Speaker 1: Pushkin. Welcome to season two of Against the Rules. I'm
Speaker 1: Michael Lewis. Before we get to where we're going, I
Speaker 1: want to go back for a moment to where we've
Speaker 1: been a little backstory from season one. The story involves
Speaker 1: a woman named Katie Highland. She's in her late thirties,
Speaker 1: a public school teacher, wife, mother of two small children.
Speaker 1: Her entire adult life, she'd been made miserable by student
Speaker 1: loans she'd taken out when she was eighteen years old.
Speaker 1: I don't see any payoff, and it just keeps getting
Speaker 1: harder and harder, and that's soul crushing her state of mind. Well,
Speaker 1: even her children could see it wasn't good. It might
Speaker 1: be actually kind of painful for her, because all of
Speaker 1: this counts with a bell and getting something changed to
Speaker 1: another thing that's the same, but changing to it. I
Speaker 1: love you if you well, it does feel kind of painful,
Speaker 1: right mommy. Yeah. A lot of the papers, Yeah there,
Speaker 1: it's a lot of paperwork. It's a lot of and
Speaker 1: a lot of pain. Yea for doing it. This killed
Speaker 1: me to hear, but especially this next part. It is
Speaker 1: very good to be thoughtful for everybody, but the person
Speaker 1: who's the most best person on earth is this lady
Speaker 1: right there, This lady Jackson's mom, Katie Highland, shouldn't have
Speaker 1: owed anybody a dime. That was the point of the story.
Speaker 1: Katie had qualified years ago for a program that Congress
Speaker 1: created to forgive the student loans of public servants, but
Speaker 1: her student loan servicer made money offer only as long
Speaker 1: as she still owed the money, and they had more
Speaker 1: or less tricked her to keep her in debt. I
Speaker 1: like to try to always find the good in people,
Speaker 1: and when you have experiences like my experience, you get
Speaker 1: discouraged and you start to think that people aren't as
Speaker 1: good as you once thought they were. Sometimes you stumble
Speaker 1: onto a story and you can't get it out of
Speaker 1: your head. Katie Hyland had played by the rules, made
Speaker 1: all her loan payments, thrown herself into being a good
Speaker 1: mother and a great teacher, and she'd been abused by
Speaker 1: the company that was meant to help her navigate her finances,
Speaker 1: and the Consumer Financial Protection Bureau, the one financial referee
Speaker 1: that might have stepped in to help her, was doing
Speaker 1: nothing to help. So we decided to help on the
Speaker 1: website go fund me to try to pay off Katie's
Speaker 1: student loans. When I looked at the page and I
Speaker 1: think I saw at that time that it was like
Speaker 1: eleven thousand dollars. I was completely blown away. I was
Speaker 1: at my son's baseball game. I remember I showed my mom.
Speaker 1: We were like freaking out about it and just reading
Speaker 1: people's responses and the encouraging words and like where people
Speaker 1: were from. There were people from Ireland, there were people
Speaker 1: from England. We started this campaign two months after the
Speaker 1: show originally aired, so after most people had listened to it.
Speaker 1: Even then, it took you our listeners less than three
Speaker 1: months to pay off fifty thousand dollars, and I think
Speaker 1: the last person that donated donated like enough to like
Speaker 1: hit it. And it was just so I was like,
Speaker 1: oh my god, Mom, like it happened. We did it,
Speaker 1: and I can't even tell it's because you said to
Speaker 1: me in one email, like just pay it forward or
Speaker 1: just do it for someone else. And every go fund
Speaker 1: made campaign that I see, I make it a point
Speaker 1: to do the same, even if it's ten twenty whatever
Speaker 1: I can do that. Don't you dare go get into
Speaker 1: debt again. I thought that would be the end of
Speaker 1: the story, but there was a lot more to it.
Speaker 1: Of course there was more to it. I mean, Katie
Speaker 1: had told us that financial stress had caused her to
Speaker 1: grind her teeth at night, and she started losing her teeth.
