E031 Establishing Good Financial Habits

Passionately Wrong Podcast Episode E031

Establishing Good Financial Habits

Key takeaway: Pay attention to small decisions because they add up over time, and use the power of time to your advantage. Imagine your future self, and use that picture to help set goals and guide yourself now. Don’t inflate your expenses as your income grows. Some other mistakes to avoid. And a host of resources that might help you on your way. 

Topics covered in this video: 

• How to create more disposable income; identify excessive spending
• The importance of saving and investing the money you free up
• Discussion of FIRE (financial independence, retire early) movement
• Why it helps to ask for advice - identifying life goals and thinking about how to get there
• Family needs to be on board with your plans
• Beware lifestyle expansion that will eat up increased earnings
• But don’t let yourself get so frugal that you forget why you saved and invested
• Rather, be thoughtful in your approach to money - it should support your life goals
• The role of social media and comparisons with others
• It is helpful to distinguish between needs and wants
• Debt is counterproductive to financial health (except possibly a mortgage)
• Mistakes: buying things you don’t have the money for right now (i.e. on credit) 
• Mistakes: taking too much risk in the hopes of getting rich quickly
• Mistakes: pursuing an unlikely path to wealth (lottery, NFL)
• Real estate investing, passive income, 
• Imagining your future self
• Randy’s pending book, Army Rich & other resources

Resources in this video:

The Wise Investor (https://www.amazon.com/gp/product/B09Y3P465L/)

https://realwealth.com/

https://militarymoneymanual.com/

If You Can, How Millennials Can Get Rich Slowly (https://www.etf.com/docs/IfYouCan.pdf) 

The Latte Factor (https://www.thelattefactor.com/) 

Transcript

James: 0:00

And so if that can be your aim to say, I know this is a lifetime endeavor, a lifetime pursuit, I'm just gonna develop habits that will serve me well, my whole lifelong, just like the physical fitness habit or an eating habit, that's probably a healthy way to think about your finances. Greetings, friends. I'm James.

Randy: 0:19

And I'm Randy. You're listening to The Passionately Wrong podcast where we challenge your assumptions, offer some different perspectives, and hopefully help you make better decisions.

James: 0:31

Hello everyone. Welcome to today's show. Today we're gonna talk to you about good financial habits and our loyal listeners will remember, one of our early episodes, I think it was episode three, we talked about how to get rich, and that was not just financial wealth, it was how to be rich in life. How to live a good life. Of course, it starts with a discussion of money and then works through a discussion on how to live a good life. Today we really do wanna focus on financial habits, that will support you in your journey in life, regardless of what your goals are. And there's a couple different ways that we can go about this, but basically I think the two principles we wanna highlight right at the very beginning for you are to. Pay attention to small decisions because small decisions add up over time. And the second piece is indeed, make sure to use the power of time, because it's the one thing that everybody has and can take advantage of. And the decisions you make and your financial consequences as a result compound over time. That's the topic, how to develop good financial habits. Maybe I could ask you, Randy, to give a few examples if you have any that come to mind about what sorts of small decisions will make an impact to, your financial health over time.

Randy: 1:48

I think, creating more disposable income, I hate that word, but that's the right word. I think creating more disposable income in order to. Have that money to use over time. is, the combination of what you're talking about, making the small decisions because we talked about this earlier and in a different episode. I stopped taking taxis to my gym because my gym is an hour walk away. So I will either walk. Or walk halfway and then take a 75 cent bus ticket and take me the rest of the way. because. I was spending literally three or$400 a month on taxis to and from the gym. which obviously if that$400, if you invest that, I, I don't know all the numbers as well as you do, probably James, but I do know, I've read a couple books called The Latte Factor, for instance, where you. You can invest$400 a month in a nice place, which will make some interest and over time, and then over 10, 20 years, that'll be a pretty hefty sum that you threw out the window when you didn't have to.

