Optimize Financial Stewardship: From Money Owned to Future Owned

Welcome to the Optimizing Beyond podcast. I'm Josh Negron, and this show's all about sharing lessons, ideas, and strategies that sharpen your thinking, strengthen your habits, and push you to grow beyond comfort zones. Let's dive in. Hey everyone, welcome back to the show. We talk a lot on this podcast about how daily anything changes everything. Those daily choices that eventually rewire who you are and what you eventually do. But let's get raw for a second. How's that going with your bank account? I see so many high achievers crushing it in the gym or in the boardroom, but behind the scenes, they're suffocating under the weight of their own success. Sure, they've got the highlight reel, but they don't have the freedom or any flexibility. Today, I want to move past the flex and into real stewardship. I'd like to share steps of my own financial optimization that changed my life to hopefully help you move from being owned by your money to actually owning your future. So let's dive in. So I wanna cover 5 things that played a major role in my family's financial stewardship journey. And those 5 are the role of generous people I respected in my life, recognizing past and potential future problems and patterns, my view on debt and how to attack the beast, how to handle the temptation of lifestyle creep, and finally exploring all the different ways to invest in your future. Now, reasonable disclaimer, I am not a financial advisor. So I do wanna make sure that you know that. And these are things that I'm sharing from my personal experience. As always, hoping that that can be a blessing to you to discern for yourself what would be good steps for you to take moving forward. All right, and for the first one, like I said, it is generous people that I respected. Now, I always joke around and say the stupid phrase rich people, and I'll be honest, that's funny to me now, but that is a comment that I think has carried on into culture, the idea that if someone is wealthy, that they are a terrible person to a certain degree. Now, growing up very poor, I did not have an overall positive view of wealthy people, and I think that's shared by a lot of people. Now, there certainly are a ton of examples of people with a lot of wealth or a lot of resources that are just not great humans at all. That being said, I think in all areas of life you can identify unsavory people in all stages. So simply having that evidence, I don't think, is a conclusive way to judge an entire category of people. If you think about it, you shouldn't do that really in any aspect of life. When my wife and I were in college and we're a newlywed couple, there were specific relationships that I can think back to of people that were definitely quite a ways ahead of us in life, comfortably at least 15, if not 20, 30 years ahead of us in that journey. And they were people who had amassed a decent amount of resources. But from the very beginning, they were challenging my views of them. Like I said, I did not have a very positive view of people who were wealthy initially. I had my own prejudices involved when I could see their external resources. Specifically, cars and homes are the ones that come to mind most often. And as a result, my judgments were carried into how I viewed them. But over time, in pretty quick order actually, I noticed that they did not fit my opinions of them, and they were challenging my view of people who have resources in a good way. These people were such a blessing to my family and everyone around them. Their reputation was powerful, helpful, humble, and overall encompassed in the idea of generosity. And this was an incredibly amazing thing to be a part of. Now, they weren't doing that to change my viewpoint of them. They were just being who they were. But in so doing, and just acting through their own character, they were doing just that. And I realized early on that wealth is more of a tool than anything else. And just like a lot of things in this life, tools can be used for good and for evil. And I'm so thankful for those years in my 20s where I encountered incredible people with incredible character, with tremendous resources that were able to show me what the tool of wealth could do in the hands of somebody trustworthy, with high integrity, and with an amazing, generous, humble spirit. I would argue, Especially on this show, we talk about optimizing all parts of your life, that stewardship is just as important as fitness, relationships, or anything else we talk about on this show. And because of that, and perhaps even more so because finances is naturally something that we all have to manage and find our way through. And while people can speak into our finances and how we invest or spend, at the end of the day, the decision is always up to us. Nobody is controlling our bank account. In most reasonable cases. And if you don't live out the things that you learn, then like all things that we talk about, if you don't go against the current, 9 times out of 10, the current will take you to a place that you ultimately don't want to go and is arguably not ideal for you. As with all things that are worth pursuing, it generally takes effort against the grain, against what everyone else is doing, to be different, to push against the natural flow and the natural temptations in order to achieve a prosperous place, which of applies across all these themes, like