EVERYTHING You've Been Told About MONEY Is WRONG (How To Become Rich)| Ramit Sethi & Lewis Howes

And I always talk about how I got out of debt is with this book. I read it 8, 9 years ago and I had college debt, I had some credit cards. I was still kind of like figuring out what do I do with my money and transferring it over and stuff like that. And I read this six-week plan, got out of debt. Now, I had them cash to get out of debt as well but I also just got structured with my life and my finances. And something crazy happens when you get organized with your finances and your money. It's like the stress starts to go away or there's a new type of stress, which is like learning how to make more and learning how to manage it better once you have more. But the stress went away from feeling like I don't have the control in my life in this area. Because they don't teach you this in school.

No, they don't. And thank you for sharing that because, you know, I sit here and I write this book and I write my emails to my email list and my social posts, but it never gets old. hearing a real person in front of me telling me how they used the book to change their life.

Game changer, man.

Yeah, I appreciate that. Because, you know, a lot of this money is not just money. Like, it's great that you can have $20,000 in your bank account or many of my readers, they use this. It came out in '09. They did exactly what the book said, and now they have hundreds and hundreds of thousands of dollars, which is amazing. But I think the more meaningful part of it is they start to realize, Wow, I can use money as a tool to create a rich life. Money doesn't have to be this thing that's bad. It doesn't have to be this thing that everyone tells me what I can't do. No lattes, no jeans, no nothing. I can actually use it. And if I want to fly business class, I can. If I want to buy something really nice for my parents, I can. And you start to almost open up your life and realize, oh, money's not holding me back. It's actually amplifying what I really want to do.

I want to talk about two different things today. One, for those who are earning a lot of money, what should they be doing with their money? Because there's actually a new problem once you earn a lot of money, if it's just sitting in a bank, that's actually a bad thing, I think.

Totally.

And nobody talks about it. Yeah, no one really talks about it. So there's a lot of high earners who are listening. So what are some of the things? And listen, there's a lot of things you can invest in. There's real estate, there's stocks, there's starting.

Businesses, you can invest in other people.

There's a Louis Howes conference. There you go. Yeah, Seven Figure Greatness. You can invest in a lot of things. And then I want to talk about that. What do the high earners do with their money? How can they manage it at a high level? How can they save taxes? How can they do all these other things to really earn more and save more? And then also, for those in the, I guess, 100,000 and below range a year, what can they really be doing so they don't feel so stressed and overwhelmed about their money? Because they're probably a little bit in debt, using too many credit cards, maybe they're buying too many things that they shouldn't be buying at that stage. and they're behind in their finances or they feel overwhelmed. So, I think I want to start with the high earners first. -Okay. -Because you've been good at teaching this to kind of like the 60 to $150,000 a year earner. This is kind of like I think that book is kind of in that range. When you say maybe up to 200,000?

-I think so. But then what happened was the people who followed the advice... -Started making more. -They're balling.

They have hundreds of thousand.

They're like, what do I do with all this money? I don't know what to do. -And that's the challenge. -It is a challenge because You can't really talk about it online. No. You go on to Reddit and everyone's like, oh, I re-warm my oatmeal nine times and I can get a lot out of it. It's like, I don't want to take advice from you oatmeal warmers.

Right.

And then if you talk about it publicly, people are kind of like, dude, boohoo, what a problem. What a jerk. And actually, you know, look, if you have been successful, if you followed a program, whether it's my program or anyone's program, you've invested, you've saved, you now have new challenges. And your biggest question is, what's next? Like I sort of won, I won that game of personal finance, what's next? I'm not in debt. I'm not in debt, so 99% of advice doesn't apply to me. And people telling me, you know, I should cut my pieces of bread in three to save, no, that doesn't apply to me because I have earned and saved a lot. So then you start to say, what's next? Am I missing something? And finally, and what I think is actually a highly advanced question is, what do I do with this money? And this is a key thing I want everybody to pay attention to. Everyone teaches you how to save money, but almost no one teaches you how to spend it. So what do high earners do with their money? Why do some people spend money on business class tickets? I used to think it was stupid. We're all getting to the same place anyway. And yet, as you earn more, you start to change your calculus of spending, and hopefully we can talk about some of that.

You know what's interesting is, I used to sit in the back middle seat, coach, Southwest or American, whatever. The cheapest flight is what I would look for. And now I look for only first class or business class. You should say business class. And I look for, can I get it for free? Can I get it with points?

Nice.

I don't care if I could have bought a laptop with that money. That's what I used to think. That's $1,000 for a flight. I can buy a laptop with that. I can buy a new iPhone. Now it's more for me about like, do I feel good? Am I recovered? Am I gonna feel good when I get home so I can work harder and earn more? Yeah, that's the way I think. I love that.

And I wanna unpack a couple of things you just said in that example. First off, when anyone says, you know, I bought a business class ticket, notice the almost instinctive reaction. It's like, ugh, you know, what a show off. And all these other things that come along with it. And I wanna challenge people. I have this principle I call the D to C principle. And instead of being derisive and saying, oh, so stupid, that's ridiculous, I would never do that. I actually want to encourage everyone to be C, curious. Why would a guy like Lewis intentionally spend money on a business class ticket? Then he earns good money, he has a lot of options, he must know something that I don't, and I want to understand why. So from D to C, and if you start to take that perspective, especially on high earners and how they spend their money, all of a sudden you stop saying, that's ridiculous. Or if I had a million dollars, I would never do that. Instead you say, why did that person spend on that? And I wanna know. Maybe I don't agree. Maybe you become a multimillionaire and you don't wanna spend on business class, you just don't care. But it's interesting that you do it and I'd like to know more. I wanna share another principle we have, which is this concept of money dials. And your money dial is the thing that you love to spend money on. It's the thing that gives you joy and it's the thing you could spend endless amounts of time optimizing.

