Speaker 1: Pushkin. Hey everyone, this is justin Richmond. I'm really excited
Speaker 1: to tell you that Pushkin's Against the Rules podcast is
Speaker 1: back for its second season. Against the Rules is the
Speaker 1: brainchild of Michael Lewis, the thought of a lot of
Speaker 1: great books, but three of which turn into movies. I'm
Speaker 1: sure you've seen Moneyball, The Big Short, and The blind Side.
Speaker 1: Michael's an incredible storyteller, and his podcast is no different.
Speaker 1: Against the Rules looks at fairness in every aspect of
Speaker 1: American life, and this season, Michael returns with a very
Speaker 1: special series on coaches. They used to be confined to
Speaker 1: just sports, but I'm sure you've noticed now that coaches
Speaker 1: are everywhere. Life coaches, death coaches, writing coaches, business coaches.
Speaker 1: You can hire a coach to improve your executive skills,
Speaker 1: your online dating performance, even your charisma. But coaching has
Speaker 1: also become an odd source of unfairness. Just look around
Speaker 1: and ask yourself who has access to these coaches and
Speaker 1: who doesn't. Stay tuned to hear the first episode of
Speaker 1: Against the Rules right here, and be sure to subscribe
Speaker 1: to hear the rest of this great season. Welcome to
Speaker 1: season two of Against the Rules. I'm Michael Lewis. Before
Speaker 1: we get to where we're going, I want to go
Speaker 1: back for a moment to where we've been a little
Speaker 1: backstory from season one. The story involves a woman named
Speaker 1: Katie Highland. She's in her late thirties, a public school teacher, wife,
Speaker 1: mother of two small children. Her entire adult life, she'd
Speaker 1: been made miserable by student loan she'd taken out when
Speaker 1: she was eighteen years old. I don't see any payoff,
Speaker 1: and it just keeps getting harder and harder, and that's
Speaker 1: soul crushing her state of mind. Well, even her children
Speaker 1: could see it wasn't good. It might be actually kind
Speaker 1: of painful for her, because all of this counts with
Speaker 1: a bell and getting something changed to another thing that's
Speaker 1: the same, but changing to it. I love you, feel well,
Speaker 1: it does feel kind of painful, right, mommy. Yeah, A
Speaker 1: lot of the paper is yeah there, it's a lot
Speaker 1: of paperwork. It's a lot of and a lot of
Speaker 1: pain for doing it. This killed me to hear, but
Speaker 1: especially this next part. It is very good to be
Speaker 1: thoughtful for everybody. But the person who's the most best
Speaker 1: person on earth is this lady right there, this lady
Speaker 1: Jackson's mom Katie Highland shouldn't have owed anybody a dime.
Speaker 1: That was the point of the story. Katie had qualified
Speaker 1: years ago for a program that Congress created to forgive
Speaker 1: the student loans of public servants, but her student loan
Speaker 1: servicer made money offer only as long as she still
Speaker 1: owed the money, and they had more or less tricked
Speaker 1: her to keep her in debt. I like to try
Speaker 1: to always find the good in people, and when you
Speaker 1: have experiences like my experience, you get discouraged and you
Speaker 1: start to think that people aren't as good as you
Speaker 1: once thought they were. Sometimes you stumble onto a story
Speaker 1: and you can't get it out of your head. Katie
Speaker 1: Hyland had played by the rules, made all her loan payments,
Speaker 1: thrown herself into being a good mother and a great teacher,
Speaker 1: and she'd been abused by the company that was meant
Speaker 1: to help her navigate her finances, and the Consumer Financial
Speaker 1: Protection Bureau, the one financial referee that might have stepped
Speaker 1: in to help her, was doing nothing to help. So
Speaker 1: we decided to help on the website go fund me
Speaker 1: to try to pay off Katie's student loans. When I
Speaker 1: looked at the page, and I think I saw at
Speaker 1: that time that it was like eleven thousand dollars. I
Speaker 1: was completely blown away. I was at my son's baseball game.
Speaker 1: I remember I showed my mom. We were like freaking
Speaker 1: out about it and just reading people's responses and the
Speaker 1: encouraging words, and like where people were from. There were
Speaker 1: people from Ireland, there were people from England. We started
Speaker 1: this campaign two months after the show originally aired, so
Speaker 1: after most people had listened to it. Even then, it
Speaker 1: took you, our listeners less than three months to pay
Speaker 1: off fifty thousand dollars. And I think the last person
Speaker 1: that donated donated like enough to like hit it, and
Speaker 1: it was just so I was like, oh my god, Mom,
Speaker 1: like it happened. We did it, and I can't even
Speaker 1: tell it's because you said to me in one email,
Speaker 1: like just pay it forward or just do it for
Speaker 1: someone else. And every go fund meat campaign that I see,
Speaker 1: I make it a point to do the same, even
Speaker 1: if it's ten twenty whatever I can do. Now, don't
Speaker 1: you dare go get into debt again. I thought that
Speaker 1: would be the end of the story, but there was
Speaker 1: a lot more to it. Of course, there was more
Speaker 1: to it. I mean, Katie had told us that financial
Speaker 1: stress had caused her to grind her teeth at night,
Speaker 1: and she started losing her teeth. She used to smile
Speaker 1: all the time. Now she avoided smiling, and along the way,
Speaker 1: she'd picked up another debt problem. Already, I'm on a
Speaker 1: payment plan with a dentist like five hundred dollars a week.
Speaker 1: I've spent like thirty thousand dollars. I've lost a bunch
Speaker 1: of teeth through the grinding and all of that. That
Speaker 1: part has been really difficult. So I still have a lot,
Speaker 1: you know, remaining with that. It's still a lot to
Speaker 1: pay off, still a lot of dental work to get done.