health, like fitness, like relationships, like mental health, and so on. And so in this section, I'll leave you with this thought. I think that true generosity and financial management is a character trait. That doesn't mean that you can't change it. However, there is a quote, and I don't know who originally said it, but it says that money and power only magnify character. They only multiply more of what they find. In other words, If someone is a good person, if they gain money or power, you will only see more of their goodness multiplied. Conversely, if someone is a person with low integrity, poor leadership, and other deep flaws, then money and power are only going to magnify those things to be even more severe. I think we're all familiar with the endless example of lottery winners out there that squander all their wealth or taken advantage of, or just do very poor things with their winnings. And this falls into this category. So this is why I think this is so applicable because it dovetails with all the things that we discuss about becoming the best version of you that you can possibly be. And so for me in my college years, I noticed this pattern of consumerism. And they say the first thing of dealing with your problems is admitting you do have one, right? And so as a result, I realized over the years as I was earning a living, building a family, that I was making choices that weren't necessarily ideal for me or my family. I think generally we all know what that feels like, but the pull of things, possessions, flexing on others, keeping up with the Joneses, and those kinds of ideas are all things that we naturally think about. We don't have to dig deep into all those. I think those naturally pull on us in, in all sorts of different ways. And so that idea of exchanging freedom for some sort of gratification. Now I'll be honest, initially that didn't go much beyond recognition. I knew that I was doing it, but it didn't necessarily stop me from doing those things, but just recognizing that this was a pattern. And it was not a pattern that I was unfamiliar with. My parents growing up had plenty of disagreements and conflicts surrounding finances. This is something I remember very vividly and not something that we have to shy away from that truth. And so I knew secondhand what the stress of money could do, how it could affect a family. And This game of constantly trying to keep up and juggling too much and not being able to feel like you can stay ahead. And honestly, like I've talked about before, I'm not really a huge fan of fear being a strong motivator in the long term. However, this fear of repeating this pattern generationally was something that kind of freaked me out. And I didn't want to repeat the same patterns that my parents had struggled with for so many years. And I think at this point, we've all heard some sort of statistic That links divorce to financial struggle. I'm sure the percentage is really high if we look it up right now, but at the very least, we know that there's a strong correlation between the erosion of marriages and relationships due to financial struggle. So I think one of the important things to remember about financial decisions is that justification is, from my view, something that plays a role in this. Now we can justify pretty much anything for ourselves, but let's look specifically at finances. Justifying any purchase is something that I think all of us have some form of PhD in. So when you want something, you can figure out a way to justify it for yourself. Now, those of you who are in relationships with significant others, you get pretty good at justifying that for your significant other as well and convincing them of your pursuit. Now, in previous episodes, we've talked about why it's so important to look at who's in your circle for a lot of different reasons. Because whoever's in your circle is going to affect who you are, your character, and your growth over time. In the same way, it's also going to affect your financial future. There's a popular phrase that said that, show me your network and I'll show you your net worth. The idea behind that is that the people that you surround yourself with are definitely going to have financial implications for you in the future, either to the good or the bad. So in the same way, if somebody wants to constantly justify a consumerism or materialistic lifestyle, they're going to surround themselves typically around people who do the same thing. This kind of keep up with the Joneses idea where everyone's just constantly trying to leapfrog and keep up with each other. So I would argue your circle either hurts or helps your financial future, and it's wise to kind of make an assessment. Look at those people in your circle and are they in a financial position that you would be okay being in? And if not, you have some things to think through. Now also some quick things to keep in mind is sometimes stage in life also matters. So If you're looking at people your age, especially if you're a younger person, to have everything together financially, that's going to statistically be less likely than people that might have 10 to 20 years on you. However, just because someone's at an older age does not mean they are automatically financially responsible. Like I said, unless someone's pushing against the current of what's normal and natural for our selfish desires, I would argue that Financial growth is typically not