks talk about how gen Z, how they're just
Speaker 2: so poor, But I'm like, these are this is the
Speaker 2: generation that just finished college, Like, this is the generation
Speaker 2: that's in their first job where they are making How
Speaker 2: much did you make, Joel in your first job?
Speaker 1: I mean, I was part time in my literal first
Speaker 1: job out and then my first time job. I want
Speaker 1: to say I made like twenty four thousand dollars adjusted
Speaker 1: for inflation.
Speaker 2: I don't know what that would be same. So in
Speaker 2: preparation for the New year thirties, Kate and I, well,
Speaker 2: then I made less than you because my take home
Speaker 2: was less than twenty one thousand dollars. Wow. In two
Speaker 2: thousand and seven, and Kate, we were looking over our
Speaker 2: budget for the year as we're just kind of seeing
Speaker 2: how we did in twenty twenty five things together, Like literally,
Speaker 2: at the beginning of two thousand and seven, I had
Speaker 2: eight hundred and sixty eight dollars to my name, Like
Speaker 2: that's how much money I had in my savings account.
Speaker 2: And guess what if you would have were to have
Speaker 2: taken a snapshot right then they'd be like, guess what
Speaker 2: millennials are so broke? Well, and they wrote those headlines
Speaker 2: and they did, but like I'm just saying that those
Speaker 2: headlines do not define you who are listening to this
Speaker 2: and you are feeling like, oh my gosh, these guys
Speaker 2: are talking about setting aside six months of living expenses,
Speaker 2: Like I don't even have it enough to hardly pay
Speaker 2: rent this this month to a certain extent, like we've
Speaker 2: all been there, but I think that you've got what
Speaker 2: it takes to be able to climb out of that.
Speaker 2: And I want to see folks just identifying with that
Speaker 2: k part that's going up as opposed to being like, yeah,
Speaker 2: like the slow, lazy part of the downward kave that's
Speaker 2: just like, yeah, it's going to peter out here for
Speaker 2: a little bit and then things aren't going to be
Speaker 2: looking up for me anymore. Well, I think that we've
Speaker 2: got a lot of listeners who are going to be
Speaker 2: optimistic about what liza ahead.
Speaker 1: And I also I get frustrated with the people who
Speaker 1: crap on the small ways that you can claw back
Speaker 1: money and you're life. Like we talked about frugality earlier
Speaker 1: and how much of an impact that can have, because
Speaker 1: I do think every dollar, especially in those early years
Speaker 1: as you're trying to get that like Garner your first
Speaker 1: ten thousand dollars in investments and then moving on up
Speaker 1: that curve, like it's if every dollar matters, feels like
Speaker 1: it matters more in those early years. And the reason
Speaker 1: is that's true. Like when we talked with Brian Preston
Speaker 1: the money guy, like he talks about how his koozy.
Speaker 1: It's like this one dollar beer cost me eighty eight dollars.
Speaker 1: And it's because a dollar invested really early on in
Speaker 1: your life, let's say, when you're like twenty, can really
Speaker 1: turn into eighty eight dollars later. A dollar invested at
Speaker 1: the age fifty guess what it's it's it's not gonna
Speaker 1: be worth eighty eight dollars unless you live to like
Speaker 1: one forty or something like that, right, which is not
Speaker 1: going to happen unless our AI overlords say that it will.
Speaker 2: But like if they allow it, if if they hook
Speaker 2: you up to some sort of power generating machine and
Speaker 2: you've got a plug into your Spinengel rather the matrix,
Speaker 2: which nobody even knows that reference anymore.
Speaker 1: But probably right, So, my gosh, that's still worth watching.
Speaker 1: I went back to watch it like a year ago,
Speaker 1: did you great?
Speaker 2: Classic? Yeah?
Speaker 1: Well, and I think like this also just say hey
Speaker 1: where are you? We'll also have some say over like
Speaker 1: what you do next with your money and how much
Speaker 1: Let's say, go back to money gear number four fully
Speaker 1: funding your emergency fund. Well, let's say you are a
Speaker 1: two parent household but you've got one income and that
Speaker 1: income feels really precarious right now, you might want to
Speaker 1: ramp up your savings beyond six months, like you might
Speaker 1: even say, actually I need nine to twelve because.
