New podcast with Eric Brotman: Don't Retire, Graduate!

Parents, is your teen college ready? Are you feeling overwhelmed, stressed out, or excited about your teen applying to college? Do you know what colleges are looking for? And if your kid gets in, do you know what you'll pay for it? College admission has never been so competitive or expensive. Shellee Howard will take you on a journey to help you and your teen get college ready. Now here's your host, Shellee.

Well, hello again. This is Shellee Howard, CEO of College Ready. And today we have an amazing guest. Eric is in the house and he is going to share with you some amazing things that, you know what, I'm not going to take it away from him. Eric, why don't you go ahead and introduce yourself?

Well, thanks, Shellee Howard. No pressure at all. My name is Eric Brotman. I run a wealth management and financial planning firm called BFG Financial Advisors in suburban Maryland. We represent families all over the country, and I'm also the host of a podcast called Don't Retire, Graduate, author of 3 books, including one by that title, and I'm trying to help empower families with financial literacy and financial planning so they can find financial freedom.

Amazing. You know, when I first heard you, it was actually on, on your podcast, and I was listening because often my, my goal, right, is to help a million families get into college and graduate debt-free. And so it's return on investment all day long. The challenge is financial literacy for teenagers. So when they say, yes, I want a career, $30,000. That's awesome. And then they don't realize that $30,000 is not going to be enough for the lifestyle they're used to. Can you talk about maybe your experience with that?

Well, first, my experience with teenagers is limited. I have a teenage daughter for the last 2 weeks or so. So I, as a parent, I'm just learning the fun of having a teenager, and I've been warned to buckle up for the next few years. But certainly in working with families, we do find a great disparity in the way that financial literacy is taught. It's almost never taught in schools and at home. Most of the lessons we learn— and you might remember this from growing up, though I won't put you on the spot— we learn lessons about money that are often the wrong lessons. Either it's because we watch our parents argue about money or fight about money or stress about, hey, we don't have enough for something. So sometimes it's a scarcity thing. Sometimes you have one spender and one saver. Sometimes you have two savers and no one ever does anything. So we bring a lot of baggage into our lives, into our adult lives, and then we're asked to make decisions. And the college decision is one of the craziest ones I know of because you're asking someone who's not old enough to legally have a Budweiser to decide whether to borrow a few hundred thousand dollars that they have no concept of. And it's, it's It's truly insane. These same folks, if they were starting a business, would be laughed out of every bank that wouldn't lend to them. But to go get a liberal arts degree, which, by the way, I have, and I'm a fan of the liberal arts, I'm not beating on a diverse education. But at the end of the day, to get that liberal arts degree, they'll lend you endless amounts of money because you can't bankrupt it away. And so, you know, for young people to understand the value of a dollar is getting extremely difficult. And, and Shellee, what's made it even harder is that currency is rare now. We use credit cards or, or online or Apple Pay, or you just swipe your wrist and stuff shows up.

Yeah.

And, and the problem with that is you don't really know what it's like to, to come into or earn money and then have to decide to part with it. There's a psychological thing of handing something over to someone that, that is lost in this digital currency world. And, and so it's harder and harder to teach kids what it is to not only earn a dollar, but to decide how to spend it.

Wow. I mean, that really sums up a lot of the frustrations that I think parents are faced with. We do something interesting at College Ready where we actually take the child, teenager, if you will, and we tell them, what does life look like 5 years after you graduate from college, 10 years you graduate after college, and they're like, what do you mean? And I'm like, do you still want to live with your parents? Of course I don't want to live with my parents. Okay, so you want to live on your own. Great. What is that going to cost? Well, I don't know. And that's when the aha moment comes on. We do such a great job as parents raising our kids so they don't have to worry about where the food's coming from. But now we're asking them to make big decisions about their future. The other challenge is I play this game with them called a million dollars, and I'll ask them, if I gave you a million dollars cash today, some don't even smile. Like, some, that doesn't even resonate. A million dollars. Some are like, yeah, yeah, yeah, that sounds good. And I say, but you'll only have 24 hours to spend it or you have to give it back to me.. And I've had people ask Siri, Siri, what do I do with $1 million? Right? No idea. Then I've had students who are like, well, I'd buy a jet, then I'd buy a yacht, and then I'd take all my friends. And you're like, no, no, no, no, $1 million.