James: 2:54

That's probably the thing that if you haven't spent time, running the numbers is hardest for people to grasp the. Three or$5 that you spend on the taxi or the coffee, which people have heard that example over and over again doesn't seem like much on an individual basis at that moment. I, I have my salary. I can afford to five bucks and that's not the issue. The issue is what that five bucks represents 20 years from now, 30 years from now. It's not$5, it's 500, 5,000. it's a lot of money that you are. Creation of a little bit of extra disposable income, does for you down the road. And so the discipline actually comes not in taking the bus versus the taxi. It comes in accepting and realizing that a small bit of saving done regularly. So you make a habit out of, saving that money that creates the foundation for something much bigger later. So we'll talk about where the much bigger comes from, but in, in principle, it requires you to not just not spend it, but you've gotta take that money and save it and invest it. other small decisions, there are many of them, right? and so I, I came across when I was looking into. my own investment plans and saving plans and life plans. a movement called Fire, which stands for financial independence, retire early, and those people are fanatical about cutting down their lifestyle while they're working and saving. In other words, then as much as they can, and they've given this whole, Idea of making small and maybe even not so small decisions, a bit of a bad name because some of those people have a very aesthetic or frugal lifestyle. So they don't have a car, they bike everywhere. And they don't buy food at the grocery store cuz they have a garden and they do things that seem extreme to some people.

Randy: 4:41

They don't even rent a house. They rent a room.

James: 4:44

They really take this idea of, I'm gonna cut my expenses down to the bare minimum. And the reason they're doing that is because they're trying to accelerate the process, accelerate the timeline of how long they need to be working and saving money before they can then retire early. The second part of the formula of financial independence retire early. They wanna save up enough money so that they can really get their freedom back. I think The extreme measures that some of the adherence of the fire movement are willing to take is in some ways a distraction from the principles that they're following, which is really just a turbocharged version of what you and I are recommending. Look at your expenses, see where you can maybe not spend money or substitute for something less expensive and build yourself a pool of savings. you don't necessarily have to earn more. That's another way we should talk about both sides of the equation. You can earn more or spend less, but either way, you create money that you then use to pay your future self. The fire movement, the reason I mention them is that they will give lots of good ideas and lots of good inspiration for things that you can. Apply if they suit your circumstances to greater or lesser extent. And so the substituting expensive transportation for less expensive transportation, keeping a car longer than most. People keep their cars, for example, buy a used car, keep it for 10 or 15 years, that already transportation cost is a huge cost for a lot of people. So making that less is a good way to do it. Housing costs is a huge cost for people. Are you familiar with the fire movement? Do you have any other, impressions from what you've heard about them? No. No.

Randy: 6:13

I, like you said, they're many of them are a little bit obsessed with this, and their goal is to save 90 to 95% of what they earn, for the first 10 years of their working life, so that they, and then they invest it now so that they'll ha they'll be. Financially independent, whatever that means to them, whether it's a millionaire or,$500,000 in the bank or whatever that is. They'll have that by the time they're 30. These are for the younger ones, they're, they're always influencing people to start younger and that's not a bad idea anyway. But not looking at the shiny, Hey, I want to go on a, I need, I deserve a vacation, so let's go to Maui, or something like that instead, trying to find, they're also all about, Just the simple things. Couponing, looking for the deals. If you're gonna go to Disney World, looking for the really good deals when no one else wants to go, like the dead of winter when there's a snowstorm or something. just things like that. And they're, I think they're all good ideas. And I think when I, of course my experience is mostly in the military, James, so we have a lot of privates who come in the military. as private, the lowest rank you can be. And they're right off the bat, they're making$2,000 a month and they've never made that much money in their entire life. and they can't even touch it for like the first two or three months cuz they're in basic training. So they come out of basic training with, ideally, si five,$6,000, still making$2,000 a month and no one's ever. The Army tries to do a decent job. They have the counselors if you go to them, but they're not, most of the time they don't come to you. I don't know if they've done a better job about this, they get out, these, get out with these$6,000 in their pocket, the$2,000 a month, and like, I'm gonna go buy, whatever, you know, car, big old, big old truck. Usually it's a car and no one has ever told them how to buy a car. How they should compare shop, how they, you know when the guy says, Hey, I'll give it to you for this price, but if you walk off the lot, the deal's done like that doesn't make sense to the guy selling you the car. He's not gonna make any money if he doesn't sell the car. If you come in the next day, you don't think he's gonna give you the same deal or someone else there is, or go to a different place. So

