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Speaker 1: Welcome to How to Money. I'm Joel and today I'm

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Speaker 1: talking moving up the wealth ladder with Nick Majulie. Yes,

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Speaker 1: I am glad to have a friend of the show

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Speaker 1: and newly married Nick Majulie back on How to Money.

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Speaker 1: He's been given the nickname NICKI Numbers because he has

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Speaker 1: a special gift, I would say for conveying wonky money

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Speaker 1: information in a straightforward and digestible way. It's kind of

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Speaker 1: a tough task. I've been a fan of his blog

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Speaker 1: of Dollars and Data for years now, and if you

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Speaker 1: want to grow your net worth while finding more spending freedom,

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Speaker 1: well that's what we're going to discuss today. So listen up. Nick,

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Speaker 1: thank you so much for coming back on the show,

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Speaker 1: my friend. Thanks for having me back on. Joel appreciate

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Speaker 1: it of course. Okay, we asked you this question three

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Speaker 1: years ago when you came on the podcast, which is

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Speaker 1: what do you like to splurge on? We ask every

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Speaker 1: guest that question. Matt and I spend what some would

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Speaker 1: call or say too much money on craft beer, and

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Speaker 1: we say, poppycock, we should spend lots of money on

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Speaker 1: craft beer because it's totally worth it. What, especially as

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Speaker 1: you've moved up the wealth out of these past few years,

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Speaker 1: what are you splurging on?

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Speaker 2: So previously three years ago I said I splurge on restaurants.

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Speaker 2: I still do that. That hasn't changed. But if I

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Speaker 2: have to pick, like, what are the two things I'm

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Speaker 2: spending a.

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Speaker 3: Lot more on.

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Speaker 2: One is I'm starting We're gonna get into this when

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Speaker 2: I talk about the wealth latter. I'm starting to splurge

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Speaker 2: a little bit on travel here and there. So I

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Speaker 2: might upgrade my seat to like a emergency row seat

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Speaker 2: versus like I never I would always just take whatever

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Speaker 2: is available. I might get more lagroom. I still haven't

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Speaker 2: gotten to the upgrade to first class yet. That's I'm

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Speaker 2: give me a few years and maybe I can afford that,

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Speaker 2: But right now I'm not in that spot yet. So

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Speaker 2: I'm upgrading to like the slightly nicer seat on the

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Speaker 2: airplane splurge. The other thing I'm splurging a lot on

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Speaker 2: is health. And it's just like it's the one thing.

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Speaker 2: I'm in my mid thirties now, and so I know,

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Speaker 2: especially for men after forty, you know, unless you take

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Speaker 2: care of yourself, it can really start to slow down.

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Speaker 2: And so I know biology is working against me eventually,

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Speaker 2: But I'm doing everything I can and I'm splurging on whatever.

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Speaker 3: Oh that costs how much?

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Speaker 2: I don't care Like health for me is like I

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Speaker 2: don't even think about the price tag when it comes

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Speaker 2: to this stuff because I think it's one of the

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Speaker 2: few things where if you don't have it, you would

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Speaker 2: give away all your money to have it, and so

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Speaker 2: I think it's that important. I think most people underspend,

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Speaker 2: criminally underspend on health. Unfortunately.

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Speaker 3: I think you're right entry.

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Speaker 1: It's actually when you talk about spending on health, I

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Speaker 1: think it's a really smart thing. But also there's a

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Speaker 1: lot of things you can do to stay healthy. They

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Speaker 1: don't cost that much money, right, And there's just all

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Speaker 1: these articles about walking ten thousand steps a day or something,

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Speaker 1: and most people can do that and at least hit

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Speaker 1: the bare minimum. But yeah, spend money on the health stuff.

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Speaker 1: I think that makes sense. And the exit road seats,

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Speaker 1: I can sympathize with that. As someone who's six foot six,

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Speaker 1: I'm getting to the point where I'm willing to bury

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Speaker 1: my frugality just to touch so I can get an

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Speaker 1: exit row seat. And you just got married. I mentioned

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Speaker 1: that at the top I'm curious how you're thoughts about

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Speaker 1: money have changed as you've been in a long term

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Speaker 1: relationship and now you're tying the financial not has that

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Speaker 1: taught you anything about money that maybe you didn't previously

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Speaker 1: know or appreciate.

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Speaker 2: Funny enough, I actually wrote about this on the blog

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Speaker 2: my wife and I are then girlfriend. We actually started

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Speaker 2: officially this year. We started like basically pooling our money.

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Speaker 2: Even then we weren't technically married yet, and I knew

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Speaker 2: we were going to get married within a few months,

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Speaker 2: and so we kind of created this system, which I

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Speaker 2: called the separate plus joint method. And the idea is,

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Speaker 2: all of your income goes into one joint account, right,

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Speaker 2: and then all of your expenses shared expenses go out

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Speaker 2: of that account. And then over time, hopefully your income

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Speaker 2: is greater than your expenses, so you're saving money, right.

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Speaker 2: And then every let's savey quarter, we take an equal

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Speaker 2: sized distribution out of the account, and then we invest

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Speaker 2: that separately, so we have no joint investment account. The

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Speaker 2: only joint property we will ever own is going to

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Speaker 2: be a home. Outside of that, if she wants to

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Speaker 2: go buy a rental property with her own assets, she

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Speaker 2: can do. If I want to go buy something, I'm

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Speaker 2: allowed to do that with my own assets. And so

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Speaker 2: the thinking here is like, I want to provide full

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Speaker 2: autonomy for both partners to invest kind of how they want.

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Speaker 2: And of course we talk about it, Oh do you

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Speaker 2: think we should be diversified this or that. Like we're

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Speaker 2: very level headed about this and we're very open. We

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Speaker 2: have discussions and I take her input, she takes mind,

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Speaker 2: vice versa. But I think the big change here is

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Speaker 2: allowing for autonomy because I know, at least historically, I

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Speaker 2: know this was something This is especially for women who

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Speaker 2: didn't really have any financial resources. It's controlled by one partner,

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Speaker 2: and then they feel like they might be trapped in

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Speaker 2: a relationship or something. And so I'm always like, hey,

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Speaker 2: we should be splitting our assets over time, and like

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Speaker 2: we each have our own assets, but obviously, you know,

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Speaker 2: everything comes into the joint account, and so it's basically

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Speaker 2: a pro ratus. So if I'm making seventy percent of

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Speaker 2: the income, I end up paying seventy percent of the expenses,

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Speaker 2: and vice versa. If we're making fifty to fifty, it

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Speaker 2: goes both ways. And so this is true of regardless

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Speaker 2: of who makes money. So that's it's a very simple system.

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Speaker 2: And if you want more details, it's on my blog.

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Speaker 2: You can search like probably joint method and you'll find

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Speaker 2: the separate and joint method.

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Speaker 1: Not to pry too much, did you guys sign a prenup?

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Speaker 1: Because I had like pre existing conceptions of a prenup

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Speaker 1: and it seemed at least from like my religious upbringing and.

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Speaker 3: Stuff like why would you why would you do that?

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Speaker 1: You're gonna stay married for life and so that talking

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Speaker 1: to people about that and then realizing that, well, they're

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Speaker 1: already like there's a prenup in place thanks to the

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Speaker 1: state that you basically signed up for, and it varies

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Speaker 1: state by state. I don't know, maybe you should be

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Speaker 1: able to create your own. I'm curious what route you took.

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Speaker 2: Yeah, so we did sign a prenup, and because I

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Speaker 2: had a significant amount of assets coming and so did she.

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Speaker 2: But she also there was another kind of twist here.

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Speaker 2: So her father's a famous sculptor in Europe, and so

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Speaker 2: technically all that inheritance, all that stuff, like if we're

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Speaker 2: married and she gets that, that's like, you know, that

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Speaker 2: would technically fall under marital property. I'm like, I don't

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Speaker 2: want any claim on that stuff that's from your family, right,

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Speaker 2: just like I don't want you to have any claim

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Speaker 2: on anything from my parents' side, et cetera. And so

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Speaker 2: everything's joint, it's being pulled and everything. So all that money,

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Speaker 2: any money we make from the day we're married, and

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Speaker 2: technically we even backdated it to January first of twenty

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Speaker 2: twenty five, all that is equally split, right and until

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Speaker 2: we ever get if we ever, god forbid, get a divorce,

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Speaker 2: at that point, you know, then things would go back

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Speaker 2: to separate. But the nice thing is, like over time,

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Speaker 2: we're actually already splitting assets like over time. So in theory,

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Speaker 2: if we ever were to get a divorce, financially, the

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Speaker 2: only thing we'd have to really worry about is any

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Speaker 2: sort of alimony. And then if we have a home,

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Speaker 2: how do we deal with that? Those are the only

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Speaker 2: real two big questions left. Everything else is going to

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Speaker 2: be split over time. And I just thought it was

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Speaker 2: a better method where she can feel like she has

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Speaker 2: her assets, I have mine, and everyone feels comfortable with that,

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Speaker 2: and she loves it. And I've had a lot of

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Speaker 2: people reach out and said this is a great way

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Speaker 2: of doing it. Not everyone does it some people love

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Speaker 2: pulling everything. Some like having everything separate where they don't

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Speaker 2: pay for anything. They everyone's but it's up, you know,

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Speaker 2: tease their own.

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Speaker 1: Last question on this, because some of the data does

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Speaker 1: seem to point to the fact that couples who combine

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Speaker 1: everything seem to be happier, or at least that's what

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Speaker 1: they admit to in surveys. So does any part of

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Speaker 1: you think that the siphoning off of finances from each

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Speaker 1: other at least like kind of creating some barriers could

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Speaker 1: lead to less intimacy.

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Speaker 3: I don't know, ask me in ten years.

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Speaker 2: But the thing though, is we track everything as a group,

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Speaker 2: Like I have a Google sheet that has all of

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Speaker 2: our assets basically flowing into it, like a rough approximation

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Speaker 2: based on the number of shares we own of different

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Speaker 2: you know, tickers and all this stuff. So I'm tracking

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Speaker 2: and we review it basically, you know, once a month

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Speaker 2: or once a quarter at least. We're looking through it together,

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Speaker 2: so like we're very on the same page. We know

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Speaker 2: about each other's assets. There's nothing that's hidden because when

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Speaker 2: we did the prenup, we had to be very open

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Speaker 2: about everything, so there's no real issue there. I'm not like,

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Speaker 2: oh I wish everything was coming like we're working as

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Speaker 2: a unit. This is just like, hey, like, those are

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Speaker 2: your assets, and I want you to know that. So

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Speaker 2: if God forbid, something happens to your mother, you don't

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Speaker 2: have to come ask me for permission to go spend

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Speaker 2: ten thousand dollars on your mother. And you never should

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Speaker 2: have to do anything of that sort. If you want

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Speaker 2: to use your separate assets, you can use them however

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Speaker 2: you want.

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Speaker 1: Basically, I think that working as a unit is key.

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Speaker 1: I think like outlining that and pointing in the same direction.

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Speaker 1: Even if you do keep something separate, that's what's going

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Speaker 1: to make the difference, I think in your ability to

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Speaker 1: care for each other over time, including your finances. All right,

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Speaker 1: let's get to some talk about your book. You begin

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Speaker 1: the book, you state that we've assumed that more wealth

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Speaker 1: is better and then it can solve all our problems.

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Speaker 1: And I do think that there is that assumption, maybe

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Speaker 1: particularly in America more so than other countries, But is

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Speaker 1: more wealth and not the answer for a lot of

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Speaker 1: people to a better life.

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Speaker 2: So more wealth helps when you don't have a lot

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Speaker 2: of wealth, and we can talk about where that is.

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Speaker 2: I have these different levels I come up with when

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Speaker 2: we can go into that in a moment here, But

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Speaker 2: the main idea is as you move up the wealth

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Speaker 2: ladder and get into these different net worth tiers or

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Speaker 2: wealth levels as I call them, money becomes less and

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Speaker 2: less effective for solving your problems. Right, So, if you're

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Speaker 2: in level one, which I say is that's less than

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Speaker 2: ten thousand dollars in net worth, most of your problems

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Speaker 2: are likely money problems. Money would literally solve most of

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Speaker 2: your life problems. But by the time you get into

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Speaker 2: let's say level five, which is ten million to one

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Speaker 2: hundred million, or level six one hundred million plus, money

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Speaker 2: is very likely not going to solve most of your problems.

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Speaker 2: Your problems are like with relationships with people, business partners,

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Speaker 2: et cetera. It's going to be with your health. Maybe

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Speaker 2: you weren't taking care of your health, something we discussed earlier. Right,

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Speaker 2: you can think start thinking through this. And the reason

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Speaker 2: why is because you can't buy those things. You can't

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Speaker 2: write your spouse a check and make her love you. Look, okay,

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Speaker 2: here's the ten thousand dollars love me forever. It doesn't

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Speaker 2: work that way, right, And the same thing's true with

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Speaker 2: your health. You can't buy a new cardiovascular system, right.

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Speaker 2: So when you start going through the motions of thinking

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Speaker 2: through this, you realize money is very useful until you

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Speaker 2: have a lot of it, and then it stops becoming

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Speaker 2: as useful. It works very well to a point, and

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Speaker 2: then everything else you've got to kind of have to

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Speaker 2: work for you. There's no shortcut to a great marriage,

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Speaker 2: there's no shortcut to being healthy, and you.

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Speaker 3: Know, at least not yet.