Speaker 2: Depends on your level of risk.
Speaker 1: Yeah, I work in an industry and my job, by
Speaker 1: career is a little more at risk. These are all
Speaker 1: things to take in mind, and like with economic fluctuations,
Speaker 1: it's just crucial to build more resilience into your financial plan.
Speaker 2: That's right. You know this makes me think too, how
Speaker 2: it's just so important to not do this alone. I
Speaker 2: think it's so important to find friends who are down
Speaker 2: to talk about money, and I would point folks to
Speaker 2: join the how to Money Facebook group. If you spend
Speaker 2: any time at all on Facebook, the only time I
Speaker 2: do spend on time, The only time I do spend
Speaker 2: on Facebook deal is if I'm like, you'll reference something
Speaker 2: that's going on in the Facebook group and I'm like, oh,
Speaker 2: let me let me go check it out. Or Facebook
Speaker 2: Marketplace actually those area, it's the groups in Marketplace. The
Speaker 2: only two good things about Facebook.
Speaker 1: And I actually plug for the Facebook feed eradicator plug
Speaker 1: in so that even when I go to Facebook on
Speaker 1: my desktop. I'm not confronted with any posts, and so
Speaker 1: it's just like you literally get sucked into that hole. No,
Speaker 1: it's like a Buddhist quote or something like that. Usually
Speaker 1: that sits there where the feed would be, and so
Speaker 1: I just go directly to the groups or directly to marketplace.
Speaker 1: I don't have to see any of that nonsense.
Speaker 2: Yeah, but I mean one of the goals of the
Speaker 2: show is for us to talk about personal finance, to
Speaker 2: talk about money, to talk about what you're spending, how
Speaker 2: much you're investing, and that's not typically something that happens
Speaker 2: in real life. It's why we have the show. It's
Speaker 2: why we encourage folks to head over to the Facebook group,
Speaker 2: because they do do that, but we also want you
Speaker 2: to get out there and touch grass and work to
Speaker 2: talk about these types of topics in real life. And Joel,
Speaker 2: this is something that you and I that we literally
Speaker 2: were doing before we started the podcast. Like literally, the
Speaker 2: original show is called Poor not Poor mm hmm, and
Speaker 2: maybe you can imagine why we called it that. Originally,
Speaker 2: it's still the name of our LLC, which I love,
Speaker 2: but we changed the name of the show to how
Speaker 2: to Money because it's more searchable But we were talking
Speaker 2: about these things before we started the stupid podcast because
Speaker 2: we enjoyed it and we saw that, oh my gosh,
Speaker 2: by challenging each other, we are ending up in better places.
Speaker 2: I know I am in a better position because of
Speaker 2: our friendship, my friend same money winds in another way. Yes,
Speaker 2: it's not just about the money, but it is how
Speaker 2: to money, after all. But to have these conversations with
Speaker 2: your spouse, with your partner, with your friends and man
Speaker 2: the I know that this is life changing. I know
Speaker 2: that the trajectory like where my family is right now, Jill,
Speaker 2: it would not be it probably it would probably be
Speaker 2: pretty close had we never met. But I know I
Speaker 2: am in a better position because of our friendship. It's
Speaker 2: a bunch of little things over time, yeah, stretched out
Speaker 2: over the years. Those returns they compound. And we hear
Speaker 2: from listeners too, like a little I was getting back
Speaker 2: to an emailer, a listener this morning on email, and
Speaker 2: she was talking about how I think she said it
Speaker 2: was like life changing information is what she called it.