something that happens at an alarming rate with anyone unless they put attention and focus on that growth area. The same way you won't find yourself in an extremely amazing fitness position if you don't put any work and attention towards it. And I think finally in this category, realizing that undirected money is just wasted. And so if I wasn't willing to put intention behind where my money goes and actually directing it and telling it where to go, That at the end of the month, I was going to ask a very common question that I think a lot of you can relate with. Where did it all go? And that is an unbelievably frustrating thing when you're working super hard to provide for your family. Maybe both of you are working, whatever that looks like. And at the end of the month, you feel like you are coming up short or you just don't have enough to show for it. That's an exhausting rat race proposition and you can't control anyone but yourself. So the push on this channel is always to control what you can control, And that does start with you. And so when it comes to finances, you can't always control what your employer pays you. You can't always control your work situation, and you can't always control a lot of external factors. However, you can control you. You can control what you spend, where you direct your money. It does take effort though. So again, pushing against that current, how do we begin to do that? And for us, it started with attacking bad debt. Now I use the phrase bad debt because people like to put degrees on debt. We're not going to get very deep into it, but As a typical rule, we're going to be referring to bad debt in things like credit cards and financing things that are arguably more wisely purchased with cash. In other words, things that are not needs, they are wants. Anytime you're financing something that is ultimately a want and not a need, that's something that I think would be healthy to put on your radar to bring some pause to. So again, very strong distinction for things that you want, not what you need. If you're not able to pay cash with that on the day that you want to purchase it, There's a lot of excuses. I get it. Well, it's on sale and it's this and it's that and the other, and I need it now. Well, no. Remember, we're talking about these are wants. These are not needs. You want it now? Yes. And it may be on sale now, but if you don't have the money for it, making that assessment, asking that question, is this the best way to wield finance and the debt system to my advantage? Which is not geared towards your advantage. I think most of us know that. But unfortunately, it's so easy to get stuck in that trap. They do make it incredibly easy on purpose. Because that's how they make their money. So step 1 of attacking debt is recognizing what types of debt are the worst and which ones are, are a little different in that equation. So I would put homes typically more on the better quotation of debt than I would bad, and then credit cards on the other side. And then there are a lot of things in between. In my opinion, I think cars can be sometimes more on the side of good, but more often than not, especially now with the average car payment being close to $1,000, It is just eye-watering what automobiles can do to a monthly budget for people. Now I get it, cars are a need, not a want. The spectrum of cars can range from want versus need in a lot of different ways. So I don't think I have to line all that out for you. I think we all get it. So I think it's important once you recognize that there is a spectrum of debt, the next thing that's important is getting on the same page with your significant other. Now I'll attach a warning here. There can be a lot of baggage and shame attached to discussions of finances. And handling money. So like we've talked about in our relationship and marriage episodes, I'd love for you to follow our conflict rules, such as practicing soft starts versus harsh startups. In other words, how you start a conversation can really set the tone for the conversation. So there's a— I always like to draw the distinction between you can ask someone, what's the deal, in 2 different ways on 2 different spectrums. The first one is, What the heck is your problem? Versus, hey, are you okay? Right? Both are asking what's up, but one is much different. And in that goes, watch your tone, avoid things like always and never. These are pretty classic normal interaction tips. And also using the law of positive intent. If you go into those conversations knowing there can be a lot of baggage and history, especially someone like me that grew up listening to fights surrounded around finances, There's just a lot of baggage that I haven't personally experienced, but I was subjected to through hearing my parents have fights around finances. So your significant other may have a whole bucket of their own baggage around finances. So having a conversation to get on the same page can be tough. And recognize also that there's this dynamic we've talked about before in our marriage episodes that some people are naturally savers and some people are naturally spenders. And so if you're the saver having the conversation with the spender, which is a lot of times how that dynamic will go, then please handle that responsibility with grace, understanding, because the odds that they're going to feel personally attacked are going to be pretty high. It's going to take some good