Speaker 1: She used to smile all the time, Now she avoided smiling,
Speaker 1: and along the way she'd picked up another debt problem. Already,
Speaker 1: I'm on a payment plan with a dentist like five
Speaker 1: hundred dollars a week. I've spent like thirty thousand dollars.
Speaker 1: I've lost a bunch of teeth through the grinding and
Speaker 1: all of that. That part has been really difficult. So
Speaker 1: I still have a lot, you know, remaining with that.
Speaker 1: It's still a lot to pay off, still a lot
Speaker 1: of dental work to get done. So you do have
Speaker 1: credit card debt? Yeah, I have credit card. Any big
Speaker 1: purchases that I've had to make, I've put on credit cards.
Speaker 1: Unless you're a very lucky kind of American, you may
Speaker 1: recognize yourself here. You try to do prudent things to
Speaker 1: save money, well, like drop the vision card ridge on
Speaker 1: your health insurance. Then suddenly your daughter needs glasses. That
Speaker 1: was the kind of thing that Katie and her husband
Speaker 1: did that wound up biting them. They now have five
Speaker 1: credit cards between them, all charging high interest rates, even
Speaker 1: though their credit score is great. Personally, I just want
Speaker 1: to not be scared to look at my bank account.
Speaker 1: I don't think I've looked at my bank account in years,
Speaker 1: to be honest. I just, yeah, that's not a good
Speaker 1: I know that's not healthy, but I don't know why.
Speaker 1: It's just like terrifies me. I'm I'm not sure why.
Speaker 1: The credit card industry already had her by the throat.
Speaker 1: She was ashamed of it, and she had no sense
Speaker 1: that anyone would help this time. Well, so here's my goal.
Speaker 1: My goal season one, the goal was to get rid
Speaker 1: of your student debt. In season two as they restore
Speaker 1: your smile. So that's what we're gonna try to do,
Speaker 1: all right, Okay, thanks Michael. I'm Michael Lewis, and this
Speaker 1: is against the rules. Last season was about referees, the
Speaker 1: attack on our societies, WHEREFS is obviously a big problem.
Speaker 1: This season is about coaches. Yeah, what are you doing
Speaker 1: and their rise in American life? You need to stop
Speaker 1: being a lazy piece of shit and work for your
Speaker 1: picture or I'm going to kick your ass. Got it.
Speaker 1: It wasn't that long ago the coaches were confined to sports.
Speaker 1: Now they're everywhere. We're going to refocus like we're training
Speaker 1: a puppy, if we're going to train your mind like
Speaker 1: we train a puppy. They're people who call themselves life
Speaker 1: coaches and other people who call themselves death coaches. I
Speaker 1: am here to guide you and making sure you grow
Speaker 1: as a person. Every big time corporate boss has an
Speaker 1: executive coach, but now so do new nbas starting out
Speaker 1: at Wall Street banks and consulting firms. These are super
Speaker 1: smart people who maybe just haven't heard the right strategies.
Speaker 1: You can hire a coach to improve your online dating
Speaker 1: performance or your career. It's a saying which is therapy
Speaker 1: is a path of tears and coaching is the path
Speaker 1: of lafta. And that's all great, but coaching is also
Speaker 1: becoming an odd source of unfairness. Just look around and
Speaker 1: ask yourself who gets good coaching and who doesn't. That
Speaker 1: guy would never have gotten into Yale, but this guy
Speaker 1: who got all this coaching did get into Yale. It
Speaker 1: just seems like anyone who can answer these questions has
Speaker 1: got to be coached. Oh my god, we're loving this
Speaker 1: fucking team. Rice money is a great place to ask
Speaker 1: this question about coaching and fairness. But first you have
Speaker 1: to stop thinking of finance as a business and start
Speaker 1: thinking of it as a competitive sport. When eighteen year
Speaker 1: old Katie Highland took out her student loans and twenty
Speaker 1: something year old Katie started using credit cards, she was
Speaker 1: basically walking into an arena alone with a target on
Speaker 1: her back. The giant company should be facing off against
Speaker 1: knew more about her game than she did. That's how
Speaker 1: they made their money from her weaknesses. You can always
Speaker 1: make more money exploiting people's irrationalities then you can by
Speaker 1: fixing them. Richard Taylor winner of the Nobel Prize in Economics.
