Speaker 1: Welcome to How the Money. I'm Joel and I'm Matt,
Speaker 1: and today we are debunking conventional financial advice. Yeah, Joe,
Speaker 1: this is gonna be like MythBusters, but the financial advised version.
Speaker 1: But I'm excited that we are going to cover just
Speaker 1: a ton of variety of different topics. It's gonna run
Speaker 1: the gamut between. Can we also do some science experiments too,
Speaker 1: As long as we can blow up like a water
Speaker 1: heater in the desert, I think that's that's all I
Speaker 1: care about. How how would science experiments translate to a podcast?
Speaker 1: Probably not very well. I think that's called alchemy, right,
Speaker 1: Like that's the whole premise of trying to turn lead
Speaker 1: into gold or whatever metal into gold. But yeah, I
Speaker 1: am excited that we're going to cover a variety of topics,
Speaker 1: everything from just something that you would hear at work
Speaker 1: talking with a coworker or maybe even h R because
Speaker 1: sometimes they're dispensing financial advice because that's part of what
Speaker 1: they do all the way, maybe even to something you
Speaker 1: would even hear like a money expert, a financial advisor,
Speaker 1: maybe on the radio even And we're gonna get to
Speaker 1: that later in the show. Yeah, there's a lot of
Speaker 1: financial advice floating around, and so not only are we
Speaker 1: going to to tell you some common financial advice that
Speaker 1: we think just isn't really all that good, we're also
Speaker 1: kind of towards the end of the show going to
Speaker 1: give you some ideas on where to go, some ways
Speaker 1: to think about how how you filter that financial advice
Speaker 1: that comes into your life. Okay, but but first, Matt,
Speaker 1: I wanted to tell you that my wife this week
Speaker 1: tried Kroger clicklist nice and she loved it. Oh, yeah,
Speaker 1: she loved it. But wait a minute, does that mean
Speaker 1: you're gonna go ahead and cancel your costco membership for
Speaker 1: the year? And uh you are you a clicklist convert? Now?
Speaker 1: I mean I can be loyal to both. They both
Speaker 1: have different Oh but can you really? Oh I can? Oh?
Speaker 1: I can so. And I know it's not Aldi. We
Speaker 1: like Aldi two, but Kroger Clicklist it's kind of this
Speaker 1: really cool tool where it's this happy medium between going
Speaker 1: into the store and shopping in true sational manner and
Speaker 1: going with something like instat cart or shipped where you
Speaker 1: order groceries and have them show up on your door.
Speaker 1: And the problem, in my opinion with the grocery delivery
Speaker 1: services is the additional expense. Not only do you pay
Speaker 1: a delivery fee and have to tip the driver, et cetera,
Speaker 1: but you pay an inflated price for groceries when you
Speaker 1: use those services. But Kroger click List is kind of
Speaker 1: a thing of its own. What you do is you
Speaker 1: kind of buy your groceries on Kroger's website and then
Speaker 1: you pick them up at the Kroger store. But you
Speaker 1: don't even have to get out of your car. As
Speaker 1: a mom of kids, you're trying to pick up the groceries.
Speaker 1: It's it's really nice that essentially someone just brings them
Speaker 1: and sticks them in your car and you pay the
Speaker 1: five dollar fee. That's the only thing. So there is
Speaker 1: a cost. So there is a cost, it's five bucks,
Speaker 1: but the prices of the actual food that you're buying
Speaker 1: are the exact same as what you would pay in
Speaker 1: the store, so you're not paying those inflated internet prices.
Speaker 1: But the coolest thing is that we're easily going to
Speaker 1: save that five bucks every time we do a Kroger
Speaker 1: clicklist order. Because when you're shopping online, you tend to
Speaker 1: do a couple of different things. You tend to a
Speaker 1: spend less money. You're not impulse buying certain things as
Speaker 1: you're walking around the grocery store, right. And then the
Speaker 1: other thing is Kroger does a great job of offering
Speaker 1: digital coupons, and so while you're shopping online, you're just
Speaker 1: gonna see the coupons and it's gonna make it a
Speaker 1: whole lot easier to apply those to your order. Yeah. Well,
Speaker 1: I will say the last time I was actually in
Speaker 1: Kroger buying some fancy seltzer because there's a certain kind
Speaker 1: of looking for actually for the Airbnb. I scanned it
Speaker 1: and I was getting ready to put it in the bag,
Speaker 1: and then right there on the spot, it's spit out
Speaker 1: a coupon. I didn't really read it. I just saw
Speaker 1: that it said peri air, which is the fancy sealzer
Speaker 1: that I buy for the Airbnb. And we're trying to
Speaker 1: make it nice down there, fancy dude. So at the
Speaker 1: end when you are supposed to kind of skin the coupons,
Speaker 1: I scanned it and it freaking took like a ton
Speaker 1: of money off. And so if Kroger is able to
Speaker 1: do the digital version of that online and I don't
Speaker 1: even have to go in the store that might be
Speaker 1: attempting for us to use as well. Man, Yeah, so
Speaker 1: we're gonna keep trying it out, especially as you know,
Speaker 1: you and I were both about to have newborn babies.
Speaker 1: The idea of sleeping babies, taking them out of the
Speaker 1: car seat, blah blah blah, going grocery shopping, it becomes
Speaker 1: a whole lot less appealing. And so this Kroger clicklist
Speaker 1: might be this happy medium solution for us, at least
Speaker 1: for a while. And yeah, we'll kind of keep folks updated,
Speaker 1: let them know if this click list experiment continues. Nice man.
