Mastering Money to Thrive in a Recession

The majority of us are taught to work to get a job and climb that corporate ladder, but wealthy people are doing something completely different. They're working to...

Welcome to the School of Greatness. My name is Lewis Howes, a former pro athlete turned lifestyle entrepreneur. And each week we bring you an inspiring person or message to help you discover how to unlock your inner greatness. Thanks for spending some time with me today. Now let the class begin. Welcome to this special masterclass. We've brought some of the top experts in the world to help you unlock the power of your life through this specific theme today. It's going to be powerful, so let's go ahead and dive in. What do you wish we taught everyone from the ages of 10 to 20?

Sure.

Five different things around money.

First thing would be, what is money? Because money as we know it is fake. Our dollars are just pieces of paper. I grew up thinking that our paper dollars are like the holy grail. You want to save this money because it is the most valuable thing there is. As I became older, I started to realize that that's not the case. Our paper dollars are just pieces of paper. It's fiat currency. which means it's issued by the government and the value is backed through the strength of the government. Now we're lucky here that the United States is the world's superpower. We have the world's strongest military, we have the world's strongest economy, but we can't stay on top forever. And inflation is when the value of a dollar goes down. So these dollars, which many of us think that if we hoard this, we'll become wealthy, saving money to wealth, is actually keeping you poor and it's making you poorer each and every day. So the first thing you have to understand is what is money? Second thing you gotta understand is what do wealthy people work for? And most of us, the majority of us are taught to work to get a job and climb that corporate ladder. But wealthy people are doing something completely different. They're working to own the corporate ladder. They're working for something called equity. And this thing really blew my mind because wealthy people are not working for that paycheck. They're working to own a piece of the company. That way they can get a piece of the profits. So, the best way to understand this is, you know, a lot of times people complain about how much money I'm making. I wish my boss paid me more. And this is where if you start to understand the system, you'll start to ask the right questions. See, a big company, you have to ask the question, who are they working for? Are they working to take care of their employees? Are they working to take care of their customers? Neither. They're working to take care of one person, their shareholders. It's this concept called fiduciary duty. I learned this in law school. The executives of a company have a fiduciary duty not towards the employees, not towards the customers, but towards the shareholders, the owners of the company. Now, what that means, an easy example of this is you're going out to dinner with your girlfriend or your wife, and you're on a date, and you get a text from one of your good friends, say, Hey, let's go play Fortnite right now. your fiduciary duty at the moment is to be with a girlfriend, to be with a wife, to be with a partner, to spend time with him or her. If you go out and leave, you're gonna get in trouble, right? So it's who is your alliance to? And the shareholders, the executives, the CEO and the executive's company, their fiduciary duty is to the shareholders, the owners of the company. So what are they trying to do? They're working to drive up the valuation of the company. so once you start to understand that, you'll realize why there's this big discrepancy between what people are paid and what people want to be paid. And when you start to understand that, you're going to change what you do with the money. That's why I said a minute ago or a little bit ago, wealthy people are working to climb, not climb the corporate ladder, but own the corporate ladder. So how do you get the equity, the ownership? You have to own a piece of the corporate ladder. Now, if you work for a public company, that means now you can take some, of your income and you can buy stock in the company. Maybe they pay you with equity, maybe they give you some sort of revenue share. That's what we do in my companies. Or if your company doesn't do that, then you have to start taking this money that you're earning and you have to start investing it into a place where you're getting equity. Maybe that means stocks, maybe that means real estate. It could be, you know, a number of different investments, but you have to work towards that equity.

Yeah.

The third thing is that you have to think bigger. I know I grew up thinking that somebody who looks like me, somebody who's brown, somebody who wears a turban, somebody who didn't have entrepreneur investor parents, could go out and do this. Because, you know, you think that somebody like me can't do this. My parents also told me that I couldn't do it. I didn't know anybody doing it. I didn't know any investors, but. you have to be the one to take that first step. And once you start to take that first step, you're gonna learn and see the second step. Then you take the second step and you're like, oh, I can start a $100 investment here. You don't have to start with, you know, hundreds of thousands or millions of dollars. Start with $100. Apps on the internet make it so much more accessible. Anything is possible. If you live in America, you speak English, you have more opportunities than really anybody else in the world. People will literally risk their lives, risk their lives to come to this country because there's opportunity here. And so if you're here, you have the ability to understand what you and I are saying, and you have that technology to do it, you're blessed. Now, what do you do with this? You have to go out and start learning. You have to go out and start doing. And then the next thing that you have to do, number four, is you have to understand the concept of debt. Because we live in this consumer culture. And it's interesting where we want to live this flex lifestyle, right? I want to show off on Instagram. I want to show off my new car, my new Chanel Gucci purse. And we kind of get caught up where I need to live a certain lifestyle that way people can think that I'm rich. But what you're doing now is you're living broke, making everybody else rich so people think you're rich. Your product rich. You have a lot of nice stuff, but you're broke. And so when you live that type of lifestyle, you are the reason why Gucci, Louis Vuitton, Chanel are making so much money, but is keeping you broke. The richest person in the world, sometimes he's the second, sometimes he's the third, is the CEO of Louis Vuitton.