Speaker 1: He spent his career trying to understand the ways that
Speaker 1: people don't act in their own self interest. And one
Speaker 1: big thing his work suggests is that ordinary people need
Speaker 1: coaching far more than they know. Let's think about the
Speaker 1: people who get the most coaching. Well, professional athletes would
Speaker 1: be one. Take Roger Federer. He's probably got ten guys,
Speaker 1: coaches and physical trainers. So here's Roger feder one of
Speaker 1: the greatest athletes in the world, and he has ten coaches.
Speaker 1: Who else? Actors Meryl Streep has a director helping her
Speaker 1: act now, God knows, Yeah, she doesn't need it, right,
Speaker 1: Brad Pitt, You know, does he really need help? But
Speaker 1: the richest, best performing people in the world have the
Speaker 1: most coaching. And who's coaching the uber driver on what
Speaker 1: hours to drive and when you should go to the
Speaker 1: airport and if you get a ride to the airport,
Speaker 1: should you wait in line or immediately leave? So coaching
Speaker 1: just ends up making the rich richer. Yeah, it's one
Speaker 1: of the many factors that contribute to this curve. We've
Speaker 1: all seen about the one percent or the point or
Speaker 1: one percent share of the economy. No one's coaching the
Speaker 1: tens of millions of Americans on the wrong end of
Speaker 1: consumer finance. No one even seems interested. I've tried, unsuccessfully
Speaker 1: to get somebody to create what I call the good bank.
Speaker 1: With this good bank look like, well, so it would
Speaker 1: warn you when you're about to overdraw your credit card,
Speaker 1: rather than wait until the end of the day when
Speaker 1: you've swiped five times and they charge you twenty five
Speaker 1: dollars penalty for each swipe, twenty five bucks a swipe.
Speaker 1: It's supposed to scare you from overdrawing your account, but
Speaker 1: you only get the warning after it's too late. I mean,
Speaker 1: there's a reason for this. It's a subtle form of
Speaker 1: 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: it's another thing, and they pay because they don't see
Speaker 1: the charge. Right. Trip to bad coaching is never show
Speaker 1: the bill, Yeah, exactly. The problem good coaching is you
Speaker 1: have to share the bill. It 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 kindoisseur 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 feach time. Right, there were thirty
Speaker 1: four billion dollars in overdraft fees paid last year, again
Speaker 1: reofiting from people screwing up. It's huge, it's huge. It's huge. Wait, wait,
Speaker 1: thirty four billion dollars in overdraft fees yep is the
Speaker 1: typical penalty thirty five bucks. Yeah, it's clem up. It
Speaker 1: used to be twenty five about ten years ago. So
Speaker 1: that means that there are a billion instances of this
Speaker 1: a year, yes, and they tend to be concentrated where
Speaker 1: the people they get hit with overdraft get hit a lot.
Speaker 1: Thirty four billion dollars in overdraft fees is really just
Speaker 1: the start. There's more than one hundred billion in credit
Speaker 1: card late payment fees and interest charged each year. And
Speaker 1: then there's the entire credit card industry, which thrives on
Speaker 1: the mistakes people make playing the money game. There is
Speaker 1: now over one trillion dollars of credit card debt in
Speaker 1: the US. People who have this debt it's been about
Speaker 1: fifteen thousand dollars. They tend to have it across three
Speaker 1: to four different cards. So let's say you're like, Okay,
Speaker 1: I don't want to be in credit card debt. I
Speaker 1: need to get out of credit card debt just going
Speaker 1: through what is that process? You have debt across three
Speaker 1: to four different cards. They likely charge different rates, they
Speaker 1: have different due dates. So do you pay off the
Speaker 1: highest rate card first? Oh? By the way, like what
Speaker 1: is the highest rate card? It's just a very complicated
Speaker 1: mess to get your way out of. Angela wondered why
Speaker 1: no one had tried to help people who had gotten
Speaker 1: into this mess. Why no one had, say, tried to
Speaker 1: create a money coaching business, the same way that Richard
Speaker 1: Thaylor wondered, why no one had even tried to create
Speaker 1: a good bank. Then she realized the sort of people
Speaker 1: with the ability to coach other people about money, or
Speaker 1: to finance a company to coach other people about money.