Speaker 1: Are Kroger's nationwide? I think so, but I think in
Speaker 1: other cities they have different names. Yeah, I think they
Speaker 1: own a bunch of different grocery stores like Ralph's and
Speaker 1: a couple others. So yeah, they're they're a very big company.
Speaker 1: They think they're the nation's largest grocer if I'm If
Speaker 1: I'm not mistaken, maybe in South Carolina they call it
Speaker 1: k Rogers instead of Roger's. Well, I've been to South Carolina.
Speaker 1: That would make sense. I don't want to hate on
Speaker 1: South Carolina too much. Plus, man, Laws are from South Carolina,
Speaker 1: so now, dude, I love South Carolina. I'm just saying
Speaker 1: there's some weird stuff that happens from time to time, right,
Speaker 1: great people, though, beautiful scenery, It's it's a lovely state,
Speaker 1: but it's not quite as beautiful of a state as Hawaii.
Speaker 1: And I think we can readily admit that. And the
Speaker 1: beer that we're drinking today on the show is from Hawaii.
Speaker 1: The beer is called Golden Sabbath. It's a Belgian style
Speaker 1: ale brewed with Hawaiian honey, made by the brewery Big
Speaker 1: Island brew House. And big thanks to listener Cody for
Speaker 1: sending this one our way. I like their litt saying
Speaker 1: on the bottle here says share the Aloha. I think
Speaker 1: another brewery in Hawaii. There. There's some lookings like Liquid Aloha,
Speaker 1: which is another good one. So yeah, I guess anything
Speaker 1: Aloha is quiet on brand for anything coming out of
Speaker 1: Why Yeah, for sure, for sure. But yeah, looking forward
Speaker 1: to sharing this one with you man, and we'll talk
Speaker 1: about this one at the end of the episode. Sounds good,
Speaker 1: everybody onto the topic at hand today, we are debunking
Speaker 1: conventional financial advice, and like we mentioned in the outset,
Speaker 1: there's a lot of financial advice floating around there's some
Speaker 1: good stuff, right, there's a lot of people delivering good
Speaker 1: financial advice, but there's also a lot of bad financial
Speaker 1: advice out there. And there are some sayings that you
Speaker 1: might hear all the time you're not even sure what
Speaker 1: they're based on. Maybe it's more of a proverbial phrase even,
Speaker 1: And some of these things are said by a whole
Speaker 1: lot of people. They get repeated and repeated, and some
Speaker 1: of these sayings deserve a second glance. They might not
Speaker 1: be completely off, we might not disagree with them, but
Speaker 1: it's important to tackle these things so that we can
Speaker 1: get a better perspective on what our response should actually
Speaker 1: be to the conventional financial wisdom that we hear touted
Speaker 1: out there. As Stephen bart would say, there's a certain
Speaker 1: amount of truthiness that some of these statements have, but
Speaker 1: are they actually true that their truth he has truthiness, Yeah,
Speaker 1: there's some sort of kernel right in there. Well, that's
Speaker 1: the thing though, that I mean, a reason I think
Speaker 1: a lot of this popular advice takes root is because
Speaker 1: there is typically some truth in it. And sometimes we
Speaker 1: may not have thought about it that much, but it
Speaker 1: seems fairly logical, so we just go with it, Okay, Joel.
Speaker 1: On that note, let's go ahead and kick it off
Speaker 1: with our first piece of financial advice. More money will
Speaker 1: make you happier, like me personally, you specifically, a little
Speaker 1: more might make me happier. Right, And that's a phrase
Speaker 1: that you're less likely to hear from a financial expert
Speaker 1: or someone giving you money advice. But it is this
Speaker 1: kind of general, vague notion out there that more money
Speaker 1: is always equivalent to greater happiness. It's an attitude, yeah, yeah, yeah,
Speaker 1: that I need to acquire more and if I get more,
Speaker 1: it will make me happier. And that's just not true.
Speaker 1: And in fact, although there are some instances in which
Speaker 1: a bit more money could make us happier. Yeah. For example,
Speaker 1: if someone's in poverty, right, if they're able to increase
Speaker 1: their salary to a certain amount and they're able to
Speaker 1: achieve some sort of baseline standard of living, certainly their
Speaker 1: quality of life is going to improve and there should
Speaker 1: be some happiness derived from that, right. Yeah, most definitely,
Speaker 1: If if we can't afford the basic necessities of life,
Speaker 1: then an increase in access to money would make a
Speaker 1: big difference. Right. But oftentimes, most of us, in middle
Speaker 1: class America, we end up buying ourselves more headaches than
Speaker 1: more money we get. We don't become happier by hoarding
Speaker 1: more or or even by pursuing happiness itself. Typically there's
Speaker 1: kind of a law of diminishing returns when it comes
Speaker 1: to having more money. Yeah, it's no surprise that the
Speaker 1: overconsumption of goods and services and just buying lots of stuff,
Speaker 1: how that does not lead to our happiness. And with that,
Speaker 1: over the past several years, I feel that there has
Speaker 1: been a shift towards folks pursuing experiences, right, Like you
Speaker 1: hear people say that, like, Oh, I'm all about the experiences.