And feel good about it.

And feel good about it. And money dial, if you think about 10 dials in front of you and each of them represents a different area of life that people spend on, it turns out that each of us has one money dial that we love spending on. Your money dial, I would be willing to bet, is relationships.

Oh yeah.

Okay, so I have a friend Nick Gray. Nick Gray loves hosting people at his house. Every day he's trying a different party, he's testing stuff, he invites people over, he does all kinds of crazy stuff. He loves relationships. That's his money dial. And a money dial, the reason I say it's a dial is you start off, you know, maybe you have a couple people out to dinner and as you start to get more money and more success, you turn that dial until you are totally dialed in. You have the perfect appetizer, you have the perfect icebreakers, You have maybe friends who have jets. You're really turning that dial. There's other money dials. The most common one is frugality. Most people actually focus on cost above all else. And you can tell because when they buy something, what's the first thing they say?

Look at the price.

You look at the price and they tell everyone else, I got this for 60% off. Okay, so that's-- that's bragging about how.

Discounted they got it.

It becomes part of their identity. Whereas for you, Dude, I see your photos, I see your conference. Your identity is about relationships. Yes. Now there's a few others. There's wellness, which is more and more common. And you'll see people, they have the perfect diet, they have a chef. And I'm talking when they really dial it in. This is the point of a- Full-time trainer. Yeah, yeah. This is the point of an advanced personal finance, which is you don't have to have a trainer when you start off, right? But you went and you searched for five hours, you found the perfect program. But as you have more money, you start to say, I want better results. I want faster results. And I have money, I'm gonna throw it at the problem. Mine, my money dial, is convenience. So I love convenience.

Me too.

And I wake up.

Everything's delivered to you.

Everything's delivered. I have a chef. When I leave to travel, I have this thing called a travel protocol that gets activated with my assistant and my plants get watered, my email gets handled differently. I mean, it's like, I've been thinking about this for the last 15 years. I'm a psycho. But that's my money dial and I love it.

So you'll pay a premium for that money dial.

Exactly. But I could not care less about certain other money dials. Other common ones that a lot of people watching probably have or listening is travel. So at a basic level, people say I like to travel. But imagine you've truly, truly become more advanced and you've become more successful and you want to throw a lot of money at the problem because you value it. Suddenly, maybe you're going three months a year. Maybe you are leading excursions. I mean, you can just expand your mind as to what you could possibly do beyond the typical eight days of vacation a year. So I share this with everyone because I like to challenge people to do something. Take a look at your spending from the last two to three months and ask yourself, what is my money dial? Once you know your money dial, then it enables you to do two really cool things. One is, you can cut back on stuff you don't care about. Okay, so if you just don't care about wellness or if you just don't care about travel, that's okay. You can cut the spend to that. But I think the cooler thing is it allows you to take that money and now spend extravagantly on the thing you love, which is your money dial. So if you're Lewis, suddenly you don't mind throwing a lavish dinner for your friends with a performer and all kinds of crazy stuff because that's your money dial. No need to apologize for it. So for everyone, especially the advanced folks who have money, you got to think now, you're at a different level. You're not just trying to cut your debt, you're not just trying to cut back, you actually can spend on the things you love. And that to me is really exciting.

So figure out your money dial and spend more intentionally on those things as opposed to spending a lot on everything.

Exactly. What I do with my financial system is I set a target each year. This is how much money I'm going to save and invest. And those numbers are aggressive.

That's a lot of money. You're going hard. Yeah, like every year.

10%, 30%. Yeah, so anywhere between those ranges. And we have folks who-- Of what you earn. Correct. And then remember, whenever I make any unexpected income, let's say I did a speaking gig or something, yeah, I might get myself some, I might go out to dinner, but the rest I'm just putting straight in investments. Wow. Okay, so that money grows aggressively. And I also want to remind everybody, especially the entrepreneurs watching, I know you have a lot of entrepreneurs. You wouldn't believe how many entrepreneur friends I know who have a good business.

And they don't invest at all. And that's a huge mistake.

What should we be investing in if you have a good business? Simple low-cost target date funds is a great way to go. Entrepreneurs-- Index funds? Yeah, index funds. They get a little too smart for their own good. They say, I could just put that money in my business. And I always say, Look, I'm glad you have a business that's throwing off tons of cash. That's awesome. Most businesses don't last 80 years. So be smart. Give yourself a small plan B. Put 5K a month, 10K a month, whatever is appropriate for your level of success. And hey, maybe your business does really well. That's awesome. But maybe one day something goes wrong. Always want to be prepared. You never want to have your back against the wall. So I just want to encourage everybody, whether you're making 250k or 2.5 million for the high earners here, Don't get too smart for your own good. Keep investing and saving.

What are the three or four main things you invest in with that 10 to 30% a year? And does it change year to year? Yeah.