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Speaker 2: Maybe one day AI will solve all this stuff, but

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Speaker 2: I just don't believe we can, you know, out engineer

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Speaker 2: biology at this point. We're not at that point. We're

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Speaker 2: getting better with a lot of the stuff, but you

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Speaker 2: can't prevent you know, decay and all the type of

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Speaker 2: stuff over time.

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Speaker 1: A good example of that, I think is like celebrities

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Speaker 1: have the same cell phone that I have essentially, right, Like, yeah,

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Speaker 1: maybe mine's a few generations older because I've I haven't

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Speaker 1: upgraded recently, but we essentially have the same device in

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Speaker 1: our hands that we use fairly regularly. And yeah, maybe

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Speaker 1: they've got a private jet, but I still get to

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Speaker 1: go where I want to go. And so I think

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Speaker 1: here you're talking about gradations of wealth and how how

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Speaker 1: that can improve your life, partly in the wealth Ladder.

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Speaker 1: And I'm curious too, like, why did you construct the

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Speaker 1: wealth ladder the way you did? What made you think that?

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Speaker 1: You don't call them wrungs, you call them levels. What

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Speaker 1: made you? What made you say these are where I

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Speaker 1: think the lines are that separate someone from being level one,

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Speaker 1: level two, level three, and level four all the way

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Speaker 1: up to level six.

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Speaker 2: So I created these levels, and I'll walk through them

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Speaker 2: in a second here because they were very easy to memorize.

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Speaker 2: But more importantly, the data fit them very well. And

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Speaker 2: I had thought of this idea years ago, but the

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Speaker 2: data didn't fit them as well, and now they fit

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Speaker 2: a lot better. And so that's what makes it useful.

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Speaker 2: But even if we move the numbers, we can debate,

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Speaker 2: oh maybe level four stops at eight million and not

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Speaker 2: ten million in level five. We can sit here and

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Speaker 2: if you want to go and hyper analyze it, you can,

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Speaker 2: But at the end of the day, like it's about

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Speaker 2: the general framework and the general direction of the idea

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Speaker 2: and not the preciseness of the level. And that's the

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Speaker 2: thing I try and get people to think about. When

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Speaker 2: you're in level four, you're going to think a little

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Speaker 2: differently than when you're in level three, even if the

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Speaker 2: exact number is not there. So let me walk through

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Speaker 2: the levels, and I'll also tell you how what percentage

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Speaker 2: of US households are in each level. So, by the way,

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Speaker 2: this is net worth. So take all your assets minus

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Speaker 2: all your liabilities, right, and now that's gonna be everything

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Speaker 2: you own. You know, so your car, your house, your cash,

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Speaker 2: your stocks, et cetera, your four one K. Subtract out

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Speaker 2: everything you owe to others. So any sort of mortgage

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Speaker 2: at student loans, credit card, debt, et cetera. That's your

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Speaker 2: net worth. Okay, And we're doing households, so that includes

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Speaker 2: if you have a spouse whatever. That's called household net worth.

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Speaker 2: Level one is less than ten thousand dollars. That is

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Speaker 2: about twenty percent of US households. Level two is ten

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Speaker 2: thousand to one hundred thousand dollars. That's also about twenty

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Speaker 2: percent of US households. Level three is one hundred thousand

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Speaker 2: to a million dollars. That's about forty percent of US households.

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Speaker 2: That's what I would call the middle class in the

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Speaker 2: United States. Level four is one million to ten million dollars.

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Speaker 2: That's what I call the upper middle class in the

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Speaker 2: United States, and that's about eighteen percent of households. And

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Speaker 2: when I say upper middle class, that's supposed to be

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Speaker 2: location agnostic. If you've got like five million bucks and

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Speaker 2: you're in rural Alabama, you're definitely upper class. Oh, we

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Speaker 2: can get into that a little bit too. Lastly, is

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Speaker 2: level five and level six. Level five is ten million

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Speaker 2: to one hundred million, and level six is one hundred

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Speaker 2: million plus. Those two represent just the top two percent

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Speaker 2: of households, and in level six there's only about eleven

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Speaker 2: thousand of these households, and so they're very there's a

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Speaker 2: very long tail, very small number of individuals in that bucket, right,

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Speaker 2: And so from this, you know, just memorize level three.

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Speaker 2: That's like one hundred thousand to a million. That's like

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Speaker 2: the middle class. And also once you know level three,

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Speaker 2: you can multiple multiply. I tend to go up a level,

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Speaker 2: or divide by ten to go down a level.

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Speaker 3: And so it's a.

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Speaker 2: Very simple logarithmic scale. And I came up with it

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Speaker 2: because I was like, hey, this actually fits the data

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Speaker 2: very well and it's easy to memorize, and like, there's

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Speaker 2: so many people that have done these wealth level ideas before,

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Speaker 2: and none of them are You can't memorize them because

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Speaker 2: they're so arbitrary. And oh and this is actually it's

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Speaker 2: nine hundred thousand to eight million, and then this one's

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Speaker 2: eight million to fourteen million. It's like, great, that's very

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Speaker 2: precise and nice, but you're splitting hair so much that

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Speaker 2: it's not as spreadable as an idea. Yeah, and so

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Speaker 2: this is not I'm gonna admit, this is not perfect.

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Speaker 2: There's no way that it's exactly ten million. There's no

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Speaker 2: way it's exactly one to ten, right, everyone knows that.

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Speaker 2: But as a framework, it's a much better way of

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Speaker 2: thinking about the idea and then thinking about, Okay, what

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Speaker 2: do I do in level four, and how is that

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Speaker 2: different from what I would do if I were in

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Speaker 2: level three or level five? And that's kind of the

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Speaker 2: idea here.

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Speaker 1: Which to your point there, I and I think this

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Speaker 1: is one of the things that you're hitting on in

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Speaker 1: your book is that maybe personal finance education is too

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Speaker 1: one size fits all, and the advice that you might

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Speaker 1: give to someone in level on level one of the

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Speaker 1: wealth Ladder, you probably wouldn't give that same advice to

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Speaker 1: somebody on level five, like, hey, cut your Netflix subscription back.

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Speaker 1: That could be impactful at level one, right level five, Sorry,

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Speaker 1: it's not even a drop in the bucket. It doesn't

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Speaker 1: it doesn't register. So do you see a problem there

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Speaker 1: with the advice that people get? And that maybe it

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Speaker 1: is kind of like hammer and nail and it's the

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Speaker 1: same thing over and over. Like I like to think

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Speaker 1: of our audience as probably being either close to level three,

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Speaker 1: in level three or aiming for level four. Those are

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Speaker 1: the kind of people I'm speaking to, so I kind

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Speaker 1: of have an idea of what advice to dish out.

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Speaker 1: Whereas if I knew that most of my audience was

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Speaker 1: level five and level six, I well, I probably wouldn't

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Speaker 1: accrue that audience because that's how the kind of person

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Speaker 1: I can speak to.

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Speaker 3: You know, no exactly, And that's exactly the point.

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Speaker 2: It's people get very good, especially personal finance content creators

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Speaker 2: myself included. I fell victim to this as well. My

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Speaker 2: first book, Just Keep Buying, is a great book for

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Speaker 2: people in level three going to level four or level

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Speaker 2: two going to level three. It doesn't work for people

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Speaker 2: on level one because me telling them, oh, hey, all

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Speaker 2: you need to do is just buy income producing assets

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Speaker 2: like they don't have the income to do that. I

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Speaker 2: do talk about raising your income. But if you know

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Speaker 2: most of the books about investing right, so it's like,

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Speaker 2: when you think about it in this way, you realize

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Speaker 2: that like just keep buying wasn't great for people in

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Speaker 2: level one, it wasn't the right solution for people trying

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Speaker 2: to get to.

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Speaker 3: Level five or level six.

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Speaker 2: So I needed to zoom out and kind of come

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Speaker 2: up with the higher level framework to view this through.

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Speaker 2: And so you're exactly right in the advice needs to change.

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Speaker 2: You need to think about it differently depending on where

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Speaker 2: you are in your life, where your wealth is, et cetera.

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Speaker 2: And that's that's the main idea here, is your financial

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Speaker 2: strategy should change over time. And I think a lot

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Speaker 2: of people just get caught in these habits and they

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Speaker 2: just keep doing the same thing for a long time

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Speaker 2: without reevaluating.

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Speaker 3: Does this still make sense?

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Speaker 1: So when you say your financial habits need to change,

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Speaker 1: do you mean that you need to invest differently?

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Speaker 3: Do you?

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Speaker 1: And also it seems like one of the things that

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Speaker 1: you're highlighting is that you need to at least think

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Speaker 1: about spending differently, like as your wealth grows. It's okay,

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Speaker 1: Like that term lifestyle create think gets beaten to pulp,

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Speaker 1: you know in most personal finance circles. It's okay, Like

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Speaker 1: the whole part of growing your net worth is that

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Speaker 1: you can enjoy some of the some of the fruits

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Speaker 1: of your labor. So how do you think then about

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Speaker 1: what needs to change as you are moving up the ladder?

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Speaker 2: Right, yeah, exactly, And so on the spending front, I

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Speaker 2: can talk about that in particular. So in chapter one,

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Speaker 2: which is about spending, right, the intro just tells you

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Speaker 2: what the wealth latter is, and then chapter one's on spending,

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Speaker 2: chapter two's on income, chapter three's on investment. So kind

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Speaker 2: of these three big buckets understanding how the wealth latter

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Speaker 2: fits with this, and on spending, the thing I really

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Speaker 2: tried to come up with was a rule that allowed

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Speaker 2: people to spend more over time without jeopardizing their long

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Speaker 2: term wealth.

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Speaker 1: Right.

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Speaker 2: So that's basically like, how do you solve the problem

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Speaker 2: of lifestyle creep? And so what I did for this

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Speaker 2: I create something called the point zero one percent rule.

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Speaker 2: And the idea is, if you take your net worth

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Speaker 2: and multiply by point zero one percent, so that is

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Speaker 2: you know, point zero zero zero one, or divide by

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Speaker 2: ten thousand, that could be easier. So if you take

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Speaker 2: your net worth and divide by ten thousand, that is

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Speaker 2: approximately how much your net worth is throwing off daily,

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Speaker 2: Like your wealth is just creating this daily. And if

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Speaker 2: you do that over three hundred and sixty five days

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Speaker 2: in a year, that's roughly three point seven percent. So

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Speaker 2: it's even more conservative than the four percent rule, right,

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Speaker 2: And this is an inflation adjusted return I'm assuming, right,

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Speaker 2: So if we assume that's true, then periodically you can

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Speaker 2: spend that point zero one percent because it's a trivial amount, right.

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Speaker 2: And where this actually came from there was a Jaz lyric.

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Speaker 2: I'm not going to repeat the exactly because he curses,

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Speaker 2: but he says, what's fifty grand to someone like me?

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Speaker 2: Can you please remind me? And at the time he

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Speaker 2: hit a net worth of five hundred million dollars, So

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Speaker 2: to jay Z when he wrote that lyric, fifty grand

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Speaker 2: was about point zero one percent of his net worth.

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Speaker 2: And that's where the idea comes from. And so just

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Speaker 2: apply that to your life. And once you do that

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Speaker 2: on the well ladder, you'll realize that, oh wow, there's

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Speaker 2: different spending categories where I create what I call spending

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Speaker 2: freedom right. So in level two, that's a net worth

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Speaker 2: of ten thousand to one hundred thousand dollars. By the

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Speaker 2: end of level two, your wealth is generating about ten

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Speaker 2: dollars a day. And so when you go to the

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Speaker 2: grocery store, you know, go a few times a week,

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Speaker 2: you will have you know, extra budget in there in

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Speaker 2: theory to just buy what you want at the grocery store.

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Speaker 2: That's the idea. As you get deeper into level two,

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Speaker 2: and once you're past level two, you can buy whatever

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Speaker 2: you want at the grocery store, you have grocery freedom.

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Speaker 2: Level three is what I call a restaurant freedom right.

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Speaker 2: So the marginal spend there is gonna be ten dollars

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Speaker 2: up to one hundred dollars right on a daily basis.

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Speaker 2: Now I'm not saying you need to spend that daily,

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Speaker 2: not recommending it. I'm just saying it's like a trivial amount.

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Speaker 2: So when you're at a restaurant, you're like, oh, should

434
00:18:26,560 --> 00:18:28,760
Speaker 2: I get the burger for twenty bucks or the salmon

435
00:18:28,800 --> 00:18:31,440
Speaker 2: for thirty That difference is ten dollars, right, And that's

436
00:18:31,480 --> 00:18:34,359
Speaker 2: where we're making the decision. That's where the lifestyle creep

437
00:18:34,400 --> 00:18:36,480
Speaker 2: comes in, is like that marginal decision. So I'm like

438
00:18:36,480 --> 00:18:39,320
Speaker 2: trying to attack that and say, hey, that's only a

439
00:18:39,320 --> 00:18:42,040
Speaker 2: ten dollars difference. So if you're in level three, like

440
00:18:42,119 --> 00:18:45,040
Speaker 2: who cares, you can spend that ten dollars, No big deal, right,

441
00:18:45,080 --> 00:18:46,919
Speaker 2: And then it goes from their level fours travel freedom,

442
00:18:46,960 --> 00:18:49,320
Speaker 2: level five is house freedom, et cetera. But we can

443
00:18:49,400 --> 00:18:52,000
Speaker 2: take this idea and apply it across the wealth letterer.