judgment on your part to navigate that conversation well. But I think getting on the same page with your spouse was something that was super powerful for us in just deciding what were our financial goals, what were the most reasonable things to pursue in the area that we were in. Which is going to be different for everyone, and recognizing that debt will not simply go away just with hope. You're going to need a plan. And unless both of you are on the same page with that plan, then it's just going to be a recipe for frustration because they're going to do what they've always done. And if you're in this situation, there's no way you're going to get out if it's just you. It's just going to build a wedge between both of you, and that's going to cause you to be in a financial position you don't want to be in, in addition to having relationship issues that you also don't want to have. So getting on the same page is important. This is going to take more than one conversation. This is going to take repeated conversations. Remember, this is the constant illustration of, of pushing and canoeing against the current in the same way that applies here to discussions with your spouse in getting on this same page. A great rule of thumb in attacking debt is a play from Dave Ramsey's playbook. Now, I won't pretend like I follow every single Dave Ramsey Directive. However, I think some of his principles are just pretty solid because he crafts them for the general public as general rules to follow, and that's attacking the smallest debt first. Now I get it, there's some math geniuses out there, they're going to be like, well, there's going to be the one you want to want to attack, the one with the highest interest rate first. I get it. Yeah, listen to me for sure. But as a general rule, I think this is a great way to pursue this and start this snowball effect that he calls. And you can do the snowball effect in a lot of different ways for sure. But again, I think attacking the smallest one first allows you to get an easy win up front when this is still a new journey for you and probably the most arduous. And early on, having wins that are quicker can help you stay on that path and reinforce this behavior. So there's a lot of pluses for taking this approach. Identify your smallest debt, eliminate it. And once you do, Then apply all the payments that you were making to eliminate that one and snowball it into the second smallest and so on and so forth. So over time, you can use that concept to knock out a lot of debt pretty quick because as the snowball grows, you're using a larger resource to tackle the bigger debts. And so again, it can be a super, super powerful tool. And the final thought I want to share with you in this section is from Navy SEAL author Brandon Thornhill in his book, The Elite Leadership Blueprint. And in the financial section of his book, which is rich with systems and extremely practical ways to execute in multiple areas of your life, specifically around leadership, he talks about treating every dollar like a soldier, one that can fight for you or one that can just be wasted. And he says, if they're lost to interest, these soldiers, they cannot fight for your future. And so getting those soldiers away from being spent on credit cards and those kinds of bad debt, will free up ways for you to move on to using those soldiers in ways that can better bless your family and fight for a future that you might not even realize is possible. And this is where a very common cliché comes into play, where compound interest is the most powerful force in the universe. And I would argue that banks prove this all the time. They use interest to their advantage in charging it to you with bad debt so that they can make a ton of money. And in the same way, we can leverage that in our future as well. But it's just so easy to slip into the opposite dark side of compound interest and allowing it to take advantage of us if we just follow the natural current down the river. And so by that same token, I want to address how we handled resisting the natural lifestyle creep. Now, anytime that you get a new job with new opportunities that give you higher earning potential, or you enter in a time of plenty, If you're in a commission job and things are just humming and going super well, or you get a promotion and you have the opportunity and you're blessed by earning more, you are inevitably going to be tempted to, by the natural current, what I'm going to label lifestyle creep. And this applies to all of us. This is natural. This is normal. This is something that we all want to do when we earn a lot of money, get a promotion, get a new job that pays us more is, well, I guess we can get that new car now. Well, we've been wanting to get a new house. That new furniture would be a good time. It's just so easy. And it takes a ton of intentionality and focus to say no and delay gratification. And if you stick to your guns in times of plenty, then you can have a tremendous amount of flexibility in drought times or difficult times where other people are going to be in some pretty tough underwater situations, having to make really hard, desperate decisions to try to keep the ship afloat at often tremendous sacrifice. There's so many benefits that you can realize if you resist this natural creep. And the first one and main one is flexibility. If you keep your expenses low, then regardless of what happens, you retain extreme