Speaker 1: So you do have credit card debt? Yeah, I have
Speaker 1: credit card debt. Any big purchases that I've had to make,
Speaker 1: I've put on credit cards. US. You're a very lucky
Speaker 1: kind of American. You may recognize yourself here. You try
Speaker 1: to do prudent things to save money, like drop the
Speaker 1: vision coverage on your health insurance. Then suddenly your daughter
Speaker 1: needs glasses. That was the kind of thing that Katie
Speaker 1: and her husband did that wound up biting them. They
Speaker 1: now have five credit cards between them, all charging high
Speaker 1: interest rates. Even though their credit score is great. Personally,
Speaker 1: I just want to not be scared to look at
Speaker 1: my bank account. I don't think I've looked at my
Speaker 1: bank account in years, to be honest. I just, yeah,
Speaker 1: that's not a good I know that's not healthy, but
Speaker 1: I don't know why. It's just like terrifies me. I'm
Speaker 1: I'm not sure why. The credit card industry already had
Speaker 1: her by the throat. She was ashamed of it, and
Speaker 1: she had no sense that anyone would help this time. Well,
Speaker 1: so here's my goal. My goal season one, the goal
Speaker 1: was to get rid of your student debt. In season
Speaker 1: two as they restore your smile. So that's what we're
Speaker 1: going to try to do, all right, Okay, thanks Michael.
Speaker 1: I'm Michael Lewis, and this is against the rules. Last
Speaker 1: season was about referees, the attack on our societies. Refs
Speaker 1: is obviously a big problem. This season is about coaches. Yeah,
Speaker 1: what are you doing and their rise in American life.
Speaker 1: You need to stop being a lazy piece of shit
Speaker 1: and work for your picture or I'm going to kick
Speaker 1: your ass. Got it. It wasn't that long ago the
Speaker 1: coaches were confined to sports. Now they're everywhere. We're going
Speaker 1: to refocus like we're training a puppy. If we're going
Speaker 1: to train your mind like we train a puppy. They're
Speaker 1: people who call themselves life coaches and other people who
Speaker 1: call themselves death coaches. I am here to guide you
Speaker 1: and making sure you grow as a person. Every big
Speaker 1: time corporate boss has an executive coach, but now so
Speaker 1: do new NBA is starting out at Wall Street banks
Speaker 1: and consulting firms. These are super smart people who maybe
Speaker 1: just haven't heard the right strategies. You can hire a
Speaker 1: coach to improve your online dating performance or your charisma.
Speaker 1: It's a saying which is therapy is a path of tears,
Speaker 1: and coaching is the path of laughta and that's all great.
Speaker 1: The coaching is also becoming an odd source of unfairness.
Speaker 1: Just look around and ask yourself who gets good coaching
Speaker 1: and who doesn't. That guy would never have gotten into Yale,
Speaker 1: but this guy who got all this coaching did get
Speaker 1: into Yale. It just seems like anyone who can answer
Speaker 1: these questions has got to be coached. Oh my god,
Speaker 1: we're lost. Fucking team. Money is a great place to
Speaker 1: ask this question about coaching and fairness, But first you
Speaker 1: have to stop thinking of finance as a business and
Speaker 1: start thinking of it as a competitive sport. When eighteen
Speaker 1: year old Katie Hid took out her student loans and
Speaker 1: twenty something year old Katie started using credit cards, she
Speaker 1: was basically walking into an arena alone with a target
Speaker 1: on her back. The giant company should be facing off
Speaker 1: against knew more about her game than she did. That's
Speaker 1: how they made their money from her weaknesses. You can
Speaker 1: always make more money exploiting people's irrationalities then you can
Speaker 1: by fixing them. Richard Taylor, winner of the Nobel Prize
Speaker 1: in Economics. He spent his career trying to understand the
Speaker 1: ways that people don't act in their own self interest.
Speaker 1: And one big thing his work suggests is that ordinary
Speaker 1: people need coaching far more than they know. Let's think
Speaker 1: about the people who get the most coaching. Well, professional
Speaker 1: athletes would be one. Take Roger Federer. He's probably got
Speaker 1: ten guys, coaches and physical trainers. So here Roger feder
Speaker 1: one of the greatest athletes in the world, and he
Speaker 1: has ten coaches. Who else? Actors Meryl Streep has a
Speaker 1: director helping her act now God knows, Yeah, she doesn't
Speaker 1: need it, right Brad Pitt, you know, does he really
Speaker 1: need help? But the richest, best performing people in the
Speaker 1: world have the most coaching. And who's coaching the uber
Speaker 1: driver on what hours to drive and when you should
Speaker 1: go to the airport? And if you get a ride
Speaker 1: to the airport, should you wait in line or immediately leave?
Speaker 1: So coaching just ends up making the rich richer. Yeah,
Speaker 1: it's one of the many factors that contribute to this curve.
Speaker 1: We've all seen about the one percent or the point
Speaker 1: or one percent share of the economy. No one's coaching
Speaker 1: the tens of millions of Americans on the wrong end
Speaker 1: of consumer finance. No one even seems interested. I've tried,
Speaker 1: unsuccessfully to get somebody to create what I call the
Speaker 1: good bank. With this good bank look like, well, so
Speaker 1: it would warn you when you're about to overdraw your
Speaker 1: credit card, rather than wait until the end of the
Speaker 1: day when you've swiped five times and they charge you
Speaker 1: twenty five dollars penalty for each swipe, twenty five bucks
Speaker 1: a swipe. It's supposed to scare you from overdrawing your account,
Speaker 1: but you only get the warning after it's too late.
Speaker 1: I mean, there's a reason for this it's a subtle
Speaker 1: form of coaching that makes the banks a lot of money. No,
Speaker 1: the problem is people pay bad coaches and not good coaches, right,
Speaker 1: and they pay because they don't see the charge. Right.
Speaker 1: Trip to bad coaching is never show the bill, Yeah, exactly.
Speaker 1: The problem with good coaching is you have to show
Speaker 1: the bill. It basically goes something like this, Right, So
Speaker 1: at the start of the month, you're paid your paycheck.
Speaker 1: This is angela strange venture capitalists and connoisseur of how
Speaker 1: the financial sector exploits human nature. And so you send
Speaker 1: your rent check out and you don't see in your
Speaker 1: bank account that check is cleared, probably for a few days.