James: 8:23

not like that. But how much of the cost of a car comes after you've bought it and how you need to add on two or three times what you just paid up front for the thing. If you're gonna ensure the car and drive the car and fix the car,

Randy: 8:35

and no one's told them that if you go to your bank, they'll probably give you a better rate. and they know. And the thing about being in the Army without any bad credit, you don't have a lot of credit, but you don't have bad credit yet usually is the bank, knows you're gonna make a, a wait a$2,000 at least a month no matter what rank you are. So they'll give you the loan cuz you're gonna, you're stuck for four years in the Army. You're gonna pay the bank back because the bank knows who to go to if they, if you don't, cause they're, there's, usually it's the federal credit union there. but they can give you a lot better rate than the, the car lot or, some other options. learning these things from the fire people is a, I think it's a great thing. and as far as, making these small decisions, learning how to shop for things and compare cost, which a lot of people don't have the patience for, but once again, it's, if you're saving.$500 off something. Or if you're not making a credit card payment where you're paying$50 interest every month or something like that's all. That's all. Every little bit counts,

James: 9:37

right? So if the basic principle is very small, decisions already start to add up and accrue to your benefit, then of course every medium sized and larger decision will also add up even more. And this starts from the moment you. Have income of any kind coming in, whether it's delivering papers, mowing lawns, or indeed your first salary working for the military or whatever job that you start. I think you're raising a good point, Randy, which is that when people first start earning money, they're not used to earning money. It seems like all the money in the world, they don't know what they don't know. They don't know. To necessarily ask for advice at a certain age. your late teens, your early twenties, you're not necessarily looking to your parents or people a generation older to give you advice how. How do we think about, advising people to avail themselves of advice? What's the, what's, what are different ways to get people to say, Hey, look, this is in your interest. no one's trying to tell you to do anything. It's really just a way for you to think about how to, is it thinking of your future self and saying, how do I wanna feel in 10 years or 20 years? What, what sort of motivators, in other words, would get people to, to listen to us today and to think about, all right, I'm only 20 something, and how am I gonna steer my life?

Randy: 10:56

I think it's, short, medium, and long goals is probably a way to look at it, right? Where do you wanna, where do you want to be in 20 years? Do you wanna, we work at a nine to five job, with a car loan or house loan. or would you rather, in 20 years living a more frugal life? be able to quit your job and do whatever you want, not necessarily retire and not work again. Mm-hmm. But maybe you could, if you invested your money right, for 20 years and didn't make the big purchases, didn't get the big expensive cars, didn't get the super big house. If you didn't, if you made those decisions earlier and you had a. You don't want to, the job you're in, you're doing right now, or that you're stuck in or whatever, while it might pay well, might not be what your dream job is. When you're in your, when you're in your late thirties or forties, if what you want to do is, I want to be an author, you're not gonna sell books in day one. Or, I want to be an artist, or I want to be whatever you want to be, and it just pays a lot less. You have that opportunity to change careers and do what you think you love to do as opposed to, so that's your long-term middle term. If you've got a family, and then you have to. your spouse probably needs to agree with your way of life. I've seen a lot of people in the military, especially where a soldier is very conservative about what he saves and spends and everything. And he's on the right track because he is, had good mentors if nothing else, and he gets married. And the, his wife, and I'm not just saying this because she's female, I'm saying it because most of the people I've come in contact with were male soldiers. But it could go the other way. This, his spouse has never had to restrict herself. Or his. And so therefore they, she doesn't agree to the budget. I don't agree to that. And he's like, well, I'm, and it becomes the biggest fight of the family, and I think that's very common is money. Money seems to be a big fight for everybody's in the long run. When you're in family relationships and couples and things like that, seems to be one of the bigger things to cause divorce. And so you need really need to If you've, if once you've embraced this, if you've embraced this thought process, you need to share that with your loved ones and make sure everyone's on board with this. Otherwise, it won't work.