Right, right.

No concept. And then I've had a few who blow my mind and they're like, well, I'd buy a fixer-upper, then I'd flip it. And then I'd reinvest that money. And I'm like, are your parents in real estate investing? They're like, yeah. And so you can see just by the influence of their environment how important this conversation is. So maybe you can talk to parents on things they can do to help their teenager when they have to make such a big life-changing decision?

It's a great question and an almost insurmountable task. And I say that because so many try to do this. And, you know, the teenage brain— and I'm no doctor— but the teenage brain is very much still developing. And so it really isn't ready to handle some of the concepts that come naturally to us once we've been in the working world for 2 years, much less 30. Um, understanding that that you can afford to do almost anything, but not everything in this life is important. Determining how to prioritize the things, the decisions that I made when it came to college were fascinating to me because now looking back, I didn't understand because I wasn't really coached on the different scenarios. And you're a Harvard mom, if I'm not mistaken. Is that true? I'm a Penn alum, so we don't acknowledge Harvard at all. They're not really an Ivy League school like the rest of us. Um, but, but nonetheless, I, I, I looked at some schools where I was up for full scholarship, and I actually, while I thought that was neat, I did not know what that could have meant. And had I— and I actually did not get awarded a full scholarship, um, and I wound up having to choose between schools, and I went to Penn because it was my dream the day I stepped on the campus. But, but had I gotten a scholarship, I would have faced a decision that no high school senior should have to face, which is, do you go to school where you really want to go but it costs money, or do you go where they really want you to be there and it doesn't cost money? And that means there may be resources available for other things, or you don't have to start in a hole. And in some ways, I'm thankful that I didn't have to make that decision. Because 18-year-old me— and this is a long time ago— but 18-year-old me, I don't know how I would have grappled with that. And I think kids today, there's much more skin in the game with parents and kids about here's the budget for school. I'm going to use college as the example because it's really the biggest elephant in the room when it comes to spending for teenagers. There's— if you give kids a finite budget And you help coach them that, look, we have— we've saved $100,000 for you for undergraduate school. It's a lot of money. However, it's not paying for 4 years at Harvard.

Mm-hmm.

All right. So it's going to be necessary to get scholarships or grants or work-study or financial aid or all of the above or some combination if you want to go to a school like that. Or as a resident here in Maryland, you can go to College Park, go to Maryland, get a 4-year degree at a fine school, and come out of school debt-free. And kids don't, kids don't really know what that means. And so it's extremely difficult. I, I really want my daughter to be in a position not only to go wherever she wants to go, because any parent would want that given the choice, but also not to be strapped with having to work in school. I'd like her to be able to do internships and learn an industry. And we're blessed, we, we have the, the wherewithal that I, I know that's a possibility. So then that creates another problem. Which is the sense of entitlement and the, oh, if I don't have skin in the game, how seriously do I take it? And so balancing between the financial end and the effort end, because if it feels like this is just 13th grade and I'm headed there and not really understanding, like, that's next and I guess I'm going, I think you need to have a reason to go to college other than it's what's next. And I think we're at a tipping point in, in the United States where There was a whole generation where a high school diploma would set you apart. This was the '50s. Neither you nor I know this, but it did happen back in the '50s. And then in the '80s, it was a college degree will set you apart.

Mm-hmm.

Today, a college degree doesn't set you apart.

Yeah, that's really—

it doesn't. And so if you're going to have to do graduate school now, you're not talking about financing 4 years, you're talking about 5, 6, 7, 8. And delaying your entry into the workforce and your earning potential and the time value of money. And it's a massive investment. So you have to talk about the return on investment of an education like this. And you can do some simple math exercises, or if math isn't your thing, if you'd rather do— study French, foreign language, than do math, then find somebody who can help with the math. But you can do a simple time value of money problem that'll say If you enter the workforce and you're $100,000 in the hole, put away X dollars for this many years, here's where you'll be when you're 60. Whereas if you aren't $100,000 in the hole, here's where you'll be where you're 60. Whereas if you wait 4 years, debt or no debt, but you have 4 fewer years to accumulate wealth, here's where you'll be when you're 60. And you can do these things with a simple spreadsheet and, and it will— some of that will resonate. With young people because the numbers get big. Um, and, you know, kids today don't look at a million dollars the way we did growing up, because growing up, a million dollars was all the money in the world. Today it's 30 or 40 grand a year in income.