I'll kind of walk you through for the high earners and then we can talk about people 100K and less. So once you have a certain amount of capital, you do have a few opportunities that you probably didn't have before. Everybody has this idea that, you know, the rich have all these crazy tax breaks and captive insurance and this and that. And I've looked into all that stuff. Right.

I know. Insurance companies and all these other things, right? Yeah.

Here's the truth. The truth is, some of it is a little sketchy, but yeah, definitely. And I'll say my core values are that when it comes to things like.

Taxes, I love your principle on this.

I'm very conservative. I'm like, dude, only in this country could I have been this successful.

I love this mindset.

I'm happy to pay my taxes. It means that I had the opportunity to create something great. And if I pay an extra 5,000 or 30,000, it doesn't change my life at all. And I want to be able to give back to the society that enabled me to do what I do.

That's a powerful mindset. And it gets you away from, you still want to optimize tax breaks that are out there, but it gets you away from trying to constantly look for some of the shortcuts or like schemes or something.

Yes, I've always found that the people especially entrepreneurs who talk about tax breaks all the time are typically the most unsuccessful ones. Two reasons. One, why are you talking about tax breaks instead of growing your business? And two, it's a very scarcity driven mindset. Ooh, I only have this much that I have to protect. When really you can just grow the pie and your taxes are simply a proportion.

Just make more.

Just make more. Now, yes, you do want to optimize and take advantage of all Legal tax breaks. So as you earn more, you do have more opportunities. You have not only your 401k, you have all kinds of advanced IRA options, you have HSAs, you have a variety of things. But at a certain point, if you're making enough, you're gonna max all of those out. Yep. Okay, so what do you do when.

You max it all out?

So then the next step is to simply create a taxable account. It's just a typical non-retirement account, just that Vanguard or where I use Vanguard, whatever you want. and you just continue to invest. So that's one, and that's gonna keep making you money over the long term. It's just you're not gonna get those tax breaks from a 401 and IRA, et cetera. The other thing is, as you accumulate more and more assets, you're gonna start to notice a lot of different people are gonna come with opportunities. Dude, I get text messages from these crazy start-ups, like, yeah, I'm opening up a bar in Brooklyn. I'm like, I don't want your stupid bar. I'm not investing in that. I could burn my cash easier. But you're gonna, as you start to accumulate a lot, you're gonna wanna do, have a little fun with your money when it comes to investing. So some people want to do crypto. I think a lot of these people are complete nut jobs. Great.

Look, you crypto. I put a little bit in there just to like have fun, but I was like, thank goodness I didn't put.

More in there because everyone's losing their money. Exactly. And they're, you know, they're all, okay, I don't even want to get into crypto because I'm gonna get a lot of angry emails. Hey, if you want to email me about your angry crypto opinions, just send it to trash@iwillteachyoutoberrich.com. don't send it to me. But you know what? I like what you said. You took a little bit, you had some fun. Yeah, some fun. 5 to 10% once you've got all your other stuff automated, you've got your index funds, lockdown, HSA, your different accounts. I don't have any problem. I think you should take 5 to 10% and you should have some fun with it. For me, I did angel investing and I basically learned that I suck. My angel investing is not good.

I haven't made any money.

Yeah, my deal flow sucks. My choices were okay, some hit, most didn't. I basically just wrote that money off. But it was fun and it allowed.

Me to have an outlet. And you learned.

I learned to meet people and you, yeah. Yeah, so if you want to do crypto, if you want to invest in somebody's bar, you want to do angel investing, if you're qualified, et cetera, be my guest. But don't jump to that first. Get all your stuff automated and at a certain point the compounding is so insane, you will start to actually earn more from your investments than you will from your income. Even if you're making 500k a year.

From the index funds you're talking about if you're investing in that. What if the market's going down or up? Should you even worry about that? Let's say you put a half a million in. Yeah. It went up 100,000 over a couple of years, but then it went back to the original investment. Should you be like, oh my gosh, I need to take this out?

Do not do that. I'll give you a real example.

I put two years of my money into this and it's still the same amount.

I should have just left it in the bank. No, you shouldn't have left it in the bank. Alright, so this happened to me just about two weeks ago. So the market went down and I hardly ever log in. I log in about once a month to my account. You see like, oh yeah. And really, you should not be checking your investments.

Check every 10 years.

Once a month is good and like, don't, you're not a day trader. Okay, so, so I happened to log in and I saw that in the 11 days of that month in one of my accounts, I had lost $75,000. Okay, so for everybody listening, yeah. How would you react if you lost $75,000 in 11 days?

Most people would be freaked out.

They'd be freaked out. They would, Pull the money out. Yeah, which is exactly the opposite of what you should do. So everyone says this common thing and they just roll their eyes. Oh, buy low, sell high. But in reality, they actually buy high and sell low. So you know what I did? I did nothing. I logged in, I felt no emotion. It wasn't like my life is over. It was like watching someone offer me concrete to eat. Like I felt nothing. I'm like, nah, it's fine, whatever. I just closed the window. the key there is every month my system is automatically investing. It's called dollar cost averaging. It's just automatically investing. And you should set the same thing up too. You shouldn't be paying attention manually. You shouldn't be sending a check. It just works automatically. And so I knew this month the market is down. And if you think about any other thing you buy, if the price of toothpaste goes down, you're happy. If the price of milk goes down, you're happy. The only time we get weird is when the price of the market goes down and then we're like, oh, let me pull all my money out. Bad move. The price went down. If you're young and you have a long time before you need the money, you're getting the market at a discount.