James: 13:10

So I like the suggested motivation that you're offering, which is just think about, how you want your life to play out, medium term, long term. The way I think about that, and I've heard young people express this and I see it in how they behave, is they want to keep their options open. They wanna be able to pursue different things at different points in their life. While what we're suggesting is one of the ways to have really. Very significant optionality is to have financial habits that allow you to make choices later that are based not only on I need to stay in this job because I earn a lot of money. if you've managed to save a significant amount because of you said, making big decisions, I would say make small decisions as well as big decisions to put yourself in that position. You really actually expand your options immensely by having a little bit of a financial buffer. That's the other side of the fire movement that's worth mentioning, which is if you've paid attention to living a, I'll say frugal lifestyle, but our cost efficient lifestyle, that has double benefits. You save more money on the one hand, but you also have lower ongoing costs. And therefore you need less money in order to achieve the independence that you're trying to achieve. So the good financial habits on the one side of just saving and investing great, but also you have a lower cost lifestyle. What happens to many people if they don't pay direct attention to this is that their lifestyle expands with their salary. So you make a little bit of money, you get a bit fancier of a car, you upgrade your house, you take nicer vacations, and all of a sudden, You're making twice as much money, but you're spending twice as much money. that just puts you in exactly the same spot that you, or keeps you in the same spot that you were before and doesn't in, in increase your optionality, expand your ability to take back some of your time to do something later, earlier than you otherwise would. So I like your point about saying, Hey, look, this is your own future flexibility that you're creating by virtue of making small

Randy: 15:02

decisions. today. Yeah, I, no one, I, my dad didn't really talk to me about this when I joined the Army, so I didn't, I started a little late. I've been trying most of my career to mentor the soldiers under me to do that. And we talked about one of the guys I did who, he came in, he came to me when. I guess he was 21, 20. He had, he was just about to turn 21, I think when he got to me, he just got outta the Special Forces course, and so I, I just saw it, I was like, Hey, I am not an expert, you're gonna make a good salary here in the Green Berets. You get all these extra pays, you're gonna go to combat. You're not gonna pay taxes while you're in combat zones, and I recommend you. Talked to an a couple, couple me, financial advisors and figure out how to make your money work for you, and I wish someone had told me that, so I would be bereft if I didn't tell you. And 10 years later, he got out. I, we can tell this story again real quick. He, he got out 10 years later. He didn't retire like I did. He got out in 10 years, took a, and didn't even have a, didn't even have a really a goal of what he's gonna do. He's just I think I'm gonna open a CrossFit gym, but you know what? I was like, oh, shoot. Are you gonna get a loan for that? He's oh, no. Thanks to your advice. I saved two,$250,000 up. And then I was like, What, why can't I get 10% of that. that was, him between 20 and 30. he was single the whole time and he, he didn't have a fantastic car. He had a, he bought a new car, but it was not a, it wasn't a sports car or anything. And, had great gas mileage. That's why I think he got it. And, he, I, he pro, I think he said, told me he put like 50% of his salary every month into investments. I

James: 16:44

think, an important takeaway is that if you start with whatever you can and just develop habits, you'll put yourself on a good path, no matter what happens, because you'll. Avoid unnecessary expenses, you'll take advantage of the power of time. and you'll avoid, some aspect of lifestyle inflation. there's an interesting flip side or dilemma here, which is to remember what the purpose of your saving is. So I've known people who saved their whole lives long, and then they never managed to ease up and say, well, okay, now that I've, Worked hard and saved my whole life long. they never find a way to turn the tap back on a little bit and to make their lives easier. So if you've lived carefully and frugally, you might, even when you could afford to take a taxi, let's say you're, 75, you're in a real hurry. You need to get there. You're like, no, I can't do it. I know if I take the bus, but you're an hour late, you're tired, you get a cold, you get pneumonia. You die because you couldn't manage to spend money that