Speaker 2: It's just a short little sentence. But what that told
Speaker 2: me was that she is not only listening, but she
Speaker 2: is putting into action some of the stuff that we
Speaker 2: talk about and year after year, decade after dec I mean,
Speaker 2: I've been the stuff that we talk about like this,
Speaker 2: the quote unquote plan, Like I've effectively been doing that
Speaker 2: for over twenty years now, and it's no surprise that
Speaker 2: you see your net worth grow and you see how
Speaker 2: it is that you view consumption and how it is
Speaker 2: that you perceive enjoyment in the here versus enjoyment and
Speaker 2: then now like, these are things that you think about
Speaker 2: and it takes time, but I want to encourage folks
Speaker 2: to have these conversations not only with your friends, your partners,
Speaker 2: but also online.
Speaker 1: Yeah, I mean, you're making me think too about One
Speaker 1: of the one of the trends that we covered maybe
Speaker 1: early in twenty twenty five was loud budgeting, where people
Speaker 1: were just like on social media, like yelling out the
Speaker 1: ways that they were trying to save money and people
Speaker 1: and just kind of making frugality normalizing it a little bit.
Speaker 1: And I think there is this really important thing about
Speaker 1: putting your hopes, your dreams, your goals out there in
Speaker 1: front of the people who love and care about you
Speaker 1: so they can ask about it. Like one of my
Speaker 1: friends at the end of last year, he wants to
Speaker 1: start a podcast. He wants to launch his first episode
Speaker 1: in the next week or so he was, and so
Speaker 1: he reached out to me in early December and he
Speaker 1: was like, hey, man, can you stay on me? Can
Speaker 1: you text me about this? And there's something about when
Speaker 1: you say he told me this is what I want
Speaker 1: to do, and then he was like, can you help me?
Speaker 1: And man, bringing a friend into that alongside with you
Speaker 1: is such a beautiful thing. So yeah, you better believe
Speaker 1: I pestered him and I texted him, hasn't going, man, like,
Speaker 1: how you making progress?
Speaker 2: So that's the topic.
Speaker 1: So it's actually he's worked for like a radio music station,
Speaker 1: and so it's about like celebrity encounters.
Speaker 2: Oh yeah, super cool.
Speaker 1: Yeah, like a down to or a celebrity account of podcast.
Speaker 1: So I'm curious to hear the first episode, which should
Speaker 1: be coming out shortly. I'll text him again after we
Speaker 1: finished recording here. Yeah, but that's the kind of thing
Speaker 1: where when you say it out loud and when you
Speaker 1: involve others in your plan, the plan is just so
Speaker 1: much more likely to succeed than just keeping it locked
Speaker 1: in your head.
Speaker 2: I love it. Do you wanna do you want to do?
Speaker 2: You have any financial goals, Like we talked about goals
Speaker 2: in the first you want to share any that you've
Speaker 2: got for twenty twenty six.
Speaker 1: Okay, So I don't have any audacious money goals for
Speaker 1: twenty twenty six.
Speaker 2: I think like I want to keep on, keep it on.
Speaker 1: It's sort of like and I think that's okay, right.
Speaker 1: There were a lot of years I had really really
Speaker 1: big goals, and I think my goal right now is
Speaker 1: actually to use more of the freedom that I've gained
Speaker 1: using it well yeah, boy, right, Like speaking my language,
Speaker 1: part of that is like, hey, supporting my wife and
Speaker 1: her new and budding career, like that's a big part
Speaker 1: of it, while still like building how the money and
Speaker 1: having fun doing the work that we enjoy doing doing
Speaker 1: it together. I think maybe if I was to call
Speaker 1: out one big account that I care about this year
Speaker 1: that like three years ago, if you'd ask me if
Speaker 1: it mattered to me, I would have been like, not really,
Speaker 1: the five twenty nine account. I'm putting more money into
Speaker 1: the five twenty nines for my kids.
Speaker 2: But also you've been doing this for twenty years, right,
Speaker 2: and so like that's a priority that it's a money
Speaker 2: Gear seven priority that's a money gear seven kind of priority,
Speaker 2: and a lot of folks will start putting the cart
Speaker 2: before the horse, and like, ma, man, like, there's a
Speaker 2: lot of different ways that you can pay for college,
Speaker 2: assuming your kid even goes to college. And I know
Speaker 2: everyone's like, well, of course my kid is going to
Speaker 2: go to college. You don't know, like there's a good
Speaker 2: chance they will, but at least some room for their
Speaker 2: own decision making in autonomy. Well, which is why you
Speaker 2: it's less of a priority, but not it's still super important.