You should get excited.

You should get excited. So I just said, Great, it went down. Fine. Doesn't bother me. And I just closed the window and a few days later, my system will just purchase it again. So it's up, it's down. It doesn't matter in the short term, but over the long term, we know that the market tends to return. about 7 to 8% over time. But it can go up, it can go down, and so you do not want to be paying attention in the short term.

Let's say you've got a half a million to a million dollars extra cash laying around. You've maxed out all your IRAs, you've got 5 to 10 grand a month going to your index funds, you've dabbled in the smaller investments and startups, and you've done it all. You've got a little bit in crypto, you've tried everything. What should you do with that extra million dollars a year?

Okay, great question. First off, this is like somebody saying to a fitness instructor, you know, I've done everything. What should I do next? And that, you know what that fitness instructor is gonna say? They're gonna say, when you say everything, what do you really mean? Like show me, are you doing foam rolling? Are you doing this? Are you all balanced? For the person who's doing this, I'm gonna give you your answer, but I'm gonna first say, are you sure? Have you planned out so you know that 10 years from now you're gonna buy a house? Do you have a 20% down payment set aside? I do, and I have no plans to buy a house anytime soon, but I have 20% set aside for a house. For that moment, yeah. Yeah, for when, so I already planned for what I know is coming even though I have no interest in it today. What about the first year of your kid's life? Do you have that set aside? What about X, Y, Z? Are you taking care of your parents when they get older? One thing that that I really love to do is talk about relationships. So I love to invite my family once a year for a big, big vacation where we can all stay in a house and there's a, you know, like a chef and all this stuff and we can all be there and the kids can be playing. Is that something that's important to you? That's cool. Right, so plan for that. Now, if you've done all that stuff, you got your six-month emergency fund, you've got your investments automated on autopilot and you still have money left over, you're in an awesome position. and now you can do a couple of things. One, if you want to keep growing that money, you can simply invest it in a non-retirement taxable account and that money will grow like crazy. If you're putting in 10, 20K a month, that money will turn into massive amounts. And if you guys don't believe me, just go search for compound interest calculator. Bankrate has a really good one and plug in 20K a month for 10 years and that's it. Just stop. and watch what happens. What is that?

7, 8%.

Yeah, at 7% returns and watch what happens. It becomes like a tsunami. You cannot stop it. So that's one. The other thing is if you want to invest in a little bit of fun stuff, if you're like, Hey, I want to take 10% of this and invest in like this crazy investment my buddy's starting a thing. Go ahead, just be prepared to write it off. Maybe it works, maybe not. And then from there, you should also remember a third thing, and nobody really talks about this. Maybe it's time to increase your quality of life. Maybe instead of staying in the middle back seat, it's time to upgrade to the exit row. Right.

Business class.

Business class. Or maybe it's time to eat at a different restaurant. Maybe it's time to really think about your money dial and say, Hey, I always claim that wellness is important and yet I'm still eating like the same old thing I used to eat 10 years ago. Maybe it's time to upgrade what I eat and where I work out and all that kind of stuff. Gears. You can do that. You've made it. You already won the basic game. So now you get to benefit from it. What about real estate?

It's a lot of people, you're there. I hear people that are all in on real estate investment or they're kind of like all in on the market.

Yeah, I think that real estate. So a lot of people gonna hate me after I say this. I know you guys have all been told since you were like two years old, real estate is the best investment ever. And it turns out that's not really true. A couple of things that might surprise you. If you're buying one home, if you're.

Buying a house and living in it. If you're buying multiple units or buying multiple homes and that's your business, it might be a better investment.

Correct. Let me make the distinction. So most people in America are told that the American life, the American dream is graduate from college, get married, buy a house, white picket fence, 2.5 kids, and you made it. And I think we all just have to look at people who are a little bit older than us to realize that might not be our American dream. We might want to travel more. We might want to work remotely. I mean, here we are in the middle of a weekday, chit-chatting and sharing it with millions of people. This is our dream. So I want to challenge people to really question what you've been taught. That's number one. Number two, most people who buy a house and live in it think that it is the best investment. But most people have never worked in a bank.

Like my piggy bank.

Yeah, they think that. They don't understand that when you spend money on a house, You've incurred tons of phantom costs. You have taxes, you have maintenance, you have all kinds of things that you don't count. And if you actually factor all those numbers in, real estate often, in fact, many times is not a great investment at all. It's a place to live. And you have these phrases like you're throwing money away on rent. It's not true. Your landlord's making a profit, otherwise they wouldn't do it. That's not true. Your landlord can't charge you whatever they want. They can only charge you with the market rate. So if you search my name in real estate, you'll see all the numbers played out. Now, on the other hand, if you are a real estate investor and you're disciplined, that's a different story and that can be effective. But mom and pop who are thinking that they bought their house in 1970 for $200,000 and now it's worth 600,000, they think they made 400,000. Actually not. If they had taken that money and put it in the market, they would probably have much, much more.

Really?

Yeah.

Wow. And less headache.

Way less headache.

Well, depending if they looked at their investment every week, maybe they'd be more stressed up the level that's going up and down.