No, why really?

Yeah, Bernard Arnault. And why? How did he get there? Because everybody wants to look rich. Everybody wants the Louis Vuitton. You know, I saw this in the pandemic especially. We were in a recession in 2021, but luxury sale products were breaking new records.

Really?

They're breaking records in 2021. Why is that? Stimulus checks went out, people had cash. And some people used that money to save, some people used that money to pay down debt, some people invested that money. But a big chunk of people took that money to places like Gucci, Louis Vuitton, and now you go and spend it.

You would think when the economy is, well, I guess when people are losing their jobs and there's financial uncertainty of the future, you'd think people would be saving or investing, not spending on luxury goods, especially if you can't even go outside to flex it. You can only do it on social media.

You don't need to go outside anymore. You can just do it on social media.

Yeah.

And so if you don't have the cash to do it, people are going into debt to buy it, and it's becoming easier and easier because of now things like buy now, pay later. It is one of the fastest growing industries in FinTech. I love financial technology, but it breaks my heart. I mean, it just, it rips my heartstrings when I see the growth of this buy now, pay later, because what does that mean? I can go out and buy anything I want, not pay for it today, pay it off over three months, and then if I don't, I get slapped with 25% interest. and if you are 18 or let's just say 21, I gave you $6,500. You never invested another penny, but you invested those $6,500 and you could get an 18% return on that money and you retired 65 and you look at this investment portfolio, you would have over $11 million. Wow. Now everyone watching this saying, where the heck am I going to get 18% on my money?

Exactly.

But your credit card company is doing it. every single day. $6,500 is what the average American household has in credit card debt right now. And you're turning around paying these companies 18, 20, 25% a year, and they're the ones that are getting rich, not you. So what's happening? You're going into debt to buy liabilities, which are things that lose your money, and then you're paying interest on top of that, which is making everybody else rich, which leaves no money in your pocket to make yourself rich. And you have to break out of that mindset.

So what do we need to know about debt then? How do people get comfortable understanding about debt, either using it in the right ways and eliminating the debts that don't support our financial growth?

Yeah, so the first thing is never finance anything that isn't going to pay you. Okay, so- Give me an example. Gucci, your vacations, your car, stop financing these things that aren't paying you. And people are going to get upset when I say your car because they're going to say, Wait, How am I supposed to buy a car without a car payment?

Don't buy a $100,000 car unless you've got the money in the bank to buy it. Go plus more. Buy a used car for six grand.

Exactly. Go buy a used car, good working condition car with cash.

Ride it for 10 years.

Exactly. The first time I made a million dollars in a year, my car was 500 bucks. My employees had better cars than I did.

I had a $4,000 car for the first five years living in Los Angeles. $4,000 car, used car, 1997.

I love it.

Was the car when it was made. And that thing was great. It was comfortable, got me from A to B. It didn't break down.

Exactly.

I didn't need to be flashy.

Exactly. I still have my $500 car.

That's great.

I still drive, you know, and it's one of those things where, you know, because I fell into this trap where the first time I started making money, You know, in my culture, cars are a big thing. The Punjabi culture, people really want to put money in their cars. They want to look cool, right? So when I was 17, 16-17, I started making a little bit of money because I was doing my side hustles. The first thing I did was I put new rims on my car. Then I put tints on my car. Then I put HID lights on my car. I had two 12-inch subwoofers in my trunk, right? I put the tints on, I put a new sound system in there.

Lights around, glow in the dark.

Yeah.

I had a Toyota, right? And then the next thing I was gonna do is I called on my cousin. I said, guess what? I got three grand in the bank. I'm about to put Lamborghini doors on my Toyota. That's crazy, man. And he's like, Just mean, you're stupid. Don't do that. And so he sat on the phone with me for like 20 minutes convincing me not to do it. Luckily I didn't. I'm really glad I didn't. But that's where all my money was going. I looked cool. My car was cool. And that's where all my money was going. I had $1,000 in my bank and I went out and I bought $1,000 watch. I was like 18 years old, right? I was in that industry, the entertainment industry, I wanted to look cool. And then, you know, I start to read these money books and my mindset starts to shift. And now all of a sudden, it's the comp, like I went from one polar extreme to the other polar extreme. I don't want to spend a penny.

On anything.

On anything. Unless it's making me money. Exactly. I don't want to spend anything unless it's making me money. So now I'm saving as much money as I can. I'm investing my money as much as I can. I'm trying to build my business. And I mean, I'm talking like, I'm running my shoes into the ground. They have holes in them. I put a piece of tape, wrap it up, I'm going to school. I got rental properties, but I got my shoes that are taped up, right? And it's like, I realized that I'm going to go, I'm not going to make those same mistakes again. And you have to break out of that mindset. The first time I made 100 grand a year, I was in school, and I was living in an apartment paying $400 a month, including my, my, my water, my electricity, my cable, my gas, my internet, everything. And the reason was, is because I didn't have a room. I slept on the living room floor. I had a little mattress. I used to pull that into the living room, put that down, go to sleep at night, wake up, fold up the sheets, put them away, drag that mattress back into the hallway because I'm like, you know, I realized that the power of compounding your money, I realized the power of putting your money into the right assets. And I'm like, this is my time to build. I've been blowing this money that I'm earning on things that are making everybody else rich.