Speaker 2: And I'm glad you're doing that well.
Speaker 1: And like we've talked about, the changes to make five
Speaker 1: twenty nine plans more flexible has made them at least
Speaker 1: more interesting, Like from a parental perspective. Part of that
Speaker 1: is too, because you can now pay for K through
Speaker 1: twelve education with five twenty nine dollars. And so I
Speaker 1: did not think our family would be a private school
Speaker 1: family until this last year in our oldest of three.
Speaker 1: It was the right move for her, for us to
Speaker 1: do for her. And so the five twenty nine dollars,
Speaker 1: it's like, hey, boom, if I stick more money in there,
Speaker 1: I get a tax break at least on the money
Speaker 1: I'm working over and yeah, I will say it kills me,
Speaker 1: but it doesn't like it actually makes me really happy
Speaker 1: to spend that money, even though I was like, we're
Speaker 1: public school people.
Speaker 2: I was a public school shild it should and like
Speaker 2: you're you're personal financing it by calling it. You know,
Speaker 2: we're going to talk more money into the five twenty nine,
Speaker 2: But what you're paying for is your values and your
Speaker 2: and your priorities today, right, Like if you're using a
Speaker 2: lot of those dollars to go towards that, and that's okay,
Speaker 2: that's my craft beer equivalent that costs a lot more
Speaker 2: than this IRPA. There you go, and that's I think
Speaker 2: that's totally fine. In a similar way, like I don't
Speaker 2: have again, like we've been at this for so long
Speaker 2: that you look up and you're like, wait a minute,
Speaker 2: how much money do we have set aside? Like not
Speaker 2: only in retirement accounts but other investment accounts. And it's
Speaker 2: just impressive what you can do by doing the hard,
Speaker 2: fiscally responsible thing year after year. And I have very
Speaker 2: few like serious financial goals like my I mean, we
Speaker 2: talked about this years ago, how we're like Coast five,
Speaker 2: but like I mean Kate and I were financially independent
Speaker 2: to what extent it varies on what we choose to
Speaker 2: spend our money on, right, Like, you can't you know,
Speaker 2: we can't. I can't pick up some expensive hobby if
Speaker 2: you develop those caveard tastes. Maybe no, maybe I'll work
Speaker 2: for another year. But like, but that speaks to just
Speaker 2: a different approach towards retirement as well, Like we're not
Speaker 2: I'm not interested in kicking back and doing nothing and
Speaker 2: just relaxing and going and playing golf. If I pick
Speaker 2: up golf, I do have to work for another two
Speaker 2: years because that's a really expensive sport, no shade, It
Speaker 2: takes a lot of time too.
Speaker 1: If you like to play golf, everybody plays every Friday,
Speaker 1: and I'm like, go for you.
Speaker 2: Yeahhh, no hate there. But similarly to you, like I
Speaker 2: think about lifestyle and some of the different things I
Speaker 2: want to achieve in my life, being able to pour
Speaker 2: into relationships, and I feel like I've done that really
Speaker 2: well with my wife. I mean, we've done a whole
Speaker 2: lot this past year where we've instituted regular things that
Speaker 2: grow and where we feel more connected than ever And
Speaker 2: it's honestly, it's amazing. Same with the kids, but even
Speaker 2: beyond that other friends, and I think that's not something
Speaker 2: I've done as good of a job on over time.
Speaker 2: And you look at the Harvard Happiness Study, all right,
Speaker 2: it's like it's the longest standing longitudinal study on happiness,
Speaker 2: and the number one thing the quality of close relationships.