Speaker 1: You pay a bunch of other bills. You know that
Speaker 1: those are gonna hit as costs in your bank account,
Speaker 1: but that also hasn't cleared. Now you're like, well, can
Speaker 1: I pay this bill? I think so, But you're doing
Speaker 1: some mental math around the checks that you have in
Speaker 1: the air, like you just don't have a sense of
Speaker 1: what is your real time cash position. And then, oh,
Speaker 1: by the way, if you screw it up, it's a
Speaker 1: thirty five dollars overdraft feech time, right, Like there were
Speaker 1: thirty four billion dollars in overdraft fees paid last year,
Speaker 1: again refitting from people screwing up. Its huge, it's huge,
Speaker 1: it's huge. Wait wait, thirty four billion dollars in overdraft
Speaker 1: fees yep is the typical penalty thirty five bucks. Yeah,
Speaker 1: it's clem up. It used to be twenty five about
Speaker 1: ten years ago. So that means that there are a
Speaker 1: billion instances of this a year, yes, and they tend
Speaker 1: to be concentrated where the people they get hit with
Speaker 1: overdraft get hit a lot. Thirty four billion dollars in
Speaker 1: overdraft fees is really just the start. There's more than
Speaker 1: one hundred billion in credit card late payment fees and
Speaker 1: interest charged each year. And then there's the entire credit
Speaker 1: card industry, which thrives on the mistakes people make playing
Speaker 1: the money game. There is now over one trillion dollars
Speaker 1: of credit card debt in the US. People who have
Speaker 1: this debt, it's fim about fifteen thousand dollars. They tend
Speaker 1: to have it across three to four different cards. So
Speaker 1: let's say you're like, Okay, I don't want to be
Speaker 1: in credit card debt. I need to get out of
Speaker 1: credit card debt. Just going through what is that process.
Speaker 1: You have debt across three to four different cards, they
Speaker 1: likely charge different rates, they have different due dates. So
Speaker 1: do you pay off the highest rate card first? Oh,
Speaker 1: by the way, like what is the highest rate card?
Speaker 1: It's just a very complicated mess to get your way
Speaker 1: out of. Angela wondered why no one had tried to
Speaker 1: help people who had gotten into this mess. Why no
Speaker 1: one had, say, tried to create a money coaching business,
Speaker 1: the same way that Richard Thaylor wondered, why no one
Speaker 1: had even tried to create a good bank. Then she
Speaker 1: realized the sort of people with the ability to coach
Speaker 1: other people about money, or to finance a company to
Speaker 1: coach other people about money. Those people already had money.
Speaker 1: People who didn't have money were like Martians to them.
Speaker 1: Like your investment banker is not the person who grew
Speaker 1: up on food stamps, right, And he's not the person
Speaker 1: who's got five different credit cards maxed out and is
Speaker 1: paying thirty percent interest rate to some bank. Another problem
Speaker 1: Angela saw trust Americans had been screwed by consumer finance
Speaker 1: for so long that they were likely to be wary
Speaker 1: when some companies sprung up claiming it was actually going
Speaker 1: to be on their side, like it takes time as
Speaker 1: an athlete or as anything to build trust with your coach,
Speaker 1: until they'll start by making these suggestions and you might
Speaker 1: follow them, you might not follow them. And you know,
Speaker 1: if they're a good coach and they know you really well,
Speaker 1: then you'll notice that over time, as you take more
Speaker 1: of their suggestions, you tend to perform better. The explosion
Speaker 1: of coaching, it's related to the war on referees. It's
Speaker 1: what happens when more and more of life feels like
Speaker 1: a brutal competitive sport. The scarier it is to lose,
Speaker 1: the more people scramble to find an edge. That's what
Speaker 1: a coach offers, an edge. Angela Strange had noticed an absence,
Speaker 1: just as Richard Taylor had noticed an absence of a
Speaker 1: coach who really should exist in the middle of American
Speaker 1: financial life. Both were waiting for whom or what they
Speaker 1: did not know. In the Year of Our Lord nineteen
Speaker 1: seventy nine, in the Mountains of Colorado, a woman gives
Speaker 1: birth out of wedlock to a boy, Jason. She names him.
Speaker 1: The mom's name is Christina Brown. She's a fundamentalist Christian
Speaker 1: and takes the Bible as the literal truth. She doesn't
Speaker 1: know how she's going to make ends meet, but she
Speaker 1: knows what she wants for her child. She wants him
Speaker 1: to be well educated. To make sure that happens, she'll
Speaker 1: educate him herself. When we were studying the health unit,
Speaker 1: I had Jason cleaned the floor on his hands and
Speaker 1: knees with an extra fifty pound backpack on his back,
Speaker 1: so that he would know what it would be like
Speaker 1: to be overweight. That's Christina. She didn't want her son
Speaker 1: to be taught what was taught in schools, the theory
Speaker 1: of evolution, for instance, but mostly she just thought she
Speaker 1: could teach him better than any school could. It was like, hey, Jason,
Speaker 1: what do you want to learn? The world is your classroom.
Speaker 1: You can go learn anything you want. That's Jason Brown,
Speaker 1: all grown up now. And you know there's one time
Speaker 1: in particular, I remember, She's like, what do you want
Speaker 1: to learn? And I said, I want to learn about taxidermy,
Speaker 1: and she said, okay, fine. She goes through the Yellow Pages.
Speaker 1: This was in the time where he had Yellow Pages,
Speaker 1: and she calls all the taxidermists and convinces that some
Speaker 1: guy who owns a taxidermy shop to let us go
Speaker 1: camp out in his workplace for a week, and we
Speaker 1: would show up there and he would he would show
Speaker 1: us how he would take these animals and you end
Speaker 1: up stuffing them and turning them into things that could
Speaker 1: go on people's walls. And what was really cool is
Speaker 1: you know, I learned about biology. I learned about the
Speaker 1: anatomy of animals. He taught us about the chemicals that
Speaker 1: were used. And then I would ask a lot of
Speaker 1: questions about just the business of taxidermy, like how much
Speaker 1: do you all these chemicals cost? How much do you
Speaker 1: pay for this thing? What do you sell it for
Speaker 1: the education of Jason Brown wasn't normal. It was kinetic.