Right.

I'll spend money on that. a little bit later, right now I want to make myself rich. And so you have to just first understand what it is that's worth spending money on and what's not. And then if you do have that debt, you've got to come up with a strategy to pay it down as fast as possible. First thing you can do, if you have a lot of credit card debt, call up the companies, see if they're going to be willing to just give you a lower amount, see if they're willing to work with you, say, look, I got $10,000 worth of debt, I'm never going to pay this off. It's not gonna happen. How about you work with me and give me $5,000 and I will work to pay that off. You start to work with them, see if you can do something. Then you can consider moving some of that money to a 0% APR card if you have 12 to 18 months to do that. That way now you can aggressively, you gotta do the smart, 'cause if you're just gonna keep doing the same things you were before, don't do it. But you have to start aggressively paying it down. You stop spending money. That way now you can pay down this debt as fast as possible and then you work to earn more money. and the money has to go somewhere as you're earning more money. You live the same lifestyle, if not smaller, and you take all this extra money and you use it to pay down your debt. That way now you can start building, right? You got to lay that foundation. You got to start working to grow upwards, but you have to get aggressive.

Is there ever a time where people should go into debt, the right type of debt, where we get the credit card debt, student loan debt, you know, buying a car and going in debt on that. those things I'm understanding is not helping your financial future.

Yeah.

When is the right time or is there a right time in your mind to take money out and spend interest on that money?

Depends, right? If it's something that's going to make you income and you can manage the debt, then yes. But it's not for everybody.

Right.

Some people don't have it in them to manage the debt. Some people don't have it in them to manage investments. Some people don't have it in them to run a business. If you're not the entrepreneurial investor type and you don't like looking at numbers, you don't like managing money, you don't like trying to grow this, stay away from it. Now you go up, maybe you can get debt to buy a home, but that's it. But if you are more of the entrepreneurial type, you have it in you that you want to grow. Now, if you're using debt, you should only be using debt to buy something.

That'S paying you with income, something that's.

Going to make you more money. Do you have any debt out right now? Right now, I do not. I have people paying me loans, but I personally don't have any debt right now. And I kind of went through this phase where I have all this real estate, but I have no debt on it. And the reason is because I'm waiting for the right opportunity. I will, I will have more debt. Really? Yeah, I'm just waiting for the right opportunity because right now all my real estate is paid off.

You've paid off all the real estate. How many properties do you have?

Units in the dozens, a number of units, but now I'm just waiting for the right opportunity.

And it's all paid off. All paid off.

So now there's just cash coming in.

It's cash coming in.

And you know, you still have that. I still got that.

That's rented for 850 a month. That 8, 000 Place.

8, 000 Place. That's just bringing in 800 bucks a month. 850 a month. Clear and free. Just. Yeah. You got to pay your expenses, your property taxes, your insurance, your maintenance, your management fees. But right now I have no debt on it. And so now what I'm waiting for is. And how much could you sell that for now? Probably a hundred thousand, hundred twenty. I mean, I don't know the exact.

It's not bad.

Yeah. I mean, it's, it's. crazy because I never, I, when I buy real estate, I never look at what can I sell this property for? I'm looking for one thing, cash flow.

Cash flow, yeah.

And so this is a big mistake that leads people into a lot of problems in real estate, because when you start buying real estate, hoping that you'll be able to sell it for a higher price in the future and things don't go as planned, then what? Yeah, you're screwed. Now you're screwed. So, you know, for me, I look at one thing, cash flow. and will I be able to see more growth in this area? So I look where businesses are moving, where is money moving to, and then that's where I want to invest because I know if property prices go up, hey, it's icing. Property prices go down, it's okay. I still got my rent, which is covering my costs.

So what's your goal, right, with the dozens of units for the opportunity for something bigger or what's the plan?

Something, yeah, it can be anything. Something bigger in real estate and I'm looking for the right opportunity. But again, my focus now isn't in real estate like it was before. A few years ago, I was heavy in real estate. Now I was doing everything that I can there. And a lot more opportunities were there. I bought a property in 2021. Haven't bought anything in 2022 yet. But my focus now is building my business because I see a bigger opportunity there for me than real estate. That's why I've been kind of, I'm still involved in real estate, but not.

The way that I was a few years ago. Because you can earn more with your business if you put the attention and the energy and the money into building the team and the resources and the technology and those things.

And it's more fun because it's a lot more active for me. And then, you know, once this gets bigger, then I'll go back to real estate. But right now, like for the last few years, I've been kind of phasing slowly away from real estate as I can transition more into the business because, you know, it's just more fun for me.

Yeah. Okay, so understanding debt was the fourth thing. What was the fifth thing you wish people learned from 10 to 20 years old about money?

You have to be willing to make mistakes, take risks, and start. And this one is hard, and it sounds simple, but a lot of people that I know, a lot of people, they are so hesitant to making that first investment because what if I do something wrong? What if I make a mistake? What if my investment goes down? And so the simple thing is- that's.