Speaker 1: I'm not about stuff. You know, there's a little more
Speaker 1: mindfulness in that area, especially publicly. There's just a broader realization.
Speaker 1: I think that stuff matters less and experiences matter more.
Speaker 1: Right exactly, they can be better than stuff. They can
Speaker 1: change your life. You have an amazing experience, you learn
Speaker 1: something about yourself, you learn something about other cultures. But
Speaker 1: even trips, even vacations, even different experiences that you can
Speaker 1: go on, you can get used to those the same
Speaker 1: hedonic treadmill that we experience when it comes to purchasing
Speaker 1: things at home and the inflated lifestyle that we have
Speaker 1: that applies to vacations and trips and these different experiences
Speaker 1: as well. Our friend Carl Mr He's got a great
Speaker 1: post over on his site about that very thing. We'll
Speaker 1: link to that in our show notes. But the conclusion
Speaker 1: that he comes to, at least for himself personally, is
Speaker 1: that for him, it's not about stuff. For him, it
Speaker 1: is not about vacations and travel. It's about finding joy
Speaker 1: and contentment in the everyday life. The vast majority of
Speaker 1: our lives are spent doing very normal things, and if
Speaker 1: we're able to find enjoyment in those things, how much
Speaker 1: richer would our lives be? Right If you enjoy your
Speaker 1: coffee a certain way every single morning and you're able
Speaker 1: to recognize that, just imagine how much value that you're
Speaker 1: actually bringing to your life with something that does not
Speaker 1: cost very much money. If you know that by buying
Speaker 1: this one burg grinder, that you're gonna be able to
Speaker 1: make some fantastic coffee, which is, by the way, that's
Speaker 1: what you need. You need a burg grinder. We touched
Speaker 1: on coffee a few weeks ago. We didn't even talk
Speaker 1: about how to grind your beans. But I've got some
Speaker 1: crummy grinder. I need a burg Grinderrinder's that you guys do? No, man,
Speaker 1: you can need to get one, all right. It crushes
Speaker 1: the bean instead of chops it. Okay, it doesn't overheat
Speaker 1: it and spoil the flavor. That's I'm getting nerdy over here.
Speaker 1: But but if you know that just something as simple
Speaker 1: as that can can bring a lot of value and
Speaker 1: joy to your every day, that's something worth investing in.
Speaker 1: Think about the efficiency and the practicality of something like
Speaker 1: that and the impact that it could have on your life. Yeah.
Speaker 1: The last thing I really want to say about money
Speaker 1: not making us happier, because I think that's just not
Speaker 1: a truism, is that part of the way that we
Speaker 1: combat that is by developing an understanding of what enough
Speaker 1: looks like in our lives. And so if we can
Speaker 1: become okay with what we have, if we can practice thankfulness,
Speaker 1: a little bit more gratitude for what we have, and
Speaker 1: an understanding that more doesn't necessarily equate to better, I
Speaker 1: think really that's going to help us see that more
Speaker 1: money doesn't necessarily make us happier, that those things just
Speaker 1: aren't equivalent. All right, Matt, you want to debunk that
Speaker 1: next piece of financial advice. Yeah, let's do it, man.
Speaker 1: The next piece of advice. It takes money to make money. Obviously,
Speaker 1: this is something that lots of folks have heard. Right.
Speaker 1: While this is true for businesses maybe that are looking
Speaker 1: to grow, maybe get that venture capital money. I mean,
Speaker 1: I'm still looking for my own personal angel investor. Are
Speaker 1: you willing to auction off shares of your soul? Probably would.
Speaker 1: It would take things though, But that's you know, with businesses,
Speaker 1: but also for you personally as well. That might be
Speaker 1: true when it comes to investing in the stock market
Speaker 1: or saving for retirement. If you're trying to make passive
Speaker 1: income a real thing, you have to do that with
Speaker 1: money because that's the vehicle that's actually earning you money. Yeah,
Speaker 1: of course you need some sort of money to be
Speaker 1: able to invest, right. It does take, for instance, being
Speaker 1: able to invest a couple of thousand dollars into your
Speaker 1: i RA every year or to hit a certain percentage
Speaker 1: in your four oh one K in order to grow
Speaker 1: your wealth. Yeah, that's actually when you have money making
Speaker 1: you money. And like that's the truth of the statement,
Speaker 1: right right, right, right, So there is definitely this carnal
Speaker 1: a truth still. But but however today it's more often
Speaker 1: used as an excuse by folks as to why they
Speaker 1: can't get ahead and save more. It's a reason to
Speaker 1: justify not pursuing entrepreneurial endeavors that you just don't have
Speaker 1: the money in order to get started. And I think
Speaker 1: in today's day and age, this truism has actually become
Speaker 1: so much less true because of the ease of being
Speaker 1: able to invest. You're rounded up change on an app
Speaker 1: like Acorns, or open up a retirement account with five
Speaker 1: bucks or zero dollars depending on who you're with, with
Speaker 1: no minimum balances, no minimum monthly contribution. It's just gotten
Speaker 1: so much easier. It doesn't take a lot of money
Speaker 1: to get started. It just takes something. It just takes
Speaker 1: prioritizing it. And when we're talking about entrepreneurial endeavors, becoming
Speaker 1: an online entrepreneur, creating something and putting it out there,
Speaker 1: the barrier to entry has been demolished. And there's something
Speaker 1: that almost all of us could do if we would
Speaker 1: just take the time and the energy to learn how
Speaker 1: to do it and to just get started. Ye Joel,
Speaker 1: So what it takes to pursue that entrepreneurial endeavor is
Speaker 1: that hard work, and that hard work over time. That's
Speaker 1: the thing, right, is to not get burnt out and think, yeah,
Speaker 1: I can you know, hit this hard for maybe a
Speaker 1: couple of months, but often it takes a long time.