Speaker 1: Hands on his mother and uraged him to ask questions.
Speaker 1: But at the same time, he lived in a very
Speaker 1: small world. It was just her and him and his
Speaker 1: little brother. Maybe because he was so dependent on his mom,
Speaker 1: he worried about her. Even as a little kid, he
Speaker 1: could see that she was exposed and vulnerable, especially when
Speaker 1: it came to money. My money was in envelopes, and
Speaker 1: each envelope had a different designation, and when the money
Speaker 1: was gone, it was gone. What would have been the
Speaker 1: envelopes designations okay. The first envelope was my tithe, then
Speaker 1: it was rent, then it was groceries, miscellaneous electric gas,
Speaker 1: and you paid in that order. That's right. We literally,
Speaker 1: and I'm not exaggerating, eight beans and rice. Pretty much
Speaker 1: every day. I ground my own wheat, made my own
Speaker 1: whole wheat, bread, made my own tortillas, made cereal in
Speaker 1: the croc for breakfast, and we had peanut butter on toast.
Speaker 1: We ate very simply. We shopped at Goodwill, even for
Speaker 1: a Christmas gift's birthday gifts. Sometimes Jason snuck a peek
Speaker 1: inside the money envelopes. A lot of the time they
Speaker 1: were totally empty. Yet, even when she had no money,
Speaker 1: his mother insisted on staying home and teaching him and
Speaker 1: his brother. By the time he was ten years old,
Speaker 1: Jason was fully aware that his mother was running huge risks.
Speaker 1: They were totally on their own. There was no safety net.
Speaker 1: The most trivial events could disrupt their lives. So we
Speaker 1: had this friend, his name was Donnie. He's a big kid,
Speaker 1: and he came over to the house and spent the
Speaker 1: weekend or something like that. And Donnie ate a lot,
Speaker 1: and he really really liked milk too, and I remember
Speaker 1: specifically in the kitchen and Donnie was just pounding the
Speaker 1: milk and he finished the milk, and I remember looking
Speaker 1: at my mom and she looked at me, and I
Speaker 1: could just see the dreaded fear on her face because
Speaker 1: Donnie drank all the milk. Donnie drank an envelope. Yeah,
Speaker 1: he drank an envelope, And we just like because I
Speaker 1: knew that the envelope for food was already used up.
Speaker 1: And you know, I could see in her eyes like, hey,
Speaker 1: what are we gonna do, Like we can't go on
Speaker 1: buy more mild like that's it. So they went without milk.
Speaker 1: Another memory is the day Jason's mom told him that
Speaker 1: she needed to take on a second job and it'd
Speaker 1: have to go to a real school. He was in
Speaker 1: the eighth grade. The real school was hellish. Other kids
Speaker 1: made fun of him. One day, a kid just walked
Speaker 1: up to him and punched him in the face, and
Speaker 1: no one did anything about it. Jason felt totally loved
Speaker 1: by his mom, and he loved her back. She'd given
Speaker 1: him real strengths. He knew how to learn to teach himself,
Speaker 1: but she'd also left him with a fear of money,
Speaker 1: of being one accident away from disaster. His mother couldn't
Speaker 1: afford for him to all off his bike and break
Speaker 1: his wrist, much less pay for him to go to college.
Speaker 1: He went to the University of Colorado. Anyway. To pay
Speaker 1: for it, he took out student loans, but the moment
Speaker 1: he did that, he felt exposed and vulnerable. Like his mom.
Speaker 1: He was eighteen years old. I would drive home every
Speaker 1: single weekend starting in January, and I would go home
Speaker 1: to my hometown where I grew up, and it was
Speaker 1: about two to two and a half hour drive, and
Speaker 1: I would spend the weekend knocking on doors, handing out flyers,
Speaker 1: say hey, would you hire me to paint your house.
Speaker 1: Jason had never painted a house, but then there was
Speaker 1: a time when he didn't know how to stuff an animal,
Speaker 1: and he'd figured out how to do that. And there's just,
Speaker 1: you know, there's six feet of snow outside, and this
Speaker 1: kid is trying to convince you to paint his house.
Speaker 1: And they're like, number one, come back to me in
Speaker 1: the summer. Number two, how many houses have you paint up? Like?
Speaker 1: I've never painted a house in my life, but I
Speaker 1: promise I'm going to hire people who do know how
Speaker 1: to paint their house. Maybe the oddest thing about Jason
Speaker 1: Brown is he found nothing odd about any of this.
Speaker 1: An eighteen year old convincing grown ups in the snow
Speaker 1: to trust him with their homes. So I brought snowshoes,
Speaker 1: and I would have a pair for me and a
Speaker 1: pair for them. And now I knew, as long as
Speaker 1: I could convince the homeowner to put on their shoes
Speaker 1: and coat and go around the house with me in snowshoes,
Speaker 1: that they would then by the end of that have
Speaker 1: a pretty good chance of hiring me. He was still
Speaker 1: a kid, but pretty soon this wasn't a kid's business.
Speaker 1: The crazy thing is, by the end of the summer,
Speaker 1: I had painted something like forty or fifty homes, and
Speaker 1: I had I think fifteen or twenty employees, And I
Speaker 1: actually put fifty thousand dollars in my pocket for one summer. Really,
Speaker 1: you cleared fifty one hundred and fifty thousand dollars a
Speaker 1: total revenue, and it was fifty thousand dollars nut to me.
Speaker 1: He wasn't done. After Jason's first year in college, he
Speaker 1: set out to grow his business. Rural Colorado wasn't a
Speaker 1: great market. There weren't that many houses. The weather was
Speaker 1: hard on paint, but not as hard as it was
Speaker 1: in other places. He decided to find a better market,
Speaker 1: and so I transferred to Boston University. And by the
Speaker 1: time wait, wait, you transferred to Boston University specifically to
Speaker 1: pursue the business of painting houses, I did, yes, Because
Speaker 1: you'd based so much money in painting houses. I didn't.