Randy: 17:46

you could. I went, I got dark quickly. I know. But,

James: 17:50

so what I wanna say is we're not asking people or suggesting that you have an unhealthy attitude towards money. It's not that you can never spend money and that you shouldn't spend money. It's just that you should be. Thoughtful about your approach to money. if you're not, it'll end up running your life in ways that you don't like. You'll end up perhaps spending more money than you otherwise would because you think it's gonna make you happy. And we can't say what amount of saving or spending, or indeed what amount of approach to money is gonna make you happy in life. To come back a little bit to our earlier topic, But I do think it's worth mentioning here that the aim of all of this is not to amass the most money and to die with the most money. It is to support the kind of life and goals that you wish to support. A lot of people do like the idea of being able to buy back flexibility, buy back, the freedom to do what they wish to do without worrying about necessarily how much money they're making and what we've talked about so far. Randy, I think are methods to help. help you achieve getting that kind of flexibility. But of course you need to decide, dear listener, what it is that you, you wish to do really? what I can say is having looked at people working and saving money and spending money over a couple of decades is people do seem to appreciate the flexibility to be able to decide what to do with their time more than they do. Just adding zeros to their bank account. just getting more money does not seem to bring the same kind of satisfaction for whatever reason. And that's not an argument not to get wealthy and to save as much money as you can. It's just wealth usually serves a purpose. and you need to think about what's your purpose. If you don't know what your purpose is because you're just starting out and you're in your twenties and you're just starting your career, it's appropriate to focus on your career and put your savings, in my view on autopilot in a way. Whether you save 20% of your income or 50% of your income or some bigger or lesser number isn't the point so much as just, assume that in the future, your future self will be happy. You decided to start saving when you were young, and so just go ahead and trust that you're gonna be happy you did it later without even necessarily having a goal in mind. And then when you're in your thirties and forties and fifties, then you'll think more carefully about those goals.

Randy: 20:03

I think, we would be remiss if we didn't talk about the influence of social media on once. Okay. And needs, right? everyone's posting on Facebook and TikTok and Instagram about, you're seeing all these influencers and everyone wants the perfect life that those influencers may or may not have, but whatever they're displaying. and I think it's, someone told me this once and it took me a while to actually do it, if you're gonna make a purchase, especially. A medium to large purchase. try not to do it spontaneously and try to figure out if you need it or you want it. And also if you do need it for whatever purpose, that there's not a cheaper way to get it. Because I've always found. When I bought something, I could always find, find it cheaper if I had tried and I just didn't try at the time because I bought it too quickly and I didn't really research it or something like that. So I would just be, I would just throw those cautions in there because I know this world we're living in is run by social media and there's a lot of influence out there that. May not be in your best interest. and even when we were younger, we always wanted the car that he had or the vacation that so-and-so went on and just either we decided not to do it or we couldn't afford it at that time. And I'd, and I'd say, don't, you don't have to keep up with the Jones. You just have to, acknowledge your own goals for your future self. And, and see if your current, your present day purchasers are going to satisfy your future self.

James: 21:39

Yes. those are good points. Humans are definitely social animals, which means we pay attention to status and hierarchy, and that leads us to make decisions that we think will elevate our status and hierarchy, but not necessarily do anything else. And that means those decisions can be. very counterproductive. And when you look at what the benefit of that social status and hierarchy is, it can be very elusive and fleeting. So that's something that people have to come to of their own accord. What I would say, with respect to your discussion of needs and wants, it's a really good thing to think about. And one easier way to distinguish between a need and a want is needs, can be satisfied. So you need to eat. And when you're hungry, if you eat something, that need, becomes diminished and it begets satisfied. A want by contrast is very hard to satisfy. You can never satisfy a want for a fancier car because there's always a newer car or a more expensive car, or a car that your neighbor has, and you don't. So if you look at your wishes, they feel the same, right? I really want to have this thing. But ask yourself whether upon acquiring that thing, that the desire goes away or is diminished, or whether the desire remains, in a, in effect, just the same way that it was. And it's not buyer'ss remorse so much as every person who's ever bought the new car or the new house or taken the trip only to realize a week later that they don't feel any different. We'll say. We'll have an opportunity to realize, oh, that was a want, not a need. And so to be specific, Randy, our advice is to, a, know the difference between needs and wants, and B, focus more on needs and to be very careful of pursuing wants, is that what you're saying?