flexibility in your options. And this is super, super important, but it's certainly not as fun as a new house or a new car or any of those things. So trust me, I get it. I had plenty of times in my life where I gave up flexibility for The things that I wanted. And if you're anything like me, you've made the same decisions. So like I said in the previous section, there is a difference between working to build your future versus just funding your lifestyle. That new car, house, or furniture are not going to propel you to a wealth-building future. In fact, a lot of those things are just depreciating items. We're not even going to call them assets at this point that you spend your soldiers on. And a lot of times there's not much left towards the end. The average car depreciates about 50% in 5 years, not to mention the interest that you pay on that side as well. Working at a car dealership myself, I see a ton of people who have negative equity or upside down in those cars. And as always, it's hard to say no. It's hard to fight against that current. But again, we've gone through some really rough times in the last, I'd say, 5 to 10 years in times of plenty and in times of scarcity. And the people that have made wise choices are able to still retain that flexibility and freedom When things get tight, when things get tough versus others that find themselves in really desperate situations. In Brandon Thornhill's book, he did have some practical budget frameworks that you can use to get started, which he called the 50/20/15/5/10 rule. And that's essentially just categories that you can start from if you're like, I don't even know where to start with in a budget. So let's go through it. So 50% is needs. This is living expenses, the things that you need to keep things going that you cannot cancel. Right? So electricity, water, utilities, blah blah blah. Your rent or mortgage. Your current car payment goes in there for now. What are all those things? And then he puts 20% for taxes. Now this book is specifically for high earners, leaders, and entrepreneurs. So if you're a high earner or a 1099 person, then 20% for taxes is pretty critical and pretty standard. So this can be a flexible thing depending on your needs and your situation. And then 50% for what he calls a future fund. This is wealth building of some sort, such as investments or debt elimination. I have a couple financial advisors that are friends of mine. And when people are interested in investing, because they have a strong feeling of FOMO, there's other people investing in their future and they don't want to miss out. So they're like, hey, where do I need— I have this money, where can I put it to work for me? And a good financial advisor will always ask some key questions, you know, like what are the rest of your finances like? And if they see a lot of bad debt, they're going to be like, hey, listen, it doesn't make any sense for you to invest money over here. While you're bleeding money over here. It's better to eliminate that debt and then be able to invest in your future. This 15% can be wealth building in the form of investing in your future or eliminating debt, because that is both investing in your future. And then there's 5 to 10% in wants. What's— what are things that can keep life enjoyable while keeping lifestyle creep in check? This is why it's critical, because when you spend your budget and it's gone for that month, Guess what? If you want something, maybe you can get it next month with that 5 or 10%, right? So it's really good to keep that in line so that it just doesn't creep up. And then lastly, 5 or 10% for giving. And this is making generosity a discipline so that it's not just something that you do occasionally. It's something that you do regularly, because if you have given out of the goodness of your heart, you do know that the principle, it is better to give than to receive, is actually true. And the more that you live that out, the more powerful that truth can manifest in your life. And from my perspective, can really help transform you into an incredible person that you're meant to be. Now, like I said, this is an example framework that Brandon gives. He also is not a financial advisor, but he says, this is what I started with and what has been helpful to him. And it's a really good place to start when you write down your budget and how you're currently spending things. You can see real quick where you are compared to these categories, and that can give you a really easy picture of, yeah, well, this is where I need to do some work. Now remember, this isn't to stab yourself with or be extremely self-critical or enter into negative self-talk or negative beliefs. That's not what we're about here. We're about identifying ways that you can improve and always improve by reasonable margins so that you can build over time. So I don't want you to use these things as a, as a club to beat yourself with, but instead use it as a way to identify those problems so that you can progress to a different place where you can look back in 10 years and go, that's the time where I made those changes and That was a pivotal moment that propelled me to a place I never thought I could go. And speaking of that personally, I can tell you that is extremely powerful. And the last one's arguably the most exciting one. That's investing in your future, where you get to look at really identifying things as assets versus liabilities, learning