444
00:18:52,200 --> 00:18:55,840
Speaker 1: So one of the things I read something recently, an article,

445
00:18:55,960 --> 00:18:58,600
Speaker 1: and one of the people being interviewed in that article

446
00:18:59,040 --> 00:19:01,000
Speaker 1: said something along the lines of like, I'm pretty good

447
00:19:01,000 --> 00:19:04,200
Speaker 1: about my budget, but I don't hesitate to drop in

448
00:19:04,280 --> 00:19:07,280
Speaker 1: a thousand bucks on like a concert I really want

449
00:19:07,320 --> 00:19:10,359
Speaker 1: to go see and I'll do that twenty times a year.

450
00:19:10,600 --> 00:19:13,040
Speaker 1: And so it seems like this person is like really

451
00:19:13,080 --> 00:19:15,240
Speaker 1: blowing their budget. They're going into debt for these for

452
00:19:15,359 --> 00:19:18,560
Speaker 1: these shows, and maybe they're on the level two of

453
00:19:18,600 --> 00:19:20,840
Speaker 1: the wealth ladder, but they shouldn't do that until they're

454
00:19:21,080 --> 00:19:24,480
Speaker 1: level four. So you are big talking, you really think

455
00:19:24,480 --> 00:19:27,080
Speaker 1: that people should focus more on their income even than

456
00:19:27,200 --> 00:19:30,359
Speaker 1: they're spending on those lower rungs. But don't We also

457
00:19:30,440 --> 00:19:33,399
Speaker 1: see a problem by now pay later as indicative of

458
00:19:33,440 --> 00:19:36,440
Speaker 1: that of people spending more than they should when they

459
00:19:36,440 --> 00:19:37,600
Speaker 1: are on those early runs.

460
00:19:37,920 --> 00:19:39,960
Speaker 2: Yeah, it definitely happens at the end of the day.

461
00:19:40,080 --> 00:19:42,399
Speaker 2: Like if the only thing you enjoy in life is

462
00:19:42,440 --> 00:19:45,800
Speaker 2: going to concerts and you have to drop one thousand dollars,

463
00:19:45,840 --> 00:19:48,600
Speaker 2: I mean, and you're doing it twenty times a year,

464
00:19:48,680 --> 00:19:50,159
Speaker 2: Like that's your life. I mean, what can I do

465
00:19:50,200 --> 00:19:52,400
Speaker 2: to Oh, don't ever do that. Don't enjoy your life

466
00:19:52,400 --> 00:19:54,240
Speaker 2: at all. I'm not saying that, but I do think

467
00:19:54,640 --> 00:19:56,159
Speaker 2: if you want to do that, that's fine, but there

468
00:19:56,200 --> 00:19:58,560
Speaker 2: are consequences to that. And that consequence is you probably

469
00:19:58,760 --> 00:20:00,320
Speaker 2: have to work longer, you may not have as much

470
00:20:00,400 --> 00:20:02,280
Speaker 2: money in the future. You know, you're not gonna have

471
00:20:02,280 --> 00:20:04,439
Speaker 2: assets to pass on what it's what you want out

472
00:20:04,480 --> 00:20:06,399
Speaker 2: of your life. So I'm not telling people not to

473
00:20:06,440 --> 00:20:09,280
Speaker 2: spend money. I'm just saying this is a framework. I

474
00:20:09,320 --> 00:20:11,440
Speaker 2: think it's actually more helpful for those that are having

475
00:20:11,520 --> 00:20:14,159
Speaker 2: trouble spending money than the opposite. And I've heard more

476
00:20:14,200 --> 00:20:16,240
Speaker 2: people say, oh my gosh, I don't think about the

477
00:20:16,240 --> 00:20:18,600
Speaker 2: grocery store anymore. I don't think about the restaurant anymore.

478
00:20:18,680 --> 00:20:21,480
Speaker 2: So I'm actually getting more people that have trouble spending money.

479
00:20:21,560 --> 00:20:23,480
Speaker 2: I'm trying to give them the freedom to spend money.

480
00:20:23,600 --> 00:20:25,480
Speaker 2: Everyone who spends a lot of money, they don't need

481
00:20:25,520 --> 00:20:27,520
Speaker 2: this rule. They're not gonna let's be honest, they're not

482
00:20:27,560 --> 00:20:28,320
Speaker 2: gonna use it.

483
00:20:28,320 --> 00:20:29,000
Speaker 3: It's the people that.

484
00:20:29,000 --> 00:20:31,760
Speaker 2: Are having trouble spending money find it really useful to

485
00:20:31,840 --> 00:20:34,439
Speaker 2: kind of free up that mental bandwidth to not worry

486
00:20:34,440 --> 00:20:36,720
Speaker 2: and have anxiety about their spending. That's where I found

487
00:20:36,720 --> 00:20:37,680
Speaker 2: it spend most effective.

488
00:20:38,040 --> 00:20:40,520
Speaker 1: Do you think part of that anxiety stems from the

489
00:20:40,520 --> 00:20:42,639
Speaker 1: fire movement? I don't know. I think at times like

490
00:20:42,720 --> 00:20:45,680
Speaker 1: the more content I consumed in that space, the more

491
00:20:45,760 --> 00:20:48,560
Speaker 1: I was like, but I got to amass this amount

492
00:20:48,560 --> 00:20:50,400
Speaker 1: of money so I can like at least have full

493
00:20:50,440 --> 00:20:52,760
Speaker 1: financial freedom within seven or eight years or something like that.

494
00:20:52,840 --> 00:20:55,159
Speaker 1: It just felt overwhelming and then I was like, why

495
00:20:55,200 --> 00:20:58,280
Speaker 1: am I doing that? Like what's the point? And sure,

496
00:20:58,320 --> 00:21:01,160
Speaker 1: I still want full financial freedom, but if it comes

497
00:21:01,200 --> 00:21:03,400
Speaker 1: at the cost of some of this spending that will

498
00:21:03,400 --> 00:21:05,760
Speaker 1: bring joy to my life now, then it's just not

499
00:21:05,840 --> 00:21:10,040
Speaker 1: worth it. But I see that in some of the

500
00:21:10,040 --> 00:21:11,720
Speaker 1: How of Money audience, some of the other folks, the

501
00:21:11,720 --> 00:21:15,840
Speaker 1: personal finance creators around there. It's like save, save, invest, invest,

502
00:21:16,200 --> 00:21:18,399
Speaker 1: and then somebody you'll get to enjoy your life.

503
00:21:18,560 --> 00:21:18,760
Speaker 3: Yeah.

504
00:21:18,960 --> 00:21:21,439
Speaker 2: I don't want to blame the fire movement because the

505
00:21:21,480 --> 00:21:24,280
Speaker 2: fire movement is very large and very broad and different,

506
00:21:24,320 --> 00:21:26,760
Speaker 2: Like there are certain types. I think maybe lean fire

507
00:21:26,800 --> 00:21:28,920
Speaker 2: would fall under that specific thing where it's like you

508
00:21:28,960 --> 00:21:30,959
Speaker 2: spend as little as possible. But I think it even

509
00:21:31,000 --> 00:21:32,640
Speaker 2: started before that you can think of, like I don't

510
00:21:32,640 --> 00:21:35,119
Speaker 2: want to name names, but there have been personal finance

511
00:21:35,119 --> 00:21:37,600
Speaker 2: commentators out there saying, oh you're and when you drink

512
00:21:37,680 --> 00:21:39,680
Speaker 2: coffee or peeing away a million dollars, you've heard. I

513
00:21:39,680 --> 00:21:41,199
Speaker 2: don't need you know who these people are, right, So

514
00:21:41,560 --> 00:21:43,359
Speaker 2: I'm not trying to attack them. I just think these

515
00:21:43,440 --> 00:21:46,119
Speaker 2: ideas are out there, like don't buy avocado toast. I

516
00:21:46,119 --> 00:21:48,080
Speaker 2: don't know who said that, but like all these little

517
00:21:48,119 --> 00:21:50,119
Speaker 2: things of why millennials don't have wealth is because of

518
00:21:50,160 --> 00:21:53,960
Speaker 2: these these small like purchases, daily purchases, and I don't

519
00:21:53,960 --> 00:21:56,119
Speaker 2: think that's true at all, And so I think that

520
00:21:56,240 --> 00:21:59,000
Speaker 2: is where it started. And I think it's just created

521
00:21:59,000 --> 00:22:01,560
Speaker 2: this anxiety around money and spending that doesn't need to

522
00:22:01,600 --> 00:22:03,480
Speaker 2: be there. So I definitely don't want to trash the

523
00:22:03,520 --> 00:22:04,960
Speaker 2: Fire movement because I think there's a lot of the

524
00:22:04,960 --> 00:22:07,359
Speaker 2: Fire movement that I like, and a lot of good things,

525
00:22:07,400 --> 00:22:09,639
Speaker 2: like telling people, Hey, you shouldn't be spending to some

526
00:22:09,760 --> 00:22:11,680
Speaker 2: crazy amount because that's just more time you have to

527
00:22:11,720 --> 00:22:13,800
Speaker 2: work later. That's a really good idea and that should

528
00:22:13,800 --> 00:22:15,640
Speaker 2: be out there. Of Course, you don't want to take

529
00:22:15,680 --> 00:22:17,720
Speaker 2: that argument to its extreme because it brings up a

530
00:22:17,720 --> 00:22:19,560
Speaker 2: lot of the issues you've brought up. So I think

531
00:22:19,600 --> 00:22:22,320
Speaker 2: it's finding that balance. Everything's about balance, right, And so

532
00:22:22,760 --> 00:22:24,280
Speaker 2: if I have to throw in with one of the

533
00:22:24,280 --> 00:22:26,280
Speaker 2: fire movements, it's Coast Fire. It's like, hey, get to

534
00:22:26,359 --> 00:22:29,159
Speaker 2: a point where your retirement's probably taking care of and

535
00:22:29,200 --> 00:22:31,000
Speaker 2: then you can kind of reevaluate your life. And I

536
00:22:31,040 --> 00:22:35,080
Speaker 2: think that's a far better, far less extreme version of

537
00:22:35,119 --> 00:22:37,320
Speaker 2: fire that I can get behind and I fully support.

538
00:22:37,680 --> 00:22:40,199
Speaker 1: So I like the way you discuss moving up the

539
00:22:40,200 --> 00:22:43,320
Speaker 1: wealth ladder and how that can impact your ability and

540
00:22:43,400 --> 00:22:44,879
Speaker 1: kind of give you a green light to spend in

541
00:22:44,920 --> 00:22:47,480
Speaker 1: some areas that you care about. What about investing? Do

542
00:22:47,520 --> 00:22:52,280
Speaker 1: you feel like our approach to investing should change as

543
00:22:52,440 --> 00:22:54,159
Speaker 1: we move up the wealth ladder? I feel like I

544
00:22:54,200 --> 00:22:57,000
Speaker 1: see people who move up the wealth lader, and then

545
00:22:57,040 --> 00:22:59,800
Speaker 1: you feel like they need to invest in more sophisticated ways.

546
00:23:00,040 --> 00:23:01,919
Speaker 1: I've been doing the index fun thing for a while,

547
00:23:02,200 --> 00:23:04,520
Speaker 1: but maybe I should put on my monocle and invest

548
00:23:04,560 --> 00:23:06,640
Speaker 1: in like a real estate syndication or something like that.

549
00:23:06,800 --> 00:23:07,600
Speaker 1: Does that make sense?

550
00:23:08,080 --> 00:23:11,080
Speaker 2: I think people do it for a host of different reasons,

551
00:23:11,080 --> 00:23:13,000
Speaker 2: and we can kind of get into it if you're

552
00:23:13,000 --> 00:23:15,800
Speaker 2: talking about like a real estate syndicate versus like a

553
00:23:15,880 --> 00:23:19,000
Speaker 2: hedge fund investment or a private equity, et cetera. I

554
00:23:19,040 --> 00:23:21,959
Speaker 2: think the investment stuff does need to change, but it

555
00:23:22,040 --> 00:23:24,240
Speaker 2: really is based on your goals and where you want

556
00:23:24,240 --> 00:23:26,119
Speaker 2: to go. And so there's people I've talked to and

557
00:23:26,160 --> 00:23:28,640
Speaker 2: people that have you know, I've been on other shows

558
00:23:28,680 --> 00:23:30,640
Speaker 2: with like people at my firm and they've asked, like, Hey,

559
00:23:30,880 --> 00:23:33,280
Speaker 2: I have six point five million dollars in the queues

560
00:23:33,400 --> 00:23:35,840
Speaker 2: right all in tech stocks basically, and you know, I

561
00:23:35,840 --> 00:23:38,000
Speaker 2: feel like I'm great, I'm doing well with everything. I've

562
00:23:38,040 --> 00:23:40,399
Speaker 2: two kids, all this stuff, and he's like, should I

563
00:23:40,520 --> 00:23:42,639
Speaker 2: like diversify it all? And it's like, yes, Like you

564
00:23:42,800 --> 00:23:45,239
Speaker 2: need to change if you want to guarantee you're going

565
00:23:45,320 --> 00:23:47,840
Speaker 2: to probably stay in level four. You probably shouldn't have

566
00:23:47,840 --> 00:23:49,760
Speaker 2: all your money, even though yes, that's been a great

567
00:23:49,800 --> 00:23:53,200
Speaker 2: strategy for the last five to seven years. I don't

568
00:23:53,240 --> 00:23:55,200
Speaker 2: know the future, and we've seen what happens when the

569
00:23:55,280 --> 00:23:58,160
Speaker 2: ques turn. We saw twenty twenty twenty two and how

570
00:23:58,160 --> 00:23:59,720
Speaker 2: bad it was, and I'm not saying that's going to

571
00:23:59,760 --> 00:24:01,880
Speaker 2: happen again, but if it were to happen, you.