Randy: 23:23

That and also, just gauging. Your need. The type of need you're trying to fill with this, and if it needs to be this expensive right now, or can we do something a little cheaper? I like, I'm all for buying quality things. So they last longer and they do what they're supposed to do as opposed to cheap pieces of junk that, blow up or break, you know, five days later and you have to buy another one. But, just doing an assess, a conscious assessment and also, In the back of your mind, and this is something I didn't do for the longest period until I was probably in my mid thir, mid thirties, like my future, would my future self come thank me for this or not?

James: 24:03

Yes. two, if I can add to your point about when you think about buying something, your, your future self, I would say assess your needs in light of your. Capability to afford it. And what specifically, what I mean is don't buy something if you don't actually have the money. And that includes the very worst form of buying things, in my opinion, which is to, you do it on debt, specifically with a credit card. The only kind of debt that I personally would count as a person to ever take, and the only one literally is, um, perhaps a, mortgage To buy a piece of real property. Any other kind of debt, I think is absolutely counterproductive to your long-term financial health. And that includes car debt and includes credit card debt, includes any kind of consumer debt that someone might offer to you. It doesn't matter what the interest rate is, that's not the point, although credit card debt has terrible interest rates, That is not you. You can't afford it if you don't have the money to buy it outright. And I mean that quite literally. And if I were to give advice to people about thinking about what they need and what they want, I would start with, do you even have the money to buy what you think you need and think you want? If you don't have the money in hand, I really wouldn't recommend. I recommend not buying it because it'll be terribly destructive to your success. So maybe we gotta spend a second talking about other things that are potentially destructive to your success. One of them, which I just mentioned, is buying stuff on credit when you don't have the cash on hand. Any other ones you would mention?

Randy: 25:37

that's the big one, right? just not just living within your means and saving. This goes back to short, medium, and long-term goals. If you have a goal to buy a car, don't buy it on credit. Save and don't change. don't trade your piece of junk in right now and buy it on credit unless your piece of junk's not working. and then, make this, make the effort to save that extra amount above and beyond what your long-term savings are and put that aside so you can pay cash and not pay all that, interest.

James: 26:11

Okay. I think that's a good summary of it. I can think of two other potential mistakes that I see people making that I would recommend they try to avoid. One is, taking on too much risk in the hope of accelerating the process of making money. So specifically, get rich quick schemes. Someone comes to you and says, I can double your money every six months with no risk. They are lying. And being realistic about what sort of return you can reasonably expect and shying away from places that, promise higher returns, they might actually occasionally deliver those high returns, but it comes with a risk. It comes with a risk that it's a fraud, that it's not repeatable, that your cryptocurrency investment is gonna go down by as much as it's gone up. avoiding get rich quick schemes is one, thing that I would say is a great threat to your money. And the second one would be, Utterly implausible methods. So let's say your theory about how you're gonna a achieve the lifestyle you want is, I'm just gonna buy lottery tickets every week until I hit the lottery. that's not a good strategy either, because the odds of payoff are quite against your favor. So that's a different sort of risk of saying, well, sometimes cryptocurrency pays off. Maybe it's the same category of risk and the lottery ticket is just that much more extreme. But, I was joking with you before we started that the best way to get rich would be to, successfully join the N F L and get a 50 million a year contract. That is a good way to make a lot of money, but it's extremely difficult and the competition is tough. I'd put that in the same category of assuming you're gonna win the lottery and when you have a completely unrealistic, goal and you actually pursue it. Then I would say you're not doing your financial future any favors by, not also pursuing less flashy, but more likely ways to, increase your earnings. So just to be, follow that one up the most. Predictable way to increase your earnings is one of the most boring and painful, which is to increase your education and then to work in a job that leverages your education. That's a great way to increase your lifetime earnings. If you are in high school, finish high school. If you do well in high school and have an opportunity, go to college. those are the times of things that, are more correlated with later higher income and earnings than anything else. So yeah, those would be some mistakes that I would recommend. Avoiding trying to get rich too quickly and then not having a plan at all and assuming you're gonna, do something, completely unlikely. Would we say to people that making a ton of money online in a side hustle is an unlikely outcome? Are there a lot of people making hundreds of millions of dollars or even millions of dollars as influencers? Should that be the strategy?