Speaker 1: And that's the sort of sweat equity that it takes
Speaker 1: to get something off the ground. And on a personal level,
Speaker 1: it doesn't absolutely require you to make a lot more money.
Speaker 1: You could also just spend less. So what that means
Speaker 1: is cutting back, and I know that can be really difficult.
Speaker 1: Once you've sort of gotten to a certain level of comfort,
Speaker 1: it's a lot harder to remove that from your life
Speaker 1: than it is to have never gotten there in the
Speaker 1: first place. So it's easy to say, oh, yeah, I
Speaker 1: just cut back, but I know that that's difficult. And
Speaker 1: that's why priorities are so important to give you that focus,
Speaker 1: in that drive to actually accomplish what it is that
Speaker 1: you truly want to accomplish. So you're saying, I don't
Speaker 1: have to sell part of my soul to that angel investor,
Speaker 1: just work hard and uh spend less. All right, it's
Speaker 1: so easy. It's so easy when you say it. All right, Well,
Speaker 1: there are some more conventional financial mantras that Matt and
Speaker 1: I feel compelled to tackle, and we'll get to a
Speaker 1: few more after the break. All right, Joe, we have
Speaker 1: talked through two of these conventional financial pieces of advice
Speaker 1: or truisms. We're kind of calling them truisms too, aren't we?
Speaker 1: More like false is um? There's truthiness involved here. Let's
Speaker 1: get to our next one, though, which is save ten
Speaker 1: percent of your income. That sounds nice, right, It does
Speaker 1: sound nice, and honestly, that is a great place to start,
Speaker 1: but don't stop there. If you're looking to achieve any
Speaker 1: sort of financial independence while you still have some energy
Speaker 1: left to actually enjoy financial independence, you're going to need
Speaker 1: a savings rate that is more than ten percent. Yeah. Man,
Speaker 1: I feel like when I was just starting out, I
Speaker 1: was listening to financial experts, I was trying to garner wisdom,
Speaker 1: and I heard a lot of people say to save
Speaker 1: and invest ten percent of your income. I heard others
Speaker 1: go out there on a limb and say fift And
Speaker 1: I think because I wasn't challenge us to save more,
Speaker 1: I didn't save more. And ultimately, now that I'm older
Speaker 1: and I've seen what the numbers look like and what
Speaker 1: I'll actually need to save in order to reach any
Speaker 1: sort of financial independence goals I have. It's just gonna
Speaker 1: take saving at a much higher clip. And so we
Speaker 1: would say that is a great minimum goal to aim for,
Speaker 1: which might sound crazy to some people. I mean, the
Speaker 1: national savings rate is what like five to seven percent
Speaker 1: something like that, And a great way to portion out
Speaker 1: that savings rate is to put half of your money
Speaker 1: in a savings account with a good rate to return
Speaker 1: for nearer term goals that you have, and then and
Speaker 1: in the other half in retirement accounts like your four
Speaker 1: own k roth, Ira, h s A, etcetera. Yeah, with
Speaker 1: those near term goals in addition to those long term
Speaker 1: goals of retirement, you have some balance, right, You have
Speaker 1: those near term goals of maybe saving up enough money
Speaker 1: to put down a nice down payments or paying for
Speaker 1: that new used car that you're gonna buy in cash.
Speaker 1: I think striking that balance is so important when it
Speaker 1: comes to staying motivated and feeling like that you're able
Speaker 1: to enjoy the benefits of your hard work now while
Speaker 1: at the same time setting yourself up for the future.
Speaker 1: And I want to say as well too that these
Speaker 1: are awesome goals to have, and this is something that
Speaker 1: we work towards. But you know, in particular me being
Speaker 1: self employed, some years are better than others, and there's
Speaker 1: years where I don't actually hit that percentage, and that's okay,
Speaker 1: Like it's not the end of the world. But knowing
Speaker 1: what it is that you're seeking after, what the goal is,
Speaker 1: that's the high bar that we're trying to set here. Yeah. Man,
Speaker 1: sometimes I just feel like a bigger challenge helps me
Speaker 1: rise to the occasion. It helps give me that subtle
Speaker 1: shift in mindset. And it might be a goal that
Speaker 1: even feels almost a little bit impossible, but but having
Speaker 1: it on your radar at least something that you want
Speaker 1: to aim for in the distant future can be really
Speaker 1: helpful even now to kind of tweak some things to
Speaker 1: start getting you headed in that direction. It sounds to
Speaker 1: me like maybe you would enjoy a nice Friday Night
Speaker 1: Lights like kind of locker room speech like that, you're
Speaker 1: all about the underdog. I've never seen Friday Night Lights,
Speaker 1: but yeah, I mean either, but I'm guessing there's awesome
Speaker 1: halftime speeches that are given in the locker room. Right now,
Speaker 1: You're probably right, You're probably right. Yeah, I'll take it, go, go,
Speaker 1: get it, go, save, take home pay. Yeah, make it happen.