Happened to me multiple times.

Yeah, but you learn every time, right? It's your tuition, it's your real tuition. And you have to be willing to try things because if you don't, you're gonna get stuck in the game of what if. what if I lose money? What if it doesn't work out? Well, what if it goes up? What if you learn? I have made a lot of mistakes. I made a video on my YouTube channel where I went through my worst real estate deal ever. That's my third property that I ever bought. It was a home in the city of Detroit, and I made every mistake possible. Now, I'm still in college, right? I don't know what's going on exactly with real estate investing. And, I mean, I bought the property and. I bought it because my contractor at the time told me that we can make a lot of money on this deal. We'll be able to rent it out. We could flip it if I wanted to. And he was like, don't even worry about getting a home inspection. Now, when I buy a property now, the first thing I do is I get a property inspection where somebody walks through the deal, makes sure a third party, an independent person, and they tell me anything wrong with the property in the foundation, in the plumbing, in really anything with the property so I know what I'm getting myself into. And so he told me, don't do that. He said, don't worry, I already walked through. He's a contractor, so I figured he knows what he's talking about. All you have to do is spend $5,500 and I will make sure this property is ready to go. So I said, okay, let's do it. So I bought the home. I gave him a check for half, maybe 2,500 or something around there, 3,000. And a week goes by, nothing starts. Two weeks go by, Nothing starts and I call him, I said, Hey man, what's going on? I thought we were gonna have this done in two weeks. Here we are two weeks later and you haven't even brought your materials here. So I got caught up with something, something's going wrong. And so now two more weeks go by, he brought some materials there, he started painting one wall and that was it. And so, you know, I'm getting upset because now it's like, you know, every day that this property is now leased out, it's costing you money. It's losing money.

Yeah.

And still nothing's getting done. Another two weeks go by and now I'm like, okay, look, what's going on? We gotta get this taken care of 'cause now we're six weeks into this deal. You haven't done a single thing. You keep putting me off. You took my money and nothing's happened. And so long story short on that, he ran away. He was having financial difficulties. That's why he wanted me to close on this deal because he needed some cash and now he's gone. So now I have another property that somebody was working on, a manager, and he was having some issues at my property. He was causing some problems. So I figured he's causing problems there. How about you come work at this property and you need a home. You can live in this home for free. Fix it up. Just fix it up.

And so he said, okay.

So now I thought, all right, you know, I found a good deal here. I've got somebody who'll fix it up. He'll live there, take care of it, and it's going to cost me less money. And so now he's living in this property. and he's like, how about this? How about you just open up a charge account at Home Depot and I'll just go buy stuff and take care of it at the home? I said, okay. So I go open up the charge account. He starts buying materials not to work in my home, but to work on other people's properties. Oh my gosh. So now I'm like, dude, like you're spending my money to go work on other people's properties so you can make double profits over there. You haven't started any work on my home. You're not paying me rent. you have a dog that you're not taking care of who's pooping everywhere in the property and it's not being taken care of. And so now how do I get somebody out of this home? I got to evict him out of my own property. There's no lease in place. So now we're going into all these legal issues of how do we get this person out of the home? We get him out of the home. It took me months to get him out. The property now is destroyed.

Oh man.

There's crap, little crap all over the home. He damaged the place, did not take care of it. And now it's like, we have to start all over from negative to start fixing this property up. So now we start fixing it. I got a licensed and insured contractor. We're months into the deal and he wants, I don't know, like a lot more money, at least 10 grand, if not more, to start doing the renovations. And we start digging deep and we start to see problem after problem after problem. So now it, you know, every cost keeps adding up. Now the home is ready to go. And I'm like, all right, fine. And everybody toLd me, Jos, please don't license this home with the city of Detroit as a rental because nobody does it. And this is, you know, again, after the 2008 crash, Detroit went through its bankruptcy. They were having their own issues, but I don't like to play games. I want to play by the rules. So I said, I'm going to get a rent. I'm going to get a license for rental. When you get a license for rental, they're going to send their own property inspectors out to the property, and they're going to inspect it and make sure that it's okay. So now the property inspectors come out. and they say, I need to lift up the home. So, what do you mean, lift up the home? They're like, yeah, we need to raise the home. I don't even know that you could do that. Apparently you can, and it's very expensive. So, I lift up the home, and then we start running the water in the property, and it turns out that the water is not draining to the main city line. Apparently, somebody previously living in this property had poured cement down the main drain. Now, in order to get this property working, we have to bust out the cement in the basement, take out this pipe, put in a new pipe, repour the cement, and then these property inspectors start disagreeing with one another. One person says that you need a 10-foot electrical riser. So we make it 10 feet. The next one comes, says, why is it 10 feet? It needs to be 13 feet. I'm like, your first person said 10, and now they start fighting with each other, and we have to keep paying for these inspectors to come back. They keep charging me permit fees for everything. If I want to paint the window sills, it's a $100 permit fee. change the smoke detectors, $75 permanent fee. So this goes on and on and on and on for months. Finally now we're approved for rental. I was like, oh my God, like this is the biggest headache of my life. We get a tenant in the property, we get licensed, tenants in the property, and now we have the license and the property inspectors just decides to go back to the property. They don't tell us. They just go back there. Even though we're fully licensed, they had no reason to go there. They knock on the door and apparently we didn't know this, the tenant was having a babysitting operation in a property. So now the inspector sees this that the tenant is running an illegal babysitting operation. He tells us, he finds us, tells us we need to evict the tenant and now we have to start this process all over again. So after that point I was like, you know what? Just sell this property. Wow. Because this is the biggest headache and that was the only deal I ever lost money on, but I learned a lot. It was my tuition. So you have to be willing to learn, be willing to make mistakes, and then be willing to grow from those mistakes, go on, and keep willing to go.