Yeah. Yeah. So, and listen, if you go, I will buy a house one day. Okay, so I don't want anyone to think that I'm telling you never to buy a house. Yeah. If you want to rent for the rest of your life, you absolutely can. Many people in New York, San Francisco and other high cost of living cities, they rent. No, there's no shame in that.

I rent by choice. I could buy a place tomorrow.

Cash. And I choose to rent.

Why do you choose to rent? After you've been here for 10 years and you've been renting the whole time. Yeah, on purpose. And how much is that, do you think? Over a half a million dollars.

Oh, yeah, it's a lot of money.

Well over.

I rent a nice place.

Yeah. Why do I do it? Because.

Could have used that money in something else. You could have put it in a house.

I did. I put it in the market and I made more. Because you didn't put it into a home.

Correct. Where it was a lot more money up front. It was more money up front. I used that money instead I put in the market. But there's also other reasons too. I couldn't get for the amount I'm paying where I live, if I were to buy a place in the same building or it would be four times more expensive. So that's the first. Second is maintenance. I'm gonna give you an example. I woke up one day and the doorman was knocking on my door. It's like 8:30 in the morning on a Saturday. He's like, Sir, sir, do you mind if we come in and take a look at something? I said, okay. And we go into the living room and there's a pool of water. It had dripped down three levels. So I was like, oh my God. They're like, Sir, go back to sleep. We'll take care of it. That day they came, they repaired the floors, not just of mine, the ceilings for the next two levels down. That's probably likely to have costed them, let's just say 50K, maybe 100K because it's Manhattan and it's a weekend service. Who knows? That's not my fault. You didn't pay for it. No, and I said, Great, that's their problem. I'm going back to sleep, man. I got another hour of sleep here. So, I want everyone, you don't have to believe me. You don't have to believe what someone else says. All you need to do is run the numbers. That is my only suggestion to you. Go to a buy versus rent calculator. Make sure you plug in all the fees, not just the taxes, the realtor fee. If you get a bigger place, you're probably going to get more furniture for it.

The HOAs or the lawn maintenance or trash service or whatever it is.

The key thing, I think, whether it's a house or investments, My point to you guys is take your money seriously. Once you take your money seriously and you put some time in it, whether it's this book or wherever you want to get your information, you're going to be better off for it. You don't want to delegate this to somebody else. I want you to understand it. And once you understand it and you automate it, you make a few good choices in life, you never have to worry about lattes or appetizers again.

How did you make the emotional shift when you started renting an expensive apartment and you're like, man, if I added all this up after a year, that's close to a down payment on a nice house in the Midwest. Or they can buy a whole house in the Midwest. You know what I mean?

Yeah.

How do you emotionally rationalize that where you're not frustrated like, oh, gosh, I just spent 10 years. Yeah. Throwing this money away. Because sometimes I feel that way. Sometimes like, man, I just spent a lot of money in these last few years.

Well, let me ask you this.

But I like the freedom and the flexibility of not having to incur all those other.

Yeah. What do you like to eat?

You like strawberries?

No.

Okay, what do you like to eat?

Good steak and veggies. Okay, steak. Once you, when you buy a steak and you eat it, do you feel.

Like you just threw your money away on that steak?

No, I enjoyed it. But it's, where is it? I don't see it. Where's my investment? Right. In fact, isn't it coming out in the toilet in a couple hours? It is, yeah. So what are we talking about here? You get value out of a steak. just like you get value out of renting. Now, if you want to incidentally build equity, that's great. But remember, you can also lose equity. Right now in Manhattan, do you know rents are down? It is. Yes. And so are prices of houses if you want to buy. They're going down every month. A lot of people like, oh my God, it's so expensive. Sometimes, but sometimes it goes down 5%, 10%. Some of these neighborhoods are down 15%. Yeah, so a lot of people don't realize. In fact, I did a survey of my readers, and I said, Do you think it's possible for real estate to decrease? Over half of people said, no. They had never even thought about it. So, I want to-- Remember 2008, 2009?

Memories are short.

You would think they would remember, but they don't. I heard people, dude, they had three houses. They bought it. They were destroyed financially. Their credit was ruined. They had to give up these houses and their identity as an investor. And three years later, they're like, I think I want to buy another couple of houses. Wow. It just goes to show I'm not saying they're stupid. It's not that at all because a lot of people have gone through this. It's the idea that the propaganda to buy a house or to follow a prescribed set of rules for the American Dream is so powerful that even losing your own houses doesn't change people's perspective.

So how do you teach people to overcome the emotional rationalization of blowing their money on rent?

Okay, it's funny.

Besides that story you just told, which helps me.

I'll tell you what, I want to acknowledge that it's real because-- It's a fear that people live with. Yeah, and I'll give you an example. Like, I call it the handshake effect. And it's when people would come over to my apartment and for the first time and they would say, Wow, this is an amazing view. And then they always say the same thing in New York. Do you own this place? And we're like shaking hands, right? It's like we just met. How much you pay? It's classic New York. And I say, no, I rent. And it's that moment where if I had said I bought, they would be like this. Wow.

Pretty impressive.

Really cool. Yeah. And you kind of get this pride. This pride.

Yeah.