Speaker 1: Those people already had money. People who didn't have money
Speaker 1: were like Martians to them. Like your investment banker is
Speaker 1: not the person who grew up on food stamps, right,
Speaker 1: And he's not the person who's got five different credit
Speaker 1: cards maxed out and is paying thirty percent interest rate
Speaker 1: to some bank. Another problem Angela saw trust Americans had
Speaker 1: been screwed by consumer finance for so long that they
Speaker 1: were likely to be wary when some companies sprung up
Speaker 1: claiming it was actually going to be on their side,
Speaker 1: like it takes time as an athlete or as anything
Speaker 1: to build trust with your coach, until they'll start by
Speaker 1: making these suggestions and you might follow them, you might
Speaker 1: not follow them. And you know, if they're a good
Speaker 1: coach and they know you really well, then you'll notice
Speaker 1: that over time, as you take more of their suggestions,
Speaker 1: you tend to perform better. The explosion of coaching, it's
Speaker 1: related to the war on referees. It's what happens when
Speaker 1: more and more of life feels like a brutal competitive sport.
Speaker 1: The scarier it is to lose, the more people scramble
Speaker 1: to find an edge. That's what a coach offers, an edge.
Speaker 1: Angela Strange had noticed an absence, just as Richard Taylor
Speaker 1: had noticed an absence of a coach who really should
Speaker 1: exist in the middle of American financial life. Both were
Speaker 1: waiting for whom or what they did not know. In
Speaker 1: the Year of Our Lord nineteen seventy nine, in the
Speaker 1: Mountains of Colorado, a woman gives birth out of wedlock
Speaker 1: to a boy, Jason. She names him. The mom's name
Speaker 1: is Christina Brown. She's a fundamentalist Christian and takes the
Speaker 1: Bible as the literal truth. She doesn't know how she's
Speaker 1: going to make ends meet, but she knows what she
Speaker 1: wants for her child. She wants him to be well educated.
Speaker 1: To make sure that happens, she'll educate him herself. When
Speaker 1: we were studying the health unit, I had Jason cleaned
Speaker 1: the floor on his hands and knees with an extra
Speaker 1: fifty pound backpack on his back, so that he would
Speaker 1: know what it would be like to be overweight. That's Christina.
Speaker 1: She didn't want her son to be taught what was
Speaker 1: taught in schools, the theory of evolution, for instance, but
Speaker 1: mostly she just thought she could teach him better than
Speaker 1: any school could. It was like, hey, Jason, what do
Speaker 1: you want to learn? The world is your classroom. You
Speaker 1: can go learn anything you want. That's Jason Brown, all
Speaker 1: grown up now. And you know there's one time in particular,
Speaker 1: I remember she's like, what do you want to learn?
Speaker 1: And I said, I want to learn about taxidermy, and
Speaker 1: 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 know,
Speaker 1: end up stuffing them and turning them into things that
Speaker 1: could go on people's walls. And what was really cool
Speaker 1: is you know, I learned about biology. I learned about
Speaker 1: the anatomy of animals. He taught us about the chemicals
Speaker 1: that were used. And then I would ask a lot
Speaker 1: of questions about just the business of taxidermy, like how
Speaker 1: much do you all these chemicals cost? How much do
Speaker 1: you pay for this thing? What do you sell it
Speaker 1: for the education of Jason Brown wasn't normal. It was
Speaker 1: kinetic hands on. His mother encouraged him to ask questions,
Speaker 1: but at the same time, he lived in a very
Speaker 1: small world. It was just turn him and his little brother.