572
00:24:01,760 --> 00:24:04,480
Speaker 3: Could see how like it could be pretty disastrous.

573
00:24:04,520 --> 00:24:06,800
Speaker 1: You know, you can protect yourself by taking your foot

574
00:24:06,800 --> 00:24:07,600
Speaker 1: off the gas pedals.

575
00:24:07,680 --> 00:24:09,520
Speaker 2: Yeah, and it's like you're something like this person's won

576
00:24:09,560 --> 00:24:12,480
Speaker 2: the game and they're still like, why are you adding

577
00:24:12,480 --> 00:24:14,320
Speaker 2: more risks? So I do think it matters where you

578
00:24:14,359 --> 00:24:16,359
Speaker 2: are in the well ladder to think about risk and

579
00:24:16,680 --> 00:24:18,920
Speaker 2: kind of your also your lifestyle situation. If you're single,

580
00:24:18,960 --> 00:24:20,560
Speaker 2: it's very different than if you have a family in

581
00:24:20,600 --> 00:24:22,720
Speaker 2: terms of how much risk you take, et cetera. So

582
00:24:23,280 --> 00:24:25,399
Speaker 2: I really like to think of it more holistically and

583
00:24:25,440 --> 00:24:28,080
Speaker 2: I don't have any harder fast rules, but I do

584
00:24:28,119 --> 00:24:31,560
Speaker 2: think depending on your goals is going to determine how

585
00:24:31,600 --> 00:24:34,480
Speaker 2: your allocation will change across the wealth ladder.

586
00:24:34,680 --> 00:24:37,240
Speaker 1: All right, I think net worth is a great helpful metric,

587
00:24:38,280 --> 00:24:41,560
Speaker 1: but I think there's also a lot of illiquidity when

588
00:24:41,600 --> 00:24:44,520
Speaker 1: we're talking about our net worth, talking about it invests

589
00:24:44,520 --> 00:24:46,280
Speaker 1: putting money in four oh one case and roth irays

590
00:24:46,320 --> 00:24:48,199
Speaker 1: and stuff like that. Can you tap it well? I

591
00:24:48,200 --> 00:24:50,680
Speaker 1: want to ask some questions about that and potentially falling

592
00:24:50,680 --> 00:24:52,960
Speaker 1: down the wealth ladder. We'll talk about that, would think matually.

593
00:24:53,280 --> 00:25:02,800
Speaker 1: Right after this, we're back still talk with Nick with

594
00:25:02,880 --> 00:25:06,159
Speaker 1: Julie talking about his new book, The Wealth Ladder, And

595
00:25:06,240 --> 00:25:08,720
Speaker 1: Nick I just mentioned illiquidity, Like, when you think about

596
00:25:08,720 --> 00:25:12,280
Speaker 1: your net worth growing, so much of it is inaccessible,

597
00:25:12,600 --> 00:25:15,200
Speaker 1: right so and rightly so, Like that's how you grow

598
00:25:15,240 --> 00:25:17,000
Speaker 1: your net worth. The more liquid it is. If if

599
00:25:17,040 --> 00:25:19,120
Speaker 1: you put all your money in high heeled savings accounts,

600
00:25:19,359 --> 00:25:20,680
Speaker 1: your net worth is going to grow a heck of

601
00:25:20,720 --> 00:25:23,320
Speaker 1: a lot slower than if you've been investing in the market,

602
00:25:23,520 --> 00:25:25,439
Speaker 1: if you bought a home and you've seen that increase

603
00:25:25,480 --> 00:25:28,520
Speaker 1: in value. So what's your take then, when we're talking

604
00:25:28,520 --> 00:25:31,320
Speaker 1: about this freedom to spend and someone's like, yeah, my

605
00:25:31,400 --> 00:25:33,879
Speaker 1: net worth growing, but it doesn't feel like I'm richer

606
00:25:34,160 --> 00:25:35,720
Speaker 1: in the here and now. It feels like I'm building

607
00:25:35,720 --> 00:25:36,360
Speaker 1: for the future.

608
00:25:36,640 --> 00:25:36,840
Speaker 3: Yeah.

609
00:25:36,880 --> 00:25:38,760
Speaker 2: So this is something I did address in the book,

610
00:25:38,800 --> 00:25:42,800
Speaker 2: which is for this spending freedoms, I do recommend using

611
00:25:42,880 --> 00:25:45,719
Speaker 2: liquid net worth to be more conservative because, for example,

612
00:25:45,760 --> 00:25:48,640
Speaker 2: let's just use an extreme example. Let's say someone has

613
00:25:48,800 --> 00:25:50,960
Speaker 2: I don't know, nine hundred thousand dollars in home equity,

614
00:25:51,359 --> 00:25:53,040
Speaker 2: they have, you know, two hundred thousand dollars in a

615
00:25:53,040 --> 00:25:54,879
Speaker 2: retirement account, and then ten thousand.

616
00:25:54,640 --> 00:25:55,359
Speaker 3: Dollars in cash.

617
00:25:55,560 --> 00:25:57,639
Speaker 2: Based on the wealth ladder, they're in level four. I

618
00:25:57,760 --> 00:26:02,199
Speaker 2: still agree with that assumption. However, based on just how

619
00:26:02,240 --> 00:26:05,200
Speaker 2: much cash they have, they're kind of in like level

620
00:26:05,240 --> 00:26:08,399
Speaker 2: one or level basically barely level two, and so they

621
00:26:08,440 --> 00:26:11,360
Speaker 2: don't have a lot of spending freedom like someone who

622
00:26:11,400 --> 00:26:15,200
Speaker 2: maybe had a very different asset profile. And so it's

623
00:26:15,240 --> 00:26:17,800
Speaker 2: just something to think about, is like, I spend based

624
00:26:17,840 --> 00:26:19,560
Speaker 2: on liquid networth, and I say that, and so even

625
00:26:19,560 --> 00:26:22,200
Speaker 2: though I'm talking about networth in general, I think spending

626
00:26:22,240 --> 00:26:24,760
Speaker 2: based on the liquid networth is a more conservative way

627
00:26:24,760 --> 00:26:26,119
Speaker 2: of going about this. So what you do is you

628
00:26:26,160 --> 00:26:28,439
Speaker 2: just take your net worth, You take out, you know,

629
00:26:28,520 --> 00:26:30,600
Speaker 2: any sort of home equity that you have, right, so

630
00:26:30,640 --> 00:26:34,040
Speaker 2: you net that out, and then you also subtract retirement

631
00:26:34,040 --> 00:26:36,240
Speaker 2: accounts because that is kind of future spending that's going

632
00:26:36,280 --> 00:26:38,080
Speaker 2: to be used at a future point in time.

633
00:26:38,280 --> 00:26:41,840
Speaker 1: Okay, I look this up before our conversation. Turns out

634
00:26:41,840 --> 00:26:45,919
Speaker 1: there are five hundred thousand ladder related injuries each and

635
00:26:45,960 --> 00:26:48,760
Speaker 1: every year. So don't clean your own gutters, is what

636
00:26:48,760 --> 00:26:52,159
Speaker 1: I learned from that. It's shocking to think that. But

637
00:26:52,520 --> 00:26:55,080
Speaker 1: what about the wealth ladder are there? Their injuries are

638
00:26:55,080 --> 00:26:58,240
Speaker 1: the people falling down off the wrongs and what typically

639
00:26:58,320 --> 00:27:02,600
Speaker 1: leads to someone and going from a higher rung two

640
00:27:02,800 --> 00:27:04,520
Speaker 1: or level to a lower level.

641
00:27:04,720 --> 00:27:07,520
Speaker 2: So I think it depends on which level you start at.

642
00:27:07,560 --> 00:27:09,959
Speaker 2: So for example, if someone's in level two and win

643
00:27:10,000 --> 00:27:11,679
Speaker 2: to level one, or a level three and win to

644
00:27:11,760 --> 00:27:15,080
Speaker 2: level two. My guess, based on what I've seen in

645
00:27:15,160 --> 00:27:17,680
Speaker 2: terms of data, is the most likely cause of that

646
00:27:18,560 --> 00:27:21,399
Speaker 2: is job loss, right or a health condition that creates

647
00:27:21,480 --> 00:27:24,080
Speaker 2: job loss. It's interrelated to one of these things. Either

648
00:27:24,080 --> 00:27:26,480
Speaker 2: you're spending, especially the United States, you're spending a lot

649
00:27:26,520 --> 00:27:28,800
Speaker 2: on health. Maybe you lose a job, you lose your

650
00:27:28,800 --> 00:27:30,520
Speaker 2: health care, and then you have to spend a lot

651
00:27:30,560 --> 00:27:34,159
Speaker 2: on health. Something like that is like the perfect storm

652
00:27:34,280 --> 00:27:37,239
Speaker 2: for you know, drying down on wealth much earlier than

653
00:27:37,280 --> 00:27:38,719
Speaker 2: you anticipated.

654
00:27:38,119 --> 00:27:40,600
Speaker 1: And that can be a perpetual cycle for a lot

655
00:27:40,640 --> 00:27:43,399
Speaker 1: of people. Too, and then hey, you lose that solid

656
00:27:43,480 --> 00:27:47,479
Speaker 1: job and you're bouncing around from inferior job to inferior

657
00:27:47,560 --> 00:27:48,119
Speaker 1: job after that.

658
00:27:48,320 --> 00:27:48,520
Speaker 3: Yeah.

659
00:27:48,560 --> 00:27:51,480
Speaker 2: Yeah, So it's that's my guess of where that's going

660
00:27:51,520 --> 00:27:53,880
Speaker 2: to happen as you move up the wealth ladder, though

661
00:27:53,920 --> 00:27:56,120
Speaker 2: it changes completely. And of course, can a job loss

662
00:27:56,119 --> 00:27:59,000
Speaker 2: still harm you, yes, but it's more likely going to

663
00:27:59,040 --> 00:28:00,000
Speaker 2: be your investment choice.

664
00:28:00,280 --> 00:28:01,960
Speaker 3: And you can think especially like level.

665
00:28:01,760 --> 00:28:05,320
Speaker 2: Four level five, Like this is where if someone got

666
00:28:05,320 --> 00:28:08,160
Speaker 2: into level four through like concentration or a level five.

667
00:28:08,240 --> 00:28:10,200
Speaker 2: Let's say you have your own business and you sold

668
00:28:10,240 --> 00:28:11,960
Speaker 2: the business or even you still own it, and it's

669
00:28:12,000 --> 00:28:15,040
Speaker 2: worth a lot on paper. If something happens to that business,

670
00:28:15,040 --> 00:28:18,000
Speaker 2: most of your network's probably in that single business. If

671
00:28:18,320 --> 00:28:21,360
Speaker 2: you know, a COVID type event happens and it adversely

672
00:28:21,400 --> 00:28:23,400
Speaker 2: impacts your business, I'll ce you own a restaurant group.

673
00:28:23,480 --> 00:28:25,960
Speaker 3: Right now, you are being you know.

674
00:28:25,880 --> 00:28:28,040
Speaker 2: You can fall down the well flatter because of this

675
00:28:28,200 --> 00:28:30,840
Speaker 2: concentration you have in your portfolio. So if I had

676
00:28:30,840 --> 00:28:32,640
Speaker 2: to pick what's the thing that caused someone to fall

677
00:28:32,640 --> 00:28:34,520
Speaker 2: down from level four to three or five to four,

678
00:28:34,840 --> 00:28:37,040
Speaker 2: it's going to be concentration bias, right, And actually, if

679
00:28:37,080 --> 00:28:39,480
Speaker 2: you look at I actually have a mobility matrix was

680
00:28:39,520 --> 00:28:41,440
Speaker 2: kind of shows, hey, if you started on this level,

681
00:28:41,600 --> 00:28:43,920
Speaker 2: what's the probability you'd be in this other level, like

682
00:28:43,960 --> 00:28:46,200
Speaker 2: in ten years or twenty years. And you see in

683
00:28:46,280 --> 00:28:48,880
Speaker 2: level five there actually is a higher probability of falling

684
00:28:48,880 --> 00:28:51,120
Speaker 2: down the ladder than in like level four for example,

685
00:28:51,200 --> 00:28:55,200
Speaker 2: because I think it's the concentration issue that people overlook.

686
00:28:55,400 --> 00:28:57,560
Speaker 2: They have most of their wealth and that they can't

687
00:28:57,600 --> 00:28:59,840
Speaker 2: imagine anything going wrong because they obviously have built all

688
00:28:59,880 --> 00:29:02,480
Speaker 2: their wealth, so they feel pretty successful. They are successful

689
00:29:02,760 --> 00:29:05,000
Speaker 2: at the same time, they don't hedge that risk and

690
00:29:05,040 --> 00:29:07,360
Speaker 2: then if something happens they could fall down the ladder.