Speaker 2: And oftentimes we don't have time for relationships, because why
Speaker 2: what do we spend two thirds of our life doing
Speaker 2: half of our waking hours doing Joel, working oftentimes to
Speaker 2: pay for the things that we've chosen to purchase or
Speaker 2: that we have financed, and we're not putting our efforts
Speaker 2: in our time towards the things that are going to
Speaker 2: actually bring us true happiness. And so for me, that's something, honestly,
Speaker 2: like that's more of a priority for me. It's less
Speaker 2: the financial We're pretty comfortable. I'm still going to continue
Speaker 2: to work because I love doing this podcast with you.
Speaker 2: Don't you folks worry about the feed going cold? Even
Speaker 2: if I let it go cold. I don't think you
Speaker 2: would let it go cold, Joel. I think to say, Matt,
Speaker 2: me too, me too, as as evidenced by this rant.
Speaker 2: But more than anything, we have a community that like
Speaker 2: we care about Yes, we care. We want folks to
Speaker 2: make some like some of the things that we've been
Speaker 2: able to experience over the years. I want so I
Speaker 2: want everybody listening to also be able to experience that
Speaker 2: and share the joy of the optionality that you've purchased
Speaker 2: for yourself. Yeah.
Speaker 1: I feel like this is the perfect way to end
Speaker 1: an episode for the new year. I feel like there's
Speaker 1: so many other things we could toss in here, but
Speaker 1: we're not. We're gonna stop it there, and we'll say
Speaker 1: that for Wednesday.
Speaker 2: Yes, that's right. For next Monday's episode, we will you.
Speaker 1: Stick with of money? Hit subscribe and just yeah, please
Speaker 1: do ride with us. And if you have money questions,
Speaker 1: especially after listening to this episode, you're like, I think
Speaker 1: I'm in this gear?
Speaker 2: What do I do now?
Speaker 1: Like, please toss them our way. We'd love to take them.
Speaker 1: Next week we'll be back to regular programming and answering
Speaker 1: your listener questions. But that's that's one of my favorite
Speaker 1: parts of this show. And look forward to riding.
Speaker 2: With you this year. Let's do it. Man. Should we
Speaker 2: get back to the beer real quick? We should make
Speaker 2: it quick. I just noticed that we are over or
Speaker 2: we're like right out an hour, which I can't believe
Speaker 2: we went that long, I know, but when you've.
Speaker 1: Got stuff to say and when you're having fun, yeah,
Speaker 1: i'd say this ipa from Burial it was like classic.
Speaker 1: It was like a low key ipa from one of
Speaker 1: the goats. It was. It was not like overly ridiculous.
Speaker 1: Some of the Burial IPAs are just like so happy
Speaker 1: that makes your brain melt. I would say this one
Speaker 1: did not quite hit that level. But yeah, this one
Speaker 1: kind of had like the juicy hotness going on. Like
Speaker 1: this reminded me of a classic New England hazy ipa,
Speaker 1: Like it had the happiness going on, but it was
Speaker 1: more like a like an earthy happiness mixed with some
Speaker 1: of that some of that juice. And I part of
Speaker 1: me wonders if we let this one sit too long
Speaker 1: in the fridge from last year, like it it almost
Speaker 1: tastes does it taste a little bit old to you?
Speaker 1: I pas, you want to drink as fresh as possible,
Speaker 1: And this is one that almost had some almost like
Speaker 1: metallocky kind of flavor, you know, like canned fruit juices,
Speaker 1: like the giant can of dull pineapple juice, like it's
Speaker 1: kind of metallocky, it's kind of tinny.
Speaker 2: I love that flavor. For some reason, you should be
Speaker 2: sitting on all your classes. I should burial I. I
Speaker 2: feel like it had a little bit of that, but
Speaker 2: honestly it didn't detract too much at all from the
Speaker 2: overall enjoyment. Yeah, we'll keep drinking good beer kee. I
Speaker 2: got to enjoy it. Yeah, all right, that's gonna do it.
Speaker 1: For this episode, we'll have links to some of the
Speaker 1: resources we mentioned up on the site. I had the
Speaker 1: money dot com.
Speaker 2: You know it. And until next time, best Friends Out,
Speaker 2: Best Friends Out.