Speaker 1: Maybe because he was so dependent on his mom, he
Speaker 1: worried about her. Even as a little kid. He could
Speaker 1: see that she was exposed and vulnerable, especially when it
Speaker 1: came to money. My money was in envelopes, and each
Speaker 1: envelope had a different designation and when the money was gone,
Speaker 1: it was gone. What would have been the envelopes designations? Okay,
Speaker 1: the first envelope was my tithe, then it was rent,
Speaker 1: then it was groceries, miscellaneous electric gas, and you paid
Speaker 1: in that order. That's right. We literally, and I'm not exaggerating,
Speaker 1: eight beans and rice. Pretty much every day. I ground
Speaker 1: my own wheat, made my own whole wheatbread, made my
Speaker 1: own tortillas, made cereal in the crock pot for breakfast,
Speaker 1: and we had peanut butter on toast. We ate very simply.
Speaker 1: We shopped at Goodwill, even for a Christmas gift's birthday gifts.
Speaker 1: Sometimes Jason snuck a peek inside the money envelopes. A
Speaker 1: lot of the time they were totally empty. Yet, even
Speaker 1: when she had no money, his mother insisted on staying
Speaker 1: home and teaching him and his brother. By the time
Speaker 1: he was ten years old, Jason was fully aware that
Speaker 1: his mother was running huge risks. They were totally on
Speaker 1: their own. There was no safety net. The most trivial
Speaker 1: events could disrupt their lives. So we had this friend,
Speaker 1: his name was Donnie. He's a big kid, and he
Speaker 1: came over to the house and spent the weekend or
Speaker 1: something like that, and Donnie ate a lot, and he
Speaker 1: really really liked milk too. And I remember specifically in
Speaker 1: the kitchen and Donnie was just pounding the milk and
Speaker 1: he finished the milk, and I remember looking at my
Speaker 1: mom and she looked at me, and I could just
Speaker 1: see the dread and fear on her face because Donnie
Speaker 1: drank all the milk. Donnie drank an envelope. Yeah, he
Speaker 1: drank an envelope, and just like because I knew that
Speaker 1: the envelope for food was already used up. And you know,
Speaker 1: I could see in her eyes like, hey, what are
Speaker 1: we gonna do? Like we can't go on buy more mode,
Speaker 1: Like that's it. So they went without milk. Another memory
Speaker 1: is the day Jason's mom told him that she needed
Speaker 1: to take on a second job and it'd have to
Speaker 1: go to a real school. He was in the eighth grade.
Speaker 1: The real school was hellish. Other kids made fun of him.
Speaker 1: One day, a kid just walked up to him and
Speaker 1: punched him in the face, and no one did anything
Speaker 1: about it. Jason felt totally loved by his mom, and
Speaker 1: he loved her back. She'd given him real strengths. He
Speaker 1: knew how to learn to teach himself, but she'd also
Speaker 1: left him with a fear of money, of being one
Speaker 1: accident away from disaster. His mother couldn't afford for him
Speaker 1: to fall off his bike and break his wrist, much
Speaker 1: less pay for him to go to college. He went
Speaker 1: to the University of Colorado anyway. To pay for he
Speaker 1: took out student loans, but the moment he did that,
Speaker 1: he felt exposed and vulnerable like his mom. He was
Speaker 1: eighteen years old. I would drive home every single weekend
Speaker 1: starting in January, and I would go home to my
Speaker 1: hometown where I grew up, and it was about two
Speaker 1: to two and a half hour drive, and I would
Speaker 1: spend the weekend knocking on doors, handing out flyers, say hey,
Speaker 1: would you hire me to paint your house. Jason had
Speaker 1: never painted a house, but then there was a time
Speaker 1: when he didn't know how to stuff an animal, and
Speaker 1: 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 out? 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 and
Speaker 1: snow shoes, that they would then by the end of
Speaker 1: that have a pretty good chance of hiring me. He
Speaker 1: was still a kid, but pretty soon this wasn't a
Speaker 1: kid's business. The crazy thing is, by the end of
Speaker 1: the summer, I had painted something like forty or fifty homes,
Speaker 1: and I had I think fifteen or twenty employees, and
Speaker 1: I actually put fifty thousand dollars in my pocket for
Speaker 1: one summer. Really, you cleared fifty one hundred and fifty
Speaker 1: thousand dollars a total revenue, And it was fifty thousand
Speaker 1: dollars nut to me. He wasn't done. After Jason's first
Speaker 1: year in college, he set out to grow his business.