Speaker 1: It's all night. That's not Friday night lights. That's the
Speaker 1: other one. Who knows? Who knows? Okay, all right, let's
Speaker 1: get to the next conventional piece of financial wisdom that
Speaker 1: we have to debunk here, which is that stock market
Speaker 1: investing is risky. And we went into a good bit
Speaker 1: of depth hill on this back in episode sixty nine.
Speaker 1: And it's true that investing haphazardly is risky, and money
Speaker 1: in the stock market will fluctuate, there will be great
Speaker 1: highs and there will be low lows, but that's not
Speaker 1: necessarily risk. The true risk in stock market investing is
Speaker 1: not doing it, because inflation eats at your money. And
Speaker 1: another risk is thinking that you can time or outsmart
Speaker 1: the market. Both of those are much worse outcomes than
Speaker 1: slowly and steadily investing the money that you have. And
Speaker 1: so the true solution to avoiding that risk while investing
Speaker 1: in the stock market is to invest in index funds,
Speaker 1: widely diversified index funds, but over the long term, because again,
Speaker 1: the market is going to have those ups and downs.
Speaker 1: But when you are invested over the long haul, thirty
Speaker 1: to forty years of ups and downs. When you're zoomed,
Speaker 1: it looks pretty smooth. It's smooth riding. You don't notice
Speaker 1: those bumps along the way. So that's the lens, right,
Speaker 1: that's the mindset that I want to have when it
Speaker 1: comes to investing in the stock market. You know, related
Speaker 1: to investing the stock market is bonds. There's a piece
Speaker 1: of financial advice out there that says that you should
Speaker 1: hold a percentage of your bonds that's equivalent to your age.
Speaker 1: And it's true you want to minimize that volatility as
Speaker 1: you near retirement. But what if you don't start saving
Speaker 1: and investing for retirement until you're much much older. For example,
Speaker 1: if you're fifty years old, you don't want half of
Speaker 1: your portfolio in bonds if you don't have much value
Speaker 1: in your portfolio. Regardless of your age, if you're in
Speaker 1: that wealth building stage of investing, you need the majority
Speaker 1: of your investments in stocks. Yeah, there's a big difference
Speaker 1: between wealth accumulation and wealth preservation, right, Matt. And and
Speaker 1: it's not necessarily dependent on the age you're at. You
Speaker 1: might be in the wealth building phase at age fifty
Speaker 1: five because you're brand new to investing and you're just
Speaker 1: getting started. That fifty year old you mentioned might still
Speaker 1: be in the wealth building phase, even though experts would
Speaker 1: be them towards a less risky portfolio. We think that
Speaker 1: when you're in the beginning stages of investing, it doesn't
Speaker 1: matter what age you are, you need to have a
Speaker 1: portfolio that's more open to risk, which is more open
Speaker 1: to volatility, which means having more of your money in
Speaker 1: stock type choices. While we're still talking about investing, another
Speaker 1: quick piece of advice that you often hear is that
Speaker 1: you need to educate yourself on investing and make sure
Speaker 1: that you stay informed. Oftentimes, in lots of areas of life,
Speaker 1: it's important to know what you're doing and to make
Speaker 1: sure that you've done the research. But a little bit
Speaker 1: goes a long way, and in the world of investing,
Speaker 1: too much reading and too much screen watching can actually
Speaker 1: lead to hubrists and worse eventual outcomes. Yes, so the
Speaker 1: answer on this one is to invest in the entire
Speaker 1: market by choosing one of our favorite funds, like with
Speaker 1: Vanguard vt s A X or v T I or
Speaker 1: with Fidelity f z R O X f c Rocks
Speaker 1: FC Rocks. There are so many people who pride themselves
Speaker 1: on their investing knowledge, but that knowledge can lead to
Speaker 1: worse outcomes by essentially fiddling with their portfolio too frequently
Speaker 1: and making changes more than they should. The best investors
Speaker 1: aren't necessarily the ones that know the most, that watch
Speaker 1: CNBC every day. They're the ones that know enough, and
Speaker 1: they know enough to kind of set it and forget
Speaker 1: it and stay the course. Please, Joe, if you don't
Speaker 1: have a stock ticker, you know, on your computer at
Speaker 1: work with all the stocks on there, you're not a
Speaker 1: real investor. Not doing it right. No, man, I don't
Speaker 1: even open statements. I very rarely look at my balance,
Speaker 1: just a couple of times a year. And honestly, ignorance
Speaker 1: is bliss. It makes me a better investor. And Jill,
Speaker 1: another really popular piece of advice that you here tossed
Speaker 1: around a lot is that your house is a good investment.
Speaker 1: Heard that one before. Yeah, we actually did an entire
Speaker 1: episode on just this topic on episode thirty. And yes,
Speaker 1: while it is true that homes do typically go up
Speaker 1: in value, well, the fact is they don't go up
Speaker 1: enough to be considered a good investments. On average, real
Speaker 1: estate has increased about four percent annually since the nineteen sixties.
Speaker 1: And I don't know if you are aware. Four percent
Speaker 1: isn't a great rate of return? Yeah, not not as
Speaker 1: good as the market overall. Right, In some of those
Speaker 1: funds that we mentioned, if you were invested there, you
Speaker 1: get a much better rate of return over the years. Yeah,
Speaker 1: closer to ten percent over that very same period of time. Yeah.