691
00:29:07,400 --> 00:29:10,120
Speaker 1: Yeah, they're not taking those protectionary measures to say like

692
00:29:10,240 --> 00:29:14,160
Speaker 1: let's let's like not screw the pooch here and fall

693
00:29:14,200 --> 00:29:17,360
Speaker 1: down and let's protect what we've got. So and that's

694
00:29:17,400 --> 00:29:20,240
Speaker 1: where you know, what you're talking about is changing your

695
00:29:20,360 --> 00:29:22,880
Speaker 1: the way you think about investing it. It does need

696
00:29:22,960 --> 00:29:25,360
Speaker 1: to change as you as you move up the wealth

697
00:29:25,400 --> 00:29:27,080
Speaker 1: ladder and as you're getting older too, right, you do

698
00:29:27,160 --> 00:29:30,160
Speaker 1: need to de risk. I'm curious to you talk about

699
00:29:30,680 --> 00:29:32,560
Speaker 1: the things that we spend our time doing. Not only

700
00:29:32,560 --> 00:29:35,239
Speaker 1: should moving up the wealth ladder, change how we think

701
00:29:35,240 --> 00:29:37,840
Speaker 1: about spending, change how we think about investing. But it

702
00:29:38,120 --> 00:29:41,240
Speaker 1: should also Hey, what opportunities come our way and whether

703
00:29:41,280 --> 00:29:43,880
Speaker 1: we say yes or no to those opportunities that should

704
00:29:43,920 --> 00:29:47,080
Speaker 1: change as our net worth increases. So what's your advice there?

705
00:29:47,120 --> 00:29:50,840
Speaker 1: And like side hustles, that's like, you know, if I'm

706
00:29:50,840 --> 00:29:53,280
Speaker 1: going to go drive for Uber on the side to

707
00:29:53,320 --> 00:29:55,640
Speaker 1: make some extra money, Well, it doesn't really make sense

708
00:29:55,640 --> 00:29:57,880
Speaker 1: if you're on level five of the wealth ladder, does it?

709
00:29:58,080 --> 00:30:00,960
Speaker 2: Yeah, So it really has to do with you have

710
00:30:01,000 --> 00:30:03,520
Speaker 2: to think about, Okay, where am I on the well ladder?

711
00:30:03,560 --> 00:30:05,360
Speaker 2: And I so instead of using the point zero one

712
00:30:05,400 --> 00:30:08,040
Speaker 2: percent rule that was for spending for income, I say

713
00:30:08,120 --> 00:30:10,720
Speaker 2: use the one percent rule. And of course everything's based

714
00:30:10,760 --> 00:30:12,720
Speaker 2: on you know, how much time it takes to do something,

715
00:30:12,720 --> 00:30:14,240
Speaker 2: But let's just do this approximately.

716
00:30:14,600 --> 00:30:16,000
Speaker 3: If something's not going to move your.

717
00:30:15,840 --> 00:30:18,040
Speaker 2: Net worth by one percent, if the whole project's not

718
00:30:18,040 --> 00:30:20,400
Speaker 2: really going to lead to something like that, then you

719
00:30:20,440 --> 00:30:22,600
Speaker 2: maybe shouldn't even be considering it. And once again, of

720
00:30:22,600 --> 00:30:25,120
Speaker 2: course how much time. If I said clap your hands

721
00:30:25,120 --> 00:30:26,640
Speaker 2: for one hundred dollars, everyone would do it, even if

722
00:30:26,680 --> 00:30:29,360
Speaker 2: you're in level five, because at the time relative to

723
00:30:29,360 --> 00:30:30,760
Speaker 2: the number of second stakes you have to clap your

724
00:30:30,760 --> 00:30:32,680
Speaker 2: hands is very small, but you get the point. And

725
00:30:32,720 --> 00:30:35,560
Speaker 2: so it's not a perfect rule. It's just an idea

726
00:30:35,640 --> 00:30:39,160
Speaker 2: of like, Okay, this is just another way of evaluating something.

727
00:30:39,160 --> 00:30:40,680
Speaker 2: So if something's like, hey, someone wants to pay me

728
00:30:40,760 --> 00:30:42,200
Speaker 2: X dollars to do this, or I'm going to work

729
00:30:42,200 --> 00:30:44,120
Speaker 2: on this side hustle and it might be able to

730
00:30:44,160 --> 00:30:46,440
Speaker 2: get to this one day, like is that going to

731
00:30:46,560 --> 00:30:48,320
Speaker 2: move your net worth enough? And if not, then you

732
00:30:48,360 --> 00:30:49,520
Speaker 2: have to really reevaluate.

733
00:30:49,520 --> 00:30:50,000
Speaker 3: And so it's just.

734
00:30:49,960 --> 00:30:52,600
Speaker 2: Another tool in your toolkit when you're thinking about taking

735
00:30:52,600 --> 00:30:55,240
Speaker 2: on different income opportunities, taking on a new client, et cetera.

736
00:30:55,480 --> 00:30:56,760
Speaker 2: And so if it's not going to move the needle,

737
00:30:56,800 --> 00:30:58,400
Speaker 2: you're like, yeah, I actually shouldn't spend a lot of

738
00:30:58,440 --> 00:31:01,280
Speaker 2: time and resources on that. Another way of thinking through

739
00:31:01,280 --> 00:31:01,840
Speaker 2: that decision.

740
00:31:01,920 --> 00:31:05,000
Speaker 1: And I think that's like when we're talking to listeners

741
00:31:05,120 --> 00:31:09,320
Speaker 1: who are typically probably in roughly that level three area

742
00:31:09,720 --> 00:31:12,400
Speaker 1: and we're talking about side hustles. For most people, we

743
00:31:12,400 --> 00:31:14,200
Speaker 1: think it's a bad idea, like it's not a good

744
00:31:14,280 --> 00:31:16,400
Speaker 1: use of your time, and it's a better idea to

745
00:31:16,440 --> 00:31:19,280
Speaker 1: increase your skills to up your income at your day job,

746
00:31:19,720 --> 00:31:22,200
Speaker 1: or it's a better use of your time to use

747
00:31:22,240 --> 00:31:25,800
Speaker 1: those hours towards starting a business that can ultimately progress

748
00:31:25,880 --> 00:31:28,480
Speaker 1: into something far more meaningful than trading your time for

749
00:31:28,600 --> 00:31:31,720
Speaker 1: money right now. So, like, do you have similar thoughts

750
00:31:31,720 --> 00:31:35,480
Speaker 1: about education, increasing income and not wasting your time maybe

751
00:31:35,480 --> 00:31:38,520
Speaker 1: on side hustles for trading your time for money in

752
00:31:38,520 --> 00:31:39,160
Speaker 1: the moment.

753
00:31:39,240 --> 00:31:42,000
Speaker 2: I think it depends. The side hustle depends where you

754
00:31:42,040 --> 00:31:43,480
Speaker 2: are on the wealth ladder. I mean, if you're in

755
00:31:43,560 --> 00:31:46,760
Speaker 2: level three, the side hustle has to get pretty large

756
00:31:46,760 --> 00:31:48,600
Speaker 2: to start competing with your day job. I'm guessing right,

757
00:31:48,640 --> 00:31:50,160
Speaker 2: if you're in level two or something, And they may

758
00:31:50,240 --> 00:31:52,320
Speaker 2: not necessarily be true, but it really depends on like

759
00:31:52,720 --> 00:31:54,680
Speaker 2: what are your current skills, how much you're currently making

760
00:31:54,720 --> 00:31:56,280
Speaker 2: if you're already at a job, or like you're making

761
00:31:56,280 --> 00:31:58,600
Speaker 2: a decent income and you're like, even if I work

762
00:31:58,720 --> 00:32:01,160
Speaker 2: my tail off this year, I may get a you know,

763
00:32:01,200 --> 00:32:03,400
Speaker 2: a ten percent racine a five percent raise. Okay, how

764
00:32:03,440 --> 00:32:06,960
Speaker 2: much is that five percent difference? And then calculate, relative

765
00:32:07,000 --> 00:32:09,440
Speaker 2: to that difference, how much could I possibly make starting

766
00:32:09,440 --> 00:32:11,720
Speaker 2: a side hustle or doing something. And so I recommend

767
00:32:11,800 --> 00:32:13,560
Speaker 2: that everyone just has a project of their own that

768
00:32:13,680 --> 00:32:15,640
Speaker 2: even if it's not for money, just something they like

769
00:32:15,720 --> 00:32:18,360
Speaker 2: to do because it's it's very valuable. I personally like

770
00:32:18,680 --> 00:32:21,280
Speaker 2: writing about personal finance and investing and doing data stuff.

771
00:32:21,280 --> 00:32:23,120
Speaker 2: And I did that for three years, didn't get paid

772
00:32:23,160 --> 00:32:25,440
Speaker 2: anything on it when I was blogging, and now it's

773
00:32:25,480 --> 00:32:28,280
Speaker 2: become something that is a side hustle that was monetized.

774
00:32:28,280 --> 00:32:29,880
Speaker 2: But that took a very long time. I've been writing

775
00:32:29,920 --> 00:32:32,680
Speaker 2: for almost nine years online, so I've seen it's a

776
00:32:32,800 --> 00:32:35,400
Speaker 2: very long journey. And I didn't do it for money though,

777
00:32:35,440 --> 00:32:36,680
Speaker 2: and so that's another thing too. I think a lot

778
00:32:36,720 --> 00:32:38,160
Speaker 2: of people you just got to follow your interest and

779
00:32:38,160 --> 00:32:40,000
Speaker 2: if you start doing that, it can really lead to

780
00:32:40,120 --> 00:32:41,000
Speaker 2: a lot of great things.

781
00:32:41,160 --> 00:32:46,240
Speaker 1: Yeah, what about real estate investing? How does that impact

782
00:32:46,240 --> 00:32:48,440
Speaker 1: people's ability to move up the wealth ladder? And did

783
00:32:48,440 --> 00:32:51,920
Speaker 1: you find any correlation between people who you've talked about

784
00:32:52,080 --> 00:32:52,560
Speaker 1: people who.

785
00:32:52,520 --> 00:32:53,200
Speaker 3: Own a business.

786
00:32:53,320 --> 00:32:56,320
Speaker 1: Let's say that can be one of those things, especially

787
00:32:56,360 --> 00:32:59,400
Speaker 1: if it's that brings you up to level four, level

788
00:32:59,400 --> 00:33:02,040
Speaker 1: five more quick. But then again, a lot of small

789
00:33:02,040 --> 00:33:04,760
Speaker 1: businesses fail, so there's risk and reward in that. But

790
00:33:04,800 --> 00:33:06,800
Speaker 1: what about investing in real estate? Has that did you

791
00:33:06,880 --> 00:33:09,760
Speaker 1: find any correlation between higher ranks of the wealth ladder

792
00:33:09,840 --> 00:33:11,040
Speaker 1: and real estate ownership.

793
00:33:11,240 --> 00:33:13,320
Speaker 2: So not as much as I would have thought. I

794
00:33:13,320 --> 00:33:14,840
Speaker 2: would have thought we would have seen more. And so

795
00:33:14,840 --> 00:33:17,600
Speaker 2: if you actually look at percentage of assets like within

796
00:33:17,640 --> 00:33:21,280
Speaker 2: each wealth level, like it does increase slightly going into

797
00:33:21,280 --> 00:33:23,640
Speaker 2: like level four, level five, level six, but it didn't

798
00:33:23,680 --> 00:33:26,800
Speaker 2: like see a massive increase. Most of the increase I

799
00:33:26,840 --> 00:33:29,880
Speaker 2: saw was in business interests, which is it's roughly defined

800
00:33:29,880 --> 00:33:32,600
Speaker 2: as like owning some sort of private business that you own,

801
00:33:32,640 --> 00:33:34,200
Speaker 2: and that's kind of how you make your wealth. And

802
00:33:34,240 --> 00:33:37,520
Speaker 2: so people in level six overwhelmingly have way more business

803
00:33:37,520 --> 00:33:39,960
Speaker 2: interests as a percentage of their total assets compared to

804
00:33:40,040 --> 00:33:42,480
Speaker 2: level five. And then level five is more than level four,

805
00:33:42,520 --> 00:33:44,880
Speaker 2: et cetera. Right, And so in the book, in chapter three,

806
00:33:44,920 --> 00:33:46,800
Speaker 2: when I talk about investments, I go through all these

807
00:33:46,840 --> 00:33:51,800
Speaker 2: different assets cash vehicles, your primary residents, real estate, stocks,

808
00:33:51,840 --> 00:33:54,840
Speaker 2: your retirement accounts, et cetera, and I show across the

809
00:33:54,840 --> 00:33:58,440
Speaker 2: wealth latter how much percentage is in each wealth level.

810
00:33:58,880 --> 00:34:01,480
Speaker 2: And the thing with real estate, I didn't see as

811
00:34:01,520 --> 00:34:03,400
Speaker 2: much of an increase as I thought I was going

812
00:34:03,440 --> 00:34:06,200
Speaker 2: to see. But what someone said I showed I had

813
00:34:06,240 --> 00:34:09,120
Speaker 2: this I tweeted this out and someone said, it's very

814
00:34:09,200 --> 00:34:12,439
Speaker 2: possible that someone owns like a real estate like LLC

815
00:34:12,640 --> 00:34:14,279
Speaker 2: and they hold all the real estate in the LLC,

816
00:34:14,640 --> 00:34:17,239
Speaker 2: and so that's being counted as business interest even though

817
00:34:17,239 --> 00:34:18,000
Speaker 2: it's real estate.