the difference between the two, and finding ways to acquire those assets in increasing frequency over time and optimizing your mindset towards them to acquire those assets in a responsible way to create lasting change. Now, like most things we talk about on here, they are not instant gratification principles. They are things that if you implement over time, you do daily over time, they're going to create a massive change in who you are and in what you're doing. And in a culture of increasing instant gratification and dopamine spikes, this is the absolute last thing that most people want to do. Now, just like in fitness, there's a ton of ways to get moving and get healthy. There are so many different ways to invest in your future I highly recommend that you find someone in your life. And if you don't, seek someone out that has specific knowledge in this space on what is an asset that you can get into, that one that interests you, that you can get into in a responsible way. Now, with a caveat, I'll say you can find a lot of information on places like podcasts and YouTube, but just be wise in those arenas because there's a lot of creators out there that don't always have your best interests at heart. And they can be a lot of these get-rich-quick schemes postured individuals because again, think instant gratification. Why would you want to take 20 years to accomplish something if you can just do it in 90 days and pay them a certain amount upfront because it's heavily discounted and they're going to share all their knowledge with you? So beware of the trap. A lot of things that are worth doing take intentionality and focus over time, and this is no different. I wish it was that easy, but then would it really be that fulfilling if it was? Probably not, because if you just won the lottery today, sure, Yeah, you'd have a lot of fun, but you probably wouldn't find yourself in the best position in 6 months to a year, arguably. And that's not me saying that, that's just statistics saying that about most people that win the lottery. So don't try to reinvent the wheel. Follow good, established, proven financial principles. Those can be found virtually anywhere if you're willing to look and willing to listen. Again, they're not going to be fast, sexy, and quick. They're going to require sacrifice, focus, intentionality. Repeating them on a daily basis in order to find the most success with them. And that's a perfect time to reflect again on who's in your circle and reevaluate how they manage their money. Are these people using their money in a way that you want to mirror? And if not, you need to find people in your life that you can answer that question in a positive way, because that's only going to help your trajectory over time. So to wrap this up, let's look at the territory we covered today. So we started with mindset shift, moving from a negative view of wealth to recognizing it as a tool for stewardship and seeing that money only magnifies the character it finds. We identified the problem of consumerism and materialism and understanding that there's a difference between choosing freedom or choosing to flex and auditing our inner circle to make sure that we're not just justifying our way to financial slavery. We also looked at how to identify and attack bad debt, getting on the same page with our spouse using the rules of engagement we've talked about previously, and the fun idea of identifying every dollar as a soldier that's able to fight for our future or just be lost into the void. We also got practical with lifestyle creep and resisting the temptation that we all fall on in that current— To just make those decisions that make us feel good in the moment. Being prepared for times of drought and difficulty that we can't always control. And we also discussed Brandon Thornhill's budget framework to help us identify our current spending and where we could make adjustments. And finally, we focused on investing in the future, how you shift your thinking from liabilities to assets and things that can go to work for you, and also finding proven mentors that you can trust so you aren't stuck trying to reinvent the wheel or bamboozled into something that isn't going to work. And like James Clear always says, you don't rise to the level of your goals, you fall to the level of your systems. So if you're not happy with where you are financially, don't stab yourself with that, but instead recognize that you'd like it to be different. Recognize that you have goals that you would like to achieve, and then identify habits and systems that can help you over time make daily decisions that can change your financial future. Because even amazing financial decisions done daily over the course of 6 months can make a drastic change in your future. If you stay consistent, which is why daily is so powerful. So if your current habits aren't matching the person you want to become, today's the day to adjust that trajectory. Because in the same way that a plane or a ship adjusts that angle just a little bit at the start, they can end up at a completely different destination towards the end. And that's what we want to leverage to your benefit. Thanks for listening to the Optimizing Beyond podcast. Remember, growth happens when you take action. So subscribe, share this with a friend, and most importantly, put what you learned into practice. Until next time, keep moving forward because daily anything changes everything.