Speaker 1: So the average person, instead of buying a home and
Speaker 1: thinking it's a good investment, funnel more of your money
Speaker 1: towards the stock market or run the numbers, and treat
Speaker 1: your primary home more like an investment. There are ways
Speaker 1: to do that too, And we're not against buying a
Speaker 1: home even if it's not a good investment, but just
Speaker 1: know the truth that you're buying the home because you
Speaker 1: love it. Don't trick yourself into thinking that it's also
Speaker 1: just this fantastic investment, because there's a good chance that
Speaker 1: it isn't. That's Rachel. And so we're going to cover
Speaker 1: a few more sayings, including one or two said by
Speaker 1: this guy named Dave Ramsey. Have you heard of him before?
Speaker 1: Heard of him? Yeah, we're gonna get to that right
Speaker 1: after the break, all right, that we're back and We're
Speaker 1: gonna myth bust a couple of those Dave Ramsey things
Speaker 1: in just a minute. But the next piece of financial
Speaker 1: advice that we need to debunk is to start saving
Speaker 1: for your kids college early. And yes, we agree, right,
Speaker 1: the earlier the better when you're saving and investing for anything.
Speaker 1: But I feel like right now we're in this interesting
Speaker 1: space in personal finance where there's a lot of pressure
Speaker 1: on parents to save for their kids, to save for
Speaker 1: their kids college, and to save a lot. But I
Speaker 1: feel like this puts a lot of pressure on us
Speaker 1: as parents from putting money where it often should be
Speaker 1: going first. Yeah, well that's what is so key, Jill.
Speaker 1: You said it right there. We're talking about retirement and
Speaker 1: that's where your money should be going first. The thing is,
Speaker 1: we're not against saving for our kids college, right, We're
Speaker 1: not against being generous trying to do nice things for
Speaker 1: our kids. We just want to make sure that we
Speaker 1: are prioritizing retirements so that when we are older, twenty
Speaker 1: years down the road, that we are in a strong
Speaker 1: place financially. Because when you're in a strong position with
Speaker 1: your money, that gives you more options, and that is
Speaker 1: an incredible and a very healthy place to be able
Speaker 1: to help your children with college at that point, make
Speaker 1: sure your own financial footing is solid before you try
Speaker 1: to start helping your kids with theirs. All right, Matt,
Speaker 1: we're gonna step in here be us. We have to
Speaker 1: disagree with Dave Ramsey. And there are are a lot
Speaker 1: of Dave Ramsey heads out there, and for good reason.
Speaker 1: You know, we've talked about how much of a difference
Speaker 1: he's made in so many lives. He's made a huge
Speaker 1: impact in my life, man, Yeah, yeah, I know, I
Speaker 1: know he's he kind of got you started down the
Speaker 1: path of thinking about money. But we do have to
Speaker 1: say that there are a couple things we disagree with
Speaker 1: and and here's the first one. Debt is dumb. And
Speaker 1: that's a statement that's made popular by Dave. Right that
Speaker 1: you that you heard a lot, Matt when you were
Speaker 1: listening to him. Yeah, he loves saying that, man. And
Speaker 1: the fact is, Dave hates any type of debt, including
Speaker 1: mortgages like sure, you should be getting rid of consumer debt, right,
Speaker 1: and even any other debt with higher interest rates. But man,
Speaker 1: you and I we feel that lower levels of debt
Speaker 1: are okay as long as you're investing. Yeah, man, I
Speaker 1: think taking on debt with low interest rates, like let's
Speaker 1: say a mortgage or student loan debt, even you want
Speaker 1: to be wise about it. You want to be really intentional,
Speaker 1: You want to be smart, and you don't want to
Speaker 1: bite off more than you can chew. But most of us,
Speaker 1: if we think about how long it would take to
Speaker 1: buy a house in a hund percent cash, I mean
Speaker 1: it would be a long, long, long long time for
Speaker 1: many of us who would never happen. And the same
Speaker 1: thing goes for a college education. And I do think
Speaker 1: student loans have gotten out of control and we need
Speaker 1: to be really thoughtful and reserved in the debts that
Speaker 1: we're willing to take on because it can get overwhelming
Speaker 1: really quickly. But debt is not dumb, and there are
Speaker 1: reasons that a smart person can take out debt and
Speaker 1: use it to their advantage as they're trying to build wealth. Yeah.
Speaker 1: So on that note, it is no surprise that you
Speaker 1: and I are both a fan of our mortgages that
Speaker 1: we have that are in the threes, because that allows
Speaker 1: us to take our money and instead of paying down
Speaker 1: those mortgages, instead of paying down those debts, we are
Speaker 1: taking that money and we are investing it. Yeah, and
Speaker 1: prioritizing investing not only allows us to get higher returns
Speaker 1: over the years, but it also gives us current tax advantages. Right. Yeah,
Speaker 1: this whole conversation around debt really is just a nuanced
Speaker 1: one that we need to have. It's I think it's
Speaker 1: difficult to come to a discussion like this and have
Speaker 1: a blanket statement where you say, just across the board,
Speaker 1: debt is dumb, right, And I don't want it to
Speaker 1: sound like that we're picking on Dave Ramsey here, but
Speaker 1: you know, something that's interesting is that he started his
Speaker 1: whole approach to finances we know where all debt is
Speaker 1: dumb back in the nineties. And man, I got curious
Speaker 1: and I was looking at what thirty year mortgage interest
Speaker 1: rates were back in the nineties when he was starting,
Speaker 1: and they were over eight percent, as a far cry
Speaker 1: from where they are now. Yeah, that's that's really high.