Randy: 28:50

seems like it from all the social media feeds I get, but I think there's a lot less than everyone thinks. I don't think a side hustle is a bad thing though. I think it's a way you can save for those short and medium term goals. it's a way that you can increase your fire, shorten your fire date if you can make a little bit hun, a hundred extra bucks, 500 extra bucks a month. Put that towards your long-term goals. as long as it's worth your time because everything you do to make money takes time and takes away from the people you love and the things you love to do. So that's just something that has to be balanced with. That's what we talked about in episode three is, being rich doesn't always mean, as you mentioned in the beginning of the podcast being rich wealth wise, but it also, relationship wise and, a sense of, wellbeing, stuff like that.

James: 29:40

That's a good point with all this. Talk about your future self and medium term goals and long-term goals. it makes it feel like there's a, an end result that you're working towards, that if only I get to that, then I'll, I'm gonna be happy. And that's probably a, not the case. And B, you definitely don't wanna ignore the fact that you're living a life right now and every day you should be trying to have a fulfilling happy life. I like that you clarified that we're not in any way suggesting. A side hustle isn't a good idea. It is a good idea. Teaches you things, it gives you a source of income. And if I had to say what. Your job and your side hustle and your financial habits do for you is they allow you to get rich slowly, not quickly. And so if that can be your aim to say, I know this is a lifetime endeavor, a lifetime pursuit, I'm just gonna develop habits that will serve me well, my whole lifelong, just like the physical fitness habit or an eating habit, that's probably a healthy way to think about your finances.

Randy: 30:38

I, I helped this, gentleman. I co-wrote a book with him. He was the expert. I was just the advisor, editor, writer for him. And, so his name's Rich Becky. He owns a company called Real wealth.com. It's about, investing in real estate for the purpose of, of renting, rental real estate. You look for the right of real estate. You rent it, you make the passive income of the rentals and stuff like that. But, he wanted to write a parable. About a normal family that has mortgage and car loans and credit card bills and a family. And they may have started their family late, so now they're almost 40 and their kids are like 10 or so 12. And so they have at least another 8, 7, 8 years before the kids go to college. And then they gotta pay for college. And so where's it ever end in this rat race? And he was an amazing guy. And he was pretty wealthy, but he was, he was amazing in the fact that he just, he, I really felt, cause I would be on these conversations like I am with you right now, James, and I felt like he really thought this was the way to financial freedom for many people. And if they just understood how it worked and the advantages of it. Then they could escape the rat race they're in. What? The reason I'm saying this is future self. I got this idea from him because one of the things that we wrote into the book was this exercise that he does, and he's written another book too. Before, a long time ago, like 12 years ago, long time ago, 12, 15 years ago, he wrote another book that he published, and in both books, one of one of the books, he actually walks you through the exercise. Because it's an instructional book, it's a basically how to make yourself better, and in this parable, They're the main character. The protagonist is going through life, through this rat race. And then he meets a mentor and the mentor advises him how to get out of the rat race. And along the way he says, Hey, I want you to do an exercise. I want you to, close your eyes and imagine yourself. And imagine you are, you're walking in you, you find your future home. What does it look like? and you walk through the door and you meet your future self and he shows you around his house. He introduces you to his family and what does that look like? And this, so that you're imagining what you want of your future so that when you come out of this, exercise is trans, you can see what your end goal is and you're willing to make these. We'll call them small sacrifices because you're making choices not to be more comfortable, to not have a bigger house, to not have a better car, to not go on the Disney cruise or whatever expenses that you want, but you don't necessarily need at this moment, so that your future self, you can actually live in that house, that your future house is sitting and have that life that your future self has. It was a really great, it was a really great idea, I thought. And that's where I got the idea of the future self.