Yeah.

So it's, it's a different, it's a different animal. Um, and then, you know, I know you work with, with families not only on how to get into schools and how to find money, which is an incredibly valuable resource,. But also, you work with them on how to finance their education and, and sort of what to do. And you need a plan for that. From the day my daughter had a Social Security number, we had a plan for that.

Mm-hmm.

And it, it wasn't fund 4 years of whatever school she wants to go to in 18 years, because that's not necessarily what her path will be. I don't know what she's gonna be like right now. She's a little bundle over here and I don't know, but to have a legitimate plan and to base that on not only your income and wherewithal, but the number of children you have and whether you want to pay for the whole thing or have them participate in that cost and whether you want to use subsidized loans. So there's no interest for a period of time and you're helping with that because it buys you years to do it. I mean, there's so many strategies, as you know. Yeah. And every family is different. And so I do think first you have to educate the parents. Then you have to work with the parents to help inform, if not fully educate, their kids on how this works. Parents all want the best for their children, but not everybody knows what that is. And I, in my book, I talk a little bit about this, and I reference paying for college to the airplane safety lecture. When you get on a commercial airplane, one of the first things they do is say, in the event of a loss of cabin pressure, two masks will fall from the ceiling. Please put on your own mask before securing the mask of your child or other. And thankfully, I've never been in that experience in an airplane. But I imagine if I was, it would be extremely difficult to not protect her first.

Right.

Problem is, if you go to protect her first and you pass out, you're no good to either one of you. Same thing's true financially. If you, if you sacrifice your own financial independence and your own ability to retire and live with dignity and to as long as you live in order to educate your kids, you're going to have some very well-educated kids you have to live with someday.

Yeah.

And that's not necessarily good for anybody either. So there is a balancing act.

Wow. That's a lot to take in, families, right? It's like, yeah, all of this needs to happen. And when I'm interviewed on podcasts, the interviewer always asks me, Shellee, if there's one thing you can tell your listener, what would it be? And it's all about planning and strategizing. And this is part of that, right? I can get them into the most amazing school of their dreams. But if their family can't afford it, what good is that for that dream? And so it goes back to understanding, is that a good return on investment for our family? And so I love the fact that, you know, uh, you are saying exactly what I'm telling my clients, because it just is— the mission is to help families understand they don't have to go into massive debt. There's opportunity. There's 11 colleges that are tuition-free. So, it's a choice to go to whatever college they choose, and it's a choice for them financially. But when's the best time to start? Now. You know, I tell people that if you wait until you're 60 to start getting ready for retirement, it's going to hurt. Right? If you wait until the senior year of high school to start having this conversation, it's gonna hurt. If you do this much easier, we start helping families in 7th and 8th grade. Why? Because the FAFSA looks at the end of the sophomore year and the beginning of the junior year. If we can help the family have their financial house in order by bringing people like you into their world, their opportunity for bigger, better scholarships is exponential. So what made you decide to write a book? That— wow.

Um, I had the thought of doing this at a Leadership Maryland opening retreat. I was a member of the class of 2009 for a statewide leadership program here, and in the opening retreat, our facilitator asked each of us to think of something we always wanted to do but never spoke of out loud, basically. And I said, I've always wanted to write a book. And part of it was I was an English major at Penn.

Okay.

And I love to write and to speak and communicate. And I went into the financial— like most great financial advisors were, of course, English majors. That's a natural transition.

I don't get that, but that's a whole nother conversation.