Speaker 1: I was like, I was like, you weren't even in
Speaker 1: the right place to paint house exactly. To pick your
Speaker 1: school based on where there'd be the most houses to paint,
Speaker 1: you got it exactly. At BU Jason ran his painting
Speaker 1: business from his laptop at the back of classrooms, prepping
Speaker 1: for the big season in the summer. When we were
Speaker 1: painting all the houses, it was about four hundred employees,
Speaker 1: and I think in the year that I sold the company,
Speaker 1: we were doing about three million dollars a total revenue.
Speaker 1: I don't remember the exact amount that I made from
Speaker 1: all that. A couple questions one, are you at any
Speaker 1: point are you conscious that you're being driven by having
Speaker 1: grown up in an environment where money was so scarce?
Speaker 1: I did so when I was I think I think
Speaker 1: I was probably about ten, I really loved avocados, and
Speaker 1: you know, money was so tight in our household. We'd
Speaker 1: go to the grocery store. I'm like, Mom, can I
Speaker 1: have avocados? She's like, I'm sorry, they're too expensive. Every
Speaker 1: now and then we would get when it was a treat,
Speaker 1: and I remember just savoring every bite of that buttery avocado,
Speaker 1: and in my mind I committed. I said, I will
Speaker 1: be rich enough one day to eat as many avocados
Speaker 1: as I want. And still to this day, I eat
Speaker 1: an avocado almost every single day, and not a single
Speaker 1: time do I ever opened an avocado and not feel it.
Speaker 1: Just immense gratitude for being able to afford as many avocados.
Speaker 1: You even gotten used to avocado? I've not gotten tired
Speaker 1: of them. No. Jason went to grad school in business
Speaker 1: at the University of Chicago. Pretty soon he knew rich people,
Speaker 1: but they didn't seem nearly as admirable or hard working
Speaker 1: as his mother. He was coming to see money and
Speaker 1: the problems around money as its own thing, as problems
Speaker 1: some people just had. Jason Brown started more companies and
Speaker 1: sold them. The companies all had one thing in common.
Speaker 1: They made it easy for people to do things they
Speaker 1: really should do. One of his companies made it easy
Speaker 1: for people to get their home computers fix remotely geek
Speaker 1: squad before geek Squad. Another made it easy for homeowners
Speaker 1: to switch to solar power and cut their electricity bills
Speaker 1: in half. Jason was all about making it easy. We
Speaker 1: did not evolve to do multi period financial optimization right
Speaker 1: as hairless apes. We did not have this expectation that
Speaker 1: we're going to live eighty years and be part of
Speaker 1: a global economy with all this complexity. One day he
Speaker 1: was reading a book, You've All Harari Sapiens. It was
Speaker 1: about how humans evolved and where the species might be heading.
Speaker 1: Evolution was a new idea did Jason. He thought it
Speaker 1: explained a lot almost out of corporate evolution. This entire industry,
Speaker 1: the finance industry, has evolved to exploit every single cognitive
Speaker 1: a bias, or every mistake that people make when they're
Speaker 1: thinking about money. Exactly. Every little bug we have in
Speaker 1: our brains that served us well when we were on
Speaker 1: the savannah, but but now is not maybe directly translatable
Speaker 1: to the kind of lives we live. And every product
Speaker 1: they have, every contract they make, is designed to exploit
Speaker 1: these bugs in our brains getting people to do things
Speaker 1: they really shouldn't do. Yep. For Jason, money wasn't just money.
Speaker 1: At some point he realized that every time he thought
Speaker 1: about money, he also thought about his mom and her
Speaker 1: three envelopes of cash for the month. I actually need
Speaker 1: to tell you a little bit more about about my mom.
Speaker 1: So my mom is, so she's my hero. And the
Speaker 1: reason she's my hero is she grew up in a
Speaker 1: pretty challenging childhood. I'm not a lot of resources, not
Speaker 1: very supportive. She ended up having me when she was
Speaker 1: twenty one or twenty two, just a high school graduate,
Speaker 1: no higher education. She had overcome all that and given
Speaker 1: him and his brother the most amazing education. She is
Speaker 1: just the model of discipline. I mean, the woman. She's
Speaker 1: a rob vegan and I'm so proud of that. That's
Speaker 1: hard to be presumable. It is, it is. It is
Speaker 1: very hard. And she's sixty two now sixty two, and
Speaker 1: most of her life she'd had to figure out everything
Speaker 1: on her own, including money. But let's say say if
Speaker 1: she graduates high school and there's like an accountant and
Speaker 1: a financial advisor, They're just like, we're going to do
Speaker 1: all your if she had a coach coming out of
Speaker 1: high school. If she had a coach coming out of
Speaker 1: high school, I know she'd own a home right now, properly,
Speaker 1: she'd have a nice little nest egg, a retirement. She
Speaker 1: would be in a good spot. It definitely was possible.
Speaker 1: But she didn't have that. Jason could take care of
Speaker 1: his mom, and he did, But what about all the
Speaker 1: other moms. He decided to create a company specifically to
Speaker 1: help them. He looked hard at the entire money game
Speaker 1: before he settled on consumer finance and especially credit cards.
Speaker 1: Because if finance is a competitive sport, the credit card
Speaker 1: companies are undefeated. They've smashed together a payment tool and
Speaker 1: alone into one, and they've designed the payment tool to
Speaker 1: again exploit all these bugs in our brain. So you
Speaker 1: get points for spending, you get access to lounges, It
Speaker 1: comes in different colors and medals. You can even get
Speaker 1: your dog's picture printed on the card. Right. So they
Speaker 1: create all of these things that make you want to
Speaker 1: use it, Yeah, exactly, make you want to use it,
Speaker 1: and make you when you go go get a credit card,
Speaker 1: you're not thinking about, oh, I might end up getting
Speaker 1: charged this interest down the road, you're thinking about, Oh,
Speaker 1: I'm going to get these points and have access to
Speaker 1: these hotels, whatever it is, and that allows banks to
Speaker 1: substantially overcharge everybody on the interest rates. So it's they
Speaker 1: just distract you from the cost of the interest rate exactly.