And then I. And then when I don't say that, they get really confused because this is the I will teach you to be rich guy, but also he rents. And I thought renting is for people who can't afford it, but I, you know, they don't understand. And they give me this look, and I realized that. So many of us are looking for somebody to approve of us while we are shaking their hand, someone we don't even know. And so instead of getting your approval from somebody you just met 10 minutes ago or from your parents who probably are not the most sophisticated investors, if you're watching this show, you know, you talk about greatness and being great means choosing your own path. Sometimes you might choose to buy. I have no problem with that if you ran the numbers and you consciously decided Sometimes it means you don't, but if you want to live the life of greatness, you need to be comfortable making different choices than what other people expect.

Mmm. Zing. I like it, man. Do you have like a spreadsheet? I'm just curious about how the way you think about your money. Do you have a spreadsheet or some type of system where you're kind of have all these things logically mapped out where you know exactly where all your money is going and where you want to put it in five or ten years?

In fact, it's even more, it's like scientific. It's like minority report. Like I wake up and I just go, no, this is what I did. So my money dial is convenience. Okay, so as I became more advanced, I realized it was time to put on a new lens. And I think this is really important for people. Many people, when they're starting out, they think that growth is linear. That basically, you know, I'm dribbling the ball, I'm gonna use the sports analogy. And I'm on thin ice because I don't know anything about sports. I dribble 10 times a minute and as I get faster, I'm gonna dribble 20 times a minute. Okay, this is a horrible analogy, but just go with me. At a certain point, you're not just counting the number of dribbles. You're actually counting ball handling, you're counting whatever else you're doing. With money, it's the same. You're not just creating a more sophisticated spreadsheet as you grow.

You're actually changing the way you think about money.

So I'll tell you what I'm changing. You're reinventing the-- you-'re not even using a spreadsheet. So I'll tell you what I did. I started off doing everything myself, and that's what's in this book. It shows you exactly how to go from, I don't even know where my money's going, or I have 5,000 bucks sitting in my savings account, to everything is running automatically, and I spend less than 60 minutes a month on my investing. That's in the book. But what happens when you get to the next level? I'll tell you what I did. I realized that it wasn't a good use of my time to be manually tracking anything, even for 60 minutes a month, because things had become complex. I had multiple investments, I have a.

Business, different accounts, everything, yeah.

All that. So I found what I call a personal CFO, and what I did was I worked with them and I said, here is exactly what I invest in, here are my core values, here's how I want you to deliver me information once a month. So they created a Basically a dossier they hand to me every month. They send it. And it's in the format that I want. Why? Because I'm the boss and they're working for me. So it shows me a couple of core things. What's my net worth? What were any spending areas that I need to be aware of? I typically have two spending areas that I track that are more variable. Like sometimes I'll go out and buy more clothes. That's a variable area for me. I said, look, I love Kashmir. What am I gonna do? Okay, and then another one I think is eating out or travel. Aside from that, all my expenses are very stable. Like I spend the same amount on stuff. I've had the same apartment for 10 years. Like I'm not going crazy. I'd rather save my money and invest it and spend a little on the stuff I love. We talk for 15 minutes each month and if anything needs to be changed, they handle it. So for a lot of people, the next step is not necessarily just doing what you're doing but better. It's actually a whole different way of looking at the problem.

Where does someone find a personal, what is it a personal CFO?

CFO. For a lot of people, the basic thing you can do to start with is to get a bookkeeper. And you know, we have this advanced personal finance course and we talk about how to find them. A bookkeeper is a good thing to start with if you've got a business or if you've got, you know, a few hundred thousand dollars a year coming in. and you've just got a number of accounts and maybe you have kids and stuff like that. Okay, they can help you organize things. As you get more sophisticated, a personal CFO, which can be part-time or if you're really sophisticated, it can be full-time, they can help you do more sophisticated things. Interesting. And they pair, they work directly with your accountant, your bookkeeper, all kinds of stuff.

Got it, okay.

Interesting. Yeah.

Just go on Craigslist and look.

Yeah, you can do that. And the best place you do it is honestly you ask your friends. Your friends who have sophisticated net worths. Right.

Ask them what they're doing.

Ask them.

Before we get into the strategy for those who are making $150,000 a year and less on how they can really optimize everything, I'm curious, who are the high earners that you talk to for advice privately, behind the scenes, in the special secret rooms on the private jets? Who are those Mega earners that you learn from?

I have a CEO group, a CEO council that I belong to and we're really candid with each other about where we spend our money. Some of them are married, some of them are divorced. How does that play in relationships? All kinds of stuff. So that's one.

It's like a New York group or is it all over the world?

Yeah, it's distributed. We're all over the place.

You talk online, you meet in person.

Both, we meet in person twice a year and we talk on the phone about once every month and a half. And I think that's important for everyone listening and watching, which is have a group of folks that are ambitious and that want to succeed. What's interesting is these guys aren't in my field at all. I actually prefer that. We're not talking about, you know, online stuff. That's not the point. We're talking about culture. We're talking about life. We're talking about relationships. I think that's great. I also have a lot of entrepreneurial friends who will share stories Stuff just off the cuff, we're hanging out. And then finally, my audience, like a million readers a month, and they're emailing me the craziest stories.

Really?

They're telling me everything. People are, they crave talking about what's going on with money because no one else will. And so I hear the best stories from my readers, and that's what I get to kind of bring to everyone else.

Why is it hard for us to talk about money? Why is it scary? Why don't we talk about it enough with our friends, our family? Why is that?

There's one great study showing people would rather talk about their sex lives than their amount of credit card debt. I love that. I think that's totally true.