Yeah, no, it's probably not exactly— that's not fact. That's pure opinion. But I always wanted to blog and to write and to speak and to impact folks and to sort of create an influence for people. And I said out loud, someday I'd like to write a book. And I didn't even know what that meant. And less than 6 months later, I got a phone call from somebody, so help me, that said, we'd like to hire you to write a book for us. And I thought I was being punked. I thought it was a joke, but it was real. I actually heard from a publisher who said, we're looking for a book on debt. And we know you're an expert and you've been recommended to us. And would you like to write a book for us? We'll hire you to do it. And so I did it and I made all kinds of mistakes as an author, but I wrote a book called Debt Free for Life, and it was all about how debt will really shackle you and you can't climb a mountain while you're digging a hole. So there was a lot to it, but I learned how to do it. I then wrote my second book, which I called Retire Wealthy.. And it was about the tools that you need in order to build a financial plan. And while the book I thought was better than Debt-Free for Life, it wasn't a manifesto. You know, it wasn't like, this is going to be my calling. And so, the more I thought about it, the brand Don't Retire, Graduate came from this idea that retirement should be something we move towards, not move away from. It's not about the absence of work. It's about the absence of needing to work. It's financial independence, but it's not sitting home and playing shuffleboard and watching daytime TV.

Mm-hmm.

So Don't Retire, Graduate became a thing, and I wrote it. And the book is actually set up like a college curriculum. It's in semesters. Each chapter is a course. So cash management, risk management, debt management, investment management, and so forth. Each, each chapter is a course. Each course ends with a pretty simple quiz, not graded. And then because no one believes in homework, we do extra credit. And the extra credit assignment at the end of each assignment, at the end of each class, becomes a financial plan. And so I married it with a workbook that if you, if you do the workbook, it's just the extra credit assignments from the book. You can work together or separate. And if you do it, you will have the basis for a financial plan. And it takes you from freshman year of your financial life, which is where you're making decisions around education and funding and talking about cash and debt and learning maybe your first employee benefits. And how do you, how do you adult financially? And then your sophomore year is about some of the big decisions that happen early in life. Do I buy my first home? What if you get married? What if you become a parent? Like, how do you plan for these things financially? How do they impact you financially? In the third section, the junior year, we start talking about investments and we start talking about this is now your peak earning years. So you have some tax issues and how do you build a portfolio and how do you start creating real wealth? And then senior year, your thesis, if you will, is your legacy. It's all figuring out what— how you want to leave the world better than you found it. What's more important than money? What, what, what type of, of legacy do you want to leave to your children, your grandchildren, your community, your educational or religious institutions, whatever they are? What kind of philanthropy matters to you? And if you go through this process, it also asks you the fundamental question. And I'll put you on the spot now. I didn't before, but I will now. And that is, I ask everyone on my show, what do you want to be when you grow up?

Oh, I love it. I should add that to my show. That's fantastic.

That's theft. You can't have it. But no, if you ask someone that, they haven't been asked since they were in second grade. And we all said the same stuff— astronaut, ballerina, pro football, whatever it is, firefighter. You know, I assure you, in second grade, I didn't go, you know, I'd like to be a financial advisor and do estate planning with families. I never— that didn't dawn on me in second grade. So what would you like to be when you grow up? I'll ask you now. What would you like to be when you grow up?

Uh, let's see. I would like to be me when I grow up. I absolutely love, love, love helping and supporting teenagers. I speak teenager. Everybody shies away. I lean in. I love them all dearly. Um, I, I don't think I will ever do the R word, retire. I believe in financial freedom, and that has a lot to do with why I'm so big on financial literacy and helping families make wise decisions about return on investment. So for me, I never set out to start a college consulting firm. It came to me when my son got into Harvard and 7 other top-tier schools. Everybody's like, how'd you do that? I want that. And I'm like, oh, well, I did it. I'll help you. And then it started with, I'll help you to go back to school and get my master's and, and certification and, you know, all of that. But I am really living my dream that I could not think of anything else I'd want to do more. And that's why I will never retire. I will always have some toe in this world of college because these kids, they're our future. I look at it as the more I help them, the better life I'm going to have in my future. So I'm not sure if that's the answer you were looking for, but that's the genuine.

I'm not looking for any answer. That's the beauty of it. I've heard all kinds of different things. I've had folks who want to be, who want to be real philanthropists. I've had, I had somebody say they wanted to be Tinkerbell when they grew up. It really could be anything. And it allows you to dream a little. I think adulting is a trap. I tell my daughter a lot, do not do it. It's a trap. And while you have to learn certain adult things naturally, you need to learn lessons, and you need to become wiser, and you need to mature in certain ways, you don't have to grow up in the certain, you know, in that sense. She often tells me that she's more mature than I am. And I think she's, I think she's right.