Speaker 1: So there's no one out there competing by saying, get
Speaker 1: our card and we'll give you a lower interest rate,
Speaker 1: because it's not even in the conversation, which is insane
Speaker 1: if you stop and think about it. I mean, our
Speaker 1: government hardly pays any interest on most of it's dead,
Speaker 1: really risky companies can borrow at seven percent. To think
Speaker 1: that millions of people are paying nineteen to thirty percent
Speaker 1: interest on anything. Who other than the American credit card
Speaker 1: borrow or pays so much and that's not even counting
Speaker 1: the billions in late fees. Once Jason Holmes on this
Speaker 1: particular racket, he noticed other things like the monthly statements
Speaker 1: these lenders send to people who owe the money. If
Speaker 1: you look at a credit card statement, the thing with
Speaker 1: the biggest font, it's like size eighty ninety font is
Speaker 1: your minimum payment. They're using something called the anchoring effect,
Speaker 1: which show you a low number and gets you to
Speaker 1: pay relatively low amounts to the card, which means that
Speaker 1: you have more debt and they charge you more money. Right,
Speaker 1: they're trying to encourage you to go into yes, so
Speaker 1: they're encouraging you to spend and encouraging you like bad coaching.
Speaker 1: It is bad coaching. Right. The more Jason Brown looked
Speaker 1: into the credit card industry, the more he thought he
Speaker 1: might be able to get people out from under it
Speaker 1: with an app. Do you think financial behaviors can be changed?
Speaker 1: One hundred percent? Believe financial behaviors can be changed. Jason
Speaker 1: created yet another company and called it Tally. He got
Speaker 1: the investor Angela Strange to give him money and to
Speaker 1: join his board. The ideas behind Tally could be traced
Speaker 1: to a class that he had snuck into at the
Speaker 1: Booth School of Business in Chicago, taught by Richard Taylor.
Speaker 1: The biggest idea was it was very hard to change
Speaker 1: people's behavior unless you make it easy for people to change,
Speaker 1: make it feel to them like no more than a nudge.
Speaker 1: We viewed nudges as an alternative to coaching. That's Richard
Speaker 1: Taylor again. You know, we could try to teach people
Speaker 1: to sign up for the four own K plan. Where
Speaker 1: there's a company match and turning it down is free
Speaker 1: money and stupid, right, Or we could just automatically enroll them, right,
Speaker 1: and we knew the ladder works really well and the
Speaker 1: former is like pulling teeth right. So so part of
Speaker 1: nudging is a response to a sense of the limits
Speaker 1: of coaching. Yeah, that's the point, right. If you really thought, well,
Speaker 1: we can coach all these people up and how not
Speaker 1: to get exploited by credit card companies, you would coach
Speaker 1: them up. The best thing is to make things automatic,
Speaker 1: making good behaviors easy. Yeah. The basis of Jason Brown's
Speaker 1: businesses that class he took from you. It's creating a
Speaker 1: decision environment where the way that people naturally, with least
Speaker 1: friction and least amount of effort go is in their
Speaker 1: interests rather than against their interests. So he picked that up.
Speaker 1: It's a good lesson to have learned. Taylor has not
Speaker 1: the first memory of Jason Brown in his class, but
Speaker 1: Jason got the gist as Taylor's message. He hired a
Speaker 1: bunch of engineers to spend three and a half years
Speaker 1: building the company software so that it nudged people with
Speaker 1: credit card debt in ways that were good for them.
Speaker 1: So if I have four different credit cards from four
Speaker 1: different banks on my visas, I do whatever I do,
Speaker 1: but but you pay them all yeah, and I pay
Speaker 1: you yeah, So you tell me what I exactly, So
Speaker 1: you download the app for free, you pass a soft
Speaker 1: credit check, and then we're saying, hey, Michael, we're going
Speaker 1: to pay all these cards when they due at the
Speaker 1: exact right time, the exact right So, so a couple
Speaker 1: of questions that naturally popped in mind. You're going to
Speaker 1: charge me a much lower interest rate than the credit
Speaker 1: card companies? How and you afford to do that if
Speaker 1: they were charging me the actual correct rate given the
Speaker 1: risk I present, Yeah to them. Well here's the rub. So,
Speaker 1: coming back to this financial industry that's designed to make
Speaker 1: money off of us, credit card interest rates are astronomically high,
Speaker 1: and they do not represent the rate that you should
Speaker 1: be paying. You'd save a bunch of money just by
Speaker 1: not paying the high interest rate. Of course, you could
Speaker 1: ruin yourself all over again by going out and buying
Speaker 1: stuff you shouldn't. But Jason's hoping that he's nudged you
Speaker 1: into a different state of mind, a state of mind
Speaker 1: in which you would make wiser decisions about money. And
Speaker 1: what we've seen is that when people invest more in
Speaker 1: their debt, they actually just tend to spend less. And mentally,
Speaker 1: it kind of makes sense because you know, if you
Speaker 1: go out and let's say that you eat out for lunch,
Speaker 1: somebody be like, well, maybe I don't want to eat
Speaker 1: out for dinner because I already are you spent some money.
Speaker 1: So the effect is I feel like I kind of
Speaker 1: spent money on my debt, and now maybe I don't
Speaker 1: want to go out for lunch. Maybe I don't want
Speaker 1: to go out for dinner. Instead of giving people points
Speaker 1: for spending, tally gives them points for saving. Instead of
Speaker 1: encouraging them to pay off the minimum, they helped them
Speaker 1: to figure out how to pay the maximum. Instead of
Speaker 1: trying to keep people acting on impulse, it tries to
Speaker 1: get them to think. Twice the company took off, but
Speaker 1: something was bothering Jason. He thought a company needed both
Speaker 1: a vision and a mission. A vision was where you
Speaker 1: were going, a mission was why you were going there.