818
00:34:18,360 --> 00:34:18,799
Speaker 3: I didn't.

819
00:34:18,880 --> 00:34:20,520
Speaker 2: I haven't looked into that, and that's something I need

820
00:34:20,560 --> 00:34:23,080
Speaker 2: to look into eventually. So I think there's probably a

821
00:34:23,080 --> 00:34:25,560
Speaker 2: little more real estate at the higher end, not just

822
00:34:25,640 --> 00:34:28,840
Speaker 2: obviously an amount that's obviously true, but even on percentage wise.

823
00:34:29,239 --> 00:34:31,600
Speaker 2: But I didn't see as much as I thought I would,

824
00:34:31,600 --> 00:34:33,800
Speaker 2: So that was the thing that was a little bit surprising.

825
00:34:33,840 --> 00:34:37,279
Speaker 1: I think in real estate usually almost most of the

826
00:34:37,280 --> 00:34:40,640
Speaker 1: time to make sense as an investment involves leverage. Do

827
00:34:40,760 --> 00:34:44,640
Speaker 1: you see leverage as a tool that people use to

828
00:34:45,080 --> 00:34:48,080
Speaker 1: move up the wealth ladder? And how risky is that?

829
00:34:48,160 --> 00:34:50,000
Speaker 1: Because leverage can cut both ways?

830
00:34:50,320 --> 00:34:53,399
Speaker 2: I mean, of course, I mean, if you've been levered up,

831
00:34:53,600 --> 00:34:56,239
Speaker 2: you know, in the past, let's say, five six years,

832
00:34:56,280 --> 00:34:58,400
Speaker 2: you probably it depends how levered up you were, obviously,

833
00:34:58,480 --> 00:35:00,839
Speaker 2: but like in general, asset prices have gone up, so

834
00:35:00,840 --> 00:35:04,080
Speaker 2: anyone with leverage has has benefited from that. But as

835
00:35:04,120 --> 00:35:06,440
Speaker 2: soon as it turns like that, can you know it's

836
00:35:06,440 --> 00:35:08,040
Speaker 2: the double edged sword and it comes and gets you

837
00:35:08,080 --> 00:35:09,480
Speaker 2: and right. So I think twenty twenty two is a

838
00:35:09,480 --> 00:35:11,280
Speaker 2: great example of it. I'm just at least in equity

839
00:35:11,320 --> 00:35:14,440
Speaker 2: markets where anyone who was levered up in twenty one

840
00:35:14,600 --> 00:35:17,560
Speaker 2: was absolutely crushing it. And then you just saw this

841
00:35:17,760 --> 00:35:20,040
Speaker 2: dry up so quickly and it just turned so fast,

842
00:35:20,080 --> 00:35:20,919
Speaker 2: and it was really bad.

843
00:35:20,920 --> 00:35:21,080
Speaker 1: You know.

844
00:35:21,080 --> 00:35:24,040
Speaker 2: There's a lot of individual names down eighty ninety percent,

845
00:35:24,280 --> 00:35:27,160
Speaker 2: like stuff that you saw like the dot com bubble,

846
00:35:27,239 --> 00:35:30,000
Speaker 2: you know, exploding. And so I'm not saying that that's

847
00:35:30,000 --> 00:35:32,040
Speaker 2: gonna happen now. I don't know, but that's that's the

848
00:35:32,160 --> 00:35:34,439
Speaker 2: risk of leverage. And I don't have as much data

849
00:35:34,520 --> 00:35:37,520
Speaker 2: on Okay, who's using leverage, how much leverage they're using today,

850
00:35:37,560 --> 00:35:39,839
Speaker 2: and then following them ten years from now and seeing

851
00:35:39,840 --> 00:35:42,240
Speaker 2: how they are. You know, so a lot some people

852
00:35:42,280 --> 00:35:44,080
Speaker 2: just get lucky and then they guess what, they take

853
00:35:44,080 --> 00:35:46,040
Speaker 2: their chips off the table at the right time, and

854
00:35:46,280 --> 00:35:47,920
Speaker 2: the thing collapses it. Oh well, I got lucky, And

855
00:35:47,920 --> 00:35:49,600
Speaker 2: I know people have done that too. So I've seen

856
00:35:49,800 --> 00:35:52,080
Speaker 2: kind of all sides of that type of stuff over time.

857
00:35:52,520 --> 00:35:56,759
Speaker 1: When if let's say someone's listening and they're earlier on

858
00:35:56,760 --> 00:35:59,279
Speaker 1: in their financial journey. When you talk about level one,

859
00:35:59,320 --> 00:36:01,279
Speaker 1: you talk about people who are on level one of

860
00:36:01,320 --> 00:36:03,040
Speaker 1: the wealth latter, you typically refer to those people as

861
00:36:03,080 --> 00:36:05,799
Speaker 1: being unlucky. Wouldn't you suggest, though, that some of those

862
00:36:05,840 --> 00:36:07,960
Speaker 1: people are also just starting their journey off? Right? They

863
00:36:08,120 --> 00:36:11,959
Speaker 1: just graduated, They've got maybe a super low net worth

864
00:36:12,040 --> 00:36:15,240
Speaker 1: because they haven't started accumulating assets yet, and they've probably

865
00:36:15,280 --> 00:36:17,920
Speaker 1: got student loan debt that they're paying off something like that.

866
00:36:18,120 --> 00:36:19,760
Speaker 1: And then what would you say to that person who's

867
00:36:19,800 --> 00:36:21,680
Speaker 1: just starting off if they're like, yeah, I don't want

868
00:36:21,680 --> 00:36:23,560
Speaker 1: to necessarily get to level six of the wealth ladder,

869
00:36:23,600 --> 00:36:25,200
Speaker 1: but I want to move up, and I want to

870
00:36:25,239 --> 00:36:26,920
Speaker 1: do it in a really efficient way, what would your

871
00:36:26,960 --> 00:36:27,600
Speaker 1: suggestions be?

872
00:36:27,800 --> 00:36:29,760
Speaker 2: Yeah, So you bring up a great point, which age

873
00:36:29,760 --> 00:36:32,680
Speaker 2: is very correlated with all with all the wealth levels.

874
00:36:32,680 --> 00:36:35,000
Speaker 2: And so in chapter ten of the book, I walk through,

875
00:36:35,040 --> 00:36:37,120
Speaker 2: like what's the median age in each level? For example,

876
00:36:37,120 --> 00:36:39,680
Speaker 2: in level four, which is one to ten million, the

877
00:36:39,800 --> 00:36:42,719
Speaker 2: median age is sixty two, so it is a.

878
00:36:42,760 --> 00:36:44,720
Speaker 3: Much older cohort. You start looking.

879
00:36:44,520 --> 00:36:46,920
Speaker 2: Through the data, the age stuff definitely matters. I'm not,

880
00:36:47,560 --> 00:36:50,600
Speaker 2: you know, downplaying that whatsoever. So you're right, there are

881
00:36:50,600 --> 00:36:52,600
Speaker 2: people in level one level two right now. They're like, oh,

882
00:36:52,600 --> 00:36:54,520
Speaker 2: I just graduate, I'm in level one, or I just graduate,

883
00:36:54,560 --> 00:36:57,760
Speaker 2: I'm in level two. Like you know, what's the issue.

884
00:36:57,760 --> 00:36:59,160
Speaker 2: You just need time. Yeah, a lot of these people

885
00:36:59,280 --> 00:37:01,520
Speaker 2: just need time to move, move the needle, and obviously

886
00:37:01,560 --> 00:37:03,160
Speaker 2: if you have a decent income that helps you can

887
00:37:03,160 --> 00:37:05,920
Speaker 2: start saving, investing, et cetera. For some people, though, they

888
00:37:05,960 --> 00:37:08,120
Speaker 2: need to build skills and they need so in level one,

889
00:37:08,160 --> 00:37:09,960
Speaker 2: I say, hey, just get to safety. Get to some

890
00:37:10,239 --> 00:37:12,680
Speaker 2: whether that means having an emergency fund that's something we've

891
00:37:12,680 --> 00:37:15,359
Speaker 2: all heard before, or just having a network of a

892
00:37:15,400 --> 00:37:18,080
Speaker 2: friend's family, whoever that you can rely on in case

893
00:37:18,120 --> 00:37:20,760
Speaker 2: something were to happen, Because the last thing we want

894
00:37:21,239 --> 00:37:23,040
Speaker 2: is for you to get stuck in level one just

895
00:37:23,080 --> 00:37:26,120
Speaker 2: perpetually because you're just you're feel like you're treading water

896
00:37:26,160 --> 00:37:28,560
Speaker 2: because like, oh, I this bad thing happened, and then

897
00:37:28,560 --> 00:37:30,200
Speaker 2: I got a new credit card debt, and then I

898
00:37:30,280 --> 00:37:32,520
Speaker 2: lost my job, like whatever. It is, like you can

899
00:37:32,600 --> 00:37:35,680
Speaker 2: imagine just like this financial tail spin happening because you

900
00:37:35,760 --> 00:37:37,600
Speaker 2: just got a little bit unlucky early on. And that's

901
00:37:38,000 --> 00:37:39,719
Speaker 2: that's where I think a lot of people in level

902
00:37:39,719 --> 00:37:42,840
Speaker 2: one are in unfortunately, and I'm saying older people in

903
00:37:42,880 --> 00:37:45,359
Speaker 2: lovel one, they just got unlucky early and maybe they

904
00:37:45,360 --> 00:37:46,560
Speaker 2: couldn't get themselves out of it.

905
00:37:47,040 --> 00:37:48,920
Speaker 1: Yeah. I've got a few more questions I want to

906
00:37:48,920 --> 00:37:52,319
Speaker 1: get to with you, Nick, including the how important is

907
00:37:52,320 --> 00:37:54,600
Speaker 1: the wealth ladder? Are we using it to compare ourselves

908
00:37:54,640 --> 00:37:56,080
Speaker 1: to the people around us too much? We'll get to

909
00:37:56,120 --> 00:38:06,880
Speaker 1: that and more right after this. Okay, back with Nick

910
00:38:06,920 --> 00:38:09,040
Speaker 1: with Julie talking about the wealth ladder, and I think

911
00:38:09,080 --> 00:38:12,440
Speaker 1: it's such a helpful framework for understanding a bunch of

912
00:38:12,480 --> 00:38:16,040
Speaker 1: things about your financial journey, about how you're growing your

913
00:38:16,040 --> 00:38:17,880
Speaker 1: net worth and then what that means to you in

914
00:38:17,920 --> 00:38:21,000
Speaker 1: the here and now as you are accruing wealth, which

915
00:38:21,040 --> 00:38:24,000
Speaker 1: is an important part of getting your finances straight. But

916
00:38:24,640 --> 00:38:27,920
Speaker 1: we're just talking Nick about how the you know, in

917
00:38:28,000 --> 00:38:30,319
Speaker 1: level four, the average person with that one to ten

918
00:38:30,360 --> 00:38:32,640
Speaker 1: million dollar net worth, they're in their sixties, and so

919
00:38:32,840 --> 00:38:36,000
Speaker 1: I think sometimes though people listening to this show or

920
00:38:36,080 --> 00:38:39,320
Speaker 1: other personal finance content, they're like that million dollars. I

921
00:38:39,320 --> 00:38:40,880
Speaker 1: think I'm supposed to hit that in my thirties, and

922
00:38:41,080 --> 00:38:43,600
Speaker 1: maybe the pressure feels really great. So do you think

923
00:38:43,640 --> 00:38:47,000
Speaker 1: that the comparison that we're doing maybe as we're looking

924
00:38:47,040 --> 00:38:49,480
Speaker 1: at these different levels of the wealth ladder that we're

925
00:38:49,520 --> 00:38:52,560
Speaker 1: trying to achieve, can have any negative side effects?

926
00:38:52,920 --> 00:38:56,160
Speaker 2: Yeah, I definitely can. I mean we don't want people to.

927
00:38:57,080 --> 00:38:59,920
Speaker 2: I think as bad as looking at data is, I

928
00:39:00,120 --> 00:39:03,880
Speaker 2: think social media is actually much worse. So I'm not

929
00:39:03,880 --> 00:39:06,759
Speaker 2: trying to defend the data, but like, if you just

930
00:39:06,760 --> 00:39:09,200
Speaker 2: look at social media, everyone's crushing in has this and

931
00:39:09,200 --> 00:39:11,400
Speaker 2: then all this type of stuff. You can't see someone's

932
00:39:11,520 --> 00:39:13,319
Speaker 2: entire balance sheet. If someone buys a home, you don't

933
00:39:13,360 --> 00:39:15,279
Speaker 2: know how much they put down the debt any of

934
00:39:15,280 --> 00:39:17,120
Speaker 2: that stuff, right, You have no clue about any of that.

935
00:39:17,440 --> 00:39:18,399
Speaker 3: I think the data is very.

936
00:39:18,280 --> 00:39:21,080
Speaker 2: Helpful because you get to see, oh, actually less than

937
00:39:21,080 --> 00:39:23,719
Speaker 2: one percent of individuals in their twenties make it into

938
00:39:23,760 --> 00:39:26,760
Speaker 2: level four, right, and it's only five percent of individuals

939
00:39:26,800 --> 00:39:28,960
Speaker 2: in their thirties make it into level four or higher.

940
00:39:29,040 --> 00:39:29,160
Speaker 3: Right.