Speaker 1: So back then, yeah, it made a lot of sense
Speaker 1: to pay down your mortgage to get rid of that
Speaker 1: debt as soon as possible, because that is a guaranteed
Speaker 1: eight and a half percent that you are essentially making
Speaker 1: on your money. It makes a ton of sense. But
Speaker 1: the fact is the financial landscape has changed since then,
Speaker 1: and so I think it's just healthy for us from
Speaker 1: a financial standpoint to revisit the statements that we hear
Speaker 1: because there has been changed that has occurred, and so
Speaker 1: it's important for us to correspondingly change our behavior. In response, Yeah,
Speaker 1: you just talked about mortgage rates. Well, I think something
Speaker 1: similar could be said for student loans. Back in college
Speaker 1: costs a whole lot less than it does today. Student
Speaker 1: loans for a lot of people are almost this necessary.
Speaker 1: Evil you and I met, We would encourage people to
Speaker 1: figure out any way they could to to save money
Speaker 1: on school, to to pay less, to find more scholarships,
Speaker 1: take more ap classes, clip out altogether of certain classes
Speaker 1: that you can become an r A, whatever, all these
Speaker 1: ways that you can cut down on the cost of college.
Speaker 1: But for a lot of people, taking out some sort
Speaker 1: of student loan debt is going to be necessary. So
Speaker 1: in that case, to further your education and pursue a
Speaker 1: career that will be more lucrative than for going to
Speaker 1: college education altogether, well, debt is not dumb in that
Speaker 1: case either. Okay, while we're talking about Dave Ramsey, let's
Speaker 1: talk about his approach towards credit cards, and he would say,
Speaker 1: to cut up your credit cards. That's what he does.
Speaker 1: We've talked about this fairly often, but your credit score
Speaker 1: is so important today and credit cards are one of
Speaker 1: the best ways to get a healthy credit score and
Speaker 1: to keep it there. We're talking about mortgage rates, the
Speaker 1: potential to land a job or not, and even insurance rates.
Speaker 1: These are all things that are affected by our credit score. Yeah, Matt,
Speaker 1: not to mention some of the protections that credit cards
Speaker 1: provide for us as consumers when we buy things. Yeah,
Speaker 1: we talked about that a little bit in our episode
Speaker 1: about lesser known credit card benefits back in the day.
Speaker 1: Another thing is the rewards that can be earned if
Speaker 1: we put our normal, everyday shopping and purchases onto a
Speaker 1: credit card as opposed to paying in cash or with
Speaker 1: a debit card. You can get sweet sign up bonuses
Speaker 1: or or mega discounted travel, or even just two percent
Speaker 1: cash back by paying with the credit card instead of
Speaker 1: paying in other ways. So the answer is not that
Speaker 1: you should cut up your credit cards, but that you
Speaker 1: should be very very careful about how you use them.
Speaker 1: That you should use them as a tool because that's
Speaker 1: what they are. They can be very good for the
Speaker 1: conscious consumer that pays their credit card bill in full
Speaker 1: and on time every single month. Yeah, and here's the thing.
Speaker 1: As we go through these conventional tropes, right, these standard
Speaker 1: pieces of advice that we're used to hearing, we can
Speaker 1: see where people are coming from. Rules of thumb can
Speaker 1: help us along our way as we make financial decisions,
Speaker 1: but it's important for us to question these assumptions as well.
Speaker 1: I think for a lot of folks who don't have
Speaker 1: a grasp on their finances, these rules of thumb are
Speaker 1: are good, they can be helpful. They're they're good, sort
Speaker 1: of like markers along the right. But for someone who
Speaker 1: has maybe just a little bit better understanding other finances,
Speaker 1: I'm gonna guess anyone that's listening to this podcast, those
Speaker 1: hard and fast rules don't stand. And I think we
Speaker 1: could greatly benefit by questioning these pieces of advice and
Speaker 1: seeing what we should and shouldn't do with our money. Yeah, man,
Speaker 1: I feel like there's a lot of nuance in the
Speaker 1: way that we had to tackle a lot of these
Speaker 1: conventional pieces of advice. Not all of them are completely idiotic,
Speaker 1: Like there's something there that makes sense to a lot
Speaker 1: of people. But I think if we do question a
Speaker 1: lot of these assumptions and do a little more digging,
Speaker 1: there's way better advice. There are way better ways that
Speaker 1: we can behave as opposed to just blindly following the
Speaker 1: things that we've heard over a long period of time.
Speaker 1: But think this all kind of begs the question if
Speaker 1: we are debunking some of this conventional financial advice, like
Speaker 1: where can we turn? And I guess, really like, why
Speaker 1: should people trust and believe that that we have a
Speaker 1: better idea or a better way of thinking than some
Speaker 1: of the folks out there that have been touting some
Speaker 1: of these pieces of advice for for years, maybe even decades. Well,
Speaker 1: part of that answer is that we would encourage folks
Speaker 1: to look for financial advice that is unbiased. A question
Speaker 1: that you can always ask yourself, is our folks trying
Speaker 1: to sell me something. If you have a financial advisor,
Speaker 1: you need to know how they are paid. Are they
Speaker 1: paid on a commission by the products that they sell you?