It's true.

100%. And think about what money means. It means that you were successful in this culture. And I am here, you know, people know me as the I will teach you to be rich guy. And I have always said money is an important but small part of living a rich life. Just because you make more or less doesn't mean we're better friends. Not at all. Has nothing to do with that. But it is important for people to be in control of their money, whether they're making $15 an hour or $15,000 an hour. And there are people I know who make that. So that just simply shows are you in control of your life at whatever level you are. It's embarrassing for people. They're never taught this. and then suddenly they graduate and they're supposed to know what tax withholding is and what a 529 and 401k and all this crazy stuff is, nobody taught it to them. So my goal here, the reason I'm talking about this is for people to feel more confident about their money, for them to take control, and for them to stop being afraid and listening to random people giving them advice. 'Cause I feel like it's hard when.

You'Re making 150,000 or less, it's hard to talk about it and feel comfortable talking about it with your peers who are in the same category because everyone kind of feels embarrassed. I know I felt that way.

For sure.

And if you stay in that space, it's going to be hard to get past it.

Yeah.

So what's the conversation starter that someone who's making 150k or less or very little, what's the conversation starter they can have with a peer or a family member or a parent or a friend or a co-worker that's not going to throw someone off, but that's going to activate the conversation about money.

Okay, having the conversation, if you most people don't want to, most people don't want to and that's okay. If you simply want to improve your own money, do that and you'll become a role model to other people and I think that's probably the most effective way. But if you do want to have a conversation, you know what I would do honestly, not to plug my own thing, get my book, get somebody else's book, it doesn't matter. Get a book, and say, Hey, I realize I need to learn about money.

Read any book about money.

Any book. Any book. Okay. And does anybody here want to join me and let's do a little book club? Ooh. So suddenly it's not you and me talking about our money, which really reflects our value in this society. Okay? I use value in quotes. It's, let's talk about this book, which is a third party in this dynamic. And we can say, I agree with this guy, I disagree. I really like how-- Let's try this. Let's try this and like, let's see. So suddenly it becomes an experiment as opposed to youo're worth X or my value is Y. And that's really something you can work on together.

I like that. Yeah. Bring something else into it to the mix. Okay, let's talk about the 150,000 a year and under people. They've been, you know, working hard jobs. They've been trying to save their money, but it just seems like they haven't been able to get past Whatever it is 50 grand a year 100 grand a year 150k they've been kind of stuck or they've crossed 100 grand a year and more problems have come to them because they're making more and spending more and they feel more broke than ever because they have no clue what they're doing with their finances still. It's the end of the year. They're about to start a new year soon and they feel overwhelmed or just clueless still about and educated about their money and what their options are for just being having peace of mind, structure, organization, and knowing that they don't have to stress about it and they can go earn more and it's gonna pay off for them. What's a few simple things that they should be doing right now to have a checklist to do before the end of the year to then crush for a whole 12 months moving forward?

All right, I'm gonna give you something called the ladder of personal finance, which tells you where your money should go. Okay, this is just step by step, put your money here, and if you wanna know all the details about it, you can check out the system. It's in the book too. It's in great detail in the book.

Got it.

All right. So if you've got some money lying around, what should you do with it? First of all, if you've got a 401k match at work, you should max that out. That's free money, take advantage of it. And if you're not sure what that means, go to your HR person and say, Does this company match any 401 contributions? If they say yes, do what I said. Next, if you've got debt, pay it off. Pay it off aggressively. You know what's interesting is that most people in debt who I talk to don't actually know how much they owe. And that's shocking. You would think, of course they would know. No, they don't. Because who wants to stare at their debt all day? Yeah, and just feel bad about it. But you know what? You feel much better when you have a plan. and the number one question I ask folks when they tell me they have debt, I say, number one, do you know how much you owe? They never do. Number two, for the rare people who say, you know, 15, 000 or 70, 000, whatever, I say, what is your debt payoff date? You can actually plug it in. You can pay, plug in a debt payoff calculator online. You can map it all out and you will be able to know the exact month your debt will be paid.

Off based on how much you're spending right now.

Based on how much you're contributing to that debt payoff. Now, you will be able to see that if you add an extra 50 bucks a month or 100 bucks a month, that thing will actually oftentimes shorten by years because of the interest. It doesn't matter if it's going to take you three months or four years to pay off your debt. It doesn't matter to me. What matters is that you know the date. Okay, so that's number two, pay off any debt you've got. Three, if you've got money left over, go to your Roth IRA. And if you can, max that out. That's a great tax advantaged account.

It's a gross tax deferred, is that right?

Yeah. Okay, so that's three. That's three, okay. It's actually post-tax money. And then four, if you still got money, you're going to go back to your 401k, which is another tax advantaged account. You're going to max that out. If you still got money, you're going to create a non-taxable, non-retirement account and just put your money in there. Now, there's a few other wrinkles to this. There's HSAs available. There's also your emergency fund that's talked about in the book and all these things are details. But that just shows you when you've got money, this is where you go. There's a structured way of thinking about it. A ladder towards financial success. Exactly. And if you follow the steps, it's almost like a waterfall. It just goes from step one to step two to step three and your money's going where it needs to go automatically and you will feel great. You'll feel great, which is so important. and also you're gonna look at your accounts and see that's going down, investment and savings are going up, and all of a sudden you wake up six months from now and you're like, oh my God, I didn't realize I have that much saved in my savings account. That's because of the decision you made today.