Speaker 1: Rural Colorado wasn't a great market. There weren't that many houses.
Speaker 1: The weather was hard on paint, but not as hard
Speaker 1: as it was in other places. He decided to find
Speaker 1: a better market, and so I transferred to Boston University.
Speaker 1: And by the time wait, wait, you transferred to Boston
Speaker 1: University specifically to pursue the business of painting houses, I did, yes,
Speaker 1: Because 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 amocados? 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 I in my mind mid 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 avocado.
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 fixed 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 that you served us well when we
Speaker 1: were on the savannah, but but now is not maybe
Speaker 1: directly translatable to the kind of lives we live, and
Speaker 1: every product they have, every contract they make, is designed
Speaker 1: to exploit these bugs in our brains, getting people to
Speaker 1: do things they really shouldn't do. For Jason, money wasn't
Speaker 1: just money. At some point, he realized that every time
Speaker 1: he thought about money, he also thought about his mom
Speaker 1: and her three envelopes of cash for the month. I
Speaker 1: actually need to tell you a little bit more about
Speaker 1: about my mom. So, my mom is, so she's my hero.
Speaker 1: And the reason she's my hero is she grew up
Speaker 1: in a pretty challenging childhood. I'm not a lot of resources,
Speaker 1: not very supportive. She ended up having me when she
Speaker 1: was twenty one or twenty two, just a high school graduate,
Speaker 1: no higher education. She'd overcome all that and given him
Speaker 1: and his brother the most amazing education. She is just
Speaker 1: the model of discipline. I mean the woman. She's a
Speaker 1: rob vegan and I'm so proud of that. Hard 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 like let's say say
Speaker 1: you 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 metals. 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 they want to use it. Yeah, exactly,
Speaker 1: make you want to use it and make you when
Speaker 1: you go go get a credit card, you're not thinking about, oh,
Speaker 1: I might end up getting charged this interest down the road.
Speaker 1: You're thinking about, oh, I'm going to get these points
Speaker 1: and have access to these hotels, whatever it is. And
Speaker 1: that allows banks to substantially overcharge everybody on the interest rates.
Speaker 1: So they just distract you from the cost of the
Speaker 1: interest rate exactly. So there's no one out there competing
Speaker 1: by saying, get our card and we'll give you a
Speaker 1: lower interest rate, because it's not even in the conversation,
Speaker 1: which is insane if you stop and think about it.
Speaker 1: I mean, our government hardly pays any interest on most
Speaker 1: of its debt. Really risky companies can borrow at seven percent.
Speaker 1: To think that millions of people are paying nineteen to
Speaker 1: thirty percent interest on anything. Who other than the American
Speaker 1: credit card borrower pays so much And that's not even
Speaker 1: counting the billions in late fees. Once Jason homed in
Speaker 1: on this particular racket, he noticed other things, like the
Speaker 1: monthly statements these lenders send to people who owe the money.
Speaker 1: You look at a credit card statement, the thing with
Speaker 1: the biggest fun 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: A 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 Thaylor.
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 foe 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 if
Speaker 1: you really thought, well, we can we can coach all
Speaker 1: these people up and how not to get exploited by
Speaker 1: credit card companies, you would coach them up. The best
Speaker 1: thing is to make things automatic, making good behaviors easy. Yeah.
Speaker 1: The basis of Jason Brown's businesses that class he took
Speaker 1: from you. It's creating our decision environment where the way
Speaker 1: that people naturally with least friction, the least amount of
Speaker 1: effort go is in their interests rather than against their interests.