I love that. And my family teases me because I say I speak teenager. Like, I, we, I've never met one that I I truly don't enjoy spending time with, even the naughty ones, because that's my, my way of communicating. Let's just be real. If you're having a bad day, let me at you. Just tell me. Let's get through it together. So I do. I— the world of teenagers is my happy place. And so I have enjoyed tremendously, um, speaking with you. One last question before we close. For those parents out there who maybe didn't start planning when their child got their Social Security and they're thinking, you know what, let's just apply to a bunch of schools, wait and see where they get in, and then I'll figure it out. Can you, can you maybe speak to that a little bit?

Well, I can't necessarily speak to it on an academic viability basis, but from a financial standpoint, I, I think it's important to have a range and understanding. Today, parents and young people are slightly in the driver's seat more than in the past. You can negotiate a college acceptance. You can negotiate financial aid packages. Colleges don't want you to know this because that creates a problem for them potentially, but very few people pay full boat.

Amen.

And, and there are lots— so the, the listed tuition, the reason tuitions tuition prices keep going up is because if they don't, they would have to discount a lower number. So they literally have to raise their prices so they can discount them more so they can entice more people to come. It's a, it's a bizarre racket, if you will. But nonetheless, they're all doing it. So I guess it's fair. I think from a financial standpoint, you have to have a range. And if your kid wants to go to Syracuse and you know that that's going to be $70,000 a year and that even with financial aid package, it's going to be $40,000 and you just can't do it, it's better not to fall in love with the place and do that necessarily unless you have a resource that can, that can really grease those skids. And I'm not that resource. Perhaps you are, which is wonderful. The world needs more people like you, and you speak teenager, which is brave. Um, I, I, I think it's always better to start planning today than tomorrow. I don't care what stage of life you're in. I do think it's wise to start thinking about this when your kids are just born, not because you want to burden yourself, but the decisions that you make around education begin before you even have children. It could be, where are we going to live? Are there good preschools? Is it— is there good daycare if you need that? Can we use the public schools, or are we going to need to think about the parochial or private school, which is a highly expensive proposition in the Baltimore metro area and a lot of other cities? And, and so, and then you have to figure out how am I going to save for college, do all those things, and by the way, not sacrifice my own retirement. So I think in order to make a decision around what you can afford to pay for college, you first have to have your own financial plan. You, if you're a single parent, or you and your spouse or significant other if you're co-parenting, have to have a plan for yourselves to understand what excess cash flow And let's hope there's plenty. But what excess cash flow do you have that you can put into those things? And then what are the tax-smart, investment-smart ways to do it? You know, I tend to think it's better— and maybe you'll tell me I'm crazy because you do this all day long— I tend to think it's better to either plan for the full, the full goal that you're setting. And I don't mean the full tuition, but the full goal you set, really plan for it or do almost nothing.

Mm-hmm.

Because I do think the folks who get caught in between wind up working hard to save a small amount of money that goes directly to the school.

It's all about where the money's put, right? The FAFSA looks at some things and they don't look at other things.

That's right.

So being wise with that plan is really, you know, I don't sell a financial product. I'm truly a consultant, but my goal is to help them do it without debt. So I have to know enough. Right. And I learned it on— when I was on fire. My son wanted to go to Harvard, and I'm like, what? So I had to figure it out. And sometimes trial by fire helps you to see that, wait, there is another way, there are other options. And so we, we at College Ready help them see what their options are, and then we send them to wonderful people like you who can make that happen for them. So if people wanted to reach you, what would be the best way for them to do that?

I'll give you two. One is at brotmanmedia.com. You'll find the podcast, the books, the workbooks, the financial literacy courses, some of which are free. There's a lot of resources there on taxes, on financial planning, and so forth. So that's brotmanmedia.com. And then if you'd like to explore our firm as potential clients of ours, the firm's site address is bfgfa.com, which is for BFG Financial Advisors. So bfgfa.com, and you can go right on the site and you can schedule an intro call with myself or one of our amazing financial advisors here in Maryland, and we'd love to talk to you.

Outstanding. Thank you so much for being on this show, and we hope you have a fantastic 2023.

Thanks, Shellee. You too.