What have you found are the top places that people should be investing?

First, calculate how many days, weeks, months, or years you can live on your saving. Because when you do that, you'll start to, you'll gain security, you'll gain that, okay? So look at how much you're spending, okay? And then say, how much do I need? And whatever that number is, you're going to need more than that because it may go down rather than go up. So, okay, now do I have a year's spending? Okay, so I think I think you start there. Then you start to think, what are the things that are most important for me? And then you start with your business or your residents that have a symbiotic relationship and that you know well. Let's say if you start with your business, okay, you're closer to that, investing in yourself, with whatever that may end up being, that may be your best investment.

Not real estate, not stocks, not the market.

Well, it depends if you're doing something where you can do it yourself and that's the thing. But if you're in a job, that's not the thing. Because you're in a different position. But anyway, if you, and then I really think there's, something good about your home, a basic thing about your home because it's nice forced savings. And it also means that you fix it up, you're saving, you find out there's, oh, well, if I add this thing or that thing, and you're enjoying it. So when you're enjoying it and you're controlling it and it's yours and so on, that's pretty good. And if they keep mortgage tax deductions and so on, there might be some benefits to it also, okay? But that's not a black and white answer. So you could take a sharp pencil and say, is it better to rent or buy? Okay, that's a different question. Maybe yes, it, but by and large, am I going to move? All of those other questions. So when you start with, okay, what is it that's close to home and how much, you need a certain amount that's liquid. In other words, you got it in your house, you got to make a mortgage payment or something and all of a sudden, you're, you know, it's not liquid and you lose your job, well, that can cause you trouble. So how much do I have that's liquid? How much do I have that's not liquid? Okay, and you start to get those things right. Okay, I've got enough liquid. I got enough, okay, not liquid in those other things. Okay, pretty soon you're getting yourself in good shape. You do those things, you're pretty much in good shape. And then you're also having some experiences and then you go beyond that, you know? And then so you start to, okay, what's a stock? What's a bond? And then you learn through experiences. I learned through my experiences. I started when I was a kid, 12, I used to caddy, and I took my caddying money and I put it in the stock market. And I was lucky. What happened to me, by the way, is I took my caddying money and I bought the only company that I ever heard of that was selling for less than $5 a share. And I thought that, that, you know, well, I was really dumb. I thought, I'll buy more shares. So if it goes up, I'll make more money. And it was the only company. It was a company that was about to go broke, but somebody, some other company acquired it and it tripled. And I thought, oh, this is an easy game. And I like it, easy money. So, but, you know, you experiment and you learn.

You'Re a very philanthropic individual. You and your wife, your foundation, your company, you, you give back in a lot of ways. Some might be through donations, like computers, some might be through financial, some might be through just your work and your content on LinkedIn, which is amazing. I recommend everyone subscribe to on LinkedIn. The content there is amazing. You're giving back in lots of ways. I'm curious, what's the greatest gift a rich person or someone with money can give someone who doesn't have money.

To give the knowledge, teach a man how to fish is better than to give him a fish. I mean, I think you can give them both. You can give education and you can sure, but ability, the capacity to be productive, because, you know, if I can give you the capacity to go out in the world, it's like go into a jungle, I give you a knife and can you live in the jungle? okay, if I give you that capacity, that's the best thing I can give you. That's why I wrote the book and, you know, pass it on. I wrote those principles over years and I wrote them down and that's what I wanna pass along. That's the most important thing.

Yeah.

But if you've got money, you can help people a lot in a lot of different ways, which is thrilling.

What would you say then are the three greatest skills that people that aren't financially abundant or that are struggling financially should learn to master in order to be in a better position financially. Three skills, what would you say they should learn?

Well, as I said before, I remember watching the movie, that was young, David Copperfield with WC Fields and he speaks to David Copperfield and he said something like, and I'll put it in dollar terms. You earn $100 and you spend $105, that's misery. If you earn $100 and you spend $95, you'll have a good life. I mean, and what wasn't exactly like that, but it was, but basically, I know so many people who don't earn much, but are there. Because if you start to think about what it is that it costs you to live in terms of, let's say, the basics, you know, give me a bed to sleep in, give me the food, let me be educated, and so on and so forth. I think most people can get themselves in a position where, you know, they're net positive. So if you can be net positive and you could do that, that's number.

One.