James: 33:34

Nice. are you aware of any other resources, for example, for people starting out their career, if you're in the military, for example. is there something that you could recommend to people as a simple reference or guide beyond, listening to this podcast, for example, are you doing anything to help out, more than just the one person that you can reach in your one-to-one mentorship? do you have any ideas for how to help a broader number of people?

Randy: 34:00

I'm starting a couple things. James. We talked about this earlier and what, but I'll, I will give kudos to this. I can't remember the guy's name, but we'll put it in the notes. He wrote this book called the Military Money Guide. And basically it looks at all the different ways. The mud the military pays you, whether it's tax free in combat zones, whether it's, investing in their new four oh plan, and, doing all these different things that all these special pays that the military pays for, pays you and all the ways you can take advantage of that. And how to use that to make yourself, he actually goes for, he's also for the fire mentality too. And so using that from the time you come in the military to when you retire or when you decide to separate and being able to be wealthy at any rank. And I've taken that information and incorporated it into a book I'm writing called Army Rich, which is for people, enlisted guys coming in at 18, 19, 20 to give them, Hey, don't buy the badass car, save your money so that in four years you can get out, have 15,$20,000 in the your bank account and have all these opportunities open up to you. You can start a small business, you can go to college. On the college fund. you can have all these opportunities, but. I think we've talked about this. I went in the army with not a lot of idea of how everything worked and how finances work. And I, I think I had$220 in the bank when I joined the Army, right? And then four years later I had, I.$320, oh, I didn't save anything. I didn't, my dad gave me a car. So that's the only reason I had a car. But I didn't do any of these things that we're talking about right now because it didn't occur to me. I didn't see my future self. I didn't have an idea of where I wanted to be in my future. And no one ever actually talked to me about it. So I wrote that book and, oh, it'll come out this year, hopefully, just to help. new people, new people come in the army, kinda understand that better. Cause I think every new soldier should have a mentor. But at, not every supervisor or sergeant has had a mentor, so they, they don't know how to mentor their soldiers that way.

James: 36:02

I. I think that's a really good reference, both of the books that you mentioned, and as you say, let's put'em in the show notes. There's one that I came across a while back that is addressed at younger people starting out their career. It's called, if You Can, how Millennials Can get Rich Slowly. I like that idea. and it's by William Bernstein and it

Randy: 36:22

Yep. And the latte factor. Which is also the basis for the book that I wrote for the wise investor that I worked with. Rich Han is just the same idea that for the cost of, if you save the money that you would go to Starbucks and pay for every day. Which a lot of people who go in the workforce, they're, they meet their buddies at Starbucks before they go to the office and they're doing these things. They're going out to lunch, they're boarding a pizza at night or whatever they're doing. If they, if they did it slightly a different way, they could save so much money a month, which they could invest into their future. Latte factors a great book.

James: 36:57

Okay, I hope we've given you listeners today a, sense of. How to think about some basic financial issues, some inspiration on thinking about your small daily habits each day, and to also think about your future self and hopefully you learn something and have some inspiration to try out these ideas yourself. Thanks everybody for listening. All right, thanks. Talk to you guys next time.

Randy: 37:21

We'd love to hear what you think, so please comment on the show with your thoughts. We read all of your comments.

James: 37:26

Thanks for joining us, and thanks for subscribing. See you next time.