941
00:39:29,200 --> 00:39:31,440
Speaker 2: So it's like once you know that, you're like, oh, actually,

942
00:39:31,480 --> 00:39:34,160
Speaker 2: like only one in twenty households in the United States

943
00:39:34,200 --> 00:39:35,799
Speaker 2: are going to make it into level four, right, And

944
00:39:35,840 --> 00:39:38,040
Speaker 2: so you start looking through that, and that's on page

945
00:39:38,080 --> 00:39:40,560
Speaker 2: one fifty and chapter ten in the book, right, and.

946
00:39:40,640 --> 00:39:42,120
Speaker 1: So feel a little more normal yeah.

947
00:39:41,960 --> 00:39:44,359
Speaker 2: Yeah, you start. I actually think it's helpful to see

948
00:39:44,360 --> 00:39:47,000
Speaker 2: this because then you realize, oh, it's actually not as

949
00:39:47,239 --> 00:39:49,879
Speaker 2: people aren't as wealthy as I originally thought, even when

950
00:39:49,880 --> 00:39:51,080
Speaker 2: you control for age.

951
00:39:50,840 --> 00:39:52,919
Speaker 3: And so that's a big piece of this too.

952
00:39:53,280 --> 00:39:56,160
Speaker 2: Even in the forties, only fifteen percent of households in

953
00:39:56,200 --> 00:39:58,360
Speaker 2: their forties make it into level four or higher. So

954
00:39:58,760 --> 00:40:01,080
Speaker 2: this is not like you, oh, it's five percent in

955
00:40:01,120 --> 00:40:02,680
Speaker 2: the thirties, but by the forti it's got to be

956
00:40:02,719 --> 00:40:05,200
Speaker 2: what thirty percent, Like, no, it's only fifteen. It's you know,

957
00:40:05,360 --> 00:40:08,400
Speaker 2: it's still increased quite a bit, but it's still you know,

958
00:40:08,520 --> 00:40:11,680
Speaker 2: a small one in six households are in level four

959
00:40:11,719 --> 00:40:14,880
Speaker 2: or higher. So keeping that in mind is incredibly important

960
00:40:14,880 --> 00:40:17,320
Speaker 2: while you're doing this stuff and as you're on your journey.

961
00:40:17,320 --> 00:40:18,840
Speaker 2: So it's like it takes time. It does take a

962
00:40:18,840 --> 00:40:19,520
Speaker 2: lot of time.

963
00:40:19,360 --> 00:40:20,040
Speaker 3: To do that.

964
00:40:20,400 --> 00:40:23,600
Speaker 1: Yeah, so give yourself time. How do you think about

965
00:40:23,680 --> 00:40:27,680
Speaker 1: the quest for moving up the wealth ladder and in

966
00:40:27,719 --> 00:40:32,920
Speaker 1: particular like level five and six we're talking about that

967
00:40:33,000 --> 00:40:36,360
Speaker 1: those are really small percentages of people that ever achieve

968
00:40:36,600 --> 00:40:40,319
Speaker 1: those levels of wealth. Is is it even a good

969
00:40:40,360 --> 00:40:42,600
Speaker 1: goal to have? And maybe for some people it is,

970
00:40:42,640 --> 00:40:45,399
Speaker 1: but I'm curious to hear your take and maybe even

971
00:40:45,920 --> 00:40:48,560
Speaker 1: your goals, like is that something you want to achieve?

972
00:40:48,920 --> 00:40:51,360
Speaker 2: Yeah, So in terms of whether it's a good goal,

973
00:40:52,680 --> 00:40:55,160
Speaker 2: I think it's a bit much. I think you don't

974
00:40:55,200 --> 00:40:57,000
Speaker 2: need it to live a great life, especially in the

975
00:40:57,080 --> 00:40:59,839
Speaker 2: United States. And I think in if you're not living

976
00:40:59,880 --> 00:41:01,920
Speaker 2: in because the US is so expensive, I think you

977
00:41:01,960 --> 00:41:04,960
Speaker 2: can get by and level three in a much better situation.

978
00:41:05,120 --> 00:41:07,959
Speaker 2: So it really depends on where you live, your cost

979
00:41:08,000 --> 00:41:11,600
Speaker 2: of living, amongst other things. In terms of my goals,

980
00:41:11,680 --> 00:41:14,400
Speaker 2: I have no inclination to ever get to level five, right.

981
00:41:14,440 --> 00:41:16,480
Speaker 2: I think I will get there nominally one day, but

982
00:41:16,520 --> 00:41:19,279
Speaker 2: in terms of real dollars, I don't think I will

983
00:41:19,320 --> 00:41:21,239
Speaker 2: ever reach out. By the time my net worth is

984
00:41:21,280 --> 00:41:23,520
Speaker 2: ten million, it won't be what ten million's worth today,

985
00:41:23,560 --> 00:41:25,880
Speaker 2: I'll say that. So that's my thinking on it.

986
00:41:25,960 --> 00:41:26,040
Speaker 3: Right.

987
00:41:26,120 --> 00:41:28,359
Speaker 2: It's going to take many decades before that happens, and

988
00:41:28,360 --> 00:41:31,279
Speaker 2: by then the real purchasing power won't be there. So

989
00:41:31,760 --> 00:41:35,279
Speaker 2: in terms of actual level five inflation adjusted wealth, I

990
00:41:35,280 --> 00:41:37,200
Speaker 2: don't think I'm ever going to get there because I

991
00:41:37,320 --> 00:41:39,560
Speaker 2: just don't have the inclination to go and start my

992
00:41:39,600 --> 00:41:40,560
Speaker 2: own business and do all.

993
00:41:40,560 --> 00:41:42,759
Speaker 3: That, like I have a day job. I do the

994
00:41:42,760 --> 00:41:43,400
Speaker 3: books and stuff.

995
00:41:43,400 --> 00:41:45,319
Speaker 2: And even if I sold, even if the wealth latter

996
00:41:45,400 --> 00:41:48,720
Speaker 2: sells a million copies right after you know, tax and everything,

997
00:41:48,760 --> 00:41:50,759
Speaker 2: I'm not going to make enough money to even it's

998
00:41:50,760 --> 00:41:52,560
Speaker 2: gonna help me, don't get me wrong, But I'm still

999
00:41:52,560 --> 00:41:52,799
Speaker 2: going to.

1000
00:41:52,840 --> 00:41:53,719
Speaker 3: Be in level four.

1001
00:41:53,760 --> 00:41:55,879
Speaker 2: I'm gonna be in level four for a very long time, right,

1002
00:41:55,920 --> 00:41:57,919
Speaker 2: So it is going to take a very and what's

1003
00:41:57,920 --> 00:42:00,319
Speaker 2: going to happen, I'm telling you already is I'm gonna

1004
00:42:00,320 --> 00:42:02,319
Speaker 2: get to a point where I'm like, Okay, do I

1005
00:42:02,400 --> 00:42:03,960
Speaker 2: need to keep doing all this stuff or can I

1006
00:42:03,960 --> 00:42:05,560
Speaker 2: take my foot off the gas a little bit and

1007
00:42:05,600 --> 00:42:08,200
Speaker 2: like enjoy more time and liked spend more time with

1008
00:42:08,280 --> 00:42:10,719
Speaker 2: my family, traveling all this other stuff. I'm going to

1009
00:42:10,800 --> 00:42:13,040
Speaker 2: now start spending down my wealth a little bit and

1010
00:42:13,080 --> 00:42:15,520
Speaker 2: it won't be growing. And so I think that is

1011
00:42:15,560 --> 00:42:17,600
Speaker 2: what's going to happen at some point. I just don't

1012
00:42:17,600 --> 00:42:20,080
Speaker 2: know when. And I need to kind of approach that

1013
00:42:20,280 --> 00:42:23,120
Speaker 2: within the next probably decade or so. I'm hoping all

1014
00:42:23,640 --> 00:42:27,040
Speaker 2: else equal, right, no crazy, you know, worldwide depression or something.

1015
00:42:27,239 --> 00:42:29,120
Speaker 1: That's what I would expect. And you have to count

1016
00:42:29,160 --> 00:42:31,960
Speaker 1: the costs ahead of time. Like, my uncle tells my

1017
00:42:32,040 --> 00:42:34,359
Speaker 1: daughter all the time she's twelve, that he wants her

1018
00:42:34,400 --> 00:42:37,200
Speaker 1: to be president of the United States someday. And we've

1019
00:42:37,200 --> 00:42:39,680
Speaker 1: talked about it, like at length now because he tells

1020
00:42:39,680 --> 00:42:41,520
Speaker 1: her that all the time, and she's like, Dad, I

1021
00:42:41,520 --> 00:42:43,359
Speaker 1: don't know, is that a good goal? And I'm like,

1022
00:42:43,440 --> 00:42:45,440
Speaker 1: I mean, if that's what she really want, But you

1023
00:42:45,520 --> 00:42:47,200
Speaker 1: have to count the cost ahead of time, because if

1024
00:42:47,200 --> 00:42:49,319
Speaker 1: you want to be president of the United States, you

1025
00:42:49,320 --> 00:42:51,960
Speaker 1: were going to have to dedicate so much of your

1026
00:42:52,040 --> 00:42:52,759
Speaker 1: life to.

1027
00:42:52,760 --> 00:42:53,399
Speaker 3: Getting that goal.

1028
00:42:53,400 --> 00:42:55,319
Speaker 1: And even if you do, there's like the chances of

1029
00:42:55,760 --> 00:43:01,600
Speaker 1: actually succeeding in getting that one job it's unlikely. So yeah,

1030
00:43:01,920 --> 00:43:04,000
Speaker 1: it might be the goal that you have someday, but

1031
00:43:04,640 --> 00:43:07,960
Speaker 1: it also you might realize that it's not even worth pursuing.

1032
00:43:08,480 --> 00:43:10,719
Speaker 1: But you got to think about that stuff ahead of time,

1033
00:43:10,760 --> 00:43:13,440
Speaker 1: because I think you can get stuck on this treadmill

1034
00:43:13,600 --> 00:43:16,160
Speaker 1: of Okay, wealth Ladder, next level, let's go up, I

1035
00:43:16,400 --> 00:43:19,240
Speaker 1: gotta I gotta keep moving and realize that you're playing

1036
00:43:19,239 --> 00:43:20,920
Speaker 1: the wrong game. You've maybe won the wrong game at

1037
00:43:20,920 --> 00:43:21,520
Speaker 1: the end of the day.

1038
00:43:21,719 --> 00:43:23,799
Speaker 2: Yeah, And that's and that is one of the there's

1039
00:43:23,840 --> 00:43:25,440
Speaker 2: three parts of the book the first part is just

1040
00:43:25,520 --> 00:43:26,920
Speaker 2: kind of telling you about the wealth lat or the

1041
00:43:26,960 --> 00:43:28,719
Speaker 2: second part I talk about each level and kind of

1042
00:43:28,719 --> 00:43:31,319
Speaker 2: different strategies to move up to burn from falling down,

1043
00:43:31,360 --> 00:43:31,760
Speaker 2: et cetera.

1044
00:43:32,120 --> 00:43:32,680
Speaker 3: And then the.

1045
00:43:32,680 --> 00:43:35,040
Speaker 2: Third part I talk about kind of that bigger picture

1046
00:43:35,160 --> 00:43:37,560
Speaker 2: like why are you climbing? Should you be climbing? I

1047
00:43:37,600 --> 00:43:39,920
Speaker 2: kind of get into all these issues because you're right,

1048
00:43:40,040 --> 00:43:41,400
Speaker 2: like most people are never going to make it to

1049
00:43:41,520 --> 00:43:44,200
Speaker 2: level five or six, myself included, And so when you

1050
00:43:44,200 --> 00:43:47,080
Speaker 2: think about that, like what are the things that really matter?

1051
00:43:47,200 --> 00:43:49,480
Speaker 2: And I really try and address that in a in

1052
00:43:49,520 --> 00:43:52,120
Speaker 2: a very different way. So that's not just keep climbing,

1053
00:43:52,160 --> 00:43:53,279
Speaker 2: that's not the that's not the.

1054
00:43:53,160 --> 00:43:53,960
Speaker 3: Goal of the book.

1055
00:43:54,160 --> 00:43:56,560
Speaker 1: Well, and you even you even talk about the downsides

1056
00:43:56,760 --> 00:44:01,799
Speaker 1: of having megawealth, and you hear from some people in

1057
00:44:01,840 --> 00:44:05,120
Speaker 1: that rarefied air who say, yeah, most of the people

1058
00:44:05,200 --> 00:44:06,920
Speaker 1: I know that are the unhappiest or some of these

1059
00:44:06,920 --> 00:44:10,200
Speaker 1: folks in these upper echelons of the wealth ladder. So

1060
00:44:11,120 --> 00:44:13,560
Speaker 1: for people I think in level one and two who

1061
00:44:14,120 --> 00:44:17,279
Speaker 1: aspire to have greater levels of wealth, it kind of

1062
00:44:17,280 --> 00:44:20,399
Speaker 1: doesn't compute. How is it that having more money leads

1063
00:44:20,400 --> 00:44:22,720
Speaker 1: to less happiness? But it's possible it does, right.

1064
00:44:22,840 --> 00:44:24,719
Speaker 2: Yeah, And so actually there's a whole chapter in the

1065
00:44:24,719 --> 00:44:26,719
Speaker 2: book where I talk about money and happiness and so

1066
00:44:26,800 --> 00:44:29,000
Speaker 2: in general. So if I would say, if you're in

1067
00:44:29,080 --> 00:44:31,760
Speaker 2: level one or two, more money will probably make you happier.