As I carry that. So that's number one. Then I guess it was the list that we went to. The second is, what do you do next in terms of what do you need, what do you invest in? And then going beyond it. And then avoid the following mistake. The most common mistake of investing, thinking that the investment that did good is a good investment. People rather more expensive. The things that quite often, those markets that did really, really well became more expensive and everybody, smart money, is all the time comparing them and competing. So what happens is the naive money buys the thing that was hot or is hot, the thing that has been terrible, which might be the thing that's beaten down. So I would say also an important element. Okay, so here's another one that's really important. Diversify.

So don't put all your eggs in one basket.

Right, because what I learned about this is that first of all, all investments compete. And it's not easy to tell whether one investment is better than the other, because if people could do that, life would be easy and everybody would make a ton of money. And this is a competitive game that's very difficult to compete in. So it's very difficult to say which one's better or worse. You could take experts and you could and do all sorts of tests, and you'll find out that they can pick that and you can't tell whether the worst ones are gonna be better. So because of that, you understand that even picking the best ones is difficult, and particularly if you're naive. Like we spend hundreds of millions of dollars each year on research to try to give us an edge. Now you've gotta compete with us. So competing in the markets is more difficult than competing in the Olympics. You wouldn't go think I'm going to compete in the Olympics, but there are more people who try harder in order to do that. So it's a zero-sum game. But diversification that they're different will reduce your risk without reducing your return.

Yeah.

So if you know how to diversify well. So that's critical. So I would say again, get your savings right and the reasons I say, I would say have great humility about what you don't know. Don't buy the thing that was hot just because you think it's hot.

Why is it such a taboo topic? Topic in general.

Yes.

I think for all classes, all individuals.

I totally agree. It's like you have, it's so funny because, and I wrote about this in my book, like for women, we have shame if we don't have enough money, but we also have shame if we have quote unquote too much.

Really?

Yes.

Why?

Because it's like, you know, oh, I have more than them and let me hide it because people are gonna think I'm showing off or they, they have imposter syndrome.

Right.

Am I worthy of having this much money? I've experienced that myself at different times, right? Like, you've worked hard for it, but you think that you don't deserve it for some reason. And I think that we just have-- I think society was sort of designed so that we wouldn't talk about money.

Why?

Because I think it's designed so that we have a few people at the top and a lot of people at the bottom. And so now, you know, then of course the middle class emerged, and we've gone through different things as a middle class, as a collective, right? But I think that's part of the reason why it's like, don't tell, you know, employers saying, don't tell your coworkers how much you're making because I'm paying you more than I'm paying this one and I don't want y'all to know. Right? So it's like, it comes from those places, but it's reinforced everywhere, you know?

Right.

Everyone's reinforcing it.

Exactly.

And I think- Not just corporations or- Yes. And because there's so much mystery, it's like, I don't know how much you make, right? You don't know, maybe you know how much I make 'cause I talk about it all the time, but you know what I mean? We don't know and we're scared to make assumptions and we're sort of guessing and we're like, well, if I put mine out there, I might be embarrassed because I discovered that I'm actually either making too much related to my peers or too little. And I think it goes back to belonging. We just want to belong to a community, to a group. You know what I mean? And so because of that, it's like we don't want to do anything that's going to make us not belong. It's such an inherent human need to belong. And so I think that we don't talk about money because we think it's going to affect our ability to belong, whether it means we're too broke or we have too much, you know, or somewhere in the middle.

So what conversations should we be having around money? How consistently should we be having them and with who?

Yes. Okay. So in terms of the conversations I'm having, I'm telling people like, if I get a speaking gig, here's how much they paid me, right? And I asked some more and they gave it to me. So make sure you do that too, right? Like, or I negotiated for higher pay or I negotiated for profit sharing or I asked for more vacation days, right? Like we need to share our money earning strategies with each other, especially with, you know, women and people of color, right? Like putting more money, like that's what allyship is, in my opinion, is putting money in the pockets of the groups who need them, right? And who, you know, we have this huge wealth chasm in this country. So like how can we start to change that? And so that's why I share how much I got paid for a book deal, like all these things that you're not supposed to share. I'm like, I'm gonna tell you. this is how much I got, this is how I got it, you know? And I think it's important. So I think sharing money making strategies is very important. I also think one of the things that has been so valuable to me with some of my peers, especially, I will say my white guy peers in particular, have showed me, like they have taught me things about like, you know, investing strategies or, you know, like, oh, here's a strategy that I'm doing with my money or I'm investing in real estate or I'm doing these different things. like what are people doing with money once you have some, right? Like once you have a little bit more than you need to live off of, what do you do with the excess and sharing those things, right? Sharing that information because it's usually hidden and it's like there's a small group of people that know and you don't know until you have peers who have done it and then you find out, right? In those quiet conversations that aren't on, you know, on Facebook, right?

Sure, sure, sure.

So should people be talking with their friends, their, their family members, their, spouses about money. What if someone's really uncomfortable and says, you know what? I don't want to talk about the money I make and what we should be doing. What conversation can you have to break the wall down?