Speaker 1: So he picked that up. It's a good lesson to
Speaker 1: have learned. Taylor has not the first memory of Jason
Speaker 1: Brown in his class, but Jason got the gist as
Speaker 1: Taylor's message. He hired a bunch of engineers to spend
Speaker 1: three and a half years building the company software so
Speaker 1: that it nudged people with credit card debt in ways
Speaker 1: that were good for them. So if I have four
Speaker 1: different credit cards from four different banks on my visas,
Speaker 1: I do whatever I do, but but you pay them
Speaker 1: off yeah, and I pay you yeah. So you're telling
Speaker 1: me what I exactly. So you download the app for free,
Speaker 1: you pass a soft credit check, and then we're saying, hey, Michael,
Speaker 1: we're going to pay all these cards when they're due
Speaker 1: at the exact right time, the exact right So a
Speaker 1: couple of questions that naturally popped in mind. You're going
Speaker 1: to charge me a much lower interest rate than the
Speaker 1: credit card companies. How can you afford to do that
Speaker 1: if they were charging me the actual correct rate given
Speaker 1: the risk I present 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 spent some money. So
Speaker 1: the effect is I feel like I kind of spent
Speaker 1: money on my debt, and now maybe I don't want
Speaker 1: to go out for lunch. Maybe I don't want to
Speaker 1: go out for dinner. Instead of giving people points for spending,
Speaker 1: tally gives them points for saving. Instead of encouraging them
Speaker 1: to pay off the minimum, they help them to figure
Speaker 1: out how to pay them maximum. Instead of trying to
Speaker 1: keep people acting on impulse, it tries to get them
Speaker 1: to think twice. The company took off, but something was
Speaker 1: bothering Jason. He thought a company needed both a vision
Speaker 1: and a mission. A vision was where you were going,
Speaker 1: a mission was why you were going there. Jason wanted
Speaker 1: to understand the deeper emotional consequences of debt, and initially
Speaker 1: my thought was that most of the emotions would be
Speaker 1: around regret, like, hey, I spent this money in the past,
Speaker 1: and I regret having bought that right, and regret from
Speaker 1: the sadness family, so it's the sense of loss of
Speaker 1: something in the past. He hired a team of researchers
Speaker 1: to test this idea. They came back and told Jason
Speaker 1: that no, this wasn't about sadness. The emotions that were
Speaker 1: coming out were anxiety, which is a fear emotion, and
Speaker 1: it's the feeling that there's a threat in the future
Speaker 1: that you don't have the capacity to handle or protect yourself.
Speaker 1: Jason paid for another study, one that tried to measure
Speaker 1: the stress levels of people with credit card debt. We
Speaker 1: had found that two thirds of individuals with card debt
Speaker 1: have medical levels of anxiety, so meaning you're in a
Speaker 1: doctor's office waiting for some important test results, the same
Speaker 1: kind of anxiety that people feel there. That's what people
Speaker 1: are feeling on a regular basis with their cards. Millions
Speaker 1: of Americans are sick from this stress, and their illness
Speaker 1: has all kinds of other effects. Oftentimes it's described as
Speaker 1: a weight on chest, drowning, not being able to breathe.
Speaker 1: So a lot of people experience stress is actual constriction
Speaker 1: within the body, and sensations of tightness are acid in
Speaker 1: the stomach. Grinding of teeth is really a common thing
Speaker 1: because it manifests oftentimes while people are sleeping. At some point,
Speaker 1: Jason realized that stress wasn't just a bug in the
Speaker 1: American financial system. It was a feature. There's a lot
Speaker 1: of research that suggests that it also affects cognition. So
Speaker 1: if you're like a sinister credit card company and you're
Speaker 1: 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: so that not only are you being led for how
Speaker 1: you can get the outcome you want, but also all
Speaker 1: the sources of interference as much as possible or being removed.
Speaker 1: Ninety nine percent of the people who sign up to
Speaker 1: use Jason's app have stayed with it, and it's kind
Speaker 1: of incredible what happens to people when they're rewarded for
Speaker 1: behaving well instead of badly. They could say, oh, you know,
Speaker 1: I'd rather buy the coffee than have it and be
Speaker 1: set aside, But ninety percent of people are still letting
Speaker 1: us set money aside for them. And I think it
Speaker 1: has very much to do with the fact that every
Speaker 1: time it happens, you get points. People would do the
Speaker 1: smart thing for themselves if you made it easy for
Speaker 1: them to do the smart thing for themselves. Make it easy,
Speaker 1: and people would create a buffer for themselves, a margin
Speaker 1: of safety, a thing Jason's mom had never had, and
Speaker 1: 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 that a coach is exactly what he'd become.