1068
00:44:31,840 --> 00:44:35,200
Speaker 2: Beyond that, I can't make any guarantees, but what the

1069
00:44:35,239 --> 00:44:37,960
Speaker 2: research shows is if you're already happy, more money is

1070
00:44:38,000 --> 00:44:39,640
Speaker 2: going to make you happier. Right, So, if you're in

1071
00:44:39,719 --> 00:44:41,839
Speaker 2: level three or four, you're enjoying life, you're not even

1072
00:44:41,880 --> 00:44:45,080
Speaker 2: asking yourself, will more money make me happier? You're probably

1073
00:44:45,120 --> 00:44:46,680
Speaker 2: going to be happier if you had more money, which

1074
00:44:46,719 --> 00:44:48,680
Speaker 2: is kind of an ironic thing. If you're in level

1075
00:44:48,760 --> 00:44:50,759
Speaker 2: three or four and you're like, oh, I don't I

1076
00:44:50,760 --> 00:44:52,320
Speaker 2: just don't feel as happy if I had more money

1077
00:44:52,320 --> 00:44:54,760
Speaker 2: than I'd be happy. It's not the money. The money's

1078
00:44:54,800 --> 00:44:57,200
Speaker 2: actually not going to do it, and the data shows that.

1079
00:44:57,320 --> 00:44:59,480
Speaker 2: So I think that's kind of the big takeaway. I mean,

1080
00:44:59,480 --> 00:45:01,080
Speaker 2: the big like somemo. How I summarize it in the

1081
00:45:01,080 --> 00:45:03,720
Speaker 2: book is if you're happy, more money will make you happier.

1082
00:45:03,719 --> 00:45:05,440
Speaker 2: If your poor, more money will make you happier. But

1083
00:45:05,480 --> 00:45:08,120
Speaker 2: if you're not poor and you're not happy. More money's

1084
00:45:08,160 --> 00:45:08,479
Speaker 2: not going.

1085
00:45:08,400 --> 00:45:08,879
Speaker 3: To do a thing.

1086
00:45:09,400 --> 00:45:11,279
Speaker 2: So that's kind of the big takeaway from what the

1087
00:45:11,320 --> 00:45:13,040
Speaker 2: research shows. And this is the newest research.

1088
00:45:13,040 --> 00:45:13,960
Speaker 3: Trust me. They looked at that.

1089
00:45:14,160 --> 00:45:15,960
Speaker 2: Everyone's heard that study about well, I heard, I thought

1090
00:45:16,000 --> 00:45:18,520
Speaker 2: happiness doesn't increase beyond seventy five thousand dollars in income.

1091
00:45:18,960 --> 00:45:21,719
Speaker 2: I look at that research. Someone else addressed it. They

1092
00:45:21,719 --> 00:45:23,600
Speaker 2: got together, looked at all the data and they had

1093
00:45:23,640 --> 00:45:25,680
Speaker 2: there's a very different conclusion out there now. So it's

1094
00:45:25,719 --> 00:45:27,799
Speaker 2: been updated and I discuss it in the book.

1095
00:45:27,840 --> 00:45:31,600
Speaker 1: It's an amplifier, right, and so yeah, I can't amplify

1096
00:45:31,680 --> 00:45:34,080
Speaker 1: that happiness and offer you more freedom and the ability

1097
00:45:34,560 --> 00:45:36,600
Speaker 1: to live the life you want. But it can also

1098
00:45:37,440 --> 00:45:40,600
Speaker 1: drag you down, and it can it really can feel

1099
00:45:40,600 --> 00:45:41,680
Speaker 1: like more money, more problems.

1100
00:45:42,000 --> 00:45:42,200
Speaker 3: Nick.

1101
00:45:42,920 --> 00:45:46,680
Speaker 1: Where can our listeners find out more about you and

1102
00:45:46,760 --> 00:45:48,200
Speaker 1: more about your new book, The Wealth Letter.

1103
00:45:48,400 --> 00:45:51,040
Speaker 2: So my websites of Dollars and Data dot com. I

1104
00:45:51,080 --> 00:45:53,560
Speaker 2: blogged there once a week. You can find me on

1105
00:45:53,760 --> 00:45:57,320
Speaker 2: LinkedIn at Nick Majulie x, slash, Twitter at Dollars in

1106
00:45:57,440 --> 00:45:59,839
Speaker 2: Data or on Instagram at Nick Madoulie and I answer.

1107
00:46:00,440 --> 00:46:01,920
Speaker 2: So please send me a DM as long as it's

1108
00:46:01,960 --> 00:46:05,680
Speaker 2: not unhinged spam. Like I swear, I answer every DM. Ladies,

1109
00:46:05,719 --> 00:46:08,239
Speaker 2: he's married, so not that kind. It's either not that

1110
00:46:08,280 --> 00:46:10,320
Speaker 2: type of DM. But no, any sort of no, seriously,

1111
00:46:10,320 --> 00:46:12,120
Speaker 2: any sort of financial question. I will try my best

1112
00:46:12,160 --> 00:46:13,959
Speaker 2: to answer it. And if not, I've probably written about

1113
00:46:14,000 --> 00:46:15,520
Speaker 2: or I know someone's written about. I can just send

1114
00:46:15,560 --> 00:46:17,640
Speaker 2: you a blog post you can read and that hopefully

1115
00:46:17,640 --> 00:46:18,600
Speaker 2: can help you in some way.

1116
00:46:18,880 --> 00:46:21,080
Speaker 1: Love it awesome, Nick, Thanks so much for joining us, tod.

1117
00:46:21,080 --> 00:46:22,879
Speaker 1: I appreciate it. Thanks for having me back on Joel,

1118
00:46:22,880 --> 00:46:27,360
Speaker 1: appreciate it. Okay, that was a fun conversation with Nick Mejulie.

1119
00:46:27,400 --> 00:46:30,320
Speaker 1: I appreciate the way he thinks and writes about money,

1120
00:46:30,760 --> 00:46:34,319
Speaker 1: and I do think that this concept of the wealth

1121
00:46:34,400 --> 00:46:37,719
Speaker 1: ladder can help you as an individual as you are

1122
00:46:38,360 --> 00:46:40,840
Speaker 1: trying to grow your wealth and trying to think about

1123
00:46:40,880 --> 00:46:44,520
Speaker 1: preserving your wealth, but also how you can change your

1124
00:46:44,640 --> 00:46:48,600
Speaker 1: life as your net worth increases. I think Nick's framework

1125
00:46:48,640 --> 00:46:51,319
Speaker 1: is super helpful for that. You'll notice by the way

1126
00:46:51,840 --> 00:46:54,400
Speaker 1: that my co host and best friend Matt was not

1127
00:46:55,239 --> 00:46:58,759
Speaker 1: on this episode with me and just trying something new,

1128
00:46:59,000 --> 00:47:03,040
Speaker 1: especially when it comes to the interview episodes to two

1129
00:47:03,080 --> 00:47:04,960
Speaker 1: people need to be asking questions. I don't know. We

1130
00:47:05,000 --> 00:47:06,520
Speaker 1: figure we give it a shot at least on this

1131
00:47:06,560 --> 00:47:08,640
Speaker 1: one and see if maybe it was better with a

1132
00:47:08,680 --> 00:47:10,520
Speaker 1: singular host. But of course he will be back with

1133
00:47:10,560 --> 00:47:14,960
Speaker 1: me on Friday. I wanted to give my big takeaway

1134
00:47:15,120 --> 00:47:19,160
Speaker 1: for this episode, and you know it just I think

1135
00:47:19,280 --> 00:47:23,479
Speaker 1: what Nick is saying. Essentially, it's different structure, different folks,

1136
00:47:23,520 --> 00:47:29,080
Speaker 1: and it takes different attributes and attitudes to succeed at

1137
00:47:29,200 --> 00:47:32,760
Speaker 1: different levels of the wealth ladder. And so what serves

1138
00:47:32,760 --> 00:47:36,520
Speaker 1: you well in rung one and Rong two doesn't serve

1139
00:47:36,560 --> 00:47:40,279
Speaker 1: you nearly as well once you move up further. And so,

1140
00:47:40,480 --> 00:47:43,520
Speaker 1: for instance, like Charlie Munger said at one point, who

1141
00:47:43,560 --> 00:47:47,680
Speaker 1: was Warren Buffett's sidekick who recently passed away, He said, basically,

1142
00:47:47,719 --> 00:47:53,000
Speaker 1: to walk everywhere you can and to use coupons every

1143
00:47:53,000 --> 00:47:55,000
Speaker 1: time you got to eat in order to reach your

1144
00:47:55,000 --> 00:47:57,520
Speaker 1: first one hundred thousand dollars. So he was saying, do

1145
00:47:57,640 --> 00:48:00,480
Speaker 1: whatever it takes to get to that point. Were even

1146
00:48:00,520 --> 00:48:02,520
Speaker 1: master first hundred k And he basically makes it sound

1147
00:48:02,560 --> 00:48:05,239
Speaker 1: like that's the hardest one hundred thousand dollars to get

1148
00:48:05,239 --> 00:48:06,920
Speaker 1: in your life, that the second, third, and fourth they

1149
00:48:06,920 --> 00:48:09,960
Speaker 1: get subsequently easier. And I think it's true. I think

1150
00:48:10,000 --> 00:48:12,719
Speaker 1: it's very true given my experience is that the first

1151
00:48:12,840 --> 00:48:15,520
Speaker 1: one hundred K is so much harder to a mass,

1152
00:48:15,520 --> 00:48:20,920
Speaker 1: and then really time and the markets, like compounding returns,

1153
00:48:21,320 --> 00:48:24,560
Speaker 1: start to work in your favor. So should you stop

1154
00:48:24,600 --> 00:48:27,200
Speaker 1: walking and stop using coupons? I don't know. I'm the

1155
00:48:27,239 --> 00:48:30,319
Speaker 1: kind of guy who's still prone and to doing those things.

1156
00:48:30,320 --> 00:48:34,320
Speaker 1: And maybe it's just because I want to be efficient

1157
00:48:34,480 --> 00:48:38,279
Speaker 1: with what's been placed into my life. But do I

1158
00:48:38,320 --> 00:48:40,959
Speaker 1: do it less than I used to? And have I

1159
00:48:41,040 --> 00:48:45,200
Speaker 1: opened the purse strings more than I did when I

1160
00:48:45,280 --> 00:48:49,520
Speaker 1: was in my early mid twenties, really just trying to

1161
00:48:49,600 --> 00:48:53,080
Speaker 1: get past wrung one and two? Yes, yes I have,

1162
00:48:53,360 --> 00:48:55,960
Speaker 1: And so my life does look different. I think about

1163
00:48:56,480 --> 00:49:02,000
Speaker 1: even just Nick's concept of being grocery store, being able

1164
00:49:02,040 --> 00:49:03,239
Speaker 1: to spend what you want at the grocery store, and

1165
00:49:03,239 --> 00:49:04,720
Speaker 1: then being able to spend what you want at a restaurant.

1166
00:49:04,719 --> 00:49:08,120
Speaker 1: Those are just different levels of financial freedom. And I

1167
00:49:08,120 --> 00:49:11,400
Speaker 1: think about staying at hostels. Would I not stay at

1168
00:49:11,560 --> 00:49:13,080
Speaker 1: I used to stay at hostels? Like would I stay

1169
00:49:13,080 --> 00:49:17,799
Speaker 1: at a hostel again? Maybe? But I'm not inclined to

1170
00:49:18,600 --> 00:49:21,680
Speaker 1: nearly as much as these days. So but there are

1171
00:49:21,719 --> 00:49:25,200
Speaker 1: also things I could learn from this book about being

1172
00:49:25,239 --> 00:49:26,920
Speaker 1: willing to spend all the things that matter to me,

1173
00:49:26,960 --> 00:49:31,520
Speaker 1: and maybe maybe as I continue to move up, being

1174
00:49:31,520 --> 00:49:33,520
Speaker 1: more generous with what I've been given to. So I

1175
00:49:33,600 --> 00:49:36,120
Speaker 1: just appreciate Nick's take, and I hope it was helpful

1176
00:49:36,480 --> 00:49:40,880
Speaker 1: for you. And unlike Nick, I don't see level five

1177
00:49:41,360 --> 00:49:47,200
Speaker 1: or six in my future, but I'm okay avoiding those

1178
00:49:47,280 --> 00:49:50,879
Speaker 1: upper rungs and live in a mostly normal life where

1179
00:49:50,880 --> 00:49:53,240
Speaker 1: I still have a lot of financial freedom and choice

1180
00:49:53,239 --> 00:49:55,360
Speaker 1: over what my days look like. But that's going to

1181
00:49:55,440 --> 00:49:57,560
Speaker 1: do it for this episode. You can always find more

1182
00:49:57,560 --> 00:49:59,919
Speaker 1: money saving information up on our website at how to Money,

1183
00:50:00,560 --> 00:50:02,279
Speaker 1: and you can sign up for the how to Money

1184
00:50:02,280 --> 00:50:06,120
Speaker 1: newsletter at howdomoney dot com slash newsletter. I guess I

1185
00:50:06,120 --> 00:50:08,279
Speaker 1: can't really do best friends out says my best friends

1186
00:50:08,400 --> 00:50:10,960
Speaker 1: out here with me, but I will say thanks for listening.