Speaker 1: Or are they a fee only advisor where they are
Speaker 1: there to give you great, sound financial advice that's in
Speaker 1: your own best interest. Yeah, And really an important part
Speaker 1: of this is to do your own due diligence, dig
Speaker 1: a little bit deeper. Multiple sources of information can be
Speaker 1: helpful as you seek to understand concepts of personal finance
Speaker 1: investing in more. I think blindly following one person, listening
Speaker 1: to their advice and just trusting it wholeheartedly and not
Speaker 1: testing it for yourself, and that that's just not a
Speaker 1: good way to go. There are a lot of great
Speaker 1: people out there giving really good financial advice, but you
Speaker 1: also have to be careful when people are giving you
Speaker 1: advice about money. And it's amazing how even just buying
Speaker 1: into a few of these misconceptions can massively affect the
Speaker 1: way you spend, the way you save, and the way
Speaker 1: you invest. And one other thing to keep in mind
Speaker 1: is that most all of these financial concepts that were
Speaker 1: discussing here are easy to understand. The vast majority of
Speaker 1: folks out there should be able to wrap their heads
Speaker 1: around them. And if you were talking to a financial
Speaker 1: advisor or somebody else that's giving you advice, there should
Speaker 1: be a red flag that goes up if they are
Speaker 1: not easily able to explain to you how that products
Speaker 1: or how that service works, if it seems overly complicated,
Speaker 1: there's a good chance that it could be a crappy
Speaker 1: product that is being sort of disguised, or that there
Speaker 1: would even be fees built into them in such a
Speaker 1: way that you would not be able to easily identify them.
Speaker 1: You man, lofty promises and complex products, or just major
Speaker 1: warning signs like while we're on this path to figuring
Speaker 1: out what financial wisdom is worth following? Yes, so are
Speaker 1: you ready to talk about this beer? Let's do it
Speaker 1: all right? We had on the show Golden Sabbath. This
Speaker 1: is my big Island brew Hoss sent to us by Cody.
Speaker 1: So this is the second beer that we got to
Speaker 1: enjoy from Hawaii. So thanks again to Cody. Joel. Were
Speaker 1: your thoughts on this beer? Next time? Can Cody send
Speaker 1: us plane tickets? Because, uh, you know what, this beer
Speaker 1: was almost as good as a plane ticket. It was
Speaker 1: really really tasty. Made with Hawaiian honey. You totally get
Speaker 1: that nice honey sweetness with just a touch of hot
Speaker 1: bitterness and then really strong Belgian yeast flavors coming through.
Speaker 1: I love it when a beer has kind of multiple
Speaker 1: notes to to pique your interest, and this one had that.
Speaker 1: It was really really tasty. Yeah for me, What stood
Speaker 1: out about this beer was it's beautiful golden honey color.
Speaker 1: Right you poured in the glass and when you read
Speaker 1: on the bottle of that, you see the word like honey,
Speaker 1: and then you actually see what looks like honey in
Speaker 1: your glass, although not quite as viscous. I don't know.
Speaker 1: Something about that rings true to me. And while I
Speaker 1: was drinking this, I was just imagining myself sitting there
Speaker 1: in Hawaii, even though I never have, but drinking a nice, clean,
Speaker 1: refreshing Belgian style a like this definitely made me think
Speaker 1: of Hawaii. Maybe not like on the beach necessarily, but
Speaker 1: sort of like maybe sitting on a porch overlooking a beach.
Speaker 1: How about that? There you go, Okay, that sounds nice? Yeah,
Speaker 1: And man, I feel like we don't need any final
Speaker 1: thoughts here. We kind of just wrapped it up right
Speaker 1: before we got to the beer. We got some really
Speaker 1: smart listeners and hopefully they can see that that kernel
Speaker 1: of truth that exists in in some of these conventional
Speaker 1: money sayings doesn't necessarily always hold true. Sometimes is inaccurate,
Speaker 1: or at most maybe used to be true and isn't
Speaker 1: true anymore, And so a little bit of question can
Speaker 1: be really good for us when it comes to some
Speaker 1: of these money sayings that we've heard throughout the years. Yeah,
Speaker 1: these tidbits of popular financial advice, they might be helpful
Speaker 1: for someone who is doing just a really, really poor
Speaker 1: job and they have no clue on what to do
Speaker 1: with their money. These tidbits of financial advice, they might
Speaker 1: be helpful. But we know for you, how the money
Speaker 1: listeners out there, that it's not going to cut it,
Speaker 1: and we would encourage you to dig a little bit
Speaker 1: deeper and take your money to the next level. Next
Speaker 1: level stuff, baby, I like it? Is that going to
Speaker 1: be it? Yeah? That's it for this episode, man. So
Speaker 1: folks want the show notes, they can check those out
Speaker 1: on our website, how to money dot com. And if
Speaker 1: you're listening to this episode and this is the first
Speaker 1: or even second or third episode that you've listened to
Speaker 1: and you have not yet hit that subscribe button, go
Speaker 1: ahead and mash that button so you're notified of upcoming episodes.
Speaker 1: All right, Matt, that's gonna do it, buddy. Until next time,
Speaker 1: Best Friends Out, Best Friends Out. M