Well, I think you could say, here's why I want to talk about money and here's why, like we have to be, I think if we're willing to be transparent, people will be transparent with us. That's what I found in the conversations that I've had. And that's how I've learned a lot about money is by having conversations. You know, like the friend that I was spending time with last night, she's an investor and a financial advisor. And so I was asking her, like, okay, well what are you investing in and how are you thinking about it? And what is an investment thesis? Like, I don't even know what that means, right? Like, you know, we were having conversations and she was teaching me all of this stuff because I was willing to tell her, like, okay, here's how much money I want to invest, but I don't know where to, where best to put it, you know, that kind of thing. So, I think you just gotta be willing to put yourself out there first. And I find that people want to talk about it. So when I bring it up and I start sharing, they immediately start sharing because it's like they were like waiting for an opportunity to talk about this.

Yes.

Is what I find. So I think we just gotta start doing it, and create more transparency around it. Um, and then yeah, it creates, it creates opportunity for all. And that's the other piece of it is like, I recognize that. you know, even someone who would be considered a direct competitor, maybe they sell the same thing I sell. I don't believe in competition in that way. I think there's more than enough money to go around. I think there's more than enough opportunity to go around. And I choose to be friendly with and support my competitors, quote unquote, and vice versa. And that just means that we all get better at what we're doing. We all can serve our clients better, right? We all can make more money. There are times where I'm too trusting and someone, you know, I don't know, I guess you could, for a lack of a better phrase, steals from me, right? Or takes an opportunity or says one thing but does another behind my back or whatever. And that's going to happen, too. But I'm like, but I don't want to be a person who's closed. So I'm just going to I just got to be me and it is what it is, right? Like there's going to be some occupational hazards when you're being transparent. Absolutely. and you just gotta navigate that as best you can, but I just choose to be who I wanna be in the world instead of who I feel like I need to protect myself, you know?

What was harder for you, making your first $100,000 in a year or making your first million in a year?

$100,000 for sure.

Why is making $100,000 harder than making a million in a year?

Because it's like, I think we're just figuring it out. I also think we're charging too little for our work at that point.

Is this when you were working as a career or when you had your own business? Or freelancing.

I never made a hundred grand prior to starting my business. Got it. You know, I went from a college to like, I had a job in between college and law school and then I went to law school and then I started my own practice.

So.

So you didn't work at a law firm after law school. So you started pretty much right away being an entrepreneur.

Right.

Which is really hard to do. Yes. My last salary before I became an entrepreneur was $41,000 a year. Gotcha. And like really good health insurance.

Yeah, yeah. And I was thrilled. that was in between law school or in between school and law schools.

Yes.

No, in between this was after law school because this was my clerkship.

Okay.

Gotcha. Yeah.

So, you know, you kind of sign on for a year, you your paycheck is not that big, but like, and you're a lawyer, right?

You're learning the ropes, you're getting reps, you're, yeah.

Exactly. And that's kind of why I decided to start my business at that time because I'm like, I already don't have a lot, right? Like, I already know how to live off of this amount of money. Yeah, so I'm like, if I can live off of this now, let me keep my expenses this way or lower them even more. Like I sold my car and we owned a house and we rented it out, moved into a smaller place.

How many kids do you have at this time?

I had none yet. Oh, well actually, that's not true. I had my stepdaughter, but she didn't live with us full time. Okay. And so that's what I did at that stage is like, I cut down my expenses as much as I could so that I could build this business. How old were you then? I was, God, 27, I want to say 2009. Or yeah, 2009 to 2010.

Okay, cool.

This was that year. And then I clerked for the judge and I started my practice and I was like, you know, I made like there were months where I made 500 bucks and months that I made $2,000. And that's why I like linking together, you know, I was doing my friend bought a salon. She was a stylist, a hairstylist. She wanna buy her first salon. I did the transaction. She was purchasing an existing business and I charged her 500 bucks for that. I don't think I've actually ever told anybody this. That's true. And I, 'cause I was ashamed. I was ashamed that I didn't know what to charge for that. And that I undervalued my services so much that I like literally have never told anybody. I charged 500 bucks for that. Um, and she's still a good friend of mine. Um, and she, that's not her fault. No, it's not her fault.

She made bank with that salon and.

She'S since now sold it.

But you also got experience doing that, you know, doing that transaction, that deal, which you've probably never done at that level.

Yes.

Seems like. So you gained confidence from that.

Yes.

So there was a win there for you as well.

There was a win.

And.

But when I saw how many hours of labor were involved, you put like weeks probably. Yes. I'm negotiating with the other side, dealing with like a difficult lawyer.

500 is a steal.

I mean, for the whole thing.

Can I hire you for that?

I should.

I should have charged 500. $50,000 minimum, you know. But it was like, but I learned from that. Oh, I add value. Of course. I can figure it out and I have a skill in that I'm trained in knowing how to figure it out. Yeah. You know what I mean?

And that was kind of like working on the job experience. Like you weren't fully probably experienced for that yet, it sounds like, but you learned, okay, I didn't need to do these 10 hours of calls that I did here. I could have done this in an email or whatever. I don't know how this works, but whatever it was, you learned your process.

To simplify it, to maximize it. Exactly. And back to that $100 grand question, question. I think that's why it's like we're figuring it out. Usually we don't know exactly what we sell in those early stages of the business. So we're selling everything. Everything. Whatever people come to us with, we're.