Speaker 1: The definition of a good coach is one who makes
Speaker 1: their players feel like they don't need the coach. Okay,
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 you,
Speaker 1: before you said, actually, this is a good thing. This
Speaker 1: isn't just humoring Michael in his podcast, This is actually
Speaker 1: 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 mean they walked me and talked me through
Speaker 1: absolutely every step of the way and made sure that
Speaker 1: I understood what was going on. I can remember you
Speaker 1: telling me that your view before was you didn't even
Speaker 1: want to look at your bank account. I knew you
Speaker 1: were going to bring that up, and I have to
Speaker 1: tell you, Michael, I looked at my bank account for
Speaker 1: the first time about two days ago, full on the
Speaker 1: 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 you know, our goals.
Speaker 1: It's going to help just not our just not even like,
Speaker 1: you know, reach our goals, but it's going to help
Speaker 1: our relationship, my husband and I because money is a
Speaker 1: definite source of stress. I mean, is there a couple
Speaker 1: where that's not true? Noah, there's no need here to
Speaker 1: recount how many thousands of dollars she saved herself by
Speaker 1: having herself coached, or how she's now paying six percent
Speaker 1: instead of twenty six percent on her credit card debts,
Speaker 1: or how she and her husband expect to be entirely
Speaker 1: debt free inside of a year. But let's just consider
Speaker 1: the broader effects this coach has had, this person who's
Speaker 1: on her side encouraging her best self. Has it changed
Speaker 1: the kind of tone of the conversation around money when
Speaker 1: you're and your husband sit down and talk about it. Yeah,
Speaker 1: it was all very emotionally charged before. And now you know,
Speaker 1: he's really taken to Okay, I'm laying everything out on
Speaker 1: a 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 like 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, I can really start to do things
Speaker 1: and I can really to think that. You know, we
Speaker 1: set a goal of trying to buy a house by
Speaker 1: the summer of two three, and that's amazing. I'm Michael Lewis.
Speaker 1: Thanks for listening to Against the Rules. Against the Rules
Speaker 1: is brought to you by Pushkin Industries. The show's produced
Speaker 1: by Audrey Dilling and Katherine Girodo, with research assistance from Lydia,
Speaker 1: Jane Cott, and Zooe Wynn. Our editor is Julia Barton.
Speaker 1: Mia o'bell is our executive producer. Our theme was composed
Speaker 1: by Nick Brittell, with additional scoring by Stellwagon Sinphonette. We
Speaker 1: got fact checked by Beth Johnson. Our show was recorded
Speaker 1: by tofur Ruth and Trey Schultz at Northgate Studios in
Speaker 1: Berkeley and James Ward at Live Oak Studio. As always
Speaker 1: thanks to Pushkin's founders Jacob Weisberg and Malcolm Gladwell. How
Speaker 1: often do you go on to go fund me and
Speaker 1: give money to strangers? My wife and I were just
Speaker 1: driving down the road and it just seemed like the
Speaker 1: right thing to do. But I don't typically go in
Speaker 1: to go fund me and donate to strangers. I think
Speaker 1: it's more when something speaks to me and it's something
Speaker 1: that you can easily cover, you just go ahead and
Speaker 1: do it. It's always how I've been taught. This is
Speaker 1: a meet Kakar, the guy who made the last donation
Speaker 1: to the fund that paid off Katie Highland student loans.
Speaker 1: He turns out to be a real estate agent in
Speaker 1: suburban DC. Makes me wish I wanted to buy a house.
Speaker 1: So who's the idea? Was it yours or your wife's
Speaker 1: to go and find the go fund me page and
Speaker 1: finish off the campaign? It was me, but she obviously
Speaker 1: it is used to me doing stuff like that, and
Speaker 1: kind of co signs it. But you know, I almost
Speaker 1: assume it was over. And I heard about the go
Speaker 1: fund me, I was intrigued to see where it was
Speaker 1: at and when I saw the level, it was a
Speaker 1: no brainer to finish it off, and the the