Let's say you're, you know, working a job, making decent money, but you're not really breaking through and you're struggling to earn more to get out of that 50K a year type of range, maybe around there. and all your friends are making the same amount. All your peers are in the same boat and everyone's stressed about money and you hear someone say, well, you know, you may earn the average of the five people you spend the most time with. Yeah. Should they cut all those five friends out of their life? Because, like, well, you know, my peers are holding me back if they're having those negative conversations. Or how can they start to level up?

Yeah.

Without cutting people out of their life. Yeah.

I I never encourage anyone to cut off their friends. And I think that's a common misconception that you have to close all the doors to your friends. Look, I've got friends from high school, junior high that I still hang out with. And I'm not judging them based on their bank account. I don't even know how much they make or how much they're worth. That's not why I'm friends. But the average of the five people you're surrounded with, that is a very powerful idea. And instead of closing the door on the people you hang out with, why not open the door to some new people? Why not find people who go to your conference, for example, or who are on my site, people who are ambitious, who have gone through these programs and say, you know what, can we set up a weekly check-in? It could be five minutes, it could be over text, but let's set up this check-in and just say, what'd you want to do last week? Did you execute? Why or why not? Every week, 9 a.m., Monday, let's do it. That's how you suddenly meet a group of people who are unapologetically ambitious, and that will change everything for you because instead of having to drag people to these self-development conferences and they say that's weird, I don't want to do it, the people you actively seek out are gonna be like, yeah, I'm in, let's do it.

Let's do it. And that's powerful. Yeah, so find the new communities that you can have these conversations with.

Yeah.

And don't cut everyone out of your life, but just start having those conversations.

With people that are more aggressive. Yeah, like, do you know what I told people to do on my Instagram account? So, I told people, It's important to find other people who support you. A lot of you are waiting around for some like millionaire to fall out from the sky and invite you to their private group. It's never gonna happen, never. Instead, why don't you start it yourself? And I said, go into my comments, write who you're looking for, and then invite someone to join you.

Like that.

You don't need to wait. No one's coming to rescue you. It's not a Disney movie. Nobody's coming. It's only you.

So take control and go find someone.

And then build that together.

I like that.

Cody working on the cameras here asked a really good question. Does my opinion on investing in real estate change if you live in the Midwest? And I think the answer is, yeah, it can. The calculus on buying a house in the Midwest is different than cities like Manhattan, San Francisco, and LA. So again, the message here is not, don't ever buy a house, but it's run the numbers to make sure that you're making the right financial decision.

Because in Columbus, Ohio, you can buy.

A house for 200 grand. Yeah.

And a nice one. There you go. It may be better to do that just to have the peace of mind.

Of your own space or whatever it may be. Yeah. What is my opinion on Dave Ramsey's concept of the debt snowball? So I think Dave Ramsey is really good for people who are in debt. That's not really the folks that I speak to that often, but I think he does a great job with them. And what he talks about is the debt snowball is encouraging people to pay off their highest balance first, right? Their highest balance. So if you have four different credit cards, you're paying off the one with the highest balance, whereas the mathematically correct answer is to pay off the credit card with the highest interest rate. So he's actually taking advantage of a peculiar quirk of human psychology, which is that we want to see a win. Right, we want to get a win. And it doesn't matter if we're paying a little extra in interest, once you get that first credit card paid off, you're gonna want to do the next one and it's gonna snowball. I happen to think it's actually really smart. And one of the reasons that I think my book has done well is that it factors in human psychology. So I'm not telling you in the book, don't spend money on lattes. In fact, I want you to spend as much money as you want on lattes.

I'm gonna get one right after this.

Exactly, get your credit right, negotiate your salary, get a good job, automate your money, You could buy 10,000 lattes. It doesn't make any difference at all. And so whether it's the debt snowball or whether it's earning more, whether it's automating your money, you want to make sure that this advice is something you're actually gonna follow.

And that means you need to bake in psychology.

Yeah, I love it. What's your definition of greatness? My definition of greatness is deciding what kind of life I wanna lead and then creating it unapologetically, even if it means making different choices than other people.

That's good.

That's good. What's yours?

Greatness is discovering the unique gifts and talents within you, pursuing your dreams and using those gifts and making an impact on the maximum number of people in that pursuit.

Love it. Wow.

That's mine.

Powerful.

If you could only share three lessons with the world, you've got all these books and programs and courses on so many different things. But if you had to take all that with you and no one had access to it anymore, you can only write down three lessons or principles or truths. And this is all the. The world would have of your information left in physical form. What would be your three truths?

Man, you're putting me on the spot here.

I know.

I like it.

Three principles of truths for the world on anything, life, anything.

Wow. Okay, my first one would be you can create a rich life through planning and unconventional choices. My next one would be that you've got something to say and the world needs to hear it. And the third one would be you could probably eat spicier food than you think. I guarantee that.

If you want to learn how to make more money and master money in your life, check out this video right here. That's when I've made the biggest mistakes in my life, is when I was desperate. And the few times that I was greedy, where I thought, oh, I'm gonna slip in there, and that's gonna be easy money. What was that? Easy money. Could you share a story of one.

Of those greedy times where you tried to jump in and. Yeah, buddy of mine.