Like, yeah, we could do that.

We just create a custom offer for that. Whatever money we can bring in, we'll do it. We will take it. And so you're very busy. I call this stage busy bee because you're very busy at this stage, but you're nothing's refined, nothing's efficient. Everything is just sort of like your massive labor towards whatever you can make happen. And so That first 100 grand, I think you are hustling for that. But in order to get to a million, or at least to do it in a way that feels sustainable, you need systems, you need process, you need team, right? And so now you're starting to build a sustainable business. You're not just, you know, by brute force making money.

And you need to clarify your offering and your audience and your niche and what your specialty is.

Exactly.

I'm not just a lawyer that can do anything you want me to do, Here's what I really specialize in. Exactly. Here are my three packages at these different levels.

Yes.

And you go all in on marketing that.

Yes, and there's money that you're saying no to. Absolutely. You learn that lesson that not all money is good money.

Isn't that crazy? Yes. I say this a lot to people. I go, it's weird that I'll turn down massive checks all the time. But I'm just like, that's not what I want to do and it doesn't serve my mission.

Yes.

If it's not serving the mission and.

I don't need the money, then I.

Shouldn'T do something Just to bring in more money. Exactly.

It's a distraction.

At different stages of my life, a different season, now to say yes to everything, you know, when I'm broke, you say yes to all these things. Yes. But then when you're like, okay, I'm here for a mission and to serve at the highest level of my skills and abilities, that brings me the most joy and brings others the most joy.

And benefits the most number of people, then you start saying no to money, which is crazy.

Yes.

It sounds crazy, doesn't it? It's delightful. I love it. I feel, I feel like, To me, it lets me know that I'm not, it's like I've not made money my master.

Yes.

Right? Like, it's very important, but it is a tool. That's good. You know what I mean? And I'm not beholden to it and I won't trade anything for it. There is plenty of things that I will not do and I don't care how much you pay me, you know? So I think that it's good to remember that and so when you're turning down opportunities, it's just an example of like, okay, I'm doing things right.

Well, I think you gotta understand that just 'cause you turned down money over here doesn't mean it's not going to keep coming to you. Like, just because you turned down something that's not right for you doesn't mean abundance of something that is right will.

Keep coming to you.

There's so much opportunity. There's always more where that came from. Absolutely.

You know, absolutely. That's powerful. Okay, so the first 100,000, how long did it take you? How many years until you made 100,000 in one year?

Can you remember roughly? Yeah, so my first year in business, and it was like, I started September 1st, 2010. And so from that year till like September 2011, I made like 60 grand that first year.

That's right.

But I think the first full 12-month calendar year was like year two. So it wasn't, it didn't take too long.

And then how long until you made seven figures in one year?

Yeah. That took me seven years.

After that, yeah. From starting business.

From September 2010, I think it was, maybe it was six. It was like 2016, 2017.

Yeah.

I think 2017 was my first seven figure year. And I had gotten close, but not, you know, like almost there, but not quite. And twice. And you know what it was interesting, what happened is, like I had my business, my revenue was doubling in the beginning. It was like I made 100 grand, then I made two or 250. And then, you know, then I made 500. Then I was like, I plateaued.

It's like, okay, 560.

Right.

620.

It started making me mad, like from 500 to 700,000. I think I was there for like three years. And there was all kinds of stuff going on in my life. One, there was a lawsuit that one of my business partners. So like, this is one of the things where too trusting too quickly caused some issues. So that was a huge distraction for me at that time. I had two babies back to back.

Wow.

So, you know, I was busy with them. And then there were just a lot of lessons I needed to learn. Like I had all these people working for me. But I didn't have good boundaries and I didn't, I just kind of let them do whatever they wanted and didn't have, you know, like I was learning how to become a boss. I was learning how to become a leader and a manager.

It's so much more challenging than just doing your skill. Like, let me just be good at the law thing, which is what people wanted me for.

Yes.

Now they want my business for that and me, but I've got to train the team and-- To deliver.

Right, exactly.

It's a different skill.

It's totally different and it's-- It can be challenging. I think that's why a lot of times we're like, well, I'm just going to go back to doing it myself. And it's like, you can, but it's going to keep you small. Yeah. You have to say yes to those challenges and learn that new skill.

Right.

And I think leadership skills are so valuable and for everybody. So yeah, I had to learn that. And it took me a couple of years to like figure out how to have stronger boundaries, figure out how to stop letting people waste my time, figure out how to charge for what I what my services are worth, right? All of those things, those were lessons that I was learning in that time.

Who was wasting your time? Like clients or people.

Everybody.

Clients were wasting my time. Team were wasting my time. Even family members, right? Like, my desk was like right in the front door. So like, it's like the door is here, my desk is right here. My husband would like be coming in and out. He's a stay at home dad at the time, taking care of the kids. And he just ran a tight ship with our household. It was amazing. Like, I had so much support in that way. But he would like every time you came through the door, what did he talk to me about? I gotta focus.

Yes, exactly.

It was like I didn't know how to create boundaries around my work time.

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