Speaker 1: Jason wanted to understand the deeper emotional consequences of debt,
Speaker 1: and initially my thought was that most of the emotions
Speaker 1: would be around regret, like, hey, I spent this money
Speaker 1: in the past, and I regret having bought that right
Speaker 1: and regret from the sadness family, So it's the sense
Speaker 1: of loss of something in the past. He hired a
Speaker 1: team of researchers to test this idea. They came back
Speaker 1: and told Jason that no, this wasn't about sadness. The
Speaker 1: emotions that were coming out were anxiety, which is a
Speaker 1: fear emotion, and it's the feeling that there's a threat
Speaker 1: in the future that you don't have the capacity to
Speaker 1: handle or protect yourself. Jason paid for another study, one
Speaker 1: that tried to measure the stress levels of people with
Speaker 1: credit card debt. We had found that two thirds of
Speaker 1: individuals with card debt have medical levels of anxiety, So
Speaker 1: meaning you're in a doctor's office waiting for some important
Speaker 1: test results, the same kind of anxiety that people feel there.
Speaker 1: That's what people are feeling on a regular basis with
Speaker 1: their cards. Millions of Americans are sick from this stress,
Speaker 1: and their illness has all kinds of other effects. Oftentimes
Speaker 1: it's described as a weight on chest, drowning, not being
Speaker 1: able to breathe. So a lot of people experience stress
Speaker 1: is actual constriction within the body, and sensations of tightness
Speaker 1: are acid in the stomach. Grinding of teeth is really
Speaker 1: a common thing because it manifests oftentimes while people are sleeping.
Speaker 1: At some point, Jason realized that stress wasn't just a
Speaker 1: bug the American financial system. It was a feature. There's
Speaker 1: a lot of research that suggests that it also affects cognition.
Speaker 1: So if you're like a sinister credit card company and
Speaker 1: you're trying to keep people trapped in a dark financial world,
Speaker 1: the first thing you would do is stress them out.
Speaker 1: By definition, the way the credit card statements are made,
Speaker 1: especially by store cards, those cards that are associated with retailers.
Speaker 1: The banks behind those are some of the best, and
Speaker 1: even they do things like make it so that even
Speaker 1: if you had wanted to set up an auto pay,
Speaker 1: it's actually not a function that is available because they're
Speaker 1: hoping that people will have late fees and forget about
Speaker 1: balances and things like that. It took Jason three and
Speaker 1: a half years to create his app. It took him
Speaker 1: two minutes to create his first logo. It's a woman
Speaker 1: reclining in a chair, her feet up on a table
Speaker 1: and a cup of coffee in her hand, a woman
Speaker 1: like his mom, but freed from anxiety with the help
Speaker 1: of a coach. So, if we were to use a
Speaker 1: sport analogy, the coaches arranged for food and meals to
Speaker 1: be delivered, so you get to eat the right thing.
Speaker 1: They've set up the gym membership for you. They've made
Speaker 1: it so that not only are you being led for
Speaker 1: how you can get the outcome you want, but also
Speaker 1: all the sources of interference, as much as possible, are
Speaker 1: being removed. Ninety nine percent of the people who sign
Speaker 1: up to use Jason's app have stayed with it, and
Speaker 1: it's kind of incredible what happens to people when they're
Speaker 1: rewarded for behaving well instead of badly. They could say, oh,
Speaker 1: you know, I'd rather buy the coffee than have it
Speaker 1: and be set aside. But ninety percent of people are
Speaker 1: still letting us set money aside for them. And I
Speaker 1: think it has very much to do with the fact
Speaker 1: that every time it happens you get points. People would
Speaker 1: do the smart thing for themselves if you made it
Speaker 1: easy for them to do the smart thing for themselves.
Speaker 1: Make it easy, and people would create a buffer for themselves,
Speaker 1: a margin of safety, a thing Jason's mom had never had,
Speaker 1: and then it kept him awake when he was a kid.
Speaker 1: Jason had not set out to become a coach, but
Speaker 1: he saw a coach is exactly what he'd become. The
Speaker 1: definition of a good coach is one who makes their
Speaker 1: players feel like they don't need the coach, okay, And
Speaker 1: the way I think you do that is, first you
Speaker 1: take out all the hard work and all the distractions. Second,
Speaker 1: you make it easy to have good behaviors, and third
Speaker 1: is you make people want to have good behaviors. And
Speaker 1: that's the thing about coaching that makes it so hard
Speaker 1: to pin down. The best coaches don't leave you needing them.
Speaker 1: You start with some fear or sense of inadequacy, they
Speaker 1: help you get past it, then they recede. And in
Speaker 1: the future, every single one of us is going to
Speaker 1: have this hyper smart service that's doing all these complex
Speaker 1: things in the background and nudging us and making us
Speaker 1: feel really good about eating our financial broccoli, so to speak.
Speaker 1: And we're going to feel great about it, but we're
Speaker 1: not even going to see it. It's an invisible coach,
Speaker 1: a coach that could maybe even help stop people from
Speaker 1: grinding their teeth at night. To be honest, I think
Speaker 1: I said this to you on the phone. I have
Speaker 1: no idea what's in my bank account. Last October we
Speaker 1: introduced Katie Highland to Jason's company Tally. She decided she
Speaker 1: needed a coach, but her husband had to sign her
Speaker 1: up because he was the only one with the nerve
Speaker 1: to look at their bank account. I make Stephen chuck it,
Speaker 1: and I ask him whether I'm good or not, and
Speaker 1: he says yes, And sometimes I believe him and sometimes
Speaker 1: I don't. But as long as I don't get a
Speaker 1: phone call from the landlord that the rent didn't go through,
Speaker 1: then I know that we're okay. So it scares the
Speaker 1: bid Jesus out of me to know what's in there,
Speaker 1: because I don't think like we don't spend frivolously like
Speaker 1: we even where it said like dining out. I put
Speaker 1: an a like work meals, and like we don't do
Speaker 1: those things. You can hear the anxiety in her voice, right,
Speaker 1: But that could change. I'm betting it will change, because
Speaker 1: a good coach can change a lot. We gave Katie
Speaker 1: Hyland some time before we bother her again, all right,
Speaker 1: So I don't know how many months ago we spoke.
Speaker 1: There was a few months anyway, But since then, like
Speaker 1: we set you up with Tally and just the idea
Speaker 1: of a financial coach. So with Talie, they've been amazing.
Speaker 1: How long was it before we introduced the two of
Speaker 1: you before you said, actually, this is a good thing.
Speaker 1: This isn't just humoring Michael in his podcast, This is
Speaker 1: actually a good thing. No, immediately immediately, I think, you know,
Speaker 1: it was definitely overwhelming at first to sort of, you know,
Speaker 1: gather all of those documents and find out what my
Speaker 1: interest rates were and you know, figure out what things
Speaker 1: I was paying every month and sort of get them
Speaker 1: together in one central location. That was a bit overwhelming.
Speaker 1: But I I mean they walked me and talked me
Speaker 1: through absolutely every step of the way and made sure
Speaker 1: that I understood what was going on. I can remember
Speaker 1: you telling me that your view before was you didn't
Speaker 1: even want to look at your bank accounts. I knew
Speaker 1: you were going to bring that up, and I have
Speaker 1: to tell you, Michael, I looked at my bank account
Speaker 1: for the first time about two days ago, full on
Speaker 1: the computer screen in front of me and all its glory.
Speaker 1: I saw my balance and you know it wasn't as
Speaker 1: bad as I envisioned. It wasn't as good as I
Speaker 1: wished it would be, but it was an important step
Speaker 1: in handling my finances. Is like actually having a realistic
Speaker 1: picture of what's in there. No, it's sort of like
Speaker 1: if you're going to get in shape, you need to
Speaker 1: have a scale to weigh your cell phone. Yeah, it's
Speaker 1: going to help just having the conversations, like having a
Speaker 1: set time as a couple for myself and my husband
Speaker 1: to sit down and say, Okay, where are we with finances?
Speaker 1: What did we spend this month, what unexpected things came up?
Speaker 1: You know, how are we looking for next month? And
Speaker 1: what are we putting toward our our goals. It's going
Speaker 1: to help just not our just not even like, you know,
Speaker 1: reach our goals, but it's going to help our relationship
Speaker 1: my husband and I because money is a definite source
Speaker 1: of stress. I mean, is there a couple where that's
Speaker 1: not true? Noah, there's no need here to recount how
Speaker 1: many thousands of dollars she saved herself by having herself coached,
Speaker 1: or how she's now paying six percent instead of twenty
Speaker 1: six percent on her credit card debts, or how she
Speaker 1: and her husband expect to be entirely debt free inside
Speaker 1: of a year. But let's just consider the broader effects
Speaker 1: this coach has had, this person who's on her side
Speaker 1: encouraging her best self. Has it changed the kind of
Speaker 1: tone of the conversation around money when you're in your
Speaker 1: husband sit down and talk about it. Yeah, it was
Speaker 1: all very emotionally charged before, and now you know he's
Speaker 1: really taken to Okay, I'm laying everything out on a
Speaker 1: spreadsheet and I you know, I put in all this,
Speaker 1: and I did all this, and come look and let
Speaker 1: me show you. So we're much more of a team
Speaker 1: and much more on the same page. And I think
Speaker 1: we're excited about the next couple of years. You can
Speaker 1: hear it, too, right, The sound of a voice has changed.
Speaker 1: All the other times I'd spoken with her, I could
Speaker 1: almost hear her teeth grinding. I could hear her stress
Speaker 1: and the way it was killing the pleasure she naturally
Speaker 1: took in life. I didn't hear that anymore. I found
Speaker 1: Katie Hyland in quarantine in New Rochelle, New York, at
Speaker 1: the early center of what was shaping up to be
Speaker 1: the greatest calamity in modern American history, but she sounded
Speaker 1: almost hopeful. You know. It's funny is that you are
Speaker 1: now sitting at one of the hot spots of the
Speaker 1: American pandemic and you sound so much happier than you
Speaker 1: did a year ago. I know, the irony and everything is.
Speaker 1: You sound happy. Well, I feel confident, you know, I
Speaker 1: feel like wow, like I can really start to do
Speaker 1: things and I can really to think that. You know,
Speaker 1: we set a goal of trying to buy a house
Speaker 1: by the summer of twenty twenty three, and that's amazing.
Speaker 1: I'm Michael Lewis. Thanks for listening to Against the Rules.
Speaker 1: Against the Rules is brought to you by Pushkin Industries.
Speaker 1: The show's produced by Audrey Dilling and Katherine Girodo, with
Speaker 1: research assistance from Lydia, Jane Cott and Zooe Wynn. Our
Speaker 1: editor is Julia Barton. Mia o'bell is our executive producer.
Speaker 1: Our theme was composed by Nick Brittell, with additional scoring
Speaker 1: by Stellwagon Sinphanette. We got fact checked by Beth Johnson.
Speaker 1: Our show was recorded by tofur Ruth and Trey Schultz
Speaker 1: at Northgate Studios in Berkeley and James Ward at Live
Speaker 1: Oak Studio. As always, thanks to Pushkin's founders, Jacob Weisberg
Speaker 1: and Malcolm Gladwell. How often do you go on to
Speaker 1: go fund me and give money to strangers? My wife
Speaker 1: and I were just driving down the road and it
Speaker 1: just seemed like the right thing to do. But I
Speaker 1: don't typically go in to go fund me and donate
Speaker 1: to strangers. I think it's more when something speaks to
Speaker 1: me and it's something that you can easily cover, you
Speaker 1: just go ahead and do it. It's always how I've
Speaker 1: been taught. This is a meet Kakar, the guy who
Speaker 1: made the last donation to the fund that paid off
Speaker 1: Katie Highland student loans. He turns out to be a
Speaker 1: real estate agent in suburban DC. Makes me wish I
Speaker 1: wanted to buy a house. So who's the idea? Was
Speaker 1: it yours or your wife's to go and find the
Speaker 1: go fund me page and finish off the campaign? It
Speaker 1: was me, but she obviously is used to me doing
Speaker 1: stuff like that and kind of co signs it. But
Speaker 1: you know, I almost as soon it was over and
Speaker 1: I heard about the go fund me, I was intrigued
Speaker 1: to see where it was at, and when I saw
Speaker 1: the level um, it was a no brainer. To finish
Speaker 1: it off